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Registration No. 333-______________
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------------
TRIARC COMPANIES, INC.
(Exact name of Registrant as specified in its charter)
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DELAWARE 5149 38-0471180
(State or other jurisdiction of (Primary Standard Industrial (IRS Employer
incorporation or organization) Classification Code Number) Identification No.)
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280 PARK AVENUE
NEW YORK, NEW YORK 10017
(212) 451-3000
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
BRIAN L. SCHORR
EXECUTIVE VICE PRESIDENT AND GENERAL COUNSEL
TRIARC COMPANIES, INC.
280 PARK AVENUE
NEW YORK, NEW YORK 10017
(212) 451-3000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
---------------------------
COPY TO:
PAUL D. GINSBERG
PAUL, WEISS, RIFKIND, WHARTON & GARRISON
1285 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10019-6064
212-373-3000
---------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO PUBLIC:
As soon as practicable after this Registration Statement becomes effective and
upon consummation of the Merger described in the enclosed Proxy
Statement/Prospectus.
---------------------------
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number for the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
CALCULATION OF REGISTRATION FEE
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Proposed Maximum Amount of
Title of Each Class of Amount to be Offering Price Per Proposed Maximum Registration
Securities to be Registered Registered Share Aggregate Offering Price Fee
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Class A Common Stock, par value $.10 per share 1,971,350 shares(1) (2) (2) $8,491.77(2)(3)
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(1) Based upon the maximum number of shares that may be issued in the Merger
described herein.
(2) The registration fee for the securities registered hereby has been
calculated pursuant to Rule 457(f)(1) under the Securities Act as follows:
one thirty-third of 1% of (A) the product of (i) $3.08, the average of the
high and low prices of Cable Car Common Stock reported on The Nasdaq
SmallCap Market on October 20, 1997, multiplied by (ii) 9,098,324, the
maximum number of shares of Cable Car Common Stock which may be exchanged
upon the consummation of the Merger.
(3) A fee of $7020.86 was paid on behalf of Cable Car Beverage Corporation with
respect to the transaction on August 12, 1997, pursuant to a filing under
Rule 14a-6(a) of a Schedule 14A. Pursuant to Rule 457(b) promulgated under
the Securities Act and Section 14(g)(1)(B) and Rule 0-11 promulgated under
the Securities Exchange Act of 1934, as amended, the amount of such
previously paid fee has been credited against the registration fee which
would otherwise be payable in connection with this filing. Accordingly, an
additional filing fee of $1,470.91 is required to be paid in connection
with this filing.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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[LETTERHEAD OF CABLE CAR BEVERAGE CORPORATION]
To our Stockholders:
You are cordially invited to attend a Special Meeting of Stockholders (the
'Special Meeting') of Cable Car Beverage Corporation ('Cable Car'), which will
be held on Tuesday, November 25, 1997, at 10:00 a.m., local time, at Norwest
Bank Building, 1740 Broadway, Forum Room, Denver, Colorado 80274. At the
Special Meeting, you will be asked to consider and vote upon the
proposed acquisition by Triarc Companies, Inc. ('Triarc') of Cable Car.
The acquisition will be accomplished by a merger (the 'Merger') of a wholly
owned subsidiary of Triarc into Cable Car, with Cable Car being the surviving
corporation in the Merger. After the effective time of the Merger, Cable Car
will be a wholly owned subsidiary of Triarc. The terms of the Merger are
described in detail in the accompanying Proxy Statement/Prospectus.
In the Merger, each share of common stock, par value $.01 per share, of
Cable Car (the 'Cable Car Common Stock') issued and outstanding immediately
prior to the effective time of the Merger will be converted into the right to
receive 0.1722 of a share of Triarc's Class A common stock, par value $.10 per
share ('Triarc Common Stock'), subject to certain adjustments described in the
Proxy Statement/Prospectus, and any cash to be paid in lieu of fractional shares
of Triarc Common Stock.
YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE MERGER AND RECOMMENDS
A VOTE FOR APPROVAL OF THE MERGER AND THE RELATED AGREEMENT AND PLAN OF MERGER.
In reaching its determination to approve the Merger, the Board of Directors
consulted with Cable Car's management, as well as its legal counsel and
financial advisor, and considered several factors including those discussed at
pages 40-41 of the accompanying Proxy Statement/Prospectus under the caption
'The Proposed Merger and Related Matters -- Cable Car's Reasons for the Merger;
Recommendation of Cable Car's Board of Directors.' The Merger provides that the
Cable Car stockholders will receive stock in Triarc, which has a higher market
value than the recent trading value of the Cable Car Common Stock. Additionally,
the Merger affords holders of Cable Car Common Stock the opportunity to reduce
their exposure to the risks inherent in Cable Car's limited number of products,
which are primarily premium soft drinks and waters, and the opportunity to
achieve greater liquidity and stability through an equity interest in Triarc (a
New York Stock Exchange listed company). You are urged to, and should, read the
discussion set forth under the captions 'The Proposed Merger and Related
Matters -- Cable Car's Reasons for the Merger; Recommendations of Cable Car's
Board of Directors' at pages 40-41, ' -- Opinion of Financial Advisor to Cable
Car' at pages 42-46, and ' -- Background of the Merger' at pages 38-40 of the
accompanying Proxy Statement/Prospectus, each in its entirety.
The attached Notice of Special Meeting and Proxy Statement/Prospectus
contain detailed information concerning the Special Meeting. Please read the
Notice and the Proxy Statement/Prospectus and consider this information
carefully.
THE MERGER CANNOT BE EFFECTED UNLESS IT IS APPROVED BY THE HOLDERS OF A
MAJORITY OF THE SHARES OF CABLE CAR COMMON STOCK ENTITLED TO VOTE AT THE SPECIAL
MEETING. IT IS IMPORTANT THAT YOUR SHARES OF CABLE CAR COMMON STOCK BE
REPRESENTED AND VOTED AT THE SPECIAL MEETING, REGARDLESS OF THE SIZE OF YOUR
HOLDINGS. ACCORDINGLY, WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING IN
PERSON, PLEASE PROMPTLY MARK, SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT IN
THE ACCOMPANYING POSTAGE PREPAID ENVELOPE. YOU MAY REVOKE YOUR PROXY IN THE
MANNER DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT/PROSPECTUS AT ANY TIME
BEFORE IT IS EXERCISED AT THE SPECIAL MEETING.
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Returning the proxy does NOT deprive you of your right to attend the
Special Meeting and to vote your shares in person with respect to the matters to
be acted upon at the Special Meeting. This solicitation is made on behalf of the
Board of Directors of Cable Car.
PLEASE DO NOT SEND ANY STOCK CERTIFICATES WITH YOUR PROXY CARD.
We look forward to your attendance at the Special Meeting. Thank you for
your consideration and your continued support.
Sincerely,
SAMUEL M. SIMPSON
Chairman
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CABLE CAR BEVERAGE CORPORATION
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 25, 1997
To the Stockholders of
CABLE CAR BEVERAGE CORPORATION:
Notice is hereby given that a Special Meeting of Stockholders of Cable Car
Beverage Corporation, a Delaware corporation ('Cable Car'), will be held on
Tuesday, November 25, 1997, 10:00 a.m., local time, at Norwest Bank Building,
1740 Broadway, Forum Room, Denver, Colorado 80274 for the following
purposes:
1. To consider and vote upon the approval of the Agreement and Plan of
Merger dated June 24, 1997, as amended (the 'Merger Agreement'), among
Triarc Companies, Inc., a Delaware corporation ('Triarc'), CCB Merger
Corporation, a Delaware corporation and a wholly owned subsidiary of Triarc
('Mergerco'), and Cable Car, that provides for the merger of Mergerco into
Cable Car (the 'Merger'). After the effective time of the Merger, Cable Car
will be the surviving corporation and a wholly owned subsidiary of Triarc.
Upon consummation of the Merger, each share of common stock, par value
$.01 per share, of Cable Car (the 'Cable Car Common Stock') issued and
outstanding immediately prior to the effective time of the Merger (other
than treasury shares and shares owned by Triarc and its subsidiaries and by
subsidiaries of Cable Car, which shares will be canceled, and shares with
respect to which the holder has properly exercised its appraisal rights
under Delaware law) will be converted into the right to receive 0.1722 of a
share (the 'Conversion Price') of Class A Common Stock, par value $.10 per
share, of Triarc ('Triarc Common Stock'), subject to the adjustment
described below, and any cash to be paid in lieu of fractional shares of
Triarc Common Stock. The Conversion Price is subject to adjustment as
follows: (i) if the Average Triarc Share Price (as defined under the
caption 'The Merger Agreement -- Conversion of Securities' in the
accompanying Proxy Statement/Prospectus) is less than $18.875, then the
Conversion Price shall be adjusted to equal the quotient obtained by
dividing $3.25 by such Average Triarc Share Price, and (ii) if the Average
Triarc Share Price is greater than $24.50, then the Conversion Price shall
be adjusted to equal the quotient obtained by dividing $4.22 by such
Average Triarc Share Price.
2. To transact such other business as may properly come before the
Special Meeting or any adjournment or postponement thereof. Cable Car does
not currently intend to bring any business other than the approval of the
Merger Agreement and the Merger before the Special Meeting or any
adjournments or postponements thereof.
THE BOARD OF DIRECTORS OF CABLE CAR HAS UNANIMOUSLY APPROVED THE MERGER AND
BELIEVES THAT THE TERMS OF THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF,
CABLE CAR AND ITS STOCKHOLDERS. THE BOARD OF DIRECTORS OF CABLE CAR RECOMMENDS
UNANIMOUSLY THAT CABLE CAR STOCKHOLDERS VOTE FOR APPROVAL OF THE MERGER
AGREEMENT AND THE MERGER AT THE SPECIAL MEETING.
Only stockholders of record at the close of business on October 23, 1997
are entitled to notice of, and to vote at, the Special Meeting and any
adjournments or postponements thereof.
Holders of Cable Car Common Stock have the right to dissent from the merger
and seek an appraisal of their shares pursuant to court proceedings by following
the procedures prescribed under Section 262 of the General Corporation Law of
the State of Delaware as further described under the caption 'Appraisal Rights'
in the accompanying Proxy Statement/Prospectus.
The accompanying Proxy Statement/Prospectus describes in detail the Merger
and the transactions contemplated by the Merger Agreement and contains certain
other information regarding Cable Car and Triarc. The Merger is of great
importance to Cable Car and its stockholders. Please read the Proxy
Statement/Prospectus carefully and then complete, sign and date the enclosed
proxy card and return it
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promptly in the enclosed self-addressed postage prepaid reply envelope whether
or not you plan to attend the Special Meeting.
By Order of the Board of Directors,
SAMUEL M. SIMPSON
Chairman
October 24, 1997
YOUR VOTE IS IMPORTANT.
------------------------
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE SPECIAL MEETING IN
PERSON. WHETHER OR NOT YOU PLAN TO ATTEND, PLEASE MARK, SIGN, DATE AND RETURN
THE ENCLOSED PROXY CARD PROMPTLY IN THE ENCLOSED POSTAGE PREPAID REPLY ENVELOPE.
YOU MAY VOTE IN PERSON AT THE SPECIAL MEETING EVEN IF YOU HAVE PREVIOUSLY
RETURNED A PROXY CARD.
------------------------
PLEASE DO NOT SEND ANY STOCK CERTIFICATES WITH YOUR PROXY CARD.
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PROXY STATEMENT/PROSPECTUS
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[CABLE CAR LOGO] [TRIARC LOGO]
PROXY STATEMENT
FOR
SPECIAL MEETING OF STOCKHOLDERS
OF
CABLE CAR BEVERAGE CORPORATION
TO BE HELD ON NOVEMBER 25, 1997
------------------------
PROSPECTUS
OF
TRIARC COMPANIES, INC.
SHARES OF CLASS A COMMON STOCK
PAR VALUE $.10 PER SHARE
------------------------
This Proxy Statement/Prospectus ('Proxy Statement/Prospectus') is being
furnished to the stockholders of Cable Car Beverage Corporation, a Delaware
corporation ('Cable Car'), in connection with the solicitation of proxies by the
Board of Directors of Cable Car (the 'Cable Car Board') for use at the Special
Meeting of Stockholders of Cable Car to be held on Tuesday, November 25,
1997 at 10:00 a.m., local time, at Norwest Bank Building, 1740 Broadway,
Forum Room, Denver, Colorado 80274, or any adjournments or postponements
thereof (the 'Special Meeting').
At the Special Meeting, holders of shares of Cable Car's common stock, par
value $.01 per share ('Cable Car Common Stock'), will vote upon a proposal to
approve the Agreement and Plan of Merger dated June 24, 1997, as amended (the
'Merger Agreement'), among Cable Car, Triarc Companies, Inc., a Delaware
corporation ('Triarc'), and CCB Merger Corporation, a Delaware corporation and
wholly owned subsidiary of Triarc ('Mergerco'), pursuant to which Mergerco will
merge into Cable Car (the 'Merger'). Cable Car will be the surviving corporation
of the Merger and will become a wholly owned subsidiary of Triarc. A copy of the
Merger Agreement is attached to this Proxy Statement/Prospectus as Appendix B-1
and is incorporated herein by reference. At the Special Meeting, stockholders of
Cable Car also will be asked to consider and vote upon such other business, if
any, as may properly be brought before the Special Meeting or any adjournments
or postponements thereof. Cable Car does not currently intend to bring any
business other than the adoption of the Merger Agreement before the Special
Meeting or any adjournments or postponements thereof.
Pursuant to the Merger, each share of Cable Car Common Stock issued and
outstanding immediately prior to the effective time of the Merger (other than
treasury shares and shares held by Triarc and its subsidiaries and subsidiaries
of Cable Car, all of which will be canceled, and shares with respect to which
the holder has properly exercised its appraisal rights under Delaware law) will
be converted into the right to receive 0.1722 of a share (the 'Conversion
Price') of Class A common stock, par value $.10 per share, of Triarc (the
'Triarc Common Stock'), subject to the adjustment described below, and any cash
to be paid in lieu of fractional shares of Triarc Common Stock. The Conversion
Price is subject to adjustment as follows: (i) if the Average Triarc Share Price
(as defined below in under the caption 'The Merger Agreement -- Conversion of
Securities') is less than $18.875, then the Conversion Price shall be adjusted
to equal the quotient obtained by dividing $3.25 by such Average Triarc Share
Price, and (ii) if the Average Triarc Share Price is greater than $24.50, then
the Conversion Price shall be adjusted to equal the quotient obtained by
dividing $4.22 by such Average Triarc Share Price (the Conversion Price as so
adjusted is referred to herein as the 'Adjusted Conversion Price'). For example,
if the Average Triarc Share Price is (i) $18.875 or greater, but not greater
than $24.50, then each share of Cable Car Common Stock will be converted at the
Effective Time into the right to receive 0.1722 of a share of Triarc Common
Stock; (ii) $18.00, then each share of Cable Car Common Stock will be converted
at the Effective Time into the right to receive 0.18056 of a share of Triarc
Common Stock; and (iii) $26.00, then each share of Cable Car Common Stock will
be converted at the Effective Time into the right to receive 0.16231 of a share
of Triarc Common Stock. Stockholders of Cable Car may obtain the most recent
stock prices of Cable Car Common Stock and Triarc Common Stock by calling Triarc
toll free at (800) 787-4272, Attention: Investor Relations. A description of the
terms of the Merger is set forth in this Proxy Statement/Prospectus under the
captions 'The Proposed Merger and Related Matters' and 'The Merger Agreement.'
------------------------
FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY INVESTORS
IN EVALUATING THE MERGER AND THE SECURITIES OFFERED HEREBY, SEE 'RISK FACTORS,'
BEGINNING ON PAGE 27.
------------------------
This Proxy Statement/Prospectus also constitutes the prospectus for the
shares of Triarc Common Stock to be issued in the Merger. Triarc has filed a
Registration Statement on Form S-4 (together with any amendments thereto, the
'Registration Statement') with the Securities and Exchange Commission (the
'Commission') regarding the registration of such shares, of which this Proxy
Statement/Prospectus is a part.
------------------------
THE SHARES OF TRIARC COMMON STOCK TO BE ISSUED IN THE MERGER HAVE NOT BEEN
APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT/PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
THIS PROXY STATEMENT/PROSPECTUS IS FIRST BEING MAILED TO CABLE CAR
STOCKHOLDERS ON OR ABOUT OCTOBER 24, 1997.
------------------------
THE DATE OF THIS PROXY STATEMENT/PROSPECTUS IS OCTOBER 22, 1997.
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TABLE OF CONTENTS
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AVAILABLE INFORMATION...................................................................................... 2
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE............................................................ 2
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS................................................. 3
SUMMARY.................................................................................................... 5
The Companies......................................................................................... 5
The Special Meeting of Stockholders of Cable Car...................................................... 7
The Merger............................................................................................ 11
Risk Factors.......................................................................................... 19
Management............................................................................................ 19
COMPARATIVE MARKET PRICES AND DIVIDENDS -- TRIARC AND CABLE CAR....................................... 19
HISTORICAL AND PRO FORMA PER SHARE DATA -- TRIARC AND CABLE CAR....................................... 22
TRIARC -- SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA............................................. 23
CABLE CAR -- SUMMARY HISTORICAL FINANCIAL DATA........................................................ 26
RISK FACTORS............................................................................................... 27
Holding Company Structure............................................................................. 27
Substantial Leverage.................................................................................. 27
Net Losses............................................................................................ 28
Possible Price Volatility of Triarc Common Stock...................................................... 28
Dividends............................................................................................. 28
Successful Completion and Integration of Acquisitions................................................. 28
Environmental Liabilities............................................................................. 29
Weather Conditions Affect the Demand for Propane...................................................... 29
Energy Efficiency and Technology Trends May Affect Demand for Propane................................. 30
Royal Crown's Reliance on Certain Bottler's and Private Label Sales................................... 30
Competition........................................................................................... 30
Dependence on Key Personnel........................................................................... 31
Control by Certain Shareholders....................................................................... 31
Certain Federal Income Tax Consequences............................................................... 32
Additional Interests of Cable Car Management.......................................................... 32
Effect of Preferred Stock; Anti-Takeover Provisions................................................... 32
Effect of Triarc Stock Options........................................................................ 32
Comparative Rights of Cable Car Stockholders Before and After the Merger.............................. 33
COMPANIES.................................................................................................. 33
Triarc Companies, Inc................................................................................. 33
CCB Merger Corporation................................................................................ 34
Cable Car Beverage Corporation........................................................................ 34
Recent Developments................................................................................... 34
THE SPECIAL MEETING........................................................................................ 36
General............................................................................................... 36
Matters to Be Considered.............................................................................. 36
Vote Required......................................................................................... 36
Record Date; Proxies.................................................................................. 37
Solicitation of Proxies............................................................................... 37
THE PROPOSED MERGER AND RELATED MATTERS.................................................................... 37
General............................................................................................... 37
Background of the Merger.............................................................................. 38
Cable Car's Reasons for the Merger; Recommendation of Cable Car's Board of Directors.................. 40
Triarc's Reasons for the Merger....................................................................... 41
Effective Time........................................................................................ 41
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Conversion of Shares of Cable Car Common Stock........................................................ 42
Opinion of Financial Advisor to Cable Car............................................................. 42
Certain Federal Income Tax Consequences............................................................... 46
Accounting Treatment.................................................................................. 47
Resale of Triarc Common Stock by Affiliates........................................................... 47
Regulatory Approvals.................................................................................. 48
Section 203 of the DGCL............................................................................... 48
Stock Exchange Listing................................................................................ 49
Additional Interests of Cable Car Management.......................................................... 49
THE MERGER AGREEMENT....................................................................................... 52
Conversion of Securities.............................................................................. 52
Exchange Procedures................................................................................... 52
Distributions with Respect to Unexchanged Shares...................................................... 53
No Further Rights in Cable Car Common Stock........................................................... 53
No Fractional Shares.................................................................................. 53
Cable Car Stock Options............................................................................... 54
Termination of Exchange Fund.......................................................................... 54
Certain Representations and Warranties................................................................ 54
Conduct of Business Pending the Merger................................................................ 55
No Solicitation of Transactions....................................................................... 56
Indemnification of Directors and Officers............................................................. 57
Conditions to Consummation of the Merger.............................................................. 57
Termination........................................................................................... 59
Effect of Termination................................................................................. 60
Fees and Expenses..................................................................................... 60
Amendment and Waiver.................................................................................. 60
Stockholders Agreement................................................................................ 61
APPRAISAL RIGHTS........................................................................................... 61
MANAGEMENT OF SURVIVING CORPORATION........................................................................ 63
CERTAIN RELATIONSHIPS AMONG TRIARC, CABLE CAR AND THEIR AFFILIATES......................................... 65
DESCRIPTION OF TRIARC CAPITAL STOCK........................................................................ 65
PRINCIPAL HOLDERS OF CABLE CAR COMMON STOCK................................................................ 66
PRINCIPAL HOLDERS OF VOTING SECURITIES OF TRIARC COMPANIES, INC............................................ 67
TRIARC COMPANIES, INC. AND SUBSIDIARIES UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.... 69
CAPITALIZATION OF TRIARC................................................................................... 80
COMPARISON OF RIGHTS OF CABLE CAR AND TRIARC STOCKHOLDERS.................................................. 81
General............................................................................................... 81
Size and Classification of the Board of Directors..................................................... 81
Cumulative Voting for Directors....................................................................... 81
Removal of Directors.................................................................................. 81
Special Meetings of Stockholders...................................................................... 81
Preferred Stock....................................................................................... 82
Certain Voting Rights................................................................................. 82
Certain Business Combinations......................................................................... 82
Appraisal Rights...................................................................................... 83
Certain Anti-Takeover Provisions in the Triarc Charter................................................ 83
Amendment of Charter Documents........................................................................ 86
Indemnification of Officers and Directors............................................................. 87
LEGAL MATTERS.............................................................................................. 88
EXPERTS.................................................................................................... 88
STOCKHOLDER PROPOSALS...................................................................................... 88
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Appendix A-1 -- Cable Car's Annual Report on Form 10-K for the year ended December 31, 1996
Appendix A-2 -- Cable Car's amendment on Form 10-K/A filed with the Commission on May 1, 1997
Appendix A-3 -- Cable Car's Quarterly Report on Form 10-Q for the quarter ended June 30, 1997
Appendix B-1 -- Agreement and Plan of Merger dated June 24, 1997 and Amendment No. 1 to Agreement and Plan of
Merger dated as of September 30, 1997
Appendix B-2 -- Stockholders Agreement dated June 24, 1997 and Amendment No. 1 to Stockholders Agreement dated
as of July 9, 1997
Appendix C -- Opinion of Montgomery Securities dated June 24, 1997
Appendix D -- Section 262 of the General Corporation Law of the State of Delaware
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LIST OF DEFINED TERMS
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1997 EBITDA................................................................................................ 44
1997 Transactions.......................................................................................... 6
Acquiring Person Termination............................................................................... 60
Acquisition Proposal....................................................................................... 57
Acquisition Proposal Termination........................................................................... 60
Adjusted Conversion Price.................................................................................. 1
AMCON...................................................................................................... 26
Antitrust Division......................................................................................... 48
Arby's Restaurants Sale.................................................................................... 5
Average Triarc Share Price................................................................................. 12
Beverage Companies......................................................................................... 44
Board Recommendation Termination........................................................................... 60
Business Combination....................................................................................... 85
C&C Sale................................................................................................... 6
Cable Car.................................................................................................. 1
Cable Car Acquisition...................................................................................... 69
Cable Car Board............................................................................................ 1
Cable Car Bylaws........................................................................................... 19
Cable Car Charter.......................................................................................... 19
Cable Car Common Stock..................................................................................... 1
Cable Car Default Termination.............................................................................. 60
Cable Car Options.......................................................................................... 12
Cable Car Subsidiaries..................................................................................... 6
Certificates............................................................................................... 53
Code....................................................................................................... 18
Commission................................................................................................. 1
Company.................................................................................................... 23
Competing Transaction Termination.......................................................................... 59
Consent Termination........................................................................................ 59
Continuing Director........................................................................................ 85
Conversion Price........................................................................................... 1
Cott....................................................................................................... 30
Cott Worldwide Agreement................................................................................... 30
Delaware Court............................................................................................. 61
DGCL....................................................................................................... 13
Dissenting Shares.......................................................................................... 52
DWG Acquisition............................................................................................ 31
EBITDA..................................................................................................... 44
Effective Time............................................................................................. 11
Equity Plan................................................................................................ 32
Exchange Act............................................................................................... 2
Exchange Agent............................................................................................. 52
Exchange Fund.............................................................................................. 52
Fractional Shares.......................................................................................... 53
FTC........................................................................................................ 48
HSR Act.................................................................................................... 18
Interested Shareholder..................................................................................... 85
IRS........................................................................................................ 32
Kelco...................................................................................................... 6
LTM EBITDA................................................................................................. 44
Merger..................................................................................................... 1
Merger Agreement........................................................................................... 1
Mergerco................................................................................................... 1
Mistic..................................................................................................... 5
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Mr. Natural................................................................................................ 65
National Propane........................................................................................... 5
Note....................................................................................................... 73
NYSE....................................................................................................... 2
Operating Partnership...................................................................................... 5
Option Average Share Price................................................................................. 9
Option Conversion Price.................................................................................... 8
Optional Termination....................................................................................... 59
Other Entity............................................................................................... 87
Partnership................................................................................................ 5
Proxy Statement/Prospectus................................................................................. 1
Quaker..................................................................................................... 28
Ratification Percentage.................................................................................... 84
Record Date................................................................................................ 10
Registration Statement..................................................................................... 1
Royal Crown................................................................................................ 5
RTM........................................................................................................ 35
Sales...................................................................................................... 69
Section 203................................................................................................ 48
Section 262................................................................................................ 61
Securities Act............................................................................................. 2
September 29, 1997 Market Price............................................................................ 73
Simpson Employment Agreement............................................................................... 13
Snapple.................................................................................................... 5
Snapple Acquisition........................................................................................ 5
Snapple Financial Statements............................................................................... 69
Snapple March 1997 Financial Statements.................................................................... 69
Snapple May 22, 1997 Financial Statements.................................................................. 69
Snapple 1996 Financial Statements.......................................................................... 69
Special Meeting............................................................................................ 1
Stewart's Fountain Agreement............................................................................... 35
Stewart's Master Agreement................................................................................. 35
Stewart's Restaurants...................................................................................... 7
Stockholders Agreement..................................................................................... 8
Stockholder Vote Termination............................................................................... 59
Subject Stock.............................................................................................. 8
Subject Stockholders....................................................................................... 8
Substitute Option.......................................................................................... 54
Surviving Corporation...................................................................................... 11
Transaction Notice......................................................................................... 56
Transactions............................................................................................... 40
Triarc..................................................................................................... 1
Triarc Board............................................................................................... 19
Triarc Bylaws.............................................................................................. 19
Triarc Charter............................................................................................. 19
Triarc Class A Common Stock................................................................................ 65
Triarc Class B Common Stock................................................................................ 65
Triarc Common Shares....................................................................................... 65
Triarc Common Stock........................................................................................ 1
Triarc Default Termination................................................................................. 59
Triarc Form 10-K........................................................................................... 69
Triarc Form 10-Q........................................................................................... 69
Triarc Preferred Stock..................................................................................... 65
Triarc Share Price Termination............................................................................. 17
Voting Shares.............................................................................................. 83
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AVAILABLE INFORMATION
Triarc and Cable Car are each subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the 'Exchange Act'), and in
accordance therewith file reports, proxy statements and other information with
the Commission. The reports, proxy statements and other information filed by
Triarc and Cable Car with the Commission may be inspected and copied at the
public reference facilities maintained by the Commission at Judiciary Plaza,
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and should be
available at the Commission's Regional Offices at 7 World Trade Center, 13th
Floor, New York, New York 10048, and 1801 California Street, Suite 4800, Denver,
Colorado 80202-2648. Copies of such material also can be obtained at prescribed
rates from the Public Reference Section of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549. The Commission maintains a site on the world wide
web that contains reports, proxy and information statements and other
information on registrants, such as Triarc and Cable Car, who must file such
material with the Commission electronically. The Commission's internet address
on the world wide web is http://www.sec.gov. Triarc Common Stock is listed on
the New York Stock Exchange, Inc. ('NYSE'), Cable Car Common Stock is quoted on
The Nasdaq SmallCap Market, and certain of Triarc's and Cable Car's reports,
proxy materials and other information may be available for inspection at the
offices of the NYSE at 20 Broad Street, New York, New York 10005, or of Nasdaq
at 1735 K Street, N.W., Washington, D.C. 20006, respectively.
Triarc has filed with the Commission a Registration Statement on Form S-4
under the Securities Act of 1933, as amended (the 'Securities Act'), with
respect to the Triarc Common Stock to be issued pursuant to the Merger. This
Proxy Statement/Prospectus does not contain all of the information set forth in
the Registration Statement and the exhibits thereto, certain parts of which were
omitted as permitted by the rules and regulations of the Commission. Such
additional information may be obtained from the Commission's principal office in
Washington, D.C. As to statements contained in this Proxy Statement/Prospectus
or in any document incorporated in this Proxy Statement/Prospectus by reference
pertaining to the content of any contract or other document referred to herein
or therein, in each instance reference is made to the copy of such contract or
other document filed as an exhibit to the Registration Statement or such other
document, each such statement being qualified in all respects by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by Triarc (File No.
1-2207) are incorporated by reference in this Proxy Statement/Prospectus:
1. Triarc's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996, as amended by amendments thereto filed with the
Commission on April 30, 1997 and May 12, 1997;
2. Triarc's Quarterly Reports on Form 10-Q for the fiscal quarters
ended June 29, 1997, as amended by an amendment thereto filed with the
Commission on September 29, 1997, and March 30, 1997;
3. Triarc's Current Reports on Form 8-K filed with the Commission on
August 4, 1997, June 26, 1997, June 6, 1997 (as amended by an amendment
thereto filed with the Commission on August 5, 1997), May 20, 1997 (as
amended by an amendment thereto filed with the Commission on August 4,
1997), March 31, 1997, February 21, 1997 and January 10, 1997; and
4. The descriptions of Triarc Common Stock set forth in Triarc's
Registration Statement on Form 8-A filed pursuant to Section 12 of the
Exchange Act, and any amendment or report filed for the purpose of updating
any such description.
The following documents filed with the Commission by Cable Car (File No.
0-14784) are incorporated by reference in this Proxy Statement/Prospectus:
1. Cable Car's Annual Report on Form 10-K for the year ended December
31, 1996, as amended by an amendment thereto filed with the Commission on
April 30, 1997, copies of which are attached hereto as Appendices A-1 and
A-2, respectively;
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2. Cable Car's Quarterly Reports on Form 10-Q for the quarters ended
June 30, 1997, a copy of which is attached hereto as Appendix A-3, and
March 31, 1997; and
3. Cable Car's Current Reports on Form 8-K filed with the Commission
on August 21, 1997 and July 2, 1997.
All documents and reports filed by Triarc or Cable Car with the Commission
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date
of this Proxy Statement/Prospectus and prior to the date of the Special Meeting
shall be deemed to be incorporated by reference in this Proxy
Statement/Prospectus and to be a part hereof from the dates of filing of such
documents or reports. Any statement contained in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Proxy Statement/Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Proxy Statement/Prospectus.
THIS PROXY STATEMENT/PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH
ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. SUCH DOCUMENTS (OTHER THAN
EXHIBITS TO SUCH DOCUMENTS, UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED
BY REFERENCE TO SUCH DOCUMENTS) ARE AVAILABLE, WITHOUT CHARGE, TO ANY PERSON,
INCLUDING ANY BENEFICIAL OWNER, TO WHOM THIS PROXY STATEMENT/PROSPECTUS IS
DELIVERED, ON WRITTEN OR ORAL REQUEST, WITH RESPECT TO TRIARC DOCUMENTS, TO
TRIARC COMPANIES, INC., 280 PARK AVENUE, NEW YORK, NEW YORK 10017, ATTENTION:
INVESTOR RELATIONS, OR BY TELEPHONE AT (212) 451-3000; OR, WITH RESPECT TO CABLE
CAR DOCUMENTS, TO CABLE CAR BEVERAGE CORPORATION, 717 17TH STREET, SUITE 1475,
DENVER, COLORADO 80202, ATTENTION: INVESTOR RELATIONS, OR BY TELEPHONE AT (303)
298-9038. IN ORDER TO ENSURE DELIVERY OF THE DOCUMENTS PRIOR TO THE SPECIAL
MEETING, REQUESTS MUST BE RECEIVED BY NOVEMBER 14, 1997.
All information set forth or incorporated by reference herein concerning
Cable Car has been furnished by Cable Car, and all information set forth or
incorporated by reference herein concerning Triarc and Mergerco has been
furnished by Triarc. All information set forth in this Proxy
Statement/Prospectus is qualified in its entirety by the information and
financial statements (including notes thereto) appearing in the documents
incorporated herein or deemed to be incorporated herein by reference.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROXY STATEMENT/PROSPECTUS OR IN THE
DOCUMENTS INCORPORATED HEREIN BY REFERENCE IN CONNECTION WITH THE SOLICITATION
AND THE OFFERING MADE HEREBY AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION SHOULD NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY CABLE CAR
OR TRIARC. THIS PROXY STATEMENT/PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL,
OR A SOLICITATION OF AN OFFER TO PURCHASE, THE SECURITIES OFFERED BY THIS PROXY
STATEMENT/PROSPECTUS OR THE SOLICITATION OF A PROXY FROM ANY PERSON IN ANY
JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH OFFER, SOLICITATION OF AN
OFFER OR PROXY SOLICITATION. NEITHER THE DELIVERY OF THIS PROXY
STATEMENT/PROSPECTUS NOR ANY DISTRIBUTION OF THE SECURITIES MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE INFORMATION SET FORTH HEREIN OR IN THE AFFAIRS OF CABLE CAR,
TRIARC OR MERGERCO OR ANY OF THEIR AFFILIATES OR SUBSIDIARIES SINCE THE DATE OF
THIS PROXY STATEMENT/PROSPECTUS OTHER THAN AS SET FORTH IN THE DOCUMENTS
INCORPORATED HEREIN BY REFERENCE.
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
This Proxy Statement/Prospectus contains forward-looking statements,
including, most importantly, information concerning possible or assumed future
results of operations of Triarc and Cable Car set forth under 'Risk Factors,'
'Companies' and 'The Proposed Merger and Related Matters,' and those preceded
by, followed by or that include the words 'may,' 'believes,' 'expects,'
'anticipates' or the
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negation thereof, or similar expressions. The achievement of the outcomes
described in such forward-looking statements is subject to both known and
unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievements of the industries in which they operate
generally, and of Triarc and Cable Car in particular, to be materially different
from any outcomes expressed or implied by such forward-looking statements. For
those statements, Triarc and Cable Car claim the protection of the safe harbor
for forward-looking statements contained in the Private Securities Litigation
Reform Act of 1995. Several important factors, in addition to those discussed
under 'Risk Factors' herein and elsewhere in this document and in the documents
which are incorporated herein by reference, could affect the future results of
Triarc and Cable Car, and could cause those results to differ materially from
those expressed in the forward-looking statements contained herein. Such
additional factors include, among other things: success of operating
initiatives; development and operating costs; advertising and promotional
efforts; brand awareness; the existence or absence of adverse publicity; market
acceptance of new product offerings; changing trends in customer tastes; changes
in business strategy or development plans; quality of management; availability,
terms and deployment of capital; business abilities and judgment of personnel;
availability of qualified personnel; labor and employee benefit costs;
availability and cost of raw materials and supplies; changes in, or failure to
comply with, government regulations; the costs and other effects of legal and
administrative proceedings; pricing pressures resulting from competitive
discounting; general economic, business and political conditions in the
countries and territories where Triarc operates; the impact of such conditions
on consumer spending; and other risks and uncertainties affecting Triarc, Cable
Car and their competitors (including those that may be taken in contemplation of
the Merger), all of which are difficult or impossible to predict accurately and
many of which are beyond the control of Triarc and Cable Car. Each of Triarc and
Cable Car will not undertake and specifically declines any obligation to
publicly release the result of any revisions which may be made to any
forward-looking statements to reflect events or circumstances after the date of
such statements or to reflect the occurrence of anticipated or unanticipated
events.
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SUMMARY
The following is a summary of certain information contained elsewhere in
this Proxy Statement/Prospectus and the Exhibits hereto. This Summary is
qualified in its entirety by the more detailed information and financial
statements and related notes appearing elsewhere in this Proxy
Statement/Prospectus or incorporated herein by reference. Stockholders are urged
to read carefully this Proxy Statement/Prospectus and the Appendices hereto, and
in particular the section herein entitled 'Risk Factors,' in their entirety.
THE COMPANIES
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Triarc Companies, Inc.
280 Park Avenue
New York, New York 10017
(212) 451-3000................................ Triarc is a holding company which, through its subsidiaries, is
engaged in the following businesses: beverages, restaurants,
dyes and specialty chemicals and liquefied petroleum gas. The
beverage operations are conducted by the Triarc Beverage
Group through Royal Crown Company, Inc. ('Royal Crown'),
Mistic Brands, Inc. ('Mistic') and Snapple Beverage Corp.
('Snapple'), which was acquired by Triarc in May 1997;
the restaurant operations are conducted by Arby's,
Inc. (d/b/a the Triarc Restaurant Group), which is the
franchisor for the Arby's restaurant system; the dyes and
specialty chemical operations are conducted through C.H.
Patrick & Co., Inc.; and the liquefied petroleum gas
operations are conducted through National Propane Partners,
L.P. (the 'Partnership'), and its operating subsidiary
partnership, National Propane, L.P. (the 'Operating
Partnership'). National Propane Corporation ('National
Propane'), an indirect wholly owned subsidiary of Triarc,
serves as the managing general partner of the Partnership and
the Operating Partnership and owns approximately 43% of their
combined equity interests with the remaining 57% owned by the
public. See 'The Companies -- Triarc Companies, Inc.'
On May 22, 1997, Triarc completed its acquisition of all of the
outstanding capital stock of Snapple from The Quaker Oats
Company (the 'Snapple Acquisition') for approximately $300
million in cash. Snapple, which markets and distributes
ready-to-drink brewed iced teas and juice drinks, had sales
in 1996 of approximately $550 million, and is considered a
market leader in the premium beverage category. See 'The
Companies -- Recent Developments -- Triarc.'
On May 5, 1997, certain indirect subsidiaries of Triarc
completed the sale of all of their 355 company owned Arby's
restaurants (the 'Arby's Restaurants Sale') to RTM Restaurant
Group, the largest franchisee in the
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Arby's system, for approximately $71 million. Arby's
continues as the franchisor of the more than 3,000 store
Arby's restaurant system. See 'The Companies -- Recent
Developments -- Triarc.'
On July 18, 1997, Royal Crown and TriBev Corporation,
subsidiaries of Triarc, completed the sale of their rights
relating to the C&C beverage line, including the C&C
trademark, to Kelco Sales & Marketing Inc. ('Kelco') (the
'C&C Sale'). In connection with the sale, Royal Crown also
agreed to sell to Kelco concentrate for C&C products and to
provide Kelco certain technical services for seven years. In
consideration for the foregoing, Royal Crown and TriBev
Corporation will receive an aggregate payment of
approximately $9.4 million, payable over seven years. See
'The Companies -- Recent Developments -- Triarc.' The Snapple
Acquisition, the Arby's Restaurants Sale and the C&C Sale are
referred to herein collectively as the '1997 Transactions.'
Triarc's corporate predecessor was incorporated in Ohio in
1929. Triarc was reincorporated in Delaware, by means of a
merger, in June 1994.
CCB Merger Corporation
c/o Triarc Companies, Inc.
280 Park Avenue
New York, New York 10017
(212) 451-3000................................ CCB Merger Corporation, a wholly owned subsidiary of Triarc
('Mergerco'), was formed under Delaware law in June 1997 by
Triarc solely for the purpose of effecting the Merger. Upon
consummation of the Merger, Mergerco will merge into Cable
Car, and the separate corporate existence of Mergerco will
thereupon cease.
Cable Car Beverage Corporation
717 17th Street, Suite 1475
Denver, Colorado 80202
(303) 298-9038................................ Cable Car Beverage Corporation is a beverage marketing company.
Cable Car's primary business is selling Stewart's premium
soft drinks (Root Beer, Orange N' Cream, Cream Ale, Ginger
Beer, Classic Key Lime and Cherries N' Cream) to beverage
distributors throughout the United States and Canada. Cable
Car also sells concentrate to soft drink bottlers who produce
and distribute beverages made from the concentrate. In
addition to Stewart's brand soft drinks, Cable Car also sells
Aspen Mountain Spring Water, Aspen flavored waters, San
Francisco Seltzer and Java Cola. Cable Car has two wholly
owned subsidiaries (the 'Cable Car Subsidiaries'), Fountain
Classics, Inc., which markets Stewart's fountain products,
and Old San Francisco Seltzer, Inc.
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On June 24, 1997, Cable Car entered into agreements amending
its licensing agreements with Stewart's Restaurants, Inc.
('Stewart's Restaurants'), as further amended on August 11,
1997. Among other things, these amendments (i) gave Cable Car
ownership of the formulas for and manufacturing rights to
concentrates used to make Stewart's soft drinks, (ii) provide
that Cable Car is permitted to use the Stewart's trademark on
any other product of any type and (iii) granted to Cable Car
the perpetual exclusive worldwide license to manufacture,
distribute and sell post-mix syrups and pre-mixes for
Stewart's beverages throughout the world (fountain-type
beverages), subject to certain rights retained by Stewart's
Restaurants. As consideration for these amendments, Cable Car
will issue to Stewart's Restaurants prior to the Effective
Time an aggregate of 150,000 shares of Cable Car Common
Stock. In addition, Cable Car will pay to Stewart's
Restaurants $400,000 in cash, of which $250,000 is payable on
March 31, 1998 and $150,000 is payable on March 31, 1999. See
'The Companies -- Recent Developments -- Cable Car.'
Cable Car was incorporated under the laws of the State of
Delaware on April 1, 1968.
THE SPECIAL MEETING OF
STOCKHOLDERS OF CABLE CAR
Time and Place.................................. The Special Meeting is scheduled to be held on Tuesday, November 25,
1997, at 10:00 a.m., local time, at Norwest Bank Building, 1740 Broadway,
Forum Room, Denver, Colorado 80274.
Matters To Be Considered........................ At the Special Meeting, holders of Cable Car Common Stock will
consider and vote upon a proposal to approve the Merger
Agreement and the Merger, and such other matters as may
properly be brought before the Special Meeting or any
adjournments or postponements thereof. Cable Car does not
currently intend to bring any business other than the
approval of the Merger Agreement and the Merger before the
Special Meeting or any adjournments or postponements thereof.
Vote Required................................... Approval of the Merger Agreement and the Merger requires the
affirmative vote of a majority of the outstanding shares of
Cable Car Common Stock. In determining whether the proposal
regarding the Merger Agreement and the Merger has been
approved, abstentions and broker nonvotes will be counted and
will have the same effect as a vote against such proposal.
Holders of Cable Car Common Stock are entitled to one vote at
the Special Meeting for each
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share of Cable Car Common Stock held of record at the close
of business on the Record Date (as defined in ' -- Record
Date; Shares Entitled to Vote' below). As of October 20, 1997,
directors and executive officers of Cable Car and their
affiliates, in the aggregate, were entitled to vote 1,803,609
shares of Cable Car Common Stock, representing approximately
20.2% of the total shares of Cable Car Common Stock entitled
to vote at the Special Meeting.
Stockholders Agreement.......................... As a condition to its entering into the Merger Agreement,
Triarc required Samuel M. Simpson, the President and Chief
Executive Officer of Cable Car, Susan L. Neff, Mr. Simpson's
wife, William H. Rutter, a director of Cable Car, and Susan
L. Fralick, Mr. Rutter's wife (collectively, the 'Subject
Stockholders'), to enter into a Stockholders Agreement, as
amended (the 'Stockholders Agreement'). As of October 20, 1997,
the Subject Stockholders owned an aggregate of 1,766,409
shares of Cable Car Common Stock, or approximately 19.7% of
the shares of Cable Car Common Stock entitled to vote at the
Special Meeting, which are subject to the terms of the
Stockholders Agreement (such amount does not include 12,200
shares owned by them but not subject to the Stockholders
Agreement). Each Subject Stockholder has agreed that at any
meeting of the holders of Cable Car Common Stock, he or she
will, until the effective time of the Merger or the
termination of the Merger Agreement, vote or cause to be
voted such Cable Car Common Stock and any Cable Car Common
Stock acquired by them after the date of the Stockholders
Agreement (collectively, the 'Subject Stock') in favor of
approval of the Merger Agreement and the Merger and against
certain other actions. Moreover, each Subject Stockholder has
also granted Triarc an irrevocable proxy to vote his or her
shares of Subject Stock as specified above in the event that
such Subject Stockholder fails to so vote his or her Subject
Stock in the agreed upon manner. A copy of the Stockholders
Agreement, including Amendment No. 1 thereto, is attached to
this Proxy Statement/Prospectus as Appendix B-2 and is
incorporated herein by reference. See 'The Proposed Merger
and Related Matters -- Additional Interests of Cable Car
Management -- Stockholders Agreement.'
In addition, pursuant to the Stockholders Agreement, each
Subject Stockholder has granted to Triarc an exclusive and
irrevocable option to purchase his or her Subject Stock in
whole but not in part under certain circumstances at a price
per share in cash equal to the product obtained by
multiplying 0.1722 (the 'Option
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Conversion Price') times the average (without rounding) of
the closing prices per share of Triarc Common Stock on the
New York Stock Exchange ('NYSE') on the NYSE Composite Tape
for the 15 consecutive NYSE trading days ending on the NYSE
trading day immediately preceding the date of the closing of
the exercise of the option (the 'Option Average Share
Price'), subject to the following adjustment: if the Option
Average Share Price is less than $18.875, then the Option
Conversion Price will be adjusted to equal the quotient
obtained by dividing $3.25 by the Option Average Share Price,
and if the Option Average Share Price is greater than $24.50,
then the Option Conversion Price will be adjusted to equal
the quotient obtained by dividing $4.22 by the Option Average
Share Price. See 'The Proposed Merger and Related
Matters -- Additional Interests of Cable Car
Management -- Stockholders Agreement.'
The Stockholders Agreement, including the options granted by
the Subject Stockholders thereunder, will terminate if (i)
the effective time of the Merger occurs or (ii) the Merger
Agreement is terminated pursuant to (A) a Consent
Termination, an Optional Termination, a Triarc Default
Termination or a Triarc Share Price Termination (as each such
term is defined in 'The Merger Agreement -- Termination'), or
(B) a Cable Car Default Termination or a Stockholder Vote
Termination (as each such term is defined in 'The Merger
Agreement -- Termination'), as long as Cable Car or its
stockholders shall not have received an Acquisition Proposal
(as defined in 'The Merger Agreement -- No Solicitation of
Transactions') and the Cable Car Board shall not have
withdrawn, or modified or changed in a manner adverse to
Triarc or Mergerco, its approval or recommendation of the
Merger Agreement or the Merger. See 'The Proposed Merger and
Related Matters -- Additional Interests of Cable Car
Management -- Stockholders Agreement.'
Voting of Proxies............................... A proxy in the form accompanying this Proxy
Statement/Prospectus is being solicited on behalf of the
Cable Car Board. Shares of Cable Car Common Stock represented
by properly executed proxy cards received prior to the vote
at the Special Meeting and that have not been revoked will be
voted in accordance with the instructions indicated thereon.
IF NO INSTRUCTIONS ARE INDICATED, SUCH PROXIES WILL BE VOTED
FOR APPROVAL OF THE MERGER AGREEMENT AND THE MERGER AND IN
THE DISCRETION OF THE PROXY HOLDER, AS TO ANY OTHER MATTER
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THAT MAY PROPERLY COME BEFORE THE SPECIAL MEETING.
Revocability of Proxies......................... A Cable Car stockholder who has given a proxy may revoke such
proxy at any time before it has been voted at the Special
Meeting by (i) giving written notice of revocation bearing a
later date than the proxy to the Secretary of Cable Car, (ii)
properly submitting to Cable Car a duly executed proxy card
relating to the same shares of Cable Car Common Stock and
bearing a later date, or (iii) attending the Special Meeting
and voting in person. Attendance at the Special Meeting will
not in and of itself revoke a proxy. All written notices of
revocation and other communications with respect to
revocation of proxies by Cable Car stockholders should be
addressed as follows: Cable Car Beverage Corporation, 717
17th Street, Suite 1475, Denver, Colorado 80202, Attention:
Secretary, or hand-delivered to the Secretary of Cable Car
before the vote is taken at the Special Meeting.
Solicitation of Proxies......................... Cable Car will bear the expense of the proxy solicitation. In
addition to the solicitation of proxies by mail, the
directors, officers and employees of Cable Car may solicit
proxies from stockholders personally or by telephone,
telegraph or facsimile transmission. Such directors, officers
and employees will not be compensated for such solicitation,
but may be reimbursed for reasonable out-of-pocket expenses.
Arrangements will also be made with banks, brokerage houses
and other custodians, nominees and fiduciaries for forwarding
proxy solicitation materials to beneficial owners of shares
held of record by such persons, and Cable Car will reimburse
such custodians, nominees and fiduciaries for their
reasonable out-of-pocket expenses in connection therewith.
Cable Car has engaged Georgeson & Company Inc. to assist
in the solicitation of proxies at an anticipated cost of
approximately $6,500 plus expenses. See 'The Special
Meeting -- Solicitation of Proxies.'
Record Date; Shares Entitled to Vote............ The close of business on October 23, 1997 has been fixed as
the record date (the 'Record Date') for determining
the holders of shares of Cable Car Common Stock
entitled to notice of and to vote at the Special Meeting. As
of September 30, 1997, 8,948,324 shares of Cable Car Common Stock
were outstanding and held of record by approximately 1,025 holders.
Quorum.......................................... The presence, in person or by proxy, of the holders of a
majority of the outstanding shares of Cable Car Common Stock
is necessary to constitute a quorum for the transaction of
business at the Special Meeting. The Special Meeting may be
adjourned if a quorum is not
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present for the purpose of obtaining additional proxies or
votes or for any other purpose and, at any subsequent
reconvening of the Special Meeting, all proxies will be voted
in the same manner as such proxies would have been voted at
the original convening of the Special Meeting (except for any
proxies that have theretofore been revoked or withdrawn),
notwithstanding that they may have been voted on at the same
or any other matter at a previous meeting.
THE MERGER
Terms of the Merger............................. At the effective time of the Merger (the 'Effective Time'),
Mergerco will merge into Cable Car, with Cable Car to be the
surviving corporation (the 'Surviving Corporation') and a
wholly owned subsidiary of Triarc. The Merger Agreement
(including Amendment No. 1 thereto) is attached as Appendix
B-1 to this Proxy Statement/Prospectus and is incorporated
herein by reference. See 'The Merger.'
Each share of Cable Car Common Stock issued and outstanding
immediately prior to the Effective Time (other than treasury
shares and shares held by Triarc and its subsidiaries and
subsidiaries of Cable Car, all of which will be canceled, and
shares with respect to which the holder has properly
exercised its appraisal rights under Delaware law) will be
converted into the right to receive 0.1722 of a share (the
'Conversion Price') of Class A Common Stock, par value $.10
per share, of Triarc ('Triarc Common Stock'), subject to the
adjustment described below, and any cash to be paid in lieu
of fractional shares of Triarc Common Stock. The Conversion
Price is subject to adjustment as follows: (i) if the Average
Triarc Share Price (as defined below) is less than $18.875,
then the Conversion Price shall be adjusted to equal the
quotient of $3.25 divided by such Average Triarc Share Price,
and (ii) if the Average Triarc Share Price is greater than
$24.50, then the Conversion Price shall be adjusted to equal
the quotient of $4.22 divided by such Average Triarc Share
Price (the Conversion Price, as so adjusted, is referred to
herein as the 'Adjusted Conversion Price'). For example, if
the Average Triarc Share Price is (i) $18.875 or greater, but
not greater than $24.50, then each share of Cable Car Common
Stock will be converted at the Effective Time into the right
to receive 0.1722 of a share of Triarc Common Stock; (ii)
$18.00, then each share of Cable Car Common Stock will be
converted at the Effective Time into the right to receive
0.18056 of a share of Triarc Common Stock; and (iii) $26.00,
then each share of
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Cable Car Common Stock will be converted at the Effective
Time into the right to receive 0.16231 of a share of Triarc
Common Stock. 'Average Triarc Share Price' means the average
(without rounding) of the closing prices per share of Triarc
Common Stock on the NYSE on the NYSE Composite Tape for the
15 consecutive NYSE trading days ending on the NYSE trading
day immediately preceding the closing date under the Merger
Agreement.
All outstanding options to purchase Cable Car Common Stock (the
'Cable Car Options'), whether or not vested or exercisable at
the Effective Time, will remain outstanding following the
Effective Time. At the Effective Time, the Cable Car Options
will, by virtue of the Merger and without any further action
on the part of Cable Car or the holder thereof, be assumed by
Triarc, and each Cable Car Option assumed by Triarc will
become and represent an option exercisable for shares of
Triarc Common Stock with the same vesting schedules, if any,
and expiration dates as such Cable Car Option immediately
prior to the Effective Time (but taking into account any
acceleration of the vesting of such Cable Car Option as a
result of the consummation of the Merger), except that (i)
each such Cable Car Option will be exercisable for that
number of shares of Triarc Common Stock (rounded to the
nearest whole share) into which the number of shares of Cable
Car Common Stock subject to such Cable Car Option immediately
prior to the Effective Time would have been converted under
the terms of the Merger Agreement applicable to the exchange
of Cable Car Common Stock for Triarc Common Stock, and (ii)
the option price per share of Triarc Common Stock will be an
amount equal to the option price per share of Cable Car
Common Stock subject to such Cable Car Option in effect
immediately prior to the Effective Time divided by the
Adjusted Conversion Price (rounded to the nearest full cent).
As discussed in 'The Proposed Merger and Related Matters --
Additional Interests of Cable Car Management -- Acceleration
of Vesting of Stock Options' below, all unvested Cable Car
Options will immediately vest at the Effective Time. Triarc
will file as soon as practicable after the Effective Time,
but in no event later than 45 days after the Effective Time,
and keep current, one or more registration statements on Form
S-8 (or any successor or appropriate form) with respect to
the shares of Triarc Common Stock subject to such substitute
options so long as such options remain outstanding. See 'The
Merger Agreement -- Cable Car Options.'
</TABLE>
12
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<S> <C>
The Cable Car Board has determined that the terms of the Merger
Agreement are fair to, and in the best interests of, Cable
Car and its stockholders. Accordingly, the Cable Car Board
has unanimously approved the Merger Agreement and the Merger
and unanimously recommends that the stockholders of Cable Car
vote FOR approval of the Merger Agreement and the Merger. The
Cable Car Board's recommendation is based on the factors
described in 'The Proposed Merger and Related
Matters -- Cable Car's Reasons for the Merger; Recommendation
of Cable Car's Board of Directors', ' -- Background of the
Merger' and ' -- Opinion of Financial Advisor to Cable Car.'
HOLDERS OF SHARES OF CABLE CAR COMMON STOCK ARE URGED TO, AND
SHOULD, READ SUCH SECTIONS, AS WELL AS APPENDIX C ATTACHED
HERETO, IN THEIR ENTIRETY.
Effective Time of the Merger.................... The Effective Time will occur as promptly as practicable after
the requisite approval of the Merger Agreement by Cable Car's
stockholders and the satisfaction or waiver of all other
conditions to the Merger. Upon the terms and subject to the
conditions of the Merger Agreement, the Effective Time will
occur at such time as the Certificate of Merger, in
accordance with the relevant provisions of the General
Corporation Law of the State of Delaware (the 'DGCL') shall
have been accepted for filing by the Secretary of State of
the State of Delaware (or at such later time as agreed to by
the parties to the Merger Agreement and specified in the
Certificate of Merger).
Additional Interests of Cable Car Management.... In considering the recommendation of the Cable Car Board with
respect to the Merger Agreement, holders of shares of Cable
Car Common Stock should be aware that certain members of
Cable Car's management and its Board of Directors have
interests in the Merger that are in addition to the interests
of Cable Car stockholders generally.
Samuel M. Simpson, the President and Chief Executive Officer
and a director of Cable Car, has a three-year employment
contract with Cable Car which provides for an annual salary
of $175,000 and annual bonuses based on Cable Car's revenues
and profits. Mr. Simpson has entered into an agreement with
Triarc that, upon the Effective Time, he will enter into an
employment agreement (the 'Simpson Employment Agreement')
with the Surviving Corporation which will supersede Mr.
Simpson's existing employment agreement with Cable Car and
provide for Mr. Simpson's employment as President and Chief
</TABLE>
13
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<TABLE>
<S> <C>
Executive Officer of the Surviving Corporation and the Cable
Car Subsidiaries, as well as a representative for the Triarc
Beverage Group for the western United States. The Simpson
Employment Agreement will have a three-year term and provide
that Mr. Simpson will receive an annual salary of $284,300
per year (subject to increase but not decrease during the
initial term of the agreement) and be eligible to receive
additional cash incentive compensation, Triarc stock options
and other benefits as more fully described in 'Management of
Surviving Corporation -- Simpson Employment Agreement.' Mr.
Simpson will also be entitled to a $400,000 bonus upon
signing the Simpson Employment Agreement which will be
refundable on a pro rata basis should he leave his employment
prior to the first anniversary of the Effective Time. See
'Management of Surviving Corporation -- Simpson Employment
Agreement.'
In accordance with the terms of their grant, all unvested Cable
Car Options, including those granted to officers, directors
and non-director employees of Cable Car, shall become
immediately exercisable on the Effective Date of the Merger.
As described under the caption 'The Proposed Merger and Related
Matters -- Additional Interests of Cable Car
Management -- Stockholders Agreement,' Triarc required as a
condition to its entering into the Merger Agreement that the
Subject Stockholders enter into the Stockholders Agreement
for no additional consideration. The Subject Stockholders
have agreed to vote the Subject Stock in favor of approval of
the Merger Agreement and the Merger and against certain other
actions, have granted to Triarc an irrevocable proxy to vote
the Subject Stock as specified above in the event that such
Subject Stockholder fails to vote his or her Subject Stock in
the agreed upon manner, and have granted to Triarc an
exclusive and irrevocable option to purchase his or her
Subject Stock under certain circumstances.
Under the Merger Agreement, Triarc has agreed that the
certificate of incorporation and bylaws of the Surviving
Corporation and each of the Cable Car Subsidiaries will
contain provisions no less favorable with respect to the
indemnification of directors, officers, agents and employees
and other individuals than those set forth in the
certification of incorporation and bylaws of Cable Car and
the Cable Car Subsidiaries as in effect on the date of the
Merger Agreement, and further agreed that such provisions
will not be amended, repealed or otherwise modified for a
period of five years after the
</TABLE>
14
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<TABLE>
<S> <C>
Effective Time in any manner that would adversely affect the
rights thereunder of individuals who at or prior to the
Effective Time were directors, officers, agents or employees
of Cable Car or any of the Cable Car Subsidiaries or who were
otherwise entitled to indemnification pursuant to the
certificate of incorporation and bylaws of Cable Car or any
of the Cable Car Subsidiaries. If the Surviving Corporation
or any of the Cable Car Subsidiaries does not have the
financial resources to satisfy its indemnification
obligations to such persons as provided under its certificate
of incorporation and bylaws, Triarc has agreed that it will
provide such indemnification of such persons to the extent so
provided. See 'The Merger Agreement -- Indemnification of
Directors and Officers.'
The Cable Car Board was aware of these interests and considered
them, among other matters, in unanimously approving the
Merger Agreement. See 'The Proposed Merger and Related
Matters -- Additional Interests of Cable Car Management.'
Conditions to Consummation of the Merger........ The obligations of Triarc and Cable Car to consummate the
Merger are subject to various conditions, including the
approval of the Merger Agreement by Cable Car's stockholders
in accordance with the DGCL. See 'The Merger
Agreement -- Conditions to Consummation of the Merger.'
Termination..................................... The Merger Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time, whether
before or after the stockholders of Cable Car have approved
the Merger Agreement: (a) by the mutual consent of the Boards
of Directors of each of Triarc and Cable Car; or (b) by
either of the Boards of Directors of Triarc or Cable Car if
(i) the Effective Time has not occurred on or before December
31, 1997, provided that the right to so terminate the Merger
Agreement will not be available to any party whose failure to
fulfill any obligation under the Merger Agreement has been
the cause of, or resulted in, the failure of the Effective
Time to occur on or before such date, (ii) any governmental
authority has issued an order, decree or ruling or taken any
other action (which order, decree, ruling or other action the
parties hereto shall use their best efforts to lift), in each
case permanently restraining, enjoining or otherwise
prohibiting the Merger and the other transactions
contemplated by the Merger Agreement and such order, decree,
ruling or other action shall have become final and non-
appealable, or (iii) the Merger Agreement and the
</TABLE>
15
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<TABLE>
<S> <C>
Merger have not been approved at the Special Meeting by the
requisite vote of the stockholders of Cable Car.
The Merger Agreement may also be terminated by the Cable Car
Board (a) if Triarc or Mergerco (i) breaches or fails in any
material respect to perform or comply with any of its
material covenants and agreements contained in the Merger
Agreement, or (ii) breaches its representations and
warranties in any material respect and such breach would have
or would be reasonably likely to have a material adverse
effect on Triarc and its subsidiaries taken as a whole, in
each case such that the conditions precedent to Cable Car's
obligations to consummate the Merger would not be satisfied,
provided that if such breach is curable by the breaching
party through the exercise of the breaching party's best
efforts and for so long as the breaching party is using its
best efforts to cure such breach, Cable Car may not so
terminate the Merger Agreement; (b) if the Cable Car Board
determines in good faith, after consultation with (i) outside
legal counsel, that termination of the Merger Agreement is
required for the Cable Car Board to satisfy its fiduciary
obligations to the Cable Car stockholders under applicable
law by reason of an unsolicited bona fide Acquisition
Proposal (as defined in 'The Merger Agreement -- No
Solicitation of Transactions') having been made, and (ii) its
financial advisor, that such Acquisition Proposal would
result in a transaction that is more favorable from a
financial point of view to the Cable Car stockholders than
the Merger, provided that Cable Car complies with certain
provisions of the Merger Agreement and notifies Triarc at
least five days in advance of its intention to terminate the
Merger Agreement or to enter into a definitive agreement with
respect to such Acquisition Proposal, and provided, further,
that within such five day period Triarc has not made a
competing proposal which is at least as favorable to the
Cable Car's stockholders from a financial point of view as
such Acquisition Proposal.
The Merger Agreement may also be terminated by the Board of
Directors of Triarc, (a) if Cable Car (i) breaches or fails
in any material respect to perform or comply with any of its
material covenants and agreements contained in the Merger
Agreement, or (ii) breaches its representations and
warranties in any material respect and such breach would have
or would be reasonably likely to have a material adverse
effect on Cable Car and its subsidiaries taken as a whole, in
each case such that the conditions precedent to Triarc's and
Mergerco's obligations to consummate the Merger would not be
satisfied, provided, that if such breach is
</TABLE>
16
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<TABLE>
<S> <C>
curable by Cable Car through its exercise of best efforts and
for so long as Cable Car is using its best efforts to cure
such breach, Triarc may not so terminate the Merger
Agreement; (b) if (i) the Cable Car Board withdraws, modifies
or changes its approval or recommendation of the Merger
Agreement or the Merger in a manner adverse to Triarc or
Mergerco or recommends to the stockholders of Cable Car any
Acquisition Proposal or other business combination, (ii)
Cable Car receives a bona fide written Acquisition Proposal
which has not been rejected by the Cable Car Board within 14
days after receipt thereof, or (iii) prior to the
certification of the vote of Cable Car's stockholders to
approve the Merger at the Special Meeting, it shall have been
publicly disclosed or Triarc or Mergerco shall have learned
that any person, entity or 'group' (as that term is defined
in Section 13(d)(3) of the Exchange Act), other than Triarc
or its subsidiaries or any of their affiliates or the Subject
Stockholders, shall have acquired beneficial ownership
(determined pursuant to Rule 13d-3 promulgated under the
Exchange Act) of more than 20% of any class or series of
capital stock of Cable Car (including the Cable Car Common
Stock), through the acquisition of stock, the formation of a
group or otherwise, or shall have been granted any option,
right or warrant, conditional or otherwise, to acquire
beneficial ownership of more than 20% of any class or series
of capital stock of Cable Car (including the Cable Car Common
Stock) other than as disclosed in a Schedule 13D on file with
the Commission on the date of the Merger Agreement; or (c) if
the Average Triarc Share Price is less than $15.00 per share
(a 'Triarc Share Price Termination').
Fees and Expenses............................... All costs and expenses incurred in connection with the Merger
Agreement and the Merger will be paid by the party incurring
such costs and expenses, whether or not the Merger is
consummated; provided, however, that if the Merger Agreement
is terminated by Triarc pursuant to a Triarc Share Price
Termination, Triarc will reimburse Cable Car for its
reasonable costs and expenses (including, without limitation,
reasonable attorneys' fees and expenses) incurred in
connection with the Merger Agreement and the Merger in an
aggregate amount not to exceed $225,000. See 'The Merger
Agreement -- Fees and Expenses.'
Stock Exchange Listing.......................... Triarc will file an application to list the shares of Triarc
Common Stock to be issued in connection with the Merger on
the NYSE. Approval of such listing, subject to official
notice of issuance, is a condition to consummation of the
Merger.
</TABLE>
17
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<TABLE>
<S> <C>
Regulatory Approvals............................ Other than the Commission declaring effective the Registration
Statement containing this Proxy Statement/Prospectus,
approvals in connection with compliance with applicable Blue
Sky or state securities laws, expiration or termination of
the applicable waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the 'HSR
Act'), and the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware, neither the
management of Triarc nor the management of Cable Car believes
that any filing with or approval of any governmental
authority is necessary in connection with the consummation of
the Merger. Triarc and Cable Car received notice that the
waiting period under the HSR Act was terminated on October
15, 1997. See 'The Proposed Merger and Related
Matters -- Regulatory Approvals.'
Appraisal Rights................................ Holders of record of Cable Car Common Stock have the right to
dissent from the Merger and seek an appraisal of their shares
pursuant to Section 262 of the DGCL. See 'Appraisal Rights.'
Accounting Treatment............................ The Merger will be accounted for by Triarc under the 'purchase'
method of accounting in accordance with generally accepted
accounting principles. Therefore, the aggregate merger
consideration paid by Triarc will be allocated to the Cable
Car assets acquired and liabilities assumed based on their
fair values, and the results of operations of Cable Car will
be included in the results of operations of Triarc only for
periods subsequent to the Effective Time. See 'The Proposed
Merger and Related Matters -- Accounting Treatment' and
'Unaudited Pro Forma Condensed Financial Information.'
Certain Federal Income Tax Consequences......... The Merger is intended to qualify for federal income tax
purposes as a 'reorganization' within the meaning of Section
368(a) of the Internal Revenue Code of 1986, as amended (the
'Code'), so that no gain or loss would be recognized by Cable
Car stockholders on the exchange of their Cable Car Common
Stock for Triarc Common Stock, except in respect of cash
received in lieu of fractional shares, and no gain or loss
would be recognized by Triarc or Cable Car. No ruling has
been (or will be) sought from the Internal Revenue Service as
to the anticipated federal income tax consequences of the
Merger. Under the Merger Agreement, Cable Car's obligation to
consummate the Merger is conditioned on the receipt of an
opinion from Sherman & Howard L.L.C. to the effect that the
Merger will constitute a reorganization within the meaning of
Section 368(a) of the Code.
</TABLE>
18
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<PAGE>
<TABLE>
<S> <C>
ALL STOCKHOLDERS SHOULD READ CAREFULLY THE DISCUSSION UNDER
'THE PROPOSED MERGER AND RELATED MATTERS -- CERTAIN FEDERAL
INCOME TAX CONSEQUENCES.' IN VIEW OF THE COMPLEXITIES OF
FEDERAL INCOME AND OTHER TAX LAWS, EACH CABLE CAR STOCKHOLDER
SHOULD CONSULT WITH HIS OR HER TAX ADVISOR REGARDING, AMONG
OTHER THINGS, THE FEDERAL, STATE AND LOCAL INCOME TAX
CONSEQUENCES OF THE MERGER APPLICABLE TO HIS OR HER SPECIFIC
CIRCUMSTANCES.
Comparison of Rights of Stockholders of Triarc
and Cable Car................................. Upon the consummation of the Merger, Cable Car stockholders
will become stockholders of Triarc and their rights as such
will be governed by Triarc's certificate of incorporation, as
amended to date (the 'Triarc Charter'), and Triarc's bylaws,
as amended to date (the 'Triarc Bylaws'), as well as by
Delaware law. For a description of the significant
differences between the provisions of Cable Car's certificate
of incorporation, as amended to date (the 'Cable Car
Charter'), and Cable Car's bylaws, as amended to date (the
'Cable Car Bylaws'), and the Triarc Charter and Triarc
Bylaws, see 'Comparison of Rights of Cable Car and Triarc
Stockholders.'
RISK FACTORS.................................... STOCKHOLDERS OF CABLE CAR SHOULD CAREFULLY EVALUATE THE MATTERS
SET FORTH UNDER 'RISK FACTORS.'
MANAGEMENT
Directors....................................... At the Effective Time, the directors of Mergerco will become
the directors of the Surviving Corporation. See 'Management
of Surviving Corporation.' The Merger will not result in any
change in the composition of the Board of Directors of Triarc
(the 'Triarc Board').
Officers........................................ At the Effective Time, the officers of Mergerco will become the
initial officers of the Surviving Corporation and, pursuant
to the Simpson Employment Agreement, Samuel M. Simpson will
become the President and Chief Executive Officer of the
Surviving Corporation. See 'Management of Surviving
Corporation.'
COMPARATIVE MARKET PRICES AND
DIVIDENDS -- TRIARC AND CABLE CAR............. The following tables set forth, for the quarters indicated
(ended March 31, June 30, September 30 and December 31 for
Cable Car, and for Triarc through
</TABLE>
19
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<PAGE>
<TABLE>
<S> <C>
December 31, 1996, and ended March 30, June 29 and September 28
for Triarc in 1997), the high and low sales prices per share of
Triarc Common Stock as reported on the NYSE and the high and low
bid price per share of Cable Car Common Stock as quoted on the
Nasdaq SmallCap Market. Shares of Triarc Common Stock are
listed on the NYSE and shares of Cable Car Common Stock are
quoted on the Nasdaq SmallCap Market under the symbols 'TRY'
and 'DRNK,' respectively.
</TABLE>
<TABLE>
<CAPTION>
TRIARC COMMON STOCK
HIGH LOW
------------ ------------
<S> <C> <C>
FISCAL YEAR 1995
1st Quarter..................................... $13 1/4 $11 1/8
2nd Quarter..................................... 16 3/4 13 1/8
3rd Quarter..................................... 15 5/8 12 3/8
4th Quarter..................................... 14 1/4 9 1/2
FISCAL YEAR 1996
1st Quarter..................................... $14 3/8 $10 7/8
2nd Quarter..................................... 13 3/8 11 1/2
3rd Quarter..................................... 12 7/8 10
4th Quarter..................................... 12 3/4 10 3/4
FISCAL YEAR 1997
1st Quarter..................................... $18 $11 1/2
2nd Quarter (1)................................. 23 5/8 15 7/8
3rd Quarter..................................... 23 1/8 18
<CAPTION>
CABLE CAR COMMON STOCK
HIGH LOW
----- -----
<S> <C> <C>
FISCAL YEAR 1995
1st Quarter..................................... $1.41 $1.00
2nd Quarter..................................... 2.00 1.09
3rd Quarter..................................... 1.81 1.38
4th Quarter..................................... 1.66 1.19
FISCAL YEAR 1996
1st Quarter..................................... $1.88 $1.44
2nd Quarter..................................... 1.84 1.25
3rd Quarter..................................... 2.50 1.44
4th Quarter..................................... 2.84 2.00
FISCAL YEAR 1997
1st Quarter..................................... $2.69 $2.09
2nd Quarter (2)................................. 3.94 2.16
3rd Quarter .................................... 3.56 3.00
</TABLE>
- ------------
(1) The high and low sales prices per share of Triarc Common Stock as reported
on the NYSE between March 31, 1997 and June 23, 1997, the last full trading
day prior to the public announcement of the execution of the Merger
Agreement, were $23 5/8 and $16 1/8, respectively.
(2) The high and low bid prices per share of Cable Car Common Stock as quoted on
Nasdaq between April 1, 1997 and June 23, 1997, the last full trading day
prior to the public announcement of the execution of the Merger Agreement,
were $3.94 and $2.16, respectively.
20
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<PAGE>
As of June 23, 1997, the last full trading day preceding the day of the
public announcement of the execution of the Merger Agreement, the closing sale
price per share of Triarc Common Stock was $20.75, the closing bid price per
share of Cable Car Common Stock was $3.88 and the equivalent pro forma price per
share of Cable Car Common Stock, calculated by multiplying the closing sale
price per share of Triarc Common Stock on such date by the Conversion Price of
0.1722, was $3.57. As of October 21, 1997, the closing sale price per share
of Triarc Common Stock was $20.06, the closing bid price per share of Cable
Car Common Stock was $3.25 and the equivalent pro forma price per share of
Cable Car Common Stock was $3.45.
No assurance can be given as to what the Conversion Price or Adjusted
Conversion Price or the market price of Triarc Common Stock will be if and when
the Merger is consummated.
CABLE CAR STOCKHOLDERS MAY OBTAIN THE MOST RECENT STOCK PRICES OF CABLE CAR
COMMON STOCK AND TRIARC COMMON STOCK BY CALLING TRIARC TOLL FREE AT (800)
787-4272, ATTENTION: INVESTOR RELATIONS.
Triarc has not paid a dividend on Triarc Common Stock in the three most
recently completed fiscal years or in the current fiscal year. Triarc currently
intends to reinvest all of its earnings for use in its business and to finance
future growth. Accordingly, Triarc does not anticipate paying cash dividends on
Triarc Common Stock in the foreseeable future.
Other than 266,469 shares of the common stock of Amcon Distributing Company
distributed to holders of record of Cable Car Common Stock as of July 5, 1995,
no dividends have been declared or paid on Cable Car Common Stock in 1995, 1996
or in the current year to date. Cable Car does not anticipate a change in this
policy in the foreseeable future.
21
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<PAGE>
HISTORICAL AND PRO FORMA
PER SHARE DATA -- TRIARC AND CABLE CAR
The following table sets forth certain historical, pro forma and pro forma
equivalent information giving effect to the Merger and the 1997 Transactions
(see 'Summary Historical and Pro Forma Consolidated Financial Data'). The data
is based on the historical and pro forma financial statements.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996 SIX MONTHS ENDED JUNE 29, 1997
---------------------------------------- ---------------------------------------
CABLE CAR CABLE CAR
PRO PRO FORMA PRO PRO FORMA
HISTORICAL FORMA(1) EQUIVALENT(3) HISTORICAL FORMA(2) EQUIVALENT(3)
---------- -------- -------------- ---------- -------- -------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE(4)
Net income per share of
Common Stock
Before Extraordinary
Items
Triarc........................... $ (.28) $ (.34) -- $(1.08) $(1.10) --
Cable Car........................ $ .14 -- $ (.06) $ .07 -- $(.19)
Book value per share of
Common Stock
Triarc........................... $ .23 $ 1.14 -- $ (.81) $ .30 --
Cable Car........................ $ .67 -- $ .20 $ .75 -- $ .05
</TABLE>
- ------------
(1) The pro forma weighted average shares outstanding during the year ended
December 31, 1996 and the outstanding shares at December 31, 1996 used to
compute the pro forma data after giving effect to the Merger and 1997
Transactions was 31,465,000 and 31,450,000, respectively.
(2) The pro forma weighted average shares outstanding during the six months
ended June 29, 1997 and the outstanding shares at June 29, 1997 used to
compute the pro forma data after giving effect to the Merger and the 1997
Transactions was 31,498,000 and 31,564,000, respectively.
(3) The Cable Car pro forma equivalent per share amounts are calculated by
multiplying pro forma Net Income per Share of Common Stock Before
Extraordinary Items and pro forma Book Value per Share of Common Stock by
the Conversion Price (0.1722) so that the per share amounts are equated to
the respective values for one share of Triarc Common Stock.
(4) Triarc and Cable Car did not make any cash distributions for the periods
presented.
22
<PAGE>
<PAGE>
TRIARC
SUMMARY HISTORICAL AND PRO FORMA CONSOLIDATED FINANCIAL DATA
The following table sets forth for the periods and as of the dates
indicated summary historical consolidated financial data for Triarc and its
subsidiaries (the 'Company') and summary consolidated pro forma financial data
for the Company after giving effect to the 1997 Transactions, as applicable, and
the Merger. The summary historical consolidated financial data of the Company
(i) as of December 31, 1996 and December 31, 1995 and for each of the years in
the three-year period ended December 31, 1996 are derived from the consolidated
financial statements audited by Deloitte & Touche LLP incorporated by reference
herein and should be read in conjunction therewith, (ii) as of December 31, 1994
are derived from the consolidated balance sheet audited by Deloitte & Touche LLP
not included herein and (iii) as of December 31, 1993, April 30, 1993 and April
30, 1992 and for the eight months ended December 31, 1993 and each of the years
in the two-year period ended April 30, 1993 are derived from the consolidated
financial statements audited by a firm other than Deloitte & Touche LLP not
included herein. The summary consolidated financial data presented as of and for
the six-month periods ended June 30, 1996 and June 29, 1997 are derived from the
unaudited condensed consolidated financial statements of the Company
incorporated by reference herein and should be read in conjunction therewith.
The Company's summary consolidated pro forma financial data are derived from the
Unaudited Pro Forma Condensed Consolidated Financial Statements of the Company
included elsewhere herein and should be read in conjunction therewith.
<TABLE>
<CAPTION>
PRO
HISTORICAL FORMA(10)
----------------------------------------------------------------------------- ------------
FISCAL YEAR ENDED EIGHT MONTHS
APRIL 30, ENDED YEAR ENDED DECEMBER 31,
----------------------- DECEMBER 31, ---------------------------------------------------
1992(1) 1993 1993(3) 1994 1995 1996 1996
---------- ---------- ------------ ---------- ---------- -------- ------------
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA
Revenues.................... $1,074,703 $1,058,274 $703,541 $1,062,521 $1,184,221 $989,249 $1,328,909
Operating profit (loss)..... 58,552 34,459(4) 29,969(5) 68,933(6) 33,989(7) (6,979)(9) 10,696
Loss from continuing
operations................ (10,207) (44,549)(4) (30,439)(5) (2,093)(6) (36,994)(7) (8,485)(9) (10,547)
Income (loss) from
discontinued operations,
net....................... 2,705 (2,430) (8,591) (3,900) -- --
Extraordinary items......... -- (6,611) (448) (2,116) -- (5,416)
Cumulative effect of changes
in accounting principles,
net....................... -- (6,388) -- -- -- --
Net loss.................... (7,502) (59,978)(4) (39,478)(5) (8,109)(6) (36,994)(7) (13,901)(9)
Preferred stock dividend
requirements(2)........... (11) (121) (3,889) (5,833) -- -- --
Net loss applicable to
common stockholders....... (7,513) (60,099) (43,367) (13,942) (36,994) (13,901)
Income (loss) per share:
Continuing operations....... (.39) (1.73) (1.62) (.34) (1.24) (.28) (.34)
Discontinued operations..... .10 (.09) (.40) (.17) -- --
Extraordinary items......... -- (.26) (.02) (.09) -- (.18)
Cumulative effect of changes
in accounting
principles................ -- (.25) -- -- -- --
Net loss per share.......... (.29) (2.33) (2.04) (.60) (1.24) (.46)
Weighted-average common
shares outstanding........ 25,867 25,808 21,260 23,282 29,764 29,898 31,465
BALANCE SHEET DATA
Total assets................ 821,170 910,662 897,246 922,167 1,085,966 854,404
Long-term debt.............. 289,758 488,654 575,161 612,118 763,346 500,529
Redeemable preferred
stock..................... -- 71,794 71,794 71,794 --(8) --
Stockholders' equity
(deficit)................. 86,482 (35,387) (75,981) (31,783) 20,650(8) 6,765
</TABLE>
23
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<TABLE>
<CAPTION>
PRO
HISTORICAL FORMA(10)
--------------------------- ----------
SIX MONTHS ENDED
----------------------------------------------
JUNE 30, JUNE 29, JUNE 29,
1996 1997 1997
-------- ---------- ----------
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA
Revenues.................................................... $575,370 $ 431,523 $ 539,316
Operating profit (loss)..................................... 43,130 (11,337)(12) (7,662)
Loss from continuing operations............................. (1,798) (32,346)(12) (34,749)
Income (loss) from discontinued operations, net............. -- --
Extraordinary items......................................... (8,538) (2,954)
Cumulative effect of changes in accounting principles,
net....................................................... -- --
Net loss.................................................... (10,336)(11) (35,300)(12)
Preferred stock dividend requirements(2).................... -- --
Net loss applicable to common stockholders.................. (10,336) (35,300)
Income (loss) per share:
Continuing operations....................................... (.06) (1.08) (1.10)
Discontinued operations..................................... -- --
Extraordinary items......................................... (.29) (.10)
Cumulative effect of changes in accounting principles....... -- --
Net loss per share.......................................... (.35) (1.18)
Weighted-average common shares outstanding.................. 29,916 29,931 31,498
BALANCE SHEET DATA
Total assets................................................ 1,156,990 1,202,137
Long-term debt.............................................. 767,737 767,737
Redeemable preferred stock.................................. -- --
Stockholders' equity (deficit).............................. (24,396) 9,309
</TABLE>
- ------------
(1) Selected Financial Data for the fiscal year ended April 30, 1992 has been
retroactively restated to reflect the discontinuance of the Company's
utility and municipal services and refrigeration operations in 1993.
(2) The Company has not paid any dividends on its common shares during any of
the periods presented.
(3) The Company changed its fiscal year from a fiscal year ending April 30 to a
calendar year ending December 31 effective for the eight-month transition
period ended December 31, 1993 ('Transition 1993').
(4) Reflects certain significant charges recorded during the fiscal year ended
April 30, 1993 as follows: $51,689,000 charged to operating profit
representing $43,000,000 of facilities relocation and corporate
restructuring relating to a change in control of the Company and $8,689,000
of other net charges; $48,698,000 charged to loss from continuing
operations representing the aforementioned $51,689,000 charged to operating
profit, $8,503,000 of other net charges, less $19,391,000 of income tax
benefit and minority interest effect relating to the aggregate of the above
charges, and plus $7,897,000 of provision for income tax contingencies and
$67,060,000 charged to net loss representing the aforementioned $48,698,000
charged to operating profit, a $5,363,000 write-down relating to the
impairment of certain unprofitable operations and accruals for
environmental remediation and losses on certain contracts in progress, net
of income tax benefit and minority interests, a $6,611,000 extraordinary
charge from the early extinguishment of debt and $6,388,000 cumulative
effect of changes in accounting principles.
(5) Reflects certain significant charges recorded during Transition 1993 as
follows: $12,306,000 charged to operating profit principally representing
$10,006,000 of increased insurance reserves; $25,617,000 charged to loss
from continuing operations representing the aforementioned $12,306,000
charged to operating profit, $5,050,000 of certain litigation settlement
costs, $3,292,000 of reduction to net realizable value of certain assets
held for sale other than discontinued operations, less $2,231,000 of
(footnotes continued on next page)
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(footnotes continued from previous page)
income tax benefit and minority interest effect relating to the aggregate
of the above charges, and plus a $7,200,000 provision for income tax
contingencies; and $34,437,000 charged to net loss representing the
aforementioned $25,617,000 charged to loss from continuing operations and
an $8,820,000 loss on disposal of discontinued operations.
(6) Reflects certain significant charges recorded during 1994 as follows:
$9,972,000 charged to operating profit representing $8,800,000 of
facilities relocation and corporate restructuring and $1,172,000 of
advertising production costs that in prior periods were deferred;
$4,782,000 charged to loss from continuing operations representing the
aforementioned $9,972,000 charged to operating profit, $7,000,000 of costs
of a proposed acquisition not consummated less $6,043,000 of gain on sale
of natural gas and oil business, less income tax benefit relating to the
aggregate of the above charges of $6,147,000; and $10,798,000 charged to
net loss representing the aforementioned $4,782,000 charged to loss from
continuing operations, $3,900,000 loss on disposal of discontinued
operations and a $2,116,000 extraordinary charge from the early
extinguishment of debt.
(7) Reflects certain significant charges recorded during 1995 as follows:
$19,331,000 charged to operating profit representing a $14,647,000 charge
for a reduction in the carrying value of long-lived assets impaired or to
be disposed of, $2,700,000 of facilities relocation and corporate
restructuring and $1,984,000 of other net charges; and $15,199,000 charged
to loss from continuing operations and net loss representing the
aforementioned $19,331,000 charged to operating profit, $7,794,000 of
equity in losses and write-down of investments in affiliates, less
$15,088,000 of net gains consisting of $11,945,000 of gain on sale of
excess timberland and $3,143,000 of other net gains, less $2,938,000 of
income tax benefit relating to the aggregate of the above charges and plus
a $6,100,000 provision for income tax contingencies.
(8) In 1995 all of the redeemable preferred stock was converted into common
stock and an additional 1,011,900 common shares were issued resulting in an
$83,811,000 improvement in stockholders' equity (deficit).
(9) Reflects certain significant charges and credits recorded during 1996 as
follows: $73,100,000 charged to operating loss representing a $64,300,000
charge for a reduction in the carrying value of long-lived assets impaired
or to be disposed of and $8,800,000 of facilities relocation and corporate
restructuring; $1,279,000 charged to loss from continuing operations
representing the aforementioned $73,100,000 charged to operating loss,
$77,000,000 of gains on sale of businesses, net and plus $5,179,000 of
income tax provision on the above net credits; and $6,695,000 charged to
net loss representing the aforementioned $1,279,000 charged to loss from
continuing operations and a $5,416,000 extraordinary charge from the early
extinguishment of debt.
(10) For a description of the adjustments and the assumptions used in preparing
the Unaudited Pro Forma Summary Consolidated Financial Data, see Notes to
the Unaudited Pro Forma Condensed Consolidated Balance Sheet and Notes to
the Unaudited Pro Forma Condensed Consolidated Statements of Operations
included elsewhere herein.
(11) Reflects an $8,538,000 extraordinary charge from the early extinguishment
of debt recorded during the six-month period ended June 30, 1996.
(12) Reflects certain significant charges and credits recorded during the six
months ended June 29, 1997 as follows: $39,790,000 charged to operating
loss representing acquisition related costs of $32,440,000 related to the
acquisition of Snapple and $7,350,000 of facilities relocation and
corporate restructuring charges; $39,305,000 charged to loss from
continuing operations representing the aforementioned $39,790,000 charged
to operating loss and other net credits of $485,000; and $42,259,000
charged to net loss representing the aforementioned $39,305,000 charged to
loss from continuing operations and a $2,954,000 extraordinary charge from
the early extinguishment of debt.
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CABLE CAR BEVERAGE CORPORATION
SUMMARY HISTORICAL FINANCIAL DATA
The following data, insofar as it relates to Cable Car's consolidated
statement of operations for the years ended December 31, 1996, 1995 and 1994,
and the balance sheet as of December 31, 1996 and 1995, has been derived from
the consolidated financial statements audited by Price Waterhouse LLP,
independent accountants appearing in Part IV of Cable Car's Annual Report on
Form 10-K for the year ended December 31, 1996, as amended by an amendment
thereto filed with the Commission on May 1, 1997, each of which is incorporated
by reference in this Proxy Statement/Prospectus, and copies of which are
attached hereto as Appendices A-1 and A-2, respectively. The consolidated
statement of operations data for the six months ended December 31, 1993 and the
fiscal years ended June 30, 1993 and 1992, and the consolidated balance sheet
data as of December 31, 1994 and 1993, and June 30, 1993 and 1992 have been
derived from the historical consolidated financial statements of Cable Car for
such periods. The consolidated statements of operations data for the six months
ended June 30, 1997 and 1996 and the consolidated balance sheet data as of June
30, 1997 are derived from unaudited consolidated financial statements
incorporated by reference in this Proxy Statement/Prospectus, and copies of
which are attached hereto as Appendix A-3. The interim financial data has been
prepared on the same basis as the audited consolidated financial statements and,
in the opinion of Cable Car, include all adjustments (consisting of normal
recurring adjustments) necessary for a fair presentation of such information.
Historical results are not necessarily indicative of results for any future
period.
The following table data should be read in conjunction with the
consolidated financial statements and notes thereto, and management's commentary
thereon contained in Item 7 of Cable Car's Annual Report on Form 10-K for the
year ended December 31, 1996, as amended, attached hereto as Appendices A-1 and
A-2, and Cable Car's Quarterly Report on Form 10-Q for the quarterly period
ended June 30, 1997, attached hereto as Appendix A-3.
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED JUNE 30, ENDED YEAR ENDED DECEMBER 31,
---------------------- DECEMBER 31, ----------------------------
1992 1993(1) 1993(2) 1994 1995(3) 1996
------------------- ------------------- ------------ ------ ------- -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue................... $14,839 $15,538 $3,031 $8,322 $12,844 $18,873
Net income (loss)......... (22) (348) 143 722 883 1,257
Net income (loss) per
common share:........... (.05) .02 .09 .10 .14
Weighted average common
and common equivalent
shares outstanding...... 7,057 7,641 7,797 8,319 8,916 9,255
BALANCE SHEET DATA:
Total assets.............. 5,266 4,054 3,921 4,449 5,361 7,142
Long-term debt............ 108 3 10 6 -- --
Stockholders' equity...... 3,067 2,953 3,097 3,945 4,402 5,982
<CAPTION>
SIX MONTHS ENDED JUNE 30,
-----------------------------------------------------------
1996 1997
---------------------------- ----------------------------
<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue................... $8,933 $12,747
Net income (loss)......... 603 693
Net income (loss) per
common share:........... .07 .07
Weighted average common
and common equivalent
shares outstanding...... 9,022 9,603
BALANCE SHEET DATA:
Total assets.............. 9,173
Long-term debt............ --
Stockholders' equity...... 6,752
</TABLE>
- ------------
(1) On June 7, 1993, Cable Car sold its wholly owned subsidiary, Sheya Brothers
Specialty Beverages ('SBCC'), to AMCON Distributing Company ('AMCON') in
return for 12.5% of the then issued and outstanding shares of common stock
of AMCON. SBCC had contributed $10.4 million and $10.6 million to annual
revenue and a pretax loss of approximately $291,000 and pretax earnings of
approximately $89,000 for the fiscal years ended June 30, 1993 and 1992,
respectively.
(2) In 1993, Cable Car elected to change its fiscal year end from June 30 to
December 31.
(3) In the third quarter of 1995, Cable Car wrote down its investment in AMCON
stock and recorded a pretax charge of $848,342. Cable Car then distributed
266,469 shares of AMCON common stock as a dividend to Cable Car stockholders
of record as of July 5, 1995. Also during 1995, Cable Car determined that,
based upon Cable Car's then current and expected future earnings, it was
more likely than not that Cable Car would realize its future income tax
benefits. Based on this determination, Cable Car released its valuation
allowance against deferred tax assets and recorded a tax benefit of
$936,440.
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RISK FACTORS
This Proxy Statement/Prospectus contains forward-looking statements that
involve risks and uncertainties. See 'Cautionary Statement Concerning
Forward-Looking Statements.' Holders of Cable Car Common Stock should consider
carefully all the information contained in this Proxy Statement/Prospectus and,
in particular, the following risk factors:
HOLDING COMPANY STRUCTURE
Because Triarc is a holding company, its ability to service debt and pay
dividends, including dividends on the Triarc Common Stock, is primarily
dependent (in addition to its cash, cash equivalents and short-term investments
on hand) upon cash flows from its subsidiaries, including loans, cash dividends
and reimbursement by subsidiaries to Triarc in connection with its providing
certain management services and payments by subsidiaries under certain tax
sharing agreements. At June 29, 1997, Triarc's (parent only) cash, cash
equivalents and short-term investments were approximately $95.2 million.
Under the terms of various indentures and credit arrangements which govern
Triarc's principal subsidiaries and which will govern them in the future,
Triarc's principal subsidiaries are subject to certain restrictions on their
ability to pay dividends and/or make loans or advances to Triarc. The ability of
any of Triarc's subsidiaries to pay cash dividends and/or make loans or advances
to Triarc is also dependent upon the respective abilities of such entities to
achieve sufficient cash flows after satisfying their respective cash
requirements, including debt service, to enable the payment of such dividends or
the making of such loans or advances.
In addition, the equity interests of Triarc in its subsidiaries rank junior
to all of the respective indebtedness, whenever incurred, of such entities in
the event of their respective liquidation or dissolution. As of June 29, 1997,
the subsidiaries of Triarc had aggregate long-term indebtedness of approximately
$780.5 million (excluding intercompany indebtedness).
As a result of the foregoing contractual restrictions and structural
subordination, Triarc may be unable to gain access to the cash flow or the
assets of its subsidiaries in amounts sufficient to discharge its obligations
under its indebtedness. See ' -- Substantial Leverage.'
SUBSTANTIAL LEVERAGE
Triarc is highly leveraged. On a pro forma basis giving effect to the 1997
Transactions and the Merger, total consolidated indebtedness of Triarc as of
June 29, 1997, would have been approximately $783.5 million. On a pro forma
basis giving effect to the 1997 Transactions and the Merger, Triarc's
consolidated interest expense would have been approximately $93.5 million for
the year ended December 31, 1996 and $42.0 million for the six months ended June
29, 1997. As of June 29, 1997, Triarc's (parent only) indebtedness was
approximately $45.7 million (excluding intercompany indebtedness other than a
$40.7 million note owed to the Operating Partnership). As a consequence of such
leverage, (i) Triarc's ability to obtain additional financing in the future for
working capital, capital expenditures, future acquisitions or other general
corporate purposes may be limited; (ii) a substantial portion of Triarc's
consolidated cash flow from operations may be dedicated to payments in respect
of its indebtedness; (iii) Triarc's flexibility in responding to economic
downturns and competitive pressures may be limited; (iv) Triarc may have
difficulty discharging its obligations under its indebtedness, including,
without limitation, the $40.7 million loan to the Company by the Operating
Partnership and Triarc's guarantees of certain debt of its subsidiaries; and (v)
Triarc's ability to pay dividends on the Triarc Common Stock may be limited. In
addition, subject to any restrictions that may exist from time to time under
certain agreements, Triarc and its subsidiaries may incur additional
indebtedness in the future for general corporate purposes, which may include
acquisitions, investments or capital expenditures.
27
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NET LOSSES
Triarc reported net losses (after preferred dividend requirements for
fiscal years to 1994) for each fiscal year from 1989 through 1996 (including the
transition period ended December 31, 1993) and for the six-month period ended
June 29, 1997. Although the diversity of Triarc's business segments precludes
overall generalizations about its operating results, Triarc believes that the
losses for the three fiscal years ended December 31, 1996 were affected in large
part by write downs of operating assets as required by FASB 121 (an aggregate of
approximately $78.9 million for fiscal 1995 and 1996), charges related to the
relocation of offices and management restructurings (an aggregate of
approximately $20.3 million for the three years), extraordinary charges relating
to the early extinguishment of indebtedness (an aggregate of approximately $7.5
million for fiscal 1994 and 1996), and operating problems incurred during fiscal
1995 and 1996 relating to the introduction of new beverage products and the
operations of new restaurants that were unable to profitably cover their
carrying costs. There can be no assurance that Triarc's operating results will
improve in future periods.
POSSIBLE PRICE VOLATILITY OF TRIARC COMMON STOCK
The market price of Triarc Common Stock has been, and may continue to be,
volatile. The market price of Triarc Common Stock may be significantly affected
by factors such as actual or anticipated fluctuations in Triarc's operating
results, new product or concept development by Triarc or its competitors,
changing trends in customer tastes, changes in financial estimates by securities
analysts, general market conditions and other factors.
DIVIDENDS
Triarc has not paid a dividend on the Triarc Common Stock in the three most
recently completed fiscal years or in the current fiscal year. Triarc currently
intends to reinvest all of its earnings for use in its business and to finance
future growth. Accordingly, Triarc does not anticipate paying cash dividends on
Triarc Common Stock in the foreseeable future.
SUCCESSFUL COMPLETION AND INTEGRATION OF ACQUISITIONS
One element of Triarc's business strategy is to continuously evaluate
acquisitions and business combinations to augment its businesses. There can be
no assurance that Triarc will identify and complete suitable acquisitions or if
completed, that such acquisitions will be successfully integrated. Acquisitions
involve numerous risks, including difficulties assimilating new operations and
products. There can be no assurance that any acquisition would result in
long-term benefits to Triarc or that management would be able to manage
effectively the resulting business.
ACQUISITION AND INTEGRATION OF SNAPPLE
On May 22, 1997, Triarc acquired all of the outstanding capital stock of
Snapple from The Quaker Oats Company ('Quaker') for approximately $300 million
in cash. After being acquired by Quaker in December 1994 for approximately $1.7
billion, Snapple's performance deteriorated significantly. Case sales and
revenues declined from 72 million cases and $675.8 million, respectively, in
1994 to 49.6 million cases and $498.3 million, respectively, for the 12 months
ended March 1997. Triarc believes that Snapple's deteriorating results under
prior ownership were largely attributable to the following factors: (i)
Snapple's relationships with its distributors became strained because it failed
to develop strong relationships with them; (ii) Snapple's frequency of new
product introduction declined dramatically; (iii) Snapple replaced successful
advertising personae with expensive marketing campaigns which proved to be
ineffective; and (iv) Snapple attempted to expand international sales by
investing heavily in marketing and infrastructure, which expenditures did not
produce corresponding sales volumes. In order to stabilize and ultimately
increase Snapple's sales and profitability, Triarc intends to capitalize on
Snapple's continued strong brand equity, increase development of new products
and packaging, utilize creative and more effective advertising and marketing to
promote Snapple products and to develop stronger relationships with Snapple's
distributors, many of whom also distribute Mistic and/or Royal Crown products.
In addition, Triarc hopes to realize cost savings through more aggressive
purchasing of
28
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raw materials (such as glass bottles, flavors and other ingredients).
Furthermore, Snapple has historically spent significantly more on advertising
and marketing per case sold than the Triarc Beverage Group has spent with
respect to Mistic products. While the Triarc Beverage Group has plans to spend
significantly more per case on Snapple advertising and marketing than its
historical spending levels for Mistic, it still intends to spend significantly
less than the historical per case spending levels of Snapple's prior owner.
Snapple also spent significantly more per case on general and administrative
expenses than does the Triarc Beverage Group for its Mistic business. The Triarc
Beverage Group intends to spend significantly less on general and administrative
expenses than Snapple's prior owner. Triarc faces risks in integrating the
operations of Snapple into the Triarc Beverage Group. There can be no assurance
that case volume stabilization or growth or greater profitability can be
achieved or that cost savings will be realized, that there will not be delays in
achieving such cost savings or that the Triarc Beverage Group will not incur
unanticipated costs in implementing its post-acquisition strategy with respect
to Snapple.
ACQUISITION AND INTEGRATION OF CABLE CAR
Triarc faces risks associated with implementing its post-Merger strategy
and integrating the operations of Cable Car into the Triarc Beverage Group. The
Triarc Beverage Group hopes to be able to increase Cable Car's sales and
profitability through improved distribution and increased purchasing
efficiencies with respect to raw materials (such as glass bottles, flavors and
other ingredients). There can be no assurance, however, that such cost savings
will be realized, that there will not be delays in achieving such cost savings
or that the Triarc Beverage Group will not incur unanticipated costs in
implementing its post-Merger strategy and integrating the operations of Cable
Car into the Triarc Beverage Group.
ENVIRONMENTAL LIABILITIES
Certain of Triarc's operations are subject to federal, state and local
environmental laws and regulations concerning the discharge, storage, handling
and disposal of hazardous or toxic substances. Such laws and regulations provide
for significant fines, penalties and liabilities, in certain cases without
regard to whether the owner or operator of the property knew of, or was
responsible for, the release or presence of such hazardous or toxic substances.
In addition, third parties may make claims against owners or operators of
properties for personal injuries and property damage associated with releases of
hazardous or toxic substances. Although Triarc believes that its operations
comply in all material respects with all applicable environmental laws and
regulations, it cannot predict what environmental legislation or regulations
will be enacted in the future or how existing or future laws or regulations will
be administered or interpreted. Triarc cannot predict the amount of future
expenditures which may be required in order to comply with any environmental
laws or regulations or to satisfy any such claims. Triarc believes that its
operations comply in all material respects with all applicable environmental
laws and regulations.
WEATHER CONDITIONS AFFECT THE DEMAND FOR PROPANE
Weather conditions, which can vary substantially from year to year, have a
significant impact on the demand for propane for both heating and agricultural
purposes. Many customers of the Operating Partnership rely heavily on propane as
a heating fuel. Accordingly, the volume of propane sold is at its highest during
the six-month peak heating season of October through March and is directly
affected by the severity of the winter weather. Historically, approximately 66%
of the Operating Partnership's retail propane volume has been sold during this
peak heating season. Actual weather conditions, therefore, may significantly
affect the Operating Partnership's financial performance. For example, warm
weather during the winter of 1994-95 significantly decreased the overall demand
for propane, and adversely affected the Operating Partnership's operating
income. Furthermore, despite the fact that overall weather conditions may be
normal variations in weather in one or more regions in which the Operating
Partnership operates can significantly affect the total volume of propane sold
by the Operating Partnership, and consequently, the Operating Partnership's
results of operations. Variations in the weather in the Midwest, where the
majority of the Operating Partnership's retail volume is sold, and in the
Northeast, where the Operating Partnership has a greater concentration of higher
margin residential
29
<PAGE>
<PAGE>
accounts, will generally have a greater impact on the Operating Partnership's
revenues than variations in the weather in other markets.
ENERGY EFFICIENCY AND TECHNOLOGY TRENDS MAY AFFECT DEMAND FOR PROPANE
The national trend toward increased energy conservation and technological
advances, including installation of improved insulation and the development of
more efficient furnaces and other heating devices, has adversely affected, and
may continue to adversely affect, demand for propane by retail customers. The
Operating Partnership cannot predict the effect of future conservation measures
or the effect that any technological advances in heating, conservation, fuel
efficiency, energy generation or other devices might have on its operations.
ROYAL CROWN'S RELIANCE ON CERTAIN BOTTLER'S AND PRIVATE LABEL SALES
Royal Crown sells its soft drink concentrate to a number of independent
bottlers who are granted exclusive licenses to sell RC Cola brand products
within a defined territory. Two of Royal Crown's bottlers, Chicago Bottling
Group and Beverage America, accounted for approximately 20.1% and 10.2%,
respectively, of Royal Crown's domestic unit sales of concentrate for branded
products during 1996. Royal Crown's ten largest bottler groups accounted for
63.6% and 68.4% of Royal Crown's domestic unit sales of concentrate for branded
products during 1995 and 1996, respectively. If one or more of these major
bottlers were to discontinue selling RC Cola brand products for any reason,
Royal Crown's sales would be adversely affected in the areas serviced by such
bottlers.
Royal Crown provides concentrate to Cott Corporation ('Cott') pursuant to a
concentrate supply agreement entered into in 1994 (the 'Cott Worldwide
Agreement'). Under the Cott Worldwide Agreement, Royal Crown is Cott's exclusive
worldwide supplier of cola concentrates for retailer-branded beverages in
various containers. In addition, Royal Crown also supplies Cott with non-cola
carbonated soft drink concentrates. Cott delivers the private label concentrate
and packaging materials to independent bottlers for bottling. The finished
private label product is then shipped to Cott's trade customers, including major
retailers such as Wal-Mart, A&P and Safeway. The Cott Worldwide Agreement
requires that Cott purchase at least 75% of its total worldwide requirements for
carbonated soft drink concentrates from Royal Crown. The initial term of the
Cott Worldwide Agreement is 21 years, with multiple six-year extensions.
Although the Cott Worldwide Agreement provides that Royal Crown may manufacture
and sell private label cola concentrate to other packagers or bottlers if Cott
does not meet certain minimum purchase requirements, there can be no assurance
that Royal Crown would be able to enter into satisfactory arrangements with an
alternative private label concentrate purchaser. In 1994, 1995 and 1996,
revenues from the Cott business represented approximately 14.2%, 12.1% and
12.6%, respectively, of Royal Crown's total revenues. If Cott's business
declines, or if the Cott Worldwide Agreement is terminated, Royal Crown's sales
could be adversely affected.
COMPETITION
Triarc's businesses operate in highly competitive industries. Triarc has
major competitors in each of its business segments, many of which have
significantly greater financial, marketing, personnel and other resources than
does Triarc.
The Triarc Beverage Group's premium and soft drink products compete
generally with all liquid refreshments and in particular with numerous
nationally-known soft drinks such as Coca-Cola and Pepsi-Cola. The Triarc
Beverage Group also competes with regional soft drink producers and other
'private label' soft drink suppliers. The Triarc Beverage Group competes with
other beverage companies not only for consumer acceptance but also for shelf
space in retail outlets and for marketing focus by the Triarc Beverage Group's
distributors, most of whom also distribute other beverage brands. The principal
methods of competition in the beverage industry include product quality and
taste, brand advertising, trade and consumer promotions, pricing, packaging and
the development of new products. In recent years, price competition has been
especially intense with respect to sales of beverages to food stores, with local
bottlers granting significant discounts and allowances off wholesale prices in
order to
30
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maintain or increase market share in the food store segment. While price
discounting by bottlers indirectly affects the Triarc Beverage Group's operating
results, Triarc cannot quantify the impact of such price competition.
Triarc completed the sale of all of its company owned Arby's restaurants in
May 1997. Subsequent to such sale, Arby's revenues are primarily dependent on
royalties based on sales at franchisees' restaurants. The Arby's restaurant
system faces direct and indirect competition from numerous well-established
competitors, including national and regional fast food chains. In addition,
Arby's competes with locally owned restaurants, drive-ins, diners and numerous
other establishments that offer low-priced food to the public. The principal
means of competition in the fast food industry are price, the quality of
products, quality and speed of service, advertising, name identification,
restaurant location and attractiveness of facilities. Triarc believes that a
number of fast food companies have in recent years experienced flattening growth
rates and declines in average sales per domestic restaurant. In response,
certain companies, including Arby's, have adopted price discounting strategies.
During past periods of discount promotions, Arby's has experienced increases in
sales, but, with respect to company owned restaurant operations, lower gross
margins. As a result, Triarc cannot quantify the net impact of price competition
on Arby's results of operations. Accordingly, continued price discounting in the
fast food industry could have an adverse effect on Arby's results of operations.
The Partnership, through its subsidiary partnership, the Operating
Partnership, competes in each of its marketing areas with numerous other propane
distributors. In addition, propane is sold in competition with all other
commonly used fuels and energy sources, including electricity, fuel oil and
natural gas. The primary competing energy source to propane is electricity,
which is available in substantially all of the market areas served by the
Partnership. Fuel oil is a major competitor for home heating and other purposes
and is sold by a diversified group of companies throughout the marketing areas
served by the Partnership.
C.H. Patrick has many competitors, including large chemical companies and
smaller concerns. No single manufacturer dominates the industry in which C.H.
Patrick participates. The principal elements of competition in the dyes and
specialty chemicals industry include quality, price and service.
DEPENDENCE ON KEY PERSONNEL
Triarc believes that its success has been and will continue to be dependent
to a significant extent upon the efforts and abilities of its senior management
team. The failure by Triarc to retain members of its senior management team
could adversely affect Triarc's ability to build on the efforts undertaken by
its current management to increase the efficiency and profitability of its
businesses. The loss of Nelson Peltz, the Chairman and Chief Executive Officer
of Triarc, or Peter May, the President and Chief Operating Officer of Triarc,
other senior members of Triarc's senior management or the senior management of
its subsidiaries could adversely affect Triarc.
CONTROL BY CERTAIN SHAREHOLDERS
DWG Acquisition Group, L.P. ('DWG Acquisition') owns directly or indirectly
approximately 24.9% of the outstanding Triarc Common Stock as of September 28,
1997. Messrs. Peltz and May, as the sole general partners of DWG Acquisition,
beneficially own all of the Triarc Common Stock owned by DWG Acquisition. In
addition, Messrs. Peltz and May individually beneficially own certain additional
shares of Triarc Common Stock which, when combined with the shares owned through
DWG Acquisition, would constitute approximately 27.9% and 27.0%, respectively,
of the Triarc Common Stock as of September 28, 1997. As a result of such
ownership, Messrs. Peltz and May are able to exercise significant influence over
the election of members of the Boards of Directors of Triarc and its
subsidiaries and may also be able to influence significantly the outcome of
certain corporate actions requiring stockholder approval, including, mergers,
consolidations and the sale of all or substantially all of Triarc's assets, and
may be in a position to prevent or cause a change in control of Triarc.
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CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The Merger is expected to be a tax-free reorganization within the meaning
of Section 368(a) of the Code for federal income tax purposes, so that no gain
or loss will be recognized by Cable Car's stockholders on the exchange of Cable
Car Common Stock for Triarc Common Stock, except in respect of cash received in
lieu of fractional shares. The receipt of a tax opinion regarding the
availability of such tax treatment is a condition to the consummation of the
Merger, although such condition may be waived. Cable Car stockholders should be
aware that such an opinion would not bind the Internal Revenue Service (the
'IRS'), and the IRS is therefore not precluded from asserting a contrary
opinion. A successful IRS challenge to the tax-free status of the Merger would
result in Cable Car stockholders recognizing taxable gain or loss with respect
to each share of Cable Car Common Stock surrendered equal to the difference
between the stockholder's tax basis in such share and the fair market value, as
of the Effective Time, of the Triarc Common Stock received in exchange therefor.
Cable Car stockholders are urged to consult their own tax advisors regarding the
tax consequences of the Merger. See 'The Proposed Merger and Related
Matters -- Certain Federal Income Tax Consequences.'
ADDITIONAL INTERESTS OF CABLE CAR MANAGEMENT
In considering the recommendation of the Cable Car Board with respect to
the Merger Agreement and the Merger, holders of Cable Car Common Stock should be
aware that certain directors and officers of Cable Car have certain interests in
respect of the Merger that are in addition to the interests of Cable Car
stockholders generally. The Cable Car Board was aware of these interests and
considered them, among other matters, in approving the Merger Agreement and the
Merger. See 'The Proposed Merger and Related Matters -- Additional Interests of
Cable Car Management.'
EFFECT OF PREFERRED STOCK; ANTI-TAKEOVER PROVISIONS
The Triarc Charter authorizes the issuance of shares of 'blank check'
preferred stock which will have such designations, rights and preferences as may
be determined from time to time by the Triarc Board. Accordingly, the Triarc
Board is empowered, without stockholder approval, to issue preferred stock with
dividend, liquidation, conversion, voting or other rights which could adversely
affect the voting power and other rights of the holders of Triarc Common Stock.
The preferred stock could be used to discourage, delay or prevent a change in
control of Triarc which is determined by the Triarc Board to be undesirable.
Although Triarc has no present intention to issue any shares of preferred stock,
there can be no assurance that Triarc will not do so in the future. See
'Description of Triarc Capital Stock.'
In addition, certain provisions in the Triarc Charter are intended to
discourage or delay a hostile takeover of control of Triarc and are summarized
in detail under the caption 'Comparison of Rights of Cable Car and Triarc
Stockholders -- Certain Anti-Takeover Provisions in the Triarc Charter.'
EFFECT OF TRIARC STOCK OPTIONS
Triarc maintains the 1993 Equity Participation Plan (the 'Equity Plan'),
which provides for the grant of stock options and restricted stock to certain
officers, key employees, consultants and non-employee directors. In addition,
non-employee directors are eligible to receive shares of Triarc Common Stock in
lieu of retainer or meeting attendance fees. The Equity Plan provides for a
maximum of 10,000,000 shares of Triarc Common Stock to be issued on the exercise
of options, to be granted as restricted stock or to be issued to non-employee
directors in lieu of fees. Under the Equity Plan, as of September 28, 1997,
options to acquire an aggregate of 8,798,170 shares of Triarc Common Stock were
outstanding, 500,775 restricted shares of Triarc Common Stock (the restrictions
on which have lapsed) had been issued, 22,812 shares of Triarc Common Stock had
been issued to non-employee directors and 521,750 shares of Triarc Common Stock
were available for future grants. The exercise of outstanding options or the
future issuance of options (and the exercise of such options) or restricted
stock will dilute the beneficial ownership of holders of Triarc Common Stock
after the Merger.
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COMPARATIVE RIGHTS OF CABLE CAR STOCKHOLDERS BEFORE AND AFTER THE MERGER
There are various differences between the rights of Cable Car's
stockholders and the rights of Triarc's stockholders. See 'Description of Triarc
Capital Stock' and 'Comparison of Rights of Cable Car and Triarc Stockholders.'
COMPANIES
TRIARC COMPANIES, INC.
Triarc is a holding company which, through its subsidiaries, is engaged in
the following businesses: beverages, restaurants, dyes and specialty chemicals
and liquefied petroleum gas. The beverage operations are conducted by the Triarc
Beverage Group through Royal Crown Company, Inc. ('Royal Crown'), Mistic Brands,
Inc. ('Mistic') and Snapple Beverage Corp., which was acquired by Triarc in May
1997; the restaurant operations are conducted by the Arby's (d/b/a the Triarc
Restaurant Group), which is the franchisor for the Arby's restaurant system; the
dyes and specialty chemical operations are conducted through C.H. Patrick & Co.,
Inc.; and the liquefied petroleum gas operations are conducted through the
Partnership and its operating subsidiary partnership, the Operating Partnership.
In addition, prior to April 29, 1996, Triarc was also engaged in the textile
business through Graniteville Company. On such date the textile related assets
of Graniteville Company were sold.
The Triarc Beverage Group oversees the operations of Triarc's beverage
subsidiaries, Snapple, Mistic and Royal Crown. Snapple, acquired from Quaker in
May 1997, markets and distributes ready-to-drink brewed iced teas and juice
drinks and is a market leader in the premium beverage category. Triarc has
undertaken and expects to continue to undertake measures designed to stabilize
and ultimately increase Snapple's sales and profitability. Such measures include
capitalizing on Snapple's continued strong brand equity, increasing the
development of new products and packaging, utilizing creative and more effective
advertising and marketing to promote Snapple products and developing stronger
relationships with Snapple's distributors, many of whom also distribute Mistic
and/or Royal Crown products. In addition, Triarc hopes to realize cost savings
through more aggressive purchasing of raw materials (such as glass bottles,
flavors and other ingredients) and increased efficiencies in advertising,
marketing and general and administrative expenses. Since acquiring Snapple,
Triarc has introduced four new products, including Orange Tropic -- Wendy's
Tropical Inspiration and three herbal or green teas. Snapple's performance had
deteriorated while owned by Quaker from December 1994 through May 1997.
Mistic's premium beverage business, acquired by Triarc in August 1995,
develops, produces and markets a wide variety of premium non-alcoholic
beverages, including non-carbonated and carbonated fruit drinks, ready to drink
brewed iced teas and naturally flavored sparkling waters under the Mistic, Royal
Mistic, Mistic Rain Forest and Mistic Breeze brand names. Since acquiring
Mistic, Triarc has introduced 34 new flavors, various bottle sizes and shapes
and numerous new package designs. Royal Crown produces and sells concentrates
used in the production of soft drinks which are sold domestically and
internationally to independent, licensed bottlers who manufacture and distribute
finished beverage products. Royal Crown's major products have significant
recognition and include: RC COLA, DIET RC COLA, DIET RITE COLA, DIET RITE
flavors, NEHI, UPPER 10 and KICK. Further, Royal Crown is the exclusive supplier
of cola concentrate to Cott Corporation which sells private label soft drinks to
major retailers in the United States, Canada, the United Kingdom, Australia,
Japan, Spain and South Africa.
Arby's is the world's largest franchise restaurant system specializing in
slow-roasted meat sandwiches. In addition, Triarc believes that Arby's is the
10th largest quick service restaurant chain in the United States based on
domestic system-wide sales. As of August 31, 1997, the Arby's restaurant system
consisted of 3,050 restaurants of which 2,881 operated within the United States
and 169 operated outside the United States. Currently, all of the Arby's
restaurants are owned and operated by franchisees. Triarc believes that, as a
franchisor, it will be able to reduce from recent historical levels the
operating costs of the restaurant segment, and substantially reduce capital
expenditure requirements, thereby improving the restaurant segment's cash flows.
Arby's continues to pursue the development of a multi-brand strategy, which
allows a single restaurant to offer the consumer distinct, but complemen-
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tary, brands in the same restaurant. Arby's currently multi-brands with T.J.
Cinnamons, Inc., which specializes in gourmet cinnamon rolls and related
products, and P.T. Noodle's, which offers a variety of Asian, Italian and
American dishes based on serving corkscrew noodles with a variety of different
sauces.
C.H. Patrick produces and markets dyes and specialty chemicals primarily to
the textile industry. The majority of C.H. Patrick's dye products are used in
the continuous dying of cotton and polyester/cotton blends. C.H. Patrick also
manufactures various textile softeners, surfactants, dying auxiliaries and
permanent press resins, as well as several acrylic polymers used in textile
finishing as soil release agents. As previously announced, Triarc continues to
review strategic alternatives to maximize the value of its dye and specialty
chemical operations. There can be no assurance that any transaction will
result from this review process.
The Partnership and the Operating Partnership are engaged primarily in the
retail marketing of liquefied petroleum gas ('propane') to residential,
commercial and industrial, and agricultural customers and to dealers that resell
propane to residential and commercial customers and the retail marketing of
propane related supplies and equipment, including home and commercial
appliances. Triarc believes that the Partnership is the sixth largest retail
marketer of propane in terms of volume in the United States. National Propane,
an indirect wholly owned subsidiary of Triarc, is the managing general partner
of the Partnership and the Operating Partnership and owns approximately 43% of
their combined equity interests with the remaining 57% owned by the public.
The mailing address of Triarc's principal executive offices is 280 Park
Avenue, New York, New York 10017, and its telephone number is (212) 451-3000.
CCB MERGER CORPORATION
Mergerco, a wholly owned subsidiary of Triarc, was formed in June 1997 by
Triarc solely for the purpose of effecting the Merger. Upon consummation of the
Merger, Mergerco will be merged into Cable Car, and Mergerco's separate
corporate existence will thereupon cease. The mailing address of Mergerco's
principal executive offices is c/o Triarc Companies, Inc., 280 Park Avenue, New
York, New York 10017, and its telephone number is (212) 451-3000.
CABLE CAR BEVERAGE CORPORATION
Cable Car Beverage Corporation is a beverage marketing company. Cable Car's
primary business is selling Stewart's brand premium soft drinks (Root Beer,
Orange N' Cream, Cream Ale, Ginger Beer, Classic Key Lime and Cherries N' Cream)
to beverage distributors throughout the United States and Canada. Cable Car also
sells concentrate to soft drink bottlers, who produce and distribute beverages
made from the concentrate. In addition to Stewart's brand soft drinks, Cable Car
also sells Aspen Mountain Spring Water, Aspen flavored waters, San Francisco
Seltzer and Java Cola. Cable Car has two wholly owned subsidiaries (the 'Cable
Car Subsidiaries'), Fountain Classics, Inc., which markets Stewart's fountain
products, and Old San Francisco Seltzer, Inc. The mailing address of Cable Car's
principal executive offices is 717 17th Street, Suite 1475, Denver, Colorado
80202, and its telephone number is (303) 298-9038.
Copies of Cable Car's Annual Report on Form 10-K for the year ended
December 31, 1996, and the amendment thereto filed with the Commission on April
30, 1997, are attached to this Proxy Statement/Prospectus as Appendices A-1 and
A-2, respectively. A copy of Cable Car's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1997 is attached to this Proxy Statement/Prospectus as
Appendix A-3.
RECENT DEVELOPMENTS
TRIARC
On May 22, 1997, Triarc completed its acquisition of Snapple from Quaker
for approximately $300 million in cash. Snapple, which markets and distributes
ready-to-drink brewed iced teas and juice
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drinks, had sales for 1996 of approximately $550 million, and is a market leader
in the premium beverage category. Snapple, together with Mistic and Royal Crown,
operates as part of the Triarc Beverage Group.
On May 5, 1997, Triarc completed the sale of all of its 355 company owned
Arby's restaurants to RTM Restaurant Group ('RTM'), the largest franchisee in
the Arby's system, for approximately $71 million. As part of the transaction,
the selling companies received options to purchase an aggregate 20% interest in
each of the RTM affiliates that own the restaurants. Arby's, a subsidiary of
Triarc, continues as the franchisor of the more than 3,000 store Arby's
restaurant system.
On July 18, 1997, Royal Crown and TriBev Corporation, subsidiaries of
Triarc, completed the sale of their rights relating to the C&C beverage line,
including the C&C trademark, to Kelco Sales & Marketing Inc. ('Kelco'), a
beverage distribution business based in Cranford, New Jersey, which will do
business under the name of C&C Beverages, Inc. C&C is a line of mixers, colas
and flavors. In connection with the sale, Royal Crown also agreed to sell to
Kelco concentrate for C&C products and to provide Kelco certain technical
services for seven years. In consideration for the foregoing, Royal Crown and
TriBev Corporation will receive an aggregate payment of approximately $9.4
million, payable over seven years.
On October 13, 1997, Triarc announced that its management had been
authorized, when and if market conditions warrant, to purchase during the next
twelve months, up to $20 million of Triarc Common Stock. Purchases under this
program may not commence until after the consummation of the Merger and there
can be no assurance that any such purchases of Triarc Common Stock will be made
in the future.
CABLE CAR
On June 24, 1997, Cable Car entered into an agreement, as further amended
on August 11, 1997, with Stewart's Restaurants, Inc. ('Stewart's Restaurants')
amending and modifying its Master Agreement dated July 11, 1989 with Stewart's
Restaurants (as amended previously and as so amended, the 'Stewart's Master
Agreement'). Among other things, the amendment gave Cable Car ownership of the
formulas for and manufacturing rights to concentrates used to make Stewart's
soft drinks. The amendment also provides that Cable Car is permitted to use the
Stewart's trademark on any other product of any type, provided that such
products comply with certain quality standards, and that Stewart's Restaurants
shall not, without Cable Car's consent, use the Stewart's trademark except to
operate Stewart's Restaurants, Drive-Ins and mobile food and beverage
concessions and on certain other products.
