UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) February 13, 1997
RC/ARBY'S CORPORATION
--------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 0-20286 59-2277791
----------------- ---------- -----------------
(State or other (Commiss ion (I.R.S. Employer
jurisdiction of File No.) Identification No.)
incorporation of
organization)
1000 Corporate Drive
Fort Lauderdale, FL 33334
--------------------------------- -----------
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (954) 351-5600
Page 1 of 178 Pages
Index to Exhibits appears on Page 4
<PAGE>
Item 5. Other Events
On February 13, 1997, Arby's Inc. ("Arby's"), Arby's Restaurant Development
Corporation ("ARDC"), Arby's Restaurant Holding Company ("ARHC") and Arby's
Restaurant Operations Company ("AROC"), each a wholly-owned subsidiary of the
Registrant, entered into a stock purchase agreement with RTM, Inc. ("RTM") and
RTM Partners, Inc. ("Holdco") pursuant to which Holdco would acquire all of the
stock of two corporations ("Newco") owning all of the 355 Arby's restaurants
owned by the Registrant and its subsidiaries. The purchase price is
approximately $71 million, consisting of $50,000 cash, a promissory note in the
face amount of $1,950,000 and the assumption of approximately $69 million in
mortgage indebtedness and capitalized lease obligations. The consummation of the
transaction is subject to customary closing conditions, including receipt of
necessary consents and regulatory approvals.
In connection with the transaction, the sellers will receive options to purchase
from Holdco up to an aggregate of 20% of the common stock of each of the two
corporations that will own the restaurants. RTM, Holdco and two affiliated
entities also entered into a guarantee in favor of the sellers and Triarc
Companies, Inc. guaranteeing payment of the assumed debt obligations. As part of
the transaction, RTM has also agreed to cause Newco to build an additional 190
Arby's restaurants over the next 14 years pursuant to a development agreement.
This is in addition to a previous commitment RTM entered into last year to build
an additional 210 Arby's restaurants.
A copy of the press release, the stock purchase agreement and the forms of
option, guaranty and development agreement are being filed herewith as exhibits
and are incorporated herein by reference.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(c) Exhibits
10.1 Stock Purchase Agreement dated February 13, 1997 among Arby's,
ARDC, ARHC, AROC, RTM and Holdco.
10.2 Form of Option granted by Holdco in favor of ARDC, ARHC and AROC.
10.3 Form of Guaranty by RTM, Holdco, RTM Management Co., LLC and
Triarc Restaurants Disposition 1, Inc. ("Newco") in favor of
Arby's, ARDC, ARHC, AROC and Triarc.
10.4 Form of Development Agreement between Arby's and Newco.
99.1 Press release dated February 13, 1997.
<PAGE>
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.
RC/ARBY'S CORPORATION
By: /s/ Curtis S. Gimson
-----------------------------------------
Curtis S. Gimson, Senior Vice President
Dated: February 20, 1997
<PAGE>
INDEX TO EXHIBITS
Exhibit
10.1 Stock Purchase Agreement dated February 13, 1997 among
Arby's, ARDC, ARHC, AROC, RTM and Holdco.
10.2 Form of Option granted by Holdco in favor of ARDC, ARHC
and AROC.
10.3 Form of Guaranty by RTM, Holdco, RTM Management Co.
LLC and Triarc Restaurants Disposition 1, Inc. ("Newco") in
favor of Arby's, ARDC, ARHC, AROC and Triarc.
10.4 Form of Development Agreement between Arby's and Newco.
99.1 Press release dated February 13, 1997.
<PAGE>
Exhibit 99.1
PRESS RELEASE
CONTACT: Martin M. Shea For Immediate Release
Triarc Companies, Inc.
212/451-3030
ARBY'S TO SELL ITS RESTAURANTS TO LARGEST FRANCHISEE
o NEW DEVELOPMENT AGREEMENT SIGNED
NEW YORK, New York, February 13, 1997 -- Triarc Companies, Inc. (NYSE:TRY),
announced today that its Restaurant Group's subsidiary Arby's, Inc., has entered
into an agreement to sell to an affiliate of RTM Restaurant Group, the largest
franchisee in the Arby's system, and the largest privately-owned franchise
company in the country, its 355 company-owned stores for approximately $71
million, subject to certain post-closing adjustments. A substantial portion of
the consideration will be the assumption of existing mortgage and capitalized
lease indebtedness. Consummation of the transaction is subject to customary
closing conditions, including receipt of necessary consents and regulatory
approvals.
Following the purchase, RTM would have approximately 670 Arby's stores in 50
markets in 24 states. The Arby's system presently has over 3,000 stores. As part
of this agreement, together with a previous commitment entered into last year,
RTM will build an additional 400 Arby's restaurants over the next 14 years.
These additional Arby's restaurants will reflect the chain's "fast-casual"
positioning.
<PAGE>
Triarc also received, as part of this agreement, an option to purchase a 20%
interest in the RTM affiliate holding the sold stores. Triarc stated that this
option reflects its continuing commitment to the Arby's brand. Triarc's future
role in the system as a franchisor will be to ensure the strength of the Arby's
brand, while continuing to bring new concepts to the system such as P.T.
Noodle's, ZuZu's and T.J. Cinnamons.
Triarc also announced that Arby's president and chief executive officer Don
Pierce, who has led Arby's, Inc. for the past four years, and introduced many
concepts that have positively impacted Arby's position in the fast-food
industry, has resigned, but will continue as a consultant to the company. Roland
C. Smith has been appointed president effective immediately. Mr. Smith was
formerly senior vice president and general manger of Arby's, Inc.
"When we first looked at Arby's, we were not only impressed with the inherent
strength of the brand, but also the strength and viability of the franchisees
who made up a substantial portion of the system. As we became more aware of the
operating expertise and efficiencies of our franchisees in creating profitable
units, we realized that by being a franchisor rather than an operator, we should
be able to create more value for our shareholders by creating profits at the
bottom line," said Nelson Peltz, chairman and chief executive officer of Triarc.
"The sale of these restaurants will increase our high margin franchise revenues,
greatly reduce general and administrative expense, result in substantially less
depreciation at the Arby's level, remove a substantial portion of debt and
related interest expense, and yield much improved pre-tax earnings. Our
responsibility to shareholders is to obtain the best returns we can from this
asset. We believe that as a pure franchisor, our bottom line returns from our
restaurant business will be significantly improved," continued Peltz.
"The sale of our company-owned units to such an experienced group of
<PAGE>
restauranteurs as RTM is a very positive move for Arby's and Triarc," said Peter
May, president and chief operating officer of Triarc. "With knowledge that our
stores will be operated by a successful and well capitalized organization, we
are committed to building and expanding the Arby's brand, and devote more of our
management time to the development and introduction of brands into the system
such as P.T. Noodle's, ZuZu's, T.J. Cinnamons as well as the expansion of the
total Arby's system. We will continue to work vigorously to drive our
co-branding and fast-casual concepts which have proven to increase sales. With
our returns on this investment being significantly heightened due to increased
franchise revenue and no capital requirements, we can apply these returns to
acquisitions of other brands," continued May.
"Our entire organization at RTM is extremely excited about our expanding role in
the Arby's system as operators of 670 restaurants. We remain dedicated to
building upon the Arby's tradition of offering consumers high quality food
served fast in a cut-above surrounding. Our plan calls for aggressive
development of new stores in our current and newly acquired markets in order to
continue Arby's strategy of becoming a major player in the adult fast food
business," said Russ Umphenour, president of RTM Restaurant Group.
Triarc Companies, Inc. is comprised of four businesses: restaurants
(Arby's), beverages (Royal Crown Company and Mistic Brands), dyes and
specialty chemicals (C.H. Patrick) and liquefied petroleum gas (National
Propane).
###
Notes To Follow
<PAGE>
NOTES
<PAGE>
The statements in this press release that are not historical facts constitute
"forward-looking statements" that are based on current expectations but involve
risks, uncertainties and other factors which may cause actual results to be
materially different from those set forth in the forward-looking statements.
Such factors include, but are not limited to the following: general economic,
business and market conditions; competition; success of operating initiatives;
development and operating costs; advertising and promotional efforts; brand
awareness; the existence or absence of adverse publicity; acceptance of new
product offerings; availability, locations and terms of sites for restaurant
development; changes in business strategy or development plans; quality of
management; availability, terms and deployment of capital; business abilities
and judgement 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; construction
schedules; the costs and other effects of legal and administrative proceedings;
and other risks and uncertainties detailed in Triarc's Form 10-K and RC/Arby's
Corporation's Form 10-K and Triarc's and RC/Arby's and other current and
periodic filings with the Securities and Exchange Commission.
<PAGE>
Exhibit 10.1
STOCK PURCHASE AGREEMENT
by and among
RTM, Inc.
RTM Partners, Inc.
and
ALL OF THE STOCKHOLDERS OF
Triarc Restaurants Disposition 1, Inc.
and
Triarc Restaurants Disposition 2, Inc.
and Arby's, Inc.
February 13, 1997
-------------------------
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I......................................................
DEFINITIONS................................................
1.1 Definitions.......................................
ARTICLE II.....................................................
PURCHASE AND SALE OF SHARES................................
2.1 Sale and Purchase of Shares.......................
2.2 Delivery of Shares................................
2.3 Consideration to be Paid by Holdco; Allocation....
2.4 Transfer of Assets to Newco; Liabilities Assumed by Newco
2.5 Excluded Liabilities.............................
2.6 Post Closing Adjustments to Purchase Price........
ARTICLE III....................................................
REPRESENTATIONS AND WARRANTIES OF THE SELLERS..............
3.1 Organization and Authority; Formation of Newco....
3.2 Corporate Power and Authority; Due Authorization..
3.3 No Conflict; Consents.............................
3.4 Compliance with Laws..............................
3.5 Inventory.........................................
3.6 Title to Assets...................................
3.7 Litigation; Judgments.............................
3.8 Benefit Plans and ERISA...........................
3.9 Financial Information.............................
3.10 No Broker or Finder..............................
3.11 No Hazardous Substance...........................
3.12 Restaurants......................................
3.13 Owned Store Real Property; Liens.................
3.14 Capitalization...................................
3.15 Ownership of Shares..............................
3.16 Subsidiaries.....................................
3.17 Contracts and Agreements.........................
3.18 Arby's Canada, Inc...............................
3.19 Standards........................................
ARTICLE IV.....................................................
REPRESENTATIONS AND WARRANTIES OF HOLDCO...................
4.1 Organization and Authority........................
4.2 Corporate Power and Authority; Due Authorization..
4.3 No Conflict; Consents.............................
4.4 Litigation; Judgments.............................
4.5 No Broker or Finder...............................
4.6 Capitalization of Holdco..........................
4.7 Arby's Employees..................................
4.8 Purchase for Investment...........................
4.9 No Liquidation....................................
ARTICLE V......................................................
COVENANTS AND AGREEMENTS...................................
5.1 Conduct of Business Prior to Closing..............
5.2 Full Access.......................................
5.3 Payment by the Sellers of the Sellers' Vendors....
5.4 Arby's Fees.......................................
5.5 FFCA Loan Agreements..............................
5.6 New Products and Marketing Programs; Training
Facilities; Multi-Branding........................
5.7 Employee Matters..................................
<PAGE>
5.8 Cooperation; Power of Attorney; Operating Agreement
5.9 Purchase of POS Equipment.........................
5.10 Title and Environmental Reports..................
5.11 Tax Covenants....................................
5.12 Licenses.........................................
5.13 Premerger Notification...........................
5.14 Further Assurances...............................
5.15 Replacement of Bonds and Letters of Credit.......
5.16 FFCA Loan Agreements.............................
5.17 Amendment of all Schedules.......................
5.18 Excluded Liabilities.............................
ARTICLE VI.....................................................
CONDITIONS TO HOLDCO'S OBLIGATIONS.........................
6.1 Representations and Warranties True;
Obligations Performed.............................
6.2 Closing Deliveries of the Sellers.................
6.3 No Injunction.....................................
ARTICLE VII....................................................
CONDITIONS TO THE SELLERS' OBLIGATIONS.....................
7.1 Representations and Warranties True;
Obligations Performed.............................
7.2 Closing Deliveries of Holdco and Newco............
7.3 No Injunction.....................................
ARTICLE VIII...................................................
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
8.1 Survival of Representations and Warranties of the
Sellers and Arby's After Closing..................
8.2 Obligation of the Sellers and Arby's to Indemnify.
8.3 Obligation of Holdco to Indemnify.................
8.4 Notice and Opportunity to Defend..................
8.5 Limitations on Indemnification....................
8.6 Computation of Losses.............................
8.7 Sole Remedy.......................................
ARTICLE IX.....................................................
MISCELLANEOUS PROVISIONS...................................
9.1 Headings..........................................
9.2 Entire Agreement; Amendment; Waiver...............
9.3 Counterparts......................................
9.4 Binding Effect....................................
9.5 Expenses..........................................
9.6 Nature of Representations.........................
9.7 Notices...........................................
9.8 Governing Law.....................................
9.9 Jurisdiction. ...................................
9.10 Confidentiality..................................
9.11 Public Announcement..............................
9.12 Severability.....................................
9.13 Limitation on Rights of Third Parties............
9.14 Valuation For Tax Reporting Purposes.............
9.15 Cooperation on Taxes.............................
9.16 Termination and Cancellation.....................
9.17 Assignment.......................................
9.18 No Solicitation, Etc.............................
<PAGE>
SCHEDULES
1(a) -- Restaurants
1(b) -- Multi-Brand Locations
2 -- Owned Store Real Property
3 -- Capitalized Leases
4 -- Operating Leases and Other Debt Documents
5 -- Equipment Leases
6 -- Petty Cash
7 -- Restaurant Leases
2.5 -- Excluded Liabilities
3.3 -- No Conflict; Consents
3.4 -- Compliance with Laws
3.7 -- Litigation; Judgements
3.11 -- No Hazardous Substance
3.13 -- Owned Store Real Property; Liens
3.16 -- Subsidiaries
3.17 -- Contracts
4.6 -- Capitalization of Holdco
5.5 -- Amendments to FFCA Loan Agreements
5.15 -- Bonds and Letters of Credit
6.2(j) -- Restaurants Requiring Landlord's Estoppel Certificates
and Consents
7.2(m) -- Indemnification of Guarantees
7.2(s) -- Restaurants Requiring Landlord's Estoppel Certificates
and Consents
EXHIBITS
1(a), (b), (c) -- Form of Multi-Brand Licenses
2.3 -- Form of Notes
5.8 -- Form of Operating Agreement
6.2(c) -- Form of Lease Assignment and Assumption Agreements
6.2(e) -- Consents
6.2(f) -- Form of FIRPTA Certificate
6.2(h) -- Form of Special Warranty Bill of Sale
6.2(i) -- Form of Special Warranty Deed
6.2(j) -- Form of Landlord's Estoppel Certificates and Consents
6.2(k) -- Form of Quitclaim Deed
6.2(l) -- Form of Equipment Lease Assignment and Assumption Agreement
6.2(m) -- Form of Owner's Affidavit
6.2(r) -- Form of Management Agreement
7.2(j) -- Holdco Consents
7.2(k) -- Form of Option Agreement
7.2(l) -- Form of Guaranty
7.2(n) -- Form of Development Agreement
7.2(s) -- Form of Landlord's Estoppel Certificates and Consents
<PAGE>
STOCK PURCHASE AGREEMENT
THIS AGREEMENT dated the ___ day of February, 1997, by and among
Arby's, Inc. ("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"),
RTM Partners, Inc., a Georgia subchapter S corporation ("Holdco"), and, for
purposes of Paragraph 5.7, 5.11, 9.14 and 9.15 only, RTM, Inc., a Georgia
corporation ("RTM"). Each of ARDC, ARHC and AROC is sometimes herein referred to
as a "Seller" and ARDC, ARHC and AROC are sometimes herein collectively referred
to as the "Sellers."
The Sellers and Arby's own and operate those certain three hundred
fifty-five (355) restaurants operating under the trade name of "Arby's(R),"
described on Schedule 1(a) attached hereto and by this reference incorporated
herein (hereinafter referred to as the "Restaurants").
Prior to the Closing (as hereinafter defined), the Sellers, other than
ARDC, will, subject to the receipt of all requisite consents and approvals,
convey the Restaurants and the shares in the Subsidiaries (as hereinafter
defined) and the Assets that they hold (as hereinafter defined) to Triarc
Restaurants Disposition 1, Inc., a Delaware corporation ("Newco One"), subject
to certain liabilities described herein, in exchange for all of the issued and
outstanding common stock, par value $1.00, per share (the "Newco One Shares"),
of Newco One, and ARDC will, subject to receipt of all requisite consents and
approvals, convey the Restaurants and Assets that it owns to Triarc Restaurants
Disposition 2, Inc., a Delaware corporation ("Newco Two"), subject to certain
liabilities described herein, in exchange for all of the issued and outstanding
common stock, par value $1.00, per share (the "Newco Two Shares" and, together
with the Newco One Shares, the "Shares") of Newco Two. Holdco desires to
purchase , and the Sellers desire to sell, convey, assign and transfer to
Holdco, all of the Shares. Newco One and Newco Two are sometimes hereinafter
collectively referred to as "Newco."
The parties hereto desire to enter into this Agreement for the purpose
of setting forth the terms and conditions upon which the foregoing will be
accomplished.
<PAGE>
ARTICLE I
DEFINITIONS
1.1 Definitions. For purposes of this document, the following
definitions shall control and have the meanings as set forth herein:
1. "Accrued Personal Absence Pay" means the aggregate amount of
personal absence pay, including the effect of all employee benefits such as
FICA, that will be earned as of the Closing Date by those Affected Employees (as
hereinafter defined) who are employees of Sellers or Arby's on the Closing Date
and who are hired by RTM or Newco One on the Closing Date.
2. "Accrued Vacation Pay" means the aggregate amount of accrued
vacation pay as of the Closing Date, excluding pay for holidays, but including
the effect of all employee benefits such as FICA, for those Affected Employees
who are employees of Sellers or Arby's on the Closing Date and who are hired by
RTM or Newco One on the Closing Date.
3. "Affiliate" means, with respect to any Person, any other person
controlling, controlled by or under common control with, such Person.
4. "Arby's Headquarters Employee" means any salaried employee of
Arby's (as defined herein) employed at Arby's corporate offices in Ft.
Lauderdale, Florida whose primary duties do not relate to the operation of the
Restaurants.
5. "Assets" means, subject to Paragraph 5.8 hereof, as of the Closing
Date, all of the Sellers' right, title and interest in, and to, all of the
assets located at the Restaurants that are used by the Sellers in the operation
of the Restaurants, whether owned or leased by the Sellers, including, without
limitation, the following: (i) all of the Sellers' right, title, and interest in
and to the Restaurant Leases, whether as lessor or lessee or both; (ii) all
Security Deposits; (iii) all leasehold improvements ("Leasehold Improvements")
owned by the Sellers with respect to the 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 POS Agreements), owned or leased by the Sellers and used in
the business of and located at the Restaurants (hereinafter the "FF&E"); (v) all
rights of the Sellers as lessor or lessee or both under the Equipment Leases;
(vi) all of the Sellers' right, title and interest in and
<PAGE>
to those certain tracts or parcels of land, together with improvements located
thereon, owned by the Sellers and listed on Schedule 2 hereto (hereinafter
referred to as "Owned Store Real Property"); (vii) all of the Seller's right,
title and interest in and to all Assumed Contracts; (viii) all of the Sellers'
rights under the POS Agreements, including, without limitation, the right to use
the software described therein; (ix) all of the Sellers' rights under the ILC
Agreements; (x) the Inventory; (xi) the Petty Cash; (xii) all District PP&E (as
hereinafter defined); and (xiii) the capital stock of the Subsidiaries (as
hereinafter defined). Notwithstanding anything herein to the contrary, except as
expressly set forth in clauses (v), (vi), (viii), (ix) and (x) above or as
otherwise provided in the Licenses, the Sellers are not transferring to Newco,
and the Assets shall not include, the Seller's or Arby's right, title and
interest in or to the right to use the name Arby's(R), P.T. Noodle's(R), T.J.
Cinnamons(R) or ZuZu(R) or any other intellectual or intangible property of the
Sellers or Arby's, or the service business operated by Arby's Canada, Inc., the
rights of Arby's Canada, Inc. as subfranchisor of Store No. 2035 or any rights
to tax refunds belonging to Arby's Canada, Inc.
6. "Assumed Contracts" means all of the contracts to which Newco One or
Newco Two is, or as of the Closing will be, a party or shall have assumed,
including only those contracts required to be assumed under Paragraph 3.17,
and/or listed on Schedule 3.17 hereto to the extent accepted by Newco (which
acceptance shall not be unreasonably withheld), true, correct and complete
copies of which have been or will be delivered to or made available to Holdco by
Sellers prior to the date which is at least ten (10) days prior to the Final
Date.
