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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Fiscal Year Ended January 3, 1999
( ) TRANSITIONAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File Number: 1-8116
WENDY'S INTERNATIONAL, INC.
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(Exact name of Registrant as specified in its charter)
Ohio 31-0785108
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
P.O. Box 256, 4288 West Dublin-Granville Road, Dublin, Ohio 43017-0256
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 614-764-3100
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Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
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Common Shares, $.10 stated value New York, Boston, Chicago,
(124,110,000 shares outstanding Pacific and Philadelphia
at February 22, 1999) Stock Exchanges
$2.50 Term Convertible Securities, Series A New York Stock Exchange
Preferred Stock Purchase Rights New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. YES _X_ NO ___.
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. ________
The aggregate market value of the voting stock held by non-affiliates of the
Registrant at February 22, 1999 was $2,467,655,000.
Documents incorporated by reference:
Portions of the Annual Report to Shareholders set forth in the Appendix to
the Definitive 1999 Proxy Statement dated March 10, 1999 are incorporated
by reference into Parts I and II.
Portions of the Definitive 1999 Proxy Statement dated March 10, 1999
are incorporated by reference into Part III.
Exhibit index on pages 15-17.
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PART I
ITEM 1. BUSINESS
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THE COMPANY
Wendy's International, Inc. was incorporated in 1969 under
the laws of the State of Ohio. Wendy's International, Inc.
and its subsidiaries are collectively referred to herein as
the "Company."
The Company is primarily engaged in the business of
operating, developing and franchising a system of
distinctive quick-service restaurants. At January 3, 1999,
there were 5,333 Wendy's restaurants (Wendy's) in operation
in the United States and in 31 other countries and
territories. Of these restaurants, 1,036 were operated by
the Company and 4,297 by the Company's franchisees.
Additionally, at January 3, 1999, the Company and its
franchisees operated 1,667 Tim Hortons (Hortons)
restaurants in Canada and the United States.
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OPERATIONS
Each Wendy's restaurant offers a relatively standard menu
featuring hamburgers and filet of chicken breast
sandwiches, which are prepared to order with the customer's
choice of condiments. Wendy's menu also includes a pita
sandwich, chili, baked and french fried potatoes, prepared
salads, desserts, soft drinks and other non-alcoholic
beverages and children's meals. In addition, the
restaurants sell a variety of promotional products on a
limited basis.
Each Hortons unit offers coffee, cappucino, fresh baked
goods such as donuts, muffins, pies, croissants, tarts,
cookies, cakes, bagels and in some units sandwiches and
soups.
The Company strives to maintain quality and uniformity
throughout all restaurants by publishing detailed
specifications for food products, preparation and service,
by continual in-service training of employees and by field
visits from Company supervisors. In the case of
franchisees, field visits are made by Company personnel who
review operations and make recommendations to assist in
compliance with Company specifications.
Generally, the Company does not sell food or supplies to
its Wendy's franchisees. However, the Company has arranged
for volume purchases of many of these products. Under the
purchasing arrangements, independent distributors purchase
certain products directly from approved suppliers and store
and sell them to local company and franchised restaurants.
These programs help assure availability of products and
provide quantity discounts, quality control and efficient
distribution. These advantages are available both to the
Company and to any franchisees who choose to participate in
the distribution program.
Under the Hortons franchise arrangements, the franchisee is
required to purchase certain products such as coffee,
sugar, flour and shortening from a Hortons subsidiary.
These products are distributed from six warehouses located
across Canada. Products are delivered to Hortons'
restaurants primarily by Hortons' fleet of trucks and
trailers.
The New Bakery Co. of Ohio, Inc., (Bakery) a wholly-owned
subsidiary of the of the Company, is a product of buns for
Wendy's restaurants. At January 3, 1999, the Bakery
supplied 581 restaurants operated by the Company and 1,858
restaurants operated by franchises. At the present time,
the Bakery does not manufacture or sell any other products.
See Notes 7 and 14 on pages AA-18, AA-19, AA-23 and AA-24
of the Appendix to the Company's 1999 Proxy Statement,
which Notes are incorporated herein by reference, for
further information regarding revenues, income before
taxes and total assets attributable to the Company's
segments.
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RAW MATERIALS
The Company and its franchisees have not experienced any
material shortages of food, equipment, fixtures or other
products which are necessary to restaurant operations. The
Company anticipates no such shortages of products and, in
any event, alternate suppliers are available.
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TRADEMARKS AND SERVICE MARKS OF THE COMPANY
The Company has registered certain trademarks and service
marks in the United States Patent and Trademark office and
in international jurisdictions, some of which include
"Wendy's", "Wendy", "Old Fashioned Hamburgers", "Quality Is
Our Recipe", "Tim Hortons", "TimBits" and "Your Friend
Along the Way". The Company believes that these and other
related marks are of material importance to the Company's
business. Domestic trademarks and service marks expire at
various times from 1999 to 2011, while international
trademarks and service marks have various durations of five
to 20 years. The Company generally intends to renew
trademarks and service marks which expire.
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SEASONALITY
The Company's business is moderately seasonal. Average
restaurant sales are normally higher during the summer
months than during the winter months.
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WORKING CAPITAL PRACTICES
Cash from operations, cash and investments on hand,
possible asset sales, and cash from repayment of notes
receivable should enable the Company to meet its financing
requirements. In addition, the Company has available unused
lines of credit.
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COMPETITION
Each Company and franchised restaurant is in competition
with other food service operations within the same
geographical area. The quick-service restaurant industry is
highly competitive. The Company competes with other
organizations primarily through the quality, variety and
value perception of food products offered. The number and
location of units, quality and speed of service,
attractiveness of facilities, effectiveness of marketing
and new product development by the Company and its
competitors are also important factors. The price charged
for each menu item may vary from market to market depending
on competitive pricing and the local cost structure.
The Company's competitive position at its Wendy's
restaurants is enhanced by its use of fresh ground beef,
its unique and diverse menu, promotional products, its wide
choice of condiments and the atmosphere and decor of its
restaurants. Hortons is known for the freshness of its wide
variety of baked goods and for its excellent coffee.
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RESEARCH AND DEVELOPMENT
The Company engages in research and development on an
ongoing basis, testing new products and procedures for
possible introduction into the Company's systems. While
research and development operations are considered to be of
prime importance to the Company, amounts expended for these
activities are not deemed material.
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GOVERNMENT REGULATIONS
A number of states have enacted legislation which, together
with rules promulgated by the Federal Trade Commission,
affect companies involved in franchising. Much of the
legislation and rules adopted have been aimed at requiring
detailed disclosure to a prospective franchisee and
periodic registration by the franchisor with state
administrative agencies. Additionally, some states have
enacted, and others have considered, legislation which
governs the termination or non-renewal of a franchise
agreement and other aspects of the franchise relationship.
The United States Congress has also considered legislation
of this nature. The Company has complied with requirements
of this type in all applicable jurisdictions. The Company
cannot predict the effect on its operations, particularly
on its relationship with franchisees, of future enactment
of additional legislation. Various other government
initiatives such as minimum wage rates and taxes can all
have a significant impact on the Company's performance.
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ENVIRONMENT AND ENERGY
Various federal, state and local regulations have been
adopted which affect the discharge of materials into the
environment or which otherwise relate to the protection of
the environment. The Company does not believe that such
regulations will have a material effect on its capital
expenditures, earnings or competitive position. The Company
cannot predict the effect of future environmental
legislation or regulations.
The Company's principal sources of energy for its
operations are electricity and natural gas. To date, the
supply of energy available to the Company has been
sufficient to maintain normal operations.
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ACQUISITIONS AND DISPOSITIONS
The Company has from time to time acquired the interests of
and sold Wendy's restaurants to franchisees, and it is
anticipated that the Company may have opportunities for
such transactions in the future. The Company generally
retains a right of first refusal in connection with any
proposed sale of a franchisee's interest. The Company will
continue to sell and acquire Wendy's restaurants in the
future where prudent.
See Notes 9 and 10 on page AA-21 of the Appendix to the
Company's 1999 Proxy Statement, which Notes are
incorporated herein by reference, for further information
regarding acquisitions and dispositions.
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INTERNATIONAL OPERATIONS
Markets in Canada are currently being developed for both
company owned and franchised restaurants. In addition to
the countries and territories listed under Item 2 on page 7
of this Form 10-K, the Company has granted development
rights for Bahrain, Egypt, Morocco, Qatar, Tunisia, the
Yemen Arab Republic and the Municipality of Shanghai and
the Provinces of Jiangsu and Zhejiang, Peoples Republic of
China.
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FRANCHISED WENDY'S RESTAURANTS
As of January 3, 1999, the Company's franchisees operated
4,297 Wendy's restaurants in 50 states, the District of
Columbia and 31 other countries and territories.
The rights and franchises under which most franchised
restaurants in the United States are operated are set forth
in one basic document, the Restaurant Franchise Agreement.
This document gives the franchisee the right to construct,
own and operate a Wendy's restaurant upon a site accepted
by Wendy's and to use the Wendy's system in connection with
the operation of the restaurant at that site. Since 1995,
the Company has used a revised form of agreement, the
Wendy's Unit Franchise Agreement, for new franchised
restaurants operated in the United States.
Wendy's has in the past franchised under different
agreements on a multi-unit basis; however, now it is
generally the intent of the Company to grant new franchises
both in the United States and foreign countries on a
unit-by-unit basis.
After having submitted to Wendy's the requested application
and financial materials, if initially approved by Wendy's,
an individual becomes an approved applicant upon the
execution of a Preliminary Letter Agreement. This
Preliminary Letter Agreement does not guarantee that the
applicant will be accepted as a Wendy's franchisee but
entitles the applicant to commence a training program,
intended to allow both parties the opportunity to more
carefully assess a long-term franchise relationship. For
existing franchisees who in Wendy's opinion are not in need
of additional training or part of a special program, the
Preliminary Letter Agreement may not be necessary. Upon the
execution of a Preliminary Letter Agreement, the applicant
is required to pay a non-refundable fee of $5,000 to help
defray some of the cost of initial orientation, the
processing of the application and background investigation.
Both the Restaurant Franchise Agreement and the Wendy's
Unit Franchise Agreement require that the franchisee pay a
royalty of 4% of gross receipts from the operation of the
restaurant. Both Agreements also typically require that the
franchisee pay the Company a technical assistance fee. In
the United States, the technical assistance fee required
under newly executed Wendy's Unit Franchise Agreements is
currently $25,000 for each restaurant.
The technical assistance fee is used to defray some of the
cost to the Company in providing technical assistance in
the development of the Wendy's restaurant, initial training
of franchisees or their operator and in providing other
assistance associated with the opening of the Wendy's
restaurant. In certain limited instances (like the
regranting of franchise rights or the relocation of an
existing restaurant), Wendy's may charge a reduced
technical assistance fee or may waive the technical
assistance fee. The Company does not select or employ
personnel on behalf of the franchisees.
The rights and franchises currently offered for
international development are contained in the Franchise
Agreement which is issued upon approval of a restaurant
site. The Franchise Agreement is for an initial term of 10
years or the term of the lease for the restaurant site,
whichever is shorter. The Franchise Agreement licenses the
franchisee to use the Company's trademarks and know-how in
the operation of the restaurant. Upon execution of the
Franchise Agreement, the franchisee is required to pay a
technical assistance fee. Generally, the technical
assistance fee is $30,000 for each restaurant. Currently,
the franchisee is required to pay a monthly net continuing
fee based on the monthly net sales of the restaurant,
usually 4%.
See Schedule II on page 14 of this Form 10-K, and
Management's Review and Outlook on pages AA-1 through AA-8
and Note 11 on page AA-21 of the Appendix to the Company's
1999 Proxy Statement (Management's Review and Outlook and
Note 11 are incorporated herein by reference) for further
information regarding reserves, commitments and
contingencies involving franchisees.
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FRANCHISED HORTONS UNITS
Hortons franchisees operate under several types of license
agreements. The standard term of a license agreement for a
standard type of unit is 10 years plus one renewal period
of 10 years less one day. The renewal is at the option of
the franchisee.
For franchisees who lease land and/or buildings from
Hortons, the license agreement generally requires between
3% and 4.5% of weekly gross sales for royalties plus a
monthly rental which is the greater of a base monthly
rental payment or a percentage (usually 10%) rental payment
based on monthly gross sales. For franchisees who do not
lease land and/or buildings from Hortons, the license
agreement generally requires 4.5% of weekly gross sales for
royalties. Hortons generally retains the right to reacquire
a franchisee's interest in a restaurant in the event the
franchisee wants to sell its interest during the first five
years of the term of the license agreement. After such
period, Hortons generally retains a right of first refusal
with regard to any proposed transfer of the franchisee's
interest in the restaurant, together with the right to
consent to transfer to a new franchisee.
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ADVERTISING AND PROMOTIONS
Products sold by Wendy's restaurants are advertised through
television, radio, newspapers and a variety of promotional
campaigns. The Company attempts to keep franchisees
informed of current advertising techniques and effective
promotions. The Company's advertising materials are also
made available to the franchisees. Both the Restaurant
Franchise Agreement and the Wendy's Unit Franchise
Agreement provide that franchisees will spend 4% of their
gross receipts for advertising and promotions. The
Restaurant Franchise Agreement specifies 2% is to be spent
on local and regional advertising (including in many cases
cooperative advertising) and 2% is the required
contribution to The Wendy's National Advertising Program,
Inc. (WNAP). Under the Restaurant Franchise Agreement, the
Company has the ability to increase the required local and
regional expenditures to 3%, for a total of 5% for
advertising and promotions, subject to certain conditions.
The Company has the ability under the Wendy's Unit
Franchise Agreement to specify and to change the 4%
advertising and promotions allocation subject to certain
restrictions. Currently, the Company requires franchisees
under the Wendy's Unit Franchise Agreement to allocate 2%
to local and regional advertising and promotions and 2% to
national advertising and promotions. In addition, under
that agreement the Company may increase the total
advertising and promotions contribution to 5% for
franchisees operating restaurants pursuant to that
agreement, if such increase is approved by an affirmative
vote representing 75% or more of all domestic Wendy's
restaurants.
Since 1993, a systemwide vote has been taken on a proposal
to increase national advertising for the following calendar
year. This voluntary program reallocates the 4% required
minimum advertising expenditures such that 2.5% goes toward
national advertising and 1.5% toward local and regional
advertising. For the period from September 1, 1998 through
February 28, 1999, the national advertising contribution
rate was temporarily reduced to 1.75%. These minimum
requirements will revert back to 2% for national and 2% for
local and regional advertising unless a new systemwide vote
in 1999 approves reallocation for 2000.
In 1998, 1997 and 1996, approximately $126 million, $109
million and $101 million, respectively, were spent on
advertising, promotions and related expenses by WNAP. WNAP
is a not-for-profit corporation which was established to
collect and administer the funds contributed by the Company
and all domestic franchisees. WNAP's Trustees are comprised
of representatives of both the Company and its franchisees.
Products sold by Hortons restaurants are advertised through
television, radio, newspapers and a variety of promotional
campaigns. Hortons provides franchisees with suggested
advertising and promotional materials. Tim Hortons Canada
currently collects 4% of monthly gross sales from
franchisees as a contribution to the Tim Hortons Canada
advertising fund, known as the Tim Hortons Advertising and
Promotion Fund (Canada) Inc. (Ad Fund). Tim Hortons U.S.
collects 4% of monthly net sales from franchisees as a
contribution to the advertising program utilized by Tim
Hortons U.S., known as Tim's National Advertising Program
(TNAP). During 1998, 1997 and 1996, approximately $33
million, $30 million and $25 million, respectively, was
spent by the Ad Fund and approximately $3 million, $2
million and $299,000, respectively, was spent by TNAP.
Products sold by Wendy's international restaurants outside
of Canada are advertised through various media including
television, radio, newspaper and a variety of promotional
campaigns. Most international franchisees are required by
their franchise agreement to spend at least 4% of the net
sales of their restaurants on advertising and marketing.
The Company assists its international franchisees in
preparing and executing marketing plans and endeavors to
keep its international franchisees informed of current
advertising techniques and effective promotions. The
Company has established an advertising cooperative in the
United Kingdom. Franchisees and the Company's subsidiary,
Wendy's Limited, are contributing 2.5% of the net sales of
their restaurants to the cooperative. The Company may from
time to time establish other regional advertising
cooperatives.
See Note 13 on page AA-22 of the Appendix to the Company's
1999 Proxy Statement, which Note is incorporated herein by
reference, for further information regarding advertising.
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PERSONNEL
As of January 3, 1999, the Company employed approximately
39,000 people, of whom approximately 36,000 were employed
in company operated restaurants. The total number of
full-time employees at that date was approximately 6,800.
The Company believes that its employee relations are
satisfactory.
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ITEM 2. PROPERTIES
Wendy's restaurants are built to Company specifications as
to exterior style and interior decor. The majority are
free-standing, one-story brick buildings, substantially
uniform in design and appearance, constructed on sites of
approximately 40,000 square feet, with parking for
approximately 45 cars. Some restaurants, located in
downtown areas or shopping malls, are of a store-front type
and vary according to available locations but generally
retain the standard sign and interior decor. The typical
new free-standing restaurant contains about 2,910 square
feet and has a food preparation area, a dining room
capacity for 94 persons and a double pick-up window for
drive-through service. The restaurants are generally
located in urban or heavily populated suburban areas, and
their success depends upon serving a large number of
customers. Wendy's also operates restaurants in special
site locations such as travel centers, gas
station/convenience stores, military bases, arenas, malls,
hospitals, airports and college campuses.
The standard Hortons restaurant currently being built
consists of a free-standing producing unit totaling 3,000
square feet. Each of these includes a bakery capable of
supplying fresh baked goods every 12 hours to several
satellite Hortons within a defined area. In addition,
Hortons has a 2,000 square foot restaurant which is a full
sized restaurant without a bakery, a prefabricated, 500
square foot, drive-through-only unit, kiosks, full-service
carts and mobile carts which are typically located in high
traffic areas.
There are also Wendy's and Hortons concepts combined in one
free-standing unit which averages about 5,200 square feet.
This unit shares a common dining room seating 104 persons.
Each unit has separate food preparation and storage areas
and most have separate pick-up windows for each concept.
At January 3, 1999, the Company and its franchisees
operated 5,333 Wendy's restaurants in the locations listed
under Item 2 on page 7 of this Form 10-K. In the fourth
quarter of 1997, the Company identified 82 underperforming
Wendy's restaurants, of which substantially all were closed
or franchised in 1998 (see Note 3 on page AA-16 of the
Appendix to the Company's 1999 Proxy Statement, which Note
is incorporated herein by reference). Of the 1,036 company
operated Wendy's restaurants, the Company owned the land
and building for 459 restaurants, owned the building and
held long-term land leases for 301 restaurants and held
leases covering land and building for 276 restaurants. The
Company's land and building leases are written for terms of
10 to 25 years with one or more five-year renewal options.
In certain lease agreements the Company has the option to
purchase the real estate. Certain leases require the
payment of additional rent equal to a percentage (ranging
from 1% to 10%) of annual sales in excess of specified
amounts. Some of the real estate owned by the Company is
subject to mortgages which mature over various terms. The
Company also owned land and buildings for, or leased, 663
Wendy's restaurant locations which were leased or subleased
to franchisees. Surplus land and buildings are generally
held for sale.
At January 3, 1999, there were 1,667 Hortons units, of
which all but 154 were franchise operated. Of the 1,513
franchised units, 250 were owned by Hortons and leased to
franchisees, 866 were leased by Hortons and in turn
subleased to a franchisee, with the remainder either owned
or leased directly by the franchisee.
The Company owns approximately 37.6 acres of land in
Dublin, Ohio on which is located the Company's corporate
headquarters. This complex contains approximately 200,000
square feet of office space.