On June 24, 1997, Cable Car also entered into an agreement, as further
amended on August 11, 1997, with Stewart's Restaurants amending and modifying
its agreement dated December 1, 1993 with Stewart's Restaurants (as amended
previously and as so amended, the 'Stewart's Fountain Agreement'). Among other
things the amendment to the Stewart's Fountain Agreement grants to Cable Car the
perpetual exclusive worldwide license to manufacture, distribute and sell post
mix syrups and pre mixes for Stewart's beverages throughout the world
(fountain-type beverages), except that Stewart's Restaurants retains such rights
in any of its company owned, licensed or franchised Stewart's Restaurants,
Drive-Ins or mobile food and beverage concessions and subject to Cable Car
meeting certain quality standards. Cable Car also agreed to certain minimum
annual royalty payments to Stewart's Restaurants.
As consideration for these amendments, Cable Car will issue to Stewart's
Restaurants prior to the Effective Time an aggregate of 150,000 shares of Cable
Car Common Stock. In addition, Cable Car will pay to Stewart's Restaurants
$400,000 in cash, of which $250,000 is payable on March 31, 1998 and $150,000 is
payable on March 31, 1999.
Cable Car has entered into a lease to move to new office space in Denver on
or about December 1, 1997. The new address of Cable Car's principal executive
offices will be 555 17th Street, Suite 3550, Denver, Colorado 80202.
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THE SPECIAL MEETING
GENERAL
This Proxy Statement/Prospectus is being furnished to stockholders of Cable
Car in connection with the solicitation of proxies by the Cable Car Board for
use at the Special Meeting to be held on Tuesday, November 25, 1997, at
10:00 a.m., local time, at Norwest Bank Building, 1740 Broadway, Forum Room,
Denver, Colorado 80274, and any adjournments or postponements thereof.
Representatives of Price Waterhouse L.L.P., Cable Car's independent
accountants, are expected to be present at the Special Meeting with the
opportunity to make a statement if they desire to do so and will be available to
respond to appropriate questions.
MATTERS TO BE CONSIDERED
At the Special Meeting, holders of Cable Car Common Stock will consider and
vote upon a proposal to approve the Merger Agreement, which provides for the
merger of Mergerco into Cable Car with Cable Car being the Surviving
Corporation, and such other matters as may properly be brought before the
Special Meeting or any adjournments or postponements thereof. Cable Car does not
currently intend to bring any business other than the approval of the Merger
Agreement and the Merger before the Special Meeting or any adjournments or
postponements thereof. See 'The Proposed Merger and Related Matters' and 'The
Merger.'
VOTE REQUIRED
Approval of the Merger Agreement and the Merger requires the affirmative
vote of a majority of the outstanding shares of Cable Car Common Stock. A vote
by a stockholder of Cable Car to approve the Merger Agreement will constitute a
vote to approve the terms of, and the transactions contemplated by, the Merger
Agreement (including the Merger).
A majority of the shares entitled to vote at the Special Meeting,
represented in person or by proxy, constitutes a quorum. The Special Meeting may
be adjourned if a quorum is not present for the purpose of obtaining additional
proxies or votes or for any other purpose, and, at any subsequent reconvening of
the Special Meeting, all proxies will be voted in the same manner as such
proxies would have been voted at the original convening of the Special Meeting
(except for any proxies that have theretofore been revoked or withdrawn),
notwithstanding that they may have been voted on the same or any other matter at
a previous meeting.
Under the DGCL, in determining whether the proposal regarding the approval
of the Merger Agreement has received the requisite number of affirmative votes,
abstentions and broker nonvotes will be counted and will have the same effect as
a vote against such proposal. Holders of Cable Car Common Stock are entitled to
one vote at the Special Meeting for each share of Cable Car Common Stock held of
record at the close of business on the Record Date. As of September 30, 1997,
directors and executive officers of Cable Car and their affiliates, in the
aggregate, were entitled to vote 1,803,609 shares of Cable Car Common Stock,
representing approximately 20.2% of the total shares entitled to vote at the
Special Meeting.
Triarc has entered into the Stockholders Agreement with the Subject
Stockholders, which governs an aggregate of approximately 19.7% of the
outstanding Cable Car Common Stock beneficially owned by the Subject
Stockholders (such amount does not include 12,200 shares of Cable Car Common
Stock owned by them but not subject to the Stockholders Agreement) as of
September 30, 1997. Each Subject Stockholder has agreed that at
any meeting of the holders of Cable Car Common Stock, he or she will, until
the Effective Time or the termination of the Merger Agreement, vote or cause
to be voted the Subject Stock in favor of approval of the Merger Agreement
and the Merger and against certain other actions. Moreover, each Subject
Stockholder has also granted Triarc an irrevocable proxy to vote his or
her shares of Subject Stock as specified above in the event that such
Stockholder fails to so vote his or her Subject Stock in the agreed upon
manner. A copy of the Stockholders Agreement is attached to this Proxy
Statement/Prospectus as Appendix B-2 and incorporated herein by reference.
See 'The Proposed
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Merger and Related Matters -- Additional Interests of Cable Car
Management -- Stockholders Agreement.'
THE BOARD OF DIRECTORS OF CABLE CAR HAS UNANIMOUSLY APPROVED THE TERMS OF
THE MERGER AGREEMENT AND THE MERGER AND RECOMMENDS THAT THE STOCKHOLDERS OF
CABLE CAR VOTE FOR APPROVAL OF THE MERGER AGREEMENT AND THE MERGER.
RECORD DATE; PROXIES
The Cable Car Board has fixed the close of business on October 23,
1997 as the Record Date for determining the stockholders of Cable Car entitled
to notice of and to vote at the Special Meeting. As of September 30, 1997,
there were 8,948,324 shares of Cable Car Common Stock outstanding and entitled
to vote, held of record by approximately 1,025 holders. Holders of shares of
Cable Car Common Stock entitled to vote at the Special Meeting (including
any adjournments or postponements thereof) and which are represented by
properly executed proxies in the form enclosed with this Proxy
Statement/Prospectus will, unless such proxies have previously been revoked,
be voted in accordance with the instructions indicated in such proxies.
To the extent instructions are not indicated on an otherwise
properly executed proxy, shares will be voted in favor of the approval of the
Merger Agreement and the Merger and in the discretion of the proxy holder as to
any other matter that may properly come before the Special Meeting. A Cable Car
stockholder who has given a proxy may revoke such proxy at any time prior to its
exercise at the Special Meeting by (i) giving written notice of revocation
bearing a later date than the proxy to the Secretary of Cable Car, (ii) properly
submitting to Cable Car a duly executed proxy card relating to the same shares
bearing a later date or (iii) attending the Special Meeting and voting in
person. Attendance at the Special Meeting will not in and of itself revoke a
proxy. All written notices of revocation and other communications with respect
to the revocation of proxies by Cable Car stockholders should be addressed as
follows: Cable Car Beverage Corporation, 717 17th Street, Suite 1475, Denver, CO
80202, Attention: Secretary, or hand-delivered to the Secretary of Cable Car
before the vote is taken at the Special Meeting.
HOLDERS OF CABLE CAR COMMON STOCK SHOULD NOT SEND ANY STOCK CERTIFICATES
WITH THEIR PROXY CARDS. IF THE MERGER AGREEMENT AND THE MERGER ARE APPROVED,
HOLDERS OF CABLE CAR COMMON STOCK WILL BE SENT A LETTER OF TRANSMITTAL WITH
INSTRUCTIONS FOR SURRENDERING THEIR CERTIFICATES REPRESENTING SHARES OF CABLE
CAR COMMON STOCK.
SOLICITATION OF PROXIES
Cable Car will bear the expense of the proxy solicitation. In addition to
solicitation of proxies by mail, the directors, officers and employees of Cable
Car may solicit proxies from stockholders personally or by telephone, telegraph
or facsimile transmission. Such directors, officers and employees will not be
compensated for such solicitation but may be reimbursed for reasonable
out-of-pocket expenses. Arrangements will also be made with banks, brokerage
houses and other custodians, nominees and fiduciaries for forwarding proxy
solicitation materials to beneficial owners of shares held of record by such
persons, and Cable Car will reimburse such custodians, nominees and fiduciaries
for their reasonable out-of-pocket expenses in connection therewith.
Cable Car has engaged Georgeson & Company Inc. to assist in the solicitation of
proxies at an anticipated cost of approximately $6,500 plus expenses.
THE PROPOSED MERGER AND RELATED MATTERS
GENERAL
The discussion in this Proxy Statement/Prospectus of the Merger Agreement
and the Merger and the description of the principal terms of the Merger
Agreement and the Merger are subject to and qualified in their entirety by
reference to the Merger Agreement, a copy of which is attached to this Proxy
Statement/Prospectus as Appendix B-1 and is incorporated herein by reference.
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BACKGROUND OF THE MERGER
The terms and conditions of the Merger were agreed upon as a result of
arms'-length negotiations between the senior management and Boards of Directors
of Triarc and Cable Car. The following is a summary of the primary contacts,
meetings and negotiations which occurred in connection with this transaction:
On March 31, 1997, a representative of Triarc contacted Samuel M. Simpson,
President and Chief Executive Officer of Cable Car, and indicated to Mr. Simpson
that Nelson Peltz, Chairman and Chief Executive Officer of Triarc, wished to
schedule a meeting. This approach was made a few days following Triarc's March
27, 1997 announcement that it was acquiring the Snapple beverage business from
Quaker. A meeting was scheduled for April 7, 1997 at Triarc's offices in New
York City.
In attendance at the April 7 meeting were Mr. Simpson, Mr. Peltz, Peter
May, President of Triarc, and Eric Kogan, a Senior Vice President of Triarc. At
that meeting, Messrs. Peltz and May outlined Triarc's plans to develop a premium
beverage business consisting of Snapple, Mistic and other compatible brands. Mr.
Peltz said he thought that the Stewart's brand was an excellent strategic fit
with Triarc's premium beverage group and that Triarc would be interested in
acquiring Cable Car. Mr. Simpson acknowledged that Stewart's would be a
complementary brand for Triarc in light of the fact that a large percentage of
Stewart's distribution is with Snapple and Mistic distributors. The parties also
discussed the fact that if the Snapple acquisition were consummated, Triarc
would soon be the Stewart's distributor in New York City through Mr. Natural,
Inc., the Snapple owned distribution company that Triarc would be acquiring in
connection with the transaction.
Mr. Simpson relayed Triarc's interest in acquiring Cable Car to the Cable
Car Board and the Board authorized Mr. Simpson to explore the possibility of a
transaction with Triarc. Mr. Simpson met with Messrs. Peltz, May and Kogan again
on April 9, 1997 at Triarc's offices. During that meeting, Mr. Simpson informed
Triarc that Cable Car was interested in discussing a potential business
combination. At this meeting, the parties also exchanged certain publicly
available documents and information and it was agreed that a confidentiality
agreement would be prepared and signed to facilitate the future exchange of
non-public information. Mr. Kogan then spent time with Mr. Simpson discussing
and reviewing the operations of each of Triarc's business units.
For the next several days, Cable Car's management reviewed information on
Triarc and continued to assess the merits of merging with Triarc. Also during
that time, several discussions were held among the members of the Cable Car
Board about a potential transaction with Triarc. During these discussions it was
determined that a Cable Car/Triarc merger was potentially attractive, based upon
both brand and distribution synergies. The Cable Car Board discussed the fact
that Triarc does not currently own a beverage brand directly competitive with
the Stewart's brand and that a large percentage of Stewart's distributors are
either Snapple or Mistic distributors, or both. The Cable Car Board felt that by
combining with Triarc, Cable Car would also be able to increase Stewart's sales
in New York City, a very populous and important market, through Mr. Natural,
Inc., which would soon be acquired by Triarc in the Snapple acquisition. The
Cable Car Board further concluded that a Cable Car/Triarc merger should result
in increased distribution of Cable Car products with third party distributors
carrying Snapple or Mistic, based upon Triarc's access to and relationships with
these independent distributors. Cable Car's directors also discussed the fact
that Triarc could acquire or develop another brand to compete directly against
the Stewart's brand should Cable Car elect to remain an independent company.
Based on the foregoing, the Cable Car Board authorized Mr. Simpson to pursue a
transaction with Triarc and to engage the services of a financial advisor.
On April 17, 1997 Mr. Simpson contacted Montgomery Securities in San
Francisco, California regarding this transaction. Montgomery Securities was
asked to provide a limited financial review of Cable Car, Triarc and the
proposed transaction for the Cable Car Board, and was not retained or authorized
to consider alternatives for Cable Car to the proposed merger with Triarc or to
solicit proposals or indications of interest from financial or other strategic
buyers. On April 22, 1997 Mr. Simpson and Myron Stadler, Cable Car's chief
accounting officer, met with representatives from Montgomery Securities at Cable
Car's corporate headquarters in Denver, Colorado. Preliminary discussions were
held at this meeting regarding the reasons for and against a sale of Cable Car
to a strategic buyer such as Triarc. In the course of this discussion, Cable
Car's historical financial results and
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projected financial results were reviewed with Montgomery Securities. Cable
Car's general business plans and the potential synergies which could result from
a business combination with Triarc were also discussed at this meeting.
Over the next three weeks, Mr. Simpson had numerous conversations with Mr.
Kogan at Triarc regarding Cable Car's and Triarc's respective businesses. During
that time Cable Car and Triarc continued to review information and documents
relating to the other's company.
On May 7, 1997, Mr. Simpson met with Messrs. Peltz, May and Kogan in New
York. During this meeting, Triarc proposed the general terms of a merger
transaction between Cable Car and Triarc. Mr. Simpson, Mr. Kogan and Brian
Schorr, Triarc's Executive Vice President and General Counsel, also met on May
8, 1997 to discuss Triarc's proposal.
On May 12, 1997 the Cable Car Board held a special meeting to review the
proposed transaction. Mr. Simpson summarized the terms of Triarc's merger
proposal to the other members of the Board. The Cable Car Board also
participated in a conference call with Montgomery Securities to discuss the
proposed transaction. Following these discussions, the Cable Car Board
authorized Mr. Simpson to proceed with negotiations with Triarc.
From May 13 until June 17, 1997, senior management and counsel for Cable
Car and Triarc had several discussions and telephone conferences to negotiate
terms and conditions of a merger agreement and a stockholders agreement between
Triarc and the Subject Stockholders and to exchange due diligence related
information and documents. In light of the time and expense that Triarc would be
required to incur in connection with pursuing the proposed transaction with
Cable Car, Triarc insisted on obtaining an agreement with the Subject
Stockholders that provides that their shares of Cable Car Common Stock would be
voted in favor of the proposed merger and that grants to Triarc the option to
purchase such shares under certain circumstances. See 'The Proposed Merger and
Related Matters -- Additional Interests of Cable Car Management -- Stockholders
Agreement.' On June 3, the Cable Car Board held a special meeting to review the
status of the proposed merger agreement. At that time, the Board authorized Mr.
Simpson to schedule a meeting between the Cable Car Board, Montgomery Securities
and senior management of Triarc for purposes of concluding due diligence and
finalizing a merger agreement.
On June 18, 1997, the Cable Car Board, along with representatives from
Montgomery Securities, met with several members of Triarc's senior management
team. In those meetings, Triarc's management provided additional detailed
information about Triarc and responded to questions from Cable Car Board members
and Montgomery Securities regarding Triarc's business operations, business plans
and financial projections. During the June 18 meetings, the parties also
discussed the remaining open issues on the Merger Agreement.
On June 19, 1997, the Cable Car Board held a special meeting. At this board
meeting, Montgomery Securities presented its financial analysis of the proposed
merger with Triarc and its oral opinion to the Cable Car Board regarding the
fairness of the consideration to be received by Cable Car stockholders, from a
financial point of view. The Cable Car Board then reviewed the current draft of
the Merger Agreement and discussed certain issues which remained unresolved.
Following this review, and after considering the factors described in 'Cable
Car's Reasons for the Merger; Recommendation of Cable Car's Board of Directors'
below, the Cable Car Board unanimously (i) determined that the terms of the
Merger were fair to, and in the best interests of, the holders of Cable Car
Common Stock, (ii) approved the terms of the Merger Agreement (subject to
satisfactory resolution of certain open issues) and authorized Cable Car's
officers to execute the Merger Agreement and to undertake all acts necessary or
desirable to complete the Merger, (iii) recommended approval of the Merger
Agreement by holders of Cable Car Common Stock and (iv) approved and ratified
for the purposes of Section 203 of the DGCL the Merger Agreement, the Merger and
the other transactions contemplated thereby, including the execution, delivery
and performance of the Stockholders Agreement, and determined that neither
Triarc nor any of its affiliates would be subject to the restrictions of Section
203 as an 'interested stockholder' of Cable Car for purposes of Section 203 as
result of such agreements or transactions.
On June 20 and again on June 23, Samuel Simpson and William Rutter, a Cable
Car director, met with Brian Schorr regarding the Merger Agreement. Conference
calls were also held with Cable Car's
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legal counsel and Triarc's outside legal advisors to finalize the terms of the
Merger Agreement. On June 24, 1997, Montgomery Securities provided the Cable Car
Board with its written opinion confirming its June 19, 1997 oral opinion as
delivered previously to the Cable Car Board.
On June 24, the Merger Agreement and the Stockholders Agreement were
executed. On June 24, 1997, pursuant to a written consent in lieu of meeting,
the Cable Car Board unanimously approved the final Merger Agreement and ratified
and approved all actions taken previously by Cable Car's officers and directors
in connection with the Merger.
CABLE CAR'S REASONS FOR THE MERGER; RECOMMENDATION OF CABLE CAR'S BOARD OF
DIRECTORS
Cable Car has determined that the terms of the Merger Agreement and the
transactions contemplated thereby (the 'Transactions') are fair to, and in the
best interests of, Cable Car and its stockholders. Accordingly, the Cable Car
Board has unanimously approved the Merger Agreement and recommends unanimously
that the stockholders of Cable Car vote FOR approval of the Merger Agreement and
the Merger. In reaching its determination, the Cable Car Board consulted with
Cable Car's management, as well as its legal counsel and financial advisor, and
considered the following material factors:
1. the opportunity that the Merger affords Cable Car's stockholders to
reduce their exposure to the risks inherent in Cable Car's reliance on a
limited number of products, primarily premium soft drinks and waters, and
the difficulties in competing against larger companies with more
diversified product lines and greater financial resources, and the fact
that the consideration per share of Cable Car Common Stock appropriately
recognizes the significant value of Cable Car's business;
2. the opportunity for Cable Car to gain greater market strength and
market recognition for its products by combining with a large company; and
the opportunity for Cable Car as a result of the Merger to offer its
products as part of a broader range of premium beverages, including
Snapple;
3. the ability the Merger affords Cable Car to utilize the resources
of the combined companies to develop additional products and new flavors
and formulations for existing products and to develop those products more
rapidly;
4. potential revenue synergies, including the ability to market Cable
Car's products through Triarc's distribution channels and to sell Cable
Car's products together with Triarc's products;
5. potential cost synergies, through consolidation and integration of
certain manufacturing, distribution, sales and administrative operations
and functions;
6. the role that Cable Car's management, which the Cable Car Board
believes is experienced and proven in the beverage industry, will play in
the management of Triarc's Beverage Group;
7. the Merger would reduce the possibility of Cable Car losing
distributors and/or market share due to Triarc's potential development or
acquisition of a brand directly competitive with the Stewart's brand;
8. information concerning the financial performance and condition,
business operations and prospects of each of Triarc and Cable Car;
9. the fact that the Merger would allow holders of Cable Car Common
Stock (a Nasdaq SmallCap company) to obtain an equity interest in Triarc (a
New York Stock Exchange listed company) and to achieve greater liquidity
than could be achieved by continuing to hold Cable Car Common Stock;
10. the Conversion Price and the 1997 trading prices for Cable Car
Common Stock and Triarc Common Stock and the fact that the consideration
per share of Cable Car Common Stock that may be received under the Merger
Agreement represents a premium over trading prices, during the last year,
of Cable Car Common Stock and recognizes the significant value of Cable
Car's business;
11. the opportunity to permit the stockholders of Cable Car to benefit
from Triarc's anticipated turnaround of the Snapple business;
12. the expectation that the Merger will be nontaxable to the
stockholders of Cable Car for federal income tax purposes;
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13. the opinion of Montgomery Securities dated June 24, 1997 (see 'The
Proposed Merger and Related Matters -- Opinion of Financial Advisor to
Cable Car'); and
14. the opportunity for stockholders of Cable Car to vote on whether
to approve the Merger Agreement and the Merger.
In view of the wide variety of factors considered by the Cable Car Board,
it did not find it practicable to quantify, or otherwise attempt to assign
relative priorities or weights to the factors listed above. Consequently, the
Cable Car Board did not quantify the assumptions and results of its analysis in
reaching its determination that the terms of the Merger Agreement and the
Transactions are fair to, and in the best interests of, Cable Car and its
stockholders. THE CABLE CAR BOARD UNANIMOUSLY RECOMMENDS THAT CABLE CAR
STOCKHOLDERS VOTE FOR APPROVAL OF THE MERGER AGREEMENT AND THE MERGER.
TRIARC'S REASONS FOR THE MERGER
The Triarc Board has determined that the Merger Agreement and the
Transactions are fair to, and in the best interests of, Triarc. Accordingly, the
Triarc Board has unanimously approved the Merger Agreement and the Merger. In
reaching its determination, the Triarc Board consulted with Triarc's management,
as well as its legal counsel, and considered the following material factors:
1. the opportunity to add the premium brands distributed and marketed
by Cable Car, particularly the Stewart's brand, to the Triarc Beverage
Group's premium beverage offerings, as well as optimizing use of the
Stewart's trademark;
2. the potential to increase Cable Car's sales and profitability
through improved distribution and potential cost savings through increased
purchasing efficiencies;
3. that Cable Car's management, which Triarc believes is experienced
and proven in the beverage industry, will enhance the management of the
Triarc Beverage Group;
4. information concerning the financial performance and condition,
business operations and prospects of Cable Car;
5. the opportunity to acquire Cable Car in a stock for stock
transaction, thereby enabling Triarc to use its cash on hand to pursue
additional acquisitions in the future; and
6. the opportunity to have a physical presence in the Western United
States which will expand Triarc's exposure and access to new beverage
products and brands.
In connection with Triarc's review of Cable Car and in the course of the
negotiations described in ' -- Background of the Merger' above, Cable Car and
its representatives provided Triarc with certain financial projections, which
Triarc believes are not publicly available, which projections forecast, for the
year ended December 31, 1997, Cable Car's net sales, gross profit and net income
to be approximately $26.0 million, $7.2 million and $1.9 million, respectively.
EFFECTIVE TIME
If the Merger Agreement and the Merger are approved by the requisite vote
of Cable Car's stockholders and all other conditions to the Merger are satisfied
or waived (other than those conditions that can be satisfied on the closing
date), the Merger will be consummated and effected at such time as the
Certificate of Merger, in accordance with the relevant provisions of the DGCL,
shall have been accepted for filing by the Secretary of State of the State of
Delaware (or at such later time as agreed to by the parties to the Merger
Agreement and specified in the Certificate of Merger). The Merger Agreement
provides that Triarc and Cable Car will cause the Effective Time to occur as
promptly as practicable following the satisfaction or waiver of all of the
conditions (other than those conditions that can be satisfied on the closing
date) set forth in the Merger Agreement. The Merger Agreement also provides that
the officers and directors of Mergerco immediately prior to the Effective Time
will be the initial officers and directors of the Surviving Corporation, in each
case until their respective successors are duly elected or appointed and
qualified in the manner provided in the Certificate of Incorporation and Bylaws
of the Surviving Corporation, or as otherwise provided by law. Pursuant to the
Simpson Employment Agreement, Samuel M. Simpson will become the President and
Chief Executive Officer of
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the Surviving Corporation. See 'Management of Surviving Corporation -- Simpson
Employment Agreement.' Subject to the terms of the Merger Agreement, at the
Effective Time, (a) the Certificate of Incorporation of the Surviving
Corporation will be the Restated Certificate of Incorporation as set forth in
Exhibit A to the Merger Agreement and (b) the Bylaws of Mergerco, as in effect
immediately prior to the Effective Time, will be the Bylaws of the Surviving
Corporation until thereafter amended as provided by law, the Certificate of
Incorporation of the Surviving Corporation and such Bylaws. The Merger Agreement
may be terminated prior to the Effective Time by either Triarc or Cable Car in
certain circumstances, whether before or after approval of the Merger Agreement
by the Cable Car stockholders. See 'The Merger Agreement -- Termination.'
CONVERSION OF SHARES OF CABLE CAR COMMON STOCK
If the Merger Agreement and the Merger are approved by the requisite vote
of Cable Car's stockholders and all other conditions to the Merger are satisfied
or waived, then Mergerco will be merged into Cable Car, which will be the
Surviving Corporation and which will thereupon become a wholly owned subsidiary
of Triarc. In the Merger, each share of Cable Car Common Stock outstanding
immediately prior to the Effective Time (other than treasury shares and shares
held by Triarc and its subsidiaries and subsidiaries of Cable Car, all of which
will be canceled, and shares with respect to which the holder has properly
exercised its appraisal rights under Delaware law) will be converted into the
right to receive 0.1722 shares of Triarc Common Stock, subject to the adjustment
described below, and any cash to be paid in lieu of fractional shares of Triarc
Common Stock. The Conversion Price is subject to adjustment as follows: (i) if
the Average Triarc Share Price is less than $18.875, then the Conversion Price
shall be adjusted to equal the quotient of $3.25 divided by such Average Triarc
Share Price, and (ii) if the Average Triarc Share Price is greater than $24.50,
then the Conversion Price shall be adjusted to equal the quotient of $4.22
divided by such Average Triarc Share Price (the Conversion Price, as so
adjusted, is referred to herein as the 'Adjusted Conversion Price').
OPINION OF FINANCIAL ADVISOR TO CABLE CAR
In connection with its consideration of the Merger, the Cable Car Board
engaged Montgomery Securities to conduct a financial review of the Merger
Agreement and of the businesses of Cable Car and Triarc. Montgomery Securities
is an internationally recognized investment banking firm that regularly engages
in the valuation of businesses and their securities in connection with mergers
and acquisition transactions. The Cable Car Board selected Montgomery Securities
to conduct this review for use by the directors in connection with their
consideration of the Merger because Montgomery Securities is highly respected
and is experienced in financial matters as they relate to the Merger. Cable Car
had not previously retained Montgomery Securities to provide any valuation,
financial advisory or other services to Cable Car or its directors other than as
set forth above in connection with the Merger.
The engagement of Montgomery Securities was limited to its analysis of the
financial fairness of the aggregate consideration to be received by the holders
of Cable Car Common Stock in the Merger. Such engagement did not extend to any
other aspect of the Merger, including (without limitation) the relative merits
of the Merger, any alternatives to the Merger or Cable Car's underlying decision
to proceed with or effect the Merger. THE OPINION OF MONTGOMERY SECURITIES WAS
DIRECTED SOLELY TO THE CABLE CAR BOARD FOR ITS CONSIDERATION IN CONNECTION WITH
THE MERGER, AND IS NOT A RECOMMENDATION TO ANY HOLDER OF CABLE CAR COMMON STOCK
AS TO WHETHER THE MERGER IS IN SUCH HOLDER'S BEST INTERESTS OR AS TO WHETHER
HOLDERS OF CABLE CAR COMMON STOCK SHOULD VOTE FOR OR AGAINST THE MERGER. THE
FULL TEXT OF SUCH WRITTEN OPINION OF MONTGOMERY SECURITIES DATED JUNE 24, 1997
IS ATTACHED HERETO AS APPENDIX C, AND SETS FORTH CERTAIN IMPORTANT
QUALIFICATIONS, ASSUMPTIONS MADE, MATTERS CONSIDERED, AREAS OF RELIANCE ON
OTHERS AND LIMITATIONS ON THE REVIEW UNDERTAKEN IN CONNECTION WITH SUCH OPINION.
The summary description of such opinion set forth below is qualified in its
entirety by the full text of the opinion attached hereto as Appendix C.
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In connection with its opinion, Montgomery Securities (i) reviewed certain
publicly available financial and other data with respect to Cable Car and
Triarc, including the consolidated financial statements for recent years and
interim periods to March 31, 1997, and certain other relevant financial and
operating data relating to Cable Car and Triarc made available to it from
published sources and from the internal records of Cable Car and Triarc; (ii)
reviewed the financial terms and conditions of the Merger Agreement; (iii)
reviewed certain publicly available information concerning the trading of, and
the trading market for, Cable Car Common Stock and Triarc Common Stock; (iv)
compared Cable Car and Triarc from a financial point of view with certain other
companies in the beverage industry which Montgomery Securities deemed to be
relevant; (v) considered the financial terms, to the extent publicly available,
of selected recent business combinations of companies in the beverage industry
which Montgomery Securities deemed to be comparable, in whole or in part, to the
Merger; (vi) reviewed and discussed with representatives of the management of
Cable Car and Triarc certain information of a business and financial nature
regarding Cable Car and Triarc furnished by Cable Car and Triarc to Montgomery
Securities, including financial forecasts and related assumptions of Cable Car
and Triarc; (vii) made inquiries regarding and discussed the Merger and the
Merger Agreement and other matters related thereto with Cable Car's counsel; and
(viii) performed such other analyses and examinations as Montgomery Securities
deemed appropriate.
Based upon its review of the foregoing, but subject to the limitations set
forth below and in reliance upon the assumptions set forth below, Montgomery
Securities provided the Board of Directors with its opinion as investment
bankers that as of the date of their opinions (June 24, 1997 and June 19, 1997),
the aggregate consideration to be received by the holders of Cable Car Common
Stock pursuant to the Merger was fair to such holders of Cable Car Common Stock
from a financial point of view.
In connection with its review, Montgomery Securities did not assume any
obligation to verify the above described information reviewed by it, and relied
on its being accurate and complete in all material respects. With respect to the
financial forecasts for Cable Car and Triarc provided to Montgomery Securities
by Cable Car's and Triarc's respective managements, Montgomery Securities
assumed that the forecasts (including the assumptions made by Triarc's
management regarding the recent acquisition of Snapple by Triarc) had been
reasonably prepared on bases reflecting the best available estimates and
judgements of the respective managements as to the future financial performance
of Cable Car and Triarc, and that such projections provided a reasonable basis
upon which Montgomery Securities could form its opinion. Montgomery Securities
also assumed that there had been no material changes in Cable Car's or Triarc's
assets, financial condition, results of operations, business or prospects since
the respective dates of their last financial statements made available to
Montgomery Securities. Montgomery Securities relied on advice of the counsel and
the independent accountants to Cable Car as to all legal and financial reporting
matters with respect to Cable Car, the Merger and the Merger Agreement.
Montgomery Securities assumed that the Merger will be consummated in a manner
that complies in all respects with the applicable provisions of the Securities
Act, the Exchange Act and all other applicable federal and state statutes, rules
and regulations. In addition, Montgomery Securities did not assume
responsibility for making an independent evaluation, appraisal or physical
inspection of any of the assets or liabilities (contingent or otherwise) of
Cable Car or Triarc, nor was Montgomery Securities furnished with any such
appraisals. Finally, Montgomery Securities' opinion was based on economic,
monetary, market and other conditions as in effect on, and the information made
available to Montgomery Securities as of, the date of the opinion (June 24,
1997). Accordingly, although subsequent developments may affect this opinion,
Montgomery Securities did not assume and does not have any obligation to update,
revise or reaffirm this opinion.
Montgomery Securities further assumed that the Merger will be consummated
in accordance with the terms described in the Merger Agreement, without any
further amendments thereto, and without waiver by Cable Car of any of the
conditions to its obligations thereunder. The full text of the Merger Agreement
is attached hereto as Appendix B-1 and the terms described in the Merger
Agreement and the conditions to Cable Car's obligations thereunder should be
reviewed and understood by holders of Cable Car Common Stock in connection with
their consideration of the Merger.
Finally, Montgomery Securities did not and could not express any opinion
regarding the price at which the Triarc Common Stock may trade at any future
time. Since the aggregate consideration to be
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received by the holders of Cable Car Common Stock pursuant to the Merger is
based upon a fixed exchange ratio (subject to a collar), the market value of the
aggregate consideration that holders of Cable Car Common Stock will receive in
the Merger may vary significantly from what such holders would have received
when the opinion of Montgomery Securities was presented to the Cable Car Board.
Additionally, the market value of the aggregate consideration received by
holders of Cable Car Common Stock in the Merger can be expected to change after
the consummation of the Merger as the trading price of Triarc Common Stock
changes in the ordinary course (or otherwise) of purchases and sales in the open
market.
Set forth below is a brief summary of the report presented by Montgomery
Securities to the Cable Car Board on June 19, 1997 in connection with its
opinion described above.
Comparable Company Analysis. Using public and other available information,
Montgomery Securities calculated the imputed per share value of the Cable Car
Common Stock based on the multiples of last twelve months' earnings before
interest, taxes, depreciation and amortization ('LTM EBITDA') at which six
publicly traded beverage companies (the 'Beverage Companies') were trading on
June 17, 1997. The Beverage Companies were Boston Beer Company, Inc., Hansen
Natural Corp., National Beverage Corp., Odwalla, Inc., Redhook Ale Brewery and
Seven UP RC Bottling Co. The June 17, 1997 stock prices of the Beverage
Companies reflected a mean LTM EBITDA multiple of 9.8x and a median LTM EBITDA
multiple of 9.7x. Montgomery Securities applied the mean and median multiples of
LTM EBITDA for the Beverage Companies to the LTM EBITDA of Cable Car and to the
earnings before interest, taxes, depreciation and amortization ('EBITDA')
projected by Cable Car's management for its 1997 fiscal year (the '1997
EBITDA'). Montgomery Securities also made applicable adjustments to reflect that
Cable Car did not have any long term debt and had a positive cash position
(defined as cash minus debt) as of March 31, 1997 of $1.3 million. This analysis
indicated an imputed equity value (defined as aggregate value plus the positive
cash position) of Cable Car of between $27.9 million and $33.2 million, or
between $3.11 and $3.71 per share.
Comparable Transaction Analysis. Montgomery Securities reviewed the
consideration paid in merger and acquisition transactions in the beverage
industry that have been announced since 1990. Montgomery Securities analyzed the
consideration paid in such transactions as a multiple of the target companies'
LTM EBITDA. Such analysis yielded mean and median multiples of 10.9x and 11.5x
LTM EBITDA, respectively. Montgomery Securities then applied the foregoing
multiples to Cable Car's LTM EBITDA and 1997 EBITDA, and added Cable Car's
positive cash position as of March 31, 1997 ($1.3 million). This analysis
indicated an imputed equity value of Cable Car of between $31.1 million and
$38.9 million, or between $3.47 and $4.35 per share.
Premiums Paid Analysis. Montgomery Securities reviewed the consideration
paid in comparable U.S. acquisitions involving cash consideration of between $25
million and $60 million that have been announced since January 1, 1994.
Montgomery Securities calculated the premiums paid in these transactions over
the applicable stock prices of the target companies one week prior to the
announcement of the acquisition offer, and then calculated the mean and median
of those premiums (which were 40.6% and 36.8%, respectively). Montgomery
Securities then applied the mean and median premiums so derived to Cable Car's
closing stock prices on April 25, 1997 ($2.38) and June 17, 1997 ($3.69), and
added the positive cash position as of March 31, 1997 ($1.3 million). The share
price of Cable Car as of April 25, 1997, was selected for this analysis because
on that date an article appeared in Beverage Digest which discussed a potential
merger involving Cable Car and Triarc. This analysis indicated an imputed equity
value of Cable Car of between $30.4 million and $31.2 million, or between $3.40
and $3.49 per share, based on the price of Cable Car Common Stock prior to the
Beverage Digest article, and between $46.4 million and $47.7 million, or between
$5.18 and $5.33 per share, based on the price of Cable Car Common Stock on June
17, 1997.
No other company or transaction used in the comparable company analysis,
the comparable transactions analysis or the premiums paid analysis as a
comparison is identical to Cable Car or the Merger. Accordingly, an analysis of
the results of the foregoing is not mathematical; rather, it involves complex
considerations and judgments concerning differences in financial and operating
characteristics of the companies and other factors that could affect the public
trading value of the companies to which Cable Car and the Merger are being
compared.
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Discounted Cash Flow Analysis. Montgomery Securities applied a discounted
cash flow analysis to Cable Car's financial forecasts for 1997 (prepared by
Cable Car's management and provided to Montgomery Securities) and for 1998
through 2002 (prepared by Montgomery Securities using 10% growth in revenues and
constant margins as assumptions). Cable Car did not provide Montgomery
Securities with any financial forecasts for periods beyond 1997.
In conducting its discounted cash flow analysis, Montgomery Securities
first calculated the estimated future streams of free cash flows that Cable Car
would produce through 2002 (using Cable Car's management's 1997 financial
forecasts for 1997, and applying the mathematical assumptions with respect to
revenues and margins set forth above for 1998 through 2002). Second, Montgomery
Securities estimated Cable Car's aggregate value at the end of 2002 by applying
a range from multiples of 8.0x to 10.0x to Cable Car's estimated EBITDA
(calculated as set forth from the mathematical assumptions set forth above) in
2002. Such cash flow streams and aggregate values were discounted to present
values using discount rates ranging from 9.0% to 14.0%, chosen to reflect
different assumptions regarding Cable Car's cost of capital. The amount of Cable
Car's positive cash position was then added to such present values. This
analysis indicated an imputed equity value of Cable Car of between $31.2 million
and $44.9 million, or between $3.48 and $5.02 per share.
Pro Forma Merger Analysis. Holders of Cable Car Common Stock will receive
Triarc Common Stock in the Merger. Montgomery Securities reviewed and analyzed
the pro forma financial impact of the Merger on the projected earnings per share
for Triarc Common Stock forecast by Triarc's management for Triarc's 1997 fiscal
year. Assuming the accuracy of the financial forecasts provided to Montgomery
Securities by the management of Cable Car and Triarc, and without giving effect
to any operating synergies that might be realized following the Merger, this
analysis indicated that the Merger should be non-dilutive to Triarc's
anticipated 1997 earnings per share.
While the foregoing summary describes all analyses and examinations that
Montgomery Securities deemed material to the preparation of its opinion to the
Cable Car Board, it does not purport to be a comprehensive description of all
analyses and examinations actually conducted by Montgomery Securities. The
preparation of a fairness opinion necessarily is not susceptible to partial
analysis or summary description; and selecting portions of the analyses and of
the factors considered by Montgomery Securities, without considering all
analyses and factors, would create an incomplete view of the process underlying
the analyses set forth in the presentation of Montgomery Securities to the Cable
Car Board on June 19, 1997. In addition, Montgomery Securities may have given
some analyses more or less weight than other analyses, and may have deemed
various assumptions more or less probable than other assumptions. Accordingly,
the ranges of valuations resulting from any particular analysis described above
should not be taken to be Montgomery Securities' view of the actual value of
Cable Car or Cable Car Common Stock. To the contrary, Montgomery Securities
expressed no opinion on the actual value of Cable Car or Cable Car Common Stock,
and its opinion that is addressed and limited to the Cable Car Board extends
only to the belief expressed by Montgomery Securities that the immediate value
to holders of Cable Car Common Stock, from a financial point of view under the
Merger, is within the range of values that might fairly be ascribed to the Cable
Car Common Stock as of the date of the opinions of Montgomery Securities (June
24, 1997 and June 19, 1997).
In performing its analyses, the Montgomery Securities made numerous
assumptions with respect to industry performance, general business and economic
conditions and other matters, many of which are beyond the control of Cable Car
and Triarc. The analyses performed by Montgomery Securities are not necessarily
indicative of actual values or actual future results, which may be significantly
more or less favorable than those suggested by such analyses. Such analyses were
prepared solely as part of Montgomery Securities' analysis for the Cable Car
Board of the fairness of the Merger to Cable Car from a financial point of view,
and were provided solely to the Cable Car Board in connection with the Cable Car
Board's consideration of the Merger. The analyses do not purport to be
appraisals or to reflect the prices at which a company might actually be sold or
the prices at which any securities may trade at any time in the future.
Montgomery Securities used in its analyses various projections of future
performance prepared by the managements of Cable Car and Triarc. The projections
are based on numerous variables and assumptions which are inherently
unpredictable and must be considered not
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certain of occurrence as projected. Accordingly, actual results could vary
significantly from those set forth in such projections.
As described above, the opinion of Montgomery Securities and the
presentation to the Cable Car Board summarized above were among the many factors
taken into consideration by the Cable Car Board in making its determination to
approve, and to recommend that its stockholders approve the Merger. Montgomery
Securities, however, does not make any recommendation to holders of Cable Car
Common Stock (or to any other person or entity) as to whether such stockholders
should vote for or against the Merger.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following summary describes the material federal income tax
consequences of the Merger to Cable Car and holders of Cable Car Common Stock
who are citizens or residents of the United States. It does not discuss all the
tax consequences that may be relevant to Cable Car stockholders in special tax
situations (such as insurance companies, financial institutions, dealers in
securities, tax-exempt organizations or non-U.S. persons) or to Cable Car's
stockholders who acquired their shares of Cable Car Common Stock pursuant to the
exercise of employee stock options or warrants, or otherwise as compensation.
The summary also does not discuss tax consequences to holders of outstanding
Cable Car stock options.
Neither Triarc nor Cable Car has obtained a ruling from the IRS with regard
to any of the federal income tax consequences of the Merger. The opinion of
counsel to Cable Car as to the federal income tax consequences of the Merger set
forth in the next paragraph will not be binding on the IRS or the courts.
Sherman & Howard L.L.C., of Denver, Colorado, special tax counsel to Cable
Car, is of the opinion that, under present federal income tax law, and based on
(i) certain representations regarding factual matters and certain covenants as
to future actions made by Triarc, Cable Car and major holders of Cable Car
Common Stock, and (ii) the assumption that the Merger and related transactions
will take place as described in the Merger Agreement, the Merger will constitute
a reorganization for federal income tax purposes within the meaning of Section
368(a) of the Code. Cable Car stockholders should be aware that if these
representations are incorrect, if these covenants are not complied with, or if
the transactions do not occur as described in the Merger Agreement, the
conclusions reached by counsel in its opinion might be jeopardized. Under the
Merger Agreement, it is a condition precedent to Cable Car's obligation to
consummate the Merger that Sherman & Howard L.L.C. deliver to Cable Car an
opinion to the effect of the foregoing.
Provided that the Merger qualifies as a reorganization, (i) Cable Car will
not recognize any taxable gain or loss as a result of the Merger, (ii) no gain
or loss will be recognized by Cable Car's stockholders upon the conversion of
their shares of Cable Car Common Stock into shares of Triarc Common Stock
pursuant to the terms of the Merger (except to the extent cash is received in
lieu of fractional shares), (iii) the aggregate tax basis of the shares of
Triarc Common Stock into which shares of Cable Car Common Stock are converted
pursuant to the Merger will be the same as the aggregate tax basis of such Cable
Car Common Stock surrendered in the exchange (reduced by the portion of the
stockholder's tax basis properly allocated to the fractional share interest, if
any, for which the stockholder receives cash) and (iv) the holding period for
shares of Triarc Common Stock into which shares of Cable Car Common Stock are
converted pursuant to the Merger will include the period that such shares of
Cable Car Common Stock were held by the holder, provided that such shares were
held as a capital asset by the holder at the Effective Time.
Any Cable Car stockholder who receives cash in lieu of a fractional share
of Triarc Common Stock will be treated for federal income tax purposes as
receiving cash in redemption of the fractional share interest. The cash payment
will be treated as a distribution in redemption of Triarc Common Stock under
Section 302 of the Code, so that such Cable Car stockholder will generally
recognize gain or loss equal to the difference between the cash received and
such stockholder's tax basis in the fractional share. Such gain or loss will be
capital gain or loss if such Cable Car Common Stock is held as a capital asset
at the Effective Time. If such Cable Car Common Stock was held for more than 12
months prior
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to the Effective Time, such gain or loss recognized upon the receipt of cash in
lieu of a fractional share will generally be long-term capital gain or loss. The
distinction between capital gain or loss and ordinary income or loss is
important for purposes of the limitations on a stockholder's ability to offset
capital losses against ordinary income, and because Cable Car stockholders that
are individuals may be entitled to a preferential rate on long-term capital
gains. The Taxpayer Relief Act of 1997 further reduces tax rates on capital
gains recognized by individuals in respect of assets held for more than 18
months. Cable Car stockholders are advised to consult with their own tax
advisors regarding the application of the Taxpayer Relief Act of 1997 to their
particular circumstances.
A successful IRS challenge to the reorganization status of the Merger would
result in Cable Car stockholders recognizing taxable gain or loss with respect
to each share of Cable Car Common Stock surrendered equal to the difference
between the stockholder's tax basis in such share and the fair market value, as
of the Effective Time, of the Triarc Common Stock received in exchange therefor.
In such event, a stockholder's aggregate basis in the Triarc Common Stock so
received would equal the fair market value of such stock as of the Effective
Time, and the stockholder's holding period for such stock would begin the day
after the Effective Time.
THE DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION ONLY.
THE DISCUSSION IS BASED ON CURRENTLY EXISTING PROVISIONS OF THE CODE, EXISTING
AND PROPOSED TREASURY REGULATIONS, AND CURRENT ADMINISTRATIVE RULINGS AND COURT
DECISIONS. ALL THE FOREGOING IS SUBJECT TO CHANGE, AND ANY SUCH CHANGE COULD
AFFECT THE CONTINUING VALIDITY OF THIS DISCUSSION. NO INFORMATION IS PROVIDED
WITH RESPECT TO THE TAX CONSEQUENCES, IF ANY, OF THE MERGER UNDER APPLICABLE
FOREIGN, STATE AND LOCAL LAWS. CABLE CAR'S STOCKHOLDERS ARE URGED TO CONSULT
THEIR OWN TAX ADVISORS AS TO THE SPECIFIC TAX CONSEQUENCES TO THEM OF THE
MERGER, INCLUDING TAX RETURN REPORTING REQUIREMENTS, THE APPLICABILITY AND
EFFECT OF FOREIGN, STATE, LOCAL AND OTHER APPLICABLE TAX LAWS AND THE POSSIBLE
EFFECT OF ANY PROPOSED CHANGES IN THE TAX LAWS.
ACCOUNTING TREATMENT
The Merger will be accounted for by Triarc under the 'purchase' method of
accounting in accordance with generally accepted accounting principles.
Therefore, the aggregate Merger Consideration paid by Triarc will be allocated
to the Cable Car assets acquired and liabilities assumed based on their fair
values; and the results of operations of Cable Car will be included in the
results of operations of Triarc only for periods subsequent to the Effective
Time.
RESALE OF TRIARC COMMON STOCK BY AFFILIATES
The shares of Triarc Common Stock to be issued in the Merger will be
registered under the Securities Act pursuant to the Registration Statement of
which this Proxy Statement/Prospectus is a part, thereby allowing such shares of
Triarc Common Stock to be freely transferable under the Securities Act, except
for shares issued pursuant to the terms of the Merger Agreement to any holder of
Cable Car Common Stock who may be deemed to be an 'affiliate' of Cable Car or
Triarc for purposes of Rule 145 under the Securities Act. Such affiliates may
not sell their shares of Triarc Common Stock acquired in connection with the
Merger, except pursuant to an effective registration statement under the
Securities Act covering such shares, or in compliance with Rule 145, Rule 144 or
another applicable exemption from the registration requirements of the
Securities Act. Persons who may be deemed to be affiliates of an entity
generally include individuals or entities that control, are controlled by or are
under common control with such entity, and includes the directors, the executive
officers and the principal stockholders of such entity.
Cable Car has agreed in the Merger Agreement to use its best efforts to
cause each director, executive officer and other person who may be deemed an
affiliate (for the purposes of Rule 145) of Cable Car to execute and deliver a
written agreement intended to ensure compliance with the Securities Act, the
form of which is attached to the Merger Agreement as Exhibit B.
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This Proxy Statement/Prospectus cannot be used for resales of Triarc Common
Stock received by any person who may be deemed an affiliate of Cable Car.
REGULATORY APPROVALS
Under the HSR Act and the rules thereunder promulgated by the Federal Trade
Commission (the 'FTC'), the Merger may not be consummated until notifications
have been given and certain information has been furnished to the FTC and the
Antitrust Division of the United States Department of Justice (the 'Antitrust
Division') and specified waiting period requirements have been satisfied. Triarc
and Cable Car filed the required notification and report forms under the HSR Act
with the FTC and the Antitrust Division with a request for early termination of
the waiting period with respect thereto and on October 15, 1997 were notified
that the waiting period had been terminated.
Other than the expiration or termination of the applicable waiting period
under the HSR Act, the Commission declaring effective the Registration Statement
containing this Proxy Statement/Prospectus, approvals in connection with
compliance with applicable Blue Sky or state securities laws and the filing of
the Certificate of Merger with the Secretary of State of the State of Delaware,
neither the management of Triarc nor the management of Cable Car believes that
any filing with or approval of any governmental authority is necessary in
connection with the consummation of the Merger. Pursuant to the Merger
Agreement, Triarc, Mergerco and Cable Car each have agreed to take all
reasonable actions necessary to comply promptly with all legal requirements
which may be imposed on it with respect to the Merger Agreement and the
consummation of the Merger. Each of Triarc, Mergerco and Cable Car have agreed
to take, and cause their subsidiaries to take, all reasonable actions necessary
to obtain any consent, authorization, order or approval of, any governmental
authority or other third party required to be obtained or made by Triarc,
Mergerco or Cable Car or any of their subsidiaries in connection with the Merger
and the transactions contemplated by the Merger Agreement.
SECTION 203 OF THE DGCL
Section 203 of the DGCL ('Section 203') prohibits a Delaware corporation
from engaging in a 'business combination' with an 'interested stockholder' for
three years following the time that such person becomes an interested
stockholder. With certain exceptions, an interested stockholder is an
individual, corporation, partnership, unincorporated association or other entity
who or which owns 15% or more of the corporation's outstanding voting stock or
is an affiliate or an associate of the corporation and was the owner of 15% or
more of the corporation's outstanding voting stock at any time within the
previous three years.
For purposes of Section 203, the term 'business combination' is defined
broadly to include mergers with or, with certain limitations, caused by the
interested stockholder; sales or other dispositions to the interested
stockholder (except proportionately with the corporation's other stockholders)
of assets of the corporation or a majority-owned subsidiary equal to ten percent
or more of the aggregate market value of the corporation's consolidated assets
or its outstanding stock; the issuance or transfer by the corporation or a
majority-owned subsidiary of stock of the corporation or of such subsidiary to
the interested stockholder, with certain enumerated exceptions; most
transactions involving the corporation or a majority-owned subsidiary having the
effect of directly or indirectly increasing the interested stockholder's
proportionate ownership of any class or series of the corporation's or such
subsidiary's stock; or any receipt by the interested stockholder (except
proportionately as a stockholder), directly or indirectly, of any loans,
advances, guarantees, pledges or other financial benefits provided by or through
the corporation or a majority-owned subsidiary.
The three-year moratorium imposed on business combinations by Section 203
does not apply if (i) prior to the time when such stockholder becomes an
interested stockholder the board of directors of the corporation approves either
the business combination or the transaction which resulted in the person
becoming an interested stockholder; (ii) upon consummation of the transaction
which made him or her an interested stockholder the interested stockholder owns
at least 85% of the voting stock of the corporation outstanding at the time the
transaction commenced (excluding from the calculation of outstanding shares
those shares owned by directors who are also officers of the corporation and
shares
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held by employee stock plans which do not afford employees the right to decide
confidentially whether to accept a tender or exchange offer); or (iii) on or
after the time when such person becomes an interested stockholder, the board
approves the business combination and it is also approved at the stockholder
meeting by sixty-six and two-thirds percent (66 2/3%) of the outstanding voting
stock not owned by the interested stockholder.
Section 203 applies only to Delaware corporations which have a class of
voting stock that is listed on a national securities exchange, authorized for
quotation on NASDAQ or held of record by more than 2,000 stockholders. However,
a Delaware corporation may elect not to be governed by Section 203 by a
provision in its original certificate of incorporation or an amendment thereto
or to the bylaws, which amendment must be approved by a majority of the shares
entitled to vote. The Cable Car Charter does not include such a provision.
The Cable Car Board believes that Section 203 will not be applicable to
Triarc or its affiliates, as, prior to the time when Triarc or its affiliates
would become an interested stockholder of Cable Car, the Cable Car Board
approved the transaction which would result in Triarc or its affiliates becoming
an interested stockholder. On June 19, 1997, the Cable Car Board approved the
Merger Agreement, the Merger and all other transactions contemplated thereby,
including the entering into and performance of the Stockholders Agreement,
which, individually or collectively, constitute the transactions which will make
Triarc or its affiliates an interested stockholder. In addition, on June 19,
1997, the Cable Car Board determined that neither Triarc nor any of its
affiliates would be subject to the restrictions of Section 203 as an 'interested
stockholder' of Cable Car as a result of the Merger Agreement, the Merger and
all other transactions contemplated thereby, including the Stockholders
Agreement.
STOCK EXCHANGE LISTING
Triarc will file an application to list the shares of Triarc Common Stock
to be issued in connection with the Merger on the NYSE. Approval of such
listing, subject to official notice of issuance, is a condition to consummation
of the Merger.
ADDITIONAL INTERESTS OF CABLE CAR MANAGEMENT
In considering the recommendation of the Cable Car Board with respect to
the Merger Agreement and the Transactions, holders of Cable Car Common Stock
should be aware that certain members of Cable Car's management and of the Cable
Car Board have interests in the Merger that are in addition to the interest of
Cable Car stockholders generally.
SIMPSON EMPLOYMENT AGREEMENT
Samuel M. Simpson, the President and Chief Executive Officer and a director
of Cable Car, currently has a three-year employment contract with Cable Car
providing for an annual salary of $175,000 and annual bonuses based on Cable
Car's revenues and profits. Mr. Simpson has entered into an agreement with
Triarc that, upon the Effective Time, he will enter into the Simpson Employment
Agreement with the Surviving Corporation which will supersede Mr. Simpson's
existing employment agreement with Cable Car and provide for Mr. Simpson's
employment as President and Chief Executive Officer of the Surviving Corporation
and the Cable Car Subsidiaries, and a representative for the Triarc Beverage
Group for the western United States. The Simpson Employment Agreement will have
a three-year term. Pursuant to its terms, Mr. Simpson will receive an annual
salary of $284,300 per year (subject to increase but not decrease during the
initial term of the agreement) and be eligible to receive additional incentive
cash compensation, Triarc stock options and other benefits as more fully
described in 'Management of the Surviving Corporation -- Simpson Employment
Agreement.' Mr. Simpson will also be entitled to a $400,000 bonus upon signing
the Simpson Employment Agreement which will be refundable on a pro rata basis
should he leave his employment prior to the first anniversary of the Effective
Time.
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ACCELERATION OF VESTING OF STOCK OPTIONS
In accordance with the terms of their grant, all unvested Cable Car Stock
Options, including those granted to officers, directors and non-director
employees of Cable Car, will become immediately exercisable on the Effective
Date of the Merger. The options for Triarc Common Stock to be issued by Triarc
in the Merger to replace such Cable Car Stock Options will be immediately
exercisable. See 'The Merger Agreement -- Cable Car Stock Options.'
STOCKHOLDERS AGREEMENT
In light of the time and expense Triarc would incur in pursuing the
proposed transaction with Cable Car, as a condition to Triarc's execution of the
Merger Agreement and for no separate consideration, Triarc required that Samuel
M. Simpson, the President and Chief Executive Officer of Cable Car, Susan L.
Neff, Mr. Simpson's wife, William H. Rutter, a director of Cable Car, and Susan
L. Fralick, Mr. Rutter's wife (collectively, the 'Subject Stockholders'),
execute the Stockholders Agreement with Triarc, which provides that the Cable
Car Common Stock held by the Subject Stockholders will be voted in favor of the
Merger. As of September 30, 1997, the Subject Stockholders owned an aggregate of
1,766,409 shares of Cable Car Common Stock, or approximately 19.7% of the shares
of Cable Car Common Stock entitled to vote at the Special Meeting, which are
subject to the terms of the Stockholders Agreement (such amount does not include
12,200 shares of Cable Car Common Stock owned by them but not subject to the
Stockholders Agreement). Each Subject Stockholder has agreed that at any meeting
of the holders of Cable Car Common Stock, he or she will, until the Effective
Time or the termination of the Merger Agreement, vote or cause to be voted such
Cable Car Common Stock and any Cable Car Common Stock acquired after the date of
the Stockholders Agreement (collectively, the 'Subject Stock') in favor of
approval of the Merger Agreement and the Merger and against any (i) action or
agreement that would result in a breach of any of Cable Car's representations or
warranties or obligations under the Merger Agreement, (ii) Acquisition Proposal,
(iii) change in a majority of the Subject Stockholders who constitute the Cable
Car Board, (iv) any change in the capitalization of Cable Car or any amendment
of Cable Car's certificate of incorporation or bylaws, (v) any other material
change in Cable Car's corporate structure or business, or (vi) any other action
which is intended, or could reasonably be expected, to prevent or delay beyond
December 31, 1997 the Merger or the other Transactions. Each Subject Stockholder
has also granted Triarc an irrevocable proxy to vote his or her shares of
Subject Stock as specified above in the event that such Stockholder fails to so
vote his or her Subject Stock.
In addition, pursuant to the Stockholders Agreement, each Subject
Stockholder has granted to Triarc an exclusive and irrevocable option to
purchase his or her Subject Stock in whole but not in part at any time after
Cable Car has delivered to Triarc a Transaction Notice (as defined in 'The
Merger Agreement -- No Solicitation of Transactions') or Cable Car has furnished
confidential information to any person or entered into negotiations with any
person with respect to an Acquisition Proposal (as defined in 'The Merger
Agreement -- No Solicitation of Transactions'), at a price per share in cash
equal to the product obtained by multiplying 0.1722 (the 'Option Conversion
Price') and the average (without rounding) of the closing prices per share of
Triarc Common Stock on the NYSE on the NYSE Composite Tape for the 15
consecutive NYSE trading days ending on the NYSE trading day immediately
preceding the date of the closing of the exercise of the option (the 'Option
Average Share Price'), subject to the following adjustment: if the Option
Average Share Price is less than $18.875, then the Option Conversion Price will
be adjusted to equal the quotient obtained by dividing $3.25 by the Option
Average Share Price, and if the Option Average Share Price is greater than
$24.50, then the Option Conversion Price will be adjusted to equal the quotient
obtained by dividing $4.22 by the Option Average Share Price. All options
granted to Triarc under the Stockholders Agreement must be exercised
simultaneously. If the Merger Agreement is terminated pursuant to a Cable Car
Default Termination or a Stockholder Vote Termination (as each such term is
defined in 'The Merger Agreement -- Termination') and the Stockholders Agreement
is not terminated as described in the next paragraph, then Triarc must exercise
the options within 10 business days following such termination of the Merger
Agreement, or the options will expire.
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The Stockholders Agreement, including the options granted by the Subject
Stockholders thereunder, will terminate if (i) the Effective Time occurs or (ii)
the Merger Agreement is terminated pursuant to a (A) Consent Termination, an
Optional Termination, a Triarc Default Termination or a Triarc Share Price
Termination (as each such term is defined in 'The Merger Agreement --
Termination') or (B) a Cable Car Default Termination or a Stockholder Vote
Termination (as each such term is defined in 'The Merger
Agreement -- Termination') so long as Cable Car or its stockholders shall not
have received an Acquisition Proposal (as defined in 'The Merger Agreement -- No
Solicitation of Transactions') and the Cable Car Board shall not have withdrawn,
or modified or changed in a manner adverse to Triarc or Mergerco its approval or
recommendation of the Merger Agreement or the Merger.
The Subject Stockholders received no separate consideration for executing
the Stockholders Agreement and did so at Triarc's insistence in order for Triarc
to agree to enter into the Merger Agreement.
The Stockholders Agreement is attached as Appendix B-2 to this Proxy
Statement/Prospectus and is incorporated herein by reference. The summary set
forth above is qualified in its entirety by reference to the Stockholders
Agreement.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under the Merger Agreement, Triarc and the Surviving Corporation have
agreed that the Certificate of Incorporation and Bylaws of the Surviving
Corporation and each of the Cable Car Subsidiaries will contain provisions no
less favorable with respect to indemnification of directors, officers, agents
and employees and other individuals than those set forth in the certification of
incorporation and Bylaws of Cable Car and the Cable Car Subsidiaries as in
effect on the date of the Merger Agreement, and further agreed that such
provisions will not be amended, repealed or otherwise modified for a period of
five years after the Effective Time in any manner that would adversely affect
the rights thereunder of individuals who at or prior to the Effective Time were
directors, officers, agents or employees of Cable Car or any of the Cable Car
Subsidiaries or who were otherwise entitled to indemnification pursuant to the
certificate of incorporation and Bylaws of Cable Car or any of the Cable Car
Subsidiaries. If the Surviving Corporation or any of the Cable Car Subsidiaries
will not have the financial resources to satisfy its indemnification obligations
to such persons as provided under its certificate of incorporation and Bylaws,
Triarc has agreed that it will provide such indemnification of such persons to
the extent so provided.
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THE MERGER AGREEMENT
The following is a summary of the material provisions of the Merger
Agreement not summarized elsewhere in this Proxy Statement/Prospectus. The
Merger Agreement is attached as Appendix B-1 to this Proxy Statement/Prospectus
and is incorporated herein by reference. This summary is qualified in its
entirety by reference to the Merger Agreement.
CONVERSION OF SECURITIES
At the Effective Time, by virtue of the Merger and without any action on
the part of Mergerco, Cable Car or the holders of any of Cable Car's securities,
each share of Cable Car Common Stock issued and outstanding immediately prior to
the Effective Time (other than any shares of Cable Car Common Stock owned by
Cable Car as treasury shares or by Triarc or any of its subsidiaries or any
subsidiaries of Cable Car, which will be canceled, and shares of Cable Car
Common Stock held by a person who has properly exercised his appraisal rights
under Section 262 of the DGCL (the 'Dissenting Shares')) will be converted into
the right to receive 0.1722 (the 'Conversion Price') of a share of Triarc Common
Stock, subject to the adjustment described below, and any cash to be paid in
lieu of fractional shares of Triarc Common Stock. The Conversion Price is
subject to adjustment as follows: (i) if the Average Triarc Share Price (as
defined below) is less than $18.875, then the Conversion Price shall be adjusted
to equal the quotient of $3.25 divided by such Average Triarc Share Price, and
(ii) if the Average Triarc Share Price is greater than $24.50, then the
Conversion Price shall be adjusted to equal the quotient of $4.22 divided by
such Average Triarc Share Price (the Conversion Price as so adjusted, is
referred to herein as the 'Adjusted Conversion Price'). For example, if the
Average Triarc Share Price is (i) $18.875 or greater, but not greater than
$24.50, then each share of Cable Car Common Stock will be converted at the
Effective Time into the right to receive 0.1722 of a share of Triarc Common
Stock; (ii) $18.00, then each share of Cable Car Common Stock will be converted
at the Effective Time into the right to receive 0.18056 of a share of Triarc
Common Stock; and (iii) $26.00, then each share of Cable Car Common Stock will
be converted at the Effective Time into the right to receive 0.16231 of a share
of Triarc Common Stock. Under the Merger Agreement, the 'Average Triarc Share
Price' means the average (without rounding) of the closing prices per share of
Triarc Common Stock on the NYSE Composite Tape for the 15 consecutive NYSE
trading days ending on the NYSE trading day immediately preceding the Closing
Date.
Holders of Dissenting Shares are entitled to exercise appraisal rights in
connection with the Merger. See 'Appraisal Rights.'
Each share of Cable Car Common Stock held in the treasury of Cable Car and
each share of Cable Car Common Stock owned by Triarc or any direct or indirect
wholly owned subsidiary of Triarc or any of the Cable Car Subsidiaries
immediately prior to the Effective Time will, by virtue of the Merger, and
without any action of the Company or the holder thereof, be canceled and
extinguished without any conversion thereof and no payment will be made with
respect thereto.
Each share of the common stock, par value $1.00 per share, of Mergerco
issued and outstanding immediately prior to the Effective Time will be converted
into one validly issued, fully paid and non-assessable share of common stock,
par value $1.00 per share, of the Surviving Corporation.
EXCHANGE PROCEDURES
As of the Effective Time, Triarc will deposit, or will cause to be
deposited, with Harris Trust Company of New York or such other bank or trust
company as may be designated by Triarc and approved by Cable Car, which approval
will not be unreasonably withheld (the 'Exchange Agent'), for the benefit of the
holders of Cable Car Common Stock, for exchange in accordance with the exchange
procedures of the Merger Agreement through the Exchange Agent, certificates
representing an aggregate number of shares of Triarc Common Stock as nearly as
practicable equal to the product of the Adjusted Conversion Price and the number
of outstanding shares of Cable Car Common Stock to be converted in accordance
with the Merger Agreement (the 'Exchange Fund').
As promptly as practicable after the Effective Time, Triarc will cause the
Exchange Agent to mail and/or make available to each holder of a certificate or
certificates which immediately prior to the
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Effective Time represented outstanding shares of Cable Car Common Stock (other
than shares to be canceled without consideration pursuant to the Merger
Agreement) (the 'Certificates') (i) a notice and letter of transmittal (which
will advise the holder of the effectiveness of the Merger) and (ii) instructions
for the procedure for effecting the surrender of the Certificates in exchange
for certificates representing shares of Triarc Common Stock and cash in lieu of
any fractional shares. Upon surrender to the Exchange Agent of a Certificate for
cancellation, together with such letter of transmittal, duly executed and
completed in accordance with the instructions thereon, and such other documents
as may be reasonably required pursuant to such instructions, the holder of such
Certificate will be entitled to receive in exchange therefor a certificate
representing that number of whole shares of Triarc Common Stock which such
holder has the right to receive in respect of the shares of Cable Car Common
Stock formerly represented by such Certificate (after taking into account all
shares of Cable Car Common Stock then held by such holder), cash in lieu of
fractional shares of Triarc Common Stock to which such holder is entitled and
any dividends or other distributions to which such holder is entitled, and the
Certificate so surrendered will then be canceled. At the Effective Time, the
Cable Car Common Stock transfer books will be closed and no further transfer of
shares of Cable Car Common Stock will be made thereafter. Until surrendered as
contemplated by these provisions of the Merger Agreement, each Certificate will
be deemed at any time after the Effective Time to represent only the right to
receive upon such surrender the certificate representing shares of Triarc Common
Stock, cash in lieu of any fractional shares of Triarc Common Stock to which
such holder is entitled and any dividends or other distributions to which such
holder is entitled.
DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES
No dividends or other distributions declared or made after the Effective
Time with respect to Triarc Common Stock with a record date at or after the
Effective Time will be paid to the holder of any unsurrendered Certificate with
respect to the shares of Triarc Common Stock represented thereby, and no cash
payment in lieu of fractional shares will be paid to any such holder until the
holder of such Certificate surrenders such Certificate. Upon surrender of any
such Certificate, there will be paid to the person in whose name the shares of
Triarc Common Stock is issued in exchange therefor, without interest, the amount
of any dividends which will have become payable with respect to such shares of
Triarc Common Stock between the Effective Time and the time of such surrender
and at the appropriate payment date, the amount of dividends or other
distributions, with a record date at or after the Effective Time but prior to
surrender and a payment date occurring after surrender, payable with respect to
such whole shares of Triarc Common Stock, subject in each case to deductions
required by applicable law to be withheld and any applicable escheat laws or
unclaimed property laws.
NO FURTHER RIGHTS IN CABLE CAR COMMON STOCK
All shares of Triarc Common Stock issued upon conversion of the shares of
Cable Car Common Stock in accordance with the terms of the Merger Agreement
(including any cash paid in respect of dividends, distributions and fractional
shares) will be deemed to have been issued in full satisfaction of all rights
pertaining to such shares of Cable Car Common Stock.
NO FRACTIONAL SHARES
Shares of the Triarc Common Stock shall be issued only in whole shares. A
holder of Cable Car Common Stock immediately prior to the Effective Time will
not be entitled to receive fractional shares of Triarc Common Stock (the
'Fractional Shares') but, instead, will be entitled to receive promptly from the
Exchange Agent a cash payment in lieu of Fractional Shares in an amount equal to
such stockholder's proportionate interest in the net proceeds from the sale or
sales in the open market by the Exchange Agent, on behalf of all such
stockholders, of the aggregate Fractional Shares. Such sales shall be made
promptly after the Effective Time, or in the case of Dissenting Shares the
holders of which have either withdrawn its demand for appraisal or failed to
establish or lost or forfeit its appraisal rights, which become exchangeable for
the Merger Consideration, promptly after such change in status of such
Dissenting Shares. Such cash payments will be made to each such stockholder only
upon proper
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surrender of such stockholder's Certificates, together with a properly completed
and duly executed transmittal form and any other required documents.
CABLE CAR STOCK OPTIONS
Each option issued by Cable Car that is exercisable for Cable Car Company
Stock and outstanding immediately prior to the Effective Time (a 'Cable Car
Option'), whether or not then vested or exercisable, shall, effective as of the
Effective Time, and without any action on the part of the holder thereof, be
assumed by Triarc and become and represent an option exercisable for shares of
Triarc Common Stock (a 'Substitute Option') with the same expiration dates as
such Cable Car Option immediately prior to the Effective Time (but taking into
account any acceleration of the vesting of such Cable Car Option as a result of
the consummation of the Merger), with the new exercise price thereof being
determined by dividing the exercise price of such Cable Car Option by the
Adjusted Conversion Price (with the result of such calculation rounded to the
nearest whole cent), and the number of shares of Triarc Common Stock issuable
upon exercise of the Substitute Options being determined by multiplying the
number of shares to be issued upon exercise of such Cable Car Option by the
Adjusted Conversion Price (with the result of such calculation rounded to the
nearest whole number). As discussed in 'The Proposed Merger and Related
Matters -- Additional Interests of Cable Car Management -- Acceleration of
Vesting of Stock Options,' all unvested Cable Car Options will vest at the
Effective Time. Triarc will file as soon as practicable after the Effective
Time, but in no event later than 45 days after the Effective Time, and keep
current, one or more registration statements on Form S-8 (or any successor or
appropriate form) with respect to the shares of Triarc Common Stock subject to
the Substitute Options so long as such Substitute Options remain outstanding.
TERMINATION OF EXCHANGE FUND
Any portion of the Exchange Fund which will not have been distributed to
the holders of Cable Car Common Stock prior to the second anniversary of the
Effective Time will be delivered to Triarc, and any holders of Cable Car Common
Stock who have not previously complied with the exchange procedures set forth in
the Merger Agreement will thereafter look only to Triarc for payment of the
Merger Consideration to which they are entitled under the Merger Agreement,
subject to escheat and similar laws.
CERTAIN REPRESENTATIONS AND WARRANTIES
The Merger Agreement contains various representations and warranties of
Triarc, Mergerco and Cable Car relating to, among other things, the following
matters (which representations and warranties are subject, in certain cases, to
specified exceptions): (i) the due organization, power, authority and good
standing of, and similar corporate matters with respect to, each of Triarc and
Cable Car and their respective subsidiaries; (ii) the authorization, execution,
delivery, performance and enforceability of the Merger Agreement by each party
thereto; (iii) each of Triarc's and Cable Car's capital structure; (iv) the
reports and other documents filed with the Commission and other regulatory
authorities, the financial statements included therein and the accuracy of the
information contained in each of them; (v) the absence of certain changes or
events prior to the date of the Merger Agreement having a material adverse
effect on Triarc and its subsidiaries, taken as a whole, or Cable Car and the
Cable Car Subsidiaries, taken as a whole, as the case may be; and (vi) with
respect to the Merger Agreement and the Merger, the absence of conflict with the
certificate of incorporation and bylaws of each of Cable Car and the Cable Car
Subsidiaries, the certificate of incorporation and bylaws of each of Triarc and
its subsidiaries, and with applicable law or any material contracts to which
Cable Car or Triarc or any of their respective subsidiaries, as the case may be,
is a party or by which they may be bound.
In addition, the Merger Agreement contains certain additional
representations and warranties of Cable Car and the Cable Car Subsidiaries
relating to (i) the vote required by Cable Car's stockholders to approve the
Merger Agreement; (ii) the absence of undisclosed liabilities; (iii) the
accuracy of the information provided by Cable Car for inclusion in the
Registration Statement (including this Proxy Statement/Prospectus); (iv)
compliance with laws; (v) the absence of pending or threatened litigation
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affecting Cable Car or any of the Cable Car Subsidiaries; (vi) the payment of
taxes, the filing of tax returns and other tax matters; (vii) compliance with
contractual obligations; (viii) the absence of defaults under Cable Car's and
the Cable Car Subsidiaries' contracts and the absence of contractual provisions
limiting their right to compete; (ix) Cable Car's and the Cable Car
Subsidiaries' ownership and right to use certain intellectual property and the
absence of (A) any challenges to their intellectual property rights, or (B) any
infringements or conflicts with their business and the intellectual property
rights of third parties; (x) certain employee benefit plans and ERISA matters;
(xi) the condition of Cable Car's inventory and receivables and the status of
Cable Car's and the Cable Car Subsidiaries' ongoing relationship with their
suppliers; (xii) historical case sales under the Stewart's Master Agreement and
the worldwide scope of the territory subject to exclusive license thereunder;
(xiii) transactions with affiliates; (xiv) the applicability of state takeover
statutes to the Merger; and (xv) the absence of any brokerage, finder's or other
fee due in connection with the Merger (except in the case of Montgomery
Securities).
The Merger Agreement contains certain additional representations and
warranties of Triarc and Mergerco relating to (i) the accuracy of information
contained in the Registration Statement (other than information provided by
Cable Car for inclusion therein) and (ii) certain issues in connection Section
368(a) of the Code.
CONDUCT OF BUSINESS PENDING THE MERGER
Pursuant to the Merger Agreement, Cable Car has agreed that, between the
date of the Merger Agreement and the Effective Time, except as provided in the
Merger Agreement or unless Triarc shall have otherwise agreed in writing, (i)
Cable Car's and the Cable Car Subsidiaries' business, including investment
practices and policies, will be conducted only in, and Cable Car and the Cable
Car Subsidiaries will not take any action except in, the ordinary course of
business and in a manner consistent in all material respects with past practice;
and (ii) each of Cable Car and the Cable Car Subsidiaries will use all
reasonable efforts to preserve intact its business organization, and to maintain
its existing relationships with material customers, distributors, suppliers,
employees, creditors and business partners.
Without limiting the generality of the foregoing, each of Cable Car and the
Cable Car Subsidiaries will not, except as specified in the Merger Agreement or
disclosed to Triarc on or before the date of the Merger Agreement, unless Triarc
shall have otherwise agreed in writing: (i) amend its certificate of
incorporation or bylaws or similar organizational documents; (ii) declare, set
aside or pay any dividend or other distribution payable in cash, stock or
property with respect to its capital stock other than dividends paid by Cable
Car's wholly owned Subsidiaries to the Cable Car; (iii) issue, sell, transfer,
pledge, dispose of or encumber any additional shares of, or securities
convertible into or exchangeable for, or options, warrants, calls, commitments
or rights of any kind to acquire, any shares of capital stock of any class of
Cable Car or the Cable Car Subsidiaries, other than issuances pursuant to the
exercise of stock options outstanding on the date of the Merger Agreement; (iv)
transfer, lease, license, sell, mortgage, pledge, dispose of, or encumber any
assets that are material to Cable Car and the Cable Car Subsidiaries taken as a
whole other than sales of investment assets in the ordinary course of business
consistent with past practice; (v) redeem, purchase or otherwise acquire
directly or indirectly any of its capital stock; (vi) grant any increase in the
compensation payable or to become payable by Cable Car or any of the Cable Car
Subsidiaries to any officer or employee other than scheduled annual increases in
the ordinary course of business consistent with past practice in an amount not
to exceed five percent for any individual; (vii) adopt any new, or amend or
otherwise increase, or accelerate the payment or vesting of the amounts payable
or to become payable under any benefit plan; (viii) enter into any, or amend any
existing, employment, consulting or severance agreement with or, except in
accordance with the existing written policies of Cable Car, grant any severance
or termination pay to any officer, director or employee of Cable Car or any of
the Cable Car Subsidiaries; (ix) make any additional contributions to any
grantor trust created by Cable Car to provide funding for non-tax-qualified
employee benefits or compensation; or (x) provide any severance program to any
Cable Car Subsidiary which does not have a severance program as of the date of
the Merger Agreement; (xi) modify, amend or terminate any of the material
contracts or waive, release or assign any material rights or claims; (xii)
permit any material
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insurance policy naming it as a beneficiary or a loss payable payee to be
canceled or terminated; (xii) subject to certain specified exceptions, (A) incur
or assume any debt except for borrowings under its existing credit facility in
an amount exceeding $100,000, (B) assume, guarantee, endorse or otherwise become
liable or responsible for the obligations of any other person, (C) make any
loans, advances or capital contributions to, or investments in, any other
person, or (D) enter into any material commitment (including, but not limited
to, any capital expenditure, 'take-or-pay' contract or purchase of assets) in
excess of $100,000; (xiii) change any of the accounting principles used by it
except as required by generally accepted accounting principles; (xiv) pay,
discharge or satisfy any material claims, liabilities or obligations; (xv)
except as permitted in the Merger Agreement, adopt a plan of complete or partial
liquidation, dissolution, merger, consolidation, restructuring, recapitalization
or other material reorganization of Cable Car or any of the Cable Car
Subsidiaries or any agreement relating to an Acquisition Proposal (as defined in
'No Solicitation of Transactions' below) (other than the Merger); (xvi) engage
in any transaction with, or enter into any agreement, arrangement, or
understanding with any of Cable Car's affiliates; (xvii) make any tax election
that would have a material adverse effect on Cable Car or any of the Cable Car
Subsidiaries; and (xviii) enter into any agreement, commitment or arrangement to
do any of the foregoing, or to authorize, recommend, propose or announce an
intention to do any of the foregoing.
Cable Car has also agreed that it will not, between the date of the Merger
Agreement and the Effective Time, intentionally take or cause to be taken any
action that would disqualify the Merger from constituting a tax-free
'reorganization' under Section 368(a) of the Code.
NO SOLICITATION OF TRANSACTIONS
Pursuant to the Merger Agreement, Cable Car has agreed that it will not
directly or indirectly, and will not authorize or permit any of the Cable Car
Subsidiaries or any officer, director, employee, agent, investment banker,
financial advisor, attorney, accountant, broker, finder or other representative
of Cable Car or any of the Cable Car Subsidiaries directly or indirectly to, (i)
solicit, initiate, encourage or induce the making, submission or announcement of
any Acquisition Proposal (as defined below) or take any action that could
reasonably be expected to lead to an Acquisition Proposal, (ii) furnish any
nonpublic information regarding any of Cable Car and the Cable Car Subsidiaries
to any person in connection with or in response to an Acquisition Proposal,
(iii) engage in discussions with any person with respect to any Acquisition
Proposal, (iv) approve, endorse or recommend (or agree to approve, endorse or
recommend) any Acquisition Proposal or (v) enter into any letter of intent or
similar document or any agreement contemplating or otherwise relating to any
Acquisition Proposal.
Notwithstanding the foregoing, the Merger Agreement permits Cable Car to
furnish nonpublic information regarding Cable Car and the Cable Car Subsidiaries
to, or enter into discussions with, any person in response to an unsolicited
bona fide written Acquisition Proposal submitted (and not withdrawn) by such
person if (1) the Cable Car Board concludes in good faith, based upon the advice
of its financial advisor, that such Acquisition Proposal would result in a
transaction that is more favorable from a financial point of view to Cable Car's
stockholders than the Merger, (2) the Cable Car Board concludes in good faith,
after consultation with outside legal counsel, that such action is required in
order for the Cable Car Board to comply with its fiduciary obligations to Cable
Car's stockholders under applicable law, (3) prior to furnishing any such
nonpublic information to, or entering into discussions with, such person, Cable
Car gives Triarc written notice of the identity of such person and of Cable
Car's intention to furnish nonpublic information to, or enter into discussions
with, such person, (4) Cable Car receives from such person an executed
confidentiality agreement, and (5) prior to furnishing any such nonpublic
information to such person, Cable Car furnishes such nonpublic information to
Triarc (to the extent such nonpublic information has not been previously
furnished).
The Merger Agreement also requires Cable Car to promptly advise Triarc
orally and in writing of any Acquisition Proposal (including the identity of the
person making or submitting such Acquisition Proposal and the terms thereof)
that is made or submitted by any person (a 'Transaction Notice') and agrees that
it will not furnish confidential information to any person or enter into
negotiations with any person with respect to an Acquisition Proposal until it
has delivered to Triarc a Transaction Notice and 48 hours have passed since
Triarc's receipt of such Transaction Notice.
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For the purposes of the Merger Agreement, 'Acquisition Proposal' means any
tender or exchange offer involving the capital stock of Cable Car, any proposal
for a merger, consolidation or other business combination involving Cable Car or
any of the Cable Car Subsidiaries, any proposal or offer to acquire in any
manner a substantial equity interest in, or a substantial portion of the
business or assets of, Cable Car or any of the Cable Car Subsidiaries, any
proposal or offer with respect to any recapitalization or restructuring with
respect to Cable Car or any of the Cable Car Subsidiaries or any proposal or
offer with respect to any other transaction similar to any of the foregoing with
respect to Cable Car or any of the Cable Car Subsidiaries, other than pursuant
to the transactions to be effected pursuant to the Merger Agreement or any other
transaction with Triarc or any of its subsidiaries.
The Merger Agreement provides that it may be terminated by the Cable Car
Board if the Cable Car Board determines in good faith, after consultation with
(i) outside legal counsel, that termination of the Merger Agreement is required
for the Cable Car Board to satisfy its fiduciary obligations to the Cable Car
stockholders under applicable law by reason of an unsolicited bona fide
Acquisition Proposal having been made, and (ii) its financial advisor, that such
Acquisition Proposal would result in a transaction that is more favorable than
the Merger from a financial point of view to the Cable Car stockholders,
provided that Cable Car has complied with the provisions of Section 5.4 of the
Merger Agreement (relating to Acquisition Proposals) and notifies Triarc at
least five days in advance of its intention to terminate the Merger Agreement or
to enter into a definitive agreement with respect to such Acquisition Proposal,
and provided, further, that within such five day period Triarc has not made a
competing proposal which is at least as favorable to the Cable Car stockholders
from a financial point of view as such Acquisition Proposal. The Merger
Agreement may be terminated by the Triarc Board if (i) the Cable Car Board
withdraws, modifies or changes its approval recommendation of the Merger
Agreement or the Merger in a manner adverse to Triarc or Mergerco or recommends
to the stockholders of Cable Car any Acquisition Proposal or other business
combination, or (ii) Cable Car receives a bona fide written Acquisition Proposal
which has not been rejected by the Cable Car Board within 14 days after receipt
thereof. See 'The Merger Agreement -- Termination.'
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under the Merger Agreement, Triarc has agreed that the certificate of
incorporation and bylaws of the Surviving Corporation and each of the Cable Car
Subsidiaries will contain provisions no less favorable with respect to the
indemnification of directors, officers, agents and employees and other
individuals than those set forth in the certification of incorporation and
bylaws of Cable Car and the Cable Car Subsidiaries as in effect on the date of
the Merger Agreement, and further agreed that such provisions will not be
amended, repealed or otherwise modified for a period of five years after the
Effective Time in any manner that would adversely affect the rights thereunder
of individuals who at or prior to the Effective Time were directors, officers,
agents or employees of Cable Car or any of the Cable Car Subsidiaries or who
were otherwise entitled to indemnification pursuant to the certificate of
incorporation and bylaws of Cable Car or any of the Cable Car Subsidiaries. If
the Surviving Corporation or any of the Cable Car Subsidiaries does not have the
financial resources to satisfy its indemnification obligations to such persons
as provided under its certificate of incorporation and bylaws, Triarc has agreed
that it will provide such indemnification of such persons to the extent so
provided.
CONDITIONS TO CONSUMMATION OF THE MERGER
The obligations of Cable Car, Triarc and Mergerco to consummate the Merger
are subject to the satisfaction or, if permitted by applicable law, waiver of
the following conditions: (i) the Merger Agreement and the Merger shall have
been approved and adopted by the affirmative vote of the stockholders of Cable
Car in accordance with the DGCL and the Cable Car Charter; (ii) no court,
arbitrator or governmental body, agency or official shall have issued any order,
decree or ruling and there shall not be any statute, rule or regulation,
restraining, enjoining or prohibiting the consummation of the Merger; (iii) the
Registration Statement shall have been declared effective, and no stop order
suspending the effectiveness of the Registration Statement will be in effect and
no proceedings for such purpose will have been initiated or threatened by the
Commission; (iv) any waiting period applicable to
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the Merger under the HSR Act shall have expired or been terminated; (e) all
actions by or in respect of or filing with any governmental authority required
to permit the consummation of the Merger will have been obtained and such
approval shall be in full force and effect; and (f) the shares of Triarc Common
Stock to be issued in the Merger shall have been approved for listing on the
NYSE, subject to official notice of issuance.
The obligations of Triarc and Mergerco to consummate the Merger are subject
to the satisfaction or, if permitted by applicable law, waiver of the following
further conditions: (i) (A) Cable Car will have performed in all material
respects all of its obligations under the Merger Agreement required to be
performed by it at or prior to the Effective Time, (B) each of the
representations and warranties of Cable Car contained in the Merger Agreement
will be true and correct as of the Effective Time as if made at and as of such
time (except for those representations and warranties that address matters only
as of a particular date or only with respect to a specific period of time which
need only be true and accurate as of such date or with respect to such period),
(C) since December 31, 1996, except as disclosed to Triarc pursuant to the
Merger Agreement, there will not have occurred any event, change or effect
having, or which would be reasonably likely to have, in the aggregate, a
material adverse effect on Cable Car and the Cable Car Subsidiaries, taken as a
whole, and (D) Triarc will have received a certificate signed by an executive
officer of Cable Car to the foregoing effect; (ii) there shall not have been any
action taken, or any statute, rule, regulation, legislation, interpretation,
judgment, order or injunction enacted, entered, enforced, promulgated, amended,
issued or deemed applicable to the Merger by any domestic legislative body,
court, government or governmental, administrative or regulatory authority or
agency (A) restraining or preventing the carrying out of the Merger and other
Transactions, (B) prohibiting Triarc's ownership or operation of any material
portion of Triarc's or Cable Car's businesses or assets, or compelling Triarc to
dispose of or hold separate all or any material portion of Triarc's or Cable
Car's businesses or assets as a result of the Transactions, (C) making
acquisition of the shares of Cable Car Common Stock pursuant to the Merger
illegal, (D) prohibiting Triarc effectively from acquiring or holding or
exercising full rights of ownership of the shares of Cable Car Common Stock,
including, without limitation, the right to vote the shares of Cable Car Common
Stock acquired by it pursuant to the Merger on all matters properly presented to
the stockholders of Cable Car, (E) prohibiting Triarc or any of its subsidiaries
or affiliates from effectively controlling in any material respect the
businesses or operations of Cable Car, Triarc or their respective subsidiaries,
or (F) which would impose any condition which would materially adversely affect
the business of the Cable Car or (as a condition of consummating the
Transactions) the business of Triarc and its subsidiaries taken as a whole;
(iii) the Cable Car Board will not have withdrawn or modified its position with
respect to the Merger; (iv) Triarc shall have received an opinion of Cable Car's
outside counsel in scope and substance substantially in the form agreed to prior
to the date of the Merger Agreement; (v) the Average Triarc Share Price (the
average (without rounding) of the closing prices per share of Triarc Common
Stock on the NYSE Composite Tape for the fifteen (15) consecutive NYSE trading
days ending on the NYSE trading day immediately preceding the Closing Date)
shall not be less than $15.00 per share; (vi) the holders of no greater than 6%
of the shares of Cable Car Common Stock outstanding on the Record Date shall
have demanded appraisal rights pursuant to, and otherwise complied with the
provisions of, subsection (d) of Section 262 of the DGCL, and shall not have
voted in favor of or consented to the Merger; and (vii) no suit, claim, action
or proceeding with respect to the Merger or the other Transactions, or Cable Car
or any of the Cable Car Subsidiaries or any of their properties or assets, shall
have been instituted or threatened which could reasonably be expected to have a
material adverse effect on Cable Car and the Cable Car Subsidiaries taken as a
whole or would, or would be reasonably likely to, materially impair the ability
of Cable Car to consummate the Merger or the other Transactions.
The obligations of Cable Car to consummate the Merger are subject to the
satisfaction of the following conditions: (i) (A) Triarc and Mergerco shall have
performed in all material respects all of their respective obligations under the
Merger Agreement required to be performed by them at or prior to the Effective
Time, (B) each of the representations and warranties of Triarc contained in the
Merger Agreement will be true and correct, in each case as of the Effective Time
as if made at and as of such time (except for those representations and
warranties that address matters only as of a particular date or only with
respect to a specific period of time which need only be true and accurate as of
such date or
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with respect to such period), (C) since December 31, 1996, there will not have
occurred any event, change or effect having, or which would be reasonably likely
to have, individually or in the aggregate, a material adverse effect on Triarc
and its subsidiaries taken as a whole, and (D) Cable Car shall have received a
certificate signed by an executive officer of Triarc to the foregoing effect;
(ii) Cable Car shall have received the opinion of outside counsel to Triarc and
Mergerco in scope and substance substantially in the form agreed to prior to the
date of the Merger Agreement; (iii) Cable Car shall have received an opinion of
Sherman & Howard L.L.C. to the effect that the Merger will be treated for
federal income tax purposes as a 'reorganization' within the meaning of Section
368(a) of the Code; and (iv) no suit, claim, action or proceeding with respect
to the Merger or the other Transactions, or Triarc or any of its subsidiaries or
any of their properties or assets, shall have been instituted which could
reasonably be expected to have a material adverse effect on Triarc and its
subsidiaries taken as a whole, or would be reasonably likely to materially
impair the ability of Triarc to consummate the Merger or the other Transactions.
TERMINATION
The Merger Agreement may be terminated and the Merger may be abandoned at
any time prior to the Effective Time, whether before or after the stockholders
of Cable Car have approved the Merger Agreement, (i) by the mutual consent of
the Boards of Directors of each of Triarc and Cable Car (a 'Consent
Termination'); (ii) by either of the Boards of Directors of Triarc or Cable Car
(in each case, an 'Optional Termination'), if (A) the Effective Time has not
occurred on or before December 31, 1997, provided that the right to so terminate
the Merger Agreement will not be available to any party whose failure to fulfill
any obligation under the Merger Agreement has been the cause of, or resulted in,
the failure of the Effective Time to occur on or before such date, or (B) any
governmental authority has issued an order, decree or ruling or taken any other
action (which order, decree, ruling or other action the parties hereto shall use
their best efforts to lift), in each case permanently restraining, enjoining or
otherwise prohibiting the Merger and the other Transactions and such order,
decree, ruling or other action shall have become final and non-appealable. The
Merger Agreement may also be terminated by either of the Boards of Directors of
Triarc or Cable Car if the Merger Agreement and the Merger has not been approved
and adopted at the Special Meeting by the affirmative vote of the stockholders
of Cable Car in accordance with the DGCL and the Cable Car Charter (a
'Stockholder Vote Termination').
The Merger Agreement may also be terminated by the Cable Car Board if (i)
Triarc or Mergerco (A) breaches or fails in any material respect to perform or
com ply with any of its material covenants and agreements contained in the
Merger Agreement or (B) breaches its representations and warranties in any
material respect and such breach would have or would be reasonably likely to
have a material adverse effect on Triarc and its subsidiaries taken as a whole,
in each case such that the conditions precedent to Cable Car's obligations to
consummate the Merger would not be satisfied, provided, that if such breach is
curable by the breaching party through the exercise of the breaching party's
best efforts and for so long as the breaching party is using its best efforts to
cure such breach, Cable Car may not so terminate the Merger Agreement pursuant
to this clause (a 'Triarc Default Termination'); and (ii) the Cable Car Board
determines in good faith, after consultation with (A) outside legal counsel,
that termination of the Merger Agreement is required for the Cable Car Board to
satisfy its fiduciary obligations to the Cable Car stockholders under applicable
law by reason of an unsolicited bona fide Acquisition Proposal having been made,
and (B) its financial advisor, that such Acquisition Proposal would result in a
transaction that is more favorable than the Merger from a financial point of
view to the Cable Car stockholders, provided that Cable Car has complied with
the provisions of Section 5.4 of the Merger Agreement (relating to Acquisition
Proposals) and notifies Triarc at least five days in advance of its intention to
terminate the Merger Agreement or to enter into a definitive agreement with
respect to such Acquisition Proposal, and provided, further, that within such
five day period Triarc has not made a competing proposal which is at least as
favorable to the Cable Car stockholders from a financial point of view as such
Acquisition Proposal (a 'Competing Transaction Termination').
The Merger Agreement may also be terminated by the Triarc Board, if (i)
Cable Car (A) breaches or fails in any material respect to perform or comply
with any of its material covenants and agreements
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contained in the Merger Agreement, or (B) breaches its representations and
warranties in any material respect and such breach would have or would be
reasonably likely to have a material adverse effect on Cable Car and its
subsidiaries taken as a whole, in each case such that the conditions precedent
to Triarc's and Mergerco's obligations to consummate the Merger would not be
satisfied, provided, that if such breach is curable by Cable Car through its
exercise of best efforts and for so long as Cable Car is using its best efforts
to cure such breach, Triarc may not terminate the Merger Agreement pursuant to
this clause (a 'Cable Car Default Termination'); (ii) (A) the Cable Car Board
withdraws, modifies or changes its approval recommendation of the Merger
Agreement or the Merger in a manner adverse to Triarc or Mergerco or recommends
to the stockholders of Cable Car any Acquisition Proposal or other business
combination (a 'Board Recommendation Termination'), (B) Cable Car receives a
bona fide written Acquisition Proposal which has not been rejected by the Cable
Car Board within 14 days after receipt thereof (an 'Acquisition Proposal
Termination'), or (C) prior to the certification of the vote of the Cable Car's
stockholders to approve the Merger at the Special Meeting, it shall have been
publicly disclosed or Triarc or Mergerco shall have learned that any person,
entity or 'group' (as that term is defined in Section 13(d)(3) of the Exchange
Act), other than Triarc or its subsidiaries or any of their affiliates or the
Subject Stockholders, shall have acquired beneficial ownership (determined
pursuant to Rule 13d-3 promulgated under the Exchange Act) of more than 20% of
any class or series of capital stock of Cable Car (including the Cable Car
Common Stock), through the acquisition of stock, the formation of a group or
otherwise, or shall have been granted any option, right or warrant, conditional
or otherwise, to acquire beneficial ownership of more than 20% of any class or
series of capital stock of Cable Car (including the Cable Car Common Stock)
other than as disclosed in a Schedule 13D on file with the Commission on the as
of the date of the Merger Agreement (an 'Acquiring Person Termination'); or
(iii) the Average Triarc Share Price is less than $15.00 per share (a 'Triarc
Share Price Termination').
EFFECT OF TERMINATION
Except as otherwise provided in the Merger Agreement, in the event of the
termination of the Merger Agreement as described above, the Merger Agreement
will become null and void and there will be no liability under the Merger
Agreement on the part of Triarc, Mergerco or Cable Car; provided, however, that
nothing in the Merger Agreement will relieve (i) any party from liability for
fraud or for willful breach of the Merger Agreement or (ii) Triarc from its
obligation to hold any nonpublic information pertaining to Cable Car or the
Cable Car Subsidiaries it has received in connection with the Merger Agreement
in confidence.
FEES AND EXPENSES
All costs and expenses incurred in connection with the Merger Agreement and
the Merger will be paid by the party incurring such costs and expenses, whether
or not the Merger is consummated; provided, however, that if the Merger
Agreement is terminated by Triarc pursuant to a Triarc Share Price Termination,
Triarc will reimburse Cable Car for its reasonable costs and expenses
(including, without limitation, reasonable attorneys' fees and expenses)
incurred in connection with the Merger Agreement and the Merger in an aggregate
amount not to exceed $225,000.
AMENDMENT AND WAIVER
The Merger Agreement may be amended by the parties to the Merger Agreement
by action taken by their respective Boards of Directors at any time prior to the
Effective Time; provided, however, that after the approval of the Merger
Agreement by the stockholders of Cable Car, no amendment or modification may be
made which would alter or change the amount or kind of shares, securities, cash,
property and/or rights to be received in exchange for or on conversion of all or
any of the capital stock of Cable Car, alter or change any term of the
certificate of incorporation of the Surviving Corporation to be effected by the
Merger, or alter or change any of the terms and conditions of the Merger
Agreement if such alteration or change would adversely affect the holders of the
capital stock of Cable Car. The Merger Agreement may not be amended except by
written agreement signed by the parties to the Merger Agreement.
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At any time prior to the Effective Time, any party to the Merger Agreement
may, by action taken by its Board of Directors, extend the time for the
performance of any obligation or other act of any other party thereto, waive any
inaccuracy in the representations and warranties of the other party contained in
the Merger Agreement or in any document delivered by the other party pursuant
thereto, and waive compliance with any agreement or condition contained therein.
Any such extension or waiver will be valid if set forth in an instrument in
writing signed on behalf of such party.
STOCKHOLDERS AGREEMENT
As a condition to Triarc's execution of the Merger Agreement and to
facilitate the consummation of the Merger, Triarc required the Subject
Stockholders to enter into the Stockholders Agreement, the terms of which are
summarized in 'The Proposed Merger and Related Matters -- Additional Interests
of Cable Car Management -- Stockholders Agreement.'
APPRAISAL RIGHTS
Holders of Cable Car Common Stock who do not vote in favor of the approval
and adoption of the Merger Agreement and who have met the conditions of, and
properly complied with the requirements of, Section 262 of the DGCL ('Section
262') will be entitled to appraisal rights. To preserve their rights,
stockholders who wish to exercise their statutory appraisal rights must submit
to Cable Car a written demand for appraisal prior to the taking of the vote on
the Merger Agreement at the Special Meeting and comply with the other procedural
requirements of Section 262 described below.
SECTION 262 IS REPRINTED IN ITS ENTIRETY AS APPENDIX D TO THIS PROXY
STATEMENT/PROSPECTUS. THE FOLLOWING DISCUSSION OF THE MATERIAL TERMS OF THE LAW
RELATING TO APPRAISAL RIGHTS IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
APPENDIX D. THIS DISCUSSION AND APPENDIX D SHOULD BE REVIEWED CAREFULLY BY ANY
STOCKHOLDER WHO WISHES TO EXERCISE STATUTORY APPRAISAL RIGHTS, OR WHO WISHES TO
PRESERVE THE RIGHT TO DO SO, AS FAILURE TO COMPLY WITH THE PROCEDURES SET FORTH
IN SECTION 262 WILL RESULT IN THE LOSS OF APPRAISAL RIGHTS, IF AVAILABLE.
A record holder of shares of Cable Car Common Stock who holds such shares
of Cable Car Common Stock on the date of making the demand described below, who
makes the demand described below with respect to such shares, who continuously
is the record holder of such shares through the Effective Time, who otherwise
complies with the statutory requirements of Section 262 and who neither votes in
favor of the Merger Agreement nor consents thereto in writing may be entitled to
an appraisal by the Delaware Court of Chancery (the 'Delaware Court') of the
fair value of his or her shares of Cable Car Common Stock. All references in
this summary of appraisal rights to a 'stockholder' are to the record holder or
holders of shares of Cable Car Common Stock.
Under Section 262, Cable Car must notify stockholders not less than 20 days
prior to the Special Meeting that appraisal rights are available and must
include in each such notice a copy of Section 262. This Proxy
Statement/Prospectus shall constitute such notice to the record holders of Cable
Car Common Stock.
Holders of shares of Cable Car Common Stock who desire to exercise their
appraisal rights must not vote in favor of the Merger Agreement and must deliver
a separate written demand for appraisal to Cable Car prior to the vote by the
Cable Car stockholders on the Merger Agreement. A stockholder who signs and
returns a proxy without expressly directing, by checking the applicable boxes on
the reverse side of the proxy card enclosed herewith or otherwise, that his or
her shares of Cable Car Common Stock be voted against the proposal to approve
the Merger Agreement or that an abstention be registered with respect to his or
her shares of Cable Car Common Stock will not be entitled to appraisal rights as
to those shares of Cable Car Common Stock because, in the absence of express
contrary instructions, such shares of Cable Car Common Stock will be voted in
favor of the proposal to approve the Merger Agreement. Accordingly, a
stockholder who desires to perfect appraisal rights with respect to any of his
or her shares of Cable Car Common Stock must either (i) refrain from executing
and returning the enclosed proxy card and from voting, in person or otherwise,
in favor of the proposal
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to approve the Merger Agreement, or (ii) check either the 'Against' or the
'Abstain' box next to the proposal to approve the Merger Agreement on such card
or affirmatively vote in person against the proposal to approve the Merger
Agreement or register in person an abstention with respect thereto. However, an
abstention or a vote against the Merger does not in and of itself constitute a
demand for appraisal. A demand for appraisal must be executed by or on behalf of
the stockholder of record and must reasonably inform Cable Car of the identity
of the stockholder of record and that such record stockholder intends thereby to
demand appraisal of his or her shares of Cable Car Common Stock. A person having
a beneficial interest in shares of Cable Car Common Stock that are held of
record in the name of another person, such as broker, fiduciary or other
nominee, must act promptly to cause the record holder to follow the steps
summarized herein properly and in a timely manner to perfect whatever appraisal
rights are available. If the shares of Cable Car Common Stock are owned of
record by a person other than the beneficial owner, including a broker,
fiduciary (such as a trustee, guardian or custodian) or other nominee, such
demand must be executed by or on behalf of the record owner. If the shares of
Cable Car Common Stock are owned of record by more than one person, as in a
joint tenancy or tenancy in common, such demand must be executed by or on behalf
of all joint owners. An authorized agent, including an agent for two or more
joint owners, may execute the demand for appraisal for a stockholder of record;
provided, however, that the agent must identify the record owner and expressly
disclose the fact that, in exercising the demand, such person is acting as agent
for the record owner.
A record owner, such as a broker, fiduciary or other nominee, who holds
shares of Cable Car Common Stock as a nominee for others, may exercise appraisal
rights with respect to the shares held for all or less than all beneficial
owners of shares as to which such person is the record owner; provided, however,
that if exercising appraisal rights with respect to less than all beneficial
owners, the written demand should set forth the number of shares as to which
appraisal is sought. Where the number of shares is not expressly stated, the
demand will be presumed to cover all shares of Cable Car Common Stock
outstanding in the name of such record owner.
A stockholder who elects to exercise appraisal rights should mail or
deliver his or her written demand to: Cable Car Beverage Corporation, 717 17th
Street, Suite 1475, Denver, Colorado 80202, Attention: Secretary.
Within ten days after the Effective Time, the Surviving Corporation must
provide notice of the Effective Time to all stockholders who have complied with
Section 262 and who have not voted in favor of or consented to the Merger
Agreement. Within 120 days after the Effective Time, either the Surviving
Corporation or any stockholder who has complied with the required conditions of
Section 262, and who is otherwise entitled to appraisal rights, may file a
petition in the Delaware Court demanding a determination of the value of the
shares of all dissenting stockholders. There is no present intent on the part of
Cable Car to file an appraisal petition and stockholders seeking to exercise
appraisal rights should not assume that the Surviving Corporation will file such
a petition or that the Surviving Corporation will initiate any negotiations with
respect to the value of such shares. Accordingly, it is the obligation of all
stockholders who desire to have their shares appraised to initiate any petitions
or other actions necessary for the perfection of their appraisal rights within
the time period and in the manner prescribed in Section 262. Within 120 days
after the Effective Time, any stockholder who has theretofore complied with the
applicable provisions of Section 262 will be entitled, upon written request, to
receive from the Surviving Corporation a statement setting forth the aggregate
number of shares of Cable Car Common Stock not voting in favor of the Merger
Agreement and with respect to which demands for appraisal were received by Cable
Car and the number of holders of such shares. Such statement must be mailed
within ten days after the written request therefor has been received by the
Surviving Corporation or within ten days after the expiration of the period for
delivery of demands for appraisal, whichever is later.
If a petition for an appraisal is timely filed, the Delaware Court is
empowered, at the hearing on such petition, to determine which stockholders, if
any, are entitled to appraisal rights. The Delaware Court may require the
stockholders who have demanded an appraisal for their shares and who hold stock
represented by certificates to submit their certificates of stock to the
Register in Chancery for notation thereon of the pendency of the appraisal
proceedings; and if any stockholder fails to comply
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<PAGE>
with such direction, the Delaware Court may dismiss the proceedings as to such
stockholder. After determining the stockholders entitled to appraisal, the
Delaware Court will appraise the shares of Cable Car Common Stock owned by such
stockholders, determining the fair value of such shares (exclusive of any
element of value arising from the accomplishment or expectation of the Merger),
together with a fair rate of interest, if any, to be paid upon the amount
determined to be the fair value. In determining fair value, the Delaware Court
is to take into account all relevant factors. The Delaware Supreme Court has
stated that, in determining value in an appraisal proceeding, 'proof of value by
any techniques or methods which are generally considered acceptable in the
financial community and otherwise admissible in court' should be considered.
Holders of shares of Cable Car Common Stock considering seeking appraisal
should recognize that the fair value of their shares determined under Section
262 could be more than, the same as or less than the consideration they are
entitled to receive pursuant to the Merger Agreement if they do not seek
appraisal of their shares. The cost of the appraisal proceeding may be
determined by the Delaware Court and taxed against the parties as the Delaware
Court deems equitable in the circumstances. Each party must bear his or her own
expenses of the proceeding, although upon application of a dissenting
stockholder of Cable Car, the Delaware Court may order that all or a portion of
the expenses incurred by any dissenting stockholder in connection with the
appraisal proceeding, including, without limitation, reasonable attorney's fees
and the fees and expenses of experts, be charged pro rata against the value of
all shares of stock entitled to appraisal.
Any holder of shares of Cable Car Common Stock who has duly demanded
appraisal in compliance with Section 262 will not, after the Effective Time, be
entitled to vote for any purpose any shares subject to demand or to receive
payment of dividends or other distributions on such shares, except for dividends
or distributions payable to stockholders of record at a date prior to the
Effective Time.
At any time within 60 days after the Effective Time, any stockholder will
have the right to withdraw such demand for appraisal and to accept the terms
offered in the Merger Agreement; after this period, the stockholder may withdraw
such demand for appraisal only with the written consent of the Surviving
Corporation, provided that, no appraisal proceeding in the Delaware Court shall
be dismissed as to any stockholder without approval of the Delaware Court. If no
petition for appraisal is filed with the Delaware Court within 120 days after
the Effective Time, stockholders' rights to appraisal shall cease, and all
holders of shares of Cable Car Common Stock will be entitled to receive the
consideration offered pursuant to the Merger Agreement.
MANAGEMENT OF SURVIVING CORPORATION
EXECUTIVE OFFICERS AND DIRECTORS OF THE SURVIVING CORPORATION
Pursuant to the Merger Agreement, the officers and directors of Mergerco
immediately prior to the Effective Time will become the officers and directors
of the Surviving Corporation, each to hold office in accordance with the
certificate of incorporation and bylaws of the Surviving Corporation then in
effect and until the successor of each is duly elected and qualified.
The following table sets forth certain information regarding those persons
who will serve as the executive officers and directors of the Surviving
Corporation, who have held such positions with Mergerco since September 1, 1997
all of whom are U.S. citizens:
<TABLE>
<CAPTION>
NAME AGE POSITIONS
---- --- ---------
<S> <C> <C>
John L. Barnes, Jr.................. 50 Director; Senior Vice President and Chief Financial
Officer
Brian L. Schorr..................... 39 Director; Executive Vice President and General
Counsel
Eric D. Kogan....................... 34 Director, President
Francis T. McCarron................. 40 Senior Vice President -- Taxes
Stuart I. Rosen..................... 38 Vice President and Secretary
</TABLE>
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<PAGE>
In addition, at the Effective Time, pursuant to the Simpson Employment
Agreement, Mr. Simpson will be appointed the President and Chief Executive
Officer of the Surviving Corporation to replace Mr. Kogan as President. It is
also expected that the other officers of Cable Car will remain in the same
offices with the Surviving Corporation. Additional information concerning
Messrs. Barnes, Kogan, McCarron, Schorr and Rosen is incorporated herein by
reference from Triarc's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996, as amended by amendments thereto filed with the Commission on
April 30, 1997 and May 21, 1997. Additional information concerning Mr. Simpson
and the other current management of Cable Car is incorporated herein by
reference from Cable Car's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996, as amended by an amendment thereto filed with the Commission
on May 1, 1997, copies of which are attached hereto as Appendices A-1 and A-2,
respectively.
SIMPSON EMPLOYMENT AGREEMENT
Samuel M. Simpson, the President and Chief Executive Officer and a director
of Cable Car, currently has a three-year employment contract which provides for
an annual salary of $175,000, an annual bonus based on Cable Car's revenues and
earnings and certain other benefits. He has entered into an agreement with
Triarc which provides that, upon the Effective Time, he will, and Triarc will
cause the Surviving Corporation to, enter into the Simpson Employment Agreement,
which will supersede Mr. Simpson's existing employment agreement with Cable Car
and provide for Mr. Simpson's employment as President and Chief Executive
Officer of the Surviving Corporation and the Cable Car Subsidiaries, and a
representative for the Triarc Beverage Group for the western United States. The
Simpson Employment Agreement will have a three year term, subject to renewal for
additional one year periods. Mr. Simpson will receive an annual salary of
$284,300 per year, which is subject to increase, but not decrease during the
original term of the Simpson Employment Agreement in amounts determined by the
Board of Directors of the Surviving Corporation, as well as certain other
benefits.
Mr. Simpson will also be eligible to receive cash incentive compensation,
which for fiscal year 1997 is based on specified targets for Cable Car's net
sales and adjusted net income and which for each of fiscal years 1998, 1999 and
2000 is comprised of a bonus of $120,000 for such year should Cable Car's net
sales for such year exceed $25 million, $27.5 million and $30 million,
respectively. Mr. Simpson will be eligible to receive additional cash incentive
compensation commencing with fiscal year 1998 comparable to that of other senior
executives of Triarc's operating subsidiaries, based on Cable Car's and Mr.
Simpson's performance assessed for each fiscal year relative to objectives
agreed to in advance between Mr. Simpson and the Cable Car Board, taking into
account the financial profile of Cable Car compared to that of Triarc's other
operating subsidiaries. Mr. Simpson will also participate in Triarc's stock
option plan during the term of his employment in amounts comparable to that of
other senior executives of Triarc's operating subsidiaries, taking into account
the financial profile of Cable Car compared to that of Triarc's other operating
subsidiaries. Mr. Simpson will also be entitled to a $400,000 cash bonus upon
signing the Simpson Employment Agreement which is refundable to Cable Car on a
pro rata basis should he leave his employment prior to the first anniversary of
the Effective Time. The Simpson Employment Agreement also provides for the
payment of a death benefit to Mr. Simpson's estate upon his death in an amount
equal to one year of his then current base salary.
The Simpson Employment Agreement may be terminated upon Mr. Simpson's
death, in the event that he becomes Disabled (as defined in the Simpson
Employment Agreement), for 'cause' (as defined in the Simpson Employment
Agreement) or upon Mr. Simpson's resignation. If Mr. Simpson's employment with
Cable Car terminates prior to the end of the then current term under the Simpson
Employment Agreement by reason of his resignation or termination for cause, he
will agree not to engage in (including as an employee, agent, consultant,
manager, executive, owner or stockholder, except as a passive investor owning
less than a two percent interest in a publicly held company) in any business or
entity that is engaged in the beverage business for a period of 24 months, and
if such termination occurs prior to the second anniversary of the Effective
Time, he will be paid $10,000 per month during the term of the non-competition
period. If Mr. Simpson chooses not to extend the Simpson Employment Agreement in
accordance with its terms, he will agree not to engage in the beverage business
for a period of 18 months. Mr. Simpson will also agree that he will keep
confidential
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all nonpublic information relating to Cable Car and its subsidiaries and
affiliates for a period of four years after the termination of his employment.
Mr. Simpson's current employment agreement with Cable Car does not include
similar non-competition and confidentiality provisions.
CERTAIN RELATIONSHIPS AMONG
TRIARC, CABLE CAR AND THEIR AFFILIATES
Cable Car is party to a Stewart's Brands Distributing Agreement, dated
February 23, 1997, with Mr. Natural, Inc., a Delaware corporation and wholly
owned subsidiary of Snapple ('Mr. Natural'). Pursuant to this agreement, Cable
Car appointed Mr. Natural its exclusive distributor for Stewart's brand soft
drinks packaged in bottles and cans for all five boroughs of New York City and
Westchester County, New York. Triarc acquired all of the outstanding capital
stock of Snapple on May 22, 1997. See 'The Companies -- Recent
Developments -- Triarc.'
DESCRIPTION OF TRIARC CAPITAL STOCK
The authorized capital stock of Triarc consists of 100,000,000 shares of
Triarc Class A common stock (referred to in this section as the 'Triarc Class A
Common Stock'), 25,000,000 shares of Triarc Class B common stock (the 'Triarc
Class B Common Stock' and, together with the Triarc Class A Common Stock, the
'Triarc Common Shares') and 25,000,000 shares of Preferred Stock (the 'Triarc
Preferred Stock'). As of the close of business on September 28, 1997, there were
outstanding 24,037,013 shares of Triarc Class A Common Stock, 5,997,662 shares
of Triarc Class B Common Stock and no shares of Triarc Preferred Stock.
The relative preferences and rights of the Triarc capital stock are set
forth in the Triarc Charter. Set forth below is a summary description of the
material terms of such rights and preferences, which is qualified by reference
to the Triarc Charter.
TRIARC COMMON SHARES
The holders of shares of Triarc Class A Common Stock are entitled to one
vote for each share held on record on all matters on which Triarc stockholders
are entitled to vote, including the election of directors. Except as required by
Delaware law, the holders of shares of Triarc Class B Common Stock are not
entitled to vote.
Shares of Triarc Class A Common Stock and Triarc Class B Common Stock share
equally in any dividends or other distributions payable in either cash, capital
stock of Triarc (other than Triarc Class A Common Stock or Triarc Class B Common
Stock) or other property of Triarc when, as and if declared by the Triarc Board.
If a dividend or distribution payable in Triarc Common Shares is declared on the
Triarc Common Shares, such dividend or distribution shall be made to the holders
of shares of Triarc Class A Common Stock in the form of shares of Triarc Class A
Common Stock and shall be made to the holders of shares of Triarc Class B Common
Stock in the form of shares of Triarc Class B Common Stock.
No dividend, other than a stock dividend payable in Triarc Common Shares,
may be paid on the Triarc Common Shares if Triarc is in arrears on the payment
of dividends on any outstanding Triarc Preferred Stock.
In the event that Triarc shall liquidate, dissolve or be wound up, whether
voluntarily or involuntarily, to the extent assets remain after payment of
creditors in full and after there shall have been paid or set aside for all
Triarc Preferred Stock then outstanding the full preferential amounts to which
they are entitled, the net assets of Triarc remaining will be divided ratably
among the holders of the Triarc Class A Common Stock and the Triarc Class B
Common Stock. The merger or consolidation of Triarc with or into any other
corporation, the merger or consolidation of any other corporation with or into
Triarc, or the sale, lease or conveyance of all or substantially all of its
assets would not be deemed to be a liquidation, dissolution or winding up for
this purpose.
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The holders of Triarc Common Shares are not entitled as of right to
purchase or subscribe for any shares of stock of any class whether heretofore or
hereafter authorized or issued, whether issued for cash, property, services or
by way of a dividend.
Shares of Triarc Class A Common Stock are not convertible. Each share of
Triarc Class B Common Stock is convertible, on a one-to-one basis, into one
share of Triarc Class A Common Stock, provided that either (i) the holder of
such share upon conversion is not an affiliate or relative of Victor Posner, or
(ii) upon such conversion, such shares are placed into a voting trust and
certain other conditions are met.
TRIARC PREFERRED STOCK
The Triarc Charter authorizes the issuance of shares of 'blank check'
preferred stock, which will have such designations, rights and preferences as
may be determined from time to time by the Triarc Board. Accordingly, the Triarc
Board is empowered, without stockholder approval, to issue Triarc Preferred
Stock with dividend, liquidation, conversion, voting or other rights which may
adversely affect the voting power or other rights of the holders of Triarc
Common Shares. As of the date of this Proxy Statement/Prospectus, there are no
shares of Triarc Preferred Stock outstanding.
PRINCIPAL HOLDERS OF CABLE CAR COMMON STOCK
The following table sets the beneficial ownership as of September 30, 1997
by each person known by Cable Car to be the beneficial owner of more than 5% of
the outstanding shares of Cable Car Common Stock (constituting the only class of
capital stock of Cable Car), each director and 'named executive officer' (as
defined in Item 402(a)(3) of Regulation S-K) of Cable Car as of September 30,
1997, and all directors and officers of Cable Car as a group:
<TABLE>
<CAPTION>
AMOUNT OF SHARES AND
NAME AND ADDRESS OF BENEFICIAL OWNER NATURE OF OWNERSHIP(1) PERCENT OF CLASS
------------------------------------ ---------------------- ----------------
<S> <C> <C>
Triarc Companies, Inc. ....................................... 1,766,409(2) 19.7%
280 Park Avenue
New York, NY 10017
Samuel M. Simpson............................................. 1,104,877(3) 12.35
James P. McCloskey............................................ 0
William H. Rutter............................................. 673,732(4) 7.53
Myron D. Stadler.............................................. 25,000 *
Directors and Executive Officers as group (4 persons)......... 1,803,609 20.15%
</TABLE>
- ------------
* Less than 1%
(1) The amounts reflected do not include options to purchase Cable Car Common
Stock. The foregoing persons have each indicated that they intend to convert
their Cable Car Options into options for Triarc Common Stock.
(2) Comprised of the Subject Stock under the Stockholders Agreement, all of
which shares are also reflected in the number of shares shown as held by
Messrs. Simpson and Rutter.
(3) Includes 381,234 shares held by Mr. Simpson's spouse as to which he
disclaims beneficial ownership.
(4) Includes 7,200 shares held by Mr. Rutter's spouse as to which he disclaims
beneficial ownership.
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<PAGE>
PRINCIPAL HOLDERS OF VOTING SECURITIES
OF TRIARC COMPANIES, INC.
The following table sets forth the beneficial ownership as of September 28,
1997 by each person known by Triarc 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 Triarc), each director and 'named executive officer'
(as defined in Item 402(a)(3) of Regulation S-K) of Triarc as of September 28,
1997, and all directors and executive officers as a group.
<TABLE>
<CAPTION>
AMOUNT OF SHARES AND
NAME AND ADDRESS OF BENEFICIAL OWNER NATURE OF OWNERSHIP(1) PERCENT OF CLASS
- ----------------------------------------------------------------- ---------------------- ----------------
<S> <C> <C>
DWG Acquisition Group, L.P. ..................................... 5,982,867(2) 24.9%
1201 North Market Street
Wilmington, DE 19801
Nelson Peltz .................................................... 6,975,767(2)(3)(4)(5) 27.9
280 Park Avenue
New York, NY 10017
Peter W. May .................................................... 6,653,000(2)(3)(6) 27.0
280 Park Avenue
New York, NY 10017
William Ehrman .................................................. 1,500,793(7)(8) 6.2
Frederick Ketcher
Jonas Gertsl
Frederic Greenberg
James McLaren
300 Park Avenue
New York, NY 10022
Hugh L. Carey.................................................... 28,036(9) *
Clive Chajet..................................................... 27,300(10) *
Stanley R. Jaffe................................................. 29,028(9) *
Joseph A. Levato................................................. 148,000(11) *
David E. Schwab II............................................... 23,000(9) *
Raymond S. Troubh................................................ 39,500(9) *
Gerald Tsai, Jr.................................................. 39,306(12) *
Brian L. Schorr.................................................. 111,990(13) *
John L. Cohlan................................................... 88,833(14) *
Eric D. Kogan.................................................... 68,000(15) *
Directors and Executive Officers as a group (22 persons)......... 8,668,460 32.8%
</TABLE>
- ------------
* Less than 1%
(1) Except as otherwise indicated, each person has sole voting and dispositive
power with respect to such shares.
(2) The Company is informed that DWG Acquisition has pledged such shares to a
financial institution on behalf of Messrs. Peltz and May to secure loans
made to them.
(3) Includes 5,982,867 shares held by DWG Acquisition, of which Mr. Peltz and
Mr. May are the sole general partners.
(4) Includes 200 shares owned by a family trust of which Mr. Peltz is a general
partner and 800 shares owned by minor children of Mr. Peltz. Mr. Peltz
disclaims beneficial ownership of these shares.
(5) Includes options to purchase 965,000 shares of Triarc Class A Common Stock
which have vested or will vest within 60 days of September 28, 1997.
(6) Includes options to purchase 643,333 shares of Triarc Class A Common Stock
which have vested or will vest within 60 days of September 28, 1997.
(footnotes continued on next page)
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(footnotes continued from previous page)
(7) The information set forth herein with respect to Messrs. Ehrman, Greenberg,
Ketcher, Gertsl and McLaren is based solely on information contained in a
Schedule 13D, dated July 16, 1996, filed pursuant to the Securities
Exchange Act of 1934, as amended.
(8) Includes an aggregate of 1,365,793 shares of Triarc Class A Common Stock
that Messrs. Ehrman, Ketcher, Gertsl, Greenberg and McLaren may be deemed
to beneficially own as general partners of EGS Associates, L.P., a Delaware
limited partnership, EGS Partners, L.L.C., a Delaware limited liability
company, Bev Partners, L.P., a Delaware limited partnership, and Jonas
Partners, L.P., a Delaware limited partnership. Also includes (i) 55,150
shares of Triarc Class A Common Stock owned directly by Mr. Ehrman and
39,150 shares of Triarc Class A Common Stock owned by members of Mr.
