Wendy's 2011 Annual Report Download - page 25

Because The Wendy’s Company is a holding company, its ability to declare and pay dividends is dependent
upon cash, cash equivalents and short-term investments on hand and cash flows from its subsidiaries. The ability of its
subsidiaries to pay cash dividends and/or make loans or advances to the holding company 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 to pay cash dividends or other payments to The
Wendy’s Company will also be limited by restrictions in debt instruments currently existing or subsequently entered
into by such subsidiaries, including the Credit Agreement and the Senior Notes indenture, which are described earlier
in this Item 1A.
A substantial amount of The Wendy’s Company Common Stock is concentrated in the hands of certain
stockholders.
Nelson Peltz, The Wendy’s Company Chairman and former Chief Executive Officer, and Peter May, The
Wendy’s Company Vice Chairman and former President and Chief Operating Officer, beneficially own shares of The
Wendy’s Company outstanding Common Stock that collectively constitute more than 25% of its total voting power.
Messrs. Peltz and May may, from time to time, acquire beneficial ownership of additional shares of Common Stock.
On December 1, 2011, The Wendy’s Company entered into an agreement (the “Trian Agreement”) with
Messrs. Peltz and May and several of their affiliates (the “Covered Persons”). Pursuant to the Trian Agreement, the
Board of Directors (the “Board”), including a majority of the independent directors, approved, for purposes of
Section 203 of the Delaware General Corporation Law (“Section 203”), the Covered Persons becoming the owners
(as defined in Section 203(c)(9) of the DGCL) of or acquiring an aggregate of up to (and including), but not more
than, 32.5% (subject to certain adjustments set forth in the Agreement, the “Maximum Percentage”) of the
outstanding shares of the Company’s Common Stock, such that no such persons would be subject to the restrictions
set forth in Section 203 solely as a result of such ownership (such approval, the “Section 203 Approval”).
Pursuant to the 2011 Agreement, each of the Covered Persons has agreed that, for so long as the Company has
a class of equity securities listed on any national securities exchange, (a) he will not purchase or cause to be purchased,
or otherwise acquire, beneficial ownership of Company voting securities that would increase the aggregate beneficial
ownership of Company voting securities by the Covered Persons above the Maximum Percentage; (b) he will not
solicit proxies or submit any proposal for the vote of stockholders of the Company 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 the Shares, in each case, if the result of such action would be to cause the Board to be comprised of less than
a majority of independent directors; (c) he will not engage in certain affiliate transactions with the Company without
the prior approval of a majority of the Audit Committee of the Board or other committee of the Board that is
comprised of independent directors; and (iii) except with respect to certain pledged shares, each of the Covered
Persons shall cause the Company voting securities owned by it to be present at stockholder meetings for the purposes
of establishing a quorum and shall vote any Company voting securities in excess of the shares beneficially owned by
them on the date of the Trian Agreement either as recommended by the Board or in the same proportion as
Company voting securities not owned by the Covered Persons are actually voted, subject to certain limited exceptions.
The Trian Agreement (other than the provisions relating to the Section 203 Approval and certain miscellaneous
provisions that survive the termination of the Agreement) will terminate upon the earliest to occur of (i) the Covered
Persons ceasing to own in the aggregate 25% of the outstanding voting power of the Company, (ii) December 1,
2014, (iii) at such time as the Company’s Common Stock is no longer listed on a national securities exchange, and
(iv) such time as any person other than the Covered Persons or any Affiliate, Associate of, or member of a Schedule
13D group with, the Covered Persons, (a) makes an offer to purchase (x) an amount of shares that when added to the
number of shares already beneficially owned by such person and its affiliates and associates equals or exceeds 50% of
the outstanding voting power of the Company or (y) all or substantially all of the assets of the Company, (b) solicits
proxies with respect to a majority slate of directors or (c) commences or announces an intention to commence a
solicitation of proxies, becomes a “participant” in a “solicitation” or assists any “participant” in, a “solicitation” as
such terms are defined in Rule 14a-1 of Regulation 14A under the Securities Exchange Act of 1934, as amended), or
submits any proposal for the vote of stockholders of the Company, or recommends or requests or induces or attempts
to induce any other person to take any such actions, or to seek to advise, encourage or influence any other person with
respect to the voting of Company voting securities, in each case, if the result of any such proposal or solicitation
would be to change a majority of the persons serving as directors on the Board.
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