SECURITY AGREEMENT
SECURITY AGREEMENT (this "Agreement") dated as of August 31, 2005 made by
INTEGRATED BRANDS, INC., a New Jersey corporation (the "Borrower"), each of the
Group One Guarantors (as defined in the Existing Loan Agreements (defined
below)) listed on Exhibit A annexed thereto (the "Group One Guarantor Debtors"
and together with the Borrower, the "Debtors" and each a "Debtor") to JPMORGAN
CHASE BANK, N.A., a national banking association and its successors and assigns
as "Agent" and for itself as the Lender under the Existing Loan Agreements
(defined below) and for itself with respect to the 2005 Note (defined below) (as
applicable, the "Lender").
PRELIMINARY STATEMENTS.
1. The Borrower, certain of the Group One Guarantors and the Lender
entered into (i) a Loan Agreement dated as of December 23, 1994, as amended
through the date hereof, and (ii) a Loan Agreement dated as of September
20, 2000, as amended through the date hereof (collectively, the "Existing
Loan Agreements").
2. The Borrower executed and delivered to the Lender a Promissory Note
in the principal amount of $40,000,000.00 dated March 25, 2005 (as amended
on the date hereof, the "2005 Note" and together with the Existing Loan
Agreements, the "Existing Credit Facilities").
3. (i) Kayla Foods Int'l (Barbados) Inc. ("Kayla") and Coolbrands
International, Inc ("Coolbrands") each executed a General Guaranty dated
September 20, 2000 and a Guaranty of Payment dated March 25, 2005
(collectively, the "Foreign Entity Guaranties"); (ii) the Group One
Guarantor Debtors (other than Coolbrands Dairy, Inc. ("Dairy") and the
Other Guaranty Parties (as defined in each of the Existing Loan Agreements)
executed a General Guaranty dated September 20, 2000 (the "All Other
Guarantors Guaranty") and, pursuant to the Second Amendment (as defined in
the Loan Agreement referred to in clause (ii) of paragraph 1 above), Dairy
joined in the All Other Guarantors Guaranty; (iii) the Group One Guarantor
Debtors and the Other Guaranty Parties executed a Guaranty of Payment dated
March 25, 2005 (the "2005 Domestic Entity Guaranty"); and (iv) Yogen Fruz
Canada, Inc. is executing a Guaranty of Payment dated the date of this
Security Agreement (the "Yogen Guaranty" and, together with the Foreign
Entity Guaranties, the All Other Guarantors Guaranty and the 2005 Domestic
Entity Guaranty, the "Guaranties");
4. (i) The obligations of Dairy under the All Other Guarantors
Guaranty and the 2005 Domestic Entity Guaranty have been secured by a
Security Agreement in favor of the Lender dated March 25, 2005; (ii) the
obligations of Coolbrands under the Foreign Entity Guaranties are being
secured by a Security Agreement in favor of the Lender dated the date of
this Agreement; and (iii) the obligations of Yogen under the Yogen Guaranty
are being secured by a Security Agreement in favor of the Lender dated the
date of this Agreement;
5. Certain defaults have occurred under the Existing Loan Agreements
and the 2005 Note and the Borrower has requested that the Lender waive such
defaults;
6. It is a condition precedent to the Lender's agreement to waive such
defaults that, among other things, the Debtors execute and deliver this
Agreement to secure (a) the due and punctual payment of all sums becoming
payable from any or all of the Debtors under or in connection with (i) this
Agreement, (ii) the Existing Loan Agreements and the "Loan Documents" as
defined in each of the Existing Loan Agreements, and (iii) the 2005 Note
and the Other Loan Documents (as defined in the 2005 Note; the documents
described in the foregoing clauses (i), (ii) and (iii) hereof being
collectively referred to herein as the "Loan Documents"), including without
limitation, (x) 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 2005 Note and the
obligations arising under the Existing Loan Agreements, when and as due,
whether at maturity, by acceleration, upon one or more dates set for
prepayment or otherwise and (y) 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 any or all of the Debtors under any of the Existing Credit
Facilities, the Guaranties or the other Loan Documents, (b) the due and
punctual performance of all covenants, agreements, obligations and
liabilities of any or all of the Debtors under or pursuant to each of the
Existing Credit Facilities, the Guaranties or the other Loan Documents
(including this Agreement), and (c) the payment of all damages (whether
provided for in the 2005 Note, the Existing Loan Agreements, the Guaranties
or the other Loan Documents or otherwise permitted by law) in respect of a
failure or refusal by any or all of the Debtors to pay or perform as
required under the 2005 Note, the Existing Loan Agreements, the 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 in order to induce the
Lender aforesaid, the Debtors 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:
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"Account Debtor" shall mean any Person who is or who may become obligated
to any or all of the Debtors under, with respect to, or on account of an
Account.
"ACH Exposure" shall mean indebtedness of any or all of the Debtors 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 any or all of the Debtors 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 any or all of the Debtors 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.
"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 any or all of the Debtors, 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 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 any or all of the Debtors under any Copyright now
or hereafter owned by any third party, and all rights of any such Debtor under
any such agreement.
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"Copyrights" shall mean all of the following now owned or hereafter
acquired by any or all of the Debtors: (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 2005 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.
"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 any or
all of the Debtors. 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 applicable Debtor from granting a Lien on
the assets or properties which are the subject of
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such permitted Lien or on such 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 such Debtor from granting a Lien on the
assets or properties that are the subject thereof or on such Debtor's rights as
lessee or licensee thereunder, but shall not include any Account Receivable of
such Debtor under any such license, lease or other agreement. The Excluded
Collateral, as of the date hereof, is described on Schedule A. (For the
avoidance of doubt, it is expressly agreed that assets owned by Americana Foods,
L.P. are not included in the scope of the term "Collateral" hereunder.)
"Existing Credit Facilities" has the meaning given to such term in the
recitals to this Agreement.
"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 any or all of the Debtors 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 any or all of the
Debtors of every kind and nature (other than Accounts Receivable) now owned or
hereafter acquired by any or all of the Debtors, including deposit accounts
(including Account No. 957177062 with the Lender, in which account the "Cash
Collateral" (as defined in the Existing Loan Agreements is held), commercial
tort claims, chattel paper, instruments, payment intangibles, tax refunds and
return claims, corporate or other business records, indemnification claims,
contract rights, 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 any or all of the Debtors 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. (For
the avoidance of doubt, it is expressly agreed that certain items (e.g. deposit
accounts) are included in the foregoing definition even though they are not
included in the definition of the term "General Intangibles" under the UCC.)
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"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
any or all of the Debtors of every kind and nature, wherever situate, now owned
or hereafter acquired by any or all of the Debtors, 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 mean inventory, as defined in Section 9-102(a)(48) of the
UCC, wherever located, now or hereafter owned or acquired by any or all of the
Debtors including, without limitation, all inventory, merchandise, goods and
other personal property which are held by or on behalf of any or all of the
Debtors 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 applicable Debtor, a separate charge is made or a
separate ▇▇▇▇ is rendered by the applicable Debtor for the storage of such goods
and whether or not the goods were purchased by the applicable 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 Debtors' respective businesses, 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 such Debtor or is held by such Debtor or by others for such
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 such 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 such 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 any or all of the Debtors, whether now owned or
hereafter acquired.
"License" shall mean any Patent License, Trademark License, Copyright
License or other license or sublicense to which any or all of the Debtors is or
are 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 any such Debtor as licensee thereunder).
"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
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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 have the meaning given thereto in the recitals to
this Agreement.
"Material Adverse Effect" means a material adverse effect on (a) the
business, assets, operations, prospects or condition, financial or otherwise, of
all of the Debtors taken as a whole, (b) the ability of any or all of the
Debtors 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 any or all of the Debtors 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 any such Debtor under any such agreement.
"Patents" shall mean all of the following now owned or hereafter acquired
by any or all of the Debtors: (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;
(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
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of a like nature, in each case, in the ordinary course of business of any
or all of the Debtors;
(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 any or all of the Debtors; 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 any or all of the Debtors against any third party for (and the
right to ▇▇▇ 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 any such Debtor, or licensed under a
Patent License, (ii) past, present or future infringement or dilution of any
Trademark now or hereafter owned by any such Debtor or licensed under a
Trademark License or injury to the goodwill associated with or symbolized by any
Trademark now or hereafter owned by any such 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 any such 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) any future lender under
any of the Existing Credit Facilities, (c) the beneficiaries of each
indemnification obligation undertaken by any or all of the Debtors under any
Loan Document, and (d) the successors, participants and permitted assigns of
each of the foregoing.
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"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 2005
Note.
"Trademark License" shall mean any written agreement, now or hereafter in
effect, granting to any or all of the Debtors any right to use any Trademark now
or hereafter owned by any third party, and all rights of any such Debtor under
any such agreement.
"Trademarks" shall mean all of the following now owned or hereafter
acquired by any or all of the Debtors: (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.
"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.
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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, each of the Debtors hereby
assigns, grants, pledges and transfers, to the Lender and the other Secured
Parties, their respective successors and assigns, a security interest in such
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 such Debtor, without the signature of such
Debtor, and naming such 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 any or all of the
Debtors with respect to or arising out of the Collateral.
ARTICLE III
Representations and Warranties
Each of the Debtors represents and warrants to the Lender and the other
Secured Parties that:
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SECTION 3.01 Title and Authority. Such 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 with
respect to such Debtor 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 Liens expressly
permitted to be prior to the Security Interest pursuant to Section 4.13 of this
Agreement.
SECTION 3.04 Absence of Other Liens. The Collateral is owned by such Debtor
free and clear of any Lien, except for Liens expressly permitted pursuant to
Section 4.13 of this Agreement. Such 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 such
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 such 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 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.
ARTICLE IV
Covenants
SECTION 4.01 Change of Name; Location of Collateral: Records; Place of
Business.
(a) Each of the Debtors 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
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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. Each of the Debtors 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. Each
of the Debtors agrees promptly to notify the Lender if any material portion of
the Collateral owned or held by it is damaged or destroyed.
(b) Each of the Debtors 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 such 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) Each of the Debtors shall keep the Equipment and Inventory of such
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. Each of the Debtors shall cause its Equipment
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. Each of the Debtors 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, its Equipment and Inventory.
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 each of the other
Debtors) as required under the Loan Documents, each of the Debtors shall deliver
to the Lender a certificate executed by its chief financial officer 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 such 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. Each of the Debtors shall, at its own
cost and expense, take any and all actions necessary to defend title to the
Collateral against all
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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) Each of the Debtors 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, each of the Debtors
hereby authorizes the Lender, with prompt notice thereof to the applicable
Debtor or Debtors to supplement this Agreement by 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 any such applicable 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 any such Debtor
hereunder with respect to such Collateral. Each of the Debtors 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. Each of the Debtors 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 Debtors' cost and expense, upon reasonable notice to any
applicable Debtor 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
affairs of the respective Debtors with their respective officers and 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
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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 Debtors fail to do so as
required by this Agreement, and the Debtors agree 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 any or all of the Debtors 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 Debtors 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 any or all of
the Debtors 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, such security interest shall be promptly assigned 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 Debtors. The Debtors shall
remain liable to observe and perform all the conditions and obligations to be
observed and performed by it under each contract, agreement or instrument
relating to the Collateral, all in accordance with the terms and conditions
thereof, and the Debtors agree 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 Debtors 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 Debtors shall not make, nor shall the
Debtors permit to be made, any sale, conveyance, lease, assignment, transfer or
other disposition of any Collateral, and the Debtors 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 Debtors 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, each of the Debtors 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, 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.
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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. Each of the Debtors, 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. Each of the Debtors irrevocably makes, constitutes and
appoints the Lender (and all officers, employees or agents designated by the
Lender) as each such 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 such 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 any or all of the Debtors 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 any or all of the Debtors
hereunder or any Event of Default, in its sole discretion, obtain and maintain
such 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 Debtors 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
Debtors 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 Debtors shall be used by the Debtors, 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 Debtors 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, each of the Debtors 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.
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SECTION 4.13 Liens. Each of the Debtors agrees that it 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 such 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 such Debtor, (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 (iii) the Lien in favor of Air Products and Chemicals, Inc. is
subject to the termination or removal thereof as provided in the respective
amendments to the Existing Loan Agreements and the 2005 Note dated the date
hereof (the "Amendments"); and
(c) Purchase money Liens on any Equipment acquired or held by such 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 Loan Agreements or by
Section 17 of the 2005 Note.
SECTION 4.14 Covenants Regarding Patent, Trademark and Copyright
Collateral.
(a) Each of the Debtors 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 ▇▇▇▇ 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) Each of the Debtors (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.
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(c) Each of the Debtors (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) Each of the Debtors shall notify the Lender promptly if it knows that
any Patent, Trademark or Copyright material to the conduct of the business of
such 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 such 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 any of the Debtors, either themselves 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 each of the Debtors 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) Each of the Debtors 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 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
its business, 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 any of the Debtors has reason to believe that any
Collateral consisting of a Patent, Trademark or Copyright material to the
conduct of any such Debtor's business has been or is about to be infringed,
misappropriated or diluted by a third party in any material respect, such Debtor
promptly shall notify the Lender and shall, if consistent with good business
judgment, promptly ▇▇▇ 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.
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(h) Upon and during the continuance of an Event of Default, each of the
Debtors 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 such Debtor's right, title and interest
thereunder to the Lender or its designee.
ARTICLE V
Power of Attorney
Each of the Debtors irrevocably makes, constitutes and appoints the Lender
(and all officers, employees or agents designated by the Lender) as such
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 such Debtor and in
such 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 such Debtor or on any invoice or ▇▇▇▇ 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 such 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
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 such 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 each of the
Debtors for the purposes set forth above is coupled with an interest and is
irrevocable. The provisions of this Section shall in no event relieve any or all
of the Debtors of any of its or their 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.
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ARTICLE VI
Remedies
SECTION 6.01 Remedies upon Default.
