<PAGE> 1
FORM 10-Q/A
AMENDMENT N0. 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
/ X / QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 26, 1994
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-14190
DREYER'S GRAND ICE CREAM, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Delaware No. 94-2967523
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
5929 College Avenue, Oakland, California 94618
(Address of principal executive offices) (Zip Code)
(510) 652-8187
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes / X / No / /
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
<TABLE>
<CAPTION>
Shares Outstanding
May 9, 1994
------------
<S> <C>
Common stock, $1.00 par value 14,007,197
</TABLE>
<PAGE> 2
DREYER'S GRAND ICE CREAM, INC.
FORM 10-Q/A
AMENDMENT NO. 1
FOR THE QUARTERLY PERIOD ENDED MARCH 26, 1994
This amendment is being filed as a result of certain errors and omissions
relating to Note 6 of Notes to Consolidated Financial Statements in Part I,
Item I, Management's Discussion and Analysis of Consolidated Financial
Condition and Results of Operations contained in Part I, Item 2 and Exhibits
and Reports on Form 8K in Part II, Item 6.
2
<PAGE> 3
DREYER'S GRAND ICE CREAM, INC.
PART I: FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DREYER'S GRAND ICE CREAM, INC.
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
March 26, December 25,
1994 1993
------------ -------------
(unaudited)
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents $ 582,000 $ 2,532,000
Trade accounts receivable, net of
allowance for doubtful accounts of
$494,000 in 1994 and $535,000 in 1993 52,604,000 46,293,000
Other accounts receivable 5,361,000 5,326,000
Inventories 31,179,000 27,817,000
Prepaid expenses and other 6,143,000 8,256,000
------------- -------------
Total current assets 95,869,000 90,224,000
Property, plant and equipment, net 150,699,000 142,275,000
Goodwill and distribution rights, net of
accumulated amortization of $8,238,000
in 1994 and $7,572,000 in 1993 87,113,000 72,988,000
Other assets 17,056,000 16,788,000
------------- -------------
Total assets $ 350,737,000 $ 322,275,000
============= =============
</TABLE>
See accompanying Notes to Consolidated Financial Statements
3
<PAGE> 4
DREYER'S GRAND ICE CREAM, INC.
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
March 26, December 25,
1994 1993
------ ------
(unaudited)
<S> <C> <C>
Liabilities and Stockholders' Equity
Current Liabilities:
Short-term bank borrowings $ 23,400,000
Accounts payable and accrued liabilities 27,496,000 $ 21,893,000
Accrued payroll and employee benefits 7,828,000 9,249,000
Current portion of long-term debt 1,075,000 1,685,000
------------- -------------
Total current liabilities 59,799,000 32,827,000
Long-term debt, less current portion 38,875,000 38,875,000
Convertible subordinated debentures 100,752,000 100,752,000
Deferred income 150,000 174,000
Deferred income taxes 26,808,000 26,613,000
------------- -------------
Total liabilities 226,384,000 199,241,000
------------- -------------
Commitments and contingencies
Stockholders' Equity:
Preferred stock, $1 par value -
10,000,000 shares authorized; no shares
issued or outstanding in 1994 and 1993
Common stock, $1 par value -
30,000,000 shares authorized; 14,737,000
shares and 14,671,000 shares issued and
outstanding in 1994 and 1993, respectively 14,737,000 14,671,000
Capital in excess of par 60,328,000 59,145,000
Retained earnings 49,288,000 49,218,000
------------- -------------
Total stockholders' equity 124,353,000 123,034,000
------------- -------------
Total liabilities and stockholders' equity $ 350,737,000 $ 322,275,000
============= =============
</TABLE>
See accompanying Notes to Consolidated Financial Statements
4
<PAGE> 5
DREYER'S GRAND ICE CREAM, INC.
CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS
<TABLE>
<CAPTION>
Thirteen Weeks Ended
----------------------------------------------------
March 26, 1994 March 27, 1993
-------------- --------------
(unaudited)
<S> <C> <C>
Revenues:
Net sales $112,001,000 $102,317,000
Other income 273,000 169,000
------------- --------------
112,274,000 102,486,000
------------- --------------
Costs and expenses:
Cost of goods sold 88,752,000 81,291,000
Selling, general and administrative 18,728,000 16,066,000
Interest, net of interest capitalized 2,209,000 1,668,000
------------- --------------
109,689,000 99,025,000
------------- --------------
Income before income taxes 2,585,000 3,461,000
Income taxes 1,003,000 1,343,000
------------- --------------
Net income $ 1,582,000 $ 2,118,000
============= ==============
Net income per share $ .11 $ .15
============== ==============
Dividends per share $ .06 $ .06
============== ===============
Retained earnings, beginning of period $ 49,218,000 $ 36,677,000
Net income 1,582,000 2,118,000
Cash dividends declared (884,000) (876,000)
Repurchase and retirement of
common stock (628,000) (91,000)
------------- --------------
Retained earnings, end of period $ 49,288,000 $ 37,828,000
============= ==============
</TABLE>
See accompanying Notes to Consolidated Financial Statements
5
<PAGE> 6
DREYER'S GRAND ICE CREAM, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Thirteen Weeks Ended
----------------------------------------
March 26, 1994 March 27, 1993
-----------------------------------------
(unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,582,000 $ 2,118,000
Adjustments to reconcile net income to cash provided from
operations:
Depreciation and amortization 4,090,000 3,548,000
Deferred income taxes 195,000 135,000
Deferred income (24,000) (24,000)
Changes in assets and liabilities, net of amounts
acquired:
Trade accounts receivable (6,311,000) (5,684,000)
Other accounts receivable (35,000) (1,276,000)
Inventories (3,362,000) 1,135,000
Prepaid expenses and other 2,113,000 2,660,000
Accounts payable and accrued liabilities 5,600,000 5,583,000
Accrued payroll and employee benefits (1,421,000) (2,862,000)
Income taxes payable 106,000
------------ ------------
2,427,000 5,439,000
------------ ------------
Cash flows from investing activities:
Acquisition of property, plant and equipment (11,470,000) (9,460,000)
Retirement of property, plant and equipment 52,000 31,000
Increase in goodwill and distribution rights (14,790,000) (307,000)
(Increase) decrease in other assets, net (699,000) 388,000
------------ ------------
(26,907,000) (9,348,000)
------------ ------------
Cash flows from financing activities:
Increase (decrease) in short-term bank borrowings 23,400,000 (29,000,000)
Proceeds from long-term debt 36,100,000
Reductions in long-term debt (610,000) (2,498,000)
Cash dividends paid (881,000) (874,000)
Issuance of stock under employee stock plans 621,000 259,000
------------ ------------
22,530,000 3,987,000
------------ ------------
(Decrease) increase in cash and cash equivalents (1,950,000) 78,000
Cash and cash equivalents, beginning of period 2,532,000 606,000
------------ ------------
Cash and cash equivalents, end of period $ 582,000 $ 684,000
============ ============
Supplemental Cash Flow Information - cash paid during the
year for:
Interest (net of amounts capitalized) $ 2,789,000 $ 2,255,000
Income taxes (net of refunds) 166,000 146,000
</TABLE>
See accompanying Notes to Consolidated Financial Statements
6
<PAGE> 7
DREYER'S GRAND ICE CREAM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - General:
Dreyer's Grand Ice Cream, Inc. and its subsidiaries (the "Company") is
a single segment industry company engaged in the business of manufacturing and
distributing premium ice cream and other frozen dairy products.
