<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 30, 1996
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)
Delaware No. 94-2967523
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
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 10, 1996
------------------
<S> <C>
Common stock, $1.00 par value 13,336,670
</TABLE>
<PAGE> 2
DREYER'S GRAND ICE CREAM, INC.
PART I: FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DREYER'S GRAND ICE CREAM, INC.
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
March 30, December 30,
($ in thousands, except per share amounts) 1996 1995
----------- ------------
(unaudited)
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents $ 4,761 $ 3,051
Trade accounts receivable, net of
allowance for doubtful accounts of
$693 in 1996 and $698 in 1995 75,683 59,298
Other accounts receivable 12,706 19,072
Inventories 41,865 33,201
Prepaid expenses and other 9,161 12,487
-------- --------
Total current assets 144,176 127,109
Property, plant and equipment, net 209,432 182,757
Goodwill and distribution rights, net 91,384 86,812
Other assets 20,410 17,427
-------- --------
Total assets $465,402 $414,105
======== ========
</TABLE>
See accompanying Notes to Consolidated Financial Statements
2
<PAGE> 3
DREYER'S GRAND ICE CREAM, INC.
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
March 30, December 30,
($ in thousands, except per share amounts) 1996 1995
---------- -----------
(unaudited)
<S> <C> <C>
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable and accrued liabilities $ 62,051 $ 35,514
Accrued payroll and employee benefits 13,409 18,634
Current portion of long-term debt 8,910 3,600
-------- --------
Total current liabilities 84,370 57,748
Long-term debt, less current portion 145,295 134,000
Deferred income taxes 32,737 31,712
-------- --------
Total liabilities 262,402 223,460
-------- --------
Commitments and contingencies
Redeemable convertible Series B preferred stock, $1 par
value - 1,008,000 shares authorized; 1,008,000
shares issued and outstanding in 1996 and 1995 98,488 98,382
-------- --------
Stockholders' Equity:
Preferred stock, $1 par value -
8,992,000 shares authorized; no shares
issued or outstanding in 1996 and 1995
Common stock, $1 par value -
30,000,000 shares authorized; 13,333,000
shares and 12,929,000 shares issued and
outstanding in 1996 and 1995, respectively 13,333 12,929
Capital in excess of par 51,581 39,370
Retained earnings 39,598 39,964
-------- --------
Total stockholders' equity 104,512 92,263
-------- --------
Total liabilities and stockholders' equity $465,402 $414,105
======== ========
</TABLE>
See accompanying Notes to Consolidated Financial Statements
3
<PAGE> 4
DREYER'S GRAND ICE CREAM, INC.
CONSOLIDATED STATEMENT OF INCOME
(unaudited)
<TABLE>
<CAPTION>
Thirteen Weeks Ended
--------------------------------
($ in thousands, except per share amounts) March 30, 1996 April 1, 1995
-------------- -------------
<S> <C> <C>
Revenues:
Net sales $ 166,970 $ 141,255
Other income 465 239
--------- ---------
167,435 141,494
--------- ---------
Costs and expenses:
Cost of goods sold 132,532 112,230
Selling, general and administrative 30,407 26,491
Interest, net of interest capitalized 1,713 2,242
--------- ---------
164,652 140,963
--------- ---------
Income before income taxes 2,783 531
Income taxes (1,099) (209)
--------- ---------
Net income $ 1,684 $ 322
Accretion of preferred stock to
redemption value (106)
Preferred stock dividends (1,144)
--------- ---------
Net income applicable to common stock $ 434 $ 322
========= =========
Net income per common share $ .03 $ .02
========= =========
Dividends per common share $ .06 $ .06
========= =========
</TABLE>
See accompanying Notes to Consolidated Financial Statements
4
<PAGE> 5
DREYER'S GRAND ICE CREAM, INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(unaudited)
<TABLE>
<CAPTION>
Common Stock
--------------------- Capital in Retained
(In thousands) Shares Amount Excess of Par Earnings Total
------- -------- ------------- -------- --------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1994 14,064 $14,064 $75,257 $46,600 $135,921
Net income 322 322
Common stock dividends declared (818) (818)
Repurchases and retirements
of common stock (250) (250) (6,403) (6,653)
Employee stock plans 105 105 1,581 1,686
------ ------- ------- ------- --------
Balance at April 1, 1995 13,919 $13,919 $70,435 $46,104 $130,458
====== ======= ======= ======= ========
Balance at December 30, 1995 12,929 $12,929 $39,370 $39,964 $ 92,263
Net income 1,684 1,684
Accretion of preferred stock
to redemption value (106) (106)
Preferred stock dividends declared (1,144) (1,144)
Common stock issued in acquisition
of M-K-D Distributors, Inc. 320 320 10,480 10,800
Common stock dividends declared (800) (800)
Repurchases and retirements
of common stock (4) (4) (110) (114)
Employee stock plans 88 88 1,841 1,929
------ ------- ------- ------- --------
Balance at March 30, 1996 13,333 $13,333 $51,581 $39,598 $104,512
====== ======= ======= ======= ========
</TABLE>
See accompanying Notes to Consolidated Financial Statements
5
<PAGE> 6
DREYER'S GRAND ICE CREAM, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
Thirteen Weeks Ended
------------------------------
($ in thousands) March 30, 1996 April 1, 1995
-------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,684 $ 322
Adjustments to reconcile net income to cash provided from operations:
Depreciation and amortization 6,004 4,900
Deferred income taxes 504 207
Changes in assets and liabilities, net of amounts acquired:
Trade accounts receivable (12,177) (15,693)
Other accounts receivable 1,811 (3,567)
Inventories (6,092) (3,470)
Prepaid expenses and other 3,770 1,880
Accounts payable and accrued liabilities 22,135 22,796
Accrued payroll and employee benefits (5,866) (6,236)
-------- --------
11,773 1,139
-------- --------
Cash flows from investing activities:
Acquisition of property, plant and equipment (22,336) (9,430)
Retirement of property, plant and equipment 111 93
Increase in goodwill and distribution rights (378) (1,776)
Increase in other assets, net (2,055) (330)
-------- --------
(24,658) (11,443)
-------- --------
Cash flows from financing activities:
Proceeds from long-term debt 26,000 15,500
Reductions in long-term debt (11,300) (3,600)
Issuance of common stock under employee stock plans 1,929 1,686
Repurchases of common stock (114) (6,653)
Cash dividends paid (1,920) (862)
-------- --------
14,595 6,071
-------- --------
Increase (decrease) in cash and cash equivalents 1,710 (4,233)
Cash and cash equivalents, beginning of period 3,051 6,334
-------- --------
Cash and cash equivalents, end of period $ 4,761 $ 2,101
======== ========
Supplemental Cash Flow Information -
Cash paid (refunded) during the period for:
Interest (net of amounts capitalized) $ 2,238 $ 2,843
Income taxes (net of refunds) (138) 106
Non-cash transaction:
Acquisition of M-K-D Distributors, Inc. 10,800
</TABLE>
See accompanying Notes to Consolidated Financial Statements
6
<PAGE> 7
DREYER'S GRAND ICE CREAM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - General:
Dreyer's Grand Ice Cream, Inc. and its subsidiaries (the Company) is a single
segment industry company engaged in the business of manufacturing and
distributing premium ice cream and other frozen dairy products to grocery and
convenience stores, foodservice accounts and independent distributors in the
United States.
The consolidated financial statements for the thirteen week periods ended March
30, 1996 and April 1, 1995, have not been audited by independent public
accountants, but include all adjustments, such as 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 Consolidated Financial
Statements for the year ended December 30, 1995, appearing in the Company's 1995
Annual Report on Form 10-K.
NOTE 2 - Inventories:
Inventories are stated at the lower of cost (determined by the first-in,
first-out method) or market. Inventories at March 30, 1996 and December 30, 1995
consisted of the following (in thousands):
<TABLE>
<CAPTION>
March 30, December 30,
1996 1995
--------- -----------
<S> <C> <C>
Raw materials $ 5,652 $ 3,291
Finished goods 36,213 29,910
-------- --------
$ 41,865 $ 33,201
======== ========
</TABLE>
NOTE 3 - Net Income Per Common Share:
Net income per common share is computed using the weighted average number of
shares of common stock outstanding during the period, which were 12,974,000
shares for the quarter ended March 30, 1996 and 13,971,000 shares for the
quarter ended April 1, 1995. The potentially dilutive effect of the Company's
redeemable convertible Series B preferred stock, convertible subordinated
debentures and other common stock equivalents was anti-dilutive for the thirteen
week periods ended March 30, 1996 and April 1, 1995. Accordingly, fully diluted
net income per share is not presented.
7
<PAGE> 8
NOTE 4 - Insurance Settlement:
In March 1996, the Company settled an insurance claim relating to the
malfunction of a refrigeration system at one of its plants. The malfunction
caused the accidental release of ammonia (refrigerant) into the plant which
contaminated the finished goods inventory. In accordance with the settlement,
the Company received the value of the finished goods inventory at its normal
selling price, plus expenses incurred recovering from the accident. This
resulted in a gain of $2,100,000, which was recorded as a reduction in cost of
goods sold for the thirteen week period ended March 30, 1996.
NOTE 5 - Purchase of M-K-D Distributors, Inc.:
On March 27, 1996, the Company acquired the remaining 50.3% of the
outstanding common stock of M-K-D Distributors, Inc. (M-K-D) for 320,000 newly
issued shares of the Company's common stock having a value of $10,800,000. The
acquisition was accounted for as a purchase and the amount by which the purchase
price exceeded the fair value of the net identifiable assets acquired of
$5,200,000 has been recorded as goodwill and distribution rights. The Company
has consolidated the results of operations of M-K-D since the beginning of
fiscal 1996. That portion of M-K-D's pre-acquisition earnings before income
taxes which was attributable to the former shareholders' interest,
approximately $148,000, was recorded as a charge to selling, general and
administrative expenses.
NOTE 6 - Lease Transaction:
On March 29, 1996, the Company entered into a lease transaction involving a
large majority of its direct-store-delivery truck fleet. The $26,000,000
proceeds received by the Company from the lease transaction were used to repay a
portion of existing bank borrowings and to fund capital expenditures. The four
year lease has been classified as a capital lease and is recorded in property,
plant and equipment.
NOTE 7 - Accounting for Stock-Based Compensation:
As of the beginning of fiscal 1996, the Company adopted Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation," which established accounting and reporting standards for
stock-based compensation plans. This standard encourages the adoption of the
fair value-based method of accounting for employee stock options or similar
equity instruments, but continues to allow the Company to measure compensation
cost for those equity instruments using the intrinsic value-based method of
accounting prescribed by Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees." Under the fair value-based method, compensation
cost is measured at the grant date based on the value of the award. Under the
intrinsic value-based method, compensation cost is the excess, if any, of the
quoted market price of the stock at the grant date or other measurement date
over the amount the employee must pay to acquire the stock. The Company
continues to use the intrinsic value-based method. The adoption of this standard
did not have any effect on the Company's Consolidated Financial Statements. The
Company will disclose the pro-forma effect on net income of using the fair-value
based method of accounting in the 1996 Annual Report to Stockholders.
8
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following table sets forth for the periods indicated the percent which the
items in the Consolidated Statement of Income bear to net sales and the
percentage change of such items compared to the indicated prior period:
<TABLE>
<CAPTION>
Percentage of Net Sales Period-to-Period
-----------------------------
Thirteen Weeks Ended Increase (Decrease)
----------------------------- --------------------
March 30, April 1, Thirteen Weeks 1996
1996 1995 Compared to 1995
--------- -------- --------------------
<S> <C> <C> <C>
Revenues:
Net sales 100.0% 100.0% 18.2%
Other income 0.3 0.2 94.6
----- -----
Total revenue 100.3 100.2 18.3
----- -----
Costs and expenses:
Cost of goods sold 79.4 79.4 18.1
Selling, general and administrative 18.2 18.8 14.8
Interest, net of interest capitalized 1.0 1.6 (23.6)
----- -----
Total costs and expenses 98.6 99.8 16.8
----- -----
Income before income taxes 1.7 0.4 424.1
Income taxes 0.7 0.2 425.8
----- -----
Net income 1.0 0.2 423.0
----- -----
Accretion of preferred stock
to redemption value 0.1 NM
Preferred stock dividends 0.6 NM
----- -----
Net income applicable to
common stock 0.3 0.2 34.8
===== =====
</TABLE>
9
<PAGE> 10
RESULTS OF OPERATIONS
Thirteen Weeks ended March 30, 1996 Compared with Thirteen Weeks Ended
April 1, 1995
The Company embarked on a five year plan (the Strategic Plan) during the
second quarter of 1994 to accelerate the sales of its brand throughout the
country. This plan includes three primary strategies: 1) a quadrupling of
advertising and consumer promotion spending, 2) rapid expansion and development
of the Company's direct-store-delivery system, and 3) introduction of innovative
new products. The potential benefits of the Strategic Plan are increased market
share and future earnings above those levels that would be attained in the
absence of the Strategic Plan. As originally announced, the Company anticipated
that the cost of implementing the Strategic Plan would materially reduce
earnings during 1994 and 1995.
Under the Strategic Plan, the Company increased the amount of its spending for
advertising and consumer promotion from 1993 levels to approximately $40,000,000
in 1994 and 1995, and plans to spend approximately $40,000,000 annually on these
marketing activities from 1996 through 1998. Since the inception of the
Strategic Plan, the Company expanded its direct-store-delivery system into 34
new markets and the Company's products are presently available to grocery stores
serving approximately 85% of the consumers in the United States. This
distribution system is considerably larger than any other direct-store-delivery
system for ice cream products currently operating in the United States. The
Company anticipates an improvement in earnings during 1996, and that the
earnings benefits expected under the Strategic Plan will be achieved in 1997 and
future years. However, no assurance can be given that the Company's expectations
relative to future market share and earnings benefits of the strategy will be
achieved. The success of the strategy will depend upon, among other things,
consumer purchase responsiveness to the increased marketing expenditures,
competitors' marketing responses, market conditions affecting the price of the
Company's products, commodity costs, and efficiencies achieved in manufacturing
and distribution operations.
Consolidated net sales for the first quarter of 1996 increased by $25,715,000,
or 18%, to $166,970,000 from $141,255,000 for the same period last year. Of the
increase, $11,066,000, or 43%, was accounted for by additional sales recorded by
the Company as a result of the consolidation of M-K-D Distributors, Inc.
(M-K-D) (See Note 5 of the Notes to Consolidated Financial Statements). Sales
of the Company's branded products were 9%, or $8,263,000, higher than the
comparable quarter in 1995 and accounted for 32% of the overall increase. The
increase of the Company's branded products related primarily to higher unit
sales in all markets due in part to the continued higher advertising and
consumer promotion spending under the Company's Strategic Plan. The products
that led this increase were Dreyer's and Edy's Fat Free Ice Cream and Grand Ice
Cream. Sales of branded products purchased from other manufacturers (partner
brands) increased 14% led by Ben & Jerry's Homemade(R) superpremium products and
frozen novelty and ice cream products from Nestle Ice Cream Company. Sales of
partner brands represented 34% of consolidated net sales compared with 35% in
the first quarter of 1995. The effect of price increases for the Company's
brands and partner brands was not significant.
Cost of goods sold increased $20,302,000, or 18%, over the first quarter of
1995, while the overall gross margin remained consistent at 20.6%. During the
first quarter of 1996 the Company recorded an insurance gain of $2,100,000 as a
reduction in costs of goods sold. (See Note 4 of the Notes to the Consolidated
Financial Statements). The resulting lower margin when this gain is excluded was
caused by lower partner brand manufacturing income.
Selling, general and administrative expenses in the first quarter of 1996 were
$3,916,000, or 15%, higher than in the same period of 1995. This increase
related primarily to the consolidation of M-K-D (See Note 5 of the Notes to the
Consolidated Financial Statements).
Income taxes increased $890,000, due to a higher pre-tax income. The effective
tax rate remained consistent at 39.5% for the first quarter of 1996 compared to
39.4% for the first quarter of 1995.
10
<PAGE> 11
LIQUIDITY AND CAPITAL RESOURCES
Working capital at March 30, 1996 decreased $9,555,000 from year-end
1995 due primarily to the seasonal increase in accounts payable and accrued
liabilities partially offset by an increase in trade accounts receivable. Cash
was provided primarily from the $26,000,000 proceeds from the lease
transaction. This source was used to fund the $22,336,000 increase in property,
plant and equipment (See Note 6 of the Notes to the Consolidated Financial
Statements).
The Company is continuing negotiations on an agreement for the private placement
of $50,000,000 of senior notes.
At March 30, 1996, the Company had $4,761,000 in cash and cash equivalents, and
an unused credit line of $71,000,000. The Company believes that its credit line,
along with its liquid resources, internally generated cash and financing
capacity, are adequate to meet anticipated operating and capital requirements.
11
<PAGE> 12
PART II: OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. No reports on Form 8-K were filed by the Company during the quarter
ended March 30, 1996.
b. Exhibits
Exhibit No. Description
- ----------- -----------
10.1 First Amendment to Credit Agreement dated April 15, 1996 among
Dreyer's Grand Ice Cream, Inc., Bank of America, NT & SA (as Agent
and as a Bank), ABN AMRO Bank, NV (as Co-Agent and as a Bank),
Credit Suisse and Union Bank of California, NA.
10.2 Participation Agreement dated March 29, 1996 among Dreyer's Grand
Ice Cream, Inc., Edy's Grand Ice Cream, BA Leasing & Capital
Corporation (as Agent and as a Participant), ABN AMRO Bank, NV and
Credit Suisse.
11 Computation of Net Income Per Common Share.
27 Financial Data Schedule.
12
<PAGE> 13
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 14, 1996 By: /s/ William F. Cronk, III
-------------------------------------------
William F. Cronk, III
President
<PAGE> 14
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
10.1 First Amendment to Credit Agreement dated April 15, 1996 among
Dreyer's Grand Ice Cream, Inc., Bank of America, NT & SA (as Agent
and as a Bank), ABN AMRO Bank, NV (as Co-Agent and as a Bank),
Credit Suisse and Union Bank of California, NA.
10.2 Participation Agreement dated March 29, 1996 among Dreyer's Grand
Ice Cream, Inc., Edy's Grand Ice Cream, BA Leasing & Capital
Corporation (as Agent and as a Participant), ABN AMRO Bank, NV and
Credit Suisse.
11 Computation of Net Income Per Common Share.
27 Financial Data Schedule.
<PAGE> 1
FIRST AMENDMENT TO CREDIT AGREEMENT
THIS FIRST AMENDMENT TO CREDIT AGREEMENT (this "Amendment"), is entered
into as of April ___, 1996 among Dreyer's Grand Ice Cream, Inc., a Delaware
corporation (the "Company"), the several financial institutions from time to
time party to this Agreement (collectively, the "Banks"; individually, a
"Bank"), ABN-AMRO Bank N.V., San Francisco International Branch as Co-Agent, and
Bank of America National Trust and Savings Association, as agent for the Banks.
RECITALS
A. The Company, Banks, and Agent are parties to a Credit Agreement
dated as of December 22, 1995 (the "Credit Agreement") pursuant to which the
Agent and the Banks have extended certain credit facilities to the Company.
B. The Company has requested that the Banks agree to certain amendments
of the Credit Agreement.
C. The Banks are willing to amend the Credit Agreement 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) Section 1.01 of the Credit Agreement is amended as
follows:
(1) The following definition is added immediately
after the definition of "Acquisition":
"Additional Capital" means an amount not less than $50,000,000
raised by the Company after March 29, 1996 through any, or any
combination, of the following:
(a) Senior Notes or other unsecured debt for borrowed money of
the Company (i) with terms and conditions acceptable to Majority Banks
and (ii) with a maturity of not less than five years;
(b) common stock issued by the Company after March 29, 1996;
-1 -
<PAGE> 2
(c) any other form of equity with terms and conditions
acceptable to Majority Banks.
(2) The last sentence in the definition of "Funded
Debt" in Section 1.01 of the Credit Agreement is amended in its entirety to
provide as follows:
For purposes of Section 7.15, obligations arising from capital leases
shall not be included in Funded Debt until the quarter ending on June
30, 1997. Commencing with such quarter and each quarter thereafter,
obligations arising from capital leases shall be included in Funded
Debt. For purposes of determining the Applicable Margin and the
commitment fee, obligations arising from capital leases shall be
included in Funded Debt until the quarter after the Company has raised
the Additional Capital.
(b) Article VI of the Credit Agreement is amended by deleting
Section 6.13.
(c) Article VII of the Credit Agreement is amended as follows:
(1) Section 7.05 is amended by amending its
subsection (g) in its entirety to provide as follows:
(g) Senior Notes up to an aggregate principal amount of
$50,000,000.
(2) Effective December 22, 1995, Section 7.14 is
amended by amending its subsection (b) in its entirety to provide as follows:
(b) For purposes of this Section, Fixed Charge Coverage Ratio
means the ratio of "A" to "B" where:
"A" means the sum of EBITDA plus current operating lease
expenses; and
"B" means interest expense plus current operating lease
expenses;
in all cases computed on a consolidated basis and measured at the end
of the relevant fiscal quarter for the four successive fiscal quarters
ending on the last day of such fiscal quarter.
(d) Section 8.01(c) is amended by deleting "6.13" from the
sections enumerated therein.
-2 -
<PAGE> 3
(e) The portions of Schedule 2 of the Compliance Certificate
relating to Sections 7.14 and 7.15 are amended in their entirety to provide as
follows:
7.14 Minimum Fixed Charge Coverage Ratio. (a) The Company shall not
permit its Fixed Charge Coverage Ratio:
<TABLE>
<CAPTION>
================================================================================
For the period consisting of the four
consecutive fiscal quarters ending on the
To be less than: last day of its:
- --------------------------------------------------------------------------------
<S> <C>
1.55 fourth fiscal quarter of 1995
- --------------------------------------------------------------------------------
1.65 first and second fiscal quarters of 1996
- --------------------------------------------------------------------------------
1.75 third fiscal quarter of 1996
- --------------------------------------------------------------------------------
2.00 fourth fiscal quarter of 1996 and each of
the first three fiscal quarters of 1997
- --------------------------------------------------------------------------------
fourth fiscal quarter of 1997 and each
2.50 fiscal quarter thereafter
================================================================================
</TABLE>
(b) For purposes of this Section, Fixed Charge Coverage Ratio
means the ratio of "A" to "B" where:
"A" means the sum of EBITDA plus current operating lease
expenses; and
"B" means interest expense plus current operating lease
expenses;
in all cases computed on a consolidated basis and measured at the end
of the relevant fiscal quarter for the four successive fiscal quarters
ending on the last day of such fiscal quarter.
<TABLE>
<CAPTION>
================================================================================
A =
- --------------------------------------------------------------------------------
<S> <C>
1. EBITDA $
-------
- --------------------------------------------------------------------------------
2. Current operating lease expenses $
-------
- --------------------------------------------------------------------------------
A = 1 + 2 $
-------
================================================================================
</TABLE>
-3 -
<PAGE> 4
<TABLE>
<CAPTION>
================================================================================
B =
- --------------------------------------------------------------------------------
<S> <C>
1. Interest expense $
-------
- --------------------------------------------------------------------------------
2. Current operating lease expenses $
-------
- --------------------------------------------------------------------------------
B = 1 + 2 $
-------
================================================================================
</TABLE>
Ratio of A to B =
------------
Required Ratio as set forth in Section 7.14(a): not less
than
------------
7.15 Funded Debt/EBITDA Ratio. (a) The Company shall not permit its
Funded Debt/EBITDA Ratio to be greater than:
(1) 5.25 for the period from the Closing Date through its
fourth fiscal quarter in 1995;
(2) 4.75 for its first fiscal quarter in 1996;
(3) 4.50 for its second fiscal quarter in 1996;
(4) 4.00 for its third fiscal quarter in 1996;
(5) 3.50 for its fourth fiscal quarter in 1996; and
(6) 3.00 for each of its fiscal quarters thereafter.
(b) In determining compliance with this Section, the Company's
Funded Debt at each quarterly measurement period shall be reduced by the amounts
shown in the following table to accommodate increases in the Company's seasonal
debt:
<TABLE>
<CAPTION>
================================================================================
Fiscal quarter each year after
ending in: 1996 1996
- --------------------------------------------------------------------------------
<S> <C> <C>
March $10,000,000 $10,000,000
- --------------------------------------------------------------------------------
June $45,000,000 $50,000,000
- --------------------------------------------------------------------------------
September $35,000,000 $40,000,000
- --------------------------------------------------------------------------------
December $ 0 $ 0
================================================================================
</TABLE>
-4 -
<PAGE> 5
1. Capitalized lease obligations (for each quarter
commencing after March 31, 1997) $
----------
2. Other Funded Debt
----------
3. Total Funded Debt (1 + 2)
----------
4. Minus amount as determined according to the
table in Section 7.15(b):
==========
5. Funded Debt for purposes of Section 7.15
(3 minus 4)
----------
6. EBITDA =
----------
7. Ratio of Funded Debt to EBITDA =
----------
8. Required ratio as set forth in Section 7.15(a): not greater than
----------
FOR PURPOSES OF DETERMINING THE APPLICABLE MARGIN AND THE COMMITMENT FEE:
1. Capitalized lease obligations (not applicable if
Additional Capital has been raised) $
----------
2. Other Funded Debt
----------
3. Total Funded Debt (1 + 2)
----------
4. Minus amount as determined according to the
table in Section 7.15(b):
==========
5. Funded Debt for purposes of determining the
Applicable Margin and the commitment fee
(3 minus 4) $
----------
6. EBITDA =
7. Ratio of Funded Debt to EBITDA to be used in
determining the Applicable Margin and the commitment fee:
----------
-5 -
<PAGE> 6
3. Representations and Warranties. The Company hereby represents and
warrants to the Agent and the Banks as follows:
(a) After giving effect to this Amendment, 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
Authority) 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 the Credit Agreement are true and correct in all material respects.
(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 as of March 29,
1996 (the "Effective Date"), provided that each of the following conditions
precedent is satisfied:
(a) The Agent has received from the Company and the Majority
Banks a duly executed original (or, if elected by the Agent, an executed
facsimile copy) of this Amendment.
(b) The Agent has received from the Company a copy of a
resolution passed by the board of directors of such corporation, 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 this Amendment.
(c) All representations and warranties contained herein are
true and correct as of the Effective Date.
5. 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
-6 -
<PAGE> 7
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.
(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. Each of
the parties hereto understands and agrees that this document (and any other
document required herein) may be delivered by any party thereto either in the
form of an executed original or an executed original sent by facsimile
transmission to be followed promptly by mailing of a hard copy original, and
that receipt by the Agent of a facsimile transmitted document purportedly
bearing the signature of a Bank or the Company shall bind such Bank or the
Company, respectively, with the same force and effect as the delivery of a hard
copy original. Any failure by the Agent to receive the hard copy executed
original of such document shall not diminish the binding effect of receipt of
the facsimile transmitted executed original of such document of the party whose
hard copy page was not received by the Agent.
(e) This Amendment, together with the Credit Agreement,
contains the entire and exclusive agreement of the parties hereto with reference
to the matters discussed herein and therein. This Amendment supersedes all prior
drafts and communications with respect thereto. This Amendment may not be
amended except in accordance with the provisions of Section 10.01 of the Credit
Agreement.
(f) 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.
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:
---------------------
Title:
--------------------
-7 -
<PAGE> 8
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Agent
By:
--------------------
Name:
Title: Vice President
ABN AMRO BANK N.V., as Co-Agent
By:
--------------------
Name:
------------------
Title:
-----------------
By:
--------------------
Name:
------------------
Title:
-----------------
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as a
Bank
By:
--------------------
Name: Michael J. Dasher
Title: Vice President
ABN AMRO BANK N.V., as a Bank
By:
--------------------
Name:
Title:
By:
--------------------
Name:
Title:
-8 -
<PAGE> 9
CREDIT SUISSE
By:
--------------------
Name:
Title:
By:
--------------------
Name:
Title:
UNION BANK OF CALIFORNIA, N.A.
By:
--------------------
Name:
Title:
By:
--------------------
Name:
Title:
-9 -
<PAGE> 1
Participation Agreement
PARTICIPATION AGREEMENT
DATED AS OF MARCH 29, 1996
ENTERED INTO AMONG
DREYER'S GRAND ICE CREAM, INC.
EDY'S GRAND ICE CREAM
AS LESSEES,
BA LEASING & CAPITAL CORPORATION,
NOT INDIVIDUALLY, BUT SOLELY IN ITS CAPACITY
AS AGENT FOR THE PARTICIPANTS, AS LESSOR
AND
THE PARTICIPANTS LISTED ON
SCHEDULE I HERETO
<PAGE> 2
Participation Agreement
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I DEFINITIONS .......................................... -1-
ARTICLE II PURCHASE AND LEASE OF VEHICLES ....................... -2-
Section 2.1 Funding; Payment of Equipment Cost ................ -2-
Section 2.2 Application of Funds .............................. -2-
Section 2.3 Time and Place of Delivery Date ................... -3-
Section 2.4 Postponement of Delivery Date ..................... -3-
ARTICLE III CONDITIONS TO DELIVERY DATE CLOSING .................. -4-
Section 3.1 Delivery Date Notice .............................. -4-
Section 3.2 Appraisal ......................................... -4-
Section 3.3 Participation Agreement ........................... -4-
Section 3.4 Lease ............................................. -4-
Section 3.5 Lease Supplements ................................. -4-
Section 3.6 Guarantee ......................................... -5-
Section 3.7 Certificates of Title ............................. -5-
Section 3.8 Transaction Costs; Fees ........................... -5-
Section 3.9 Opinions of Counsel ............................... -5-
Section 3.10 Corporate Status and Proceedings ................. -6-
Section 3.11 Consents and Approvals ........................... -6-
Section 3.12 Payment of Impositions ........................... -6-
Section 3.13 Search Reports ................................... -6-
Section 3.14 Insurance ........................................ -7-
Section 3.15 Proceedings Satisfactory, Etc .................... -7-
Section 3.16 Absence of Material Adverse Effect ............... -7-
Section 3.17 Representations and Warranties True;
Absence of Defaults ..................... -7-
ARTICLE IV GENERAL PROVISIONS ................................... -7-
Section 4.1 Nature of Transaction ............................. -7-
Section 4.2 Waiver ............................................ -8-
Section 4.3 Replacements ...................................... -8-
Section 4.4 Dreyer's as Representative ........................ -8-
ARTICLE V REPRESENTATIONS AND WARRANTIES ....................... -9-
Section 5.1 Representations and Warranties of Lessees ......... -9-
Section 5.2 Representations and Warranties of
Participants ............................ -15-
Section 5.3 Representations and Warranties of BALCAP .......... -15-
</TABLE>
-i-
<PAGE> 3
Participation Agreement
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE VI COVENANTS ............................................ -17-
Section 6.1 Covenants of Lessees .............................. -17-
Section 6.2 Covenants of Lessor ............................... -24-
ARTICLE VII GENERAL INDEMNITIES .................................. -24-
Section 7.1 Indemnity ......................................... -24-
Section 7.2 Increased Capital Costs ........................... -26-
Section 7.3 LIBO Rate Unlawful ................................ -27-
Section 7.4 Funding Losses .................................... -27-
ARTICLE VIII GENERAL TAX INDEMNITY ................................ -27-
Section 8.1 General Tax Indemnity ............................. -27-
Section 8.2 Contest ........................................... -28-
Section 8.3 Gross Up .......................................... -30-
Section 8.4 Tax Returns ....................................... -30-
Section 8.5 Withholding Tax Exemption ......................... -31-
ARTICLE IX AMENDMENTS TO OPERATIVE DOCUMENTS .................... -32-
Section 9.1 Amendments to Operative Documents With
Consent of Participants ................. -32-
Section 9.2 Amendments to Operative Documents
Affecting Agent ......................... -33-
ARTICLE X AGENT ............................................... -33-
Section 10.1 Appointment of Agent; Powers and
Authorization to Take Certain Actions ... -33-
Section 10.2 Reliance ......................................... -35-
Section 10.3 Action Upon Instructions Generally ............... -35-
Section 10.4 Indemnification .................................. -36-
Section 10.5 Independent Credit Investigation ................. -37-
Section 10.6 Refusal to Act ................................... -37-
Section 10.7 Resignation or Removal of Agent;
Appointment of Successor ................ -37-
Section 10.8 Separate Agent ................................... -38-
Section 10.9 Termination of Agency ............................ -39-
Section 10.10 Compensation of Agency .......................... -39-
Section 10.11 Limitations ..................................... -39-
ARTICLE XI MISCELLANEOUS ....................................... -40-
Section 11.1 Survival of Covenants ............................ -40-
</TABLE>
-ii-
<PAGE> 4
Participation Agreement
<TABLE>
<CAPTION>
Page
<S> <C>
Section 11.2 APPLICABLE LAW ................................... -40-
Section 11.3 Distribution and Application of Rents and
Other Payments .......................... -40-
Section 11.4 Notices .......................................... -40-
Section 11.5 Transaction Costs; Other Expenses ................ -41-
Section 11.6 Counterparts ..................................... -41-
Section 11.7 Severability ..................................... -41-
Section 11.8 Successors and Assigns ........................... -42-
Section 11.9 Participations ................................... -44-
Section 11.10 JURY TRIAL ...................................... -45-
Section 11.11 Captions; Table of Contents ..................... -45-
Section 11.12 FINAL AGREEMENT ................................. -45-
Section 11.13 No Third-Party Beneficiaries .................... -46-
Section 11.14 Further Assurances .............................. -46-
Section 11.15 Reproduction of Documents ....................... -46-
Section 11.16 Consideration for Consents to Waivers
and Amendments .......................... -46-
Section 11.17 Role of BALCAP .................................. -47-
Section 11.18 Submission to Jurisdiction ...................... -47-
</TABLE>
-iii-
<PAGE> 5
Participation Agreement
LIST OF SCHEDULES AND EXHIBITS
Schedule I - Commitments of Participants; Payment Instructions
Schedule II - Description of Vehicles
Schedule X - Definitions
Exhibit A - Form of Lease
Schedule I - Description of Vehicles
Exhibit A - Form of Lease Supplement
Exhibit B - Form of Delivery Date Notice
Schedule I - Vehicle List and Equipment Cost
Exhibit C - Form of Opinion of Lessees' Special Counsel
Exhibit D - Form of Officer's Certificate
Exhibit E - Form of Guarantee
Exhibit F - Form of Investor's Letter
-iv-
<PAGE> 6
Participation Agreement
PARTICIPATION AGREEMENT
This PARTICIPATION AGREEMENT, dated as of March 29, 1996 (this
"Participation Agreement"), is entered into among: (a) Dreyer's Grand Ice Cream,
Inc., a Delaware corporation ("Dreyer's"), and Edy's Grand Ice Cream, a
California corporation ("Edy's"), as Lessees (each a "Lessee" and collectively,
the "Lessees"); (b) BA Leasing & Capital Corporation, a California corporation,
not in its individual capacity except to the extent expressly set forth herein,
but solely in its capacity as Agent for the Participants from time to time
hereunder, as Lessor ("Agent" or "Lessor"), and (c) the several Participants
listed on Schedule I hereto (together with their respective permitted
successors, assigns and transferees, each a "Participant" and collectively the
"Participants").
