<PAGE> 1
FORM 10-Q
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.
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
2
<PAGE> 3
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
3
<PAGE> 4
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
4
<PAGE> 5
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
5
<PAGE> 6
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>
6
<PAGE> 7
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 incurred $351,000 in transaction costs resulting in
an increase of $11,321,000 in goodwill and distribution rights.
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.
Dreyer's 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. Dreyer's 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
day trading 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 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.
7
<PAGE> 8
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>
8
<PAGE> 9
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"). 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, competitor's 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
higher interest rate ot the 1994 as compared with the same period in 1993 due
primarily to 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.
9
<PAGE> 10
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 of 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. According to the terms of this
agreement, the proceeds would be used to repurchase the Company's shares. (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 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.
10
<PAGE> 11
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>
11
<PAGE> 12
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 10, 1994 By: /s/ Paul R. Woodland
--------------------------
Paul R. Woodland
Vice President -- Finance
and Administration and
Chief Financial Officer
12
<PAGE> 13
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>
<PAGE> 1
EXHIBIT 2.1
AMENDMENT TO SECURITIES PURCHASE AGREEMENT
This Amendment to Securities Purchase Agreement (the "Amendment") is
entered into this 6th day of May, 1994 by and among Dreyer's Grand Ice Cream,
Inc., a Delaware corporation (the "Company"), and Trustees of General Electric
Pension Trust, a New York common law trust ("GE Pension"), GE Investment Private
Placement Partners, I, a Delaware limited partnership ("GEIPPP") and General
Electric Capital Corporation, a New York corporation (collectively the
"Purchasers").
Recitals
A. Company entered into a Securities Purchase Agreement dated June 24, 1993
with Purchasers (the "Agreement"), pursuant to which Purchasers acquired
various securities of Company.
B. Company and Purchasers now desire to amend the Agreement as set forth
herein.
1. Amendments.
1.1. Section 6.A. of the Agreement is hereby amended by deleting from such
section the words "June 30, 1996" and inserting in place thereof the words
"September 30, 1997."
1.2. Section 6.1 of the Agreement is hereby amended to read in its entirety
as follows:
"6.1. Financial Covenants. (a) The Company will not permit its
Consolidated Net Worth at any time to be less than the sum of (i)
$100,000,000 and (ii) the aggregate Stated Value of the outstanding shares
of Preferred Stock (it being understood that, for the purposes of this
paragraph (a), (x) the Notes and any other Subordinated Indebtedness of the
Company shall not be treated as equity and (y) Consolidated Net Worth shall
not be reduced by any amount up to one hundred and six million dollars
($106,000,000) borrowed to redeem, purchase or acquire shares of Common
Stock to the extent such amounts are repaid from the net cash proceeds
received, not more than 180 days after the effective date of such
borrowing, by the Company from Nestle for the issue and sale of shares of
Common Stock and warrants to purchase or acquire shares of Common Stock on
the terms set forth in the Nestle Purchase Agreement and the Nestle Warrant
Agreement).
1
<PAGE> 2
(b) The Company will not incur, create, assume or permit to exist any
Indebtedness if such Indebtedness (excluding the Notes, any Subordinated
Indebtedness and, Indebtedness (up to one hundred and six million dollars
($106,000,000) incurred to redeem, purchase or acquire shares of Common
Stock to the extent such Indebtedness is repaid by the net cash proceeds
received, not more than 180 days after incurring such Indebtedness, by the
Company from Nestle for the issue and sale of shares of Common Stock and
warrants to purchase or acquire shares of Common Stock on the terms set
forth in the Nestle Purchase Agreement and the Nestle Warrant Agreement
(the "Bridge Indebtedness")) would result in a ratio of Consolidated Total
Indebtedness (excluding the Notes and any Subordinated Indebtedness and any
Bridge Indebtedness) to Consolidated Net Worth (which for this purpose
shall include the principal amount of any Notes and other Subordinated
Indebtedness then outstanding and Bridge Indebtedness) of more than 1.25 to
1.00.
(c) The Company will not permit its Fixed Charge Ratio to be less than
1.0 to 1.0 on the last day of fiscal years 1994 and 1995, and 1.5 to 1.0 on
the last day of each fiscal year thereafter."
1.3. Section 6.4 of the Agreement is hereby amended to read in its entirety
as follows:
"6.4. Dividends and Distributions. The Company will not, and will not
permit any Subsidiary to, declare or pay any dividend on, or make any
other distribution in respect of, or redeem, purchase or otherwise acquire
any shares of Common Stock or any other shares of capital stock of the
Company ranking junior to or on a parity with the Preferred Stock; provided
that if no Event of Default shall have occurred and be continuing and, in
the case of a transaction described in clause (i) or (iii), after giving
effect to any such transaction the Company would not be in violation of any
of the covenants set forth in Section 6.1 and could incur an additional
dollar of indebtedness under Section 6.1(b), the Company may: (i) pay cash
dividends on its Common Stock in an aggregate amount (when added to any
redemptions, purchases or acquisitions described in the proviso to clause
(iii) hereof other than those redemptions, purchases or acquisitions in an
amount up to one hundred and six million dollars ($106,000,000) funded
through the
2
<PAGE> 3
incurrence of Bridge Indebtedness or with the net cash proceeds received
by the Company from Nestle for the issue and sale of shares of Common
Stock and warrants to purchase or acquire shares of Common Stock on the
terms set forth in the Nestle Purchase Agreement and the Nestle Warrant
Agreement) not to exceed at any time the sum of $5,000,000 plus 40% of
cumulative net income of the Company, determined in accordance with
generally accepted accounting principles (but excluding extraordinary
after-tax gains from sales of material assets), during the period (treated
as one accounting period) commencing on December 27, 1992 and ending on
the date any such dividend is paid, (ii) pay dividends in capital stock
of the Company so long as any such dividend results in an adjustment
pursuant to Section 10.7(a) hereof, and (iii) redeem, purchase or otherwise
acquire shares of Common Stock; provided that, in the case of any
redemption, purchase or acquisition of Common Stock at a price which
exceeds 110% of the Current Market Price of the Common Stock for five
Trading Days ending on the date of such transaction, the aggregate dollar
amount paid in connection with such redemption, purchase or acquisition in
excess of 110% of the Current Market Price (when added to any cash
dividends on the Common Stock and any other redemptions, repurchases or
acquisitions at a price which exceeds 110% of such Current Market Price)
may not exceed the aggregate amount set forth in clause (i) above; and
provided, however, that nothing in this Section 6.4 shall prevent the
Company from redeeming, at the redemption price of $.01 per Right, the
Rights issued pursuant to the Amended and Restated Rights Agreement (the
"Rights Agreement") dated as of March 4, 1991 between the Company and
First Interstate Bank of California, as amended from time to time."
1.4. Section 9.1 of the Agreement is hereby amended by deleting from such
section, in each place where they appear, the words "June 30, 1996" and
inserting in place thereof the words "December 15, 1997".
1.5. Section 9.5(a) of the Agreement is hereby amended to read in its
entirety as follows:
"9.5. Redemption Procedures. (a) Notice of any redemption of Notes
pursuant to Section 9.1 or 9.2 which relate to a redemption date after
December 15, 1997 and prior to January 1, 1998
3
<PAGE> 4
shall be mailed at least 60 but not more than 120 days prior to the date
fixed for redemption to each holder of Notes to be redeemed, at such
holder's address as it appears in the Note Register. Notice of any
redemption of Notes pursuant to Section 9.1 or 9.2 which relate to a
redemption date on or before December 16, 1997 or after December 31, 1997
shall be mailed at least 30 but not more than 60 days prior to the date
fixed for redemption to each holder of Notes to be redeemed, at such
holder's address as it appears in the Note Register. In order to
facilitate the redemption of Notes, the Board of Directors may fix a
record date for the determination of Notes to be redeemed."
1.6. The definition of Fixed Charge Ratio in Section 12.1 of the Agreement
is hereby amended by deleting the words "most recently completed" from before
the words "fiscal year", and inserting in place thereof the word "relevant".
1.7. Section 12.1 of the Agreement is hereby amended to add the following
definitions in their correct alphabetical position:
"'Nestle' means Nestle Holdings, Inc., a Delaware corporation."
"'Nestle Purchase Agreement' means the Stock and Warrant Purchase Agreement
dated May 6, 1994 between the Company and Nestle, as in effect on such
date."
"'Nestle Warrant Agreement' means the Warrant Agreement dated ______, 1994
between the Company and Nestle, as in effect on such date."
1.8. The Company shall within five (5) business days amend the Certificate
of Designation of Series B Convertible Preferred Stock (Exhibit E to the
Agreement) as follows:
(1) by deleting from Section 5(a), in each place where they appear, the words
"June 30, 1996" and inserting in place thereof the words "December 15, 1997".
(2) by amending Section 5(e)(i) to read in its entirety as follows:
"(e)(i) Notice of any redemption of shares of Series B Preferred Stock
pursuant to paragraph (a) or (b) of this Section 5 which relate to a
redemption date after December 15, 1997 and prior to
4
<PAGE> 5
January 1, 1998 shall be mailed at least 60 but not more than 120 days
prior to the date fixed for redemption to each holder of shares of Series
B Preferred Stock to be redeemed, at such holder's address as it appears
on the transfer books of the Corporation. Notice of any redemption of
shares of Series B Preferred Stock pursuant to paragraph (a) or (b) of
this Section 5 which relate to a redemption date on or before December 16,
1997 or after December 31, 1997 shall be mailed at least 30 but not more
than 60 days prior to the date fixed for redemption to each holder of
shares of Series B Preferred Stock to be redeemed, at such holder's address
as it appears on the transfer books of the Corporation. In order to
facilitate the redemption of shares of Series B Preferred Stock, the Board
of Directors may fix a record date for the determination of shares of
Series B Preferred Stock to be redeemed."
(3) by amending Section 2(a) to read in its entirety as follows:
"(a) The holders of shares of Series B Preferred Stock, in preference to
the holders of shares of Common Stock and of any shares of other capital
stock of the Corporation ranking junior to the Series B Preferred Stock as
to payment of dividends, shall be entitled to receive, when, as and if
declared by the Board of Directors, out of the assets of the Corporation
legally available therefor, cumulative cash dividends at an annual rate
equal to the Adjusted Preferred Dividend Rate (as defined in Section 11)
from and after the date of issuance of the Series B Preferred Stock (the
"Issue Date"), as long as the shares of Series B Preferred Stock remain
outstanding; provided, however, that such dividends shall cease to accrue
and be cumulative on a given share of Series B Preferred Stock from and
after October 1, 1997 if (i) the holder has been notified under Section
5(e) hereof that the share will be redeemed in 1997, and (ii) all dividends
and other amounts due with respect to such share of Series B Preferred
Stock are paid to the holder thereof on the redemption date specified in
such notice or such dividends and other amounts are segregated and held in
trust by the Company for payment upon surrender of such share in accordance
with such notice. Dividends shall be computed on the basis of the Stated
Value, and shall accrue and be payable quarterly, in
5
<PAGE> 6
arrears, on the last business day of March, June, September and December
in each year (each such date being referred to herein as a "Quarterly
Dividend Payment Date"), commencing on the first Quarterly Dividend
Payment Date following the Issue Date."
Any breach of the covenant in this Section 1.8 shall be subject to the
provisions of Section 8.1(g) of the Agreement.
1.9. Each of the Purchasers shall surrender for exchange within ten (10)
days of execution of this Amendment the Notes issued by the Company pursuant to
the Agreement, each of which Note shall be exchanged for a new Note:
(1) providing that interest on the Note shall cease to accrue from and after
October 1, 1997 if (i) the holder has been notified by the Company under
Section 9.5 of the Agreement that the Note will be redeemed in 1997, and (ii)
all amounts due under the Note are paid to the holder thereof on the redemption
date specified in such notice or such amounts are segregated and held in trust
by the Company for payment upon surrender of the Note in accordance with such
notice;
(2) dated the date to which interest has been paid on the Note so surrendered
(or, if no interest has been paid, the date of such surrendered Note), but in
the same aggregate unpaid principal amount as such surrendered Note; and
(3) registered in the name of the holder surrendering such Note.
2. Miscellaneous.
2.1. Except as expressly amended herein, all terms, covenants and
provisions of the Agreement are and shall remain in full force and effect and
all references therein to such Agreement shall henceforth refer to the
Agreement as amended by this Amendment. This Amendment shall be deemed
incorporated into, and a part of, the Agreement.
2.2. This Amendment shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns. No third party
beneficiaries are intended in connection with this Amendment.
