Please wait
Notice of Put Right for
All Outstanding Shares of Class A Callable Puttable
Common Stock
of
Dreyer’s Grand Ice Cream Holdings, Inc.
at
$83.00 per Class A Share
This Put Right expires
at 5:00 P.M.,
New York City time, on
Friday, January 13, 2006.
To holders of shares of Class A Callable Puttable Common
Stock (the “Class A Shares”) of Dreyer’s
Grand Ice Cream Holdings, Inc., a Delaware corporation
(“Dreyer’s”):
This notice (this “Notice of Put Right”) is
being sent to you pursuant to Section (c)(ii)(B) of
Article FIFTH of the Restated Certificate of Incorporation
of Dreyer’s (the “Restated Certificate”).
Capitalized terms used in this Notice of Put Right, unless
otherwise defined herein, will have the meanings given such
terms in the Restated Certificate.
Under Section (c)(ii) of Article FIFTH of the Restated
Certificate, you have the right to require Dreyer’s to
purchase (the “Put Right”) all or part of the
Class A Shares held by you, subject to the terms and
conditions of the Restated Certificate, for $83.00 in cash per
Class A Share (the “Purchase Price”). If
you elect to require Dreyer’s to purchase your Class A
Shares at the Purchase Price, you must do so by delivering a
Letter of Transmittal and your Class A Shares to
Mellon Investor Services, Depositary Agent for the Put Right,
prior to 5:00 p.m. New York City time on January 13,
2006.
This Notice of Put Right relates to the first put period, which
begins on December 1, 2005 and ends at 5:00 p.m. New
York City time on January 13, 2006 (the “First Put
Period”).
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THE PUT
RIGHT OR PASSED UPON THE MERITS OR FAIRNESS OF THE PUT RIGHT OR
PASSED UPON THE ADEQUACY OR ACCURACY OF THE INFORMATION
CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
Important
Stockholders who desire to exercise the Put Right should do the
following, as applicable:
(1) complete
and sign the enclosed Letter of Transmittal and enclose all
documents required by it and its instructions, including any
certificate representing Class A Shares (or mark the
section of the Letter of Transmittal to surrender Class A
Shares held directly in book entry form through the Direct
Registration System maintained by Mellon Investor Services) and
any required signature guarantees, and mail or deliver them to
Mellon Investor Services, Depositary Agent for the Put Right, at
the address listed on the back cover of this Notice of Put
Right; or
(2) follow
the procedures for book entry transfer of Class A Shares
held in book entry form by the Depository Trust Company, as set
forth in “Procedures for Exercising the Put
Right – Valid Delivery Through Book Entry Delivery of
Class A Shares from the Depository Trust Company to Mellon
Investor Services” on page 31; or
(3) request
your broker, dealer, commercial bank, trust company or other
nominee to effect the transaction for you.
Stockholders who have Class A Shares registered in the
name of a broker, dealer, commercial bank, trust company or
other nominee must contact such broker, dealer, commercial
1
bank, trust company or other nominee if you desire to
exercise the Put Right for those Class A Shares.
Stockholders who desire to deliver Class A Shares and whose
certificates for such Class A Shares are not immediately
available, or who cannot comply with the procedure for book
entry transfer on a timely basis, may deliver such Class A
Shares by following the procedures for guaranteed delivery set
forth in “Procedures for Exercising the Put
Right – Guaranteed Delivery” on
page 32.
Questions and requests for assistance may be directed to Mellon
Investor Services, which is serving as the Information Agent for
the Put Right, at its addresses and telephone numbers set forth
on the back cover of this Notice of Put Right. Requests for
additional copies of this Notice of Put Right and the Letter of
Transmittal may be directed to Mellon Investor Services or to
brokers, dealers, commercial banks or trust companies.
The date of this Notice of Put Right is
,
2005
2
Summary Term
Sheet
This summary highlights important and material information
contained in this Notice of Put Right but is intended to be an
overview only. To fully understand the Put Right described in
this document and for a more complete description of the terms
of the Put Right, you should read carefully the entire Notice of
Put Right, the schedules to the Notice of Put Right, documents
incorporated by reference or otherwise referenced to herein and
the Letter of Transmittal. Section and heading references are
included to direct you to a more complete description of the
topics contained in this summary.
Dreyer’s Grand Ice Cream Holdings, Inc.
(“Dreyer’s”) was formed in connection with
the combination of the businesses of Nestlé Ice Cream
Company, LLC (“NICC”) and Dreyer’s Grand
Ice Cream, Inc. (“DGIC”) on June 26, 2003
pursuant to the closing of the transactions under the Agreement
and Plan of Merger and Contribution, dated June 16, 2002,
as amended (the “Merger Agreement”), by and
among Dreyer’s, DGIC, Nestlé Holdings, Inc.
(“Nestlé Holdings”), NICC Holdings, Inc.
(“NICC Holdings”) and a subsidiary of DGIC
formed for the purpose of effecting the transactions
contemplated by the Merger Agreement. At the closing under the
Merger Agreement, the businesses of DGIC and NICC were combined
and the security holders of DGIC, other than those affiliated
with Nestlé S.A., a corporation organized under the laws of
Switzerland (“Nestlé S.A.”), received
shares of, or options to purchase shares of, Dreyer’s
Class A Callable Puttable Common Stock, par value $0.01 per
share (the “Class A Shares”), representing
approximately 33% of the fully-diluted capital stock of
Dreyer’s, and Nestlé Holdings and NICC Holdings
received shares of Dreyer’s Class B Common Stock, par
value $0.01 per share (“Class B Shares”),
representing approximately 67% of the fully-diluted capital
stock of Dreyer’s. Nestlé Holdings and NICC Holdings
have since transferred all of the Class B Shares to
Nestlé Ice Holdings, Inc. (“Nestlé
Ice”). The term “Nestlé” is used
throughout this Notice of Put Right to refer collectively to
Nestlé S.A., Nestlé Holdings and Nestlé Ice.
Under Section (c)(ii) of Article FIFTH of the Restated
Certificate of Incorporation of Dreyer’s (the
“Restated Certificate”), holders of
Class A Shares have the right (the “Put
Right”) to require Dreyer’s to purchase, during
two periods, all or part of the Class A Shares held by
them, subject to the terms and conditions of the Restated
Certificate, for $83.00 in cash per Class A Share (the
“Purchase Price”). The first period is from
December 1, 2005 until 5:00 p.m. New York City time on
January 13, 2006 (the “First Put Period”).
The second period is from April 3, 2006 until
5:00 p.m. New York City time on May 12, 2006 (the
“Second Put Period”). The term
“Expiration Time” as used herein refers to
5:00 p.m. New York City time on January 13, 2006 or
5:00 p.m. New York City time on May 12, 2006, as
applicable.
Under the terms of the Governance Agreement dated June 26,
2003 (the “Governance Agreement”) by and among
Nestlé Holdings, Dreyer’s, and, with respect to
Articles I, II and VIII thereof, Nestlé S.A. (the
parent of Nestlé Holdings), Nestlé S.A. or Nestlé
Holdings is required to provide, or cause its affiliate to
provide, the funds to pay the Purchase Price for which the Put
Right is properly exercised. In exchange for the payment of the
Purchase Price, Dreyer’s will issue one Class B Share
to Nestlé for each Class A Share that is purchased by
Dreyer’s. All Class A Shares that are purchased by
Dreyer’s will be retired and cancelled.
Section (c)(iv) of Article FIFTH of the Restated
Certificate provides that on the date that Nestlé owns at
least 90% of the issued and outstanding voting stock of
Dreyer’s (the “Conversion Date”) each
outstanding Class A Share will automatically be converted
into one Class B Share (the “Conversion”).
The Governance Agreement further provides that should
Nestlé own 90% or more of the outstanding voting stock of
Dreyer’s, Nestlé will promptly cause a
“short-form” merger between Dreyer’s and
Nestlé Holdings (or its affiliate) (the “Short
Form Merger”). Under Section 253 of the
Delaware General Corporation Law (the “DGCL”),
Nestlé Holdings (or its affiliate) may effect the Short
Form Merger without the affirmative vote of, or prior
notice to, Dreyer’s board of directors or stockholders.
If a Short Form Merger is consummated as a result of a
Conversion due to stockholders exercising the Put Right during
either the First or Second Put Period, then holders of
Class A Shares who did not exercise the Put Right will be
entitled to receive $83.00 in cash per Class B Share.
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If a stockholder properly exercised the Put Right prior to the
Conversion Date, the automatic conversion of Class A Shares
to Class B Shares will not affect the right of such
stockholder to receive the Purchase Price for any Class A
Shares for which the Put Right was properly exercised.
Prior to January 1, 2007, under certain circumstances that
would involve a substantial adverse change in Dreyer’s
business or financial viability and which would result in a
“Triggering Event,” as defined in the Restated
Certificate and described more fully in “A Triggering
Event” on page 27, Nestlé has the
right, in its sole discretion, under the Governance Agreement to
either (a) cause Dreyer’s to redeem all outstanding
Class A Shares at the “Triggering Event
Price” (as described more fully in “A
Triggering Event” on page 27) or
(b) offer to purchase all outstanding Class A Shares
directly from the holders of such shares at the Triggering Event
Price.
If at any time prior to January 1, 2007 a Short
Form Merger is consummated as a result of a Conversion due
to a Triggering Event, then holders of Class A Shares will
be entitled to receive the Triggering Event Price in cash per
Class B Share.
If a Short Form Merger is not consummated prior to
January 1, 2007, under the Restated Certificate and the
Governance Agreement, Dreyer’s and Nestlé have the
right at any time during the period between January 1, 2007
through and including June 30, 2007 to redeem all (but not
part) of the outstanding Class A Shares without the consent
of any holder of the Class A Shares at the price of $88.00
in cash per Class A Share (the “Call
Right”).
If a Short Form Merger is consummated, (a) holders of
Class A Shares at the effective time of such Short
Form Merger will not be eligible for appraisal rights under
Delaware law, and (b) the vesting of outstanding options to
purchase Class A Shares (the “Stock
Options”) will be accelerated in full and such Stock
Options will be immediately and without further action converted
into the right to receive a payment per Class A Share equal
to the difference between the payment that would otherwise be
due to a holder of Class A Shares upon the consummation of
the Short Form Merger and the per share exercise price of
the Stock Option.
Stockholders who exercise the Put Right during either the First
or Second Put Periods will receive $83.00 in cash for their
Class A Shares sooner than stockholders who receive $83.00
in cash as a result of the Short Form Merger. However, if a
Short Form Merger is not consummated before the conclusion
of the Second Put Period and Dreyer’s or Nestlé cause
the Call Right to be exercised, stockholders whose Class A
Shares are redeemed under the Call Right in 2007 will receive
$5.00 per share more than stockholders who exercised the Put
Right during either of the Put Periods in 2006. There can be no
assurance that either Dreyer’s or Nestlé will exercise
the Call Right in 2007.
Questions And Answers About The Put Right
The following are answers to some of the questions that you
may have about the Put Right. To fully understand the Put Right
and for a more complete description of the terms of the Put
Right, you should read carefully this entire Notice of Put
Right, the appendices to this Notice of Put Right, documents
incorporated by reference or otherwise referred to herein and
the Letter of Transmittal. Section and heading references are
included to direct you to a more complete description of the
topics contained in this summary.
What securities have a Put Right?
All holders of Class A Shares may exercise the Put Right to
require Dreyer’s to purchase any and all Class A
Shares during the First Put Period or the Second Put Period, if
there is one. For information about the terms of the Put Right,
please see “The Put Right” on
page 22 and “Procedures for Exercising the
Put Right” on page 30.
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Who is purchasing my Class A Shares?
Under the Restated Certificate, Dreyer’s will purchase your
Class A Shares. Nestlé Holdings, a wholly-owned
subsidiary of Nestlé S.A., will provide, or cause its
affiliate to provide, the funds to purchase the Class A
Shares in accordance with the Governance Agreement. Please see
“Special Factors – Background of
Nestlé’s Investment in Dreyer’s” on
page 15 and “Certain Information Concerning
the Nestlé Entities” on page 42 for
further information about Nestlé. Each Class A Share
that is tendered for purchase will be cancelled and Nestlé
Ice, a wholly-owned subsidiary of Nestlé Holdings, will be
issued one Class B Share for each Class A Share that
is purchased.
How much will I receive for each Class A Share?
Holders of Class A Shares will receive $83.00 in cash for
each Class A Share for which the Put Right is properly
exercised, subject to withholding for applicable taxes. Please
see “The Put Right” on page 22 for
information about the terms of the Put Right.
Does Nestlé have the financial resources to fund the
Purchase Price?
Yes. Funds for the Purchase Price will be deposited by
Nestlé, or its affiliate, with Mellon Investor Services,
which is acting as Depositary Agent for the Put Right. Please
see “Source and Amount of Funds” on
page 43 for more information about how Nestlé
will fund the Purchase Price for the Class A Shares.
When do I have to decide whether or not to exercise my Put
Right during the First Put Period?
In order to exercise your Put Right during the First Put Period,
your Class A Shares, together with a properly completed
Letter of Transmittal, must be validly delivered to Mellon
Investor Services no later than 5:00 p.m. New York City
time on January 13, 2006. Please see “Procedures
for Exercising the Put Right” on page 30
for more information about what must be delivered to Mellon
Investor Services.
Has the Put Right been approved or recommended by the
stockholders or directors of either Dreyer’s or any of the
Nestlé entities?
The terms of the Merger Agreement and the transactions
contemplated thereby, including the Restated Certificate, were
negotiated by and among the parties to the Merger Agreement,
which was attached to, and described in, the Proxy Statement/
Prospectus dated February 14, 2003 (the “Proxy
Statement/ Prospectus”) that was sent to DGIC’s
stockholders to solicit their approval to the Merger Agreement
and the combination of the businesses of DGIC and NICC. The
terms of the Put Right, including the timing and duration of the
First Put Period and the Second Put Period and the Purchase
Price of $83.00 in cash per Class A Share, are set forth in
the Restated Certificate. The stockholders of DGIC approved the
Merger Agreement and related transactions, including the
exchange of shares of DGIC common stock for Class A Shares
having the rights set forth in the Restated Certificate, at a
special meeting of stockholders of DGIC on March 20, 2003.
DGIC’s board of directors unanimously approved the Merger
Agreement and the transactions contemplated there by, including
without limitation, the formation of Dreyer’s and the
provisions of the Restated Certificate.
No further approval of either the board of directors or
stockholders of Dreyer’s is required under Delaware law
with respect to the Put Right, the Call Right, the Triggering
Event or a Short Form Merger.
The stockholders of Nestlé S.A. and its subsidiaries were
not required to approve the Merger Agreement and the
transactions contemplated there by, the Restated Certificate or
the Governance Agreement. The boards of directors of Nestlé
S.A. and Nestlé Holdings approved the Merger Agreement and
the Governance Agreement.
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The boards of directors of Nestlé and Dreyer’s have
not issued a recommendation as to whether or not the holders of
Class A Shares should exercise the Put Right or continue to
hold or dispose of their Class A Shares. Therefore, it is
at the discretion of the holders of Class A Shares whether
or not to exercise the Put Right or continue to hold such
shares, in light of the possibility of a redemption of such
shares (a) upon the consummation of a Short
Form Merger, (b) upon the occurrence of a Triggering
Event or (c) under the Call Right.
How will the Put Right affect the payment of dividends?
Under the Governance Agreement, Dreyer’s has certain
obligations regarding the declaration and payment of dividends
on the Class A Shares and Class B Shares
(collectively, “Dreyer’s Common Stock”).
In accordance with these obligations, since the closing of the
transactions under the Merger Agreement, Dreyer’s board of
directors has declared a cash dividend of $.06 per share per
quarter. Should Dreyer’s board of directors declare a
dividend of $0.06 per share for the quarter ended
December 31, 2005, the record date for determining the
stockholders who are eligible to receive such a dividend would
normally be December 30, 2005. If a dividend is declared by
Dreyer’s board of directors to be paid to the stockholders
of record on December 30, 2005, all holders of record of
Class A Shares on December 30, 2005 will be entitled
to receive such dividend payment even if they have properly
exercised their Put Right. Please see “Miscellaneous
Provisions Related to the Put Right, the Call Right and a
Triggering Event – Dividends and the Put
Periods” on page 29 for more information.
What are the conditions to the Put Right?
There is no condition that the Put Right must be exercised for a
specific number of Class A Shares or a certain percentage
of the issued and outstanding Class A Shares. As long as
you comply with the instructions set forth in this Notice of Put
Right and the accompanying Letter of Transmittal to exercise the
Put Right for your Class A Shares, you will have obtained
the right to receive $83.00 in cash for each Class A Share
for which the Put Right has been properly exercised, subject to
withholding of applicable taxes as discussed below.
How do I exercise the Put Right and deliver my Class A
Shares?
Please refer to “Procedures for Exercising the Put
Right” on page 30 for detailed instructions
on how to exercise your Put Right and how to validly deliver
your Class A Shares. In summary:
• Holders of certificates representing
Class A Shares: Return a properly completed Letter of
Transmittal and certificates representing Class A Shares to
Mellon Investor Services;
• Holders of Class A Shares that
are held in book entry form through an account in Mellon
Investor Services’ Direct Registration System: Return a
properly completed Letter of Transmittal to Mellon Investor
Services;
• Holders of Class A Shares held
in book entry form (also known as “street name”)
through a brokerage or other securities account maintained by a
commercial institution: Contact your broker, dealer,
commercial bank, trust company or other nominee for their
assistance in exercising your Put Right.
• Holders of Class A Shares held
in book entry form (also known as “street name”)
directly with the Depository Trust Company (such holders
generally are commercial institutions such as brokers, dealers,
commercial banks and trust companies): Follow the procedures
for book entry transfer of the Class A Shares, as described
in “Procedures for Exercising the Put Right” on
page 30.
6
In order to exercise your Put Right during the First Put
Period, you must validly deliver
your Class A Shares, together with a properly
completed Letter of Transmittal,
no later than 5:00 p.m. New York City time on
January 13, 2006.
May I withdraw my exercise of the Put Right after I have
validly delivered my Class A Shares to Mellon Investor
Services?
Yes. Your election to exercise the Put Right may be withdrawn at
any time prior to 5:00 p.m. New York City time on
December 30, 2005. See “Procedures for Exercising
the Put Right – Right of Withdrawal” on
page 33 for more information.
How do I withdraw my exercise of the Put Right?
You (or your broker if your Class A Shares are held in
“street name”) must notify Mellon Investor Services at
one of the addresses set forth on the back cover of this Notice
of Put Right if you wish to withdraw your exercise of the Put
Right. The notice must include the name of the stockholder that
exercised the Put Right, the number of Class A Shares for
which the exercise is being withdrawn and the name in which the
Class A Shares are registered. Mellon Investor Services
must receive any withdrawal for the exercise of the Put Right
prior to 5:00 p.m. New York City time on December 30,
2005. For complete information about the procedures for
withdrawing your exercise of the Put Right, see
“Procedures for Exercising the Put Right –
Right of Withdrawal” on page 33.
When will payment of the Purchase Price for my Class A
Shares be made?
Holders of Class A Shares that are validly delivered upon
exercise of the Put Right to Mellon Investor Services on or
before December 30, 2005 will be issued payment of the
aggregate Purchase Price within two business days after
January 1, 2006.
Holders of Class A Shares that are validly delivered upon
exercise of the Put Right to Mellon Investor Services on or
after December 31, 2005 and on or before
January 13, 2006, will be issued payment of the aggregate
Purchase Price as promptly as practicable.
What is the Short Form Merger and what will happen to
outstanding Class A Shares if a Short Form Merger is
consummated?
Under the terms of the Restated Certificate and the Governance
Agreement, each Class A Share for which the Put Right is
exercised will be cancelled and one Class B Share will be
issued to Nestlé for each Class A Share that is
cancelled. Nestlé currently owns approximately 67% of the
fully-diluted capital stock of Dreyer’s. Accordingly,
Nestlé’s percentage ownership of outstanding
Dreyer’s Common Stock will increase to the extent the Put
Right is exercised by holders of Class A Shares.
If at any time Nestlé owns at least 90% of the issued and
outstanding voting stock of Dreyer’s, each then outstanding
Class A Share will automatically be converted into one
Class B Share (the “Conversion”) and
Nestlé will then be obligated, under the Governance
Agreement, to effect a “short form” merger between
Dreyer’s and Nestlé (the “Short
Form Merger”) under Delaware law. The Short
Form Merger will not require the approval of either
Dreyer’s board of directors or stockholders. In the absence
of Triggering Event, should a Short Form Merger be consummated
before January 1, 2007, all holders of Class A Shares
who did not previously exercise the Put Right will be entitled
to receive a cash payment of $83.00 per share and these
holders will receive a notification of the Short Form Merger
from Nestlé along with instructions on how to receive
payment for their shares. Please see “Miscellaneous
Provisions Related to the Put Right, the Call Right and a
Triggering Event – Short Form Merger” on
page 29 for more information.
In the event that a validly executed Letter of Transmittal and
accompanying Class A Shares (in physical certificate form,
or through a book entry transfer by either Mellon Investor
Services or the Depository Trust Company, or through receipt of
a notice of guaranteed delivery from an Eligible Institution)
arrives at the offices of Mellon Investor Services after either
(1) the Conversion, or (2) the
7
occurrence of a Triggering Event, then such Letter of
Transmittal and Class A Shares without further action on
the part of the delivering stockholder will be irrevocably
deemed validly delivered for the purpose of exchanging such
Class A Shares for the right to receive a cash payment per
Class A Share of (1) $83.00 in the case of a Short
Form Merger prior to January 1, 2007, (2) $88.00 in
the case of a Short Form Merger on or after January 1,
2007, or (3) the Triggering Event Price in the case of a
Triggering Event at any time.