WHEREAS, on the Delivery Date, Lessees will transfer to Lessor, and
Lessor will purchase and receive from Lessees, an interest in the Vehicles for
the purpose of securing performance of Lessees' obligations under the Operative
Documents;
AND WHEREAS, upon the transfer of such interest in the Vehicles on the
Delivery Date, Lessor will lease such Vehicles to Lessees and Lessees will lease
such Vehicles from Lessor, pursuant to the terms of the Lease substantially in
the form of Exhibit A hereto and one or more Lease Supplements, each such Lease
Supplement being substantially in the form of Exhibit A to the Lease;
NOW THEREFORE, in consideration of the mutual terms and conditions
herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Capitalized terms used but not defined herein (including those used in
the foregoing recitals) shall have the meanings specified in Schedule X hereto
unless the context otherwise requires, which Schedule X shall for all purposes
constitute a part of this Participation Agreement.
<PAGE> 7
Participation Agreement
ARTICLE II
PURCHASE AND LEASE OF VEHICLES
Section 2.1 Funding; Payment of Equipment Cost.
(a) Subject to the terms and conditions hereinafter set forth,
and in reliance on the representations and warranties contained herein
or made pursuant hereto, upon receipt of the Delivery Date Notice, each
Participant shall transfer to Lessor on the specified Delivery Date an
amount equal to the product of the aggregate Equipment Cost of the
Vehicles specified in the Delivery Date Notice, multiplied by such
Participant's Commitment Percentage (each such transfer being referred
to herein as a "Funding"). In no event shall any Participant be
required to provide funds under this Participation Agreement in an
aggregate amount exceeding such Participant's Commitment.
(b) Remittances pursuant to this Section 2.1 shall be made in
immediately available federal funds by wire transfer to the account of
Lessor set forth below (or as otherwise specified by Lessor to each
Participant prior to the date of the requested Funding) and must be
received by Lessor by 12:00 p.m., Eastern time on the specified
Delivery Date:
Bank: Bank of America NT&SA
San Francisco Main Branch
San Francisco, California
ABA Routing #: 121 000 358
Account #: 06568-57503
Payee: BA Leasing & Capital Corporation
Notify: Richard Walter, (415) 765-7476
Reference: Dreyer's Grand Ice Cream, Inc.
Section 2.2 Application of Funds. On the Delivery Date, upon (a)
receipt by Lessor of all amounts to be paid by the Participants pursuant to
Section 2.1, and (b) satisfaction or waiver of each of the conditions set forth
in Article III, (i) Lessor shall purchase an interest in the Vehicles to be
financed on the Delivery Date, as specified in the Delivery Date Notice
delivered pursuant to Section 3.1, (ii) in consideration therefor, Lessor shall
pay, from the funds made available by the Participants pursuant to Section 2.1,
an amount equal to the aggregate Equipment Cost of the Vehicles being so
financed in immediately available federal funds remitted by wire transfer to the
account specified by Lessees in the Delivery Date Notice, and
-2-
<PAGE> 8
Participation Agreement
(iii) Lessor shall lease to Lessees the Vehicles, and Lessees shall accept
delivery of and lease from Lessor such Vehicles pursuant to the Lease.
Section 2.3 Time and Place of Delivery Date. Subject to the conditions
set forth in Article III, the Delivery Date Closing shall take place on the date
specified therefor in the Delivery Date Notice, commencing at 9:00 a.m. Los
Angeles time, at Mayer, Brown & Platt, 350 South Grand Avenue, Suite 2500, Los
Angeles, California 90071, subject to the following:
(i) only one Funding and one Delivery Date may
occur;
(ii) the Funding and the Delivery Date shall occur
on a Business Day on or after the date hereof and not later
than March 29, 1996, it being understood that there may be the
Funding without a Delivery Date Closing if Lessees have
postponed the Delivery Date pursuant to Section 2.4, so long
as the Delivery Date occurs not later than April 30, 1996; and
(iii) in no event shall the aggregate amount
advanced by the Participants exceed the Total Commitment.
Section 2.4 Postponement of Delivery Date. In the event that the
Participants shall make the Funding requested pursuant to the Delivery Date
Notice and the relevant Delivery Date Closing shall not have occurred on the
date specified in the Delivery Date Notice, Lessees shall pay to Lessor, for the
benefit of the Participants, interest on the amount funded by each Participant
at the Assumed Interest Rate, less any interest earned by investing such funded
amounts, which interest shall be for the ratable benefit of the Participants;
provided that this provision shall not be construed to require Lessor to invest
such funds in interest-bearing accounts. Such interest shall be due and payable
by Lessees upon the occurrence of the Delivery Date and such payment shall be an
additional condition precedent to the Delivery Date Closing; provided, however,
that no additional Delivery Date Notice shall be required to be given if the
Delivery Date Closing is postponed and thereafter consummated; and provided,
further, that if the Delivery Date Closing shall not have occurred by the first
to occur of (a) the fifth (5th) Business Day following the Funding in respect
thereof and (b) April 30, 1996, then all such interest shall be due and payable
on such date, and Lessor shall refund to each Participant all amounts funded by
such Participant, plus any other amounts due under Section 7.4.
-3-
<PAGE> 9
Participation Agreement
ARTICLE III
CONDITIONS TO DELIVERY DATE CLOSING
The obligation of each Participant and Lessor to perform its
obligations on the Delivery Date, and of each Participant to make its Funding,
shall be subject to the fulfillment to the satisfaction of (including, with
respect to writings, such writings being in form and substance reasonably
satisfactory to the addressee or beneficiary thereof), or the waiver in writing
by, such Participant of the conditions precedent set forth in this Article III
on or prior to the Delivery Date (except that the obligation of any party hereto
shall not be subject to the performance or compliance of such party or of any of
such party's Affiliates).
Section 3.1 Delivery Date Notice. Lessees shall have delivered to
Lessor and each Participant, prior to the proposed Delivery Date, an irrevocable
notice (a "Delivery Date Notice") substantially in the form of Exhibit B,
specifying (i) the proposed Delivery Date, (ii) a description (including model,
make, serial number and registration) of each Vehicle to be financed on the
Delivery Date, (iii) the respective Equipment Costs of such Vehicles, (iv) as to
each such Vehicle, which Lessee is to be the Lessee thereof, and (v) wire
transfer instructions for the disbursement of funds.
Section 3.2 Appraisal. Prior to the Delivery Date, Lessor and each
Participant shall have received an Appraisal to their reasonable satisfaction
opining as to the Appraised Value of the Vehicles as of the Delivery Date and
each of the first four anniversaries of the Delivery Date, and opining that the
remaining economic useful life of each Vehicle is not less than four (4) years.
Section 3.3 Participation Agreement. Lessor and each of the
Participants shall have received a fully executed counterpart of this
Participation Agreement.
Section 3.4 Lease. Lessor and each Participant shall have received a
fully executed counterpart of the Lease; provided, however, only Lessor shall
receive the Lease marked "Counterpart No. 1 - Lessor's Original Copy".
Section 3.5 Lease Supplements. Each Lessee shall have executed and
delivered to Lessor and each Participant one or more Lease Supplements in form
and substance reasonably satisfactory to Lessor and each Participant and
substantially in the form of Exhibit A to the Lease (each a "Lease Supplement");
provided, however, only Lessor shall receive the Lease Supplement marked
"Counterpart No. 1 - Lessor's Original Copy". Each Lease Supplement to be
executed and delivered by a Lessee on each Delivery Date shall set forth:
-4-
<PAGE> 10
Participation Agreement
(a) in Schedule I thereto, a description of and the Equipment
Cost for each of the Vehicles; and
(b) in Schedule II thereto, a schedule of the installments of
Fixed Rent, the Payment Dates therefor payable during the Lease Term,
the Supplement Balance of such Lease Supplement as of the Delivery Date
and as of each Payment Date in the Lease Term, assuming in each case
that all installments of Fixed Rent due and payable thereunder to and
including such Payment Date have been paid. The scheduled payments of
Fixed Rent shall be in amounts sufficient that the outstanding Lease
Balance will be no greater than the Appraised Value of the Vehicles as
of the eighth Payment Date and each Payment Date thereafter.
Schedule I to each Lease Supplement shall be prepared by the applicable Lessee,
and shall be subject to Lessor's approval. Schedule II to each Lease Supplement
shall be prepared by Lessor, and the items set forth by Lessor in such Schedule
shall be conclusive and binding upon each Lessee for all purposes hereunder.
Section 3.6 Guarantee. On or prior to the Delivery Date, Dreyer's shall
have duly executed and delivered the Guarantee to Lessor and each Participant.
Section 3.7 Certificates of Title. Lessor and each Participant shall
have received a duly executed Officer's Certificate from Dreyer's, (a) setting
forth the state in which each Vehicle is titled and registered; and (b)
certifying that (i) the representations and warranties in Section 5.1(q) are
true and correct with respect to each such Vehicle and (ii) the Certificates of
Title for such Vehicles do not evidence title, or any interest in or Lien
against title, in any such Vehicle in any Person other than the Lessee of such
Vehicle.
Section 3.8 Transaction Costs; Fees. Lessees shall have paid to Lessor,
for the benefit of Lessor and the Participants, any Transaction Costs invoiced
and not previously paid. Such payment shall be made by wire transfer of
immediately available funds to the account specified for Lessor on Schedule I.
On or prior to the Delivery Date, Lessees shall have paid to BALCAP the
arrangement fee provided for in the Fee Letter.
Section 3.9 Opinions of Counsel. Each Participant and Lessor shall have
received the opinion of Manwell & Milton, as counsel to Lessees, substantially
to the effect of the matters set forth in Exhibit C. By their execution hereof,
Lessees expressly instruct such counsel to execute and deliver such opinion to
Lessor and the Participants.
-5-
<PAGE> 11
Participation Agreement
Section 3.10 Corporate Status and Proceedings. Lessor and each
Participant shall have received:
(a) certificates of existence and good standing with respect
to each Lessee from the Secretaries of State of the States of their
incorporation, dated no earlier than the 15th day prior to the Delivery
Date; and
(b) with respect to each Lessee, an Officer's Certificate
substantially in the form of Exhibit D, dated the Delivery Date, with
respect to such Person's governing documents, resolutions and incumbent
officers, representations and warranties and absence of defaults.
In addition, the Participants shall have received an officer's
certificate of the Bank with respect to the Bank's resolutions,
by-laws, incumbent officers and representations and warranties.
Section 3.11 Consents and Approvals. All necessary consents, approvals
and authorizations of, and declarations, registrations and filings with,
Authorities and nongovernmental Persons required to consummate the transactions
contemplated by this Participation Agreement and the other Operative Documents
shall have been obtained or made by each Lessee and shall be in full force and
effect.
Section 3.12 Payment of Impositions. All Impositions other than Charges
payable on or prior to the Delivery Date in connection with the execution,
delivery, recording or filing of any of the Operative Documents, in connection
with the filing of any of the financing statements, any applications regarding
certificates of title and any other documents, in connection with the
consummation of any other transactions contemplated hereby or by any of the
other Operative Documents, shall have been paid in full by Lessees.
Section 3.13 Search Reports. Prior to the Delivery Date, Lessor shall
have received reports acceptable to Lessor and counsel to the Participants as to
each Lessee by the office of the Secretaries of State and the appropriate county
filing or recording offices of each jurisdiction where a Lessee has its
principal office and each jurisdiction in which any Vehicle is titled, each
dated as close to the Delivery Date as practicable, in respect of a search of
the applicable UCC files and any indices of Liens maintained by such offices
(including, if applicable, indices of judgment, revenue and tax liens); provided
that any such search report that is not delivered on the Delivery Date shall be
delivered promptly thereafter, and to the extent that such search reports
indicate the existence of a lien on any Vehicle, such Vehicle shall be
repurchased pursuant to Section 6.1(f).
-6-
<PAGE> 12
Participation Agreement
Section 3.14 Insurance. Lessor shall have received (and each
Participant shall have received a copy of) a current certificate to the effect
that insurance complying with Section 7.1 of the Lease is in full force and
effect, and there shall be no past due premiums in respect of any such
insurance.
Section 3.15 Proceedings Satisfactory, Etc. All proceedings taken in
connection with the Delivery Date and all documents relating thereto shall be
reasonably satisfactory to Lessor, each Participant and their counsel, and
Lessor, each Participant and their counsel shall have received copies of such
documents as any of them may reasonably request in connection therewith, all in
form and substance reasonably satisfactory to Lessor, each Participant and their
counsel.
Section 3.16 Absence of Material Adverse Effect. Since December 31,
1994, no Material Adverse Effect shall have occurred.
Section 3.17 Representations and Warranties True; Absence of Defaults.
Each of the representations and warranties made by or on behalf of each Lessee
under the Operative Documents shall be true on and as of the Delivery Date, and
no Incipient Default or Event of Default shall have occurred and be continuing
on and as of the Delivery Date.
ARTICLE IV
GENERAL PROVISIONS
Section 4.1 Nature of Transaction. It is the intent of the parties
that: (a) the transaction contemplated hereby constitutes a capital lease from
Lessor to Lessees for purposes of each Lessee's financial reporting, (b) the
transaction contemplated hereby is a financing and preserves ownership and title
in the Vehicles to Lessees for purposes of Federal and state income tax,
bankruptcy, commercial law and UCC purposes, (c) the Lease grants a security
interest in the Vehicles and the other Collateral to Lessor, and (d) the
obligations of Lessees to pay Fixed Rent and Variable Rent shall be treated as
payments of principal and interest, respectively. Nevertheless, each Lessee
acknowledges and agrees that neither Lessor nor any Participant has made any
representations or warranties to Lessee concerning the tax, accounting or legal
characteristics of the Operative Documents and that each Lessee has obtained and
relied upon such tax, accounting and legal advice from Lessees' advisors and
professionals concerning the Operative Documents as they deem appropriate.
Lessor shall not claim any depreciation with respect to the Vehicles. Except as
specifically provided for herein or in the Lease, Lessor shall retain an
interest in the Vehicles, free and clear of all Liens other than Permitted
Liens, as security for the obligations of
-7-
<PAGE> 13
Participation Agreement
Lessees under the Operative Documents. Without limiting the foregoing, each
Lessee shall be permitted to be named as the record owner of each Vehicle leased
by such Lessee on the Certificate of Title and the registration issued for such
Vehicle by each applicable Authority; provided that in each case Lessor is
listed on the same Certificate of Title as having a security interest in the
Vehicle or such Lessee has taken such other steps as may be necessary to perfect
Lessor's security interest in such Vehicle. Other than Lessor, no Person shall
be named on the Certificate of Title of any Vehicle as having a security
interest in such Vehicle.
Section 4.2 Waiver. As a material inducement to Lessor and each
Participant to engage in the transactions contemplated by the Operative
Documents, each Lessee hereby unconditionally and irrevocably waives any and all
benefits under California Civil Code Sections 2819 and 2822.
Section 4.3 Replacements. Participants hereby agree that they shall
instruct Lessor to release a Part or Vehicle from the Lease and evidence such
release by the execution and delivery of a termination statement release, a
release of Lien from the applicable Certificate of Title and such other
documents as may be required to release the replaced Part or Vehicle from the
Lease and which are in form and substance satisfactory to the Required
Participants subject to the satisfaction of the conditions set forth in the
Lease with respect to the release of such Part or Vehicle.
Section 4.4 Dreyer's as Representative. Each Lessee hereby appoints
Dreyer's as its representative for receipt of any payment, notice or other
communication directed to Lessees, or any Lessee, pursuant to any of the
Operative Documents, and for the taking of any action (including the making of
any representations and covenants) which a Lessee is required or permitted to
undertake or make pursuant to the Operative Documents. Lessor and each
Participant may regard any notice or other communication pursuant to any
Operative Document (including the Delivery Date Notice) from Dreyer's as a
notice or communication from the Lessees. Without limiting the foregoing, Lessor
shall make all payments of Equipment Cost on the Delivery Date to Dreyer's, for
the benefit of the applicable Lessee or Lessees, to an account specified by
Dreyer's in the Delivery Date Notice, and such payment to Dreyer's shall
constitute payment to such Lessee or Lessees for all purposes under the
Operative Documents. Dreyer's hereby accepts such appointment and agrees that it
shall not resign from its duties as Lessees' representative without the written
consent of the Required Participants. Each Lessee hereby covenants and agrees
that each representation and warranty, covenant, agreement and undertaking made
in its name or on its behalf by Dreyer's shall be deemed for all purposes to
have been made by such Lessee and shall be binding upon and enforceable against
such Lessee to the same extent as if the same had been made directly by such
Lessee.
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Participation Agreement
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Section 5.1 Representations and Warranties of Lessees. As of the
Delivery Date, each Lessee makes the representations and warranties set forth in
this Section 5.1 to Lessor and each Participant.
(a) Corporate Existence. Dreyer's is a corporation duly
incorporated, validly existing and in good standing under the laws of
the State of Delaware, Edy's is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of
California, and each such Person is duly qualified or licensed and in
good standing as a foreign corporation authorized to do business in
each state where, because of the nature of its activities or
properties, such qualification or licensing is required, except for
such jurisdictions where the failure to be so qualified or licensed
would not have a Material Adverse Effect. Edy's is a wholly-owned
Subsidiary of Dreyer's.
(b) Corporate Authority. Each of the Lessees has all requisite
corporate power and authority to execute, deliver, and perform its
respective obligations under each Operative Document to which it is a
party.
(c) Authorization; Non-Contravention. The execution and
delivery by each of Lessees of the Operative Documents to which it is a
party, and the performance by each such Person of its respective
obligations under such Operative Documents, have been duly authorized
by all necessary corporate action (including any necessary stockholder
action) on its part, and do not and will not: (i) violate any provision
of any law, rule, regulation, order, writ, judgment, decree,
determination or award, which violation or violations would have,
individually or in the aggregate, a Material Adverse Effect; (ii)
violate any provision of the charter or bylaws of any Lessee; (iii)
result in a breach of or constitute a default under any indenture, loan
or credit agreement, or any other agreement or instrument to which any
Lessee is a party or by which any Lessee or their respective properties
may be bound or affected, which breaches or default would have,
individually or in the aggregate, a Material Adverse Effect; or (iv)
result in, or require, the creation or imposition of any Lien of any
nature upon or with respect to any of the properties now owned or
hereafter acquired by any Lessee (other than the security interest
contemplated by the Lease); and none of the Lessees is in default under
or in violation of its respective charter or bylaws.
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Participation Agreement
(d) Binding Effect. Each of the Operative Documents to which
any Lessee is a party constitutes the legal, valid and binding
obligation of such Person, enforceable against such Person, in
accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally and by
general principles of equity.
(e) Absence of Litigation, etc. There is no litigation
(including, without limitation, derivative actions), arbitration or
governmental proceedings pending or, to the knowledge of any Lessee,
threatened against any Lessee in which there is a reasonable
possibility of an adverse decision which, if adversely determined,
would have a Material Adverse Effect.
(f) Consents, etc. No authorization, consent, approval,
license or formal exemption from, nor any filing, declaration or
registration with, any Authority, including, without limitation, the
Securities and Exchange Commission, or with any securities exchange, is
or will be required in connection with the execution and delivery by
any Lessee of the Operative Documents to which they are party, the
performance by any Lessee of their respective obligations under such
Operative Documents or the ownership, operation and maintenance of the
Vehicles as contemplated by the Operative Documents, except as
described in Section 5.1(b).
(g) Location of Offices. The principal place of business and
chief executive office (as such term is used in Article 9 of the UCC)
of each Lessee is located at 5925 College Avenue, Oakland, California.
(h) ERISA. Relying upon the accuracy of the representations in
Section 5.2(a) hereof, the execution and delivery of the Operative
Documents by Lessees will not involve any prohibited transaction within
the meaning of ERISA or Section 4975 of the Internal Revenue Code of
1986, as amended.
(i) Taxes. Each Lessee has filed or caused to be filed all
United States Federal and all other material tax returns that are
required to be filed by each such Person, and has paid or caused to be
paid all taxes shown to be due and payable on such returns or on any
assessment received by any Lessee to the extent that such taxes have
become due and payable except to the extent that taxes due, but unpaid,
are being contested in good faith by such Lessee by appropriate action
or proceeding and, to the extent (if any) that such taxes are not due
and payable, has established or caused to be established reserves that
are adequate for the payment thereof in accordance with GAAP.
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Participation Agreement
(j) Compliance with Laws. The Vehicles, the properties from
which they are operated and serviced and the current operation and use
thereof and thereon do not violate any laws, rules, regulations, or
orders of any Authorities that are applicable thereto, including,
without limitation, any thereof relating to matters of occupational
safety and health or Environmental Laws, or motor vehicles or the
titling or registration thereof, except for such violations as would
not have, individually or in the aggregate, a Material Adverse Effect.
(k) Disclosure. Taken as a whole, neither this Participation
Agreement, nor any offering materials, nor the other Operative
Documents to which each Lessee is or will be a party nor the other
documents and certificates furnished pursuant to this Participation
Agreement to Lessor or the Participants in connection with the
transactions contemplated by this Participation Agreement, contains any
untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements contained herein and therein,
in the light of the circumstances under which they were made, not
misleading.
(l) Impositions. To the best of Lessees' knowledge, after due
inquiry, no sales, use, excise, transfer or other tax, fee or
Imposition shall result from (i) the titling, registration or delivery
of a Vehicle on or before the Delivery Date, except such taxes, fees or
Impositions that have been paid in full on or prior to the Delivery
Date, except with respect to sales and use taxes owing in connection
with a transfer which shall be paid monthly or quarterly as due and
payable or (ii) the actions contemplated to be taken pursuant to the
Operative Documents on the Delivery Date or any exercise of the option
under Article X of the Lease or the required purchase of Lessor's
interest in the Vehicles pursuant to Article XI of the Lease.
Notwithstanding the provisions of Article VIII of the Lease, no Event
of Default will be deemed to occur by reason of a breach of this
subsection (l) to the extent that the effect of such breach can be
cured, and is so cured within the applicable time period set forth in
Article VIII of the Lease, by Lessees' payment of money in satisfaction
of the applicable Imposition, together with any other fees, costs or
expenses incurred by or levied against Lessor or any Participant in
connection therewith.
(m) Title. Each Lessee has record title to each of the
Vehicles listed opposite such Lessee's name on Schedule I to the
Delivery Date Notice (or has beneficial title to such Vehicle with
record title being subject only to the issuance in the ordinary course
of the original Certificate of Title, for which an application has
already been submitted to the appropriate titling Authority) and
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Participation Agreement
each of the Vehicles and all of the other Collateral is free from all
Liens except for Permitted Liens.
(n) Perfection of Security Interests. No filing, recordation
or registration is necessary or advisable in order to perfect the
security interest of Lessor in the Vehicles and the other Collateral,
other than (i) the filing or recording of financing statements under
Article 9 of the applicable UCC in the jurisdictions contemplated by
Section 3.13, and the recordation on the Certificate of Title for each
Vehicle of the security interest of Lessor or (ii) in the case of any
Sublease, the delivery to Lessor of the chattel paper original of such
Sublease, and upon the actions described in the foregoing clauses (i)
and (ii), the security interests in the Vehicles and the other
Collateral are enforceable, properly perfected, first-priority Liens,
subject only to Permitted Liens. In connection with the submission of
each application to have the Lien of Lessor listed on a Certificate of
Title, the applicable Lessee shall submit sufficient evidence of
ownership of the applicable Vehicle to the relevant motor vehicle
titling Authority.
(o) Appraisal Data. The information provided by each Lessee to
the Appraiser and forming the basis for the conclusions set forth in
the Appraisal, taken as a whole, was true and correct in all material
respects and did not omit any information necessary to make the
information provided not materially misleading.
(p) Certain Vehicle Matters.
(i) Each Vehicle accepted by the Lessor on the
Delivery Date which is to be used in interstate commerce will
be properly registered pursuant to the International
Registration Plan as in effect in the state in which such
Vehicle is titled on the Delivery Date.
(ii) No Lessee is in the business of selling
vehicles and the Vehicles do not constitute "inventory" under
any applicable UCC.
(iii) Each Vehicle is equipped with a Rack and a
Computer Tracking Device.
(q) Registration of Vehicles Used in Intrastate or Interstate
Commerce. Each Vehicle accepted by Lessor on the Delivery Date will be,
when the applicable Lessee takes delivery thereof under the Lease and
at all times thereafter, either (i) used in interstate commerce, titled
in a State with respect
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Participation Agreement
to which Lessor and the Participants have received an opinion in the
form of Exhibit C and registered in a State which is a party to the
International Registration Plan or (ii) used in intrastate commerce,
registered in the State in which it is so used and titled in a State
with respect to which Lessor and the Participants have received an
opinion in the form of Exhibit C.
(r) Holding Company. No Lessee is subject to regulation as a
"holding company," an "affiliate" of a "holding company", or a
"subsidiary company" of a "holding company," within the meaning of the
Public Utility Holding Company Act of 1935, as amended.
(s) Investment Company Act. No Lessee is an "investment
company" or a company "controlled" by an "investment company" within
the meaning of the Investment Company Act of 1940, as amended.
(t) Intellectual Property. There are no patents, patent
rights, trademarks, service marks, trade names, copyrights, licenses or
other intellectual property rights with respect to the Vehicles, or
proprietary, patented or patentable modifications or Parts used in
connection with the Vehicles, in each case which have been added to the
Vehicles and which are specific or proprietary to the Lessees and their
businesses, the absence of which would have a material adverse effect
on the current Fair Market Value of the Vehicles.
(u) Subjection to Regulation. To the best knowledge of each
Lessee, neither Lessor nor any Participant will, solely by reason of
being characterized as "lessors" of the Vehicles under the Operative
Documents or the consummation and performance of the transactions
contemplated thereby (other than upon the exercise of remedies under
the Lease) (i) become subject to ongoing regulation by any Authority as
a company engaged in the business of any Lessee in any jurisdiction or
(ii) become subject to any other ongoing regulation of its operations
by any Authority (other than any taxing Authority).
(v) Use of Proceeds. The use of the proceeds from the
transaction contemplated by the Operative Documents will not violate or
result in any violation of Section 7 of the Securities Exchange Act of
1934, as amended, or any regulations issued pursuant thereto,
including, without limitation, Regulations G, T, U and X of the Board
of Governors of the Federal Reserve System.
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Participation Agreement
(w) Absence of Defaults. No Incipient Default or Event of
Default has occurred and is continuing, and since December 31, 1994,
there has occurred no Material Adverse Effect.
(x) Absence of Casualty. No Casualty has occurred with respect
to the Vehicles being delivered on the Delivery Date.
(y) Solvency. The transactions contemplated by the Operative
Documents on the Delivery Date (including the transfer of an interest
in the Vehicles) will not render any Lessee insolvent, nor will it be
made in contemplation of any Lessee's insolvency; the value of the
assets and properties of each Lessee at fair valuation and at their
then present fair salable value is and, after such transactions, will
be greater than such Lessee's total liabilities, including contingent
liabilities, as they become due; the property remaining in the hands of
each Lessee after such transfers was not and will not be an
unreasonably small amount of capital.
(z) Insurance. All insurance coverages required by Section 7.1
of the Lease are in full force and effect and there are no past due
premiums in respect of any such insurance.
(aa) SEC Reports. At least three (3) Business Days prior to
the Delivery Date, Dreyer's shall have delivered to each of the
Participants copies of its most recent Annual Report on Form 10-K and
its 2 most recent Quarterly Reports on Form 10-Q, in each case as filed
with the Securities and Exchange Commission; the consolidated financial
statements set forth in such Reports have been prepared in accordance
with GAAP, applied on a consistent basis throughout the periods covered
thereby and on a basis consistent with prior periods; and such
consolidated financial statements fairly present the consolidated
financial condition of Dreyer's and its consolidated subsidiaries at
such dates and the consolidated results of their operations for such
periods.
(ab) Private Offering. Neither any Lessee, nor anyone acting
on behalf of any of them, has taken or will take any action which will
subject the issue and sale of any interest being acquired by Lessor or
any Participant under the Operative Documents to the requirements of
Section 5 of the Securities Act of 1933, as amended (the "Securities
Act"), and, assuming the truth and accuracy of the representations set
forth in Section 5.2(b), the issuance, sale and delivery of such
interests under the circumstances contemplated by this Participation
Agreement do not require the registration of such interests under
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Participation Agreement
the Securities Act or the qualification of any of the Operative
Documents under the Trust Indenture Act of 1939, as amended.
(ac) Brokers, etc. No Lessee has engaged or authorized any
broker, finder, investment banker or other third party to act on its
behalf, directly or indirectly, as a broker, finder, investment banker,
agent or in any other like capacity in connection with any of the
Operative Documents or the transactions contemplated thereby, other
than BALCAP. Each Lessee shall be responsible for, and shall indemnify,
defend and hold Lessor and each Participant harmless from and against
any and all claims, liabilities or demands by any Person for broker's,
finder's, investment banker's or agent's fees, commissions or other
entitlements with respect to the Operative Documents and the
transactions contemplated thereby (except to the extent arising from a
breach of Section 5.2(c) or Section 5.3(f), or from any claim made by
BALCAP).
Section 5.2 Representations and Warranties of Participants. Each of the
Participants hereby represents and warrants, severally but not jointly, to the
other parties as set forth in this Section 5.2.
(a) ERISA. Such Participant is not and will not be funding any
of its Commitment or performing any of its obligations under the
Operative Documents with the assets of an "employee benefit plan" (as
defined in Section 3(3) of ERISA) which is subject to Title I of ERISA,
or a "plan" (as defined in Section 4975(e)(1) of the Code).
(b) Investment. The interest being acquired by such
Participant under the Operative Documents is being acquired for its own
account, without any view to the distribution thereof or any interest
therein, provided that such Participant shall be entitled to assign,
transfer or convey its interest in accordance with Section 11.8.
(c) Brokers, etc. Such Participant has not engaged or
authorized any broker, finder, investment banker or other third party
to act on its behalf, directly or indirectly, as a broker, finder,
investment banker, agent or in any other like capacity in connection
with any of the Operative Documents or the transactions contemplated
thereby, other than BALCAP.
Section 5.3 Representations and Warranties of BALCAP. BALCAP, in its
individual capacity, hereby represents and warrants to the other Participants as
set forth in this Section 5.3.
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Participation Agreement
(a) Organization and Authority. BALCAP is a corporation duly
organized and validly existing in good standing under the laws of
California and has the corporate power and authority to enter into and
perform its obligations under the Operative Documents.
(b) Authorization; Binding Effect. The Operative Documents to
which BALCAP is or will be a party have been or will be, on the date
required to be delivered hereby, duly authorized, executed and
delivered by BALCAP, and this Participation Agreement is, and such
other Operative Documents are, or, when so executed and delivered by
BALCAP will be, valid, legal and binding agreements of BALCAP,
enforceable against BALCAP in accordance with their respective terms,
except as enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by general principles of
equity.
(c) Non-Contravention. Neither the execution and delivery by
BALCAP of the Operative Documents to which it is or will be a party,
either in its individual capacity, as BALCAP, or both, nor compliance
with the terms and provisions thereof, conflicts with, results in a
breach of, constitutes a default under (with or without the giving of
notice or lapse of time or both), or violates any of the terms,
conditions or provisions of: (i) the articles of incorporation or
by-laws of BALCAP; (ii) any bond, debenture, note, mortgage, indenture,
agreement, lease or other instrument to which BALCAP, either in its
individual capacity, as BALCAP, or both, is now a party or by which it
or its property, either in its individual capacity, as BALCAP, or both,
is bound or affected, where such conflict, breach, default or violation
would be reasonably likely to materially and adversely affect the
ability of BALCAP, either in its individual capacity, as BALCAP or
both, to perform its obligations under any Operative Document to which
it is or will be a party, either in its individual capacity, as BALCAP,
or both; or (iii) any of the terms, conditions or provisions of any
law, rule, regulation, order, injunction or decree of any Authority
applicable to it in its individual capacity, as BALCAP, or both, where
such conflict, breach, default or violation would be reasonably likely
to materially and adversely affect the ability of BALCAP, either in its
individual capacity, as BALCAP or both, to perform its obligations
under any Operative Document to which it is or will be a party.
(d) Absence of Litigation, etc. There is no litigation
(including, without limitation, derivative actions), arbitration or
governmental proceedings pending or, to the best knowledge of BALCAP,
threatened against it which would be
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Participation Agreement
reasonably likely to adversely affect BALCAP's ability to perform its
obligations under the Operative Documents to which it is party.
(e) Consents, etc. No authorization, consent, approval,
license or formal exemption from, nor any filing, declaration or
registration with, any Authority, is or will be required in connection
with the execution and delivery by BALCAP of the Operative Documents to
which it is party or the performance by BALCAP of its obligations under
such Operative Documents.
(f) Brokers, etc. BALCAP has not engaged or authorized any
broker, finder, investment banker or other third party (other than Bank
of America National Trust and Savings Association) to act on its
behalf, directly or indirectly, as a broker, finder, investment banker,
agent or in any other like capacity in connection with any of the
Operative Documents or the transactions contemplated thereby.
ARTICLE VI
COVENANTS
Section 6.1 Covenants of Lessees. Each of the Lessees covenants and
agrees with the Participants and Lessor that during the Lease Term each Lessee
shall comply with each of the following provisions of this Section 6.1.
(a) Corporate Existence, etc. Subject to Section 6.1(c) and any merger
permitted thereby pursuant to which any Lessee ceases to exist (in which case
this subsection (a) shall apply to the surviving corporation of such merger),
each Lessee shall do or cause to be done all things necessary to preserve and
keep in full force and effect its corporate existence, rights and powers and
franchises and its power and authority to perform its obligations under the
Operative Documents, including, without limitation, any necessary qualification
or licensing in any foreign jurisdiction, except where the failure to be so
qualified would not have a Material Adverse Effect.
