FORBEARANCE, WAIVER AND INDEMNIFICATION
Exhibit
4.18
Forbearance,
Waiver and Indemnification by and among CoolBrands International Inc., 2118769
Ontario Inc. and each of the guarantors
FORBEARANCE,
WAIVER AND INDEMNIFICATION
THIS
FORBEARANCE, WAIVER AND INDEMNIFICATION dated as of November 17, 2006
(this “Agreement”), is entered into by and among CoolBrands
International Inc. and each of the other guarantors on the signature pages
hereto (collectively, the “Guarantors”) and 2118769 Ontario
Inc.
W
I T N E S S E T H:
WHEREAS
Americana Foods Limited Partnership (the “Borrower”) was
indebted to JPMorgan Chase Bank, N.A., GMAC Commercial Finance LLC and General
Electric Capital Corporation (collectively, the “Former
Lenders”) pursuant to a Credit Agreement dated as of April 21, 2006
(the “Americana Credit Agreement”), among the Borrower, the
Former Lenders and JPMorgan Chase Bank, N.A., in its capacity as lead arranger
and administrative agent thereunder (the “Agent”);
WHEREAS
pursuant to a Master Assignment and Assumption dated as of the date hereof
(the
“Master Assignment and Assumption”), the Former Lenders and the
Agent assigned to 2118769 Ontario Inc., and 2118769 Ontario Inc. assumed,
all of
the rights and obligations of each of the Former Lenders and the Agent under
the
Americana Credit Agreement and other documents and instruments delivered
pursuant thereto, including, without limitation, any and all guarantees and
security, including, without limitation, the guarantees and security listed
on
Schedule “A” hereto (collectively, the “Guarantees and
Security”) provided by the Guarantors in respect of the obligations of
the Borrower under the Americana Credit Agreement (collectively, the
“Americana Secured Obligations”);
WHEREAS
the Borrower, having commenced proceedings under Title 7 of the United States
Code, defaulted under the Americana Credit Agreement;
WHEREAS
the Guarantors have requested that 2118769 Ontario Inc. forbear from exercising
certain rights and remedies in respect of the Guarantees and Security and
2118769 Ontario Inc. has agreed to do so, but only upon the terms and conditions
set forth herein;
NOW,
THEREFORE, for valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, and subject to the fulfillment of the conditions
set forth below, the parties hereto hereby agree as follows:
ARTICLE
I
FORBEARANCE
AND WAIVER
1.1 Forbearance.
In
reliance upon the representations, warranties and covenants of the Guarantors
contained in this Agreement, and subject to the terms and conditions of this
Agreement and any documents or instruments executed in connection herewith,
2118769 Ontario Inc. agrees to forbear from taking any action or exercising
any
right or remedy at law or in equity permitted to be taken or exercised by
it
under the Guarantees and Security or under applicable law or in equity during
the period (the “Forbearance Period”) beginning on the
Effective Date (as hereinafter defined) and ending on the earlier of: (a)
May
17, 2007; and (b) the date on which the Integrated Forbearance Arrangement
(as
hereinafter defined) terminates (the “Forbearance End Date”);
provided, however, that such forbearance shall not in any way or manner restrict
2118769 Ontario Inc. from exercising any rights or remedies it may have with
respect to the Guarantees and Security from and after the expiration or
termination of the Forbearance Period. The Forbearance Period shall
automatically terminate and expire on the Forbearance End Date without any
requirement for notice to the Guarantors or any other person or entity and
all
rights, remedies and privileges of 2118769 Ontario Inc. under the Guarantees
and
Security shall be available to, and capable of exercise by, 2118769 Ontario
Inc.
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1.2 Waiver.
2118769
Ontario Inc. hereby agrees to waive the enforcement of any rights and remedies
in respect of the Guarantees and Security for the duration of the Forbearance
Period; provided that nothing contained in this Agreement shall constitute
a
waiver of any of 2118769 Ontario Inc.’s rights or remedies at law or in equity,
and no delay by 2118769 Ontario Inc. in exercising any right under this
Agreement nor any failure to exercise same will waive that right or any other
right upon termination of the Forbearance Period.
ARTICLE
II
CONDITIONS
TO EFFECTIVENESS
2.1 Effective
Date.
