-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, Bqf4yPu1zlZ07TuP1kAwPyOeyxvc2am26AjjuUuUavbVFbS3pJeqj7u643cAtUfA ILxsKziRQP42t8/3RWcCMQ== 0000950149-94-000123.txt : 19940526 0000950149-94-000123.hdr.sgml : 19940526 ACCESSION NUMBER: 0000950149-94-000123 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19940326 FILED AS OF DATE: 19940524 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DREYERS GRAND ICE CREAM INC CENTRAL INDEX KEY: 0000352305 STANDARD INDUSTRIAL CLASSIFICATION: 2024 IRS NUMBER: 942967523 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-14190 FILM NUMBER: 94529950 BUSINESS ADDRESS: STREET 1: 5929 COLLEGE AVE CITY: OAKLAND STATE: CA ZIP: 94618 BUSINESS PHONE: 5106528187 10-Q/A 1 AMENDMENT NO. 1 TO FORM 10-Q 1 FORM 10-Q/A AMENDMENT N0. 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) / X / QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 26, 1994 OR / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 0-14190 DREYER'S GRAND ICE CREAM, INC. (Exact name of registrant as specified in its charter) 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.
Shares Outstanding May 9, 1994 ------------ Common stock, $1.00 par value 14,007,197
2 DREYER'S GRAND ICE CREAM, INC. FORM 10-Q/A AMENDMENT NO. 1 FOR THE QUARTERLY PERIOD ENDED MARCH 26, 1994 This amendment is being filed as a result of certain errors and omissions relating to Note 6 of Notes to Consolidated Financial Statements in Part I, Item I, Management's Discussion and Analysis of Consolidated Financial Condition and Results of Operations contained in Part I, Item 2 and Exhibits and Reports on Form 8K in Part II, Item 6. 2 3 DREYER'S GRAND ICE CREAM, INC. PART I: FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS DREYER'S GRAND ICE CREAM, INC. CONSOLIDATED BALANCE SHEET
March 26, December 25, 1994 1993 ------------ ------------- (unaudited) Assets Current Assets: Cash and cash equivalents $ 582,000 $ 2,532,000 Trade accounts receivable, net of allowance for doubtful accounts of $494,000 in 1994 and $535,000 in 1993 52,604,000 46,293,000 Other accounts receivable 5,361,000 5,326,000 Inventories 31,179,000 27,817,000 Prepaid expenses and other 6,143,000 8,256,000 ------------- ------------- Total current assets 95,869,000 90,224,000 Property, plant and equipment, net 150,699,000 142,275,000 Goodwill and distribution rights, net of accumulated amortization of $8,238,000 in 1994 and $7,572,000 in 1993 87,113,000 72,988,000 Other assets 17,056,000 16,788,000 ------------- ------------- Total assets $ 350,737,000 $ 322,275,000 ============= =============
See accompanying Notes to Consolidated Financial Statements 3 4 DREYER'S GRAND ICE CREAM, INC. CONSOLIDATED BALANCE SHEET
March 26, December 25, 1994 1993 ------ ------ (unaudited) Liabilities and Stockholders' Equity Current Liabilities: Short-term bank borrowings $ 23,400,000 Accounts payable and accrued liabilities 27,496,000 $ 21,893,000 Accrued payroll and employee benefits 7,828,000 9,249,000 Current portion of long-term debt 1,075,000 1,685,000 ------------- ------------- Total current liabilities 59,799,000 32,827,000 Long-term debt, less current portion 38,875,000 38,875,000 Convertible subordinated debentures 100,752,000 100,752,000 Deferred income 150,000 174,000 Deferred income taxes 26,808,000 26,613,000 ------------- ------------- Total liabilities 226,384,000 199,241,000 ------------- ------------- Commitments and contingencies Stockholders' Equity: Preferred stock, $1 par value - 10,000,000 shares authorized; no shares issued or outstanding in 1994 and 1993 Common stock, $1 par value - 30,000,000 shares authorized; 14,737,000 shares and 14,671,000 shares issued and outstanding in 1994 and 1993, respectively 14,737,000 14,671,000 Capital in excess of par 60,328,000 59,145,000 Retained earnings 49,288,000 49,218,000 ------------- ------------- Total stockholders' equity 124,353,000 123,034,000 ------------- ------------- Total liabilities and stockholders' equity $ 350,737,000 $ 322,275,000 ============= =============
See accompanying Notes to Consolidated Financial Statements 4 5 DREYER'S GRAND ICE CREAM, INC. CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS
Thirteen Weeks Ended ---------------------------------------------------- March 26, 1994 March 27, 1993 -------------- -------------- (unaudited) Revenues: Net sales $112,001,000 $102,317,000 Other income 273,000 169,000 ------------- -------------- 112,274,000 102,486,000 ------------- -------------- Costs and expenses: Cost of goods sold 88,752,000 81,291,000 Selling, general and administrative 18,728,000 16,066,000 Interest, net of interest capitalized 2,209,000 1,668,000 ------------- -------------- 109,689,000 99,025,000 ------------- -------------- Income before income taxes 2,585,000 3,461,000 Income taxes 1,003,000 1,343,000 ------------- -------------- Net income $ 1,582,000 $ 2,118,000 ============= ============== Net income per share $ .11 $ .15 ============== ============== Dividends per share $ .06 $ .06 ============== =============== Retained earnings, beginning of period $ 49,218,000 $ 36,677,000 Net income 1,582,000 2,118,000 Cash dividends declared (884,000) (876,000) Repurchase and retirement of common stock (628,000) (91,000) ------------- -------------- Retained earnings, end of period $ 49,288,000 $ 37,828,000 ============= ==============
See accompanying Notes to Consolidated Financial Statements 5 6 DREYER'S GRAND ICE CREAM, INC. CONSOLIDATED STATEMENT OF CASH FLOWS
Thirteen Weeks Ended ---------------------------------------- March 26, 1994 March 27, 1993 ----------------------------------------- (unaudited) Cash flows from operating activities: Net income $ 1,582,000 $ 2,118,000 Adjustments to reconcile net income to cash provided from operations: Depreciation and amortization 4,090,000 3,548,000 Deferred income taxes 195,000 135,000 Deferred income (24,000) (24,000) Changes in assets and liabilities, net of amounts acquired: Trade accounts receivable (6,311,000) (5,684,000) Other accounts receivable (35,000) (1,276,000) Inventories (3,362,000) 1,135,000 Prepaid expenses and other 2,113,000 2,660,000 Accounts payable and accrued liabilities 5,600,000 5,583,000 Accrued payroll and employee benefits (1,421,000) (2,862,000) Income taxes payable 106,000 ------------ ------------ 2,427,000 5,439,000 ------------ ------------ Cash flows from investing activities: Acquisition of property, plant and equipment (11,470,000) (9,460,000) Retirement of property, plant and equipment 52,000 31,000 Increase in goodwill and distribution rights (14,790,000) (307,000) (Increase) decrease in other assets, net (699,000) 388,000 ------------ ------------ (26,907,000) (9,348,000) ------------ ------------ Cash flows from financing activities: Increase (decrease) in short-term bank borrowings 23,400,000 (29,000,000) Proceeds from long-term debt 36,100,000 Reductions in long-term debt (610,000) (2,498,000) Cash dividends paid (881,000) (874,000) Issuance of stock under employee stock plans 621,000 259,000 ------------ ------------ 22,530,000 3,987,000 ------------ ------------ (Decrease) increase in cash and cash equivalents (1,950,000) 78,000 Cash and cash equivalents, beginning of period 2,532,000 606,000 ------------ ------------ Cash and cash equivalents, end of period $ 582,000 $ 684,000 ============ ============ Supplemental Cash Flow Information - cash paid during the year for: Interest (net of amounts capitalized) $ 2,789,000 $ 2,255,000 Income taxes (net of refunds) 166,000 146,000
