coolbrands20fa.htm

Exhibit 4.11

Asset Purchase Agreement dated November 16, 2006 between Eskimo Pie Frozen Distribution, Inc. and Southwest Traders, Inc. - Florida

This ASSET PURCHASE AGREEMENT is dated as of November 16, 2006, (the “Agreement”) by and among Eskimo Pie Frozen Distribution, Inc., a Delaware corporation (“Seller”) and Southwest Traders Inc., a California corporation (the “Buyer”) and Integrated Brands, Inc., a New Jersey corporation which is a party to this Agreement solely for purposes of Section 6.6 and Section 6.11 of this Agreement.

W I T N E S E T H:

A. Seller operates a frozen food distribution business in the state of Florida (“East Coast Operations”).

B. Buyer desires to purchase from Seller certain assets related to Seller’s East Coast Operations as further set forth in this Agreement and Seller desires to sell such assets to Buyer, upon the terms and subject to the conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the foregoing and the respective covenants and agreements hereinafter contained, the parties hereto hereby agree as follows:

SECTION 1. DEFINITIONS.

As used in this Agreement (including the recitals and schedules hereto), the following terms shall have the following meanings (such meanings to be applicable equally to both singular and plural forms of the terms defined):

“Accounts Receivable Amount” shall have the meaning set forth in Section 2.4(a);

“Accounts Receivable Deadline” shall have the meaning set forth in Section 2.4(b);

“Accounts Receivable” shall have the meaning set forth in Section 2.1(e) hereof;

“Acquired Inventory” shall have the meaning set forth in Section 2.1(d) hereof;

“Acquired Inventory Price” shall have the meaning set forth in Section 2.2(a) hereof;

“Affiliate” shall mean, as to any Person, any other Person which directly or indirectly controls, or is under common control with, or is controlled by, such Person. As used in this definition, “control” (including, with its correlative meanings, “controlled by” and “under common control with”) shall mean possession, directly or indirectly, of the power to direct or cause the direction of management or policies (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise) of such Person;

“Assumed Trade Payables” shall have the meaning set forth in Section 2.1(f) hereof;

“Bill of Sale and Assignment of Owned Vehicles” shall have the meaning set forth in Section 3.3(c) hereof

“Bill of Sale and Assignment of Purchased Assets” shall have the meaning set forth in Section 3.3(b) hereof;

“Business Day” shall mean days other than Saturdays, Sundays and other legal holidays or days on which the banks in New York, New York are closed;

“Buyer” shall have the meaning set forth in the Recitals hereto;

“Buyer Indemnitees” shall have the meaning set forth in Section 7.2 hereof;

“Closing” shall have the meaning set forth in Section 3.1 hereof;

“Closing Date” shall have the meaning set forth in Section 3.1 hereof;

“East Coast Operations” shall have the meaning set forth in the Recitals hereto.

“Escrow Agent” shall have the meaning set forth in Section 2.3(c)(i) hereof;

“Escrow Agreement” shall have the meaning set forth in Section 2.3(c)(i) hereof;

“Governmental Authority” shall mean any foreign or United States federal, state or local government or political agency, division, subdivision thereof or any regulatory body, agency or authority or any authority, agency or commission entitled to exercise any administrative, executive, judicial, legislative, police, regulatory or taxing authority or power, any court or tribunal (or any department, bureau or division thereof) or any arbitrator or arbitral body;

“Holdback” shall have the meaning set forth in Section 2.4(a) hereof;

“Holdback Delivery Date” shall have the meaning set forth in Section 2.4(c) hereof;

“Identifiers” shall have the meaning set forth in Section 6.8 hereof;

“Indemnifying Person” shall have the meaning set forth in Section 7.4 hereof;

“Indemnitees” shall have the meaning set forth in Section 7.4 hereof;

“Lien” shall mean any mortgage, pledge, security interest, encumbrance, lien (statutory or other), right of way, easement, encroachment, right of first offer or first refusal, community or other marital property interest, equitable interest, conditional sale agreement or any other restriction with respect to use, ownership or transfer;

“Losses” shall have the meaning set forth in Section 7.2 hereof;

“Material Adverse Effect” shall mean an effect on or change in the business, operations, assets, properties or financial condition of the entity which when considered either individually or in the aggregate together with all other adverse changes or effects, is or is reasonably likely to be, materially adverse to the business, operations, assets, properties or financial condition of the entity except for any such effects resulting from (i) this Agreement, the transactions contemplated hereby or the announcement thereof, (ii) changes in general economic or political conditions or the industry of the entity in general, (iii) changes in laws generally applicable to the entity or the industry in which it operates or (iv) actions attributable to the entity or its Affiliates;

“Maximum Amount” shall have the meaning set forth in Section 7.3(a)(ii) hereof;

“Net Difference” shall have the meaning set forth in Section 2.2(b) hereof;

“Ordinary Course of Business” means an action taken in the ordinary course of business, consistent with past practice;

“Other Fees” shall have the meaning set forth in Section 2.3(a) hereof;

“Owned Vehicles” shall have the meaning set forth in Section 2.1(i) hereof;

“Person” shall mean and include any individual, corporation, limited liability company, partnership, joint venture, association, joint-stock company, trust, any other unincorporated organization or Governmental Authority;

“Prepaid Rent” shall have the meaning set forth in Section 2.2(c) hereof;

“Proceeding” shall mean any claim, action, arbitration, audit, hearing, investigation, litigation or suit (whether in contract or tort or civil, criminal, administrative, judicial or investigative, whether formal or informal, whether public or private) commenced, brought, conducted or heard by or before, or otherwise involving, any Governmental Authority or arbitrator;

“Purchase Price” shall have the meaning set forth in Section 2.2 hereof;

“Purchased Assets” shall have the meaning set forth in Section 2.1 hereof;

“Seller” shall have the meaning set forth in the Recitals hereto;

“Seller Indemnitees” shall have the meaning set forth in Section 7.5 hereof;

“Threshold Amount” shall have the meaning set forth in Section 7.3(a)(i) hereof;

“Transaction Documents” shall mean this Agreement, the schedules hereto, the Bill of Sale and Assignment of Purchased Assets, Bill of Sale and Assignment of Owned Vehicles, the Escrow Agreement and all other documents to be entered into or delivered by any party in connection with the transactions contemplated to be consummated pursuant to any of the foregoing; and

SECTION 2. TRANSFER OF PURCHASED ASSETS; PURCHASE PRICE; PAYMENT; ESCROW.

2.1 Transfer of Assets. Subject to the other terms and conditions herein set forth, the Seller shall sell, convey, transfer, assign and deliver to the Buyer, free and clear of any Lien, and the Buyer shall purchase from the Seller, on the Closing Date, all of the assets, properties, claims and rights specifically identified in the referenced schedules of this Agreement (hereinafter collectively referred to as the “Purchased Assets”). The Purchased Assets shall include the following:

(a) the real property leases set forth on Schedule 2.1(a), subject to the respective leases;

(b) the customer lists and information and the supplier lists and information previously disclosed to Buyer;

(d) the inventory of the East Coast Operations on the Closing Date (“Acquired Inventory”), but for purposes of calculating the Purchase Price to be paid on the Closing Date, the Acquired Inventory will be the inventory calculated as of 12:01 a.m. E.S.T on November 16, 2006 and a schedule reflecting the calculation as of 12:01 a.m. E.S.T on November 16, 2006 will be attached to this Agreement on the Closing Date as Schedule 2.1(d);

(e) the accounts receivable which all are less than 60 days past due on the Closing Date (“Accounts Receivable”), but for purposes of calculating the Purchase Price to be paid on the Closing Date, the Accounts Receivable will be the accounts receivable which are less than 60 days past due calculated as of 12:01 a.m. E.S.T on November 16, 2006 and a schedule reflecting the calculation as of 12:01 a.m. E.S.T on November 16, 2006 will be attached to this Agreement on the Closing Date as Schedule 2.1(e);

(f) the trade payables of the East Coast Operations on the Closing Date (“AssumedTrade Payables”) which includes the rental fees owed to Unilever, PLC for freezer assets accrued through the Closing Date, but for purposes of calculating the Purchase Price to be paid on the Closing Date, the Assumed Trade Payables will be the trade payables of the East Coast Operations calculated as of 12:01 a.m. E.S.T. on November 16, 2006 and a schedule reflecting the calculation as of 12:01 a.m. E.S.T on November 16, 2006 will be attached to this Agreement on the Closing Date as Schedule 2.1(f);

(g) INTENTIONALLY OMITTED;

(h) all leased trucks that are leased from either GE Capital or Ryder which are scheduled to any lease assignment documents to be prepared and executed either before or after the Closing and that are set forth on Schedule 2.1(h), subject to the respective leases;

(i) the owned vehicles set forth on Schedule 2.1(i) and all titles to such Owned Vehicles in the possession of Seller on the Closing Date (“Owned Vehicles”); and

(j) the goodwill associated with the items listed in subparagraphs (a) through (i) of this Section 2.1.

2.2 Purchase Price. The purchase price for the Purchased Assets shall be determined as set forth below (the “Purchase Price”). The Purchase Price for the Purchased Assets shall be the sum of the Acquired Inventory Price, the Net Difference and the Prepaid Rent, as defined as follows:

(a) The “Acquired Inventory Price” for all of the Acquired Inventory shall be the value of the Acquired Inventory at the lower of cost or market value as of 12:01 a.m. E.S.T. on November 16, 2006.

(b) The “Net Difference” shall be the difference between the Accounts Receivable and the Assumed Trade Payables as of 12:01 a.m. E.S.T. on November 16, 2006.

(c) “Prepaid Rent” shall include all prepayments of rent for the month of November made by the Seller for the real property leases, the equipment leases and the vehicle leases in the amount that is set forth on Schedule 2.2(c) which shall be delivered by Seller on the Closing Date.

2.3 Payment of Purchase Price. At the Closing, Buyer shall pay the Purchase Price as follows:

(a) To Others: The following amounts shall be paid by Buyer at Closing in immediately available funds to the Persons set forth below into the account designated for each such Person as set forth on Schedule 2.3(a) (“Other Fees” shall collectively refer to the fees payable to the Persons set forth below in Sections 2.3(a)(i) and (ii)):

(i) the amount that is set forth on Schedule 2.3(a)(i) which shall be delivered by Duff & Phelps, LLC on the Closing Date, shall be paid to Duff & Phelps, LLC; and

(ii) the amount that is set forth on Schedule 2.3(a)(i) which shall be delivered by Hanson, Bridgett, Marcus, Vlahos & Rudy LLP on the Closing Date, shall be paid to Hanson, Bridgett, Marcus, Vlahos & Rudy LLP.

(b) To Seller:

(i) If the Net Difference is Six Hundred Thousand Dollars ($600,000) or more, the Buyer shall pay to the Seller at the Closing in immediately available funds into the account set forth on Schedule 2.3(b) the Acquired Inventory Price, plus Prepaid Rent, plus fifty percent (50%) of the Net Difference, less the Other Fees.

(ii) If the Net Difference is less than Six Hundred Thousand Dollars ($600,000), the Buyer shall pay to the Seller at Closing in immediately available funds into the account set forth on Schedule 2.3(b) an amount equal to the Purchase Price less the Other Fees and less the Three Hundred Thousand Dollars ($300,000) paid to the Escrow Agent pursuant to Section 2.3(c)(ii).

(i) If the Net Difference is Six Hundred Thousand Dollars ($600,000) or more, then at the Closing the Buyer shall pay in immediately available funds into the account set forth on Schedule 2.3(c)(1) to the escrow agent (“Escrow Agent”) named in the Escrow Agreement (the “Escrow Agreement”) attached as Schedule 2.3(c)(2), for application in accordance with the terms and conditions set forth in Section 2.4, fifty percent (50%) of the Net Difference.

(ii) If the Net Difference is less than Six Hundred Thousand Dollars ($600,000), then at the Closing the Buyer shall pay in immediately available funds to the Escrow Agent into the account set forth on Schedule 2.3(c)(1) Three Hundred Thousand Dollars ($300,000) for application in accordance with the terms and conditions set forth in Section 2.4.

2.4 Terms of Escrow; Buyer’s Obligation to Collect Accounts Receivable.

(a) Designation of Escrow Funds. Two Hundred Thousand Dollars ($200,000) of the amount paid to the Escrow Agent pursuant to Section 2.3(c) shall be designated as the “Holdback”. The balance of any amount paid to the Escrow Agent pursuant to Section 2.3(c) shall be designated as the “Accounts Receivable Amount”.

(b) Accounts Receivable Amount; Buyer’s Obligation to Collect Accounts Receivable. From the Closing Date until one hundred and twenty (120) days after the Closing Date (“Accounts Receivable Deadline”), Buyer shall act in good faith and use its best efforts to collect the Accounts Receivable and also Seller’s accounts receivable that are more than 60 days past due on the Closing Date, in accordance with industry standards for collection of accounts receivable. Seller grants to Buyer a non-exclusive, nontransferable license to use Seller's name for billing and collection purposes during such one hundred and twenty (120) day period. Buyer shall indemnify and hold Seller Indemnitees harmless from any taxes or other Losses incurred by Seller Indemnitees relating to Buyer's use of Seller's name for such billing and collection purposes. Buyer will promptly pay to Seller any amounts Buyer collects on Seller’s accounts receivable that are more than 60 days past due on the Closing Date. On the Accounts Receivable Deadline, Buyer agrees to immediately turn over the collection of any uncollected Accounts Receivable and also Seller’s uncollected accounts receivable that are more than 60 days past due on the Closing Date, to a collections agency of Seller’s choice who shall be instructed to pay any amounts collected on such Accounts Receivable to Seller. On the Accounts Receivable Deadline, the Accounts Receivable Amount, plus interest earned on such amount, shall be paid out of escrow as follows:

(i) If one hundred percent (100%) of the Accounts Receivable has been collected on the Accounts Receivable Deadline or if Buyer has not acted in good faith and used its best efforts from the Closing Date through the Accounts Receivable Deadline in accordance with industry standards for collection of accounts receivable to collect the Accounts Receivable and also Seller’s accounts receivable that are more than 60 days past due on the Closing Date, then Seller shall be paid all of the Accounts Receivable Amount, plus interest earned on such amount.