This
Agreement shall become effective on the date (the “Effective
Date”) when all of the following conditions have been
satisfied:
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(a)
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2118769
Ontario Inc. shall have received counterparts of this Agreement
duly
executed on behalf of each of the
Guarantors;
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(b)
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2118769
Ontario Inc. shall have received a duly executed warrant certificate
for
5,500,000 subordinate voting shares of CoolBrands International
Inc. in
form and substance satisfactory to 2118769 Ontario
Inc.;
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(c)
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the
representations and warranties made by each of the Guarantors herein
shall
be true and correct in all material
respects;
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(d)
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each
of the Guarantors shall have obtained all consents and waivers
from any
person or entity necessary for the execution, delivery and performance
of
this Agreement and any other document, action or transaction contemplated
hereby;
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(e)
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2118769
Ontario Inc. shall have delivered the Master Assignment and Assumption
duly executed by 2118769 Ontario Inc. and shall have received the
Master
Assignment and Assumption duly executed by the Agent and each of
the
Former Lenders and the assignment transaction contemplated thereunder
shall have been completed;
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(f)
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JPMorgan
Chase Bank, N.A. (“JPMorgan”), in its capacity as
administrative agent, and the lenders (collectively, the
“Integrated Lenders”) under the
credit agreement dated as of April 21, 2006, among JPMorgan, the
Integrated Lenders and Integrated Brands Inc., Eskimo Pie Frozen
Distribution, Inc., Eskimo Pie Corporation and Coolbrands Dairy,
Inc., as
borrowers (the “Integrated Credit Agreement”), shall have
agreed to forbearance terms in respect of the obligations arising
from the
Integrated Credit Agreement, which forbearance terms shall be reasonably
satisfactory to 2118769 Ontario Inc.(the
“Integrated Forbearance Arrangement”);
and
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(g)
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all
of the professional fees and expenses of Xxxxxxx Xxxxxxx and 2118769
Ontario Inc., including, without limitation, the reasonable fees
and
expenses of Goodmans LLP, shall have been paid in full by wire
transfer of
immediately available
funds.
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ARTICLE
III
REPRESENTATIONS
AND WARRANTIES
3.1 Representations
and Warranties.
In
order to induce 2118769 Ontario Inc. to enter into this Agreement, each of
the
Guarantors represents and warrants to 2118769 Ontario Inc. as
follows:
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(a)
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the
execution, delivery and performance by such Guarantor of this Agreement:
(i) has been duly authorized by all requisite corporate or other
action on
the part of the Guarantor; and (ii) does not (x) contravene or
violate any
of the organizational or constitutive documents of the Guarantor,
or (y)
result in, or require the creation or imposition of, any lien or
other
encumbrance on any property or assets of the Guarantor other than
as
permitted by the Integrated Credit Agreement or the Americana Credit
Agreement; and
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(b)
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upon
the effectiveness of this Agreement, it will constitute the legal,
valid
and binding obligation of the Guarantor, enforceable against the
Guarantor
in accordance with its terms, in each case subject to the effects
of
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium
or other similar laws relating to or affecting creditors’ rights
generally, and to general equitable principles (whether considered
in a
proceeding in equity or at
law).
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ARTICLE
IV
ACKNOWLEDGEMENTS
BY GUARANTORS
4.1 Acknowledgment
of Indebtedness.
Each
Guarantor hereby confirms, agrees and acknowledges, as of the date hereof,
that:
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(a)
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it
is validly indebted to 2118769 Ontario Inc. for the payment in
full of all
Americana Secured Obligations, without defense, counterclaim, offset,
cross-complaint, claim or demand of any kind or nature
whatsoever;
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(b)
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the
amounts reflected in the statement attached as Schedule “B” hereto are
accurate and that such amounts form part of the Americana Secured
Obligations;
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(c)
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except
as otherwise set out herein, 2118769 Ontario Inc. has not waived,
and does
not intend to waive enforcement in respect of the Guarantees and
Security;
and
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(d)
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2118769
Ontario Inc. has a presently exercisable right to exercise its
rights and
remedies under the Guarantees and
Security.
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4.2 Guarantees
and Security Still in Force.