If I decide not to exercise my Put Right, how will my
Class A Shares Be Affected?
If you elect not to exercise the Put Right with respect to some
or all of the Class A Shares that you hold and, after the
Expiration Time of the First Put Period, Nestlé owns
less than 90% of the issued and outstanding voting stock
of Dreyer’s, you will have the opportunity to again
exercise the Put Right with respect to your Class A Shares
in the Second Put Period between April 3, 2006 and
May 12, 2006 for the same Purchase Price of $83.00 per
Class A Share.
If you do not exercise the Put Right with respect to your
Class A Shares in either of the Put Periods and there has
not been a Short Form Merger, then during the period from
January 1, 2007 to June 30, 2007 either Nestlé or
Dreyer’s may exercise the Call Right, which would cause the
redemption of all outstanding Class A Shares for a payment
of $88.00 in cash per Class A Share. There can be no
assurance that either Nestlé or Dreyer’s will exercise
the Call Right.
In addition, if a Triggering Event should occur prior to
January 1, 2007, all Class A Shares outstanding at
such time will be converted into the right to receive the cash
payment per Class A Share equal to the Triggering Event
Price.
If a Triggering Event has not occurred and a Short
Form Merger has not been consummated on or before
June 30, 2007, all Class A Shares that remain
outstanding after June 30, 2007 and are held by
stockholders other than Nestlé and its affiliates will
automatically be converted into Class B Shares, which are
not listed for trading on any exchange. Thereafter, there would
no longer be a public trading market for Dreyer’s
securities. Nestlé is under no obligation to cause
Dreyer’s to register the Class B Shares with the
Securities and Exchange Commission (“SEC”).
Should the Class B Shares not be registered with the SEC
and if there are fewer than 500 stockholders of record of such
Class B Shares, Dreyer’s public reporting and other
obligations under the Securities and Exchange Act of 1934 (the
“Exchange Act”), such as the Sarbanes-Oxley
Act, would terminate. Please see “Special
Factors – Certain Effects of the Exercise of the Put
Right” on page 21 for more information.
I hold options to purchase Class A Shares: Am I eligible
to exercise the Put Right?
No. Holders of options to purchase Class A Shares
issued under stock option plans maintained by Dreyer’s (the
“Stock Options”) are not eligible to
participate in the Put Right unless such holder first exercises
the applicable vested Stock Option. If you wish to exercise your
vested Stock Options, please contact:
Dreyer’s Grand Ice Cream Holdings, Inc.
Attention: People Support
5929 College Avenue
Oakland, California 94618
(510) 601-4247
I hold options to purchase Class A Shares: What happens
to these Stock Options in the event of a Short
Form Merger?
Under the terms of the Merger Agreement, the Governance
Agreement and the documents governing the Stock Options,
immediately prior to and contingent upon the consummation of a
Short Form Merger, the vesting of all outstanding stock
options will accelerate in full. Under the terms of the Merger
Agreement and the Governance Agreement, upon the consummation of
a Short Form Merger,
8
each outstanding Stock Option will be converted into the right
to receive a cash payment per Class A Share equal to the
difference of:
• either: (1) $83.00 if the Short
Form Merger is consummated prior to January 1, 2007,
(2) $88.00 if the Short Form Merger is consummated on
or after January 1, 2007, or (3) the Triggering Event
Price in cash should a Triggering Event occur; minus
• the per share exercise price underlying
the outstanding Stock Option; minus
• withholding for applicable taxes (such
net payment, the “Stock Option Payment”).
Following the consummation of a Short Form Merger, holders
of Stock Options will be sent a notification from Nestlé
that the Short Form Merger has been consummated along with
the Stock Option Payment. Please see “Treatment of
Special Categories of Dreyer’s Securities –
Treatment of Stock Options Under the Short
Form Merger” on page 35 for more
information.
I hold Class A Shares that were acquired under
DGIC’s Secured Stock Plan: How do I exercise the Put Right
for these Class A Shares?
Certain holders acquired Class A Shares under DGIC’s
Secured Stock Plan which provides, among other things, that the
holder acquired such Class A Shares using in whole or in
part funds loaned by DGIC in return for which Dreyer’s, as
the successor to DGIC, received a security interest in such
Class A Shares. Certificates representing such Class A
Shares are held in escrow by Dreyer’s subject to repayment
of all outstanding principal and interest due under such loans.
If you own Class A Shares acquired under DGIC’s
Secured Stock Plan, you are eligible to exercise the Put Right
and receive a payment equal to the difference between:
• $83.00 in cash per Class A Share
for all such Class A Shares acquired under the DGIC Secured
Stock Plan; minus
• the outstanding principal and interest
due under DGIC’s Secured Stock Plan; minus
• withholding for applicable taxes (such
net payment, the “Secured Stock Payment”).
Holders of Class A Shares acquired under the DGIC Secured
Stock Plan who wish to exercise the Put Right for such
Class A Shares may do so, provided that they first contact
Dreyer’s to request Dreyer’s to send such share
certificates as well as the information as to the amount of the
Secured Stock Payment to Mellon Investor Services. Upon receipt
from the stockholder by Mellon Investor Services of a properly
executed Letter of Transmittal and the information and
certificate from Dreyer’s, such stockholders will receive
the Secured Stock Payment, as well as a closing statement from
Dreyer’s setting forth the calculation of the Secured Stock
Payment.
Please see “Treatment of Special Categories of
Dreyer’s Securities – Exercising the Put
Right for Class A Shares Acquired Under DGIC’s Secured
Stock Plan” on page 35 for more information.
I am a participant in the DGIC Stock Fund offered under the
DGIC 401(k) Retirement Plan: Am I eligible to exercise the Put
Right?
No. The administrative committee (the
“Administrative Committee”) of the
Dreyer’s Grand Ice Cream, Inc. Stock Fund (the
“Stock Fund”) which is offered under the
Dreyer’s Grand Ice Cream, Inc. Savings Plan has advised
Nestlé and Dreyer’s that holders of units in the Stock
Fund do not hold title to any Class A Shares and, for the
reasons described herein, the authority to exercise the Put
Right for the Class A Shares held by the Stock Fund will be
retained by the Administrative Committee. Please see
“Treatment of Special Categories of Dreyer’s
Securities – Treatment of Class A Shares Held by
the DGIC Stock Fund” on page 36 for more
information.
9
I still have not exchanged my DGIC common stock certificates:
May I use these certificates to exercise the Put Right?
Yes. If you hold a certificate for DGIC common stock and wish to
exercise the Put Right, you should mark Box #4 on the Letter of
Transmittal for delivering certificated shares and deliver the
properly completed Letter of Transmittal together with the
certificates for DGIC common stock.
Must I exercise the Put Right for all of my Class A
Shares?
No. The decision to exercise the Put Right with respect to your
Class A Shares is at your individual discretion.
Accordingly, you may exercise the Put Right for all, none or a
portion of your Class A Shares during the First Put Period
or the Second Put Period, if there is one.
What are the material United States federal income tax
considerations with respect to my exercise of the Put Right?
Sales of Class A Shares pursuant to the exercise of the Put
Right and the exchange of Class A Shares for cash pursuant
to the Short Form Merger will be taxable transactions for
federal income tax purposes and may also be taxable under
applicable state, local and other tax laws. Gain or loss will be
capital gain or loss if the Class A Shares are held as
capital assets by the stockholder. As individual tax
situations differ, stockholders should consult with their
individual tax and legal advisors concerning the tax treatment
of the exercise of the Put Right. If you exercise your Put
Right during the First Put Period, the Purchase Price for the
Class A Shares will be paid to you in 2006 and
Dreyer’s will record such purchase on its books as of the
date of such payment. Dreyer’s will not make any such
payment in 2005 nor will it record any purchase of Class A
Shares in 2005. Please see “Miscellaneous Provisions
Related to the Put Right, the Call Right and a Triggering
Event — Material United States Federal Income Tax
Consequences of the Purchase of Class A Shares” on
Page 30 for more information.
Will the Class A Shares continue to trade on NASDAQ?
The Class A Shares will continue to trade on the NASDAQ
National Market System (“NASDAQ”) until
Nestlé owns 90% of the outstanding voting stock of
Dreyer’s. At that time, all issued and outstanding
Class A Shares will automatically be converted into
Class B Shares, Nestlé will consummate the Short
Form Merger and the listing of the Class A Shares on
NASDAQ will be terminated.
What is the market value of my Class A Shares as of a
recent date?
On September 6, 2005, the reported closing price for the
Class A Shares on NASDAQ was $81.88 per share. You should
obtain a recent market quotation for the Class A Shares in
deciding whether to exercise the Put Right for your Class A
Shares. Please see “Certain Information Concerning
Dreyer’s – Price Range of Class A Shares;
Dividends” on page 37 for recent high and
low sales prices for the Class A Shares.
10
To whom may I direct questions about the Put Right?
If you have questions or need assistance, you should contact
Mellon Investor Services, which is acting as Depositary Agent,
Information Agent, Solicitation Agent and Transfer Agent for the
Put Right at the following address and telephone number:
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Mellon Investor Services |
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A Mellon Financial
CompanySM |
By Telephone: 9 a.m. to 6 p.m. New York City time,
Monday through Friday, except for bank holidays:
From within the U.S., Canada or Puerto Rico:
1-888-256-2660 (Toll Free)
From outside the U.S.:
1-201-329-8660 (Collect)
For the hearing impaired:
TDD from within the U.S., Canada or Puerto Rico:
1-800-231-5469 (Toll Free)
TDD from outside the U.S.: 1-201-329-8354 (Collect)
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By Mail
Mellon Investor Securities LLC
Reorganization Department
P.O. Box 3301
South Hackensack, New Jersey 07606
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By Overnight Courier
Mellon Investor Securities LLC
Reorganization Department
Mail Prop – Reorg
480 Washington Blvd.
Jersey City, NJ 07032 |
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By Hand
Mellon Investor Securities LLC
Reorganization Department
120 Broadway, 13th Floor
New York, New York 10271 |
By Facsimile Transmission (for Eligible Institutions
only): (201) 296-4293
Confirm by Telephone:
(201) 296-4860
11
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13
To the Holders of
Class A Shares of
Dreyer’s Grand Ice
Cream Holdings, Inc.
Introduction
This Notice of Put Right pertains to the right of the holders of
Class A Callable Puttable Common Stock, par value $0.01 per
share (the “Class A Shares”), of
Dreyer’s Grand Ice Cream Holdings, Inc.
(“Dreyer’s”) to require Dreyer’s to
purchase all or part of the Class A Shares held by them for
$83.00 in cash per Class A Share, upon the terms and
subject to the conditions set forth in this Notice of Put Right
and the related Letter of Transmittal. Holders of Class A
Shares who exercise the Put Right will not be obligated to pay
brokerage fees or commissions on the purchase of Class A Shares
by Dreyer’s.
THIS NOTICE OF PUT RIGHT AND THE RELATED LETTER OF TRANSMITTAL
CONTAIN IMPORTANT INFORMATION AND SHOULD BE READ IN THEIR
ENTIRETY BEFORE ANY DECISION IS MADE WITH RESPECT TO THE PUT
RIGHT.
Background of
Dreyer’s
Dreyer’s was formed in connection with the combination of
the businesses of Dreyer’s Grand Ice Cream, Inc.
(“DGIC”) and Nestlé Ice Cream Company, LLC
(“NICC”) on June 26, 2003 (the
“Merger Closing Date”). Dreyer’s
manufactures and distributes ice cream and other frozen snack
products. The “Dreyer’s Grand Ice Cream” line of
products is marketed throughout the western United States, Texas
and certain markets in the Far East. The “Edy’s®
Grand® Ice Cream” line of products is sold under the
Edy’s brand name throughout the remaining regions of the
United States and certain markets in the Caribbean and South
America. Dreyer’s manufactures and/or distributes products
under license from affiliates of Nestlé S.A., including
Häagen-Dazs® ice cream, Nestlé®
Drumstick® ice cream sundae cones, Nestlé Crunch®
and Nestlé® Butterfinger® ice cream bars and
Carnation® ice cream sandwiches. Dreyer’s branded
products, including licensed and joint venture products, enjoy
strong consumer recognition and loyalty. Dreyer’s also
manufactures under license and/or distributes branded ice cream
and frozen snack products for other companies.
Dreyer’s entered into an Agreement and Plan of Merger and
Contribution, dated June 16, 2002, as amended (the
“Merger Agreement”), with DGIC, December Merger
Sub, Inc., Nestlé Holdings, Inc. (“Nestlé
Holdings”) and NICC Holdings, Inc. (“NICC
Holdings”), to combine the businesses of DGIC and NICC.
The term “Nestlé” is used throughout this
Notice of Put Right to refer collectively to
Nestlé S.A., a corporation organized under the laws of
Switzerland (“Nestlé S.A.”),
Nestlé Holdings and Nestlé Ice Holdings, Inc., an
indirect wholly-owned subsidiary of Nestlé Holdings
(“Nestle Ice”). On the Merger Closing Date,
upon the closing of the transactions under the Merger Agreement
(the “Merger”), the businesses of DGIC and NICC
were combined and each became a wholly-owned subsidiary of
Dreyer’s. Prior to the Merger Closing Date, DGIC was a
publicly traded company and NICC was an indirect, wholly-owned
subsidiary of Nestlé S.A. As a result of the Merger, the
former securityholders of DGIC (other than those affiliated with
Nestlé) received shares or options to purchase Class A
Shares constituting approximately 33% of the fully-diluted
capital stock of Dreyer’s in exchange for their shares of
DGIC common stock and options to purchase DGIC common stock.
Nestlé Holdings and NICC Holdings (in exchange for its
contribution of the equity interest of NICC to Dreyer’s)
received shares of Dreyer’s Class B Common Stock
(“Class B Shares”) constituting
approximately 67% of the fully-diluted capital stock of
Dreyer’s. The Class A Shares are listed on the Nasdaq
National Market System (“NASDAQ”) and began
trading under the symbol “DRYR” on June 27, 2003.
The Class B Shares are not listed for trading on any
exchange.
According to Dreyer’s Quarterly Report on Form 10-Q
for the quarter ended June 25, 2005 (the
“Form 10-Q”) filed with the Securities and
Exchange Commission (“SEC”) on August 4,
2005, as of August 2, 2005 there were 31,084,828
Class A Shares outstanding. On June 25, 2005, there
were outstanding options to purchase 259,535 Class A Shares
at a weighted average exercise price of $25.76
14
which were vested and exercisable and there were outstanding
options to purchase 606,293 Class A Shares at a
weighted average exercise price of $25.62 which were unvested
and not exercisable.
On the Merger Closing Date, Nestlé Holdings, Nestlé
S.A. and Dreyer’s entered into a Governance Agreement (the
“Governance Agreement”), which is described in
further detail in “Special Factors –
Background of Nestlé’s Investment in
Dreyer’s” on Page 15. Nestlé S.A.
is a party to the Governance Agreement only with respect to
Article I (which relates to the purchase and redemption of
the Class A Shares), Article II (which relates to
Nestlé’s standstill and the payment provisions
relating to the redemption of the Class A Shares) and
Article VIII (which contains miscellaneous provisions,
including indemnification provisions). The Governance Agreement
contains agreements of the parties concerning the purchase of
the Class A Shares, the corporate governance of
Dreyer’s and future acquisitions or dispositions of
securities of Dreyer’s by Nestlé and its affiliates.
The Restated Certificate of Incorporation of Dreyer’s (the
“Restated Certificate”) contains provisions
under which Dreyer’s may purchase its Class A Shares
on the terms and conditions specified therein. These include
purchases at the option of the holders of the Class A
Shares pursuant to the Put Right, which is the subject of this
Notice of Put Right, and redemptions at the election of
Dreyer’s and/or Nestlé pursuant to the Call Right,
upon the consummation of a Short Form Merger (as defined
below) and upon the occurrence of a Triggering Event (as defined
below). The terms and conditions of these purchase and
redemption rights are described below, which description is
qualified in its entirety by reference to the provisions of the
Restated Certificate, which is incorporated herein by this
reference.
Special
Factors
Going Private Rules
Because Nestlé is an affiliate of Dreyer’s, the
transactions contemplated herein constitute a “going
private” transaction under Rule 13E-3 under the
Exchange Act. Rule 13E-3 requires, among other things, that
certain information relating to the fairness of the Put Right
and the Short Form Merger and the consideration to be paid
for the purchase of Class A Shares pursuant to the exercise
of the Put Right and the Short Form Merger to minority
stockholders be filed with the SEC and disclosed to minority
stockholders prior to consummation of the Short Form Merger.
Nestlé and Dreyer’s are providing such information in
this Notice of Put Right. Nestlé does not presently intend
to cause Dreyer’s to file a Form 15 to evidence the
termination of Dreyer’s duty to file reports pursuant to
Section 15(d) of the Exchange Act until after the Short
Form Merger is complete.
Background of Nestlé’s Investment in
Dreyer’s
Meetings, communications and agreements between Nestlé and
Dreyer’s that preceded the execution of the Merger
Agreement are set forth in the Proxy Statement/ Prospectus dated
February 14, 2003 that was sent to DGIC’s stockholders
to solicit their approval of the combination of the businesses
of DGIC and NICC as contemplated by the Merger Agreement, as
well as the other transactions contemplated thereby and the
provisions of the Restated Certificate, including without
limitation, the terms of the Put Right, the Call Right, the
Triggering Event, the Short Form Merger, the timing and
duration of the First Put Period and the Second Period and the
Purchase Price of $83.00 per Class A Share.
There have been no changes to the Restated Certificate, the
Merger Agreement or the Governance Agreement that relate to
these provisions since the Merger Closing Date. The five members
of Dreyer’s board of directors who are nominated by
Nestlé have participated in meetings of Dreyer’s board
of directors since the Merger Closing Date. In the third and
fourth quarters of 2004, Dreyer’s and Nestlé engaged
in exploratory discussions regarding the possible sale of
Dreyer’s intellectual property assets to Nestlé at
fair market value. However, these preliminary discussions ended
in the fourth quarter of 2004 without resulting in any agreement
between Dreyer’s and Nestlé.
15
Nestlé S.A., Nestlé Holdings and Dreyer’s entered
into the Governance Agreement in connection with the Merger.
Nestlé S.A. is a party to the Governance Agreement only
with respect to Article I (which relates to the purchase
and redemption of Class A Shares), Article II (which
relates to Nestlé’s standstill and the payment
provisions relating to the redemption of Class A Shares)
and Article VIII (which contains miscellaneous provisions,
including indemnification provisions). The provisions in the
Governance Agreement relating to the Put Right, the Call Right,
the Triggering Event and the Short Form Merger have been
set forth in other sections of this Notice of Put Right. A
summary of other terms of the Governance Agreement is provided
below.
Registration Rights: At any time after July 1, 2007
or the date that it becomes illegal for Nestlé Holdings,
Nestlé S.A. or any of their affiliates to continue to own
Class B Shares, upon Nestlé Holdings’ request,
Dreyer’s will be required to prepare and file with the SEC
one or more, but not more than three, registration statements
covering the number of Class B Shares requested to be
registered by Nestlé Holdings.
Affiliate Transactions: Prior to July 1, 2007, with
limited exceptions for transactions contemplated under the
Governance Agreement (such as the Call Right), Nestlé
Holdings has agreed that Nestlé and its affiliates may not
engage in any material transaction with Dreyer’s in which
they have a material interest without the approval of a majority
of the non-Nestlé directors (see the discussion of the
board composition below).
Nestlé Standstill: Prior to July 1, 2007, with
limited exceptions for transactions contemplated under the
Governance Agreement (such as the Call Right), Nestlé has
agreed that it or its affiliates may not, directly or
indirectly, purchase or otherwise acquire shares of
Dreyer’s or propose or offer to purchase or acquire shares
of Dreyer’s, if, as a result of the acquisition, the voting
interest of Nestlé and its affiliates in Dreyer’s
would exceed 67% of Dreyer’s outstanding capital stock on a
fully-diluted basis.
Composition of the Board of Directors: The Governance
Agreement provides that, unless changed in accordance with
Dreyer’s bylaws, the board of directors of Dreyer’s
will consist of 10 directors. Prior to July 1, 2007, at all
times 50% of the then-serving members of Dreyer’s board of
directors will be directors nominated by Nestlé and
Nestlé has agreed to use its reasonable best efforts to
make sure that Nestlé directors do not comprise more than
50% of the then-serving members of Dreyer’s board of
directors unless Nestlé acquires 100% of the outstanding
shares of Dreyer’s capital stock. In addition, Nestlé
has also agreed that, from July 1, 2007 to July 1,
2008, at least three directors will be directors that meet
NASDAQ’s independence standards, and Nestlé has agreed
to use its reasonable best efforts to cause compliance with this
condition unless Nestlé acquires 100% of the outstanding
shares of Dreyer’s capital stock. The three independent
directors will have the right to nominate any replacement for an
independent director.
Committees of the Board of Directors: The Governance
Agreement provides that: (i) any committee of Dreyer’s
board of directors, except the audit committee, will contain at
least one director nominated by Nestlé; (ii) the audit
committee will consist only of independent directors; and
(iii) the compensation committee will consist of four
directors, two of whom will be independent directors and two of
whom will be directors nominated by Nestlé.