7. "Assumed Contract Obligations" means only those obligations of
Sellers under the Assumed Contracts which are assumed by Newco One or Newco Two
and arise and accrue from and after the Closing Date, and shall exclude any and
all obligations of Sellers which arise or accrue prior to the Closing Date under
the Assumed Contracts.
8. "Business Day" means any day on which banks in New York, New York
are open for general banking business, other than a Saturday, a Sunday, a legal
holiday or any other day on which banks in New York, New York are required or
authorized by law to close.
9. "Capitalized Leases" means, collectively, each of the leases
listed on Schedule 3 hereto.
<PAGE>
10. "Closing" means the sale of the Shares contemplated hereby at the
offices of Paul, Weiss, Rifkind, Wharton & Garrison, located at 1285 Avenue of
the Americas, New York, New York 10019, or at such other location as shall be
agreed upon by the parties hereto.
11. "Closing Date" means the date two Business Days after the date on
which each of the closing conditions set forth in Articles VI and VII hereof
have been satisfied or waived, or such other date as shall be agreed upon by the
parties hereto.
12. "Debt Documents" 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") and ARDC, the Loan
Agreement dated as of October 13, 1995 by and between FFCA and ARHC, the Loan
Agreement dated as of September 5, 1996 by and between FFCA and ARHC, each as
amended and supplemented through the date of this Agreement, and each of the
promissory notes issued thereunder, other than those described on Schedule 2.5
hereto (the "Excluded FFCA Liabilities"), and each of the documents and
agreements entered into in connection therewith (collectively, the "FFCA Loan
Agreements"), each of the Capitalized Leases and each of the operating leases
and other agreements, as all such Debt Documents are listed on Schedule 4
hereto. As used herein "Debt Documents" does not include the agreements related
to the Excluded Liabilities (as herein defined).
13. "District PP&E" means all personal property owned or leased by the
Sellers and utilized by the Sellers' Area Managers or Directors of Operations in
connection with the ownership and/or operation of the Restaurants.
14. "Equipment Leases" means all of the equipment leases, including
the equipment leases between ARDC and AROC, listed on Schedule 5 hereto.
15. "Final Date" is the date immediately preceding the Closing Date.
16. "ILC Liabilities" means the rights and obligations of the Sellers
or Arby's under the Master Lease, signed by Arby's on April 15, 1994, between
Arby's and International Leasing Corporation, and all equipment schedules
thereto (the "ILC Agreements").
17. "Inventory" means all merchantable inventory of food, beverages and
other consumables, paper and supplies, as well as new uniforms and promotional
items reasonably acceptable to Holdco located or otherwise used at the
Restaurants at the close of business
<PAGE>
on the Final Date. "Inventory Cost" means the cost of Inventory as of the Final
Date, determined as set forth in Paragraph 2.6(a)(i) hereof.
18. "Knowledge" means, as to the Sellers, the actual knowledge of the
President, Chief Financial Officer or any Senior Vice President of Sellers, of
Arby's or Triarc (as hereinafter defined) or any Senior Vice President and the
Vice President - Legal, Vice President - Franchise Services and Vice President -
Development of Arby's or of any Divisional Vice President of Sellers or Arby's.
19. "Licenses" means collectively, (i) new Arby's license agreements,
in the form of the "1002-080188-40 LA" license (the "Arby's Licenses"), which
shall be executed and delivered by Arby's and Newco immediately following the
Closing and shall remain in effect until such time as a new license agreement
reasonably acceptable to Holdco (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 in the forms of Exhibits 1(a), 1(b) and 1(c)
hereto, respectively (the "Multi-Brand Licenses"), between Newco and Arby's to
be entered into immediately following the Closing and shall remain in effect
until such time as a new license agreement reasonably acceptable to Holdco (also
a "New Arby's License") becomes effective under applicable franchise laws, and
thereafter, upon execution and delivery thereof, such New Arby's License. Arby's
Licenses are being issued, and subsequent to the Closing New Arby's Licenses
will, in accordance with Paragraph 5.12 hereof, be issued, for each of the
Restaurants listed on Schedule 1(a) hereto. Multi-Brand Licenses are being
issued for each of the Restaurants to the extent set forth on Schedule 1(b)
hereto. The New Arby's Licenses issued to each Restaurant listed on Schedule
1(a) hereto shall provide for a term of twenty years minus the period such
Restaurant operated under the "1002-080188-40 LA" form of license.
20. "Person" means any individual, corporation, trust, limited
liability company, unincorporated organization, governmental authority or any
other form of entity.
21. "Petty Cash" means the sum of the amounts set forth for each
Restaurant on Schedule 6 hereto.
<PAGE>
22. "POS Liabilities" means the rights and obligations for payments of
hardware lease rental costs, but excluding periodic software license and
maintenance agreement costs, as reflected in the Adjusted Cash Flow Calculations
referred to in Section 3.9 hereof, of the Sellers under the Term Lease Master
Agreement, executed by Arby's on December 27, 1994 and by IBM Credit Corporation
on February 8, 1995, and each of the leases entered into in accordance therewith
(the "POS Agreements").
23. "POS Software" means any and all rights that Sellers possess to any
owned or licensed software that the Sellers utilize in the operation of the
Restaurants pursuant to the POS Agreements or which has been internally
developed in connection with the interpretation of information generated by the
POS equipment leased by the Sellers pursuant to the POS Agreements.
24. "Restaurant Leases" are the leases of land and building or land,
building and equipment, including without limitation, the leases between ARDC
and AROC relating to certain of the Restaurants, together with any and all
amendments thereto, which leases are listed on Schedule 7 hereto and true,
correct and complete copies of which have been made available to RTM and Holdco,
or will be made available to RTM and Holdco as soon as is reasonably practical,
but in any event at least ten days prior to the Final Date.
25. "Transaction Documents" means this Agreement and any and all
documents called for herein to be executed by any Seller, RTM, Holdco, Newco One
or Newco Two and/or third parties, including, but not limited to, the Licenses,
the Guaranty (as hereinafter defined), the Security Documents (as defined in the
Guaranty) and all other closing delivery items called for in Paragraphs 6.2 and
7.2 hereof.
Accordingly, in consideration of the mutual covenants and agreements
contained herein, and intending to be legally bound, the parties hereto agree as
follows:
ARTICLE II
PURCHASE AND SALE OF SHARES
2.1 Sale and Purchase of Shares. At the Closing and upon the terms and
subject to the conditions of this Agreement, the Sellers shall sell to Holdco,
and Holdco shall purchase from the Sellers, all of the Shares.
<PAGE>
2.2 Delivery of Shares. At the Closing, each Seller shall deliver, or
cause to be delivered, to Holdco stock certificates representing all of the
Shares owned by it, duly endorsed in blank or accompanied by stock powers duly
executed in proper form for transfer, which shares, in the aggregate, shall
constitute all of the Shares.
2.3 Consideration to be Paid by Holdco; Allocation. The consideration
to be paid by Holdco to the Sellers hereunder shall be determined, paid and
allocated as provided herein. Subject to Paragraph 2.6 below, the purchase price
for the Shares shall be payable by (i) delivery at the Closing of (A) cash in
the amount of $50,000.00 and (B) promissory notes of RTM, in the aggregate
principal amount at maturity of $1,950,000, in the form of Exhibit 2.3 hereto
(the "Notes"), (ii) execution and delivery by Holdco of the Option Agreements
(as hereinafter defined), and (iii) the execution and delivery by RTM, Holdco,
Newco and RTM Management of the Guaranty (the "Purchase Price"). The Purchase
Price will be allocated among the Sellers in the manner set forth in writing and
delivered by Sellers to Holdco not later than ten (10) days prior to the Final
Date, subject to Paragraphs 9.14 and 9.15 below.
2.4 Transfer of Assets to Newco; Liabilities Assumed by Newco. Holdco
acknowledges and agrees that prior to the Closing, subject to receipt of
requisite consents and approvals, the Sellers other than ARDC, shall convey or
cause to be conveyed to Newco One, and ARDC shall convey to Newco Two, all of
their right, title and interest in and to the Assets, and that Newco One shall
assume obligations of Arby's and the Sellers, other than ARDC, and Newco Two
shall assume from ARDC, and shall become liable for, and Newco as between Newco
and the Sellers and Arby's, shall be responsible for and hold harmless Sellers
and Arby's with respect to only the following liabilities (collectively, the
"Assumed Liabilities"):
(i) the rights and obligations of the Sellers or Arby's under
the Restaurant Leases and the Equipment Leases arising and accruing after
the Final Date;
(ii) the rights and obligations of the Sellers under the Debt
Documents arising and accruing after the Final Date;
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(iii) all fees, dues and assessments arising and accruing
after the Final Date for the Arby's Franchise Association and for any of
the Sellers' or Arby's' other advertising programs occurring after the
Final Date, whether local or national;
(iv) the Prorated Expenses (to the extent provided in Paragraph
2.6(a)(vi) below), Accrued Vacation Pay and Accrued Personal Absence Pay
and other items to the extent set forth in Paragraphs 2.6(a);
(v) the obligations and liabilities of the Sellers under
the Assumed Contracts arising and accruing on or after the Closing Date; and
(vi) POS periodic software, license and maintenance
agreement costs arising and accruing after the Closing Date as reflected in
the Adjusted Cash Flow Calculations referred to in Section 3.9 hereof.
2.5 Excluded Liabilities. Notwithstanding anything to the contrary set
forth herein, but subject to Paragraphs 2.6 (a)(iii), 2.6(a)(iv) and 2.6(a)(v)
hereof, Newco shall not assume obligations of Sellers or Arby's or be liable for
any of the Sellers' or Arby's liabilities listed on Schedule 2.5 hereto nor any
of the liabilities of Sellers or Arby's other than the Assumed Liabilities ("the
Excluded Liabilities").
2.6 Post Closing Adjustments to Purchase Price.
(a) Inventory Cost, Petty Cash, Security Deposits and Prorated
Expenses. On or before thirty (30) days following the Closing Date, Newco One
shall pay to the Sellers, on behalf of Holdco, as additional Purchase Price, an
amount, in cash, equal to the excess, if any, of the sum of the Inventory Cost,
plus the Petty Cash, plus the Security Deposits minus the Accrued Personal
Absence Pay, minus the Accrued Vacation Pay and plus Prorated Expenses. Such
items shall be determined as follows:
(i) Inventory Cost shall be as set forth on a schedule
prepared by the Sellers as of the close of business on the Final Date,
which schedule shall be (i) derived from and in accordance with the books
and records of the Sellers and (ii) determined using generally accepted
accounting principles consistent with past practice of the Sellers and
Arby's. Newco shall have the
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right to review the Sellers' and Arby's' books and records and Inventory in
order to verify the Sellers' schedule of Inventory and Inventory Cost;
(ii) Petty Cash shall be as shown on Schedule 6 hereto,
as agreed by Sellers and Holdco;
(iii) All security deposits under leases relating to the
Assets and all utility deposits and any other prepaid amounts (other than
tax-related deposits) reasonably acceptable to Newco (collectively,
"Security Deposits"), shall be as set forth on a schedule prepared by the
Sellers as of the close of business on the Final Date. Newco shall have the
right to review the Seller's and Arby's books and records in order to
verify the Seller's schedule of Security Deposits;
(iv) Accrued Personal Absence Pay shall be as set forth
on a schedule prepared by the Sellers as of the close of business on the
Final Date and delivered to Newco within 20 days after the Closing. Newco
shall have the right to review the Seller's and Arby's books and records in
order to verify the Seller's schedule of Accrued Personal Absence Pay;
(v) Accrued Vacation Pay shall be as set forth on a
schedule prepared by the Sellers as of the close of business on the Final
Date and delivered to Newco within 20 days after the Closing. Newco shall
have the right to review the Seller's and Arby's' books and records in
order to verify the Seller's schedule of Accrued Vacation Pay;
(vi) "Prorated Expenses" means Newco's portion of those
costs and expenses which the Sellers or Arby's have paid but which are to
be prorated between Newco and the Sellers or Arby's on a per-diem basis
effective as of the Closing Date, including, without limitation, all rents
for the Restaurant Leases and the Equipment Leases (other than the
Restaurant Leases and Equipment Leases between ARDC and AROC), all interest
payments under the Debt Documents and all other charges and fees
customarily prorated and adjusted in similar transactions, including
property taxes, but excluding all sales, transfer and use taxes and similar
charges, if any, arising out of the transfer of the Assets
<PAGE>
contemplated by this Agreement, all of which excluded taxes and similar
charges should be paid in accordance with Paragraph 9.5 hereof. "Prorated
Expenses" shall not include (i) any income, sales, use, business,
occupation, withholding, employment, security or similar tax, or any other
taxes of any kind whatsoever with respect to the Assets and the operation
of the Restaurants relating to any period before the close of business on
the Final Date, all of which shall be paid by the Sellers or Arby's, (ii)
any income, sales, use, business, occupation, withholding, employment,
security or similar tax, or any other taxes of any kind whatsoever with
respect to the Assets and the operation of the Restaurants relating to any
period after the close of business on the Final Date, all of which shall be
paid by Newco and (iii) any payments under Restaurant Leases and Equipment
Leases between ARDC and AROC to the extent that any such payments would
duplicate payments actually made by Newco pursuant to the Debt Documents.
In addition, Holdco shall cause all utilities to be metered as of the close
of business on the Final Date and Newco One shall make provisions for
separate billing thereafter to Newco One for all utility charges commencing
on the Closing Date; and
(b) Other Items. Notwithstanding the foregoing, within thirty
(30) days of the Closing Date, if the 1997 real and/or personal property
taxes and/or other taxes, as to the Restaurants, have not been previously
paid by the Sellers or Arby's, then Newco shall be entitled to a credit
against the amount due to the Sellers under Paragraph 2.6(a) above, and, if
and to the extent that such credit exceeds such amount, then Sellers shall
pay such excess to Newco in cash within thirty (30) days after the
determination of such excess in an amount equal to the Sellers' or Arby's'
pro-rata share of the 1997 property taxes assessed against the Real and
Personal Property and Sellers' and Arby's' portion of all sales taxes
payable for or attributable to the operation of the Restaurants prior to
the Closing Date. If Newco receives such a credit in the 30-day
reconciliation period referred to above, Newco shall pay or cause to be
paid all of the 1997 tax year real and personal property taxes when said
bills are rendered. Said prorations shall either be based: (i) on the
amount assessed for 1997, if
<PAGE>
determined; or (ii) on the amount paid in 1996, if the amount of the 1997
taxes are not as yet determined, and in such case, shall be further
adjusted between Newco and the Sellers when the 1997 tax bills become
available. Newco or the Sellers, as applicable, shall further pay to the
appropriate party within thirty (30) days following the Closing Date, the
net amount of any further adjustments made under Paragraphs 2.6(a)(vi)
hereof and this Paragraph 2.6(b) which are not ascertainable on the Final
Date.
(c) Store No. 13. At least ten (10) Business Days prior to the
Final Date, the Sellers and Arby's will deliver to Holdco a certificate,
reasonably acceptable in form and substance to Holdco, setting forth the cost to
the Sellers and Arby's of building Store No. 13, located at 1427 S. Byrne,
Toledo, Ohio, with appropriate invoices or other evidence, reasonably
satisfactory to Holdco of such costs, attached thereto. Holdco hereby agrees to
cause Newco to assume, and to relieve Sellers and Arby's of any obligations with
respect to, the principal amount (and any related future interest, premiums and
penalties) of Excluded FFCA Liabilities equal to the full amount set forth on
such certificate. Additionally, Sellers shall assign or cause to be assigned the
Ground Lease, including improvements, relating to Unit #13 to Newco free and
clear of all liens and other encumbrances that may have been placed on the
premises by Sellers or by any mechanic or materialman as a result of work
performed at the premises by or on behalf of Sellers or Arby's, but excluding
the recordation of the Ground Lease and/or any liens placed on the premises by
the landlord under the Ground Lease, except for those amounts set forth on the
certificate provided for above as finally approved.
(d) Sale of Restaurants by Newco. If Newco One or Newco Two (or
any of their Affiliates) shall, directly or indirectly, sell, transfer, assign
or otherwise dispose of, or enter into a letter of intent or other agreement
(whether oral or written), including without limitation, an option agreement,
within 12 months of the Closing Date, to sell, transfer, assign or otherwise
dispose of, any of the Restaurants, for an amount in excess of the amount
allocated to such Restaurants (whether in an asset sale or by sale of stock) on
Schedule 1(a) hereto, Newco One or Newco Two, as the case may be, shall, at the
closing of such sale, pay to the Seller that transferred directly
<PAGE>
(or indirectly) such Restaurant or shares to Newco One or Newco Two, as the case
may be, an amount, in cash, equal to the excess of 80% of such excess amount
minus 80% of such party's reasonable costs and expenses of such sale. The
parties acknowledge that any such payment is a cost of sale to Newco and not a
purchase price adjustment as to such Restaurant. Notwithstanding the foregoing,
the maximum liability of Newco under this Paragraph 2.6(d) shall not exceed
$2,000,000, in the aggregate. For purposes of this provision, the sale price for
any such Restaurant shall include, without duplication, the amount of debt or
other liabilities of Newco (or such affiliate) that are assumed or repaid in
connection with, or otherwise cease to exist after the occurrence of, such sale.
(e) Condemnation or Casualty. In the event any of the Owned Store
Real Property and any of the real property covered by the Restaurant Leases is
or becomes the subject of an actual condemnation proceeding or actual casualty
loss, Sellers shall notify Holdco and Holdco shall, subject to terms and
conditions of this Agreement, proceed to closing and, at the option of Holdco,
either (i) the applicable Restaurant shall be transferred to Newco One or Newco
Two, as the case may be, prior to the Closing and Newco One or Newco Two, as the
case may be, shall accept an assignment of all of Sellers' right in and to any
condemnation proceeds/casualty insurance proceeds or (ii) the applicable
Restaurant shall be excluded from the Restaurants transferred to Newco, with a
corresponding reduction in the Purchase Price in an amount equal to the amount
allocated to such Restaurant on Schedule 1(a) hereto.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLERS AND ARBY'S
In order to induce Holdco and RTM to enter into this Agreement and
consummate the transactions contemplated hereby, each Seller represents and
warrants, jointly and severally, and Arby's represents and warrants, severally
and not jointly, to Holdco and RTM as follows:
3.1 Organization and Authority; Formation of Newco. (a) Seller and
Arby's. Such Seller and Arby's is a corporation duly organized, validly
existing and in good
<PAGE>
standing under the laws of the State of Delaware. Such Seller and Arby's is duly
qualified as a foreign corporation in such jurisdictions as the conduct of its
business or the ownership of its properties require. Such Seller and Arby's has
all necessary corporate power and authority to own its properties and conduct
its business as it is presently being conducted.
(b) Newco. Each of Newco One and Newco Two is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Each of Newco One and Newco Two is duly qualified as a foreign
corporation in such jurisdictions as the conduct of its business or the
ownership of its properties require. Each of Newco One and Newco Two has all
necessary corporate power and authority to own its properties and conduct its
business as it is presently being conducted.
(c) Formation of Newco. Newco One and Newco Two have been formed
and prior to the Closing, neither entity will have had any operations, entered
into any agreements (written or oral) or incurred any liabilities except those
expressly contemplated by this Agreement, franchise taxes, qualification fees
and other related liabilities.
3.2 Corporate Power and Authority; Due Authorization. Such Seller and
Arby's have full corporate power and authority to execute and deliver the
Transaction Documents to which such Seller or Arby's is or will be a party and
to consummate the transactions contemplated thereby. The Board of Directors of
such Seller and Arby's has duly approved and authorized the execution and
delivery of this Agreement and each of the Transaction Documents and the
consummation of the transactions contemplated hereby and thereby, and no other
corporate or other proceedings on the part of any Seller or Arby's (other than
consents of the sole shareholder of such Seller and Arby's) are necessary or
required to authorize or approve the execution and delivery of this Agreement or
any of the Transaction Documents to which such Seller or Arby's is a party, or
the consummation of any of the transactions contemplated hereby or thereby. This
Agreement and each of the Transaction Documents to which such Seller or Arby's
is a party constitutes, or will constitute, when executed and delivered, a valid
and binding agreement of such Seller and Arby's, in each case enforceable in
accordance with its terms, subject to (i) bankruptcy,
<PAGE>
insolvency, reorganization, fraudulent conveyance or transfer, moratorium or
similar laws affecting creditors' rights generally and (ii) general principles
of equity (regardless of whether such enforceability is considered in a
proceeding at law or in equity).