(a) Upon the occurrence and during the continuance of an "Event of Default"
under the 2005 Note or any of the Existing Loan Agreements, or upon any event of
default or default beyond applicable periods of notice and grace under this
Agreement, any of the Existing Facilities, any of the Guaranties, or any of the
other Loan Documents, 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,
each of the Debtors agrees to deliver each item of Collateral to the Lender
forthwith on demand, and each of the Debtors agrees 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 such 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 such 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, each of
the Debtors 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 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 any or all of the Debtors, and each of the Debtors hereby waives (to the
extent permitted by law) all rights of redemption, stay and appraisal which such
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) If the Lender intends to make a sale of any Collateral, the Lender
shall give any or all of the Debtors who are the owner or owners thereof, 10
days' written notice (which each of
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the Debtors 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 none of the
Debtors shall 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 any or all of
the Debtors, 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 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 any or all of the
Debtors 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
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THIRD, to the Debtor who pledged the Collateral which was the
subject of the collection, 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, each of the Debtors 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 such Debtor) to use, license
or sub-license any of the Collateral consisting of Intellectual Property now
owned or hereafter acquired by such 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 Debtors 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 any or all of the Debtors, to it or them at c/o
Integrated Brands Inc., ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attention of ▇▇▇▇▇ ▇. ▇▇▇▇▇, Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇, with a copy to ▇▇▇▇ ▇.
▇▇▇▇▇, Esq., ▇▇▇▇▇▇▇ Procter LLP, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇ and if to the Lender, to JPMorgan Chase Bank,
N.A., ▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention of ▇▇▇▇▇
▇'▇▇▇▇▇▇▇▇, Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇). 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.
21
SECTION 7.02 Security Interest Absolute. The obligations of the Debtors
under this Agreement are joint and several, and independent of the Obligations
or any other obligations of any or all of the Debtors or any other guarantors of
any or all of the Obligations to the Lender under or in respect of any of the
Loan Documents, and a separate action or actions may be brought and prosecuted
against any one or more of the Debtors to enforce this Agreement, irrespective
of whether any action is brought against any of the other Debtors (or any other
guarantor of any or all of the Obligations) or any of the other Debtors (or any
other guarantor of any or all of the Obligations) is joined in any such action
or actions. All rights of the Lender hereunder, the Security Interest and all
obligations of the Debtors hereunder shall be absolute and unconditional
irrespective of (a) any lack of validity or enforceability of the 2005 Note,
either of the Existing Loan Agreements, any of the Guaranties, any of the other
Loan Documents, 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 2005 Note, either of the Existing Loan Agreements, any of
the Guaranties, any of the other Loan Documents 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, any or all of the Debtors 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 any or all of the Debtors 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 execution and delivery by the Lender
of any waiver and amendment to the Existing Loan Agreements and/or the 2005 Note
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 Debtors when a counterpart hereof executed on behalf of the
Debtors 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 Debtors and the Lender and their respective successors and assigns, and
shall inure to the benefit of the Debtors, the Lender and the other Secured
Parties and their respective successors and assigns, except that the Debtors
shall not have the right to assign, delegate or transfer their respective 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 Debtors or the Lender that are contained in this
Agreement shall bind and inure to the benefit of their respective successors and
assigns.
22
SECTION 7.06 Lender's Fees and Expenses; Indemnification.
(a) The Debtors 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 any or all of the Debtors to perform or observe any of the provisions hereof.
(b) Without limitation of its indemnification obligations under the other
Loan Documents, the Debtors agree 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 2005 Note, the Existing Loan Agreements, the
Guaranties, or any other Loan Document, the consummation of the transactions
contemplated hereby, the repayment of any or all of the Obligations, 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
23
any departure by any or all of the Debtors 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 any or
all of the Debtors in any case shall entitle any or all of the Debtors 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 any or all of the Debtors 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) Each of the Debtors hereby irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of New York State
court sitting in New York
24
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 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 any or all of the Debtors or their respective properties in the courts
of any jurisdiction.
(b) Each of the Debtors 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 affect 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 Debtors, at the Debtors'
expense, all UCC termination statements and similar documents which the Debtors
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.]
25
IN WITNESS WHEREOF, Each of the Debtors has caused this Agreement to be
duly executed and delivered by its officers thereunto duly authorized as of the
date first above written.
INTEGRATED BRANDS INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
KAYLA FOODS INT'L (BARBADOS) INC.
▇▇▇▇▇▇▇'▇ ICE CREAM COMPANY
YOGEN FRUZ ACQUISITIONS INC.
NORTHERN LIGHTS FROZEN DESSERTS, INC.
ESKIMO PIE CORPORATION
SUGAR CREEK FOODS INC.
▇▇▇▇▇▇▇'▇, INC.
▇▇▇▇▇▇▇'▇ INDUSTRIES, INC.
GOLDEN SWIRL MANAGEMENT COMPANY
I CAN'T BELIEVE ITS YOGURT, LTD.
By Kayla Foods Int'l (Barbados), Inc.,
its General Partner
By:
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
ESKIMO PIE FROZEN DISTRIBUTION INC.
By:
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chief Executive Officer
IN WITNESS WHEREOF, Each of the Debtors has caused this Agreement to be
duly executed and delivered by its officers thereunto duly authorized as of the
date first above written.
INTEGRATED BRANDS INC.
By:
--------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
KAYLA FOODS INT'L (BARBADOS) INC.
▇▇▇▇▇▇▇'▇ ICE CREAM COMPANY
YOGEN FRUZ ACQUISITIONS INC.
NORTHERN LIGHTS FROZEN DESSERTS, INC.
ESKIMO PIE CORPORATION
SUGAR CREEK FOODS INC.
▇▇▇▇▇▇▇'▇, INC.
▇▇▇▇▇▇▇'▇ INDUSTRIES, INC.
GOLDEN SWIRL MANAGEMENT COMPANY
I CAN'T BELIEVE ITS YOGURT, LTD.
By Kayla Foods Int'l (Barbados), Inc.,
its General Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
ESKIMO PIE FROZEN DISTRIBUTION INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chief Executive Officer
EXHIBIT A
Group One Guarantors* Party to this Security Agreement
KAYLA FOODS INT'L (BARBADOS) INC., a Barbados corporation
▇▇▇▇▇▇▇'▇, INC., a Delaware corporation
▇▇▇▇▇▇▇'▇ ICE CREAM COMPANY, a California corporation
YOGEN FRUZ ACQUISITIONS INC., a Nevada corporation
▇▇▇▇▇▇▇'▇ INDUSTRIES, INC., an Illinois corporation
NORTHERN LIGHTS FROZEN DESSERTS, INC., a Utah corporation
GOLDEN SWIRL MANAGEMENT COMPANY, a Utah corporation
I CAN'T BELIEVE ITS YOGURT, LTD., a Texas limited partnership
SUGAR CREEK FOODS INC., a Virginia corporation
ESKIMO PIE FROZEN DISTRIBUTION INC, a Delaware corporation
ESKIMO PIE CORPORATION, a Virginia corporation
* For Information Only: Each of Coolbrands and Yogen have executed a separate
Security Agreement dated the date of this Agreement and Dairy executed a
Security Agreement dated March 25, 2005.
27
Annex 1 to the
Security Agreement
COMPLETE ONE FOR EACH DEBTOR
[To be completed by each Debtor prior to the Post Closing Delivery Date]
SCHEDULE I
NAME OF DEBTOR: _____________________
1. Names. The exact name of the Debtor is as that name appears on its
organizational documents is as follows:
2. Other Identifying Factors.
(a) The following is the mailing address of the Debtor:
(b) If different from its mailing address, the Debtor's place of
business or, if more than one, its chief executive office is located at the
following address:
Address County State
------- ------ -----
(c) The following is the type of organization of the Debtor:
(d) The state of organization of the Debtor is as follows:
(e) The following is the Debtor's state issued organizational
identification number [state "None" if the state of organization does not issue
such a number]:
3. Other Names, etc. The following is a list of all other names (including
trade names or similar appellations) used by the Debtor, or any other business
or organization to which the Debtor became the successor by merger,
consolidation, acquisition, change in form, nature or jurisdiction of
organization or otherwise, now or at any time during the past five (5) years [if
the
Security Agreement
Annex 1 to the
Security Agreement
Debtor has used any such other name, answer the questions in Part 2 with respect
to each such name on this Schedule I]:
4. Current Locations. (a) The following are all other locations in which
the Debtor maintains any books or records relating to any of the Collateral
consisting of Receivables:
Address County State
------- ------ -----
(b) The following are all other places of business of the Debtor:
Address County State
------- ------ -----
(c) The following are all other locations where any of the Collateral
consisting of Inventory (not in the possession of an individual doctor pursuant
to a written agreement with the Debtor) or Equipment is located:
Address County State
------- ------ -----
(d) The following are the names and addresses of all persons or
entities, other than the Debtor, such as lessees, consignees, warehousemen or
purchasers of chattel paper, which have possession or are intended to have
possession of any of the Collateral consisting of instruments, chattel paper,
Inventory (not in the possession of an individual doctor pursuant to a written
agreement with the Debtor) or Equipment:
Address County State
------- ------ -----
Security Agreement
Annex 1 to the
Security Agreement
5. Prior Locations. (a) Set forth below is the information required by
Section 4(a) or (b) with respect to each location or place of business
previously maintained by the Debtor at any time during the past five (5) years
in a state in which the Debtor has previously maintained a location or place of
business at any time during the past four (4) months:
Address County State
------- ------ -----
(b) Set forth below is the information required by Section 4(c) or (d)
with respect to each other location at which, or other person or entity with
which, any of the Collateral consisting of Inventory or Equipment has been
previously held at any time during the past twelve (12) months:
Address County State
------- ------ -----
6. Fixtures. Set forth below is the information required by UCC Section
9-502(b) or former Section 9-402(5) of each state in which any of the Collateral
consisting of fixtures are or are to be located, and the name and address of
each real estate recording office where a mortgage on the real estate on which
such fixtures are or are to be located would be recorded:
IN WITNESS WHEREOF, the undersigned has duly signed this certificate on
this ____ day of __________, 2005.
[______________________________________]
By:
------------------------------------
Name:
Title:
Security Agreement
SCHEDULE 1 TO PERFECTION CERTIFICATE
Changes in Identity and Structure
None.
Schedule I to the
Security Agreement
Copyrights
None.
Schedule II to the
Security Agreement
Patents
None.
Schedule III to the
Security Agreement
Trademarks
Follows this page.
[The Debtor shall supplement this Schedule as required by the Amendments]
Schedule IV to the
Security Agreement
Existing Liens
Follows this page.
Schedule A to Security Agreement
(Excluded Collateral)
Leased equipment subject to Liens permitted under Section 4.13
SECURITY AGREEMENT
THIS AGREEMENT is made as of the 31 day of August, 2005.
TO: JPMORGAN CHASE BANK, N.A. for itself with respect to the 2005 Note
(as defined below) and in its capacity as agent (together with its
permitted successors and assigns in such capacity) for itself in
such capacity and on behalf of the Lender from time to time
parties to the Existing Loan Agreements (as defined below) (the
"Secured Party")
GRANTED BY: YOGEN FRUZ CANADA INC., an Ontario corporation (the "Debtor")
having its principal office or place of business at ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
ARTICLE 1
DEFINITIONS
1.1 Defined Terms
Unless the context otherwise requires or unless otherwise specified, all the
terms used in this Agreement without initial capitals which are defined in the
Personal Property Security Act (Ontario) (the "PPSA"), have the same meanings in
this Agreement as in the PPSA.
1.2 Definitions
Wherever used in this Agreement, the following words and terms have the meanings
set out below:
"2005 Note" means the promissory note executed by the Borrower in the
principal amount of USD$40,000,000 dated March 25, 2005, as amended.
"Account Debtor" means any Person who becomes obligated to the Debtor
under, with respect to, or on account of, an Account Receivable.
"Accounts Receivable" means all "accounts," as such term is defined in the
PPSA, now or in the future owned by the Debtor, and includes without
limitation, all accounts receivable, other receivables, book debts, claims
and other forms of monetary obligation now or in the future owned, received
or acquired by, or belonging or owing to, the Debtor, whether arising out
of goods sold or services rendered by it, or from any other transaction,
and "Account Receivable" means any one of them.
"ACH Exposure" means indebtedness of the Debtor to the Lenders on account
of automatic clearing house direct deposit payroll transactions.
"Borrower" means Integrated Brands, Inc., a New Jersey corporation.
-2-
"Business Day" means any day, other than a Saturday or Sunday, on which
banks in New York City are open for commercial banking business during
normal banking hours and interbank wire transfers can be made on the
Fedwire system.
"Capital Lease" means a lease which has been or should be, in accordance
with GAAP, capitalized on the books of the lessee.
"Chattel Paper" means all or any part of any present or future interest of
the Debtor in chattel paper.
"Contracts" means any contracts, agreements, indentures, licences, permits,
quotas, commitments, entitlements, engagements or other arrangements,
whether written or unwritten, to which the Debtor is now or subsequently a
party or has a benefit, right, or in which the Debtor now or subsequently
has an interest.
"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 (as defined in the 2005 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 of Title" means all or any part of any documents of title,
whether negotiable or non-negotiable, including, without limitation, all
warehouse receipts and bills of lading, in which the Debtor now or
subsequently has an interest.
"Equipment" means all goods in which the Debtor now or subsequently has an
interest (including, without limitation, all tools, apparatus, fixtures,
plant, machinery and furniture) other than Inventory or consumer goods and
any part of such Inventory or consumer goods.
"Existing Credit Facilities" means the 2005 Note and the Existing Loan
Agreements.
-3-
"Existing Loan Agreements" means (i) a loan agreement dated as of December
23, 1994, as amended through the date hereof; and (ii) a loan agreement
dated as of September 20, 2000, as amended through the date hereof, in each
case among the Borrower, certain of the Group One Guarantors (as defined
therein) and the Lender.
"Guaranties" means, collectively, the General Guaranties executed by each
of Kayla Foods Int'l (Barbados) Inc. ("Kayla") and Coolbrands International
Inc. ("Coolbrands") each dated September 20, 2000, and the Guaranties of
Payment executed by Kayla and Coolbrands, each dated March 25, 2005
(collectively, the "Foreign Entity Guaranties") and the General Guaranty
executed by certain of the Group One Guarantors and other guarantors dated
September 20, 2000, which General Guaranty was subsequently joined in by
Coolbrands Dairy, Inc. pursuant to a separate agreement (the "All Other
Guarantors Guaranty"); and the Guaranty of Payment executed by the Group
One Guarantors and the Other Guaranty Parties dated March 25, 2005 (the
"2005 US Entity Guaranty"), and the Guaranty of Payment dated the date of
this Security Agreement (the "Yogen Guaranty" and, together with the
Foreign Entity Guaranties, the All Other Guarantors Guaranty and the 2005
US Entity Guaranty, the "Guaranties").