Each
of the Guarantors hereby: (a) ratifies and affirms in their entirety the
Guarantees and Security; and (b) subject to the terms and conditions of this
Agreement, agrees that the Guarantees and Security shall remain in full force
and effect throughout the Forbearance Period and from and after the expiration
or termination thereof. Each of the Guarantors agrees that nothing in
this Agreement shall, or shall be construed to: (a) impair the validity,
perfection or priority of the lien and security interest created under or
evidenced by the Guarantees and Security; (b) waive or impair any rights,
powers
or remedies of 2118769 Ontario Inc. under the Guarantees and Security upon
termination of the Forbearance Period, all of which are expressly reserved;
(c)
require 2118769 Ontario Inc. to extend the Forbearance Period, or grant
additional cure or forbearance periods, or otherwise modify this Agreement;
or
(d) waive enforcement in respect of the Guarantees and Security, except as
expressly set forth herein.
ARTICLE
V
INDEMNIFICATION
BY GUARANTORS AND ADDITIONAL SECURITY
5.1 Each
of the Guarantors hereby indemnifies Xxxxxxx Xxxxxxx and 2118769 Ontario
Inc.
and its representatives, subsidiaries, affiliates, officers, directors,
employees, shareholders, professional advisors, sureties, agents, heirs,
successors and assigns (each individually an “Indemnitee”)
against, and holds each Indemnitee harmless from, any and all losses, claims,
damages, penalties, liabilities and related expenses, including the reasonable
fees, reasonable charges and disbursements of any counsel for the Indemnitee,
incurred by or asserted against any Indemnitee arising out of, in connection
with, or as a result of: (a) the execution or delivery of the Master Assignment
and Assumption or any agreement or instrument contemplated thereby, the
performance by the parties thereto of their respective obligations thereunder
or
the consummation of any transactions contemplated thereby; (b) the execution
or
delivery by 2118769 Ontario Inc. of an irrevocable standby letter of credit
in
the aggregate face amount of $5,000,000 dated as of the date hereof in favour
of
JPMorgan, for the rateable benefit of the Integrated Lenders, in connection
with
the Integrated Credit Agreement (the “Letter of Credit”); (c)
liability arising, directly or indirectly, as a consequence of the Indemnitees’
entering into this Agreement or otherwise; and
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(d)
any actual or prospective claim, litigation, investigation or proceeding
relating to any of the foregoing, whether based in contract, tort or any
other
theory and regardless of whether any Indemnitee is a party thereto; provided
that such indemnity shall not, as to any Indemnitee, be available to the
extent
that such losses, claims, damages, penalties, 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 wilfull misconduct
of
such Indemnitee.
5.2 The
obligations of any Guarantor under this Article V shall be unconditional,
and
not subject to any set-off or defense based upon any claim such Guarantor
may
have against any Indemnitee, and shall remain in full force and effect without
regard to any circumstance or condition, including, without limitation: (a)
the
repayment of the Americana Secured Obligations; and (b) any bankruptcy,
insolvency, receivership, reorganization, dissolution, liquidation or other
like
proceeding under any existing or future law of any jurisdiction, domestic
or
foreign (including any case under Title 7 or 11 of the United States Code,
as
amended from time to time, or any successor statute), involving or affecting
any
Guarantor or any Indemnitee or any involuntary petition having been filed
against any Guarantor or any Indemnitee (regardless of whether an order for
relief has been entered).
5.3 If
judgment is entered against any Indemnitee, in any action, suit or proceeding
to
enforce the indemnities contained herein, the Guarantors shall reimburse
such
Indemnitee for all reasonable costs and expenses incurred by such Indemnitee
in
connection therewith, including, without limitation, reasonable attorneys’
fees.
5.4 Each
Guarantor agrees that it will not assert any right, claim or cause of action,
including, without limitation, a claim of subrogation, contribution or
indemnification that it has against any other Guarantor or any collateral
of any
other Guarantor, until the Guarantors have fully performed all of their
obligations to 2118769 Ontario Inc. and the Americana Secured Obligations
have
been indefeasibly paid in full.
5.5 As
security for the indemnities provided in this Article V and the Letter of
Credit, each of the Guarantors agrees to grant a security interest in all
of its
assets, property and undertaking in favour of each of Xxxxxxx Xxxxxxx and
2118769 Ontario Inc. (the “Additional
Security”), subject to the Additional Security being subordinated and
postponed to: (a) the security granted in connection with the Secured
Obligations as defined in the Integrated Credit Agreement; and (b) the
Guarantees and Security. Unless otherwise agreed by 2118769 Ontario
Inc., the Additional Security shall be in the same form as the security given
by
the Guarantors pursuant to the Integrated Credit Agreement.