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<TABLE>
<CAPTION>
DOMESTIC WENDY'S DOMESTIC TIM HORTONS
---------------- --------------------
STATE COMPANY FRANCHISE COMPANY FRANCHISE
<S> <C> <C> <C> <C>
Alabama -- 92 -- --
Alaska -- 10 -- --
Arizona 33 38 -- --
Arkansas -- 49 -- --
California 8 186 -- --
Colorado 37 61 -- --
Connecticut -- 30 -- --
Delaware -- 17 -- --
Florida 90 260 -- --
Georgia 32 190 -- --
Idaho -- 20 -- --
Illinois 80 113 -- --
Indiana 2 154 -- --
Iowa -- 37 -- --
Kansas 15 45 -- --
Kentucky 2 105 1 --
Louisiana 43 44 -- --
Maine 2 10 -- --
Maryland -- 102 -- --
Massachusetts 44 20 -- --
Michigan 31 174 33 4
Minnesota 23 17 -- --
Mississippi -- 66 -- --
Missouri 18 57 -- --
Montana -- 15 -- --
Nebraska -- 31 -- --
Nevada -- 41 -- --
New Hampshire 1 17 -- --
New Jersey 14 89 -- --
New Mexico -- 24 -- --
New York 53 126 7 10
North Carolina 28 158 -- --
North Dakota -- 7 -- --
Ohio 116 287 38 2
Oklahoma -- 41 -- --
Oregon 14 40 -- --
Pennsylvania 76 146 -- --
Rhode Island -- 10 -- --
South Carolina -- 95 -- --
South Dakota -- 9 -- --
Tennessee -- 169 -- --
Texas 60 231 -- --
Utah 27 11 -- --
Vermont - 3 -- --
Virginia 38 134 -- --
Washington 24 37 -- --
West Virginia 17 47 5 --
Wisconsin -- 63 -- --
Wyoming -- 13 -- --
District of Columbia -- 7 -- --
--- ----- --- ---
928 3,748 84 16
--- ----- --- ---
</TABLE>
<TABLE>
<CAPTION>
INTERNATIONAL WENDY'S INTERNATIONAL TIM HORTONS
--------------------- -------------------------
COUNTRY/TERRITORY COMPANY FRANCHISE COMPANY FRANCHISE
<S> <C> <C> <C> <C>
Argentina -- 18 -- --
Aruba -- 3 -- --
Bahamas -- 5 -- --
Canada 93 174 70 1,497
Cayman Islands -- 1 -- --
Colombia -- 1 -- --
Dominican Republic -- 6 -- --
El Salvador -- 5 -- --
Greece -- 12 -- --
Guam -- 4 -- --
Guatemala -- 6 -- --
Hawaii 1 4 -- --
Honduras -- 12 -- --
Hong Kong -- 7 -- --
Hungary -- 2 -- --
Iceland -- 1 -- --
Indonesia -- 34 -- --
Japan -- 89 -- --
Kuwait -- 3 -- --
Mexico -- 6 -- --
New Zealand -- 11 -- --
Philippines -- 44 -- --
Puerto Rico -- 28 -- --
Saipan -- 1 -- --
Saudi Arabia -- 12 -- --
Switzerland -- 4 -- --
Taiwan -- 18 -- --
Turkey -- 9 -- --
United Arab Emirates -- 2 -- --
United Kingdom 14 4 -- --
Venezuela -- 21 -- --
Virgin Islands -- 2 -- --
---- --- ---- -----
108 549 70 1,497
---- --- ---- -----
</TABLE>
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ITEM 3. LEGAL PROCEEDINGS
On June 9, 1997, Arthur L. Wilson, individually and
purportedly on behalf of a putative class of other persons
similarly situated, filed a complaint against the Company
in the U.S. District Court for the Southern District of
Mississippi. The complaint alleged that the Company had
engaged in racial discrimination in violation of Title
VII and 42 U.S.C. Section 1981. The plaintiff sought
judgment in an undetermined amount against the Company for
punitive and compensatory damages (including benefits) as
well as injunctive and equitable relief. After the
plaintiff's motion to add five additional plaintiffs was
denied, a second complaint was filed in the same court on
July 13, 1998. The second complaint was brought by the five
plaintiffs both individually and purportedly on behalf of a
putative class of other persons similarly situated. The
allegations in the second complaint were substantially
similar to those in the Wilson action. The Company's motion
to dismiss the class claims in the Wilson action was
granted, as was the Company's motion for summary judgment
on the plaintiff's claims that the Company was the
"employer" of employees of its franchisees. The Wilson
action was settled and the complaint was dismissed on
December 30, 1998. The second action was also settled and
that complaint was dismissed on December 9, 1998. The
settlements were not material to the Company's results of
operations, liquidity or financial condition. This case was
last referenced in the Company's Form 10-Q for the quarter
ended October 4, 1998.
On October 22, 1998, Theldon Branch, individually and
purportedly on behalf of a putative class of other persons
similarly situated, filed a complaint against the Company
in the U.S. District Court for the Southern District of
Texas. The complaint alleged that the Company discriminated
in its dealings with some of its African-American
franchisees. The plaintiff sought equitable relief and $150
million in compensatory and punitive damages. This action
was settled and the complaint was dismissed on February 10,
1998. The settlement was not material to the Company's
results of operations, liquidity or financial condition.
This case was last referenced in the Company's Form 10-Q
for the quarter ended October 4, 1998.
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
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PART II
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ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
This information is incorporated herein by reference from
page AA-27 of the Appendix to the Company's 1999 Proxy
Statement.
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ITEM 6. SELECTED FINANCIAL DATA
This information is incorporated herein by reference from
page AA-27 of the Appendix to the Company's 1999 Proxy
Statement.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Management's Review and Outlook on pages AA-1 through AA-8
of the Appendix to the Company's 1999 Proxy Statement is
incorporated herein by reference.
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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Consolidated Financial Statements of the Company at
January 3, 1999 and December 28, 1997 and for each of the
three fiscal years in the periods ended January 3, 1999,
December 28, 1997, and December 29, 1996 and the Report of
Independent Accountants on these Consolidated Financial
Statements are incorporated herein by reference from pages
AA-9 through AA-25 of the Appendix to the Company's 1999
Proxy Statement.
The Report of Independent Accountants on the Company's
Consolidated Financial Statement Schedule is included on
page 13 of this report.
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ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
8
<PAGE> 9
PART III
ITEMS 10, 11, 12, AND 13. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT;
EXECUTIVE COMPENSATION; SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT; AND CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
EXECUTIVE OFFICERS OF THE REGISTRANT
<TABLE>
<CAPTION>
NAME AGE POSITION WITH COMPANY OFFICER SINCE
<S> <C> <C> <C> <C>
R. David Thomas 66 Senior Chairman of the Board and Founder, Director 1969
Gordon F. Teter 55 Chairman of the Board, Chief Executive Officer and
President, Director 1987
Frederick R. Reed 50 Chief Financial Officer, and Secretary, Director 1996
John T. Schuessler 48 President and Chief Operating Officer U.S. Operations 1983
George Condos 45 Executive Vice President 1982
Ronald E. Musick 58 Executive Vice President, Director 1986
Edward L. Austin 41 Senior Vice President 1990
Emil J. Brolick 51 Senior Vice President 1988
John F. Brownley 56 Senior Vice President and Treasurer 1981
Donald F. Calhoon 47 Senior Vice President 1984
Kathie T. Chesnut 47 Senior Vice President 1990
Joyce L. Eufemi 52 Senior Vice President 1993
Stephen D. Farrar 48 Senior Vice President 1984
Brion G. Grube 47 Senior Vice President 1990
Lawrence A. Laudick 51 Senior Vice President, General Controller and 1976
Assistant Secretary
Leon M. McCorkle, Jr. 58 Senior Vice President and General Counsel 1998
Kathleen A. McGinnis 47 Senior Vice President 1989
Thomas J. Mueller 47 Senior Vice President 1998
James J. Rieger 52 Senior Vice President 1994
Jack C. Whiting 49 Senior Vice President 1987
</TABLE>
No arrangements or understandings exist pursuant to which
any person has been, or is to be, selected as an officer,
except in the event of a change in control of the Company,
as provided in the Company's Key Executive Agreements. The
executive officers of the Company are appointed by the
Board of Directors.
With the exception of Messrs. Teter, Reed, Schuessler,
Austin, Brolick, Calhoon, Mrs. Chesnut, Ms. Eufemi,
Mr. Laudick, Mr. McCorkle, Mr. Mueller and Mr. Rieger
each of the above individuals has held the same principal
occupation with the Company for at least the last
five years.
Mr. Teter was President of Casa Lupita Restaurants and
Executive Vice President of its parent company, Ponderosa,
Inc., from 1985 to 1987. Mr. Teter became a Senior Vice
President of the Company in 1987 and Executive Vice
President in 1988. He was named President and Chief
Operating Officer in 1991. Mr. Teter assumed the title of
Chief Executive Officer in 1994. He became Chairman of the
Board in 1997.
Mr. Reed joined the Company in 1996 as Executive Vice
President, General Counsel and Secretary. Prior to that he
was a senior partner of Vorys, Sater, Seymour and Pease
LLP. Mr. Reed has been a member of the Company's Board of
Directors since his election in 1995. Mr. Reed was named
Chief Financial Officer in 1997.
Mr. Schuessler joined the Company in 1974. He served in
Company Operations as Regional Vice President from 1983 to
1984, Zone Vice President from 1984 to 1986, and Division
Vice President from 1986 until 1987, when he was promoted
to Senior Vice President of the Northeast Region. In 1995,
Mr. Schuessler was promoted to Executive Vice President of
U.S. Operations. He was named President and Chief Operating
Officer U.S. Operations in 1997.
Mr. Austin joined the Company in 1976. Before being named
Senior Vice President of the Southeast Region in 1996, Mr.
Austin had held the position of Division Vice President for
the New Orleans Division since 1994 and for the Los Angeles
Division since 1990.
9
<PAGE> 10
Mr. Brolick joined the Company in 1988 as Vice President of
Planning. In 1988 he became Vice President, Strategic
Planning and Research and New Product Marketing. He was
named Senior Vice President, Strategic Planning and
Research and New Product Marketing in 1995. Prior to
joining Wendy's, Mr. Brolick was with Ponderosa, Inc. as
Vice President, Marketing and Concept Development.
Mr. Calhoon joined the Company in 1978 and held various
positions with the Company until being named Vice
President, Field Marketing in 1984. In 1989 he was promoted
to Vice President, Corporate Marketing and in 1995 was
named Senior Vice President, Corporate Marketing.
Mrs. Chesnut joined the Company in 1990 as Vice President,
Special Projects. In 1991, Mrs. Chesnut was named Vice
President, Research and Development and in 1994, she was
promoted to Senior Vice President, Research and
Development, Quality Assurance and Purchasing. Mrs. Chesnut
was formerly with Showbiz Pizza Time, Inc. as Director of
Research and Development.
Ms. Eufemi joined the Company in 1993. After holding the
position of Division Vice President for both the Colonial
Division and Chicago Division, she was named Senior Vice
President of the Upper U.S. Region in 1995. Prior to
joining the Company, Ms. Eufemi was with Nutri/System, Inc.
from 1989 to 1993 as Vice President/General Manager of the
Western Region.
Mr. Laudick joined the Company in 1976 as Assistant
Controller. He was named Controller in 1977, General
Controller in 1981, Vice President and General Controller
in 1983 and Senior Vice President and General Controller in
1997. Mr. Laudick has also been named Assistant Secretary
since 1976.
Mr. McCorkle joined the Company in 1998 as Senior Vice
President and General Counsel. Prior to joining the
Company, he was a senior partner of Vorys, Sater, Seymour
and Pease LLP.
Mr. Mueller joined the Company in 1998 as Senior Vice
President, Special Projects, and in March of 1999 he was
named Senior Vice President for the Northeast Region. Prior
to joining the Company, Mr. Mueller was with Burger King
from 1973 to 1997, where his most recent position was
Senior Vice President, North American Operations.
Mr. Rieger joined the Company in 1994 as Regional Vice
President - International for the Latin America Region and
in 1996 became Vice President - International Development.
In 1998, Mr. Rieger was promoted to Senior Vice President -
International Division. Prior to joining the Company, Mr.
Rieger had been with Metromedia Steakhouses Company since
1982 where he served as Senior Vice President, Chief
Financial Officer, Treasurer and Corporate Controller.
The information required by these Items, other than the
information set forth above, is omitted and incorporated
herein by reference from the Company's 1999 Proxy Statement
dated March 10, 1999. However, no information set forth in
the 1999 Proxy Statement regarding the Report of the
Compensation Committee on Executive Compensation (pages
9-13) or the performance graphs (pages 13-14) shall be
deemed incorporated by reference into this Form 10-K.
PART IV
- --------------------------------------------------------------------------------
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) (1) and (2) - The following Consolidated Financial
Statements of Wendy's International, Inc. and
Subsidiaries, included in the Appendix to the Company's
1999 Proxy Statement on pages AA-9 to AA-25 and
incorporated by reference in Item 8, are filed as part
of this Annual Report on Form 10-K.
Consolidated Statements of Income - Years
ended January 3, 1999, December 28, 1997 and
December 29, 1996.
Consolidated Balance Sheets - January 3, 1999
and December 28, 1997.
Consolidated Statements of Cash Flows - Years
ended January 3, 1999, December 28, 1997 and
December 29, 1996.
Consolidated Statements of Shareholders' Equity -
Years ended January 3, 1999, December 28, 1997 and
December 29, 1996.
Consolidated Statements of Comprehensive Income -
Years ended January 3, 1999, December 28, 1997 and
December 29, 1996.
Notes to the Consolidated Financial Statements.
Report of Independent Accountants
(3) Listing of Exhibits - See Index to Exhibits.
The following management contracts or compensatory
plans or arrangements are required to be filed as
exhibits to this report:
Sample Restated Key Executive Agreement between
the Company and Messrs. Brolick, Brownley,
Calhoon, Condos, Laudick, McCorkle, Musick,
Rath, Reed, Schuessler, Teter, Thomas, Mrs Chesnut
and Mrs. McGinnis.
Agreement between the Company and Mr. Teter.
Employment Agreement between The TDL Group Ltd.
(a subsidiary of the Company) and Mr. Joyce.
10
<PAGE> 11
Amendment to Employment Agreement between The
TDL Group Ltd. and Mr. Joyce.
Employment Agreement between The TDL Group Co.
(a subsidiary of the Company), Mr. Joyce and the
Company.
Amended and Restated Senior Executive Earnings
Maximization Plan.
Description of Earnings Maximization Plan.
Description of Management Incentive Plan.
Supplemental Executive Retirement Plan,
as amended.
1978 Non-Qualified Stock Option Plan, as amended.
1982 Stock Option Plan, as amended.
1984 Stock Option Plan, as amended.
1987 Stock Option Plan, as amended.
1990 Stock Option Plan, as amended.
(b) The Company filed a Form 8-K on November 13, 1998
announcing (under Item 5) October 1998 sales, summary
segment results for the third quarter and year-to-date
periods of 1998 and 1997, and goals for earnings and
new restaurant development. A copy of the press release
issued November 12, 1998 was attached.
(c) Exhibits filed with this report are listed in the Index
to Exhibits.
(d) The following Consolidated Financial Statement Schedule
of Wendy's International, Inc. and Subsidiaries is
included in Item 14(d): II - Valuation and Qualifying
Accounts
All other schedules for which provision is made in the
applicable accounting regulations of the Securities and
Exchange Commission are not required under the related
instructions, are inapplicable, or the information has
been disclosed elsewhere.
11
<PAGE> 12
- --------------------------------------------------------------------------------
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the
Securities Exchange Act of 1934, the Registrant has duly
caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Wendy's International, Inc.
By /s/ FREDERICK R. REED 3/31/99
----------------------------------
Frederick R. Reed
Chief Financial Officer
and Secretary
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following
persons on behalf of the Registrant and in the capacities
and on the dates indicated.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
/s/ R. DAVID THOMAS* 3/31/99 /s/ RONALD V. JOYCE* 3/31/99
-------------------------------------------- -----------------------------------------
R. David Thomas, Senior Ronald V. Joyce, Director
Chairman of the Board and
Founder, Director
/s/ GORDON F. TETER* 3/31/99 /s/ FREDERICK R. REED 3/31/99
-------------------------------------------- -----------------------------------------
Gordon F. Teter, Chairman of the Board, Frederick R. Reed, Chief Financial Officer
Chief Executive Officer and and Secretary, Director
President, Director
/s/ RONALD E. MUSICK* 3/31/99 /s/ PAUL D. HOUSE* 3/31/99
-------------------------------------------- -----------------------------------------
Ronald E. Musick, Executive Vice Paul D. House, Director
President, Director
/s/ LAWRENCE A. LAUDICK* 3/31/99 /s/ W. CLAY HAMNER* 3/31/99
-------------------------------------------- -----------------------------------------
Lawrence A. Laudick, Senior Vice W. Clay Hamner, Director
President, General Controller
and Assistant Secretary
/s/ ERNEST S. HAYECK* 3/31/99 /s/ JANET HILL* 3/31/99
-------------------------------------------- -----------------------------------------
Ernest S. Hayeck, Director Janet Hill, Director
/s/ THOMAS F. KELLER* 3/31/99 /s/ TRUE H. KNOWLES* 3/31/99
-------------------------------------------- -----------------------------------------
Thomas F. Keller, Director True H. Knowles, Director
/s/ ANDREW G. McCAUGHEY* 3/31/99 /s/ FIELDEN B. NUTTER, SR.* 3/31/99
-------------------------------------------- -----------------------------------------
Andrew G. McCaughey, Director Fielden B. Nutter, Sr., Director
/s/ JAMES V. PICKETT* 3/31/99 /s/ THEKLA R. SHACKELFORD* 3/31/99
-------------------------------------------- -----------------------------------------
James V. Pickett, Director Thekla R. Shackelford, Director
*By /s/ FREDERICK R. REED 3/31/99
-----------------------------------------
Frederick R. Reed
Attorney-in-Fact
</TABLE>
12
<PAGE> 13
REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULE
- --------------------------------------------------------------------------------
To The Board of Directors and
Shareholders of Wendy's International, Inc.
Our audits of the consolidated financial statements
referred to in our report dated February 10, 1999,
appearing on page AA-25 of the Appendix to the 1999 Proxy
Statement of Wendy's International, Inc. (which report and
consolidated financial statements are incorporated by
reference in this Annual Report on Form 10-K) also included
an audit of the Financial Statement Schedule listed in Item
14(d) of this Form 10-K. In our opinion, this financial
statement schedule presents fairly, in all material
respects, the information set forth therein when read in
conjunction with the related consolidated financial
statements.
Columbus, Ohio PRICEWATERHOUSECOOPERS LLP
February 10, 1999
- --------------------------------------------------------------------------------
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the
registration statement of Wendy's International, Inc. on
Form S-8 (File Nos. 2-67253, 2-98696, 33-18177, 2-82823,
33-36602, 33-36603, 333-9261, 333-32675, 33-57913,
333-60031, and 333-60033) of our reports dated February 10,
1999, on our audits of the consolidated financial
statements and financial statement schedule of Wendy's
International, Inc. as of January 3, 1999 and December 28,
1997 and for the years ended January 3, 1999, December 28,
1997 and December 29, 1996, which reports are either
included or incorporated by reference in this Annual Report
on Form 10-K.
Columbus, Ohio PRICEWATERHOUSECOOPERS LLP
March 31, 1999
13
<PAGE> 14
WENDY'S INTERNATIONAL, INC. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS (in thousands)
<TABLE>
<CAPTION>
BALANCE AT CHARGED (CREDITED) BALANCE AT
BEGINNING TO COSTS & ADDITIONS END OF
CLASSIFICATION OF YEAR EXPENSES (DEDUCTIONS) (A) YEAR
-------------- ------- -------- ---------------- ----
<S> <C> <C> <C> <C>
Fiscal year ended January 3, 1999:
Reserve for royalty receivables $ 1,962 $ 1,237 $ (201) $ 2,998
Reserve for possible franchise-
related losses & contingencies 5,883 12,012 (613) 17,282
-------- -------- -------- --------
$ 7,845 $ 13,249 $ (814) $ 20,280
-------- -------- -------- --------
Fiscal year ended December 28, 1997:
Reserve for royalty receivables $ 2,044 $ 71 $ (153) $ 1,962
Reserve for possible franchise-
related losses & contingencies 6,630 109 (856) 5,883
-------- -------- -------- --------
$ 8,674 $ 180 $ (1,009) $ 7,845
-------- -------- -------- --------
Fiscal year ended December 29, 1996:
Reserve for royalty receivables $ 3,579 $ (1,294) $ (241) $ 2,044
Reserve for possible franchise-
related losses & contingencies 7,231 1,011 (1,612) 6,630
-------- -------- -------- --------
$ 10,810 $ (283) $ (1,853) $ 8,674
-------- -------- -------- --------
</TABLE>
(a) Primarily represents reserves written off or reversed
or transferred due to the resolution of certain
franchise situations.
Year-end balances are reflected in the Consolidated Balance Sheet as follows:
<TABLE>
<CAPTION>
JANUARY 3, DECEMBER 28, DECEMBER 29,
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Deducted from accounts receivable $ 7,816 $5,979 $4,339
Deducted from notes receivable - current 596 106 480
Deducted from notes receivable - long-term 11,350 1,255 2,355
Included in accrued expenses - other 518 505 1,500
------- ------ ------
$20,280 $7,845 $8,674
------- ------ ------
</TABLE>
14
<PAGE> 15
- --------------------------------------------------------------------------------
WENDY'S INTERNATIONAL, INC. AND SUBSIDIARIES
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION WHERE FOUND
------- ----------- -----------
<S> <C> <C>
2(a) Share Purchase Agreement, dated as of Incorporated herein by reference from
October 31, 1995, by and among Wendy's Exhibit 2 of Form 10-Q for the quarter
International, Inc., 1149658 Ontario Inc., ended October 1, 1995.
632687 Alberta Ltd. and Ronald V. Joyce
(b) Amendment to the Share Purchase Incorporated herein by reference to Exhibit 2.2
Agreement, dated as of December 28, 1995, to Ronald V. Joyce's Schedule 13D, dated
by and among Wendy's International, Inc., January 5, 1996.