2.3. This Amendment shall be governed by and construed in accordance with
the law of the State of Delaware.
2.4. This Amendment may be executed in any number of counterparts, each of
which shall be deemed an original, but all
6
<PAGE> 7
such counterparts together shall constitute but one and the same instrument.
IN WITNESS WHEREOF, the Company and the Purchasers have caused this Amendment
to be executed and delivered as of the date first above written.
DREYER'S GRAND ICE CREAM, INC. TRUSTEES OF GENERAL ELECTRIC
PENSION TRUST
By: \s\ Paul R. Woodland By: \s\ John H. Myers
------------------------ ---------------------
Title: Vice President Title: Trustee
-------------------- -----------------
GENERAL ELECTRIC CAPITAL GE INVESTMENT PRIVATE
CORPORATION PLACEMENT PARTNERS I
By: GE Investment Management
By: John T. Carlton Incorporated, its
--------------------------------- General Partner
Title: Department Operations Manager
-----------------------------
By: \s\ John H. Myers
---------------------
Title: Trustee
-----------------
7
<PAGE> 1
Exhibit 4.1
AMENDMENT TO REGISTRATION RIGHTS AGREEMENT
This Amendment to Registration Rights Agreement (the "Amendment") is
entered into this 6 day of May, 1994 by and among Dreyer's Grand Ice Cream,
Inc., a Delaware corporation (the "Company"), and Trustees of General Electric
Pension Trust, a New York common law trust ("GE Pension"), GE Investment
Private Placement Partners, I, a Delaware limited partnership ("GEIPPP") and
General Electric Capital Corporation, a New York corporation (collectively the
"Investors").
Recitals
A. The Company entered into a Registration Rights Agreement dated June
30, 1993 with the Investors (the "Agreement"), pursuant to which the Investors
acquired the right under certain circumstances to cause securities of the
Company held by them to be registered by the Company under the Securities Act
of 1933.
B. The Company and Investors now desire to amend the Agreement as set
forth herein.
1. Amendments.
1.1. Section 2.2(a) is hereby amended by adding the following
at the end of such section:
"Notwithstanding anything to the contrary in this
Section 2.2(a), if any such proposal by the Company to
register any of its securities was as a result of the
exercise of a demand registration right under
Section 3 of the Nestle Registration Rights Agreement,
then the Company shall not be obligated to include
any Registrable Securities in any such registration
without the consent of the Nestle Holders; provided,
however, that such consent shall be deemed to have
been given if the Nestle Holders allow any securities
of the Company other than 'Registrable Securities'
(as defined in the Nestle Registration Rights
Agreement) to be included in such registration."
1.2. Subsection 2.2(b) is hereby amended to read in its
entirety as follows:
"(b) Priority in Incidental Registrations. If the
managing underwriter of any underwritten offering
shall inform the Company by letter of its belief that
the number or type of Registrable Securities
1
<PAGE> 2
requested to be included in such registration would
materially adversely affect such offering, then the
Company will include in such registration, to the extent
of the number and type which the Company is so advised can
be sold in (or during the time of) such offering
(i) first, all securities proposed by the Company to be
sold for its own account, if any; (ii) second, and only if
all the securities proposed by the Company to be sold for
its own account have been so included, such Registrable
Securities and securities of the Company requested
for inclusion in such registration pursuant to the
exercise of piggyback registration rights under
Section 4(a) of the Nestle Registration Rights Agreement
(the 'Nestle Securities'), pro rata among the holders of
the Registrable Securities and Nestle Securities on
the basis of the respective percentages of the total
amount of securities requested to be so included by such
holders which are represented by Registrable Securities,
on the one hand, and Nestle Securities, on the other
hand; and (iii) third, and only if all of the Registrable
Securities and Nestle Securities have been included in such
registration, any other securities of the Company
requested to be included in such registration; provided,
however, that if such registration was as a result of the
exercise of a demand registration right pursuant to
Section 3 of the Nestle Registration Rights Agreement, and
the Nestle Holders have consented to the inclusion of
Registrable Securities in such offering, then the
securities to be included in such registration shall be
selected, after all 'Registrable Securities' (as defined
in the Nestle Registration Rights Agreement) originally
proposed to be included in such registration have been so
included, (y) first, from the Registrable Securities and
(z) second, and only if all the Registrable Securities
have been included in such registration, from any other
securities eligible for inclusion in such registration."
1.3. Subsection 2.4(c) is hereby amended to read in its
entirety as follows:
"(c) Holdback Agreements. (i) Each holder of Registrable
Securities agrees, in each of the instances set out below,
not to effect any public sale or distribution, including any
sale pursuant to Rule 144 under the Securities Act, of any
Registrable Securities, and not to effect any such public
sale or distribution of any other equity
2
<PAGE> 3
security of the Company or of any security convertible
into or exchangeable or exercisable for any equity
security of the Company during the 15 days prior to, and
during the 90-day period (or such longer period as may be
reasonably requested by the underwriter, if any, of an
offering) beginning on, the effective date of a registration
statement (except as part of such registration) provided
that each holder of Registrable Securities has received
written notice of such registration at least 15 days prior
to such effective date:
(1) in the case of an underwritten public
offering in which any such holder is participating, if
requested by the managing underwriters of such
underwritten public offering,
(2) in the case of an underwritten public
offering in which any such holder is not participating
and which is initiated pursuant to the exercise
of demand registration rights under Section 3
of the Nestle Registration Rights Agreement, if
requested by the managing underwriters of such
underwritten public offering,
(3) in the case of a registration pursuant to
Section 2.1 hereof in which any such holder is
participating and which is not an underwritten
public offering, if requested by the holders of
a majority of the Registrable Securities
requesting such registration,
(4) in the case of an incidental registration
pursuant to Section 2.2 hereof in which any such
holder is participating and which is not an
underwritten public offering, if requested by the
holders of a majority of the securities
requesting such registration, or
(5) in the case of a registration in which any
such holder is not participating and which is
initiated pursuant to the exercise of demand
registration rights under Section 3 of the
Nestle Registration Rights Agreement and which
is not an underwritten public offering, if
requested by the Nestle Holders.
3
<PAGE> 4
(ii) In the event of any registration of Registrable
Securities pursuant to Section 2.1 or 2.2 hereof, the
Company agrees (i) not to effect any public or private
sale or distribution of any of its equity securities or
of any equity security convertible into or exchangeable
or exercisable for any equity security of the Company
(other than any such sale or distribution of such
securities in connection with any merger or
consolidation by the Company or any subsidiary of the
Company of the capital stock or substantially all the
assets of any other person or in connection with an
employee stock option or other benefit plan) during the
15 days prior to, and during the 90-day period beginning
on, the effective date of such registration statement
(except as part of such registration) to the extent the
Company is timely notified in writing by a holder of the
Registrable Securities or the managing underwriters of
any such registration, and (ii) that any agreement
entered into after the date of this Agreement pursuant
to which the Company issues or agrees to issue any
privately placed equity securities shall contain a
provision under which holders of such securities agree
not to effect any public sale or distribution of any
such securities during the period referred to in the
foregoing clause (i), including any sale pursuant to
Rule 144 under the Securities Act (except as part of
such registration, if permitted)."
1.4. Section 3 of the Agreement is hereby amended by adding
the following definitions in their correct alphabetical position:
"'Nestle' means Nestle Holdings, Inc., a Delaware
corporation."
"'Nestle Holders' means the selling holders of a
majority of all 'Registrable Securities' (as defined
in the Nestle Registration Rights Agreement) included
in a demand registration under Section 3 of the
Nestle Registration Rights Agreement."
"'Nestle Registration Rights Agreement' means the
Registration Rights Agreement dated May ___, 1994
between the Company and Nestle as in effect on such
date."
4
<PAGE> 5
2. Miscellaneous.
2.1. Except as expressly amended herein, all terms,
covenants and provisions of the Agreement are and shall remain in full
force and effect and all references therein to such Agreement shall
henceforth refer to the Agreement as amended by this Amendment. This
Amendment shall be deemed incorporated into, and a part of, the
Agreement.
2.2. This Amendment shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and
assigns. No third party beneficiaries are intended in connection with
this Amendment.
2.3. This Amendment shall be governed by and construed in
accordance with the law of the State of Delaware.
2.4. 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.
IN WITNESS WHEREOF, the Company and the Purchasers have caused this
Amendment to be executed and delivered as of the date first above written.
DREYER'S GRAND ICE CREAM, INC. TRUSTEES OF GENERAL ELECTRIC
PENSION TRUST
By: /s/ PAUL R. WOODLAND By: /s/ JOHN H. MYERS
-------------------------- -------------------------------
Title: Vice President Title: Trustee
----------------------- ----------------------------
GENERAL ELECTRIC CAPITAL GE INVESTMENT PRIVATE PLACEMENT
CORPORATION PARTNERS I
By: /s/ JOHN T. CARLTON By: GE Investment Management
-------------------------- Incorporated, its
Title: Department Operations General Partner
Manager
----------------------- /s/ JOHN H. MYERS
By: ---------------------------
Title: Trustee
------------------------
5
<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: ________________________
Name: William C. Collett
Title: Treasurer
BANK OF AMERICA NATIONAL
TRUST
AND SAVINGS ASSOCIATION, as Agent
By: _________________________
Name: Kevin C. Leader
Title: Vice President
BANK OF AMERICA NATIONAL
TRUST
AND SAVINGS ASSOCIATION, as a Bank
By: _________________________
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
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.
<PAGE> 20
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> 21
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> 22
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> 23
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.
-19-
<PAGE> 24
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.
-20-
<PAGE> 25
SCHEDULE 5.15
TO CREDIT AGREEMENT
PENDING UNFAIR LABOR PRACTICE COMPLAINTS
1. Edy's Grand Ice Cream, NLRB Case No. 25-CA-23141
-21-
<PAGE> 26
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.
-22-
<PAGE> 27
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>
-23-
<PAGE> 1
Exhibit 10.2
============================================================================
CREDIT AGREEMENT
Dated as of May 6, 1994
between
DREYER'S GRAND ICE CREAM, INC.
and
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
============================================================================
<PAGE> 2
CREDIT AGREEMENT
This CREDIT AGREEMENT is entered into as of May 6, 1994, between
Dreyer's Grand Ice Cream, Inc., a Delaware corporation (the "Company"), and
Bank of America National Trust and Savings Association (the "Bank").
WHEREAS, the Bank has agreed to make available to the Company a
non-revolving credit facility upon the terms and conditions set forth in this
Agreement;
NOW, THEREFORE, in consideration of the mutual agreements, provisions
and covenants contained herein, the parties agree as follows:
ARTICLE I
DEFINITIONS
1.01 Certain Defined Terms. The following terms have the following
meanings:
"Affiliate" means, as to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by, or is
under common control with, such Person. A Person shall be deemed to
control another Person if the controlling Person possesses, directly
or indirectly, the power to direct or cause the direction of the
management and policies of the other Person, whether through the
ownership of voting securities, by contract, or otherwise.
"Agreement" means this Credit Agreement.
"Applicable Margin" means 0.75% with respect to Same Day Rate
Loans and 0.00% with respect to Base Rate Loans.
"Assignee" has the meaning specified in subsection 9.08(a).
"Attorney Costs" means and includes all fees and disbursements
of any law firm or other external counsel, the allocated cost of
internal legal services and all disbursements of internal counsel.
"Bank" has the meaning specified in the introductory clause
hereto.
"Bankruptcy Code" means the Federal Bankruptcy Reform Act of
1978 (11 U.S.C. Section 101, et seq.).
"Base Rate" means, for any day, the higher of (a) 0.50% per
annum above the latest Federal Funds Rate, or (b) the rate of interest
in effect for such day as publicly announced from time to time by the
Bank in San Francisco, California, as its "reference rate." (The
reference rate is a rate set by the Bank based upon various factors
including the Bank's costs and desired return, general economic
conditions and other factors, and is used as
-1-
<PAGE> 3
a reference point for pricing some loans, which may be price at,
above, or below such announced rate.) Any change in the reference
rate announced by the Bank shall take effect at the opening of
business on the day specified in the public announcement of such
change.
"Base Rate Loan" means a Loan that bears interest based on
the Base Rate.
"Borrowing" means a borrowing hereunder consisting of a Loan
of a single Type made to the Company on a given day by the Bank under
Article II.
"Borrowing Date" means any date on which a Borrowing occurs
under Section 2.03.
"Business Day" means any day other than a Saturday, Sunday or
other day on which commercial banks in New York, New York or San
Francisco, California are authorized or required by law to close.