Ehrman's immediate family; (ii) 23,600 shares of Triarc Class A Common
Stock owned directly by Mr. Ketcher and 1,100 shares of Triarc Class A
Common Stock owned by a member of Mr. Ketcher's immediate family and his
mother-in-law, (iii) 2,500 shares of Triarc Class A Common Stock owned
directly by Mr. Gertsl and 8,500 shares of Triarc Class A Common Stock
owned by a member of Mr. Gertsl's immediate family; and (iv) 2,000 shares
of Triarc Class A Common Stock owned directly by Mr. Greenberg and 3,000
shares of Triarc Class A Common Stock owned by a member of Mr. Greenberg's
immediate family.
(9) Includes options to purchase 19,500 shares of Triarc Class A Common Stock
which have vested or will vest within 60 days of September 28, 1997.
(10) Includes options to purchase 19,500 shares of Triarc Class A Common Stock
which have vested or will vest within 60 days of September 28, 1997 and
1,300 shares owned by Mr. Chajet's wife, as to which shares Mr. Chajet
disclaims beneficial ownership.
(11) Includes options to purchase 120,000 shares of Triarc Class A Common Stock
which have vested or will vest within 60 days of September 28, 1997.
(12) Includes options to purchase 22,500 shares of Triarc Class A Common Stock
which have vested or will vest within 60 days of September 28, 1997.
(13) Includes options to purchase 105,000 shares of Triarc Class A Common Stock
which have vested or will vest within 60 days of September 28, 1997.
(14) Includes options to purchase 76,333 shares of Triarc Class A Common Stock
which have vested or will vest within 60 days of September 28, 1997. Mr.
Cohlan resigned as an officer of Triarc as of September 1, 1997.
(15) Includes options to purchase 59,000 shares of Triarc Class A Common Stock
which have vested or will vest within 60 days of September 28, 1997.
------------------------
The foregoing table does not include 5,997,622 shares of Triarc's
non-voting Class B Common Stock owned by Victor Posner and certain affiliates of
Victor Posner as a result of a Settlement Agreement dated January 9, 1995 by and
among Victor Posner, certain affiliates of Victor Posner and Triarc. For
information regarding this Settlement Agreement, see 'Item 1.
Business -- Introduction -- New Ownership; Posner Settlement' in Triarc's Annual
Report on Form 10-K for the year ended December 31, 1995. The shares of Triarc
Class B Common Stock can be converted without restriction into an equal number
of shares of Triarc Class A Common Stock following a transfer to a non-affiliate
of Mr. Posner. Triarc has certain rights of first refusal if such shares are
proposed to be sold to an unaffiliated party. If the 5,997,622 currently
outstanding shares of the Triarc Class B Common Stock were converted into shares
of Triarc Class A Common Stock, such shares would constitute approximately 20.0%
of the then outstanding shares of Triarc Class A Common Stock as of September
28, 1997. None of the directors or officers of Triarc beneficially owned any
Triarc Class B Common Stock as of September 28, 1997. Except for the
arrangements relating to the shares described in footnote (2) to the foregoing
table, there are no arrangements known to Triarc the operation of which may at a
subsequent date result in a change in control of Triarc.
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TRIARC COMPANIES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro forma (i) condensed consolidated balance sheet
of Triarc Companies, Inc. and subsidiaries (the 'Company') as of June 29, 1997
and (ii) condensed consolidated statement of operations of the Company for the
year ended December 31, 1996 and for the six months ended June 29, 1997 have
been prepared by adjusting such financial statements, as derived and condensed,
as applicable, from (i) the consolidated financial statements in Triarc's Annual
Report on Form 10-K for the fiscal year ended December 31, 1996 (the 'Triarc
Form 10-K'), audited by Deloitte & Touche LLP and (ii) the unaudited condensed
consolidated financial statements in Triarc's Quarterly Report on Form 10-Q for
the fiscal quarter ended June 29, 1997 (the 'Triarc Form 10-Q'). Such
adjustments to the condensed consolidated balance sheet as of June 29, 1997
reflect first, the C&C Sale on July 18, 1997 as previously reported in Triarc's
Current Report on Form 8-K filed on August 4, 1997 and second, the proposed
Merger (referred to in these financial statements as the 'Cable Car
Acquisition'). Such adjustments for the condensed consolidated statement of
operations for the year ended December 31, 1996 and the six months ended June
29, 1997 reflect first, the 1997 Transactions, consisting of (a) the Arby's
Restaurants Sale on May 5, 1997 as previously reported in Triarc's Current
Report on Form 8-K/A filed on August 4, 1997, (b) the C&C Sale (collectively
with the Arby's Restaurants Sale, the 'Sales') and (c) the Snapple Acquisition
on May 22, 1997, and second, the Cable Car Acquisition.
The combined statements of certain revenues and operating expenses of
Snapple for the year ended December 31, 1996 and for the period from January 1,
1997 to the May 22, 1997 Acquisition date included in the unaudited pro forma
condensed consolidated financial statements have been derived and condensed, as
applicable, from (i) the combined financial statements for the year ended
December 31, 1996 (the 'Snapple 1996 Financial Statements') audited by Arthur
Andersen LLP and (ii) the combination of (a) unaudited combined financial
statements for the three months ended March 31, 1997 (the 'Snapple March 1997
Financial Statements' and collectively with the Snapple 1996 Financial
Statements, the 'Snapple Financial Statements') and (b) the Snapple unaudited
combined statement of certain revenues and operating expenses for the period
from April 1, 1997 to May 22, 1997 (the 'Snapple May 22, 1997 Financial
Statements'). The Snapple Financial Statements are included in Triarc's Current
Report on Form 8-K/A filed on August 5, 1997. The Snapple May 22, 1997 Financial
Statements were provided to the Company by Quaker.
The consolidated balance sheet of Cable Car as of June 30, 1997 and
consolidated statements of operations of Cable Car for the year ended December
31, 1996 and for the six months ended June 30, 1997 included in the unaudited
pro forma condensed consolidated financial statements have been derived and
condensed, as applicable, from: (i) the consolidated financial statements for
the year ended December 31, 1996 audited by Price Waterhouse L.L.P. as set forth
in Cable Car's Annual Report on Form 10-K for the fiscal year ended December 31,
1996, a copy of which is attached hereto as Appendix A-1, and (ii) the unaudited
consolidated financial statements for the six months ended June 30, 1997 as set
forth in Cable Car's Quarterly Report on Form 10-Q for the fiscal quarter ended
June 30, 1997, a copy of which is attached hereto as Appendix A-3.
The allocation of the purchase price of Snapple and the pro forma
adjustments for the allocation of the purchase price of Cable Car on the pro
forma condensed consolidated balance sheet and the effect thereof on pro forma
adjustments to the pro forma condensed consolidated statements of operations are
based on preliminary estimates and are subject to finalization. The pro forma
condensed consolidated financial statements have been prepared as if the Cable
Car Acquisition and the C&C Sale had occurred as of June 29, 1997 for the pro
forma condensed consolidated balance sheet and all of the above transactions had
occurred as of January 1, 1996 for the pro forma condensed consolidated
statements of operations. Such pro forma adjustments are described in the
accompanying notes to the pro forma condensed consolidated balance sheet and
statements of operations which should be read in conjunction with such
statements. The Unaudited Pro Forma Condensed Consolidated Financial Statements
should also be read in conjunction with the Company's audited consolidated
financial statements and management's discussion and analysis of financial
condition and results of operations appearing in the Triarc Form 10-K, the
Company's unaudited condensed consolidated financial
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<PAGE>
statements and management's discussion and analysis of financial condition and
results of operations appearing in the Triarc Form 10-Q, the Snapple Financial
Statements and the Cable Car Financial Statements. The Unaudited Pro Forma
Condensed Consolidated Financial Statements do not purport to be indicative of
the actual financial position or results of operations of the Company had such
transactions actually been consummated on June 29, 1997 and January 1, 1996,
respectively, or of the future financial position or results of operations of
the Company.
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TRIARC COMPANIES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 29, 1997
<TABLE>
<CAPTION>
ADJUSTMENTS
ADJUSTMENTS PRO FORMA CABLE CAR FOR THE
AS FOR THE C&C FOR THE AS CABLE CAR
REPORTED SALE C&C SALE REPORTED ACQUISITION PRO FORMA
---------- ----------- ---------- --------- ----------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................... $ 71,349 $ 750(a) $ 72,099 $1,229 $ -- $ 73,328
Short-term investments...................... 59,724 -- 59,724 -- -- 59,724
Receivables, net............................ 133,570 703(a) 134,273 2,694 -- 136,967
Inventories................................. 87,669 -- 87,669 3,247 -- 90,916
Deferred income tax benefit................. 43,647 -- 43,647 520 -- 44,167
Prepaid expenses and other current assets... 12,039 -- 12,039 86 -- 12,125
---------- ----------- ---------- --------- ----------- ----------
Total current assets................... 407,998 1,453 409,451 7,776 -- 417,227
Investment in Cable Car.......................... -- -- -- -- 34,601(i) --
(34,601)(ii)
Properties, net.................................. 121,926 (2)(a) 121,924 128 -- 122,052
Unamortized costs in excess of net assets of
acquired companies............................. 290,593 -- 290,593 550 20,117(ii) 311,260
Trademarks....................................... 264,633 (1,575)(a) 263,058 193 11,107(ii) 274,358
Deferred costs, deposits and other assets........ 71,840 5,300(a) 77,140 121 (21)(ii) 77,240
---------- ----------- ---------- --------- ----------- ----------
$1,156,990 $ 5,176 $1,162,166 $8,768 $ 31,203 $1,202,137
---------- ----------- ---------- --------- ----------- ----------
---------- ----------- ---------- --------- ----------- ----------
</TABLE>
71
<PAGE>
<PAGE>
TRIARC COMPANIES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET -- (CONTINUED)
JUNE 29, 1997
<TABLE>
<CAPTION>
ADJUSTMENTS PRO FORMA
AS FOR THE FOR THE
REPORTED C&C SALE C&C SALE
---------- ----------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS'
EQUITY DEFICIT
Current liabilities:
Current portion of
long-term debt......... $ 15,777 $ -- $ 15,777
Accounts payable......... 60,905 -- 60,905
Accrued expenses and
other current
liabilities............ 177,879 681(a) 178,736
176(a)
---------- ----------- ----------
Total current
liabilities....... 254,561 857 255,418
Long-term debt................ 767,737 -- 767,737
Deferred income taxes......... 78,834 -- 78,834
Deferred income and other
liabilities................. 50,395 4,015(a) 54,410
Minority interests............ 29,859 -- 29,859
Stockholders' equity
(deficit):
Common stock............. 3,398 -- 3,398
Additional paid-in
capital................ 163,752 -- 163,752
Accumulated deficit...... (147,124) 304(a) (146,820)
Treasury stock........... (45,000) -- (45,000)
Other.................... 578 -- 578
---------- ----------- ----------
Total stockholders'
equity
(deficit)......... (24,396) 304 (24,092)
---------- ----------- ----------
$1,156,990 $ 5,176 $1,162,166
---------- ----------- ----------
---------- ----------- ----------
<CAPTION>
CABLE ADJUSTMENTS
CAR FOR THE
AS CABLE CAR
REPORTED ACQUISITION PRO FORMA
-------- ----------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS'
EQUITY DEFICIT
Current liabilities:
Current portion of
long-term debt.........$ -- $ -- $ 15,777
Accounts payable......... 795 -- 61,700
Accrued expenses and
other current
liabilities............ 1,625 1,200(i) 181,561
-------- ----------- ----------
Total current
liabilities....... 2,420 1,200 259,038
Long-term debt................ -- -- 767,737
Deferred income taxes......... (404) 3,354(ii) 81,784
Deferred income and other
liabilities................. -- -- 54,410
Minority interests............ -- -- 29,859
Stockholders' equity
(deficit):
Common stock............. 90 157(i) 3,555
(90)(ii)
Additional paid-in
capital................ 9,899 33,244(i) 196,996
(9,899)(ii)
Accumulated deficit...... (3,208) 3,208(ii) (146,820)
Treasury stock........... (29) 29(ii) (45,000)
Other.................... -- -- 578
-------- ----------- ----------
Total stockholders'
equity
(deficit)......... 6,752 26,649 9,309
-------- ----------- ----------
$ 8,768 $31,203 $1,202,137
-------- ----------- ----------
-------- ----------- ----------
</TABLE>
72
<PAGE>
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
BALANCE SHEET
C&C SALE PRO FORMA ADJUSTMENTS
(a) To reflect the C&C Sale consisting of the C&C trademark and equipment
related to the operation of the C&C beverage line to Kelco for the
proceeds of $750,000 in cash and an $8,650,000 note (the 'Note') with
a discounted value of $6,003,000 consisting of $4,373,000 relating to
the C&C Sale and $2,380,000 relating to future revenues. The Note is
classified $703,000 as current receivables and $5,300,000 as
non-current deferred costs, deposits and other assets. The $2,380,000
of deferred revenues consists of (i) $2,096,000 relating to minimum
take-or-pay commitments for sales of concentrate for C&C products to
Kelco and (ii) $284,000 relating to future technical services to be
performed for Kelco by the Company, both under a contract with Kelco.
Such deferred revenues are classified $231,000 as 'Accrued expenses
and other current liabilities' and $2,149,000 as non-current 'Deferred
income and other liabilities'. The excess of the proceeds of
$4,373,000 over the carrying value of the C&C trademark of $1,575,000
and the related equipment of $2,000 resulted in a pretax gain of
$2,796,000 which is being recognized pro-rata between the gain on sale
and the carrying value of the assets sold based on the cash proceeds
and collections under the Note since realization of the Note is not
yet fully assured. As such, $480,000 of such pretax gain has been
recognized currently which, less taxes of $176,000 at the incremental
income tax rate of 36.6%, results in a net gain of $304,000. The
remaining $2,316,000 has been deferred, of which $450,000 is
classified as 'Accrued expenses and other current liabilities' and
$1,866,000 is classified as non-current 'Deferred income and other
current liabilities'.
CABLE CAR ACQUISITION PRO FORMA ADJUSTMENTS
(i) To reflect the Company's investment in Cable Car of $34,601,000
consisting of (a) the assumed value of $31,727,000 as of a recent date
of 1,566,731 shares (including 25,830 shares in respect of 150,000
shares of Cable Car Common Stock to be issued prior to the Effective
Time in connection with the amendment of Cable Car's license
agreements with Stewart's Restaurants) of Triarc Common Stock, par
value $.10 per share, to be issued in the Merger (based upon an
assumed average Triarc share price of $20 1/4, which was the closing
market price for Triarc Common Stock as reported in the consolidated
transaction reporting system as of September 29, 1997 (the 'September
29, 1997 Market Price'), (b) the assumed value of $2,274,000 of
155,411 options to purchase an equal number of shares of Triarc Common
Stock with below market option prices (as of the assumed issuance date
of September 29, 1997) based upon the September 29, 1997 Market Price
for Triarc Common Stock issued in exchange for all of the outstanding
Cable Car Options and (c) $600,000 of an aggregate $1,200,000 of
estimated expenses, of which the remaining $600,000 is attributable to
this registration of the 1,566,731 shares of Triarc Common Stock under
the Securities Act and, accordingly, charged to 'Additional paid-in
capital'. The number of shares of Triarc Common Stock actually issued
in the Merger may vary. See 'The Proposed Merger and Related
Matters -- Conversion of Shares of Cable Car Stock'.
73
<PAGE>
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
BALANCE SHEET -- (CONTINUED)
(ii) To reflect the preliminary estimated allocation of the purchase price of
Cable Car as follows (in thousands):
<TABLE>
<CAPTION>
DEBIT
(CREDIT)
--------
<S> <C>
Adjust 'Trademarks' to write up the trademarks and tradenames ($7,000) and distribution
network ($4,107) to fair value in accordance with an independent appraisal................. $ 11,107
Adjust 'Deferred costs, deposits and other assets' to eliminate organization costs........... (21)
Adjust 'Deferred income taxes' for the adjustments above and the effect of the converted
Cable Car Options in (i) above............................................................. (3,354)
Eliminate the 'Common stock' ($90), 'Additional paid-in-capital' ($9,899), Accumulated
deficit' ($3,208) and 'Treasury stock' ($29) of Cable Car.................................. 6,752
Eliminate the Company's investment in Cable Car.............................................. (34,601)
Adjust 'Unamortized costs in excess of net assets of acquired companies' to eliminate the
historical Goodwill of Cable Car and record the excess of the Company's investment in Cable
Car over the adjusted net assets of Cable Car.............................................. 20,117
--------
$ --
--------
--------
</TABLE>
74
<PAGE>
<PAGE>
TRIARC COMPANIES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
ADJUSTMENTS PRO FORMA
FOR THE SALES FOR THE SALES
AS AND THE SNAPPLE AND THE SNAPPLE
REPORTED SNAPPLE ACQUISITION ACQUISITION
-------- --------- --------------- ---------------
(IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Revenues:
Net sales................. $931,920 $ 550,800 $(228,031)(a) $ 1,243,526
444(f)
(11,607)(g)
Royalties, franchise fees
and other revenues...... 57,329 -- 9,121(b) 66,510
60(f)
-------- --------- --------------- ---------------
989,249 550,800 (230,013) 1,310,036
-------- --------- --------------- ---------------
Costs and expenses:
Cost of sales............. 652,109 352,900 (187,535)(a) 807,354
178(f)
(10,298)(g)
Advertising, selling and
distribution............ 139,662 188,400 (24,764)(a) 294,770
(1,702)(g)
(6,826)(j)
General and
administrative.......... 131,357 93,900 (9,913)(a) 169,588
(434)(g)
(45,322)(k)
Reduction in carrying
value of long-lived
assets impaired or to be
disposed of............. 64,300 -- (58,900)(a) 5,400
Facilities relocation and
corporate
restructuring........... 8,800 16,600 (2,400)(a) 23,000
-------- --------- --------------- ---------------
996,228 651,800 (347,916) 1,300,112
-------- --------- --------------- ---------------
Operating profit (loss)... (6,979) (101,000) 117,903 9,924
Interest expense.............. (73,379) -- 8,421(c) (93,505)
(273)(f)
(28,274)(m)
Gain on sale of businesses,
net......................... 77,000 -- -- 77,000
Other income, net............. 7,996 -- 16(g) 8,695
683(h)
-------- --------- --------------- ---------------
Income (loss) before
income taxes and
minority interests...... 4,638 (101,000) 98,476 2,114
Provision for income taxes.... (11,294) -- (28,406)(e) (11,321)
(578)(i)
28,957(n)
Minority interests in income
of consolidated
subsidiary.................. (1,829) -- -- (1,829)
-------- --------- --------------- ---------------
Income (loss) before
extraordinary items..... $ (8,485) $(101,000) $ 98,449 $ (11,036)
-------- --------- --------------- ---------------
-------- --------- --------------- ---------------
Income (loss) before
extraordinary items per
share................... $ (.28) $ (.37)
-------- ---------------
-------- ---------------
<CAPTION>
ADJUSTMENTS
CABLE CAR FOR THE
AS CABLE CAR
REPORTED ACQUISITION PRO FORMA
---------- ----------- ----------
(IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
Revenues:
Net sales.................$ 18,873 $ -- $1,262,399
Royalties, franchise fees
and other revenues...... -- -- 66,510
---------- ----------- ----------
18,873 -- 1,328,909
---------- ----------- ----------
Costs and expenses:
Cost of sales............. 13,671 -- 821,025
Advertising, selling and
distribution............ 1,994 -- 296,764
General and
administrative.......... 1,197 1,239(i) 172,024
Reduction in carrying
value of long-lived
assets impaired or to be
disposed of............. -- -- 5,400
Facilities relocation and
corporate
restructuring........... -- -- 23,000
---------- ----------- ----------
16,862 1,239 1,318,213
---------- ----------- ----------
Operating profit (loss)... 2,011 (1,239) 10,696
Interest expense.............. -- -- (93,505)
Gain on sale of businesses,
net......................... -- -- 77,000
Other income, net............. 53 -- 8,748
---------- ----------- ----------
Income (loss) before
income taxes and
minority interests...... 2,064 (1,239) 2,939
Provision for income taxes.... (807) 471(ii) (11,657)
Minority interests in income
of consolidated
subsidiary.................. -- -- (1,829)
---------- ----------- ----------
Income (loss) before
extraordinary items.....$ 1,257 $ (768) $ (10,547)
---------- ----------- ----------
---------- ----------- ----------
Income (loss) before
extraordinary items per
share................... $ (.34)(iii)
----------
----------
</TABLE>
75
<PAGE>
<PAGE>
TRIARC COMPANIES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 29, 1997
<TABLE>
<CAPTION>
ADJUSTMENTS PRO FORMA ADJUSTMENTS
PREACQUISITION FOR THE SALES FOR THE SALES CABLE CAR FOR THE
AS PERIOD OF AND THE SNAPPLE AND THE SNAPPLE AS CABLE CAR
REPORTED SNAPPLE ACQUISITION ACQUISITION REPORTED ACQUISITION
-------- -------------- --------------- --------------- --------- -----------
(IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Net sales...................... $401,882 $ 172,400 $ (74,195)(a) $ 493,930 $12,747 $ --
222(f)
(6,379)(g)
Royalties, franchise fees and
other revenues............... 29,641 -- 2,968(b) 32,639 -- --
30(f)
-------- -------------- --------------- --------------- --------- -----------
431,523 172,400 (77,354) 526,569 12,747 --
-------- -------------- --------------- --------------- --------- -----------
Costs and expenses:
Cost of sales.................. 255,406 100,600 (59,127)(a) 291,180 9,124 --
89(f)
(5,788)(g)
Advertising, selling and
distribution................. 80,792 58,700 (8,145)(a) 127,944 1,386 --
(396)(g)
(3,007)(j)
General and administrative..... 66,872 28,200 (3,319)(a) 81,542 997 612(i)
(256)(g)
(9,955)(k)
Facilities relocation and
corporate restructuring...... 7,350 -- (5,597)(a) 1,753 -- --
Acquisition related............ 32,440 -- -- 32,440 -- --
Loss on assets held for sale... -- 1,414,600 (1,414,600)(l) -- -- --
-------- -------------- --------------- --------------- --------- -----------
442,860 1,602,100 (1,510,101) 534,859 11,507 612
-------- -------------- --------------- --------------- --------- -----------
Operating profit (loss)........ (11,337) (1,429,700) 1,432,747 (8,290) 1,240 (612)
Interest expense................... (33,963) -- 2,756(c) (42,036) -- --
140(f)
(10,969)(m)
Other income, net.................. 6,912 -- 1,798(d) 8,427 31 --
69(g)
(352)(h)
-------- -------------- --------------- --------------- --------- -----------
Income (loss) before income
taxes and minority
interests.................... (38,388) (1,429,700) 1,426,189 (41,899) 1,271 (612)
Benefit from (provision for) income
taxes............................ 9,213 -- (3,701)(e) 10,007 (578) 233(ii)
(184)(i)
4,679(n)
Minority interests in income of
consolidated subsidiary.......... (3,171) -- -- (3,171) -- --
-------- -------------- --------------- --------------- --------- -----------
Income (loss) before
extraordinary items.......... $(32,346) $ (1,429,700) $ 1,426,983 $ (35,063) $ 693 $(379)
-------- -------------- --------------- --------------- --------- -----------
-------- -------------- --------------- --------------- --------- -----------
Income (loss) before
extraordinary items per
share........................ $ (1.08) $ (1.17)
-------- ---------------
-------- ---------------
<CAPTION>
PRO
FORMA
--------
(IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C>
Revenues:
Net sales...................... $506,677
Royalties, franchise fees and
other revenues............... 32,639
--------
539,316
--------
Costs and expenses:
Cost of sales.................. 300,304
Advertising, selling and
distribution................. 129,330
General and administrative..... 83,151
Facilities relocation and
corporate restructuring...... 1,753
Acquisition related............ 32,440
Loss on assets held for sale... --
--------
546,978
--------
Operating profit (loss)........ (7,662)
Interest expense................... (42,036)
Other income, net.................. 8,458
--------
Income (loss) before income
taxes and minority
interests.................... (41,240)
Benefit from (provision for) income
taxes............................ 9,662
Minority interests in income of
consolidated subsidiary.......... (3,171)
--------
Income (loss) before
extraordinary items.......... $(34,749)
--------
--------
Income (loss) before
extraordinary items per
share........................ $ (1.10)(iii)
--------
--------
</TABLE>
76
<PAGE>
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
ARBY'S RESTAURANTS SALE PRO FORMA ADJUSTMENTS
(a) To reflect the elimination of the sales, cost of sales, advertising,
selling and distribution expenses and allocated general and
administrative expenses, the reduction in carrying value of long-lived
assets impaired or to be disposed of for the year ended December 31,
1996 related to the sold restaurants and the portion of the facilities
relocation and corporate restructuring charge associated with
restructuring the restaurant segment in connection with the Arby's
Restaurants Sale. The allocated general and administrative expenses
reflect the portion of the Company's total general and administrative
expenses allocable to the operating results associated with the
restaurants sold as determined by management of the Company. Such
allocated amounts consist of (i) salaries, bonuses, travel and
entertainment expenses, supplies, training and other expenses related
to area managers who had responsibility for the day-to-day operation
of the sold restaurants and (ii) the portion of general corporate
overhead (e.g. accounting, human resources, marketing, etc.) estimated
to be avoided as a result of the Company no longer operating
restaurants. Since the Company no longer owns Arby's restaurants but
continues to operate as an Arby's franchisor, it is undertaking a
reorganization of its restaurant segment eliminating 65 positions in
its corporate and field administrative offices and significantly
reducing leased office space. The effect of the elimination of income
and expenses of the sold restaurants is significantly greater in the
year ended December 31, 1996 as compared with the six months ended
June 29, 1997 principally due to two 1996 eliminations which did not
recur in the 1997 period for (i) the $58,900,000 reduction in carrying
value of long-lived assets associated with the restaurants sold and
(ii) depreciation and amortization on the long-lived restaurant assets
sold, which had been written down to their estimated fair values as of
December 31, 1996 and were no longer depreciated or amortized while
they were held for sale.
(b) To reflect royalties on the sales of the sold restaurants at the rate
of 4%.
(c) To reflect a reduction to interest expense relating to the debt
assumed by RTM.
(d) To reflect the elimination of the $2,342,000 loss on sale of
restaurants and a $544,000 (only the portion related to the restaurant
headquarters) gain on termination of a portion of the Fort Lauderdale,
Florida headquarters lease for space no longer required by the
restaurant segment as a result of the Arby's Restaurants Sale recorded
in the six months ended June 29, 1997.
(e) To reflect the income tax effects of the above at the incremental
income tax rate of 38.9%.
C&C SALE PRO FORMA ADJUSTMENTS
(f) To reflect (i) realization of deferred revenues based on the portion
of the minimum take-or-pay commitment for sales of concentrate for C&C
products to Kelco to be fulfilled and fees related to the technical
services to be performed, both under the contract with Kelco, (ii)
imputation of interest on the deferred revenues and (iii) recognition
of the estimated cost of the concentrate to be sold.
(g) To reflect the elimination of sales, cost of sales, advertising,
selling and distribution expenses, general and administrative expenses
and other expense related to the C&C beverage line.
(h) To reflect accretion of the discount on the portion of the Note
relating to the C&C Sale.
(i) To reflect the income tax effects of the above at the incremental
income tax rate of 36.6%.
77
<PAGE>
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS -- (CONTINUED)
SNAPPLE ACQUISITION PRO FORMA ADJUSTMENTS
(j) Represents adjustments to 'Advertising, selling and distribution'
expenses as follows (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, 1996 JUNE 29, 1997
----------------- ------------------
<S> <C> <C>
Record (reverse) net purchases (depreciation) of refrigerated
display cases expensed when purchased and placed in
service..................................................... $ 3,174 $ (879)
Reverse reported take-or-pay expense for obligations
associated with long-term production contracts as a result
of adjustment to fair value................................. (10,000) (2,128)
----------------- ----------
$(6,826) $(3,007)
----------------- ----------
----------------- ----------
</TABLE>
(k) Represents adjustments to 'General and administrative' expenses as
follows (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, 1996 JUNE 29, 1997
----------------- ------------------
<S> <C> <C>
Record amortization of trademarks and tradenames of $210,000
over an estimated life of 35 years.......................... $ 6,000 $ 2,334
Record amortization of Goodwill of $88,942 over an estimated
life of 35 years............................................ 2,541 989
Reverse reported amortization of intangibles for which no
amortization was recorded subsequent to March 31, 1997 when
they were written down to their estimated fair values....... (54,200) (13,400)
Record amortization relating to the excess of fair value of an
equity investment over the underlying book value over an
estimated life of 35 years.................................. 337 122
----------------- ------------------
$(45,322) $ (9,955)
----------------- ------------------
----------------- ------------------
</TABLE>
(l) To reverse the historical loss on sale of assets for the six months
ended June 29, 1997 related to the reduction of the carrying value of
Snapple in connection with its sale to Triarc.
(m) Represents adjustments to 'Interest expense' as follows (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, 1996 JUNE 29, 1997
----------------- ------------------
<S> <C> <C>
Record interest expense at weighted average rate of 10.2% on
$330,000 of borrowings associated with the Credit
Agreement................................................... $(33,424) $(12,811)
Record amortization on $11,200 of deferred financing costs
associated with the Credit Agreement........................ (1,889) (713)
Reverse reported interest expense on Mistic's former bank
facility.................................................... 6,086 2,231
Reverse reported amortization of deferred financing costs
associated with Mistic's former bank facility............... 953 324
----------------- ------------------
$(28,274) $(10,969)
----------------- ------------------
----------------- ------------------
</TABLE>
78
<PAGE>
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS -- (CONTINUED)
(n) Represents adjustments to 'Benefit from (provision for) income taxes'
(in thousands):
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, 1996 JUNE 29,1997
----------------- ------------------
<S> <C> <C>
To reflect an income tax benefit on the adjusted historical
pretax loss at 39% (exclusive of nondeductible Goodwill
write-off and/or amortization) since no income tax benefit
is reflected in the reported historical results of
operations.................................................. $26,286 $ 65,208
To reflect the estimated income tax effect of the above
adjustments (exclusive of nondeductible Goodwill write-off
and/or amortization) at 39%................................. 2,671 (60,529)
----------------- ----------
$28,957 $ 4,679
----------------- ----------
----------------- ----------
</TABLE>
CABLE CAR ACQUISITION PRO FORMA ADJUSTMENTS
(i) Represents adjustments to 'General and administrative' expenses as
follows (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, 1996 JUNE 29, 1997
----------------- ------------------
<S> <C> <C>
Record amortization of Goodwill of $20,667 over an estimated
useful life of 25 years..................................... $ 827 $413
Record amortization of trademarks and tradenames and
distribution network of $11,300 over an estimated useful
life of 25 years............................................ 452 226
Reverse reported amortization of intangibles.................. (40) (27)
------- ------
$1,239 $612
------- ------
------- ------
</TABLE>
(ii) To reflect the income tax effects of the above at the incremental
income tax rate of 38%.
(iii) The loss before extraordinary items per share has been determined by
dividing the loss before extraordinary items by the weighted average
shares outstanding (29,898,000 and 29,931,000 for the year ended
December 31, 1996 and the six-month period ended June 29, 1997,
respectively) plus the 1,567,000 shares to be issued in connection
with the Merger.
INTEGRATION OF ACQUISITIONS
The accompanying pro forma condensed consolidated statements of operations
do not reflect cost savings that the Company believes it will achieve from
changes in operating strategies subsequent to the acquisitions of Snapple and
Cable Car and operational synergies with Mistic. Such savings include cost
reductions in domestic advertising and marketing and general and administrative
expenses and more cost-efficient international operations. With respect to
Snapple's domestic advertising, the Company plans to reduce such expenditures to
approximately $1.90 per case from the pre-Snapple Acquisition 1996 level of
approximately $2.65 per case through elimination of programs, such as product
giveaways, which it considers non-effective, and the reduction of advertising
development costs including talent, production and agency costs. The Company
believes it can achieve such levels since the 1996 advertising and marketing
levels at Mistic were approximately $1.56 per case. Domestic general and
administrative expenses relating to Snapple are being reduced through space
reductions and elimination of excess personnel. The corporate office facilities
related to Snapple have been reduced from approximately 50,000 square feet at
the Quaker corporate facility to approximately 12,500 square feet at the Triarc
Beverage Group in White Plains, New York. Further, the Company has reduced
administrative personnel, facilitated in part by the integration with Mistic.
With respect to international operations, Snapple incurred significant losses in
1996. The Company intends to rationalize its international advertising and
marketing and general and administrative expenses similar to its domestic
operations to eliminate such losses.
79
<PAGE>
<PAGE>
CAPITALIZATION OF TRIARC
The following table sets forth the unaudited historical capitalization of
Triarc as of June 29, 1997, the pro forma capitalization of Triarc adjusted to
give effect to the C&C Sale and the pro forma capitalization of Triarc further
adjusted to give effect to the Cable Car Acquisition. The adjustments made to
Triarc's historical consolidated capitalization to arrive at the adjusted
consolidated capitalization are described under 'Triarc Companies, Inc. and
Subsidiaries -- Unaudited Pro Forma Condensed Consolidated Financial
Statements.' This table should be read in conjunction with the consolidated
financial statements of Triarc Companies, Inc. and its subsidiaries incorporated
by reference herein and 'Triarc Companies, Inc. and Subsidiaries -- Unaudited
Pro Forma Condensed Consolidated Financial Statements' and related notes thereto
included elsewhere in this Proxy Statement/Prospectus.
<TABLE>
<CAPTION>
PRO FORMA FOR
PRO FORMA THE CABLE CAR
ACTUAL FOR THE C&C SALE ACQUISITION
------ ---------------- -------------
(IN MILLIONS)
<S> <C> <C> <C>
Current portion of long-term debt................................. $ 15.8 $ 15.8 $ 15.8
------ ------- -------------
Long-term debt:
9 3/4% senior secured notes.................................. 275.0 275.0 275.0
8.54% first mortgage notes................................... 125.0 125.0 125.0
Term loans................................................... 323.0 323.0 323.0
Revolving loans.............................................. 38.5 38.5 38.5
Other........................................................ 6.2 6.2 6.2
------ ------- -------------
Total long-term debt.................................... 767.7 767.7 767.7
------ ------- -------------
Stockholders' equity (deficit).................................... (24.4) (24.1) 9.3
------ ------- -------------
Total capitalization............................... $759.1 $759.4 $792.8
------ ------- -------------
------ ------- -------------
</TABLE>
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COMPARISON OF RIGHTS OF CABLE CAR
AND TRIARC STOCKHOLDERS
GENERAL
As a result of the Merger, holders of shares of Cable Car Common Stock will
own shares of Triarc Common Stock. The DGCL is the statute which governs
Delaware corporations. Both Triarc and Cable Car are corporations incorporated
under the laws of the State of Delaware, and there are no differences between
the rights of Triarc and Cable Car stockholders arising out of the DGCL. The
following is a summary of certain material similarities and differences between
the rights of holders of shares of Cable Car Common Stock and holders of shares
of Triarc Common Stock. These differences arise from differences between the
Cable Car Charter and the Cable Car Bylaws, and the Triarc Charter and the
Triarc Bylaws, the governing instruments of the two companies. The
identification of specific differences is not intended to indicate that other
equally or more significant differences do not exist. The summaries set forth
herein are qualified in their entirety by reference to the Cable Car Charter and
Cable Car Bylaws and the Triarc Charter and Triarc Bylaws.
SIZE AND CLASSIFICATION OF THE BOARD OF DIRECTORS
The Triarc Charter requires a Board comprised of not less than seven nor
more than 15 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
Triarc Board is exclusive. Triarc currently has nine directors. Triarc does not
have a classified board and all directors stand for election on an annual basis.
Each director serves until his or her successor is elected and qualified.
The Cable Car Bylaws require a Board comprised of not less than three nor
more than seven members, which number may be increased or decreased within such
range by the Cable Car Board. Cable Car currently has three directors. Cable Car
does not have a classified board and all directors stand for election on an
annual basis. Each director serves until his or her successor is elected and
qualified.
CUMULATIVE VOTING FOR DIRECTORS
Neither the Triarc Charter nor the Cable Car Charter provides for
cumulative voting.
REMOVAL OF DIRECTORS
The Triarc Bylaws provide that a duly elected director of Triarc may be
removed, without cause, by the affirmative vote of the holders of two-thirds of
the voting power of the outstanding capital stock of Triarc entitled to vote in
the election of directors, voting as a single class. As the Cable Car Bylaws is
silent, Delaware law provides that a duly elected director of Cable Car may be
removed only for cause by the holders of a majority of the shares of the
outstanding capital stock of Cable Car entitled to vote in the election of
directors.
SPECIAL MEETINGS OF STOCKHOLDERS
Under the Triarc Bylaws, a special meeting of stockholders of Triarc may be
called only by the Chairman of the Board and Chief Executive Officer or the
President and Chief Operating Officer or the Triarc Board. Business transacted
at any special meeting is limited to the purposes stated in the notice of the
special stockholders' meeting given to stockholders.
Under the Cable Car Bylaws, a special meeting of stockholders may be called
by (i) the President of Cable Car, (ii) the request in writing or by vote of a
majority of the directors or (iii) the request in writing of stockholders
holding a majority of the capital stock of Cable Car outstanding and entitled to
vote.
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PREFERRED STOCK
The Triarc Charter authorizes the issuance of shares of 'blank check'
preferred stock, which will have such designations, rights and preferences as
may be determined from time to time by the Triarc Board. Accordingly, the Triarc
Board is empowered, without stockholder approval, to issue preferred stock with
dividend, liquidation, conversion, voting or other rights which may adversely
affect the voting power or other rights of the holders of Triarc Common Shares.
As of the date of this Proxy Statement/Prospectus, there are no shares of Triarc
Preferred Stock outstanding.
The Cable Car Charter does not authorize preferred stock for issuance by
the Cable Car Board.
CERTAIN VOTING RIGHTS
The DGCL generally requires approval of any merger, consolidation or sale
of substantially all of 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. Neither the Cable Car
Charter nor Cable Car's By-laws address the vote required to approve a merger,
consolidation or sale of substantially all of the corporation's assets.
Accordingly, such transactions will be governed by the DGCL. The Triarc Charter
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 Triarc Charter -- Business Combination Provision' below.
In addition to voting rights provided by Delaware law and under the Triarc
Charter, the rules of the NYSE, on which the Triarc Common Stock is listed, also
afford stockholders certain voting rights. For example, NYSE rules require
stockholder approval prior to the issuance by Triarc 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 stockholder approval for
certain transactions in which Triarc's common stock, or securities convertible
into Triarc's common stock, are to be issued to a Triarc director, officer,
substantial stockholder, 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
stockholder approval for any issuance of securities by Triarc that will result
in a change of control of Triarc.
CERTAIN BUSINESS COMBINATIONS
The DGCL prohibits a corporation which has securities traded on a national
securities exchange, authorized for quotation on Nasdaq or held of record by
more than 2,000 stockholders from engaging in certain business combinations,
including a merger, sale of substantial assets, loan or substantial issuance of
stock, with an interested stockholder, or an interested stockholder's
affiliates, for a three-year period beginning on the date the interested
stockholder acquires 15% or more of the outstanding voting stock of the
corporation. The restrictions on business combinations do not apply if the board
of directors gives prior approval to the transaction in which the 15% ownership
level is exceeded, the interested stockholder acquires at one time at least 85%
of the corporation's stock (excluding those shares owned by persons who are
directors and also officers as well as employee stock plans in which employees
do not have a confidential right to vote), or the business combination is
approved by the board of directors and authorized at a meeting of stockholders
by the holders of at least two-thirds of the outstanding voting stock, excluding
shares owned by the interested stockholder. Although a Delaware corporation may
elect, pursuant to its certificate of incorporation or bylaws, not to be
governed by this provision, none of the Triarc Charter, the Triarc Bylaws, the
Cable Car Charter or the Cable Car Bylaws contain such an election. With respect
to the Merger, the Cable Car Board approved the Merger Agreement and the Merger
prior to the time that Triarc entered into the Stockholders Agreement (pursuant
to
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which Triarc became an 'interested stockholder' of Cable Car under the
applicable provision of the DGCL).
APPRAISAL RIGHTS
Under the DGCL, 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 shares (as determined by a court) in lieu of the
consideration he would otherwise receive in the merger. See 'Appraisal Rights.'
Unless a corporation's certificate of incorporation provides otherwise, the DGCL
does not require that such dissenters' 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 or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or widely held
(by more than 2,000 stockholders), 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 the
surviving corporation in 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 Cable
Car Common Stock is not listed on a national securities exchange or designated
as a national market system security, nor is such stock held by more than 2,000
stockholders. Accordingly, the holders of Cable Car Common Stock are not subject
to the exclusion from appraisal rights provided in Section 262. The Triarc
Common Stock is listed on the NYSE and the holders of such stock are not
afforded appraisal rights under Section 262 with respect to certain merger
transactions.
CERTAIN ANTI-TAKEOVER PROVISIONS IN THE TRIARC CHARTER
Certain provisions in the Triarc Charter are intended to discourage or
delay a hostile takeover of control of Triarc. These provisions, in general
terms, (i) provide that the number of directors shall not be less than seven nor
more than 15, 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 Triarc Board 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 Triarc Board, 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 Triarc 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 set forth below. In addition, the anti-takeover provisions
are interrelated and have cumulative anti-takeover effects as described herein.
Similar provisions are not included in the Cable Car Charter or the Cable Car
Bylaws.
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 Triarc's stock do not exercise their voting power in a manner
which the Triarc Board 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 Triarc by replacing the
Triarc Board.
SIZE OF THE BOARD OF DIRECTORS AND FILLING VACANCIES ON THE BOARD OF DIRECTORS
The Triarc Charter states that the Triarc Board consists of not less than
seven nor more than 15 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 Triarc Board is exclusive. The Triarc Charter provides that vacancies
that may occur between annual meetings may
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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 Triarc Board 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 Triarc Board. The purpose of including these provisions with respect to the
size of the Triarc Board and the filling of vacancies in the Triarc Charter is
to prevent the elimination of such provisions through amendment of the Triarc
Bylaws by a shareholder or group owning or controlling a substantial voting
block so as to permit shareholders directly to increase the size of the Triarc
Board 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 Triarc Bylaws without prior approval of the Triarc Board, whereas the
Triarc Charter may be amended only if the Triarc Board first approves and
recommends such action to shareholders.
BUSINESS COMBINATION PROVISION
The Triarc Charter 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
(defined below) is a party to the transaction or its percentage equity interest
in Triarc or any subsidiary of Triarc 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, Triarc 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 Triarc'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 Triarc Board approves
the Business Combination in accordance with the requirements set forth in clause
(ii) above, the Triarc Board 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 Triarc Board 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 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 Triarc Board 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.
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An 'Interested Shareholder' generally is defined under the Triarc Charter
as the Beneficial Owner of 10% or more of the voting power of the outstanding
Voting Shares (other than Triarc, its employee benefit plans, or its majority
owned subsidiaries), excluding, however, DWG Acquisition or any 'Affiliate' or
'Associate' (each as defined in the Triarc Charter) thereof. The Triarc Board
considers that a 10% holding, which causes a person to be classified as an
'insider' under Section 16 of 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, Triarc 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
Triarc Class B Common Stock were to be converted by a Beneficial Owner into
shares of Triarc 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 Triarc Charter) 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
Triarc 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 Triarc Charter) of the assets of Triarc 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 Triarc 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 Interested 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 Triarc or any subsidiary; or (iv) an issuance
(or a related series of issuances) of securities of Triarc 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 or more; (v) a liquidation, dissolution,
spinoff, split up or split off of Triarc (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 Triarc 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 Triarc 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 whose
election or appointment or recommendation by the Triarc Board for election by
Triarc's shareholders was approved of by at least a majority of the Continuing
Directors then on the Triarc Board.
The Business Combination provision described above is intended to provide
safeguards to Triarc's shareholders by requiring a higher shareholder vote than
required under Delaware law in the event another person first obtains a
substantial interest in Triarc and then wishes to accomplish a combination of
such person's business with that of Triarc, or otherwise eliminate the
shareholdings of the other shareholders. The federal securities law and
regulations issued thereunder govern the disclosure
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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 Triarc 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 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 Triarc 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
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, to the extent a
Business Combination were involved as part of a plan to acquire control of
Triarc, this provision would increase the likelihood that a purchaser would
negotiate directly with the Triarc Board.
Triarc believes that the Triarc Board normally is in a better position than
the individual shareholders of Triarc to negotiate effectively on behalf of all
shareholders in that the Triarc Board is likely to be more knowledgeable than
any individual shareholder in assessing the business and prospects of Triarc.
Accordingly, Triarc is of the view that negotiations between the Triarc Board
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 Triarc through a Business Combination or otherwise.
Although not all acquisitions of Triarc's capital stock are made with the
objective of acquiring control of Triarc 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 Triarc 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 Triarc's capital stock, which Triarc believes to be
disruptive to the stability of Triarc, and which can sometimes precipitate a
change of control of Triarc on terms unfavorable to Triarc's other shareholders.
AMENDMENT OF CHARTER DOCUMENTS
The Triarc Charter may be amended in accordance with the DGCL, except that
the Triarc Charter provides that the Business Combination provision described
above may not be repealed, 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
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the entire Triarc Board (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). The Triarc Bylaws may be altered, amended or repealed, or new
by-laws adopted, by (i) the affirmative vote of stockholders holding not less
than two-thirds of the voting power of the shares entitled to vote on such
issue, or (ii) the affirmative vote of not less than a majority of all of the
directors then holding office and entitled to vote on such issue.
The Cable Car Charter may be amended in accordance with the DGCL. The Cable
Car Bylaws may be amended, altered or repealed or added to at any regular
meeting of the stockholders or board of directors or at any special meeting
called for such purpose, by the affirmative vote of a majority of the stock
issued and outstanding and entitled to vote or of a majority all of the
directors then holding office.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
The Triarc Charter provides indemnification 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).
The Triarc Charter (as well as the Triarc Bylaws) provides that, to the
extent not prohibited by law, Triarc 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 Triarc, or is or was serving in any capacity at the request of
Triarc 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 Triarc may be similarly indemnified in respect of
service to Triarc or to an Other Entity at the request of Triarc to the extent
the Triarc Board at any time specifies that such persons are entitled to the
benefits of the indemnification provisions of the Triarc Charter. The Triarc
Charter specifies that any director or officer of Triarc serving in any capacity
with a majority owned subsidiary or any employee benefit plan of Triarc or any
majority owned subsidiary corporation shall be deemed to be doing so at the
request of Triarc.
The Triarc Charter and the Triarc Bylaws permit 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, this provision
is limited by reference to the DGCL, which specifically limits indemnification
in the case of derivative suits (suits brought in the name and on behalf of
Triarc) to the payment of expenses if the person acted in good faith and in a
manner such person reasonably believed to be in or not opposed to the best
interests of Triarc. If a person is adjudged liable to Triarc in a derivative
suit (but not in other suits) no indemnification payments may be made unless a
court determines otherwise.
The Triarc Charter also provides that expenses are to be advanced prior to
the final disposition of a proceeding upon the receipt by Triarc 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 and 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 Triarc. The right to
indemnification under the Triarc Charter is a contract right and, therefore,
cannot be retroactively eliminated by a later stockholder vote, and is not an
exclusive right and, therefore, Triarc may provide other indemnification, if
appropriate.
In addition, the Triarc Charter permits Triarc, as provided in the DGCL, to
purchase directors' and officers' liability insurance, and establish a trust
fund to ensure payments of indemnification claims.
Finally, the Triarc Charter 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 Triarc Board, independent
counsel or stockholders that such person is not entitled to indemnification. The
purpose of this provision is to permit court determination of the issue,
notwithstanding a negative
87
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<PAGE>
decision by the Triarc Board, its chosen counsel or the stockholders, which
decision might be made, for example, following a change of control in Triarc.
The Cable Car Bylaws provide that Cable Car will indemnify to the fullest
extent permitted by law any person who is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding by
reason of the fact that such person is or was a director or officer of the Cable
Car, or while a director or officer of Cable Car is or was serving at its
request as a director, officer, partner, trustee, employee or agent of any other
foreign or domestic entity, against all expenses and liabilities actually and
reasonably incurred by such person in connection with holding such positions.
The Cable Car Bylaws provide that Cable Car may, by determination of the Cable
Car Board, similarly indemnify any present or former employee or agent of Cable
Car to the fullest extent permitted by law or any lesser extent.
LEGAL MATTERS
The legality of the Triarc Common Stock being offered hereby will be passed
upon for Triarc by Paul, Weiss, Rifkind, Wharton & Garrison, New York, New York.
The federal income tax consequences in connection with the Merger will be passed
upon by Sherman & Howard, L.L.C., Denver, Colorado. Members of Paul, Weiss,
Rifkind, Wharton & Garrison own approximately 1,600 shares of Triarc Common
Stock.
EXPERTS
The consolidated financial statements of Triarc incorporated by reference
and the related financial statement schedule incorporated in this Proxy
Statement/ Prospectus by reference to Triarc's Annual Report on Form 10-K for
the year ended December 31, 1996 have been audited by Deloitte & Touche LLP,
independent auditors, as stated, which is in their report incorporated herein by
reference, and have been so incorporated in reliance upon the report of such
firm given upon their authority as experts in accounting and auditing.
The financial statements of Snapple Beverage Corp. incorporated by
reference in this Proxy Statement/Prospectus have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their reports with
respect thereto and are incorporated by reference herein in reliance upon the
authority of said firm as experts in accounting and auditing in giving said
reports.
The consolidated financial statements of Cable Car incorporated in this
Proxy Statement/Prospectus by reference to Cable Car's Annual Report on Form
10-K for the fiscal year ended December 31, 1996, have been so incorporated in
reliance on the report of Price Waterhouse LLP, independent accountants, given
on the authority of said firm as experts in accounting and auditing.
STOCKHOLDER PROPOSALS
If the Merger is not consummated, or is not consummated within the time
period currently contemplated, Cable Car will hold its 1997 Annual Meeting of
Stockholders. As described in Cable Car's proxy statement relating to its 1996
Annual Meeting of Stockholders, stockholder proposals for inclusion in Cable
Car's proxy statement and form of proxy relating to the Cable Car 1997 Annual
Meeting of Stockholders must have been received by Cable Car on or before
January 1, 1997.
88
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APPENDIX A-1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------------
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE TRANSITION PERIOD FROM __________________ TO _________________
COMMISSION FILE NUMBER 0-14784
------------------------
CABLE CAR BEVERAGE CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------------
DELAWARE 52-0880815
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
717 17TH STREET, SUITE 1475, DENVER, COLORADO 80202
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (303) 298-9038
------------------------
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
------------------- -----------------
None None
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Common Stock, $.01 Par Value
(TITLE OF CLASS)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes __X__ No ______
The aggregate market value of equity securities held by non-affiliates of
the Registrant on March 25, 1997 was approximately $18,730,000.
As of March 25, 1997 there were 8,905,324 shares of common stock
outstanding.
===============================================================================
<PAGE>
<PAGE>
CABLE CAR BEVERAGE CORPORATION AND SUBSIDIARIES
1996 FORM 10-K ANNUAL REPORT
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
PART I
Item 1. Business....................................................................................... 3
Item 2. Properties..................................................................................... 5
Item 3. Legal Proceedings.............................................................................. 5
Item 4. Submission of Matters to a Vote of Security Holders............................................ 5
PART II
Item 5. Market for the Registrant's Common Stock and Related Stockholder Matters....................... 5
Item 6. Selected Financial Data........................................................................ 6
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.......... 6
Item 8. Financial Statements and Supplementary Data.................................................... 9
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure........... 9
PART III
Item 10. Directors and Executive Officers of the Registrant............................................. 9
Item 11. Executive Compensation......................................................................... 9
Item 12. Security Ownership of Certain Beneficial Owners and Management................................. 9
Item 13. Certain Relationships and Related Transactions................................................. 9
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K................................ 9
</TABLE>
2
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<PAGE>
PART I
ITEM 1. BUSINESS.
GENERAL
Cable Car Beverage Corporation, (the 'Company') was incorporated under the
laws of Delaware on April 1, 1968. The Company's business consists of marketing
its line of proprietary soft drinks and waters throughout the United States and
in Canada. As discussed in more detail below, the Company's product line
consists of Stewart's brand soft drinks, JAVA COLA, Fountain Classics Seltzer,
San Francisco Seltzer, Aspen Mountain Spring Water and Aspen flavored waters.
During 1996, the Company began marketing two new Stewart's flavors (Stewart's
Classic Key Lime and Cherries N' Cream) as well as a new line of carbonated,
coffee-flavored cola under the name of JAVA COLA.
PROPRIETARY PRODUCTS MARKETING:
General: The Company initially entered its current business of marketing
beverages on August 27, 1987 when it acquired, through its subsidiary Old San
Francisco Seltzer, Inc. ('SFS'), the assets and business of Old San Francisco,
Inc. ('Old SF'), a California corporation that marketed a product line of
flavored seltzers.
The Company added to its line of beverages when, on July 11, 1989, it
entered into a licensing agreement with Stewart's Restaurants, Inc.
('Stewart's'), a New Jersey based franchiser of Stewart's Drive-In Root Beer
Stands, pursuant to which the Company has the exclusive right to produce and
market Stewart's brand beverages for the entire United States. Pursuant to an
addendum to the Stewart's licensing agreement dated April 11, 1994, the Company
was granted the exclusive rights for Canada, and once the Company achieves
cumulative sales of 4,000,000 cases, the license becomes worldwide provided the
Company maintains annual sales of 1,000,000 cases. The agreement provides for a
sliding scale royalty with a minimum annual royalty of $50,000. For the year
ended December 31, 1996, the royalty payments exceeded the minimum royalty due
and the Company expects the same in future years. Termination of the agreement
may occur if the Company's annual sales of Stewart's Root Beer are less than
500,000 cases for each year.
On December 1, 1993, the Company entered into a separate licensing
agreement with Stewart's, whereby the Company has the exclusive right to market
Stewart's brand beverages as a fountain product in 15 states. The agreement
provided for a one time licensing fee of $29,250 and payment of a sliding scale
royalty. The Company is marketing the Stewart's fountain product through its
wholly-owned subsidiary, Fountain Classics, Inc. ('FCI').
On November 22, 1989, the Company acquired the assets and business of Aspen
Mineral Water Corporation ('Aspen'), a Colorado corporation that marketed a
sparkling water. Currently, the Company markets a line of non-carbonated fruit
flavored beverages under the brand name of Aspen. The Company also markets a
non-carbonated spring water under the Aspen name.
Proprietary Products: The Company's proprietary product line currently
consists of Stewart's premium soft drinks (Root Beer, Orange N' Cream, Cream
Ale, Ginger Beer, Classic Key Lime, and Cherries N' Cream), JAVA COLA, San
Francisco Seltzer, Aspen Mountain Spring Water and Aspen flavored waters.
Stewart's products are packaged in original and diet and are sweetened using
non-sugar sweeteners -- fructose in the original line and NutraSweet brand
sweetener in the diet line. JAVA COLA is a unique coffee-flavored cola made with
real coffee and is sold in four different flavors: Original, Diet, Mocha and
Vanilla. San Francisco Seltzer is a naturally flavored soft drink which contains
no sodium or preservatives and is available in regular and diet flavors that are
sweetened with fructose and NutraSweet, respectively. Aspen Mountain Spring
Water is a non-carbonated water. Aspen flavored waters are non-carbonated, fruit
flavored beverages.
For the years ended December 31, 1996 and 1995, the Stewart's brand
accounted for approximately 98% and 96% of the Company's proprietary brand
sales, respectively. The Company anticipates that the Stewart's brand will
continue to account for a significant portion of sales for the year ending
December 31, 1997.
3
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<PAGE>
Marketing and Distribution: The brand products business consists of both
sales of concentrate to regional soft drink bottlers and the sale of finished
goods to distributors. Where the Company sells concentrate to bottlers, the
bottlers produce finished goods and sell through their own distribution network.
When the Company sells finished goods directly to distributors, the Company has
product produced for it by contract manufacturers. The Company does not directly
manufacture any of the products it sells. The Company's products are retailed
primarily in grocery, convenience and liquor stores and food service accounts.
Consumer marketing consists of newspaper, magazine, outdoor and radio
advertising, along with in-store product demonstrations and point of sale
promotions. The Company presently sells product to numerous bottlers and
distributors in the United States and Canada.
Competition: The soft drink business is extremely competitive and there are
numerous competing products. Most competitors are larger and have greater
financial resources than the Company. The Company's principal means for
competing within this category are its product line and flavors and through its
advertising, packaging and promotions.
Trademarks: The Company owns the trademark 'San Francisco Seltzer' which
was registered with the United States Patent and Trademark Office on March 1,
1988. The Company also owns the trademark 'Fountain Classics' which is used on
the Stewart's Premium Sodas line of products. The 'Fountain Classics' trademark
was registered with the United States Patent and Trademark Office on June 18,
1991. The Company owns the trademark 'Aspen' which was registered on May 31,
1994 with the United States Patent and Trademark Office. The foregoing
trademarks are registered for a 10-year period and may be extended thereafter
for additional 10-year periods subject to compliance with federal statutory and
regulatory provisions. Management is of the view that its trademarks are of
significant importance to its operations and loss of such trademarks could
adversely affect the Company to an indeterminable extent. The Company is taking
appropriate steps to protect its trademarks. Stewart's Restaurants, Inc. owns
the trademark 'Stewart's' which is registered with the United States Patent and
Trademark Office. The Company has an exclusive trademark license agreement with
Stewart's Restaurants. (See 'Proprietary Products Marketing -- General'.)
WHOLESALE DISTRIBUTION -- DIVESTED ON JUNE 7, 1993
General: From 1987 until 1993, the Company was also engaged in the business
of wholesale distribution of beverages through its former subsidiary, Sheya
Brothers Specialty Beverages, Inc. ('SBSB'). On June 7, 1993, SBSB was merged
into AMCON Distributing Company ('AMCON'), a then privately-held, Omaha-based
wholesale distributor.
In connection with the merger of SBSB into AMCON, the Company received
306,143 shares of common stock of AMCON. Pursuant to the Agreement and Plan of
Merger with AMCON, on July 31, 1995, the Company distributed 266,469 AMCON
shares to shareholders of the Company on a prorata basis. As of December 31,
1996, the Company holds 39,674 shares of AMCON.
SEASONALITY:
Due to the seasonality of the beverage industry, the Company's sales
volumes are normally at their highest in the second and third calendar quarters.
PROSPECTIVE PRODUCTS AND ACQUISITION ACTIVITIES:
The Company continues to develop line extensions under its various brand
names, primarily by adding new packages and flavors. As described above, the
Company introduced the following new products during 1996: Stewart's Classic Key
Lime and Cherries N' Cream. The Company intends to continue expanding into
beverage products, through both internal development and acquisition, that are
compatible with its existing brands and can be sold through the Company's
existing bottling and distribution network.
4
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<PAGE>
MAJOR CUSTOMERS:
For the year ended December 31, 1996, two customers, K.O.
Lester -- Lebanon, TN and Mid-State Beverage Company -- New Brunswick, NJ,
accounted for approxiamtely 14% and 18% of the Company's net sales,
respectively.
For the year ended December 31, 1995, the same two customers each accounted
for approximately 20% of the Company's net sales.
COMPANY EMPLOYEES:
As of December 31, 1996, the Company had 17 employees. In addition, the
Company has used certain consultants on an 'as needed' basis.
ITEM 2. PROPERTIES.
The Company is currently leasing, through September 1997, approximately
3,024 square feet of office space at 717 17th Street, Denver, Colorado 80202, at
an annual cost of $28,350.
ITEM 3. LEGAL PROCEEDINGS.
The Company and its subsidiaries are not parties to, nor are any of their
properties subject to, any pending legal proceedings which are expected to have
any materially adverse effect on the Company's results of operations or
financial position. Additionally, to the best of management's knowledge, no
material legal proceeding is contemplated or has been threatened against the
Company and its subsidiaries.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There were no matters submitted to a vote of all security holders during
the quarter ended December 31, 1996.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS.
The Company's Common Stock trades on the NASDAQ Small-Cap Market under the
symbol DRNK. The following table reflects the range of the high and low bid
prices per share of the Company's Common Stock as reported by NASDAQ through
December 31, 1996. These quotations represent inter-dealer quotations, without
adjustment for retail mark-ups, mark-downs or commissions and may not
necessarily represent market transactions. As of March 25, 1997, the Company had
approximately 1,100 holders of record of its shares and the Company is informed
that approximately 3,000 additional persons hold shares beneficially.
<TABLE>
<CAPTION>
COMMON STOCK
--------------
HIGH LOW
----- -----
<S> <C> <C>
Year Ended December 31, 1996:
December 1996 Quarter................................................... $2.84 $2.00
September 1996 Quarter.................................................. 2.56 1.44
June 1996 Quarter....................................................... 1.84 1.25
March 1996 Quarter...................................................... 1.88 1.44
Year Ended December 31, 1995:
December 1995 Quarter................................................... $1.66 $1.19
September 1995 Quarter.................................................. 1.81 1.38
June 1995 Quarter....................................................... 2.00 1.09
March 1995 Quarter...................................................... 1.41 1.00
</TABLE>
5
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<PAGE>
The Company has never declared or paid a cash dividend on its common stock
and does not anticipate a change in this policy in the foreseeable future. The
Board of Directors currently intends to retain earnings to finance the
acquisition and development of new products, expansion of markets and for other
corporate purposes.
ITEM 6. SELECTED FINANCIAL DATA.
The following data, insofar as they relate to the consolidated statement of
operations for the years ended December 31, 1996, 1995 and 1994; and the balance
sheet as of December 31, 1996 and 1995, have been derived from the consolidated
financial statements appearing in Part IV of this Form 10-K. The consolidated
statement of operations data for the six-months ended December 31, 1993 and the
fiscal years ended June 30, 1993 and 1992; and the consolidated balance sheet
data as of December 31, 1994 and 1993, and June 30, 1993 and 1992 have been
derived from the historical consolidated financial statements of the Company for
such periods.
The following table data should be read in conjunction with the
consolidated financial statements and notes thereto, and management's commentary
thereon contained in Item 7 of this report.
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED YEAR ENDED JUNE 30,
-------------------------------------- DECEMBER 31, -------------------------
1996 1995 1994 1993(1) 1993 1992
----------- ----------- ---------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Statement of Operations
Data:
Revenue................ $18,872,556 $12,843,620 $8,322,301 $ 3,030,982 $15,537,997 $14,838,598
----------- ----------- ---------- ------------ ----------- -----------
----------- ----------- ---------- ------------ ----------- -----------
Net income (loss)...... $ 1,257,132 $ 882,600 $ 721,695 $ 143,449 $ (348,176) $ (22,384)
----------- ----------- ---------- ------------ ----------- -----------
----------- ----------- ---------- ------------ ----------- -----------
Net income (loss) per
common share:........ $ .14 $ .10 $ .09 $ .02 $ (.05) $
----------- ----------- ---------- ------------ ----------- -----------
----------- ----------- ---------- ------------ ----------- -----------
Weighted average common
and common equivalent
shares outstanding... 9,255,479 8,915,666 8,318,909 7,796,799 7,640,780 7,057,416
----------- ----------- ---------- ------------ ----------- -----------
----------- ----------- ---------- ------------ ----------- -----------
Balance Sheet Data:
Total assets........... $ 7,141,782 $ 5,360,700 $4,448,832 $ 3,920,799 $ 4,054,120 $ 5,266,381
----------- ----------- ---------- ------------ ----------- -----------
----------- ----------- ---------- ------------ ----------- -----------
Long-term debt......... $ 0 $ 0 $ 5,970 $ 10,099 $ 2,817 $ 108,476
----------- ----------- ---------- ------------ ----------- -----------
----------- ----------- ---------- ------------ ----------- -----------
Stockholders' equity... $ 5,982,046 $ 4,402,421 $3,944,778 $ 3,096,886 $ 2,953,347 $ 3,066,613
----------- ----------- ---------- ------------ ----------- -----------
----------- ----------- ---------- ------------ ----------- -----------
</TABLE>
- ------------
(1) In 1993, the Company elected to change its fiscal year end from June 30 to
December 31.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
UNCERTAINTIES THAT MAY AFFECT FUTURE RESULTS
The Company's future operating results are subject to a number of
uncertainties, including the ability of the Company to market its beverage
products and to develop and introduce new products, and the number, quantity and
marketing forces behind products introduced by competitors. The Company expects
the level of competition in the beverage industry to become even more intense
and large beverage companies with greater resources have a competitive advantage
over the Company. In addition, general economic conditions, the cost of raw
materials and general conditions in the beverage business may have an impact on
the Company's future operations. There can be no assurance the Company will
continue to be successful nor that it will not encounter difficulties in
retaining its current market niche due to a variety of factors such as market
acceptance, costs of manufacturing and
6
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<PAGE>
marketing, and competition in the beverage industry, all of which are largely
beyond the Company's ability to reasonably predict, much less control.
GENERAL
The Company entered into the business of non-alcoholic beverage marketing
in fiscal 1988 when it acquired the assets and business of Old San Francisco
Seltzer, Inc. Since that time, the Company added Stewart's Root Beer and Aspen
Sparkling Mountain Spring Water to the proprietary brands that it markets
nationally and has continued to grow its line of Stewart's soft drinks (Root
Beer, Orange N' Cream, Cream Ale, Ginger Beer, Key Lime and Cherries N' Cream).
Stewart's soft drinks are currently sold in over 43 states and Canada. In
December 1993, the Company entered into a licensing agreement with Stewart's
Restaurants, Inc., whereby the Company has the exclusive right to sell Stewart's
brand beverages as a fountain product in 15 states.
FINANCIAL CONDITION
The Company's current ratio at December 31, 1996 is 5.0 to 1 as compared to
4.0 to 1 at December 31, 1995.
Stockholders' equity at December 31, 1996 increased by $1,579,625
principally from net income of $1,257,132 for the year ended December 31, 1996
and the exercise of options of $322,493 which includes a tax benefit.
LIQUIDITY AND CAPITAL RESOURCES
For the year ended December 31, 1996, cash increased by $832,538. Operating
activities provided cash of $773,658 primarily from net income of $1,257,132 and
increases in accrued income taxes and other current liabilities of $116,998 and
$239,209, respectively. These increases in cash were partially offset by
increases in accounts receivable and inventory of $317,848 and $622,639,
respectively and a decrease in accounts payable. Investing activities used cash
of $257,653, primarily from the purchase of short-term investments and the
acquisition of property and equipment. Financing activities generated $316,533,
primarily from the exercise of stock options. Working capital increased
$1,758,644 to a ratio of 5.0 to 1.
For the comparable twelve month period ended December 31, 1995, investing
and financing activities generated $14,004 and $365,653, respectively and
operating activities used $384,124 for a net decrease in cash of $4,467.
The Company intends to utilize cash from operations to meet its ongoing
obligations. The Company has also maintained a bank line of credit in the amount
of $500,000 which it may utilize from time to time to meet seasonal cash needs.
Management does not expect liquidity problems during 1997 assuming the Company
can maintain or exceed its current sales volume, and expenses as a percentage of
sales remain relatively constant.
RESULTS OF OPERATIONS
COMPARISON OF THE YEAR ENDED DECEMBER 31, 1996 TO THE COMPARABLE TWELVE MONTH
PERIOD ENDED DECEMBER 31, 1995:
The Company had net income of $1,257,132 for the year ended December
31, 1996 versus net income of $882,600 for the comparable twelve month
period ended December 31, 1995. This represents an increase in net income
for 1996 of $374,532 or 42%.
Revenue from the sale of products increased to $18,872,556 in 1996
from $12,843,620 in 1995. This increase of $6,028,936 or 47% was due
primarily to the general expansion of the Company's customer base and from
the introduction of two new Stewart's brand flavors: Key Lime and Cherries
N' Cream.
Cost of goods sold was $4,051,774 greater in 1996 than in 1995 due to
higher revenue. The cost of goods sold as a percentage of sales, however,
decreased from 75% to 72% primarily due to
7
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<PAGE>
increased unit sales price on certain Stewart's brand packages which was
intended to offset increasing material costs over the last two years.
General and administrative expense increased $297,221 from 1995 to
1996, and remained relatively constant as a percentage of total revenue at
6%. The increase in general and administrative expense in 1996 was
primarily the result of the addition of 4 new employees, increased cost
related to professional services, and an increase in bad debt expense.
Selling expense increased $593,358 from 1995 to 1996, and remained
relatively constant as a percentage of total revenue at 11%. The increased
selling expense in 1996 was primarily the result of increased promotional
spending and expenses related to development and introduction of two new
Stewart's flavors and the JAVA COLA line.
COMPARISON OF THE YEAR ENDED DECEMBER 31, 1995 TO THE COMPARABLE TWELVE MONTH
PERIOD ENDED DECEMBER 31, 1994:
The Company had net income of $882,600 for the year ended December 31,
1995 versus net income of $721,695 for the comparable twelve month period
ended December 31, 1994.
Revenue from the sale of products increased to $12,843,620 in 1995
from $8,322,301 in 1994. This increase of $4,521,319 or 54% was due
primarily to an expanded customer base for the Stewart's brand products.
Cost of goods sold was $3,588,613 greater in 1995 than in 1994 due to
higher revenue. The cost of goods sold as a percentage of sales, however,
increased from 73% to 75% primarily due to increased costs of certain raw
materials which were not passed on to its customers through increased sales
prices.
General and administrative expense increased $100,188 from 1994 to
1995, but decreased as a percentage of total revenue from 9% to 6%. This
percentage decrease is primarily a result of increased sales with nominal
increases in corporate overhead.
Selling expense increased $595,535 from 1994 to 1995, and increased as
a percentage of sales from 10% to 11%. The increase is primarily due to
increased promotional expenses used to introduce new brands and products,
and the addition of two new sales representatives during 1995.
Net income was impacted in the year 1995 by two non-recurring and
unrelated items: a write-down of an investment and the recording of a
deferred income tax benefit. During the third quarter 1995, the Company
wrote-down its investment in AMCON Distributing Company, Inc. to the market
price of AMCON common stock as reported by NASDAQ on August 4, 1995, the
date upon which the stock was initially included on NASDAQ. The write-down
resulted in a charge of $848,342.
During the third quarter of 1995, the Company recorded an income tax
benefit of $936,440 which primarily represents the future tax benefits
associated with the Company's net operating loss carryforwards. The Company
recorded the tax benefit based on management's determination in the third
quarter of 1995 that it was more likely than not that the Company would
utilize its future income tax benefits.
8
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<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
See financial statements listed in the index on page F1.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
PART III
Information required in items 10, 11, 12 and 13 of Part III will be
included in the Company's Proxy Statement for the Annual Meeting of Stockholders
and will be filed in not more than 120 days after the Company's fiscal year end.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) The following documents are filed as a part of this report:
FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
The financial statements and financial statement schedules filed with this
report are listed in the Index to Financial Statements appearing on page F1.
EXHIBITS
The documents listed below have been filed as exhibits to this report:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBITS
- -------- --------
<C> <S>
(3)-A Certificate of Incorporation, as amended (Filed as Exhibit (3) with and incorporated by reference from
Form 10-K dated October 9, 1987)
(3)-B Certificate of Amendment -- July 20, 1989, changing name*
(3)-C Bylaws, as amended (Filed as Exhibit (3) with and incorporated by reference from Form 10-K dated
October 9, 1987)
(10)-G Stewart's Master Agreement -- Stewart's Restaurants, Inc. as amended by Addendum, dated April 11, 1994
and incorporated by reference from Form 10-K dated May 4, 1994
(10)-S Employment Agreement with executive, Samuel M. Simpson
(21) Subsidiaries of the Company (Filed as Exhibit (22) with and incorporated by reference to the current
Form 10-K, Note 1 to the Consolidated Financial Statements.)
</TABLE>
- ------------
* Incorporated by reference to Form S-1 filed September 25, 1989, SEC file
#33-30480.
------------------------
(b) Reports on Form 8-K
None.
9
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Cable Car Beverage Corporation has duly caused this report
to be signed on its behalf by the undersigned, hereunto duly authorized.
CABLE CAR BEVERAGE CORPORATION
By /s/ SAMUEL M. SIMPSON
..................................
SAMUEL M. SIMPSON
PRESIDENT AND CHIEF EXECUTIVE
OFFICER
March 27, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ------------------------------------------------ ----------------
<C> <S> <C>
/s/ SAMUEL M. SIMPSON Chairman of the Board & President March 27, 1997
.........................................
(SAMUEL M. SIMPSON)
/s/ JAMES P. MCCLOSKEY Director March 27, 1997
.........................................
(JAMES P. MCCLOSKEY)
/s/ WILLIAM H. RUTTER Director March 27, 1997
.........................................
(WILLIAM H. RUTTER)
/s/ MYRON D. STADLER Chief Accounting Officer March 27, 1997
.........................................
(MYRON D. STADLER)
</TABLE>
10
<PAGE>
<PAGE>
CABLE CAR BEVERAGE CORPORATION AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Accountants.......................................................................... F-2
Consolidated Balance Sheet at December 31, 1996, and 1995.................................................. F-3
Consolidated Statement of Operations for the Years Ended December 31, 1996, 1995 and 1994.................. F-4
Consolidated Statement of Cash Flows for the Years Ended December 31, 1996, 1995 and 1994.................. F-5
Consolidated Statement of Changes in Stockholders' Equity for the Years Ended December 31, 1996, 1995 and
1994..................................................................................................... F-6
Notes to Consolidated Financial Statements................................................................. F-7
</TABLE>
No financial statement schedules are required.
F-1
<PAGE>
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
CABLE CAR BEVERAGE CORPORATION
In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of operations, of cash flows and of changes in
stockholders' equity present fairly, in all material respects, the financial
position of Cable Car Beverage Corporation and its subsidiaries (the 'Company')
at December 31, 1996 and 1995, and the results of their operations and their
cash flows for each of the three years in the period ended December 31, 1996, in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
PRICE WATERHOUSE LLP
Denver, Colorado
March 14, 1997
F-2
<PAGE>
<PAGE>
CABLE CAR BEVERAGE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1996 1995
----------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents...................................................... $ 1,408,729 $ 576,191
Short-term investments......................................................... 195,042
Accounts receivable, net of allowance for doubtful accounts of $100,743 at
December 31, 1996 and $55,949 at December 31, 1995............................ 1,336,094 1,063,040
Inventories.................................................................... 2,430,896 1,808,257
Prepaid expenses and other current assets...................................... 23,582 40,394
Deferred income tax assets..................................................... 394,029 340,389
----------- -----------
Total current assets...................................................... 5,788,372 3,828,271
Property and equipment, net
Property and equipment, less accumulated depreciation of $144,441 at December
31, 1996 and $99,231 at December 31, 1995..................................... 130,778 116,466
Other assets:
Goodwill and other intangibles, less accumulated amortization of $387,168 at
December 31, 1996 and $347,007 at December 31, 1995........................... 591,265 631,426
Investment in AMCON Distributing Company....................................... 99,185 99,185
Other assets................................................................... 58,603 72,498
Deferred income tax assets..................................................... 473,579 612,854
----------- -----------
$ 7,141,782 $ 5,360,700
----------- -----------
----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities....................................... $ 231,408 $ 380,198
Accrued income taxes........................................................... 146,140 29,142
Other current liabilities...................................................... 782,188 542,979
Current portion of long-term debt.............................................. 5,960
----------- -----------
Total current liabilities................................................. 1,159,736 958,279
----------- -----------
----------- -----------
Commitments: (see Note 8)
Stockholders' equity:
Common stock, $.01 par value; 25,000,000 shares authorized; 8,981,681 issued at
December 31, 1996 and 8,658,349 shares issued at December 31, 1995............ $ 89,817 $ 86,584
Additional paid-in capital..................................................... 9,822,137 9,502,877
Accumulated deficit............................................................ (3,901,273) (5,158,405)
Less -- 76,357 common shares in treasury....................................... (28,635) (28,635)
----------- -----------
5,982,046 4,402,421
----------- -----------
$ 7,141,782 $ 5,360,700
----------- -----------
----------- -----------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements
F-3
<PAGE>
<PAGE>
CABLE CAR BEVERAGE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------
1996 1995 1994
----------- ----------- ----------
<S> <C> <C> <C>
Revenue:
Sales........................................................... $18,872,556 $12,843,620 $8,322,301
Cost and expenses:
Cost of goods sold.............................................. 13,670,934 9,619,160 6,030,547
General and administrative...................................... 1,108,329 811,108 710,920
Selling and distribution........................................ 1,993,580 1,400,222 804,687
Depreciation and amortization................................... 88,460 66,388 57,485
----------- ----------- ----------
16,861,303 11,896,878 7,603,639
----------- ----------- ----------
Income from operations............................................... 2,011,253 946,742 718,662
Other income and (expenses):
Interest income and other....................................... 52,775 51,405 20,479
Interest expense................................................ (350) (1,114) (2,346)
Loss on AMCON stock............................................. (848,342)
----------- ----------- ----------
Income before income taxes........................................... 2,063,678 148,691 736,795
Provision (benefit) for income taxes................................. 806,546 (733,909) 15,100
----------- ----------- ----------
Net income........................................................... $ 1,257,132 $ 882,600 $ 721,695
----------- ----------- ----------
----------- ----------- ----------
Net income per common share.......................................... $ 0.14 $ 0.10 $ 0.09
----------- ----------- ----------
----------- ----------- ----------
Weighted average common and common equivalent shares................. 9,255,479 8,915,666 8,318,909
----------- ----------- ----------
----------- ----------- ----------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements
F-4
<PAGE>
<PAGE>
CABLE CAR BEVERAGE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------
1996 1995 1994
---------- ---------- ---------
<S> <C> <C> <C>
Cash flows from operating activities:
Net Income.......................................................... $1,257,132 $ 882,600 $ 721,695
Adjustment to reconcile net income to net cash from operating
activities:
Loss on investment in AMCON.................................... 848,342
Depreciation and amortization.................................. 88,460 66,388 57,486
Provision for loss on accounts receivable...................... 44,794 (3,662) 32,111
Deferred income tax assets..................................... 85,635 (953,243)
Change in current assets and liabilities:
Accounts receivable............................................ (317,848) (401,554) (163,477)
Inventories.................................................... (622,639) (1,209,320) (99,703)
Prepaid expenses and other current assets...................... 16,812 (8,020) (21,359)
Other assets................................................... 13,895 (68,677) 10,246
Accounts payable and accrued liabilities....................... (148,790) 276,714 (269,146)
Accrued income taxes........................................... 116,998 26,042 3,100
Other current liabilities...................................... 239,209 160,266 69,316
---------- ---------- ---------
Net cash from (used in) operating activities.............. 773,658 (384,124) 340,269
Cash flows from investing activities:
Cash paid for short-term investments................................ (195,042) (151,876)
Proceeds from short-term investments................................ 151,876
Equipment acquisitions.............................................. (62,611) (97,872) (24,276)
Other............................................................... (40,000) (12,500)
---------- ---------- ---------
Net cash from (used in) investing activities.............. (257,653) 14,004 (188,652)
---------- ---------- ---------
Cash flows from financing activities:
Principal payments on debt.......................................... (5,960) (8,796) (11,339)
Proceeds from issuance of stock..................................... 182,498 374,449 67,197
Tax benefit associated stock options................................ 139,995
---------- ---------- ---------
Net cash from financing activities........................ 316,533 365,653 55,858
---------- ---------- ---------
Net increase (decrease) in cash and cash equivalents..................... 832,538 (4,467) 207,475
Cash and cash equivalents at beginning of period......................... 576,191 580,658 373,183
---------- ---------- ---------
Cash and cash equivalents at end of period............................... $1,408,729 $ 576,191 $ 580,658
---------- ---------- ---------
---------- ---------- ---------
Supplemental disclosure of non-cash financing and investing activities:
Property dividend of investment in AMCON stock...................... $ 799,407
Conversion of debt to equity........................................ $ 59,000
Capital lease obligations........................................... $ 7,000
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements
F-5
<PAGE>
<PAGE>
CABLE CAR BEVERAGE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON STOCK TREASURY STOCK
-------------------- ADDITIONAL ---------------------
NUMBER OF PAID IN ACCUMULATED NUMBER OF
SHARES AMOUNT CAPITAL DEFICIT SHARES AMOUNT
--------- ------- ---------- ----------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1993........... 7,873,156 $78,732 $9,010,082 (5,963,293) 76,357 $(28,635)
Exercise of stock options and
warrants, net...................... 131,462 1,315 65,882
Conversion of debt to equity......... 100,000 1,000 58,000
Issuance of stock to retire
warrants........................... 50,000 500 (500)
Net income........................... 721,695
--------- ------- ---------- ----------- --------- --------
Balance, December 31, 1994........... 8,154,618 81,547 9,133,464 (5,241,598) 76,357 (28,635)
Exercise of stock options and
warrants, net...................... 503,731 5,037 369,413
Dividend of AMCON stock.............. (799,407)
Net income........................... 882,600
--------- ------- ---------- ----------- --------- --------
Balance, December 31, 1995........... 8,658,349 86,584 9,502,877 (5,158,405) 76,357 (28,635)
Exercise of stock options............ 323,332 3,233 179,265
Tax benefit associated stock
options............................ 139,995
Net income........................... 1,257,132
--------- ------- ---------- ----------- --------- --------
Balance, December 31, 1996........... 8,981,681 $89,817 $9,822,137 $(3,901,273) $ 76,357 $(28,635)
--------- ------- ---------- ----------- --------- --------
--------- ------- ---------- ----------- --------- --------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements
F-6
<PAGE>
<PAGE>
CABLE CAR BEVERAGE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 -- ORGANIZATION AND OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES:
ORGANIZATION AND OPERATIONS -- Cable Car Beverage Corporation (the 'Company'),
formerly Great Eastern International, Inc., was incorporated under the laws of
Delaware on April 1, 1968. Since 1987, the Company's primary business has been
the marketing and distribution of beverages and it has been engaged in the food
and beverage business since 1986.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Principles of Consolidation -- The Company's consolidated financial
statements include the accounts of its wholly-owned subsidiaries Old San
Francisco Seltzer, Inc. ('SFS') and Fountain Classics, Inc. ('FCI'). All
significant intercompany accounts and transactions have been eliminated.
Revenue Recognition -- Revenue from beverage finished product and
concentrate sales are recorded at the time of receipt and acceptance by the
customer.
Concentration of Credit Risk -- The Company's customers consist primarily
of beverage distributors. Financial instruments which potentially subject the
Company to concentrations of credit risk are primarily accounts receivable,
short-term investments and cash equivalents. The Company performs ongoing credit
evaluations of its customers' financial condition and generally requires no
collateral from its customers. The Company's sales to major customers are
discussed in Note 9.
Inventories -- Inventories are recorded at the lower of cost or market.
Cost is determined using the first-in, first-out (FIFO) method.
Property and Equipment -- Property and equipment, primarily consisting of
furniture and office equipment, is stated at cost and is generally depreciated
on a straight-line method over the estimated useful lives of the respective
depreciable assets of three to five years. Maintenance and repairs are expensed
as incurred and improvements are capitalized.
Goodwill -- Goodwill is recorded for the excess of the purchase price over
the fair value of net tangible assets acquired. Goodwill is amortized on a
straight-line basis over a 25-year period. The recoverability of goodwill is
assessed quarterly, based on undiscounted projected cash flows. Impairment is
recognized when a permanent diminution in value occurs.
Net Income Per Common Share -- Net income per common share is computed
under the treasury stock method using the weighted average number of common
shares and dilutive common stock equivalent shares outstanding during the year.
Cash Equivalents -- Generally, only highly liquid investments purchased
with original maturities of three months or less are considered to be cash
equivalents. Cash equivalents included in cash and cash equivalents at December
31, 1996 and 1995 are certificates of deposit which aggregated approximately
$135,429 and $318,694, respectively. Cash equivalents are carried at cost which
approximates fair value. The Company has a cash investment policy which
generally restricts investments to ensure preservation of principal and
maintenance of liquidity.
Short-term Investments -- Short-term investments are stated at an amortized
cost of $195,042 which, at December 31, 1996, approximates market value.
Significant Estimates -- Certain estimates and assumptions that affect the
reported amounts of assets and liabilities, and the reported amounts of revenue
and expenses are made by management in the preparation of financial statements
in conformity with generally accepted accounting principles. Actual results
could differ from these estimates.
NOTE 2 -- MERGER OF SHEYA BROTHERS SPECIALTY BEVERAGES, INC. AND INVESTMENT IN
AMCON STOCK:
On June 7, 1993, the Company merged its wholly-owned subsidiary, Sheya
Brothers Specialty Beverages, Inc. ('SBSB'), into AMCON Distributing Company
('AMCON'), a then privately held,
F-7
<PAGE>
<PAGE>
CABLE CAR BEVERAGE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Omaha-based wholesale distributor. In exchange for the net assets of SBSB, the
Company received 12.5% of the issued and outstanding common stock of AMCON. As
part of the transaction, the Company agreed to distribute a minimum of
two-thirds of the AMCON shares to its shareholders, representing approximately
an 8% ownership interest in AMCON.
During the third quarter of 1995, the Company wrote-down its investment in
the market price of AMCON common stock as reported by NASDAQ on August 4, 1995,
the date upon which the stock was initially included on NASDAQ, which resulted
in a charge of $848,342. The Company then distributed 266,469 shares of AMCON
common stock as a dividend to the Company's shareholders of record as of July 5,
1995. This distribution of 266,469 shares of AMCON represented 87% of the
Company's holdings in AMCON. At December 31, 1996, the Company continued to hold
39,674 shares of AMCON common stock.
NOTE 3 -- INVENTORIES:
Inventories consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1996 1995
---------- ----------
<S> <C> <C>
Finished Goods.................................................... $1,330,990 $1,009,223
Raw Materials..................................................... 1,099,906 799,034
---------- ----------
$2,430,896 $1,808,257
---------- ----------
---------- ----------
</TABLE>
NOTE 4 -- OTHER CURRENT LIABILITIES:
Other current liabilities consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1996 1995
-------- --------
<S> <C> <C>
Commitments for marketing and promotional programs.................... $397,474 $218,621
Unbilled inventory receipts........................................... 64,521 106,808
Bonuses............................................................... 141,800 75,000
Travel and entertainment.............................................. 36,186 53,500
Other, individually not material...................................... 142,207 89,050
-------- --------
$782,188 $542,979
-------- --------
-------- --------
</TABLE>
NOTE 5 -- LINE OF CREDIT:
During 1996, the Company extended for one year its $500,000 revolving line
of credit collateralized by the Company's accounts receivable and inventory. No
borrowings were outstanding under the line as of December 31, 1996. Borrowings
made under the agreement bear interest at a variable rate of one point over
prime. The line of credit agreement also includes certain financial and other
covenants. The agreement is currently scheduled to expire in June 1997.
F-8
<PAGE>
<PAGE>
CABLE CAR BEVERAGE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 6 -- INCOME TAXES:
The Company's net deferred income tax asset consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1996 1995
-------- --------
<S> <C> <C>
Net operating loss carryforwards...................................... $621,000 $742,000
Accrued liabilities and reserves...................................... 170,000 145,000
Other, net............................................................ 39,000 45,000
Allowance for doubtful accounts....................................... 38,000 21,000
-------- --------
$868,000 $953,000
-------- --------
-------- --------
</TABLE>
The net operating loss carryforwards are subject to certain annual
utilization limits. Previously, the Company had recorded a valuation allowance
equal to the deferred income tax assets due to management's uncertainty about
the likelihood that the Company would fully utilize these benefits. However, it
was determined by the Company during 1995 that, based upon the Company's recent
and expected future operating results, it was then more likely than not that the
Company would realize its future income tax benefits. Based on this
determination, the Company released the valuation allowance and provided an
income tax benefit of $936,440 during 1995. As of December 31, 1996, the Company
has net operating loss carryforwards of approximately $1,634,000 which expire
from 2000 through 2005. Pursuant to Section 382 of the Internal Revenue Code,
the Company is limited in the amount of net operating loss carryforwards it may
use each year to offset taxable income. The Company's consolidated Section 382
annual limitation is approximately $343,000.
The provision (benefit) for income taxes is comprised of the following:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1996 1995 1994
-------- --------- -------
<S> <C> <C> <C>
Current............................................................. $721,000 $ 219,000 $15,100
Deferred............................................................ 86,000 (953,000) 0
-------- --------- -------
$807,000 $(734,000) $15,100
-------- --------- -------
-------- --------- -------
</TABLE>
The provision for income taxes differs from the amount computed by applying
the U.S. federal income tax rate of 34% to pretax earnings as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------
1996 1995 1994
---------- ----------- ---------
<S> <C> <C> <C>
Income before income taxes.................................... $2,063,678 $ 148,691 $ 737,000
U.S. federal income tax at statutory rate..................... $ 702,000 $ 50,600 $ 251,000
Differences:
State income taxes, net of federal tax benefit........... 43,000 5,200
Loss on dividend of AMCON stock............................... 318,100
Increase (decrease) in unrecognized net operating losses and
future deductions........................................... (1,139,000) (271,000)
Non-deductible items and other, net........................... 62,000 31,100 35,100
---------- ----------- ---------
Provision for income taxes.................................... $ 807,000 $ (734,000) $ 15,100
---------- ----------- ---------
---------- ----------- ---------
</TABLE>
NOTE 7 -- STOCK OPTIONS:
The Company, on a discretionary basis, grants non-qualified stock options
to directors, key employees, and consultants to purchase common stock of the
Company. Stock options are granted at an exercise price not less than the fair
market value of the common stock on the date of grant and generally vest over
four or five years. The expiration period generally occurs between three to six
years.
F-9
<PAGE>
<PAGE>
CABLE CAR BEVERAGE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following table summarizes stock option activity for 1994, 1995 and
1996:
<TABLE>
<CAPTION>
WEIGHTED AVERAGE
SHARES EXERCISE PRICE
--------- ----------------
<S> <C> <C>
Outstanding at December 31, 1993.............................. 1,224,996 $ .85
Granted during 1994...................................... 100,000 .75
Exercised during 1994.................................... (110,000) .45
Forfeited during 1994.................................... (15,000) .75
--------- ------
Outstanding at December 31, 1994.............................. 1,199,996 .88
Granted during 1995...................................... 312,500 1.23
Exercised during 1995.................................... (101,666) .70
Forfeited during 1995.................................... (275,000) .75
--------- ------
Outstanding at December 31, 1995.............................. 1,135,830 1.02
Granted during 1996...................................... 190,000 2.00
Exercised during 1996.................................... (323,332) .56
Forfeited during 1996.................................... (99,998) 2.37
--------- ------
Outstanding at December 31, 1996.............................. 902,500 $1.24
--------- ------
--------- ------
</TABLE>
The weighted average fair values of options granted during 1996 and 1995
were $.448 and $.685, respectively.
The following table summarizes information about stock options as of
December 31, 1996:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
-------------------------- ------------------------
WEIGHTED
AVERAGE WEIGHTED
REMAINING AVERAGE
NUMBER CONTRACTUAL NUMBER EXERCISE
RANGE OF EXERCISE PRICES OUTSTANDING LIFE EXERCISABLE PRICE
- ------------------------------------------ ----------- ----------- ----------- ---------
<S> <C> <C> <C> <C>
$0.70 - 0.75.............................. 215,000 2.86 years 215,000 0.70
$1.10..................................... 225,000 3.08 years 205,800 1.10
$1.25..................................... 272,500 3.65 years 184,300 1.25
$2.00..................................... 190,000 4.31 years
----------- ----------- ----------- ---------
902,500 3.46 years 605,100 1.00
----------- ----------- ----------- ---------
----------- ----------- ----------- ---------
</TABLE>
The Company applies APB 25 in accounting for its stock compensation plans,
and no compensation expense has been recognized in the financial statements for
options granted to employees and directors. Had compensation expense for the
Company's stock option plan been determined based on the fair values at the
grant dates for awards under the plan consistent with the method of accounting
prescribed by FASB Statement 123, the Company's net income and income per share
would have been decreased to the pro forma amounts indicated below for the years
ended December 31:
<TABLE>
<CAPTION>
1996 1995
---------- --------
<S> <C> <C>
Net income:
As reported.................................................... $1,257,132 $882,600
Pro forma...................................................... 1,221,278 805,378
Net income per share:
As reported.................................................... $ 0.14 $ 0.10
Pro forma...................................................... 0.13 0.09
</TABLE>
In accordance with the guidance provided under SFAS 123, the fair value of
each option grant is estimated using the Black-Scholes option-pricing model with
the following weighted-average assumptions: dividend yield of zero; expected
volatility of 47% in 1996 and 36% in 1995; risk-free interest rate of 5.83% in
1996 and 5.59% in 1995; and an expected term of five years. The risk-free
interest rate used
F-10
<PAGE>
<PAGE>
CABLE CAR BEVERAGE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
in the calculation in the yield on the grant date of the U.S. Treasury Strip
with a maturity equal to the expected term of the option.
NOTE 8 -- COMMITMENTS:
The Company has commitments to lease office space through September 30,
1997. Rental expense of $41,339, $39,139 and $37,901 has been recognized for the
years ended December 31, 1996, 1995 and 1994, respectively. At December 31,
1996, the minimum annual rental commitments under noncancellable operating
leases were approximately $28,350 through September 1997.
The Company has outstanding commitments to purchase raw materials
(primarily glass) which aggregate approximately $2.6 million at December 31,
1996.
The Company has a licensing agreement with Stewart's Restaurants, Inc.
which provides for a sliding-scale royalty with a minimum annual royalty of
$50,000.
NOTE 9 -- MAJOR CUSTOMERS:
Two customers accounted for approximately 18% and 14% individually of the
Company's net sales for the year ended December 31, 1996. Two customers each
accounted for approximately 20% of net sales for the years ended December 31,
1995 and 1994.
NOTE 10 -- QUARTERLY INFORMATION (UNAUDITED)(1):
The following interim financial information represents the 1996 and 1995
consolidated results of operations on a quarterly basis:
<TABLE>
<CAPTION>
PER
COMMON
PRETAX SHARE
GROSS INCOME NET NET
QUARTER ENDED REVENUE PROFIT (LOSS) INCOME INCOME
- --------------------------------------- ---------- ---------- --------- -------- ------
<S> <C> <C> <C> <C> <C>
December 31, 1996...................... $4,275,088 $1,153,903 $ 339,092 $208,610 $.02
September 30, 1996..................... 5,664,924 1,579,016 758,762 445,115 .05
June 30, 1996.......................... 5,249,735 1,482,795 675,506 430,051 .05
March 31, 1996......................... 3,682,809 985,908 290,318 173,356 .02
December 31, 1995...................... $3,214,852 $ 699,116 $ 120,515 $102,054 $.01
September 30, 1995..................... 4,286,294 1,060,199 (502,320) 355,763 .04
June 30, 1995.......................... 3,453,111 957,094 397,313 322,001 .04
March 31, 1995......................... 1,889,363 508,051 133,182 102,782 .01
</TABLE>
- ------------
(1) The Unaudited Quarterly Information for 1995 was not reviewed by the
Company's independent accountants in accordance with standards established
for such reviews.
F-11
<PAGE>
<PAGE>
APPENDIX A-2
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-K/A
AMENDMENT NO. 1
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE TRANSITION PERIOD FROM __________________ TO __________________
COMMISSION FILE NUMBER 0-14784
------------------------
CABLE CAR BEVERAGE CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------------
DELAWARE 52-0880815
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
717 17TH STREET, SUITE 1475, DENVER, COLORADO 80202
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (303) 298-9038
------------------------
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
------------------- ----------------
None None
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Common Stock, $.01 Par Value
(TITLE OF CLASS)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes __X__ No ______
The aggregate market value of equity securities held by non-affiliates of
the Registrant on April 23, 1997 was approximately $17,035,000.
As of April 23, 1997 there were 8,905,324 shares of common stock
outstanding.
================================================================================
<PAGE>
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Directors and Executive Officers
The executive officers and directors of the Company are as follows:
<TABLE>
<CAPTION>
YEAR BECAME
NAME AGE DIRECTOR POSITION
- ------------------------------------ --- ----------- --------------------------
<S> <C> <C> <C>
Samuel M. Simpson................... 44 1986 President, Director
James P. McCloskey.................. 46 1992 Director
William H. Rutter................... 45 1995 Director
Myron D. Stadler.................... 30 N/A Chief Accounting Officer
</TABLE>
Set forth below is certain information regarding the directors and
executive officers:
Samuel M. Simpson has been President, Chief Executive Officer and a
director of the Company since 1986. He has served as Chairman of the Board
since 1992. He was employed as a consultant to reorganize the Company
during 1983 prior to joining the Company first as its Vice President in
1984 and later as its President and Chief Executive Officer in 1986. From
1979 to 1984 Mr. Simpson was President of Energy Prospects, Inc. a Denver
based privately owned oil and gas company.
James P. McCloskey is Chief Financial Officer of Red Robin
International, Inc. in Denver, Colorado and has been a director of the
Company since 1992. From April 1994 to February 1996, Mr. McCloskey was the
Chief Financial Officer for Avalon Software Company, in Tucson, Arizona.
From 1988 until April 1994, he was Chief Financial Officer of the Famous
Amos Chocolate Chip Cookie Corporation, San Francisco, California. From
1985 to 1988 he was Chief Financial Officer and President, respectively, of
the William J. Ash Corporation and The James P. McCloskey Corporation,
Denver, Colorado, both privately owned real estate development companies.
Mr. McCloskey is a certified public accountant.
William H. Rutter is a private investor and has been a director of the
Company since 1995. From 1991 to 1993, Mr. Rutter was the president of
Capstone Management Corporation which owns and operates restaurants in the
Denver area. From 1984 to 1990, he was a partner in Sherman & Howard, a
Denver, Colorado law firm.
Myron D. Stadler has been employed by the Company since 1992 and was
elected Chief Accounting Officer and Secretary in 1995. Prior to 1992, Mr.
Stadler was a financial analyst for the City and County of Denver at
Stapleton International Airport.
ITEM 11. EXECUTIVE COMPENSATION.
The following table provides summary information concerning compensation
paid to or earned by the Company's Chief Executive Officer for the years ended
December 31, 1996, 1995 and 1994.
2
<PAGE>
<PAGE>
SUMMARY COMPENSATION
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------------ ------------------- ----------------------
NAME & OTHER ANNUAL RESTRICTED LTIP ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(2) STOCK OPTIONS #PAYOUTS COMPENSATION
- ----------------------------- ---- -------- -------- --------------- ---------- ------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Samuel M. Simpson(1)
President & Chairman
of the Board............... 1996 $150,000 $140,000 $ 170,266 $0 0 $0 $0
1995 120,000 75,000 0 0 0 0 0
1994 115,137 40,000 0 0 0 0 0
</TABLE>
- ------------
(1) As permitted by Commission rules, no amounts are shown for certain
perquisites, where such amounts do not exceed the lesser of 10% of bonus
plus salary or $50,000.
(2) The amounts under 'Other Annual Compensation' represent the value realized
from the exercise of stock options.
The following table provides information with respect to the named officers
concerning unexercised stock options held as of December 31, 1996.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
<TABLE>
<CAPTION>
NUMBER OF
UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN THE MONEY OPTIONS
SHARES DECEMBER 31, 1996(#) AT DECEMBER 31, 1996($)(1)
ACQUIRED ON VALUE ---------------------------- ---------------------------------
NAME EXERCISE(#) REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------- ----------- -------- ----------- ------------- --------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Samuel M. Simpson
President & Chairman
of the Board............ 166,666 170,266 135,000 75,000 140,250 18,750
Myron D. Stadler
Chief Accounting
Officer & Secretary..... 25,000 20,428 27,200 42,800 31,980 28,520
</TABLE>
- ------------
(1) Based on the closing bid price of the Company's common stock at December 31,
1996 as reported by the NASDAQ system.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
INDIVIDUAL GRANTS STOCK
----------------------------------------------------- PRICE
% OF TOTAL OPTIONS APPRECIATION FOR
NUMBER OF SECURITIES GRANTED TO EXERCISE OR OPTION TERM(1)
UNDERLYING OPTIONS EMPLOYEES IN BASE PRICE ----------------
NAME GRANTED (#)(2) FISCAL YEAR ($/SH) EXPIRATION DATE 5% 10%
- ----------------------- -------------------- ------------------ ----------- ----------------- ------ ------
<S> <C> <C> <C> <C> <C> <C>
McCloskey, James P..... 37,500 20% $2.00 December 31, 2000 11,822 24,825
Rutter, William H...... 37,500 20% $2.00 December 31, 2000 11,822 24,825
Simpson, Samuel M...... 75,000 39% $2.00 December 31, 2000 23,644 49,650
Stadler, Myron......... 20,000 11% $2.00 December 31, 2003 3,370 7,262
</TABLE>
- ------------
(1) The potential realizable value is based on the term of the option at the
date of grant. It is calculated by assuming that the stock price on the date
of grant appreciates at the indicated annual rate, compounded annually for
the entire term, and that the option is exercised and sold on the last day
of the option term for the appreciated stock price. These amounts represent
certain assumed rates of
(footnotes continued on next page)
3
<PAGE>
<PAGE>
(footnotes continued from previous page)
appreciation only, in accordance with the rules of the Commission, and do
not reflect the Company's estimate or projection of future stock price
performance. Actual gains, if any, are dependent on the actual future
performance of the Common Stock. There can be no assurance that the amounts
reflected in this table will be achieved.
(2) These options become exercisable December 31, 1997 through December 31,
2000.
COMPENSATION PURSUANT TO PLANS
The Company presently has no proposed compensation plans such as pension,
profit sharing, retirement plans, or other similar forms of executive
compensation.
EMPLOYMENT AGREEMENT
The Company's President and Chief Executive Officer, Samuel M. Simpson, has
an employment agreement with the Company which currently runs through December
31, 1999. Mr. Simpson's agreement provides for an annual base salary of $175,000
plus an annual bonus which is based on the Company achieving certain financial
performance levels.
DIRECTORS
The Company compensates outside directors at the rate of $1,000 per quarter
and reimburses direct expenses associated with attending meetings. The Board of
Directors does not have committees.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The table below sets forth information as of April 23, 1997 with respect to
beneficial ownership of the Common Stock by all directors and officers, both
individually and as a group, and by each person known by the Company to be the
beneficial owner of more than five percent of the outstanding shares of the
Common Stock. As of April 23, 1997 the Company had 8,905,324 shares of common
stock outstanding.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF
NAME BENEFICIAL OWNERSHIP(1) CLASS OWNED
-------- -------------------------- -----------
<S> <C> <C>
OFFICERS & DIRECTORS
Samuel M. Simpson........................................ 1,314,877 14.3%
James P. McCloskey....................................... 143,625 1.57%
William H. Rutter........................................ 761,232 8.39%
Myron D. Stadler......................................... 95,000 1.05%
Officers and Directors as a Group (4 persons)....... 2,314,734 24.4%
</TABLE>
5% SHAREHOLDERS
None
- ------------
(1) Includes presently outstanding options to purchase shares of the Company's
Common Stock held by each of the foregoing.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
On May 1, 1996, the Company loaned $75,000 to Samuel M. Simpson, the
Company's President and CEO. The loan proceeds were used by Mr. Simpson to
exercise 166,666 stock options in the Company. This loan was evidenced by a
promissory note bearing interest of 8% per annum, with interest and principal
due and payable on January 31, 1997. Mr. Simpson pledged 268,644 shares of
common stock of the Company as security for this loan. The largest aggregate
amount of indebtedness during 1996 was $79,016.39 which included $4,016.39 of
accrued interest. The entire amount of the loan including interest was repaid on
December 31, 1996.
4
<PAGE>
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) The following documents are filed as a part of this report:
FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
The financial statements and financial statement schedules filed with this
report are listed in the Index to Financial Statements appearing on page F1.
EXHIBITS
The documents listed below have been filed as exhibits to this report:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBITS
- --------- ---------------------------------------------------------------------------------------------------------
<S> <C>
(3)(a) -- Certificate of Incorporation, as amended (Filed as Exhibit (3) with and incorporated by reference from
Form 10-K dated October 9, 1987)
(3)(b) -- Certificate of Amendment -- July 20, 1989, changing name*
(3)(c) -- Bylaws, as amended (Filed as Exhibit (3) with and incorporated by reference from Form 10-K dated
October 9, 1987)
(10)(g) -- Stewart's Master Agreement -- Stewart's Restaurants, Inc. as amended by Addendum, dated April 11, 1994
and incorporated by reference from Form 10-K dated May 4, 1994
(10)(s) -- Employment Agreement with executive, Samuel M. Simpson and incorporated by reference from Form 10-K
dated April 14, 1995
(10)(t) -- Addendum to Employment Agreement with executive, Samuel M. Simpson
(21) -- Subsidiaries of the Company (Filed as Exhibit (22) with and incorporated by reference to the current
Form 10-K, Note 1 to the Consolidated Financial Statements)
</TABLE>
- ------------
* Incorporated by reference to Form S-1 filed September 25, 1989, SEC file
#33-30480.
(b) Reports on Form 8-K
None.
5
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Cable Car Beverage Corporation has duly caused this report
to be signed on its behalf by the undersigned, hereunto duly authorized.
CABLE CAR BEVERAGE CORPORATION
(Registrant)
By /S/ SAMUEL M. SIMPSON
.........................
SAMUEL M. SIMPSON
PRESIDENT AND CHIEF
EXECUTIVE OFFICER
Date: April 23, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
- ------------------------------------------ -------------------------------------------- -------------------
<C> <S> <C>
/s/ SAMUEL M. SIMPSON Chairman of the Board and President April 23, 1997
.........................................
(SAMUEL M. SIMPSON)
/s/ MYRON D. STADLER Chief Accounting Officer April 23, 1997
.........................................
(MYRON D. STADLER)
</TABLE>
6
<PAGE>
<PAGE>
APPENDIX A-3
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-Q
(Mark One)
[x] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _________ TO _________
COMMISSION FILE NUMBER 0-14784
------------------------
CABLE CAR BEVERAGE CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------------
DELAWARE 52-0880815
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION) IDENTIFICATION NO.)
717 17TH STREET, SUITE 1475, DENVER, COLORADO 80202-3314
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(303) 298-9038
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
(FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF CHANGED SINCE LAST
REPORT)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes __X__ No _______
The Registrant had 8,948,324 shares of its $.01 par value common stock
outstanding as of August 8, 1997.
================================================================================
<PAGE>
<PAGE>
FORM 10-Q
2ND QUARTER
INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Part I -- Financial Information
Item 1. Consolidated Financial Statements:
Consolidated balance sheet at June 30, 1997 (Unaudited) and at December 31, 1996...................... 3
Consolidated statement of operations for the six-month and three-month periods ended June 30, 1997 and
June 30, 1996 (Unaudited)............................................................................ 4
Consolidated statement of cash flows for the six-month periods ended June 30, 1997 and June 30, 1996
(Unaudited).......................................................................................... 5
Consolidated statement of changes in stockholders' equity (Unaudited)................................. 6
Notes to unaudited consolidated financial statements for the six-month period ended June 30, 1997..... 7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.............. 7
Part II -- Other Information............................................................................... 9
</TABLE>
2
<PAGE>
<PAGE>
PART I -- FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
CABLE CAR BEVERAGE CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
----------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents...................................................... $ 1,229,406 $ 1,408,729
Short-term investments......................................................... 195,042
Accounts receivable, net of allowance for doubtful accounts of $143,025 at June
30, 1997 and $100,743 at December 31, 1996.................................... 2,694,410 1,336,094
Inventories, net............................................................... 3,246,493 2,430,896
Prepaid expenses and other current assets...................................... 86,012 23,582
Deferred income tax assets..................................................... 519,950 394,029
----------- ------------
Total current assets...................................................... 7,776,271 5,788,372
Property and equipment, net
Property and equipment less accumulated depreciation of $173,896 at June 30,
1997 and $144,441 at December 31, 1996........................................ 127,945 130,778
Other assets:
Goodwill and other intangibles, less accumulated amortization of $414,842 at
June 30, 1997 and $387,168 at December 31, 1996............................... 763,649 591,265
Investment in AMCON Distributing Co............................................ 99,185 99,185
Other assets................................................................... 1,312 58,603
Deferred income tax assets..................................................... 404,541 473,579
----------- ------------
$ 9,172,903 $ 7,141,782
----------- ------------
----------- ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities....................................... $ 795,227 $ 231,408
Accrued income taxes........................................................... 66,360 146,140
Other current liabilities...................................................... 1,559,292 782,188
----------- ------------
Total current liabilities................................................. 2,420,879 1,159,736
----------- ------------
Stockholders' equity:
Common stock, $.01 par value; 25,000,000 shares authorized; 9,024,681 shares
issued at June 30, 1997 and 8,981,681 issued at December 31, 1996............. 90,247 89,817
Additional paid-in capital..................................................... 9,898,687 9,822,137
Accumulated deficit............................................................ (3,208,275) (3,901,273)
Less -- 76,357 common shares in treasury....................................... (28,635) (28,635)
----------- ------------
6,752,024 5,982,046
----------- ------------
$ 9,172,903 $ 7,141,782
----------- ------------
----------- ------------
</TABLE>
See notes to unaudited consolidated financial statements
3
<PAGE>
<PAGE>
CABLE CAR BEVERAGE CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------ -------------------------
1997 1996 1997 1996
---------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Revenue:
Sales.............................................. $7,388,832 $5,249,735 $12,746,696 $8,932,544
Cost and expenses:
Cost of goods sold................................. 5,283,393 3,766,940 9,123,558 6,463,841
General and administrative......................... 668,652 273,375 940,373 515,129
Selling and distribution........................... 735,603 521,183 1,385,775 965,331
Depreciation and amortization...................... 33,410 22,277 57,129 42,084
---------- ---------- ----------- ----------
6,721,058 4,583,775 11,506,835 7,986,385
---------- ---------- ----------- ----------
Income from operations.................................. 667,774 665,960 1,239,861 946,159
Other income and (expenses):
Interest income and other non-operating income..... 15,220 9,629 31,344 19,893
Interest expense................................... (83) (228)
---------- ---------- ----------- ----------
Income before income taxes.............................. 682,994 675,506 1,271,205 965,824
Provision for income taxes.............................. 340,988 245,455 578,207 362,417
---------- ---------- ----------- ----------
Net income.............................................. $ 342,006 $ 430,051 $ 692,998 $ 603,407
---------- ---------- ----------- ----------
Net income per common share............................. $ .04 $ .05 $ .07 $ .07
---------- ---------- ----------- ----------
---------- ---------- ----------- ----------
Weighted average common and common equivalent shares.... 9,687,764 9,050,647 9,602,700 9,022,000
---------- ---------- ----------- ----------
---------- ---------- ----------- ----------
</TABLE>
See notes to unaudited consolidated financial statements
4
<PAGE>
<PAGE>
CABLE CAR BEVERAGE CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
SEPTEMBER 30,
-------------------------
1997 1996
----------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income..................................................................... $ 692,998 $ 603,407
Adjustment to reconcile net income to net cash from operating activities:
Depreciation and amortization............................................. 57,129 42,084
Provision for loss on accounts receivable................................. 42,282 21,332
Change in assets and liabilities:
Accounts receivable....................................................... (1,492,886) (845,677)
Inventories............................................................... (815,597) (545,604)
Prepaid expenses and other current assets................................. (62,430) (14,749)
Other assets.............................................................. 57,291 (72,161)
Deferred income tax assets................................................ (56,883) 44,363
Accounts payable and accrued liabilities.................................. 563,819 597,424
Accrued income taxes...................................................... (79,780) 220,753
Other current liabilities................................................. 777,104 193,353
----------- ---------
Net cash from (used in) operating activities......................... (316,953) 244,525
----------- ---------
Cash flows from investing activities:
Proceeds from short-term investments........................................... 195,042
Cash paid to reacquire certain distribution rights............................. (30,790)
Property and equipment acquisitions............................................ (26,622) (39,141)
----------- ---------
Net cash from (used in) investing activities......................... 137,630 (39,141)
----------- ---------
Cash flows from financing activities:
Principal payments on debt..................................................... (4,389)
Proceeds from issuance of stock................................................ 134,998
----------- ---------
Net cash from financing activities................................... 130,609
----------- ---------
Net increase (decrease) in cash and cash equivalents................................ (179,323) 335,993
Cash and cash equivalents at beginning of period.................................... 1,408,729 576,191
----------- ---------
Cash and cash equivalents at end of period.......................................... $ 1,229,406 $ 912,184
----------- ---------
----------- ---------
Supplemental disclosure of non-cash financing and investing activities
Issuance of stock to reacquire certain distribution rights..................... $ 76,980
Forgiveness of accounts receivable to reacquire certain distribution rights.... 92,288
</TABLE>
See notes to unaudited consolidated financial statements
5
<PAGE>
<PAGE>
CABLE CAR BEVERAGE CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN
STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL TREASURY STOCK
-------------------- PAID-IN ACCUMULATED ------------------
SHARES AMOUNT CAPITAL DEFICIT SHARES AMOUNT
--------- ------- ---------- ----------- ------ --------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1996............. 8,981,681 $89,817 $9,822,137 $(3,901,273) 76,357 $(28,635)
Stock issued to reacquire certain
distribution rights.................. 43,000 430 76,550
Net Income............................. 692,998
--------- ------- ---------- ----------- ------ --------
Balance June 30, 1997.................. 9,024,681 $90,247 $9,898,687 $(3,208,275) 76,357 $(28,635)
--------- ------- ---------- ----------- ------ --------
--------- ------- ---------- ----------- ------ --------
</TABLE>
See notes to unaudited consolidated financial statements
6
<PAGE>
<PAGE>
CABLE CAR BEVERAGE CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 -- FINANCIAL STATEMENTS PRESENTATION
The consolidated interim financial statements of Cable Car Beverage
Corporation (the 'Company') at June 30, 1997, and for the six-month and
three-month periods ended June 30, 1997, and June 30, 1996 are unaudited. In the
opinion of management, all adjustments (consisting of only normal recurring
adjustments) necessary to present fairly the consolidated financial position,
results of operations and cash flows for all periods presented have been made.
The Company's consolidated interim financial statements include the
accounts of its wholly-owned subsidiaries, Old San Francisco Seltzer, Inc. and
Fountain Classics, Inc.
Certain information and substantially all footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been omitted. It is suggested that these financial
statements be read in conjunction with the fiscal year ended Company's
consolidated financial statements, filed in Form 10-K for December 31, 1996. The
results of operations for the period ended June 30, 1997 are not necessarily
indicative of the operating results for the full year.
Certain reclassifications have been reflected in the prior period financial
statements to conform to the current year presentations.
NOTE 2 -- NET INCOME PER COMMON SHARE
Net income per common share was computed under the treasury stock method
using the weighted average number of common shares and dilutive common stock
equivalent shares outstanding during the period. In February 1997, the FASB
issued SFAS No. 128, 'Earnings per Share,' which is effective for periods ending
after December 15, 1997 and requires changes in the computation, presentation
and disclosure of earnings per share. Earnings per share for all prior periods
must be restated to conform with computation provisions of SFAS No. 128. The
adoption of SFAS No. 128 for the year ended December 31, 1997 will not have a
material impact on the Company's reported financial results.
NOTE 3 -- INVENTORIES
Inventories consisted of:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
---------- ------------
<S> <C> <C>
Finished Goods................................................... $1,519,816 $1,330,990
Raw Materials.................................................... 1,726,677 1,099,906
---------- ------------
$3,246,493 $2,430,896
---------- ------------
---------- ------------
</TABLE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Certain statements in the following discussions regarding the Company's
future product and business plans, financial results, performance and events are
forward-looking statements and are based on current expectations. Actual results
may differ materially due to a number of risks and uncertainties.
CURRENT DEVELOPMENTS
During the second quarter, the Company reacquired territorial marketing and
distribution rights from certain of its distributors located in the northeastern
United States. The cost to reacquire these territorial distribution rights
totaled $200,058, of which $30,790 was paid in cash, $92,288 was accounts
receivable forgiven, and the remainder was paid through the issuance of the
Company's common stock.
7
<PAGE>
<PAGE>
RESULTS OF OPERATIONS
COMPARISON OF THE SIX-MONTH PERIODS ENDED JUNE 30, 1997 AND JUNE 30, 1996
Revenue for the six-months ended June 30, 1997 was $12,746,696 versus
revenue of $8,932,544 for the six-months ended June 30, 1996. This increase of
$3,814,152, or 43%, was primarily due to increased sales of Stewart's brand
products.
Cost of goods sold increased by $2,659,717 for the comparative six-months
ended June 30, 1997 and June 30, 1996. As a percentage of sales, cost of goods
sold decreased to 71.6% for the six-months ended June 30, 1997 from 72.4% for
the six-months ended June 30, 1996. The improved gross margin was primarily due
to favorable sweetener costs compared with the six months ended June 30, 1996.
General and administrative expenses increased by $425,244 for the
six-months ended June 30, 1997 compared to the six-months ended June 30, 1996.
General and administrative costs also increased as a percentage of sales to 7.4%
from 5.8% for the six-months ended June 30, 1997 and 1996, respectively. This
increase is primarily the result of approximately $313,000 of expenses related
to the proposed merger with Triarc Companies, Inc. (see Part II, Item 5, below).
These expenses are non-recurring and are not related to ongoing operations of
the Company. Excluding these merger related expenses, general and administrative
expenses would have been $627,557 or 4.9% of sales.
Selling and distribution expenses increased $420,444 for the comparative
six-months ended June 30, 1997 from June 30, 1996, primarily due to increased
promotional spending on the Stewart's brand products. As a percentage of sales,
selling expenses were relatively constant at 11%.
Pre-tax income rose $305,381, or 32%, to $1,271,205 for the six-months
ended June 30, 1997 from $965,824 for the six-months ended June 30, 1996. Net
income rose $89,591, or 15%, to $692,998 from $603,407 for the comparative
periods ending June 30, 1997 and 1996, respectively. Excluding merger related
costs, pre-tax income would have risen 64% to $1,584,021 and net income would
have increased 57% to $949,522 for the six-month period compared to the prior
year period.
COMPARISON OF THE THREE-MONTH PERIODS ENDED JUNE 30, 1997 AND JUNE 30, 1996
Revenue for the three-months ended June 30, 1997 was $7,388,832 versus
revenue of $5,249,735 for the three-months ended June 30, 1996. This increase of
$2,139,097, or 41%, was primarily due to increased sales of Stewart's brand
products.
Cost of goods sold increased by $1,516,453 for the comparative three-months
ended June 30, 1997 and June 30, 1996. As a percentage of sales, cost of goods
sold remained relatively constant at 72% for the comparative three-months ended
June 30, 1997 and 1996.
General and administrative expenses increased by $395,277 for the
three-months ended June 30, 1997 compared to the three-months ended June 30,
1996. General and administrative costs also increased as a percentage of sales
to 9% from 5.2% for the three-months ended June 30, 1997 and 1996, respectively.
This increase is primarily the result of approximately $313,000 of expenses
related to the proposed merger with Triarc Companies, Inc. (see Part II, Item 5,
below). These expenses are non-recurring and are not related to ongoing
operations of the Company. Excluding these merger related expenses, general and
administrative expenses would have been $355,836 or 4.8% of sales.
Selling and distribution expenses increased $214,420 for the comparative
three-months ended June 30, 1997 from June 30, 1996, primarily due to increased
promotional spending on the Stewart's brand products. As a percentage of sales,
selling expenses were relatively constant at 10%.
Pre-tax income rose $7,488, or 1%, to $682,994 for the three-months ended
June 30, 1997 from $675,506 for the three-months ended June 30, 1996. Net income
declined $88,045, or 20%, to $342,006 from $430,051 for the comparative
three-month periods ended June 30, 1997 and 1996, respectively. Excluding merger
related costs, pre-tax income would have rose 47% to $995,810 and net income
would have increased 39% to $598,530 for the three-month period compared to the
prior year period.
Because the Triarc merger related expenses are not deductible for tax
purposes, the Company's annual effective tax rate for 1997 is expected to be
45%. The effective tax rate of 50% and 45% for the
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three-months and six-months ended June 30, 1997, respectively, reflect the
impact of the nondeductible merger expenses.
LIQUIDITY AND CAPITAL RESOURCES
The Company's current ratio at June 30, 1997 was 3.21 as compared to 5.0 at
December 31, 1996. Working capital at June 30, 1997 was $5,355,392 as compared
to $4,628,636 at December 31, 1996. For the six-months ended June 30, 1997, cash
decreased by $179,323. The principal use of cash during this period was for
operating activities. Inventories and accounts receivable increased
significantly as a result of increased sales. Net income adjusted for
depreciation, amortization and other provisions generated approximately $792,000
in cash. Accounts receivable and inventories increased by a total of
approximately $2,308,000, and accounts payable and other current liabilities
increased approximately $1,341,000. Investing activities provided cash of
approximately $138,000, primarily from the proceeds from short-term investments.
The Company intends to utilize cash from operations to meet its ongoing
obligations. The Company also maintains a bank line of credit in the amount of
$500,000 which it may utilize from time to time to meet seasonal cash needs.
Management does not expect liquidity problems for the next twelve months
assuming the Company can maintain or exceed its current sales volume, and
expenses as a percentage of sales remain relatively constant.
FORWARD-LOOKING STATEMENTS
This Quarterly Report of Form 10-Q contains certain statements, including
statements under 'Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations,' that constitute 'forward-looking
statements' within the meaning of the Private Securities Litigation Reform Act
of 1995. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results of the
Company to be materially different from any future results implied by such
forward-looking statements. Such factors include, but are not limited to general
economic and business conditions; the costs of raw materials, the ability of the
Company to maintain margins; continued or new relationships with distributors
and brand support, changes in consumer preferences; government regulations and
other factors. The Company undertakes no obligation to revise any
forward-looking statements in order to reflect events or circumstances that may
arise after the date of this report.
PART II -- OTHER INFORMATION
ITEM 5. OTHER INFORMATION
MERGER AGREEMENT -- TRIARC COMPANIES, INC.
On June 24, 1997 the Company entered into a definitive agreement with
Triarc Companies, Inc. (NYSE:TRY) whereby the Company agreed to be merged with a
wholly-owned subsidiary of Triarc (the 'Merger Agreement'). Approval of the
Merger Agreement and the proposed merger (the 'Merger') requires the affirmative
vote of a majority of the outstanding shares of the Company's common stock.