1149658 Ontario Inc., 1052106 Ontario
Limited and Ronald V. Joyce
(c) Agreement between Ronald V. Joyce, Incorporated herein by reference from Exhibit 2
WENTIM, LTD., Wendy's International, Inc. of Form 10-Q for the quarter ended
and the Irrevocable Trust for the Benefit October 4, 1998.
of Ronald V. Joyce, dated as of
September 16, 1998
(d) Amendment to Share Purchase Agreement, Attached hereto.
dated as of February 25, 1999, by and among
Wendy's International, Inc., WENTIM, LTD.
and Ronald V. Joyce
(e) Share Exchange Agreement, dated as of Incorporated herein by reference to Exhibit 2.3
December 29, 1995, by and among to Ronald V. Joyce's Schedule 13D, dated
Wendy's International, Inc., 1149658 Ontario January 5, 1996.
Inc., and Ronald V. Joyce
(f) Amending Agreement No. 2 to the Share Attached hereto.
Exchange Agreement, dated as of February
25, 1999, by and among Wendy's International,
Inc., WENTIM, LTD. and Ronald V. Joyce
(g) Provisions attaching to Exchangeable Incorporated herein by reference to Exhibit 2.4
Shares to Ronald V. Joyce's Schedule 13D, dated
January 5, 1996.
(h) Support Agreement, dated as of December Incorporated herein by reference to Exhibit 2.5
29, 1995, by and among Wendy's to Ronald V. Joyce's Schedule 13D, dated
International, Inc., 1149658 Ontario Inc., January 5, 1996.
and Ronald V. Joyce
(i) Irrevocable Trust Agreement for the Benefit Incorporated herein by reference to Exhibit 2.6
of Ronald V. Joyce, dated as of December to Ronald V. Joyce's Schedule 13D, dated
29, 1995, between Dana Klein and The January 5, 1996.
Huntington Trust Company, N.A.
(j) Subscription Agreement, dated as of Incorporated herein by reference to Exhibit 2.7
December 29, 1995, by and between to Ronald V. Joyce's Schedule 13D, dated
the Irrevocable Trust for the Benefit January 5, 1996.
of Ronald V. Joyce and Wendy's
International, Inc.
(k) Amending Agreement No. 2 to the Attached hereto.
Subscription Agreement, dated as of February
25, 1999, by and between the Irrevocable
Trust for the Benefit of Ronald V. Joyce and
Wendy's International, Inc.
(l) Guaranty Agreement, dated as of Incorporated herein by reference to Exhibit 2.8
December 29, 1995, by and between the to Ronald V. Joyce's Schedule 13D, dated
Irrevocable Trust for the Benefit of Ronald January 5, 1996.
V. Joyce and Ronald V. Joyce
</TABLE>
15
<PAGE> 16
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION WHERE FOUND
------- ----------- -----------
<S> <C> <C>
(m) Amending Agreement No. 2 to the Guaranty Attached hereto.
Agreement, dated as of February 25,
1999, by and between the Irrevocable Trust
for the Benefit of Ronald V. Joyce and
Ronald V. Joyce
(n) Registration Rights Agreement, dated as of Incorporated herein by reference to Exhibit 2.10
December 29, 1995, by and between Wendy's to Ronald V. Joyce's Schedule 13D,
International, Inc. and Ronald V. Joyce dated January 5, 1996.
(o) Amending Agreement No. 1 to the Registration Attached hereto.
Rights Agreement, dated as of February 25,
1999, by and between Wendy's International,
Inc. and Ronald V. Joyce
3(a) Articles of Incorporation, as amended to Attached hereto.
date
(b) New Regulations, as amended Incorporated herein by reference from Exhibit 3(b) of
Form 10-Q for the quarter ended March 31, 1996.
*4(a) Indenture between the Company and Incorporated herein by reference from
The Huntington National Bank pertaining Form S-3 Registration Statement, File No. 33-57101.
to 7% debentures and 6.35% notes due
December 15, 2025 and December 15, 2005,
respectively
(b) Indenture for subordinated debt securities Incorporated herein by reference from
between the Company and NBD Bank, Exhibit 4(a) of Form 10-Q for the quarter
as trustee ended September 29, 1996.
(c) First Supplemental Indenture between the Incorporated herein by reference from
Company and NBD Bank Exhibit 4(b) of Form 10-Q for the quarter
ended September 29, 1996.
(d) Amended and Restated Declaration of Trust Incorporated herein by reference from
Wendy's Financing I Exhibit 4(c) of Form 10-Q for the quarter
ended September 29, 1996.
(e) Certificate P-1 Evidencing Trust Preferred Incorporated herein by reference from
Securities of Wendy's Financing I Exhibit 4(d) of Form 10-Q for the quarter
ended September 29, 1996.
(f) Certificate P-2 Evidencing Trust Preferred Incorporated herein by reference from
Securities of Wendy's Financing I Exhibit 4(e) of Form 10-Q for the quarter
ended September 29, 1996.
(g) Preferred Securities Guarantee Agreement Incorporated herein by reference from
the benefit of the holders of Trust Exhibit 4(f) of Form 10-Q for the quarter
Preferred Securities of Wendy's Financing I ended September 29, 1996.
(h) 5% Convertible Subordinated Debenture Incorporated herein by reference from
of the Company Exhibit 4(g) of Form 10-Q for the quarter
ended September 29, 1996.
(i) Amended and Restated Rights Agreement Incorporated herein by reference from
between the Company and American Stock Amendment No. 2 to Form 8-A/1A Registration
Transfer and Trust Company Statement, File No. 1-8116.
10(a) Sample Restated Key Executive Agreement Attached hereto.
between the Company and Messrs. Brolick,
Brownley, Calhoon, Condos, Laudick, McCorkle,
Musick, Rath, Reed, Schuessler, Teter, Thomas,
Mrs. Chesnut and Mrs. McGinnis
</TABLE>
* Neither the Company nor its subsidiaries are party to
any other instrument with respect to long-term debt for
which securities authorized thereunder exceed 10 percent
of the total assets of the Company and its subsidiaries
on a consolidated basis. Copies of instruments with
respect to long-term debt of lesser amounts will be
furnished to the Commission upon request.
16
<PAGE> 17
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION WHERE FOUND
------- ----------- -----------
<S> <C> <C>
(b) Agreement between the Company Incorporated herein by reference from
and Mr. Teter Exhibit 10(e) of Form 10-K for the year
ended January 1, 1995.
(c) Employment Agreement between The Incorporated herein by reference from
TDL Group Ltd. and Ronald V. Joyce Exhibit 10(f) of Form 10-K for the year
ended December 31, 1995.
(d) Amendment to Employment Agreement Incorporated herein by reference from
between The TDL Group Ltd. (a subsidiary Exhibit 10 of Form 10-Q for the quarter of
the Company) and Ronald V. Joyce ended March 31, 1996.
(e) Employment Agreement between The TDL Group Incorporated herein by reference from
Co. (a subsidiary of the Company), Exhibit 10 of Form 10-Q for the quarter
Ronald V. Joyce and the Company ended October 4, 1998.
(f) Amended and Restated Senior Executive Incorporated herein by reference from the
Earnings Maximization Plan Annex to the Company's Definitive 1999
Proxy Statement, dated March 10, 1999.
(g) Description of Earnings Maximization Plan Attached hereto.
(h) Description of Management Incentive Plan Attached hereto.
(i) Supplemental Executive Retirement Plan, Incorporated herein by reference from
as amended Exhibit 10(j) of Form 10-K for the year
ended December 31, 1995.
(j) 1978 Non-Qualified Stock Option Plan, Incorporated herein by reference from
as amended the Company's Definitive Proxy
Statement, dated March 11, 1994.
(k) 1982 Stock Option Plan, as amended Incorporated herein by reference from
the Company's Definitive Proxy
Statement, dated March 11, 1994.
(l) 1984 Stock Option Plan, as amended Incorporated herein by reference from
the Company's Definitive Proxy
Statement, dated March 11, 1994.
(m) 1987 Stock Option Plan, as amended Incorporated herein by reference from
the Company's Definitive Proxy
Statement, dated March 11, 1994.
(n) 1990 Stock Option Plan, as amended Incorporated herein by reference from
the Company's Definitive Proxy
Statement, dated March 5, 1997.
13 Portions of the Annual Report to Shareholders Incorporated herein by reference from the
set forth in the Appendix to the Company's Appendix to the Company's Definitive 1999
Definitive 1999 Proxy Statement, dated March Proxy Statement, dated March 10, 1999.
10, 1999, as described in Parts I and II of
this Annual Report on Form 10-K
21 Subsidiaries of the Registrant Attached hereto.
23 Consent of PricewaterhouseCoopers LLP Incorporated by reference to page 13
of this Form 10-K.
24 Powers of Attorney Attached hereto.
99 Safe harbor under the Private Securities Attached hereto.
Litigation Reform Act of 1995
</TABLE>
17
<PAGE> 1
Exhibit 2(d)
AMENDMENT TO SHARE PURCHASE AGREEMENT
THIS AGREEMENT is made this 26th day of February, 1999 by and between
RONALD VAUGHAN JOYCE ("Transferor"),
WENTIM, LTD., an Ontario Corporation having its principal
office at 874 Sinclair Road, Oakville, Ontario L6K 2Y1
("WENTIM"),
and
WENDY'S INTERNATIONAL, INC., an Ohio corporation having its
principal office at 4288 West Dublin-Granville Road, Dublin,
Ohio 43017 ("Wendy's")
WHEREAS Wendy's, Transferor, 1149658 Ontario Inc. and 632687 Alberta
Ltd. entered into a Share Purchase Agreement dated October 31, 1995, which
agreement was subsequently amended December 28, 1995 and September 16, 1998; and
WHEREAS 1149658 Ontario Inc. and 632687 Alberta Ltd. amalgamated
effective December 29, 1995 with WENTIM being the successor corporation; and
WHEREAS the parties wish to amend section 4.3(b) of the Share Purchase
Agreement to permit the Transferor to pledge Exchangeable Shares of WENTIM to a
Canadian chartered bank (the "Bank").
NOW THEREFORE for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
<PAGE> 2
Page 2
1. Capitalized terms not otherwise defined in this Agreement shall have
the meaning attributed to them in the Share Purchase Agreement as
amended to date.
2. Pursuant to section 8.5 of the Share Purchase Agreement, section 4.3(b)
of the Share Purchase Agreement is amended to read as follows:
Seller agrees that Seller will not sell, dispose of, mortgage, pledge,
charge, grant a security interest in, or otherwise transfer the
Exchangeable Shares or any part thereof, except for an exchange of such
Exchangeable Shares for Wendy's Common Shares pursuant to Newco's
Articles of Incorporation or the Share Exchange Agreement and except
for a transfer to Wendy's (or to a wholly owned direct or indirect
subsidiary of Wendy's designated by Wendy's ) or a transfer to the
Trustee under the Guaranty and the Trust Agreement and except for a
pledge to a Canadian chartered bank made in compliance with the
Transaction Agreements, as amended as from to time (including without
limitation sections 5.6 and 6.3 of the Share Exchange Agreement and
section 2 of the Guaranty).
3. This Agreement shall bind and enure to the benefit of the parties
hereto and their permitted successors and assigns.
4. This Agreement may be executed in one or more counterparts and each
copy which has been signed by all parties shall be deemed to be a
duplicate original, but all of which, taken together, shall be deemed
to constitute a single instrument.
<PAGE> 3
Page 3
IN WITNESS WHEREOF this Agreement has been executed by the parties as
of the date first written above.
/s/ Kathleen M. McLaughlin /s/ Ronald V. Joyce
- -------------------------- --------------------------------------------
Witnessed by: RONALD VAUGHAN JOYCE
WENTIM, LTD.
By: /s/ Frederick R. Reed
---------------------------------------
Title: Chief Financial Officer & Secretary
WENDY'S INTERNATIONAL, INC.
By: /s/ Frederick R. Reed
---------------------------------------
Title: Chief Financial Officer & Secretary
<PAGE> 1
Exhibit 2(f)
SHARE EXCHANGE AGREEMENT
AMENDING AGREEMENT NO. 2
THIS IS AN AMENDING AGREEMENT made as of February 25, 1999 by
and among WENDY'S INTERNATIONAL, INC., an Ohio corporation ("Wendy's"), WENTIM,
LTD., an Ontario corporation and a subsidiary of Wendy's ("WENTIM") and RONALD
V. JOYCE ("Seller").
WHEREAS:
A. Wendy's and 1149658 Ontario Inc., a predecessor of WENTIM, and
Seller entered into a Share Exchange Agreement dated as of December 29, 1995
which was amended by an Agreement dated September 16, 1998 between Wendy's,
WENTIM, the Seller and the Irrevocable Trust for the benefit of Ronald V. Joyce
established under agreement dated as of December 29, 1995 (the "Trust")
(collectively, the "Share Exchange Agreement"); and
B. Seller wishes to pledge Newco Exchangeable Shares to Canadian
Imperial Bank of Commerce, a bank chartered under the laws of Canada ("CIBC") as
security for loans which may be made from time to time by CIBC to Seller.
NOW THEREFORE, in consideration of the mutual covenants and
agreements contained in this agreement and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
ARTICLE I
INTERPRETATION
1.1 One Agreement. This Agreement amends the Share Exchange Agreement and
this Agreement and the Share Exchange Agreement shall be read, interpreted,
construed and have effect as, and shall constitute one agreement with the same
effect as if the amendments made to the Share Exchange Agreement by this
Agreement had been contained in the Share Exchange Agreement as of the date of
this Agreement.
1.2 Defined Terms. In this Agreement, unless something in the subject
matter or context is inconsistent:
(a) terms defined in the description of the parties or in the
recitals have the respective meanings given to them in such
description or recitals; and
(b) all other capitalized terms have the respective meanings given
to them in the Share Exchange Agreement as amended by Article
2 of this Agreement.
1.3 Headings. The headings of the Articles and Sections of this Agreement
are inserted for convenience of reference only and shall not affect the
construction or interpretation of this Agreement.
<PAGE> 2
- 2 -
1.4 References. All references in this Agreement to Articles and
Sections, unless otherwise specified, are to Articles and Sections of the Share
Exchange Agreement.
ARTICLE II
AMENDMENTS
2.1 Section 6.3 of the Share Exchange Agreement is amended to read as
follows:
TRANSFER BY SELLER. Seller shall not transfer (other than to Wendy's, a
wholly owned direct or indirect subsidiary of Wendy's, designated by
Wendy's or the Escrow Agent) all or any portion of Seller's Newco
Exchangeable Shares, except to the Trustee under the Trust Agreement
pursuant to the terms of the Guaranty and the Trust Agreement.
Notwithstanding the foregoing, Seller may from time to time transfer
all or any portion of Seller's Newco Exchangeable Shares to a bank
chartered under the laws of Canada (the "Bank"), as security for loans
made by the Bank to Seller, provided that the Bank gives written notice
to Wendy's and WENTIM of any pledge of Newco Exchangeable Shares along
with a copy of the pledge and further provided that the Bank has
agreed, as pledgee, to be bound by the provisions of the Share Exchange
Agreement and the Guaranty. Upon receipt by Wendy's and Newco of a
certificate from an officer of the Bank stating that Seller is in
default in any payment of principal of or interest accruing on loans
made by the Bank to Seller, and specifying the number of Newco
Exchangeable Shares pledged to the Bank by Seller, the Bank shall be
entitled to all of the rights of and be subject to all of the
obligations of Seller with respect to such number of Newco Exchangeable
Shares as if the Bank were named in this Agreement in place of Seller.
The Bank shall also provide written notice to Wendy's and WENTIM if the
pledge ceases to be in effect.
2.2 Section 7.1 of the Share Exchange Agreement is amended to read as
follows:
TERM. This Agreement shall continue until the earliest to occur of
the following events:
(a) no outstanding Newco Exchangeable Shares are held by Seller or are
pledged to a Bank which has notified Wendy's and WENTIM of such pledge
and which has complied with Section 6.3 hereof, and
(b) the execution of an instrument in writing terminating this
Agreement, signed by duly authorized officers or representatives of
Wendy's, WENTIM and by Seller; and in the event that Newco Exchangeable
Shares are pledged to a Bank which has notified Wendy's and WENTIM of
such pledge and which has complied with Section 6.3 hereof, no such
instrument will have the effect of terminating this Agreement without
the consent of the Bank.
<PAGE> 3
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2.3 Section 8.6 of the Share Agreement is amended to add the following:
If to the Bank:
Canadian Imperial Bank of Commerce
Main Branch, Commerce Court West
25 King Street West
Toronto, Ontario
M5L 1A2
Attention: P.J. Mulqueen
Senior Account Manager
Facsimile: (416) 980-7491
ARTICLE III
GENERAL
3.1 Effective Date and Confirmation. This Agreement and the amendment to
the Share Exchange Agreement contained in this Agreement shall be effective as
of and from the date of this Agreement. The Share Exchange Agreement, as amended
by this Agreement, is confirmed by Wendy's, WENTIM and Seller.
3.2 Binding Nature. This Agreement shall enure to the benefit of and be
binding upon each of Wendy's, WENTIM and Seller and their respective successors
and permitted assigns.
3.3 Conflicts. If any provision of this Agreement is inconsistent with
any provision of the Share Exchange Agreement the relevant provision of this
Agreement shall prevail.
3.4 Law of Contract. This Agreement shall be governed by and construed in
accordance with the laws of the Province of Ontario and the laws of Canada
applicable in the Province of Ontario.
3.5 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same Agreement.
<PAGE> 4
- 4 -
IN WITNESS OF WHICH Wendy's, WENTIM and Seller have executed this
Agreement as of the date indicated on the first page of this Agreement.
WENDY'S INTERNATIONAL, INC.
By: /s/ Frederick R. Reed
-------------------------------------------
Name: Frederick R. Reed
Title: Chief Financial Officer/Secretary
By: /s/ Lawrence A. Laudick
-------------------------------------------
Name: Senior Vice President
Title: Assistant Secretary
I/We have authority to bind
Wendy's International, Inc.
WENTIM, LTD.
By: /s/ Frederick R. Reed
-------------------------------------------
Name: Frederick R. Reed
Title: Chief Financial Officer/Secretary
By: /s/ Lawrence A. Laudick
-------------------------------------------
Name: Senior Vice President
Title: Assistant Secretary
I/We have authority to bind WENTIM, Ltd.
/s/ Gord Oliver /s/ Ronald V. Joyce
- ---------------------------- --------------------------------
WITNESS RONALD V. JOYCE
<PAGE> 1
Exhibit 2(k)
SUBSCRIPTION AGREEMENT
AMENDING AGREEMENT NO. 2
THIS IS AN AMENDING AGREEMENT made as of February 25, 1999, by and
among THE IRREVOCABLE TRUST FOR THE BENEFIT OF RONALD V. JOYCE, an Ohio Trust
("Subscriber"), and WENDY'S INTERNATIONAL, INC., an Ohio Corporation ("Issuer").
WHEREAS:
A. Issuer and Subscriber entered into a Subscription Agreement dated as
of December 29, 1995, as amended by an Agreement dated September 16, 1998,
between Issuer, WENTIM, Ronald V. Joyce ("Shareholder") and Subscriber (the
"Subscription Agreement"), pursuant to which Subscriber subscribed for and
purchased Wendy's Common Shares and agreed to pay for such Wendy's Common Shares
by conveying to Issuer an equivalent number of Newco Exchangeable Shares, which
Newco Exchangeable Shares were originally issued to Shareholder; and
B. Shareholder intends to pledge a portion of his Newco Exchangeable
Shares to a bank chartered under the laws of Canada (each, "a Bank") as security
for loans which may be made from time to time by a Bank to Shareholder.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained in this agreement and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
ARTICLE I
INTERPRETATION
1.1 One Agreement. This Agreement amends the Subscription Agreement and
this Agreement and the Subscription Agreement shall be read, interpreted,
construed and have effect as, and shall constitute one agreement with the same
effect as if the amendments made to the Subscription Agreement by this Agreement
had been contained in the Subscription Agreement as of the date of this
Agreement.
1.2 Defined Terms. In this Agreement, unless something in the subject
matter or context is inconsistent:
(a) terms defined in the description of the parties or in
the recitals have the respective meanings given to
them in such description or recitals; and
<PAGE> 2
(b) all other capitalized terms have the respective
meanings given to them in the Subscription Agreement.
1.3 Headings. The headings of the Articles and Sections of this
Agreement are inserted for convenience of reference only and shall not affect
the construction or interpretation of this Agreement.
1.4 References. All references in this Agreement to Articles and
Sections, unless otherwise specified, are to Articles and sections of the
Subscription Agreement.
ARTICLE II
AMENDMENTS
2.1 The fourth sentence of Section (2) of the Subscription Agreement
shall be amended to read as follows:
Upon payment of the purchase price hereunder by delivery of
certificates evidencing Newco Exchangeable Shares duly
endorsed for transfer to ISSUER at its principal executive
offices, ISSUER shall cause its transfer agent to issue one or
more certificate(s) to SUBSCRIBER representing SUBSCRIBER'S
ownership of fully paid and nonassessable Wendy's Common
Shares; provided, however, if SUBSCRIBER directs in writing
that the certificate(s) be issued in the name of a BENEFICIARY
(as defined in the Irrevocable Trust Agreement for the Benefit
of Ronald V. Joyce of even date hereof), ISSUER shall cause
the certificate(s) to be issued in the name of the BENEFICIARY
upon receipt of written representations and warranties from
the BENEFICIARY in substantially the form set forth in
paragraph (3) below.