Dividends: The Governance Agreement provides that the
dividend policy of Dreyer’s will be to pay a dividend no
less than the greater of: (i) $0.24 per share of
Dreyer’s Common Stock on an annualized basis, or
(ii) 30% of Dreyer’s net income per share of
Dreyer’s Common Stock for the preceding calendar year;
unless the Board of Directors, in discharging its fiduciary
duties, determines not to declare a dividend in a given period.
The Governance Agreement provides that the calculation of net
income will exclude the ongoing non-cash impact of accounting
entries arising from the accounting for the Merger, including
increases in amortization or depreciation expenses resulting
from any required write-ups on Dreyer’s consolidated
balance sheet, and any journal entries related to the recording
of the Put Right or Call Right.
16
Approval Rights: The Governance Agreement and the bylaws
of Dreyer’s provide that, prior to July 1, 2007, the
affirmative vote of a majority of the then-authorized number of
directors will be required to authorize Dreyer’s to take
certain significant actions. In addition, the Restated
Certificate provides that, prior to July 1, 2007, if the
then-serving continuing directors nominated by Nestlé
constitute less than 50% of the total authorized number of
directors of Dreyer’s, the affirmative vote of the holders
of a majority of the outstanding Class B Shares will be
required to approve or authorize Dreyer’s to take these
significant actions.
Agreements of Nestlé as to Voting: In any election
of directors, Nestlé and its affiliates agreed to vote the
Class B Shares for all nominees in proportion to the votes
cast by the holders of Class A Shares. However, Nestlé
and its affiliates may cast all of their votes in favor of any
nominee nominated or proposed for nomination by Nestlé
under the Governance Agreement. Notwithstanding the foregoing,
if any person or group, other than any person or group having a
Schedule 13D or Schedule 13G on file with the SEC
prior to June 14, 2002, becomes the beneficial owner of 15% or
more of the then outstanding Class A Shares, Nestlé
agreed that it and its affiliates will vote their Class B
Shares in favor of the nominees nominated by Nestlé and the
nominees nominated by the non-Nestlé directors.
Covenants: Dreyer’s agreed to perform a number of
actions, including presenting an annual plan, budget and three
year business plan to the board of directors, not exceeding the
capital spending levels specified in Dreyer’s annual plan,
providing Nestlé with financial statements and inspection
rights and submitting written quality standards regarding the
production, manufacturing, packaging, transfer and supply of its
product to Nestlé for its review and working with
Nestlé to consider any modifications or revisions to such
quality standards.
Indemnification of Officers and Directors: Dreyer’s
is required to maintain, for the benefit of its directors and
officers, an insurance and indemnification policy that provides
coverage for acts or omissions with coverage limits and other
terms at reasonable levels consistent with industry practice.
Dreyer’s is a party to agreements that DGIC or NICC had
entered into with Nestlé or its affiliates prior to the
Merger Closing Date. Since the Merger Closing Date,
Dreyer’s and Nestlé or its affiliates have entered
into various agreements related to the licensing of intellectual
property either owned or licensed to Nestlé S.A. or its
affiliates, the provision of various services, borrowing
arrangements and confidentiality. In accordance with the terms
of the Governance Agreement, as described above, these
agreements were negotiated at arms-length.
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Agreements Entered Into Prior
to the Merger Closing Date |
Dreyer’s is a party to the following agreements which were
entered into prior to the Merger Closing Date and remain in
effect:
• Amended and Restated
Sublicense Agreement for Other Pillsbury Proprietary
Information, dated September 1, 2002, by and between
Nestlé USA – Prepared Foods Division, Inc. and
Nestlé Ice Cream Company, LLC, as amended and assigned to
Dreyer’s Grand Ice Cream Holdings, Inc. and its
subsidiaries, for the use of certain proprietary information of
Pillsbury.
• Amended and Restated
Sublicense Agreement for Pillsbury Trademarks and Technology,
dated September 1, 2002, by and among Société des
Produits Nestlé S.A., Nestec Ltd. and Nestlé Ice Cream
Company, LLC, as amended and assigned to Dreyer’s Grand Ice
Cream Holdings, Inc. and its subsidiaries, for the use of
Pillsbury licensed trademarks and technology.
• Amended and Restated Other
Nestlé USA Proprietary Information License Agreement, dated
September 1, 2002, by and between Nestlé
USA – Prepared Foods Division, Inc. and Nestlé
Ice Cream Company, LLC, as amended and assigned to Dreyer’s
Grand Ice Cream Holdings, Inc. and its subsidiaries, for the use
of certain proprietary information of Nestlé Prepared Foods
Company.
17
• Amended and Restated
Trademark/ Technology License Agreement, dated September 1,
2002, by and among Nestlé S.A., Nestec Ltd.,
Société des Produits Nestlé S.A., and Nestlé
Ice Cream Company, LLC, as amended, for the use of certain
trademarks and technology of Nestlé.
• Nestlé International
Co-Pack Agreement, dated October 8, 1999, with Nestlé
Prepared Foods Company, for production, packaging and supply of
products to Nestlé USA-Food Group, Inc. (or its designee)
for resale outside the United States and the District of
Columbia.
• Häagen-Dazs Japan
Co-Pack Agreement, dated October 8, 1999, with Pillsbury,
Nestlé USA-Food Group, Inc., and NICC, for production,
packaging and supply of products to Pillsbury for resale to the
Häagen-Dazs Japan Joint Venture.
• Amendment, Assumption and
Release Agreement dated June 3, 2003 by and among DGIC, New
December, Inc., NICC, Citibank N.A., Nestlé Holdings and
Nestlé USA, Inc. regarding certain irrevocable letters of
credit in the aggregate amount of $7,925,000 issued by Citibank
N.A. on behalf of NICC.
Dreyer’s has also entered into loan agreements with
Nestlé in order to obtain funds for working capital on more
favorable terms than could be obtained from a commercial bank.
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Nestlé S.A. Credit
Facility |
On June 27, 2003, Dreyer’s entered into a long-term
bridge loan facility with Nestlé S.A. for up to
$400,000,000. On September 26, 2003, Dreyer’s and
Nestlé S.A. amended the specified term of the bridge loan
facility to allow the facility’s term to be extended at
Dreyer’s option to December 31, 2005. On
March 23, 2004, Dreyer’s and Nestlé S.A. amended
the applicable margin on borrowings from the initial
agreement’s flat margin to a margin based on the year-end
and the half-year financial results. On May 28, 2004,
Dreyer’s and Nestlé S.A. amended the events of default
of this facility in conjunction with the addition of the
Nestlé Capital Corporation Sub-Facility (discussed below).
On December 6, 2004, Dreyer’s and Nestlé S.A.
amended the maximum amount available under this facility with an
increase of $250,000,000 for a new available maximum of
$650,000,000.
On June 15, 2005, Dreyer’s and Nestlé S.A.
amended the maximum amount available under this facility for a
new available maximum of $700,000,000 and extended the term to
be twelve months from the effective date of the amendment with
an option for Dreyer’s to extend the term again to a date
not later than December 30, 2006. The agreement also
amended the margin determination ratios at each half-yearly and
yearly reporting date to be based on Dreyer’s adjusted
Earnings Before Interest, Taxes, Depreciation, Amortization and
Royalties (“EBITDAR”) performance. Finally, the
agreement amended the events of default of this facility to
require certain EBITDAR performance ratios tests to be performed
at the full year reporting period.
Under the terms of the agreement, drawdowns under this facility
bear interest at the three-month USD LIBOR on the initial
drawdown date, increased by a margin determined by certain
financial ratios at Dreyer’s year end and half year
reporting. At December 25, 2004 and December 27, 2003,
Dreyer’s had $350,000,000 and $125,000,000 outstanding on
this bridge loan facility bearing interest at 3.01 and
2.37 percent, respectively. At June 25, 2005,
Dreyer’s had $595,000,000 outstanding on this bridge loan
facility bearing interest at 3.94 percent.
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Nestlé Capital Corporation
Sub-Facility |
On May 24, 2004, Dreyer’s entered into a loan
agreement with Nestlé Capital Corporation for up to
$50,000,000 in overnight and short-term advancements. This loan
agreement constitutes an allocation of the long-term bridge loan
facility with Nestlé S.A. As such, aggregate proceeds or
repayments under this facility will result in a corresponding
decrease or increase in the total borrowings available under the
$700,000,000 Nestlé S.A. bridge loan facility.
18
Under the terms of the agreement, drawdowns under this facility
bear interest at the average daily three-month USD LIBOR for all
overnight drawdowns taken during any given month, increased by a
margin determined by certain financial ratios at Dreyer’s
year-end and half-year reporting. At December 25, 2004,
Dreyer’s had $4,600,000 outstanding on this sub-facility
bearing interest at 2.99 percent. At June 25, 2005
Dreyer’s had $9,800,000 outstanding on this sub-facility
bearing interest at 3.91 percent.
At June 25, 2005 and December 25, 2004, the combined
outstanding borrowings on the Nestlé S.A. credit
facility, which includes the Nestlé Capital Corporation
sub-facility, was $604,800,000 and $354,600,000, respectively.
At June 25, 2005 and December 25, 2004, the unused
amount of the total available Nestlé S.A. credit facility,
which includes the Nestlé Capital Corporation sub-facility,
was $95,200,000 and $295,400,000, respectively.
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Summary of Payments Between
Nestlé and Dreyer’s |
The following summarizes payments during Dreyer’s last two
fiscal years between Dreyer’s and Nestlé (and its
affiliates), excluding the credit facilities described above:
• Inventory Purchases:
Dreyer’s inventory purchases from Nestlé Prepared
Foods Company or its affiliates for the six months ended
June 25, 2005 were $10,675,000. Inventory purchases were
$18,856,000 and $10,510,000 for 2004 and 2003, respectively.
• Taxes Receivable: In accordance
with Nestlé’s tax sharing policy, any intercompany
taxes for NICC are to be settled by actual payment. The final
reimbursement due from Nestlé for tax losses for the period
from January 1, 2003 through the Merger Close Date is
presented as “Taxes receivable due from affiliates.”
Taxes receivable due from affiliates totaled $12,236,000 at
December 27, 2003. The balance was paid in full by
Nestlé in 2004; as such, there was no balance at
December 25, 2004. During 2004 and 2003, Dreyer’s
received $21,664,000 and $16,943,000, respectively, from
Nestlé for tax reimbursements.
• Royalty Expense: Dreyer’s
pays affiliates of Nestlé for the use of trademarks or
technology owned by such affiliates and licensed or sublicensed
to Dreyer’s for use in the manufacture and sale of ice
cream and frozen snacks. Royalty expense to affiliates of
Nestlé for the six months ended June 25, 2005 was
$15,655,000. Royalty expense to affiliates totaled $27,288,000
and $22,764,000 for 2004 and 2003, respectively.
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Other Agreements Since the
Merger Closing Date |
Since the Merger Closing Date, Dreyer’s and Nestlé (or
its affiliates) entered into the following agreements none of
which are considered by Dreyer’s to be material to
Dreyer’s business:
• Transition Services Agreement, dated as
of June 26, 2003, as amended, with Nestlé USA, Inc.,
for the provision of certain services at cost such as
information technology support and payroll services, consumer
response, risk management, travel, corporate credit cards and
trade promotions.
• Research and Development Agreement,
dated as of June 26, 2003, as amended, with Nestec Ltd., an
affiliate of Nestlé S.A., for the provision of certain
limited research and development services being performed by
Nestec Ltd.
• Distributor Agreement, effective as of
September 1, 2003, with Nestlé USA, Inc. for
distribution of Nestlé frozen prepared food products.
• Services Agreement, dated
October 1, 2003, with Nestlé USA, Inc. for the
provision of sensory testing services.
• A form of letter agreement used from
time to time to appoint a Nestlé international company as
DGIC’s exclusive distributor of ice cream and other frozen
dessert products within certain
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territories, including the Philippines, Singapore, Malaysia, the
Caribbean region, Puerto Rico, Russia, Thailand, Mexico and
Chile.
• Valassis Communications, Inc. 2004-2006
Nestlé USA, Inc. Agreement dated as of December 19,
2003, by and among Nestlé USA, Inc., on behalf of itself
and its two affiliated companies, Nestlé Prepared Foods
Company and Nestlé Purina PetCare Company, and Valassis
Communications, Inc. for the purchase of advertising space
and/or cents-off coupons.
• Tax Services Agreement, dated
January 5, 2004, with Nestlé Holdings for the
provision of tax services.
• Services Agreement (Engineering), as
amended, dated February 5, 2004, with Nestlé USA, Inc.
for technical assistance in connection with designing a new
refrigeration system.
• Services Agreement (Servers), dated
February 5, 2004, with Nestlé USA, Inc. for the
housing of three Intel servers.
• Memorandum of Understanding, dated
March 31, 2004, with Nestlé Canada, Inc. for the
manufacture of certain products.
• Confidential Disclosure Agreement, dated
April 6, 2004, with Nestlé USA, Inc. and Nestlé
USA – Prepared Foods Division, Inc. involving sharing
marketing research and intelligence information.
• Joint Promotion Agreement, effective
April 26, 2004, with Nestlé USA, Inc. –
Beverage Division regarding coupon exchange between the
Dreyer’s and Nesquik brands.
• Confidentiality Agreement, dated
July 16, 2004, with Nestlé S.A. involving certain
confidentiality obligations.
• Letter Agreement, dated August 23,
2004, with Nestlé USA, Inc. to provide copies of and access
to certain documents and material relating to Nestlé USA,
Inc.’s Environmental Audit Program.
• Consent dated September 21, 2004 by
Dreyer’s to the continued full force and effect of a
License Agreement dated November 1, 2003 by and between
Silhouette Brands, Inc. and Nestlé Canada, Inc. which
provides for the use of Silhouette Brands, Inc.’s
trademarks in Canada by Nestlé Canada, Inc.
• Services Agreement, dated
December 2, 2004, with Nestlé USA, Inc. for certain
purchasing services.
• Co-manufacturing Agreement dated
March 4, 2005, with Nestlé Canada, Inc. for the
manufacturing of certain products.
• Services Agreement, dated May 4,
2005, with Nestlé USA, Inc. for certain recruiting services.
• Services Agreement, dated May 30,
2005, with Nestlé USA, Inc. for certain capital purchasing
services.
• Services Agreement, dated August 1,
2005, with Nestlé USA, Inc. for certain technical
assistance services.
All material agreements, arrangements or understandings and any
actual or potential conflicts of interest between Dreyer’s
or affiliates of Dreyer’s (other than Nestlé) and
(a) Dreyer’s, Dreyer’s executive officers,
directors or affiliates or (b) Nestlé or its
respective executive officers, directors or affiliates are
described in the agreements listed above or in
Schedule B to this Notice of Put Right.
Purpose of the Put Right and Nestlé’s Plans for
Dreyer’s
The Put Right allows holders of Class A Shares to exercise
the right to cause Dreyer’s to purchase their Class A
Shares as provided in the Restated Certificate. Nestlé and
Dreyer’s have caused
20
this Notice of Put Right to be sent to the holders of
Class A Shares as required under the terms of the Restated
Certificate and the Governance Agreement, as applicable.
Nestlé’s intent is to cause Dreyer’s to purchase
for cash as many Class A Shares as necessary for
Nestlé to acquire ownership of at least 90% of the issued
and outstanding shares of voting stock of Dreyer’s and
consummate a Short Form Merger. In the event a Short
Form Merger is consummated, Nestlé currently
anticipates that it will continue to sell Dreyer’s
products, but may integrate certain aspects of Dreyer’s
operations into Nestlé over time.
Certain Effects of the Exercise of the Put Right
The exercise of the Put Right, and the subsequent consummation
of a Short Form Merger if Nestlé acquires ownership of
at least 90% of the outstanding voting stock of Dreyer’s,
will affect Dreyer’s and its stockholders in a number of
ways.
In the event that following the First Put Period, no Short
Form Merger is consummated:
The consummation of the Short Form Merger under which
Dreyer’s would become a wholly-owned subsidiary of
Nestlé is contingent upon Nestlé owning at least 90%
of the issued and outstanding voting stock of Dreyer’s.
There can be no assurance that Nestlé will own at least 90%
of the issued and outstanding voting stock of Dreyer’s
following the Expiration Time.
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NASDAQ Listing and Public
Reporting Obligations under the Exchange Act |
If Nestlé owns less than 90% of the issued and outstanding
voting stock of Dreyer’s following the Expiration Time,
under the Governance Agreement Nestlé has agreed to
cooperate with Dreyer’s until July 1, 2007 to ensure
that the Class A Shares remain listed on NASDAQ. All
Class A Shares outstanding following the close of business
on June 30, 2007 will be automatically converted into
Class B Shares, which are not listed for trading on any
exchange. Thereafter, there would no longer be a public trading
market for Dreyer’s securities.
If at any time on or after July 1, 2007, Dreyer’s has
less than 500 record holders of Class B Shares and
Nestlé has not registered the Class B Shares under the
Exchange Act, Dreyer’s public reporting and other
obligations under the provisions of the Exchange Act, such as
the Sarbanes-Oxley Act, would terminate. This would
substantially reduce the information required to be furnished by
Dreyer’s to Dreyer’s stockholders, and certain
provisions of the Exchange Act would no longer applicable to
Dreyer’s, such as the short-swing profit recovery
provisions of Section 16(b), the requirement to furnish a
proxy statement in connection with a stockholders’ meeting
and the related requirement to furnish an annual report to
stockholders, and the provisions of Rule 13E-3 with respect
to “going-private” transactions.
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Federal Reserve Board Margin
Requirements |
The Class A Shares are presently “margin
securities” under the regulations of the Board of Governors
of the Federal Reserve (the “Federal Reserve
Board”), which has the effect, among other things, of
allowing brokers to extend credit on the collateral of the
Class A Shares. In the event that Nestlé owns less
than 90% of the issued and outstanding voting stock of
Dreyer’s and the Class A Shares no longer met the
Federal Reserve Board’s requirements for “margin
securities,” such as without limitation, at least 800
holders of record and daily quotations for both bid and asked
prices for the stock are continuously available to the general
public, the Class A Shares would no longer constitute
“margin securities,” in which event the Class A
Shares would be ineligible for use as collateral for margin
loans made by brokers.
In the event that the Short Form Merger is
consummated:
If the Short Form Merger is consummated, Nestlé would
own all outstanding equity securities of Dreyer’s. As a
result, Nestlé and its subsidiaries will be entitled to all
the benefits resulting from Nestlé’s 100% ownership of
Dreyer’s, including all income generated by Dreyer’s
operations and any
21
future increase in the value of Dreyer’s business.
Similarly, Nestlé will also bear all of the risk of losses
generated by Dreyer’s operations and any decrease in the
value of Dreyer’s business after the Short
Form Merger. Upon consummation of the Short
Form Merger, Dreyer’s will become a privately held
corporation. Accordingly, former stockholders will not have the
opportunity to participate in the earnings and growth of
Dreyer’s after the Short Form Merger and will not have
any right to vote on corporate matters. Similarly, former
stockholders will not face the risk of losses generated by
Dreyer’s operations or a decline in the value of
Dreyer’s business after the Short Form Merger.
The Class B Shares will not be publicly listed on NASDAQ.
As soon as possible following the Short Form Merger,
Nestlé will terminate the registration of the Class A
Shares under the Exchange Act. Such termination of registration
will greatly reduce publicly available information about
Dreyer’s (including its financial statements).
Nestlé’s and Dreyer’s Positions Regarding the
Fairness of the Put Right
The provisions of the Restated Certificate, including without
limitation the terms of the Put Right, the timing and duration
of the First Put Period and the Second Put Period and the
Purchase Price of $83.00 per Class A Share, were negotiated
by and among the parties to the Merger Agreement, which was
attached to, and described in, the Proxy Statement/ Prospectus
dated February 14, 2003 that was sent to DGIC’s
stockholders to solicit their approval to the Merger Agreement
and the combination of the businesses of DGIC and NICC. The
stockholders of DGIC approved the Merger Agreement and related
transactions, including the Restated Certificate of
Dreyer’s, at a special meeting of the stockholders of DGIC
on March 20, 2003. The terms of the Put Right as set forth
in this Notice of Put Right are derived exclusively from the
Restated Certificate and the Governance Agreement, which were
attached to, and described in, the Proxy Statement/ Prospectus.
This Notice of Put Right is being delivered by Dreyer’s
pursuant to its obligations under the Restated Certificate.
Neither the boards of directors of Nestlé nor Dreyer’s
are making any recommendation as to whether the holders of
Class A Shares should or should not exercise the Put Right.
Further, neither Nestlé nor Dreyer’s is providing an
opinion with respect to the fairness of the Put Right, the
Purchase Price or the terms of the Short Form Merger to the
holders of Class A Shares.
The Put Right
General
Under Section (c)(ii) of Article FIFTH of the Restated
Certificate, each holder of Class A Shares has the right to
require Dreyer’s (the “Put Right”) to
purchase out of legally available funds all or part of the
Class A Shares held by the holder at a price of $83.00 in
cash per Class A Share (the “Purchase
Price”) during each of the following periods:
• the period beginning on December 1,
2005 and ending at 5:00 p.m. New York City time on
January 13, 2006 (the “First Put Period”);
and
• the period beginning on April 3,
2006 and ending at 5:00 p.m. New York City time on
May 12, 2006 (the “Second Put Period”).
On the first day of each Put Period, Dreyer’s is required
to mail to each holder of Class A Shares:
• a put notification (which this Notice of
Put Right so constitutes); and
• a form of notice to be used in
exercising the Put Right (which the Letter of Transmittal
enclosed with this Notice of Put Right so constitutes).