Pursuant to the proposed Merger, each share of the Company's Common Stock
issued and outstanding immediately prior to the effective time of the Merger
(other than treasury shares and shares held by Triarc and its subsidiaries and
subsidiaries of the Company, all of which will be canceled, and shares with
respect to which the holder has exercised appraisal rights under Delaware law)
will be converted into the right to receive 0.1722 of a share (the 'Conversion
Price') of Class A common stock, par value $.10 per share, of Triarc (the
'Triarc Common Stock'), subject to the adjustment described below, and any cash
to be paid in lieu of fractional shares of Triarc Common Stock. The Conversion
Price is subject to adjustment as follows: (i) if the Average Triarc Share Price
(based on the average closing price for 15 consecutive trading days immediately
preceding closing) is less than $18.875, then the Conversion Price shall be
adjusted to equal the quotient obtained by dividing $3.25 by such Average Triarc
Share Price, and (ii) if the Average Triarc Share Price is greater than $24.50,
then the Conversion
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Price shall be adjusted to equal the quotient obtained by dividing $4.22 by such
Average Triarc Share Price.
Triarc is a holding company which, through its subsidiaries, is engaged in
the following businesses: beverages, restaurants, dyes and specialty chemicals
and liquefied petroleum gas. The beverage operations are conducted by the Triarc
Beverage Group through Royal Crown Company, Inc., Mistic Brands, Inc. and, since
its acquisition on may 22, 1997, Snapple Beverage Corp.; the restaurant
operations are conducted by the Triarc Restaurant Group through Arby's, Inc.;
the dyes and specialty chemical operations are conducted through C.H. Patrick &
Co., Inc.; and the liquefied petroleum gas operations are conducted through
National Propane Corporation, the managing general partner of National propane
Partners, L.P., and its operating subsidiary partnership, National Propane, L.P.
CHANGE OF CONTROL
As a condition to its entering into the Merger Agreement, Triarc required
Samuel M. Simpson, the President and Chief Executive Officer of the Company,
Susan L. Neff, Mr. Simpson's wife, William H. Rutter, a director of the Company,
and Susan L. Fralick, Mr. Rutter's wife (collectively, the 'Subject
Stockholders'), to enter into a Stockholders Agreement, as amended (the
'Stockholders Agreement'). The Subject Stockholders own an aggregate of
1,766,409 shares of the Company's Common Stock, or approximately 19.7% of the
shares of the Company's Common Stock, which are subject to the terms of the
Stockholders Agreement (such amount does not include 12,200 shares owned by them
but not subject to the Stockholders Agreement). Each Subject Stockholder has
agreed that at any meeting of the holders of the Company's Common Stock, he or
she will, until the effective time or the termination of the Merger Agreement,
vote or cause to be voted such Cable Car Common Stock and any of the Company's
Common Stock acquired by them after the date of the Stockholders Agreement in
favor of approval of the Merger Agreement and the merger and against certain
other actions. Moreover, each Subject Stockholder has also granted Triarc an
irrevocable proxy to vote his or her shares of stock as specified above in the
event that such Subject Stockholder fails to so vote his or her stock in the
agreed upon manner.
In addition, pursuant to the Stockholders Agreement, each Subject
Stockholder has granted to Triarc an exclusive and irrevocable option to
purchase his or her stock in whole but not in part under certain circumstances
at a price per share in cash equal to the product obtained by multiplying 0.1722
(the 'Option Conversion Price') times the average (without rounding) of the
closing prices per share of Triarc Common Stock on the NYSE on the NYSE
Composite Tape for the 15 consecutive NYSE trading days ending on the NYSE
trading day immediately preceding the date of the closing of the exercise of the
option (the 'Option Average Share Price'), subject to the following adjustment:
if the Option Average Share Price is less than $18.875, then the Option
Conversion Price will be adjusted to equal the quotient obtained by dividing
$3.25 by the Option Average Share Price, and if the Option Average Share Price
is greater than $24.50, then the Option Conversion Price will be adjusted to
equal the quotient obtained by dividing $4.22 by the Option Average Share Price.
AGREEMENTS WITH STEWART'S
On June 24, 1997 the Company entered into agreements with Stewart's
Restaurants, Inc. ('Stewart's Restaurants') amending and modifying its licensing
agreements with Stewart's Restaurants (the 'Stewart's Master Agreement') as
further amended on August 11, 1997. Among other things, these amendments (i)
gave the Company ownership of the formulas for and manufacturing rights to
concentrates used to make Stewart's soft drinks; (ii) provide that the Company
is permitted to use the Stewart's trademark on any other product of any type;
and (iii) granted to the Company the perpetual exclusive worldwide license to
manufacture, distribute and sell post-mix syrups and premixes for Stewart's
beverages throughout the world (fountain-type beverages), subject to certain
rights retained by Stewart's Restaurants. As consideration for these amendments,
the Company agreed to issue to Stewart's Restaurants an aggregate of 150,000
shares of the Company's Common Stock and to pay Stewart's Restaurants $400,000
in cash, of which $250,000 is payable on March 31, 1998 and $150,000 is payable
on March 31, 1999.
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
(2)-1 Agreement and Plan of Merger -- Triarc Company, Inc.***
3 (i) Certificate of Incorporation*
3 (ii) Certificate of Amendment (Changing Name)**
3 (iii) By-Laws*
(10)-V Agreement -- Stewart's Restaurants, Inc.***
(10)-W Agreement -- Stewart's Restaurants, Inc.***
(10)-X Stockholders Agreement -- Samuel M. Simpson and
William H. Rutter***
* Incorporated by reference to Form 10-K dated 10/09/87
** Incorporated by reference to Form S-1 filed 09/25/89 (SEC #33-30480)
*** Incorporated by reference to Form 8-K filed July 2, 1997 (SEC #0-14784)
(b) Reports on Form 8-K
The Registrant filed a Report on Form 8-K on July 2, 1997 relating to
the proposed merger with Triarc, the Stockholders' Agreement with Triarc
and the agreements with Stewart's Restaurants, Inc.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
Date: August 13, 1997
CABLE CAR BEVERAGE CORPORATION
(registrant)
By: /s/ SAMUEL M. SIMPSON
...................................
(SAMUEL M. SIMPSON)
PRESIDENT
By: /s/ MYRON D. STADLER
..................................
(MYRON D. STADLER)
CHIEF ACCOUNTING OFFICER
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APPENDIX B-1
================================================================================
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
CABLE CAR BEVERAGE CORPORATION,
TRIARC COMPANIES, INC.
AND
CCB MERGER CORPORATION
-----------------------
Dated: June 24, 1997
-----------------------
================================================================================
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TABLE OF CONTENTS
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<S> <C> <C>
ARTICLE I
THE MERGER
SECTION 1.1 The Merger............................................................................... 1
SECTION 1.2 Closing.................................................................................. 1
SECTION 1.3 Certificate of Incorporation............................................................. 2
SECTION 1.4 By-laws.................................................................................. 2
SECTION 1.5 Board of Directors and Officers.......................................................... 2
SECTION 1.6 Meeting of Company Stockholders.......................................................... 2
SECTION 1.7 SEC Filings.............................................................................. 3
SECTION 1.8 Effective Time of the Merger............................................................. 3
ARTICLE II
CONVERSION OF SHARES
SECTION 2.1 Conversion of Shares..................................................................... 3
SECTION 2.2 No Further Transfers..................................................................... 5
SECTION 2.3 Exchange of Shares of Company Common Stock............................................... 5
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 3.1 Organization and Good Standing........................................................... 6
SECTION 3.2 Corporate Authorization; Validity of Agreement; Company Action........................... 6
SECTION 3.3 Capitalization........................................................................... 7
SECTION 3.4 Reports and Financial Statements......................................................... 7
SECTION 3.5 Absence of Certain Changes............................................................... 8
SECTION 3.6 Consents and Approvals; No Violations.................................................... 8
SECTION 3.7 No Undisclosed Liabilities............................................................... 8
SECTION 3.8 Registration Statement................................................................... 8
SECTION 3.9 Litigation; Compliance with Law.......................................................... 8
SECTION 3.10 Taxes.................................................................................... 9
SECTION 3.11 No Default............................................................................... 10
SECTION 3.12 Contracts................................................................................ 10
SECTION 3.13 Intellectual Property.................................................................... 10
SECTION 3.14 Employee Benefit Plans................................................................... 11
SECTION 3.15 Inventory and Supplies................................................................... 12
SECTION 3.16 Receivables.............................................................................. 12
SECTION 3.17 Case Sales............................................................................... 12
SECTION 3.18 Transactions with Affiliates............................................................. 12
SECTION 3.19 State Takeover Statutes.................................................................. 12
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PARENT AND MERGERCO
SECTION 4.1 Organization and Good Standing........................................................... 12
SECTION 4.2 Corporate Authorization; Validity of Agreement........................................... 12
SECTION 4.3 Capitalization........................................................................... 13
SECTION 4.4 Reports and Financial Statements......................................................... 13
SECTION 4.5 Absence of Certain Changes............................................................... 13
SECTION 4.6 Consents and Approvals; No Violations.................................................... 14
SECTION 4.7 Registration Statement................................................................... 14
SECTION 4.8 Tax Representations...................................................................... 14
ARTICLE V
COVENANTS
SECTION 5.1 Interim Operations of the Company........................................................ 15
SECTION 5.2 Access to Information.................................................................... 16
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SECTION 5.3 Consents and Approvals................................................................... 16
SECTION 5.4 No Solicitation.......................................................................... 17
SECTION 5.5 Additional Agreements.................................................................... 17
SECTION 5.6 Notification of Certain Matters.......................................................... 18
SECTION 5.7 Indemnification of Directors and Officers................................................ 18
SECTION 5.8 Rule 145 Affiliates...................................................................... 18
SECTION 5.9 Stock Exchange Listing................................................................... 18
SECTION 5.10 Tax-Free Reorganization.................................................................. 18
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.1 Conditions to the Obligations of Each Party.............................................. 18
SECTION 6.2 Conditions to the Obligations of the Parent and Mergerco................................. 19
SECTION 6.3 Conditions to the Obligations of the Company............................................. 20
ARTICLE VII
TERMINATION
SECTION 7.1 Termination.............................................................................. 20
SECTION 7.2 Effect of Termination.................................................................... 22
ARTICLE VIII
GENERAL AGREEMENTS
SECTION 8.1 Definitions.............................................................................. 22
SECTION 8.2 Survival of Representations, Warranties and Agreements................................... 25
SECTION 8.3 Expenses................................................................................. 25
SECTION 8.4 Notice................................................................................... 25
SECTION 8.5 Amendments............................................................................... 26
SECTION 8.6 Waiver................................................................................... 26
SECTION 8.7 Brokers.................................................................................. 26
SECTION 8.8 Publicity................................................................................ 26
SECTION 8.9 Headings................................................................................. 26
SECTION 8.10 Non-Assignability........................................................................ 26
SECTION 8.11 Entire Agreement; No Third Party Beneficiaries; Rights of Ownership...................... 27
SECTION 8.12 Specific Performance..................................................................... 27
SECTION 8.13 Counterparts............................................................................. 27
SECTION 8.14 Governing Law............................................................................ 27
SECTION 8.15 Consent to Jurisdiction.................................................................. 27
SECTION 8.16 Waiver of Jury Trial..................................................................... 27
SECTION 8.17 Disclosure Schedule...................................................................... 27
</TABLE>
Exhibit:
A -- Form of Restated Certificate of Incorporation.
B -- Form of Affiliate Agreement.
Schedule:
I -- Disclosure Schedule.
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EXHIBIT A TO AGREEMENT AND PLAN OF MERGER
FORM OF RESTATED CERTIFICATE OF INCORPORATION
CERTIFICATE OF INCORPORATION
OF
CABLE CAR BEVERAGE CORPORATION
1. Name. The name of the corporation is 'CABLE CAR BEVERAGE CORPORATION'
(the 'Corporation').
2. Address; Registered Office and Agent. The address of the Corporation's
registered office is 1013 Centre Road, City of Wilmington, County of New Castle,
State of Delaware 19805; and its registered agent at such address is The
Prentice-Hall Corporation, Inc.
3. Purposes. The purpose of the Corporation is to engage in any lawful act
or activity for which corporations may be organized under the General
Corporation Law.
4. Number of Shares. The total number of shares of stock that the
Corporation shall have authority to issue is: One Thousand (1,000), all of which
shall be shares of Common Stock of the par value of One Dollar ($1.00) each.
5. Election of Directors. Members of the Board of Directors of the
Corporation (the 'Board') may be elected either by written ballot or by voice
vote.
6. Limitation of Liability. No director of the Corporation shall be
personally liable to the Corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director, provided that this provision shall
not eliminate or limit the liability of a director (a) for any breach of the
director's duty of loyalty to the Corporation or its stockholders, (b) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (c) under Section 174 of the General Corporation Law
or (d) for any transaction from which the director derived any improper personal
benefits.
Any repeal or modification of the foregoing provision shall not adversely
affect any right or protection of a director of the Corporation existing at the
time of such repeal or modification.
7. Indemnification.
7.1 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, at the request of the Corporation, is or was serving as a
director or officer of any other corporation or in a capacity with comparable
authority or responsibilities for any 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, disbursements and other
charges). Persons who are not directors or officers of the Corporation (or
otherwise entitled to indemnification pursuant to the preceding sentence) 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 Section 7.
7.2 (a) The Corporation shall, from time to time, 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 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 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
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appeal that such director, officer or other person is not entitled to be
indemnified for such expenses; and provided, further, that such expenses
incurred by or on behalf of any director or officer or other person shall not be
paid in advance of the final disposition of a Proceeding if, in the reasonable
judgment of the Board, it would not be proper for the Company to advance such
expenses.
(b) In addition to any advances made pursuant to Section 7.2(a), the
Corporation may, from time to time, reimburse 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 General Corporation Law, such
expenses incurred by or on behalf of any director or officer or other person may
be reimbursed 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 hereunder), to repay any such amount so
reimbursed 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.
7.3 The rights to indemnification and reimbursement or advancement of
expenses provided by, or granted pursuant to, this Section 7 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.
7.4 The rights to indemnification and reimbursement or advancement of
expenses provided by, or granted pursuant to, this Section 7 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.
7.5 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 Section 7, the By-laws or under Section 145 of the General
Corporation Law or any other provision of law.
7.6 The provisions of this Section 7 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 Section 7 is in effect and any other person
entitled to indemnification hereunder, on the other hand, pursuant to which the
Corporation and each such director, officer, or other person intend to be, and
shall be, legally bound. No repeal or modification of this Section 7 shall
affect any rights or obligations with respect to any state of facts then or
theretofore existing or there after arising or any proceeding theretofore or
thereafter brought or threatened based in whole or in part upon any such state
of facts.
7.7 The rights to indemnification and reimbursement or advancement of
expenses provided by, or granted pursuant to, this Section 7 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, 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, 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.
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7.8 Any director or officer of the Corporation serving in any capacity of
(a) another corporation of which a majority of the shares entitled to vote in
the election of its directors is held, 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.
7.9 Any person entitled to be indemnified or to reimbursement or
advancement of expenses as a matter of right pursuant to this Section 7 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.
8. Adoption, Amendment and/or Repeal of By-Laws. The Board may from time to
time adopt, amend or repeal the By-laws of the Corporation; provided, however,
that any By-laws adopted or amended by the Board may be amended or repealed, and
any By-laws may be adopted, 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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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated June 24, 1997 (this 'Agreement'), by and
among Cable Car Beverage Corporation, a Delaware corporation (the 'Company'),
Triarc Companies, Inc., a Delaware corporation (the 'Parent'), and CCB Merger
Corporation, a Delaware corporation and a wholly owned subsidiary of the Parent
('Mergerco').
The Boards of Directors of the Parent, Mergerco and the Company have
approved, and deem it advisable and in the best interests of their respective
stockholders to consummate, the merger of Mergerco with and into the Company
(the 'Merger') upon the terms and subject to the conditions set forth herein and
in accordance with the General Corporation Law of the State of Delaware (the
'DGCL').
The Parent and Mergerco are unwilling to enter into this agreement unless
certain stockholders of the Company enter into a stockholders agreement (the
'Stockholders Agreement') among the Parent, Mergerco and such stockholders
providing for, among other things, the granting to the Parent and Mergerco of
the right to vote shares of Company Common Stock owned by such stockholders
under the circumstances set forth in such agreement and the granting to Parent
and Mergerco of an option to purchase such shares of Company Common Stock owned
by such stockholders under the circumstances and at the price set forth in such
agreement, and the Board of Directors of the Company has approved the Parent and
Mergerco entering into the Stockholders Agreement.
The Board of Directors of the Company, having received advice from
Montgomery Securities, its investment advisor, and an opinion from such firm to
the effect that the consideration to be received by the stockholders of the
Company pursuant to the Merger is fair to such stockholders from a financial
point of view (the 'Company Fairness Opinion'), has approved the transactions
contemplated by this Agreement and the Stockholders Agreement (the 'Contemplated
Transactions') in accordance with the provisions of Section 203 of the DGCL
('Section 203') and has resolved to recommend the approval of the Merger by the
holders of shares of the Common Stock, par value $.01 per share, of the Company
(the 'Company Common Stock').
For United States federal income tax purposes, it is intended that the
Merger provided for herein shall qualify as a reorganization within the meaning
of Section 368(a) of the Internal Revenue Code of 1986, as amended (the 'Code').
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows (capitalized terms used herein have the meanings
ascribed to them in Section 8.1):
ARTICLE I
THE MERGER
SECTION 1.1 The Merger. Upon the terms and subject to the conditions hereof
and in accordance with the provisions of the DGCL, at the Effective Time,
Mergerco and the Company shall consummate the Merger pursuant to which Mergerco
shall be merged with and into the Company in accordance with the applicable
provisions of the DGCL and the separate existence of Mergerco shall thereupon
cease, and the Company, as the surviving corporation in the Merger (the
'Surviving Corporation'), shall continue its corporate existence under the laws
of the State of Delaware as a wholly owned subsidiary of the Parent. The Merger
shall have the effects set forth in Section 259 of the DGCL.
SECTION 1.2 Closing. The closing of the Merger (the 'Closing') shall take
place at the offices of Paul, Weiss, Rifkind, Wharton & Garrison, 1285 Avenue of
the Americas, New York, New York 10019-6064 on a date to be specified by the
parties, which shall be no later than five (5) Business Days after all of the
conditions set forth in Article VI hereof shall be fulfilled or waived in
accordance with this Agreement and applicable law or at such other time, date
and/or place as the Company, the Parent and Mergerco may agree (the 'Closing
Date'). Subject to the provisions of Article VII hereof, failure to consummate
the Merger on the date and time and at the place determined pursuant to this
Section 1.2 shall not result in the termination of this Agreement and will not
relieve any party of any obligations hereunder.
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SECTION 1.3 Certificate of Incorporation. The certificate of incorporation
of the Company as in effect immediately prior to the Effective Time (the
'Certificate of Incorporation') shall be amended in its entirety as set forth in
Exhibit A hereto, and such Certificate of Incorporation, as so amended at the
Effective Time, shall be the certificate of incorporation of the Surviving
Corporation, until thereafter further changed or amended as provided therein or
by applicable law.
SECTION 1.4 By-laws. The by-laws of Mergerco as in effect immediately prior
to the Effective Time shall be the by-laws of the Surviving Corporation until
thereafter changed or amended as provided therein or as otherwise permitted or
required by the Surviving Corporation's certificate of incorporation or by
applicable law, except that at the Effective Time, the name in the heading
thereof shall be changed to 'Cable Car Beverage Corporation.'
SECTION 1.5 Board of Directors and Officers.
(a) The directors of Mergerco immediately prior to the Effective Time shall
be the initial directors of the Surviving Corporation and shall serve 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 applicable law.
(b) The officers of Mergerco immediately prior to the Effective Time shall
be the initial officers of the Surviving Corporation and shall serve 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 applicable law.
SECTION 1.6 Meeting of Company Stockholders.
(a) Subject to the provisions of Section 1.6(b) below, the Company shall
take all necessary action in accordance with applicable law to convene a meeting
of its stockholders (a 'Meeting') to consider and vote upon the Merger and this
Agreement and shall use its best efforts to hold such Meeting as promptly as
practicable after the date the Registration Statement becomes effective. Subject
to the provisions of Section 1.6(b) below, the Company agrees that the Board of
Directors of the Company shall recommend that the Company's stockholders vote in
favor of the Merger and the approval and adoption of this Agreement. The Parent
agrees that it shall vote, or cause to be voted, in favor of the Merger and the
adoption and approval of this Agreement any shares of Company Common Stock held
by it or by any of its Subsidiaries on the record date set by the Company for
determining shares of Company Common Stock entitled to vote at the Meeting.
(b) Nothing in Section 1.6(a) shall prevent the Board of Directors of the
Company from withdrawing, amending or modifying its unanimous recommendation in
favor of the Merger if (i) an unsolicited bona fide written Acquisition Proposal
is submitted to the Company and is not withdrawn, (ii) the Board of Directors of
the Company concludes in good faith, based upon the advice of its financial
advisor, that such Acquisition Proposal would result in a transaction that is
more favorable from a financial point of view to the Company's stockholders than
the Merger, (iii) neither the Company nor any of its Representatives shall
violate any of the restrictions set forth in Section 5.4(a), and (iv) the Board
of Directors of the Company concludes in good faith, after consultation with its
outside legal counsel, that the withdrawal, amendment or modification of such
recommendation is required in connection with such Acquisition Proposal in order
for the Board of Directors of the Company to comply with its fiduciary
obligations to the Company's stockholders under applicable law. Nothing in
Section 1.6(a) or in Section 5.4(a) shall prevent the Board of Directors of the
Company from recommending that its stockholders accept an unsolicited tender
offer or exchange offer commenced by a third party with respect to shares of
Company Common Stock if (1) such tender offer or exchange offer constitutes an
Acquisition Proposal, (2) the Board of Directors of the Company shall have
withdrawn its recommendation in favor of the Merger in accordance with and as
permitted by the preceding sentence, (3) the Board of Directors of the Company
shall have concluded in good faith, based upon the advice of its financial
advisor, that such tender offer or exchange offer is more favorable from a
financial point of view to the Company's stockholders than the Merger, (4)
neither the Company nor any of its Representatives shall have violated any of
the restrictions set forth in Section 5.4, and (5) the Board of Directors of the
Company shall have concluded in good faith, after consultation with its outside
legal counsel, that the recommendation in favor of acceptance of such tender
offer or exchange
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offer is required in order for the Board of Directors of the Company to comply
with its fiduciary obligations to the Company's stockholders under applicable
law. Nothing contained in this Section 1.6 shall limit the Company's obligation
to hold and convene the Meeting, it being understood that the Company shall be
required to hold and convene the Meeting in accordance with this Section 1.6
unless the holding of such Meeting would constitute a violation of any
applicable court order or statute. The Company shall use all reasonable efforts
to ensure that the holding of the Meeting will not constitute a violation of any
applicable court order or statute.
SECTION 1.7 SEC Filings.
(a) As soon as practicable after the date hereof, the Parent shall prepare
and file with the SEC the Registration Statement on Form S-4 (such registration
statement at the time it becomes effective, together with all amendments duly
filed and mailed is referred to as the 'Registration Statement') under the
Securities Act, which registers the Parent Class A Common Stock to be issued to
the Company's stockholders pursuant to the Merger and in which the prospectus
(the 'Prospectus') will be in the form of a proxy statement. The Company shall
prepare and provide the Parent with information concerning the Company required
to be included in the Registration Statement. Such information prepared and
provided by the Company shall comply in all material respects with all
applicable requirements of law.
(b) Each of the Company and the Parent, as applicable, shall use its
reasonable best efforts to (i) respond to any comments of the SEC, (ii) have the
Registration Statement declared effective under the Securities Act as promptly
as practicable after such filing and to keep the Registration Statement
effective as long as is necessary to consummate the Merger and (iii) cause the
Prospectus to be mailed to the stockholders of the Company as promptly as
practicable after the Registration Statement is declared effective under the
Securities Act. Each of the Parent and the Company shall notify the other
promptly of the receipt of any comments from the SEC and of any request by the
SEC for amendments or supplements to the Registration Statement or for
additional information and will supply the other with copies of all
correspondence between such party or any of its representatives and the SEC,
with respect to the Registration Statement. The Registration Statement shall
comply in all material respects with all applicable requirements of law. The
Parent shall take any action required to be taken under state blue sky or
securities laws in connection with the Merger and the issuance of the Merger
Consideration in connection therewith.
(c) No amendment or supplement to the Registration Statement will be made
without the approval of the Company, which approval will not be unreasonably
withheld or delayed. The Parent will advise the Company, promptly after it
receives notice thereof, of the time when the Registration Statement or any
amendment thereto has become effective or any amendment thereto, or the issuance
of any stop order, or the suspension of the qualification of the Parent Class A
Common Stock to be issued in the Merger for offering or sale in any jurisdiction
or of any request by the NYSE for amendment of the Registration Statement.
SECTION 1.8 Effective Time of the Merger. As soon as practicable following
the satisfaction or waiver of the conditions set forth in Article VI hereof, a
Certificate of Merger shall be duly executed by the Company and shall be duly
filed with the Secretary of State of the State of Delaware in accordance with
the DGCL. The Merger shall become effective on the date on which such
Certificate of Merger is so filed with the Secretary of State of the State of
Delaware.
ARTICLE II
CONVERSION OF SHARES
SECTION 2.1 Conversion of Shares. At the Effective Time, by virtue of the
Merger and without any action on the part of the holder thereof:
(a) Each share of Company Common Stock owned by the Parent or Mergerco or
by any direct or indirect Subsidiary of the Parent immediately prior to the
Effective Time, and each share of Company Common Stock held in the treasury of
the Company or by any direct or indirect Subsidiary of the Company immediately
prior to the Effective Time (each of the foregoing shares being an 'Excluded
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Share'), shall, by virtue of the Merger, and without any action on the Company
or the holder thereof, be cancelled.
(b) Each share of Company Common Stock issued and outstanding immediately
prior to the Effective Time (other than the Excluded Shares and other than the
Dissenting Shares) shall be by virtue of the Merger, and without any action on
the part of the holder thereof, cancelled and converted solely into the right to
receive, upon the surrender of the certificate formerly representing such share
of Company Common Stock in accordance with Section 2.3 hereof, 0.1722 (the
'Conversion Price') of a validly issued, fully paid and non-assessable share of
the Parent Class A Common Stock, without interest; provided, that (i) if the
Average Parent Share Price shall be less than $18.875, then the Conversion Price
shall be adjusted so that it shall equal the quotient obtained by dividing (A)
$3.25 by (B) the Average Parent Share Price, and (ii) if the Average Parent
Share Price shall be greater than $24.50, then the Conversion Price shall be
adjusted so that it shall equal the quotient obtained by dividing (x) $4.22 by
(y) the Average Parent Share Price (the Conversion Price to reflect such
adjustment, if any, is hereinafter referred to as the 'Adjusted Conversion
Price').
(c) Each share of Mergerco Common Stock issued and outstanding immediately
prior to the Effective Time shall be converted into one validly issued, fully
paid and non-assessable share of common stock, par value $1.00 per share, of the
Surviving Corporation.
(d) (i) Each Company Stock Option that is outstanding immediately prior to
the Effective Time, whether or not then vested or exercisable, shall,
effective as of the Effective Time, and without any action on the part of
the holder thereof, be assumed by the Parent and become and represent an
option exercisable for shares of Parent Class A Common Stock (a 'Substitute
Option') with the same vesting schedules, if any, and expiration dates as
such Company Stock Option immediately prior to the Effective Time (but
taking into account any acceleration of the vesting of such Company Stock
Option as a result of the consummation of the Merger), with (A) the new
exercise price thereof being determined by dividing the exercise price of
such Company Stock Option by the Adjusted Conversion Price (with the result
of such calculation rounded to the nearest whole cent) and (B) the number of
shares issuable upon exercise being determined by multiplying the number of
shares to be issued upon exercise of such Company Stock Option by the
Adjusted Conversion Price (with the result of such calculation rounded to
the nearest whole number).
(ii) The Parent shall take all corporate action necessary to reserve
for issuance a sufficient number of the shares of Parent Class A Common
Stock for delivery upon exercise of the Substitute Options. As soon as
practicable after the Effective Time, but in no event later than 45 days
after the Effective Time, the Parent shall file one or more registration
statements on Form S-8 (or any successor or appropriate form (including a
shelf registration statement on Form S-3 if Form S-8 is not available))
with respect to the shares of Parent Class A Common Stock subject to such
Substitute Options and shall maintain the effectiveness of such
registration statement or registration statements (and maintain the current
status of the prospectus or prospectuses referred to therein) for so long
as such Substitute Options remain outstanding.
(e) Each share of Company Common Stock issued and outstanding immediately
prior to the Effective Time and held by a stockholder of the Company who does
not vote in favor of the Merger and who complies with all of the relevant
provisions of Section 262 (each such share being a 'Dissenting Share') shall not
be converted into the right to receive the Merger Consideration pursuant to the
Merger, but instead the holders of Dissenting Shares shall be entitled to
receive such consideration as shall be determined in accordance with the
provisions of Section 262; provided, however, that (i) if any such holder of
Dissenting Shares shall have failed to establish its entitlement to appraisal
rights as provided in Section 262 or (ii) if any such holder of Dissenting
Shares shall have effectively withdrawn its demand for appraisal of such shares
of Company Common Stock, or lost its right to appraisal and payment as provided
in Section 262, or (iii) if neither any holder of Dissenting Shares nor the
Surviving Corporation shall have filed a petition demanding a determination of
the value of all Dissenting Shares within the time period provided in Section
262, such holder or holders (as the case may be) shall forfeit the right to the
appraisal of such shares of Company Common Stock and each such share of Company
Common Stock shall thereupon be deemed to have been converted, as of the
Effective Time, into and represent the right to receive the Merger Consideration
upon surrender of the certificate or certificates
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formerly representing such shares of Company Common Stock in accordance with
Section 2.3 hereof. The Company shall not, except with the prior written consent
of the Parent, voluntarily make or agree to make any payment with respect to, or
settle or offer to settle, any such demands for payment.
SECTION 2.2 No Further Transfers. At the Effective Time, the Company Common
Stock transfer books shall be closed and no further transfer of shares of
Company Common Stock shall be made thereafter. If, after the Effective Time, any
certificate previously representing shares of Company Common Stock is presented
for transfer, it shall be forwarded to the Exchange Agent (as defined in Section
2.3 hereof) for cancellation and exchange in accordance with Section 2.3 hereof.
SECTION 2.3 Exchange of Shares of Company Common Stock.
(a) Prior to the Effective Time, the Parent shall designate, subject to the
approval of the Company which shall not be unreasonably withheld, a bank or
trust company to act as exchange agent (the 'Exchange Agent') for the Merger.
Immediately prior to the Effective Time, the Parent will instruct the transfer
agent of the shares of the Parent Class A Common Stock to countersign and
deliver to the Exchange Agent certificates representing an aggregate number of
shares of the Parent Class A Common Stock as nearly as practicable equal to the
product of the Adjusted Conversion Price and the number of shares of Company
Common Stock to be converted into the Parent Class A Common Stock pursuant to
Section 2.1(b) so as to allow for the issuance and delivery of the Merger
Consideration on a timely basis. The Parent shall pay all reasonable charges or
expenses, including those of the Exchange Agent, in connection with the exchange
of the shares of Company Common Stock for the Merger Consideration.
(b) As soon as practicable after the Effective Time, the Parent shall cause
the Exchange Agent to mail and/or make available to each holder of a Certificate
(other than holders of Certificates theretofore representing Excluded Shares) (a
'Stockholder') a notice and letter of transmittal advising such holder of the
effectiveness of the Merger and the procedure for surrendering to the Exchange
Agent such Certificate or Certificates for exchange for the Merger Consideration
multiplied by the number of shares of Company Common Stock represented by such
Certificate or Certificates. Upon the surrender to the Exchange Agent of such
Certificate or Certificates, together with a letter of transmittal, duly
executed and completed in accordance with the instructions thereon, the
Stockholder shall be entitled to receive the Merger Consideration. From and
after the Effective Time, until surrendered in accordance with the provisions of
this Section 2.3, each Certificate evidencing shares of Company Common Stock
(other than Certificates representing Excluded Shares and Dissenting Shares)
shall represent for all purposes only the right to receive the Merger
Consideration, without any interest thereon. Any portion of the Merger
Consideration that shall not have been paid to Stockholders pursuant to this
Section 2.3 prior to the second anniversary of the Effective Time (including any
cash payable pursuant to Section 2.3(e) hereof) shall be paid to the Parent and
any Stockholder who has not theretofore complied with this Section 2.3
thereafter shall look, subject to escheat and other similar laws, solely to the
Parent for payment of the Merger Consideration to which they are entitled under
this Agreement.
(c) No dividends or other distributions that are otherwise payable on the
shares of the Parent Class A Common Stock constituting any of the Merger
Consideration shall be paid to the holder of any unsurrendered Certificate until
such Certificate is properly surrendered as provided herein, but (i) upon such
surrender, there shall be paid to the Person in whose name the shares of the
Parent Class A Common Stock constituting any of the Merger Consideration shall
be issued the amount of any dividends which shall have become payable with
respect to such shares between the Effective Time and the time of such surrender
and (ii) at the appropriate payment date or as soon thereafter as practicable,
there shall be paid to such Person the amount of any dividends on such shares of
the Parent Class A Common Stock which shall have a record or due date prior to
such surrender and a payment date after such surrender, subject in each such
case to (x) deduction therefrom of any amount required by applicable law to be
withheld, and (y) any applicable escheat laws or unclaimed property laws. On
surrender of a Certificate, no interest shall be payable with respect to the
payment of such dividends and no interest shall be payable with respect to the
amount of any cash payable in lieu of a fractional share of the Parent Class A
Common Stock pursuant to Section 2.3(e).
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(d) If any cash is to be paid pursuant to Section 2.3(e), or certif icates
representing shares of the Parent Class A Common Stock are to be issued, to a
Person other than the Person in whose name the Certificate so surrendered in
exchange therefor is registered, it shall be a condition of the payment or
issuance thereof that the Certificate so surrendered shall be properly endorsed
and otherwise in proper form for transfer and that the Person requesting such
exchange shall pay to the Exchange Agent any transfer or other taxes required by
reason of the payment of cash to a Person other than, or if the issuance of
certificates representing the shares of the Parent Class A Common Stock in any
name other than that of, the registered holder of the Certificate surrendered,
or otherwise required, or shall establish to the satisfaction of the Exchange
Agent that such tax has been paid or is not payable.
(e) Shares of the Parent Class A Common Stock shall be issued only in whole
shares. A Stockholder will not be entitled to receive Fractional Shares but,
instead, will be entitled to receive promptly from the Exchange Agent a cash
payment in lieu of Fractional Shares in an amount equal to such Stockholder's
proportionate interest in the net proceeds from the sale or sales in the open
market by the Exchange Agent, on behalf of all such Stockholders, of the
aggregate Fractional Shares. Such sales shall be made promptly after the
Effective Time, or in the case of Dissenting Shares which become exchangeable
for the Merger Consideration pursuant to Section 2.1(e) hereof, promptly after
such change in status of such Dissenting Shares. Such cash payments will be made
to each such Stockholder only upon proper surrender of such Stockholder's
Certificates, together with a properly completed and duly executed transmittal
form and any other required documents.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Parent and Mergerco as follows:
SECTION 3.1 Organization and Good Standing. Each of the Company and its
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, and has all
requisite corporate or other power and authority and all necessary governmental
approvals to own, lease and operate its properties and to carry on its business
as now being conducted, except where the failure to be so organized, existing
and in good standing or to have such power, authority and governmental approvals
would not have a Material Adverse Effect on the Company and its Subsidiaries
taken as a whole. Section 3.1 of the Disclosure Schedule sets forth a complete
list of the Company's Subsidiaries, their state of incorporation and each state
in which they are qualified to do business.
SECTION 3.2 Corporate Authorization; Validity of Agreement; Company Action.
(a) The Company has full corporate power and authority to execute and deliver
this Agreement and, subject to obtaining any necessary approval of its
stockholders as contemplated by Section 1.6 hereof with respect to the Merger,
to consummate the Contemplated Transactions. The execution, delivery and
performance by the Company of this Agreement, and the consummation by it of the
Contemplated Transactions, have been duly and validly authorized by its Board of
Directors and, except for obtaining the approval of its stockholders as
contemplated by Section 1.6 hereof with respect to the Merger, no other
corporate action or proceedings on the part of the Company is necessary to
authorize the execution and delivery by the Company of this Agreement, and the
consummation by it of the Contemplated Transactions. This Agreement has been
duly executed and delivered by the Company and, assuming this Agreement
constitutes a valid and binding obligation of the Parent and Mergerco,
constitutes a valid and binding obligation of the Company enforceable against
the Company in accordance with its terms, except that (i) such enforcement may
be subject to applicable bankruptcy, insolvency or other similar laws, now or
hereafter in effect, affecting creditors' rights generally, and (ii) the remedy
of specific performance and injunctive and other forms of equitable relief may
be subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought.
(b) The affirmative vote of the holders of a majority of the shares of
Company Common Stock outstanding (the 'Required Stockholder Vote') is the only
vote of the holders of any class or series of Company capital stock necessary to
approve the Merger.
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SECTION 3.3 Capitalization. (a) The authorized capital stock of the Company
consists of 25,000,000 shares of Company Common Stock. As of the date hereof,
(i) 9,024,681 shares of Company Common Stock are issued, of which 8,948,324
shares are outstanding and 76,357 shares are held in treasury and (ii) options
to acquire an aggregate of 902,500 shares of Company Common Stock have been
issued pursuant to Company Stock Options. The Company has previously delivered
to the Parent a true and correct list of all outstanding Company Stock Options
setting forth in each case the name of the optionholder, the number of shares of
Company Common Stock subject thereto, the exercise price, the vesting schedule
and the expiration date. All the outstanding shares of the Company's capital
stock are duly authorized, validly issued, fully paid and non-assessable. There
is no Voting Debt of the Company or any of its Subsidiaries issued and
outstanding. Except as set forth above, as set forth in Section 3.3(a) of the
Disclosure Schedule, and for the Contemplated Transactions, (i) there are no
shares of capital stock of the Company authorized, issued or outstanding and
(ii) there are no existing options, warrants, calls, pre-emptive rights,
subscriptions or other rights, convertible securities, agreements, arrangements
or commitments of any character, relating to the issued or unissued capital
stock of the Company or any of its Subsidiaries, obligating the Company or any
of its Subsidiaries to issue, transfer or sell or cause to be issued,
transferred or sold any shares of capital stock or Voting Debt of, or other
equity interest in, the Company or any of its Subsidiaries or securities
convertible into or exchangeable for such shares or equity interests or
obligations of the Company or any of its Subsidiaries to grant, extend or enter
into any such option, warrant, call, subscription or other right, convertible
security, agreement, arrangement or commitment. Except as set forth in Section
3.3(a) of the Disclosure Schedule, there are no outstanding contractual
obligations of the Company or any of its Subsidiaries to repurchase, redeem or
otherwise acquire any shares of the capital stock of the Company or any
Subsidiary or affiliate of the Company or to provide funds to make any
investment (in the form of a loan, capital contribution or otherwise) in any
Subsidiary or any other entity. Following the Merger neither the Company nor any
of its Subsidiaries will have any obligation to issue, transfer or sell any
shares of its capital stock.
(b) All of the outstanding shares of capital stock of each of the
Subsidiaries are directly owned by the Company, and all such shares have been
validly issued and are fully paid and non-assessable and are owned by either the
Company or one of its Subsidiaries free and clear of all liens, charges,
security interests, options, claims or encum brances of any nature whatsoever.
(c) Except as set forth in Section 3.3(c) of the Disclosure Schedule, there
are no voting trusts or other agreements or understandings to which the Company
or any of its Subsidiaries is a party with respect to the voting of the capital
stock of the Company or any of the Subsidiaries. None of the Company or its
Subsidiaries is required to redeem, repurchase or otherwise acquire shares of
capital stock of the Company, or any of its Subsidiaries, respectively, as a
result of the Contemplated Transactions.
SECTION 3.4 Reports and Financial Statements. The Company has filed with
the SEC, and has heretofore made available to the Parent true and complete
copies of, all forms, reports, schedules, statements and other documents
required to be filed by it and its Subsidiaries since December 31, 1993 under
the Exchange Act and the Securities Act (as such documents have been amended
since the time of their filing, collectively, the 'Company SEC Documents'). As
of their respective dates or, if amended, as of the date of the last such
amendment, the Company SEC Documents, including, without limitation, any
financial statements or schedules included therein (a) did not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading and (b) complied
in all material respects with the applicable requirements of the Exchange Act
and the Securities Act, as the case may be, and the applicable rules and
regulations of the SEC thereunder. Each of the consolidated financial statements
included in the Company SEC Documents have been prepared from, and are in
accordance with, the books and records of the Company and/or its consolidated
Subsidiaries, comply in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with GAAP applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto) and fairly present in all material respects the con solidated
financial position and the consolidated results of operations and cash flows
(and changes in financial position, if any) of the Company and its consolidated
Subsidiaries as at the dates thereof or for the periods
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presented therein (subject, in the case of unaudited interim financial
statements, to normal year end adjustments).
SECTION 3.5 Absence of Certain Changes. Except as disclosed in the Company
SEC Documents or as set forth in Section 3.5 of the Disclosure Schedule, since
December 31, 1996, the Company and its Subsidiaries have conducted their
respective businesses and operations in the ordinary course of business
consistent with past practice. Since December 31, 1996, there has not occurred
(i) any event, change or effect (including the incurrence of any liabilities of
any nature, whether or not accrued, contingent or otherwise) having or, which
would be reasonably likely to have, in the aggregate, a Material Adverse Effect
on the Company and its Subsidiaries taken as a whole; (ii) any declaration,
setting aside or payment of any dividend or other distribution (whether in cash,
stock or property) with respect to the equity interests of the Company or of any
of its Subsidiaries, other than regular quarterly cash dividends or dividends
paid by its Subsidiaries; or (iii) any change by the Company or any of its
Subsidiaries in accounting principles or methods, except insofar as may be
required by a change in GAAP.
SECTION 3.6 Consents and Approvals; No Violations. Except as set forth in
Section 3.6 of the Disclosure Schedule and for (a) the filing of a pre-merger
notification and report form by the Company under the HSR Act and the expiration
or termination of the applicable waiting period thereunder, (b) the filing of a
Certificate of Merger with the Secretary of State of the State of Delaware in
accordance with the DGCL, (c) filings with the SEC and any applicable national
securities exchanges or Nasdaq, (d) filings under state securities, 'Blue Sky'
or anti-takeover laws, (e) any applicable filings required under the laws of
foreign jurisdictions and (f) filings, authorizations, consents or approvals
relating to matters which, in the aggregate, are not material to the Company and
its Subsidiaries taken as a whole, neither the execution, delivery or
performance of this Agreement nor the consummation by the Company of the
Contemplated Transactions nor compliance by the Company with any of the
provisions hereof will (i) conflict with or result in any breach of any
provision of the certificate of incorporation or by-laws or similar
organizational documents of the Company or of any of its Subsidiaries, (ii)
require any material filing with, or permit, authorization, consent or approval
of, any Governmental Authority, (iii) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, amendment, cancellation or acceleration)
under, any of the terms, conditions or provisions of any material Company
Agreement or (iv) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to the Company, any of its Subsidiaries or any of their
properties or assets.
SECTION 3.7 No Undisclosed Liabilities. Except (a) as disclosed in Section
3.7 of the Disclosure Schedule, (b) to the extent disclosed in the Company SEC
Documents filed prior to the date of this Agreement and (c) for liabilities and
obligations incurred in the ordinary course of business consistent with past
practice, since December 31, 1996, neither the Company nor any of its
Subsidiaries has incurred any liabilities or obligations of any nature, whether
or not accrued, contingent or otherwise. Section 3.7 of the Disclosure Schedule
sets forth each instrument evidencing indebtedness of the Company and its
Subsidiaries which will accelerate or become due or payable, or result in a
right of redemption or repurchase on the part of the holder of such
indebtedness, or with respect to which any other payment or amount will become
due or payable, in any such case with or without due notice or lapse of time, as
a result of this Agreement, the Merger or the other Contemplated Transactions.
SECTION 3.8 Registration Statement. None of the information provided by the
Company for inclusion in the Registration Statement will be false or misleading
with respect to any material fact or will omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading.
SECTION 3.9 Litigation; Compliance with Law. (a) Except (i) as disclosed in
Section 3.9(a) of the Disclosure Schedule or (ii) to the extent disclosed in the
Company SEC Documents filed prior to the date of this Agreement, there is no
suit, claim, action, proceeding, review or investigation pending or, to the
knowledge of the Company, threatened against or affecting, the Company or any of
its Subsidiaries.
(b) The Company and its Subsidiaries have complied in all material respects
with all laws, statutes, regulations, rules, ordinances, and judgments, decrees,
orders, writs and injunctions, of any court or Governmental Authority relating
to any of the property owned, leased or used by them, or applicable
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to their business, including, but not limited to, equal employment opportunity,
discrimination, occupational safety and health, environmental, insurance
regulatory, antitrust laws, ERISA and laws relating to Taxes (as defined in
Section 3.10).
SECTION 3.10 Taxes. (a) All material federal, state, county, local,
foreign, and other taxes (including, without limitation, income, profits,
premium, estimated, excise, sales, use, occupancy, gross receipts, franchise, ad
valorem, severance, capital levy, production, transfer, license, stamp,
environmental, withholding, employment, unemployment compensation, payroll
related and property taxes, import duties, and other governmental charges and
assessments), whether or not measured in whole or in part by net income, and
including deficiencies, interest, additions to tax or interest, and penalties
with respect thereto (hereinafter 'Taxes' or, individually, a 'Tax'), required
to be paid on or before the date hereof by or with respect to the Company or any
of its Subsidiaries, including amounts, other than amounts being contested in
good faith and for payment of which adequate reserves are reflected in the
Company's financial statements included in its Quarterly Report on Form 10-Q for
the quarterly period ended March 31, 1997, required to be paid on or before the
date hereof with respect to Taxes as a result of any tax sharing agreement or
similar arrangement ('Tax Sharing Agreement Amounts') of the Company or any of
its Subsidiaries, have been timely paid.
(b) All material returns and reports required to be filed by or with
respect to the Company or any of its Subsidiaries with respect to Taxes
(hereinafter 'Tax Returns' or, individually, a 'Tax Return') on or before the
date hereof have been timely filed. No penalties or other charges in a material
amount are or will become due with respect to the late filing of any Tax Return
of the Company or any of its Subsidiaries or payment of any Tax of the Company
or any of its Subsidiaries required to be filed or paid on or before the date
hereof.
(c) With respect to all Tax Returns filed by or with respect to the Company
or any its Subsidiaries, (i) Section 3.10(c) of the Disclosure Schedule sets
forth the periods for which the statute of limitations for the assessment of
federal Taxes have expired; (ii) except as set forth in Section 3.10(c) of the
Disclosure Schedule, no audit is in progress and no extension of time has been
executed with respect to any date on which any Tax Return was or is to be filed
and no waiver or agreement has been executed for the extension of time for the
assessment or payment of any Tax; and (iii) except as set forth in Section
3.10(c) of the Disclosure Schedule, there is no material unassessed deficiency
proposed or threatened against the Company or any of its Subsidiaries.
(d) Except as set forth in Section 3.10(d) of the Disclosure Schedule,
neither the Company nor any of its Subsidiaries has not been and is not a party
to any tax sharing agreement, tax indemnification agreement or similar
arrangement.
(e) Section 3.10(e) of the Disclosure Schedule identifies (i) the common
parent of each group of affiliated corporations that filed a consolidated
federal income tax return, and the period to which such returns related, that
included the Company or any of its Subsidiaries since 1987 and (ii) all material
Tax liabilities or issues that have been asserted or proposed by a taxing
authority with respect to any such return and all claims with respect to Taxes
in a material amount that have been asserted against the Company or any of its
Subsidiaries.
(f) With regard to any assets or property held or acquired by the Company
or any of its Subsidiaries, the Company or such Subsidiary has not filed a
consent to the application of Section 341(f) of the Code, or agreed to have
Section 341(f)(2) of the Code apply to any disposition of a subsection (f) asset
(as such term is defined in Section 341(f)(4) of the Code) owned by the Company
or such Subsidiary.
(g) The Company and its Subsidiaries have not agreed, and are not required
to make, any adjustment under Section 481(a) of the Code by reason of a change
in accounting method or otherwise, and there is no application to change any
accounting method by the Company or any of its Subsidiaries pending with any
taxing authority. The Internal Revenue Service has not proposed any such
adjustment or change in method.
(h) Reserves and provisions for Taxes reflected in the Company's financial
statements included in its Quarterly Report on Form 10-Q for the quarterly
period ended March 31, 1997 are adequate.
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(i) The Company and its Subsidiaries have not been and are not in violation
(or with notice or lapse of time or both, would be in violation) of any
applicable law relating to the payment or withholding of Taxes relating to
employment and have duly and timely withheld from employee salaries, wages and
other compensation and timely paid over to the appropriate taxing authorities
all amounts required to be so withheld and paid over for all periods under all
applicable laws.
(j) There are no liens or encumbrances of any kind with respect to Taxes
upon any of the assets of the Company and its Subsidiaries (except for liens for
Taxes not yet due) or on the capital stock of the Company or any of its
Subsidiaries.
SECTION 3.11 No Default. Except as disclosed in the Company SEC Documents,
the business of the Company and each of its Subsidiaries is not being conducted
in default or violation of any term, condition or provision of (a) its
respective certificate of incorporation or by-laws or similar organizational
documents, or (b) any Company Agreement, excluding from the foregoing clause
(b), defaults or violations that would not have a Material Adverse Effect on the
Company and its Subsidiaries taken as a whole or would not, or would not be
reasonably likely to, materially impair the ability of the Company to consummate
the Merger or the other Contemplated Transactions.
SECTION 3.12 Contracts. (a) The Company has previously delivered to the
Parent true and complete copies of all material Company Agreements and true and
correct summaries of all material oral agreements to which the Company or any of
its Subsidiaries is a party. Each material Company Agreement is valid, binding
and enforceable and in full force and effect in accordance with its terms.
Neither the Company nor any of its Subsidiaries is in default in any material
respect under any such Company Agreement, nor does any condition exist that with
notice or lapse of time or both would constitute such a material default
thereunder. To the knowledge of the Company or any of the Subsidiaries, no other
party to any such Company Agreement is in default thereunder in any material
respect, nor does any condition exist that with notice or lapse of time or both
would constitute such a material default thereunder, nor is any such material
default threatened.
(b) Except as set forth in Section 3.12(b) of the Disclosure Schedule,
neither the Company nor any Subsidiary is a party to any Company Agreement that
(i) includes any 'change of control' or similar provision which, as a result of
the Merger or any other Contemplated Transaction, would result in a violation or
breach of, or default (with or without due notice or lapse of time or both)
under, such Company Agreement, or give rise to a right to accelerate the terms
of payment or the provision of benefits, or enhance the amount of payment or the
provision of benefits, thereunder, or (ii) expressly and materially limits the
ability of the Company or any of its Subsidiaries to compete in or conduct any
line of business or compete with any person or in any geographic area or during
any period of time.
(c) The Company (i) has satisfied the sales requirements under paragraph 3
of the Stewart's Master Agreement such that the territory subject to the
Stewart's Master Agreement is worldwide and (ii) has not failed to achieve the
sales requirements under said paragraph 3 which would permit Stewart's to
terminate the Stewart's Master Agreement with respect to any territory.
SECTION 3.13 Intellectual Property.
(a) Section 3.13(a) of the Disclosure Schedule lists (i) all Copyrights,
Patents, Trademarks and formulae and processes (other than unregistered
Trademarks for which no application for registration is pending) (collectively,
the 'Intellectual Property') owned by the Company or any of its Subsidiaries,
specifying as to each such item, as applicable: (A) the category of Intellectual
Property; (B) the owner of the item; (C) the jurisdictions in which the item is
issued or registered or in which any applica tion for issuance or registration
has been filed, including the respective issuance, registration or application
number; (D) the date of application, issuance or registration and the expiration
date of the item; and (E) with respect to any Trademarks, the class or classes
of goods or services on which each such Trademark is or is intended to be used;
(ii) all material licenses, sublicenses and other agreements ('IP Licenses')
under which the Company or any of its Subsidiaries is either a licensor or
licensee of any Intellectual Property; and (iii) all agreements involving
Intellectual Property that are currently in negotiation or proposed by the
Company or any of its Subsidiaries. Neither the Company nor any of its
Subsidiaries owns any Copyrights or Patents or is a party to any license for a
Copyright or Patent either as a licensor or as a licensee. The Company has
previously delivered to the Parent true and complete
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copies of all material documents evidencing Intellectual Property and IP
Licenses (including all modifications, amendments and supplements).
(b) Except as set forth in Section 3.13(b) of the Disclosure Schedule, the
Company and its Subsidiaries own or have a license for all the Intellectual
Property that is material to the business of the Company and its Subsidiaries as
presently conducted or being developed, free and clear of any liens.
(c) None of the Company or its Subsidiaries or, to the knowledge of the
Company, any other party is in breach of or default under any IP License. Each
IP License is now, and immediately following the consummation of the
Contemplated Transactions will be, valid and in full force and effect.
(d) No Claim is pending or, to the knowledge of the Company, threatened,
that challenges the validity, enforceability, ownership of or right to use,
sell, license or dispose of any Intellectual Property, nor does the Company know
of any valid grounds for any such Claim.
(e) To the knowledge of the Company, neither the Company nor any of its
Subsidiaries has infringed upon or otherwise violated the intellectual property
rights of third parties or has received or has been the subject of any Claim,
charge or notice alleging any such infringement or other violation, and the
Company knows of no basis for any such Claim. To the knowledge of the Company,
the continued use of the Intellectual Property by the Company or the relevant
Subsidiary after the Effective Time will not infringe upon or otherwise violate
any intellectual property rights of third parties as a result of the continued
operation of the businesses of the Company and its Subsidiaries as presently
conducted.
(f) To the knowledge of the Company, no third party is infringing upon or
otherwise violating the Intellectual Property rights of the Company or any of
its Subsidiaries.
(g) All registered Trademarks held by the Company or any of its
Subsidiaries are valid and subsisting. The Company and its Subsidiaries have
taken all necessary action to maintain and protect each item of Intellectual
Property owned or used by the Company or any of its Subsidiaries.
(h) To the knowledge of the Company, no Patent, statute, rule, regulation,
code or standard is pending or proposed that would have a material adverse
effect on the validity, enforceability, ownership of or right to use, sell,
license or dispose of any Intellectual Property.
(i) None of the material formulae and processes of the Company or any of
its Subsidiaries has been disclosed to any Person other than its bottlers,
suppliers and consultants and Stewart's.
SECTION 3.14 Employee Benefit Plans.
(a) With respect to each Company Benefit Plan, the Company has previously
provided to the Parent true and complete copies of (i) all plan texts and
agreements and related trust agreements, if any, (ii) all summary plan
descriptions, if any, (iii) the most recent annual report (including all
schedules thereto), if any, (iv) the most recent annual audited financial
statement, if any, (v) if the plan is intended to qualify under Code Section
401(a) or 403(a), the most recent determination letter, if any, received from
the IRS and (vi) all material communications with any Governmental Authority
(including, without limitation, the PBGC and the IRS).
(b) There are no Company Benefit Plans that provide retiree medical or life
or pension coverage (other than coverage mandated by law) or that are subject to
any of Code Section 412, ERISA Section 302 or Title IV of ERISA.
(c) Each Company Benefit Plan conforms in all material respects to, and its
administration is in all material respects in compliance with, all applicable
laws and regulations, except for such failures to conform or comply that,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect with respect to the Company and its Subsidiaries taken
as a whole.
(d) Except as disclosed in the Company SEC Documents or as set forth in
Section 3.14(d) of the Disclosure Schedule, the consummation of the Contemplated
Transactions will not (a) entitle any current or former Company Employee to
severance pay, unemployment compensation or any similar payment or (b)
accelerate the time of payment or vesting, or increase the amount of any
compensation due to, any current or former Company Employee.
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SECTION 3.15 Inventory and Supplies. Except as set forth on Section 3.15 of
the Disclosure Schedule, the inventory of each of the Company and its
Subsidiaries is in good and merchantable condition, and suitable and usable or
salable in the ordinary course of business for the purposes for which it is
intended and none of such inventory is obsolete, damaged, or defective, subject
to an inventory reserve computed in a manner consistent with past practice and
reasonably estimated to reflect inventory values. Section 3.15 of the Disclosure
Schedule sets forth the location of all of the inventory of the Company and its
Subsidiaries. The Company has no knowledge of any adverse condition affecting
the supply of materials available to the Company and its Subsidiaries.
SECTION 3.16 Receivables. All accounts and notes receivable of the Company
and its Subsidiaries (a) have arisen in the ordinary course of business of the
Company and its Subsidiaries and (b) subject only to a reserve for bad debts
computed in a manner consistent with past practice and reasonably estimated to
reflect the probable results of collection, have been collected or are
collectible in the ordinary course of business of the Company and its
Subsidiaries in the aggregate recorded amounts thereof in accordance with their
terms.
SECTION 3.17 Case Sales. Section 3.17 of the Disclosure Schedule sets forth
the true and correct amount of the Company's aggregate sales of cases of soft
drinks under the 'Stewart's' trademark for the eighteen (18) months ended
December 31, 1991, each of fiscal years 1992, 1993, 1994, 1995 and 1996 and the
first five (5) months of 1997.
SECTION 3.18 Transactions with Affiliates. Except to the extent disclosed
in the Company SEC Documents filed prior to the date of this Agreement, since
December 31, 1996, there have been no material transactions, agreements,
arrangements or understandings between the Company or its Subsidiaries, on the
one hand, and the Company's affiliates (other than wholly owned Subsidiaries of
the Company) or any other Person, on the other hand, that would be required to
be disclosed under Item 404 of Regulation S-K under the Securities Act.
SECTION 3.19 State Takeover Statutes. The Board of Directors of the Company
has approved the Merger and this Agreement, and the entering into, and
performance, by the Parent and Mergerco of the Stockholders Agreement. Such
approval is sufficient to render inapplicable to the Merger, this Agreement and
the entering into, and performance, by the Parent and Mergerco of the
Stockholders Agreement and any other transactions contemplated by this Agreement
and the Stockholders Agreement, the restrictions on business combinations
provided for in Section 203. Other than Section 203, no state takeover statute
or similar statute or regulation applies or purports to apply to the Merger,
this Agreement or the Stockholders Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE PARENT AND MERGERCO
The Parent and Mergerco, jointly and severally, represent and warrant to
the Company as follows:
SECTION 4.1 Organization and Good Standing. Each of the Parent and its
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, and has all
requisite corporate or other power and authority and all necessary governmental
approvals to own, lease and operate its properties and to carry on its business
as now being conducted, except where the failure to be so organized, existing
and in good standing or to have such power, authority and governmental approvals
would not have a Material Adverse Effect on the Parent and its Subsidiaries
taken as a whole. Each of the Parent and its Subsidiaries is duly qualified or
licensed to do business and in good standing in each jurisdiction in which the
property owned, leased or operated by it or the nature of the business conducted
by it makes such qualification or licensing necessary, except where the failure
to be so duly qualified or licensed and in good standing would not have a
Material Adverse Effect on the Parent and its Subsidiaries taken as a whole.
Mergerco has not heretofore conducted any business other than in connection with
this Agreement and the Contemplated Transactions.
SECTION 4.2 Corporate Authorization; Validity of Agreement; Necessary
Action. Each of the Parent and Mergerco has full corporate power and authority
to execute and deliver this Agreement and to
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consummate the Contemplated Transactions. The execution, delivery and
performance by the Parent and Mergerco of this Agreement and the consummation by
the Parent and Mergerco of the Contemplated Transactions have been duly and
validly authorized by their respective Boards of Directors and no other
corporate action or proceedings on the part of the Parent and Mergerco is
necessary to authorize the execution and delivery by the Parent and Mergerco of
this Agreement, and the consummation by the Parent and Mergerco of the
Contemplated Transactions. This Agreement has been duly executed and delivered
by the Parent and Mergerco, and assuming this Agreement constitutes a valid and
binding obligation of the Company, constitutes a valid and binding obligation of
each of the Parent and Mergerco, enforceable against each of them in accordance
with its terms, except that (i) such enforcement may be subject to applicable
bankruptcy, insolvency or other similar laws, now or hereafter in effect,
affecting creditors rights generally, and (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
SECTION 4.3 Capitalization. (a) The authorized capital stock of the Parent
consists of 60,000,000 shares of Parent Class A Common Stock, 16,000,000 shares
of Parent Class B Common Stock, par value $.10 per share, 25,000,000 shares of
Preferred Stock, of which 5,982,866 shares have been designated Redeemable
Preferred Stock. As of June 17, 1997, 23,998,221 shares of Parent Class A Common
Stock and 5,997,662 shares of Parent Class B Common Stock were issued and
outstanding, and no shares of Preferred Stock were issued or outstanding. As of
March 31, 1997, options to acquire an aggregate of 8,849,499 shares of Parent
Class A Common Stock had been issued. The authorized capital stock of Mergerco
consists solely of 1,000 shares of Mergerco Common Stock, all of which, as of
the date hereof, are issued and outstanding and held by the Parent. All of the
outstanding shares of capital stock of the Parent and Mergerco (including
Mergerco) have been duly authorized and validly issued and are fully paid and
non-assessable.
(b) The shares of the Parent Class A Common Stock to be issued pursuant to
the Merger will be duly authorized, validly issued, fully paid and
non-assessable and not subject to preemptive rights.
SECTION 4.4 Reports and Financial Statements. The Parent has filed with the
SEC, and has heretofore made available to the Company true and complete copies
of, all forms, reports, schedules, statements and other documents required to be
filed by it and its Subsidiaries since December 31, 1993 under the Exchange Act
or the Securities Act (as such documents have been amended since the time of
their filing, collectively, the 'Parent SEC Documents'). As of their respective
dates or, if amended, as of the date of the last such amendment, the Parent SEC
Documents, including, without limitation, any financial statements or schedules
included therein (a) did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading and (b) complied in all material respects with
the applicable requirements of the Exchange Act and the Securities Act, as the
case may be, and the applicable rules and regulations of the SEC thereunder.
Each of the consolidated financial statements included in the Parent SEC
Documents have been prepared from, and are in accordance with, the books and
records of the Parent and/or its consolidated Subsidiaries, comply in all
material respects with applicable accounting requirements and with the published
rules and regulations of the SEC with respect thereto, have been prepared in
accordance with GAAP applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto) and fairly present in all
material respects the consolidated financial position and the consolidated
results of operations and cash flows (and changes in financial position, if any)
of the Parent and its consolidated Subsidiaries as at the dates thereof or for
the periods presented therein (subject, in the case of unaudited interim
financial statements, to normal year end adjustments).
SECTION 4.5 Absence of Certain Changes. Except to the extent set forth in
the Parent SEC Documents filed prior to the date of this Agreement, since
December 31, 1996, the Parent and its Subsidiaries have conducted their
respective businesses in the ordinary course of business consistent with past
practice. Since December 31, 1996, there has not occurred (a) any event, change
or effect (including the incurrence of any liabilities of any nature, whether or
not accrued, contingent or otherwise) having or, which would be reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
the Parent and its Subsidiaries taken as a whole; (b) any declaration, setting
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aside or payment of any dividend or other distribution (whether in cash, stock
or property) with respect to the equity interests of the Parent or of any of its
Subsidiaries other than regular quarterly cash dividends or dividends paid by
wholly owned Subsidiaries; or (c) any change by the Parent or any of its
Subsidiaries in accounting principles or methods, except insofar as may be
required by a change in GAAP.
SECTION 4.6 Consents and Approvals; No Violations. Except for (a) the
filing of a pre-merger notification and report form by the Parent under the HSR
Act, and the expiration or termination of the applicable waiting period
thereunder, (b) the filing of a Certificate of Merger with the Secretary of the
State of the State of Delaware in accordance with the DGCL, (c) filings with the
SEC and any applicable national securities exchanges, (d) filings under state
securities, 'Blue Sky' or antitakeover laws, (e) any applicable filings required
under the laws of foreign jurisdictions and (f) filings, authorizations,
consents or approvals relating to matters which, in the aggregate, are not
material to the Parent and its Subsidiaries (including Mergerco but excluding
the Company and its Subsidiaries) taken as a whole, neither the execution,
delivery or performance of this Agreement by the Parent and Mergerco nor the
consummation by the Parent and Mergerco of the Contemplated Trans actions nor
compliance by the Parent and Mergerco with any of the provisions hereof will (i)
conflict with or result in any breach of any provision of the certificate of
incorporation or by-laws of the Parent and any of its Subsidiaries, (ii) require
any filing with, or permit, authorization, consent or approval of, any
Governmental Authority (except where the failure to obtain such permits,
authorizations, consents or approvals or to make such filings would not have a
Material Adverse Effect on the Parent and its Subsidiaries taken as a whole or
would not, or would not be reasonably likely to, materially impair the ability
of the Parent and Mergerco to consummate the Merger or the other Contemplated
Transactions), (iii) result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default (or give rise to any
right of termination, amendment, cancellation or acceleration) under, any of the
terms, conditions or provisions of any note, bond, mortgage, indenture,
guarantee, other evidence of indebtedness, lease, license, contract, agreement
or other in strument or obligation to which the Parent or any of its
Subsidiaries is a party or by which any of them or any of their properties or
assets may be bound or (iv) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to the Parent, any of its Subsidiaries or
any of their properties or assets, except in the case of clauses (iii) and (iv)
for violations, breaches or defaults which would not have a Material Adverse
Effect on the Parent and its Subsidiaries taken as a whole or would not, or
would not be reasonably likely to, materially impair the ability of the Parent
or Mergerco to consummate the Merger or the other Contemplated Transactions.
SECTION 4.7 Registration Statement. The Registration Statement (and any
amendment thereof or supplement thereto), at the date it becomes effective and
at the time of the Meeting, will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading; provided, however, that no
representation is made by the Parent or Mergerco with respect to statements made
therein based on information supplied by the Company for inclusion in the
Registration Statement. Subject to the proviso set forth in the preceding
sentence, the Registration Statement will comply in all material respects with
the provisions of the Securities Act and the rules and regulations thereunder.
SECTION 4.8 Tax Representations. (a) Mergerco is a wholly owned subsidiary
of the Parent organized for the purpose of consummating the Merger and has no
assets other than (i) Parent Class A Common Stock, if any, and (ii) assets
permitted under Treasury Regulation 1.368-2(j)(3)(iii).
(b) The Parent has no plan or intention not to (i) continue at least a
principal historic business line of the Company or (ii) use at least a
significant portion of the Company's historical assets in a business of the
Parent, in each case within the meaning of Treasury Regulation 1.368-1(d).
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ARTICLE V
COVENANTS
SECTION 5.1 Interim Operations of the Company. The Company covenants and
agrees that, except (i) as expressly provided in this Agreement, (ii) with the
prior written consent of the Parent or (iii) as set forth on Section 5.1 of the
Disclosure Schedule, after the date hereof and prior to the Effective Time:
(a) the business of the Company and its Subsidiaries, including,
without limitation, investment practices and policies, shall be conducted
only in the ordinary course of business consistent with past practice and,
each of the Company and its Subsidiaries shall use all reasonable efforts
to preserve its business organization intact and maintain its existing
relations with material customers, distributors, suppliers, employees,
creditors and business partners;
(b) the Company will not, directly or indirectly, split, combine or
reclassify the outstanding Company Common Stock, or any outstanding capital
stock of any of the Subsidiaries of the Company;
(c) neither the Company nor any of its Subsidiaries shall (i) amend
its certificate of incorporation or by-laws or similar organizational
documents; (ii) declare, set aside or pay any dividend or other
distribution payable in cash, stock or property with respect to its capital
stock other than dividends paid by the Company's wholly owned Subsidiaries
to the Company; (iii) issue, sell, transfer, pledge, dispose of or encumber
any additional shares of, or securities convertible into or exchangeable
for, or options, warrants, calls, commitments or rights of any kind to
acquire, any shares of capital stock of any class of the Company or its
Subsidiaries, other than issuances pursuant to exercise of stock options
outstanding on the date hereof as disclosed in Section 3.3 hereof; (iv)
transfer, lease, license, sell, mortgage, pledge, dispose of, or encumber
any assets that are material to the Company and its Subsidiaries taken as a
whole other than sales of investment assets in the ordinary course of
business consistent with past practice; or (v) redeem, purchase or
otherwise acquire directly or indirectly any of its capital stock;
(d) neither the Company nor any of its Subsidiaries shall (i) grant
any increase in the compensation payable or to become payable by the
Company or any of its Subsidiaries to any officer or employee other than
scheduled annual increases in the ordinary course of business consistent
with past practice in an amount not to exceed five percent (5%) for any
individual; (ii) adopt any new, or amend or otherwise increase, or
accelerate the payment or vesting of the amounts payable or to become
payable under any Company Benefit Plan; (iii) enter into any, or amend any
existing, employment, consulting or severance agreement with or, except in
accordance with the existing written policies of the Company, grant any
severance or termination pay to any officer, director or employee of the
Company or any of its Subsidiaries; (iv) make any additional contributions
to any grantor trust created by the Company to provide funding for
non-tax-qualified employee benefits or compensation; or (v) provide any
severance program to any Subsidiary which does not have a severance program
as of the date of this Agreement;
(e) neither the Company nor any of its Subsidiaries shall modify,
amend or terminate any of the material Company Agreements or waive, release
or assign any material rights or claims, except in the ordinary course of
business consistent with past practice;
(f) neither the Company nor any of its Subsidiaries shall permit any
material insurance policy naming it as a beneficiary or a loss payable
payee to be cancelled or terminated, except in the ordinary course of
business consistent with past practice;
(g) neither the Company nor any of its Subsidiaries shall: (i) incur
or assume any debt except for borrowings under its existing credit facility
in an amount exceeding $100,000 without the written consent of the Parent,
which consent shall not be unreasonably withheld, provided that the Company
may extend the term of its existing credit facility for a period not to
exceed one (1) year so long as the commitment thereunder is not increased;
(ii) assume, guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations of any
other Person; (iii) make any loans, advances or capital contributions to,
or
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investments in, any other Person (other than to wholly owned Subsidiaries
of the Company, or customary loans or advances to employees in accordance
with past practice not to exceed $25,000 in the aggregate); or (iv) enter
into any material commitment (including, but not limited to, any capital
expenditure, 'take-or-pay' contract or purchase of assets) in excess of
$100,000, provided that the Company may (x) purchase inventory in the
ordinary course of business consistent with past practice (without any
'take-or-pay' commitment) and (y) enter into a lease for office space in
the greater Denver, Colorado area not to exceed 4,500 square feet, at a
cost per square foot per year not to exceed $17.00 and for a term not to
exceed three (3) years;
(h) neither the Company nor any of its Subsidiaries shall change any
of the accounting principles used by it unless required by GAAP;
(i) neither the Company nor any of its Subsidiaries shall pay,
discharge or satisfy any material claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction of any such claims, liabilities
or obligations, (x) reflected or reserved against in, or contemplated by,
the consolidated financial statements (or the notes thereto) of the Company
and its consolidated Subsidiaries, (y) incurred in the ordinary course of
business consistent with past practice or (z) which are legally required to
be paid, discharged or satisfied;
(j) neither the Company nor any of its Subsidiaries will adopt a plan
of complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other material reorganization of the
Company or any of its Subsidiaries or any agreement relating to a
Acquisition Proposal (other than the Merger);
(k) neither the Company nor any of its Subsidiaries will engage in any
transaction with, or enter into any agreement, arrangement, or
understanding with, directly or indirectly, any of the Company's
affiliates, including, without limitation, any transactions, agreements,
arrangements or understandings with any affiliate or other Person covered
under Item 404 of Regulation S-K under the Securities Act that would be
required to be disclosed under such Item 404 other than such transactions
of the same general nature, scope and magnitude as are disclosed in the
Company SEC Documents;
(l) except upon the prior written consent of the Parent, the Company
shall not make any Tax election that would have a Material Adverse Effect
on the Company or any of its Subsidiaries; and
(m) neither the Company nor any of its Subsidiaries will enter into an
agreement, contract, commitment or arrangement to do any of the foregoing,
or to authorize, recommend, propose or announce an intention to do any of
the foregoing.
SECTION 5.2 Access to Information. The Company shall (and shall cause each
of its Subsidiaries to) afford to the officers, employees, accountants, counsel,
financing sources and other representatives of the Parent, reasonable access,
during normal business hours, during the period prior to the Effective Time, to
all of its and its Subsidiaries' properties, books, contracts, commitments and
records (including any Tax Returns or other Tax related information pertaining
to the Company and its Subsidiaries) and, during such period, the Company shall
(and shall cause each of its Subsidiaries to) furnish promptly to the Parent (a)
a copy of each report, schedule, registration statement and other document filed
or received by it during such period pursuant to the requirements of the federal
securities laws or any insurance regulatory laws and (b) all other information
concerning its business, properties and personnel as the Parent may reasonably
request (including any Tax Returns or other Tax related information pertaining
to the Company and its Subsidiaries). The Parent will hold any such information
which is nonpublic in confidence in accordance with the provisions of the
Confidentiality Agreement.
SECTION 5.3 Consents and Approvals. Each of the Company, the Parent and
Mergerco will take all reasonable actions necessary to comply promptly with all
legal requirements which may be imposed on it with respect to this Agreement and
the Contemplated Transactions which actions shall include, without limitation,
furnishing all information in connection with approvals of or filings with any
Governmental Authority, including, without limitation, any schedule, or reports
required to be filed with the SEC, and will promptly cooperate with and furnish
information to each other in connection with any such requirements imposed upon
any of them or any of their Subsidiaries in connection with
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this Agreement and the Contemplated Transactions. Each of the Company, the
Parent and Mergerco will, and will cause its Subsidiaries to, take all
reasonable actions necessary to obtain any consent, authorization, order or
approval of, or any exemption by, any Governmental Authority or other public or
private third party, required to be obtained or made by the Parent, Mergerco,
the Company or any of their Subsidiaries in connection with the Merger or the
taking of any action contemplated thereby or by this Agreement.
SECTION 5.4 No Solicitation.
(a) The Company shall not directly or indirectly, and shall not authorize
or permit any of its Subsidiaries or any officer, director, employee, agent,
investment banker, financial advisor, attorney, accountant, broker, finder or
other representative (collectively, 'Representatives') of any of the Company or
any of its Subsidiaries (collectively, the 'Acquired Corporations') directly or
indirectly to, (i) solicit, initiate, encourage or induce the making, submission
or announcement of any Acquisition Proposal or take any action that could
reasonably be expected to lead to an Acquisition Proposal, (ii) furnish any
nonpublic information regarding any of the Acquired Corporations to any Person
in connection with or in response to an Acquisition Proposal, (iii) engage in
discussions with any Person with respect to any Acquisition Proposal, (iv)
approve, endorse or recommend (or agree to approve, endorse or recommend) any
Acquisition Proposal or (v) enter into any letter of intent or similar document
or any agreement contemplating or otherwise relating to any Acquisition
Proposal; provided, however, that this Section 5.4(a) shall not prohibit the
Company from furnishing nonpublic information regarding the Acquired
Corporations to, or entering into discussions with, any Person in response to an
unsolicited bona fide written Acquisition Proposal submitted (and not withdrawn)
by such Person if (1) the Board of Directors of the Company concludes in good
faith, based upon the advice of its financial advisor, that such Acquisition
Proposal would result in a transaction that is more favorable from a financial
point of view to the Company's stockholders than the Merger, (2) the Board of
Directors from the Company concludes in good faith, after consultation with
outside legal counsel, that such action is required in order for the Board of
Directors of the Company to comply with its fiduciary obligations to the
Company's stockholders under applicable law, (3) prior to furnishing any such
nonpublic information to, or entering into discussions with, such Person, the
Company gives the Parent written notice of the identity of such Person and of
the Company's intention to furnish nonpublic information to, or enter into
discussions with, such Person, and the Company receives from such Person an
executed confidentiality agreement containing customary limitations on the use
and disclosure of all nonpublic written and oral information furnished to such
Person by or on behalf of the Company, and (4) prior to furnishing any such
nonpublic information to such Person, the Company furnishes such nonpublic
information to the Parent (to the extent such nonpublic information has not been
previously furnished by the Company to the Parent).
(b) The Company shall promptly advise the Parent orally and in writing of
any Acquisition Proposal (including the identify of the Person making or
submitting such Acquisition Proposal and the terms thereof) that is made or
submitted by any Person (such Notification referred to as a 'Transaction
Notice'). The Company agrees that it will not furnish confidential information
to any Person or enter into negotiations with any Person with respect to an
Acquisition Proposal until it has delivered to the Parent a Transaction Notice
and forty-eight (48) hours have passed since the Parent's receipt of such
Transaction Notice.
(c) As of the date of this Agreement, the Company shall immediately cease
and cause to be terminated any existing discussions with any Person that relate
to any Acquisition Proposal.
(d) Notwithstanding anything to the contrary contained in this Agreement,
the Company may give a copy of this Section 5.4 to any Person who submits an
unsolicited bona fide written Acquisition Proposal to the Company if, prior to
giving a copy of this Section 5.4 to such Person, the Company gives the Parent
written notice that the Company intends to give copy of this Section 5.4 to such
Person.
SECTION 5.5 Additional Agreements. Subject to the terms and conditions
herein provided, each of the parties hereto agrees to use its best efforts to
take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable, whether under applicable laws and
regulations or otherwise, or to remove any injunctions or other impediments or
delays, legal or otherwise, to consummate and make effective the Merger and the
other Contemplated Transactions. In
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case at any time after the Effective Time any further action is necessary or
desirable to carry out the purposes of this Agreement, the proper officers and
directors of the Company, the Parent and Mergerco shall use their best efforts
to take, or cause to be taken, all such necessary actions.
SECTION 5.6 Notification of Certain Matters. The Company shall give prompt
notice to the Parent, and the Parent shall give prompt notice to the Company, of
(a) the occurrence, or non-occurrence of any event the occurrence or
non-occurrence of which would cause any representation or warranty contained in
this Agreement to be untrue or inaccurate in any material respect at or prior to
the Effective Time and (b) any material failure of the Company or the Parent, as
the case may be, to comply with or satisfy any covenant, condition or agreement
to be complied with or satisfied by it hereunder; provided, however, that the
delivery of any notice pursuant to this Section 5.6 shall not limit or otherwise
affect the remedies available hereunder to the party receiving such notice.
SECTION 5.7 Indemnification of Directors and Officers. The certificate of
incorporation and by-laws of the Surviving Corporation and each of its
Subsidiaries shall contain provisions no less favorable with respect to
indemnification of directors, officers, agents and employees and other
individuals than those set forth in the certification of incorporation and
by-laws of the Company and its Subsidiaries as in effect on the date hereof,
which provisions shall not be amended, repealed or otherwise modified for a
period of five (5) years after the Effective Time in any manner that would
adversely affect the rights thereunder of individuals who at or prior to the
Effective Time were directors, officers, agents or employees of the Company or
any of its Subsidiaries or who were otherwise entitled to indemnification
pursuant to the certificate of incorporation and by-laws (or equivalent
governing instruments) of the Company or any of its Subsidiaries; provided, that
if the Surviving Corporation or any of its subsidiaries shall not have the
financial resources to satisfy its indemnification obligations to such
directors, officers, agents or employees or other individuals as provided under
its certificate of incorporation and by-laws in accordance with this Section
5.7, the Parent agrees that it shall provide such indemnification of such
Persons to the extent set forth in such certificate of incorporation and by-laws
in accordance with this Section 5.7.
SECTION 5.8 Rule 145 Affiliates. At least 30 days prior to the Closing
Date, the Company shall deliver to the Parent a letter identifying, to the best
of the Company's knowledge, all Persons who are, at the time of the Meeting,
deemed to be 'affiliates' of the Company for purposes of Rule 145 under the
Securities Act (the 'Company Affiliates'). The Company shall use all reasonable
efforts to cause each Person who is identified as a Company Affiliate to deliver
to the Parent prior to the Closing Date an agreement substantially in the form
of Exhibit B to this Agreement.
SECTION 5.9 Stock Exchange Listing. The Parent shall use all reasonable
efforts to cause the shares of the Parent Class A Common Stock issued in the
Merger and the shares of the Parent Class A Common Stock to be reserved for
issuance upon exercise of the Substitute Options to be approved for listing on
the NYSE prior to the Closing Date.
SECTION 5.10 Tax-Free Reorganization. The Company shall not intentionally
take or cause to be taken any action before the Effective Time which would
disqualify the Merger as a 'reorganization' within the meaning of Section 368(a)
of the Code.
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.1 Conditions to the Obligations of Each Party. The obligations of
the Company, on the one hand, and the Parent, and Mergerco on the other hand, to
consummate the Merger are subject to the satisfaction (or, if permissible,
waiver by the party for whose benefit such conditions exist) of the following
conditions at or prior to the Effective Time:
(a) this Agreement and the Merger shall have been approved and adopted
by the Required Stockholder Vote in accordance with the DGCL;
(b) no court, arbitrator or governmental body, agency or official
shall have issued any order, decree or ruling and there shall not be any
statute, rule or regulation, restraining, enjoining or prohibiting the
consummation of the Merger;
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(c) the Registration Statement shall have become effective under the
Securities Act and no stop order suspending effectiveness of the
Registration Statement shall have been issued and no proceeding for that
purpose shall have been initiated or threatened by the SEC;
(d) any waiting period applicable to the Merger under the HSR Act
shall have expired or been terminated;
(e) all actions by or in respect of or filing with any Governmental
Authority required to permit the consummation of the Merger shall have been
obtained and such approval shall be in full force and effect; and
(f) the shares of Parent Class A Common Stock to be issued in the
Merger shall have been approved for listing on the NYSE, subject to
official notice of issuance.
SECTION 6.2 Conditions to the Obligations of the Parent and Mergerco. The
obligations of the Parent and Mergerco to consummate the Merger are subject to
the satisfaction (or waiver by the Parent) of the following further conditions:
(a) the representations and warranties of the Company shall have been
true and accurate in all material respects as of the Effective Time as if
made at and as of such time (except for those representations and
warranties that address matters only as of a particular date or only with
respect to a specific period of time which need only be true and accurate
as of such date or with respect to such period);
(b) the Company shall have performed in all material respects its
obligations hereunder required to be performed by it at or prior to the
Effective Time;
(c) since December 31, 1996, except as set forth in Section 3.5 of the
Disclosure Schedule, there shall not have occurred any event, change or
effect having, or which would be reasonably likely to have, in the
aggregate, a Material Adverse Effect on the Company and its Subsidiaries,
taken as a whole;
(d) the Parent shall have received a certificate signed by an
executive officer of the Company to the effect of Sections 6.2(a), (b) and
(c); (e) there shall not have been any action taken, or any statute, rule,
regulation, legislation, interpretation, judgment, order or injunction
enacted, entered, enforced, promulgated, amended, issued or deemed
applicable to the Merger by any domestic legislative body, court,
government or governmental, administrative or regulatory authority or
agency (i) restraining or preventing the carrying out of the Contemplated
Transactions, (ii) prohibiting the Parent's ownership or operation of all
or any material portion of its or the Company's businesses or assets, or
compelling the Parent to dispose of or hold separate all or any material
portion of the Parent's or the Company's businesses or assets as a result
of the Contemplated Transactions; (iii) making acquisition of the shares of
Company Common Stock pursuant to the Merger illegal; (iv) prohibiting the
Parent effectively from acquiring or holding or exercising full rights of
ownership of the shares of Company Common Stock, including, without
limitation, the right to vote the shares of Company Common Stock acquired
by it pursuant to the Merger on all matters properly presented to the
stockholders of the Company; (v) prohibiting the Parent or any of its
Subsidiaries or affiliates from effectively controlling in any material
respect the businesses or operations of the Company, the Parent or their
respective subsidiaries; or (vi) which would impose any condition which
would materially adversely affect the business of the Company or (as a
condition of consummating the Contemplated Transactions) the business of
the Parent and its Subsidiaries taken as a whole;
(f) the Company's Board of Directors shall not have withdrawn or
modified its position with respect to the Merger;
(g) the Parent shall have received an opinion of Krys Boyle Freedman
Scott & Sawyer, P.C. in scope and substance substantially in the form
agreed to by the Company and the Parent prior to the date hereof;
(h) the Average Parent Share Price shall not be less than $15.00 per
share;
(i) the holders of no greater than seven and one-half percent (7.5%)
of the shares of Company Common Stock outstanding on the record date for
the Meeting (x) shall have demanded their
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appraisal rights with respect to their shares of Company Common Stock
pursuant to, and otherwise complied with the provisions of, subsection (d)
of Section 262, and (y) shall not have voted in favor of or consented to
the Merger; or
(j) no suit, claim, action or proceeding with respect to the Merger or
the other Contemplated Transactions, or the Company or any of its
Subsidiaries or any of their properties or assets, shall have been
instituted or threatened which could reasonably be expected to have a
Material Adverse Effect on the Company and its Subsidiaries taken as a
whole or would, or would be reasonably likely to, materially impair the
ability of the Company to consummate the Merger or the other Contemplated
Transactions.
SECTION 6.3 Conditions to the Obligations of the Company. The obligations
of the Company to consummate the Merger are subject to the satisfaction (or
waiver by the Company) of the following further conditions:
(a) the representations and warranties of the Parent and Mergerco
shall be true and accurate in all material respects as of the Effective
Time as if made at and as of such time (except for those representations
and warranties that address matters only as of a particular date or only
with respect to a specific period of time which need only be true and
accurate as of such date or with respect to such period);
(b) each of the Parent and Mergerco shall have performed in all
material respects all of the respective obligations hereunder required to
be performed by the Parent or Mergerco, as the case may be, at or prior to
the Effective Time;
(c) since December 31, 1996, there shall not have occurred any event,
change or effect having, or which would be reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on the Parent
and its Subsidiaries taken as a whole;
(d) the Company shall have received a certificate signed by an
executive officer of the Parent as to Sections 6.3(a), (b) and (c);
(e) the Company shall have received an opinion of Paul, Weiss,
Rifkind, Wharton & Garrison in scope and substance substantially in the
form agreed to by the Parent and the Company prior to the date hereof;
(f) the Company shall have received an opinion of Sherman & Howard
L.L.C. to the effect that the Merger will qualify as a 'reorganization'
within the meaning of Section 368 of the Code; and
(g) no suit, claim, action or proceeding with respect to the Merger or
the other Contemplated Transactions, or the Parent or any of its
Subsidiaries or any of their properties or assets, shall have been
instituted which could reasonably be expected to have a Material Adverse
Effect on the Parent and its Subsidiaries taken as a whole, or would be
reasonably likely to materially impair the ability of the Parent to
consummate the Merger or the other Contemplated Transactions.
ARTICLE VII
TERMINATION
SECTION 7.1 Termination. Anything herein or elsewhere to the contrary
notwithstanding, this Agreement may be terminated and the Merger contemplated
herein may be abandoned at any time prior to the Effective Time, whether before
or after stockholder approval thereof:
(a) By the mutual consent of the Board of Directors of the Parent and
the Board of Directors of the Company;
(b) By either of the Board of Directors of the Company or the Board of
Directors of the Parent:
(i) if the Merger shall not have occurred on or prior to December
31, 1997; provided, however, that the right to terminate this Agreement
under this Section 7.1(b)(i) shall not be available to any party whose
failure to fulfill any obligation under this Agreement has been the
cause of, or resulted in, the failure of the Merger to occur on or prior
to such date;
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(ii) if a complete Registration Statement shall not have been filed
with the SEC on or before October 1, 1997; or
(iii) if any Governmental Authority shall have issued an order,
decree or ruling or taken any other action (which order, decree, ruling
or other action the parties hereto shall use their best efforts to
lift), in each case permanently restraining, enjoining or otherwise
prohibiting the Contemplated Transactions and such order, decree, ruling
or other action shall have become final and non-appealable;
(c) By the Board of Directors of the Company:
(i) if the Parent or Mergerco (x) breaches or fails in any material
respect to perform or comply with any of its material covenants and
agreements contained herein or (y) breaches its representations and
warranties in any material respect and such breach would have or would
be reasonably likely to have a Material Adverse Effect on the Parent and
its Subsidiaries taken as a whole, in each case such that the conditions
set forth in Section 6.1 or Section 6.3 would not be satisfied;
provided, however, that if any such breach is curable by the breaching
party through the exercise of the breaching party's best efforts and for
so long as the breaching party shall be so using its best efforts to
cure such breach, the Company may not terminate this Agreement pursuant
to this Section 7.1(c)(i);
(ii) if the Board of Directors of the Company determines in good
faith, after consultation with (x) outside legal counsel, that
termination of the Agreement is required for the Board of Directors of
the Company to satisfy its fiduciary obligations to the Company's
stockholders under applicable law by reason of an unsolicited bona fide
Acquisition Proposal having been made and (y) its financial advisor that
such Acquisition Proposal would result in a transaction that is more
favorable than the Merger from a financial point of view to the
Company's stockholders; provided that the Company shall have complied
with the provisions of Section 5.4 and shall notify the Parent at least
five (5) days in advance of its intention to terminate this Agreement
pursuant to this Section 7.1(c)(ii) or to enter into a definitive
agreement with respect to such Acquisition Proposal; and provided,
further, that within such five (5) day period the Parent has not made a
competing proposal which is at least as favorable to the Company's
stockholders from a financial point of view as such Acquisition
Proposal;
(iii) if the Company fails to obtain the Required Stockholder Vote
at the Meeting.
(d) By the Board of Directors of the Parent:
(i) if the Company (x) breaches or fails in any material respect to
perform or comply with any of its material covenants and agreements
contained herein or (y) breaches its representations and warranties in
any material respect and such breach would have or would be reasonably
likely to have a Material Adverse Effect on the Company and its
Subsidiaries taken as a whole, in each case such that the conditions set
forth in Section 6.1 or Section 6.2 would not be satisfied; provided,
however, that if any such breach is curable by the Company through the
exercise of the Company's best efforts and for so long as the Company
shall be so using its best efforts to cure such breach, the Parent may
not terminate this Agreement pursuant to this Section 7.1(d)(i);
(ii) if (A) the Board of Directors of the Company shall have
withdrawn, or modified or changed in a manner adverse to the Parent or
Mergerco its approval or recommendation of this Agreement or the Merger
or shall have recommended an Acquisition Proposal or other business
combination, (B) the Company shall have received a bona fide written
Acquisition Proposal which has not been rejected by the Board of
Directors of the Company within fourteen (14) days after receipt
thereof, or (C) prior to the certification of the vote of the Company's
stockholders to approve the Merger at the Meeting, it shall have been
publicly disclosed or the Parent or Mergerco shall have learned that any
person, entity or 'group' (as that term is defined in Section 13(d)(3)
of the Exchange Act) (an 'Acquiring Person'), other than the Parent or
its Subsidiaries or any of their affiliates or the stockholders of the
Company party to the Stockholders Agreement, shall have acquired
beneficial ownership (determined pursuant to Rule 13d-3 promulgated
under the Exchange Act) of more than 20% of any class
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or series of capital stock of the Company (including the Shares),
through the acquisition of stock, the formation of a group or otherwise,
or shall have been granted any option, right or warrant, conditional or
otherwise, to acquire beneficial ownership of more than 20% of any class
or series of capital stock of the Company (including the Shares) other
than as disclosed in a Schedule 13D on file with the SEC on the date
hereof;
(iii) if the Company fails to obtain the Required Stockholder Vote
at the Meeting; or
(iv) the condition set forth in 6.2(h) is not fulfilled.
SECTION 7.2 Effect of Termination. In the event of the termination of this
Agreement as provided in Section 7.1, written notice thereof shall forthwith be
given to the other party or parties specifying the provision hereof pursuant to
which such termination is made, and this Agreement shall forthwith become null
and void, and there shall be no liability on the part of the Parent, Mergerco or
the Company except (A) for fraud or for willful breach of this Agreement and (B)
as set forth in Section 8.3 hereof and in the last sentence of Section 5.2.
ARTICLE VIII
GENERAL AGREEMENTS
SECTION 8.1 Definitions. For the purposes of this Agreement, the following
terms have the meanings ascribed to them in this Section 8.1:
'Agreement' has the meaning specified in the recitals hereto.
'Acquired Corporations' has the meaning specified in Section 5.4(a).
'Acquiring Person' has the meaning specified in Section 7.1(d)(ii).
'Acquisition Proposal' means any tender or exchange offer involving the
capital stock of the Company, any proposal for a merger, consolidation or other
business combination involving the Company or any of its Subsidiaries, any
proposal or offer to acquire in any manner a substantial equity interest in, or
a substantial portion of the business or assets of, the Company or any of its
Subsidiaries, any proposal or offer with respect to any recapitalization or
restructuring with respect to the Company or any of its Subsidiaries or any
proposal or offer with respect to any other transaction similar to any of the
foregoing with respect to the Company or any of its Subsidiaries, other than
pursuant to the transactions to be effected pursuant to this Agreement or any
other transaction with the Parent or a Subsidiary of the Parent.
'Adjusted Conversion Price' has the meaning specified in Section 2.1(b).
'Average Parent Share Price' means the average (without rounding) of the
closing prices per share of Parent Class A Common Stock on the NYSE on the NYSE
Composite Tape for the fifteen (15) consecutive NYSE trading days ending on the
NYSE trading day immediately preceding the Closing Date.
'Business Day' means any day that is not a Saturday or Sunday or a day on
which banks located in New York City are authorized or required to be closed.
'Certificate' means a stock certificate which immediately prior to the
Effective Time represents shares of the Company Common Stock.
'Certificate of Incorporation' has the meaning specified in Section 1.3.
'Claims' means any actions, causes of action, suits, claims, complaints,
demands, litigations or legal, administrative or arbitral proceedings or
investigations.
'Closing' has the meaning specified in Section 1.2.
'Closing Date' has the meaning specified in Section 1.2.
'Code' has the meaning specified in the recitals.
'Company' means Cable Car Beverage Corporation, a Delaware corporation.
'Company Affiliates' has the meaning specified in Section 5.8.
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'Company Agreement' means any note, bond, mortgage, indenture, guarantee,
other evidence of indebtedness, lease, license, contract, agreement or other
instrument or obligation to which the Company or any of its Subsidiaries is a
party or by which any of them or any of their properties or assets may be bound.
'Company Benefit Plan' means any material employee benefit plan,
arrangement, policy or commitment, including, without limitation, any
employment, consulting, severance or deferred compensation agreement, executive
compensation, bonus, incentive, pension, profit-sharing, savings, retirement,
stock option, stock purchase or severance pay plan, any life, health, disability
or accidental death and dismemberment insurance plan, any holiday or vacation
practice or any other employee benefit plan within the meaning of section 3(3)
of ERISA, that is maintained, administered or contributed to by the Company or
any of its affiliates for the benefit of their current or former employees.
'Company Common Stock' has the meaning specified in the recitals hereto.
'Company Employee' means any individual employed by the Company or any of
its Subsidiaries.
'Company Fairness Opinion' has the meaning specified in the recitals
hereto.
'Company SEC Documents' has the meaning specified in Section 3.4.
'Company Stock Option' means an option issued by the Company that is
exercisable for Company Common Stock.
'Confidentiality Agreement' means the confidentiality agreement between the
Company and the Parent, dated April 23, 1997, as amended or modified from time
to time.
'Contemplated Transactions' has the meaning specified in the recitals
hereto.
'Conversion Price' has the meaning specified in Section 2.1(b).
'Copyrights' means any foreign or United States copyright registrations and
applications for registration thereof, and any non-registered copyrights.
'DGCL' has the meaning specified in the recitals hereto.
'Disclosure Schedule' means the disclosure schedule delivered by the
Company to the Parent prior to the date hereof.
'Dissenting Share' has the meaning specified in Section 2.1(e).
'Effective Time' means the time and date at which the Certificate of Merger
is filed with the Secretary of State of the State of Delaware pursuant to
Section 1.8.
'ERISA' means the Employee Retirement Income Security Act of 1974, as
amended, together with the rules and regulations promulgated thereunder.
'Exchange Act' means the Securities and Exchange Act of 1934, as amended.
'Exchange Agent' has the meaning specified in Section 2.3(a).
'Excluded Share' has the meaning specified in Section 2.1(a).
'Fractional Shares' means fractional shares of Parent Class A Common Stock.
'GAAP' means United States generally accepted accounting principles as in
effect from time to time.
'Governmental Authority' means any nation or government, any state or other
political subdivision thereof, and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
'HSR Act' means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended.
'Intellectual Property' has the meaning specified in Section 3.13(a).
'IP Licenses' has the meaning specified in Section 3.13(a).
'IRS' means the United States Internal Revenue Service.
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'Material Adverse Effect' means, with respect to any Person (or group of
Persons taken as a whole), such event, change or effect, in the aggregate with
such other events, changes or effects, which is materially adverse to the
condition (financial or otherwise), business, results of operations or prospects
of such Person.
'Meeting' has the meaning specified in Section 1.6(a).
'Merger' has the meaning specified in the recitals hereto.
'Merger Consideration' means the shares of Parent Class A Common Stock to
be issued pursuant to the Merger in exchange for Certificates, together with any
cash to be received pursuant to Section 2.3(e) in lieu of issuing Fractional
Shares.
'Mergerco' means CCB Merger Corporation, a Delaware corporation.
'Mergerco Common Stock' means the Common Stock, par value $1.00 per share,
of Mergerco.
'NYSE' means the New York Stock Exchange.
'Order' means any order, judgment, injunction, award, decree or writ of any
Governmental Authority.
'Parent' means Triarc Companies, Inc., as Delaware corporation.
'Parent Class A Common Stock' means the Class A Common Stock, par value
$.10 per share, of Parent.
'Parent Class B Common Stock' means the Class B Common Stock, par value
$.10 per share, of Parent.
'Parent Disclosure Schedule' means the disclosure schedule delivered by the
Parent to the Company on or prior to the date hereof.
'Parent SEC Documents' has the meaning specified in Section 4.4.
'Patents' means any foreign or United States patents and patent
applications including any divisions, continuations, continuations-in-part,
substitutions or reissues thereof, whether or not patents are issued on such
applications and whether or not such applications are modified, withdrawn or
resubmitted.
'PBGC' means the Pension Benefit Guaranty Corporation.
'Person' means any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization or other entity or
Governmental Entity.
'Prospectus' has the meaning specified in Section 1.7(a).
'Registration Statement' has the meaning specified in Section 1.7(a).
'Representatives' has the meaning specified in Section 5.4(a).
'Required Stockholder Vote' has the meaning specified in Section 3.2(b).
'SEC' means the Securities and Exchange Commission.
'Section 203' has the meaning specified in the recitals hereto.
'Section 262' shall mean Section 262 of the DGCL.
'Securities Act' means the Securities Act of 1933, as amended.
'Software' means any computer software programs, source code, object code,
data and documentation.
'Stewart's' means Stewart's Restaurants Inc.
'Stewart's Master Agreement' means the Stewart's Master Agreement, dated
July 11, 1989, between Stewart's and the Company, as amended.
'Stockholder' has the meaning specified in Section 2.3(b).
'Stockholders Agreement' has the meaning specified in the recitals thereto.
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'Subsidiary' means, with respect to any Person, any corporation 50% or more
of the outstanding voting power of which, or any partnership, joint venture,
limited liability company or other entity 50% or more of the total equity
interest of which, is directly or indirectly owned by such Person.
'Substitute Option' has the meaning specified in Section 2.1(d)(i).
'Surviving Corporation' has the meaning specified in Section 1.1.
'Tax' has the meaning specified in Section 3.10(a).
'Tax Return' has the meaning specified in Section 3.10(b).
'Tax Sharing Agreement Amounts' has the meaning specified in Section
3.10(a).
'Trademarks' means any foreign or United States trademarks, service marks,
trade dress, trade names, brand names, designs and logos, corporate names,
product or service identifiers, whether registered or unregistered, and all
registrations and applications for registration thereof.
'Transaction Notice' has the meaning specified in Section 5.4(b).
'Voting Debt' means bonds, debentures, notes or other indebtedness having
voting rights (or convertible into securities having such rights).
SECTION 8.2 Survival of Representations, Warranties and Agreements. All
representations, warranties and agreements in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Effective
Time.
SECTION 8.3 Expenses. (a) Except as set forth in Section 8.3(b), whether or
not the Merger is consummated, all costs and expenses incurred in connection
with this Agreement and the Contemplated Transactions shall be paid by the party
incurring such costs and expenses.
(b) If the Board of Directors of the Parent shall terminate this Agreement
pursuant to Section 7.1(d)(iv) in respect of the condition set forth in Section
6.2(h), then the Parent shall reimburse the Company for its reasonable costs and
expenses (including, without limitation, reasonable attorneys' fees and
expenses) incurred in connection with this Agreement and the Contemplated
Transactions in an amount not to exceed $225,000 in the aggregate.
SECTION 8.4 Notice. All notices and other communications hereunder shall be
in writing and shall be deemed to have been duly given if delivered by
messenger, transmitted by telecopier, telex or telegram or mailed by registered
or certified mail, postage prepaid, as follows:
(a) If to the Parent or Mergerco, to:
Triarc Companies, Inc.
280 Park Avenue
New York, New York 10017
Attention: Brian L. Schorr, Esq.
Telecopy No.: (212) 451-3216
with a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Attention: Neale M. Albert, Esq.
Telecopy No.: (212) 373-2315
(b) If to the Company, to:
Cable Car Beverage Corporation
717 17th Street, Suite 1475
Denver, Colorado 80202
Attention: Samuel M. Simpson
Telecopy No.: (303) 298-1150
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with a copy to:
Krys Boyle Freedman Scott & Sawyer, P.C.
Dominion Plaza
600 Seventeenth Street
Suite 2700 South Tower
Denver, Colorado 80202
Attention: Thomas Boyle, Esq.
Telecopy No.: (303) 893-2882
Except as otherwise specified herein, all notices and other communications
shall be considered to have been duly given on the first to occur of (a) the
date of delivery if delivered personally on a Business Day during normal
business hours, and if not, on the next occurring Business Day, (b) five (5)
days following posting if transmitted by mail, (c) the date of transmission with
confirmed answer-back if transmitted by telex on a Business Day during normal
business hours, and if not, on the next occurring Business Day, or (d) the date
of receipt if transmitted by telecopier or facsimile on a Business Day during
normal business hours, and if not, on the next occurring Business Day. Any party
may change his or its address for purposes hereof by notice to the other party
given as provided in this Section 8.4.
SECTION 8.5 Amendments. Subject to applicable law, this Agreement may be
amended by the parties hereto, by action taken by their respective Boards of
Directors, at any time prior to the Effective Time, provided, however, that
after approval of this Agreement by the stockholders of the Company, no
amendment or modification shall (a) alter or change the amount or kind of
shares, securities, cash, property and/or rights to be received in exchange for
or on conversion of all or any of the shares of any class or series thereof of
the Company, (b) alter or change any term of the certificate of incorporation of
the Surviving Corporation to be effected by the Merger, or (c) alter or change
any of the terms and conditions of this Agreement if such alteration or change
would adversely affect the holders of any class or series of capital stock of
the Company. This Agreement may not be amended, modified or supplemented except
by written agreement of the parties hereto.
SECTION 8.6 Waiver. At any time prior to the Effective Time, the parties
hereto by action taken by their respective Boards of Directors may (a) extend
the time for the performance of any of the obligations or other acts of the
other parties hereto, (b) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto, and
(c) waive compliance with any of the agreements or conditions contained herein.
Any agreement on the part of a party hereto to any such extension or waiver
shall be valid only if set forth in an instrument in writing signed on behalf of
such party.
SECTION 8.7 Brokers. The Company represents and warrants that no broker,
finder or investment banker is entitled to any brokerage, finder's or other fee
or commission in connection with the Merger based upon arrangements made by or
on behalf of the Company other than the fee payable to Montgomery Securities in
connection with its providing financial advice to the Company and the Company's
Board of Directors and delivery of the Company Fairness Opinion. The Parent and
Mergerco represent and warrant that no broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the Merger based upon arrangements made by or on behalf of the Parent and
Mergerco.
SECTION 8.8 Publicity. So long as this Agreement is in effect, neither the
Company nor the Parent nor any of their respective affiliates shall issue or
cause the publication of any press release or other public statement or
announcement with respect to this Agreement or the Contemplated Transaction
without prior consultation with the other party, except as may be required by
law or by obligations pursuant to any listing agreement with a national
securities exchange or Nasdaq, provided that the Company and the Parent may
include this Agreement and the Stockholders Agreement as exhibits to a report on
Form 8-K filed with the SEC, and in each such case shall use all reasonable
efforts to consult with the other party prior to such release or announcement
being issued or such filing being made.
SECTION 8.9 Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 8.10 Non-Assignability. This Agreement shall not be assigned by
operation of law or otherwise, except that at the election of the Parent, any
direct or indirect wholly owned Subsidiary of
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the Parent may be substituted for Mergerco in the Merger for all purposes of
this Agreement (including, but not limited to, the representations and
warranties of Mergerco herein).
SECTION 8.11 Entire Agreement; No Third Party Beneficiaries; Rights of
Ownership. This Agreement and the Confidentiality Agreement (including the
exhibits hereto and the documents and the instruments referred to herein and
therein): (a) constitute the entire agreement and supersede all prior agreements
and understandings, both written and oral, among the parties with respect to the
subject matter hereof, and (b) except as provided in Section 5.7 with respect to
the obligations of the Parent thereunder, are not intended to confer upon any
Person other than the parties hereto any rights or remedies hereunder.
SECTION 8.12 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to the remedy of specific performance of the terms hereof, in addition
to any other remedy at law or equity.
SECTION 8.13 Counterparts. This Agreement may be executed in two or more
counterparts each of which shall be deemed to constitute an original and shall
become effective when one or more counterparts have been signed by each of the
parties hereto and delivered to the other parties.
SECTION 8.14 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed wholly within such state except to the extent
the provisions of the DGCL apply.
SECTION 8.15 Consent to Jurisdiction. Any action or proceeding seeking to
enforce any provision of, or based on any right arising out of, this Agreement
may be brought against any of the parties in the courts of the State of New
York, County of New York, or, if it has or can acquire jurisdiction, in the
United States District Court for the Southern District of New York, and each of
the parties consents to the jurisdiction of such courts (and of the appropriate
appellate courts) in any such action or proceeding and waives any objection to
venue laid therein. Process in any action or proceeding referred to in the
preceding sentence may be served on any party anywhere in the world.
SECTION 8.16 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY
WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT, THE MERGER OR ANY OTHER CONTEMPLATED
TRANSACTIONS.
SECTION 8.17 Disclosure Schedule. The Disclosure Schedule is a part of this
Agreement as if fully set forth herein and all references to this Agreement
shall be deemed to include the Disclosure Schedule.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by
their respective duly authorized officers as of the date first above written.
CABLE CAR BEVERAGE CORPORATION
By: /s/ SAMUEL M. SIMPSON
...................................
Name: Samuel M. Simpson
Title: President
TRIARC COMPANIES, INC.
By: /s/ BRIAN L. SCHORR
...................................
Name: Brian L. Schorr
Title: Executive Vice President
CCB MERGER CORPORATION
By: /s/ BRIAN L. SCHORR
...................................
Name: Brian L. Schorr
Title: Executive Vice President
28
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EXHIBIT B TO AGREEMENT AND PLAN OF MERGER
FORM OF AFFILIATE AGREEMENT
, 1997
Triarc Companies, Inc.
280 Park Avenue
New York, NY 10017
Ladies and Gentlemen:
I have been advised that as of the date of this letter I may be deemed to
be an 'affiliate' of Cable Car Beverage Corporation, a Delaware corporation (the
'Company'), as the term 'affiliate' is defined for purposes of paragraphs (c)
and (d) of Rule 145 of the rules and regulations (the 'Rules and Regulations')
of the Securities and Exchange Commission (the 'Commission') under the
Securities Act of 1933, as amended (the 'Act'). Pursuant to the terms of the
Agreement and Plan of Merger, dated June 24, 1997 (the 'Agreement'), by and
among the Company, Triarc Companies, Inc., a Delaware corporation (the
'Parent'), and CCB Merger Corporation, a Delaware corporation and a wholly owned
subsidiary of the Parent ('Mergerco'), the Company will be merged with and into
Mergerco (the 'Merger').
As a result of the Merger, I will receive shares of Class A Common Stock,
par value $.10 per share, of the Parent (the 'Parent Stock') in exchange for
shares owned by me of Common Stock, $.01 par value per share, of the Company.
I represent, warrant, and covenant to the Parent that in the event I
receive any Parent Stock as a result of the Merger:
A. I shall not make any sale, transfer, or other disposition of the
Parent Stock in violation of the Act or the Rules and Regulations.
B. I have carefully read this letter and the Agreement and discussed
the requirements of such documents and other applicable limitations upon my
ability to sell, transfer, or otherwise dispose of the Parent Stock to the
extent I felt necessary, with my counsel or counsel for the Company.
C. I have been advised that the issuance of the Parent Stock to me
pursuant to the Merger has been registered with the Commission under the
Act on a Registration Statement on Form S-4. However, I have also been
advised that, since at the time the Merger was submitted for a vote of the
stockholders of the Company, I may be deemed to have been an affiliate of
the Company and the distribution by me of the Parent Stock has not been
registered under the Act, I may not sell, transfer or otherwise dispose of
the Parent Stock issued to me in the Merger unless (i) such sale, transfer,
or other disposition has been registered under the Act, (ii) such sale,
transfer, or other disposition is made in conformity with Rule 145
promulgated by the Commission under the Act, or (iii) in the opinion of
counsel reasonably acceptable to the Parent, or a 'no action' letter
obtained by the undersigned from the staff of the Commission, such sale,
transfer, or other disposition is otherwise exempt from registration under
the Act.
D. I understand that the Parent is under no obligation to register the
sale, transfer, or other disposition of the Parent Stock by me or on my
behalf under the Act or to take any other action necessary in order to make
compliance with an exemption from such registration available.
E. I also understand that stop transfer instructions will be given to
the Parent's transfer agent with respect to the Parent Stock and that there
will be placed on the certificates for the Parent Stock issued to me, or
any substitutions therefor, a legend stating in substance:
THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF
1933 APPLIES. THE SHARES REPRESENTED BY THIS CERTIFICATE MAY ONLY BE
TRANSFERRED IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT DATED
BETWEEN THE REGISTERED HOLDER HEREOF
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AND , A COPY OF WHICH AGREEMENT IS ON FILE AT THE
PRINCIPAL OFFICES OF TRIARC COMPANIES, INC.
F. I also understand that unless the transfer by me of my Parent Stock
has been registered under the Act or is a sale made in conformity with the
provisions of Rule 145, the Parent reserves the right to put the following
legend on the certificates issued to my transferee:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 AND WERE ACQUIRED FROM A PERSON WHO
RECEIVED SUCH SHARES IN A TRANSACTION TO WHICH RULE 145 PROMULGATED
UNDER THE SECURITIES ACT OF 1933 APPLIES. THE SHARES HAVE BEEN ACQUIRED
BY THE HOLDER NOT WITH A VIEW TO, OR FOR RESALE IN CONNECTION WITH, ANY
DISTRIBUTION THEREOF WITHIN THE MEANING OF THE SECURITIES ACT OF 1933
AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN
ACCORDANCE WITH AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT OF 1933.
It is understood and agreed that the legends set forth in paragraphs E and
F above shall be removed by delivery of substitute certificates without such
legend if such legend is not required for purposes of the Act or the Agreement,
including sales under Rule 145(d). It is also understood and agreed that such
legends and the stop orders referred to above will be removed if (i) one (1)
year shall have elapsed from the date the undersigned became the beneficial
owner of the Parent Stock received in the Merger and the provisions of Rule
145(d)(2) are then available to the undersigned, (ii) two (2) years shall have
elapsed from the date the undersigned became the beneficial owner of the Parent
Stock received in the Merger and the provisions of Rule 145(d)(3) are then
applicable to the undersigned, or (iii) Parent has received either an opinion of
counsel, which opinion of counsel shall be reasonably satisfactory to the
Parent, or a 'no action' letter obtained by the undersigned from the staff of
the Commission, to the effect that the restrictions imposed by Rule 145 under
the Act no longer apply to the undersigned.
Execution of this letter should not be considered an admission on my part
that I am an 'affiliate' of the Company as described in the first paragraph of
this letter or as a waiver of any rights I may have to object to any claim that
I am such an affiliate on or after the date of this letter.
Very truly yours,
.....................................
Accepted this day of
, 1997 by
By:
..................................
Name:
Title:
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AMENDMENT NO. 1
TO
AGREEMENT AND PLAN OF MERGER
Amendment No. 1, dated as of September 30, 1997 ('Amendment'), by and among
Cable Car Beverage Corporation, a Delaware corporation (the 'Company'), Triarc
Companies, Inc., a Delaware corporation (the 'Parent'), and CCB Merger
Corporation, a Delaware corporation ('Mergerco'), to the Agreement and Plan of
Merger, dated June 24, 1997 (the 'Agreement'), by and among the Company, the
Parent and Mergerco.
Each of the parties to the Agreement have determined that it would be in
its best interest to amend the terms thereof to the extent set forth in this
Amendment.
Capitalized terms used in this Amendment and not otherwise defined herein
shall have the meanings ascribed to them in the Agreement.
Accordingly, the parties hereto agree as follows:
1. Amendments to the Agreement. The Agreement is hereby amended as
follows:
(a) Clause (y) of the second proviso contained in Section 5.1(g) of
the Agreement is hereby amended and restated in its entirety to read as
follows:
'(y) enter into a lease for office space in the greater Denver,
Colorado area not to exceed 4,500 square feet, at a cost per
square foot not to exceed $17.50 and for a term not to exceed four
(4) years;'
(b) Section 6.2 (i) of the Agreement is hereby amended by deleting
the phrase 'seven and one-half percent (7.5%)' appearing therein and
substituting in lieu thereof the phrase 'six percent (6%).'
2. Effective Date. Upon the execution and delivery hereof by each
party hereto, this Amendment shall have effect as and from the date on
which the Agreement was executed and delivered.
3. Confirmation of the Agreement. Except to the extent amended
specifically by this Amendment, the provisions of the Agreement are hereby
confirmed and shall remain in full force and effect. This Amendment is
limited as written and shall not be deemed (a) to be a consent under or a
waiver of any other term or condition of the Agreement or any of the
documents referred to therein or (b) to prejudice any right or rights which
any of the parties to the Agreement now has or may have in the future under
or in connection with the Agreement or any of the documents referred to
therein. Each reference to the 'Agreement' in the Agreement shall be a
reference to the Agreement as amended hereby.
4. Successors and Assigns. This Amendment shall be binding upon and
inure to the benefit of the parties hereto and their permitted successors
and assigns.
5. Representations and Warranties. Each party represents and warrants
to the others as follows: Such party has full corporate power and authority
to execute and deliver this Amendment. This Amendment has been duly
executed and delivered by such party and, assuming this Amendment
constitutes a valid and binding obligation of the other parties hereto,
constitutes a valid and binding obligation of such party enforceable
against such party in accordance with its terms, except that (i) such
enforcement may be subject to applicable bankruptcy, insolvency or other
similar laws, now or hereafter in effect, affecting creditors' rights
generally, and (ii) the remedy of specific performance and injunctive and
other forms of equitable relief may be subject to equitable defenses and to
the discretion of the court before which any proceeding therefor may be
brought.
6. Governing Law. This Amendment, including, without limitation, the
validity hereof and the right and obligations of the parties hereunder,
shall be governed by and construed in accordance with the laws of the State
of New York applicable to contracts made and to be performed wholly within
such state except to the extent the provisions of the DGCL apply.
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7. Counterparts. This Amendment may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first above written.
CABLE CAR BEVERAGE CORPORATION
By: /S/ SAMUEL M. SIMPSON
..................................
Name: Samuel M. Simpson
Title: President
TRIARC COMPANIES, INC.
By: /S/ BRIAN L. SCHORR
..................................
Name: Brian L. Schorr
Title: Executive Vice President
CCB MERGER CORPORATION
By: /S/ BRIAN L. SCHORR
..................................
Name: Brian L. Schorr
Title: Executive Vice President
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APPENDIX B-2
STOCKHOLDERS AGREEMENT
STOCKHOLDERS AGREEMENT, dated June 24, 1997 (this 'Agreement'), by and
among Triarc Companies, Inc., a Delaware corporation (the 'Parent') and each of
the other parties signatory hereto (each, a 'Stockholder' and, collectively, the
'Stockholders').
RECITALS
A. Concurrently herewith, the Parent, CCB Merger Corporation, a Delaware
corporation and wholly owned subsidiary of the Parent ('Mergerco'), and Cable
Car Beverage Corporation, a Delaware corporation (the 'Company'), are entering
into an Agreement and Plan of Merger (as amended or modified from time to time,
the 'Merger Agreement'; capitalized terms used herein without definition shall
have the respective meanings ascribed to them in the Merger Agreement) pursuant
to which Mergerco will be merged with and into the Company (the 'Merger').
B. As of the date hereof, each of the Stockholders Beneficially Owns (as
defined below) the number of shares of the Common Stock, par value $.01 per
share, of the Company ('Company Common Stock') set forth opposite such
Stockholder's name on Schedule I hereto.
C. As an inducement and a condition to entering into the Merger Agreement,
the Parent has required that the Stockholders agree, and the Stockholders have
agreed, to enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual premises,
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
1. Provisions Concerning Company Common Stock. Each Stockholder hereby
agrees that during the period commencing on the date hereof and continuing until
the first to occur of (i) the Effective Time and (ii) the termination of the
Merger Agreement in accordance with Section 7.1 thereof, at any meeting of the
holders of Company Common Stock, however called, or in connection with any
written consent of the holders of Company Common Stock, such Stockholder shall
vote (or cause to be voted) the Company Common Stock held of record or
Beneficially Owned by such Stockholder (but excluding the Company Common Stock
identified as Excluded Shares on Schedule I hereto), whether heretofore owned or
hereafter acquired (collectively, the 'Shares'), (i) in favor of approval of the
Merger Agreement and the transactions contemplated thereby (the 'Contemplated
Transactions'), including, without limitation, the Merger, and any actions
required in furtherance thereof; (ii) against any action or agreement that would
result in a breach in any respect of any covenant, representation or warranty or
any other obligation or agreement of the Company under the Merger Agreement or
the Contemplated Transactions; and (iii) except as otherwise agreed to in
writing in advance by the Parent, against the following actions (other than the
Merger and the other Contemplated Transactions): (A) any Acquisition Proposal;
or (B) (1) any change in a majority of the Stockholders who constitute the board
of directors of the Company; (2) any change in the present capitalization of the
Company or any amendment of the Company's certificate of incorporation or
by-laws; (3) any other material change in the Company's corporate structure or
business; or (4) any other action which is intended, or could reasonably be
expected, to prevent, or delay beyond the date specified in Section 7.1(b)(1) of
the Merger Agreement, the Merger or the Contemplated Transactions. Such
Stockholder shall not enter into any agreement or understanding with any Person
the effect of which would be inconsistent or violative of the provisions and
agreements contained in Section 1 or 3 hereof.
For purposes of this Agreement, 'Beneficially Own' or 'Beneficial
Ownership' with respect to any securities shall mean having 'beneficial
ownership' of such securities (as determined pursuant to Rule 13d-3 under the
Securities Exchange Act of 1934, as amended (the 'Exchange Act')), including
pursuant to any agreement, arrangement or understanding, whether or not in
writing. Without duplicative counting of the same securities by the same holder,
securities Beneficially Owned by a Person shall include securities Beneficially
Owned by all other Persons with whom such Person would constitute a 'group' as
within the meanings of Section 13(d)(3) of the Exchange Act. For the purposes of
this Agreement, 'Person' means any individual, corporation (including any
non-profit corporation),
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general or limited partnership, limited liability company, joint venture,
estate, trust, association, organization or other entity or Governmental
Authority.
2. Irrevocable Proxy. In the event the Stockholder shall fail to comply
with the provisions of Section 1, the Stockholder hereby agrees that such
failure shall result, without any further action by the Stockholder, in the
irrevocable appointment of the Parent and each of its officers, as its attorney
and proxy pursuant to the provisions of Section 212 of the General Corporation
Law of the State of Delaware, with full power of substitution, to vote and
otherwise act (by written consent or otherwise) with respect to the Shares which
the Stockholder is entitled to vote at any meeting of the holders of Company
Common Stock (whether annual or special and whether or not an adjourned or
postponed meeting) or consent in lieu of any such meeting or otherwise, on the
matters and in the manner specified in Section 1 (the 'Proxy'). This Proxy and
power of attorney is irrevocable and coupled with an interest. The Stockholder
hereby revokes all other proxies and powers of attorney with respect to such
Shares that it may have heretofore appointed or granted, and no subsequent proxy
or power of attorney shall be given or written consent executed (and if given or
executed, shall not be effective) by the Stockholder with respect thereto. All
obligations of the Stockholder under this Agreement shall be binding upon the
heirs, personal representatives, successors and/or assigns of the Stockholder.
3. Grant of Option. Each Stockholder severally grants to the Parent an
exclusive and irrevocable option (an 'Option') to purchase such Stockholder's
Shares in whole but not in part, subject to the provisions of Section 4 hereof,
at the Option Price (as defined below) at any time after the Company shall have
(a) delivered to the Parent a Transaction Notice or (b) shall have furnished
confidential information to any Person or entered into negotiations with any
Person with respect to an Acquisition Proposal; provided, that if the Merger
Agreement is terminated pursuant to Section 7.1(c)(iii), 7.1(d)(i) or
7.1(d)(iii) of the Merger Agreement and this Agreement does not terminate in
accordance with Section 5 hereof, then the Options granted hereunder shall
expire at 5:00 p.m. (New York City time) on the tenth (10th) Business Day
following such termination of the Merger Agreement unless the Parent shall have
delivered a written notice to each Stockholder of its exercise of the Options in
accordance with Section 4 hereof. For purposes of this Agreement, the 'Option
Price' with respect to each share of Company Common Stock to be purchased by the
exercise of any Option shall be an amount in cash equal to the product obtained
by multiplying (a) 0.1722 (the 'Option Conversion Price') times (b) the Option
Average Parent Share Price (as defined below); provided, that (i) if the Option
Average Parent Share Price shall be less than $18.875, then the Option
Conversion Price shall be adjusted so that it shall equal the quotient obtained
by dividing (A) $3.25 by (B) the Option Average Parent Share Price, and (ii) if
the Option Average Parent Share Price shall be greater than $24.50, then the
Option Conversion Price shall be adjusted so that it shall equal the quotient
obtained by dividing (x) $4.22 by (y) the Option Average Share Price. For the
purposes of this Section 3, 'Option Average Share Price' means the average
(without rounding) of the closing prices per share of Parent Class A Common
Stock on the NYSE on the NYSE Composite Tape for the fifteen (15) consecutive
trading days ending on the NYSE trading day immediately preceding the date of
the closing of the exercise of the Option.