(b) Compliance With Laws. Each Lessee shall comply with all applicable
statutes, regulations, franchises, and orders of, and all applicable
restrictions imposed by, any Authority, in respect of the conduct of its
business and the ownership of its properties (including, without limitation,
applicable Environmental Laws), except for such instances of non-compliance
which would not have, individually or in the aggregate, a Material Adverse
Effect. Without limiting the foregoing, Lessees shall at all times be
responsible for, and shall comply with, all provisions of any Authority with
respect to the titling and registration of Vehicles.
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Participation Agreement
(c) Mergers, Consolidations, Dispositions. Dreyer's shall not, and
shall not suffer or permit any Subsidiary to, merge, consolidate with or into,
or convey, transfer, lease or otherwise consolidate with or into, or convey,
transfer, lease or otherwise dispose of (whether in one transaction or in a
series of transactions) all or substantially all of its assets (whether now
owned or hereafter acquired) to or in favor of any Person, except:
(i) any Subsidiary of Dreyer's may merge with Dreyer's,
provided that Dreyer's shall be the continuing or surviving
corporation, or with any one or more Subsidiaries of Dreyer's, provided
that if any transaction shall be between such a Subsidiary and a
Wholly-Owned Subsidiary of Dreyer's, such Wholly-Owned Subsidiary shall
be the continuing or surviving corporation;
(ii) any Subsidiary of Dreyer's may sell all or substantially
all of its assets (upon voluntary liquidation or otherwise), to
Dreyer's or another Wholly-Owned Subsidiary of Dreyer's; and
(iii) promptly upon the consummation of such transaction any
such transaction involving a Lessee, the surviving or continuing
corporation, if such corporation was not already a Lessee, shall
expressly assume (pursuant to a written instrument satisfactory in form
and substance to Lessor and each Participant) the obligations of such
Lessee under the Operative Documents, and shall cause the Certificate
of Title for each Vehicle acquired by it pursuant to such transaction
to be reissued with such corporation listed as the holder of title to
each such Vehicle (unless it has provided to Lessor and each
Participant, prior to the consummation of such transaction, an opinion
of counsel acceptable to Lessor to the effect that such re-titling is
not required under applicable law), with the security interest of
Lessor duly noted thereon, and such corporation shall have complied
with the provisions of Section 6.1(f)(i) on or prior to the effective
date of such transaction.
(d) Liens. No Lessee shall incur or suffer to exist any Lien on any of
the Collateral (including any Rack or Computer Tracking Device) other than
Permitted Liens. Without limiting the foregoing, no Lessee shall assign or
pledge any of its rights under any Sublease to any Person other than Lessor.
(e) Change of Name or Location. Each Lessee shall furnish to Lessor
notice on or before the 30th day prior to any relocation of its chief executive
office or principal place of business, or change of its name.
(f) Perfection and Maintenance of Security Interest.
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Participation Agreement
(i) Not later than 120 days following the Delivery Date,
Lessees shall have caused the security interest of Lessor to be
properly reflected on the Certificate of Title of each Vehicle, and
Lessor shall have received from each Lessee duly executed UCC financing
statements identifying each Lessee as debtor and Lessor as secured
party, and describing the Lease as a secured transaction, and such
financing statements shall have been filed in (A) each jurisdiction in
which any Lessee has its principal office and (B) each jurisdiction in
which any Vehicle subject to the Lease is titled; provided, that
Lessees shall use their best efforts to effect the foregoing within 90
days following the Delivery Date. In addition, Lessor and the
Participants shall have received an opinion of Lessees' counsel
opining, to the satisfaction of Lessor and the Participants, as to the
form and filing of such UCC financing statements and the perfection of
the security interests represented thereby. With respect to any Vehicle
that Lessees propose (whether by re-titling, substitution or
replacement) to have titled in a State that was not covered by the
opinion of Lessees' counsel delivered pursuant to Section 3.9, prior to
such re-titling, substitution or replacement Lessor and the
Participants shall have received a new opinion of Lessees' counsel
substantially in the form of Exhibit C with respect to the State in
which such Vehicle is proposed to be titled.
(ii) With respect to any Vehicle as to which (x) Lessor's
security interest has not been perfected as described in the preceding
paragraph (i) within the time period specified in such paragraph or any
other applicable provision of the Operative Documents, or (y) Lessees
shall have failed to comply with the provisions of paragraph (iii)
below within the applicable time period specified in such paragraph or
(z) UCC searches delivered subsequent to the Delivery Date as
contemplated by the proviso of Section 3.13 indicate the existence of a
lien, Lessees shall be required immediately to exercise the purchase
option under Article X of the Lease.
(iii) With respect to each Vehicle, Lessees shall submit to
the applicable motor vehicle Authority (A) within ten (10) days
following the Delivery Date in the case of Vehicles titled in the
States of Florida, Georgia, Illinois, Kansas, Maryland, Minnesota,
Missouri and Wisconsin and (B) within (30) days following the Delivery
Date in the case of Vehicles titled in any other State, all materials
required in order to cause the Lessor's security interest to be
reflected on the Certificate of Title for each Vehicle, including the
Certificate of Title for such Vehicle, together with (X) applications
duly completed by each Lessee requesting that such Authority record the
interests of Lessor as lienholder on such Certificate of Title and (Y)
payment of all applicable fees and charges, and Lessees shall have
delivered to Lessor, within the applicable time
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Participation Agreement
period set forth in the foregoing clauses (A) and (B), copies of the
materials so submitted, accompanied by a certification from Lessees
that such copies are true and complete and that the same have been
submitted within such required time period.
(iv) Lessees, at their expense, shall cause, as soon as
possible, but in any event no later than the 10th day after any
request, financing statements (and continuation statements with respect
thereto) and all other documents necessary or reasonably requested by
Lessor in connection with the establishment and perfection of the
interest of Lessor in the Collateral, to be recorded or filed at the
locations contemplated by Section 3.13, and in such manner, and, at its
expense, shall take, or shall cause to be taken, all such other action
as may be necessary or reasonably requested by Lessor or the Required
Participants in order to establish, preserve, protect and perfect the
right, title and interest of Lessor to the Collateral.
(v) All Certificates of Title shall be available during normal
business hours for inspection by Lessor.
The security interest of Lessor on any Certificate of Title shall not
be removed therefrom, nor shall any other security interest be noted thereon,
unless and until such Vehicle is to be released from the Lien created by the
Lease in accordance with the applicable provisions of the Operative Documents.
No Lessee shall, without the prior written approval of Lessor, register any
Vehicle in any manner that would render Section 5.1(q) untrue with respect to
such Vehicle as of any date of determination.
It is expressly understood that to the extent that any Certificate of
Title is in the possession of any Lessee such possession shall be strictly for
the benefit of Lessor and solely in accordance with the provisions of the
Operative Documents.
(g) Ownership of Other Lessees; Compliance. Dreyer's shall at all times
be the sole record and beneficial owner, directly or indirectly, of 100% of the
issued and outstanding shares of capital stock (on a fully diluted basis) of
each other Lessee. Dreyer's shall not permit any Liens to exist on any such
capital stock, or, except as permitted by Section 6.1(c), any liquidation or
dissolution of any other Lessee. Dreyer's shall cause each other Lessee to
comply with the covenants set forth in the Operative Documents.
(h) Revolving Credit Facility. Each Lessee shall at all times comply,
and shall cause each of its Subsidiaries to comply, with the Financial Covenants
set forth in the Revolving Credit Facility (giving effect to any applicable
grace and cure periods), to the
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Participation Agreement
same extent and with the same effect as if such Financial Covenants were set
forth herein; provided, that in determining compliance with such covenants for
purposes of this Participation Agreement:
(i) so long as BALCAP (or any of its Affiliates) and ABN Amro
Bank N.V. (or any of its Affiliates) are both parties to the Revolving
Credit Facility, (x) if there exists a breach by Dreyer's or any of its
Subsidiaries of a Covenant, a waiver of such breach by the "Lenders"
under the Revolving Credit Facility shall be deemed a waiver of such
breach by the Participants under this Participation Agreement and (y)
any consent granted by the "Lenders" under the Revolving Credit
Facility to any variation from any Financial Covenant shall be deemed a
consent to such variation by the Participants under this Participation
Agreement; and
(ii) at such time as either BALCAP (or any of its Affiliates)
or ABN AMRO Bank N.V. (or any of its Affiliates) is no longer a party
to the Revolving Credit Facility or at any time immediately prior to
the termination of such facility, the Financial Covenants shall be
incorporated herein by reference and made a part hereof in such form as
existed immediately prior to BALCAP (or any of its Affiliates) or ABN
AMRO Bank N.V. (or any of its Affiliates) ceasing to be a party to the
Revolving Credit Facility or the termination of the Revolving Credit
Facility, and any action that would require consent or approval shall
require the consent or approval of Lessor at the direction of the
Required Participants.
(i) Notices. Lessees shall promptly notify Lessor and each Participant:
(i) of the occurrence of any Incipient Default or Event of
Default, and of the occurrence or existence of any event or
circumstance that foreseeably will become an Incipient Default or Event
of Default;
(ii) of any matter or matters that has resulted or may result,
individually or in the aggregate, in a Material Adverse Effect,
including (A) breach or non-performance of, or any default under, a
Contractual Obligation of Dreyer's or any Subsidiary; (B) any dispute,
litigation, investigation, proceeding or suspension between Dreyer's or
any Subsidiary and any Authority; or (C) the commencement of, or any
material development in, any litigation or proceeding affecting
Dreyer's or any Subsidiary; including pursuant to any applicable
Environmental Laws;
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Participation Agreement
(iii) of the occurrence of any of the following events
affecting Dreyer's or any ERISA Affiliate (but in no event more than 10
days after such event), and deliver to Lessor and each Participant a
copy of any notice with respect to such event that is filed with an
Authority and any notice delivered by an Authority to Dreyer's or any
ERISA Affiliate with respect to such event.
(1) an ERISA Event;
(2) a material increase in the Unfunded Pension
Liability of any Pension Plan;
(3) the adoption of, or the commencement of
contributions to, any Plan subject to Section 412 of the Code by
Dreyer's or any ERISA Affiliate; or
(4) the adoption of any amendment to a Plan subject
to Section 412 of the Code, if such amendment results in a material
increase in contributions or Unfunded Pension Liability.
Each notice delivered pursuant to this subsection (i) shall specify the
nature of the matter or matters to which such notice relates the action
any Lessee is taking with respect thereto.
(j) Periodic Reporting. Dreyer's shall deliver to Lessor and each
Participant:
(i) as soon as available, but not later than 100 days after
the end of each fiscal year, a copy of the audited consolidated balance
sheet of Dreyer's and its Subsidiaries as at the end of such year and
the related consolidated statements of income or operations,
shareholders' equity and cash flows for such year, setting forth in
each case in comparative form the figures for the previous fiscal year,
and accompanied by the opinion of Price Waterhouse or another
nationally-recognized independent public accounting firm ("Independent
Auditor") which report shall state that such consolidated financial
statements present fairly, in all material respects, the financial
position for the periods indicated in conformity with GAAP applied on a
basis consistent with prior years. Such opinion shall not be qualified
or limited because of a restricted or limited examination by the
Independent Auditor of any material portion of Dreyer's or any
Subsidiary's records;
(ii) as soon as available, but not later than 60 days after
the end of each of the first three fiscal quarters of each fiscal year,
a copy of the unaudited
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Participation Agreement
consolidated balance sheet of Dreyer's and its Subsidiaries as of the
end of such quarter and the related consolidated statements of income,
shareholders' equity and cash flows for the period commencing on the
first day and ending on the last day of such quarter, and certified by
a Responsible Officer as fairly presenting, in all material respects,
in accordance with GAAP (subject to ordinary, good faith year-end audit
adjustments), the financial position and the results of operations of
Dreyer's and the Subsidiaries;
(iii) concurrently with each delivery pursuant to the
foregoing paragraphs (i) and (ii), but in any event not later than the
30th day after the end of each quarterly accounting period in each
fiscal year of Dreyer's, an Officer's Certificate of Dreyer's stating
that such officer has reviewed the activities of Lessees during such
period and that during such period Lessees have performed and fulfilled
each and every covenant, obligation and condition contained in the
Operative Documents, no Incipient Default, Event of Default or Casualty
exists under any of the Operative Documents, or if such condition shall
exist, specifying the nature and status thereof;
(iv) concurrently with the delivery of the financial
statements referred to in paragraph (i) above, a certificate of the
Independent Auditor stating that in making the examination necessary
therefor no knowledge was obtained of any Incipient Default or Event of
Default, except as specified in such certificate;
(v) promptly, copies of all financial statements and reports
that Dreyer's sends to its shareholders, and copies of all financial
statements and regular, periodical or special reports (including Forms
10-K, 10-Q and 8-K) that Dreyer's or any Subsidiary may make to, or
file with, the SEC; and
(vi) if Lessor or any Participant shall request that Dreyer's
deliver to Lessor, or to such Participant, information with respect to
Dreyer's that meets the requirements of Rule 144A(d)(4)(i) of the
Securities Exchange Act of 1934 (or any successor provision), then: (x)
promptly following the receipt by Dreyer's of that request, Dreyer's
shall deliver such information to Lessor, or to such Participant, and
(y) such information shall, at the time of such delivery, be as of a
date so as to be entitled to the presumption that such information is
"reasonably current" within the meaning of Rule 144A(d)(4)(ii) of such
Act (or any successor provision).
In addition to the foregoing, Dreyer's shall deliver to Lessor
and each Participant, together with each delivery pursuant to the
foregoing clause (i), a copy of any compliance certificate required to
be delivered pursuant to the
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Participation Agreement
Revolving Credit Facility with respect to any Financial Covenant,
accompanied by an Officer's Certificate of Dreyer's authorizing Lessor
and each Participant to rely on such compliance certificate. Dreyer's
shall provide Lessor and each Participant with a current copy of the
Revolving Credit Agreement as in effect from time to time, including
all amendments, modifications and supplements thereto and waivers
thereunder; provided, that Dreyer's shall not be required by this
provision to provide any materials referred to in this paragraph to any
Participant who is a lender under the Revolving Credit Facility and who
has received such materials pursuant thereto.
(k) Additional Information. Promptly upon receipt of a written request
from Lessor or any Participant, Lessees shall deliver to such requesting party
such other data and information as from time to time may be reasonably
requested.
(l) Reports to Participants. Each Lessee shall, concurrently with any
notice, delivery or other communication required to be delivered to Lessor
pursuant to any Operative Document, deliver a copy of such notice, delivery or
other communication to each Participant at such Participant's current address.
(m) As to Certain Collateral. Lessees will at all times cause a Rack
and a Computer Tracking Device to be associated with (and, in the case of the
Rack and the printer included in the Computer Tracking Device, located on) each
Vehicle that is subject to the Lease.
Section 6.2 Covenants of Lessor. Lessor, in its individual capacity,
covenants and agrees with each of the other parties that: (a) it will not
directly or indirectly create, incur, assume or suffer to exist any Lessor Liens
arising by, through or under it on the Collateral, other than Permitted Lessor
Liens; (b) it will, at its own cost and expense, promptly take such action in
its individual capacity as may be necessary to discharge fully such Lessor Liens
created by it on the Collateral, other than Permitted Lessor Liens; and (c) it
will not, except in compliance with the Operative Documents, sell, transfer or
otherwise dispose of all or any part of the Vehicles or the other Collateral.
ARTICLE VII
GENERAL INDEMNITIES
Section 7.1 Indemnity. Whether or not the transactions contemplated
hereby are consummated, to the fullest extent permitted by applicable law,
Lessees waive and release any claims now or hereafter existing against
Indemnitees on account of, and
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Participation Agreement
shall indemnify, reimburse and hold the Indemnitees harmless (in accordance with
Section 8.3) from, any and all claims by third parties (including, but not
limited to, claims relating to trademark or patent infringement and claims based
upon negligence, strict liability in tort, violation of laws, including, without
limitation, Environmental Laws, statutes, rules, codes or orders or claims
arising out of any loss or damage to any property or death or injury to any
Person), any losses, damages or obligations owing to third parties, any
penalties, liabilities, demands, suits, judgments or causes of action, and all
legal proceedings (either administrative or judicial), in each case whether or
not the Indemnitee is a party thereto, and any costs or expenses in connection
therewith (including costs incurred in connection with discovery) or in
connection with the enforcement of this indemnity (including reasonable
attorneys' fees and expenses, and fees and expenses of internal counsel,
incurred by the Indemnitees), including, in each case, matters based on or
arising from the negligence of Indemnitees (subject to the proviso below), which
may be imposed on, incurred by or asserted against the Indemnitees by Persons
other than Lessees (except to the extent arising by or through a claim of a
third party) in any way relating to or arising in any manner out of:
(a) the registration, purchase, taking or foreclosure of a
security interest in, ownership, delivery, condition, lease, sublease,
assignment, storage, transportation, possession, use, operation,
return, redelivery or other disposition of any of the Vehicles, or any
defect in any such Vehicle, arising from the material or any article
used therein or from the design, testing or use thereof, or from any
maintenance, service, repair, overhaul or testing of any such Vehicle
regardless of when such defect shall be discovered, whether or not such
Vehicle is in the possession of any Lessee and no matter where it is
located; or
(b) this Participation Agreement, any other Operative Document
or any document or certificate delivered in connection therewith, the
enforcement hereof or thereof or the consummation of the transactions
contemplated hereby or thereby;
provided that Lessees shall not be obligated to indemnify an Indemnitee for any
such claim, loss, damage, liability, obligation, penalty, demand or suit to the
extent the same results directly from
(c) the willful misconduct or gross negligence of such
Indemnitee;
(d) the creation or existence of a Lessor Lien attributable to
such Indemnitee;
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Participation Agreement
(e) a disposition by such Indemnitee of any Vehicle following
the purchase of such Vehicle by such Indemnitee from Lessor in a
foreclosure sale or any use or operation of such Vehicle following such
disposition (other than use or operation by any Lessee or Sublessee or
an Affiliate, agent or representative of any Lessee); or
(f) any Impositions described in Section 8.1 except any amount
necessary under this Section 7.1 to hold the Indemnitee harmless
(subject to Section 8.3) from all Impositions required to be paid by
such Indemnitee with respect to the receipt or accrual of such
indemnity under the laws of any Authority in the United States;
provided, however, that nothing in the preceding proviso shall be deemed to
exclude or limit any claim that any Indemnitee may have under any Operative
Document or applicable laws from Lessees for breach of their representations,
warranties or covenants.
Section 7.2 Increased Capital Costs. If any change in, or the
introduction, adoption, effectiveness, interpretation, reinterpretation or
phase-in of, any law or regulation, directive, guideline, decision or request
(whether or not having the force of law) of any court, central bank regulator or
other Authority ("Change in Law") affects or would affect the amount of capital
required or expected to be maintained by any Participant directly or by its
parent company (including, without limitation, any reserve requirements
specified under regulations issued from time to time by the Board of Governors
of the Federal Reserve System and then applicable to assets or liabilities
consisting of and including "Eurocurrency Liabilities" as defined in Regulation
D of such Board of Governors) and such Participant determines (in its sole and
absolute discretion) that the rate of return on it or its parent's capital as a
consequence of the Funding made by such Participant hereunder to pay its share
of the Equipment Cost is reduced to a level below that which such Participant or
its parent could have achieved but for the occurrence of any such circumstances,
then, in any such case, upon written notification from time to time by such
Participant to Dreyer's, Lessees shall, within five (5) Business Days following
receipt of the statement referred to in the next sentence, pay directly to such
Lessor additional amounts sufficient to compensate such Participant or its
parent for such reduction in rate of return (subject to Section 8.3). A
statement of a Participant as to any such additional amount or amounts
(including calculations thereof in reasonable detail) shall, in the absence of
manifest error, be conclusive and binding on Lessees. In determining such
amount, each Participant shall use any method of averaging or attribution that
it (in its reasonable discretion) shall deem applicable.
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Participation Agreement
Section 7.3 LIBO Rate Unlawful. If any Participant shall determine in
good faith (which determination shall, upon notice thereof to Dreyer's, be
conclusive and binding on Lessees) that a Change in Law makes it unlawful, or
the central bank or other Authority asserts that it is unlawful, for such
Participant to make, continue or maintain any amount of such Participant's
Funding on a LIBO Rate basis, the obligations of such Lessor to make, continue
or maintain any such Funding shall, upon such determination, forthwith be
suspended until such Participant shall notify Dreyer's that the circumstances
causing such suspension no longer exist, and all Variable Rent allocable to such
Participant, commencing with the Rent Period in which such notice is given,
shall automatically be determined on a Base Rate basis beginning on the next
immediately succeeding Payment Date with respect thereto or sooner, if required
by such law or assertion.
Section 7.4 Funding Losses. Lessees agree to reimburse any Participant
for any loss or expense incurred (including any loss or expense incurred by
reason of the liquidation or reemployment of deposits or other funds acquired by
such Participant to make, continue or maintain any portion of its Outstanding
Investment as a LIBO Rate financing) as a result of (i) the failure of the
transaction contemplated by Article I of the Lease to occur on or before the
Delivery Date specified in the Delivery Date Notice or (ii) any payment of all
or any portion of the Lease Balance for any reason on a date other than a
Payment Date. Any such Participant shall promptly notify Dreyer's in writing of
the amount of any claim under this Section 7.4, the reason or reasons therefor
and the additional amount required fully to compensate such Participant for such
loss or expense. Such written notice (which shall include calculations in
reasonable detail) shall, in the absence of manifest error, be conclusive and
binding on Lessees.
ARTICLE VIII
GENERAL TAX INDEMNITY
Section 8.1 General Tax Indemnity. Lessees agree to pay or reimburse
Indemnitees for, and to indemnify and hold Indemnitees harmless from, all
Impositions arising at, or relating to, any time prior to or during the Lease
Term, or upon any termination of the Lease or prior to, or upon the return of,
the Vehicles to Lessor, and levied or imposed upon Indemnitees directly or
otherwise, by any Federal, state or local government or taxing authority in the
United States or by any foreign country or foreign or international taxing
authority upon or with respect to: (a) the Vehicles or any other Collateral; (b)
the exportation, importation, registration, purchase, ownership, delivery,
condition, lease, sublease, assignment, storage, transportation, possession,
use, operation, maintenance, repair, return, redelivery, sale (including to
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Participation Agreement
Lessor or any Participant pursuant to the Operative Documents), transfer of
title or other disposition thereof; (c) the rentals, receipts, or earnings
arising from any of the Vehicles; or (d) the Lease, any of the other Operative
Documents or any payment made thereunder; provided that this Section 8.1 shall
not apply to: (i) Impositions which are based upon or measured by the
Indemnitee's net income, or which are expressly in substitution for, or relieve
Indemnitee from, any actual Imposition based upon or measured by Indemnitee's
net income; (ii) Impositions characterized under local law as franchise, net
worth, or shareholder's capital (excluding, however, any value-added, license,
property or similar Impositions); and (iii) Impositions based upon the voluntary
transfer, assignment or disposition by Lessor or any Participant of any interest
in any of the Vehicles (other than a transfer pursuant to the exercise of
remedies under the Operative Documents, transfers pursuant to Article X or
Article XI of the Lease, or a transfer to Lessees or otherwise pursuant to the
Lease).
Notwithstanding anything in the preceding paragraph of this Section
8.1, Lessees agree to pay or reimburse Indemnitees for, and to indemnify and
hold each Indemnitee harmless from: (A) any Imposition based on, or measured by
the net income of such Indemnitee imposed by any federal, state or local taxing
Authority in the United States or any taxing Authority in any other jurisdiction
in which such Indemnitee maintains its principal place of business to the extent
such Imposition would not have been imposed if on the Delivery Date the Lessor
had advanced funds directly to Lessees in the form of a loan secured by the
Vehicles and the other Collateral in an amount equal to the amount advanced on
the Delivery Date with the debt service for such loan equal to scheduled rental
payments payable from time to time and a principal balance in the amount of the
Lease Balance remaining at the end of the Lease Term was due at the end of such
terms (the "Income Tax Indemnity"); and (B) Impositions imposed with respect to
the payment, receipt or accrual of any indemnity payment hereunder; and (C) with
respect to any Lessor which is not incorporated under the laws of the United
States, or a state thereof, and which has complied with Section 8.5, any
deduction or withholding of any United States Federal income tax.
Section 8.2 Contest. Lessees shall pay on or before the time or times
prescribed by law any Impositions (except any Impositions excluded by Section
8.1); provided, however, that Lessees shall be under no obligation to pay any
such Imposition so long as the payment of such Imposition is not delinquent or
is being contested by a Permitted Contest. If any claim or claims is or are made
against any Indemnitee solely for any Imposition which is subject to
indemnification as provided in Section 8.1, Indemnitee shall as soon as
practicable, but in no event more than 20 days after receipt of formal written
notice of the Imposition or proposed Imposition, notify Dreyer's and if, in the
reasonable opinion of Dreyer's and (in the case of any
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Participation Agreement
Imposition which may reasonably be expected to exceed $100,000 in the aggregate)
tax counsel acceptable to the Indemnitee, there exists a reasonable basis to
contest such Imposition (and if the provisos of the definition of "Permitted
Contest" continue to be satisfied and so long as no Event of Default exists),
Lessees at their expense may, to the extent permitted by applicable law, contest
such Imposition, and subsequently may appeal any adverse determination, in the
appropriate administrative and legal forums; provided that in all other
circumstances, upon notice from Dreyer's to such Indemnitee that there exists a
reasonable basis to contest any such Imposition (as supported by an opinion of
tax counsel to Lessees reasonably acceptable to the Indemnitee), the Indemnitee,
at Lessees' expense, shall contest any such Imposition. Lessees shall pay all
expenses incurred by the Indemnitee in contesting any such Imposition
(including, without limitation, all reasonable attorneys' and accountants' fees,
including the allocated costs of internal counsel), upon demand by the
Indemnitee. Lessees shall have the right to participate in the conduct of any
proceedings controlled by the Indemnitee to the extent that such participation
by such Person does not interfere with the Indemnitee's control of such contest
and Lessees shall in all events be kept informed, to the extent practicable, of
material developments relative to such proceedings. The Indemnitee shall have
the right to participate in the conduct of any proceedings controlled by Lessees
and the Indemnitee shall in all events be kept informed, to the extent
practicable, of material developments relative to such proceedings. The
Indemnitees agree that a contested claim for which Lessees would be required to
make a reimbursement payment hereunder will not be settled or compromised
without Dreyer's prior written consent (which consent shall neither be
unreasonably delayed nor withheld), unless the provisos of the definition of
"Permitted Contest" would not continue to be satisfied. Indemnitee shall
endeavor to settle or compromise any such contested claim in accordance with
written instructions received from Dreyer's, provided that: (x) Lessees on or
before the date the Indemnitee execute a settlement or compromise pays the
contested Imposition to the extent agreed upon or makes an indemnification
payment to the Indemnitee in an amount acceptable to the Indemnitee; and (y) the
settlement or compromise does not, in the reasonable opinion of the Indemnitee
materially adversely affect the right of such Participant to receive Rent or the
Lease Balance or any other payment pursuant to the Operative Documents, or
involve a material risk of sale, forfeiture or loss of any of the Vehicles or
any interest therein or any matter described in the provisos to the definition
of "Permitted Contest". The failure of an Indemnitee to timely contest a claim
against it for any Imposition which is subject to indemnification under Section
8.1 and for which it has an obligation to Lessees to contest under this Section
8.2 in the manner required by applicable law or regulations where Dreyer's has
timely requested that such Indemnitee contest such claim shall relieve Lessees
of their obligations to such Indemnitee under Section 8.1 with respect to such
claim to the extent such failure results in the loss of an effective
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Participation Agreement
contest. If applicable law requires the payment of a contested Imposition as a
condition to, or regardless of, its being contested, and Lessees choose to
contest such Imposition or to direct the Indemnitee to contest such Imposition
in accordance with this Section, then Lessees shall provide the Indemnitee with
the funds to pay such Imposition, such provision of funds to be deemed a
non-interest bearing loan by Lessees to the Indemnitee to be repaid by any
recovery of such Imposition from such contest and any remaining unpaid amount
not recovered to offset Lessees' obligation to indemnify the Indemnitee for such
Imposition. In the event that the Indemnitee receives a refund (or like
adjustment) in respect of any Imposition for which the Indemnitee has been
reimbursed by Lessees, the Indemnitee shall immediately remit the amount of such
refund (or like adjustment) to Dreyer's, net of all costs and expenses incurred
by such Indemnitee.
Section 8.3 Gross Up. If an Indemnitee shall not be entitled to a
corresponding and equal deduction with respect to any payment or Imposition
which Lessees are required to pay or reimburse under Article VII, Section 8.1 or
Section 8.2 (each such payment or reimbursement under Article VII, Section 8.1
or Section 8.2, an "original payment") and which original payment constitutes
income to such Indemnitee, then Lessees shall pay to such Indemnitee on demand
the amount of such original payment on a gross-up basis such that, after
subtracting all Impositions imposed on such Indemnitee with respect to such
original payment by Lessees (including any Impositions otherwise excluded by
Section 8.1 and assuming for this purpose that such Indemnitee was subject to
taxation at the applicable Federal, state or local marginal rates used to
compute such Indemnitee's tax return for the year in which such income is
taxable), such payments shall be equal to the original payment to be received.
Section 8.4 Tax Returns. Except as otherwise provided in the third
sentence below, Lessees shall prepare and file (whether or not it is a legal
obligation of an Indemnitee) all tax returns or reports that may be required
with respect to any Impositions assessed, charged or imposed on the Vehicles or
the Lease, including, but not limited to sales and use taxes, property taxes (ad
valorem and real property) and any other tax or charge based upon the ownership,
leasing, subleasing, rental, sale, purchase, possession, use, operation,
delivery, return or other disposition of any of the Vehicles or upon the rentals
or the receipts therefrom (excluding, however, any tax based upon the net income
of an Indemnitee or any tax which is in substitution for or relief of a tax
imposed upon or measured by the net income of an Indemnitee). Lessees may notify
in writing all applicable Authorities having jurisdiction with respect to
personal property taxes that one of the Lessees is the appropriate party for
receiving notices of (or copies of, if such Authority is required by law to
notify Lessor) assessment, appeal and payment with respect to the Vehicles. If
an Indemnitee is
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Participation Agreement
obligated by law to file any such reports or returns, then Lessees shall, at
least 10 days before the same are due, prepare the same and forward them to the
Indemnitee, as appropriate, with detailed instructions as to how to comply with
all applicable filing requirements, together with funds in the amount of any
payment required pursuant thereto. Indemnitee shall forward to Dreyer's at its
address listed in Section 11.4 copies of all assessment and valuation notices it
receives within 10 days of receipt; provided that Indemnitee's failure to
deliver such notices on a timely basis shall not relieve Lessees of any
obligations hereunder. The parties hereto agree that neither they nor any
corporation controlled by them, or under common control with them, directly or
indirectly will at any time take any action or fail to take any action with
respect to the filing of any income tax return, including an amended income tax
return, inconsistent with the intention of the parties expressed in Section 4.1.
Section 8.5 Withholding Tax Exemption. (a) At least five (5) Business
Days prior to the first date on which any Rent is payable hereunder or under any
other Operative Document for the account of any Participant not incorporated
under the laws of the United States or a state thereof, such Participant agrees
that it will have delivered to Dreyer's and Lessor two duly completed copies of
United States Internal Revenue Service Form 1001 or 4224, certifying in either
case that such Participant is entitled to receive payments under this
Participation Agreement and the other Operative Documents without deduction or
withholding of any United States Federal income taxes. Each Participant which so
delivers a Form 1001 or 4224 further undertakes to deliver to Dreyer's and
Lessor two additional copies of such form (or a successor form) on or before the
date that such form expires (currently, three successive calendar years for Form
1001 and one calendar year for Form 4224) or becomes obsolete or after the
occurrence of any event requiring a change in the most recent forms so delivered
by it, and such amendments thereto or extensions or renewals thereof as may be
reasonably requested by Dreyer's or Lessor, in each case certifying that such
Participant is entitled to receive payments under this Participation Agreement
and the other Operative Documents without deduction or withholding of any United
States Federal income taxes, unless prior to the date on which any such delivery
would otherwise be required any change in treaty, law or regulation or in the
interpretation thereof by the applicable taxing Authority occurring after such
Participant became a Participant hereunder has rendered all such forms
inapplicable or has prevented such Participant from duly completing and
delivering any such form with respect to it and such Participant advises
Dreyer's and Lessor that, as a result of such change in treaty, law, regulation
or interpretation, it is not capable of receiving payments without any
withholding of United States Federal income tax.
(b) At least five (5) Business Days prior to the first date on which
any Rent is payable hereunder or under any other Operative Document for the
account of any
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Participation Agreement
Participant who does not have a street address in the State of California, such
Participant agrees that it will have delivered to Dreyer's and Lessor two duly
completed copies of California Form 587 or 590, certifying in either case that
such Participant is entitled to receive payments under this Participation
Agreement and the other Operative Documents without deduction or withholding of
any California income taxes. Each Participant which so delivers a Form 587 or
590 further undertakes to deliver to Dreyer's and Lessor two additional copies
of such form (or a successor form) on or before the date that such form expires
or becomes obsolete or after the occurrence of any event requiring a change in
the most recent forms so delivered by it (including, without limitation, any
change in residency or address), and such amendments thereto or extensions or
renewals thereof as may be reasonably requested by Dreyer's or Lessor, in each
case certifying that such Participant is entitled to receive payments under this
Participation Agreement and the other Operative Documents without deduction or
withholding of any California income taxes, unless prior to the date on which
any such delivery would otherwise be required any change in treaty, law or
regulation or in the interpretation thereof by the applicable taxing Authority
occurring after such Participant became a Participant hereunder has rendered all
such forms inapplicable or has prevented such Participant from duly completing
and delivering any such form with respect to it and such Participant advises
Dreyer's and Lessor that, as a result of such change in treaty, law, regulation
or interpretation, it is not capable of receiving payments without any
withholding of California income tax.