The consolidated financial statements for the thirteen week periods
ended March 26, 1994, and March 27, 1993, have not been audited by independent
public accountants, but include all adjustments, consisting of normal recurring
accruals, which management considers necessary for a fair presentation of the
consolidated operating results for the periods. The statements have been
prepared by the Company pursuant to the rules and regulations of the Securities
and Exchange Commission. Accordingly, certain information and footnote
disclosure normally included in financial statements prepared in conformity
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. The operating results for interim
periods are not necessarily indicative of results to be expected for an entire
year. The aforementioned statements should be read in conjunction with the
Company's Annual Report to Stockholders for the year ended December 25, 1993.
NOTE 2 - Financial Statement Presentation:
Certain reclassifications have been made to the prior period financial
statements in order to conform to the current presentation.
NOTE 3 - Inventories:
Inventories are stated at the lower of cost (determined by the
first-in, first-out method) or market. Inventories at March 26, 1994 and
December 25, 1993 consisted of the following (in thousands):
<TABLE>
<CAPTION>
March 26, December 25,
1994 1993
-------- ----------
<S> <C> <C>
Raw materials $ 3,618 $ 2,050
Finished goods 27,561 25,767
------- -------
$31,179 $27,817
======= =======
</TABLE>
7
<PAGE> 8
NOTE 4 - Net Income Per Share:
Net income per common share is computed using
the weighted average number of shares of common stock
outstanding during the period which were 14,698,000 shares for
the quarter ended March 26, 1994 and 14,579,000 shares for the
quarter ended March 27, 1993.
NOTE 5 - Goodwill and Distribution Rights:
On January 4, 1994, the Company entered into a long-term
distribution agreement with Sunbelt Distributors, Inc. (Sunbelt), the leading
independent direct-store-delivery ice cream distributor in Texas. Under the
agreement, the Company paid Sunbelt $10,970,000 in cash to secure the
long-term exclusive right to have its products distributed by Sunbelt in Texas
and certain parts of Louisiana and Arkansas. In conjunction with this
transaction, the Company recorded $11,321,000 in distribution rights, including
$351,000 in transaction costs.
NOTE 6 - Subsequent Event:
On May 6, 1994, the Company entered into an agreement (the
"Nestle Agreement") with an affiliate of Nestle USA, Inc. ("Nestle"), whereby
Nestle will purchase three million newly issued shares of common stock of the
Company for $32 per share and warrants to purchase an additional two million
shares at an exercise price of $32 per share. Warrants for one million shares
will expire in three years from the closing date and warrants for the other
million shares will expire in five years from the closing date. Nestle is
paying an aggregate of $10,000,000 for the two million warrants.
The Company will have the right to cause Nestle to exercise
the warrants at $24 per share subject to certain conditions at any time during
the three year period following the closing. The Company will also have the
right to cause Nestle to exercise the warrants at any time through the warrant
expiration dates at $32 per share if the average trading price of the common
stock exceeds $60 during a 130 trading day period, subject to certain
conditions. Furthermore, within five years from the date of closing, if the
average trading price of the common stock equals or exceeds $60 during a 130
trading day period, Nestle will be required to pay an additional $2 for each
share purchased by it and each share issued in respect of warrants exercised by
it.
Closing of the Nestle Agreement is subject to certain
conditions, including the expiration or termination of applicable waiting
periods under the Hart-Scott-Rodino Antitrust Improvements Act.
In addition to the above Nestle Agreement, the Company is
entering into a distribution agreement with Nestle to distribute Nestle's
frozen novelty and ice cream products in certain markets beginning in 1995.
Also, on May 6, 1994, the Company entered into a credit
agreement with a bank (the "Credit Agreement") to borrow up to $100,000,000.
Under the terms of this agreement, the Company can borrow funds to finance the
purchase of its common stock. (See below.) Interest on borrowings is payable at
a same day funding rate plus an applicable margin, or at the bank's reference
rate. The Credit Agreement terminates at the earlier of the closing of the
Nestle Agreement, the date the combined purchase price of shares and warrants
of the Nestle Agreement is reduced to less than $100,000,000, the date the
Nestle Agreement is terminated, or in 60 days.
Subsequent to quarter end, the Company repurchased 763,000
shares of its common stock at prices ranging from $22.50 to $22.75 under a
newly authorized plan to repurchase up to 5 million shares through open market
purchases and negotiated transactions.
8
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following table sets forth for the periods indicated the percent
which the items in the Consolidated Statement of Income and Retained Earnings
bear to net sales and the percentage change of such items compared to the
indicated prior period:
<TABLE>
<CAPTION>
Period-to-Period
Percentage of Net Sales Increase (Decrease)
----------------------- -------------------
Thirteen Weeks Ended
-----------------------
March 26, March 27, Thirteen Weeks 1994
1994 1993 Compared to 1993
---------- ---------- -------------------
<S> <C> <C> <C>
Revenues:
Net sales 100.0% 100.0% 9.5%
Other income 0.2 0.2 61.5
----- -----
Total revenue 100.2 100.2 9.6
----- -----
Costs and expenses:
Cost of goods sold 79.2 79.5 9.2
Selling, general and administrative 16.7 15.7 16.6
Interest, net of interest capitalized 2.0 1.6 32.4
----- -----
Total costs and expenses 97.9 96.8 10.8
----- -----
Income before income taxes 2.3 3.4 (25.3)
Income taxes 0.9 1.3 (25.3)
----- -----
Net income 1.4 2.1 (25.3)
===== =====
</TABLE>
9
<PAGE> 10
RESULTS OF OPERATIONS
Thirteen Weeks Ended March 26, 1994 Compared with Thirteen Weeks Ended March
27, 1993
Consolidated net sales for the first quarter of 1994 increased 9% to
$112,001,000 compared with $102,317,000 for the same period last year. Sales of
the Company's brands increased 17% and represented 66% of consolidated net
sales as compared with 62% in the first quarter of 1993. The increase related
primarily to higher unit sales of the Company's established brands in all
markets and, to a lesser extent, sales of two recently introduced products,
Dreyer's and Edy's Ice Cream Bars and Tropical Fruit Bars. The effect of price
increases for the Company's brands was not significant. Sales of products
purchased from other manufacturers (partner brands) decreased 2% and
represented 34% of consolidated net sales as compared with 38% in the first
quarter of 1993. The effect of price increases for partner brands was not
significant.
The Company is embarking on a five year plan to accelerate the sales of
its Company brands by greatly increasing its consumer marketing efforts and
expanding its distribution system into additional markets (the "Marketing
Plan"). Under this Marketing Plan, the Company will increase the amount of its
spending for advertising and consumer promotion from a level of approximately
$12,000,000 in 1993 to $40,000,000 in 1994, and plans to spend approximately
$50,000,000 annually on these marketing activities from 1995 through 1998. The
Company will begin selling its Edy's branded products in the Boston and
Charlotte markets this year, in addition to the previously announced
introduction of Dreyer's line of products into the Houston market. The Company
anticipates that the new business plan will materially reduce earnings during
the next twelve to twenty-four month period below levels that would have been
attained under the current business plan. The potential benefits of the new
strategy are increased market share and future earnings above those levels that
would be attained in the absence of the strategy. Dreyer's believes that these
benefits are not likely to impact the Company's results until 1996 at the
earliest. No assurance can be given that the anticipated benefits of the
strategy will be achieved. The success of the strategy will depend upon, among
other things, consumer responsiveness to the Marketing Plan, competitors'
activities, and general economic conditions.
