<PAGE>
________________________________________________________________________________
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
- ----------------------------------------------------------
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to SS240.14a-ll(c) or SS240.14a-12
- ----------------------------------------------------------
TRIARC COMPANIES, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
TRIARC COMPANIES, INC.
(NAME OF PERSON(S) FILING PROXY STATEMENT)
- ----------------------------------------------------------
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-ll(c)(l)(ii), 14a-6(i)(1), or 14a-6(i)(2)
[x] $125 FEE PAID WITH FILING OF PRELIMINARY MATERIAL.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1).
4) Proposed maximum aggregate value of transaction:
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-ll(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration No.:
3) Filing Party:
4) Date Filed:
- ------------
(1). Set forth the amount on which the filing fee is calculated and state how it
was determined.
________________________________________________________________________________
<PAGE>
TRIARC COMPANIES, INC.
NOTICE OF ANNUAL
MEETING OF
SHAREHOLDERS AND
PROXY STATEMENT
PLEASE COMPLETE, SIGN, DATE AND RETURN
YOUR PROXY PROMPTLY
[LOGO]
THURSDAY, JUNE 9, 1994
AT 11:00 A.M.
HOTEL INTER-CONTINENTAL
NEW YORK, NEW YORK
<PAGE>
[LOGO]
TRIARC COMPANIES, INC.
777 SOUTH FLAGLER DRIVE, SUITE 1000E
WEST PALM BEACH, FLORIDA 33401
(407) 653-4000
May 11, 1994
Dear Shareholders:
It is our pleasure to invite you to join us at the Annual Meeting of
Shareholders which will be held at Hotel Inter-Continental in New York, New York
at 11:00 A.M. on Thursday, June 9, 1994.
We shall report to you at the meeting on the Company's current operations
and outlook. The meeting will also include a question and discussion period. The
Board of Directors and management hope that many of you will be able to attend
in person.
At the meeting, you will be asked to consider and vote on the election of
13 directors, the reincorporation of the Company in Delaware by means of a
merger, certain amendments to the Company's Amended and Restated 1993 Equity
Participation Plan, and a proposal to authorize the Company to enter into
indemnification agreements with its directors and officers. The Board of
Directors has unanimously approved the proposals and recommends that you vote
FOR each of them. Please give this proxy material your careful attention, as the
discussion is important to your decisions on the matters being presented.
The formal notice of Annual Meeting and the Proxy Statement follow. It is
important that your shares be represented and voted whether or not you plan to
be present at the meeting. Please mark, sign, date and return the enclosed proxy
promptly. If you attend the meeting and wish to vote your shares personally, you
may revoke your proxy. Our Transition Report on Form 10-K for the period from
May 1 through December 31, 1993 also accompanies these proxy materials.
Sincerely,
<TABLE>
<S> <C>
NELSON PELTZ PETER W. MAY
NELSON PELTZ PETER W. MAY
Chairman and Chief President and Chief
Executive Officer Operating Officer
</TABLE>
<PAGE>
[LOGO]
TRIARC COMPANIES, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 9, 1994
------------------------
The Annual Meeting of Shareholders of Triarc Companies, Inc. will be held
at Hotel Inter-Continental in New York, New York on Thursday, June 9, 1994 at
11:00 A.M., local time, for the following purposes:
(1) To elect 13 directors to hold office as specified in the
accompanying Proxy Statement;
(2) To consider and act upon the reincorporation of the Company in
Delaware by means of a merger that would result in, among other things, an
increase in the Company's authorized shares of capital stock and the
adoption of certain 'fair price' and other anti-takeover measures;
(3) To consider and act upon certain amendments to the Company's
Amended and Restated 1993 Equity Participation Plan;
(4) To consider and act upon a proposal to authorize indemnification
agreements between the Company and each of its directors and officers and
certain other persons; and
(5) To transact such other business as may properly come before the
meeting or any adjournment or postponement thereof.
Shareholders entitled to vote at the meeting or any adjournment or
postponement thereof are holders of record of the Company's Class A Common Stock
at the close of business on April 25, 1994.
By order of the Board of Directors
CURTIS S. GIMSON
Senior Vice President and
Associate General Counsel, and
Secretary
May 11, 1994
YOUR VOTE IS IMPORTANT! A FAVORABLE VOTE OF THE HOLDERS OF TWO-THIRDS OF
THE OUTSTANDING SHARES OF THE COMPANY'S CLASS A COMMON STOCK IS NECESSARY
TO APPROVE THE PROPOSAL TO REINCORPORATE THE COMPANY IN DELAWARE.
SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING. WHETHER OR NOT
YOU PLAN TO ATTEND, PLEASE COMPLETE, SIGN AND DATE THE ENCLOSED PROXY AND
RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. YOU MAY NEVERTHELESS VOTE IN PERSON
IF YOU ATTEND THE MEETING. PLEASE DO NOT SEND ANY STOCK CERTIFICATES AT THIS
TIME.
<PAGE>
TRIARC COMPANIES, INC.
777 SOUTH FLAGLER DRIVE, SUITE 1000E
WEST PALM BEACH, FLORIDA 33401
------------------------
PROXY STATEMENT
------------------------
INTRODUCTION
GENERAL
The accompanying proxy is solicited by the Board of Directors (the 'Board
of Directors' or the 'Board') of Triarc Companies, Inc. (the 'Company' or
'Triarc') in connection with the Annual Meeting of Shareholders of the Company
to be held on Thursday, June 9, 1994, at 11:00 A.M., local time, at Hotel
Inter-Continental, New York, New York (the 'Meeting'), and at any adjournment or
postponement of the Meeting. This Proxy Statement and a proxy are first being
mailed to shareholders on or about May 11, 1994. The mailing address of the
Company's principal executive office is 777 South Flagler Drive, Suite 1000E,
West Palm Beach, Florida 33401.
When a proxy is returned properly dated and signed, the shares represented
thereby will be voted by the persons named as proxies in accordance with each
shareholder's directions. Shareholders may specify their choices by marking the
appropriate boxes on the enclosed proxy. If a proxy is dated, signed and
returned without specifying choices, the shares will be voted as recommended by
the Board of Directors FOR the election of the nominees for directors named
below and FOR Proposals (2), (3) and (4). The Company does not have cumulative
voting in the election of directors. Under the Company's Amended Code of
Regulations (the 'Code of Regulations'), business transacted at the Meeting is
confined to the purposes stated in the Notice of the Meeting. The proxy being
solicited does, however, convey discretionary authority to the persons named
therein as proxies to vote on matters incident to the conduct of the Meeting.
The proxy may be revoked by the shareholder at any time prior to the time it is
voted by giving notice of such revocation either personally or in writing to the
Secretary of the Company.
VOTING SECURITIES
All holders of record of the Company's Class A Common Stock, par value $.10
per share (the 'Class A Common Stock'), at the close of business on April 25,
1994 are entitled to vote on all business of the Meeting. At the close of
business on such day, the Company had 24,056,732 shares of Class A Common Stock
outstanding and entitled to vote at the Meeting. Each share of Class A Common
Stock entitles the holder to one vote per share. The presence, in person or by
proxy, of shareholders entitled to cast at least a majority of the votes which
all shareholders are entitled to cast shall constitute a quorum.
Under Ohio law and the Code of Regulations, if a quorum is present at the
Meeting, the 13 nominees for election as directors who receive the greatest
number of votes cast will be elected. The affirmative vote of holders of at
least two-thirds of the total number of shares of Class A Common Stock
outstanding and entitled to vote at the Meeting is required for approval of
Proposal (2) and the
<PAGE>
affirmative vote of a majority of the total number of shares of Class A Common
Stock outstanding and entitled to vote at the Meeting is required for approval
of Proposals (3) and (4). With respect to Proposal (2), (3) and (4), abstentions
and votes withheld by brokers in the absence of instructions from streetname
holders (broker non-votes) have the same effect as votes cast against such
proposal. With respect to the election of directors, an abstention from voting
any shares for the election of any nominee for director will have the practical
effect of a vote against that nominee. Broker non-votes with respect to any
shares will not affect the election of directors since such shares are not
considered present for voting purposes.
The Company has been informed that the 5,982,867 shares of Class A Common
Stock owned by DWG Acquisition Group, L.P., a Delaware partnership of which
Nelson Peltz and Peter W. May are the sole general partners ('DWG Acquisition'),
will be voted in accordance with the recommendation of the Board of Directors
FOR the election of the nominees for director named below and FOR Proposals (2),
(3) and (4). For certain information concerning the voting of such shares, see
'Proposal 1. Election of Directors -- Certain Agreements Concerning Directors.'
PROPOSAL 1.
ELECTION OF DIRECTORS
NOMINEES FOR ELECTION
It is recommended that the 13 nominees herein named be elected as directors
of the Company, with each director to hold office until the next Annual Meeting
of Shareholders, and until his successor is elected and qualified or until his
prior death, resignation or removal. Eight of the 13 nominees are presently
serving as directors of the Company and were elected directors at the last
Annual Meeting of Shareholders held on October 27, 1993, to serve until the next
annual meeting of the Company's shareholders and until such director's successor
is duly chosen and qualified or until his prior death, resignation or removal.
The Company is unaware of any reason why any of the nominees named herein would
be unwilling or unable to serve as a director. Should, however, any nominee for
director be unwilling or unable to serve at the time of the Meeting or any
adjournment or postponement thereof, the persons named in the proxy will vote
for the election of such other person for such directorship as the Board of
Directors may recommend. Messrs. Kingsmore, Pallot, Prendergast, Rosen and
Weisglass, five of the current directors of the Company, will not stand for
reelection and will continue to serve as directors of the Company until the
Meeting.
Certain information regarding each person nominated by the Board of
Directors, including his principal occupation during the past five years and
current directorships, is set forth below. Unless otherwise indicated, all
nominees have had the indicated principal occupations for the past five years.
<TABLE>
<CAPTION>
BUSINESS EXPERIENCE DURING PAST
NAME OF DIRECTOR FIVE YEARS, AGE AND OTHER INFORMATION
- ------------------------------------ ---------------------------------------------------------------------------
<S> <C>
Nelson Peltz........................ Mr. Peltz has been a director and Chairman and Chief Executive Officer of
the Company since April 23, 1993. Since April 23, 1993, he has also been
Chairman and Chief Executive Officer of certain of the Company's
subsidiaries, including Southeastern Public Service Company ('SEPSCO')
and RC/Arby's Corporation, formerly known as Royal Crown Corporation
('RCAC'). Mr. Peltz has also been a director of National Propane
Corporation, a
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
BUSINESS EXPERIENCE DURING PAST
NAME OF DIRECTOR FIVE YEARS, AGE AND OTHER INFORMATION
- ------------------------------------ ---------------------------------------------------------------------------
<S> <C>
wholly-owned subsidiary of the Company ('National Propane'), since April
23, 1993. From April 23, 1993 until January 1994, Mr. Peltz was also a
director and Chairman of the Board and Chief Executive Officer of Wilson
Brothers, a company engaged in the specialty decoration of glass and
ceramic items and the design, manufacture and servicing of overhead
industrial cranes ('Wilson'). In January 1994, Triarc disposed of its
58.6% interest in Wilson. He is also a general partner of DWG
Acquisition, whose principal business is ownership of securities of the
Company. From its formation in January 1989 until April 23, 1993, Mr.
Peltz was Chairman and Chief Executive Officer of Trian Group, Limited
Partnership, an affiliate of DWG Acquisition ('Trian'), which provided
investment banking and management services for entities controlled by Mr.
Peltz and Peter W. May. From 1983 to December 1988, he was Chairman and
Chief Executive Officer and a Director of Triangle Industries, Inc.
('Triangle') which, through wholly-owned subsidiaries, was at that time a
manufacturer of packaging products, copper electrical wire and cable and
steel conduit and currency and coin handling products. He was also
Chairman and Chief Executive Officer and a Director of Avery, Inc.
('Avery') from prior to 1987 until October 1992. Until the October 1989
sale of Uniroyal Chemical Holding Company, Avery was primarily engaged in
the manufacture and sale of specialty chemicals. From November 1989
through May 1992, Mr. Peltz was a director of Mountleigh Group plc
('Mountleigh'), a British property trading and retailing company for
which administrative receivers were appointed in May 1992. He served in
various executive capacities, including Executive Chairman, of Mountleigh
from November 1989 until October 1991. He is a director of Equitable Bag
Co., Inc. ('Equitable Bag'), a designer, manufacturer and distributor of
customized plastic and paper merchandise bags. Mr. Peltz is 51 years of
age.
Peter W. May........................ Mr. May has been a director and President and Chief Operating Officer of
the Company since April 23, 1993. Since April 23, 1993, he has also been
a director and President and Chief Operating Officer of certain of the
Company's subsidiaries, including SEPSCO and RCAC. Mr. May has also been
a director of National Propane since April 23, 1993. From April 23, 1993
until January 1994, Mr. May was also a director and President and Chief
Operating Officer of Wilson. He is also a general partner of DWG
Acquisition. From its formation in January 1989 until April 23, 1993, Mr.
May was President and Chief Operating Officer of Trian. He was President
and Chief Operating Officer and a director of Triangle from 1983 until
December 1988. Mr. May was also President and Chief Operating Officer and
a director of Avery from prior to 1987 until October 1992. From November
1989 through May 1992, Mr. May was associated with Mountleigh and he
served as Joint Managing Director of Mountleigh from November 1989 until
October 1991. He is a director of Equitable Bag. Mr. May was also named a
director on April 29, 1993 of The
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
BUSINESS EXPERIENCE DURING PAST
NAME OF DIRECTOR FIVE YEARS, AGE AND OTHER INFORMATION
- ------------------------------------ ---------------------------------------------------------------------------
<S> <C>
Leslie Fay Companies, Inc. following its filing on April 5, 1993 for
protection under Chapter 11 of the United States Bankruptcy Code. Mr. May
is 51 years of age.
Leon Kalvaria....................... Mr. Kalvaria has been a director and Vice Chairman of the Company since
April 23, 1993. Since April 23, 1993, he has also been a director and
Vice Chairman of certain of the Company's subsidiaries, including SEPSCO
and RCAC. Mr. Kalvaria has also been a director of National Propane since
April 23, 1993. From April 23, 1993 until January 1994, Mr. Kalvaria was
also a director and Vice Chairman of Wilson. He joined Trian in January
1991 and was Vice Chairman of Trian from April 1992 until April 23, 1993.
He is a director of Equitable Bag. Prior to joining Trian, Mr. Kalvaria
was employed by CS First Boston, an investment banking firm, for more
than 10 years. Mr. Kalvaria was Managing Director of the Mergers and
Acquisitions Department of First Boston from 1989 to 1991. Mr. Kalvaria
is 35 years of age.
Hugh L. Carey....................... Mr. Carey has been an Executive Vice President of W.R. Grace & Co.
('Grace') since 1987. Since January 1993, he has served Grace as director
of its Government Relations Division, and from 1987 until 1993, he ran
Grace's office of environmental policy. Mr. Carey was the Governor of the
State of New York from 1975 until 1983. From 1991 until 1993, he was
Chairman of the National Institute of Former Governors. Mr. Carey is also
a director of Meditrust, Inc., Great Western Resources, First Albany
Corporation and the China Trust Bank. Mr. Carey is 75 years of age.
Clive Chajet........................ Mr. Chajet has been Chairman and Chief Executive Officer of Lippincott &
Margulies Inc., a consulting firm specializing in identity and image
management, New York, New York, since 1983. Mr. Chajet is 57 years of
age.
Irving Mitchell Felt................ Mr. Felt is a private investor. He is a Chairman of The Felt Foundation,
Inc., a philanthropic organization. Since 1983, Mr. Felt has been the
Honorary Chairman of the Board of Directors of Madison Square Garden
Corporation, an entertainment company, New York, New York, and prior
thereto he served as President and Chairman of the Board of Madison
Square Garden Corporation. From 1983 through 1988, Mr. Felt was a
Director of Triangle. Mr. Felt is 84 years of age and has been a director
of the Company since April 23, 1993.
Stanley R. Jaffe.................... Mr. Jaffe is a private investor. From 1991 until 1993, Mr. Jaffe was
President and Chief Operating Officer and a director of Paramount
Communications Inc., a motion picture and entertainment company. From
prior to 1988 until 1991, Mr. Jaffe was principal partner in
Jaffe/Lansing Productions, an independent motion picture production
company. Mr. Jaffe is 53 years of age.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
BUSINESS EXPERIENCE DURING PAST
NAME OF DIRECTOR FIVE YEARS, AGE AND OTHER INFORMATION
- ------------------------------------ ---------------------------------------------------------------------------
<S> <C>
Harold E. Kelley.................... Mr. Kelley is an Attorney-At-Law and a Certified Public Accountant. Mr.
Kelley is 73 years of age and has been a director of the Company since
March 1991.
Richard M. Kerger................... Mr. Kerger is a partner of Marshall & Melhorn, a law firm. Mr. Kerger is 48
years of age and has been a director of the Company since March 1991.
M.L. Lowenkron...................... Mr. Lowenkron is a private investor. From 1980 until October 1993, Mr.
Lowenkron was Chief Executive Officer of A&W Brands, Inc. ('A&W'), a
manufacturer of soft drink concentrates, and he served as Chairman of the
Board of A&W from 1991 until October 1993. Mr. Lowenkron is a director of
Hat Brands, Inc., Heilemen Brewing Company and The National Easter Seal
Society. Mr. Lowenkron is 62 years of age.
Daniel R. McCarthy.................. Mr. McCarthy is a Senior Partner of McCarthy & Lebit, Co., LPA, a law firm.
Mr. McCarthy is also a director of American Ship Building Company, which
is engaged in ship building and ship repairs. On November 4, 1993,
American Ship Building Company filed for protection under Chapter 11 of
the United States Bankruptcy Code. Mr. McCarthy is 69 years of age and
has been a director of the Company since March 1991.
Raymond S. Troubh................... Mr. Troubh has been a financial consultant, including serving as a senior
advisor at Salomon Brothers, Inc, an investment banking firm, since prior
to 1988. Mr. Troubh is a director of ADT Limited, American Maize-Products
Company, Applied Power, Inc., ARIAD Pharmaceuticals, Inc., Becton,
Dickinson & Co., Benson Eyecare Corporation, Foundation Health
Corporation, General America Investors Company, Manville Corporation,
Olsten Corporation, Petrie Stores Corporation, Riverwood International
Corporation, Time-Warner Inc., and Wheeling-Pittsburgh Corporation. Mr.
Troubh is 68 years of age.
Gerald Tsai, Jr..................... Mr. Tsai is a private investor. Since February 1993, he has been Chairman
of the Board, President and Chief Executive Officer of Delta Life
Corporation, a life insurance and annuity company with which Mr. Tsai
became associated in 1992. From 1982 until December 1988, Mr. Tsai served
Primerica Corporation in various executive capacities, including as
Chairman of the Board and Chief Executive Officer from 1987 until
December 1988. Mr. Tsai also serves as a director of Palm Beach National
Bank and Trust Company, Rite Aid Corporation, Sequa Corporation, Zenith
National Insurance Corporation and Proffitt's Inc. He is a trustee of
Meditrust, Boston University and New York University Medical Center. Mr.
Tsai is 65 years of age and has been a director of the Company since
October 27, 1993.
</TABLE>
5
<PAGE>
BOARD MEETINGS AND CERTAIN COMMITTEES OF THE BOARD
Eleven meetings of the full Board of Directors were held during the fiscal
year ended April 30, 1993 ('Fiscal 1993') and seven meetings of the full Board
of Directors were held during the transition period from May 1, 1993 through
December 31, 1993 ('Transition 1993'). Each incumbent director who is a nominee
for reelection attended more than 75% of such meetings of the Board and of all
committees of the Board of Directors that he was eligible to attend in Fiscal
1993 and Transition 1993.
The Company has standing audit, nominating, and compensation committees
whose current functions and members are described below. It is anticipated that
at its first meeting following the Meeting, the Board will designate the
directors to serve on each of these Committees until the next annual meeting of
shareholders.
Audit Committee. The Audit Committee is composed of Messrs. Daniel R.
McCarthy (Chairman), Irving Mitchell Felt, Martin Rosen and Gerald Tsai, Jr.
This Committee is charged with the responsibility of satisfying itself of the
propriety and accuracy of the financial statements of the Company and any of its
subsidiaries which have publicly-owned securities. In the course of performing
its functions, the Audit Committee (i) reviews the Company's internal accounting
controls and its annual consolidated financial statements, (ii) reviews with the
Company's independent certified public accountants the scope of their audit,
their report and their recommendations, (iii) considers the possible effect on
the independence of such accountants in approving non-audit services requested
of them, and (iv) recommends the action to be taken with respect to the
appointment of the Company's independent certified public accountants. The Audit
Committee met four times during Fiscal 1993 and five times during Transition
1993. As discussed above, Mr. Rosen will not stand for reelection but will
continue to serve as a director of the Company until the Meeting.
Nominating Committee. The Nominating Committee is composed of Messrs. Peter
W. May (Chairman), Harold E. Kelley, Nelson Peltz and Gerald Tsai, Jr. This
Committee is charged with the responsibility of considering and recommending
individuals to be considered by the Board for membership on the Board of
Directors. The Nominating Committee did not meet during Fiscal 1993 and met once
during Transition 1993.
The Nominating Committee will consider nominations for Board membership by
shareholders. The Nominating Committee has adopted the following rules with
respect to considering such nominations: (i) the nominating shareholder must
have owned shares of Common Stock or preferred stock (entitled to vote for
Directors) for at least six months prior to the date the nomination is
submitted; (ii) the nomination must be received by the Nominating Committee 120
days before the mailing date for proxy material applicable to the annual meeting
for which such nomination is proposed for submission; and (iii) a detailed
statement setting forth the qualifications, as well as the written consent, of
each party nominated must accompany each nomination submitted.
Compensation Committee. The Compensation Committee is composed of Messrs.
Irving Mitchell Felt (Chairman), William L. Pallot and Gerald Tsai, Jr. The
Committee is charged with the responsibility of (i) reviewing, advising and
making recommendations with respect to employee salary and compensation plans,
benefits and standards applicable to the executive officers of the Company, (ii)
taking such action with respect thereto that are not reserved to the Board of
Directors, and (iii) administering the Company's Amended and Restated 1993
Equity Participation Plan (the 'Equity Participation Plan') and such other
salary or compensation plans as the Committee is designated to administer. The
Compensation Committee met once during Fiscal 1993 subsequent to the change in
control of the Company which occurred on April 23, 1993 (the 'Change in
Control') and six times
6
<PAGE>
during Transition 1993. As discussed above, Mr. Pallot will not stand for
reelection but will continue to serve as a director of the Company until the
Meeting.
COMPENSATION OF DIRECTORS
Each non-management director receives an annual retainer of $25,000 for
serving on the Board. In addition, non-management directors receive $1,000 for
each meeting of the Board or of a Committee of the Board attended. If Proposal
(3) is approved at the Meeting, non-management directors will be given the
option of electing to receive all or a portion of their annual retainer and
meeting fees in the form of shares of Class A Common Stock rather than in cash.
See 'Proposal 3. Approval of Matters With Respect to the Amended and Restated
1993 Equity Participation Plan.' In addition, pursuant to the Equity
Participation Plan, each director of the Company who is not then an employee of
the Company or any subsidiary receives, on the later of (i) the date of his
initial election or appointment to the Board of Directors and (ii) April 24,
1993, options to purchase 3,000 shares of Class A Common Stock and, in
connection therewith, tandem stock appreciation rights ('SARs') for the same
number of shares. On the date of each subsequent annual meeting of shareholders
of the Company at which a director is reelected, such director will receive
options to purchase 1,000 shares of Class A Common Stock and, in connection
therewith, SARs for the same number of shares. Each such option has a term of
ten years, subject to certain exceptions provided in the Equity Participation
Plan. Each such option becomes exercisable to the extent of one-half thereof on
each of the two immediately succeeding anniversaries of the date of grant. The
price per share to be paid by the holder of such an option is equal to the fair
market value of one share of Class A Common Stock on the date the option is
granted. The purchase price of the shares of Class A Common Stock as to which
such an option is exercised shall be paid only in cash, and such SARs shall be
exercisable only for shares of Class A Common Stock.
As discussed above, certain current directors of the Company will not stand
for reelection but will continue to serve as directors of the Company until the
Meeting. In connection therewith, the Board of Directors determined that the
four non-employee directors who are retiring will receive (a) their respective
full annual retainers through December 31, 1994 and (b) payments of cash that
are equivalent to the benefits, if any, that would result from the exercise in
full of their stock options (to the extent not previously exercised) at any time
prior to December 31, 1995.
Pursuant to a stipulation of settlement entered into in connection with
certain litigation to which the Company was a party before the United States
District Court for the Northern District of Ohio, Eastern Division (the 'Ohio
Court'), in March 1991, a special committee (the 'Special Committee') was
created consisting of three directors designated by the Ohio Court pursuant to
such stipulation (the 'Court Appointed Directors'), along with two directors to
be selected by the Board, who are not employee-insiders or members of Victor
Posner's family. The five members of the Special Committee are the three Court
Appointed Directors (Messrs. Kelley, Kerger and McCarthy) and Messrs. Pallot and
Prendergast. Subsequent to the Change in Control, the Board of Directors
approved a cash payment to each of the members of the Special Committee in
respect to their services to the Company (principally relating to such now
settled litigation which had been pending in the Ohio Court) through April 23,
1993 as follows: $2,200,000 to Mr. Kelley, $1,300,000 to Mr. McCarthy,
$1,000,000 to Mr. Kerger and $200,000 to each of Messrs. Pallot and Prendergast.
In addition, the Board of Directors granted restricted stock awards to Messrs.
Kelley, McCarthy and Kerger with respect to 60,000, 60,000 and 30,000 shares,
respectively, which grants were ratified by the Compensation Committee. The
grant of restricted stock awards was pursuant to the Equity Participation Plan
and such awards will vest in full
7
<PAGE>
and all restrictions on transferability shall terminate on the earlier of
December 31, 1996 or the date the individual ceases to be a director of the
Company, unless the individual ceases to be a director as a result of his
voluntary resignation or his decision not to stand for reelection or as a result
of his directorship being terminated for cause in accordance with the Ohio
Corporation Law. As discussed above, Messrs. Pallot and Prendergast will not
stand for reelection but will continue to serve as directors of the Company
until the Meeting. It is anticipated that at its first meeting following the
Meeting, the Board will appoint two additional directors to serve on the Special
Committee together with the Court Appointed Directors.
CERTAIN AGREEMENTS CONCERNING DIRECTORS
In connection with the Change in Control, the Board of Directors was
reconstituted on April 23, 1993 in accordance with a Stock Purchase Agreement
dated as of October 1, 1992 (the 'Stock Purchase Agreement') among DWG
Acquisition, and Victor Posner and certain entities controlled by him
(collectively, the 'Posner Entities'), as described in the Company's Proxy
Statement dated March 31, 1993 for its Special Meeting of Shareholders held on
April 21, 1993.
The Stock Purchase Agreement provides, among other things, that (i) as long
as the Posner Entities and entities controlled by them, in the aggregate, are
beneficial owners of equity securities of the Company representing or
convertible into more than one-half of one percent of the issued and outstanding
common stock of the Company, DWG Acquisition (a) will not vote its shares in
favor of a director (other than the Court Appointed Directors) who knowingly
causes the Company to breach or vote in favor of any action that would
constitute a breach of the Company's obligations under certain transactions
entered into between the Posner Entities and their affiliates, on the one hand,
and the Company and its affiliates, on the other hand and (b) will, in the event
either Steven Posner (who no longer serves as a director) or Martin Rosen ceases
to be a director of the Company, vote its shares in favor of any appropriate
person nominated by Steven Posner (other than Victor Posner or certain of his
family members) to fill such vacancy and (ii) until the earlier of (x) April 23,
1998 and (y) the date on which Security Management Corp., a Maryland corporation
controlled by Victor Posner ('Security Management'), ceases to own beneficially
more than 50% of the shares of the Company's non-voting redeemable cumulative
convertible preferred stock, par value $.10 per share (the 'Redeemable
Convertible Preferred Stock'), issued to it in connection with the Change in
Control (or shares of common stock into which Redeemable Convertible Preferred
Stock may be converted), will, in the event that Russell A. Boyle (who no longer
serves as a director), H. Douglas Kingsmore, William Pallot or Thomas
Prendergast or their respective successors cease to be a director of the
Company, vote its shares to fill such vacancy in favor of any person (other than
Victor Posner or certain of his family members) acceptable to both DWG
Acquisition and Steven Posner.
In addition, as previously reported in connection with the Change in
Control, DWG Acquisition and Messrs. Peltz and May agreed (a) never to vote any
shares of the Company owned or controlled by DWG Acquisition for the election of
Victor Posner as a director of the Company, (b) to cause any slate of directors
of the Company directly or indirectly proposed or recommended by DWG Acquisition
during the period (the 'Effective Period') terminating on the earliest of (i)
April 23, 1998, (ii) the date on which Victor Posner (and his affiliates) ceases
to own shares of Class A Common Stock equal in the aggregate to more than 5% of
the issued and outstanding Triarc common stock and (iii) the date on which the
shares of Triarc common stock cease to be publicly held, to include the Court
Appointed Directors and (c) during the Effective Period, subject to DWG
Acquisition's absolute right to vote the
8
<PAGE>
minimum number of shares necessary to accomplish the election of Messrs. Peltz,
May and Kalvaria and Mr. Irving Mitchell Felt, or their successors, to cast any
other votes available to it for the election of the Court Appointed Directors.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The following table sets forth the beneficial ownership as of April 25,
1994 by each person known by the Company to be the beneficial owner of more than
5% of the outstanding shares of Class A Common Stock (constituting the only
class of voting capital stock of the Company), each director of the Company and
nominee for director of the Company who has such ownership, each executive
officer whose name appears in the Summary Compensation Table below who was an
executive officer of the Company as of April 25, 1994 and all directors and
executive officers as a group.
<TABLE>
<CAPTION>
AMOUNT AND
NAME AND ADDRESS OF NATURE
BENEFICIAL OWNER OF OWNERSHIP(1) PERCENT OF CLASS
- ------------------------------------------------------------------ ---------------- ----------------
<S> <C> <C>
DWG Acquisition .................................................. 5,982,867 shares(4) 24.9%
1201 North Market Street
Wilmington, DE 19801
Nelson Peltz ..................................................... 6,182,967 shares(2)(3)(4)(6) 25.5%
777 South Flagler Drive, Suite 1000E
West Palm Beach, FL 33401
Peter W. May ..................................................... 6,116,200 shares(2)(4)(7) 25.3%
900 Third Avenue
New York, NY 10022
Leon Kalvaria .................................................... 92,500 shares(5) *
777 South Flagler Drive, Suite 1000E
West Palm Beach, FL 33401
Irving Mitchell Felt ............................................. 1,500 shares(8) *
The Mirabella
10430 Wilshire Blvd., Suite 202
Los Angeles, CA 90024
Harold E. Kelley ................................................. 61,500 shares(9) *
777 South Flagler Drive, Suite 1000E
West Palm Beach, FL 33401
Richard M. Kerger ................................................ 31,700 shares(10) *
777 South Flagler Drive, Suite 1000E
West Palm Beach, FL 33401
Daniel R. McCarthy ............................................... 111,500 shares(11) *
777 South Flagler Drive, Suite 1000E
West Palm Beach, FL 33401
William L. Pallot ................................................ 1,931 shares(12) *
400 Pickle Road
Shelbyville, TN 37160
</TABLE>
- ------------
* Less than 1%
(table continues on next page)
9
<PAGE>
(table continued from previous page)
<TABLE>
<CAPTION>
AMOUNT AND
NAME AND ADDRESS OF NATURE
BENEFICIAL OWNER OF OWNERSHIP(1) PERCENT OF CLASS
- ------------------------------------------------------------------ ---------------- ----------------
<S> <C> <C>
Thomas A. Prendergast ............................................ 1,500 shares(8) *
501 Executive Center Blvd.
Suite 210
El Paso, TX 79902
Martin Rosen ..................................................... 7,500 shares(12) *
757 Third Avenue, 6th FL
New York, NY 10017
Gerald Tsai, Jr. ................................................. 1,000 shares *
200 Park Avenue, 37th Fl.
Suite 3709
New York, NY 10166
Stephen S. Weisglass ............................................. 11,500 shares(12) *
777 South Flagler Drive, Suite 1000E
West Palm Beach, FL 33401
John C. Carson ................................................... 45,000 shares(13) *
1000 Corporate Drive
Ft. Lauderdale, FL 33334
Harold D. Kingsmore .............................................. 50,000 shares(13) *
133 Marshall Street
Graniteville, SC 29829
Donald L. Pierce ................................................. 66,250 shares(14) *
1000 Corporate Drive
Ft. Lauderdale, FL 33334
Clive Chajet ..................................................... 2,800 shares(15) *
499 Park Avenue
New York, NY 10022
Raymond S. Troubh ................................................ 5,000 shares *
10 Rockefeller Plaza, Suite 712
New York, NY 10020
Directors and Executive Officers as a group (23 persons).......... 6,952,848 shares 28.4%
</TABLE>
- ------------
* Less than 1%
(1) Except as otherwise indicated, each person has sole voting and dispositive
power with respect to such shares.
(2) Includes 5,982,867 shares held by DWG Acquisition, of which Mr. Peltz and
Mr. May are the sole general partners.
(3) Includes 100 shares owned by Mr. Peltz's minor son, as to which Mr. Peltz
disclaims beneficial ownership.
(4) As previously reported, the Change in Control occurred on April 23, 1993.
On that date, DWG Acquisition acquired 5,982,867 shares of Class A Common
Stock from Victor Posner, Security Management, and Victor Posner Trust No.
20 for an aggregate purchase price of $71,794,404
(footnotes continued on next page)
10
<PAGE>
(footnotes continued from previous page)
pursuant to the Stock
Purchase Agreement. In addition, on April 23, 1993, pursuant to an Exchange
Agreement dated as of October 1, 1992, the Company and Security Management
exchanged the remaining 5,982,866 shares of Class A Common Stock of the
Company owned by the Posner Entities for an equal number of shares of the
Redeemable Convertible Cumulative Preferred Stock having a stated value of
$12.00 per share or an aggregate stated value of $71,794,392.
The Company is informed that DWG Acquisition has pledged an aggregate of
4,040,000 shares of Class A Common Stock (the 'Pledged Shares') to two
financial institutions on behalf of Messrs. Peltz and May to secure certain
loans made to them by such financial institutions in connection with the
Change in Control. The loan documentation in connection with such loans
contains customary provisions concerning the maturity of the loans and
other provisions with respect thereto and with respect to the Pledged
Shares.
(5) Represents 42,500 restricted shares granted under the Equity Participation
Plan and vested options to purchase 50,000 shares of Class A Common Stock.
(6) Includes vested options to purchase 200,000 shares of Class A Common Stock.
(7) Includes vested options to purchase 133,333 shares of Class A Common Stock.
(8) Represents vested options to purchase 1,500 shares of Class A Common Stock.
(9) Represents 60,000 restricted shares granted under the Equity Participation
Plan and vested options to purchase 1,500 shares of Class A Common Stock.
(10) Represents 30,000 restricted shares granted under the Equity Participation
Plan, 200 shares purchased by Mr. Kerger and vested options to purchase
1,500 shares of Class A Common Stock.
(11) Includes 60,000 restricted shares granted under the Equity Participation
Plan, vested options to purchase 1,500 shares of Class A Common Stock and
50,000 shares owned by a trust of which Mr. McCarthy's wife is a trustee,
as to which shares Mr. McCarthy disclaims beneficial ownership.
(12) Includes vested options to purchase 1,500 shares of Class A Common Stock.
(13) Represents restricted shares granted under the Equity Participation Plan.
(14) Represents 61,250 restricted shares granted under the Equity Participation
Plan and 5,000 shares purchased by Mr. Pierce.
(15) Includes 1,300 shares owned by Mr. Chajet's wife, as to which shares
Mr. Chajet disclaims beneficial ownership.
--------------------------
The foregoing table does not include 5,982,866 shares of the Redeemable
Convertible Preferred Stock owned by an affiliate of Victor Posner, which are
convertible by Victor Posner or his affiliates into 4,985,722 shares of
non-voting common stock of the Company at a conversion price of $14.40 per
share, subject to certain adjustments. The shares of Redeemable Convertible
Preferred Stock can be converted without restriction into an equal number of
shares of Class A Common Stock following a transfer to a non-affiliate of Victor
Posner. The Company has certain rights of first refusal if such shares are sold
to an unaffiliated party. If the 5,982,866 currently outstanding shares of the
Redeemable Convertible Preferred Stock were converted into shares of Class A
Common Stock, such shares would constitute approximately 17.2% of the then
outstanding shares of Class A Common Stock. Except for the arrangements relating
to the Pledged Shares described in footnote (4) to the foregoing table, there
are
11
<PAGE>
no arrangements known to the Company the operation of which may at a
subsequent date result in a change in control of the Company.
EXECUTIVE COMPENSATION
REPORT OF THE COMPENSATION COMMITTEE
Introduction. This report to shareholders presents an overview of both the
charter of the Compensation Committee of the Board of Directors (the
'Compensation Committee') and of the Company's compensation philosophy. It also
discusses the Compensation Committee's compensation related decisions in respect
of Fiscal 1993 and Transition 1993 performance. Since the Compensation
Committee was totally reconstituted in connection with the Change in Control
which took place on April 23, 1993, neither the Compensation Committee nor
current management take any responsibility for the compensation philosophy or
practices of the Company prior to the Change of Control.
The Compensation Committee's Role. The Compensation Committee's principal
function is to review and approve the compensation program for the executive
officers of the Company (the 'Executive Compensation Program'). The Compensation
Committee also administers the Equity Participation Plan. To fulfill its
principal function, the Compensation Committee specifically reviews and approves
each of the elements of the Executive Compensation Program and will continually
assess the effectiveness of the program as a whole. This includes reviewing the
design of the Company's various incentive plans for executive officers and
assessing the competitiveness of the overall Executive Compensation Program.
Overall Objectives of the Executive Compensation Program. The Executive
Compensation Program is designed to help the Company retain, motivate and
recruit the executive officers needed to maximize the Company's return to
shareholders. The Company's explicit objective is to pay at levels required to
secure the exceptionally talented executive officers, in particular, and
employees, in general, necessary to achieve its long-term financial, strategic
and stock growth goals. Since one of the Company's goals is to grow rapidly,
both by internal expansion and through acquisitions, the Company has recruited
the executive talent required to run a company which is significantly larger
than the Company is today.
Toward that end, the Executive Compensation Program is designed to provide:
Levels of compensation that are competitive with those provided in
the various markets in which the Company competes for its executive
resources.
Incentive compensation that:
varies in a consistent and predictable manner with the financial
performance of the Company and/or its various business units;
varies in a consistent and predictable manner with the stock price
performance of the Company; and
effectively rewards individual performance.
In designing and administering the Executive Compensation Program, the
Compensation Committee, acting on behalf of the shareholders, seeks an
appropriate balance among these objectives, the most important of which are
discussed in greater detail below.
Providing Highly Competitive Levels of Compensation. The Company provides
its executive officers with a total compensation package that -- at expected
levels of performance -- is intended to rank in the top quartile of compensation
packages provided to executives who hold comparable positions or have similar
qualifications in companies which are significantly larger than the Company is
today.
Given the Company's aggressive shareholder return objectives, the Company
has designed salary and incentive programs intended to attract exceptionally
high-caliber executives and is committed to
12
<PAGE>
paying these same executives a substantial portion of their compensation
based directly on the Company and business unit performance.
To establish appropriate competitive frames of reference, the Company looks
toward pay levels offered by leading-performance companies in the relevant
markets for executive talent. In addition, the Company periodically assesses an
executive's competitive level of compensation based on information drawn from a
variety of sources, including proxy statements, compensation surveys and
external compensation consultants. In the course of this analysis, the Company
considers each position's relative content, accountabilities and scope of
responsibility. The Company also takes into account its businesses, current
size and expected growth, expected contributions from specific executives and
other similar factors.
While the expected value of an executive's compensation package is set at a
highly competitive level, each executive officer's pay package places a
significant portion of pay at risk, and the actual value of the package will
exceed or fall below this level depending on actual Company results. The Company
is committed to the pay-for-performance philosophy and is implementing an
Executive Compensation Program which ensures that shareholders receive
performance-for-pay.
Ensuring Incentive Compensation Varies With Performance. The Executive
Compensation Program is designed to ensure that incentive compensation varies in
a consistent and predictable manner with the financial and stock performance of
the Company and/or its business units. Awards paid under the Company's annual
and long-term incentive plans will be directly tied to the Company's and its
units' short-and long-term financial performance, as well as the performance of
the Company's stock price.
The Company's various incentive plans each serve slightly different
purposes and, as such, employ different measures of performance and cover
different periods of time. Accordingly, an executive officer's total
compensation will not typically vary based on any single measure of Company or
business unit performance over a particular period of time. However, in
combination, these plans provide a powerful incentive -- focusing management
attention on those measures important to shareholders, and hold participants
accountable for poor results and reward them for superior accomplishments.
The Company also believes that effectively rewarding individual performance
helps drive managers to contribute in ways that enhance the financial and stock
performance of the Company and its various business units. Although the
Executive Compensation Program provides compensation that varies with financial
and stock price performance, an executive officer's incentive awards may also be
influenced by qualitative assessments of Company, business unit and individual
performance, as appropriate. For all executive officers, these assessments are
made by the Compensation Committee.
Overview of the Executive Compensation Program. The Executive Compensation
Program is comprised of three principal elements, the base salary program, and
annual and long-term incentives. Each of these is designed and administered with
the explicit purpose of furthering the shareholders' interests by facilitating
the employment of highly-talented executives and motivating them to achieve
exceptional levels of performance. An overview of each of these elements and how
each is intended to support shareholder interests is provided below.
Base Salary Compensation. The Company's base salary program is intended to
provide base salary levels that are competitive in the external market for
executive talent, reflect an individual's ongoing performance, and are
periodically adjusted based on the executive's performance, the Company's
overall financial performance and expected salary increases in the market for
executive talent.
The Company believes the mix of elements in the Executive Compensation
Program is appropriate, and will periodically review base salary levels, their
relationship to the competitive market and to the other components of the
program.
13
<PAGE>
Annual Incentive Compensation. The Company's annual cash incentive plan for
executive officers (the 'Annual Plan') is intended to provide competitive annual
pay opportunities with actual amounts earned directly linked to annual Company
and/or business unit financial performance. If appropriate to the position
and/or unit, awards also vary based partially on the individual's annual
performance. The Annual Plan sets annual incentive target awards at levels that
are competitive in the context of the Company's total Executive Compensation
Program, and the appropriate mix of variable and fixed compensation. Financial
performance is assessed annually against pre-set financial and strategic
objectives.
Each executive's award is tied to performance measures most appropriate to
his or her responsibilities. To reinforce the need for teamwork and focus
attention on overall Company objectives, all participants have a portion of
their award tied to corporate or unit financial performance, as defined by
operating income and other measures selected by the Compensation Committee at
the outset of each plan year.
The Compensation Committee believes that the Annual Plan will play a
critical role in the Company's ability to attract desired executives and
motivate them toward aggressive levels of performance.
Long-Term Incentive Compensation. The Company provides executive officers
with incentives linked to longer-term business unit and corporate performance
through mid-term cash incentive plans (the 'Mid-Term Plans') and the Equity
Participation Plan. The combination of these two key elements is intended to
provide competitive long-term incentive opportunities, enable participants to
build significant wealth when meaningful stockholder wealth has been created,
and directly link a significant portion of total pay to the Company's long-term
stock performance and, as appropriate, to business unit longer-term financial
performance.
Each Mid-Term Plan is designed for senior managers of the Company's
principal business units and is developed jointly by the chief executive officer
of the business unit and representatives of the Company. Each Mid-Term Plan will
pay cash awards to participants based on the unit's profit performance over a
three-year period. A pool is created based upon the amount by which the unit's
actual profit exceeds an acceptable level and is targeted to pay, in combination
with stock options, competitive long-term incentives at expected levels of
profit.
The Equity Participation Plan provides senior corporate and business unit
managers and key employees, including the individuals named in the Summary
Compensation Table below, with stock-based incentives. Although the Equity
Participation Plan is generally designed to provide periodic grants of options
on the Class A Common Stock, it also provides for the use of restricted stock
awards. Overall, the Equity Participation Plan is intended to provide
competitive long-term incentive opportunities and tie executive long-term
financial gain to increases in the Company's stock price.
Other Executive Compensation. In addition, the Company provides executive
officers with benefits and perquisites generally consistent with those offered
by other companies to similar positions. Overall, the Compensation Committee
believes the provided levels of benefits and perquisites are necessary and, in
combination with the previously mentioned compensation elements, facilitate the
Company's ability to secure the needed executive talents.
Summary of Compensation Committee Actions. As noted above, the Compensation
Committee was totally reconstituted following the Change in Control on April 23,
1993. The Committee met once during Fiscal 1993 immediately following the Change
in Control and six times during Transition 1993. The actions taken at those
meetings are described below.
14
<PAGE>
At its meeting immediately following the Change in Control, the
Compensation Committee approved compensation packages for the executive officers
of the Company, most of whom had been elected to their positions after the
Change in Control. The Committee also granted options to purchase an aggregate
of 1,712,500 shares of Class A Common Stock and granted awards of 268,000
restricted shares of Class A Common Stock to the executive officers and other
officers and key employees of the Company.
During Transition 1993, the Compensation Committee granted options to
purchase 290,000 shares of Class A Common Stock and awarded 21,500 restricted
shares of Class A Common Stock to officers and key employees of the Company
and its subsidiaries. Additionally, as described above under 'Compensation of
Directors,' the Compensation Committee approved, based on the recommendation of
the Board of Directors, the award of an aggregate of 150,000 restricted shares
of Class A Common Stock to the three court-appointed members of the Special
Committee as partial compensation for their services through April 23, 1993.
In March 1994, the Compensation Committee approved bonuses, grants of stock
options and restricted stock awards to the executive officers of the Company in
respect of their performance during Transition 1993 and to incentivize future
performance. In the aggregate, the Compensation Committee awarded options to
purchase 412,000 shares of Class A Common Stock and awarded 44,750 restricted
shares of Class A Common Stock to executive officers, other officers and key
employees of the Company in respect of their performance during Transition 1993
and to incentivize future performance.
All of the above-referenced options and restricted shares of Class A Common
Stock are reflected in the Summary Compensation Table below.
In April 1994, the Compensation Committee approved, subject to approval by
the shareholders of appropriate amendments to the Equity Participation Plan, the
grant of 'performance stock options' for an aggregate of 3,850,000 shares of
Class A Common Stock to Messrs. Peltz, May and Kalvaria. See 'Proposal 3.
Approval of Amendments to the Company's Amended and Restated 1993 Equity
Participation Plan.' The Board of Directors has approved such amendments.
At present, there remain outstanding options to purchase 2,514,500 shares
of Class A Common Stock and 491,250 restricted shares of Class A Common Stock.
As a result, 494,250 shares of Class A Common Stock are available for future
awards under the Equity Participation Plan. If Proposal (3) is approved by the
shareholders, options to purchase 6,364,500 shares of Class A Common Stock will
remain outstanding and 3,144,250 shares of Class A Common Stock will be
available for future awards under the Equity Participation Plan.
In January 1994, the Compensation Committee approved the severance
arrangements for Charles W. McGovern, formerly Senior Vice President and
Treasurer of the Company, and William R. Pollert, formerly Senior Vice
President-Administrative Services, of the Company. For each of Messrs. McGovern
and Pollert, the Committee approved continuation of salary for one year with an
additional one year of salary continuation if the individual does not find
suitable alternative employment within the first year. Additionally, benefit
coverage would continue for up to three years if suitable alternative employment
is not found. The Committee also approved, for both Messrs. McGovern and
Pollert, certain arrangements whereby they will receive payments of cash that
are equivalent to the benefits, if any, that would result from the vesting in
full of their restricted stock awards and the exercise in full of their stock
options.
Adoption of CEO and COO Compensation Arrangements. In April 1993, the
Compensation Committee adopted compensation arrangements with the Company's new
Chairman and Chief Executive Officer and President and Chief Operating Officer
that included base salaries of $1 per year
15
<PAGE>
and incentive compensation on a discretionary basis. In addition, at that time
the Compensation Committee approved for such executives up-front stock option
grants.
In April 1994, the Compensation Committee approved for the Chairman and
Chief Executive Officer and the President and Chief Operating Officer grants of
'performance stock options' for an aggregate of 3,500,000 shares of Class A
Common Stock, subject to approval by the shareholders of appropriate amendments
to the Equity Participation Plan. These options were granted in lieu of base
salary, annual performance bonus and long term compensation for a six-year
period commencing April, 1993. The Board of Directors has approved such
amendments. They have an exercise price of $20.125 per share and will vest and
become exercisable as follows: if the closing price of a share of Class A
Common Stock is at least approximately 135% of the exercise price for 20 out
of 30 consecutive trading days ending on or prior to March 30, 1999, each such
option will vest and become exercisable as to one third of the shares subject
to the option; if the closing price of a share of Class A Common Stock is at
least approximately 180% of the exercise price for 20 out of 30 consecutive
trading days ending on or prior to March 30, 2000, each such option will vest
and become exercisable as to one third of the shares subject to the option;
and if the closing price of a share of Class A Common Stock is at least
approximately 225% of the exercise price for 20 out of 30 consecutive trading
days ending on or prior to March 30, 2001, the options will vest and become
exercisable as to one third of the shares subject to the option. In addition to
early vesting in the event such closing price levels are attained, each
such option will also vest and become exercisable after 14 years and 6 months
even if Class A Common Stock does not so appreciate. For additional information
regarding the terms of such 'performance stock options,' see 'Proposal 3.
Approval of Amendments to the Company's Amended and Restated 1993 Equity
Participation Plan' below.
The Omnibus Budget Reconciliation Act of 1993 (the 'Tax Act') includes a
provision which may preclude a publicly held corporation from deducting annual
compensation in excess of $1,000,000 paid to certain of its highly compensated
officers. There are, however, exceptions under the Tax Act for qualified
performance based compensation (including stock options and SARs) if certain
conditions are met. Although the Company intends that awards of the 'performance
stock options' granted to the Chairman and Chief Executive Officer and the
President and Chief Operating Officer will satisfy these conditions, there can
be no assurance such awards will satisfy such conditions.
In addition, the Compensation Committee agreed that annual incentives for
the rest of the corporate staff would be on a discretionary basis, based on
interim and year-end reviews of performance relative to strategic and financial
objectives. The Compensation Committee believes that a less discretionary
process would be impractical during the current period of relative uncertainty,
as the Company's corporate center and business are restructured. The Company
intends to move to a more formalized annual incentive plan that determines
awards based on Company or unit performance and achievement of specific
objectives, when appropriate.
Adoption of Mid-Term Plans. The Compensation Committee approved, in
concept, the implementation of the Mid-Term Plans which is intended to focus the
efforts of the management of each of the Company's four principal business units
on sustained profitability. The Mid-Term Plans, which are described above, will
pay awards out of an incentive pool created for each of the four principal
business units based upon the amount by which a unit's actual profit exceeds an
acceptable level.
The Compensation Committee believes the Mid-Term Plans will provide an
important component of incentive compensation by highlighting longer-term
performance of each business unit. With relatively autonomous units in diverse
businesses, linking a portion of variable pay to business unit results will hold
senior unit managers accountable for sustained unit profitability. A manager's
16
<PAGE>
participation in a Mid-Term Plan would be complemented, as appropriate, by
participation in the Equity Participation Plan. Taken together, these two forms
of long-term incentives will provide business unit managers with vested
interests in maximizing their unit's longer-term profitability.
Grant of Equity-based Incentives. The Compensation Committee approved stock
option grants to selected corporate and business unit managers, since the
Compensation Committee determined that it was in the best interest of
shareholders to provide significant equity incentives to the new management
team. Accordingly, options were granted with an exercise price equal to the
closing price of the Class A Common Stock on April 27, 1993, the first full
trading day for the Class A Common Stock following the Change in Control. Such
options are set forth in the Summary Compensation Table below.
In addition, the Compensation Committee approved grants of restricted stock
to selected executives to provide retention incentives and compensation for
forfeited compensation from previous employers or for prior years. Restricted
stock awards have restrictions, most of which lapse on December 31, 1996.
Summary. The Compensation Committee believes the Executive Compensation
Program, through the Compensation Committee's administration of the elements of
the Program, will ensure the Company's ability to retain, motivate and attract
the executive resources required to maximize shareholder returns. The Company's
competitive pay philosophy facilitates the employment of talented executives.
The emphasis on variable pay and the direct link to both short-and long-term
results, as well as financial and stock performance, links this competitive pay
to critical measures of Company performance. In combination, all these elements
act in the best interests of the Company's shareholders.
The Compensation Committee
Irving M. Felt, Chairman
William L. Pallot
Gerald Tsai, Jr.
INTRODUCTION TO SUMMARY COMPENSATION TABLE
Just prior to the end of Fiscal 1993, a new chief executive officer as well
as other new executive officers of the Company were elected in connection with
the Change in Control which was consummated on April 23, 1993. At the same time,
the Company's former chief executive officer and all other executive officers of
the Company, except Harold D. Kingsmore and Jack Coppersmith, ceased to be
executive officers of the Company. Accordingly, during Fiscal 1993 neither the
Company's new chief executive officer nor any of its other new executive
officers received any material amount of salary from the Company. Therefore, the
only information with respect to annual salaries for Fiscal 1993 set forth in
the Summary Compensation Table is presented with respect to Messrs. Kingsmore
and Coppersmith. The Summary Compensation Table does set forth cash bonuses
awarded during Fiscal 1993 to certain of the new executive officers at the time
they accepted employment with the Company and in respect of performance during
1993, as well as non-cash awards under the Equity Participation Plan to the
Company's new chief executive officer and to four of the other new executive
officers of the Company who constituted the Company's four most highly
compensated executive officers during Transition 1993. The individuals whose
names appear in the Summary Compensation Table are sometimes referred to
collectively as the 'Named Officers.' Additional information with respect to the
compensation arrangements for the Named Officers is described below under
' -- Employment Arrangements with Executive Officers.'
17
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-------------------------------------------------------
AWARDS PAYOUTS
ANNUAL COMPENSATION ---------------------------- -------
--------------------------------------------------- RESTRICTED SECURITIES
NAME AND PRINCIPAL OTHER ANNUAL STOCK UNDERLYING LTIP ALL OTHER
POSITION PERIOD(1) SALARY($) BONUS($) COMPENSATION($)(2) AWARD(S)(#)(6) OPTIONS(#)(6) PAYOUTS($) COMPENSATION($)
- ---------------------- --------- --------- --------- ------------------ -------------- ------------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Nelson Peltz(3) ...... TP 1 -- -- -- 75,000 -- --
Chairman and Chief 1993 -- -- -- -- 600,000 -- --
Executive Officer of
Triarc
Peter W. May(3) ...... TP 1 -- -- -- 50,000 -- --
President and Chief 1993 -- -- -- -- 400,000 -- --
Operating Officer of
Triarc
Leon Kalvaria ........ TP 333,336 550,000 520,181(10) 12,500 40,000 -- --
Vice Chairman of 1993 -- 800,000(4) -- 30,000 150,000 -- --
Triarc
John C. Carson ....... TP 322,436 250,000 123,626(11) 7,500 30,000 -- --
President and Chief 1993 -- 1,000,000(5) -- 37,500 120,000 -- --
Executive Officer of
Royal Crown Company,
Inc.
Harold D. TP 266,666 450,000 -- -- 10,000 -- --
Kingsmore .......... 1993 300,000 1,300,000 (7) 50,000 50,000 -- --
President and Chief 1992 300,000 700,000 (7) -- -- -- 11,903(8)
Executive Officer of 1991 300,000 750,000 (7) -- -- -- --
Graniteville Company
Donald L. Pierce ..... TP 218,750 175,000 346,797(12) 6,250 35,000 -- --
President and Chief 1993 -- 500,000(5) -- 55,000 65,000 -- --
Executive Officer of
Arby's, Inc.
Jack TP 61,151 -- -- -- -- -- --
Coppersmith(9) ..... 1993 236,715 350,000 (7) -- 25,000 -- --
Executive Vice 1992 241,360 120,000 (7) -- -- -- --
President 1991 248,000 -- (7) -- -- -- --
-- Operations of
SEPSCO
</TABLE>
- ------------
(1) Information set forth opposite the letter 'TP' relates to Transition 1993,
while information set forth opposite 1993, 1992 or 1991 relates to Fiscal
1993, Fiscal 1992 or Fiscal 1991, respectively.