ARTICLE IX
AMENDMENTS TO OPERATIVE DOCUMENTS
Section 9.1 Amendments to Operative Documents With Consent of
Participants. This Participation Agreement and each of the other Operative
Documents shall be changed, waived, discharged or terminated with respect to
each Lessee and each Participant upon the ratification in writing of such
change, waiver, discharge or termination by Lessees and the Required
Participants, in which case such change, waiver, discharge or termination shall
be effective as to each Participant and each Lessee; provided no such change,
waiver, discharge or termination shall, without the written ratification of each
Participant:
(i) modify any of the provisions of this Section 9.1 or
Article III, change the definitions of "Commitment", "Commitment
Percentage", "Total Commitment" or "Required Participants" or modify or
waive any provision of an Operative Document requiring action by the
foregoing, or release any Collateral (except as otherwise specifically
provided in any Operative Document);
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(ii) modify, amend, waive or supplement any of the provisions
of Articles III, VII, VIII, X or XI, Sections 13.09 or 13.10 of the
Lease or Section 11.3 hereof;
(iii) reduce, modify, amend or waive any indemnities in favor
of any Participant, whether pursuant to Articles VII or VIII or
otherwise (except that any Person may consent to any reduction,
modification, amendment or waiver of any indemnity payable to it);
(iv) modify, postpone, reduce or forgive, in whole or in part,
any payment of Rent (other than pursuant to the terms of any Operative
Document), Lease Balance, interest or, subject to clause (iii) above,
any other amount payable under the Lease or this Participation
Agreement, or modify the definition or method of calculation of any
payment of Rent (other than pursuant to the terms of any Operative
Document), Lease Balance or other amount payable hereunder;
(v) consent to any assignment of the Lease releasing any
Lessee from its obligations in respect of the payments due pursuant to
the Operative Documents or changing the absolute and unconditional
character of such obligations, or any similar assignment of the
Guarantee similarly releasing Dreyer's, or any other release of
Dreyer's; or
(vi) permit the creation of any Lien on the Collateral or any
part thereof except as contemplated in the Operative Documents, or
deprive Lessor of the benefit of the security interest in the
Collateral granted by Lessees or required to be perfected hereunder.
Section 9.2 Amendments to Operative Documents Affecting Agent. Without
the prior written consent of Agent, no amendment of, supplement to, or waiver or
modification of, any Operative Document shall adversely affect Agent's rights or
immunities or modify or increase the duties or obligations of Agent with respect
to any Operative Document.
ARTICLE X
AGENT
Section 10.1 Appointment of Agent; Powers and Authorization
to Take Certain Actions.
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(a) Each Participant irrevocably appoints and authorizes BA
Leasing & Capital Corporation to act as its agent hereunder, with such
powers as are specifically delegated to Agent by the terms hereof,
together with such other powers as are reasonably incidental thereto.
Each Participant authorizes and directs Agent to, and Agent agrees for
the benefit of the Participants, that, on the Initial Delivery Date it
will accept the documents described in Article III of this
Participation Agreement. Agent accepts the agency hereby created
applicable to it and agrees to receive all payments and proceeds
pursuant to the Operative Documents and disburse such payments or
proceeds in accordance with the Operative Documents. Agent shall have
no duties or responsibilities except those expressly set forth in the
Lease and this Participation Agreement. Agent shall not be responsible
to any Participant (or to any other Person) (i) for any recitals,
statements, representations or warranties of any party contained in the
Lease, this Participation Agreement, or in any certificate or other
document referred to or provided for in, or received by any of them
under, the Operative Documents, other than the representations and
warranties made by Agent in Section 5.3, or (ii) for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of
the Collateral or the title thereto (subject to Agent's obligations
under Section 6.3) or of the Lease or any other document referred to or
provided for therein or (iii) for any failure by any Lessee, any
Participant or any other third party (other than Agent) to perform any
of its obligations under any Operative Document. Agent may employ
agents, trustees or attorneys-in-fact, may vest any of them with any
property, title, right or power deemed necessary for the purposes of
such appointment and shall not be responsible for the negligence or
misconduct of any of them selected by it with reasonable care. Neither
Agent nor any of its directors, officers, employees or agents shall be
liable or responsible for any action taken or omitted to be taken by it
or them hereunder, or in connection herewith, except for its or their
own gross negligence or willful misconduct.
(b) Agent shall not have any duty or obligation to manage,
control, use, operate, store, lease, sell, dispose of or otherwise deal
with any Vehicle, any other Collateral or the Lease, or to otherwise
take or refrain from taking any action under, or in connection with,
this Agreement, the Lease or any related document to which Agent is a
party, except as expressly provided by the terms hereof, and no implied
duties of any kind shall be read into any Operative Document against
Agent. The permissive right of Agent to take actions enumerated in this
Agreement and the Lease shall never be construed as a duty, unless
Agent is instructed or directed to exercise, perform or enforce one or
more rights by the Required Participants (provided that Agent has
received indemnification reasonably satisfactory to it). Subject to
Section 10.1(c) below,
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Participation Agreement
no provision of the Operative Documents shall require Agent to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its obligations under the Operative Documents, or
in the exercise of any of its rights or powers thereunder. It is
understood and agreed that the duties of Agent are ministerial in
nature.
(c) Except as specifically provided herein, Agent is acting
hereunder solely as agent and, except as specifically provided herein,
is not responsible to any party hereto in its individual capacity,
except with respect to any claim arising from Agent's gross negligence
or willful misconduct or any breach of a representation or covenant
made in its individual capacity.
(d) Agent may accept deposits from, lend money to and
otherwise deal with Lessees or any of their Affiliates with the same
rights as it would have if it were not the named Agent hereunder.
Section 10.2 Reliance. Agent may rely upon, and shall not be bound or
obligated to make any investigation into the facts or matters stated in, any
certificate, notice or other communication (including any communication by
telephone, telecopy, telex, telegram or cable) reasonably believed by it to be
genuine and correct and to have been made, signed or sent by or on behalf of the
proper Person or Persons, and upon advice and statements of legal counsel,
independent accountants and other experts selected by Agent with due care
(including any expert selected by Agent to aid Agent in any calculations
required in connection with its duties under the Operative Documents).
Section 10.3 Action Upon Instructions Generally. Subject to Sections
10.4 and 10.6, upon written instructions of the Required Participants, Agent
shall, on behalf of the Participants, give such notice or direction, exercise
such right, remedy or power hereunder or in respect of any Vehicle, and give
such consent or enter into such amendment to any document to which it is a party
as Agent as may be specified in such instructions. Agent shall deliver to each
Participant a copy of each notice, report and certificate received by Agent
pursuant to the Operative Documents. Agent shall have no obligation to
investigate or determine whether there has been an Event of Default or an
Incipient Default. Agent shall not be deemed to have notice or knowledge of an
Event of Default or Incipient Default unless a Responsible Officer of Agent is
notified in writing of such Event of Default or Incipient Default, provided that
Agent shall be deemed to have been notified in writing of any failure of Lessees
to pay Rent in the amounts and at the times set forth in Article III of the
Lease. If Agent receives notice of an Event of Default, Agent shall give prompt
notice thereof, at Lessees' expense, to each Participant. Subject to Sections
10.4 and 10.6 and Article
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Participation Agreement
IX, Agent shall take action or refrain from taking action with respect to such
Event of Default as directed by the Required Participants or, in the case of a
Payment Default, as directed by any Participant; provided that, unless and until
Agent receives such directions, Agent may refrain from taking any action, or may
act in its discretion, with respect to such Event of Default or Payment Default.
Prior to the date the Lease Balance shall have become due and payable by
acceleration pursuant to Section 8.2 of the Lease, Required Participants may
deliver written instructions to Agent to waive, and Agent shall waive pursuant
thereto, any Event of Default and its consequences; provided that in the absence
of written instructions from all Participants, Agent shall not waive any (i)
Payment Default or (ii) covenant or provision which, under Section 9.1, cannot
be modified or amended without the consent of all Participants. As to any
matters not expressly provided for by this Agreement, Agent shall in all cases
be fully protected in acting, or in refraining from acting, hereunder in
accordance with instructions signed by the Required Participants and such
instructions of the Required Participants and any action taken or failure to act
pursuant thereto shall be binding on each Participant.
Section 10.4 Indemnification. Each Participant shall reimburse and hold
Agent harmless, ratably in accordance with its Outstanding Investment at the
time the indemnification is required to be given, (but only to the extent that
any such indemnified amounts have not in fact been paid to Agent by, or on
behalf of, Lessees in accordance with Section 7.1) from any and all claims,
losses, damages, obligations, penalties, liabilities, demands, suits, judgments,
or causes of action, and all legal proceedings, and any reasonable costs or
expenses in connection therewith, including allocated charges, costs and
expenses of internal counsel of Agent and all other reasonable attorneys' fees
and expenses incurred by Agent, in any way relating to or arising in any manner
out of (i) any Operative Document, the enforcement hereof or thereof or the
consummation of the transactions contemplated thereby, or (ii) instructions from
the Required Participants (including, without limitation, the costs and expenses
that Lessees are obligated to and does not pay hereunder, but excluding normal
administrative costs and expenses incident to the performance by Agent of its
agency duties hereunder other than materially increased administrative costs and
expenses incurred as a result of an Event of Default), provided that no
Participant shall be liable for any of the foregoing to the extent they arise
from (a) the gross negligence or willful misconduct of Agent, (b) the inaccuracy
of any representation or warranty or breach of any covenant given by Agent in
Section 5.3 or Section 6.3 hereof or in the Lease, (c) in the case of Agent's
handling of funds, the failure to act with the same care as Agent uses in
handling its own funds or (d) any taxes, fees or other charges payable by Agent
based on or measured by any fees, commissions or compensation received by it for
acting as Agent in connection with the transactions contemplated by the
Operative Documents.
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Participation Agreement
Section 10.5 Independent Credit Investigation. Each Participant by
entering into this Agreement agrees that it has, independently and without
reliance on Agent or any other Participant and based on such documents and
information as it has deemed appropriate, made its own credit analysis of
Lessees and its own decision to enter into this Agreement and each of the other
Operative Documents to which it is a party and that it will, independently and
without reliance upon Agent or any other Participant, and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own analysis and decisions in taking action under this Agreement and
any related documents to which it is a party. Agent shall not be required to
keep itself informed as to the performance or observance by Lessees of any other
document referred to (directly or indirectly) or provided for herein or to
inspect the properties or books of Lessees. Except for notices or statements
which Agent is expressly required to give under this Agreement and for notices,
reports and other documents and information expressly required to be furnished
to Agent alone (and not also to each Participant, it being understood that Agent
shall forward copies of same to each Participant) hereunder or under any other
Operative Document, Agent shall not have any duty or responsibility to provide
any Participant with copies of notices or with any credit or other information
concerning the affairs, financial condition or business of Lessees (or any of
its affiliates) that may come into the possession of Agent or any of its
Affiliates.
Section 10.6 Refusal to Act. Except for notices and actions expressly
required of Agent hereunder and except for the performance of its covenants in
Section 6.3, Agent shall in all cases be fully justified in failing or refusing
to act unless (a) it is indemnified to its reasonable satisfaction by the
Participants against any and all liability and reasonable expense which may be
incurred by it by reason of taking or continuing to take any such action
(provided that such indemnity shall not be required to extend to liability or
expense arising from any matter described in clauses (a) through (d) of Section
10.4, it being understood that no action taken by Agent in accordance with the
instructions of the Required Participants shall be deemed to constitute any such
matter) and (b) it is reasonably satisfied that such action is not contrary to
any Operative Document or to any applicable law.
Section 10.7 Resignation or Removal of Agent; Appointment of Successor.
Subject to the appointment and acceptance of a successor Agent as provided
below, Agent may resign at any time by giving notice thereof to each Participant
and Lessees or may be removed at any time by written notice from the Required
Participants. Upon any such resignation or removal, the Required Participants at
the time of the resignation or removal shall have the right to appoint a
successor Agent which shall be a financial institution having a combined capital
and surplus of not less than $50,000,000. If, within 30 calendar days after the
retiring Agent's giving of notice
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Participation Agreement
of resignation or receipt of a written notice of removal, a successor Agent is
not so appointed and does not accept such appointment, then the retiring or
removed Agent may appoint a successor Agent and transfer to such successor Agent
all rights and obligations of the retiring Agent. Such successor Agent shall be
a financial institution having combined capital and surplus of not less than
$50,000,000. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring or
removed Agent and the retiring or removed Agent shall be discharged from duties
and obligations as Agent thereafter arising hereunder and under any related
document. If the retiring Agent does not appoint a successor, any Participant
shall be entitled to apply to a court of competent jurisdiction for such
appointment, and such court may thereupon appoint a successor to act until such
time, if any, as a successor shall have been appointed as above provided.
Section 10.8 Separate Agent. The Required Participants may, and if they
fail to do so at any time when they are so required, Agent may, for the purpose
of meeting any legal requirements of any jurisdiction in which any Vehicle or
Collateral may be located, appoint one or more individuals or corporations
either to act as co-agent jointly with Agent or to act as separate agent of all
or any part of the Vehicles or Collateral or the Lease, and vest in such
individuals or corporations, in such capacity, such title to the Vehicles or
Collateral or the Lease or any part thereof, and such rights or duties as Agent
may consider necessary or desirable. Agent shall not be required to qualify to
do business in any jurisdiction where it is not now so qualified. Agent shall
execute, acknowledge and deliver all such instruments as may be required by any
such co-agent or separate agent more fully confirming such title, rights or
duties to such co-agent or separate agent. Upon the acceptance in writing of
such appointment by any such co-agent or separate agent, it, she or he shall be
vested with such interest in the Vehicles or Collateral and the Lease or any
part thereof, and with such rights and duties, not inconsistent with the
provisions of the Operative Documents, as shall be specified in the instrument
of appointment, jointly with Agent (except insofar as local law makes it
necessary for any such co-agent or separate agent to act alone), subject to all
terms of the Operative Documents. Any co-agent or separate agent, to the fullest
extent permitted by legal requirements of the relevant jurisdiction, at any
time, by an instrument in writing, shall constitute Agent its attorney-in-fact
and agent, with full power and authority to do all acts and things and to
exercise all discretion on its behalf and in its name. If any co-agent or
separate agent shall die, become incapable of acting, resign or be removed, the
interest in the Vehicles or Collateral and the Lease and all rights and duties
of such co-agent or separate agent shall, so far as permitted by law, vest in
and be exercised by Agent, without the appointment of a successor to such
co-agent or separate agent.
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Participation Agreement
Section 10.9 Termination of Agency. The agency created hereby shall
terminate upon the final disposition by Agent of all Collateral at any time
subject hereto and the final distribution by Agent of all monies or other
property or proceeds received pursuant to the Lease in accordance with its
terms, provided that at such time Lessees shall have complied fully with all the
terms hereof.
Section 10.10 Compensation of Agency. Lessees shall pay Agent its
reasonable fees, costs and expenses for the performance of Agent's obligations
hereunder and under the other Operative Documents.
Section 10.11 Limitations. It is expressly understood and agreed by and
among the parties hereto that, except as otherwise provided herein or in the
other Operative Documents: (a) this Participation Agreement and the other
Operative Documents to which Agent is a party are executed by Agent, not in its
individual capacity (except with respect to the representations and covenants of
Agent in Sections 5.3 and 6.3), but solely as Agent under the Operative
Documents in the exercise of the power and authority conferred and vested in it
as such Agent; (b) each and all of the undertakings and agreements herein made
on the part of Agent are each and every one of them made and intended not as
personal undertakings and agreements by Agent, or for the purpose or with the
intention of binding Agent personally, but are made and intended for the purpose
of binding only the Collateral unless expressly provided otherwise; (c) actions
to be taken by Agent pursuant to its obligations under the Operative Documents
may, in certain circumstances, be taken by Agent only upon specific authority of
the Participants; (d) nothing contained in the Operative Documents shall be
construed as creating any liability on Agent, individually or personally, or any
incorporator or any past, present or future subscriber to the capital stock of,
or stockholder, officer or director, employee or agent of, Agent to perform any
covenants either express or implied contained herein, all such liability, if
any, being expressly waived by the other parties hereto and by any Person
claiming by, through or under them; and (e) so far as Agent, individually or
personally, is concerned, the other parties hereto and any Person claiming by,
through or under them shall look solely to the Collateral and Lessees for the
performance of any obligation under any of the instruments referred to herein;
provided, however, that nothing in this Section 10.11 shall be construed to
limit in scope or substance the general corporate liability of Agent in respect
of its gross negligence or willful misconduct or those representations,
warranties and covenants of Agent in its individual capacity set forth herein or
in any of the other agreements contemplated hereby.
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Participation Agreement
ARTICLE XI
MISCELLANEOUS
Section 11.1 Survival of Covenants. All claims pertaining to the
representations, warranties, covenants or indemnities of the Participants shall
survive the termination of the Lease to the extent such claims arose out of
events occurring or conditions existing prior to any such termination. Without
limiting the foregoing, the provisions of Article VII and Article VIII hereof
shall survive the termination of the Lease.
Section 11.2 APPLICABLE LAW. THIS PARTICIPATION AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED UNDER THE LAWS OF CALIFORNIA WITHOUT REGARD TO THE
CHOICE OF LAW PROVISIONS THEREOF.
Section 11.3 Distribution and Application of Rents and Other Payments.
Except as otherwise specifically provided for in the Lease or in Articles VII
and VIII hereof, all amounts of money received or realized by Lessor pursuant to
the Operative Documents (after payment of accrued but unpaid fees and expenses
and indemnification payments payable to BALCAP in its capacity Agent or Lessor
that remain unpaid for 30 days or more) shall be distributed to each Participant
pro rata, in accordance with each Participant's Outstanding Investment and
without preference or priority of any Participant over another. All payments to
the Participants shall be made in accordance with Section 3.2 of the Lease.
Section 11.4 Notices. All notices, demands, declarations, consents,
directions, approvals, instructions, requests and other communications required
or permitted by the terms hereof shall be in writing and shall be deemed to have
been duly given when delivered personally, by facsimile (and confirmed, which
confirmation may be mechanical), nationally recognized overnight courier or
otherwise actually received or 3 Business Days after being deposited in the
United States mail certified, postage prepaid, addressed as follows:
If to any Lessee:
Dreyer's Grand Ice Cream, Inc.
5929 College Avenue
Oakland, CA 94618-1391
Attn: Treasurer
Fax: 510-450-4592;
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Participation Agreement
if to Lessor:
BA Leasing & Capital Corporation
Four Embarcadero Center, 12th Floor
San Francisco, CA 94111
Attn: Contract Administration
Fax: 415-765-7373; and
if to the Participants, to their respective addresses set forth on
Schedule I hereto or at such other place as any such party may
designate by notice given in accordance with this Section 11.4.
Section 11.5 Transaction Costs; Other Expenses. Lessees shall pay all
reasonable Transaction Costs whether or not the transactions contemplated hereby
close. In addition, Lessees shall pay or reimburse Lessor and the Participants
for all other out-of-pocket costs and expenses (including legal fees of counsel
to Lessor and the Participants, any local or special counsel and allocated fees
of internal counsel) reasonably incurred in connection with: (a) entering into,
or the giving or (in the case of any amendments, supplements, waivers or
consents proposed by Lessees) withholding of, any future amendments,
supplements, waivers or consents with respect to the Operative Documents
(including without limitation any legal services rendered in connection with or
arising under Sections 6.1 and 6.2 hereof); (b) any Casualty or termination of
the Lease or any other Operative Document; (c) the negotiation and documentation
of any restructuring or "workout," whether or not consummated, of any Operative
Document; (d) the enforcement of the rights or remedies under the Operative
Documents; (e) further assurances requested pursuant to Section 11.14 hereof or
any similar provision in other Operative Documents; (f) any transfer by Lessor
or a Participant of any interest in the Operative Documents during the
continuance of an Event of Default; and (g) the ongoing fees and expenses of
Agent under the Operative Documents.
Section 11.6 Counterparts. This Participation Agreement may be executed
in any number of counterparts and by different parties hereto on separate
counterparts, each executed counterpart constituting an original but all
together one agreement.
Section 11.7 Severability. Whenever possible, each provision of this
Participation Agreement shall be interpreted in such manner as to be effective
and valid under applicable law; but if any provision of this Participation
Agreement shall be prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Participation Agreement.
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Participation Agreement
Section 11.8 Successors and Assigns; Transfers. This Participation
Agreement shall be binding upon the parties hereto and their respective
successors and assigns, and shall inure to the benefit of the parties hereto and
their respective successors and permitted assigns. No Lessee may assign any of
its respective rights and obligations under any Operative Document except as
expressly provided in the Operative Documents.
No Participant shall assign, convey or otherwise transfer all or any
portion of its right, title or interest in, to or under any of the Operative
Documents or any Certificate without the prior written consent of Lessor and
Lessees, except that without the prior written consent of Lessor or Lessees (x)
any bank or similar financial or commercial lending institution may pledge its
interest in the ordinary course of its business; provided, that no transfer upon
a foreclosure pursuant to such a pledge may occur unless the other provisions of
this Section are complied with, (y) any Participant may transfer all or any
portion of its interest to any of its Affiliates or to any other existing
Participant upon compliance with subsections (a), (b), (c), (d) and (g) below,
and (z) any Participant may transfer any or all of such right, title and
interest upon compliance with subsections (a) through (g) below with the consent
of Dreyer's, which consent shall not be unreasonably withheld or delayed; and
provided, further, that the restrictions set forth in this Section 11.8 shall
not apply to a participation, with respect to which Section 11.9 shall apply:
(a) Required Notice and Effective Date. Any Participant
desiring to effect a transfer of its interest shall give written notice
of each such proposed transfer to Lessees, Lessor and each other
Participant at least five (5) days prior to such proposed transfer,
setting forth the name of such proposed transferee, the percentage or
interest to be retained by such Participant, if any, and the date on
which such transfer is proposed to become effective. All reasonable
out-of-pocket costs incurred by Lessor in connection with any such
disposition by a Participant under this Section 11.8 shall be borne by
such Participant. In the event of a transfer under this Section 11.8,
any expenses incurred by the transferee in connection with its review
of the Operative Documents and its investigation of the transactions
contemplated thereby shall be borne by such transferee or the relevant
Participant, as they may determine, but shall not be considered costs
and expenses which Lessees are obligated to pay or reimburse under
Section 11.5.
(b) Assumption of Obligations. Any transferee pursuant to this
Section 11.8 shall have executed and delivered to Lessor a letter in
substantially the form of the Investor's Letter attached hereto as
Exhibit F, and thereupon the obligations of the transferring
Participant under the Operative
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Participation Agreement
Documents shall be proportionately released and reduced to the extent
of such transfer. Upon any such transfer as above provided, the
transferee shall be deemed to be bound by all obligations (whether or
not yet accrued) under, and to have become a party to, all Operative
Documents to which its transferor was a party, shall be deemed the
pertinent "Participant" for all purposes of the Operative Documents and
shall be deemed to have made that portion of the payments pursuant to
the Operative Documents previously made or deemed to have been made by
the transferor represented by the interest being conveyed; and each
reference herein and in the other Operative Documents to the pertinent
"Participant" shall thereafter be deemed a reference to the transferee,
to the extent of such transfer, for all purposes. Upon any such
transfer, Lessor shall deliver to each Participant and Lessees an
amended Schedule I to this Participation Agreement, revised to reflect
the relevant information for such new Participant and the Commitment of
such new Participant (and the revised Commitment of the transferor
Participant if it shall not have transferred its entire interest).
(c) Employee Benefit Plans. No Participant may make any such
assignment, conveyance or transfer to or in connection with any
arrangement or understanding in any way involving any employee benefit
plan (or its related trust), as defined in Section 3(3) of ERISA, or
with the assets of any such plan (or its related trust), as defined in
Section 4975(e)(1) of the Code (other than a governmental plan, as
defined in Section 3(32) of ERISA), with respect to which any Lessee or
such Participant or any of their Affiliates is a party in interest
within the meaning of ERISA or a "disqualified person" within the
meaning of the Code.
(d) Representations and Warranties. Notwithstanding anything
to the contrary set forth above, no Participant may assign, convey or
transfer its interest to any Person, unless such Person shall have
delivered to Lessor and Lessees a certificate confirming the accuracy
of the representations and warranties set forth in Section 5.2 with
respect to such Person (other than as such representation or warranty
relates to the execution and delivery of Operative Documents).
(e) Financial Condition of Transferee. No transfer by a
Participant shall be effective against the other parties to this
Participation Agreement unless the transferee is a bank or other
financial institution with a combined capital, surplus and undivided
profits of at least $50,000,000, or (B) any subsidiary of such a bank,
financial institution or corporation, provided that such bank,
financial institution or corporation furnishes a guaranty with respect
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Participation Agreement
to the transferee's obligations as a Participant, or (C) any other
entity, provided the transferee's obligations as a Participant are
guaranteed by the transferor Participant.
(f) Amounts. Any transfer of Certificates shall be in a
principal amount which represents an original Commitment of at least
$5,000,000; provided that the foregoing limitation shall not apply to a
Participant's transfer of the entire principal amount of such
Participant's Certificates.
(g) Effect. From and after any transfer of its Certificates
(other than a pledge) the transferring Participant shall be released,
to the extent assumed by the transferee, from its liability and
obligations hereunder and under the other Operative Documents to which
such transferor is a party in respect of obligations to be performed on
or after the date of such transfer. Upon any transfer by a Participant
as above provided, any such transferee shall be deemed a "Participant"
for all purposes of such documents and each reference herein to a
Participant shall thereafter be deemed a reference to such transferee
for all purposes, except as the context may otherwise require.
Notwithstanding any transfer as provided in this Section 11.8, the
transferor shall be entitled to all benefits accrued and all rights
vested prior to such transfer, including, without limitation, rights to
indemnification under this Participation Agreement or any other
Operative Document.
Section 11.9 Participations.
(a) Participations. Notwithstanding anything in Section 11.8
to the contrary, each Participant covenants and agrees that it will not grant
participations in its Certificates to any Person (a "Transferee") unless such
Person (i) is a bank or other financial institution, (ii) represents and
warrants, in writing, to such Participant, for the benefit of the Lessor, the
other Participants and Lessees, that no part of the funds used by it to acquire
an interest in the Certificates constitutes assets of any Employee Benefit Plan
or its related trust and (iii) expressly agrees in the documentation providing
for such participation that the Transferee will have no rights under the
Operative Documents except as expressly provided in this Section 11.9. Any such
transferring Person shall require any Transferee of its interest in the
Certificates to make the representations and warranties set forth in the
preceding sentence, in writing, to such Person for its benefit and the benefit
of Lessor, the Participants and Lessees. In the event of any such sale by a
Participant of a participating interest to a Transferee, such Participant's
obligations under this Participation Agreement and under the other Operative
Documents shall remain unchanged, such Participant shall remain solely
responsible for the performance thereof, such Participant shall remain
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Participation Agreement
the holder of its Certificate for all purposes under this Participation
Agreement and under the other Operative Documents, and Lessor and, except as set
forth in Section 11.9(b), Lessees shall continue to deal solely and directly
with such Participant in connection with such Participant's rights and
obligations under this Participation Agreement and under the other Operative
Documents.
(b) Transferee Indemnities. Each Transferee shall be entitled
to the benefits of Article VII with respect to its Certificates or participation
in the Certificates outstanding from time to time; provided, that no Transferee
shall be entitled to receive any greater amount pursuant to such Article than
the transferor Participant would have been entitled to receive in respect of the
amount of the Certificates or participation transferred by such transferor
Participant to such Transferee had no such transfer or participation occurred.
Each transferee of a Participant pursuant to this Section 11.9 shall be
entitled to the benefits of Sections 7.2, 7.3 and 7.4; provided that no such
transferee shall be entitled to receive any greater amount pursuant to such
Sections than the transferor Participant would have been entitled to receive in
respect of the amount of the Commitment transferred by such transferor
Participant to such transferee if such transfer had not occurred.
SECTION 11.10 JURY TRIAL. EACH LESSEE WAIVES ANY RIGHT TO A TRIAL BY
JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS
PARTICIPATION AGREEMENT OR ANY OTHER OPERATIVE DOCUMENT OR UNDER ANY AMENDMENT,
INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE
DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY RELATIONSHIP
EXISTING IN CONNECTION WITH THIS PARTICIPATION AGREEMENT OR ANY OPERATIVE
DOCUMENT AND AGREE THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A
COURT AND NOT BEFORE A JURY.
Section 11.11 Captions; Table of Contents. Section captions and the
table of contents used in this Participation Agreement (including the exhibits
and schedules) are for convenience of reference only and shall not affect the
construction of this Participation Agreement.
Section 11.12 FINAL AGREEMENT. THIS PARTICIPATION AGREEMENT, TOGETHER
WITH THE OTHER OPERATIVE DOCUMENTS, REPRESENT THE ENTIRE FINAL AGREEMENT BETWEEN
THE PARTIES WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED HEREBY AND IN THE
OTHER OPERATIVE DOCUMENTS. THIS PARTICIPATION AGREEMENT CANNOT BE MODIFIED,
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<PAGE> 51
Participation Agreement
SUPPLEMENTED, AMENDED, RESCINDED OR CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES, EXCEPT BY AN
INSTRUMENT IN WRITING SIGNED BY THE PARTIES HERETO IN ACCORDANCE WITH THE TERMS
HEREOF. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
Section 11.13 No Third-Party Beneficiaries. Nothing in this
Participation Agreement or the other Operative Documents shall be deemed to
create any right in any Person not a party hereto or thereto (other than the
permitted successors and assigns of Lessor, Participants and Lessees), and such
agreements shall not be construed in any respect to be a contract in whole or in
part for the benefit of any third party except as aforesaid.
Section 11.14 Further Assurances. Each Lessee, at its expense, will
promptly and duly execute and deliver all such documents and take such further
action as may be necessary or appropriate in order to effect the intent or
purpose of this Participation Agreement and the other Operative Documents and to
establish and protect the rights and remedies created or intended to be created
in favor of the Lessor and Participants, including, without limitation, if
requested by Required Participants at the expense of Lessees, the recording or
filing of any Operative Document or any other document in accordance with the
laws of the appropriate jurisdictions.
Section 11.15 Reproduction of Documents. This Participation Agreement,
all documents constituting Schedules or Exhibits hereto, and all documents
relating hereto received by a party hereto, including, without limitation: (a)
consents, waivers and modifications that may hereafter be executed; (b) the
Certificates of Title and all other documents received by the Lessor or the
Participants in connection with the receipt and/or acquisition of the Vehicles;
and (c) financial statements, certificates, and other information previously or
hereafter furnished to Lessor or any Participant may be reproduced by the party
receiving the same by any photographic, photostatic, microfilm, micro-card,
miniature photographic or other similar process. Each of the parties hereto
agrees and stipulates that, to the extent permitted by law, any such
reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by such party in the
regular course of business) and that, to the extent permitted by law, any
enlargement, facsimile, or further reproduction of such reproduction shall
likewise be admissible in evidence.
Section 11.16 Consideration for Consents to Waivers and Amendments.
Each Lessee agrees that it will not, and that it will not permit any of its
Affiliates to, offer or give any consideration or benefit of any kind whatsoever
to any Participant in
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Participation Agreement
connection with, in exchange for, or as an inducement to, such Participant's
consent to any waiver in respect of, any modification or amendment of, any
supplement to, or any other consent or approval under, any Operative Document
unless such consideration or benefit is offered ratably to all Participants.
Section 11.17 Role of BALCAP. Each party hereto acknowledges hereby
that it is aware of the fact that BALCAP has acted as an "arranger" with respect
to the transactions contemplated by the Operative Documents and that, as of the
Delivery Date, BALCAP will also be Agent and a Participant. Each party releases
BALCAP and its affiliates (including Bank of America National Trust and Savings
Association) from any liability as a result of its acting simultaneously as
"arranger", as Agent and as a Participant.
Section 11.18 Submission to Jurisdiction. Any suit by Lessor or any
Participant to enforce any claim arising out of the Operative Documents may be
brought in any state or Federal court located in San Francisco, California
having subject matter jurisdiction, and with respect to any such claim, each
Participant hereby irrevocably: (a) submits to the jurisdiction of such courts;
and (b) consents to the service of process out of said courts by mailing a copy
thereof, by registered mail, postage prepaid, to Lessees at their respective
addresses specified in this Participation Agreement, and agrees that such
service, to the fullest extent permitted by law: (i) shall be deemed in every
respect effective service of process upon it in any such suit, action or
proceeding; and (ii) shall be taken and held to be valid personal service upon
and personal delivery to it. Each Lessee irrevocably waives, to the fullest
extent permitted by law: (A) any claim, or any objection, that it now or
hereafter may have, that venue is not proper with respect to any such suit,
action or proceeding brought in such a court located in San Francisco,
California including, without limitation, any claim that any such suit, action
or proceeding brought in such court has been brought in an inconvenient forum;
and (B) any claim that any Lessee is not subject to personal jurisdiction or
service of process in such forum. Each Lessee agrees that any suit to enforce
any claim arising out of the Operative Documents or any course of conduct or
dealing of Lessor or any Participant shall be brought and maintained exclusively
in any state or Federal court located in San Francisco, California. Nothing in
this Section 11.18 shall affect the right of Lessor or any Participant to bring
any action or proceeding against any Lessee or any Vehicle or other Collateral
in the courts of any other jurisdiction. Each Lessee agrees that a final
judgment in any action or proceeding in a state or Federal court within the
United States may be enforced in any other jurisdiction by suit on the judgment
or in any other manner provided by law.
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Participation Agreement
[Remainder of page intentionally left blank]
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<PAGE> 54
Participation Agreement
IN WITNESS WHEREOF, the parties hereto have caused this Participation
Agreement to be executed and delivered as of the date first above written.
DREYER'S GRAND ICE CREAM, EDY'S GRAND ICE CREAM
INC., as Lessee as Lessee
By /s/ William C. Collett By /s/ William C. Collett
------------------------------ ------------------------------
Name Printed: William C. Collett Name Printed: William C. Collett
------------------- -------------------
Title: Treasurer Title: Treasurer
-------------------------- --------------------------
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Participation Agreement
LESSOR: BA LEASING & CAPITAL CORPORATION,
not individually except as set
forth herein, but solely in its
capacity as Agent
By /s/ Sara L. Fitch
---------------------------
Name Printed: Sara L. Fitch
----------------
Title: Vice President
-----------------------
By /s/ Robert A. Stark
----------------------------
Name Printed: Robert A. Stark
-----------------
Title: Vice President
------------------------
[signatures continue on following page]
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<PAGE> 56
Participation Agreement
PARTICIPANTS: BA LEASING & CAPITAL CORPORATION,
as Participant
By /s/ Kim Lee
-----------------------------
Name Printed: Kim Lee
------------------
Title: Assistant Vice President
-------------------------
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<PAGE> 57
Participation Agreement
CREDIT SUISSE, as Participant
By /s/ MARILOU PALENZUPLA
--------------------------------
Name Printed: MARILOU PALENZUPLA
---------------------
Title: MEMBER OF SENIOR MANAGEMENT
----------------------------
By /s/ DEBORAH A. SHEA
--------------------------------
Name Printed: DEBORAH A. SHEA
---------------------
Title: ASSOCIATE
----------------------------
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<PAGE> 58
Participation Agreement
ABN AMRO BANK N.V.