4. Exercise of Option. The Parent shall exercise each and every Option
granted hereunder simultaneously. In the event the Parent wishes to exercise the
Options, the Parent shall send a written notice to each Stockholder specifying
the place (which shall be either Denver, Colorado or New York, New York), time
and date (which, to the extent practicable in the reasonable judgment of the
Parent, shall be no earlier than forty-eight (48) hours after the delivery of
such notice) for the closing of such purchase. At the closing for the exercise
of the Options:
(a) the Parent shall deliver to each Stockholder a certified or bank
check or checks payable to or upon the order of such Stockholder in an
amount equal to the aggregate Option Price of the Shares being purchased
from such Stockholder; and
(b) each Stockholder shall deliver to the Parent a duly executed
certificate or certificates representing the number of Shares being
purchased duly endorsed in blank or accompanied by appropriate stock powers
duly endorsed in blank.
5. Termination. This Agreement, including the Options granted hereunder,
shall terminate on the earlier to occur of (a) the Effective Time; (b) the
termination of the Merger Agreement pursuant to the following provisions of the
Merger Agreement: Section 7.1(a), 7.1(b), 7.1(c)(i) or 7.1(d)(iv), or Section
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7.1(c)(iii), 7.1(d)(i) or 7.1(d)(iii), provided that in the case of a
termination of the Merger Agreement pursuant to Section 7.1(c)(iii), 7.1(d)(i)
or 7.1(d)(iii) of the Merger Agreement, this Agreement shall terminate only if
the Company or its stockholders shall not have received an Acquisition Proposal,
and the Board of Directors of the Company shall not have withdrawn, or modified
or changed in a manner adverse to the Parent or Mergerco, its approval or
recommendation of the Merger Agreement or the Merger; and (c) the date that is
31 days after the date set forth in Section 7.1(b)(i) of the Merger Agreement,
as such date as set forth in Section 7.1(b)(i) of the Merger Agreement may be
extended, modified or waived from time to time in accordance with the provisions
of the Merger Agreement.
6. Representations and Warranties. Each Stockholder hereby represents and
warrants to the Parent and Mergerco as follows:
(a) Ownership of Company Common Stock. Such Stockholder is, as of the
date hereof, the record and Beneficial Owner of the number of shares of
Company Common Stock set forth opposite such Stockholder's name on Schedule
I hereto. On the date hereof, the Company Common Stock set forth opposite
such Stockholder's name on Schedule I hereto constitutes all of the Company
Common Stock owned of record or Beneficially Owned by such Stockholder.
Such Stockholder has good and valid title, and sole voting power and sole
power to issue instructions with respect to the matters set forth in
Section 1 hereof, sole power of disposition, sole power of conversion, sole
power to demand appraisal rights and sole power to agree to all of the
matters set forth in this Agreement (including, without limitation, to
execute and deliver the Proxy), in each case with respect to all of the
Company Common Stock set forth opposite such Stockholder's name on Schedule
I hereto, with no limitations, qualifications, encumbrances or restrictions
on such rights (other than those created under this Agreement) except as
set forth on Schedule I hereto.
(b) Power, Binding Agreement. Such Stockholder has the legal capacity,
power and authority to enter into and perform all of such Stockholder's
obligations under this Agreement. The execution, delivery and performance
of this Agreement by such Stockholder will not violate any other agreement
to which such Stockholder is a party. This Agreement has been duly and
validly executed and delivered by such Stockholder and constitutes a valid
and binding agreement of such Stockholder, enforceable against such
Stockholder in accordance with its terms, except that (i) such enforcement
may be subject to applicable bankruptcy, insolvency or other similar laws,
now or hereafter in effect, affecting creditors' rights generally, and (ii)
the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion
of the court before which any proceeding therefor may be brought. There is
no beneficiary or holder of a voting trust certificate or other interest of
any trust of which such Stockholder is trustee who is not a party to this
Agreement and whose consent is required for the execution and delivery of
this Agreement or the consummation by such Stockholder of the transactions
contemplated hereby. The Stockholder has not entered into any voting
agreement or trust or other stockholder agreement with respect to any
Company Common Stock Beneficially Owned or held of record by such
Stockholder or granted to any Person any proxy (revocable or irrevocable)
or power-of-attorney with respect to such Company Common Stock other than
the Proxy expressly contemplated hereby. If such Stockholder is married and
such Stockholder's Company Common Stock constitutes community property,
this Agreement has been duly authorized, executed and delivered by, and
constitutes a valid and binding agreement of, such Stockholder's spouse.
(c) No Conflicts. (i) Other than the filing of Forms 13-D pursuant to
the Securities Exchange Act of 1934, as amended, and such other filings,
consents, authorizations and approvals as are contemplated by the Merger
Agreement, no filing with, and no permit, authorization, consent or
approval of, any Governmental Authority is necessary for the execution of
this Agreement by such Stockholder and the consummation by such Stockholder
of the transactions contemplated hereby.
(ii) None of the execution and delivery of this Agreement by such
Stockholder, the consummation by such Stockholder of the transactions
contemplated hereby or compliance by such Stockholder with any of the
provisions hereof shall (A) result in a violation or breach of, or
constitute (with or without notice or lapse of time or both) a default (or
give rise to any third party right of termination, cancellation, material
modification or acceleration) under any of the terms,
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conditions or provisions of its governing documents (as applicable) or any
note, bond, mortgage, indenture, license, contract, commitment,
arrangement, understanding, agreement or other instrument or obligation of
any kind to which such Stockholder is a party or by which such Stockholder
or any of such Stockholder's properties or assets may be bound, or (B)
violate any order, writ, injunction, decree, judgment, order, statute, rule
or regulation applicable to such Stockholder or any of such Stockholder's
properties or assets.
(d) As of the date hereof, there is (i) no suit, claim, action,
proceeding, review or investigation pending, or to the knowledge of such
Stockholder, threatened against the Stockholder, and (ii) no judgment,
decree, order, writ or injunction of any Governmental Authority to which
the Stockholder or his or her assets are subject, that could materially
impair the ability of the Stockholder to perform his or her obligations
hereunder or to consummate the transactions contemplated hereby.
(e) No Finder's Fees. No broker, investment banker, financial advisor
or other Stockholder is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with the Merger
or the other Contemplated Transactions based upon arrangements made by or
on behalf of such Stockholder or any of his or her affiliates or, to the
knowledge of such Stockholder, the Company or any of its affiliates, other
than the fee payable to Montgomery Securities in connection with its
providing financial advice to the Company and the Company's Board of
Directors and delivery of the Company Fairness Opinion.
(f) Reliance by the Parent. Such Stockholder understands and
acknowledges that the Parent is entering into the Merger Agreement in
reliance upon such Stockholder's execution and delivery of this Agreement.
7. Covenants.
(a) Other Potential Acquirors. Such Stockholder (i) shall immediately cease
any existing discussions or negotiations, if any, with any parties conducted
heretofore with respect to any potential Acquisition Proposal, in his or her
capacity as such, and (ii) from and after the date hereof shall not, in such
capacity, directly or indirectly, initiate, solicit or encourage (including by
way of furnishing non-public information or assistance), engage in any
discussions or negotiations with respect to, or take any other action to
facilitate, any inquiries or the making of any proposal that constitutes, or may
reasonably be expected to lead to, an Acquisition Proposal, or agree to or
endorse any Acquisition Proposal, or authorize or permit any of such
Stockholder's agents to do so, and such Stockholder shall promptly notify the
Parent of any offers, proposals, inquiries or Acquisition Proposals and shall
provide a copy of any such written proposal and a summary of any oral proposal
to the Parent immediately after receipt thereof (and shall specify the material
terms and conditions of such proposal and identify the Person making such
proposal) and thereafter keep the Parent promptly advised of any developments
with respect thereto.
(b) Restriction on Transfer, Proxies and Non-Interference. Such Stockholder
shall not, directly or indirectly, except as contemplated by the Merger
Agreement and this Agreement: (i) offer for sale, sell, transfer, tender,
pledge, encumber, assign or otherwise dispose of, or enter into any contract,
option or other arrangement or understanding with respect to or consent to the
offer for sale, sale, transfer, tender, pledge, encumbrance, assignment or other
disposition of, any or all of such Stockholder's Shares or any interest therein;
(ii) grant any proxies or powers of attorney, deposit any Shares into a voting
trust or enter into a voting agreement with respect to any Shares; or (iii) take
any action that would make any representation or warrant of such Stockholder
contained herein untrue or incorrect or have the effect of preventing or
disabling such Stockholder from performing such Stockholder's obligations under
this Agreement.
8. Further Assurances. From time to time, at the Parent's request and
without further consideration, each Stockholder shall execute and deliver such
additional documents and take all such further lawful action as may be
reasonably necessary or desirable to consummate and make effective, in the most
expeditious manner practicable, the transactions contemplated by this Agreement.
9. Stop Transfer. Each Stockholder agrees with, and covenants to, the
Parent that such Stockholder shall not request that the Company register the
transfer (book-entry or otherwise) of any certificate or
4
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<PAGE>
uncertificated interest representing any of such Stockholder's Shares, unless
such transfer is made in compliance with this Agreement. In the event of a stock
dividend or distribution, or any change in the Company Common Stock by reason of
any stock dividend, split-up, recapitalization, combination, exchange of Company
Common Stock or the like, the term 'Company Common Stock' shall be deemed to
refer to and include the Company Common Stock as well as all such stock
dividends and distributions and any Company Common Stock into which or for which
any or all of the Company Common Stock may be changed or exchanged.
10. Disclosure. Each Stockholder hereby agrees to permit the Parent to
publish and disclose in the S-4 and the Proxy Statement (including all documents
and schedules filed with the SEC), and any press release or other disclosure
document which the Parent, in its sole discretion, determines to be necessary or
desirable in connection with the Merger and any transactions related thereto,
such Person's identity and ownership of Company Common Stock and the nature of
his or her commitments, arrangements and understandings under this Agreement.
11. Miscellaneous.
(a) Entire Agreement. This Agreement constitutes the entire agreement among
the parties with respect to the subject matter hereof and supersedes all other
prior agreements and understandings, both written and oral, between the parties
with respect to the subject matter hereof.
(b) Certain Events. Each Stockholder agrees that this Agreement and the
obligations hereunder shall attach to such Stockholder's Shares and shall be
binding upon any person or entity to which legal or beneficial ownership of such
Shares shall pass, whether by operation of law or otherwise, including, without
limitation, such Stockholder's heirs, guardians, administrators or successors.
Notwithstanding any transfer of his or her Shares, the transferor shall remain
liable for the performance of all obligations under this Agreement of the
transferor.
(c) Assignment. This Agreement shall not be assigned by the Company or any
Stockholder by operation of law or otherwise without the prior written consent
of the other party. The Parent may assign, in its sole discretion, its rights
and obligations hereunder to any direct or indirect wholly owned subsidiary of
the Parent.
(d) Amendments, Waivers, Etc. This Agreement may not be amended, changed,
supplemented, waived or otherwise modified or, except as expressly provided
herein, terminated, with respect to any Stockholder, except upon the execution
and delivery of a written agreement executed by such Stockholder and the Parent;
provided that Schedule I hereto may be supplemented by the Parent by adding the
name and other relevant information concerning any Stockholder of the Company
who agrees to be bound by the terms of this Agreement without the agreement of
any other party hereto, and thereafter such added Stockholder shall be treated
as a 'Stockholder' for all purposes of this Agreement.
(e) Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if delivered by messenger,
transmitted by telecopier, telex or telegram or mailed by registered or
certified mail, postage prepaid, as follows:
If to any Stockholder: At the addresses set forth on Schedule I hereto
with a copy to: Krys Boyle Freedman Scott & Sawyer, P.C.
Dominion Plaza
600 Seventeenth Street
Suite 2700, South Tower
Denver, Colorado 80202
Attention: Thomas Boyle, Esq.
Telecopy: (303) 893-2882
If to the Parent: Triarc Companies, Inc.
280 Park Avenue
New York, New York 10017
Attention: Brian L. Schorr, Esq.
Telecopy: (212) 451-3216
5
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<PAGE>
with a copy to: Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Attention: Neale M. Albert, Esq.
Telecopy: (212) 373-2315
Except as otherwise specified herein, all notices and other communications
shall be considered to have been duly given on the first to occur of (a) the
date of delivery if delivered personally on a Business Day during normal
business hours, and if not, on the next occurring Business Day, (b) five (5)
days following posting if transmitted by mail, (c) the date of transmission with
confirmed answer-back if transmitted by telex on a Business Day during normal
business hours, and if not, on the next occurring Business Day, or (d) the date
of receipt if transmitted by telecopier or facsimile on a Business Day during
normal business hours, and if not, on the next occurring Business Day. Any party
may change his, her or its address for purposes hereof by notice to the other
party given as provided in this Section 9(e).
(f) Severability. Whenever possible, each provision or portion of any
provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
(g) Specific Performance. Each of the parties hereto recognizes and
acknowledges that a breach by it of any covenants or agreements contained in
this Agreement will cause the other party to sustain damages for which it would
not have an adequate remedy at law for money damages, and therefore each of the
parties hereto agrees that in the event of any such breach, the aggrieved party
shall be entitled to the remedy of specific performance of such covenants and
agreements and injunctive and other equitable relief in addition to any other
remedy to which it may be entitled, at law or in equity.
(h) Remedies Cumulative. All rights, powers and remedies provided under
this Agreement or otherwise available in respect hereof at law or in equity
shall be cumulative and not alternative, and the exercise of any thereof by any
party shall not preclude the simultaneous or later exercise of any other such
right, power or remedy by such party.
(i) No Waiver. The failure of any party hereto to exercise any right, power
or remedy provided under this Agreement or otherwise available in respect hereof
at law or in equity, or to insist upon compliance by any other party hereto with
his, her or its obligations hereunder, and any custom or practice of the parties
at variance with the terms hereof, shall not constitute a waiver by such party
of his, her or its right to exercise any such or other right, power or remedy or
to demand such compliance.
(j) No Third Party Beneficiaries. This Agreement is not intended to be for
the benefit of, and shall not be enforceable by, any person or entity who or
which is not a party hereto.
(k) Descriptive Headings. The descriptive headings used herein are inserted
for convenience of reference only and are not intended to be part of or to
affect the meaning or interpretation of this Agreement.
(l) Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original, but all of which, taken together shall
constitute one and the same Agreement.
(m) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE
PRINCIPLES OF CONFLICTS OF LAW THEREOF, EXCEPT TO THE EXTENT THAT THE GENERAL
CORPORATION LAW OF THE STATE OF DELAWARE APPLY.
(N) NO LIMITATION OF FIDUCIARY DUTIES. THE PARTIES HERETO ACKNOWLEDGE AND
AGREE THAT NONE OF THE PROVISIONS HEREIN SHALL BE DEEMED TO RESTRICT OR LIMIT
ANY FIDUCIARY DUTY ANY OF THE STOCKHOLDERS MAY HAVE AS A MEMBER OF THE BOARD OF
DIRECTORS OF THE COMPANY; PROVIDED, THAT
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NO SUCH DUTY SHALL EXCUSE ANY OF THE STOCKHOLDERS FROM HIS OBLIGATIONS AS A
STOCKHOLDER TO VOTE THE SHARES OF THE COMPANY COMMON STOCK AS HEREIN PROVIDED,
AND TO OTHERWISE COMPLY WITH EACH OF THE TERMS AND CONDITIONS OF THIS AGREEMENT.
IN WITNESS WHEREOF, the Parent and each Stockholder have caused this
Agreement to be duly executed as of the day and year first above written.
TRIARC COMPANIES, INC.
By: /s/ BRIAN L. SCHORR
...................................
Name: Brian L. Schorr
Title: Executive Vice President
STOCKHOLDERS:
/s/ SAMUEL M. SIMPSON
.....................................
Samuel M. Simpson
/s/ SUSAN L. NEFF
.....................................
Susan L. Neff
/s/ WILLIAM H. RUTTER
.....................................
William H. Rutter
/s/ SUSAN L. FRALICK
.....................................
Susan L. Fralick
ACKNOWLEDGMENT:
The undersigned hereby acknowledges the terms and provisions of Section 9
of this Agreement.
CABLE CAR BEVERAGE CORPORATION
By: /s/ SAMUEL M. SIMPSON
...................................
Name: Samuel M. Simpson
Title: President
7
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<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
SHARES OF
COMPANY EXCLUDED
STOCKHOLDER NAME AND ADDRESS COMMON STOCK SHARES SHARES
- ----------------------------------------------------------------------- ------------ ---------- -------
<S> <C> <C> <C>
Samuel M. Simpson ..................................................... 723,643 0 723,643(1)
3005 Cherry Ridge Road
Cherry Hills Village, CO 80110
Susan L. Neff ......................................................... 381,234 0 381,234
3005 Cherry Ridge Road
Cherry Hills Village, CO 80110
William H. Rutter ..................................................... 666,532 10,000(2) 656,532
1868 South Highland Drive
Moab, UT 84532
Susan L. Fralick ...................................................... 7,200 5,000(3) 2,200
1868 South Highland Drive
Moab, UT 84532
</TABLE>
- ------------
(1) 60,000 of Mr. Simpson's Shares have been pledged to William H. Rutter as
security.
(2) Mr. Rutter's Excluded Shares are comprised of 10,000 shares in a trust for
his benefit, for which Cynthia S. Rutter is trustee.
(3) Ms. Fralick's Excluded Shares are comprised of 5,000 shares in an IRA
account.
<PAGE>
<PAGE>
AMENDMENT NO. 1 TO STOCKHOLDERS AGREEMENT
AMENDMENT NO. 1, dated as of July 9, 1997 (this 'Amendment'), to
Stockholders Agreement, dated June 24, 1997 (the 'Stockholders Agreement'), by
and among Triarc Companies, Inc., a Delaware corporation (the 'Parent'), and
Samuel M. Simpson, Susan L. Neff, William H. Rutter and Susan L. Fralick
(collectively, the 'Stockholders').
The Parent and each of the Stockholders desire to amend and restate
Schedule I to the Stockholders Agreement to correct an inadvertent error therein
and hereby agree as follows:
1. Amendment. Schedule I to the Stockholders Agreement is hereby amended
and restated in its entirety in the the form attached hereto as Exhibit A.
2. Entire Agreement. This Agreement sets forth the entire understanding and
agreement of the parties hereto in relation to the subject matter hereof. None
of the terms or conditions of this Amendment may be changed, modified, waived or
canceled except by a writing signed by all parties hereto.
3. Full Force and Effect. Except as hereby specifically amended, the
Stockholders Agreement is hereby confirmed and ratified in all respects and
shall remain in full force and effect according to its terms. All references in
the Stockholders Agreement to the 'Agreement' shall mean the Stockholders
Agreement as amended hereby.
4. Counterparts. This Amendment may be executed in any number of
counterparts, each of which shall be deemed an original and all of which
together constitute one and the same instrument.
5. Governing Law. This Amendment shall be construed in accordance with and
governed by the laws of the State of New York without giving effect to its
principles of conflicts of law.
IN WITNESS WHEREOF, the Parent and each Stockholder have caused this
Amendment No. 1 to be duly executed as of the day and year first above written.
TRIARC COMPANIES, INC.
By: /s/ BRIAN L. SCHORR
.................................
Name: Brian L. Schorr
Title: Executive Vice President
STOCKHOLDERS:
/s/ SAMUEL M. SIMPSON
.....................................
Samuel M. Simpson
/s/ SUSAN L. NEFF
.....................................
Susan L. Neff
/s/ WILLIAM H. RUTTER
.....................................
William H. Rutter
/s/ SUSAN L. FRALICK
.....................................
Susan L. Fralick
<PAGE>
<PAGE>
EXHIBIT A
SCHEDULE I
<TABLE>
<CAPTION>
SHARES OF
COMPANY EXCLUDED
STOCKHOLDER NAME AND ADDRESS COMMON STOCK SHARES SHARES
- ----------------------------------------------------------------------- ------------ ---------- -------
<S> <C> <C> <C>
Samuel M. Simpson ..................................................... 723,643 0 723,643(1)
3005 Cherry Ridge Road
Cherry Hills Village, CO 80110
Susan L. Neff ......................................................... 381,234 0 381,234
3005 Cherry Ridge Road
Cherry Hills Village, CO 80110
William H. Rutter ..................................................... 666,532 10,000(2) 656,532
1868 South Highland Drive
Moab, UT 84532
Susan L. Fralick ...................................................... 7,200 2,200(3) 5,000
1868 South Highland Drive
Moab, UT 84532
</TABLE>
- ------------
(1) 60,000 of Mr. Simpson's Shares have been pledged to William H. Rutter as
security.
(2) Mr. Rutter's Excluded Shares are comprised of 10,000 shares in a trust for
his benefit, for which Cynthia S. Rutter is trustee.
(3) Ms. Fralick's Excluded Shares are comprised of 2,200 shares in an IRA
account.
<PAGE>
<PAGE>
APPENDIX C
[LETTERHEAD OF MONTGOMERY SECURITIES]
June 24, 1997
Board of Directors
Cable Car Beverage Corporation
717 17th Street, Suite 1475
Denver, Colorado 80202
Gentlemen:
We understand that Cable Car Beverage Corporation, a Delaware corporation
('Seller'), and Triarc Companies, Inc., a Delaware corporation ('Buyer'), have
entered into a Merger Agreement dated June 24, 1997 (the 'Merger Agreement'),
pursuant to which Seller will be merged with and into Buyer, which will be the
surviving entity (the 'Merger'). Pursuant to the Merger, as more fully described
in the Merger Agreement and as further described to us by management of Seller,
we understand that each outstanding share of the common stock, $.01 par value
per share ('Seller Common Stock'), of Seller will be converted into and
exchangeable for 0.1722 shares of the Class A common stock, $.10 par value per
share ('Buyer Common Stock'), of Buyer, subject to certain adjustments (the
'Consideration'). The terms and conditions of the Merger are set forth in more
detail in the Merger Agreement.
You have asked for our opinion as investment bankers as to whether the
Consideration to be received by the stockholders of Seller pursuant to the
Merger is fair to such stockholders from a financial point of view, as of the
date hereof. In connection with this assignment, on June 19, 1997 we presented
to the Board of Directors of Seller a summary of our financial analysis and our
oral opinion as to the matters set forth in this letter. As you are aware, we
were not retained to nor did we advise Seller with respect to alternatives to
the Merger or Seller's underlying decision to proceed with or effect the Merger.
Further, we were not requested to nor did we solicit or assist Seller in
soliciting indications of interest from third parties for all or any part of
Seller.
In connection with our opinion, we have, among other things: (i) reviewed
certain publicly available financial and other data with respect to Seller and
Buyer, including the consolidated financial statements for recent years and
interim periods to March 31, 1997 and certain other relevant financial and
operating data relating to Seller and Buyer made available to us from published
sources and from the internal records of Seller and Buyer, (ii) reviewed the
financial terms and conditions of the Merger Agreement; (iii) reviewed certain
publicly available information concerning the trading of, and the trading market
for, Seller Common Stock and Buyer Common Stock; (iv) compared Seller and Buyer
from a financial point of view with certain other companies in the beverage
industry which we deemed to be relevant; (v) considered the financial terms, to
the extent publicly available, of selected recent business combinations of
companies in the beverage industry which we deemed to be comparable, in whole or
in part, to the Merger; (vi) reviewed and discussed with representatives of the
management of Seller and Buyer certain information of a business and financial
nature regarding Seller and Buyer, furnished to us by them, including financial
forecasts and related assumptions of Seller and Buyer; (vii) made inquiries
regarding and discussed the Merger and the Merger Agreement and other matters
related thereto with Seller's counsel; and (viii) performed such other analyses
and examinations as we have deemed appropriate.
In connection with our review, we have not assumed any obligation
independently to verify the foregoing information and have relied on its being
accurate and complete in all material respects. With respect to the financial
forecasts for Seller and Buyer provided to us by their respective managements,
upon their advice and with your consent we have assumed for purposes of our
opinion that the forecasts (including the assumptions regarding the recent
acquisition of Snapple Beverage Corp. by Buyer) have been reasonably prepared on
bases reflecting the best available estimates and judgments of their respective
managements at the time through the date hereof as to the future financial
performance of Seller and Buyer and that they provide a reasonable basis upon
which we can form our opinion. We
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have also assumed that there have been no material changes in Seller's or
Buyer's assets, financial condition, results of operations, business or
prospects since the respective dates of their last financial statements made
available to us. We have relied on advice of the counsel and the independent
accountants to Seller as to all legal and financial reporting matters with
respect to Seller, the Merger and the Merger Agreement. We have assumed that the
Merger will be consummated in a manner that complies in all respects with the
applicable provisions of the Securities Act of 1933, as amended (the 'Securities
Act'), the Securities Exchange Act of 1934 and all other applicable federal and
state statutes, rules and regulations. In addition, we have not assumed
responsibility for making an independent evaluation, appraisal or physical
inspection of any of the assets or liabilities (contingent or otherwise) of
Seller or Buyer, nor have we been furnished with any such appraisals. Finally,
our opinion is based on economic, monetary and market and other conditions as in
effect on, and the information made available to us as of, the date hereof.
Accordingly, although subsequent developments may affect this opinion, we have
not assumed any obligation to update, revise or reaffirm this opinion.
We have further assumed with your consent that the Merger will be
consummated in accordance with the terms described in the Merger Agreement,
without any further amendments thereto, and without waiver by Seller of any of
the conditions to its obligations thereunder.
Based upon the foregoing and in reliance thereon, it is our opinion as
investment bankers that the Consideration to be received by the stockholders of
Seller pursuant to the Merger is fair to such stockholders from a financial
point of view, as of the date hereof.
We are not expressing (and cannot express) an opinion regarding the price
at which the Buyer Common Stock may trade at any future time. The Consideration
to be received by the stockholders of Seller pursuant to the Merger is based
upon a fixed exchange ratio (subject to a collar) and, accordingly, the market
value of the Consideration may vary significantly from what such stockholder
would receive if the Merger were completed today. Additionally, the market value
of the Consideration received in the Merger can be expected to change after
consummation of the Merger as the trading price of Buyer's Securities changes in
the ordinary course (or otherwise) of purchases and sales in the open market.
This opinion is directed to the Board of Directors of Seller in its
consideration of the Merger and is not a recommendation to any stockholder as to
how such stockholder should vote with respect to the Merger. Further, this
opinion addresses only the financial fairness of the Consideration to the
stockholders and does not address any other aspect of the Merger including,
without limitation, the relative merits of the Merger, any alternatives to the
Merger or Seller's underlying decision to proceed with or effect the Merger.
This opinion may not be used or referred to by Seller, or quoted or disclosed to
any person in any manner, without our prior written consent, which consent is
hereby given to the inclusion of this opinion in any proxy statement or
prospectus filed with the Securities and Exchange Commission in connection with
the Merger. In furnishing this opinion, we do not admit that we are experts
within the meaning of the term 'experts' as used in the Securities Act and the
rules and regulations promulgated thereunder, nor do we admit that this opinion
constitutes a report or valuation within the meaning of Section 11 of the
Securities Act.
Very truly yours,
MONTGOMERY SECURITIES
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APPENDIX D
APPRAISAL RIGHTS
PROVISIONS OF THE
DELAWARE GENERAL CORPORATION LAW
Section 262. Appraisal Rights.
(a) Any stockholder of a corporation of this State who holds shares of
stock on the date of the making of a demand pursuant to subsection (d) of this
section with respect to such shares, who continuously holds such shares through
the effective date of the merger or consolidation, who has otherwise complied
with subsection (d) of this section and who has neither voted in favor of the
merger or consolidation nor consented thereto in writing pursuant to sec. 228 of
this title shall be entitled to an appraisal by the Court of Chancery of the
fair value of his shares of stock under the circumstances described in
subsections (b) and (c) of this section. As used in this section, the word
'stockholder' means a holder of record of stock in a stock corporation and also
a member of record of a nonstock corporation; the words 'stock' and 'share' mean
and include what is ordinarily meant by those words and also membership or
membership interest of a member of a nonstock corporation; and the words
'depository receipt' mean a receipt or other instrument issued by a depository
representing an interest in one or more shares, or fractions thereof, solely of
stock of a corporation, which stock is deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to sec. 251 (other than a merger effected pursuant to
subsection (g) of sec. 251), 252, 254, 257, 258, 263 or 264 of this title:
(1) Provided, however, that no appraisal rights under this section
shall be available for the shares of any class or series of stock, which
stock, or depository receipt in respect thereof, at the record date fixed
to determine the stockholders entitled to receive notice of and to vote at
the meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or (ii) held
of record by more than 2,000 holders; and further provided that no
appraisal rights shall be available for any shares of stock of the
constituent corporation surviving a merger if the merger did not require
for its approval the vote of the stockholders of the surviving corporation
as provided in subsection (f) of sec. 251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or series
of stock of a constituent corporation if the holders thereof are required
by the terms of an agreement of merger or consolidation pursuant to sec.
251, 252, 254, 257, 258, 263 and 264 of this title to accept for such stock
anything except:
a. Shares of stock of the corporation surviving or resulting from
such merger or consolidation, or depository receipts in respect thereof;
b. Shares of stock of any other corporation, or depository receipts
in respect thereof, which shares of stock (or depository receipts in
respect thereof) or depository receipts at the effective date of the
merger or consolidation will be either listed on a national securities
exchange or designated as a national market system security on an
interdealer quotation system by the National Association of Securities
Dealers, Inc. or held of record by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of this
paragraph;
d. Any combination of the shares of stock, depository receipts and
cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a., b. and c. of this
paragraph.
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(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under sec. 253 of this title is not owned by the
parent corporation immediately prior to the merger, appraisal rights shall
be available for the shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets of
the corporation. If the certificate of incorporation contains such a provision,
the procedures of this section, including those set forth in subsections (d) and
(e) of this section, shall apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights
are provided under this section is to be submitted for approval at a
meeting of stockholders, the corporation, not less than 20 days prior to
the meeting, shall notify each of its stockholders who was such on the
record date for such meeting with respect to shares for which appraisal
rights are available pursuant to subsection (b) or (c) hereof that
appraisal rights are available for any or all of the shares of the
constituent corporations, and shall include in such notice a copy of this
section. Each stockholder electing to demand the appraisal of his shares
shall deliver to the corporation, before the taking of the vote on the
merger or consolidation, a written demand for appraisal of his shares. Such
demand will be sufficient if it reasonably informs the corporation of the
identity of the stockholder and that the stockholder intends thereby to
demand the appraisal of his shares. A proxy or vote against the merger or
consolidation shall not constitute such a demand. A stockholder electing to
take such action must do so by a separate written demand as herein
provided. Within 10 days after the effective date of such merger or
consolidation, the surviving or resulting corporation shall notify each
stockholder of each constituent corporation who has complied with this
subsection and has not voted in favor of or consented to the merger or
consolidation of the date that the merger or consolidation has become
effective; or
(2) If the merger or consolidation was approved pursuant to 'SS' 228
or 'SS' 253 of this title, each constituent corporation, either before the
effective date of the merger or consolidation or within ten days
thereafter, shall notify each of the holders of any class or series of
stock of such constituent corporation who are entitled to appraisal rights
of the approval of the merger or consolidation and that appraisal rights
are available for any or all shares of such class or series of stock of
such constituent corporation, and shall include in such notice a copy of
this section; provided that, if the notice is given on or after the
effective date of the merger or consolidation, such notice shall be given
by the surviving or resulting corporation to all such holders of any class
or series of stock of a constituent corporation that are entitled to
appraisal rights. Such notice may, and, if given on or after the effective
date of the merger or consolidation, shall, also notify such stockholders
of the effective date of the merger or consolidation. Any stockholder
entitled to appraisal rights may, within twenty days after the date of
mailing of such notice, demand in writing from the surviving or resulting
corporation the appraisal of such holder's shares. Such demand will be
sufficient if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the
appraisal of such holder's shares. If such notice did not notify
stockholders of the effective date of the merger or consolidation, either
(i) each such constituent corporation shall send a second notice before the
effective date of the merger or consolidation notifying each of the holders
of any class or series of stock of such constituent corporation that are
entitled to appraisal rights of the effective date of the merger or
consolidation or (ii) the surviving or resulting corporation shall send
such a second notice to all such holders on or within 10 days after such
effective date; provided, however, that if such second notice is sent more
than 20 days following the sending of the first notice, such second notice
need only be sent to each stockholder who is entitled to appraisal rights
and who has demanded appraisal of such holder's shares in accordance with
this subsection. An affidavit of the secretary or assistant secretary or of
the transfer agent of the corporation that is required to give either
notice that such notice has been given shall, in the absence of fraud, be
prima facie evidence of the facts stated therein. For purposes of
determining the stockholders entitled to receive either notice, each
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constituent corporation may fix, in advance, a record date that shall be
not more than 10 days prior to the date the notice is given; provided that,
if the notice is given on or after the effective date of the merger or
consolidation, the record date shall be such effective date. If no record
date is fixed and the notice is given prior to the effective date, the
record date shall be the close of business on the day next preceding the
day on which the notice is given.
(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any stockholder who has
complied with subsections (a) and (d) hereof and who is otherwise entitled to
appraisal rights, may file a petition in the Court of Chancery demanding a
determination of the value of the stock of all such stockholders.
Notwithstanding the foregoing, at any time within 60 days after the effective
date of the merger or consolidation, any stockholder shall have the right to
withdraw his demand for appraisal and to accept the terms offered upon the
merger or consolidation. Within 120 days after the effective date of the merger
or consolidation, any stockholder who has complied with the requirements of
subsections (a) and (d) hereof, upon written request, shall be entitled to
receive from the corporation surviving the merger or resulting from the
consolidation a statement setting forth the aggregate number of shares not voted
in favor of the merger or consolidation and with respect to which demands for
appraisal have been received and the aggregate number of holders of such shares.
Such written statement shall be mailed to the stockholder within 10 days after
his written request for such a statement is received by the surviving or
resulting corporation or within 10 days after expiration of the period for
delivery of demands for appraisal under subsection (d) hereof, whichever is
later.
(f) Upon the filing of any such petition by a stockholder, service of a
copy thereof shall be made upon the surviving or resulting corporation, which
shall within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the addresses
therein stated. Such notice shall also be given by 1 or more publications at
least 1 week before the day of the hearing, in a newspaper of general
circulation published in the City of Wilmington, Delaware, or such publication
as the Court deems advisable. The forms of the notices by mail and by
publication shall be approved by the Court, and the costs thereof shall be borne
by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled to
appraisal rights. The Court may require the stockholders who have demanded an
appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as to
such stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any element
of value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining such fair value, the
Court shall take into account all relevant factors. In determining the fair rate
of interest, the Court may consider all relevant factors, including the rate of
interest which the surviving or resulting corporation would have had to pay to
borrow money during the pendency of the proceeding. Upon application by the
surviving or resulting corporation or by any stockholder entitled to participate
in the appraisal proceeding, the Court may, in its discretion, permit discovery
or other pretrial proceedings and may proceed to trial upon the appraisal prior
to the final determination of the stockholder entitled to an appraisal. Any
stockholder whose name appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this section and who has submitted his
certificates of stock to the Register in Chancery, if such is required, may
participate fully in all proceedings until it is finally determined that he is
not entitled to appraisal rights under this section.
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(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the Court
may direct. Payment shall be so made to each such stockholder, in the case of
holders of uncertified stock forthwith, and the case of holders of shares
represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded his appraisal rights as provided in subsection (d)
of this section shall be entitled to vote such stock for any purpose or to
receive payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of record at a date
which is prior to the effective date of the merger or consolidation); provided,
however, that if no petition for an appraisal shall be filed within the time
provided in subsection (e) of this section, or if such stockholder shall deliver
to the surviving or resulting corporation a written withdrawal of his demand for
an appraisal and an acceptance of the merger or consolidation, either within 60
days after the effective date of the merger or consolidation as provided in
subsection (e) of this section or thereafter with the written approval of the
corporation, then the right of such stockholder to an appraisal shall cease.
Notwithstanding the foregoing, no appraisal proceeding in the Court of Chancery
shall be dismissed as to any stockholder without the approval of the Court, and
such approval may be conditioned upon such terms as the Court deems just.
(1) The shares of the surviving or resulting corporation to which the
shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized and
unissued shares of the surviving or resulting corporation.
D-4
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Triarc Charter provides indemnification to the extent not
prohibited by Delaware law (including as such law may be amended in the future
to be more favorable to directors and officers). Section 145 of the DGCL
provides that a corporation may indemnify any person who was or is a party or is
threatened to be made and party to any threatened, pending or completed civil,
criminal, administrative or investigative action, suit or proceeding (other than
an action by or in the right of the corporation, such as a derivative action) by
reason of the fact that he or she 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. The Triarc Charter
provides that its officers and directors, and any person serving in any capacity
at the request of Triarc for an Other Entity shall be entitled to such
indemnification; however, the Triarc Board may specifically grant such
indemnification to other persons in respect of service to Triarc or an Other
Entity. The Triarc Charter specifies that any director or officer of Triarc
serving in any capacity with a majority owned subsidiary or any employee benefit
plan of Triarc or of any majority owned subsidiary shall be deemed to be doing
so at the request of Triarc.
Under Section 145 of the DGCL, depending on the nature of the
proceeding, a corporation may indemnify against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred in connection with such action, suit or proceeding if the person so
indemnified acted in good faith and in a manner he or she reasonably believed to
be in or not opposed to the best interests of the corporation and, with respect
to any criminal action or proceeding, had no reasonable cause to believe that
his or her conduct was unlawful. In the case of a derivative action, no
indemnification may be made in respect of any claim, issue or matter as to which
such person shall have been adjudged to be liable to the corporation, unless and
only to the extent that the Delaware Court or the court in which such action or
suit was brought shall determine upon application that, despite the adjudication
of liability, such person is fairly and reasonable entitled to indemnity for
such expenses as such court shall deem proper.
Section 145 further provides that to the extent that a director or
officer of a corporation is successful in the defense of any action, suit or
proceeding referred to above or in the defense of any claim, issue or matter
therein, he or she shall be indemnified against expenses (including attorneys'
fees) actually and reasonably incurred in connection therewith. However, if such
director or officer is not successful in the defense of any such action, suit or
proceeding, or in the defense of any claim, issue or matter therein, he or she
shall only be indemnified by the corporation as authorized in the specific case
upon a determination that indemnification is proper because he or she met the
applicable standard set forth above as determined by a majority of the
disinterested directors, by independent legal counsel or by the stockholders.
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2
The Triarc Charter provides that expenses are to be advanced prior to
the final disposition of a proceeding upon the receipt by Triarc of an
undertaking, as required by the DGCL, that the director or officer or other
indemnified person will repay such advances if he or she is ultimately found not
to be entitled to indemnification under the DGCL.
The Triarc Charter permits a person entitled to indemnity to bring an
action in court to obtain such indemnity and provides that, in any such action,
the court will not be bound by a decision of the Triarc Board, independent
counsel or stockholders that such person is not entitled to indemnification.
Such person is also indemnified for any expenses incurred in connection with
successfully establishing his or her right to indemnification in any such
proceeding. The Triarc Charter expressly provides that the right to
indemnification thereunder is a contract right and, therefore, cannot be
retroactively eliminated by a later stockholder vote, and is not an exclusive
right and, therefore, Triarc may provide other indemnification, if appropriate.
Triarc also enters into indemnification agreements with its directors
and officers indemnifying them against liability they may incur in their
capacity as such. The indemnification agreements do not provide indemnification
to the extent that the indemnitee is indemnified by Triarc under the Triarc
Charter, the Triarc Bylaws, its directors' and officers' liability insurance, or
otherwise. Additionally, the indemnification agreements do not provide
indemnification (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 Triarc
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.
Determinations as to whether an indemnitee is entitled to be paid under
the indemnification agreements may be made by the majority vote of a quorum of
disinterested directors, independent legal counsel selected by the Triarc Board,
a majority of disinterested Triarc stockholders or by a final adjudication of a
court of competent jurisdiction. In the event that Triarc undergoes a 'Change of
Control' (as defined in the indemnification agreements) all such determinations
shall be made by special independent counsel selected by the indemnitee and
approved by Triarc, which consent may not be unreasonably withheld. In certain
circumstances, an indemnitee may require Triarc to establish a trust fund to
assure that funds will be available to pay any amounts which may be due such
indemnitee under an indemnification agreement.
As permitted by Section 102(b)(7) of the DGCL, the Triarc Charter
includes a provision which eliminates the personal liability of a director to
Triarc or its stockholders for monetary damages for breach of fiduciary duty as
a director, other than liability (i) for the breach of a director's duty of
loyalty to Triarc and it stockholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing
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3
violation of law, (iii) under Section 174 of the DGCL (relating to unlawful
payment of a dividend and unlawful stock purchase and redemption) or (iv) for
any transaction from which the director derived any improper personal benefit.
Finally, the Triarc Charter authorizes Triarc, as permitted by the
DGCL, to purchase directors' and officers' liability insurance. Triarc carries
directors' and officers' liability insurance covering losses up to $25,000,000.
ITEM 21. EXHIBITS
EXHIBIT
NO. DESCRIPTION
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2.1 -- Agreement and Plan of Merger, dated June 24, 1997, among Cable Car
Beverage Corporation, Triarc and CCB Merger Corporation (included
as Appendix B-1 to the Proxy Statement/Prospectus filed as part of
this Registration Statement).
2.2 -- Amendment No. 1 to Agreement and Plan of Merger, dated as of
September 30, 1997 (included as Appendix B-1 to the Proxy
Statement/Prospectus filed as part of this Registration
Statement).
3.1 -- Certificate of Incorporation of Triarc, as in effect.*
3.3 -- By-laws of Triarc, incorporated herein by reference to Exhibit 3.1
to Triarc's Current Report on Form 8-K dated March 31, 1997 (SEC
file No. 1-2207).
4.1 -- Note Purchase Agreement dated as of April 23, 1993 among RCAC,
Triarc, RCRB Funding, Inc. and Merrill Lynch, Pierce, Fenner &
Smith Incorporated, incorporated herein by reference to Exhibit 4
to Triarc's Current Report on Form 8-K dated April 23, 1993 (SEC
file No. 1-2207).
4.2 -- Indenture dated as of August 1, 1993 among RC/Arby's Corporation
('RCAC'), Royal Crown, Arby's, Inc. ('Arby's') and The Bank of New
York, as Trustee, relating to the 9-3/4% Senior Secured Notes Due
2000.*
4.3 -- Amended and Restated Loan Agreement dated as of October 13, 1995
by and between FFCA Acquisition Corporation and Arby's Restaurant
Development Corporation ('ARDC'), incorporated herein by reference
to Exhibit 10.1 to RCAC's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1995 (SEC file No. 0-20286).
4.4 -- Loan Agreement dated as of October 13, 1995 by and between FFCA
Acquisition Corporation ('FFCAAC') and Arby's Restaurant Holding
Company ('ARHC'), incorporated herein by reference to Exhibit 10.2
to RCAC's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1995 (SEC file No. 0-20286).
4.5 -- Credit Agreement, dated as of June 26, 1996, among National
Propane, L.P., The First National Bank of Boston, as
administrative agent and a lender, Bank of America NT & SA, as a
lender, and BA Securities, Inc., as syndication agent,
incorporated herein by reference to Exhibit 10.1 to Current Report
of National Propane Partners, L.P. (the 'Partnership') on Form 8-K
dated August 13, 1996 (SEC file No. 1-11867).
4.6 -- Note Purchase Agreement, dated as of June 26, 1996 ('Note Purchase
Agreement'), among National Propane, L.P. and each of the
Purchasers listed in Schedule A thereto relating to $125 million
aggregate principal amount of 8.54% First Mortgage Notes due June
30, 2010, incorporated herein by reference to
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4
Exhibit 10.2 to the Partnership's Current Report on Form 8-K dated
August 13, 1996 (SEC file No. 1-11867).
4.7 -- Consent, Waiver and Amendment dated November 5, 1996 among
National Propane, L.P. and each of the Purchasers under the Note
Purchase Agreement, incorporated herein by reference to Exhibit
4.1 to Triarc's Current Report on Form 8-K dated March 31, 1997
(SEC file No. 1-2207).
4.8 -- Second Consent, Waiver and Amendment dated January 14, 1997 among
National Propane, L.P. and each of the Purchasers under the Note
Purchase Agreement, incorporated herein by reference to Exhibit
4.2 to Triarc's Current Report on Form 8-K dated March 31, 1997
(SEC file No. 1-2207).
4.9 -- Credit Agreement dated as of May 16, 1996 between: C.H. Patrick &
Co., Inc., the Registrant, each of the lenders party thereto,
Internationale Nederlanden (U.S.) Capital Corporation, as agent,
and The First National Bank of Boston, as co-agent, incorporated
herein by reference to Exhibit 4.3 to Triarc's Current Report on
Form 8-K dated March 31, 1997 (SEC file No. 1-2207).
4.10 -- Note dated July 2, 1996 of Triarc, payable to the order of
National Propane, L.P., incorporated herein by reference to
Exhibit 10.5 to the Partnership's Current Report on Form 8-K dated
August 13, 1996 (SEC file No. 1-11867).
4.11 -- Loan Agreement dated as of September 5, 1996 by and between FFCA
Mortgage Corporation and ARHC, incorporated herein by reference to
Exhibit 4.1 to RC/Arby's Corporation's Current Report on Form 8-K
dated November 14, 1996 (SEC file No. 0-20286).
4.12 -- Supplement to Loan Agreement as of June 26, 1996 among FFCA
Acquisition Corporation, ARHC, ARDC and Arby's, incorporated
herein by reference to Exhibit 4.2 to RCAC's Current Report on
Form 8-K dated November 14, 1996 (SEC file No. 0-20286).
4.13 -- Agreement Regarding Cross Collateralization and Cross-Default
Provisions as of June 26, 1996 by and among FFCA Acquisition
Corporation, ARDC, ARHC and Arby's, Inc., incorporated herein by
reference to Exhibit 4.3 to RCAC's Current Report on Form 8-K
dated November 14, 1996 (SEC file No. 0- 020286).
4.14 -- First Amendment dated as of March 27, 1997, to the Credit
Agreement dated as of June 26, 1996, among National Propane, L.P.,
The First National Bank of Boston, as administrative agent and a
lender, Bank of America NT & SA, as a lender, and BA Securities,
Inc., as syndication agent, incorporated herein by reference to
Exhibit 10.3 to the Partnership's Current Report on Form 8-K dated
March 31, 1997 (SEC file No. 1-11867).
4.15 -- Amended and Restated Credit Agreement dated as of August 15, 1997
among Mistic Brands, Inc., Snapple Beverage Corp. and Triarc
Beverage Holdings Corp., as the Borrowers, various financial
institutions as the Lenders, Donaldson, Lufkin & Jenrette
Securities Corporation, as the arranger for the Lenders, Morgan
Stanley Senior Funding, as co-arranger and the Documentation Agent
for the Lenders, DLJ Capital Funding, Inc., as the Syndication
Agent for the Lenders, and The Bank of New York, as the
Administrative Agent for the Lenders, incorporated herein by
reference to Exhibit 10.1 to Triarc's Quarterly Report on Form
10-Q/A for the quarterly period ended June 29, 1997, dated
September 29, 1997 (SEC file No. 1-2207).
4.16 -- Master Agreement dated as of May 5, 1997, among Franchise Finance
Corporation of America, Franchise Finance, FFCAAC, FFCA Mortgage
Corporation, Triarc, ARDC, ARHC, Arby's Restaurant Operations
Company ('AROC'), Arby's, RTM Operating Company ('RTMOC'), RTM
Development Company, RTM Partners, Inc. ('Holdco'), RTM Holding
Company, Inc. ('RTM Parent'), RTM Management Company, LLC ('RTMM')
and RTM, Inc. ('RTM').*
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5
5.1 -- Opinion of Paul, Weiss, Rifkind, Wharton & Garrison, as to the
legality of the Parent Class A Common Stock being registered
hereby.*
8.1 -- Tax Opinion of Sherman & Howard, LLC.*
9.1 -- Stockholders Agreement dated June 24, 1997 by and among Triarc and
each of the parties signatory thereto (included as Appendix B-2 to
the Proxy Statement/Prospectus filed as part of this Registration
Statement).
9.2 -- Amendment No. 1 to Stockholders Agreement date as of July 9, 1997
by and among Triarc and each of the parties signatory thereto
(included in Appendix B-2 to the Proxy Statement/Prospectus filed
as part of this Registration Statement).
10.1 -- Employment Agreement dated as of April 24, 1993 between Donald L.
Pierce and Arby's, incorporated herein by reference to Exhibit 7
to Triarc's Current Report on Form 8-K dated April 23, 1993 (SEC
file No. 1-2207).
10.2 -- Employment Agreement dated as of April 24, 1993 among John C.
Carson, Royal Crown and Triarc, incorporated herein by reference
to Exhibit 8 to Triarc's Current Report on Form 8-K dated April
23, 1993 (SEC file No. 1-2207).
10.3 -- Employment Agreement dated as of April 24, 1993 between Ronald D.
Paliughi and National Propane Corporation (the 'Paliughi
Employment Agreement'), incorporated herein by reference to
Exhibit 9 to Triarc's Current Report on Form 8-K dated April 23,
1993 (SEC file No. 1-2207).
10.4 -- Triarc's 1993 Equity Participation Plan, as amended and restated,
incorporated herein by reference to Exhibit 10.1 to Triarc's
Current Report on Form 8-K dated March 31, 1997 (SEC file No.
1-2207).
10.5 -- Form of Non-Incentive Stock Option Agreement under Triarc's
Amended and Restated 1993 Equity Participation Plan, incorporated
herein by reference to Exhibit 10.2 to Triarc's Current Report on
Form 8-K dated March 31, 1997 (SEC file No. 1-2207).
10.6 -- Form of Restricted Stock Agreement under Triarc's Amended and
Restated 1993 Equity Participation Plan, incorporated herein by
reference to Exhibit 13 to Triarc's Current Report on Form 8-K
dated April 23, 1993 (SEC file No. 1-2207).
10.7 -- Consulting Agreement dated as of April 23, 1993 between Triarc and
Steven Posner, incorporated herein by reference to Exhibit 10.8 to
Triarc's Annual Report on Form 10-K for the fiscal year ended
April 30, 1993 (SEC file No. 1-2207).
10.8 -- Concentrate Sales Agreement dated as of January 28, 1994 between
Royal Crown and Cott,-- Confidential treatment has been granted
for portions of the agreement -- incorporated herein by reference
to Exhibit 10.12 to Amendment No. 1 to Triarc's Registration
Statement on Form S-4 dated March 11, 1994 (SEC file No. 1-2207).
10.9 -- Form of Indemnification Agreement, between Triarc and certain
officers, directors, and employees of Triarc, incorporated herein
by reference to Exhibit F to the 1994 Proxy (SEC file No. 1-2207).
10.10 -- Amendment No. 1, dated December 7, 1994 to the Paliughi
Employment Agreement, incorporated herein by reference to Exhibit
10.1 to Triarc's Current Report on Form 8-K dated March 29, 1995
(SEC file No. 1-2207).
10.11 -- Settlement Agreement, dated as of January 9, 1995, among Triarc,
Security Management Corp., Victor Posner Trust No. 6 and Victor
Posner, incorporated herein by reference to Exhibit 99.1 to
Triarc's Current Report on Form 8-K dated January 11, 1995 (SEC
file No. 1-2207).
10.12 -- Employment Agreement, dated as June 29, 1994, between Brian L.
Schorr and Triarc, incorporated herein by reference to Exhibit
10.2 to Triarc's Current Report on Form 8-K dated March 29, 1995
(SEC file No. 1-2207).
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6
10.13 -- Amendment No. 2, dated as of March 27, 1995, to the Paliughi
Employment Agreement, incorporated herein by reference to Exhibit
10.20 to Triarc's Annual Report on Form 10-K for the year ended
December 31, 1995 (SEC file No. 1-2207).
10.14 -- Letter Agreement, dated as of January 1, 1996 between Triarc and
Leon Kalvaria incorporated herein by reference to Exhibit 10.21 to
Triarc's Annual Report on Form 10-K for the year ended December
31, 1995 (SEC file No. 1-2207).
10.15 -- Employment and SAR Agreement dated as of August 9, 1995 between
Mistic Brands, Inc. and Michael Weinstein, incorporated herein by
reference to Exhibit 10.2 to Triarc's Annual Report on Form 10-K
for the year ended December 31, 1995 (SEC file No. 1-2207).
10.16 -- Employment and SAR Agreement dated as of August 9, 1995 between
Mistic Brands, Inc. and Ernest J. Cavallo, incorporated herein by
reference to Exhibit 10.23 to Triarc's Annual Report on Form 10-K
for the year ended December 31, 1995 (SEC file No. 1-2207).
10.17 -- Amendment to Employment Agreement of Ronald D. Paliughi dated of
June 10, 1996, incorporated herein by reference to Exhibit 10.7 to
Partnership's Current Report on Form 8-K dated August 13, 1996.
(SEC file No. 1-11867).
10.18 -- Stock Purchase Agreement dated February 13, 1997 by and among
Arby's, ARDC, ARHC, AROC, Holdco and RTM, incorporated herein by
reference to Exhibit 10.1 to RCAC's Current Report on Form 8-K
dated February 13, 1997 (SEC file No. 0-20286).
10.19 -- Purchase Agreement among the Partnership, Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated,
Donaldson, Lufkin & Jenrette Securities Corporation, Janney
Montgomery Scott Inc., Rauscher Pierce Refsnes, Inc. and the
Robinson-Humphrey Company, Inc., incorporated herein by reference
to Exhibit 1.1 to the Partnership's Current Report on Form 8-K
dated August 13, 1996 (SEC file No. 1-11867).
10.20 -- Contribution and Assumption Agreement among the Partnership,
National Propane, National Propane SGP, Inc. and National Sales &
Service, Inc., incorporated herein by reference to Exhibit 10.4 to
the Partnership's Current Report on Form 8-K dated August 13, 1996
(SEC file No. 1-11867).
10.21 -- Conveyance, Contribution and Assumption Agreement among the
Partnership, National Propane and National Propane SGP, Inc.,
incorporated herein by reference to Exhibit 10.3 to the
Partnership's Current Report on Form 8-K dated August 13, 1996
(SEC file No. 1-11867).
10.22 -- Supply Agreement dated as of March 31, 1996 by and between
Avondale Mills, Inc. and C.H. Patrick & Co., Inc. -- Confidential
treatment has been granted for portions of the Supply Agreement --
incorporated herein by reference to Exhibit 10 to Triarc's Current
Report on Form 8-K/A dated June 25, 1996 (SEC file No. 1-2207).
10.23 -- Employment Agreement dated as of April 29, 1996 between Triarc
and John L. Barnes, Jr., incorporated herein by reference to
Exhibit 10.3 to Triarc's Current Report on Form 8-K dated March
31, 1997 (SEC file No. 1-2207).
10.24 -- Stock Purchase Agreement dated as of October 1, 1992 among DWG
Acquisition, Victor Posner, Security Management Corp. and Victor
Posner Trust No. 20, incorporated herein by reference to Exhibit
10 to Amendment No. 4 to Triarc's Current Report on Form 8-K dated
October 5, 1992 (SEC file No. 1-2207).
10.25 -- Amendment dated as of October 1, 1992 between Triarc and DWG
Acquisition, incorporated herein by reference to Exhibit 11 to
Amendment No. 4 to Triarc's Current Report on Form 8-K dated
October 5, 1992 (SEC file No. 1-2207).
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7
10.26 -- Exchange Agreement dated as of October 1, 1992 between Triarc and
Security Management Corp., incorporated herein by reference to
Exhibit 12 to Amendment No. 4 to Triarc's Current Report on Form
8-K dated October 5, 1992 (SEC file No. 1-2207).
10.27 -- Asset Purchase Agreement dated as of March 31, 1996 by and among
Avondale Mills Inc., Avondale Incorporated, Graniteville Company
and the Registrant incorporated herein by reference to Exhibit 2.1
to the Triarc's Current Report on Form 8-K dated April 18, 1996
(SEC file No. 1-2207).
10.28 -- Asset Purchase Agreement dated as of August 9, 1995 among Mistic
Brands, Inc., Joseph Victori Wines, Inc., Best Flavors, Inc.,
Nature's Own Beverage Company and Joseph Umbach, the Companies,
and Joseph Umbach, incorporated herein by reference to Exhibit 2.1
to Triarc's Quarterly Report on Form 8-K dated August 9, 1995 (SEC
file No. 1-2207).
10.29 -- Stock Purchase Agreement dated as of March 27, 1997 between The
Quaker Oats Company and Triarc, incorporated herein by reference
to Exhibit 2.1 to Triarc's Current Report on Form 8-K dated March
31, 1997 (SEC file No. 1-2207).
10.30 -- Option granted by Holdco in favor of ARHC, together with a
schedule identifying other documents omitted and the material
details in which such documents differ.*
10.31 -- Guaranty dated as of May 5, 1997 by RTM, RTM Parent, Holdco, RTMM
and RTMOC in favor of Arby's ARDC, ARHC, AROC and Triarc.*
10.32 -- Settlement Agreement dated as of June 6, 1997 between Triarc,
Victor Posner, Security Management Corporation and APL
Corporation, incorporated herein by reference to Exhibit 10.5 to
Triarc's Quarterly Report on Form 10-Q for the quarter ended June
29, 1997 (SEC file No. 1-2207).
21.1 -- Subsidiaries of the Registrant.*
23.1 -- Consent of Paul, Weiss, Rifkind, Wharton & Garrison, with
respect to the legality of securities being registered (contained
in Exhibit 5.1).
23.2 -- Consent of Sherman & Howard, LLC, with respect to certain tax
matters (contained in Exhibit 5.2).
23 3 -- Consent of Deloitte & Touche LLP.*
23.4 -- Consent of Arthur Andersen LLP. *
23.5 -- Consent of Price Waterhouse LLP.*
23.6 -- Consent of Nationsbanc Montgomery Securities, Inc.*
99.1 -- Order of the United States District Court for the Northern
District of Ohio, dated February 7, 1995, incorporated herein by
reference to Exhibit 99.1 to Triarc's Current Report on Form 8-K
dated March 29, 1995 (SEC file No. 1-2207).
99.2 -- Opinion of Montgomery Securities, Inc. dated June 24,1997
(included as Appendix C to the Proxy Statement/Prospectus filed as
part of this Registration Statement)
- -----------------------
* Filed herewith
ITEM 22. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement: (i) to
include any prospectus required by Section 10(a)(3) of the Securities Act of
1933, as amended (the
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8
'Securities Act'); (ii) to reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the Registration
Statement; and (iii) to include any material information with respect to the
plan of distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement.
(2) That, for the purpose of determining any liability under
the Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934, as amended (the 'Exchange Act') (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Exchange Act), that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) The undersigned Registrant hereby undertakes as follows: that prior
to any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this Registration Statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other Items of the applicable form.
(d) The undersigned Registrant undertakes that every prospectus (i)
that is filed pursuant to paragraph (c) immediately preceding, or (ii) that
purports to meet the requirements of section lO(a)(3) of the Securities Act and
is used in connection with an offering of securities subject to Rule 415 under
the Securities Act, will be filed as a part of an amendment to the Registration
Statement and will not be used until such amendment is effective, and that, for
purposes of determining any liability under the Securities Act, each such
post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the
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9
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(e) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
(f) The undersigned Registrant hereby undertakes to respond to requests
for information that is incorporated by reference into the Proxy Statement/
Prospectus pursuant to Items 4, lO(b), 11 or 13 of this Form, within one
business day of receipt of such request, and to send the incorporated documents
by first class mail or other equally prompt means. This includes information
contained in documents filed subsequent to the effective date of the
Registration Statement through the date of responding to the request.
(g) The undersigned Registrant hereby undertakes to supply by means of
a post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.
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SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York, State of New York, on October 22, 1997.
TRIARC COMPANIES, INC.
(Registrant)
By: /s/ Nelson Peltz
---------------------------------
Nelson Peltz
Chairman and Chief Executive Officer
POWER OF ATTORNEY
The officers and directors of Triarc Companies, Inc. whose signatures
appear below hereby constitute and appoint Nelson Peltz and Peter W. May, and
each of them (with full power to each of them to act alone), their true and
lawful attorneys-in-fact, with full powers of substitution and resubstitution,
to sign and execute on behalf of the undersigned any and all amendments,
including any post-effective amendments, to this Registration Statement, and to
file the same, with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, and each of the
undersigned does hereby ratify and confirm all that said attorneys-in-fact shall
do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below on October 22, 1997 by the
following persons in the capacities indicated.
Signature Titles
--------- -------
/s/ Nelson Peltz Chairman and Chief Executive Officer and Director
- ---------------------------- (Principal Executive Officer)
Nelson Peltz
/s/ Peter W. May President and Chief Operating Officer and Director
- ---------------------------- (Principal Operating Officer)
Peter W. May
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Signature Titles
--------- -------
/s/ John L. Barnes. Jr. Senior Vice President and Chief Financial Officer
- --------------------------- (Principal Financial Officer)
John L. Barnes, Jr.
/s/ Fred H. Schaefer Vice President and Chief Accounting Officer
- --------------------------- (Principal Accounting Officer)
Fred H. Schaefer
/s/ Hugh L. Carey Director
- ---------------------------
Hugh L. Carey
/s/ Clive Chajet Director
- ---------------------------
Clive Chajet
/s/ Stanley R. Jaffe Director
- ---------------------------
Stanley R. Jaffe
/s/ Joseph A. Levato Director
- ---------------------------
Joseph A. Levato
/s/ David E. Schwab II Director
- ---------------------------
David E. Schwab II
/s/ Raymond S. Troubh Director
- ---------------------------
Raymond S. Troubh
/s/ Gerald Tsai, Jr. Director
- ---------------------------
Gerald Tsai, Jr.
STATEMENT OF DIFFERENCES
------------------------
The section symbol shall be expressed as ...................'SS'
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EXHIBIT 3.1
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
2
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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
3
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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
4
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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
5
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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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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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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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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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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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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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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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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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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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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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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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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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(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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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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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
33
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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
34
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<PAGE>
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,
35
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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.
36
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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
37
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CERTIFICATE OF MERGER
OF
TRIARC COMPANIES, INC.
(an Ohio Corporation)
WITH AND INTO
TRIARC MERGER CORPORATION
(a Delaware Corporation)
************************************
The undersigned corporation, organized and existing under and by virtue
of the General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY:
FIRST: That the name and state of incorporation of each of the
constitutent corporations of ther merger (the "Merger") are as follows:
Name State of Incorporation
Triarc Companies, Inc. Ohio
Triarc Merger Corporation Delaware
SECOND: That an Agreement and Plan of Merger between the parties to the
Merger has been approved, adapted, certified, executed and acknowledged by each
of Triarc Companies, Inc. and Triarc Merger Corporation in accordance with the
requirements of subsection (c) of Section 252 of the General Corporation Law of
the State of Delaware.
THIRD: That Triarc Merger Corporation shall be the surviving
corporation.
FOURTH: That the Certificate of Incorporation of Triarc Merger
Corporation shall be the Certificate of Incorporation of the surviving
corporation, and the following amendment to such Certificate of Incorportion
shall be effected by the Merger:
1. ARTICLE I is amended in its entirety to read as follows:
"ARTICLE I
Name
The name of the corporation shall be Triarc Companies, Inc. (the
"Corporation")."
FIFTH: That the executed Agreement and Plan of Merger is on file at
the principal place of business of the surviving corporation. The address of
said principal
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2
place of business is 777 South Flagler Drive, Suite 1000E, West Palm Beach,
Florida 33401.
SIXTH: That a copy of the Agreement and Plan of Merger will be furnished
by Triarc Merger Corporation, on request and without cost, to any stockholder of
Triarc Companies, Inc.
SEVENTH: The authorized capital stock of the Ohio corporation which
is a party to the merger is as follows:
Class Number of Shares Par Value
Class A Common 75,000,000 $.10
Class B Common 12,000,000 $.10
Cumulative Convertible
Redeemable Preferred 6,000,000 $.10
Serial Preferred 5,000,000 $.10
Junior Serial Preferred 2,000,000 $.10
IN WITNESS WHEREOF, Triarc Merger Corporation has caused this
certificate to be signed by Joseph A. Levato, its Executive Vice President, and
attested by Mary C. Wade, its Assistant Secretary, on the 30th day of June,
1994.
TRIARC MERGER CORPORATION,
a Delaware Corporation
By: /s/ Joseph A. Levato
-------------------------------
Name: Joseph A. Levato
Title: Executive Vice President
ATTEST:
By: /s/ Mary C. Wade
-----------------------------
Name: Mary C. Wade
Title: Assistant Secretary
<PAGE>
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
TRIARC COMPANIES, INC.
------------------------------------
(Pursuant to Section 242 of the
General Corporation Law of the State of Delaware)
Triarc Companies, Inc., a corporation organized and existing under the
laws of the State of Delaware (the "Corporation"), does hereby certify as
follows:
1. The name of the Corporation is Triarc Companies, Inc.
2. The date of filing of the Certificate of Incorporation of
the Corporation with the Secretary of State was May 6, 1994.
3. This Certificate of Amendment amends the Certificate of
Incorporation, as now in effect, to change the minimum required number of
directors and the maximum number of directors of the Corporation.
4. The first sentence of Section 2 of Article V of the
Certificate of Incorporation is hereby amended to read in its entirety
as follows:
"The Board of Directors shall consist of not less than seven (7)
nor more than fifteen (15) 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 the
Certificate of Incorporation or of the
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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."
5. Such amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, the Corporation has authorized the
undersigned to execute this Certificate of Amendment of the Certificate of
Incorporation of the Corporation this 4th day of June, 1997.
TRIARC COMPANIES, INC.
By: /s/ Brian L. Schorr
--------------------------------
Brian L. Schorr
Executive Vice President
By: /s/ Stuart I. Rosen
---------------------------------
Stuart I. Rosen
Vice President and Secretary
<PAGE>
<PAGE>
Exhibit 4.2
- --------------------------------------------------------------------------------
ROYAL CROWN CORPORATION,
Issuer
ROYAL CROWN COLA CO. and ARBY'S, INC.,
Guarantors
and
THE BANK OF NEW YORK,
Trustee
Indenture
Dated as of August 1, 1993
---------------
9 3/4% SENIOR SECURED NOTES DUE 2000
- --------------------------------------------------------------------------------
<PAGE>
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TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS
<S> <C> <C>
SECTION 1.1 Certain Terms Defined....................................8
ARTICLE II
ISSUE, EXECUTION, FORM AND
REGISTRATION OF SENIOR NOTES
SECTION 2.1 Authentication and Delivery of
Senior Notes............................................21
SECTION 2.2 Execution of Senior Notes...............................22
SECTION 2.3 Certificate of Authentication...........................22
SECTION 2.4 Form, Denomination and Date of Senior Notes;
Payments of Interest....................................23
SECTION 2.5 Registration, Transfer and Exchange.....................23
SECTION 2.6 Mutilated, Defaced, Destroyed, Lost and
Stolen Senior Notes.....................................24
SECTION 2.7 Cancellation of Senior Notes; Destruction Thereof.......25
SECTION 2.8 Temporary Senior Notes..................................25
ARTICLE III
COVENANTS OF THE ISSUER AND THE
GUARANTORS
SECTION 3.1 Payment of Principal and Interest.......................26
SECTION 3.2 Offices for Payments, etc...............................26
SECTION 3.3 Appointment to Fill a Vacancy in Office of Trustee......27
SECTION 3.4 Paying Agents...........................................27
SECTION 3.5 Certificate to Trustee; Notice to Trustee...............28
SECTION 3.6 Senior Noteholders Lists................................28
SECTION 3.7 Furnishing of Information by the Issuer; SEC Filings....28
SECTION 3.8 Further Assurances......................................30
SECTION 3.9 Maintenance of Property, Insurance......................30
SECTION 3.10 Taxes...................................................30
SECTION 3.11 Corporate Existence.....................................30
SECTION 3.12 Compliance with Statutes, etc...........................31
SECTION 3.13 Limitation on Indebtedness..............................31
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SECTION 3.14 Limitation on Liens.....................................32
SECTION 3.15 Limitation on Sales of Assets and
Restricted Subsidiary Stock.............................34
SECTION 3.16 Limitation on Investments, Loans and Advances...........34
SECTION 3.17 Limitation on Restricted Payments.......................35
SECTION 3.18 Limitation on Transactions with Affiliates..............36
SECTION 3.19 Limitation on Restrictions on Distributions
from Restricted Subsidiaries............................37
SECTION 3.20 Limitation on Certain Capital Stock.....................37
SECTION 3.21 Restricted and Unrestricted Subsidiaries................37
SECTION 3.22 Additional Guarantors...................................38
SECTION 3.23 Regarding the Existing Subordinated Debentures..........38
ARTICLE IV
REMEDIES OF THE TRUSTEE AND SENIOR
NOTEHOLDERS ON EVENT OF DEFAULT
SECTION 4.1 Event of Default Defined;
Acceleration of Maturity; Waiver of Default.............39
SECTION 4.2 Collection of Indebtedness by Trustee;
Trustee May Prove Debt..................................42
SECTION 4.3 Application of Proceeds.................................44
SECTION 4.4 Suits for Enforcement...................................45
SECTION 4.5 Restoration of Rights on Abandonment of
Proceedings.............................................45
SECTION 4.6 Limitations on Suits by Senior Noteholders..............45
SECTION 4.7 Powers and Remedies Cumulative;
Delay or Omission Not Waiver of Default.................45
SECTION 4.8 Control by Senior Noteholders...........................46
SECTION 4.9 Waiver of Past Defaults.................................46
ARTICLE V
CONCERNING THE TRUSTEE
SECTION 5.1 Duties and Responsibilities of the Trustee;
During Default; Prior to Default........................47
SECTION 5.2 Certain Rights of the Trustee...........................48
SECTION 5.3 Trustee Not Responsible for Recitals,
Disposition of Senior Notes or
Application of Proceeds Thereof.........................49
SECTION 5.4 Trustee and Agents May Hold Senior Notes;
Collections, etc........................................49
SECTION 5.5 Moneys Held by Trustee..................................49
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SECTION 5.6 Compensation and Indemnification of Trustee
and Its Prior Claim.....................................49
SECTION 5.7 Right of Trustee to Rely on Officers' Certificate, etc..50
SECTION 5.8 Persons Eligible for Appointment as Trustee.............50
SECTION 5.9 Resignation and Removal: Appointment of
Successor Trustee.......................................51
SECTION 5.10 Acceptance of Appointment by Successor Trustee..........52
SECTION 5.11 Merger, Conversion......................................52
SECTION 5.12 Reports by the Trustee..................................53
ARTICLE VI
CONCERNING THE SENIOR NOTEHOLDERS
SECTION 6.1 Evidence of Action Taken by Senior Noteholders..........53
SECTION 6.2 Proof of Execution of Instruments and of Holding
of Senior Notes; Record Date............................53
SECTION 6.3 Holders to Be Treated as Owners.........................54
SECTION 6.4 Senior Notes Owned by Issuer Deemed Not
Outstanding.............................................54
ARTICLE VII
SUPPLEMENTAL INDENTURES
SECTION 7.1 Supplemental Indentures Without Consent of Senior
Noteholders.............................................55
SECTION 7.2 Supplemental Indentures With Consent of Senior
Noteholders.............................................56
SECTION 7.3 Effect of Supplemental Indenture........................57
SECTION 7.4 Documents to Be Given to Trustee........................57
SECTION 7.5 Notation on Senior Notes in Respect of Supplemental
Indentures..............................................57
ARTICLE VIII
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
SECTION 8.1 When Issuer and Principal Guarantors May Merge or
Transfer Assets.........................................58
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ARTICLE IX
SATISFACTION AND DISCHARGE OF INDENTURE;
UNCLAIMED MONEYS
<S> <C> <C>
SECTION 9.1 Satisfaction and Discharge of Indenture.................59
SECTION 9.2 Application by Trustee of Funds Deposited
for Payment of Senior Notes.............................60
SECTION 9.3 Repayment of Moneys Held by Paying Agent................60
SECTION 9.4 Return of Moneys Held by Trustee and Paying
Agent Unclaimed for Two Years...........................60
ARTICLE X
GUARANTEES
SECTION 10.1 The Guarantees..........................................61
SECTION 10.2 Guarantees Unconditional................................61
SECTION 10.3 Discharge Only Upon Payment In Full;
Reinstatement In Certain Circumstances..................62
SECTION 10.4 Waiver by the Guarantors................................62
SECTION 10.5 Subrogation; Contribution...............................62
SECTION 10.6 Stay of Acceleration....................................63
SECTION 10.7 Limit of Liability......................................63
ARTICLE XI
REDEMPTION OF SENIOR NOTES
SECTION 11.1 Right of Optional Redemption............................63
SECTION 11.2 Notice of Redemption; Partial Redemptions...............63
SECTION 11.3 Payment of Senior Notes Called for Redemption...........64
SECTION 11.4 Exclusion of Certain Senior Notes from Eligibility
for Selection for Redemption............................65
ARTICLE XII
REDEMPTION UPON CHANGE OF CONTROL
SECTION 12.1 Change of Control.......................................65
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ARTICLE XIII
NET PROCEEDS OFFER
<S> <C> <C>
SECTION 13.1 Net Proceeds Offer......................................67
ARTICLE XIV
COLLATERAL AND SECURITY
SECTION 14.1 Collateral Documents....................................69
SECTION 14.2 Release of Collateral...................................69
SECTION 14.3 Certificates of the Issuer..............................70
SECTION 14.4 Certificates of the Trustee.............................70
SECTION 14.5 Opinion of Counsel to the Issuer........................71
ARTICLE XV
MISCELLANEOUS PROVISIONS
SECTION 15.1 Incorporators, Stockholders, Officers and
Directors of Issuer and Restricted Subsidiaries
Exempt from Individual Liability........................71
SECTION 15.2 Provisions of Indenture for the Sole Benefit
of Parties and Senior Noteholders.......................72
SECTION 15.3 Successors and Assigns of Issuer and Guarantors
Bound by Indenture......................................72
SECTION 15.4 Notices and Demands on Issuer, Guarantors,
Trustee and Senior Noteholders..........................72
SECTION 15.5 Officers' Certificates and opinions of Counsel;
Statements to Be Contained Therein......................73
SECTION 15.6 Payments Due on Saturdays, Sundays and Holidays.........73
SECTION 15.7 Effect of Headings......................................74
SECTION 15.8 NEW YORK LAW TO GOVERN..................................74
SECTION 15.9 Counterparts............................................74
SECTION 15.10 Conflict with the Trust Indenture Act...................74
Schedule 3.13 - Existing Indebtedness
Schedule 3.14 - Existing Liens
Schedule 3.18 - Existing Transactions with Affiliates
Schedule 3.19 - Existing Restrictions on Distributions from Restricted Subsidiaries
</TABLE>
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THIS INDENTURE, dated as of August 1, 1993 among ROYAL CROWN
CORPORATION, a Florida corporation (the "Issuer"), ROYAL CROWN COLA CO., a
Delaware corporation ("RC Cola"), ARBY'S, INC., an Ohio corporation ("Arby's")
(RC Cola and Arby's as Guarantors pursuant to Article X hereof), and THE BANK OF
NEW YORK, a New York banking corporation (the "Trustee"),
W I T N E S S E T H :
WHEREAS, the Issuer has duly authorized the issue of its 9 3/4%
Senior Secured Notes Due 2000 (the "Senior Notes"), and to provide, among other
things, for the authentication, delivery and administration thereof, the Issuer
has duly authorized the execution and delivery of this Indenture;
WHEREAS, the Issuer has duly determined to secure its
obligations in respect of the Senior Notes and duly authorized the execution and
delivery of the Collateral Documents (as defined herein) to which it is a party;
WHEREAS, each of RC Cola and Arby's has (i) duly authorized its
unconditional guarantee of the Senior Notes on the terms hereinafter set forth,
(ii) duly determined to secure its obligations in respect of the Senior Notes
and duly authorized the execution and delivery of the Collateral Documents to
which it is a party and (iii) duly authorized the execution and delivery of this
Indenture;
WHEREAS, the Issuer has made or intends to make a public
offering of the Senior Notes, the proceeds of which are intended to be used
among other things to redeem in full the Issuer's Senior Secured Step-Up Rate
Notes Due 2000;
WHEREAS, this Indenture is subject to the provisions of the
Trust Indenture Act of 1939, as amended, and the rules and regulations of the
Securities and Exchange Commission promulgated thereunder that are required to
be part of this Indenture and, to the extent applicable, shall be governed by
such provisions; and
WHEREAS, the Senior Notes and the Trustee's certificate of
authentication shall be in substantially the following form:
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2
[FORM OF FACE OF SENIOR NOTE]
Number $
ROYAL CROWN CORPORATION
9 3/4% SENIOR SECURED NOTES DUE 2000
ROYAL CROWN CORPORATION, a Florida corporation (the
"Issuer"), for value received hereby promises to pay to
or registered assigns the principal sum of Dollars at the Issuer's office
or agency for said purpose on August 1, 2000, in such coin or currency of the
United States of America as at the time of payment shall be legal tender for the
payment of public and private debts, and to pay interest on said principal sum
in like coin or currency at the rate per annum set forth above at said office or
agency, semi-annually on February 1 and August 1 (each, an "Interest Payment
Date") of each year commencing on February 1, 1994, from the date of the most
recent Interest Payment Date to which interest has been duly paid or provided
for (including, if applicable, the date hereof) or, if no interest has been paid
or provided for, the original issue date of this Senior Note, until the
principal hereof is paid or made available for payment; provided, that if the
Issuer shall default in the payment of interest due on any such Interest Payment
Date, then this Senior Note shall bear interest from the next preceding Interest
Payment Date to which interest on the Senior Notes has been paid or duly
provided for, or, if no interest has been paid or duly provided for on the
Senior Notes since the original issue date of this Senior Note, from such
original issue date. The interest so payable on any Interest Payment Date will,
except as otherwise provided in the Indenture referred to on the reverse hereof,
be paid to the person in whose name this Senior Note is registered at the close
of business on the Regular Record Date; provided that interest may be paid, at
the option of the Issuer, by mailing a check therefor payable to the registered
holder entitled thereto at his last address as it appears on the Senior Note
register; and provided further that if the Issuer shall default in the payment
of the interest due on any Interest Payment Date, then such defaulted interest
shall be paid to the Persons in whose names outstanding Senior Notes are
registered at the close of business on a subsequent record date established by
the Issuer in accordance with the provisions of the Indenture referred to on the
reverse hereof. Interest will be computed on the basis of a 360-day year of
twelve 30-day months.
If the Issuer shall fail to pay when due (without regard to any
applicable grace period) any principal of or premium or interest on this Senior
Note, such overdue payment shall bear interest at the rate borne by the Senior
Notes plus 1% per annum.
Pursuant to the Indenture referred to on the reverse hereof, the
payment of principal of and premium and interest on the Senior Notes is
unconditionally guaranteed, jointly and severally, by Royal Crown Cola Co., a
Delaware corporation ("RC Cola"), and Arby's, Inc., an Ohio corporation
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3
("Arby's"). Reference is made to the further provisions of such Indenture in
respect of the guarantees of RC Cola, Arby's and such other subsidiaries of the
Issuer as may furnish a guarantee of the Senior Notes as provided in such
Indenture.
This Senior Note shall not be valid or obligatory until the
certificate of authentication hereon shall have been duly signed by the Trustee
acting under the Indenture referred to on the reverse hereof.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be
duly executed under its corporate seal.
Dated:
[Seal] ROYAL CROWN CORPORATION,
as Issuer
By: ______________________________
Senior Vice President and
Chief Financial Offer
By: ______________________________
Treasurer
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4
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Senior Notes described in the within-mentioned
Indenture.
THE BANK OF NEW YORK,
as Trustee
--------------------------------
Authorized Signatory
[FORM OF REVERSE OF SENIOR NOTE]
ROYAL CROWN CORPORATION
9 3/4% SENIOR SECURED NOTES DUE 2000
This Senior Note is one of a duly authorized issue of debt
securities of the Issuer issued or to be issued pursuant to an indenture dated
as of August 1, 1993 (as amended or supplemented from time to time, the
"Indenture"), duly executed and delivered by the Issuer, RC Cola and Arby's to
The Bank of New York, as Trustee (the "Trustee"). Except as otherwise provided
in the Indenture, the aggregate amount of debt securities that may be issued
pursuant to the Indenture is limited to $275,000,000. Reference is hereby made
to the Indenture and all indentures supplemental thereto for a description of
the rights, limitations of rights, obligations, duties and immunities thereunder
of the Trustee, the Issuer, the Guarantors and the holders (the words "holders"
or "holder" meaning the registered holders or registered holder) of the Senior
Notes. All terms used in this senior Note which are defined in the Indenture and
not otherwise defined herein have the meanings assigned to them in the
Indenture.
The obligations of the Issuer and the Guarantors in respect of
the Senior Notes are secured by the Collateral Documents. Reference is hereby
made to the Collateral Documents for a description of the Collateral, the nature
and extent of the security and the provisions regarding release of the
Collateral.
In case an Event of Default, as defined in the Indenture, shall
have occurred and be continuing, the principal of all the Senior Notes may be
declared due and payable, in the manner and with the effect, and subject to the
conditions, provided in the Indenture. The Indenture provides that in certain
events such declaration and its consequences may be waived by the holders of a
majority in aggregate principal amount of the Senior Notes then outstanding, and
that, prior to any such declaration, such holders may waive any past default
under the Indenture and its consequences except a default in the payment of
principal of or premium or
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5
interest on any of the Senior Notes. Any such waiver shall be conclusive and
binding upon the holder of this Senior Note and upon all future holders and
owners of this Senior Note and any Senior Note which may be issued in exchange
or substitution therefor, whether or not any notation thereof is made upon this
Senior Note or such other Senior Notes.
The Indenture permits the Issuer, the Guarantors and the Trustee,
with the consent of the holders of not less than a majority in aggregate
principal amount of the Senior Notes at the time outstanding, evidenced as in
the Indenture provided, to execute supplemental indentures adding any provisions
to or changing in any manner or eliminating any of the provisions of the
Indenture or of any supplemental indenture or modifying in any manner the rights
of the holders of the Senior Notes; provided that no such supplemental indenture
shall, without the consent of each holder of Senior Notes affected thereby, (i)
reduce the percentage in principal amount of Senior Notes the holders of which
must consent to an amendment, supplement or waiver, (ii) reduce the rate of or
extend the time for payment of interest on any Senior Note, (iii) reduce the
principal or extend the fixed maturity of any Senior Note, (iv) reduce any price
at which any Senior Note may be redeemed at the option of the Issuer, or at
which any Senior Note is to be repurchased by the Issuer at the option of the
holder in connection with a Change of Control Offer or a Net Proceeds Offer, (v)
waive a default in the payment of the principal of or premium or interest on any
Senior Note, (vi) make any Senior Note payable in money other than that stated
in the Senior Note, (vii) release any Guarantor from its unconditional
obligation to guarantee payment in respect of the principal of and interest on
any Senior Note (except in accordance with the Indenture), (viii) consent to the
assignment or transfer by the Issuer or any Guarantor of any of their rights and
obligations under the Indenture (except in accordance with the Indenture), (ix)
add provisions to the Indenture that subordinate the obligations of the Issuer
or any Guarantor in respect of any Senior Note to other Indebtedness of the
Issuer or such Guarantor, as the case may be, (x) amend, modify or waive any
provision of Section 7.2 of the Indenture or (xi) consent to the release of all
of the Collateral from the Lien created by the Collateral Documents.
No reference herein to the Indenture and no provision of this
Senior Note or of the Indenture shall alter or impair the obligation of the
Issuer, which is absolute and unconditional, to pay the principal of and premium
(if any) and interest on this Senior Note at the place, times and rate, and in
the currency, herein prescribed.
The Senior Notes are issuable only as registered Senior Notes
without coupons in denominations of $1,000 and any integral multiple of $1,000.
At the office or agency of the Issuer referred to on the face
hereof and in the manner and subject to the limitations provided in the
Indenture, Senior Notes may be exchanged for a like aggregate principal amount
of Senior Notes of other authorized denominations.
Upon due presentment for registration of transfer of this Senior
Note at the above-mentioned office or agency of the Issuer, a new Senior Note or
Senior
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6
Notes of authorized denominations, for a like aggregate principal amount, will
be issued to the transferee as provided in the Indenture, except that the
Trustee shall not be required to exchange or register a transfer of (i) any
Senior Notes for a period of 15 days next preceding the first mailing of notice
of redemption of Senior Notes to be redeemed or (ii) any Senior Notes selected,
called or being called for redemption except, in the case of any Senior Note
where notice has been given to registered holders of Senior Notes that such
Senior Note is to be redeemed in part, the portion thereof not so to be
redeemed. No service charge shall be made for any such transfer, but the Issuer
may require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto.
Subject to the next succeeding paragraph, the Senior Notes may
not be redeemed at the option of the Issuer on or before July 31, 1998.
Thereafter, the Senior Notes may be redeemed at the option of the Issuer as a
whole, or from time to time in part, upon the mailing of a notice to the holders
of Senior Notes to be redeemed, all as provided in the Indenture, at the
following redemption prices (expressed in percentages of principal amount),
together in each case with accrued interest to the date fixed for redemption:
If redeemed during the
twelve-month period
beginning August 1, Redemption Price
- ---------------------- -----------------
1998......................................... 102.786%
1999......................................... 101.393%
Notwithstanding the foregoing, at any time prior to August 1,
1996, the Issuer may redeem up to 33.3% of the original aggregate principal
amount of the Senior Notes with the net proceeds of an Initial Public Equity
Offering of the Issuer at a redemption price of 110% of par, plus accrued and
unpaid interest to the redemption date.
In accordance with the Indenture, notice of redemption shall be
given to the holders of the Senior Notes to be redeemed no less than 30 nor more
than 60 days prior to the date fixed for redemption. Except as otherwise
provided in the Indenture, if the date fixed for redemption is an Interest
Payment Date, then the interest payable on such date shall be paid to the holder
of record on the first day of the month in which the date fixed for redemption
falls, notwithstanding any transfer or exchange of this Senior Note after the
record date and before the date fixed for redemption.
Subject to payment by the Issuer of a sum sufficient to pay the
amount due on redemption, interest on this Senior Note (or portion hereof if
this Senior Note is redeemed in part) shall cease to accrue upon the date duly
fixed for redemption of this Senior Note (or portion hereof if this Senior Note
is redeemed in part).
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7
In the event of a Change of Control, the Issuer will make a
Change of Control Offer to purchase all of the Senior Notes outstanding at a
price equal to 101% of the principal amount of the Senior Notes to be purchased
plus accrued interest thereon to the date of purchase.
In the event of certain dispositions of assets, the Issuer will
make a Net Proceeds Offer to purchase outstanding Senior Notes with the Net
Proceeds from such dispositions at a price equal to 100% of the principal amount
of Senior Notes to be purchased plus accrued interest thereon to the date of
purchase, all as provided in the Indenture.
The Senior Notes are subject to defeasance as described in the
Indenture.
The Issuer, the Trustee and any authorized agent of the Issuer or
the Trustee may deem and treat the registered holder hereof as the absolute
owner of this Senior Note (whether or not this Senior Note shall be overdue and
notwithstanding any notation of ownership or other writing hereon made by anyone
other than the Issuer or the Trustee or any authorized agent of the Issuer or
the Trustee) for the purpose of receiving payment of, or on account of, the
principal hereof, premium (if any) hereon and, subject to the provisions on the
face hereof, interest hereon and for all other purposes, and neither the Issuer
nor the Trustee nor any authorized agent of the Issuer or the Trustee shall be
affected by any notice to the contrary.
No recourse shall be had for the payment of the principal of or
premium or interest on this Senior Note, for any claim based hereon, or
otherwise in respect hereof, or based on or in respect of the Indenture or any
indenture supple mental thereto, against any incorporator, shareholder, officer
or director, as such, past, present or future, of the Issuer, any Guarantor or
any successor corporation, either directly or through the Issuer, any Guarantor
or any respective successor corporation, whether by virtue of any constitution,
statute or rule of law or by the enforcement of any assessment or penalty or
otherwise, all such liability being, by the acceptance hereof and as part of the
consideration for the issue hereof, expressly waived and released.
THIS SENIOR NOTE IS GOVERNED BY AND IS TO BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
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8
AND WHEREAS, all things necessary to make the Senior Notes, when
executed by the Issuer and authenticated and delivered by the Trustee as in this
Indenture provided, the valid, binding and legal obligations of the Issuer, and
to constitute these presents a valid indenture and agreement according to its
terms, have been done;
NOW, THEREFORE:
In consideration of the premises and the purchases of the Senior
Notes by the holders thereof, the Issuer, each Guarantor and the Trustee
mutually covenant and agree for the equal and proportionate benefit of the
respective holders from time to time of the Senior Notes as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Certain Terms Defined. The following terms (except as
otherwise expressly provided or unless the context otherwise clearly requires)
for all purposes of this Indenture and of any indenture supplemental hereto have
the respective meanings specified in this Section. All other terms used in this
Indenture which are defined in the Trust Indenture Act of 1939 or the
definitions of which in the Securities Act of 1933 are referred to in the Trust
Indenture Act of 1939 (except as herein otherwise expressly provided or unless
the context otherwise clearly requires), have the meanings assigned to such
terms in said Trust Indenture Act and in said Securities Act as in force on the
Issue Date. All accounting terms used herein and not expressly defined have the
meanings given to them in accordance with generally accepted accounting
principles, and the term "generally accepted accounting principles" means,
unless otherwise specified herein, such accounting principles which are
generally accepted on the Issue Date. The words "herein" , "hereof" and
"hereunder" and other words of similar import refer to this Indenture as a whole
and not to any particular Article, Section or other subdivision, and section and
subsection references are to this Indenture unless otherwise specified. The
terms defined in this Article include the plural as well as the singular.
"Adjusted EBITDA" means, for any period, Consolidated Net Income
for such period, plus, without duplication, the sum of (i) to the extent
deducted in determining such Consolidated Net Income, income tax expense,
depreciation and amortization expense and charges relating to any Specified
Write-Off (net of related tax effect), (ii) Adjusted Interest Expense for such
period and (iii) to the extent not otherwise reflected in Adjusted EBITDA for
such period, Cash Interest Income for such period.
"Adjusted Interest Expense" means, for any period, the amount
deducted in determining Consolidated Net Income for such period in respect of
interest expense of the Issuer and its Restricted Subsidiaries for such period
as determined in accordance with generally accepted accounting principles, minus
any
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9
portion thereof attributable to amortization of debt financing costs, plus, to
the extent deducted in determining such interest expense, interest income of the
Issuer and its Restricted Subsidiaries. In determining Adjusted Interest Expense
for any period prior to the Reorganization Date, it shall be assumed that (x)
the Step-Up Notes issued on the Reorganization Date were issued at the beginning
of such period and bore interest throughout such period at a rate of 11.25% per
annum and (y) any Indebtedness of the Issuer that was repaid on the
Reorganization Date with the proceeds of the Step-Up Notes was repaid at the
beginning of such period. In determining Adjusted Interest Expense for any
period through March 31, 1994, there shall be added, to the extent deducted in
determining Adjusted Interest Expense, amounts provided for in the quarter ended
March 31, 1993 in respect of interest relating to income taxes for the Issuer
and its Restricted Subsidiaries.
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with, such Person. For purposes of this Indenture, Nelson Peltz
and Peter W. May and their Affiliates, and Victor Posner and his Affiliates,
shall be deemed Affiliates of the Issuer and DWG. A Person shall be deemed to
control a corporation if such Person possesses, directly or indirectly, the
power to direct or cause the direction of the management and policies of such
corporation, whether through the ownership of voting securities, by contract or
otherwise.
"Asset Sale" means any direct or indirect sale, conveyance,
transfer, lease or other disposition (including without limitation by means of a
sale-leaseback transaction) to any Person other than the Issuer, a Wholly Owned
Restricted Subsidiary or, to the extent permitted under Section 3.17, an
Unrestricted Subsidiary, in one transaction or a series of related transactions,
of any Capital Stock of any Restricted Subsidiary or any other property or asset
of the Issuer or a Restricted Subsidiary, other than Ordinary Course Sales.
"Assumed Investment Rate" means, at any date, the offered rate on
such date in the London interbank market for one-month deposits in U.S. dollars,
as published by the Board of Governors of the Federal Reserve System in
"Statistical Release H.15(519), Selected Interest Rates", or any successor
publication of the Board of Governors of the Federal Reserve System, under the
heading "Eurodollar Deposits".
"Average Life" means, as of the date of determination, with
respect to any Indebtedness, the quotient obtained by dividing (i) the sum of
the products of the numbers of years from the date of determination to the dates
of each successive scheduled principal payment of such Indebtedness multiplied
by the amount of such principal payment by (ii) the sum of all such scheduled
principal payments.
"Board of Directors" means, with respect to any corporation, the
Board of Directors of such corporation or any committee of such Board duly
authorized to act on behalf of such Board.
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10
"Bottling Business" means any soft drink bottling or distribution
business.
"Business Day" means a day which in New York City is neither a
legal holiday nor a day on which banking institutions are authorized by law or
regulation to close.
"Capital Lease Obligations" means obligations under a lease that
are required to be capitalized in accordance with generally accepted accounting
principles, and the amount of Indebtedness represented by such obligations shall
be the capitalized amount of such obligations, as determined in accordance with
generally accepted accounting principles.
"Capital Stock" means, with respect to any Person, any capital
stock of such Person (including without limitation preferred stock), any shares,
interests, participations or other ownership interests (however designated) of
or in such Person and any rights (other than debt securities convertible into
corporate stock), warrants or options to purchase any of the foregoing.
"Cash Interest Income" means, for any period, the consolidated
interest income of the Issuer and its Restricted Subsidiaries for such period as
determined in accordance with generally accepted accounting principles, minus
any portion thereof not received in cash during the relevant period. In
determining Cash Interest Income for any period prior to the Reorganization
Date, it shall be assumed that the net proceeds to the Issuer from the initial
issuance and sale of the Step-Up Notes, to the extent not used to repay
Indebtedness of the Issuer on the Reorganization Date, to pay transaction costs
incurred in connection with the issue and sale of the Step-Up Notes and the
other transactions occurring on the Reorganization Date or to make a $75,000,000
advance to DWG, generated cash interest income from the beginning of such period
at the Assumed Investment Rate in effect at the beginning of such period.
"CFC Holdings" means CFC Holdings Corp., a Florida corporation,
and its successors and assigns.
"Change of Control" means the occurrence with respect to any of
the Issuer, DWG, Arby's or RC Cola (a "Specified Person") of one or more of the
following events:
(i) the Issuer or, prior to a Spin-Off or an Initial Public
Equity Offering, DWG shall sell, transfer or otherwise convey all or
substantially all its assets to any person or group of persons (as such
terms are used for purposes of Section 13 (d) (3) of the Exchange Act)
in one transaction or series of related transactions, or shall merge or
consolidate with or into another person, and immediately after giving
effect thereto, the beneficial owners of the Voting Capital Stock of
such Specified Person immediately prior to the transaction or series of
related transactions own, directly or indirectly, in the aggregate, and
in the same proportion with respect to each other, less
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11
than a majority of the total voting power of the Voting Capital Stock
of the transferee or surviving entity; or
(ii) any Specified Person shall be liquidated or dissolved,
except, in the case of the Issuer, Arby's or RC Cola, following the sale
of all or substantially all of its assets in accordance with Article
VIII and except in the case of DWG subsequent to a Spin-Off or an
Initial Public Equity Offering; or
(iii) with respect to the Issuer or, prior to a Spin-Off or an
Initial Public Equity Offering, DWG, any person or group of persons (as
such terms are used for purposes of Section 13(d)(3) of the Exchange
Act), other than Nelson Peltz and Peter W. May and their Affiliates,
shall become the beneficial owner (as that term is used in Rule 13d-3
under the Exchange Act, except that a person shall be deemed to have
beneficial ownership of all Capital Stock that any such person has the
right to acquire, regardless of when such right is exercisable),
directly or indirectly, of 50% or more of the total voting power of the
Voting Capital Stock then outstanding of such Specified Person; or
(iv) with respect to the Issuer or, prior to a Spin-Off or an
Initial Public Equity offering, DWG, during any period of 24 consecutive
months beginning on or after (x) the date of a Spin-Off or an Initial
Public Equity offering, in the case of the Issuer, or (y) the
Reorganization Date, in the case of DWG, individuals who at the
beginning of such period constituted the Board of Directors of such
Specified Person (together with any new directors whose election by such
Board or whose nomination for election by the shareholders of such
Specified Person was approved by a vote of a majority of the directors
then still in office who were either directors at the beginning of such
period or whose election or nomination for election was previously so
approved), cease for any reason to constitute a majority of the Board of
Directors of such Specified Person then in office; or
(v) with respect to Arby's or RC Cola, the Issuer for any reason
shall cease to own directly 100% of the issued and outstanding Capital
Stock of such Specified Person; or
(vi) with respect to the Issuer, a Substantial Asset Transfer
shall occur.
For purposes of this definition, a "Substantial Asset Transfer"
shall occur if, after giving effect to a Subject Transfer, either (x) the
Attributable EBITDA of all Subject Transfers exceeds the Maximum Percentage of
Adjusted EBITDA for the relevant Reference Period or (y) the book value of the
assets transferred pursuant to all Subject Transfers exceeds the Maximum
Percentage of the book value of the consolidated assets of the Issuer and its
Restricted Subsidiaries as of the end of the relevant Reference Period. A
"Subject Transfer" is a transfer of assets (including, without limitation,
Capital Stock of a Restricted Subsidiary) made after the Issue Date by the
Issuer or a Restricted Subsidiary to a Person other than the Issuer, any Wholly
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12
Owned Restricted Subsidiary or, to the extent permitted by Section 3.17, any
Unrestricted Subsidiary. The "Attributable EBITDA" for any Subject Transfer is
an amount equal to the portion of Adjusted EBITDA for the Reference Period which
is properly allocable to the assets transferred, as determined in good faith by
the chief financial officer of the Issuer with, in the event such portion of
Adjusted EBITDA exceeds $5,000,000, the concurrence of the independent public
accountants of the Issuer. The "Reference Period" with respect to any Subject
Transfer is the period of four consecutive fiscal quarters of the Issuer ending
on the most recent date prior to the date of such Subject Transfer for which
financial statements are delivered or required to be delivered pursuant to
Section 3.7 hereof. The "Maximum Percentage" means (i) with reference to all
Subject Transfers made after the Issue Date, 40%, and (ii) with reference to all
Subject Transfers made during any period of twelve consecutive calendar months,
20%.
"Change of Control Offer" has the meaning specified in Section
12.1.
"Code" means the Internal Revenue Code of 1986, as amended from
time to time.
"Collateral" means all property in which a security interest is
granted or purported to be granted to the Collateral Trustee pursuant to the
Collateral Documents and not released pursuant to the terms hereof or thereof.
"Collateral Documents" means the Collateral Trust Agreement and
the other Collateral Documents referred to therein.
"Collateral Trust Agreement" means the Collateral Trust Agreement
dated as of August 1, 1993 among the Issuer, RC Cola, Arby's, CFC Holdings and
the Collateral Trustee, as such Collateral Trust Agreement may be amended or
supplemented from time to time.
"Collateral Trustee" has the meaning specified in the Collateral
Trust Agreement.
"Collateral Trustee Fees" means all fees, costs, indemnification
and expenses of the Collateral Trustee of the types described in Sections 4.3,
4.4, 4.5 and 4.6 of the Collateral Trust Agreement.
"Commission" means the Securities and Exchange Commission.
"Consolidated Net Income" means, for any period, the consolidated
net income (or loss) of the Issuer and its Restricted Subsidiaries for such
period as determined in accordance with generally accepted accounting
principles; provided that there shall be excluded therefrom, without
duplication, (i) all non-cash gains or losses which are either extraordinary (as
determined in accordance with generally accepted accounting principles) or
relate to the sale of assets outside the ordinary course of business, (ii) the
net income (or loss) of any Person (other than a Restricted Subsidiary) in which
the Issuer or a Restricted subsidiary has an interest, except to the
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13
extent of the amount of any dividends or distributions actually paid in cash to
the Issuer or a Restricted Subsidiary during such period out of funds legally
available therefor, (iii) the net income (or loss) of any Person accrued or
attributable to any period prior to the date it became a Restricted Subsidiary
or was merged with or into the Issuer or a Restricted Subsidiary or whose
property was acquired by the Issuer or a Restricted Subsidiary, (iv) the net
income, if positive, of any Restricted Subsidiary to the extent that the
declaration of dividends or similar distributions by such Restricted Subsidiary
is not at the time permitted, directly or indirectly, by operation of the terms
of its charter or any agreement, instrument, judgment, decree, order, statute,
law, rule or governmental regulations applicable to such Restricted Subsidiary
or its stockholders, and (v) any interest income, other than Cash Interest
Income.
"Consolidated Net Worth" of any person means the total of the
amounts shown on the balance sheet of such person and its Restricted
Subsidiaries, determined on a consolidated basis in accordance with generally
accepted accounting principles, as of the end of the most recent fiscal quarter
of such person ending at least 45 days prior to the taking of any action for the
purpose of which the determination is being made, as (i) the par or stated value
of all outstanding Capital Stock of such person plus (ii) paid-in capital or
capital surplus relating to such Capital Stock plus (iii) any retained earnings
or earned surplus less (A) any accumulated deficit and (B) any amounts
attributable to redeemable Capital Stock.
"Core Business" means those businesses conducted by the Issuer
and its Restricted Subsidiaries on the Issue Date and any similar lines of
business conducted by the Issuer and its Restricted Subsidiaries after the Issue
Date.
"Corporate Trust Office" means the office of the Trustee at which
the corporate trust business of the Trustee shall, at any particular time, be
administered, which office is, at the date as of which this Indenture is dated,
located at 101 Barclay Street, New York, New York 10286.
"Default" means any event, act or condition which with notice or
lapse of time, or both, would constitute an Event of Default.
"DWG" means DWG Corporation, an Ohio corporation, and its
successors and assigns.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, or any successor statute.
"ERISA Group" means the Issuer, any Subsidiary and all members of
a controlled group of corporations and all trades or businesses (whether or not
incorporated) under common control which, together with the Issuer or any
Subsidiary, are treated as a single employer under Section 414 of the Code.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder.
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14
"Expiration Date" has the meaning specified in Section 6.2.
"Existing Subordinated Debentures" means the Issuer's 16 7/8%
Subordinated Debentures due 1996.
"Guarantees" means the joint and several guarantees of the
Guarantors as set forth in Article X, as such Guarantees may be amended or
supplemented from time to time. "Guarantors" means, collectively, at any time RC
Cola and Arby's, (ii) any other Restricted Subsidiary that has prior to such
time furnished a Guarantee pursuant to Section 3.22(a) which Guarantee has not
been released prior to such time pursuant to Section 3.22(b) and (iii) the
respective permitted successors and assigns of the foregoing.
"Holder", "holder of Senior Notes", "Senior Noteholder" or other
similar terms means the registered holder of any Senior Note.
"Indebtedness" of any Person means, at any date, without
duplication, (i) all obligations of such Person for borrowed money, (ii) all
obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments, (iii) all obligations of such Person in respect of letters
of credit or bankers' acceptances or other similar instruments (or reimbursement
obligations with respect thereto), (iv) all obligations of such Person to pay
the deferred purchase price of property or services (except trade accounts
payable arising in the ordinary course of business), (v) all Capital Lease
Obligations of such Person, (vi) all obligations of such Person in respect of
interest rate and foreign currency protection or hedging arrangements, (vii) all
Indebtedness secured by a Lien on any asset of such Person, whether or not such
Indebtedness is otherwise an obligation of such Person, and (viii) all Indebted
ness and Preferred Stock Obligations of others guaranteed by such Person.
"Indenture" means this instrument as originally executed and
delivered or, if amended or supplemented as herein provided, as so amended or
supplemented.
"Independent Director" of the Board of Directors of DWG or the
Issuer, as the case may be, means any director other than a director who is an
officer or employee of DWG, the Issuer or any of their respective Affiliates.
"Initial Public Equity Offering" means the first public offering
for cash of common stock of the Issuer after the Issue Date.
"Interest Payment Date" means any date specified in a Senior Note
as a fixed date upon which payment of an installment of interest is due and
payable.
"Investment" means any loan or advance to any other person,
payment of any guarantee of the obligations of any other person, any acquisition
of any Capital Stock of any other person, any capital contribution to any other
person, or any other investment in any other person, except for: (i) negotiable
instruments endorsed for collection in the ordinary course of business and (ii)
demand or overnight deposit accounts which do not contain any restriction on the
transfer or withdrawal of funds
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15
therefrom. The amount of any Investment shall be the original cost of such
Invest ment, plus the cost of all additions thereto and minus the amount of any
portion of such Investment repaid to such person in cash as a repayment of
principal or a return of capital, as the case may be, but without any other
adjustments for increases or decreases in value, or write-ups, write-downs or
write-offs with respect to such Investment. In determining the amount of any
Investment involving a transfer of any property other than cash, such property
shall be valued at its fair market value at the time of such transfer, as
determined in good faith by the Board of Directors of the person making such
transfer, whose determination will be conclusive and evidenced by a board
resolution.
"Issue Date" means August 12, 1993, the date of the original
issuance of the Senior Notes under this Indenture.
"Issuer" means Royal Crown Corporation, a Florida corporation,
and its permitted successors and assigns.
"Lien" means any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), or preference,
priority or other security agreement of any kind or nature whatsoever
(including, without limita tion, any conditional sale or other title retention
agreement and any financing lease having substantially the same effect as any of
the foregoing).
"Management Services Agreement" means, collectively, (i) the
Management Services Agreement dated as of April 23, 1993 between DWG and RC Cola
and (ii) the Management Services Agreement dated as of April 23, 1993 between
DWG and Arby's, in each case as in effect on the Issue Date.
"Material Plan" means at any time a Plan having Unfunded
Liabilities exceeding $2,000,000.
"Multiemployer Plan" means at any time an employee pension
benefit plan within the meaning of Section 4001(a)(3) of ERISA to which any
member of the ERISA Group is then making or accruing an obligation to make
contributions or has within the preceding five plan years made contributions,
including for these purposes any Person which ceased to be a member of the ERISA
Group during such five year period.
"Net Proceeds" means the proceeds received by the Issuer or a
Restricted Subsidiary in connection with an Asset Sale, which proceeds shall
consist of the sum of (i) cash (including any cash received by way of deferred
payment of principal pursuant to a note or installment received or otherwise,
but only as and when received) and (ii) marketable securities issued to the
Issuer or a Restricted Subsidiary, in each case net of all legal, title and
recording tax expenses, commis sions and other fees and expenses incurred, and
all Federal, state, local and foreign tax liability (including, without
limitation, withholding taxes) arising or which will arise in connection with
such disposition and any subsequent transfer to the Issuer
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16
(such taxes to be determined at the time of the Asset Sale and assumed payable
at the then applicable maximum statutory rates).
"Net Proceeds Offer" has the meaning specified in Section
3.15(b).
"Notice of Acceleration" has the meaning specified in the
Collateral Trust Agreement.
"Officers' Certificate" means a certificate signed by the
Chairman of the Board of Directors or the President or any Vice President
(whether or not designated by a number or numbers or a word or words added
before or after the title "Vice President") and by the Treasurer or the
Secretary or any Assistant Secretary or Assistant Treasurer of the Issuer and
delivered to the Trustee. Each such certificate shall conform to the
requirements of Section 314 of the Trust Indenture Act of 1939 and include the
statements provided for in Section 15.5 if and to the extent required hereby.
"Opinion of Counsel" means an opinion in writing signed by legal
counsel (who may be an employee of or counsel to the Issuer). Each such opinion
shall conform to the requirements of Section 314 of the Trust Indenture Act and
include the statements provided for in Section 15.5 if and to the extent
required hereby.
"Ordinary Course Sales" means sales of inventory or other
property or assets by the Issuer or any Restricted Subsidiary in the ordinary
course of business. For purposes of this Indenture, sales of Arby's stores by
the Issuer or any Restricted Subsidiary shall not be considered ordinary Course
Sales.
"original issue date" of any Senior Note (or portion thereof)
means the earlier of (i) the date of such Senior Note and (ii) the date of any
Senior Note (or portion thereof) for which such Senior Note was issued (directly
or indirectly) on registration of transfer, exchange or substitution.
"outstanding", when used with reference to Senior Notes, shall,
subject to the provisions of Section 6.4, mean, as of any particular time, all
Senior Notes authenticated and delivered by the Trustee under this Indenture,
except
(a) Senior Notes theretofore canceled by the Trustee or
delivered to the Trustee for cancellation;
(b) on or after the date on which the conditions set forth in
Section 9.1(a) or 9.1(b) hereof have been satisfied, Senior Notes
theretofore authenticated and delivered by the Trustee under this
Indenture; and
(c) Senior Notes in substitution for which other Senior Notes
shall have been authenticated and delivered, or which shall have been
paid, pursuant to the terms of Section 2.6 (unless proof satisfactory to
the Trustee is
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presented that any of such Senior Notes is held by a Person in whose
hands such Senior Note is a legal, valid and binding obligation of the
Issuer).
"Paying Agent" means any Person appointed by the Issuer to pay
the principal of or any premium or interest on any Senior Notes on behalf of the
Issuer and, if no Person shall be so appointed, then the Issuer.
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Person" means any individual, partnership, joint venture, firm,
corporation, association, trust or other enterprise or any government or
political subdivision or agency, department or instrumentality thereof.
"Plan" means at any time an employee pension benefit plan (other
than a Multiemployer Plan) which is covered by Title IV of ERISA or subject to
the minimum funding standards under Section 412 of the Code and either (i) is
maintained, or contributed to, by any member of the ERISA Group for employees of
any member of the ERISA Group or (ii) has at any time within the preceding five
years been maintained, or contributed to, by any Person which was at such time a
member of the ERISA Group for employees of any Person which was at such time a
member of the ERISA Group.
"Preferred Stock Obligations" of any Person means all obligations
of such Person to make payments on or in respect of its preferred stock,
including, without limitation, dividend payments, liquidation preference
payments and payments in respect of the redemption (mandatory or optional) of
such preferred stock.
"Pro Forma Interest Coverage Ratio" means, for any period of four
consecutive fiscal quarters (the "Reference Period"), the ratio of Adjusted
EBITDA to Adjusted Interest Expense for such period; provided that:
(i) to the extent that the proceeds of any Indebtedness proposed
to be incurred pursuant to Section 3.13(j) (the "Proposed Indebtedness")
on the date of the transaction giving rise to the need to calculate the
Pro Forma Interest Coverage Ratio (the "Transaction Date") are to be
used to finance the purchase price of a substantially concurrent
acquisition of assets or a business in the Core Business, Adjusted
EBITDA for the Reference Period shall be adjusted to give effect to such
acquisition as if it had occurred on the first day of the Reference
Period;
(ii) if, during the Reference Period, the Issuer or any of its
Restricted Subsidiaries shall have consummated any Asset Sale, Adjusted
EBITDA and Adjusted Interest Expense for the Reference Period shall be
adjusted to give effect to such Asset Sale and to the retirement of any
related Indebtedness of the Issuer or such Restricted Subsidiary as if
the same had occurred on the first day of the Reference Period;
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18
(iii) in calculating Adjusted Interest Expense for purposes of
this ratio, (A) the incurrence of the Proposed Indebtedness shall be
assumed to have occurred on the first day of the Reference Period and
(B) to the extent the proceeds from the incurrence of the Proposed
Indebtedness are to be used simultaneously to retire outstanding
Indebtedness, the application of such net proceeds shall be assumed to
have occurred on the first day of the Reference Period; and
(iv) in calculating Cash Interest Income for purposes of this
ratio, to the extent the proceeds from the incurrence of the Proposed
Indebtedness are not to be used as contemplated by clause (i) or (iii)
above, such proceeds shall be assumed to have generated interest income
from the first day of the Reference Period at the Assumed Investment
Rate in effect on such day.
In calculating the Pro Forma Interest Coverage Ratio for the Reference Period in
connection with any proposed incurrence of Indebtedness pursuant to Section
3.13(j), any pro forma adjustments made in calculating the Pro Forma Interest
Coverage Ratio for such Reference Period (or any portion thereof) in connection
with any prior incurrence of Indebtedness pursuant to Section 3.13(j) shall be
given effect.
"Pro Forma Restricted Payment Capacity" exists on any date of
determination when the Pro Forma Interest Coverage Ratio for the most recent
four-quarter period prior to the date of determination for which financial
statements are available exceeds (A) 2.0 to 1.0, for any date of determination
on or prior to August 1, 1996, or (B) 2.5 to 1.0, for any date of determination
after August 1, 1996.
"Qualified Capital Stock" means any and all shares of Capital
Stock of the Issuer issued after the Issue Date, provided that such shares are
not subject to any mandatory redemption or other mandatory purchase obligation
on the part of the Issuer prior to the final maturity of the Senior Notes.
"Regular Record Date" means, with respect to the interest payable
on the Senior Notes on any Interest Payment Date, the fifteenth day of the month
immediately preceding the month in which such Interest Payment Date falls,
whether or not such fifteenth day is a Business Day.
"Reorganization Date" means April 23, 1993.
"Repurchase Payments" has the meaning specified in Section 3.17.
"Responsible Officer" when used with respect to the Trustee means
the chairman of the Board of Directors, any vice chairman of the Board of
Directors, the chairman of the trust committee, the chairman of the executive
committee, any vice chairman of the executive committee, the president, any vice
president (whether or not designated by numbers or words added before or after
the title "vice president"), the cashier, the secretary, the treasurer, any
trust officer, any assistant trust officer, any assistant vice president, any
assistant cashier, any assistant secretary, any
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19
assistant treasurer, or any other officer or assistant officer of the Trustee
customarily performing functions similar to those performed by the persons who
at the time shall be such officers, respectively, or to whom any corporate trust
matter is referred because of his knowledge of and familiarity with the
particular subject.
"Restricted Payment" means (i) any dividend or other distribution
on any shares of the Capital Stock of the Issuer or any Restricted Subsidiary
(other than dividends payable solely in shares of such Capital Stock or options,
warrants or other rights to acquire such Capital Stock), (ii) any payment on
account of the purchase, redemption, retirement or acquisition of (A) any shares
of the Capital Stock of the Issuer or any Restricted Subsidiary or (B) any
option, warrant or other right to acquire shares of such Capital Stock, (iii)
any purchase, redemption, defeasance or other acquisition or retirement for
value of any Subordinated Indebtedness prior to the scheduled maturity,
scheduled repayment of principal or scheduled sinking fund payment, as the case
may be, of such Subordinated Indebtedness and (iv) any Investment in any Person
(other than Investments permitted by paragraphs (a) through (e) of Section
3.16); provided that the term "Restricted Payment" shall not include (x) any
dividend, distribution or other payment on the Capital Stock of any Restricted
Subsidiary to the Issuer or any Wholly Owned Restricted Subsidiary or (y) any
payment made pursuant to the Tax Sharing Agreement.
"Restricted Subsidiary" means (i) any Subsidiary that exists on
the Issue Date and (ii) any other Subsidiary that the Issuer has not designated
as an Unrestricted subsidiary pursuant to Section 3.21.
"Security Register" and "Security Registrar" have the respective
meanings specified in Section 2.5.
"Senior Note" or "Senior Notes" means any 9 3/4% Senior Secured
Notes Due 2000 authenticated and delivered under this Indenture.
"Senior Note Obligations" means at any time all principal of and
premium and interest (including, without limitation, any interest which accrues
after the commencement of any case, proceeding or other action relating to the
bankruptcy, insolvency or reorganization of the Issuer) on the outstanding
Senior Notes and all other amounts payable by the Issuer hereunder.
"Specified Write-offs" means, without duplication, (i) all
non-recurring, non-cash write-offs taken by the Issuer and its Restricted
Subsidiaries after December 31, 1992 and before the end of the twelve-month
period following the Reorganization Date, (ii) all expenses incurred by the
Issuer and its Restricted Subsidiaries after December 31, 1992 resulting from
the application of Statement of Financial Accounting Standards No. 106 ("SFAS
106") to the extent exceeding the cash payments for benefits covered by SFAS 106
for the relevant period, (iii) all non-cash writeoffs taken by the Issuer and
its Restricted Subsidiaries after December 31, 1992 resulting from the
application of Statement of Financial Accounting Standards No. 109, (iv) all
charges taken by the Issuer and its Restricted Subsidiaries after December 31,
1992 in respect of prepayment premiums, and payments made in lieu
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20
of participating interest obligations, on Indebtedness of the Issuer that was
refinanced on the Reorganization Date, (v) all other non-recurring write-offs
taken by the Issuer and its Restricted Subsidiaries in the quarter ended March
31, 1993 and (vi) all other non-recurring write-offs not in excess of $5,250,000
taken by the Issuer and its Restricted Subsidiaries in the nine months ended
December 31, 1993.
"Spin-Off" means a transaction or series of related transactions
whereby all Capital Stock of the Issuer held directly or indirectly by DWG is
distributed ratably to the holders of the Capital Stock of DWG and, after giving
effect thereto, the holders of Voting Capital Stock of DWG prior to such
transactions or series of related transactions own, in the aggregate, an
identical percentage of the Voting Capital Stock of the Issuer.
"Step-Up Notes" means the Issuer's Senior Secured Step-Up Rate
Notes Due 2000 issued pursuant to an indenture dated as of April 23, 1993 among
the Issuer, as issuer, RC Cola and Arby's, as joint and several guarantors, and
The Bank of New York, as trustee.
"Subordinated Indebtedness" means any Indebtedness of the Issuer
which is subordinate or junior in right of payment to the Senior Notes (whether
pursuant to its terms or by operation of law).
"Subsidiary" means, with respect to any Person, any corporation
or other entity of which a majority of the Capital Stock or other ownership
interests having ordinary voting power to elect a majority of the board of
directors (or other persons performing similar functions) are directly or
indirectly owned by such Person. Unless the context indicates otherwise, all
references herein to Subsidiaries are references to Subsidiaries of the Issuer.
"Tax Sharing Agreement" means the Tax Sharing Agreement dated as
of April 23, 1993 between DWG and the Issuer as in effect on the Issue Date.
"Temporary Cash Investments" means (i) securities issued or
directly and fully guaranteed or insured by the United States of America or any
agency or instrumentality thereof (provided that the full faith and credit of
the United States of America is pledged in support thereof) having maturities of
not more than one year from the date of acquisition, (ii) time deposits and
certificates of deposit having maturities of not more than one year from the
date of acquisition with any U.S. branch of a commercial bank so long as the
unsecured senior long-term debt of such bank or of such bank's holding company
is rated at least A by Standard & Poor's Corporation ("S&P") or Moody's
Investors Service, Inc. ("Moody's"), (iii) repurchase obligations with a term of
not more than seven days for underlying securities of the types described in
clause (i) entered into with any bank meeting the qualifications specified in
clause (ii) above, (iv) commercial paper rated at least A-1 or the equivalent
thereof by S&P or at least P-1 or the equivalent thereof by Moody's and in each
case maturing within six months after the date of acquisition, (v) investments
in money market funds substantially all the assets of which are comprised of
securities of the types described in clauses (i) through (iv) above, and
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21
(vi) debt securities of an issuer incorporated under the laws of the United
States of America or any state thereof which are issued pursuant to an effective
registration statement under the Securities Act of 1933 and which are rated at
least BBB by S&P or Baa2 by Moody's.
"Trustee" means the entity identified as "Trustee" in the first
paragraph hereof and, subject to the provisions of Article Five, shall also
include any successor trustee.
"Trust Indenture Act of 1939" means the Trust Indenture Act of
1939 as in force at the date as of which this Indenture was originally executed,
except to the extent that any subsequent amendment of the Trust Indenture Act of
1939 shall apply retroactively to this Indenture.
"Unfunded Liabilities" means, with respect to any Plan at any
time, the amount (if any) by which (i) the value of all benefit liabilities
under such Plan, determined on a plan termination basis using the assumptions
prescribed by the PBGC for purposes of Section 4044 of ERISA, exceeds (ii) the
fair market value of all Plan assets allocable to such liabilities under the
Title IV or ERISA (excluding any accrued but unpaid contributions), all
determined as of the then most recent valuation date for such Plan, but only to
the extent that such excess represents a potential liability of a member of the
ERISA Group to the PBGC or any other Person under Title IV of ERISA.
"Unrestricted Subsidiary" means any Subsidiary that the Issuer
has classified pursuant to Section 3.21 as an Unrestricted Subsidiary and that
has not been reclassified as a Restricted Subsidiary pursuant to such Section.
"Voting Capital Stock" means, with respect to any Person, any
Capital Stock of such Person which has ordinary power to vote in elections of
the board of directors (or other persons performing similar functions) of such
Person.
"Wholly Owned Restricted Subsidiary" means, at any time, any
Restricted Subsidiary all of the Capital Stock of which (except directors'
qualifying shares) is at the time owned by the Issuer or another Wholly Owned
Restricted Subsidiary.
ARTICLE II
ISSUE, EXECUTION, FORM AND
REGISTRATION OF SENIOR NOTES
SECTION 2.1 Authentication and Delivery of Senior Notes. Upon the
execution and delivery of this Indenture, or from time to time thereafter,
Senior Notes in an aggregate principal amount not exceeding the amount specified
in the form of Senior Note hereinabove recited (except as otherwise provided in
Section 2.6) may be executed by the Issuer and delivered to the Trustee for
authentication, and the
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22
Trustee shall thereupon authenticate and deliver said Senior Notes to or upon
the written order of the Issuer (a "Company Order"), signed by both (i) its
President or any Vice President (whether or not designated by a number or
numbers or a word or words added before or after the title "Vice President") and
(ii) its Secretary, its Treasurer or any Assistant Secretary or Assistant
Treasurer without any further action by the Issuer.