"Capital Adequacy Regulation" means any guideline, request or
directive of any central bank or other Governmental Authority, or any
other law, rule or regulation, whether or not having the force of law,
in each case, regarding capital adequacy of the Bank or of any
corporation controlling the Bank.
"Closing Date" means the date on which all conditions
precedent set forth in Section 4.01 are satisfied or waived by the
Bank.
"Commitment", as to the Bank, has the meaning specified in
Section 2.01.
"Contractual Obligation" means, as to any Person, any
provision of any security issued by such Person or of any agreement,
undertaking, contract, indenture, mortgage, deed of trust or other
instrument, document or agreement to which such Person is a party or
by which it or any of its property is bound and, as to the Company,
includes any provision under the Nestle Agreement.
"Conversion/Continuation Date" means any date on which, under
Section 2.04, the Company (a) converts a Loan of one Type to another
Type, or (b) continues as a Loan of the same Type, but with a new
Interest Period, a Loan having an Interest Period expiring on such
date.
"Default" means any event or circumstance which, with the
giving of notice, the lapse of time, or both, would (if not cured or
otherwise remedied during such time) constitute an Event of Default.
"Event of Default" means any of the events or circumstances
specified in Section 8.01.
-2-
<PAGE> 4
"Federal Funds Rate" means, for any day, the rate set forth in
the weekly statistical release designated as H.15(519), or any
successor publication, published by the Federal Reserve Bank of New
York (including any such successor, "H.15(519)") on the preceding
Business Day opposite the caption "Federal Funds (Effective)"; or, if
such rate is not so published on any such preceding Business Day, the
rate for such day will be the arithmetic mean as determined by the
Bank of the rates for the last transaction in overnight Federal funds
arranged prior to 9:00 a.m. (New York, New York time) on that day by
each of three leading brokers of Federal funds transactions in New
York, New York selected by the Bank.
"FRB" means the Board of Governors of the Federal Reserve
System, and any Governmental Authority succeeding to any of its
principal functions.
"GAAP" means generally accepted accounting principles set
forth from time to time in the opinions and pronouncements of the
Accounting Principles Board and the American Institute of Certified
Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board (or agencies with similar functions of
comparable stature and authority within the U.S. accounting
profession), which are applicable to the circumstances as of the
Closing Date.
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof, any central bank (or
similar monetary or regulatory authority) thereof, any entity
exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government, and any
corporation or other entity owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing.
"HSR" means the Hart-Scott-Rodino Antitrust Improvements Act
of 1976 and the rules and regulations thereunder, in all cases as
amended from time to time.
"Indemnified Liabilities" has the meaning specified in Section
9.05.
"Indemnified Person" has the meaning specified in Section 9.05.
"Interest Period" means, as to each Same Day Rate Loan, the
period commencing on the Borrowing Date of such Loan to the next
Business Day;provided that no Interest Period shall extend beyond the
Termination Date.
"Insolvency Proceeding" means (a) any case, action or
proceeding before any court or other Governmental Authority relating
to bankruptcy, reorganization, insolvency, liquidation, receivership,
dissolution, winding-up or relief of debtors, or (b) any general
assignment for the benefit of creditors, composition, marshalling of
assets for creditors, or other, similar arrangement in respect of its
creditors generally or any substantial portion of its creditors;
undertaken under U.S. Federal, state or foreign law, including the
Bankruptcy Code.
-3-
<PAGE> 5
"Loan" means an extension of credit by the Bank to the Company
under Article II, or any portion thereof remaining after or resulting
from any conversion of Loans under Section 2.04, and may be a Base
Rate Loan or a Same Day Rate Loan (each, a "Type" of Loan).
"Loan Documents" means this Agreement and all other documents
delivered to the Bank in connection herewith.
"Margin Stock" means "margin stock" as such term is defined in
Regulation G, T, U or X of the FRB.
"Material Adverse Effect" means (a) a material adverse change
in, or a material adverse effect upon, the operations, business,
properties, condition (financial or otherwise) or prospects of the
Company or the Company and its Subsidiaries taken as a whole; (b) a
material impairment of the ability of the Company to perform under any
Loan Document and to avoid any Event of Default; or (c) a material
adverse effect upon the legality, validity, binding effect or
enforceability against the Company of any Loan Document.
"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 Bank 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).
"Notice of Borrowing" means a notice in substantially the form
of Exhibit A.
"Notice of Conversion/Continuation" means a notice in
substantially the form of Exhibit B.
"Obligations" means all advances, debts, liabilities,
obligations, covenants and duties arising under any Loan Document
owing by the Company to the Bank, or any Indemnified Person, whether
direct or indirect (including those acquired by assignment), absolute
or contingent, due or to become due, now existing or hereafter
arising.
"Organization Documents" means, for any corporation, the
certificate or articles of incorporation, the bylaws, any certificate
of determination or instrument relating to the rights of preferred
shareholders of such corporation, any shareholder rights agreement,
and all applicable resolutions of the board of directors (or any
committee thereof) of such corporation.
"Participant" has the meaning specified in subsection 9.08(b).
-4-
<PAGE> 6
"Person" means an individual, partnership, corporation,
business trust, joint stock company, trust, unincorporated
association, joint venture or Governmental Authority.
"Requirement of Law" means, as to any Person, any law
(statutory or common), treaty, rule or regulation or determination of
an arbitrator or of a Governmental Authority, in each case applicable
to or binding upon the Person or any of its property or to which the
Person or any of its property is subject.
"Responsible Officer" means the chief executive officer or the
president of the Company, or any other officer having substantially
the same authority and responsibility; or, with respect to compliance
with financial covenants, the chief financial officer or the treasurer
of the Company, or any other officer having substantially the same
authority and responsibility.
"Same Day Rate" means the rate specified by the Bank to the
Company prior to the making of the Same Day Rate Loan to which such
rate will apply, and agreed to by the Company.
"Same Day Rate Loan" means a Loan that bears interest at the
Same Day Rate.
"Termination Date" means the earliest to occur of:
(a) The date that is 60 days after the date of this
Agreement;
(b) The date on which the Commitment terminates in
accordance with the provisions of this Agreement;
(c) The date on which the Nestle Closing occurs;
(d) The date the aggregate of the Share Purchase
Price and the Warrant Purchase Price (as such terms are
defined in the Nestle Agreement) is less than $100,000,000;
and
(d) The date the Nestle Agreement is terminated or
ceases to be in effect for any reason.
"Subsidiary" of a Person means any corporation, association,
partnership, joint venture or other business entity of which more than
50% of the voting stock or other equity interests (in the case of
Persons other than corporations) is owned or controlled directly or
indirectly by the Person, or one or more of the Subsidiaries of the
Person, or a combination thereof. Unless the context otherwise
clearly requires, references herein to a "Subsidiary" refer to a
Subsidiary of the Company.
"Type" has the meaning specified in the definition of "Loan."
1.02 Other Interpretive Provisions. (a) The meanings of defined
terms are
-5-
<PAGE> 7
equally applicable to the singular and plural forms of the defined terms.
(b) The words "hereof", "herein", "hereunder" and similar
words refer to this Agreement as a whole and not to any particular provision of
this Agreement; and subsection, Section, Schedule and Exhibit references are to
this Agreement unless otherwise specified. The term "documents" includes any
and all instruments, documents, agreements, certificates, indentures, notices
and other writings, however evidenced. The term "including" is not limiting
and means "including without limitation." In the computation of periods of
time from a specified date to a later specified date, the word "from" means
"from and including"; the words "to" and "until" each mean "to but excluding",
and the word "through" means "to and including."
(c) Unless otherwise expressly provided herein, (i)
references to agreements (including this Agreement) and other contractual
instruments shall be deemed to include all subsequent amendments and other
modifications thereto, but only to the extent such amendments and other
modifications are not prohibited by the terms of any Loan Document, and (ii)
references to any statute or regulation are to be construed as including all
statutory and regulatory provisions consolidating, amending, replacing,
supplementing or interpreting the statute or regulation.
(d) The captions and headings of this Agreement are for
convenience of reference only and shall not affect the interpretation of this
Agreement. This Agreement and the other Loan Documents are the result of
negotiations among and has been reviewed by counsel to the Bank and the
Company, and are the products of both parties. Accordingly, they shall not be
construed against the Bank merely because of the Bank's involvement in their
preparation.
1.03 Accounting Principles and Periods. Unless the context otherwise
clearly requires, all accounting terms not expressly defined herein shall be
construed, and all financial computations required under this Agreement shall
be made, in accordance with GAAP, consistently applied. References herein to
"fiscal year" and "fiscal quarter" refer to such fiscal periods of the Company.
ARTICLE II
THE CREDIT
2.01 Amount and Terms of Commitment. The Bank agrees, on the terms
and conditions set forth herein, to make loans to the Company from time to time
on any Business Day during the period from the Closing Date to the Termination
Date, in an aggregate amount not to exceed $100,000,000 (such amount, as the
same may be reduced under Section 2.05 or as a result of one or more
assignments under Section 9.08, the "Commitment"). The credit granted under
this Agreement is not a revolving credit and the Company may not borrow sums
paid or prepaid.
2.02 Loan Accounts. The Loans made by the Bank shall be evidenced by
-6-
<PAGE> 8
one or more loan accounts or records maintained by the Bank in the ordinary
course of business. The loan accounts or records maintained by the Bank shall
be conclusive absent manifest error of the amount of the Loans made by the Bank
to the Company and the interest and payments thereon. Any failure so to record
or any error in doing so shall not, however, limit or otherwise affect the
obligation of the Company hereunder to pay any amount owing with respect to the
Loans.
2.03 Procedure for Borrowing. Each Borrowing shall be made upon the
Company's irrevocable written notice delivered to the Bank in the form of a
Notice of Borrowing (which notice must be received by the Bank prior to 9:00
a.m. (San Francisco, California time) on the requested Borrowing Date,
specifying: (i) the amount of the Borrowing, which shall be in an aggregate
minimum amount of $1,000,000 or any multiple of $1,000,000 in excess thereof;
(ii) the requested Borrowing Date, which shall be a Business Day; and (iii) the
Type of Loans comprising the Borrowing.
2.04 Conversion and Continuation Elections.
(a) The Company may, upon irrevocable written notice to the
Bank in accordance with subsection 2.04(b):
(1) Elect, as of any Business Day, in the case of
Base Rate Loans, or as of the last day of the applicable Interest
Period, in the case of Same Day Rate Loans to convert any such Loans
(or any part thereof in an amount not less than $1,000,000 or that is
in an integral multiple of $1,000,000 in excess thereof) into Loans of
any other Type; or
(2) Elect, as of the last day of the applicable
Interest Period, to continue any Loan having an Interest Period
expiring on such day (or any part thereof in an amount not less than
$1,000,000 or that is in an integral multiple of $1,000,000 in excess
thereof);
provided, that if at any time the aggregate amount of any Same Day Rate
Loan is reduced, by payment, prepayment, or conversion of part thereof to be
less than $1,000,000, such Same Day Rate Loan shall automatically convert into
a Base Rate Loan, and on and after such date the right of the Company to
continue such Loan as, and convert such Loan into, a Same Day Rate Loan shall
terminate.
(b) The Company shall deliver a Notice of
Conversion/Continuation to be received by the Bank not later than 9:00 a.m.
(San Francisco, California time) on the Conversion/Continuation Date, if any
Loan is to be converted into or continued as a Same Day Rate Loan or is to
be converted into a Base Rate Loan, specifying:
(A) The proposed Conversion/Continuation Date;
(B) The amount of the Loan to be converted or continued; and
(C) The Type of Loan resulting from the proposed conversion
or continuation.
-7-
<PAGE> 9
(c) If upon the expiration of any Interest Period applicable
to any Same Day Rate Loan the Company has failed to select timely a new
Interest Period to be applicable to such Loan, or if any Default or Event of
Default then exists, the Company shall be deemed to have elected to convert
such Loan into a Base Rate Loan effective as of the expiration date of such
Interest Period.
(d) Unless the Bank otherwise agrees in writing, during the
existence of a Default or Event of Default, the Company may not elect to have a
Loan converted into or continued as a Same Day Rate Loan.
2.05 Voluntary Termination or Reduction of Commitment. The Company
may, upon not less than five Business Days' prior notice to the Bank, terminate
the Commitment, or permanently reduce the Commitment by an aggregate minimum
amount of $1,000,000; unless, after giving effect thereto and to any
prepayments of Loans made on the effective date thereof, the then outstanding
principal amount of the Loans would exceed the amount of the Commitment then in
effect. Once reduced in accordance with this Section, the Commitment may not
be increased. All accrued commitment fees to, but not including the effective
date of any reduction or termination of Commitment, shall be paid on the
effective date of such reduction or termination.