"Instruments" means all or any part of any letters of credit and other
instruments in which the Debtor now or subsequently has an interest.
"Intangibles" means all intangible property of whatever kind in which the
Debtor now or subsequently has an interest, including, without limitation,
all of the Debtor's rights under Contracts, Intellectual Property Rights,
Technical Information, and permits.
"Intellectual Property Rights" means all trade-marks, trade-names, brands,
trade dress, business names, uniform resource locators ("URL"), domain
names, tag lines, designs, graphics, logos and other commercial symbols and
indicia of origin, goodwill, patents and inventions, copyrights, industrial
designs, and other intellectual property rights, whether registered or not
or the subject of a pending application for registration, owned by or
licensed to the Debtor.
"Inventory" means all inventory (as defined in the PPSA), including without
limitation, raw materials, works-in-progress, finished goods and
by-products, spare parts, operating supplies, packing, shipping and
packaging materials of or relating to the business of the Debtor.
"Liens" means any mortgage, deed of trust, pledge, security interest,
hypothecation, assignment, deposit arrangement, encumbrance, lien
(statutory or other), or preference, priority, or other security agreement
or preferential arrangement, charge, or encumbrance of any kind or nature
whatsoever, including, without limitation, any conditional sale or 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 PPSA or comparable law of any jurisdiction to evidence
any of the foregoing.
"Money" means all or any part of any money in which the Debtor now or
subsequently has an interest.
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"Obligations" has the meaning specified in Section 3.1.
"Permitted Encumbrances" means:
(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;
(c) pledges and deposits made in the ordinary course of business in
compliance with workers' compensation, employment 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 of the Debtor;
(e) judgment liens in respect of judgments that do not constitute an Event
of Default under Section 6.1;
(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;
(g) any Lien on any property or asset of the Debtor existing on the date
hereof and set forth in Schedule "A"; 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;
(h) 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; and
(i) Liens in favour of the Secured Party created pursuant to this
Agreement;
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provided that the term "Permitted Encumbrances" shall not include any Lien
securing Debt, other than Liens in favour of the Secured Party and 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 Section 17
of the 2005 Guaranty.
"Person" means any individual, sole proprietorship, partnership, firm,
entity, unincorporated association, unincorporated syndicate,
unincorporated organization, trust, body corporate, and where the context
requires, any of them when they are acting as trustee, executor,
administrator or other legal representative.
"Places of Business" means the Debtor's places of business specified in
Section 4.1(d), and "Place of Business" means any one of them.
"Proceeds" means all proceeds and personal property in any form derived
directly or indirectly from any dealing with all or any part of the Secured
Property and any insurance or payment that indemnifies or compensates for
such property lost, damaged or destroyed, and proceeds of proceeds and any
part of any such proceeds.
"Secured Property" means all of the Debtor's personal property, now owned
or subsequently acquired, including, without limitation, all Accounts
Receivable, Chattel Paper, Contracts, Documents of Title, Equipment,
Intangibles, Instruments, Inventory, Money, Securities and Proceeds,
together with all increases, additions and accessions to any of them, and
all substitutions or any replacements of any of them.
"Securities" means all or any part of any shares, limited partnership
units, trust units, stock, warrants, bonds, debentures, debenture stock and
other security in which the Debtor now or subsequently has an interest.
"Security Interest" means the security interest granted under Section 2.1.
"Technical Information" means all know-how and information owned by or
licensed to the Debtor, confidential or otherwise, including, without
limitation, and any information of a scientific, technical, financial or
business nature regardless of its form.
1.3 Certain Rules of Interpretation
In this Agreement:
(a) Governing Law. This Agreement is a contract made under and shall be
governed by and construed in accordance with the law of the Province
of Ontario and the federal laws of Canada applicable in the Province
of Ontario.
(b) Headings. Headings of Articles and Sections are inserted for
convenience of reference only and shall not affect the construction or
interpretation of this Agreement.
(c) Including. Where the word "including" or "includes" is used in this
Agreement, it means "including (or includes) without limitation."
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(d) No Strict Construction. The language used in this Agreement is the
language chosen by the parties to express their mutual intent, and no
rule of strict construction shall be applied against any party.
(e) Number and Gender. Unless the context otherwise requires, words
importing the singular include the plural and vice versa and words
importing gender include all genders.
(f) Severability. If, in any jurisdiction, any provision of this Agreement
or its application to any party or circumstance is restricted,
prohibited or unenforceable, such provision shall, as to such
jurisdiction, be ineffective only to the extent of such restriction,
prohibition or unenforceability without invalidating the remaining
provisions of this Agreement and without affecting the validity or
enforceability of such provision in any other jurisdiction or without
affecting its application to other parties or circumstances.
(g) Statutory references. A reference to a statute includes all
regulations made pursuant to such statute and, unless otherwise
specified, the provisions of any statute or regulation which amends,
supplements, supersedes or succeeds any such statute or any such
regulation.
(h) Time. Time is of the essence in the performance of the parties'
respective obligations.
(i) References to Agreements. The term "this Agreement" refers to this
agreement including all schedules, amendments, supplements,
extensions, renewals, replacements, novations or restatements from
time to time, in each case as permitted, and references to "Articles"
or "Sections" means the specified Articles or Sections of this
Agreement.
(j) Paramountcy. If there is a conflict, inconsistency, ambiguity or
difference between any provision of this Agreement and either the 2005
Note or the Existing Loan Agreements, the provisions of the 2005 Note
or the Existing Loan Agreements, as applicable, shall prevail, and
such provision of this Agreement shall be amended to the extent only
to eliminate any such conflict, inconsistency, ambiguity or
difference. Any right or remedy in this Agreement which may be in
addition to the rights and remedies contained in the 2005 Note and the
Existing Loan Agreements shall not constitute a conflict,
inconsistency, ambiguity or difference.
1.4 Entire Agreement
This Agreement, the 2005 Note and the Existing Loan Agreements and the
agreements and other documents required to be delivered pursuant to this
Agreement, the 2005 Note and the Existing Loan Agreements, constitute the entire
agreement between the parties and set out all the covenants, promises,
warranties, representations, conditions, understandings and agreements between
the parties pertaining to the subject matter of this Agreement and supersede all
prior agreements, understandings, negotiations and discussions, whether oral or
written. There are no
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covenants, promises, warranties, representations, conditions, understandings or
other agreements, oral or written, express, implied or collateral between the
parties in connection with the subject matter of this Agreement except as
specifically set forth in this Agreement, the 2005 Note and the Existing Loan
Agreements and any document required to be delivered pursuant to this Agreement.
ARTICLE 2
SECURITY INTERESTS
2.1 Security Interest
As continuing security for the repayment and the performance of each of the
Obligations of the Debtor to the Secured Party, subject to Sections 2.4, 2.5 and
2.6, the Debtor grants to the Secured Party, a continuing, specific and fixed
security interest in all of the Debtor's Secured Property of every nature and
kind, now owned or subsequently acquired and at any time and from time to time
existing or in which the Debtor has or acquires an interest, wherever situate,
including, without limitation, all of the Secured Property.
2.2 Fixed Nature of Security Interests
The Security Interest is intended to operate as a fixed and specific charge of
all of the Secured Property presently existing, and with respect to all future
Secured Property, to operate as a fixed and specific charge of such future
Secured Property.
2.3 Attachment
The Debtor acknowledges that value has been given and that it has rights in the
Secured Property. The Security Interest is intended to attach, as to all of the
Secured Property, upon the execution by the Debtor of this Agreement.
2.4 Leases
The last day of any term for lease or sublease of any real property reserved by
any lease, written or unwritten, or any agreement to lease, now held or
subsequently acquired by the Debtor is excepted out of the Security Interests.
As further security for the payment of the Obligations, the Debtor agrees that
it will stand possessed of the reversion of such last day of the term and shall
hold it in trust for the Secured Party for the purpose of this Agreement. After
the occurrence and continuance of an Event of Default which is continuing, the
Debtor shall assign and dispose of the same in such manner as the Secured Party
may from time to time direct in writing without cost or expense to the Secured
Party. Upon any sale, assignment, sublease or other disposition of such lease or
agreement to lease, the Secured Party shall, for the purpose of vesting the
residue of any such term in any purchaser, sublessee or such other acquiror of
the lease, agreement to lease or any interest in any of them, be entitled by
deed or other written instrument to assign to such other person, the residue of
any such term in place of the Debtor and to vest the residue freed and
discharged from any obligation whatsoever respecting the same.
-8-
2.5 Consent
Nothing in this Agreement shall constitute an assignment or attempted assignment
of any Contract which by its provisions or by law is not assignable or which
requires the consent of a third party to its assignment unless such consent has
been obtained. In each such case, during the occurrence and continuance of an
Event of Default, the Debtor shall, unless the Secured Party otherwise agrees in
writing, promptly, upon written request by the Secured Party, attempt to obtain
the consent of any necessary third party to its assignment under this Agreement
and to its further assignment by the Secured Party to any third party as a
result of the exercise by the Secured Party of remedies after demand. Upon such
consent being obtained or waived, this Agreement shall apply to the applicable
Contract without regard to this section and without the necessity of any further
assurance to effect such assignment. Unless and until the consent to assignment
is obtained as provided above, the Debtor shall, to the extent it may do so at
law or pursuant to the provisions of the Contract or interest in question hold
all benefit to be derived from such Contracts in trust for the Secured Party
(including, without limitation, the Debtor's beneficial interest in any Contract
which may be held in trust for the Debtor by a third party), as additional
security for payment of Obligations and shall deliver up all such benefit to the
Secured Party, promptly upon demand by the Secured Party.
2.6 Other Matters
(a) Until the Security Interest is enforceable, the grant of the Security
Interest in the Intellectual Property Rights does not affect in any
way the Debtor's rights to commercially exploit the Intellectual
Property Rights, defend such rights, enforce the Debtor's rights in
such rights or with respect to it against third parties in any court
or claim and be entitled to receive any damages with respect to any
infringement of such rights.
(b) The Security Interest does not extend to consumer goods.
ARTICLE 3
OBLIGATIONS SECURED
3.1 Obligations
The Secured Property constitutes and will constitute continuing security for the
following obligations (the "Obligations") of the Debtor to the Secured Party:
(a) the due and punctual payment of all sums becoming payable from the
Debtor under or in connection with (i) this Agreement, (ii) the
Existing Loan Agreements and the "Loan Documents" as defined in each
of the Existing Loan Agreements, and (iii) the 2005 Note and the Other
Loan Documents (as defined in the 2005 Note; the documents described
in the foregoing clauses (i), (ii) and (iii) hereof being collectively
referred to herein as the "Loan Documents"), including without
limitation, (x) 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
2005 Note and the obligations
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arising under the Existing Loan Agreements, when and as due, whether
at maturity, by acceleration, upon one or more dates set for
prepayment or otherwise and (y) 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
any of the Existing Credit Facilities, the Guaranties or the other
Loan Documents;
(b) the due and punctual performance of all covenants, agreements,
obligations and liabilities of the Debtor under or pursuant to each of
the Existing Credit Facilities, the Guaranties or the other Loan
Documents (including this Agreement); and
(c) the payment of all damages (whether provided for in the 2005 Note, the
Existing Loan Agreements, the Guaranties or 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 the 2005 Note, the
Existing Loan Agreements, the Guaranties or the other Loan Documents.
ARTICLE 4
DEBTOR'S REPRESENTATIONS, WARRANTIES AND COVENANTS
4.1 Representations and Warranties
The Debtor represents and warrants to the Secured Party the matters set out
below:
(a) Authority. The Debtor has all necessary corporate power, authority,
and capacity to enter into and carry out its obligations under this
Agreement and to grant the Security Interest.
(b) Ownership of Secured Property Free of Charges. The Debtor is the owner
of or has rights in the Secured Property free and clear of all Liens
whatsoever other than the Permitted Encumbrances.
(c) No Other Corporate Names or Styles. The Debtor does not carry on
business under or use any name or style other than the name(s)
specified in this Agreement including, without limitation, any names
in the French language.
(d) Place of Business of Debtor. The following is/are the Debtor's
Place(s) of Business:
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
and the Debtor's chief executive office is located at
▇▇▇▇ ▇▇▇▇▇▇▇'▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇▇
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(e) Reliance and Survival. All representations and warranties of the
Debtor made in this Agreement or in any certificate or other document
delivered by or on behalf of the Debtor to or for the benefit of the
Secured Party are material, shall survive and shall not merge upon the
execution and delivery of this Agreement and shall continue in full
force and effect. The Secured Party shall be deemed to have relied
upon such representations and warranties notwithstanding any
investigation made by or on behalf of the Secured Party at any time.
4.2 Covenants
Unless compliance with the following covenants is waived by the Secured Party in
writing or unless non-compliance with any such covenants is otherwise consented
to by the Secured Party in writing, the Debtor covenants and agrees that:
(a) Notification to Secured Party. The Debtor shall promptly notify the
Secured Party of all loss or damage to or loss of possession of all or
any material part of the Secured Property other than by disposition in
accordance with the terms of this Agreement.
(b) Protection of Security. The Debtor shall, at its own cost and expense,
take any and all actions necessary to defend title to the Secured
Property against all Persons and to defend the Security Interest of
the Secured Party in the Secured Property and the priority thereof
against any Lien not expressly permitted under this Agreement.
(c) No Accessions or Fixtures. The Debtor shall prevent the Secured
Property from becoming an accession to any property other than the
Secured Property or from becoming a fixture unless the Security
Interests rank prior to the interests of all other persons in the real
property.
(d) Legend. Promptly after a request therefor from the Secured Party
following an Event of Default, the Debtor shall legend, in form and
manner reasonably satisfactory to the Secured Party, 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 Secured
Party and that the Secured Party has a security interest therein.
(e) Encumbrances. The Debtor shall not create, incur, assume, permit or
suffer to exist any Lien, on or with respect to any of the Secured
Property, except for Permitted Encumbrances.
(f) 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. Subject to applicable law, the Secured Party and such
Persons as the Secured Party may designate shall have the right, at
the Debtor's cost and expense, upon reasonable notice to the Debtor
and during normal business hours, to inspect the Secured Property, all
records related thereto (and to make extracts and copies from such
records) and the
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premises upon which any of the Secured Property is located, to discuss
the affairs of the Debtor with its respective officers and 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 Secured Property, including, in the case
of Accounts Receivable or Secured Property 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 Secured Property for the purpose of making such a verification.