(2) Information in this column is set forth in accordance with the regulations
of the Securities and Exchange Commission only for Transition 1993, Fiscal
1993 and Fiscal 1992.
(3) Did not receive any amount of compensation during Fiscal 1993, except as
set forth under 'Long Term Compensation -- Awards.'
(4) Discretionary bonus awarded April 24, 1993 in respect of services rendered
in connection with the Refinancing and Reorganization. See ' -- Employment
Arrangements with Executive Officers,' below.
(5) One-time bonus pursuant to employment agreements entered into effective
April 24, 1993. See ' -- Employment Arrangements with Executive Officers,'
below.
(6) All restricted stock awards and stock option grants were made pursuant to
the Equity Participation Plan. The restricted stock awards are described
under ' -- Employment Arrangements with Executive Officers' below. Based
upon the closing price of Class A Common Stock on the New York Stock
Exchange, the principal market for Class A Common Stock since November 17,
1993 ('NYSE'), on December 31, 1993 of $25, the number and value of the
aggregate restricted stock
(footnotes continued on next page)
18
<PAGE>
(footnotes continued from previous page)
holdings of the Named Officers are as follows: Mr. Kalvaria -- 42,500
shares with a value of $1,062,500; Mr. Carson -- 45,000 shares with a value
of $1,125,000; Mr. Kingsmore -- 50,000 shares with a value of $1,250,000;
and Mr. Pierce -- 61,250 shares with a value of $1,531,250. The option
grants are described below under ' -- Options Granted In Respect of Fiscal
1993 and Transition 1993.' Prior to adoption of the Equity Participation
Plan in April 1993, the Company's executive compensation program did not
include grants of restricted stock awards.
(7) Perquisites and other personal benefits did not exceed the lesser of either
$50,000 or 10% of the total annual salary and bonus reported under the
headings of 'Salary' and 'Bonus.'
(8) Represents distributions under the Graniteville Company Retirement Savings
Plan.
(9) Mr. Coppersmith resigned as an officer and employee effective August 10,
1993.
(10) Includes $519,323 relating to Mr. Kalvaria's relocation to South Florida.
(11) Includes $121,422 relating to Mr. Carson's relocation to South Florida.
(12) Includes $345,289 relating to Mr. Pierce's relocation to South Florida.
EMPLOYMENT ARRANGEMENTS WITH EXECUTIVE OFFICERS
Nelson Peltz and Peter W. May. Since the Change in Control, Nelson Peltz
and Peter W. May have been serving the Company as its Chairman and Chief
Executive Officer and its President and Chief Operating Officer, respectively,
and each of them currently is receiving an annual base salary of $1.00. In
addition, Messrs. Peltz and May participate in the incentive compensation and
welfare and benefit plans made available to the Company's corporate officers,
including the Equity Participation Plan described below. In April 1994, the
Compensation Committee approved, subject to approval by the shareholders of
appropriate amendments to the Equity Participation Plan, the grant of
'performance stock options' for an aggregate of 3,500,000 shares of Class A
Common Stock to Messrs. Peltz and May. The Board of Directors has approved such
amendments. These options were granted in lieu of base salary, annual
performance bonus and long term compensation for a six-year period commencing
April, 1993. They have an exercise price of $20.125 per share and will vest and
become exercisable as follows: if the closing price of a share of Class A Common
Stock is at least approximately 135% of the exercise price for 20 out of 30
consecutive trading days ending on or prior to March 30, 1999, each such option
will vest and become exercisable as to one third of the shares subject to the
option; if the closing price of a share of Class A Common Stock is at least
approximately 180% of the exercise price for 20 out of 30 consecutive trading
days ending on or prior to March 30, 2000, each such option will vest and become
exercisable as to one third of the shares subject to the option; and if the
closing price of a share of Class A Common Stock is at least approximately 225%
of the exercise price for 20 out of 30 consecutive trading days ending on or
prior to March 30, 2001, the options will vest and become exercisable as to one
third of the shares subject to the option. In addition to early vesting in the
event such closing price levels are attained, each such option will also vest
and become exercisable after 14 years and 6 months even if Class A Common Stock
does not so appreciate. For additional information regarding the terms of such
'performance stock options,' see 'Proposal 3. Approval of Amendments to the
Company's Amended and Restated 1993 Equity Participation Plan' below.
Leon Kalvaria. Since the Change in Control, Leon Kalvaria has been serving
the Company as its Vice Chairman and is currently receiving an annual base
salary of $500,000. Effective November 1,
19
<PAGE>
1993, Mr. Kalvaria entered into an employment agreement with the Company (the
'Kalvaria Employment Agreement') having an initial term which expires on
December 31, 1996 but which automatically extends for successive three year
periods on January 1 of each year, commencing January 1, 1995, unless, not later
than one year preceding the date of any such extension, either party notifies
the other that it does not wish to have the term so extended. The Kalvaria
Employment Agreement provides for an annual salary of $500,000. In addition, the
Kalvaria Employment Agreement provides that Mr. Kalvaria will be entitled to
receive a bonus payment in each full calendar year of the agreement, commencing
in 1994, in an amount not less than the amount by which the salary and other
cash payments made to him during such year pursuant to any long or short-term
management incentive plan is less than $800,000. The Kalvaria Employment
Agreement also provides that if Mr. Kalvaria dies during the term of the
agreement, his legal representative will be entitled to receive from the Company
an amount calculated at an annual rate of $800,000 for the remaining term of the
agreement if the Company had been able to procure, at a reasonable rate, term
insurance on Mr. Kalvaria's life to pay such obligation, or, if the Company had
not been able to procure such insurance, an amount calculated at the annual rate
of $800,000 for the three-month period following Mr. Kalvaria's death. The
Company has obtained such insurance to fund this obligation for the next seven
years at an annual premium of approximately $3,000. The Kalvaria Employment
Agreement also provides that if the Company terminates the agreement as a result
of Mr. Kalvaria becoming disabled, the Company will continue to pay Mr. Kalvaria
at the annual rate of $800,000 for an 18 month period following such
termination. Pursuant to the Kalvaria Employment Agreement, if Mr. Kalvaria's
employment terminates for any reason other than for cause, the restricted stock
awards granted to Mr. Kalvaria in April 1993 and March 1994 will immediately
vest and the stock options granted to Mr. Kalvaria in April 1993 and March 1994
will immediately vest in their entirety and remain exercisable for a period of
one year following the date of such termination. Such accelerated vesting will
not, however, be applicable to certain 'performance stock options' granted to
Mr. Kalvaria. For additional information regarding the terms of such
'performance stock options,' see 'Proposal 3. Approval of Amendments to the
Company's Amended and Restated 1993 Equity Participation Plan' below.
The Company and Mr. Kalvaria are parties to an agreement (the 'Relocation
Agreement') pursuant to which Mr. Kalvaria relocated to Florida in order to work
in the West Palm Beach office. Mr. Kalvaria owns a cooperative apartment (the
'Apartment'), and because relocation companies, including the relocation company
retained by the Company, typically do not handle the sale of cooperative
apartments, the Relocation Agreement is designed to place Mr. Kalvaria in the
same position he would have occupied if he had sold the Apartment through a
relocation company at an appraised value of $3.5 million. Accordingly, in
addition to providing certain standard relocation benefits, pursuant to the
Relocation Agreement, the Company guaranteed a $3 million bank loan (the 'Bank
Loan') secured by a first mortgage on Mr. Kalvaria's new Florida residence (the
'Florida Property'), and the Company made loans aggregating $500,000 to Mr.
Kalvaria in connection with his purchase of the Florida Property. The Bank Loan
bears interest at 6 1/2% per annum, has a 15-year amortization schedule, and
matures in 5 years. The Relocation Agreement provides that when Mr. Kalvaria
sells the Apartment, the net proceeds will be used to reduce the principal on
the Bank Loan to $1 million, at which time the Company's guarantee will be
released. Additionally, any excess net proceeds from the sale of the Apartment
will be used to reduce the principal of the Company loans. To the extent that
the net proceeds of the sale of the Apartment are insufficient to reduce the
principal on the Bank Loan to $1 million, the Company will make additional loans
to Mr. Kalvaria which will be used to reduce the principal on the Bank Loan to
$1 million. The Company loans bear interest at the
20
<PAGE>
higher of 6 1/2% per annum or the applicable federal rate for medium term loans
with interest payable annually and mature on December 31, 1996.
John C. Carson. On April 24, 1993, the Company and Royal Crown Company,
Inc. ('Royal Crown') entered into an employment agreement with John C. Carson
(the 'Carson Employment Agreement') providing for the employment of Mr. Carson
as President and Chief Executive Officer of Royal Crown. Mr. Carson's term of
full-time employment began on May 10, 1993 and will continue (unless otherwise
terminated as provided in the Carson Employment Agreement) until December 31,
1996, subject to automatic renewal for successive two-year periods unless either
Royal Crown or Mr. Carson elects, upon 180 days' notice, not to renew.
Pursuant to the Carson Employment Agreement, Mr. Carson will receive an
annual base salary of $500,000. Mr. Carson also will be eligible to receive an
annual cash incentive bonus under Royal Crown's proposed Annual Plan (described
below), cash compensation under Royal Crown's proposed Mid-Term Plan (described
below) and additional compensation under the Equity Participation Plan. For
1994, the sum of Mr. Carson's salary and annual cash incentive bonus will be at
least $800,000. Mr. Carson's annual base salary will be reviewed annually for
possible increase, but not decrease, by the Board of Directors of Royal Crown.
Should Royal Crown elect to terminate Mr. Carson's employment without good
cause, the Carson Employment Agreement provides that he will receive a special
payment of $800,000 in addition to base salary through the end of the month in
which the termination occurs and accrued bonuses and compensation under Royal
Crown's proposed mid-term cash incentive plan. The Carson Employment Agreement
provides that, in the event of a change in control of Royal Crown or any parent
of Royal Crown, Mr. Carson would be obligated to continue in employment under
the Carson Employment Agreement until the first anniversary of such change in
control, after which he would have the right to resign as an officer and
employee of Royal Crown and to receive the same payments that he would have been
entitled to receive had his employment been terminated by Royal Crown without
good cause.
Harold D. Kingsmore. On April 24, 1993, Graniteville Company
('Graniteville') and Harold D. Kingsmore entered into an employment agreement
(the 'Kingsmore Employment Agreement') providing for Mr. Kingsmore's employment
as President and Chief Executive Officer of Graniteville. The term of the
agreement commenced May 1, 1993 and will continue (unless otherwise terminated
as provided in the Kingsmore Employment Agreement) until December 31, 1996,
subject to renewal for an additional three years unless either party notifies
the other that it does not wish to renew.
Pursuant to the Kingsmore Employment Agreement, Mr. Kingsmore will receive
an annual base salary of $400,000. Mr. Kingsmore also will be eligible to
receive an annual cash incentive bonus under Graniteville's proposed Annual Plan
(described below), cash compensation under Graniteville's proposed Mid-Term Plan
(described below) and additional compensation under the Equity Participation
Plan. To compensate for the fact that no distribution will be made under the
mid-term plan until completion of the first three year performance cycle, Mr.
Kingsmore will receive cash compensation of at least $850,000 with respect to
his services during 1994 and 1995, exclusive of any accrual with respect to such
years under the mid-term plan. Mr. Kingsmore's annual base salary will be
reviewed annually for possible increase, but not decrease, by Graniteville's
Board of Directors.
Donald L. Pierce. On April 24, 1993, Arby's, Inc. ('Arby's') entered into
an employment agreement with Donald L. Pierce (the 'Pierce Employment
Agreement,' and collectively with the Kalvaria Employment Agreement, the Carson
Employment Agreement and the Kingsmore Employment Agreement, the 'Employment
Agreements') providing for Mr. Pierce's employment as President
21
<PAGE>
and Chief Executive Officer of Arby's. The term of Mr. Pierce's employment
commenced in May 1993 and will continue (unless otherwise terminated as provided
in the Pierce Employment Agreement) until December 31, 1996, subject to renewal
for an additional three years unless either party notifies the other that it
does not wish to renew.
Pursuant to the Pierce Employment Agreement, Mr. Pierce will receive an
annual base salary of $350,000. Mr. Pierce also will be eligible to receive an
annual cash incentive bonus under Arby's proposed Annual Plan (described below),
cash compensation under Arby's proposed Mid-Term Plan (described below) and
additional compensation under the Equity Participation Plan. Mr. Pierce's annual
base salary will be reviewed annually for possible increase, but not decrease,
by Arby's Board of Directors.
CASH INCENTIVE PLANS
As indicated above under ' -- Report of the Compensation Committee,' the
Company will develop Annual Plans and Mid-Term Plans for executive officers of
each of the Company's four principal business units.
Pursuant to their Employment Agreements, the proposed annual cash incentive
plans of Royal Crown, Graniteville and Arby's will enable Messrs. Carson,
Kingsmore and Pierce, respectively, to earn up to 75% of their then-current base
salaries based on achievement of certain individual and company performance
goals to be determined by Mr. Carson and Company representatives, in the case of
Royal Crown's plan, Mr. Kingsmore and Company representatives, in the case of
Graniteville's plan, and Mr. Pierce and Company representatives, in the case of
Arby's plan. Officers and key employees of each of Royal Crown, Graniteville and
Arby's will also be eligible to participate in the relevant company's plan,
which will be administered by such company's board of directors.
From time to time, the Compensation Committee may award discretionary
bonuses based on performance to certain executive officers. The amounts of such
bonuses will be based on the Compensation Committee's evaluation of each such
individual's contribution.
Pursuant to the terms of their Employment Agreements, Messrs. Carson,
Kingsmore and Pierce also will be entitled to additional compensation pursuant
to a proposed Mid-Term Plan of Royal Crown, Graniteville and Arby's,
respectively. Each Mid-Term Plan will be developed jointly by the chief
executive officer of the subsidiary and representatives of the Company. Each
Mid-Term Plan will be designed to yield to Messrs. Carson, Kingsmore and Pierce
a target award in cash at least equal to 75% of the participant's then-current
base salary if Royal Crown, Graniteville or Arby's, as the case may be, achieves
an agreed-upon profit over a three-year performance cycle. During each plan
year, an amount will be accrued based upon the amount by which the relevant
company's profit for such year exceeds a minimum return to be determined. A new
three-year performance cycle will begin each year, such that after the third
year the annual cash amount paid to Messrs. Carson, Kingsmore and Pierce
pursuant to the relevant Mid-Term Plan should equal the target award if their
respective company's profit goals have been achieved. For Mr. Carson, amounts
accrued with respect to 1993 and 1994 will be guaranteed at a minimum of 100% of
the annualized target award for the portion of 1993 that Mr. Carson was employed
by Royal Crown (i.e., at least $72,917 based on a May 31, 1993 commencement
date) and a minimum of 100% of the target award for 1994 (i.e., at least
$125,000). For Mr. Pierce, amounts accrued for 1993 will be guaranteed at a
minimum of 80% of the annualized target for the portion of 1993 that he was
employed by Arby's (i.e., at least $40,833 based on a May 31, 1993 commencement
date).
22
<PAGE>
1993 EQUITY PARTICIPATION PLAN
The Equity Participation Plan was adopted on April 24, 1993, amended and
restated on July 22, 1993, and, as amended and restated, was approved by the
Company's shareholders on October 27, 1993. It expires by its terms on April 24,
1998. The plan provides for the grant of options to purchase Class A Common
Stock, tandem SARs and restricted shares of Class A Common Stock. Selected
officers and key employees of, and key consultants to, the Company and its
subsidiaries are eligible to participate in the plan. The plan is being
administered by the Compensation Committee, which will determine from time to
time to grant options, SARs and restricted stock.
On April 24, 1993, each of Messrs. Kalvaria, Carson, Kingsmore and Pierce
were granted restricted shares of Class A Common Stock under the Equity
Participation Plan (each, a 'Fiscal 1993 RSA'). Each Fiscal 1993 RSA is set
forth in the Summary Compensation Table above. In addition, on March 1, 1994,
each of Messrs. Kalvaria, Carson and Pierce also received additional restricted
shares of Class A Common Stock, which shares were granted in respect of their
respective performance during Transition 1993 and to incentivize their future
performance (each, a 'Transition 1993 RSA'). Each Transition 1993 RSA is set
forth in the Summary Compensation Table above. All of the Fiscal 1993 RSAs
granted to Mr. Carson will vest on May 10, 1996, and all of the Fiscal 1993 RSAs
granted to Messrs. Kingsmore and Pierce will vest on December 31, 1996. All of
the Transition 1993 RSAs granted to Messrs. Carson and Pierce will vest on
January 1, 1997. All of the Fiscal 1993 RSAs granted to Mr. Kalvaria will vest
on December 31, 1996 and all of the Transition 1993 RSAs granted to him will
vest on January 1, 1997; provided, however, if Mr. Kalvaria's employment
terminates for any reason other than for cause, his Fiscal 1993 RSAs and
Transition 1993 RSAs will vest immediately upon such termination.
Shareholders are being asked at the Meeting to approve certain amendments
to the Equity Participation Plan, see 'Proposal 3. Approval of Amendments to the
Company's Amended and Restated 1993 Equity Participation Plan.'
MISCELLANEOUS
Messrs. Carson, Kingsmore, Pierce and Kalvaria are entitled pursuant to
their respective Employment Agreements to participate in other long-term
compensation and life insurance, disability and medical plans made generally
available to senior officers of Royal Crown, Graniteville, Arby's and the
Company, respectively. Messrs. Carson, Kingsmore and Pierce also will be
provided the use of a car and other customary benefits during the terms of their
respective agreements. Pursuant to the Company's standard employment-related
relocation policy, which is applicable to each of the Named Officers and other
senior officers of the Company, an officer's compensation will be increased to
the extent necessary to cause all employment-related relocation expenses to be
fully reimbursed on an 'after-tax' basis.
Mr. Coppersmith resigned as an officer and employee of SEPSCO effective
August 10, 1993 and entered into a consulting agreement with SEPSCO pursuant to
which he will render consulting services on a part-time basis for a fee of
$30,000 per month until May 1, 1995. At the end of the consulting period, Mr.
Coppersmith may receive a discretionary bonus based upon the value of the
services rendered by him.
23
<PAGE>
OPTIONS GRANTED IN RESPECT OF FISCAL 1993 AND TRANSITION 1993
The following table sets forth certain information with respect to options
to purchase shares of Class A Common Stock granted to the Named Officers in
respect of Fiscal 1993 and Transition 1993 performance and to incentivize future
performance. No tandem or freestanding SARs were granted to any of the Named
Officers, and no stock options were exercised by any Named Officer during Fiscal
1993 or Transition 1993. As noted in such table, certain of such options were
granted on March 1, 1994, subsequent to the end of Transition 1993, but in
respect of Transition 1993 performance.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- ----------------------------------------------------------------------------------------------------------------- GRANT DATE
% OF TOTAL VALUE
NUMBER OF OPTIONS GRANTED TO ----------
SECURITIES EMPLOYEES IN EXERCISE GRANT DATE
UNDERLYING RESPECT OF OR BASE PRESENT
OPTIONS FISCAL 1993 AND PRICE EXPIRATION VALUE
NAME GRANTED(#) TRANSITION 1993 ($/SH) DATE ($)(1)
- ---------------------------------------------- ---------- ------------------ -------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Nelson Peltz.................................. 600,000(2)(4) 27% 18.00 4/24/03 6,145,200
75,000(3)(4) 21.00 3/1/04 896,175
Peter W. May.................................. 400,000(2)(4) 18% 18.00 4/24/03 4,096,800
50,000(3)(4) 21.00 3/1/04 597,450
Leon Kalvaria................................. 150,000(2)(4) 8% 18.00 4/24/03 1,536,300
40,000(3)(4) 21.00 3/1/04 477,960
John C. Carson................................ 120,000(2)(5) 6% 18.00 4/24/03 1,157,760
30,000(3)(5) 21.00 3/1/04 337,680
Harold D. Kingsmore........................... 50,000(2)(5) 2% 18.00 4/24/03 482,400
10,000(3)(5) 21.00 3/1/04 112,560
Donald L. Pierce.............................. 65,000(2)(5) 4% 18.00 4/24/03 627,120
35,000(3)(5) 21.00 3/1/04 393,960
Jack Coppersmith(6)........................... 25,000(2) 1% 18.00 4/24/03 241,200
</TABLE>
- ------------
(1) These values were calculated using a Black-Scholes option pricing model. The
actual value, if any, that an executive may realize will depend on the
excess, if any, of the stock price over the exercise price on the date the
options are exercised, and no assurance exists that the value realized by an
executive will be at or near the value estimated by the Black-Scholes model.
The following assumptions were used in the calculations:
(a) assumed option term of 7.5 years;
(b) stock price volatility factor of 0.4758;
(c) 6.5% annual discount rate;
(d) no dividend payment; and
(e) 3% discount to Black-Scholes ratio for each year an option remains
unvested.
(2) These options were granted on April 24, 1993 and have an exercise price
equal to the closing price of Class A Common Stock on the American Stock
Exchange, the principal market for Class A Common Stock until November 17,
1993 (the 'ASE'), on April 27, 1993, the first day of trading after the
options were granted.
(3) These options were granted on March 1, 1994 in respect of performance during
Transition 1993 and have an exercise price equal to the closing price of
Class A Common Stock on the NYSE on March 1, 1994.
(4) One-third of the options granted will vest on each of the first, second and
third anniversaries of the date of grant and the options will be exercisable
at any time between the date of vesting and the
(footnotes continued on next page)
24
<PAGE>
(footnotes continued from previous page)
tenth anniversary of the date of grant. Pursuant to the Kalvaria Employment
Agreement, if Mr. Kalvaria's employment terminates for any reason other than
for cause, the stock option awards granted to Mr. Kalvaria will immediately
vest in their entirety and remain exercisable for a period of one year
following the date of such termination.
(5) One-third of the options granted will vest on each of the third, fourth and
fifth anniversaries of the date of grant and the options will be exercisable
at any time between the date of vesting and the tenth anniversary of the
date of grant.
(6) Mr. Coppersmith resigned as an officer and employee effective August 10,
1993 and as a result, he has forfeited his options.
OPTION VALUES AT END OF FISCAL 1993 AND TRANSITION 1993
The following table sets forth certain information concerning the value at
the end of Fiscal 1993 and Transition 1993 of unexercised in-the-money options
to purchase shares of Class A Common Stock granted to the Named Officers
outstanding as of the end of Fiscal 1993 and Transition 1993. This table does
not include the options to purchase shares of Class A Common Stock which were
granted on March 1, 1994 because such options had not been granted until
subsequent to the end of Transition 1993 and therefore were not outstanding as
of the end of Fiscal 1993 or Transition 1993.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF VALUE OF
UNDERLYING UNEXERCISED UNEXERCISED
UNEXERCISED IN-THE-MONEY IN-THE-MONEY
OPTIONS OPTIONS OPTIONS
AT FISCAL AT FISCAL AT TRANSITION
SHARES 1993 1993 1993 END
ACQUIRED END(#)(1) END($)(2) ($)(3)
ON VALUE EXERCISABLE/ EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) REALIZED($) UNEXERCISABLE UNEXERCISABLE UNEXERCISABLE
- ------------------------------------------------- ----------- ----------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Nelson Peltz..................................... -0- -0- -0-/600,000 -0-/525,000 -0-/4,200,000
Peter W. May..................................... -0- -0- -0-/400,000 -0-/350,000 -0-/2,800,000
Leon Kalvaria.................................... -0- -0- -0-/150,000 -0-/131,250 -0-/1,050,000
John C. Carson................................... -0- -0- -0-/120,000 -0-/105,000 -0-/ 840,000
Harold D. Kingsmore.............................. -0- -0- -0-/ 50,000 -0-/ 43,750 -0-/ 350,000
Donald L. Pierce................................. -0- -0- -0-/ 65,000 -0-/ 56,875 -0-/ 455,000
</TABLE>
- ------------
(1) At the end of Transition 1993, there was no change in the number of
securities underlying unexercised Options granted to the Named Officers or
in the number of such Options that were exercisable at such time.
(2) On April 30, 1993, the last day of Fiscal 1993, the closing price of Class A
Common Stock on the ASE was $18 7/8.
(3) On December 31, 1993, the last day of Transition 1993, the closing price of
Class A Common Stock on the NYSE was $25.00.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Martin Rosen, who served as a member of the Compensation Committee from
April 24, 1993 until October 1993, is a member of the law firm of Rosen & Reade.
During Fiscal 1993 and Transition
25
<PAGE>
1993, the Company paid Rosen & Reade approximately $1,744,000 and approximately
$1,127,000, respectively, on account of legal services rendered to the Company.
As discussed above, Mr. Rosen will not stand for reelection but will continue to
serve as a director of the Company until the Meeting.
STOCK PRICE PERFORMANCE GRAPH
TRIARC COMPANIES, INC.
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN:
TRIARC VS. S&P 500 & S&P DIVERSIFIED MANUFACTURING
TOTAL RETURN TO SHAREHOLDERS
REINVESTED DIVIDENDS
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
BASE
PERIOD RETURN RETURN RETURN RETURN RETURN
1988 1989 1990 1991 1992 1993
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
TRIARC ................. 100 170 45 45 205 355
S&P 500................. 100 130 125 162 175 190
MANU-DIVERSIFIED INDLS.. 100 110 105 130 140 170
</TABLE>
Companies in indices weighted by market capitalization; indexed to 100 at
4/30/88. All dividends, if any, reinvested over period.
26
<PAGE>
CERTAIN TRANSACTIONS
TRANSACTIONS IN CONNECTION WITH THE CHANGE IN CONTROL
The Company and its subsidiaries completed certain transactions in
connection with the Change in Control, including transactions involving certain
of the Posner Entities. Such transactions included:
(a) The exchange by the Posner Entities and the Company of 5,982,866
shares of the Company's common stock for an equal number of shares of the
Company's Redeemable Convertible Preferred Stock;
(b) The resignation of Victor Posner and his son, Steven Posner, as
officers and employees of the Company and all of its subsidiaries and the
entering into a five year consulting agreement with Steven Posner (not
requiring the provision of any substantial services) which provided for an
initial payment of $1,000,000 on April 23, 1993 and an annual consulting
fee of $1,000,000 thereafter;
(c) The entering into of a modification of the lease with respect to
the corporate headquarters of the Company and certain subsidiaries
described below under ' -- Certain Transactions with Former Management and
Former Affiliates'; and
(d) The purchase of certain minority interests in CFC Holdings Corp.
('CFC Holdings'), SEPSCO and Wilson from the Posner Entities described
below (the 'Minority Share Acquisitions').
In connection with the Change in Control, the Company acquired from the
Posner Entities shares of certain subsidiaries for an aggregate purchase price
of $17.2 million. After giving effect to the offsets of certain amounts owed to
the Company, the Posner Entities received net proceeds from such transactions
aggregating approximately $9.7 million. The prices paid for such minority
interests were determined by negotiations among the Company, DWG Acquisition and
the sellers in the context of the Change in Control, and no separate
determination was made that the respective purchase prices represented the fair
value of the shares purchased.
In accordance with certain agreements (the 'CFC Holdings Agreements')
between the Company and certain holders of shares of common stock (the 'Holdings
Common Stock') of CFC Holdings, the indirect parent of Royal Crown and Arby's,
which agreements are described in the following two paragraphs, the Company
purchased on April 23, 1993 an additional 4.5% of the shares of Holdings Common
Stock.
Pursuant to the CFC Holdings Agreements, the Company purchased from NVF
Company ('NVF') on April 23, 1993 141,000 shares of Holdings Common Stock
representing 1.4% of the then issued and outstanding capital stock of CFC
Holdings for $3.6 million. At December 31, 1992, the aggregate net book value of
the 141,000 shares of Holdings Common Stock being sold by NVF was approximately
$212,000. The Company made payment of the purchase price to NVF first by offset
against amounts (aggregating approximately $2.5 million) owed to the Company and
subsidiaries by NVF on account of the cost sharing arrangements described under
' -- Certain Transactions with Former Management and Former Affiliates' (the
'Former Cost Sharing Arrangements') and $1.1 million was paid by the Company to
NVF in cash. At April 23, 1993, Posner Entities beneficially owned approximately
38.2% of the outstanding voting securities of NVF (approximately 36.4% of NVF's
common stock actually outstanding on such date), and NVF may be deemed to be
controlled by Victor Posner. In August 1993, NVF became a debtor in a case filed
by its creditors under Chapter 11 of the Federal Bankruptcy Code. For
information concerning claims made against the Company by NVF's
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<PAGE>
bankruptcy counsel and reserves taken by the Company in respect of contingent
liabilities relating to such NVF bankruptcy proceeding (the 'NVF Proceeding'),
see 'Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Results of Operations' in the Company's Transition
Report on Form 10-K for the period from May 1, 1993 to December 31, 1993, which
is incorporated by reference herein. In addition, in April, 1994, the
Official Committee of Unsecured Creditors of NVF (the 'NVF Committee') filed a
motion in the NVF Proceeding seeking the court's authorization to commence an
adversary proceeding against the Company and certain of its subsidiaries for (a)
aiding and abetting breach of fiduciary duty and the duty of care, (b) equitable
subordination of claims which the Company may have against NVF, and (c) recovery
of certain allegedly fraudulently transfers and conveyances allegedly made by
NVF to the Company. The bankruptcy court has not yet ruled with respect to the
NVF Committee's motion. The Company intends to vigorously contest such claims.
Because NVF Committee's notion was filed on April 23, 1994, the Company has not
had an opportunity to fully investigate the matters contained therein. However,
based upon information currently available to the Company, the Company's
management does not believe that the outcome of the NVF Proceeding will have a
material adverse effect on the Company's consolidated financial position or
results of operations.
Pursuant to the CFC Holdings Agreements, the Company purchased from
Insurance Risk Management, Inc. ('IRM') on April 23, 1993, 324,300 shares of
Holdings Common Stock, representing 3.1% of the then issued and outstanding
capital stock of CFC Holdings, for an aggregate of $8.4 million. At December 31,
1992, the aggregate net book value of the 324,300 shares of Holdings Common
Stock being sold by IRM was approximately $488,000. The Company made payment of
the purchase price to IRM first, by offset of the $2.1 million owed to the
Company by IRM on account of the stock repurchase described below, second, by
offset against amounts owed to the Company and subsidiaries by IRM on account of
the Former Cost Sharing Arrangements described under ' -- Certain Transactions
with Former Management and Former Affiliates' (aggregating approximately $1.7
million), third, by offset against amounts owed by IRM to Chesapeake Insurance
Company Limited, a direct wholly-owned subsidiary of CFC Holdings ('Chesapeake
Insurance'), (representing insurance premiums payable, aggregating approximately
$1.2 million) and fourth, by the payment by the Company to IRM in cash of the
remaining $3.4 million. At April 23, 1993, 25% of the stock of IRM was owned by
the Company, 40% was owned by NVF and 35% was owned by Salem Corporation
('Salem'), which at that time was, in turn, 49% owned by Victor Posner and which
at that time might have been deemed to be controlled by Victor Posner. Since
each of NVF and Salem may be deemed to be controlled by Victor Posner, IRM may,
in turn, be deemed to be controlled by Victor Posner.
IRM also purchased from the Company on April 23, 1993 the 250 shares of
IRM's common stock owned by the Company for $2.1 million. At December 31, 1992,
the aggregate net book value of the shares of IRM being sold by the Company was
approximately $1.2 million, after giving pro forma effect to the proposed sale
by IRM of the shares of the Holdings Common Stock described above. The payment
for such purchase of shares of IRM owned by the Company was made by offset
against amounts owed by the Company and subsidiaries under the agreement for the
sale of the Holdings Common Stock, as described above.
In addition, on April 23, 1993, the Company purchased from Posner Entities,
721,931 shares of SEPSCO common stock, representing 6.2% of the then issued and
outstanding voting securities of SEPSCO, at a purchase price of approximately
$6.93 per share or an aggregate of $5 million. Such price approximated the
market price for such stock on the date that a letter of intent was entered into
with respect to the Change in Control ($6.875 on September 1, 1992). At April
23, 1993, the closing sale price
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<PAGE>
for SEPSCO's common stock on the Pacific Stock Exchange ('PSE') was $15.50, and
the aggregate market value of the 721,931 shares of SEPSCO common stock being
purchased by the Company was approximately $11.2 million. The Company also
purchased from Posner Entities 161,800 shares of common stock of Wilson,
representing approximately 4.9% of the issued and outstanding voting securities
of Wilson, at a purchase price of approximately $1.24 per share or an aggregate
of $200,000. Such price approximated the net book value for such stock on the
date that a letter of intent was entered into with respect to the Change in
Control ($1.21 as of June 30, 1992). At April 23, 1993, the closing sale price
for Wilson's common stock on the PSE was $.5625 and the aggregate market value
of the 161,800 shares of Wilson common stock being purchased by the Company was
approximately $91,000. The payment for the purchases of SEPSCO and Wilson stock,
described above, was made by the Company in cash.
TRANSACTIONS WITH FORMER MANAGEMENT AND FORMER AFFILIATES
During Fiscal 1993, the Company and its subsidiaries engaged in
transactions with certain corporations which at that time might have been deemed
to be controlled by Victor Posner and to have been affiliates of the Company and
its subsidiaries until the Change in Control. Such former affiliates (the
'Former Affiliates') were NVF, NVF's 68% owned subsidiary, APL Corporation
('APL'), IRM, Salem and until its filing for protection under Chapter 7 of the
Federal Bankruptcy Court in February 1992, Pennsylvania Engineering Corporation
('PEC').
(1) Pursuant to a management services agreement (the 'Former Management
Services Agreement') and the Former Cost Sharing Arrangements, in Fiscal 1993,
the Company provided to its subsidiaries and the Former Affiliates certain
management services, including legal, accounting, internal auditing, insurance,
financial and other management services. Under the Former Management Services
Agreement, the Company charged the Former Affiliates $6,640,000 (including
interest on past due balances) for such services in Fiscal 1993, excluding the
charges described in paragraph (2) below. Certain Former Affiliates were unable
to pay approximately $5,096,000 of the amounts charged to them during such
period, and such amounts were reserved and reallocated among the Company and its
subsidiaries and other participants under the Former Management Services
Agreement, of which approximately $4,991,000 was borne by the Company and its
subsidiaries, and the remaining $105,000 was borne by the other participants.
The agreements entered into in connection with the Change in Control
provide for the termination of providing management services and space pursuant
to the Former Cost Sharing Arrangements to the Former Affiliates within six
months after the closing of the Change in Control as well as for the
reimbursement for any space or services provided to the Former Affiliates during
the period between the date of the closing of the Change in Control and the date
of such termination at commercially reasonable rates no less than the rates the
Company would charge an unaffiliated third party. Pursuant to these
arrangements, the Company provided certain limited services to the Former
Affiliates through October 23, 1993, and discontinued such services thereafter.
Charges to the Former Affiliates for such services, including certain
reinsurance and equipment lease billings, aggregated approximately $166,000
during Transition 1993.
(2) Until January 31, 1994, the Company leased approximately 297,000 square
feet at 6917 Collins Avenue, Miami Beach, Florida (the 'Leased Space') from
Victor Posner Trust No. 6, a trust created for the benefit of Victor Posner and
his children (the 'Landlord'), pursuant to a master commercial lease agreement
dated as of April 1, 1983 (the 'Lease'). In Fiscal 1993, the Leased Space, which
constituted approximately 98% of the space in such building, was used primarily
for the corporate offices of the
29
<PAGE>
Company, certain of its subsidiaries and certain of the Former Affiliates. Also
included in the Leased Space were apartments which were used from time to time
on an 'as needed' basis by the Company, its subsidiaries, and the Former
Affiliates for accommodations for persons visiting such corporate offices. In
Fiscal 1993, $5,790,000 of the cost of the Leased Space was borne by the Company
and its subsidiaries, and $826,000 was charged to the Former Affiliates.
Approximately $436,000 of the amounts charged to certain of the Former
Affiliates during Fiscal 1993 which such Former Affiliates were unable to pay
were reserved and reallocated among the Company and its subsidiaries and the
other participants under the Former Management Services Agreement, of which
approximately $380,000 was borne by the Company and its subsidiaries.
In connection with the Change in Control, the Landlord and the Company
entered into a Lease Modification and Extension Agreement (the 'Lease
Modification'). The Lease Modification provided, among other things, for an
extension of the lease for a period of four years commencing on April 1, 1993
and ending on March 31, 1997 and for a reduction in the annual amount of base
rent retroactive to October 1, 1992 to the lesser of $14.00 per rentable square
foot or an aggregate of $4 million per annum. In addition, the Lease
Modification provided for a reduction in the amount charged for inside and
outside parking associated with the building, the elimination of any charges or
fees on account of furniture and fixtures used in the apartments described above
and the elimination of any obligation to restore the premises at the end of the
term of the extended Lease. The Lease Modification also provided that the
Landlord may, on nine months' notice to the Company, terminate the Lease, and
that the Company may, on six months' notice to the Landlord, terminate the lease
upon payment to the Landlord of a single payment (the 'Early Termination
Payment') equal to all of the base rent which would otherwise be payable for the
balance of the extended term, without discount, plus additional rent due through
the date of such early termination, less any amounts then owed by Landlord to
the Company, and, that thereafter the Company and subsidiaries shall be released
from any further obligations under the Lease Modification. Pursuant to the Lease
Modification, all outstanding rent obligations for the Leased Space, aggregating
approximately $20,638,000, were settled on April 23, 1993 for $11,738,000,
resulting in a rent reduction credit of approximately $8,900,000. Aggregate rent
payments of approximately $2.9 million were made by the Company in respect of
the Leased Space during Transition 1993. In July 1993, the Company gave notice
of termination of the Lease effective January 31, 1994. Because Landlord and
Triarc have not been able to agree upon the precise amount of the Early
Termination Payment, the parties have agreed to extend the time for payment of
the Early Termination Payment to May 16, 1994. In connection with such
extension, the parties agreed that the amount to be paid in respect of the Early
Termination Payment will bear interest from February 1, 1994 until paid at the
prime or base reference rate of Citibank. In July 1993, the Company recorded a
charge of approximately $13,000,000 to provide for the remaining payments on the
Lease subsequent to its cancellation.
(3) In Fiscal 1993, NPC Leasing Corp. ('NPC Leasing'), an indirect
wholly-owned subsidiary of the Company, leased vehicles and other equipment to
the Former Affiliates under long-term lease obligations which are accounted for
as direct financing leases. Lease billings by NPC Leasing to the Former
Affiliates during Fiscal 1993 were approximately $144,000. Since May 1, 1993,
NPC Leasing has not been providing any services to, nor are any material credits
due to NPC Leasing from, any Former Affiliate.
(4) Until October 1, 1993, Chesapeake Insurance provided certain insurance
coverage and the reinsurance of certain risks primarily for the Company and its
subsidiaries and the Former Affiliates. During Fiscal 1993, net premiums
attributable to such insurance coverage and reinsurance for the
30
<PAGE>
Former Affiliates approximated $2,875,000. Chesapeake Insurance no longer
insures or reinsures any risks for any periods commencing on or after October 1,
1993.
(5) During Fiscal 1993, the Company and its subsidiaries secured the major
portion of their property and liability insurance coverage through IRM, an
insurance agency which acted as agent or broker and provided claims processing
services. Commissions and payments for such services to IRM by the Company and
subsidiaries amounted to approximately $1,591,000 for Fiscal 1993. Such services
from IRM were discontinued subsequent to April 1993.
(6) In connection with the Former Cost Sharing Arrangements, advances,
insurance premiums, equipment leases and accrued interest, the Company had
receivables due from APL, a Former Affiliate, aggregating $38,120,000 as of
April 20, 1992, against which a valuation allowance of $34,713,000 was recorded.
APL has experienced recurring losses and other financial difficulties in recent
years and in July 1993 APL became a debtor in a proceeding under Chapter 11 of
the Bankruptcy Code (the 'APL Proceedings'). Accordingly, during Fiscal 1993,
the Company and its subsidiaries provided an additional $9,863,000 for the
unreserved portion of the receivable at April 30, 1992 and additional net
billings in 1993. In February 1994, the Official Committee of Unsecured
Creditors of APL Corporation (the 'APL Committee') filed a complaint (the 'APL
Complaint') against certain Posner Entities, the Company and certain companies
formerly or presently affiliated with Mr. Posner or with the Company, alleging
causes of action arising from various transactions allegedly caused by the named
Posner Entities in breach of their fiduciary duties to APL and resulting in
corporate waste, fraudulent transfers and preferences. In the APL Complaint, the
APL Committee asserts claims against the Company for (a) aiding and abetting
breach of fiduciary duty, (b) equitable subordination of claims which the
Company may have against APL, (c) declaratory relief as to whether APL has any
liability to the Company, and (d) recovery of fraudulent transfers allegedly
made by APL to the Company prior to commencement of the APL Proceeding. The APL
Complaint seeks an undetermined amount of damages from the Company, as well as
the other relief identified in the preceding sentence. Based upon the results of
the Company's investigation of these matters to date, the Company's management
does not believe that the outcome of the APL Proceeding will have a material
adverse effect on the financial condition or results of operations of the
Company or its subsidiaries.
(7) The Company and its subsidiaries had secured receivables from PEC, a
Former Affiliate, aggregating $6,664,000 as of April 30, 1992 against which a
$3,664,000 valuation allowance was recorded. PEC had also filed for protection
under the bankruptcy code in February 1992, and accordingly, during Fiscal 1993,
the Company and its subsidiaries provided an additional $3,000,000 valuation
allowance to provide for the unreserved portion of the receivable and to take
into account the Company's significant doubts as to the net realizability of the
underlying collateral.
In addition, during Transition 1993, the Company sold a yacht and certain
other assets having a net book value of approximately $400,000 to an entity
owned by Victor Posner for cash sales prices aggregating approximately $310,000.
CERTAIN OTHER TRANSACTIONS
The Company subleases from an affiliate of Messrs. Peltz and May
approximately 26,800 square feet of furnished office space in New York, New York
owned by an unaffiliated third party. In addition, until October 26, 1993, the
Company also subleased from another affiliate of Messrs. Peltz and May
approximately 32,000 square feet of office space in West Palm Beach, Florida
owned by an unaffiliated third party. Subsequent to October 26, 1993, the
Company assumed the lease for approximately 17,000 square feet of office space
in West Palm Beach. The aggregate amount paid by the Company with
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<PAGE>
respect to such subleases was approximately $1.8 million during Transition 1993,
which is less than the aggregate amount such affiliates paid to the unaffiliated
third party owners. Messrs. Peltz and May have guaranteed to the unaffiliated
landlords payment of rent for the New York and the West Palm Beach office space.
Pursuant to an agreement dated as of October 1, 1992 entered into in
connection with the Change in Control, the Company agreed to reimburse DWG
Acquisition for certain of the reasonable, out-of-pocket expenses incurred by
DWG Acquisition in connection with services rendered by it to the Company
without charge relating to the refinancing and restructuring of the Company and
subsidiaries and other transactions beneficial to the Company and its
subsidiaries. Pursuant to such agreement, the Company reimbursed DWG Acquisition
for $229,000 in expenses, which amount related principally to travel,
reproduction and delivery expense.
Triangle Aircraft Service Corporation ('TASCO'), a company owned by Messrs.
Peltz and May, owns three aircraft. From August 1992 until September 30, 1993,
TASCO operated such aircraft and made them available for use by the Company and
its subsidiaries for a fee (the 'TASCO Fee'), and the Company and its
subsidiaries made extensive use of these aircraft. The TASCO Fee was an amount
equal to TASCO's direct out-of-pocket expenses, excluding fuel, oil and
lubricants, plus two times the cost of fuel, oil and lubricants. The TASCO Fee
was in accordance with Federal Aviation Administration regulations applicable to
non-charter carriers. During Fiscal 1993 and the five month period commencing on
May 1, 1993 and ending on September 30, 1993, the Company and its subsidiaries
were charged $754,000 and $681,000, respectively, in respect of such TASCO Fees.
On October 1, 1993, the Company and TASCO entered into an agreement pursuant to
which the Company is leasing TASCO's three aircraft on a 'dry lease' basis
(i.e., the Company pays an aggregate annual rent of $2,200,000 to TASCO and pays
the operating expenses of the aircraft directly to unaffiliated third parties).
During the three month period commencing on October 1, 1993 and ending on
December 31, 1993, the Company and its subsidiaries paid $550,000 to TASCO
pursuant to this agreement.
Until February, 1994, an affiliate of Messrs. Peltz and May leased an
apartment in New York City. Commencing June 1, 1993, such apartment was used by
executives of the Company and in connection therewith, the Company reimbursed
such affiliate approximately $189,000 of rent for the apartment for the seven
months ended December 31, 1993.
The Company and SEPSCO have agreed in principle to the sale by SEPSCO to
the Company of the stock of the SEPSCO subsidiaries that hold SEPSCO's natural
gas and oil working and royalty interests. The sale of SEPSCO's natural gas and
oil interest will be for a net cash purchase price of $8.5 million, which the
Company and SEPSCO believe is equal to their estimated fair value and which is
approximately $4.5 million higher than their net book value. Immediately
following the consummation of the SEPSCO Merger (described below), the Company
and SEPSCO began this sale process. This transaction was approved by both the
Board of Directors of the Company and the Board of Directors of SEPSCO, with
both David E. Schwab II and Sir Ian MacGregor, the only members of the Board of
Directors of SEPSCO who are not also members of the Board of Directors of the
Company, voting to approve the transaction.
During Fiscal 1993 and Transition 1993, the Company and its subsidiaries
paid Rosen & Reade, a law firm, approximately $1,744,000 and approximately
$1,127,000, respectively, on account of legal services rendered to the Company
and its subsidiaries. Martin Rosen, a director of the Company, a partner of such
firm.
For certain transactions involving Mr. Kalvaria, see ' -- Employment
Arrangements with Executive Officers -- Leon Kalvaria' above.
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During Transition 1993, the Company entered into a SEPSCO Merger Agreement
(defined below) for the acquisition of the outstanding shares of SEPSCO that it
did not already own. The SEPSCO Merger Agreement was intended to satisfy the
Company's obligations under the SEPSCO Settlement described below. See 'Certain
Legal Proceedings.' The SEPSCO Merger Agreement was approved by the stockholders
of SEPSCO at a special meeting of its stockholders held on April 14, 1994.
CERTAIN LEGAL PROCEEDINGS
On April 14, 1994, a wholly owned subsidiary of the Company was merged into
SEPSCO and, as a result, SEPSCO became a wholly owned subsidiary of the Company.
In this merger, holders of outstanding shares of SEPSCO common stock, other than
the Company and its subsidiaries, received 0.8 of a share of Class A Common
Stock for each of their shares of SEPSCO common stock. This merger was
structured to satisfy the Company's obligations under the terms of a stipulation
of settlement relating to the settlement of a proported derivative action
brought by William A. Ehrman, a SEPSCO stockholder, on behalf of SEPSCO against
the Company, certain of its affiliates and certain individuals.
PROPOSAL 2.
REINCORPORATION IN DELAWARE
The Board of Directors has unanimously approved and recommends that the
shareholders consider and approve the reincorporation of the Company in Delaware
by means of a merger of the Company into a wholly-owned subsidiary of the
Company (the 'Merger'). Management and the Board of Directors believe the best
interests of the Company and its shareholders will be served by changing the
Company's place of incorporation from Ohio to Delaware by merging Triarc
Companies, Inc. (hereinafter referred to in this section as the 'Ohio
Corporation') into a newly-formed Delaware corporation, Triarc Merger
Corporation (hereinafter referred to in this section as the 'Delaware
Corporation'). The Delaware Corporation would be the surviving entity in the
Merger and, as a result of the Merger, would change its name to Triarc
Companies, Inc. In the following discussion of the proposed reincorporation, the
term the 'Company' includes either or both the Ohio Corporation and the Delaware
Corporation.
The Merger will not involve any change in the business, properties or
management of the Ohio Corporation. The Company will establish an office in
Delaware at 1209 Orange Street, Wilmington, Delaware. However, the Company's
corporate headquarters will not change, and there will not be any movement of
personnel, including management, to Delaware. The officers and directors of the
Ohio Corporation holding office immediately prior to the Merger being effective
will continue to serve as the officers and directors of the Delaware
Corporation. The agreement and plan of merger (the 'Merger Agreement'), which
sets forth the terms and conditions on which the Ohio Corporation will be merged
into the Delaware Corporation, provides that the Merger may be abandoned by
action of a majority of the respective Boards of Directors of the Ohio
Corporation and the Delaware Corporation at any time prior to the effective time
of the Merger.
The Merger will become effective, if approved by the shareholders at the
Meeting, upon the filing of Certificates of Merger, as provided by Delaware and
Ohio law, which is expected to be accomplished on or after 10 days following the
Meeting, assuming that the Merger is approved at the Meeting and that
dissenters' rights in respect of not more than 1% of the outstanding shares of
the Company are validly exercised. If dissenters' rights are validly exercised
in respect of shares representing more than 1% of the outstanding shares, the
Boards of Directors of the Ohio Corporation and the Delaware
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Corporation reserve their respective rights to elect to abandon (but are not
required to abandon) the Merger, as provided in the Merger Agreement. At the
time the Merger is effective, each share of the Class A Common Stock then issued
(including shares held in the treasury) will be automatically converted into and
exchanged for one share of Class A Common Stock, par value $.10 per share (the
'Delaware Class A Common Stock'), of the Delaware Corporation and each share of
the Redeemable Convertible Preferred Stock then issued will be automatically
converted into and exchanged for one share of non-voting, cumulative convertible
redeemable preferred stock, par value $.10 per share (the 'Delaware Redeemable
Convertible Preferred Stock'), of the Delaware Corporation.
A copy of the Merger Agreement is attached hereto as Exhibit A, a copy of
the Certificate of Incorporation of the Delaware Corporation (the 'Delaware
Certificate') is attached hereto as Exhibit B and a copy of the By-Laws of the
Delaware Corporation (the 'Delaware By-Laws') is annexed hereto as Exhibit C.
ANY DESCRIPTION IN THIS PROXY STATEMENT OF THE MERGER AGREEMENT, THE DELAWARE
CERTIFICATE OR THE DELAWARE BY-LAWS IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
EXHIBITS A, B, AND C, RESPECTIVELY.
The Board of Directors believes that reincorporation in Delaware is
beneficial, even though the shareholders in some instances will have fewer
rights and less protection under the Delaware General Corporation Law (the
'Delaware Corporation Law') than under the Ohio General Corporation Law and
Chapters 1704 and 1707 of the Ohio Revised Code (collectively, the 'Ohio
Corporation Law'), because Delaware's laws are comprehensive and flexible and
its judiciary has considerable expertise in dealing with corporate legal issues.
In addition, as a result of the Merger, the authorized capitalization of the
Company, which is currently 100 million shares of capital stock, will be
increased to 150 million shares of capital stock, an increase of 50 million
shares, which the Board of Directors believes is also desirable because the
additional capital stock would be available for issuances for a variety of
proper corporate purposes without additional delays involved in approving
amendments to the Delaware Certificate. See 'Increase of Authorized Shares of
Capital Stock,' below.
EXPENSES
The estimated expenses previously incurred and expected to be incurred in
connection with the Merger are as follows:
<TABLE>
<CAPTION>
DESCRIPTION AMOUNT
- ---------------------------------------------------------------------- ----------
<S> <C>
Filing Fees........................................................... $ 125
Legal Fees............................................................ 250,000
Printing Fees......................................................... 75,000
Solicitation Fees..................................................... 8,000
Miscellaneous......................................................... 1,875
----------
Total....................................................... $ 335,000
----------
----------
</TABLE>
Most of these expenses will be incurred whether or not the Merger is
approved by the shareholders. These expenses are being paid from the Company's
general operating funds.
DISSENTERS' RIGHTS
In the opinion of Ohio counsel to the Company, Baker & Hostetler,
Cleveland, Ohio, holders of Class A Common Stock and holders of Redeemable
Convertible Preferred Stock will have dissenters' rights in connection with the
Merger. These rights are summarized below.
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<PAGE>
Section 1701.84 of the Ohio Revised Code provides that any holder of Class
A Common Stock or Redeemable Convertible Preferred Stock (a 'shareholder') who
so desires is entitled to relief as a dissenting shareholder ('Dissenting
Shareholder') and as such may exercise dissenters' rights with respect to the
Merger. The following is a summary of the principal steps a shareholder must
take to perfect dissenters' rights under Sections 1701.84 and 1701.85 of the
Ohio Revised Code. THIS SUMMARY DOES NOT PURPORT TO BE COMPLETE AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SECTIONS 1701.84 and 1701.85 OF THE CODE, A COPY
OF WHICH IS ATTACHED HERETO AS EXHIBIT D. ANY SHAREHOLDER CONTEMPLATING THE
EXERCISE OF DISSENTERS' RIGHTS IS URGED TO REVIEW CAREFULLY SUCH PROVISIONS AND
TO CONSULT LEGAL COUNSEL, SINCE DISSENTERS' RIGHTS WILL BE LOST IF THE
PROCEDURAL REQUIREMENTS UNDER SECTIONS 1701.84 and 1701.85 OF THE OHIO REVISED
CODE ARE NOT FULLY AND PRECISELY SATISFIED. To perfect dissenters' rights with
respect to any shares of Class A Common Stock or Redeemable Convertible
Preferred Stock (the 'Dissenting Shares'), a Dissenting Shareholder must satisfy
each of the following conditions:
1. No Vote in Favor of the Merger. Shares of Class A Common Stock held by
the Dissenting Shareholder must not be voted at the Meeting in favor of the
Merger. This requirement will be satisfied if (a) a proxy is signed and returned
with instructions to vote against the Merger or to abstain from such vote, (b)
no proxy is returned and no vote is cast at the Meeting in favor of the Merger,
or (c) the Dissenting Shareholder revokes a proxy and thereafter abstains from
voting with respect to the Merger or votes against the Merger at the Meeting. A
vote in favor of the Merger at the Meeting constitutes a waiver of dissenters'
rights. A proxy that is returned signed but on which no voting preference is
indicated will be voted in favor of the Merger and will constitute a waiver of
dissenters' rights.
The foregoing provisions will not be applicable to shares of Redeemable
Convertible Preferred Stock held by the Dissenting Shareholders because such
stock has no voting rights with respect to the proposed Merger. The remaining
provisions of Section 1701.85 of the Ohio Revised Code, including those
summarized hereinafter, will, however, apply to any Dissenting Shareholder who
wishes to exercise dissenters' rights with regard to Redeemable Convertible
Preferred Stock.
2. Filing Written Demand. Not later than ten days after the taking of the
vote on the Merger, a Dissenting Shareholder must deliver to the Company a
written demand (the 'Demand') for payment of the fair cash value of the
Dissenter's Shares, which demand must identify the name and address of the
holder of record of the Dissenter's Shares, the number and class of Dissenter's
Shares and the amount claimed as the fair cash value thereof. Voting against the
Merger will not itself constitute a Demand. The Company will not send any
further notice to Shareholders as to the date on which such ten-day period
expires.
3. Petitions to be Filed in Court. Within three months after the service of
the Demand, if the Company and the Dissenting Shareholder do not reach an
agreement on the fair cash value of the Dissenter's Shares, the Dissenting
Shareholder or the Company may file a complaint in the appropriate Court of
Common Pleas in Ohio (the 'Common Pleas Court'), or join or be joined in an
action similarly brought by another Dissenting Shareholder, for a judicial
determination of the fair cash value of the Dissenter's Shares. The Company does
not intend to file any complaint for a judicial determination of the fair cash
value of any Dissenter's Shares.
Upon motion of the complainant, the Common Pleas Court will hold a hearing
to determine whether the Dissenting Shareholder is entitled to be paid the fair
cash value of the Dissenter's Shares. If
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the Common Pleas Court finds that the Dissenting Shareholder is so entitled, it
may appoint one or more appraisers to receive evidence and to recommend a
decision on the amount of such value. The Common Pleas Court is required to make
a finding as to the fair cash value of the Dissenter's Shares and to render a
judgement against the Company for the payment thereof, with interest at such
rate and from such date as the Common Pleas Court considers equitable. Costs of
the proceedings, including reasonable compensation to the appraiser or
appraisers to be fixed by the Common Pleas Court, are to be apportioned or
assessed as the Common Pleas Court considers equitable. Payment of the fair cash
value of the Dissenter's Shares is required to be made within 30 days after the
date of final determination of such value or the effective time of the Merger,
whichever is later, only upon surrender to the Company of the certificates
representing the Dissenter's Shares for which payment is made.
Fair cash value is the amount which a willing seller, under no compulsion
to sell, would be willing to accept, and which a willing buyer, under no
compulsion to purchase, would be willing to pay, but in no event may the fair
cash value exceed the amount specified in the Demand. The fair cash value is to
be determined as of the day prior to the day of the Meeting. In computing this
value, any appreciation or depreciation in the market value of the Dissenter's
Shares resulting from the Merger is excluded.