The “Expiration Time” will mean, for the First
Put Period, 5:00 p.m. New York City time on
January 13, 2006 and for the Second Put Period,
5:00 p.m. New York City time on May 12, 2006.
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Additionally, Dreyer’s is required to publish a notice
summarizing this Notice of Put Right in a newspaper of general
circulation in the State of New York, City of New York, on the
first day of each Put Period. The Restated Certificate provides
that Dreyer’s board of directors will fix a record date for
determination of holders of Class A Shares entitled to be
given the put notification, which may not be more than five days
prior to the date of the put notification. The record date for
this Notice of Put Right is November 28, 2005.
If less than all of the Class A Shares represented by a
stock certificate are exercised with respect to the Put Right, a
new stock certificate representing the Class A Shares as to
which the Put Right was not exercised will be issued to the
holder of such Class A Shares.
Dreyer’s may delay the dates to take the actions described
above to the extent necessary to comply with the United States
federal securities laws. To the extent that there are any
delays, the dates on which payments would otherwise be required
to be made will be extended by the same number of days of the
delay.
Nestlé’s Obligation to Provide Funds to Purchase
Class A Shares
Under the terms of the Governance Agreement, Nestlé will
provide, or cause its affiliate to provide, to Mellon Investor
Services, in its capacity as Depositary Agent for the Put Right,
immediately prior to the time that any amounts are required to
be deposited with Mellon Investor Services for payment to the
holders of Class A Shares pursuant to the Restated
Certificate, funds in an amount equal to the product of the
number of Class A Shares with respect to which the Put
Right has been properly exercised multiplied by the Purchase
Price. In exchange for such payment, Mellon Investor Services,
as Dreyer’s Transfer Agent, will issue to Nestlé Ice,
a designated subsidiary of Nestlé, a number of duly
authorized and validly issued shares of Class B Shares
equal to the number of Class A Shares purchased by
Dreyer’s.
First Put Period
Put Rights Exercised on or Prior to December 30, 2005
No later than January 2, 2006, Nestlé is required, on
behalf of Dreyer’s, to deposit, or cause its affiliate to
deposit, with Mellon Investor Services, in its capacity as
Depositary Agent, funds sufficient to pay the Purchase Price for
all Class A Shares with respect to which the Put Right has
been properly exercised during the period beginning on
December 1, 2005 and ending on December 30, 2005.
Each holder of Class A Shares that has:
• properly executed and returned the
Letter of Transmittal on or prior to 5:00 p.m. New York
City time on December 30, 2005; and
• surrendered Class A Shares (or
followed instructions in the Letter of Transmittal for the
guaranteed delivery of such shares either in certificate or book
entry form) with respect to which the Put Right has been
exercised during the period beginning on December 1, 2005
and ending on December 30, 2005;
will be paid the Purchase Price not later than two business days
after January 1, 2006, without interest.
Put Rights Exercised after December 30, 2005 and on or
before January 13, 2006
During the nine business day period after December 30,
2005, Nestlé is required, on behalf of Dreyer’s, to
daily, but no more than once daily, on an as-needed basis,
deposit, or cause its affiliate to deposit, with Mellon Investor
Services funds sufficient to pay the Purchase Price for all
Class A Shares with respect to which the Put Right has been
properly exercised.
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Each holder of Class A Shares that has:
• properly executed and returned the
Letter of Transmittal on or prior to 5:00 p.m. New York
City time on January 13, 2006; and
• surrendered Class A Shares (or
followed instructions in the Letter of Transmittal for the
guaranteed delivery of such shares either in certificate or book
entry form) with respect to which the Put Right has been
exercised during the period beginning on December 31, 2005
and ending on January 13, 2006;
will be paid the Purchase Price promptly, without interest.
Second Put Period
Put Rights Exercised on or after April 3, 2006 and on or
before April 28, 2006
No later than May 1, 2006, Nestlé, on behalf of
Dreyer’s, is required to deposit, or cause its affiliate to
deposit, with Mellon Investor Services, in its capacity as
Depositary Agent, funds sufficient to pay the Purchase Price for
all Class A Shares with respect to which the Put Right has
been properly exercised during the period beginning on
April 3, 2006 and ending on April 28, 2006.
Each holder of Class A Shares that has:
• properly executed and returned the
Letter of Transmittal on or prior to 5:00 p.m. New York
City time April 28, 2006; and
• surrendered Class A Shares (or
followed instructions in the Letter of Transmittal for the
guaranteed delivery of such shares either in certificate or book
entry form) with respect to which the Put Right has been
exercised during the period beginning on April 3, 2006 and
ending on April 28, 2006;
will be paid the Purchase Price not later than two business days
after May 1, 2006, without interest.
Put Rights Exercised after April 28, 2006 and on or
before May 12, 2006
During the 10 business day period after April 28, 2006,
Nestlé is required, on behalf of Dreyer’s, to daily,
but no more than once daily, on an as-needed basis, deposit, or
cause its affiliate to deposit, with Mellon Investor Services,
funds sufficient to pay the Purchase Price for all shares of
Class A Shares with respect to which the Put Right has been
exercised.
Each holder of Class A Shares that has:
• properly executed and returned the
Letter of Transmittal on or prior to 5:00 p.m. New York
City time on May 12, 2006; and
• surrendered Class A Shares (or
followed instructions in the Letter of Transmittal for the
guaranteed delivery of such shares either in certificate or book
entry form) with respect to which the Put Right has been
properly exercised during the period beginning on April 29,
2006 and ending on May 12, 2006;
will be paid the Purchase Price promptly, without interest.
Certain Conditions of the Put Right
Notwithstanding any other provision of the Put Right,
Dreyer’s will not be required to accept for payment or pay
the Purchase Price for any Class A Shares, may postpone the
acceptance for payment of the Purchase Price or payment for
delivered Class A Shares, and may, in its sole discretion,
terminate or amend the Put Right as to any Class A Shares
for which the Purchase Price has not been paid if on or after
December 1, 2005, and at or prior to the time of payment
for any such Class A Shares (whether or not any
Class A Shares have theretofore been accepted for payment
or paid for pursuant to the Put Right), any of the following
events have occurred:
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(a) |
there is threatened, instituted or pending any action,
proceeding or application before any court, government or
governmental authority or other regulatory or administrative
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commission, domestic or foreign
which, seeks to restrain, delay or prohibit the purchase of
shares pursuant to the Put Right or any subsequent Short
Form Merger or, seeks to obtain any material damages or
otherwise directly or indirectly relates to the transactions
contemplated by the Put Right or other subsequent business
combination;
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(b) |
any statute, including without limitation any state
anti-takeover statute, rule, regulation, order or injunction, is
sought, proposed, enacted, promulgated, entered, enforced or
deemed applicable or which becomes applicable or asserted to be
applicable to the Put Right or any subsequent Short
Form Merger that might, directly or indirectly, result in
any of the consequences referred to in paragraph (a) above;
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(c) |
any Triggering Event for which Nestlé is responsible for
paying the Triggering Event Price in exchange for the delivery
of Class A Shares to Mellon Investor Services. |
The conditions described in items (a) through (c) above are
for the sole benefit of Dreyer’s and may be asserted by
Dreyer’s regardless of the circumstances (including any
action or inaction by Dreyer’s) giving rise to any such
conditions, or may be waived by Dreyer’s as a whole or in
part at any time and from time to time in its sole discretion.
The determination as to whether any of such conditions has
occurred will be in the sole judgment of Dreyer’s and will
be final and binding on all parties. The failure by
Dreyer’s at any time to exercise any of the foregoing
rights will not be deemed a waiver of any such right and each
such right will be deemed an ongoing right which may be asserted
at any time and from time to time.
The Call
Right
Subject to and in accordance with the terms of the Restated
Certificate and the Governance Agreement, during the period
beginning on January 1, 2007 and ending on June 30,
2007, at Dreyer’s option (the “Call
Right”), Class A Shares may be redeemed out of
legally available funds, in whole but not in part, at a price of
$88.00 per Class A Share payable in cash (the
“Redemption Price”). In addition, the
Governance Agreement provides that: (a) Nestlé
Holdings may cause Dreyer’s to exercise the Call Right for
the redemption of the Class A Shares by providing
Dreyer’s written notice of this request; and
(b) Nestlé Holdings or Nestlé S.A. may elect, at
their sole discretion, to offer to purchase the Class A
Shares directly from the holders of Class A Shares at the
Redemption Price.
Under the Restated Certificate, Dreyer’s is required to
provide notice of any proposed redemption (the “Call
Notification”) to holders of Class A Shares by
mailing a notice to the holders of record of Class A Shares
not less than 10 and not more than 30 days prior to the
date fixed for redemption.
At least one business day prior to the date of any redemption of
any Class A Shares under the Call Right, Dreyer’s will
be required to:
• deposit the aggregate Redemption Price,
together with declared and unpaid dividends to the redemption
date, of the Class A Shares to be redeemed with Mellon
Investor Services for payment to holders of Class A Shares;
and
• deliver irrevocable written instructions
authorizing Mellon Investor Services to apply the deposited
funds solely to the redemption of the Class A Shares.
The funds required to be deposited in connection with the Call
Right will be reduced by the aggregate Redemption Price of any
Class A Shares deposited by Nestlé, or its affiliate,
if any, in lieu of the funds deposited by Dreyer’s.
Upon the exercise of the Call Right, each holder of Class A
Shares will be paid the Redemption Price for Class A Shares
within three business days following the surrender of the stock
certificate or stock certificates representing Class A
Shares to Mellon Investor Services, together with a properly
executed Letter of Transmittal covering the Class A Shares.
25
After Dreyer’s gives the Call Notification or Mellon
Investor Services has been irrevocably authorized by
Dreyer’s to give the Call Notification, if Dreyer’s
(or Nestlé in lieu thereof) deposits the Redemption Price
for the Class A Shares being redeemed, then:
• all of the Class A Shares for which
the deposit of the Redemption Price has been made upon exercise
of the Call Right will not be deemed outstanding for any
purpose, regardless of whether or not the date fixed for
redemption has occurred or the stock certificates for the
Class A Shares have been surrendered for cancellation; and
• all rights with respect to Class A
Shares will cease and terminate, except the right to receive the
Redemption Price to which the stockholders are entitled, without
interest.
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A Triggering
Event
The term “Triggering Event” means either a
substantial adverse change determination or an insolvency event,
as defined below.
The term “substantial adverse change
determination” means the good faith determination made
prior to January 1, 2007 by Dreyer’s independent
directors, in their sole discretion, after consulting with
financial and legal experts of national standing, that there has
been a substantial adverse change in the business or financial
viability of Dreyer’s and its subsidiaries, taken as a
whole, since the Merger Closing Date.
The term “insolvency event” means the
occurrence of any of the following events:
• the filing by Dreyer’s of a
voluntary petition in bankruptcy, or seeking a reorganization,
in order to effect a plan or other arrangement with creditors or
any other relief under the Bankruptcy Code, or under any United
States federal or state law granting relief to debtors;
• the filing or commencement of any
involuntary petition or proceeding under the Bankruptcy Code or
any other applicable United States federal or state law relating
to bankruptcy, reorganization or other relief for debtors
against Dreyer’s that is not dismissed within 30 days;
• the filing by Dreyer’s of an answer
admitting the jurisdiction of the court and the material
allegations of any involuntary petition; or
• the adjudication of Dreyer’s as
bankrupt, or the entry of an order for relief against
Dreyer’s by any court of competent jurisdiction under the
Bankruptcy Code or any other applicable United States federal or
state law relating to bankruptcy, reorganization or other relief
for debtors.
If a Triggering Event occurs prior to January 1, 2006, the
redemption price for the Class A Shares will be the
“Triggering Event Price,” which is equal to the
Purchase Price of $83.00 per share discounted at the rate of
4.6% per annum based on a 365-day year for the period beginning
on the date of the Triggering Event and ending on
January 1, 2006. Consequently, if a Triggering Event occurs
prior to January 1, 2006, the Triggering Event Price for
the Class A Shares would be less than the Purchase Price of
$83.00 per share. For example, if a Triggering Event occurred on
December 15, 2005, the Triggering Event Price would be
$82.82.
If there has not been a Short Form Merger and a Triggering
Event occurs prior to January 1, 2007, Dreyer’s will
be required to redeem out of legally available funds all
outstanding Class A Shares. The Triggering Event Price for
the Class A Shares will be equal to the Purchase Price of
$83.00 per share if a Triggering Event occurs after
January 1, 2006 and prior to January 1, 2007. The
Governance Agreement also provides that Nestlé Holdings or
Nestlé S.A. may elect, at their sole discretion, to offer
to purchase the Class A Shares directly from the holders of
Class A Shares at the Triggering Event Price. The right to
redeem the Class A Shares due to a Triggering Event will
terminate on January 1, 2007.
In a bankruptcy or similar proceedings involving Dreyer’s
or in a claim involving fraudulent conveyance, Dreyer’s may
not be able to redeem the Class A Shares and pay the
Triggering Event Price.
Upon the occurrence of a Triggering Event:
• Dreyer’s will immediately be
relieved of its purchase obligations in respect of any Put
Right; and
• Class A Shares will not be
purchased under the Put Right, regardless of the proper exercise
of the Put Right prior to the Triggering Event, and holders of
such Class A Shares will instead receive the Triggering
Event Price.
27
Miscellaneous
Provisions Related to
the Put Right, the Call
Right and a Triggering Event
Adjustments
If Dreyer’s effects a subdivision or combination of the
Class A Shares, whether by reclassification or otherwise,
into a greater or lesser number of Class A Shares, then the
Purchase Price, Redemption Price or the Triggering Event Price,
as applicable, will be adjusted by multiplying the Purchase
Price, Redemption Price or the Triggering Event Price, as
applicable, in effect immediately prior to the event by the
ratio of the number of Class A Shares outstanding
immediately prior to the event to the number of Class A
Shares outstanding immediately after the event. Additionally, if
Dreyer’s pays any dividend on Class A Shares in
Class A Shares, then the Purchase Price, Redemption Price
or the Triggering Event Price, as applicable, will be adjusted
based on this same formula.
Enforcement of Nestlé’s Obligations
Under the Governance Agreement, Dreyer’s is required to
take the actions as may be necessary to cause the performance by
Nestlé of its obligations under the Governance Agreement.
All determinations on behalf of Dreyer’s with respect to
Nestlé’s performance under the Governance Agreement
will be made by a majority of the Dreyer’s directors who
are not designees of Nestlé.
Segregation of Funds
Under the Restated Certificate and the Governance Agreement, all
funds delivered to Mellon Investor Services for the purchase of
Class A Shares pursuant to the Put Right, the Call Right or
upon the occurrence of a Triggering Event will:
• always be held in a segregated account
by Mellon Investor Services and not be subject to any lien or
attachment of any creditor (including, without limitation,
Mellon Investor Services) of any person or entity;
• never, whether in whole or in part, be
transferred directly to Dreyer’s or become subject to
Dreyer’s control or dominion;
• not be commingled with any other funds
of Dreyer’s or any other person or entity; and
• be used solely by Mellon Investor
Services for the purposes expressly described in the Restated
Certificate.
Except for any interest or investment returns on the funds held
by Mellon Investor Services (which will be returned to
Nestlé), any and all funds held by Mellon Investor Services
will only be paid to, or, in the case of any withholdings for
taxes, on behalf of, holders of Class A Shares, and no
other entity will be paid any portion or all of the funds held
by Mellon Investor Services or have any interest in or rights to
these funds.
Purchased or Redeemed Class A Shares
All Class A Shares purchased or redeemed by Dreyer’s
under the Put Right, the Call Right or upon the occurrence of a
Triggering Event will be retired and certificates representing
the Class A Shares will be cancelled promptly after the
purchase or redemption thereof. No additional Class A
Shares will be issued after the date of redemption of
Class A Shares under the Call Right.
Conversion
Section (c)(iv) of Article FIFTH of the Restated
Certificate provides that unless previously called for
redemption on or prior to the Conversion Date, each Class A
Share outstanding on the Conversion Date will be automatically
converted into one Class B Share (the
“Conversion”). The “Conversion
28
Date” will be either the close of business on
June 30, 2007 or the date on which Nestlé and its
affiliates own at least 90% of the issued and outstanding voting
stock of Dreyer’s.
Short Form Merger
The Governance Agreement provides that if at any time
Nestlé and its affiliates own at least 90% of Dreyer’s
outstanding voting stock and all Class A Shares are
converted into Class B Shares, Nestlé will promptly
cause a “short-form” merger between Dreyer’s and
Nestlé (or its affiliate) (the “Short
Form Merger”). Section 253 of the of the
Delaware General Corporation Law (the “DGCL”)
provides that if Nestlé owns at least 90% of the issued and
outstanding shares of each class of Dreyer’s capital stock,
a merger of Nestlé and Dreyer’s may be effected by
executing, acknowledging and filing, in accordance with
Section 103 of the DGCL, a certificate of such ownership
and merger setting forth a copy of the resolution of
Nestlé’s board of directors to so merge and the date
of its adoption. Section 253 of the DGCL also provides that
Nestlé (or its affiliate) may effect the Short
Form Merger without the affirmative vote of, or prior
notice to, Dreyer’s board of directors or stockholders.
Therefore, upon the acquisition by Nestlé and its
affiliates of at least 90% of Dreyer’s outstanding voting
stock and the conversion of all Class A Shares into
Class B Shares, Nestlé is obligated to effect the
Short Form Merger without a meeting or vote of
Dreyer’s stockholders or directors.
In the absence of Triggering Event, if a Short Form Merger
occurs before January 1, 2007, all holders of Class A
Shares who did not previously exercise the Put Right will be
entitled to receive a cash payment of $83.00 per share.
Should a Short Form Merger occur, holders of Class A
Shares who have not previously properly exercised the Put Right
will receive a notification of the Short Form Merger from
Nestlé along with instructions on how to receive payment
for their shares.
Dividends and the Put Periods
Under the Governance Agreement, the dividend policy of
Dreyer’s is to pay a dividend not less than the greater of
(i) $.24 per common share on an annualized basis or
(ii) 30 percent of Dreyer’s net income per share
for the preceding calendar year (net income, calculated for this
purpose, excludes the ongoing non-cash impact of accounting
entries arising from the accounting for the Merger and related
transactions, including increases in amortization or
depreciation expenses resulting from required write-ups, and
entries related to recording of the Put Right or Call Right),
unless Dreyer’s board of directors, in discharging its
fiduciary duties, determines not to declare a dividend.
Since the Merger Closing Date, Dreyer’s board of directors
has declared a cash dividend of $.06 per share per quarter.
If Dreyer’s board of directors declares a dividend of
$0.06 per share for the quarter ended December 31,
2005, the record date for determining stockholders eligible to
receive such a dividend would normally be December 30,
2005. If a dividend is declared by Dreyer’s board of
directors to be paid to the stockholders of record on
December 30, 2005, all holders of record of Class A
Shares on December 30, 2005 will be entitled to receive
such dividend payment even if they have exercised the Put Right
prior to that date. Any dividend payment will be made in 2006.
Stockholder Notification
Dreyer’s has instructed Mellon Investor Services to provide
a list of stockholders and security positions for the purpose of
disseminating this Notice of Put Right to holders of record of
Class A Shares on November 28, 2005. This Notice of
Put Right and the related Letter of Transmittal will be mailed
to record holders of Class A Shares and will be furnished
to brokers, banks and similar persons whose names, or the names
of whose nominees, appear on the stockholder list or, if
applicable, who are listed as participants in a clearing
agency’s security position listing for subsequent
transmittal to beneficial owners of Class A Shares.
29
Material United States Federal Income Tax Consequences of the
Purchase of Class A Shares
Sales of Class A Shares pursuant to the exercise of the Put
Right, the Call Right and the exchange of Class A Shares
for cash pursuant to the Short Form Merger will be taxable
transactions for federal income tax purposes and may also be
taxable under applicable state, local and other tax laws. Gain
or loss will be capital gain or loss if the Class A Shares
are held as capital assets by the stockholder. As individual
tax situations differ, stockholders should consult with their
individual tax and legal advisors concerning the tax treatment
of the exercise of the Put Right. If you exercise your Put
Right during the First Put Period, the Purchase Price for the
Class A Shares will be paid to you in 2006 and
Dreyer’s will record such purchase on its books as of the
date of such payment. Dreyer’s will not make any such
payment in 2005 nor will it record any purchase of Class A
Shares in 2005.
Procedures for
Exercising the Put Right
Acceptance for Payment and Payment for Class A Shares
Subject to applicable rules of the Securities and Exchange
Commission (“SEC”), Dreyer’s expressly
reserves the right to delay acceptance for payment of, or
payment for, Class A Shares in order to comply, in whole or
in part, with any applicable law. Except for Class A Shares
that are held directly by Mellon Investor Services (as
Dreyer’s Transfer Agent) in book entry form, payment for
Class A Shares delivered and accepted for payment pursuant
to the Put Right will be made only after timely receipt by
Mellon Investor Services of certificates evidencing such
Class A Shares or a confirmation of a book entry transfer
of such Class A Shares (a “Book Entry
Confirmation”) into Mellon Investor Services Investor
Service’s account at The Depository Trust Company (the
“Depository Trust Company”), a properly
completed and duly executed Letter of Transmittal (or facsimile
thereof) and any other required documents prior to the
Expiration Time. For Class A Shares that are held directly
in book entry form through an account in Mellon Investor
Services’ Direct Registration System, payment for
Class A Shares delivered and accepted for payment pursuant
to the Put Right will be made only after timely receipt by
Mellon Investor Services of a properly completed and duly
executed Letter of Transmittal (or facsimile thereof) and any
other required documents.