3.3 No Conflict; Consents. Subject to and contingent upon obtaining all
of the consents, approvals, authorizations and/or loan payoffs set forth in
Schedule 3.3 hereto, the execution and delivery by such Seller and Arby's of
this Agreement and the required documents and the consummation by such Seller or
Arby's of the transactions contemplated hereby and thereby (including, without
limitation, the transfer of the Restaurants and Assets to Newco) do not and will
not: (a) to such Seller's or Arby's' Knowledge violate the terms of any
instrument, document or agreement to which such Seller or Arby's is a party or
by which such Seller or Arby's or the property of such Seller or Arby's is
bound, or be in conflict with, result in a breach of or constitute (upon the
giving of notice or lapse of time or both) a default under any such instrument,
document or agreement, or result in the creation of any lien upon any of the
property or Assets of such Seller or Arby's; or (b) violate any order, writ,
injunction, decree, judgment, ruling binding upon such Seller or Arby's or, to
such Seller's or Arby's' Knowledge, any law (other than bulk sales laws), rule
or regulation of any federal, state, county, municipal, or foreign court or
governmental authority applicable to such Seller or Arby's and relating to the
business of the Restaurants or the Assets.
3.4 Compliance with Laws. Except as set forth on Schedule 3.4, at the
Closing each Seller and Arby's is not to its Knowledge in violation of, or under
any investigation with respect to, or has received any written notice of any
non-compliance with, enforcement action under or violation of, any applicable
law, statute, order, rule, regulation, agency agreement, judgment, decree,
arbitration award, penalty or fine entered by any federal, state, county,
municipal, or foreign court or governmental authority relating to the business
of the Restaurants or to the Assets, excluding, those matters covered by
Paragraphs 3.11 and 3.12 hereof.
3.5 Inventory. Such Seller's Inventory consists, and as of the close
of business on the Final Date and Closing Date Newco's Inventory will consist,
of items
<PAGE>
which are in all material respects of a quality and quantity usable and salable
in the ordinary course of business.
3.6 Title to Assets. Prior to Closing, there shall have been
transferred and/or assigned to Newco One or Newco Two all of the Assets
currently owned by such Seller and Arby's, free and clear of all claims, liens,
encumbrances, security interests, mortgages and similar interests of any kind or
nature whatsoever ("Liens"), subject only to the Assumed Liabilities and the
Permitted Exceptions (as defined in Paragraph 3.13 below).
3.7 Litigation; Judgments. Except as set forth on Schedule 3.7 hereto,
there is no action, proceeding or investigation pending or threatened, in
writing, against or involving such Seller or Arby's relating to the Assets or
the operation of the Restaurants that, individually or in the aggregate, is
reasonably likely to have an adverse effect on Newco. Such Seller and Arby's is
not subject to any judgment, order or decree entered in any lawsuit or
proceeding relating to the Assets or the operation of the Restaurants, which is
reasonably likely to have an adverse effect on Newco.
3.8 Benefit Plans and ERISA. All "employee benefit plans," as defined
by Section 3(3) of ERISA, and any other benefit plans, including, without
limitation, vacation pay, Medicare and Medicaid supplements, retirement
supplements, salary continuation for disability and scholarship programs
maintained by such Seller or any member of a "Controlled Group" (within the
meaning of Section 4001(a)(14) of ERISA in which Seller is a member (the
"Controlled Group")) to which such Seller or any member of a Controlled Group
contributes are hereinafter collectively referred to as the "Plans." No Plan
obligates or will obligate Newco, following the Closing, to make any
contributions or obligations whatsoever thereunder, other than any required
employer 401K contributions with respect to the period prior to the Closing,
which are obligations of the Sellers or Arby's.
3.9 Financial Information. The schedule titled "Arby's, Inc., Adjusted
Cash Flow Calculations Based on the Latest Twelve Months Ended November 30,
1996", previously provided by or on behalf of any Seller to Holdco or its
representatives, is true and correct, was prepared from the books and records of
Sellers with adjustments
<PAGE>
made as disclosed in the schedule. Since the respective date of such
information, there have not been any changes, other than insignificant changes,
in the financial condition, assets, liabilities, revenues, expenses or
operations of such Seller's Restaurants. The schedules titled "Lease Summaries"
and "Leases", previously provided by or on behalf of any Seller to Holdco or its
representatives, are true and correct and were prepared from the books and
records of Sellers.
3.10 No Broker or Finder. Such Seller and Arby's has not authorized any
broker or agent to act on its behalf, nor does such Seller or Arby's have any
Knowledge of any broker or agent purporting to act on its behalf with respect to
transactions contemplated by this Agreement or any other Transaction Document.
3.11 No Hazardous Substance. For purposes of this paragraph, "hazardous
substance" means any material, in each case giving rise to liability under the
Resources Conservation Recovery Act, 42 U.S.C. Section 6901 et seq., the
Comprehensive Environment Response Compensation and Liability Act, 42 U.S.C.
Section 9601 et seq., and/or any other federal, state, provincial or other
applicable "environmental laws," rules, ordinances or regulations, or generally
any contaminant, petroleum product, asbestos, oil, radioactive or other
material, in each case the removal of which is required or the maintenance of
which is prohibited or penalized by any applicable local, state or federal
agency, authority or governmental unit. To such Seller's and Arby's Knowledge,
except as set forth on Schedule 3.11 hereto (i) no hazardous substance exists at
the Restaurants owned by such Seller, and (ii) there are no pending or
threatened, in writing, litigation or proceedings before any administrative
agency in which any person or entity alleges the presence, release, threat of
release, placement on or in any Restaurants owned by such Seller, or the
generation, transportation, storage, treatment, or disposal at the Restaurants
owned by such Seller of any hazardous substance. To such Seller's and Arby's
Knowledge, neither such Seller nor Arby's has received any written notice of and
neither such Seller nor Arby's has Knowledge that any governmental authority or
any employee or agent thereof has determined, or threatens to determine, that
there is a presence, release, threat of release, placement on or in any
Restaurants owned by such Seller, or the generation, transportation, storage,
treatment or disposal at the Restaurants owned
<PAGE>
by such Seller of, any hazardous substance. As to those Restaurants set forth on
Schedule 3.11, and to Arby's' Knowledge, (i) no remediation process is presently
ongoing (ii) no testing and no test results relating to such Restaurants is
required to be reported to any governmental authority and (iii) no remediation
has been mandated for any of such Restaurants.
3.12 Restaurants. To such Seller's and Arby's Knowledge, neither such
Seller nor Arby's has received written notice that any of the buildings and
structures or any appurtenances thereto or equipment therein or the operation or
maintenance thereof violates any restrictive covenants or any applicable
federal, state or local law, ordinance or zoning regulation. To such Seller's
and Arby's' Knowledge, none of the property nor any buildings, structures or
improvements thereon violate any building, fire, environmental or other
regulatory laws, ordinances or regulations, and to such Seller's and Arby's'
Knowledge, neither such Seller nor Arby's has received written notice of any
violation. To such Seller's and Arby's' Knowledge, no governmental authority has
issued or threatened, in writing, to issue any written notice or order that
materially adversely affects the use of any of the Restaurants or other Assets
as presently utilized and to such Seller's and Arby's' Knowledge neither such
Seller nor Arby's has received written notice from any other third party of any
adverse claim that would materially adversely affect the current operations of
any of the Restaurants. There are no condemnation or eminent domain proceedings
pending or, to such Seller's and Arby's' Knowledge, threatened in writing,
against the property, and neither such Seller nor Arby's has received written
notice of the intent of any public authority or government entity to take or use
the property or any part thereof.
3.13 Owned Store Real Property; Liens. Neither such Seller nor Arby's
is a "Foreign Person" for the purposes of the withholding rules of the Federal
Deficit Reduction Act of 1984 or the Foreign Investor in Real Property Tax Act.
Such Seller has made available to Holdco true, correct and complete copies of
all deeds and other conveyance instruments by which such Seller acquired any
right, title or interest in and to the Owned Store Real Property and of all
other material instruments, agreements and documents pertaining to such Owned
Store Real Property or to any rights or privileges
<PAGE>
pertaining or appurtenant thereto. Prior to the Closing, such Seller will
transfer to Newco One or Newco Two, as the case may be, fee-simple title to the
Owned Store Real Property owned by such Seller, together with all the tenements,
appurtenances, rights, easements, privileges and rights-of-way incident thereto
by special warranty deed, free and clear of all Liens, and insured by a
nationally recognized title insurance company at standard rates in a policy form
reasonably acceptable to Holdco (and Holdco acknowledges that Lawyers Title
Insurance Company is a nationally recognized title insurance company and that a
policy form acceptable to FFCA shall be accepted by Holdco) but subject to:
liens relating to the Assumed Liabilities and the Excluded Liabilities;
easements, restrictive covenants and conditions of record that do not materially
interfere with the conduct of the business at the applicable Restaurant; matters
that would be revealed by a current and accurate survey of the property that do
not materially interfere with the conduct of the business at the applicable
Restaurant; Liens of landlords, carriers, warehousemen, mechanics, materialmen
and other Liens imposed by law for sums not more than 60 days delinquent or
which are being contested in good faith, have been satisfactorily bonded over or
for which appropriate reserves have been made or for which such Seller will make
payment or otherwise clear of record by indemnifying Newco's title insurance
company in order to remove any such exception from any title insurance policy
being issued to Newco; with respect to Restaurants that are subject to a
Restaurant Lease, the terms of such Restaurant Lease so long as no default
exists thereafter that has not been cured provided and upon the condition that
the lessee under any such Restaurant Lease has received notice of any such
default and such default has not been cured within the time period provided for
under the applicable Restaurant Lease or the applicable Landlord under such
Restaurant Lease has waived any such default; matters set forth in Schedule 3.13
hereto; zoning ordinances and any violations thereof which are permitted as non
conforming uses, if any; liens for taxes, assessments or other governmental
charges not yet due or payable or that are being contested in good faith or for
which such Seller will make payment or otherwise clear of record by indemnifying
Newco's title insurance company (to the extent that such taxes are not yet due
and payable) in order to remove any such exception from any title insurance
policy being
<PAGE>
issued to Newco; matters which do not materially adversely affect the use of the
property as presently utilized; and such other matters, if any, as may be
approved in writing by Holdco, as set forth in the Special Warranty Deeds
delivered by the Sellers to Newco One or Newco Two, as the case may be, at the
Closing (collectively, the "Permitted Exceptions"). There are no outstanding
invoices or monies owed by such Seller to any third party under any easement
agreement or declaration of covenants encumbering the Owned Store Real Property,
and such Seller will pay (or reimburse Newco One or Newco Two, as the case may
be, for) any charges assessed under any such easements or declaration of
covenants which charges relate to periods prior to the Closing Date, but are
assessed subsequent to the Closing Date.
3.14 Capitalization. Each of Newco One and Newco Two is authorized to
issue 3,000 shares of common stock, par value $1.00 per share (collectively, the
"Common Stock"), of which 1,000 shares of Newco One and 1,000 shares of Newco
Two are issued and outstanding. No shares of Common Stock are held as treasury
stock. No other class of capital stock or other ownership interest of Newco One
or Newco Two is authorized or outstanding. There is no outstanding right,
subscription, warrant, call, unsatisfied preemptive right, option or other
agreement of any kind to purchase or otherwise to receive from Newco One or
Newco Two any of the outstanding, authorized but unissued, unauthorized or
treasury shares of the capital stock or any other security of Newco One or Newco
Two and there is no outstanding security of any kind convertible into any such
capital stock.
3.15 Ownership of Shares. All of the outstanding shares of Common Stock
owned by such Seller are, and at the Closing will be, owned by such Seller free
and clear of all Liens. All of the outstanding shares of capital stock of Newco
One or Newco Two owned by such Seller are duly authorized and validly issued,
fully paid and nonassessable.
3.16 Subsidiaries. Schedule 3.16 hereto sets forth the name and
jurisdiction of organization for each corporation or other entity (collectively,
"Subsidiaries") in which Newco One has, or at the Closing will have, a direct or
indirect ownership interest. Newco One owns 100% of the outstanding ownership
interests
<PAGE>
in the Subsidiaries. Each Subsidiary is duly organized, validly existing and in
good standing under the laws of its jurisdiction of organization. Except for the
Subsidiaries, neither Newco One nor Newco Two has or will have, at the Closing,
directly or indirectly own any interest in any other Person.
3.17 Contracts and Agreements. Except as set forth on Schedule 3.17, at
the Closing, Newco will not be a party to any contract which (A) has a term that
expires more than one year after the Closing Date or (B) pursuant to the terms
of which there is either a current or future obligation of Newco to make an
annual payment in excess of (x) $20,000 with respect to capital improvements of
any Restaurant or (y) $10,000 with respect to the operations of any Restaurant,
or (C) which materially affects the business, operations, assets (including,
without limitation, the Assets), properties or condition of Newco and was not
executed in the ordinary course of business of operating Restaurants.
3.18 Arby's Canada, Inc. The representations and warranties set forth
in Sections 3.3 through 3.13 are hereby made by Arby's as to the Restaurants
leased or owned by Arby's Canada, Inc.
3.19 Standards. Notwithstanding anything to the contrary contained
herein, if a representation or warranty contained in Article III hereof is based
on "Knowledge" or a derivation thereof is not true and correct and has had or
would have an adverse effect on the business, assets, properties or condition of
Newco which causes Newco to incur Losses (as hereafter defined) in excess of
$5,000 with respect to any one Restaurant, then in such event, such inaccuracy
or breach shall be treated as a Special Claim (as hereinafter defined).
EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS AGREEMENT,
NEITHER THE SELLERS NOR ANY OF THEIR AGENTS OR PERSONS ACTING ON THEIR BEHALF
MAKES ANY OTHER REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, RELATING TO THE
SHARES, THE ASSETS, THE RESTAURANTS OR ANY OTHER PROPERTY THAT IS THE SUBJECT OF
THIS AGREEMENT, AND THE SELLERS HEREBY DISCLAIM ANY SUCH REPRESENTATION OR
WARRANTY NOT SET FORTH IN THIS AGREEMENT INCLUDING, WITHOUT LIMITATION, ANY
IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
<PAGE>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF HOLDCO
In order to induce the Sellers to enter into this Agreement and
consummate the transactions contemplated hereby, Holdco represents and warrants
to the Sellers as follows:
4.1 Organization and Authority. Each of Holdco and RTM is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Georgia. RTM is duly qualified as a foreign corporation in such
jurisdictions as the conduct of its business or the ownership of its properties
requires such qualification. Holdco is qualified to do business in all
jurisdictions in which such qualification is necessary. Holdco has had no
operations, has not entered into any agreements (written or oral) and has not
incurred any liabilities.
4.2 Corporate Power and Authority; Due Authorization. Each of Holdco
and RTM are authorized and permitted under its governance documents to execute
and deliver this Agreement and each of the Transaction Documents to which it is
or will be a party and to consummate the transactions contemplated hereby and
thereby. The Board of Directors of RTM has duly approved and authorized and all
necessary action by the Board of Directors of Holdco has occurred to duly
approve and authorize, the execution and delivery of this Agreement and each of
the Transaction Documents to which it is a party and the consummation of the
transactions contemplated hereby and thereby, and no other corporate proceedings
on the part of Holdco or RTM is or shall be necessary to approve and authorize
the execution and delivery of this Agreement and such Transaction Documents and
the consummation of the transactions contemplated hereby and thereby. This
Agreement and each of the Transaction Documents to which Holdco or RTM is a
party constitutes, or will constitute, when executed and delivered, a valid and
binding agreement of Holdco or RTM, as the case may be, in each case enforceable
against Holdco or RTM, as the case may be, in accordance with its terms, subject
to (i) bankruptcy, insolvency, reorganization, fraudulent conveyance or
transfer, moratorium or similar laws affecting creditors' rights generally and
(ii) general principles of equity (regardless of whether such enforceability is
considered in a proceeding at law or in equity).
<PAGE>
4.3 No Conflict; Consents. The execution and delivery by Holdco and RTM
of this Agreement and/or the Transaction Documents to which each entity is a
party and the consummation by Holdco and RTM of the transactions contemplated
hereby and thereby does not and will not: (a) violate the terms of any material
instrument, document or agreement to which Holdco or RTM is a party or by which
Holdco or RTM or any of their property is bound, or be in conflict with, result
in a breach of or constitute (upon the giving of notice or lapse of time, or
both) a default under any such instrument, document or agreement, or result in
the creation of any lien upon any of the property or assets of Holdco or RTM or
any of their Affiliates; or (b) violate any order, writ, injunction, decree,
judgment, ruling, law or regulation of any federal, state, county, municipal or
foreign court or governmental authority applicable to Holdco or RTM and relating
to the purchase of the Shares or the ownership by Newco of the Restaurants and
the Assets.
4.4 Litigation; Judgments. There is no action, proceeding or
investigation pending or threatened against or involving Holdco, RTM or any of
their Affiliates relating to the Shares or the ownership by Newco of the Assets
or the Restaurants or that would adversely affect the ability of Holdco, RTM and
their Affiliates to consummate the transactions contemplated hereby and by the
other Transaction Documents. Neither Holdco, RTM nor any of their Affiliates is
subject to any judgment, order or decree entered in any lawsuit or proceeding
relating to the purchase of the Shares or the ownership by Newco of the Assets
or the Restaurants.
4.5 No Broker or Finder. Neither Holdco, RTM nor any of their
Affiliates has authorized any broker or agent to act on its behalf, nor does
Holdco, RTM nor any of their Affiliates have any knowledge of any broker or
agent purporting to act on its behalf with respect to transactions contemplated
by this Agreement or any other Transaction Document.
4.6 Capitalization of Holdco. All of the outstanding stock interests of
Holdco are, or at the Closing will be, owned by the Persons listed on Schedule
4.6 hereto, free and clear of all Liens (except as contemplated by this
Agreement and the other Transaction Documents). No other class of ownership
interest of Holdco is, or at the Closing will be, authorized or outstanding.
There is no outstanding right,
<PAGE>
subscription, warrant, call, unsatisfied preemptive right, option or other
agreement of any kind to purchase or otherwise to receive from Holdco any stock
interests or any other security of Holdco and there is no outstanding security
of any kind convertible into any such stock interests.
4.7 Arby's Employees. Neither Holdco nor any of its Affiliates has
offered employment to any current Arby's Headquarters Employee or has entered
into any agreements to employ any such employee in the future. Holdco agrees
that it will not, and will not permit its Affiliates to, without Arby's prior
written consent, directly or indirectly, hire, or solicit the hiring of, any
Arby's Headquarters Employee during the two year period commencing on the date
of this Agreement.
4.8 Purchase for Investment. Holdco is purchasing the Shares for its
own account for investment and not for resale or distribution.
4.9 No Liquidation. Holdco has no current plan or intention of
liquidating Newco One or Newco Two or transferring, conveying or otherwise
disposing of all or substantially all of the assets of Newco One or Newco Two.
ARTICLE V
COVENANTS AND AGREEMENTS
5.1 Conduct of Business Prior to Closing. The Sellers and Arby's
covenant and agree that prior to the commencement of business on the Closing
Date and except as otherwise consented to or approved by Holdco in writing, the
Sellers and Arby's and Newco shall operate the Restaurants, in the ordinary
course and substantially in the same manner as heretofore conducted. Without
limiting the foregoing, (A) the Sellers and Arby's shall, and prior to the
Closing shall cause Newco to: (i) maintain Inventory at normal levels consistent
with ordinary business practices; (ii) use commercially reasonable efforts to
maintain all Assets in good operating condition and repair, ordinary wear and
tear excepted; (iii) not further encumber the Assets (other than by Permitted
Exceptions); and (iv) not take any action, omit to take any action or permit any
third party to take any action which would cause any Seller to be in breach, in
any material respect, at the Closing Date of any of its representations,
warranties or covenants contained herein; and (B) the Sellers and Arby's shall
not, and shall not cause
<PAGE>
or permit Newco to (i) enter into, modify or amend any of the Assumed Contracts;
(ii) enter into, modify or amend any Debt Documents; (iii) enter into, modify or
amend any ILC Agreements; or (iv) enter into, modify or amend any of the POS
Agreements; without consulting with Holdco, to the extent reasonably
practicable, in each of the circumstances as described in clauses 5.1(B)(i)-(iv)
above.
5.2 Full Access. The Sellers and Arby's covenant and agree that between
the date hereof and the Closing Date, Holdco and its officers, employees and
authorized representatives shall, upon prior notice, have full access at
reasonable business hours to the Assets, Sellers' and Arby's' employees and any
and all files, books, documents and other records maintained by the Sellers,
Arby's, their agents, employees, accountants and other representatives
pertaining to any of the Assets or the operation of the Restaurants, the Assumed
Contracts, the Debt Documents, the Excluded FFCA Liabilities and/or the Excluded
Liabilities.