The Secured Party shall have the absolute right to share any
information it gains from such inspection or verification with any
Secured Party.
(g) Risk and Insurance. The Debtor bears the sole risk of any loss,
damage, destruction or confiscation of or to the Secured Property
during the Debtor's possession of the Secured Property or otherwise.
The Debtor shall maintain insurance on all of the Secured Property
with financially sound and reputable insurers including, without
limitation, all-risk property insurance, comprehensive general
liability insurance and business interruption insurance and with such
coverage and against such loss or damage to the full insurable value
of such property with the Secured Party as a named insured and with
loss payable to the Secured Party as its interest may appear. If the
Debtor fails to so insure, the Secured Party may insure the Secured
Property and the premiums for such insurance shall be added to the
balance of the Obligations secured under this Agreement as they exist
at the date of the payment of such premium by the Secured Party.
(h) Changes and Other Names. The Debtor shall not, unless 30 days' prior
written notice is provided to the Secured Party (i) change its name as
it appears in official filings in the jurisdiction of its
organization; or (ii) change its chief executive office, principal
place of business, domicile (within the meaning of the Civil Code of
Quebec), corporate offices or warehouses or locations at which Secured
Property is held or stored, or the location of its Books and Records.
(i) No Affecting the Security. It shall not do, permit or suffer to be
done anything to adversely affect the ranking or validity of the
Security.
(j) 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
Secured Party 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 Canadian
Intellectual Property Office or other documents in connection herewith
or therewith. If any amount payable under or in connection with any of
the Secured Property shall be or become evidenced by any promissory
note or other instrument, such note or instrument
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shall be forthwith pledged and delivered to the Secured Party, duly
endorsed in a manner satisfactory to the Secured Party.
ARTICLE 5
RIGHT TO DEAL
5.1 Debtor's Rights before Event of Default
Until the occurrence and continuance of an Event of Default and subject to the
terms of this Agreement, the Debtor is entitled to deal with the Secured
Property in the ordinary course of business, provided that, that no such action
shall be taken which would impair the effectiveness of the Security Interests
created by this Agreement or the value of the Secured Property or which would be
inconsistent with or violate the provisions of this Agreement or any other
written agreement between the Secured Party and the Debtor.
5.2 Securities
Until the occurrence and continuance of an Event of Default and subject to the
terms of this Agreement, the Debtor is entitled to receive dividends or other
distributions, vote the Securities and give consents, waivers and ratifications
in respect of the Securities, provided that, that no such action shall be taken
which would impair the effectiveness of the Security Interests or the value of
the Securities or which would be inconsistent with or violate the provisions of
this Agreement or any other written agreement between the Secured Party and the
Debtor.
5.3 Transfer of Ownership
The Secured Party may, at its sole and unfettered discretion, require the Debtor
to transfer registered ownership of the Securities to the Secured Party, the
Secured Party's agent or a nominee of the Secured Party. Notwithstanding such
transfer, prior to the occurrence and continuance of an Event of Default,
Sections 5.1 and 5.2 shall continue to apply and upon such transfer the Secured
Party shall provide the Debtor with such proxies and other written
authorizations as may reasonably be requested by the Debtor to enable the Debtor
to exercise the rights and take the actions described in Sections 5.1 and 5.2.
ARTICLE 6
DEFAULT
6.1 Default
The Debtor shall be in default under this Agreement upon the occurrence and
during the continuance of an "Event of Default" under the 2005 Note or any of
the Existing Loan Agreements, or upon any event of default or default beyond
applicable periods of notice and grace under this Agreement, any of the Existing
Credit Facilities, any of the Guaranties, or any of the other Loan Documents, or
with respect to any ACH Exposure (such "Events of Default," events of default
and defaults being the "Events of Default").
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6.1 Demand Obligations
The fact that this Agreement provides for Events of Default and rights of
acceleration shall not derogate from the nature of any Obligation which is
payable on demand.
ARTICLE 7
REMEDIES
7.1 Secured Party's Rights and Remedies
Upon the occurrence and during the continuance of an Event of Default, all of
the Obligations shall, at the Secured Party's option, become immediately due and
payable and the Secured Party may, in its discretion, proceed to enforce payment
and performance of the Obligations and to exercise any or all of the rights and
remedies contained in this Agreement, (including, without limitation, the
signification and collection of the Debtor's Accounts Receivable), or otherwise
afforded by law, in equity or otherwise. The Secured Party shall have the right
to enforce one or more remedies successively or concurrently in accordance with
applicable law and the Secured Party expressly retains all rights and remedies
not inconsistent with the provisions in this Agreement including all the rights
it may have under the PPSA. Without limitation, the Secured Party may, upon the
occurrence and during the continuance of any Event of Default and to the extent
permitted by applicable law:
(a) Appointment of Receiver. Appoint by instrument in writing a receiver
(which term shall include a receiver and manager or agent) of the
Debtor and of all or any part of the Secured Property and remove or
replace such receiver from time to time or may institute proceedings
in any court of competent jurisdiction for the appointment of a
receiver. Any such receiver appointed by the Secured Party, with
respect to responsibility for its acts, shall, to the extent permitted
by applicable law, be deemed the agent of the Debtor and not of the
Secured Party. Where the "Secured Party" is referred to in this
Article the reference includes, where the context permits, any
receiver so appointed and the officers, employees, servants or agents
of such receiver.
(b) Enter and Repossess. Immediately and without notice enter the Debtor's
premises and repossess, disable or remove the Secured Property.
(c) Retain the Secured Property. Retain and administer the Secured
Property in the Secured Party's sole and unfettered discretion.
(d) Dispose of the Secured Property. Dispose of any Secured Property by
public auction, private tender or private contract with or without
notice, advertising or any other formality, all of which are waived by
the Debtor to the extent permitted by law. The Secured Party may, to
the extent permitted by law, at its discretion, establish the terms of
such disposition, including, without limitation, terms and conditions
as to credit, upset, reserve bid or price. All payments made pursuant
to such dispositions shall be credited against the Obligations only as
they are actually received. The Secured Party may, to the extent
permitted by law, enter into, rescind or vary any contract for the
disposition of any Secured Property and
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may dispose of any Secured Property again without being answerable for
any related loss. Any such disposition may take place whether or not
the Secured Party has taken possession of the Secured Property.
(e) Foreclosure. Foreclose upon the Secured Property.
(f) Power of Attorney. Upon the occurrence, and during the continuance of,
an Event of Default, the Debtor constitutes and appoints the Secured
Party from time to time, or any receiver appointed of the Debtor as
provided for in this Agreement, the true and lawful attorney of the
Debtor irrevocably with full power of substitution to do, make and
execute all such lawful documents, acts, matters or things with the
right to use the name of the Debtor whenever and wherever it may be
deemed necessary or expedient in connection with the exercise of its
rights and remedies set forth in this Agreement. Without limitation,
the Secured Party or its agent is authorized to sign any financing
statements and similar forms which may be necessary or desirable to
perfect the Security Interest in any jurisdiction on behalf of the
Debtor. The Debtor declares that the irrevocable power of attorney
granted in this Agreement, being coupled with an interest, is given
for valuable consideration.
(g) Securities.
(i) Disposal. Without limiting the generality of Section 7.1(d), the
Debtor acknowledges that when disposing of any Securities, the
Secured Party may be unable to effect a public sale of any or all
of the Securities, or to sell any or all of the securities as a
control block sale at more than a stated premium to the "market
price" of any shares, stock, instruments, warrants, bonds,
debenture stock and other securities forming part of the
Securities, by reason of certain prohibitions contained in the
Securities Act (Ontario) and applicable laws of other
jurisdictions, but may be compelled to resort to one or more
private sales to a restricted group of purchasers who will be
obliged to agree, among other things, to acquire such Securities
as principal and to comply with other resale restrictions
provided for in the Securities Act (Ontario) and other applicable
laws. The Debtor acknowledges and agrees that any such private
sale may result in prices and other terms less favourable to the
seller than if such sale were a public sale or a control block
sale and, notwithstanding such circumstances, agrees that any
such private sale shall not be deemed to have been made in a
commercially unreasonable manner solely by reason of its being a
private sale. The Secured Party shall be under no obligation to
delay a sale of any of the Securities for the period of time
necessary to permit the issuer of such securities to qualify such
Securities for public sale under the Securities Act (Ontario) or
under applicable securities laws of other jurisdictions, even if
the issuer would agree to do so, or to permit a prospective
purchaser to make a formal offer to all or substantially all
holders of any class of securities forming any part of the
Securities.
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(ii) Exercise of Rights. Upon the occurrence, and during the
continuance of, an Event of Default, the Secured Party may elect
by written notice to the Debtor and to an officer of the issuer
of the Securities, that all or part of the rights of the Debtor
in the Securities including, without limitation, the right to
vote, give consents, waivers or ratifications and take other
actions and receive dividends or other distributions, shall
cease, and upon such election all such rights shall become vested
in the Secured Party or as it may direct.
(iii) Registration. Require that the Securities be registered in the
name of the Secured Party or as it may direct and the Secured
Party may then, without notice, exercise any and all voting and
corporate rights at any meeting of the issuers thereof and
exercise any and all rights, privileges or options pertaining to
the Securities as if it were the absolute owner, including
without limitation, the right to exchange at its discretion, any
and all of the Securities upon the issuer's amalgamation, merger,
consolidation, reorganization, recapitalization or other
readjustment or upon the issuer's exercise of any right,
privilege or option pertaining to any of the Securities and to
deposit and deliver any and all of the Secured Property with any
committee, depositary, transfer agent, registrar or other
designated agency upon such terms and conditions as it may
determine.
(h) Collection of Accounts Receivable. Upon the occurrence, and during the
continuance of, an Event of Default, the Secured Party on its own
account or through a receiver, receiver-manager or agent and whether
alone or in conjunction with the exercise of all or any other remedies
contemplated by this Agreement, shall have the right, at any time, to
notify and direct Account Debtors to make all payments whatever to the
Secured Party and the Secured Party shall have the right, at any time,
to hold all amounts acquired from any Account Debtors and any Proceeds
as part of the Secured Property. Upon such occurrence and during such
continuance, any payments received by the Debtor shall be held by the
Debtor in trust for the Secured Party in the same medium in which
received, shall not be commingled with any assets of the Debtor and
shall, at the request of the Secured Party be turned over to the
Secured Party not later than the next business day following the day
of their receipt.
(i) Carry on Business. Carry on or concur in the carrying on of all or any
part of the business of the Debtor and may, in any event, to the
exclusion of all others, including the Debtor, enter upon, occupy and
use all premises of or occupied or used by the Debtor and use any of
the personal property (which shall include fixtures) of the Debtor for
such time and such purposes as the Secured Party sees fit. The Secured
Party shall not be liable to the Debtor for any neglect in so doing or
in respect of any related rent, costs, charges, depreciation or
damages.
(j) Payment of Encumbrances. Pay any encumbrance, lien, claim, tax,
assessment fee or charge that may exist or be threatened against the
Secured Property, and
-16-
any amount so paid together with costs, charges and expenses incurred
shall be added to the Obligations.
(k) Payment of Deficiency. If the proceeds of realization are insufficient
to pay all monetary Obligations, the Debtor shall forthwith pay or
cause to be paid to the Secured Party any deficiency and the Secured
Party may ▇▇▇ the Debtor to collect the amount of such deficiency.
(l) Dealing with Secured Property. Subject to applicable law, seize,
collect, realize, borrow money on the security of, release to third
parties, sell (by way of public or private sale), lease or otherwise
deal with the Secured Property in such manner, upon such terms and
conditions, at such time or times and place or places and for such
consideration as may seem to the Secured Party advisable and without
notice to the Debtor. The Secured Party may charge on its own behalf
and pay to others sums for expenses incurred and for services rendered
(expressly including without limitation, legal, consulting, broker,
management, receivership and accounting fees) in or in connection with
seizing, collecting, realizing, borrowing on the security of, selling
or obtaining payment of the Secured Property and may add all such sums
to the Obligations.
7.2 Assemble the Secured Property
To assist the Secured Party in the implementation of such rights and remedies,
the Debtor will, at its own risk and expense and immediately upon the Secured
Party's request, assemble and prepare for removal such items of the Secured
Property as are selected by the Secured Party as shall, in the Secured Party's
sole judgment, have a value sufficient to cover all the Obligations.
7.3 Allocation of proceeds
All monies collected or received by the Secured Party in respect of the Secured
Property may be held by the Secured Party and may be applied on account of such
parts of the Obligations at the sole discretion of the Secured Party.
7.4 Waivers and Extensions
The Secured Party may waive default or any breach by the Debtor of any of the
provisions contained in this Agreement. No waiver shall extend to a subsequent
breach or default, whether or not the same as or similar to the breach or
default waived and no act or omission of the Secured Party shall extend to or be
taken in any manner whatsoever to affect any subsequent breach or default of the
Debtor or the rights of the Secured Party resulting therefrom. Any such waiver
must be in writing and signed by the Secured Party to be effective.
The Secured Party may also grant extensions of time and other indulgences, take
and give up securities, accept compositions, grant releases and discharges,
release the Secured Property to third parties and otherwise deal with the
Debtor's guarantors or sureties and others and with the Secured Property and
other securities as the Secured Party may see fit without prejudice to the
liability of the Debtor to the Secured Party, or the Secured Party's rights,
remedies and powers under this Agreement. No extension of time, forbearance,
indulgence or other accommodation
-17-
now, heretofore or hereafter given by the Secured Party to the Debtor shall
operate as a waiver, alteration or amendment of the rights of the Secured Party
or otherwise preclude the Secured Party from enforcing such rights.
7.5 Remedies Cumulative and Waivers
For greater certainty, it is expressly understood and agreed that the rights and
remedies of the Secured Party under this Agreement are cumulative and are in
addition to and not in substitution for any rights or remedies provided by law
or equity; and any single or partial exercise by the Secured Party of any right
or remedy for a default or breach of any term, covenant, condition or agreement
contained in this Agreement shall not be deemed to be a waiver of, or to alter,
affect or prejudice, any other right or remedy to which the Secured Party may be
lawfully entitled for such default or breach. Any waiver by the Secured Party of
the strict observance, performance or compliance with any term, covenant,
condition or other matter contained in this Agreement and any indulgence
granted, either expressly or by course of conduct by the Secured Party shall be
effective only in the specific instance and for the purpose for which it was
given and shall be deemed not to be a waiver of any right or remedy of the
Secured Party under this Agreement as a result of any other default or breach
under this Agreement.