See accompanying Notes to Consolidated Financial Statements 6 7 DREYER'S GRAND ICE CREAM, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - General: Dreyer's Grand Ice Cream, Inc. and its subsidiaries (the "Company") is a single segment industry company engaged in the business of manufacturing and distributing premium ice cream and other frozen dairy products. The consolidated financial statements for the thirteen week periods ended March 26, 1994, and March 27, 1993, have not been audited by independent public accountants, but include all adjustments, consisting of normal recurring accruals, which management considers necessary for a fair presentation of the consolidated operating results for the periods. The statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, certain information and footnote disclosure normally included in financial statements prepared in conformity with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. The operating results for interim periods are not necessarily indicative of results to be expected for an entire year. The aforementioned statements should be read in conjunction with the Company's Annual Report to Stockholders for the year ended December 25, 1993. NOTE 2 - Financial Statement Presentation: Certain reclassifications have been made to the prior period financial statements in order to conform to the current presentation. NOTE 3 - Inventories: Inventories are stated at the lower of cost (determined by the first-in, first-out method) or market. Inventories at March 26, 1994 and December 25, 1993 consisted of the following (in thousands):
March 26, December 25, 1994 1993 -------- ---------- Raw materials $ 3,618 $ 2,050 Finished goods 27,561 25,767 ------- ------- $31,179 $27,817 ======= =======
7 8 NOTE 4 - Net Income Per Share: Net income per common share is computed using the weighted average number of shares of common stock outstanding during the period which were 14,698,000 shares for the quarter ended March 26, 1994 and 14,579,000 shares for the quarter ended March 27, 1993. NOTE 5 - Goodwill and Distribution Rights: On January 4, 1994, the Company entered into a long-term distribution agreement with Sunbelt Distributors, Inc. (Sunbelt), the leading independent direct-store-delivery ice cream distributor in Texas. Under the agreement, the Company paid Sunbelt $10,970,000 in cash to secure the long-term exclusive right to have its products distributed by Sunbelt in Texas and certain parts of Louisiana and Arkansas. In conjunction with this transaction, the Company recorded $11,321,000 in distribution rights, including $351,000 in transaction costs. NOTE 6 - Subsequent Event: On May 6, 1994, the Company entered into an agreement (the "Nestle Agreement") with an affiliate of Nestle USA, Inc. ("Nestle"), whereby Nestle will purchase three million newly issued shares of common stock of the Company for $32 per share and warrants to purchase an additional two million shares at an exercise price of $32 per share. Warrants for one million shares will expire in three years from the closing date and warrants for the other million shares will expire in five years from the closing date. Nestle is paying an aggregate of $10,000,000 for the two million warrants. The Company will have the right to cause Nestle to exercise the warrants at $24 per share subject to certain conditions at any time during the three year period following the closing. The Company will also have the right to cause Nestle to exercise the warrants at any time through the warrant expiration dates at $32 per share if the average trading price of the common stock exceeds $60 during a 130 trading day period, subject to certain conditions. Furthermore, within five years from the date of closing, if the average trading price of the common stock equals or exceeds $60 during a 130 trading day period, Nestle will be required to pay an additional $2 for each share purchased by it and each share issued in respect of warrants exercised by it. Closing of the Nestle Agreement is subject to certain conditions, including the expiration or termination of applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act. In addition to the above Nestle Agreement, the Company is entering into a distribution agreement with Nestle to distribute Nestle's frozen novelty and ice cream products in certain markets beginning in 1995. Also, on May 6, 1994, the Company entered into a credit agreement with a bank (the "Credit Agreement") to borrow up to $100,000,000. Under the terms of this agreement, the Company can borrow funds to finance the purchase of its common stock. (See below.) Interest on borrowings is payable at a same day funding rate plus an applicable margin, or at the bank's reference rate. The Credit Agreement terminates at the earlier of the closing of the Nestle Agreement, the date the combined purchase price of shares and warrants of the Nestle Agreement is reduced to less than $100,000,000, the date the Nestle Agreement is terminated, or in 60 days. Subsequent to quarter end, the Company repurchased 763,000 shares of its common stock at prices ranging from $22.50 to $22.75 under a newly authorized plan to repurchase up to 5 million shares through open market purchases and negotiated transactions. 8 9 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following table sets forth for the periods indicated the percent which the items in the Consolidated Statement of Income and Retained Earnings bear to net sales and the percentage change of such items compared to the indicated prior period:
Period-to-Period Percentage of Net Sales Increase (Decrease) ----------------------- ------------------- Thirteen Weeks Ended ----------------------- March 26, March 27, Thirteen Weeks 1994 1994 1993 Compared to 1993 ---------- ---------- ------------------- Revenues: Net sales 100.0% 100.0% 9.5% Other income 0.2 0.2 61.5 ----- ----- Total revenue 100.2 100.2 9.6 ----- ----- Costs and expenses: Cost of goods sold 79.2 79.5 9.2 Selling, general and administrative 16.7 15.7 16.6 Interest, net of interest capitalized 2.0 1.6 32.4 ----- ----- Total costs and expenses 97.9 96.8 10.8 ----- ----- Income before income taxes 2.3 3.4 (25.3) Income taxes 0.9 1.3 (25.3) ----- ----- Net income 1.4 2.1 (25.3) ===== =====
9 10 RESULTS OF OPERATIONS Thirteen Weeks Ended March 26, 1994 Compared with Thirteen Weeks Ended March 27, 1993 Consolidated net sales for the first quarter of 1994 increased 9% to $112,001,000 compared with $102,317,000 for the same period last year. Sales of the Company's brands increased 17% and represented 66% of consolidated net sales as compared with 62% in the first quarter of 1993. The increase related primarily to higher unit sales of the Company's established brands in all markets and, to a lesser extent, sales of two recently introduced products, Dreyer's and Edy's Ice Cream Bars and Tropical Fruit Bars. The effect of price increases for the Company's brands was not significant. Sales of products purchased from other manufacturers (partner brands) decreased 2% and represented 34% of consolidated net sales as compared with 38% in the first quarter of 1993. The effect of price increases for partner brands was not significant. The Company is embarking on a five year plan to accelerate the sales of its Company brands by greatly increasing its consumer marketing efforts and expanding its distribution system into additional markets (the "Marketing Plan"). Under this Marketing Plan, the Company will increase the amount of its spending for advertising and consumer promotion from a level of approximately $12,000,000 in 1993 to $40,000,000 in 1994, and plans to spend approximately $50,000,000 annually on these marketing activities from 1995 through 1998. The Company will begin selling its Edy's branded products in