5.3 Payment by the Sellers of the Sellers' Vendors. Each Seller and
Arby's covenants and agrees that within thirty (30) days following the Closing
Date, such Seller and Arby's will pay in full all monies owed by such Seller or
Arby's to any vendor, supplier, merchant, wholesaler, distributor, service
company or similar supplier of products and services to the Restaurants
(collectively, "Vendors") for products or services purchased prior to the
Closing, if the same is then due; provided that, in the event such Seller or
Arby's disputes in good faith any amount claimed to be owed to a Vendor or
Vendors, and such Seller or Arby's is using reasonable efforts to resolve such
dispute or disputes, such Seller and Arby's is not obligated to pay such amount
unless and until such Seller and Arby's and Vendor or Vendors settle their
dispute or disputes. Thereafter, such Seller and Arby's will make prompt payment
of any Vendor invoices subsequently received by such Seller or Arby's or Newco
relating to the operation of the Restaurants prior to and through the Final Date
as such invoices become due and in accordance with such Seller's or Arby's'
payment practices to such Vendors. The obligations of Seller and Arby's under
this Paragraph shall survive the Closing and are Excluded Liabilities under this
Agreement.
<PAGE>
5.4 Arby's Fees. Holdco and the Sellers hereby acknowledge that Arby's,
as franchisor, shall agree in the Licenses to waive the payment of customary
initial franchise fees relating to the acquisition by Newco of the Restaurants,
and, in the case of a transfer by Newco One or Newco Two of any of the
Restaurants to an existing Arby's franchisee within 12 months of the Closing
Date, the customary transfer fees relating to transfers of Arby's restaurants.
Holdco acknowledges and agrees that the waiver of such fees does not apply to
any of the restaurants to be opened by Newco pursuant to the Development
Agreement (as hereinafter defined). Until the third anniversary of the Closing
Date, Seller will consent to a transfer of location of a License to another
location approved by Arby's within five (5) miles of the existing location
within the applicable designated market area, and will waive one-half the
customary transfer fees relating to such transfers, provided that (i) Newco is
not then in default under such Arby's License Agreement, (ii) such transfer does
not violate any other Arby's Licensing Agreement with any other Arby's licensee
and (iii) with respect to such a transferred License, Holdco shall ensure that
Newco One or Newco Two, as the case may be, enters into a New Arby's License (or
then current License, as applicable) prior to any opening of such Restaurant.
Any transfer of License and subsequent reopening of a Restaurant pursuant to
transfer, as contemplated above, will not count toward the fulfillment of any
requirements under the Development Agreement. Additionally, Newco shall be
entitled to open three Restaurants, without paying initial franchise fees as to
such three Restaurants, provided that Arby's approves the location of such
Restaurants in accordance with its standard licensing procedures.
5.5 FFCA Loan Agreements. The Sellers and Holdco covenant and agree to
use commercially reasonable efforts to obtain prior to the Closing, the
amendments to the FFCA Loan Agreements described on Schedule 5.5 hereto.
Notwithstanding the foregoing, (i) neither Sellers nor Holdco shall be under any
obligation to make any payment or other concession (monetary or otherwise, other
than to pay FFCA's fees and expenses, which shall be borne one-half by Sellers
and one-half by RTM or an Affiliate thereof) to FFCA in connection with their
attempt to obtain such amendments.
<PAGE>
5.6 New Products and Marketing Programs; Training Facilities; Multi-
Branding.
(a) New Products and Marketing Programs. Holdco covenants and
agrees, after the Closing, to permit, and to cause Newco to permit, at the
option of Arby's, Sellers and their Affiliates to use, at any one time, up to
twenty (20) of the Restaurants or the restaurants opened by Newco pursuant to
the Development Agreement, at least one of which shall be located in Canada,
unless Newco at such time does not own any Restaurants in Canada, (such 20
Restaurants and/or restaurants, the "Test and Training Restaurants"), any ten
(10) of such Test and Training Restaurants which, at any one time, may be in the
same Designated Market Area for test marketing of products and for testing
marketing concepts. The Sellers agree that they shall, or shall cause their
Affiliates to, reimburse Newco for any incremental costs incurred by Newco in
connection with the foregoing. Holdco agrees to follow, and to cause Newco to
follow, Arby's operating procedures in the preparation and implementation of
such products and/or marketing concepts, and, at the Sellers' cost and expense
(other than for related inventory, which shall be at the sole cost and expense
of Newco), to participate in the development of new products and new marketing
programs, as well as testing of multi-brand concepts and products in the Test
and Training Restaurants, such participation, and the determination of the
locations of the Test and Training Restaurants, to be on terms mutually agreed
upon by the Sellers and Newco.
(b) Training Facilities. Upon prior written notice, Holdco
covenants and agrees, subsequent to the Closing, to permit, and to cause Newco
to permit, Sellers and their Affiliates to use up to ten (10) Test and Training
Restaurants (no more than one of which may be in any one Designated Market Area)
to train existing and future franchisees in the operation and management of an
Arby's restaurant. The Sellers agree to reimburse Newco for any incremental
costs incurred by Newco in connection with the foregoing.
(c) Good Faith Negotiations. Holdco covenants and agrees to
negotiate, and to cause Newco to negotiate, in good faith with the Sellers, and
Sellers covenant and agree to negotiate in good faith with Holdco and/or Newco,
with respect to
<PAGE>
the determination of the locations of the Test and Training Restaurants, the
deployment of products and marketing programs and the testing of multi-brand
concepts and products in the Test and Training Restaurants, and the costs and
expenses to be paid for and/or reimbursed by Sellers in connection with any of
the foregoing.
5.7 Employee Matters.
(a) Affected Employees. As soon as is reasonably practical, and in
any event not less than ten (10) days prior to the Final Date, RTM covenants and
agrees to deliver to Sellers and Arby's a list of all employees of Sellers and
their Affiliates involved in the operation of the Restaurants (other than those
employees (the "Store Level Employees") located at the Restaurants), who hold a
title at or below Area Manager (the "Restaurant Employees"). The Restaurant
Employees and Store Level Employees are sometimes herein collectively referred
to as the "Affected Employees."
(b) Offer to Employ. RTM covenants and agrees, immediately
following the Closing, to offer to employ each Restaurant Employee as of the
Closing Date at a compensation and benefit level that are substantially
equivalent to the compensation and benefit level provided to such Restaurant
Employee on the Final Date, provided, however, that nothing in this Agreement
shall be construed to limit the right of RTM to terminate the employment of any
Restaurant Employee who accepts such offer of employment, for cause or
otherwise, at any time after the Closing Date. Newco One covenants and agrees,
immediately following the Closing, to offer to employ each Store Level Employee
as of the Closing Date at a compensation level and benefit level that are
substantially equivalent to the compensation and benefit level provided to such
Store Level Employee on the Final Date, provided, however, that nothing in this
Agreement shall be construed to limit the right of Newco One to terminate the
employment of any Store Level Employee who accepts such offer of employment, for
cause or otherwise, at any time after the Closing Date. Neither RTM nor Newco
shall be obligated hereby to offer employment to any Affected Employee who is
not lawfully employed by Sellers or their Affiliates, with all appropriate
documentation regarding the same, under any applicable laws, rules, regulations
or ordinances in effect as of the Closing Date, including without limitation any
and all immigration laws. Sellers and Arby's represent and warrant to RTM and
Newco
<PAGE>
that, to their knowledge, all Affected Employees are so lawfully employed by
Sellers and their Affiliates.
(c) WARN. Each party shall deliver to the other a copy of the
draft notices, if any, required to be issued by such party in accordance with
the Worker Adjustment and Retraining Notification Act of 1988, as amended
("WARN") (or any similar foreign or domestic laws), which notices shall be
subject to the other party's review and comment. If RTM and Newco One do not
offer employment to, or continue to employ, other than as an independent
contractor or a consultant, on or promptly after the Closing Date any Affected
Employee, then RTM shall reimburse the Sellers for any liability that any one or
more of them may incur under WARN (or other similar foreign or domestic laws).
(d) Employee Benefit Plans. RTM covenants and agrees to enroll the
Affected Employees who become employees of RTM or Newco One in RTM's employee
benefit plans, effective as of the Closing (or as soon as practicable
thereafter), including, as applicable, its medical plan, dental plan, life
insurance plan, and disability plan, under the same coverage applicable to other
similarly situated employees of RTM, giving such employees service credit for
their employment with the Sellers for eligibility and vesting purposes for all
of RTM's employee benefit plans (including, without limitation, health coverage
and vacation plans), as if such service had been performed with RTM and waiving
any preexisting condition exclusion with respect to RTM's medical plan, to the
extent that such preexisting condition would have been covered under the
Sellers' healthcare plan. RTM shall credit each such current employee with all
deductible payments and co-payments paid by such current employee under the
Sellers' or their Affiliates' healthcare plans prior to the Closing Date during
1997 for purposes of determining the extent to which any such current employee
has satisfied his or her deductible and whether he or she has reached the
out-of-pocket maximum under RTM's medical plan for such plan year. Claims for
benefits by Affected Employees and former employees under the Sellers' or their
Affiliates' Plans which are incurred but not paid prior to the Closing Date
shall be paid according to such transition claims procedures as may be agreed
upon by RTM and the Sellers.
<PAGE>
(e) Severance. RTM shall bear all of the severance costs
(including, without limitation, "COBRA" costs and severance costs incurred by
the Sellers and their Affiliates) arising out of the failure by RTM or Newco One
to comply with their obligations under this Paragraph 5.7.
5.8 Cooperation; Power of Attorney; Operating Agreement. (a)
Cooperation. The Sellers shall give any notices to third parties, and the
Sellers and Holdco shall each use their good faith commercially reasonable
efforts (which shall not require payments of money to third parties in order to
obtain waivers or consents from such third parties, other than the payment of
FFCA's fees and expenses) (in consultation with each other) to obtain any third
party consents (A) necessary or proper to consummate the transactions
contemplated in this Agreement, (B) disclosed or required to be disclosed in the
Schedules to this Agreement, (C) required to avoid a breach of or default under
any of the Sellers' material agreements in connection with the consummation of
the transactions contemplated in this Agreement (including, without limitation,
the transfer of the Restaurants and the Assets to Newco) or (D) required to
prevent a material adverse effect from occurring on or prior to the Closing Date
or a material adverse effect after the Closing Date. For purposes of this clause
5.8(a)(D), and without limitation of other matters having such effect, a
"material adverse effect" shall be deemed to have occurred if a party is unable
to operate any Restaurant for in excess of fifteen (15) consecutive days, or
incurs costs, expenses or losses in excess of $25,000.00 as a result thereof.
(b) Power of Attorney; Operating Agreement. In the event that the
Sellers or Arby's shall fail to obtain any third party consent described in
Paragraph 5.8 (a) above, the Sellers and Arby's shall use their good faith
reasonable efforts (which shall not include the payment of money by the Sellers
or Arby's unless fully reimbursed by Holdco), and shall take any such actions
reasonably requested by Holdco, to minimize any adverse effect upon the Assets
which could reasonably be expected to result after the Closing Date, from the
failure to obtain such consent. Subject to the immediately preceding sentence,
such actions shall include, without limitation, if reasonably requested by
Holdco and if such grant would not constitute a violation of applicable law
<PAGE>
or a breach of the applicable contract, the granting of a limited power of
attorney by the Sellers and Arby's to Holdco or Newco to permit Holdco or Newco,
as the case may be, to act on behalf of Sellers or Arby's under the applicable
contracts and agreements, or a management agreement, in form and substance
reasonably satisfactory to Holdco and the Sellers and Arby's, pursuant to which
Newco One will manage the affected Restaurants for Sellers and Arby's until such
time as such consent was no longer required, in which event Holdco and Newco One
shall indemnify the Sellers and Arby's for any expenses or losses incurred by
the Sellers and Arby's under the applicable contracts and agreements or as a
result of Holdco or Newco One, as the case may be, acting pursuant to such power
of attorney (other than any third party claim for breach of an applicable
contract or agreement by reason of and to the extent resulting from (i) the
actual grant by the Sellers and Arby's of the limited power of attorney or (ii)
the execution and delivery of the Operating Agreement substantially in the form
attached hereto as Exhibit 5.8 and the contemplated performance by Newco One of
its obligations thereunder). The Sellers and Holdco agree that up to 15% of the
leased Restaurants may be managed by Newco pursuant to an operating agreement
following the Closing, which for purposes of Paragraphs 6.2(j) and 7.2(s) shall
be deemed to constitute compliance with such Paragraphs.
5.9 Purchase of POS Equipment. The Sellers covenant and agree that, if
requested by Holdco or Newco, the Sellers will use their commercially reasonable
efforts (i) to cause Arby's to assign to Newco One the right under the POS
Agreements and ILC Agreements to exercise the buyout or lease option with
respect to the equipment, software and other products leased pursuant to the POS
Agreements and ILC Agreements or, (ii) if after exercise by Arby's of
commercially reasonable efforts, such assignment is not possible and the Sellers
receive from Holdco or Newco the full amount, in cash, required with respect
thereto, to cause Arby's to exercise the buyout or lease option with respect to
the equipment, software and other products leased pursuant to the POS Agreements
and ILC Agreements and convey to Newco by Limited Warranty Bill of Sale, free
and clear of all liens and encumbrances (other than Permitted Exceptions) title
to the equipment, software and other products covered by said POS Agreements and
ILC Agreements.
<PAGE>
5.10 Title and Environmental Reports. The Sellers covenant and agree to
deliver to Holdco, within 10 days after the execution of this Agreement, copies
of all title insurance policies, surveys, and environmental reports covering the
Owned Store Real Properties and all properties covered by the Restaurant Leases
which the Sellers have in their possession. The Sellers covenant and agree,
within 10 days after the execution of this Agreement, to request from the
lenders under the Debt Documents all title insurance policies, surveys and
environmental reports covering the Owned Real Properties and all properties
covered by the Restaurant Leases which are in the possession of such lenders (to
the extent the Sellers and Arby's do not already have such documents) and, to
the extent that Sellers receive the same from such lenders, to promptly make
available such policies, surveys and reports to Holdco. All of such information
shall be subject to Holdco's review and reasonable approval.
5.11 Tax Covenants. Holdco and its Affiliates shall join with the
Sellers in making an election under Section 338(h)(10) of the Internal Revenue
Code of 1986, as amended (the "Code") (and comparable elections pursuant to
state and local law) with respect to the purchase and sale of the Shares (such
election under Section 338(h)(10) of the Code, coupled with all comparable state
and local elections, being collectively referred to as the "Section 338
Election") and shall not take any position inconsistent with the Section 338
Election. Holdco and the Sellers shall (a) cause an IRS Form 8023-A that has
been completed in accordance with Treasury Regulations Section 1.338(h) (10)-1
and all comparable forms required or appropriate pursuant to any relevant state
law to be executed on the Closing and (b) take such other action as the Sellers
or Holdco, as the case may be, shall reasonably request, including, but not
limited to, providing the Sellers with any requested information, and making
available and causing appropriate Persons to take any action on behalf of Holdco
and its Affiliates, or the Sellers and its Affiliates, as the case may be,
required or appropriate for the making of such Section 338 Election in
accordance with Treasury Regulations Section 1.338(h)(10)-1 and Form 8023-A (and
in accordance with relevant state and local law). Holdco and its Affiliates and
the Sellers and its Affiliates will appropriately and timely prepare and file an
IRS Form 8594 (and any other forms required by Section 338(h)(10)(C) or 1060 of
<PAGE>
the Code) reporting the sale and purchase made pursuant to this Agreement (and
in accordance with relevant state and local law). In the event that Newco is
included in a consolidated or combined tax filing with Holdco and/or its
Affiliates, Newco will enter into a tax sharing agreement with Holdco and/or its
Affiliates to provide for Newco's share of taxes with respect to such
consolidated or combined tax filing. The tax sharing agreement will provide that
Newco's liability with respect to such consolidated or combined tax filing shall
be equal to the amount of taxes Newco would have paid if Newco had filed a
separate tax return (or a consolidated or combined filing by Newco and any of
its subsidiaries). Provided that Newco makes such payment, Newco shall be
indemnified against any tax liability with respect to such consolidated or
combined filing. In the event that Newco has losses or credits, Newco shall be
entitled to a refund of amounts previously paid or to be paid with respect to
such consolidated or combined filing, provided Newco could have carried back or
carried forward such losses or credits if it had filed a separate tax return.
All payments to be made by or to Newco shall be made at the time such payments
would be made to or by any taxing authority, determined as if Newco had filed a
separate tax return, whether by estimated tax, amended return, refund claim or
otherwise. Any payments by or to Newco shall be adjusted to reflect audit
adjustments by any taxing authority and shall reflect appropriate interest and
penalties determined as if Newco had filed a separate return. However, no
payments shall be made by Newco with respect to penalties unless such penalties
are actually imposed with respect to Newco by a taxing authority. Any payment by
Newco with respect to a consolidated or combined state tax filing shall be
treated as a deductible tax for federal income tax purposes. Deferred
intercompany gains or losses shall only be reflected in determining the amount
to be paid by or to Newco at the time such transactions are no longer deferred
for tax purposes.
5.12 Licenses. Holdco covenants and agrees to cause Newco One, subject
to and in accordance with paragraph 19 of Section 1.1, to execute and deliver to
Arby's, immediately following the Closing, Arby's Licenses and Multi-Brand
Licenses (as applicable) for each of the Restaurants and, within ten (10)
Business Days of the date that Arby's notifies Holdco, in writing, that the New
Arby's Licenses are effective under
<PAGE>
applicable franchise laws, to execute and deliver to Arby's New Arby's Licenses
for each of the Restaurants, as well as for any restaurants which to such date
have been opened by Newco One pursuant to the Development Agreement.
Notwithstanding anything to the contrary set forth herein or in the Arby's
Licenses, the New Arby's Licenses or the Multi-Brand Licenses, Sellers agree
that, in the event Newco or Holdco refinances the debt evidenced by the Debt
Documents or enters into the Amendments to FFCA Loan Agreements contemplated
hereby, and as a result of such refinancing or amendment, FFCA requests, as a
condition to such refinancing or amendment, that the Arby's Licenses, the New
Arby's Licenses and/or the Multi-Brand Licenses be collaterally assigned to
FFCA, Sellers hereby agree to consent to such collateral assignments, provided
and upon the express conditions that (i) such collateral assignments are in the
form previously approved by Sellers in connection with the closings under the
Debt Documents; (ii) any changes to such form of collateral assignment shall be
subject to Sellers' prior written consent; and (iii) such consent shall be
limited to the properties originally financed by FFCA under the Debt Documents
and shall not, under any circumstances, include any other property owned or
controlled by either Newco or Holdco and financed by FFCA for which Arby's
Licenses, New Arby's Licenses and/or Multi-Brand Licenses have been or will be
issued.
5.13 Premerger Notification. Within 10 Business Days of the date of
this Agreement, the Sellers and Holdco shall file or cause to be filed
notification and report forms with respect to the transactions contemplated
hereby in accordance with the Hart-Scott-Rodino Antitrust Improvement Act of
1976, as amended, and the rules and regulations promulgated thereunder (the "HSR
Act").
5.14 Further Assurances.
(a) Sellers and Arby's. At any time on or after the Closing Date,
each Seller will execute and will cause Arby's to execute and deliver any
further assignments, conveyances and other assurances, documents and instruments
of transfer reasonably requested by Holdco and will take any other action
consistent with the terms of this Agreement that may be reasonably requested by
Holdco for the purpose of assigning, transferring, granting, conveying and
confirming to Holdco or Newco, or
<PAGE>
reducing to possession, any or all of the Assets, or as necessary to carry out
such Seller's and Arby's obligations under this Agreement. If reasonably
requested by Holdco, each Seller and Arby's further agrees, at Holdco's sole
cost and expense, to prosecute or otherwise enforce in its own name for the
benefit of Holdco or Newco any claims, rights or benefits that are transferred
to Holdco or Newco and that require prosecution or enforcement in the name of
such Seller or Arby's.
(b) RTM, Holdco and Newco. At any time on or after the Closing
Date, RTM, Holdco and Newco will execute and deliver any further assignments,
conveyances and other assurances, documents and instruments of transfer
reasonably requested by the Sellers or Arby's and will take any other action
consistent with the terms of this Agreement that may be reasonably requested by
the Sellers or Arby's for the purpose of assigning, transferring, granting,
conveying and confirming to Newco, or reducing to possession, any or all of the
Assets, or as necessary to carry out RTM's, Holdco's and Newco's obligations
under this Agreement and the other Transaction Documents. If reasonably
requested by the Sellers or Arby's, RTM, Holdco and Newco further agree, at the
sole cost of Sellers and Arby's, to prosecute or otherwise enforce in its own
name for the benefit of the Sellers and Arby's any claims, rights or benefits
that are transferred to the Sellers or Arby's by this Agreement and the other
Transaction Documents and that require prosecution or enforcement in RTM's,
Holdco's or Newco's name.