2.06 Prepayments. Subject to Section 3.03, the Company may, at any
time or from time to time, upon not less than three Business Days' irrevocable
notice to the Bank, prepay Loans in whole or in part in an amount not less than
$1,000,000. Such notice of prepayment shall specify the date and amount of
such prepayment and the Type(s) of Loans to be prepaid. If such notice is
given by the Company, the Company shall make such prepayment and the payment
amount specified in such notice shall be due and payable on the date specified
therein, together with accrued interest to each such date on the amount prepaid
and any amounts required pursuant to Section 3.03.
2.07 Repayment. The Company shall repay to the Bank on the
Termination Date the principal amount of Loans outstanding on such date.
2.08 Interest.
(a) Each Loan shall bear interest on the outstanding
principal amount thereof from the applicable Borrowing Date at a rate per annum
equal to the Base Rate or the Same Day Rate, as the case may be plus the
Applicable Margin.
(b) Interest on each Same Day Rate Loan shall be paid in
arrears on the last day of each Interest Period for such Loan and on the date
such Loan is paid. Interest on each Base Rate Loan shall be paid in arrears on
the Termination Date. Interest shall also be paid on the date of any
prepayment of Loans under Section 2.06 for the portion of the Loans so prepaid
and upon payment (including prepayment) in full thereof and, during the
existence of any Event of Default, interest shall be paid on demand of the
Bank.
(c) Notwithstanding subsection (a) of this Section, while any
Event of Default exists or after acceleration, the Company shall pay interest
(after as well as
-8-
<PAGE> 10
before entry of judgment thereon to the extent permitted by law) on the
principal amount of all outstanding Loans, at a rate per annum which is
determined by adding 2% per annum to the Applicable Margin then in effect for
such Loans; provided, however, that, on and after the expiration of any
Interest Period applicable to any Same Rate Loan outstanding on the date of
occurrence of such Event of Default or acceleration, the principal amount of
such Loan shall, during the continuation of such Event of Default or after
acceleration, bear interest at a rate per annum equal to the Base Rate plus 2%.
2.09 Commitment Fee. The Company shall pay to the Bank a commitment
fee on the average daily unused portion of the Commitment, computed from the
Closing Date through the Termination Date, based upon the daily utilization for
such period as calculated by the Bank, equal to 0.375% per annum. Such
commitment fee shall be due and payable on the Termination Date. The
commitment fee provided in this subsection shall accrue at all times after the
above-mentioned commencement date, including at any time during which one or
more conditions in Article IV are not met.
2.10 Upfront Fee. The Company shall pay to the Bank an upfront fee of
$150,000 on the day the Company executes this Agreement.
2.11 Computation of Fees and Interest. All computations of interest
and fees shall be made on the basis of a 360-day year and actual days elapsed
(which results in more interest being paid than if computed on the basis of a
365-day year). Interest and fees shall accrue during each period during which
interest or such fees are computed from the first day thereof to the last day
thereof. Each determination of an interest rate by the Bank shall be
conclusive and binding on the Company in the absence of manifest error.
2.12 Payments by the Company. All payments to be made by the Company
shall be made without set-off, recoupment or counterclaim. Except as otherwise
expressly provided herein, all payments by the Company shall be made to the
Bank at the address from time to time specified by the Bank for such purpose,
and shall be made in dollars and in immediately available funds, no later than
3:00 p.m. (San Francisco, California time) on the date specified herein. Any
payment received by the Bank later than 3:00 p.m. (San Francisco, California
time) shall be deemed to have been received on the following Business Day and
any applicable interest or fee shall continue to accrue. Whenever any payment
is due on a day other than a Business Day, such payment shall be made on the
following Business Day, and such extension of time shall in such case be
included in the computation of interest or fees, as the case may be.
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY
3.01 Taxes. If any payments to the Bank under this Agreement are made
from outside the United States, the Company will not deduct any foreign taxes
from any payments it makes to the Bank. If any such taxes are imposed on any
-9-
<PAGE> 11
payments made by the Company (including payments under this Section), the
Company will pay the taxes and will also pay to the Bank, at the time interest
is paid, any additional amount which the Bank specifies as necessary to
preserve the after-tax yield the Bank would have received if such taxes had not
been imposed. The Company will confirm that it has paid the taxes by giving
the Bank official tax receipts (or notarized copies) within 30 days after the
due date.
3.02 Increased Costs and Reduction of Return.
(a) If the Bank determines that, due to either (1) the
introduction of or any change in or in the interpretation of any law or
regulation or (2) the compliance by the Bank with any guideline or request from
any central bank or other Governmental Authority (whether or not having the
force of law), there shall be any increase in the cost to the Bank of agreeing
to make or making, funding or maintaining any Same Date Rate Loan, then the
Company shall be liable for, and shall from time to time, upon demand, pay to
the Bank, additional amounts as are sufficient to compensate the Bank for such
increased costs.
(b) If the Bank shall have determined that (1) the
introduction of any Capital Adequacy Regulation, (2) any change in any Capital
Adequacy Regulation, (3) any change in the interpretation or administration of
any Capital Adequacy Regulation by any central bank or other Governmental
Authority charged with the interpretation or administration thereof, or (4)
compliance by the Bank (or any applicable lending office of the Bank) or any
corporation controlling the Bank with any Capital Adequacy Regulation, affects
or would affect the amount of capital required or expected to be maintained by
the Bank or any corporation controlling the Bank and (taking into consideration
the Bank's or such corporation's policies with respect to capital adequacy and
the Bank's desired return on capital) determines that the amount of such
capital is increased as a consequence of its Commitment, loans, credits or
obligations under this Agreement, then, upon demand of the Bank to the Company,
the Company shall pay to the Bank, from time to time as specified by the Bank,
additional amounts sufficient to compensate the Bank for such increase.
3.03 Funding Losses. The Company shall reimburse the Bank and hold
the Bank harmless from any loss or expense which the Bank may sustain or incur
as a consequence of: (a) the failure of the Company to make on a timely basis
any payment of principal of any Same Day Rate Loan; (b) the failure of the
Company to borrow, continue, or convert a Loan after the Company has given (or
is deemed to have given) a Notice of Borrowing or a Notice of
Conversion/Continuation; (c) the failure of the Company to make any prepayment
in accordance with any notice delivered under Section 2.06; (d) the prepayment
or other payment (including after acceleration thereof) of a Same Day Rate Loan
on a day that is not the last day of the relevant Interest Period; or (e) the
automatic conversion under Section 2.04 of any Same Day Rate Loan to a Base
Rate Loan on a day that is not the last day of the relevant Interest Period;
including any such loss or expense arising from the liquidation or reemployment
of funds obtained by it to maintain its Same Day Rate Loans or from fees
payable to terminate the deposits from which such funds were obtained.
-10-
<PAGE> 12
3.04 Inability to Determine Rates. If the Bank determines that for
any reason adequate and reasonable means do not exist for determining the Same
Day Rate for any requested Interest Period with respect to a proposed Same Day
Rate Loan, or that the Same Day Rate with respect to a proposed Same Day Rate
Loan does not adequately and fairly reflect the cost to the Bank of funding
such Loan, the Bank will promptly so notify the Company. Thereafter, the
obligation of the Bank to make or maintain Same Day Rate Loans hereunder shall
be suspended until the Bank revokes such notice in writing. Upon receipt of
such notice, the Company may revoke any Notice of Borrowing or Notice of
Conversion/Continuation then submitted by it. If the Company does not revoke
such Notice, the Bank shall make, convert or continue the Loans, as proposed by
the Company, in the amount specified in the applicable notice submitted by the
Company, but such Loans shall be made, converted or continued as Base Rate
Loans instead of Same Day Rate Loans.
3.05 Survival. The agreements and obligations of the Company in this
Article III shall survive the payment of all other Obligations.
ARTICLE IV
CONDITIONS PRECEDENT
4.01 Conditions of Initial Loan. The obligation of the Bank to make
the initial Loan hereunder is subject to the condition that the Bank have
received on or before the Closing Date all of the following, in form and
substance satisfactory to the Bank:
(a) Credit Agreement. This Agreement executed by the Company.
(b) Resolutions; Incumbency.
(1) Copies of the resolutions of the board of
directors of the Company authorizing the transactions contemplated hereby,
certified as of the Closing Date by the Secretary of the Company; and
(2) A certificate of the Secretary of the Company,
dated as of the Closing Date, certifying the names and true signatures of the
officers of the Company authorized to execute, deliver and perform, as
applicable, this Agreement, and all other Loan Documents to be delivered by it
hereunder.
(c) Opinion of Counsel. An opinion of Manwell & Milton,
counsel for the Company, dated as of the Closing Date, substantially in the
form of Exhibit C;
(d) Payment of Fees. Evidence of payment by the Company of
all accrued and unpaid fees, costs and expenses to the extent then due and
payable on the Closing Date, together with Attorney Costs of the Bank to the
extent invoiced prior to or on the Closing Date, plus such additional amounts
of Attorney Costs as shall constitute the Bank's reasonable estimate of
Attorney Costs incurred or to be incurred by it through the closing proceedings
(provided that such estimate
-11-
<PAGE> 13
shall not thereafter preclude final settling of accounts between the Company
and the Bank); including any such costs, fees and expenses arising under or
referenced in Sections 2.09, 2.10 and 9.04.
(e) Certificate. A certificate signed by a Responsible
Officer, dated as of the Closing Date, stating that:
(1) The representations and warranties contained in
Article V are true and correct on and as of such date, as though made on and as
of such date;
(2) No Default or Event of Default exists or would
result from the execution and delivery of this Agreement; and
(3) There has occurred since December 25, 1993, no
event or circumstance that has resulted or could reasonably be expected to
result in a Material Adverse Effect.
(f) Nestle Agreement. Copies of the Nestle Agreement and all
instruments, documents, and other agreements relating to the Nestle Agreement,
certified as true and complete by the Company and in the versions to be
executed.
(g) Public Announcement of the Nestle Agreement. A
certificate from a Responsible Officer of the Company certifying that the
Nestle Agreement has been publicly announced.
(h) Other Documents. Such other approvals, opinions,
documents or materials as the Bank may request.
4.02 Conditions to All Loans. The obligation of the Bank to make any
Loan (including the initial Loan) or to continue or convert any Loan is subject
to the satisfaction of the following conditions precedent on the relevant
Borrowing Date or Conversion/Continuation Date:
(a) Notice of Borrowing. The Bank shall have received a
Notice of Borrowing or a Notice of Conversion/Continuation, as applicable;
(b) Continuation of Representations and Warranties. The
representations and warranties in Article V shall be true and correct on and as
of such Borrowing Date or Conversion/ Continuation Date with the same effect as
if made on and as of such Borrowing Date or Conversion/Continuation Date
(except to the extent such representations and warranties expressly refer to an
earlier date, in which case they shall be true and correct as of such earlier
date);
(c) No Existing Default. No Default or Event of Default
shall exist or shall result from such Borrowing or continuation or conversion;
(d) Initial Waiting Period under HSR. With respect to each
Loan made, continued, or converted five days after the date of this Agreement:
-12-
<PAGE> 14
(1) The Company and Nestle Holdings, Inc. shall have
filed completed Notification and Report Forms under and as required by
HSR;
(2) The initial 30 day waiting period under HSR with
respect to the transactions contemplated by the Nestle Agreement shall
not have been extended;
(3) No Governmental Authority shall have taken any
action to enjoin or delay the consummation of the transactions
contemplated by the Nestle Agreement.
Each Notice of Borrowing and Notice of Conversion/Continuation submitted by the
Company hereunder shall constitute a representation and warranty by the Company
hereunder, as of the date of each such notice and as of each Borrowing Date or
Conversion/Continuation Date, as applicable, that the conditions in Section
4.02 are satisfied.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to the Bank that:
5.01 Corporate Existence and Power. Each of the Company and its
Subsidiaries:
(a) Is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation;
(b) Has the power and authority and all governmental
licenses, authorizations, consents and approvals to own its assets, carry on
its business and to execute, deliver, and perform its obligations under the
Loan Documents;
(c) Is duly qualified as a foreign corporation and is
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 or license; and
(d) Is in compliance with all Requirements of Law;
except, in each case referred to in clause (c) or clause (d), to the extent
that the failure to do so could not reasonably be expected to have a Material
Adverse Effect.