the Boston and Charlotte markets this year, in addition to the previously announced introduction of Dreyer's line of products into the Houston market. The Company anticipates that the new business plan will materially reduce earnings during the next twelve to twenty-four month period below levels that would have been attained under the current business plan. The potential benefits of the new strategy are increased market share and future earnings above those levels that would be attained in the absence of the strategy. Dreyer's believes that these benefits are not likely to impact the Company's results until 1996 at the earliest. No assurance can be given that the anticipated benefits of the strategy will be achieved. The success of the strategy will depend upon, among other things, consumer responsiveness to the Marketing Plan, competitors' activities, and general economic conditions. Cost of goods sold increased $7,461,000 or 9% over the first quarter of 1993, while the overall gross margin increased from 20.5% in the first quarter of 1993 to 20.8% in the first quarter of 1994. The higher margin was primarily the result of increased sales of the Company's brands, which carry a higher margin than partner brands, offset principally by higher distribution expenses. Selling, general and administrative expenses in the first quarter of 1994 were $2,662,000 or 17% higher than in the same period of 1993. This increase related primarily to increased product advertising and promotion expenses incurred in a continuing effort to enhance the Company's long-term competitive position. Interest expense was $541,000 or 32% higher in the first quarter of 1994 as compared with the same period in 1993 due primarily to the higher interest rate of the convertible subordinated debentures issued in the third quarter of 1993. Income taxes decreased $340,000 reflecting a lower pre-tax income, while the effective tax rate remained the same at 38.8% for the first quarter of both 1994 and 1993. 10 11 LIQUIDITY AND CAPITAL RESOURCES Working capital at March 26, 1994 decreased $21,327,000 from year end 1993 due primarily to the increase in short-term bank borrowings and accounts payable and accrued liabilities, offset in part by the seasonal increase in trade receivables and inventories. Cash was provided primarily from the $23,400,000 increase in short-term bank borrowings. This source was used to fund the $11,470,000 increase in property, plant and equipment and the $14,790,000 increase in goodwill and distribution rights resulting primarily from the Sunbelt distribution rights agreement (see Note 5 of Notes to Consolidated Financial Statements). On May 6, 1994, the Company entered into an agreement with an affiliate of Nestle USA, Inc., whereby Nestle will purchase three million newly issued shares of common stock of the Company for $32 per share and warrants to purchase an additional two million shares at an exercise price of $32 per share. The warrants are subject to certain limitations and requirements. Nestle is paying an aggregate of $10,000,000 for these warrants. Total proceeds from the issuance of the initial three million shares and the two million warrants will be approximately $106,000,000. Closing of the Nestle Agreement is subject to certain conditions, including the expiration or termination of applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act. Also, on May 6, 1994, the Company entered into a credit agreement with a bank to borrow up to $100,000,000. Under the terms of this agreement, the Company can borrow funds to finance the purchase of its common stock. (See Note 6 of Notes to Consolidated Financial Statements.) Subsequent to quarter end, the Company repurchased 763,000 shares of its common stock at prices ranging from $22.50 to $22.75 under a newly authorized plan to repurchase up to 5 million shares through open market purchases and negotiated transactions. These repurchases were funded through the Credit Agreement. (See Note 6 of Notes to Consolidated Financial Statements.) At March 26, 1994, the Company had $582,000 in cash and cash equivalents, and an unused credit line of $26,600,000. The Company believes that its credit lines, proceeds from the Nestle Agreement, its internally generated cash and financing capacity are adequate to meet anticipated operating and capital requirements. 11 12 PART II: OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a. No reports on Form 8-K were filed by the Company during the quarter ending on March 26, 1994. b. Exhibits* EXHIBIT NO. DESCRIPTION - - - ----------- ----------- 2.1 Amendment to Securities Purchase Agreement dated May 6, 1994 by and among the Company, Trustees of General Electric Pension Trust, GE Investment Private Placement Partners, I and General Electric Capital Corporation, amending the Securities Purchase Agreement dated June 24, 1993 by and among the Company, Trustees of General Electric Pension Trust, GE Investment Private Placement Partners, I and General Electric Capital Corporation.** 4.1 Amendment to Registration Rights Agreement dated May 6, 1994 by and among the Company, Trustees of General Electric Pension Trust, GE Investment Private Placement Partners, I and General Electric Capital Corporation, amending the Registration Rights Agreement dated June 30, 1993 by and among the Company, Trustees of General Electric Pension Trust, GE Investment Private Placement Partners, I and General Electric Capital Corporation.** 10.1 Second Amendment to Credit Agreement dated May 6, 1994 by and among the Company, Bank of America NT & SA, as Agent and for itself, ABN AMRO Bank N.V. and Continental Bank N.A., amending the Credit Agreement dated April 30, 1993 by and among the Company, Bank of America NT & SA as Agent and for itself, ABN AMRO Bank N.V. and Continental Bank N.A.*** 10.2 Credit Agreement dated May 6, 1994 by and between the Company and Bank of America NT & SA.** 10.3 Amendment to Distribution Agreement, dated April 18, 1994, and Letter Agreement modifying such Amendment to Distribution Agreement, dated April 18, 1994 between the Company and Ben & Jerry's Homemade, Inc., amending the Distribution Agreement between the Company and Ben & Jerry's Homemade, Inc., dated January 7, 1987, as amended.** 11 Computation of Earnings Per Common Share.**
12 13 _______________ * An Exhibit 10.4, while not listed in either Item 6(b) or in the Index to Exhibits, was erroneously filed with the Company's Quarterly Report on Form 10-Q filed on May 10, 1994. The filed agreement was not consummated as of May 10, 1994 nor has such agreement been consummated as of May 23, 1994. ** Previously filed. *** Refiled to include all conformed signatures. 13 14 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. DREYER'S GRAND ICE CREAM, INC. Dated: May 23, 1994 By: /s/ Paul R. Woodland -------------------------- Paul R. Woodland Vice President -- Finance and Administration and Chief Financial Officer 14 15 Index to Exhibits* EXHIBIT NO. DESCRIPTION - - - ----------- ----------- 2.1 Amendment to Securities Purchase Agreement dated May 6, 1994 by and among the Company, Trustees of General Electric Pension Trust, GE Investment Private Placement Partners, I and General Electric Capital Corporation, amending the Securities Purchase Agreement dated June 24, 1993 by and among the Company, Trustees of General Electric Pension Trust, GE Investment Private Placement Partners, I and General Electric Capital Corporation.** 4.1 Amendment to Registration Rights Agreement dated May 6, 1994 by and among the Company, Trustees of General Electric Pension Trust, GE Investment Private Placement Partners, I and General Electric Capital Corporation, amending the Registration Rights Agreement dated June 30, 1993 by and among the Company, Trustees of General Electric Pension Trust, GE Investment Private Placement Partners, I and General Electric Capital Corporation. ** 10.1 Second Amendment to Credit Agreement dated May 6, 1994 by and among the Company, Bank of America NT & SA, as Agent and for itself, ABN AMRO Bank N.V. and Continental Bank N.A., amending the Credit Agreement dated April 30, 1993 by and among the Company, Bank of America NT & SA as Agent and for itself, ABN AMRO Bank N.V. and Continental Bank N.A.*** 10.2 Credit Agreement dated May 6, 1994 by and between the Company and Bank of America NT & SA.** 10.3 Amendment to Distribution Agreement, dated April 18, 1994, and Letter Agreement modifying such Amendment to Distribution Agreement, dated April 18, 1994 between the Company and Ben & Jerry's Homemade, Inc., amending the Distribution Agreement between the Company and Ben & Jerry's Homemade, Inc., dated January 7, 1987, as amended.** 11 Computation of Earnings Per Common Share.**