ARTICLE III
GENERAL
3.1 Effective Date and Confirmation. This Agreement and the amendment
to the Subscription Agreement contained in this Agreement shall be effective as
of and from the date of this Agreement. The Subscription Agreement, as amended
by this Agreement, is confirmed by ISSUER and SUBSCRIBER.
3.2 Binding Nature. This Agreement shall inure to the benefit of and be
binding upon each of ISSUER and SUBSCRIBER and their respective successors and
permitted assigns.
3.3 Conflicts. If any provision of this Agreement is inconsistent with
any provision of the Share Exchange Agreement the relevant provision of this
Agreement shall prevail.
<PAGE> 3
3.4 Law of Contract. This Agreement and the Subscription Agreement
shall be governed by and construed in accordance with the laws of the State of
Ohio.
3.5 Counterparts. This Agreement may be executed in one or more
counterparts and each copy which has been signed by all parties shall be deemed
to be a duplicate original, but all of which, taken together, shall be deemed to
constitute a single instrument.
IN WITNESS OF WHICH Issuer and Subscriber have executed this
Agreement as of the date indicated on the first page of this Agreement.
WENDY'S INTERNATIONAL, INC.
By: /s/ Frederick R. Reed
------------------------------------------
Name: Frederick R. Reed
Title: Chief Financial Officer & Secretary
I/We have authority to bind
Wendy's International, Inc.
IRREVOCABLE TRUST FOR THE BENEFIT
OF RONALD V. JOYCE
THE HUNTINGTON NATIONAL BANK, TRUSTEE
By: /s/ Candada J. Moore
------------------------------------------
Name: Candada J. Moore
Title: Vice President
I/We have authority to bind the Trust
<PAGE> 1
Exhibit 2(m)
GUARANTY AGREEMENT
AMENDING AGREEMENT NO. 2
THIS IS AN AMENDING AGREEMENT made as of February 25, 1999 by
and between the Irrevocable Trust for the benefit of RONALD V. JOYCE (the
"Trust") and RONALD V. JOYCE (the "Shareholder").
WHEREAS:
A. The Trust and the Shareholder entered into a guaranty agreement
dated as of December 29, 1995 which was amended by an Agreement dated September
16, 1998 between the Trust, the Shareholder and other parties (collectively, the
"Guaranty Agreement"); and
B. The Shareholder wishes to pledge Newco Exchangeable Shares to
Canadian Imperial Bank of Commerce, a bank chartered under the laws of Canada
("CIBC") as security for loans which may be made from time to time by CIBC to
Seller.
NOW THEREFORE, in consideration of the mutual covenants and
agreements contained in this agreement and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
ARTICLE I
INTERPRETATION
1.1 One Agreement. This Agreement amends the Guaranty Agreement and this
Agreement and the Guaranty Agreement shall be read, interpreted, construed and
have effect as, and shall constitute one agreement with the same effect as if
the amendments made to the Guaranty Agreement by this Agreement had been
contained in the Guaranty Agreement as of the date of this Agreement.
1.2 Defined Terms. In this Agreement, unless something in the subject
matter or context is inconsistent:
(a) terms defined in the description of the parties or in the
recitals have the respective meanings given to them in such
description or recitals; and
(b) all other capitalized terms have the respective meanings given
to them in the Guaranty Agreement as amended by Article 2 of
this Agreement.
1.3 Headings. The headings of the Articles and Sections of this Agreement
are inserted for convenience of reference only and shall not affect the
construction or interpretation of this Agreement.
<PAGE> 2
- 2 -
1.4 References. All references in this Agreement to Articles and
Sections, unless otherwise specified, are to Articles and Sections of the
Guaranty Agreement.
ARTICLE II
AMENDMENTS
2.1 Section 2 of the Guaranty Agreement is amended to read as follows:
2. In addition to any other restrictions that may apply from time to
time to the Newco Exchangeable Shares and Wendy's Common Shares,
Shareholder may transfer (other than to Issuer) all or any portion of
Shareholder's Newco Exchangeable Shares and Wendy's Common Shares only
in accordance with Section 4.3 of the Purchase Agreement and Sections
5.6 and 6.3 of the Share Exchange Agreement as amended. Notwithstanding
the foregoing, Shareholder may pledge from time to time to a bank
chartered under the laws of Canada (the "Bank"), Newco Exchangeable
Shares (the "Pledged Newco Exchangeable Shares") pursuant to the form
of the securities pledge agreement, attached hereto as Schedule A (the
"Securities Pledge Agreement"), along with Wendy's Common Shares
received upon the presentation and surrender of the Pledged Newco
Exchangeable Shares, on the condition that the Bank acknowledges its
agreement to be bound by the Share Exchange Agreement and by the
Guaranty Agreement as the Seller and as the Shareholder respectively,
to the extent of the Pledged Newco Exchangeable Shares.
ARTICLE III
GENERAL
3.1 Effective Date and Confirmation. This Agreement and the amendment to
the Guaranty Agreement contained in this Agreement shall be effective as of and
from the date of this Agreement. The Guaranty Agreement, as amended by this
Agreement, is confirmed by the Trust and the Shareholder.
3.2 Binding Nature. This Agreement shall enure to the benefit of and be
binding upon each of the Trust and the Shareholder and their respective
successors, permitted assigns, heirs and executors.
3.3 Conflicts. If any provision of this Agreement is inconsistent with any
provision of the Guaranty Agreement the relevant provision of this Agreement
shall prevail
3.4 Law of Contract. This Agreement shall be governed by and construed in
accordance with the laws of the State of Ohio without giving effect to conflict
of law principles.
3.5 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same Agreement.
<PAGE> 3
- 3 -
IN WITNESS OF WHICH the Trust and the Shareholder have executed this
Agreement as of the date indicated on the first page of this Agreement.
THE IRREVOCABLE TRUST FOR THE
BENEFIT OF RONALD V. JOYCE
THE HUNTINGTON NATIONAL BANK, TRUSTEE
By: /s/ Candada J. Moore
---------------------------------
Name: Candada J. Moore
Title: Vice President
/s/ Gord Oliver /s/ Ronald V. Joyce
- ------------------------------ ------------------------------
WITNESS RONALD V. JOYCE
ACKNOWLEDGEMENT
Canadian Imperial Bank of Commerce acknowledges to the Trust that it is
bound by and agrees to honour the terms of the Guaranty Agreement as Shareholder
to the extent of the Pledged Newco Exchangeable Shares.
CANADIAN IMPERIAL BANK OF
COMMERCE
By: /s/ P.J. Mulqueen
---------------------------------
Name: P.J. Mulqueen
Title: Senior Account Manager
I have authority to bind Canadian
Imperial Bank of Commerce
<PAGE> 1
Exhibit 2(o)
REGISTRATION RIGHTS AGREEMENT
AMENDING AGREEMENT NO. 1
THIS IS AN AMENDING AGREEMENT made as of February 25, 1999 by
and among WENDY'S INTERNATIONAL, INC., an Ohio corporation ("Wendy's") and
RONALD V. JOYCE ("Shareholder").
WHEREAS:
A. Wendy's and Shareholder entered into a Registration Rights Agreement
dated as of December 29, 1995 (the "Registration Rights Agreement"); and
B. Shareholder wishes to pledge Newco Exchangeable Shares to Canadian
Imperial Bank of Commerce, a bank chartered under the laws of Canada ("CIBC") as
security for loans which may be made from time to time by CIBC to Shareholder.
NOW THEREFORE, in consideration of the mutual covenants and
agreements contained in this agreement and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
ARTICLE I
INTERPRETATION
1.1 One Agreement. This Agreement amends the Registration Rights Agreement
and this Agreement and the Registration Rights Agreement shall be read,
interpreted, construed and have effect as, and shall constitute one agreement
with the same effect as if the amendments made to the Registration Rights
Agreement by this Agreement had been contained in the Registration Rights
Agreement as of the date of this Agreement.
1.2 Defined Terms. In this Agreement, unless something in the subject
matter or context is inconsistent:
(a) terms defined in the description of the parties or in the
recitals have the respective meanings given to them in such
description or recitals;
(b) all other capitalized terms have the respective meanings given
to them in the Registration Rights Agreement as amended by
Article 2 of this Agreement; and
(c) "Bank" means a bank chartered under the laws of Canada to
which an assignment has been properly made under Section
9.6(2) of the Registration Rights Agreement.
<PAGE> 2
- 2 -
1.3 Headings. The headings of the Articles and Sections of this Agreement
are inserted for convenience of reference only and shall not affect the
construction or interpretation of this Agreement.
1.4 References. All references in this Agreement to Articles and Sections,
unless otherwise specified, are to Articles and Sections of the Registration
Rights Agreement.
ARTICLE II
AMENDMENTS
2.1 The definition of Registrable Securities is amended to read as follows:
Any Wendy's Common Shares (or any shares of capital stock issued in
exchange therefor or reclassification thereof) issued to Shareholder
(or a permitted assignee under Section 9.6(2) of this Agreement)
pursuant to the Ancillary Agreements, except that particular
Registrable Securities shall cease to be Registrable Securities if and
at such time as (i) a registration statement with respect to the sale
of such securities shall have been declared effective under the 1933
Act and such securities shall have been disposed of in accordance with
such registration statement or (ii) such securities shall have been
sold or otherwise transferred in a privately negotiated transaction,
pursuant to Rule 144 under the 1933 Act, or otherwise, to a party other
than Ronald V. Joyce or his legal representatives.
2.2 Section 9.1 of the Registrations Rights Agreement is amended to read
as follows:
9.1 Amendments, Modifications, etc. This Agreement may not be amended,
modified or supplemented by the parties hereto in any manner, except by
an instrument in writing signed by duly authorized officers or
representatives of Wendy's and Shareholder. In addition, so long as
Newco Exchangeable Shares or any Wendy's Common Shares are pledged by
Shareholder to a Bank any amendment, modification of, or supplement to
this Agreement in any manner requires an instrument in writing signed
by duly authorized officers or representatives of any such Bank.
2.3 Section 9.4 of the Registrations Rights Agreement is amended to add
notice to CIBC (so long as Newco Exchangeable Shares or Wendy's Common Shares
have been pledged and continue to be pledged by Shareholder to CIBC) as follows:
<PAGE> 3
- 3 -
If to CIBC:
Canadian Imperial Bank of Commerce
Main Branch, Commerce Court West
25 King Street West
Toronto, Ontario
M5L 1A2
Attention: P.J. Mulqueen
Senior Financial Adviser
Facsimile: (416) 980-7491
2.4 Section 9.6 of the Registration Rights Agreement shall be renumbered
Section 9.6(1), and Section 9.6(2) shall be added to the Registration Rights
Agreement as follows:
9.6(2) Assignment to a Bank. Notwithstanding Section 9.6(1) Shareholder
shall be entitled to assign its rights together with its obligations,
under this Agreement to a Bank in connection with and to the extent of
Newco Exchangeable Shares from time to time pledged by Shareholder to a
Bank as security for loans made by a Bank to Shareholder and upon such
assignment such Bank shall be entitled to all of the rights of and be
subject to all of the obligations of Shareholder with respect to such
pledged Newco Exchangeable Shares as if such Bank were named in this
Agreement in place of Shareholder. Such Bank shall give notice to
Wendy's of any pledge of Newco Exchangeable Shares along with a copy of
the pledge and such Bank shall agree in writing, as pledgee, to be
bound by the obligations of Shareholder under the Registration Rights
Agreement to the extent that such obligations apply to Newco
Exchangeable Shares pledged by Shareholder to such Bank.
ARTICLE III
GENERAL
3.1 Effective Date and Confirmation. This Agreement and the amendment to
the Registration Rights Agreement contained in this Agreement shall be effective
as of and from the date of this Agreement. The Registration Rights Agreement, as
amended by this Agreement, is confirmed by Wendy's and Shareholder.
3.2 Binding Nature. This Agreement shall enure to the benefit of and be
binding upon each of Wendy's and Shareholder and their respective successors and
permitted assigns.
3.3 Conflicts. If any provision of this Agreement is inconsistent with any
provision of the Registration Rights Agreement the relevant provision of this
Agreement shall prevail.
<PAGE> 4
- 4 -
3.4 Law of Contract. This Agreement shall be governed by and construed in
accordance with the laws of the State of Ohio, without regard to its conflict of
law rules.
3.5 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same Agreement.
IN WITNESS OF WHICH Wendy's and Shareholder have executed this
Agreement as of the date indicated on the first page of this Agreement.
WENDY'S INTERNATIONAL, INC.
By: /s/ Frederick R. Reed
----------------------------------------
Name: Frederick R. Reed
Title: Chief Financial Officer/Secretary
By: /s/ Lawrence A. Laudick
---------------------------------------
Name: Lawrence A. Laudick
Title: Assistant Secretary
I/We have authority to bind Wendy's
International, Inc.
/s/ Gord Oliver /s/ Ronald V. Joyce
- ---------------------------- ---------------------------------------
WITNESS RONALD V. JOYCE
<PAGE> 1
CERTIFICATE OF AMENDMENT TO
THE ARTICLES OF INCORPORATION OF
WENDY'S INTERNATIONAL, INC.
Robert L. Barney, Chairman of the Board and Chief Executive Officer,
and Lawrence E. Schauf, Secretary, of Wendy's International, Inc., an Ohio
corporation for profit with its principal place of business at Dublin, Ohio, do
hereby certify that at a meeting of the Board of Directors held pursuant to
notice on the 4th day of August, 1988, the following resolution was adopted
pursuant to Section 1701.70(B)(1) of the Ohio Revised Code:
RESOLVED, that, pursuant to the authority vested in the Board
of Directors of the corporation in accordance with the provisions of
Chapter 1701 of the Ohio Revised Code, as amended, and by Article IV of
the corporation's Articles of Incorporation, such Article IV is amended
to add a new section providing for a series of Voting Preferred Shares
and that the designation and authorized number of shares, and the
relative rights, preferences and limitations of, such series are as
follows:
Of the 250,000 preferred shares of the corporation, 150,000
shall constitute a series of Voting Preferred Stock and shall have,
subject and in addition to the other provisions of this Article IV, the
following relative rights, preferences and limitations.
Section 1. Designation and Amount. The shares of such series
shall be designated as "Series A Preferred Shares" (the "Series A
Preferred Stock"). The number of shares of Series A Preferred Stock may
be increased or decreased by resolution of the Board of Directors;
provided, that no decrease shall reduce the number of shares of Series
A Preferred Stock to a number less than that of the shares then
outstanding plus the number of shares issuable upon exercise of
outstanding rights, options or warrants or upon conversion of
outstanding securities issued by the Corporation.
Section 2. Dividends and Distributions.
(A) Subject to the prior and superior rights of the holders of
any shares of any series of Preferred Stock ranking prior and superior
to the Series A Preferred Stock with respect to dividends, the holders
of Series A Preferred Stock in preference to the holders of shares of
Common Stock, without par value per share (the "Common Stock"), of the
Corporation and any other junior stock, shall be entitled to receive,
when, as and if declared by the Board of Directors out of funds legally
available for the purpose, quarterly dividends payable in cash on the
first day of January, April, July, and October in each year (each such
date being referred to herein as a "Quarterly Dividend Payment Date"),
commencing on the first Quarterly Dividend Payment Date after the first
issuance of a share or fraction of a share of Series A Preferred Stock
in an amount per share (rounded to the nearest cent) equal to the
greater of (a) $100.00, or (b) subject to the provision for adjustment
hereinafter set forth, 10,000 times the aggregate per share amount of
all cash dividends, and 10,000 times the aggregate per share amount
(payable in kind) of all non-cash dividends or other distributions
other than a dividend payable in shares of Common Stock or a
subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock, since the
immediately preceding Quarterly Dividend Payment Date, or, with respect
to the first Quarterly Dividend Payment Date, since the first issuance
of any share or fraction of a share of Series A Preferred Stock. In the
event the Corporation shall at any time after September
<PAGE> 2
2, 1988 (the "Rights Declaration Date") (i) declare any dividend on
Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock, or (iii) combine the outstanding Common Stock
into a smaller number of shares, then in each such case the amount to
which holders of shares of Series A Preferred Stock were entitled
immediately prior to such event under clause (b) of the preceding
sentence shall be adjusted by multiplying such amount by a fraction,
the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which
is the number of shares of Common Stock that were outstanding
immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution
on the Series A Preferred Stock as provided in paragraph (A) above
immediately after it declares a dividend or distribution on the Common
Stock (other than a dividend payable in shares of Common Stock);
provided that, in the event no dividend or distribution shall have been
declared on the Common Stock during the period between any Quarterly
Dividend Payment Date and the next subsequent Quarterly Dividend
Payment Date, a dividend of $100.00 per share on the Series A Preferred
Stock shall nevertheless be payable on such subsequent Quarterly
Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares
of Series A Preferred Stock unless the date of issue of such shares is
prior to the record date for the first Quarterly Dividend Payment Date,
in which case dividends on such shares shall begin to accrue from the
date of issue of such shares, or unless the date of issue is a
Quarterly Dividend Payment Date or is a date after the record date for
the determination of holders of Series A Preferred Stock entitled to
receive a quarterly dividend and before such Quarterly Dividend Payment
Date in either of which events such dividends shall begin to accrue and
be cumulative from such Quarterly Dividend Payment Date. Accrued but
unpaid dividends shall not bear interest. Dividends paid on the shares
of Series A Preferred Stock in an amount less than the total amount of
such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at
the time outstanding. The Board of Directors may fix a record date for
the determination of holders of shares of Series A Preferred Stock
entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be no more than 30 days prior to the
date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series A
Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set
forth, each share of Series A Preferred Stock shall entitle the holder
thereof to 1 vote on all matters submitted to a vote of the
shareholders of the Corporation.
(B) Except as otherwise provided herein or by law, the holders
of shares of Series A Preferred Stock and the holders of shares of
Common Stock shall vote together as one class on all matters submitted
to a vote of shareholders of the Corporation.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as provided in
Section 2 are in arrears, thereafter and until all accrued and unpaid
dividends and distributions, whether or not declared, on Series A
Preferred Stock outstanding shall have been paid in full, the
Corporation shall not
<PAGE> 3
(i) declare or pay dividends on, make any other distributions
on, or redeem or purchase or otherwise acquire for
consideration any shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to
the Series A Preferred Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or
winding up) with the Series A Preferred Stock except dividends
paid ratably on the Series A Preferred Stock and all such
parity stock on which dividends are payable or in arrears in
proportion to the total amounts to which the holders of all
such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity (either
as to dividends or upon liquidation, dissolution or winding
up) with the Series A Preferred Stock provided that the
Corporation may at any time redeem, purchase or otherwise
acquire shares of any such parity stock in exchange for shares
of any stock of the Corporation ranking junior (either as to
dividends or upon dissolution, liquidation or winding up) to
the Series A Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any
shares of Series A Preferred Stock or any shares of stock
ranking on a parity with the Series A Preferred Stock except
in accordance with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to all
holders of such shares upon such terms as the Board of
Directors, after consideration of the respective annual
dividend rates and other relative rights and preferences of
the respective series and classes, shall determine in good
faith will result in fair and equitable treatment among the
respective series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any
shares of stock of the Corporation unless the Corporation could, under
paragraph (A) of this Section 4, purchase or otherwise acquire such
shares at such time and in such manner.
Section 5. Reacquired Shares. Any Series A Preferred Stock
purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and cancelled promptly after the
acquisition thereof. All such shares shall upon their cancellation
become authorized but unissued shares of Preferred Stock and may be
reissued as part of a new series of Preferred Stock to be created by
resolution or resolutions of the Board of Directors, subject to the
conditions and restrictions on issuance set forth herein.
Section 6. Liquidation, Dissolution or Winding Up.
(A) Upon any liquidation (voluntary or otherwise), dissolution
or winding up of the Corporation, no distribution shall be made to the
holders of shares of stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series A Preferred
Stock unless, prior thereto, the holders of shares of Series A
Preferred Stock shall have received per share, the greater of 10,000
times $25.00 or 10,000 times the payment made per share of Common
Stock, plus an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of such
payment (the "Series A Liquidation Preference"). Following the payment
of the full amount of the Series A Liquidation Preference, no
additional distributions shall be made to the holders of shares of
Series A Preferred Stock unless, prior thereto, the holders of shares
of Common Stock shall have received an amount per share (the "Common
Adjustment") equal to the quotient obtained by dividing (i) the Series
A Liquidation Preference by (ii)
<PAGE> 4
10,000 (as appropriately adjusted as set forth in subparagraph C below
to reflect such events as stock splits, stock dividends and
recapitalizations with respect to the Common Stock) (such number in
clause (ii), the "Adjustment Number"). Following the payment of the
full amount of the Series A Liquidation Preference and the Common
Adjustment in respect of all outstanding Series A Preferred Stock and
Common Stock, respectively, and holders of Series A Preferred Stock and
holders of shares of Common Stock shall receive their rateable and
proportionate share of the remaining assets to be distributed in the
ratio of the Adjustment Number to 1 with respect to such Preferred
Stock and Common Stock, on a per share basis, respectively.