Payment of the Purchase Price for Class A Shares accepted
for payment pursuant to the exercise of the Put Right will be
made by Mellon Investor Services, which will act as agent for
the delivering stockholders for the purpose of receiving
payments from Nestlé Holdings, or its affiliates, and
transmitting such payments to the delivering stockholders.
Under no circumstances will interest on the Purchase Price be
paid, regardless of any delay in making such payment.
If any delivered Class A Shares are not accepted for
payment pursuant to the terms and conditions of the Put Right
for any reason, or if certificates are submitted for more
Class A Shares than for which the Put Right has been
exercised, certificates for such excess Class A Shares will
be returned, without expense to the delivering stockholder (or,
in the case of Class A Shares delivered by book entry
transfer of such Class A Shares into Mellon Investor
Services’ account at the Depository Trust Company pursuant
to the procedures set forth above, such Class A Shares will
be credited to an account maintained with the Depository Trust
Company), as soon as practicable following expiration of the
applicable Put Period.
Nestlé Holdings reserves the right to transfer or assign in
whole or in part from time to time to one or more of its
affiliates the right to provide the funds to purchase all or any
portion of the Class A Shares for which the Put Right has
been properly exercised, but any such transfer or assignment
will not relieve Nestlé Holdings of its obligations under
the Governance Agreement to provide the funds to purchase
Class A Shares for which the Put Right has been exercised
and will in no way prejudice the rights of delivering
stockholders to receive payment for Class A Shares that
have been Validly Delivered (as defined below) and accepted for
payment pursuant to the exercise of the Put Right.
30
Procedure for Validly Delivering Class A Shares
For Class A Shares to be deemed “Validly
Delivered” pursuant to the exercise of the Put Right,
one of the following must occur:
• For Class A Shares represented
by physical certificates: a properly completed and duly
executed Letter of Transmittal in accordance with the
instructions of the Letter of Transmittal, with any required
signature guarantees, certificates for Class A Shares for
which the Put Right has been exercised, and any other documents
required by the Letter of Transmittal, must be received by
Mellon Investor Services prior to the Expiration Time at one of
its addresses set forth on the back cover of this Notice of Put
Right; or
• For Class A Shares that are held
in book entry form directly through Mellon Investor
Services’ Direct Registration System: a properly
completed and duly executed Letter of Transmittal in accordance
with the instructions of the Letter of Transmittal, with any
required signature guarantees, and any other documents required
by the Letter of Transmittal, must be received by Mellon
Investor Services prior to the Expiration Time at one of its
addresses set forth on the back cover of this Notice of Put
Right; or
• For Class A Shares Held in Book
Entry form at the Depository Trust Company: such
Class A Shares must be delivered pursuant to the procedures
for book entry transfer described below (and the Book Entry
Confirmation of such delivery received by Mellon Investor
Services, including an Agent’s Message (as defined herein)
if the delivering stockholder has not delivered a Letter of
Transmittal), prior to the Expiration Time; or
• Guaranteed Delivery: the
delivering stockholder must comply with the guaranteed delivery
procedures set forth below.
The term “Agent’s Message” means a message
transmitted by the Depository Trust Company to, and received by,
Mellon Investor Services and forming a part of a “Book
Entry Confirmation,” which states that the Depository
Trust Company has received an express acknowledgment from the
participant in the Depository Trust Company delivering the
Class A Shares which are the subject of such Book Entry
Confirmation that such participant has received and agrees to be
bound by the terms of the Letter of Transmittal and that
Dreyer’s may enforce such agreement against the participant.
Valid Delivery Through Book Entry Delivery of Class A
Shares From the Depository Trust Company to Mellon Investor
Services
Mellon Investor Services has established an account with respect
to the Class A Shares at the Depository Trust Company for
purposes of the exercise of the Put Right. Any financial
institution that is a participant in the Depository Trust
Company’s systems may make a book entry transfer of
Class A Shares by causing the Depository Trust Company to
transfer such Class A Shares into Mellon Investor
Services’ account in accordance with the Depository Trust
Company’s procedures for such transfer. However, although
delivery of Class A Shares may be effected through book
entry transfer, either the Letter of Transmittal (or facsimile
thereof), properly completed and duly executed, together with
any required signature guarantees, or an Agent’s Message in
lieu of the Letter of Transmittal, and any other required
documents, must, in any case, be transmitted to and received by
Mellon Investor Services at one of its addresses set forth on
the back cover of this Notice of Put Right by the Expiration
Time, or the delivering stockholder must comply with the
guaranteed delivery procedures described below.
Delivery of documents to the Depository Trust Company in
accordance with its procedures does not constitute delivery to
Mellon Investor Services.
The method of delivery of the Class A Shares, the Letter
of Transmittal and all other required documents, including
delivery through the Depository Trust Company, is at the
election and risk of the delivering stockholder. Class A
Shares will be deemed Validly Delivered only when actually
31
received by Mellon Investor Services (including, in the case
of a book entry transfer, by Book Entry Confirmation).
If delivery is by mail, it is recommended that the delivering
stockholder use properly insured registered mail with return
receipt requested. In all cases, sufficient time should be
allowed to ensure timely delivery prior to the Expiration
Time.
Signature Guarantees
Except as otherwise provided below, all signatures on a Letter
of Transmittal must be guaranteed by a financial institution
that is a participant in the Security Transfer Agents Medallion
Program, the New York Stock Exchange Medallion Signature
Guarantee Program or the Stock Exchange Medallion Program or by
any other “Eligible Guarantor Institution,” as such
term is defined in Rule 17Ad-15 under the Securities and
Exchange Act of 1934 (the “Exchange Act”)
(each, an “Eligible Institution”). Most
commercial banks, savings and loans associations and brokerage
houses participate in a medallion signature guarantee program.
Signatures on a Letter of Transmittal need not be guaranteed if:
• the Letter of Transmittal is signed by
the registered holder(s) (which term, for purposes of this
section, includes any participant in the Depository Trust
Company’s systems whose name appears on a security position
listing as the owner of the Class A Shares) of the
Class A Shares delivered therewith and such registered
holder has not completed Box #7 entitled “Special Transfer
Instructions” on the Letter of Transmittal; or
• such Class A Shares are delivered
for the account of an Eligible Institution.
If the certificates for Class A Shares are registered in
the name of a person other than the signer of the Letter of
Transmittal, or if payment is to be made or certificates for
Class A Shares not delivered or not accepted for payment
are to be returned to a person other than the registered holder
of the certificates surrendered, then the delivered certificates
must be endorsed or accompanied by appropriate stock powers, in
either case signed exactly as the name or names of the
registered holders or owners appear on the certificates, with
the signatures on the certificates or stock powers guaranteed as
described above.
Guaranteed Delivery
A stockholder who desires to exercise the Put Right and who
cannot comply with the procedures for book entry transfer on a
timely basis, or who cannot deliver all required documents to
Mellon Investor Services prior to the Expiration Time, may be
deemed to have Validly Delivered such Class A Shares by
following all of the procedures set forth below:
• such delivery of the Class A Shares
is made by or through an Eligible Institution;
• a properly completed and duly executed
Notice of Guaranteed Delivery, substantially in the form
provided by Dreyer’s, is received by Mellon Investor
Services, prior to the Expiration Time; and
• the certificates for all delivered
Class A Shares, in proper form for transfer (or a Book
Entry Confirmation with respect to all such Class A
Shares), together with a properly completed and duly executed
Letter of Transmittal, with any required signature guarantees
(or, in the case of a book entry transfer, an Agent’s
Message in lieu of the Letter of Transmittal), and any other
required documents, are received by Mellon Investor Services
within three trading days after the date of execution of such
Notice of Guaranteed Delivery. A “trading day” is any
day on which NASDAQ is open for business.
32
The Notice of Guaranteed Delivery may be delivered by hand to
Mellon Investor Services or transmitted by facsimile
transmission or mail to Mellon Investor Services and must
include a guarantee by an Eligible Institution in the form set
forth in such Notice of Guaranteed Delivery.
Right of Withdrawal
An exercise of the Put Right is revocable only if proper notice
of such withdrawal, as set forth below, is received by Mellon
Investor Services at or before 5:00 p.m. New York City time
on December 30, 2005.
For a withdrawal of the exercise to be effective, a signed
written or facsimile transmission notice of withdrawal must be
timely received by Mellon Investor Services at one of its
addresses set forth on the back cover of this Notice of Put
Right. Any such notice of withdrawal must specify the name of
the stockholder having Validly Delivered the Class A Shares
to be withdrawn, the number or amount of Class A Shares to
be withdrawn and the names in which the certificate(s)
evidencing the Class A Shares to be withdrawn are
registered, if different from that of the person who Validly
Delivered such Class A Shares. The signature(s) on the
notice of withdrawal must be guaranteed by an Eligible
Institution, unless such Class A Shares have been Validly
Delivered for the account of any Eligible Institution.
If Class A Shares have been Validly Delivered pursuant to
the procedures for book entry transfer, any notice of withdrawal
must specify the name and number of the account at the
Depository Trust Company or through Mellon Investor
Services’ Direct Registration System, as the case may be,
to be credited with the withdrawn Class A Shares. If
certificates for Class A Shares to be withdrawn have been
Validly Delivered or otherwise identified to Mellon Investor
Services, the name of the registered holder and the serial
numbers of the particular certificates evidencing the
Class A Shares to be withdrawn must also be furnished to
Mellon Investor Services prior to the physical release of such
certificates.
All questions as to the form and validity (including time of
receipt) of any notice of withdrawal will be determined by
Dreyer’s, in its sole discretion, which determination shall
be final and binding. None of Dreyer’s, Nestlé, Mellon
Investor Services or any of their affiliates will be under any
duty to give notification of any defects or irregularities in
any notice of withdrawal or incur any liability for failure to
give such notification. Withdrawals of the exercise of the Put
Right for Class A Shares may not be rescinded, and any
Class A Shares for which the exercise of the Put Right is
properly withdrawn will be deemed not to have been Validly
Delivered for purposes of the Put Right. However, Class A
Shares for which the exercise of the Put Right has been
withdrawn may be Validly Delivered again by submitting a
properly completed Letter of Transmittal along with certificates
representing Class A Shares (if applicable) to Mellon
Investor Services prior to 5:00 p.m. New York City time on
January 13, 2006.
Lost, Missing or Destroyed Certificates
Any holder of Class A Shares who has held their stock in
certificated form will find their certificated ownership details
in Box 4 of the Letter of Transmittal. Any holder of
Class A Shares in certificated form may claim that some or
all of their stock certificates are lost, missing or destroyed
by completing the “Affidavit of Lost, Missing or Destroyed
Certificate(s) and Agreement of Indemnity” located in
Box 6 of the Letter of Transmittal. The Affidavit and
Agreement of Indemnity becomes valid only if the stockholder
claiming lost, missing, or destroyed certificate(s) signs and
notarizes the Letter of Transmittal in Box 6 and includes a
payment for (1) a service fee plus (2) the surety fee
of the indemnity bond (as calculated under the instructions in
Box 6) and follows all other instructions as specified in
Box 6 of the Letter of Transmittal. Any holder of
Class A Shares claiming lost, missing or destroyed
certificates(s) must also designate their intention to exercise
the Put Right to receive the Purchase Price on none, all, or a
specific portion of the total certificated shares in their
account (located in Box 4 of the Letter of Transmittal).
33
Timing of Payments
Delivering stockholders may be paid at different times depending
upon when the properly completed Letter of Transmittal and
certificates for Class A Shares or Book Entry Confirmations
with respect to Class A Shares are actually received by
Mellon Investor Services. Under no circumstances will
interest on the Purchase Price for the Validly Delivered
Class A Shares be paid, regardless of any delay in making
such payment.
Exercise of Put Right Constitutes an Agreement
The Valid Delivery of Class A Shares pursuant to one of the
procedures described above will constitute a binding agreement
between the delivering stockholder and Dreyer’s for the
exercise of the Put Right, upon the terms and subject to the
conditions of the Put Right.
Determination of Validity
All questions as to the validity, form, eligibility (including
time of receipt) and acceptance of delivery of Class A
Shares will be determined by Dreyer’s in its sole
discretion, which determination will be final and binding.
Dreyer’s reserves the absolute right to reject any and all
deliveries of Letters of Transmittal and Class A Shares
determined by it not to be in proper form or the acceptance for
payment of or payment for which may, in the opinion of
Dreyer’s counsel, be unlawful. Dreyer’s also reserves
the absolute right to waive any defect or irregularity in the
delivery of any Letter of Transmittal or Class A Shares by
any particular stockholder whether or not similar defects or
irregularities are waived in the case of other stockholders. No
Class A Shares will be deemed to have been Validly
Delivered until all defects and irregularities relating to the
delivery thereof have been cured or waived. None of Nestlé,
Dreyer’s, Mellon Investor Services or any other person will
be under any duty to give notification of any defects or
irregularities in deliveries or incur any liability for failure
to give any such notification. Dreyer’s interpretation of
the terms and conditions of the Put Right (including the Letter
of Transmittal and Instructions thereto) will be final and
binding.
Backup Withholding
In order to avoid “backup withholding” of federal
income tax on payments of cash pursuant to the exercise of the
Put Right, a stockholder surrendering Class A Shares must,
unless an exemption applies, provide Mellon Investor Services
with such stockholder’s correct taxpayer identification
number (“TIN”) on a Substitute Form W-9
and certify under penalties of perjury that such TIN is correct
and that such stockholder is not subject to backup withholding.
If a stockholder does not provide such stockholder’s
correct TIN or fails to provide the certifications described
above, the Internal Revenue Service (the “IRS”)
may impose a penalty on such stockholder and payment of cash to
such stockholder pursuant to the exercise of the Put Right may
be subject to backup withholding of 30%. All stockholders who
are United States tax payers surrendering Class A Shares
pursuant to the exercise of the Put Right should complete and
sign the main signature form and the Substitute Form W-9
included as Box 2 on the Letter of Transmittal to provide
the information and certification necessary to avoid backup
withholding (unless an applicable exemption exists and is proved
in a manner satisfactory to Dreyer’s and Mellon Investor
Services). Certain stockholders (including, among others, all
corporations and certain foreign individuals and entities) are
not subject to backup withholding. Non-corporate foreign
stockholders should complete and sign the main signature form
and a Form W-8BEN Certificate of Foreign Status of
Beneficial Owner for United States Tax Withholding, a copy of
which may be obtained from Mellon Investor Services, in order to
avoid backup withholding.
34
Treatment of Special
Categories of Dreyer’s Securities
Treatment of Stock Options Under the Put Right and the Call
Right
As of September 6, 2005, options to purchase 209,642
Class A Shares which were vested and exercisable were
outstanding under Dreyer’s equity incentive plans (the
“Stock Options”). Holders of Stock Options are
not eligible to participate in the Put Right or the Call Right
unless such holder first exercises the applicable vested Stock
Option. If you wish to exercise your vested Stock Options,
please contact:
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Dreyer’s Grand Ice Cream
Holdings, Inc.
Attention: People Support
5929 College Avenue
Oakland, California 94618
(510) 601-4247
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Treatment of Stock Options Under the Short
Form Merger
Under the terms of the Merger Agreement, the Governance
Agreement and the documents governing the Stock Options,
immediately prior to and contingent upon the consummation of a
Short Form Merger, the vesting of all outstanding Stock
Options will accelerate in full. Upon the consummation of a
Short Form Merger, all outstanding Stock Options will be
converted into the right to receive a cash payment per
Class A Share equal to the difference of:
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(a) |
either: (1) $83.00, if the Short Form Merger is
consummated prior to January 1, 2007, (2) $88.00, if
the Short Form Merger is consummated on or after
January 1, 2007, or (3) the Triggering Event Price
should a Triggering Event occur; minus |
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(b) |
the per share exercise price underlying the outstanding Stock
Option; minus |
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(c) |
withholding for applicable taxes (such net payment, the
“Stock Option Payment”). |
Following a Short Form Merger, holders of Stock Options
will be sent a notification from Nestlé that the Short
Form Merger has been consummated along with payment of the
Stock Option Payment.
Exercising the Put Right for Class A Shares Acquired
Under DGIC’s Secured Stock Plan
Under the provisions of the DGIC Secured Stock Plan, DGIC loaned
certain stockholders funds that were used entirely to purchase
shares of common stock of DGIC which were subsequently converted
into Class A Shares. Certain of these stockholders continue
to have one or more of these loans outstanding in return for
which Dreyer’s (as the successor in interest to DGIC)
continues to hold a security interest in the Class A Shares
purchased using such loans. Certificates representing such
Class A Shares are held in escrow by Dreyer’s subject
to repayment of all outstanding principal and interest due under
such loans.
If you own Class A Shares and continue to have outstanding
one or more loans under the Dreyer’s Secured Stock Plan,
you are eligible to exercise the Put Right with respect to such
shares and receive a cash payment per Class A Share equal
to difference between:
(a) $83.00;
minus
(b) the
outstanding principal and interest under due the Dreyer’s
Secured Stock Plan; minus
(c) withholding
for applicable taxes (such net payment, the “Secured
Stock Payment”).
Holders of Class A Shares acquired under the DGIC Secured
Stock Plan who wish to exercise the Put Right for such
Class A Shares may do so, provided that they first contact
Dreyer’s to request Dreyer’s to send such share
certificates as well as the information as to the amount of the
Secured Stock Payment to Mellon Investor Services. Upon receipt
from the stockholder by Mellon Investor Services of a properly
executed Letter of Transmittal and the information and
certificate from Dreyer’s, such
35
stockholders will receive the Secured Stock Payment, as well as
a closing statement from Dreyer’s setting forth the
calculation of the Secured Stock Payment.
For further information on how to exercise the Put Right for
such Class A Shares, please contact:
|
|
|
Dreyer’s Grand Ice Cream
Holdings, Inc.
Attention: Leanne Pratt
5929 College Avenue
Oakland, California 94618
Tel: (510) 610-4343
|
Treatment of Class A Shares Held by the DGIC Stock
Fund
Approximately 380,000 Class A Shares are held by the
Charles Schwab Trust Company on behalf of the Dreyer’s
Grand Ice Cream, Inc. Stock Fund (the “Stock
Fund”), a unitized trust of the Dreyer’s Grand Ice
Cream, Inc. Savings Plan (the “401(k) Plan”), a
defined contribution qualified benefit plan offered to employees
of Dreyer’s. Participants in the 401(k) Plan have the
option to choose to allocate a portion of their holdings in the
401(k) Plan to be invested in the Stock Fund, which in turn must
invest such funds in Class A Shares while retaining such
cash as is necessary to administer sales and purchases under the
Stock Fund. An investment in the Stock Fund does not provide
participants with legal title to such Class A Shares, which
is retained by the Stock Fund. Participants in the Stock Fund
thus hold the right to units in the unitized trust, and such
units in turn consist of a mix of Class A Shares and the
cash necessary to administer the Stock Fund.
The Stock Fund is administered by a committee (the
“Administrative Committee”), whose members have
fiduciary responsibilities to Stock Fund participants, as set
forth under regulations promulgated by the U.S. Department
of Labor’s Pension and Benefit Welfare Administration under
authority contained in the Employee Retirement Income Security
Act of 1974, as amended (“ERISA”).
In the context of more traditional transactions, such as tender
offers, participants in defined contribution retirement plans
may be accorded the opportunity by the trustees of such plans to
have “pass through” decision making, whereby the
trustees of the particular plan follow the instructions of the
plan’s individual participants in deciding whether or not,
and to what extent, to participate in a tender offer. The 401(k)
Plan has had provisions providing for such pass through voting
for the last several years.
However, the Put Right presents unique circumstances that are
not present in other transactions. For example, unlike in a
tender offer where customarily all decisions by stockholders to
participate in the tender offer is accepted by the offeror at
one time, under the terms of the Restated Certificate, decisions
by holders of Class A Shares to exercise the Put Right
often must be accepted on a daily basis during either of the Put
Periods. The potential daily reallocation of investments in the
Stock Fund, which are not immediately liquidated and returned to
Stock Fund participants, presents substantially increased
transaction costs which must be absorbed by Stock Fund
participants and creates the possibility of inequitable
financial consequences for Stock Fund participants who elect not
to exercise the Put Right. Accordingly, the Administrative
Committee has notified Dreyer’s that it has elected not to
“pass through” the right to exercise the Put Right to
the participants in the Stock Fund. Therefore, individual
participants in the Stock Fund will not have the right to
exercise their Put Rights for Class A Shares held by the
Stock Fund. Further, at a regular meeting of the Administrative
Committee on September 1, 2005, the 401(k) Plan was amended
to give the Administrative Committee the right to direct the
trustee as to whether to exercise the Put Right on behalf of the
participants of the Stock Fund.
Each of Nestlé and Dreyer’s disclaims any authority or
responsibility for decisions taken or to be taken by the
Administrative Committee.
36
Certain Information
Concerning Dreyer’s
Dreyer’s is a Delaware corporation with its principal
executive offices located at 5929 College Avenue, Oakland,
California 94618. Dreyer’s manufactures and distributes ice
cream and other frozen snack products. The “Dreyer’s
Grand Ice Cream” line of products is marketed throughout
the western United States, Texas and certain markets in the Far
East. The “Edy’s® Grand® Ice Cream”
line of products is sold under the Edy’s brand name
throughout the remaining regions of the United States and
certain markets in the Caribbean and South America.