_______________ * An Exhibit 10.4, while not listed in either Item 6(b) or in the Index to Exhibits, was erroneously filed with the Company's Quarterly Report on Form 10-Q filed on May 10, 1994. The filed agreement was not consummated as of May 10, 1994 nor has such agreement been consummated as of May 23, 1994. ** Previously filed. *** Refiled to include all conformed signatures. EX-10.1 2 SECOND AMENDMENT TO CREDIT AGREEMENT 1 Exhibit 10.1 SECOND AMENDMENT TO CREDIT AGREEMENT This SECOND AMENDMENT TO CREDIT AGREEMENT (this "Amendment"), dated as of May 6, 1994, is entered into by and among DREYER'S GRAND ICE CREAM, INC. (the "Company"), BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as agent for itself and the Banks (the "Agent"), BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, ABN AMRO BANK N.V., and CONTINENTAL BANK N.A. (collectively, the "Banks"). RECITALS A. The Company, Bank of America National Trust and Savings Association, ABN AMRO Bank N.V., Continental Bank N.A., and Agent are parties to a Credit Agreement dated as of April 30, 1993 (as amended and as in effect as of the date of this Amendment, the "Credit Agreement") pursuant to which the Agent and such banks have extended certain credit facilities to the Company. B. The Company has asked the Agent and the Banks to amend the Credit Agreement as set forth in this Amendment. C. The Agent and the Banks are willing to amend the Credit Agreement as set forth and subject to the terms and conditions of this Amendment. NOW, THEREFORE, for valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto hereby agree as follows: 1. Defined Terms. Unless otherwise defined herein, capitalized terms used herein shall have the meanings, if any, assigned to them in the Credit Agreement. 2. Amendments to Credit Agreement. (a) The following definitions are added to Article 1 of the Credit Agreement in the proper alphabetical order: "BofA Bridge Loan" means the $100,000,000 non-revolving line of credit granted by BofA to the Company pursuant to a credit agreement between BofA and the Company dated as of May 6, 1994, as in effect from -1- 2 time to time. "Nestle Agreement" means the Stock and Warrant Purchase Agreement by and between the Company and Nestle Holdings, Inc. as the Purchaser dated May 6, 1994, together with all of its Exhibits and Schedules, in the form delivered to the Banks on May 6, 1994. "Nestle Closing" means the date on which the Company delivers certificates for "Shares" and "Warrants" to Nestle Holdings, Inc. and the Company receives the "Share Purchase Price" and the "Warrant Purchase Price" from Nestle Holdings, Inc. as set forth in the Nestle Agreement (as such terms are defined in the Nestle Agreement). "Share Purchase Period" means the period: (a) Commencing on the first date on which both of the following have occurred (1) the Nestle Agreement has been publicly announced by the Company or Nestle Holdings, Inc. and (2) the Nestle Agreement has been executed by all the parties thereto; and (b) Ending on the earliest of: (1) 60 days after the date determined in accordance with (a) of this definition, except that if the Nestle Closing occurs prior to the end of such 60 day period, 180 days after the Nestle Closing; (2) the date the Nestle Agreement is terminated or ceases to be in effect for any reason; or (3) the date the Nestle Agreement is modified in a manner not acceptable to the Majority Banks, if such modification occurs prior to Nestle Closing. (b) Section 5.1(c) of the Credit Agreement is hereby amended in its entirety to provide as follows: "(c) is duly qualified as a foreign corporation, licensed and, except as specifically disclosed in Schedule 5.1, in good standing under the laws of each jurisdiction where its ownership, lease or operation of property or the conduct of its business requires such qualification; and" (c) Sections 5.7(b) and 5.7(c) of the Credit Agreement are hereby amended in their entirety to provide as follows: "(b) Except as specifically disclosed in Schedule 5.7, each Plan is in compliance in all material respects with the applicable provisions of ERISA, the Code and other Federal or state law, including all requirements under the Code or ERISA for filing reports (which are true and correct in all -2- 3 material respects as of the date filed), and benefits have been paid in accordance with the provisions of the Plan. "(c) Each Qualified Plan has been determined by the IRS to qualify under Section 401 of the Code and, except as specifically disclosed in Schedule 5.7, to the best knowledge of the Company nothing has occurred which would cause the loss of such qualification or tax-exempt status." (d) Section 5.12(a) of the Credit Agreement is hereby amended in its entirety to provide as follows: "(a) Except as specifically disclosed in Schedule 5.12, the on-going operations of the Company and each of its Subsidiaries comply in all respects with all Environmental Laws, except such non-compliance which would not reasonably be expected (if enforced in accordance with applicable law) to result in liability in excess of $5,000,000 in the aggregate. (e) Section 5.15 of the Credit Agreement is hereby amended in its entirety to provide as follows: "5.15 Labor Relations. There are no strikes, lockouts or other labor disputes against the Company or any of its Subsidiaries, or, to the best of the Company's knowledge, threatened against or affecting the Company or any of its Subsidiaries and, except as specifically disclosed in Schedule 5.15, no significant unfair labor practice complaint is pending against the Company or any of its Subsidiaries or, to the best knowledge of the Company, threatened against any of them before any Governmental Authority. (f) Section 5.16 of the Credit Agreement is hereby amended by replacing "Schedule 5.5" with "Schedule 5.16". (g) Section 6.2 of the Credit Agreement is hereby amended by deleting "and" at the end of subsection 6.2(c), changing the "." at the end of subsection 6.2(d) to ";" and adding the following subsections 6.2(e) and (f): "(e) Promptly, during the period commencing on May 6, 1994 and ending on the Nestle Closing, copies of all material communications received and sent by the Company or of which the Company is aware, in connection with the Nestle Agreement and any transaction contemplated by the Nestle Agreement, including but not limited to communications from the Federal Trade Commission and the Department of Justice relating to the foregoing; and" -3- 4 "(f) No later than 10 days after the last day of the Share Purchase Period, a certificate signed by