(ii) If less than one hundred percent (100%) of the Accounts Receivable have been collected on the Accounts Receivable Deadline and provided that Buyer has acted in good faith and used its best efforts from the Closing Date through the Accounts Receivable Deadline in accordance with industry standards for collection of accounts receivable to collect the Accounts Receivable and also Seller’s accounts receivable that are more than 60 days past due on the Closing Date, then:

(A) If the amount of uncollected Accounts Receivable is more than the Accounts Receivable Amount, then Buyer shall be paid all of the Accounts Receivable Amount, plus interest earned on such amount.

(B) If the amount of uncollected Accounts Receivable is less than the Accounts Receivable Amount, then the Buyer shall be paid the amount of uncollected Accounts

Receivable out of the Accounts Receivable Amount, plus interest earned on such amount, and the Seller shall be paid the difference between the Accounts Receivable Amount and the amount of uncollected Accounts Receivable, plus interest earned on such amount.

(c) Holdback. The Holdback, plus interest earned on such amount, will be delivered to Seller on the date which is twelve (12) months after the Closing Date (the “HoldbackDelivery Date”). If Buyer has made a good faith claim or claims for indemnification under Section 7 hereof on or prior to the Holdback Delivery Date, then notwithstanding the provisions of this Subsection 2.4(c), the Escrow Agent shall continue to hold that portion of the Holdback otherwise required to be delivered on the Holdback Delivery Date or equal to the amount of such claim or claims (plus interest earned on such amount) until the validity of Buyer’s indemnification claim or claims has been determined pursuant to the provisions of the Escrow Agreement. Buyer shall become the owner of that portion of the Holdback equal to the amount of the claim or claims determined to be valid (plus interest earned on such amount), and the balance (plus interest on such amount) shall be delivered to Seller. Any indemnification to which Buyer shall be entitled under Section 7 hereof shall be limited to the amount of the Holdback.

SECTION 3. CLOSING

3.1 Date of Closing. The purchase and sale contemplated by this Agreement (the “Closing”) shall take place on November 17, 2006 (the “Closing Date”); provided, however, the Closing Date may be postponed to a date mutually agreed by the parties. The Closing may be completed in separate locations with the use of fax or email and signatures in counterparts as permitted under Section 8.12 below.

3.2 Conditions to Obligation of Buyer and of Seller to Closing.

(a) Seller. The only conditions to the obligation of Seller to the Closing, which can be waived by Seller in its sole discretion, shall be (i) the delivery by Buyer of the Buyer closing deliveries set forth below in Section 3.3 on the Closing Date, and (ii) the closing on the Closing Date of Buyer's acquisition of certain assets in Seller's frozen food distribution business on the West Coast pursuant to an Asset Purchase Agreement for certain assets of Seller’s West Coast operations of even date with this Agreement.

(b) Buyer. The only conditions to the obligation of Buyer to the Closing, which can be waived by Buyer in its sole discretion, shall be (i) the delivery by Seller of the Seller closing deliveries set forth below in Section 3.4 on the Closing Date, (ii) Seller’s compliance with the covenant set forth in Section 6.12, and (iii) the closing on the Closing Date of Buyer's acquisition of certain assets in Seller's frozen food distribution business on the West Coast pursuant to an Asset Purchase Agreement for certain assets of Seller’s West Coast operations of even date with this Agreement.

3.3 Buyer Deliveries at Closing. At the Closing, the Buyer shall deliver (and shall have executed any deliverable as necessary) to Seller each of the following:

(a) the Purchase Price payable in accordance with Section 2.3;

(b) the Bill of Sale and Assignment of Purchased Assets (other than the Owned Vehicles) in the form attached hereto as Schedule 3.3(b) (“Bill of Sale and Assignment of Purchased Assets”);

(c) the Bill of Sale and Assignment of Owned Vehicles in the form attached hereto as Schedule 3.3(c) (“Bill of Sale and Assignment of Owned Vehicles”); and

(d) the Escrow Agreement.

3.4 Seller Deliveries at Closing: At the Closing, the Seller shall deliver (and shall execute any deliverable as necessary) to Buyer each of the following:

(a) the Bill of Sale and Assignment of Purchased Assets;

(b) the Bill of Sale and Assignment of Owned Vehicles;

(c) all endorsements, assignments and other instruments of conveyance that shall be necessary and sufficient to transfer title to the remaining Purchased Assets to Buyer;

(d) physical possession and control of the Purchased Assets;

(e) the Escrow Agreement; and

(f) UCC-3 Financing Statements, discharges and releases, releasing all Liens on the Purchased Assets.

SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE SELLER.

Seller represents and warrants to Buyer, as of the date of this Agreement and as of the Closing Date, as follows:

4.1 Disclosure Schedule. Seller has delivered to Buyer individually numbered schedules (collectively, the “Disclosure Schedule”) corresponding to the subsections of this Agreement. Each individual schedule in the Disclosure Schedule contains exceptions to the specifically identified section and subsection contained in this Section and sets forth each exception in reasonable detail, with attached documentation as necessary to reasonably explain the exception. Any exception to the representations and warranties contained in a section or subsection of this Section is described in a separate schedule of the Disclosure Schedule that specifically identifies the applicable section or subsection of this Section and shall be deemed to modify the representation and warranty contained in this Agreement. To the knowledge of the Seller, the Disclosure Schedule is complete and accurate in all respects. To the knowledge of the Seller, Seller has provided Buyer with true and complete copies of all documents referenced in the Disclosure Schedule.

4.2 Authorization; Enforceability. The execution, delivery and performance by Seller of this Agreement and the Transaction Documents and the consummation of the transactions contemplated hereby and thereby are within the corporate power and authority of Seller and have been duly authorized by all necessary corporate action on the part of Seller. This Agreement and the Transaction Documents have been duly executed and delivered by and constitute the legal, valid and binding obligation of the Seller, enforceable against it in accordance with its respective terms, subject to the effect of any applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting creditors’ rights generally and subject, as to enforceability, to the effect of general principles of equity (regardless of whether such enforceability is considered in a Proceeding in equity or at law).

4.3 No Conflict or Violation. The execution, delivery and performance by the Seller of the Transaction Documents does not and will not violate or conflict with any provision of the Articles of Incorporation or By-Laws of the Seller.

4.4 Acquired Inventory. The Seller has good and marketable title to the Acquired Inventory. The Acquired Inventory shall (a) not be damaged, defective or obsolete, (b) be readily usable or saleable, (c) meet all applicable requirements of any applicable Governmental Authority, and (d) meet all other applicable quality standards for manufacturing or resale.

4.5 Brokers. Except for the fees payable to Duff & Phelps, LLC, the Seller has not incurred or become liable for any broker’s commission or finder’s fee relating to or in connection with the transactions contemplated by this Agreement.

4.6 Accuracy of Statements. No representation or warranty made by any Seller in this Agreement, or any written statement, certificate, or schedule furnished, or to be furnished, to Buyer pursuant to this Agreement, or in connection with the transactions contemplated by this Agreement, contains or will contain any untrue statement of a material fact or omits or will omit to state a material fact necessary to make the statements not misleading. The representations and warranties of Seller shall be deemed to be made as of the Closing Date.

4.7 Litigation. To Seller’s knowledge, there is no claim, legal action, suit, arbitration, investigation or hearing of which the Seller has received notice, notice of claim or other legal, administrative or governmental proceedings pending against Seller or any of the Purchased Assets (or in which the Seller is a plaintiff or otherwise a party thereto) relating to the Purchased Assets.

4.8 Environmental Compliance Matters. To Seller’s knowledge, Seller has not received any notice of any claim, proceeding or investigation under federal, state or local law relating to air, soil, subsurface and water pollution, soil monitoring and the storage, treatment, disposal, removal, remediation, release, discharge or emission or any Hazardous Material (as defined below) with respect to the real property subject to the leases identified in Schedule 2.1(a). For the

purposes of this Agreement, Hazardous Material shall mean any flammables, asbestos, explosives, radioactive materials, hazardous wastes, toxic substances or related materials, including, without limitation, any substances defined as or included in the definition of “hazardous substances,” “hazardous wastes,” “hazardous materials,” or “toxic substances” under any applicable federal, state, or local laws, rules, regulations or orders or which federal, state or local laws, rules, regulations or orders designate as potentially dangerous to public health and/or safety when present in the environment.

4.9 Leases. To Seller’s knowledge, except for the notice of default for Ft. Myers which has been delivered to Buyer, Seller has not received any notice of a default by any party to the real property leases identified on Schedule 2.1(a) or the vehicle leases identified in Schedule 2.1 (h).

4.10 Knowledge; Disclosure.

(a) Whenever a representation or warranty made by the Seller herein refers to the knowledge of the Seller, such knowledge shall be deemed to consist of the actual or constructive knowledge, possessed or which would be possessed, after reasonable inquiry of appropriate management personnel of Seller, and review of the books and records of Seller on the Closing Date of either David Stein or Frank Orfanello.

(b) Notwithstanding anything to the contrary contained in this Agreement or in the Disclosure Schedule, any information disclosed in one Section of the Disclosure Schedule shall be deemed to be disclosed in another Section of the Disclosure Schedule to which such information may reasonably apply so long as such disclosure with respect to such information is in sufficient detail to enable a reasonable reader to identify its applicability to the relevant provision of the Agreement. Certain information set forth in the Disclosure Schedule is included solely for informational purposes and may not be required to be disclosed pursuant to this Agreement. The disclosure of any information shall not be deemed to constitute an acknowledgment that such information is required to be disclosed in connection with the representations and warranties made by the Seller in this Agreement or that such information is material, nor shall such information be deemed to establish a standard of materiality, nor shall it be deemed an admission of any liability of, or concession as to any defense available to, the Seller.

SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE BUYER.

The Buyer hereby represents and warrants to the Seller, as of the date of this Agreement and as of the Closing Date, as follows:

5.1 Authorization; Enforceability. The execution, delivery and performance by Buyer of this Agreement and the Transaction Documents and the consummation of the transactions contemplated hereby and thereby are within the corporate power and authority of Buyer and have been duly authorized by all necessary action on the part of Buyer. This Agreement and the Transaction Documents have been duly executed and delivered by and constitute the legal, valid and binding obligation of Buyer, enforceable against it in accordance with its respective terms, subject to the effect of any applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting creditors’ rights generally and subject, as to enforceability, to the effect of general principles of equity (regardless of whether such enforceability is considered in a Proceeding in equity or at law).

5.2 No Conflict or Violation. The execution, delivery and performance by the Buyer of the Transaction Documents does not and will not violate or conflict with any provision of the Articles of Incorporation or By-laws of the Buyer and does not and will not violate any provision of law, or any order, judgment or decree of any court or other Governmental Authority or regulatory authority.

5.3 Consents and Approval. No consent, waiver, authorization or approval of any Governmental Authority or regulatory authority, domestic or foreign, or of any other Person, is required by the Buyer in connection with the execution and delivery of the Transaction Documents by the Buyer or the performance by the Buyer of its obligations thereunder.

5.4 No Litigation. There are no Proceedings, pending or, to the knowledge of the Buyer, threatened, before any federal, state or local court or Governmental Authority, or before any arbitrator of any nature, brought by or against the Buyer or any of its officers, directors, employees, agents or Affiliates as to which there is a reasonable likelihood of an adverse determination and which, if adversely determined (a) would delay, hinder or prevent the consummation of the transactions contemplated by this Agreement by Buyer, or (b) would have a Material Adverse Effect on the ability of Buyer to perform its obligations under this Agreement.

5.5 Brokers. The Buyer has not incurred or become liable for any broker’s commission or finder’s fee relating to or in connection with this Agreement or the transactions contemplated hereby.

5.6 Access. The Buyer acknowledges that Seller has provided Buyer with statements of Seller’s Acquired Inventory, Accounts Receivable and Assumed Trade Payables calculated as of November 9, 2006. The Buyer acknowledges that up through the date of this Agreement, Seller has provided Buyer with reasonable access to the properties, books, records and employees of Seller’s East Coast Operations. The Buyer represents and warrants that it has reviewed all documents made available to it (either directly by Seller and its representatives or by accessing such documents on a public website) among Seller, Dreyer’s Grand Ice Cream, Inc. and Nestle Ice Cream Company, LLC.

SECTION 6. ADDITIONAL COVENANTS.

The Seller and Buyer covenant and agree as follows:

6.1 Collection of Receivables. Pursuant to Section 2.4(b), Buyer shall have the right, authority and obligation after the Closing Date and until the Accounts Receivable Deadline to collect all Accounts Receivables and also Seller’s accounts receivable that are more than 60 days past due on the Closing Date. Buyer will promptly pay to Seller any amounts Buyer collects on Seller’s accounts receivable that are more than 60 days past due on the Closing Date. On the Accounts Receivable Deadline, Buyer agrees to immediately turn over the collection of any uncollected Accounts Receivable and also Seller’s uncollected accounts receivable that are more than 60 days past due on the Closing Date, to a collections agency of Seller’s choice who shall be instructed to pay any amounts collected on such Accounts Receivable to Seller. Seller acknowledges and agrees that if Seller is paid amounts for Accounts Receivable after the Closing Date and before the Accounts Receivable Deadline, Seller shall promptly pay such funds to Buyer.

6.2 Payment of Assumed Trade Payables. Buyer will pay all Assumed Trade Payables within sixty (60) days after the Closing Date; provided, however, that payment of a particular Assumed Trade Payable may be delayed for a commercially reasonable period in the event of a bona fide dispute with the vendor of a particular Assumed Trade Payable if the Buyer acts in good faith to resolve such bona fide dispute.