7.6 Effect of Possession or Receiver
As soon as the Secured Party takes possession of any Secured Property or
appoints a receiver, all powers, functions, rights and privileges of the Debtor
with respect to the Secured Property shall cease, unless specifically continued
by the written consent of the Secured Party or the receiver.
7.7 Set-off or Compensation
In addition to and not in limitation of any rights granted now or after the date
of this Agreement at law, upon the occurrence and during the continuance of an
Event of Default, the Secured Party may at any time and from time to time
without notice to the Debtor (it being expressly waived by the Debtor) to
set-off and compensate and apply any and all deposits, general or special, term
or demand, provisional or final, matured or unmatured, and any other
indebtedness at any time owing by the Secured Party, or to appropriate any other
properties or assets at any time held by the Secured Party, to or for the credit
of or the account of the Debtor, against and on account of the Obligations, even
if any of them are contingent or unmatured.
7.8 Limitation of Liability
The Secured Party shall not be liable or accountable:
(a) by reason of any entry into or taking possession of all or any of the
Secured Property, to account as mortgagee in possession or for
anything except actual receipts, or for any loss on realization or any
act or omission for which a secured party in possession might be
liable; or
(b) for any failure to exercise its remedies, take possession of, seize,
collect, realize, sell, lease or otherwise dispose of or obtain
payment for the Secured Property and shall not be bound to institute
proceedings for such purposes or for the purpose of
-18-
preserving any rights, remedies or powers of the Secured Party, the
Debtor or any other person in respect of same.
No Secured Party shall by virtue of these presents be deemed to be a mortgagee
in possession of the Secured Property. The Debtor releases and discharges the
Secured Party and the receiver from every claim of every nature, whether
sounding in damages or not, which may arise or be caused to the Debtor or any
person claiming through or under the Debtor by reason or as a result of anything
done by the Secured Party or any successor or assign claiming through or under
the Secured Party or the receiver under the provisions of this Agreement unless
such claim be the result of dishonesty, gross neglect or wilful misconduct.
ARTICLE 8
GENERAL
8.1 Expenses
The Debtor shall pay all costs and expenses (including the reasonable fees and
disbursements of legal counsel and other advisors) incurred by the Secured Party
in connection with the negotiation, preparation and execution of this Agreement
and the perfection, protection of and enforcement under this Agreement, advice
with respect to this Agreement, and those arising in connection with the
realization, disposition, retention, protection or collection of any Secured
Property and the protection or enforcement of the rights, remedies and powers of
the Secured Party or any receiver and those incurred for perpetual registration
of any financing statement registered in connection with the Security Interests.
All amounts for which the Debtor is required under this Agreement to reimburse
the Secured Party or any receiver shall, from the date of disbursement until the
date the Secured Party or the receiver receives reimbursement, be deemed
advanced to the Debtor by the Secured Party, shall be deemed to be Obligations
secured hereby and shall bear interest at the highest rate per annum charged by
the Secured Party on any of the other Obligations.
In particular, the Debtor agrees to indemnify and save the Secured Party
harmless from all reasonable legal fees and disbursements incurred by the
Secured Party in connection with any enforcement of rights and remedies under
this Agreement. This indemnity is independent of and in addition to any right
which the Secured Party may have to seek recovery of costs in any litigation
which results in respect of this Agreement and is intended to ensure that the
Secured Party are fully reimbursed for one-hundred percent (100%) of such fees
and disbursements which may be incurred as by it and its legal counsel.
8.2 Notices
Any notice, consent or approval required or permitted to be given in connection
with this Agreement (in this Section referred to as a "Notice") shall be in
writing and shall be sufficiently given if delivered as provided in the Existing
Loan Agreements, with notice to Borrower under the Existing Loan Agreements to
suffice as notice to the Debtor.
Any Notice delivered or transmitted to a party as provided above shall be deemed
to have been given and received on the day it is delivered or transmitted,
provided that it is delivered or transmitted on a Business Day prior to 5:00
p.m. local time in the place of delivery or receipt.
-19-
However, if the Notice is delivered or transmitted after 5:00 p.m. local time or
if such day is not a Business Day then the Notice shall be deemed to have been
given and received on the next Business Day.
Any party may, from time to time, change its address by giving Notice to the
other party in accordance with the provisions of this Section.
8.3 Amendment
No amendment, supplement, modification or waiver or termination of this
Agreement and, unless otherwise specified, no consent or approval by any party,
shall be binding unless executed in writing by the party to be bound.
8.4 Enurement
This Agreement shall be binding on the Debtor, and its successors (including any
successor by reason of amalgamation), and permitted assigns and enure to the
benefit of the Secured Party and their respective successors (including any
successor by reason of amalgamation) and assigns.
8.5 Further Assurances
The Debtor shall at all times do all such things and provide all such reasonable
assurances as may be required to consummate the transactions contemplated by
this Agreement, and shall provide such further documents or instruments required
by the Secured Party as may be reasonably necessary or desirable to effect the
purpose of this Agreement and carry out its provisions, and for the better
granting, transferring, assigning, charging, setting over, assuring, confirming
or perfecting the Security Interest and the priority accorded to them by law or
under this Agreement.
8.6 Execution and Delivery
This Agreement may be executed by the parties in counterparts and may be
executed and delivered by facsimile and all such counterparts and facsimiles
shall together constitute one and the same agreement.
The Debtor acknowledges receiving a copy of this Agreement, and further agrees
that a carbon, photographic, photostatic or other reproduction of this Agreement
or of a financing statement is sufficient as a financing statement.
8.7 Security Interests Effective Immediately
Neither the execution of, nor any filing with respect to, this Agreement shall
obligate the Secured Party to make any advance or loan or further advance, or
bind the Secured Party to grant or extend any credit to the Debtor, but the
Security Interests shall take effect forthwith upon the execution of this
Agreement by the Debtor.
-20-
8.8 Statutory Waivers
To the fullest extent permitted by law, the Debtor waives all of the rights,
benefits and protections given by the provisions of any existing or future
statute which imposes limitations upon the powers, rights or remedies of the
Secured Party or upon the methods of realization of security, including any
seize or ▇▇▇ or anti-deficiency statute or any similar provisions of any other
statute.
8.9 Reasonableness
The Debtor acknowledges that the provisions of this Agreement and, in
particular, those respecting rights, remedies and powers of the Secured Party
and any receiver against the Debtor, its business and any Secured Property upon
the occurrence and continuance of an Event of Default, are commercially
reasonable and not manifestly unreasonable.
8.10 Discharge
Upon payment and performance by the Debtor of the Obligations, the Secured Party
shall upon request in writing by the Debtor deliver up this Agreement to the
Debtor and shall at the expense of the Debtor cancel and discharge the Security
Interests and execute and deliver to the Debtor such documents as shall be
requisite to discharge the Security Interests.
[INTENTIONALLY LEFT BLANK]
-21-
IN WITNESS OF WHICH the Debtor has duly executed this Agreement.
YOGEN FRUZ CANADA INC.
By: /s/ Illegible
------------------------------------
Name:
Title:
By: /s/ Illegible
------------------------------------
Name:
Title:
I/We have authority to bind the
Corporation.
-21-
IN WITNESS OF WHICH the Debtor has duly executed this Agreement
YOGEN FRUZ CANADA INC.
By:
------------------------------------
Name:
Title:
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title:
I/We have authority to bind the
Corporation.
SCHEDULE"A"
EXISTING LIENS
--------------------------------------------------------------------------------------------------------------------
File No.
Registration No. General Collateral
Registration Date Debtor(s) Name and Secured Party(ies) Collateral Description (and/or Motor
No. Registration Period Address Name and Address Classification Vehicle Description)
--------------------------------------------------------------------------------------------------------------------
1 615484161 YOGEN FRUZ HOLAND LEASING CAUTION FILING
20050527 0849 2109 0162 CANADA INC 1995 LTD CG, MV, YEAR: 2003
May 27, 2005 8300 WOODBINE 8525 DECARIE AS=$35OOO, MAKE: GMC
2 years MARKHAM ONT MONTREAL QUE H4P DM=APR MODEL: YUKON
L3R 9Y7 2J2 30, 2007 DENALLI
V.I.N.: ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇
--------------------------------------------------------------------------------------------------------------------
2 613103652 YOGEN FRUZ HOLAND LEASING CAUTION FILING
20050303 1744 2109 0157 CANADA INC 1995 LTD CG, MV, YEAR: 2005
March 03, 2005 8300 WOODBINE 8525 DECARIE AS=$120000, MAKE: PORSCHE
3 years ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇ DM=FEB MODEL: CAYENNE
▇▇▇ ▇▇▇ 28, 2008 V.I.N.: ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇
--------------------------------------------------------------------------------------------------------------------
3 611890497 YOGEN FRUZ HOLAND LEASING CAUTION FILING
20050110 1803 2109 0150 CANADA INC 1995 LTD CG, MV, YEAR: 2003
January 10, 2005 8300 WOODBINE 8525 DECARIE AS=$37000, MAKE: YUKON
1 year ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇ DM=DEC MODEL: DENALLI
L3R 9Y7 2J2 31, 2005 V.I.N.: ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇
--------------------------------------------------------------------------------------------------------------------
4 606673143 YOGEN FRUZ HOLAND LEASING CAUTION FILING
20040623 1212 2109 0127 CANADA INC 1995 LTD CG, MV, YEAR: 2004
June 23, 2004 8300 WOODBINE 8525 DECARIE AS=$250000, MAKE: BENTLEY
4 years MARKHAM ONT MONTREAL QUE H4P DM=JUN MODEL: CONT GT
L3R 9Y7 2J2 30, 2008 V.I.N.: ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇
--------------------------------------------------------------------------------------------------------------------
-23-
--------------------------------------------------------------------------------------------------------------------
File No.
Registration No. General Collateral
Registration Date Debtor(s) Name and Secured Party(ies) Collateral Description (and/or Motor
No. Registration Period Address Name and Address Classification Vehicle Description)
--------------------------------------------------------------------------------------------------------------------
5 606330207 YOGEN FRUZ HOLAND LEASING CAUTION FILING
20040610 1515 2109 0125 CANADA INC 1995 LTD CG, MV, YEAR: 2004
June 10, 2004 8300 WOODBINE 8525 DECARIE AS=$65000, MAKE: PORSCHE
3 years ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇ DM=MAY MODEL: 911
L3R 9Y7 2J2 31, 2006 V.I.N.: WO0AB29974S685250
--------------------------------------------------------------------------------------------------------------------
6 605854953 YOGEN FRUZ HOLAND LEASING CAUTION FILING
20040527 1648 2109 0124 CANADA INC 1995 LTD CG, MV, YEAR: 2005
May 27, 2004 8300 WOODBINE 8525 DECARIE AS=$22000, MAKE: DODGE
3 years ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇ DM=MAY MODEL: CARAVAN
L3R 9Y7 2J2 31, 2007 V.I.N.: ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇
--------------------------------------------------------------------------------------------------------------------
7 895140684 YOGEN FRUZ HOLAND LEASING CAUTION FILING
20030606 1451 2109 0079 CANADA INC 1995 LTD CG, MV, YEAR: 2003
June 06, 2003 8300 WOODBINE 8525 DECARIE AS=$196000, MAKE: MERCEDES
4 years ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇ DM=MAY MODEL: SL55
L3R 9Y7 2J2 31, 2007 V.I.N.: ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇
--------------------------------------------------------------------------------------------------------------------
8 890210664 YOGEN FRUZ HOLAND LEASING CG, MV,
20021218 1724 2109 0022 CANADA INC 1995 LTD AS=$193000,
December 18, 2002 8300 WOODBINE 8525 ▇▇▇▇▇▇▇ ▇▇=JUN YEAR: 2003
3 years ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇ 30, 2005 MAKE: MERCEDES
L3R 9Y7 2J2 MODEL: SL500
V.I.N.: ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇
--------------------------------------------------------------------------------------------------------------------
-24-
--------------------------------------------------------------------------------------------------------------------
No. File No.
Registration No. General Collateral
Registration Date Debtor(s) Name and Secured Party(ies) Collateral Description (and/or Motor
Registration Period Address Name and Address Classification Vehicle Description)
--------------------------------------------------------------------------------------------------------------------
9 890153838 YOGEN FRUZ HOLAND LEASING CAUTION FILING
20021217 1424 2109 0013 CANADA 1995 LTD CG, MV, YEAR: 2002
December 17, 2002 8300 WOODBINE 8525 DECARIE AS=$63000, MAKE: CHEV
3 years ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇ DM=DEC 31,2005 MODEL: SUBURBAN K15
L3R 9Y7 2J2 V.I.N.: ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇
--------------------------------------------------------------------------------------------------------------------
SECURITY AGREEMENT
THIS AGREEMENT is made as of the 31 day of August, 2005.
TO: JPMORGAN CHASE BANK, N.A. for itself with respect to the 2005 Note
(as defined below) and in its capacity as agent (together with its
permitted successors and assigns in such capacity) for itself in
such capacity and on behalf of the Lender from time to time
parties to the Existing Loan Agreements (as defined below) (the
"Secured Party")
GRANTED BY: COOLBRANDS INTERNATIONAL INC., a Nova Scotia corporation (the
"Debtor") having its principal office or place of business at
▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
ARTICLE 1
DEFINITIONS
1.1 Defined Terms
Unless the context otherwise requires or unless otherwise specified, all the
terms used in this Agreement without initial capitals which are defined in the
Personal Property Security Act (Ontario) (the "PPSA"), have the same meanings in
this Agreement as in the PPSA.
1.2 Definitions
Wherever used in this Agreement, the following words and terms have the meanings
set out below:
"2005 Note" means the promissory note executed by the Borrower in the
principal amount of USD$40,000,000 dated March 25, 2005, as amended.
"Account Debtor" means any Person who becomes obligated to the Debtor
under, with respect to, or on account of, an Account Receivable.
"Accounts Receivable" means all "accounts," as such term is defined in the
PPSA, now or in the future owned by the Debtor, and includes without
limitation, all accounts receivable, other receivables, book debts, claims
and other forms of monetary obligation now or in the future owned, received
or acquired by, or belonging or owing to, the Debtor, whether arising out
of goods sold or services rendered by it, or from any other transaction,
and "Account Receivable" means any one of them.