Cost of goods sold increased $7,461,000 or 9% over the first quarter of
1993, while the overall gross margin increased from 20.5% in the first quarter
of 1993 to 20.8% in the first quarter of 1994. The higher margin was primarily
the result of increased sales of the Company's brands, which carry a higher
margin than partner brands, offset principally by higher distribution expenses.
Selling, general and administrative expenses in the first quarter of
1994 were $2,662,000 or 17% higher than in the same period of 1993. This
increase related primarily to increased product advertising and promotion
expenses incurred in a continuing effort to enhance the Company's long-term
competitive position.
Interest expense was $541,000 or 32% higher in the first quarter of
1994 as compared with the same period in 1993 due primarily to the higher
interest rate of the convertible subordinated debentures issued in the third
quarter of 1993.
Income taxes decreased $340,000 reflecting a lower pre-tax income,
while the effective tax rate remained the same at 38.8% for the first quarter
of both 1994 and 1993.
10
<PAGE> 11
LIQUIDITY AND CAPITAL RESOURCES
Working capital at March 26, 1994 decreased $21,327,000 from year end
1993 due primarily to the increase in short-term bank borrowings and accounts
payable and accrued liabilities, offset in part by the seasonal increase in
trade receivables and inventories. Cash was provided primarily from the
$23,400,000 increase in short-term bank borrowings. This source was used to
fund the $11,470,000 increase in property, plant and equipment and the
$14,790,000 increase in goodwill and distribution rights resulting primarily
from the Sunbelt distribution rights agreement (see Note 5 of Notes to
Consolidated Financial Statements).
On May 6, 1994, the Company entered into an agreement with an
affiliate of Nestle USA, Inc., whereby Nestle will purchase three million newly
issued shares of common stock of the Company for $32 per share and warrants to
purchase an additional two million shares at an exercise price of $32 per
share. The warrants are subject to certain limitations and requirements. Nestle
is paying an aggregate of $10,000,000 for these warrants. Total proceeds from
the issuance of the initial three million shares and the two million warrants
will be approximately $106,000,000.
Closing of the Nestle Agreement is subject to certain conditions,
including the expiration or termination of applicable waiting periods under the
Hart-Scott-Rodino Antitrust Improvements Act.
Also, on May 6, 1994, the Company entered into a credit agreement
with a bank to borrow up to $100,000,000. Under the terms of this agreement,
the Company can borrow funds to finance the purchase of its common stock. (See
Note 6 of Notes to Consolidated Financial Statements.)
Subsequent to quarter end, the Company repurchased 763,000 shares of
its common stock at prices ranging from $22.50 to $22.75 under a newly
authorized plan to repurchase up to 5 million shares through open market
purchases and negotiated transactions. These repurchases were funded through
the Credit Agreement. (See Note 6 of Notes to Consolidated Financial
Statements.)
At March 26, 1994, the Company had $582,000 in cash and cash
equivalents, and an unused credit line of $26,600,000.
The Company believes that its credit lines, proceeds from the Nestle
Agreement, its internally generated cash and financing capacity are adequate to
meet anticipated operating and capital requirements.
11
<PAGE> 12
PART II: OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. No reports on Form 8-K were filed by the Company during the quarter
ending on March 26, 1994.
b. Exhibits*
<TABLE>
EXHIBIT NO. DESCRIPTION
- - - ----------- -----------
<S> <C>
2.1 Amendment to Securities Purchase Agreement dated May 6, 1994 by and among the Company, Trustees of General
Electric Pension Trust, GE Investment Private Placement Partners, I and General Electric Capital Corporation,
amending the Securities Purchase Agreement dated June 24, 1993 by and among the Company, Trustees of General
Electric Pension Trust, GE Investment Private Placement Partners, I and General Electric Capital Corporation.**
4.1 Amendment to Registration Rights Agreement dated May 6, 1994 by and among the Company, Trustees of General
Electric Pension Trust, GE Investment Private Placement Partners, I and General Electric Capital Corporation,
amending the Registration Rights Agreement dated June 30, 1993 by and among the Company, Trustees of General
Electric Pension Trust, GE Investment Private Placement Partners, I and General Electric Capital Corporation.**
10.1 Second Amendment to Credit Agreement dated May 6, 1994 by and among the Company, Bank of America NT & SA, as
Agent and for itself, ABN AMRO Bank N.V. and Continental Bank N.A., amending the Credit Agreement dated
April 30, 1993 by and among the Company, Bank of America NT & SA as Agent and for itself, ABN AMRO Bank N.V.
and Continental Bank N.A.***
10.2 Credit Agreement dated May 6, 1994 by and between the Company and Bank of America NT & SA.**
10.3 Amendment to Distribution Agreement, dated April 18, 1994, and Letter Agreement modifying such Amendment to
Distribution Agreement, dated April 18, 1994 between the Company and Ben & Jerry's Homemade, Inc., amending the
Distribution Agreement between the Company and Ben & Jerry's Homemade, Inc., dated January 7, 1987, as amended.**
11 Computation of Earnings Per Common Share.**
</TABLE>
12
<PAGE> 13
_______________
* An Exhibit 10.4, while not listed in either Item 6(b) or in the Index to
Exhibits, was erroneously filed with the Company's Quarterly Report on
Form 10-Q filed on May 10, 1994. The filed agreement was not consummated
as of May 10, 1994 nor has such agreement been consummated as of
May 23, 1994.
** Previously filed.
*** Refiled to include all conformed signatures.
13
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DREYER'S GRAND ICE CREAM, INC.
Dated: May 23, 1994 By: /s/ Paul R. Woodland
--------------------------
Paul R. Woodland
Vice President -- Finance
and Administration and
Chief Financial Officer
14
<PAGE> 15
Index to Exhibits*
<TABLE>
EXHIBIT NO. DESCRIPTION
- - - ----------- -----------
<S> <C>
2.1 Amendment to Securities Purchase Agreement dated May 6, 1994 by and among the Company, Trustees of General
Electric Pension Trust, GE Investment Private Placement Partners, I and General Electric Capital Corporation,
amending the Securities Purchase Agreement dated June 24, 1993 by and among the Company, Trustees of General
Electric Pension Trust, GE Investment Private Placement Partners, I and General Electric Capital Corporation.**
4.1 Amendment to Registration Rights Agreement dated May 6, 1994 by and among the Company, Trustees of General
Electric Pension Trust, GE Investment Private Placement Partners, I and General Electric Capital Corporation,
amending the Registration Rights Agreement dated June 30, 1993 by and among the Company, Trustees of General
Electric Pension Trust, GE Investment Private Placement Partners, I and General Electric Capital Corporation. **
10.1 Second Amendment to Credit Agreement dated May 6, 1994 by and among the Company, Bank of America NT & SA, as
Agent and for itself, ABN AMRO Bank N.V. and Continental Bank N.A., amending the Credit Agreement dated
April 30, 1993 by and among the Company, Bank of America NT & SA as Agent and for itself, ABN AMRO Bank N.V.
and Continental Bank N.A.***
10.2 Credit Agreement dated May 6, 1994 by and between the Company and Bank of America NT & SA.**
10.3 Amendment to Distribution Agreement, dated April 18, 1994, and Letter Agreement modifying such Amendment to
Distribution Agreement, dated April 18, 1994 between the Company and Ben & Jerry's Homemade, Inc., amending the
Distribution Agreement between the Company and Ben & Jerry's Homemade, Inc., dated January 7, 1987, as amended.**
11 Computation of Earnings Per Common Share.**
</TABLE>
_______________
* An Exhibit 10.4, while not listed in either Item 6(b) or in the Index to
Exhibits, was erroneously filed with the Company's Quarterly Report on
Form 10-Q filed on May 10, 1994. The filed agreement was not consummated
as of May 10, 1994 nor has such agreement been consummated as of
May 23, 1994.