5.02 Corporate Authorization; No Contravention. The execution,
delivery and performance by the Company of this Agreement, each other Loan
Document to which the Company is party, the Nestle Agreement, and the Company's
purchase and retirement of its own stock have been duly authorized by all
necessary corporate action, and do not and will not:
-13-
<PAGE> 15
(a) Contravene the terms of any of the Company's Organization
Documents;
(b) Except as set forth in Schedule 5.02, conflict with or
result in any breach or contravention of, or the creation of any lien under,
any document evidencing any Contractual Obligation to which the Company is a
party or any order, injunction, writ or decree of any Governmental Authority to
which the Company or its property is subject; or
(c) Violate any Requirement of Law.
5.03 Governmental Authorization. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority is necessary or required in connection with the
execution, delivery or performance by, or enforcement against, the Company or
any of its Subsidiaries of the Agreement or any other Loan Document.
5.04 Binding Effect. This Agreement and each other Loan Document to
which the Company is a party constitute the legal, valid and binding
obligations of the Company, enforceable against the Company in accordance with
their respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, or similar laws affecting the enforcement of creditors'
rights generally or by equitable principles relating to enforceability.
5.05 Litigation. There are no actions, suits, proceedings, claims or
disputes pending, or to the best knowledge of the Company, threatened or
contemplated, at law, in equity, in arbitration or before any Governmental
Authority, against the Company, or its Subsidiaries or any of their respective
properties which: (a) purport to affect or pertain to the Nestle Agreement or
the purchase by the Company of its common stock, this Agreement or any other
Loan Document, or any of the transactions contemplated hereby or thereby; or
(b) if determined adversely to the Company or its Subsidiaries, would
reasonably be expected to have a Material Adverse Effect. No injunction, writ,
temporary restraining order or any order of any nature has been issued by any
court or other Governmental Authority purporting to enjoin or restrain the
execution, delivery or performance of the Nestle Agreement, this Agreement or
any other Loan Document, or directing that the transactions provided for herein
or therein not be consummated as herein or therein provided.
5.06 No Default. No Default or Event of Default exists or would
result from the incurring of any Obligations by the Company. As of the Closing
Date, neither the Company nor any Subsidiary is in default under or with
respect to any Contractual Obligation in any respect which, individually or
together with all such defaults, could reasonably be expected to have a
Material Adverse Effect, or that would, if such default had occurred after the
Closing Date, create an Event of Default under subsection 8.01(e).
5.07 Use of Proceeds; Margin Regulations. The proceeds of the Loans
are to be used solely for the purposes set forth in and permitted by Section
6.06. Neither the Company nor any Subsidiary is generally engaged in the
business of purchasing or selling Margin Stock or extending credit for the
purpose of
-14-
<PAGE> 16
purchasing or carrying Margin Stock. The Company shall, immediately after each
purchase of its common stock, immediately retire all such purchased common
stock.
5.08 Title to Properties. The Company and each Subsidiary have good
record and marketable title in fee simple to, or valid leasehold interests in,
all real property necessary or used in the ordinary conduct of their respective
businesses, except for such defects in title as could not, individually or in
the aggregate, have a Material Adverse Effect. As of the Closing Date, the
property of the Company and its Subsidiaries is subject to no liens, other than
those previously disclosed to the Bank in writing.
5.09 Taxes. The Company and its Subsidiaries have filed all Federal
and other material tax returns and reports required to be filed, and have paid
all Federal and other material taxes, assessments, fees and other governmental
charges levied or imposed upon them or their properties, income or assets
otherwise due and payable, except those which are being contested in good faith
by appropriate proceedings and for which adequate reserves have been provided
in accordance with GAAP. There is no proposed tax assessment against the
Company or any Subsidiary that would, if made, have a Material Adverse Effect.
5.10 Financial Condition.
(a) The audited consolidated financial statements of the
Company and its Subsidiaries dated December 25, 1993 and the related
consolidated statements of income or operations, shareholders' equity and cash
flows for the fiscal year ended on that date:
(1) Were prepared in accordance with GAAP
consistently applied throughout the period covered thereby, except as
otherwise expressly noted therein;
(2) Fairly present the financial condition of the
Company and its Subsidiaries as of the date thereof and results of
operations for the period covered thereby; and
(3) Show all material indebtedness and other
liabilities, direct or contingent, of the Company and its consolidated
Subsidiaries as of the date thereof, including liabilities for taxes,
material commitments and contingent obligations of every kind or
nature.
(b) Since December 25, 1993 there has been no Material
Adverse Effect.
5.11 Regulated Entities. None of the Company, any Person controlling
the Company, or any Subsidiary, is an "Investment Company" within the meaning
of the Investment Company Act of 1940. The Company is not subject to
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Interstate Commerce Act, any state public utilities code, or any
other Federal or state statute or regulation limiting its ability to incur any
indebtedness or other
-15-
<PAGE> 17
obligation of any kind or nature.
5.12 No Burdensome Restrictions. Neither the Company nor any
Subsidiary is a party to or bound by any Contractual Obligation, or subject to
any restriction in any Organization Document, or any Requirement of Law, which
could reasonably be expected to have a Material Adverse Effect.
5.13 Subsidiaries. As of the Closing Date, the Company has no
Subsidiaries other than those specifically disclosed in part (a) of Schedule
5.13 hereto and has no equity investments in any other corporation or entity
other than those specifically disclosed in part (b) of Schedule 5.13.
5.14 Full Disclosure. None of the representations or warranties made
by the Company or any Subsidiary in the Loan Documents as of the date such
representations and warranties are made or deemed made, and none of the
statements contained in any exhibit, report, statement or certificate furnished
by or on behalf of the Company or any Subsidiary in connection with the Loan
Documents (including the offering and disclosure materials delivered by or on
behalf of the Company to the Bank prior to the Closing Date), contains any
untrue statement of a material fact or omits any material fact required to be
stated therein or necessary to make the statements made therein, in light of
the circumstances under which they are made, not misleading as of the time when
made or delivered.
5.15 Nestle Agreement.
(a) There are no changes to the Nestle Agreement;
(b) The Nestle Agreement is in full force and effect;
(c) All representations and warranties of the Company and, to
the Company's knowledge, all representations and warranties of Nestle Holdings,
Inc. contained in the Nestle Agreement are true and correct;
(d) The Company and, to the Company's knowledge, Nestle
Holdings, Inc. are in compliance with their respective obligations under the
Nestle Agreement; and
(e) All conditions to the Nestle Closing (other than the
condition set forth in Section 1.4(c)(i) of the Nestle Agreement) would be met
as of the date this representation is made or deemed made except for:
(1) The condition set forth in Section 1.4(a)(ii) of
the Nestle Agreement;
(2) The execution and delivery at the Nestle Closing
of those documents, in the form attached to the Nestle
Agreement (in those instances where such documents are so
attached), described in Sections 1.4(b)(vi) through
1.4(b)(xii) and Sections 1.4(c)(iv) through 1.4(c)(vi) of the
Nestle Agreement.
-16-
<PAGE> 18
ARTICLE VI
COVENANTS
So long as the Bank shall have any Commitment hereunder, or any Loan
or other Obligation shall remain unpaid or unsatisfied, unless the Bank waives
compliance in writing:
6.01 Nestle Agreement.
(a) The Company shall deliver promptly to the Bank, 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.
(b) 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 Bank. The Bank agrees to give such consent
unless, in the sole opinion of the Bank, such modification will have a material
adverse effect to the interests of the Bank under this Agreement. The Bank
shall notify the Company whether or not it consents to the proposed
modification not later than three Business Days after the Bank receives notice
from the Company of the proposed modification together with all details
necessary to enable the Bank to decide whether or not to give its consent.
Failure by the Bank to so notify the Company shall be deemed a decision by the
Bank not to grant the requested consent.
(c) The Company shall deliver to the Bank as soon as
available:
(1) And in any event, within five Business Days
after the date of this Agreement, a copy 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. The Nestle Agreement
shall contain all Exhibits, Schedules, and other attachments thereto,
each in the form which will be executed by the party or parties
designated therein; and
(2) In any event, within five Business Days after
the Nestle Closing:
(A) A copy of each of the agreements,
instruments, and documents (other than the Nestle Agreement),
set forth in Section 4.01(f), certified by the Company to be
true and complete and as executed by the party or parties
designated therein;
(B) A copy 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,
-17-
<PAGE> 19
documents, and other agreements relating to the Nestle
Agreement; and
(C) 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 4.01(f).
6.02 Information. The Company shall furnish to the Bank promptly such
information regarding the Nestle Agreement, business, financial or corporate
affairs of the Company or any Subsidiary as the Bank may from time to time
request.
6.03 Notices. The Company shall promptly notify the Bank:
(a) Of the occurrence of any Default or Event of Default, and
of the occurrence or existence of any event or circumstance that foreseeably
will become a Default or Event of Default;
(b) Of any matter that has resulted or may result in a
Material Adverse Effect, including (i) breach or non-performance of, or any
default under, a Contractual Obligation of the Company or any Subsidiary; (ii)
any dispute, litigation, investigation, proceeding or suspension between the
Company or any Subsidiary and any Governmental Authority; (iii) the
commencement of, or any material development in, any litigation or proceeding
affecting the Company or any Subsidiary; including pursuant to any applicable
environmental laws; or (iv) any of the foregoing with respect to the Nestle
Agreement.
Each notice under this Section shall be accompanied by a
written statement by a Responsible Officer setting forth details of the
occurrence referred to therein, and stating what action the Company or any
affected Subsidiary proposes to take with respect thereto and at what time.
Each notice under subsection 6.03(a) shall describe with particularity any and
all clauses or provisions of this Agreement or other Loan Document that have
been (or foreseeably will be) breached or violated.
6.04 Payment of Obligations. The Company shall, and shall cause each
Subsidiary to, pay and discharge as the same shall become due and payable, all
their respective obligations and liabilities, including: (a) all tax
liabilities, assessments and governmental charges or levies upon it or its
properties or assets, unless the same are being contested in good faith by
appropriate proceedings and adequate reserves in accordance with GAAP are being
maintained by the Company or such Subsidiary; (b) all lawful claims which, if
unpaid, would by law become a lien upon its property; and (c) all indebtedness,
as and when due and payable, but subject to any subordination provisions
contained in any instrument or agreement evidencing such indebtedness.
-18-
<PAGE> 20
6.05 Compliance with Laws. The Company shall comply, and shall cause
each Subsidiary to comply, in all material respects with all Requirements of
Law of any Governmental Authority having jurisdiction over it or its business
(including the Federal Fair Labor Standards Act), except such as may be
contested in good faith or as to which a bona fide dispute may exist.
6.06 Use of Proceeds. The Company shall use the proceeds of the Loans
to purchase its own common stock on the open market, which common stock shall
be immediately retired, and each purchase shall be in full compliance with all
Requirements of Law.
ARTICLE VII
NO DIRECT OR INDIRECT SECURITY IN MARGIN STOCK
7.01 No Direct of Indirect Security in Margin Stock. The Bank and the
Company declare and agree that the credit granted under this Agreement is not
secured, directly or indirectly, by any Margin Stock and to that end, the Bank
hereby waives with respect to the credit granted under this Agreement:
(a) Any right or arrangement it may now or hereafter have
with the Company whereby the Bank may in any way restrict the Company's right
or ability to sell, pledge or otherwise dispose of Margin Stock owned by the
Company;
(b) Any right or arrangement the Bank may have to accelerate
the credit extended under this Agreement by reason of the Company's exercise of
its right or ability to sell, pledge, or otherwise dispose of Margin Stock
owned by the Company, which exercise is a breach or default under another
credit to the Company to which the Bank, or any of its Affiliates, is a party;
and
(c) Any security interest it may now or hereafter have in
Margin Stock to the extent such security interest secures the credit granted
under this Agreement because of an "other indebtedness" clause or a similar
grant of security interest securing the Company's obligations generally without
specifically stating that the credit granted under this Agreement is secured by
such security interest.