Dreyer’s manufactures and/or distributes products under
license from affiliates of Nestlé S.A., including
Häagen-Dazs® ice cream, Nestlé®
Drumstick® ice cream sundae cones, Nestlé Crunch®
and Nestlé® Butterfinger® ice cream bars and
Carnation® ice cream sandwiches. Dreyer’s branded
products, including licensed and joint venture products, enjoy
strong consumer recognition and loyalty. Dreyer’s also
manufactures under license and/or distributes branded ice cream
and frozen snack products for other companies.
As of the date hereof,
(a) Dreyer’s
has informed Nestlé that, after making reasonable inquiry
of its executive officers, directors and affiliates,
Dreyer’s has been informed by the following executive
officer of Dreyer’s that he intends to exercise the Put
Right and cause Dreyer’s to purchase his Class A
Shares:
| |
|
|
| Name |
|
Title |
| |
|
|
|
Thomas M. Delaplane
|
|
Executive Vice President — Sales |
(b) none
of Dreyer’s executive officers, directors or affiliates
have made any public recommendation with respect to the Put
Right; and
(c) Dreyer’s
has not received any appraisal, report or opinion on the
fairness of the Put Right.
Information regarding beneficial ownership of the Class A
Shares and Class B Shares as well as agreements between
Dreyer’s and its executive officers are set forth in
Schedule B to this Notice of Put Right.
37
Price Range of Class A Shares; Dividends
The Class A Shares are quoted on NASDAQ under the symbol
“DRYR.” The following table sets forth, for the fiscal
quarters indicated, the high and low sales prices for the
Class A Shares on NASDAQ based upon public sources:
| |
|
|
|
|
|
|
|
|
|
| |
|
Sales Price | |
| |
|
| |
| Fiscal Year |
|
High | |
|
Low | |
| |
|
| |
|
| |
|
2003
|
|
|
|
|
|
|
|
|
| |
Third Quarter |
|
$ |
79.00 |
|
|
$ |
77.05 |
|
| |
Fourth Quarter |
|
$ |
77.82 |
|
|
$ |
77.16 |
|
|
2004
|
|
|
|
|
|
|
|
|
| |
First Quarter |
|
$ |
79.00 |
|
|
$ |
77.55 |
|
| |
Second Quarter |
|
$ |
79.24 |
|
|
$ |
78.80 |
|
| |
Third Quarter |
|
$ |
80.00 |
|
|
$ |
78.97 |
|
| |
Fourth Quarter |
|
$ |
80.50 |
|
|
$ |
79.90 |
|
|
2005
|
|
|
|
|
|
|
|
|
| |
First Quarter |
|
$ |
80.80 |
|
|
$ |
80.25 |
|
| |
Second Quarter |
|
$ |
81.71 |
|
|
$ |
80.65 |
|
| |
Third Quarter (through September 6) |
|
$ |
81.88 |
|
|
$ |
81.22 |
|
On September 6, 2005, the reported closing price of the
Class A Shares on NASDAQ was $81.88 per Class A Share.
Stockholders are urged to obtain a current market quotation
for the Class A Shares.
Since the Merger Closing Date, the Dreyer’s board of
directors has declared a cash dividend of $.06 per share per
quarter. Please see “Miscellaneous Provisions Related to
the Put Right, the Call Right and a Triggering Event –
Dividends and the Put Periods” on page 29
for additional information regarding the possible declaration
and payment of dividends during the First Put Period.
38
Selected Consolidated Financial Information
The following table sets forth summary historical consolidated
financial data for Dreyer’s as of and for the six months
ended June 25, 2005 and June 26, 2004 and as of and for
each of the years ended December 25, 2004 and
December 27, 2003.
This data and the comparative per share data set forth below are
extracted from, and should be read in conjunction with, the
audited consolidated financial statements and other financial
information contained in Dreyer’s Annual Report on
Form 10-K for the year ended December 25, 2004 and the
unaudited consolidated interim financial statements and other
financial information contained in Dreyer’s Quarterly
Reports on Form 10-Q for the quarterly periods ended on
March 26, 2005 and June 25, 2005, including the notes
thereto. More comprehensive financial information is included in
such reports (including management’s discussion and
analysis of financial condition and results of operation) and
other documents filed by Dreyer’s with the SEC, and the
following summary is qualified in its entirety by reference to
such reports and other documents and all of the financial
information and notes contained therein. The financial
statements included as Item 8 in Dreyer’s Annual
Report on Form 10-K for the year ended December 25,
2004 and Item 1 in Dreyer’s Quarterly Report on
Form 10-Q for the quarterly periods ended on June 25, 2005
and June 26, 2004 are hereby incorporated herein by this
reference. Copies of such reports and other documents may be
examined at or obtained from the SEC in the manner set forth
below.
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
For Six Months Ended | |
|
For the Years Ended | |
| |
|
June 25, | |
|
June 26, | |
|
December 25, | |
|
December 27, | |
| |
|
2005 | |
|
2004 | |
|
2004 | |
|
2003 | |
| |
|
| |
|
| |
|
| |
|
| |
| |
|
(In Thousands, except share amounts) | |
|
Statement of Operations Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Total net revenues |
|
$ |
812,804 |
|
|
$ |
767,724 |
|
|
$ |
1,588,428 |
|
|
$ |
1,190,561 |
|
| |
Total costs and expenses |
|
|
890,692 |
|
|
|
838,387 |
|
|
|
1,721,212 |
|
|
|
1,305,311 |
|
| |
Net loss |
|
|
(57,083 |
) |
|
|
(43,104 |
) |
|
|
(81,891 |
) |
|
|
(75,735 |
) |
| |
Net loss available to Class A callable puttable and
Class B common stockholders
|
|
|
(201,239 |
) |
|
|
(168,726 |
) |
|
|
(342,366 |
) |
|
|
(191,780 |
) |
|
Balance Sheet Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Current assets |
|
|
424,052 |
|
|
|
426,446 |
|
|
|
321,512 |
|
|
|
357,517 |
|
| |
Non-current assets |
|
|
2,991,572 |
|
|
|
2,730,228 |
|
|
|
2,925,182 |
|
|
|
2,733,906 |
|
| |
Current liabilities |
|
|
244,944 |
|
|
|
204,062 |
|
|
|
240,319 |
|
|
|
191,862 |
|
| |
Non-current liabilities |
|
|
707,060 |
|
|
|
448,742 |
|
|
|
507,864 |
|
|
|
383,679 |
|
| |
Class A callable puttable common stock |
|
|
2,428,839 |
|
|
|
2,071,364 |
|
|
|
2,251,040 |
|
|
|
1,903,314 |
|
| |
Total stockholders’ equity |
|
|
34,781 |
|
|
|
432,506 |
|
|
|
247,471 |
|
|
|
612,568 |
|
| |
Cash dividends declared per common share |
|
|
0.12 |
|
|
|
0.12 |
|
|
|
0.24 |
|
|
|
0.18 |
|
| |
Average shares of common stock outstanding |
|
|
95,433 |
|
|
|
94,472 |
|
|
|
94,563 |
|
|
|
78,681 |
|
39
Ratio of Earnings to Fixed Charges
The following table sets forth certain historical information
regarding earnings to fixed charges ratio for Dreyer’s for
the six months ended June 25, 2005 and for each of the
years ended December 25, 2004 and December 27, 2003.
Ratio of Earnings to Fixed Charges
(Unaudited)
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
For Six Months | |
|
|
| |
|
Ended | |
|
For the Years Ended | |
| |
|
June 25, 2005 | |
|
December 25, 2004 | |
|
December 27, 2003 | |
| (in thousands, except ratio) |
|
| |
|
| |
|
| |
|
Earnings:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes and income from equity investees
|
|
$ |
(79,048 |
) |
|
$ |
(135,577 |
) |
|
$ |
(115,999 |
) |
|
Fixed charges
|
|
|
6,311 |
|
|
|
9,314 |
|
|
|
4,793 |
|
|
Amortization of capitalized interest
|
|
|
747 |
|
|
|
1,600 |
|
|
|
756 |
|
|
Amortization of debt issuance costs
|
|
|
— |
|
|
|
1,267 |
|
|
|
351 |
|
|
Distributed earnings from equity investees
|
|
|
1,160 |
|
|
|
2,793 |
|
|
|
1,249 |
|
|
Less capitalized interest
|
|
|
1,959 |
|
|
|
1,681 |
|
|
|
379 |
|
| |
|
|
|
|
|
|
|
|
|
|
Loss from continuing operations before fixed charges
|
|
$ |
(68,871 |
) |
|
$ |
(118,922 |
) |
|
$ |
(108,471 |
) |
| |
|
|
|
|
|
|
|
|
|
|
Fixed Charges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net of capitalized interest
|
|
$ |
6,311 |
|
|
$ |
9,291 |
|
|
$ |
4,103 |
|
|
Capitalized debt issuance costs
|
|
|
— |
|
|
|
23 |
|
|
|
690 |
|
| |
|
|
|
|
|
|
|
|
|
| |
Total fixed charges
|
|
$ |
6,311 |
|
|
$ |
9,314 |
|
|
$ |
4,793 |
|
| |
|
|
|
|
|
|
|
|
|
|
Ratio of Earnings to Fixed Charges
|
|
|
(10.91 |
) |
|
|
(12.77 |
) |
|
|
(22.63 |
) |
Comparative Per Share Data
The following table sets forth certain historical per share data
for Dreyer’s. Net loss per share of common stock and book
value per share of common stock is presented for the six months
ended June 25, 2005 and June 26, 2004 and for each of
the years ended December 25, 2004 and December 27,
2003.
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
For Six Months Ended | |
|
For the Years Ended | |
| |
|
June 25, | |
|
June 26, | |
|
December 25, | |
|
December 27, | |
| |
|
2005 | |
|
2004 | |
|
2004 | |
|
2003 | |
| |
|
| |
|
| |
|
| |
|
| |
|
Net loss per share
|
|
$ |
(2.11 |
) |
|
$ |
(1.79 |
) |
|
$ |
(3.62 |
) |
|
$ |
(2.44 |
) |
|
Book value per share
|
|
$ |
25.81 |
|
|
$ |
26.49 |
|
|
$ |
26.29 |
|
|
$ |
26.76 |
|
Book value per share is not a term defined by generally accepted
accounting principles. Book value per share is calculated by
dividing the sum of Class A callable puttable common stock
and Total stockholders’ equity by the total number of
Class A Shares and Class B Shares outstanding.
Except as otherwise set forth herein, the information concerning
Dreyer’s contained in this Notice of Put Right, including
in Schedule B hereto, has been provided by
Dreyer’s or taken from or based upon publicly available
documents and records on file with the SEC and other public
sources and is qualified in its entirety by reference thereto.
Although Nestlé has no knowledge that would indicate that
any statements contained herein based on such documents and
records are untrue, Nestlé cannot take responsibility for
the accuracy or completeness of the information contained in
such documents and records, or for any failure by Dreyer’s
to disclose events which may have occurred or may affect the
significance or accuracy of any such information but which are
unknown to Nestlé.
40
Available Information
Dreyer’s is subject to the information and reporting
requirements of the Exchange Act and in accordance therewith is
obligated to file reports and other information with the SEC
relating to its business, financial condition and other matters.
Such reports, proxy statements and other information is
available for inspection at the public reference room at the
SEC’s offices at 450 Fifth Street, N.W.,
Washington, D.C. 20549 and also is available for inspection
and copying at the regional offices of the SEC located at the
SEC address above and Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60611. Copies may be
obtained, by mail, upon payment of the SEC’s customary
charges, by writing to its principal office at 450 Fifth Street,
N.W., Judiciary Plaza, Washington, D.C. 20549 and can be
obtained electronically on the SEC’s Website at
http://www.sec.gov.
41
Certain Information
Concerning the Nestlé Entities
Nestlé Ice is a corporation organized under the laws of
Delaware and is principally engaged in the business of holding
the Class B Shares. Nestlé Holdings is a corporation
organized under the laws of Delaware and is principally engaged
in the business of holding United States operating subsidiaries
which produce and distribute food and beverage products. The
address of the principal business and principal office of each
of Nestlé Ice and Nestlé Holdings is Merritt View, 383
Main Avenue, Fifth Floor, Norwalk, Connecticut 06851.
Nestlé S.A. is a corporation duly organized under the laws
of Switzerland and is a holding company which holds interests in
worldwide operating companies which: manufacture and sell food
and beverage products throughout the world; engage in research
and development activities; manufacture and sell cosmetic
products; and develop, manufacture and sell pharmaceutical
products. The address of its principal business and principal
office is Avenue Nestlé 55, CH-1800 Vevey, Switzerland.
Nestlé Ice is a wholly-owned subsidiary of Nestlé
Holdings, which in turn is a wholly-owned subsidiary of
Nestlé S.A.
The name, citizenship, business address, business telephone
number and current principal occupation (including the name,
principle business and address of the organization in which such
occupation is conducted) of each of the directors and executive
officers of Nestlé Ice, Nestlé Holdings and
Nestlé S.A. are set forth in Schedule A to this
Notice of Put Right.
Neither Nestlé nor any of its affiliated entities own or
have a right to acquire any Class A Shares nor have they
engaged in any transactions in Class A Shares in the past
60 days. Under the standstill provisions of the Governance
Agreement, Nestlé has not acquired any Dreyer’s equity
securities during the past two years. Nestlé has informed
Dreyer’s that, after making reasonable inquiry, Nestlé
does not believe that any of the persons listed in
Schedule A hereto beneficially own Class A
Shares, have a right to acquire Class A Shares or have
engaged in any transactions in Class A Shares in the past
60 days.
None of the executive officers, directors or affiliates of
Nestlé have made any public recommendation with respect to
the Put Right. Nestlé has not received any appraisal,
report or opinion on the fairness of the Put Right.
Except as set forth under Special Factors, there have
been no negotiations, transactions or material contacts during
the past two years between Nestlé, or, to the best of its
knowledge, any of the persons listed in Schedule A
hereto, on the one hand, and Dreyer’s or its affiliates, on
the other hand, concerning a merger, consolidation or
acquisition, a tender offer or other acquisition of securities,
an election of directors, or a sale or other transfer of a
material amount of assets nor, to the best knowledge of
Nestlé, have there been any such negotiations or material
contacts between subsidiaries, executive officers and directors.
Except as described under Special Factors, neither
Nestlé nor, to the best of its knowledge, any of the
persons listed in Schedule A hereto, has had any
transaction with Dreyer’s or any of its executive officers,
directors or affiliates that would require disclosure under the
rules and regulations of the SEC applicable to the Put Right.
42
Source and Amount of
Funds
Nestlé estimates that $2.64 billion will be required
to pay:
• the Purchase Price for all of the
outstanding Class A Shares pursuant to the exercise of the
Put Right;
• the Stock Option Payment in the event a
Short Form Merger occurs; and
• related fees and expenses.
The Purchase Price and related fees and expenses will be funded
through a combination of available cash on hand, short-term
borrowings and/or use of other new or existing debt facilities.
Any financing activities will not be contingent upon any aspect
of the Put Right and will not be contingent upon, or result in,
a security interest in any Nestlé assets or Class B
Shares.
Fees and Expenses;
Persons Used
Nestlé and Dreyer’s have jointly retained Mellon
Investor Services to act as Depositary Agent, Information Agent
and Solicitation Agent with respect to the Put Right. In
addition, Mellon Investor Services continues to serve in its
capacity as Transfer Agent for the Class A Shares as
provided for in an agreement previously entered into by and
between Dreyer’s and Mellon Investor Services. Nestlé
and Dreyer’s have agreed to pay Mellon Investor Services
reasonable and customary compensation for its services in
connection with the Put Right. Nestlé and Dreyer’s
have also agreed to reimburse Mellon Investor Services for its
reasonable out-of-pocket expenses, including the fees and
expenses of its counsel, in connection with the Put Right, and
have agreed to indemnify Mellon Investor Services against
certain liabilities and expenses in connection with the Put
Right.
Brokers, dealers, commercial banks and trust companies will be
reimbursed by Dreyer’s for customary mailing and handling
expenses incurred by them in forwarding material to their
customers.
Various officers and employees in the finance, human resources,
investor relations and legal departments at Dreyer’s have
participated, and are anticipated to continue to participate, in
the administration of the Put Right.
The following is an estimate of the fees and expenses to be
incurred by Nestlé and Dreyer’s in connection with the
First Put Period, which have been mutually determined upon
consultation between Nestlé and Dreyer’s:
| |
|
|
|
|
|
|
SEC Filing Fees
|
|
$ |
310,174 |
|
|
Legal Fees and Expenses
|
|
|
350,000 |
|
|
Accounting Fees and Expenses
|
|
|
5,000 |
|
|
Depositary/ Information Agent/ Solicitation Fees
|
|
|
112,200 |
|
|
Printing and Mailing Costs
|
|
|
43,067 |
|
|
Miscellaneous
|
|
|
4,559 |
|
| |
|
|
|
| |
Total
|
|
$ |
825,000 |
|
Nestlé has not made any provisions in connection with this
Put Right for Dreyer’s stockholders to access its files or
for Nestlé to provide counsel, legal advice or tax advice
to Dreyer’s stockholders at Nestlé’s expense.
43
Certain Legal
Matters
Forward Looking Disclaimers
Statements that Nestlé or Dreyer’s may publish,
including those included in this Notice of Put Right, that are
not purely historical and that relate to the Put Rights, the
Call Right, a Triggering Event, the Short Form Merger,
Nestlé, Dreyer’s or their businesses or proposals are
“forward-looking statements.” These statements are
based on Nestlé’s and Dreyer’s current
expectations and involve risks and uncertainties which include
(i) whether a sufficient number of Class A Shares will
be exercised pursuant to the Put Rights to enable the
consummation of the Short Form Merger, (ii) whether
Nestlé or Dreyer’s will elect to exercise the Call
Right, (iii) general economic factors and capital market
conditions and (iv) general industry trends (including
trends relating to Dreyer’s products or prospects as an
independent company or as a wholly-owned subsidiary of
Nestlé). Nestlé and Dreyer’s wish to caution the
reader that these factors are among the factors that could cause
actual results to differ materially from the expectations
described in the forward-looking statements.
Short Form Merger Appraisal Rights
If Nestlé acquires at least 90% of the outstanding voting
stock of Dreyer’s, Nestlé will cause Nestlé Ice
or another subsidiary of Nestlé to consummate a
“short-form” merger pursuant to Section 253 of
the DGCL. Section 253 of the DGCL provides that if
Nestlé Ice or such other subsidiary owns at least 90% of
the outstanding shares of each class of Dreyer’s capital
stock, Nestlé Ice or such other subsidiary, may merge with
Dreyer’s by executing, acknowledging and filing, in
accordance with Section 103 of the DGCL, a certificate of
such ownership and merger setting forth a copy of the resolution
of Nestlé Ice or such other subsidiary’s board of
directors to so merge (including a statement of the terms and
conditions of the merger and the consideration to be paid upon
surrender of the Class A Shares not owned by Nestlé
and its subsidiaries) and the date of its adoption. Under
Section 253 of the DGCL, such a merger of Dreyer’s
with Nestlé Ice or such other subsidiary would not require
the approval or any other action on the past of the board of
directors or stockholders of Dreyer’s.
Holders of Class A Shares do not have appraisal rights as a
result of the Put Right or in the event of a Short
Form Merger. Section 262(b)(1) of the Delaware General
Corporation Law provides that appraisal rights are unavailable
to stockholders of corporations that are designated as national
market systems securities on an interdealer quotation system by
the National Association of Securities Dealers, Inc.
General Regulatory Compliance
Nestlé and Dreyer’s are not aware of any licenses or
other regulatory permits which are material to the business of
Dreyer’s and which might be adversely affected by the Put
Right or of any approval or other action by any governmental,
administrative or regulatory agency or authority which would be
required for the Put Right. Should any such approval or other
action be required, it is currently contemplated that such
approval or action would be sought or taken.
The Put Right is not effective in (nor will deliveries be
accepted from or on behalf of) holders of Class A Shares in
any jurisdiction in which the Put Right, or the acceptance and
purchase of Class A Shares thereunder, would not be in
compliance with the laws of such jurisdiction. Nestlé and
Dreyer’s are not aware of any jurisdiction in which the Put
Right or the acceptance of Class A Shares in connection
therewith would not be in compliance with the laws of such
jurisdiction. Nestlé and Dreyer’s may, however, in
their sole discretion, take such action as they may deem
necessary to make the Put Right legal in any jurisdiction where
it is not in compliance with the laws of such jurisdiction and
to extend the Put Right to holders of Class A Shares in
such jurisdiction.
44
Antitrust Compliance
Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended (the “HSR Act”), certain acquisition
transactions may not be consummated unless certain information
has been furnished to the Antitrust Division of the Department
of Justice and the Federal Trade Commission and certain waiting
period requirements have been satisfied. As explained more fully
below, however, neither the Put Right nor the Call Right, or in
the event that Nestlé becomes the owner of 90% or more of
the issued and outstanding voting stock of Dreyer’s as a
result of the Put Right, the Call Right, or a Triggering Event,
a Short Form Merger, are reportable transactions under the
HSR Act.
Nestlé currently owns directly or beneficially more than
50% of the outstanding voting securities of Dreyer’s. Under
HSR Act reporting regulations, this level of ownership means
that Nestlé is in “control” of Dreyer’s for
the purposes of such regulations. Based on the foregoing,
Nestlé believes that no filing under the HSR Act is
required in connection with the Put Right, or in the event that
Nestlé becomes the owner of 90% or more of the issued and
outstanding shares of voting stock of Dreyer’s as a result
of the Put Right, the Call Right, a Triggering Event or a Short
Form Merger.