** Previously filed.
*** Refiled to include all conformed signatures.
<PAGE> 1
Exhibit 10.1
SECOND AMENDMENT TO CREDIT AGREEMENT
This SECOND AMENDMENT TO CREDIT AGREEMENT (this "Amendment"), dated as
of May 6, 1994, is entered into by and among DREYER'S GRAND ICE CREAM, INC.
(the "Company"), BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as
agent for itself and the Banks (the "Agent"), BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, ABN AMRO BANK N.V., and CONTINENTAL BANK N.A.
(collectively, the "Banks").
RECITALS
A. The Company, Bank of America National Trust and Savings
Association, ABN AMRO Bank N.V., Continental Bank N.A., and Agent are parties
to a Credit Agreement dated as of April 30, 1993 (as amended and as in effect
as of the date of this Amendment, the "Credit Agreement") pursuant to which the
Agent and such banks have extended certain credit facilities to the Company.
B. The Company has asked the Agent and the Banks to amend the Credit
Agreement as set forth in this Amendment.
C. The Agent and the Banks are willing to amend the Credit Agreement
as set forth and subject to the terms and conditions of this Amendment.
NOW, THEREFORE, for valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the parties hereto hereby agree as follows:
1. Defined Terms. Unless otherwise defined herein, capitalized terms
used herein shall have the meanings, if any, assigned to them in the Credit
Agreement.
2. Amendments to Credit Agreement.
(a) The following definitions are added to Article 1 of the
Credit Agreement in the proper alphabetical order:
"BofA Bridge Loan" means the $100,000,000 non-revolving line
of credit granted by BofA to the Company pursuant to a credit
agreement between BofA and the Company dated as of May 6, 1994, as in
effect from
-1-
<PAGE> 2
time to time.
"Nestle Agreement" means the Stock and Warrant Purchase
Agreement by and between the Company and Nestle Holdings, Inc. as the
Purchaser dated May 6, 1994, together with all of its Exhibits and
Schedules, in the form delivered to the Banks on May 6, 1994.
"Nestle Closing" means the date on which the Company delivers
certificates for "Shares" and "Warrants" to Nestle Holdings, Inc. and
the Company receives the "Share Purchase Price" and the "Warrant
Purchase Price" from Nestle Holdings, Inc. as set forth in the Nestle
Agreement (as such terms are defined in the Nestle Agreement).
"Share Purchase Period" means the period:
(a) Commencing on the first date on which both of the
following have occurred (1) the Nestle Agreement has been publicly
announced by the Company or Nestle Holdings, Inc. and (2) the Nestle
Agreement has been executed by all the parties thereto; and
(b) Ending on the earliest of:
(1) 60 days after the date determined in accordance
with (a) of this definition, except that if the Nestle Closing
occurs prior to the end of such 60 day period, 180 days after
the Nestle Closing;
(2) the date the Nestle Agreement is terminated or
ceases to be in effect for any reason; or
(3) the date the Nestle Agreement is modified in a
manner not acceptable to the Majority Banks, if such
modification occurs prior to Nestle Closing.
(b) Section 5.1(c) of the Credit Agreement is hereby amended
in its entirety to provide as follows:
"(c) is duly qualified as a foreign corporation,
licensed and, except as specifically disclosed in Schedule 5.1, in
good standing under the laws of each jurisdiction where its ownership,
lease or operation of property or the conduct of its business requires
such qualification; and"
(c) Sections 5.7(b) and 5.7(c) of the Credit Agreement are
hereby amended in their entirety to provide as follows:
"(b) Except as specifically disclosed in Schedule
5.7, each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other Federal or state
law, including all requirements under the Code or ERISA for filing
reports (which are true and correct in all
-2-
<PAGE> 3
material respects as of the date filed), and benefits have been paid
in accordance with the provisions of the Plan.
"(c) Each Qualified Plan has been determined by the
IRS to qualify under Section 401 of the Code and, except as
specifically disclosed in Schedule 5.7, to the best knowledge of the
Company nothing has occurred which would cause the loss of such
qualification or tax-exempt status."
(d) Section 5.12(a) of the Credit Agreement is hereby amended
in its entirety to provide as follows:
"(a) Except as specifically disclosed in Schedule
5.12, the on-going operations of the Company and each of its
Subsidiaries comply in all respects with all Environmental Laws,
except such non-compliance which would not reasonably be expected (if
enforced in accordance with applicable law) to result in liability in
excess of $5,000,000 in the aggregate.
(e) Section 5.15 of the Credit Agreement is hereby amended in
its entirety to provide as follows:
"5.15 Labor Relations. There are no strikes, lockouts or
other labor disputes against the Company or any of its Subsidiaries,
or, to the best of the Company's knowledge, threatened against or
affecting the Company or any of its Subsidiaries and, except as
specifically disclosed in Schedule 5.15, no significant unfair labor
practice complaint is pending against the Company or any of its
Subsidiaries or, to the best knowledge of the Company, threatened
against any of them before any Governmental Authority.
(f) Section 5.16 of the Credit Agreement is hereby amended by
replacing "Schedule 5.5" with "Schedule 5.16".
(g) Section 6.2 of the Credit Agreement is hereby amended by
deleting "and" at the end of subsection 6.2(c), changing the "." at the end of
subsection 6.2(d) to ";" and adding the following subsections 6.2(e) and (f):
"(e) Promptly, during the period commencing on May
6, 1994 and ending on the Nestle Closing, copies of all material
communications received and sent by the Company or of which the
Company is aware, in connection with the Nestle Agreement and any
transaction contemplated by the Nestle Agreement, including but not
limited to communications from the Federal Trade Commission and the
Department of Justice relating to the foregoing; and"
-3-
<PAGE> 4
"(f) No later than 10 days after the last day of the
Share Purchase Period, a certificate signed by a Responsible Officer
of the Company certifying that the Company immediately retired all of
the common stock of Company which it purchased during the Share
Purchase Period."
(h) Section 6.3 of the Credit Agreement is hereby amended by
deleting "and" at the end of subsection 6.3(h), changing the "." at the end of
subsection 6.3(i) to "; and" and adding the following subsection 6.3(j):
"(j) during the period commencing on May 6, 1994 and
ending on the Nestle Closing, each proposed amendment, modification,
or waiver to the Nestle Agreement."