5.15 Replacement of Bonds and Letters of Credit. Set forth on Schedule 5.15
hereto, is a list of all bonds and letters of credit posted by or on behalf of
the Sellers in connection with the utilities provided to the Restaurants. Holdco
agrees that it will, or will cause Newco One to, replace each such bond or
letter of credit with a bond or letter of credit obtained by Holdco or Newco One
on or prior to the earlier of (i) 45 days after the date of the Closing and (ii)
the expiration date for such bond or letter of credit. Holdco agrees to
indemnify and hold harmless each of the Sellers and Arby's from and against any
Losses (as hereinafter defined) incurred by the Sellers or Arby's after the
Closing in connection with, or in any way relating to, the bonds and letters of
credit listed on Schedule 5.15 hereto.
<PAGE>
5.16 FFCA Loan Agreements. The Sellers agree that, prior to the
Closing, they will not, and will not permit Newco One or Newco Two to, borrow
any additional funds under the FFCA Loan Agreements, nor shall Sellers (or any
of them) request any additional advance, or borrow any additional funds, under
the FFCA Loan Agreements.
5.17 Amendment of all Schedules. The parties hereto acknowledge and
agree that notwithstanding anything to the contrary set forth herein, Sellers
shall deliver, amend, modify or delete any and all of the Schedules attached
hereto at any time after the date hereof up to and including the Final Date,
subject to Holdco's review and reasonable approval thereof and to Section 6.1
below, provided that the Sellers may not amend Schedule 3.17 to add any
contracts which (A) has a term that expires more than one year after the Closing
Date, or (B) pursuant to the terms of which there is either a current or future
obligation of Newco to make an annual payment in excess of (x) $20,000 with
respect to capital improvements of any Restaurant or (y) $10,000 with respect to
the operations of any Restaurant, or (C) which materially affects the business,
operations, assets (including, without limitation, the Assets), properties or
condition of Newco or was not executed in the ordinary course of operating
Restaurants.
5.18 Excluded Liabilities. The Sellers and Arby's covenant and agree
to pay all Excluded Liabilities.
ARTICLE VI
CONDITIONS TO HOLDCO'S OBLIGATIONS
The obligations of Holdco under this Agreement to consummate the
purchase of the Shares shall be subject to the fulfillment on or prior to the
Closing Date of each of the following conditions:
6.1 Representations and Warranties True; Obligations Performed. The
representations and warranties of each Seller and Arby's contained in this
Agreement shall be true and correct in all material respects as of the Closing
Date with the same force and effect as if made as of the Closing Date, except
those representations and warranties that relate to a specific date, which shall
be true and correct in all material respects as of such date, and all the
covenants contained in this Agreement to be complied with by each Seller on or
before the Closing Date shall have been complied
<PAGE>
with in all material respects. If and to the extent the representation and
warranties of any Seller and Arby's contained in this Agreement are not true and
correct in all material respects as of the Closing Date (or such other specific
date) and the covenants and conditions contained in this Agreement to be
complied with in all material respects by any Seller on or before the Closing
Date have not been so complied with, then such Seller shall promptly notify
Holdco in writing in reasonable detail thereof before consummation of the
Closing. At the Closing, each Seller and Arby's shall deliver to Holdco an
officer's certificate as to compliance by such Seller with the conditions set
forth in this Paragraph 6.1. The information to be set forth on any and all
Schedules and the forms of any and all Exhibits, shall be subject to the review
and reasonable approval of Holdco and Sellers prior to Closing. In the event
that any condition precedent in this Article 6 is not satisfied in full prior to
Closing or waived by Holdco in its sole election, then Holdco and Sellers agree
to use their respective commercially reasonable efforts, in good faith, to
negotiate an adjustment to the consideration payable by Holdco under Section
2.3(a)(i) and/or to the Assumed Liabilities under Section 2.4 above, taking into
account the information originally provided to RTM and the basis upon which the
parties originally structured this transaction and entered into this Agreement.
The parties acknowledge that because Sellers are unable to transfer the right to
own and operate Store No. 2035, then Holdco and Sellers agree to use their
respective commercially reasonable efforts, in good faith, to negotiate an
adjustment to the consideration payable by Holdco under Section 2.3(a)(i) and/or
to the Assumed Liabilities under Section 2.4 above, taking into account the
information originally provided to RTM and the basis upon which the parties
originally structured this transaction and entered into this Agreement.
6.2 Closing Deliveries of the Sellers. All of the items below shall
have been delivered, and all of the transactions described shall have been
consummated at or prior to the Closing:
(a) Share Certificates. Sellers shall have delivered stock
certificates representing all of the Shares, duly endorsed for transfer or
accompanied by duly executed stock powers;
<PAGE>
(b) Directors' Resolutions. Sellers and Arby's shall have
delivered copies certified by the Secretary or Assistant Secretary of each
Seller and Arby's of resolutions of the Board of Directors of such Seller and
Arby's authorizing the execution and delivery of this Agreement and the
Transaction Documents and consummation of the transactions contemplated herein
and therein;
(c) Lease Assignment and Assumption Agreements. Sellers shall
have delivered Lease Assignment and Assumption Agreements of the Restaurant
Leases by Newco, in substantially the form shown on Exhibit 6.2(c) hereto;
(d) Licenses. Arby's shall have executed and delivered the
Licenses for each of the Restaurants;
(e) Consents. Sellers shall have delivered executed copies of
each of the consents listed on Schedule 6.2(e) hereto;
(f) FIRPTA Certificate. Sellers shall have delivered a certificate
duly executed by each Seller setting forth such Seller's address and tax
identification number certifying that such Seller is not a foreign person for
purposes of the foreign investment in real property tax act, substantially in
the form of Exhibit 6.2(f) hereto;
(g) Possession of Assets. Prior to the Closing , the Sellers shall
have delivered to Newco full possession of the Assets or executed the power of
attorney or Operating Agreement referred to in Paragraph 5.8 hereof with respect
to those Assets not so delivered to Newco;
(h) Special Warranty Bill of Sale. Sellers shall have delivered
to Newco Special warranty bills of sale in and to the FF&E located at the
Restaurants, and to the District PP&E, in each case, substantially in the form
of Exhibit 6.2(h) hereto;
(i) Special Warranty Deed. Sellers shall have delivered to Newco
Special Warranty Deeds in and to the Owned Real Property, substantially in the
form of Exhibit 6.2(i) hereto;
(j) Landlord's Estoppel Certificates and Consents. Sellers shall
have delivered to Newco Landlord's Estoppel Certificates and Consents for those
Restaurants listed on Schedule 6.2(j), substantially in the form of Exhibit
6.2(j) hereto;
<PAGE>
(k) Quitclaim Deed. Sellers shall have delivered to Newco
Quitclaim Deeds, substantially in the form of Exhibit 6.2(k) hereto, which
convey any and all right, title and interest that each Seller has in and to the
leasehold improvements located at the locations covered by the Restaurant
Leases, if not conveyed by assignment of the applicable Restaurant Lease;
(l) Equipment Lease Assignment and Assumption Agreement. Sellers
shall have delivered to Newco lease assignment and assumption agreements
assigning the Equipment Leases, substantially in the form of Exhibit 6.2(l)
hereto;
(m) Owner's Affidavit. Each Seller shall have delivered to
Holdco, an Owner's Affidavit which applies to the Owned Store Real Property,
substantially in the form of Exhibit 6.2(m) hereto;
(n) Assumption of Debt Documents. Newco shall have executed and
delivered assignments and assumption agreements evidencing the assumption by
Newco of each of the Debt Documents in the form and substance reasonably
satisfactory to Holdco.
(o) Security Deposits. Sellers shall have delivered to Newco
[One] an assignment of all of Seller's right, title and interest in and to the
Security Deposits;
(p) Resignations. Each of the directors and officers of Newco
shall have resigned effective as of the Closing.
(q) HSR Act. The applicable waiting period under the HSR Act shall
have expired or been terminated.
(r) Management Agreements. Newco One shall have executed and
delivered the Management Agreements with each of RTM and RTM Management,
substantially in the form of Exhibit 6.2(r) hereto (the "Management Agreement").
(s) Landlord's Estoppel Certificates and Consents. Newco shall
have delivered to Sellers Landlord's Estoppel Certificates and Consents for
those Restaurants listed on Schedule 7.2(s), substantially in the form of
Exhibit 7.2(s) hereto.
(t) Development Agreement. At or prior to Closing, Arby's shall
have executed and delivered a development agreement substantially in the form
of Exhibit 7.2(n) hereto (the "Development Agreement").
<PAGE>
(u) FFCA Loan Agreement Amendments. FFCA shall have agreed to the
Amendments to the FFCA Loan Agreements described in Schedule 5.5 hereto.
6.3 No Injunction. As of the Closing, there shall be no effective
injunction, writ or preliminary restraining order or any order of any nature
issued by a court or governmental or regulatory agency of competent jurisdiction
to the effect that the transfer of the Assets to Newco or the sale of the Shares
to Holdco may not be consummated as herein provided, no proceeding or lawsuit
shall have been commenced by any court, governmental or regulatory agency for
the purpose of obtaining any such injunction, writ or preliminary restraining
order and no written notice shall have been received from any such court or
agency indicating an intent to restrain, prevent, materially delay or
restructure the transactions contemplated by this Agreement.
ARTICLE VII
CONDITIONS TO THE SELLERS' OBLIGATIONS
The Obligations of the Sellers under this Agreement to consummate the
sale of the Shares shall be subject to the fulfillment on or prior to the
Closing Date of each of the following conditions:
7.1 Representations and Warranties True; Obligations Performed. The
representations and warranties of each of Holdco and its Affiliates contained in
this Agreement and in the other Transaction Documents shall be true and correct
in all material respects as of the Closing Date with the same force and effect
as if made as of the Closing Date, and all the covenants contained in this
Agreement to be complied with by Holdco and its Affiliates on or before the
Closing Date shall have been complied with in all material respects. If and to
the extent the representations and warranties of Holdco and its Affiliates
contained in this Agreement or in any of the other Transaction Documents are not
true and correct in all material respects as of the Closing Date and the
covenants and conditions contained in this Agreement to be complied with in all
material respects by Holdco or its Affiliates on or before the Closing Date have
not been so complied with, then Holdco shall promptly notify the Sellers in
writing in reasonable detail thereof before consummation of the Closing. At the
Closing, Holdco shall deliver
<PAGE>
to the Sellers an officer's certificate as to compliance by Holdco of the
conditions set forth in this Paragraph 7.1.
7.2 Closing Deliveries of Holdco and Newco. At or prior to the Closing,
Holdco and Newco, as the case may be, shall have executed and delivered to the
Sellers or otherwise caused to be delivered to the Sellers, as the case may be,
each of the following documents or other items:
(a) Payment. At the Closing, Newco shall have assumed the Assumed
Liabilities, as described in Paragraph 2.4, and, to the extent provided in
Paragraph 2.6(c), the Excluded FFCA Liabilities, in each case pursuant to
assignment and assumption agreements in form and substance reasonably
satisfactory to the Sellers;
(b)(i) The Notes. RTM shall have executed and delivered to the
Sellers the Notes. (ii) Cash Payment. Holdco shall have made the cash payment
required pursuant to this Agreement.
(c) Lease Assignment and Assumption Agreement. Newco shall have
executed and delivered Lease Assignment and Assumption Agreements with respect
to the Restaurant Leases, substantially in the form of Exhibit 6.2(c) hereto;
(d) Equipment Lease Assignment and Assumption Agreement. Newco
shall have executed and delivered lease assignment and assumption agreements
with respect to the Equipment Leases substantially in the form of Exhibit 6.2(l)
hereto;
(e) Debt Documents Assignment and Assumption Agreements. Newco
shall have executed and delivered assignment and assumption agreements
evidencing the assumption by Newco of each of the Debt Documents in form and
substance reasonably satisfactory to the Sellers;
(f) Licenses. Newco One shall have executed and delivered the
Licenses for each of the Restaurants;
(g) Articles of Incorporation; Bylaws. Holdco shall have
delivered certified copies of the Articles of Incorporation and by-laws of
Holdco;
(h) Certificate of Good Standing. Holdco shall have delivered a
Certificate of Good Standing of Holdco from its jurisdiction of incorporation;
<PAGE>
(i) Directors' Resolutions. Holdco shall have delivered copies,
certified by the Secretary of RTM, Holdco and RTM Management, of resolutions of
the Board of Directors of RTM, Holdco and RTM Management authorizing the
execution and delivery of this Agreement and/or the Transaction Documents to
which such entity is a party and consummation of the transactions contemplated
herein and therein;
(j) Holdco Consents. Holdco shall have delivered executed copies
of each of the consents listed on Schedule 7.2 (j) hereto;
(k) Option Agreements. Holdco shall have executed and delivered to
each Seller Option Agreements substantially in the form of Exhibit 7.2(k)
hereto, which Option Agreements, in the aggregate, grant to the Sellers the
right to acquire 20% of the outstanding shares of Newco One and 20% of the
outstanding shares of Newco Two;
(l) Guaranty. RTM, Holdco, Newco One and RTM Management shall
have executed and delivered a Guaranty substantially in the form of Exhibit
7.2 (1) hereto (the "Guaranty");
(m) Indemnification of Guarantees. RTM shall have executed and
delivered an indemnification agreement, in form and substance reasonably
satisfactory to the Sellers, evidencing the indemnification by RTM of Triarc
Companies, Inc. ("Triarc") for any amounts paid by Triarc under any of the
guarantees listed on Schedule 7.2 (m) hereto; and
(n) Development Agreement. At or prior to the Closing, Newco One
shall have executed and delivered the Development Agreement.
(o) HSR Act. The applicable waiting period under the HSR Act shall
have expired or been terminated.
(p) Management Agreement. RTM and RTM Management shall have
executed and delivered the Management Agreements to which they are a party,
respectively.
(q) Opinion of Counsel. The Sellers shall have received the
opinion of outside counsel to Holdco, who shall be reasonably acceptable to the
Sellers, dated the Closing Date, addressed to the Sellers, as to the
enforceability of the Notes, the Guaranty and the Security Documents (as defined
in the Guaranty), excluding real estate
<PAGE>
Security Documents, against RTM, Holdco, Newco, RTM Management and the
Principals (as defined in the Guaranty) as the case may be.
(r) Sellers' Legal Opinion. The Sellers shall have received the
favorable opinion of Paul, Weiss, Rifkind, Wharton & Garrison, counsel to the
Sellers, covering such matters relating to the Transaction Documents and the
consummation of the transactions thereby as the Sellers may reasonably request,
the cost of which shall be borne by Sellers.
(s) Landlord's Estoppel Certificates and Consents. Newco shall
have delivered to Sellers Landlord's Estoppel Certificates and Consents for
those Restaurants listed on Schedule 7.2(s), substantially in the form of
Exhibit 7.2(s) hereto.
(t) FFCA Loan Agreements Amendments. FFCA shall have agreed to
the amendments to the FFCA Loan Agreements described in Schedule 5.5 hereto.
7.3 No Injunction. As of the Closing, there shall be no effective
injunction, writ or preliminary restraining order or any order of any nature
issued by a court or governmental or regulatory agency of competent jurisdiction
to the effect that the transfer of the Assets to Newco or the sale of the Shares
to Holdco may not be consummated as herein provided, no proceeding or lawsuit
shall have been commenced by any court, governmental or regulatory agency for
the purpose of obtaining any such injunction, writ or preliminary restraining
order and no written notice shall have been received from any such court or
agency indicating an intent to restrain, prevent, materially delay or
restructure the transactions contemplated by this Agreement.
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS
AND WARRANTIES; INDEMNIFICATION
8.1 Survival of Representations and Warranties of the Sellers and
Arby's After Closing. All representations, warranties, covenants and agreements
of the Sellers and Arby's and Holdco and its Affiliates in this Agreement and
the Transaction Documents shall survive the execution and delivery of this
Agreement and the Closing hereunder. Except as otherwise specifically provided
in this Agreement, all representations and warranties of the Sellers and Arby's
contained in this Agreement or in any Transaction Documents shall thereafter
terminate and expire (i) on the date that is one (1) year from
<PAGE>
the Closing Date, with respect to any General Claim (as defined below) based
upon, arising out of or otherwise in respect of any fact, circumstance, action
or proceeding of which Holdco shall not have given written notice to the Sellers
on or prior to the date that is one (1) year from the Closing Date, (ii) with
respect to any Tax Claim (as defined below), on the later of (a) the date upon
which the liability to which any such Tax Claim may relate is barred by all
applicable statutes of limitation or (b) the date upon which any claim for
refund or credit related to such Tax Claim is barred by all applicable statutes
of limitations, and (iii) on the fifth anniversary of the Closing Date, with
respect to any Environmental Claim (as defined below) based upon, arising out of
or otherwise in respect of any fact, circumstance, action or proceeding of which
Holdco shall not have given written notice to the Sellers and Arby's on or prior
to the fifth anniversary of the Closing Date and (iv) as of the Closing with
respect to Paragraph 3.09 hereof. Except as otherwise provided in this
Agreement, the covenant and agreement of the Sellers and Arby's contained in
Paragraph 5.18 shall terminate and expire on the date upon which such Excluded
Liability to which it may relate is barred by all applicable statutes of
limitation. As used in this Agreement, the following terms have the following
meanings:
(w) "General Claim" means any claim (other than a Tax Claim, an
Environmental Claim or a Special Claim) based upon, arising out of or otherwise
in respect of any inaccuracy in or any breach of any representation, warranty,
covenant or agreement of any Seller or Arby's contained in this Agreement or in
any Transaction Document delivered pursuant to this Agreement.
(x) "Tax Claim" means any claim based upon, arising out of or otherwise
in respect of any inaccuracy in or any breach of any representation, warranty,
covenant or agreement of any Seller or Arby's contained in this Agreement or in
any Transaction Document delivered pursuant to this Agreement related to taxes.
(y) "Environmental Claim" means any claim based upon, arising out of or
otherwise in respect of any inaccuracy in or any breach of the representation
and warranties of any Seller or Arby's contained in Paragraph 3.11 hereof.
<PAGE>
(z) "Special Claim" means any claim based upon, arising out of or
otherwise in respect of any breach of any covenant or agreement of any Seller or
Arby's with respect to (i) any lawsuit or worker's compensation claim pending on
the Closing Date which relates solely to the ownership or operation of the
Restaurants by the Sellers on or prior to the Final Date, (ii) the payment by
the Sellers of the Excluded Liabilities and/or the Excluded FFCA Liabilities,
(iii) failure by the Sellers to comply with applicable bulk sales laws.
8.2 Obligation of the Sellers and Arby's to Indemnify. Subject to the
limitations contained in Paragraph 8.1 and Paragraph 8.5, each of the Sellers,
jointly and severally, and Arby's, severally and not jointly, agrees to
indemnify, defend and hold harmless Holdco (and its directors, officers,
employees, affiliates, successors and assigns) from and against all losses,
liabilities, damages, deficiencies, demands, claims, actions, judgments or
causes of action, assessments, costs or expenses (including, without limitation,
interest, penalties and reasonable attorneys' fees and disbursements)("Losses")
based upon, arising out of or otherwise in respect of (i) any inaccuracy in or
any breach of any representation, warranty, covenant or agreement of such Seller
contained in this Agreement or in any Transaction Document delivered pursuant to
this Agreement or (ii) the failure of such Seller to comply with any applicable
bulk sales law.
8.3 Obligation of Holdco to Indemnify. Holdco agrees to indemnify,
defend and hold harmless the Sellers from and against all Losses based upon,
arising out of or otherwise in respect of (i) any inaccuracy in or any breach of
any representation, warranty, covenant or agreement of Holdco, RTM or any of
their Affiliates contained in this Agreement or in any Transaction Document
delivered pursuant to this Agreement, (ii) the operations of Newco from and
after the Closing Date and (iii) any Assumed Liabilities, until paid. Except as
otherwise provided in this Agreement, the covenant and agreement of Holdco in
respect of any Assumed Liability shall terminate and expire upon the date upon
which such Assumed Liability is barred by all applicable statutes of limitation.