The dissenters' rights of any Dissenting Shareholder will terminate if,
among other things, (a) such Dissenting Shareholder has not complied with
Section 1701.85 of the Ohio Revised Code, (b) the Merger is abandoned or
otherwise not carried out or such Dissenting Shareholder withdraws his or her
Demand with the consent of the Board of Directors of the Company, or (c) no
agreement has been reached between the Company and the Dissenting Shareholder
with respect to the fair cash value of the Dissenter's Shares and neither the
Dissenting Shareholder nor the Company shall have timely filed or joined in a
complaint in the Common Pleas Court. For a discussion of certain tax
consequences to a shareholder exercising dissenters' rights, see 'Certain
Federal Income Tax Consequences' below.
If the holders of more than 1% of the outstanding shares of Class A Common
Stock perfect their rights as Dissenting Shareholders, the Board of Directors of
each of the Ohio Corporation and the Delaware Corporation reserve their
respective right to abandon (but are not required to abandon) the Merger, as
provided in the Merger Agreement.
BECAUSE A PROXY CARD WHICH DOES NOT CONTAIN VOTING INSTRUCTIONS WILL,
UNLESS REVOKED, BE VOTED IN FAVOR OF THE MERGER, A SHAREHOLDER OF CLASS A COMMON
STOCK WHO WISHES TO EXERCISE HIS OR HER DISSENTERS' RIGHTS MUST EITHER NOT SIGN
AND RETURN HIS PROXY CARD OR, IF HE OR SHE SIGNS AND RETURNS HIS OR HER PROXY
CARD, VOTE AGAINST OR ABSTAIN FROM VOTING ON THE MERGER. AS INDICATED ABOVE,
THIS PROCEDURE DOES NOT APPLY TO HOLDERS OF REDEEMABLE CONVERTIBLE PREFERRED
STOCK WHO WISH TO EXERCISE DISSENTERS' RIGHTS WITH RESPECT TO SUCH STOCK SINCE
THE REDEEMABLE CONVERTIBLE PREFERRED STOCK HAS NO VOTING RIGHTS WITH RESPECT TO
THE MERGER.
FINANCIAL STATEMENTS
Accompanying this Proxy Statement is the Company's Transition Report on
Form 10-K for Transition 1993 which contains certain historical financial
statements of the Company and its subsidiaries and the notes thereto, as well as
Management's Discussion and Analysis of Financial Condition and Results of
Operations. Shareholders should read such financial statements and information
in connection with their consideration of the Merger.
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ACCOUNTING TREATMENT OF THE MERGER
Triarc will account for the Merger as an 'as if pooling', and such
accounting treatment will have no effect on the Company's financial statements.
REGULATORY APPROVALS
No Federal or state regulatory requirements remain to be complied with in
order to consummate the Merger.
REQUIRED VOTE
The proposal to reincorporate the Company in Delaware by means of the
Merger must be approved by the affirmative vote of holders of at least
two-thirds of the total number of shares of Class A Common Stock outstanding and
entitled to vote at the meeting. DWG Acquisition, which owns approximately 24.9%
of the outstanding shares of Class A Common Stock, has indicated that it will
vote FOR the Merger.
The Board of Directors has a fiduciary duty under the common law to act in
the best interest of the Company and the shareholders. The Board of Directors
has considered this duty in recommending the Merger.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE
PROPOSED REINCORPORATION IN DELAWARE BY MEANS OF THE MERGER
EXCHANGE OF STOCK CERTIFICATES
It will not be necessary for shareholders of the Ohio Corporation to
exchange their existing stock certificates for stock certificates of the
Delaware Corporation.
REASONS FOR CHANGE IN STATE OF INCORPORATION
The Board of Directors believes that the best interests of the Company and
its shareholders will be served by changing the Company's state of incorporation
from Ohio to Delaware because Delaware's tax policies are moderate and
consistent; its corporation laws are comprehensive and flexible and are
periodically revised to meet changing business needs; and its judiciary has
considerable expertise in dealing with corporate legal issues. The Board of
Directors notes that many corporations initially have chosen Delaware as their
state of incorporation or subsequently have changed their state of incorporation
to Delaware in a manner similar to that proposed by the Company. It should be
noted, however, that shareholders in some instances have fewer rights and hence
less protection under the Delaware Corporation Law then under the Ohio
Corporation Law.
COMPARISON OF SHAREHOLDER RIGHTS UNDER OHIO LAW AND UNDER DELAWARE LAW
INTRODUCTION
The rights of a holder of stock in the Delaware Corporation will differ in
some respects from those of a holder of stock in the Ohio Corporation. The
following summary does not purport to be a complete statement of the rights of
shareholders under applicable Ohio laws, the amended Articles of Incorporation
of the Ohio Corporation (the 'Ohio Articles') and the Amended Code of
Regulations of
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the Ohio Corporation (the 'Code of Regulations') as compared with the rights of
stockholders under Delaware law, the Delaware Certificate and the Delaware
By-Laws. The identification of specific differences is not meant to indicate
that other equally or more significant differences do not exist. This summary is
qualified in its entirety by reference to the Delaware Corporation Law and the
Ohio Corporation Law and the governing corporate instruments of the Ohio
Corporation and the Delaware Corporation, to which shareholders are referred.
CERTAIN VOTING RIGHTS
The Delaware Corporation Law generally requires approval of any merger,
consolidation or sale of substantially all the assets of a corporation at a
meeting of stockholders by vote of the holders of a majority of all outstanding
shares of the corporation entitled to vote thereon, although a certificate of
incorporation of a Delaware corporation may provide for a greater vote. The
Delaware Certificate provides for a 75% vote of the stockholders entitled to
vote thereon in order to approve certain mergers or consolidations. See
'Description of Anti-Takeover Provisions in the Delaware Certificate -- Business
Combination Provision,' below.
Under the Ohio Corporation Law, unless otherwise provided in the
corporation's articles of incorporation, such matters require the approval of
the holders of shares entitling such holders to exercise at least two-thirds of
the voting power of the corporation. The articles of incorporation of an Ohio
corporation may provide for a greater or lesser vote or a vote by separate class
of stock so long as the vote provided for is not less than a majority of the
voting power of the corporation. The Ohio Articles do not contain any provisions
changing the requirement for the approval of such matters by the holders of
shares entitling such holders to exercise at least two-thirds of the voting
power of the corporation.
If a proposed amendment to the certificate of incorporation of a Delaware
corporation affects adversely the rights, preferences or powers of a class of
stock without voting rights in certain specified matters, such amendment must
also be approved by a majority of the holders of that class of stock. Unless
otherwise provided by an Ohio corporation's articles of incorporation, the Ohio
Corporation Law would require that, among certain other amendments, an amendment
that would change the express terms of a class of shares without voting rights
in any substantially prejudicial manner would have to be approved by the holders
of two-thirds of the outstanding shares of such class.
The Ohio Articles generally provide that (i) the consent of holders of
two-thirds of the outstanding shares of Redeemable Convertible Preferred Stock,
voting as a class, is required to approve certain amendments to the Ohio
Articles or the Code of Regulations that would adversely affect the right of the
holders of the Redeemable Convertible Preferred Stock set forth in the Ohio
Articles and that (ii) the consent of the holders of a majority of the
outstanding shares of Ohio Corporation's Serial Preferred Stock, par value $.10
per share (the 'Ohio Serial Preferred Stock'), and Ohio Corporation's Junior
Serial Preferred Stock, par value $.10 per share (the 'Ohio Junior Serial
Preferred Stock'), each voting as a class, is required to approve amendments to
the Ohio Articles or the Code of Regulations that could cause substantial
prejudice to the rights of the holders of the Ohio Serial Preferred Stock or the
Ohio Junior Serial Preferred Stock. As of the date hereof, there were 5,982,866
shares of Redeemable Convertible Preferred Stock outstanding, all of which are
owned by the Posner Entities, and there were no outstanding shares of Ohio
Serial Preferred Stock or Ohio Junior Serial Preferred Stock.
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Both the Ohio Corporation Law and the Delaware Corporation Law permit
mergers without approval by shareholders of the surviving corporation if, among
other things, no charter amendment is involved and no more than a specified
maximum increase in outstanding voting stock will result from issuances to
shareholders of the non-surviving corporation pursuant to the merger. Under
Delaware Corporation Law, the maximum permitted increase is 20% of the
corporation's common stock outstanding immediately prior to the merger. Under
Ohio law, the maximum permitted increase is any amount less than 16 2/3% of a
corporation's resulting shares possessing the voting power of that corporation
in the election of directors.
In addition to voting rights provided by Delaware and Ohio laws, the rules
of the NYSE, on which the Class A Common Stock is currently listed and on which,
it is currently anticipated, that the Delaware Class A Common Stock will be
listed, also afford shareholders certain voting rights. For example, NYSE rules
require shareholder approval prior to the issuance by the Company of any common
stock, or any securities convertible into common stock, if such shares are to be
issued in connection with any transaction or series of related transactions,
other than a public offering for cash, if (i) the voting power of such common
stock would be equal to at least 20% of the voting power of the shares
outstanding prior to the issuance of such shares, or (ii) the number of such
shares would be equal to at least 20% of the number of shares of common stock
outstanding prior to the issuance of such shares. The NYSE rules also require
shareholder approval for certain transactions in which the Company's common
stock, or securities convertible into the Company's common stock, are to be
issued to a Company director, officer, substantial shareholder, or an entity in
which any such person holds a substantial interest, if the number of shares of
common stock so issued or into which the securities so issued are convertible
exceeds one percent of the number of shares of common stock outstanding prior to
such issuance or one percent of the outstanding voting power prior to such
issuance. The NYSE also requires shareholder approval for any issuance of
securities by the Company that will result in a change of control of the
Company.
SPECIAL MEETINGS OF SHAREHOLDERS; SHAREHOLDER ACTION BY WRITTEN CONSENT
Under the Delaware Corporation Law, special stockholder meetings may be
called by the board of directors and by any person or persons authorized by the
certificate of incorporation or the by-laws. Under the Delaware By-Laws, special
meetings of stockholders may be called at any time by the Chairman and Chief
Executive Officer or the secretary or by a majority of the directors or by
resolution of the board of directors.
Under the Ohio Corporation Law, a special meeting of the shareholders may
be called by the chairman of the board of directors, the president, a majority
of the directors acting without a meeting, persons owning 25% of the outstanding
shares entitled to vote at such meeting (or a lesser or greater proportion as
specified in the articles or regulations but not greater than 50%) or the person
or persons authorized to do so by the articles of incorporation or the
corporation's regulations. The Code of Regulations does not authorize any
additional persons to call a meeting. The Code of Regulations further provide
that business transacted at any special meeting of shareholders shall be
confined to the purpose stated in the notice for such special meeting.
Under the Delaware Corporation Law, any action by stockholders must be
taken at a meeting of stockholders, unless a consent in writing setting forth
the action so taken is signed by the stockholders having not less than the
minimum number of votes necessary to take such action at a meeting at which all
shares entitled to vote were present and voted.
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Under the Ohio Corporation Law, any action by shareholders generally must
be taken at a meeting of shareholders, unless a consent in writing setting forth
the action so taken is signed by all the shareholders who would be entitled to
notice of the meeting held to consider the subject matter thereof.
AMENDMENT OF CERTIFICATE OF INCORPORATION AND BY-LAWS
The Delaware Corporation Law allows amendments of the certificate of
incorporation if the board of directors adopts a resolution setting forth the
amendment proposed, declaring its advisability, and the stockholders thereafter
approve such proposed amendment either at a special meeting called by the board
for the purpose of approval of such amendment by the stockholders or, if so
directed by the board, at the next annual stockholders' meeting. At any such
meeting, the proposed amendment generally must be approved by a majority of the
outstanding shares entitled to vote.
The Ohio Corporation Law permits the adoption of amendments to the articles
of incorporation if such amendments are approved at a meeting held for such
purpose by the holders of shares entitling them to exercise two-thirds of the
voting power of the corporation, or such lesser, but not less than a majority,
or greater vote as specified in the corporation's articles of incorporation. The
Ohio Articles do not alter this provision.
Under the Delaware Corporation Law, the power to adopt, amend or repeal
by-laws resides with the stockholders entitled to vote thereon, and with the
directors if such power is conferred upon the board of directors by the
certificate of incorporation. The Delaware Certificate so provides.
Under the Ohio Corporation Law, regulations may be adopted, amended or
repealed only by approval of the shareholders. They may be adopted or amended at
a meeting of shareholders by the affirmative vote of the holders of shares
entitling them to exercise a majority of the voting power on such proposal or by
written consent signed by holders of shares entitling them to exercise
two-thirds of the voting power on such proposed amendment.
BOARD APPROVED PREFERRED STOCK
Both the Delaware Corporation Law and the Ohio Corporation Law permit a
corporation's certificate of incorporation or articles of incorporation,
respectively, to allow the board of directors to issue, without shareholder
approval, a series of preferred or preference stock and to designate their
rights, preferences, privileges and restrictions (except that the Ohio
Corporation Law does not permit the board of directors to fix the voting rights
of any such series of preferred or preference stock). The Delaware Certificate
grants such power to the board of directors. Similarly, the Ohio Articles grant
such power to the board of directors with respect to the Ohio Serial Preferred
Stock and the Ohio Junior Serial Preferred Stock.
LIABILITY AND INDEMNIFICATION OF OFFICERS AND DIRECTORS
The Delaware Corporation Law and the Ohio Corporation Law have provisions
and limitations regarding directors' liability and indemnification by a
corporation of its officers, directors and employees.
A director of an Ohio corporation will not be found to have violated his or
her fiduciary duties to the corporation or its shareholders unless there is
proof by clear and convincing evidence that the director has not acted in good
faith, in a manner he or she reasonably believes to be in or not opposed
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to the best interests of the corporation, or with the care that an ordinarily
prudent person in a like position would use under similar circumstances. In
addition, under the Ohio Corporation Law a director is liable in damages for any
action or failure to act as a director only if it is proved by clear and
convincing evidence that such act or omission was undertaken either with
deliberate intent to cause injury to the corporation or with reckless disregard
for the best interests of the corporation, unless the corporation's articles or
regulations make this provision inapplicable by specific reference. The Ohio
Articles do not make this provision inapplicable.
The Ohio Corporation Law does not, however, require proof of intent to
cause injury or reckless disregard as a condition to the availability of
injunctions, recovery on principles of restitution or other relief which is
essentially equitable in nature. The Ohio Corporation Law limits a director's
liability for breaches of the fiduciary duties of care and loyalty. This
standard does not apply, however, where the director has acted either outside
his or her capacity as a director or with respect to certain dividends,
distributions, purchases or redemptions of corporation shares, loans or, in the
case of a corporation that does not have actively traded shares, a change in
control in which a majority of the shareholders receive a greater consideration
for their shares than other shareholders. The Ohio Corporation Law further
requires all expenses, including attorney's fees, incurred by a director in
defending any action, suit or proceeding to be paid by the corporation as they
are incurred in advance of the final disposition of the action, suit or
proceeding upon receipt of an undertaking by or on behalf of the director in
which he or she agrees to repay such amounts if it is proved by clear and
convincing evidence that his or her action or failure to act involved an act or
omission undertaken with deliberate intent to cause injury to the corporation or
undertaken with reckless disregard for the best interests of the corporation and
the director reasonably cooperates with the corporation concerning the action,
suit or proceeding. These provisions are automatically applicable to an Ohio
corporation unless the corporation opts out from these sections. The Ohio
Corporation has not opted out.
The Delaware Corporation Law permits a Delaware corporation to include in
its certificate of incorporation a provision which eliminates or limits the
personal liability of a director to the corporation or its stockholders of
monetary damages for breach of fiduciary duties as a director provided no such
provision may eliminate or limit the liability of a director (i) for any breach
of the director's duty of loyalty to the corporation or its stockholders, (ii)
for acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, (iii) under Section 174 of the Delaware
Corporation Law (dealing with illegal redemptions and stock repurchases) or (iv)
for any transaction from which the director derived an improper personal
benefit. The Delaware Certificate includes such a provision. See 'Description of
Indemnification Provisions,' below.
Under the Delaware Corporation Law, a director or officer may, in general,
be indemnified by the corporation if he or she has acted in good faith and in a
manner he or she reasonably believed to be in or not opposed to the best
interest of the corporation and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his or her conduct was unlawful.
For a description of the indemnification provisions contained in the Delaware
Certificate, see 'Description of Indemnification Provisions,' below.
CLASSIFICATION OF BOARD OF DIRECTORS
Both the Delaware Corporation Law and the Ohio Corporation Law permit, but
do not require, the adoption of a 'classified' board of directors with staggered
terms under which a part of the board of directors is elected each year for a
maximum term of three years. Neither the Ohio Corporation nor the
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Delaware Corporation has a classified board of directors and all directors stand
for election on an annual basis.
CUMULATIVE VOTING OF SHARES
Under the Delaware Corporation Law, shareholders of a corporation cannot
elect directors by cumulative voting unless its certificate of incorporation so
provides. The Delaware Certificate does not provide for cumulative voting. As a
result, the holder or holders of a majority of the voting power of the Delaware
Corporation are able to elect all directors then being elected.
In accordance with the Ohio Corporation Law, cumulative voting (unless
eliminated by an amendment of the articles of incorporation) is required to be
available for the election of directors if notice to such effect is given by a
shareholder prior to a shareholders' meeting and an announcement to such effect
is made at such meeting. The Ohio Articles have been amended to provide for the
elimination of such cumulative voting rights.
NUMBER OF DIRECTORS
Under the Delaware Corporation Law, unless the certificate of incorporation
specifies the number of directors, a board of directors may change the
authorized number of directors by an amendment to the corporation's by-laws if
fixed therein, or in such manner as provided therein. If the certificate of
incorporation specifies the number of directors, the number of directors can
only be changed by amending the certificate of incorporation. The Delaware
Certificate provides that the number of directors shall be not less than ten nor
more than twenty, with the exact number to be determined from time to time by a
vote of the majority of directors then in office.
Under the Ohio Corporation Law, the number of directors of a corporation
may be fixed or changed by the shareholders or by the board of directors if so
authorized by the corporation's articles of incorporation or regulations. The
Code of Regulations provides that the number of directors which shall constitute
the whole board of directors shall be limited to a maximum of thirteen persons
unless changed by a vote of the holders of a majority of shares entitled to vote
thereon at a meeting of shareholders called for the purpose of electing
directors.
REMOVAL OF DIRECTORS
In general, under both the Delaware Corporation Law and the Ohio
Corporation Law, any or all of the directors of a corporation may be removed,
with or without cause, by vote of the holders of a majority of the shares then
entitled to vote at an election of directors, except that the Delaware
Corporation Law authorizes removal by the shareholders of a member of a
classified board only for cause.
DISSENTERS' RIGHTS IN MERGERS
Under both the Delaware Corporation Law and the Ohio Corporation Law, a
shareholder of a corporation participating in certain merger transactions may,
under certain circumstances, receive cash in the amount of the fair market value
of his or her shares (as determined by a court) in lieu of the consideration he
or she would otherwise receive in the merger. Unless a corporation's certificate
of incorporation provides otherwise, the Delaware Corporation Law does not
require that such dissenters'
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rights of appraisal be afforded to stockholders with respect to (i) a merger or
consolidation by a corporation the shares of which are either listed on a
national securities exchange designated as a national market security or an
interdealer quotation system by the National Association of Securities Dealers,
Inc. or widely held (by more than 2,000 shareholders), if the stockholders of
such corporation receive only shares of the surviving corporation or of such a
listed or widely held corporation; or (ii) those stockholders who are the
stockholders of a corporation surviving a merger if no vote of such stockholder
is required because, among other things, the number of shares to be issued in
the merger does not exceed 20% of the shares of the surviving corporation
outstanding immediately prior to the merger (if certain other conditions are
met).
The Ohio Corporation Law does not provide exclusions from dissenters'
rights similar to those described above with respect to the Delaware Corporation
Law. However, under the Ohio Corporation Law, in mergers and certain other
transactions (e.g., acquisitions of assets or of a majority of stock interests
in exchange for stock) in which, after giving effect to the transaction, the
original shareholders of the acquiring corporation retain more than five-sixths
of the voting power of such corporation in the election of directors, such
shareholders are denied dissenters' rights.
PAYMENT OF DIVIDENDS
Both the Delaware Corporation Law and the Ohio Corporation Law permit the
payment of dividends and the redemption of shares out of paid-in, earned or
other surplus. However, under the Ohio Corporation Law, if a dividend is paid
out of capital surplus, shareholders must be so notified. Under the Delaware
Corporation Law, no such notice is required and dividends may also be paid out
of net profits for the fiscal year in which declared or out of net profits for
the preceding fiscal year, even if the corporation has no surplus.
REPURCHASE OF SHARES
Under the Ohio Corporation Law, a corporation by act of its directors may
repurchase shares only in certain specified instances, the most significant of
which are when the articles authorize the redemption of such shares, when the
articles in substance provide that the corporation shall have the right to
repurchase, and when authorized by the shareholders at a meeting called for such
purpose by the affirmative vote of the holders of two-thirds of the shares of
each class or, if the articles so provide, by a greater or lesser proportion but
not less than a majority. The Ohio Articles authorize the directors to use
surplus or net profits in excess of $250,000 to repurchase shares of the
Company's Class A Common Stock in certain circumstances.
The Delaware Corporation Law vests discretion in the board of directors to
authorize the repurchase of shares.
Both the Ohio Corporation Law and the Delaware Corporation Law permit the
redemption of shares out of paid-in, earned or other surplus.
LOANS TO DIRECTORS AND OFFICERS
Under the Delaware Corporation Law, a corporation may make loans to,
guarantee the obligations of or otherwise assist its officers or other employees
and those of its subsidiaries when the transaction, in the judgment of the
corporation's board of directors, may reasonably be expected to benefit the
corporation. Under the Ohio Corporation Law, a corporation generally may make a
loan to or guaranty
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of the obligations of officers, directors or shareholders only if such loan or
guaranty is approved by a majority of the disinterested members of its board of
directors. The disinterested directors, taking into account the terms and
provisions of the loan and other relevant factors, must determine that the
making of the loan could reasonably be expected to benefit the corporation.
Under the Ohio Corporation Law, directors who authorize unlawful loans are
jointly and severally liable for the loan together with interest. The standard
of conduct which is a precondition to the imposition of monetary damages that is
discussed under ' -- Liability and Indemnification of Officers and Directors'
above is not applicable to directors' authorizing unlawful loans.
TENDER OFFER STATUTE
The Ohio tender offer statute requires any person making a tender offer for
a corporation incorporated in Ohio to comply with certain filing, disclosure and
procedural requirements. Delaware has no tender offer statute.
The Ohio tender offer statute imposes certain filing and disclosure
requirements. The disclosure requirements include a statement of any plans or
proposals that the offeror, upon gaining control, may have to liquidate the
subject company, sell its assets, effect a merger or consolidation of it,
establish, terminate, convert, or amend employee benefit plans, close any plant
or facility of the subject company or of any of its subsidiaries or affiliates,
change or reduce the work force of the subject company or any of its
subsidiaries or affiliates, or make any other major change in its business,
corporate structure, management personnel, or policies of employment.
Until the issue of constitutionality is decided by clearly controlling
appellate court decisions or clarifying legislation is adopted, the
enforceability of the Ohio statute as a protection against board-opposed
takeover attempts is uncertain.
In addition, Ohio has a 'Control Share Acquisition' statute which requires
shareholder approval for the acquisition of voting power for certain ranges of
stock ownership. This statute was declared unconstitutional in 1986 by the
United States District Court for the Southern District of Ohio in Fleet
Aerospace Corp. v. Holderman, which holding was affirmed by the United States
Court of Appeals for the Sixth Circuit. On April 27, 1987, however, the United
States Supreme Court vacated and remanded the Sixth Circuit's decision in light
of the Supreme Court's holding in CTS Corporation v. Dynamics Corporation of
America, which held that Indiana's Control Share Acquisition Act, a law similar
in some respects to the Ohio Control Share Acquisition Act, is constitutional.
MERGER MORATORIUM STATUTES
Both Ohio and the Delaware have 'Merger Moratorium' statutes which are
designed to encourage potential acquirors of publicly traded corporations such
as the Company to obtain the consent and approval of the proposed target's board
of directors prior to commencing a tender offer for the target company's shares.
This encouragement is accomplished by prohibiting or restricting acquirors from
undertaking many post-acquisition financial restructuring alternatives.
Both the Ohio and the Delaware statutes permit a corporation to opt out of
the operation of the merger moratorium provisions. The Ohio Corporation has not
opted out, while the Delaware Corporation has opted out.
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The Ohio Merger Moratorium law becomes applicable when a person (a
potential acquiror and all of that acquiror's affiliates) can vote or direct the
vote of 10% or more of the voting shares. In Delaware, the law is applicable
when a person acquires more than 15% of the voting stock.
Under the Ohio law (with minor exceptions), there is an absolute
prohibition on mergers and dissolution and restrictions on asset sales and
purchases and other transactions that would give the acquiror significant funds
or assets of the target during the three-year period after the acquiror becomes
a more than 10% shareholder. Following the three-year period, in Ohio, the
acquiror can engage in these transactions only if a fair price (as defined in
the statute) is provided to the minority shareholders or the acquiror obtains
the consent of the shareholders holding a majority of the disinterested shares.
In Delaware, the restriction lasts for only three years. During that
three-year period, the restrictions are not applicable if at the time the
acquiror became subject to the statute it holds more than 85% of such stock or
the transaction is approved by two-thirds of the disinterested stockholders.
ANTI-GREENMAIL STATUTE
'Greenmail' is the practice whereby a corporation purchases the shares of a
substantial minority shareholder at a premium to avoid the future potential
takeover of the corporation by that minority shareholder. Ohio recently enacted
an anti-greenmail statute which would cause the forfeiture of the premium
received by the minority shareholder. The Ohio Corporation Law permits a
corporation to opt out of the anti-greenmail statute. The Ohio Corporation has
so opted out. Delaware has no anti-greenmail statute.
GENERAL PROVISIONS OF THE DELAWARE CERTIFICATE
The Delaware Certificate has been prepared in accordance with the Delaware
Corporation Law and gives the Company broad corporate power to engage in any
lawful activity in which a corporation incorporated under the Delaware
Corporation Law may engage. THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO THE DELAWARE CERTIFICATE, WHICH IS ATTACHED HERETO AS EXHIBIT B.
The authorized capitalization of the Delaware Corporation consists of 150
million shares, of which 100 million are Delaware Class A Common Stock, 25
million are shares of Class B Common Stock, par value $.10 per share ('Delaware
Class B Common Stock'), and 25 million are shares of Preferred Stock, par value
$.10 per share (the 'Delaware Preferred Stock'), of which Delaware Preferred
Stock 5,982,866 shares are designated as Redeemable Convertible Cumulative
Preferred Stock (the 'Delaware Redeemable Convertible Preferred Stock') and are
substantially identical to the Redeemable Convertible Preferred Stock. The
Delaware Certificate grants to the board of directors general power to provide
from time to time for the issuance of shares of Delaware Preferred Stock in
series, to determine the number of shares of each such series, to fix the
relative rights and preferences as between any such series, to grant voting or
conversion rights and to provide the dividend rate, the redemption and
liquidation rights and such other rights, preferences, qualifications,
limitations or restrictions of a particular series as it may deem appropriate.
Neither the Delaware Certificate nor the Delaware By-Laws contain any
cumulative voting provisions.
The Delaware Certificate contains certain provisions which would, if the
Merger is consummated, help to assure the continuity and stability of the
Company's policies in the future by insuring the
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continuity of management. The proposed provisions would, the Board of Directors
believes, permit it to represent more effectively the interests of all
shareholders in a variety of situations, including responses to circumstances
created by demands or actions by a shareholder or group of shareholders owning a
substantial number of shares. See 'Description of Anti-Takeover Provisions in
the Delaware Certificate,' below.
After the Merger, the directors and officers of the Delaware Corporation
will be the same individuals holding office as the directors and officers of the
Ohio Corporation immediately prior to the Merger becoming effective.
PURPOSES AND EFFECTS OF CERTAIN PROVISIONS IN THE DELAWARE CERTIFICATE
The Merger, if consummated, would have certain 'anti-takeover' effects
because the Delaware Certificate contains several provisions which are intended
to discourage or delay a hostile takeover of control of the Company. These
provisions, in general terms, would: (i) provide that the number of directors
shall not be less than ten (10) nor more than twenty (20), with the exact number
to be determined from time to time by a majority of the Board of Directors then
in office; (ii) provide that vacancies on the Board of Directors resulting from
an increase in size, removal of directors or otherwise may be filled only by a
majority of the remaining directors then in office, and (iii) require the
affirmative vote of the holders of shares representing at least 75% of the
voting power of the Voting Shares (defined below) in order to enter into certain
Business Combinations (defined below), unless (a) such Business Combinations are
approved by at least a majority of the entire Board of Directors, but only if a
majority of the directors acting favorably on the matter are Continuing
Directors (defined below), or (b) certain minimum price, form of consideration
and procedural requirements are met. The term 'Voting Shares' is defined in the
provisions as any issued and outstanding shares of capital stock of the Company
entitled to vote generally in the election of directors. Each of these
provisions has particular anti-takeover effects associated with it, and these
effects together with a more detailed description of each provision are
contained in 'Description of Anti-Takeover Provisions in the Delaware
Certificate,' below. In addition, the anti-takeover provisions are interrelated
and have cumulative anti-takeover effects as described herein.
The principal purpose of these provisions is to provide a measure of
assurance that a shareholder or group of shareholders owning a controlling
interest in the Company's stock do not exercise their voting power in a manner
which the Board of Directors believes would be to the detriment of the remaining
shareholders. The provisions are further intended to make it more difficult for
a hostile or unfriendly party to obtain control of the Company through replacing
the Board of Directors.
This aspect of the reincorporation is not in response to any efforts, known
to the Company, its Board of Directors or its management, by any person to
accumulate Voting Shares or obtain control of the Company. Neither management
nor the Board of Directors is aware of any present effort by any other
corporation, person or entity to attempt an unfriendly takeover of the Company.
Nevertheless, the Board of Directors has observed that historically there have
been a number of takeovers of publicly-owned corporations that have been
accomplished by a swift purchase of a control block of stock by means of open
market purchases or by tender offers to acquire a company's stock at prices that
may not reflect fair value (as determined by such company's board of directors),
even though such prices may be higher than the prevailing market price.
Moreover, such offers may be followed by a merger, consolidation,
recapitalization or other business combination or transformation of the acquired
company by the control block purchasers. Because of the control purchased, the
terms of such mergers
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or other transformations may be determined primarily by the acquiring entity
with a minimum of negotiation with the board of directors of the acquired
company. Such a takeover may be beneficial to shareholders of the acquired
company in that it may involve purchases of their stock at prices that are
higher than the market prices for such stock. However, such a takeover may also
be detrimental to the shareholders and to the company because the lack of
negotiation with the acquired company may preclude a proper evaluation of the
merits of the transaction in light of other alternatives and in light of the
company's underlying values. As a result, the terms of the takeover and the
consideration offered to shareholders, both in a tender offer and in a
subsequent merger or other transformation, may be less favorable than is
warranted or otherwise obtainable. However, it should be noted that the effect
of the provisions in the Delaware Certificate could be to preclude the
shareholders from participating in a transaction that a majority might favor,
because the Board of Directors has determined that such a transaction does not
treat minority shareholders equitably and, therefore, is not in the Company's
overall best interest.
In addition, the Board of Directors has observed the practice in corporate
takeovers for a purchaser (or attempted purchaser) to pay cash to acquire a
controlling equity interest in a company by tender offer, or other transactions,
and then to acquire the remaining equity interest in the company by paying the
balance of the shareholders a price for their shares which is lower than the
price paid to acquire control and/or is in a less desirable form (e.g.,
securities of the purchaser instead of cash). Although the period during which
securities tendered in response to a partial tender offer must be accepted on a
pro rata basis is coextensive with the duration of the offer, in multi-step
acquisitions professional investors, because of their sophistication and
expertise in the takeover area, are generally in a better position to take
advantage of the more lucrative first-step tender offer before it expires, while
small shareholders often have to accept the price paid in the second-step merger
for all or a substantial portion of their shares. The Board of Directors is of
the view that such 'two-tier pricing' works to the disadvantage of long-term or
smaller shareholders and gives professional investors an unfair advantage over
such shareholders in a takeover situation. The Board of Directors also considers
that by its nature such 'two-tier pricing' tends to (and it is designed to)
pressure shareholders to sell their shares rather than risk either remaining as
shareholders in a company controlled by the purchaser or being forced to accept
the lower price for all of their shares.
The requirement of a 75% vote for certain Business Combinations is designed
to prevent a purchaser from utilizing two-tier pricing and similar inequitable
tactics in the event of an attempt to take over the Company. Shareholders should
note, however, that if a group were able to purchase shares representing at
least 75% of the voting power of the Voting Shares, it would be possible to
proceed with a two-tier price takeover. The provision is not designed to prevent
or discourage tender offers for the Company, although it may have the effect of
inhibiting certain types of tender offers, as described below. For a discussion
that explains (a) that the 'fair price' provision will not ensure that
shareholders will receive a fair price for their shares (i) in an instance where
no Business Combination is proposed or (ii) where Continuing Directors approve
two-tier pricing and (b) that such provision will not apply to DWG Acquisition
or any affiliate or associate thereof, and that substantial shareholders might
privately negotiate the sale of their shares for personal or business reasons
which may not reflect the interests of minority shareholders, see 'Description
of Anti-Takeover Provisions in the Delaware Certificate -- Business Combination
Provision,' below.
The Board of Directors believes that the Company has a bright future and
that its shareholders will best be served if the company remains independent.
However, it is not the purpose of the provision to further this objective.
Rather, the provision is designed to help assure that if control of the Company
is
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nevertheless acquired by any person or a person not approved by a majority of
the entire Board of Directors, each holder of the Voting Shares will be treated
as fairly as every other holder and that professional investors will not profit
at the expense of the Company's public shareholders. If the Merger is approved
by the shareholders, it is unlikely, as a result of this provision and given the
present holdings of DWG Acquisition, that any new group could obtain control of
the Company.
While the provision is designed to help ensure fair treatment of
shareholders in the event of a takeover, it is not the purpose of the provision
to ensure that shareholders will receive a premium price for their shares in a
takeover or that any such price would necessarily be adequate. For example, the
pricing provision does not guarantee that a shareholder will receive the highest
market price paid for such shares; rather it insures that a shareholder will
receive the highest price paid for such shares by an Interested Shareholder
(defined below) during the prior two years. Accordingly, the Board of Directors
is of the view that the provision would not prevent the Board of Directors from
opposing any future takeover proposal which it believes not to be in the best
interests of the Company and its shareholders, whether or not such a proposal
satisfies the minimum price, form of consideration and procedural requirements
of the provision.
The provision may discourage some purchasers, particularly those of less
than all the Company's shares, and may thereby deprive holders of the Company's
stock of an opportunity to sell their stock at a temporarily higher market
price. Because of the higher percentage requirements for shareholder approval of
any Business Combination and the possibility of having to pay a higher price to
other shareholders in such a Business Combination, it may become more costly for
a purchaser to acquire control of the Company. The provision, therefore, may
decrease the likelihood that a tender offer will be made for shares representing
less than 75% of the voting power of the Voting Shares and, as a result, may
adversely affect those shareholders who would desire to participate in such a
tender offer. A potential purchaser of stock seeking to obtain control may also
be discouraged from purchasing stock because a 75% shareholder vote (with
certain exceptions) would be required in order to change or eliminate these
provisions. It should be noted that the provisions would not necessarily
discourage persons who might be willing to seek control by acquiring at least
75% of the voting power of the Voting Shares.
In certain cases, the provision's minimum price provisions, while providing
objective pricing criteria, could be arbitrary and not indicative of value. In
addition, an Interested Shareholder may be unable, as a practical matter, to
comply with all of the procedural requirements of the provision. In these
circumstances, unless a potential purchaser were willing to purchase 75% of the
voting power of the Voting Shares prior to a Business Combination, it would be
forced either to negotiate with the Board of Directors and offer terms
acceptable to it or to abandon the proposed Business Combination.
Another effect of this provision would be to give veto power to the holders
of a minority of the voting power of the Voting Shares with respect to a
Business Combination which is opposed by the Board of Directors but which a
majority of shareholders may believe to be desirable and beneficial. This is the
case because a Business Combination requires the approval of not only 75% of the
voting power of the Voting Shares but also the affirmative vote of the holders
of a majority of the voting power of the Voting Shares, excluding shares of
stock beneficially owned by any Interested Shareholder. The shares of capital
stock beneficially owned by DWG Acquisition could be used to effect such a veto.
See 'Security Ownership of Certain Beneficial Owners,' above. This provision,
therefore, could have the effect of encouraging a person interested in a
Business Combination to negotiate with, and consider the views of DWG
Acquisition, which might discourage someone from attempting to effect a Business
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Combination. That result, in turn, may help members of management retain their
current positions with the Company, regardless of whether that is desired by a
majority of the Company's shareholders. In addition, since only the Continuing
Directors will have the authority to waive the 75% shareholder vote required for
Business Combinations that do not meet all of the minimum price, form of
consideration and procedural requirements of the provision, the provision may
tend to insulate current management against the possibility of removal in the
event a person does attempt to effect a Business Combination.
Shareholders should consider, moreover, that acquisitions or restructurings
effected without prior negotiation with and approval by a company's board of
directors are not necessarily detrimental to shareholders, especially since many
of such transactions involve the purchase of stock at prices above current
market prices. To the extent that the provisions in the Delaware Certificate
would impair the ability of a person or group acquiring a substantial block of
shares promptly to assume effective control of the management and assets of the
Company, the provisions may discourage open market or private purchases of the
Company's stock that could enable shareholders to participate therein to realize
premium prices for their shares and might also eliminate the temporary increases
in market price that frequently accompany such events. The provisions might also
make it more likely that a proposed or threatened acquisition or restructuring
determined not to be in the Company's best interests because of its effect on
smaller or minority shareholders could be defeated by the Board of Directors,
even though shareholders might thereby be deprived of the opportunity to sell
their shares at a premium and even though a majority of shareholders may want
such an opportunity. Further, the provisions will make more difficult or
discourage a proxy contest or the removal of incumbent directors, and thus will
reduce the ability of shareholders to effect changes in the Board of Directors
and management of the Company, which holders of a majority or greater voting
power might consider to be in their best interest, whether or not in connection
with a proposed acquisition of control or restructuring of the Company.
Nevertheless, the Board of Directors believes that the benefits to
shareholders expected to result from the provisions, of reinforcing the Board of
Directors' ability to review fully any proposed or threatened acquisition or
restructuring and available alternatives thereto and encouraging the proponent
of any such transactions to negotiate with directors who were elected by the
shareholders and are familiar with the Company, outweigh the potential
disadvantages of the provisions.
Other than as described in this Proxy Statement, the Delaware Certificate
contains no provisions intended or believed by the Board of Directors to have
anti-takeover effects, although it does contain provisions fixing the maximum
and minimum numbers of directors and conferring on the Board of Directors all
corporate powers not reserved to shareholders by the Delaware Certificate or
Delaware law. The provisions fixing the maximum and minimum number of directors
can be used to prevent a shareholder with a controlling block of shares from
increasing the size of the board and filling the vacancies created thereby with
that shareholder's nominees. As discussed below (see 'Increase of Authorized
Shares of Capital Stock'), the issuance of authorized but unissued shares of
capital stock as well as the Board of Directors' power to determine the voting
power of any new issuance of Preferred Stock could also be used to impede a
takeover. In addition, the By-laws of the Delaware Corporation contain
provisions similar to certain of the provisions in the Delaware Certificate,
including provisions vesting in the Board of Directors authority to change its
size and fill vacancies on the Board of Directors occurring between Annual
Meetings.
Although the Company may in the future consider other proposals that may be
characterized as having an anti-takeover effect, the Company (except for the
proposals to adopt amendments to the
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Equity Participation Plan (see 'Proposal 3. Approval of Amendments to the
Amended and Restated 1993 Equity Participation Plan'), and to authorize the
Company to enter into Indemnification Agreements with its directors, officers
and certain other persons (see 'Proposal 4. Authorization of Indemnification
Agreements') which also might be characterized as having certain anti-takeover
effects) does not have any present intention to submit additional proposals to
the shareholders or to adopt any additional anti-takeover provisions.
The Delaware Certificate also contains provisions intended to provide the
broadest possible indemnification of officers and directors of the Company and
certain other persons and to limit the liability of directors of the Company to
the Company and its shareholders to the greatest degree permitted by law. See
'Description of Indemnification Provision,' below.
DESCRIPTION OF ANTI-TAKEOVER PROVISIONS IN THE DELAWARE CERTIFICATE
1. Size of the Board of Directors and Filling Vacancies on the Board of
Directors. The Code of Regulations states that the number of directors that
shall constitute the whole Board of Directors shall be limited to a maximum of
13 directors until changed by vote of shareholders at a meeting called for the
purpose of electing directors. The Code of Regulations of the Ohio Corporation
currently permits the Board of Directors to fill any vacancy on the Board of
Directors, from whatever cause arising. The Delaware Certificate states that the
Board of Directors consists of not less than ten nor more than twenty members,
provided, however, that such maximum number may be increased to reflect the
right of holders of preferred stock to elect directors in certain circumstances
with the exact number of directors to be fixed by a majority vote of the
directors then in office and that such authority of the Board of Directors is
exclusive. The Delaware Certificate provides that vacancies that may occur
between annual meetings may be filled only by a majority of the remaining
directors then in office, even if less than a quorum, subject to the rights of
holders of any class or series of preferred stock to elect directors. In
addition, the provision provides that any new director elected to fill a vacancy
on the Board of Directors will serve for the remainder of the full term of that
director for which the vacancy occurred and no decrease in the number of
directors shall shorten the term of any incumbent. Vacancies caused by an
increase in the number of directors would be filled by the Board of Directors.
The purpose of including the provisions respecting the size of the Board of
Directors and the filling of vacancies in the Delaware Certificate is to prevent
the elimination of such provisions through By-law amendment by a shareholder or
group owning or controlling a substantial voting block so as to permit
shareholders directly to increase the size of the Board of Directors and to fill
vacancies resulting therefrom or otherwise, which would enable such shareholder
or group of shareholders to elect its own nominees to the vacancies. This would
be possible because, under Delaware law, shareholders may amend the By-laws of
the Delaware Corporation without prior approval of the Board of Directors,
whereas the Delaware Certificate may be amended only if the Board of Directors
first approves and recommends such action to shareholders.
2. Business Combination Provision. The Board of Directors is concerned
about the partial or 'two-step' tender offer technique of accomplishing
corporate takeovers. The first step in this technique is typically a tender
offer made by another corporation or entity seeking control at a price that
often substantially exceeds the market value of the target corporation's stock.
After acquiring a controlling number of shares, the entity will then effectuate
the second step: a business combination with the target corporation designed to
eliminate the then remaining shareholders' interest in the corporation. The
terms of the second step business combination may not reflect arm's-length
bargaining and therefore
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may not assure proper treatment of the shareholders remaining after the tender
offer or other first step. The provisions are intended to prevent persons who
might acquire a controlling interest in the Company from imposing a Business
Combination on minority shareholders unless such persons are able and willing to
deal fairly with minority shareholders by paying them a price for their interest
in the Company which is equal or comparable to the price received by all other
shareholders of the Company. As discussed herein, the 'fair price' provision
will not ensure that shareholders will receive a fair price for their shares (a)
in an instance where no Business Combination is proposed or (b) where Continuing
Directors approve a two-tier pricing. Furthermore, such provision will not apply
to DWG Acquisition nor will it prevent substantial shareholders from privately
negotiating the sale of their shares for personal or business reasons which may
not reflect the interests of minority shareholders.
With regard to the Ohio Corporation, the affirmative vote of the holders of
two-thirds of the votes cast is required to approve a merger. Delaware law
requires, in addition to Board of Directors approval, the affirmative vote of
the holders of a majority of the outstanding shares entitled to vote at the
meeting to approve a merger, consolidation, liquidation or dissolution of a
company or a sale, lease or exchange of all or substantially all of a company's
assets. The Delaware Certificate provides that the approval of the holders of
shares representing at least 75% of the voting power of the Voting Shares be
required in order to approve certain Business Combinations if an Interested
Shareholder is a party to the transaction or its percentage equity interest in
the Company or any subsidiary of the Company would be increased by the
transaction. The required 75% approval of any Business Combination must include
the affirmative vote of the holders of shares representing at least a majority
of the voting power of the Voting Shares exclusive of those shares beneficially
owned by any Interested Shareholder.
The voting requirements outlined above will not apply, however, if: (i)
immediately prior to the time the Business Combination is consummated, the
Company is the Beneficial Owner (defined below) of a majority of each class of
the outstanding equity securities of the Interested Shareholder; (ii) the
Business Combination was approved by at least a majority of the Board of
Directors (even though not the entire Board of Directors), but only if a
majority of the directors acting favorably upon such matter are Continuing
Directors; or (iii) the consideration to be received by the holders of each
class of the Company's outstanding Voting Shares acquired by the Interested
Shareholder is at least equal to the greater of the highest per share price
(including any brokerage commissions, transfer taxes and soliciting dealers'
fees) paid by the Interested Shareholder for any shares of such class (a) within
the two-year period immediately prior to the first public announcement of the
proposal of the Business Combination or (b) in the transaction in which it
became an Interested Shareholder, and is in cash or in the same form of
consideration as the Interested Shareholder paid to acquire the largest number
of Voting Shares previously acquired by it. The pricing provision does not
guarantee that a shareholder will receive the highest market price paid for such
shares, rather it insures that a shareholder will receive the highest price paid
for such shares by an Interested Shareholder during the prior two years. If
either the ownership or form of consideration requirements set forth in clauses
(i) and (iii) above are satisfied, the Business Combination shall require the
approval of the holders of at least two-thirds of the votes entitled to be cast
by the holders of all the then outstanding Voting Shares (the 'Ratification
Percentage') (and the additional majority vote). If the Board of Directors
approves the Business Combination in accordance with the requirements set forth
in clause (ii) above, the Board of Directors may, again in accordance with the
voting provisions of such clause (ii), determine to require a vote of
shareholders. If a shareholder vote is required for such Business Combination
under law (such as, for example, in the case of a merger or liquidation), the
Board of Directors shall require the affirmative vote of the then outstanding
Voting Shares equal to the higher of: (1) the Ratification Percentage (such
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affirmative vote shall not require the additional majority vote), and (2) such
other percentage as is required by law. If a shareholder vote is not required
for such Business Combination under law, the Board of Directors may, in its
discretion, either decide not to require a shareholder vote to approve the
Business Combination or require the affirmative vote of the outstanding Voting
Shares equal to (i) the Ratification Percentage (such affirmative vote shall not
require the additional majority vote) or (ii) such other percentage as it so
determines.
An 'Interested Shareholder' generally is defined under the Delaware
Certificate as the Beneficial Owner of 10% or more of the voting power of the
outstanding Voting Shares (other than the Company, its employee benefit plans,
or its majority owned subsidiaries), excluding, however, DWG Acquisition or any
'Affiliate' or 'Associate' (each as defined in the Delaware Certificate)
thereof. The Board of Directors considers that a 10% holding, which causes a
person to be classified as an 'insider' under Section 16 of the Securities
Exchange Act of 1934, as amended (the 'Exchange Act'), and is double the
percentage ownership required to trigger reporting obligations under Section
13(d) of the Exchange Act, for shareholders of public companies, is appropriate
to define an Interested Shareholder. At the present time, the Company is not
aware of the existence of any shareholder or group of shareholders that would be
an Interested Shareholder. However, if the currently outstanding shares of the
Company's Convertible Preferred Stock were to be converted by a Beneficial Owner
into shares of Class A Common Stock, such Beneficial Owner (if other than DWG
Acquisition) would become, upon such conversion, an Interested Shareholder.
'Beneficial Owner' and 'Beneficial Ownership' are defined in accordance with the
definition of beneficial ownership under Rule 13d-3 of the General Rules and
Regulations under the Exchange Act, and include all shares as to which the
Interested Shareholder in question has sole or shared voting or investment
power. However, an Interested Shareholder is also deemed to own beneficially
shares owned, directly or indirectly, by any 'Affiliate' or 'Associate' (each as
defined in the Delaware Certificate) of the Interested Shareholder, as well as
(i) shares which it or any such Affiliate or Associate has a right to acquire,
(ii) shares issuable upon the exercise of options or rights, or upon conversion
of convertible securities, held by the Interested Shareholder, and (iii) shares
beneficially owned by any other person with whom the Interested Shareholder or
any of such shareholder's Affiliates or Associates acts as a partnership,
syndicate or other group pursuant to an agreement, arrangement or understanding
for the purpose of acquiring, holding, voting or disposing of shares of capital
stock of the Company.
A 'Business Combination' includes: (i) a merger or consolidation involving
the Company or any of its subsidiaries and an Interested Shareholder or an
Affiliate or Associate of an Interested Shareholder, or an Affiliate thereof;
(ii) a sale, lease or other disposition (in one or a series of transactions) of
a 'Substantial Part' (as defined in the Delaware Certificate) of the assets of
the Company or any of its subsidiaries to an Interested Shareholder or an
Affiliate or Associate of any Interested Shareholder, or an Affiliate thereof;
(iii) any sale or other disposition (in one or a series of transactions) to the
Company or any of its subsidiaries of any assets (excluding any Voting Shares,
but including without limitation any securities whether outstanding, authorized
but unissued or in treasury, issued by an Interest Shareholder, or by an
Affiliate or Associate of an Interested Shareholder or by an Affiliate thereof)
of (A) any Interested Shareholder or (B) an Affiliate or Associate of an
Interested Shareholder, or an Affiliate thereof, if the amount paid therefor
constitutes a Substantial Part of the assets of the Company or any subsidiary;
or (iv) an issuance (or a related series of issuances) of securities of the
Company or any of its subsidiaries (except upon conversion of convertible
securities as a result of a pro rata stock dividend or stock split) to an
Interested Shareholder or an Affiliate or Associate of an Interested Shareholder
or an Affiliate thereof, for consideration aggregating $5,000,000
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or more; (v) a liquidation, dissolution, spinoff, split up or split off of the
Company (if as of the record date for the determination of shareholders entitled
to vote with respect thereto or, if no vote would otherwise be required, the
date the transaction is planned to be consummated, any person is an Interested
Shareholder); (vi) a reclassification or recapitalization of securities
(including, without limitation, any combination of shares or reverse stock
split) of the Company or any of its subsidiaries or a reorganization, in any
case having the effect, directly or indirectly, of increasing the percentage
interest of an Interested Shareholder in any class of equity securities of the
Company or such subsidiary; and (vii) any agreement, contract or other
arrangement providing for any of the transactions described in this definition
of Business Combination.
A 'Continuing Director' is defined as one serving as a director as of the
date of the Merger, or one subsequently elected or appointed whose election or
appointment or recommendation by the Board of Directors for election by the
Company's shareholders was approved of by at least a majority of the Continuing
Directors then on the Board of Directors.
'Voting Shares' is defined as any issued and outstanding shares of capital
stock of the Company entitled to vote generally in the election of directors.
The Business Combination provision described above is intended to provide
safeguards to the Company's shareholders by requiring a higher shareholder vote
than required under Delaware law in the event another person first obtains a
substantial interest in the Company and then wishes to accomplish a combination
of such person's business with that of the Company, or otherwise eliminate the
shareholdings of the other shareholders. The federal securities law and
regulations issued thereunder govern the disclosure required to be made to
minority shareholders in such transactions but do not assure to shareholders the
fairness of the terms of the Business Combination. Moreover, the statutory right
of the remaining shareholders of the Company to dissent in connection with
certain Business Combinations and receive the 'fair value' of their shares in
cash may involve significant expense, delay and uncertainty to dissenting
shareholders. Further, the 'fair value' of a shareholder's shares, as determined
under this standard, may not be equivalent to the minimum price as determined
pursuant to the provisions.
The Business Combination provision is intended to close partially these
gaps in the federal and state laws and to minimize certain of the potential
inequities of those Business Combinations that involve two or more steps by
requiring that in order to complete a Business Combination that is not approved
by the Continuing Directors, such Interested Shareholder must obtain the
affirmative votes of at least 75% of the voting power of the outstanding Voting
Shares prior to proposing the Business Combination (including the affirmative
vote of the holders of shares representing at least a majority of the voting
power of the outstanding Voting Shares exclusive of those shares beneficially
owned by the Interested Shareholder), or meet the minimum price and procedural
requirements of the provision and obtain the approval of at least two-thirds of
the voting power of the outstanding Voting Shares (and the additional majority
vote). The provision also is designed to protect those shareholders who have not
tendered or otherwise sold their shares to a purchaser who is attempting to
acquire control by ensuring that at least the same price and form of
consideration are paid to such shareholders in a Business Combination as were
paid to shareholders in the initial step of the acquisition. In the absence of
the provision, an Interested Shareholder who acquired control of the Company
could subsequently, by virtue of such control, force minority shareholders to
sell or exchange their shares at a price that would not reflect any premium such
purchaser may have paid in order to acquire its controlling interest, but rather
at a price set by such Interested Shareholder. Such a price might not only be
lower than the price
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paid by such purchaser in acquiring control, but also could be in a less
desirable form of consideration (e.g., equity or debt securities of the
purchaser).
In many situations, the minimum price, form of consideration and procedural
requirements of the provision would require that a purchaser pay shareholders a
higher price for their shares and/or structure the transaction differently from
what would be the case without the provision. Accordingly, the Board of
Directors believes that, to the extent a Business Combination were involved as
part of a plan to acquire control of the Company, this provision would increase
the likelihood that a purchaser would negotiate directly with the Board of
Directors. The Board of Directors believes that it normally is in a better
position than the individual shareholders of the Company to negotiate
effectively on behalf of all shareholders in that the Board of Directors is
likely to be more knowledgeable than any individual shareholder in assessing the
business and prospects of the Company. Accordingly, the Board of Directors is of
the view that negotiations between the Board of Directors and the purchaser
would increase the likelihood that shareholders ultimately will receive a higher
price for their shares from anyone desiring to obtain control of the Company
through a Business Combination or otherwise.
Although not all acquisitions of the Company's capital stock are made with
the objective of acquiring control of the Company through a subsequent Business
Combination, a purchaser in many cases desires to have the option to consummate
such a Business Combination. Assuming that to be the case, the provision would
tend to discourage purchasers whose objective is to seek control of the Company
at a relatively low price, since acquiring the remaining equity interest may be
difficult unless the minimum price, form of consideration and procedural
requirements were satisfied or a majority of the Continuing Directors were to
approve the transaction. The provision also should discourage the accumulation
of large blocks of the Company's capital stock, which the Board of Directors
believes to be disruptive to the stability of the Company, and which can
sometimes precipitate a change of control of the Company on terms unfavorable to
the Company's other shareholders.
The Delaware Certificate provides that this provision may not be repeated,
altered, changed or amended in any respect unless such action is approved by the
affirmative vote of the holders of at least 75% of the Voting Shares (which 75%
must include the affirmative vote of the holders of shares representing at least
a majority of the voting power of the Voting Shares exclusive of those of which
any Interested Shareholder is the Beneficial Owner), unless approved by a vote
of a majority of the entire Board of Directors (but only if a majority of the
directors acting favorably on the matter are Continuing Directors), in which
case the Business Combination provision may be amended by the affirmative vote
of holders of at least a majority of the voting power of the Voting Shares (such
affirmative vote does not require the additional majority vote); and provided,
further, that the Ratification Percentage may be amended, altered, changed or
repealed by the affirmative vote of the holders of at least two-thirds of the
voting power of the Voting Shares (such affirmative vote does not require the
additional majority vote).
DESCRIPTION OF THE INDEMNIFICATION PROVISIONS
The Ohio Corporation's indemnification arrangements are set forth in the
Code of Regulations. The Ohio Articles do not provide for indemnification.