6.3 Confidentiality.

(a) The Buyer acknowledges that the information provided to it in connection with the transactions contemplated hereby remains subject to the terms of a confidentiality agreement dated August 10, 2006 through the Closing Date.

(b) For a period of two (2) years after the Closing Date, the Buyer will keep confidential and will not use or disclose to any Person any and all confidential information provided to it by the Seller or its Affiliates or their representatives concerning the Seller or its Affiliates or their respective businesses other than information that is included in the Purchased Assets. From and after the Closing, the Seller will keep confidential and will not use or disclose to any Person any and all confidential information that is expressly included in the Purchased Assets; provided that the foregoing shall not include financial information relating to historical operations of the Seller’s business as necessary in connection with the Seller’s and its Affiliates retained operations.

6.4 Press Release. Prior to and subsequent to the Closing, the parties hereto will, and will cause each of their Affiliates and representatives to, maintain the confidentiality of this Agreement and will not, and will cause each of their Affiliates not to, issue or cause the publication of any press release or other public announcement with respect to this Agreement or the transactions contemplated hereby without the prior written consent of the other parties hereto which consent shall not be unreasonably withheld; provided, however, that a party may, without the prior consent of the other parties hereto, issue or cause publication of any such press release or public announcement to the extent that such party reasonably determines, after consultation with outside legal counsel, such action to be required by law or by the rules of any applicable self-regulatory organization, in which event such party will use its commercially reasonable efforts to allow the other parties hereto reasonable time to comment on such press release or public announcement in advance of its issuance.

6.5 East Coast Operations Employees. Seller will act in good faith in providing Buyer access to employees of Seller’s East Coast Operations prior to the Closing Date and Seller will assist in the transitioning of employees of Seller’s East Coast Operations. Notwithstanding the foregoing, Buyer and each employee of Seller’s East Coast Operations will need to mutually agree that such employee will become an employee of Buyer, and accordingly, Seller makes no covenant concerning Buyer’s ability to hire any employee of the East Coast Operations.

6.6 Distribution Agreement. Within thirty (30) days after the Closing Date, Integrated Brands, Inc. and Buyer will commence in good faith negotiations concerning mutually agreeable terms of a distribution agreement in accordance with normal and customary business practices pursuant to which Integrated Brands, Inc. will give Buyer the right to distribute certain products of Integrated Brands, Inc. in the non-grocery store channel in certain territories.

6.7 Ryder Trucks. For a period of up to 7 days following the Closing Date (the "Term"), Seller shall allow Buyer to utilize the trucks and tractor currently leased by Seller from Ryder and used in the East Coast Operations. Seller shall continue its current insurance covering the trucks and tractor during the Term. Buyer shall reimburse Seller, on a per diem basis, (i) the actual cost incurred by Seller under the respective Ryder leases and (ii) the actual cost of maintaining insurance of the trucks and tractor. Payment shall be made to Seller within 10 days following receipt of a detailed invoice.

6.8 Removal of Identifiers. Within thirty (30) days after the Closing Date, Buyer will remove all of the trademarks, logos and other intellectual property of Seller or any third parties (“Identifiers”) from all vehicles, equipment, signage and other similar usage of such Identifiers on the Purchased Assets. For thirty (30) days after the Closing Date, Seller hereby grants to Buyer a non-exclusive, non-transferable license to use the Identifiers of Seller on vehicles, signage and other similar usage of such Identifiers of Seller on the Purchased Assets if the Identifier of Seller was used on such item on the Closing Date.

6.9 Department of Transportation Numbers. Promptly after the Closing Date, Buyer will apply Buyer’s Department of Transportation Numbers to all vehicles acquired as Purchased Assets.

6.10 Phone Service. Buyer has requested that Seller continue phone service for the month of November at Seller’s facilities listed on Schedule 6.10 which schedule shall be delivered by Buyer on the Closing Date. Buyer shall pay to Seller the costs of such phone services from the Closing Date through November 30, 2006 within five (5) days of receipt of an invoice from Seller for such costs.

6.11 Post-Closing Adjustments. In order to facilitate the Closing occurring on the Closing Date, the parties acknowledge that the contents of each of the schedules for Acquired Inventory, Accounts Receivable and Assumed Trade Payables reflects the contents of the items in that particular schedule as of a few days prior to the Closing Date. No later than thirty (30) days after the Closing Date, the Buyer and the Seller agree to reconcile the actual contents of each of the schedules for Acquired Inventory, Accounts Receivable and Assumed Trade Payables on the Closing Date against the respective schedule to this Agreement and if this reconciliation indicates that one party owes money to the other party, each party covenants and agrees to promptly pay any such money it owes to the other party. Integrated Brands, Inc. agrees to guarantee payment of any amounts that the parties agree that Seller owes to Buyer as a result of the reconciliation contemplated by this Section 6.11.

6.12 Conduct of Business. During the period from the date hereof until the Closing Date, the Seller will conduct the business of the East Coast Operations consistent with how the business of the East Coast Operations has been run during the week preceding the date hereof.

6.13 Efforts to Perform. Seller and Buyer each shall use its commercially reasonable efforts to satisfy the covenants set forth in Section 6 of this Agreement in a timely and expeditious manner.

6.14 INTENTIONALLY OMITTED.

6.15 Transition Services. Seller will provide the services set forth on Schedule 6.15 as requested by Buyer for a period not to exceed thirty (30) days after the Closing Date.

SECTION 7. SURVIVAL AND INDEMNIFICATION.

7.1 Survival of Representations and Warranties. All representations and warranties of the Seller and the Buyer in this Agreement or in any instrument delivered pursuant to this Agreement shall be effective as of the Closing Date, and shall survive and continue until the date that is twelve (12) months following the Closing Date; provided, that if any claims for indemnification have been asserted with respect to any such representations and warranties prior to the end of such period, the representations and warranties on which any such claims are based shall continue in effect until final resolution of any claims. All covenants and agreements to be performed pursuant to this Agreement shall continue indefinitely, subject to applicable statutes of limitation.

7.2 Indemnification by the Seller. Notwithstanding the Closing or the delivery of the Purchased Assets and regardless of any investigation at any time made by or on behalf of the Buyer, the Seller shall indemnify and fully defend, save and hold the Buyer, any Affiliate of the Buyer and its shareholders, directors, officers, managers, agents, employees, successors and assigns (the “Buyer Indemnitees”), harmless if any Buyer Indemnitee shall at any time or from time to time suffer any demand, claim, damage, liability, loss, cost, expense (including all reasonable attorneys’ fees and expenses of investigation), deficiency, interest, penalty, impositions, assessments or fines (collectively, “Losses”) to the extent arising out of or resulting from, any one or more of the following:

(a) any untruth or inaccuracy in any representations of the Seller contained in this Agreement or the Transaction Documents;

(b) any failure of the Seller to duly perform or observe any term, provision, covenant, agreement contained herein or the Transaction Documents on the part of the Seller to be performed or observed; and

(c) any claim or cause of action by any party against any Buyer Indemnitiees to the extent arising out of or related to the operation of the Purchased Assets by the Seller on or before the Closing Date, except for claims or causes of action related to liabilities specifically assumed by Buyer herein.

7.3 Limitations on Indemnification by Seller.

(a) The indemnification obligations of the Seller pursuant to Section 7.2 shall be limited as follows:

(i) The Seller shall have no obligation to provide any indemnification until the aggregate dollar amount of all Losses that would otherwise be indemnifiable pursuant to Section 7.2 exceeds Twenty-five Thousand Dollars ($25,000) (the “Threshold Amount”), and then only to the extent such aggregate amount exceeds such Threshold Amount;

(ii) The Seller shall not be obligated to indemnify any Buyer Indemnitees pursuant to Section 7.2 for any amount of indemnifiable Losses in excess of the Holdback (the “Maximum Amount”); and

(iii) The Seller shall not obligated to indemnify any Buyer Indemnitees for any Loss relating to a Buyer Indemnitees use of intellectual property of any third party.

Notwithstanding anything herein to the contrary, the limitations set forth in Section 7.3 shall not apply to or with respect to claims for fraud or intentional breach.

(b) Payments pursuant to Section 7.2 shall be further limited to the amount of any liability or damage that remains after deducting therefrom any insurance proceeds and any indemnity distribution or other similar payment actually received by Buyer Indemnitees from any third party with respect thereto (less any out of pocket costs or expenses resulting therefrom). A Buyer Indemnitee shall exhaust all of its remedies against applicable insurers, indemnitees or contributors or any other party prior to seeking indemnification hereunder. The amount of Losses otherwise recoverable under Section 7.2 shall be adjusted to the extent to which any federal, state, local or foreign tax liabilities or benefits are actually realized by the Buyer Indemnitees by reason of any Losses or indemnity payment hereunder in the year of the Loss.

(c) No Buyer Indemnitee shall be entitled to any indemnification hereunder with respect to any breach of any representation, warranty or covenant with respect to which (i) any shareholder, director, officer, employee, representative or agent of Buyer had actual knowledge, at any time prior to the Closing, of such breach, that such breach was threatened or of the events, circumstances or conditions constituting or resulting in such breach, or (ii) to the extent Buyer or such Buyer Indemnitee could have, with reasonable efforts, mitigated or prevented the Buyer Losses with respect to such breach.

(d) Notwithstanding anything herein to the contrary, no breach of any representation, warranty, covenant or agreement contained herein shall give rise to any right on the part of Buyer or a Buyer Indemnitee, after the consummation of the transactions contemplated hereby, to rescind this Agreement or any of the transactions contemplated hereby.

(e) Neither the Seller nor any of its Affiliates shall have any liability under any provision of this Agreement for any consequential, exemplary or punitive damages or any multiple of damages or diminution in value. Buyer and each Buyer Indemnitee, shall take all reasonable steps to mitigate Buyer Losses for which indemnification may be claimed by them pursuant to this Agreement upon and after becoming aware of any event that could reasonably be expected to give rise to such Buyer Losses.

(f) Any actual indemnity payment under Section 7.2 shall be determined without duplication of recovery by reason of the state of facts giving rise to such liability constituting a breach of more than one representation, warranty, covenant or agreement.

7.4 Procedures for Indemnification. The Buyer Indemnitees and Seller Indemnitees shall be referred to in this Section 7.4 as the “Indemnitees”. Indemnitees shall give the party against whom indemnification is sought pursuant to this Section 7 (the “Indemnifying Person”) prompt notice of any written claim, demand, assessment, action, suit or Proceeding to which the indemnity set forth in this Section 7 applies. If the document evidencing such claim or demand is a court pleading, the Indemnitee shall give such notice, including a copy of such pleading, within seven (7) days of receipt of such pleading, otherwise, the Indemnitee shall give such notice within thirty (30) days of the date it receives written notice of such claim. Failure to give timely notice of a matter which may give rise to an indemnification claim shall not affect the rights of the Indemnitee to collect such Loss from the Indemnifying Person so long as such failure to so notify does not materially adversely affect the Indemnifying Person’s ability to defend such Loss against a third party.

If the Indemnitee’s request for indemnification arises from the claim of a third party, the Indemnifying Person may, at its option, assume control of the defense of any such claim, or any litigation resulting from such claim so long as (a) the Indemnifying Person gives written notice to the Indemnitee within twenty (20) days after the Indemnitee has given notice of the third party claim that the Indemnifying Person will indemnify the Indemnitee from and against the entirety of any and all Losses the Indemnitee may suffer resulting from, arising out of, relating to, in the nature of, or caused by the third party claim, (b) the Indemnifying Person provides the Indemnitee with evidence reasonably acceptable to the Indemnitee that the Indemnifying Person will have adequate financial resources to defend against the third party claim and fulfill its indemnification obligations hereunder, (c) the third party claim involves only money damages and does not seek an injunction or other equitable relief against the Indemnitee, (d) the Indemnitee has not been advised in writing by counsel that an actual or potential conflict exists between the Indemnitee and the Indemnifying Person in connection with the defense of the third party claim, (e) settlement of, an adverse judgment with respect to or the Indemnifying Person’s conduct of the defense of the third party claim is not, in the good faith judgment of the Indemnitee, likely to be adverse to the Indemnitee’s reputation or continuing business interests (including its relationships with current or potential customers, suppliers or other parties material to the conduct of its business) and (f) the Indemnifying Person conducts the defense of the third party claim actively and diligently. The Indemnitee may retain separate co-counsel at its sole cost and expense and participate in the defense of the third party claim; provided, however, that the Indemnifying Person will pay the reasonable fees and expenses of separate co-counsel retained by the Indemnitee that are incurred prior to Indemnifying Person’s assumption of control of the defense of the third party claim.

Failure by the Indemnifying Person to notify the Indemnitee of its election to defend a complaint by a third party within twenty (20) days shall be a waiver by the Indemnifying Person of its right to respond to such complaint and within thirty (30) days after notice thereof shall be a waiver by the Indemnifying Person of its right to assume control of the defense of such claim or action. If the Indemnifying Person assumes control of the defense of such claim or litigation resulting therefrom, the Indemnifying Person shall take all reasonable steps necessary in the defense or settlement of such claim or litigation resulting therefrom. The Indemnifying Person shall not, in the defense of such claim or litigation, consent to entry of any judgment against any Indemnitee or enter into any settlement, involving any Indemnitee, except in either case with written consent of the Indemnitee, which consent shall not be unreasonably withheld or delayed. The Indemnitee shall furnish the Indemnifying Person in reasonable detail all information the Indemnitee may have with respect to any such third-party claim and shall make available to the Indemnifying Person and its representatives all records and other similar materials which are reasonably required in the defense of such third-party claim and shall otherwise cooperate with and assist the Indemnifying Person in the defense of such third-party claim.

If the Indemnifying Person does not assume control of the defense of any such third-party claim or litigation resulting therefrom, the Indemnitee may defend against such claim or litigation in such manner as it may reasonably deem appropriate, and the Indemnifying Person shall indemnify the Indemnitee from any Loss indemnifiable under Section 7 incurred in connection therewith. The Indemnifying Person shall not be obligated to the Indemnitee for any settlement or

consent to a stay of judgment made by any Indemnitee if such settlement or consent is entered into without the prior written consent of the Indemnifying Person which consent shall not be unreasonably withheld or delayed.