ARTICLE VIII
EVENTS OF DEFAULT
8.01 Event of Default. Any of the following shall constitute an
"Event of Default":
(a) Non-Payment. The Company fails to pay, (i) when and as
required to be paid herein, any amount of principal of any Loan, or (ii) within
five days after the same becomes due, any interest, fee or any other amount
payable hereunder or under any other Loan Document; or
-19-
<PAGE> 21
(b) Representation or Warranty. Any representation or
warranty by the Company or any Subsidiary made or deemed made herein, in any
other Loan Document, or which is contained in any certificate, document or
financial or other statement by the Company, any Subsidiary, or any Responsible
Officer, furnished at any time under this Agreement, or in or under any other
Loan Document, is incorrect in any material respect on or as of the date made
or deemed made; or
(c) Specific Defaults. The Company fails to perform or
observe any term, covenant or agreement contained in Sections 6.01 and 6.06;
(d) Other Defaults. The Company fails to perform or observe
any other term or covenant contained in this Agreement or any other Loan
Document, and such default shall continue unremedied for a period of 20 days
after the earlier of (i) the date upon which a Responsible Officer knew or
reasonably should have known of such failure or (ii) the date upon which
written notice thereof is given to the Company by the Bank; or
(e) Cross-Default. The Company or any Subsidiary (i) fails
to make any payment in respect of any indebtedness or contingent obligation or
other obligation of any kind or nature having an aggregate principal amount
(including undrawn committed or available amounts and including amounts owing
to all creditors under any combined or syndicated credit arrangement) of more
than $1,000,000 when due (whether by scheduled maturity, required prepayment,
acceleration, demand, or otherwise); or (ii) subject to the provisions of
Article VII of this Agreement, fails to perform or observe any other condition
or covenant, or any other event shall occur or condition exist, under any
agreement or instrument relating to any such indebtedness or contingent
obligation or other obligation of any kind or nature, if the effect of such
failure, event or condition is to cause, or to permit the holder or holders of
such indebtedness or beneficiary or beneficiaries of such indebtedness or other
obligation of any kind or nature (or a trustee or agent on behalf of such
holder or holders or beneficiary or beneficiaries) to cause such indebtedness
or other obligation to be declared to be due and payable prior to its stated
maturity, or such contingent obligation of every kind or nature to become
payable or cash collateral in respect thereof to be demanded; or
(f) Insolvency; Voluntary Proceedings. The Company or any
Subsidiary (i) ceases or fails to be solvent, or generally fails to pay, or
admits in writing its inability to pay, its debts as they become due, subject
to applicable grace periods, if any, whether at stated maturity or otherwise;
(ii) voluntarily ceases to conduct its business in the ordinary course; (iii)
commences any Insolvency Proceeding with respect to itself; or (iv) takes any
action to effectuate or authorize any of the foregoing; or
(g) Involuntary Proceedings. (i) Any involuntary Insolvency
Proceeding is commenced or filed against the Company or any Subsidiary, or any
writ, judgment, warrant of attachment, execution or similar process, is issued
or levied against a substantial part of the Company's or any Subsidiary's
properties, and any such proceeding or petition shall not be dismissed, or such
writ, judgment, warrant of attachment, execution or similar process shall not
be released, vacated or fully bonded within 60 days after commencement, filing
or levy; (ii) the
-20-
<PAGE> 22
Company or any Subsidiary admits the material allegations of a petition against
it in any Insolvency Proceeding, or an order for relief (or similar order under
non-U.S. law) is ordered in any Insolvency Proceeding; or (iii) the Company or
any Subsidiary acquiesces in the appointment of a receiver, trustee, custodian,
conservator, liquidator, mortgagee in possession (or agent therefor), or other
similar Person for itself or a substantial portion of its property or business;
or
(h) Monetary Judgments. One or more non-interlocutory
judgments, non-interlocutory orders, decrees or arbitration awards is entered
against the Company or any Subsidiary involving in the aggregate a liability
(to the extent not covered by independent third-party insurance as to which the
insurer does not dispute coverage) as to any single or related series of
transactions, incidents or conditions, of $1,000,000 or more, and the same
shall remain unsatisfied, unvacated and unstayed pending appeal for a period of
10 days after the entry thereof; or
(i) Non-Monetary Judgments. Any non-monetary judgment, order
or decree is entered against the Company or any Subsidiary which does or would
reasonably be expected to have a Material Adverse Effect, and there shall be
any period of 10 consecutive days during which a stay of enforcement of such
judgment or order, by reason of a pending appeal or otherwise, shall not be in
effect; or
(j) Change of Control. (i) Any person, who is not as of the
date of this Agreement, a member of the Company's Board of Directors, acquires
beneficial ownership of 33 1/3% or more of the combined voting power of the
Company's outstanding securities, (ii) a change occurs in the composition of
majority membership of the Company's Board of Directors over any two year
period, (iii) a change of ownership of the Company's stock occurs such that the
Company becomes subject to the delisting of its common stock from the NASDAQ
National Market System, (iv) the Company's Board of Directors approves the sale
of all or substantially all of the assets of the Company, or (v) the Company's
Board of Directors approves any merger, consolidation, issuance of securities,
or purchase of assets, the result of which would be the occurrence of any event
described in clause (i), (ii), or (iii) of this subsection; or
(k) Adverse Change. There occurs a Material Adverse Effect.
8.02 Remedies. If any Event of Default occurs, the Bank may: (a)
declare the commitment of the Bank to make Loans to be terminated, whereupon
such commitment shall be terminated; (b) declare the unpaid principal amount of
all outstanding Loans, all interest accrued and unpaid thereon, and all other
amounts owing or payable hereunder or under any other Loan Document to be
immediately due and payable, without presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived by the Company;
and (c) exercise all rights and remedies available to it under the Loan
Documents or applicable law; provided, however, that upon the occurrence of any
event specified in subsection (f) or (g) of Section 8.01 (in the case of clause
(i) of subsection (g) upon the expiration of the 60-day period mentioned
therein), the obligation of the Bank to make Loans shall automatically
terminate and the unpaid principal amount of all
-21-
<PAGE> 23
outstanding Loans and all interest and other amounts as aforesaid shall
automatically become due and payable without further act of the Bank.
8.03 Rights Not Exclusive. The rights provided for in this Agreement
and the other Loan Documents are cumulative and are not exclusive of any other
rights, powers, privileges or remedies provided by law or in equity, or under
any other instrument, document or agreement now existing or hereafter arising.
ARTICLE IX
MISCELLANEOUS
9.01 Amendments and Waivers. No amendment or waiver of any provision
of this Agreement or any other Loan Document, and no consent with respect to
any departure by the Company therefrom, shall be effective unless the same
shall be in writing and signed by the Bank and the Company, and then any such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given.
9.02 Notices.
(a) All notices, requests and other communications shall be
in writing (including, unless the context expressly otherwise provides, by
facsimile transmission, provided that any matter transmitted by the Company by
facsimile (i) shall be immediately confirmed by a telephone call to the
recipient at the number specified on the signature page hereof with respect to
such Person, and (ii) shall be followed promptly by delivery of a hard copy
original thereof) and mailed, telecopied or delivered, to the address or
facsimile number specified for notices on the signature page hereof with
respect to such Person; or, as directed to the Company or the Bank, to such
other address as shall be designated by such party in a written notice to the
other parties, and as directed to any other party, at such other address as
shall be designated by such party in a written notice to the Company and the
Bank.
(b) All such notices, requests and communications shall, when
transmitted by overnight delivery, or faxed, be effective when delivered for
overnight (next-day) delivery, or transmitted in legible form by facsimile
machine, respectively, or if mailed, upon the third Business Day after the date
deposited into the U.S. mail, or if delivered, upon delivery; except that
notices pursuant to Article II shall not be effective until actually received
by the Bank.
(c) Any agreement of the Bank herein to receive certain
notices by telephone or facsimile is solely for the convenience and at the
request of the Company. The Bank shall be entitled to rely on the authority of
any Person purporting to be a Person authorized by the Company to give such
notice and the Bank shall not have any liability to the Company or other Person
on account of any action taken or not taken by the Bank in reliance upon such
telephonic or facsimile notice. The obligation of the Company to repay the
Loans shall not be affected in any way or to any extent by any failure by the
Bank to receive written confirmation
-22-
<PAGE> 24
of any telephonic or facsimile notice or the receipt by the Bank of a
confirmation which is at variance with the terms understood by the Bank to be
contained in the telephonic or facsimile notice.
9.03 No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of the Bank, any right, remedy, power or
privilege hereunder, shall operate as a waiver thereof; nor shall any single
or partial exercise of any right, remedy, power or privilege hereunder preclude
any other or further exercise thereof or the exercise of any other right,
remedy, power or privilege.
9.04 Costs and Expenses. The Company shall, whether or not the
transactions contemplated hereby are consummated, pay or reimburse the Bank
within five Business Days after demand (subject to subsection 4.01(d)) for all
costs and expenses (including Attorney Costs) incurred by the Bank in
connection with (a) the development, preparation, delivery, administration and
execution of, and any amendment, supplement, waiver or modification to (in each
case, whether or not consummated), this Agreement, any Loan Document and any
other documents prepared in connection herewith or therewith, and the
consummation of the transactions contemplated hereby and thereby, and (b) the
enforcement, attempted enforcement, or preservation of any rights or remedies
under this Agreement or any other Loan Document (including in connection with
any "workout" or restructuring regarding the Loans, and including in any
Insolvency Proceeding or appellate proceeding).
9.05 Indemnity. Whether or not the transactions contemplated hereby
are consummated, the Company shall indemnify and hold the Bank and each of its
officers, directors, employees, counsel, agents and attorneys-in-fact (each, an
"Indemnified Person") harmless from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
charges, expenses and disbursements (including Attorney Costs) of any kind or
nature whatsoever which may at any time (including at any time following
repayment of the Loans) be imposed on, incurred by or asserted against any
such Person in any way relating to or arising out of this Agreement or any
document contemplated by or referred to herein, or the transactions
contemplated hereby, or any action taken or omitted by any such Person under or
in connection with any of the foregoing, including with respect to any
investigation, litigation or proceeding (including any Insolvency Proceeding or
appellate proceeding) related to or arising out of this Agreement or the Loans
or the use of the proceeds thereof, whether or not any Indemnified Person is a
party thereto (all the foregoing, collectively, the "Indemnified Liabilities");
provided, that the Company shall have no obligation hereunder to any
Indemnified Person with respect to Indemnified Liabilities resulting solely
from the gross negligence or willful misconduct of such Indemnified Person. The
agreements in this Section shall survive payment of all other Obligations.
9.06 Payments Set Aside. To the extent that the Company makes a
payment to the Bank, or the Bank exercises its right of set-off, and such
payment or the proceeds of such set-off or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside or required
(including pursuant to any settlement entered into by the Bank in its
discretion) to be repaid to a trustee, receiver or any other party, in
connection with any Insolvency Proceeding or
-23-
<PAGE> 25
otherwise, then to the extent of such recovery the obligation or part thereof
originally intended to be satisfied shall be revived and continued in full
force and effect as if such payment had not been made or such set-off had not
occurred.
9.07 Successors and Assigns. The provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that the Company may not assign or
transfer any of its rights or obligations under this Agreement without the
prior written consent of the Bank.
9.08 Assignments, Participations, etc.
(a) The Bank may at any time, with the prior consent of the
Company (other than any time after acceleration of the Loans), which consent
shall not be unreasonably withheld, assign and delegate to one or more
commercial banks (each an "Assignee") all, or any part of all, of the Loans,
the Commitment and the other rights and obligations of the Bank hereunder, in a
minimum amount of $1,000,000; provided, however, that the Company may continue
to deal solely and directly with the Bank in connection with the interest so
assigned to an Assignee until written notice of such assignment, together with
payment instructions, addresses and related information with respect to the
Assignee, shall have been given to the Company by the Bank and the Assignee.
(b) The Bank may at any time, without notice to or consent of
the Company, sell to one or more commercial banks or other Persons (a
"Participant") participating interests in any Loans, the Commitment of that
Bank and the other interests of that Bank (the "originating Bank") hereunder
and under the other Loan Documents.
(c) The Bank agrees to take normal and reasonable precautions
and exercise due care to maintain the confidentiality of all information
identified as "confidential" or "secret" by the Company and provided to it by
the Company under this Agreement, and neither the Bank nor any of its
Affiliates shall use any such information other than in connection with or in
enforcement of this Agreement; except to the extent such information (i) was or
becomes generally available to the public other than as a result of disclosure
by the Bank, or (ii) was or becomes available on a non-confidential basis from
a source other than the Company, provided that such source is not bound by a
confidentiality agreement with the Company known to the Bank; provided,
however, that the Bank may disclose such information (A) at the request or
pursuant to any requirement of any Governmental Authority to which the Bank is
subject or in connection with an examination of the Bank by any such authority;
(B) pursuant to subpoena or other court process; (C) when required to do so in
accordance with the provisions of any applicable Requirement of Law; (D) to the
extent reasonably required in connection with any litigation or proceeding to
which the Bank or its Affiliates may be party, (E) to the extent reasonably
required in connection with the exercise of any remedy hereunder or under any
other Loan Document, (F) to the Bank's independent auditors and other
professional advisors, (G) to any Participant or Assignee, actual or potential,
provided that such Person agrees in writing to keep such information
confidential to the same extent required of the Bank hereunder, and (H) as
-24-
<PAGE> 26
expressly permitted under the terms of any other document or agreement
regarding confidentiality to which the Company is party or is deemed party with
the Bank.