a Responsible Officer of the Company certifying that the Company immediately retired all of the common stock of Company which it purchased during the Share Purchase Period." (h) Section 6.3 of the Credit Agreement is hereby amended by deleting "and" at the end of subsection 6.3(h), changing the "." at the end of subsection 6.3(i) to "; and" and adding the following subsection 6.3(j): "(j) during the period commencing on May 6, 1994 and ending on the Nestle Closing, each proposed amendment, modification, or waiver to the Nestle Agreement." (i) Section 7.5 of the Credit Agreement is hereby amended by deleting "and" at the end of subsection 7.5(f), replacing the "." at the end of subsection 7.5(g) with "; and", and adding the following subsection 7.5(h): "(h) the BofA Bridge Loan during the period from May 6, 1994 through the earlier of (1) the Nestle Closing, or (2) 60 days after May 6, 1994." (j) Section 7.7 of the Credit Agreement is hereby amended in its entirety to provide as follows: "7.7 Use of Proceeds. The Company shall not and shall not suffer or permit any of its Subsidiaries to use any portion of proceeds of the Loans, directly or indirectly, (i) to purchase or carry Margin Stock (ii) to repay or otherwise refinance indebtedness of the Company or others incurred to purchase or carry Margin Stock, (iii) to extend credit for the purpose of purchasing or carrying any Margin Stock, or (iv) to acquire any security in any transaction that is subject to Section 13 or 14 of the Exchange Act; except that the Company may use any portion of proceeds of the Loans (x) to pay for purchases, during the Share Purchase Period, of the Company's common stock for immediate retirement and (y) to repay indebtedness of the Company which incurred during the Share Purchase Period in order to purchase its own common stock for immediate retirement during such period." (k) Section 7.8 of the Credit Agreement is hereby amended by deleting "and" at the end of subsection 7.8(b), replacing the "." at the end of subsection 7.8(c) with "; and", and adding the following as subsection 7.8(d): "(d) In addition to that permitted under the preceding subsections, Guaranty Obligations covering up to $1,000,000 principal of primary obligations." -4- 5 (l) Section 7.12(b) of the Credit Agreement is hereby amended in its entirety to provide as follows: "(b) purchase, redeem or otherwise acquire shares of its common stock or warrants or options to acquire any such shares with the proceeds received from the substantially concurrent issue of new shares of its common stock. Purchases of its common stock for immediate retirement during the Share Purchase Period up to an amount equal to the Net Issuance Proceeds of the "Securities" (as defined in the Nestle Agreement) sold to Nestle Holdings, Inc. under the Nestle Agreement shall be deemed an acquisition with the proceeds received from the substantially concurrent issue of new shares of its common stock for purposes of this subsection;" (m) Section 7.14 of the Credit Agreement is hereby amended in its entirety to provide as follows: "7.14 Current Ratio. On and after the Initial Borrowing Date, the Company shall not permit during any fiscal quarter its ratio of Consolidated Current Assets to Consolidated Current Liabilities to be less than 2.0 to 1.0. "(a) Outstandings under this Agreement shall not be included in Consolidated Current Liabilities throughout the Company's 1994 fiscal year. "(b) Outstandings under the BofA Bridge Loan shall not be included in Consolidated Current Liabilities during the period from May 6, 1994 through the earliest of (1) the Nestle Closing, (2) 60 days after May 6, 1994, (3) the date the Nestle Agreement is modified in a manner not acceptable to the Majority Banks, or (4) the date the Nestle Agreement is terminated or ceases to be in effect for any reason." (n) Section 7.15 of the Credit Agreement is hereby amended in its entirety to provide as follows: "7.15 Consolidated Tangible Net Worth. The Company shall not permit its Consolidated Tangible Net Worth at any time during any fiscal quarter to be less than the sum of (i) $90,000,000; plus (ii) 75% of the Company's net profit for each fiscal quarter beginning with the first fiscal quarter of 1993; plus (iii) 100% of Net Issuance Proceeds of any stock offerings or subordinated debt, subject to the provisions of subsection (b) of this Section. "(a) During the period from May 6, 1994 through the earliest of (1) the Nestle Closing, (2) 60 days after May 6, 1994, (3) the date the Nestle Agreement is modified in a manner not acceptable to the Majority Banks, or (4) the date the Nestle Agreement is terminated or ceases to be in effect for any reason, the Company's purchases of its common stock which are permitted under Section 7.12(b) shall be disregarded in computing the Company's Consolidated Tangible Net Worth; and -5- 6 "(b) After the lapse of the period provided in subsection (a) of this Section, in making the computations required under this Section, the portion of Net Issuance Proceeds from the Nestle Agreement to be included shall be the amount by which such Net Issuance Proceeds exceeds the aggregate purchase price paid by the Company for the purchases of its common stock during the Share Purchase Period and permitted under Section 7.12(b). (o) Section 7.16 of the Credit Agreement is hereby amended in its entirety to provide as follows: "7.16 Leverage Ratio. The Company shall not permit its Leverage Ratio to exceed the ratio indicated for the period set forth below:
"Period Ratio ------ ----- "First fiscal quarter of 1993 2.25 to 1.0 "Second fiscal quarter of 1993 2.25 to 1.0 "Each fiscal quarter thereafter 1.25 to 1.0
"The financial effect of the BofA Bridge Loan and the Company's purchases of its common stock during the Share Purchase Period shall be disregarded in determining compliance under this Section during the period commencing on the first date on which both of the following have occurred (1) the Nestle Agreement has been publicly announced by the Company or Nestle Holdings, Inc. and (2) the Nestle Agreement has been executed by the parties thereto, and ending on the earliest of (w) the Nestle Closing, (x) 60 days after the beginning of such period, (y) the date the Nestle Agreement is modified in a manner not acceptable to the Majority Banks, or (z) the date the Nestle Agreement is terminated or ceases to be in effect for any reason." (p) Section 7.17 of the Credit Agreement is hereby amended in its entirety to provide as follows: "7.17 Minimum Fixed Charge Coverage Ratio. The Company shall not permit its Fixed Charge Coverage Ratio (a) during the first quarter of 1994 to be less than 2.40 to 1.00 and (b) at all other times before and after such first quarter, to be less than 2.50 to 1.00. For purposes of this Section, Fixed Charge Coverage Ratio means the ratio of "A" to "B" where: ""A" means the sum of earnings before taxes plus current operating lease expenses plus interest expense; and ""B" means interest expense plus current operating lease expense; "in all cases computed on a consolidated basis and measured on the last day of a fiscal quarter on a rolling four quarter basis." -6- 7 (q) The Credit Agreement is hereby amended by adding the following Section 7.22 immediately after Section 7.21: "7.22 The Nestle Agreement. "(a) Prior to the Nestle Closing, the Company shall not enter into or agree to any amendment, waiver, or other modification to the Nestle Agreement without the prior written consent of the Majority Banks. The Banks agree to give such consent unless, in the sole opinion of the Majority Banks, such modification will have a material adverse effect to the interests of the Banks under this Agreement. "(b) The Agent shall notify the Company whether or not the Majority Banks have consented to the proposed modification not later than three Business Days after the Agent receives notice from the Company of the proposed modification together with all details necessary to enable the Banks to decide whether or not to give their consent. Failure by the Agent to so notify the Company shall be deemed a decision of the Majority Banks not to grant the requested consent. "(c) Failure by the Company to obtain the prior written consent of the Majority Banks as required under subsection (a) of this Section shall not constitute an Event of Default." (r) The Credit Agreement is hereby amended by adding Schedules 5.1 and 5.16 and replacing Schedules 5.7, 5.12, 5.15, and 5.17 with the respective schedules bearing the same heading set forth in Schedule I of this Amendment. (s) The schedules to the Compliance Certificate shall be modified to reflect the changes to the Credit Agreement contained in this Amendment. 