Wendy's 2010 Annual Report Download - page 33

“Covered Persons”) which provides, among other things, that: (i) to the extent the Covered Persons acquire any rights
in respect of our common stock so that the effect of such acquisition would increase their aggregate beneficial
ownership in Wendy’s/Arby’s common stock to greater than 25%, the Covered Persons may not engage in a business
combination (within the meaning of Section 203 of the Delaware General Corporation Law ) for a period of three
years following the date of such occurrence unless such transaction would be subject to one of the exceptions set forth
in Section 203(b)(3) through (7) (assuming for these purposes that 15% in the definition of interested stockholder
contained in Section 203 was deemed to be 25%); (ii) for so long as Wendy’s/Arby’s has a class of equity securities
that is listed for trading on the New York Stock Exchange or any other national securities exchange, none of the
Covered Persons shall solicit proxies or submit any proposal for the vote of its stockholders or recommend or request
or induce any other person to take any such actions or seek to advise, encourage or influence any other person with
respect to Wendy’s/Arby’s common stock, in each case, if the result of such action would be to cause the Board of
Directors to be comprised of less than a majority of independent directors; and (iii) for so long as Wendy’s/Arby’s has
a class of equity securities that is listed for trading on the New York Stock Exchange or any other national securities
exchange, none of the Covered Persons shall engage in certain affiliate transactions with Wendy’s/Arby’s without the
prior approval of a majority of the Audit Committee or other committee of the Board of Directors that is comprised
of independent directors. The Trian Agreement will terminate upon the earliest to occur of (i) the Covered Persons
beneficially owning less than 15% of Wendy’s/Arby’s common stock, (ii) November 5, 2011 (with respect to clauses
(ii) and (iii) of the preceding sentence), and (iii) at such time as any person not affiliated with the Covered Persons
makes an offer to purchase an amount of Wendy’s/Arby’s common stock which when added to Wendy’s/Arby’s
common stock already beneficially owned by such person and its affiliates and associates equals or exceeds 50% or
more of outstanding Wendy’s/Arby’s common stock or all or substantially all of Wendy’s/Arby’s assets or solicits
proxies with respect to a majority slate of directors.
This concentration of ownership gives Messrs. Peltz and May significant influence over the outcome of actions
requiring stockholder approval. If in the future Messrs. Peltz and May were to acquire more than a majority of
Wendy’s/Arby’s outstanding voting power, they would be able to determine the outcome of the election of members
of the Board of Directors and the outcome of corporate actions requiring majority stockholder approval, including
mergers, consolidations and the sale of all or substantially all of Wendy’s/Arby’s assets. They would also be in a
position to prevent or cause a change in control of Wendy’s/Arby’s.
Wendy’s/Arby’s certificate of incorporation contains certain anti-takeover provisions and permits our Board of
Directors to issue preferred stock without stockholder approval and limits its ability to raise capital from
affiliates.
Certain provisions in Wendy’s/Arby’s certificate of incorporation are intended to discourage or delay a hostile
takeover of control of Wendy’s/Arby’s. Wendy’s/Arby’s certificate of incorporation authorizes the issuance of shares of
“blank check” preferred stock, which will have such designations, rights and preferences as may be determined from
time to time by its Board of Directors. Accordingly, its Board of Directors is empowered, without stockholder
approval, to issue preferred stock with dividend, liquidation, conversion, voting or other rights that could adversely
affect the voting power and other rights of the holders of its common stock. The preferred stock could be used to
discourage, delay or prevent a change in control of Wendy’s/Arby’s that is determined by its Board of Directors to be
undesirable. Although Wendy’s/Arby’s has no present intention to issue any shares of preferred stock, it cannot assure
you that it will not do so in the future.
Wendy’s/Arby’s certificate of incorporation prohibits the issuance of preferred stock to affiliates, unless offered
ratably to the holders of Wendy’s/Arby’s common stock, subject to an exception in the event that Wendy’s/Arby’s is
in financial distress and the issuance is approved by its audit committee. This prohibition limits the ability to raise
capital from affiliates.
Risks Related to Wendy’s/Arby’s Restaurants
Wendy’s/Arby’s Restaurants is dependent on dividends and/or loans or advances from its subsidiaries to meet its
debt service obligations.
The ability of Wendy’s/Arby’s Restaurants’ subsidiaries to pay cash dividends and/or make loans or advances to
Wendy’s/Arby’s Restaurants will be dependent upon their respective abilities to achieve sufficient cash flows after
satisfying their respective cash requirements, including subsidiary-level debt service and revolving credit agreements,
to enable the payment of such dividends or the making of such loans or advances. The ability of any of its subsidiaries
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