(B) In the event there are not sufficient assets available to
permit payment in full of the Series A Liquidation Preference and the
liquidation preferences of all other series of Preferred Stock, if any,
which rank on a parity with the Series A Preferred Stock then such
remaining assets shall be distributed ratably to the holders of such
parity shares in proportion to their respective liquidation
preferences. In the event there are not sufficient assets available to
permit payment in full of the Common Adjustment, then such remaining
assets shall be distributed ratably to the holders of Common Stock.
(C) In the event the Corporation shall at any time after the
Rights Declaration Date (i) declare any dividend on Common Stock
payable in shares of Common Stock, (ii) subdivide the outstanding
Common Stock, or (iii) combine the outstanding Common Stock into a
smaller number of shares, then in each such case the Adjustment Number
in effect immediately prior to such event shall be adjusted by
multiplying such Adjustment Number by a fraction the numerator of which
is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of
Common Stock that were outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the Corporation
shall enter into any consolidation, merger, combination or other
transaction in which the shares of Common Stock are exchanged for or
changed into other stock or securities, cash and/or any other property,
then in any such case the Series A Preferred Stock shall at the same
time be similarly exchanged or changed in an amount per share (subject
to the provision for adjustment hereinafter set forth) equal to 10,000
times the aggregate amount of stock, securities, cash and/or any other
property (payable in kind), as the case may be, into which or for which
each share of Common Stock is changed or exchanged. In the event the
Corporation shall at any time after the Rights Declaration Date (i)
declare any dividend on Common Stock payable in shares of Common Stock,
(ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each
such case the amount set forth in the preceding sentence with respect
to the exchange or change of Series A Preferred Stock shall be adjusted
by multiplying such amount by a fraction, the numerator of which is the
number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common
Stock that are outstanding immediately prior to such event.
Section 8. Redemption. The shares of Series A Preferred Stock
shall not be redeemable.
Section 9. Ranking. The Series A Preferred Stock shall rank
junior to all other series of the Corporation's Preferred Stock as to
the payment of dividends and the distribution of assets, unless the
terms of any such series shall provide otherwise.
Section 10. Fractional Shares. Series A Preferred Stock may be
issued in fractions of a share which shall entitle the holder, in
proportion to such holder's fractional shares, to exercise voting
rights, receive dividends, participate in distributions and to have the
benefit of all other rights of holders of Series A Preferred Stock.
<PAGE> 5
IN WITNESS WHEREOF, I have executed and subscribed this
Certificate and do affirm the foregoing as true under the penalties of
perjury this 25th day of August 1988.
/s/ ROBERT L. BARNEY
-------------------------
Robert L. Barney
Chairman of the Board &
Chief Executive Officer
Attest:
/s/ LAWRENCE E. SCHAUF
- -------------------------
Lawrence E. Schauf
Secretary
<PAGE> 6
CERTIFICATE OF AMENDMENT
(BY SHAREHOLDERS)
TO THE ARTICLES OF INCORPORATION OF
WENDY'S INTERNATIONAL, INC.
Ronald P. Fay, who is President, and John W. Funk, who is Secretary of
the above named Ohio corporation for profit with its principal location at
Dublin, Ohio do hereby certify the following:
a meeting of the shareholders was duly called and held on April 30,
1985, at which meeting a quorum of the shareholders was present in
person or by proxy, and by the affirmative vote of the holders of
shares entitling them to exercise 78.20% of the voting power of the
corporation,
the following resolution was adopted to amend the articles:
RESOLVED, that the first paragraph of Article IV of the Amended
Articles of Incorporation be, and the same hereby is, amended to read
as follows:
"ARTICLE IV. The authorized number of shares of the corporation is
200,250,000 of which 200,000,000 shares shall be common shares, without
par value, and 250,000 shares shall be preferred shares, $1.00 par
value."
IN WITNESS WHEREOF, the above named officers, acting for and on behalf
of the corporation, have subscribed their names this 3rd day of May, 1985
/s/ RONALD P. FAY
------------------------------
Ronald P. Fay
President and Chief
Executive Officer
/s/ JOHN W. FUNK
------------------------------
John W. Funk, Secretary,
Executive Vice President and
Chief Administrative Officer
<PAGE> 7
CERTIFICATE OF AMENDMENT TO
AMENDED ARTICLES OF
WENDY'S INTERNATIONAL, INC.
Robert L. Barney, President, and John W. Funk, Secretary, of Wendy's
International, Inc., an Ohio corporation, with its principal office located at
Dublin, Ohio, do hereby certify that a meeting of the holders of the shares of
said corporation entitling them to vote on the proposal to amend the Amended
Articles of Incorporation thereof, as contained in the following Resolutions,
was duly called and held on the 29th day of April, 1980, at which meeting a
quorum of such shareholders was present in person or by proxy, and that, by the
affirmative vote of the holders of shares entitling them to exercise not less
than a majority of the voting power of the corporation on such proposal, the
following Resolutions were adopted:
RESOLVED, that Article SEVENTH of the Company's Amended Articles of
Incorporation be amended to read as follows:
"SEVENTH: Notwithstanding any provision of the Ohio Revised Code
requiring for any purpose the vote, consent, waiver or release of the
holders of shares of the corporation entitling them to exercise
two-thirds or any other proportion of the voting power of the
corporation or of any class or classes thereof, such action, unless
expressly otherwise provided by statute, may be taken by the vote,
consent, waiver or release of the holders of the shares entitling them
to exercise not less than a majority of the voting power of the
corporation or of such class or classes; provided, however, that unless
at least two-thirds (2/3) of the Directors of the corporation shall
recommend the approval of any of the following matters, the affirmative
vote of the holders of shares entitling them to exercise not less than
seventy-five percent (75%) of the voting power of the corporation, or
seventy-five percent (75%) of the voting power of any class or classes
of shares of the corporation which entitle the holders thereof to vote
in respect of any such matter as a class, shall be required to adopt:
(1) A proposed amendment to the Amended Articles of
Incorporation of the corporation;
(2) Proposed new Regulations or an amendment of the
New Regulations of the corporation;
(3) An agreement of merger or consolidation providing for the
proposed merger or consolidation of the corporation with or
into one or more other corporations and requiring shareholder
approval;
<PAGE> 8
(4) A proposed combination or majority share acquisition involving
the issuance of shares of the Company and requiring
shareholder approval;
(5) A proposal to sell, exchange, transfer or otherwise dispose of
all, or substantially all, the assets, with or without the
goodwill, of the corporation;
(6) A proposed dissolution of the corporation."
RESOLVED, that Article EIGHTH of the existing Amended Articles of
Incorporation of Wendy's International, Inc., an Ohio corporation, be,
and said Article hereby is, renumbered and designated Article NINTH.
RESOLVED, that the following be, and it hereby is, substituted as
Article EIGHTH of the Amended Articles of Incorporation of Wendy's
International, Inc., an Ohio corporation:
"EIGHTH: In the event that any person proposes (a) an exchange or
tender offer for shares of the corporation, (b) a merger or
consolidation of the corporation, or (c) a purchase or acquisition of
all or substantially all of the assets of the corporation, the
Directors shall, in evaluating what is in the best interests of the
corporation, consider the following:
- the fairness of the price or financial terms of the proposal;
- the effect upon employees, franchisees, customers and suppliers
of the corporation;
- the relationship of the proposal to the value of the corporation
in a transaction of a similar type resulting from free
negotiations;
- such other factors, whether legal, economic, or social, as the
Directors determine to be relevant."
IN WITNESS WHEREOF, said Robert L. Barney, President, and John W. Funk,
Secretary, of Wendy's International, Inc., acting for and on behalf of said
corporation, have hereunto subscribed their names and caused the seal of the
corporation to be affixed this 1st day of May, 1980.
/s/ ROBERT L. BARNEY
------------------------------
Robert L. Barney, President
/s/ JOHN W. FUNK
------------------------------
John W. Funk, Secretary
<PAGE> 9
CERTIFICATE OF AMENDMENT TO
AMENDED ARTICLES OF
WENDY'S INTERNATIONAL, INC.
Robert L. Barney, President, and John W. Funk, Secretary, of Wendy's
International, Inc., an Ohio corporation, with its principal office located at
Dublin, Ohio, do hereby certify that a meeting of the holders of the shares of
said corporation entitling them to vote on the proposal to amend the Amended
Articles of Incorporation thereof, as contained in the following Resolution, was
duly called and held on the 24th day of April, 1979, at which meeting a quorum
of such shareholders was present in person or by proxy, and that, by the
affirmative vote of the holders of shares entitling them to exercise not less
than a majority of the voting power of the corporation on such proposal, the
following Resolution was adopted:
RESOLVED, that the first paragraph of ARTICLE FOURTH of the Amended
Articles of Incorporation be, and the same hereby is, amended to read
as follows:
"FOURTH: The authorized number of shares of the corporation is
40,250,000, of which 40,000,000 shares shall be common shares,
without par value, and 250,000 shares shall be preferred
shares, $1.00 par value."
IN WITNESS WHEREOF, said Robert L. Barney, President, and John W. Funk,
Secretary, of Wendy's International, Inc., acting for and on behalf of said
corporation, have hereunto subscribed their names and caused the seal of the
corporation to be affixed this 24th day of April, 1979.
/s/ ROBERT L. BARNEY
------------------------------
Robert L. Barney, President
/s/ JOHN W. FUNK
------------------------------
John W. Funk, Secretary
<PAGE> 10
ANNEX 1
AMENDED ARTICLES OF INCORPORATION
OF
WENDY'S INTERNATIONAL, INC.
FIRST: The name of the corporation shall be Wendy's
International, Inc.
SECOND: The place in Ohio where the principal office of the
corporation is to be located is the Village of
Dublin, Franklin County, Ohio.
THIRD: The purpose or purposes for which corporation is
formed are:
1. To develop, own, operate and manage business
enterprises of every nature and kind (including,
without limitation, enterprises engaged in food sales
and related services) and to own and license others
to use tradenames, trademarks, patents and similar
rights.
2. To provide management, consulting and advising
services to business.
3. To do any and all things related to the foregoing and
to engage in any other lawful act or activity for
which corporation may be formed under Section 1701.01
to 1701.98, inclusive, of the Ohio Revised Code.
FOURTH: The authorized number of shares of the corporation is
20,250,000 of which 20,000,000 shares shall be common shares,
without par value, and 250,000 shares shall be preferred
shares, $1.00 par value.
Each share, regardless of class, shall entitle the
holder thereof to one vote.
The directors of the corporation may adopt amendments
to the Articles in respect of any unissued or treasury shares
of any class and thereby fix or change: the division of such
shares into series and the designation and authorized number
of shares of each series; the dividend rate; the dates of
payment of dividends and the dates from which they are
cumulative; liquidation price; redemption rights and price;
sinking fund requirements; conversion rights; and restrictions
on the issuance of shares of any class or series.
FIFTH: No shareholder of the corporation shall have, as a
matter of right, the pre-emptive right to purchase or
subscribe for shares of any class, now or thereafter
authorized, or to purchase or subscribe for securities or
other obligations convertible into or exchangable for such
shares or which by warrants or otherwise entitle the holders
thereof to subscribe for or purchase any such shares.
<PAGE> 11
SIXTH: The corporation by its directors may purchase,
redeem, hold, sell, transfer and otherwise deal with (A)
shares of any class or series issued by it, (B) any security
or other obligation of the corporation which may confer upon
the holder thereof the right to convert the same into shares
of any class or series authorized by the Articles of the
corporation, and (C) any security or other obligation which
may confer upon the holder thereof the right to purchase
shares of any class or series authorized by the Articles of
the corporation.
SEVENTH: Notwithstanding any provision of the Ohio Revised
Code now or hereafter in force requiring for any purpose the
vote, consent, waiver or release of the holders of shares of
the corporation entitling them to exercise a greater
proportion of the voting power of the corporation, or of any
class or classes or shares thereof, any action may, to the
extent permitted by Law, be taken by the vote, consent, waiver
or release of the holders of shares entitling them to exercise
not less than a majority of the voting power of the
corporation, or of such class or classes.
EIGHTH: These Amended Articles supersede and take the place
of the existing Amended Articles of Incorporation.
<PAGE> 12
CERTIFICATE OF AMENDMENT
(BY SHAREHOLDERS)
TO THE ARTICLES OF INCORPORATION OF
WENDY'S INTERNATIONAL, INC.
------------------------------------------------------------------------------
(NAME OF CORPORATION)
( ) Chairman of the Board
Ronald P. Fay , who is (X) President
- ----------------------- ( ) Vice President
and John W. Funk , who is (X) Secretary
-------------------- ( ) Assistant Secretary
of the above named Ohio corporation for profit with its principal location at
_________________, Ohio do hereby certify that: (check the appropriate box and
complete the appropriate statements)\
-----
a meeting of the shareholders was duly called and held on
----- __________________, ________, at which meeting a quorum of
the shareholders was present in person or by proxy, and by
the affirmative vote of the holders of shares entitling
them to exercise ________% of the voting power of the
corporation,
in a writing signed by all of the shareholders who would be
-----
entitled to a notice of a meeting held for that purpose,
-----
the following resolution was adopted to amend the articles:
RESOLVED, that the first paragraph of Article IV of the Amended
Articles of Incorporation be, and the same hereby is, amended to read
as follows:
"ARTICLE IV. The authorized number of shares of the corporation is
100,250,000, of which 100,000,000 shares shall be common shares,
without par value, and 250,000 shares shall be preferred shares, $1.00
par value."
IN WITNESS WHEREOF, the above named officers, acting for and on behalf
of the corporation, have subscribed their names this ________ day of __________,
19_____.
---------------------------------
(President)
---------------------------------
(Secretary)
NOTE: Ohio law does not permit one officer to sign in two capacities. Two
separate Signatures are required, even if this necessitates the
election of a second Officer before filing can be made.
================================================================================
<PAGE> 13
CERTIFICATE OF AMENDMENT
(BY SHAREHOLDERS)
TO THE ARTICLES OF INCORPORATION OF
WENDY'S INTERNATIONAL, INC.
------------------------------------------------------------------------------
(NAME OF CORPORATION)
( ) Chairman of the Board
John W. Funk , who is (X) President
- ---------------------------- ( ) Vice President
and R. Michael Kennedy , who is (X) Secretary
------------------------- ( ) Assistant Secretary
of the above named Ohio corporation for profit with its principal location at
_________________________, Ohio do hereby certify that: (check the appropriate
box, complete the appropriate statements)
XX a meeting of the shareholders was duly called and held on
_______________, 19____, at which meeting a quorum of the
affirmative vote present in person or by proxy, and by the
affirmative vote of the holders of shares entitling them to
exercise __________% of the voting power of the corporation,
================================================================================
<PAGE> 1
Exhibit 10(a)
RESTATED EMPLOYMENT AGREEMENT
Between
WENDY'S INTERNATIONAL, INC.
And
-------------------------------
This Agreement is made and entered into as of _______________, _______,
by and between WENDY'S INTERNATIONAL, INC., an Ohio corporation ("WENDY'S"), and
_________________ (the "EXECUTIVE"), who are the parties to this Agreement.
RECITALS
(1) WENDY'S is engaged, directly and through subsidiaries, in the
business of owning, operating and franchising fast food restaurants and carrying
on ancillary activities incident thereto.
(2) The EXECUTIVE possesses unique skills, knowledge and experience
relating to WENDY'S business.
(3) The EXECUTIVE is currently employed by WENDY'S directly or through
a subsidiary of WENDY'S, and desires to continue to be so employed.
(4) WENDY'S desires to be assured of the continued services of the
EXECUTIVE and to afford him the job security this Agreement provides without,
however, increasing the compensation he would otherwise obtain were it not for
the occurrence of events foreseen by this Agreement, and the EXECUTIVE desires
to be assured that, in the event of a material change in WENDY'S management,
occasioned by a substantial change in the control of WENDY'S, the terms,
conditions and environment of his employment will not be unreasonably affected.
(5) WENDY'S desires to be assured of the objectivity of the EXECUTIVE
in evaluating a potential offer the effect of which would be a change of control
of WENDY'S, and advising whether or not he believes a potential change of
control is in the best interests of WENDY'S and its shareholders. WENDY'S
further desires to be assured of the dedication of the EXECUTIVE to maximizing
the value to be received by the shareholders of WENDY'S in the circumstances of
negotiating or otherwise responding to a proposed change of control, and to be
assured of the continuity of services of the EXECUTIVE during such time as a
proposed change of control is under negotiation or otherwise pending.
<PAGE> 2
CONSIDERATION
In consideration of their mutual covenants expressed herein, the
parties, intending to be legally bound hereby, agree as follows:
Section 1. EXECUTIVE'S Rights to Continued Employment in the event of a
CHANGE IN CONTROL of WENDY'S.
For purposes of this Agreement a "CHANGE IN CONTROL" shall mean the
occurrence of:
(a) An acquisition (other than directly from WENDY'S) of any common
stock or other voting securities of WENDY'S entitled to vote generally for the
election of directors (the "Voting Securities") by any "Person" (as the term
person is used for purposes of Section 13(d) or 14(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")), immediately after which such
Person has "Beneficial Ownership" (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of thirty percent (30%) or more of the then outstanding
shares of WENDY'S common stock or the combined voting power of WENDY'S then
outstanding Voting Securities; provided, however, in determining whether a
CHANGE IN CONTROL has occurred, Voting Securities which are acquired in a
"Non-Control Acquisition" (as hereinafter defined) shall not constitute an
acquisition which would cause a CHANGE IN CONTROL. A "Non-Control Acquisition"
shall mean an acquisition by (i) an employee benefit plan (or a trust forming a
part thereof) maintained by (A) WENDY'S or (B) any corporation or other Person
of which a majority of its voting power or its voting equity securities or
equity interest is owned, directly or indirectly, by WENDY'S (for purposes of
this definition, a "Subsidiary") (ii) WENDY'S or its Subsidiaries, or (iii) any
Person in connection with a "Non-Control Transaction" (as hereinafter defined);
(b) The individuals who, as of ____________, ______, are members of the
Board (the "Incumbent Board"), cease for any reason to constitute at least
seventy percent (70%) of the members of the Board; provided, however, that if
the election, or nomination for election by WENDY'S common stockholders, of any
new director was approved by a vote of at least two-thirds of the Incumbent
Board, such new director shall, for purposes of this Plan, be considered as a
member of the Incumbent Board; provided further, however, that no individual
shall be considered a member of the Incumbent Board if such individual initially
assumed office as a result of either an actual or threatened "Election Contest"
(as described in Rule 14a-11 promulgated under the Exchange Act) or other actual
or threatened solicitation of proxies or consents by or on behalf of a Person
other than the Board (a "Proxy Contest") including by reason of any agreement
intended to avoid or settle any Election Contest or Proxy Contest; or
2
<PAGE> 3
(c) The consummation of:
(i) A merger, consolidation or reorganization with or into
WENDY'S or in which securities of WENDY'S are issued, unless such
merger, consolidation or reorganization is a "Non-Control Transaction."
A "Non-Control Transaction" shall mean a merger, consolidation or
reorganization with or into WENDY'S or in which securities of WENDY'S
are issued where:
(A) the stockholders of WENDY'S, immediately before
such merger, consolidation or reorganization, own directly or
indirectly immediately following such merger, consolidation or
reorganization, at least seventy percent (70%) of the combined
voting power of the outstanding voting securities of the
corporation resulting from such merger or consolidation or
reorganization (the "Surviving WENDY'S") in substantially the
same proportion as their ownership of the Voting Securities
immediately before such merger, consolidation or
reorganization,
(B) the individuals who were members of the Incumbent
Board immediately prior to the execution of the agreement
providing for such merger, consolidation or reorganization
constitute at least two-thirds of the members of the board of
directors of the Surviving WENDY'S, or a corporation
beneficially directly or indirectly owning a majority of the
Voting Securities of the Surviving WENDY'S, and
(C) no Person other than (i) WENDY'S, (ii) any
Subsidiary, (iii) any employee benefit plan (or any trust
forming a part thereof) that, immediately prior to such
merger, consolidation or reorganization, was maintained by
WENDY'S or any Subsidiary, or (iv) any Person who, immediately
prior to such merger, consolidation or reorganization had
Beneficial Ownership of thirty percent (30%) or more of the
then outstanding Voting Securities or common stock of WENDY'S,
has Beneficial Ownership of thirty percent (30%) or more of
the combined voting power of the Surviving WENDY'S then
outstanding voting securities or its common stock;
(ii) A complete liquidation or dissolution of WENDY'S; or
(iii) The sale or other disposition of all or substantially
all of the assets of WENDY'S to any Person (other than a transfer to a
Subsidiary).
Notwithstanding the foregoing, a CHANGE IN CONTROL shall not be deemed
to occur solely because any Person (the "Subject Person") acquired Beneficial
Ownership of more than the permitted amount of the then outstanding common stock
or Voting Securities as a result of the acquisition of common stock or Voting
Securities by WENDY'S which, by reducing the number of shares of common stock or
Voting Securities then outstanding, increases the proportional number of shares
Beneficially
3
<PAGE> 4
Owned by the Subject Persons, provided that if a CHANGE IN CONTROL would occur
(but for the operation of this sentence) as a result of the acquisition of
common stock or Voting Securities by WENDY'S, and after such share acquisition
by WENDY'S, the Subject Person becomes the Beneficial Owner of any additional
common stock or Voting Securities which increases the percentage of the then
outstanding Voting Securities Beneficially Owned by the Subject Person, then a
CHANGE IN CONTROL shall occur.