3. Representations and Warranties. The Company hereby represents and warrants to the Agent and the Banks as follows: (a) No Default or Event of Default has occurred and is continuing. (b) The execution, delivery and performance by the Company of this Amendment have been duly authorized by all necessary corporate and other action and do not and will not require any registration with, consent or approval of, notice to or action by, any person (including any governmental agency) in order to be effective and enforceable. The Credit Agreement as amended by this Amendment constitutes the legal, valid and binding obligations of the Company, enforceable against it in accordance with its respective terms, without defense, counterclaim or offset. (c) All representations and warranties of the Company contained in -7- 8 the Credit Agreement are true and correct. (d) The Company is entering into this Amendment on the basis of its own investigation and for its own reasons, without reliance upon the Agent and the Banks or any other person. 4. Effective Date. This Amendment will become effective on May 6, 1994 (the "Effective Date"), provided that each of the following conditions precedent has been satisfied on such date: (a) The Agent has received from the Company a duly executed original of this Amendment and with respect to each Bank, either a duly executed original signature page to this Amendment or a signature page sent by facsimile transmission to be followed promptly by mailing of a hard copy. Each of the parties understands and agrees that receipt by the Agent of a facsimile transmitted signature page purportedly bearing the signature of a Bank shall bind such Bank with the same force and effect as the delivery of a hard copy original and failure by the Agent to receive the hard copy original signature page shall not diminish the binding effect of receipt of a facsimile transmitted signature page. (b) The Agent has received from Manwell & Milton, counsel to the Company, an opinion dated the Effective Date and addressed to the Agent and the Banks substantially in the form of Exhibit 1 to this Amendment. (c) The Agent has received from the Company a copy of a resolution passed by the board of directors of the Company, certified by the Secretary or an Assistant Secretary of the Company as being in full force and effect on the date hereof, authorizing the execution, delivery and performance of this Amendment and in form and substance satisfactory to Majority Banks. (d) The Agent has received from the Company a certificate of the Secretary of the Company certifying the names and true signatures of the officers of the Company authorized to execute and deliver this Amendment and in form and substance satisfactory to Majority Banks. (e) The Agent has received from the Company a certificate, signed by a Responsible Officer of the Company, certifying that all representations and warranties contained herein are true and correct as of the Effective Date. (f) The Agent has received, in sufficient number of copies for Agent and each Bank, certified by the Company to be true and complete, copies of the Nestle Agreement in the version to be executed. 5. Covenants. The Company covenants and agrees that it shall deliver to the Agent in sufficient number of copies for Agent and each Bank, certified by the Company to be true and complete, as soon as available: -8- 9 (a) And in any event, within five Business Days after the date of this Agreement, copies of the Nestle Agreement in the form executed, certified by the Company to be true and complete and as executed by all the parties thereto with the exhibits and schedules in the form to be executed by the party or parties designated therein; and (b) In any event, within five Business Days after the Nestle Closing: (1) Copies of each of the agreements, instruments, and documents (other than the Nestle Agreement), set forth in Section 4.1(f), certified by the Company to be true and complete and as executed by the party or parties designated therein; (2) Copies of each of the resolutions passed by the Board of Directors of Nestle Holdings, Inc. certified by the Secretary or an Assistant Secretary of such corporation as being in full force and effect on the date hereof, authorizing the execution, delivery and performance of the Nestle Agreement, and all instruments, documents, and other agreements relating to the Nestle Agreement; and (3) The certificate of the Secretary of Nestle Holdings, Inc. certifying the names and true signatures of the officers of Nestle Holdings, Inc. authorized to execute and deliver the Nestle Agreement. The copies of the agreements, instruments, documents, resolutions, and certificates to be delivered under this subsection shall be delivered with a certificate (executed by a Responsible Officer of the Company) representing and warranting that such agreements, instruments, and documents are substantially identical to those delivered pursuant to Section 4.1(f). Any failure to so deliver such agreements, instruments, documents, resolutions, and certificates, and any misrepresentation in the accompany certificate from a Responsible Officer shall be an Event of Default under the Credit Agreement. 6. Miscellaneous. (a) Except as herein expressly amended, all terms, covenants and provisions of the Credit Agreement are and shall remain in full force and effect and all references therein to such Credit Agreement shall henceforth refer to the Credit Agreement as amended by this Amendment. This Amendment shall be deemed incorporated into, and a part of, the Credit Agreement. (b) This Amendment shall be binding upon and inure to the benefit of the parties hereto and thereto and their respective successors and assigns. No third party beneficiaries are intended in connection with this Amendment. (c) This Amendment shall be governed by and construed in accordance with the law of the State of California. -9- 10 (d) This Amendment may be executed in any number of counterparts, each of which shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument. (e) If any term or provision of this Amendment shall be deemed prohibited by or invalid under any applicable law, such provision shall be invalidated without affecting the remaining provisions of this Amendment or the Credit Agreement, respectively. (f) The Company covenants to pay to or reimburse the Agent, upon demand, for all costs and expenses (including allocated costs of in-house counsel) incurred in connection with the preparation, negotiation, execution and delivery of this Amendment. -10- 11 IN WITNESS WHEREOF, the