(i) Section 7.5 of the Credit Agreement is hereby amended by
deleting "and" at the end of subsection 7.5(f), replacing the "." at the end of
subsection 7.5(g) with "; and", and adding the following subsection 7.5(h):
"(h) the BofA Bridge Loan during the period from May
6, 1994 through the earlier of (1) the Nestle Closing, or (2) 60 days
after May 6, 1994."
(j) Section 7.7 of the Credit Agreement is hereby amended in
its entirety to provide as follows:
"7.7 Use of Proceeds. The Company shall not and shall not
suffer or permit any of its Subsidiaries to use any portion of
proceeds of the Loans, directly or indirectly, (i) to purchase or
carry Margin Stock (ii) to repay or otherwise refinance indebtedness
of the Company or others incurred to purchase or carry Margin Stock,
(iii) to extend credit for the purpose of purchasing or carrying any
Margin Stock, or (iv) to acquire any security in any transaction that
is subject to Section 13 or 14 of the Exchange Act; except that the
Company may use any portion of proceeds of the Loans (x) to pay for
purchases, during the Share Purchase Period, of the Company's common
stock for immediate retirement and (y) to repay indebtedness of the
Company which incurred during the Share Purchase Period in order to
purchase its own common stock for immediate retirement during such
period."
(k) Section 7.8 of the Credit Agreement is hereby amended by
deleting "and" at the end of subsection 7.8(b), replacing the "." at the end of
subsection 7.8(c) with "; and", and adding the following as subsection 7.8(d):
"(d) In addition to that permitted under the
preceding subsections, Guaranty Obligations covering up to $1,000,000
principal of primary obligations."
-4-
<PAGE> 5
(l) Section 7.12(b) of the Credit Agreement is hereby amended
in its entirety to provide as follows:
"(b) purchase, redeem or otherwise acquire shares of
its common stock or warrants or options to acquire any such shares
with the proceeds received from the substantially concurrent issue of
new shares of its common stock. Purchases of its common stock for
immediate retirement during the Share Purchase Period up to an amount
equal to the Net Issuance Proceeds of the "Securities" (as defined in
the Nestle Agreement) sold to Nestle Holdings, Inc. under the Nestle
Agreement shall be deemed an acquisition with the proceeds received
from the substantially concurrent issue of new shares of its common
stock for purposes of this subsection;"
(m) Section 7.14 of the Credit Agreement is hereby amended in
its entirety to provide as follows:
"7.14 Current Ratio. On and after the Initial Borrowing
Date, the Company shall not permit during any fiscal quarter its ratio
of Consolidated Current Assets to Consolidated Current Liabilities to
be less than 2.0 to 1.0.
"(a) Outstandings under this Agreement shall not be
included in Consolidated Current Liabilities throughout the Company's
1994 fiscal year.
"(b) Outstandings under the BofA Bridge Loan shall
not be included in Consolidated Current Liabilities during the period
from May 6, 1994 through the earliest of (1) the Nestle Closing, (2)
60 days after May 6, 1994, (3) the date the Nestle Agreement is
modified in a manner not acceptable to the Majority Banks, or (4) the
date the Nestle Agreement is terminated or ceases to be in effect for
any reason."
(n) Section 7.15 of the Credit Agreement is hereby amended in
its entirety to provide as follows:
"7.15 Consolidated Tangible Net Worth. The Company shall not
permit its Consolidated Tangible Net Worth at any time during any
fiscal quarter to be less than the sum of (i) $90,000,000; plus (ii)
75% of the Company's net profit for each fiscal quarter beginning with
the first fiscal quarter of 1993; plus (iii) 100% of Net Issuance
Proceeds of any stock offerings or subordinated debt, subject to the
provisions of subsection (b) of this Section.
"(a) During the period from May 6, 1994 through the
earliest of (1) the Nestle Closing, (2) 60 days after May 6, 1994, (3)
the date the Nestle Agreement is modified in a manner not acceptable
to the Majority Banks, or (4) the date the Nestle Agreement is
terminated or ceases to be in effect for any reason, the Company's
purchases of its common stock which are permitted under Section
7.12(b) shall be disregarded in computing the Company's Consolidated
Tangible Net Worth; and
-5-
<PAGE> 6
"(b) After the lapse of the period provided in
subsection (a) of this Section, in making the computations required
under this Section, the portion of Net Issuance Proceeds from the
Nestle Agreement to be included shall be the amount by which such Net
Issuance Proceeds exceeds the aggregate purchase price paid by the
Company for the purchases of its common stock during the Share
Purchase Period and permitted under Section 7.12(b).
(o) Section 7.16 of the Credit Agreement is hereby amended in
its entirety to provide as follows:
"7.16 Leverage Ratio. The Company shall not permit its
Leverage Ratio to exceed the ratio indicated for the period set forth
below:
<TABLE>
<CAPTION>
"Period Ratio
------ -----
<S> <C>
"First fiscal quarter of 1993 2.25 to 1.0
"Second fiscal quarter of 1993 2.25 to 1.0
"Each fiscal quarter thereafter 1.25 to 1.0
</TABLE>
"The financial effect of the BofA Bridge Loan and the Company's
purchases of its common stock during the Share Purchase Period shall
be disregarded in determining compliance under this Section during the
period commencing on the first date on which both of the following
have occurred (1) the Nestle Agreement has been publicly announced by
the Company or Nestle Holdings, Inc. and (2) the Nestle Agreement has
been executed by the parties thereto, and ending on the earliest of
(w) the Nestle Closing, (x) 60 days after the beginning of such
period, (y) the date the Nestle Agreement is modified in a manner not
acceptable to the Majority Banks, or (z) the date the Nestle Agreement
is terminated or ceases to be in effect for any reason."
(p) Section 7.17 of the Credit Agreement is hereby amended in
its entirety to provide as follows:
"7.17 Minimum Fixed Charge Coverage Ratio. The Company shall
not permit its Fixed Charge Coverage Ratio (a) during the first
quarter of 1994 to be less than 2.40 to 1.00 and (b) at all other
times before and after such first quarter, to be less than 2.50 to
1.00. For purposes of this Section, Fixed Charge Coverage Ratio means
the ratio of "A" to "B" where:
""A" means the sum of earnings before taxes plus current operating
lease expenses plus interest expense; and
""B" means interest expense plus current operating lease expense;
"in all cases computed on a consolidated basis and measured on the
last day of a fiscal quarter on a rolling four quarter basis."
-6-
<PAGE> 7
(q) The Credit Agreement is hereby amended by adding the
following Section 7.22 immediately after Section 7.21:
"7.22 The Nestle Agreement.
"(a) Prior to the Nestle Closing, the Company shall
not enter into or agree to any amendment, waiver, or other
modification to the Nestle Agreement without the prior written consent
of the Majority Banks. The Banks agree to give such consent unless,
in the sole opinion of the Majority Banks, such modification will have
a material adverse effect to the interests of the Banks under this
Agreement.
"(b) The Agent shall notify the Company whether or
not the Majority Banks have consented to the proposed modification not
later than three Business Days after the Agent receives notice from
the Company of the proposed modification together with all details
necessary to enable the Banks to decide whether or not to give their
consent. Failure by the Agent to so notify the Company shall be
deemed a decision of the Majority Banks not to grant the requested
consent.