Federal Reserve Board Regulations
Regulations G, T, U and X (the “Margin
Regulations”) promulgated by the Federal Reserve Board
place restrictions on the amount of credit that may be extended
for the purpose of purchasing margin stock (including the
Class A Shares) if such credit is secured directly or
indirectly by margin stock. Nestlé is not providing funds
for the purchase of Class A Shares pursuant to the Put
Right through any credit that is secured directly or indirectly
by margin stock. Therefore, the Margin Regulations are
inapplicable to the fulfillment of Nestlé’s
obligations under the Put Right.
Section 203 of the Delaware General Corporation Law and
Dreyer’s Restated Certificate
In general, Section 203 of the DGCL is an anti-takeover
statute that prevents an “Interested Stockholder”
(defined generally as a person with 15% or more of a
corporation’s outstanding voting stock) of a Delaware
corporation from engaging in a “Business Combination”
(defined as a variety of transactions, including mergers) with
such corporation for three years following the date such person
became an Interested Stockholder unless:
• before such person became an Interested
Stockholder, the board of directors of the corporation approved
either the Business Combination or the transaction which
resulted in such person becoming an Interested Stockholder;
• upon consummation of the transaction
which resulted in such person becoming an Interested
Stockholder, the Interested Stockholder owned at least 85% of
the voting stock of the corporation outstanding at the time the
transaction commenced (excluding stock held by directors who are
also officers of the corporation and by employee stock ownership
plans that do not provide employees with the rights to determine
confidentially whether shares held subject to the plan will be
delivered or exchanged pursuant to the Put Right); or
• following the transaction in which such
person became an Interested Stockholder, the Business
Combination is approved by the board of directors of the
corporation and authorized at a meeting of stockholders by the
affirmative vote of the holders of two-thirds of the outstanding
voting stock of the corporation not owned by the Interested
Stockholder.
Section 203 provides that during such three-year period the
corporation may not merge or consolidate with an Interested
Stockholder or any affiliate or associate thereof, and also may
not engage in certain other transactions with an Interested
Stockholder or any affiliate or associate thereof, including
without limitation:
• any sale, lease, exchange, mortgage,
pledge, transfer or other disposition of assets (except
proportionately as a stockholder of the corporation) having an
aggregate market value equal to 10% or
45
more of the aggregate market value of all assets of the
corporation determined on a consolidated basis or the aggregate
market value of all the outstanding stock of a corporation;
• any transaction which results in the
issuance or transfer by the corporation or by certain
subsidiaries thereof of any stock of the corporation or such
subsidiaries to the Interested Stockholder, except pursuant to a
transaction which effects a pro rata distribution to all
stockholders of the corporation;
• any transaction involving the
corporation or certain subsidiaries thereof which has the effect
of increasing the proportionate share of the stock of any class
or series, or securities convertible into the stock of any class
or series, of the corporation or any such subsidiary which is
owned directly or indirectly by the Interested Stockholder
(except as a result of immaterial changes due to fractional
share adjustments); or
• any receipt by the Interested
Stockholder of the benefit (except proportionately as a
stockholder of such corporation) of any loans, advances,
guarantees, pledges or other financial benefits provided by or
through the corporation.
In connection with the Merger Agreement, Dreyer’s took all
necessary corporate action to exempt Nestlé and its
affiliates from the provisions of Section 203. Thus,
Nestlé and Dreyer’s believe that the restrictions in
Section 203 do not apply to any business combination
between Nestlé (or one of its subsidiaries) and
Dreyer’s.
State Takeover Laws
A number of states have adopted laws and regulations applicable
to acquiring securities of corporations which are incorporated
in such states and/or which have substantial assets,
stockholders, principal executive offices or principal places of
business therein. In Edgar v. MITE Corporation,
the Supreme Court of the United States held that the Illinois
Business Takeover Statute, which made the takeover of certain
corporations more difficult, imposed a substantial burden on
interstate commerce and was therefore unconstitutional. In
CTS Corporation v. Dynamics Corporation of
America, the Supreme Court held that as a matter of
corporate law, and in particular, those laws concerning
corporate governance, a state may constitutionally disqualify an
acquiror of “Control Class A Shares” (ones
representing ownership in excess of certain voting power
thresholds e.g. 20%, 33% or 50%) of a corporation incorporated
in its state and meeting certain other jurisdictional
requirements from exercising voting power with respect to those
shares without the approval of a majority of the disinterested
stockholders.
Nestlé and Dreyer’s do not believe that any state
takeover laws purport to apply to the Put Right or the Short
Form Merger. Nestlé and Dreyer’s have not
currently complied with any state takeover statute or
regulation. Nestlé and Dreyer’s reserve the right to
challenge the applicability or validity of any state law
purportedly applicable to the Put Right or a Short
Form Merger and nothing in this Notice of Put Right or any
action taken in connection with the Put Right or the Short
Form Merger is intended as a waiver of such right. If it is
asserted that any state takeover statute is applicable to the
Put Right or the Short Form Merger and if an appropriate
court does not determine that it is inapplicable or invalid as
applied to the Put Right or the Short Form Merger, Dreyer’s
might be required to file certain information with, or to
receive approvals from, the relevant state authorities, and
Dreyer’s might be unable to accept for payment or pay for
Class A Shares delivered pursuant to the exercise of the
Put Right, or be delayed in consummating the purchase of
Class A Shares pursuant to the exercise of the Put Right or
a Short Form Merger. In such case, Dreyer’s may not be
obliged to accept for payment or pay for any Class A Shares
delivered pursuant to the Put Right.
Miscellaneous
Nestlé has filed a Statement on Schedule TO and
Dreyer’s has filed a Statement on Schedule 14D-9 and a
Statement on Schedule 13e-4 (collectively, the
“Statements”) with the SEC.
46
Such Statements were filed under the General Rules and
Regulations under the Exchange Act and furnish information with
respect to the Put Right. Each of Nestlé and Dreyer’s
may file amendments to their respective Statements. Such
Statements include within them the information required by the
SEC’s Statement on Schedule 13E-3 relating to
“going private” transactions. Such Statements and any
amendments thereto, including exhibits, may be examined and
copies may be obtained from the principal office of the SEC in
Washington, D.C.
No person has been authorized to give any information or make
any representation on behalf of Nestlé or Dreyer’s not
contained in this Notice of Put Right or in the Letter of
Transmittal and, if given or made, such information or
representation must not be relied upon as having been authorized.
|
|
| |
Dreyer’s Grand Ice Cream Holdings, Inc. |
| |
Nestlé S.A. |
| |
Nestlé Holdings, Inc. |
| |
Nestlé Ice Holdings, Inc. |
,
2005
47
Schedule A
Information concerning
the
Executive Officers and
Directors of Nestlé
Nestlé Ice
Holdings, Inc.
Executive Officers and
Directors
| |
|
|
|
|
|
|
|
|
| |
|
|
|
Present Principal | |
|
|
| Name |
|
Present Business Address |
|
Occupation | |
|
Citizenship |
| |
|
|
|
| |
|
|
|
EXECUTIVE OFFICER |
|
|
|
|
|
|
|
|
| |
|
Manfred R. Lehmann |
|
Nestlé Ice Holdings, Inc.
c/o Nestlé USA, Inc.
800 North Brand Blvd.
Glendale, California
91203 |
|
Vice President and
Treasurer of Nestlé
Holdings, Inc. |
|
Switzerland and United States |
| |
|
DIRECTOR
|
|
|
|
|
|
|
|
|
| |
|
Manfred R. Lehmann |
|
Nestlé Ice Holdings, Inc.
c/o Nestlé USA, Inc.
800 North Brand Blvd.
Glendale, California
91203 |
|
Vice President and Treasurer of Nestlé Holdings, Inc. |
|
Switzerland and United States |
A-1
Nestlé Holdings,
Inc
Executive Officers and
Directors
| |
|
|
|
|
|
|
| |
|
|
|
Present Principal |
|
|
| Name |
|
Present Business Address |
|
Occupation |
|
Citizenship |
| |
|
|
|
|
|
|
|
EXECUTIVE OFFICERS |
|
|
|
|
|
|
| |
|
Joseph M. Weller |
|
Nestlé Holdings, Inc.
c/o Nestlé USA, Inc.
800 North Brand Boulevard
Glendale, California
91203 |
|
President, Chief Executive Officer and Chairman of the Board |
|
United States |
| |
|
Rock Foster |
|
Nestlé Holdings, Inc.
c/o Nestlé USA, Inc.
800 North Brand Boulevard
Glendale, California
91203 |
|
Vice President and Controller |
|
United States |
| |
|
Kristin Adrian |
|
Nestlé Holdings, Inc.
c/o Nestlé USA, Inc.
800 North Brand Boulevard
Glendale, California
91203 |
|
Senior Vice President, General Counsel and Secretary |
|
United States |
| |
|
Alexander Spitzer |
|
Nestlé Holdings, Inc.
383 Main Avenue, 5th Floor
Norwalk, Connecticut
06851 |
|
Senior Vice President, Taxes |
|
United States |
| |
|
Manfred R. Lehmann |
|
Nestlé Holdings, Inc.
c/o Nestlé USA, Inc.
800 North Brand Boulevard
Glendale, California
91203 |
|
Vice President and Treasurer |
|
Switzerland and United States |
| |
|
Kimberly A. Lund |
|
Nestlé Holdings, Inc.
c/o Nestlé USA, Inc.
800 North Brand Boulevard
Glendale, California 91203 |
|
Vice President and Chief Information Officer |
|
United States |
| |
|
Mark E. Siegal |
|
Nestlé Holdings, Inc.
383 Main Avenue, 5th Floor
Norwalk, Connecticut 06851 |
|
Vice President, Taxes |
|
United States |
| |
|
Gary Kirschenbaum |
|
Nestlé Holdings, Inc.
383 Main Avenue, 5th Floor
Norwalk, Connecticut 06851 |
|
Vice President, Taxes |
|
United States |
A-2
| |
|
|
|
|
|
|
| |
|
|
|
Present Principal |
|
|
| Name |
|
Present Business Address |
|
Occupation |
|
Citizenship |
| |
|
|
|
|
|
|
|
DIRECTORS
|
|
|
|
|
|
|
| |
|
Joseph M. Weller |
|
Nestlé Holdings, Inc.
c/o Nestlé USA, Inc.
800 North Brand Boulevard
Glendale, California 91203 |
|
President, Chief Executive Officer and Chairman of the Board |
|
United States |
| |
|
Rock Foster |
|
Nestlé Holdings, Inc.
c/o Nestlé USA, Inc.
800 North Brand Boulevard
Glendale, California 91203 |
|
Vice President and Controller |
|
United States |
A-3
Nestlé
S.A.
Executive Officers and
Directors
| |
|
|
|
|
|
|
| |
|
|
|
Present Principal |
|
|
| Name |
|
Present Business Address |
|
Occupation |
|
Citizenship |
| |
|
|
|
|
|
|
|
EXECUTIVE OFFICERS |
|
|
|
|
|
|
| |
|
Peter Brabeck-Letmathe |
|
Nestlé S.A.
Avenue Nestlé 55
CH-1800 Vevey
Switzerland |
|
Chairman and Chief Executive Officer |
|
Austria |
| |
|
Francisco Castaner |
|
Nestlé S.A.
Avenue Nestlé 55
CH-1800 Vevey
Switzerland |
|
Executive Vice President Pharmaceuticals and Cosmetics Products,
Liaison with L’Oréal Human Resources, Corporate Affairs |
|
Spain |
| |
|
Wolfgang Reichenberger |
|
Nestlé S.A.
Avenue Nestlé 55
CH-1800 Vevey
Switzerland |
|
Executive Vice
President Finance,
Control, Legal,
Tax, Purchasing,
Export |
|
Austria and Switzerland |
| |
|
Lars Olofsson |
|
Nestlé S.A.
Avenue Nestlé 55
CH-1800 Vevey
Switzerland |
|
Executive Vice President Europe |
|
Sweden |
| |
|
Werner Bauer |
|
Nestlé S.A.
Avenue Nestlé 55
CH-1800 Vevey
Switzerland |
|
Executive Vice President Technical, Production, Environment,
Research and Development |
|
Germany |
| |
|
Frits Van Dijk |
|
Nestlé S.A.
Avenue Nestlé 55
CH-1800 Vevey
Switzerland |
|
Executive Vice President Asia, Oceania, Africa and Middle East |
|
Netherlands |
| |
|
Edward A. Marra |
|
Nestlé S.A.
Avenue Nestlé 55
CH-1800 Vevey
Switzerland |
|
Executive Vice
President Strategic Business Units, Marketing |
|
Canada and United States |
| |
|
Carlo Donati |
|
Nestlé S.A.
Avenue Nestlé 55
CH-1800 Vevey
Switzerland |
|
Executive Vice President Chairman and CEO of Nestlé Waters |
|
Switzerland |
A-4
| |
|
|
|
|
|
|
| |
|
|
|
Present Principal |
|
|
| Name |
|
Present Business Address |
|
Occupation |
|
Citizenship |
| |
|
|
|
|
|
|
|
Paul Bulcke |
|
Nestlé S.A.
Avenue Nestlé 55
CH-1800 Vevey
Switzerland |
|
Executive Vice President United State of America, Canada, Latin
America, Caribbean |
|
Belgium |
| |
|
Chris Johnson |
|
Nestlé S.A.
Avenue Nestlé 55
CH-1800 Vevey
Switzerland |
|
Deputy Executive Vice President GLOBE Program, IS/IT, Strategic
Supply Chain, eNestlé |
|
United States |
| |
|
Luis Cantarell |
|
Nestlé S.A.
Avenue Nestlé 55
CH-1800 Vevey
Switzerland |
|
Deputy Executive Vice President Nestlé Nutrition |
|
Spain |
| |
|
Richard T. Laube |
|
Nestlé S.A.
Avenue Nestlé 55
CH-1800 Vevey
Switzerland |
|
Deputy Executive Vice President Corporate Business Development
Manager |
|
Switzerland and United States |
| |
|
DIRECTORS
|
|
|
|
|
|
|
| |
|
Peter Brabeck-Letmathe |
|
Nestlé S.A.
Avenue Nestlé 55
CH-1800 Vevey
Switzerland |
|
Chairman and Chief Executive Officer of Nestlé S.A. |
|
Austria |
| |
|
Günter Blobel |
|
Rockefeller University
Laboratory of Cell
Biology
1230 York Avenue
New York, New York
20021-6399 |
|
Professor |
|
Germany |
| |
|
Peter Böckli |
|
Böckli Bodmer & Partner
Case postale 2348
CH-4002 Basel
Switzerland |
|
Lawyer, Law Professor emeritus |
|
Switzerland |
| |
|
Daniel Borel |
|
Logitech Europe S.A.
Moulin du Choc D
CH-1122 Romanel-sur-Morges
Switzerland |
|
Chairman of Logitech International S.A. |
|
Switzerland |
A-5
| |
|
|
|
|
|
|
| |
|
|
|
Present Principal |
|
|
| Name |
|
Present Business Address |
|
Occupation |
|
Citizenship |
| |
|
|
|
|
|
|
|
Edward George |
|
c/o Linda Scott
NM Rothschild & Sons Ltd
New Court
St. Swithen’s Lane
GB-London EC4P 4DU
Great Britain |
|
Former Governor of the Bank of England |
|
United Kingdom |
| |
|
Rolf Hänggi |
|
c/o Rüd, Blass & Cie AG
Privatbank
Selnaustrasse 32
CH-8039 Zürich
Switzerland |
|
Consultant |
|
Switzerland |
| |
|
Nobuyuki Idei |
|
Sony Corporation
6-7-35 Kitashinagawa
Shinagawa-ku
Tokyo, Japan 141-0001 |
|
Chief Corporate Advisor of Sony Corporation |
|
Japan |
| |
|
André Kudelski |
|
Kudelski S.A.
Route de Geneve
Case postale 134
CH-1033 Cheseaux
Switzerland |
|
Chairman and Chief Executive Officer of the Kudelski Group |
|
Switzerland |
| |
|
Andreas Koopmann |
|
Bobst Group S.A.
Case postale
CH-1001 Lausanne
Switzerland |
|
Chief Executive Officer of the Bobst Group S.A. |
|
Switzerland |
| |
|
Jean-Pierre Meyers |
|
L’Oreal S.A.
41, Rue Martre
F-92117 Clichy-Cedex
France |
|
Vice Chairman of L’Oréal S.A. |
|
France |
| |
|
Carolina Müller-Möhl |
|
Müller-Möhl Group
Weinplatz 10
Postfach
CH-8022 Zürich
Switzerland |
|
Chair of Müller- Möhl Group |
|
Switzerland |
| |
|
Kaspar Villiger |
|
c/o Markwalder & Partner
Monbijoustrasse 22
Postfach
CH-3001 Bern
Switzerland |
|
Former President of the Swiss Confederation |
|
Switzerland |
A-6
Schedule B
Certain Additional
Information About Dreyer’s
Security Ownership of Certain Beneficial Owners
Class A Callable Puttable Common Stock
The following table sets forth information as of
September 6, 2005, concerning the beneficial ownership of
Dreyer’s Class A Callable Puttable Common Stock by
each person (including any “group” as that term is
used in Section 13(d)(3) of the Securities Exchange Act of
1934, as amended (the “Exchange Act”)), who is
known to Dreyer’s to be the beneficial owner of more than
five percent of such class:
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Number of | |
|
|
|
Percent of All | |
| |
|
Shares Beneficially | |
|
Percent | |
|
Classes of | |
| Name and Address of Beneficial Owner |
|
Owned* | |
|
of Class* | |
|
Common Stock | |
| |
|
| |
|
| |
|
| |
|
Bank of America
Corporation(1)
|
|
|
2,501,931 |
|
|
|
8.01 |
% |
|
|
2.61 |
% |
| |
101 South Tyron Street
Charlotte, NC 28255 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Carlson Capital
L.P.(2)
|
|
|
2,483,898 |
|
|
|
7.96 |
|
|
|
2.59 |
|
| |
2100 McKinnery Avenue
Dallas, TX 75201 |
|
|
|
|
|
|
|
|
|
|
|
|
|
CIC Banque
CIAL(3)
|
|
|
4,932,967 |
|
|
|
15.80 |
|
|
|
5.15 |
|
| |
31 rue Jean Wenger-Valentin
6700 Strasbourg, France |
|
|
|
|
|
|
|
|
|
|
|
|
|
Gabelli Asset Management,
Inc.(4)
|
|
|
2,597,414 |
|
|
|
8.32 |
|
|
|
2.71 |
|
| |
One Corporate Center
Rye, NY 10580 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Intrepid Funding Master
Trust(5)
|
|
|
2,500,000 |
|
|
|
8.01 |
|
|
|
2.61 |
|
| |
c/o Wilmington Trust Company as
Owner, Trustee
1100 North Market Street
Wilmington, DE 19890 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Andrew H. Tisch, Daniel R. Tisch, James J. Tisch and
Thomas J.
Tisch(6)
|
|
|
2,876,748 |
|
|
|
9.21 |
|
|
|
3.00 |
|
| |
c/o TowerView LLC
500 Park Avenue
New York, NY 10022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| * |
The number of shares beneficially owned and percentages were
calculated pursuant to Rule 13d-3(d)(1) under the Exchange
Act which provides that beneficial ownership of a security is
acquired by a person if that person has the right to acquire
beneficial ownership of such security within 60 days
through the exercise of a right such as the exercise of an
option or the conversion of a convertible security into Common
Stock. Any securities which are subject to options or conversion
privileges are deemed outstanding for the purpose of computing
the percentage of outstanding securities of the class owned by
the person who holds the option or conversion privilege but are
not deemed outstanding for the purpose of computing the
percentage of the class owned by any other person. Percentages
were calculated on the basis of 31,219,672 shares of
Class A Shares and 64,564,315 shares of Class B
Shares outstanding as of September 6, 2005. |
B-1
|
|
| (1) |
Based on a Schedule 13G filed jointly by Bank of America
Corporation (“BofA”), NationsBanc Montgomery
Holdings Corporation (“NationsBanc”), Banc of
America Securities, LLC (“BofA Securities”), NB
Holdings Corporation (“NB Holdings”), Bank of
America, NA (“BofA NA”), NMS Services Inc.
(“NMS”) and NMS Services (Cayman) Inc.
(“NMS Cayman”) with the SEC on June 30,
2005. BofA is the parent holding company of NationsBanc, BofA
Securities, NB Holdings, BofA NA, NMS and NMS Cayman. Consists
of 2,501,931 shares beneficially owned by BofA as to which
BofA shares voting and dispositive power. Each of NationsBanc
and BofA Securities beneficially own 1,930 shares and share
voting and dispositive power with respect to such shares. NB
Holdings beneficially owns 1,931 shares and shares voting
and dispositive power with respect to such shares. BofA NA
beneficially owns 1 share and has sole voting and dispositive
power with respect to such share. Each of NMS and NMS Cayman
beneficially own 2,500,000 shares and share voting and
dispositive power with respect to such shares. |
| |
| (2) |
Based on a Schedule 13G filed jointly by Carlson Capital,
L.P., Asgard Investment Corp. and Clint D. Carlson with the SEC
on June 30, 2005. Consists of 2,483,898 shares held
for the accounts of Carlson Capital, L.P.’s clients and
held by Mr. Carlson for his own account. Each of Carlson
Capital, L.P., Asgard Investment Corp. and Clint D. Carlson
beneficially own such shares and have sole voting and
dispositive power with respect to such shares. |
| |
| (3) |
Based on a Schedule 13D filed by CIC Banque CIAL
(“CIC”) with the SEC on March 23, 2005.