(d) Notwithstanding any other provision in this Agreement,
the Bank may at any time create a security interest in, or pledge, all or any
portion of its rights under this Agreement in favor of any Federal Reserve Bank
in accordance with Regulation A of the FRB or 31 CFR Section 203.15, and such
Federal Reserve Bank may enforce such pledge or security interest in any manner
permitted under applicable law.
9.09 Set-off. In addition to any rights and remedies of the Bank
provided by law, if an Event of Default exists or the Loans have been
accelerated, the Bank is authorized at any time and from time to time, without
prior notice to the Company, any such notice being waived by the Company to the
fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held by,
and other indebtedness at any time owing by, the Bank to or for the credit or
the account of the Company against any and all Obligations owing to the Bank,
now or hereafter existing, irrespective of whether or not the Bank shall have
made demand under this Agreement or any Loan Document and although such
Obligations may be contingent or unmatured. The Bank agrees promptly to notify
the Company after any such set-off and application made by the Bank; provided,
however, that the failure to give such notice shall not affect the validity of
such set-off and application.
9.10 Counterparts. This Agreement may be executed in any number of
separate counterparts, each of which, when so executed, shall be deemed an
original, and all of said counterparts taken together shall be deemed to
constitute but one and the same instrument.
9.11 Severability. The illegality or unenforceability of any
provision of this Agreement or any instrument or agreement required hereunder
shall not in any way affect or impair the legality or enforceability of the
remaining provisions of this Agreement or any instrument or agreement required
hereunder.
9.12 No Third Parties Benefited. This Agreement is made and entered
into for the sole protection and legal benefit of the Company, the Bank and
their permitted successors and assigns, and no other Person shall be a direct
or indirect legal beneficiary of, or have any direct or indirect cause of
action or claim in connection with, this Agreement or any of the other Loan
Documents.
9.13 Governing Law and Jurisdiction.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA; PROVIDED THAT THE BANK
SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE
OF CALIFORNIA OR OF THE UNITED STATES FOR THE NORTHERN DISTRICT OF CALIFORNIA,
AND BY EXECUTION AND DELIVERY OF
-25-
<PAGE> 27
THIS AGREEMENT, EACH OF THE COMPANY AND THE BANK CONSENTS, FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS.
EACH OF THE COMPANY AND THE BANK IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING
ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR
PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT
RELATED HERETO. THE COMPANY AND THE BANK EACH WAIVE PERSONAL SERVICE OF ANY
SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS
PERMITTED BY CALIFORNIA LAW.
9.14 Waiver of Jury Trial. THE COMPANY AND THE BANK EACH WAIVE THEIR
RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON
OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR
THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR
OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER
PARTY OR PARTIES, PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT
CLAIMS, TORT CLAIMS, OR OTHERWISE. THE COMPANY AND THE BANK EACH AGREE THAT
ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A
JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR
RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS
TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN
PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE
OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL
APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
-26-
<PAGE> 28
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered in San Francisco, California by their proper and
duly authorized officers as of the day and year 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
By: /s/ MICHAEL J. DASHER
-------------------------
Name: Michael J. Dasher
Title: Vice President
-27-
<PAGE> 29
NOTICES (OTHER THAN NOTICES OF BORROWING AND NOTICES
OF CONVERSION/CONTINUATION):
Bank of America National Trust and Savings Association
555 California St., 41st Floor
San Francisco, California 94104
Attention: M.J. Dasher
Telephone: (415) 622-2126 Facsimile: (415) 622-4585
DOMESTIC LENDING OFFICE:
1850 Gateway Boulevard
Fourth Floor
Concord, California 94520
Attention: Ms. Annie Loo
Telephone: 510/673-7337
Facsimile: 510/675-7531
-28-
<PAGE> 30
Exhibit A
Notice of Borrowing
DREYER'S GRAND ICE CREAM, INC.
Date: _____________, 1994
To: Bank of America National Trust and Savings Association
Re: Credit Agreement dated as of May 6, 1994 (as extended, renewed,
amended or restated from time to time, the "Credit Agreement") between
Dreyer's Grand Ice Cream, Inc. and Bank of America National Trust and
Savings Association
Ladies and Gentlemen:
The undersigned Dreyer's Grand Ice Cream, Inc. (the "Company") refers to the
Credit Agreement, the terms defined therein being used herein as therein
defined, and hereby gives you notice irrevocably, pursuant to Section 2.03 of
the Credit Agreement, of the Borrowing specified herein:
1. The Business Day of the proposed Borrowing is ______________, 1994.
2. The aggregate amount of the proposed Borrowing is $____________.
3. The Borrowing is to be a [Base Rate] [Same Day Rate] Loan.
The undersigned hereby certifies that the following statements are true on the
date hereof, and will be true on the date of the proposed Borrowing, before and
after giving effect thereto and to the application of the proceeds therefrom:
(a) the representations and warranties of the Company contained in Article
V of the Credit Agreement are true and correct as though made on and as of such
date (except to the extent such representations and warranties relate to an
earlier date, in which case they are true and correct as of such date);
(b) no Default or Event of Default has occurred and is continuing, or
would result from such proposed Borrowing.
DREYER'S GRAND ICE CREAM, INC.
By: _________________________
Name:
Title:
-i-
<PAGE> 31
Exhibit B
Notice of Conversion/Continuation
DREYER'S GRAND ICE CREAM
Date: ____________, 1994
To: Bank of America National Trust and Savings Association
Re: Credit Agreement dated as of May 6, 1994 (as extended, renewed,
amended or restated from time to time, the "Credit Agreement") between
Dreyer's Grand Ice Cream, Inc. and Bank of America National Trust and
Savings Association
Ladies and Gentlemen:
The undersigned, Dreyer's Grand Ice Cream, Inc. (the Company), refers to the
Credit Agreement, the terms defined therein being used herein as therein
defined, and hereby gives you notice irrevocably, pursuant to Section 2.04 of
the Credit Agreement, of the [conversion] [continuation] of the Loans specified
herein, that:
1. The date of the [conversion] [continuation] is ____________, 199_.
2. The aggregate amount of the Loans [converted] is $___________ or
[continued] is $_________________.
3. The Loans are to be [converted into] [continued as] [Same Date Rate]
[Base Rate] Loans.
The undersigned hereby certifies that the following statements are true on
the date hereof, and will be true on the date of the proposed [conversion]
[continuation], before and after giving effect thereto and to the application
of the proceeds therefrom:
(a) the representations and warranties of the Company contained in Article
V of the Credit Agreement are true and correct as though made on and as of such
date (except to the extent such representations and warranties relate to an
earlier date, in which case they are true and correct as of such date);
(b) no Default or Event of Default has occurred and is continuing, or
would result from such proposed [conversion] [continuation].
DREYER'S GRAND ICE CREAM, INC.
By: __________________________
Name:
Title:
-i-
<PAGE> 32
EXHIBIT C
Opinion of Counsel
May 6, 1994
Bank of America N.T. & S.A.
555 California Street
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 Credit Agreement dated May
4, 1994 (the "Credit Agreement"), by and between the Company and Bank of
America N.T. & S.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 4.01(c) of the Credit Agreement.
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 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 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
1
<PAGE> 33
Bank of America N.T. & S.A.
May 6, 1994
Page ii
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 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 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 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 Credit Agreement and the Nestle
Agreement, performance by the Company of its obligations under such agreements,
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 Schedule 5.02 to the Credit Agreement, 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, 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 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.
2
<PAGE> 34
Bank of America N.T. & S.A.
May 6, 1994
Page iii
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.
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 opinions expressed herein are based upon the law in effect on the
date hereof, and we assume no obligation to revise or supplement this opinion.
3
<PAGE> 35
Bank of America N.T. & S.A.
May 6, 1994
Page iv
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
4
<PAGE> 36
EXHIBIT
Exhibit A - Notice of Borrowing
Exhibit B - Notice of Conversion/Continuation
Exhibit C - Opinion of Counsel
SCHEDULE
Schedule 5.02 - Conflicting Contractual Obligations
Schedule 5.13 - Subsidiaries
<PAGE> 37
SCHEDULE 5.02
to
CREDIT AGREEMENT
dated May 6, 1994
CONFLICTING CONTRACTUAL OBLIGATIONS
1. Steve's New York Store Door Distribution Agreement, dated November 20,
1992, between Steve's Homemade Ice Cream, Inc. and Edy's Grand Ice
Cream.
2. Steve's National Distribution Agreement, dated November 20, 1992,
between Steve's Homemade Ice Cream, Inc. and Edy's Grand Ice Cream.
3. Dolly Madison New York Store Door Distribution Agreement, dated
November 20, 1992, between Calip Dairies, Inc. and Edy's Grand Ice
Cream.
<PAGE> 38
SCHEDULE 5.13
to
CREDIT AGREEMENT
dated May 6, 1994
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
</TABLE>
B. Ownership Interests
-------------------
<TABLE>
<CAPTION>
Type of
Name Entity
---- ---------
<S> <C>
M-K-D Distributors Inc. Corporation
DSD Partnership General Partnership
Kabushiki Kaisha Dreyer's Japan Limited Liability Stock Company
Yadon Enterprises, Inc. Corporation
</TABLE>
<PAGE> 1
EXHIBIT 10.3
AMENDMENT TO DISTRIBUTION AGREEMENT
Amendment dated as of April 18, 1994 to the Distribution Agreement
originally entered into as of January 6, 1987 as heretofore amended by and
between Dreyer's Grand Ice Cream, Inc., a Delaware corporation ("Dreyer's"),
Edy's Grand Ice Cream, a California corporation ("Edy's"), Edy's of New York,
Inc., a New York corporation ("Edy's - New York") and Ben & Jerry's Homemade,
Inc. a Vermont corporation ("Manufacturer").
WHEREAS, Dreyer's, Edy's, Edy's - New York and Manufacturer desire to
amend the Agreement, as previously amended (the "Agreement" or the
"Distribution Agreement") as set forth hereinafter.
NOW THEREFORE, in consideration of the mutual promises of the other, each
of the parties hereby agrees to further amend certain provisions of the
Agreement, as heretofore amended, as follows:
1. Change of Control Section.
Those certain provisions set forth in Sections 2 and 3 of the Second
Amendment dated as of August 31, 1992 to the Distribution Agreement (the
"Previously Added Change of Control Provisions") shall be amended by adding the
following at the end thereof:
Notwithstanding the foregoing Previously Added Change of Control
Provisions,
(i) From this date forward, the term "frozen desserts" as used in the
phrase a "manufacturer or distributor of frozen desserts which is a significant
competitive factor in the United States" which phrase is amended to read "a
manufacturer, distributor, marketer, or
<PAGE> 2
licensor of frozen desserts which is a significant competitive factor in
the United States" shall refer to ice cream, frozen yogurt, sorbet, ices,
or other frozen dairy based desserts or other similar nondairy frozen
substitutes for such products in either packaged (including bulk) or novelty
forms. The term "Significant Competitor" shall mean a manufacturer,
distributor, marketer, or licensor of frozen desserts which is such a
significant competitive factor for purposes of this agreement.
(ii) After the happening of any of the events outlined in Clauses
(a), (b), or (c) immediately below and following written notice by Manufacturer
and thirty days following Dreyer's receipt of such notice during which period
Dreyer's has not taken actions to successfully keep such events from
continuing, such events shall be deemed a change of control for purposes of
this agreement, and Manufacturer may terminate the Agreement as specified in
the Previously Added Change of Control Provisions. In the event of such
termination by the Manufacturer, the Manufacturer shall be entitled to receive
the termination payment specified in the Previously Added Change of Control
Provisions and Dreyer's shall have the obligation to purchase and resale
products of the Manufacturer for the period and upon the terms set forth in the
Previously Added Change of Control Provisions, except that the Manufacturer
shall have eighteen (18) months instead of nine (9) months within which to give
Dreyer's a notice of termination:
(a) Prior to Manufacturer giving a notice of termination
to Dreyer's under this Agreement, Dreyer's directly
or indirectly introduces in the United States a super
premium product (as defined in the Agreement as
amended hereby) of its own, or acquires a super
premium product in the United States, other than the
Manufacturer's super premium products, or distributes
in the United States a super premium product of
another person, other than products approved or
waived in writing by the Manufacturer or the
Manufacturer's own super premium products.