If the Indemnitee should have a claim against the Indemnifying Person that does not involve a third party claim, the Indemnitee shall deliver a notice of such claim to the Indemnifying Person. If the Indemnifying Person notifies the Indemnitee that it does not dispute the claim described in such notice or fails to notify the Indemnitee within thirty (30) days after delivery of such notice by the Indemnitee whether the Indemnifying Person disputes the claim described in such notice, the Loss in the amount specified in the Indemnitee’s notice will be conclusively deemed a liability of the Indemnifying Person and the Indemnifying Person shall pay the amount of such Loss to the Indemnitee on demand. If the Indemnifying Person has timely disputed its liability with respect to such claim, a senior executive of each of the Indemnifying Person and the Indemnitee with full negotiating authority will proceed in good faith to negotiate a resolution of such dispute, and if not resolved through the negotiations of such executives within sixty (60) days after the delivery of the Indemnitee’s notice of such claim, such dispute shall be resolved fully and finally by a court of competent jurisdiction.

7.5 Indemnification by the Buyer. Notwithstanding the Closing or the delivery of the Purchased Assets, the Buyer shall indemnify and fully defend, save and hold the Seller, any other Affiliate of the Seller, and its shareholders, directors, officers, agents, employees, successors and assigns (the “Seller Indemnitees”), harmless if any Seller Indemnitee shall at any time or from time to time suffer any Losses arising out of or resulting from, or shall pay or become obligated to pay any sum on account of, any one or more of the following:

(a) any untruth or inaccuracy in any representation of the Buyer or the breach of any warranty of the Buyer contained in this Agreement or the Transaction Documents;

(b) any failure of the Buyer to duly perform or observe any term, provision, covenant, agreement or condition contained in this Agreement or the Transaction Documents on the part of the Buyer to be performed or observed; and

(c) any claim or cause of action by any party against any Seller Indemnitee to the extent arising out of or related to the operation of the Purchased Assets by the Buyer on or after the Closing Date.

7.6 Limitations on Indemnification by Buyer.

(a) Payments pursuant to Section 7.5 shall be limited to the amount of any liability or damage that remains after deducting therefrom any insurance proceeds and any indemnity distribution or other similar payment actually received by Seller Indemnitees from any third party with respect thereto. A Seller Indemnitee shall exhaust all of its remedies against applicable insurers, Indemnitees or contributors or any other party prior to seeking indemnification hereunder. The amount of Losses otherwise recoverable under Section 7.5 shall be adjusted to the extent to which any federal, state, local or foreign tax liabilities or benefits are realized by the Seller Indemnitees by reason of any Losses or indemnity payment hereunder.

(b) Notwithstanding anything herein to the contrary, no breach of any representation, warranty, covenant or agreement contained herein shall give rise to any right on the part of Seller or a Seller Indemnitee, after the consummation of the transactions contemplated hereby, to rescind this Agreement or any of the transactions contemplated hereby.

(c) Neither the Buyer nor any of its Affiliates shall have any liability under any provision of this Agreement for any consequential, exemplary or punitive damages or any multiple of damages (other than such damages for the benefit of a third party). Seller and each Seller Indemnitee, shall take all reasonable steps to mitigate Seller Losses for which indemnification may be claimed by them pursuant to this Agreement upon and after becoming aware of any events that could reasonably be expected to give rise to such Seller Losses.

(d) Any actual indemnity payment under Section 7.5 shall be determined without duplication of recovery by reason of the state of facts giving rise to such liability constituting a breach of more than one representation, warranty, covenant or agreement.

(e) No Seller Indemnitee shall be entitled to any indemnification hereunder with respect to any breach of any representation, warranty or covenant with respect to which (i) any shareholder, director, officer, employee, representative or agent of Seller had actual knowledge, at any time prior to the Closing, of such breach, that such breach was threatened or of the events, circumstances or conditions constituting or resulting in such breach, or (ii) to the extent Seller or such Seller Indemnitee could have, with reasonable efforts, mitigated or prevented the Seller Losses with respect to such breach. Notwithstanding the foregoing, this limitation shall not apply with respect to knowledge, if any, of any shareholder,

director, officer, employee, representative or agent of Seller with respect to the use of intellectual property of third parties on vehicles, signage and other similar usage on the Purchased Assets before or after the Closing.

7.7 Successors and Assigns. All of the rights and obligations of the Seller and the Buyer pursuant to this Section 7 shall survive any sale, assignment or other transfer by the Buyer of title to or interest in any of the Purchased Assets or any part thereof and shall apply to and bind each and every successor and assign of the Buyer to any of the Purchased Assets.

7.8 Remedies Exclusive. From and after the Closing, the rights of the parties to indemnification relating to this Agreement or the transactions contemplated hereby shall be strictly limited to those contained in this Section 7, and such indemnification rights shall be the exclusive remedies of the parties subsequent to the Closing Date with respect to this Agreement except for remedies for fraud or specific performance, injunctive or other equitable relief. To the maximum extent permitted by law, the parties hereby waive all other remedies for breach of this Agreement and/or the representations, warranties and covenants in this Agreement, whether under any laws, at common law or otherwise.

7.9 Materiality. Any qualifications in the representations, warranties and covenants with respect to a Material Adverse Effect, materiality, material or similar terms will not have any effect with respect to the calculation of the amount of any Losses or the application of the Threshold Amount pursuant to Section 7.3(a).

SECTION 8. MISCELLANEOUS.

8.1 Successors and Assigns. Except as permitted below, neither this Agreement nor any of the rights, interests or obligations under this Agreement may be assigned, in whole or in part, by operation of law or otherwise by the parties hereto. Any assignment in violation of the preceding sentence will be void. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of, and be enforceable by, the parties and their respective successors and assigns. Notwithstanding the foregoing, Buyer may assign all or any part of its right and obligations hereunder, provided Buyer remains liable for all such obligations.

8.2 Governing Law; Jurisdiction. This Agreement will be governed by, and construed in accordance with, the internal laws of the State of New York regardless of the laws that might otherwise govern under applicable principles of conflict of laws.

8.3 Expenses. Except as otherwise provided herein, each of the parties hereto shall pay its own expenses in connection with this Agreement and the Transaction Documents and the transactions contemplated hereby and thereby, including, without limitation, any legal and accounting fees, whether or not the transactions contemplated hereby are consummated.

8.4 Severability. In the event that any part of this Agreement is declared by any court or other judicial or administrative body to be null, void or unenforceable, said provision shall survive to the extent it is not so declared, and all of the other provisions of this Agreement shall remain in full force and effect.

8.5 Notices. All notices, requests, claims, demands and other communications under this Agreement will be in writing and will be deemed given if delivered personally, sent by overnight courier (providing proof of delivery), or via facsimile to the parties at the following addresses (or at such other address for a party as specified by like notice):

If to the Seller:

Eskimo Pie Frozen Distribution, Inc.

c/o Integrated Brands Inc.

4175 Veterans Highway

Ronkonkoma, NY 11779

Attention: David J. Stein

Fax: (631) 737-9792

Copy to:

Hanson Bridgett

425 Market Street - 26th Floor

San Francisco, CA 94105

Attn: Vicki L. Randall, Esq.

Fax: (415) 995-5008

If to the Buyer:

Southwest Traders Inc.

27565 Diaz Road

Temecula, CA 92590

Attn: Kenneth C. Smith

Fax: (951) 699-5717

Copy to:

Scott T. Schafer, Esq.

148 Woodward Ave.

Escondido, CA 92025

Fax: (760) 781-1771

Any party may change its address for the purpose of this Section by giving the other party written notice of its new address in the manner set forth above.

8.6 Amendments; Waivers. This Agreement may be amended or modified, and any of the terms, covenants, representations, warranties or conditions hereof may be waived, only by a written instrument executed by the parties hereto, or in the case of a waiver, by the party waiving compliance. Any waiver by any party of any condition, or of the breach of any provision, term, covenant, representation or warranty contained in this Agreement, in any one or more instances, shall not be deemed to be nor construed as further or continuing waiver of any such condition, or of the breach of any other provision, term, covenant, representation or warranty of this Agreement.

8.7 Entire Agreement. This Agreement and the schedules hereto and the Transaction Documents contain the entire understanding between the parties hereto with respect to the transactions contemplated hereby and thereby and supersedes and replaces all prior and contemporaneous agreements and understandings, oral or written, with regard to such transactions. All schedules hereto and any documents and instruments delivered pursuant to any provision hereof are expressly made a part of this Agreement as fully as though completely set forth herein.

8.8 Parties in Interest. Nothing in this Agreement is intended to confer any rights or remedies under or by reason of this Agreement on any Persons other than the Seller and the Buyer and their respective successors and permitted assigns. Nothing in this Agreement is intended to relieve or discharge the obligations or liability of any third Persons to the Seller or the Buyer. No provision of this Agreement shall give any third Persons any right of subrogation or action over or against the Seller or the Buyer.

8.9 Section and Paragraph Headings. The section and paragraph headings in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement.

8.10 Mutual Drafting. The parties hereto are sophisticated and have been represented by attorneys throughout the transactions contemplated hereby who have carefully negotiated the provisions hereof. As a consequence, the parties do not intend that the presumptions of laws or rules relating to the interpretation of contracts against the drafter of any particular clause should be applied to this Agreement or any agreement or instrument executed in connection herewith, and therefore waive their effects.

8.11 Further Assurances. From and after the Closing, as and when requested by any party, each party will execute and deliver, or cause to be executed and delivered, all such documents and instruments and will take, or cause to be taken, at the requesting party’s expense, all such further or other actions, as such other party may reasonably deem necessary or desirable to consummate the transactions contemplated by this Agreement.

8.12 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which shall constitute the same instrument. Signatures transmitted electronically or by facsimile shall have the same legal and binding effect as original signatures.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized as of the date first above written.

ESKIMO PIE FROZEN DISTRIBUTION, INC.

By: ”David J. Stein”

Name: David J. Stein

Title: President

SOUTHWEST TRADERS, INC.

By: ”Ken Smith”

Name: Ken Smith

Title: President

Executing only for purposes of Section 6.6 and Section 6.11 of this Agreement:

INTEGRATED BRANDS, INC.

By:________________________

Name: _____________________

Title: ______________________

Exhibit 4.16

Intercreditor and Subordination Agreement dated November 17, 2006

INTERCREDITOR AND SUBORDINATION AGREEMENT

INTERCREDITOR AND SUBORDINATION AGREEMENT, dated as of November 17, 2006, (this “Agreement”), by and among 2118769 Ontario Inc., an Ontario corporation (“Ontario”), Michael Serruya, an individual (“Serruya” and together with Ontario, the “Subordinated Creditors”), JPMORGAN CHASE BANK, N.A., in its capacity as administrative agent for itself and the other lenders party to the Integrated Credit Agreement (as defined below) (in such capacity, the “Integrated Agent”), and JPMORGAN CHASE BANK, N.A., in its capacity as administrative agent for itself and the other lenders party to the Americana Credit Agreement (as defined below) (in such capacity, the “Americana Agent” and together with the Integrated Agent, the “Administrative Agent”).

INTRODUCTORY STATEMENT

A. All capitalized terms used herein and not otherwise defined above or in this Introductory Statement are used as defined in Section 1.

B. Integrated Brands Inc., Eskimo Pie Frozen Distribution, Inc., Eskimo Pie Corporation and Coolbrands Dairy, Inc., as Borrowers (the “Integrated Borrowers”), the Loan Guarantors party thereto (the “Integrated Loan Guarantors” and together with the Integrated Borrowers, the “Integrated Loan Parties”), the lenders party thereto (the “Integrated Lenders”) and the Integrated Agent entered into that certain Credit Agreement, dated as of April 21, 2006 (as amended, supplemented or otherwise modified from time to time, the “Integrated Credit Agreement”).

C. Americana Foods Limited Partnership, as Borrower (the “Americana Borrower” and, together with the Integrated Borrowers, the “Borrowers” and each a “Borrower”), the lenders party thereto (the “Americana Lenders” and together with the Integrated Lenders, the “Senior Lenders”) and the Americana Agent entered into that certain Credit Agreement, dated as of April 21, 2006 (as amended, supplemented or otherwise modified from time to time, the “Americana Credit Agreement” and together with the Integrated Credit Agreement, the “Senior Credit Agreements”).

D. To secure all present and future obligations of the Integrated Borrowers under or in connection with the Integrated Credit Agreement and the other Integrated Loan Documents, pursuant to the Integrated Collateral Documents the Integrated Loan Parties have granted and hereafter may grant to the Integrated Agent Liens in substantially all of such Integrated Loan Parties’ assets, real and personal, tangible and intangible, now existing or hereafter arising or acquired and the proceeds thereof as more particularly set forth in their respective Integrated Collateral Documents (the “Collateral”).

E. The Integrated Loan Parties (the “Americana Guarantors”) have each executed a Guarantee (collectively, the “Americana Guarantees”) in favor of the Americana Agent pursuant to which the Americana Guarantors have guaranteed the timely payment and performance of the Secured Obligations (as defined in the Americana Credit Agreement).

F. To secure all present and future obligations of the Americana Guarantors under or in connection with the Americana Guarantees, the Americana Guarantors have granted and hereafter may grant to the Americana Agent Liens in the Collateral owned by them.

G. Each of the Integrated Loan Parties party thereto, the Integrated Lenders party thereto and the Integrated Agent, entered into that certain Forbearance, Waiver and First Amendment to Credit Agreement, dated as of the date hereof (as amended, supplemented or otherwise modified from time to time, the “Forbearance and First Amendment”), pursuant to which, among other things, the Integrated Agent and the Integrated Lenders have agreed to permit the Integrated Loan Parties to grant a junior security interest in the Collateral to the Subordinated Creditors.