<PAGE>
8.4 Notice and Opportunity to Defend.
(a) Notice of Claims. Promptly after receipt by any party hereto
(the "Indemnitee") of notice of any demand, claim or circumstances which, with
the lapse of time, would or might give rise to a claim or the commencement (or
threatened commencement) of any action, proceeding or investigation (an
"Asserted Liability") that may result in a Loss, the Indemnitee shall give
notice thereof (the "Claims Notice") to any other party (or parties) obligated
to provide indemnification pursuant to Paragraph 8.2 or 8.3 hereof (the
"Indemnifying Party"). The Claims Notice shall describe the Asserted Liability
in reasonable detail, and shall indicate the amount (estimated, if necessary and
to the extent feasible) of the Loss that has been or may be suffered by the
Indemnitee.
(b) Opportunity to Defend. The Indemnifying Party may elect to
compromise or defend, at its own expense and by its own counsel, any Asserted
Liability. If the Indemnifying Party elects to compromise or defend such
Asserted Liability, it shall within 30 days (or sooner, if the nature of the
Asserted Liability so requires) notify the Indemnitee of its intent to do so,
and the Indemnitee shall cooperate, at the expense of the Indemnifying Party, in
the compromise of, or defense against, such Asserted Liability. If the
Indemnifying Party elects not to compromise or defend the Asserted Liability,
fails to notify the Indemnitee of its election as herein provided or contests
its obligation to indemnify under this Agreement, the Indemnitee may pay,
compromise or defend such Asserted Liability. Notwithstanding the foregoing,
neither the Indemnifying Party nor the Indemnitee may settle or compromise any
claim over the objection of the other; provided, however, that consent to
settlement or compromise shall not be unreasonably withheld. In any event, the
Indemnitee and the Indemnifying Party may participate, at their own expense, in
the defense of such Asserted Liability. If the Indemnifying Party chooses to
defend any claim, the Indemnitee shall make available to the Indemnifying Party
any books, records or other documents within its control that are necessary or
appropriate for such defense.
8.5 Limitations on Indemnification. The indemnification provided for
in Paragraph 8.2 shall be subject to the following limitations:
<PAGE>
(i) The Sellers and Arby's shall not be obligated to pay any
amounts for indemnification under this Article VIII, except those based
upon, arising out of or otherwise in respect of Special Claims or
Paragraphs 3.1(c), 3.2, 3.10, 3.14, 5.3, 5.18 and 9.5 hereof (collectively,
the "Basket Exclusions"), until the aggregate amounts for indemnification,
exclusive of those based on the Basket Exclusions, equals $2,000,000 (the
"Basket Amount"), whereupon the Sellers shall be obligated to pay in full
all such amounts for indemnification in excess of the Basket Amount.
(ii) Subject to the limitations set forth in clauses (iii) and
(iv) of this Section 8.5 the Sellers and Arby's shall be obligated to pay
any amounts for indemnification based on the Basket Exclusions (in
accordance with their liability as set forth in Paragraph 8.2) without
regard to the individual or aggregate amounts thereof and without regard to
whether the aggregate of all other indemnification payments shall have
exceeded, in the aggregate, the Basket Amount.
(iii) The indemnification obligations of the Sellers hereunder
shall not exceed, in the aggregate, $55,000,000.
(iv) The indemnification obligations of Sellers under Section
8.2 ("Sellers' Indemnification Obligations") shall be suspended (and Seller
shall not be required to make any indemnification payments) from and after the
date on which the legality or enforceability of the Guaranty as against any of
the Guarantors is challenged in any judicial (or alternative dispute resolution)
action or proceeding and shall remain suspended until a final, non-appealable,
decision is rendered in such action or proceeding. Sellers' Indemnification
Obligations shall cease and determine, and be of no further force or effect, and
Sellers shall have no liability therefor, from and after the first date on which
(a) it is determined that the Guaranty cannot be enforced as against any one or
more of the Guarantors or (b) any one or more of the Guarantors shall fail
timely to honor its stated obligations under the Guaranty for any reason
whatsoever, including, without limitation, its inability or unwillingness to do
so.
8.6 Computation of Losses. (i) The amount of any Losses for which
indemnification is provided under this Article VIII shall be reduced by any
insurance
<PAGE>
recovery if and when actually realized or received, in each case in respect of
such Losses. Any such recovery shall be promptly repaid by the Indemnitee to the
Indemnifying Party following the time at which such recovery is realized or
received pursuant to the previous sentence, minus all reasonably allocable
costs, charges and expenses incurred by the Indemnitee in obtaining such
recovery. Notwithstanding the foregoing, if (x) the amount of Indemnifiable
Losses for which the Indemnifying Party is obligated to indemnify the Indemnitee
is reduced by any insurance recovery in accordance with the provisions of the
previous sentence, and (y) the Indemnitee subsequently is required to repay the
amount of any such insurance recovery or such insurance recovery is disallowed,
then the obligation of the Indemnifying Party to indemnify with respect to such
amounts shall be reinstated immediately and such amounts shall be paid promptly
to the Indemnitee in accordance with the provisions of this Agreement.
(ii) With respect to claims for indemnification pursuant to this
Article VIII, Losses shall not include any Losses (i) which constitute costs of
causing the operation of the Restaurants to comply with applicable laws to the
extent any costs so incurred exceed the Commercially Reasonable Costs of causing
the operation of the Restaurants to comply in all material respects with such
laws; (ii) which constitute costs of operating the Restaurants in the ordinary
course in compliance with applicable laws in all material respects except to the
extent such costs constitute Commercially Reasonable Costs arising out of
violations of applicable laws that existed or occurred at or prior to the
Closing; or (iii) which constitute costs of conducting the investigation and
remediation of environmental conditions to the extent such costs exceed the
Commercially Reasonable Costs of conducting investigation and remediation of
said environmental conditions. For purposes of this Agreement, "Commercially
Reasonable Costs" shall mean the costs which a reasonably prudent person, acting
in a commercially reasonable manner and seeking to minimize or mitigate his
expenses to the extent reasonably practicable consistent with prudent business
practices (assuming such person did not have any right of indemnity under this
Agreement), would expend to resolve the matter.
<PAGE>
8.7 Sole Remedy. Holdco acknowledges that the indemnification
provisions contained in this Article VIII constitute Holdco's sole remedy
following the Closing with respect to any of the matters arising out of or in
connection with this Agreement. Holdco acknowledges and agrees that: (i) Holdco
and its Affiliates have the experience and knowledge to evaluate the business,
financial condition, assets and liabilities of the Sellers and Arby's; and (ii)
in determining to acquire the Shares and, therefore, the underlying assets and
liabilities of Newco (including the real property, fixtures and tangible
personal property), Holdco has made its own investigation into, and based
thereon Holdco has formed an independent judgment concerning, the Shares and the
underlying assets and liabilities of Newco (including the real property,
fixtures and tangible personal property). It is therefore expressly understood
and agreed that Holdco hereby waives, releases and agrees not to make any claim
or bring any contribution, cost recovery or other action against the Sellers,
their Affiliates, and, if applicable, their respective directors, officers,
shareholders, partners, attorneys, accountants, agents and employees and their
heirs, successors and assigns, under any applicable law (including environmental
laws) or regulation now existing or hereafter enacted other than for Losses for
which the Sellers are expressly required to indemnify Holdco under this Article
VIII. Holdco agrees that it will not bring any such claim or action under any
law or regulation (including environmental laws) which seeks to allocate
liabilities between Holdco and the Sellers in a different manner than as
expressly set forth in this Agreement or in a more costly manner than would be
the case under applicable laws in effect on the date hereof.
ARTICLE IX
MISCELLANEOUS PROVISIONS
9.1 Headings. The subject headings of the paragraphs, sections and
subsections of this Agreement are included for purposes of convenience only and
shall not affect the construction or interpretation of any of its provisions.
9.2 Entire Agreement; Amendment; Waiver. This Agreement constitutes the
entire agreement between the parties pertaining to the subject matter contained
in it and supersedes all prior agreements, representations and understandings of
the parties.
<PAGE>
No supplement, modification or amendment of this Agreement shall be binding
unless executed in writing by both parties. No waiver of any of the provisions
of this Agreement shall be deemed or shall constitute a waiver of any other
provisions, whether or not similar, nor shall any waiver constitute a continuing
waiver. No waiver shall be binding unless executed in writing by the party
making the waiver.
9.3 Counterparts. This Agreement may be executed simultaneously in one
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
9.4 Binding Effect. This Agreement shall be binding on and shall
inure to the benefit of the parties hereto and their respective permitted
successors and assigns.
9.5 Expenses. Except as expressly provided herein, Holdco and the
Sellers shall each respectively be responsible for their own fees and expenses
(and those of their Affiliates), including the fees and expenses of its counsel,
accountants and other advisors, incurred in connection with the preparation,
execution and delivery of this Agreement and the other Transaction Documents,
including, but not limited to, legal and accounting fees. Each of Holdco, on the
one hand, and the Sellers, on the other hand, agree to be liable for one-half of
(i) the fees payable by each of the parties hereto under the HSR Act, (ii) the
payment of all FFCA costs and FFCA related mortgage recording and other charges,
and (iii) all sales, transfer and use taxes and similar charges (other than any
transferee liability with respect to taxes relating to non-compliance with bulk
sales laws, which shall be borne by Sellers), if any, arising out of any
transfers of the Assets contemplated by this Agreement, including the transfer
of assets to Newco.
9.6 Nature of Representations. No representations or warranties
whatsoever are made by any party, except as specifically set forth in this
Agreement, or as specifically set forth in any schedule, instrument,
certificate, exhibit or other writing provided for herein. All statements
contained in any such instrument or other writing shall be deemed to be
representations and warranties under this Agreement to the extent specified in
this Agreement. All such representations and warranties shall not survive the
execution and delivery of this Agreement.
<PAGE>
9.7 Notices. All notices, requests, demands, and other communications
under this Agreement shall be in writing and shall be deemed to have been duly
given on the date of service if served personally or telecopied (receipt
confirmed) on the party to whom notice is to be given, one (1) business day
after the date of depositing the same with a reputable overnight courier service
or five (5) days after the date of depositing the same in the U.S. mail, if
mailed to the party to whom notice is to be given, by first-class mail,
registered or certified, postage prepaid and properly addressed as follows:
To any Seller:
c/o Arby's, Inc.
1000 Corporate Drive
Ft. Lauderdale, Florida 33334
Attention: General Counsel
Telecopy No.: (954) 351-5619
with a copy to:
Triarc Companies, Inc.
280 Park Avenue
New York, New York 10017
Attention: General Counsel
Telecopy No.: (212) 451-3216
To RTM:
RTM, Inc.
5995 Barfield Road
Atlanta, Georgia 30328
Attention: Mr. Dennis E. Cooper
Senior Vice President
To Holdco:
[Holdco]
c/o RTM, Inc.
5995 Barfield Road
Atlanta, Georgia 30328
Attention: Mr. Dennis E. Cooper
Senior Vice President
with a copy to:
Arnall Golden & Gregory
2800 One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309-3450
Attention: Philip G. Skinner
Any party may change its address for purposes of this section by giving
the other party written notice of the new address in the manner set forth above.
<PAGE>
9.8 Governing Law. This Agreement shall be construed in accordance
with, and governed by, the laws of the State of Florida applicable to agreements
made and to be performed entirely within such State.
9.9 Jurisdiction.
(a) Any action or proceeding relating in any way to this Agreement
or any of the Transaction Documents may be brought and enforced in the courts of
the State of Florida or of the United States that are located in Broward County,
Florida, and each of the parties irrevocably consents to the jurisdiction of
each such court in respect of any such action or proceeding. Each of the parties
further irrevocably consents 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 such party at its address as
provided for notices hereunder. The foregoing shall not limit the right of any
party to serve process in any other jurisdiction.
(b) Each party hereby irrevocably waives any objection that it may
now or hereafter have to the laying of venue of any action or proceeding arising
under or relating to this Agreement or any other Transaction Documents in any
court located in any jurisdiction chosen by any other party in accordance with
clause (a) of this Paragraph 9.9, and hereby further irrevocably waives any
claim that a court located in any such jurisdiction is not a convenient forum
for any such action or proceeding.
(c) Each party hereby irrevocably waives, to the fullest extent
permitted by applicable law, all immunity (whether on the basis of sovereignty
or otherwise) from jurisdiction, 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 Agreement or any of the Transaction Documents in the
courts of the State of Florida of the United States located in Broward County,
Florida or of any other country or jurisdiction, and each party hereby waives
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.
9.10 Confidentiality. At all times, both during the term of this
Agreement and after the Closing, each of the parties hereto and their respective
agents,
<PAGE>
representatives, attorneys, accountants, financial advisors, partners and
employees shall keep strictly confidential all non-public confidential or
proprietary information in the possession of or known by them in connection with
the business or operations of any of the other parties hereto. All information
provided or obtained by Holdco or any of its Affiliates pursuant to this
Agreement and the Transaction Documents shall be held in accordance with and
subject to the terms of the Confidentiality Agreement, dated October 28, 1996,
between RTM and Arby's (the "Confidentiality Agreement").
9.11 Public Announcement. Neither the Sellers, nor Holdco or any of
their respective affiliates (including, without limitation Triarc or RTM) shall
make any public announcement concerning the subject of this Agreement or any of
the Transaction Documents without the prior written approval of the other
parties to this Agreement, except as may be required to comply with the
requirements of applicable law or the rules and regulations of any applicable
stock exchange, and then only after consultation with the other parties to this
Agreement.
9.12 Severability. Any provision hereof which is prohibited or
unenforceable in any jurisdiction will, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction will not invalidate or render unenforceable such provision in any
other jurisdiction. To the extent permitted by law, the parties hereto waive any
provision of law which renders any such provision prohibited or unenforceable in
any respect.
9.13 Limitation on Rights of Third Parties. Nothing expressed or
implied in this Agreement is intended, or shall be construed, to confer upon or
give any person, other than the parties hereto, and their permitted successors
or assigns, any rights, remedies, obligations or liabilities under or by reason
of this Agreement, or result in such person, being deemed a third party
beneficiary of this Agreement. 9.14 Valuation For Tax Reporting Purposes. RTM
and the Sellers shall cooperate on the allocation of the Purchase Price together
with the Assumed Liabilities and any other consideration payable pursuant to
this Agreement to be used in preparing and filing their
<PAGE>
respective Forms 8594 with the Internal Revenue Service, as required by Section
1060 of the Code and for all other relevant federal and state tax purposes.
9.15 Cooperation on Taxes. RTM, Holdco and the Sellers will, in good
faith, provide each other with such cooperation and information as either of
them reasonably may request of the other in filing any tax return, amended tax
return or claim for refund, determining a liability for taxes or a right to a
refund of taxes or conducting any audit or any other proceeding in respect of
taxes. Each party shall use its reasonable best efforts to make its employees
and agents (including attorneys, accountants and other professionals) available
to the other on a mutually convenient basis to provide explanations of any
documents or information provided hereunder. RTM, Holdco and the Sellers will
provide such cooperation and assistance at their own expense, provided however,
that all out-of-pocket fees and expenses, including fees and expenses of outside
accountants and lawyers, shall be paid by the party requesting such cooperation
and assistance. RTM and Holdco will retain any material records or other
documents that they obtain pursuant to this Agreement or any of the Transaction
Documents which relate to tax matters of Sellers for taxable periods through the
Closing Date until six months after the expiration of the statute of limitations
(including any extensions) applicable to such returns and other documents. Any
information pertaining to Sellers' taxes shall be kept confidential by RTM and
Holdco. Upon the expiration of any statute of limitations (including any
extensions), with respect to a taxable period, RTM and Holdco shall offer to
provide to the Sellers all records with respect to such period before destroying
such records.
9.16 Termination and Cancellation.
(a) This Agreement may be terminated as follows: (i) at the election of
Holdco, if one or more of the conditions contained in Article VI to the
obligations of Holdco to close has not been satisfied or waived on or prior to
June 30, 1997, (ii) at the election of the Sellers, if one or more of the
conditions contained in Article VII to their obligation to close has not been
satisfied or waived on or prior to June 30, 1997 or (iii) at any time prior to
the Closing Date by the mutual written consent of the parties hereto. If this
Agreement is terminated pursuant to the provisions hereof and
<PAGE>
the transactions contemplated hereby are not consummated as described herein the
parties hereto agree that the provisions of the Confidentiality Agreement shall
survive and remain in full force and effect in accordance with the terms thereof
for the period provided therein.
(b) Upon the termination of this Agreement, each party shall bear its
own expenses incurred in connection with the negotiation, preparation, execution
and performance of this Agreement. In the event of the termination of this
Agreement due to a breach by any party of its material obligations under this
Agreement, such breaching party shall bear the reasonable expenses of the other
parties incurred in connection with the negotiation, preparation, execution and
performance of this Agreement in addition to any other damages that may be
applicable.
9.17 Assignment. No party may assign this Agreement or any part hereof,
without the prior written consent of the other parties hereto.
9.18 No Solicitation, Etc.. Subject to any fiduciary duties under
applicable law, from the date of this Agreement until the earlier of: (i) 90
days from the date hereof, (ii) the Closing or (iii) this Agreement is
terminated as provided in Article VIII of this Agreement, the Sellers and Arby's
and Triarc shall not solicit or enter into any discussions or negotiations with
or furnish or cause to be furnished any information concerning the Sellers or
Arby's to any person or entity (other than Holdco and its officers, directors,
shareholders, employees and other agents) in connection with any acquisition of
all or substantially all of the Restaurants, whether by merger, sale of capital
stock, sale of assets or other business combination involving the Sellers or
Arby's.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first above written.
ARBY'S , INC.
By: /s/Curtis S. Gimson
------------------------
Its: SVP & GC
SELLERS:
ARBY'S RESTAURANT DEVELOPMENT CORPORATION
By: /s/Curtis S. Gimson
------------------------
Its: SVP
ARBY'S RESTAURANT HOLDING COMPANY
By: /s/Curtis S. Gimson
------------------------
Its: SVP
ARBY'S RESTAURANT OPERATIONS COMPANY
By: /s/John L. Barnes, Jr.
------------------------
Its: VP
Triarc Companies, Inc. ("Triarc") hereby irrevocably guarantees the prompt and
complete payment and/or performance by the Sellers and Arby's, Inc. of each of
the Seller's and Arby's, Inc.'s obligations under this Agreement; provided,
however, that any time after the date hereof Arby's, Inc. or any direct or
indirect parent company of Arby's, Inc. which owns more than 50% of the
outstanding voting securities of Arby's, Inc. may be substituted for Triarc as
guarantor and Triarc shall be released from its obligations hereunder, subject
to the approval of Holdco, which will not be withheld unreasonably, if Arby's,
Inc. or such parent expressly assumes in writing the prompt and complete payment
and/or performance of the Sellers' and Arby's, Inc.'s obligations under this
Agreement.
Such guaranty shall survive the Closing.
TRIARC COMPANIES, INC.
By: /s/John L. Barnes, Jr.
------------------------
Its: SVP
<PAGE>
PURCHASER:
RTM PARTNERS, INC.
By: /s/Dennis E. Cooper
------------------------
Its: SVP
By: /s/Douglas N. Benham
------------------------
Its: SVP
For purposes of Paragraphs 5.7, 5.11, 9.14 and 9.15 only:
RTM, INC.
By: /s/Dennis E. Cooper
------------------------
Its: SVP
By: /s/Douglas N. Benham
------------------------
Its: SVP
In addition to the foregoing, RTM, Inc. hereby irrevocably guarantees the prompt
and complete payment and/or performance by RTM Partners, Inc. of all of RTM
Partners, Inc.'s obligations under this Agreement. Such guaranty shall terminate
at the Closing.
RTM, INC.
By: /s/Dennis E. Cooper
------------------------
Its: SVP
By: /s/Douglas N. Benham
------------------------
Its: SVP
<PAGE>
SUMMARY OF OMITTED SCHEDULES AND EXHIBITS
SCHEDULES
1(a) -- Restaurants
1(b) -- Multi-Brand Locations
2 -- Owned Store Real Property
3 -- Capitalized Leases
4 -- Operating Leases and Other Debt Documents
5 -- Equipment Leases
6 -- Petty Cash
7 -- Restaurant Leases
2.5 -- Excluded Liabilities
3.3 -- No Conflict; Consents
3.4 -- Compliance with Laws
3.7 -- Litigation; Judgements
3.11 -- No Hazardous Substance
3.13 -- Owned Store Real Property; Liens
3.16 -- Subsidiaries
3.17 -- Contracts
4.6 -- Capitalization of Holdco
5.5 -- Amendments to FFCA Loan Agreements
5.15 -- Bonds and Letters of Credit
6.2(j) -- Restaurants Requiring Landlord's Estoppel Certificates and
Consents
7.2(m) -- Indemnification of Guarantees
7.2(s) -- Restaurants Requiring Landlord's Estoppel Certificates and
Consents
EXHIBITS
1(a), (b), (c) -- Form of Multi-Brand Licenses
2.3 -- Form of Notes
5.8 -- Form of Operating Agreement
6.2(c) -- Form of Lease Assignment and Assumption Agreements
6.2(e) -- Consents
6.2(f) -- Form of FIRPTA Certificate
6.2(h) -- Form of Special Warranty Bill of Sale
6.2(i) -- Form of Special Warranty Deed
6.2(j) -- Form of Landlord's Estoppel Certificates and Consents
6.2(k) -- Form of Quitclaim Deed
6.2(l) -- Form of Equipment Lease Assignment and Assumption
Agreement
6.2(m) -- Form of Owner's Affidavit
6.2(r) -- Form of Management Agreement
7.2(j) -- Holdco Consents
7.2(k) -- Form of Option Agreement
7.2(l) -- Form of Guaranty
7.2(n) -- Form of Development Agreement
7.2(s) -- Form of Landlord's Estoppel Certificates and Consents
The Registrant hereby agrees to furnish supplementally a copy of any omitted
schedule or exhibit to the Securities and Exchange Commission upon its request.