The Trustee shall be entitled to receive and be fully protected
in relying upon an Opinion of Counsel stating that such Senior Notes, when
authenticated and delivered by the Trustee and issued by the Issuer in the
manner and subject to customary conditions and qualifications specified in such
Opinion of counsel, will constitute valid and legally binding obligations of the
Issuer.
Notwithstanding any other provision of this Indenture, if all
Senior Notes are not to be originally issued at one time, all officers'
Certificates, Company orders and opinions of Counsel required to be delivered to
the Trustee in connection with the authentication of Senior Notes shall be
delivered prior to the authentication upon original issuance of such Senior
Notes and shall not be thereafter required to be delivered to the Trustee.
SECTION 2.2 Execution of Senior Notes. The Senior Notes shall be
signed on behalf of the Issuer by (i) the President or any Vice President
(whether or not designated by a number or numbers or a word or words added
before or after the title "Vice President") of the Issuer and (ii) by the
Treasurer or any Assistant Treasurer or the Secretary or any Assistant Secretary
of the Issuer under its corporate seal, which may, but need not, be attested.
Such signatures may be the manual or facsimile signatures of the present or any
future such officers. The seal of the Issuer may be in the form of a facsimile
thereof and may be impressed, affixed, imprinted or otherwise reproduced on the
Senior Notes. Typographical and other minor errors or defects in any such
reproduction of the seal or any such signature shall not affect the validity or
enforceability of any Senior Note which has been duly authenticated and
delivered by the Trustee.
In case any officer of the Issuer who shall have signed any of
the Senior Notes shall cease to be such officer before the Senior Note so signed
shall be authenticated and delivered by the Trustee or disposed of by the
Issuer, such Senior Note nevertheless may be authenticated and delivered or
disposed of as though the person who signed such Senior Note had not ceased to
be such officer of the Issuer; and any Senior Note may be signed on behalf of
the Issuer by such persons as, at the actual date of the execution of such
Senior Note, shall be the proper officers of the Issuer, although at the date of
the execution and delivery of this Indenture any such person was not such
officer.
SECTION 2.3 Certificate of Authentication. Only such Senior Notes
as shall bear thereon a certificate of authentication substantially in the form
herein before recited, executed by the Trustee by manual signature of one of its
authorized signatories, shall be entitled to the benefits of this Indenture or
be valid or obligatory for any purpose. Such certificate by the Trustee upon any
Senior Note executed by
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23
the Issuer shall be conclusive evidence that the Senior Note so authenticated
has been duly authenticated and delivered hereunder and that the Holder is
entitled to the benefits of this Indenture.
SECTION 2.4 Form, Denomination and Date of Senior Notes; Payments
of Interest. The Senior Notes and the Trustee's certificates of authentica tion
shall be substantially in the form recited above. The Senior Notes shall be
issuable as registered securities without coupons and in denominations provided
for in the form of Senior Note above recited. The Senior Notes shall be
numbered, lettered or otherwise distinguished in such manner or in accordance
with such plans as the officers of the Issuer executing the same may determine
with the approval of the Trustee.
Any of the Senior Notes may be issued with appropriate
insertions, omissions, substitutions and variations, and may have imprinted or
otherwise reproduced thereon such legend or legends, not inconsistent with the
provisions of this Indenture, as may be required to comply with any law or with
any rules or regula tions pursuant thereto, or with the rules of any securities
market in which the Senior Notes are admitted to trading, or to conform to
general usage.
Each Senior Note shall be dated the date of its authentication,
shall bear interest from the applicable date and shall be payable on the dates
specified in the form of Senior Note recited above.
The Person in whose name any Senior Note is registered at the
close of business on any Regular Record Date with respect to any Interest
Payment Date shall be entitled to receive the interest, if any, payable on such
Interest Payment Date notwithstanding any transfer or exchange of such Senior
Note subsequent to the Regular Record Date and prior to such Interest Payment
Date, except if and to the extent the Issuer shall default in the payment of the
interest due on such Interest Payment Date, in which case such defaulted
interest shall be paid to the Persons in whose names outstanding Senior Notes
are registered at the close of business on a subsequent record date (which shall
be not less than five Business Days prior to the date of payment of such
defaulted interest) established by notice given by mail by or on behalf of the
Issuer to the Holders of Senior Notes not less than 15 days preceding such
subsequent record date.
SECTION 2.5 Registration, Transfer and Exchange. The Issuer shall
cause to be kept at the Corporate Trust Office of the Trustee a register (the
register maintained in such office and in any other office or agency of the
Issuer maintained pursuant to Section 3.2 being herein sometimes collectively
referred to as the "Security Register") in which, subject to such reasonable
regulations as it may prescribe, the Issuer shall provide for the registration
and transfer of Senior Notes. The Trustee is hereby appointed as the initial
"Security Registrar" for the purpose of registering Senior Notes and transfers
of Senior Notes as herein provided.
Upon due presentation for registration of transfer of any Senior
Note at each such office or agency, the Issuer shall execute and the Trustee
shall authenticate
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24
and deliver in the name of the transferee or transferees a new Senior Note or
Senior Notes in authorized denominations for a like aggregate principal amount.
Any Senior Note or Senior Notes may be exchanged for a Senior
Note or Senior Notes in other authorized denominations, in an equal aggregate
principal amount. Senior Notes to be exchanged shall be surrendered at each
office or agency to be maintained by the Issuer for the purpose as provided in
Section 3.2, and the Issuer shall execute and the Trustee shall authenticate and
deliver in exchange therefor the Senior Note or Senior Notes which the Senior
Noteholder making the exchange shall be entitled to receive, each bearing
numbers not contemporaneously outstanding.
All Senior Notes presented for registration of transfer,
exchange, redemption or payment shall (if so required by the Issuer or the
Trustee) be duly endorsed by, or be accompanied by a written instrument or
instruments of transfer in form satisfactory to the Issuer and the Trustee duly
executed by, the Holder or his attorney duly authorized in writing.
The Issuer may require payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection with any
exchange or registration of transfer of Senior Notes. No service charge shall be
made to such Holder for any such transaction.
The Trustee shall not be required to exchange or register a
transfer of (i) any Senior Notes for a period of 15 days next preceding the
first mailing of notice of redemption of Senior Notes to be redeemed or (ii) any
Senior Notes selected, called or being called for redemption except, in the case
of any Senior Note where notice has been given to Senior Noteholders that such
Senior Note is to be redeemed in part, the portion thereof not so to be
redeemed.
All Senior Notes issued upon any transfer or exchange of Senior
Notes shall be valid obligations of the Issuer evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Senior Notes
surrendered upon such transfer or exchange.
SECTION 2.6 Mutilated, Defaced, Destroyed, Lost and Stolen Senior
Notes. In case any temporary or definitive Senior Note shall become mutilated,
defaced or be apparently destroyed, lost or stolen, the Issuer in its discretion
may execute, and upon the written request of any officer of the Issuer, the
Trustee shall authenticate and deliver, a new Senior Note bearing a number not
contemporaneously outstanding, in exchange and substitution for the mutilated or
defaced Senior Note, or in lieu of and substitution for the Senior Note so
apparently destroyed, lost or stolen. In every case the applicant for a
substitute Senior Note shall furnish to the Issuer and to the Trustee and any
agent of the Issuer or the Trustee such security or indemnity as may be required
by them to indemnify and defend and to save each of them harmless and, in every
case of destruction, loss or theft evidence to their satisfaction of the
apparent destruction, loss or theft of such Senior Note and of the ownership
thereof.
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25
Upon the issuance of any substitute Senior Note, the Issuer may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Trustee) connected therewith. In case any Senior
Note which has matured or is about to mature, or has been called for redemption
in full, shall become mutilated or defaced or be apparently destroyed, lost or
stolen, the Issuer may, instead of issuing a substitute Senior Note, pay or
authorize the payment of the same (without surrender thereof except in the case
of a mutilated or defaced Senior Note), if the applicant for such payment shall
furnish to the Issuer and to the Trustee and any agent of the Issuer or the
Trustee such security or indemnity as any of them may require to save each of
them harmless from all risks, however remote, and, in every case of apparent
destruction, loss or theft, the applicant shall also furnish to the Issuer and
the Trustee and any agent of the Issuer or the Trustee evidence to their
satisfaction of the apparent destruction, loss or theft of such Senior Note and
of the ownership thereof.
Every substitute Senior Note issued pursuant to the provisions of
this Section by virtue of the fact that any Senior Note is apparently destroyed,
lost or stolen shall constitute an additional contractual obligation of the
Issuer, whether or not the apparently destroyed, lost or stolen Senior Note
shall be at any time enforceable by anyone, and shall be entitled to all the
benefits of (but shall be subject to all the limitations of rights set forth in)
this Indenture equally and proportionately with any and all other Senior Notes
duly authenticated and delivered hereunder. All Senior Notes shall be held and
owned upon the express condition that, to the extent permitted by law, the
foregoing provisions are exclusive with respect to the replacement or payment of
mutilated, defaced, or apparently destroyed, lost or stolen senior Notes and
shall preclude any and all other rights or remedies notwithstanding any law or
statute existing or hereafter enacted to the contrary with respect to the
replacement or payment of negotiable instruments or other securities without
their surrender.
SECTION 2.7 Cancellation of Senior Notes; Destruction Thereof.
All Senior Notes surrendered for payment, redemption, registration of transfer
or exchange, if surrendered to the Issuer or any agent of the Issuer or the
Trustee, shall be delivered to the Trustee for cancellation or, if surrendered
to the Trustee, shall be cancelled by it; and no Senior Notes shall be issued in
lieu thereof except as expressly permitted by any of the provisions of this
Indenture. The Trustee shall, in accordance with its normal procedures, dispose
of all Senior Notes delivered or surrendered to the Trustee, unless the Issuer,
by order signed by the President or any Vice President (whether or not
designated by a number or numbers or a word or words added before or after the
title "Vice President") and its Secretary, its Treasurer or any Assistant
Secretary or Assistant Treasurer directs that such cancelled Senior Notes be
returned to the Issuer. If the Issuer shall acquire any of the Senior Notes,
such acquisition shall not operate as a redemption or satisfaction of the
indebtedness represented by such Senior Notes unless and until the same are
delivered to the Trustee for cancellation.
SECTION 2.8 Temporary Senior Notes. Pending the preparation of
definitive Senior Notes, the Issuer may execute and the Trustee shall
authenticate and
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deliver temporary Senior Notes (printed, lithographed, typewritten or otherwise
reproduced, in each case in form satisfactory to the Trustee). Temporary Senior
Notes shall be issuable as registered Senior Notes without coupons, of any
authorized denomination, and substantially in the form of the definitive Senior
Notes but with such omissions, insertions and variations as may be appropriate
for temporary Senior Notes, all as may be determined by the Issuer with the
concurrence of the Trustee. Temporary Senior Notes may contain such reference to
any provisions of this Indenture as may be appropriate. Every temporary Senior
Note shall be executed by the Issuer and authenticated by the Trustee upon the
same conditions and in substantially the same manner, and with like effect, as
the definitive Senior Notes. Without unreasonable delay the Issuer shall execute
and shall furnish definitive Senior Notes and thereupon temporary Senior Notes
may be surrendered in exchange therefor without charge at each office or agency
to be maintained by the Issuer for the purpose pursuant to Section 3.2, and the
Trustee shall authenticate and deliver in exchange for such temporary Senior
Notes a like aggregate principal amount of definitive Senior Notes of authorized
denominations. Until so exchanged the temporary Senior Notes shall be entitled
to the same benefits under this Indenture as definitive Senior Notes.
ARTICLE III
COVENANTS OF
THE ISSUER AND THE GUARANTORS
SECTION 3.1 Payment of Principal and Interest. (a) The Issuer
covenants and agrees that it will duly and punctually pay or cause to be paid
the principal of, and premium and interest on, each of the Senior Notes at the
place or places, at the respective times and in the manner provided in the
Senior Notes. Each installment of interest on the Senior Notes may be paid by
mailing checks for such interest payable to or upon the written order of the
Holders of Senior Notes entitled thereto as they shall appear on the registry
books of the Issuer or the Trustee, as the case may be.
(b) The Issuer covenants and agrees that if it shall fail to pay
when due (without regard to any applicable grace period) any principal of or
premium or interest on any Senior Note, then the Issuer will pay interest on
such overdue payment at the rate borne by the Senior Notes plus 1% per annum.
SECTION 3.2 Offices for Payments, etc. So long as any of the
Senior Notes remain outstanding, the Issuer will maintain in The City of New
York the following: (i) an office or agency where the Senior Notes may be
presented for the payment of principal thereof and premium and interest thereon,
(ii) an office or agency where the Senior Notes may be presented for
registration of transfer and for exchange as in this Indenture provided and
(iii) an office or agency where notices and demands to or upon the Issuer in
respect of the Senior Notes or this Indenture may be served. The Issuer will
give to the Trustee written notice of the location of any such office or agency
and of any change in the location thereof. The Issuer hereby initially
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designates the Corporate Trust Office of the Trustee as the office or agency for
each such purpose. In case the Issuer shall fail to maintain any such office or
agency or shall fail to give such notice of the location or of any change in the
location thereof, presentations and demands may be made and notices may be
served at the Corporate Trust Office.
SECTION 3.3 Appointment to Fill a Vacancy in Office of Trustee.
The Issuer, whenever necessary to avoid or fill a vacancy in the office of
Trustee, will appoint, in the manner provided in Section 5.9, a Trustee, so that
there shall at all times be a Trustee hereunder.
SECTION 3.4 Paying Agents. The Issuer hereby appoints the Trustee
as initial "Paying Agent". Whenever the Issuer shall appoint a Paying Agent
other than the Trustee, it will cause such Paying Agent to execute and deliver
to the Trustee an instrument in which such agent shall agree with the Trustee,
subject to the provisions of this Section,
(a) that it will hold all sums received by it as such agent for
the payment of the principal of or premium or interest on the Senior Notes
(whether such sums have been paid to it by the Issuer or by any other obligor on
the senior Notes) in trust for the benefit of the Holders of the Senior Notes or
of the Trustee,
(b) that it will give the Trustee written notice of any failure
by the Issuer (or by any other obligor on the Senior Notes) to make any payment
of the principal of or premium or interest on the Senior Notes when the same
shall be due and payable, and
(c) that it will pay any such sums so held in trust by it to the
Trustee upon the Trustee's written request at any time during the continuance of
the failure referred to in clause (b) above.
The Issuer shall, prior to each due date of the principal of or
premium or interest on the Senior Notes, deposit with the Paying Agent a sum
sufficient to pay such principal, premium or interest, and (unless such Paying
Agent is the Trustee) the Issuer will promptly notify the Trustee in writing of
any failure to take such action. In no event shall the Paying Agent (if other
than the Issuer) be responsible for making any payment of principal of or
premium or interest on the Senior Notes on the due date thereof if the Issuer
shall not have made such deposit as aforesaid.
If the Issuer determines to act as its own Paying Agent, it
shall, on or before each due date of the principal of or premium or interest on
the Senior Notes, set aside, segregate and hold in trust for the benefit of the
Holders of the Senior Notes a sum sufficient to pay such principal, premium or
interest so becoming due. The Issuer shall promptly notify the Trustee in
writing of any failure to take such action.
Anything in this Section to the contrary notwithstanding, the
Issuer may at any time, for the purpose of obtaining a satisfaction and
discharge of this Indenture
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or for any other reason, pay or cause to be paid to the Trustee all sums held in
trust by the Issuer or any Paying Agent hereunder, as required by this Section,
such sums to be held by the Trustee upon the trusts herein contained. Upon such
payment to the Trustee, the Paying Agent, and any predecessor Paying Agents, if
any, shall be released from any liability with respect to such sums.
Anything in this Section to the contrary notwithstanding, the
agreement to hold sums in trust as provided in this Section is subject to the
provisions of Sections 9.3 and 9.4.
SECTION 3.5 Certificate to Trustee; Notice to Trustee. The Issuer
will furnish to the Trustee:
(a) at the time of the furnishing to the Trustee of the financial
statements required by clauses (i) and (ii) of Section 3.7(a), a certificate
(which need not comply with Section 15.5) from the principal executive,
financial or accounting officer of the Issuer (i) stating that a review of the
activities of the Issuer and its Subsidiaries has been made with a view to
determining whether the Issuer's obligations under the Indenture have been
complied with and (ii) stating whether such officer has obtained knowledge (from
such review or otherwise) of any Default under the Indenture during the 12-month
period ended on the date of such financial statements; and
(b) promptly, and in any event within three Business Days after
the Issuer obtains knowledge thereof, notice of (i) any payment default in
excess of $100,000 by the Issuer or any of its Restricted Subsidiaries on any
Indebtedness, (ii) the occurrence of any event which constitutes a Default or
Event of Default and (iii) any litigation or governmental proceeding pending
against the Issuer or any of its Restricted Subsidiaries which is likely to have
a material adverse effect on the Issuer and its Restricted Subsidiaries taken as
a whole.
SECTION 3.6 Senior Noteholders Lists. If and so long as the
Trustee shall not be the Security Registrar, the Issuer will furnish or cause to
be furnished to the Trustee a list in such form as the Trustee may reasonably
require of the names and addresses of the Holders of the Senior Notes (i)
semiannually, not more than 15 days after the Regular Record Date for the
payment of interest in the first and third quarters of each year on the Senior
Notes as hereinabove specified, as of such Regular Record Date, and (ii) at such
other times as the Trustee may request in writing, within 30 days after receipt
by the Issuer of any such request as of a date not more than 15 days prior to
the time such information is furnished. The Trustee may destroy any list
provided to it pursuant to this Section upon the receipt of a new list provided
to it pursuant to this Section.
SECTION 3.7 Furnishing of Information by the Issuer; SEC Filings.
(a) The Issuer will furnish to the Trustee and to each Senior Noteholder:
(i) within 50 days after the end of each of the first
three fiscal quarters in each fiscal year of the Issuer, commencing with
the quarter
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ending June 30, 1993, the unaudited consolidated balance sheet of the
Issuer and its Restricted Subsidiaries as of the end of such quarterly
period and the related consolidated statements of operations, cash flows
and stockholders' equity for such quarterly period and for the elapsed
portion of the fiscal year ended with the last day of such quarterly
period, and in each case setting forth comparative figures for the
related periods in the prior fiscal year, all of which shall be
certified by the chief financial officer of the Issuer (in each case
subject to year-end audit adjustments);
(ii) within 95 days after the end of each fiscal year of
the Issuer, the consolidated balance sheet of the Issuer and its
Restricted Subsidiaries as of the end of such fiscal year and the
related consolidated statements of operations, cash flows and
stockholders' equity for such fiscal year, in each case setting forth
comparative figures for the preceding fiscal year and certified by
Arthur Andersen & Co. or other independent certified public accountants
of recognized national standing, and in each case together with a report
of such accounting firm stating that in the course of its audit of such
financial statements, which audit was conducted in accordance with
generally accepted auditing standards, such accounting firm has obtained
no knowledge of any Default or Event of Default which has occurred and
is continuing or, if in the opinion of such accounting firm such a
Default or Event of Default has occurred and is continuing, a statement
as to the nature thereof; and
(iii) within 15 days after the Issuer or any Restricted
Subsidiary is required to file the same with the Commission by virtue of
being subject to the reporting requirements of Section 13 or 15 (d) of
the Exchange Act (or, if earlier, within 15 days after the same are
filed with the commission), copies of the annual reports and of the
information, documents and other reports which the Issuer or such
Restricted Subsidiary may be required to file with the Commission
pursuant to Section 13 or Section 15(d) of the Exchange Act.
Any financial statements of the Issuer and its Restricted
Subsidiaries that are filed with the Trustee pursuant to this Section may be
prepared in accordance with generally accepted accounting principles as in
effect on the date of such financial statements, provided that the Issuer shall
have filed with the Trustee simultaneously therewith a certificate (which need
not comply with Section 15.5) from the principal financial or accounting officer
of the Issuer setting forth in reasonable detail the reconciliations necessary
to make any determination hereunder involving financial terms, including,
without limitation, the determination of Consolidated Net Income, Adjusted
EBITDA, Adjusted Interest Expense or Cash Interest Income for the period then
ending.
(b) The Issuer shall furnish to the holders of the Senior Notes
copies of any reports that the Issuer is required to file with the Commission
pursuant to Section 13 or 15(d) of the Exchange Act, and if the Issuer shall at
any time cease to be subject to the reporting requirements of Section 13 or
15(d) of the Exchange Act
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30
after having previously been subject to such requirements, it shall nevertheless
file with the Commission, within the time periods prescribed by the Exchange Act
or the rules of the Commission promulgated thereunder, annual reports consisting
of audited financial statements (including footnotes) and management's
discussion and analysis of financial condition and results of operations,
quarterly reports consisting of unaudited interim financial statements
(including footnotes) and management's discussion and analysis of financial
condition and results of operations and provide such reports to the holders of
Senior Notes within 15 days after it files them with the Commission.
(c) The Issuer shall file with the Trustee and the Commission, in
accordance with rules and regulations prescribed from time to time by the
Commission, such additional information, documents and reports with respect to
compliance by the Issuer with the conditions and covenants of this Indenture as
may be required from time to time by such rules and regulations.
(d) The Issuer shall transmit by mail to all Holders, as their
names and addresses appear in the Security Register, within 30 days after the
filing thereof with the Trustee, in the manner and to the extent required by
Section 313(c) of the Trust Indenture Act, such summaries of any information,
documents and reports required to be filed by the Issuer pursuant to paragraphs
(a) and (b) of this Section 3.7 as may be required by rules and regulations
prescribed from time to time by the Commission.
SECTION 3.8 Further Assurances. The Issuer and each Guarantor
will promptly execute and deliver such additional instruments and do such
further acts as in the opinion of the Trustee may be reasonably necessary or
proper to carry out the purposes of this Indenture.
SECTION 3.9 Maintenance of Property, Insurance. The Issuer will,
and will cause each of its Restricted Subsidiaries to, (i) keep all material
property useful and necessary in its business in good working order and
condition in accordance with prevailing industry practice, (ii) maintain with
financially sound and reputable insurance companies insurance on all its
material properties in at least such amounts and against at least such risks as
are usually insured against by companies of similar size and established repute
engaged in the same or a similar business and (iii) furnish to the Trustee, upon
written request, full information as to the insurance carried.
SECTION 3.10 Taxes. The Issuer will, and will cause each of its
Restricted Subsidiaries to, pay when due all taxes, assessments and governmental
levies, except (i) as contested in good faith and by appropriate proceedings if
adequate reserves (in the good faith judgment of the management of the Issuer)
have been established with respect thereto or (ii) where the failure to pay
would not have a material adverse effect on the Issuer and its Restricted
Subsidiaries taken as a whole.
SECTION 3.11 Corporate Existence. Subject to Article VIII hereof,
the Issuer will do or cause to be done all things necessary to preserve and keep
in full force and effect its corporate existence and the corporate existence of
each Restricted
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Subsidiary in accordance with the respective organizational documents of the
Issuer and each such Restricted Subsidiary and the rights (charter and
statutory), licenses and franchises of the Issuer and such Restricted
Subsidiary; provided, however, that the Issuer shall not be required to preserve
any such right, license or franchise, or the corporate existence of any such
Restricted Subsidiary (excluding RC Cola and Arby's), if the preservation
thereof is no longer desirable in the conduct of the business of the Issuer and
its Restricted Subsidiaries taken as a whole and the loss thereof is not adverse
in any material respect to the Holders; and provided further that if the
corporate existence of any such Restricted Subsidiary is to be terminated and
such Restricted Subsidiary has more than a de minimis amount of assets, the
Board of Directors of the Issuer shall be required to make a determination that
the preservation of the corporate existence of such Restricted Subsidiary is no
longer desirable or in the best interests of the Issuer.
SECTION 3.12 Compliance with Statutes, etc. The Issuer will, and
will cause each of its Restricted Subsidiaries to, comply with all applicable
statutes, regulations and orders of, and all applicable restrictions imposed by,
all governmental bodies, federal or state, in respect of the conduct of its
business and the ownership of its property (including applicable statutes,
regulations, orders and restrictions relating to environmental standards and
controls), except such noncompliance as would not be likely to, in the
aggregate, have a material adverse effect on the Issuer and its Restricted
Subsidiaries taken as a whole.
SECTION 3.13 Limitation on Indebtedness. The Issuer will not, and
will not permit any of its Restricted subsidiaries to, create, incur, assume or
suffer to exist any Indebtedness, except:
(a) Indebtedness evidenced by the Senior Notes or otherwise
arising under this Indenture or the Collateral Documents;
(b) Indebtedness of the Issuer and its Restricted Subsidiaries
outstanding on the Issue Date and identified on Schedule 3.13 hereto;
(c) Indebtedness incurred by the Issuer or any Restricted
Subsidiary for the purpose of financing all or any part of the purchase price of
assets acquired in the ordinary course of business ("Purchase Money
Indebtedness") and/or in respect of Capital Lease Obligations not in excess of
$15,000,000 in any fiscal year and not prohibited under Section 3.15;
(d) Indebtedness of the Issuer to any Wholly Owned Restricted
Subsidiary or of any Wholly Owned Restricted Subsidiary to any other Wholly
owned Restricted Subsidiary or to the Issuer;
(e) obligations under standby letters of credit incurred by the
Issuer or any Restricted Subsidiary in the ordinary course of business; provided
that the aggregate undrawn stated amount of all such letters of credit, when
added to the aggregate amount of all unreimbursed drawings in respect thereof,
shall at no time exceed $5,000,000;
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(f) Indebtedness incurred by the Issuer or any Guarantor in
connection with a purchase of the Senior Notes pursuant to a Change of Control
offer; provided that the aggregate principal amount of such Indebtedness does
not exceed the aggregate unpaid principal amount of the Senior Notes thereby
purchased (plus the amount of reasonable fees and expenses, including
underwriting discounts and commissions, incurred in connection with obtaining
such Indebtedness), and such Indebtedness requires no repayment of the principal
thereof prior to the final maturity of the Senior Notes;
(g) Indebtedness in respect of interest rate hedging arrangements
with respect to up to one half of the original principal amount of the Senior
Notes, provided that any such hedging arrangements are entered into with
counterparties whose senior unsecured debt securities are rated investment grade
by at least two nationally recognized statistical rating organizations;
(h) Indebtedness incurred by the Issuer or any Restricted
Subsidiary in exchange for or to repay, prepay, repurchase, redeem, defease,
retire or refinance ("refinance") any Indebtedness of the Issuer or such
Restricted Subsidiary, as the case may be, permitted by clauses (a) through (g)
above or any successor or replacement Indebtedness, provided that (i) the
principal amount of the Indebtedness so incurred shall not exceed the unpaid
principal amount of the Indebtedness so exchanged or refinanced and (ii) the
Indebtedness so incurred (A) does not mature prior to the Stated Maturity of the
Indebtedness so exchanged or refinanced, (B) has an Average Life equal to or
greater than the remaining Average Life of the Indebtedness so exchanged or
refinanced and (C) does not have an effective carrying cost greater than the
carrying cost of the Indebtedness so exchanged or refinanced;
(i) additional Indebtedness of the issuer in an aggregate
principal amount not to exceed $25,000,000 at any time outstanding; and
(j) additional Indebtedness of the issuer or any Guarantor so
long as (i) after giving effect to the incurrence of such Indebtedness and the
application of the proceeds therefrom, the Pro Forma Interest Coverage Ratio for
the most recent four-quarter period in respect of which financial statements are
available exceeds (A) 2.25 to 1 (for Indebtedness incurred through August 1,
1994), (B) 2.5 to 1 (for Indebtedness incurred on or after August 2, 1994 and
prior to August 1, 1995) or (C) 2.75 to 1 (for Indebtedness incurred on or after
August 2, 1995) and (ii) such additional Indebtedness requires no repayment of
the principal thereof prior to the final maturity of the Senior Notes.
SECTION 3.14 Limitation on Liens. The Issuer will not, and will
not permit any of its Restricted Subsidiaries to, create, incur, assume or
suffer to exist any Lien upon any of its property, assets, income or profits,
whether owned on the Issue Date or thereafter acquired, except:
(a) Liens for taxes, assessments or other governmental charges
not yet due or which are being contested in good faith and by appropriate
proceedings if adequate reserves with respect thereto are maintained on the
books of the Issuer or
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such Restricted Subsidiary, as the case may be, in accordance with generally
accepted accounting principles;
(b) carriers', warehousemen's, mechanics', landlords', material-
men's, repairmen's or other like Liens arising by operation of law in the
ordinary course of business if (i) the underlying obligations are not overdue
for a period of more than 60 days, (ii) such Liens are being contested in good
faith and by appropriate proceedings and adequate reserves with respect thereto
are maintained on the books of the Issuer or such Restricted Subsidiary, as the
case may be, in accordance with generally accepted accounting principles or
(iii) the underlying obligations do not exceed $1,000,000 in the aggregate at
any time for the issuer and its Restricted Subsidiaries;
(c) pledges or deposits in connection with workmen's
compensation, unemployment insurance and other social security legislation;
(d) deposits to secure the performance of bids, trade contracts
(other than for borrowed money), leases, statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature incurred
in the ordinary course of business;
(e) easements, rights-of-way, zoning and similar restrictions and
other similar encumbrances or title defects incurred in the ordinary course of
business which, in the aggregate, are not substantial in amount, and which do
not in any case materially detract from the value of the property subject
thereto or interfere with the ordinary conduct of the business of the Issuer or
any of its Restricted Subsidiaries;
(f) Liens arising by virtue of Capital Lease Obligations
permitted to be incurred under Section 3.13;
(g) Liens arising by operation of law in connection with
judgments, except to the extent an Event of Default exists with respect thereto;
(h) Liens on assets securing only Indebtedness incurred
concurrently with, or within 90 days after, the acquisition or construction
thereof to finance the cost of such acquisition or construction, provided that
such Indebtedness is permitted to be incurred under Section 3.13;
(i) Liens on assets existing at the time of acquisition thereof
by the Issuer or a Restricted Subsidiary and Liens on assets of a Person
existing at the time such Person becomes a Restricted Subsidiary, in either case
not created in contemplation of such event, provided that any Indebtedness
secured thereby is permitted under Section 3.13;
(j) Liens created by the Collateral Documents; and
(k) Liens existing on the Issue Date and identified on Schedule
3.14 hereto (i) securing Indebtedness which is to remain outstanding after the
Issue Date or
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(ii) securing the Step-Up Notes, which Liens shall cease to be of record not
later than thirty days after the Issue Date.
SECTION 3.15 Limitation on Sales of Assets and Restricted
Subsidiary Stock. (a) The Issuer will not, and will not permit any of its
Restricted Subsidiaries to, consummate any Asset Sale unless (i) the Issuer or
such Restricted Subsidiary, as the case may be, receives consideration at the
time of such Asset Sale at least equal to the fair market value, as determined
in good faith by the Board of Directors of the Issuer (including as to the value
of all non-cash consideration), of the shares and/or assets subject to such
Asset Sale and (ii) at least 80% of the considera tion therefor received by the
Issuer or such Restricted Subsidiary is in the form of cash. For the purposes of
this provision, any liabilities (as shown on the Issuer's or such Restricted
Subsidiary's balance sheet or notes thereto) of the Issuer or any Restricted
Subsidiary that are assumed by the transferee in any such Asset Sale (or that
otherwise cease to be obligations of the Issuer and any Restricted Subsidiary
after such Asset Sale), and any notes, obligations or other marketable
securities received by the Issuer or any Restricted Subsidiary from such
transferee that are promptly converted by the Issuer or such Restricted
Subsidiary into cash, will be deemed to be cash.
(b) Within 180 days after the receipt by the Issuer or any of its
Restricted Subsidiaries of any Net Proceeds, the Issuer or such Restricted
Subsidiary, as the case may be, may (i) reinvest such Net Proceeds in Core
Business assets or (ii) designate such Net Proceeds as having been used to
finance the acquisition cost of Core Business assets acquired within 180 days
prior to the Asset sale giving rise to such Net Proceeds (but only if, at the
time of the acquisition of such Core Business assets, the Issuer or a Restricted
Subsidiary was bound by a written agreement to consulate such Asset Sale). Any
Net Proceeds that are not so used or designated as having been used within the
specified time period provided in the preceding sentence shall constitute
"Excess Proceeds".
At such time as the aggregate amount of Excess Proceeds received
by the Issuer and its Restricted Subsidiaries and not previously applied to a
purchase offer for Senior Notes aggregate $5,000,000 or more (an "Asset Sale
Trigger"), the issuer shall make an offer to purchase any outstanding Senior
Notes (up to the aggregate amount of such Net Proceeds) (a "Net Proceeds
offer"), on a date not less than 30 nor more than 45 days following the date of
such Asset Sale Trigger, at 100% of the principal amount thereof, together with
accrued interest to the date of repurchase, in accordance with Section 13.1 of
this Indenture.
SECTION 3.16 Limitation on Investments, Loans and Advances. The
Issuer will not, and will not permit any of its Restricted Subsidiaries to, make
any Investment in any other Person after the Issue Date, except:
(a) any Restricted Subsidiary of the Issuer may make advances
or loans to the Issuer;
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(b) the Issuer and each of its Restricted Subsidiaries may
acquire and hold accounts receivable owing to it, if credited or acquired in the
ordinary course of business and payable or dischargeable in accordance with
customary trade terms; provided that nothing in this clause (b) shall prevent
the Issuer or any Restricted Subsidiary from providing such concessionary trade
terms as management deems reasonable in the circumstances;
(c) the Issuer and each of its Restricted Subsidiaries may make
payroll advances in the ordinary course of business;
(d) the Issuer may make Investments in Guarantors, and
Guarantors may make Investments in other Guarantors;
(e) the issuer and its Restricted Subsidiaries may make
Temporary Cash Investments; and
(f) the Issuer and its Restricted Subsidiaries may make
Investments in Unrestricted Subsidiaries, Core Business assets or Bottling
Business assets (or any entity which is primarily engaged in a Core Business or
the Bottling Business) to the extent permitted by Section 3.17.
SECTION 3.17 Limitation on Restricted Payments. The Issuer will
not, and will not permit any of its Restricted Subsidiaries to, make any
Restricted Payment unless at the time of and after giving effect to the proposed
Restricted Payment on a pro forma basis (the value of any such payment, if other
than cash, to be determined by a majority of the Independent Directors of the
Issuer, whose determination shall be conclusive and evidenced by a board
resolution), (i) no Default or Event of Default shall have occurred and be
continuing, (ii) there shall exist Pro Forma Restricted Payment Capacity and
(iii) the aggregate amount of Restricted Payments declared or made after the
Issue Date shall not exceed the sun of (A) 50% of Consolidated Net Income
accrued during the period (treated as one accounting period) beginning on July
1, 1993 and ending on the last day of the most recent fiscal quarter ending
prior to the date of such proposed Restricted Payment (or if such Consolidated
Net Income shall be a deficit, less loot of such deficit) plus (B) the aggregate
net cash proceeds received by the Issuer after the Issue Date from the issuance
or sale (other than to a Subsidiary) of its Qualified Capital Stock (or of any
convertible debt securities of the Issuer that have been converted into shares
of its Qualified Capital Stock) or from contributions made by holders of its
outstanding Capital Stock to its common equity capital accounts (to the extent
such net cash proceeds are not applied in the manner described in clause (a) of
the next paragraph) plus (C) $1,000,000.
The foregoing provisions do not prohibit: (a) the defeasance,
redemption, purchase or other acquisition of Capital Stock or Subordinated
Indebtedness of the Issuer with the net cash proceeds received by the Issuer
from the substantially concurrent sale of Qualified Capital Stock of the Issuer
or in exchange for Qualified Capital Stock of the Issuer; (b) any defeasance,
redemption, purchase or other acquisition of Subordinated Indebtedness of the
Issuer made by exchange for, or
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out the proceeds of the substantially concurrent sale of, Indebtedness of the
Issuer, so long as such Indebtedness is permitted to be incurred pursuant to
Section 3.13(h); (c) the payment of any dividend on or redemption of Capital
Stock of the Issuer within 60 days after the date of its declaration or
authorization, if such dividend or redemption could have been made on the date
of its declaration or authorization in compliance with the foregoing provisions;
(d) Investments made in Unrestricted Subsidiaries, Core Business assets or
Bottling Business assets (or any entity which is primarily engaged in a Core
Business or the Bottling Business), and payments made to purchase Existing
Subordinated Debentures prior to the scheduled maturity thereof (other than
scheduled sinking fund payments) ("Repurchase Payments"), so long as, after
giving effect to any such Investment or Repurchase Payment, the aggregate amount
of Investments and Repurchase Payments so made after the Reorganization Date
shall not exceed $25,000,000 in the aggregate; and (e) additional Investments
made in Unrestricted Subsidiaries after the Issue Date with the cash proceeds of
any capital contribution received by the Issuer after the Issue Date, so long as
such proceeds are so invested within 30 days after the Issuer's receipt thereof.
Restricted Payments permitted to be made as described in this paragraph will be
excluded in calculating the amount of Restricted Payments which shall be
permitted thereafter, except such Restricted Payments made as described in
clause (d) or (e), which will be included in calculating the amount of
Restricted Payments which shall be permitted thereafter. Notwithstanding the
immediately preceding sentence, if the Issuer shall have made any Repurchase
Payments as permitted by clause (d) above, then the amount of Restricted
Payments which shall be permitted to be made after the date on which the
aggregate principal amount of Existing Subordinated Debentures shall have been
paid in full or otherwise retired shall be increased by an amount equal to the
lesser of (x) the aggregate amount of Repurchase Payments theretofore made or
(y) the aggregate principal amount of Existing Subordinated Debentures purchased
in connection with the making of such Repurchase Payments.
SECTION 3.18 Limitation on Transactions with Affiliates. The
Issuer will not, and will not permit any of its Restricted Subsidiaries to,
enter into or suffer to exist any transaction or arrangement with any Affiliate
(other than the Issuer and its Restricted Subsidiaries), including, without
limitation, any purchase, sale, lease or exchange of property or the rendering
of any service or any Investment, except for (i) transactions or arrangements
entered into in good faith which are upon fair and reasonable terms no less
favorable to the Issuer or such Restricted Subsidiary than it would obtain in a
comparable arm's length transaction with a Person not an Affiliate (such
determination, (A) in the case of any transaction or arrangement (or series of
related transactions or arrangements) involving amounts exceeding $1,000,000, to
be evidenced by a board resolution of the Board of Directors of the Issuer and,
prior to a Spin-Off or an Initial Public offering DWG, such resolutions to have
been approved by a majority of the Independent Directors of the Issuer and, if
applicable, DWG and delivered to the Trustee), and (B) in the case of any
transaction or arrangement (or series of related transactions or arrangements)
involving amounts exceeding $10,000,000, to be further evidenced by an opinion
letter, delivered to the Trustee, of a nationally recognized investment banking
firm stating that such transaction or arrangement (or series of related
transactions or arrangements) is fair to the Issuer or such Restricted
Subsidiary from a financial point of view), (ii) the Tax
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Sharing Agreement, (iii) the Management Services Agreement, (iv) the
transactions and arrangements existing on the Issue Date and identified on
Schedule 3.18 hereto (in each case as in effect on the Issue Date) and (v)
amendments to the agreements described in (ii), (iii) and (iv) above, provided
that any such material amendments meet the standards described in (i) above.
SECTION 3.19 Limitation on Restrictions on Distributions from
Restricted Subsidiaries. The Issuer will not, and will not permit any of its
Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or
suffer to exist or become effective, or enter into any agreement with any Person
that would cause to become effective, any consensual encumbrance or restriction
of any kind on the ability of any Restricted Subsidiary to (i) pay dividends, in
cash or otherwise, or make any other distributions on or in respect of its
Capital Stock, (ii) pay any Indebtedness or other obligation owed to the Issuer
or any Wholly Owned Restricted Subsidiary, (iii) make any loans or advances to
the Issuer or any Wholly Owned Restricted Subsidiary or (iv) transfer any of its
property or assets to the Issuer or any Wholly Owned Restricted Subsidiary,
except for encumbrances or restrictions in effect on the Issue Date and
identified on Schedule 3.19 hereto.
SECTION 3.20 Limitation on Certain Capital Stock. The Issuer will
not issue or at any time have outstanding any Capital Stock other than common
stock and Qualified Capital Stock. No Restricted Subsidiary will be permitted to
issue or at any time have outstanding any shares of Capital Stock other than
common stock.
SECTION 3.21 Restricted and Unrestricted Subsidiaries. (a) The
Issuer may designate a newly formed or newly acquired Subsidiary of the Issuer
or of any of its Restricted Subsidiaries (other than Subsidiaries of a
Guarantor) as an Unrestricted Subsidiary if at the time of such designation (and
after giving effect thereto): (i) no Default or Event of Default has occurred
and is continuing and (ii) such designation is effective immediately upon such
person becoming a Subsidiary of either the Issuer or any of its Restricted
Subsidiaries; provided, however, that the restriction referred to in clause (i)
above shall not apply to the designation of any such Subsidiary as an
Unrestricted Subsidiary in connection with an Investment in such Subsidiary that
is permitted by clause (d) or (e) of the second paragraph of Sec tion 3.17.
Unless so designated as an Unrestricted Subsidiary, any person that becomes a
Subsidiary of the issuer or any of its Restricted Subsidiaries shall be
classified as a Restricted Subsidiary thereof. No Restricted Subsidiary may be
redesignated as an Unrestricted Subsidiary. Subject to the next succeeding
paragraph, an Unrestricted Subsidiary may be redesignated as a Restricted
Subsidiary. The designation of an Unrestricted Subsidiary or the removal of such
designation in compliance with the next succeeding paragraph shall be made by
the Board of Directors of the Issuer pursuant to a certified board resolution
delivered to the Trustee and shall be effective as of the date specified in the
applicable certified board resolution, which shall not be prior to the date such
certified board resolution is delivered to the Trustee.
(b) The Issuer will not, and will not permit any of its
Restricted Subsidiaries to, take any action or enter into any transaction or
series of transactions
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that would result in an Unrestricted Subsidiary becoming a Restricted Subsidiary
unless, after giving effect to such action, transaction or series of
transactions, on a pro forma basis, (i) the Issuer could incur at least $1.00 of
additional Indebtedness pursuant to Section 3.13(j) and (ii) no Default or Event
of Default would occur or be continuing.
SECTION 3.22 Additional Guarantors. (a) The Issuer may from time
to time after the Issue Date cause one or more Restricted Subsidiaries to become
a Guarantor hereunder by causing such Restricted Subsidiary to execute such
instruments and to take such other actions as the Trustee may require in order
to evidence the Guarantee by such Restricted Subsidiary under Article X of the
Indenture, the agreement by such Restricted Subsidiary to be bound by the other
terms of this Indenture and the agreement by such Restricted Subsidiary to
secure its obligations in respect of the Senior Notes by granting to the
Collateral Trustee a security interest in collateral of the type pledged by the
other Guarantors pursuant to the Collateral Documents.
(b) In the event that the Capital Stock of any Restricted
Subsidiary which theretofore became a Guarantor pursuant to Section 3.22(a) is
thereafter disposed of in its entirety by the Issuer and its Restricted
Subsidiaries, such Guarantor shall be released and discharged from any
obligation under this Indenture and the Collateral Documents; provided that no
such disposition shall be made unless, immediately after such disposition and
after giving effect thereto, (i) no Event of Default shall have occurred and be
continuing and (ii) no Change of Control shall result therefrom.
SECTION 3.23 Regarding the Existing Subordinated Debentures. (a)
Notwithstanding anything to the contrary contained in section 3.15, the Issuer
will not, and will not permit any Restricted Subsidiary to, consummate any sale
or other disposition of assets if, after giving effect thereto, (i) the Issuer
would be required by the provisions of the indenture pursuant to which the
Existing Subordinated Debentures were issued to make an offer to purchase
Existing Subordinated Debentures and (ii) the sum of the aggregate purchase
price of the Existing Subordinated Debentures to be purchased pursuant to such
offer (without regard to whether such purchase offer is accepted by any holders
of such Existing Subordinated Debentures) plus the aggregate amount of
Restricted Payments theretofore made by the Issuer as permitted by clause (d) of
the second paragraph of Section 3.17 would exceed an amount equal to
$25,000,000.
(b) The Issuer covenants and agrees that (i) it will cause the
aggregate principal amount of Existing subordinated Debentures held by it on the
Issue Date to be presented for cancellation and retired and (ii) it will cause
any portion of the Existing Subordinated Debentures so presented for
cancellation and retirement to be applied as a credit to future scheduled
amortizations of the Existing Subordinated Debentures in inverse order of
maturity. The Issuer further covenants and agrees that it will cause any of the
Existing Subordinated Debentures purchased with Repurchase Payments to be
promptly presented for cancellation and retired.
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ARTICLE IV
REMEDIES OF THE TRUSTEE AND SENIOR NOTEHOLDERS
ON EVENT OF DEFAULT
SECTION 4.1 Event of Default Defined; Acceleration of Maturity;
Waiver of Default. In case one or more of the following Events of Default
(whatever the reason for such Event of Default and whether it shall be voluntary
or involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body) shall have occurred and be continuing, that
is to say:
(a) default in the payment of all or any part of the principal of
or premium on any of the Senior Notes as and when the same shall become due and
payable, whether at stated maturity, upon any redemption, pursuant to a Net
Proceeds offer or a Change of Control offer, by declaration or otherwise; or
(b) default in the payment of any installment of interest upon
any of the Senior Notes, or any other amount payable under this Indenture, as
and when the same shall become due and payable, and continuance of such default
for a period of 10 days; or
(c) the Issuer or any Guarantor shall fail to observe or perform
any of its covenants or agreements contained in the Senior Notes or this
Indenture (other than those covered by clause (a) or (b) above) for a period of
20 days after the date on which written notice specifying such failure, stating
that such notice is a "Notice of Default" hereunder and demanding that the
Issuer or such Guarantor, as the case may be, remedy the same, shall have been
given by registered or certified mail, return receipt requested, to the Issuer
or such Guarantor, as the case may be, by the Trustee, or to the Issuer or such
Guarantor, as the case may be, and the Trustee by the Holders of at least 25% in
aggregate principal amount of the Senior Notes at the time outstanding; or
(d) one or more judgments or decrees shall be entered against the
Issuer or any of its Restricted Subsidiaries requiring the payment of an
aggregate amount (excluding any portion thereof covered by insurance) of
$2,000,000 or more and such judgments or decrees shall not have been paid,
vacated, discharged, stayed or bonded within 60 days after the entry of such
judgment or decrees; or
(e) the Issuer or any Restricted Subsidiary shall commence a
voluntary case concerning itself under Title 11 of the United States Code
entitled "Bankruptcy" as now or hereafter in effect, or any successor thereto
(the "Bankruptcy Code"); or an involuntary case shall be commenced against the
Issuer or any Restricted Subsidiary, and the petition is not controverted within
10 days, or is not dismissed within 60 days, after commencement of the case; or
a custodian (as defined in the Bankruptcy Code) is appointed for, or takes
charge of, all or substantially all of the property of the Issuer or any
Restricted Subsidiary, or the Issuer or any Restricted Subsidiary commences any
other proceeding under any reorganization, arrangement,
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adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or
similar law of any jurisdiction whether now or hereafter in effect relating to
the Issuer or any Restricted Subsidiary, or there is commenced against the
Issuer or any Restricted Subsidiary any such proceeding which remains
undismissed for a period of 60 days, or the Issuer or any Restricted Subsidiary
is adjudicated insolvent or bankrupt; or any order of relief or other order
approving any such case or proceeding is entered; or the Issuer or any
Restricted Subsidiary suffers any appointment of any custodian or the like for
it or any substantial part of its property to continue undischarged or unstayed
for a period of 60 days; or the Issuer or any Restricted Subsidiary makes a
general assignment for the benefit of creditors; or any corporate action is
taken by the Issuer or any Restricted Subsidiary for the purpose of effecting
any of the foregoing; or
(f) any of the Collateral Documents shall cease in any material
respect to be in full force and effect or shall cease in any material respect to
give the Collateral Trustee the Liens, rights, powers and privileges purported
to be created thereby (including, without limitation, a perfected security
interest in, and Lien on, all of the Collateral) in favor of the Collateral
Trustee for the benefit of the Secured Parties (as defined in the Collateral
Trust Agreement), superior to and prior to the rights of all third Persons and
subject to no other Liens (in each case, except as permitted by such Collateral
Documents and by Section 3.14 of this Indenture and other than as a result of
any action on the part of the Collateral Trustee); or
(g) the Issuer, any Guarantor or CFC Holdings shall default in
the due performance or observance of any term, covenant or agreement on its part
to be performed or observed pursuant to any of the Collateral Documents and such
default shall continue for a period of 20 days after the date on which written
notice thereof shall have been given as provided in clause (c) above; or
(h) the Issuer or any of its Restricted Subsidiaries shall fail
to pay when due (after giving effect to any applicable grace period) any payment
of principal of or premium or interest on any Indebtedness (other than under
this Indenture or the Senior Notes) with an aggregate principal amount exceeding
$5,000,000, or any other default shall occur with respect to any Indebtedness
(other than under this Indenture or the Senior Notes) with an aggregate
principal amount exceeding $5,000,000, the effect of which is to cause, or to
permit the holders of such Indebtedness to cause, such Indebtedness to become
due prior to its stated maturity; or
(i) any provision of Article X shall cease to be in full force
and effect with respect to any Guarantor, or any Guarantor or any Person acting
by or on behalf of such Guarantor shall deny or disaffirm such Guarantor's
obligations thereunder; or
(j) any member of the ERISA Group shall fail to pay when due an
amount or amounts aggregating in excess of $1,000,000 which it shall have become
liable to pay under Title IV of ERISA; or notice of intent to terminate a
Material Plan shall be filed under Title IV of ERISA by any member of the ERISA
Group, any plan administrator or any combination of the foregoing; or the PBGC
shall institute proceedings under Title IV of ERISA to terminate, to impose
liability (other than for
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premiums under Section 4007 of ERISA) in respect of, or to cause a trustee to be
appointed to administer any Material Plan; or a condition shall exist by reason
of which the PBGC would be entitled to obtain a decree adjudicating that any
Material Plan must be terminated; or there shall occur a complete or partial
withdrawal from, or a default, within the meaning of Section 4219(c)(5) of
ERISA, with respect to, one or more Multiemployer Plans which causes one or more
members of the ERISA Group to incur a current payment obligation in excess of
$2,500,000;
then, and in each and every such case, unless the principal of all of the Senior
Notes shall have already become due and payable, the Trustee may, and upon
notice in writing from Holders of a majority in aggregate principal amount of
Senior Notes outstanding shall, by notice in writing to the Issuer, declare the
entire principal of all the Senior Notes and the interest accrued thereon to be
due and payable immediately, and upon any such declaration the same shall become
immediately due and payable; provided that, if an Event of Default specified in
clause (e) above shall occur with respect to the Issuer or any Guarantor, the
Senior Notes shall become due and payable automatically without the giving of
any such notice or any other action by any Person. Upon the occurrence of any
such event, the Trustee shall, if the Collateral Trustee and the Trustee are not
the same Person, deliver a Notice of Acceleration to the Collateral Trustee.
Subject to the provisions of Sections 5.1 and 5.2, the Trustee shall not be
charged with knowledge of any Event of Default under the Indenture unless
written notice thereof shall have been given to the Trustee by the Issuer or by
the Holders of not less than a majority in aggregate principal amount of the
Senior Notes at the time outstanding. Notwithstanding the foregoing, if, at any
time after the principal of the Senior Notes shall have been so declared due and
payable, and before any judgment or decree for the payment of the moneys due
shall have been obtained or entered as hereinafter provided, (i) the Issuer
shall pay or shall deposit with the Trustee a sum sufficient to pay all matured
installments of interest upon all the Senior Notes and the principal of and any
premium on any and all Senior Notes which shall have become due otherwise than
by acceleration (with interest upon such principal, premium and, to the extent
that payment of such interest is enforceable under applicable law, on overdue
installments of interest, at the rate of interest specified in the Senior Notes
to the date of such payment or deposit) and such amount as shall be sufficient
to cover reasonable compensation to the Trustee and each predecessor Trustee,
their respective agents, attorneys and counsel, and all other expenses and
liabilities incurred, and all advances made, by the Trustee and each predecessor
Trustee except as a result of negligence or bad faith of the Trustee or any
predecessor Trustee and (ii) if any and all Events of Default under this
Indenture, other than the non-payment of the principal of Senior Notes which
shall have become due by acceleration, shall have been cured, waived or
otherwise remedied as provided herein, then and in every such case the Holders
of a majority in aggregate principal amount of Senior Notes outstanding, by
written notice to the Issuer and to the Trustee, may waive all defaults and
rescind and annul such declaration and its consequences, but no such waiver or
rescission and annulment shall extend to or shall affect any subsequent default
or shall impair any right consequent thereon. If such declaration and its
consequences are rescinded and annulled as provided in the immediately preceding
sentence and the Trustee had given a Notice of Acceleration to the Collateral
Trustee, the Trustee shall promptly cancel the Notice of Acceleration previously
delivered to
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the Collateral Trustee by delivering a written notice of cancellation to the
Collateral Trustee (A) before the Collateral Trustee takes any action to
exercise any remedy with respect to the Collateral or (B) thereafter, if the
Collateral Trustee believes that all actions it has taken to exercise any remedy
or remedies with respect to the Collateral can be reversed without undue
difficulty.
SECTION 4.2 Collection of Indebtedness by Trustee; Trustee May
Prove Debt. The Issuer and each of the Guarantors covenant that (i) in case
default shall be made in the payment of any installment of interest on any of
the Senior Notes when such interest shall have become due and payable, and such
default shall have continued for a period of 10 days, or (ii) in case default
shall be made in the payment of all or any part of the principal of or premium
on any of the Senior Notes when the same shall have become due and payable,
whether at maturity or upon any redemption or by declaration or otherwise, then
upon demand of the Trustee, the Issuer shall pay to the Trustee for the benefit
of the Holders of the Senior Notes the whole amount that then shall have become
due and payable on all such Senior Notes for principal, premium or interest, as
the case may be (with interest to the date of such payment upon the overdue
principal and, to the extent that payment of such interest is enforceable under
applicable law, on overdue installments of interest at the rate of interest
specified in the Senior Notes); and in addition thereto, such further amount as
shall be sufficient to cover the costs and expenses of collection, including
reasonable compensation to the Trustee and each predecessor Trustee, their
respective agents, attorneys and counsel, and any expenses and liabilities
incurred, and all advances made, by the Trustee and each predecessor Trustee
except as a result of its negligence or bad faith.
Until such demand is made by the Trustee, the Issuer may pay the
principal of and premium and interest on the Senior Notes to the registered
Holders, whether or not the Senior Notes be overdue.
In the event the Issuer shall fail forthwith to pay such amounts
upon such demand, the Trustee, in its own name and as trustee of an express
trust, shall be entitled and empowered to institute any action or proceedings at
law or in equity for the collection of the sums so due and unpaid, and may
prosecute any such action or proceedings to judgment or final decree, and may
enforce any such judgment or final decree against the Issuer, any Guarantor or
any other obligor upon the Senior Notes and collect in the manner provided by
law out of the property of the Issuer, any Guarantor or any other obligor upon
the Senior Notes, wherever situated, the moneys adjudged or decreed to be
payable.
In the event there shall be pending proceedings relative to the
Issuer, any Guarantor or any other obligor upon the Senior Note's under Title 11
of the United States Code or any other applicable Federal or state bankruptcy,
insolvency or similar law, or in the event a receiver, assignee or trustee in
bankruptcy or reorganization, liquidator, sequestrator or similar official shall
have been appointed for or taken possession of the Issuer, any Guarantor or any
such other obligor or their respective properties, or in case of any other
comparable judicial proceedings relative to the Issuer, any Guarantor or any
other such obligor, or to the creditors or property
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of the Issuer, any Guarantor or any other such obligor, the Trustee,
irrespective of whether the principal of the Senior Notes shall then be due and
payable as therein expressed or by declaration or otherwise and irrespective of
whether the Trustee shall have made any demand pursuant to the provisions of
this Section, shall be entitled and empowered, by intervention in such
proceedings or otherwise:
(a) to file and prove a claim or claims for the whole amount of
principal, premium and interest owing and unpaid in respect of the Senior Notes,
and to file such other papers or documents as may be necessary or advisable in
order to have the claims of the Trustee (including any claim for reasonable
compensation to the Trustee and each predecessor Trustee, and their respective
agents, attorneys and counsel, and for reimbursement of all expenses and
liabilities incurred, and all advances made, by the Trustee and each predecessor
Trustee, except as a result of negligence or bad faith) and of the Senior
Noteholders allowed in any judicial proceedings relative to the Issuer, any
Guarantor or any other obligor upon the Senior Notes, or to the creditors or
property of the Issuer, any Guarantor or any such other obligor,
(b) unless prohibited by applicable law and regulations, to vote
on behalf of the Holders of the Senior Notes in any election of a trustee or a
standby trustee in arrangement, reorganization, liquidation or other bankruptcy
or insolvency proceedings or of a person performing similar functions in
comparable proceedings, and
(c) to collect and receive any moneys or other property payable
or deliverable on any such claims, and to distribute all amounts received with
respect to the claims of the Senior Noteholders and of the Trustee on their
behalf; and any trustee, receiver, or liquidator, custodian or other similar
official is hereby authorized by each of the Senior Noteholders to make payments
to the Trustee, and, in the event that the Trustee shall consent to the making
of payments directly to the Senior Noteholders, to pay to the Trustee such
amounts as shall be sufficient to cover reasonable compensation to the Trustee,
each predecessor Trustee and their respective agents, attorneys and counsel, and
all other expenses and liabilities incurred, and all advances made, by the
Trustee and each predecessor Trustee except as a result of negligence or bad
faith.
Nothing herein contained shall be deemed to authorize the Trustee
to authorize or consent to or vote for or accept or adopt on behalf of any
Senior Note holder any plan of reorganization, arrangement, adjustment or
composition affecting the Senior Notes or the rights of any Holder thereof, or
to authorize the Trustee to vote in respect of the claim of any Senior
Noteholder in any such proceeding except, as aforesaid, to vote for the election
of a trustee in bankruptcy or similar person.
All rights of action and of asserting claims under this
Indenture, or under any of the Senior Notes, may be enforced by the Trustee
without the possession of any of the Senior Notes or the production thereof at
any trial or other proceedings relative thereto, and any such action or
proceedings instituted by the Trustee shall be brought in its own name as
trustee of an express trust, and any recovery of judgment,
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subject to the payment of the allowed expenses, disbursements and compensation
of the Trustee, each predecessor Trustee and their respective agents and
attorneys, shall be for the ratable benefit of the Holders of the Senior Notes.
In any proceedings brought by the Trustee (and also any
proceedings involving the interpretation of any provision of this Indenture to
which the Trustee shall be a party) the Trustee shall be held to represent all
the Holders of the Senior Notes, and it shall not be necessary to make any
Holders of the Senior Notes parties to any such proceedings.
SECTION 4.3 Application of Proceeds. Any moneys collected by the
Trustee pursuant to this Article shall be applied in the following order at the
date or dates fixed by the Trustee and, in case of the distribution of such
moneys on account of principal, premium or interest, upon presentation of the
several Senior Notes and stamping (or otherwise noting) thereon the payment, or
issuing Senior Notes in reduced principal amounts in exchange for the presented
Senior Notes if only partially paid, or upon surrender thereof if fully paid:
First: To the payment of all amounts due to the Collateral
Trustee and each predecessor Collateral Trustee, if any, under the
Collateral Trust Agreement;
Second: To the payment of all amounts due to the Trustee and
each predecessor Trustee, if any, under Section 5.6;
Third: In case the principal of or any premium on the Senior
Notes shall not have become and be then due and payable, to the payment
of interest in default in the order of the maturity of the installments
of such interest, with interest (to the extent that such interest has
been collected by the Trustee) upon the overdue installments of interest
at the rate of interest specified in the Senior Notes, such payments to
be made ratably to the persons entitled thereto, without discrimination
or preference;
Fourth: In case the principal of or any premium on the Senior
Notes shall have become and shall be then due and payable, to the
payment of the whole amount then owing and unpaid upon all the Senior
Notes for principal, premium and interest, with interest upon the
overdue principal, any overdue premium and (to the extent that such
interest has been collected by the Trustee) upon overdue installments of
interest at the rate of interest specified in the Senior Notes; and in
case such moneys shall be insufficient to pay in full the whole amount
so due and unpaid upon the Senior Notes, then to the payment of such
principal, premium and interest, without preference of any kind, ratably
to the aggregate of such principal, premium and accrued and unpaid
interest, respectively; and
Fifth: To the payment of the remainder, if any, to the Issuer
or any other person lawfully entitled thereto.
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SECTION 4.4 Suits for Enforcement. In case an Event of Default
has occurred, has not been waived and is continuing, the Trustee may in its
discretion proceed to protect and enforce the rights vested in it by this
Indenture by such appropriate judicial proceedings as the Trustee shall deem
most effectual to protect and enforce any of such rights, either at law or in
equity or in bankruptcy or otherwise, whether for the specific enforcement of
any covenant or agreement contained in this Indenture or in aid of the exercise
of any power granted in this Indenture or to enforce any other legal or
equitable right vested in the Trustee by this Indenture or by law.
SECTION 4.5 Restoration of Rights on Abandonment of Proceedings.
In case the Trustee shall have proceeded to enforce any right under this
Indenture and such proceedings shall have been discontinued or abandoned for any
reason, or shall have been determined adversely to the Trustee, then and in
every such case the Issuer, each of the Guarantors and the Trustee shall be
restored respectively to their former positions and rights hereunder, and all
rights, remedies and powers of the Issuer, each of the Guarantors, the Trustee
and the Senior Noteholders shall continue as though no such proceedings had been
taken.
SECTION 4.6 Limitations on Suits by Senior Noteholders. No Holder
of any Senior Note shall have any right by virtue or by availing of any
provision of this Indenture to institute any action or proceeding at law or in
equity or in bankruptcy or otherwise upon or under or with respect to this
Indenture, or for the appointment of a trustee, receiver, liquidator, custodian
or other similar official or for any other remedy hereunder, unless such Holder
previously shall have given to the Trustee written notice of default and of the
continuance thereof, as hereinbefore provided, and unless also the Holders of
not less than 25% in aggregate principal amount of the Senior Notes then
outstanding shall have made written request upon the Trustee to institute such
action or proceedings in its own name as trustee hereunder and shall have
offered to the Trustee such reasonable indemnity as it may require against the
costs, expenses and liabilities to be incurred therein or thereby and the
Trustee for 60 days after its receipt of such notice, request and offer of
indemnity shall have failed to institute any such action or proceedings and no
direction inconsistent with such written request shall have been given to the
Trustee pursuant to Section 4.8; it being understood and intended, and being
expressly covenanted by the taker and Holder of every Senior Note with every
other taker and Holder and the Trustee, that no one or more Holders of Senior
Notes shall have any right in any manner whatever by virtue or by availing of
any provision of this Indenture to affect, disturb or prejudice the rights of
any other Holder of Senior Notes, or to obtain or seek to obtain priority over
or preference to any other such Holder or to enforce any right under this
Indenture, except in the manner herein provided and for the equal, ratable and
common benefit of all Holders of Senior Notes. For the protection and
enforcement of the provisions of this Section, each and every Senior Noteholder
and the Trustee shall be entitled to such relief as can be given either at law
or in equity.
SECTION 4.7 Powers and Remedies Cumulative; Delay or Omission Not
Waiver of Default. Except as provided in Section 2.6, no right or remedy herein
conferred upon or reserved to the Trustee or to the Senior Noteholders is
intended to
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46
be exclusive of any other right or remedy, and every right and remedy shall, to
the extent permitted by law, be cumulative and in addition to every other right
and remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
No delay or omission of the Trustee or of any Holder of any of
the Senior Notes to exercise any right or power accruing upon any Event of
Default occurring and continuing as aforesaid shall impair any such right or
power or shall be construed to be a waiver of any such Event of Default or an
acquiescence therein; and, subject to Section 4.6, every power and remedy given
by this Indenture or by law to the Trustee or to the Senior Noteholders may be
exercised from time to time, and as often as shall be deemed expedient, by the
Trustee or by the Senior Noteholders.
SECTION 4.8 Control by Senior Noteholders. The Holders of a
majority in aggregate principal amount of the Senior Notes at the time
outstanding shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred on the Trustee by this Indenture; provided that
such direction shall not be otherwise than in accordance with law and the
provisions of this Indenture and provided further that (subject to the
provisions of Section 5.1) the Trustee shall have the right to decline to follow
any such direction if the Trustee, being advised by counsel, shall determine
that the action or proceeding so directed may not lawfully be taken or if the
Trustee in good faith by its board of directors, the executive committee, or a
trust committee of directors or Responsible Officers of the Trustee shall
determine that the action or proceedings so directed would involve the Trustee
in personal liability.
Nothing in this Indenture shall impair the right of the Trustee
in its discretion to take any action deemed proper by the Trustee and which is
not inconsistent with such direction by Senior Noteholders.
SECTION 4.9 Waiver of Past Defaults. Prior to the declaration of
the maturity of the Senior Notes as provided in Section 4.1, the Holders of a
majority in aggregate principal amount of the Senior Notes at the time
outstanding may on behalf of the Holders of all the Senior Notes waive any past
Default or Event of Default hereunder and its consequences, except a default (i)
in the payment of principal of or premium or interest on any of the Senior Notes
or any other amount payable to Holders of Senior Notes under this Indenture or
(ii) in respect of a covenant or provision hereof which cannot be modified or
amended without the consent of the Holder of each Senior Note affected. In the
case of any such waiver, the Issuer, each of the Guarantors, the Trustee and the
Holders of the Senior Notes shall be restored to their former positions and
rights hereunder, respectively, but no such waiver shall extend to any
subsequent or other default or impair any right consequent thereon.
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Upon any such waiver, such default shall cease to exist and be
deemed to have been cured and not to have occurred, and any Event of Default
arising therefrom shall be deemed to have been cured, and not to have occurred
for every purpose of this Indenture, but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
thereon.
ARTICLE V
CONCERNING THE TRUSTEE
SECTION 5.1 Duties and Responsibilities of the Trustee; During
Default; Prior to Default. The Trustee, prior to the occurrence of an Event of
Default and after the curing or waiving of all Events of Default which may have
occurred, undertakes to perform such duties and only such duties as are
specifically set forth in this Indenture. In case an Event of Default has
occurred (which has not been cured or waived), the Trustee shall exercise such
of the rights and powers vested in it by this Indenture, and use the same degree
of care and skill in their exercise, as a prudent man would exercise or use
under the circumstances in the conduct of his own affairs.
No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own wilful misconduct, except that:
(a) prior to the occurrence of an Event of Default and after the
curing or waiving of all such Events of Default which may have occurred:
(i) the duties and obligations of the Trustee shall be
determined solely by the express provisions of this Indenture, and the
Trustee shall not be liable except for the performance of such duties
and obligations as are specifically set forth in this Indenture, and no
implied covenants or obligations shall be read into this Indenture
against the Trustee; and
(ii) in the absence of bad faith on the part of the
Trustee, the Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon
any statements, certificates or opinions furnished to the Trustee and
conforming to the requirements of this Indenture;
(b) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer or Responsible Officers of the
Trustee, unless it shall be proved that the Trustee was negligent in
ascertaining the pertinent facts; and
(c) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with the
direction of the Holders of not less than a majority in aggregate principal
amount of the Senior Notes
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at the time outstanding relating to the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust or
power conferred upon the Trustee, under this Indenture.
None of the provisions contained in this Indenture shall require
the Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the exercise
of any of its rights or powers, if the Trustee determines that the repayment of
such funds or adequate indemnity against such liability is not reasonably
assured to it.
SECTION 5.2 Certain Rights of the Trustee. Subject to Section
5.1:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, Officers' certificate or any other
certificate, statement, instrument, opinion, report, notice, request, consent,
order, bond, debenture, note, coupon, security or other paper or document
reasonably believed by it to be genuine and to have been signed or presented by
the proper party or parties;
(b) any request, direction, order or demand of the Issuer
mentioned herein shall be sufficiently evidenced by an Officers' Certificate
(unless other evidence in respect thereof is herein specifically prescribed, and
any resolution of the Board of Directors of the Issuer may be evidenced to the
Trustee by a copy thereof certified by the secretary or an assistant secretary
of the Issuer;
(c) the Trustee may consult with counsel and any advice or
Opinion of Counsel shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted to be taken by it hereunder so
long as such action is taken, suffered or omitted to be taken in good faith and
in reliance on such advice or Opinion of Counsel;
(d) the Trustee shall be under no obligation to exercise any of
the trusts or powers vested in it by this Indenture at the request, order or
direction of any of the Senior Noteholders pursuant to the provisions of this
Indenture, unless such Senior Noteholders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
which might be incurred therein or thereby;
(e) the Trustee shall not be liable for any action taken or
omitted to be taken by it in good faith and reasonably believed by it to be
authorized or within the discretion, rights or powers conferred upon it by this
Indenture;
(f) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval,
appraisal, bond, debenture, note, coupon, security, or other paper or document
unless requested in writing so to do by the Holders of not less than a majority
in aggregate principal amount of the Senior Notes then outstanding; provided
that, if the Trustee determines in its sole and absolute discretion to make any
such investigation, then it shall be entitled, upon
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49
reasonable prior notice and during normal business hours, to examine the books
and records and the premises of the Issuer, personally or by agent or attorney,
and the reasonable expenses of every such examination shall be paid by the
Issuer or, if paid by the Trustee or any predecessor trustee, shall be
reimbursed by the Issuer upon demand; and
(g) the Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents or
attorneys not regularly in its employ and the Trustee shall not be responsible
for any misconduct or negligence on the part of any such agent or attorney
appointed with due care by it hereunder.
SECTION 5.3 Trustee Not Responsible for Recitals, Disposition of
Senior Notes or Application of Proceeds Thereof. The recitals contained herein
and in the Senior Notes, except the Trustee's certificates of authentication,
shall be taken as the statements of the Issuer and the Guarantors and the
Trustee assumes no responsibility for the correctness of the same. The Trustee
makes no representation as to the validity or sufficiency of this Indenture or
of the Senior Notes. The Trustee shall not be accountable for the use or
application by the Issuer of any of the Senior Notes or of the proceeds thereof.
SECTION 5.4 Trustee and Agents May Hold Senior Notes;
Collections, etc. The Trustee or any agent of the Issuer or the Trustee, in its
individual or any other capacity, may become the owner or pledgee of Senior
Notes with the same rights it would have if it were not the Trustee or such
agent and may otherwise deal with the Issuer and receive, collect, hold and
retain collections from the Issuer with the same rights it would have if it were
not the Trustee or such agent.
SECTION 5.5 Moneys Held by Trustee. Subject to the provisions of
Section 9.4 hereof, all moneys received by the Trustee shall, until used or
applied as herein provided, be held in trust for the purposes for which they
were received, but need not be segregated from other funds except to the extent
required by mandatory provisions of law. Neither the Trustee nor any agent of
the Issuer or the Trustee shall be under any liability for interest on any
moneys received by it hereunder.
SECTION 5.6 Compensation and Indemnification of Trustee and Its
Prior Claim. The Issuer and each of the Guarantors jointly and severally
covenant and agree to pay to the Trustee from time to time, and the Trustee
shall be entitled to, reasonable compensation (which shall not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust), and the Issuer and each of the Guarantors jointly and severally covenant
and agree to pay or reimburse the Trustee and each predecessor Trustee upon its
request for all reasonable expenses, disbursements and advances incurred or made
by or on behalf of it in accordance with any of the provisions of this Indenture
(including the reasonable compensation and the expenses and disbursements of its
counsel and of all agents and other persons not regularly in its employ) except
any such expense, disbursement or advance as may arise from its negligence or
bad faith.
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50
Notwithstanding the foregoing, if the payment or reimbursement of
any such expense, disbursement or advance is subject to allowance by a court
having jurisdiction over a proceeding described in Section 4.2, the Issuer shall
not be required to make such payment or reimbursement prior to the allowance
thereof and thereafter only to the extent of the allowed amount thereof.
The Issuer and each of the Guarantors also jointly and severally
covenant, subject to applicable law, to indemnify the Trustee and each
predecessor Trustee for, and to hold it harmless against, any loss, liability or
expense incurred without negligence or bad faith on its part, arising out of or
in connection with the acceptance or administration of this Indenture or the
trusts hereunder and its duties hereunder, including the costs and expenses of
defending itself against or investigating any claim of liability in the
premises. The obligations of the issuer and the Guarantors under this Section to
compensate and indemnify the Trustee and each predecessor Trustee and to pay or
reimburse the Trustee and each predecessor Trustee for expenses, disbursements
and advances shall constitute additional indebtedness hereunder and shall
survive the satisfaction and discharge of this Indenture. Such additional
indebtedness shall be a senior claim to that of the Senior Notes and the
Guarantees upon all property and funds held or collected by the Trustee as such,
except funds held in trust for the benefit of the Holders of particular Senior
Notes, and the Senior Notes and the Guarantees are hereby subordinated to such
senior claim.
As security for the performance of the obligations of the Issuer
and the Guarantors under this Section, the Trustee shall have a lien prior to
the Senior Notes and the Guarantees upon all property and funds held or
collected by the Trustee as such, except funds held in trust for the payment of
principal of (and premium, if any) or interest on the Senior Notes.
Any expenses and compensation for any services rendered by the
Trustee after the occurrence of an Event of Default specified in Section 4.1(e)
shall, to the extent permitted by applicable law, constitute expenses and
compensation for service of administration under all applicable Federal or State
bankruptcy, insolvency, reorganization or other similar laws.
SECTION 5.7 Right of Trustee to Rely on Officers' Certificate,
etc. Subject to Sections 5.1 and 5.2, whenever in the administration of the
trusts of this Indenture the Trustee shall deem it necessary or desirable that a
matter be proved or established prior to taking or suffering or omitting any
action hereunder, such matter (unless other evidence in respect thereof be
herein specifically prescribed) may, in the absence of negligence or bad faith
on the part of the Trustee, be deemed to be conclusively proved and established
by an Officers' Certificate delivered to the Trustee, and such certificate, in
the absence of negligence or bad faith on the part of the Trustee, shall be full
warrant to the Trustee for any action taken, suffered or omitted by it under the
provisions of this Indenture upon the faith thereof.
SECTION 5.8 Persons Eligible for Appointment as Trustee. The
Trustee hereunder shall at all times be a corporation having a combined capital
and
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surplus of at least $50,000,000, and which is eligible in accordance with the
provisions of Section 310(a) of the Trust Indenture Act of 1939. If such
corporation publishes reports of condition at least annually, pursuant to law or
to the requirements of a Federal, State or District of Columbia supervising or
examining authority, then for the purposes of this Section, the combined capital
and surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published.
SECTION 5.9 Resignation and Removal: Appointment of Successor
Trustee. (a) The Trustee may at any time resign by giving written notice of
resignation to the Issuer and by mailing notice thereof by first-class mail to
Holders of Senior Notes at their last addresses as they shall appear on the
Senior Note register. Upon receiving such notice of resignation, the Issuer
shall promptly appoint a successor trustee by written instrument in duplicate,
executed by authority of their respective Boards of Directors, one copy of which
instrument shall be delivered to the resigning Trustee and one copy to the
successor trustee. If no successor Trustee shall have been so appointed and have
accepted appointment within 30 days after the mailing of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee, or any Senior
Noteholder who has been a bona fide Holder of a Senior Note or Senior Notes for
at least six months may, on be-half of himself and all others similarly
situated, petition any such court for the appointment of a successor trustee.
Such court may thereupon, after such notice, if any, as it may deem proper and
prescribe, appoint a successor trustee.
(b) In case at any time any of the following shall occur:
(i) the Trustee shall fail to comply with the provisions
of Section 310(b) of the Trust Indenture Act of 1939, after written
request therefor by the Issuer, any Guarantor or any Senior Noteholder
who has been a bona fide Holder of a Senior Note or Senior Notes for at
least six months; or
(ii) the Trustee shall cease to be eligible in accordance
with the provisions of Section 5.8 And shall fail to resign after
written request therefor by the Issuer, any Guarantor or any such Senior
Noteholder; or
(iii) the Trustee shall become incapable of acting, or
shall be adjudged a bankrupt or insolvent, or a receiver or liquidator
of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property
or affairs for the purpose of rehabilitation, conservation or
liquidation;
then, in any such case, the Issuer may remove the Trustee and appoint a
successor trustee by written instrument, in duplicate, executed by order of its
Boards of Directors, one copy of which instrument shall be delivered to the
Trustee so removed and one copy to the successor trustee, or, subject to Section
315(e) of the Trust Indenture Act of 1939, any Senior Noteholder who has been a
bona fide Holder of a Senior Note or Senior Notes for at least six months may,
on behalf of himself and all
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52
others similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor trustee. Such court
may thereupon, after such notice, if any, as it may deem proper and prescribe,
remove the Trustee and appoint a successor trustee.
(c) The Holders of a majority in aggregate principal amount of
the Senior Notes at the time outstanding may at any time remove the Trustee and
appoint a successor trustee by delivering to the Trustee so removed, to the
successor trustee so appointed and to the Issuer the evidence provided for in
Section 6.1 of the action in that regard taken by the Senior Noteholders.
(d) Any resignation or removal of the Trustee and any appointment
of a successor trustee pursuant to any of the provisions of this Section 5.9
shall become effective upon acceptance of appointment by the successor trustee
as provided in Section 5.10.
SECTION 5.10 Acceptance of Appointment by Successor Trustee. Any
successor trustee appointed as provided in Section 5.9 shall execute and deliver
to the Issuer and to its predecessor trustee an instrument accepting such
appointment hereunder, and thereupon the resignation or removal of the
predecessor trustee shall become effective and such successor trustee, without
any further act, deed or conveyance, shall become vested with all rights,
powers, duties and obligations of its predecessor hereunder, with like effect as
if originally named as trustee herein; but, nevertheless, on the written request
of the issuer or of the successor trustee, upon payment of its charges then
unpaid, the trustee ceasing to act shall, subject to Section 9.4, pay over to
the successor trustee all moneys at the time held by it hereunder and shall
execute and deliver an instrument transferring to such successor trustee all
such rights, powers, duties and obligations. Upon request of any such successor
trustee, the Issuer and each of the Guarantors shall execute any and all
instruments in writing for more fully and certainly vesting in and confirming to
such successor trustee all such rights and powers. Any trustee ceasing to act
shall, nevertheless, retain a prior claim upon all property or funds held or
collected by such trustee to secure any amounts then due it pursuant to the
provisions of Section 5.6.
Upon acceptance of appointment by a successor trustee as provided
in this Section 5.10, the Issuer shall mail notice thereof by first-class mail
to the Holders of Senior Notes at their last addresses as they shall appear in
the Senior Note register. If the acceptance of appointment is substantially
contemporaneous with the resignation, then the notice called for by the
preceding sentence may be combined with the notice called for by Section 5.9. If
the Issuer fails to mail such notice within 10 days after acceptance of
appointment by the successor trustee, the successor trustee shall cause such
notice to be mailed at the expense of the Issuer.
SECTION 5.11 Merger, Conversion. Consolidation or Succession to
Business of Trustee. Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Trustee shall be a
party, or any corporation succeeding to the corporate trust business of the
Trustee, shall be the
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successor of the Trustee hereunder, provided that such corporation shall be
eligible under the provisions of Section 5.8, without the execution or filing of
any paper or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding.
In case at the time such successor to the Trustee shall succeed
to the trusts created by this Indenture any of the Senior Notes shall have been
authenticated but not delivered, any such successor to the Trustee may adopt the
certificate of authentication of any predecessor Trustee and deliver such Senior
Notes so authenticated; and, in case at that time any of the Senior Notes shall
not have been authenticated, any successor to the Trustee may authenticate such
Senior Notes either in the name of any predecessor hereunder or in the name of
the successor Trustee; and in all such cases such certificate shall have the
full force which it is anywhere in the Senior Notes or in this Indenture
provided that the certificate of the Trustee shall have; provided, that the
right to adopt the certificate of authentication of any predecessor Trustee or
to authenticate Senior Notes in the name of any predecessor Trustee shall apply
only to its successor or successors by merger, conversion or consolidation.
SECTION 5.12 Reports by the Trustee. Any Trustee's report
required under Section 313(a) of the Trust Indenture Act of 1939 shall be
transmitted on or before the first date for the regular payment of semi-annual
interest on the Senior Notes next succeeding May 15 in each year, and shall be
dated as of a date convenient to the Trustee no more than 60 nor less than 45
days prior thereto.
ARTICLE VI
CONCERNING THE SENIOR NOTEHOLDERS
SECTION 6.1 Evidence of Action Taken by Senior Noteholders. Any
request, demand, authorization, direction, notice, consent, waiver or other
action provided by this Indenture to be given or taken by Senior Noteholders may
be embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Senior Noteholders in person or by an agent duly appointed
in writing; and, except as herein otherwise expressly provided, such action
shall become effective when the last instrument required to effect such action
is delivered to the Trustee. Proof of execution of any instrument or of a
writing appointing any such agent shall be sufficient for any purpose of this
Indenture and (subject to Sections 5.1 and 5.2) conclusive in favor of the
Trustee, the Issuer and each of the Guarantors, if made in the manner provided
in this Article.
SECTION 6.2 Proof of Execution of Instruments and of Holding of
Senior Notes; Record Date. Subject to Sections 5.1 and 5.2, the execution of any
instrument by a Senior Noteholder or his agent or proxy may be proved in
accordance with such reasonable rules and regulations as may be prescribed by
the Trustee or in such manner as shall be satisfactory to the Trustee. The
holding of Senior Notes shall be proved by the Security Register or by a
certificate of the Security Registrar. The
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Issuer may set in advance a record date for purposes of determining the identity
of Holders of Senior Notes entitled to vote or consent to any action referred to
in Section 6.1, which record date may be set at any time or from time to time by
notice to the Trustee, for any date or dates (in the case of any adjournment or
resolicitation) not more than 60 days prior to the date on which such notice is
sent to the Trustee; provided that the Issuer may not set a record date for, and
the provisions of this Section shall not apply with respect to, the giving or
making of any notice, declaration, request or direction referred to in Article
IV. If any record date is set pursuant to this Section, the Holders of
outstanding Senior Notes on such record date, and no other Holders, shall be
entitled to take the relevant action, whether or not such Holders remain Holders
after such record date; provided further that no such action shall be effective
hereunder unless taken on or prior to the 180th day after such record date by
Holders of the requisite principal amount of outstanding Senior Notes on such
record date. Nothing in this Section shall be construed to render ineffective
any action duly taken by Holders of the requisite principal amount of
outstanding Senior Notes on the date such action is taken. Promptly after any
record date is set pursuant to this Section, the Issuer, at its own expense,
shall cause notice of such record date and, the proposed action by Holders to be
given in writing to the Trustee and to each Holder of Senior Notes in the manner
set forth in Section 15.4.
SECTION 6.3 Holders to Be Treated as Owners. The Issuer, each of
the Guarantors, the Trustee and any agent of the Issuer, any Guarantor or the
Trustee may deem and treat the Person in whose name any Senior Note shall be
registered upon the Security Register as the absolute owner of such Senior Note
(whether or not such Senior Note shall be overdue and notwithstanding any
notation of ownership or other writing thereon) for the purpose of receiving
payment of or on account of the principal of, premium on and, subject to the
provisions of this Indenture, interest on such Senior Note and for all other
purposes; and neither the Issuer, the Guarantors nor the Trustee nor any agent
of the Issuer, any Guarantor or the Trustee shall be affected by any notice to
the contrary. All such payments so made to any such Person, or upon his order,
shall be valid, and, to the extent of the sum or sums so paid, effectual to
satisfy and discharge the liability for moneys payable upon any such Senior
Note.
SECTION 6.4 Senior Notes Owned by Issuer Deemed Not Outstanding.
In determining whether the Holders of the requisite aggregate principal amount
of Senior Notes have concurred in any direction, consent or waiver under this
Indenture, Senior Notes which are owned by the Issuer or any of its Affiliates
shall be disregarded and deemed not to be outstanding for the purpose of any
such determination, except that for the purpose of determining whether the
Trustee shall be protected in relying on any such direction, consent or waiver
only Senior Notes which the Trustee knows are so owned shall be so disregarded.
Senior Notes so owned which have been pledged in good faith may be regarded as
outstanding if the pledgee establishes to the satisfaction of the Trustee the
pledgee's right so to act with respect to such Senior Notes and that the pledgee
is not the Issuer or any of its Affiliates. In case of a dispute as to such
right, the advice of counsel shall be full protection in respect of any decision
made by the Trustee in accordance with such advice. Upon request of the Trustee,
the Issuer shall furnish to the Trustee promptly an officers'
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Certificate listing and identifying all Senior Notes, if any, known by the
Issuer to be owned or held by or for the account of any of the above-described
persons; and, subject to Sections 5.1 and 5.2, the Trustee shall be entitled to
accept such officers' Certificate as conclusive evidence of the facts therein
set forth and of the fact that all Senior Notes not listed therein are
outstanding for the purpose of any such determination.
ARTICLE VII
SUPPLEMENTAL INDENTURES
SECTION 7.1 Supplemental Indentures Without Consent of Senior
Noteholders. The Issuer and each of the Guarantors, when authorized by a
resolution of their respective Boards of Directors, and the Trustee may from
time to time and at any time enter into an indenture or indentures supplemental
hereto for one or more of the following purposes:
(a) to convey, transfer, assign, mortgage or pledge to the
Trustee or the Collateral Trustee as security for the Senior Notes any property
or assets;
(b) to evidence the succession, or successive successions, of
another corporation to the Issuer or to a Guarantor, and the assumption by the
successor corporation of the covenants, agreements and obligations of the Issuer
or such Guarantor hereunder; or to evidence the agreement by any Restricted
Subsidiary after the Issue Date to become a Guarantor and to be bound by the
terms of this Indenture pursuant to Section 3.22;
(c) to add to the covenants of the Issuer or a Guarantor such
further covenants, restrictions, conditions or provisions as their respective
Boards of Directors and the Trustee shall consider to be for the protection of
the Holders of Senior Notes, and to make the occurrence, or the occurrence and
continuance, of a default in any such additional covenants, restrictions,
conditions or provisions an Event of Default permitting the enforcement of all
or any of the several remedies provided in this Indenture as herein set forth;
provided that, in respect of any such additional covenant, restriction,
condition or provision, such supplemental indenture may provide for a particular
period of grace after default (which period may be shorter or longer than that
allowed in the case of other defaults) or may provide for an immediate
enforcement upon such an Event of Default or may limit the remedies available to
the Trustee upon such an Event of Default or may limit the right of the Holders
of a majority in aggregate principal amount of the Senior Notes to waive such an
Event of Default;
(d) to cure any ambiguity or to correct or supplement any
provision contained herein or in any supplemental indenture which may be
defective or inconsistent with any other provision contained herein or in any
supplemental indenture; or to make such other provisions in regard to matters or
questions arising under this Indenture or under any supplemental indenture as
the Boards of Directors
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of the Issuer and the Guarantors may deem necessary or desirable and which shall
not adversely affect the interests of the Holders of the Senior Notes; and
(e) to provide for the issuance under this Indenture of Senior
Notes in coupon form (including Senior Notes registrable as to principal only)
and to provide for exchangeability of such Senior Notes with Senior Notes issued
hereunder in fully registered form, and to make all appropriate changes for such
purpose.
The Trustee is hereby authorized to join in the execution of any
such supplemental indenture, to make any further appropriate agreements and
stipulations which may therein contained and to accept the conveyance, transfer,
assignment, mortgage or pledge of any property thereunder, but the Trustee shall
not be obligated to enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
Any supplemental indenture authorized by the provisions of this
Section may be executed without the consent of the Holders of any of the Senior
Notes at the time outstanding, notwithstanding any of the provisions of Section
7.2.
SECTION 7.2 Supplemental Indentures With Consent of Senior
Noteholders. With the consent (evidenced as provided in Article VI) of the
Holders of not less than a majority in aggregate principal amount of the Senior
Notes at the time outstanding, the Issuer and each of the Guarantors, when
authorized by a resolution of their respective Boards of Directors, and the
Trustee may, from time to time and at any time, enter into an indenture or
indentures supplemental hereto for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Indenture or
of any supplemental indenture or of modifying in any manner the rights of the
Holders of the Senior Notes; provided that no such supplemental indenture shall,
without the consent of each Holder of Senior Notes affected thereby, (i) reduce
the percentage in principal amount of Senior Notes the Holders of which must
consent to an amendment, supplement or waiver, (ii) reduce the rate of or extend
the time for payment of interest on any Senior Note, (iii) reduce the principal
or extend the fixed maturity of any Senior Note, (iv) reduce the price at which
any Senior Note may be redeemed at the option of the Issuer or at which any
Senior Note is to be repurchased by the Issuer at the option of the holder in
connection with a Change of Control Offer or a Net Proceeds offer, (v) waive a
default in the payment of the principal of or premium or interest on any Senior
Note, (vi) make any Senior Note payable in money other than that stated in the
Senior Note, (vii) release any Guarantor from its unconditional obligation to
guarantee payment in respect of the principal of and interest on any Senior Note
(except in accordance with this Indenture), (viii) consent to the assignment or
transfer by the Issuer or any Guarantor of any of their rights and obligations
under this Indenture (except in accordance with this Indenture), (ix) add
provisions to this Indenture that subordinate the obligations of the Issuer or
any Guarantor in respect of any Senior Note to other Indebtedness of the Issuer
or such Guarantor, as the case may be, (x) amend, modify or waive any provision
of this Section or (xi) consent to the release of all of the Collateral from the
Lien created by the Collateral Documents.
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Upon the request of the Issuer and each of the Guarantors,
accompanied by a copy of a resolution of their respective Boards of Directors
certified by the Secretary or an Assistant Secretary of the Issuer or the
relevant Guarantor, as the case may be, authorizing the execution of any such
supplemental indenture, and upon the filing with the Trustee of evidence of the
consent of Senior Noteholders and other documents, if any, required by Section
6.1, the Trustee shall join with the Issuer and the Guarantors in the execution
of such supplemental indenture unless such supplemental indenture affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise, in
which case the Trustee may in its discretion, but shall not be obligated to,
enter into such supplemental indenture.
It shall not be necessary for the consent of the Senior
Noteholders under this Section to approve the particular form of any proposed
supplemental indenture, but it shall be sufficient if such consent shall approve
the substance thereof.
Promptly after the execution by the Issuer, each of the
Guarantors and the Trustee of any supplemental indenture pursuant to the
provisions of this Section, the Trustee shall mail a notice thereof (prepared by
the Issuer) by first-class mail to the Holders of Senior Notes at their
addresses as they shall appear in the Security Register, setting forth in
general terms the substance of such supplemental indenture. Any failure of the
Trustee to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such supplemental indenture.
SECTION 7.3 Effect of Supplemental Indenture. Upon the execution
of any supplemental indenture pursuant to the provisions hereof, this Indenture
shall be and be deemed to be modified and amended in accordance therewith and
the respective rights, limitations of rights, obligations, duties and immunities
under this Indenture of the Trustee, the Issuer, each of the Guarantors and the
Holders of Senior Notes shall thereafter be determined, exercised and enforced
hereunder subject in all respects to such modifications and amendments, and all
the terms and conditions of any such supplemental indenture shall be and be
deemed to be part of the terms and conditions of this Indenture for any and all
purposes.
SECTION 7.4 Documents to Be Given to Trustee. The Trustee,
subject to the provisions of Sections 5.1 and 5.2, may receive an Officers'
Certificate and an Opinion of Counsel satisfactory in form and substance to the
Trustee as conclusive evidence that any such supplemental indenture complies
with the applicable provisions of this Indenture.
SECTION 7.5 Notation on Senior Notes in Respect of Supplemental
Indentures. Senior Notes authenticated and delivered after the execution of any
supplemental indenture pursuant to the provisions of this Article may bear a
notation in form approved by the Trustee as to any matter provided for by such
supplemental indenture or as to any action taken at any such meeting. If the
Issuer or the Trustee shall so determine, new Senior Notes so modified as to
conform, in the opinion of the Trustee and the Board of Directors of the Issuer,
to any modification of this Indenture contained in any such supplemental
indenture may be prepared by the Issuer,
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authenticated by the Trustee and delivered in exchange for the Senior Notes then
outstanding.
ARTICLE VIII
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
SECTION 8.1 When Issuer and Principal Guarantors May Merge or
Transfer Assets. None of the Issuer, Arby's or RC Cola (the "Subject obligor")
may consolidate with or merge with or into any other Person, or directly and/or
indirectly through its Subsidiaries, sell, convey, assign, transfer, lease or
otherwise dispose of all or substantially all of its properties and assets
(determined on a consolidated basis for the Subject Obligor and its Subsidiaries
taken as a whole) to any Person, unless: (i) either (A) the Subject Obligor or
the Issuer shall be the continuing person or (B) the Person (if other than the
Subject Obligor or the Issuer) (the "Surviving Entity") formed by such
consolidation or into which the Subject obligor is merged or that acquires, by
sale, assignment, conveyance, transfer, lease or disposition, all or
substantially all of the properties and assets of the Subject Obligor
(determined as aforesaid) as an entirety shall be a corporation organized and
validly existing under the laws of the United States or any State thereof or the
District of Columbia and shall expressly assume by a supplemental indenture
executed and delivered to the Trustee, in form satisfactory to the Trustee, all
the obligations of the Subject Obligor pursuant to this Indenture; (ii)
immediately before and after giving effect to such transaction (and treating any
Indebtedness which becomes an obligation of the Issuer or the Surviving Entity
or any Restricted Subsidiary as a result of such transaction as having been
incurred by the Issuer, such Surviving Entity or such Restricted Subsidiary at
the time of such transaction), no Default or Event of Default shall have
occurred and be continuing; (iii) immediately after giving effect to such
transaction the Issuer or the Surviving Entity, as the case may be, could incur
at least $1.00 of additional Indebtedness pursuant to Section 3.13(j) hereof;
(iv) immediately after giving effect to such transaction, the Subject Obligor or
the Surviving Entity, as the case may be, shall have a Consolidated Net Worth
which is not less than the Consolidated Net Worth of the Subject Obligor
immediately prior to such transaction; and (v) the Issuer shall have delivered
to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating
that such consolidation, merger or transfer and such supplemental indenture (if
any) comply with this Indenture. Notwithstanding the foregoing, any Subject
Obligor may merge with any of its Restricted Subsidiaries where the purpose of
such merger is to change its state of incorporation, provided that (x) the
Surviving Entity shall not, after giving effect to such merger, have
Indebtedness greater than that of the Subject Obligor (or, in cases where the
Restricted Subsidiary involved in such merger is a Guarantor, Indebtedness
greater than that of the Subject Obligor and such Restricted Subsidiary)
immediately prior to such merger and (y) the conditions specified in clauses
(ii), (iv) and (v) above are satisfied.
The resulting, surviving or transferee Person of any such
transaction shall be the successor Subject Obligor and in any such case other
than a lease the
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predecessor Subject Obligor (if other than the successor Subject Obligor) shall
be released from the obligation to pay the principal of and premium and interest
on the Senior Notes.
ARTICLE IX
SATISFACTION AND DISCHARGE OF INDENTURE;
UNCLAIMED MONEYS
SECTION 9.1 Satisfaction and Discharge of Indenture. (a) If at
any time (A) the Issuer shall have paid or caused to be paid the principal of
and premium and interest on all the Senior Notes outstanding hereunder, as and
when the same shall have become due and payable, or (B) the Issuer shall have
delivered to the Trustee for cancellation all Senior Notes theretofore
authenticated (other than any Senior Notes which shall have been destroyed, lost
or stolen and which shall have been replaced or paid as provided in Section
2.6), and if, in any such case, the Issuer shall also have paid or caused to be
paid all other sums payable by the Issuer under this Indenture, the Senior Notes
and the Collateral Documents, then this Indenture shall cease to be of further
effect, and the Trustee, on demand of the Issuer, accompanied by an Officers'
Certificate and an Opinion of Counsel and at the cost and expense of the Issuer,
shall execute proper instruments acknowledging such satisfaction of and
discharge of this Indenture. The Issuer agrees to reimburse the Trustee for any
costs or expenses thereafter reasonably and properly incurred and to compensate
the Trustee for any services thereafter reasonably and properly rendered by the
Trustee in connection with this Indenture, the Senior Notes or the Collateral
Documents.
(b) The Issuer shall be deemed to have paid and discharged the
entire indebtedness on all Senior Notes outstanding on the 91st day after the
date of the deposit referred to in subparagraph (A) below, and the provisions of
this Indenture with respect to the Senior Notes shall no longer be in effect
(except as to (i) rights of registration of transfer and exchange and the
Issuer's right of optional redemption, (ii) substitution of mutilated, defaced,
destroyed, lost or stolen Senior Notes, (iii) rights of Holders of Senior Notes
to receive payments of principal thereof and premium (if any) and interest
thereon, upon the original stated due dates therefor (but not upon
acceleration), (iv) the rights, obligations, duties and immunities of the
Trustee hereunder and (v) the rights of such Senior Noteholders as beneficiaries
hereof with respect to the property so deposited with the Trustee payable to all
or any of them), and the Trustee, at the expense of the Issuer, shall at the
Issuer's request, execute proper instruments acknowledging the same, if:
(A) the Issuer has irrevocably deposited or caused to be
irrevocably deposited with the Trustee as trust funds in trust,
specifically pledged as security for, and dedicated solely to, the
benefit of the Senior Noteholders (i) cash in an amount, (ii) direct
non-callable obligations of, or non-callable obligations guaranteed by,
the United States of America, backed by its full faith and credit ("U.S.
Government obligations"), maturing as to
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principal and interest at such times and in such amounts as will ensure
the availability of cash or (iii) a combination thereof, sufficient, in
the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to
the Trustee, to pay the principal of and premium (if any) and interest
on all Senior Notes outstanding on each date that such principal,
premium or interest is due and payable;
(B) no Default or Event of Default under Section 4.1(e)
shall have occurred or been continuing at any time during such 91-day
period;
(C) such deposit will not result in a breach or violation
of, or constitute a default under, any agreement or instrument to which
the Issuer or any Guarantor is a party or by which it is bound;
(D) such deposit will not cause the Trustee to have a
conflicting interest as defined in Section 310 of the Trust Indenture
Act of 1939 with respect to any securities of the Issuer;
(E) the Issuer has delivered to the Trustee an opinion of
Counsel to the effect that the Senior Noteholders will not recognize
income, gain or loss for Federal income tax purposes as a result of such
deposit, defeasance and discharge and will be subject to Federal income
tax on the same amount and in the same manner and at the same times, as
would have been the case if such deposit, defeasance and discharge had
not occurred; and
(F) the Issuer has delivered to the Trustee an officer's
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for relating to the defeasance contemplated by this
provision have been complied with.
SECTION 9.2 Application by Trustee of Funds Deposited for Payment
of Senior Notes. Subject to Section 9.4, all moneys and obligations and proceeds
thereof deposited with the Trustee pursuant to Section 9.1 shall be held in
trust (but not segregated from other funds except to the extent required by law)
and applied by it to the payment, either directly or through any Paying Agent
(including the Issuer acting as its own Paying Agent), to the Holders of the
particular Senior Notes for the payment or redemption of which such cash and
obligations have been deposited with the Trustee, of all sums due and to become
due thereon for principal, premium and interest.
SECTION 9.3 Repayment of Moneys Held by Paying Agent. In
connection with the satisfaction and discharge of this Indenture all moneys then
held by any Paying Agent under the provisions of this Indenture shall, upon
demand of the Issuer, be repaid to it or paid to the Trustee and thereupon such
paying agent shall be released from all further liability with respect to such
moneys.
SECTION 9.4 Return of Moneys Held by Trustee and Paying Agent
Unclaimed for Two Years. Any moneys deposited with or paid to the Trustee or
any
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Paying Agent for the payment of the principal of or premium or interest on any
Senior Note and not applied but remaining unclaimed for two years after the date
upon which such principal, premium or interest shall have become due and
payable, shall, upon the written request of the Issuer and unless otherwise
required by mandatory provisions of applicable escheat or abandoned or unclaimed
property law, be repaid to the Issuer by the Trustee or such Paying Agent, and
the Holder of such Senior Note shall, unless otherwise required by mandatory
provisions of applicable escheat or abandoned or unclaimed property laws,
thereafter look only to the Issuer for any payment which such Holder may be
entitled to collect, and all liability of the Trustee or any Paying Agent with
respect to such moneys shall thereupon cease.
ARTICLE X
GUARANTEES
SECTION 10.1 The Guarantees. Each Guarantor hereby
unconditionally guarantees, jointly and severally, the full and punctual payment
(whether at stated maturity, upon acceleration or otherwise) of the principal of
and premium and interest on each Senior Note issued by the Issuer pursuant to
this Indenture, and the full and punctual payment of all other amounts payable
by the Issuer under this Indenture and the Collateral Documents. Upon failure by
the Issuer to pay punctually any such amount, such Guarantor shall forthwith on
demand pay the amount not so paid at the place and in the manner specified in
this Indenture and the Collateral Documents.
SECTION 10.2 Guarantees Unconditional. The obligations of each
Guarantor hereunder shall be unconditional and absolute and, without limiting
the generality of the foregoing, shall not be released, discharged or otherwise
affected by:
(i) any extension, renewal, settlement, compromise, waiver or
release in respect of any obligation of the Issuer or any other
Guarantor under this Indenture, any Senior Note or any Collateral
Document, by operation of law or otherwise;
(ii) any modification or amendment of or supplement to this
Indenture, any Senior Note or any Collateral Document;
(iii) any release, non-perfection or invalidity of any direct or
indirect security for any obligation of the Issuer or any other
Guarantor under this Indenture, any Senior Note or any Collateral
Document;
(iv) any change in the corporate existence, structure or
ownership of the Issuer or any other Guarantor, or any insolvency,
bankruptcy, reorganization or other similar proceeding affecting the
Issuer or any other Guarantor or their respective assets or any
resulting release or discharge of any obligation of the Issuer or any
other Guarantor contained in this Indenture, any Senior Note or any
Collateral Document;
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(v) the existence of any claim, set-off or other rights which
such Guarantor may have at any time against the Issuer, any other
Guarantor, the Trustee, any Senior Noteholder, the Collateral Agent or
any other Person, whether in connection herewith or any unrelated
transactions; provided that nothing herein shall prevent the assertion
of any such claim by separate suit or compulsory counterclaim;
(vi) any invalidity or unenforceability relating to or against
the Issuer or any other Guarantor for any reason of this Indenture, any
Senior Note or any Collateral Document, or any provision of applicable
law or regulation purporting to prohibit the payment by the Issuer or
any other Guarantor of the principal of or premium or interest on any
Senior Note or any other amount payable by the Issuer or any other
Guarantor under this Indenture or any Collateral Document; or
(vii) any other act or omission to act or delay of any kind by
the Issuer, any other Guarantor, the Trustee, any Senior Noteholder, the
Collateral Agent or any other Person or any other circumstance
whatsoever which might, but for the provisions of this paragraph,
constitute a legal or equitable discharge of such Guarantor's
obligations hereunder.
SECTION 10.3 Discharge Only Upon Payment In Full; Reinstatement
In Certain Circumstances. Subject to Section 3.22(b), each Guarantor's
obligations hereunder shall remain in full force and effect until the Indenture
shall have terminated and the principal of and premium and interest on the
Senior Notes and all other amounts payable by the Issuer under this Indenture
and the Collateral Documents shall have been paid in full. If at any time any
payment of the principal of or premium or interest on any Senior Note or any
other amount payable by the Issuer under this Indenture or any Collateral
Document is rescinded or must be otherwise restored or returned upon the
insolvency, bankruptcy or reorganization of the Issuer or otherwise, each
Guarantor's obligations hereunder with respect to such payment shall be
reinstated as though such payment had been due but not made at such time.
SECTION 10.4 Waiver by the Guarantors. Each Guarantor irrevocably
waives acceptance hereof, presentment, demand, protest and any notice not
provided for herein, as well as any requirement that at any time any action be
taken by any Person against the Issuer or any other Person.
SECTION 10.5 Subrogation; Contribution. (a) Upon making any
payment hereunder in respect of its Guarantee, each Guarantor (i) shall be
subrogated to the rights of the payee against the Issuer with respect to such
payment and (ii) shall be entitled to a contribution from each other Guarantor
in an amount pro rata based upon the net assets of each Guarantor at the time of
the payment giving rise to such right of contribution (determined in accordance
with generally accepted accounting principles as in effect on the date of such
determination). Upon making any contribution hereunder to a Guarantor that has
made any payment in respect of its Guarantee (a "Paying Guarantor"), each
Guarantor shall become vested with the
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Paying Guarantor's subrogation rights against the Issuer to the extent of the
amount of such contribution.
(b) No Guarantor shall enforce any right against the Issuer or
any other Guarantor or receive any payment by way of subrogation or contribution
until all amounts of principal of and premium and interest on the Senior Notes
and all other amounts payable by the Issuer under this Indenture and the
Collateral Documents have been paid in full.
SECTION 10.6 Stay of Acceleration. If acceleration of the time
for payment of any amount payable by the Issuer under this Indenture, any Senior
Note or any Collateral Document is stayed upon the insolvency, bankruptcy or
reorganization of the Issuer, all such amounts otherwise subject to acceleration
under the terms of this Indenture shall nonetheless be payable by each Guarantor
hereunder forthwith on demand by the Trustee made at the request of the
requisite number of Senior Noteholders.
SECTION 10.7 Limit of Liability. The obligations of each
Guarantor under this Article X shall be limited to an aggregate amount equal to
the largest amount that would not render its obligations hereunder subject to
avoidance under Section 548 of the United States Bankruptcy Code or any
comparable provisions of any applicable state law.
ARTICLE XI
REDEMPTION OF SENIOR NOTES
SECTION 11.1 Right of Optional Redemption. Subject to the next
succeeding paragraph, the Issuer at its option may at any time after August 1,
1998 redeem all, or from time to time any part of, the Senior Notes, upon
payment of the applicable optional redemption price set forth in the form of
Senior Note hereinabove recited, together with accrued interest to the date
fixed for redemption.
Notwithstanding the foregoing, at any time prior to August 1,
1996, the Issuer may redeem up to 33.3% of the original aggregate principal
amount of the Senior Notes with the net proceeds of an Initial Public Equity
Offering of the Issuer at a redemption price of 110% of par, plus accrued and
unpaid interest to the redemption date.
SECTION 11.2 Notice of Redemption; Partial Redemptions. Notice of
redemption to the Holders of Senior Notes to be redeemed as a whole or in part
shall be given by mailing notice of such redemption by first class mail, postage
prepaid, at least 30 days and not more than 60 days prior to the date fixed for
redemption to such Holders of Senior Notes at their last addresses as they shall
appear in the Security Register. 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. Failure to give notice by mail, or any defect in
the notice to the
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Holder of any Senior Note designated for redemption as a whole or in part, shall
not affect the validity of the proceedings for the redemption of any other
Senior Note.
The notice of redemption to each such Holder shall specify the
principal amount of each Senior Note held by such Holder to be redeemed, the
date fixed for redemption, the redemption price, the place or places of payment,
that payment will be made upon presentation and surrender of such Senior Notes,
that interest accrued to the date fixed for redemption will be paid as specified
in said notice and that on and after said date interest thereon or on the
portions thereof to be redeemed will cease to accrue. In case any Senior Note is
to be redeemed in part only, the notice of redemption shall state the portion of
the principal amount thereof to be redeemed and shall state that on and after
the date fixed for redemption, upon surrender of such Senior Note, a new Senior
Note or Senior Notes in principal amount equal to the unredeemed portion thereof
will be issued.
The notice of redemption of Senior Notes to be redeemed at the
option of the Issuer shall be given by the Issuer or, at the Issuer's request,
by the Trustee in the name and at the expense of the Issuer.
At least one Business Day prior to the redemption date specified
in the notice of redemption given as provided in this Section, the Issuer will
deposit with the Trustee or with one or more paying agents (or, if the Issuer is
acting as its own paying agent, set aside, segregate and hold in trust as
provided in Section 3.4) an amount of money sufficient to redeem on the
redemption date all the Senior Notes so called for redemption at the appropriate
redemption price, together with accrued and unpaid interest to the date fixed
for redemption. If less than all the outstanding Senior Notes are to be
redeemed, the Issuer will deliver to the Trustee, not later than five days prior
to the date on which notice of such redemption is to be mailed to Holders of
Senior Notes pursuant to this Section, an Officers' Certificate stating the
aggregate principal amount of Senior Notes to be redeemed.
If less than all the Senior Notes are to be redeemed, the Senior
Notes to be redeemed shall be redeemed on a pro rata basis. Senior Notes may be
redeemed in part in multiples of $1,000 only. The Trustee shall, upon the
written request of the Issuer, promptly notify the Issuer in writing of the
Senior Notes selected for redemption and, in the case of any Senior Notes
selected for partial redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise requires, all
provisions relating to the redemption of Senior Notes shall relate, in the case
of any Senior Note redeemed or to be redeemed only in part, to the portion of
the principal amount of such Senior Note which has been or is to be redeemed.
SECTION 11.3 Payment of Senior Notes Called for Redemption. If
notice of redemption has been given as above provided, the Senior Notes or
portions of Senior Notes specified in such notice shall become due and payable
on the date and at the place stated in such notice at the applicable redemption
price, together with interest accrued to the date fixed for redemption, and on
and after said date (unless the Issuer shall default in the payment of such
Senior Notes at the redemption price,
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together with interest accrued to said date) interest on the Senior Notes or
portions of Senior Notes so called for redemption shall cease to accrue and,
except as provided in Sections 5.5 and 9.4, such Senior Notes shall cease from
and after the date fixed for redemption to be entitled to any benefit or
security under this Indenture, and the Holders thereof shall have no right in
respect of such Senior Notes except the right to receive the redemption price
thereof and accrued interest to the date fixed for redemption. On presentation
and surrender of such Senior Notes at a place of payment specified in said
notice, said Senior Notes or the specified portions thereof shall be paid and
redeemed by the Issuer at the applicable redemption price, together with
interest accrued thereon to the date fixed for redemption; provided that any
semi-annual payment of interest becoming due on the date fixed for redemption
shall be payable to the Holders of such Senior Notes registered as such on the
relevant Regular Record Date subject to the terms and provisions of Section 2.4
hereof.
If any Senior Note called for redemption shall not be so paid
upon surrender thereof for redemption, the principal thereof and premium (if
any) thereon shall, until paid or duly provided for, bear interest from the date
fixed for redemption at the rate specified in the Senior Note.
Upon presentation of any Senior Note redeemed in part only, the
Issuer shall execute and the Trustee shall authenticate and deliver to or on the
order of the Holder thereof, at the expense of the Issuer, a new Senior Note or
Senior Notes, of authorized denominations, in principal amount equal to the
unredeemed portion of the Senior Note so presented.
SECTION 11.4 Exclusion of Certain Senior Notes from Eligibility
for Selection for Redemption. Senior Notes shall be excluded from eligibility
for selection for redemption if they are identified by registration and
certificate number in a written statement signed by an authorized officer of the
Issuer and delivered to the Trustee at least 35 days prior to the last date on
which notice of redemption may be given as being owned of record and
beneficially by, and not pledged or hypothecated by either (a) the Issuer or (b)
an entity specifically identified in such written statement directly or
indirectly controlling or controlled by or under direct or indirect common
control with the Issuer.
ARTICLE XII
REDEMPTION UPON CHANGE OF CONTROL
SECTION 12.1 Change of Control. (a) Upon a Change of Control,
each Senior Noteholder shall have the right to require that the Issuer
repurchase any or all of such Holder's Senior Notes at a repurchase price in
cash equal to 101% of the principal amount thereof, plus accrued interest to the
date of repurchase, in accordance with the terms contemplated in Section 12.1(b)
(a "Change of Control Offer").
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(b) Within 15 days following any such Change of Control, the
Issuer shall mail a notice and election form to each Senior Noteholder with a
copy to the Trustee or, at the Issuer's request, the Trustee shall mail such
notice and election form, stating:
(1) that such Change of Control has occurred and that such
Senior Noteholder has the right to require the Issuer to repurchase such
Holder's Senior Notes at a repurchase price in cash equal to 101% of the
principal amount thereof plus accrued interest to the date of
repurchase;
(2) the circumstances and relevant facts regarding such
Change of Control (including information with respect to pro forma
historical income, cash flow and capitalization after giving effect to
such Change of Control);
(3) the repurchase date (which shall not be earlier than
30 days nor later than 60 days after the date such notice is mailed)
(the "Repurchase Date");
(4) the date on or before which Senior Noteholders must
make an election in order to have their Senior Notes repurchased in
connection with the Change of Control Offer, which date shall not be
less than 15 days after the date of such notice or less than 10 days
before the Repurchase Date;
(5) that any Senior Note not tendered will continue to
accrue interest;
(6) that any Senior Note accepted for payment pursuant to
the Change of Control Offer shall cease to accrue interest after the
Repurchase Date;
(7) that Senior Noteholders electing to have a Senior Note
purchased pursuant to the Change of Control Offer will be required to
surrender the Senior Note to the Paying Agent at the address specified
in the notice prior to the close of business on the third Business Day
prior to the Repurchase Date;
(8) that Senior Noteholders will be entitled to withdraw
their election in whole or in part if the Paying Agent receives, not
later than the close of business on the third Business Day (or such
shorter period as may be required by applicable law) preceding the
Repurchase Date, a telegram, telex, facsimile transmission or letter
setting forth the name of the Holder, the principal amount of Senior
Notes the Holder delivered for purchase, and a statement that such
Holder is so withdrawing his election to have such Senior Notes
purchased; and
(9) that Senior Noteholders which elect to have their
Senior Notes purchased only in part (in integral multiples of $1,000)
will be issued
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new Senior Notes in a principal amount equal to the unpurchased portion
of the Senior Notes surrendered.
Notwithstanding the foregoing, any such Change of Control Offer
shall remain open for a period of not less than twenty (20) Business Days
commencing on the earliest date on which an election to repurchase may be made.
(c) On the Repurchase Date, the Issuer shall (i) accept for
payment Senior Notes or portions thereof (in integral multiples of $1,000)
properly tendered (and not subsequently withdrawn), (ii) deposit with the
Trustee money sufficient to pay the purchase price of all Senior Notes or
portions thereof so accepted for payment and (iii) deliver or cause to be
delivered to the Trustee Senior Notes so accepted together with an Officers'
Certificate (which need not comply with Section 15.5) identifying the Senior
Notes or portions thereof so tendered to the Issuer. The Trustee shall promptly
mail to the holders of Senior Notes so accepted payment in an amount equal to
the purchase price, and promptly authenticate and mail to such Holders a new
Senior Note in a principal amount equal to any unpurchased portion of the Senior
Notes surrendered. The Issuer will publicly announce the results of the Change
of Control Offer on or as soon as practicable after the Repurchase Date.
ARTICLE XIII
NET PROCEEDS OFFER
SECTION 13.1 Net Proceeds Offer. (a) Whenever the Issuer is
required under Section 3.15(b) to make a Net Proceeds Offer, the Issuer shall
make such Net Proceeds Offer in accordance with the procedures set forth in
Section 13.1(b). If the aggregate purchase price of Senior Notes tendered
pursuant to the Net Proceeds Offer is less than the Net Proceeds required by
Section 3.15(b) and this Section 13.1 to be allotted to the purchase of the
Senior Notes then, subject to the provisions of Article XIV and the Collateral
Documents, the Issuer may use the remaining Net Proceeds for general corporate
purposes and such Net Proceeds shall no longer constitute "Excess Proceeds"
within the meaning of Section 3.15(b).
(b) (i) Promptly, and in any event within the time period
specified in Section 3.15(b), the Issuer shall be obligated to deliver to the
Trustee and send, by first-class mail to each Senior Noteholder in whose name a
Senior Note is then registered, or, at the request of the Issuer, the Trustee
shall send, a written notice stating that:
(1) such Holder may elect to have his Senior Notes
purchased by the Issuer either in whole or in part (subject to
prorationing as hereinafter described in the event the Net Proceeds
Offer is oversubscribed in multiples of $1,000 principal amount, at a
purchase price equal to 100% of the principal amount thereof plus
accrued interest to the Purchase Date (as defined below);
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(2) any Senior Note not tendered or accepted for payment
will continue to accrue interest;
(3) any Senior Note accepted for payment pursuant to the
Net Proceeds offer shall cease to accrue interest after the Purchase
Date;
(4) the date on or before which Holders must make an
election in order to have their Senior Notes repurchased in connection
with the Net Proceeds Offer, which date shall not be less than 15 days
after the date of such notice or less than 10 days before the Purchase
Date; and
(5) Holders will be entitled to withdraw their election in
the manner described in clause (iii) below.
The notice shall also specify a purchase date not less than 30
days nor more than 45 days after the date of such notice (the "Purchase Date")
and shall include all instructions and materials necessary to enable each Holder
to tender Senior Notes pursuant to the Net Proceeds Offer.
(ii) Not later than the date upon which written
notice of a Net Proceeds Offer is delivered to the Trustee as provided
above, the Issuer shall deliver to the Trustee an officers' Certificate
stating the amount of the Net Proceeds Offer (the "Net Proceeds Offer
Amount"). Not later than one Business Day prior to the Purchase Date,
the Issuer shall irrevocably deposit with a Paying Agent (or, if the
Issuer is acting as its own Paying Agent, segregate and hold in trust)
in immediately available funds an amount sufficient to pay the Purchase
Price of all Senior Notes or portions thereof so accepted for payment,
such funds to be held for payment in accordance with the provisions of
this Section. As soon as practicable after the expiration of the period
for which the Net Proceeds Offer re-mains open (the "Net Proceeds Offer
Period"), the Issuer shall deliver to the Trustee the Senior Notes or
portions thereof which have been properly tendered to and are to be
accepted by the Issuer. The Issuer shall accept all Senior Notes
properly tendered and the Paying Agent shall, on the Purchase Date, mail
or deliver payment to each Holder who has tendered Senior Notes so
accepted, subject to clauses (iii) and (iv) below, in the amount of the
purchase price.
(iii) Holders electing to have a Senior Note
purchased will be required to surrender the Senior Note, with an
appropriate form duly completed, to the Trustee at the address specified
in the notice at least three Business Days prior to the Purchase Date.
Holders will be entitled to withdraw their election if the Trustee or
Paying Agent receives not later than the close of business on the third
Business Day prior to the Purchase Date a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder and a
statement that such Holder is withdrawing its or his election to have
all or a portion of its or his Senior Notes purchased.
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69
(iv) If at the expiration of the Net Proceeds
Offer Period the aggregate purchase price of Senior Notes surrendered
for purchase exceeds the Net Proceeds Offer Amount, the Senior Notes to
be purchased shall be purchased on a pro rata basis (with such
adjustments as may be deemed appropriate by the Trustee so that only
Senior Notes in denominations of $1,000 or multiples thereof shall be
purchased). Holders whose Senior Notes are purchased only in part will
be issued new Senior Notes equal in principal amount to the unpurchased
portion of the Senior Notes surrendered.
(v) At the time the Issuer delivers Senior Notes
to the Trustee which are to be accepted for purchase, the Issuer will
also deliver an officers' Certificate stating that such Senior Notes are
to be accepted by the Issuer pursuant to and in accordance with the
terms of this Section.
ARTICLE XIV
COLLATERAL AND SECURITY
SECTION 14.1 Collateral Documents. Each Holder of a Senior Note,
by its acceptance thereof, (i) consents and agrees to the terms of the
Collateral Documents, (ii) authorizes and ratifies the entering into by the
Collateral Trustee of each of the Collateral Documents to which it is a party
and (iii) authorizes and directs the Collateral Trustee to perform its
obligations and exercise its rights thereunder in accordance therewith.
SECTION 14.2 Release of Collateral. (a) Subject to Sections
14.2(b) and 14.2(c) hereof and the requirements of the Collateral Documents,
Collateral may be released from the security interest created by the Collateral
Documents at any time or from time to time in accordance with Section 5.02 of
the Collateral Trust Agreement.
(b) No Collateral shall be released pursuant to Section 5.02 of
the Collateral Trust Agreement if:
(i) such release is in connection with the disposition of
inventory (as defined in the Uniform Commercial Code as in effect from
time to time in the State of New York) and (A) if the Trustee and the
Collateral Trustee are not the same Person, the Trustee shall have
delivered to the Collateral Trustee the certificate required by Section
14.4(a) hereof and shall not thereafter have delivered the certificate
required by Section 14.4(b) hereof, or (B) if the Trustee and the
Collateral Trustee are the same Person, the Issuer shall have failed to
deliver the Officers' Certificate required by Section 14.3(a) hereof and
the Issuer shall not have subsequently cured such failure; or
(ii) in any other case or if such release occurs with the
consent of the Required Secured Parties (as defined in the Collateral
Trust Agreement) and (A) if the Trustee and the Collateral Trustee are
not the same
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70
Person, the Trustee shall not have delivered to the Collateral Trustee
the Officers' Certificate required by Section 14.4(c) hereof, or (B) if
the Trustee and the Collateral Trustee are the same Person, the Issuer
shall have failed to deliver to the Trustee all of the certificates,
documents and opinions required by Section 14.3.
No provision of this Section is intended or shall be construed to
prohibit the collection of accounts receivable by the Issuer or any Guarantor;
provided that neither the Issuer nor any Guarantor shall collect any account
receivable (A) if the Trustee and the Collateral Trustee are not the same
Person, the Trustee shall have delivered to the Collateral Trustee the
certificate required by Section 14.4(a) hereof and shall not thereafter have
delivered the certificate required by Section 14.4(b) hereof, or (B) if the
Trustee and the Collateral Trustee are the same Person, the Issuer shall have
failed to deliver the Officers' Certificate required by Section 14.3(a) hereof
and the Issuer shall not have subsequently cured such failure.
(c) At any time when a Notice of Acceleration shall be in effect
under the Collateral Trust Agreement, no release of Collateral pursuant to
Section 5.02 of the Collateral Trust Agreement shall be effective as against the
Holders of the Senior Notes.