"ACH Exposure" means indebtedness of the Debtor to the Lenders on account
of automatic clearing house direct deposit payroll transactions.
"Borrower" means Integrated Brands, Inc., a New Jersey corporation.
-2-
"Business Day" means any day, other than a Saturday or Sunday, on which
banks in New York City are open for commercial banking business during
normal banking hours and interbank wire transfers can be made on the
Fedwire system.
"Capital Lease" means a lease which has been or should be, in accordance
with GAAP, capitalized on the books of the lessee.
"Chattel Paper" means all or any part of any present or future interest of
the Debtor in chattel paper.
"Contracts" means any contracts, agreements, indentures, licences, permits,
quotas, commitments, entitlements, engagements or other arrangements,
whether written or unwritten, to which the Debtor is now or subsequently a
party or has a benefit, right, or in which the Debtor now or subsequently
has an interest.
"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 (as defined in the 2005 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 of Title" means all or any part of any documents of title,
whether negotiable or non-negotiable, including, without limitation, all
warehouse receipts and bills of lading, in which the Debtor now or
subsequently has an interest.
"Equipment" means all goods in which the Debtor now or subsequently has an
interest (including, without limitation, all tools, apparatus, fixtures,
plant, machinery and furniture) other than Inventory or consumer goods and
any part of such Inventory or consumer goods.
"Existing Credit Facilities" means the 2005 Note and the Existing Loan
Agreements.
-3-
"Existing Loan Agreements" means (i) a loan agreement dated as of December
23, 1994, as amended through the date hereof; and (ii) a loan agreement
dated as of September 20, 2000, as amended through the date hereof, in each
case among the Borrower, certain of the Group One Guarantors (as defined
therein) and the Lender.
"Guaranties" means, collectively, the General Guaranties executed by each
of Kayla Foods Int'l (Barbados) Inc. ("Kayla") and Coolbrands International
Inc. ("Coolbrands") each dated September 20, 2000, and the Guaranties of
Payment executed by Kayla and Coolbrands, each dated March 25, 2005
(collectively, the "Foreign Entity Guaranties") and the General Guaranty
executed by certain of the Group One Guarantors and other guarantors dated
September 20, 2000, which General Guaranty was subsequently joined in by
Coolbrands Dairy, Inc. pursuant to a separate agreement (the "All Other
Guarantors Guaranty"); and the Guaranty of Payment executed by the Group
One Guarantors and the Other Guaranty Parties dated March 25, 2005 (the
"2005 US Entity Guaranty"), and the Guaranty of Payment dated the date of
this Security Agreement (the "Yogen Guaranty" and, together with the
Foreign Entity Guaranties, the All Other Guarantors Guaranty and the 2005
US Entity Guaranty, the "Guaranties").
"Instruments" means all or any part of any letters of credit and other
instruments in which the Debtor now or subsequently has an interest.
"Intangibles" means all intangible property of whatever kind in which the
Debtor now or subsequently has an interest, including, without limitation,
all of the Debtor's rights under Contracts, Intellectual Property Rights,
Technical Information, and permits.
"Intellectual Property Rights" means all trade-marks, trade-names, brands,
trade dress, business names, uniform resource locators ("URL"), domain
names, tag lines, designs, graphics, logos and other commercial symbols and
indicia of origin, goodwill, patents and inventions, copyrights, industrial
designs, and other intellectual property rights, whether registered or not
or the subject of a pending application for registration, owned by or
licensed to the Debtor.
"Inventory" means all inventory (as defined in the PPSA), including without
limitation, raw materials, works-in-progress, finished goods and
by-products, spare parts, operating supplies, packing, shipping and
packaging materials of or relating to the business of the Debtor.
"Liens" means any mortgage, deed of trust, pledge, security interest,
hypothecation, assignment, deposit arrangement, encumbrance, lien
(statutory or other), or preference, priority, or other security agreement
or preferential arrangement, charge, or encumbrance of any kind or nature
whatsoever, including, without limitation, any conditional sale or 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 PPSA or comparable law of any jurisdiction to evidence
any of the foregoing.
"Money" means all or any part of any money in which the Debtor now or
subsequently has an interest.
-4-
"Obligations" has the meaning specified in Section 3.1.
"Permitted Encumbrances" means:
(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;
(c) pledges and deposits made in the ordinary course of business in
compliance with workers' compensation, employment 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 of the Debtor;
(e) judgment liens in respect of judgments that do not constitute an Event
of Default under Section 6.1;
(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;
(g) any Lien on any property or asset of the Debtor existing on the date
hereof and set forth in Schedule "A"; 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;
(h) 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; and
(i) Liens in favour of the Secured Party created pursuant to this
Agreement;
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provided that the term "Permitted Encumbrances" shall not include any Lien
securing Debt, other than Liens in favour of the Secured Party and 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 Section 17
of the 2005 Guaranty.
"Person" means any individual, sole proprietorship, partnership, firm,
entity, unincorporated association, unincorporated syndicate,
unincorporated organization, trust, body corporate, and where the context
requires, any of them when they are acting as trustee, executor,
administrator or other legal representative.
"Places of Business" means the Debtor's places of business specified in
Section 4.1(d), and "Place of Business" means any one of them.
"Proceeds" means all proceeds and personal property in any form derived
directly or indirectly from any dealing with all or any part of the Secured
Property and any insurance or payment that indemnifies or compensates for
such property lost, damaged or destroyed, and proceeds of proceeds and any
part of any such proceeds.
"Secured Property" means all of the Debtor's personal property, now owned
or subsequently acquired, including, without limitation, all Accounts
Receivable, Chattel Paper, Contracts, Documents of Title, Equipment,
Intangibles, Instruments, Inventory, Money, Securities and Proceeds,
together with all increases, additions and accessions to any of them, and
all substitutions or any replacements of any of them.
"Securities" means all or any part of any shares, limited partnership
units, trust units, stock, warrants, bonds, debentures, debenture stock and
other security in which the Debtor now or subsequently has an interest.
"Security Interest" means the security interest granted under Section 2.1.
"Technical Information" means all know-how and information owned by or
licensed to the Debtor, confidential or otherwise, including, without
limitation, and any information of a scientific, technical, financial or
business nature regardless of its form.
1.3 Certain Rules of Interpretation
In this Agreement:
(a) Governing Law. This Agreement is a contract made under and shall be
governed by and construed in accordance with the law of the Province
of Ontario and the federal laws of Canada applicable in the Province
of Ontario.
(b) Headings. Headings of Articles and Sections are inserted for
convenience of reference only and shall not affect the construction or
interpretation of this Agreement.
(c) Including. Where the word "including" or "includes" is used in this
Agreement, it means "including (or includes) without limitation."
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(d) No Strict Construction. The language used in this Agreement is the
language chosen by the parties to express their mutual intent, and no
rule of strict construction shall be applied against any party.
(e) Number and Gender. Unless the context otherwise requires, words
importing the singular include the plural and vice versa and words
importing gender include all genders.
(f) Severability. If, in any jurisdiction, any provision of this Agreement
or its application to any party or circumstance is restricted,
prohibited or unenforceable, such provision shall, as to such
jurisdiction, be ineffective only to the extent of such restriction,
prohibition or unenforceability without invalidating the remaining
provisions of this Agreement and without affecting the validity or
enforceability of such provision in any other jurisdiction or without
affecting its application to other parties or circumstances.
(g) Statutory references. A reference to a statute includes all
regulations made pursuant to such statute and, unless otherwise
specified, the provisions of any statute or regulation which amends,
supplements, supersedes or succeeds any such statute or any such
regulation.
(h) Time. Time is of the essence in the performance of the parties'
respective obligations.
(i) References to Agreements. The term "this Agreement" refers to this
agreement including all schedules, amendments, supplements,
extensions, renewals, replacements, novations or restatements from
time to time, in each case as permitted, and references to "Articles"
or "Sections" means the specified Articles or Sections of this
Agreement.
(j) Paramountcy. If there is a conflict, inconsistency, ambiguity or
difference between any provision of this Agreement and either the 2005
Note or the Existing Loan Agreements, the provisions of the 2005 Note
or the Existing Loan Agreements, as applicable, shall prevail, and
such provision of this Agreement shall be amended to the extent only
to eliminate any such conflict, inconsistency, ambiguity or
difference. Any right or remedy in this Agreement which may be in
addition to the rights and remedies contained in the 2005 Note and the
Existing Loan Agreements shall not constitute a conflict,
inconsistency, ambiguity or difference.
1.4 Entire Agreement
This Agreement, the 2005 Note and the Existing Loan Agreements and the
agreements and other documents required to be delivered pursuant to this
Agreement, the 2005 Note and the Existing Loan Agreements, constitute the entire
agreement between the parties and set out all the covenants, promises,
warranties, representations, conditions, understandings and agreements between
the parties pertaining to the subject matter of this Agreement and supersede all
prior agreements, understandings, negotiations and discussions, whether oral or
written. There are no
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covenants, promises, warranties, representations, conditions, understandings or
other agreements, oral or written, express, implied or collateral between the
parties in connection with the subject matter of this Agreement except as
specifically set forth in this Agreement, the 2005 Note and the Existing Loan
Agreements and any document required to be delivered pursuant to this Agreement.
ARTICLE 2
SECURITY INTERESTS
2.1 Security Interest
As continuing security for the repayment and the performance of each of the
Obligations of the Debtor to the Secured Party, subject to Sections 2.4, 2.5 and
2.6, the Debtor grants to the Secured Party, a continuing, specific and fixed
security interest in all of the Debtor's Secured Property of every nature and
kind, now owned or subsequently acquired and at any time and from time to time
existing or in which the Debtor has or acquires an interest, wherever situate,
including, without limitation, all of the Secured Property.
2.2 Fixed Nature of Security Interests
The Security Interest is intended to operate as a fixed and specific charge of
all of the Secured Property presently existing, and with respect to all future
Secured Property, to operate as a fixed and specific charge of such future
Secured Property.
2.3 Attachment
The Debtor acknowledges that value has been given and that it has rights in the
Secured Property. The Security Interest is intended to attach, as to all of the
Secured Property, upon the execution by the Debtor of this Agreement.
2.4 Leases
The last day of any term for lease or sublease of any real property reserved by
any lease, written or unwritten, or any agreement to lease, now held or
subsequently acquired by the Debtor is excepted out of the Security Interests.
As further security for the payment of the Obligations, the Debtor agrees that
it will stand possessed of the reversion of such last day of the term and shall
hold it in trust for the Secured Party for the purpose of this Agreement. After
the occurrence and continuance of an Event of Default which is continuing, the
Debtor shall assign and dispose of the same in such manner as the Secured Party
may from time to time direct in writing without cost or expense to the Secured
Party. Upon any sale, assignment, sublease or other disposition of such lease or
agreement to lease, the Secured Party shall, for the purpose of vesting the
residue of any such term in any purchaser, sublessee or such other acquirer of
the lease, agreement to lease or any interest in any of them, be entitled by
deed or other written instrument to assign to such other person, the residue of
any such term in place of the Debtor and to vest the residue freed and
discharged from any obligation whatsoever respecting the same.
-8-
2.5 Consent
Nothing in this Agreement shall constitute an assignment or attempted assignment
of any Contract which by its provisions or by law is not assignable or which
requires the consent of a third party to its assignment unless such consent has
been obtained. In each such case, during the occurrence and continuance of an
Event of Default, the Debtor shall, unless the Secured Party otherwise agrees in
writing, promptly, upon written request by the Secured Party, attempt to obtain
the consent of any necessary third party to its assignment under this Agreement
and to its further assignment by the Secured Party to any third party as a
result of the exercise by the Secured Party of remedies after demand. Upon such
consent being obtained or waived, this Agreement shall apply to the applicable
Contract without regard to this section and without the necessity of any further
assurance to effect such assignment. Unless and until the consent to assignment
is obtained as provided above, the Debtor shall, to the extent it may do so at
law or pursuant to the provisions of the Contract or interest in question hold
all benefit to be derived from such Contracts in trust for the Secured Party
(including, without limitation, the Debtor's beneficial interest in any Contract
which may be held in trust for the Debtor by a third party), as additional
security for payment of Obligations and shall deliver up all such benefit to the
Secured Party, promptly upon demand by the Secured Party.
2.6 Other Matters
(a) Until the Security Interest is enforceable, the grant of the Security
Interest in the Intellectual Property Rights does not affect in any
way the Debtor's rights to commercially exploit the Intellectual
Property Rights, defend such rights, enforce the Debtor's rights in
such rights or with respect to it against third parties in any court
or claim and be entitled to receive any damages with respect to any
infringement of such rights.
(b) The Security Interest does not extend to consumer goods.
ARTICLE 3
OBLIGATIONS SECURED
3.1 Obligations
The Secured Property constitutes and will constitute continuing security for the
following obligations (the "Obligations") of the Debtor to the Secured Party:
(a) the due and punctual payment of all sums becoming payable from the
Debtor under or in connection with (i) this Agreement, (ii) the
Existing Loan Agreements and the "Loan Documents" as defined in each
of the Existing Loan Agreements, and (iii) the 2005 Note and the Other
Loan Documents (as defined in the 2005 Note; the documents described
in the foregoing clauses (i), (ii) and (iii) hereof being collectively
referred to herein as the "Loan Documents"), including without
limitation, (x) 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
2005 Note and the obligations
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arising under the Existing Loan Agreements, when and as due, whether
at maturity, by acceleration, upon one or more dates set for
prepayment or otherwise and (y) 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
any of the Existing Credit Facilities, the Guaranties or the other
Loan Documents;
(b) the due and punctual performance of all covenants, agreements,
obligations and liabilities of the Debtor under or pursuant to each of
the Existing Credit Facilities, the Guaranties or the other Loan
Documents (including this Agreement); and
(c) the payment of all damages (whether provided for in the 2005 Note, the
Existing Loan Agreements, the Guaranties or 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 the 2005 Note, the
Existing Loan Agreements, the Guaranties or the other Loan Documents.
ARTICLE 4
DEBTOR'S REPRESENTATIONS, WARRANTIES AND COVENANTS
4.1 Representations and Warranties
The Debtor represents and warrants to the Secured Party the matters set out
below:
(a) Authority. The Debtor has all necessary corporate power, authority,
and capacity to enter into and carry out its obligations under this
Agreement and to grant the Security Interest.
(b) Ownership of Secured Property Free of Charges. The Debtor is the owner
of or has rights in the Secured Property free and clear of all Liens
whatsoever other than the Permitted Encumbrances.