H. It is a condition precedent to the effectiveness of the Forbearance and First Amendment that the parties hereto shall have executed and delivered this Agreement in order to set forth the relative rights and priorities of the Administrative Agent, the Senior Lenders and the Subordinated Creditors under the Senior Debt Documents and the Subordinated Debt Documents.

Accordingly, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Administrative Agent on behalf of the Senior Lenders and the Subordinated Creditors hereby agree as follows:

1. Defined Terms.

(a) As used in this Agreement, the following terms shall have the following meanings:

“Alternate Forum” has the meaning given to such term in Section 16 hereof.

“Americana Collateral Documents” means the “Collateral Documents,” as defined in the Americana Credit Agreement.

“Americana Loan Documents” means the “Loan Documents,” as defined in the Americana Credit Agreement.

“Americana Obligations” means all obligations of the Americana Guarantors arising under, with respect to or in connection with any Americana Guarantee.

“Americana Security Agreement” means that certain Pledge and Security Agreement, dated as of April 21, 2006, among the Americana Guarantors and the Americana Agent, for the benefit of the Americana Agent and the Americana Lenders, and any other pledge or security agreement entered into, after the date of this Agreement by any other Integrated Loan Party (as required by the Americana Credit Agreement or any other Americana Loan Document), as the same may be amended, restated or otherwise modified from time to time.

“Avoidance Action” has the meaning given to such term in Section 5 hereof.

“Bankruptcy Code” means The Bankruptcy Reform Act of 1978, as heretofore and hereafter amended, and codified as 11 U.S.C. Section 101 etseq.

“Business Day” means any day that is not a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to remain closed.

“Holdings” means CoolBrands International Inc., a Canadian federal corporation.

“Indebtedness” means any and all obligations and liabilities, principal, premiums, interest, fees, reimbursement obligations and indemnities, whether now or hereafter existing, absolute or contingent, secured or unsecured, due or not due, joint or several, and however arising (including interest, costs, fees and expenses (including professional fees) and any other amounts accruing after maturity and interest and any other amounts accruing after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding regardless of whether such interest, costs, fees or expenses, including professional fees, is allowable, payable or accruable to the holders of such indebtedness in any such bankruptcy case, proceeding or other action).

“Integrated Collateral Documents” means the “Collateral Documents,” as defined in the Integrated Credit Agreement.

“Integrated Loan Documents” means the “Loan Documents,” as defined in the Integrated Credit Agreement.

“Integrated Obligations” means the “Secured Obligations,” as defined in the Integrated Credit Agreement.

“Integrated Security Agreement” means the “Security Agreement,” as defined in the Integrated Credit Agreement.

“Indemnification Agreement” means that certain Indemnification and Waiver Agreement, dated as of November 17, 2006, by and among the Subordinated Creditors, the Administrative Agent and the Senior Lenders, as the same may be amended, restated or otherwise modified from time to time.

“Lien” means any mortgage, deed of trust, hypothecation, pledge, security interest, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, preference, priority or other security or preferential arrangement, in each case, of any kind or nature whatsoever (including any right of setoff, any conditional sale or other title retention agreement, any agreement to grant a security interest at a future date, any lease in the nature of security or any agreement having substantially the same economic effect as any of the foregoing, the filing of, or agreement to give or authorize, any financing statement under the Uniform Commercial Code of any jurisdiction, and with respect to any equity interest or other security, any purchase option, call or similar right of a third party with respect to such equity interest or other security).

“Loan Guarantors” has the meaning given to such term in the Integrated Credit Agreement.

“Obligors” means, collectively, the Integrated Borrowers, Holdings and the other Integrated Loan Parties.

“Person” shall mean any natural person, corporation, division of a corporation, partnership, limited liability partnership, limited liability company, trust, joint venture, association, company, estate, unincorporated organization or government or any agency or political subdivision thereof.

“Senior Collateral Documents” means, collectively, the Americana Collateral Documents and the Integrated Collateral Documents.

“Senior Credit Termination Date” shall mean the date upon which all of the Senior Debt has been indefeasibly paid in full in cash, any commitment to lend under the Senior Credit Agreements shall have been terminated in its entirety, and all letters of credit issued under or pursuant to the Senior Credit Agreements shall have expired or been terminated, cancelled, surrendered or cash collateralized in accordance with the terms of the Senior Credit Agreements.

“Senior Debt” means, collectively, the Integrated Obligations and the Americana Obligations.

“Senior Debt Documents” means, collectively, the Integrated Loan Documents and the Americana Loan Documents.

“Senior Security Documents” means collectively, the Americana Security Agreement and the Integrated Security Agreement.

“Standby Letter of Credit” means that certain irrevocable standby letter of credit in favor of the Administrative Agent, for the ratable benefit of certain of the Senior Lenders, in the aggregate face amount of $5,000,000, as the same may be amended, restated or otherwise modified from time to time.

“Subordinated Debt” means all obligations of each Obligor to the Subordinated Creditors evidenced by or incurred pursuant to the Subordinated Debt Documents; provided, that the terms of such Subordinate Debt shall not impose on the Obligors any representations, warranties, covenants, events of default or remedies that, in the case of each such representation, warranty, covenant, event of default or remedy, are more restrictive or burdensome to the Obligors than the terms and provisions of the Senior Credit Agreements in effect at the time of the execution of the Subordinated Debt Documents.

“Subordinated Debt Documents” means the Indemnification Agreement and the Standby Letter of Credit.

“Subordinated Security Document” means any pledge or security agreement entered into by either Subordinated Creditor and any Obligor, and all other agreements, documents and instruments executed from time to time in connection therewith, as the same may be amended, restated or otherwise modified from time to time, in each case, as permitted hereunder.

“Uniform Commercial Code” means the Uniform Commercial Code as in effect from time to time in the applicable jurisdiction.

Rules of Construction. All references to “Sections,” “Exhibits,” “Schedules” and “paragraphs” shall be to Sections, Exhibits, Schedules and paragraphs, respectively, of this Agreement unless otherwise specifically provided. Any of the terms specified in this paragraph 1 may, unless the context otherwise requires, be used in the singular or the plural depending on the reference. All references to statutes and related regulations shall include, unless otherwise specifically provided herein, any amendments of same and any successor statutes and regulations, as applicable. The words “include,” “includes” and “including” shall be deemed to be followed by the words “without limitation.”

2. Subordination.

(a) Payment. (i) The Subordinated Creditors hereby irrevocably agree that any and all Subordinated Debt shall be in all respects subordinate, junior and inferior in right of payment and collection to the prior indefeasible payment in full in cash of any and all Senior Debt. In the event of any receivership, insolvency, bankruptcy, assignment for the benefit of creditors, readjustment of indebtedness, composition, reorganization (whether or not pursuant to bankruptcy laws), sale of all or substantially all of the assets, dissolution, winding up, liquidation, or any other marshalling of the assets and liabilities of any of the Obligors while any of the Senior Debt remains outstanding, any payment or distribution of assets of any of the Obligors of any kind or character, whether in cash, securities or other property, which would otherwise be payable to or deliverable to the Subordinated Creditors upon or with respect to any or all of the Subordinated Debt or which would constitute the Collateral or the proceeds of the Collateral shall be paid or delivered directly to the Administrative Agent for application to the Senior Debt in accordance with this Agreement until the Senior Credit Termination Date has occurred. The Senior Lenders shall have the right to enforce, collect and receive every such payment or distribution and give acquittance therefor.

(ii) The Subordinated Creditors hereby irrevocably agree that no payment of or on account of the Subordinated Debt shall be made, including by means of setoff, offset, recoupment or by any other means, whether or not there exists a Default or an Event of Default under and as defined in each respective Senior Credit Agreement, or any guaranty therefor enforced, unless and until the Senior Credit Termination Date has occurred. Until the Senior Credit Termination Date, all cash, cash equivalents or other property owned, leased or held by or on behalf of the Obligors shall be subject to this Agreement and the Subordinated Creditors hereby agree that their right to receive any payment or distribution therefrom shall be expressly subordinate and junior in right of payment to the indefeasible payment in cash in full of the Senior Debt. The Subordinated Creditors hereby irrevocably further agree not to demand, receive or accept on account of the Subordinated Debt any payment prior to the Senior Credit Termination Date.

(b) Lien. Notwithstanding anything to the contrary contained in any Senior Debt Document or Subordinated Debt Document and irrespective of (i) the time, order or method of attachment or perfection of the security

interests created by any Senior Security Document or Subordinated Security Document; (ii) the time or order of filing or recording of financing statements or other documents filed or recorded to perfect security interests in any Collateral; (iii) anything contained in any filing or agreement to which the Administrative Agent, any Senior Lender or the Subordinated Creditors may now or hereafter be a party; (iv) the rules for determining priority under the Uniform Commercial Code or any other law governing the relative priority of secured creditors; (v) whether the security interest or lien of the Administrative Agent on behalf of the Senior Lenders has been perfected; or (vi) the validity, enforceability or avoidability of any security interest or lien of the Administrative Agent on the Collateral, any security interest of the Subordinated Creditors in any of the Collateral is and shall be subordinate, junior and inferior in priority, operation and effect to any security interest or lien on such Collateral of the Administrative Agent on behalf of the Senior Lenders. Until the Senior Credit Termination Date, the Subordinated Creditors agree that they shall not (i) except as permitted in paragraph 5 of this Agreement, take any action or enforce any of their rights under the Subordinated Debt Documents in respect of the Subordinated Debt or the Collateral; (ii) take any action or enforce any of their rights in respect of the Collateral, including any action of foreclosure; (iii) contest, protest or object to any foreclosure proceeding or action brought by the Administrative Agent or any Senior Lender or any other exercise by the Administrative Agent or any Senior Lender of any rights or remedies under any Senior Debt Document; (iv) take any action to enforce any of their rights in respect of any other property in or on which the Obligors have granted or may hereinafter grant a security interest or lien to secure the payment of the Subordinated Debt; or (v) amend, modify or supplement those provisions of the Subordinated Debt Documents relating to the Collateral or which would affect, impact or alter the right to payment thereunder to the extent that any such amendment, modification or supplement is adverse to the interests of the Administrative Agent or any Senior Lender; provided that the Subordinated Creditors may file any proof of claim or, subject to the restrictions and limitations placed upon the Subordinated Creditors as set forth in this Agreement, take any action necessary to perfect, protect and preserve their interests under the Subordinated Debt Documents.

(c) Exercise of Rights and Remedies. In exercising rights and remedies with respect to the Collateral, the Administrative Agent and the Senior Lenders may enforce the provisions of the Senior Collateral Documents and exercise remedies thereunder and under any other Senior Debt Documents, all in such order and in such manner as they may determine in the exercise of their sole business judgment. Such exercise and enforcement shall include the rights to sell or otherwise dispose of the Collateral, to incur expenses in connection with such sale or disposition and to exercise all the rights and remedies of a secured lender under the Uniform Commercial Code.

(d) Release of Lien. The Administrative Agent’s and the Senior Lenders’ rights with respect to the Collateral include the right to release any or all of the Collateral from the Lien of any Senior Security Document or Subordinated Security Document during the pendency of any Event of Default and/or the exercise of any of the Administrative Agent’s or Senior Lenders’ remedies, including in connection with the sale or other disposition of such Collateral, notwithstanding that the net proceeds of any such sale may not be used to permanently prepay any Senior Debt or Subordinated Debt. If the Administrative Agent or the Senior Lenders shall determine that the release of the Lien of any Subordinated Security Document on such Collateral is necessary or advisable, the Subordinated Creditors, as applicable, shall execute such release documents and instruments and shall take such further actions as the Administrative Agent or the Senior Lenders shall request. Each Subordinated Creditor hereby irrevocably constitutes and appoints the Administrative Agent and any officer or agent of the Administrative Agent, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of such Subordinated Creditor and in the name of such Subordinated Creditor or in the Administrative Agent’s own name, from time to time in the Administrative Agent’s discretion, for the purpose of carrying out the terms of this paragraph, to take any and all appropriate action and to execute any and all documents and instruments which may be necessary or desirable to accomplish the purposes of this paragraph, including any financing statements, endorsements, assignments or other instruments of transfer or release. Each Subordinated Creditor hereby ratifies all that said attorneys shall lawfully do or cause to be done pursuant to the power of attorney granted in this paragraph.

3. Turnover of Payments. Should any payment, distribution or security or the proceeds thereof (whether in cash, property or securities) be received by the Subordinated Creditors on or after the date of this Agreement and prior to the Senior Credit Termination Date on account of or with respect to any Subordinated Debt, the Subordinated Creditors shall forthwith deliver the same to the Administrative Agent for distribution to the Senior Lenders, in the form received (together with any endorsement or assignment by the Subordinated Creditors where required by the Administrative Agent), for application on account of the Senior Debt and, until so delivered, the same shall be held in trust by the Subordinated Creditors, as trustee for the Administrative Agent, for the benefit of the Senior Lenders.

4. Moratorium on Exercise of Rights and Remedies.

(a) The Subordinated Creditors agree that the Administrative Agent and the Senior Lenders shall have the sole and exclusive right to enforce rights and exercise remedies with respect to the Collateral. Accordingly, notwithstanding any other provisions hereof or of the Subordinated Debt Documents to the contrary, the Subordinated

Creditors shall not exercise any remedies or rights whatsoever with respect to the Subordinated Debt or the Collateral under the Subordinated Debt Documents or otherwise, including the right to accelerate or demand payment of or sue for arrearage with respect to the Subordinated Debt or commence or join with any other creditor in commencing any proceeding or action for liquidation, dissolution, receivership, insolvency, reorganization or bankruptcy of any Obligor, until the Senior Credit Termination Date.

(b) Nothing in this Agreement shall impose any duty, responsibility or obligation upon the Administrative Agent or the Senior Lenders with respect to the Collateral, the Obligors, or with respect to amounts owed to the Subordinated Creditors. All rights and interests of the Administrative Agent and the Senior Lenders, and all agreements and obligations of the Subordinated Creditors, under this Agreement shall remain in full force and effect irrespective of any circumstance which might constitute a defense available to, or a discharge of the Subordinated Creditors or the Obligors in respect of the Senior Debt or in respect of this Agreement.