SECTION 14.3 Certificates of the Issuer. The Issuer will furnish
to the Trustee:
(a) within 15 days after the end of each of the six-month periods
ended on June 30 or December 31 in each year, a certificate from the principal
executive, financial or accounting officer of the Issuer stating that all
dispositions of inventory (as defined in the Uniform Commercial Code as in
effect from time to time in the State of New York) and all collections of
accounts receivable during such six-month period were made in the ordinary
course of business and that all proceeds therefrom were used by the Issuer in
connection with its business or other-wise as permitted herein; and
(b) prior to each proposed release of Collateral pursuant to
Section 5.02 of the Collateral Trust Agreement other than by reason of
transactions referred to in the preceding clause (a), (i) all documents required
by Section 314(d) of the Trust Indenture Act of 1939, (ii) an Officers'
Certificate requesting a release of Collateral and describing the property to be
so released and (iii) an opinion of Counsel to the effect that such accompanying
documents constitute all documents required by Section 314(d) of the Trust
Indenture Act of 1939 in connection with such release.
The Trustee may, to the extent permitted by Sections 5.1 and 5.2
hereof, accept as conclusive evidence of compliance with the foregoing
provisions the appropriate statements contained in such instruments.
SECTION 14.4 Certificates of the Trustee. The Trustee shall
deliver to the Collateral Trustee:
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71
(a) in the event that the Issuer has failed to deliver the
Officers' Certificate required by Section 14.3(a) hereof, within five days of
the date on which such Officers' Certificate was required to be delivered, a
certificate notifying the Collateral Trustee of such failure;
(b) in the event that the Issuer shall subsequently cure such
failure described in the preceding clause (a), within five days of the receipt
by the Trustee of such Officers' Certificate, a certificate stating that the
Issuer has cured such failure; and
(c) in the event that the Issuer wishes to release Collateral in
accordance with Section 5.2 of the Collateral Trust Agreement and Section 14.2
hereof and has delivered the certificates and documents required by Section 14.3
hereof, a certificate stating that the Trustee has received all documentation
required by Section 314(d) of the Trust Indenture Act of 1939 in connection with
such release.
The Trustee shall have no obligation to deliver the foregoing documents if it
shall also be the Collateral Trustee.
SECTION 14.5 Opinion of Counsel to the Issuer. The Issuer shall
deliver to the Trustee:
(a) promptly after the execution and delivery of this Indenture,
an Opinion of Counsel either stating that in the opinion of such counsel this
Indenture has been properly recorded and filed so as to make effective the lien
intended to be created thereby, and reciting the details of such action, or
stating that in the opinion of such counsel no such action is necessary to make
such lien effective; and
(b) on June 30 of each year, an Opinion of Counsel either stating
that in the opinion of such counsel all such action has been taken with respect
to the recording, filing, re-recording, and refiling of this Indenture and the
Collateral Documents as is necessary to maintain the lien of this Indenture and
the Collateral Documents, and reciting the details of such action, or stating
that in the opinion of such counsel no such action is necessary to maintain such
lien.
ARTICLE XV
MISCELLANEOUS PROVISIONS
SECTION 15.1 Incorporators, Stockholders, Officers and Directors
of Issuer and Restricted Subsidiaries Exempt from Individual Liability. No
recourse under or upon any obligation, covenant or agreement contained in this
Indenture, or in any Senior Note, or because of any indebtedness evidenced
thereby, shall be had against any incorporator, as such or against any past,
present or future stockholder, officer or director, as such, of the Issuer or
any Restricted Subsidiary or of any successor of any such Person, either
directly or through any such Person, under any rule of law, statute or
constitutional provision or by the enforcement of any
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72
assessment or by any legal or equitable proceeding or otherwise, all such
liability being expressly waived and released by the acceptance of the Senior
Notes by the Holders thereof and as part of the consideration for the issue of
the Senior Notes.
SECTION 15.2 Provisions of Indenture for the Sole Benefit of
Parties and Senior Noteholders. Nothing in this Indenture or in the Senior
Notes, express or implied, shall give or be construed to give to any Person,
other than the parties hereto and their successors and the Holders of the Senior
Notes, any legal or equitable right, remedy or claim under this Indenture or
under any covenant or provision herein contained, all such covenants and
provisions being for the sole benefit of the parties hereto and their successors
and of the Holders of the Senior Notes.
SECTION 15.3 Successors and Assigns of Issuer and Guarantors
Bound by Indenture. All the covenants, stipulations, promises and agreements in
this Indenture contained by or in behalf of the Issuer and any Guarantor shall
bind their respective successors and assigns, whether so expressed or not.
SECTION 15.4 Notices and Demands on Issuer, Guarantors, Trustee
and Senior Noteholders. Any notice or demand which by any provision of this
Indenture is required or permitted to be given or served by the Trustee or by
the Holders of Senior Notes to or on the Issuer or a Guarantor may be given or
served by being deposited postage prepaid, first-class mail (except as otherwise
specifically provided herein) addressed (until another address of the Issuer or
the relevant Guarantor is filed by the Issuer or such Guarantor with the
Trustee) to 6917 Collins Avenue, Miami Beach, Florida 33141, Attention: Chief
Financial Officer. Any notice, direction, request or demand by the Issuer, any
Guarantor or any Senior Noteholder to or upon the Trustee shall be deemed to
have been sufficiently given or made, for all purposes, if given pr made at the
Corporate Trust Office.
Where this Indenture provides for notice to Holders, such notice
shall be sufficiently given (unless otherwise herein expressly provided) if in
writing and mailed, first-class postage prepaid, to each Holder entitled
thereto, at his last address as it appears in the Security Register. In any case
where notice to Holders is given by mail, neither the failure to mail such
notice, nor any defect in any notice so mailed, to any particular Holder shall
affect the sufficiency of such notice with respect to other Holders. Where this
Indenture provides for notice in any manner, such notice may be waived in
writing by the Person entitled to receive such notice, either before or after
the event, and such waiver shall be the equivalent of such notice. Waivers of
notice by Holders shall be filed with the Trustee, but such filing shall not be
a condition precedent to the validity of any action taken in reliance upon such
waiver.
In case, by reason of the suspension of or irregularities in
regular mail service, it shall be impracticable to mail notice to the Issuer,
the Guarantors and the Senior Noteholders when such notice is required to be
given pursuant to any provision of this Indenture, then any manner of giving
such notice as shall be satisfactory to the Trustee shall be deemed to be a
sufficient giving of such notice.
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73
SECTION 15.5 Officers' Certificates and opinions of Counsel;
Statements to Be Contained Therein. Upon any application or demand by the Issuer
to the Trustee to take any action under any of the provisions of this Indenture,
the Issuer shall furnish to the Trustee an Officers' Certificate stating that
all conditions precedent provided for in this Indenture relating to the proposed
action have been complied with and an Opinion of Counsel stating that in the
opinion of such counsel all such conditions precedent have been complied with,
except that in the case of any such application or demand as to which the
furnishing of such documents is specifically required by any provision of this
Indenture relating to such particular application or demand, no additional
certificate or opinion need be furnished.
Each certificate or opinion provided for in this Indenture and
delivered to the Trustee with respect to compliance with a condition or covenant
provided for in this Indenture shall include (i) a statement that the person
making such certificate or opinion has read such covenant or condition, (ii) a
brief statement as to the nature and scope of the examination or investigation
upon which the statements or opinions contained in such certificate or opinion
are based, (iii) a statement that, in the opinion of such person, he has made
such examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with and (iv) a statement as to whether or not, in the opinion of such
person, such condition or covenant has been complied with.
Any certificate, statement or opinion of an officer of the Issuer
may be based, insofar as it relates to legal matters, upon a certificate or
opinion of or representations by counsel, unless such officer knows that the
certificate or opinion or representations with respect to the matters upon which
his certificate, statement or opinion may be based as aforesaid are erroneous.
Any certificate, statement or opinion of counsel may be based, insofar as it
relates to factual matters or information which is in the possession of the
Issuer, upon the certificate, statement or opinion of or representations by an
officer or officers of the Issuer, unless such counsel knows that the
certificate, statement or opinion or representations with respect to the matters
upon which his certificate, statement or opinion may be based as aforesaid are
erroneous.
Any certificate, statement or opinion of an officer of the Issuer
or of counsel may be based, insofar as it relates to accounting matters, upon a
certificate or opinion of or representations by an accountant or firm of
accountants in the employ of the Issuer, unless such officer or counsel, as the
case may be, knows that the certificate or opinion or representations with
respect to the accounting matters upon which his certificate, statement or
opinion may be based as aforesaid are erroneous.
Any certificate or opinion of any independent firm of public
accountants filed with the Trustee shall contain a statement that such firm is
independent.
SECTION 15.6 Payments Due on Saturdays, Sundays and Holidays. If
the scheduled due date of any principal of or premium or interest on the Senior
Notes or the date fixed for redemption of any Senior Note shall not be a
Business
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74
Day, then payment of such principal, premium or interest need not be made on
such date, but may be made on the next succeeding Business Day with the same
force and effect as if made on the scheduled due date or the date fixed for
redemption, and no interest shall accrue for the period after such date.
SECTION 15.7 Effect of Headings. The Article and Section headings
herein and the Table of Contents are for convenience only and shall not affect
the construction hereof.
SECTION 15.8 NEW YORK LAW TO GOVERN. THIS INDENTURE AND RACE
SENIOR NOTE SHALL BE DEEMED TO BE A CONTRACT UNDER THE LAWS OF THE STATE OF
NEW YORK, AND FOR ALL PURPOSES SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS
OF SAID STATE.
SECTION 15.9 Counterparts. This Indenture may be executed in any
number of counterparts, each of which shall be an original, but such
counterparts shall together constitute but one and the same instrument.
SECTION 15.10 Conflict with the Trust Indenture Act. If any
provision hereof limits, qualifies or conflicts with a provision of the Trust
Indenture Act which is required under such Act to be a part of and govern this
Indenture, the latter provision shall control. If any provision of this
Indenture modifies or supersedes any provision of the Trust Indenture Act which
may be so modified or superseded, the latter provision shall be deemed to apply
to this Indenture as so modified.
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75
IN WITNESS WHEREOF, the parties hereto have caused this Indenture
to be duly executed, and their respective corporate seals to be hereunto affixed
and attested, all as of the date first above written.
ROYAL CROWN CORPORATION,
as Issuer
By: /s/ Joseph A. Levato
-------------------------------
[CORPORATE SEAL] Title: Senior Vice President
Attest: /s/ Curtis S. Gimson
---------------------
ROYAL CROWN COLA CO.,
as Guarantor
By: /s/ Joseph A. Levato
------------------------------
[CORPORATE SEAL] Title: Executive Vice President
Attest: /s/ Curtis S. Gimson
-------------------------
ABBY'S, INC.,
as Guarantor
By: /s/ Joseph A. Levato
-----------------------------
[CORPORATE SEAL] Title: Executive Vice President
Attest: /s/ Curtis S. Gimson
-------------------------
THE BANK OF NEW YORK,
as Trustee
By: /s/ Todd N. Niemy
----------------------------
[CORPORATE SEAL] Title: Assistant Vice President
Attest: /s/ C. Wenz
----------------------------
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<PAGE>
Exhibit 4.16
MASTER AGREEMENT
MASTER AGREEMENT (this "Agreement"), dated as of May 5, 1997,
among Franchise Finance Corporation of America, a Delaware corporation
("Franchise Finance"), Franchise Finance, as Master Servicer and Special
Servicer pursuant to the P&S Agreement (as defined below) ("Servicer"), FFCA
Acquisition Corporation, a Delaware corporation ("Acquisition"), FFCA Mortgage
Corporation, a Delaware corporation (the "Lender" and together with Acquisition,
Franchise Finance and Servicer collectively, "FFCA"), Triarc Companies, Inc., a
Delaware corporation ("Triarc"), Arby's Restaurant Development Corporation, a
Delaware corporation ("ARDC"), Arby's Restaurant Holding Company, a Delaware
corporation ("ARHC"), Arby's Restaurant Operations Company, a Delaware
corporation ("AROC"), Arby's, Inc., a Delaware corporation ("Arby's"), RTM
Operating Company (f/k/a Triarc Restaurants Disposition 1, Inc.), a Delaware
corporation ("RTMOC"), RTM Development Company (f/k/a Triarc Restaurants
Disposition 2, Inc.), a Delaware corporation ("RTMDC"), RTM Partners, Inc., a
Georgia corporation ("Holdco"), RTM Holding Company, Inc., a Georgia corporation
("Parent"), RTM Management Company, LLC, a Georgia limited liability company
("RTMM"), and RTM, Inc., a Georgia corporation ("RTM"). Capitalized terms used
herein without definition shall have the meanings ascribed thereto in the Loan
Documents, the Sale-Leaseback Documents or the Pension Documents (all as defined
below), as applicable. The term Loan Documents shall have the meaning ascribed
thereto in the applicable Loan Agreement (as defined below).
PRELIMINARY STATEMENTS
Pursuant to the Amended and Restated Loan Agreement, dated as
of October 13, 1995 and effective as of May 1, 1995, as supplemented (the "ARDC
Loan Agreement"), by and between Acquisition and ARDC, Acquisition has advanced
to ARDC certain mortgage loans in the original aggregate principal amount of
$31,706,974 (the "ARDC Mortgage Loans") and certain equipment loans in the
original aggregate principal amount of $3,042,405 (the "ARDC Equipment Loans"
and together with the ARDC Mortgage Loans, collectively, the "ARDC Loans"). The
ARDC Mortgage Loans are evidenced by 51 separate Notes identified on Schedule I
hereto (collectively, the "ARDC Notes") and are secured by a first priority
security interest in 51 related Sites identified on Schedule II hereto (the
"ARDC Sites") pursuant to the several Deeds of Trust corresponding thereto
(collectively, the "ARDC Deeds of Trust"). The ARDC Equipment Loans are
evidenced by 16 separate Equipment Notes identified on Schedule I hereto
(collectively, the "ARDC Equipment Notes") and secured by a first priority
security interest in the related Equipment pursuant to the Equipment Security
Agreements corresponding thereto
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2
(collectively, the "ARDC Equipment Security Agreements") and certain related
UCC-1 Financing Statements. The ARDC Sites are leased to AROC pursuant to a
separate Lease with respect to each ARDC Site (collectively, the "ARDC Leases")
and a separate Equipment Lease with respect to the Equipment at such ARDC Site
(collectively, the "ARDC Equipment Leases") and managed on behalf of AROC by
Arby's pursuant to the Management Agreement, dated as of May 1, 1995 (the "AROC
Management Agreement"), between Arby's and ARDC. In addition, AROC and Arby's
have entered into a License Agreement with respect to each ARDC Site
(collectively, the "ARDC License Agreements"). AROC has collaterally assigned
the ARDC License Agreements to ARDC pursuant to a Collateral Assignment of
License Agreement with respect to each ARDC Site (collectively, the "AROC
Collateral Assignments"), and ARDC has collaterally assigned all of its right,
title and interest in and to the AROC Collateral Assignments to Acquisition
pursuant to a Collateral Assignment of License Agreement with respect to each
ARDC Site (the "ARDC Collateral Assignments").
Pursuant to the Loan Agreement, dated as of October 13, 1995,
as supplemented (the "ARHC Loan Agreement"), by and between Acquisition and
ARHC, Acquisition has advanced to ARHC certain mortgage loans in the original
aggregate principal amount of $19,822,907 (the "ARHC Initial Mortgage Loans")
and certain equipment loans in the original aggregate principal amount of
$4,065,280 (the "ARHC Equipment Loans"). In addition, pursuant to the Loan
Agreement, dated as of September 5, 1996 (the "1996 Loan Agreement" and together
with the ARDC Loan Agreement and the ARHC Loan Agreement, collectively, the
"Loan Agreements"), by and between the Lender and ARHC, the Lender has advanced
to ARHC certain additional mortgage loans in the original aggregate principal
amount of $1,600,000 (the "ARHC Additional Mortgage Loans" and together with the
ARHC Initial Mortgage Loans, collectively the "ARHC Mortgage Loans"). The ARHC
Mortgage Loans and the ARHC Equipment Loans are referred to collectively as the
"ARHC Loans." The ARHC Mortgage Loans are evidenced by separate Notes identified
on Schedule I hereto (the "ARHC Notes") and secured by a first priority security
interest in the 30 related Sites identified on Schedule II hereto (the "ARHC
Sites") pursuant to the several Deeds of Trust corresponding thereto (the "ARHC
Deeds of Trust"). The ARHC Equipment Loans are evidenced by 23 separate
Equipment Notes identified on Schedule I hereto (the "ARHC Equipment Notes") and
secured by a first priority security interest in the related Equipment pursuant
to the several Equipment Security Agreements corresponding thereto
(collectively, the "ARHC Equipment Security Agreements") and certain UCC-1
Financing Statements. The ARHC Sites are managed on behalf of ARHC by Arby's
pursuant to the Management Agreement, dated as of May 1, 1995, as amended (the
"ARHC Management Agreement"), between Arby's and ARHC. In addition, ARHC and
Arby's have entered into a License Agreement with respect to each ARHC Site
(collectively, the "ARHC License Agreements"). ARHC has collaterally assigned
the ARHC License Agreements to Acquisition or the Lender, as applicable,
pursuant to a Collateral Assignment of License Agreement with respect to each
ARHC Site
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3
(the "ARHC Collateral Assignments"). The AROC Collateral Assignments, the ARDC
Collateral Assignments and the ARHC Collateral Assignments are referred to
herein collectively as the "Collateral Assignments." The Collateral Assignments
have been consented to by Arby's and entitle Acquisition or the Lender, as
applicable, upon an Event of Default and the exercise by Acquisition or the
Lender as applicable, of its remedies under the Loan Documents, to operate such
ARHC Sites and ARDC Sites as Arby's Restaurants in accordance with the terms of
such License Agreements.
Triarc has (i) guaranteed (x) the obligations of ARHC under
the Loan Documents (the "ARHC Debt Guaranties") and (y) the obligations of AROC
under the ARDC Leases and the ARDC Equipment Leases (the "AROC Lease Guaranties"
and together with the ARHC Debt Guaranties, collectively, the "Guaranties"),
pursuant to an Unconditional Guaranty of Payment and Performance with respect to
each Site and (ii) agreed to pay the royalty fees payable under the ARHC License
Agreements and the ARDC License Agreements pursuant to the Amended and Restated
Royalties Payment Agreement, dated as of October 13, 1995, among Triarc, Arby's
and Acquisition (the "ARHC Royalties Payment Agreement"), and the Amended and
Restated Royalties Payment Agreement, dated as of October 13, 1995, among
Triarc, Arby's and Acquisition (the "AROC Royalties Payment Agreement"), as the
case may be, in the event Acquisition or the Lender, as applicable, exercises
its remedies under the Loan Documents and elects to operate the ARHC Sites or
the ARDC Sites, as the case may be, as Arby's restaurants or Dual Concepts in
accordance with the terms of the applicable License Agreements.
Effective as of June 1, 1996, Acquisition and the Lender,
directly or indirectly, assigned and conveyed, inter alia, certain of the ARDC
Loans, the ARHC Loans and the Pension Obligations (as defined below) and the
corresponding ARDC Notes, ARHC Notes, ARDC Equipment Notes, ARHC Equipment Notes
and Pension Notes (as defined below) listed on Schedule III hereto, mortgages,
deeds of trust, deeds to secure debt, security agreements and similar documents
securing such ARDC Loans, ARHC Loans, ARDC Notes, ARHC Notes, ARDC Equipment
Notes, ARHC Equipment Notes and Pension Notes, to LaSalle National Bank, Trustee
(the "Trustee"), pursuant to the Pooling and Servicing Agreement, dated as of
June 1, 1996 (the "P&S Agreement") among FFCA Secured Assets Corporation,
Depositor; Franchise Finance, Master Servicer and Special Servicer; Trustee; and
ABN AMRO Bank N.V., Fiscal Agent. As a result of such transfer, such ARDC Loans,
ARHC Loans and certain of the Pension Loan Obligations are included in a
segregated pool of assets held by a trust fund or grantor trust (collectively,
the "Trust Fund") in which pass-through certificates (collectively, the
"Certificates") have been issued (the "Securitization") to certain investors
(the "Certificate Holders"), in multiple classes, and which evidence the entire
beneficial ownership interest in the Trust Fund.
Franchise Finance and Acquisition are lessors under those
certain leases with Arby's described on the attached Schedule IV (the
"Sale-Leaseback Leases") with respect to the properties described on Schedule IV
(the "Sale-Leaseback Sites").
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4
The Sale-Leaseback Leases were entered into by Franchise Finance, one or more of
its predecessors in interest or Acquisition, as lessor, and Arby's or one or
more of its predecessors in interest, as lessee, and are evidenced by certain
purchase agreements or sale-leaseback agreements (the "Sale-Leaseback
Agreements") and by certain memoranda of lease recorded in the applicable real
property records (the "Memoranda"). The Sale-Leaseback Leases, the
Sale-Leaseback Agreements, the Memoranda and the other documents described on
Schedule IV are referred to collectively as the "Sale-Leaseback Documents"). The
obligations of the lessee under the Sale-Leaseback Documents are referred to
herein collectively as the "Sale-Leaseback Obligations."
Franchise Finance leases to Arby's certain parcels of land
(the "Pension Sites") pursuant to those ground leases described on the attached
Schedule V (the "Pension Leases"). Franchise Finance holds a first priority
security interest in the buildings and improvements located on the Pension Sites
pursuant to those certain mortgages, deeds of trust and deeds to secure debt
described on Schedule V (the "Pension Security Instruments"), which Pension
Security Instruments secure certain indebtedness of Arby's to Franchise Finance
evidenced by the promissory notes described on Schedule V (the "Pension Notes").
The Pension Leases, the Pension Security Instruments, the Pension Notes and the
other documents described in Schedule V are referred to collectively as the
"Pension Documents." The obligations of the lessee under the Pension Leases are
referred to herein as the "Pension Lease Obligations." The obligations of the
borrower under the Pension Notes, Pension Security Instruments and the other
loan documents related thereto are referred to as the "Pension Loan
Obligations." The Pension Lease Obligations and the Pension Loan Obligations are
referred to herein collectively as the "Pension Obligations."
On February 13, 1997, Arby's, ARDC, ARHC, AROC and Holdco,
and, for certain limited purposes, RTM and Triarc, entered into a Stock Purchase
Agreement (the "RTM Purchase Agreement") pursuant to which ARDC, ARHC and AROC
will sell (the "RTM Sale") to Holdco, and Holdco will purchase from ARDC, ARHC
and AROC, all of the shares of capital stock of RTMOC and RTMDC. RTMDC's
Certificate of Incorporation will contain at the RTM Closing (as defined below)
substantially identical provisions as those contained in ARDC's Certificate of
Incorporation.
In connection with, and immediately prior to, the consummation
of the RTM Sale (the "RTM Closing"), subject to the execution and delivery of
this Agreement by FFCA and the other parties hereto and the satisfaction or
waiver of the conditions contained in Section 1 hereof, (i) ARHC will assign and
convey to RTMOC all of its rights, title and interest in and to all of the
Assets (as defined in the RTM Purchase Agreement), including, without
limitation, the assets and properties comprising the ARHC Sites as more fully
described in the RTM Purchase Agreement (the "ARHC Assets Transfer"), other than
the Assets in respect of any Restaurant owned by ARHC that is subject to a
ground lease for which consent to such transfer
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5
shall not have been obtained at or prior to the RTM Closing ("Retained
Restaurants"), (ii) AROC will assign and convey to RTMOC all of its rights,
title and interest in and to the ARDC Leases and the ARDC Equipment Leases
pertaining to the ARDC Sites (the "AROC Transfer"), (iii) ARDC will assign and
convey to RTMDC all of its rights, title and interest in and to all of the
Assets (as defined in the RTM Purchase Agreement), including, without
limitation, the assets and properties comprising the ARDC Sites as more fully
described in the RTM Purchase Agreement, including the ARDC Leases and the ARDC
Equipment Leases (the "ARDC Assets Transfer"), (iv) Arby's will assign and
convey all of its rights, title and interest in and to the Sale-Leaseback Sites
and the Sale-Leaseback Documents to its parent, which will immediately
thereafter assign and convey such rights, title and interest to ARHC or AROC,
which will immediately thereafter assign and convey such rights, title and
interest to RTMOC (the "Sale-Leaseback Transfer"), and (v) Arby's will assign
and convey all of its rights, title and interest in and to the Pension Sites and
the Pension Documents to its parent, which will immediately thereafter assign
and convey such rights, title and interest to ARHC or AROC, which will
immediately thereafter assign and convey such rights, title and interest to
RTMOC (the "Pension Transfer"). The ARDC Assets Transfer, the ARHC Assets
Transfer, the AROC Transfer, the Sale-Leaseback Transfer and the Pension
Transfer are referred to collectively as the "Transfers". Title to the Retained
Restaurants will not be transferred by ARHC to RTMOC but instead will be
retained by ARHC, and the Retained Restaurants will be managed by RTMOC pursuant
to the terms of a Managing and Operating Agreement, substantially in the form
attached as Exhibit 5.8 to the RTM Purchase Agreement (the "Operating
Agreement"), until such time as FFCA shall have received satisfactory evidence
that all necessary landlord consents to the transfer of the Retained Restaurants
have been obtained. The ARHC Loans pertaining to the Retained Restaurants are
listed on Schedule VI-A hereto and are referred to herein collectively as the
"Retained Restaurant Loans."
Simultaneously with the Transfers, subject to execution and
delivery of this Agreement by FFCA and the other parties hereto and satisfaction
or waiver of the conditions contained in Section 1 hereof, ARHC will assign, and
RTMOC will assume, pursuant to a separate instrument for each Site, all
obligations of ARHC arising and accruing from and after the date of the RTM
Closing under the applicable ARHC Loans and under any of the Loan Document
pertaining thereto (other than (a) all of the ARHC Retained Loans (as defined
herein), except that RTMOC will assume such obligations with respect to the
Assumed ARHC Retained Loan (as defined below), and (b) all of the Retained
Restaurant Loans), pursuant to an instrument of assignment and assumption or
such other documentation as is reasonably required by and is reasonably
acceptable to FFCA and Triarc (each, an "ARHC Assignment and Assumption"), and
ARHC will thereupon be released and discharged from all obligations under such
ARHC Loans (other than the ARHC Retained Loans and the Retained Restaurant
Loans) and the Loan Documents related thereto that arise and accrue from and
after the date of RTM Closing (except that ARHC will not be released from any
payment obligation under the Loan Documents
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6
that arose or accrued and was due and payable prior to the date of the RTM
Closing and any obligation for indemnification under the Loan Documents in
respect of third party claims that are based on facts and circumstances
occurring prior to the date of the RTM Closing) (the "ARHC Release"). The "ARHC
Retained Loans" means the loans and other obligations under the Loan Documents
pertaining to the ARHC Sites listed on Schedules VI-B and VI-C hereto. The ARHC
Retained Loan with respect to Unit #354 located at Northwood, Ohio and listed as
No. 1 on Schedule VI-C hereto is referred to as the "Assumed ARHC Retained
Loan." None of the Retained Restaurant Loans are ARHC Retained Loans. Without
the prior written consent of FFCA, ARHC will not be released from any obligation
for payment or indemnification under the Loan Documents pertaining to the ARHC
Retained Loans regardless of whether such obligation arises or accrues prior to
or subsequent to the RTM Closing and regardless of whether RTMOC has assumed the
obligations of ARHC under such Loan Documents as contemplated by Section 4(x)
below.
Simultaneously with the Transfers, subject to execution and
delivery of this Agreement by FFCA and the other parties hereto and the
satisfaction or waiver of the conditions contained in Section 1 hereof, AROC
will assign, and RTMOC will assume, pursuant to a separate instrument for each
Site, all obligations of AROC arising and accruing from and after the date of
the RTM Closing under the applicable ARDC Loans and/or under any of the Loan
Documents pertaining thereto (including, without limitation, the ARDC Leases and
the ARDC Equipment Leases) pursuant to an instrument of assignment and
assumption or such other documentation as is reasonably required by and is
reasonably acceptable to FFCA (each, an "AROC Assignment and Assumption"), and
thereupon AROC will be released and discharged from all obligations under such
ARDC Loans and the Loan Documents related thereto (including, without
limitation, the ARDC Leases and the ARDC Equipment Leases) that arise and accrue
from and after the date of the RTM Closing (except that AROC will not be
released from any payment obligation under the Loan Documents that arose or
accrued and was due and payable prior to the date of the RTM Closing and any
obligation for indemnification under the Loan Documents in respect of third
party claims that are based on facts and circumstances occurring prior to the
date of the RTM Closing) (the "AROC Release").
The Collateral with respect to the ARHC Retained Loans will be
transferred to RTMOC in connection with the Transfers but such loans will not be
assumed by RTMOC. The Collateral with respect to the Retained Restaurant Loans
will not be transferred to RTMOC in connection with the Transfers but will
instead will be operated by RTMOC under the Operating Agreement and will be
transferred to RTMOC at such time as FFCA shall have received satisfactory
evidence that all necessary landlord consents to such transfer shall have been
obtained, and at such time RTMOC shall assume all of ARHC's obligations under
such Retained Restaurant Loan arising and accruing from and after the date of
the RTM Closing pursuant to documentation in form and substance reasonably
satisfactory to FFCA and ARHC shall be released from its obligations under such
Retained Restaurant Loans and the
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7
Loan Documents related thereto that arise and accrue from and after the date of
such transfer (except that ARHC will not be released from any payment obligation
under the Loan Documents that arose or accrued and was due and payable prior to
the date of such transfer and any obligation for indemnification under the Loan
Documents in respect of third party claims that are based on facts and
circumstances occurring prior to the date of such transfer).
Simultaneously with the Transfers, subject to the execution
and delivery of this Agreement by FFCA and the other parties hereto and the
satisfaction or waiver of the conditions contained in Section 1 hereof, ARDC
will assign, and RTMDC will assume, pursuant to a separate instrument for each
Site, all obligations of ARDC arising and accruing from and after the date of
the RTM Closing under the applicable ARDC Loans or any of the Loan Documents
pertaining thereto and the ARDC Leases and the ARDC Equipment Leases pursuant to
an instrument of assignment and assumption or such other documentation as is
required by and is acceptable to FFCA (each, an "ARDC Assignment and
Assumption"), and thereupon ARDC will be released and discharged from all
obligations under such ARDC Loans and the Loan Documents related thereto that
arise and accrue from and after the date of the RTM Closing (except that ARDC
will not be released from any payment obligation under the Loan Documents that
arose or accrued and was payable prior to the date of the RTM Closing and any
obligation for indemnification under the Loan Documents in respect of third
party claims that are based on facts and circumstances occurring prior to the
date of the RTM Closing) (the "ARDC Release").
Simultaneously with the Transfers, subject to execution and
delivery of this Agreement by FFCA and the other parties hereto and satisfaction
or waiver of the conditions contained in Section 1 hereof, Arby's will assign to
its parent and its parent will assume and immediately thereafter assign to ARHC
or AROC, which will assume and immediately thereafter assign to RTMOC, and RTMOC
will assume, pursuant to a separate instrument for each Sale-Leaseback Site, all
Sale-Leaseback Obligations of Arby's arising and accruing from and after the
date of the RTM Closing under the applicable Sale-Leaseback Documents pursuant
to an instrument of assignment and assumption or such other documentation as is
required by and is acceptable to FFCA (each, a "Sale-Leaseback Assignment and
Assumption").
Simultaneously with the Transfers, subject to execution and
delivery of this Agreement by FFCA and the other parties hereto and satisfaction
or waiver of the conditions contained in Section 1 hereof, Arby's will assign to
its parent and its parent will assume and immediately thereafter assign to ARHC
or AROC, which will assume and immediately thereafter assign to RTMOC, and RTMOC
will assume pursuant to a separate instrument for each Pension Site, all Pension
Obligations of Arby's arising and accruing from and after the date of the RTM
Closing under the applicable Pension Documents pursuant to an instrument of
assignment and assumption or such other documentation as is required by and is
acceptable to FFCA (each, a "Pension Assignment and Assumption").
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8
The ARDC Assignments and Assumptions, the ARHC Assignments and
Assumptions, the AROC Assignments and Assumptions, the Sale-Leaseback
Assignments and Assumptions and the Pension Assignments and Assumptions are
referred to collectively as the "Assignments and Assumptions"). The ARDC
Releases, the ARHC Releases and the AROC Releases are referred to collectively
herein as the "Releases." The Releases will be effected pursuant to both a
separate instrument for each applicable Site and a single instrument for all
applicable Sites.
Triarc, Arby's, ARDC, AROC, ARHC, RTMOC, RTMDC, Holdco,
Parent, RTMM and RTM have requested that FFCA consent and agree to the RTM Sale,
the Transfers, the Assignments and Assumptions and the Releases, and FFCA,
having all requisite authority, is willing to consent and agree to all of the
foregoing and to grant releases on the terms and conditions set forth herein. In
addition to the documents to be executed and delivered as described above,
Triarc, ARDC, AROC, ARHC, Arby's, RTMOC, RTMDC, RTM, RTMM, Parent and FFCA, as
applicable, will execute and deliver such other documents as are contemplated by
Sections 1, 3 and 4, including, without limitation, certain new license
agreements and collateral assignments of license agreements, certain
terminations of license agreements, consents to collateral assignments of
license agreements, certain terminations of Guaranties, the New Triarc
Guaranties (as defined in Section 3), and certain guaranties with respect to the
ARHC Loans and the ARDC Leases and the ARDC Equipment Leases and collateral
assignments of such guaranties with respect to the ARDC Leases and the ARDC
Equipment Leases.
ACCORDINGLY, for good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged, the parties hereto, intending to
be legally bound, agree as follows:
AGREEMENT
1. Conditions to Effectiveness; Effective Time. The consents,
waivers, amendments, agreements, terminations and releases contained in this
Agreement are hereby made and granted by FFCA and the other parties to this
Agreement, but the same are subject to, and shall become effective only upon
(the "Effective Time"), the satisfaction of the following conditions, which are
for the benefit of, and may be waived by, FFCA:
(i) the Certificate of Incorporation of RTMDC shall
have been amended in a manner reasonably satisfactory to FFCA;
(ii) RTMOC and ARHC shall have executed and delivered
a separate ARHC Assignment and Assumption with respect to each of the
ARHC Loans (other than (a) each of the ARHC Retained Loans, except that
RTMOC and ARHC shall have executed and delivered a separate ARHC
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9
Assignment and Assumption with respect to the Assumed ARHC Retained
Loan, and (b) each of the Retained Restaurant Loans), in form and
substance reasonably satisfactory to FFCA;
(iii) RTMOC and AROC shall have executed and
delivered a separate AROC Assignment and Assumption with respect to
each of the AROC Leases, in form and substance reasonably satisfactory
to FFCA;
(iv) RTMDC and ARDC shall have executed and delivered
a separate ARDC Assignment and Assumption with respect to each of the
ARDC Loans, the ARDC Leases and the ARDC Equipment Leases, all in form
and substance reasonably satisfactory to FFCA;
(v) RTM shall have executed and delivered a separate
Guaranty of RTMOC's obligations to RTMDC under each of the ARDC Leases
and ARDC Equipment Leases assumed pursuant to the corresponding AROC
Assignment and Assumption, and each such Guaranty shall have been
collaterally assigned pursuant to a separate instrument by RTMDC to
FFCA, all in a form substantially identical to the AROC Lease
Guaranties executed by Triarc and the collateral assignments of same
and otherwise reasonably satisfactory to FFCA and Triarc;
(vi) RTM shall have executed and delivered a separate
Guaranty of RTMOC's obligations under each of the ARHC Notes and ARHC
Equipment Notes and related Loan Documents assumed pursuant to the
corresponding ARHC Assignment and Assumption, in a form substantially
identical to the ARHC Debt Guaranties executed by Triarc and otherwise
reasonably satisfactory to FFCA and Triarc (and RTM hereby acknowledges
that the AROC Lease Guaranties are being terminated as contemplated by
Section 3(v) below), in form and substance reasonably satisfactory to
FFCA and Triarc;
(vii) FFCA shall have received evidence reasonably
satisfactory to it of receipt of all necessary third party consents
from ground lessors to effect the Assignments and Assumptions (except
with respect to the Retained Restaurants);
(viii) Triarc shall have executed and delivered the
New Triarc Guaranties and an amendment and restatement of each of the
ARHC Debt Guaranties (collectively, the "Triarc Guaranties"), all in
form and substance reasonably satisfactory to FFCA;
(ix) Arby's and RTMOC shall have executed and
delivered the New Licenses (as hereinafter defined) and RTMOC shall
have executed and delivered a collateral assignment of each of the New
Licenses in favor of
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10
RTMDC or FFCA, as applicable, and RTMDC, to the extent applicable shall
have executed and delivered a Collateral Assignment of each such
collateral assignment granted to it for the benefit of FFCA, which
collateral assignments shall have been consented to by Arby's, all in
form and substance reasonably satisfactory to FFCA;
(x) RTM and Triarc each shall have executed and
delivered a Royalties Payment Agreement with respect to the obligations
of RTMOC under the New Licenses corresponding to the ARDC Loans and the
ARHC Loans (the "Royalties Payment Agreements"), in a form
substantially identical to the AROC Royalties Payment Agreement
executed and delivered by Triarc and otherwise reasonably satisfactory
to FFCA and Triarc;
(xi) RTMOC and ARHC shall have executed and delivered
the Operating Agreement with respect to the Retained Restaurants, in
form and substance reasonably satisfactory to FFCA;
(xii) the representations and warranties of each
party (other than FFCA) contained in this Agreement or any document or
instrument expressly contemplated in this Agreement to be delivered in
connection herewith shall be true and correct in all material respects
as of such date as if made on such date (except for any representation
and warranty expressly made as of an earlier date);
(xiii) FFCA shall have received the confirmation by
Duff & Phelps of the rating assigned to the Securitization after giving
effect to the completion of the Transfers and the execution and
delivery of the Assignments and Assumptions and the Releases as
contemplated in this Agreement;
(xiv) FFCA shall have received endorsements to each
of the loan policies of title insurance issued to the Lender or
Acquisition, as applicable, with respect to each of the ARDC Loans and
the ARHC Loans, which endorsements shall date down the effective date
of each such policy through the Effective Time, and insure the
continued first priority of the liens granted in favor of the Lender or
Acquisition, as applicable, pursuant to the instruments insured by such
policies, without exception for any matters not originally shown in
such policies unless approved by Lender or Acquisition, as applicable,
which approval shall not be unreasonably withheld, delayed or
conditioned;
(xv) FFCA shall have received UCC search results
reasonably satisfactory to FFCA evidencing the continued first priority
of the liens granted to Franchise Finance, Acquisition or the Lender,
as applicable, in personal property of ARDC, ARHC or AROC, as
applicable, pursuant to the Loan Documents;
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11
(xvi) FFCA shall have received opinions of counsel to
each of the other parties to this Agreement (and at their sole cost and
expense) in form and substance reasonably satisfactory to FFCA with
respect to the matters addressed in Section 5(iii) of this Agreement;
(xvii) each of the Pension Leases and the
Sale-Leaseback Leases shall have been amended in form and substance
reasonably acceptable to FFCA to include references to the applicable
New Licenses (as defined in Section 3(iii));
(xviii) RTMOC shall have entered into a New License
with Arby's with respect to each of the Sale-Leaseback Sites and
Pension Sites;
(xix) RTMOC and RTM shall have entered into a
management services agreement pertaining to certain services as
specified therein, and RTMOC and RTMM shall have entered into a
management services agreement pertaining to certain services as
specified therein, with respect to the Sites, the Sale-Leaseback Sites
and the Pension Sites, which management services agreements
(collectively, the "Management Service Agreements") shall be in form
and substance reasonably satisfactory to FFCA;
(xx) FFCA shall have received from or on behalf of
the other parties to this Agreement such other documents, legal
opinions and other instruments as FFCA shall reasonably require,
including, without limitation, UCC financing statements, all in form
and substance reasonably satisfactory to FFCA, which documents, legal
opinions and other instruments shall be delivered at the sole cost and
expense of the parties to this Agreement other than FFCA; and
(xxi) Notation shall have been made on the deeds or
other instruments conveying the Sites related to the ARHC Retained
Loans and the bills of sale conveying the Equipment corresponding to
such Sites that such assets shall be subject to the Deeds of Trust and
Equipment Security Agreements (and related UCC-1 Financing Statements)
encumbering such Sites.
If the RTM Closing does not occur on the same day as FFCA
indicates that the foregoing conditions have been satisfied or waived, the
consents, amendments, agreements, terminations and releases contained in this
Agreement shall be null and void and of no force and effect.
2. Consent. (a) Effective as of the Effective Time and subject
to the satisfaction or waiver of each of the conditions set forth in Section 1
hereof, FFCA hereby consents and agrees to, and, only as to the transactions
specifically
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12
described in this Agreement, waives any provisions of the Loan Documents to the
extent necessary to permit, the following:
(i) the consummation of the Transfers and the RTM
Sale;
(ii) the consummation of the ARHC Assignments and
Assumptions, including without limitation, the assignment by ARHC to,
and the assumption by RTMOC of, all of ARHC's rights and obligations
under (a) the ARHC Notes, (b) the ARHC Equipment Notes, (c) the ARHC
Deeds of Trust, and (d) the ARHC Equipment Security Agreements;
(iii) the consummation of the AROC Assignments and
Assumptions, including without limitation, the assignment by AROC to,
and the assumption by RTMOC of, all of AROC's rights and obligations
under (a) the ARDC Leases and (b) the ARDC Equipment Leases;
(iv) the consummation of the ARDC Assignments and
Assumptions, including without limitation, the assignment by ARDC to,
and the assumption by RTMDC of, all of ARDC's rights and obligations
under (a) the ARDC Notes, (b) the ARDC Equipment Notes, (c) the ARDC
Deeds of Trust, (d) the ARDC Equipment Security Agreements, (e) the
ARDC Leases and (f) the ARDC Equipment Leases;
(v) the consummation of the Sale-Leaseback
Assignments and Assumptions, including, without limitation, the
assignment by Arby's to, and the assumption by RTMOC of, all of Arby's
rights and obligations under the Sale-Leaseback Documents;
(vi) the consummation of the Pension Assignments and
Assumptions, including, without limitation, the assignment by Arby's
to, and the assumption by RTMOC of, all of Arby's rights and
obligations under the Pension Documents;
(vii) the terminations of certain agreements referred
to in Section 3; and
(viii) the consummation of the transfer to RTMOC of
all of the Assets comprising any Retained Restaurant, and the
assignment by ARHC to RTMOC, and the assumption by RTMOC, of all
obligations of ARHC under the applicable Loan Documents relating to the
corresponding Retained Restaurant Loans, upon receipt by FFCA of
evidence to its reasonable satisfaction that all necessary landlord
consents to such transfer have been obtained.
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13
(b) Effective as of the Effective Time, each of ARDC,
ARHC, AROC, Arby's and Triarc hereby consents and agrees to the events described
in the preceding subsection (a), the releases and terminations described in
Section 3, the further agreements described in Section 4 and the events
otherwise described in the Preliminary Statements of this Agreement. Triarc
acknowledges and agrees to its obligations under the Triarc Guaranties and the
Royalties Payment Agreement, and acknowledges and agrees that it has not been
released as to its payment obligations under the AROC Lease Guaranties which
arose or accrued and were due and payable before the date of the RTM Closing and
any obligation for indemnification under the AROC Lease Guaranties in respect of
third party claims that are based on facts and circumstances occurring prior to
the date of the RTM Closing.
(c) Effective as of the Effective Time, each of RTM,
RTMOC, RTMDC, RTMM, Parent and Holdco hereby consents and agrees to the events
described in the preceding subsection (a), the releases and terminations
described in Section 3, the further agreements described in Section 4 and the
events otherwise described in the Preliminary Statements of this Agreement.
3. Releases and Terminations. Effective as of the
Effective Time and subject to the satisfaction or waiver of the conditions
contained in Section 1 hereof:
(i) FFCA and ARHC, ARDC and AROC agree to
deliver to each other appropriate instruments (a separate instrument
for each of the Sites and one instrument for all of the Sites (other
than with respect to the Retained Restaurants Loans and the ARHC
Retained Loans)) in a form reasonably satisfactory to FFCA and ARHC,
ARDC and AROC, effecting the Releases and the release of FFCA from all
obligations to ARHC, ARDC and AROC under the Loan Documents which arise
or accrue from and after the date of the RTM Closing;
(ii) FFCA and ARHC agree that, upon receipt
of evidence reasonably satisfactory to FFCA that all necessary landlord
consents required to transfer to RTMOC the Assets comprising a Retained
Restaurant have been obtained, to execute and deliver to each other
appropriate instruments for each of the subject Sites in a form
reasonably satisfactory to FFCA and ARHC releasing each other from
their respective obligations under the promissory notes and the other
Loan Documents relating to such Retained Restaurant Loan which arise or
accrue from and after the date of such transfer (except that ARHC shall
not be released from any payment obligation under the Loan Documents
pertaining to such Retained Restaurant Loan that arose or accrued and
was due and payable prior to the date of such transfer and any
obligations under such Loan Documents in respect of third party claims
that are based on facts and circumstances occurring prior to the date
of such transfer;
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14
(iii) FFCA agrees that upon the consummation
of the Assignments and Assumptions, and the execution and delivery by
RTMOC and Arby's of license agreements as provided in Section 5.12 of
the RTM Purchase Agreement (the "New Licenses") and the satisfaction or
waiver of all of the conditions specified in Section 1, the ARHC
License Agreements and the ARDC License Agreements (other than with
respect to the Retained Restaurants) shall be terminated and cancelled
and be of no further force or effect (the "License Agreement
Termination") and the Collateral Assignments (other than with respect
to the Retained Restaurants, until such time as such Retained
Restaurant is transferred to RTMOC as contemplated herein) shall be
terminated and cancelled and be of no further force and effect;
(iv) FFCA agrees that upon the consummation
of the Assignments and Assumptions and the satisfaction or waiver of
all of the conditions specified in Section 1, the AROC Management
Agreement and the ARHC Management Agreement (other than with respect to
the Retained Restaurants, until such time as such Retained Restaurant
is transferred to RTMOC as contemplated herein) may be terminated and
cancelled and be of no further force and effect (the "Management
Agreement Termination");
(v) FFCA agrees that upon the consummation
of the Assignments and Assumptions, and upon the execution and delivery
by Triarc of the Royalties Payment Agreement as contemplated by Section
2(x) and the satisfaction or waiver of all the conditions specified in
Section 1, the obligations of Triarc under the AROC Royalties Payment
Agreement and the ARHC Royalties Payment Agreement shall be terminated
and cancelled and be of no further force and effect (the "Royalties
Payment Agreement Termination");
(vi) FFCA agrees that upon the consummation
of the Assignments and Assumptions, and upon the execution and delivery
by Triarc of an Unconditional Guaranty of Payment and Performance (the
"New Triarc Guaranties") with respect to each ARDC Note and ARDC
Equipment Note (substantially in the form of the ARHC Debt Guaranties
and otherwise reasonably satisfactory to FFCA and Triarc) and the
satisfaction or waiver of all of the conditions specified in Section 1,
the obligations of Triarc under the AROC Lease Guaranties which arise
and accrue from and after the date of the RTM Closing shall be
terminated and cancelled and be of no further force or effect (the
"AROC Lease Guaranties Termination"), except that Triarc shall not be
released from any payment obligation under the AROC Lease Guaranties
that arose or accrued and was due and payable prior to the date of the
RTM Closing and any obligations for indemnification under the AROC
Lease Guaranties in respect of third party claims that are based on
facts and circumstances occurring prior to the date of the RTM Closing;
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15
(vii) RTMOC agrees that, upon the
satisfaction or waiver of all the conditions specified in Section 1, it
shall comply with the provisions of Sections 10.B., 10.C., 10.D.,
10.E., 10.F., 10.G., 10.I., 10.J. and 10.K. of the ARHC Loan Agreements
with respect to each ARHC Retained Loan and Retained Restaurant Loan.
4. Further Agreements.
(i) Effective as of the Effective Time and subject to
the satisfaction or waiver of the conditions set forth in Section 1 hereof, FFCA
agrees:
(a) to consent to the execution and delivery
by Triarc of an amendment and restatement of each of the ARHC Debt
Guaranties in form and substance mutually satisfactory to FFCA and
Triarc;
(b) (x) to deliver to Triarc simultaneously
with, and in the same manner as, delivery to, or receipt from, RTMOC,
RTMDC or RTM, as applicable, written notice of any breach, default or
event of default under any of the Loan Documents, and (y) that no
notice from FFCA shall constitute a notice of default under any Loan
Document or shall commence the running of any applicable cure or grace
period unless and until such notice is received by Triarc;
(c) with respect to the Retained Restaurant
Loans and ARHC Retained Loans, (x) to deliver to RTM simultaneously
with, and in the same manner as delivery from, ARHC or Triarc, as
applicable, written notice of any breach, default or event of default
under any of the Loan Documents pertaining to such loans and (y) that
no notice from FFCA shall constitute a notice of default under any Loan
Document pertaining to such loans or commence the running of any
applicable cure or grace period unless and until such notice is
received by RTM;
(d) to permit Triarc or any of its
affiliates to cure any default or event of default arising under any of
the Loan Documents; provided that it is understood that any such right
to cure will not increase the applicable cure period under the Loan
Documents;
(e) to permit RTM or any of its affiliates
to cure any default or event of default arising under any of the Loan
Documents pertaining to the ARHC Retained Loans; provided that it is
understood that any such right to cure will not increase the applicable
cure period under the applicable Loan Documents;
(f) to make no further loans or advances
under any of the Loan Documents without the prior written consent of
Triarc (and, in the
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16
case of loans and advances with respect to an ARHC Retained Loan, the
prior written consent of RTM) except that FFCA's rights to make
advances under the Loan Documents as are contemplated by such Loan
Documents to protect its rights in the collateral thereunder shall not
be limited or affected in any manner;
(g) (x) not to amend any provision of any of
the Loan Documents (or any documents executed by RTMOC, RTMDC or RTM in
replacement of any of such documents or otherwise in connection with
the ARDC Loans, ARDC Leases or ARHC Loans) without Triarc's prior
written consent, in the case of any amendment that (A) increases the
rate of interest or changes the amount of rental payments or time for
payment of principal, rent or interest on any of the ARHC Loans, ARDC
Leases or ARDC Loans (collectively, the "FFCA Obligations"), or (B)
changes the principal amount or timing of scheduled payments of any of
the FFCA Obligations, or (C) adds provisions that subordinate the FFCA
Obligations to any other obligations of any person; and (y) not to
amend any other provision of the Loan Documents (or any documents
executed by RTMOC, RTMDC or RTM in replacement of any such documents or
otherwise in connection with the ARDC Loans, ARDC Leases or ARHC Loans)
without Triarc's prior written consent, which consent shall be deemed
given by Triarc if it shall fail to deliver to FFCA written objection
to any proposed amendment within 20 days after receipt of documentation
containing the proposed form of such amendment and which consent shall
not be unreasonably withheld (except that, such consent may be given or
withheld by Triarc in its sole discretion in the case of any amendment
that is reasonably likely to increase the amount of Triarc's (or its
successor's or assign's) liability under, or that is reasonably likely
to increase the likelihood that a claim will be made against such
person under, the Triarc Guaranties, the Royalties Payment Agreement,
any other Loan Document or any of its other obligations in respect of
the FFCA Obligations);
(h) (x) not to amend any provision of any of
the Sale-Leaseback Documents or Pension Documents (or any documents
executed by RTMOC or RTM in replacement of any such documents or
otherwise in connection with the Sale-Leaseback Obligations or Pension
Obligations) without Arby's prior written consent, in the case of any
amendment that (A) increases the rate of interest, or changes the
amount of rental payments or time for payment of principal, rent or
interest on any of the Sale-Leaseback Obligations or Pension
Obligations (collectively, the "Arby's FFCA Obligations"), or (B)
changes the principal amount or timing of scheduled payments of any of
the Pension Loan Obligations, or (C) adds provisions that subordinate
the Arby's FFCA Obligations to any other obligations of any person; and
(y) not to amend any other provision of any of the Sale-Leaseback
Documents or Pension Documents (or any documents executed by RTMOC or
RTM in replacement of any such documents or otherwise in connection
with
<PAGE>
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17
the Sale-Leaseback Obligations or Pension Obligations) without Arby's
prior written consent, which consent shall be deemed given by Arby's if
it shall fail to deliver to FFCA written objection to any proposed
amendment within 20 days after receipt of documentation containing the
proposed form of such amendment and which consent shall not be
unreasonably withheld (except that, such consent may be given or
withheld by Arby's in its sole discretion in the case of any amendment
that is reasonably likely to increase the amount of Arby's (or its
successor's or assign's) liability under, or that is reasonably likely
to increase the likelihood that a claim will be made against such
person under, the Sale-Leaseback Documents or the Pension Documents or
any of its other obligations in respect of the Arby's FFCA
Obligations);
(i) not to amend any provision contained in
any Guaranty or Royalties Payment Agreement made by RTM or its assigns
in connection with the ARHC Loans, ARDC Loans, ARDC Leases,
Sale-Leaseback Obligations or Pension Obligations without Triarc's
prior written consent;
(j) without the prior written consent of
Triarc and RTM, not to consent to the release of any obligor under the
Loan Documents or Pension Loan Documents, as applicable or any
collateral from the liens created by the Loan Documents or Pension Loan
Documents, as applicable other than pursuant to the terms of such
documents as currently in effect or pursuant to this Agreement or to
consent to the granting of any consensual lien on any of the collateral
securing the obligations under the Loan Documents or the Pension Loan
Documents; and
(k) without the prior written consent of
Arby's, not to consent to the release of any obligor under the
Sale-Leaseback Documents or Pension Leases other than pursuant to the
terms of such documents as currently in effect or pursuant to this
Agreement.
(ii) Simultaneously with the execution and delivery
of this Agreement, FFCA agrees to deliver to ARDC, ARHC, AROC, Arby's, Triarc,
RTMOC, RTMDC or their designees an opinion of counsel in form and substance
reasonably satisfactory to the person requesting the same with respect to the
matters addressed in Section 5(i) and (ii)(a) and (b) hereof.
(iii) Subject to the limitations set forth in Section
13, the parties to this Agreement (other than FFCA) agree, jointly and
severally, to pay or reimburse FFCA for all transaction fees and expenses to the
extent paid by or invoiced to FFCA as a result of the Transfers, the Assignments
and Assumptions, the Releases and the other matters contemplated by this
Agreement, whether incurred before, on or after the RTM Closing, including
without limitation, transfer taxes,
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18
recording and filing fees, documentary stamp taxes, escrow fees, reasonable
attorneys fees and expenses and the cost of title insurance endorsements.
(iv) RTM and RTMM hereby agree that until all
obligations under the ARHC Loans, ARDC Loans, Sale-Leaseback Obligations and
Pension Obligations (collectively, the "Senior Obligations") shall have been
indefeasibly repaid in full, upon the occurrence and during the continuance of
an event of default under any of the Loan Documents, the Sale-Leaseback
Documents or the Pension Documents, its right to collect and receive any
payments under the applicable Management Service Agreement shall be, and hereby
are, subordinated to the payment in full of the Senior Obligations. If any
amount shall be collected and received by RTM or RTMM in violation of the
foregoing, such amount shall be held by RTM or RTMM, as applicable, in trust for
FFCA and shall forthwith upon receipt be turned over to FFCA in the exact form
received, to be applied against the Senior Obligations. Notwithstanding the
foregoing, neither RTM nor RTMM shall be obligated to continue to provide their
respective management services to RTMOC at any time on terms that they are not
being paid for such services on a current basis in accordance with the terms of
the applicable Management Services Agreement. Notwithstanding the foregoing,
FFCA acknowledges and agrees that (a) at all times other than after the
occurrence and during the continuance of such an event of default, RTM and RTMM
may collect and retain all payments received under the Management Services
Agreement and (b) RTM and RTMM may grant to Triarc and its affiliates as
security in all of their rights under the applicable Management Services
Agreements and upon a foreclosure upon such security interests, Triarc or its
affiliates may receive and retain such payments, but Triarc acknowledges and
agrees that its rights to so receive and retain such payments shall be subject
to this Section 4(iv).
(v) ARDC, ARHC, AROC, Arby's and Triarc hereby agree,
so long as any obligations remain outstanding under the ARDC Loans, that such
persons, whether acting alone or in concert, shall not exercise any right of
subrogation, indemnity or reimbursement, or make any other claim, against RTMDC.
Each of RTM, RTMM, RTMOC and Parent hereby acknowledge and agree that nothing in
this Section 4(v) shall in any way diminish or constitute a defense against any
obligation of such party to indemnify and hold Triarc and its affiliates
harmless against, or otherwise be liable for, any Losses (as defined in the
Stock Purchase Agreement) incurred by them based upon, arising out of or
otherwise in respect of the operation of RTMDC from and after the date of the
RTM Closing.
(vi) ARHC hereby agrees that until (i) all
obligations under the ARHC Retained Loans are paid in full and (ii) all
obligations under the Retained Restaurant Loans are paid in full or assumed by
RTMOC upon receipt of necessary consents to the transfer of the collateral
related thereto as contemplated herein, it will not effect a liquidation or
dissolution of ARHC.
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19
(vii) Without Triarc's prior written consent, RTMDC,
RTMOC, Holdco and Parent hereby agree that they shall not amend, and FFCA agrees
that it shall not consent to any amendment of, Section 3, 6, 8, 9, 10, 11, 12 or
13 of the Restated Certificate of Incorporation of RTMDC as in effect on the
date hereof.
(viii) FFCA hereby waives, with Triarc's consent, any
requirement in any of the Loan Documents, Pension Documents or Sale-Leaseback
Documents that RTMOC, RTMDC or RTM deliver audited financial statements to FFCA
in respect of their fiscal years ended May 1997.
(ix) It is understood and agreed by the parties that
the term "arise and accrue from and after the date of the RTM Closing" or
another specified date, or any variation thereof, when used in this Agreement or
any Release delivered pursuant hereto, shall include all obligations that become
due and payable on and after such specified date (notwithstanding the fact that
the obligation to make such payment arose or was accrued prior to such date).
(x) (a) The parties hereto acknowledge and agree
that, upon satisfaction or waiver of all of the conditions specified in
Section 1, ARHC shall convey each of the Sites and the Equipment
corresponding to the ARHC Retained Loans to RTMOC (the "Conveyances")
subject to the corresponding Deeds of Trust and Equipment Security
Agreements (and the related UCC-1 Financing Statements) but the
corresponding ARHC Loans will not be assumed by RTMOC (except as may be
required in the future by Section 4(x)(d) or (f) and except for the
Assumed ARHC Retained Loan) RTMOC agrees with and for the benefit of
FFCA that from and after such conveyances, it shall:
(i) comply with and perform each of the
covenants of ARHC under the Loan Documents applicable to such ARHC
Retained Loans (other than the covenant to make payment of principal
and interest under such Loan Documents), including, without limitation,
the covenants set forth in Section 10 of the ARHC Loan Agreement,
Article II of the Deeds of Trust corresponding to such ARHC Retained
Loans and Section 3 of the Equipment Security Agreements corresponding
to such ARHC Retained Loans; and
(ii) comply with and perform each of the
provisions of Article III of the Deeds of Trust and Section 3.7 of
the Equipment Security Agreements corresponding to such ARHC Loans,
including, without limitation, applying the proceeds of all casualties
and condemnations affecting the Sites and Equipment corresponding to
such ARHC Retained Loans in accordance with the terms and conditions
of such Article III and Section 3.7.
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20
(b) ARHC, ARDC, AROC, Arby's and Triarc
stipulate and agree for the benefit of FFCA not to assert any claims,
counterclaims, offsets or defenses to the performance of ARHC's
obligations under the Loan Documents pertaining to the ARHC Retained
Loans that are not otherwise available to them (without giving effect
to the Conveyances but after giving effect to all written waivers made
by such persons) that arise solely as a result of:
(i) the conveyance of the Sites and
Equipment corresponding to such ARHC Retained Loans to RTMOC;
(ii) the ownership, use, operation
and maintenance of the Sites and Equipment corresponding to such ARHC
Retained Loans by RTMOC, including, without limitation, the compliance
by RTMOC with the terms and conditions of this Section; or
(iii) any failure, omission, delay
or lack on the part of FFCA to enforce, assert or exercise any
provision of the Loan Documents pertaining to the ARHC Retained Loans,
including any right, power or remedy conferred on FFCA in any of such
Loan Documents or any action on the part of FFCA granting indulgence or
extension in any form, and agree that such failure, omission, delay or
inaction shall not diminish, impair or limit the obligations of ARHC
under such Loan Documents.
ARHC, ARDC, AROC, Arby's and Triarc further stipulate and agree for the benefit
of FFCA not to contest the validity or enforceability of any provision of this
Agreement or any of the Loan Documents pertaining to the ARHC Retained Loans or
the validity or perfection of any lien upon the Sites or Equipment related to
such ARHC Retained Loans.
(c) RTM, RTMOC, RTMDC, RTMM, Parent and
Holdco stipulate and agree for the benefit of FFCA (i) not to assert
any defense to the exercise and enforcement by FFCA of its rights and
remedies under the Loan Documents pertaining to the ARHC Retained
Loans, including, without limitation, the commencement and prosecution
to completion of a nonjudicial or a judicial foreclosure action or the
appointment of a receiver; and (ii) that the first priority of the
liens of the Deeds of Trust and Equipment Security Agreements (and
related UCC-1 Financing Statements) corresponding to such ARHC Retained
Loans shall not be affected or impaired by reason of the happening from
time to time of the following, all without notice to, or the further
consent of, RTM, RTMOC, RTMDC, RTMM, Parent and Holdco (except as
otherwise expressly provided in this Agreement): (1) the waiver by FFCA
of the observance or performance by ARHC of any of the obligations,
undertakings, conditions or other provisions contained in any of the
Loan Documents pertaining to the ARHC Retained Loans; (2) the
extension, in
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21
whole or in part, of the time for payment of any amount owing or
payable under the Loan Documents pertaining to the ARHC Retained Loans;
(3) the modification or amendment (whether material or otherwise) or
any of the obligations of ARHC under, or any other provisions of, any
of the Loan Documents pertaining to the ARHC Retained Loans; (4) the
taking or the omission of any of the actions referred to in any of the
Loan Documents pertaining to the ARHC Retained Loans (including,
without limitation, the giving of any consent referred to therein); and
(5) any failure, omission, delay or lack on the part of FFCA to
enforce, assert or exercise any provision of the Loan Documents
pertaining to the ARHC Retained Loans, including any right, power or
remedy conferred on FFCA in any of such Loan Documents or any action on
the part of FFCA granting indulgence or extension in any form.
(d) If, at any time subsequent to the
Effective Time, (i) FFCA elects to include one or more of the ARHC
Retained Loan in one or more securitizations, and the written opinion
of outside counsel to FFCA or the advice of FFCA's underwriter with
respect to such securitization is that RTMOC must assume as co-obligor
the obligations of ARHC under the ARHC Retained Loans in order for such
ARHC Retained Loans to be included in such securitization, or (ii) FFCA
receives a written opinion of outside counsel to FFCA that RTMOC must
assume as co-obligor the obligations of ARHC under the ARHC Retained
Loans in order for FFCA to meet or satisfy any legal requirement
applicable to FFCA, ARHC shall, upon receipt of notice from FFCA,
assign to RTMOC and RTMOC shall assume from ARHC as co-obligor, all of
the obligations of ARHC arising and accruing under the Loan Documents
pertaining to the ARHC Retained Loans to be included in such
securitization or to meet or satisfy any legal requirement applicable
to FFCA; provided, however, notwithstanding such assignment and
assumption, ARHC and Triarc shall not be released from the respective
obligations with respect to such Loan Documents. ARHC and RTMOC agree
to execute a separate ARHC Assignment and Assumption with respect to
each ARHC Retained Loan assumed by RTMOC, Triarc agrees to execute a
separate New Triarc Guaranty with respect to each such ARHC Retained
Loan, RTM agrees to execute a separate Guaranty of RTMOC's obligations
under each such ARHC Retained Loan, and each of the parties to this
Agreement agrees to execute such other documents with respect to such
assignment and assumption as are consistent with the obligations being
assumed and as are otherwise consistent with the documents executed
pursuant to Section 1 (but without releasing or terminating any of the
obligations of ARHC or Triarc with respect to such ARHC Retained Loans
all in form substantially identical to those being executed and
delivered on the date hereof with respect to the ARHC Loans that are
not ARHC Retained Loans). All of the costs and expenses incurred by or
on behalf of FFCA as a result of the preceding provisions shall be paid
by the parties to this Agreement other than FFCA as contemplated by
Section 4(iii).
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22
(e) The parties hereto acknowledge and agree
for the benefit of FFCA that a breach of any of the stipulations,
agreements, terms and conditions of Section 4(x) shall constitute an
Event of Default under the ARHC Loan Agreement and the Loan Documents
pertaining to the ARHC Retained Loans and shall entitle FFCA to
immediately exercise its rights and remedies under such ARHC Loan
Agreement and Loan Documents without the obligation to provide any of
ARHC, ARDC, AROC, Arby's, Triarc, RTM or RTMOC with any notice, grace
or cure rights (subject, in the case of Section 4(x)(a)(i) and (ii) to
the cure periods applicable under the Loan Documents and in the case of
Section 4(x)(d) and (f), to a ten day cure period after receipt of
written notice by Triarc and RTM). The parties to this Agreement other
than FFCA agree and acknowledge that a material inducement to FFCA
entering into and performing the terms and conditions of this Agreement
are the stipulations and agreements set forth in this Section 4(x).
(f) If after time after the Effective Time
FFCA is advised by Florida or Pennsylvania counsel that it is unable to
deliver a written legal opinion in form and substance reasonably
satisfactory to FFCA advising that RTMOC's failure to assume the ARHC
Retained Loans will not materially impair FFCA's ability to proceed
against the related collateral, FFCA shall notify ARHC and RTMOC, and
ARHC shall assign, and RTMOC shall assume, the applicable ARHC Retained
Loans with respect to the ARHC Sites in the applicable state in the
manner provided in Section 4(x)(d) above.
5. Representations and Warranties.
(i) Each of Franchise Finance, Acquisition, Servicer
and the Lender represents and warrants to the other parties hereto that:
(a) it is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware with all corporate power and authority necessary to own, lease
and operate its properties and carry on its business as now conducted
and to execute, deliver and perform this Agreement;
(b) all necessary corporate action has been
taken on its part to authorize the execution, delivery and performance
of this Agreement and this Agreement has been duly executed and
delivered by it;
(c) the authorization, execution, delivery
and performance of this Agreement and the documents, instruments and
agreements provided for herein will not result in any breach or default
under any other document, instrument or agreement to which it is a
party or by which it is subject or bound, except for any breach or
default that would not
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23
have a material adverse effect on the business, properties or financial
condition of any of the parties hereto or on the consummation of any of
the transactions contemplated under this Agreement; and
(d) this Agreement constitutes its legal,
valid and binding obligations enforceable against it in accordance with
its terms.
(ii) Servicer, in its capacity as Master Servicer and
Special Servicer under the P&S Agreement and the other applicable documents
pertaining to the Securitization, represents and warrants to the other parties
(other than Acquisition, Franchise Finance and the Lender) as follows with
respect to the ARDC Loans, the ARHC Loans and the Pension Loan Obligations
listed on the attached Schedule III hereto:
(a) it has all requisite authority under the
applicable documents relating to the Securitization and otherwise to
execute, deliver and perform this Agreement and all documents to be
delivered by it pursuant to this Agreement and no consent or approval
is required under the documents relating to the Securitization or
otherwise in connection therewith;
(b) the consents, waivers, amendments,
releases and terminations made by Servicer under this Agreement are
binding and irrevocable on the Trust Fund, the Certificate Holders, any
successor to Servicer as Master Servicer or Special Servicer under the
Securitization and each other Person that has or may acquire any
interest in the ARHC Loans, ARDC Loans or Pension Loan Obligations
listed on the attached Schedule III hereto; and
(c) Schedule III attached hereto is a true
and complete list of all of the ARDC Loans, ARHC Loans and Pension Loan
Obligations that have been conveyed to the Trust Fund and are included
in the Securitization.
All representations and warranties of Franchise Finance,
Acquisition, Servicer and the Lender made in this Agreement shall be and will
remain true and complete in all material respects as of the Effective Time as if
made and restated in full as of such Effective Time and shall survive the
execution and delivery of the documents contemplated by this Agreement,
including without limitation, those contemplated by Section 1.
(iii) Each party to this Agreement (other than FFCA)
represents and warrants to the other parties hereto that:
(a) it is a corporation duly organized,
validly existing and in good standing under the laws of its
jurisdiction of incorporation (as set
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24
forth in the introductory paragraph of this Agreement) with all
corporate power and authority necessary to own, lease and operate its
properties and carry on its business as now conducted and execute,
deliver and perform this Agreement;
(b) all necessary corporate action has been
taken by it to authorize the execution, delivery and performance of
this Agreement and this Agreement has been duly executed and delivered
by it;
(c) there are no suits, actions, proceedings
or investigations pending or threatened against or involving it before
any court, arbitrator, or administrative or governmental body which
might reasonably result in any material adverse change in its business,
properties or condition;
(d) the authorization, execution, delivery
and performance of this Agreement and the documents, instruments and
agreements provided for herein will not result in any breach or default
under any other document, instrument or agreement to which it is a
party or by which it is subject or bound except where such breach or
default would not have a material adverse effect on such party or the
consummation of the transactions contemplated under the Agreement;
(e) the authorization, execution, delivery
and performance of this Agreement and the documents, instruments and
agreements provided for herein will not violate any applicable law,
statute, regulation, rule, ordinance, code, rule or order applicable to
it, except for such violations that would not have a material adverse
effect on such party or the consummation of the transactions
contemplated under this Agreement; and
(f) this Agreement constitutes the legal,
valid and binding obligation of such entity, enforceable against such
entity in accordance with its terms; and
(g) except for those consents which have
already been obtained and delivered in writing to FFCA or that pertain
to a Retained Restaurant or the absence of which would not have a
material adverse effect on its consolidated business, operations,
assets or financial condition, no consent, license, permit, approval or
authorization of any Person, entity or governmental authority is
required in connection with its execution, delivery or performance of
this Agreement.
Each of Arby's, ARDC, AROC ARHC and Triarc, severally and not
jointly, further represent and warrant to FFCA that the representations and
warranties made by such Person in the Loan Documents, the Sale-Leaseback
Documents and the Pension Documents are true and correct in all material
respects as of the date of this
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25
Agreement (except for such representations and warranties expressly made as of
an earlier date). All representations and warranties of Arby's, ARDC, AROC,
ARHC, Triarc, RTM, RTMOC, RTMDC, RTMM, Parent and Holdco made in this Agreement
shall be and will remain true and complete in all material respects as of the
Effective Time as if made and restated in full as of such Effective Time and
shall survive the execution and delivery of the documents contemplated by this
Agreement, including without limitation, those contemplated by this Agreement,
including without limitation, those contemplated by Section 1.
6. Further Assurances. Each party agrees, any time and from
time to time, at the reasonable request of any of the parties hereto, to
promptly and duly execute, deliver, file and record any financing statement,
specific assignment, instrument, document or other paper and take such further
actions that may be necessary or desirable or that any of the parties hereto,
may reasonably request, to effect the intent of the parties.
7. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Arizona (regardless of the
laws that might otherwise govern under applicable principles of conflicts of
law) as to all matters, including but not limited to matters of validity,
construction, effect, performance and remedies; provided, however, the parties
to this Agreement do not intend that the preceding choice of law provision
modify or amend the choice of law provisions set forth in the Loan Documents,
the Sale-Leaseback Documents, the Pension Documents or the documents evidencing
the Securitization.
8. Specific Performance. The parties hereto acknowledge and
agree that any breach of the terms of this Agreement would give rise to
irreparable harm for which money damages would not be an adequate remedy and
accordingly the parties hereto agree that, in addition to any other remedies,
each shall be entitled to enforce the terms of this Agreement by a decree of
specific performance without the necessity of proving the inadequacy of money
damages as a remedy or posting a bond or other security.
9. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of which
together shall Constitute one and the same Agreement.
10. Entire Agreement; Reaffirmation. This Agreement, and the
Schedules hereto, and the Loan Documents, Sale-Leaseback Documents, Pension
Documents and other documents and instruments referred to herein, constitute the
entire agreement among the parties with respect to the subject matter hereof and
supersedes all prior agreements and understandings, both written and oral, of
the parties or any of them with respect to the subject matter hereof, if any.
This Agreement shall not constitute a waiver of any rights or remedies in
respect of the ARDC Loans, ARHC Loans, Sale-Leaseback Documents or Pension
Documents
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26
except as specifically provided herein, and, except to the extent of the (i)
modifications to the Loan Documents, the Sale-Leaseback Documents and the
Pension Documents specifically referenced in this Agreement, and (ii) waivers
and consents expressly provided for in this Agreement, the Loan Documents, the
Sale-Leaseback Documents and the Pension Documents are ratified and reaffirmed
in all respects and are and shall remain in full force and effect.
11. Termination of Commitment Letter. Each of the parties to
this Agreement agrees and acknowledges that effective as of the Effective Time
that certain Commitment Letter dated May 1, 1995 between Franchise Finance and
the Lender and ARDC and ARHC is terminated and of no further force and effect,
including, without limitation, the obligations of Franchise Finance and the
Lender to make any loans pursuant to such Commitment Letter.
12. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns and shall bind all current holders of any interest in the ARDC Loans,
ARDC Leases, ARHC Loans, Sale-Leaseback Obligations or Pension Obligations and
their successors in interest.
13. Indemnity. Triarc, ARDC, ARHC, AROC and Arby's, jointly
and severally, shall indemnify and hold harmless FFCA and each of their
shareholders, directors, officers, employees, Affiliates, trustees, successors
and assigns from and against up to an aggregate of $200,000 of reasonable
attorneys' fees and costs and associated professionals' fees and costs which are
actually incurred by such indemnified persons as a result of claims, actions
and/or proceedings by one or more Certificate Holders asserting losses incurred
by such Certificate Holders as a result of the transactions described in this
Agreement, including, without limitation, the Transfers, the Assignments and
Assumptions and the Releases.
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27
IN WITNESS WHEREOF, the parties hereto have entered into this
Agreement as of the date first above written.
FRANCHISE FINANCE CORPORATION OF
AMERICA
By: /s/ Dennis L. Ruben
------------------------------------------
Name: Dennis L. Ruben
Title: Executive Vice President and
General Counsel
FFCA ACQUISITION CORPORATION
By: /s/ Dennis L. Ruben
------------------------------------------
Name: Dennis L. Ruben
Title: Executive Vice President and
General Counsel
FFCA MORTGAGE CORPORATION
By: /s/ Dennis L. Ruben
------------------------------------------
Name: Dennis L. Ruben
Title: Executive Vice President and
General Counsel
FRANCHISE FINANCE CORPORATION
OF AMERICA, as Master Servicer and
Special Servicer
By: /s/ Dennis L. Ruben
------------------------------------------
Name: Dennis L. Ruben
Title: Executive Vice President and
General Counsel
ARBY'S RESTAURANT DEVELOPMENT
CORPORATION
By: /s/ Christine C. Marshall
------------------------------------------
Name: Christine C. Marshall
Title: Vice President and Associate
General Counsel
<PAGE>
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28
ARBY'S RESTAURANT HOLDING COMPANY
By: /s/ Christine C. Marshall
-----------------------------------------
Name: Christine C. Marshall
Title: Vice President and Associate
General Counsel
ARBY'S RESTAURANT OPERATIONS COMPANY
By: /s/ Christine C. Marshall
-----------------------------------------
Name: Christine C. Marshall
Title: Vice President and Associate
General Counsel
ARBY'S, INC.
By: /s/ Christine C. Marshall
-----------------------------------------
Name: Christine C. Marshall
Title: Vice President and Associate
General Counsel
TRIARC COMPANIES, INC.
By: /s/ Stuart I. Rosen
-----------------------------------------
Name: Stuart I. Rosen
Title: Vice President and Secretary
RTM PARTNERS, INC.
By: /s/ Philip G. Skinner
-----------------------------------------
Name: Philip G. Skinner
Title: Vice President
RTM, INC.
By: /s/ Philip G. Skinner
-----------------------------------------
Name: Philip G. Skinner
Title: Vice President
<PAGE>
<PAGE>
29
RTM DEVELOPMENT COMPANY
By: /s/ Stuart I. Rosen
-----------------------------------------
Name: Stuart I. Rosen
Title: Vice President and Secretary
RTM OPERATING COMPANY
By: /s/ Stuart I. Rosen
-----------------------------------------
Name: Stuart I. Rosen
Title: Vice President and Secretary
RTM MANAGEMENT COMPANY, LLC
By: RTM ENTERPRISES, INC., its
Managing Member
By: /s/ Philip G. Skinner
-----------------------------------------
Name: Philip G. Skinner
Title: Vice President
RTM HOLDING COMPANY, INC.
By: /s/ Philip G. Skinner
-----------------------------------------
Name: Philip G. Skinner
Title: Vice President
<PAGE>
<PAGE>
Exhibit 5.1
[Letterhead of Paul, Weiss, Rifkind, Wharton & Garrison]
October 21, 1997
Triarc Companies, Inc.
280 Park Avenue
New York, New York 10017
Ladies and Gentlemen:
In connection with Registration Statement on Form S-4 (the
"Registration Statement") of Triarc Companies, Inc., a Delaware corporation
("Triarc"), filed with the Securities and Exchange Commission (the "Commission")
pursuant to the Securities Act of 1933, as amended (the "Act"), and the rules
and regulations promulgated thereunder, we have been requested by Triarc to
render this opinion as to the validity of up to 1,971,350 shares of Class A
Common Stock, par value $.10 per share (the "Merger Shares"), of Triarc to be
issued as merger consideration in exchange for 9,098,324 outstanding shares of
the Common Stock, par value $.01 per share, of Cable Car Beverage Corporation,
a Delaware corporation ("Cable
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Triarc Companies, Inc. 2
Car"), pursuant to the terms and conditions of the Agreement and Plan of Merger,
dated June 24, 1997, as amended (the "Merger Agreement"), by and among Cable
Car, Triarc and CCB Merger Corporation, a Delaware corporation and wholly
owned subsidiary of Triarc ("Mergerco") (assuming that there are no dissenting
shareholders).
In connection with furnishing this opinion, we have examined
originals, or copies certified or otherwise identified to our satisfaction, of
(i) the Certificate of Incorporation of Triarc, as amended on or prior to the
date hereof, (ii) the By-laws of Triarc, as amended on or prior to the date
hereof, (iii) the Merger Agreement, (iv) the Registration Statement and (v) all
such corporate records, agreements and other instruments of Triarc, and all such
other certificates, agreements and documents as we deemed relevant and necessary
as a basis for the opinion hereinafter expressed.
In our examination of the aforesaid documents, we have
assumed, without independent investigation, that the Merger Shares will be
issued in accordance with the terms of the Merger Agreement and the resolutions
authorizing their issuance. In such examination, we have also assumed, without
independent investigation, the genuineness of all signatures, the legal capacity
of all individuals who have executed any of the documents reviewed by us, the
authenticity of all documents submitted to us as originals, the conformity to
original documents of all documents submitted to us as certified, photostatic,
reproduced or conformed copies
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Triarc Companies, Inc. 3
of valid existing agreements or other documents, and the authenticity of all of
such latter documents. In expressing our opinion herein, we have relied, as to
certain matters of fact, on representations, statements or certificates of
officers of Triarc and public officials.
Based upon the foregoing, and subject to the assumptions,
exceptions and qualifications stated herein, we are of the opinion that, at the
time the Merger (as defined in the Merger Agreement) becomes effective, the
Merger Shares will have been duly authorized, validly issued, fully paid and
non-assessable.
Our opinion expressed above is limited to the General
Corporation Laws of the State of Delaware. Our opinion is rendered only with
respect to the laws and the rules, regulations and orders thereunder, which are
currently in effect.
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement and to the reference to this firm under the
heading "Legal Matters" in the Prospectus included in the Registration
Statement. In giving our consent, we do not thereby admit that we are in the
category of persons whose
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Triarc Companies, Inc. 4
consent is required by the Act or the rules and regulations of the Commission
thereunder.
Very truly yours,
PAUL, WEISS, RIFKIND, WHARTON & GARRISON
<PAGE>
<PAGE>
Exhibit 8.1
[Letterhead of Sherman & Howard L.L.C.]
October 22, 1997
The Board of Directors
Cable Car Beverage Corporation
717 Seventeenth Street, Suite 1475
Denver, Colorado 80202
Ladies and Gentlemen:
You have requested our opinion regarding certain federal income tax
consequences of the proposed merger of CCB Merger Corporation, a Delaware
corporation ("Mergerco"), with and into Cable Car Beverage Corporation
("Company"). Mergerco is a wholly-owned subsidiary of Triarc Companies, Inc., a
Delaware corporation ("Parent").
FACTS
-----
The terms of the proposed merger (the "Merger") are contained in the
Agreement and Plan of Merger dated June 24, 1997 (the "Plan of Merger"). Terms
not otherwise defined in this letter will have the meanings assigned to them in
the Plan of Merger. In preparing this opinion, you have directed us to assume
that (a) the Merger will be consummated in accordance with the terms, conditions
and other provisions of the Plan of Merger, and (b) all of the factual
information, descriptions, representations and assumptions set forth or referred
to in this letter, in the Officer's Certificates from Parent and the Company
dated October 21, 1997 (the "Officer's Certificates"), in the Shareholder's
Certificates from major Company shareholders dated October 21, 1997 (the
"Shareholder's Certificates") and in the Form S-4 Registration Statement of
Parent dated October 22, 1997 as filed with the Securities and Exchange
Commission ("Registration Statement"), and mailed to the Company's shareholders
in connection with the special meetings of shareholders to approve the Merger,
are accurate and complete and will be accurate and complete at the Effective
Time. We have not independently verified any factual matters relating to the
Merger in connection with or apart from our preparation of this opinion and,
accordingly, our
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Page 2
opinion does not take into account any matters not set forth in this letter
which might have been disclosed by independent verification.
With your permission, we have also relied on the following additional
representations and assumptions:
1. The Merger will be a statutory merger under the applicable
provisions of the Delaware General Corporation Law, duly approved by any
required board of directors and shareholder action. The Merger will be carried
out in accordance with the Plan of Merger and as described in the Registration
Statement.
2. The Company has no issued or outstanding stock other than 8,948,324
shares of Company Common Stock. Except for options to acquire an aggregate
902,500 shares of Company Common Stock pursuant to Company Stock Options, no
options or warrants to purchase Company Stock, and no securities or other
instruments convertible into Company Common Stock, will be outstanding at the
Effective Time.
3. All shares of Parent Class A Common Stock into which shares of
Company Common Stock will be converted pursuant to the Merger will be voting
stock of Parent, will be newly issued or treasury shares, and will be issued (or
reissued) by Parent directly or through Mergerco to the exchanging Company
shareholders in the Merger.
4. The fair market value of the Parent Class A Common Stock and other
consideration received by each Company shareholder will be approximately equal
to the fair market value of Company Common Stock surrendered pursuant to the
Merger. Except for holders of no greater than 6% of Company Common Stock who
exercise dissenters' rights, no holder of Company Common Stock will receive, in
exchange for such stock and pursuant to any consideration other than Parent
Class A Common Stock and cash paid in lieu of a fractional share of Parent Class
A Common Stock. No fractional share of Parent Class A Common Stock will be
issued in the Merger.
5. There is no plan or intention by the shareholders of the Company who
own 5% or more of Company Common Stock, and to the best knowledge of the
management of the Company, there is no plan or intention on the part of the
remaining shareholders of the Company to sell, exchange or otherwise dispose of
a number of shares of Parent Class A Common Stock received in the Merger that
would reduce the ownership by the Company's shareholders of the Parent Class A
Common Stock received in the Merger to a number of shares having an aggregate
value, as of the Effective Time, of less than 50% of the value of all of the
formerly outstanding Company Common Stock as of the same date. For purposes of
this paragraph, shares of Company Common Stock surrendered by dissenters or
exchanged for cash in lieu of fractional shares of Parent Class A Common Stock
will be treated as outstanding
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Page 3
Company Common Stock as of the Effective Time. Moreover, shares of Company
Common Stock and Parent Class A Common Stock held by the Company's shareholders
that are sold, redeemed, or disposed of prior or subsequent to the Merger and in
contemplation or as part of the Merger are considered for purposes of this
paragraph.
6. Immediately following the Merger, the Company will hold at least 90%
of the fair market value of its net assets and at least 70% of the fair market
value of its gross assets held immediately prior to the Merger, and at least 90%
of the fair market value of Mergerco's net assets and at least 70% of the fair
market value of Mergerco's gross assets held immediately prior to the Merger.
For purposes of this paragraph, amounts paid by the Company or Mergerco to
dissenters, amounts paid by the Company or Mergerco to shareholders who receive
cash or other property, amounts used by the Company or Mergerco to pay
reorganization expenses, and all redemptions and distributions (except for
regular, normal dividends) will be included as assets of the Company or
Mergerco, respectively, that are held immediately prior to the Merger.
7. Immediately prior to the Merger, Parent will be in direct control of
Mergerco within the meaning of Section 368(c) of the Code(1) (which provides
that control means the ownership of stock possessing at least 80% of the total
combined voting power of all classes of stock entitled to vote and at least 80%
of the total number of shares of all other classes of stock of the corporation).
8. The Company has no plan or intention to issue additional shares of
its stock that would result in Parent losing control of the Company within the
meaning of Section 368(c) of the Code.
9. In the Merger, shares of Company Common Stock representing control
of the Company within the meaning of Section 368(c) of the Code will be
exchanged solely for voting stock of Parent.
10. Following the Merger, the Company will not have outstanding any
options, warrants, convertible securities or any other type of right pursuant to
which any person could acquire stock in the Company that, if exercised or
converted, would affect Parent's acquisition or control of the Company within
the meaning of Section 368(c) of the Code.
11. Neither Parent nor any of its affiliates has any plan or intention
to reacquire any of the Parent Class A Common Stock to be issued in the Merger.
- -----------------
(1) Unless otherwise specifically indicated, all references to "Section" are to
sections of the Internal Revenue Code of 1986, as amended (the "Code").
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Page 4
Following the Merger, any acquisition of Parent Class A Common Stock pursuant to
any stock repurchase program of Parent will be directed to Parent shareholders
generally and will not be directed specifically to the Company shareholders who
receive Parent Class A Common Stock pursuant to the Merger.
12. Parent has no current plan or intention to liquidate the Company,
to merge the Company with and into another corporation (other than pursuant to
the Merger), to sell or otherwise dispose of any stock of the Company, or to
sell or otherwise dispose of any of the assets of the Company or Mergerco,
except for dispositions made in the ordinary course of business or transfers to
corporations controlled by Parent.
13. The Company has not disposed of assets in the two years prior to
the Merger representing more than 50% of its historical business assets. Parent
will continue at least a principal historic business line of the Company or use
at least a significant portion of the Company's historical assets in a business
of the Parent, in each case conducted or held by the Company at the time of the
Merger and in each case within the meaning of Treasury Regulation 1.368-1(d)
under Section 368 of the Code.
14. Mergerco will have no liabilities assumed by the Company pursuant
to the Merger, and will not transfer to the Company any assets subject to
liabilities, except in each case liabilities attributed to the Company by
operation of law by reason of its membership in a controlled or combined group.
15. Parent, the Company and the shareholders of the Company will pay
their respective expenses, if any, incurred in connection with the Merger.
16. There is no intercorporate indebtedness existing between Parent and
the Company, or between Mergerco and the Company, that was issued, acquired or
will be settled at a discount.
17. Parent does not own, nor has it owned during the past five years,
any shares of stock of the Company.
18. At the Effective Time, the fair market value of the assets of the
Company will exceed the sum of its liabilities, if any, to which the assets are
subject.
19. Neither Parent, Mergerco nor the Company is an investment company
within the meaning of Section 368(a)(2)(F) of the Code (which generally provides
that a corporation is an investment company if it is a regulated investment
company, a real estate investment trust, or a corporation 50% or more of the
value of whose total assets are stock and securities and 80% or more of the
value of whose assets are held for investment; with cash, cash equivalents,
government securities and certain other
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Page 5
property described in Treasury Regulations excluded from assets, and with look-
through principles applying to subsidiaries).
20. The Company is not under the jurisdiction of a court in a title 11
or similar case within the meaning of Section 368(a)(3)(A) of the Code.
21. No dividends or distributions, other than regular or normal
dividends or distributions, will be made with respect to any stock of the
Company prior to the Merger. Other than such normal dividends or distributions,
the Company has not redeemed its stock, made any distribution with respect to
its stock or disposed of any assets in contemplation or as part of the Merger.
Following the Merger, no dividends or distributions will be made to the former
Company shareholders by Parent, other than regular or normal dividend
distributions with respect to their shares made with regard to all shares of
Parent Class A Common Stock.
22. None of the compensation received by any Company shareholder-
employee for services performed for the Company or any of its affiliates is or
will be separate consideration for, or allocable to, any of their shares of
Company Common Stock to be surrendered in the Merger. None of the Parent Class A
Common Stock received pursuant to the Merger by any shareholder-employee of the
Company in exchange for shares of Company Common Stock is or will be in exchange
for, or in consideration of, any employment, consulting or similar arrangement
between such shareholder-employee and Parent or any of its affiliates for
services rendered or to be rendered by such shareholder-employee. Any
compensation paid or to be paid to any Company shareholder who will be an
employee of or perform advisory services for Parent or any of its affiliates
after the Merger, and any amount paid to a Company shareholder as consideration
for agreements not to disclose confidential information about, or compete with,
Parent or any of its affiliates, will be in consideration of services or
agreements actually performed or to be performed, will be commensurate with
amounts paid to third parties bargaining at arm's length for similar services or
agreements.
23. The payment of cash in lieu of issuing fractional shares of Parent
Class A Common Stock is solely for the purpose of avoiding the expense and
inconvenience to Parent of issuing fractional shares of Parent Class A Common
Stock and does not represent separately bargained for consideration. In
addition, this cash payment will not be made pro rata to all Company
shareholders. The total cash consideration that will be paid in the Merger to
Company shareholders in lieu of issuing fractional shares of Parent Class A
Common Stock will not exceed 1% of the total consideration that will be issued
in the Merger to the Company shareholders in exchange for their shares of
Company Common Stock. The fractional share interests of each Company shareholder
will be aggregated, and no Company shareholder will receive cash in an
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Page 6
amount equal to or greater than the value of one full share of Parent Class A
Common Stock.
24. The Company shareholders that will receive cash in lieu of
fractional shares of Parent Class A Common Stock will not have control of
Parent, for purposes of Section 302(b) of the Code, following the Merger.
25. The Merger is being effected for bona fide business reasons as
described in the Registration Statement.
OPINION
-------
Assuming that the Merger is consummated in accordance with the terms
and conditions set forth in the Plan of Merger and based on the facts set forth
or referred to in the Registration Statement, the Officer's Certificates, the
Shareholder's Certificates and this letter (an advance copy of which has been
provided to you), including all representations and assumptions in any such
documents, and subject to the qualifications and other matters set forth in this
letter, it is our opinion that for federal income tax purposes:
1. The Merger will qualify as a reorganization within the meaning of
Section 368(a) of the Code.
2. The Company will not recognize any taxable gain or loss as a result
of the Merger.
3. No gain or loss will be recognized by the shareholders of the
Company who exchange all of their Company Common Stock solely for Parent Class A
Common Stock pursuant to the Merger (except with respect to cash received in
lieu of a fractional share interest in Parent Class A Common Stock).
4. The aggregate tax basis of the Parent Class A Common Stock received
by the shareholders of the Company who, pursuant to the Merger, exchange all of
their Company Common Stock solely for Parent Class A Common Stock (plus cash in
lieu of a fractional share) will be the same as the aggregate tax basis of the
Company Common Stock surrendered in exchange (reduced by any amount allocable to
a fractional share interest in Parent Class A Common Stock for which cash is
received).
5. Any cash received by a holder of Company Common Stock in lieu of a
fractional share interest in Parent Class A Common Stock will be treated as
received in exchange for such fractional share. Such gain or loss generally will
be recognized for federal income tax purposes measured by the difference between
the amount of cash received and the portion of the shareholder's tax basis
allocable to such fractional
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Page 7
share. The cash payment will be treated as a distribution in redemption of
Parent Class A Common Stock under Section 302 of the Code, so that a shareholder
of the Company who is an individual will be taxed at a maximum federal income
tax rate of 20% on such gain if the Company Common Stock has been held as a
capital asset for more than eighteen months prior to the Effective Time.
6. The holding period of the Parent Class A Common Stock received
pursuant to the Merger in exchange for Company Common Stock will include the
holding period of the Company Common Stock surrendered in exchange if such
Company Common Stock was a capital asset in the hands of the exchanging
shareholder at the Effective Time.
Our opinion is limited to the foregoing federal income tax consequences
of the Merger as a reorganization within the meaning of Section 368(a) of the
Code, which are the only matters as to which you have requested our opinion. We
do not address any other federal income tax consequences of the Merger or other
matters of federal law. Additionally, we have not considered matters (including
state or local tax consequences) arising under the laws of any jurisdiction
other than matters of federal law arising under the laws of the United States.
Our opinion is based on the understanding that the relevant facts are,
and will be as of the Effective Time, as set forth or referred to in this
letter. If this understanding is incorrect or incomplete in any respect, our
opinion could be affected.
Our opinion is also based on the Code, Treasury Regulations, case law,
and Internal Revenue Service rulings as they now exist. These authorities are
all subject to change and such change may be made with retroactive effect. We
can give no assurance that after any such change, our opinion would not be
different. Moreover, our opinion will not be binding on the Internal Revenue
Service or the courts.
We undertake no responsibility to update or supplement our opinion.
Only the Company and its shareholders may rely on this opinion, and only with
respect to the proposed Merger described above.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name under the captions
"Summary--The Merger--Certain Federal Income Tax Consequences," "The Proposed
Merger and Related Matters--Certain Federal Income Tax Consequences" and "Legal
Matters" in the Registration Statement and the prospectus included therein.
Very truly yours,
SHERMAN & HOWARD L.L.C.
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<PAGE>
Exhibit 10.30
THIS OPTION AND ANY SECURITIES ACQUIRED UPON THE EXERCISE OF THIS OPTION
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY STATE SECURITIES LAWS AND NEITHER THE SECURITIES NOR
ANY INTEREST THEREIN MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH
ACT OR SUCH LAWS OR AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND SUCH LAWS.
THIS OPTION IS ALSO SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AS SET FORTH
HEREIN.
-----------------------------------
OPTION
-----------------------------------
This certifies that, for good and valuable consideration, RTM Partners, Inc.
(the "Company"), grants to Arby's Restaurant Holding Company, a Delaware
corporation, or its registered assigns (the "Optionholder"), the right to
subscribe for and purchase from the Company one hundred fifty-three (153)
validly issued, fully paid and nonassessable shares (the "Option Shares") of the
Common Stock, par value $1.00 per (the "Common Stock" of RTM Operating Company
("Newco"), at a purchase price per Option Share of $3,038.49 (the "Exercise
Price"), at any time and from time to time, beginning on the date which is two
years from the date of issuance of this Option (the "Commencement Date") and
ending at 5:00 PM Eastern time on the date which is three years from the date of
issuance of this Option (the "Expiration Date"), all subject to the terms,
conditions and adjustments herein set forth.
Certificate No. 1
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1. Duration and Exercise of Option; Limitation on Exercise; Payment of
Taxes.
1.1 Duration and Exercise of Option. Subject to the terms and conditions
set forth herein, the Option may be exercised, in whole but not in part, by the
Optionholder by:
(a) the surrender of this Option to the Company, with a duly executed
Exercise Form specifying the number of Option Shares to be purchased, during
normal business hours on any Business Day from and
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<PAGE>
including the Commencement Date through and including the Expiration Date; and
(b) the delivery of payment to the Company, for the account of the
Company, by cash or by certified or bank cashier's check, of the Exercise Price
for the number of Option Shares specified in the Exercise Form in lawful money
of the United States of America. The Company agrees that such Option Shares
shall be deemed to be transferred to the Optionholder as the record holder of
such Option Shares as of the close of business on the date on which this Option
shall have been surrendered and payment made for the Option Shares as aforesaid.
1.2 Limitations on Exercise. Notwithstanding anything to the contrary
herein, this Option may be exercised only (i) if all Similar Options are also
exercised on the same date that this Option is exercised and (ii) upon the
delivery to the Company of any certificates, legal opinions, or other documents
reasonably requested by the Company to satisfy the Company that the proposed
exercise of this Option may be effected without registration under the
Securities Act.
1.3 Option Shares Certificate. A stock certificate or certificates for
the Option Shares specified in the Exercise Form shall be delivered to the
Optionholder within ten (10) Business Days after receipt of the Exercise Form
and receipt of payment of the purchase price.
1.4 Payment of Taxes. The issuance of certificates for Option Shares
shall be made without charge to the Optionholder for any stock transfer or other
issuance tax in respect thereto; provided, however, that the Optionholder shall
be required to pay any and all taxes which may be payable in respect of any
transfer involved in the issuance and delivery of any certificate in a name
other than that of the then Optionholder as reflected upon the books of the
Company.
1.5 Divisibility of Option; Transfer of Option.
(a) Subject to the provisions of this Section 1.6, this Option may be
divided into Options of one thousand shares or multiples thereof, upon surrender
at the principal office of the Company, without charge to any Optionholder. Upon
such division, the Options may be transferred of record as the then Optionholder
may specify without charge to such Optionholder (other than any applicable
transfer taxes). In addition, subject to the provisions of this Section 1.5, the
Optionholder shall not have the right to transfer this Option, except that
Optionholder shall have the right to transfer this Option in its entirety to
Triarc Companies, Inc. or any of its Subsidiaries or Affiliates.
(b) Upon surrender of this Option to the Company with a duly executed
Assignment Form and funds sufficient to pay any transfer tax, the Company shall,
without charge, execute and deliver a new Option or Options of like tenor in the
name of the assignee named in such Assignment
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Form, and this Option shall promptly be canceled. Any such transfer shall be
subject, if requested by the Company, to the receipt by the Company of a written
opinion of legal counsel, which opinion shall be addressed to the Company and be
reasonably satisfactory in form and substance to the Company's counsel, to the
effect that the proposed transfer of this Option may be effected without
registration under the Securities Act. In addition, the Optionholder and the
transferee shall execute any documentation reasonably required by the Company to
ensure compliance with the Securities Act. The Optionholder shall not be
entitled to transfer this Option, or any part thereof, if such legal opinion is
not acceptable to the Company or if such documentation is not provided. The term
"Option" as used in this Agreement shall be deemed to include any Options issued
in substitution or exchange for this Option.
1.6 Right of First Refusal.
(a) If the Holders of Registrable Securities make a request for demand
registration in accordance with Section 7.1 hereof, or if the Holders wish to
sell Registrable Securities to a third party, the Company shall have the right,
exercisable in accordance with the provisions of this Section 1.6, to purchase
all (but not less than all) of the Registrable Securities proposed to be
included in the registration by the Holders, or all of the Registrable
Securities proposed to be sold to a third party, as the case may be, (the
"Subject Shares") at a price per share equal to the Fair Market Value. In order
to exercise such right, the Company must send notice (the "Section 1.6 Notice")
to the Company within 15 Business Days after the receipt by Company of a notice
from the Holders of the Subject Shares demanding registration in accordance with
Section 7.1 hereof, or seeking to sell Subject Shares to a third party, as the
case may be, which notice shall state that the Company is exercising its right
to purchase the Subject Shares and shall specify the date for the settlement of
the sale and purchase, which shall be no less than 10 Business Days nor more
than 15 Business Days after the date of the Section 1.6 Notice. The delivery of
the Section 1.6 Notice by the Company shall constitute the irrevocable exercise
of the rights of the Company hereunder, shall create a binding contract of sale
and purchase between the Holders of the Subject Shares and the Company and shall
relieve the Company of its obligations to register the Subject Shares in
accordance with Section 7.1 hereof. The Company and the Holders shall consummate
the purchase of the Subject Shares under this Section 1.6 by delivery of
immediately available funds against delivery of duly endorsed certificates at
such time as is specified by the Company in the Section 1.6 Notice. The Company
may at its option require the Holders to sell the Subject Shares under this
Section 1.6 to a third party designee.
(b) If the Company (by itself or through any designee) declines or
fails to purchase all of the Subject Shares in accordance with Section 1.6 (a),
then the Company shall proceed with the registration with respect to such
Subject Shares in accordance with Section 7.1 hereof.
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2. Restrictions on Transfer; Restrictive Legends.
2.1 Restrictive Legends. Except as otherwise permitted by this Section 2,
each Option shall (and each Option issued upon direct or indirect transfer or in
substitution for any Option pursuant to Section 1.6 or Section 4 shall) be
stamped or otherwise imprinted with a legend in substantially the following
form:
THIS OPTION AND ANY SECURITIES ACQUIRED UPON THE EXERCISE OF THIS OPTION
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
STATE SECURITIES LAWS AND NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY BE
OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR SUCH LAWS OR AN EXEMPTION
FROM REGISTRATION UNDER SUCH ACT AND SUCH LAWS. THIS OPTION IS ALSO SUBJECT TO
CERTAIN RESTRICTIONS ON TRANSFER AS SET FORTH HEREIN.
Except as otherwise permitted by this Section 2, each stock certificate for
Option Shares transferred to the Optionholder upon the exercise of any Option
and each stock certificate issued upon the direct or indirect transfer of any
such Option Shares shall be stamped or otherwise imprinted with a legend in
substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND
NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD,
TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT OR SUCH LAWS OR AN EXEMPTION FROM
REGISTRATION UNDER SUCH ACT AND SUCH LAWS. THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE ALSO SUBJECT TO CERTAIN RESTRICTIONS SET FORTH IN THE OPTION
DATED MAY 5, 1997.
Notwithstanding the foregoing, the Optionholder may require the Company to
issue an Option or to cause Newco to issue a stock certificate for Option
Shares, in each case without a legend, if the Option or the Option Shares, as
the case may be, are no longer subject to the restrictions on transfer set forth
herein and either (i) such Option or such Option Shares, as the case may be,
have been registered for resale under the Securities Act or (ii) the
Optionholder has delivered to the Company an opinion of legal counsel, which
opinion shall be addressed to the Company and be reasonably satisfactory in form
and substance to the Company's counsel, to the effect that such registration is
not required with respect to such Option or such Option Shares, as the case may
be.
2.2 Come Along Rights. Until the tenth anniversary of the date hereof,
the Company shall not Transfer more than 20% of the shares of Common Stock owned
by the Company to an unaffiliated third party without complying with the terms
and conditions set forth in this Section 2.2, as
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applicable.
(a) If the Company desires to Transfer more than 20% of the shares of
Common Stock owned by it, the Company shall give not less than twenty (20) days
prior written notice (the "Participation Notice") of such intended Transfer to
each Optionholder and each Holder of Option Shares. The Participation Notice
shall set forth the terms and conditions of such proposed Transfer, including
the name of the prospective transferee, the number of the shares of Common Stock
proposed to be transferred by the Company, the purchase price per share of
Common Stock proposed to be paid therefor and the payment terms and type of
Transfer to be effectuated. Within ten (10) days following the delivery of a
Notice by the Company, each Optionholder and each Holder of Option Shares may,
by notice in writing to the Company, have the opportunity and right to sell to
the purchasers in such proposed Transfer (upon the same terms and conditions as
the Company) up to that number of Option Shares transferable to such
Optionholder upon exercise of its Option or that number of Option Shares owned
by such Holder of Option Shares, as the case may be, as shall equal the product
of (x) a fraction, the numerator of which is the number of Option Shares owned
by such Holder, or the number of Option Shares transferable to such Optionholder
upon exercise of its Option, as the case may be, as of the date of such proposed
Transfer and the denominator of which is the aggregate number of shares of
Common Stock beneficially owned as of the date of the Participation Notice by
the Company and by all Optionholders and Holders of Option Shares, multiplied by
(y) the number of shares of Common Stock proposed to be transferred by the
Company. The number of shares of Common Stock to be sold by the Company shall be
reduced to the extent necessary to provide for such sales of Option Shares and
Options by Holders of Option Shares and Optionholders, respectively.
(b) At the closing of any proposed Transfer in respect of which a
Participation Notice has been delivered, the Company, together with all
Optionholders and Holders of Option Shares electing to sell Options and Option
Shares, shall deliver to the proposed transferee certificates evidencing the
Option Shares and Options to be sold, duly endorsed, in the case of Option
Shares, with stock powers and in the case of Options, with assignment forms.
Holders of Option Shares shall receive in exchange therefor the consideration
per share to be paid or delivered by the proposed transferee in respect of such
Option Shares as described in the Participation Notice. Holders of Options shall
receive in exchange therefor the consideration per share to be paid or delivered
by the proposed transferee in respect of Option Shares, less the exercise price
per Option Share of the Option.
2.3 Take Along Rights
(a) Until the tenth anniversary of the date hereof, if the Company
determines to sell or exchange (in a business combination or otherwise), in one
or a series of bona fide arms length transactions to an unaffiliated third
party, all of the shares of Common
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Stock held by the Company, then, upon thirty (30) days' written notice from the
Company to the Optionholders and the Holders of Option Shares, which notice
shall include reasonable details of the proposed sale or exchange, including the
proposed time and place of closing and the consideration to be received by the
Company in respect of their shares of Common Stock, each Optionholder and each
Holder of Option Shares shall be obligated to, and shall sell, transfer and
deliver to such third party all of its Options and Option Shares in the same
transaction at the closing thereof (and will deliver certificates for all of
such Options and Option Shares at the closing, free and clear of all claims,
liens and encumbrances). Each Holder of Option Shares shall receive the same
consideration per share of Common Stock upon such sale as the Company receives
and each Optionholder shall receive the same consideration per share of Common
Stock upon such sale, less the exercise price per share of Common Stock of the
Option. If stockholder approval of the transaction if required, each Holder of
Option Shares shall vote his Option Shares in favor thereof.
(b) The provisions of this Section 2.3 shall not apply to any transfer
pursuant to a public offering.
2.4 Corporate Governance
Until the tenth anniversary of the date hereof, the Company and the
Optionholders and each Holder of Option Shares shall take all action, including
but not limited to the Company and the Holders of Option Shares voting so that
neither the Company nor any Optionholder or Holder of Option Shares shall enter
into any agreements or arrangements of any kind with any person with respect to
the Common Stock of Newco or the governance of Newco on terms which conflict
with the provisions of this Option.
3. Title to Option Shares.
The Company covenants and agrees that all Option Shares which are
transferred upon the exercise of this Option will, upon such transfer, be
validly issued, fully paid, and nonassessable, not subject to any preemptive
rights, and free from all taxes, liens, security interests, charges, and other
encumbrances.
4. Loss or Destruction of Option.
Subject to the terms and conditions hereof, upon receipt by the Company
of evidence reasonably satisfactory to it of the loss, theft, destruction or
mutilation of this Option and, in the case of loss, theft or destruction, of
such bond or indemnification as the Company may reasonably require, and, in the
case of such mutilation, upon surrender and cancellation of this Option, the
Company will execute and deliver a new Option of like tenor.
5. Ownership of Option.
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The Company may deem and treat the person in whose name this Option is
registered as the holder and owner hereof (notwithstanding any notations of
ownership or writing hereon made by anyone other than the Company) for all
purposes and shall not be affected by any notice to the contrary, until
presentation of this Option for registration of transfer.
6. Anti-dilution Provisions.
6.1 Adjustment of Number of Shares Purchasable and Exercise Price.
Subject to the provisions of this Section 6, the Exercise Price and the number
and type of shares of Common Stock transferable to the Optionholder upon
exercise of this Option shall be subject to adjustment at any time prior to the
Expiration Date.
(a) Adjustment of Exercise Price. In the event Newco shall issue,
sell, or distribute any shares of Common Stock for a consideration per share
less than the Fair Market Value per share of Common Stock, in effect immediately
prior to the time of such issue or sale, or for no consideration, then,
forthwith upon such issue or sale, the Exercise Price shall be reduced to the
lower of the prices calculated by:
(1) dividing (A) an amount equal to the sum of (x) the number of
shares of Common Stock outstanding immediately prior to such issue or sale
multiplied by the then existing Exercise Price, plus (y) the aggregate
consideration, if any, received by Newco upon such issue or sale, by (B) the
total number of shares of Common Stock outstanding immediately after such issue
or sale;
(2) multiplying the then existing Exercise Price by a fraction, the
numerator of which is the sum of (x) the number of shares of Common Stock
outstanding immediately prior to such issue or sale multiplied by the Fair
Market Value per share of Common Stock immediately prior to such issue or sale
plus (y) the cash consideration received by Newco upon such issue or sale, the
denominator of which is the total number of shares of Common Stock outstanding
immediately after such issue or sale times the Fair Market Value per share of
Common Stock immediately prior to such issue or sale.
For purposes of this subsection (a), the date as of which the Fair Market
Value per share of Common Stock shall be computed shall be the earlier of the
dates on which Newco shall have (i) entered into a firm contract for the
issuance of such shares or (ii) issued such shares.
(b) Adjustment of Number of Shares Purchasable. Upon any adjustment of
the Exercise Price as provided in this Section 6.1 or in Section 6.2, the holder
hereof shall thereafter be entitled to purchase, at the Exercise Price resulting
from such adjustment, the number of shares of Common Stock (calculated to the
nearest .001 of a share) obtained by multiplying the Exercise Price in effect
immediately prior to such adjustment by the number of shares of Common Stock
purchasable hereunder
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immediately prior to such adjustment and dividing the product thereof by the
Exercise Price resulting from such adjustment.
(c) Minimum Adjustment. In the event any adjustment of the Exercise
Price pursuant to this section shall result in an adjustment of less than $.01
per share of Common Stock, no such adjustment shall be made, but any such lesser
adjustment shall be carried forward and shall be made at the time and together
with the next subsequent adjustment which, together with any adjustment so
carried forward, shall amount to $.01 or more per share of Common Stock;
provided however, upon any adjustment of the Exercise Price resulting from (i)
the declaration of a dividend upon, or the making of any distribution in respect
of, any stock of Newco payable in Common Stock or Convertible Securities or (ii)
the reclassification by subdivision, combination or otherwise, of the Common
Stock into a greater or smaller number of shares, the foregoing figure of $.01
per share (or such figure as last adjusted) shall be proportionately adjusted
and provided further, upon the exercise of this Option, the Company shall make
all necessary adjustments (to the nearest .001 of a cent) not theretofore made
to the Exercise Price up to and including the date upon which this Option is
exercised.
6.2 Provisions Applicable to Section 6.1. For purposes of Section 6.1,
the following subsections (a) through (j), inclusive, shall be applicable:
(a) Options, Other Rights or Convertible Securities.
(1) Issuance. In case at any time Newco shall in any manner grant
(whether directly or by assumption in a merger or otherwise) any options or
other rights to subscribe for or to purchase Common Stock or Convertible
Securities, or shall in any manner issue or sell Convertible Securities, whether
or not such rights or options or rights to convert or exchange any such
Convertible Securities are immediately exercisable, and the consideration per
share (as determined under subsection 6.2(f)) for which shares of Common Stock
are issuable upon the exercise of such rights or options or upon conversion or
exchange of such Convertible Securities shall be less than (i) the Exercise
Price in effect immediately prior to the time of the granting of such rights or
options or such Convertible Securities, or (ii) the Fair Market Value per share
of Common Stock existing immediately prior to the time of the granting of such
rights or options or such Convertible Securities, then the maximum number of
shares of Common Stock issuable upon the exercise of such rights or options or
upon conversion or exchange of the maximum amount of such Convertible Securities
shall be deemed to be outstanding and to have been issued for such consideration
per share.
No further adjustments of the Exercise Price shall be made upon the
actual issue of Common Stock or of Convertible Securities upon exercise of
options or rights or upon the actual issue of Common Stock upon conversion or
exchange of Convertible Securities if adjustments pursuant to
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this Section 6.2(a)(1) have been made previously in respect of the grant of such
options or rights, or in respect of issuance or sale of such Convertible
Securities, except as otherwise provided in subsection (2) below.
For purposes of this subsection (1), the date as of which the Fair Market
Value per share of Common Stock shall be computed shall be the earlier of the
dates on which Newco shall have (i) entered into a firm contract for the
issuance of such rights or other options or (ii) issued such rights or other
options.
(2) Readjustment of Exercise Price. In the event (i) the purchase
price per share provided for in any rights, options or Convertible Securities
referred to in subsection (1) above, (ii) the number of shares of Convertible
Securities that would be delivered under such rights, options or Convertible
Securities, (iii) the additional consideration, if any, payable upon exercise of
such rights or options or the conversion or exchange of such Convertible
Securities, or (iv) the rate at which any Convertible Securities above are
convertible into or exchangeable for Common Stock, in any case, shall change,
the Exercise Price in effect at the time of such event shall forthwith be
readjusted to the Exercise Price which would have been in effect at such time
had such rights, options or Convertible Securities still outstanding provided
for such changed purchase price, additional consideration or conversion rate, as
the case may be, at the time initially granted, issued or sold.
On the expiration of any such option or right not exercised, or the
termination of any such unexercised right to convert or exchange Convertible
Securities, the Exercise Price then in effect hereunder shall forthwith be
increased to the Exercise Price which would have been in effect at the time of
such expiration or termination had such right, option or Convertible Security
never been issued, and the Common Stock issuable thereunder shall no longer be
deemed to be outstanding.
No readjustment of the Exercise Price pursuant to this subsection (2)
shall have the effect of increasing the Exercise Price by an amount in excess of
the adjustment initially made to the Exercise Price in respect to the issue,
sale, grant or assumption of the applicable options, rights or Convertible
Securities.
(b) Splits and Combinations. In case Newco shall at any time subdivide
any of its outstanding shares of Common Stock into a greater number of shares,
the Exercise Price in effect immediately prior to such subdivision shall be
proportionately reduced and, conversely, in case the outstanding shares of
Common Stock of Newco shall be combined into a smaller number of shares, the
Exercise Price in effect immediately prior to such combination shall be
proportionately increased.
(c) Reorganization, Reclassification or Recapitalization of Newco. In
the case of any capital reorganization or
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reclassification or recapitalization of the capital stock of Newco (other than
that referred to in subsection (b) of this Section 6.2), or in the case of the
consolidation or merger of Newco with or into another corporation, or in the
case of the sale or transfer of all or substantially all of the property of
Newco, upon the exercise of this Option or any portion thereof (in lieu of or in
addition to the number of shares of Common Stock theretofore deliverable, as
appropriate) the amount of stock, other securities, or property which the
Optionholder would have received had he exercised this Option or such portion
thereof immediately prior to such capital reorganization or reclassification of
capital stock, consolidation, merger, or sale shall be delivered, and the
aggregate Exercise Price shall remain unchanged.
Prior to and as a condition of the consummation of any transaction
described in the preceding sentence, the Company shall make equitable, written
adjustments in the application of the provisions set forth herein with respect
to the rights and interests of the Optionholders so that the provisions set
forth herein shall thereafter be applicable, in a manner as similar as possible
to the methods used herein, to any shares of stock or other securities or other
property thereafter deliverable upon exercise of this Option, which adjustments
are satisfactory to the Optionholders entitled to purchase not less than 51% of
the total number of Option Shares not yet purchased.
(d) Dilution in Case of Issuance of Other Securities. In case any Other
Securities shall be issued or sold or shall become subject to issue or sale upon
the conversion or exchange of any stock (or Other Securities) of Newco (or any
issuer of Other Securities or any other Person referred to in subsection (c)) or
to subscription, purchase or other acquisition pursuant to any options or rights
issued or granted by Newco (or any such other issuer or Person) for a
consideration such as to dilute, within the standards established in the other
provisions of this Section 6, the purchase rights granted by this Option, then,
and in each such case, the computations, adjustments and readjustments provided
for in this Section 6 with respect to the Exercise Price shall be made in a
manner as similar as possible to the method so provided and shall be applied to
determine the amount of Other Securities from time to time receivable upon the
exercise of the Option so as to protect the Optionholders against such dilution
of the purchase right.
(e) Other Dilutive Events. In case any event shall occur as to which
the other provisions of this Section 6 are not applicable strictly, but with
respect to which the failure to make any adjustment would not protect fairly the
purchase rights represented by this Option in accordance with the essential
intent and principles hereof then, in each such case, the Company shall appoint
a firm of independent public accountants of recognized national standing (which
may be the regular auditors of the Company or Newco), which shall give their
opinion upon the adjustment, if any, on a basis consistent with the essential
intent and principles established in this Section 6, necessary to preserve,
without
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dilution, the purchase rights represented by this Option. Upon receipt of such
opinion, the Company will promptly mail a copy thereof to the holder of this
Option and shall make the adjustments described therein.
(f) Determination of Consideration. For purposes of this Section 6, the
consideration received by Newco for the issue, sale, grant or assumption of
additional shares of Common Stock, rights, options or Convertible Securities,
irrespective of the accounting treatment of such consideration, shall be valued
as follows:
(1) Cash Payment. In the case of cash, the net amount received by
Newco after deduction of any accrued interest, dividends or any expenses paid or
incurred or any underwriting commissions or concessions paid or allowed by
Newco;
(2) Securities or Other Property. In the case of securities or other
property, as of the date immediately preceding such issue, sale, grant or
assumption, the lesser of (i) the Fair Market Value per share of the security
for which such consideration was received, and (ii) the Fair Value of such
consideration;
(3) Allocation Related to Common Stock. In the event additional
shares of Common Stock are issued or sold together with other securities or
other assets of Newco for a consideration which covers both, the consideration
received (computed as provided in (1) and (2) above) shall be allocable to such
additional shares of Common Stock as determined in good faith by the Board of
Directors of Newco (except as otherwise provided in (4) below);
(4) Allocation Related to Options, Other Rights and Convertible
Securities. In case any options or other rights to purchase any shares of Common
Stock or Convertible Securities shall be issued or sold together with other
securities or other assets of Newco, in one integral transaction such that no
specific consideration is allocated to the rights or options, such rights,
options or Convertible Securities shall be deemed to have been issued without
consideration;
(5) Dividends in Securities. In case Newco shall declare a dividend
or make any other distribution upon any stock of Newco payable, in either case,
in Common Stock or Convertible Securities, such Common Stock or Convertible
Securities, as the case may be, issuable in payment of such dividend or
distribution shall be deemed to have been issued or sold without consideration;
(6) Warrants, Options, Other Rights and Convertible Securities. The
price per share for which shares of Common Stock are issuable upon the exercise
of rights or options to purchase any shares of Common Stock or upon conversion
or exchange of Convertible Securities shall be determined by dividing (i) the
sum of (x) the total amount, if any, received or receivable by Newco as
consideration for the
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granting of such rights or options or the issuance of such Convertible
Securities, plus (y) the minimum aggregate amount of additional consideration
payable to Newco upon the exercise of such rights or options, or, in the case of
such Convertible Securities, the minimum aggregate amount of additional
consideration, if any, payable upon the conversion or exchange thereof, in each
case after deducting any accrued interest, dividends or any expenses paid or
incurred or any underwriting commissions or concessions paid or allowed by Newco
by, (ii) the 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;
(7) Merger, Consolidation or Sale of Assets. In case any shares of Common
Stock or Convertible Securities or any rights or options to purchase such Common
Stock or Convertible Securities shall be issued in connection with any merger or
consolidation in which Newco is the surviving corporation, the amount of
consideration therefor shall be deemed to be the Fair Value of such portions of
the assets and business of the acquired corporation as the Fair Value opinion
shall attribute to such Common Stock, Convertible Securities, rights or options,
as the case may be. In the event of any merger or consolidation of Newco in
which Newco is not the surviving corporation or in the event of any sale of all
or substantially all of the assets of Newco for stock or other securities of any
corporation, Newco shall be deemed to have issued a number of shares of its
Common Stock for stock or securities of the other corporation computed on the
basis of the actual exchange ratio on which the transaction was predicated and
for a consideration equal to the Fair Value on the date of such transaction of
such stock or securities of the other corporation, and if any such calculation
results in adjustment of the Exercise Price, the determination of the number of
shares of Common Stock issuable upon exercise of this Option immediately prior
to such merger, consolidation or sale, for the purposes of subsection (c) above,
shall be made after giving effect to such adjustment of the Exercise Price.
(g) Record Date. In case Newco shall take a record of the holders of
the Common Stock for the purpose of entitling them (i) to receive a dividend or
other distribution payable in Common Stock or in Convertible Securities, or (ii)
to subscribe for or purchase Common Stock or Convertible Securities, then all
references in this Section 6 to the date of the issue or sale of the shares of
Common Stock deemed to be issued or sold pursuant to the declaration of such
dividend or making of such other distribution or to the date of the granting of
such right of subscription or purchase, as the case may be, shall be deemed to
be references to such record date;
(h) Shares Outstanding. The number of shares of Common Stock deemed to
be outstanding at any given time shall not include (i) shares of Common Stock in
the treasury of Newco or any subsidiary;
(i) Maximum Exercise Price. At no time shall the Exercise Price per
share of Common Stock exceed the Exercise Price specified on the
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cover of this Option except as provided in subsection (b) or (c) of this Section
6.2; and
(j) Application. Except as otherwise provided herein, all subsections
of this Section 6.2 are intended to operate independently of one another. If an
event occurs that requires the application of more than one subsection, all
applicable subsections shall be given independent effect.
6.3 Dilution in Case of Distribution of Indebtedness, Dividends or
Assets. In the event Newco shall fix a record date for making to all holders of
its Common Stock a distribution of evidence of its indebtedness, securities
(other than shares of Common Stock) whether issued by Newco or not, property,
rights, assets (including all cash dividends or other cash distributions whether
payable out of earnings or out of surplus legally available for dividends under
the laws of the jurisdiction governing Newco or otherwise), or any other thing
of value, then the Optionholder shall be entitled to receive, subject to
applicable law, upon exercise of the Option, that portion of such distribution
to which it would have been entitled had Optionholder exercised its Option
immediately prior to the date of such distribution. At the time Newco fixes the
record date for such distribution, the Company shall allocate sufficient
reserves to ensure the timely and full performance of the provisions of this
Section 6.3. The payments of any amounts by Newco pursuant to management
agreements between Newco and RTM, Inc. and RTM Management Co., LLC, as such
agreements are in effect as of the date of issuance of this Option, shall not be
considered distributions subject to this Section 6.3.