Article VI of the Ohio Corporation's Code of Regulations provides that the
Company shall indemnify any person who was or is a party or is threatened to be
made a party, to any threatened, pending, or completed action, suit, or
proceeding, whether civil, criminal, administrative or investigative, by reason
of the fact that he is or was a director, officer, employee, or agent of the
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Company or is or was serving at the request of the Company as a director,
trustee, officer, employee, or agent of another corporation, domestic or
foreign, nonprofit or for profit, partnership, joint venture, trust or other
enterprise in the manner and to the maximum extent permitted by the Ohio
Corporation Law, as amended from time to time. The Code of Regulations further
provides that such indemnification is not to be deemed exclusive of any other
rights to which those seeking indemnification may be entitled under the Ohio
Articles of Incorporation or the Code of Regulations or any agreement, vote of
shareholders or disinterested directors, or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a director,
trustee, officer, employee, or agent and shall inure to the benefit of the
heirs, executors, and administrators of such a person. The Code of Regulations
further provides that the Company may purchase and maintain insurance on behalf
of any person who is or was a director, officer, employee, or agent of the
Company, or is or was serving at the request of the Company as a trustee,
director, officer, employee or agent of another corporation, domestic or
foreign, nonprofit or for profit, partnership, joint venture, trust, or other
enterprise against any liability asserted against him and incurred by him in any
such capacity, or arising out of his status as such, whether or not the Company
would have the power to indemnify him against such liability under this Section.
Directors' and Officers' Liability Insurance. The Ohio Corporation has a
director and officer liability policy (the 'D & O Policy') with National Union
Fire Insurance Company, a division of American International Group, in force
from April 23, 1994 to April 23, 1995. The D & O Policy covers claims made
against directors and officers of the Ohio Corporation while acting in their
respective capacities as directors and officers, except for and to the extent
that the Ohio Corporation has indemnified such directors and officers. While the
Ohio Corporation has pursued the broadest coverage terms available, no such
policy is broad enough to cover all potential claims. Major exclusions include
'claims brought by shareholders owning 5% or more of the stock' and wrongful
acts occurring or alleged to have occurred prior to April 23, 1993.
The Delaware Certificate provides indemnification in all situations to the
fullest extent permitted by Delaware law (including as such law may be amended
in the future to be more favorable to directors and officers).
Article VII of the Delaware Certificate provides as follows:
Section 1 provides that, to the extent not prohibited by law, the Delaware
Corporation shall indemnify its directors and officers for expenses (including
attorneys' fees and disbursements) and any liability or loss paid or incurred if
such person is or was made, or threatened to be made, a party to any action by
reason of the fact that such person is or was a director or officer of the
Delaware Corporation, or is or was serving in any capacity at the request of the
Delaware Corporation for any other corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise (an 'Other Entity'). Persons
who are not directors or officers of the Delaware Corporation may be similarly
indemnified in respect of service to the Delaware Corporation or to an Other
Entity at the request of the Delaware Corporation to the extent the Board of
Directors at any time specifies that such persons are entitled to the benefits
of Article VII of the Delaware Certificate.
Section 1 permits indemnification whether the basis of such proceeding is
an alleged action in an official capacity or in any other capacity while serving
as an officer or director. However, Section 1 is limited by reference to the
Delaware Corporation Law, which specifically limits indemnification in the case
of derivative suits (suits brought in the name and on behalf of the Delaware
Corporation) to the payment of expenses if the person acted in good faith and in
a manner such person reasonably believed
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to be in or not opposed to the best interests of the Delaware Corporation. If a
person is adjudged liable to the Delaware Corporation in a derivative suit (but
not in other suits) no indemnification payments may be made unless a court
determines otherwise.
Section 2 provides that expenses are to be advanced prior to the final
disposition of a proceeding upon the receipt by the Delaware Corporation of an
undertaking that the director or officer will repay such advances if he or she
is ultimately found not to be entitled to indemnification.
Section 3 provides that the right to indemnification under the Delaware
Certificate is not an exclusive right and, therefore, the Delaware Corporation
may provide other indemnification, if appropriate. Such a non-exclusivity
provision is currently provided in the Ohio Corporation's Code of Regulations.
Section 4 provides that the right to indemnity and to receive advances
continues as to a director or officer after such person has ceased to hold an
office with the Delaware Corporation. Similar provision for continuation of
protection is currently contained in the Ohio Corporation's Code of Regulations.
Section 5 permits the Delaware Corporation, as provided in the Delaware
Corporation Law, to purchase directors' and officers' liability insurance.
Section 5 also permits the Delaware Corporation to establish a trust fund to
ensure payments of indemnification claims.
Section 6 provides that the right to indemnification is a contract right
and, therefore, cannot be retroactively eliminated by a later stockholder vote.
Section 7 permits a person entitled to indemnity to bring an action in
court to obtain such indemnity and requires that in any such suit the court will
not be bound by a decision of the Board of Directors, independent counsel or
stockholders that such person is not entitled to indemnification. The purpose of
Section 7 is to permit court determination of the issue, notwithstanding a
negative decision by the Board of Directors, its chosen counsel or the
stockholders, which decision might be made, for example, following a change of
control in the Delaware Corporation.
Section 8 provides that any director or officer of the Delaware Corporation
serving in any capacity with a majority owned subsidiary or any employee benefit
plan of the Delaware Corporation or any majority owned subsidiary corporation
shall be deemed to be doing so at the request of the Delaware Corporation.
Section 9 provides that any person entitled to be indemnified may elect to
have the right to indemnification interpreted on the basis of the applicable law
in effect at the time of the occurrence of the events giving rise to the action,
to the extent permitted by law, or on the basis of the applicable law in effect
at the time such indemnification is sought.
Currently, the indemnification provisions in the Code of Regulations are
subject to repeal or amendment by either the stockholders or the Board of
Directors. The indemnification provisions contained in the Delaware Certificate
may be amended or repealed only by the stockholders of the Delaware Corporation
following approval thereof by the Board of Directors. The Delaware Corporation
has been informed that in the opinion of the Securities and Exchange Commission,
indemnification for liabilities arising under the Securities Act of 1933, as
amended, is against public policy as expressed in such Act and is therefore
unenforceable.
Article VIII of the Delaware Certificate, in general, eliminates the
personal liability of each of the directors of the Delaware Corporation (but not
a director acting in another capacity, such as an officer or employee) to the
Delaware Corporation or its stockholders for monetary damages for breach of a
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director's fiduciary duty of care. Except as described below, the effect of such
Article is to protect directors for all their business decisions, including
those later found by a court to have been negligent or grossly negligent. Such
Article might also protect directors from liability for breaches of their
fiduciary duties in non-decision making contexts. However, it does not eliminate
or limit the liability of a director for: (i) a breach of the director's duty of
loyalty to the Delaware Corporation or its stockholders; (ii) acts or omissions
not in good faith; (iii) acts or omissions which involve intentional misconduct
or a knowing violation of law; (iv) willful or negligent conduct in connection
with the payment of illegal dividends, or unlawful stock repurchases or
redemptions; or (v) any transaction from which the director derives an improper
personal benefit. In addition, such Article does not limit a director's
liability for violations of the Federal securities laws. In general, the 'duty
of loyalty' requires directors to refrain from self-dealing; it requires
directors to place the interests of stockholders above their own when the two
may be in conflict.
Although monetary damage awards occasioned by a breach of the duty of care
are eliminated, the Delaware Certificate does not eliminate the duty of care
and, therefore, does not prevent a stockholder from seeking equitable remedies
for an alleged breach of such duty, including an injunction prohibiting a
proposed action or transaction. The Delaware Certificate permits only a
limitation on liability of a director to the Delaware Corporation (including
derivative actions) and its stockholders. Directors are potentially liable for
damages in suits brought by third parties (including governmental and regulatory
agencies).
The indemnification provided by the Delaware Certificate and the limitation
on the personal liability of a director to its stockholders for monetary damages
for violations of a director's fiduciary duty of care provided by the Delaware
Certificate extend only so far as is legally permitted. If the Delaware
Corporation Law is amended to permit broader indemnification rights, the
protection afforded to directors and officers of the Delaware Corporation by the
Delaware Certificate will be expanded to the fullest extent authorized by the
Delaware Corporation Law, as so amended, without further stockholder action.
Similarly, if the Delaware Corporation Law is amended to permit the further
elimination or limitation of the personal liability of directors for breaches of
fiduciary duties, then the liability of directors shall be eliminated or limited
to the fullest extent authorized by the Delaware Corporation Law.
The Company believes that the indemnification provisions described above,
together with the limitation of Directors' liability provided for by the
Delaware Certificate, will ensure that the stockholders will continue to benefit
from the services of qualified directors and officers. Notwithstanding the
foregoing, under certain circumstances, because of the indemnification
provisions, the Company may in the future be obligated to incur more expense in
indemnifying its officers and directors, which may affect the Company's future
profitability. In addition, stockholders should note that limitation on
directors' liability may have the effect of reducing the likelihood of
derivative litigation against directors and may also discourage or deter
stockholders or management from bringing a lawsuit against directors for breach
of their fiduciary duty of care, even though such an action, if successful,
might otherwise have benefitted the Company and its stockholders. Furthermore,
because of the limitation of a director's liability, the Company's stockholders
will lose the right to maintain certain causes of action in the future that
exist under common law, including a stockholder's right on behalf of himself or
the Company to recover monetary damages against Directors for negligence or
gross negligence.
Because the Company believes that providing effective indemnification
arrangements is vital to the Company's ability to continue to attract and retain
effective qualified and capable directors, management, employees and
fiduciaries, the Board of Directors is also asking shareholders to authorize
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indemnification agreements to be entered into by the Corporation with each of
its directors, officers and certain other employees, agents and fiduciaries. See
'Proposal 4. Authorization of Indemnification Agreements.'
PROVISIONS OF THE DELAWARE BY-LAWS
The By-laws of the Delaware Corporation have been prepared in accordance
with the Delaware Certificate and the Delaware Corporation Law. They set forth
important rules relating to the governing of the Delaware Corporation, including
provisions which dictate how the Board of Directors and Committees thereof are
to operate, how meetings of shareholders of the Delaware Corporation may be
called and the procedures to be followed by any shareholder of the Delaware
Corporation that wishes to nominate any person to be a director of the Delaware
Corporation or otherwise bring any other proposal before a meeting of
shareholders. Shareholders are urged to carefully review the full text of the
Delaware By-laws which is attached to this Proxy Statement as Exhibit C hereto.
TRADING IN THE DELAWARE CLASS A COMMON STOCK
It is anticipated that the Delaware Corporation will take the necessary
steps to arrange for the Delaware Class A Common Stock to be listed and traded
on the NYSE and on the PSE. It is also expected that such listing and trading
will begin on the effective date of the Merger, subject to the rules of the NYSE
and the PSE.
FEDERAL INCOME TAX CONSEQUENCES
In the opinion of counsel to the Company, Paul, Weiss, Rifkind, Wharton &
Garrison, under present Federal income tax laws, no gain or loss will be
recognized to the Ohio Corporation or the Delaware Corporation as a result of
the Merger, and no gain or loss will be recognized under such laws to the
holders of outstanding shares of capital stock of the Company other than holders
who receive cash on exercise of dissenters' rights as a result thereof. A holder
of shares who dissents and receives cash payment for his shares will be treated
as having received such payment in redemption of such shares, subject to the
conditions and limitations of Section 302 of the Internal Revenue Code of 1986,
as amended, including the attribution rules of Section 318. EACH HOLDER WHO
CONTEMPLATES EXERCISING DISSENTERS' RIGHTS SHOULD CONSULT HIS OWN TAX ADVISOR AS
TO THE POSSIBILITY THAT ANY PAYMENT TO HIM WILL BE TREATED AS DIVIDEND INCOME
RATHER THAN CAPITAL GAIN. No opinion is given with respect to the tax
consequences to the holders of outstanding shares of capital stock of the
Company arising under the law of any state, locality or foreign jurisdiction,
nor is any opinion given with respect to the Federal tax consequences of the
Merger upon foreign holders of outstanding shares of capital stock of the
Company.
INCREASE OF AUTHORIZED SHARES OF CAPITAL STOCK
The authorized capitalization of the Ohio Corporation consists of 100
million shares, of which 75 million are Class A Common Stock, 12 million are
Class B Common Stock, 6 million are Redeemable Convertible Preferred Stock, 5
million are Ohio Serial Preferred Stock and 2 million are Ohio Junior Serial
Preferred Stock.
The authorized capitalization of the Delaware corporation consists of 150
million shares, of which 100 million are Delaware Class A Common Stock, 25
million are Delaware Class B Common Stock and 25 million are Delaware Preferred
Stock, including 5,982,866 shares of Delaware Redeemable
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Convertible Preferred Stock. Accordingly, approval of the Merger will include
approval of an effective increase of 50 million shares of capital stock. The
capital structure of the Delaware Certificate was designed to provide the holder
of shares of Delaware Class A Common Stock and Delaware Redeemable Convertible
Preferred Stock with substantially the same rights, preferences and limitations
after the Merger as were applicable to the Class A Common Stock and Redeemable
Convertible Preferred Stock prior to the Merger.
Immediately following the effective time of the Merger, the Delaware
Corporation will have issued and outstanding the same number of shares of
Delaware Class A Common Stock and the same number of shares of Delaware
Redeemable Convertible Preferred Stock as the Ohio Corporation had issued and
outstanding of Class A Common Stock and of Redeemable Convertible Preferred
Stock immediately prior to the effective time of the Merger. In addition,
4,985,722 shares of Delaware Class B Common Stock will be reserved for issuance
upon the conversion of the Delaware Redeemable Convertible Preferred Stock and
4,985,722 shares of Delaware Class A Common Stock will be reserved for issuance
upon the conversion of the Delaware Redeemable Convertible Preferred Stock
and/or the Delaware Class B Common Stock into which such Delaware Redeemable
Convertible Preferred Stock is convertible; and 3,008,750 shares (to be
increased to 9,508,750 shares if Proposal 3 is approved) of Delaware Class A
Common Stock will be reserved for issuance upon the exercise of stock options or
the issuance of restricted stock awards issued pursuant to the Equity
Participation Plan. Immediately prior to and immediately following the effective
time of the Merger, the Delaware Corporation will have the same number of shares
of Delaware Class B Common Stock and of Delaware Class A Common Stock reserved
for issuance as the Ohio Corporation had reserved for issuance of its Class B
Common Stock and its Class A Common Stock. If Proposal 4 is approved, the number
of shares of Delaware Class A Common Stock and of Ohio Class A Common Stock
reserved for issuance under the Equity Participation Plan will be increased in
identical manner.
The Board of Directors believes that the increase in the number of
authorized shares of capital stock is desirable so that additional shares of
capital stock are available for issuance for proper corporate purposes,
including possible stock dividends, acquisitions, financings, employee benefit
plans and other corporate purposes, in order to avoid, in each instance, the
delay and expense otherwise involved in obtaining shareholder approval for
individual amendments to the Delaware Certificate. For example, the Company
continuously reviews opportunities to acquire businesses, some of which might
involve the issuance of shares of capital stock. If the Merger is approved, the
Board of Directors would be able to issue, for any proper corporate purpose,
such authorized but unissued shares without further action from the
shareholders. Depending on the purpose, terms and conditions, any such issuance
could have the effect of diluting current shareholders' proportionate interests
in the Company. Shareholders have no preemptive rights to subscribe to
additional shares of capital stock of the Delaware Corporation when issued.
Whether or not any proposed transaction involving the issuance of shares will be
submitted to the shareholders for approval will be determined by legal
requirements and the regulations of any stock exchange on which the Company's
shares are then listed.
Although not a factor in the Board of Directors' decision to propose the
Merger, one of the effects of increasing the number of authorized shares of
capital stock may be to enable the Board to render more difficult or to
discourage an attempt to obtain control of the Company by means of merger,
tender offer, proxy contest or otherwise, and thereby protect the continuity of
present management. The Board of Directors would have the additional shares
available to effect a sale of shares, merger, consolidation or similar
transaction whereby the number of the Company's outstanding shares would be
increased and thereby dilute the interest of a party attempting to obtain
control of the Company as well as voting
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rights of the Company's other shareholders. In addition, the Board of Directors
is authorized under the Delaware Certificate to determine the voting powers of
any series of preferred stock, thereby creating the possibility of class voting
for approval of mergers or consolidations or similar transactions, which may
render more difficult or may discourage attempts to obtain control of the
Company.
Under the Delaware Certificate, the Board of Directors is authorized,
without further action by the shareholders, to issue shares of Preferred Stock
in series. The Preferred Stock is senior to all classes of Delaware Common Stock
with respect to dividend payments and distribution of assets upon liquidation.
With respect to each series of Delaware Preferred Stock, the authority of the
Board of Directors of the Delaware Corporation includes, but is not limited to,
the authority to determine: (i) the number of shares in the series; (ii)
dividend rates; (iii) voting powers, if any; (iv) conversion or exchange
privileges, if any; (v) redemption provisions, if any; (vi) liquidation rights;
(vii) whether the shares will be subject to sinking or retirement fund; and
(viii) such other provisions relating to rights and privileges as shall not be
inconsistent with law or the Delaware Certificate. The specific terms of any
series of Delaware Preferred Stock will depend primarily on market and other
conditions at the time of issuance. So long as there are shares of Delaware
Redeemable Convertible Preferred Stock outstanding, the aggregate stated value
of all other shares of Preferred Stock ranking on a parity with the shares of
Delaware Redeemable Convertible Preferred Stock with respect to dividend
payments and distribution of assets upon liquidation may not exceed $50 million.
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PROPOSAL 3.
APPROVAL OF AMENDMENTS TO AMENDED AND RESTATED 1993
EQUITY PARTICIPATION PLAN
INTRODUCTION
In 1993, as a part of the Company's ongoing program to provide senior
management with incentives linked to longer-term business unit and corporate
performance, the Board of Directors and shareholders approved the Equity
Participation Plan. The Equity Participation Plan is designed to provide senior
corporate and business unit managers and key employees with stock based
incentives which overall are intended to provide competitive long-term incentive
opportunities and tie executive long-term financial gain to increases in the
Company's stock price. To further the purposes of the Equity Participation Plan,
the Board of Directors in April 1994 amended the Equity Participation Plan,
subject to approval of the Company's shareholders, to (a) increase the maximum
number of shares of Class A Common Stock that may be granted as restricted
shares or delivered pursuant to the exercise of options granted under the Equity
Participation Plan from 3,500,000 to 10,000,000; (b) extend the maximum term for
which options (other than options automatically granted to non-employee
directors) may be granted under the Equity Participation Plan from ten to 15
years; (c) increase the number of shares of Class A Common Stock with respect to
which options and SARs may be granted to any individual during the term of the
Equity Participation Plan from 3,500,000 to 5,000,000; (d) permit the exercise
of options through a cashless exercise program and, in the case of certain
non-employee Directors, by delivery of previously acquired shares of Class A
Common Stock held by such directors for at least six months; (e) authorize the
Committee (as hereinafter defined), at its discretion, to grant replacement or
reload options upon the exercise of certain options under certain circumstances;
and (f) permit directors to elect to receive any annual retainer and/or meeting
fees that may become payable in shares of Class A Common Stock (collectively,
the 'Amendments'). The Board of Directors believes that the Amendments will
provide the Committee with increased flexibility in structuring grants of
options and in awarding options and restricted shares to eligible participants
(other than non-employee directors whose grants are fixed under the terms of the
Equity Participation Plan). In addition, the Committee has awarded an aggregate
of 3,850,000 'performance stock options' (the 'Performance Options') under the
Equity Participation Plan to Messrs. Peltz, May and Kalvaria, subject to
shareholder approval of Proposal 3. A vote FOR approval of Proposal 3 will
constitute a vote for approval of the Amendments. If the Amendments are
approved, the Performance Options will become effective. For further information
concerning options (including the Performance Options) and restricted shares
granted under the Equity Participation Plan, see 'Executive Compensation' above.
REQUIRED VOTE
Approval of Proposal 3 requires the affirmative vote of holders of a
majority of the total shares of Class A Common Stock outstanding and entitled to
vote at the Meeting. If Proposal 3 is approved, the Amendments and the
Performance Option grants (which were granted subject to the approval of
appropriate amendments to the Equity Participation Plan by the shareholders)
will become effective. If Proposal 3 is not approved, the Amendments will not
become effective and the Equity Participation Plan will continue in effect as
adopted by the Board of Directors on April 24, 1993 and approved by the
shareholders at the October 27, 1993 Annual Meeting of Shareholders and the
Performance Option grants will not become effective and will be deemed to be
null and void ab initio.
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE AMENDMENTS
TO THE EQUITY PARTICIPATION PLAN.
SUMMARY OF PLAN PROVISIONS AND PROPOSED AMENDMENTS
The following description of the Equity Participation Plan is merely a
summary of certain provisions thereof and is qualified in its entirety by the
full text of the Equity Participation Plan attached hereto as Exhibit E. Such
Exhibit E is a part of this Proxy Statement and should be read in connection
with the following summary. In Exhibit E, language in brackets [ ] currently
appears in the Equity Participation Plan but will be deleted if Proposal 3 is
approved and language that is underlined will be added to the Equity
Participation Plan if Proposal 3 is approved.
Purpose. The purpose of the Equity Participation Plan is to promote the
interests of the Company and its shareholders by (i) securing for the Company
and its shareholders the benefits of the additional incentive inherent in the
ownership of the capital stock of the Company by directors, selected officers,
and key employees of, and key consultants to, the Company and its subsidiaries,
including the individuals named in the Summary Compensation Table, who are
important to the success and growth of the business of the Company and its
subsidiaries and (ii) assisting the Company to secure and retain the services of
such persons. The Equity Participation Plan provides for granting such persons
(a) options for the purchase of shares of Class A Common Stock, (b) tandem SARs
and (c) restricted shares of Class A Common Stock that are both restricted as to
transferability and subject to a substantial risk of forfeiture ('Restricted
Shares'). Approximately 100 employees and approximately 10 non-employee
directors are eligible to participate under the Equity Participation Plan.
Administration. The Equity Participation Plan is administered by a
committee (the 'Committee') consisting of two or more directors appointed from
time to time by the Board of Directors of the Company. The current members of
the Committee are Messrs. Felt, Pallot and Tsai, who are the current members of
the Compensation Committee. Except for certain automatic grants to non-employee
directors and shares which may be issued in lieu of cash retainer and meeting
fees, as described below, no member of the Committee may be, or within one year
before having become a member of the Committee may have been, granted or awarded
pursuant to the Plan or any other plan of the Company or any of its
subsidiaries, any options, SARs or Restricted Shares. Subject to the limitations
and conditions of the Equity Participation Plan, the Committee has authority to
determine the amounts, times, forms and terms and conditions of grants under the
Plan.
Although the Committee has discretion (within the limits of the Equity
Participation Plan) to determine the terms of options granted under the Equity
Participation Plan, all of the Options previously granted under the Equity
Participation Plan, other than the options automatically granted to the
non-employee directors under Section 11 of the Equity Participation Plan and the
Performance Options, vest and become exercisable either (i) one-third on each of
the first, second and third anniversaries of the grant date or (ii) one-third on
each of the third, fourth and fifth anniversaries of the grant date.
All of the Performance Options were granted by the Committee, subject to
approval by the shareholders of appropriate amendments to the Equity
Participation Plan. The Board of Directors has approved such amendments. The
3,500,000 Performance Options which in the aggregate were granted to the
Chairman and Chief Executive Officer and to the President and Chief Operating
Officer were granted in lieu of base salary, annual performance bonus and
long-term compensation for a six-year period commencing April, 1993. In
addition, 350,000 Performance Options were granted to the Vice Chairman. All of
the Performance Options have an exercise price of $20.125 per share and will
vest and
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become exercisable as follows: if the closing price of a share of Class A Common
Stock is at least $27.1875 (approximately 135% of the exercise price of each
Performance Option) for 20 out of 30 consecutive trading days ending on or prior
to March 30, 1999, each Performance Option will vest and become exercisable as
to one-third of the shares subject to the Performance Option; if the closing
price of a share of Class A Common Stock is at least $36.25 per share
(approximately 180% of the exercise price of each Performance Option) for 20 out
of 30 consecutive trading days ending on or prior to March 30, 2000, each
Performance Option will vest and become exercisable as to one-third of the
shares subject to the Performance Option; and if the closing price of a share of
Class A Common Stock is at least $45.3125 (approximately 225% of the exercise
price of the Performance Option) for 20 out of 30 consecutive trading days
ending on or prior to March 30, 2001, the Performance Option will vest and
become exercisable as to one-third of the shares subject to the Performance
Option. In addition to early vesting in the event such closing price levels are
attained, each such option will also vest and become exercisable on September
30, 2008 even if Class A Common Stock does not so appreciate.
Additionally, the Performance Options that are exercisable immediately
prior to termination of the optionee's employment remain exercisable after
termination of the optionee's employment during the period of three months
immediately following such termination, except upon termination for cause. Upon
the optionee's death or permanent disability while employed by the Company or
upon the optionee's death during the three months following the optionee's
termination of employment, the option becomes fully exercisable and, in the case
of the optionee's death, remains exercisable until six months after the issuance
of letters testamentary or letters of administration to the executor or
administrator of the deceased optionee's estate, but in no event later than one
year after the optionee's death.
Shares Subject to the Plan. Subject to certain antidilution adjustments,
the maximum aggregate number of shares of Class A Common Stock that may granted
as Restricted Shares or delivered on the exercise of options pursuant to the
Equity Participation Plan (and the maximum number of shares of Class A Common
Stock subject to option for any individual optionee) is currently 3,500,000.
Subject to shareholder approval of the Amendments, the maximum number of shares
of Class A Common Stock that may be granted or delivered pursuant to the Equity
Participation Plan will be 10,000,000. In addition, subject to shareholder
approval of the Amendments, the maximum number of shares of Class A Common Stock
with respect to which options or SARs may be granted to any individual optionee
during the term of the Equity Participation Plan will be increased from
3,500,000 to 5,000,000. The shares of Class A Common Stock may be either
authorized but unissued shares or treasury shares, including such shares
reacquired by the Company.
If an option expires or terminates for any reason during the term of the
Equity Participation Plan and prior to the exercise in full of such option or
the related SAR, if any, or if Restricted Shares are forfeited as provided in
the grant of such Restricted Shares, the number of shares of Class A Common
Stock previously subject to but not delivered under such option, related SAR or
grant of Restricted Shares shall be available for the grant of options, SARs or
Restricted Shares thereafter. An option that terminates upon the exercise of a
tandem SAR shall be deemed to have been exercised at the time of the exercise of
such tandem SAR, and the shares of Class A Common Stock subject thereto shall
not be available for further grants under the Equity Participation Plan.
Certain Provisions Relating to Options and SARs. For Federal income tax
purposes, options granted pursuant to the Equity Participation Plan will be
'nonqualified' options, i.e., they will not be 'incentive stock options' as such
term is defined in Section 422 of the Internal Revenue Code of 1986, as
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amended. The price per share to be paid by the optionee on the date an option is
exercised may not be less than 50% of the fair market value on the date such
option is granted. The Performance Options were granted in April, 1994 (subject
to approval of appropriate amendments to the Equity Participation Plan by the
shareholders) and have an exercise price of $20.125 per share, which was the
closing price of the Class A Common Stock on the NYSE on the grant date. The
period after which options granted under the Equity Participation Plan may not
be exercised shall be determined by the Committee with respect to each option
granted but currently may not exceed ten years from the date on which the option
is granted. Subject to shareholder approval, the Equity Participation Plan has
been amended by the Board of Directors to provide that options (which would
include the Performance Options) may be granted for a maximum of 15 years from
the date on which the option is granted. Options previously granted (other than
the Performance Options which have a 15 year term) will not be amended and will
remain exercisable for a maximum term of ten years from the date of grant. The
purchase price of the shares of Class A Common Stock as to which an option is
exercised is to be paid in cash or by check, except that the Committee may in
its discretion allow such payment to be made by surrender of unrestricted shares
of Class A Common Stock (at their fair market value on the date of exercise) or
by a combination of cash, check and unrestricted shares of Class A Common Stock.
Subject to shareholder approval, the Equity Participation Plan has been amended
to provide that in addition to the foregoing provisions with respect to the
payment of the purchase price of shares of Class A Common Stock as to which an
option is exercised, an optionee may also elect to purchase shares of Class A
Common Stock on exercise of an option by assigning to the Company a sufficient
amount of the proceeds from the sale of shares upon such exercise to pay for the
purchase price of all such exercised options, through a cashless exercise
program (as more fully described in the Equity Participation Plan) or by any
combination of the foregoing.
The Committee may in its discretion grant SARs in connection with any
option, either at the time the option is granted or at any time thereafter while
the option remains outstanding, to any person who at that time is eligible to be
granted an option. The number of SARs granted to a person which shall be
exercisable during any given period of time shall not exceed the number of
shares of Class A Common Stock which he or she may purchase upon the exercise of
the related option or options during such period of time. Upon the exercise of
an option pursuant to the Equity Participation Plan, the SARs relating to the
shares of Class A Common Stock covered by such exercise shall terminate. Upon
the exercise of SARs pursuant to the Equity Participation Plan, the related
option to the extent of an equal number of shares of Class A Common Stock shall
terminate.
Upon an optionee's exercise of some or all of his or her SARs, the optionee
will receive in settlement of such SARs an amount equal to the value of the
stock appreciation for the number of SARs exercised. The stock appreciation for
an SAR will be the difference between (i) the fair market value of the
underlying share of Class A Common Stock on the date of the exercise of such SAR
and (ii) the option price per share of Class A Common Stock specified for the
related option. Upon an optionee's exercise of SAR's, the optionee will receive
in settlement thereof an amount equal to the value of the stock appreciation for
the number SARs exercised, payable in cash, shares of Class A Common Stock or a
combination thereof, as determined in the sole discretion of the Committee.
An SAR will be exercisable only during the period when the option to which
it is related is also exercisable. However, in no event may an SAR be
exercisable during the first six months after being granted, except that an SAR
is exercisable at the time of death or disability of the optionee if the related
option is then exercisable. No SAR may be exercised for cash, in whole or in
part, except during the period beginning on the third business day following the
date of release of the Company's quarterly
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and annual summary statements of sales and earnings and ending on the twelfth
business day following such date.
Subject to shareholder approval of the Amendments, the Equity Participation
Plan has been amended to authorize the Committee, at its discretion, to issue
replacement or reload options to an option holder who has utilized shares of
Class A Common Stock to pay the exercise price of an option granted under the
Equity Participation Plan and/or to pay any withholding taxes applicable to such
exercise. If granted, a replacement or reload option will be exercisable for the
same number of shares as were utilized by the exercising option holder to pay
such exercise price and/or withholding taxes. Any such replacement or reload
option will have an exercise price equal to the fair market value of a share of
Class A Common Stock on the date such replacement or reload option is granted,
and, unless the Committee determines otherwise, all other terms and conditions
of such replacement or reload option (including the date or dates on which such
option shall become exercisable and the term of the option) will be identical to
the terms and conditions of the exercised option with respect to which the
replacement or reload option is granted. No replacement or reload option may be
granted in respect of the exercise of any option granted pursuant to the Equity
Participation Plan as an automatic grant to a non-employee director (see
'Automatic Grants to Non-Employee Directors' below).
Automatic Grants to Non-Employee Directors. Each director of the Company
who is not then an employee of the Company or any subsidiary receives under the
Equity Participation Plan on the later of (i) the date of his or her initial
election or appointment to the Board of Directors and (ii) April 24, 1993,
options to purchase 3,000 shares of Class A Common Stock and, in connection
therewith, SARs for the same number of shares of Class A Common Stock. On the
date of each subsequent annual meeting of shareholders of the Company at which a
director is reelected, he or she receives options to purchase 1,000 shares of
Class A Common Stock and, in connection therewith, SARs for the same number of
shares of Class A Common Stock. Each such option has a term of ten years,
subject to earlier termination upon the option holder's termination of service
to the Company. Each such option becomes exercisable to the extent of one-half
thereof on each of the two immediately succeeding anniversaries of the date of
grant. The price per share of Class A Common Stock to be paid by the holder of
such an option is equal to the fair market value of one share of Class A Common
Stock on the date the option is granted. The purchase price of the shares of
Class A Common Stock as to which such an option is exercised may be paid in
cash, and, subject to shareholder approval of the Amendments, by check, by
delivery of unrestricted shares of Class A Common Stock held by the optionee for
at least six months, through the cashless exercise program described above under
'Certain Provisions Relating to Options and SARs' or by a combination of the
foregoing at the director's election. SARs are exercisable only for shares of
Class A Common Stock.
Elective Purchase of Shares. Subject to shareholder approval of the
Amendments, the Equity Participation Plan has been amended to permit directors
to elect to receive in shares of Class A Common Stock all or any portion of the
annual retainer fees and/or Board or committee meeting attendance fees (the
'Fees') that otherwise would be payable to him or her in cash.
Any election (other than an initial election made within a specified period
following the approval of the Amendments or the time a director first becomes a
member of the Board) to receive shares of Class A Common Stock rather than cash
must be made at least six months in advance of payment and shall continue in
effect until revoked by an election made at least six months in advance. There
shall be no limit on the number of elections or revocations that may be made by
a director, except that no such election (other than an initial election made
within a specified period following the approval of the
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Amendments or the time a director first becomes a member of the Board) or
revocation may take effect until at least six months after such election or
revocation shall have been delivered to the Secretary of the Company. Any shares
of Class A Common Stock payable under such an election shall be issued on the
same date that the Fees would have been paid in cash. The number of shares of
Class A Common Stock to be issued on account of an election to receive shares of
Class A Common Stock in payment of Fees shall be based on the average of the
closing prices of the shares of Class A Common Stock for the 20 consecutive
trading days immediately preceding the date as of which the Fees are payable.
Cash will be paid in lieu of issuing any fractional share of Class A Common
Stock.
Certain Provisions Applicable to Restricted Shares. The Committee may grant
Restricted Shares to certain eligible persons at any time. In granting
Restricted Shares, the Committee shall determine in its sole discretion the
period or periods during which the restrictions on transferability applicable to
such Restricted Shares will be in force (the 'Restricted Period'). During the
Restricted Period applicable to each grant of Restricted Shares, such Restricted
Shares may not be sold, assigned, transferred or otherwise disposed of, or
mortgaged, pledged or otherwise encumbered. Furthermore, a grantee's eventual
right, if any, to such Restricted Shares may not be assigned or transferred
except by will or by the laws of descent and distribution. With respect to each
grant of Restricted Shares, the Committee shall determine in its sole discretion
the restrictions on vesting which will apply to the Restricted Shares for the
Restricted Period. If the Committee deems restrictions on vesting inappropriate
for any grantee, it may approve the award and delivery to such grantee of all or
any portion of the Restricted Shares free and clear of all restrictions on
transferability. The Company is not obligated to deliver any Restricted Shares
free and clear of the restrictions on transferability until the Company has
satisfied itself that such delivery complies with all applicable laws and
regulations.
Shareholder Rights. Except for the restrictions on transferability, a
grantee of Restricted Shares will have the rights of a holder of the shares of
Class A Common Stock, including the right to receive dividends paid on such
shares and the right to vote such shares at meetings of shareholders of the
Company. However, no optionee will have any of the rights of a shareholder with
respect to any shares of Class A Common Stock unless and until he or she has
exercised his or her option with respect to such shares of Class A Common Stock
and has paid the full purchase price therefor.
Changes in Control. The Equity Participation Plan also provides that upon
(i) the acquisition by any person of 50% or more of the combined voting power of
the Company's outstanding securities entitled to vote generally in the election
of directors, or (ii) a majority of the directors of the Company being
individuals who are not nominated by the Board of Directors (a 'Plan Change of
Control'), any outstanding options granted under the Equity Participation Plan
to officers or directors of the Company shall become fully and immediately
exercisable and any restrictions on vesting applicable to any Restricted Shares
held by an officer of the Company will lapse and such Restricted Shares will be
delivered free and clear of all transferability restrictions. The acquisition of
any portion of the combined voting power of the Company by DWG Acquisition,
Nelson Peltz or Peter W. May or by any person affiliated with such persons will
not constitute a Plan Change of Control.
Amendment and Discontinuance. The Board of Directors may alter, suspend, or
discontinue the Equity Participation Plan, but, with certain exceptions relating
to antidilution adjustments, may not, without the approval of the holders of a
majority of the Class A Common Stock, make any alteration or amendment which
operates to (a) materially increase the number of shares of Class A Common Stock
which are available for the grant of options, SARs and Restricted Shares under
the Equity Participation Plan, (b) extend the term during which options may be
granted under the Equity Participation Plan or
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the maximum option period provided in the Equity Participation Plan, (c)
decrease the minimum option price provided in the Equity Participation Plan, (d)
materially increase the rights of optionees with respect to SARs in a manner
which would not comply with Rule 16b-3 of the Securities and Exchange Commission
('Rule 16b-3'), (e) amend the provisions for automatic grants to non-employee
directors in a manner which would not comply with Rule 16b-3, or (f) materially
modify the requirements as to eligibility for participation in the Equity
Participation Plan, except as otherwise required to comply with Rule 16b-3.
Effective Date and Duration of the Plan and Amendments. The Equity
Participation Plan became effective as of April 24, 1993, the date of its
adoption by the Board of Directors. The Amendments shall, upon approval by
shareholders, become effective as of April 21, 1994, the date the Compensation
Committee granted the Performance Options subject to the approval by the
shareholders of appropriate amendments to the Equity Participation Plan. The
term during which options, SARs and Restricted Shares may be granted under the
Equity Participation Plan expires on April 24, 1998.
FEDERAL TAX CONSEQUENCES
An employee who has been granted an option, SAR or Restricted Shares will
not generally realize taxable income at the date of grant and the Company will
not be entitled to a deduction at that time.
An employee who exercises an option or a SAR generally will realize
ordinary income in an amount measured by the excess, if any, of the fair market
value of the shares of Class A Common Stock on the date of exercise over the
option price, or, in the case of an SAR, the fair market value of the shares of
Class A Common Stock and any cash delivered upon exercise. In each case, the
Company will generally be entitled to a corresponding deduction for federal
income tax purposes.
At the time Restricted Shares vest (that is, upon expiration of the
Restriction Period) the holder of Restricted Shares will generally realize
ordinary income in an amount equal to the fair market value of such Restricted
Shares and any cash delivered at the time of vesting, and the Company will
generally be entitled to a corresponding deduction for federal income tax
purposes. However, if an employee makes a special tax election to recognize
income with respect to the Restricted Shares on the date of grant, then the
amount of ordinary income will be determined on such date. Dividends paid to the
holder during the Restriction Period will also be compensation income to the
employee and deductible as such by the Company.
If a director's Fees are paid in the form of shares of Class A Common
Stock, generally the director will realize ordinary income equal to the value of
those shares (plus any cash received in lieu of a fractional share). If the sale
of such shares by the director could give rise to suit under Section 16(b) of
the Securities Exchange Act of 1934, taxation is generally deferred for up to
six months.
On August 10, 1993, President Clinton signed into law the Tax Act, which
includes a provision that may preclude a publicly held corporation from
deducting annual compensation in excess of $1,000,000 paid to certain of its
highly compensated officers. However, there are exceptions for qualified
performance based compensation (including certain stock options and SARs) if
certain conditions are met. Although the Company intends that awards of stock
options and SARs under the Equity Participation Plan will satisfy the
requirements to be considered performance based for purposes of the Tax Act,
there can be no assurance such awards will satisfy such requirements. The
foregoing is only a general summary of the tax effects to the employee and the
Company of options, SARs and Restricted Shares granted or awarded under the
Equity Participation Plan. There are a number of special tax rules
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(including the alternative minimum tax, deduction limits and excise taxes
applicable in the event of a change in control and withholding requirements) and
elections which may be applicable under certain circumstances.
INFORMATION CONCERNING THE PERFORMANCE OPTIONS
The following table sets forth the value of all of the Performance Options
as of their date of grant (April 21, 1994) using a Black-Scholes option pricing
model. Other than the Performance Options, no benefits have been awarded or
granted pursuant to the Amendments to any of the Named Officers.
NEW PLAN BENEFITS
AMENDED AND RESTATED 1993 EQUITY PARTICIPATION PLAN
<TABLE>
<CAPTION>
NUMBER OF SECURITIES GRANT DATE
NAME AND POSITION UNDERLYING OPTIONS GRANTED (#) PRESENT VALUE ($)(1)
- ------------------------------------------------------------ ------------------------------ --------------------
<S> <C> <C>
Nelson Peltz................................................ 2,100,000 19,187,175
Peter W. May................................................ 1,400,000 12,791,450
Leon Kalvaria............................................... 350,000 3,197,862.50
</TABLE>
- ------------
(1) These values were calculated using the Binomial Option Pricing Model, which
provides a better methodology for developing a present value for Performance
Options than the Black-Scholes Model. The options will become exercisable
and have actual value to the executive only if the performance criteria are
achieved. The actual value, if any, that an executive may realize will
depend on the excess, if any, of the stock price over the exercise price on
the date the options are exercised, and no assurance exists that the value
realizes by an executive will be at or near the value estimated by the
Binomial Pricing Model. The following assumptions were used in the
calculations:
(a) assumed option term of 7.5 years;
(b) stock price volatility factor of 0.4758;
(c) 6.5% annual discount rate; and
(d) no dividend payment.
PROPOSAL 4
AUTHORIZATION OF INDEMNIFICATION AGREEMENTS
INTRODUCTION; REQUIRED VOTE
As discussed under 'Proposal 2. Reincorporation in
Delaware -- Indemnification Provisions' above, the Board of Directors has
determined that it is the Company's best interest to provide the broadest
possible indemnification coverage to the Company's directors and officers. In
addition, the Board of Directors has determined that providing broad
indemnification to certain other of its employees, agents and fiduciaries will
inure to the Company's benefit. The Indemnification Agreements, the form of
which is attached as Exhibit F, provide for indemnification of directors,
officers, employees, agents and fiduciaries in cases where indemnification might
not otherwise be available under Ohio law or the Ohio Articles, prior to the
Merger, or under the Delaware law or the Delaware Certificate following the
Merger. The Indemnification Agreements will give directors and officers
assurance that indemnification will continue despite future changes in the
Company's corporate charter or a change in control of the
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Company. In addition, the availability of Indemnification Agreements will permit
the Board of Directors to extend indemnification protection to those employees,
agents and fiduciaries who the Board of Directors determines to be in need of
and entitled to such protection.
Authorization of the Indemnification Agreements requires the affirmative
vote of holders of a majority of the total shares of Class A Common Stock
outstanding and entitled to vote at the Meeting.
If approved, the Indemnification Agreements may be entered into by the
Company either before or after the Merger. The obligations of the Ohio
Corporation under any Indemnification Agreement entered into prior to the
Merger, will be assumed by the Delaware Corporation following the Merger.
DESCRIPTION OF INDEMNIFICATION AGREEMENTS
THE FOLLOWING IS A DESCRIPTION OF CERTAIN OF THE TERMS OF THE FORM OF THE
INDEMNIFICATION AGREEMENTS WHICH IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
EXHIBIT F.
Each Indemnification Agreement will provide that the Company will indemnify
each indemnitee (i.e., the person with whom the Indemnification Agreement has
been entered into) and hold him or her harmless from all amounts, except as
discussed below, which he or she pays or is obligated to pay as a result of
claims against him or her for, or otherwise in respect of, any actual or alleged
act or omission by the indemnitee in his or her capacity as, or otherwise by
reason of or arising out of his or her being, a director, officer, employee,
agent or fiduciary of the Company. The Indemnification Agreements also provide
for advances of litigation expenses to an indemnitee, upon request, provided
that the indemnitee agrees to repay the amount advanced if it is ultimately
determined by a court of competent jurisdiction that the indemnitee is not
entitled to indemnification for expenses.
The Company is not aware of any existing or threatened litigation which
will result in greater claims being made under the Indemnification Agreements
than could otherwise be made under existing indemnification provisions
applicable to the Company and its subsidiaries. Each indemnitee will be
indemnified against all such claims made after the Indemnification Agreement is
entered into, whether the acts or omissions on which such claims are based occur
prior to or after the date of his or her Indemnification Agreement. The
liability against which the indemnitee will be protected under the
Indemnification Agreement includes all damages, judgments, sums or amounts paid
in settlement, fines, penalties, counsel fees and costs of proceedings or
appeals which are within the scope of the Indemnification Agreement.
No indemnification will be provided under the Indemnification Agreement (i)
for the return by the indemnitee of any illegal remuneration paid to him or her;
(ii) for any profits payable by the indemnitee to the Company pursuant to
Section 16(b) of the Exchange Act; (iii) for any liability resulting from the
indemnitee's fraudulent, dishonest or willful misconduct; (iv) for any amount
the payment of which is not permitted by applicable law; (v) for any liability
resulting from conduct producing unlawful personal benefit; or (vi) if a final
court adjudication determines such indemnification is not lawful. Further, the
indemnitee is not entitled to indemnification under the Indemnification
Agreement to the extent that the indemnitee is indemnified by the Company
pursuant to the Company's corporate charter, corporate regulations or by-laws,
directors' and officers' liability insurance or otherwise. In the event that the
Company refuses to pay an indemnitee's request for the payment of sums due under
the Indemnification Agreement, the indemnitee is entitled to bring suit against
the Company to recover
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such amount and to be paid the expenses incurred in bringing such suit unless it
is determined that such suit as brought in bad faith or in frivolous grounds.
The Indemnification Agreements establish the presumption that the
indemnitee has met the applicable standard of conduct required for
indemnification. Indemnification would be provided unless a determination is
made that the applicable standard of conduct has not been met. Determinations
concerning whether an indemnitee is entitled to be paid under the
Indemnification Agreement may be made by the majority vote of a quorum of
disinterested directors, independent legal counsel selected by the Board of
Directors, a majority of disinterested stockholders of the Company or by a final
adjudication of a court of competent jurisdiction. However, in the event that
the Company has undergone a 'Change of Control' (as defined in the
Indemnification Agreements) all determinations concerning an indemnitee's
entitlement to payment will be made by special independent counsel selected by
the indemnitee and approved by the Company, which consent may not be
unreasonably withheld. In order to assure the indemnitee that funds will be
available to pay any amounts which may be due the indemnitee under the
Indemnification Agreement in instances involving any such Change in Control, the
indemnitee, upon the occurrence of a 'Potential Change in Control' (as defined
in the Indemnification Agreements) can require the Company to establish a trust
fund. Under the terms of such a trust, the Company will be required at the
written request of the indemnitee, upon a Potential Change of Control, to
contribute funds to the trust sufficient to pay the amounts the indemnitee
reasonably expects the Company may be obligated to pay under the Indemnification
Agreement. In any case where the special independent counsel is involved, the
amount or amounts to be deposited in the trust pursuant to the foregoing funding
obligation will be determined by the disinterested directors, or a person or
committee appointed by the disinterested directors (including the special
independent counsel). The provisions of the Indemnification Agreements which
operate upon a Change in Control could have an anti-takeover effect.
Neither Ohio law, the Ohio Articles, Delaware law nor the Delaware
Certificate provides for indemnification of judgments or amounts paid in
settlement of claims by, or in the right of, the Company (derivative actions)
or, in the case of the Delaware Certificate, unless specifically authorized by
the Delaware Court of Chancery, the costs of defense for director or officer
found liable to the Company. The Indemnification Agreements require
indemnification in such cases unless one of the exclusions, including the
exclusion for payment of sums which violate applicable law, is applicable.
The Indemnification Agreements will be governed by the laws of the state of
incorporation of the Corporation at the time a claim under an Indemnification
Agreement is made.
Because of the personal interest of the directors and officers in the broad
indemnification rights contained in the Indemnification Agreements, the Board of
Directors believes that it is appropriate to seek shareholder approval of the
Indemnification Agreements. In the event that an Indemnification Agreement is
challenged, it is expected that approval thereof by the shareholders would be
raised as a defense. An individual shareholder's approval of the Indemnification
Proposal would, in all probability, prevent such shareholder from later
challenging, either individually or as a member of a class of the Company's
shareholders, the validity of the Indemnification Agreements. A shareholder
would not, however, be prevented from asserting that the payment of
indemnification in a particular case is inappropriate. For example, a
shareholder might sucessfully assert that a particular act by an indemnitee is
not one for which indemnification is permitted under the Indemnification
Agreements.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE AUTHORIZATION OF THE
INDEMNIFICATION AGREEMENTS.
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OTHER MATTERS
MISCELLANEOUS
Representatives of the Company's independent auditors, Arthur Andersen &
Co., will be present at the Meeting with the opportunity to make a statement if
they desire to do so and will be available to respond to appropriate questions.
EXPENSES OF SOLICITATION
The cost of soliciting proxies will be borne by the Company. In addition to
the solicitation of proxies by use of the mails, some of the officers, directors
and regular employees of the Company and its subsidiaries, none of whom will
receive additional compensation therefor, may solicit proxies in person or by
telephone, telegraph or other means. Solicitation will also be made by employees
of Georgeson & Company, which firm will be paid a fee of $8,000, plus expenses.
As is customary, the Company will, upon request, reimburse brokerage firms,
banks, trustees, nominees and other persons for their out-of-pocket expenses in
forwarding proxy materials to their principals.
SHAREHOLDER PROPOSALS FOR THE 1995 ANNUAL MEETING
From time to time, shareholders present proposals which may be proper
subjects for inclusion in the proxy statement and for consideration at the
Annual Meeting. To be considered, proposals must be submitted on a timely basis.
Proposals for the 1995 Annual Meeting must be received by the Company no later
than March 31, 1995, except that if the date of such meeting is changed by more
than 30 days from its currently contemplated date, a reasonable time before
solicitation of proxies for such meeting is made. Any such proposals, as well as
any questions related thereto, should be submitted in writing to the Secretary
of the Company.
INFORMATION INCORPORATED BY REFERENCE
The Company hereby incorporates by reference into this Proxy Statement
'Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operation' of the Company's Transition Report on Form 10-K for the Transition
Period from May 1, 1993 to December 31, 1993, copies of which are being provided
to shareholders along with this Proxy Statement.
By Order of the Board of Directors
CURTIS S. GIMSON
Secretary
West Palm Beach, Florida
May 11, 1994
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EXHIBIT A
AGREEMENT AND PLAN OF MERGER
AGREEMENT dated as of May 11, 1994 (the 'Merger Agreement'), by and between
TRIARC COMPANIES, INC., an Ohio corporation (the 'Merging Corporation'), and
TRIARC MERGER CORPORATION, a Delaware corporation (the 'Surviving Corporation').
The Surviving Corporation is a wholly owned subsidiary of the Merging
Corporation. The Merging Corporation and the Surviving Corporation are
hereinafter sometimes collectively called the 'Constituent Corporations.'
The Merging Corporation and the Surviving Corporation desire to effect a
merger (the 'Merger') of the Merging Corporation with and into the Surviving
Corporation as provided in this Merger Agreement. The Boards of Directors of the
Constituent Corporations have approved the Merger and directed that this Merger
Agreement be submitted to their respective stockholders for adoption. This
Merger Agreement sets forth an agreement of merger pursuant to the provisions of
the Ohio General Corporation Law and the Delaware General Corporation Law.
The authorized shares of capital stock of the Merging Corporation consist
of 75,000,000 shares of Class A Common Stock, par value $.10 per share ('Ohio
Class A Common Stock'), 12,000,000 shares of Class B Common Stock, par value
$.10 per share ('Ohio Class B Common Stock'), 6,000,000 shares of Cumulative
Convertible Redeemable Preferred Stock, par value $.10 per share ('Ohio
Redeemable Preferred Stock'), 5,000,000 shares of Serial Preferred Stock, par
value $.10 per share ('Ohio Serial Preferred Stock'), and 2,000,000 shares of
Junior Serial Preferred Stock, par value $.10 per share ('Ohio Junior Serial
Preferred Stock'). The authorized shares of capital stock of the Surviving
Corporation consists of 100,000,000 shares of Class A Common Stock, par value
$.10 per share ('Delaware Class A Common Stock'), 25,000,000 shares of Class B
Common Stock, par value $.10 per share ('Delaware Class B Common Stock'), and
25,000,000 shares of Preferred Stock, par value $.10 per share (the 'Delaware
Preferred Stock'), of which 5,982,866 have been designated Cumulative
Convertible Redeemable Preferred Stock ('Delaware Redeemable Preferred Stock').
In consideration of the premises and of the mutual covenants, agreements
and conditions set forth herein, the parties hereto do hereby agree as follows:
SECTION 1. Terms and Conditions of Merger and Mode of Carrying Merger into
Effect.
(a) Upon the Effective Date (as defined in Section 4 hereof) of the Merger,
the Merging Corporation shall merge with and into the Surviving Corporation.
(b) The Surviving Corporation shall be the only corporation surviving the
Merger, and its name shall, effective upon the Effective Date, be changed to
'Triarc Companies, Inc.' The established offices and facilities of the Merging
Corporation immediately prior to the Effective Date shall continue as the
established offices and facilities of the Surviving Corporation after the
Effective Date. The location of the principal office of the Surviving
Corporation in the State of Delaware, such State being the State under the laws
of which the Surviving Corporation exists, shall be c/o The Corporation Trust
Company, 1209 Orange Street, Wilmington, Delaware 19801. Upon and after the
Effective Date, the separate corporate existence of the Merging Corporation
shall cease.
(c) All assets and properties (including, without limitation, real,
personal and mixed, tangible and intangible, choses in action, rights and
credits) then owned by each of the Constituent Corporations, or which would
inure to the benefit of either of such Constituent Corporations, shall
immediately, by
A-1
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operation of law and without any conveyance, transfer or further action of any
kind, become the assets and property of the Surviving Corporation. The Surviving
Corporation shall be deemed to be a continuation of the entity of each of the
Constituent Corporations, and shall succeed to the rights and obligations of
each respective Constituent Corporation, and to the duties and liabilities
connected therewith, including, without limitation, any obligation of the
Merging Corporation under any indemnification agreement entered into by the
Merging Corporation prior to the Effective Date with any of its directors,
officers or other persons.
(d) All rights of creditors and all liens upon the property of either of
the Constituent Corporations shall be preserved unimpaired by the Merger, and
all debts, liabilities, obligations and duties, including but not limited to the
obligations of the Merging Corporation pursuant to stock options, warrants and
convertible debt instruments, of either of the Constituent Corporations shall,
on the Effective Date, become the responsibility and liability of the Surviving
Corporation, and may be enforced against it to the same extent as if said debts,
liabilities, obligations and duties had been incurred or contracted by it. All
corporate acts, plans (including but not limited to stock option and equity
participation plans), policies, arrangements, approvals and authorizations of
the Merging Corporation, its shareholders, board of directors, officers and
agents, which were valid and effective immediately prior to the Effective Date,
shall be taken for all purposes as the acts, plans, policies, arrangements,
approvals and authorizations of the Surviving Corporation and shall be as
effective and binding thereon as the same were with respect to the Merging
Corporation.
(e) In addition to the foregoing effects set forth in subsections (c) and
(d) of this Section, the Merger shall have the effects set forth in Section 259
of the Delaware General Corporation Law.
(f) After the Effective Date, the Surviving Corporation intends to qualify
to transact business as a foreign corporation in Ohio, and upon and after the
Effective Date, the Surviving Corporation consents to be sued in and may be
served with process in the State of Ohio in any proceeding for the enforcement
of any obligation of the Merging Corporation and in any proceeding for the
enforcement of the rights, if any, of a dissenting stockholder of the Merging
Corporation against the Surviving Corporation. The Surviving Corporation
irrevocably appoints the Ohio Secretary of State as its agent to accept service
of process in any such proceeding which process should be mailed by the Ohio
Secretary of State to the Surviving Corporation at 777 South Flagler Drive,
Suite 1000E, West Palm Beach, Florida 33401. The Surviving Corporation agrees
that if the Merger is consummated it will promptly pay to dissenting
stockholders of the Merging Corporation the amount, if any, to which they shall
be entitled under the provisions of the Ohio General Corporation Law with
respect to the rights of dissenting stockholders.
(g) The Certificate of Incorporation and By-laws of the Surviving
Corporation in effect immediately prior to the Effective Date shall continue to
be the Certificate of Incorporation and By-laws, respectively, of the Surviving
Corporation upon and after the Effective Date until altered, amended or
repealed, except that such Certificate of Incorporation and By-laws shall be
amended at the Effective Date to change the name of the Surviving Corporation to
'Triarc Companies, Inc.'
(h) The directors of the Merging Corporation at the Effective Date shall be
the directors of the Surviving Corporation and will hold office from the
Effective Date until their respective successors are duly elected or appointed
and qualify in the manner provided in the Certificate of Incorporation and
By-laws of the Surviving Corporation, or as otherwise provided by law.
(i) The officers of the Merging Corporation at the Effective Date shall
hold the same respective offices with the Surviving Corporation that such
officers held with the Merging Corporation, until their
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respective successors are duly elected or appointed and qualify in the manner
provided in the Certificate of Incorporation and By-laws of the Surviving
Corporation, or as otherwise provided by law.
SECTION 2. Manner and Basis of Converting Shares or Other Securities of the
Merging Corporation into Shares or Other Securities of the Surviving
Corporation; Dividends.