"(c) Failure by the Company to obtain the prior
written consent of the Majority Banks as required under subsection (a)
of this Section shall not constitute an Event of Default."
(r) The Credit Agreement is hereby amended by adding
Schedules 5.1 and 5.16 and replacing Schedules 5.7, 5.12, 5.15, and 5.17 with
the respective schedules bearing the same heading set forth in Schedule I of
this Amendment.
(s) The schedules to the Compliance Certificate shall be
modified to reflect the changes to the Credit Agreement contained in this
Amendment.
3. Representations and Warranties. The Company hereby represents and
warrants to the Agent and the Banks as follows:
(a) No Default or Event of Default has occurred and is
continuing.
(b) The execution, delivery and performance by the Company of
this Amendment have been duly authorized by all necessary corporate and other
action and do not and will not require any registration with, consent or
approval of, notice to or action by, any person (including any governmental
agency) in order to be effective and enforceable. The Credit Agreement as
amended by this Amendment constitutes the legal, valid and binding obligations
of the Company, enforceable against it in accordance with its respective terms,
without defense, counterclaim or offset.
(c) All representations and warranties of the Company
contained in
-7-
<PAGE> 8
the Credit Agreement are true and correct.
(d) The Company is entering into this Amendment on the basis
of its own investigation and for its own reasons, without reliance upon the
Agent and the Banks or any other person.
4. Effective Date. This Amendment will become effective on May 6,
1994 (the "Effective Date"), provided that each of the following conditions
precedent has been satisfied on such date:
(a) The Agent has received from the Company a duly executed
original of this Amendment and with respect to each Bank, either a duly
executed original signature page to this Amendment or a signature page sent by
facsimile transmission to be followed promptly by mailing of a hard copy. Each
of the parties understands and agrees that receipt by the Agent of a facsimile
transmitted signature page purportedly bearing the signature of a Bank shall
bind such Bank with the same force and effect as the delivery of a hard copy
original and failure by the Agent to receive the hard copy original signature
page shall not diminish the binding effect of receipt of a facsimile
transmitted signature page.
(b) The Agent has received from Manwell & Milton, counsel to
the Company, an opinion dated the Effective Date and addressed to the Agent and
the Banks substantially in the form of Exhibit 1 to this Amendment.
(c) The Agent has received from the Company a copy of a
resolution passed by the board of directors of the Company, certified by the
Secretary or an Assistant Secretary of the Company as being in full force and
effect on the date hereof, authorizing the execution, delivery and performance
of this Amendment and in form and substance satisfactory to Majority Banks.
(d) The Agent has received from the Company a certificate of
the Secretary of the Company certifying the names and true signatures of the
officers of the Company authorized to execute and deliver this Amendment and in
form and substance satisfactory to Majority Banks.
(e) The Agent has received from the Company a certificate,
signed by a Responsible Officer of the Company, certifying that all
representations and warranties contained herein are true and correct as of the
Effective Date.
(f) The Agent has received, in sufficient number of copies
for Agent and each Bank, certified by the Company to be true and complete,
copies of the Nestle Agreement in the version to be executed.
5. Covenants. The Company covenants and agrees that it shall deliver
to the Agent in sufficient number of copies for Agent and each Bank, certified
by the Company to be true and complete, as soon as available:
-8-
<PAGE> 9
(a) And in any event, within five Business Days after the
date of this Agreement, copies of the Nestle Agreement in the form executed,
certified by the Company to be true and complete and as executed by all the
parties thereto with the exhibits and schedules in the form to be executed by
the party or parties designated therein; and
(b) In any event, within five Business Days after the Nestle
Closing:
(1) Copies of each of the agreements, instruments,
and documents (other than the Nestle Agreement), set forth in Section
4.1(f), certified by the Company to be true and complete and as
executed by the party or parties designated therein;
(2) Copies of each of the resolutions passed by the
Board of Directors of Nestle Holdings, Inc. certified by the Secretary
or an Assistant Secretary of such corporation as being in full force
and effect on the date hereof, authorizing the execution, delivery and
performance of the Nestle Agreement, and all instruments, documents,
and other agreements relating to the Nestle Agreement; and
(3) The certificate of the Secretary of Nestle
Holdings, Inc. certifying the names and true signatures of the
officers of Nestle Holdings, Inc. authorized to execute and deliver
the Nestle Agreement.
The copies of the agreements, instruments, documents, resolutions, and
certificates to be delivered under this subsection shall be delivered with a
certificate (executed by a Responsible Officer of the Company) representing and
warranting that such agreements, instruments, and documents are substantially
identical to those delivered pursuant to Section 4.1(f).
Any failure to so deliver such agreements, instruments, documents, resolutions,
and certificates, and any misrepresentation in the accompany certificate from
a Responsible Officer shall be an Event of Default under the Credit Agreement.
6. Miscellaneous.
(a) Except as herein expressly amended, all terms, covenants
and provisions of the Credit Agreement are and shall remain in full force and
effect and all references therein to such Credit Agreement shall henceforth
refer to the Credit Agreement as amended by this Amendment. This Amendment
shall be deemed incorporated into, and a part of, the Credit Agreement.
(b) This Amendment shall be binding upon and inure to the
benefit of the parties hereto and thereto and their respective successors and
assigns. No third party beneficiaries are intended in connection with this
Amendment.
(c) This Amendment shall be governed by and construed in
accordance with the law of the State of California.
-9-
<PAGE> 10
(d) This Amendment may be executed in any number of
counterparts, each of which shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument.
(e) If any term or provision of this Amendment shall be
deemed prohibited by or invalid under any applicable law, such provision shall
be invalidated without affecting the remaining provisions of this Amendment or
the Credit Agreement, respectively.
(f) The Company covenants to pay to or reimburse the Agent,
upon demand, for all costs and expenses (including allocated costs of in-house
counsel) incurred in connection with the preparation, negotiation, execution
and delivery of this Amendment.
-10-
<PAGE> 11
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Amendment as of the date first above written.
DREYER'S GRAND ICE CREAM, INC.
By: /s/ William C. Collett
________________________
Name: William C. Collett
Title: Treasurer
BANK OF AMERICA NATIONAL
TRUST
AND SAVINGS ASSOCIATION, as Agent
By: /s/ Kevin C. Leader
_________________________
Name: Kevin C. Leader
Title: Vice President
BANK OF AMERICA NATIONAL
TRUST
AND SAVINGS ASSOCIATION, as a Bank
By: /s/ Michael J. Dasher
_________________________
Name: Michael J. Dasher
Title: Vice President
<PAGE> 12
ABN AMRO BANK N.V.
By: /s/ CAROL A. LEVINE
---------------------------
Name: Carol A. Levine
Title: Vice President
By: /s/ ROBERT N. HARTINGER
----------------------------
Name: Robert N. Hartinger
Title: Group Vice President
<PAGE> 13
CONTINENTAL BANK N.A.
By: /s/ GUY R. STAPLETON
-----------------------
Name: Guy R. Stapleton
Title: Vice President
<PAGE> 14
EXHIBIT 1
Opinion of Counsel for the Company
May 6, 1994
Bank of America N.T. & S.A.
555 California Street
San Francisco, CA 94104
Continental Bank N.A.
231 South LaSalle Street
Chicago, IL 60697
ABN AMRO Bank N.V.