parties hereto have executed and delivered this Amendment as of the date first above written. DREYER'S GRAND ICE CREAM, INC. By: /s/ William C. Collett ________________________ Name: William C. Collett Title: Treasurer BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Agent By: /s/ Kevin C. Leader _________________________ Name: Kevin C. Leader Title: Vice President BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as a Bank By: /s/ Michael J. Dasher _________________________ Name: Michael J. Dasher Title: Vice President 12 ABN AMRO BANK N.V. By: /s/ CAROL A. LEVINE --------------------------- Name: Carol A. Levine Title: Vice President By: /s/ ROBERT N. HARTINGER ---------------------------- Name: Robert N. Hartinger Title: Group Vice President 13 CONTINENTAL BANK N.A. By: /s/ GUY R. STAPLETON ----------------------- Name: Guy R. Stapleton Title: Vice President 14 EXHIBIT 1 Opinion of Counsel for the Company May 6, 1994 Bank of America N.T. & S.A. 555 California Street San Francisco, CA 94104 Continental Bank N.A. 231 South LaSalle Street Chicago, IL 60697 ABN AMRO Bank N.V. 555 California Street Suite 2750 San Francisco, CA 94104 Gentlemen: We have acted as counsel to Dreyer's Grand Ice Cream, Inc., a Delaware corporation (the "Company"), in connection with the Second Amendment dated May 3, 1994 (the "Amendment") to Credit Agreement dated as of April 30, 1993 and amended May 24, 1993 (the "Credit Agreement"), among the Company, Bank of America N.T. & S.A., as one of the Banks and as Agent, and ABN AMRO Bank N.V. and Continental Bank N.A. Capitalized terms used herein and not defined herein shall have the meanings assigned to them in the Credit Agreement. This opinion is rendered pursuant to Section 4(b) of the Amendment. The Company has entered into a Stock and Warrant Purchase Agreement with Nestle Holdings, Inc. dated of even date herewith (the "Nestle Agreement"), pursuant to which, among other things, the Company will issue three million (3,000,000) shares of common stock of the Company and warrants exercisable for an additional two million (2,000,000) shares. The Company has also authorized a program to repurchase shares of common stock of the Company with funds of up to one hundred and six million dollars ($106,000,000) (the "1994 Stock Repurchase Program"). We have examined executed copies of the Amendment and the Credit Agreement. We have also examined such other documents and certificates of public officials and representatives of the Company as we have deemed necessary as a basis for the opinions expressed herein. With respect to factual matters not within our actual knowledge, we have made no independent investigation but have relied solely upon factual recitals set forth in the Credit Agreement and in other documents which we have reviewed and upon the officer's certificate and the certificates of appropriate public officials referred to above. We have assumed the genuineness of all signatures and documents submitted as originals, that all copies submitted to us conform to the originals, the legal capacity of all natural persons, and as to documents executed by entities other than the Company or its Subsidiaries, that each such entity has complied with any applicable requirement to file returns and pay taxes under the California Franchise Tax law and had the power to enter into and perform its obligations under such documents, and that such documents have been duly authorized, executed and delivered by, and are binding upon and enforceable -1- 15 Bank of America N.T. & S.A. Continental Bank N.A. ABN AMRO Bank N.V. May 6, 1994 Page 2 against, such entities. Based on the foregoing and subject to the qualifications set forth below, it is our opinion that: 1. Each of the Company and its Subsidiaries is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation, and is duly qualified as a foreign corporation, licensed and in good standing under the laws of each jurisdiction where its ownership, lease or operation of property or the conduct of its business requires such qualification (except in such jurisdiction or jurisdictions where a failure to do any or all of the above would not have a Material Adverse Effect). 2. The Company has full corporate power and authority to execute, deliver and perform its obligations under the Amendment, the Credit Agreement and the Nestle Agreement. Each of the Company and its Subsidiaries has full corporate power and authority to own its property and to carry on its business in the manner currently conducted. 3. The Amendment, the Credit Agreement and the Nestle Agreement have been duly authorized by all necessary corporate action on the part of the Company and have been duly executed and delivered by the Company. 4. The Amendment, the Credit Agreement and the Nestle Agreement are valid and binding obligations of the Company, enforceable in accordance with their respective terms. 5. Execution and delivery of the Amendment, the Credit Agreement and the Nestle Agreement, performance by the Company of its obligations under each such agreement, and the performance by the Company of its 1994 Stock Repurchase Program, do not violate the Certificate of Incorporation or by-laws of the Company, or any applicable law or regulation or any order of court or arbitrator known to us and specifically directed to the Company or its Subsidiaries, or, except as set out in Exhibit A to this letter, result in a material breach of, or default under, the provisions of any material contract known to us by which the Company or its Subsidiaries is bound. 6. To our knowledge, except as set forth in Schedule 5.5 to the Credit Agreement, there are no actions, suits or proceedings pending or overtly threatened against the Company or its Subsidiaries before any court or administrative agency which (i) affect or pertain to the Credit Agreement or the transactions contemplated thereby, or (ii) if determined adversely, would reasonably be expected to have a Material Adverse Effect. 7. To our best knowledge at the date hereof, all conditions to Closing under the Nestle Agreement would be met at the date hereof, except for: (i) the condition set forth in Section 1.4(a)(ii) of the Nestle Agreement, and (ii) the execution and delivery at the Closing under the Nestle Agreement of those documents, in the form attached to the -2- 16 Bank of America N.T. & S.A. Continental Bank N.A. ABN AMRO Bank N.V. May 6, 1994 Page 3 Nestle Agreement (if so attached), described in Sections 1.4(b)(vi)-(xii) and Sections 1.4(c)(iv)-(vi) (inclusive) of the Nestle Agreement; provided, however, that we express no opinion as to the condition set forth in Section 1.4(c)(i) of the Nestle Agreement. 8. To our knowledge, neither the Company nor any Subsidiary is generally engaged in the business of purchasing or selling Margin Stock (as defined in Regulation U of the Board of Governors of the Federal Reserve System) or extending credit for the purpose of purchasing or carrying Margin Stock. 9. All shares of common stock of the Company to be repurchased by the Company as part of its 1994 Stock Repurchase Program will be retired by the Company upon repurchase and therefore any such repurchased shares would not be Margin Stock. 