If the EXECUTIVE'S employment is terminated by WENDY'S without CAUSE
prior to the date of a CHANGE IN CONTROL but the EXECUTIVE reasonably
demonstrates that the termination (A) was at the request of a third party who
has indicated an intention or taken steps reasonably calculated to effect a
CHANGE IN CONTROL or (B) otherwise arose in connection with, or in anticipation
of, a CHANGE IN CONTROL which has been threatened or proposed, such termination
shall be deemed to have occurred after a CHANGE IN CONTROL for purposes of this
Agreement provided a CHANGE IN CONTROL shall actually have occurred.
1.1 From and after the date of occurrence of a CHANGE IN CONTROL,
WENDY'S shall cause the EXECUTIVE to be employed, and the EXECUTIVE
shall accept employment, with the duties, nature and place of such
employment as described in Section 2 of this Agreement. The term of
such employment, referred to hereinafter as the "EMPLOYMENT TERM,"
shall commence on the date when the CHANGE IN CONTROL shall have
occurred and shall end on the earlier of:
(a) the fifth anniversary of:
(i) the date when the occurrence of an event described in
subparagraph (a) of Section 1 hereof shall be disclosed in a
Schedule 13D or other such similar or successor form
promulgated by the Securities and Exchange Commission, filed
with the Securities and Exchange Commission of Washington, D.
C., and the duplicate of which is actually received by
WENDY'S, or
(ii) the date on which a transaction described in subparagraph
(c) of Section 1 of this Agreement (other than a Non-Control
Transaction) shall be consummated, or
(iii) the first date on which at least thirty percent (30%) of
the members of the Board of Directors of WENDY'S are not
INCUMBENT DIRECTORS; or
(b) the date when the EMPLOYMENT TERM shall be terminated by WENDY'S
for CAUSE or by the EXECUTIVE without GOOD REASON (as such terms are
defined in Section 4 of this Agreement); or
4
<PAGE> 5
(c) the death of the EXECUTIVE.
Section 2. Duties, Nature and Place of Employment. During the
EMPLOYMENT TERM, the EXECUTIVE shall provide WENDY'S with such executive,
financial, administrative, and consulting services in managing and directing
WENDY'S business as may be required by the EXECUTIVE'S job description, as
attached hereto, or as amended by the agreement of the parties hereafter, or
reasonably requested and directed from time to time by action of WENDY'S Board
of Directors. The EXECUTIVE shall at all times faithfully, industriously and to
the best of his ability and talent perform all of the duties that may be
required or requested of him pursuant to the express terms and conditions of
this Agreement. Such duties shall be performed in Franklin County, Ohio and, on
a temporary basis, at such other place or places as the interests, needs,
business and opportunities of WENDY'S and of its subsidiaries shall reasonably
require.
Section 3. Remuneration during the EMPLOYMENT TERM. During the
EMPLOYMENT TERM, the EXECUTIVE shall receive from WENDY'S, as a minimum, the
salary, benefits and perquisites being paid to or afforded him immediately prior
to the date of occurrence of the CHANGE IN CONTROL provided that such salary
shall be increased as of the EXECUTIVE'S established annual salary review date
in each calendar year by a percentage at least as great as the annual increase
in the Consumer Price Index for All Urban Consumers for All Items most recently
published by the United States Bureau of Labor Statistics prior to such salary
review date. Such salary shall be paid to the EXECUTIVE on the same days of each
month as WENDY'S pays its other employees. The EXECUTIVE shall also receive an
annual bonus each year at least equal to the same annual bonus he received in
the twelve months preceding the CHANGE IN CONTROL; provided, however, that if
the bonus plan in which the EXECUTIVE participated during the twelve months
preceding the CHANGE IN CONTROL is not the same as the bonus plan in which the
EXECUTIVE is participating following the CHANGE IN CONTROL, with respect to the
twelve month period preceding the CHANGE IN CONTROL, the EXECUTIVE will be
deemed to have received a bonus equal to that received by the EXECUTIVE'S
predecessor in his position, (or, where there was not a predecessor in the same
position, equal to the average of the bonuses received by bonus plan
participants in comparable positions to the EXECUTIVE'S then current position).
The EXECUTIVE shall also be entitled to all rights afforded him under the terms
of any outstanding stock options granted him by WENDY'S and all incentive
compensation and deferred compensation programs maintained by WENDY'S in which
the EXECUTIVE was entitled to participate immediately preceding the CHANGE IN
CONTROL, or successors to such programs.
3.1 WENDY'S Board of Directors shall review annually the performance of
the EXECUTIVE, the results of operations and financial condition of
WENDY'S, together with prevailing economic conditions and other
factors, and consider and act upon:
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(a) whether to pay the EXECUTIVE an increase in salary above
the aforesaid minimum annual salary, and
(b) whether to pay the EXECUTIVE a bonus in excess of the
minimum bonus required aforesaid; provided, however, if
WENDY'S pays a bonus to any of its other full-time exempt
employees, WENDY'S shall pay the EXECUTIVE a bonus computed on
the same basis as the bonus paid to such other employees if
the bonus so computed is in excess of the minimum bonus
required to be paid the EXECUTIVE pursuant to this Section 3.
3.2 WENDY'S shall cause the EXECUTIVE, his spouse and dependent
children to be enrolled in and covered by group life, hospitalization,
major medical and disability income insurance coverages under insurance
plans and executive medical reimbursement plans not less favorable to
the EXECUTIVE than the plans of such description in effect immediately
prior to the date of occurrence of the CHANGE IN CONTROL.
3.3 WENDY'S shall cause the EXECUTIVE to be a participant in one or
more retirement income (pension) plans which afford participation and
benefits to the EXECUTIVE on a basis not less favorable to the
EXECUTIVE than the plans of such description in effect immediately
prior to the date of occurrence of the CHANGE IN CONTROL; provided,
however, that if WENDY'S extends to any executive officer of WENDY'S
(or of any of its subsidiaries) one or more retirement income (pension)
plans affording participation and benefits more favorable than those
required by the preceding sentence, then WENDY'S shall cause the
EXECUTIVE to be a participant in the latter plan(s).
3.4 WENDY'S shall cause reimbursement to be paid promptly to the
EXECUTIVE for all expenses reasonably incurred by him in connection
with performing his duties pursuant hereto.
3.5 In the event that the insurance and reimbursement plan benefits
required by paragraph 3.2, above, or the retirement income (pension)
plan benefits required by paragraph 3.3, above, are not actually
available to the EXECUTIVE under the terms of the plan(s) or applicable
law, then WENDY'S shall make available to the EXECUTIVE an equivalent
benefit, or an amount of cash consideration sufficient to fund or
purchase an equivalent benefit, computed as if he had received a full
year of service (for vesting and benefit purposes) for each of his
years of service with WENDY'S or any affiliate or subsidiary, including
any years for which he is entitled to payment under Section 3 during
the EMPLOYMENT TERM.
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Section 4. Termination of Employment of the EXECUTIVE during the
EMPLOYMENT TERM. The EXECUTIVE'S employment hereunder may be terminated under
the following circumstances:
4.1 Cause. WENDY'S may terminate the EXECUTIVE'S employment under this
Agreement for "CAUSE." A termination for CAUSE is a termination by
reason of the Board's good faith determination that the EXECUTIVE (a)
willfully and continually failed to substantially perform his duties
with WENDY'S (other than a failure resulting from the EXECUTIVE'S
incapacity due to physical or mental illness) after a written demand
for substantial performance is delivered to the EXECUTIVE by the Board
of Directors which specifically identifies the manner in which the
Board of Directors believes that the EXECUTIVE has not substantially
performed his duties and such failure substantially to perform
continues for at least fourteen (14) days, or (b) has willfully engaged
in conduct which is demonstrably and materially injurious to WENDY'S,
monetarily or otherwise, or (c) has otherwise materially breached this
Agreement (including, without limitation, a voluntary termination of
the EXECUTIVE'S employment by the EXECUTIVE during the EMPLOYMENT
TERM). No act, nor failure to act, on the EXECUTIVE'S part, shall be
considered "willful" unless he has acted, or failed to act, with an
absence of good faith and without a reasonable belief that his action
or failure to act was in the best interest of WENDY'S. Notwithstanding
the foregoing, the EXECUTIVE'S employment shall not be deemed to have
been terminated for CAUSE unless and until (1) there shall have been
delivered to the EXECUTIVE a copy of a written notice setting forth
that the EXECUTIVE was guilty of conduct set forth above in clause (a),
(b) or (c) of the first sentence of this Section 4.1 and specifying the
particulars thereof in detail, and (2) the EXECUTIVE shall have been
provided an opportunity to be heard by the Board of Directors of
WENDY'S (with the assistance of EXECUTIVE'S counsel).
4.2 (a) Good Reason. The EXECUTIVE may terminate his employment for
"GOOD REASON." For purposes of this Agreement, GOOD REASON shall mean
the occurrence after a CHANGE IN CONTROL of any of the events or
conditions described in Subsections (1) through (6) hereof without the
EXECUTIVE'S express written consent:
(1) a change in the EXECUTIVE'S status, title, position or
responsibilities (including reporting responsibilities) which,
in the EXECUTIVE'S reasonable judgment, does not represent a
promotion from his status, title, position or responsibilities
as in effect immediately prior thereto; the assignment to the
EXECUTIVE of any duties or responsibilities which, in the
EXECUTIVE'S reasonable judgment, are inconsistent with such
status, title, position or responsibilities; or any removal of
the EXECUTIVE from or failure to reappoint or reelect him to
any of such positions, except in connection with the
termination of his
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employment for DISABILITY, CAUSE, as a result of his death or
by the EXECUTIVE other than for GOOD REASON;
(2) a reduction by WENDY'S in the EXECUTIVE'S base salary as
in effect immediately prior to the CHANGE IN CONTROL or as the
same may be increased from time to time, or a failure to
increase EXECUTIVE'S annual base salary as of his established
annual salary review date in any calendar year by a percentage
at least as great as the annual increase in the Consumer Price
Index for All Urban Consumers and for All Items most recently
published by the United States Bureau of Labor Statistics
prior to such salary review date;
(3) WENDY'S requiring the EXECUTIVE to be based at any place
outside a 30-mile radius from the EXECUTIVE'S business office
location immediately prior to the CHANGE IN CONTROL, except
for reasonably required travel on WENDY'S business which is
not materially greater than such travel requirements prior to
the CHANGE IN CONTROL;
(4) the failure by WENDY'S to continue to provide the
EXECUTIVE with the compensation and benefits substantially
similar (in terms of benefit levels and/or reward
opportunities) to those provided for under this Agreement and
those provided to him under any of the employee benefit plans
in which the EXECUTIVE becomes a participant, or the taking of
any action by WENDY'S which would directly or indirectly
materially reduce any of such benefits or deprive the
EXECUTIVE of any material fringe benefit enjoyed by him at the
time of the CHANGE IN CONTROL;
(5) any material breach by WENDY'S of any provision of this
Agreement; and
(6) the failure of WENDY'S to notify the EXECUTIVE within the
30-day period specified in Section 17 hereof that WENDY'S has
obtained a satisfactory agreement from a successor or assign
of WENDY'S to assume and agree to perform this Agreement, as
contemplated in such Section 17.
(b) The EXECUTIVE'S right to terminate his employment pursuant to this
Section 4.2 shall not be affected by his incapacity due to physical or
mental illness.
4.3 Notice of Termination. Any purported termination by WENDY'S or by
the EXECUTIVE shall be communicated by written NOTICE OF TERMINATION to
the other. For purposes of this Agreement, a "NOTICE OF TERMINATION"
shall mean a notice which indicates the specific termination provision
in this Agreement relied upon and shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination
of the
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EXECUTIVE'S employment under the provision so indicated. If the
EXECUTIVE'S employment is terminated by WENDY'S for any reason, NOTICE
OF TERMINATION must be given at least 30 days prior to the EXECUTIVE'S
TERMINATION DATE (as defined below). For purposes of this Agreement, no
such purported termination shall be effective without such NOTICE OF
TERMINATION.
4.4 Termination Date, Etc. "TERMINATION DATE" shall mean if the
EXECUTIVE'S employment is terminated for any reason other than due to
death, the date specified in the Notice of Termination.
Section 5. Compensation Upon Termination. Upon termination of the
EXECUTIVE'S employment during the EMPLOYMENT TERM, the EXECUTIVE shall be
entitled to the following benefits:
5.1 If the EXECUTIVE'S employment shall be terminated by WENDY'S for
CAUSE or by the EXECUTIVE other than for GOOD REASON, WENDY'S shall pay
the EXECUTIVE his full base salary and accrued vacation pay through the
TERMINATION DATE, plus any benefits or awards which pursuant to the
terms of any compensation or benefit plan have been earned or become
payable, but which have not yet been paid to the EXECUTIVE and WENDY'S
shall have no further obligations to the EXECUTIVE under this
Agreement. The EXECUTIVE'S benefits thereafter shall be determined in
accordance with WENDY'S employee benefit plans and other applicable
programs and practices then in effect.
5.2 If the EXECUTIVE'S employment terminates by reason of the
EXECUTIVE'S death, WENDY'S shall pay the EXECUTIVE'S beneficiaries his
full base salary and accrued vacation pay through the TERMINATION DATE,
plus any benefits or awards which pursuant to the terms of any
compensation or benefit plan have been earned or become payable, but
which have not yet been paid to the EXECUTIVE and a pro rata portion of
any bonus or incentive award that the EXECUTIVE would have been
entitled to receive in respect of the calendar year in which the
EXECUTIVE'S TERMINATION DATE occurs had he continued in employment
until the end of such calendar year, payable at the same time that such
bonuses or awards are payable to other WENDY'S employees. In the case
of the EXECUTIVE'S death, the EXECUTIVE'S beneficiaries' benefits shall
be determined in accordance with WENDY'S employee benefit plans and
other applicable programs and practices then in effect.
5.3 If the EXECUTIVE'S employment by WENDY'S shall be terminated (i) by
WENDY'S other than for CAUSE or death, or (ii) by the EXECUTIVE for
GOOD REASON, then the EXECUTIVE shall be entitled to the benefits
provided below:
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(a) WENDY'S shall pay the EXECUTIVE his full base salary and accrued
vacation pay through the TERMINATION DATE, plus the maximum benefits or
awards which pursuant to the terms of any compensation or benefit plan
have been earned or become payable as if all objectives including the
completion of the award cycle thereunder had been met, but which have
not yet been paid to the EXECUTIVE, and a pro rata portion of any bonus
or incentive award that the EXECUTIVE would have been entitled to
receive in respect of the calendar year in which the EXECUTIVE'S
TERMINATION DATE occurs had he continued in employment until the end of
such calendar year, calculated (i) if the EXECUTIVE is participating in
either the Senior Executive Earnings Maximization Plan ("SEEMP") or the
Earnings Maximization Plan ("EMP"), with the bonus pool being
determined (A) as if the target level two (2) entry point had been
achieved by WENDY'S for such year, (B) if actual performance is
measurable against the targeted performance over a period of less than
one year, based on the actual Wendy's performance up to the EXECUTIVE'S
TERMINATION DATE (or if the TERMINATION DATE occurs in the year in
which a CHANGE IN CONTROL occurs, up to the date of the CHANGE IN
CONTROL, if later), or (C) at the level established in the preceding
year, whichever is greater and, in the case of the EMP, as if the
EXECUTIVE'S percentage interest in the plan's bonus pool had been equal
to his percentage interest in the pool in the preceding year (or if he
was not a participant in the bonus pool in the preceding year, the
EXECUTIVE will be deemed to have had a percentage interest equal to the
percentage interest of the EXECUTIVE'S predecessor in his position, or,
where there was not a predecessor in the same position, equal to the
average of the percentage interests of bonus plan participants in
comparable positions to the Executive's then current position) and/or
(ii) if the EXECUTIVE is not participating in either the SEEMP or the
EMP or participates in another bonus plan in addition to the SEEMP or
the EMP, as if all performance targets under the applicable plan had
been fully met at the highest level by WENDY'S and by the EXECUTIVE
and, if applicable, the EXECUTIVE'S percentage interest in any bonus
pool had been at least equal to his percentage interest in the
preceding year (or if he was not a participant in the plan in the
preceding year, the EXECUTIVE will be deemed to have had a percentage
interest equal to the percentage interest of the EXECUTIVE'S
predecessor in his position, or, where there was not a predecessor in
the same position, equal to the average of the percentage interests of
bonus plan participants in comparable positions to the Executive's then
current position); provided, however, that the bonus payment provided
for in this Section 5.3(a) shall be reduced (but not below zero) by the
amount, if any, payable to the EXECUTIVE in respect of the year in
which the EXECUTIVE'S TERMINATION DATE occurs under the provisions of
the SEEMP, EMP or other bonus or incentive plan, as applicable.
(b) as severance pay and in lieu of any further salary for periods
subsequent to the TERMINATION DATE, WENDY'S shall pay to the EXECUTIVE
in a single payment an amount in cash equal to three times the sum of
(A) the
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EXECUTIVE'S base salary at the rate in effect at the time Notice of
Termination is given and (B) one third of the sum of the annual bonuses
paid or payable to the EXECUTIVE in respect of the three calendar years
preceding the calendar year in which the EXECUTIVE'S TERMINATION DATE
occurs; provided, however, that if the EXECUTIVE had not been a
participant in each of those three calendar years in the annual bonus
plan in which he was participating as of his TERMINATION DATE, then
with respect to any calendar year during the relevant three-year period
for which the EXECUTIVE was not so participating, the EXECUTIVE will be
deemed to have received a bonus equal to that received by the
EXECUTIVE'S predecessor in his position, (or, where there was not a
predecessor in the same position, equal to the average of the bonuses
received by bonus plan participants in comparable positions to the
Executive's then current position).
(c) as additional severance, WENDY'S shall pay to the EXECUTIVE in a
single payment an amount equal to the excess of (i) the present value
of the retirement benefits attributable to employer contributions the
EXECUTIVE would have accrued under WENDY'S tax-qualified retirement
plan and supplemental plan if he had remained an employee for three
years following the TERMINATION DATE and had continued to earn his base
salary in effect at the TERMINATION DATE over (ii) the present value of
his vested accrued benefits under such plans attributable to employer
contributions as of the TERMINATION DATE. Present values shall be
determined using the assumptions stated in WENDY'S tax-qualified
retirement plan.
(d) for the three years following the TERMINATION DATE, WENDY'S shall
at its expense continue on behalf of the EXECUTIVE and his dependents
and beneficiaries the life insurance, disability, medical, dental and
hospitalization benefits which were being provided to the EXECUTIVE at
the time NOTICE OF TERMINATION is given. The benefits provided in this
Section 5.3(d) shall be no less favorable to the EXECUTIVE, in terms of
amounts and deductibles and costs to him, than the coverage provided
the EXECUTIVE under the plans providing such benefits at the time
NOTICE OF TERMINATION is given (or, if the EXECUTIVE'S employment is
terminated after a CHANGE IN CONTROL, at the time of the CHANGE IN
CONTROL if more favorable to the EXECUTIVE). WENDY'S obligation
hereunder with respect to the foregoing benefits shall be limited to
the extent that the EXECUTIVE obtains any such benefits pursuant to a
subsequent employer's benefit plans, in which case WENDY'S may reduce
the coverage of any benefits it is required to provide the EXECUTIVE
hereunder as long as the aggregate coverage of the combined benefit
plans is no less favorable to the EXECUTIVE in terms of amounts and
deductibles and costs to him, than the coverage provided hereunder by
WENDY'S to the EXECUTIVE at the time the NOTICE OF TERMINATION is given
(or, if the EXECUTIVE'S employment is terminated after a CHANGE IN
CONTROL, at the time of the CHANGE IN CONTROL if more favorable to the
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EXECUTIVE). This paragraph (d) shall not be interpreted so as to limit
any benefits to which the EXECUTIVE or his dependents may be entitled
under any of WENDY'S employee benefit plans, programs or practices
following the EXECUTIVE'S termination of employment.
(e) WENDY'S shall offer to sell to the EXECUTIVE at book value the
automobile provided to the EXECUTIVE at the time of the EXECUTIVE'S
termination of employment.
(f) (1) Effect of Section 280G of the Internal Revenue Code. In the
event it shall be determined that any payment (other than the payment
provided for in this Section 5.3(f)) or distribution of any type to or
for the benefit of the EXECUTIVE, by WENDY'S, any affiliate of WENDY'S,
any Person who acquires ownership or effective control of WENDY'S or
ownership of a substantial portion of WENDY'S assets (within the
meaning of Section 280G of the Internal Revenue Code of 1986, as
amended (the "Code"), and the regulations thereunder) or any Affiliate
of such Person, whether paid or payable or distributed or distributable
pursuant to the terms of this Agreement or otherwise (the "Payments"),
is or will be subject to the excise tax imposed by Section 4999 of the
Code or any interest or penalties with respect to such excise tax (such
excise tax, together with any such interest and penalties, are
collectively referred to as the "Excise Tax"), then the EXECUTIVE shall
be entitled to receive an additional payment (a "Reimbursement
Payment") in an amount such that after payment by the EXECUTIVE of all
taxes (including any interest or penalties imposed with respect to such
taxes), including any income tax, employment tax or Excise Tax, imposed
upon the Reimbursement Payment, the EXECUTIVE retains an amount of the
Reimbursement Payment equal to the Excise Tax imposed upon the
Payments.