6.4 Rights Offering. In the event Newco shall effect an offering of
Common Stock pro rata among its stockholders, the Optionholder shall be
entitled, subject to applicable law, to elect to participate in each and every
such offering as if this Option had been exercised immediately prior to each
such offering. The Company shall promptly (but in any case no later than 5
Business Days prior to such rights offering) cause Newco to mail by first class,
postage prepaid, to the Optionholder, notice that such rights offering will take
place.
6.5 No Adjustments under Certain Circumstances. Anything herein to the
contrary notwithstanding, the Company shall not be required to make any
adjustment of the Exercise Price in the case of:
(a) the transfer of shares of Common Stock to the Optionholder upon the
exercise of this Option; or
(b) the issuance of shares of Common Stock pursuant to a rights
offering in which the Optionholder elects to participate under the provisions of
Section 6.4.
6.6 Notices of Adjustments and of Extraordinary Corporate Events.
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(a) Adjustments to Exercise Price. Upon any adjustment of the Exercise
Price, a certificate signed (i) by the President of the Company, or (ii) by any
independent firm of certified public accountants of recognized national standing
selected by the Company and at its expense, shall be mailed promptly to each
Optionholder, which certificate sets forth in reasonable detail the events
requiring the adjustment and the method by which such adjustment was calculated
and specifies the Exercise Price and the number of shares of Common Stock
purchasable upon exercise of such Optionholder's Option, in each case, adjusted
pursuant to this Section 6.
The certificate of any independent firm of certified public accountants of
recognized national standing selected by the Board of Directors of the Company
shall be conclusive evidence of the correctness of any computation made under
Section 6.1.
(b) Extraordinary Corporate Events. In case Newco after the date hereof
shall propose to (i) distribute any dividend (whether stock or cash or
otherwise) to the holders of shares of Common Stock or to make any other
distribution to the holders of shares of Common Stock, (ii) offer to the holders
of shares of Common Stock rights to subscribe for or purchase any additional
shares of any class of stock or any other rights or options, or (iii) effect any
reclassification of the Common Stock (other than a reclassification involving
merely the subdivision or combination of outstanding shares of Common Stock),
any capital reorganization, any consolidation or merger (other than a merger in
which no distribution of securities or other property is to be made to holders
of shares of Common Stock), any sale, transfer or other disposition of all or
substantially all of its property, assets and business, or the liquidation,
dissolution or winding up of Newco, then, in each such case, the Company shall
mail to each Optionholder notice of such proposed action, which notice shall
specify the date on which (a) the books of Newco shall close, or (b) a record
shall be taken for determining the holders of Common Stock entitled to receive
such stock dividends or other distribution or such rights or options, or (c)
such reclassification, reorganization, consolidation, merger, sale, transfer,
other disposition, liquidation, dissolution or winding up shall take place or
commence, as the case may be, and the date, if any, as of which it is expected
that holders of record of Common Stock shall be entitled to receive securities
or other property deliverable upon such action. Such notice shall be mailed in
the case of any action covered by clause (i) or (ii) above at least 10 days
prior to the record date for determining holders of Common Stock for purposes of
receiving such payment or offer, or in the case of any action covered by clause
(iii) above at least 30 days prior to the date upon which such action takes
place and 20 days prior to any record date to determine holders of Common Stock
entitled to receive such securities or other property.
(c) Effect of Failure. Failure to file any certificate or notice or to
mail any notice, or any defect in any certificate or notice, pursuant to this
Section 6.6 shall not affect the legality or validity of the adjustment of the
Exercise Price, the number of shares purchasable upon
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exercise of this Option, or any transaction giving rise thereto.
7. Registration Rights.
The holder shall be entitled to the following registration rights:
7.1 Demand Registration.
7.1.1 At any time after Newco completes a public offering of the
Common Stock and is eligible to register securities on Form S-3 or any similar
successor form, the Holders of a majority in interest of the Registrable
Securities shall have the right to make a written request for registration under
the Securities Act (a "Demand Registration") of all or part of its or their
Registrable Securities. Upon receipt of the written request (the "Request") of
any such Holder or Holders, the Company shall cause Newco to use its best
efforts to effect the registration under the Securities Act of all Registrable
Securities that the Company has been so requested to cause Newco to register by
such Holder or Holders, provided, however, that the Company need only cause
Newco to effect one Demand Registration under the Securities Act of Registrable
Securities. Within 10 days after receipt of a Request, the Company will give
written notice (the "Notice") of such Request to all other Holders advising such
Holders of their right to include Registrable Securities in the registration
requested, and the Company will cause Newco to include in such registration all
Registrable Securities of such class or type covered by written requests for
inclusion received by the Company during the 15 business days following the
receipt by the applicable Holder of the Notice. All requests made pursuant to
this subsection 7.1.1 will specify the aggregate number of Registrable
Securities to be registered.
7.1.2 The Holders of a majority in interest of the Registrable
Securities shall have the right to select the managing underwriters, if any, for
such registration, subject to the approval of Newco, which shall not be
unreasonably withheld. If the managing underwriter of any underwritten offering
under this Section 7.1 shall inform Newco by letter that, in its opinion, the
number or type of Registrable Securities requested to be included in such
registration would adversely affect such offering, and Newco has so advised the
Holders in writing, then the Company will cause Newco to include in such
registration, to the extent of the number and type that Newco is so advised can
be sold in (or during the time of) such offering, first, such Registrable
Securities requested to be included in such registration by the Holders, pro
rata among such Holders on the basis of the estimated proceeds from the sale
thereof, and second, all other securities proposed to be registered.
7.1.3 Notwithstanding the foregoing, the Company shall not be
obligated to cause Newco to effect a registration pursuant to Section 7.1.1 (i)
during any lock-up period to which the Holders are subject pursuant to Section
9.6 or (ii) if within 30 days following a
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Request, Newco delivers a notice to the Holders that it intends to initiate a
public offering of Common Stock under the Securities Act (other than on a Form
S-4 or S-8). If Newco shall furnish to the Holders a certificate stating that in
the good faith judgment of the Board of Directors of Newco a registration would
require the premature disclosure of material non-public information which
disclosure would be seriously detrimental to Newco, the Company's obligation to
cause Newco to use its best efforts to file a registration statement shall be
deferred for a period not to exceed 90 days; provided, however, that in such
event, the Holders of a majority in interest of the Registrable Securities shall
have the right to withdraw the Request without penalty or incurring any costs
otherwise required to be borne by Newco or the Company in connection with a
Demand Registration.
7.1.4 If the Holders of a majority in interest of the Registrable
Securities elect to withdraw a Request, then the Company shall be relieved of
its obligations under this Section 7.1 if such withdrawal is not attributable to
the fault of the Company. If the Company exercises its right of first refusal
under Section 1.6 (a) hereof following a Request, the Company shall have no
further obligation under Section 7.1 hereof.
7.2 Incidental Registration.
7.2.1 If at any time following the second anniversary of the issuance
of this Option, Newco proposes to register any of its Common Stock under the
Securities Act by registration on any form other than Form S-4 or S-8 or any
similar successor form, whether or not for sale for its own account, the Company
shall cause Newco, at each such time to give prompt written notice to all
registered Holders of Registrable Securities of its intention to do so and of
such Holders' rights under this Section 7.2. Upon the written request of any
such Holder (a "Requesting Holder") made as promptly as practicable and in any
event within 10 days after the receipt of any such notice (which request shall
specify the Registrable Securities intended to be disposed of by such Requesting
Holder and the intended method of disposition), the Company shall cause Newco to
use its best efforts to effect the registration under the Securities Act of all
Registrable Securities that the Company has been so requested to register by the
Requesting Holders thereof to the extent required to permit the disposition of
such Registrable Securities in accordance with the intended methods thereof
described as aforesaid; provided, however, that prior to the effective date of
the registration statement filed in connection with such registration,
immediately upon notification to Newco from the managing underwriter of the
price at which such securities are to be sold, if such price is below the price
which any Requesting Holder shall have indicated to be acceptable to such
Requesting Holder, and if such price is below the range of prices indicated on
the cover of the most recent preliminary prospectus relating to such
registration, the Company shall cause Newco to so advise such Requesting Holder
of such price, and such Requesting Holder shall then have the right to withdraw
its request to have its Registrable Securities included in such registration
statement
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without penalty; provided further, that if, at any time after giving written
notice of its intention to register any securities and prior to the effective
date of the registration statement filed in connection with such registration,
Newco shall determine for any reason not to register or to delay registration of
such securities, the Company may, at its election, give written notice of such
determination to each Requesting Holder of Registrable Securities and (i) in the
case of a determination not to register, shall be relieved of its obligation to
cause Newco to register any Registrable Securities in connection with such
registration (but not from any obligation of the Company to cause Newco to pay
the registration expenses in connection therewith), and (ii) in the case of a
determination to delay registering, shall be permitted to delay registering any
Registrable Securities, for the same period as the delay in registering such
other securities.
7.2.2 If the managing underwriter of any underwritten offering under
this Section 7.2 shall inform Newco by letter that, in its opinion, the number
or type of Registrable Securities requested to be included in such registration
would adversely affect such offering, and Newco has so advised the Requesting
Holders in writing, then the Company will cause Newco to include in such
registration, to the extent of the number and type that Newco is so advised can
be sold in (or during the time of) such offering, (i) all securities proposed by
Newco to be sold for its own account and (ii) such Registrable Securities
requested to be included in such registration pursuant to this Agreement or a
Similar Option and all other securities proposed to be registered pro rata among
all such securities on the basis of the estimated proceeds from the sale
thereof.
8. Obligations of the Company. In connection with the registration of the
Registrable Securities as contemplated by Section 7.1 or 7.2, the Company shall
cause Newco to:
8.1 prepare and file with the SEC a registration statement or
statements or similar documents (the "Registration Statement") with respect to
(i) in the case of registration contemplated by Section 7.1, all Registrable
Securities, and thereafter use its best efforts to cause the Registration
Statement to become effective as soon as practicable and in any event within 90
days after the Request, and (ii) in the case of incidental registration pursuant
to Section 7.2, the securities to be sold by Newco together with the Registrable
Securities to be sold by the Requesting Holders and the other securities
referred to in Section 7.2.2, and thereafter use its best efforts to cause the
Registration Statement to become effective as soon as practicable, which
Registration Statement (including any amendments or supplements thereto and
prospectuses contained therein), in each case, shall not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein, or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading;
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8.2 prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to the Registration Statement and the
prospectus used in connection with the Registration Statement as may be
necessary to keep the Registration Statement effective and to comply with the
provisions of the Securities Act with respect to the disposition of all
Registrable Securities covered by the Registration Statement until such time as
all of such Registrable Securities have been disposed of in accordance with the
intended methods of disposition by the seller or sellers thereof set forth in
the Registration Statement;
8.3 furnish to each Holder whose Registrable Securities are included in
the Registration Statement such number of copies of a prospectus, including a
preliminary prospectus and all amendments and supplements thereto and such other
documents, as such Holder may reasonably request in order to facilitate the
disposition of the Registrable securities owned by such Holder;
8.4 use its best efforts to (i) register and qualify the Registrable
Securities covered by the Registration Statement under such other securities or
Blue Sky laws of such jurisdictions as the Holders who hold a majority in
interest of the Registrable Securities reasonably request, (ii) prepare and file
in those jurisdictions all required amendments (including post-effective
amendments) and supplements, (iii) take such other actions as may be necessary
to maintain such registrations and qualifications in effect at all times the
Registration Statement is in effect and (iv) take all other actions necessary or
advisable to enable the disposition of such securities in all such
jurisdictions; provided, however, that Newco shall not be required in connection
therewith or as a condition thereto to qualify to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
Section 8.4;
8.5 (i) in the case of registration contemplated by Section 7.1, in the
event Holders who hold a majority in interest of the Registrable Securities
select underwriters for the offering, and (ii) in the case of registration
contemplated by Section 7.2, in the case of an underwritten offering, enter into
and perform its obligations under an underwriting agreement with the managing
underwriter of such offering, in usual and customary form, including, without
limitation, customary indemnification and contribution obligations, and (ii) in
the case of any non-underwritten offering, provide to broker-dealers
participating in any distribution of Registrable Securities reasonable
indemnification substantially similar to that provided by Section 11.1;
8.6 promptly notify each Holder of the happening of any event of which
Newco has knowledge, as a result of which Newco believes the prospectus included
in the Registration Statement, as then in effect, includes an untrue statement
of a material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances then existing, not
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misleading, and use its best efforts to prepare promptly a supplement or
amendment to the Registration Statement to correct such untrue statement or
omission, and deliver a number of copies of such supplement or amendment to each
Holder as such Holder may reasonably request;
8.7 promptly notify each Holder who holds Registrable Securities being
sold (or, in the event of an underwritten offering, the managing underwriters)
of the issuance by the SEC of any stop order or other suspension of
effectiveness of the Registration Statement, and make every reasonable effort to
obtain the withdrawal of any order suspending the effectiveness of the
Registration Statement at the earliest possible time;
8.8 permit a single firm of counsel designated as selling stockholders'
counsel by the Holders who hold a majority in interest of the Registrable
Securities being sold to review the Registration Statement and all amendments
and supplements thereto a reasonable period of time prior to their filing with
the SEC, and shall not file any document in a form to which such counsel
reasonably objects;
8.9 make generally available to its security holders as soon as
practical, but not later than 90 days after the close of the period covered
thereby, an earnings statement (in form complying with the provisions of Rule
158 under the Securities Act) covering a twelve-month period beginning not later
than the first day of the Company's fiscal quarter next following the effective
date of the Registration Statement;
8.10 at the request of the Holders who hold a majority in interest of
the Registrable Securities being sold, furnish on the date that Registrable
Securities are delivered to an underwriter for sale in connection with the
Registration Statement (i) a letter, dated such date, from Newco's independent
certified public accountants, in form and substance as is customarily given by
independent certified public accountants to underwriters in an underwritten
public offering, addressed to the underwriters; and (ii) an opinion, dated such
date, from counsel representing Newco for purposes of such Registration
Statement, in form and substance as is customarily given to underwriters in an
underwritten public offering, addressed to the underwriters;
8.11 make available for inspection by any Holder, any underwriter
participating in any disposition pursuant to the Registration Statement, and any
attorney, accountant, or other agent retained by any such Holder or underwriter
(collectively, the "Inspectors"), all pertinent financial and other records,
pertinent corporate documents and properties of Newco, as shall be reasonably
necessary to enable each Inspector to exercise its due diligence responsibility,
and cause Newco's officers, directors and employees to supply all information
reasonably requested by any such Inspector in connection with the Registration
Statement;
8.12 use its best efforts either to (i) cause all the
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Registrable Securities covered by the Registration Statement to be listed on a
national securities exchange and on each additional national securities exchange
on which similar securities issued by Newco are then listed, if any, if the
listing of such Registrable Securities is then permitted under the rules of such
exchange or (ii) secure designation of all the Registrable Securities covered by
the Registration Statement as a NASDAQ "National Market Security" within the
meaning of Rule 11Aa2-l of the SEC and the quotation of the Registrable
Securities on the NASDAQ National Market;
8.13 provide a transfer agent and registrar, which may be a single
entity, for the Registrable Securities not later than the effective date of the
Registration Statement;
8.14 cooperate with the Holders who hold Registrable Securities being
sold and the managing underwriter or underwriters, if any, to facilitate the
timely preparation and delivery of certificates (not bearing any restrictive
legends) representing Registrable Securities to be sold pursuant to the
Registration Statement and enable such certificates to be in such denominations
or amounts, as the case may be, and registered in such names as the managing
underwriter or underwriters, if any, or the Holders may reasonably request; and
8.15 take all other reasonable actions necessary to expedite and
facilitate disposition by the Holders of the Registrable Securities pursuant to
the Registration Statement.
9. Obligations of the Holders.
9.1 It shall be a condition precedent to the obligations of the Company
to take any action pursuant to this Agreement with respect to each Holder that
such Holder shall furnish to Newco such information regarding itself, the
Registrable Securities held by it and the intended method of disposition of such
securities as shall be reasonably required to effect the registration of the
Registrable Securities and shall execute such documents and agreements in
connection with such registration as Newco may reasonably request. At least ten
days prior to the first anticipated filing date of the Registration Statement,
the Company shall cause Newco to notify each Holder of the information Newco
requires from each such Holder (the "Requested Information") if he elects to
have any of his Registrable Securities included in the Registration Statement.
If within three Business Days of the filing date Newco has not received the
Requested Information from a Holder (a "Non-Responsive Holder"), then the
Company may permit Newco to file the Registration Statement without including
Registrable Securities of such Non-Responsive Holders;
9.2 Each Holder, by his acceptance of the Registrable Securities,
agrees to cooperate with Newco in connection with the preparation and filing of
any registration statement hereunder, unless such Holder has decided not to
participate;
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9.3 In the case of registration contemplated by Section 7.1, in the
event Holders holding a majority in interest of the Registrable Securities
select underwriters for the offering, and in the case of registration
contemplated by Section 7.2, in the event of an underwritten offering, each
Holder agrees to enter into and perform his obligations under an underwriting
agreement, in usual and customary form, including without limitation customary
indemnification and contribution obligations, with the managing underwriter of
such offering and take such other actions as are reasonably required in order to
expedite or facilitate the disposition of the Registrable Securities, unless (i)
in the case of registration contemplated by Section 7.1, such Holder has
notified Newco in writing of his election to exclude all of his Registrable
Securities from the Registration Statement, or (ii) in the case of registration
contemplated by Section 7.2, such Holder has decided not to participate;
9.4 Each Holder agrees that, upon receipt of any notice from
Newco of the happening of any event of the kind described in Section 8.6, such
Holder will immediately discontinue disposition of Registrable Securities
pursuant to the Registration Statement covering such Registrable Securities
until such Holder's receipt of the copies of the supplemented or amended
prospectus contemplated by Section 8.6 and, if so directed by Newco, such Holder
shall deliver to Newco (at the expense of Newco) or destroy (and deliver to
Newco a certificate of such destruction) all copies, other than permanent file
copies then in such Holder's possession, of the prospectus covering such
Registrable Securities current at the time of receipt of such notice;
9.5 No Holder may participate in any underwritten registration
hereunder unless such Holder (i) agrees to sell such Holder's Registrable
Securities on the basis provided in any underwriting arrangements approved by
the Holders entitled hereunder to approve such arrangements, (ii) completes and
executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the terms of such
underwriting arrangements and (iii) agrees to pay such Holder's pro rata portion
of all underwriting discounts and commissions; and
9.6 In consideration of the Company's agreements hereunder, each Holder
agrees that, upon the request of Newco or any managing underwriter for any
public offering of Newco's securities, it shall not sell, effect any short sale
of, loan, pledge, grant any option for the purchase of, or otherwise dispose of
any Common Stock (other than shares included in any registration effected
hereunder) without the prior written consent of Newco or such managing
underwriter, as the case may be, for such period of time (not to exceed 180
days) from the effective date of such registration as Newco or the managing
underwriter may specify.
10. Expenses of Registration. The Company shall cause all expenses other
than underwriting discounts and commissions incurred in
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connection with registration, filings or qualifications pursuant to Section 8,
including, without limitation, all registration, listing, filing and
qualification fees, printing and accounting fees, the fees and disbursements of
counsel for Newco and the reasonable fees and disbursements of one firm of
counsel for the Holders, to be borne by Newco, except as otherwise required by
applicable rules or regulations of the National Association of Securities
Dealers or by applicable federal or state securities laws.
11. Indemnification. In the event any Registrable Securities are included
in a Registration Statement under this Agreement:
11.1 To the extent permitted by law, the Company will cause Newco to
indemnify and hold harmless each Holder who holds such Registrable Securities,
the directors, if any, of such Holder, the officers, if any, of such Holder, who
sign the Registration Statement, each person, if any, who controls such Holder,
any underwriter (as defined in the Securities Act) for the Holders, and each
person, if any, who controls any such underwriter within the meaning of the
Securities Act or the Securities Exchange Act of 1934, as amended (the "Exchange
Act") (each, an "Indemnified Holder") against any losses, claims, damages,
expenses, liabilities (joint or several) (collectively, "Claims") to which any
of them may become subject under the Securities Act, the Exchange Act or
otherwise, insofar as such Claims (or actions or proceedings, whether commenced
or threatened, in respect thereof) arise out of or are based upon any of the
following statements, omissions or violations (collectively, a "Violation"): (i)
any untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement or any post-effective amendment thereof, or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, (ii)
any untrue statement or alleged untrue statement of a material fact contained in
any preliminary prospectus if used prior to the effective date of such
Registration Statement, or contained in the final prospectus (as amended or
supplemented if Newco files any amendment thereof or supplement thereto with the
SEC), or the omission or alleged omission to state therein a material fact
required to be stated therein, or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, or (iii) any violation or alleged violation by Newco of the
Securities Act, the Exchange Act, any state securities law, or any rule or
regulation promulgated under the Securities Act, the Exchange Act, or any state
securities law. Subject to the restrictions set forth in Section 11.4 with
respect to the number of legal counsel, the Company shall cause Newco to
reimburse the Holders and each such underwriter or controlling person, promptly
as such expenses are incurred and are due and payable, for any legal fees or
other reasonable expenses incurred by them in connection with investigating or
defending any such Claim, whether or not such claim, investigation or proceeding
is brought or initiated by Newco or a third party. If multiple claims are
brought against an Indemnified Holder in an arbitration proceeding, and
indemnification is permitted under applicable law and is provided for under
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this Section 11 with respect to at least one such claim, the Company will cause
Newco to agree that any arbitration award shall be conclusively deemed to be
based on claims as to which indemnification is permitted and provided for,
except to the extent the arbitration award expressly states that the award, or
any portion thereof, is based solely on a claim as to which indemnification is
not available. Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 11.1 (a) as to any
Indemnified Holder shall not apply to a Claim arising out of or based upon a
Violation which occurs in reliance upon and in conformity with information
furnished in writing to Newco by such Indemnified Holder expressly for use in
connection with the preparation of the Registration Statement or any such
amendment thereof or supplement thereto; and (b) shall not apply to amounts paid
in settlement of any Claim if such settlement is effected without the prior
written consent of Newco. The Company shall cause Newco to not withhold such
consent unreasonably. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of the Indemnified Holder
and shall survive the transfer of the Registrable Securities by the Holders
pursuant to Section 14.
11.2 In connection with any Registration Statement in which a Holder is
participating, each such Holder agrees to indemnify and hold harmless, to the
same extent and in the same manner set forth in Section 11.1, Newco, each of its
directors, each of its officers who sign the Registration Statement, each
person, if any, who controls Newco within the meaning of the Securities Act or
the Exchange Act, any underwriter and any other stockholder selling securities
pursuant to the Registration Statement or any of its directors or officers or
any person who controls such stockholder or underwriter (collectively and
together with an Indemnified Holder, an "Indemnified Party"), against any Claim
to which any of them may become subject, under the Securities Act, the Exchange
Act or otherwise, insofar as such Claim arises out of or is based upon any
Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished to Newco by such Holder expressly for use in connection with such
Registration Statement; and such Holder will reimburse any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such Claim; provided, however, that the indemnity agreement
contained in this Section 11.2 shall not apply to amounts paid in settlement of
any Claim if such settlement is effected without the prior written consent of
such Holder, which consent shall not be unreasonably withheld; provided,
further, that the Holder shall be liable under this Section 11.2 for only that
amount of a Claim as does not exceed the net proceeds to such Holder as a result
of the sale of Registrable Securities pursuant to such Registration Statement.
11.3 Newco shall be entitled to receive indemnities from underwriters,
selling brokers, dealer managers, and similar securities industry professionals
participating in the distribution to the same extent as provided above, with
respect to information about such persons so
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furnished in writing by such persons expressly for inclusion in the Registration
Statement.
11.4 Promptly after receipt by an Indemnified Party under this Section
11 of notice of the commencement of any action (including any governmental
action), such Indemnified Party shall, if a Claim in respect thereof is to be
made against any indemnifying Party under this Section 11, deliver to the
indemnifying Party a written notice of the commencement thereof, and the
indemnifying Party shall have the right to participate in, and, to the extent
the indemnifying Party so desires, jointly with any other indemnifying Party
similarly noticed, to assume control of the defense thereof with counsel
satisfactory to the Indemnified Parties; provided, however, that an Indemnified
Party shall have the right to retain its own counsel, with the fees and expenses
to be paid by the indemnifying Party, if, in the reasonable opinion of counsel
for the Indemnified Party, representation of such Indemnified Party by the
counsel retained by the indemnifying Party would be inappropriate due to actual
or potential differing interests between such Indemnified Party and any other
party represented by such counsel in such proceeding. The Company shall cause
Newco to pay for only one legal counsel for the Holders; such legal counsel
shall be selected by the Holders holding a majority in interest of the
Registrable Securities. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action shall not relieve such indemnifying party of any liability to the
Indemnified Party under this Section 11, except to the extent that such failure
to notify results in the forfeiture by the indemnifying party of substantive
rights or defenses. The indemnification required by this Section 11 shall be
made by periodic payments of the amount thereof during the course of the
investigation or defense, as such expense, loss, damage or liability is incurred
and is due and payable.
12. Contribution. To the extent any indemnification by an indemnifying
party is prohibited or limited by law, the indemnifying party agrees to make the
maximum contribution with respect to any amounts for which it would otherwise be
liable under Section 11 to the fullest extent permitted by law; provided,
however, that (i) no contribution shall be made under circumstances where the
maker would not have been liable for indemnification under the fault standards
set forth in Section 11, (ii) no seller of Registrable Securities guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any seller of Registrable
Securities who was not guilty of such fraudulent misrepresentation and (iii)
contribution by any seller of Registrable Securities shall be limited in amount
to the net amount of proceeds received by such seller from the sale of such
Registrable Securities.
13. Reports Under Securities Exchange Act of 1934. With a view to making
available to the Holders the benefits of Rule 144 promulgated under the
Securities Act or any other similar rule or regulation of the SEC that may at
any time permit the Holders to sell securities of Newco to the
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public without registration ("Rule 144"), the Company agrees to cause Newco to:
13.1 make and keep public information available, as those terms are
understood and defined in Rule 144;
13.2 file with the SEC in a timely manner all reports and other
documents required of Newco under the Securities Act and the Exchange Act; and
13.3 furnish to each Holder so long as such Holder owns Registrable
Securities, promptly upon request, (i) a written statement by Newco that it has
complied with the reporting requirements of Rule 144 (at any time after 90 days
after the effective date of the first registration statement filed by Newco),
the Securities Act and the Exchange Act (at any time after it has become subject
to such reporting requirements), (ii) a copy of the most recent annual or
quarterly report of Newco and such other reports and documents so filed by
Newco, and (iii) such other information as may be reasonably requested to permit
the Holders to sell such securities without registration.
14. Assignment of Registration Rights. The right to have the Company
cause Newco to register Registrable Securities pursuant to this Option shall be
automatically assigned by the Holders to transferees or assignees of this Option
or such Registrable Securities, provided that immediately following such
transfer or assignment, the further disposition of such securities by the
transferee or assignee would be subject to restrictions under the Securities
Act. The term "Holders" as used herein shall include permitted assignees and
transferees.
15. Holdco Public Offering. In the event that the Company or any direct
or indirect parent of the Company completes a public offering (a "Company IPO")
of its common or common equivalent equity (the "Company Common Stock"), and at
such time the Common Stock is not publicly traded, then, at the request of
Optionholders entitled to purchase not less than 51% of the total number of
Option Shares not yet purchased, the Company shall issue to each Optionholder an
option (a "Replacement Option") to purchase shares of Company Common Stock in
exchange for his Option to purchase Common Stock. The Replacement Option shall
contain provisions so that the provisions set forth herein shall thereafter be
applicable, in a manner as similar as possible to the methods used herein, to
any shares of stock or other securities or other property thereafter deliverable
upon exercise of the Replacement Option. For example, the Replacement Option
shall obligate the Company to undertake all responsibilities and obligations to
be undertaken hereunder by the Company or by Newco and all references herein to
Newco shall be replaced in the Replacement Options by analogous references to
the Company and all references herein to the Common Stock shall be replaced in
the Replacement Options by analogous references to the Company Common Stock. The
Replacement Option shall bind the Company, shall be accompanied by an opinion of
counsel as to the
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enforceability of the Replacement Option and shall be approved by Optionholders
entitled to purchase not less than 51% of the total number of Option Shares not
yet purchased. The Replacement Option shall be exercisable for a percentage of
the shares of Company Common Stock outstanding on a fully diluted basis on the
date of issuance of the of the Replacement Option equal to the percentage of the
outstanding shares of Common Stock on a fully diluted basis represented by the
Option Shares underlying this Option at the time of issuance of the Replacement
Option transferable to the Optionholder upon exercise of this Option, multiplied
by a fraction, the numerator of which is the Fair Value of Newco on the date of
completion of the Company IPO and the denominator of which is the Fair Value of
the Company on the date of completion of the Company IPO. For the purposes of
this Section 15, "fully diluted basis" means the number of shares of Company
Common Stock outstanding on the date of exercise of the Replacement Option,
after giving effect to the exercise of all Replacement Options and the
conversion or exercise of any securities convertible into or exchangeable for
Company Common Stock and any outstanding options, warrants or other rights to
purchase or subscribe for Company Common Stock which have been issued by the
Company. Upon issuance of the Replacement Options, the Company covenants and
agrees that during the period within which the Replacement Option may be
exercised, the Company will at all times have authorized and reserved, and keep
available free from preemptive rights, a sufficient number of shares of Company
Common Stock to provide for the exercise of the rights represented by all
Replacement Options. The Company further covenants and agrees that all shares of
Company Common Stock which are issued upon the exercise of the Replacement
Options will, upon issuance, be validly issued, fully paid, and nonassessable,
not subject to any preemptive rights, and free from all taxes, liens, security
interests, charges, and other encumbrances.
16. Amendments. Any provision of this Option (including registration
rights) may be amended and the observance thereof may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the Holders who
hold a majority in interest of the Registrable Securities. Any amendment or
waiver effected in accordance with this Section 15 shall be binding upon each
Holder and the Company.
17. Expiration of the Option. Except with respect to Sections 2, 7, 8, 9,
10, 11, 12, 13, 14, 15, 17, 18 and 19 the obligations of the Company pursuant to
this Option shall terminate on the Expiration Date, unless the Option is not
exercised, in which case all of the obligations of the Company under this
Agreement shall terminate on the Expiration Date.
18. Definitions.
As used herein, unless the context otherwise requires, the following
terms have the following respective meanings:
Affiliate: of any person or entity means any other person or
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entity directly or indirectly controlling, controlled by or under direct or
indirect common control with such person or entity. For the purposes of this
definition, "control," when used with respect to any person or entity, means the
power to direct or cause the direction of the management or policies of such
person or entity, directly or indirectly, whether through the ownership of
voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
Assignment Form: an Assignment Form in the form annexed hereto as Exhibit
B.
Book Value: per share of Common Stock as of any date herein shall mean
the Consolidated Net Worth of Newco and its Subsidiaries as of such date divided
by the number of shares of Common Stock outstanding as of such date.
Business Day: any day other than a Saturday, Sunday or a day on which
national banks are authorized by law to close in The City of New York, State of
New York.
Claims: the meaning specified in Section 11.1.
Common Stock: the meaning specified on the cover of this Option.
Company: the meaning specified on the cover of this Option.
Company Common Stock: the meaning specified in Section 15.
Company IPO: the meaning specified in Section 15.
Convertible Securities: evidences of indebtedness, shares of stock or
other securities which are convertible into or exchangeable for, with or without
payment of additional consideration, additional shares of Common Stock, either
immediately or upon the arrival of a specified date or the happening of a
specified event.
Consolidated Net Worth: as of any date herein specified, the total
consolidated assets of Newco and its Subsidiaries minus the total consolidated
liabilities of Newco and its Subsidiaries (exclusive of any liabilities
associated with the Option) as determined from the consolidated balance sheet of
Newco and its Subsidiaries from the most recent fiscal quarter, which
consolidated balance sheet shall be prepared in accordance with generally
accepted accounting principles consistently applied, shall be in reasonable
detail, and shall be certified as complete and correct by the chief financial or
accounting officer of Newco.
Demand Registration: the meaning specified in Section 7.1.
Exchange Act: the meaning specified in Section 11.1 or any successor
Federal statute, and the rules and regulations of the SEC
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thereunder, all as the same shall be in effect at the time. Reference to a
particular section of the Exchange Act shall include a reference to a comparable
section, if any, of any such successor Federal statute.
Exercise Form: an Exercise Form in the form annexed hereto as Exhibit A.
Exercise Price: the meaning specified on the cover of this Option.
Expiration Date: the meaning specified on the cover of this Option.
Fair Market Value: Fair Market Value of a share of Common Stock as of a
particular date (the "Determination Date") shall mean: (i) If the Common Stock
is listed on a national securities exchange, then the Fair Market Value shall be
the average of the closing prices of the Common Stock on the principal national
securities exchange on which the Common Stock is listed or admitted for trading
on the last twenty Business Days prior to the Determination Date, or if not
listed or traded on any such exchange, then the Fair Market Value shall be the
average of the closing prices of the Common Stock on the National Market System
(the "National Market System") of the National Association of Securities Dealers
Automated Quotations System ("NASDAQ") on the last twenty Business Days prior to
the Determination Date; or, if the Common Stock is not listed on any national
securities exchange or quoted on the National Market System, the average of the
highest bid and lowest asked prices in the over-the-counter market as reported
by the National Quotation Bureau or any similar successor organization on the
last twenty Business Days prior to the Determination Date; or
(ii) If the Common Stock is not so listed or admitted to unlisted
trading privileges, then the Fair Market Value shall be the higher of (x) the
Book Value per share, and (y) the fair value as reasonably determined by an
Independent Financial Expert selected by the independent certified public
accountants of Newco (which determination shall be reasonably described in the
written notice delivered to the Optionholder together with the Common Stock
certificates).
Where the term "Fair Market Value" is used in reference to securities
other than Common Stock (as is the case in Section 6.2(f)), all references to
Common Stock in this Section 1.2(c) shall be read to mean such securities.
Fair Value: as reasonably calculated by the Company's Board of Directors
or a duly appointed committee of such Board and agreed to by the Optionholders
(who shall agree among themselves by a majority in interest) or, failing such
agreement within 15 days after such Board's or the committee's calculation, the
fair value as determined by an Independent Financial Expert selected by the
independent certified public accountants
<PAGE>
<PAGE>
of the Company. Such firm shall determine the fair value of the security,
property, or assets, as the case may be, in question and deliver its opinion in
writing to the Company and to such holders.
Holder(s): holder(s) of Registrable Securities.
Indemnified Holder: the meaning specified in Section 11.1.
Indemnified Party: the meaning specified in Section 11.2.
Independent Financial Expert: means a nationally recognized investment
banking firm (a) that does not (and whose directors, officers, employees and
Affiliates do not) have a direct or indirect material financial interest in the
Company or Newco, (b) that has not been, and, at the time it is called upon to
serve as an Independent Financial Expert under this Agreement is not (and none
of whose directors, officers, employees or Affiliates is) a promoter, director
or officer of the Company or Newco, (c) that has not been retained by the
Company or Newco for any purpose, other than to perform an equity valuation,
within the preceding 12 months and (d) that is otherwise qualified to serve as
an independent financial advisor.
Inspectors: the meaning specified in Section 8.11.
NASDAQ: the meaning specified in the definition of Fair Market Value.
National Market System: the meaning specified in the definition of Fair
Market Value.
Non-Responsive Holder: the meaning specified in Section 9.2.
Other Securities: any stock and other securities of Newco (other than
Common Stock) or of any other entity which shall become subject to issue or sale
upon the conversion or exchange of any stock or other securities of Newco.
Participation Notice: the meaning specified in Section 2.2.
Registrable Securities: (i) the Option Shares and other securities
transferred or transferable to the Optionholder upon exercise of this Option and
(ii) any securities issued or issuable with respect to any Common Stock or other
securities referred to in subdivision (i) by way of stock dividend or stock
split or in connection with a combination or other reorganization or otherwise.
Any shares constituting Registrable Securities shall cease to be such if and
when they (i) are distributed to the public pursuant to a registration statement
under the Securities Act or Rule 144, (ii) become subject to resale pursuant to
Rule 144(k) under the Securities Act (or any successor provision) or (iii) shall
have otherwise been transferred and the new certificate evidencing ownership
thereof does
<PAGE>
<PAGE>
not bear a restrictive legend pursuant to the Securities Act and is not subject
to a stop transfer order delivered by or on behalf of Newco.
Registration Statement: the meaning specified in Section 8.1.
Replacement Option: the meaning specified in Section 15.
Requested Information: the meaning specified in Section 9.1.
Requesting Holder: the meaning specified in Section 7.2.1.
Rule 144: the meaning specified in Section 13.
SEC: the Securities and Exchange Commission or any other Federal agency
at the time administering the Securities Act or the Exchange Act, whichever is
the relevant statute for the particular purpose.
Securities Act: the meaning specified on the cover of this Option, or any
successor Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time. Reference to a
particular section of the Securities Act, shall include a reference to the
comparable section, if any, of any such successor Federal statute.
Similar Options: any Option substantially in the same form as this
Option.
Subsidiary: any corporation or other entity (a) more than 50% (by number
of votes) owned by Newco and/or by one or more of its Subsidiaries, or any other
business entity in which Newco and/or one or more of its Subsidiaries owns more
than a 50% interest in either the capital or profits of such business entity, or
(b) whose net earnings or portions thereof are consolidated with the net
earnings of Newco and are recorded in the books of Newco for financial reporting
purposes in accordance with generally accepted accounting principles or (c) of
which a majority of the capital stock or other ownership interests having
ordinary voting power to elect a majority of the board of directors (or other
persons performing similar functions) are directly or indirectly owned by Newco
and/or one or more of its Subsidiaries.
Transfer: for purposes of Section 2.2, to transfer, sell, assign, pledge,
hypothecate, give, create a security interest or lien on, place in trust (voting
or otherwise), assign or in any other way encumber or dispose of, directly or
indirectly and whether or not by operation of law or for value, any share of
Common Stock.
Violation: the meaning specified in Section 11.1.
Optionholder: the meaning specified on the cover of this Option.
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<PAGE>
Option Shares: the meaning specified on the cover of this Option.
19. Miscellaneous.
19.1 Entire Agreement. This Option constitutes the entire agreement
between the Company and the Optionholder with respect to the Options.
19.2 Binding Effects; Benefits. This Option shall inure to the benefit
of and shall be binding upon the Company and the Optionholder and their
respective heirs, legal representatives, successors and assigns. Nothing in this
Option, expressed or implied, is intended to or shall confer on any person other
than the Company and the Optionholder, or their respective heirs, legal
representatives, successors or assigns, any rights, remedies, obligations or
liabilities under or by reason of this Option.
19.3 Section and Other Headings. The section and other headings
contained in this Option are for reference purposes only and shall not be deemed
to be a part of this Option or to affect the meaning or interpretation of this
Option.
19.4 Pronouns. All pronouns and any variations thereof refer to the
masculine, feminine or neuter, singular or plural, as the context may require.
19.5 Further Assurances. Each of the Company and the Optionholder shall
do and perform all such further acts and things and execute and deliver all such
other certificates, instruments and documents as the Company or the Optionholder
may, at any time and from time to time, reasonably request in connection with
the performance of any of the provisions of this Agreement.
19.6 Notices. All notices and other communications required or
permitted to be given under this Option shall be in writing and shall be by
telecopier, courier service or personal delivery, to the parties hereto at the
following addresses or to such other address as any party hereto shall hereafter
specify by notice to the other party hereto:
(a) if to the Company, addressed to:
c/o RTM Restaurant Group
5995 Barfield Road
Atlanta, GA 30328
Attention: General Counsel
(b) if to the Optionholder, addressed to:
the address of such Optionholder
appearing on the books of the Company.
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<PAGE>
Except as otherwise provided herein, all such notices and communications shall
be deemed to have been duly given when delivered by hand, if personally
delivered; by courier, if delivered by commercial overnight courier service; and
when receipt is acknowledged, if telecopied.
19.7 Separability. Any term or provision of this Option which is
invalid or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the terms and provisions of this Option or
affecting the validity or enforceability of any of the terms or provisions of
this Option in any other jurisdiction.
19.8 Governing Law. This Option shall be deemed to be a contract made
under the laws of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to such
agreements made and to be performed entirely within such State.
19.9 No Rights or Liabilities as Stockholder. Nothing contained in this
Option shall be determined as conferring upon the Optionholder any rights as a
stockholder of Newco or as imposing any liabilities on the Optionholder to
purchase any securities whether such liabilities are asserted by Newco or by
creditors or stockholders of Newco or otherwise.
IN WITNESS WHEREOF, the Company has caused this Option to be signed by
its duly authorized officer.
RTM PARTNERS, INC.
By: /s/ Philip G. Skinner
Name: Philip G. Skinner
Title: Vice President
Dated: May 5, 1997
<PAGE>
<PAGE>
Exhibit A
EXERCISE FORM
(To be executed upon exercise of this Option)
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<PAGE>
The undersigned hereby irrevocably elects to exercise the right,
represented by this Option, to purchase _________ of the Option Shares and
herewith tenders (i) payment for such Option Shares to the order of [ ] in the
amount of $__________ in accordance with the terms of this Option. The
undersigned requests that a certificate for such Option Shares be registered in
the name of __________________ and that such certificates be delivered to
__________________ whose address is _______________________.
Dated:______________
Signature_____________________________
-----------------------------
(Print Name)
-----------------------------
(Street Address)
-----------------------------
(City) (State) (Zip Code)
Signed in the Presence of:
- -------------------------
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<PAGE>
Exhibit B
FORM OF ASSIGNMENT
(To be executed only upon transfer of this Option)
For value received, the undersigned registered holder of the within Option
hereby sells, assigns and transfers unto _________________ the right represented
by such Option to purchase ________________ shares of Common Stock of [ ] to
which such Option relates and all other rights of the Optionholder under the
within Option (including, without limitation, the registration rights provided
in Section 7 of the within Option), and appoints ______________________ Attorney
to make such transfer
<PAGE>
<PAGE>
on the books of [ ] maintained for such purpose, with full power of substitution
in the premises.
Dated: ___________________
Signature_____________________________
-----------------------------
(Print Name)
-----------------------------
(Street Address)
-----------------------------
(City) (State) (Zip Code)
Signed in the presence of:
- -------------------------
<PAGE>
<PAGE>
Exhibit 10.30
Schedule of Omitted Documents and Summary of Material Differences
1. Option Dated May 5, 1997 pursuant to which RTM Partners, Inc. granted to
Arby's Restaurant Operating Company the right to purchase forty-seven (47)
shares of the Common Stock, par value $1.00 per share, of RTM Operating
Company at a purchase price of $3,038.49 per share, expiring May 5, 1999
(Certificate No. 2).
2. Option dated May 5, 1997 pursuant to which RTM Partners, Inc. granted to
Arby's Restaurant Development Company the right to purchase two hundred
(200) shares of the Common Stock, par value $1.00 per share, of RTM
Development Company at a purchase price of $7,971.52 per share, expiring
May 5, 1999 (Certificate No. 1).
<PAGE>
<PAGE>
Exhibit 10.31
================================================================================
GUARANTY
by
RTM, INC.
RTM HOLDING COMPANY, INC.
RTM PARTNERS, INC.
RTM OPERATING COMPANY
RTM MANAGEMENT CO., LLC
in favor of
ARBY'S, INC., ARBY'S RESTAURANT
DEVELOPMENT CORPORATION,
ARBY'S RESTAURANT HOLDING COMPANY,
ARBY'S RESTAURANT OPERATIONS COMPANY
AND TRIARC COMPANIES, INC.
---------------------------------------
Dated as of May 5, 1997
---------------------------------------
================================================================================
<PAGE>
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C> <C>
1. Definitions ................................................................ 2
2. The Guaranty ............................................................... 5
2.1 Guaranty by RTM, Parent, Holdco,
RTM Management and Newco One ........................................ 5
2.2 Guaranty by RTM, Parent Holdco, and RTM Management .................. 5
2.3 Guaranty by RTM, Parent, Holdco, RTM
Management and Newco One ............................................ 5
2.4 Guaranty by RTM, Holdco, RTM Management and Newco One ............... 6
2.5 Guaranty by RTM, Parent, Holdco and Newco One ....................... 6
2.6 Guaranty by Parent, Holdco, RTM Management and Newco One ............ 6
2.7 Guaranty by RTM Management .......................................... 6
2.8 Guaranteed Obligations .............................................. 7
3. Liability of the Guarantor ................................................. 7
3.1 Guaranty of Payment ................................................. 7
3.2 Continuing Guaranty ................................................. 7
3.3 Absolute and Unconditional Guaranty ................................. 7
4. Waivers of Notices and Defenses ............................................ 9
5. Bankruptcy and Related Matters ............................................. 10
5.1 No Proceedings Against RTM, Parent, Holdco, RTM Management, Newco One
or Newco Two ........................................................ 10
5.2 Guarantors Remain Obligated ......................................... 10
5.3 Stay of Acceleration ................................................ 10
5.4 Post-Petition Interest .............................................. 11
5.5 Reinstatement of Guaranty ........................................... 11
5.6 Limitation of Guarantor's Liability ................................. 11
6. No Subrogation ............................................................. 11
7. Subordination of Other Obligations ......................................... 12
8. Setoff; Security Arrangements .............................................. 12
8.1 Setoff .............................................................. 12
8.2 Security Arrangements ............................................... 13
8.3 RTM Fee1 ............................................................ 14
9. Taxes ...................................................................... 14
9.1 Payments Free of Taxes .............................................. 14
9.2 Payment of Taxes Withheld ........................................... 14
9.3 Indemnification ..................................................... 14
</TABLE>
i
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C> <C> <C>
10. Representations and Warranties ............................................. 15
10.1 Existence and Power ................................................. 15
10.2 Authorization; No Contravention ..................................... 15
10.3 Binding Obligation .................................................. 15
10.4 Not an Investment Company or Holding Company ........................ 16
10.5 Relationship of RTM to Parent, Holdco Newco One or Newco Two ........ 16
10.6 Financial Condition ................................................. 16
10.7 Net Worth ........................................................... 16
11. Covenants .................................................................. 17
11.1 Financial Condition of RTM, Parent, Holdco, RTM Management, Newco One
or Newco Two ........................................................ 17
11.2 Financial Statements and Other Reports .............................. 17
11.3 Maintenance of Consolidated Net Worth ............................... 18
11.4 Notice of Events .................................................... 18
11.5 Management Agreements ............................................... 19
11.6 Board Member ........................................................ 19
11.7 Dividends and Distributions ......................................... 19
11.8 Mergers or Sales .................................................... 19
11.9 Development of New Restaurants....................................... 19
12. Events of Default .......................................................... 20
12.1 Default in Transaction Documents; Other Defaults .................... 20
12.2 Default in Other Agreements ......................................... 20
12.3 Involuntary Bankruptcy; Appointment of Custodian, Etc ............... 21
12.4 Voluntary Bankruptcy; Appointment of Custodian, Etc ................. 21
12.5 Judgments and Attachments ........................................... 21
12.6 Dissolution ......................................................... 22
12.7 Business Interruption ............................................... 22
12.8 Change of Control ................................................... 22
13. Miscellaneous .............................................................. 23
13.1 Survival of Warranties .............................................. 23
13.2 Notices ............................................................. 23
13.3 No Waivers .......................................................... 23
13.4 Expenses ............................................................ 23
13.5 Amendments and Waivers .............................................. 24
13.6 Successors and Assigns; No Third Party Beneficiaries ................ 24
13.7 APPLICABLE LAW ...................................................... 24
13.8 JURISDICTION ........................................................ 24
13.9 Severability ........................................................ 25
13.10 Interpretation ...................................................... 25
13.11 Further Assurances .................................................. 25
</TABLE>
ii
<PAGE>
<PAGE>
GUARANTY
GUARANTY, dated as of May 5, 1997, by RTM, Inc., a Georgia
corporation ("RTM"), RTM Holding Company, Inc., a Georgia subchapter S
corporation ("Parent"), RTM Partners, Inc., a Georgia corporation ("Holdco"),
RTM Management Co., LLC, a Georgia limited liability company ("RTM Management")
and RTM Operating Company, a Delaware corporation ("Newco One") (collectively,
the "Guarantors") in favor of Arby's, Inc., a Delaware corporation ("Arby's"),
Arby's Restaurant Development Corporation, a Delaware corporation ("ARDC"),
Arby's Restaurant Holding Company, a Delaware corporation ("ARHC"), Arby's
Restaurant Operations Company, a Delaware corporation ("AROC," and, together
with ARDC and ARHC, the "Sellers") and Triarc Companies, Inc., a Delaware
corporation ("Triarc," and, together with the Sellers, the "Beneficiaries").
R E C I T A L S
A. Pursuant to the Stock Purchase Agreement (the "Stock
Purchase Agreement"), dated as of February 13, 1997, among Holdco, the Sellers
and RTM, the Sellers have agreed to sell to Holdco, and Holdco has agreed to
acquire from Sellers, all of the issued and outstanding shares of common stock,
par value $1.00 per share of Newco One, (the "Newco One Shares"), and all of the
issued and outstanding shares of common stock, par value $1.00 per share of
Triarc Restaurants Disposition 2, Inc., a Delaware corporation ("Newco Two")
(the "Newco Two Shares" and, together with Newco One Shares, the "Shares"), on
the terms and conditions set forth therein (the "Sale").
B. The Sellers have required, as a condition precedent to their
obligation to consummate the Sale under the Stock Purchase Agreement, that the
Guarantors execute and deliver this Guaranty. The Sellers would not sell the
Shares to Holdco but for the execution and delivery of this Guaranty by each of
the Guarantors.
C. In furtherance of the business purposes of each of the
Guarantors, each of the Guarantors desires to irrevocably and unconditionally
guarantee all of the Guaranteed Obligations (as hereafter defined).
D. Affiliates of RTM (the "Principals") are the direct owners
of all of the outstanding stock of Parent and all of the membership (equity)
interests in RTM Management. Upon consummation of the Sale, Holdco will be the
direct owner of all of the capital stock of Newco One and Newco Two.
NOW, THEREFORE, based upon the foregoing, and in order to induce
the Beneficiaries to enter into the Stock Purchase Agreement and to sell the
Shares to Holdco, the Guarantors hereby agree as follows:
<PAGE>
<PAGE>
2
1. Definitions. Capitalized terms not otherwise defined in this
Guaranty shall have the meanings ascribed to them in the Stock Purchase
Agreement. As used in this Guaranty, the following terms have the following
meanings unless the context otherwise requires:
"Assets" means (A) except for those Assets that are (a) subject
to security interests in favor of FFCA pursuant to any FFCA Loan Agreement, or
(b) related to the Restaurants identified as Unit Nos. 897, 1452 and 1453 on
Schedule 1 to this Guaranty, all of Newco One's right, title and interest in and
to the restaurants listed on Schedule 1 to this Guaranty and any other
restaurants hereafter owned or leased by Newco One (the "Restaurants"), all of
the assets of any kind, tangible or intangible, located at the Restaurants that
are now or hereafter used by Newco One in the operation of the Restaurants or
associated therewith, whether owned or leased by Newco One, including, without
limitation, the following: (i) all of Newco One's right, title, and interest in
and to the leases of land and buildings or land, buildings and equipment,
including without limitation, the leases that are listed on Schedule 2 to this
Guaranty (the "Restaurant Leases"); (ii) all security deposits under leases
relating to the Assets and all utility deposits and any other prepaid amounts
(other than tax-related deposits) ("Security Deposits"); (iii) all leasehold
improvements ("Leasehold Improvements") owned by Newco One with respect to
leased Restaurants (if not included in the Restaurant Leases); (iv) all
furniture, fixtures, equipment and personal property, including, without
limitation, cash registers (to the extent not included under the Term Lease
Master Agreement, dated December 27, 1994, between Arby's and IBM Credit
Corporation and each of the leases entered into in accordance therewith (the
"POS Agreements")), owned or leased by Newco One and used in the business of and
located at the Restaurants (the "FF&E"); (v) all rights of Newco One under all
equipment leases including, without limitation, those listed on Schedule 2 to
this Guaranty (the "Equipment Leases); (vi) all of Newco One's right, title and
interest in and to those certain tracts or parcels of land, together with
improvements located thereon, owned by Newco One, including, without limitation,
those listed on Schedule 3 to this Guaranty; (vii) all of Newco One's right,
title and interest in and to all of the Contracts to which Newco One is now or
hereafter a party, or shall have assumed, including, without limitation, the
Licenses; (viii) all of Newco One's rights under the POS Agreements, including,
without limitation, the right to use the software described therein; (ix) all of
Newco One's rights under the Master Lease, dated February , 1994 between Arby's
and International Leasing Corporation and all equipment schedules thereto (the
"ILC Agreement"); (x) all merchandise inventory of food, beverages and other
consumables, paper and supplies, as well as uniforms and promotional items
located or otherwise used at the Restaurants (the "Inventory"); (xi) the sum of
all amounts maintained as petty cash at the Restaurants (the "Petty Cash"); and
(xii) all personal property owned or leased by Newco One and utilized by the
area managers or directors of operations in connection with the ownership and/or
operation of the Restaurants; in all cases whether now owned or hereafter
acquired and (B) all rights of RTM Management under the Management Agreements,
including without limitation, all
<PAGE>
<PAGE>
3
rights to receive the RTM Fees and all rights of Newco One and Newco Two under
the Management Agreements.
"Bankruptcy Code" means the Bankruptcy Code of 1978, as amended.
"Change of Control" means, with respect to any Guarantor, (i) the
sale, lease or transfer of all or substantially all of the Guarantor's assets to
any other person or group (as such term is used in Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")), (ii) the
liquidation or dissolution of the Guarantor, or (iii) the acquisition by any
person or group (as such term is used in Section 13(d)(3) of the Exchange Act)
of a direct or indirect majority in interest (more than 50%) of the aggregate
voting power of the Guarantor by way of merger or consolidation or otherwise,
provided, however, that no "Change of Control," as herein defined, shall be
deemed to have occurred as the result of (a) the merger of any two or more of
the Guarantors and/or, unless prohibited by any provision of the FFCA Loan
Agreements that is not waived, Newco Two, (b) the transfer of shares of Parent,
among the Principals, interesse, (c) a transfer of shares of Holdco by the
Parent to the Principals (or, if following such a transfer, the transfer of
shares of Holdco among the Principals), or (d) a public offering of shares of
common stock of any of the Guarantors if (i) following such public offering, the
Principals, collectively, and the Parent and/or Holdco (in the case of a public
offering of common stock of Newco One or Newco Two) continue to be controlling
Affiliates, or the controlling Affiliate, of the entity the shares of which are
the subject of such public offering and (ii) if such public offering occurs
following the exercise by Sellers of their options under the Option Agreements
and each Seller has been accorded the opportunity to participate on a pro rata
basis as a seller in such public offering (other than where the issuer is RTM
Management, Parent or RTM as long as there is no breach of the provisions of
Section 15 of the Option Agreement).
"Contracts" means each material contract or any other material
agreement to which Newco One is a party, as the same may from time to time be
amended, supplemented or otherwise modified, and including, without limitation,
(a) all rights of Newco One to receive moneys due and to become due to it
thereunder or in connection therewith, (b) all rights of Newco One to damages
arising out of, or for, breach or default in respect thereof and (c) all rights
of Newco One to perform and to exercise all remedies thereunder.
"Event of Default" has the meaning ascribed to such term in
Section 12.
"FFCA" means FFCA Acquisition Corporation and FFCA Mortgage
Corporation.
"FFCA Loan Agreements" means, collectively, the Amended and
Restated Loan Agreement dated as of October 13, 1995 by and between FFCA
Acquisition Corporation (n/k/a FFCA Mortgage Corporation) ("FFCA Acquisition")
and ARDC, the Loan Agreement dated as of October 13, 1995 by and between FFCA
Acquisition and ARHC, the Loan Agreement dated as of September 5, 1996 by and
<PAGE>
<PAGE>
4
between FFCA Acquisition and ARHC, each as amended and supplemented, and each of
the promissory notes issued thereunder, other than the Excluded FFCA
Liabilities, and each of the documents and agreements entered into in connection
therewith.
"Guaranteed Obligations" has the meaning ascribed to such term in
Section 2.
"Guaranty" means this Guaranty, as it may be amended,
supplemented or otherwise modified from time to time.
"Licenses" means collectively, (i) new Arby's license agreements,
in the form of the "1002-080188-40 LA" license (the "Arby's Licenses"), to be
executed and delivered by Arby's and Newco One, which shall remain in effect
until such time as a new license agreement reasonably acceptable to RTM
Partners, Inc. (the "New Arby's License") becomes effective under applicable
franchise laws, and thereafter, upon execution and delivery thereof, such New
Arby's Licenses, and (ii) the new T.J. Cinnamons, ZuZu and P.T. Noodle's license
agreements (the "Multi-Brand Licenses"), between Newco One and Arby's which
shall remain in effect until such time as a new license agreement reasonably
acceptable to RTM Partners, Inc. (also a "New Arby's License") becomes effective
under applicable franchise laws, and thereafter, upon execution and delivery
thereof, such New Arby's License and all New Arby's Licenses and Multi-Brand
Licenses issued for each of the Restaurants.
"Management Agreements" means the Management Agreement, dated as
of the date hereof between RTM Management and Newco One and the Management
Agreement dated as of the date hereof, between RTM Management and Newco Two.
"RTM Fees" means the fee of 5% of net sales of Newco One and
Newco Two to be paid by Newco One and Newco Two to RTM Management to cover RTM
Management's expenses for corporate overhead attributable to Newco One and/or
Newco Two pursuant to the Management Agreements.
"Security Documents" means the (i) the Pledge Agreement, dated as
of the date hereof, among Holdco and the Beneficiaries, (ii) the Security
Agreements, each dated as of the date hereof, (a) between RTM Management and the
Beneficiaries and (b) between Newco One and the Beneficiaries, and (iii) any and
all other documents, instruments and agreements contemplated by, or now or
hereafter delivered in connection with any of the foregoing, including any
extensions, modifications, substitutions, amendments and renewals thereof.
"Transaction Documents" means the Stock Purchase Agreement, the
Notes, this Guaranty, the Security Documents, the Debt Documents, the Assumption
Agreements and any and all other documents, instruments and agreements
contemplated by, or now or hereafter delivered in connection with any of the
foregoing including any
<PAGE>
<PAGE>
5
extensions, modifications, substitutions, amendments and renewals thereof, but
not including the Licenses or any Market Development Agreements.
"UCC" means the Uniform Commercial Code as in effect from time to
time in the applicable jurisdiction.
2. The Guaranty.
2.1. Guaranty by RTM, Parent, Holdco, RTM Management and
Newco One. Each of RTM, Parent, Holdco, RTM Management and Newco One, jointly
and severally, hereby irrevocably guaranties the due and punctual payment in
full when due (whether at stated maturity, upon acceleration, demand or
otherwise, including amounts that would become due but for the operation of the
automatic stay under Section 362(a) of the Bankruptcy Code, or any successor
provision), of any and all sums, whether of principal, interest (including any
interest payable subsequent to a default), fees, expenses, indemnities and other
amounts (including all reasonable fees, disbursements and other charges of
counsel actually incurred by each of the Beneficiaries), payable by Newco Two
pursuant to or arising under, out of or in connection with the Transaction
Documents (other than the Notes), whether direct or indirect, absolute or
contingent, due or to become due, now existing or hereafter incurred, including,
without limitation, the payment of the Assumed Liabilities.
2.2. Guaranty by RTM, Parent Holdco, and RTM Management.
Each of RTM, Parent, Holdco, and RTM Management, jointly and severally, hereby
irrevocably guaranties the due and punctual payment in full when due (whether at
stated maturity, upon acceleration, demand or otherwise, including amounts that
would become due but for the operation of the automatic stay under Section
362(a) of the Bankruptcy Code, or any successor provision), of any and all sums,
whether of principal, interest (including any interest payable subsequent to a
default), fees, expenses, indemnities and other amounts (including all
reasonable fees, disbursements and other charges of counsel actually incurred by
each of the Beneficiaries), payable by Newco One pursuant to or arising under,
out of or in connection with the Transaction Documents (other than the Notes),
whether direct or indirect, absolute or contingent, due or to become due, now
existing or hereafter incurred, including, without limitation, the payment of
the Assumed Liabilities.
2.3. Guaranty by RTM, Parent, Holdco, RTM Management and
Newco One. Each of RTM, Parent, Holdco, RTM Management and Newco One, jointly
and severally, hereby irrevocably guaranties the due and punctual payment in
full when due (whether at stated maturity, upon acceleration, demand or
otherwise, including amounts that would become due but for the operation of the
automatic stay under Section 362(a) of the Bankruptcy Code, or any successor
provision), of any and all sums, whether of principal, interest (including any
interest payable subsequent to a default), fees, expenses, indemnities and other
amounts (including all reasonable fees, disbursements and other charges of
counsel actually incurred by each of the Beneficiaries), payable by Holdco
pursuant to or arising under, out of or in connection
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6
with the Transaction Documents (other than the Notes), whether direct or
indirect, absolute or contingent, due or to become due, now existing or
hereafter incurred.
2.4. Guaranty by RTM, Holdco, RTM Management and Newco
One. Each of RTM, Holdco, RTM Management and Newco One, jointly and severally,
hereby irrevocably guaranties the due and punctual payment in full when due
(whether at stated maturity, upon acceleration, demand or otherwise, including
amounts that would become due but for the operation of the automatic stay under
Section 362(a) of the Bankruptcy Code, or any successor provision), of any and
all sums, whether of principal, interest (including any interest payable
subsequent to a default), fees, expenses, indemnities and other amounts
(including all reasonable fees, disbursements and other charges of counsel
actually incurred by each of the Beneficiaries), payable by Parent pursuant to
or arising under, out of or in connection with the Transaction Documents (other
than the Notes), whether direct or indirect, absolute or contingent, due or to
become due, now existing or hereafter incurred.
2.5. Guaranty by RTM, Parent, Holdco and Newco One. Each
of RTM, Parent, Holdco and Newco One, jointly and severally, hereby irrevocably
guaranties the due and punctual payment in full when due (whether at stated
maturity, upon acceleration, demand or otherwise, including amounts that would
become due but for the operation of the automatic stay under Section 362(a) of
the Bankruptcy Code, or any successor provision), of any and all sums, whether
of principal, interest (including any interest payable subsequent to a default),
fees, expenses, indemnities and other amounts (including all reasonable fees,
disbursements and other charges of counsel actually incurred by each of the
Beneficiaries), payable by RTM Management pursuant to or arising under, out of
or in connection with the Transaction Documents (other than the Notes), whether
direct or indirect, absolute or contingent, due or to become due, now existing
or hereafter incurred.
2.6. Guaranty by Parent, Holdco, RTM Management and Newco
One. Each of Parent, Holdco, RTM Management and Newco One, jointly and
severally, hereby irrevocably guaranties the due and punctual payment in full
when due (whether at stated maturity, upon acceleration, demand or otherwise,
including amounts that would become due but for the operation of the automatic
stay under Section 362(a) of the Bankruptcy Code, or any successor provision),
of any and all sums, whether of principal, interest (including any interest
payable subsequent to a default), fees, expenses, indemnities and other amounts
(including all fees, disbursements and other charges of counsel to each of the
Beneficiaries), payable by RTM pursuant to or arising under, out of or in
connection with the Transaction Documents (other than the Notes), whether direct
or indirect, absolute or contingent, due or to become due, now existing or
hereafter incurred.
2.7. Guaranty by RTM Management. RTM Management hereby
irrevocably guarantees the due and punctual payment in full of the principal of,
and interest upon, the Notes when they become due upon the stated maturity date
thereof or by acceleration or otherwise.
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7
2.8. Guaranteed Obligations. The obligations to pay all
such sums and perform all such payment terms and provisions set forth in this
Section 2 are hereafter collectively referred to as the "Guaranteed
Obligations." The Guarantors acknowledge that there are no conditions whatsoever
to the effectiveness of this Guaranty.
3. Liability of the Guarantors. Each of the Guarantors agrees
that its obligations hereunder are irrevocable, continuing, absolute,
independent and unconditional and shall not be affected by any circumstance
whatsoever (other than the indefeasible payment in full and the complete
performance of the Guaranteed Obligations) which may constitute a defense or a
legal or equitable discharge (whether in whole or in part) of a guarantor or
surety, whether foreseen or unforeseen and whether similar or dissimilar to any
circumstance described in this Guaranty. In furtherance of the foregoing and
without limiting the generality thereof, each of the Guarantors agrees as
follows:
3.1. Guaranty of Payment. This Guaranty is a guaranty of
payment and performance of payment obligations, and not of collection only. Each
Guarantor waives any requirement that the Beneficiaries, as a condition of
payment by such Guarantor, (i) proceed against RTM, Parent, Holdco, RTM
Management or Newco One, as the case may be, any other guarantor of the
Guaranteed Obligations or any other person, (ii) proceed against or exhaust any
security received from RTM, Parent, Holdco, RTM Management or Newco One, as the
case may be, any other guarantor of the Guaranteed Obligations or any other
person, or (iii) pursue any other remedy whatsoever in the power of the
Beneficiaries. Each of the Guarantees set forth in this Section 2 shall be, and
be deemed to be, an agreement by the Guarantors identified therein to exonerate,
and to hold and save harmless, the Beneficiaries, and each of them, of, from and
against all obligations or liabilities for payment of the Guaranteed
Obligations.
3.2. Continuing Guaranty. This Guaranty shall remain in
full force and effect until all of the Guaranteed Obligations have been
completely performed and indefeasibly paid in full, notwithstanding that from
time to time prior thereto RTM, Parent, Holdco, RTM Management, Newco One or
Newco Two, as the case may be, may be free from any of the Guaranteed
Obligations. A Guarantor's payment of a portion, but not all, of the Guaranteed
Obligations shall in no way limit, affect, modify or abridge such Guarantor's
liability for any portion of the Guaranteed Obligations that has not been
completely performed or indefeasibly paid in full.
3.3. Absolute and Unconditional Guaranty. This Guaranty
and the obligations of the Guarantors hereunder are not subject to any
reduction, limitation, impairment, discharge or termination for any reason
(other than the complete performance of payment obligations and the indefeasible
payment in full of the Guaranteed Obligations), including, without limitation,
the occurrence of any one or more of the following, whether or not such
Guarantors shall have had notice or knowledge of any of them:
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8
(i) any change in the manner, place or terms
of payment (including the currency thereof) of any of the Guaranteed
Obligations;
(ii) any settlement, compromise, release or
discharge of, or acceptance or refusal of any offer of performance with respect
to, or substitutions for, the Guaranteed Obligations or any agreement relating
thereto or any subordination of the payment of the Guaranteed Obligations to the
payment of any other obligations;
(iii) any rescission, waiver, extension,
renewal, alteration, amendment or modification of, or any consent to departure
from, any of the terms or provisions of the Guaranteed Obligations or any
agreement relating thereto, or any other guaranties or security for the
Guaranteed Obligations, in each case whether or not in accordance with the terms
thereof;
(iv) the Guaranteed Obligations, this
Guaranty or any other agreement relating thereto at any time being found to be
illegal, invalid or unenforceable in any respect or the existence or invocation
of any provision of applicable law or regulation purporting to prohibit the
payment by RTM, Parent, Holdco, RTM Management, Newco One or Newco Two, as the
case may be, of any of the Guaranteed Obligations;
(v) any request or acceptance of other
guaranties of the Guaranteed Obligations or the taking and holding of any
security for the payment of the Guaranteed Obligations, this Guaranty, or any
other guaranty of the Guaranteed Obligations or any release, impairment,
surrender, exchange, substitution, compromise, settlement, rescission or
subordination thereof;
(vi) any failure to perfect or continue
perfection of a security interest in any collateral which secures any of the
Guaranteed Obligations; or any enforcement and application of any security now
or hereafter held by the Beneficiaries in respect of this Guaranty or the
Guaranteed Obligations and any direction of the order or manner of sale thereof,
or the exercise of any other right or remedy that the Beneficiaries may have
with respect to any such security, as the Beneficiaries in their sole discretion
may determine, including foreclosure on any such security pursuant to one or
more judicial or nonjudicial sales;
(vii) any failure or omission to exercise,
assert or enforce, or any agreement or election not to assert or enforce, or the
stay or enjoining, by order of court, by operation of law or otherwise, of the
exercise or enforcement of, any claim or demand or any right, power or remedy
(whether arising under the Transaction Documents, at law, in equity or
otherwise) with respect to the Guaranteed Obligations or any agreement relating
thereto, or with respect to any other guaranties of or any security for the
payment of the Guaranteed Obligations;
(viii) any change in or reorganization of
the corporate structure of RTM, Parent, Holdco, RTM Management, Newco One or
Newco Two or any
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9
of their subsidiaries or any dissolution, termination, consolidation or merger
or sale or other disposition, whether or not for fair consideration, of all or
substantially all of the assets of any of the foregoing or any consent by each
of the Beneficiaries thereto or to any restructuring of the Guaranteed
Obligations;
(ix) the election by the Beneficiaries in
any proceeding instituted under the Bankruptcy Code of the application of
Section 1111(b)(2) of the Bankruptcy Code; any borrowing or grant of a security
interest by RTM, Parent, Holdco, RTM Management, Newco One or Newco Two, as
debtor-in-possession, under Section 364 of the Bankruptcy Code; or the
disallowance under Section 502 of the Bankruptcy Code of all or any portion of
the claims of the Beneficiaries for repayment of the Guaranteed Obligations; or
(x) any other act or thing or omission, or
delay to do any other act or thing, which may or might in any manner or to any
extent vary the risk of any Guarantor as an obligor in respect of the Guaranteed
Obligations.
4. Waivers of Notices and Defenses. Each of the Guarantors hereby
waives, for the benefit of the Beneficiaries:
(i) any defense arising by reason of the
incapacity, lack of authority or any disability of RTM, Parent, Holdco, RTM
Management, Newco One or Newco Two, as the case may be;
(ii) any notice of the creation, renewal,
extension or accrual of any of the Guaranteed Obligations and notice of or proof
of reliance by the Beneficiaries upon this Guaranty or acceptance of this
Guaranty (the Guaranteed Obligations and all dealings between RTM, Parent,
Holdco, RTM Management, Newco One or Newco Two, as the case may be, and the
Guarantor, on the one hand, and the Beneficiaries, on the other hand, being
conclusively deemed to have been created, incurred or conducted in reliance upon
this Guaranty);
(iii) any setoff or counterclaim (other than
a setoff or counterclaim that is acknowledged by the Beneficiaries, or
judicially determined by a court of competent jurisdiction, not subject to
further appeal, to be valid) any demand for performance, notice of
nonperformance, diligence, presentment, protest, notice of protest, notice of
dishonor, notice of defaults under the Stock Purchase Agreement or any other
Transaction Document, notice of any amendment, renewal, extension or
modification of the Guaranteed Obligations or any agreement related thereto,
notice that any portion of the Guaranteed Obligations is due, notice of any
collection proceedings, and notice of any other fact which might increase the
risk of any Guarantor;
(iv) any defense based upon any statute or
rule of law that provides that the obligation of a surety cannot be larger in
amount or in other respects more burdensome than that of the principal;
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10
(v) any benefit of, or any right to
participate in, or any notices of exchange, sale, surrender or other handling
of, any security or collateral given to the Beneficiaries to secure payment or
performance of the Guaranteed Obligations or any other liability of RTM, Parent,
Holdco, RTM Management, Newco One or Newco Two, as the case may be, to any of
the Beneficiaries; and
(vi) to the fullest extent permitted by law,
any other defenses or benefits that may be derived from or afforded by law which
limit the liability of, or exonerate, guarantors or sureties, or which may
conflict with the terms of this Guaranty, including, without limitation, failure
of consideration, breach of warranty, statute of frauds, statute of limitations,
accord and satisfaction, and usury.
5. Bankruptcy and Related Matters.
5.1. No Proceedings Against RTM, Parent, Holdco, RTM
Management, Newco One or Newco Two. So long as any of the Guaranteed
Obligations remain outstanding, the Guarantors shall not, without the prior
written consent of each of the Beneficiaries, commence or join with any other
person in commencing any bankruptcy, liquidation, reorganization or insolvency
proceedings of, or against, RTM, Parent, Holdco, RTM Management, Newco One or
Newco Two, as the case may be.
5.2. Guarantors Remain Obligated. The obligations of the
Guarantors under this Guaranty shall not be reduced, limited, impaired,
discharged, deferred, suspended or terminated by any proceeding or action,
voluntary or involuntary, involving the bankruptcy, insolvency, receivership,
reorganization, marshaling of assets, assignment for the benefit of creditors,
composition with creditors, readjustment, liquidation or arrangement of RTM,
Parent, Holdco, Management, Newco One or Newco Two, as the case may be, or
similar proceedings or actions or by any defense which RTM, Parent, Holdco,
Management, Newco One or Newco Two, as the case may be, may have by reason of
the order, decree or decision of any court or administrative body resulting from
any such proceeding or action. Without limiting the generality of the foregoing,
each of the Guarantors' liability shall extend to all amounts and obligations
that constitute the Guaranteed Obligations and would be owed by RTM, Parent,
Holdco, Management, Newco One or Newco Two, as the case may be, but for the fact
that they are unenforceable or not allowable due to the existence of any such
proceeding or action.
5.3. Stay of Acceleration. Each of the Guarantors agrees
that, notwithstanding anything to the contrary herein, if, after the occurrence
and during the continuance of an Event of Default, the Beneficiaries are
prevented by applicable law from exercising their respective rights to
accelerate the maturity of the Guaranteed Obligations, to collect interest on
the Guaranteed Obligations or to enforce or exercise any other right or remedy
with respect to the Guaranteed Obligations, or the Beneficiaries are prevented
from taking any action to realize on any security or collateral or are prevented
from collecting any of the Guaranteed Obligations, such Guarantor shall pay to
the Beneficiaries upon demand therefor the amount that would otherwise have been
due
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11
and payable had such rights and remedies been permitted to be exercised by the
Beneficiaries.
5.4. Post-Petition Interest. Pursuant to, and without
limiting, the foregoing, each of the Guarantors acknowledges and agrees that any
interest on any portion of the Guaranteed Obligations which accrues after the
commencement of any proceeding or action referred to in Section 5.2 (or, if
interest on any portion of the Guaranteed Obligations ceases to accrue by
operation of law by reason of the commencement of said proceeding or action,
such interest as would have accrued on such portion of the Guaranteed
Obligations if said proceedings or actions had not been commenced) shall be
included in the Guaranteed Obligations, it being the intention of each of the
Guarantors and the Beneficiaries that the Guaranteed Obligations which are
guarantied by the Guarantors pursuant to this Guaranty shall be determined
without regard to any rule of law or order which may relieve RTM, Parent,
Holdco, RTM Management, Newco One or Newco Two, as the case may be, of any
portion of such Guaranteed Obligations. The Guarantors will permit any trustee
in bankruptcy, receiver, debtor in possession, assignee for the benefit of
creditors or similar person to pay the Beneficiaries, or allow the claim of the
Beneficiaries, in respect of, any such interest accruing after the date on which
such proceeding is commenced.
5.5. Reinstatement of Guaranty. Notwithstanding anything
to the contrary contained herein, in the event that all or any portion of the
Guaranteed Obligations are paid by RTM, Parent, Holdco, RTM Management or Newco
One, as the case may be, the obligations of the Guarantors hereunder shall
continue and remain in full force and effect or be reinstated, as the case may
be, if all or any part of such payment(s) are rescinded or recovered, directly
or indirectly, from the Beneficiaries as a preference, fraudulent transfer or
otherwise, and any such payments which are so rescinded or recovered shall
constitute Guaranteed Obligations for all purposes under this Guaranty.
5.6. Limitation of Guarantor's Liability. Each Guarantor
and by its acceptance hereof each of the Beneficiaries hereby confirms that it
is the intention of all parties hereto that the guarantee by such Guarantor
pursuant to this Guaranty not constitute a fraudulent transfer or conveyance for
purposes of any bankruptcy law, the Uniform Fraudulent Conveyance Act, the
Uniform Fraudulent Transfer Act or any similar federal or state law. To
effectuate the foregoing intention, each of the Beneficiaries and the Guarantors
hereby irrevocably agree that the obligations of such Guarantor under this
Guaranty shall be limited to the maximum amount as will, after giving effect to
all other contingent and fixed liabilities of such Guarantor and after giving
effect to any collections from or payments made by or on behalf of any other
Guarantor in respect of the obligations of such other Guarantor under this
Guaranty, result in the obligations of such Guarantor under this Guaranty not
constituting such fraudulent transfer or conveyance.
6. No Subrogation. Notwithstanding any payment or payments made
by the Guarantors hereunder, or any set-off or application of funds of the
Guarantors by
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12
the Beneficiaries, the Guarantors hereby irrevocably waive any claim or other
rights that they may now or hereafter acquire against RTM, Parent, Holdco, RTM
Management, Newco One or Newco Two, as the case may be, or any other insider
guarantor that arise from the existence, payment, performance or enforcement of
the Guarantors' obligations under this Guaranty or any other Transaction
Document, including, without limitation, any right of subrogation,
reimbursement, exoneration, contribution or indemnification and any right to
participate in any claim or remedy of the Beneficiaries against RTM, Parent,
Holdco, RTM Management, Newco One or Newco Two, as the case may be, or any other
insider guarantor or any collateral security, whether or not such claim, remedy
or right arises in equity or under contract, statute or common law, including,
without limitation, the right to take or receive from RTM, Parent, Holdco, RTM
Management, Newco One or Newco Two, as the case may be, or any other insider
guarantor, directly or indirectly, in cash or other property or by set-off or in
any other manner, payment or security on account of such claim, remedy or right.
If any amount shall be paid to any Guarantor in violation of the preceding
sentence, such amount shall be held by such Guarantor in trust for the
Beneficiaries, segregated from other funds of such Guarantor, and shall,
forthwith upon receipt by such Guarantor, be turned over to the Beneficiaries in
the exact form received by such Guarantor (duly endorsed by such Guarantor to
the Beneficiaries, if so requested by the Beneficiaries), to be applied against
the Guaranteed Obligations, whether matured or unmatured, in such order as the
Beneficiaries may determine.
7. Subordination of Other Obligations. Each of the Guarantors
hereby agrees that any indebtedness of RTM, Parent, Holdco, RTM Management,
Newco One or Newco Two, as the case may be, now or hereafter held by the
Guarantors, other than indebtedness for borrowed money, is hereby subordinated
in right of payment to the Guaranteed Obligations, and any such indebtedness of
RTM, Parent, Holdco, RTM Management, Newco One or Newco Two, as the case may be,
to the Guarantors collected or received by the Guarantors after an Event of
Default has occurred and is continuing shall be held in trust for the
Beneficiaries and shall forthwith be paid over to the Beneficiaries to be
credited and applied against the Guaranteed Obligations, whether matured or
unmatured, without in any way affecting, impairing or limiting the liability of
the Guarantors under this Guaranty.
8. Setoff; Security Arrangements.
8.1. Setoff. In addition to any rights and remedies of
the Beneficiaries provided by law or otherwise, upon the occurrence of a default
and acceleration of the obligations owing in connection with the Transaction
Documents, each Beneficiary shall have the right, without prior notice to the
Guarantors any such notice being expressly waived to the extent permitted by
applicable law, to set off and apply against any amounts due under the
Transaction Documents, whether matured or unmatured, of each of the Guarantors
to such or any other Beneficiary, and other amounts owing from such Beneficiary
to such Guarantor, whether matured or unmatured, at, or at any time after, the
happening of any of the above-mentioned events, and such right of set-off may be
exercised by such Beneficiary against such Guarantor or against any
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13
trustee in bankruptcy, debtor in possession, assignee for the benefit of
creditors, receiver, custodian or execution, judgment of attachment creditor of
such Guarantor, or against anyone else claiming through or against such
Guarantor or such trustee in bankruptcy, debtor in possession, assignee for the
benefit of creditors, receivers, or execution, judgment or attachment creditor,
notwithstanding the fact that such right of set-off shall not have been
exercised by such Beneficiary prior to the making, filing or issuance, or
service upon such Beneficiary of, or of notice of, any such petition, assignment
for the benefit of creditors, appointment or application for the appointment of
a receiver, or issuance of execution, subpoena, order or warrant. Each
Beneficiary agrees promptly to notify the Guarantors after any such set-off and
application made by such Beneficiary, provided that the failure to give such
notice shall not affect the validity of such set-off and application.
8.2. Security Arrangements. Holdco has given the
Beneficiaries a pledge of the stock of Newco One and Newco Two, Parent has given
the Beneficiaries a pledge of stock of Holdco, RTM Management has granted to the
Beneficiaries security interests in the RTM Fees and Newco One has granted to
the Beneficiaries security interests in the Assets, in each case as collateral
security for the Guaranteed Obligations and such other obligations as are
specified in the Security Documents. Holdco, Parent, RTM Management and Newco
One will take all actions necessary or desirable, including the execution and
delivery of all agreements, mortgages, indentures, trust deeds and other
documents evidencing liens on real property and interests therein (collectively,
"Real Property Lien Documents"), assignments, documents and instruments and the
filing of appropriate financing statements and Real Property Lien Documents
under the provisions of the UCC or applicable governmental requirements in each
of the offices where such filings are necessary or appropriate, to grant the
Beneficiaries a duly perfected lien on the stock of Newco One and/or Newco Two
and/or the stock of Holdco and/or the Assets and/or the RTM Fees, as the case
may be, pursuant to the Security Documents. Holdco has pledged all of the
capital stock of Newco One and Newco Two as collateral security for the
Guaranteed Obligations and such other obligations as are specified in the
Security Documents. Holdco has delivered on the date hereof stock certificates
representing all of the issued and outstanding shares of capital stock of Newco
One and Newco Two accompanied by stock powers duly executed by Holdco in blank
with signatures guaranteed. Parent has pledged all the capital stock of Holdco
as collateral security for the Guarantied Obligations and such other obligations
as are specified in the Security Documents. Parent has delivered on the date
hereof stock certificates representing all of the issued and outstanding shares
of capital stock of Holdco accompanied by stock powers duly executed by Parent
in blank with signatures guaranteed. Reference is hereby made to Schedule 8.2
for the material terms of the Security Documents, which shall also have such
other and further terms and provisions as are normally included in similar
Security Documents and are mutually agreed upon by the parties.
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14
8.3. RTM Fees. Parent, Holdco, RTM Management, Newco One
and Newco Two, and each of them, hereby agree that upon the occurrence and
continuance of an Event of Default, Newco One and Newco Two shall pay the RTM
Fees to the Beneficiaries, instead of to RTM Management, which shall be relieved
of any obligation to perform services under the Management Agreements so long as
the RTM Fees are being paid to the Beneficiaries. The Beneficiaries shall have
the right (but not the obligation) to use the RTM Fees to provide (or cause to
be provided) all services which RTM Management would otherwise be required to
provide and to pay amounts then due under the Transaction Documents. Any amounts
received by the Beneficiaries in excess of amounts used to provide such services
(or cause them to be provided) or to pay amounts then due under the Transaction
Documents, shall be held in escrow by the Beneficiaries in an interest bearing
account and shall be returned to RTM Management together with all accrued
interest thereon when all Events of Default have been remedied or waived by
Triarc Companies, Inc. or, if earlier, when all Guaranteed Obligations have been
satisfied.
9. Taxes.
9.1. Payments Free of Taxes. All payments hereunder
(including, without limitation, payments on account of principal, interest and
fees) shall be made by the Guarantors free and clear of, and without deduction
for, or on account of, any present or future tax, duty, levy, impost, fee,
assessment or other charge of whatever nature now or hereafter imposed by any
jurisdiction or by any political subdivision or taxing authority thereof or
therein, together with any interest, additions to tax or interest, and penalties
or other liabilities with respect thereto, but excluding therefrom in the case
of each Beneficiary, taxes imposed on or measured by the overall net income of
such Beneficiary (all such tax or taxes, other than such excluded tax or taxes,
being referred to herein as a "Tax" or "Taxes"). If any of the Guarantors is
required by law to make any deduction or withholding of any Taxes from any
payment due hereunder, then the amount payable will be increased as may be
necessary so that, after making all required deductions and taking account of
any Taxes and excluded taxes imposed on such increased amount the Beneficiaries
receive an amount equal to the sum it would have received had no such deduction
or withholding been required.
9.2. Payment of Taxes Withheld. If any of the Guarantors
makes any payment hereunder in respect of which it is required by law to make
any deduction or withholding of any Taxes or excluded taxes, it shall pay the
full amount to be deducted or withheld to the relevant taxation or other
authority within the time allowed for such payment under applicable law and
shall deliver to the Beneficiary within 30 days after it has made such payment
to the applicable authority a receipt issued by such authority evidencing the
payment to such authority of all amounts so required to be deducted or withheld
from such payment.
9.3. Indemnification. Without prejudice to the provisions
of Section 9.1, if any Beneficiary is required by law to make any payment on
account of Taxes on or in relation to any sum received or receivable hereunder
by such Beneficiary
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15
or any liability for Tax in respect of any such payment is imposed, levied or
assessed against such Beneficiary, the Guarantors will promptly indemnify the
Beneficiaries against such Tax payment or liability, together with any interest,
penalties and expenses (including counsel fees, disbursements and other charges)
payable or incurred in connection therewith, including any Tax or excluded tax
or taxes on the Beneficiaries arising by virtue of payments under this Section
9.3, computed in a manner consistent with Section 9.1. A certificate as to the
amount of such payment by any Beneficiary, absent manifest error, shall be
final, conclusive and binding upon all parties hereto for all purposes.
10. Representations and Warranties. Each of the Guarantors,
jointly and severally, hereby represents and warrants to the Beneficiaries that
the following statements are true and correct:
10.1. Existence and Power. Each of RTM, Parent, Holdco
and Newco One is a is a corporation, and RTM Management is a limited liability
company. Each of them is duly organized, validly existing and in good standing
under the laws of its state of organization; has all necessary power and all
material governmental licenses, authorizations, consents and approvals required
to own its property and to carry on its business as now conducted and is
qualified to do business in all jurisdictions in which such qualification is
necessary.
10.2. Authorization; No Contravention. The execution,
delivery and performance by such Guarantor of this Guaranty and each other
Transaction Document to which it is a party, are within such Guarantor's power
under its governance documents, have been duly authorized by all necessary
corporate or membership action, require no action by or in respect of, filing
with or notice to, any governmental authority (other than a filing pursuant to
the HSR Act) and do not contravene, or constitute a default under, or require
the consent of any creditor, stockholder or other person under, any provision of
applicable law or regulation or of the certificate of incorporation, by-laws or
other governance documents of such Guarantor or of any agreement, judgment,
injunction, order, decree or other instrument binding upon such Guarantor or its
subsidiaries or to which any of their respective assets are subject, or result
in the creation or imposition of any lien on any asset of such Guarantor or any
of its subsidiaries.
10.3. Binding Obligation. This Guaranty and each other
Transaction Document to which such Guarantor is a party has been duly and
validly executed and delivered by such Guarantor and constitutes the legal,
valid and binding obligation of such Guarantor enforceable against such
Guarantor in accordance with its terms, except as the enforceability thereof may
be limited by bankruptcy, insolvency or other similar laws affecting the
enforcement of creditors' rights generally and by equitable principles relating
to the availability of equitable remedies.
<PAGE>
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16
10.4. Not an Investment Company or Holding Company. Such
Guarantor is not an "investment company" within the meaning of the Investment
Company Act of 1940, as amended, or a "holding company" within the meaning of
the Public Utility Holding Company Act of 1935, as amended.
10.5. Relationship of RTM to Parent, Holdco Newco One or
Newco Two. The Principals are the controlling persons of RTM, and the
Principals are the direct owners of all of the capital stock of Parent (which
owns all of the capital stock of Holdco) and of all of the membership interests
in RTM Management; the agreement of the Sellers to sell the Shares to Holdco is
of substantial and material benefit to RTM and RTM Management, each of which
will receive substantial management fees following the sale of the shares to
Holdco; RTM and RTM Management induced the Sellers to enter into, and the
Sellers would not have entered into, the agreement to sell the Shares to Holdco
without issuance of the Notes and execution of this Guaranty by RTM and RTM
Management; and RTM and RTM Management have each reviewed and approved copies of
the Stock Purchase Agreement and all other Transaction Documents and each is
fully informed of the remedies the Beneficiaries may pursue upon the occurrence
of a default under any of the Transaction Documents.
10.6. Financial Condition. The audited consolidated
balance sheets of RTM and its subsidiaries as at May 26, 1996 (the "May 26, 1996
Balance Sheet") and May 28, 1995 and the related consolidated statements of
operations, common stockholders' equity and cash flows of RTM and its
subsidiaries for the years then ended, certified by RTM's independent certified
public accounts, copies of which have been delivered to the Beneficiaries, were
prepared in accordance with generally accepted accounting principles, have been
prepared from, and are consistent with, the books and records of RTM and its
subsidiaries and fairly present in all material respects the consolidated
financial position of RTM and its subsidiaries as at such dates and the
consolidated results of operations and cash flows of RTM and its subsidiaries
for the years then ended. The consolidated balance sheet of RTM and its
subsidiaries as at November 10, 1996 and the related consolidated statements of
operations and stockholders' equity of RTM and its subsidiaries for the 26 weeks
then ended, copies of which have been delivered to the Beneficiaries, were
prepared in accordance with generally accepted accounting principles, have been
prepared from, and are consistent with, the books and records of RTM and its
subsidiaries and fairly present in all material respects the consolidated
financial position of RTM and its subsidiaries as at such date and the
consolidated results of operations of RTM and its subsidiaries for the period
then ended. No events which have had or could reasonably be expected to have a
Material Adverse Effect on RTM have occurred since November 10, 1996.
10.7. Net Worth. The consolidated net worth of RTM as of
the date hereof, computed in a manner consistent with the May 26, 1996 Balance
Sheet is not less than $35 million.
<PAGE>
<PAGE>
17
11. Covenants.
11.1. Financial Condition of RTM, Parent, Holdco, RTM
Management, Newco One or Newco Two. Each of the Guarantors agrees that the
Beneficiaries shall have no obligation to disclose or discuss with any Guarantor
their assessment, or such Guarantor's assessment, of the financial condition of
RTM, Parent, Holdco, RTM Management, Newco One or Newco Two, as the case may be.
Each of the Guarantors represents and warrants that it has adequate means to
obtain information from RTM, Parent, Holdco, RTM Management, Newco One or Newco
Two, as the case may be, on a continuing basis concerning the financial
condition of RTM, Parent, Holdco, RTM Management, Newco One or Newco Two, as the
case may be, and their ability to perform their obligations under the
Transaction Documents, and each of the Guarantors covenants and agrees to keep
informed of the financial condition of RTM, Parent, Holdco, RTM Management,
Newco One and Newco Two, as the case may be, and of all circumstances bearing
upon the risk of nonpayment of the Guaranteed Obligations.
11.2. Financial Statements and Other Reports. The
Guarantors will deliver to each of the Beneficiaries:
(i) as soon as available and in any event
within forty-five days after the end of each of the first three fiscal quarters
of each year and the end of the fiscal year ending May 31, 1997 (the latter
being herein called the "Stub Year"), (1) the consolidated balance sheets of
each of RTM, Parent, Holdco, Newco One and Newco Two and their subsidiaries as
at the end of such fiscal quarter and (2) the related consolidated statements of
operations and stockholders' equity for such fiscal quarter or the Stub Year, as
the case may be, in reasonable detail and certified by the chief financial
officer of each of RTM, Parent, Holdco, Newco One and Newco Two that they were
prepared in accordance with generally accepted accounting principles,
consistently applied, have been prepared from and are consistent with, the books
and records of each of RTM, Parent, Holdco, Newco One, Newco Two and their
subsidiaries, and fairly present in all material respects the consolidated
financial position of each of RTM, Parent, Holdco, Newco One, Newco Two and
their respective subsidiaries, as at the dates indicated and the results of
their operations for the periods indicated, subject only to changes resulting
from audit and normal year-end adjustments;
(ii) as soon as available and in any event
within ninety days after the end of each fiscal year (other than the Stub Year),
(1) the consolidated balance sheets of each of RTM, Parent, Holdco, Newco One,
Newco Two and their respective subsidiaries as at the end of such fiscal year,
(2) the related consolidated statements of operations, stockholders' equity and
cash flows for such fiscal year, in reasonable detail and certified by the chief
financial officer of each of RTM, Parent, Holdco, Newco One and Newco Two that
they were prepared in accordance with generally accepted accounting principles,
consistently applied, have been prepared from
<PAGE>
<PAGE>
18
and are consistent with, the books and records of each of RTM, Parent, Holdco,
Newco, Newco One, Newco Two and their subsidiaries, and fairly present in all
material respects the consolidated financial position of each of RTM, Parent,
Holdco, Newco One, Newco Two and their respective subsidiaries, as at the dates
indicated and the results of their operations and their cash flows for the
periods indicated and (3) a report thereon of Arthur Andersen & Co. or other
independent certified public accountants of recognized national standing, which
report shall express no doubts about the ability of each of RTM, Parent, Holdco,
Newco One, Newco Two and their respective subsidiaries to continue as a going
concern, and shall state that such consolidated financial statements fairly
present the consolidated financial positions of each of RTM, Parent, Holdco,
Newco One, Newco Two and their respective subsidiaries as at the dates indicated
and the results of their operations and their cash flows for the period
indicated in conformity with generally accepted accounting principles applied on
a consistent basis with prior years (except as otherwise disclosed in such
financial statements) and that the examination by such accountants in connection
with such consolidated financial statements has been made in accordance with
generally accepted auditing standards; and
(iii) together with each delivery of
financial statements pursuant to Sections 11.2(i) and (ii) above, (1) an
officers' certificate of each of RTM, Parent, Holdco, RTM Management, Newco One
and Newco Two stating that the signers have reviewed the terms of this Guaranty
and have made, or caused to be made under their supervision, a review in
reasonable detail of the transactions and condition of each of RTM, Parent,
Holdco, RTM Management and Newco One, and their subsidiaries during the
accounting period covered by such financial statements and that such review has
not disclosed the existence during or at the end of such accounting period, and
that the signers do not have knowledge of the existence as at the date of the
officers' certificate, of any condition or event which constitutes an Event of
Default, or, if any such condition or event existed or exists, specifying the
nature and period of existence thereof and what action each of RTM, Parent,
Holdco, RTM Management and Newco One have taken, are taking and propose to take
with respect thereto and (2) a compliance certificate demonstrating in
reasonable detail compliance (as determined in accordance with generally
accepted accounting principles, consistently applied) during and at the end of
such accounting periods with the restrictions contained in Section 11.3.
11.3. Maintenance of Consolidated Net Worth. RTM shall
not permit its consolidated net worth computed in accordance with generally
accepted accounting principles as in effect from time to time hereafter (but
excluding from the computation any after tax writeoffs of non-cash charges)
shall be not less than $25 million.
11.4. Notice of Events. As soon as any Guarantor obtains
knowledge thereof, such Guarantor shall give the Beneficiaries written notice of
any condition or event which has resulted or might reasonably be expected to
result in (i) a
<PAGE>
<PAGE>
19
Material Adverse Effect with respect to any of the Guarantors, (ii) a breach of,
or noncompliance by any of the Guarantors with, any term, condition or covenant
contained herein or in any other Transaction Document or (iii) an Event of
Default.
11.5. Management Agreements. The Guarantors agree that
each of the Beneficiaries is a third party beneficiary of the Management
Agreements and Newco One, Newco Two and RTM Management shall not amend, modify,
assign, alter, waive any provision of, or terminate, the Management Agreements
without the prior written consent of Triarc Companies, Inc., which consent shall
not be unreasonably withheld.
11.6. Board Member. Until the tenth anniversary of the
date hereof, Parent and Holdco shall take any and all actions necessary to
ensure that the Board of Directors of Newco One and the Board of Directors of
Newco Two, or any successor to, or direct or indirect public parent of, Newco
One and Newco Two, as the case may be, shall each always include at least one
member who shall be designated by the Beneficiaries.
11.7. Dividends and Distributions. Parent, Holdco and
Newco One agree that until the occurrence of the indefeasible payment in full
and the complete performance of all obligations under the FFCA Loan Agreements,
each of them shall not, without the prior written consent of each of the
Beneficiaries, declare or pay, and Parent and Holdco will not permit Newco Two
to declare or pay, any dividend, or make any other payment or distribution, of
any kind to its respective shareholders or members on account of Parent's,
Holdco's, Newco One's or Newco Two's equity or membership interests, as the case
may be.
11.8. Mergers or Sales. Until the occurrence of the
indefeasible payment in full and the complete performance of the Guaranteed
Obligations hereunder, each of RTM, Parent, Holdco, RTM Management, Newco One
and Newco Two will be prohibited from selling, transferring or otherwise
conveying all or substantially all of its assets or merging or otherwise
combining with any other entity, except for a merger that would not result in a
Change of Control and is one of the following: (a) the merger of any two or more
of the Guarantors, (b) the merger of Holdco with Newco One and (c) the merger of
RTM with an unrelated entity so long as (i) RTM is the defacto survivor of such
merger, and (ii) such merger does not result in a violation of the covenant
contained in Section 11.3 hereof.
11.9. Development of New Restaurants. The Guarantors
(including, without limitation, Parent and Holdco) shall not permit Newco Two to
acquire, build or otherwise develop any Restaurants or other retail outlets of
any kind, which are not owned by Newco Two on the date of this Guaranty, it
being intended
<PAGE>
<PAGE>
20
that, as between Newco One and Newco Two, all development of new Restaurants or
other retail outlets shall occur in Newco One.
12. Events of Default. If any of the following conditions or
events ("Events of Default") shall occur and be continuing:
12.1. Default in Transaction Documents; Other Defaults.
(i) Failure to make payment when due under the FFCA Loan Agreements, which
failure shall have continued for a period longer than one-half of the number of
days in the grace or cure period applicable to such payment under the FFCA Loan
Agreements, (ii) failure by Newco One or Newco Two to pay when due any
uncontested license fees or franchise fees to any Beneficiary, which failure
shall have continued for more than twenty days after written notice, (iii) the
validity or enforceability of this Guaranty or any of the Security Documents is
challenged by any of the Guarantors or any of their Affiliates and such
challenge is not effectively withdrawn within twenty days, (iv) this Guaranty
and/or any of the Security Agreements referred to herein shall have been
determined by any court having jurisdiction to be invalid or unenforceable
against any of the Guarantors, (v) any violation of any of the covenants set
forth in Sections 11.3, 11.5, 11.6, 11.7, 11.8 and 11.9 shall have occurred and
such violation shall have continued for twenty days after written notice, (vi)
any other failure or failures to pay any uncontested amounts required to be paid
under the Transaction Documents if such payment or payments, alone or in the
aggregate, equal $2 million or more, and such failure or failures to pay shall
not have been remedied or waived by Triarc Companies, Inc. within thirty days
after the date of written notice from one or more of the Beneficiaries or (vii)
any failure or failures to pay $2 million or more when due under the Debt
Documents other than the FFCA Loan Agreements, which failure shall have
continued for a period longer than one-half of the number of days in the grace
or cure period applicable to such payment under such Debt Documents.
12.2. Default in Other Agreements. Failure of any
Guarantor or Newco Two to pay at final maturity any principal on one or more
issues of indebtedness or contingent obligations of such Guarantor or Newco Two
(other than the Assumed Liabilities) or breach or default by such Guarantor or
Newco Two with respect to any other material term of any one or more issues of
indebtedness or contingent obligations of such Guarantor or Newco Two or any
agreement or instrument evidencing or securing such indebtedness or contingent
obligations and such default or breach (i) if it is a payment default permits
the acceleration of that indebtedness or contingent obligation prior to its
stated maturity (whether or not such an acceleration occurs) or (ii) if it is a
breach or default of a non-payment term, actually results in such an
acceleration, and, in either case, the principal amount of such indebtedness or
contingent obligation and all other such indebtedness or contingent obligations
of Parent, Holdco, Newco One or Newco Two in respect of which there is a failure
to pay principal or interest, or a default or breach that permits acceleration
of indebtedness, which equals $5 million or more.
<PAGE>
<PAGE>
21
12.3. Involuntary Bankruptcy; Appointment of Custodian,
Etc. A court of competent jurisdiction enters a bankruptcy order under any
bankruptcy law that:
(i) is for relief against any of the Guarantors or
Newco Two any material subsidiary of any of the Guarantors or Newco
Two in an involuntary case or proceeding, or
(ii) appoints a custodian of any of the Guarantors
or Newco Two or any material subsidiary of any of the Guarantors or
Newco Two for all or substantially all of its properties, or
(iii) orders the liquidation of any of the
Guarantors or Newco Two or any material subsidiary of any of the
Guarantors or Newco Two, and
in each case the order or decree remains unstayed and in effect for 90 days.
12.4. Voluntary Bankruptcy; Appointment of Custodian, Etc.
Any of the Guarantors or Newco Two or any material subsidiary of any of the
Guarantors or Newco Two pursuant to or within the meaning of any bankruptcy law:
(i) commences a voluntary case or proceeding, or
(ii) consents to the entry of a bankruptcy order
for relief against it in an involuntary case or proceeding, or
(iii) consents to the appointment of a custodian
of it or for all or substantially all of its property, or
(iv) makes a general assignment for the benefit of
its creditors or files a proposal or scheme of arrangement involving
the rescheduling or composition of its indebtedness, or
(v) consents to the filing of a petition in
bankruptcy against it, or
(vi) shall generally not pay its debts when such
debts become due or shall admit in writing its inability to pay its
debts generally.
12.5. Judgments and Attachments. Any money judgment, or
post-judgment writ or warrant of attachment, or similar process involving in any
individual case or in the aggregate at any time an amount in excess of $5
million (to the extent not covered by third-party insurance as to which the
insurance company has
<PAGE>
<PAGE>
22
acknowledged coverage) shall be entered or filed against any of the Guarantors
or Newco Two, or any of their respective properties or assets and shall remain
undischarged, unvacated, unbonded or unstayed for a period of 90 days or in any
event later than ten days prior to the date of any proposed sale thereunder.
12.6. Dissolution. Any order, judgment or decree shall be
entered against any of the Guarantors or Newco Two or any material subsidiary of
any of the Guarantors or Newco Two decreeing the dissolution or split-up of any
of the Guarantors or Newco Two or any material subsidiary of any of the
Guarantors or Newco Two and such order shall remain undischarged or unstayed for
a period in excess of 60 days.
12.7. Business Interruption. Any of the Guarantors or
Newco Two, or any material subsidiary of any of the Guarantors or Newco Two is
required permanently to discontinue all or substantially all of the business, or
is prevented from conducting all or substantially all of its business for a
period of such prolonged duration as is likely to render it unable to fulfill
its obligations under this Guaranty, whether by reason of (i) any injunction,
order or decree of any tribunal, or (ii) material damage to, or the loss, theft
or destruction of, any material portion of its assets, or (iii) any strike,
lockout or other labor dispute, or (iv) any act of God or public enemy or other
casualty or (v) the loss, suspension, forfeiture or inability to renew any
license or permit essential to its business, provided, that to the extent that
the loss, suspension, forfeiture or inability to renew any such license or
permit is dependent upon a decision by any Beneficiary of this Guaranty, such
Beneficiary's decision shall have been made in a manner substantially consistent
with the standards applied by it in making similar decisions in respect of the
granting, revoking, renewing, or refusing renewal of, licenses or permits of its
other franchisees, generally.
12.8. Change of Control. The occurrence of a Change of
Control of any of the Guarantors.
THEN (i) upon the occurrence of any Event of Default described in
the foregoing Sections 12.3 or 12.4, all of the amounts due under this Guaranty
shall automatically become immediately due and payable, without presentment,
demand, protest or other requirements of any kind, all of which are hereby
expressly waived by each of the Guarantors, and (ii) upon the occurrence of any
other Event of Default, any of the Beneficiaries shall, by written notice to the
Guarantors, declare all of the amounts due under this Guaranty to be, and the
same shall forthwith become, due and payable; provided, however, that if any
declaration of acceleration under this Guaranty occurs solely because an Event
of Default set forth in Section 12.2 has occurred and is continuing, such
declaration of acceleration shall be automatically annulled if the holders of
the indebtedness which are the subject of such Event of Default have rescinded
their declaration of acceleration in respect of such indebtedness within thirty
days of such
<PAGE>
<PAGE>
23
acceleration of such indebtedness and the Beneficiaries have received written
notice thereof within such time and if no other Event of Default has occurred
during such thirty-day period which has not been cured or waived in accordance
with this Agreement. Nevertheless, if at any time after acceleration all Events
of Default shall be remedied or waived, then the Beneficiaries shall, by written
notice to Guarantors rescind and annul the acceleration and its consequences;
but such action shall not affect any subsequent Event of Default or Potential
Event of Default or impair any right consequent thereon. In addition to the
rights and remedies granted to the Beneficiaries pursuant to this Guaranty, the
Beneficiaries have the rights and remedies granted to them pursuant to the
Security Documents.
13. Miscellaneous.
13.1. Survival of Warranties. All agreements, covenants,
representations and warranties made herein shall survive the execution and
delivery of this Guaranty, and the execution and delivery of the Stock Purchase
Agreement and the other Transaction Documents.
13.2. Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including bank wire,
facsimile transmission, telex or similar writing) and shall be given to such
party at its address set forth in the Stock Purchase Agreement and in the case
of Parent, Newco One and Newco Two, c/o RTM, Inc. at 5995 Barfield Road,
Atlanta, Georgia 30328.
13.3. No Waivers. No failure or delay by the Beneficiaries
in exercising any right, power or privilege hereunder or under any other
Transaction Document shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
13.4. Expenses. Each of the Guarantors agrees to pay, or
cause to be paid, on demand, and to save the Beneficiaries harmless against
liability for, any and all costs and expenses (including, without limitation,
fees and disbursements of counsel and fees, costs and expenses incurred in
connection with any bankruptcy proceeding) incurred or expended by each of the
Beneficiaries in connection with the enforcement, amendment, modification or
waiver of or preservation of any rights under this Guaranty and the collection
of amounts payable hereunder, and until so paid, such fees, costs, disbursements
and expenses shall be added to, and constitute, Guaranteed Obligations.
<PAGE>
<PAGE>
24
13.5. Amendments and Waivers. This writing is intended by
the Guarantors and the Beneficiaries as the final expression of this Guaranty
and is also intended as a complete statement of the terms of their agreement
with respect to the matters covered hereby. No amendment, modification,
termination or waiver of any provision of this Guaranty, or consent to any
departure by any Guarantor therefrom, shall in any event be effective without
the written consent of each of the Beneficiaries.
13.6. Successors and Assigns; No Third Party
Beneficiaries. This Guaranty is a continuing guaranty and shall be binding upon
the Guarantors and their successors and assigns; provided, however, that the
Guarantors may not assign this Guaranty or any of the rights or obligations of
the Guarantors hereunder without the prior written consent of the Beneficiaries.
This Guaranty shall inure to the benefit of the Beneficiaries and their
respective successors and assigns. Nothing contained in this Guaranty shall be
deemed to confer upon anyone other than the parties hereto (and their permitted
successors and assigns) any right to insist upon or to enforce the performance
or observance of any of the obligations contained herein.
13.7. APPLICABLE LAW. THIS GUARANTY SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK.
13.8. JURISDICTION.
(a) ANY ACTION OR PROCEEDING AGAINST THE GUARANTORS
RELATING IN ANY WAY TO THIS GUARANTY OR ANY OTHER TRANSACTION DOCUMENT MAY BE
BROUGHT AND ENFORCED IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED
STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND THE GUARANTORS IRREVOCABLY
CONSENTS TO THE JURISDICTION OF EACH SUCH COURT IN RESPECT OF ANY SUCH ACTION OR
PROCEEDING. THE GUARANTORS FURTHER IRREVOCABLY CONSENT TO THE SERVICE OF PROCESS
IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED
OR CERTIFIED MAIL, POSTAGE PREPAID, RETURN RECEIPT REQUESTED, TO EACH OF THE
GUARANTORS AT ITS ADDRESS AS PROVIDED FOR NOTICES HEREUNDER. THE FOREGOING SHALL
NOT LIMIT THE RIGHT OF ANY BENEFICIARY TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR TO BRING ANY ACTION OR PROCEEDING, OR TO OBTAIN EXECUTION OF
ANY JUDGMENT, IN ANY OTHER JURISDICTION.
(b) THE GUARANTORS HEREBY IRREVOCABLY WAIVE ANY OBJECTION
THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR
PROCEEDING ARISING
<PAGE>
<PAGE>
25
UNDER OR RELATING TO THIS GUARANTY OR ANY OTHER TRANSACTION DOCUMENT IN ANY
COURT LOCATED IN ANY JURISDICTION CHOSEN BY THE BENEFICIARY IN ACCORDANCE WITH
CLAUSE (A) OF THIS SUBSECTION, AND HEREBY FURTHER IRREVOCABLY WAIVE ANY CLAIM
THAT A COURT LOCATED IN SUCH JURISDICTION IS NOT A CONVENIENT FORUM FOR ANY SUCH
ACTION OR PROCEEDING.
(c) THE GUARANTORS HEREBY IRREVOCABLY WAIVE, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE UNITED STATES FEDERAL AND STATE LAW, ALL
IMMUNITY (WHETHER ON THE BASIS OF SOVEREIGNTY OR OTHERWISE) FROM JURISDICTION,
SERVICE OF PROCESS, ATTACHMENT (BOTH BEFORE AND AFTER JUDGMENT) AND EXECUTION TO
WHICH IT MIGHT OTHERWISE BE ENTITLED IN ANY ACTION OR PROCEEDING RELATING IN ANY
WAY TO THIS GUARANTY OR ANY OTHER TRANSACTION DOCUMENT IN THE COURTS OF THE
STATE OF NEW YORK, OF THE UNITED STATES OR OF ANY OTHER COUNTRY OR JURISDICTION,
AND THE GUARANTORS HEREBY WAIVE ANY RIGHT IT MIGHT OTHERWISE HAVE TO RAISE OR
CLAIM OR CAUSE TO BE PLEADED ANY SUCH IMMUNITY AT OR IN RESPECT OF ANY SUCH
ACTION OR PROCEEDING.
13.9. Severability. If any provision in or obligation
under this Guaranty shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
13.10. Interpretation. Section headings in this Guaranty
are included herein for convenience of reference only and shall not constitute a
part of this Guaranty for any other purpose or be given any substantive effect.
As used in this Guaranty, the words "including" and "include" mean including
without limiting the generality of any description preceding such term.
13.11. Further Assurances. At any time or from time to
time, upon the request of the Beneficiaries, the Guarantors shall execute and
deliver such
<PAGE>
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26
further documents and do such other acts and things as the Beneficiaries may
reasonably request in order to effect fully the purposes of this Guaranty.
IN WITNESS WHEREOF, each of the Guarantors has executed this
Guaranty by its duly authorized officer as of the date first above written.
GUARANTORS:
RTM, INC.
By: /s/ Philip G. Skinner
----------------------------------------
Name: Philip G. Skinner
Title: Vice President
RTM HOLDING COMPANY, INC.
By: /s/ Philip G. Skinner
----------------------------------------
Name: Philip G. Skinner
Title: Vice President
RTM PARTNERS, INC.
By: /s/ Philip G. Skinner
----------------------------------------
Name: Philip G. Skinner
Title: Vice President
RTM MANAGEMENT CO., LLC
By: RTM Enterprises, Inc.,
Managing Member
By: /s/ Philip G. Skinner
----------------------------------------
Name: Philip G. Skinner
Title: Vice President
<PAGE>
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27
RTM OPERATING COMPANY
By: /s/ Philip G. Skinner
----------------------------------------
Name: Philip G. Skinner
Title: Vice President
<PAGE>
<PAGE>
Exhibit 21.1
TRIARC COMPANIES, INC. AND SUBSIDIARIES
SUBSIDIARIES OF THE REGISTRANT
September 28, 1997
The subsidiaries of Triarc Companies, Inc., their respective states or
jurisdictions of organization and the names under which such subsidiaries do
business are as follows:
<TABLE>
<CAPTION>
STATE OR JURISDICTION
UNDER WHICH ORGANIZED
-----------------------
<S> <C>
National Propane Corporation* ............................................... Delaware
National Propane SGP, Inc. .............................................. Delaware
National Propane Partners, L.P.** ..................................... Delaware
National Propane, L.P.** ........................................... Delaware
National Sales & Service, Inc............... .................... Delaware
Carib Gas Corporation of St. Croix (formerly
LP Gas Corporation of St. Croix) ............................... Delaware
Carib Gas Corporation of St. Thomas (formerly
LP Gas Corporation of St.Thomas) ............................... Delaware
NPC Leasing Corp ............................................................ New York
Citrus Acquisition Corporation .............................................. Florida
Adams Packing Association, Inc. (formerly New
Adams, Inc.) ......................................................... Delaware
Groves Company, Inc. (formerly New Texsun, Inc.) ........................ Delaware
Home Furnishing Acquisition Corporation ..................................... Delaware
1725 Contra Costa Property, Inc. (formerly Couroc
of Monterey, Inc.) ................................................... Delaware
Hoyne Industries, Inc. (formerly New Hoyne, Inc.) ....................... Delaware
Hoyne International (U.K.), Inc.......................................... Delaware
GS Holdings, Inc............................................................. Delaware
GVT Holdings, Inc.***.................................................... Delaware
TXL Corp.............................................................. South Carolina
TXL International Sales, Inc.......................................... South Carolina
GTXL, Inc............................................................. Delaware
TXL Holdings, Inc..................................................... Delaware
C.H. Patrick & Co., Inc............................................ South Carolina
Southeastern Public Service Company ..................................... Delaware
Crystal Ice & Cold Storage, Inc.................................... Delaware
Southeastern Gas Company .......................................... Delaware
Geotech Engineers, Inc......................................... West Virginia
Triarc Holdings 1, Inc....................................................... Delaware
Triarc Holdings 2, Inc....................................................... Delaware
Triarc Development Corporation .............................................. Delaware
Triarc Acquisition Corporation .............................................. Delaware
</TABLE>
<PAGE>
<PAGE>
TRIARC COMPANIES, INC. AND SUBSIDIARIES
SUBSIDIARIES OF THE REGISTRANT
September 29, 1997
<TABLE>
<CAPTION>
STATE OR JURISDICTION
UNDER WHICH ORGANIZED
-----------------------
<S> <C>
Triarc Beverage Holdings Corp................................................ Delaware
Mistic Brands, Inc....................................................... Delaware
Snapple Beverage Corp.................................................... Delaware
Snapple International Corp............................................ Delaware
Snapple Beverages de Mexico, S.A. de C.V****...................... Mexico
Snapple Beverage (UK) Holdings Limited............................ United Kingdom
Snapple Beverage (Europe) Limited.............................. United Kingdom
Snapple Europe Limited................................................ United Kingdom
Snapple Canada, Ltd................................................... Canada
Snapple Worldwide Corp................................................ Delaware
Southwest Snapple Corp................................................ Delaware
Southwest Snapple Holdings Corp....................................... Delaware
Snapple Finance Corp.................................................. Delaware
Pacific Snapple Distributors, Inc..................................... Delaware
Mr. Natural, Inc...................................................... Delaware
Snapple Caribbean Corp................................................ Delaware
Rhode Island Beverage Corp.*****...................................... Delaware
Rhode Island Beverage Packing Co., L.P.******...................... Delaware
CFC Holdings Corp.*******.................................................... Florida
Chesapeake Insurance Company Limited********.............................. Bermuda
RC/Arby's Corporation (formerly Royal Crown
Corporation).............................................................. Delaware
RCAC Asset Management, Inc............................................ Delaware
Arby's, Inc........................................................... Delaware
Arby's Building and Construction Co............................... Georgia
Arby's Canada Inc................................................. Canada
Daddy-O's Express, Inc............................................ Georgia
Arby's (Hong Kong) Limited........................................ Hong Kong
Arby's De Mexico S.A. de CV....................................... Mexico
Arby's Immobiliara............................................ Mexico
Arby's Servicios.............................................. Mexico
TJ Holding Company, Inc........................................... Delaware
Arby's Restaurants, Limited........................................... United Kingdom
Arby's Limited........................................................ United Kingdom
Arby's Restaurant Construction Company................................ Delaware
Arby's Restaurant Development Corporation............................. Delaware
Arby's Restaurant Holding Company..................................... Delaware
Arby's Restaurants, Inc............................................... Delaware
Arby's Restaurant Operations Company.................................. Delaware
RC-8, Inc. (formerly Tyndale, Inc.)................................... Indiana
RC-11, Inc. (formerly National Picture &
Frame Co.)........................................................... Mississippi
Promociones Corona Real, S.A. de C.V.................................. Mexico
RC Leasing, Inc....................................................... Delaware
Royal Crown Nederland B.V............................................. Netherland
RC Cola Canada Limited (formerly Nehi Canada
Limited)............................................................. Canada
Royal Crown Bottling Company of Texas (formerly
Royal Crown Bottlers of Texas, Inc.).................................. Delaware
</TABLE>
<PAGE>
<PAGE>
TRIARC COMPANIES, INC. AND SUBSIDIARIES
SUBSIDIARIES OF THE REGISTRANT
September 29, 1997
<TABLE>
<CAPTION>
STATE OR JURISDICTION
UNDER WHICH ORGANIZED
-----------------------
<S> <C>
Royal Crown Company, Inc. (formerly Royal Crown
Cola Co.)............................................................ Delaware
RC Services Limited*********....................................... Ireland
Retailer Concentrate Products, Inc................................. Florida
TriBev Corporation ................................................ Delaware
CCB Merger Corporation ...................................................... Delaware
</TABLE>
- -------------
* 24.3% owned by Southeastern Public Service Company and 75.7% owned by
Triarc Companies, Inc.
** National Propane Corporation is the managing general partner of both
partnerships and holds a combined 2% unsubordinated general partner
interest therein and a 38.7% subordinated general partner interest in
National Propane Partners, L.P. National Propane SGP, Inc. is the
special general partner of both partnerships and holds a combined 2%
unsubordinated general partner interest therein. The public owns a
57.3% limited partner interest in National Propane Partners, L.P.
National Propane Partners, L.P. is the sole limited partner of
National Propane, L.P.
*** 50% owned by GS Holdings, Inc. and 50% owned by Southeastern Public
Service Company.
**** 99% owned by Snapple International Corp. and 1% owned by Snapple
Worldwide Corp.
***** 50% owned by Snapple Beverage Corp. and 50% owned by Jeffrey
Honickman, individually and as Trustee under the Harold A. Honickman
December 1992 Indenture of Trust.
****** Rhode Island Beverage Corp. is the managing general partner of Rhode
Island Beverage Packing Co., L.P. and holds a 1% general partnership
interest therein. Snapple Beverage Corp. owns a 49.5% limited partner
interest in Rhode Island Beverage Packing Co., L.P. The remaining
limited partnership interest is owned by Jeffrey Honickman, as
Trustee under the Harold A. Honickman December 1992 Indenture of
Trust.
******* 94.6% owned by Triarc Companies, Inc. and 5.4% owned by Southeastern
Public Service Company.
******** Common Stock 100% owned by CFC Holdings; Preferred Stock is owned
38.5% by RC/Arby's Corporation, 23% by Southeastern Public Service
Company and 38.5% by TXL Corp.
********* 99% owned by Royal Crown Company, Inc. and 1% owned by RC/Arby's
Corporation.
<PAGE>
<PAGE>
Exhibit 23.3
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Triarc Companies, Inc. on Form S-4 of our reports dated March 31, 1997,
appearing in and incorporated by reference in the Annual Report on Form 10-K of
Triarc Companies, Inc. for the year ended December 31, 1996 and to the
references to us under the headings "Experts", "Triarc Companies, Inc. and
Subsidiaries--Unaudited Pro Forma Condensed Consolidated Financial Statements"
and "Summary--Triarc Summary Historical and Pro Forma Consolidated Financial
Data" in the Prospectus, which is part of this Registration Statement.
DELOITTE & TOUCHE LLP
New York, New York
October 20, 1997
<PAGE>
<PAGE>
Exhibit 23.4
Consent of Independent Public Accountants
-----------------------------------------
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated June 20, 1997 and
to all references to our Firm included in this registration statement.
ARTHUR ANDERSEN LLP
October 20, 1997
<PAGE>
<PAGE>
Exhibit 23.5
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We hereby consent to the incorporation by reference and the use in the Proxy
Statement/Prospectus constituting part of this Registration Statement on Form
S-4 of our report dated March 14, 1997 appearing on page F2 of Cable Car
Beverage Corporation's Annual Report on Form 10-K for the year ended December
31, 1996, which report also appears in such Proxy Statement/Prospectus. We also
consent to the reference to us under the headings "CABLE CAR BEVERAGE
CORPORATION--Summary Historical Financial Data," "THE SPECIAL MEETING--General"
and "EXPERTS" in such Proxy Statement/Prospectus.
PRICE WATERHOUSE LLP
Denver, Colorado
October 20, 1997
<PAGE>
<PAGE>
Exhibit 23.6
[Letterhead of
NationsBanc Montgomery Securities, Inc.]
We hereby consent to the inclusion of the opinion letter of
Montgomery Securities (our predecessor in interest) dated June 24, 1997 to the
Board of Directors of Cable Car Beverage Corporation (the "Company") regarding
the acquisition of the Company by Triarc Companies, Inc. ("Triarc") in Triarc's
Registration Statement on Form S-4 (the "Registration Statement") to be filed
with the Securities and Exchange Commission on October 22, 1997, and to the
references therein to our firm and to our opinion under the headings "The
Proposed Merger and Related Matters--Background of the Merger," "--Cable Car's
Reasons for the Merger; Recommendation of Cable Car's Board of Directors,"
"--Opinion of Financial Advisor to Cable Car" and "The Merger Agreement--Certain
Representations and Warranties." In giving the foregoing consent, we do not
admit and we hereby disclaim (i) that we come within the category of persons
whose consent is required under Section 7 of the Securities Act of 1933, as
amended (the "Securities Act"), or the rules and regulations of the Securities
and Exchange Commission promulgated thereunder, and (ii) that we are experts
with respect to any part of the Registration Statement within the meaning of the
term "experts" as used in the Securities Act and the rules and regulations of
the Securities and Exchange Commission promulgated thereunder.
Very truly yours,
NATIONSBANC MONTGOMERY SECURITIES, INC.
Dated: October 21, 1997