Consists of 4,932,967 shares beneficially owned by CIC and
CIC has sole voting and dispositive power with respect to such
shares. |
| |
| (4) |
Based on a Schedule 13D filed jointly by Mario J. Gabelli
(“Mario Gabelli”), Gabelli Funds, LLC
(“Gabelli Funds”), GAMCO Investors, Inc.
(“GAMCO”), Gabelli Securities, Inc.
(“GSI”), MJG Associates, Inc. (“MJG
Associates”), Gabelli & Company, Inc. Profit
Sharing Plan (the “Gabelli Plan”), Gabelli
Foundation, Inc. (the “Foundation”), Gabelli
Group Capital Partners, Inc. (“Gabelli
Partners”), Gabelli Asset Management, Inc.
(“GBL”) (collectively, the “Reporting
Persons”) with the SEC on July 27, 2005. Consists
of 2,597,414 shares beneficially owned by Mario Gabelli,
including 1,191,000 shares beneficially owned by Gabelli
Funds, 1,110,573 shares beneficially owned by GAMCO,
163,241 shares beneficially owned by GSI,
6,300 shares beneficially owned by MJG Associates,
20,000 shares beneficially owned by the Gabelli Plan,
23,300 shares beneficially owned by the Foundation,
80,000 shares beneficially owned by Gabelli Asset
Management and 3,000 shares beneficially owned by Mario
Gabelli. Gabelli Partners is the parent company of GBL and GBL
is the parent company of GAMCO, GSI (the parent company of
Gabelli & Company, Inc.), Gabelli Funds and Gabelli
Advisors. Mario Gabelli is the majority stockholder and Chairman
of the Board of Directors and Chief Executive Officer of Gabelli
Partners and GBL, and the Chief Investment Officer for Gabelli
Funds, GAMCO, Gabelli & Company, Inc., the Foundation
and Gabelli Partners. Mario Gabelli is the sole shareholder,
director and employee of MJG Associates. GBL and is the majority
shareholder of GSI and the largest shareholder of Gabelli
Advisers. Mario Gabelli is deemed to have beneficial ownership
of the shares owned beneficially by each of the other Reporting
Persons. GSI is deemed to have beneficial ownership of the
Securities beneficially owned by Gabelli & Company,
Inc. GBL and Gabelli Partners are deemed to have beneficial
ownership of the shares owned beneficially by each of the
Reporting Persons other than Mario Gabelli and the Foundation.
Each of the Reporting Persons has the sole voting and
dispositive power with respect to the shares beneficially owned
by such Reporting Person, except that GAMCO does not have the
authority to vote 100,300 of the shares, Gabelli Funds has sole
voting and dispositive power with respect to the shares
beneficially owned by it, subject to certain restrictions, and
the voting and dispositive power of Mario Gabelli, GBL and
Gabelli Partners is indirect with respect to the shares
beneficially owned directly by the other Reporting Persons. |
| |
| (5) |
Based on a Schedule 13D filed by Intrepid Funding Master
Trust (“Intrepid Funding”) and Intrepid
Portfolios LLC (“Intrepid Portfolios”) with the
SEC on November 19, 2004. Consists of 2,500,000 shares
beneficially owned by Intrepid Portfolios. Intrepid Funding is
the parent company |
B-2
|
|
|
and Intrepid Portfolios and is
deemed to beneficially own the shares held by Intrepid
Portfolio. Intrepid Funding and Intrepid Portfolios share voting
and dispositive power with respect to all 2,500,000 shares.
|
| |
| (6) |
Based on a Schedule 13G/A
filed jointly by Andrew H. Tisch, Daniel R. Tisch, James S.
Tisch and Thomas J. Tisch (collectively the “Tisch
Reporting Persons”) with the SEC on February 10,
2005. Consists of 500,200 shares beneficially owned by
Andrew H. Tisch, 1,743,748 shares beneficially owned by
Daniel R. Tisch, 500,200 shares beneficially owned by James
S. Tisch and 497,600 shares beneficially owned by Thomas J.
Tisch. The Tisch Reporting Persons share voting and dispositive
power with respect to 125,000 of the shares beneficially owned
by each of them, which shares are held in the name of the Tisch
Foundation. Each of the Tisch Reporting Persons are managers of
the Tisch Foundation. 375,200 of the shares beneficially owned
by Andrew H. Tisch are held in the names of trusts for his
benefit and, by virtue of his status of the trustee of such
trusts, he has sole voting and dispositive power with respect to
such shares. 375,200 of the shares beneficially owned by Daniel
R. Tisch are held in the names of trusts for his benefit and, by
virtue of his status of the trustee of such trusts, he has sole
voting and dispositive power with respect to such shares. 22,400
of the shares beneficially owned by Daniel R. Tisch are
held in the name of Four-Fourteen Partners, LLC and, by virtue
of his status as manager of Four-Fourteen Partners, LLC, he has
sole voting and dispositive power with respect to such shares.
1,174,866 of the shares beneficially owned by Daniel R. Tisch
are held in the name of TowerView LLC and, by virtue of his
status as manager of TowerView LLC, he has sole voting and
dispositive power with respect to such shares. 78,682 of the
shares beneficially owned by Daniel R. Tisch are held in the
name of the Damial Foundation and he has sole voting and
dispositive power with respect to such shares. 375,200 of the
shares beneficially owned by James S. Tisch are held in the
names of trust for his benefit and, by virtue of his status as
the trustee of such trusts, he has sole voting and dispositive
power with respect to such shares. 350,200 of the shares
beneficially owned by Thomas J. Tisch are held in the name of a
trust for his benefit and by virtue of his status as the trustee
of such trusts he has sole voting and dispositive power with
respect to such shares.
|
B-3
Class B Common Stock
The following table sets forth information as of
September 6, 2005, concerning the beneficial ownership of
Dreyer’s Class B Common Stock by each person
(including any “group” as that term is used in
Section 13(d)(3) of the Exchange Act) who is known to
Dreyer’s to be the beneficial owner of more than five
percent of such class:
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Number of | |
|
|
|
Percent of All | |
| |
|
Shares Beneficially | |
|
Percent | |
|
Classes of | |
| Name and Address of Beneficial Owner |
|
Owned* | |
|
of Class* | |
|
Common Stock* | |
| |
|
| |
|
| |
|
| |
|
Nestlé Ice Holdings, Inc.(1)
c/o Nestlé USA, Inc.
800 North Brand Boulevard
Glendale, California 91203
|
|
|
64,564,315 |
|
|
|
100 |
% |
|
|
67.41 |
% |
|
|
| * |
The number of shares beneficially owned and percentages were
calculated pursuant to Rule 13d-3(d)(1) under the Exchange
Act which provides that beneficial ownership of a security is
acquired by a person if that person has the right to acquire
beneficial ownership of such security within 60 days
through the exercise of a right such as the exercise of an
option or the conversion of a convertible security into Common
Stock. Any securities which are subject to options or conversion
privileges are deemed outstanding for the purpose of computing
the percentage of outstanding securities of the class owned by
the person who holds the option or conversion privilege but are
not deemed outstanding for the purpose of computing the
percentage of the class owned by any other person. Percentages
were calculated on the basis of 31,219,672 Class A
Shares and 64,564,315 Class B Shares outstanding as of
September 6, 2005. |
| |
| (1) |
Based on a Schedule 13D/ A filed jointly by Nestlé Ice
Holdings, Inc., Nestlé Holdings, Inc. and Nestlé S.A.
with the SEC on July 7, 2005. Nestlé Ice Holdings,
Inc. is a wholly-owned indirect subsidiary of Nestlé
Holdings, Inc., and Nestlé Holdings, Inc. is a wholly-owned
subsidiary of Nestlé S.A. Nestlé S.A. has ultimate
voting and dispositive power for the Class B Shares held by
Nestlé Ice Holdings, Inc. |
B-4
Security Ownership of Management
The following table sets forth information as of
September 6, 2005, concerning the beneficial ownership of
Dreyer’s Class A Shares by each director of
Dreyer’s, the Chief Executive Officer and each of the four
other most highly compensated executive officers of
Dreyer’s (the five officers are referred to as the
“Named Executive Officers”), and all directors
and executive officers of Dreyer’s as a group. None of such
persons owns any Class B Shares. Except as otherwise noted,
each person has sole voting and sole investment power with
respect to the shares shown:
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Number of | |
|
|
|
Percent of All | |
| |
|
Shares Beneficially | |
|
Percent | |
|
Classes of | |
| Name and Address of Beneficial Owner |
|
Owned* | |
|
of Class* | |
|
Common Stock* | |
| |
|
| |
|
| |
|
| |
|
T. Gary
Rogers(1)
|
|
|
805,713 |
|
|
|
2.58 |
|
|
|
** |
|
|
Thomas M.
Delaplane(2)
|
|
|
720 |
|
|
|
** |
|
|
|
** |
|
|
J. Tyler
Johnston(3)
|
|
|
720 |
|
|
|
** |
|
|
|
** |
|
|
Timothy F.
Kahn(4)
|
|
|
676 |
|
|
|
** |
|
|
|
** |
|
|
William R.
Oldenburg(5)
|
|
|
720 |
|
|
|
** |
|
|
|
** |
|
|
Jan L.
Booth(6)
|
|
|
2,000 |
|
|
|
** |
|
|
|
** |
|
|
Peter
Brabeck-Letmathe(7)
|
|
|
0 |
|
|
|
** |
|
|
|
** |
|
|
William F.
Cronk, III(8)
|
|
|
248,182 |
|
|
|
** |
|
|
|
** |
|
|
Jean-Marie
Gurné(7)
|
|
|
0 |
|
|
|
** |
|
|
|
** |
|
|
Tahira
Hassan(7)
|
|
|
0 |
|
|
|
** |
|
|
|
** |
|
|
John W. Larson
|
|
|
0 |
|
|
|
** |
|
|
|
** |
|
|
Carlos E.
Represas(7)
|
|
|
0 |
|
|
|
** |
|
|
|
** |
|
|
Timothy P. Smucker
|
|
|
0 |
|
|
|
** |
|
|
|
** |
|
|
Joe
Weller(7)
|
|
|
0 |
|
|
|
** |
|
|
|
** |
|
|
Directors and executive officers as a group (14 persons)
|
|
|
1,058,731 |
|
|
|
3.39 |
|
|
|
1.11 |
|
|
|
| * |
The number of shares beneficially owned and percentages were
calculated pursuant to Rule 13d-3(d)(1) under the Exchange
Act which provides that beneficial ownership of a security is
acquired by a person if that person has the right to acquire
beneficial ownership of such security within 60 days
through the exercise of a right such as the exercise of an
option or the conversion of a convertible security into Common
Stock. Any securities which are subject to options or conversion
privileges are deemed outstanding for the purpose of computing
the percentage of outstanding securities of the class owned by
the person who holds the option or conversion privilege but are
not deemed outstanding for the purpose of computing the
percentage of the class owned by any other person. Percentages
were calculated on the basis of 31,219,672 shares of
Class A Callable Puttable Common Stock and
64,564,315 shares of Class B Common Stock outstanding
as of September 6, 2005. |
| |
| ** |
Less than one percent. |
| |
| (1) |
Held by the Rogers Revocable Trust for which Mr. Rogers and
his wife serve as co-trustees (Mr. Rogers and his wife
share the voting and investment power with respect to such
shares). |
| |
| (2) |
Held by Mr. Delaplane and his wife as co-trustees of the
Delaplane Family Trust (Mr. Delaplane and his wife share
the voting and investment power with respect to such shares). |
| |
| (3) |
Held by the Tyler and Melanie Johnston Trust for which
Mr. Johnston and his wife serve as co-trustees
(Mr. Johnston and his wife share the voting and investment
power with respect to such shares). |
| |
| (4) |
Held by the Kahn Adams Family Living Trust. |
B-5
|
|
| (5) |
Held by the William R. Oldenburg and Deborah Oldenburg Trust for
which Mr. Oldenburg and his wife serve as co-trustees
(Mr. Oldenburg and his wife share the voting and investment
power with respect to such shares). |
| |
| (6) |
Held by the Jan L. Booth 2004 Trust for which Ms. Booth
serves as the trustee (Ms. Booth has sole voting and
investment power with respect to such shares). |
| |
| (7) |
Mr. Brabeck-Letmathe, Mr. Gurné, Ms. Hassan,
Mr. Represas and Mr. Weller disclaim beneficial
ownership with respect to the shares of Series B Common
Stock held by Nestlé and its affiliates. |
| |
| (8) |
Held directly by the Cronk Revocable Trust for which
Mr. Cronk and his wife serve as co-trustees (Mr. Cronk
and his wife share the voting and investment power with respect
to such shares). |
Agreements Between Dreyer’s and Its Executive
Officers
Stock Options
No stock options were granted to the Named Executive Officers
during the period beginning on December 28, 2003, the first
day of Dreyer’s 2004 fiscal year, through December 25,
2004 the last day of Dreyer’s’s 2004 fiscal year.
The following table provides information on option exercises
during the period beginning on December 28, 2003, the first
day of Dreyer’s 2004 fiscal year, through December 25,
2004, the last day of Dreyer’s’s 2004 fiscal year, by
the Named Executive Officers and the value of such
officers’ unexercised in-the-money options as of
December 25, 2004:
Aggregated Option Exercises in the Last Fiscal Year
and Fiscal Year-End Option Values
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
Number of Securities | |
|
Value of Unexercised | |
| |
|
Number | |
|
|
|
Underlying Unexercised | |
|
In-The-Money Options | |
| |
|
of Shares | |
|
|
|
Options at FY-End(#) | |
|
at FY-End($) | |
| |
|
Acquired on | |
|
Value | |
|
| |
|
| |
| Name |
|
Exercise(#) | |
|
Realized($) | |
|
Exercisable | |
|
Unexercisable | |
|
Exercisable | |
|
Unexercisable | |
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
T. Gary Rogers
|
|
|
102,847 |
|
|
|
5,563,985 |
|
|
|
0 |
|
|
|
205,693 |
|
|
|
0 |
|
|
|
11,359,851 |
|
|
Timothy F. Kahn
|
|
|
37,076 |
|
|
|
1,957,813 |
|
|
|
0 |
|
|
|
73,476 |
|
|
|
0 |
|
|
|
4,064,622 |
|
|
Thomas M. Delaplane
|
|
|
103,810 |
|
|
|
6,646,236 |
|
|
|
48,133 |
|
|
|
69,547 |
|
|
|
2,656,997 |
|
|
|
3,839,214 |
|
|
William R. Oldenburg
|
|
|
148,193 |
|
|
|
8,937,819 |
|
|
|
0 |
|
|
|
69,547 |
|
|
|
0 |
|
|
|
3,838,214 |
|
|
J. Tyler Johnston
|
|
|
35,133 |
|
|
|
1,846,316 |
|
|
|
0 |
|
|
|
69,547 |
|
|
|
0 |
|
|
|
3,838,214 |
|
Employment Contracts, Employment Termination and Change of
Control Arrangements
In connection with the Merger Agreement, Dreyer’s entered
into employment agreements with each of the Named Executive
Officers. Each employment agreement became effective on the
Merger Closing Date.
During his employment under the employment agreement,
Mr. Rogers has full authority to operate the day-to-day
business affairs of Dreyer’s and he agreed to devote
substantially his full time and attention to the business and
affairs of Dreyer’s. During their employment under the
employment agreements, the other Named Executive Officers agreed
to devote substantially their full time and attention to the
business and affairs of Dreyer’s.
Each Named Executive Officer’s base salary during the term
of his employment agreement will not be less than his annual
base salary as in effect on the date the employment agreement
was signed, as it may be increased in accordance with
Dreyer’s normal salary adjustment practices. In addition,
each Named Executive Officer will be awarded an annual cash
bonus on terms and conditions not less favorable than those in
effect as of the date the employment agreement was signed. Each
Named
B-6
Executive Officer also will be offered long-term incentive
compensation opportunities comparable to those previously
provided to the Named Executive Officer by DGIC through stock
options, which will be made available through awards under the
2004 Dreyer’s Long Term Incentive Plan
(“LTIP”). Each Named Executive Officer is also
entitled to other benefits and perquisites on par with other
executives of Dreyer’s and not less favorable than those
provided to the Named Executive Officer on the date the
employment agreement was signed.
If the Named Executive Officer’s employment is terminated
by Dreyer’s for cause, or by the Named Executive Officer
without “good reason” (as defined in the employment
agreement), the Named Executive Officer will receive a lump-sum
payment of any accrued but unpaid base salary, annual bonus and
vacation pay and the Named Executive Officer’s unvested
stock options that were deferred under the employment agreement
will be forfeited.
If Dreyer’s terminates the Named Executive Officer’s
employment other than for death, disability or cause, or if the
Named Executive Officer resigns for good reason, the Named
Executive Officer will:
(1) receive a lump sum payment of:
• His base salary for the remaining term
of the employment agreement;
• An amount equal to the annual bonus
percentage that applies if all performance targets are met
multiplied by the total amount of his base salary for the
remaining term of the employment agreement; and
• The value of additional 401(k) benefits
he would have received had he continued to be employed by
Dreyer’s for the remaining term of the employment agreement;
(2) receive any accrued but unpaid base salary, vacation
pay and annual bonus as of the date of termination;
(3) continue to earn long-term incentive compensation, on
the same terms as if the Named Executive Officer’s
employment had not been terminated, for the remaining term of
the employment agreement;
(4) be entitled to receive welfare and fringe benefits for
the remaining term of the employment agreement; and
(5) be entitled to immediate vesting of the stock options
that were deferred under the employment agreement, with
continued exercisability as provided by their terms, or, if
longer, until the day after the put rights have ceased to be
exercisable (but in no event after the termination of their
original term).
Dreyer’s will pay the Named Executive Officer’s legal
fees and expenses incurred in any dispute involving his
employment agreement, unless the court finds that the Named
Executive Officer’s claim was frivolous or maintained in
bad faith. Dreyer’s also will provide outplacement services
to the Named Executive Officer. If any payments or benefits the
Named Executive Officer receives are subject to the United
States federal excise tax on excess parachute payments under
Section 4999 of the Code, he will receive an additional
payment to restore him to the after-tax position that he would
have been in if the United States federal excise tax had not
been imposed.
Each employment agreement includes a waiver by the Named
Executive Officer of the accelerated vesting of the Named
Executive Officer’s unvested stock options as a result of
the Merger by Dreyer’s Board of Directors. Under each
employment agreement, these stock options have vested and will
vest as follows:
• the shares subject to options which
qualify as incentive stock options under the Code vested as to
2/3 of such shares on June 26, 2004 and June 26, 2005,
with the remaining 1/3 of such shares vesting on April 3,
2006; and
B-7
• the shares of Class A Callable
Puttable Common Stock subject to options which qualify as
non-statutory stock options under the Code vested as to 2/3 of
such shares in equal installments on December 1, 2003 and
December 1, 2004, with the remaining 1/3 of such shares to
vest on April 3, 2006.
The vesting of these stock options are subject to the
continuation of the Named Executive Officer’s service to
Dreyer’s and are subject to accelerated vesting in certain
cases as described above.
On March 9, 2005, Dreyer’s announced that Doug Holdt
had been appointed to serve as Executive Vice
President – Finance and Administration and Chief
Financial Officer of Dreyer’s. Mr. Holdt’s
employment with Dreyer’s commenced on April 4, 2005.
Mr. Holdt’s annual compensation consists of a base
salary of $420,000 with a bonus opportunity of 65% of his base
salary which will be determined in accordance with the terms
established for Dreyer’s’s other executive officers.
In addition, Mr. Holdt is eligible to receive 43,902 units
under Dreyer’s’s 2004 LTIP. Finally, Dreyer’s
contributed $300,000 to Mr. Holdt’s account under
Dreyer’s’s 2004 Deferred Compensation Plan which will
vest in 5 equal installments over 5 years.
B-8
Questions and requests for assistance may be directed to Mellon
Investor Services at the telephone number and location listed
below. Requests for additional copies of this Notice of Put
Right, the Letter of Transmittal, the Notice of Guaranteed
Delivery and other materials related to the Put Right may be
directed to Mellon Investor Services at its telephone number and
location listed below, and will be furnished promptly at
Dreyer’s expense. You may also contact your broker, dealer,
commercial bank, trust company or other nominee for assistance
concerning the Put Right.
The Depositary Agent, Information Agent, Solicitation Agent and
Transfer Agent for the Put Right is:
|
|
| |
Mellon Investor Services |
| |
| |
A Mellon Financial
CompanySM |
By Telephone: 9 a.m. to 6 p.m. New York City time,
Monday through Friday, except for bank holidays:
From within the U.S., Canada or Puerto Rico:
1-888-256-2660 (Toll Free)
From outside the U.S.:
1-201-329-8660 (Collect)
For the hearing impaired:
TDD from within the U.S., Canada or Puerto Rico:
1-800-231-5469 (Toll Free)
TDD from outside the U.S.: 1-201-329-8354 (Collect)
| |
|
|
|
|
|
By Mail
|
|
By Overnight Courier |
|
By Hand |
|
Mellon Investor Services LLC
Reorganization Department
P.O. Box 3301
South Hackensack, New Jersey 07606
|
|
Mellon Investor Services LLC
Reorganization Department
Mail Stop – Reorg
480 Washington Blvd.
Jersey City, NJ 07032 |
|
Mellon Investor Services LLC
Reorganization Department
120 Broadway, 13th Floor
New York, New York 10271 |
By Facsimile Transmission (for Eligible Institutions
only): (201) 296-4293
Confirm by Telephone:
(201) 296-4860