555 California Street
Suite 2750
San Francisco, CA 94104
Gentlemen:
We have acted as counsel to Dreyer's Grand Ice Cream, Inc., a
Delaware corporation (the "Company"), in connection with the Second Amendment
dated May 3, 1994 (the "Amendment") to Credit Agreement dated as of April 30,
1993 and amended May 24, 1993 (the "Credit Agreement"), among the Company, Bank
of America N.T. & S.A., as one of the Banks and as Agent, and ABN AMRO Bank
N.V. and Continental Bank N.A. Capitalized terms used herein and not defined
herein shall have the meanings assigned to them in the Credit Agreement. This
opinion is rendered pursuant to Section 4(b) of the Amendment.
The Company has entered into a Stock and Warrant Purchase
Agreement with Nestle Holdings, Inc. dated of even date herewith (the "Nestle
Agreement"), pursuant to which, among other things, the Company will issue
three million (3,000,000) shares of common stock of the Company and warrants
exercisable for an additional two million (2,000,000) shares. The Company has
also authorized a program to repurchase shares of common stock of the Company
with funds of up to one hundred and six million dollars ($106,000,000) (the
"1994 Stock Repurchase Program").
We have examined executed copies of the Amendment and the
Credit Agreement. We have also examined such other documents and certificates
of public officials and representatives of the Company as we have deemed
necessary as a basis for the opinions expressed herein. With respect to
factual matters not within our actual knowledge, we have made no independent
investigation but have relied solely upon factual recitals set forth in the
Credit Agreement and in other documents which we have reviewed and upon the
officer's certificate and the certificates of appropriate public officials
referred to above.
We have assumed the genuineness of all signatures and
documents submitted as originals, that all copies submitted to us conform to
the originals, the legal capacity of all natural persons, and as to documents
executed by entities other than the Company or its Subsidiaries, that each such
entity has complied with any applicable requirement to file returns and pay
taxes under the California Franchise Tax law and had the power to enter into
and perform its obligations under such documents, and that such documents have
been duly authorized, executed and delivered by, and are binding upon and
enforceable
-1-
<PAGE> 15
Bank of America N.T. & S.A.
Continental Bank N.A.
ABN AMRO Bank N.V.
May 6, 1994
Page 2
against, such entities.
Based on the foregoing and subject to the qualifications set
forth below, it is our opinion that:
1. Each of the Company and its Subsidiaries is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation, and is duly qualified as a
foreign corporation, licensed and in good standing under the laws of each
jurisdiction where its ownership, lease or operation of property or the conduct
of its business requires such qualification (except in such jurisdiction or
jurisdictions where a failure to do any or all of the above would not have a
Material Adverse Effect).
2. The Company has full corporate power and authority to
execute, deliver and perform its obligations under the Amendment, the Credit
Agreement and the Nestle Agreement. Each of the Company and its Subsidiaries
has full corporate power and authority to own its property and to carry on its
business in the manner currently conducted.
3. The Amendment, the Credit Agreement and the Nestle
Agreement have been duly authorized by all necessary corporate action on the
part of the Company and have been duly executed and delivered by the Company.
4. The Amendment, the Credit Agreement and the Nestle
Agreement are valid and binding obligations of the Company, enforceable in
accordance with their respective terms.
5. Execution and delivery of the Amendment, the Credit
Agreement and the Nestle Agreement, performance by the Company of its
obligations under each such agreement, and the performance by the Company of
its 1994 Stock Repurchase Program, do not violate the Certificate of
Incorporation or by-laws of the Company, or any applicable law or regulation or
any order of court or arbitrator known to us and specifically directed to the
Company or its Subsidiaries, or, except as set out in Exhibit A to this letter,
result in a material breach of, or default under, the provisions of any
material contract known to us by which the Company or its Subsidiaries is
bound.
6. To our knowledge, except as set forth in Schedule 5.5
to the Credit Agreement, there are no actions, suits or proceedings pending or
overtly threatened against the Company or its Subsidiaries before any court or
administrative agency which (i) affect or pertain to the Credit Agreement or
the transactions contemplated thereby, or (ii) if determined adversely, would
reasonably be expected to have a Material Adverse Effect.
7. To our best knowledge at the date hereof, all
conditions to Closing under the Nestle Agreement would be met at the date
hereof, except for: (i) the condition set forth in Section 1.4(a)(ii) of the
Nestle Agreement, and (ii) the execution and delivery at the Closing under the
Nestle Agreement of those documents, in the form attached to the
-2-
<PAGE> 16
Bank of America N.T. & S.A.
Continental Bank N.A.
ABN AMRO Bank N.V.
May 6, 1994
Page 3
Nestle Agreement (if so attached), described in Sections 1.4(b)(vi)-(xii) and
Sections 1.4(c)(iv)-(vi) (inclusive) of the Nestle Agreement; provided,
however, that we express no opinion as to the condition set forth in Section
1.4(c)(i) of the Nestle Agreement.
8. To our knowledge, neither the Company nor any
Subsidiary is generally engaged in the business of purchasing or selling Margin
Stock (as defined in Regulation U of the Board of Governors of the Federal
Reserve System) or extending credit for the purpose of purchasing or carrying
Margin Stock.
9. All shares of common stock of the Company to be
repurchased by the Company as part of its 1994 Stock Repurchase Program will be
retired by the Company upon repurchase and therefore any such repurchased
shares would not be Margin Stock.
10. We have advised the Company or have arranged for the
Company to receive advice from other competent counsel in connection with the
following Requirements of Law, which advice we deemed necessary or prudent to
fully advise the Company regarding (a) its obligations under and the legal
effects of entering into and performing the Nestle Agreement, and (b) the
Company's commencement and performance of its 1994 Stock Repurchase Program:
Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended Clayton Act of 1914, as amended
Delaware General Corporation Law regarding director's
duties and general corporate governance
Section 13(e) of the Securities Exchange Act of 1934,
as amended, and Rule 10b-18 promulgated under such
act
The opinions set forth above are subject to the following
qualifications:
(a) The enforceability of the Company's obligations under
the Amendment and the Credit Agreement are subject to the effect of any
applicable bankruptcy, insolvency, reorganization, receivership,
conservatorship, arrangement, moratorium or similar law affecting creditor's
rights generally, to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law), to the
requirement that any actions taken or determinations made by the Bank be
consistent with the implied covenant of good faith and fair dealing and the
Bank's obligation to act in a commercially reasonable manner in exercising any
rights and remedies.
(b) Whenever a statement herein is qualified by "known to
us," "to our knowledge," or similar phrase, it indicates that in the course of
our representation of the Company no information that would give us current
actual knowledge of the inaccuracy of such statement has come to the attention
of the attorneys in this firm who have rendered legal services in connection
with this transaction. We have not made any independent investigation to
determine the accuracy of such statement, except as expressly described herein.
-3-
<PAGE> 17
Bank of America N.T. & S.A.
Continental Bank N.A.
ABN AMRO Bank N.V.
May 6, 1994
Page 4
We express no opinion as to any matter other than as set forth
above. Further, we express no opinion on the laws of any jurisdiction other
than the State of California, the federal law of the United States of America
and the corporate law of the State of Delaware.
