Wendy's 2010 Annual Report Download - page 45

approximately $5.2 million of SSG expenses, which were expensed in 2010 and included in “General and
administrative,” and was to be paid over a 24 month period through March 2012. We made payments of $2.0 million
in 2010. Effective April 5, 2010, the SSG leased 2,300 square feet of office space from Arby’s until December 31,
2016, unless terminated earlier, for an annual base rental of $51 thousand.
Should a sale of Arby’s occur as discussed in “Introduction and Executive Overview—Our Business” herein,
under the change of control provisions in the agreement that established SSG, the activities of SSG would be wound
up. In the wind up process, the assets, personnel and functions of SSG would be transferred to QSCC and ARCOP as
such parties and Wendy’s/Arby’s Restaurants agree. In contemplation of a possible sale, the parties are in discussion
regarding the dissolution of SSG and transferring SSG’s assets, personnel and functions to QSCC and ARCOP.
(Wendy’s/Arby’s)
Equities Account
In 2005, Wendy’s/Arby’s invested $75.0 million in brokerage accounts (the “Equities Account”), which were
managed by a management company (the “Management Company”) formed by the Chairman and then Chief
Executive Officer and the Vice Chairman and then President and Chief Operating Officer of Wendy’s/Arby’s (the
“Former Executives”) and a director, who is Wendy’s/Arby’s former Vice Chairman (collectively with the Former
Executives, the “Principals”). The Equities Account was invested principally in equity securities, cash equivalents and
equity derivatives of a limited number of publicly-traded companies. In addition, the Equities Account sold securities
short and invested in market put options in order to lessen the impact of significant market downturns.
On June 10, 2009, Wendy’s/Arby’s and the Management Company entered into a withdrawal agreement (the
“Withdrawal Agreement”) which provided that Wendy’s/Arby’s would be permitted to withdraw all amounts in the
Equities Account on an accelerated basis (the “Early Withdrawal”) effective no later than June 26, 2009. Prior to the
Withdrawal Agreement and as a result of an investment management agreement with the Management Company,
which was terminated on June 26, 2009, Wendy’s/Arby’s had not been permitted to withdraw any amounts from the
Equities Account until December 31, 2010, although $47.0 million was released from the Equities Account in 2008
subject to an obligation to return that amount to the Equities Account by a specified date. In consideration for
obtaining such Early Withdrawal right, Wendy’s/Arby’s agreed to pay the Management Company $5.5 million (the
“Withdrawal Fee”), was not required to return the $47.0 million referred to above and was no longer obligated to pay
investment management and incentive fees to the Management Company. The Equities Account investments were
liquidated in June 2009 for $37.4 million (the “Equities Sale”), of which $31.9 million was received by Wendy’s/
Arby’s, net of the Withdrawal Fee, and for which Wendy’s/Arby’s realized a gain of $2.3 million in 2009, which are
both included in “Investment income (expense), net.”
Sublease of New York Office Space
In July 2008 and July 2007, Wendy’s/Arby’s entered into agreements under which the Management Company
is subleasing office space on two of the floors of Wendy’s/Arby’s former New York headquarters. During the second
quarter of 2010, Wendy’s/Arby’s and the Management Company entered into an amendment to the sublease,
effective April 1, 2010, pursuant to which the Management Company’s early termination right was cancelled in
exchange for a reduction in rent. Under the terms of the amended sublease, the sublease is not cancelable prior to the
expiration of the prime lease and the Management Company pays rent to Wendy’s/Arby’s in an amount that covers
substantially all of Wendy’s/Arby’s rent obligations under the prime lease for the subleased space.
Services Agreements
Wendy’s/Arby’s and the Management Company entered into a new services agreement (the “New Services
Agreement”), which commenced on July 1, 2009 and will continue until June 30, 2011, unless sooner terminated.
Under the New Services Agreement, the Management Company assists Wendy’s/Arby’s with strategic merger and
acquisition consultation, corporate finance and investment banking services and related legal matters. Pursuant to the
terms of this agreement, Wendy’s/Arby’s is paying the Management Company a service fee of $0.25 million per
quarter, payable in advance commencing July 1, 2009. In addition, in the event the Management Company provides
substantial assistance to Wendy’s/Arby’s in connection with a merger or acquisition, corporate finance and/or similar
39