(a) Upon the Effective Date, each share of Ohio Class A Common Stock, which
shall be issued immediately prior to the Merger, including shares held in the
treasury but excluding such shares as to which dissenters' rights, if any, have
been exercised, shall be automatically converted into one share of Delaware
Class A Common Stock, and each issued certificate which immediately prior to the
Merger represented shares of Ohio Class A Common Stock shall thereafter be
deemed to represent the same number of shares of Delaware Class A Common Stock.
(b) Upon the Effective Date, each share of Ohio Class B Common Stock, which
shall be issued immediately prior to the Merger, including shares held in the
treasury, if any, but excluding such shares as to which dissenters' rights, if
any, have been exercised, shall be automatically converted into one share of
Delaware Class B Common Stock, and each issued certificate, if any, which
immediately prior to the Merger represented shares of Ohio Class B Common Stock
shall thereafter be deemed to represent the same number of shares of Delaware
Class B Common Stock.
(c) Upon the Effective Date, each share of Ohio Redeemable Preferred Stock
which shall be issued immediately prior to the Merger, except such shares as to
which dissenters' rights, if any, have been exercised, shall be automatically
converted into one share of Delaware Redeemable Preferred Stock, and each issued
certificate which immediately prior to the Merger represented shares of Ohio
Redeemable Preferred Stock shall thereafter be deemed to represent the same
number of shares of Delaware Redeemable Preferred Stock.
(d) Upon the Effective Date, no shares of Ohio Serial Preferred Stock or
Ohio Junior Serial Preferred Stock are or will be issued or outstanding.
(e) Upon the Effective Date, each option, warrant or other right to
purchase or otherwise acquire from the Merging Corporation shares of Ohio Class
A Common Stock which shall be in existence immediately prior to the Merger shall
be automatically converted into an option, warrant or right to purchase or
otherwise acquire from the Surviving Corporation the same number of shares of
Delaware Class A Common Stock at the same price per share as in effect
immediately prior to the Merger and upon the same terms and conditions as set
forth in such option, warrant or right and the plan, agreement or other document
pursuant to which it was granted. Upon the Effective Date, each option, warrant
or other right to purchase or otherwise acquire from the Merging Corporation
shares of Ohio Class B Common Stock which shall be in existence immediately
prior to the Merger shall be automatically converted into an option, warrant or
right to purchase or otherwise acquire from the Surviving Corporation the same
number of shares of Delaware Class B Common Stock at the same price per share as
in effect immediately prior to the Merger and upon the terms and conditions as
set forth in such option, warrant or right and the plan, agreement or other
document pursuant to which it was issued. The Merging Corporation's Amended and
Restated 1993 Equity Participation Plan in existence immediately prior to the
Merger shall be assumed by, and continue in effect upon the same terms and
conditions as a plan of the Surviving Corporation, except that it shall
thereafter relate to the capital stock of the Surviving Corporation. Upon the
Effective Date, the number, series and classes of shares of stock of the
Surviving Corporation shall be automatically reserved for issuance upon the
exercise of options granted or to be granted under such plan, or upon the
exercise of any other right to
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acquire shares of any class of the Surviving Corporation, which shall equal the
number, series and classes of shares of capital stock of the Merging Corporation
that were so reserved immediately prior to the Merger. Upon the Effective Date,
the Surviving Corporation shall, except as expressly provided herein,
automatically assume all of the obligations of the Merging Corporation under the
Merging Corporation's Amended and Restated 1993 Equity Participation Plan and
the outstanding options and restricted shares and stock appreciation rights
granted under such plan.
(f) Upon the Effective Date, each share of capital stock of the Surviving
Corporation which shall be issued immediately prior to the Merger shall be
automatically cancelled and retired and shall have the status of authorized and
unissued shares of the Surviving Corporation; and no shares of capital stock of
the Surviving Corporation shall be issued in respect thereof.
(g) Issued certificates representing shares of capital stock of the Merging
Corporation, from and after the Effective Date, shall represent the same number
of shares of the class and series of the Surviving Corporation into which they
shall be converted and the holders of such certificates shall have precisely the
same rights as if such certificates had been issued by the Surviving
Corporation, except that the Surviving Corporation shall be entitled to rely
upon the stock records of the Merging Corporation as to the ownership of such
shares.
(h) After the Effective Date, each holder of a certificate representing
issued shares of capital stock of the Merging Corporation may, but shall not be
required to, surrender the same to the Surviving Corporation, and (subject to
the provisions of subsection (g) of this Section) each holder shall be entitled,
upon such surrender, to receive a certificate or certificates representing the
number of shares of the Surviving Corporation provided in this Section for the
conversion thereof.
(i) If any stockholder cannot produce the certificate or certificates
theretofore evidencing the ownership of shares of the Merging Corporation, such
stockholder shall be required to proceed in regard thereto as such stockholder
would have had to do were such stockholder under like circumstances applying for
the issuance of a new certificate of the Surviving Corporation.
(j) All outstanding shares of capital stock of the Merging Corporation held
by stockholders who shall have properly exercised dissenters' rights, if any,
with respect thereto in the manner provided in Section 1701.85 of the Ohio
General Corporation Law shall not be converted into the right to receive the
capital stock of the Surviving Corporation as provided in this Section 2, but
such stockholder shall be entitled to receive the fair cash value of his shares
as shall be determined in accordance with Section 1701.85 of the Ohio General
Corporation law; provided that if such stockholder shall have failed to perfect
or shall have effectively withdrawn, waived or lost his right to dissent and to
receive payment of the fair cash value of his shares under the Ohio General
Corporation Law, such holder's shares of capital stock of the Merging
Corporation shall be deemed converted, as of the Effective Date, into the
capital stock of the Merging Corporation that such holder otherwise would have
been entitled to receive as a result of the Merger.
(k) The holders of shares of the Merging Corporation shall be entitled to
receive from the Surviving Corporation (i) those dividends which were declared
by the Board of Directors of the Merging Corporation prior to, but not yet paid
at, the Effective Date, and (ii) (x) those dividends which may be declared by
the Board of Directors of the Surviving Corporation subsequent to the Effective
Date, pursuant to the Certificate of Incorporation, as amended, of the Surviving
Corporation if such holders are record holders of shares of capital stock of the
Surviving Corporation as of the record date for payment of such dividends, or
(y) if applicable, any amount payable pursuant to Section 1701.85(E) of the Ohio
General Corporation Law (any such payment to be credited as provided in such
Section
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1701.85(E)); and no holder of shares of the Merging Corporation shall be
entitled to any other dividends which might otherwise accrue on or prior to the
Effective Date.
SECTION 3. Conditions.
Effectuation of the Merger and the other transactions herein provided are
conditioned on the following:
(a) The Merger shall have received approval of the holders of the
capital stock of the Merging Corporation and the Surviving Corporation in
the manner required by the Ohio General Corporation Law and the Delaware
General Corporation Law, respectively, and the Articles of Incorporation
and Code of Regulations of the Merging Corporation and the Certificate of
Incorpo-ration and By-laws of the Surviving Corporation, respectively.
(b) Receipt of all consents, orders and approvals and satisfaction of
all other requirements prescribed by law which are necessary for the
consummation of the Merger.
The Board of Directors of the Merging Corporation may in its sole
discretion impose such other conditions upon consummation of the acts
contemplated herein as said Board of Directors may deem necessary or desirable.
SECTION 4. Filing; Effective Date.
After this Merger Agreement shall have been executed by each of the
Constituent Corporations and the conditions set forth in Section 3 hereof have
been satisfied, a Certificate of Merger (the 'Ohio Certificate') shall be filed
with the Secretary of State of Ohio in the manner prescribed by the Ohio General
Corporation Law, and this Merger Agreement (or a Certificate of Merger or a
Certificate of Ownership and Merger (either such certificate being the 'Delaware
Certificate') in lieu thereof) shall be filed with the Secretary of State of
Delaware in the manner prescribed by the Delaware General Corporation Law. The
Merger shall be consummated and shall become effective (the 'Effective Date') on
the later of (i) the time and date on which the Ohio Certificate has been filed
with the Secretary of State of Ohio, or (ii) the time and date on which this
Merger Agreement (or the Delaware Certificate in lieu thereof) has been filed
with the Secretary of State of Delaware; provided, however, that in no event
shall the Effective Date be a date later than that permitted by the Ohio General
Corporation Law or the Delaware General Corporation Law.
SECTION 5. Further Assurances.
Prior to the Effective Date, each of the Constituent Corporations shall
take all such actions as shall be necessary or appropriate in order to
effectuate the Merger. In case at any time after the Effective Date the
Surviving Corporation shall determine that any further conveyance, assignment or
other documents or any further action is necessary or desirable to vest in or
confirm to the Surviving Corporation full title to all the properties, assets,
rights, privileges and franchises of the Merging Corporation, the officers and
directors of the Surviving Corporation, in the name and on behalf of each of the
Constituent Corporations, shall be authorized to execute and deliver all such
instruments and take all such actions in the name and on behalf of each of the
Constituent Corporations, as may be necessary or desirable in order to vest in
and confirm to the Surviving Corporation title to and possession of all such
properties, assets, rights, privileges and franchises, and otherwise to carry
out the purposes of this Merger Agreement.
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SECTION 6. Termination and Amendment.
(a) At any time prior to the Effective Date, this Merger Agreement may be
terminated by the mutual consent of the Boards of Directors of each of the
Constituent Corporations, whether before or after the approval of this Merger
Agreement by the shareholders of either or both of the Constituent Corporations.
In the event this Merger Agreement is so terminated, it shall be of no further
force or effect and there shall be no liability by reason of this Merger
Agreement or its termination on the part of either of the Constituent
Corporations or of their respective directors, officers, employees, agents,
shareholders or incorporators.
(b) The Constituent Corporations may, by written agreement between them,
amend, modify or supplement this Merger Agreement at any time prior to the
Effective Date, provided that no amendment shall be made after the approval of
this Merger Agreement by the stockholders of either or both of the Constituent
Corporations which changes the terms of this Merger Agreement in a way which is
materially adverse to the shareholders of the Constituent Corporations or which
otherwise effects an amendment hereto which is not permitted (i) pursuant to
Section 252(c) of the Delaware General Corporation Law, or (ii) pursuant to
Section 1701.79 of the Ohio General Corporation Law (inasmuch as such purported
amendment affects stockholders of the Merging Corporation).
SECTION 7. Governing Law.
This Merger Agreement shall be governed by the laws of the State of Ohio or
the State of Delaware, as relevant, applicable to agreements made and to be
performed entirely within such States.
SECTION 8. Counterparts.
This Merger Agreement may be executed in any number of counterparts, each
of which shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 9. Severability.
Should any part of this Merger Agreement for any reason be declared
invalid, such declaration shall not affect the validity of any remaining portion
thereof, which remaining portion shall remain in full force and effect as if
this Merger Agreement had been executed with the invalid portion thereof
eliminated.
SECTION 10. Entire Agreement.
This Merger Agreement embodies the entire agreement and understanding
between the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements and understandings between the parties hereto
relating to such subject matter.
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IN WITNESS WHEREOF, each of the Constituent Corporations has caused this
Merger Agreement to be duly executed on its behalf and its corporate seal to be
hereunto affixed by their respective officers thereunto duly authorized, as of
the date first above written.
<TABLE>
<S> <C>
[Corporate Seal] TRIARC COMPANIES, INC.
/s/ ANTHONY W. GRAZIANO, JR.
By ....................................................
Name: ANTHONY W. GRAZIANO, JR.
Title: EXECUTIVE VICE PRESIDENT
ATTEST:
/s/ MARY C. WADE
By ....................................................
Name: MARY C. WADE
Title: ASSISTANT SECRETARY
[Corporate Seal] TRIARC MERGER CORPORATION
/s/ JOSEPH A. LEVATO
By ....................................................
Name: JOSEPH A. LEVATO
Title: EXECUTIVE VICE PRESIDENT
ATTEST:
/s/ MARY C. WADE
By ....................................................
Name: MARY C. WADE
Title: ASSISTANT SECRETARY
</TABLE>
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EXHIBIT B
CERTIFICATE OF INCORPORATION
OF
TRIARC MERGER CORPORATION
------------------------
The undersigned incorporator, in order to form a corporation under the
General Corporation Law of the State of Delaware, certifies as follows:
ARTICLE I
NAME
The name of the corporation shall be Triarc Merger Corporation (the
'Corporation').
ARTICLE II
ADDRESS; REGISTERED AGENT
The address of the Corporation's registered office is 1209 Orange Street,
City of Wilmington, County of New Castle, State of Delaware; and its registered
agent at such address is The Corporation Trust Company.
ARTICLE III
PURPOSES
The purpose or purposes for which the Corporation is formed are:
1. To purchase or otherwise acquire real estate, and any interest or
right therein and to hold, own, control, manage and develop the same; to
purchase or otherwise acquire leaseholds, shares of stock, mortgages and
bonds and other securities; for its own account to erect, construct,
maintain, improve, rebuild, alter, manage and control, either directly or
through ownership of stock in any corporation, any and all kinds of
buildings, stores, offices or other structures; to sell, manage, improve,
develop, assign, transfer, convey, lease, alienate or dispose of land,
buildings, or other process of the corporation, real and personal.
2. To manufacture or cause to be manufactured, produce, buy, import
and otherwise acquire, and to sell, export, deal and traffic in, at
wholesale and retail, and either as principal or agent or otherwise, goods,
wares, commodities, merchandise and personal property of every kind, nature
and description.
3. To apply for, obtain, register, purchase, lease or otherwise
acquire any concessions, rights, options, patents, privileges, inventions,
improvements and processes, copyrights, trade names and trade marks, trade
labels, or any right, option or contract in relation thereto, and to
perform, carry out and fulfill the terms and conditions thereof, and to
develop, maintain, lease, sell, transfer, dispose of, and otherwise deal
with the same.
It is the intention that the purposes specified in any clause or
subdivision contained in this Article III, except as otherwise expressed, shall
be in no way limited or restricted by reference to or inference from the terms
of any other clause or subdivision of this Article III and that the purposes
specified in
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each of the clauses and subdivisions of this Article III shall be deemed to be
independent purposes. This corporation reserves the right substantially to
change and add to any of the purposes for which it is formed, pursuant to the
Delaware General Corporation.
ARTICLE IV
CAPITALIZATION
The total number of shares of stock (the 'Capital Stock') that the
corporation shall have authority to issue is One Hundred and Fifty Million
(150,000,000) of which
(a) One Hundred Million (100,000,000) shall be shares of Class A
Common Stock, par value ten cents ($.10) per share (the 'Class A Common
Stock');
(b) Twenty-Five Million (25,000,000) shall be shares of Class B Common
Stock, par value ten cents ($.10) per share (the 'Class B Common Stock, and
together with the Class A Common Stock, the 'Common Stock'); and
(c) Twenty Five Million (25,000,000) shall be shares of Preferred
Stock, par value ten cents ($.10) per share (the 'Preferred Stock'), of
which 5,982,866 shares are herein designated Cumulative Convertible
Redeemable Preferred Stock (the 'Cumulative Convertible Preferred Stock').
Subject to the provisions of this Certificate of Incorporation and except
as otherwise provided by law, the stock of the Corporation, regardless of class,
may be issued for such consideration and for such corporate purposes as the
Board of Directors may from time to time determine.
A statement of the powers, preferences, and rights, and the qualifications,
limitations or restrictions thereof, in respect of each class of stock is as set
forth below:
A. Powers and Rights of the Class A Common Stock and the Class B Common
Stock. The Class A Common Stock and the Class B Common Stock shall be identical
in all respects except as expressly set forth below and shall have the following
terms:
SECTION 1. Voting. The holders of Class A Common Stock shall possess voting
power for the election of directors and for all other corporate purposes, each
share of Class A Common Stock being entitled to one vote. The holders of the
Class B Common Stock shall possess no voting rights except as required by law.
SECTION 2. Dividends and Distributions. As and when dividends or other
distributions payable in either cash, capital stock of the Corporation (other
than Class A Common Stock or Class B Common Stock) or other property of the
Corporation may be declared by the Board of Directors, the amount of any such
dividend payable on each share of Class A Common Stock shall be equal in all
cases to the amount of such dividend payable on each share of Class B Common
Stock, and the amount of any such dividend payable on each share of Class B
Common Stock shall be equal in all cases to the amount of such dividend payable
on each share of Class A Common Stock. If a distribution payable in shares of
voting capital stock of any Subsidiary (as defined in Part D) shall be made on
shares of Class A Common Stock, a distribution payable in the same number of
shares of nonvoting capital stock of such Subsidiary shall be made
simultaneously on the shares of Class B Common Stock. Such nonvoting capital
stock shall be identical to the voting capital stock distributed in all respects
except as to voting power and shall be convertible into voting capital stock
pursuant to the terms of Section 3(a) of this Part A which shall apply mutatis
mutandis. Dividends and distributions payable in shares of Class A
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Common Stock may not be made on or to shares of any class of the Corporation's
capital stock other than the Class A Common Stock. If a dividend or distribution
payable in shares of Class A Common Stock shall be made on the shares of Class A
Common Stock, a dividend or distribution payable in shares of Class B Common
Stock shall be made simultaneously on the shares of Class B Common Stock, and
the number of shares of Class B Common Stock payable on each share of Class B
Common Stock pursuant to such dividend or distribution shall be equal to the
number of shares of Class A Common Stock payable on each share of Class A Common
Stock pursuant to such dividend or distribution. Similarly, if a dividend or
distribution payable in shares of Class B Common Stock shall be made on the
shares of Class B Common Stock, a dividend or distribution payable in shares of
Class A Common Stock shall be made simultaneously on the shares of Class A
Common Stock, and the number of shares of Class A Common Stock payable on each
share of Class A Common Stock pursuant to such dividend or distribution shall be
equal to the number of shares of Class B Common Stock payable on each share of
Class B Common Stock pursuant to such dividend or distribution. If the
Corporation shall (A) subdivide the outstanding shares of Class A Common Stock
or Class B Common Stock, (B) combine the outstanding shares of Class A Common
Stock or Class B Common Stock or (C) issue by reclassification any shares of
Class A Common Stock or Class B Common Stock, then, and in each such case, such
subdivision, combination or issuance shall be deemed to occur simultaneously
with respect to the shares of the class of Common Stock not affected by such
subdivision, combination or issuance.
SECTION 3. Conversion. Shares of the Class B Common Stock shall be
convertible into Class A Common Stock on the following terms and conditions:
(a) Conversion Right. Subject to and upon compliance with the
provisions of this Section 3, any holder of shares of Class B Common Stock
may at such holder's option, at any time, or from time to time, convert
each such share into one fully paid and non-assessable share of Class A
Common Stock. The right of any holder of any shares of Class B Common Stock
that is a member of the Exchange Group (as defined in Part D) to exercise
the conversion rights pursuant to this Section 3(a) is conditioned upon (i)
such holder immediately disposing of such shares pursuant to a registered
public offering or a private sale to a Person (as defined in Part D) that
is not a member of the Exchange Group or (ii) such holder entering into a
voting trust agreement on terms reasonably satisfactory to such holder and
the Buyer (as defined in Part C) in respect of such shares for ten years,
which voting trust agreement will provide that the voting of the Class A
Common Stock held by such holder will require the mutual agreement of
Steven Posner and the Buyer; provided, however, if at the time of any such
conversion or subsequent to any such conversion at any time during such
ten-year period (i) Steven Posner shall die or neither Nelson Peltz nor
Peter W. May is a general partner of the Buyer, (ii) the voting trust
ceases to be effective or (iii) the voting trust would disqualify for
listing, or would constitute a cause for delisting, the Class A Common
Stock on the New York Stock Exchange or any other national stock exchange
(or the National Association of Securities Dealers Automated Quotation
System) on which the Corporation determines to list such stock (or to have
such stock quoted), then such member of the Exchange Group would have no
such rights to convert any shares of Class B Common Stock for so long as
such condition exists, or if conversion has theretofore occurred, the
shares of Class A Common Stock held by such member of the Exchange Group
shall automatically be converted into Class B Common Stock.
(b) Dividend Upon Conversion. No payment or adjustment shall be made
by the Corporation to any holder of shares of Class B Common Stock
surrendered for conversion into Class A Common Stock in respect of
dividends accrued since the last preceding dividend payment date on
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the shares of Class B Common Stock surrendered for conversion; provided,
however, that if shares of Class B Common Stock shall be converted
subsequent to the record date for any dividend and prior to the payment
date for such dividend, notwithstanding such conversion, the dividend
falling due on such dividend payment date shall be payable (whether or not
punctually paid or duly provided for) to the Person in whose name such
shares are registered at the close of business on such record date.
(c) Method of Conversion.
(1) The surrender of any shares of Class B Common Stock for
conversion shall be made by the holder thereof by delivering (a) the
certificate or certificates evidencing ownership of such shares with
proper endorsement or instruments of transfer and (b)(i) a certificate
representing and warranting that the holder is not a member of the
Exchange Group, or (ii) evidence that the holder has complied with and
remains subject to the voting trust described in Section 3(a) of this
Part A, to the Corporation at the office or agency to be maintained by
the Corporation for that purpose, and such holder shall give written
notice to the Corporation at said office or agency that he elects to
convert such shares of Class B Common Stock in accordance with the
provisions of such notice and of this Section 3. Such notice shall also
state the number of whole shares of Class B Common Stock to be converted
and the name or names (with addresses) in which the certificate or
certificates evidencing ownership of Class A Common Stock which shall be
issuable on such conversion shall be issued. In the case of lost or
destroyed certificates evidencing ownership of shares of Class B Common
Stock to be surrendered for conversion, the holder shall submit proof of
loss or destruction and such indemnity as shall be required by the
Corporation.
(2) As soon as practicable after its receipt of such notice, the
certificate or certificates evidencing ownership of such shares of Class
B Common Stock and the certificate or evidence referred to in clause (1)
above, the Corporation shall issue and shall deliver at said office or
agency to the Person for whose account such shares of Class B Common
Stock were so surrendered, or on his or her written order, a certificate
or certificates for the number of such shares of Class A Common Stock
and a check or cash payment (if any) to which such holder is entitled
with respect to fractional shares as determined by the Corporation, in
accordance with Section 3(d) hereof, at the close of business on the
date of conversion.
(3) Such conversion shall be deemed to have been effected on the
date on which the Corporation shall have received such notice and the
certificate or certificates for such shares of Class B Common Stock; and
the Person or Persons in whose name or names any certificate or
certificates for Class A Common Stock shall be issuable upon such
conversion shall be deemed to have become on said date the holder or
holders of record of the shares represented thereby; provided that any
such surrender on any date when the stock transfer books of the
Corporation shall be closed shall become effective for all purposes on
the next succeeding day on which such stock transfer books are open.
(d) Fractional Shares. No fractional shares or scrip representing
fractional shares shall be issued upon the conversion of any shares of
Class B Common Stock, but the holder thereof will receive in cash an amount
equal to the value of such fractional share of Class A Common Stock based
on the Current Market Price (as set forth in Section 5(e)(iv) of Part C).
If more than one share of Class B Common Stock shall be surrendered for
conversion at one time by the same
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holder, the number of full shares issuable upon conversion thereof shall be
computed on the basis of the aggregate number of such shares so
surrendered.
(e) Payment of Taxes. The Corporation shall pay any tax in respect of
the issue of stock certificates on conversion of shares of Class B Common
Stock. The Corporation shall not, however, be required to pay any tax which
may be payable in respect of any transfer involved in the issue and
delivery of stock in any name other than that of the holder of the shares
converted, and the Corporation shall not be required to issue or deliver
any such stock certificate unless and until the Person or Persons
requesting the issuance thereof shall have paid the Corporation the amount
of any such tax or shall have established to the satisfaction of the
Corporation that such tax has been paid.
(f) Class A Common Stock Reserved for Conversion. The Corporation
shall at all times reserve and keep available out of its authorized and
unissued Class A Common Stock or have available in its treasury the full
number of shares of Class A Common Stock deliverable upon the conversion of
all outstanding shares of Class B Common Stock and shall take all such
action as may be required from time to time in order that it may validly
and legally issue fully paid and non-assessable shares of Class A Common
Stock upon conversion of the Class B Common Stock.
SECTION 4. Distribution of Assets Upon Liquidation. In the event the
Corporation shall be liquidated, dissolved or wound up, whether voluntarily or
involuntarily, after there shall have been paid or set aside for the holders of
all shares of the Preferred Stock then outstanding the full preferential amounts
to which they are entitled hereunder or under the resolutions authorizing the
issuance of such Preferred Stock, the net assets of the Corporation remaining
shall be divided among the holders of the Class A Common Stock and the Class B
Common Stock in such a manner that the amount and kind of such net assets
distributed to the holder of each share of Class A Common Stock shall be equal
to the amount and kind of such net assets distributed to the holder of each
share of Class B Common Stock. The merger or consolidation of the Corporation
into or with any other corporation, the merger of any other corporation with or
into the Corporation, or the sale, lease, or conveyance of all or substantially
all of the assets of the Corporation, shall not be deemed to be a dissolution,
liquidation or winding up for purposes of this Section 4.
B. Preferred Stock.
SECTION 1. Issuance in Series. The shares of Preferred Stock may be issued
from time to time in one or more series of any number of shares, provided that
the aggregate number of shares issued and not cancelled of any and all such
series shall not exceed the total number of shares of Preferred Stock
hereinabove authorized, and with distinctive serial designations, all as shall
hereafter be stated and expressed in the resolution or resolutions providing for
the issue of such shares of Preferred Stock from time to time adopted by the
Board of Directors pursuant to authority so to do which is hereby vested in the
Board of Directors. Each series of shares of Preferred Stock (a) may have such
voting powers, full or limited, or may be without voting powers; (b) may be
subject to redemption at such time or times and at such prices; (c) may be
entitled to receive dividends (which may be cumulative or non-cumulative) at
such rate or rates, on such conditions and at such times, and payable in
preference to, or in such relation to, the dividends payable on any other class
or classes or series of stock; (d) may have such rights upon the dissolution of,
or upon any distribution of the assets of, the Corporation; (e) may be made
convertible into or exchangeable for, shares of any other class or classes or of
any other series of the same or any other class or classes of shares of the
Corporation at such price or prices or at such rates of exchange and with such
adjustments; (f) may be entitled to the benefit of a sinking fund to be
B-5
<PAGE>
applied to the purchase or redemption of shares of such series in such amount or
amounts; (g) may be entitled to the benefit of conditions and restrictions upon
the creation of indebtedness of the Corporation or any Subsidiary, upon the
issue of any additional shares (including additional shares of such series or of
any other series) and upon the payment of dividends or the making of other
distributions on, and the purchase, redemption or other acquisition by the
Corporation or any Subsidiary of, any outstanding shares of the Corporation and
(h) may have such other relative, participating, optional or other special
rights, qualifications, limitations or restrictions thereof; all as shall be
stated in said resolution or resolutions providing for the issue of such shares
of Preferred Stock. The Corporation shall take all such actions as are necessary
to cause shares of Preferred Stock of any series that have been redeemed
(whether through the operation of a sinking fund or otherwise) or that if
convertible or exchangeable, have been converted into or exchanged for shares of
any other class or classes to have the status of authorized and unissued shares
of Preferred Stock of the same series and may be reissued as a part of the
series of which they were originally a part or may be reclassified and reissued
as part of a new series of shares of Preferred Stock to be created by resolution
or resolutions of the Board of Directors or as part of any other series of
shares of Preferred Stock, all subject to the conditions or restrictions on
issuance set forth in the resolution or resolutions adopted by the Board of
Directors providing for the issue of any series of shares of Preferred Stock.
SECTION 2. Limitation on Issuance of Shares Ranking on a Parity with the
Cumulative Convertible Preferred Stock. Except as otherwise expressly authorized
by the holders of at least two-thirds of the shares of the Cumulative
Convertible Preferred Stock at the time outstanding in accordance with Section
4(b) of Part C, the Aggregate Dollar Amount (as defined below) of the Shares
ranking on a parity with the Cumulative Convertible Preferred Stock (as defined
in Part D) of all series issued and outstanding from time to time by the
Corporation shall not exceed $50,000,000. 'Aggregate Dollar Amount' shall mean
the aggregate Stated Value (as defined in Part C) of such shares or liquidation
preference (excluding accrued and unpaid dividends or any amount measured by
reference thereto) for such shares, whichever is greater.
SECTION 3. No Vote Unless Expressly Provided or Required by Law;
Dividends. Subject to the provisions of any applicable law or of the By-laws of
the Corporation, as from time to time amended, with respect to the closing of
the stock transfer books or the fixing of a record date for the determination of
stockholders entitled to vote and except as otherwise provided by law, in this
Certificate of Incorporation or by the Certificate of Designation relating to
the issue of any series of shares of Preferred Stock, the holders of outstanding
shares of Preferred Stock shall not possess voting power for the election of
directors or for any other purposes. Except as otherwise provided in the
Certificate of Incorporation or by the Certificate of Designation relating to
the issue of any series of shares of Preferred Stock, the holders of shares of
Common Stock shall be entitled, to the exclusion of the holders of shares of
Preferred Stock of any and all series, to receive such dividends as from time to
time may be declared by the Board of Directors.
C. Designation of Cumulative Convertible Redeemable Preferred Stock. The
Cumulative Convertible Preferred Stock shall have a stated value of $12.00 per
share ('Stated Value'), shall rank prior to all shares of the Corporation other
than the Shares ranking on a parity with the Cumulative Convertible Preferred
Stock, shall rank on a parity with and only with shares ranking on a parity with
the Cumulative Convertible Preferred Stock, and shall have the following terms:
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<PAGE>
SECTION 1. Dividends.
(a) The holders of Cumulative Convertible Preferred Stock, in
preference to the holders of Common Stock of any class and of any other
class of shares ranking junior to the Cumulative Convertible Preferred
Stock (as defined in Part D), shall be entitled to receive out of any funds
legally available therefor, and when, as and if declared by the Board of
Directors, dividends in cash at the annual rate of 8.125% of Stated Value,
or $.975 per share. Dividends on Cumulative Convertible Preferred Stock
shall be payable in arrears semi-annually on the last day of each Dividend
Period (as defined in Part D) commencing September 30, 1994. The dividends
payable for each full Dividend Period on each share of Cumulative
Convertible Preferred Stock shall be $.4875. Such dividends on each such
share shall accrue and be cumulative from and after April 23, 1993, or, if
later, the most recent date prior to the Effective Date on which dividends
were paid in respect of the shares of Predecessor Convertible Preferred
Stock (as defined in Part D). No interest shall be payable on accrued
dividends. No dividends shall be paid upon or declared or set apart for
Cumulative Convertible Preferred Stock for any dividend period unless at
the same time a like proportionate dividend for the dividend periods
terminating on the same or any earlier date, ratably in proportion to the
respective dividend rates fixed therefor, shall have been paid upon or
declared or set apart for all shares ranking on a parity with the
Cumulative Convertible Preferred Stock of all series then issued and
outstanding and entitled to receive such dividend.
(b) So long as any Cumulative Convertible Preferred Stock shall be
outstanding, unless all accrued and unpaid dividends on the Cumulative
Convertible Preferred Stock and each and every series of shares ranking on
a parity with the Cumulative Convertible Preferred Stock for all prior
Dividend Periods shall have been declared and paid in full, no dividend,
except a dividend payable in Common Stock of any class or in shares of any
other class ranking junior to the Cumulative Convertible Preferred Stock,
shall be paid or declared or any distribution be made, on or in respect of
the Common Stock of any class, any Shares ranking on a parity with the
Cumulative Convertible Preferred Stock or any Shares ranking junior to the
Cumulative Convertible Preferred Stock (as defined in Part D), nor shall
any Common Stock of any class or any Shares ranking on a parity with the
Cumulative Convertible Preferred Stock or any Shares ranking junior to the
Cumulative Convertible Preferred Stock be purchased, redeemed, retired or
otherwise acquired by the Corporation, except out of proceeds of the sale
of Common Stock or other Shares of the Corporation ranking junior to the
Cumulative Convertible Preferred Stock received by the Corporation
subsequent to the date of first issuance of Cumulative Convertible
Preferred Stock. The foregoing restrictions on the payment of dividends or
other distributions on, and on the purchase, redemption, retirement or
other acquisition of, Common Stock or any other Shares ranking on a parity
with the Cumulative Convertible Preferred Stock or Shares ranking junior to
the Cumulative Convertible Preferred Stock shall be inapplicable to (i) any
payments in lieu of issuance of fractional shares thereof, whether upon any
merger, conversion, stock dividend or otherwise; (ii) the acquisition of
any shares of Common Stock or any other capital stock of the Corporation in
connection with the settlement of disputes arising out of acquisitions by
the Corporation pursuant to which such stock was issued or the rescission
of any acquisition by the Corporation pursuant to which such stock was
issued in each case provided that no payment is made to DWG Acquisition
Group, L.P. (the 'Buyer') or any Affiliate or Associate (as such terms are
defined in Part D hereof) thereof; (iii) the conversion of shares of
Cumulative Convertible Preferred Stock, or Preferred Stock into Common
Stock; or (iv) the conversion of shares of Class
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A Common Stock into Class B Common Stock or the conversion of shares of
Class B Common Stock into Class A Common Stock.
SECTION 2. Redemption.
(a) Optional Redemption.
(i) The Corporation may not redeem the Cumulative Convertible
Preferred Stock prior to April 23, 1998.
(ii) The Corporation may, on and after April 23, 1998, at the
option of the Board of Directors, redeem all but not part of the
Cumulative Convertible Preferred Stock at the time outstanding at a
price per share equal to the applicable redemption price set forth below
plus an amount equal to accrued and unpaid dividends:
<TABLE>
<CAPTION>
IF REDEEMED DURING
THE TWELVE MONTHS
BEGINNING ON THE PER SHARE
FOLLOWING APRIL 23 REDEMPTION PRICE
------------------ ----------------
<S> <C>
1998 $12.84
1999 12.72
2000 12.60
2001 12.48
2002 12.36
2003 12.24
2004 12.12
</TABLE>
(b) Mandatory Redemption. All outstanding shares of Cumulative
Convertible Preferred Stock must be redeemed by the Corporation on April
23, 2005 at a price per share equal to the amount of the Stated Value plus
an amount equal to accrued and unpaid dividends.
(c) Redemption Procedures.
(i) In case the Corporation shall desire to exercise its right to
redeem the Cumulative Convertible Preferred Stock in accordance with
Section 2(a) of this Part C or shall be required to redeem the
Cumulative Convertible Preferred Stock in accordance with Section 2(b)
of this Part C, it shall mail first class postage prepaid (or, if the
Cumulative Convertible Preferred Stock to be redeemed is held of record
by 10 Persons or less, by certified mail), a notice of such redemption,
not less than 30 nor more than 60 days prior to the date fixed for
redemption (the 'Redemption Date'), to each holder's last address as it
shall appear upon the stock transfer books of the Corporation. Any
notice which is mailed in the manner herein provided shall be
conclusively presumed to have been duly given, whether or not the holder
receives notice. In any case, failure duly to give notice by mail, or
any defect in the notice, to the holder of any shares of Cumulative
Convertible Preferred Stock shall not affect the validity of the
proceedings for the redemption of any other shares of Cumulative
Convertible Preferred Stock.
(ii) Each such notice shall specify the Redemption Date, the place
of redemption (which shall be a location either in New York City or
Miami, Florida), and the redemption price at which the Cumulative
Convertible Preferred Stock is to be redeemed (including the amount of
accrued and unpaid dividends to be paid), and shall state that payment
of the redemption price of the Cumulative Convertible Preferred Stock
will be made on surrender of the Cumulative
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<PAGE>
Convertible Preferred Stock at said place of redemption, and that from
and after the Redemption Date the Cumulative Convertible Preferred Stock
will cease to be outstanding. Such notice shall also state the current
Conversion Price (as defined in Section 5(a)(i) of this Part C) and the
date on which the right to convert the Cumulative Convertible Preferred
Stock into Common Stock will expire as provided in Section 5(a)(iv) of
this Part C.
(iii) If notice of redemption shall have been given as provided
herein, the Cumulative Convertible Preferred Stock, unless converted
into Common Stock pursuant to Section 5 of this Part C on or prior to
the fifth Business Day (as defined in Part D) prior to the Redemption
Date, shall be redeemed by the Corporation on the Redemption Date and at
the place stated in such notice at the applicable redemption price,
together with accrued and unpaid dividends for each Dividend Period
ended prior to the Redemption Date plus a pro rata portion of the
dividend which would otherwise have accrued for the portion of the
Dividend Period ended on the Redemption Date. On and after such
Redemption Date, provided that cash sufficient for the redemption
thereof shall then be irrevocably deposited with the Redemption Agent
(as defined in part D) for that purpose for a period of one year from
and after the Redemption Date, the Cumulative Convertible Preferred
Stock shall cease to be outstanding. On presentation and surrender of
Cumulative Convertible Preferred Stock to the Redemption Agent for
redemption as provided in such notice, there shall be paid to the holder
the applicable redemption price, together with accrued and unpaid
dividends determined as provided above.
(iv) At least one Business Day prior to the Redemption Date, the
Corporation shall deposit with the Redemption Agent an amount of money
sufficient to pay on the Redemption Date in immediately available funds
the applicable redemption price of, and an amount equal to accrued and
unpaid dividends, if any, determined as provided above, on, all the
Cumulative Convertible Preferred Stock then outstanding. Any moneys
which shall have been deposited for redemption of Cumulative Convertible
Preferred Stock and not required for that purpose by reason of
conversion of Cumulative Convertible Preferred Stock on or prior to the
Redemption Date or which are held by the Redemption Agent for a period
of one year shall be promptly repaid to the Corporation. Any interest
accrued on the funds so deposited shall belong to the Corporation and be
paid to the Corporation from time to time on demand.
(d) Any share of Cumulative Convertible Preferred Stock which is (i)
redeemed by the Corporation pursuant to the provisions of this Section 2,
(ii) converted in accordance with the express terms of Section 5 of this
Part C, or (iii) otherwise acquired by the Corporation, may not be
reissued. The Corporation shall take all such actions as are necessary to
cause such stock to resume the status of authorized but unissued Preferred
Stock without designation as to series.
(e) The Corporation may not purchase less than all of the shares of
the Cumulative Convertible Preferred Stock then outstanding except in
accordance with a stock purchase offer made to all holders of record of
Cumulative Convertible Preferred Stock.
(f) Notwithstanding the foregoing provisions of this Section 2, the
Corporation may not and shall not be required to redeem any shares of the
Corporation in violation of applicable law.
SECTION 3. Liquidation.
(a) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Corporation, the holders of
Cumulative Convertible Preferred Stock shall be entitled
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<PAGE>
to receive in full out of the assets of the Corporation available for
distribution to its shareholders after satisfaction of indebtedness and
other liabilities, including out of its capital, before any amount shall be
paid or distributed among the holders of the Common Stock of any class or
any other Shares ranking junior to the Cumulative Convertible Preferred
Stock, the amount of the Stated Value per share, plus an amount equal to
all dividends accrued and unpaid thereon for each Dividend Period or
portion thereof ended prior to the date of payment of the amount due
pursuant to such liquidation, dissolution or winding up of the affairs of
the Corporation. In the event the net assets of the Corporation legally
available therefor are insufficient to permit the payment upon all
outstanding shares of Cumulative Convertible Preferred Stock and shares on
a parity with the Cumulative Convertible Preferred Stock of the full
preferential amount to which they are respectively entitled, then such net
assets shall be distributed ratably upon all outstanding shares of
Cumulative Convertible Preferred Stock and shares on a parity with the
Cumulative Convertible Preferred Stock in proportion to the full
preferential amount to which each such share is entitled.
(b) After payment to the holders of Cumulative Convertible Preferred
Stock of the full preferential amounts provided for in Section 3(a) of this
Part C the holders of Cumulative Convertible Preferred Stock, as such,
shall have no right or claim to any of the remaining assets of the
Corporation.
(c) The merger or consolidation of the Corporation into or with any
other corporation, the merger of any other corporation with or into the
Corporation, or the sale, lease or conveyance of all or substantially all
the assets of the Corporation, shall not be deemed to be a dissolution,
liquidation or winding up for the purpose of this Section 3.
SECTION 4. Voting Rights.
(a) General. Except as expressly provided in this Section 4, or as
otherwise from time to time required by applicable law, the Cumulative
Convertible Preferred Stock shall have no voting rights.
(b) Voting Rights on Extraordinary Matters. The affirmative vote of
the holders of at least two-thirds of the shares of the Cumulative
Convertible Preferred Stock at the time outstanding, voting separately as a
class, given in person or by proxy at a meeting called for the purpose
shall be necessary to effect any one or more of the following:
(i) Any amendment, alteration or repeal, whether by merger,
consolidation or otherwise, of any of the provisions of the Certificate
of Incorporation or of the By-laws of the Corporation which would
adversely affect the preferences or voting or other rights of the
holders of Cumulative Convertible Preferred Stock which are set forth
anywhere in the Certificate of Incorporation; provided, however, any
amendment of the Certificate of Incorporation to authorize, create or
change the authorized or outstanding shares of any shares ranking junior
to the Cumulative Convertible Preferred Stock, shall not be deemed to
adversely affect the preferences or voting or other rights of the
holders of Cumulative Convertible Preferred Stock; or
(ii) The issuance of any Shares, or any security convertible into
such shares, ranking prior to or on a parity with (subject to the
ability of the Corporation to issue certain Preferred Stock as provided
in Section 4(b)(iii)) the Cumulative Convertible Preferred Stock; or
(iii) The issuance of any Shares ranking on a parity with the
Cumulative Convertible Preferred Stock, or any security convertible into
Shares ranking on a parity with the Cumulative Convertible Preferred
Stock, except and to the extent that the Aggregate Dollar
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<PAGE>
Amount of such Shares ranking on a party with the Cumulative Convertible
Preferred Stock is equal to or below the $50 million limit provided for
in Part B, Section 2 (it being understood that the vote of any holder of
Cumulative Convertible Preferred Stock is required only with respect to
the issuance of Shares ranking on a parity with the Cumulative
Convertible Preferred Stock in excess of such $50 million Aggregate
Dollar Amount); or
(iv) The increase in the authorized or issued number of shares of
Cumulative Convertible Preferred Stock or the authorization, creation,
increase in the authorized number of or issuance of any security
convertible into such shares; or
(v) The purchase or redemption of less than all of the shares of
the Cumulative Convertible Preferred Stock then outstanding except in
accordance with a stock purchase offer made to all holders of record of
Cumulative Convertible Preferred Stock.
Holders of Cumulative Convertible Preferred Stock may act by written consent as
permitted by applicable law.
SECTION 5. Conversion. Each share of the Cumulative Convertible Preferred
Stock shall be convertible into Common Stock at any time until the close of
business on the fifth Business Day prior to the Redemption Date (unless the
Corporation shall default in any payment due upon redemption thereof in which
case each such share shall continue to be convertible), as set forth below, on
the following terms and conditions:
(a) Conversion Right of Holder.
(i) Subject to and upon compliance with the provisions of this
Section 5, the holder of any shares of Cumulative Convertible Preferred
Stock which is a member of the Exchange Group, at such holder's option,
at any time or from time to time, shall have the unconditional right to
convert any such shares into the number of fully paid and non-assessable
shares of Class B Common Stock determined by dividing (A) the product of
the Stated Value and the number of shares of Cumulative Convertible
Preferred Stock to be converted on the Conversion Date (as defined in
Section 5(a)(vii) hereof) by (B) the Conversion Price in effect on the
Conversion Date. The initial conversion price shall be an amount per
share equal to the Predecessor Conversion Price (as defined in Part D)
in effect immediately prior to the Effective Date and such price shall
be subject to adjustment as set forth in Section 5(e) of this Part C
(the conversion price, as it may be so adjusted, the 'Conversion
Price').
(ii) Subject to and upon compliance with the provisions of this
Section 5, the holder of any shares of Cumulative Convertible Preferred
Stock which is not a member of the Exchange Group, upon presentation of
a certificate reasonably satisfactory to the Corporation that such
holder is not a member of the Exchange Group, at such holder's option,
at any time or from time to time, shall have the unconditional right to
convert any such shares into the number of fully paid and non-assessable
shares of Class A Common Stock determined by dividing (A) the product of
the Stated Value and the number of shares of Cumulative Convertible
Preferred Stock to be converted on the Conversion Date by (B) the
Conversion Price in effect on the Conversion Date.
(iii) Subject to and upon compliance with the provisions of this
Section 5, the holder of any shares of Cumulative Convertible Preferred
Stock which is a member of the Exchange Group, at such holder's option,
at any time or from time to time, shall have the right to convert any
such shares into the number of fully paid and nonassessable shares of
Class A Common
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<PAGE>
Stock determined by dividing (A) the product of the Stated Value and the
number of shares of Cumulative Convertible Preferred Stock to be
converted on the Conversion Date by (B) the Conversion Price in effect
on the Conversion Date; provided that any such member of the Exchange
Group converting shares of Cumulative Convertible Preferred Stock into
Class A Common Stock, as the sole condition precedent to such
conversion, shall comply with and remain subject to the voting trust
provisions of Part A, Section 3(a).
(iv) If notice of redemption of any shares of Cumulative
Convertible Preferred Stock shall be given as provided herein, the right
to convert such shares pursuant to this Section 5 shall terminate and
expire at the close of business on the fifth Business Day prior to the
Redemption Date (unless the Corporation shall default in any payment due
upon redemption thereof in which case each of such shares shall continue
to be convertible).
(v) The surrender of any shares of Cumulative Convertible Preferred
Stock for conversion shall be made by the holder thereof by delivering
to the Corporation at the office or agency to be maintained by the
Corporation for that purpose (A) the certificate or certificates
evidencing ownership of such shares with proper endorsement or
instruments of transfer, (B) if the conversion is being made pursuant to
Section 5(a)(ii) above, a certificate representing and warranting that
the holder is not a member of the Exchange Group, (C) if the conversion
is being made pursuant to Section 5(a)(iii) above, evidence that the
holder has complied with and remains subject to the voting trust
provisions of Part A, Section 3(a), and (D) a written statement of
election under the last sentence of Section 5(a)(vi). Such holder shall
give written notice to the Corporation at said office or agency that he
elects to convert such shares of Cumulative Convertible Preferred Stock
in accordance with the provisions of this Section 5. Such notice shall
also state the number of whole shares of Cumulative Convertible
Preferred Stock to be converted, whether Class A Common Stock or Class B
Common Stock is to be issued upon conversion, and the name or names
(with addresses) in which the certificate or certificates evidencing
ownership of the Class A Common Stock or the Class B Common Stock, as
the case may be, which shall be issuable on such conversion shall be
issued. In the case of lost or destroyed certificates evidencing
ownership of shares of Cumulative Convertible Preferred Stock to be
surrendered for conversion, the holder shall submit proof of loss or
destruction and such indemnity as shall be reasonably required by the
Corporation.
(vi) As soon as practicable after its receipt of such notice, the
certificate or certificates evidencing ownership of such shares of
Cumulative Convertible Preferred Stock, and, if conversion is being made
pursuant to Sections 5(a)(ii) or 5(a)(iii) above, the certificate or
evidence referred to in Section 5(a)(v), the Corporation shall issue and
shall deliver at said office or agency to the person for whose account
such shares of Cumulative Convertible Preferred Stock were so
surrendered, or on his or her written order, a certificate or
certificates for the number of such shares of Class A Common Stock or
Class B Common Stock, as the case may be, and a check or cash payment
(if any) to which such holder is entitled with respect to fractional
shares as determined by the Corporation, in accordance with Section 5(f)
of this Part C, at the close of business on the Conversion Date and any
accrued and unpaid dividends through the Conversion Date in accordance
with Section 5(d) of this Part C. Notwithstanding the foregoing, if, on
any Conversion Date, the Corporation shall be in arrears in the payment
of dividends on the Cumulative Convertible Preferred Stock for three or
more Dividend Periods, each holder of such stock shall have the right to
elect either (A) (1) to have all or part of such accrued and unpaid
dividends credited against the Conversion Price, provided,
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<PAGE>
however, that in no event shall such Conversion Price be reduced below
the amount per share equal to the amount below which the Predecessor
Conversion Price (as defined in Part D) could not be lowered immediately
prior to the Effective Date (subject to adjustment on the same basis as
the Conversion Price is subject to adjustment) and (2) to receive in
cash, to the extent funds are legally available and not contractually
restricted under agreements with Persons who are not the Buyer or
Affiliates or Associates of the Buyer and to the extent not then paid in
full, to retain the right to receive in cash, as soon thereafter as
funds are legally available and not so contractually restricted, all
accrued and unpaid dividends in excess of the amount, if any, credited
as provided in clause (i) or (B) to retain the right to receive in cash,
as soon thereafter as funds are legally available and not so
contractually restricted, all accrued and unpaid dividends.
(vii) Such conversion shall be deemed to have been effected on the
date (the 'Conversion Date') on which the Corporation shall have
received such notice and the certificate or certificates for such shares
of Cumulative Convertible Preferred Stock and, if conversion is made
pursuant to Section 5(a)(ii) or 5(a)(iii) above, the certificate or
evidence referred to in Section 5(a)(v); and the person or persons in
whose name or names any certificate or certificates for Common Stock
shall be issuable upon such conversion shall be deemed to have become on
said date the holder or holders of record of the shares represented
thereby; provided that any such surrender on any date when the stock
transfer books of the Corporation shall be closed shall become effective
for all purposes on the next succeeding day on which such stock transfer
books are open.
(b) Call for Conversion by the Corporation.
(i) If, at any time during the period beginning on April 23, 1996
and ending on April 22, 1998, the Closing Price (as defined in Part D)
per share of Class A Common Stock is equal to or greater than the
Predecessor Call Threshold Price (as defined in Part D), subject to
adjustment as set forth in Section 5(e) of this Part C (such amount, as
it may be so adjusted, the 'Call Threshold Price'), for any 20 out of 30
consecutive Trading Days (as defined in Part D) during such period (a
'Call Threshold'), within the first 30 days following any Call
Threshold, the Corporation may issue a notice to call for conversion
into Common Stock all (but not less than all) of the Cumulative
Convertible Preferred Stock at the time outstanding on the terms and
conditions and in accordance with the procedures set forth in this
Section 5(b).
(ii) Upon such call for conversion, each share of Cumulative
Convertible Preferred Stock that is held by a member of the Exchange
Group shall be converted in accordance herewith into the number of fully
paid and non-assessable shares of Class B Common Stock, or Class A
Common Stock if the holder of such shares elects to comply with the
voting trust provisions of Part A, Section 3(a), determined by dividing
(A) the product of the Stated Value and the number of such holder's
shares of Cumulative Convertible Preferred Stock by (B) the Conversion
Price in effect on the Conversion Call Date (as defined in clause (iv)
below).
(iii) Upon such call for conversion, each share of Cumulative
Convertible Preferred Stock that is held by a person which is not a
member of the Exchange Group shall be converted in accordance herewith
into the number of fully paid and non-assessable shares of Class A
Common Stock determined by dividing (A) the product of the Stated Value
and the number of
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<PAGE>
such holder's shares of Cumulative Convertible Preferred Stock by (B)
the Conversion Price in effect on the Conversion Call Date.
(iv) If the Corporation shall desire to exercise its right to call
for conversion all of the Cumulative Convertible Preferred Stock, it
shall give notice of such call by first class mail postage prepaid (or,
if such shares are held of record by 10 Persons or less, by certified
mail), not less than 10 nor more than 45 days prior to the date fixed
for conversion in such notice (the 'Conversion Call Date'), to each
holder's last address as it shall appear upon the stock transfer books
of the Corporation. Any notice which is mailed in the manner herein
provided shall be conclusively presumed to have been duly given, whether
or not the holder receives the notice. In any case, failure duly to give
notice by mail, or any defect in the notice, to the holder of any
Cumulative Convertible Preferred Stock shall not affect the validity of
the call for conversion of any other Cumulative Convertible Preferred
Stock.
Each such notice shall specify the Conversion Call Date, the place
of conversion (which must be in New York City or Miami, Florida), and
the Conversion Price at which such Cumulative Convertible Preferred
Stock is to be converted and shall state that issuance and delivery of
the certificate or certificates for the Common Stock to be issued on
conversion of the Cumulative Convertible Preferred Stock will be made on
surrender of the Cumulative Convertible Preferred Stock at said place of
conversion and that from and after the Conversion Call Date such
Cumulative Convertible Preferred Stock shall cease to be outstanding.
(v) If notice of call for conversion shall have been given as
provided hereinabove, the Cumulative Convertible Preferred Stock
outstanding on the Conversion Call Date shall be converted into Class A
Common Stock or Class B Common Stock, as the case may be, by the
Corporation on the Conversion Call Date and at the place stated in such
notice at the applicable Conversion Price. On and after the Conversion
Call Date, the Cumulative Convertible Preferred Stock shall cease to be
outstanding.
(vi) The surrender of shares of Cumulative Convertible Preferred
Stock for conversion pursuant to a call for conversion made by the
Corporation pursuant to Section 5(b) shall be made by the holder thereof
by delivering the certificate or certificates evidencing ownership of
such shares with proper endorsement or instruments of transfer and the
certificate or evidence referred to in Section 5(a)(v) above, as
applicable, to the Corporation at the office or agency to be maintained
by the Corporation for that purpose. In the case of lost or destroyed
certificates evidencing ownership of shares of Cumulative Convertible
Preferred Stock to be surrendered for conversion pursuant to a call for
conversion, the holder shall submit proof of loss or destruction and
such indemnity as shall be reasonably required by the Corporation.
(vii) As soon as practicable after its receipt of the certificate
or certificates evidencing ownership of such shares of Cumulative
Convertible Preferred Stock and, if applicable, the certificate or
evidence referred to in Section 5(a)(v) above, the Corporation shall
issue and deliver at said office or agency to the person for whose
account such shares of Cumulative Convertible Preferred Stock were so
surrendered, or on such person's written order, a certificate or
certificates for the number of such shares of Class A Common Stock or
Class B Common Stock, as the case may be, and a check or cash payment
(if any) to which such holder is entitled with respect to fractional
shares as determined by the Corporation in accordance with Section 5(f)
of this Part C and with respect to any accrued and unpaid dividends in
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accordance with Section 5(d) of this Part C. Notwithstanding the
foregoing, if, on the Conversion Call Date, the Corporation shall be in
arrears in the payment of dividends on the Cumulative Convertible
Preferred Stock for three or more Dividend Periods, each holder of such
stock shall have the right to elect either (A) (1) to have all or part
of such accrued and unpaid dividends credited against the Conversion
Price, provided, however, that in no event shall such Conversion Price
per share be reduced below the amount per share equal to the amount
below which the Predecessor Conversion Price could be lowered
immediately prior to the Effective Date (subject to adjustment on the
same basis as the Conversion Price is subject to adjustment) and (2) to
receive in cash, to the extent funds are legally available and not
contractually restricted under agreements with Persons who are not the
Buyer or Affiliates or Associates of the Buyer and to the extent not
then paid in full, to retain the right to receive in cash, as soon
thereafter as funds are legally available and not so contractually
restricted, all accrued and unpaid dividends in excess of the amount, if
any, credited as provided in clause (i) or (B) to retain the right to
receive in cash, as soon thereafter as funds are legally available and
not so contractually restricted, all accrued and unpaid dividends.
(viii) Conversion of all Cumulative Convertible Preferred Stock
then outstanding shall be deemed to have been effected on the Conversion
Call Date and the person or persons in whose name or names any
certificate or certificates for Class A Common Stock or the Class B
Common Stock, as the case may be, shall be issuable upon such conversion
shall be deemed to have become on said date the holder or holders of
record of the shares of Class A Common Stock or Class B Common Stock, as
the case may be, into which such person's or persons' Cumulative
Convertible Preferred Stock shall be deemed to be converted on said
date.
(c) Holder's Right to Put After Call for Conversion. If the
Corporation calls for the conversion of the Cumulative Convertible
Preferred Stock pursuant to Section 5(b) of this Part C then within 30 days
after the Conversion Call Date, each holder of Common Stock into which such
Cumulative Convertible Preferred Stock was converted as of such date shall
have the unconditional right to require the Corporation to purchase all or
part of such holder's Common Stock at a purchase price per share equal to
the Predecessor Put Price (as defined in Part D), subject to adjustment in
accordance with Section 5(e) of this Part C (such purchase price, as so
adjusted, the 'Put Price'). If such holder of Common Stock desires to
require the Corporation to purchase such holder's shares of Common Stock in
accordance herewith, such holder shall give written notice to the
Corporation at said office or agency that such holder elects to have the
Corporation purchase such holder's shares of Class A Common Stock or Class
B Common Stock, as the case may be, in accordance with the provisions of
this Section 5(c). Such notice shall also state the number of whole shares
of Class A Common Stock or Class B Common Stock to be purchased by the
Corporation pursuant to this Section 5(c). In the case of lost or destroyed
certificates evidencing ownership of shares of Class A Common Stock or
Class B Common Stock, as the case may be, to be purchased by the
Corporation pursuant to this Section 5(c), such holder shall submit proof
of loss or destruction and such indemnity as shall be reasonably required
by the Corporation. On delivery of the certificate or certificates
evidencing ownership of the Common Stock to be purchased by the Corporation
pursuant to this Section 5(c), with proper endorsement or instruments of
transfer to the Corporation, to the office or agency to be maintained by
the Corporation for that purpose, the Corporation or its designee shall pay
to such holder of such Class A Common Stock or Class B Common Stock, as the
case may be, in immediately available funds the Put Price for each share of
such stock delivered pursuant to this Section 5(c).