(c) The Subordinated Creditors agree and acknowledge that, until the Senior Credit Termination Date has occurred, the Subordinated Creditors shall not exercise any claims or rights by way of subrogation or otherwise as a result of the payment of any amounts to the Administrative Agent or the Senior Lenders on account of the Senior Debt. This Agreement shall continue to be effective or shall be reinstated, as the case may be, if at any time any lien or security interest asserted by the Administrative Agent or the Senior Lenders is avoided or payment on or in respect of the Senior Debt shall be rescinded or must otherwise be returned by the Administrative Agent or the Senior Lenders upon the insolvency, bankruptcy, reorganization of the Obligors or otherwise, all as though such payment had not been made.

5. Agreements Regarding Insolvency.

(a) The Subordinated Creditors hereby irrevocably consent and agree to (i) the granting to the Administrative Agent or the Senior Lenders of any replacement liens or other adequate protection to the Administrative Agent or the Senior Lenders pursuant to 11 U.S.C. §§ 105, 361, 362, 363, 364, 365, 506 or 553; and (ii) any conditions, restrictions or limitations requested by the Administrative Agent or the Senior Lenders with respect to the use by the Obligors of the Administrative Agent’s or the Senior Lenders’ Collateral, including cash collateral. Until the Senior Credit Termination Date, the Subordinated Creditors agree that they will not extend credit or grant any financial accommodation to the Obligors or provide or participate in any debtor-in-possession financing or any exit financing under a plan of reorganization for the Obligors except (a) to the extent such financing is junior to the Senior Debt and secured by Liens junior to the Liens securing the Senior Debt or (b) as part of a debtor-in-possession or exit financing arranged by the Administrative Agent. To the extent that the Subordinated Creditors have or acquire any rights under 11 U.S.C. §§ 361, 363, 364 or 553 with respect to the Collateral, the Subordinated Creditors hereby agree not to assert such rights without the prior written consent of the Administrative Agent; provided, that if requested by the Administrative Agent, the Subordinated Creditors shall seek to exercise such rights in the manner requested by the Administrative Agent. Further, the Subordinated Creditors agree that notwithstanding anything in 11 U.S.C. § 506 to the contrary, the Subordinated Creditors’ rights or entitlement to receive any payments in respect of the Subordinated Debt Documents in connection with the Subordinated Debt and the Collateral shall in all respects be junior and subordinate to the Administrative Agent’s and the Senior Lenders’ right to receive interest, costs, fees or expenses, including professional fees, even to the extent the Administrative Agent or the Senior Lenders are deemed unsecured. In addition, the Subordinated Creditors each irrevocably agrees that it shall not vote in favor of any plan of reorganization or support or promote any such plan proposed under 11 U.S.C. § 1129 by, for or on behalf of the Obligors unless the Administrative Agent and the Senior Lenders vote in favor of such plan; provided, however, that in any bankruptcy case filed by or against the Obligors, the Subordinated Creditors may appear as a party-in-interest pursuant to 11 U.S.C. § 1109 for all purposes subject to the restrictions and limitations contained herein.

(b) If at any time any liens, security interests, guaranty, undertaking or promise given by any of the Obligors to the Subordinated Creditors is challenged, avoided, voided, disallowed, recharacterized or subordinated in whole or in part (collectively, an “Avoidance Action”), the Subordinated Creditors and the Obligors each hereby acknowledge and agree that such Avoidance Action or its outcome shall not impair, affect, avoid, or limit the Senior Debt, the Administrative Agent’s or the Senior Lenders’ liens, security interests or rights in and to the Collateral, or their respective rights or interests in, to or under this Agreement, the Senior Credit Agreements or the other Senior Debt Documents.

(c) The provisions of this Agreement shall continue in full force and effect notwithstanding any commencement of a proceeding under the Bankruptcy Code, receivership, insolvency, assignment for the benefit of creditors, readjustment of indebtedness, composition, reorganization (whether or not pursuant to bankruptcy laws), sale of all or substantially all of the assets, dissolution, winding up, liquidation, or any other marshalling of the assets and liabilities of any of the Obligors.

6.. Assignment of Subordinated Debt, etc. Each Subordinated Creditor is prohibited from assigning or otherwise transferring the Subordinated Debt, the Subordinated Debt Documents or their rights and claims under the Subordinated Debt Documents, except to an assignee or other transferee that has expressly acknowledged and assumed in writing all of the obligations of the Subordinated Creditors under this Agreement.

7. Continuing Agreement; Modification of Terms of Senior Debt.

(a) This Agreement shall constitute a continuing agreement of subordination, and the Senior Lenders may, without notice to the Subordinated Creditors, lend additional monies, extend further credit and make other financial accommodations to or for the account of the Obligors in reliance hereon or sell, assign or convey all or a portion of the Senior Debt and/or interest in the Collateral securing such Senior Debt. The Subordinated Creditors, in advance, hereby irrevocably waive, release and disclaim any rights to direct, compel, request or assert claims against the Administrative Agent or the Senior Lenders to marshall, assemble, arrange, sell, use or dispose of the Collateral or any other property of the Obligors in any order, manner or fashion.

(b) The Administrative Agent and the Senior Lenders, at any time and from time to time, may enter into such agreement or agreements with the Obligors, as the Administrative Agent and the Senior Lenders may deem proper, granting additional collateral to the Administrative Agent, extending the time of payment or renewing or otherwise altering in any manner the terms of all or any of the Senior Debt or affecting in any manner any security underlying any or all of the Senior Debt, or may exchange, sell or surrender or otherwise deal with any of the Collateral therefor, or may release any balance of funds of the Obligors with the Administrative Agent or the Senior Lenders without notice to the Subordinated Creditors and without in any way impairing or affecting this Agreement.

(c) Any amendment, supplement, modification, consent or waiver in respect of the observance or performance of the covenants set forth in any Senior Debt Document or any Event of Default (as defined in each respective Senior Credit Agreement) thereunder shall be deemed to be an amendment, supplement, modification, consent or waiver in respect of the observance or performance of the covenants set forth in the Subordinated Debt Documents or any breach or default thereunder arising from the same facts and shall be deemed to be binding on the Subordinated Creditors.

(d) No right of any present or future holders of any Senior Debt to enforce any of the provisions of this Agreement shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Administrative Agent or the Senior Lenders or any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Obligors with the terms of the Senior Debt Documents or the Subordinated Debt Documents, regardless of any knowledge thereof which any such holder may have or be otherwise charged with. The holders of the Senior Debt may extend, renew, modify, or amend the terms of the Senior Debt or any security therefor and release, sell or exchange such security or otherwise deal freely with the Obligors, all without affecting the liabilities and obligations of the Subordinated Creditors to the holders of the Senior Debt.

8. No Modification of Subordinated Debt Documents. No rights, remedies, claims or privileges created by or in favor of the Subordinated Creditors arising under, with respect to or in connection with the Subordinated Debt Documents or any documents executed in connection therewith may be expanded or enlarged in any respect unless they are not adverse to or detrimental to interests of the Administrative Agent and the Senior Lenders and the Subordinated Debt Documents shall not be amended, modified or changed in any respect, in each case, without the express prior written consent of the Administrative Agent if such amendment, modification or change is adverse to or detrimental to the interests of the Administrative Agent and the Senior Lenders.

9. Waiver and Amendment. The Administrative Agent’s or the Senior Lenders’ delay in or failure to exercise any right or remedy shall not be deemed to modify, alter, waive or amend any obligation of the Subordinated Creditors under this Agreement. The terms of this agreement may be waived, amended, supplemented or modified only by a written instrument executed by the Integrated Borrowers, the other Obligors, the Administrative Agent and the Subordinated Creditors.

10. Successors and Assigns. This Agreement shall inure to the benefit of the Administrative Agent’s or the Senior Lenders’ successors and assigns and shall bind the successors and assigns of the Subordinated Creditors.

11. Application of Payments and Proceeds of Collateral. Until the occurrence of the Senior Credit Termination Date, all payments received by the Administrative Agent and the Senior Lenders, or any of them, from the Obligors shall be applied as provided in the Senior Credit Agreements. All proceeds of the Collateral received by the Administrative Agent on behalf of the Senior Lenders shall be applied as provided in the Senior Credit Agreements. Upon the indefeasible payment in full in cash of all of the Senior Debt and the occurrence of the Senior Credit Termination Date,

the Administrative Agent and the Senior Lenders shall turn over to the Subordinated Creditors all Collateral remaining in their possession.

12. Conditions Precedent. It shall be a condition precedent to the effectiveness of this Agreement that the Obligors execute and deliver the Forbearance and First Amendment and consent to this Agreement.

13. Governing Law. This Agreement shall be construed in accordance with and governed by the laws of the State of New York.

14. Notices. Notices and other communications provided for herein shall be in writing and shall be delivered by hand, facsimile or mailed by overnight delivery as follows:

(a) if to the Administrative Agent or Senior Lenders:

Chase Business Credit

1166 Avenue of the Americas

New York, NY 10036

Attention: Mark A. Cuccinello

Fax: (212) 899-2929

(b) if to the Subordinated Creditors:

[______________________]

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 (x) on the third Business Day after the date when sent, postage prepaid, return receipt requested, if by certified or registered mail, (y) when delivered, if delivered by hand or overnight courier service, or (z) when receipt is acknowledged, if by facsimile. The names to be used for notices to any party may be changed at any time by such party by giving written notice of any change thereto to each other party entitled to receive notices hereunder.

15. Further Assurances. The Subordinated Creditors agree to execute, acknowledge and deliver to the Administrative Agent, upon its request, any further instruments as may be reasonably requested by the Administrative Agent to carry out the intention of or facilitate the performance of this Agreement. In addition, whenever in this Agreement a provision refers to the Subordinated Creditors receiving no payment or taking no remedial action with respect to the Subordinated Debt or from the Collateral or proceeds of the Collateral prior to Senior Credit Termination Date, the parties intend that upon the Senior Credit Termination Date, the Subordinated Creditors may receive payments or take remedial action in respect of the Subordinated Debt or from the Collateral or proceeds of the Collateral, subject to the requirement that if any payment received in respect of the Senior Debt must subsequently be disgorged, any payments received in respect of the Subordinated Debt or from the Collateral or proceeds of the Collateral will remain subject to the requirements of this Agreement that they be paid over to the Senior Debt to the extent of the payments disgorged and any remedial action taken in respect of the Subordinated Debt or from the Collateral or proceeds of the Collateral shall be discontinued and, to the extent possible, shall be rescinded until the Senior Debt shall again have been paid in full.

16. EACH OF THE SUBORDINATED CREDITORS, THE ADMINISTRATIVE AGENT AND THE SENIOR LENDERS HEREBY IRREVOCABLY SUBMITS ITSELF TO THE EXCLUSIVE JURISDICTION OF THE SUPREME COURT OF THE STATE OF NEW YORK, NEW YORK COUNTY, AND THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, SITTING IN NEW YORK COUNTY, FOR THE PURPOSE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, AND HEREBY WAIVES, AND AGREES NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE, IN ANY SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF THE ABOVE-NAMED COURTS FOR ANY REASON WHATSOEVER, OR THAT SUCH SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM; PROVIDED, HOWEVER, THAT IN THE EVENT THE OBLIGORS FILE A CASE UNDER THE BANKRUPTCY CODE IN A JURISDICTION OTHER THAN IN NEW YORK STATE (THE “ALTERNATE FORUM”), THE PARTIES HERETO HEREBY AGREE THAT A SUIT OR ACTION IN CONNECTION WITH ANY DISPUTE UNDER THIS AGREEMENT MAY ALSO BE BROUGHT IN THE UNITED STATES DISTRICT COURT LOCATED IN THAT ALTERNATE FORUM. EACH OF THE SUBORDINATED CREDITORS, THE ADMINISTRATIVE AGENT AND THE SENIOR LENDERS HEREBY WAIVES THE RIGHT TO TRIAL BY JURY AND SHALL NOT SEEK A JURY TRIAL IN ANY PROCEEDING ARISING OUT OF THIS AGREEMENT OR ANY RELATED INSTRUMENT OR DOCUMENT. EACH OF THE SUBORDINATED CREDITORS, THE ADMINISTRATIVE AGENT AND THE

SENIOR LENDERS WILL NOT SEEK TO CONSOLIDATE SUCH PROCEEDING INTO ANY ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED.

17. Miscellaneous. In the event of an inconsistency between the provisions of this Agreement and any similar or related provision in the Subordinated Debt Documents, including provisions with respect to governing law and jurisdiction, the provisions of this Agreement shall govern. This Agreement shall be an Senior Debt Document pursuant to the Senior Credit Agreements and shall (unless expressly indicated herein or therein) be construed, administered, and applied, in accordance with all of the terms and provisions of the Senior Credit Agreements.

[SIGNATURES ON FOLLOWING PAGE]

IN WITNESS WHEREOF, the parties have executed this Agreement as of this 17^thday of November, 2006.

Subordinated Creditors:

2118769 ONTARIO INC.

By: ___________________________________

Name:

Title:

______________________________________

Michael Serruya

Integrated Administrative Agent:

JPMORGAN CHASE BANK, N.A., as Administrative Agent under the Integrated Credit Agreement

By: ___________________________________

Name:

Title:

Americana Administrative Agent:

JPMORGAN CHASE BANK, N.A., as Administrative Agent under Americana Credit Agreement

By: ___________________________________

Name:

Title:

Each of the undersigned acknowledges by its signature receipt of a copy of this Agreement and hereby consents to and agrees to honor the Agreement:

COOLBRANDS INTERNATIONAL INC.

By: ___________________________________

Name:

Title:

INTEGRATED BRANDS INC.

By: ___________________________________

Name:

Title:

ESKIMO PIE FROZEN DISTRIBUTION, INC.