San Francisco International
Branch, as Participant
By: ABN AMRO NORTH AMERICA,
INC., as Agent
By /s/ Gina M. Brusatori
--------------------------------
Name Printed: GINA M. BRUSATORI
---------------------
Title: VICE PRESIDENT
----------------------------
By /s/ Daniel P. Taylor
--------------------------------
Name Printed: DANIEL P. TAYLOR
---------------------
Title: OFFICER
----------------------------
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Participation Agreement
SCHEDULE I
TO
PARTICIPATION AGREEMENT
LESSOR AND PARTICIPANT ADDRESSES; PARTICIPANT COMMITMENTS
LESSOR: BA LEASING & CAPITAL CORPORATION (address set forth in Section 11.4)
PARTICIPANTS:
1. BA LEASING & CAPITAL CORPORATION
Commitment: $11,000,000 Commitment Percentage: 42.31%
Address for Notices and Payment Instructions
BA Leasing & Capital Corporation
Four Embarcadero Center, Suite 1200
San Francisco, CA 94111
Attention: Contract Administration
Bank of America NT & SA
San Francisco Main Branch
San Francisco, CA
ABA # 121 000 358
Account # 06568-57503
Payee: BA Leasing & Capital Corporation
Notify: Richard Walter
Phone: (415) 765-7476
2. ABN AMRO BANK N.V.
Commitment: $10,000,000 Commitment Percentage: 38.46%
Address for Notices and Payment Instructions
ABN AMRO BANK N.V.
101 California Street, Suite 4550
San Francisco, CA 94111-5812
Attention: Gloria C. Lee (Notices of Funding & Payment)
Gina Brusatori (All Other Notices)
Telephone: 415/984-3720
Facsimile: 415/362-3524
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<PAGE> 60
Participation Agreement
Federal Reserve Bank of New York
A/C ABN AMRO New York
ABA # 026 009 580
Favor: ABN AMRO San Francisco
Account #: 651 001 0545-41
Reference: Dreyer's Grand Ice Cream
3. CREDIT SUISSE
Commitment: $5,000,000 Commitment Percentage: 19.23%
Address for Notices and Payment Instructions
Credit Suisse
633 West 5th St., 64th Floor
Los Angeles, CA 90071
Attention: Ms. Rita Asa, Loan Department
Telephone: (213) 955-8284
Facsimile: (213) 955-8245
copy to:
Credit Suisse
50 California St., Suite 2940
San Francisco, CA 94111
Attention: Mr. Drew Tammen, Associate
Telephone: (415) 391-9590
Facsimile: (415) 362-1175
Credit Suisse
New York, NY
ABA # 026009179
Account #: 11674201
Account Name: For Account of Credit Suisse Los Angeles
Reference: Dreyer's Grand Ice Cream
SI-2
<PAGE> 61
SCHEDULE II
TO
PARTICIPATION AGREEMENT
DESCRIPTION OF VEHICLES
The majority of the Dreyer's/Edy's Route Truck Fleet is composed of
refrigerated distribution trucks used for direct-store-delivery of packaged ice
cream with the following designs:
International 4900 or 4700 chassis with a 19' or 20' refrigerated body which
includes cold plates, Dole blower or Thermal King force air refrigeration
units, and a rear level lift gate. The engines are DT 466 Internationals with
automatic transmissions.
The second largest group of vehicles are International 8100's with DT 530
International engines and Allison automatic transmissions. These units carry
24' refrigeration bodies with similar components as described above.
The fleet also contains a small number of units absorbed during acquisitions
and/or used equipment purchases. These units (Hinos, Macks and Volvos) reflect
the International 4900 chassis design with 19' bodies.
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<PAGE> 62
SCHEDULE X
TO
PARTICIPATION AGREEMENT
DEFINITIONS
The following terms (or other terms used or defined in any Operative
Document which have meanings substantially similar or equivalent to the meanings
assigned to such terms) shall have the following meanings for all purposes, and
such meanings shall be equally applicable both to the singular and plural forms
of the terms defined. Any agreement, document or instrument defined or referred
to in this Schedule X shall include each amendment, modification or supplement
thereto including each waiver and consent that may (pursuant to the Operative
Documents) be effective from time to time, except as otherwise expressly
indicated. The definition of any person herein shall include its successors and
permitted assigns. Reference to schedules and exhibits in this Schedule X shall
mean Schedules and Exhibits attached to the Participation Agreement, except as
otherwise indicated. All references to "the Vehicles" or "all of the Vehicles"
or words of similar import shall be deemed to refer to all Vehicles covered by
all Lease Supplements then in effect.
"Actual Knowledge" shall mean, as to any matter with respect to any
Person, the actual knowledge of such matter by a Responsible Officer of such
Person and shall include receipt of a notice of such matter by any such
Responsible Officer.
"Administrative Charge" shall mean, as of any date during any Rent
Period set forth below in connection with any prepayment of all or any portion
of the Lease Balance in respect of which the payment of an Administrative Charge
is required, an amount equal to the percentage of the Lease Balance being so
prepaid set forth opposite such Rent Period below:
<TABLE>
<CAPTION>
Rent Period Percentage
----------- ----------
<S> <C>
First Rent Period 2.00%
Second Rent Period 1.75%
Third Rent Period 1.50%
Fourth Rent Period 1.25%
Fifth Rent Period 1.00%
Sixth Rent Period 0.75%
Seventh Rent Period 0.50%
Eighth Rent Period and thereafter 0.25%
following the Eighth Rent Period 0.00%
</TABLE>
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<PAGE> 63
"Affiliate(s)" of any Person shall mean any other Person that directly
or indirectly through one or more intermediaries controls, is controlled by, or
is under common control with, such Person. No Person shall be considered an
Affiliate of Lessor unless such Person directly or indirectly through one or
more intermediaries controls, is controlled by, or is under common control with,
Lessor solely in its capacity as Lessor under the Lease.
"Agent" shall have the meaning provided in the preamble to the
Participation Agreement.
"Allocation Fraction" of any Vehicle shall mean, (a) with respect to
any Lease Supplement, a fraction, the numerator of which is the Equipment Cost
of such Vehicle and the denominator of which is the aggregate Equipment Cost of
all of the Vehicles then subject to such Lease Supplement, including such
Vehicle, and (b) with respect to the Lease, a fraction, the numerator of which
is the Equipment Cost of such Vehicle and the denominator of which is the
aggregate Equipment Cost of all of the Vehicles then subject to the Lease,
including such Vehicle.
"alter" shall have the meaning provided in Section 5.5(a) of the Lease.
"Appraisal(s)" shall mean each of the appraisals of the Vehicles from
an Appraiser received pursuant to the terms of the Lease.
"Appraised Value" shall mean, with respect to any Vehicle as of any
date of determination, the Fair Market Value of such Vehicle as set forth on the
Appraisal therefor.
"Appraiser" shall mean Hennig & Company or such other Person as is
selected by the Required Participants.
"Assumed Interest Rate" shall mean, as of the date of any Funding, the
Interest Rate that would have been applicable for purposes of calculating
Variable Rent under the Lease in the event that the Delivery Date had occurred
on such date.
"Authority" shall mean any: (a) Federal, state, local or (if any
Vehicle or any component thereof has been moved outside of the United States)
foreign, tribunal, legislative body, governmental subdivision, administrative
agency or other governmental authority; or (b) arbitrator or panel of
arbitrators, in the case of each of clause (a) and (b) having or exercising
jurisdiction over any Lessee, Lessor or any Vehicle (or any component thereof).
"BALCAP" shall mean BA Leasing & Capital Corporation, in its individual
capacity.
SX-2
<PAGE> 64
"Base Rate" means, for the initial Rent Period, the Reference Rate, and
for each Rent Period thereafter with respect to the Lease Balance and each
Supplement Balance, the higher of (a) 0.50% per annum above the Federal Funds
Rate for such day and (b) the rate of interest in effect for such day as
publicly announced from time to time by Bank of America National Trust and
Savings Association ("BofA") in San Francisco, California, as its "Reference
Rate"; plus the percentage set forth below opposite Dreyer's Funded Debt/EBITDA
Ratio as of the most recently ended fiscal quarter prior to the commencement of
such Rent Period:
<TABLE>
<CAPTION>
Ratio Percentage
----- ----------
<S> <C>
Below 2.50, but less than 4.5 0.000%
4.50 or greater 0.250%.
</TABLE>
The "Reference Rate" is a rate set by BofA based upon various factors including
BofA's costs and desired return, general economic conditions and other factors,
and is used as a reference point for pricing some loans, which may be priced at,
above, or below such announced rate. Any change in the Reference Rate announced
by BofA shall take effect at the opening of business on the day specified in the
public announcement of such change.
"Basic Rent" shall mean, with respect to the Lease or any Lease
Supplement (as the context may require) all installments of Fixed Rent and
Variable Rent due and payable by Lessees on each Payment Date during the Lease
Term.
"Business Day" shall mean any day on which
(a) Federal and state chartered banks in San Francisco,
California are open for commercial banking business; and
(b) solely with respect to determinations of Variable Rent and
Rent Periods, dealings in Dollars are carried on in the London
interbank market.
"Casualty" shall mean any of the following events in respect of any
Vehicle: (a) the loss of such Vehicle or the use thereof due to theft,
disappearance, destruction, damage beyond repair or rendition of such Vehicle
permanently unfit for normal use for any reason whatsoever; (b) any damage to
such Vehicle which results in an insurance settlement with respect to such
Vehicle on the basis of a total loss; (c) the permanent condemnation,
confiscation or seizure of, or requisition of title to or use of, such Vehicle;
(d) as a result of any rule, regulation, order or other action by any Authority,
the use of such Vehicle in the normal course of business shall have been
prohibited, directly or indirectly, for a period of twelve consecutive months,
in any event, if use of such Vehicle shall have been prohibited, directly or
indirectly, for
SX-3
<PAGE> 65
a period of twelve consecutive months; or (e) the operation or location of such
Vehicle, while under requisition for use by any Authority, in any area excluded
from coverage by any insurance policy then in effect with respect to such
Vehicle required by the terms of Section 7.1 of the Lease, if Lessees shall be
unable to obtain indemnity in lieu thereof from such Authority; provided that
for the purpose of the foregoing clause (e), if such Vehicle shall be returned
to Lessees prior to the Casualty Settlement Date in such condition that a
Casualty would not otherwise be deemed to exist with respect thereto, then such
event shall, at the option of Lessees, not constitute a Casualty.
"Casualty Amount" of any Vehicle shall mean, with respect to any
Casualty, an amount equal to the product of (a) the Lease Balance on the date of
such Casualty and (b) the Allocation Fraction of such Vehicle .
"Casualty Notice" shall have the meaning provided in Section 6.1 of the
Lease.
"Casualty Proceeds" shall have the meaning provided in Section 6.2 of
the Lease.
"Casualty Settlement Date" shall have the meaning provided in Section
6.1(a) of the Lease.
"Certificate of Title" shall mean a certificate of title, certificate
of ownership, manufacturer's certificate of origin or any similar equivalent
instrument issued by any applicable Authority evidencing title, or an interest
in title, to a Vehicle.
"Charges" shall mean (a) freight, installation and other similar costs
with respect to any Vehicle and (b) applicable sales, use or similar taxes
imposed upon any Vehicle.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Collateral" shall mean all of each Lessee's right, title and interest
in and to each of the following, whether now existing or hereafter arising or
acquired, and wherever located:
(a) the Vehicles (including all Racks and Computer Tracking
Devices located on or regularly used with the Vehicles);
(b) the Subleases;
(c) all contracts necessary to purchase, operate and maintain
the Vehicles, including all warranties;
SX-4
<PAGE> 66
(d) any rebate, offset or other similar rights under a
purchase order, invoice or purchase agreement with any manufacturer of
any Vehicle;
(e) all books, manuals, logs, records, writings, data bases,
information and other property relating to, used or useful in
connection with, evidencing, embodying or incorporating any of the
foregoing; and
(f) all products, accessions and proceeds of and from any and
all of the foregoing Collateral (including proceeds which constitute
property of the types described in clauses (a), (b), (c), (d) and (e)
above and, to the extent not otherwise included, all payments under
insurance (whether or not Lessor is the loss payee thereof), or any
indemnity, warranty or guaranty, payable by reason of loss or damage to
or otherwise with respect to any of the foregoing Collateral.
"Commitment Percentage" shall mean, with respect to each Participant,
the quotient (expressed as a percentage) of such Participant's Commitment
divided by the Total Commitment.
"Computer Tracking Devices" shall mean the Norand Model 6200 Hand-Held
10-Key Computers with Model 4820V Tractor-Feed Printers, Custom-Built Truck
Stand, designed to down-load to a main-frame computer, located on (in the case
of the printers) and used in connection with each of the Vehicles.
"Consolidated Net Worth" of Dreyer's shall have the meaning provided in
the Revolving Credit Facility as in effect from time to time; provided, that at
such time as either BALCAP (or any of its Affiliates) or ABN AMRO Bank N.V. (or
any of its Affiliates) is no longer a party to the Revolving Credit Facility or
at any time immediately prior to the termination of such facility, the
definition of Consolidated Net Worth set forth in the Revolving Credit Facility
at such time shall be incorporated herein by reference and made a part hereof in
such form as existed immediately prior to BALCAP (or any of its Affiliates) or
ABN AMRO Bank N.V. (or any of its Affiliates) ceasing to be a party to the
Revolving Credit Facility or the termination of the Revolving Credit Facility.
"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.
SX-5
<PAGE> 67
"Delivery Date" shall mean the actual date on or prior to April 30,
1996 on which the transactions contemplated in Article II of the Participation
Agreement are completed.
"Delivery Date Closing" shall mean, with respect to the Delivery Date,
the completion of those transactions described in Article II of the
Participation Agreement.
"Delivery Date Notice" shall have the meaning provided in Section 3.1
of the Participation Agreement.
"Deposit Account" shall have the meaning provided in Section 6.2 of the
Lease.
"Dollar" and the sign "$" mean lawful money of the United States.
"Dreyer's" shall have the meaning provided in the introductory
paragraph of the Participation Agreement.
"EBITDA" means earnings before interest, taxes, depreciation and
amortization of non-cash charges, all determined on a consolidated basis and in
accordance with GAAP.
"Environmental Laws" means all federal, state, local, or foreign laws
and regulations, relating to pollution or protection of public health and the
environment (including without limitation, ambient air, surface water, ground
water, land surface or subsurface strata), including, without limitation, laws
and regulations relating to emissions, discharges, releases or threatened
releases of Materials of Environmental Concern, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of Materials of Environmental Concern.
"Equipment Cost" shall mean, for any Vehicle, the Appraised Value of
such Vehicle as of the Delivery Date.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with Dreyer's within the meaning of Section
414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes
of provisions relating to Section 412 of the Code).
"ERISA Event" means (a) a Reportable Event with respect to a Pension
Plan; (b) a withdrawal by Dreyer's or any ERISA Affiliate from a Pension Plan
subject to
SX-6
<PAGE> 68
Section 4063 of ERISA during a plan year in which it was a substantial employer
(as defined in Section 4001(a)(2) of ERISA) or a cessation of operations which
is treated as such a withdrawal under Section 4062(3) of ERISA; (c) a complete
or partial withdrawal by Dreyer's or any ERISA Affiliate from a Multiemployer
Plan or notification that a Multiemployer Plan is in reorganization; (d) the
filing of a notice of intent to terminate, the treatment of a Plan amendment as
a termination under Section 4041 or 4041A of ERISA, or the commencement of
proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e)
an event or condition which might reasonably be expected to constitute grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Pension Plan or Multiemployer Plan; or (f) the
imposition of any liability under Title IV of ERISA, other than PBGC premiums
due but not delinquent under Section 4007 of ERISA, upon Dreyer's or any ERISA
Affiliate.
"Event of Default" shall have the meaning provided in Section 8.1 of
the Lease.
"Excluded Amounts" shall mean:
(a) all indemnity payments and expenses to which Lessor or any
Participant (or the respective successors, assigns, agents, officers, directors
or employees of any such Person) is entitled pursuant to the Operative
Documents;
(b) any amounts payable under any Operative Documents to
reimburse Lessor or any Participant (including the reasonable expenses of Lessor
or any Participant incurred in connection with any such payment) for performing
any of the obligations of Lessees under and as permitted by any Operative
Document;
(c) any insurance proceeds (or payments with respect to risks
self-insured or policy deductibles) under liability policies payable to Lessor
or any Participant (or the respective successors, assigns, agents, officers,
directors or employees of any such Person);
(d) any insurance proceeds under policies maintained by Lessor
or any Participant and not required to be maintained by Lessees under the Lease;
(e) any amount payable to Lessor or any Participant pursuant
to Sections 3.8 and 10.5 of the Participation Agreement, whether or not such
amounts are or can be characterized as Rent; and
(f) any payments of interest on payments referred to in
clauses (a) through (e) above.
SX-7
<PAGE> 69
"Fair Market Value" shall mean, with respect to any Vehicle as of any
date, the price which a purchaser would pay to purchase such Vehicle in an
arm's-length transaction between a willing buyer and a willing seller, neither
of them being under any compulsion to buy or sell. In making any determination
of Fair Market Value the appraiser may assume such Vehicle has been maintained
in accordance with the requirements of the Lease and that such Vehicle is in the
condition in which it is required to be hereunder as of the date for which such
determination is made (unless such fair market value is being determined for
purposes of Section 5.1(t) of the Participation Agreement, in which case the
foregoing assumptions shall not be made and the Appraiser shall determine the
actual condition of each Vehicle). Appraiser shall use such reasonable methods
of appraisal as are chosen by Lessor upon instructions from the Required
Participants.
"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 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 for any relevant day 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 Lessor of the rates for the last
transaction in overnight Federal funds arranged prior to 9:00 a.m. (New York
City time) on that day by each of three leading brokers of Federal funds
transactions in New York City selected by the Lessor.
"Fee Letter" shall mean that certain letter agreement dated March 8,
1996 between Dreyer's and BALCAP.
"Financial Covenants" shall mean, as of any date of determination, such
covenants as are set forth in the Revolving Credit Facility at such date with
respect to the incurrence of liens, indebtedness and other obligations,
restricted payments, restricted investments, capital expenditures, and
maintenance of financial ratios, amounts or changes in amounts.
"Fixed Rent" shall mean, for each Payment Date during the Lease Term,
that portion of the installment of Rent payable on such Payment Date set forth
on Schedule II to each Lease Supplement.
"Funded Debt" of Dreyer's shall have the meaning provided in the
Revolving Credit Facility as in effect from time to time; provided, that at such
time as either BALCAP (or any of its Affiliates) or ABN AMRO Bank N.V. (or any
of its Affiliates) is no longer a party to the Revolving Credit Facility or at
any time immediately prior to the termination of such facility, the definition
of Funded Debt set forth in the Revolving Credit Facility at such time shall be
incorporated herein by reference and made a part hereof in such form as existed
immediately prior to BALCAP (or any of its
SX-8
<PAGE> 70
Affiliates) or ABN AMRO Bank N.V. (or any of its Affiliates) ceasing to be a
party to the Revolving Credit Facility or the termination of the Revolving
Credit Facility.
"Funded Debt/EBITDA Ratio" of any Person means the ratio of such
Person's Funded Debt to its EBITDA; with EBITDA calculated on a rolling four
quarter basis.
"Funding" shall have the meaning provided in Section 2.1 of the
Participation Agreement.
"GAAP" shall mean generally accepted accounting principles in the
United States of America in effect from time to time, applied on a consistent
basis both as to classification of items and amounts.
"Guarantee" shall mean the Guarantee executed and delivered by
Dreyer's, substantially in the form of Exhibit E to the Participation Agreement,
as amended, modified or supplemented from time to time in accordance with the
Participation Agreement.
"Impositions" shall mean all fees (including, but not limited to,
license, documentation, recording or registration fees) and taxes (including but
not limited to all income, sales, use, lease, sublease, gross receipts, personal
property, occupational, value added or other taxes, levies, imposts, duties,
assessments, charges or withholdings of any nature whatsoever), together with
any penalties, fines or additions to tax or interest thereon.
"Incipient Default" shall mean an event or condition which, with the
giving of notice or the passage of time or both, would constitute an Event of
Default.
"Indemnitee(s)" shall mean Lessor in both its individual and agent
capacity, the Participants, any Affiliate of any of them and any assignee,
officer, director, employee, attorney or agent of any of them.
"Insolvency Event" shall mean, with respect to any Person, any event
pursuant to which such person makes an assignment for the benefit of creditors,
files a petition in bankruptcy, petitions or applies to any tribunal for the
appointment of a custodian, receiver or any trustee for it or for a substantial
part of its property, commences any proceeding under any bankruptcy,
reorganization, arrangement, readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction, whether now or hereafter in effect, consents
or acquiesces in the filing of any such petition, application, proceeding or
appointment of or taking possession by the custodian, receiver, liquidator,
assignee, trustee or sequestrator (or other similar official) of such Person or
any substantial part of its property, or admits its inability to pay its debts
generally
SX-9
<PAGE> 71
as they become due, or authorizes any of the foregoing to be done or taken on
behalf of such Person.
"Interest Rate" means (a) for the initial Rent Period, the Reference
Rate (as defined in the definition of "Base Rate" set forth above), (b) for the
second Rent Period, the rate per annum equal to the sum of the LIBO Rate for
such Rent Period plus 1.250%, and (c) for each Rent Period thereafter, the rate
per annum equal to the sum of the LIBO Rate for such Rent Period plus the
percentage set forth below opposite Dreyer's Funded Debt/EBITDA Ratio as of the
most recently ended fiscal quarter reported prior to the commencement of such
Rent Period:
<TABLE>
<CAPTION>
Ratio Percentage
----- ----------
<S> <C>
Below 2.50 0.500%
2.50 or greater but less than 3.0 0.625%
3.0 or greater but less than 3.5 0.750%
3.5 or greater but less than 4.0 0.875%
4.0 or greater but less than 4.5 1.000%
4.5 or greater 1.250%
</TABLE>
"International Registration Plan" shall mean the reciprocity agreement
among various states, including Oregon and Illinois, and Canadian provinces,
pursuant to which fleets of motor vehicles used in interstate commerce are
registered and licensed for operation within and among the signatory states and
provinces.
"interstate" or "intrastate" shall refer to interstate or intrastate
activity within the United States.
"Investment Percentage" shall mean, with respect to each Participant as
of any date of determination, the quotient (expressed as a percentage) of such
Participant's Outstanding Investment divided by the Lease Balance.
"Investor's Letter" shall have the meaning provided in Section 11.8(b)
of the Participation Agreement.
"IRS" shall mean the Internal Revenue Service.
"Lease" shall mean that certain Master Lease Intended as Security,
dated as of March 29, 1996, by and between Lessor and Lessees, substantially in
the form of Exhibit A to the Participation Agreement, as amended, modified or
supplemented from time to time in accordance with the Participation Agreement.
SX-10
<PAGE> 72
"Lease Balance" shall mean, as of any determination date, the aggregate
Equipment Cost of all of the Vehicles, minus all amounts of Fixed Rent actually
paid to the date of determination and all Reduction Amounts actually paid to the
date of determination.
"Lease Supplement" shall have the meaning provided in Section 3.5 of
the Participation Agreement.
"Lease Term" shall have the meaning provided in Section 2.1 of the
Lease.
"Lessee" and "Lessees" shall have the meanings provided in the preamble
to the Participation Agreement.
"Lessor" shall have the meaning provided in the preamble to the
Participation Agreement.
"Lessor Liens" shall mean Liens or other conveyances resulting from any
act of or claim against Lessor in its individual capacity (or any Person
claiming by, through or under Lessor in its individual capacity), in each case
arising out of any event or condition not related to the exercise of Lessor's
rights or the performance of its duties expressly provided under any Operative
Document.
"LIBO Rate" means, relative to any Rent Period with respect to the
Lease Balance and each Supplement Balance, the rate per annum determined by
Lessor to be the offered rate per annum at which deposits in United States
Dollars appears on the Telerate System Page 3750 (or any successor page),
determined in as of 11:00 a.m. (London time) two Business Days prior to the
beginning of such Rent Period for delivery on the first day of such Rent Period,
and in an amount approximately equal to the amount of the Lease Balance or the
applicable Supplement Balance and for a period approximately equal to such Rent
Period.
"Lien" shall mean: (a) any interest in property securing an obligation
owed to, or claimed by, a Person other than the owner of the property, whether
such interest is based on the common law, statute or contract, and including,
without limitation, any judgment lien, security interest, mortgage, encumbrance,
pledge, conditional sale, right of distraint or trust receipt or a lease,
consignment or bailment for security purposes; or (b) any reservation,
exception, encroachment, easement, right-of-way, covenant, condition,
restriction, lease or other title exception or defect, cloud on title or
encumbrance affecting property.
"Material Adverse Effect" shall mean any change or changes, effect or
effects or condition or conditions that individually or in the aggregate are or
are reasonably likely to be materially adverse to (i) the business, assets,
operations, properties,
SX-11
<PAGE> 73
prospects or condition (financial or otherwise) of Dreyer's and its Subsidiaries
taken as a whole, (ii) the transactions contemplated by the Operative Documents,
(iii) the ability of Dreyer's or any other Lessee to perform its respective
obligations under the Operative Documents or (iv) the validity or enforceability
of any of the Operative Documents or any rights or remedies under any thereof.
"Materials of Environmental Concern" means chemicals, pollutants,
contaminants, wastes, toxic substances, hazardous substances, petroleum, and
petroleum products.
"Multiemployer Plan" means a "multiemployer plan" within the meaning of
Section 4001(a)(3) of ERISA, to which Dreyer's or any ERISA Affiliate makes, is
making, or is obligated to make contributions or, during the preceding three
calendar years, has made, or been obligated to make, contributions.
"Officer's Certificate" shall mean a certificate executed on behalf of
any entity by its President, one of its Vice Presidents, its Chief Financial
Officer, its Treasurer, its Assistant Treasurer, its Controller or its
Secretary.
"Operative Document(s)" shall mean the Participation Agreement, the
Lease, the Lease Supplements, the Guarantee, the Delivery Date Notice, the
Subleases, any Assumption Agreement, each Certificate of Title and each UCC
financing statement filed or to be filed from time to time with respect to the
security interests created pursuant to the Lease.
"Outstanding Investment" of any Participant as of any date of
determination shall mean the aggregate amount funded by such Participant
pursuant to Section 2.1 of the Participation Agreement (but excluding amounts
returned to such Participant pursuant to Section 2.4 of the Participation
Agreement), reduced by all Fixed Rent paid to Lessor for the account of such
Participant and all Reduction Amounts paid to Lessor for the account of such
Participant.
"Part(s)" shall mean all appliances, parts, instruments, appurtenances,
accessories, furnishings and other equipment of whatever nature that may from
time to time be incorporated or installed in or attached to any Vehicle.
"Partial Casualty" shall mean any loss, damage, destruction, taking by
eminent domain, loss of use or theft of any portion of a Vehicle which does not
constitute a Casualty.
"Participant Commitment" shall mean, with respect to each Participant,
the amount set forth opposite such Participant's name on Schedule I to the
Participation Agreement.
SX-12
<PAGE> 74
"Participant(s)" shall have the meaning provided in the introductory
paragraph to the Participation Agreement.
"Participants" shall mean each of the Persons identified as a Lessor in
Schedule I to the Participation Agreement and those Persons to whom the
Certificates may be transferred or assigned from time to time in accordance with
the provisions of the Lease and the Participation Agreement.
"Participation Agreement" shall mean the Participation Agreement, dated
as of March 29, 1996, entered into among Lessees, Lessor and the Participants,
as amended, modified or supplemented from time to time in accordance with its
terms.
"Payment Date" shall mean the last day of each Rent Period.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Pension Plan" means a pension plan (as defined in Section 3(2) of
ERISA) subject to Title IV of ERISA which Dreyer's sponsors, maintains, or to
which it makes, is making, or is obligated to make contributions, or in the case
of a multiple employer plan (as described in Section 4064(a) of ERISA) has made
contributions at any time during the immediately preceding five (5) plan years.
"Permitted Contest" shall mean actions taken by a Person to contest in
good faith, by appropriate proceedings initiated timely and diligently
prosecuted, the legality, validity or applicability to the Vehicles or any
interest therein of any Person of: (a) any law, regulation, rule, judgment,
order, or other legal provision or judicial or administrative requirements; (b)
any term or condition of, or any revocation or amendment of, or other proceeding
relating to, any authorization or other consent, approval or other action by any
Authority; or (c) any Lien or Imposition; provided that the initiation and
prosecution of such contest would not: (i) result in, or materially increase the
risk of, the imposition of any criminal liability on any Indemnitee; (ii)
materially and adversely affect the security interests created by the Lease or
the right, title or interest of Lessor in or to any of the Vehicles or the right
of Lessor to receive payment of Rent or the Lease Balance or any interest
therein; or (iii) materially and adversely affect the fair market value, utility
or remaining useful life of the Vehicles or any interest therein or the
continued economic operation thereof; and provided further that in any event
adequate reserves in accordance with GAAP are maintained against any adverse
determination of such contest.
"Permitted Lessor Liens" shall mean Lessor Liens: (a) for Taxes of
Lessor or a Participant either not yet due or being challenged by a Permitted
Contest; (b) arising out of judgments or awards against Lessor or a Participant
with respect to which at the time an appeal or proceeding for review is being
prosecuted by a Permitted
SX-13
<PAGE> 75
Contest; and (c) arising out of Liens arising voluntarily in the ordinary course
of business of Lessor or a Participant for amounts the payment of which is
either not delinquent or is being contested by a Permitted Contest.
"Permitted Liens" shall mean: (i) any rights in favor of Lessor or the
Participants under the Operative Documents and any rights of any Persons
entitled to use of the Collateral in accordance with Section 5.2 of the Lease;
(ii) any Lien, (including, without limitation, Liens of carriers, warehousemen,
mechanics or materialmen) in favor of any Person securing payment of the price
of goods or services provided in the ordinary course of business for amounts the
payment of which is not overdue or is being contested in good faith by
appropriate proceedings promptly initiated and diligently prosecuted, so long as
such proceedings do not involve any reasonable danger of sale, forfeiture or
loss of all or any material part of the Collateral and do not materially
adversely affect any Lien created in favor of Lessor under the Lease; (iii) any
Permitted Lessor Lien or any Lien arising out of any breach by any Lessor of its
obligations under the Operative Documents; (iv) any Lien for current taxes,
assessments or other governmental charges which are not delinquent or the
validity of which is being contested by a Permitted Contest; (v) attachments,
judgments and other similar Liens arising in connection with court proceedings,
provided the execution or other enforcement of such Liens is effectively stayed
and the claims secured hereby are being contested in good faith and by
appropriate proceedings; and (vi) any Lien incurred in the ordinary course of
business to secure performance of statutory obligations.
"Person" shall mean any individual, partnership, corporation, trust,
unincorporated association or joint venture, a government or any department or
agency thereof or any other legal entity.
"Plan" means an employee benefit plan (as defined in section 3(3) of
ERISA) which Dreyer's sponsors or maintains or to which Dreyer's makes, is
making, or is obligated to make contributions and includes any Pension Plan.
"Racks" shall mean Cannon Portable Ice Cream Racks, folding 2-tier
design, 1" square steel tubing, plated, with 4 heavy duty casters (in 2 sizes,
29 x 35 x 68" H 32 x 50 x 68" H), located on and used in connection with each of
the Vehicles.
"Reduction Amounts" shall mean amounts paid by Lessees to Lessor for
the purchase of any Vehicle pursuant to Section 6.1 or 6.2 of the Lease,
provided, that "Reduction Amounts" shall not include any Rent, Administrative
Charges or any costs, expenses or taxes to be paid by Lessees in connection with
any such purchase, sale or transfer.
SX-14
<PAGE> 76
"Rent" shall mean, with respect to the Lease or any Lease Supplement,
Basic Rent and or any amount designated as "supplemental Rent" payable pursuant
to the Operative Documents, as the context may require.
"Rent Period" shall mean, (i) the period commencing on (and including)
the Delivery Date and ending on (but excluding) the second Business Day
following the Delivery Date, and (ii) thereafter, the period beginning on (and
including) the second Business Day following the Delivery Date and ending on
(but excluding) the date which numerically corresponds to such date three months
thereafter and each consecutive three-month period thereafter, with each such
period ending on the date which numerically corresponds to the date on which
such period commenced; provided, however, that (a) if such Rent Period would
otherwise end on a day which is not a Business Day, then such Rent Period shall
end on the next following Business Day, unless (solely for purposes of
determining Rent Periods in connection with calculating Variable Rent on a LIBO
Rate basis) such next following Business Day is the first Business Day of a
calendar month, in which case such Rent Period shall end on the Business Day
immediately preceding such numerically corresponding day, and (b) no Rent Period
may end later than the last day of the Lease Term.
"Replaced Part" shall have the meaning provided in Section 5.4(a) of
the Lease.
"Replacement Part" shall have the meaning provided in Section 5.4(a) of
the Lease.
"Replacement Vehicle" shall have the meaning provided in Section 5.4(c)
of the Lease.
"Reportable Event" means, any of the events set forth in Section
4043(c) of ERISA or the regulations thereunder, other than any such event for
which the 30-day notice requirement under ERISA has been waived in regulations
issued by the PBGC.
"Required Participants" shall mean, with respect to any approval,
action, waiver, direction, or consent, Participants whose Outstanding
Investments aggregate at least two-thirds of the Lease Balance as of such date
of determination.
"Responsible Officer" of any Person shall mean: (i) in the case of any
business corporation, the chairman of the board of directors of such corporation
if such chairman is an officer of such corporation, the president, any vice
president or any assistant vice president of such corporation, the secretary or
any assistant secretary of such corporation or the treasurer or any assistant
treasurer of such corporation; (ii) in the case of any partnership, a general
partner (if such general partner is an individual), or a Responsible Officer of
a corporate general partner, of such partnership or the general manager of such
partnership or any assistant general manager of such
SX-15
<PAGE> 77
partnership; and (iii) in the case of any commercial bank or trust company, the
chairman or vice chairman of the board of directors or trustees of such bank or
trust company, the chairman or vice chairman of the executive committee of the
board of directors or trustees of such bank or trust company, the president, any
vice president, the secretary, any assistant secretary, the treasurer, any
assistant treasurer, the cashier, any assistant cashier, any trust officer or
any assistant trust officer of such bank or trust company, the controller or any
assistant controller of such bank or trust company, any executive or senior or
assistant or second vice president of such bank or trust company or any other
individual who is employed by such bank or trust company and customarily
performs functions similar to those performed by any of the other officers of
such bank or trust company referred to herein.