<PAGE>
Exhibit 10.2
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 _______________________, a Delaware corporation, or
its registered assigns (the "Optionholder"), the right to subscribe for and
purchase from the Company ________ validly issued, fully paid and nonassessable
shares (the "Option Shares") of the Common Stock, par value $1.00 per (the
"Common Stock" of Newco, Inc. ("Newco"), at a purchase price per Option Share of
$ ___________ (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. _____________
<PAGE>
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
<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
<PAGE>
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.
<PAGE>
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 _____, 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
<PAGE>
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
<PAGE>
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.
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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.
<PAGE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
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;
<PAGE>
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
<PAGE>
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
<PAGE>
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;
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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>
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>
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.
<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:
[ ]
(b) if to the Optionholder, addressed to:
the address of such Optionholder
appearing on the books of the Company.
<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.
[ ]
By:__________________________________
Dated:
<PAGE>
Exhibit A
EXERCISE FORM
(To be executed upon exercise of this Option)
<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:
- -------------------------
<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>
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>
Exhibit 10.3
GUARANTY
by
RTM, INC.
RTM PARTNERS, INC.
RTM MANAGEMENT CO., LLC
TRIARC RESTAURANTS DISPOSITION 1, INC.
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 ________ ___, 1997
---------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
1. Definitions...............................................
2. The Guaranty..............................................
2.1 Guaranty by RTM, Holdco, RTM Management and Newco One
2.2 Guaranty by RTM, Holdco and RTM Management............
2.3 Guaranty by RTM, RTM Management and Newco One........
2.4 Guaranty by RTM, Holdco and Newco One................
2.5 Guaranty by RTM Management, Holdco and Newco One.....
2.6 Guaranty by RTM Management...........................
2.7 Guaranteed Obligations...............................
3. Liability of the Guarantor................................
3.1 Guaranty of Payment..................................
3.2 Continuing Guaranty..................................
3.3 Absolute and Unconditional Guaranty..................
4. Waivers of Notices and Defenses...........................
5. Bankruptcy and Related Matters............................
5.1 No Proceedings Against RTM, Holdco, RTM Management,
Newco One or Newco Two...............................
5.2 Guarantors Remain Obligated..........................
5.3 Stay of Acceleration.................................
5.4 Post-Petition Interest...............................
5.5 Reinstatement of Guaranty............................
5.6 Limitation of Guarantor's Liability..................
6. No Subrogation...........................................
7. Subordination of Other Obligations.......................
8. Setoff; Security Arrangements............................
8.1 Setoff..............................................
8.2 Security Arrangements...............................
8.3 RTM Fee.............................................
<PAGE>
9. Taxes....................................................
9.1 Payments Free of Taxes..............................
9.2 Payment of Taxes Withheld...........................
9.3 Indemnification.....................................
10. Representations and Warranties...........................
10.1 Existence and Power.................................
10.2 Authorization; No Contravention.....................
10.3 Binding Obligation..................................
10.4 Not an Investment Company or Holding Company........
10.5 Relationship of RTM to Holdco, Newco One or Newco Two
10.6 Financial Condition.................................
10.7 Net Worth...........................................
11. Covenants................................................
11.1 Financial Condition of RTM, Holdco, RTM Management,
Newco One or Newco Two..............................
11.2 Financial Statements and Other Reports..............
11.3 Maintenance of Consolidated Net Worth...............
11.4 Notice of Events....................................
11.5 Management Agreements...............................
11.6 Board Member........................................
11.7 Dividends and Distributions.........................
11.8 Mergers or Sales....................................
12. Events of Default........................................
12.1 Default in Transaction Documents; Other Defaults....
12.2 Default in Other Agreements.........................
12.3 Involuntary Bankruptcy; Appointment of Custodian, Etc.
12.4 Voluntary Bankruptcy; Appointment of Custodian, Etc.
12.5 Judgments and Attachments...........................
12.6 Dissolution.........................................
12.7 Business Interruption...............................
12.8 Change of Control...................................
13. Miscellaneous............................................
13.1 Survival of Warranties..............................
13.2 Notices.............................................
13.3 No Waivers..........................................
13.4 Expenses............................................
13.5 Amendments and Waivers..............................
13.6 Successors and Assigns; No Third Party Beneficiaries
13.7 APPLICABLE LAW......................................
13.8 JURISDICTION........................................
<PAGE>
13.9 Severability....................................
13.10 Interpretation..................................
13.11 Further Assurances..............................
<PAGE>
GUARANTY
GUARANTY, dated as of February __, 1997, by RTM, Inc., a Georgia
corporation ("RTM"), RTM Partners, Inc., a Georgia subchapter S corporation
("Holdco"), RTM Management Co., LLC, a Georgia limited liability company ("RTM
Management") and Triarc Restaurants Disposition 1, Inc., a Delaware corporation
("Newco One") (collectively, the "Guarantors")(1) 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
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 the
(1) If consented to by Franchise Finance Corporation of America, Triarc
Restaurants Disposition 2, Inc. ("Newco Two") shall be added as a Guarantor
hereunder (with obligations substantially mirroring those of Newco One) and
execute a Security Documents substantially similar to the ones to be executed by
Newco One.
<PAGE>
Newco One Shares, the "Shares"), on the terms and conditions set forth therein
(the "Sale").
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.
In furtherance of the business purposes of each of the Guarantors,
each of the Guarantors desires to irrevocably and unconditionally guaranty all
of the Guaranteed Obligations (as hereafter defined).
Affiliates of RTM (the "Principals") are the direct owners of all
of the outstanding stock of Holdco 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:
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 (i) the Assets (as defined in the Stock Purchase
Agreement) and proceeds from or accessions or additions to the Assets and any
substitutions for the Assets as permitted by the Debt Documents and (ii) all
rights of RTM Management under the Management Agreements, including without
limitation, all rights to receive the RTM Fees and all rights of Newco One and
Newco Two under the Management Agreements. For purposes of this definition of
the term "Assets," the term "Restaurants" as used in the definition of "Assets"
contained in the Stock Purchase Agreement shall, for purposes of incorporating
herein the definition of "Assets," be deemed to include any Restaurants
hereafter acquired or developed by Newco One pursuant to the Development
Agreement.
"Bankruptcy Code" means the Bankruptcy Code of 1978, as amended.
"Change of Control" means, with respect to any Guarantor,
<PAGE>
(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 Holdco,
among the Principals, interesse, or (c) a public offering of shares of common
stock of any of the Guarantors if (i) following such public offering, the
Principals, collectively, 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 or RTM as long as
there is no breach of the provisions of Section 15 of the Option Agreement).
"Event of Default" has the meaning ascribed to such term in
Section 12.
"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.
"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
<PAGE>
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 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.
The Guaranty.
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 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.
Guaranty by RTM, Holdco and RTM Management. Each of RTM,
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
<PAGE>
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.
Guaranty by RTM, RTM Management and Newco One. Each of RTM,
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 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.
Guaranty by RTM, Holdco and Newco One. Each of RTM, 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 Sec-
tion 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.
Guaranty by RTM Management, Holdco and Newco One. Each of RTM
Management, 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
<PAGE>
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.
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.
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.
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 consti-
tute 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:
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, 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, 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
<PAGE>
liabilities for payment of the Guaranteed Obligations.
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, 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.
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:
any change in the manner, place or terms of
payment (including the currency thereof) of any of the Guaranteed
Obligations;
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;
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;
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, Holdco, RTM Management, Newco One or Newco Two, as the case may be, of any
of the Guaranteed Obligations;
<PAGE>
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;
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 foreclo-sure on any such security pursuant to one or more
judicial or nonjudicial sales;
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;
any change in or reorganization of the
corporate structure of RTM, Holdco, RTM Management, Newco One or Newco Two or
any 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;
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, 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
<PAGE>
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.
Waivers of Notices and Defenses. Each of the Guarantors
hereby waives, for the benefit of the Beneficiaries:
any defense arising by reason of the
incapacity, lack of authority or any disability of RTM, Holdco, RTM
Management, Newco One or Newco Two, as the case may be;
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, 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);
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;
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;
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, Holdco, RTM Management,
Newco One or Newco Two, as the case may be, to any of the Beneficiaries; and
<PAGE>
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.
Bankruptcy and Related Matters.
No Proceedings Against RTM, 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, Holdco, RTM Management, Newco One or Newco Two, as the case may
be.
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, receiver-
ship, reorganization, marshaling of assets, assignment for the benefit of
creditors, composition with creditors, readjustment, liquidation or arrangement
of RTM, Holdco, Management, Newco One or Newco Two, as the case may be, or
similar proceedings or actions or by any defense which RTM, 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, 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.
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
<PAGE>
collecting any of the Guaranteed Obligations, such Guarantor shall pay to the
Beneficiaries upon demand therefor the amount that would otherwise have been due
and payable had such rights and remedies been permitted to be exercised by the
Beneficiaries.
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, 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.
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, 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.
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
<PAGE>
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.
No Subrogation. Notwithstanding any payment or payments made by
the Guarantors hereunder, or any set-off or application of funds of the
Guarantors by the Beneficiaries, the Guarantors hereby irrevocably waive any
claim or other rights that they may now or hereafter acquire against RTM,
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, 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, 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.
Subordination of Other Obligations. Each of the Guarantors hereby
agrees that any indebtedness of RTM, 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, 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
<PAGE>
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.
Setoff; Security Arrangements.
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 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.
Security Arrangements. Holdco, has given the Beneficiaries a
pledge of the stock of Newco One and Newco Two, 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, 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,
<PAGE>
"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 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.
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.
RTM Fees. RTM Management, Holdco and 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.
Taxes.
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
<PAGE>
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.
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.
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 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.
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:
Existence and Power. Each of RTM, Holdco and Newco
One is a is a corporation, and RTM Management is a limited liability
<PAGE>
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.
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.
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.
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.
Relationship of RTM to 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 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
<PAGE>
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.
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.
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.
Covenants.
Financial Condition of RTM, 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, 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, Holdco, RTM Management, Newco One or Newco Two, as the case may be, on a
continuing basis concerning the financial condition of RTM, 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, Holdco, RTM Management, Newco One and Newco Two, as the case may be, and of
all circumstances bearing upon the risk of nonpayment
<PAGE>
of the Guaranteed Obligations.
Financial Statements and Other Reports. The
Guarantors will deliver to each of the Beneficiaries:
as soon as available and in any event within forty-five days
after the end of each of the first three fiscal quarter of each year, (1) the
consolidated balance sheets of each of RTM, 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, in reasonable detail and certified by the chief financial officer of
each of RTM, 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, Holdco, Newco One, Newco Two and their subsidiaries, and fairly present
in all material respects the consolidated financial position of each of RTM,
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;
as soon as available and in any event within ninety days
after the end of each fiscal year, (1) the consolidated balance sheets of each
of RTM, 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, 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, Holdco, Newco, Newco One,
Newco Two and their subsidiaries, and fairly present in all material respects
the consolidated financial position of each of RTM, 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, 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, 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 together
with each delivery of financial statements pursuant to Sections 11.2(i) and (ii)
above, (1) an officers'
<PAGE>
certificate of each of RTM, 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, 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, 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.
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.
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 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.
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.
Board Member. Until the tenth anniversary of the date hereof,
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.
Dividends and Distributions. 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 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
<PAGE>
account of Holdco's, Newco One's or Newco Two's equity or membership interests,
as the case may be; provided, however, (a) Holdco may, in connection with any
Principal's payments of personal income taxes to any taxing authority, make
dividend payments to each Principal in an aggregate amount, in respect of each
tax year of each Principal, which does not exceed the product of (i) the income
of Holdco includible in gross taxable income of its shareholders and allocable
to such Principal for such tax year multiplied by (ii) 45 percent, (b) Newco may
distribute to Holdco amounts not in excess of the amounts payable as dividends
by Holdco pursuant to the foregoing clause (a); provided that the amount of such
distribution when added together with all prior such distributions, shall not
exceed $150,000 in the aggregate and (c) the payments described above may be
made quarterly based upon the estimated taxable income of Holdco shown on the
respective estimated tax returns for the current tax year.
Mergers or Sales. Until the occurrence of the indefeasible
payment in full and the complete performance of the Guaranteed Obligations
hereunder, each of RTM, 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.
Development of New Restaurants. The Guarantors (including,
without limitation, 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 that all
development of new Restaurants or other retail outlets shall occur in Newco One.
Events of Default. If any of the following conditions or
events ("Events of Default") shall occur and be continuing:
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
<PAGE>
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..
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 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.
Involuntary Bankruptcy; Appointment of Custodian, Etc.
A court of competent jurisdiction enters a bankruptcy order under any
bankruptcy law that:
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
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
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.
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:
<PAGE>
commences a voluntary case or proceeding, or
consents to the entry of a bankruptcy order for
relief against it in an involuntary case or proceeding, or
consents to the appointment of a custodian
of it or for all or substantially all of its property, or
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
consents to the filing of a petition in
bankruptcy against it, or
shall generally not pay its debts when such debts become
due or shall admit in writing its inability to pay its debts generally.
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 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.
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.
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,
<PAGE>
licenses or permits of its other franchisees, generally.
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 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.
Miscellaneous.
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.
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 Newco One
and Newco Two, c/o RTM, Inc. at the address set forth in the Stock Purchase
Agreement.
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.
<PAGE>
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.
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.
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.
APPLICABLE LAW. THIS GUARANTY SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK.
JURISDICTION.
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.
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 UNDER OR RELATING TO THIS GUARANTY OR ANY OTHER
<PAGE>
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.
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.
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.
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.
Further Assurances. At any time or from time to time, upon the
request of the Beneficiaries, the Guarantors shall execute and deliver such
further documents and do such other acts and things as the Beneficiaries may
reasonably request in order to effect fully the
<PAGE>
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:_______________________
Name:
Title:
RTM PARTNERS, INC.
By:_______________________
Name:
Title:
RTM MANAGEMENT CO., LLC
By:_______________________
Name:
Title:
TRIARC RESTAURANTS DISPOSITION 1,
INC.
By:_______________________
Name:
Title:
<PAGE>
Schedule 8.2
SCHEDULE OF SECURITY DOCUMENTS
Pledge Agreement of Holdco, Inc.
Coverage. All of the capital stock of Newco One and Newco Two
(collectively, "the "Shares"), together with all dividends and other income
received thereon, and the proceeds and avails of any disposition of all or any
part thereof.
<PAGE>
Deposits. (i) Stock certificates representing all of the capital
stock of Newco One and Newco Two, together with stock powers in respect thereof,
duly endorsed in blank with signatures guaranteed, (ii) an assignment of the
dividends and other income received thereon, and the proceeds and avails of any
disposition thereof, and (iii) such UCC and other forms as are necessary to
perfect the Beneficiaries' liens on the dividends and other income received
thereon and the proceeds and avails of any disposition thereof.
Obligations of the Pledgor. To cause the business and operations
of Newco One and Newco Two to be conducted in a manner consistent with the
Guaranty and to cause Newco One and Newco Two to refrain from any conduct
inconsistent with the Guaranty.
Privileges of the Pledgor. Pledgor shall be entitled to vote the
Shares so long as there has not been a default under the Guaranty.
Covenants of the Pledgor. Substantially similar to those
made in the Guaranty.
Release provisions.
Upon satisfaction and discharge of all assumed liabilities
under the FFCA Loan Agreements, the Shares shall be released.
If there is a public offering of capital stock of Newco One
and/or Newco Two, which includes some (but not all) of the Shares, and no
default under the Guaranty exists either immediately before, or immediately
after, such public offering, the proceeds of sale of the Shares shall be
released from the lien of the pledge to the extent that such proceeds exceed the
value of the Shares that remain subject to the pledge if such remaining shares
then have an aggregate book value at least equal to 150% of the aggregate book
value of all Shares that were subject to the pledge immediately prior to the
public offering.
Upon satisfaction and discharge of all assumed liabilities
under the FFCA Loan Agreements, the pledged assets shall be released from the
pledge.
Security Agreement of Newco One.
Coverage. All Assets, as defined in the Guaranty, of Newco
One.
Deposits. A general assignment of the Assets, together with all
documents, instruments and papers necessary to enable the Beneficiaries to have
perfected security interests in all of such Assets.
Obligations of Newco One. To fulfill its obligations under
the Transaction Documents (including the Guaranty) and to refrain from any
conduct inconsistent therewith, including, without limitation, to refrain
<PAGE>
from the declaration and payment of dividends and other distributions to
its stockholders.
Privileges of Newco One. To operate its business without
interference from the Beneficiaries so long as there is no default under
the Guaranty.
Covenants of Newco One. Substantially similar to those
made in the Guaranty.
Release provisions.
During the first eighteen months following execution of the
Security Agreement (the "Initial Release Period"), collateral having a value
(determined in a manner consistent with the valuation principles that apply for
purposes of allocating the purchase price under the Stock Purchase Agreement,
except that no Restaurant shall be deemed to have a value of less than $250,000)
of $10 million shall be released from the liens imposed by the Security
Agreement solely for the purpose of enabling Newco One to (i) finance a portion
of the costs of acquiring or developing new Restaurants to be owned and operated
by Newco One, (ii) to make improvements, which under generally accepted
accounting principles are capital improvements, to existing Restaurants and
(iii) to make repairs but only to the extent that the costs of repairs to any
Restaurant exceed 1.5% of the net sales of such Restaurant.
During each succeeding twelve month period following the
Initial Release Period, collateral having a value (determined as provided in
Section 2.6.1 hereof) of $5 million shall be released from the liens imposed by
the Security Agreement for the purposes described in Section 2.6.1 hereof.
Upon satisfaction and discharge of all assumed liabilities
under the FFCA Loan Agreements, all of the collateral of Newco One subject to
the liens under the Security Agreement shall be released.
Security Agreement of RTM Management.
Coverage. The Management Agreements, the RTM Fees
receivable thereunder, and all income earned thereon.
Deposits. (i) An assignment of the Management Agreements
and the RTM Fees and any income earned thereon, and (ii) such documents,
instruments and papers as are necessary to enable the Beneficiaries to
have perfected security interests therein.
Obligations of RTM Management. To perform all services required of
it under the Management Agreements and to collect all RTM Fees, subject to the
provisions of the Guaranty.
Covenants of RTM Management. Substantially similar to
those in the Guaranty.
<PAGE>
Release Provisions. Upon satisfaction and discharge of all assumed
liabilities under the FFCA Loan Agreements, the Management Agreements shall be
released from the liens imposed by the Security Agreement.
Fees.
The Secured Parties, on the one hand, and the Guarantors, on the other
hand, shall each be responsible for 50% of the costs and expenses incurred in
connection with the preparation of the Security Documents and any related
filings or recordings of such documents; provided, however, that in no event
shall the Guarantors be obligated to pay more than $200,000 of such costs.
<PAGE>
Exhibit 10.4
DEVELOPMENT
AGREEMENT
<PAGE>
ARBY'S, INC.
DEVELOPMENT AGREEMENT
TABLE OF CONTENTS
PAGE
1. GRANT
2. TERM
3. DEVELOPMENT FEE
4. DEVELOPMENT SCHEDULE
5. LOCATION OF RESTAURANTS
6. SITE ACCEPTANCE
7. DISCLAIMER
8. LOCATION REQUIREMENTS
9. CONSTRUCTION
10. TRAINING
11. LICENSE AGREEMENT
12. NO RIGHT TO OPERATE OR USE TRADEMARKS
13. TERMINATION
14. EFFECT OF EXPIRATION OR TERMINATION
15. CONFIDENTIALITY
16. ASSIGNMENT
17. NEW DEVELOPMENT AGREEMENT
18. GOVERNING LAW AND FORUM SELECTION
19. DEVELOPER'S ACKNOWLEDGMENTS
20. ENTIRE AGREEMENT
ATTACHMENTS
EXHIBIT "A" - TERRITORY
EXHIBIT "A-1" - DISTINCTION FROM EXISTING MDA
EXHIBIT "B" - DEVELOPMENT SCHEDULE
EXHIBIT "C" - PAYMENT SCHEDULE
<PAGE>
DEVELOPMENT AGREEMENT
This is a Development Agreement ("Agreement") made in Fort Lauderdale,
Florida, by and between ARBY'S, INC. d/b/a TRIARC RESTAURANT GROUP, a Delaware
corporation, with its principal office at 1000 Corporate Drive, Fort Lauderdale,
Florida 33334 ("Arby's"), and NEWCO, a(n) * corporation/partnership/individual
with *its principal office/his/her/their residence located at * ("Developer").