By: ___________________________________

Name:

Title:

ESKIMO PIE CORPORATION

By: ___________________________________

Name:

Title:

COOLBRANDS DAIRY, INC.

By: ___________________________________

Name:

Title:

SUGAR CREEK FOODS, INC.

By: ___________________________________

Name:

Title:

INTEGRATED BRANDS FRANCHISE CORP.

By: ___________________________________

Name:

Title:

COOLBRANDS SMOOTHIES FRANCHISE LLC

By: INTEGRATED BRANDS FRANCHISE CORP., its sole member

By: ___________________________________

Name:

Title:

	NAME OF EACH EXCHANGE
TITLE OF EACH CLASS		ON WHICH REGISTERED
	Not Applicable

Subordinate Voting Shares:	50,049,774
Multiple Voting Shares:	6,025,659

ITEM 1 IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS	2

ITEM 2 OFFER STATISTICS AND EXPECTED TIMETABLE	2

ITEM 3 KEY INFORMATION	2

ITEM 4 INFORMATION ON THE COMPANY	5

ITEM 4A UNRESOLVED STAFF COMMENTS	14

ITEM 5 OPERATING AND FINANCIAL REVIEW AND PROSPECTS	14

ITEM 6 DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES	34

ITEM 7 MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS	42

ITEM 8 FINANCIAL INFORMATION	45

ITEM 9 THE OFFER AND LISTING	47

ITEM 10 ADDITIONAL INFORMATION	49

ITEM 11 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	54

ITEM 12 DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES	54

ITEM 13 DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES	54

ITEM 14 MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS	55

ITEM 15 CONTROLS AND PROCEDURES	55

ITEM 16 [RESERVED]	56

ITEM 16A AUDIT COMMITTEE FINANCIAL EXPERT	56

ITEM 16B CODE OF ETHICS	57

ITEM 16C PRINCIPAL ACCOUNTANT FEES AND SERVICES	57

ITEM 16D EXEMPTIONS FROM LISTING STANDARDS FOR AUDIT COMMITTEES	57

ITEM 16E PURCHASE OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS	58

ITEM 17 FINANCIAL STATEMENTS	58

ITEM 18 FINANCIAL STATEMENTS	58

ITEM 19 EXHIBITS	58

	2006			2005			2004		2003		2002

Revenues	$	99,348		$	149,710		$	280,736	$	161,394	$	94,616
Net (loss) income from continuing operations	$	(63,620	)	$	(69,016	)	$	20,325	$	15,031	$	8,978
(Loss) income from discontinued operations		(6,972	)		(5,054	)		3,187		3,795		3,019
Gain on sale of discontinued operations		410
Net (loss) earnings	$	(70,182	)	$	(74,070	)	$	23,512	$	18,826	$	11,997
Basic (loss) earnings per share from continuing operations	$	(1.13	)	$	(1.23	)	$	0.37	$	0.29	$	0.19
Basic (loss) earnings per share from discontinued operations		(0.12	)		(0.09	)		0.05		0.07		0.06
Basic (loss) earnings per share	$	(1.25	)	$	(1.32	)	$	0.42	$	0.36	$	0.25
Fully diluted (loss) earnings per share from continuing operations	$	(1.13	)	$	(1.23	)	$	0.37	$	0.28	$	0.18
Fully diluted (loss) earnings per share from discontinued operations		(0.12	)		(0.09	)		0.05		0.07		0.06
Fully diluted (loss) earnings per share	$	(1.25	)	$	(1.32	)	$	0.42	$	0.35	$	0.24

	2006			2005		2004		2003		2002

Working Capital	$	(23,992	)	$	28,477	$	118,138	$	58,985	$	34,796
Total Assets	$	160,548		$	297,845	$	317,257	$	223,684	$	179,972
Total Long-Term Liabilities⁽¹⁾	$	3,173		$	17,514	$	25,658	$	34,205	$	24,677
Shareholders' Equity	$	61,118		$	138,406	$	211,101	$	132,714	$	107,513
Number of Shares issued and outstanding:
Class A Subordinate Voting Shares		50,049			49,918		49,863		45,629		45,497
Class B Multiple Voting Shares		6,026			6,029		6,030		6,179		6,209

	Operating Segments
Revenue Source	Frozen Desserts			Foodservice⁽¹⁾		Corporate		Total

United States	$	120,959		$	20,990	$	-	$	141,949
Canada		202			-		103		305
International		-			-		-		-
Inter-segment revenues		(43,597	)		-		-		(43,597	)
Other revenues:		620			71		-		691
Total consolidated net revenues	$	78,184		$	21,061	$	103	$	99,348

	Year ended August 31,
	2006			2005			2004
Total net revenues from continuing operations	$	99,348		$	149,710		$	280,736
Net (loss) income from continuing operations		(63,620	)		(69,016	)		20,325
Gain on sale of discontinued operations		410			-			-
Net (loss) income from discontinued operations		(6,972	)		(5,054	)		3,187
Discontinued operations		(6,562	)		(5,054	)		3,187
Net (loss) income	$	(70,182	)	$	(74,070	)	$	23,512

(Loss) earnings per share from continuing operations:
Basic and Diluted		(1.13	)		(1.23	)		0.37
(Loss) earnings per share from discontinued operations:
Basic and Diluted		(0.12	)		(0.09	)		0.05
(Loss) earnings per share:
Basic and Diluted		(1.25	)		(1.32	)		0.42

Total assets		160,548			297,845			317,257
Total long-term debt⁽¹⁾		348			8,248			27,754

	Year Ended August 31,
					Percentage of Net Sales
	2006		2005		2006		2005

Frozen dessert	$	76,035	$	271,086		78.4		74.3
Yogurt		-		44,007		-		12.1
Foodservice		20,901		17,736		21.6		4.9
Dairy components		-		19,538		-		5.3
Franchising and licensing		-		12,319		-		3.4
Total, as originally reported		96,936		364,686		100.0		100.0

Less amounts reclassified to net loss from discontinued operations:
Frozen dessert		-		147,718
Yogurt		-		44,007
Dairy components		-		17,769
Franchising and licensing		-		12,319
		-		221,813
Net sales from continuing operations		96,936		142,873

Pro Forma adjustment reclassifying Americana Foods to discontinued operations		50,745		62,357
Pro forma total	$	46,191	$	80,519

	Year Ended August 31,
							Percentage of Net Sales
	2006			2005			2006			2005

Frozen dessert	$	(16,829	)	$	(15,488	)		(22.1	)		(5.7	)
Yogurt					7,369						16.7
Foodservice		3,047			3,626			14.6			20.4
Dairy components					4,287						21.9
Franchising and licensing					3,224						2.6
Total, as originally reported		(13,782	)		3,018			(14.2	)		0.8

Less amounts reclassified to net loss from discontinued operations:
Frozen dessert					(12,141	)
Yogurt					7,369
Dairy components					3,874
Franchising and licensing					3,224
		-			2,326
Gross profit from continuing operations		(13,782	)		692

Pro Forma adjustment reclassifying Americana Foods to discontinued operations		(10,549	)		(484	)
Pro forma total	$	(3,233	)	$	1,176

	Year Ended August 31,
					Percentage of Sales
	2006		2005		2006		2005

Frozen dessert	$	32,547	$	38,818		42.8		14.3
Yogurt				4,993				11.4
Foodservice		1,737		1,486		8.3		8.4
Dairy components				1,694				8.7
Franchising and licensing				5,109				41.5
Corporate (including stock-based compensation expense)		5,817		1,990
Total, as originally reported		40,101		54,090		41.4		14.8

Less amounts reclassified to net loss from discontinued operations:
Frozen dessert				4,879
Yogurt				4,993
Dairy components				1,579
Franchising and licensing				5,109
				16,560
Selling, general and administrative expenses of continuing operations		40,101		37,530
Pro Forma adjustment reclassifying Americana Foods to discontinued operations		5,574		3,938
Pro forma total	$	34,527	$	33,592

Quarter ended	August 31, 2006			May 31, 2006			February 29, 2006			November 30, 2005
Total revenues from continuing operations	$	31,654		$	26,168		$	15,101		$	26,425
Loss from continuing operations		(41,096	)		(12,326	)		(5,887	)		(4,311	)
Gain from sale of discontinued operations		3			-			407			-
Loss from discontinued operations		(4,918	)		512			(2,473	)		(93	)
Net loss		(46,011	)		(11,814	)		(7,953	)		(4,404	)
Earnings per share (basic and diluted)
Loss per share from continuing operations		(0.72	)		(0.22	)		(0.11	)		(0.08	)
Loss per share from discontinued operations		(0.10	)		0.01			(0.03	)		(0.0	)
Loss per share		(0.82	)		(0.21	)		(0.14	)		(0.08	)

Quarter ended	August 31, 2005			May 31, 2005			February 29, 2005			November 30, 2004
Income (loss) from continuing operations		(60,529	)		(8,272	)		(3,525	)		3,310
Income (loss) from discontinued operations		(3,339	)		(2,743	)		1,737			(709	)
Net income (loss)		(63,868	)		(11,015	)		(1,788	)		2,601
Earnings per share (basic and diluted)
Income (loss) per share from continuing operations		(1.08	)		(0.15	)		(0.06	)		0.06
Income (loss) per share from discontinued operations		(0.06	)		(0.05	)		0.03			(0.01	)
Income (loss) per share		(1.14	)		(0.20	)		(0.03	)		0.05

Quarter ended	August 31, 2004		May 31, 2004			February 29, 2004		November 30, 2003
Total revenues		129,052		128,140			99,946		92,800
Net earnings		12,484		(625	)		8,465		3,188
Earnings per share
Basic		0.22		(0.01	)		0.15		0.06
Diluted		0.22		(0.01	)		0.15		0.06

	Total		Less than 1 year		1 – 3 years		4 – 5 years		After 5 years
Contractual obligations
Notes payable in default- Corporate Credit Facility	$	10,077	$	10,077
Notes payable in default- Americana Credit Facility revolver		6,418		6,418
Notes payable in default- Americana Credit Facility term loan		17,083		17,083
Obligation under capital leases		561		177		315		69
Operating leases		1,676		933		342		187		214
Other liabilities		4,287		4,287		-		-		-
Total contractual obligations	$	40,102	$	38,975	$	657	$	256	$	214

	Age	Positions with the Corporation	Principal Occupation⁽¹⁾

Michael Serruya Thornhill,Ontario	42	Chairman, President, Chief Executive Officer and Director	CEO of the Corporation
Aaron Serruya Thornhill, Ontario	41	Director	President and Chief Executive Officer, International Franchise Corp.
Romeo DeGasperis^(2)(3)(4) Toronto, Ontario	40	Director	Vice President, Con-Drain Company

Ronald W. Binns^(2)(3)(4)	50	Director	Chief Financial Officer-Nevada Capital Corporation Ltd
Garry Macdonald^(2)(3)(4)	60	Director	President and Principal of Maccess Management Inc.
Ken MacKenzie Markham, Ontario	51	Chief Financial Officer	Officer of the Corporation

		Annual Compensation			Long-Term Compensation
Name and Principal Position	Fiscal Year End	Salary ($)	Bonus	Other Annual Compensation ⁽¹⁾ ($)	Securities Under Options Granted ⁽²⁾ #	All Other Compensation ⁽³⁾ ($)

Michael Serruya⁽⁷⁾ Chairman, President & Chief Executive Officer	2006	Cdn $420,000	-	-	-	-
David J. Stein⁽⁶⁾ President, Chief Executive Officer	2006	533,077	-	-	-	2,250
Gary P Stevens Chief Financial Officer	2006	188,558	-	33,454	-	1,235
Francis Orfanello Executive Vice President	2006	435,577	-	-	100,000⁽⁴⁾	-
J. Leo Glynn⁽⁵⁾ President, Eskimo Pie Frozen Distribution Inc.	2006	247,840	82,000	-	-	-
Daniel Heschke Chief Information Officer	2006	240,000	-	177,627⁽⁷⁾	-	582

					Market Value of
	Securities Under	% of Total Options		Securities Underlying
	Options Granted	Granted	Exercise or Base Price	Options on Date of Grant
Name	#	in Fiscal Year	(Cdn $/Security)	(Cdn $/Security)		Expiration Date
Romeo DeGasperis⁽¹⁾	10,000	3.13%	2.85	2.85		February 27, 2016
William McManaman⁽³⁾	10,000	3.13%	2.85	2.85		February 27, 2016
Aaron Serruya⁽⁵⁾	10,000	3.13%	2.85	2.85		February 27, 2016
Robert Baker⁽³⁾	10,000	3.13%	2.85	2.85		February 27, 2016
Beth Bronner⁽³⁾	10,000	3.13%	2.85	2.85		February 27, 2016
Josh Sosland⁽³⁾	10,000	3.13%	2.85	2.85		February 27, 2016
Francis Orfanello	100,000	31.30%	2.84	2.84		January 11, 2016⁽⁴⁾

Frozen Dessert Segment	786
Yogurt Segment	178
Foodservice Segment	37
Dairy Components Segment	32

		Amount Owned and
	Identity of	Nature of Beneficial	Percent of
Title of Class	Person or Group	Ownership	Class**
Subordinate Voting Shares and Multiple Voting Shares	The Estate of Richard E. Smith(⁽¹³⁾	11,606,492shares⁽¹⁾	18.85%
Subordinate Voting Shares and Multiple Voting Shares	David M. Smith⁽¹³⁾	11,606,492 shares⁽²⁾	18.85%
Subordinate Voting Shares and Multiple Voting Shares	David Stein⁽¹³⁾	11,606,492 shares⁽³⁾	18.85%
Subordinate Voting Shares and Multiple Voting Shares	Michael Serruya⁽¹³⁾	11,606,492 shares⁽⁴⁾	18.85%
Subordinate Voting Shares and Multiple Voting Shares	Aaron Serruya⁽¹³⁾	11,606,492 shares⁽⁵⁾	18.85%
Subordinate Voting Shares and Multiple Voting Shares	The Serruya Family Trust⁽¹³⁾	11,606,492shares	18.85%
Subordinate Voting Shares and Multiple Voting Shares	1082272 Ontario, Inc.^(6)(13)	11,606,492 shares⁽⁷⁾	18.85%
Subordinate Voting Shares	Ronald W. Binns	500,000 shares	*
Subordinate Voting Shares	Romeo DeGasperis	6,700 shares	*
Subordinate Voting Shares	Gary P. Stevens	101,127 shares⁽⁸⁾	*
Subordinate Voting Shares	Timothy Timm	113,795 shares⁽⁹⁾	*
Subordinate Voting Shares	John LeSauvage	89,166 shares⁽¹⁰⁾	*
Subordinated Voting Shares	Daniel Hescke	66,667⁽¹¹⁾	*