(c) No Other Corporate Names or Styles. The Debtor does not carry on
business under or use any name or style other than the name(s)
specified in this Agreement including, without limitation, any names
in the French language.
(d) Place of Business of Debtor. The following is/are the Debtor's
Place(s) of Business:
▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
and the Debtor's chief executive office is located at
▇▇▇▇ ▇▇▇▇▇▇▇'▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇▇
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(e) Reliance and Survival. All representations and warranties of the
Debtor made in this Agreement or in any certificate or other document
delivered by or on behalf of the Debtor to or for the benefit of the
Secured Party are material, shall survive and shall not merge upon the
execution and delivery of this Agreement and shall continue in full
force and effect. The Secured Party shall be deemed to have relied
upon such representations and warranties notwithstanding any
investigation made by or on behalf of the Secured Party at any time.
4.2 Covenants
Unless compliance with the following covenants is waived by the Secured Party in
writing or unless non-compliance with any such covenants is otherwise consented
to by the Secured Party in writing, the Debtor covenants and agrees that:
(a) Notification to Secured Party. The Debtor shall promptly notify the
Secured Party of all loss or damage to or loss of possession of all or
any material part of the Secured Property other than by disposition in
accordance with the terms of this Agreement.
(b) Protection of Security. The Debtor shall, at its own cost and expense,
take any and all actions necessary to defend title to the Secured
Property against all Persons and to defend the Security Interest of
the Secured Party in the Secured Property and the priority thereof
against any Lien not expressly permitted under this Agreement.
(c) No Accessions or Fixtures. The Debtor shall prevent the Secured
Property from becoming an accession to any property other than the
Secured Property or from becoming a fixture unless the Security
Interests rank prior to the interests of all other persons in the real
property.
(d) Legend. Promptly after a request therefor from the Secured Party
following an Event of Default, the Debtor shall legend, in form and
manner reasonably satisfactory to the Secured Party, 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 Secured
Party and that the Secured Party has a security interest therein.
(e) Encumbrances. The Debtor shall not create, incur, assume, permit or
suffer to exist any Lien, on or with respect to any of the Secured
Property, except for Permitted Encumbrances.
(f) 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. Subject to applicable law, the Secured Party and such
Persons as the Secured Party may designate shall have the right, at
the Debtor's cost and expense, upon reasonable notice to the Debtor
and during normal business hours, to inspect the Secured Property, all
records related thereto (and to make extracts and copies from such
records) and the
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premises upon which any of the Secured Property is located, to discuss
the affairs of the Debtor with its respective officers and 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 Secured Property, including, in the case
of Accounts Receivable or Secured Property 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 Secured Property for the purpose of making such a verification.
The Secured Party shall have the absolute right to share any
information it gains from such inspection or verification with any
Secured Party.
(g) Risk and Insurance. The Debtor bears the sole risk of any loss,
damage, destruction or confiscation of or to the Secured Property
during the Debtor's possession of the Secured Property or otherwise.
The Debtor shall maintain insurance on all of the Secured Property
with financially sound and reputable insurers including, without
limitation, all-risk property insurance, comprehensive general
liability insurance and business interruption insurance and with such
coverage and against such loss or damage to the full insurable value
of such property with the Secured Party as a named insured and with
loss payable to the Secured Party as its interest may appear. If the
Debtor fails to so insure, the Secured Party may insure the Secured
Property and the premiums for such insurance shall be added to the
balance of the Obligations secured under this Agreement as they exist
at the date of the payment of such premium by the Secured Party.
(h) Changes and Other Names. The Debtor shall not, unless 30 days' prior
written notice is provided to the Secured Party (i) change its name as
it appears in official filings in the jurisdiction of its
organization; or (ii) change its chief executive office, principal
place of business, domicile (within the meaning of the Civil Code of
Quebec), corporate offices or warehouses or locations at which Secured
Property is held or stored, or the location of its Books and Records.
(i) No Affecting the Security. It shall not do, permit or suffer to be
done anything to adversely affect the ranking or validity of the
Security.
(j) 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
Secured Party 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 Canadian
Intellectual Property Office or other documents in connection herewith
or therewith. If any amount payable under or in connection with any of
the Secured Property shall be or become evidenced by any promissory
note or other instrument, such note or instrument
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shall be forthwith pledged and delivered to the Secured Party, duly
endorsed in a manner satisfactory to the Secured Party.
ARTICLE 5
RIGHT TO DEAL
5.1 Debtor's Rights before Event of Default
Until the occurrence and continuance of an Event of Default and subject to the
terms of this Agreement, the Debtor is entitled to deal with the Secured
Property in the ordinary course of business, provided that, that no such action
shall be taken which would impair the effectiveness of the Security Interests
created by this Agreement or the value of the Secured Property or which would be
inconsistent with or violate the provisions of this Agreement or any other
written agreement between the Secured Party and the Debtor.
5.2 Securities
Until the occurrence and continuance of an Event of Default and subject to the
terms of this Agreement, the Debtor is entitled to receive dividends or other
distributions, vote the Securities and give consents, waivers and ratifications
in respect of the Securities, provided that, that no such action shall be taken
which would impair the effectiveness of the Security Interests or the value of
the Securities or which would be inconsistent with or violate the provisions of
this Agreement or any other written agreement between the Secured Party and the
Debtor.
5.3 Transfer of Ownership
The Secured Party may, at its sole and unfettered discretion, require the Debtor
to transfer registered ownership of the Securities to the Secured Party, the
Secured Party's agent or a nominee of the Secured Party. Notwithstanding such
transfer, prior to the occurrence and continuance of an Event of Default,
Sections 5.1 and 5.2 shall continue to apply and upon such transfer the Secured
Party shall provide the Debtor with such proxies and other written
authorizations as may reasonably be requested by the Debtor to enable the Debtor
to exercise the rights and take the actions described in Sections 5.1 and 5.2.
ARTICLE 6
DEFAULT
6.1 Default
The Debtor shall be in default under this Agreement upon the occurrence and
during the continuance of an "Event of Default" under the 2005 Note or any of
the Existing Loan Agreements, or upon any event of default or default beyond
applicable periods of notice and grace under this Agreement, any of the Existing
Credit Facilities, any of the Guaranties, or any of the other Loan Documents, or
with respect to any ACH Exposure (such "Events of Default," events of default
and defaults being the "Events of Default").
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6.1 Demand Obligations
The fact that this Agreement provides for Events of Default and rights of
acceleration shall not derogate from the nature of any Obligation which is
payable on demand.
ARTICLE 7
REMEDIES
7.1 Secured Party's Rights and Remedies
Upon the occurrence and during the continuance of an Event of Default, all of
the Obligations shall, at the Secured Party's option, become immediately due and
payable and the Secured Party may, in its discretion, proceed to enforce payment
and performance of the Obligations and to exercise any or all of the rights and
remedies contained in this Agreement, (including, without limitation, the
signification and collection of the Debtor's Accounts Receivable), or otherwise
afforded by law, in equity or otherwise. The Secured Party shall have the right
to enforce one or more remedies successively or concurrently in accordance with
applicable law and the Secured Party expressly retains all rights and remedies
not inconsistent with the provisions in this Agreement including all the rights
it may have under the PPSA. Without limitation, the Secured Party may, upon the
occurrence and during the continuance of any Event of Default and to the extent
permitted by applicable law:
(a) Appointment of Receiver. Appoint by instrument in writing a receiver
(which term shall include a receiver and manager or agent) of the
Debtor and of all or any part of the Secured Property and remove or
replace such receiver from time to time or may institute proceedings
in any court of competent jurisdiction for the appointment of a
receiver. Any such receiver appointed by the Secured Party, with
respect to responsibility for its acts, shall, to the extent permitted
by applicable law, be deemed the agent of the Debtor and not of the
Secured Party. Where the "Secured Party" is referred to in this
Article the reference includes, where the context permits, any
receiver so appointed and the officers, employees, servants or agents
of such receiver.
(b) Enter and Repossess. Immediately and without notice enter the Debtor's
premises and repossess, disable or remove the Secured Property.
(c) Retain the Secured Property. Retain and administer the Secured
Property in the Secured Party's sole and unfettered discretion.
(d) Dispose of the Secured Property. Dispose of any Secured Property by
public auction, private tender or private contract with or without
notice, advertising or any other formality, all of which are waived by
the Debtor to the extent permitted by law. The Secured Party may, to
the extent permitted by law, at its discretion, establish the terms of
such disposition, including, without limitation, terms and conditions
as to credit, upset, reserve bid or price. All payments made pursuant
to such dispositions shall be credited against the Obligations only as
they are actually received. The Secured Party may, to the extent
permitted by law, enter into, rescind or vary any contract for the
disposition of any Secured Property and
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may dispose of any Secured Property again without being answerable for
any related loss. Any such disposition may take place whether or not
the Secured Party has taken possession of the Secured Property.
(e) Foreclosure. Foreclose upon the Secured Property.
(f) Power of Attorney. Upon the occurrence, and during the continuance of,
an Event of Default, the Debtor constitutes and appoints the Secured
Party from time to time, or any receiver appointed of the Debtor as
provided for in this Agreement, the true and lawful attorney of the
Debtor irrevocably with full power of substitution to do, make and
execute all such lawful documents, acts, matters or things with the
right to use the name of the Debtor whenever and wherever it may be
deemed necessary or expedient in connection with the exercise of its
rights and remedies set forth in this Agreement. Without limitation,
the Secured Party or its agent is authorized to sign any financing
statements and similar forms which may be necessary or desirable to
perfect the Security Interest in any jurisdiction on behalf of the
Debtor. The Debtor declares that the irrevocable power of attorney
granted in this Agreement, being coupled with an interest, is given
for valuable consideration.
(g) Securities.
(i) Disposal. Without limiting the generality of Section 7.1(d), the
Debtor acknowledges that when disposing of any Securities, the
Secured Party may be unable to effect a public sale of any or all
of the Securities, or to sell any or all of the securities as a
control block sale at more than a stated premium to the "market
price" of any shares, stock, instruments, warrants, bonds,
debenture stock and other securities forming part of the
Securities, by reason of certain prohibitions contained in the
Securities Act (Ontario) and applicable laws of other
jurisdictions, but may be compelled to resort to one or more
private sales to a restricted group of purchasers who will be
obliged to agree, among other things, to acquire such Securities
as principal and to comply with other resale restrictions
provided for in the Securities Act (Ontario) and other applicable
laws. The Debtor acknowledges and agrees that any such private
sale may result in prices and other terms less favourable to the
seller than if such sale were a public sale or a control block
sale and, notwithstanding such circumstances, agrees that any
such private sale shall not be deemed to have been made in a
commercially unreasonable manner solely by reason of its being a
private sale. The Secured Party shall be under no obligation to
delay a sale of any of the Securities for the period of time
necessary to permit the issuer of such securities to qualify such
Securities for public sale under the Securities Act (Ontario) or
under applicable securities laws of other jurisdictions, even if
the issuer would agree to do so, or to permit a prospective
purchaser to make a formal offer to all or substantially all
holders of any class of securities forming any part of the
Securities.
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(ii) Exercise of Rights. Upon the occurrence, and during the
continuance of, an Event of Default, the Secured Party may elect
by written notice to the Debtor and to an officer of the issuer
of the Securities, that all or part of the rights of the Debtor
in the Securities including, without limitation, the right to
vote, give consents, waivers or ratifications and take other
actions and receive dividends or other distributions, shall
cease, and upon such election all such rights shall become vested
in the Secured Party or as it may direct.
(iii) Registration. Require that the Securities be registered in the
name of the Secured Party or as it may direct and the Secured
Party may then, without notice, exercise any and all voting and
corporate rights at any meeting of the issuers thereof and
exercise any and all rights, privileges or options pertaining to
the Securities as if it were the absolute owner, including
without limitation, the right to exchange at its discretion, any
and all of the Securities upon the issuer's amalgamation, merger,
consolidation, reorganization, recapitalization or other
readjustment or upon the issuer's exercise of any right,
privilege or option pertaining to any of the Securities and to
deposit and deliver any and all of the Secured Property with any
committee, depositary, transfer agent, registrar or other
designated agency upon such terms and conditions as it may
determine.
(h) Collection of Accounts Receivable. Upon the occurrence, and during the
continuance of, an Event of Default, the Secured Party on its own
account or through a receiver, receiver-manager or agent and whether
alone or in conjunction with the exercise of all or any other remedies
contemplated by this Agreement, shall have the right, at any time, to
notify and direct Account Debtors to make all payments whatever to the
Secured Party and the Secured Party shall have the right, at any time,
to hold all amounts acquired from any Account Debtors and any Proceeds
as part of the Secured Property. Upon such occurrence and during such
continuance, any payments received by the Debtor shall be held by the
Debtor in trust for the Secured Party in the same medium in which
received, shall not be commingled with any assets of the Debtor and
shall, at the request of the Secured Party be turned over to the
Secured Party not later than the next business day following the day
of their receipt.
(i) Carry on Business. Carry on or concur in the carrying on of all or any
part of the business of the Debtor and may, in any event, to the
exclusion of all others, including the Debtor, enter upon, occupy and
use all premises of or occupied or used by the Debtor and use any of
the personal property (which shall include fixtures) of the Debtor for
such time and such purposes as the Secured Party sees fit. The Secured
Party shall not be liable to the Debtor for any neglect in so doing or
in respect of any related rent, costs, charges, depreciation or
damages.
(j) Payment of Encumbrances. Pay any encumbrance, lien, claim, tax,
assessment fee or charge that may exist or be threatened against the
Secured Property, and
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any amount so paid together with costs, charges and expenses incurred
shall be added to the Obligations.
(k) Payment of Deficiency. If the proceeds of realization are insufficient
to pay all monetary Obligations, the Debtor shall forthwith pay or
cause to be paid to the Secured Party any deficiency and the Secured
Party may ▇▇▇ the Debtor to collect the amount of such deficiency.
(l) Dealing with Secured Property. Subject to applicable law, seize,
collect, realize, borrow money on the security of, release to third
parties, sell (by way of public or private sale), lease or otherwise
deal with the Secured Property in such manner, upon such terms and
conditions, at such time or times and place or places and for such
consideration as may seem to the Secured Party advisable and without
notice to the Debtor. The Secured Party may charge on its own behalf
and pay to others sums for expenses incurred and for services rendered
(expressly including without limitation, legal, consulting, broker,
management, receivership and accounting fees) in or in connection with
seizing, collecting, realizing, borrowing on the security of, selling
or obtaining payment of the Secured Property and may add all such sums
to the Obligations.
