Wendy's 2010 Annual Report Download - page 46

transaction that is consummated at any time during the period commencing on the date the New Services Agreement
was executed and ending six months following the expiration of its term, Wendy’s/Arby’s will negotiate a success fee
to be paid to the Management Company which is reasonable and customary for such transactions.
Under a prior services agreement which commenced on June 30, 2007 and expired on June 30, 2009, (the
“Services Agreement”) the Management Company provided a broader range of professional and strategic services to
Wendy’s/Arby’s in connection with its 2007 restructuring and the related transition of executive management
responsibilities.
The Companies paid approximately $2.5 million and $5.4 million in 2010 and 2009, respectively, in fees for
corporate finance advisory services under the New Services Agreement in connection with the negotiation and
execution of the Credit Agreement in 2010 and the issuance of the Senior Notes in 2009.
Liquidation Services Agreement
On June 10, 2009, Wendy’s/Arby’s and the Management Company entered into a liquidation services
agreement (the “Liquidation Services Agreement”) pursuant to which the Management Company assists Wendy’s/
Arby’s in the sale, liquidation or other disposition of its cost investments and DFR Notes (the “Legacy Assets”), which
are not related to the Equities Account. As of the date of the Liquidation Services Agreement, the Legacy Assets were
valued at $36.6 million (the “Target Amount”), of which $5.1 million was owned by Wendy’s/Arby’s
Restaurants. The Liquidation Services Agreement, which expires June 30, 2011, required Wendy’s/Arby’s to pay the
Management Company a fee of $0.9 million in two installments in June 2009 and 2010, which is being amortized
over the term of the agreement and included in “General and administrative.” In addition, in the event that any or all
of the Legacy Assets are sold, liquidated or otherwise disposed of and the aggregate net proceeds to us are in excess of
the Target Amount, Wendy’s/Arby’s would be required to pay the Management Company a success fee equal to 10%
of the aggregate net proceeds in excess of the Target Amount. Assuming a current liquidation of all remaining Legacy
Assets, the aggregate proceeds ($32.2 million as of January 2, 2011 primarily related to the cancellation and
repayment of the DFR Notes) would not be expected to be in excess of the Target Amount.
Aircraft Agreement
In August 2007, Wendy’s/Arby’s entered into time share agreements under which the Former Executives and
the Management Company used two Wendy’s/Arby’s corporate aircraft in exchange for payment of certain
incremental flight and related costs of such aircraft. Those time share agreements expired during the second quarter of
2009 and, in the third quarter of 2009, one of the aircraft was sold to an unrelated third party.
In June 2009, Wendy’s/Arby’s and TASCO, LLC (an affiliate of the Management Company) (“TASCO”)
entered into an aircraft lease agreement (the “Aircraft Lease Agreement”) for the other aircraft that was previously
under a time share agreement. The Aircraft Lease Agreement originally provided that Wendy’s/Arby’s would lease
such corporate aircraft to TASCO from July 1, 2009 until June 30, 2010. On June 24, 2010, Wendy’s/Arby’s and
TASCO renewed the Aircraft Lease Agreement for an additional one year period (expiring June 30, 2011). Under the
Aircraft Lease Agreement, TASCO pays $10 thousand per month for such aircraft plus substantially all operating
costs of the aircraft including all costs of fuel, inspection, servicing and storage, as well as operational and flight crew
costs relating to the operation of the aircraft, and all transit maintenance costs and other maintenance costs required
as a result of TASCO’s usage of the aircraft. Wendy’s/Arby’s continues to be responsible for calendar-based
maintenance and any extraordinary and unscheduled repairs and/or maintenance for the aircraft, as well as insurance
and other costs. The Aircraft Lease Agreement may be terminated by Wendy’s/Arby’s without penalty in the event it
sells the aircraft to a third party, subject to a right of first refusal in favor of the Management Company with respect
to such a sale.
Presentation of Financial Information
The Companies’ fiscal reporting periods consist of 52 or 53 weeks ending on the Sunday closest to
December 31 and are referred to herein as (1) “the year ended January 2, 2011” or “2010”, which consisted of 52
weeks, (2) “the year ended January 3, 2010” or “2009”, which consisted of 53 weeks and (3) “the year ended
December 28, 2008” or “2008” which consisted of 52 weeks. All references to years and quarters relate to fiscal
periods rather than calendar periods. Certain percentage changes between these years are considered not measurable or
non meaningful (“n/m”).
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