The opinion expressed herein are based upon the law in effect
on the date hereof, and we assume no obligation to revise or supplement this
opinion.
-4-
<PAGE> 18
Bank of America N.T. & S.A.
Continental Bank N.A.
ABN AMRO Bank N.V.
May 6, 1994
Page 5
This opinion is rendered solely for your use in connection
with the transaction described above and may not be relied upon by any other
person for any purpose without our prior written consent.
Very truly yours
MANWELL & MILTON
By
Edmund R. Manwell
-5-
<PAGE> 19
SCHEDULE I
OF THE
SECOND AMENDMENT TO CREDIT AGREEMENT
Set out on the following pages are Schedules 5.1, 5.7, 5.12,
5.15, 5.16 and 5.17 of the Credit Agreement.
-16-
<PAGE> 20
SCHEDULE 5.1
TO CREDIT AGREEMENT
STATES WHERE EITHER THE COMPANY OR A SUBSIDIARY IS NOT AS OF MAY 3, 1994 IN
GOOD STANDING
<TABLE>
<CAPTION>
State Where
Name Not in Good Standing
- - - ---- --------------------
<S> <C>
Edy's Grand Ice Cream Kansas*
Nebraska*
New Mexico**
Edy's of Illinois, Inc. Indiana**
</TABLE>
-17-
<PAGE> 21
SCHEDULE 5.7
TO CREDIT AGREEMENT
ERISA
List of All Plans
Stock Related Plans
1. Dreyer's Grand Ice Cream, Inc. Incentive Stock Option Plan (1982).
2. Dreyer's Grand Ice Cream, Inc. Stock Option Plan (1992).
3. Dreyer's Grand Ice Cream, Inc. Stock Option Plan (1993).
4. Dreyer's Grand Ice Cream, Inc. Section 423 Employee Stock Purchase Plan
(1990).
5. Dreyer's Grand Ice Cream, Inc. Employee Secured Stock Purchase Plan (1990).
6. Dreyer's Grand Ice Cream, Inc. Employee Stock Gift Plan.
Defined Contribution Plans
7. Dreyer's Grand Ice Cream, Inc. Money Purchase Pension Plan, as amended.
8. Dreyer's Grand Ice Cream, Inc. Savings Plan, as amended.
Miscellaneous Plans
(some which are not set forth in written plan documents)
9. Dreyer's Grand Ice Cream, Inc. Bonus Plan.
10. Dreyer's Grand Ice Cream, Inc. Sick Leave Program.
11. Dreyer's Grand Ice Cream, Inc. Salary Continuance Program.
12. Dreyer's Grand Ice Cream, Inc. Flexible Benefit Plan, as amended
(and related Rainbow Plan Flexible Compensation Trust dated January 1,
1987).
13. Dreyer's Grand Ice Cream, Inc. Taxsavers Plan (1983).
14. PrinCare Retiree Medical through Principal Mutual Life Insurance Company.
15. Metromatic Life Insurance Program through Metropolitan Life Insurance
Company.
Third Party Insurance Based Plans
16. Life Insurance, Accidental Death and Dismemberment, Long Term Disability and
Dental Coverage through Principal Mutual Life Insurance Company
17. Comprehensive Health Plan and Vision Plan provided through Principal
Mutual Life Insurance Company.
18. Preferred Provider Organization Health Plan and Vision Plan provided
through Principal Mutual Life Insurance Company.
19. CIGNA FlexCare Health Maintenance Organization (including CIGNA
Medical Group Healthplan, CIGNA Private Practice Plan, CIGNA Healthplan of San
Diego and CIGNA Healthplan of Northern California).
20. Physicians Health Plan (PHP) provided through Physicians Health Plan of
Indiana.
21. Medica Primary #390 provided through Medica (Minnesota).
Multiemployer Plans
22. Western Conference of Teamsters Pension Trust (Local 150 and 302) (and
corresponding Trust Agreement).
23. Dairy Industry Trust Fund (Local 302) (and corresponding Trust Agreement).
24. United Food and Commercial Workers Union Local 655 Welfare Fund (and
corresponding Trust Agreement).
25. Stationary Engineers Local 39 Health & Welfare Plan (and corresponding
Trust Agreement).
26. IUOE Stationary Engineers Local 39 Annuity Trust Fund (and
corresponding Trust Agreement).
-18-
<PAGE> 22
27. IUOE Stationary Engineers Local 39 Pension Plan (and corresponding Trust
Agreement).
Existing Remediable Issues
1. Such matters that exist now or may arise in the future
because of the participation of the employees of the Dreyer's Grand Ice Cream
Charitable Foundation and Edy's Grand Ice Cream Charitable Foundation in the
Dreyer's Grand Ice Cream, Inc. Money Purchase Pension Plan, as amended, and
the Dreyer's Grand Ice Cream, Inc. Savings Plan, as amended.
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<PAGE> 23
SCHEDULE 5.12
TO CREDIT AGREEMENT
ENVIRONMENTAL MATTERS
Properties Which are Exceptions to Section 5.12(c):
1. 5929 College Avenue, Oakland, California (and adjacent site to the extent
that there has been migration).
2. 1250 Whipple Road, Union City, California.
3. Edy's Grand Ice Cream Fort Wayne, Indiana plant.
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<PAGE> 24
SCHEDULE 5.15
TO CREDIT AGREEMENT
PENDING UNFAIR LABOR PRACTICE COMPLAINTS
1. Edy's Grand Ice Cream, NLRB Case No. 25-CA-23141
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<PAGE> 25
SCHEDULE 5.16
TO CREDIT AGREEMENT
PENDING INTELLECTUAL PROPERTY DISPUTES, CLAIMS, ETC.
1. Claims of Stanley Jones Against Polar Express Systems International,
Inc.
2. Don Thomas Claim
3. Dreyer's Grand Ice Cream, Inc. and Edy's Grand Ice Cream, Inc. v.
Calip Dairies, Inc., T&W Ice Cream, Inc., and T&W Sales, Inc., dba
T&W Ice Cream of New Jersey, Inc.
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<PAGE> 26
SCHEDULE 5.17
TO CREDIT AGREEMENT
A. Name and Jurisdiction of Incorporation of Subsidiaries
------------------------------------------------------
<TABLE>
<CAPTION>
Jurisdiction of
Name Incorporation
---- -------------
<S> <C>
Edy's Grand Ice Cream California
Edy's of Illinois, Inc. Illinois
Polar Express Systems Kentucky
International, Inc.
Dreyer's International, Inc. [FSC] Virgin Islands
B. Ownership Interests
-------------------
Type of
Name Entity
---- ---------
M-K-D Distributors Inc. Corporation
DSD Partnership General Partnership
Kabushiki Kaisha Dreyer's Japan Limited Liability Stock Company
Yadon Enterprises, Inc. Corporation
</TABLE>
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<PAGE> 27
MANWELL & MILTON
EXHIBIT A to
Letter dated May 6, 1994
Dolly Madison New York Store Door Distribution Agreement dated November 20,
1992 between Edy's and Calip Dairies, Inc.
Steve's New York Store Door Distribution Agreement dated November 20, 1992
between Edy's and Steve's Homemade Ice Cream, Inc.
Steve's National Distribution Agreement dated November 20, 1992 between
Dreyer's, Edy's and Steve's Homemade Ice Cream, Inc.