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(d) Dividend Upon Conversion. No payment or adjustment shall be made
to any holder of shares of Cumulative Convertible Preferred Stock
surrendered by the holder thereof at such holder's option in respect of any
dividends which would have accrued for the portion of the Dividend Period
ended on the Conversion Date on the shares of Cumulative Convertible
Preferred Stock surrendered for conversion; provided, however, that (i) if
shares of Cumulative Convertible Preferred Stock shall be converted
subsequent to the record date for any dividend thereon and prior to the
payment date for such dividend, notwithstanding such conversion the
dividend shall be payable on the payment date for such dividend to the
person in whose name such shares of Cumulative Convertible Preferred Stock
were held of record at the close of business on such record date and (ii)
all accrued and unpaid dividends for each Dividend Period ended prior to
such Conversion Call Date or date of surrender shall be paid to the person
in whose name such shares were held of record at the close of business on
such record date. If either (A) the shares of Cumulative Convertible
Preferred Stock are called for conversion by the Corporation, or (B) a
record date shall be set by the Corporation with respect to Common Stock
for any purpose other than a cash dividend not requiring an adjustment
under Section 5(e)(iii) and shares of Cumulative Convertible Preferred
Stock are converted into Common Stock on or before such record date, then
in either case holders of such shares shall be entitled to receive on the
Conversion Call Date in the case of clause (A) or at the time of conversion
in the case of clause (B) all accrued and unpaid dividends thereon for each
Dividend Period ended prior to the Conversion Call Date in the case of
clause (A) or the time of conversion in the case of clause (B) plus a pro
rata portion of the dividend thereon which would otherwise have accrued for
the portion of the Dividend Period ended on such Conversion Call Date or at
the time of conversion, as the case may be. If the Corporation shall at
such time be in arrears in the payment of dividends on the Cumulative
Convertible Preferred Stock for three or more Dividend Periods, each holder
shall have the right to elect either (Y) (1) to have all or part of such
accrued and unpaid dividends credited against the Conversion Price,
provided, however, that in no event shall the Conversion Price per share be
reduced below an amount per share equal to the amount below which the
Predecessor Conversion Price cold not be lowered immediately prior to the
Effective Date (subject to adjustment on the same basis as the Conversion
Price is subject to adjustment) and (2) to receive in cash, to the extent
funds are legally available and not contractually restricted under
agreements with Persons who are not the Buyer or Affiliates or Associates
of the Buyer and to the extent not then paid in full, to retain the right
to receive in cash, as soon thereafter as funds are legally available and
not so contractually restricted, all accrued and unpaid dividends in excess
of the amount, if any, credited as provided in clause (i) or (Z) to retain
the right to receive in cash, as soon thereafter as funds are legally
available and not so contractually restricted, all accrued and unpaid
dividends.
(e) Adjustments to Conversion Price, Call Threshold Price And Put
Price. The Conversion Price, Call Threshold Price and Put Price shall each
be subject to adjustments from time to time as follows:
(i) In case the Corporation shall at any time or from time to time
after the Effective Date (A) pay a dividend or make a distribution on
the outstanding shares of Common Stock in shares of Common Stock, (B)
subdivide the outstanding shares of Common Stock into a greater number
of shares, (C) combine the outstanding shares of Common Stock into a
smaller number of shares or (D) issue by reclassification of the shares
of Common Stock any shares of capital stock of the Corporation, then,
and in each such case, the Conversion Price in effect immediately prior
to such event or the record date therefor, whichever is earlier, shall
be
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<PAGE>
adjusted so that the holder of any shares of Cumulative Convertible
Preferred Stock thereafter surrendered for conversion shall be entitled
to receive the number of shares of Common Stock or other securities of
the Corporation which such holder would have owned or have been entitled
to receive immediately following any of the events described above had
such shares of Cumulative Convertible Preferred Stock been surrendered
for conversion immediately prior to the happening of such event or the
record date therefor, whichever is earlier, and the Call Threshold Price
and the Put Price with respect to the Common Stock shall be
proportionately adjusted so as to result in a new Call Threshold Price
and a new Put Price equal to the product of (i) the initial Call
Threshold Price or initial Put Price, as the case may be, in either case
as adjusted theretofore, and (ii) a fraction the numerator of which is
the number of shares of Common Stock outstanding immediately prior to
the applicable event listed above and the denominator of which is the
number of shares of Common Stock outstanding immediately following such
event. An adjustment made pursuant to this Section 5(e)(i) shall become
effective (x) in the case of any such dividend or distribution,
immediately after the close of business on the record date for the
determination of holders of shares of Common Stock entitled to receive
such dividend or distribution, or (y) in the case of such subdivision,
reclassification or combination, at the close of business on the day
upon which such corporate action becomes effective. No adjustment shall
be made pursuant to this Section 5(e)(i) in connection with any
transaction to which Section 5(e)(v) applies.
(ii) In case, at any time or from time to time after the Effective
Date, the Corporation shall issue or sell any shares of Common Stock
(except as provided in Section 5(e)(i) of this Part C) for a
consideration per share less than the Current Market Price (as defined
in Section 5(e)(iv)) in effect immediately prior to such issue or sale,
including the issuance or exchange of any shares of Common Stock as
consideration for the acquisition by the Corporation of any shares of
capital stock of any Subsidiary in connection with the settlement of any
litigation or otherwise and whether or not such Subsidiary is merged
with or into the Corporation contemporaneously therewith or thereafter,
then forthwith upon such issue or sale, the Conversion Price in effect
immediately prior to such issue or sale shall be adjusted (calculated to
the nearest cent) by dividing the Conversion Price in effect immediately
prior to such issue or sale by a fraction, the numerator of which shall
be an amount equal to the sum of the number of shares of Common Stock
issued and outstanding immediately prior to such issue or sale plus the
number of additional shares of Common Stock issued or to be issued and
the denominator of which shall be the number of shares of Common Stock
outstanding immediately prior to such issue or sale plus the number of
shares of Common Stock which the aggregate consideration for the total
number of such additional shares of Common Stock would purchase at the
Current Market Price immediately prior to such issue or sale. If at any
time an adjustment is made in the Conversion Price pursuant to this
Section 5(e)(ii), then the Call Threshold Price and the Put Price shall
be similarly adjusted by dividing the Call Threshold Price and the Put
Price by the fraction determined as provided above. No adjustment shall
be made pursuant to this Section 5(e)(ii) in connection with any
transaction to which Section 5(e)(v) applies.
(A) For the purposes of Section 5(e)(ii) above, the following
paragraphs (1) to (5), inclusive, shall also be applicable:
(1) In case at any time the Corporation shall grant any
rights to subscribe for, or any rights, warrants, or options to
purchase, Common Stock or any stock or other
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<PAGE>
securities convertible into or exchangeable for Common Stock
(such convertible or exchangeable stock or securities being
herein called 'Convertible Securities'), whether or not such
rights or options or the right to convert or exchange any such
Convertible Securities are immediately exercisable, and the price
per share for which Common Stock is issuable upon the exercise of
such rights or options or upon conversion or exchange of such
Convertible Securities (determined by dividing (A) the total
amount, if any, received or receivable by the Corporation as
consideration for the granting of such rights or options, plus
the minimum aggregate amount of additional consideration payable
to the Corporation upon the exercise of such rights or options,
plus, in the case of any such rights or options which relate to
such Convertible Securities, the minimum aggregate amount of
additional consideration, if any, payable upon the issue or sale
of such Convertible Securities and upon the conversion or
exchange thereof, by (B) the total maximum number of shares of
Common Stock issuable upon the exercise of such rights or options
or upon the conversion or exchange of all such Convertible
Securities issuable upon the exercise of such rights or options)
shall be less than the Current Market Price immediately prior to
the time of the granting of such rights or options, then the
total maximum number of shares of Common Stock issuable upon the
exercise of such rights or options or upon conversion or exchange
of the total maximum amount of such Convertible Securities
issuable upon the exercise of such rights or options shall (as of
the date of granting of such rights or options) be deemed to be
outstanding and to have been issued for such price per share.
Except as provided in clause (B) of this Section 5(e)(ii), no
further adjustments of the Conversion Price shall be made upon
the actual issue of such Common Stock or of such Convertible
Securities upon exercise of such rights or options or upon the
actual issue of such Common Stock upon conversion or exchange of
such Convertible Securities.
(2) In case at any time the Corporation shall issue or sell
any Convertible Securities, whether or not the rights to exchange
or convert thereunder are immediately exercisable, and the price
per share for which Common Stock is issuable upon such conversion
or exchange (determined by dividing (A) the total amount received
or receivable by the Corporation as consideration for the issue
or sale of such Convertible Securities, plus the minimum
aggregate amount of additional consideration, if any, payable to
the Corporation upon the conversion or exchange thereof, by (B)
the total maximum number of shares of Common Stock issuable upon
the conversion or exchange of all such Convertible Securities)
shall be less than the Current Market Price immediately prior to
the time of such issue or sale, then the total maximum number of
shares of Common Stock issuable upon conversion or exchange of
all such Convertible Securities shall (as of the date of the
issue or sale of such Convertible Securities) be deemed to be
outstanding and to have been issued for such price per share,
provided that (i) except as provided in clause (B) of this
Section 5(e)(ii), no further adjustments of the Conversion Price
shall be made upon the actual issue of such Common Stock upon
conversion or exchange of such Convertible Securities, and (ii)
if any such issue or sale of such Convertible Securities is made
upon exercise of any rights to subscribe for or to purchase or
any option to purchase any such Convertible Securities for which
adjustments of the Conversion Price have
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<PAGE>
been or are to be made pursuant to other provisions of this
Section 5(e)(ii), no further adjustment of Conversion Price shall
be made by reason of such issue or sale.
(3) In case at any time the Corporation shall declare a
dividend or make any other distribution upon any stock of the
Corporation payable in Convertible Securities, any Convertible
Securities issuable in payment of such dividend or distribution
shall be deemed to have been issued or sold without
consideration.
(4) In case at any time any shares of Common Stock or
Convertible Securities or any rights or options to purchase any
such Common Stock or Convertible Securities shall be issued or
sold for cash, the consideration received therefor shall be
deemed to be the amount received by the Corporation therefor,
without deduction therefrom of any expenses incurred or any
underwriting commissions or concessions or discounts paid or
allowed by the Corporation in connection therewith. In case any
shares of Common Stock or Convertible Securities or any rights or
options to purchase any such Common Stock or Convertible
Securities shall be issued or sold for a consideration other than
cash, the amount of the consideration other than cash received by
the Corporation shall be deemed to be the fair market value of
such non-cash consideration as determined (i) in the case of
Common Stock, Convertible Securities, rights or options having a
fair market value (as determined in good faith by the Board of
Directors) of $10,000,000 or less, in good faith by the Board of
Directors of the Corporation, and (ii) in the case of such Common
Stock, Convertible Securities, rights or options having a fair
market value in excess of $10,000,000, in good faith by the Board
of Directors of the Corporation based on, among other things, a
valuation of such non-cash consideration by a
nationally-recognized, independent investment banking firm, in
each case without deduction therefrom of any expenses incurred or
any underwriting commissions or concessions or discounts paid or
allowed by the Corporation in connection therewith. In case any
shares of Common Stock or Convertible Securities or any rights or
options to purchase any such Common Stock or Convertible
Securities shall be issued in connection with any merger of
another corporation (other than the Predecessor Corporation) into
the Corporation, the amount of consideration therefor shall be
deemed to be the fair market value of the net assets of such
merged corporation as determined (i) in the case of net assets
having a fair market value (as determined in good faith by the
Board of Directors) of $10,000,000 or less, in good faith by the
Board of Directors of the Corporation, and (ii) in the case of
net assets having a fair market value in excess of $10,000,000,
in good faith by the Board of Directors of the Corporation based
on, among other things, a valuation opinion by a
nationally-recognized, independent investment banking firm, in
each case after deducting therefrom all cash and other
consideration (if any) paid by the Corporation in connection with
any such merger, but without deducting therefrom any expenses
incurred in connection therewith.
(5) In case at any time the Corporation shall take a record
of the holders of Common Stock for the purpose of entitling them
(i) to receive a dividend or other distribution payable in
Convertible Securities, or (ii) to subscribe for or purchase
Common Stock or Convertible Securities, then such record date
shall be deemed to be the date of the issue or sale of the shares
of Common Stock deemed to have been issued or sold upon the
declaration of such dividend or the making of such other
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<PAGE>
distribution or the date of the granting of such right of
subscription or purchase, as the case may be.
(B) If the purchase price provided for in any right or option
referred to in paragraph (1) of clause (A) of this Section 5(e)(ii),
or the rate at which any Convertible Securities referred to in
paragraphs (1) or (2) of said clause (A) are convertible into or
exchangeable for Common Stock, shall change or a different purchase
price or rate shall become effective at any time or from time to time
(other than under or by reason of provisions set forth in this
Section 5(e) designed to protect against dilution), then, upon such
change becoming effective, the Conversion Price then in effect
hereunder shall forthwith be increased or decreased to such
Conversion Price as would have obtained had the adjustments made upon
the granting or issuance of such rights or options or Convertible
Securities been made upon the basis of (1) the issuance of the number
of shares of Common Stock theretofore actually delivered upon the
exercise of such options or rights or upon the conversion or exchange
of such Convertible Securities, and the total consideration received
therefor, and (2) the granting or issuance at the time of such change
of any such options, rights, or Convertible Securities then still
outstanding for the consideration, if any, received by the
Corporation therefor and to be received on the basis of such changed
price. On the expiration of any right, warrant or option referred to
in paragraph (1) of clause (A) of this Section 5(e)(ii), or on the
termination of any right to convert or exchange any Convertible
Securities referred to in paragraphs (1) or (2) of said clause (A),
the Conversion Price shall forthwith be readjusted to such amount as
would have been obtained had the adjustment made upon the granting or
issuance of such rights or options or Convertible Securities been
made upon the basis of the issuance or sale of only the number of
shares of Common Stock actually issued upon the exercise of such
options or rights or upon the conversion or exchange of such
Convertible Securities. If the purchase price provided for in any
such right or option, or the rate at which any such Convertible
Securities are convertible into or exchangeable for Common Stock,
shall change at any time under or by reason of provisions with
respect thereto designed to protect against dilution, then in case of
the delivery of Common Stock upon the exercise of any such right or
option or upon conversion or exchange of any such Convertible
Security, the Conversion Price then in effect hereunder shall
forthwith be decreased to such Conversion Price as would have been
obtained had the adjustments made upon the issuance of such right or
option or Convertible Security been made upon the basis of the
issuance of (and the total consideration received for) the shares of
Common Stock delivered as aforesaid.
(iii) In case the Corporation shall at any time or from time to
time after the Effective Date declare, order, pay or make a dividend or
other distribution in cash or otherwise (including, without limitation,
any distribution of stock or other securities or property or rights or
warrants to subscribe for securities of the Corporation or any of its
Subsidiaries (as defined in Part D hereof) by way of dividend or
spinoff), on its Common Stock, other than (A) dividends payable in cash
not in excess of 50% of Earnings (as defined in Part D hereof) on an
accumulated basis commencing on May 1, 1993, or (B) dividends or
distributions of shares of Common Stock which are referred to in Section
5(e)(i), then, and in each such case, the Conversion Price shall be
adjusted by multiplying (1) the applicable Conversion Price on the day
immediately prior to the record date fixed for the determination of
stockholders entitled to
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receive such dividend or distribution by (2) a fraction, the denominator
of which shall be the Current Market Price per share of Common Stock,
and the numerator of which shall be such Current Market Price per share
of Common Stock less the fair market value per share of Common Stock of
such dividend or distribution (as determined in good faith by the Board
of Directors of the Corporation, a certified resolution with respect to
which shall be mailed to each holder of shares of Cumulative Convertible
Preferred Stock and, in each case where such fair market value is in
excess of $10,000,000, a valuation opinion of a nationally-recognized,
independent investment banking firm), and the Call Threshold Price and
the Put Price shall be similarly adjusted by multiplying the Call
Threshold Price and the Put Price by such fraction. No adjustment shall
be made pursuant to this Section 5(e)(iii) in connection with any
transaction to which Section 5(e)(v) applies. For purposes of
determining the percentage of Earnings distributed by dividend in excess
of the limitation set forth in Section 5(e)(iii) above, the Corporation
shall deliver to the holders of record of the Cumulative Convertible
Preferred Stock substantially contemporaneously with the filing of the
Annual Report on Form 10-K of the Corporation with the Securities and
Exchange Commission a certificate prepared by the regular independent
certified public accountants of the Corporation that shall set forth the
Earnings of the Corporation (including for such purpose the Predecessor
Corporation (as defined in Part D)) on a cumulative basis commencing May
1, 1993, the dividends paid by the Corporation and the Predecessor
Corporation on its shares of capital stock on a cumulative basis from
and after such date both in absolute amount and as a percentage of such
Earnings, and the amount of the adjustment, if any, which would be
required under Section 5(e)(iii) if conversion of the Cumulative
Convertible Preferred Stock had occurred as of the close of business on
the last day of the most recently concluded fiscal year of the
Corporation. Notwithstanding anything herein to the contrary, no
adjustment shall be made pursuant to this Section 5(e)(iii) in
connection with any payment of cash dividends by the Corporation unless
one or more holders of Cumulative Convertible Preferred Stock have
elected to convert their Cumulative Convertible Preferred Stock pursuant
to Section 5(a) of this Part C or the Corporation has exercised its
right to require conversion pursuant to Section 5(b) of this Part C, in
which case the adjustment, if any, required by this Section 5(e)(iii)
shall be made immediately prior to the Conversion Date and shall be
certified by the Corporation's regular independent certified public
accountants.
(iv) For the purpose of any computation under Sections 5(e)(ii) and
5(e)(iii) (and under Section 3(d) of Part A), the Current Market Price
per share of the Common Stock on any date shall be deemed to be the
average of the daily Closing Prices of such stock for the twenty
consecutive Trading Days commencing thirty Trading Days prior to the
date in question.
(v) In the case of any consolidation of the Corporation with, or
merger of the Corporation into, any other entity, any merger of another
entity into the Corporation (other than a merger which does not result
in any reclassification, conversion, exchange or cancellation of
outstanding shares of Common Stock of the Corporation, other than a
change in par value or from par value to no par value or from no par
value to par value, or as a result of a subdivision or combination) or
any sale or transfer of all or substantially all of the assets of the
Corporation, each holder of a share of Cumulative Convertible Preferred
Stock then outstanding shall have the right thereafter to convert such
share only into the kind and amount of securities, cash and other
property receivable upon such consolidation, merger, sale or transfer by
a holder of the number of shares of Common Stock of the Corporation into
which
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such shares of Cumulative Convertible Preferred Stock might have been
converted immediately prior to such consolidation, merger, sale or
transfer, assuming such holder of Common Stock of the Corporation is not
an entity with which the Corporation consolidated or into which the
Corporation merged or which merged into the Corporation or to which such
sale or transfer was made, as the case may be ('constituent entity'), or
an affiliate of a constituent entity, and failed to exercise his rights
of election, if any, as to the kind or amount of securities, cash and
other property receivable upon such consolidation, merger, sale or
transfer (provided that if the kind or amount of securities, cash and
other property receivable upon such consolidation, merger, sale or
transfer is not the same for each share of Common Stock of the
Corporation held immediately prior to such consolidation, merger, sale
or transfer by other than a constituent entity or an affiliate thereof
and in respect of which such rights of election shall not have been
exercised ('non-electing share'), then for the purpose of this Section
(5)(e) the kind and amount of securities, cash and other property
receivable upon such consolidation, merger, sale or transfer by each
non-electing share shall be deemed to be the kind and amount so
receivable per share by a plurality of the non-electing shares). If
necessary, appropriate adjustment shall be made in the application of
the provisions set forth herein with respect to the rights and interests
thereafter of the holders of shares of Cumulative Convertible Preferred
Stock to the end that the provisions set forth herein shall thereafter
correspondingly be made applicable, as nearly as may reasonably be
appropriate, in relation to any shares of stock or other securities or
property thereafter deliverable on the conversion of the shares. The
above provisions shall similarly apply to successive consolidations,
mergers, sales or transfers. The Corporation shall not effect any such
consolidation, merger, sale or transfer, unless prior to or
simultaneously with the consummation thereof the successor corporation
(if other than the Corporation) resulting from such consolidation or
merger or the corporation purchasing such assets or other appropriate
corporation or entity shall assume, by written instrument, the
obligation to deliver to the holder of each share of Cumulative
Convertible Preferred Stock such shares of stock, securities or assets
as, in accordance with the foregoing provisions, such holder may be
entitled to receive under this Section 5(e).
(vi) The Corporation may make such adjustments in the Conversion
Price, Call Threshold Price or Put Price, in addition to those required
by subparagraphs (i) through (v) of this Section 5(e), as it considers
to be advisable in order that any event treated for Federal income tax
purposes as a dividend of stock or stock rights shall not be taxable to
the recipients.
(vii) No adjustment in the Conversion Price, Call Threshold Price
or Put Price will be made for the issuance of shares of capital stock
(or rights, warrants or other securities convertible into or
exchangeable for shares of capital stock) (i) to employees, officers,
directors or consultants pursuant to the Corporation's or any
Subsidiaries' employee benefit plans, employee compensation arrangements
or stock option plans or programs in effect from time to time or (ii)
pursuant to underwritten public offerings of shares of capital stock of
the Corporation.
(viii) No adjustment will be required to be made in the Conversion
Price, Call Threshold Price or Put Price until cumulative adjustments
require an adjustment of at least 1% of such Conversion Price, Call
Threshold Price or Put Price.
(ix) For purposes of this Section 5(e), the number of shares of
Common Stock at any time outstanding shall not include any shares of
Common Stock then owned or held by or for the
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account of the Corporation but the sale or issue of such shares shall be
a sale or issue for the purposes of Section 5(e)(ii).
(x) The certificate of any firm of independent public accountants
of recognized standing selected by the Board of Directors of the
Corporation (which may be the firm of independent public accountants
regularly employed by the Corporation) shall be presumptively correct
for any computation made under this Section 5(e).
(xi) If the Corporation shall take a record of the holders of its
Common Stock for the purpose of entitling them to receive a dividend or
other distribution, and shall thereafter and before the distribution to
stockholders thereof legally abandon its plan to pay or deliver such
dividend or distribution, then no adjustment pursuant to this Section
5(e) in the number of shares of Common Stock issuable upon exercise of
the right of conversion granted by this Section 5(e) or in the
Conversion Price, Call Threshold Price or Put Price then in effect shall
be required by reason of the taking of such record.
(f) Fractional Shares. No fractional shares or scrip representing
fractional shares shall be issued upon the conversion of any shares of
Cumulative Convertible Preferred Stock, but the holder thereof will receive
in cash an amount equal to the value of such fractional share of Common
Stock based on the Current Market Price. If more than one share of
Cumulative Convertible Preferred Stock shall be surrendered for conversion
at one time by the same holder, the number of full shares issuable upon
conversion thereof shall be computed on the basis of the aggregate number
of such shares so surrendered.
(g) Payment of Taxes. The Corporation shall pay any tax in respect of
the issue of stock certificates on conversion of shares of Cumulative
Convertible Preferred Stock. The Corporation shall not, however, be
required to pay any tax which may be payable in respect of any transfer
involved in the issue and delivery of stock in any name other than that of
the holder of the shares converted, and the Corporation shall not be
required to issue or deliver any such stock certificate unless and until
the person or persons requesting the issuance thereof shall have paid the
Corporation the amount of any such tax or shall have established to the
satisfaction of the Corporation that such tax has been paid.
(h) Class A Common Stock and Class B Common Stock Reserved for
Conversion. The Corporation shall at all times reserve and keep available
out of its authorized and unissued Class A Common Stock and Class B Common
Stock or have available in its treasury the full number of shares of Class
A Common Stock and Class B Common Stock deliverable upon the conversion of
all outstanding shares of Cumulative Convertible Preferred Stock and Class
B Common Stock and shall take all such action as may be required from time
to time in order that it may validly and legally issue fully paid and
non-assessable shares of Class A Common Stock and shares of Class B Common
Stock, as the case may be, upon conversion of the Cumulative Convertible
Preferred Stock or Class B Common Stock, as the case may be.
(i) Notice of Adjusted Conversion Price, Call Threshold Price and Put
Price. If, and at any time, the Conversion Price, Call Threshold Price or
Put Price is adjusted as herein provided a notice stating that the
Conversion Price, Call Threshold Price or Put Price, as the case may be,
has been adjusted and setting forth the adjusted Conversion Price, Call
Threshold Price or Put Price, as the case may be, shall be mailed forthwith
by the Corporation by first class mail postage prepaid (or, if such shares
are held of record by 10 Persons or less, by certified mail) to the holders
of Cumulative Convertible Preferred Stock at their last addresses as they
shall appear upon the
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Corporation's stock transfer books. Failure to mail the notice or any
defect in such notice shall not affect the validity of any transaction
referred to in such notice.
(j) Notice of Certain Events. In the event:
(i) the Corporation shall declare a dividend (or any other
distribution, including a spinoff or distribution of stock of any
Subsidiary) on its Common Stock (other than a cash dividend payable out
of Earnings not requiring an adjustment pursuant to Section 5(e)(iii));
or
(ii) the Corporation shall authorize the issuance to holders of its
Common Stock of rights or warrants to subscribe for or purchase Common
Stock or convertible securities; or
(iii) of any reclassification of the Common Stock or of any
consolidation or merger to which the Corporation is a party or of the
sale or transfer of all or substantially all of the assets of the
Corporation and for which approval of any stockholders of the
Corporation is required; or
(iv) of the voluntary or involuntary dissolution, liquidation or
winding up of the Corporation; then, and in each event, the Corporation
shall cause to be mailed to each holder of Cumulative Convertible
Preferred Stock, at his address as the same shall appear on the books of
the Corporation, as promptly as possible but in any event at least
fifteen days prior to the applicable date hereinafter specified, by
first class mail postage prepaid (or, if such shares are held of record
by 10 Persons or less, by certified mail), a notice stating (A) the date
on which a record is to be taken for the purpose of such dividend,
distribution, issuance, or, if a record is not to be taken, the date as
of which the holders of Class A Common Stock or Class B Common Stock of
record to be entitled to such dividend, distribution or issuance are to
be determined, and the nature and amount of such dividend, distribution
or issuance or (B) the date on which such reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation or
winding up is expected to become effective, and the date as of which it
is expected that holders of Class A Common Stock or Class B Common Stock
of record shall be entitled to exchange their Class A Common Stock or
Class B Common Stock, as the case may be, for securities or other
property deliverable upon such reclassification, consolidation, merger,
sale, transfer, dissolution, liquidation or winding up.
D. Definitions. As used herein the following terms shall have the following
meanings:
(a) 'Affiliate' of a specified Person shall mean any other Person who
directly, or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with the Person specified.
(b) 'Associate' when used to indicate a relationship with any Person
shall mean (i) any corporation or organization of which such Person is an
officer or partner or is, directly or indirectly, the beneficial owner of
ten (10) percent or more of any class of equity securities, (ii) any trust
or other estate in which such Person has a substantial beneficial interest
or as to which such Person serves as trustee or in a similar fiduciary
capacity, (iii) any spouse, parents, children, siblings, mothers-and
fathers-in-law, sons-and daughters-in-law, and brothers-and sisters-in-law
or (iv) any officer or director of any corporation controlling or
controlled by such Person.
(c) 'Business Day' shall mean each Monday, Tuesday, Wednesday,
Thursday and Friday that is not a day on which banking organizations in New
York, New York are authorized or obligated by law or executive order to
close.
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(d) 'Closing Price' shall mean the reported last sale price regular
way or, in case no such reported sale takes place on such day, the average
of the reported closing bid and asked prices regular way, in either case on
the New York Stock Exchange, Inc. or, if the Class A Common Stock or Class
B Common Stock, as the case may be, is not listed or admitted to trading on
such exchange, on the principal national securities exchange on which the
Class A Common Stock or Class B Common Stock, as the case may be, is listed
or admitted to trading, or, if not listed or admitted to trading on any
national securities exchange, on the National Association of Securities
Dealers Automated Quotations National Market System, or, if the Class A
Common Stock or Class B Common Stock, as the case may be, is not listed or
admitted to trading on any national securities exchange or quoted on such
National Market System, the average of the closing bid and asked prices in
the over-the-counter market as furnished by any New York Stock Exchange
member firm selected from time to time by the Board for that purpose, or,
if the Corporation's Class A Common Stock is not priced in such a market,
the value determined, in good faith by the Board of Directors or, if the
Corporation's Class B Common Stock is not priced in such a market, the
value of the Class A Common Stock determined in accordance herewith.
(e) 'Common Stock' shall mean stock of the Corporation of any class,
whether now or hereafter authorized, which has the right to participate in
the distribution of either earnings or assets of the Corporation without
limit as to the amount or percentage, including, without limitation, the
Class A Common Stock and the Class B Common Stock.
(f) 'Dividend Period' shall mean the six-month period ending on March
30 or September 30, as the case may be, of each year, commencing with the
period ending September 30, 1994.
(g) 'Earnings' shall mean the consolidated net income of the
Corporation (including the Predecessor Corporation) and the Subsidiaries as
reflected on the statement of operations and retained earnings prepared in
accordance with generally accepted accounting principles and reported in
the Corporation's (including the Predecessor Corporation's) financial
statements as filed with the Securities and Exchange Commission.
(h) 'Effective Date' means the date on which the merger of the
Predecessor Corporation with and into the Corporation shall have been
consummated and become effective pursuant to the provisions of the
Agreement and Plan of Merger by and between the Predecessor Corporation and
the Corporation.
(i) 'Exchange Group' shall mean Security Management Corp., a Maryland
corporation ('SMC'), Victor Posner Trust No. 20, a trust organized under
the laws of the State of Florida (the 'Trust'), beneficiaries of the Trust,
Victor Posner ('Posner') and any person (including any individual,
corporation, partnership, firm, joint venture, association, joint-stock
company, trust, unincorporated organization, governmental or regulatory
body or other entity) controlling, controlled by, or under common control
with SMC, Posner, the Trust or beneficiaries of the Trust and the spouse,
lineal descendants and other relatives or family members of Posner.
(j) 'Original Issue Date' means April 23, 1993.
(k) 'Person' shall mean any individual, corporation, partnership,
firm, joint venture, association, joint-stock company, trust,
unincorporated organization, governmental or regulatory body or other
entity.
(l) 'Predecessor Call Threshold Price' means the Call Threshold Price
for the Predecessor Convertible Preferred Stock in effect immediately prior
to the Effective Date.
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<PAGE>
(m) 'Predecessor Common Stock' means the shares of Class A Common
Stock, par value $.10 per share, and Class B Common Stock, par value $.10
per share, of the Predecessor Corporation.
(n) 'Predecessor Conversion Price' means the price per share at which
shares of Predecessor Convertible Preferred Stock were convertible into
shares of Predecessor Common Stock immediately prior to the Effective Date.
(o) 'Predecessor Convertible Preferred Stock' means the shares of
Cumulative Convertible Preferred Stock, par value $.10 per share, of the
Predecessor Corporation.
(p) 'Predecessor Corporation' means Triarc Companies, Inc., an Ohio
corporation.
(q) 'Predecessor Put Price' means the 'put price' (as defined in the
Articles of Incorporation of the Predecessor Corporation) for the
Predecessor Convertible Preferred Stock in effect immediately prior to the
Effective Date.
(r) 'Redemption Agent' shall mean any individual, corporation
(including the Corporation), partnership, joint venture, trust or
unincorporated organization that is identified in any notice of redemption
provided for herein and that is authorized by the Corporation to pay the
redemption price of, and accrued and unpaid dividends determined under
Section 2 of Part C on the Cumulative Convertible Preferred Stock on
presentation and surrender to such agent.
(s) 'Shares ranking junior to the Cumulative Preferred Stock' shall
mean and include each and every series of Preferred Stock and all other
shares of the Corporation other than those defined under this Section as
shares 'ranking prior to' or 'on a parity with' the Cumulative Convertible
Preferred Stock.
(t) 'Shares ranking on a parity with the Cumulative Convertible
Preferred Stock' shall mean and include shares of each and every series of
Preferred Stock (up to the Aggregate Dollar Amount) and all other shares
(including shares of Preferred Stock in excess of the Aggregate Dollar
Amount), if authorized and issued as provided in Section 4(b) of Part C, of
the Corporation in respect of which the rights of the holders thereof as to
the payment of dividends or as to distributions in the event of a voluntary
or involuntary liquidation, dissolution or winding up of the affairs of the
Corporation rank equally (except as to the amounts fixed therefor) with the
rights of the holders of Cumulative Convertible Preferred Stock.
(u) 'Shares ranking prior to the Cumulative Convertible Preferred
stock' shall mean and include all shares of the Corporation in respect of
which the rights of the holders thereof as to the payment of dividends or
as to distributions in the event of a voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Corporation are given
preference over the rights of the holders of Cumulative Convertible
Preferred Stock.
(v) 'Subsidiary' shall mean any corporation whose shares of capital
stock having ordinary voting power to elect a majority of the directors of
such corporation are owned, directly or indirectly, by the Corporation.
(w) 'Trading Day' shall mean each Monday, Tuesday, Wednesday, Thursday
and Friday which is a day on which the New York Stock Exchange or the
American Stock Exchange, as the case may be, is open for trading in
securities or a day on which securities are quoted on the National
Association of Securities Dealers Automated Quotation National Market
System.
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ARTICLE V
BOARD OF DIRECTORS; STOCKHOLDERS MEETINGS
SECTION 1. The business and affairs of the Corporation shall be managed by
or under the direction of the Board of Directors.
SECTION 2. The Board of Directors shall consist of not less than ten (10)
nor more than twenty (20) persons, the exact number to be fixed from time to
time by the Board of Directors pursuant to a resolution adopted by a majority of
directors then in office; provided, however, that such maximum number may be
increased from time to time to reflect the rights of holders of Preferred Stock
to elect directors in accordance with the terms of this Certificate of
Incorporation or of the Certificate of Designation pursuant to which any class
or series of Preferred Stock is issued or to the extent provided in any
resolution or resolutions adopted by the Board of Directors providing for the
issuance of any class or series of Preferred Stock pursuant to Article IV of
this Certificate of Incorporation. Notwithstanding anything to the contrary
contained in this Certificate of Incorporation, any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting if all of the members of the Board of Directors
or the committee, as the case may be, consent thereto in writing, and the
writing or writings are filed with the minutes of proceedings of the Board of
Directors or committee. Members of the Board of Directors or any committee
thereof designated by the Board of Directors, may participate in a meeting of
the Board of Directors, or of such committee, as the case may be, by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and participation in a
meeting in such a manner shall constitute presence in person at such meeting.
SECTION 3. Subject to the rights of the holders of any class or series of
Preferred Stock, any vacancy in the Board of Directors caused by death,
resignation, removal, retirement, disqualification or any other cause (including
an increase in the number of directors) may be filled solely by resolution
adopted by the affirmative vote of a majority of the directors then in office,
whether or not such majority constitutes less than a quorum, or by a sole
remaining director. Any new director elected to fill a vacancy on the Board of
Directors will serve for the remainder of the full term of that director for
which the vacancy occurred. No decrease in the size of the Board of Directors
shall have the effect of shortening the term of any incumbent director.
SECTION 4. Except as otherwise provided by law or by this Certificate of
Incorporation, a majority of the directors in office at the time of a duly
assembled meeting shall be necessary to constitute a quorum for the transaction
of business, and the act of a majority of the directors present at such meeting
shall be the act of the Board of Directors.
SECTION 5. Except as otherwise provided by law, at any annual or special
meeting of stockholders only such business shall be conducted as shall have been
properly brought before the meeting. Except as otherwise provided in this
Article V, in order to be properly brought before the meeting, such business
must have either been (A) specified in the written notice of the meeting (or any
supplement thereto) given to stockholders of record on the record date for such
meeting by or at the direction of the Board of Directors, (B) brought before the
meeting at the direction of the Chairman, the President or the Board of
Directors or (C) specified in a written notice given by or on behalf of a
stockholder of record on the record date for such meeting entitled to vote
thereat or a duly authorized proxy for such stockholder, in accordance with all
of the following requirements. A notice referred to in clause (C) of the
preceding sentence must be delivered personally to, or mailed to and received
at, the principal
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<PAGE>
executive office of the Corporation, addressed to the attention of the
Secretary, not less than 45 days nor more than 60 days prior to the meeting;
provided, however, that in the event that less than 55 days' notice or prior
public disclosure of the date of the meeting is given or made to stockholders,
notice by the stockholder to be timely must be so received not later than the
close of business on the 10th day following the day on which such notice of the
date of the annual or special meeting was mailed or such public disclosure was
made, whichever first occurs. Such notice referred to in clause (C) of the first
sentence of this Section 5 shall set forth (i) a full description of each such
item of business proposed to be brought before the meeting and the reasons for
conducting such business at such meeting, (ii) the name and address of the
person proposing to bring such business before the meeting, (iii) the class and
number of shares held of record, held beneficially and represented by proxy by
such person as of the record date for the meeting (if such date has then been
made publicly available) and as of the date of such notice, (iv) if any item of
such business involves a nomination for director, all information regarding each
such nominee that would be required to be set forth in a definitive proxy
statement filed with the SEC pursuant to Section 14 of the Securities Exchange
Act of 1934, as amended, or any successor thereto, and the written consent of
each such nominee to serve if elected, (v) any material interest of the
stockholder in such item of business and (vi) all other information that would
be required to be filed with the SEC if, with respect to the business proposed
to be brought before the meeting, the person proposing such business was a
participant in a solicitation subject to Section 14 of the Securities Exchange
Act of 1934, as amended, or any successor thereto. No business shall be brought
before any meeting of stockholders of the Corporation otherwise than as provided
in this Section 5. The Corporation may require a proposed nominee for director
to furnish such other information as may be required to be set forth in a
stockholder's notice of nomination which pertains to the nominee or which may be
reasonably required to determine the eligibility of such proposed nominee to
serve as a director of the Corporation. At the request of the Board of
Directors, any individual nominated by the Board of Directors for election as a
director shall furnish to the Secretary of the Corporation that information
required to be set forth in a stockholder's notice of nomination which pertains
to a nominee. The Chairman of the meeting may, if the facts warrant, determine
that a nomination or stockholder proposal was not made in accordance with the
foregoing procedure, and if he should so determine, he shall so declare to the
meeting and the defective nomination or proposal shall be disregarded.
SECTION 6. The annual meeting of stockholders of the Corporation for the
election of directors and the transaction of such other business as may be
brought before the meeting in accordance with this Certificate of Incorporation
shall be held on the date and the time fixed from time to time by the Board of
Directors, by a resolution adopted by the affirmative vote of a majority of the
Entire Board (as defined in Article VI of this Certificate of Incorporation).
SECTION 7. Except as otherwise provided by law or by Article VI of this
Certificate of Incorporation, at any meeting of stockholders of the Corporation
the presence in person or by proxy of the holders of a majority in voting power
of the outstanding stock of the Corporation entitled to vote shall constitute a
quorum for the transaction of business brought before the meeting in accordance
with this Certificate of Incorporation and, a quorum being present, the
affirmative vote of the holders of a majority in voting power present in person
or represented by proxy and entitled to vote shall be required to effect action
by stockholders; provided, however, that the affirmative vote of a plurality in
voting power present in person or represented by proxy and entitled to vote
shall be required to effect elections of directors.
SECTION 8. At every meeting of stockholders, the Chairman or, in the
absence of such officer, the President or, in the absence of both such officers,
such person as shall have been designated by the
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Chairman, or if he has not done so, then by the President, or if he has not done
so, by resolution adopted by the affirmative vote of a majority of the Entire
Board, shall act as chairman of the meeting. The chairman of the meeting shall
have sole authority to prescribe the agenda and rules of order for the conduct
of such meeting of stockholders and to determine all questions arising thereat
relating to the order of business and the conduct of the meeting, except as
otherwise required by law.
SECTION 9. Any class or series of Preferred Stock may exercise the special
voting rights, if any, of such class or series to elect directors upon the
occurrence of certain events specified in the Certificate of Designation
pursuant to which any such class or series of Preferred Stock is issued or in
this Certificate of Incorporation, as the case may be, in any manner now or
hereafter permitted by this Certificate of Incorporation, Delaware law or the
applicable Certificate of Designation for such class or series of Preferred
Stock.
SECTION 10. The exercise by the Board of Directors of the powers conferred
in this Article V shall at all times be subject to any statutory or other
limitations upon such powers provided by the laws of the State of Delaware.
SECTION 11. Members of the Board of Directors may be elected either by
written ballot or by voice vote.
SECTION 12. The Corporation may in its by-laws confer powers upon its Board
of Directors in addition to the foregoing, and in addition to the powers and
authorities expressly conferred upon it by statute.
ARTICLE VI
BUSINESS COMBINATIONS
SECTION 1. In addition to any affirmative vote required by law or under any
other provisions of this Certificate of Incorporation or required in a specific
case by the Board of Directors, and except as otherwise expressly provided in
this Article VI, a Business Combination (as hereinafter defined) shall require
the approval of the holders of the then outstanding Voting Shares (as
hereinafter defined) entitled to cast at least 75% of the votes entitled to be
cast by the holders of all of the then outstanding Voting Shares (and such
affirmative vote must include the affirmative vote of the holders of Voting
Shares entitled to cast at least a majority of the votes entitled to be cast by
the holders of all the then outstanding Voting Shares which are not Beneficially
Owned (as hereinafter defined) by any Interested Stockholder (as hereinafter
defined). Each such affirmative vote shall be required notwithstanding the fact
that no vote may be required, or that some lesser percentage may be specified,
by law or in any agreement with any national securities exchange or otherwise.
SECTION 2. The provisions of Section 1 of this Article VI shall not be
applicable if: (i) immediately prior to the time the Business Combination is
consummated, the Corporation is the Beneficial Owner (as hereinafter defined) of
a majority of each class of the outstanding Equity Securities (as hereinafter
defined) of the Interested Stockholder; (ii) the Business Combination was
approved by at least a majority of the Board of Directors (even though not the
Entire Board (as hereinafter defined)), but only if a majority of the directors
acting favorably upon such matter are Continuing Directors (as hereinafter
defined); or (iii) the consideration to be received in or as a result of the
Business Combination by the holders of each class of the Voting Shares acquired
by the Interested Stockholder is at least equal to the greater of the highest
per share price (including any brokerage commissions, transfer taxes and
soliciting dealers' fees and with appropriate adjustments for recapitalizations
and for
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<PAGE>
stock splits, reverse stock splits and stock dividends) paid by the Interested
Stockholder for any shares of such class (A) within the two-year period
immediately prior to the first public announcement of the proposal of the
Business Combination or (B) in the transaction in which it became an Interested
Stockholder, and is in cash or in the same form of consideration as the
Interested Stockholder paid to acquire the largest number of Voting Shares
previously acquired by it. If the ownership or form of consideration
requirements set forth in clauses (i) and (iii) of this Section 2 are satisfied,
the Business Combination shall require the approval of the holders of then
outstanding Voting Shares entitled to cast at least two-thirds of the votes
entitled to be cast by the holders of all of the then outstanding Voting Shares
(the 'Ratification Percentage') (and such approval must include the affirmative
vote of the holders of Voting Shares entitled to cast at least a majority of the
votes entitled to be cast by the holders of all the then outstanding Voting
Shares which are not Beneficially Owned by any Interested Stockholder). If the
Board of Directors approves the Business Combination in accordance with the
requirements set forth in clause (ii) of the preceding sentence, the Board of
Directors may, again in accordance with the voting provisions of such clause
(ii), determine to require a vote of stockholders. If a stockholder vote is
required for such Business Combination under law, the Board of Directors shall
require the affirmative vote of the then outstanding Voting Shares equal to the
higher of: (1) the Ratification Percentage (such affirmative vote shall not
require the affirmative vote of the holders of Voting Shares entitled to cast a
majority of the votes entitled to be cast by the holders of all the then
outstanding Voting Shares which are not Beneficially Owned by any Interested
Stockholder) and (2) such other percentage as is required by law. If a
stockholder vote is not required for such Business Combination under law, the
Board of Directors may, in its discretion, (x) decide not to require a
stockholder vote to approve the Business Combination or (y) require the
affirmative vote of the outstanding Voting Shares equal to (i) the Ratification
Percentage (such affirmative vote shall not require the affirmative vote of the
holders of Voting Shares entitled to cast a majority of the votes entitled to be
cast by the holders of all the then outstanding Voting Shares which are not
Beneficially Owned by any Interested Stockholder) or (ii) such other percentage
as it so determines. Each such affirmative vote shall be required
notwithstanding the fact that no vote may be required, or that some lesser
percentage may be specified, by law or in any agreement with any national
securities exchange or otherwise.
SECTION 3. For the purposes of this Article VI:
(1) 'Business Combination' shall mean:
(A) any merger or consolidation of the Corporation or any
Subsidiary (as hereinafter defined) with or into (whether or not the
Corporation is the surviving corporation) (i) any Interested Stockholder
or an Affiliate or Associate (as hereinafter defined) of an Interested
Stockholder, or an Affiliate thereof, or (ii) any other corporation
(whether or not itself an Interested Stockholder), which, after such
merger or consolidation, would be an Affiliate or Associate of an
Interested Stockholder or an Affiliate thereof; or
(B) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or a series of related transactions) to
or with any Interested Stockholder or an Affiliate or Associate of an
Interested Stockholder, or an Affiliate thereof, of any Substantial Part
(as hereinafter defined) of the assets of the Corporation or of any
Subsidiary; or
(C) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or a series of related transactions) to
the Corporation or any Subsidiary of any assets (excluding any Voting
Shares, but including without limitation any securities, whether
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outstanding, authorized but unissued or in treasury, issued by an
Interested Stockholder or by an Affiliate or Associate of an Interested
Stockholder or by an Affiliate thereof) of (i) any Interested
Stockholder or (ii) an Affiliate or Associate of an Interested
Stockholder, or an Affiliate thereof, if the amount paid therefor
constitutes a Substantial Part of the assets of the Corporation or any
Subsidiary; or
(D) the issuance or transfer by the Corporation or by any
Subsidiary (in one transaction or a series of related transactions) of
any securities of the Corporation or any Subsidiary (except upon
conversion of convertible securities as a result of a pro rata stock
dividend or stock split) to any Interested Stockholder or an Affiliate
or Associate of an Interested Stockholder, or an Affiliate thereof, in
exchange for cash, securities or other property (or a combination
thereof) having an aggregate fair market value of $5,000,000 or more; or
(E) the adoption of any plan or proposal for the liquidation,
dissolution, spinoff, split-up or split-off of the Corporation if, as of
the record date for the determination of stockholders entitled to notice
thereof and to vote thereon or, if no vote would otherwise be required,
the date the transaction is planned to be consummated, any Person (as
hereinafter defined) shall be an Interested Stockholder; or
(F) any reclassification of securities (including, without
limitation, any combination of shares or reverse stock split) or
recapitalization of the Corporation, or any reorganization, merger or
consolidation of the Corporation with any of its Subsidiaries or any
similar transaction (whether or not with or into or otherwise involving
an Interested Stockholder), which has the effect, directly or
indirectly, of increasing the proportionate share of the outstanding
securities of any class of Equity Securities of the Corporation or any
Subsidiary of which any Interested Stockholder is, directly or
indirectly, the Beneficial Owner; or
(G) any agreement, contract or other arrangement providing for any
of the transactions described in this definition of Business
Combination.
(2) A 'Person' shall mean any individual, firm, corporation or other
entity.
(3) 'Interested Stockholder' shall mean any Person (other than the
Corporation or any Subsidiary and other than any pension, profit sharing,
employee stock ownership or other employee benefit plan of the Corporation
or any Subsidiary or any trustee of or fiduciary with respect to any such
plan when acting in such capacity) who or which, as of the record date for
the determination of stockholders entitled to notice of and to vote on any
Business Combination, or immediately prior to the consummation of any such
Business Combination (other than a Business Combination referred to in
subparagraph (1)(E) of this Section 3) is the Beneficial Owner of more than
ten (10) percent of the voting power of the Voting Shares (determined
solely on the basis of the total number of Voting Shares so beneficially
owned in relation to the total number of Voting Shares issued and
outstanding); provided, however, that DWG Acquisition Group, L.P., a
Delaware limited partnership, or any Affiliate or Associate thereof, shall
not be considered an Interested Stockholder for purposes of this Article
VI.
(4) 'Beneficial Ownership' shall be determined, and a Person shall be
the 'Beneficial Owner' of all securities which such Person is deemed to own
beneficially, pursuant to Rule 13d-3 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as amended (or any successor
rule or statutory provision) or, if said Rule 13d-3 shall be rescinded and
there shall be no successor rule or statutory provision thereto, pursuant
to said Rule 13d-3 as in effect on the date of
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the merger of Triarc Companies, Inc., an Ohio corporation, with and into
the Corporation (the 'Merger'); provided, however, that a Person shall, in
any event, also be deemed to be the 'Beneficial Owner' of any Voting
Shares:
(A) of which such Person or any of its Affiliates or Associates is,
directly or indirectly, the Beneficial Owner, or
(B) of which such Person or any of its Affiliates or Associates has
(i) the right to acquire (whether such right is exercisable immediately
or only after the passage of time), pursuant to any agreement,
arrangement or understanding (but shall not be deemed to be the
Beneficial Owner of any Voting Shares solely by reason of an agreement,
arrangement or understanding with the Corporation to effect a Business
Combination) or upon the exercise of conversion rights, exchange rights,
warrants, or options, or otherwise, or (ii) sole or shared voting or
investment power with respect thereto pursuant to any agreement,
arrangement, understanding, relationship or otherwise (but shall not be
deemed to be the Beneficial Owner of any Voting Shares solely by reason
of a revocable proxy granted for a particular meeting of stockholders,
pursuant to a public solicitation of proxies for such meeting, with
respect to shares of which neither such Person nor any such Affiliate or
Associate is otherwise deemed the Beneficial Owner), or
(C) of which any other Person is, directly or indirectly, the
Beneficial Owner if such first mentioned Person or any of its Affiliates
or Associates acts with such other Person as a partnership, syndicate or
other group pursuant to any agreement, arrangement or understanding for
the purpose of acquiring, holding, voting or disposing of any shares of
capital stock of the Corporation;
and provided further, however, that (i) no director or officer of the
Corporation, nor any Associate or Affiliate of any such director or
officer, shall, solely by reason of any or all of such directors and
officers acting in their capacities as such, be deemed for any purposes
hereof, to be the Beneficial Owner of any Voting Shares of which any other
such director or officer (or any Associate or Affiliate thereof) is the
Beneficial Owner and (ii) no trustee of an employee stock ownership or
similar plan of the Corporation or any Subsidiary ('Employee Plan Trustee')
nor any Associate or Affiliate of any such Employee Plan Trustee, shall,
solely by reason of being an Employee Plan Trustee or Associate or
Affiliate of an Employee Plan Trustee, be deemed for any purposes hereof,
to be the Beneficial Owner of any Voting Shares held by or under any such
plan.
(5) 'Continuing Director' shall mean a Person who was a member of the
Board of Directors of the Corporation as of the date of the Merger, or a
person thereafter elected by the stockholders or appointed by the Board of
Directors whose election or appointment or recommendation by the Board of
Directors for election by the Corporation's stockholders was approved of by
at least a majority of the Continuing Directors then on the Board of
Directors.
(6) 'Entire Board' shall mean the number of directors determined from
time to time by the Board of Directors pursuant to a resolution adopted
pursuant to Section 2 of Article V of this Certificate of Incorporation.
(7) An 'Affiliate' of a specified Person is a Person who directly, or
indirectly through one or more intermediaries, controls, or is controlled
by, or is under common control with, the Person specified. The term
'Associate' used to indicate a relationship with any Person shall mean (i)
any corporation or organization (other than the Corporation or a
Subsidiary) of which such Person is
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an officer or partner or is, directly or indirectly, the Beneficial Owner
of ten (10) percent or more of any class of Equity Securities, (ii) any
trust or other estate in which such Person has a substantial beneficial
interest or as to which such Person serves as trustee or in a similar
fiduciary capacity (other than an Employee Plan Trustee, as defined above),
(iii) any Relative (as hereinafter defined) of such Person or (iv) any
officer or director of any corporation controlling or controlled by such
Person.
(8) 'Relative' shall mean a Person's spouse, parents, children,
siblings, mothers-and fathers-in-law, sons-and daughters-in-law, and
brothers-and sisters-in-law.
(9) 'Subsidiary' shall mean any corporation of which a majority of any
class of Equity Security is owned, directly or indirectly, by the
Corporation; provided, however, that for the purposes of the definition of
Interested Stockholder set forth in paragraph (3) of this Section 3, the
term 'Subsidiary' shall mean only a corporation of which a majority of each
class or series of Equity Security is owned, directly or indirectly, by the
Corporation.
(10) 'Substantial Part' shall mean assets having a book value
(determined in accordance with generally accepted accounting principles) in
excess of 10% of the book value (determined in accordance with generally
accepted accounting principles) of the total consolidated assets of the
entity in question and its consolidated Subsidiaries, at the end of its
most recent fiscal year ending prior to the time the determination is made.
(11) 'Voting Shares' shall mean any issued and outstanding shares of
capital stock of the Corporation entitled to vote generally in the election
of directors; provided, however, that for purposes of computing the number
of Voting Shares of which a Person is a Beneficial Owner in order to
determine whether such Person is an Interested Stockholder, the outstanding
Voting Shares owned by the Interested Stockholder shall include shares
deemed owned by such Person through the application of paragraph (4) of
this Section 3.
(12) 'Equity Security' shall have the meaning given to such term under
Rule 3a11-1 of the General Rules and Regulations under the Securities
Exchange Act of 1934, as in effect on January 1, 1994.
SECTION 4. A majority of the Entire Board shall have the power to
determine, but only if a majority of the Entire Board shall then consist of
Continuing Directors, or, if a majority of the Entire Board shall not then
consist of Continuing Directors, a majority of the then Continuing Directors
shall have the power to determine, for the purposes of this Article VI on the
basis of information known to them, (i) the number of Voting Shares of which any
Person is the Beneficial Owner, (ii) whether a Person is an Affiliate or
Associate of another, (iii) whether a Person has an agreement, arrangement or
understanding with another as to any matter referred to in subparagraph (4)(C)
of Section 3 of this Article VI, (iv) whether the assets subject to any Business
Combination constitute a Substantial Part of the assets of the entity in
question, and/or (v) any other factual matter relating to the applicability or
effect of this Article VI. Any determinations made by the Board of Directors, or
by the Continuing Directors, as the case may be, pursuant to this Article VI in
good faith and the basis of such information and assistance as was then
reasonably available for such purpose shall be conclusive and binding upon the
Corporation and its stockholders, including any Interested Stockholder.
SECTION 5. Any amendment, alteration, change or repeal of this Article VI,
or any other amendment of this Certificate of Incorporation made at a time when
the Corporation has an Interested Stockholder, shall, in addition to any other
vote or approval required by law or by this Certificate of
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Incorporation, require the affirmative vote of the holders of the then
outstanding Voting Shares entitled to cast at least 75% of the votes entitled to
be cast by the holders of all of the then outstanding Voting Shares (and such
affirmative vote must include the affirmative vote of the holders of Voting
Shares entitled to cast at least a majority of the votes entitled to be cast by
the holders of all Voting Shares exclusive of those of which any Interested
Stockholder is the Beneficial Owner); provided, however, that such 75% vote (and
such additional affirmative vote of the holders of Voting Shares entitled to
cast at least a majority of the votes entitled to be cast by the holders of all
Voting Shares exclusive of those of which any Interested Stockholder is the
Beneficial Owner) shall not be required for any amendment, alteration, change or
repeal declared advisable by the Board of Directors by the affirmative vote of a
majority of the Entire Board and submitted to the stockholders for their
consideration, but only if a majority of the members of the Board of Directors
acting favorably upon such matter shall be Continuing Directors, in which case
this Article VI, or any other provision of this Certificate of Incorporation,
may be amended by the affirmative vote of stockholders holding at least a
majority of the voting power of the outstanding Voting Shares (such affirmative
vote shall not require the affirmative vote of the holders of Voting Shares
entitled to cast at least a majority of the votes entitled to be cast by the
holders of all the then outstanding Voting Shares exclusive of those of which
any Interested Stockholder is the Beneficial Owner); and provided, further, that
the Ratification Percentage may be amended, altered, repealed or changed by the
affirmative vote of the holders of at least two-thirds of the voting power of
the outstanding Voting Shares (such affirmative vote shall not require the
affirmative vote of the holders of Voting Shares entitled to cast at least a
majority of the votes entitled to be cast by the holders of all the then
outstanding Voting Shares exclusive of those of which any Interested Stockholder
is the Beneficial Owner).