(2) All mathematical determinations, and all determinations as
to whether any of the Payments are "parachute payments" (within the
meaning of Section 280G of the Code), that are required to be made
under this Section 5.3(f), including determinations as to whether a
Reimbursement Payment is required, the amount of such Reimbursement
Payment and amounts relevant to the last sentence of this Section
5.3(f)(2), shall be made by an independent accounting firm selected by
the EXECUTIVE from among the five (5) largest accounting firms in the
United States (the "Accounting Firm"), which shall provide its
determination (the "Determination"), together with detailed supporting
calculations regarding the amount of any Reimbursement Payment and any
other relevant matter, both to WENDY'S and the EXECUTIVE by no later
than ten (10) days following the Termination Date, if applicable, or
such earlier time as is requested by WENDY'S or the EXECUTIVE (if the
EXECUTIVE reasonably believes that any of the Payments may be subject
to the Excise Tax). If the Accounting Firm determines that no Excise
Tax is payable by the EXECUTIVE, it shall furnish the EXECUTIVE and
WENDY'S with an opinion reasonably
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acceptable to the EXECUTIVE and WENDY'S that no Excise Tax is payable
(including the reasons therefor) and that the EXECUTIVE has substantial
authority not to report any Excise Tax on his federal income tax
return. If a Reimbursement Payment is determined to be payable, it
shall be paid to the EXECUTIVE within twenty (20) days after the
Determination (and all accompanying calculations and other material
supporting the Determination) is delivered to WENDY'S by the Accounting
Firm. Any determination by the Accounting Firm shall be binding upon
WENDY'S and the EXECUTIVE, absent manifest error. As a result of
uncertainty in the application of Section 4999 of the Code at the time
of the initial determination by the Accounting Firm hereunder, it is
possible that Reimbursement Payments not made by WENDY'S should have
been made ("Underpayment"), or that Reimbursement Payments will have
been made by WENDY'S which should not have been made ("Overpayments").
In either such event, the Accounting Firm shall determine the amount of
the Underpayment or Overpayment that has occurred. In the case of an
Underpayment, the amount of such Underpayment (together with any
interest and penalties payable by the EXECUTIVE as a result of such
Underpayment) shall be promptly paid by WENDY'S to or for the benefit
of the EXECUTIVE. In the case of an Overpayment, the EXECUTIVE shall,
at the direction and expense of WENDY'S, take such steps as are
reasonably necessary (including the filing of returns and claims for
refund), follow reasonable instructions from, and procedures
established by, WENDY'S, and otherwise reasonably cooperate with
WENDY'S to correct such Overpayment, provided, however, that (i) the
EXECUTIVE shall not in any event be obligated to return to WENDY'S an
amount greater than the net after-tax portion of the Overpayment that
he has retained or has recovered as a refund from the applicable taxing
authorities and (ii) if a Reimbursement Payment is determined to be
payable, this provision shall be interpreted in a manner consistent
with an intent to make the EXECUTIVE whole, on an after-tax basis, from
the application of the Excise Tax, it being understood that the
correction of an Overpayment may result in the EXECUTIVE repaying to
WENDY'S an amount which is less than the Overpayment. The cost of all
such determinations made pursuant to this Section 5.3(f) shall be paid
by WENDY'S.
5.4 The amounts provided for in Sections 5.1, 5.2 and 5.3(a), (b) and
(c) shall be paid within five days after the EXECUTIVE'S TERMINATION
DATE.
5.5 The EXECUTIVE shall not be required to mitigate the amount of any
payment provided for in this Agreement by seeking other employment or
otherwise and no such payment shall be offset or reduced by the amount
of any compensation or benefits provided to the EXECUTIVE in any
subsequent employment.
Section 6. Effect of a CHANGE IN CONTROL. Upon the occurrence of any
CHANGE IN CONTROL, (a) any options to purchase shares of common stock of
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WENDY'S and any stock appreciation rights granted by WENDY'S to the EXECUTIVE
which are not yet fully vested and exercisable shall become fully vested and
exercisable, and (b) any restrictions remaining at that time on any stock
awarded to the EXECUTIVE by WENDY'S shall lapse.
Section 7. Fees and Expenses. WENDY'S shall pay all reasonable legal
fees and related expenses (including the costs of experts, evidence and counsel)
incurred in good faith by the EXECUTIVE as they become due as a result of (a)
the termination of the EXECUTIVE'S employment by WENDY'S or by the EXECUTIVE for
GOOD REASON (including all such fees and expenses, if any, incurred in
contesting, defending or disputing the basis for any such termination of
employment), (b) the EXECUTIVE'S hearing before the Board of Directors of
WENDY'S as contemplated in Section 4.1 of this Agreement, or (c) the EXECUTIVE
seeking to obtain or enforce any right or benefit provided by this Agreement or
by any other plan or arrangement maintained by WENDY'S under which the EXECUTIVE
is or may be entitled to receive benefits.
Section 8. Benefits Protection Trust. WENDY'S shall establish a
BENEFITS PROTECTION TRUST for the benefit of the EXECUTIVE and other executives
with employment agreement with the independent bank as trustee. Such BENEFITS
PROTECTION TRUST shall be established pursuant to a separate TRUST AGREEMENT.
The terms and conditions of the BENEFITS PROTECTION TRUST shall be governed, in
all respects, by the TRUST AGREEMENT. Prior to a CHANGE IN CONTROL, WENDY'S
shall transfer to the BENEFITS PROTECTION TRUST assets at least equal to the sum
of (a) the present value of all benefits that would be payable to the EXECUTIVE
and all the other executives if they were all terminated by WENDY'S without
CAUSE immediately following a CHANGE IN CONTROL and (b) the estimated amount
needed to pay for any legal fees the EXECUTIVE and the other executives may
incur in enforcing their rights under their employment agreements. All payments
required under this Agreement on account of the EXECUTIVE'S termination of
employment by WENDY'S without CAUSE following a CHANGE IN CONTROL shall be paid
from the BENEFITS PROTECTION TRUST to the extent not otherwise paid by WENDY'S.
Section 9. Protection of Business. Notwithstanding anything to the
contrary in this Agreement:
9.1 At all times during the EMPLOYMENT TERM while the EXECUTIVE is
employed by WENDY'S, the EXECUTIVE will not participate as a partner,
joint venturer, officer, director, employee, or representative, or have
any direct financial interest in, any business or enterprise conducting
a quick service restaurant business in the United States, other than a
business or enterprise engaged in operating restaurants under a
franchise granted by WENDY'S or any of its subsidiaries; provided, that
the ownership by EXECUTIVE of securities of a public corporation shall
not be a violation of this subparagraph so long as (a) the EXECUTIVE
does not own, directly or indirectly, more than five percent (5%) of
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any class of the securities of such corporation, and (b) the value of
such securities does not exceed ten percent (10%) of the net worth of
the EXECUTIVE; and provided further that ownership by EXECUTIVE of
securities of WENDY'S or any successor to WENDY'S by merger or other
form of transaction contemplated by subparagraph (b) or (c) of Section
1 hereof shall not be a violation of this subparagraph.
9.2 The EXECUTIVE will not at any time (during or after the expiration
of the EMPLOYMENT TERM) divulge, disclose, reveal or communicate to any
person, firm, corporation, partnership, joint venture or other entity,
directly or indirectly, any trade secrets or other information which
the EXECUTIVE may have obtained during the course of his employment by
WENDY'S in respect of any matters affecting or relating to the fast
food restaurant business of WENDY'S or its subsidiaries, including,
without limitation, any of their plans, policies, business practices,
finances, recipes, methods of operation, franchises or other
information known to the EXECUTIVE to be considered by WENDY'S to be
confidential information.
9.3 The restrictions on competition and other restrictions imposed upon
the EXECUTIVE by this Section 9 may be enforced by WENDY'S by an action
for an injunction, it being agreed (in view of the general practical
impossibility of determining by computation or legal proof the exact
amount of damages, if any, resulting to WENDY'S from a violation by the
EXECUTIVE of the provisions of this Section 9) that there would be no
adequate remedy at law for any breach by the EXECUTIVE of any such
restriction.
Section 10. Notices and Payments. All payments required or permitted to
be made under the provisions of this Agreement, and all notices and other
communications required or permitted to be given or delivered under this
Agreement to WENDY'S or to the EXECUTIVE, which notices or communications must
be in writing, shall be deemed to have been given if delivered by hand, or
mailed by first class mail, addressed as follows:
10.1 if to WENDY'S, to:
Chief Executive Officer
WENDY'S INTERNATIONAL, INC.
4288 West Dublin Granville Road
P. O. Box 256
Dublin, Ohio 43017
With a copy (except as to payments) to:
General Counsel
WENDY'S INTERNATIONAL, INC.
4288 West Dublin-Granville Road
P. O. Box 256
Dublin, Ohio 43017
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10.2 if to EXECUTIVE, to:
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WENDY'S or the EXECUTIVE may, by notice given to the other from time to
time, designate a different address for making payments required to be made, and
for the giving of notices or other communications required or permitted to be
given, to the party designating such new address. Any payment, notice or other
communication required or permitted to be given in accordance with this
Agreement shall be deemed to have been given if and when placed in the U.S.
Mail, addressed and mailed as provided above.
Section 11. Payroll Taxes. Any payment required or permitted to be made
or given to the EXECUTIVE pursuant to this Agreement shall be subject to the
withholding and other requirements of applicable laws, and to the deduction
requirements of any benefit plan maintained by WENDY'S in which the EXECUTIVE is
a participant, and to all reporting, filing and other requirements in respect of
such payments, and WENDY'S shall promptly satisfy all such requirements.
Section 12. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Ohio.
Section 13. Duplicate Originals. This Agreement may be executed in one
or more counterparts, each of which shall be deemed to be a duplicate original,
but all of which, taken together, shall constitute a single instrument.
Section 14. Captions. The captions contained in this Agreement are
included only for convenience of reference and do not define, limit, explain or
modify this Agreement or its interpretation, construction or meaning.
Section 15. Severability. If any provision of this Agreement or the
application of any provision to any person or any circumstances shall be
determined to be invalid or unenforceable, then such determination shall not
affect any other provision of this Agreement or the application of said
provision to any other person or circumstance, all of which other provisions
shall remain in full force and effect. It is the intention of WENDY'S and the
EXECUTIVE that if any provision of this Agreement is susceptible of two or more
constructions, one of which would render the provision enforceable and other or
others of which would render the provision unenforceable, then the provision
shall have the meaning which renders it enforceable.
16
<PAGE> 17
Section 16. Number and Gender. When used in this Agreement, the number
and gender of each pronoun shall be construed to be such number and gender as
the context, circumstances or its antecedent may require.
Section 17. Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns (including successive,
as well as immediate, successors and assigns) of WENDY'S; provided, however,
that the obligations of this Agreement may not be transferred by WENDY'S;
provided, however, that if WENDY'S transfers to any other person substantially
all of its business and assets by merger, consolidation, sale of assets or
otherwise, WENDY'S must transfer its obligations hereunder to such other person
and such other person must accept such transfer and assume the obligations of
WENDY'S imposed hereby. WENDY'S shall notify the EXECUTIVE in writing within the
thirty-day period following any transfer of business and assets that the
transferee has accepted the transfer and assumption of WENDY'S obligations under
this Agreement. This Agreement shall inure to the benefit of and be binding upon
the heirs and assigns (including successive, as well as immediate, assigns) of
the EXECUTIVE; provided, however, that the rights of the EXECUTIVE under this
Agreement may be assigned only to his personal representative or by will or
pursuant to applicable laws of descent and distribution.
Section 18. Prior Agreement. This Agreement amends and restates the
prior employment agreement between the EXECUTIVE and WENDY'S dated as of
________________, ______ (the "Prior Agreement"), and upon the execution of this
Agreement, the Prior Agreement shall be superceded and shall be of no further
force and effect.
Section 19. Arbitration. Any dispute arising under or in connection
with this Agreement shall be submitted to arbitration by the American
Arbitration Association in Columbus, Ohio, and the determination of the American
Arbitration Association shall be final and absolute. The arbitrator shall be
governed by the duly promulgated commercial arbitration rules of the American
Arbitration Association and the pertinent provisions of the laws of the State of
Ohio relating to arbitration. During the pendency of such arbitration
proceedings, the EXECUTIVE shall be entitled to the full benefits provided by
the Agreement.
[Remainder of page intentionally left blank.]
17
<PAGE> 18
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed to be effective as of the date first above written.
WENDY'S:
Wendy's International, Inc.
By
------------------------------------
EXECUTIVE:
--------------------------------------
an individual
18
<PAGE> 1
Exhibit 10(g)
DESCRIPTION OF EARNINGS MAXIMIZATION PLAN
The Earnings Maximization Plan (the "Plan") was adopted by the Board of
Directors in 1998 to provide incentive cash compensation to key officers of the
Company. The Plan replaced the prior Earnings Maximization Plan that had been
originally adopted by the Board of Directors in 1988. The Plan covers fiscal
1999 through fiscal 2003.
Under the Plan, a bonus pool is funded only when the Company achieves
specified Earnings Per Share targets, which increase annually. These targets are
set by the Compensation Committee of the Board of Directors. The bonus pool for
any fiscal year in which a target is achieved will initially be calculated as
Earnings Per Share multiplied by the funding pool level. The funding pool level
is specified by the Compensation Committee. The amount of the bonus pool as so
calculated will then be multiplied by either 105%, 110% or 115% if the Company's
Return On Assets equals or exceeds the rates specified by the Compensation
Committee. The resulting product will be the final bonus pool distributed.
The Chief Executive Officer determines the key officers of the Company
who will participate in the Plan and the amount of the bonus pool that will be
allocated to each participant (provided that aggregate payments cannot exceed
the specified bonus pool amount). Participants in the Senior Executive Earnings
Maximization Plan (the "SEEMP") cannot participate in the Plan.
The Plan provides for an adjustment to the calculation of Earnings Per
Share where the statutory tax rates applicable to the Company change.
In the event of a "change in control" of the Company, bonuses will be
paid in the same manner as set forth in the SEEMP. For the purposes of the Plan,
"Earnings Per Share" and "Return On Assets" have the same meaning as set forth
in the SEEMP.
<PAGE> 1
Exhibit 10(h)
DESCRIPTION OF MANAGEMENT INCENTIVE PLAN
The Management Incentive Plan (the "Plan") was adopted by the Executive
Committee of the Company to provide incentive cash compensation to key officers
and other employees of the Company. The Plan applies only to regular full-time
management and administrative employees of the Company at or above a specified
grade level. Participants in the Company's Senior Executive Earnings
Maximization Plan are not eligible to participate in the Plan.
The Plan establishes a year-end cash payout opportunity, based on the
financial success of the Company and each individual participant's performance.
The payout for each fiscal year is determined based on the Company's actual
earnings per share and return on assets compared to the budgeted earnings per
share and return on assets. The Company's actual earnings per share and return
on assets for fiscal 1998 were calculated excluding the effect of the
non-recurring charges recorded in the fourth quarter of 1998.
Each participant in the Plan has a targeted bonus percentage based on
such participant's grade level. The targeted bonus percentages ranged from 15% -
33% of the participant's base salary for the 1998 fiscal year.
The Company's earnings per share and return on assets performance
establishes a "bonus factor" of between 0% and 225%. For each fiscal year, the
same bonus factor percentage applies to all participants. The actual bonus
amount paid to each participant is calculated by multiplying such participant's
base salary times the targeted bonus percentage times the bonus factor
percentage. Each participant is only eligible to receive a payout under the Plan
if the participant's most recent performance appraisal rating was one of the
three highest categories.
<PAGE> 1
- --------------------------------------------------------------------------------
WENDY'S INTERNATIONAL, INC. AND SUBSIDIARIES
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
<TABLE>
<CAPTION>
JURISDICTION
OF INCORPORATION OR
ORGANIZATION
SUBSIDIARY COUNTRY STATE
<S> <C> <C>
Wendy's Old Fashioned Hamburgers of New York, Inc. U.S. Ohio
Wendy's Capital Corporation U.S. Virginia
Wendy Restaurant, Inc. U.S. Delaware
Wendy's of Denver, Inc. U.S. Colorado
The New Bakery Co. of Ohio, Inc. U.S. Ohio
Delavest, Inc. U.S. Delaware
Wentexas, Inc. U.S. Texas
Restaurant Finance Corporation U.S. Ohio
Wendy's Restaurants of Canada Inc. Canada
Wendy's of N.E. Florida, Inc. U.S. Florida
Wendy's Old Fashioned Hamburger Restaurants Pty. Ltd. Australia
Wendy's Restaurants (NZ) Limited New Zealand
Wendcreek Venture U.S. Florida
M & W (U.K.) Limited United Kingdom
WendServe (Korea), Inc. U.S. Delaware
Wendy's Restaurants (Ireland) Limited Ireland
WendServe, Inc. U.S. Delaware
Wenark, Inc. U.S. Florida
Wendy's Limited United Kingdom
WENTIM, LTD. Canada
Delcan, Inc. U.S. Delaware
Delcan Finance No. 1, Inc. Canada
Delcan Finance No. 2, Inc. Canada
Delcan Finance No. 3, Inc. Canada
Delcan Finance No. 4, Inc. Canada
Alberta (Delaware) Inc. U.S. Delaware
Tim Donut U.S. Limited, Inc. U.S. Florida
T.H.D. Donut (Delaware), Inc. U.S. Delaware
The TDL Group Ltd. Canada
Barhav Developments Limited Canada
TIMWEN Partnership Canada
Markdel, Inc. U.S. Delaware
Findel Corp. U.S. Delaware
Domark Investments, Inc. U.S. Delaware
Wendy's Financing I U.S. Delaware
THD Nevada, Inc. U.S. Nevada
The THD Group U.S. Ohio
The TDL Group Canada
The TDL Group No. 2 Canada
The TDL Group Co. Canada
THD RE No. 1 Co. Canada
TH N.S. Finance No. 1 Co. Canada
3020376 Nova Scotia Company Canada
</TABLE>
<PAGE> 1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS: That the undersigned officer and/or
director of Wendy's International, Inc. (the "Company"), which is about to file
a Form 10-K with the Securities and Exchange Commission, under the provisions of
the Securities Exchange Act of 1934, as amended, hereby constitutes and appoints
Frederick R. Reed, Leon M. McCorkle, Jr. and Lawrence A. Laudick as his or her
true and lawful attorneys-in-fact and agents, with full power of substitution
and resubstitution, for him or her and in his or her name, place and stead, in
any and all capacities, to sign the Form 10-K, any and all amendments and
documents related thereto, and to file the same, and all exhibits thereto, and
other documents relating thereto, with the Securities and Exchange Commission,
and grants unto each of said attorneys-in-fact and substitute or substitutes
full power and authority to do each and every act and thing requested and
necessary to be done in and about the premises as fully to all intents and
purposes as he or she might do in person, and hereby ratifies and confirms all
things that each of said attorneys-in-fact and substitute or substitutes may
lawfully do and seek to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 31st day of March, 1999.
/s/ R. David Thomas
-----------------------------------
R. David Thomas, Senior Chairman of
the Board & Founder, Director
<PAGE> 2
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS: That the undersigned officer and/or
director of Wendy's International, Inc. (the "Company"), which is about to file
a Form 10-K with the Securities and Exchange Commission, under the provisions of
the Securities Exchange Act of 1934, as amended, hereby constitutes and appoints
Frederick R. Reed, Leon M. McCorkle, Jr. and Lawrence A. Laudick as his or her
true and lawful attorneys-in-fact and agents, with full power of substitution
and resubstitution, for him or her and in his or her name, place and stead, in
any and all capacities, to sign the Form 10-K, any and all amendments and
documents related thereto, and to file the same, and all exhibits thereto, and
other documents relating thereto, with the Securities and Exchange Commission,
and grants unto each of said attorneys-in-fact and substitute or substitutes
full power and authority to do each and every act and thing requested and
necessary to be done in and about the premises as fully to all intents and
purposes as he or she might do in person, and hereby ratifies and confirms all
things that each of said attorneys-in-fact and substitute or substitutes may
lawfully do and seek to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 31st day of March, 1999.
/s/ Ronald V. Joyce
-----------------------------------
Ronald V. Joyce, Director
<PAGE> 3
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS: That the undersigned officer and/or
director of Wendy's International, Inc. (the "Company"), which is about to file
a Form 10-K with the Securities and Exchange Commission, under the provisions of
the Securities Exchange Act of 1934, as amended, hereby constitutes and appoints
Frederick R. Reed, Leon M. McCorkle, Jr. and Lawrence A. Laudick as his or her
true and lawful attorneys-in-fact and agents, with full power of substitution
and resubstitution, for him or her and in his or her name, place and stead, in
any and all capacities, to sign the Form 10-K, any and all amendments and
documents related thereto, and to file the same, and all exhibits thereto, and
other documents relating thereto, with the Securities and Exchange Commission,
and grants unto each of said attorneys-in-fact and substitute or substitutes
full power and authority to do each and every act and thing requested and
necessary to be done in and about the premises as fully to all intents and
purposes as he or she might do in person, and hereby ratifies and confirms all
things that each of said attorneys-in-fact and substitute or substitutes may
lawfully do and seek to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 31st day of March, 1999.