"Revolving Credit Facility" shall mean that certain Credit Agreement
dated as of December 22, 1995 among Dreyer's, the Banks listed therein, Bank of
America National Trust and Savings Association, as Agent, and ABN Amro Bank
N.V., as Co-Agent, as amended, restated, replaced, refinanced, supplemented,
waived and otherwise in effect from time to time, including any similar
successor agreement or agreements or arrangement or arrangements providing for
revolving or working capital indebtedness, whether or not secured; provided that
if at any time there shall exist no such arrangement or agreement, the term
"Revolving Credit Facility" shall be deemed to refer to the last such agreement
or arrangement to have been in effect, exclusive of any modification to the
terms of such agreement or arrangement that were made in contemplation of the
termination thereof.
"Schedule X" shall mean this Schedule to the Participation Agreement.
"Securities Act" shall have the meaning provided in Section 5.1(aa) of
the Participation Agreement.
"Sublease" shall mean a sublease of Vehicles entered into in accordance
with Section 5.2 of the Lease.
"Sublessee" shall mean the lessee or sublessee under any Sublease.
"Subsidiary" shall mean, with respect to any Person, any corporation,
association, partnership, joint venture or other business entity more than 50%
(by number of votes) of the stock of any class or classes (or equivalent
interests) of which is at the time owned by such Person or by one or more
Subsidiaries of such Person, if the holders of the stock of such class or
classes (or equivalent interests) (a) are ordinarily, in the absence of
contingencies, entitled to vote for the election of a majority of the directors
(or Persons performing similar functions) of such business entity, even though
the right so to vote has been suspended by the happening of such a contingency,
or (b) at the time entitled, as such holders, to vote for the election of
SX-16
<PAGE> 78
a majority of the directors (or Persons performing similar functions) of such
business entity, whether or not the right so to vote exists by reason of a
happening of a contingency.
"Supplement Balance" shall mean, as of any determination date with
respect to any Lease Supplement, the aggregate Equipment Cost of all of the
Vehicles subject to such Lease Supplement, minus all amounts of Fixed Rent
actually paid to the date of determination pursuant to such Lease Supplement and
all Reduction Amounts with respect to such Lease Supplement actually paid with
respect to such Vehicles to the date of determination.
"Termination Date" shall mean the date the Lease Term ends pursuant to
(a) Article VIII of the Lease relating to termination as a result of an Event of
Default, (b) Article X of the Lease relating to early termination, or (c)
Article XI of the Lease.
"Total Commitment" shall mean $26,000,000.
"Transaction Costs" shall mean, without duplication,
(i) legal fees and expenses of Mayer, Brown & Platt, any local
or special counsel and allocated costs of internal counsel of Bank of
America National Trust and Savings Association incurred on behalf of
Lessor and the Participants through the Delivery Date in connection
with the negotiation, execution and delivery of the term sheet, the
commitment letters, the Operative Documents, and the transactions
contemplated thereby;
(ii) the fees and expenses of the Appraiser;
(iii) the fees, legal fees, costs and expenses of Agent;
(iv) all costs of lien searches and perfection of a first
priority security interest in the Vehicles; and
(v) all other fees, costs and expenses relating to the
negotiation, documentation and consummation of the transactions
contemplated hereby.
"UCC" shall mean the Uniform Commercial Code, as in effect from time to
time in any applicable jurisdiction.
"Unfunded Pension Liability" means the excess of a Plan's benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of that
Plan's assets, determined in accordance with the assumptions used for funding
the Pension Plan pursuant to Section 412 of the Code for the applicable plan
year.
SX-17
<PAGE> 79
"Variable Rent" shall mean, for each Rent Period with respect to the
Lease Balance or any Supplement Balance (as the context may require), an amount
equal to interest accrued on the Lease Balance or such Supplement Balance
outstanding during such Rent Period at the Interest Rate.
"Vehicle" shall mean each truck listed on Schedule I to each Lease
Supplement, and any substitutions therefor, replacements thereof and additions
thereto from time to time pursuant to the Operative Documents.
"Welfare Plan" shall mean, with respect to any Person, a "welfare plan"
as such term is defined in section 3(1) of ERISA to which such Person or any
Related Person to such Person may have any liability or contingent liability.
SX-18
<PAGE> 80
EXHIBITS
TO
PARTICIPATION AGREEMENT
<PAGE> 81
Lease
EXHIBIT A
TO
PARTICIPATION AGREEMENT
FORM OF
COUNTERPART NO. ___ OF 5 SERIALLY NUMBERED MANUALLY EXECUTED COUNTERPARTS. TO
THE EXTENT THAT THIS DOCUMENT CONSTITUTES CHATTEL PAPER UNDER THE UNIFORM
COMMERCIAL CODE, NO SECURITY INTEREST IN THIS DOCUMENT MAY BE CREATED THROUGH
THE TRANSFER AND POSSESSION OF ANY COUNTERPART OTHER THAN COUNTERPART NO. 1.
MASTER LEASE INTENDED AS SECURITY
DATED AS OF MARCH 29, 1996
AMONG
DREYER'S GRAND ICE CREAM, INC.
EDY'S GRAND ICE CREAM,
AS LESSEES,
AND
BA LEASING & CAPITAL CORPORATION,
not individually, but solely in its capacity as
Agent for the Participants from time to time
under the Participation Agreement, as Lessor
<PAGE> 82
Lease
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE I
DELIVERY AND ACCEPTANCE................. A-2
1.1. Transfer, Acceptance and Lease of Vehicles.................. A-2
1.2. Acceptance Procedure........................................ A-2
ARTICLE II
LEASE TERM......................... A-2
2.1. Lease Term.................................................. A-2
2.2. Lease Commencement Date..................................... A-2
ARTICLE III
RENT; OTHER ECONOMIC PROVISIONS............ A-3
3.1. Rent Payments............................................... A-3
3.2. Place and Manner of Payment................................. A-3
3.3. Net Lease................................................... A-3
ARTICLE IV
WARRANTIES......................... A-4
4.1. Warranty Disclaimer......................................... A-4
4.2. Quiet Enjoyment............................................. A-5
ARTICLE V
POSSESSION, ASSIGNMENT, USE AND
MAINTENANCE OF VEHICLES.................. A-5
5.1. Restriction on Lessees' Possession and Use.................. A-5
5.2. Subleases................................................... A-5
5.3. Maintenance................................................. A-7
5.4. Repair, Replacement and Substitution........................ A-7
5.5. Alterations, Modifications and Additions; Removable Parts... A-9
5.6. Inspection of Collateral.................................... A-10
ARTICLE VI
RISK OF LOSS; REPLACEMENT; WAIVER AND INDEMNITY..... A-11
6.1. Casualty.................................................... A-11
</TABLE>
A-i
<PAGE> 83
Lease
TABLE OF CONTENTS
-----------------
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE VII
INSURANCE......................... A-12
7.1. Required Coverages.......................................... A-12
7.2. Delivery of Insurance Certificates.......................... A-13
ARTICLE VIII
DEFAULT........................... A-13
8.1. Events of Default........................................... A-13
8.2. Remedies.................................................... A-17
8.3. Additional Remedies......................................... A-18
8.4. Proceeds of Sale; Deficiency................................ A-19
8.5. Right to Perform Lessees' Agreements........................ A-20
ARTICLE IX
RETURN OF VEHICLES.................... A-20
ARTICLE X
EARLY TERMINATION..................... A-20
ARTICLE XI
LEASE TERMINATION..................... A-22
ARTICLE XII
OWNERSHIP, GRANT OF SECURITY
INTEREST TO LESSOR AND FURTHER ASSURANCES........ A-22
12.1. Grant of Security Interest................................. A-22
12.2. Retention of Proceeds in the Case of Default............... A-23
12.3. Attorney-in-Fact........................................... A-23
12.4. Release of Liens........................................... A-24
ARTICLE XIII
MISCELLANEOUS........................ A-24
13.1. No Waiver.................................................. A-24
13.2. Survival of Covenants...................................... A-24
13.3. APPLICABLE LAW............................................. A-25
13.4. Effect and Modification of Lease........................... A-25
13.5. Notices.................................................... A-25
13.6. Counterparts............................................... A-25
13.7. Severability............................................... A-25
</TABLE>
A-ii
<PAGE> 84
Lease
TABLE OF CONTENTS
-----------------
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
13.8. Successors and Assigns; Benefit of Agreement............... A-25
13.9. Assignment by Lessor....................................... A-25
13.10. Assignment by Lessees...................................... A-26
13.11. JURY TRIAL................................................. A-26
13.12. Section Headings; Table of Contents........................ A-26
13.13. FINAL AGREEMENT............................................ A-26
13.14. Timeliness of Performance.................................. A-26
</TABLE>
SCHEDULE I EQUIPMENT LIST
EXHIBIT A FORM OF LEASE SUPPLEMENT
A-iii
<PAGE> 85
Lease
MASTER LEASE INTENDED AS SECURITY
This MASTER LEASE INTENDED AS SECURITY (as amended, modified, restated
or supplemented from time to time, this "Lease") dated as of March 29, 1996 is
among (a) Dreyer's Grand Ice Cream, Inc., a Delaware corporation, ("Dreyer's"),
and Edy's Grand Ice Cream, a California corporation, as Lessees (each a "Lessee"
and collectively, the "Lessees"), each with its principal office at 5929 College
Avenue, Oakland, CA 94618-1391, and (b) BA Leasing & Capital Corporation, not
individually, but solely in its capacity as Agent for the Participants from time
to time under the Participation Agreement, as Lessor ("Lessor").
WHEREAS, pursuant to the terms and conditions set forth herein and in
that certain Participation Agreement, dated as of March 29, 1996, (the
"Participation Agreement") among Lessees, the several Participants identified
therein, and Lessor, the Participants have agreed to finance the Vehicles and
that Lessor will lease to each Lessee and each Lessee will lease from Lessor,
Lessor's interest in certain personal property described in Schedule I hereto
and replacements thereto;
AND WHEREAS, capitalized terms used but not otherwise defined herein
(including those used in the foregoing recitals) shall have the meanings
specified in Schedule X to the Participation Agreement, unless the context
otherwise requires;
AND WHEREAS, each Lessee may from time to time enter into a Lease
Supplement with Lessor covering certain of the Vehicles identified on Schedule I
hereto;
AND WHEREAS, each Lease Supplement executed from time to time by Lessor
and a Lessee shall be incorporated herein by reference;
AND WHEREAS, to secure Lessees' obligations under this Lease and the
other Operative Documents, Lessees will grant to Lessor a security interest in
the Collateral.
NOW THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
<PAGE> 86
Lease
ARTICLE I
DELIVERY AND ACCEPTANCE
Section 1.1. Transfer, Acceptance and Lease of Vehicles. On the
Delivery Date, subject to the satisfaction or waiver of the conditions set forth
in Article III of the Participation Agreement, (a) each Lessee executing a Lease
Supplement thereby grants, assigns, transfers and sets over unto Lessor an
interest in the Vehicles to be delivered on the Delivery Date and covered by the
Lease Supplement, (b) Lessor hereby agrees to accept delivery on such Delivery
Date of the interest in the Vehicles to be so delivered pursuant to the terms of
the Participation Agreement and simultaneously to lease such Vehicles to such
Lessee under this Lease and the applicable Lease Supplement, and (c) each such
Lessee hereby agrees, expressly for the direct benefit of Lessor, to lease from
Lessor hereunder, for the Lease Term, such Vehicles to be delivered on the
Delivery Date.
Section 1.2. Acceptance Procedure. Lessor hereby authorizes one or more
employees of each Lessee, to be designated by Dreyer's, as the authorized
representative or representatives of Lessor to accept delivery under this Lease
of the Vehicles identified on Schedule I to each Lease Supplement executed by
such Lessee on the Delivery Date. Lessees hereby agree that such acceptance of
delivery by such authorized representative or representatives and the execution
and delivery by a Lessee on the Delivery Date of a Lease Supplement shall,
without further act, constitute the irrevocable acceptance by such Lessee under
this Lease of the Vehicles which are the subject thereof for all purposes of
this Lease and the other Operative Documents on the terms set forth therein and
herein.
ARTICLE II
LEASE TERM
Section 2.1. Lease Term. Unless earlier terminated, the term of this
Lease shall commence on and include the Delivery Date and end on but not include
the fourth anniversary thereof (the "Lease Term").
Section 2.2. Lease Commencement Date. The lease commencement date shall
be the Delivery Date.
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ARTICLE III
RENT; OTHER ECONOMIC PROVISIONS
Section 3.1. Rent Payments. Lessees shall pay to Lessor, for the
benefit of the Participants, the amounts of Basic Rent determined in accordance
with this Section 3.1 and each Lease Supplement. Scheduled installments of Basic
Rent may be adjusted pursuant to Section 6.1. All computations of interest
pursuant to the Operative Documents shall be made on the basis of actual number
of days elapsed in a 360-day year. On each Payment Date during the Lease Term,
each Lessee shall pay to Lessor, Basic Rent under each Lease Supplement to which
such Lessee is a party, consisting of the amount of Fixed Rent set forth
opposite the applicable Payment Date on Schedule II to each such Lease
Supplement and Variable Rent accrued on the Supplement Balance of each such
Lease Supplement during the Rent Period ended on such Payment Date.
Section 3.2. Place and Manner of Payment. Rent and all other sums due
to Lessor hereunder shall be paid in immediately available funds at the office
of Lessor set forth on Schedule I to the Participation Agreement, or at such
other office of Lessor as it may from time to time specify to Dreyer's in a
notice pursuant to this Lease. All such payments shall be received by Lessor not
later than 11:00 a.m. San Francisco time, on the date due; funds received after
such time shall for all purposes under the Operative Documents be deemed to have
been received by Lessor on the next succeeding Business Day. Any payments
received by Lessor not later than 11:00 a.m. San Francisco time, shall be paid
by Lessor to the Participants in immediately available funds no later than 1:00
p.m. San Francisco time on the same day and any payments received by Lessor from
or on behalf of Lessees after 11:00 a.m. San Francisco time, shall be paid to
Participants as soon after receipt as practicable, but not later than 1:00 p.m.
San Francisco time on the next succeeding Business Day. Lessees shall pay to
Lessor, on demand, interest at the rate per annum which is 2% above the Interest
Rate in effect from time to time on any overdue amount of Rent, Administrative
Charge or any other payment due under this Lease and (to the extent permitted by
applicable law) interest from the date due (not taking into account any grace
period) until payment is made.
Section 3.3. Net Lease. This Lease is a net lease and each Lessee's
obligation to pay all Rent, Administrative Charges, indemnities and other
amounts payable hereunder shall be absolute and unconditional under any and all
circumstances and, without limiting the generality of the foregoing, Lessees
shall not be entitled to any abatement or reduction of Rent or any setoff
against Rent, Administrative Charge, indemnity or other amount, whether arising
by reason of any past, present or future
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claims of any nature by any Lessee against Lessor or any Participant, or
otherwise. Except as otherwise expressly provided herein, this Lease shall not
terminate, nor shall the obligations of Lessees be otherwise affected: (a) by
reason of any defect in, damage to, or loss of possession or use, obsolescence
or destruction, of any or all of the Vehicles, however caused; or (b) by the
taking or requisitioning of any or all of the Vehicles by condemnation or
otherwise; or (c) by the invalidity or unenforceability or lack of due
authorization by Lessor or any Lessee or other infirmity of this Lease; or (d)
by lack of power or authority of Lessor or any Participant to enter into this
Lease or any other Operative Document; or (e) by the attachment of any Lien of
any third party to any Vehicle; or (f) by any prohibition or restriction of or
interference with Lessees' use of any or all of the Vehicles by any Person; or
(g) by the insolvency of or the commencement by or against Lessor or any
Participant of any bankruptcy, reorganization or similar proceeding; or (h) by
any other cause, whether similar or dissimilar to the foregoing, any present or
future law to the contrary notwithstanding. It is the intention of the parties
that all Rent, Administrative Charges, indemnities and other amounts payable by
Lessees hereunder shall be payable in all events in the manner and at the times
herein provided unless Lessees' obligations in respect thereof have been
terminated or modified pursuant to the express provisions of this Lease. To the
extent permitted by applicable law, each Lessee hereby waives any and all rights
which it may now have or which may at any time be conferred upon it, by statute
or otherwise, to terminate, cancel, quit or surrender this Lease, in whole or in
part, except strictly in accordance with the express terms hereof. Each rental,
indemnity or other payment made by Lessees hereunder shall be final, and no
Lessee shall seek to recover (except as expressly provided in this Lease) all or
any part of such payment from Lessor for any reason whatsoever. Without
affecting Lessees' obligation to pay Rent, Administrative Charge or other
amounts payable hereunder, Lessees may seek damages for a breach by Lessor or
any Participant of its obligations under this Lease or the Participation
Agreement.
ARTICLE IV
WARRANTIES
Section 4.1. Warranty Disclaimer. EACH LESSEE ACKNOWLEDGES AND
AGREES THAT: (a) EACH OF THE VEHICLES LEASED BY IT IS OF A SIZE, DESIGN,
CAPACITY AND MANUFACTURE SELECTED BY SUCH LESSEE; (b) EACH LESSEE IS
SATISFIED THAT THE SAME IS SUITABLE FOR ITS PURPOSES; (c) NEITHER LESSOR
NOR ANY PARTICIPANT IS A MANUFACTURER THEREOF OR A DEALER IN
PROPERTY OF SUCH KIND; AND (d) NEITHER LESSOR NOR ANY PARTICIPANT HAS
MADE OR SHALL BE DEEMED TO HAVE MADE: (i) ANY REPRESENTATION OR
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WARRANTY OR COVENANT WITH RESPECT TO THE TITLE, MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE, CONDITION, QUALITY, DESCRIPTION, DURABILITY OR SUITABILITY
OF ANY VEHICLE IN ANY RESPECT OR IN CONNECTION WITH OR FOR THE PURPOSES AND USES
OF ANY LESSEE; OR (ii) ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS
OR IMPLIED, WITH RESPECT TO ANY VEHICLE.
Section 4.2. Quiet Enjoyment. In the absence of an Event of Default,
neither Lessor nor any Participant nor any Person acting by, through or under
any of such Persons, shall take any actions to interfere with the Lessees' quiet
enjoyment of the Vehicles during the Lease Term.
ARTICLE V
POSSESSION, ASSIGNMENT, USE AND
MAINTENANCE OF VEHICLES
Section 5.1. Restriction on Lessees' Possession and Use. No Lessee
shall nor shall any Lessee permit any Sublessee to: (a) use, operate, maintain
or store any Vehicle or any portion thereof: (i) except in accordance with
Section 5.3; or (ii) in violation of any applicable insurance policy or law or
regulation of any Authority; (b) except as permitted by Section 6.1, abandon any
Vehicle; (c) except as permitted by Section 5.2, sublease or assign, without the
prior written consent of Lessor, any Vehicle or permit the operation thereof by
anyone other than a Lessee; (d) except as set forth in Section 5.2, sell, assign
or transfer any of its rights hereunder or in any Vehicle, or directly or
indirectly create, incur or suffer to exist any Lien, on any of its rights
hereunder or in any Vehicle, except for Permitted Liens; (e) permit any Vehicle
to be titled in any jurisdiction other than the jurisdiction in which it was
titled on the Delivery Date, except in compliance with Section 6.1(f) of the
Participation Agreement; and (f) permit any Vehicle to be located outside of the
United States. Each Lessee will defend the transfer of the Vehicles by such
Lessee to Lessor against the claims or demands of all Persons (other than Lessor
Liens).
Section 5.2. Subleases. So long as no Event of Default shall have
occurred and be continuing, any Lessee may sublease one or more Vehicles to a
wholly-owned Subsidiary of such Lessee or to another Lessee without the prior
written consent of Lessor; provided, that any Sublease entered into pursuant to
this Section 5.2 shall satisfy each of the following conditions:
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(a) such Sublease shall be expressly subordinate and
subject to this Lease and the Liens created hereunder, and to the
applicable Lease Supplement;
(b) such Sublease shall be in writing and shall expressly
prohibit any further assignment, sublease or transfer;
(c) such Sublease shall prohibit the Sublessee from making
any alterations or modifications to the Vehicle that would violate this
Lease;
(d) such Sublease shall require the Sublessee to maintain
the Vehicle in accordance with Section 5.3;
(e) all of the applicable Lessee's rights, title and
interest in, to and under such Sublease shall be pledged by such Lessee
to Lessor, as collateral for such Lessee's obligations under the
Operative Documents, by delivery of an executed original counterpart
upon the execution and delivery thereof, marked as the sole original
execution counterpart for Uniform Commercial Code purposes, to Lessor,
and each Lessee shall, at its own cost and expense, do any further act
and execute, acknowledge, deliver, file, register and record any
further documents which Lessor may reasonably request in order to
create, perfect, preserve and protect Lessor's security interest in
such Sublease;
(f) no Lessee shall, without Lessor's prior written
consent, permit or consent to any renewal or extension of a Sublease at
any time when an Event of Default has occurred and is continuing; and
(g) Lessees shall notify Lessor and each Participant in
writing promptly upon entering into any Sublease, which notice shall
include (i) a description of the Vehicle or Vehicles to be leased
thereunder, and (ii) the street address, city, county and State where
such Vehicle or Vehicles will be located during the term of such
Sublease, and Lessees shall provide copies of each Sublease to Lessor,
provided that if such Sublease will require that the Vehicle be titled
or registered in a different jurisdiction, then the applicable Lessee
must comply with Section 6.1(f) of the Participation Agreement in
connection with such titling and registration.
The liability of each Lessee with respect to this Lease, the Lease Supplements
and each of the other Operative Documents shall not be altered or affected in
any way by the existence of any Sublease.
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Section 5.3. Maintenance. At all times during the term of this Lease,
Lessees shall at their expense or shall cause each Sublessee to: (a) maintain,
manage and monitor the Vehicles in compliance in all material respects with all
applicable requirements of law, Authority and/or insurance policies; (b)
maintain the Vehicles (or cause the Vehicles to be maintained) in as good
operating order, repair and condition as it was on the date such Vehicles became
subject to this Lease (assuming that, as of such date, each such Vehicle was in
good operating order, repair and condition), ordinary wear and tear excepted;
(c) maintain, manage and monitor the Vehicles in accordance with the terms of
all applicable contracts (including, without limitation, service contracts and
insurance contracts) in a manner consistent with Lessees' customary practices;
and (d) conduct all scheduled maintenance of the Vehicles in conformity with
Lessees' maintenance procedures then in effect for similar equipment owned or
leased by Lessees, and applicable warranty guidelines. Lessees shall in any
event maintain the Vehicles (or cause the Vehicles to be maintained) in at least
as good a condition as comparable equipment owned or leased by them or any of
their Subsidiaries. Lessees will maintain or cause to be maintained, and shall
permit Lessor and the Participants to inspect, any records, logs and other
materials required by any Authority having jurisdiction to be maintained or
filed in respect of any Vehicle.
Section 5.4. Repair, Replacement and Substitution.
(a) As soon as practicable after a Partial Casualty, the
Lessee of the Vehicle suffering such Partial Casualty shall repair and
rebuild the affected portions of such Vehicle (or cause such affected
portions to be repaired and rebuilt) to the condition required to be
maintained by Section 5.3. In the event that any Part which may from
time to time be incorporated or installed in or attached to any Vehicle
becomes at any time worn out, damaged or permanently rendered unfit for
use for any reason whatsoever (unless such event constitutes a
Casualty, in which event the provisions of Section 6.1 hereof shall
apply), the Lessee of such Vehicle, at its own cost and expense, will
promptly replace, or cause to be replaced, such Part with a replacement
Part (a "Replacement Part") in accordance with such Lessee's customary
practices, but in any event subject to Section 5.3. In addition, each
Lessee may, at its own cost and expense, remove in the ordinary course
of maintenance, service, repair, overhaul or testing, any Part, whether
or not worn out, destroyed, seized, confiscated, damaged beyond repair
or permanently rendered unfit for use; provided, that such Lessee will,
at its own cost and expense, replace such Part with a Replacement Part
as promptly as is commercially reasonable. All Replacement Parts shall
be free and clear of all Liens (other than Permitted Liens) and shall
be in as good operating condition
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as, and shall have a value and utility at least equal to, the Parts
replaced, assuming such replaced Parts and the Vehicles were in the
condition and repair required to be maintained by the terms of Section
5.3. Any Part at any time removed from any Vehicle shall remain subject
to this Lease no matter where located, until such time as such Part
shall be replaced by a Part which has been incorporated or installed in
or attached to such Vehicle and which meets the requirements for a
Replacement Part specified above. Immediately upon any Replacement Part
becoming incorporated or installed in or attached to any such Vehicle
as above provided, without further act: (i) title to the replaced Part
(the "Replaced Part") shall thereupon vest in the Lessee of such
Vehicle, free and clear of all rights of Lessor, and shall no longer be
deemed a Part hereunder; (ii) such Replacement Part shall thereupon
vest in Lessor, as provided in Section 12.1 (in the same manner as the
underlying Vehicle); and (iii) such Replacement Part shall become
subject to this Lease, the security interest created hereunder, and the
applicable Lease Supplement, and shall be deemed part of such Vehicle
for all purposes hereof to the same extent as the Parts incorporated or
installed in or attached to such Vehicle on the date such Vehicle
became subject to this Lease.
(b) Upon the satisfaction of the conditions specified in
Section 5.4(a), and the Replacement Part becoming subject to this Lease
and the security interest created hereunder, Lessor shall execute and
deliver to Lessees such documents as may be reasonably necessary to
release the Replaced Part from the terms and scope of this Lease (but
without representations or warranties, except that the Replaced Part is
free and clear of all Lessor Liens), in such form as may be reasonably
requested by Lessees and are in form and substance satisfactory to the
Required Participants, all at the expense of the applicable Lessee.
(c) In addition to the foregoing, Lessees shall have the
option at any time to replace any Vehicle (a "Replaced Vehicle") with a
substitute Vehicle (a "Replacement Vehicle"), subject to the following
conditions:
(i) any such Replacement Vehicle shall satisfy one
of the following conditions: (x) the Replacement Vehicle
shall be of identical manufacture and model as the
Replaced Vehicle and the condition of such Replacement
Vehicle shall satisfy the provisions of this Lease, or (y)
such Replacement Vehicle shall have a utility, an
Appraised Value, and an economic useful life at least
equal to those of the Replaced Vehicle immediately prior
to such substitution, assuming that the
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Replaced Vehicle was in the condition and repair required
to be maintained by the terms of this Lease, and Lessees
shall have provided to the Lessor and each Participant, at
Lessees' expense, an Appraisal satisfactory to Lessor and
each Participant in their sole and absolute discretion
with respect to the determination of such utility,
Appraised Value and economic useful life or (z) such
Replacement Unit shall otherwise be acceptable to each of
the Participants in its respective sole and absolute
discretion; and
(ii) Lessees shall have satisfied each of the
conditions set forth in Section 6.1(f) of the
Participation Agreement with respect to the proposed
replacement.
Upon the satisfaction of the conditions specified in this Section
5.4(c) and the Replacement Vehicle becoming subject to this Lease and
the security interest created hereunder, Lessor shall execute and
deliver to Lessees such instruments (without representation or
warranty) as may be reasonably required to release the Replaced Vehicle
from the terms and scope of this Lease, in such form as may be
reasonably requested by Lessees and in form and substance satisfactory
to Lessor, all at Lessees' own cost and expense.
Section 5.5. Alterations, Modifications and Additions; Removable Parts.
(a) Except as provided in Sections 5.3 and 5.4, no Lessee
shall remove, replace or alter any Vehicle or affix or place any
accessory, equipment or device on any Vehicle if such removal,
replacement, alteration or addition would materially impair the
originally intended function or use or materially reduce the value or
useful life of such Vehicle; provided, that each Lessee, at its own
expense, will make, or cause to be made, any alteration, improvement,
modification or addition to or in respect of any Vehicle that may be
necessary, from time to time, to comply in all material respects with
any applicable law, governmental rule or regulation or any provision of
any insurance policy required to be maintained under Section 7.1 (any
Parts being used to comply with this provision shall be hereafter
referred to as "Mandatory Parts"). All Parts affixed to or installed as
a part of any Vehicle, excluding temporary replacements, shall
thereupon become subject to the security interest under this Lease. If
no Event of Default shall exist, any Lessee may remove, at its expense,
any Part at any time during the term of this Lease (such Part, a
"Removable Part"): (i) which is in addition to, and not in replacement
of or substitution for, any Part originally incorporated or installed
in or attached to a Vehicle on the date such item
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became subject to this Lease or any Part in replacement of or
substitution for any such Part originally incorporated or installed or
attached to such Vehicle; (ii) which is not a Mandatory Part; and (iii)
which can be removed from any Vehicle without causing damage to such
Vehicle or diminishing or impairing the value, utility or condition
which such Vehicle would have had at such time had such addition not
occurred; provided, that: (x) such removal will not materially impair
the value, use or useful life which the Vehicle would have had at such
time had such Part not been affixed or placed to or on such Vehicle;
and (y) such Part is not necessary for the continued normal use of such
Vehicle. Lessees shall repair all damage to any Vehicle resulting from
any alteration so as to restore such Vehicle to the condition in which
it existed prior to such alteration (ordinary wear and tear excepted).
Neither Lessor nor any Participant shall have any obligation to pay for
or to reimburse any Lessee for any alteration required or permitted by
this Section 5.5.
(b) As provided in Section 4.1 of the Participation
Agreement and Section 12.1 of this Lease, all Parts incorporated or
installed in or attached or added to any Vehicle as the result of
alterations, modifications or additions under this Section 5.5, except
Removable Parts, shall, without further act, vest in Lessor to secure
Lessees' performance of their obligations under the Operative
Documents, in the manner provided in clause (ii) of Section 5.4(a) and
the other applicable provisions of Section 5.4 shall apply with respect
to such Parts. Upon the removal by a Lessee of any Removable Part as
provided herein, such Removable Part shall no longer be deemed part of
the Vehicle from which it was removed. Any Removable Part not removed
by a Lessee as provided herein prior to the end of the Lease Term shall
become the property of Lessor at such time.
Section 5.6. Inspection of Collateral. Lessor, the Participants and
each of their agents and representatives shall have the right at all reasonable
times, upon reasonable notice, to inspect any Collateral, including without
limitation any Certificate of Title; provided, that so long as no Event of
Default shall have occurred and be continuing, Lessees shall only be required to
pay the expenses of such inspections to the extent undertaken by Lessor or
another single party acting on behalf of all of the Participants (it being
understood that such single party may be a Participant if so designated by the
other Participants).
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ARTICLE VI
RISK OF LOSS; REPLACEMENT; WAIVER AND INDEMNITY
Section 6.1. Casualty. Upon a Casualty, Lessees shall give prompt
written notice thereof (a "Casualty Notice") to Lessor, which notice shall
specify whether the Lessee of the Vehicle suffering such casualty will:
(a) repay a portion of the Lease Balance equal to the
Casualty Amount together with all Variable Rent accrued on such portion
of the Lease Balance to the date of payment, which repayment shall be
made no later than the next scheduled Payment Date occurring after such
Casualty or, if such Casualty occurs during the last 5 Business Days of
a Rent Period, then no later than the second Payment Date occurring
after such Casualty, provided that in any event such repayment shall be
made no later than the last day of the Lease Term (the "Casualty
Settlement Date"); or
(b) replace the Vehicle with respect to which the Casualty
has occurred pursuant to the provisions of Section 5.4(c), provided
that upon the occurrence and during the continuance of an Event of
Default or an Incipient Default, such Lessee shall be obligated, at the
option of the Required Participants, to make the payments referred to
in clause (a) above and shall not be entitled to exercise any right or
election of replacement as set forth in this clause (b).
If a Lessee has elected, or is required, to pay the Casualty Amount
pursuant to clause (a) above, such Lessee shall continue to make all payments of
Rent due under the applicable Lease Supplement until and including the Casualty
Settlement Date. Upon payment of the Casualty Amount in respect of any Vehicle
suffering a Casualty on such Casualty Settlement Date, the remaining scheduled
payments of Fixed Rent, if any, shall each be reduced by an amount equal to the
product of the scheduled amount of such Fixed Rent prior to the receipt of such
payment by Lessor multiplied by the Allocation Fraction under such Lease
Supplement of the Vehicle suffering such Casualty.
Section 6.2. Casualty Proceeds. All proceeds of any casualty insurance
or condemnation proceeds ("Casualty Proceeds") paid or payable to any Lessee or
any Affiliate of a Lessee by reason of a Casualty or Partial Casualty to a
Vehicle shall be deposited into a deposit account established by Lessor (the
"Deposit Account"), unless the applicable Lessee shall have already complied
with the applicable provisions of Section 5.4 or 6.1 with respect to such
Casualty or Partial Casualty. Any Casualty
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Proceeds paid to Lessor with respect to a Vehicle suffering a Casualty or a
Partial Casualty shall also be deposited in the Deposit Account. Any monies in
the Deposit Account attributable to a Casualty or Partial Casualty shall be
remitted promptly to Dreyer's (for the benefit of the applicable Lessee) after
the applicable Lessee's full compliance with Section 6.1 or Section 5.4, as
applicable. Notwithstanding the foregoing provisions of this Section 6.2, and
provided that no Incipient Default or Event of Default shall exist, if the
aggregate amount of Casualty Proceeds at any one time outstanding is $250,000 or
less, then Dreyer's (on behalf of the applicable Lessee) may receive such
Casualty Proceeds directly, without delivery to Lessor; provided, that such
Casualty Proceeds are applied in accordance with the requirements of Section 6.1
or Section 5.4, as applicable. Notwithstanding any Casualty, all of the
applicable Lessee's obligations under this Lease and each Lease Supplement
(including its obligation to make all payments of Rent as they become due) shall
continue unabated and in full force and effect as provided in this Lease.
Without limiting the foregoing, no Lessee's obligations under Section 5.4 shall
be affected by the amount of any Casualty Proceeds received by such Lessee.
ARTICLE VII
INSURANCE
Section 7.1. Required Coverages. At their own expense, Lessees will
maintain the following insurance coverages:
(a) primary vehicle and general liability insurance of not
less than $1,000,000 per occurrence, with excess coverages of not less
than $5,000,000 per occurrence and $6,000,000 in the aggregate, in each
case naming Lessor and the Participants as additional insureds; and
(b) self-insurance against all risks of loss or physical
damage to the Vehicles.
