Wendy's 2012 Annual Report Download - page 24

up to the date of sale, such as income, sales and use, and other operating taxes. As of December 30, 2012, Wendy’s
Restaurants had accrued $1.3 million for certain tax liabilities related to Arby’s which are the obligations of Wendy’s
Restaurants pursuant to the indemnification provisions of the Purchase and Sale Agreement and it is possible that
further accruals may occur in future periods as audits by various taxing authorities are resolved. Further accruals in
future periods would adversely affect our results of operations
There can be no assurance regarding whether or to what extent the Company will pay dividends on its Common
Stock in the future.
Holders of the Company’s Common Stock will only be entitled to receive such dividends as its Board of
Directors may declare out of funds legally available for such payments. Any dividends will be made at the discretion of
the Board of Directors and will depend on the Company’s earnings, financial condition, cash requirements and such
other factors as the Board of Directors may deem relevant from time to time.
Because the 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
Company will also be limited by restrictions in debt instruments currently existing or subsequently entered into by
such subsidiaries, including the Credit Agreement, which is described earlier in this Item 1A.
A substantial amount of the Company’s Common Stock is concentrated in the hands of certain stockholders.
Nelson Peltz, the Company’s Chairman and former Chief Executive Officer, and Peter May, the Company’s
Vice Chairman and former President and Chief Operating Officer, beneficially own shares of the Company’s
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 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 Trian 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, (i) 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; (ii) 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; (iii) 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 (iv) 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
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