ARTICLE
VI
MISCELLANEOUS
6.1 Notices
Any
notice, certificate, consent, determination or other communication require
or
permitted to be given or made under this Agreement shall be in writing and
shall
be effectively given and made if: (a) delivered personally; (b) sent by prepaid
courier service; or (c) sent prepaid by fax or other similar means of electronic
communication, in each case to the applicable address set out
below:
In
the case of 2118769 Ontario Inc.:
0000
Xxxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxx,
Xxxxxxx X0X 0X0
Attention: Xxxxxxx
Xxxxxxx
Facsimile: 905-479-5235
With
a copy to:
Goodmans
LLP
0000-000
Xxxxx Xxxxxx
Xxxxxxx,
XX X0X 0X0
Attention: Xxxxxx
X. Xxxxxxxx
Facsimile: 000-000-0000
In
the case of the Guarantors to:
The
attention of the individuals and at the addresses set forth on Exhibit “A” to
the Americana Credit Agreement, as applicable
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6.2 Counterparts,
etc.
This
Agreement may be executed by the parties hereto in several counterparts,
each of
which shall be deemed to be an original and all of which shall constitute
but
one and the same agreement. Delivery of an executed counterpart by
facsimile shall be effective as delivery of a manually executed
counterpart.
6.3 GOVERNING
LAW.
This
Agreement in accordance with Section 5-401 of the General Obligations Law
of the
State of New York shall be governed by and construed in accordance with the
laws
of the State of New York, but otherwise without regard to any conflicts of
laws
principles thereof that would call for the application of the laws of any
other
jurisdiction, but giving effect to Federal Laws applicable to National
Banks.
6.4 Successors
and Assigns.
This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns.
6.5 Entire
Agreement.
This
Agreement and the Guarantees and Security set forth the entire understanding
and
agreement of the parties hereto in relation to the subject matter hereof
and
thereof and supersede any prior negotiations and agreements among the parties
relative to such subject matter. No promise, condition,
representation or warranty, express or implied, not herein or therein set
forth
shall bind any party hereto, and no one of them has relied on any such promise,
condition, representation or warranty. Each of the parties hereto
acknowledges that, except as otherwise expressly stated in this Agreement,
no
representations, warranties or commitments, express or implied, have been
made
by any party to any other party with respect to the subject matter of this
Agreement. None of the terms or conditions of this Agreement may be
changed, modified, waived or cancelled, orally or otherwise.
6.6 Supremacy
Unless
otherwise indicated herein, in the event of a conflict or inconsistency between
the provisions of this Agreement and the provisions of the Guarantees and
Security, the provisions of this Agreement shall prevail.
6.7 Relationship.
The
Guarantors agree that the relationship between 2118769 Ontario Inc. and the
Guarantors is that of creditor and debtor and not that of partners or joint
venturers. This Agreement does not constitute a partnership
agreement, or any other association between 2118769 Ontario Inc. and the
Guarantors. The Guarantors acknowledge that 2118769 Ontario Inc. has
acted at all times only as creditor to the Guarantors within the normal and
usual scope of the activities normally undertaken by a creditor and in no
event
has 2118769 Ontario Inc. attempted to exercise any control over the Guarantors
or their respective businesses or affairs.
6.8 No
Third Party Beneficiaries.
This
Agreement is made and entered into for the sole protection and benefit of
the
Guarantors and 2118769 Ontario Inc. and no other person or entity shall have
any
right of action hereon, right to claim any right or benefit from the terms
contained herein, or be deemed a third party beneficiary hereunder.
6.9 Expenses.
All
reasonable out-of-pocket costs and expenses incurred by Xxxxxxx Xxxxxxx and
2118769 Ontario Inc. in connection with the preparation, negotiation, execution
and administration of the forbearance contemplated herein, including, without
limitation, the reasonable fees and disbursements of Goodmans LLP and the
costs
associated with the Letter of Credit, shall be paid or reimbursed by the
Guarantors, promptly upon receipt of invoices therefor.