Such insurance shall (i) name Lessor and Participants as insured
parties thereunder as specified above (without any representation or warranty
by, or obligation upon, Lessor or any Participant) as their interests may
appear, (ii) contain the agreement by the Insurer that any loss thereunder shall
be payable to Lessor and the Participants notwithstanding any action, inaction
or breach of representation or warranty by any Lessee or any other Person having
an interest in any Vehicle (including, without limitation, Lessor or any
Participant), (iii) provide that there shall be no recourse against Lessor or
any Participant for payment of premiums or other
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amounts with respect thereto, (iv) provide that Insurer shall give Lessor and
each Participant at least 30 days' prior written notice of cancellation,
material modification, lapse or reduction of limits, (v) be primary with respect
to any other insurance carried by or available to Lessor and the Participants,
(vi) provide that the insurer shall waive any right of subrogation, setoff,
counterclaim, or other deduction, whether by attachment or otherwise, against
Lessor or any Participant, and (vii) contain a cross-liability clause providing
for coverage of Lessor and each Participant as if separate policies had been
issued to each of them. Lessees will notify Lessor and Participants promptly of
any policy cancellation, reduction in policy limits, modification or amendment.
Section 7.2. Delivery of Insurance Certificates. On or before the
Delivery Date, Dreyer's shall deliver to Lessor certificates of insurance
satisfactory to Lessor and the Participants evidencing the existence of all
insurance required to be maintained hereunder and setting forth the respective
coverages, limits of liability, carrier, policy number and period of coverage.
Thereafter, throughout the Lease Term, at the time each of Lessee's insurance
policies is renewed (but in no event less frequently than once each year),
Dreyer's shall deliver to Lessor and each Participant certificates of insurance
evidencing that all insurance required by Section 7.1 to be maintained by
Lessees with respect to the Vehicles is in effect.
ARTICLE VIII
DEFAULT
Section 8.1. Events of Default. The following shall constitute events
of default (each an "Event of Default") hereunder and under each Lease
Supplement then in effect (whether any such event shall be voluntary or
involuntary or come about or be effected by operation of law or pursuant to or
in compliance with any judgment, decree or order of any court or any order, rule
or regulation of any Authority):
(a) any payment of Rent shall not be made within three (3)
Business Days after the date due or any payment of all or any portion
of the Lease Balance, Administrative Charge or any other payment
payable by any Lessee hereunder or by any Lessee under any other
Operative Document (including without limitation, any amount payable
pursuant to Section 6.1(f), Article VII or VIII of the Participation
Agreement or Article XI of this Lease) shall not be paid when due;
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(b) any representation or warranty made by or on behalf of
any Lessee contained in any Operative Document or in any certificate,
letter or other writing or instrument furnished or delivered to Lessor
or the Participants or, pursuant thereto shall at any time prove to
have been incorrect in any material respect when made, deemed made or
reaffirmed, as the case may be;
(c) any Lessee shall default in the performance or
observance of any term, covenant, condition or agreement on its part to
be performed or observed under Section 13.10 of this Lease or under
Section 6.1(c), (f) or (g) of the Participation Agreement (except to
the extent that Section 13.10 incorporates Section 5.2 of this Lease,
in which case clause (e) of this Section 8.1 shall apply);
(d) any Lessee shall default in the performance or
observance of any term, covenant, condition or agreement on its part to
be performed or observed under Section 7.1 of this Lease;
(e) any Lessee shall default in the performance or
observance of any other term, covenant, condition or agreement on its
part to be performed or observed hereunder or under any other Operative
Document (and not constituting an Event of Default under any other
clause of this Section 8.1), and such default shall continue unremedied
for a period of 30 days after the earlier to occur of (i) written
notice thereof by Lessor or any Participant to any Lessee or (ii) any
Lessee has Actual Knowledge thereof;
(f) (i) any Lessee shall generally fail to pay, or admit
in writing its inability to pay, its debts as they become due, or shall
voluntarily commence any case or proceeding or file any petition under
any bankruptcy, insolvency or similar law or seeking dissolution,
liquidation or reorganization or the appointment of a receiver, agent,
custodian or liquidator for itself or a substantial portion of its
property, assets or business or to effect a plan or other arrangement
with its creditors, or shall file any answer admitting the jurisdiction
of the court and the material allegations of any involuntary petition
filed against it in any bankruptcy, insolvency or similar case or
proceeding, or shall be adjudicated bankrupt, or shall make a general
assignment for the benefit of creditors, or shall consent to, or
acquiesce in the appointment of, a receiver, agent, custodian or
liquidator for itself or a substantial portion of its property, assets
or business; or (ii) corporate action shall be taken by any Lessee for
the purpose of effectuating any of the foregoing;
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(g) involuntary proceedings or an involuntary petition
shall be commenced or filed against any Lessee under any bankruptcy,
insolvency or similar law or seeking the dissolution, liquidation or
reorganization of any Lessee or the appointment of a receiver, agent,
custodian or liquidator for any Lessee or of a substantial part of the
property, assets or business of any Lessee, or any writ, judgment,
warrant of attachment, execution or similar process shall be issued or
levied against a substantial part of the property, assets or business
of any Lessee, and such proceedings or petition shall not be dismissed
or stayed, or such writ, judgment, warrant of attachment, execution or
similar process shall not be released, vacated or fully bonded, within
30 days after commencement, filing or levy, as the case may be;
(h) any one or more of the following shall occur and the
liability of Dreyer's and its Subsidiaries on a consolidated basis
shall exceed, individually or in the aggregate, $1,000,000: (i) a
contribution failure occurs with respect to any Pension Plan (other
than a Multiemployer Plan) sufficient to give rise to a lien under
Section 302(f) of ERISA or Section 412(n) of the Code with respect to
any Pension Plan (other than a Multiemployer Plan) as to which any
Lessee or any ERISA Affiliate to any Lessee may have any liability,
(ii) there shall exist an unfunded current liability (as defined in
302(d)(8) of the Code) with respect to any Pension Plan, (iii) steps
are undertaken to terminate any Pension Plan, (iv) any Reportable Event
occurs with respect to a Pension Plan for which notice to the PBGC has
not been waived, (v) any action is taken with respect to a Pension Plan
which could result in the requirement that any Lessee or any ERISA
Affiliate to any Lessee furnish a bond or other security to the PBGC or
such Pension Plan, (vi) the occurrence of any event which could cause
any Lessee or any ERISA Affiliate to any Lessee to incur any liability,
fine or penalty with respect to any Pension Plan or any increase in
liability with respect to any Pension Plan, or (vii) the occurrence of
any event that could result in any increase in the liability (or
contingent liability) of any Lessee or any ERISA Affiliate to any
Lessee with respect to post-retirement benefits under any Welfare Plan;
(i) any Operative Document or the security interest
granted under this Lease shall (except in accordance with its terms),
in whole or in part, terminate, cease to be effective or cease to be
the legally valid, binding and enforceable obligation of any Lessee, or
any Lessee or any Affiliate of any of them shall, directly or
indirectly, contest in any manner in any court the effectiveness,
validity, binding nature or enforceability thereof; or the security
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interest securing Lessees' obligations under the Operative Documents
shall, in whole or in part, cease to be a perfected first priority
security interest;
(j) Dreyer's shall fail to perform in any material respect
any covenant or condition under the Guarantee, or shall repudiate or
revoke the Guarantee;
(k) there shall have occurred any event of default in the
performance or observance of any obligation or condition with respect
to the Revolving Credit Facility or any other indebtedness owing by or
guaranteed by Dreyer's or any Lessee having an aggregate principal
amount in excess of $1,000,000 the effect of which is to permit the
acceleration of the maturity of such indebtedness prior to its
expressed or stated maturity or the acceleration of such guarantee;
(l) one or more non-interlocutory judgments,
non-interlocutory orders, decrees or arbitration awards is entered
against Dreyer's 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, in
an aggregate amount equal to 5% or more of Dreyer's Consolidated Net
Worth, and the same shall remain unsatisfied, unvacated and unstayed
pending appeal for a period of 30 days after the entry thereof; or
(m) any non-monetary judgment, order or decree is entered
against Dreyer's 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
(n) (i) any Person acquires beneficial ownership of 40% or
more of the combined voting power of Dreyer's outstanding securities
immediately after such acquisition (which 40% shall be calculated after
including the dilutive effect of the conversion or exchange of any
outstanding securities of Dreyer's convertible into or exchangeable for
voting securities), (ii) a change occurs in the composition of majority
membership of Dreyer's Board of Directors over any two year period,
(iii) a change of ownership of Dreyer's such that Dreyer's becomes
subject to the delisting of its common stock from the NASDAQ National
Market System, (iv) Dreyer's Board of Directors approves the sale of
all or substantially all of the assets of Dreyer's, or (v) Dreyer's
Board of
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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.
Notwithstanding anything to the contrary in this subsection,
acquisitions by any person (or any group of which such a person is a
member) who as of the date of this Lease is a member of the Board of
Directors of Dreyer's, of beneficial ownership of 40% or more of the
combined voting power of Dreyer's outstanding securities immediately
after such acquisition (calculation of such 40% being made as described
above) shall not be deemed subject to this subsection;
(o) any Authority revokes or fails to renew any material
license, permit or franchise of Dreyer's or any Subsidiary, or Dreyer's
or any Subsidiary for any reason loses any material license, permit or
franchise, or Dreyer's or any Subsidiary suffers the imposition of any
restraining order, escrow, suspension or impound of funds in connection
with any proceeding (judicial or administrative) with respect to any
material license, permit or franchise; or
(p) there occurs a Material Adverse Effect which, in the
opinion of Required Participants, (1) will adversely effect the ability
of Dreyer's to perform under any Operative Document or to avoid any
Event of Default or (2) will have a material adverse effect upon the
legality, validity, binding effect, or enforceability against Dreyer's
of any Operative Document.
Section 8.2. Remedies. If any Event of Default has occurred and is
continuing, Lessor may exercise in any order one or more or all of the remedies
set forth in this Section 8.2 (it being understood that no remedy herein
conferred is intended to be exclusive of any other remedy or remedies, but each
and every remedy shall be cumulative and shall be in addition to every other
remedy given herein or now or hereafter existing at law or in equity or by
statute).
(a) Lessor may proceed by appropriate court action or
actions, either at law or in equity, to enforce performance by Lessees
of the applicable covenants of this Lease or to recover damages for the
breach thereof;
(b) Lessor may by notice in writing to Lessees terminate
this Lease, but Lessees shall remain liable as hereinafter provided;
and Lessor may, at its option, do any one or more of the following: (i)
declare the Lease Balance, all accrued Variable Rent, all other amounts
then payable by Lessees under this Lease and the other Operative
Documents to be immediately due and payable, and recover any other
damages and expenses (including the costs and expenses
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described in Article VII and Section 11.5 of the Participation
Agreement) in addition thereto which Lessor or any Participant shall
have sustained by reason of such Event of Default; (ii) enforce the
security interest given hereunder pursuant to the Uniform Commercial
Code or any other law; (iii) enter upon the premises where any Vehicle
may be and either remove such Vehicle, with any damage to the
improvements on such premises to be borne by Lessees (except to the
extent such damage is due to the willful misconduct or gross negligence
of Lessor or its representatives), or take possession of such Vehicle;
and (iv) require Lessees to return the Vehicles as provided in Article
IX; or
(c) Lessor may require Lessees immediately to purchase
Lessor's interest in the Vehicles for an aggregate equipment cost equal
to the sum of the Lease Balance, all accrued Variable Rent,
Administrative Charges and all other amounts then due and payable under
the Operative Documents.
Notwithstanding the foregoing, upon the occurrence of any Event of Default
described in subsection (f) or (g) of Section 8.1, Lessees shall automatically
and immediately be required to purchase all of the Vehicles for an amount equal
to the entire outstanding Lease Balance, together with all accrued unpaid Rent
and other amounts then due and payable under the Operative Documents and, to the
extent lawful, the applicable Administrative Charge, without presentment,
demand, notice, declaration, protest or other requirements of any kind, all of
which are hereby expressly waived.
Except for notices expressly otherwise provided for in the Operative
Documents, each Lessee hereby waives presentment, demand, protest and notice of
any kind including, without limitation, notices of default, notice of
acceleration and notice of intent to accelerate.
Section 8.3. Additional Remedies. In addition to the remedies set forth
in Section 8.2, if any Event of Default shall occur, Lessor (at the direction of
the Required Participants) may, but is not required to, sell the Collateral in
one or more sales. Any Participant or Lessor may purchase all or any part of the
Collateral at such sale. Each Lessee acknowledges that sales for cash or on
credit to a wholesaler, retailer or user of such Collateral, at a public or
private auction, are all commercially reasonable. Any notice required by law of
intended disposition by Lessor shall be deemed reasonable and properly given if
given at least 10 days before such disposition.
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Section 8.4. Proceeds of Sale; Deficiency. All payments received and
amounts held or realized by the Lessor at any time when an Event of Default
shall have occurred and be continuing and after, pursuant to Section 8.2, the
Lease Balance shall have been accelerated or Lessees are required to purchase
the Vehicles, as well as all payments or amounts then held or thereafter
received by Lessor, shall be distributed forthwith upon receipt by the Lessor in
the following order of priority:
first: (i) so much of such payments or amounts as shall be
required to reimburse first the Lessor and then any Participant for any
tax (other than any income tax payable on interest and on fees and
other compensation of the Lessor), expense or other amount owed to the
Lessor or any Participant in connection with the collection or
distribution of such payments or amounts to the extent not previously
reimbursed by Lessees (including, without limitation, the expenses of
any sale, taking or other proceeding, expenses in connection with
realizing on any of the Collateral, reasonable attorneys' fees and
expenses (including the allocated costs of internal counsel), court
costs and any other reasonable expenditures incurred or reasonable
expenditures or advances made by the Lessor or any Participant in the
protection, exercise or enforcement of any right, power or remedy upon
such Event of Default whether pursuant to Section 8.2 or otherwise)
shall be so applied by the Lessor first to itself and then to such
Participants; and (ii) so much of such payments or amounts as shall be
required to pay the reasonable fees and compensation of Lessor in
connection with acting as Lessor not previously paid by Lessees, shall
be distributed to the Lessor;
second: so much of such payments or amounts except those
specified in clause third below, which under the terms of this Lease
and the other Operative Documents have accrued, including, without
limitation, such amounts as shall be required to reimburse the then
existing or prior Participants for payments made by them to Lessor
pursuant to Section 10.4 of the Participation Agreement (to the extent
not previously reimbursed);
third: so much of such payments or amounts remaining as
shall be required to pay in full the aggregate Outstanding Investments
of the Participants, together with all unpaid accrued Variable Rent and
any applicable Administrative Charge, shall be distributed to the
Participants pro rata in accordance with their respective Outstanding
Investments, and in the event that the aggregate amount so to be
distributed shall be insufficient to pay any of the foregoing in full
all as aforesaid, then in the following order, (a) any applicable
Administrative Charge, (b) all accrued unpaid Variable Rent
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(including, to the extent permitted by applicable law, interest on
interest) and (c) the aggregate unpaid Outstanding Investments, ratably
to the Participants in accordance with their respective Outstanding
Investments; and
fourth: so much of such payments or amounts as shall
remain shall be distributed to Dreyer's for the benefit of the Lessees.
Section 8.5. Right to Perform Lessees' Agreements. If Lessees fail to
perform any of their agreements contained herein or in any other Operative
Document within the time period specified therefor, whether or not an Event of
Default has occurred and is continuing, Lessor, upon written instructions from
Required Participants and receipt by Lessor of indemnification satisfactory to
it, may perform such agreement and the fees and expenses incurred by Lessor (or
any Participant) in connection with such performance together with interest
thereon shall be payable by Lessees upon demand. Interest on fees and expenses
so incurred by Lessor or any Participant shall accrue at the rate provided in
Section 3.2 for overdue payments.
ARTICLE IX
RETURN OF VEHICLES
If Lessor has terminated this Lease pursuant to Section 8.2, Lessees
shall, upon demand of Lessor, (a) maintain (or cause to be maintained) the
Vehicles in the condition required by Section 5.3, store the Vehicles without
cost to Lessor or any Participant and keep all of the Vehicles insured in
accordance with Article VII, or (b) upon such termination forthwith package and
deliver exclusive possession of such Vehicles to Lessor, at a location
designated by Lessor, together with a copy of an inventory list of the Vehicles
then subject to the Lease, all then current plans, specifications and operating,
maintenance and repair manuals relating to the Vehicles that have been received
or prepared by Lessees, appropriately protected and in the condition required by
Section 5.3 (and in any event in condition to be placed in immediate service),
to Lessor. This Article IX shall survive termination of this Lease.
ARTICLE X
EARLY TERMINATION
If no Incipient Default or Event of Default shall exist, Lessees may,
at their option, upon at least 30 days' advance written notice from Dreyer's to
Lessor, purchase Lessor's interest in some or all of the Vehicles subject to
this Lease for the
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sum of (i) accrued Variable Rent payable on or prior to the date of purchase,
(ii) the Casualty Amount of each Vehicle so purchased, (iii) the applicable
Administrative Charge, if any, and (iv) all other fees and expenses and other
amounts then due and payable pursuant to this Lease and the other Operative
Documents, subject to the following:
(a) no Administrative Charge shall be payable until the
aggregate Casualty Amounts of all Vehicles purchased pursuant to this
Article X (without regard to Vehicles purchased pursuant to clause (d)
below) since the Delivery Date exceeds $1,500,000;
(b) upon the indefeasible payment by Lessees of the sums
described in the foregoing clauses (i) through (iv) (collectively, the
"Termination Amount"), the obligation of Lessees to pay Rent hereunder
in respect of the Vehicles so purchased shall cease, the term of this
Lease shall end on the date of such payment and Lessor shall execute
and deliver to Dreyer's such documents as may be reasonably required to
release such Vehicles from the terms and scope of this Lease (without
representations or warranties, except that such Vehicles are free and
clear of Lessor Liens), in such form as may be reasonably requested by
Dreyer's, all at Lessees' sole cost and expense;
(c) any purchase pursuant to this Article X shall be
consummated on a Payment Date, provided that Lessor may release its
security interest in the manner described in the foregoing clause (b)
prior to the applicable Payment Date so long as the aggregate Casualty
Amounts of all Vehicles so released does not exceed $1,500,000, and if
Lessees desire to have Vehicles with an aggregate Casualty Amount of
more than $1,500,000 released prior to a Payment Date, Lessees shall
pay the Termination Amount on the date of release (including any
amounts due under Section 7.4 of the Participation Agreement), it being
understood that in connection with any release prior to the payment of
the applicable Termination Amount, the Casualty Amount of any Vehicle
so released shall continue to constitute part of the Lease Balance
until such Casualty Amount has been paid, and Rent shall continue to
accrue thereon to the date of payment; and
(d) notwithstanding the foregoing, Lessees may, and shall,
exercise the option set forth in this Article X with respect to any
Vehicle that Lessees are required to purchase pursuant to Section
6.1(f) of the Participation Agreement on the date required by such
Section, and if such date is not a Payment Date, Lessees shall pay any
amounts due under Section 7.4 of the
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Participation Agreement in connection therewith, and no Administrative
Charge shall be payable in connection with such purchases until the
portion of the aggregate original Lease Balance attributable to all
Vehicles purchased under this clause (d) following the Delivery Date
exceeds 25%.
ARTICLE XI
LEASE TERMINATION
On the last day of the Lease Term, Lessees shall purchase Lessor's
interest in all, but not less than all, of the Vehicles then subject to this
Lease on the last day of the Lease Term for a purchase price in cash equal to
the then outstanding Lease Balance, any accrued unpaid Rent, and all other sums
then due and payable under the Operative Documents.
ARTICLE XII
OWNERSHIP, GRANT OF SECURITY
INTEREST TO LESSOR AND FURTHER ASSURANCES
Section 12.1. Grant of Security Interest. Each Lessee hereby assigns,
grants and pledges to Lessor, a security interest in all of such Lessee's right,
title and interest, whether now or hereafter existing or acquired, in the
Collateral, to secure (in accordance with Section 4.1 of the Participation
Agreement) the payment and performance of all obligations of Lessees now or
hereafter existing under this Lease or any other Operative Document. Each Lessee
shall, at its expense, do any further act and execute, acknowledge, deliver,
file, register and record any further documents which Lessor or any Participant
may reasonably request in order to protect Lessor's interest in the Collateral,
subject to no Liens other than Permitted Liens, and Lessor's rights and benefits
under this Lease. Each Lessee shall promptly and duly execute and deliver to
Lessor such documents and assurances and take such further action as Lessor or
any Participant may from time to time reasonably request in order to carry out
more effectively the intent and purpose of this Lease and the other Operative
Documents, to establish and protect the rights and remedies created or intended
to be created in favor of Lessor hereunder and thereunder, and to establish,
perfect and maintain the rights and interest of Lessor, in and to the Vehicles,
subject to no Lien other than Permitted Liens, or of such financing statements
or fixture filings or other documents with respect hereto as Lessor or any
Participant may from time to time reasonably request, and Lessees agree to
execute and deliver promptly such of the foregoing financing statements and
fixture filings or other documents as may require
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execution by any Lessee (including, without limitation, any documents required
in connection with causing Lessor's interest to be reflected on any Certificate
of Title). To the extent permitted by applicable laws, each Lessee hereby
authorizes any such financing statements and other documents to be filed without
the necessity of the signature of such Lessee, if such Lessee has failed to sign
any such instrument within 10 days after request therefor by Lessor or any
Participant. Upon Dreyer's request, Lessor shall at such time as all of the
obligations of each Lessee under this Lease or any other Operative Documents
have been indefeasibly paid or performed in full (other than Lessees' contingent
obligations, if any, under Articles VII and VIII of the Participation
Agreement), execute and deliver termination statements and other appropriate
documentation reasonably requested by Dreyer's, all at Lessees' expense, to
evidence Lessor's release of its security interest in the Collateral. At such
time, Lessor shall execute and deliver to Dreyer's such documents as may be
reasonably necessary (without representations or warranties except that the
Vehicles are free and clear of Lessor Liens) to release Lessor's security
interest in the Vehicles.
Section 12.2. Retention of Proceeds in the Case of Default. If any
Lessee would be entitled to any amount (including any Casualty Proceeds or
Partial Casualty Proceeds) but for the existence of any Event of Default or
Incipient Default, Lessor shall hold such amount as part of the Collateral and
shall be entitled to apply such amounts against any amounts due hereunder;
provided, that Lessor shall distribute such amount or transfer such Vehicle in
accordance with the other terms of this Lease if and when no Event of Default or
Incipient Default exists.
Section 12.3. Attorney-in-Fact. Each Lessee hereby irrevocably appoints
Lessor as such Lessee's attorney-in-fact, with full authority in the place and
stead of such Lessee and in the name of such Lessee or otherwise, from time to
time in Lessor's discretion, upon the occurrence and during the continuance of
an Event of Default, to take any action (including any action that such Lessee
is entitled to take) and to execute any instrument which Lessor or the Required
Participants may deem necessary or advisable to accomplish the purposes of this
Lease (subject to any limitations set forth in the Operative Documents),
including, without limitation:
(a) to ask, demand, collect, sue for, recover, compromise,
receive and give acquittance and receipts for money due and to become
due under or in connection with the Collateral;
(b) to receive, endorse and collect any drafts or other
instruments, documents and chattel paper in connection with the
foregoing clause (a);
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(c) to file any claim or take any action or institute any
proceedings which Lessor may deem to be necessary or advisable for the
collection thereof or to enforce compliance with the terms and
conditions of any Collateral; and
(d) to perform any affirmative obligations of any Lessee
hereunder.
Each Lessee hereby acknowledges, consents and agrees that the power of attorney
granted pursuant to this Section 12.3 is irrevocable and coupled with an
interest.
Section 12.4. Release of Liens. Upon the replacement or substitution of
any Vehicle or Part or Sublease, or the payment of all amounts required pursuant
to Section 6.1 in connection with a Casualty, in each case in compliance with
the applicable provisions of the Lease, such Vehicle or Part or Sublease shall
be released from the security interest created hereunder as provided in Section
5.4(b).
ARTICLE XIII
MISCELLANEOUS
Section 13.1. No Waiver. No delay or omission in the exercise of any
right, power or remedy accruing to Lessor and/or the Participants upon any
breach or default of any Lessee hereunder shall impair any such right, power or
remedy, nor shall it be construed to be a waiver of any such breach or default,
or an acquiescence therein or of or in any similar breach or default thereafter
occurring, nor shall any single or partial exercise of any right, power or
remedy preclude other or further exercise thereof, or the exercise of any other
right, power or remedy, nor shall any waiver of any single breach or default be
deemed a waiver of any other breach or default theretofore or thereafter
occurring. Any waiver, permit, consent or approval of any kind or character on
the part of Lessor or the Participants of any breach or default under this Lease
must be specifically set forth in writing and must satisfy the requirements set
forth in Article XI of the Participation Agreement with respect to approval by
Lessor or the Participants.
Section 13.2. Survival of Covenants. All claims pertaining to the
representations, warranties and covenants of Lessees under Articles II, III, IV,
V, VI, VII, X, XI and XIII shall survive the termination of this Lease to the
extent such claims arose out of events occurring or conditions existing prior to
any such termination.
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Section 13.3. APPLICABLE LAW. THIS LEASE SHALL BE GOVERNED BY AND
CONSTRUED UNDER THE LAWS OF CALIFORNIA, WITHOUT REGARD TO THE CHOICE OF LAW
PROVISIONS THEREOF.
Section 13.4. Effect and Modification of Lease. No variation,
modification, amendment or waiver of this Lease, including any schedules or
exhibits hereto, or any other Operative Document to which Lessor or any
Participant is a party shall be valid unless the same shall have been entered
into in accordance with Article IX of the Participation Agreement.
Section 13.5. Notices. All notices, demands, requests, consents,
approvals and other instruments hereunder shall be in writing and shall be
deemed to have been properly given if given as provided for in Section 11.4 of
the Participation Agreement.
Section 13.6. Counterparts. This Lease has been executed in several
counterparts. One counterpart has been prominently marked "Lessor's Copy". Only
the counterpart marked "Lessor's Copy" shall evidence a monetary obligation of
Lessees or shall be deemed to be an original or to be chattel paper for purposes
of the Uniform Commercial Code, and such copy shall be held by Lessor.
Section 13.7. Severability. Whenever possible, each provision of this
Lease shall be interpreted in such manner as to be effective and valid under
applicable law; but if any provision of this Lease shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Lease.
Section 13.8. Successors and Assigns; Benefit of Agreement. This Lease
shall be binding upon the parties hereto and, subject to Sections 13.9 and 13.10
hereof, their respective successors and assigns, and shall inure to the benefit
of the parties hereto and their respective successors and permitted assigns. It
is expressly understood and agreed that Lessor is entering into this Lease for
the benefit of the Participants, who are third party beneficiaries of this Lease
and each Lease Supplement.
Section 13.9. Assignment by Lessor. Lessor shall not sell, assign,
transfer or otherwise dispose of its rights or delegate its obligations under
this Lease to any other Person except as permitted or required by the
Participation Agreement.
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Section 13.10. Assignment by Lessees. No Lessee shall sell, assign,
transfer or otherwise dispose of its rights or delegate its obligations under
this Lease to any other Person, except as permitted or required by Section 5.2
hereof or the Participation Agreement.
Section 13.11. JURY TRIAL. EACH LESSEE WAIVES ANY RIGHT TO A TRIAL BY
JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS
LEASE OR ANY RELATED DOCUMENT OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR
AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION
HEREWITH OR THEREWITH OR ARISING FROM ANY RELATIONSHIP EXISTING IN CONNECTION
WITH THIS LEASE OR ANY RELATED DOCUMENT AND AGREES THAT ANY SUCH ACTION OR
PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
Section 13.12. Section Headings; Table of Contents. Section headings
and the table of contents used in this Lease (including the schedule) are for
convenience of reference only and shall not affect the construction of this
Lease.
Section 13.13. FINAL AGREEMENT. THIS LEASE, TOGETHER WITH THE OTHER
OPERATIVE DOCUMENTS, REPRESENTS THE ENTIRE FINAL AGREEMENT BETWEEN THE PARTIES
WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED BY THE LEASE AND THE OTHER
OPERATIVE DOCUMENTS. THIS LEASE CANNOT BE MODIFIED, SUPPLEMENTED, AMENDED,
RESCINDED OR CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES, EXCEPT BY AN INSTRUMENT IN WRITING SIGNED BY THE
PARTIES HERETO IN ACCORDANCE WITH THE TERMS OF THE PARTICIPATION AGREEMENT.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
Section 13.14. Timeliness of Performance. The provisions of Articles
VIII and XI pertaining to the delivery of notice and the performance of certain
events on dates required by Articles VIII and XI are to be strictly adhered to
by the parties hereto.
[remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Lease to be
executed and delivered as of the date first above written.
DREYER'S GRAND ICE CREAM, INC., EDY'S GRAND ICE CREAM,
as Lessee as Lessee
By___________________________ By____________________________
Name Printed:________________ Name Printed:_________________
Title:________________________ Title:_________________________
BA LEASING & CAPITAL CORPORATION, not
in its individual capacity, but solely
as Agent under the Participation
Agreement, as Lessor
By____________________________
Name Printed:_________________
Title:________________________
By____________________________
Name Printed:_________________
Title:________________________
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SCHEDULE I TO LEASE
VEHICLES
<PAGE> 113
EXHIBIT A TO LEASE
FORM OF
LEASE SUPPLEMENT NO. __
COUNTERPART NO. ___ OF 5 SERIALLY NUMBERED MANUALLY EXECUTED COUNTERPARTS. TO
THE EXTENT THAT THIS DOCUMENT CONSTITUTES CHATTEL PAPER UNDER THE UNIFORM
COMMERCIAL CODE, NO SECURITY INTEREST IN THIS DOCUMENT MAY BE CREATED THROUGH
THE TRANSFER AND POSSESSION OF ANY COUNTERPART OTHER THAN COUNTERPART NO. 1.
LEASE SUPPLEMENT dated March 29, 1996 (this "Lease Supplement") between
___________________________________, a [Delaware/California] corporation (the
"Lessee"), and BA Leasing & Capital Corporation, not individually, but solely in
its capacity as Agent for the Participants from time to time under the
Participation Agreement, as Lessor ("Lessor").
W I T N E S S E T H :
WHEREAS, Lessees and Lessor have heretofore entered into that certain
Master Lease Intended as Security dated as of March 29, 1996 (the "Lease";
capitalized terms used herein shall have the meanings specified in the Lease);
and
WHEREAS, the Lease provides for the execution and delivery of a Lease
Supplement on the Delivery Date substantially in the form hereof for the purpose
of confirming the acceptance and lease of certain Vehicles, specifying the Rent
applicable to such Vehicles and setting forth certain other matters, all as
required pursuant to the Lease;
NOW, THEREFORE, in consideration of the premises and other good and
sufficient consideration, Lessor and Lessee hereby agree as follows:
1. Delivery and Acceptance. Lessee hereby transfers to Lessor the
interest contemplated by the Lease in the Vehicles listed on Schedule I hereto,
for purposes of securing performance of Lessees' obligations under the Operative
Documents. Lessor hereby confirms such transfer and leases to the Lessee, and
Lessees hereby confirm acceptance of delivery and leases from Lessor, under the
Lease as hereby supplemented, of the Vehicles listed on Schedule I hereto.
<PAGE> 114
2. Inspection and Approval. Lessee hereby acknowledges and confirms
that it has inspected and approved the Vehicles set forth on Schedule I hereto
for all purposes of the Lease and the other Operative Documents and, as between
the Lessor and the Lessee, such Vehicles comply in all material respects with
the specifications for such Vehicles, are in good working order, repair,
condition and appearance, and without defect therein with respect to design,
manufacture, conditions, operation and fitness for use or in any other respect,
whether or not discoverable by Lessee as of the date hereof. Lessee reaffirms,
as to the Vehicles set forth in Schedule I, each of the waivers, acknowledgments
and agreements of Lessee set forth in Section 4.1 of the Lease.
3. Warranty. Lessee hereby represents and warrants that no event which
would constitute a Casualty under the Lease has occurred with respect to the
Vehicles set forth on Schedule I hereto as of the date hereof. Lessee hereby
reaffirms each of the representations and warranties set forth in Section 5.1 of
the Participation Agreement as if made on the date hereof, including that the
Vehicles set forth on Schedule I hereto are free and clear of all Liens other
than Permitted Liens.
4. Term and Supplement Balance. The term of this Lease Supplement shall
commence on the date hereof and end on the Termination Date. The Supplement
Balance as of each Payment Date, assuming the payment of all scheduled
installments of Fixed Rent hereunder through such Payment Date, are set forth,
respectively, in the appropriate portions of Schedule II hereto.
5. Rent. On each Payment Date during the Lease Term, Lessees shall pay
to Lessor the amount of the Fixed Rent set forth on Schedule II hereto and the
applicable amount of Variable Rent.
6. Confirmation. Lessee hereby confirms its agreement, in accordance
with the Lease as supplemented by this Lease Supplement, to pay Rent to Lessor
for each Vehicle leased hereunder. Nothing herein shall reduce Lessee's
obligation to make all other payments required under the Lease, including those
payments to be made on the last day of the Lease Term pursuant to Article XI of
the Lease.
7. Incorporation into Lease. This Lease Supplement shall be construed
in connection with and as part of the Lease, and all terms, conditions and
covenants contained in the Lease, as supplemented by this Lease Supplement,
shall be and remain in full force and effect and shall govern the Vehicles
described on Schedule I hereto.
8. References. Any and all notices, requests, certificates and other
instruments executed and delivered concurrently with or after the execution and
-2-
<PAGE> 115
delivery of this Lease Supplement may refer to the "Master Lease Intended as
Security, dated as of March 29, 1996", or may identify the Lease in any other
respect without making specific reference to this Lease Supplement, but
nevertheless all such references shall be deemed to include this Lease
Supplement, unless the context shall otherwise require.
9. Counterparts. This Lease Supplement may be executed in any number of
counterparts, each executed counterpart constituting an original but all
together one and the same instrument.
10. Governing Law. This Lease Supplement shall be governed by and
construed in accordance with the laws and decisions of the State of California
without regard to principles of conflicts of laws.
[remainder of page intentionally left blank]
<PAGE> 116
IN WITNESS WHEREOF, the parties hereto have caused this Lease
Supplement to be duly executed and delivered on the day and year first above
written.
BA LEASING & CAPITAL CORPORATION,
not in its individual capacity, but
solely as Agent under the
Participation Agreement, as Lessor
By____________________________
Name Printed:_________________
Title:________________________
By____________________________
Name Printed:_________________
Title:________________________
DREYER'S GRAND ICE CREAM, INC.,
as Lessee
By___________________________
Name Printed:________________
Title:_______________________
<PAGE> 117
IN WITNESS WHEREOF, the parties hereto have caused this Lease
Supplement to be duly executed and delivered on the day and year first above
written.