7.2 Assemble the Secured Property
To assist the Secured Party in the implementation of such rights and remedies,
the Debtor will, at its own risk and expense and immediately upon the Secured
Party's request, assemble and prepare for removal such items of the Secured
Property as are selected by the Secured Party as shall, in the Secured Party's
sole judgment, have a value sufficient to cover all the Obligations.
7.3 Allocation of proceeds
All monies collected or received by the Secured Party in respect of the Secured
Property may be held by the Secured Party and may be applied on account of such
parts of the Obligations at the sole discretion of the Secured Party.
7.4 Waivers and Extensions
The Secured Party may waive default or any breach by the Debtor of any of the
provisions contained in this Agreement. No waiver shall extend to a subsequent
breach or default, whether or not the same as or similar to the breach or
default waived and no act or omission of the Secured Party shall extend to or be
taken in any manner whatsoever to affect any subsequent breach or default of the
Debtor or the rights of the Secured Party resulting therefrom. Any such waiver
must be in writing and signed by the Secured Party to be effective.
The Secured Party may also grant extensions of time and other indulgences, take
and give up securities, accept compositions, grant releases and discharges,
release the Secured Property to third parties and otherwise deal with the
Debtor's guarantors or sureties and others and with the Secured Property and
other securities as the Secured Party may see fit without prejudice to the
liability of the Debtor to the Secured Party, or the Secured Party's rights,
remedies and powers under this Agreement. No extension of time, forbearance,
indulgence or other accommodation
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now, heretofore or hereafter given by the Secured Party to the Debtor shall
operate as a waiver, alteration or amendment of the rights of the Secured Party
or otherwise preclude the Secured Party from enforcing such rights.
7.5 Remedies Cumulative and Waivers
For greater certainty, it is expressly understood and agreed that the rights and
remedies of the Secured Party under this Agreement are cumulative and are in
addition to and not in substitution for any rights or remedies provided by law
or equity; and any single or partial exercise by the Secured Party of any right
or remedy for a default or breach of any term, covenant, condition or agreement
contained in this Agreement shall not be deemed to be a waiver of, or to alter,
affect or prejudice, any other right or remedy to which the Secured Party may be
lawfully entitled for such default or breach. Any waiver by the Secured Party of
the strict observance, performance or compliance with any term, covenant,
condition or other matter contained in this Agreement and any indulgence
granted, either expressly or by course of conduct by the Secured Party shall be
effective only in the specific instance and for the purpose for which it was
given and shall be deemed not to be a waiver of any right or remedy of the
Secured Party under this Agreement as a result of any other default or breach
under this Agreement.
7.6 Effect of Possession or Receiver
As soon as the Secured Party takes possession of any Secured Property or
appoints a receiver, all powers, functions, rights and privileges of the Debtor
with respect to the Secured Property shall cease, unless specifically continued
by the written consent of the Secured Party or the receiver.
7.7 Set-off or Compensation
In addition to and not in limitation of any rights granted now or after the date
of this Agreement at law, upon the occurrence and during the continuance of an
Event of Default, the Secured Party may at any time and from time to time
without notice to the Debtor (it being expressly waived by the Debtor) to
set-off and compensate and apply any and all deposits, general or special, term
or demand, provisional or final, matured or unmatured, and any other
indebtedness at any time owing by the Secured Party, or to appropriate any other
properties or assets at any time held by the Secured Party, to or for the credit
of or the account of the Debtor, against and on account of the Obligations, even
if any of them are contingent or unmatured.
7.8 Limitation of Liability
The Secured Party shall not be liable or accountable:
(a) by reason of any entry into or taking possession of all or any of the
Secured Property, to account as mortgagee in possession or for
anything except actual receipts, or for any loss on realization or any
act or omission for which a secured party in possession might be
liable; or
(b) for any failure to exercise its remedies, take possession of, seize,
collect, realize, sell, lease or otherwise dispose of or obtain
payment for the Secured Property and shall not be bound to institute
proceedings for such purposes or for the purpose of
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preserving any rights, remedies or powers of the Secured Party, the
Debtor or any other person in respect of same.
No Secured Party shall by virtue of these presents be deemed to be a mortgagee
in possession of the Secured Property. The Debtor releases and discharges the
Secured Party and the receiver from every claim of every nature, whether
sounding in damages or not, which may arise or be caused to the Debtor or any
person claiming through or under the Debtor by reason or as a result of anything
done by the Secured Party or any successor or assign claiming through or under
the Secured Party or the receiver under the provisions of this Agreement unless
such claim be the result of dishonesty, gross neglect or wilful misconduct.
ARTICLE 8
GENERAL
8.1 Expenses
The Debtor shall pay all costs and expenses (including the reasonable fees and
disbursements of legal counsel and other advisors) incurred by the Secured Party
in connection with the negotiation, preparation and execution of this Agreement
and the perfection, protection of and enforcement under this Agreement, advice
with respect to this Agreement, and those arising in connection with the
realization, disposition, retention, protection or collection of any Secured
Property and the protection or enforcement of the rights, remedies and powers of
the Secured Party or any receiver and those incurred for perpetual registration
of any financing statement registered in connection with the Security Interests.
All amounts for which the Debtor is required under this Agreement to reimburse
the Secured Party or any receiver shall, from the date of disbursement until the
date the Secured Party or the receiver receives reimbursement, be deemed
advanced to the Debtor by the Secured Party, shall be deemed to be Obligations
secured hereby and shall bear interest at the highest rate per annum charged by
the Secured Party on any of the other Obligations.
In particular, the Debtor agrees to indemnify and save the Secured Party
harmless from all reasonable legal fees and disbursements incurred by the
Secured Party in connection with any enforcement of rights and remedies under
this Agreement. This indemnity is independent of and in addition to any right
which the Secured Party may have to seek recovery of costs in any litigation
which results in respect of this Agreement and is intended to ensure that the
Secured Party are fully reimbursed for one-hundred percent (100%) of such fees
and disbursements which may be incurred as by it and its legal counsel.
8.2 Notices
Any notice, consent or approval required or permitted to be given in connection
with this Agreement (in this Section referred to as a "Notice") shall be in
writing and shall be sufficiently given if delivered as provided in the Existing
Loan Agreements, with notice to Borrower under the Existing Loan Agreements to
suffice as notice to the Debtor.
Any Notice delivered or transmitted to a party as provided above shall be deemed
to have been given and received on the day it is delivered or transmitted,
provided that it is delivered or transmitted on a Business Day prior to 5:00
p.m. local time in the place of delivery or receipt.
-19-
However, if the Notice is delivered or transmitted after 5:00 p.m. local time or
if such day is not a Business Day then the Notice shall be deemed to have been
given and received on the next Business Day.
Any party may, from time to time, change its address by giving Notice to the
other party in accordance with the provisions of this Section.
8.3 Amendment
No amendment, supplement, modification or waiver or termination of this
Agreement and, unless otherwise specified, no consent or approval by any party,
shall be binding unless executed in writing by the party to be bound.
8.4 Enurement
This Agreement shall be binding on the Debtor, and its successors (including any
successor by reason of amalgamation), and permitted assigns and enure to the
benefit of the Secured Party and their respective successors (including any
successor by reason of amalgamation) and assigns.
8.5 Further Assurances
The Debtor shall at all times do all such things and provide all such reasonable
assurances as may be required to consummate the transactions contemplated by
this Agreement, and shall provide such further documents or instruments required
by the Secured Party as may be reasonably necessary or desirable to effect the
purpose of this Agreement and carry out its provisions, and for the better
granting, transferring, assigning, charging, setting over, assuring, confirming
or perfecting the Security Interest and the priority accorded to them by law or
under this Agreement.
8.6 Execution and Delivery
This Agreement may be executed by the parties in counterparts and may be
executed and delivered by facsimile and all such counterparts and facsimiles
shall together constitute one and the same agreement.
The Debtor acknowledges receiving a copy of this Agreement, and further agrees
that a carbon, photographic, photostatic or other reproduction of this Agreement
or of a financing statement is sufficient as a financing statement.
8.7 Security Interests Effective Immediately
Neither the execution of, nor any filing with respect to, this Agreement shall
obligate the Secured Party to make any advance or loan or further advance, or
bind the Secured Party to grant or extend any credit to the Debtor, but the
Security Interests shall take effect forthwith upon the execution of this
Agreement by the Debtor.
-20-
8.8 Statutory Waivers
To the fullest extent permitted by law, the Debtor waives all of the rights,
benefits and protections given by the provisions of any existing or future
statute which imposes limitations upon the powers, rights or remedies of the
Secured Party or upon the methods of realization of security, including any
seize or ▇▇▇ or anti-deficiency statute or any similar provisions of any other
statute.
8.9 Reasonableness
The Debtor acknowledges that the provisions of this Agreement and, in
particular, those respecting rights, remedies and powers of the Secured Party
and any receiver against the Debtor, its business and any Secured Property upon
the occurrence and continuance of an Event of Default, are commercially
reasonable and not manifestly unreasonable.
8.10 Discharge
Upon payment and performance by the Debtor of the Obligations, the Secured Party
shall upon request in writing by the Debtor deliver up this Agreement to the
Debtor and shall at the expense of the Debtor cancel and discharge the Security
Interests and execute and deliver to the Debtor such documents as shall be
requisite to discharge the Security Interests.
[INTENTIONALLY LEFT BLANK]
-21-
IN WITNESS OF WHICH the Debtor has duly executed this Agreement.
COOLBRANDS INTERNATIONAL INC.
By: [SIGNATURE ILLEGIBLE]
--------------------------------------------
Name:
Title:
By: [SIGNATURE ILLEGIBLE]
--------------------------------------------
Name:
Title:
I/We have authority to bind the Corporation.
-21-
IN WITNESS OF WHICH the Debtor has duly executed this Agreement.
COOLBRANDS INTERNATIONAL INC.
By:
--------------------------------------------
Name:
Title:
By: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: CFO
I/We have authority to bind the Corporation.
SCHEDULE "A"
EXISTING LIENS
Nil.
GUARANTY OF PAYMENT
New York, New York
As of August 31, 2005
WHEREAS, Integrated Brands Inc., a New Jersey corporation, having an office
at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (the "Borrower"), certain
other guarantors and JPMorgan Chase Bank, N.A., a national banking association
("Chase"), in its capacity as "Agent" and for itself as the "Lender" therein
entered into (i) a Loan Agreement dated as of December 23, 1994, as amended
through the date hereof, and (ii) a Loan Agreement dated as of September 20,
2000, as amended through the date hereof (collectively, the "Existing Credit
Facilities"), and Chase, as the Lender made a loan to the Borrower in the
principal amount of $40,000,000.00 (the "2005 Loan"), which is evidenced by a
Promissory Note, made by the Borrower to Chase dated March 25, 2005 (the "2005
Note");
WHEREAS, the undersigned receives direct and substantial benefit from the
credit facilities extended to the Borrower under the Existing Credit Facilities
and the making of the 2005 Loan; and
WHEREAS, the certain events of default have occurred under the Existing
Credit Facilities and the 2005 Note and Chase is willing to waive such events of
default and amend certain of the terms of the Existing Credit Facilities and the
2005 Note 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, 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 Existing Credit Facilities and the
2005 Note, including, without limitation, any liabilities of the Borrower to
Chase arising from or pursuant to the provisions of the 2005 Note, the Existing
Credit Facilities 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 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 Security Agreements (as defined in Exhibit
A) 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
respective Security Agreements) or any part thereof;
(b) any amendment to, or restructuring of, this Guaranty, the
Obligations, or any of the 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 Security Agreements
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 Chase 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
2005 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 (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), 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." 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
2
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 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,
after the occurrence of any of the events of default set forth in paragraph 8
below, 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
3
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 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 any
loan under the Existing Credit Facilities or the loan under the 2005 Note;
(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
either of the Existing Credit Facilities or under the 2005 Note; or
(c) the undersigned violates any provision of this Guaranty;
4
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
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.
5
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 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
6
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 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 ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇, with a copy to Integrated Brands
Inc., ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention of ▇▇▇▇▇ ▇.
▇▇▇▇▇ and with a copy to ▇▇▇▇ ▇. ▇▇▇▇▇, Esq., ▇▇▇▇▇▇▇ Procter LLP, ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, and if to Chase, to JPMorgan Chase Bank, N.
A., ▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention of ▇▇▇▇▇
▇'▇▇▇▇▇▇▇▇. 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
7
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 2005 Note or under either or
both of the Existing Credit Facilities or otherwise with respect to the 2005
Loan or the credit facilities extended under the Existing Credit Facilities 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 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 either of the
Existing Credit Facilities, in the 2005 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.
8
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 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
9
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)
U.S. dollars 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 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 ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (the "Process Agent") with an office on the date
hereof at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, 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,
10
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 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.
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]
11
IN WITNESS WHEREOF, the undersigned has duly executed this Guaranty the day
and year first above set forth.
WITNESS: YOGEN FRUZ CANADA, INC.
By: /s/ Illegible
----------------------------------- -------------------------------
Name:
Title:
12
IN WITNESS WHEREOF, the undersigned has duly executed this Guaranty the day
and year first above set forth.
WITNESS: YOGEN FRUZ CANADA, INC.
/s/ Illegible By:
----------------------------------- -------------------------------
Name:
Title:
12
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 2005 Note.
(b) The term "Existing Credit Facilities" shall have the meaning given
to such term in the recitals to this Guaranty.
(c) The term "Guarantor" means any Person guaranteeing any of all of
the obligations of the Borrower under the 2005 Note and/or either or both of the
Existing Credit Facilities.
(d) The term "Loan Documents" shall mean collectively, each of the
"Loan Documents" as defined in each of the Existing Credit Facilities, and the
2005 Note and each of the "Other Loan Documents" as defined in the 2005 Note,
and all other documents executed by the Borrower or others, and by or in favor
of Chase, in connection with the 2005 Note, the Existing Credit Facilities, this
Guaranty or any other guaranty of the Obligations given by a Guarantor.
(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 Agreements" means the "Security Agreements" as
defined in the Existing Credit Facilities and the 2005 Note.
(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.
(i) The term "2005 Note" shall have the meaning given to such term in
the recitals to this Guaranty.
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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, 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.
14