WHEREAS, Arby's owns a number of trademarks and service marks, including
the trademark "ARBY'S," and is a franchisor of Arby's Restaurants, which serve
roast beef sandwiches and other food items; and
WHEREAS, Developer desires the rights to develop Arby's Restaurants
within the geographic area specified in this Development Agreement for the
limited term of this Agreement; and
WHEREAS, Arby's is willing to grant such rights in accordance with the
terms and conditions of this Agreement;
NOW, THEREFORE, it is mutually agreed as follows:
1. GRANT. Arby's hereby grants to Developer during the term of this
Development Agreement and subject to the conditions hereof the right to develop
Arby's Restaurants in the limited geographical area identified and set forth in
Exhibit A hereto, exclusive of any Unit Trading Area or Protected Area located
therein as defined in any License or Franchise Agreements currently issued to
other parties; this geographical area shall be referred to as the "Territory."
The operation of the restaurants developed pursuant to this Agreement will be
governed by individual License Agreements issued by Arby's in accordance with
Section ll below. So long as Developer is in compliance with the terms and
conditions of this Agreement, Arby's will not license others to operate, nor
will it itself operate, any new or additional Arby's Restaurants in the
Territory during the term of this Agreement.
2. TERM. Unless earlier terminated pursuant to Section 13, this
Development Agreement shall expire Thirteen Years, Ten Months from the date of
execution of this Agreement by Arby's or upon the execution by Arby's of the
License Agreement for the last of the restaurants specified in Exhibit B (the
"Development Schedule"), whichever first occurs.
3. DEVELOPMENT FEE. Upon execution of this Development Agreement,
Developer shall pay to Arby's a fee of $1,900,000.00 (the "Development Fee") in
accordance with the Payment Schedule attached hereto as Exhibit C. This
Development Fee shall be fully earned by Arby's in consideration of its
execution of this Agreement and shall be non-refundable. However, Arby's shall
credit $10,000 of the Development Fee toward payment of the License Fee for each
of the first one hundred ninety (190) License Agreements issued to Developer
pursuant to this Development Agreement, provided that the applicable restaurants
are constructed and opened in accordance with the Development Schedule.
<PAGE>
4. DEVELOPMENT SCHEDULE. Developer shall open and continuously operate
properly licensed Arby's Restaurants in accordance with the Development Schedule
set forth in Exhibit B. In the event that Developer opens and continuously
operates a greater number of Arby's Restaurants than required during any interim
period of the Development Schedule, the requirements of the succeeding period(s)
shall be deemed satisfied to the extent of such excess number of restaurants, up
to the total number of restaurants specified in the Development Schedule.
5. LOCATION OF RESTAURANTS. Developer is responsible for locating
proposed sites within the Territory for each of the restaurants contemplated in
the Development Schedule; during the term of this Agreement, Developer shall use
its best efforts to locate suitable sites. Arby's may in its discretion offer
counseling and advice in site selection. In no event, however, shall Arby's be
obligated to loan money, guarantee leases, provide financing or otherwise become
directly involved and/or obligated to Developer or to any third party in respect
of such site selection or development; these activities and undertakings shall
be the exclusive responsibility of Developer, financially and otherwise.
6. SITE ACCEPTANCE. Upon selection by Developer of a proposed site for a
restaurant, Developer promptly shall submit to Arby's such specific site data
and demographic and other information concerning the site as may be reasonably
required by Arby's, utilizing such forms as may be required by Arby's. Arby's
shall either accept or reject such site in accordance with Arby's then-current
site selection policies and procedures. To be effective, any acceptance must be
in writing. Developer understands and acknowledges that Arby's may reject any
proposed site, in which event Developer will not proceed at the rejected site,
but will seek to locate an acceptable site. The acquisition in any manner of any
proposed site prior to acceptance by Arby's shall be at the sole risk and
responsibility of Developer and shall not obligate Arby's in any way to accept
same.
7. DISCLAIMER. In executing this Development Agreement, accepting a
proposed site, giving approvals or advice or providing services or assistance in
connection with this Development Agreement, Arby's does not guarantee the
suitability of an accepted site or the success of any Arby's restaurant
established at such site. Arby's expressly disclaims any warranties, express or
implied, with respect to the suitability of any site or the success of any
restaurant. Developer understands and acknowledges that the suitability of a
site and the success of any restaurant depend on many factors outside the
control of either Arby's or Developer (such as interest rates, unemployment
rates, demographic trends and the general economic climate), but principally
depend on Developer's efforts in the operation of the restaurant.
8. LOCATION REQUIREMENTS. As a condition for accepting a proposed
site, Arby's may require Developer to negotiate a lease or sales contract
that includes certain terms regarding duration or other specified matters.
Developer understands and acknowledges that a site acceptance may be
<PAGE>
conditioned on such matters and that if Developer does not wish to, or cannot,
satisfy the pertinent conditions within a reasonable time, the site will be
deemed rejected.
9. CONSTRUCTION. Upon receiving acceptance for a proposed site,
Developer shall proceed promptly to secure control of the accepted site and to
obtain necessary zoning and building approvals and permits. Arby's will provide
generic plans for the Arby's-approved building, including specifications for
fixtures, furnishings, signs and equipment. Developer must hire an architect and
general contractor to adapt these generic plans to the accepted site and must
submit proposed final working plans to Arby's for approval within the time
limits set by Arby's. Developer shall not proceed with construction or
remodeling until Developer has received Arby's written approval of the final
working plans. Developer shall ensure that the building is constructed or
remodeled in accordance with the final working plans and specifications
designated and approved by Arby's. Developer will allow Arby's to make periodic
inspections and will provide such periodic progress reports as may be requested
by Arby's.
10. TRAINING. Unless Developer already is operating at least one Arby's
restaurant, Developer, a partner of Developer if Developer is a partnership, or
the majority shareholder of Developer if Developer is a corporation, must
complete Arby's New Owner's Training Program prior to issuance of the License
Agreement for the first restaurant set forth in the Development Schedule. In
addition, if Developer is not operating any Arby's restaurants prior to issuance
of the License Agreement for the first restaurant set forth in the Development
Schedule, two representatives of Developer must attend and be certified at
Arby's Restaurant Management Training Program prior to issuance of the License
Agreement for the first restaurant under the Development Schedule, another
representative of Developer must attend and be certified prior to issuance of
the License Agreement for the second restaurant under the Development Schedule,
and Arby's in its sole discretion and prior to issuance of any further License
Agreements for additional restaurants may require additional representatives of
Developer to attend and be certified at the Restaurant Management Training
Program or complete another comparable program approved in advance by Arby's. If
Developer is an individual who intends to participate in the daily operation of
the restaurant, or if Developer includes a partner or shareholder who intends to
participate in the daily operation of the restaurant, that person must attend
and be certified at the Restaurant Management Training Program as one of
Developer's first two representatives. If Developer already is operating one,
but only one, Arby's restaurant prior to issuance of the License Agreement for
the first restaurant under the Development Schedule, one additional
representative of Developer must attend and be certified at the Restaurant
Management Training Program prior to issuance of the License Agreement for the
first restaurant under the Development Schedule, and Arby's in its sole
discretion and prior to issuance of any further License Agreements for
additional restaurants may require additional representatives of Developer to
attend and be certified at the Restaurant Management Training Program or
<PAGE>
complete another comparable program approved in advance by Arby's. If Developer
already is operating two or more Arby's restaurants prior to issuance of the
License Agreement for the first restaurant under the Development Schedule,
Arby's in its sole discretion and prior to issuance of any License Agreement
under the Development Schedule, may require an additional representative to
attend and be certified at the Restaurant Management Training Program or
complete another comparable training program approved in advance by Arby's.
Arby's will pay tuition for training at the New Owner's Training Program and the
Restaurant Management Training Program; all other expenses shall be the sole
responsibility of Developer.
11. LICENSE AGREEMENT. No Arby's Restaurant may be opened or operated by
Developer under any circumstances until the required License Fee has been paid
and the License Agreement for such location has been executed by Arby's. The
License Fee shall be Thirty-Seven Thousand and Five Hundred Dollars ($37,500)
for Developer's first License Agreement, and Twenty-Five Thousand Dollars
($25,000) for each subsequent License Agreement. The License Fee for each
License Agreement must be paid at least thirty (30) days prior to scheduled
execution of the Agreement. All License Agreements issued pursuant to this
Development Agreement will contain generally the same terms and conditions as
are being offered to other licensees similarly situated at time of issuance,
including without limitation those terms and conditions pertaining to royalties
and other fees and duration of the Agreement; as a condition of Arby's execution
of such License Agreement, Arby's may require Optionee or its principles to
execute a personal guarantee, letter of credit or corporate guarantee to secure
payment of royalties and other fees required to be paid under the License
Agreement. Developer shall comply with Arby's then-current franchising policies
and procedures for issuance of the License Agreements. Arby's shall be under no
obligation to execute and issue a License Agreement if Developer is in breach or
default of any other License or Franchise Agreement between Arby's and
Developer, or if Developer is not eligible for expansion pursuant to Arby's
then-current criteria for expansion. In addition, Arby's shall be under no
obligation to execute and issue a License Agreement unless Developer has
complied in a timely manner with all terms and conditions of this Development
Agreement and has satisfied all requirements set forth herein (including
construction and training requirements) with respect to the pertinent accepted
site. If and when a License Agreement is executed by Arby's, it shall govern the
relations between the parties with respect to the pertinent restaurant.
12. NO RIGHT TO OPERATE OR USE TRADEMARKS. Developer acknowledges that
until a License Agreement has been issued for a specified site, Developer shall
not have or be entitled to exercise any of the rights, powers and privileges
granted by the License Agreement, including without limitation the right to use
Arby's trademarks, service marks and trade names; that the execution of this
Development Agreement shall not be deemed to grant any such rights, powers or
privileges to Developer; and that Developer may not under any circumstances
commence operation of any Arby's restaurant prior to execution by Arby's of a
License Agreement for the
<PAGE>
pertinent location.
13. TERMINATION. This Agreement shall terminate immediately and
without notice to either party upon:
(a) the death of Developer, if Developer is an individual; or
(b) the commencement of any proceedings by or against Developer
under the Bankruptcy Act, under any Chapter thereof or amendment thereto, or
under any other insolvency act, whether federal or state; the appointment of any
trustee or receiver for the business or property of Developer; or any assignment
by Developer for the benefit of creditors.
Arby's shall have the right at its election to terminate this Agreement
immediately upon notice to Developer, upon the occurrence of any of the
following:
(a) failure to comply with the Development Schedule;
(b) the attempted assignment of this Agreement without the
prior written approval of Arby's;
(c) if Developer is a corporation or a partnership, the transfer
of any of the capital stock or partnership interest of such corporation or
partnership during the term of this Agreement without the prior written approval
of Arby's;
(d) the discovery by Arby's of any material misrepresentation
in any of the information or documents submitted to Arby's by or on behalf of
Developer;
(e) any violation by Developer of any of the provisions of
this Agreement; or
(f) the termination by Arby's of any License or Franchise
Agreement or other agreement between Arby's and Developer or Developer's failure
to cure a default under any other agreement between Arby's and Developer within
the time specified by Arby's.
For purposes of Sections 11 and 13 herein, any License or Franchise
Agreements issued to Developer, any affiliated company of Developer or any
corporation, partnership or joint venture (or their affiliates) in which
Developer or any stockholder, partner or joint venture of Developer, direct or
indirect, has any interest of ownership or participation, regardless of
location, shall be deemed an Agreement between Arby's and Developer.
14. EFFECT OF EXPIRATION OR TERMINATION. Upon expiration or
completion of this Development Agreement, or upon termination for any
reason, the rights granted to Developer pursuant to Section 1 of this
Development Agreement shall be extinguished immediately. Unless the
<PAGE>
parties have executed a new development agreement, Arby's thereafter shall have
the right to operate or permit others to operate Arby's Restaurants within the
Territory, except as limited by the Unit Trading Area or Protected Area
provisions of any then-effective License or Franchise Agreements.
15. CONFIDENTIALITY. At all times during the term of this Agreement, and
after termination of this Agreement for any reason, Developer (and if a
corporation or partnership, its shareholders, directors, and officers or
partners, as individuals) shall not divulge, disclose or communicate, directly
or indirectly, to any other person or entity any confidential or proprietary
information or knowledge obtained from Arby's.
16. ASSIGNMENT. This Agreement shall inure to the benefit of and be
binding upon Arby's, its successors and assigns. However, neither this Agreement
nor any of Developer's rights hereunder shall be assignable or transferable by
Developer, directly or indirectly, by operation of law or otherwise, without
prior written approval from Arby's.
17. NEW DEVELOPMENT AGREEMENT. If Developer wishes to negotiate a new
development agreement with Arby's with respect to further development of Arby's
Restaurants in the Territory, Developer must so advise Arby's in writing sixty
(60) days before the expiration date of this Development Agreement or sixty (60)
days before the anticipated date of execution of the License Agreement for the
final restaurant under the Development Schedule in Exhibit B. Subject to receipt
of such notice and so long as this Development Agreement is in effect and
Developer is not and has not been in default under this Development Agreement or
any License or Franchise Agreement or other agreement with Arby's, Arby's then
will negotiate in good faith with Developer with respect to a new development
agreement during the remainder of the term of this Development Agreement.
18. GOVERNING LAW AND FORUM SELECTION. This Agreement shall be governed,
construed and interpreted in accordance with the laws of the State of Florida.
In the event of any dispute concerning the parties' rights or obligations under
this Agreement, Developer agrees to file any suit against Arby's only in the
federal or state court having jurisdiction where Arby's principal office is then
located.
19. DEVELOPER'S ACKNOWLEDGMENTS. Developer understands and acknowledges
that there are significant risks in any business venture and that the primary
factor in Developer's success or failure under this agreement will be
Developer's own efforts. In addition, Developer acknowledges that Arby's and its
representatives have made no representations to Developer other than or
inconsistent with the matters set forth in the Franchise Offering Circular
provided to Developer and that Developer has undertaken this venture solely in
reliance upon the matters set forth in the Franchise Offering Circular and
Developer's own independent investigation of the merits of this venture.
<PAGE>
20. ENTIRE AGREEMENT. This Development Agreement contains the entire
agreement between the parties and shall not be modified except by a written
document executed by both parties.
WITNESS: DEVELOPER: NEWCO, a ---------- corporation
- ------------------- By:-----------------------
*Name
*Title
Date:---------------------------
WITNESS: ARBY'S, INC.
d/b/a TRIARC RESTAURANT GROUP
- ------------------- By:----------------------
*Name
*Title
Date:---------------------------
<PAGE>
EXHIBIT A
TERRITORY
TBD
*
Arby's and Developer acknowledge and agree that the actual Territory and any
exclusivity therein shall be finalized prior to the Final Date, as that term is
defined under that certain Stock Purchase Agreement, dated as of February ___,
1997, by and among Sellers (as defined therein) and Holdco (as defined therein).
ACKNOWLEDGED AND APPROVED
------------------------ (Developer)
------------------------ (Arby's)
<PAGE>
<PAGE>
EXHIBIT A-1
Distinction from existing MDA
Arby's and Developer acknowledge and agree that the terms of this Development
Agreement are separate and apart from, and the Units to be developed hereunder
are in addition to, the terms and conditions set forth in that certain
Development Agreement, dated as of June ___, 1996 (the "Existing Development
Agreement"), by and among Arby's and RTMSC, Inc., RTM Savannah, Inc., RTM
Georgia, Inc., RTM Alabama, inc., RTM Gulf Coast, Inc., RTM Southwest Texas,
Inc., RTM West, Inc., RTM Portland, Inc., RTM SeaTac, Inc., RTM Mid America,
Inc. and RTM Indianapolis, Inc. (collectively, "Developer") and none of the
Units to be developed hereunder shall count toward the obligations of Developer
set forth in the Existing Development Agreement.
<PAGE>
EXHIBIT B
DEVELOPMENT SCHEDULE
1. Zero (0) licensed, open and operating Arby's Restaurant(s) on or
before December 31, 1997;
2. Six (6) additional licensed, open and operating Arby's Restaurant(s) on or
before December 31, 1998, for a cumulative total of SIX (6) Restaurants in the
Territory.
3. Eight (8) additional licensed, open and operating Arby's Restaurant(s) on or
before December 31, 1999, for a cumulative total of FOURTEEN (14) Restaurants in
the Territory.
4. Ten (10) additional licensed, open and operating Arby's Restaurant(s) on or
before December 31, 2000, for a cumulative total of twenty-four (24) Restaurants
in the Territory.
5. Ten (10) additional licensed, open and operating Arby's Restaurant(s) on or
before December 31, 2001, for a cumulative total of thirty-four (34) Restaurants
in the Territory.
6. Ten (10) additional licensed, open and operating Arby's Restaurant(s) on or
before December 31, 2002, for a cumulative total of forty-four (44) Restaurants
in the Territory.
7. Fifteen (15) additional licensed, open and operating Arby's Restaurant(s) on
or before December 31, 2003, for a cumulative total of fifty-NINE (59)
Restaurants in the Territory.
<PAGE>
8. Fifteen (15) additional licensed, open and operating Arby's Restaurant(s) on
or before December 31, 2004, for a cumulative total of SEVENTY-FOUR (74)
Restaurants in the Territory.
9. Fifteen (15) additional licensed, open and operating Arby's Restaurant(s) on
or before December 31, 2005, for a cumulative total of eighty-nine (89)
Restaurants in the Territory.
10. Fifteen (15) additional licensed, open and operating Arby's Restaurant(s) on
or before December 31, 2006, for a cumulative total of one hundred four (104)
Restaurants in the Territory.
11. Fifteen (15) additional licensed, open and operating Arby's Restaurant(s) on
or before December 31, 2007, for a cumulative total of one hundred NINETEEN
(119) Restaurants in the Territory.
12. Fifteen (15) additional licensed, open and operating Arby's Restaurant(s) on
or before December 31, 2008, for a cumulative total of one hundred THIRTY-FOUR
(134) Restaurants in the Territory.
13. Twenty-eight (28) additional licensed, open and operating Arby's
Restaurant(s) on or before December 31, 2009, for a cumulative total of one
hundred SIXTY-TWO (162) Restaurants in the Territory.
14. Twenty-eight (28) additional licensed, open and operating Arby's
Restaurant(s) on or before December 31, 2010, for a cumulative total of one
hundred ninety (190) Restaurants in the Territory.
ACKNOWLEDGED & APPROVED
--------------------- -------------------
Newco Arby's
<PAGE>
EXHIBIT C
PAYMENT SCHEDULE
The total amount due and owing by Developer to Arby's under this Agreement is
One Million Nine Hundred Thousand and 00/100 Dollars ($1,900,000.00), which
amount shall be payable as follows:
A. On the date hereof, Developer shall pay to Arby's the sum of Four
Hundred Thousand and 00/100 Dollars ($400,000.00);
<PAGE>
B. On January 1, 1998, Developer shall pay to Arby's the sum of Two
Hundred Fifty Thousand and 00/100 Dollars ($250,000.00);
C. On January 1, 1999, Developer shall pay to Arby's the sum of Two
Hundred Fifty Thousand and 00/100 Dollars ($250,000.00);
D. On January 1, 2000, Developer shall pay to Arby's the sum of Two
Hundred Thousand and 00/100 Dollars ($200,000.00);
E. On January 1, 2001, Developer shall pay to Arby's the sum of Two
Hundred Thousand and 00/100 Dollars ($200,000.00);
F. On January 1, 2002, Developer shall pay to Arby's the sum of Two
Hundred Thousand and 00/100 Dollars ($200,000.00);
G. On January 1, 2003, Developer shall pay to Arby's the sum of Two
Hundred Thousand and 00/100 Dollars ($200,000.00); and
H. On January 1, 2004, Developer shall pay to Arby's the sum of Two
Hundred Thousand and 00/100 Dollars ($200,000.00).
ACKNOWLEDGED & APPROVED
--------------------- ---------------------
Newco Arby's
<PAGE>