Period	High (Cdn $)	Low (Cdn $)
Sept. 2005 – Aug, 2006	3.18	0.62
Sept. 2004 - Aug. 2005	10.25	2.55
Sept. 2003 - Aug. 2004	27.00	8.75
Sept. 2002 - Aug. 2003	18.54	4.25
Sept. 2001 - Aug. 2002	8.15	1.60

	Year Ended August 31, 2006		Year Ended August 31, 2005
Audit fees	$	450,000	$	430,000
Audit-related fees		111,096		27,750
Tax fees		25,971		10,800
All other fees		-		-

Total	$	587,067	$	468,550

Report of Independent Registered Public Accounting Firm	F-2
Report of Auditors	F-3
Consolidated Balance Sheets as of August 31, 2006 and 2005	F-4
Consolidated Statements of Operations for the years ended August 31, 2006, 2005, and 2004	F-6
Consolidated Statements of Shareholders' Equity for the years ended August 31, 2006, 2005, and 2004	F-7
Consolidated Statements of Cash Flow for the years ended August 31, 2006, 2005, and 2004	F-8
Notes to Consolidated Financial Statements	F-9

	COOLBRANDS INTERNATIONAL INC.
	(Registrant)

	By:	“Michael Serruya”
		Name: Michael Serruya Title: President and CEO

	2006		2005

Assets

Current Assets:

Cash	$	393	$	24,062
Investments		-		7,500
Restricted cash		-		10,000
Receivables, net		12,780		22,833
Receivables – affiliates		-		1,780
Inventories		9,131		29,918
Current assets of discontinued operations held for sale		38,142		52,719
Income taxes recoverable		11,000		9,767
Prepaid expenses		819		1,490
Deferred income taxes, net of valuation allowance		-		5,148

Total current assets		72,265		165,217

Non-current assets of discontinued operations held for sale		51,927		64,453

Deferred income taxes, net of valuation allowance		-		14,799

Property, plant and equipment		23,051		31,976

Intangible and other assets		1,515		5,857

Goodwill		11,790		15,543

	$	160,548	$	297,845

“Michael Serruya”	“Ronald W. Binns”
_________________, Director	_________________, Director

	2006			2005
Liabilities and Shareholders’ Equity

Current Liabilities:
Notes payable in default	$	10,077		$	-
Notes payable of majority owned subsidiary in default		23,501			-
Accounts payable		20,462			28,198
Accrued liabilities		14,900			21,106
Payables – affiliates		-			620
Income taxes payable		140			-
Deferred income taxes, net of valuation allowance		-			93
Current liabilities of discontinued operations held for sale		22,890			34,009
Short term borrowings		-			34,553
Current maturities of long-term debt		-			18,161
Other liabilities		4,287			-

Total current liabilities		96,257			136,740

Other liabilities		-			2,442
Non-current liabilities of discontinued operations held for sale		825			684
Long-term debt, including obligations under capital leases		348			8,248
Deferred income taxes		2,000			6,140

Total liabilities		99,430			154,254

Minority interest		-			5,185

Commitments and contingencies

Shareholders’ Equity:
Capital stock		97,804			97,578
Additional paid-in capital		38,812			46,376
Accumulated other comprehensive losses		(1,464	)		(1,696	)
Accumulated deficit		(74,034	)		(3,852	)

Total shareholders’ equity		61,118			138,406

	$	160,548		$	297,845

	2006			2006 Pro Forma (See Notes 3 and 13) (Unaudited)			2005			2004
Net revenues:

Net sales	$	96,936		$	46,191		$	142,873		$	275,394
Other income		2,412			2,267			6,837			5,342

Total net revenues		99,348			48,458			149,710			280,736

Cost of goods sold		110,718			49,424			142,181			176,929
Selling, general and administrative expenses		40,101			34,527			37,530			71,516
Interest expense		2,000			401			1,687			1,491
Asset impairment		21,289			10,139			51,141
(Gain) loss on sale of building		-			-			(3,515	)

(Loss) income from continuing operations before income taxes and minority interest		(74,760	)		(46,033	)		(79,314	)		30,800

Minority interest		5,185			-			2,700			958

(Loss) income from continuing operations before income taxes		(69,575	)		(46,033	)		(76,614	)		31,758

(Recovery of) Provision for income taxes:

Current		(11,100	)		(11,100	)		(8,439	)		26,767
Deferred		5,145			5,145			841			(15,334	)
		(5,955	)		(5,955	)		(7,598	)		11,433
Net (loss) income from continuing operations		(63,620	)		(40,078	)		(69,016	)		20,325

Discontinued operations:
(Loss) income from operations of discontinued operations		(6,972	)		(6,972	)		(5,054	)		3,187
Gain on sale of franchising segment		410			410
Loss generated by majority owned subsidiary, net of minority interest		-			(23,542	)		-

Net (loss) income from discontinued operations		(6,562	)		(30,104	)		(5,054	)		3,187

Net (loss) income	$	(70,182	)	$	(70,182	)	$	(74,070	)		23,512
Per share data:

(Loss) earnings per share (basic and diluted):
Continuing operations	$	(1.13	)	$	(0.71	)	$	(1.23	)	$	0.37
Discontinued operations		(0.12	)		(0.54	)		(0.09	)		0.05
	$	(1.25	)	$	(1.25	)	$	(1.32	)	$	0.42
Weighted average shares outstanding:
Shares used in per share calculation – basic		56,047			56,047			55,924			55,441
Shares used in per share calculation - diluted		56,047			56,047			55,924			56,329

	Capital stock		Additional paid-in capital			Accumulated other comprehensive (losses)			Retained earnings (accumulated deficit)			Total Shareholders’ equity
Balance at September 1, 2003	$	85,199	$	1,649		$	(840	)	$	46,706		$	132,714
Comprehensive earnings:
Net earnings										23,512
Other comprehensive losses, net of income taxes:
Currency translation adjustment							(256	)
Total comprehensive loss													23,256
Issuance of shares for stock options exercised		11,779											11,779
Issuance of shares for warrants exercised		507											507
Tax benefit relating to exercise of non-qualified stock options				11,862									11,862
Stock-based compensation expense				30,983									30,983
Balance at August 31, 2004		97,485		44,494			(1,096	)		70,218			211,101
Comprehensive losses:
Net loss										(74,070	)
Other comprehensive losses, net of income taxes:
Currency translation adjustment							(600	)
Total comprehensive loss													(74,670	)
Issuance of shares for stock options exercised		93		(36	)								57
Stock-based compensation expense				1,918									1,918
Balance at August 31, 2005		97,578		46,376			(1,696	)		(3,852	)		138,406
Compressive losses:
Net loss										(70,182	)
Other comprehensive gain, net of income taxes:
Currency translation adjustment							232
Total comprehensive loss													(69,950	)
Issuance of shares for stock options exercised		226		(87	)								139
Stock-based compensation expense				443									443
Reversal of deferred tax asset set up in connection with stock-based compensation expense				(7,920	)								(7,920	)
Balance at August 31, 2006	$	97,804	$	38,812		$	(1,464	)	$	(74,034	)	$	61,118

	2006			Pro forma adjustments			2006 Pro forma			2005
							(Unaudited)
Assets
Current Assets:
Cash	$	393					$	393		$	24,062
Investments		-						-			7,500
Restricted cash		-						-			10,000
Receivables, net		12,780			(6,082	)		6,698			22,833
Receivables - affiliates		-						-			1,780
Inventories		9,131			(1,570	)		7,561			29,918
Current assets of discontinued operations held for sale		38,142						38,142			52,719
Income taxes recoverable		11,000						11,000			9,767
Prepaid expenses		819						819			1,490
Deferred income taxes, net of valuation allowance		-						-			5,148
Current assets of Americana Foods		-			7,652			7,652			-
Total current assets		72,265			-			72,265			165,217
Non-current assets of discontinued operations held for sale		51,927						51,927			64,453
Deferred income taxes, net of valuation allowance		-						-			14,799
Property, plant and equipment		23,051			(18,386	)		4,665			31,976
Property, plant and equipment of Americana Foods		-			18,386			18,386			-
Intangible and other assets		1,515						1,515			5,857
Goodwill		11,790						11,790			15,543
	$	160,548			-		$	160,548		$	297,845
Liabilities and Shareholders’ Equity
Current Liabilities:
Notes payable in default	$	10,077					$	10,077		$	-
Notes payable of majority owned subsidiary in default		23,501			(23,501	)		-			-
Accounts payable		20,462			(8,735	)		11,727			28,198
Accrued liabilities		14,900			(3,955	)		10,945			21,106
Payables – affiliates		-						-			620
Income taxes payable		140						140			-
Deferred income taxes, net of valuation allowance		-						-			93
Current liabilities of discontinued operations held for sale		22,890						22,890			34,009
Current liabilities of Americana Foods		-			36,191			36,191			,
Short term borrowings		-						-			34,553
Current maturities of long-term debt		-						-			18,161
Other liabilities		4,287						4,287
Total current liabilities		96,257			-			96,257			136,740
Other liabilities		-						-			2,442
Non-current liabilities of discontinued operations held for sale		825						825			684
Long-term debt, including obligations under capital lease		348						348			8,248
Deferred income taxes		2,000						2,000			6,140
Total liabilities		99,430			-			99,430			154,254
Minority interest		-						-			5,185
Commitments and contingencies
Shareholders’ Equity:
Capital stock		97,804						97,804			97,578
Additional paid-in capital		38,812						38,812			46,376
Accumulated other comprehensive losses		(1,464	)					(1,464	)		(1,696	)
Accumulated deficit		(74,034	)		10,153			(63,881	)		(3,852	)
Deficit of Americana Foods		-			(10,153	)		(10,153	)		-
Total shareholders’ equity		61,118			-			61,118			138,406
	$	160,548			-		$	160,548		$	297,845

August 31, 2006	Frozen Dessert (EPFD)			Franchising and Licensing			Yogurt (CBD)			Dairy Components (Value America)		Total
Total current assets	$	19,197					$	14,441		$	4,504	$	38,142
Total non-current assets		65						49,132			2,730		51,927
Total current liabilities		9,915						11,949			1,026		22,890
Total non-current liabilities								825					825
Net assets	$	9,347			-		$	50,799		$	6,208	$	66,354

For the year ended August 31, 2006
Total revenue	$	128,103		$	3,613		$	109,304		$	19,057	$	260,077
Cost of sales		131,251			2,122			95,143			15,042		243,558
Selling, general, and administrative expenses		3,640			1,684			8,891			1,651		15,866
Interest expense								2,197					2,197
Asset impairment								5,428					5,428
(Loss) income	$	(6,788	)	$	(193	)	$	(2,355	)	$	2,364	$	(6,972	)

August 31, 2005	Frozen Dessert (EPFD)			Franchising and Licensing			Yogurt (CBD)		Dairy Components (Value America)		Total
Total current assets	$	27,925		$	3,425		$	16,039	$	5,330	$	52,719
Total non-current assets		330			6,681			54,538		2,904		64,453
Total liabilities		16,680			2,378			13,331		1,620		34,009
Total non-current liabilities		6			678							684
Net assets	$	11,569		$	7,050		$	57,246	$	6,614	$	82,479

For the year ended August 31, 2005
Total revenue	$	157,557		$	16,102		$	44,007	$	17,769	$	235,435
Cost of sales		159,858			9,017			36,638		13,895		219,408
Selling, general, and administrative expenses		4,879			5,109			4,993		1,579		16,560
Interest expense					7			891				898
Asset impairment					4,384							4,384
Income tax (benefit) expense		(2,826	)		2,025							(801	)
Other (income) expense		(120	)		160							(114	)
(Loss) income	$	(4,234	)	$	(4,600	)	$	1,485	$	2,295	$	(5,054	)

Fair value acquired:				Purchase consideration:
Current assets	$	5,373		Cash	$	17,500
Property, plant and equipment		11,846		Acquisition costs		1,652
Trademark rights		15,000		Bank loan		40,000
Goodwill		27,582			$	59,152
		59,801
Less: Liabilities		(649	)
	$	59,152


	As Originally Reported			Reflecting Discontinued Operations

Pro forma total net revenues	$	434,728		$	149,710
Pro forma net loss from continuing operations					(69,016	)
Pro forma net loss from discontinued operations					(892	)
Pro forma net loss	$	(69,908	)	$	(69,908	)
Pro forma net los per share basic and diluted for continuing operations				$	(1.23	)
Pro forma net loss per share basic and diluted for discontinued operations					(0.02	)
Pro forma net loss per share basic and diluted	$	(1.25	)	$	(1.25	)

	2006			2005 As previously reported			Amounts reclassified to discontinued operations			2005
Trade accounts receivable	$	13,177		$	57,213		$	(33,545	)	$	23,668
Franchise and license fees receivable		-			324			(214	)		110
Notes receivable, current maturities		12			97			(97	)		-
		13,189			57,634			(33,856	)		23,778
Less Allowance for doubtful accounts		(409	)		(3,108	)		2,163			(945	)
		12,780			54,526			(31,693	)	$	22,833
Due from Affiliates		-			-			-			1,780
	$	12,780								$	24,613