10. We have advised the Company or have arranged for the Company to receive advice from other competent counsel in connection with the following Requirements of Law, which advice we deemed necessary or prudent to fully advise the Company regarding (a) its obligations under and the legal effects of entering into and performing the Nestle Agreement, and (b) the Company's commencement and performance of its 1994 Stock Repurchase Program: Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended Clayton Act of 1914, as amended Delaware General Corporation Law regarding director's duties and general corporate governance Section 13(e) of the Securities Exchange Act of 1934, as amended, and Rule 10b-18 promulgated under such act The opinions set forth above are subject to the following qualifications: (a) The enforceability of the Company's obligations under the Amendment and the Credit Agreement are subject to the effect of any applicable bankruptcy, insolvency, reorganization, receivership, conservatorship, arrangement, moratorium or similar law affecting creditor's rights generally, to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law), to the requirement that any actions taken or determinations made by the Bank be consistent with the implied covenant of good faith and fair dealing and the Bank's obligation to act in a commercially reasonable manner in exercising any rights and remedies. (b) Whenever a statement herein is qualified by "known to us," "to our knowledge," or similar phrase, it indicates that in the course of our representation of the Company no information that would give us current actual knowledge of the inaccuracy of such statement has come to the attention of the attorneys in this firm who have rendered legal services in connection with this transaction. We have not made any independent investigation to determine the accuracy of such statement, except as expressly described herein. -3- 17 Bank of America N.T. & S.A. Continental Bank N.A. ABN AMRO Bank N.V. May 6, 1994 Page 4 We express no opinion as to any matter other than as set forth above. Further, we express no opinion on the laws of any jurisdiction other than the State of California, the federal law of the United States of America and the corporate law of the State of Delaware. The opinion expressed herein are based upon the law in effect on the date hereof, and we assume no obligation to revise or supplement this opinion. -4- 18 Bank of America N.T. & S.A. Continental Bank N.A. ABN AMRO Bank N.V. May 6, 1994 Page 5 This opinion is rendered solely for your use in connection with the transaction described above and may not be relied upon by any other person for any purpose without our prior written consent. Very truly yours MANWELL & MILTON By Edmund R. Manwell -5- 19 SCHEDULE I OF THE SECOND AMENDMENT TO CREDIT AGREEMENT Set out on the following pages are Schedules 5.1, 5.7, 5.12, 5.15, 5.16 and 5.17 of the Credit Agreement. -16- 20 SCHEDULE 5.1 TO CREDIT AGREEMENT STATES WHERE EITHER THE COMPANY OR A SUBSIDIARY IS NOT AS OF MAY 3, 1994 IN GOOD STANDING
State Where Name Not in Good Standing - - - ---- -------------------- Edy's Grand Ice Cream Kansas* Nebraska* New Mexico** Edy's of Illinois, Inc. Indiana**
-17- 21 SCHEDULE 5.7 TO CREDIT AGREEMENT ERISA List of All Plans Stock Related Plans 1. Dreyer's Grand Ice Cream, Inc. Incentive Stock Option Plan (1982). 2. Dreyer's Grand Ice Cream, Inc. Stock Option Plan (1992). 3. Dreyer's Grand Ice Cream, Inc. Stock Option Plan (1993). 4. Dreyer's Grand Ice Cream, Inc. Section 423 Employee Stock Purchase Plan (1990). 5. Dreyer's Grand Ice Cream, Inc. Employee Secured Stock Purchase Plan (1990). 6. Dreyer's Grand Ice Cream, Inc. Employee Stock Gift Plan. Defined Contribution Plans 7. Dreyer's Grand Ice Cream, Inc. Money Purchase Pension Plan, as amended. 8. Dreyer's Grand Ice Cream, Inc. Savings Plan, as amended. Miscellaneous Plans (some which are not set forth in written plan documents) 9. Dreyer's Grand Ice Cream, Inc. Bonus Plan. 10. Dreyer's Grand Ice Cream, Inc. Sick Leave Program. 11. Dreyer's Grand Ice Cream, Inc. Salary Continuance Program. 12. Dreyer's Grand Ice Cream, Inc. Flexible Benefit Plan, as amended (and related Rainbow Plan Flexible Compensation Trust dated January 1, 1987). 13. Dreyer's Grand Ice Cream, Inc. Taxsavers Plan (1983). 14. PrinCare Retiree Medical through Principal Mutual Life Insurance Company. 15. Metromatic Life Insurance Program through Metropolitan Life Insurance Company. Third Party Insurance Based Plans 16. Life Insurance, Accidental Death and Dismemberment, Long Term Disability and Dental Coverage through Principal Mutual Life Insurance Company 17. Comprehensive Health Plan and Vision Plan provided through Principal Mutual Life Insurance Company. 18. Preferred Provider Organization Health Plan and Vision Plan provided through Principal Mutual Life Insurance Company. 19. CIGNA FlexCare Health Maintenance Organization (including CIGNA Medical Group Healthplan, CIGNA Private Practice Plan, CIGNA Healthplan of San Diego and CIGNA Healthplan of Northern California). 20. Physicians Health Plan (PHP) provided through Physicians Health Plan of Indiana. 21. Medica Primary #390 provided through Medica (Minnesota). Multiemployer Plans 22. Western Conference of Teamsters Pension Trust (Local 150 and 302) (and corresponding Trust Agreement). 23. Dairy Industry Trust Fund (Local 302) (and corresponding Trust Agreement). 24. United Food and Commercial Workers Union Local 655 Welfare Fund (and corresponding Trust Agreement). 25. Stationary Engineers Local 39 Health & Welfare Plan (and corresponding Trust Agreement). 26. IUOE Stationary Engineers Local 39 Annuity Trust Fund (and corresponding Trust Agreement). -18- 22 27. IUOE Stationary Engineers Local 39 Pension Plan (and corresponding Trust Agreement). Existing Remediable Issues 1. Such matters that exist now or may arise in the future because of the participation of the employees of the Dreyer's Grand Ice Cream Charitable Foundation and Edy's Grand Ice Cream Charitable Foundation in the Dreyer's Grand Ice Cream, Inc. Money Purchase Pension Plan, as amended, and the Dreyer's Grand Ice Cream, Inc. Savings Plan, as amended. -19- 23 SCHEDULE 5.12 TO CREDIT AGREEMENT ENVIRONMENTAL MATTERS Properties Which are Exceptions to Section 5.12(c): 1. 5929 College Avenue, Oakland, California (and adjacent site to the extent that there has been migration). 2. 1250 Whipple Road, Union City, California. 3. Edy's Grand Ice Cream Fort Wayne, Indiana plant. -20- 24 SCHEDULE 5.15 TO CREDIT AGREEMENT PENDING UNFAIR LABOR PRACTICE COMPLAINTS 1. Edy's Grand Ice Cream, NLRB Case No. 25-CA-23141 -21- 25 SCHEDULE 5.16 TO CREDIT AGREEMENT PENDING INTELLECTUAL PROPERTY DISPUTES, CLAIMS, ETC. 1. Claims of Stanley Jones Against Polar Express Systems International, Inc. 2. Don Thomas Claim 3. Dreyer's Grand Ice Cream, Inc. and Edy's Grand Ice Cream, Inc. v. Calip Dairies, Inc., T&W Ice Cream, Inc., and T&W Sales, Inc., dba T&W Ice Cream of New Jersey, Inc. -22- 26 SCHEDULE 5.17 TO CREDIT AGREEMENT A. Name and Jurisdiction of Incorporation of Subsidiaries ------------------------------------------------------
Jurisdiction of Name Incorporation ---- ------------- Edy's Grand Ice Cream California Edy's of Illinois, Inc. Illinois Polar Express Systems Kentucky International, Inc. Dreyer's International, Inc. [FSC] Virgin Islands B. Ownership Interests ------------------- Type of Name Entity ---- --------- M-K-D Distributors Inc. Corporation DSD Partnership General Partnership Kabushiki Kaisha Dreyer's Japan Limited Liability Stock Company Yadon Enterprises, Inc. Corporation
-23- 27 MANWELL & MILTON EXHIBIT A to Letter dated May 6, 1994 Dolly Madison New York Store Door Distribution Agreement dated November 20, 1992 between Edy's and Calip Dairies, Inc. Steve's New York Store Door Distribution Agreement dated November 20, 1992 between Edy's and Steve's Homemade Ice Cream, Inc. Steve's National Distribution Agreement dated November 20, 1992 between Dreyer's, Edy's and Steve's Homemade Ice Cream, Inc. -----END PRIVACY-ENHANCED MESSAGE-----