ARTICLE VII
INDEMNIFICATION
SECTION 1. To the extent not prohibited by law, the Corporation shall
indemnify any person who is or was made, or threatened to be made, a party to
any threatened, pending or completed action, suit or proceeding (a
'Proceeding'), whether civil, criminal, administrative or investigative,
including, without limitation, an action by or in the right of the Corporation
to procure a judgment in its favor, by reason of the fact that such person, or a
person of whom such person is the legal representative, is or was a Director or
officer of the Corporation, or is or was serving in any capacity at the request
of the Corporation for any other corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise (an 'Other Entity'), against
judgments, fines, penalties, excise taxes, amounts paid in settlement and costs,
charges and expenses (including attorneys' fees and disbursements). Persons who
are not Directors or officers of the Corporation may be similarly indemnified in
respect of service to the Corporation or to an Other Entity at the request of
the Corporation to the extent the Board at any time specifies that such persons
are entitled to the benefits of this Article VII.
SECTION 2. The Corporation shall, from time to time, reimburse or advance
to any Director or officer or other person entitled to indemnification hereunder
the funds necessary for payment of expenses, including attorneys' fees and
disbursements, incurred in connection with any Proceeding, in advance of the
final disposition of such Proceeding; provided, however, that, if required by
the Delaware General Corporation Law, such expenses incurred by or on behalf of
any Director or officer or other person may be paid in advance of the final
disposition of a Proceeding only upon receipt by the Corporation of an
undertaking, by or on behalf of such Director or officer (or other person
indemnified
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hereunder), to repay any such amount so advanced if it shall ultimately be
determined by final judicial decision from which there is no further right of
appeal that such Director, officer or other person is not entitled to be
indemnified for such expenses.
SECTION 3. The rights to indemnification and reimbursement or advancement
of expenses provided by, or granted pursuant to, this Article VII shall not be
deemed exclusive of any other rights to which a person seeking indemnification
or reimbursement or advancement of expenses may have or hereafter be entitled
under any statute, this Certificate of Incorporation, the By-laws of the
Corporation (the 'By-laws'), any agreement, any vote of stockholders or
disinterested Directors or otherwise, both as to action in his or her official
capacity and as to action in another capacity while holding such office.
SECTION 4. The rights to indemnification and reimbursement or advancement
of expenses provided by, or granted pursuant to, this Article VII shall continue
as to a person who has ceased to be a Director or officer (or other person
indemnified hereunder) and shall inure to the benefit of the executors,
administrators, legatees and distributees of such person.
SECTION 5. The Corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a Director, officer, employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or agent of an Other Entity, against any
liability asserted against such person and incurred by such person in any such
capacity, or arising out of such person's status as such, whether or not the
Corporation would have the power to indemnify such person against such liability
under the provisions of this Article VII, the By-laws or under Section 145 of
the Delaware General Corporation Law or any other provision of law.
SECTION 6. The provisions of this Article VII shall be a contract between
the Corporation, on the one hand, and each Director and officer who serves in
such capacity at any time while this Article VII is in effect and any other
person indemnified hereunder, on the other hand, pursuant to which the
Corporation and each such Director, officer, or other person intend to be
legally bound. No repeal or modification of this Article VII shall affect any
rights or obligations with respect to any state of facts then or theretofore
existing or thereafter arising or any proceeding theretofore or thereafter
brought or threatened based in whole or in part upon any such state of facts.
SECTION 7. The rights to indemnification and reimbursement or advancement
of expenses provided by, or granted pursuant to, this Article VII shall be
enforceable by any person entitled to such indemnification or reimbursement or
advancement of expenses in any court of competent jurisdiction. The burden of
proving that such indemnification or reimbursement or advancement of expenses is
not appropriate shall be on the Corporation. Neither the failure of the
Corporation (including its Board of Directors, its independent legal counsel and
its stockholders) to have made a determination prior to the commencement of such
action that such indemnification or reimbursement or advancement of expenses is
proper in the circumstances nor an actual determination by the Corporation
(including its Board of Directors, its independent legal counsel and its
stockholders) that such person is not entitled to such indemnification or
reimbursement or advancement of expenses shall constitute a defense to the
action or create a presumption that such person is not so entitled. Such a
person shall also be indemnified for any expenses incurred in connection with
successfully establishing his or her right to such indemnification or
reimbursement or advancement of expenses, in whole or in part, in any such
proceeding.
SECTION 8. Any Director or officer of the Corporation serving in any
capacity (a) another corporation of which a majority of the shares entitled to
vote in the election of its directors is held,
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directly or indirectly, by the Corporation or (b) any employee benefit plan of
the Corporation or any corporation referred to in clause (a) shall be deemed to
be doing so at the request of the Corporation.
SECTION 9. Any person entitled to be indemnified or to reimbursement or
advancement of expenses as a matter of right pursuant to this Article VII may
elect to have the right to indemnification or reimbursement or advancement of
expenses interpreted on the basis of the applicable law in effect at the time of
the occurrence of the event or events giving rise to the applicable Proceeding,
to the extent permitted by law, or on the basis of the applicable law in effect
at the time such indemnification or reimbursement or advancement of expenses is
sought. Such election shall be made, by a notice in writing to the Corporation,
at the time indemnification or reimbursement or advancement of expenses is
sought; provided, however, that if no such notice is given, the right to
indemnification or reimbursement or advancement of expenses shall be determined
by the law in effect at the time indemnification or reimbursement or advancement
of expenses is sought.
ARTICLE VIII
LIMITATION ON LIABILITY OF DIRECTORS
SECTION 1. A director of the Corporation shall not be personally liable to
the Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the Delaware General Corporation
Law, or (iv) for any transaction from which the director derived any improper
personal benefit. If the Delaware General Corporation Law is amended after
approval by the stockholders of this Article VIII to authorize corporate action
further eliminating or limiting the personal liability of directors, then the
liability of a director of the Corporation shall be eliminated or limited to the
fullest extent authorized by the Delaware General Corporation Law, as so
amended.
SECTION 2. Any repeal or modification of the foregoing paragraph by the
stockholders of the Corporation shall be prospective only and shall not
adversely affect any right or protection of a director of the Corporation
existing at the time of such repeal or modification.
ARTICLE IX
ADOPTION, AMENDMENT AND/OR REPEAL OF BY-LAWS
The Board of Directors may from time to time (after adoption by the
undersigned of the original By-laws) make, alter or repeal the By-laws by a vote
of two-thirds of the entire Board of Directors that would be in office if no
vacancy existed, whether or not present at a meeting; provided, however, that
any By-laws made, amended or repealed by the Board of Directors may be amended
or repealed, and any By-laws may be made, by the stockholders of the Corporation
by vote of a majority of the holders of shares of stock of the Corporation
entitled to vote in the election of Directors of the Corporation.
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ARTICLE X
INCORPORATOR
The name and mailing address of the incorporator are: Mary C. Wade, c/o
Triarc Companies, Inc., 900 Third Avenue, 31st Floor, N.Y., N.Y. 10022.
WITNESS the signature of this Certificate this 6th of May, 1994.
/s/ MARY C. WADE
.....................................
Incorporator
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EXHIBIT C
TRIARC MERGER CORPORATION
BY-LAWS
ARTICLE I
OFFICES
SECTION 1. Registered Office in Delaware. The registered office of the
Corporation (as defined in Article IX below) in the State of Delaware shall be
located at 1209 Orange Street in the City of Wilmington, County of New Castle,
and the name of the resident agent in charge thereof shall be The Corporation
Trust Company.
SECTION 2. Executive Offices. The Corporation shall maintain executive
offices at 777 South Flagler Drive, Suite 1000E, West Palm Beach, Florida and at
900 Third Avenue, New York, New York 10022, or such other location as the Board
of Directors shall determine.
SECTION 3. Other Offices. In addition to the registered office in the State
of Delaware and the principal executive office, the Corporation may have offices
at such other places within and without the State of Delaware as the Board of
Directors may from time to time determine or the business of the Corporation may
require.
ARTICLE II
MEETING OF STOCKHOLDERS
SECTION 1. Annual Meetings. The annual meeting of stockholders of the
Corporation for the election of directors and the transaction of such other
business as may be brought before the meeting in accordance with the Certificate
of Incorporation (as defined in Article IX below) and these By-Laws shall be
held on the date and at the time fixed from time to time by the Board of
Directors within thirteen (13) months after the date of the preceding annual
meeting. The annual meeting of stockholders of the Corporation shall not be
called or held otherwise than as provided in the Certificate of Incorporation or
in these By-Laws.
SECTION 2. Special Meeting. Special meetings of stockholders of the
Corporation may be called only at the direction of the Chairman and Chief
Executive Officer, the President and Chief Operating Officer or the Board of
Directors.
SECTION 3. Place of Meeting. Annual and special meetings of stockholders of
the Corporation shall be held at the registered office of the Corporation in the
City of Wilmington, County of New Castle, State of Delaware, unless some other
place within or without the State of Delaware shall have been fixed by a
resolution adopted by the Board and designated in the notice of meeting.
SECTION 4. Notice of Meetings. Notice of every meeting of stockholders of
the Corporation, annual or special, stating the time, place and, in general
terms, the purpose or purposes thereof, shall be given by the Chairman and Chief
Executive Officer or the President and Chief Operating Officer or the Secretary
of the Corporation to each stockholder of record entitled to vote at the
meeting. Notice of the time, place and purposes of any annual or special meeting
of stockholders may be dispensed with if every stockholder entitled to notice of
and to vote at such meeting shall attend, either in person or by
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proxy, or if every absent stockholder entitled to such notice and vote shall, in
a writing or writings filed with the records of the meeting either before or
after the holding thereof, waives such notice.
SECTION 5. Means of Giving Notice. A notice of any annual or special
meeting of stockholders of the Corporation may be given either personally or by
mail or other means of written communication, charges prepaid, addressed to the
stockholder at such stockholder's address appearing on the books of the
Corporation or given by such stockholder to the Corporation for the purpose of
notice. If a stockholder gives no address to the Corporation for the purpose of
notice, notice is duly given to such stockholder if sent by mail or other means
of written communication addressed to the place where the registered office of
the Corporation is situated, or if published, at least once in a newspaper of
general circulation in the county in which such office is located.
SECTION 6. Time of Notice. Any required notice of any meeting of
stockholders of the Corporation shall be sent to each stockholder entitled
thereto not less than ten (10) nor more than sixty (60) days prior to the date
of the meeting.
SECTION 7. Record Date. The record date for determining stockholders
entitled to notice of and to vote at any meeting of stockholders of the
Corporation shall be that date, not less than ten (10) nor more than sixty (60)
days preceding the date of the meeting, fixed for such purpose by the
affirmative vote of a majority of the Board of Directors, or, if no such date is
fixed for such purpose by the Board of Directors, the date next preceding the
day on which notice of the meeting is given, or, if notice of the meeting is
waived, the day next preceding the day on which the meeting is held.
SECTION 8. List of Stockholders. The officer who has charge of the stock
ledger of the Corporation shall prepare and make, at least ten (10) days before
every meeting of stockholders of the Corporation, a complete list of the
stockholders entitled to vote at the meeting, arranged in alphabetical order,
showing the address of each stockholder and the number of shares registered in
the name of each stockholder. Such list shall be open to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary business
hours, for a period of at least ten (10) days prior to the meeting, either at a
place within the city where the meeting is to be held, which place shall be
specified in the notice of the meeting, or, if not specified, at the place where
the meeting is to be held. The list shall also be produced and kept at the time
and place of the meeting during the whole time thereof, and may be inspected by
any stockholder.
SECTION 9. Quorum. At any meeting of stockholders of the Corporation the
presence in person or by proxy of the holders of a majority in voting power of
the outstanding stock of the Corporation entitled to vote shall constitute a
quorum for the transaction of business brought before the meeting in accordance
with the Certificate of Incorporation and these By-Laws and, a quorum being
present, the affirmative vote of the holders of a majority in voting power
present in person or represented by proxy and entitled to vote shall be required
to effect action by stockholders; provided, however, that the affirmative vote
of a plurality in voting power present in person or represented by proxy and
entitled to vote shall be required to effect elections of directors. The
stockholders present at any duly organized meeting of stockholders may continue
to do business until adjournment, notwithstanding the withdrawal of enough
stockholders to have less than a quorum.
SECTION 10. Adjournment. Any meeting of stockholders of the Corporation may
be adjourned from time to time, without notice other than by announcement at the
meeting by the chairman of the meeting at which such adjournment is taken, and
at any such adjourned meeting at which a quorum shall be present any action may
be taken that could have been taken at the meeting originally called; provided,
however, that if the adjournment is for more than thirty (30) days, or if after
the adjournment
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a new record date is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given to each stockholder of record entitled to vote at the
adjourned meeting.
SECTION 11. Organization. At every meeting of stockholders of the
Corporation, the Chairman and Chief Executive Officer or, in the absence of such
officer, the President and Chief Operating Officer or, in the absence of both
such officers, such individual as shall have been designated by the Chairman and
Chief Executive Officer, or if such officer has not done so, then by the
President and Chief Operating Officer, or if such officer has not done so, by a
resolution adopted by the affirmative vote of a majority of the Board of
Directors, shall act as chairman of the meeting. The Secretary of the
Corporation or, in the absence of such officer, an Assistant Secretary in
attendance or, in the absence of the Secretary and an Assistant Secretary, an
individual appointed by the chairman of the meeting shall act as secretary of
the meeting and keep a record of the proceedings of the meeting.
SECTION 12. Agenda and Rules of Order. The chairman of the meeting shall
have sole authority to prescribe the agenda and rules of order for the conduct
of any meeting of stockholders of the Corporation and to determine all questions
arising thereat relating to the order of business and the conduct of the
meeting, except as otherwise required by law.
SECTION 13. Conduct of Business at Meetings. Except as otherwise provided
by law, at any annual or special meeting of stockholders of the Corporation only
such business shall be conducted as shall have been properly brought before the
meeting. In order to be properly brought before the meeting, such business must
have either been:
(A) specified in the written notice of the meeting (or any supplement
thereto) given to stockholders of record on the record date for such
meeting by or at the direction of the Board of Directors; or
(B) brought before the meeting at the direction of the Chairman and
Chief Executive Officer, the President and Chief Operating Officer or the
Board of Directors.
SECTION 14. Stockholder Action by Consent. Any action required or permitted
to be taken by the holders of the issued and outstanding stock of the
Corporation may be effected at an annual or special meeting of stockholders or
by the consent in writing of such stockholders or any of them, which writing
shall be filed with the minutes of proceedings of the stockholders.
ARTICLE III
BOARD OF DIRECTORS
SECTION 1. Board of Directors. The business and affairs of the Corporation
shall be managed by or under the direction of the Board of Directors.
SECTION 2. Qualification of Director. Each director shall be at least
eighteen (18) years of age. Directors need not be stockholders of the
Corporation.
SECTION 3. Number of Directors. The Board of Directors shall consist of not
fewer than two (2) nor more than fifteen (15) individuals, the exact number to
be fixed from time to time by the Board of Directors pursuant to a resolution
adopted by a majority of directors then in office.
SECTION 4. Election and Term of Office. The members of the Board of
Directors shall be elected by the stockholders at the annual meeting of
stockholders and each director shall hold office until the annual meeting of
stockholders next succeeding his or her election and until his or her successor
is
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elected and qualified, or until his or her earlier death, resignation,
retirement, disqualification or removal.
SECTION 5. Vacancies. Any vacancy in the Board of Directors caused by
death, resignation, retirement, disqualification or removal or any other cause
(including an increase in the number of directors) may be filled solely by
resolution adopted by the affirmative vote of a majority of the directors then
in office, whether or not such majority constitutes less than a quorum, or by a
sole remaining director. Any new director elected to fill a vacancy on the Board
of Directors will serve for the remainder of the full term of the director for
which the vacancy occurred. No decrease in the size of the Board of Directors
shall have the effect of shortening the term of any incumbent director.
SECTION 6. Resignation of Directors. Any director may resign at any time.
Such resignation shall be made in writing and shall take effect at the time
specified therein, and if no time be specified, shall take effect at the time of
its receipt by the Chairman and Chief Executive Officer, the President and Chief
Operating Officer or the Secretary of the Corporation. The acceptance of a
resignation shall not be necessary to make it effective, but no resignation
shall discharge any accrued obligation or duty of a director.
SECTION 7. Removal of Directors. A duly elected director of the Corporation
may be removed from such position, with or without cause, only by the
affirmative vote of the holders of two-thirds ( 2/3) of the voting power of the
outstanding capital stock of the Corporation entitled to vote in the election of
directors, voting as a single class..
SECTION 8. Quorum of Directors. Except as otherwise required by law or by
the Certificate of Incorporation or by these By-Laws, (i) a majority of the
directors in office at the time of a duly assembled meeting shall constitute a
quorum and be sufficient for the transaction of business, and (ii) any act of a
majority of the directors present at a meeting at which there is a quorum shall
be the act of the Board of Directors.
SECTION 9. Place of Meeting. Subject to the provisions of Section 10 of
this Article III, the Board of Directors may hold any meeting at such place or
places within or without the State of Delaware as it may determine.
SECTION 10. Organization Meeting. After each annual meeting of stockholders
of the Corporation, the Board of Directors shall meet immediately at the place
where such meeting of stockholders was held for the purpose of organization,
election of Executive Officers (as defined in Section 1 of Article V), and the
transaction of other business.
SECTION 11. Regular Meetings. Regular meetings of the Board of Directors
may be held at such times and at such places within or without the State of
Delaware as the Board of Directors shall from time to time determine.
SECTION 12. Special Meetings. Special meetings of the Board of Directors
may be called by the Chairman and Chief Executive Officer, the President and
Chief Operating Officer or any two directors, and any such meeting shall be held
at such time and at such place within or without the State of Delaware as shall
be specified in the notice of meeting.
SECTION 13. Notice of Meetings. Subject to the provisions of Section 10 of
this Article III, notice of the place, day and hour of every meeting of the
Board of Directors shall be given to each director by mailing such notice at
least two (2) days before the meeting to his or her last known address or by
personally delivering, telegraphing or telephoning such notice to him or her at
least twenty-four (24) hours before the meeting.
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SECTION 14. Organization. The Chairman and Chief Executive Officer or, in
the absence of such officer, the President and Chief Operating Officer shall
call meetings of the Board of Directors to order and shall act as the chairman
thereof. In the absence of the Chairman and Chief Executive Officer and the
President and Chief Operating Officer, a majority of the directors present may
elect as chairman of the meeting any director present. The Secretary of the
Corporation or, in the absence of such officer, an Assistant Secretary in
attendance or, in the absence of the Secretary and an Assistant Secretary, an
individual appointed by the chairman of the meeting shall act as a secretary of
the meeting and keep a record of the proceedings of the meeting.
SECTION 15. Order of Business. Unless otherwise determined by the Board of
Directors the order of business and rules of order at any meeting of the Board
of Directors shall be determined by the chairman of the meeting.
SECTION 16. Adjournment. Any meeting of the Board of Directors may be
adjourned from time to time by a majority of the directors present, whether or
not they shall constitute a quorum, and no notice shall be required of any
adjourned meeting beyond the announcement of such adjournment at the meeting.
SECTION 17. Action by Board of Directors Without a Meeting. Unless
otherwise restricted by the Certificate of Incorporation or these By-Laws, any
action required or permitted to be taken at any meeting of the Board of
Directors or any committee thereof may be taken without a meeting if all the
members of the Board or the committee, as the case may be, consent thereto in
writing and the writings are filed with the minutes of the proceedings of the
Board of Directors or committee, as the case may be.
SECTION 18. Action by Conference Telephone. Unless otherwise restricted by
the Certificate of Incorporation or these By-Laws, members of the Board of
Directors or of any committee thereof may participate in a meeting of the Board
of Directors or of such committee, as the case may be, by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a meeting
in such manner shall constitute presence in person at such a meeting.
SECTION 19. Compensation. Each director, in consideration of his or her
serving as such, shall be entitled to receive from the Corporation such
compensation as the Board of Directors shall from time to time determine,
together with reimbursement for reasonable expenses incurred by him or her in
attending meetings of the Board of Directors. Each director who shall serve as a
member of any committee of the Board of Directors, in consideration of his or
her serving as such, shall be entitled to such additional compensation as the
Board of Directors shall from time to time determine, together with
reimbursement for reasonable expenses incurred by him or her in attending
meetings of such committee. Nothing herein contained shall be construed to
preclude any director from serving the Corporation in any other capacity and
receiving compensation therefor.
ARTICLE IV
COMMITTEES OF DIRECTORS
SECTION 1. Committees. By resolution adopted by the affirmative vote of a
majority of the Board of Directors, the Board of Directors may appoint one or
more committees, which may include as members directors only or directors and
non-directors, as the Board of Directors may from time to time consider
desirable, and such committees shall have such powers and duties as the Board of
Directors
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shall determine and as shall be specified in the resolution of appointment;
provided, however, that the powers and duties of any such committee whose
members shall include non-directors shall be limited to making recommendations
to the Board of Directors.
SECTION 2. Committee Vacancies. Any member of a committee appointed
pursuant to this Article IV shall serve at the pleasure of the Board of
Directors, which Board shall have the power at any time by the affirmative vote
of a majority of the Board of Directors to remove any member, with or without
cause, and to fill vacancies in the membership of a committee. No committee
appointed pursuant to this Article IV shall have the power to fill any vacancy
in the membership of such committee. Any committee appointed pursuant to Section
1 of this Article IV shall exist at the pleasure of the Board of Directors,
which Board shall have the power at any time by the affirmative vote of a
majority of the Board of Directors to change the powers and duties of any such
committee or to dissolve it.
SECTION 3. Committee Meetings. Regular meetings of a committee appointed
pursuant to this Article IV shall be held at such times and at such places
within or without the State of Delaware as the Board of Directors or the
committee shall from time to time determine, and no notice of such regular
meetings shall be required. Special meetings of any committee may be called by
the chairman of such committee or by the Chairman and Chief Executive Officer or
by the President and Chief Operating Officer, and shall be called by the
Secretary of the Corporation on the written request of any member of such
committee. Notice of a special meeting of any committee shall be given to each
member thereof by mailing such notice at least forty-eight (48) hours, or by
personally delivering, telegraphing or telephoning the same at least eighteen
(18) hours, before the meeting. It shall not be requisite for the validity of
any meeting of any committee that notice thereof shall have been given to any
committee member who is present at the meeting or, if absent, waives notice
thereof in writing filed with the records of the meeting either before or after
the holding thereof. The majority of the members of a committee shall constitute
a quorum for the transaction of committee business, and the act of a majority of
the members present at any meeting at which there is a quorum shall be the act
of the committee. A committee shall keep regular minutes of its meetings and all
action taken or resolutions adopted shall be reported to the Board of Directors
at the meeting of the Board next following such action.
ARTICLE V
OFFICERS
SECTION 1. Executive Officers. At the organization meeting of the Board of
Directors following the annual meeting of stockholders, the Board of Directors
shall elect as executive officers of the Corporation a Chairman and Chief
Executive Officer, a President and Chief Operating Officer, a Secretary and a
Treasurer, and may elect as executive officers of the Corporation one or more
Chairmen Emeritus, Vice Chairmen, Executive Vice Presidents and Senior Vice
Presidents. All such executive officers elected by the Board of Directors are
referred to in these By-Laws as 'Executive Officers.' The Board of Directors may
from time to time appoint such other officers and agents of the Corporation as
the interests of the Corporation may require and may fix their duties and terms
of office. To the extent permitted by law, any number of offices may be held by
the same person.
SECTION 2. Other Officers. In addition to the Executive Officers elected by
the Board of Directors pursuant to Section 1 of this Article V, the Chairman and
Chief Executive Officer and the President and Chief Operating Officer may from
time to time appoint such other officers of the Corporation, including, Vice
Presidents, Assistant Vice Presidents, Staff Vice Presidents, Assistant
Secretaries, Assistant Treasurers and Controllers, as the interests of the
Corporation may require (the 'Other
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Officers'); provided, however, that no Other Officer may be appointed to the
office of Chairman Emeritus, Vice Chairman, President and Chief Operating
Officer, Executive Vice President, Senior Vice President, Secretary or
Treasurer. Each appointment of an Other Officer shall be in writing and shall
set forth the duties of the Other Officer being appointed and, subject to
Section 3 of this Article V, such officer's term of office.
SECTION 3. Term of Office. Each Executive Officer shall hold office until
the organization meeting of the Board of Directors following the annual meeting
of stockholders next succeeding such officer's election and until such officer's
successor is elected and qualified, or until such officer's earlier death,
resignation, retirement or removal. Each Other Officer shall hold office for a
term to be decided by the appointing Chairman and Chief Executive Officer or
President and Chief Operating Officer, as the case may be; provided, however,
that no such term shall be for a period longer than the term of office of the
appointing Chairman and Chief Executive Officer or President and Chief Operating
Officer.
SECTION 4. Removal of Officers. Any Executive Officer or Other Officer may
be removed from office with or without cause at any time by the affirmative vote
of a majority of the Board of Directors. Any Other Officer may be removed from
office at any time with or without cause by the Chairman and Chief Executive
Officer or President and Chief Operating Officer.
SECTION 5. Vacancies. A vacancy in any Executive Office or Other Office
arising from any cause may be filled for the unexpired portion of the term by
the Board of Directors. A vacancy in any Other Office arising from any cause may
be filled for the unexpired portion of the term by the Chairman and Chief
Executive Officer or President and Chief Operating Officer.
SECTION 6. Compensation of Officers. The salaries or compensation, if any,
of the Executive Officers shall be fixed by the Board of Directors or the
Compensation Committee of the Board of Directors, if their be one. The salaries
or compensation of the Other Officers and division officers, if there be any,
may be fixed from time to time by the Board of Directors, the Chairman and Chief
Executive Officer or the President and Chief Operating Officer.
SECTION 7. Chairman and Chief Executive Officer. The Chairman and Chief
Executive Officer shall be Chairman of the Board of Directors and of the
Executive Committee, if any, shall be the chief executive officer of the
Corporation and, subject to the control of the Board of Directors, shall have
general charge and control of the business and affairs of the Corporation with
power and authority, when acting in the ordinary course of business of the
Corporation, in the name and on behalf of the Corporation and under its seal
attested by the Secretary or an Assistant Secretary of the Corporation, or
otherwise, to (i) execute and deliver agreements, contracts, certificates and
other instruments, (ii) purchase and accept delivery of stocks, bonds, evidences
of interest and indebtedness, rights and options to acquire the same, and all
other securities, whether negotiable or non-negotiable, (iii) sell, assign,
transfer and deliver all stocks, bonds, evidence of interest and indebtedness,
rights and options to acquire the same, and all other securities, corporate or
otherwise, now or hereafter standing in the name of or owned beneficially by the
Corporation, (iv) open and maintain accounts with banking institutions,
including investment banks and brokerage firms, and (v) borrow from banks and
other financial institutions, including investment banks and brokerage firms,
such sums of money for such periods of time and upon such terms as such officer
shall deem necessary or appropriate, and execute and deliver notes, other
evidences of indebtedness and agreements for the repayment of any sums so
borrowed in the name and on behalf of the Corporation; provided, however, that
no borrowing pursuant to this clause (v) shall have an original maturity of more
than one year. Such officer shall preside at all meetings of stockholders of the
Corporation and the Board of Directors at which such officer is present.
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Such officer shall perform all other duties and enjoy all other powers which are
commonly incident to the office of Chairman and Chief Executive Officer, or are
delegated to such officer from time to time by the Board of Directors or are or
may at any time be authorized or required by law.
SECTION 8. Chairman Emeritus and Vice Chairmen of the Board. The Chairman
Emeritus and Vice Chairmen of the Board, if there be any, shall be members of
the Board of Directors and shall have such powers and perform such duties as may
from time to time be assigned to them by the Board of Directors, the Chairman
and Chief Executive Officer or the President and Chief Operating Officer.
SECTION 9. President and Chief Operating Officer. The President and Chief
Operating Officer shall be a member of the Board of Directors and of the
Executive Committee, if any, shall be the chief operating officer of the
Corporation responsible for directing, administering and coordinating the
business operations of the Corporation in accordance with policies, goals and
objectives established by the Board of Directors and the Chairman and Chief
Executive Officer with power and authority, when acting in the ordinary course
of business of the Corporation, in the name and on behalf of the Corporation and
under its seal attested by the Secretary or an Assistant Secretary of the
Corporation, or otherwise, to, (i) execute and deliver agreements, contracts,
certificates and other instruments, (ii) purchase and accept delivery of stocks,
bonds, evidences of interest and indebtedness, rights and options to acquire the
same, and all other securities, whether negotiable or non-negotiable, (iii)
sell, assign, transfer and deliver all stocks, bonds, evidences of interest and
indebtedness, rights and options to acquire the same, and all other securities,
corporate or otherwise, now or hereafter standing in the name of or owned
beneficially by the Corporation, (iv) open and maintain accounts with banking
institutions, including investment banks and brokerage firms, and (v) borrow
from banks and other financial institutions, including investment banks and
brokerage firms, such sums of money for such periods of time and upon such terms
as such officer shall deem necessary or appropriate, and execute and deliver
notes, other evidences of indebtedness and agreements for the repayment of any
sums so borrowed in the name and on behalf of the Corporation; provided,
however, that no borrowing pursuant to this clause (v) shall have an original
maturity of more than one year. Such officer shall perform all other duties and
enjoy all other powers which are commonly incident to the office of President
and Chief Operating Officer or which are delegated to such officer by the Board
of Directors or the Chairman and Chief Executive Officer. In the absence of the
Chairman and Chief Executive Officer, the President and Chief Operating Officer
shall perform all duties and may exercise all powers of the Chairman and Chief
Executive Officer and shall preside at meetings of stockholders of the
Corporation and the Executive Committee.
SECTION 10. Executive Vice Presidents, Senior Vice Presidents and Vice
Presidents Elected by the Board. The Executive Vice Presidents, the Senior Vice
Presidents and the Vice Presidents elected by the Board of Directors pursuant to
Section 1 of this Article V, if there be any, shall have such powers and perform
such duties as may from time to time be assigned to them by the Board of
Directors, the Chairman and Chief Executive Officer or the President and Chief
Operating Officer.
SECTION 11. Secretary. The Secretary shall record the proceedings of all
meetings of stockholders of the Corporation and of the Board of Directors which
such officer attends in a book or books to be kept for that purpose. Such
officer shall attend to the giving and serving of all notices on behalf of the
Corporation, shall have custody of the records and the seal of the Corporation
and shall affix the seal to any instrument which requires the seal of the
Corporation. Such officer shall, in general, perform all the duties and
functions incident to the office of Secretary and shall also perform such other
duties as may
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from time to time be assigned to such officer by the Board of Directors, the
Chairman and Chief Executive Officer or the President and Chief Operating
Officer.
SECTION 12. Treasurer. The Treasurer shall have custody and control of all
funds and securities of the Corporation, except as otherwise provided by the
Board of Directors. Such officer shall keep full and accurate accounts of all
receipts and disbursements of the Corporation in books to be kept for that
purpose, shall deposit all money and other valuable effects in the name and to
the credit of the Corporation in such depositories as may be designated by the
Board of Directors, and shall render to the Chairman and Chief Executive
Officer, the President and Chief Operating Officer or the Board of Directors,
whenever any of them may require it, an account of all such officer's
transactions as Treasurer and an account of the financial condition of the
Corporation. Such officer shall also perform such other duties as may from time
to time be assigned to such officer by the Board of Directors, the Chairman and
Chief Executive Officer or the President and Chief Operating Officer.
SECTION 13. Powers and Duties of Other Officers. The Other Officers shall
have such powers and perform such duties as may from time to time be assigned to
them by the Board of Directors, the Chairman and Chief Executive Officer or the
President and Chief Operating Officer.
ARTICLE VI
CAPITAL STOCK
SECTION 1. Certificates. Each stockholder of the Corporation shall be
entitled to a certificate or certificates signed by or in the name of the
Corporation by the Chairman and Chief Executive Officer, the President and Chief
Operating Officer, an Executive Vice President or a Senior Vice President, and
by the Treasurer, an Assistant Treasurer, the Secretary or an Assistant
Secretary, certifying the number of shares of stock of the Corporation owned by
such stockholder. Any or all of the signatures on the certificates may be a
facsimile.
In case any officer, Transfer Agent or Registrar who has signed or whose
facsimile signature has been placed upon a certificate shall have ceased to be
such officer, Transfer Agent or Registrar before such certificate is issued, it
may be issued by the Corporation with the same effect as if he, she or it was
such officer, Transfer Agent or Registrar at the date of issue.
All certificates of each class or series shall be consecutively numbered
and shall be entered in the books of the Corporation as they are issued. Every
certificate shall certify the name of the Person owning the shares represented
thereby, with the number of shares and the date of issue. The names and
addresses of all Persons owning shares of the Corporation, with the number of
shares owned by each and the date or dates of issue of the shares held by each,
shall be entered in the books of the Corporation kept for that purpose by the
proper officers, agents or employees of the Corporation.
The Corporation shall be entitled to treat the holder of record of any
share or shares of stock of the Corporation as the holder in fact thereof and,
accordingly, shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other Persons, whether or
not it has actual or other notice thereof, except as provided by law.
SECTION 2. Cancellation of Certificates. All certificates surrendered to
the Corporation shall be cancelled and, except in the case of lost, stolen or
destroyed certificates, no new certificates shall be issued until the former
certificate or certificates for the same number of shares of the same class of
stock have been surrendered and cancelled.
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SECTION 3. Lost, Stolen or Destroyed Certificates. The Board of Directors
may direct a new certificate or certificates to be issued in place of any
certificate or certificates theretofore issued by the Corporation alleged to
have been lost, stolen or destroyed, upon the making of an affidavit of the fact
by the Person claiming the certificate or certificates to be lost, stolen or
destroyed. In its discretion and as a condition precedent to the issuance of any
such new certificate or certificates, the Board of Directors may require that
the owner of such lost, stolen or destroyed certificate or certificates, or such
Person's legal representative, advertise the same in such manner as the Board
shall require and/or give the Corporation and its Transfer Agent or Agents,
Registrar or Registrars a bond in such form and amount as the Board of Directors
may direct as indemnity against any claim that may be made against the
Corporation and its Transfer Agent or Agents, Registrar or Registrars, and that
the owner requesting such new certificate or certificates obtain a final order
or decree of a court of competent jurisdiction as such owner's right to receive
such new certificate or certificates.
SECTION 4. Transfer of Shares. Shares of stock shall be transferable on the
books of the Corporation by the holder thereof, in person or by duly authorized
attorney, upon the surrender of the certificate or certificates representing the
shares to be transferred, properly endorsed, with such proof or guarantee of the
authenticity of the signature as the Corporation or its agents may reasonably
require.
SECTION 5. Transfer Agents and Registrars. The Corporation may have one or
more Transfer Agents and one or more Registrars of its stocks, whose respective
duties the Board of Directors may define from time to time. No certificate of
stock shall be valid until countersigned by a Transfer Agent, if the Corporation
shall have a Transfer Agent, or until registered by the Registrar, if the
Corporation shall have a Registrar. The duties of Transfer Agent and Registrar
may be combined.
SECTION 6. Closing of Transfer Books and Fixing of Record Date. The Board
of Directors shall have power to close the stock transfer books of the
Corporation for a period not exceeding sixty (60) days preceding the date of any
meeting of stockholders, or the date for payment of any dividend, or the date
for the allotments of rights, or the date when any change or conversion or
exchange of capital stock shall go into effect, or for a period not exceeding
sixty (60) days in connection with obtaining the consent of stockholders for any
purpose, provided, however, that in lieu of closing the stock transfer books as
aforesaid, the Board of Directors may fix in advance a date, which shall not be
more than sixty (60) days nor less than ten (10) days before the date of any
meeting of stockholders nor more than sixty (60) days before the date for the
payment of any dividend, or the date for the allotment of rights, or the date
when any change or conversion or exchange of capital stock shall go into effect,
or a date in connection with obtaining such consent, as a record date for the
determination of the stockholders entitled to notice of, and to vote at, any
such meeting and any adjournment thereof, or entitled to receive payment of any
such dividend, or to any such allotment of rights, or to exercise the rights in
respect of any such change, conversion or exchange of capital stock, or to give
such consent, and in such case such stockholders, and only such stockholders as
shall be stockholders of record on the date so fixed, shall be entitled to such
notice of, and to vote at, such meeting and any adjournment thereof, or to
receive payment of such dividend, or to such allotment of rights, or to exercise
such rights, or to give such consent, as the case may be, notwithstanding any
transfer of any stock on the books of the Corporation after any such record date
fixed as aforesaid.
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ARTICLE VII
CONTRACTS, CHECKS, DRAFTS, PROXIES
SECTION 1. Execution of Contracts. The Board of Directors may authorize any
Executive or Other Officer, agent or employee of the Corporation to enter into
any contract or execute and deliver any instrument in the name or on behalf of
the Corporation, and such authority may be general or confined to specific
instances, and, unless so authorized by the Board of Directors, no Executive or
Other Officer, agent or employee except the Chairman and Chief Executive Officer
and the President and Chief Operating Officer shall have any power or authority
to bind the Corporation by any contract or to pledge its credit or to render it
liable pecuniarily for any purpose or to any amount.
SECTION 2. Loans. Except as otherwise provided in these By-Laws, no loan
shall be contracted in the name or on behalf of the Corporation, and no evidence
of indebtedness shall be issued, endorsed or accepted in its name, or on its
behalf, unless authorized by the Board of Directors. Such authority may be
general or confined to specific instances. When so authorized, the Executive or
Other Officer, agent or employee thereunto authorized may effect loans and
advances at any time for the Corporation from any Person (including any bank,
trust company or other institution) and for such loans and advances may make,
execute and deliver promissory notes or other evidences of indebtedness of the
Corporation, and, when authorized as aforesaid, as security for the payment of
any and all loans and advances may make, execute and deliver promissory notes or
other evidences of indebtedness and liabilities of the Corporation, may
mortgage, pledge, hypothecate or transfer any real or personal property at any
time owned or held by the Corporation, and to that end execute instruments of
mortgage or pledge or otherwise transfer such property.
SECTION 3. Checks, Drafts, etc. All checks, drafts, bills of exchange or
other orders for the payment of money, obligations, notes or other evidences of
indebtedness, bills of lading, warehouse receipts and insurance certificates of
the Corporation, shall be signed or endorsed by the Chairman and Chief Executive
Officer, the President and Chief Operating Officer or such other Executive
Officer or Other Officer, agent, attorney, or employee of the Corporation as
shall from time to time be determined by the Board of Directors, the Chairman
and Chief Executive Officer or the President and Chief Operating Officer.
SECTION 4. Proxies in Respect of Securities of Other Corporations. The
Chairman and Chief Executive Officer, the President and Chief Operating Officer
and such other Executive or Other Officers as are designated by the Chairman and
Chief Executive Officer or the President and Chief Operating Officer are
authorized to vote by casting a ballot in person or by voting by proxy on behalf
of the Corporation the shares owned by the Corporation of the stock or other
securities in any other Corporation at meetings of the holders of the stock or
other securities of such other corporation, or to consent in writing, in the
name of the Corporation as such holder, to any action by such other corporation.
ARTICLE VIII
INDEMNIFICATION
The Corporation shall, and by reason of the enactment of this By-Law hereby
does, indemnify each and every individual (including his or her heirs, executors
and assigns) who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that he or she
is or was a
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director, Executive Officer or Other Officer of the Corporation, or, while a
director, Executive Officer or Other Officer of the Corporation, is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement in connection with such action, suit or proceeding,
to the full extent that it has the power to do so under Delaware Law. Such
indemnification shall not be deemed exclusive of any other rights to which those
indemnified may be entitled under the Certificate of Incorporation or under any
agreement, contract of insurance, vote of stockholders or disinterested
directors, or otherwise, or of the broader power of the Corporation to indemnify
a director, Executive Officer, Other Officer, employee or agent of the
Corporation as authorized by Delaware Law.
ARTICLE IX
DEFINITIONS
For purposes of these By-Laws, the following terms shall have the meanings
set forth below:
'Corporation' shall mean Triarc Merger Corporation.
'Delaware Law' shall mean the General Corporation Law of the State of
Delaware, as amended from time to time.
'Executive Officers' shall have the meaning set forth in Section 1 of
Article V of these By-Laws.
'Other Officer' shall have the meaning set forth in Section 2 of
Article V of these By-Laws.
'Person' shall mean any individual, firm, corporation or other entity.
'Certificate of Incorporation' shall mean the Certificate of
Incorporation of the Corporation, as from time to time amended.
'Voting Shares' shall mean any issued and outstanding shares of
capital stock of the Corporation entitled to vote generally in the election
of directors.
ARTICLE X
MISCELLANEOUS
SECTION 1. Books and Records. The books and records of the Corporation may
be kept at such places within or without the State of Delaware as the Board of
Directors may from time to time determine. The stock record books and the blank
stock certificate books shall be kept by the Secretary or by any other officer
or agent designated by the Board of Directors.
SECTION 2. Dividends and Reserves. The Board of Directors, from time to
time, may determine whether any, and, if any, what part of its net profits of
the Corporation, or of its net assets in excess of its capital, available
therefor pursuant to law and the Certificate of Incorporation, shall be declared
by it as dividends on the stock of the Corporation. The Board of Directors, in
its discretion, in lieu of declaring any such dividend, may use and apply any of
such net profits or net assets as a reserve for working capital, to meet
contingencies, for the purpose of maintaining or increasing the property or
business of the Corporation or for any other lawful purpose which it may think
conducive to the best interests of the Corporation.
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SECTION 3. Seal. The corporate seal of the Corporation shall be in the form
of a circle and shall bear the name of the Corporation and the year and state of
its incorporation.
SECTION 4. Fiscal Year. The fiscal year of the Corporation shall end on the
last day of December in each year unless the Board of Directors shall determine
otherwise.
ARTICLE XI
AMENDMENTS
All By-Laws of the Corporation shall be subject to alteration, amendment or
repeal, in whole or in part, and new By-Laws not inconsistent with Delaware Law
or any provision of the Certificate of Incorporation may be made, by (i) the
affirmative vote of stockholders holding not less than two-thirds of the voting
power of the Voting Shares (as defined in Article IX above) of the Corporation
then entitled to vote on such issue, or (ii) the affirmative vote of not less
than a majority of all of the directors of the Corporation then holding office
and entitled to vote on such issue.
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EXHIBIT D
OHIO REVISED CODE
SECTION 1701.84 Dissenters in case of merger, consolidation, combination,
or majority share acquisition.
The following are entitled to relief as dissenting shareholders under
section 1701.85 of the Revised Code:
(A) Shareholders of a domestic corporation that is being merged or
consolidated into a surviving or new corporation, domestic or foreign,
pursuant to section 1701.78, 1701.79 or 1701.801 of the Revised Code;
(B) In the case of a merger into a domestic corporation, shareholders
of the surviving corporation who under section 1701.78 of the Revised Code
are entitled to vote on the adoption of an agreement of merger, but only as
to the shares so entitling them to vote;
(C) Shareholders, other than the parent corporation, of a domestic
subsidiary corporation that is being merged into the domestic or foreign
parent corporation pursuant to section 1701.80 of the Revised Code;
(D) In the case of a combination or a majority share acquisition,
shareholders of the acquiring corporation who under section 1701.83 of the
Revised Code are entitled to vote on such transaction, but only as to the
shares so entitling them to vote;
(E) Shareholders of a domestic subsidiary corporation into which is
being merged one or more domestic or foreign corporations pursuant to
section 1701.801 of the Revised Code.
SECTION 1701.85 Procedure in case of dissents.
(A)(1) A shareholder of a domestic corporation is entitled to relief
as a dissenting shareholder in respect of the proposals in sections
1701.74, 1701.76, and 1701.84 of the Revised Code, only in compliance with
this section.
(2) If the proposal must be submitted to the shareholders of the
corporation involved, the dissenting shareholder shall be a record holder
of the shares of the corporation as to which he seeks relief as of the date
fixed for the determination of shareholders entitled to notice of a meeting
of the shareholders at which the proposal is to be submitted, and such
shares shall not have been voted in favor of the proposal. Not later than
ten days after the date on which the vote on such proposal was taken at the
meeting of the shareholders, the shareholders shall deliver to the
corporation a written demand for payment to him of the fair cash value of
the shares as to which he seeks relief, stating his address, the number and
class of such shares, and the amount claimed by him as the fair cash value
of the shares.
(3) The dissenting shareholder entitled to relief under division (C)
of section 1701.84 of the Revised Code in the case of a merger pursuant to
section 1701.80 of the Revised Code and a dissenting shareholder entitled
to relief under division (E) of section 1701.84 of the Revised Code in the
case of a merger pursuant to section 1701.801 of the Revised Code shall be
a record holder of the shares of the corporation as to which he seeks
relief as of the date on which the agreement of merger was adopted by the
directors of that corporation. Within twenty days after he has been sent
the notice provided in section 1701.80 or 1701.801 of the Revised Code, the
shareholder shall
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deliver to the corporation a written demand for payment with the same
information as that provided for in division (A)(2) of this section.
(4) In the case of a merger or consolidation, a demand served on the
constituent corporation involved constitutes service on the surviving or
the new corporation, whether served before, on, or after the effective date
of the merger or consolidation.
(5) If the corporation sends to the dissenting shareholder, at the
address specified in his demand, a request for the certificates
representing the shares as to which he seeks relief, he, within fifteen
days from the date of the sending of such request, shall deliver to the
corporation the certificates requested, in order that the corporation may
forthwith endorse on them a legend to the effect that demand for the fair
cash value of such shares has been made. The corporation promptly shall
return such endorsed certificates to the shareholder. Failure on the part
of the shareholder to deliver such certificates terminates his rights as a
dissenting shareholder, at the option of the corporation, exercised by
written notice sent to him within twenty days after the lapse of the
fifteen-day period, unless a court for good cause shown otherwise directs.
If shares represented by a certificate on which such a legend has been
endorsed are transferred, each new certificate issued for them shall bear a
similar legend, together with the name of the original dissenting holder of
such shares. Upon receiving a demand for payment from a dissenting
shareholder who is the record holder of uncertificated securities, the
corporation shall make an appropriate notation of the demand for payment in
its shareholder records. If uncertificated shares for which payment has
been demanded are to be transferred, any new certificate issued for the
shares shall bear the legend required for certificated securities as
provided in this paragraph. A transferee of the shares so endorsed, or of
uncertificated securities where such notation has been made, acquires only
such rights in the corporation as the original dissenting holder of such
shares had immediately after the service of a demand for payment of the
fair cash value of the shares. Such request by the corporation is not an
admission by the corporation that the shareholder is entitled to relief
under this section.
(B) Unless the corporation and the dissenting shareholder shall have
come to an agreement on the fair cash value per share of the shares as to
which he seeks relief, the shareholder or the corporation, which in case of
a merger or consolidation may be the surviving or the new corporation,
within three months after the service of the demand by the shareholder, may
file a compliant in the court of common pleas of the county in which the
principal office of the corporation that issued such shares is located, or
was located, or was located at the time when the proposal was adopted by
the shareholders of the corporation, or, if the proposal was not required
to be submitted to the shareholders, was approved by the directors. Other
dissenting shareholders, within the period of three months, may join as
plaintiffs, or may be joined as defendants in any such proceeding, and any
two or more such proceedings may be consolidated. The complaint shall
contain a brief statement of the facts, including the vote and the facts
entitling the dissenting shareholder to the relief demanded. No answer to
such complaint is required. Upon the filing of the complaint, the court, on
motion of the petitioner, shall enter an order fixing a date for a hearing
on the complaint, and requiring that a copy of the complaint and a notice
of the filing and of the date for hearing be given to the respondent or
defendant in the manner in which summons is required to be served or
substituted service is required to be made in other cases. On the day fixed
for hearing on the complaint or any adjournment of it, the court shall
determine from the complaint and from such evidence as is submitted by
either party whether the shareholder is entitled to be paid the fair cash
value of any shares and, if so, the number and class of such shares. If the
court finds that the
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shareholder is so entitled, the court may appoint one or more persons as
appraisers to receive evidence and to recommend a decision on the amount of
the fair cash value. The appraisers have such power and authority as is
specified in the order of their appointment. The court thereupon shall make
a finding as to the fair cash value of a share, and shall render judgment
against the corporation for the payment of it, with interests at such rate
and from such date as the court considers equitable. The costs of the
proceeding, including reasonable compensation to the appraisers to be fixed
by the court, shall be assessed or apportioned as the court considers
equitable. The proceeding is a special proceeding, and final orders in it
may be vacated, modified, or reversed on appeal pursuant to the Rules of
Appellate Procedure and, to the extent not in conflict with those rules,
Chapter 2505 of the Revised Code. If, during the pendency of any proceeding
instituted under this section, a suit or proceeding is or has been
instituted to enjoin or otherwise to prevent the carrying out of the action
as to which the shareholder has dissented, the proceeding instituted under
this section shall be stayed until the final determination of the other
suit or proceeding. Unless any provision in division (D) of this section is
applicable, the fair cash value of the shares as agreed upon by the parties
or as fixed under this section shall be paid within thirty days after the
date of final determination of such value under this division, the
effective date of the amendment to the articles, or the consummation of the
other action involved, whichever occurs last. Upon the occurrence of the
last such event, payment shall be made immediately to a holder of
uncertificated securities entitled to such payment. In the case of holders
of shares represented by certificates, payment shall be made only upon and
simultaneously with the surrender to the corporation of the certificates
representing the shares for which such payment is made.
(C) If the proposal was required to be submitted to the shareholders
of the corporation, fair cash value as to those shareholders shall be
determined as of the day prior to that on which the vote by the
shareholders was taken, and, in the case of a merger pursuant to section
1701.80 or 1701.801 of the Revised Code, fair cash value as to shareholders
of a constituent subsidiary corporation shall be determined as of the day
before the adoption of the agreement of merger by the directors of the
particular subsidiary corporation. The fair cash value of a share for the
purposes of this section is the amount that a willing seller, under no
compulsion to sell, would be willing to accept, and that a willing buyer,
under no compulsion to purchase, would be willing to pay, but in no event
shall the fair cash value exceed the amount specified in the demand of the
particular shareholder. In computing such fair cash value, any appreciation
or depreciation in market value resulting from the proposal submitted to
the directors or to the shareholders shall be excluded.
(D) The right and obligation of a dissenting shareholder to receive
such fair cash value and to sell such shares as to which he seeks relief
and the right and obligation of the corporation to purchase such shares and
to pay the fair cash value of them terminate if:
(1) Such shareholder has not complied with this section, unless the
corporation by its directors waives such failure;
(2) The corporation abandons or is finally enjoined or prevented
from carrying out or the shareholders rescind their adoption of the
action involved;
(3) The shareholder withdraws his demand, with the consent of the
corporation by its directors;
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(4) The corporation and the dissenting shareholder shall not have
come to an agreement as to the fair cash value per share, and neither
the shareholder nor the corporation shall have filed or joined in a
complaint under division (B) of this section within the period provided.
(E) From the time of giving the demand until either the termination of
the rights and obligations arising from it or the purchase of the shares by
the corporation, all other rights accruing from such shares, including
voting and dividend or distribution rights, are suspended. If during the
suspension, any dividend or distribution is paid in money upon shares of
such class, or any dividend, distribution, or interest is paid in money
upon any securities issued in extinguishment of or in substitution for such
shares, an amount equal to the dividend, distribution, or interest that,
except for the suspension, would have been payable upon such shares or
securities shall be paid to the holder of record as a credit upon the fair
cash value of the shares. If the right to receive fair cash value is
terminated otherwise than by the purchase of the shares by the corporation,
all rights of the holder shall be restored and all distributions that,
except for the suspension, would have been made shall be made to the holder
of record of the shares at the time of termination.
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EXHIBIT E
[AMENDED AND RESTATED DWG CORPORATION]
{TRIARC COMPANIES, INC.}
1993 EQUITY PARTICIPATION PLAN
1. PURPOSE
The purpose of the 1993 Equity Participation Plan (the 'Plan') of [DWG
Corporation] {Triarc Companies, Inc.} (the 'Company') is to promote the
interests of the Company and its stockholders by (i) securing for the Company
and its stockholders the benefits of the additional incentive inherent in the
ownership of the capital stock of the Company (the 'Capital Stock') by selected
officers, directors ('Directors') and key employees of, and key consultants to,
the Company and its subsidiaries who are important to the success and growth of
the business of the Company and its subsidiaries and (ii) assisting the Company
to secure and retain the services of such persons. The Plan provides for
granting such persons (a) options ('Options') for the purchase of shares of
Capital Stock (the 'Shares'), (b) tandem stock appreciation rights ('SARs')
and (c) Shares which are both restricted as to transferability and subject
to a substantial risk of forfeiture ('Restricted Shares').
2. ADMINISTRATION
The Plan shall be administered by a Committee (the 'Committee') consisting
of two or more Directors appointed by the Board of Directors of the Company.
Except as provided in Section 11 below, no member of the Committee shall be, or
within one year before having become a member thereof shall have been granted or
awarded pursuant to the Plan or any other plan of the Company or any of its
subsidiaries or affiliates, Options, SARs or Restricted Shares of the Company or
any of its subsidiaries or affiliates. The members of the Committee may be
changed at any time and from time to time in the discretion of the Board of
Directors of the Company. Subject to the limitations and conditions hereinafter
set forth, the Committee shall have authority to grant Options hereunder, to
determine the number of Shares for which each Option shall be granted and the
Option price or prices, to determine any conditions pertaining to the exercise
or to the vesting of each Option, to grant tandem SARs in connection with any
Option either at the time of the Option grant or thereafter, to make awards of
Restricted Shares, to determine the number of Restricted Shares to be granted,
and to establish in its discretion the restrictions to which any such Restricted
Shares shall be subject. The Committee shall have full power to construe and
interpret the Plan and any Plan agreement executed pursuant to the Plan to
establish and amend rules for its administration, and to establish in its
discretion terms and conditions applicable to the exercise of Options and SARs
and the grant of Restricted Shares. The determination of the Committee on all
matters relating to the Plan or any Plan agreement shall be conclusive. No
member of the Committee shall be liable for any action or determination made in
good faith with respect to the Plan or any award hereunder.
- ------------
Brackets [ ] indicate proposed deletions; {underlining} indicates proposed
additions.
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3. SHARES SUBJECT TO THE PLAN
The Shares to be transferred or sold pursuant to the grant of Restricted
Shares or the exercise of Options or SARs granted under the Plan shall be
authorized Shares, and may be issued Shares reacquired by the Company and held
in its treasury or may be authorized but unissued Shares. Subject to the
provisions of Section 19 hereof (relating to adjustments in the number and
classes or series of Capital Stock to be delivered pursuant to the Plan), the
maximum aggregate number of Shares to be granted as Restricted Shares or to be
delivered on the exercise of Options shall be [3,500,000] {10,000,000} and all
such shares shall be shares of the Company's Class A Common Stock, par value
$0.10 per share (the 'Class A Common Stock').
If an Option expires or terminates for any reason during the term of the
Plan and prior to the exercise in full of such Option or the related SAR, if
any, or if Restricted Shares are forfeited as provided in the grant of such
Shares, the number of Shares previously subject to but not delivered under such
Option, related SAR or grant of Restricted Shares shall be available for the
grant of Options, SARs or Restricted Shares thereafter; provided, however, that
the grantee (or the grantee's beneficiary) has not enjoyed any of the benefits
of stock ownership (other than voting rights or dividends that are forfeited).
An Option that terminates upon the exercise of a tandem SAR shall be deemed to
have been exercised at the time of the exercise of such tandem SAR, and the
Shares subject thereto shall not be available for further grants under the Plan.