<PAGE> 3
(b) Within twelve months after Dreyer's gives notice to the
Manufacturer to terminate the Agreement without cause, a
Significant Competitor currently beneficially owns 2.5 million or
more shares of Dreyer's voting stock ( as adjusted for stock
splits or similar events) on a fully diluted basis, the event in
(a) occurs, and Dreyer's realizes $10 million dollars or more in
sales of the new super premium products within the twelve month
period.
(c) (1) Either (i) neither T. Gary Rogers ("Rogers") nor William F.
Cronk, III ("Cronk") is the Chief Executive Officer of Dreyer's or
officer fulfilling the same responsibilities, or (ii) Rogers and
Cronk collectively own less than one million shares of Dreyer's
voting stock (as adjusted for stock splits or similar events), and
(2) a Significant Competitor beneficially owns 22% or more of
Dreyer's combined voting power on a fully diluted basis; provided,
however that the foregoing event shall not be treated as a change
of control if it occurs because of the death or disability of
Rogers or Cronk or other similar incapacitating event.
"Fully diluted" shall in each case assume the issuance of all shares
issuable upon exercise or conversion of any outstanding options,
warrants or other securities or rights irrespective of the exercise
conversion or exchange price thereof or any term limiting the
current exercisability.
(iii) The amount of the termination payment payable under the
Previously Added Change of Control Provisions shall be for all purposes of the
Agreement adjusted by the CPI Index (December 1993 to equal 100 for this
purpose).
<PAGE> 4
2. Definition of Super Premium Products.
The Agreement shall be amended by adding at the end of Section 2 of the
Agreement, as previously amended, a new last paragraph reading as follows:
"Super premium products ("super premium products") shall be defined as ice
cream, frozen yogurt, sorbets, ices or other frozen dessert products whether
dairy based or not (although not to include super premium novelties) primarily
sold in pint-size containers for a current retail price equal to or greater
than an average of $2.19 per pint over a 52 week period adjusted by the CPI
Index (December 1993 to equal 100 for this purpose), and including quart or
half-gallon sizes of such products".
Manufacturer agrees that Dreyer's may continue to distribute those Super
Premium Products previously approved by manufacturer in writing and, in
addition, hereby adds Dole Sorbet to that list of approved exceptions.
3. Performance Clause.
Section 2 of the Agreement as amended above is hereby further amended by
adding at the end thereof the following:
"If Manufacturer notifies Dreyer's with reasonable specificity that a
particular account or group of accounts (excluding grocery stores with three or
more cash registers) in a specific market in the Territory is not, in the sole
reasonable judgment of Manufacturer, receiving appropriate distribution (i.e.
flavors, shelf space, competitive price at the retail level, etc.); Dreyer's
shall endeavor to correct the problem. If following ninety (90) days from such
notice, Manufacturer is not, in its sole reasonable judgment, satisfied that
the problem has been corrected,
<PAGE> 5
Manufacturer may propose a solution (which may or may not involve Dreyer's
exclusivity). If, within a reasonable period (generally thirty (30) days),
Dreyer's agrees to implement such solution and if Dreyer's in fact implements
such solution, the notice shall be of no further effect. If Dreyer's does not
so agree to implement such solution or does not in fact implement such
solution, Manufacturer shall have the right to terminate Dreyer's distribution
rights to such account or group of accounts.
If, notwithstanding the best efforts of Manufacturer and Dreyer's for at
least one hundred twenty (120) days, Dreyer's is unable to obtain authorization
to sell, directly or indirectly, to a particular store or chain of stores with
three or more cash registers, Manufacturer may utilize alternative distribution
for such store or chain of stores."
4. Miscellaneous.
The existing terms and conditions of the Agreement as previously amended
shall remain in full force and effect except as such terms and conditions are
specifically amended by the letter of even date herewith from W.F. Cronk to
Charles Lacy or are amended by or conflict with the terms of this Amendment.
All capitalized terms used in herein and not otherwise defined shall have the
meaning given to those terms in the Agreement. If any provision of this
Amendment is held by a court of competent jurisdiction to be invalid, void, or
unenforceable, the remaining provisions shall nevertheless continue in full
force and effect without being impaired or invalidated in any way. This
Amendment shall become effective immediately after said letter of even date
from W.F. Cronk of Dreyer's to Chuck Lacy of the Manufacturer and both said
letter and this Amendment shall become effective upon the acquisition by Nestle
USA, Inc. and/or its affiliates (which is agreed to be a Significant
Competitor) of three million shares of Dreyer's common stock and a warrant to
purchase one million shares of Dreyer's common stock expiring three years from
the closing under the Nestle agreement and a warrant to purchase one million
shares of Dreyer's common stock expiring five years from the closing under the
Nestle agreement.
<PAGE> 6
IN WITNESS WHEREOF, each of the parties hereto has caused this
Amendment to be executed and delivered by its duly authorized officer.
BEN & JERRY'S HOMEMADE, INC. DREYER'S GRAND ICE CREAM, INC.
By: /s/ JERRY GREENFIELD By: /s/ WILLIAM F. CRONK, III
----------------------- ---------------------------
EDY'S GRAND ICE CREAM, INC.
By: /s/ WILLIAM F. CRONK, III
---------------------------
EDY'S OF NEW YORK, INC.
By: /s/ WILLIAM F. CRONK, III
--------------------------
<PAGE> 7
(DREYER'S GRAND ICE CREAM, LETTERHEAD)
April 18, 1994
Via Telecopy
Mr. Charles Lacy
President and Chief Operating Officer
Ben & Jerry's Homemade, Inc.
Junction of Routes 2 and 100 South
North Moretown, VT 05660
Dear Chuck:
Notwithstanding any of the change of control provisions in Section 2 of the
Second Amendment to Distribution Agreement dated as of January 6, 1987 as
amended through the date hereof, you and we agree to apply the 35% combined
voting power standard to Nestle USA, Inc. and its affiliates (and not the 22%
combined voting power standard) for purposes of such provisions. You and we
also agree that all calculations of percentages of combined voting power of
securities under the Distribution Agreement shall be made on a fully diluted
basis (that is, assuming issuance of all shares issuable upon exercise or
conversion of any outstanding options, warrants or other securities or rights
irrespective of the exercise, conversion or exchange price thereof or any term
limiting the current exercisability).
If the above reflects your understanding please so indicate in the space
provided below, returning one copy to my attention.
Most sincerely,
/s/ W. F. CRONK
W. F. Cronk
President
Agreed to and Accepted:
BEN & JERRY'S HOMEMADE, INC.
/s/ JERRY GREENFIELD
- - ------------------------------
By: Jerry Greenfield
Its: Vice Chairman
<PAGE> 1
EXHIBIT 10.4
FORM OF RIGHTS AGREEMENT AMENDMENT
F-1
<PAGE> 2
FIRST AMENDMENT TO AMENDED AND RESTATED RIGHTS AGREEMENT
This First Amendment (the "Amendment"), dated this ____ day of May,
1994, amends the Amended and Restated Rights Agreement (the "Rights Agreement")
by and between Dreyer's Grand Ice Cream, Inc., a Delaware corporation (the
"Company"), and First Interstate Bank of California, a state banking
corporation organized and existing under the laws of the State of California
(the "Rights Agent") (successor to the former Rights Agent, Bank of America,
N.T. & S.A.). All terms not otherwise defined herein shall have the meaning
given such terms in the Rights Agreement.
WHEREAS, the Board of Directors of the Company has approved the sale
of common stock of the Company and warrants to purchase common stock of the
Company (the "Securities") pursuant to a Stock and Warrant Purchase Agreement
(the "Stock Purchase Agreement"), Collateral Agreements (as defined in the
Stock Purchase Agreement) and Right of First Refusal Agreements (as defined in
the Stock Purchase Agreement) (all such agreements collectively referred to as
the "Agreements"), and such sale and related transactions would otherwise cause
the purchaser to become an Acquiring Person;
WHEREAS, the Board of Directors of the Company has determined that it
is desirable to amend the definition of Acquiring Person so that the purchaser
of the Securities will not be deemed an Acquiring Person upon consummation of
the Agreements;
WHEREAS, pursuant to Section 27 of the Rights Agreement the Company
may, subject to certain limitations, amend the Rights Agreement without the
approval of any holders of Rights Certificates to make any provisions with
respect to the Rights which the Company deems necessary or desirable.
NOW, THEREFORE, upon all of the terms and conditions set forth
hereinafter, the Company and the Rights Agent agree as follows:
1. AMENDMENT.
The first sentence of Section 1(a) of the Rights Agreement is hereby
amended to read in its entirety as follows:
"(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates
and Associates (as such terms are hereinafter defined) of such
Person, shall be the Beneficial Owner (as such term is hereinafter
defined) of 20% or more of the Common Shares of the Company then
outstanding, but shall not include (i) the Company, (ii) any
Subsidiary (as such term is hereinafter defined) of the Company,
(iii) any employee benefit plan of the Company or any Subsidiary
of the Company (iv) any entity holding Common Shares for or
pursuant to the terms of any such
- 1 -
<PAGE> 3
plan, (v) T. Gary Rogers, William F. Cronk, III, or any Affiliate
or Associate of T. Gary Rogers or William F. Cronk, III, or (vi)
Nestle Holdings, Inc., a Delaware corporation, or any Affiliate or
Associate of Nestle Holdings, Inc., so long as Nestle Holdings,
Inc. is not in breach of Section 6.1(d) or proviso (B) to Section
6.1, as may be applicable at the time, of the Stock and Warrant
Purchase Agreement dated May __, 1994 between the Company and
Nestle Holdings, Inc. (each of the foregoing in clauses (v) and
(vi) an "Exempted Person")."
2. MISCELLANEOUS.
(a) Choice of Law. This Amendment shall be deemed to be
a contract made under the laws of the state of Delaware and for all purposes
shall be governed and construed in accordance with the laws of such State
applicable to contracts to be made and performed entirely within such State.
(b) Counterparts. This Amendment may be executed in one
or more counterparts, each of which shall be deemed to be an original, but all
of which together shall constitute one and the same instrument.
(c) Severability. If any term or provision of this Amendment
is held by a court of competent jurisdiction or other authority to be invalid,
void or unenforceable, the remainder of the terms and provisions of this
Amendment shall in no way be affected, impaired or invalidated.
(d) Existing Terms. The existing terms and conditions of the
Rights Agreement shall remain in full force and effect except as such terms and
conditions are specifically amended or conflict with the terms of this
Amendment.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Amendment to be executed and delivered by its duly authorized officer on the
day and year first above written.
THE COMPANY: RIGHTS AGENT:
DREYER'S GRAND ICE CREAM, INC. FIRST INTERSTATE BANK OF
CALIFORNIA
By: _________________________ By: _________________________
Its: _________________________ Its: _________________________
- 2 -
<PAGE> 1
EXHIBIT 11
DREYERS' GRAND ICE CREAM, INC.
COMPUTATION OF EARNINGS PER COMMON SHARE
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THIRTEEN WEEKS
--------------------------
MARCH 26, MARCH 27,
1994 1993
--------- ---------
(UNAUDITED)
<S> <C> <C>
PRIMARY
Net income $ 1,582 $ 2,118
Weighted average number of shares of common
stock outstanding 14,698 14,579
------- -------
Earnings per share, as reported $ .11 $ .15
------- -------
Weighted average number of shares of common
stock outstanding 14,698 14,579
Common stock equivalent-Assumed exercise of
common stock options 73 159
------- -------
Weighted average number of shares of common
stock outstanding, including common stock
equivalents 14,771 14,738
------- -------
Earnings per share $ .11(1) $ .14(1)
------- -------
FULLY DILUTED
Net income $ 1,582 $ 2,118
------- -------
Add interest expense on convertible subordinated
debentures issued June 1993, due June 2006 and
amortization of related issuance costs, net of tax 1,020
------- -------
Adjusted net income $ 2,602 $ 2,118
------- -------
Weighted average number of shares of common
stock outstanding 14,698 14,579
Common stock equivalent-Assumed exercise of
common stock options 73 159
Assumed conversion of debentures 2,900
------- -------
Adjusted shares 17,671 14,738
------- -------
Earnings per share $ .15(2) $ .14(2)
------- -------
</TABLE>
(1) This calculation is submitted in accordance with Regulation S-K item
601(b)(11) although it is not required by footnote 2 to paragraph 14 of APB
No. 15 because it results in dilution of less than 3%.
(2) This calculation is submitted in accordance with Regulation S-K item
601(b)(11) although it is contrary to APB Opinion No. 15 because it
produces an anti-dilutive effect.