/s/ Gordon F. Teter
-----------------------------------------------
Gordon F. Teter, Chairman of the Board,
Chief Executive Officer and President, Director
<PAGE> 4
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS: That the undersigned officer and/or
director of Wendy's International, Inc. (the "Company"), which is about to file
a Form 10-K with the Securities and Exchange Commission, under the provisions of
the Securities Exchange Act of 1934, as amended, hereby constitutes and appoints
Frederick R. Reed, Leon M. McCorkle, Jr. and Lawrence A. Laudick as his or her
true and lawful attorneys-in-fact and agents, with full power of substitution
and resubstitution, for him or her and in his or her name, place and stead, in
any and all capacities, to sign the Form 10-K, any and all amendments and
documents related thereto, and to file the same, and all exhibits thereto, and
other documents relating thereto, with the Securities and Exchange Commission,
and grants unto each of said attorneys-in-fact and substitute or substitutes
full power and authority to do each and every act and thing requested and
necessary to be done in and about the premises as fully to all intents and
purposes as he or she might do in person, and hereby ratifies and confirms all
things that each of said attorneys-in-fact and substitute or substitutes may
lawfully do and seek to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 31st day of March, 1999.
/s/ Ronald E. Musick
-----------------------------------
Ronald E. Musick,
Executive Vice President, Director
<PAGE> 5
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS: That the undersigned officer and/or
director of Wendy's International, Inc. (the "Company"), which is about to file
a Form 10-K with the Securities and Exchange Commission, under the provisions of
the Securities Exchange Act of 1934, as amended, hereby constitutes and appoints
Frederick R. Reed, Leon M. McCorkle, Jr. and Lawrence A. Laudick as his or her
true and lawful attorneys-in-fact and agents, with full power of substitution
and resubstitution, for him or her and in his or her name, place and stead, in
any and all capacities, to sign the Form 10-K, any and all amendments and
documents related thereto, and to file the same, and all exhibits thereto, and
other documents relating thereto, with the Securities and Exchange Commission,
and grants unto each of said attorneys-in-fact and substitute or substitutes
full power and authority to do each and every act and thing requested and
necessary to be done in and about the premises as fully to all intents and
purposes as he or she might do in person, and hereby ratifies and confirms all
things that each of said attorneys-in-fact and substitute or substitutes may
lawfully do and seek to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 31st day of March, 1999.
/s/ Paul D. House
-----------------------------------
Paul D. House, Director
<PAGE> 6
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS: That the undersigned officer and/or
director of Wendy's International, Inc. (the "Company"), which is about to file
a Form 10-K with the Securities and Exchange Commission, under the provisions of
the Securities Exchange Act of 1934, as amended, hereby constitutes and appoints
Frederick R. Reed, Leon M. McCorkle, Jr. and Lawrence A. Laudick as his or her
true and lawful attorneys-in-fact and agents, with full power of substitution
and resubstitution, for him or her and in his or her name, place and stead, in
any and all capacities, to sign the Form 10-K, any and all amendments and
documents related thereto, and to file the same, and all exhibits thereto, and
other documents relating thereto, with the Securities and Exchange Commission,
and grants unto each of said attorneys-in-fact and substitute or substitutes
full power and authority to do each and every act and thing requested and
necessary to be done in and about the premises as fully to all intents and
purposes as he or she might do in person, and hereby ratifies and confirms all
things that each of said attorneys-in-fact and substitute or substitutes may
lawfully do and seek to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 31st day of March, 1999.
/s/ Lawrence A. Laudick
-------------------------------------------
Lawrence A. Laudick
Senior Vice President, General Controller &
Assistant Secretary
<PAGE> 7
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS: That the undersigned officer and/or
director of Wendy's International, Inc. (the "Company"), which is about to file
a Form 10-K with the Securities and Exchange Commission, under the provisions of
the Securities Exchange Act of 1934, as amended, hereby constitutes and appoints
Frederick R. Reed, Leon M. McCorkle, Jr. and Lawrence A. Laudick as his or her
true and lawful attorneys-in-fact and agents, with full power of substitution
and resubstitution, for him or her and in his or her name, place and stead, in
any and all capacities, to sign the Form 10-K, any and all amendments and
documents related thereto, and to file the same, and all exhibits thereto, and
other documents relating thereto, with the Securities and Exchange Commission,
and grants unto each of said attorneys-in-fact and substitute or substitutes
full power and authority to do each and every act and thing requested and
necessary to be done in and about the premises as fully to all intents and
purposes as he or she might do in person, and hereby ratifies and confirms all
things that each of said attorneys-in-fact and substitute or substitutes may
lawfully do and seek to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 31st day of March, 1999.
/s/ W. Clay Hamner
-----------------------------------
W. Clay Hamner, Director
<PAGE> 8
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS: That the undersigned officer and/or
director of Wendy's International, Inc. (the "Company"), which is about to file
a Form 10-K with the Securities and Exchange Commission, under the provisions of
the Securities Exchange Act of 1934, as amended, hereby constitutes and appoints
Frederick R. Reed, Leon M. McCorkle, Jr. and Lawrence A. Laudick as his or her
true and lawful attorneys-in-fact and agents, with full power of substitution
and resubstitution, for him or her and in his or her name, place and stead, in
any and all capacities, to sign the Form 10-K, any and all amendments and
documents related thereto, and to file the same, and all exhibits thereto, and
other documents relating thereto, with the Securities and Exchange Commission,
and grants unto each of said attorneys-in-fact and substitute or substitutes
full power and authority to do each and every act and thing requested and
necessary to be done in and about the premises as fully to all intents and
purposes as he or she might do in person, and hereby ratifies and confirms all
things that each of said attorneys-in-fact and substitute or substitutes may
lawfully do and seek to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 31st day of March, 1999.
/s/ Ernest S. Hayeck
-----------------------------------
Ernest S. Hayeck, Director
<PAGE> 9
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS: That the undersigned officer and/or
director of Wendy's International, Inc. (the "Company"), which is about to file
a Form 10-K with the Securities and Exchange Commission, under the provisions of
the Securities Exchange Act of 1934, as amended, hereby constitutes and appoints
Frederick R. Reed, Leon M. McCorkle, Jr. and Lawrence A. Laudick as his or her
true and lawful attorneys-in-fact and agents, with full power of substitution
and resubstitution, for him or her and in his or her name, place and stead, in
any and all capacities, to sign the Form 10-K, any and all amendments and
documents related thereto, and to file the same, and all exhibits thereto, and
other documents relating thereto, with the Securities and Exchange Commission,
and grants unto each of said attorneys-in-fact and substitute or substitutes
full power and authority to do each and every act and thing requested and
necessary to be done in and about the premises as fully to all intents and
purposes as he or she might do in person, and hereby ratifies and confirms all
things that each of said attorneys-in-fact and substitute or substitutes may
lawfully do and seek to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 31st day of March, 1999.
/s/ Janet Hill
-----------------------------------
Janet Hill, Director
<PAGE> 10
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS: That the undersigned officer and/or
director of Wendy's International, Inc. (the "Company"), which is about to file
a Form 10-K with the Securities and Exchange Commission, under the provisions of
the Securities Exchange Act of 1934, as amended, hereby constitutes and appoints
Frederick R. Reed, Leon M. McCorkle, Jr. and Lawrence A. Laudick as his or her
true and lawful attorneys-in-fact and agents, with full power of substitution
and resubstitution, for him or her and in his or her name, place and stead, in
any and all capacities, to sign the Form 10-K, any and all amendments and
documents related thereto, and to file the same, and all exhibits thereto, and
other documents relating thereto, with the Securities and Exchange Commission,
and grants unto each of said attorneys-in-fact and substitute or substitutes
full power and authority to do each and every act and thing requested and
necessary to be done in and about the premises as fully to all intents and
purposes as he or she might do in person, and hereby ratifies and confirms all
things that each of said attorneys-in-fact and substitute or substitutes may
lawfully do and seek to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 31st day of March, 1999.
/s/ Thomas F. Keller
-----------------------------------
Thomas F. Keller, Director
<PAGE> 11
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS: That the undersigned officer and/or
director of Wendy's International, Inc. (the "Company"), which is about to file
a Form 10-K with the Securities and Exchange Commission, under the provisions of
the Securities Exchange Act of 1934, as amended, hereby constitutes and appoints
Frederick R. Reed, Leon M. McCorkle, Jr. and Lawrence A. Laudick as his or her
true and lawful attorneys-in-fact and agents, with full power of substitution
and resubstitution, for him or her and in his or her name, place and stead, in
any and all capacities, to sign the Form 10-K, any and all amendments and
documents related thereto, and to file the same, and all exhibits thereto, and
other documents relating thereto, with the Securities and Exchange Commission,
and grants unto each of said attorneys-in-fact and substitute or substitutes
full power and authority to do each and every act and thing requested and
necessary to be done in and about the premises as fully to all intents and
purposes as he or she might do in person, and hereby ratifies and confirms all
things that each of said attorneys-in-fact and substitute or substitutes may
lawfully do and seek to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 31st day of March, 1999.
/s/ True H. Knowles
-----------------------------------
True H. Knowles, Director
<PAGE> 12
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS: That the undersigned officer and/or
director of Wendy's International, Inc. (the "Company"), which is about to file
a Form 10-K with the Securities and Exchange Commission, under the provisions of
the Securities Exchange Act of 1934, as amended, hereby constitutes and appoints
Frederick R. Reed, Leon M. McCorkle, Jr. and Lawrence A. Laudick as his or her
true and lawful attorneys-in-fact and agents, with full power of substitution
and resubstitution, for him or her and in his or her name, place and stead, in
any and all capacities, to sign the Form 10-K, any and all amendments and
documents related thereto, and to file the same, and all exhibits thereto, and
other documents relating thereto, with the Securities and Exchange Commission,
and grants unto each of said attorneys-in-fact and substitute or substitutes
full power and authority to do each and every act and thing requested and
necessary to be done in and about the premises as fully to all intents and
purposes as he or she might do in person, and hereby ratifies and confirms all
things that each of said attorneys-in-fact and substitute or substitutes may
lawfully do and seek to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 31st day of March, 1999.
/s/ Andrew G. McCaughey
-----------------------------------
Andrew G. McCaughey, Director
<PAGE> 13
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS: That the undersigned officer and/or
director of Wendy's International, Inc. (the "Company"), which is about to file
a Form 10-K with the Securities and Exchange Commission, under the provisions of
the Securities Exchange Act of 1934, as amended, hereby constitutes and appoints
Frederick R. Reed, Leon M. McCorkle, Jr. and Lawrence A. Laudick as his or her
true and lawful attorneys-in-fact and agents, with full power of substitution
and resubstitution, for him or her and in his or her name, place and stead, in
any and all capacities, to sign the Form 10-K, any and all amendments and
documents related thereto, and to file the same, and all exhibits thereto, and
other documents relating thereto, with the Securities and Exchange Commission,
and grants unto each of said attorneys-in-fact and substitute or substitutes
full power and authority to do each and every act and thing requested and
necessary to be done in and about the premises as fully to all intents and
purposes as he or she might do in person, and hereby ratifies and confirms all
things that each of said attorneys-in-fact and substitute or substitutes may
lawfully do and seek to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 31st day of March, 1999.
/s/ Fielden B. Nutter, Sr.
-----------------------------------
Fielden B. Nutter, Sr., Director
<PAGE> 14
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS: That the undersigned officer and/or
director of Wendy's International, Inc. (the "Company"), which is about to file
a Form 10-K with the Securities and Exchange Commission, under the provisions of
the Securities Exchange Act of 1934, as amended, hereby constitutes and appoints
Frederick R. Reed, Leon M. McCorkle, Jr. and Lawrence A. Laudick as his or her
true and lawful attorneys-in-fact and agents, with full power of substitution
and resubstitution, for him or her and in his or her name, place and stead, in
any and all capacities, to sign the Form 10-K, any and all amendments and
documents related thereto, and to file the same, and all exhibits thereto, and
other documents relating thereto, with the Securities and Exchange Commission,
and grants unto each of said attorneys-in-fact and substitute or substitutes
full power and authority to do each and every act and thing requested and
necessary to be done in and about the premises as fully to all intents and
purposes as he or she might do in person, and hereby ratifies and confirms all
things that each of said attorneys-in-fact and substitute or substitutes may
lawfully do and seek to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 31st day of March, 1999.
/s/ James V. Pickett
-----------------------------------
James V. Pickett, Director
<PAGE> 15
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS: That the undersigned officer and/or
director of Wendy's International, Inc. (the "Company"), which is about to file
a Form 10-K with the Securities and Exchange Commission, under the provisions of
the Securities Exchange Act of 1934, as amended, hereby constitutes and appoints
Frederick R. Reed, Leon M. McCorkle, Jr. and Lawrence A. Laudick as his or her
true and lawful attorneys-in-fact and agents, with full power of substitution
and resubstitution, for him or her and in his or her name, place and stead, in
any and all capacities, to sign the Form 10-K, any and all amendments and
documents related thereto, and to file the same, and all exhibits thereto, and
other documents relating thereto, with the Securities and Exchange Commission,
and grants unto each of said attorneys-in-fact and substitute or substitutes
full power and authority to do each and every act and thing requested and
necessary to be done in and about the premises as fully to all intents and
purposes as he or she might do in person, and hereby ratifies and confirms all
things that each of said attorneys-in-fact and substitute or substitutes may
lawfully do and seek to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 31st day of March, 1999.
/s/ Thekla R. Shackelford
-----------------------------------
Thekla R. Shackelford, Director
<PAGE> 1
EXHIBIT 99
SAFE HARBOR UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
The Private Securities Litigation Reform Act of 1995 (the "Act")
provides a "safe harbor" for forward-looking statements to encourage
companies to provide prospective information, so long as those
statements are identified as forward-looking and are accompanied by
meaningful cautionary statements identifying important factors that
could cause actual results to differ materially from those discussed in
the statement. Wendy's International, Inc. (the "Company") desires to
take advantage of the "safe harbor" provisions of the Act.
Certain information in the 1998 Annual Report on Form 10-K,
particularly information regarding future economic performance and
finances, and plans, expectations and objectives of management, is
forward looking. The following factors, in addition to other possible
factors not listed, could affect the Company's actual results and cause
such results to differ materially from those expressed in
forward-looking statements:
Competition. The quick-service restaurant industry is intensely
competitive with respect to price, service, location, personnel, and
type and quality of food. The Company and its franchisees compete with
international, regional and local organizations primarily through the
quality, variety and value perception of food products offered. The
number and location of units, quality and speed of service,
attractiveness of facilities, effectiveness of advertising and
marketing programs, and new product development by the Company and its
competitors are also important factors. The Company anticipates that
intense competition will continue to focus on pricing. Certain of the
Company's competitors have substantially larger marketing budgets.
Economic, Market and Other Conditions. The quick-service restaurant
industry is affected by changes in national, regional, and local
economic conditions, consumer preferences and spending patterns,
demographic trends, consumer perceptions of food safety, weather,
traffic patterns and the type, number and location of competing
restaurants. Factors such as inflation, food costs, labor and benefit
costs, legal claims, and the availability of management and hourly
employees also affect restaurant operations and administrative
expenses. The ability of the Company and its franchisees to finance new
restaurant development, improvements and additions to existing
restaurants, and the acquisition of restaurants from, and sale of
restaurants to franchisees is affected by economic conditions,
including interest rates and other government policies impacting land
and construction costs and the cost and availability of borrowed funds.
Importance of Locations. The success of Company and franchised
restaurants is dependent in substantial part on location. There can be
no assurance that current locations will continue to be attractive, as
demographic patterns change. It is possible the neighborhood or
economic conditions where restaurants are located could decline in the
future, thus resulting in potentially reduced sales in those locations.
Government Regulation. The Company and its franchisees are subject to
various federal, state, and local laws affecting their business. The
development and operation of restaurants depend to a significant extent
on the selection and acquisition of suitable sites, which are subject
to zoning, land use, environmental, traffic, and other regulations.
Restaurant operations are also subject to licensing and regulation by
state and local departments relating to health, sanitation and safety
standards, federal and state labor laws (including applicable minimum
wage requirements, overtime, working and safety conditions, and
citizenship requirements), federal and state laws which prohibit
discrimination and other laws regulating the design and operation of
facilities, such as the Americans with Disabilities Act of 1990.
Changes in these laws and regulations, particularly increases in
applicable minimum wages, may adversely affect financial results. The
operation of the Company's franchisee system is also subject to
regulation enacted by a number of states and rules promulgated by the
Federal Trade Commission. The Company cannot predict the effect on its
operations, particularly on its relationship with franchisees, of the
future enactment of additional legislation regulating the franchise
relationship.
Growth Plans. The Company plans to significantly increase the number of
systemwide Wendy's and Tim Hortons restaurants open or under
construction. There can be no assurance that the Company or its
franchisees will be able to achieve growth objectives or that new
restaurants opened or acquired will be profitable. The opening and
success of restaurants depends on various factors, including the
identification and availability of suitable and economically viable
locations, sales levels at existing restaurants, the negotiation of
acceptable lease or purchase terms for new locations, permitting and
regulatory compliance, the ability to meet construction schedules, the
financial and other development capabilities of franchisees, the
ability of the Company to hire and train qualified management
personnel, and general economic and business conditions.
International Operations. The Company's business outside of the United
States is subject to a number of additional factors, including
international economic and political conditions, differing cultures and
consumer preferences, currency regulations and fluctuations, diverse
government regulations and tax systems, uncertain or differing
interpretations of rights and obligations in connection with
international franchise agreements and the collection of royalties from
international franchisees, the availability and cost of land and
construction costs, and the availability of experienced management,
appropriate franchisees, and joint venture partners. Although the
Company believes it has developed the support structure required for
international growth, there is no assurance that such growth will occur
or that international operations will be profitable.
<PAGE> 2
Disposition of Restaurants. The disposition of Company-operated
restaurants to new or existing franchisees is part of the Company
strategy to develop the overall health of the system by acquiring
restaurants from, and disposing of restaurants to, franchisees where
prudent. The expectation of gains from future dispositions of
restaurants depends in part on the ability of the Company to complete
disposition transactions on acceptable terms.
Transactions to Improve Return on Investment. The Company owns several
notes receivable issued by franchisees. The Company has entered into an
agreement with a third party lender that permits the lender to contact
franchisees, offer to refinance notes and enter into commitments to
refinance such notes on or before March 31, 1999. The Company expects
that a substantial portion of the notes will be refinanced. However,
franchisees could decide to not refinance for various reasons,
including changes in economic, credit market or other conditions, and
the Company cannot require franchisees to refinance. In addition, the
timing of refinancing transactions would be controlled by the lender
and franchisees. As a result, there is no assurance as to when the
Company could receive cash proceeds or realize income from refinancing
transactions.
The sale of real estate previously leased to franchisees is generally
part of the program to improve the Company's return on invested
capital. There are various reasons why the program might be
unsuccessful, including changes in economic, credit market, real estate
market or other conditions, and the ability of the Company to complete
sale transactions on acceptable terms and at or near the prices
estimated as attainable by the Company.
Year 2000. The Company anticipates timely completion of its program to
address year 2000 issues. However, if the new information systems are
not implemented on a timely basis, modifications to existing systems
cannot be accomplished on a timely basis, information technology
resources do not remain available, or other unanticipated events occur,
there would be adverse financial and operational effects on the
Company. The amount of these effects cannot be ascertained at this
time.
Although the Company has not been informed of material year 2000 issues
by third parties with which it has a material relationship or
franchisees, there is no assurance that these entities will be year
2000 compliant on a timely basis. Unanticipated failures or significant
delays in furnishing products or services by third parties or general
public infrastructure service providers, or the inability of
franchisees to perform sales reporting and financial management
functions or to make timely payments to the Company or suppliers, could
have a material adverse effect on results of operations, financial
condition and/or liquidity.
Readers are cautioned not to place undue reliance on forward-looking
statements, which speak only as of the date thereof. The Company
undertakes no obligation to publicly release any revisions to the
forward-looking statements contained in the 1998 Annual Report on Form
10-K, or to update them to reflect events or circumstances occurring
after the date the Annual Report on Form 10-K was first furnished to
shareholders, or to reflect the occurrence of unanticipated events.
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This schedule contains summary financial information extracted from the
consolidated balance sheet and consolidated statement of income and is
qualified in its entirety by reference to such financial statements.
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<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-03-1999
<PERIOD-START> DEC-29-1997
<PERIOD-END> JAN-03-1999
<CASH> 160,743
<SECURITIES> 2,070
<RECEIVABLES> 94,689
<ALLOWANCES> 20,280
<INVENTORY> 33,015
<CURRENT-ASSETS> 313,694
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0
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<COMMON> 11,796
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