4. ELIGIBILITY
Options, SARs or Restricted Shares may be granted from time to time to
selected officers and key employees of, key consultants to, and, subject to the
provisions of Section 2 hereof, Directors (including non-employee Directors) of
the Company or any consolidated subsidiary, as defined in this Section 4. In
addition, Options and SARs shall be granted automatically to non-employee
Directors as provided in Section 11 hereof. From time to time, the Committee
shall designate from such eligible officers, employees and consultants those who
will be granted Options, SARs or Restricted Shares, and in connection therewith,
the number of Shares to be covered by each grant of Options or Restricted
Shares. Persons granted Options are referred to hereinafter as 'optionees,' and
persons granted Restricted Shares are referred to hereinafter as 'grantees.'
Nothing in the Plan, or in any grant of Options, SARs or Restricted Shares
pursuant to the Plan, shall confer on any person any right to continue in the
employ of the Company or any of its subsidiaries, nor in any way interfere with
the right of the Company or any of its subsidiaries to terminate the person's
employment at any time.
The term 'subsidiary' shall mean, at the time of reference, any corporation
organized or acquired (other than the Company) in an unbroken chain of
corporations beginning with the Company if, at the time of the granting of the
Option, each of the corporations (including the Company) other than the last
corporation in the unbroken chain owns stock possessing 50% or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain. The term 'affiliate' shall mean any person or entity which, at
the time of reference, directly, or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control with, the
Company. {Notwithstanding any other provision of the Plan to the contrary, in no
event may the aggregate number of shares of Class A Common Stock with respect to
which Options and SARs are granted under the Plan to any individual exceed
5,000,000 during the term of the Plan.}
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PROVISIONS RELATING TO OPTIONS AND SARS
5. CHARACTER OF OPTIONS
Options granted hereunder shall not be incentive stock Options as such term
is defined in Section 422 of the Internal Revenue Code of 1986, as amended from
time to time (the 'Code'). Options granted hereunder shall be 'non-qualified'
stock options subject to the provisions of Section 83 of the Code.
{If an Option granted under the Plan (other than an Option granted pursuant
to Section 11 of the Plan) is exercised by an optionee, then, at the discretion
of the Committee, the optionee may receive a replacement or reload Option
hereunder to purchase a number of Shares equal to the number of Shares utilized
to pay the exercise price and/or withholding taxes on the Option exercise, with
an exercise price equal to the 'fair market value' (as defined in Section 7 of
the Plan) of a Share on the date such replacement or reload Option is granted,
and, unless the Committee determines otherwise, with all other terms and
conditions (including the date or dates on which the Option shall become
exercisable and the term of the Option) identical to the terms and conditions of
the Option with respect to which the reload Option is granted. No replacement or
reload Option shall be granted in respect of the exercise of any Option granted
pursuant to Section 11 of the Plan.}
6. STOCK OPTION AGREEMENT
Each Option granted under the Plan, whether or not accompanied by SARs,
shall be evidenced by a written stock Option agreement, which shall be executed
by the Company and by the person to whom the Option is granted. The agreement
shall contain such terms and provisions, not inconsistent with the Plan, as
shall be determined by the Committee.
7. OPTION EXERCISE PRICE
The price per Share to be paid by the optionee on the date an Option is
exercised shall not be less than 50 percent of the fair market value of one
Share on the date the Option is granted.
For purposes of this Plan, the 'fair market value' as of any date in
respect of any Shares of Common Stock shall mean the closing price per share of
Common Stock for the trading day on or on the first trading day immediately
subsequent to such date. The closing price for such day shall be (a) as reported
on the composite transactions tape for the principal exchange on which the
Common Stock is listed or admitted to trading (the 'Composite Tape'), or if the
Common Stock is not reported on the Composite Tape or if the Composite Tape is
not in use, the last reported sales price regular way on the principal national
securities exchange on which such Common Stock shall be listed or admitted to
trading (which shall be the national securities exchange on which the greatest
number of such shares of Common Stock has been traded during the 30 consecutive
trading days commencing 45 trading days before such date), or, in either case,
if there is no transaction on any such day, the average of the bid and asked
prices regular way on such day, or (b) if such Common Stock is not listed on any
national securities exchange, the closing price, if reported, or, if the closing
price is not reported, the average of the closing bid and asked prices, as
reported on the National Association of Securities Dealers Automated Quotation
System ('NASDAQ'). If on any such date the Common Stock is not quoted by any
such exchange or NASDAQ, the fair market value of the Common Stock on such date
shall be determined by the Committee in its sole discretion. In no event shall
the fair market value of any share be less than its par value.
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8. OPTION TERM
The period after which Options granted under the Plan may not be exercised
shall be determined by the Committee with respect to each Option granted, but
may not exceed [ten] {fifteen} years from the date on which the Option is
granted, subject to the third paragraph of Section 9 hereof.
9. EXERCISE OF OPTIONS
The time or times at which or during which Options granted under the Plan
may be exercised, and any conditions pertaining to such exercise or to the
vesting in the optionee of the right to exercise Options or SARs, shall be
determined by the Committee in its sole discretion. Subsequent to the grant of
an Option which is not immediately exercisable in full, the Committee, at any
time before complete termination of such Option, may accelerate or extend the
time or times at which such Option and the related SAR, if any, may be exercised
in whole or in part.
No Option or SAR granted under the Plan shall be assignable or otherwise
transferable by the optionee, either voluntarily or involuntarily, except by
will or the laws of descent and distribution. An Option or SAR shall be
exercisable during the optionee's lifetime only by the optionee.
The unexercised portion of any Option or SAR granted under the Plan shall
automatically and without notice terminate and become null and void at the time
of the earliest to occur of the following:
(a) the expiration of [ten] {the period of time determined by the
Committee upon the grant of such Option; provided that such period shall
not exceed fifteen} years from the date on which such Option was granted;
(b) the termination of the optionee's employment by, or services to,
the Company and its subsidiaries if such termination constitutes or is
attributable to a breach by the optionee of an employment or consulting
agreement with the Company or any of its subsidiaries, or if the optionee
is discharged or if his or her services are terminated for cause; or
(c) the expiration of such period of time or the occurrence of such
event as the Committee in its discretion may provide upon the granting
thereof.
The Committee and the Board of Directors shall have the right to determine what
constitutes cause for discharge or termination of services, whether the optionee
has been discharged or his or her services terminated for cause and the date of
such discharge or termination of services, and such determination of the
Committee or the Board of Directors shall be final and conclusive.
In the event of the death of an optionee, Options or SARs, if any,
exercisable by the optionee at the time of his or her death may be exercised
within one year thereafter by the person or persons to whom the optionee's
rights under the Options or SARs, if any, shall pass by will or by the
applicable law of descent and distribution. However, in no event may any Option
or SAR be exercised by anyone after the earlier of (a) the final date upon which
the optionee could have exercised it had the optionee continued in the
employment of the Company or its subsidiaries to such date, or (b) one year
after the optionee's death.
An Option may be exercised only by a notice in writing complying in all
respects with the applicable stock Option agreement. Such notice may instruct
the Company to deliver Shares due upon the exercise of the Option to any
registered broker or dealer approved by the Company (an 'approved broker') in
lieu of delivery to the optionee. Such instructions shall designate the account
into which the Shares are to be deposited. The optionee may tender such notice,
properly executed by the optionee,
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together with the aforementioned delivery instructions, to an approved broker.
The purchase price of the Shares as to which an Option is exercised shall be
paid in cash or by check, except that the Committee may, in its discretion,
allow such payment to be made by surrender of unrestricted Shares (at their fair
market value on the date of exercise), or by a combination of cash, check and
unrestricted Shares.
{Payment in accordance with Section 9 may be deemed to be satisfied, if and
to the extent provided in the applicable Option agreement, by delivery to the
Company of an assignment of a sufficient amount of the proceeds from the sale of
Shares acquired upon exercise to pay for all of the Shares acquired upon
exercise and an authorization to the broker or selling agent to pay that amount
to the Company, which sale shall be made at the grantee's direction at the time
of exercise, provided that the Committee may require the grantee to furnish an
opinion of counsel acceptable to the Committee to the effect that such delivery
would not result in the grantee incurring any liability under Section 16 of the
Securities Exchange Act of 1934, as amended, and does not require the consent,
clearance or approval of any governmental or regulatory body (including any
securities exchange or similar self-regulatory organization).}
The obligation of the Company to deliver Shares upon such exercise shall be
subject to all applicable laws, rules and regulations, and to such approvals by
governmental agencies as may be deemed appropriate by the Committee, including,
among others, such steps as counsel for the Company shall deem necessary or
appropriate to comply with requirements of relevant securities laws. Such
obligation shall also be subject to the condition that the Shares reserved for
issuance upon the exercise of Options granted under the Plan shall have been
duly listed on any national securities exchange which then constitutes the
principal trading market for the Shares.
10. STOCK APPRECIATION RIGHTS
The Committee may in its discretion grant SARs in connection with any
Option, either at the time the Option is granted or at any time thereafter while
the Option remains outstanding, to any person who at that time is eligible to be
granted an Option. The number of SARs granted to a person which shall be
exercisable during any given period of time shall not exceed the number of
Shares which he or she may purchase upon the exercise of the related Option or
Options during such period of time. Upon the exercise of an Option pursuant to
the Plan, the SARs relating to the Shares covered by such exercise shall
terminate. Upon the exercise of SARs pursuant to the Plan, the related Option to
the extent of an equal number of Shares shall terminate.
Upon an optionee's exercise of some or all of his or her SARs, the optionee
shall receive in settlement of such SARs an amount equal to the value of the
stock appreciation for the number of SARs exercised, payable in cash, Shares or
a combination thereof, as determined in the sole discretion of the Committee.
The stock appreciation for an SAR is the difference between (i) the fair market
value of the underlying Share on the date of the exercise of such SAR and (ii)
the Option price specified for the related Option. At the time of such exercise,
the optionee shall have the right to elect the portion of the amount to be
received that shall consist of cash and the portion that shall consist of
Shares, which, for purposes of calculating the number of Shares to be received,
shall be valued at their fair market value on the date of the exercise of such
SARs. The Committee in its sole discretion shall have the right to disapprove an
optionee's election to receive cash in full or partial settlement of the SARs
exercised, and to require the Shares to be delivered in lieu of cash. If Shares
are to be received upon exercise of an SAR, cash shall be delivered in lieu of
any fractional share.
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An SAR is exercisable only during the period when the Option to which it is
related is also exercisable. However, in no event shall an SAR be exercisable
during the first six months after being granted except that an SAR shall be
exercisable at the time of death or disability of the optionee if the related
Option is then exercisable. No SAR may be exercised for cash, in whole or in
part, except during the period beginning on the third business day following the
date of release of the Company's quarterly and annual summary statements of
sales and earnings and ending on the twelfth business day following such date.
11. AUTOMATIC GRANTS TO NON-EMPLOYEE DIRECTORS{; ELECTIVE PURCHASE OF SHARES}
{11.1 AUTOMATIC GRANTS TO NON-EMPLOYEE DIRECTORS}
Notwithstanding any other provision of the Plan, each Director who is not
then an employee of the Company or any subsidiary shall receive on the later of
(i) the date of his initial election or appointment to the Board of Directors
and (ii) the date of adoption of the Plan by the Board of Directors,
nonqualified Options to purchase 3,000 Shares and, in connection therewith, SARs
for the same number of Shares. On the date of each subsequent annual meeting of
stockholders of the Company at which a Director is reelected, he shall receive
nonqualified Options to purchase 1,000 Shares and, in connection therewith, SARs
for the same number of Shares. Each such Option shall have a term of ten years,
subject to the provisions of this Section [11] {11.1} below. Each such Option
shall become exercisable to the extent of one-half thereof on each of the two
immediately succeeding anniversaries of the date of grant. The price per Share
to be paid by the holder of such an Option shall equal the fair market value of
one Share on the date the Option is granted. The purchase price of the Shares as
to which such an Option is exercised shall be paid [only in cash, and such SARs
shall be exercisable only for Shares.] {in cash, by check, by the delivery of
unrestricted Shares held by the Director for at least six months, through the
cashless exercise program described in Section 9, or any combination thereof, at
the Director's election. SARs issued under this Section [11] 11.1} shall be
exercisable for Shares. Any Director holding Options or SARs granted under this
Section [11] {11.1} who is a member of the Committee shall not participate in
any action of the Committee with respect to any claim or dispute involving such
Director.
Subject to the provisions of the applicable Plan agreement, the unexercised
portion of any such Option shall automatically and without notice terminate and
become null and void at the time of the earliest to occur of the following:
(a) the expiration of ten years from the date on which such Option was
granted;
(b) the termination of the optionee's services to the Company and its
subsidiaries if the optionee's services are terminated for 'cause,' that is
(i) on account of fraud, embezzlement or other unlawful or tortious
conduct, whether or not involving or against the Company or any affiliate,
(ii) for violation of a policy of the Company or any affiliate, (iii) for
serious and willful acts or misconduct detrimental to the business or
reputation of the Company of any affiliate or (iv) for 'cause' or any like
term as defined in any written contract between the Company and the
optionee; or
(c) if the optionee's service terminates for reasons other than as
provided in subsection (a), (b) or (d) of this Section [11] {11.1,} the
portion of Options granted to such optionee which were exercisable
immediately prior to such termination may be exercised until the earlier of
(i) 90 days after his termination of service or (ii) the date on which such
Options terminate or expire in
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accordance with the provisions of the Plan (other than this Section [11]
{11.1}) and the Plan agreement; or
(d) if the optionee's service terminates by reason of his death, or if
the optionee's service terminates in the manner described in Subsection (c)
of this Section [11] {11.1} and he dies within such period for exercise
provided for therein, the portion of Options exercisable by him immediately
prior to his death shall be exercisable by the person to whom such Options
pass under such optionee's will (or, if applicable, pursuant to the laws of
descent and distribution) until the earlier of (i) one year after the
optionee's death or (ii) the date on which such Options terminate or expire
in accordance with the provisions of the Plan (other than this Section [11]
{11.1}) and the Plan agreement.
To the extent necessary to comply with Rule 16b-3 of the Securities
Exchange Act of 1934 (the 'Act') as in effect from time to time or any successor
rule thereafter ('Rule 16b-3'), the provisions of this Section 11.1 shall not be
amended more than once every six months other than to comport with changes in
the Code, the Employee Retirement Income Security Act of 1974, as amended, or
the rules thereunder.
{11.2 ELECTIVE PURCHASE OF SHARES}
{In addition to any other benefit to which any Director may be entitled
under the terms of the Plan, a Director shall be permitted to elect to receive
all or any portion of the annual retainer fees and/or board of directors or
committee meeting attendance fees, if any (collectively, the 'Fees') that
otherwise would be payable in cash to such Director, in Shares rather than cash
in accordance with the provisions of this Section 11.2.}
{Any Director may elect to receive all or any portion of his or her Fees in
Shares rather than cash by delivering a written election (an 'Election Notice,'
the election set forth therein being referred to as the 'Election') to the
Secretary of the Company. An Election shall continue in effect until it is
revoked by delivery to the Secretary of the Company of a written revocation
notice (a 'Revocation') or modified by delivery to the Secretary of the Company
of a new Election Notice. Any Election or Revocation under this Section 11.2
shall be effective with respect to Fees that otherwise would be paid after the
later of (x) with respect to an Initial Election (as defined below), the date of
receipt by the Secretary of the Company of the Election Notice or, if later, the
date specified in such Election Notice, and (y) with respect to any Revocation
or any Election other than an Initial Election, six months after the date of
receipt by the Secretary of the Company of such Revocation or Election Notice.
There shall be no limit on the number of Elections or Revocations that may be
made a Director. A Director who does not elect that all or a portion of his Fees
be paid in Shares shall receive his Fees in cash on the date that such Fees are
otherwise due. Any Shares payable under this Section 11.2 shall be issued to the
Director on the same date that the Fees would have been paid in cash. The number
of Shares to be issued to a Director who makes an Election under this Section
11.2 shall be determined by dividing:}
{(i) The amount of the Director's Fees for which he has made an
Election under this Section 11.2, by}
{(ii) the average of the fair market value of the Shares (as defined in
Section 7 of the Plan) for the twenty (20) consecutive trading days
immediately preceding the date as of which the Fees otherwise would be
payable.}
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{Only full Shares shall be issued pursuant to this Section. If the formula set
forth above would result in a Director receiving any fractional Share, then, in
lieu of such fractional Share, the Director shall be paid cash.}
{For purposes of this Section 11.2 an 'Initial Election' means an Election
received by the Secretary of the Company from a Director on a date not later
than the later of (a) ten days following the date on which the Company's
shareholders shall have approved the addition to the Plan of this Section 11.2,
and (b) ten days after a Director is first elected a director of the Company.}
PROVISIONS RELATING TO RESTRICTED SHARES
12. GRANTING OF RESTRICTED SHARES
The Committee may grant Restricted Shares to eligible persons at any time.
In granting Restricted Shares, the Committee shall determine in its sole
discretion the period or periods during which the restrictions on
transferability applicable to such Shares will be in force (the 'Restricted
Period'). The Restricted Period may be the same for all such Shares granted at a
particular time or to any one grantee or may be different with respect to
different grantees or with respect to various of the Shares granted to the same
grantee, all as determined by the Committee in its sole discretion.
Each grant of Restricted Shares under the Plan shall be evidenced by an
agreement which shall be executed by the Company and by the person to whom the
Restricted Shares are granted. The agreement shall contain such terms and
provisions, not inconsistent with the Plan, as shall be determined by the
Committee.
13. RESTRICTIONS ON TRANSFERABILITY
During the Restricted Period applicable to each grant of Restricted Shares,
such Shares may not be sold, assigned, transferred or otherwise disposed of, or
mortgaged, pledged or otherwise encumbered. Furthermore, a grantee's eventual
right, if any, to such Shares may not be assigned or transferred except by will
or by the laws of descent and distribution. The restrictions on the
transferability of Restricted Shares imposed by this Section are referred to in
this Plan as the 'Transferability Restrictions.'
14. DETERMINATION OF VESTING RESTRICTIONS
With respect to each grant of Restricted Shares, the Committee shall
determine in its sole discretion the restrictions on vesting which will apply to
the Shares for the Restricted Period, which restrictions as initially determined
and as they may be modified pursuant to the Plan, are referred to hereinafter as
the 'Vesting Restrictions.' By way of illustration but not by way of limitation,
any such determination of Vesting Restrictions by the Committee may provide (a)
that the grantee will not be entitled to any such Shares unless he or she is
still employed by the Company or its subsidiaries at the end of the Restricted
Period; (b) the grantee will become vested in such Shares according to such
schedule as the Committee may determine; (c) that the grantee will become vested
in such Shares at the end of or during the Restricted Period based upon the
achievement (in such manner as the Committee may determine) of such performance
standards as the Committee may determine; (d) that the grantee will become
vested in such Shares in any combination of the foregoing or under such other
terms and conditions as the Committee in its sole discretion may determine; and
(e) how any such Vesting
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Restrictions will be applied, modified or accelerated in the case of the
grantee's death, total and permanent disability (as determined by the Committee)
or retirement.
The performance standards, if any, set by the Committee for any grantee may
be individual performance standards applicable to the grantee, may be
performance standards for the Company or the division, business unit or
subsidiary by which the grantee is employed, may be performance standards set
for the grantee under any other plan providing for incentive compensation for
the grantee, or may be any combination of such standards. Performance standards
set at the time of the grant of any Restricted Shares may be revised at any time
prior to the beginning of the last year of the Restricted Period, but only to
take into account significant changes in circumstances as determined by the
Committee in its sole discretion.
If the Committee deems the Vesting Restrictions inappropriate for any
grantee, it may approve the award and delivery to such grantee of all or any
portion of the Restricted Shares then held in escrow pursuant to Section 15. Any
Restricted Shares so awarded and delivered to a grantee shall be delivered free
and clear of the Transferability Restrictions.
15. MANNER OF HOLDING AND DELIVERING RESTRICTED SHARES
Each certificate issued for Restricted Shares granted hereunder will be
registered in the name of the grantee and will be deposited with the Company or
its designee in an escrow account accompanied by a stock power executed in blank
by the grantee covering such Shares. The certificates for such Shares will
remain in escrow until the earlier of the end of the applicable Restricted
Period, or, if the Committee has provided for earlier termination of the
Transferability Restrictions following a grantee's death, total and permanent
disability, retirement or earlier vesting of such Shares, such earlier
termination of the Transferability Restrictions. At whichever time is
applicable, the certificates representing the number of such Shares to which the
grantee is then entitled will be released from escrow and delivered to the
grantee free and clear of the Transferability Restrictions, provided that in the
case of a grantee who is not entitled to receive the full number of such Shares
evidenced by the certificates then being released from escrow because of the
application of the Vesting Restrictions, such certificates will be returned to
the Company and cancelled, and a new certificate representing the Shares, if
any, to which the grantee is entitled pursuant to the Vesting Restrictions, will
be issued and delivered to the grantee, free and clear of the Transferability
Restrictions.
16. TRANSFER IN THE EVENT OF DEATH, DISABILITY OR RETIREMENT
Notwithstanding a grantee's death, total and permanent disability or
retirement, the certificates for his or her Restricted Shares will remain in
escrow and the Transferability Restrictions will continue to apply to such
Shares unless the Committee determines otherwise. Upon the release of such
Shares from escrow and the termination of the Transferability Restrictions,
either upon any such determination by the Committee or at the end of the
applicable Restricted Period, as the case may be, the portion of such grantee's
Restricted Shares to which he or she is entitled, determined pursuant to his or
her applicable Vesting Restrictions, will be awarded and delivered to the
grantee or to the person or persons to whom the grantee's rights, if any, to the
Shares shall pass by will or by the applicable law of descent and distribution,
as the case may be. However, the Committee may in its sole discretion award and
deliver all or any greater portion of the Restricted Shares to any such grantee
or to such person or persons.
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17. LIMITATIONS ON OBLIGATION TO DELIVER SHARES
The Company shall not be obligated to deliver any Restricted Shares free
and clear of the Transferability Restrictions until the Company has satisfied
itself that such delivery complies with all laws and regulations by which the
Company is bound.
GENERAL PROVISIONS
18. SHAREHOLDER RIGHTS
Except for the Transferability Restrictions, a grantee of Restricted Shares
shall have the rights of a holder of the Shares, including the right to receive
dividends paid on such Shares and the right to vote such Shares at meetings of
shareholders of the Company. However, no optionee shall have any of the rights
of a shareholder with respect to any Shares unless and until he or she has
exercised his or her Option with respect to such Shares and has paid the full
purchase price therefor.
19. CHANGES IN SHARES
In the event of (i) any split, reverse split, combination of shares,
reclassification, recapitalization or similar event which involves, affects or
is made with regard to any class or series of Capital Stock which may be
delivered pursuant to the Plan ('Plan Shares'), (ii) any dividend or
distribution on Plan Shares payable in Capital Stock, or (iii) a merger,
consolidation or other reorganization as a result of which Plan Shares shall be
increased, reduced or otherwise changed or affected, then in each such event the
Committee shall, to the extent it deems it to be consistent with such event and
necessary or equitable to carry out the purposes of the Plan, appropriately
adjust (a) the maximum number of shares of Capital Stock and the classes or
series of such Capital Stock which may be delivered pursuant to the Plan, (b)
the number of shares of Capital Stock and the classes or series of Capital Stock
subject to outstanding Options or SARs, (c) the Option price per share of all
Capital Stock subject to outstanding Options, and (d) any other provisions of
the Plan, provided, however, that (i) any adjustments made in accordance with
clauses (b) and (c) shall make any such outstanding Option or SAR as nearly as
practicable, equivalent to such Option or SAR, as the case may be, immediately
prior to such change and (ii) no such adjustment shall give any optionee any
additional benefits under any outstanding Option.
20. REORGANIZATION
In the event that the Company is merged or consolidated with another
corporation, or in the event that all or substantially all of the assets of the
Company are acquired by another corporation, or in the event of a reorganization
or liquidation of the Company (each such event being hereinafter referred to as
a 'Reorganization Event') or in the event that the Board of Directors shall
propose that the Company enter into a Reorganization Event, then the Committee
may in its discretion take any or all of the following actions: (i) by written
notice to each optionee, provide that his or her Options will be terminated
unless exercised within thirty days (or such longer period as the Committee
shall determine in its sole discretion) after the date of such notice (without
acceleration of the exercisability of such Options); and (ii) advance the date
or dates upon which any or all outstanding Options shall be exercisable.
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Whenever deemed appropriate by the Committee, any action referred to in
subparagraph (a) above may be made conditional upon the consummation of the
applicable Reorganization Event. The provisions of this Section 20 shall apply
notwithstanding any other provision of the Plan.
21. CHANGE OF CONTROL
Notwithstanding anything in the Plan to the contrary, upon (i) the
acquisition by any person of 50% or more of the combined voting power of the
Company's outstanding securities entitled to vote generally in the election of
directors, or (ii) a majority of the directors of the Company being individuals
who are not nominated by the Board of Directors (a 'Change of Control'), any
outstanding Options granted under the Plan to officers or directors of the
Company shall be fully and immediately exercisable and any Vesting Restrictions
applicable to any Restricted Shares held by an officer of the Company shall
lapse and such Restricted Shares shall be delivered free and clear of all
Transferability Restrictions. The acquisition of any portion of the combined
voting power of the Company by DWG Acquisition Group, L.P., Nelson Peltz or
Peter May or by any person affiliated with such persons (or the acquisition or
disposition by any person or persons who receive any award under Section 11
hereof) shall in no event constitute a Change of Control.
22. WITHHOLDING TAXES
Whenever under the Plan shares of Common Stock are to be delivered pursuant
to an award, the Committee may require as a condition of delivery that the
optionee or grantee remit an amount sufficient to satisfy all federal, state and
other governmental holding tax requirements related thereto. Whenever cash is to
be paid under the Plan (whether upon the exercise of an SAR or otherwise), the
Company may, as a condition of its payment, deduct therefrom, or from any salary
or other payments due to the grantee, an amount sufficient to satisfy all
federal, state and other governmental withholding tax requirements related
thereto or to the delivery of any shares of Common Stock under the Plan.
Without limiting the generality of the foregoing, (i) an optionee or
grantee may elect to satisfy all or part of the foregoing withholding
requirements by delivery of unrestricted shares of Common Stock owned by the
optionee or grantee for at least six months (or such other period as the
Committee may determine) having a fair market value (determined as of the date
of such delivery by the optionee or grantee) equal to all or part of the amount
to be so withheld, provided that the Committee may require, as a condition of
accepting any such delivery, the optionee or grantee to furnish an opinion of
counsel acceptable to the Committee to the effect that such delivery would not
result in the optionee or grantee incurring any liability under Section 16(b) of
the Act; and (ii) the Committee may permit any such delivery to be made by
withholding shares of Common Stock from the Shares otherwise issuable pursuant
to the award giving rise to the tax withholding obligation (in which event the
date of delivery shall be deemed the date such award was exercised).
23. AMENDMENT AND DISCONTINUANCE
The Board of Directors may alter, suspend, or discontinue the Plan, but,
except as provided in Section 19, may not, without the approval of the holders
of a majority of the Class A Common Stock, make any alteration or amendment
hereto which operates (a) to materially increase the number of Shares which are
available for the grant of Options, SARs and Restricted Shares under the Plan,
(b) to extend the term during which Options may be granted under the Plan or the
maximum Option period
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provided in Section 9, (c) to decrease the minimum Option price provided in
Section 8, (d) to materially increase the rights of optionees with respect to
SARs in a manner which would not comply with Rule 16b-3, (e) to amend Section 11
in a manner which would not comply with Rule 16b-3, or (f) to materially modify
the requirements as to eligibility for participation in the Plan, or (g) as
otherwise required to comply with Rule 16b-3.
24. GOVERNING LAWS
The Plan shall be applied and construed in accordance with an governed by
the law of the state of Ohio, to the extent such law is not superseded by or
inconsistent with Federal law.
25. EFFECTIVE DATE AND DURATION OF PLAN
The Plan shall become effective on April 24, 1993, the date of its adoption
by the Board of Directors; subject, however, to the approval of the Plan by the
holders of a majority of the Class A Common Stock outstanding and entitled to
vote generally in the election of directors on or prior to April 24, 1994. The
term during which Options, SARs and Restricted Shares may be granted under the
Plan shall expire on April 24, 1998.
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EXHIBIT F
FORM OF INDEMNIFICATION AGREEMENT
AGREEMENT, made this day of , 199 between Triarc
Companies, Inc., a corporation (the 'Company'), and
(the 'Indemnitee').
WHEREAS, it is essential to the Company and its stockholders to attract and
retain qualified and capable directors, officers, employees, trustees, agents
and fiduciaries; and
WHEREAS, it has been the policy of the Company to indemnify its directors
and officers so as to provide them with the maximum possible protection
permitted by law; and
WHEREAS, in recognition of Indemnitee's need for protection against
personal liability in order to induce Indemnitee to serve or continue to serve
the Company in an effective manner, and, in the case of directors and officers,
to supplement or replace the Company's directors' and officers' liability
insurance coverage, and in part to provide Indemnitee with specific contractual
assurance that the protection promised by the Company's corporate charter and/or
corporate by-laws or regulations (together, the Company's 'Governing Documents')
will be available to Indemnitee (regardless of, among other things, any
amendment to or revocation of governing documents or any change in the
composition of the Company's Board of Directors or any acquisition transaction
relating to the Company), the Company, with the prior approval of the Company's
stockholders, wishes to provide the Indemnitee with the benefits contemplated by
this Agreement; and
WHEREAS, as a result of the provision of such benefits Indemnitee has
agreed to serve or to continue to serve the Company;
NOW, THEREFORE, the parties hereto do hereby agree as follows:
1. Definitions. The following terms, as used herein, shall have the
following respective meanings:
(a) An Affiliate: of a specified Person is a Person who directly,
or indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with, the Person specified.
The term Associate used to indicate a relationship with any Person shall
mean (i) any corporation or organization (other than the Company or a
Subsidiary) of which such Person is an officer or partner or is,
directly, or indirectly, the Beneficial Owner of ten (10) percent or
more of any class of Equity Securities, (ii) any trust or other estate
in which such Person has a substantial beneficial interest or as to
which such Person serves as trustee or in a similar fiduciary capacity
(other than an Employee Plan Trustee), (iii) any Relative of such
Person, or (iv) any officer or director of any corporation controlling
or controlled by such Person.
(b) Beneficial Ownership: shall be determined, and a Person shall
be the Beneficial Owner of all securities which such Person is deemed to
own beneficially, pursuant to Rule 13d-3 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended (or
any successor rule or statutory provision), or, if said Rule 13d-3 shall
be rescinded and there shall be no successor rule or statutory provision
thereto, pursuant to said Rule 13d-3 as in effect on [January 1, 1994];
provided, however, that a Person shall, in any event, also be deemed to
be the Beneficial Owner of any Voting Shares: (A) of which such Person
or any of its Affiliates or Associates is, directly or indirectly, the
Beneficial Owner, or (B) of which such Person or any of its Affiliates
or Associates has (i) the right to acquire (whether such right is
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exercisable immediately or only after the passage of time), pursuant to
any agreement, arrangement or understanding or upon the exercise of
conversion rights, exchange rights, warrants, or options, or otherwise,
or (ii) sole or shared voting or investment power with respect thereto
pursuant to any agreement, arrangement, understanding, relationship or
otherwise (but shall not be deemed to be the Beneficial Owner of any
Voting Shares solely by reason of a revocable proxy granted for a
particular meeting of stockholders, pursuant to a public solicitation of
proxies for such meeting, with respect to shares of which neither such
Person nor any such Affiliate or Associate is otherwise deemed the
Beneficial Owner), or (C) of which any other Person is, directly or
indirectly, the Beneficial Owner if such first mentioned Person or any
of its Affiliates or Associates acts with such other Person as a
partnership, syndicate or other group pursuant to any agreement,
arrangement or understanding for the purpose of acquiring, holding,
voting or disposing of any shares of capital stock of the Company; and
provided further, however, that (i) no director or officer of the
Company, nor any Associate or Affiliate of any such director or officer,
shall, solely by reason of any or all of such directors and officers
acting in their capacities as such, be deemed for any purposes hereof,
to be the Beneficial Owner of any Voting Shares of which any other such
director or officer (or any Associate or Affiliate thereof) is the
Beneficial Owner and (ii) no trustee of an employee stock ownership or
similar plan of the Company or any Subsidiary ('Employee Plan Trustee')
or any Associate or Affiliate of any such Trustee, shall, solely by
reason of being an Employee Plan Trustee or Associate or Affiliate of an
Employee Plan Trustee, be deemed for any purposes hereof to be the
Beneficial Owner of any Voting Shares held by or under any such plan.
(c) Change in Control: shall be deemed to have occurred if (A) any
Person (other than (i) the Company or any Subsidiary, (ii) any pension,
profit sharing, employee stock ownership or other employee benefit plan
of the Company or any Subsidiary or any trustee of or fiduciary with
respect to any such plan when acting in such capacity, or (iii) DWG
Acquisition Group, L.P. ('DWG Acquisition'), Nelson Peltz ('Peltz'),
Peter W. May ('May') or any Affiliate or Associate of DWG Acquisition or
of Peltz or May) who is or becomes, after the date of this Agreement,
the Beneficial Owner of 20% or more of the total voting power of the
Voting Shares, (B) during any period of two consecutive years,
individuals who at the beginning of such period constitute the Board of
Directors of the Company and any new director whose election or
appointment by the Board of Directors or nomination or recommendation
for election by the Company's stockholders was approved by a vote of at
least two-thirds (2/3) of the directors then still in office who either
were directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any reason
to constitute a majority thereof, (C) the stockholders of the Company
approve a merger or consolidation of the Company with any other
corporation, other than a merger or consolidation which would result in
the Voting Shares of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into Voting Shares of the surviving entity) at least 80% of
the total voting power represented by the Voting Shares of the Company
or such surviving entity outstanding, or the stockholders of the Company
approve a plan of complete liquidation of the Company or an agreement
for the sale or disposition by the Company of all or substantially all
of the Company's assets, or (D) a change in control of a nature that
would be required to be reported
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in response to Item 6(e) of Schedule 14A of Regulation 14 promulgated
under the Securities Exchange Act of 1934, as amended, as in effect on
January 1, 1994.
(d) Claim: means any threatened, pending or completed action, suit,
arbitration or proceeding, or any inquiry or investigation, whether
brought by or in the right of the Company or otherwise, that Indemnitee
in good faith believes might lead to the institution of any such action,
suit, arbitration or proceeding, whether civil, criminal,
administrative, investigative or other, or any appeal therefrom.
(e) D&O Insurance: means any valid directors' and officers'
liability insurance policy maintained by the Company for the benefit of
the Indemnitee, if any.
(f) Determination: means a determination, and Determined means a
matter which has been determined based on the facts known at the time,
by: (i) a majority vote of a quorum of disinterested directors, or (ii)
if such a quorum is not obtainable, or even if obtainable, if a quorum
of disinterested directors so directs, by independent legal counsel in a
written opinion, or, in the event there has been a Change in Control, by
the Special Independent Counsel (in a written opinion) selected by
Indemnitee as set forth in Section 6, or (iii) a majority of the
disinterested stockholders of the Company, or (iv) a final adjudication
by a court of competent jurisdiction.
(g) Equity Security: shall have the meaning given to such term
under Rule 3a11-1 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as amended, as in effect on January 1,
1994.
(h) Excluded Claim: means any payment for Losses or Expenses in
connection with any Claim: (i) based upon or attributable to Indemnitee
gaining in fact any personal profit or advantage to which Indemnitee is
not entitled; or (ii) for the return by Indemnitee of any remuneration
paid to Indemnitee without the previous approval of the stockholders of
the Company which is illegal; or (iii) for an accounting of profits in
fact made from the purchase or sale by Indemnitee of securities of the
Company within the meaning of Section 16 of the Securities Exchange Act
of 1934, as amended, as in effect on January 1, 1994, or similar
provisions of any state law; or (iv) resulting from Indemnitee's
knowingly fraudulent, dishonest or willful misconduct; or (v) the
payment of which by the Company under this Agreement is not permitted by
applicable law.
(i) Expenses: means any reasonable expenses incurred by Indemnitee
as a result of a Claim or Claims made against Indemnitee for
Indemnifiable Events including, without limitation, attorneys' fees and
all other costs, expenses and obligations paid or incurred in connection
with investigating, defending, being a witness in or participating in
(including on appeal), or preparing to defend, be a witness in or
participate in any Claim relating to any Indemnifiable Event.
(j) Fines: means any fine, penalty or, with respect to an employee
benefit plan, any excise tax or penalty assessed with respect thereto.
(k) Indemnifiable Event: means any event or occurrence, occurring
prior to or after the date of this Agreement, related to the fact that
Indemnitee is or was a director, officer, employee, trustee, agent or
fiduciary of the Company, or is or was serving at the request of the
Company as a director, officer, employee, trustee, agent or fiduciary of
another corporation, partnership, joint venture, employee benefit plan,
trust or other enterprise, or by reason of
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anything done or not done by Indemnitee, including, but not limited to,
any breach of duty, neglect, error, misstatement, misleading statement,
omission, or other act done or wrongfully attempted by Indemnitee, or
any of the foregoing alleged by any claimant, in any such capacity.
(l) Losses: means any amounts or sums which Indemnitee is legally
obligated to pay as a result of a Claim or Claims made against
Indemnitee for Indemnifiable Events including, without limitation,
damages, judgments and sums or amounts paid in settlement of a Claim or
Claims, and Fines.
(m) Person: means any individual, partnership, corporation,
business trust, joint stock company, trust, unincorporated association,
joint venture, governmental authority or other entity of whatever
nature.
(n) Potential Change in Control: shall be deemed to have occurred
if (A) the Company enters into an agreement, the consummation of which
would result in the occurrence of a Change in Control; (B) any Person
(including the Company) publicly announces an intention to take or to
consider taking actions which if consummated would constitute a Change
in Control; (C) any Person (other than (i) the Company or any
Subsidiary, (ii) any pension, profit sharing, employee stock ownership
or other employee benefit plan of the Company or any Subsidiary or any
trustee of or fiduciary with respect to any such plan when acting in
such capacity, or (iii) DWG Acquisition, Peltz, May, or any Affiliate or
Associate of DWG Acquisition or of Peltz or May) who is or becomes the
Beneficial Owner of 9.5% or more of the total voting power of the Voting
Shares, increases his Beneficial Ownership of such voting power by 5% or
more over the percentage so owned by such Person on the date hereof; or
(D) the Board of Directors adopts a resolution to the effect that, for
purposes of this Agreement, a Potential Change in Control has occurred.
(o) Relative: means a Person's spouse, parents, children, siblings,
mothers-and father-in-law, sons-and daughters-in-law, and brothers-and
sisters-in-law.
(p) Reviewing Party: means any appropriate person or body
consisting of a member or members of the Company's Board of Directors or
any other person or body appointed by the Board (including the Special
Independent Counsel referred to in Section 6) who is not a party to the
particular Claim for which Indemnitee is seeking indemnification.
(q) Subsidiary: means any corporation of which a majority of any
class of Equity Security is owned, directly or indirectly, by the
Company.
(r) Trust: means the trust established pursuant to Section 7
hereof.
(s) Voting Shares: means any issued and outstanding shares of
capital stock of the Company entitled to vote generally in the election
of directors.
2. Basic Indemnification Agreement. In consideration of, and as an
inducement to, the Indemnitee rendering valuable services to the Company,
the Company agrees that in the event Indemnitee is or becomes a party to or
witness or other participant in, or is threatened to be made a party to or
witness or other participant in, a Claim by reason of (or arising in part
out of) an Indemnifiable Event, the Company will indemnify Indemnitee to
the fullest extent authorized by law, against any and all Expenses and
Losses (including all interest, assessments and other charges paid or
payable in connection with or in respect of such Expenses and Losses) of
such Claim,
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whether or not such Claim proceeds to judgment or is settled or otherwise
is brought to a final disposition, subject in each case, to the further
provisions of this Agreement.
3. Limitations on Indemnification. Notwithstanding the provisions of
Section 2, Indemnitee shall not be indemnified and held harmless from any
Losses or Expenses (a) which have been Determined, as provided herein, to
constitute an Excluded Claim; (b) to the extent Indemnitee is indemnified
by the Company and has actually received payment pursuant to the Company's
Governing Documents, D&O Insurance, or otherwise; or (c) other than
pursuant to the last sentence of Section 4(d) or Section 14, in connection
with any Claim initiated by Indemnitee, unless the Company has joined in or
the Board of Directors has authorized such Claim.
4. Indemnification Procedures.
(a) Promptly after receipt by Indemnitee of notice of any Claim,
Indemnitee shall, if indemnification with respect thereto may be sought
from the Company under this Agreement, notify the Company of the
commencement thereof and Indemnitee agrees further not to make any
admission or effect any settlement with respect to such Claim without
the consent of the Company, except any Claim with respect to which the
Indemnitee has undertaken the defense in accordance with the second to
last sentence of Section 4(d).
(b) If, at the time of the receipt of such notice, the Company has
D&O Insurance in effect, the Company shall give prompt notice of the
commencement of Claim to the insurers in accordance with the procedures
set forth in the respective policies. The Company shall thereafter take
all necessary or desirable action to cause such insurers to pay, on
behalf of Indemnitee, all Losses and Expenses payable as a result of
such Claim.
(c) To the extent the Company does not, at the time of the Claim
have applicable D&O Insurance, or if a Determination is made that any
Expenses arising out of such Claim will not be payable under the D&O
Insurance then in effect, the Company shall be obligated to pay the
Expenses of any Claim in advance of the final disposition thereof and
the Company, if appropriate, shall be entitled to assume the defense of
such Claim, with counsel satisfactory to Indemnitee, upon the delivery
to Indemnitee of written notice of its election so to do. After delivery
of such notice, the Company will not be liable to Indemnitee under this
Agreement for any legal or other Expenses subsequently incurred by the
Indemnitee in connection with such defense other than reasonable
Expenses of investigation; provided that Indemnitee shall have the right
to employ its counsel in such Claim but the fees and expenses of such
counsel incurred after delivery of notice from the Company of its
assumption of such defense shall be at the Indemnitee's expense;
provided further that if: (i) the employment of counsel by Indemnitee
has been previously authorized by the Company; (ii) Indemnitee shall
have reasonably concluded that there may be a conflict of interest
between the Company and Indemnitee in the conduct of any such defense;
or (iii) the Company shall not, in fact, have employed counsel to assume
the defense of such action, the reasonable fees and expenses of counsel
shall be at the expense of the Company.
(d) All payments on account of the Company's indemnification
obligations under this Agreement shall be made within sixty (60) days of
Indemnitee's written request therefor unless a Determination is made
that the Claims giving rise to Indemnitee's request are Excluded Claims
or otherwise not payable under this Agreement, provided that all
payments on account of the Company's obligation to pay Expenses under
Section 4(c) of this Agreement prior to the final disposition of any
Claim shall be made within 20 days of Indemnitee's written request
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therefor and such obligation shall not be subject to any such
Determination but shall be subject to Section 4(e) of this Agreement. In
the event the Company takes the position that the Indemnitee is not
entitled to indemnification in connection with the proposed settlement
of any Claim, the Indemnitee shall have the right at its own expense to
undertake defense of any such Claim, insofar as such proceeding involves
Claims against the Indemnitee, by written notice given to the Company
within 10 days after the Company has notified the Indemnitee in writing
of its contention that the Indemnitee is not entitled to
indemnification. If it is subsequently determined in connection with
such proceeding that the Indemnifiable Events are not Excluded Claims
and that the Indemnitee, therefore, is entitled to be indemnified under
the provisions of Section 2 hereof, the Company shall promptly indemnify
the Indemnitee.
(e) Indemnitee hereby expressly undertakes and agrees to reimburse
the Company for all Losses and Expenses paid by the Company in
connection with any Claim against Indemnitee in the event and only to
the extent that a Determination shall have been made by a court of
competent jurisdiction in a decision from which there is no further
right to appeal that Indemnitee is not entitled to be indemnified by the
Company for such Losses and Expenses because the Claim is an Excluded
Claim or because Indemnitee is otherwise not entitled to payment under
this Agreement.
5. Settlement. The Company shall have no obligation to indemnify
Indemnitee under this Agreement for any amounts paid in settlement of any
Claim effected without the Company's prior written consent. The Company
shall not settle any Claim in which it takes the position that Indemnitee
is not entitled to indemnification in connection with such settlement
without the consent of the Indemnitee, nor shall the Company settle any
Claim in any manner which would impose any Fine or any obligation on
Indemnitee, without Indemnitee's written consent. Neither the Company nor
Indemnitee shall unreasonably withhold their consent to any proposed
settlement.
6. Change in Control; Extraordinary Transactions. The Company and
Indemnitee agree that if there is a Change in Control of the Company (other
than a Change in Control which has been approved by a majority of the
Company's Board of Directors who were directors immediately prior to such
Change in Control) then all Determinations thereafter with respect to the
rights of Indemnitee to be paid Losses and Expenses under this Agreement
shall be made only by a special independent counsel (the 'Special
Independent Counsel') selected by Indemnitee and approved by the Company
(which approval shall not be unreasonably withheld) or by a court of
competent jurisdiction. The Company shall pay the reasonable fees of such
Special Independent Counsel and shall indemnify such Special Independent
Counsel against any and all reasonable expenses (including reasonable
attorneys' fees), claims, liabilities and damages arising out of or
relating to this Agreement or its engagement pursuant hereto.
The Company covenants and agrees that, in the event of a Change in
Control of the sort set forth in clause (C) of Section 1(c), the Company
will use its best efforts (a) to have the obligations of the Company under
this Agreement including, but not limited to those under Section 7,
expressly assumed by the surviving, purchasing or succeeding entity, or (b)
otherwise to adequately provide for the satisfaction of the Company's
obligations under this Agreement, in a manner reasonably acceptable to the
Indemnitee.
7. Establishment of Trust. In the event of a Potential Change in
Control, the Company shall, upon written request by Indemnitee, create a
trust (the 'Trust') for the benefit of the Indemnitee
F-6
<PAGE>
and from time to time upon written request of Indemnitee shall fund the
Trust in an amount sufficient to satisfy any and all Losses and Expenses
which are actually paid or which Indemnitee reasonably determines from time
to time may be payable by the Company under this Agreement. The amount or
amounts to be deposited in the Trust pursuant to the foregoing funding
obligation shall be determined by the Reviewing Party, in any case in which
the Special Independent Counsel is involved. The terms of the Trust shall
provide that upon a Change in Control: (i) the Trust shall not be revoked
or the principal thereof invaded without the written consent of the
Indemnitee; (ii) the trustee of the Trust shall advance, within twenty days
of a request by the Indemnitee, any and all Expenses to the Indemnitee (and
the Indemnitee hereby agrees to reimburse the Trust under the circumstances
under which the Indemnitee would be required to reimburse the Company under
Section 4(e) of this Agreement); (iii) the Company shall continue to fund
the Trust from time to time in accordance with the funding obligations set
forth above; (iv) the trustee of the Trust shall promptly pay to the
Indemnitee all Losses and Expenses for which the Indemnitee shall be
entitled to indemnification pursuant to this Agreement; and (v) all
unexpended funds in the Trust shall revert to the Company upon a final
determination by a court of competent jurisdiction in a final decision from
which there is no further right of appeal that the Indemnitee has been
fully indemnified under the terms of this Agreement. The Trustee of the
Trust shall be chosen by the Indemnitee.
8. No Presumption. For purposes of this Agreement, the termination of
any Claim by judgment, order, settlement (whether with or without court
approval) or conviction, or upon a plea of nolo contendere, or its
equivalent, shall not, of itself, create a presumption that Indemnitee did
not meet any particular standard of conduct or have any particular belief
or that a court has determined that indemnification is not permitted by
applicable law.
9. Non-exclusivity, Etc. The rights of the Indemnitee hereunder shall
be in addition to any other rights Indemnitee may have under the Company's
Governing Documents or under the laws, as in effect from time to time, of
the Company's state of incorporation (such laws being the 'Applicable State
Laws'), any vote of stockholders or disinterested directors or otherwise,
both as to action in the Indemnitee's official capacity and as to action in
any other capacity by holding such office, and shall continue after the
Indemnitee ceases to serve the Company as a director, officer, employee,
agent or fiduciary, for so long as the Indemnitee shall be subject to any
Claim by reason of (or arising in part out of) an Indemnifiable Event. To
the extent that a change in the Applicable State Laws (whether by statute
or judicial decision or by reincorporation of the Company in a different
jurisdiction) permits greater indemnification by agreement than would be
afforded currently under the Company's Governing Documents and this
Agreement, it is the intent of the parties hereto that Indemnitee shall
enjoy by this Agreement the greater benefits so afforded by such change.
10. Liability Insurance. To the extent the Company maintains D&O
Insurance, Indemnitee, if an officer or director of the Company, shall be
covered by such policy or policies, in accordance with its or their terms,
to the maximum extent of the coverage available for any director or officer
of the Company.
11. Subrogation. In the event of payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of the
rights of recovery of Indemnitee, who shall execute all papers required and
shall do everything that may be necessary to secure such rights,
F-7
<PAGE>
including the execution of such documents necessary to enable the Company
effectively to bring suit to enforce such rights.
12. Partial Indemnity, Etc. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of the Expenses and Losses of a Claim but not, however, for all of
the total amount thereof, the Company shall nevertheless indemnify
Indemnitee for the portion thereof to which Indemnitee is entitled.
Moreover, notwithstanding any other provision of this Agreement, to the
extent that Indemnitee has been successful on the merits or otherwise in
defense of any or all Claims relating in whole or in part to any
Indemnifiable Event or in defense of any issue or matter therein, including
dismissal without prejudice, Indemnitee shall be indemnified against all
Expenses incurred in connection therewith. In connection with any
Determination as to whether Indemnitee is entitled to be indemnified
hereunder the burden of proof shall be on the Company to establish that
Indemnitee is not so entitled.
13. Liability of Company. The Indemnitee agrees that neither the
stockholders nor the directors nor any officer, employee, representative or
agent of the Company shall be personally liable for the satisfaction of the
Company's obligations under this Agreement and the Indemnitee shall look
solely to the assets of the Company for satisfaction of any claims
hereunder.
14. Enforcement.
(a) Indemnitee's right to indemnification and other rights under
this Agreement shall be specifically enforceable by Indemnitee only in
the state or Federal courts of the State of New York or of the then
current State of incorporation of the Company and shall be enforceable
notwithstanding any adverse Determination by the Company's Board of
Directors, independent legal counsel, the Special Independent Counsel or
the Company's stockholders and no such Determination shall create a
presumption that Indemnitee is not entitled to be indemnified hereunder.
In any such action the Company shall have the burden of proving that
indemnification is not required under this Agreement.
(b) In the event that any action is instituted by Indemnitee under
this Agreement, or to enforce or interpret any of the terms of this
Agreement, Indemnitee shall be entitled to be paid all court costs and
reasonable expenses, including reasonable counsel fees, incurred by
Indemnitee with respect to such action, unless the court determines that
each of the material assertions made by Indemnitee as a basis for such
action were not made in good faith or were frivolous.
15. Severability. In the event that any provision of this Agreement is
determined by a court to require the Company to do or to fail to do an act
which is in violation of applicable law, such provision (including any
provision within a single section, paragraph or sentence) shall be limited
or modified in its application to the minimum extent necessary to avoid a
violation of law, and, as so limited or modified, such provision and the
balance of this Agreement shall be enforceable in accordance with their
terms to the fullest extent permitted by law.
16. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the state in which the Company is
incorporated at the time any claim for indemnification is made hereunder
applicable to agreements made and to be performed entirely within such
state.
17. Consent to Jurisdiction. The Company and the Indemnitee each
hereby irrevocably consent to the jurisdiction of the courts of the State
of New York and the State promulgating the
F-8
<PAGE>
Applicable State Laws at the time any claim for indemnification hereunder
is made for all purposes in connection with any action or proceeding which
arises out of or relates to this Agreement and agree that any action
instituted under this Agreement shall be brought only in the state and
Federal courts of the States indicated in this Section.
18. Notices. All notices, or other communications required or
permitted hereunder shall be sufficiently given for all purposes if in
writing and personally delivered, telegraphed, telexed, sent by facsimile
transmission or sent by registered or certified mail, return receipt
requested, with postage prepaid addressed as follows, or to such other
address as the parties shall have given notice of pursuant hereto:
(a) If to the Company, to:
Triarc Companies, Inc.
777 South Flagler Drive, Suite 1000E
West Palm Beach, Florida 33401
Attention: Corporate Secretary
Telecopier No. 407-653-4268
(b) If to the Indemnitee, to:
........................................................................
........................................................................
........................................................................
........................................................................
19. Counterparts. This Agreement may be signed in counterparts, each
of which shall be an original and all of which, when taken together, shall
constitute one and the same instrument.
20. Successors and Assigns. This Agreement shall be (i) binding upon
all successors and assigns of the Company, including any direct or indirect
successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business and/or assets of the Company, and (ii)
shall be binding upon and inure to the benefit of any successors and
assigns, heirs, and personal or legal representatives of Indemnitee.
21. Amendment; Waiver. No amendment, modification, termination or
cancellation of this Agreement shall be effective unless made in a writing
signed by each of the parties hereto. No waiver of any of the provisions of
this Agreement shall be deemed or shall constitute a waiver of any other
provision hereof (whether or not similar) nor shall such waiver constitute
a continuing waiver.
F-9
<PAGE>
IN WITNESS WHEREOF, the Company and Indemnitee have executed this Agreement
as of the day and year first above written.
TRIARC COMPANIES, INC.
By ..................................
Title:
ATTEST:
[Corporate Seal]
By ................................
Title:
WITNESS:
................................... ...................................
Indemnitee
F-10
<PAGE>
STATEMENT OF DIFFERENCES
The section symbol shall be expressed as SS.
Language in Exhibit E that will be added to the Equity Participation Plan
if Proposal 3 is approved (appearing in the paper format as underlined)
will appear in braces ({ }) in this electronic format.
<PAGE>
TRIARC COMPANIES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Nelson Peltz and Peter W. May and each of them,
with power of substitution, attorneys and proxies to represent and to vote all
shares of Class A Common Stock of Triarc Companies, Inc. (the 'Company') which
the undersigned is entitled to vote at the Annual Meeting of Shareholders of
Triarc Companies, Inc. to be held at Hotel Inter-Continental, New York, New York
on Thursday, June 9, 1994, at 11:00 A.M. local time, and at any adjournments or
postponements thereof:
<TABLE>
<S> <C> <C>
1. Election of Directors: FOR all nominees listed below AUTHORITY WITHHELD to vote for all
(except as otherwise instructed below) [ ] nominees listed below [ ]
Nelson Peltz, Peter W. May, Leon Kalvaria, Hugh L. Carey, Clive Chajet, Irving Mitchell Felt, Stanley R. Jaffee,
Harold E. Kelley, Richard M. Kerger, M. L. Lowenkron, Daniel R. McCarthy, Raymond S. Troubh and Gerald Tsai, Jr.
To withhold authority to vote for any nominee, write that nominee's name in space below:
_______________________________________________________________________________________________________________
2. Proposal to reincorporate the Company in Delaware by means of a merger and thereby increase the Company's author-
ized shares and adopt certain 'fair price' and anti-takeover measures which are described in the Proxy Statement.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Proposal to approve amendments to the Company's Amended and Restated 1993 Equity Participation Plan which are
described in the Proxy Statement.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Proposal to authorize the Company to enter into Indemnification Agreements with each of its directors and officers
and certain other persons.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
</TABLE>
<PAGE>
<PAGE>
The Board of Directors recommends a vote FOR the election of the nominees named
above and FOR Proposals 2, 3 and 4. This Proxy when properly executed will be
voted in the manner directed herein by the undersigned shareholder. If no
direction is made, this Proxy will be voted FOR the election of the nominees
named above and FOR proposals 2, 3 and 4. Under the Company's Code of
Regulations, business transacted at the Annual Meeting of Shareholders is
confined to the purposes stated in the Notice of the Meeting. This Proxy will,
however, convey discretionary authority to the persons named herein as proxies
to vote on matters incident to the conduct of the Meeting.
<TABLE>
<S> <C>
.......................... , 1994
Date
...........................[SEAL]
...........................[SEAL]
THIS PROXY SHOULD BEAR YOUR
SIGNATURE(S) EXACTLY AS YOUR
NAME(S) APPEAR IN THE STENCIL TO
THE LEFT. WHEN SIGNING AS
ATTORNEY, EXECUTOR, ADMINISTRA-
TOR, PERSONAL REPRESENTATIVE,
TRUSTEE, GUARDIAN OR CORPORATE
OFFICER, PLEASE GIVE FULL TITLE.
FOR JOINT ACCOUNTS, EACH JOINT
OWNER SHOULD SIGN.
PLEASE DATE, SIGN AND RETURN TODAY IN THE ENCLOSED ENVELOPE.
</TABLE>