BA LEASING & CAPITAL CORPORATION,
not in its individual capacity, but
solely as Agent under the
Participation Agreement, as Lessor
By____________________________
Name Printed:_________________
Title:________________________
By____________________________
Name Printed:_________________
Title:________________________
EDY'S GRAND ICE CREAM,
as Lessee
By___________________________
Name Printed:________________
Title:_______________________
<PAGE> 118
SCHEDULE I
TO LEASE SUPPLEMENT NO. __
Vehicles Subject to this Lease Supplement Equipment Cost
- ----------------------------------------- --------------
<PAGE> 119
SCHEDULE II
TO LEASE SUPPLEMENT NO. __
Delivery Date: ______
Aggregate Equipment Cost: $______
Fixed Rent Payments & Supplement Balance:
Payment Fixed
Date Rent Payment Supplement Balance
---- ------------ ------------------
Totals:
====== ======
<PAGE> 120
EXHIBIT B
TO
PARTICIPATION AGREEMENT
FORM OF
DELIVERY DATE NOTICE
(Date)
TO: BA Leasing & Capital Corporation, not individually, but solely
in its capacity as Agent for the Participants from time to
time under the Participation Agreement, as Lessor ("Lessor"),
under that certain Participation Agreement, dated as of March
29, 1996, among the Lessees identified therein, Lessor and the
several Participants identified therein (all capitalized terms
used herein and not otherwise defined shall have the meanings
assigned to them in the Participation Agreement, unless the
context otherwise requires).
FROM: Lessees
REGARDING: Delivery Date Closing
1. The Delivery Date Closing is scheduled for____________, 1996
at the offices of Mayer, Brown & Platt, 350 South Grand Avenue, 25th Floor, Los
Angeles, CA 90071, commencing at 9:00 a.m.
2. The Vehicles to be financed on such date are identified on
Schedule I hereto, and the description of the Vehicles set forth on Schedule I
hereto complies with the requirements of Section 3.1 of the Participation
Agreement.
3. The aggregate Equipment Cost for the Vehicles to be acquired
is $____________, to be funded by each Lessor ratably in accordance with its
Commitment. The Equipment Cost for each Vehicle is listed on Schedule I hereto.
4. Lessees hereby represent and warrant that as of the Delivery
Date each Vehicle identified on Schedule I, such Vehicle will at all times
either be (a) used in interstate commerce, titled in a State with respect to
which Lessor and the Participants have received an opinion in the form of
Exhibit C to the Participation Agreement and registered in a State which is a
party to the International Registration Plan or (b) used in intrastate commerce,
registered in the State in which it is so used and titled in a State with
respect to which Lessor and the Participants have received an opinion in the
form of Exhibit C to the Participation Agreement.
<PAGE> 121
The Equipment Cost shall be sent by wire transfer to Lessees at the
following account:
[Lessees' Wire Instructions].
____________________________________
DREYER'S GRAND ICE CREAM, INC.,
on behalf of each of the Lessees
By:_________________________________
Name Printed:_______________________
Title:______________________________
<PAGE> 122
Schedule I
to
Delivery Date Notice
Vehicles List
Lessee Make Model Serial # Equipment Cost Jurisdiction1
===============================================================================
- ----------------------------
(1)Please provide respective States of titling and registration for each
Vehicle.
<PAGE> 123
EXHIBIT C
TO
PARTICIPATION AGREEMENT
_____________ __, 1996
Address to Lessor
and each Participant
Re: Dreyer's Grand Ice Cream, Inc. and Edy's Grand Ice
Cream Master Lease Intended as Security.
Gentlemen:
We are special counsel to Dreyer's Grand Ice Cream, Inc., a Delaware
corporation, and Edy's Grand Ice Cream, a California corporation (each a
"Dreyer's Party" and collectively the "Dreyer's Parties"). We have examined and
are familiar with originals of or copies identified to our satisfaction of the
Participation Agreement, dated as of March 29, 1996 (the "Participation
Agreement"), among the Dreyer's Parties and Dreyer's Business Trust No. 1996-A
(acting through BA Leasing & Capital Corporation, not individually, but solely
in its capacity as Agent for the Participants from time to time under the
Participation Agreement), as Lessor ("Lessor"), each of the other Operative
Documents, and such other documents and proceedings as we have considered
necessary for the purpose of rendering this opinion. In addition, we have
examined and are familiar with such other legal and factual matters as we have
deemed necessary for the purpose of rendering this opinion. Capitalized terms
used in this opinion and not otherwise defined herein shall have the respective
meanings specified in Schedule X to the Participation Agreement. This opinion is
being furnished to you at the request of the Dreyer's Parties pursuant to
Section 3.10 of the Participation Agreement.
In rendering this opinion we have assumed: (a) the genuineness of the
signatures on all documents and instruments (other than the signatures of
officers of the Dreyer's Parties on the Operative Documents to which any of them
is a party), the authenticity of all documents submitted as originals, and the
conformity to originals of all documents submitted as photostatic or certified
copies; and (b) that the
<PAGE> 124
__________________
__________ __, 1996
Page 2
Operative Documents constitute the legal, valid and binding obligations of the
respective parties thereto, if any, other than the Dreyer's Parties.
Based upon and subject to the foregoing, we are of the opinion that:
1. Each Dreyer's Party is a corporation duly organized, validly
existing and in good standing under the laws of its respective state of
incorporation, and each Dreyer's Party is duly qualified or licensed and in good
standing as a foreign corporation authorized to do business in each State where
any Vehicle is to be titled or registered and in each additional jurisdiction
where, because of the nature of its activities or properties, such qualification
or licensing is required, except for such jurisdictions where the failure to be
so qualified or licensed will not have a Material Adverse Effect, or prevent the
enforcement of contracts to which such Dreyer's Party is a party.
2. Each Dreyer's Party has all requisite corporate power and
authority to execute, deliver, and perform its obligations under each Operative
Document to which it is a party.
3. The execution and delivery by each Dreyer's Party of the
Operative Documents to which it is a party and the performance by each Dreyer's
Party of its obligations under such Operative Documents have been duly
authorized by all necessary corporate action (including any necessary
stockholder action) on its part, and do not and will not (i) violate any
provision of any law, rule or regulation presently in effect having
applicability to any Dreyer's Party, or of any order, writ, judgment, decree,
determination or award (which violation would have, individually or in the
aggregate, a Material Adverse Effect) presently in effect having applicability
to any Dreyer's Party or of the charter or by-laws of any Dreyer's Party or (ii)
result in a breach of or constitute a default under any indenture or loan or
credit agreement, or result in a breach of or constitute a default under any
other agreement or instrument to which any Dreyer's Party is a party or by which
any Dreyer's Party or its properties may be bound or affected, or (iii) result
in, or require, the creation or imposition of any lien of any nature upon or
with respect to any of the properties now owned or hereafter acquired by any
Dreyer's Party (other than Permitted Liens) and neither of the Dreyer's Parties
is in default under or in violation of its charter or by-laws.
<PAGE> 125
__________________
__________ __, 1996
Page 3
4. Each Operative Document to which each Dreyer's Party is a
party has been duly executed and delivered by each Dreyer's Party and
constitutes the legal, valid and binding obligation of each Dreyer's Party,
enforceable against each Dreyer's Party in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting the enforcement of creditors' rights generally
and by general principles of equity, including, without limitation, concepts of
materiality, reasonableness, good faith and fair dealing and the possible
unavailability of specific performance or injunctive relief (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
5. There is no litigation (including, without limitation,
derivative actions), arbitration or governmental proceedings pending or, to our
knowledge, threatened against any Dreyer's Party which may result in a Material
Adverse Effect.
6. No authorization, consent, approval, license or formal
exemption from, nor any filing, declaration or registration with, any Authority
is or will be required in connection with the execution and delivery by each
Dreyer's Party of the Operative Documents to which it is a party, or the
performance by each Dreyer's Party of its obligations under such Operative
Documents or the ownership, operation and maintenance of the Vehicles as
contemplated by the Operative Documents.
7. Neither of the Dreyer's Parties is an "investment company" or
a company "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended. Use of the Proceeds from the
transaction contemplated by the Participation Agreement, if used by the Dreyer's
Parties in accordance with the terms of the Operative Documents, will not result
in a violation of Regulations G, T, U or X of the Board of Governors of the
Federal Reserve System.
8. Neither of the Dreyer's Parties is subject to regulation as
"holding company," an "affiliate" of a "holding company," or a "subsidiary
company" of a "holding company," within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
9. The Operative Documents create valid security interests under
the UCC in favor of Lessor, as security for payment of each Dreyer's Party's
obligations under the Operative Documents, in all of each Dreyer's Party's
right, title and interest in and to the Collateral.
<PAGE> 126
__________________
__________ __, 1996
Page 4
10. Assuming for purposes of this paragraph that the Lease
constitutes a lease intended as security, the applicable laws and regulations of
each State where any Vehicle is to be titled or registered (collectively, the
"Titling States") permit, or do not prohibit, (i) the interest of Lessee of such
Vehicle to be reflected as that of the "owner" of such Vehicle on the
Certificate of Title relating thereto and (ii) the interest of Lessor to be
reflected as that of "lienholder" on such Certificate of Title.
11. The security interest of Lessor in a Vehicle shall be
perfected in the State of ____________ [specify particular Titling State] at
such time as there shall have been delivered to ___________ [specify appropriate
entity (e.g., the Secretary of State, Department of Motor Vehicles, Department
of Transportation, etc.)] (i) the existing certificate of title, if any, to the
Vehicle, (ii) a completed and executed application for a certificate of title in
substantially the form attached to the Certificate and marked Exhibit __,
showing the applicable Dreyer's Party as owner thereof, and the security
interest of Lessor, and (iii) all requisite fees[, provided, however, that if
such delivery is completed within __ days after the creation of the security
interest, such security interest will be perfected at the time of its
creation].2
12. Each UCC financing statement is in proper form for filing, and
upon the filing of such financing statements with the offices listed on Schedule
A hereto, the security interest of Lessor, in all of the Collateral will be
perfected to the extent that a security interest in such Collateral may be
perfected by so filing. No other filing, recordation or registration is
necessary in order to perfect Lessor's security interest in such Collateral.
- -------------------------
(2) This paragraph 12 may be modified as necessary to conform with the
perfection requirements of each particular Titling State; provided, however,
that in each instance such paragraph must address any applicable timing
requirements for the lien application.
<PAGE> 127
__________________
__________ __, 1996
Page 5
We are licensed to practice law only in the State(s) of ___________,
and, with respect to paragraphs 10, 11 and 12, our opinion as to the laws of the
State[s] of __________________ is based solely upon our review of
_____________3.
This opinion is solely for the benefit of you and your counsel and may
not be relied upon by, and copies may not be delivered to, any other person
without our prior approval.
Very truly yours,
- ----------------------
(3)Identify the UCC and all statutes, rules, regulations and orders of each of
the Titling States which have been reviewed.
<PAGE> 128
EXHIBIT D
TO
PARTICIPATION AGREEMENT
OFFICER'S CERTIFICATE
OF
[LESSEE]
THE UNDERSIGNED [NAME] , [OFFICE] of ______________________ (the
"Company"), pursuant to that certain Participation Agreement dated as of March
29, 1996, among the Lessees identified therein, BA Leasing & Capital
Corporation, not individually, but solely in its capacity as Agent for the
Participants from time to time under the Participation Agreement, as Lessor
("Lessor"), and the several Participants listed therein (the "Participation
Agreement"), does hereby certify as follows (capitalized terms used herein shall
have the meanings ascribed thereto in the Participation Agreement):
1. No proceeding for merger, consolidation, liquidation,
reorganization or dissolution of the Company or the sale of
all or substantially all of its assets is pending or
contemplated.
2. Attached hereto are true and correct copies of all resolutions
adopted by the Board of Directors of the Company relating to
the Participation Agreement and the other Operative Documents,
which resolutions have not been amended or rescinded and are
in full force and effect on the date hereof.
3. The representations and warranties contained in the
Participation Agreement are true on and as of the date hereof
with the same effect as if such representations and warranties
had been made on and as of the date hereof; the Company and
its Subsidiaries have performed all agreements on their part
required to be performed under the Participation Agreement and
the other Operative Documents on or prior to the date hereof;
and there exists on the date hereof no Incipient Default or
Event of Default.
4. The following persons are on the date hereof duly qualified
and acting officers of the Company, duly elected or appointed
to the offices set forth beside their respective names and
signatures, and each such
<PAGE> 129
person who, as an officer of the Company, signed the
Participation Agreement, any of the other Operative Documents
or any other document delivered prior hereto or on the date
hereof in connection with such agreements and documents and
the transactions contemplated therein was, at the respective
times of such signing and delivery and is now duly elected or
appointed, qualified and acting as such officer, and the
signatures of such persons appearing on such documents are
their genuine signatures:
NAME OFFICE SIGNATURE
- ---------------------- ---------------------- ---------------------
- ---------------------- ---------------------- ---------------------
- ---------------------- ---------------------- ---------------------
- ---------------------- ---------------------- ---------------------
IN WITNESS WHEREOF, I have signed my name this day of ________________,
1996.
By: ___________________
Name:
Title:
<PAGE> 130
I,__________________, ___________________of the Company,
hereby certify that____ is on the date hereof the duly elected, qualified and
acting __________ of the Company, and that the signature set forth above is
his/her true and correct signature.
Dated: _____________ , 1996.
By:____________________
Name:
Title:
<PAGE> 131
EXHIBIT E
TO
PARTICIPATION AGREEMENT
FORM OF
GUARANTEE
--------------------------------------------
--------------------------------------------
GUARANTEE
dated as of March 29, 1996
of
DREYER'S GRAND ICE CREAM, INC.
in favor of
BA LEASING & CAPITAL CORPORATION,
not individually, but solely in its capacity as
Agent for the Participants from time to time
under the Participation Agreement, as Lessor
--------------------------------------------
--------------------------------------------
<PAGE> 132
GUARANTEE
This GUARANTEE (the "Guarantee"), dated as of March 29, 1996, of
DREYER'S GRAND ICE CREAM, INC., a Delaware corporation (the "Guarantor"), is
made in favor of the Beneficiaries identified below and delivered to BA Leasing
& Capital Corporation, not individually, but solely in its capacity as Agent for
the Participants from time to time under the Participation Agreement, as Lessor
(the "Lessor") pursuant to that certain Participation Agreement, dated as of
March 29, 1996, among the Lessees identified therein, Lessor and the several
Participants identified therein. Capitalized terms used herein and not otherwise
defined shall have the meanings assigned to them in the Participation Agreement,
unless the context otherwise requires.
WHEREAS, on the date hereof, Guarantor is the direct beneficial owner
of all the issued and outstanding capital stock of each other Lessee (each, a
"Subsidiary Lessee" and collectively the "Subsidiary Lessees";
AND WHEREAS, pursuant to the Lease and the Participation Agreement,
Lessor has agreed to finance the Vehicles pursuant to the Lease;
AND WHEREAS, Lessor and the Participants are unwilling to enter into
the transactions contemplated by the Participation Agreement, and Lessor is
unwilling to accept the appointment set forth in the Participation Agreement
unless Guarantor executes this Guarantee and as an inducement to Lessor and the
Participants, Guarantor is entering into this Guarantee and the guarantee
provided for herein;
AND WHEREAS, it is in the best interest of Guarantor to execute this
Guarantee inasmuch as Guarantor will derive substantial direct and indirect
benefits from the transactions contemplated by the Participation Agreement.
NOW, THEREFORE, Guarantor covenants and agrees as follows:
SECTION 1 Guarantee. Guarantor, as primary obligor and not as surety,
hereby unconditionally and irrevocably guarantees to Lessor (both individually
and in its capacity as Lessor), the Participants and each other Indemnitee and
their respective successors and assigns (individually, a "Beneficiary" and,
collectively, the "Beneficiaries") as their respective interests may appear: (a)
the due, punctual and full payment by Subsidiary Lessees of all amounts
(including, without limitation, amounts payable as damages in case of default)
to be paid by Subsidiary Lessees
<PAGE> 133
pursuant to the Lease, the Participation Agreement, and/or any other Operative
Document to which any Lessee is or is to be a party whether such obligations now
exist or arise hereafter, as and when the same shall become due and payable in
accordance with the terms thereof; and (b) the due, prompt and faithful
performance of, and compliance with, all other obligations, covenants, terms,
conditions and undertakings of Subsidiary Lessees contained in the Participation
Agreement, the Lease or any other Operative Documents to which any of them is or
is to be a party in accordance with the terms thereof (such obligations referred
to in clauses (a) and (b) above being hereinafter called the "Obligations").
Guarantor further agrees to pay any and all costs and expenses (including
reasonable fees and disbursements of counsel) that may be paid or incurred by
any Beneficiary in collecting any Obligations and/or in preserving or enforcing
any rights under this Guarantee or under the Obligations.
The Guarantee is a guaranty of payment, performance and compliance and
not of collectability, is in no way conditioned or contingent upon any attempt
to collect from or enforce performance or compliance by any Subsidiary Lessee or
upon any other event, contingency or circumstance whatsoever, and shall be
binding upon and against Guarantor without regard to the validity or
enforceability of the Lease, the Participation Agreement or any other Operative
Document.
If for any reason whatsoever Subsidiary Lessees shall fail or be unable
duly, punctually and fully to pay such amounts as and when the same shall become
due and payable or to perform or comply with any such obligation, covenant,
term, condition or undertaking, Guarantor will immediately pay or cause to be
paid such amounts to the Person or Persons entitled to receive the same
(according to their respective interests) under the terms of the Operative
Documents, as appropriate, or perform or comply with any such obligation,
covenant, term, condition or undertaking or cause the same to be performed or
complied with, together with interest on any amount due and owing from the date
the same shall have become due and payable to the date of payment.
SECTION 2 Guarantor's Obligations Unconditional. The covenants and
agreements of Guarantor set forth in this Guarantee shall be primary obligations
of Guarantor, and such obligations shall be continuing, absolute and
unconditional, shall not be subject to any counterclaim, setoff, deduction,
diminution, abatement, recoupment, suspension, deferment, reduction or defense
(other than full and strict compliance by Guarantor with its obligations
hereunder), whether based upon any claim that any Lessee, Guarantor, or any
other Person may have against any Beneficiary or any other Person or otherwise,
and shall remain in full force and effect without regard to, and shall not be
released, discharged or in any way affected by,
<PAGE> 134
any circumstance or condition whatsoever (whether or not Guarantor or any Lessee
shall have any knowledge or notice thereof) including, without limitation:
(a) any amendment, modification, addition, deletion, supplement or
renewal to or of or other change in the Obligations or any
Operative Document or any of the agreements referred to in any
thereof, or any other instrument or agreement applicable to
any Operative Document or any of the parties to such
agreements, or to the Vehicles, or any assignment, mortgage or
transfer thereof or of any interest therein, or any furnishing
or acceptance of additional security for, guaranty of or right
of offset with respect to, any of the Obligations; or the
failure of any security or the failure of any Beneficiary to
perfect or insure any interest in any collateral; or the
release or surrender of possession by any Beneficiary of any
collateral (including without limitation any Certificate of
Title);
(b) any failure, omission or delay on the part of Lessees or any
Beneficiary to conform or comply with any term of any
instrument or agreement referred to in clause (a) above;
(c) any waiver, consent, extension, indulgence, compromise,
release or other action or inaction under or in respect of any
instrument, agreement, guaranty, right of offset or security
referred to in clause (a) above or any obligation or liability
of Lessees or any Beneficiary, or any exercise or non-exercise
by any Beneficiary of any right, remedy, power or privilege
under or in respect of any such instrument, agreement,
guaranty, right of offset or security or any such obligation
or liability;
(d) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or similar proceeding
with respect to any Lessee, any Beneficiary or any other
Person or any of their respective properties or creditors, or
any action taken by any trustee or receiver or by any court in
any such proceeding;
(e) any limitation on the liability or obligations of any Person
under the Lease or any other Operative Document, the
Obligations, any collateral security for the Obligations or
any other guaranty of the Obligations or any discharge,
termination, cancellation, frustration, irregularity,
invalidity or unenforceability, in whole or in part, of any of
the foregoing, or any other agreement, instrument, guaranty or
security referred to in clause (a) above or any term of any
thereof;
<PAGE> 135
(f) any defect in the title, compliance with specifications,
condition, design, operation or fitness for use of, or any
damage to or loss or destruction of, or any interruption or
cessation in the use of the Vehicles by Lessees or any other
Person for any reason whatsoever (including, without
limitation, any governmental prohibition or restriction,
condemnation, requisition, seizure or any other act on the
part of any governmental or military authority, or any act of
God or of the public enemy) regardless of the duration thereof
(even though such duration would otherwise constitute a
frustration of a lease), whether or not resulting from
accident and whether or not without fault on the part of
Lessee or any other Person;
(g) any merger or consolidation of any Lessee or Guarantor into or
with any other Person or any sale, lease or transfer of any of
the assets of any Lessee or Guarantor to any other Person;
(h) any change in the ownership of any shares of capital stock of
any Lessee, or any corporate change in any Lessee; or
(i) any other occurrence or circumstance whatsoever, whether
similar or dissimilar to the foregoing and any other
circumstance that might otherwise constitute a legal or
equitable defense or discharge of the liabilities of a
guarantor or surety or that might otherwise limit recourse
against Guarantor.
The obligations of Guarantor set forth herein constitute the full
recourse obligations of Guarantor enforceable against it to the full extent of
all its assets and properties, notwithstanding any provision in the
Participation Agreement or any other agreements limiting the liability of any
Beneficiary or any other Person, or any agreement by any Lessor to look for
payment with respect thereto, solely to the Collateral.
SECTION 3 Waiver and Agreement. Guarantor waives any and all notice of
the creation, renewal, extension or accrual of any of the Obligations and notice
of or proof of reliance by any Beneficiary upon this Guarantee or acceptance of
this Guarantee, and the Obligations, and any of them, shall conclusively be
deemed to have been created, contracted or incurred in reliance upon this
Guarantee. Guarantor unconditionally waives, to the extent permitted by law: (a)
acceptance of this Guarantee and proof of reliance by any Beneficiary hereon;
(b) notice of any of the matters referred to in Section 2 hereof, or any right
to consent or assent to any thereof; (c) all notices that may be required by
statute, rule of law or otherwise, now
<PAGE> 136
or hereafter in effect, to preserve intact any rights against Guarantor,
including without limitation, any demand, presentment, protest, proof or notice
of nonpayment under the Participation Agreement, the Lease or any other
Operative Document, and notice of default or any failure on the part of any
Lessee to perform and comply with any covenant, agreement, term or condition of
the Participation Agreement, the Lease or any other Operative Document; (d) any
right to the enforcement, assertion or exercise against any Lessee of any right,
power, privilege or remedy conferred in the Participation Agreement, the Lease
or any other Operative Document or otherwise; (e) any requirement of diligence
on the part of any Person; (f) any requirement of any Beneficiary to take any
action whatsoever, to exhaust any remedies or to mitigate the damages resulting
from a default by any Person under the Participation Agreement, the Lease or any
other Operative Document; (g) any notice of any sale, transfer or other
disposition by any Person of any right under, title to or interest in the
Participation Agreement, the Lease any other Operative Document or the
Collateral; (h) any and all benefits under California Civil Code Sections 2809,
2810, 2819, 2822, 2825, 2845, 2846, 2847, 2848, 2849, 2850, 2899 and 3433 and
California Code of Civil Procedure Sections 580a, 580b, 580d and 726; and (i)
any other circumstance whatsoever that might otherwise constitute a legal or
equitable discharge, release or defense of a guarantor or surety, or that might
otherwise limit recourse against Guarantor.
Guarantor agrees that this Guarantee shall be automatically reinstated
if and to the extent that for any reason any payment by or on behalf of Lessees
is rescinded or must be otherwise restored by any of the Beneficiaries, whether
as a result of any proceedings in bankruptcy or reorganization or otherwise.
Guarantor further agrees that, without limiting the generality of this
Guarantee, if an Event of Default shall have occurred and be continuing and
Lessor is prevented by applicable law from exercising its remedies under the
Lease, Lessor shall be entitled to receive hereunder from Guarantor, upon demand
therefor, the sums which would have otherwise been due from Lessees had such
remedies been exercised.
SECTION 4 Waiver of Subrogation. Guarantor hereby irrevocably waives
any claim or other rights which it may now or hereafter acquire against any
Subsidiary Lessee that arise from the existence, payment, performance or
enforcement of Guarantor's obligations under this Guarantee or any other
Operative Agreement, including any right of subrogation, reimbursement,
exoneration, or indemnification, any right to participate in any claim or remedy
of the Beneficiaries against any Subsidiary Lessee or any Collateral which
Lessor now has or hereafter acquires, whether or not such claim, remedy or right
arises in equity, or under contract, statute or common law, including the right
to take or receive from any Subsidiary Lessee, directly or indirectly,
<PAGE> 137
in cash or other property or by set-off or in any manner, payment or security on
account of such claim or other rights. If any amount shall be paid to Guarantor
in violation of the preceding sentence and the Obligations shall not have been
indefeasibly paid in cash, such amount shall be deemed to have been paid to
Guarantor for the benefit of, and held in trust for, the Beneficiaries, and
shall forthwith be paid to Lessor to be credited and applied pursuant to the
terms of the Participation Agreement and the Lease. Guarantor acknowledges that
it will receive direct and indirect benefits from the financing arrangements
contemplated by the Participation Agreement and that the waiver set forth in
this Section 4 is knowingly made in contemplation of such benefits. Guarantor
hereby absolutely, unconditionally and irrevocably waives and agrees not to
assert or take advantage of any defense based upon an election of remedies by
Lessor, including an election to proceed by non-judicial rather than judicial
foreclosure, which destroys or impairs any right of subrogation of Guarantor or
the right of Guarantor to proceed against any Person for reimbursement or both.
SECTION 5 Rights of the Beneficiaries. This Guarantee is made for the
benefit of, and shall be enforceable by, each Beneficiary as its interest may
appear.
SECTION 6 Term of Guarantee. This Guarantee and all guaranties,
covenants and agreements of Guarantor contained herein shall continue in full
force and effect and shall not be discharged until such time as all the
Obligations shall be indefeasibly paid in full in cash and all the agreements of
Guarantor and each other Lessee hereunder and under the Lease, the Participation
Agreement and the other Operative Documents shall have been duly performed. If,
as a result of any bankruptcy, dissolution, reorganization, insolvency,
arrangement or liquidation proceedings (or proceedings similar in purpose or
effect) or if for any other reason, any payment received by any Beneficiary in
respect of the Obligations is rescinded or must be returned by such Beneficiary,
this Guarantee shall continue to be effective as if such payment had not been
made and, in any event, as provided in the preceding sentence.
SECTION 7 Notices, Amendments, etc. All notices, demands, requests,
consents, approvals and other instruments hereunder shall be in writing and
shall be deemed to have been properly given if given as provided for in Section
11.4 of the Participation Agreement. No provision of this Guarantee may be
amended, modified, supplemented or waived except as provided in Section 9.1 of
the Participation Agreement.
SECTION 8 Severability of this Guarantee. In case any provisions of
this Guarantee or any application thereof shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions and statements and any
<PAGE> 138
other application thereof shall not in any way be affected or impaired thereby.
To the extent permitted by law, Guarantor hereby waives any provision of law
that renders any term or provision hereof invalid or unenforceable in any
respect.
SECTION 9 Further Assurances. Guarantor hereby agrees to execute and
deliver all such instruments and take all such action as Lessor or any other
Beneficiary may from time to time reasonably request in order to fully
effectuate the purposes of this Guarantee.
<PAGE> 139
SECTION 10 Miscellaneous. THIS GUARANTEE SHALL IN ALL RESPECTS BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
CALIFORNIA, WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES OF SUCH STATE.
This Guarantee shall be binding upon Guarantor and its successors, transferees
and assigns and inure to the benefit of and be enforceable by the respective
successors, transferees, and assigns of the Beneficiaries, provided, however,
that Guarantor may not assign any of its obligations hereunder without the prior
written consent of Lessor and each Participant. The table of contents and
headings in this Guarantee are for purposes of reference only, and shall not
limit or otherwise affect the meaning hereof. This Guarantee may be executed in
any number of counterparts and by different parties hereto on separate
counterparts, each executed counterpart constituting an original, but all of
which together shall constitute one agreement.
IN WITNESS WHEREOF, Guarantor has caused this Guarantee to be executed
as of the date first above written.
DREYER'S GRAND ICE CREAM, INC.
By:____________________
Name Printed:_____________
Title:_________________
<PAGE> 140
EXHIBIT F
TO
PARTICIPATION AGREEMENT
FORM OF INVESTORS LETTER
______________________
______________________
______________________
BA Leasing & Capital Corporation,
not individually, but solely in its
capacity as Agent
for the Participants from time to
time under the Participation Agreement,
as Lessor
Ladies and Gentlemen:
Capitalized terms used in this letter and not otherwise defined herein
shall have the meanings assigned thereto in that certain Participation Agreement
(the "Participation Agreement"), dated as of March 29, 1996 among the Lessees
identified therein, BA Leasing & Capital Corporation, not individually, but
solely in its capacity as Agent for the Participants from time to time under the
Participation Agreement, as Lessor, and the several Participants identified
therein, unless the context otherwise requires. The undersigned has agreed to
purchase the interest of _____________ as a Participants under the Participation
Agreement and the other Operative Documents (as defined therein), representing a
Commitment of (amount) Dollars $(_________) (the "Interest"), and desires that
Lessor authenticate and deliver to the undersigned and to each Lessor a new
Schedule I to the Participation Agreement evidencing the Commitment of the
undersigned pursuant to Section 11.8 of the Participation Agreement. The
undersigned hereby represents and warrants as of the date hereof to the
addressees hereof as follows:
(a) The undersigned is not (i) an "employee benefit plan"
(or related trust) as defined in Section 3(3) of ERISA, which is
subject to Title I of ERISA,
<PAGE> 141
(ii) a "plan" (or related trust) as defined in Section 4975(e)(1) of
the Code, or (iii) an entity deemed to hold "plan assets" within the
meaning of 29 C.F.R. Section 2510.3-101 of any such employee benefit
plan or plan, and the acquisition of the undersigned of the Interest
will not give rise to a nonexempt prohibited transaction under Section
406(a) of ERISA or Section 4975(c)(1)(A)-(D) of the Code;
(b) The Interest is being acquired by the undersigned for
investment and not with a view to the resale or distribution of such
Interest or any part thereof, but without prejudice, however, to the
right of the undersigned at all times to sell or otherwise dispose of
all or any part of such Interest under a registration available under
the Securities Act of 1933, as amended, or under an exemption from such
registration available under such Act, it being understood that
(subject to Section 11.8 of the Participation Agreement) the
disposition by the undersigned of the Interest to be purchased by the
undersigned shall, at all times, remain entirely within its control;
(c) neither the undersigned nor any Person authorized to
act on its behalf has directly or indirectly offered to sell any
interests in the Collateral, the Interest or any security similar
thereto, to, or otherwise approved or negotiated with respect thereto
with, anyone other than the Participant, and neither it nor any Person
authorized to act on its behalf will so offer or sell in violation of
Section 5 of the Securities Act of 1933, as amended, or securities or
blue sky law of any applicable jurisdiction; and
(d) the undersigned agrees to treat its Interest for
federal, state and local income and franchise tax purposes as
indebtedness of Lessee[s].
The undersigned understands that the Interest has not been and will not
be registered or qualified under the Securities Act of 1933, as amended, or any
securities or "blue sky" laws of any jurisdiction and that no participant has an
obligation to effect such registration or otherwise assist in the disposition of
the Interest.
Very truly yours,
_______________________________
By:____________________________
Name Printed:__________________
Title:_________________________
F-2
<PAGE> 1
EXHIBIT 11
DREYER'S GRAND ICE CREAM, INC.
COMPUTATION OF NET INCOME PER COMMON SHARE
(unaudited)
<TABLE>
<CAPTION>
Thirteen Weeks Ended
--------------------------------
(in thousands, except per share amounts) March 30, 1996 April 1, 1995
-------------- -------------
<S> <C> <C>
PRIMARY
Net income applicable to common stock $ 434 $ 322
Weighted average number of shares of common
stock outstanding 12,974 13,971
------- -------
Net income per common share, as reported $ .03 $ .02
======= =======
Weighted average number of shares of common
stock outstanding 12,974 13,971
Common stock equivalent--assumed exercise of
common stock options 322 95
------- -------
Weighted average number of shares of common
stock outstanding, including common stock
equivalents 13,296 14,066
======= =======
Net income per common share $ .03(1) $ .02(1)
======= =======
FULLY DILUTED
Net income applicable to common stock $ 434 $ 322
Add interest expense on convertible subordinated
debentures issued June 1993, due June 2006, and
amortization of related issuance costs, net of tax 1,017
Add preferred dividends on redeemable convertible
Series B preferred stock, due June 2001 1,144
Add accretion of preferred stock to redemption value 106
------- -------
Adjusted net income $ 1,684 $ 1,339
======= =======
Weighted average number of shares of common
stock outstanding 12,974 13,971
Common stock equivalent--assumed exercise of
common stock options 463 95
Assumed conversion of debentures 2,900 2,900
------- -------
Adjusted shares 16,337 16,966
======= =======
Net income per common share $ .10(2) $ .08(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
Opinion 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.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AND THE CONSOLIDATED STATEMENT OF INCOME AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-30-1996
<CASH> 4,761
<SECURITIES> 0
<RECEIVABLES> 76,376
<ALLOWANCES> (693)
<INVENTORY> 41,865
<CURRENT-ASSETS> 144,176
<PP&E> 295,636
<DEPRECIATION> (86,204)
<TOTAL-ASSETS> 465,402
<CURRENT-LIABILITIES> 84,370
<BONDS> 145,295
98,488
0
<COMMON> 13,333
<OTHER-SE> 91,179
<TOTAL-LIABILITY-AND-EQUITY> 465,402
<SALES> 166,970
<TOTAL-REVENUES> 167,435
<CGS> 132,532
<TOTAL-COSTS> 132,532
<OTHER-EXPENSES> 30,135
<LOSS-PROVISION> 272
<INTEREST-EXPENSE> 1,713
<INCOME-PRETAX> 2,783
<INCOME-TAX> 1,099
<INCOME-CONTINUING> 1,684
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,684
<EPS-PRIMARY> .03
<EPS-DILUTED> .03
</TABLE>