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6.10 Waiver
of Jury Trial
Each
Guarantor hereby waives trial by jury of all issues arising in any action,
suit
or proceeding to which the Guarantors and 2118769 Ontario Inc. may be parties
in
connection with this Agreement.
6.11 Further
Assurances
From
and after the date hereof, each of the Guarantors covenants and agrees to
execute and deliver all such agreements, instruments and documents and to
take
all such further actions as 2118769 Ontario Inc. may reasonably deem necessary
from time to time to carry out the intent and purposes of this Agreement,
including, without limitation, the Additional Security.
6.12 Full
Force and Effect.
This
Agreement shall be limited precisely as written and shall not be deemed:
(a) to
be a consent granted pursuant to, or a waiver or modification of, any term
or
condition of the Guarantees or Security or any of the instruments or agreements
referred to therein or a waiver of enforcement in respect of the Guarantees
and
Security: or (b) to prejudice any other right or rights which 2118769 Ontario
Inc. may now have or have in the future under or in connection with the
Guarantees and Security or any of the instruments or agreements referred
to
therein. Except to the extent hereby amended or modified, the
Guarantees and Security shall continue in full force and effect in accordance
with the provisions thereof, and are hereby ratified and confirmed.
6.13 Consultation
with Advisors.
Each
of the Guarantors acknowledges that it has consulted with counsel and with
such
other experts and advisors as it has deemed necessary in connection with
the
negotiation, execution and delivery of this Agreement. This Agreement
shall be deemed to have been jointly drafted and shall be construed without
regard to any presumption or rule requiring that it be construed against
the
party causing this Agreement or any part hereof or thereof to be
drafted.
6.14 Invalidity;
Severability.
Whenever
possible, each provision of this Agreement shall be interpreted in such manner
as to be effective and valid under all applicable laws and
regulations. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating
the
remaining provisions hereof, and any such prohibition or unenforceability
in any
jurisdiction shall not invalidate or render unenforceable such provision
in any
other jurisdiction.
6.15 Headings.
The
headings of this Agreement are for the purposes of reference only and shall
not
affect the construction of, or be taken into consideration in interpreting,
this
Agreement.
6.16 Survival.
Section
4.2 and Sections 5.1 to 5.4 of this Agreement survive the Forbearance End
Date
and the repayment of the Americana Secured Obligations. All other
representations, warranties, covenants, agreements, undertakings, waivers
and
releases by each of the Guarantors contained herein shall survive until all
Americana Secured Obligations shall have been indefeasibly paid in full in
cash
(whether or not the Forbearance End Date shall have occurred).
6.17 Further
Amendments and Consents.
Should
there be a need for further amendments, modifications, waivers or consents
with
respect to the matters addressed herein or any other matters, requests for
such
amendments, modifications, waivers or consents shall be evaluated by 2118769
Ontario Inc. when formally requested, in writing, by the Guarantors, and,
except
as otherwise expressly set forth herein to the contrary, 2118769 Ontario
Inc.
may deny any such requests in their sole discretion. No such
amendment, modification waiver or consent shall be effective unless made
in
accordance with the terms of the Guarantees and Security.
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IN
WITNESS WHEREOF the Guarantors and 2118769 Ontario Inc. have caused
this Agreement to be duly executed on the date first above written.
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2118769
Ontario Inc.
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By:
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Name:
Title:
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GUARANTORS:
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By:
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Name:
Title:
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INTEGRATED
BRANDS INC.
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By:
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Name:
Title:
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CBA
FOODS LLC
By:
INTEGRATED BRANDS INC.,
its
sole member
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By:
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Name:
Title:
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CB
AMERICANA LLC
By:
INTEGRATED BRANDS INC.,
its
sole member
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By:
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Name:
Title:
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ESKIMO
PIE FROZEN DISTRIBUTION, INC.
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By:
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Name:
Title:
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ESKIMO
PIE CORPORATION
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By:
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Name:
Title:
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COOLBRANDS
DAIRY, INC.
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By:
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Name:
Title:
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SUGAR
CREEK FOODS, INC.
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By:
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Name:
Title:
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INTEGRATED
BRANDS FRANCHISE CORP.
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By:
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Name:
Title:
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COOLBRANDS
SMOOTHIES FRANCHISE LLC
By:INTEGRATED
BRANDS FRANCHISE CORP., its sole member
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By:
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Name:
Title:
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