-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, T/dFE0s6GoPMthHR7M5gxU00k4ekY06ll79kbeGz8uodrW4Aie3u8ormmQcXY1Rz LRGT28XQg2VmbTNVWEeLdQ== 0000950117-97-001710.txt : 19971023 0000950117-97-001710.hdr.sgml : 19971023 ACCESSION NUMBER: 0000950117-97-001710 CONFORMED SUBMISSION TYPE: S-4 PUBLIC DOCUMENT COUNT: 13 FILED AS OF DATE: 19971022 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: TRIARC COMPANIES INC CENTRAL INDEX KEY: 0000030697 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING & DRINKING PLACES [5810] IRS NUMBER: 380471180 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: SEC FILE NUMBER: 333-38457 FILM NUMBER: 97699145 BUSINESS ADDRESS: STREET 1: 280 PARK AVENUE CITY: NEW YORK STATE: NY ZIP: 10017 BUSINESS PHONE: 2124513000 MAIL ADDRESS: STREET 1: 280 PARK AVENUE CITY: NEW YORK STATE: NY ZIP: 10017 FORMER COMPANY: FORMER CONFORMED NAME: DWG CORP DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: DWG CIGAR CORP DATE OF NAME CHANGE: 19680820 FORMER COMPANY: FORMER CONFORMED NAME: DEISEL WEMMER GILBERT CORP DATE OF NAME CHANGE: 19680820 S-4 1 TRIARC S-4 Registration No. 333-______________ - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------------------- FORM S-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 --------------------------- TRIARC COMPANIES, INC. (Exact name of Registrant as specified in its charter) DELAWARE 5149 38-0471180 (State or other jurisdiction of (Primary Standard Industrial (IRS Employer incorporation or organization) Classification Code Number) Identification No.)
--------------------------- 280 PARK AVENUE NEW YORK, NEW YORK 10017 (212) 451-3000 (Address, including zip code, and telephone number, including area code, of Registrant's principal executive offices) BRIAN L. SCHORR EXECUTIVE VICE PRESIDENT AND GENERAL COUNSEL TRIARC COMPANIES, INC. 280 PARK AVENUE NEW YORK, NEW YORK 10017 (212) 451-3000 (Name, address, including zip code, and telephone number, including area code, of agent for service) --------------------------- COPY TO: PAUL D. GINSBERG PAUL, WEISS, RIFKIND, WHARTON & GARRISON 1285 AVENUE OF THE AMERICAS NEW YORK, NEW YORK 10019-6064 212-373-3000 --------------------------- APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO PUBLIC: As soon as practicable after this Registration Statement becomes effective and upon consummation of the Merger described in the enclosed Proxy Statement/Prospectus. --------------------------- If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. [ ] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number for the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] CALCULATION OF REGISTRATION FEE
- ----------------------------------------------------------------------------------------------------------------------------------- Proposed Maximum Amount of Title of Each Class of Amount to be Offering Price Per Proposed Maximum Registration Securities to be Registered Registered Share Aggregate Offering Price Fee - ----------------------------------------------------------------------------------------------------------------------------------- Class A Common Stock, par value $.10 per share 1,971,350 shares(1) (2) (2) $8,491.77(2)(3) - -----------------------------------------------------------------------------------------------------------------------------------
(1) Based upon the maximum number of shares that may be issued in the Merger described herein. (2) The registration fee for the securities registered hereby has been calculated pursuant to Rule 457(f)(1) under the Securities Act as follows: one thirty-third of 1% of (A) the product of (i) $3.08, the average of the high and low prices of Cable Car Common Stock reported on The Nasdaq SmallCap Market on October 20, 1997, multiplied by (ii) 9,098,324, the maximum number of shares of Cable Car Common Stock which may be exchanged upon the consummation of the Merger. (3) A fee of $7020.86 was paid on behalf of Cable Car Beverage Corporation with respect to the transaction on August 12, 1997, pursuant to a filing under Rule 14a-6(a) of a Schedule 14A. Pursuant to Rule 457(b) promulgated under the Securities Act and Section 14(g)(1)(B) and Rule 0-11 promulgated under the Securities Exchange Act of 1934, as amended, the amount of such previously paid fee has been credited against the registration fee which would otherwise be payable in connection with this filing. Accordingly, an additional filing fee of $1,470.91 is required to be paid in connection with this filing. THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933, OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. - -------------------------------------------------------------------------------- [LETTERHEAD OF CABLE CAR BEVERAGE CORPORATION] To our Stockholders: You are cordially invited to attend a Special Meeting of Stockholders (the 'Special Meeting') of Cable Car Beverage Corporation ('Cable Car'), which will be held on Tuesday, November 25, 1997, at 10:00 a.m., local time, at Norwest Bank Building, 1740 Broadway, Forum Room, Denver, Colorado 80274. At the Special Meeting, you will be asked to consider and vote upon the proposed acquisition by Triarc Companies, Inc. ('Triarc') of Cable Car. The acquisition will be accomplished by a merger (the 'Merger') of a wholly owned subsidiary of Triarc into Cable Car, with Cable Car being the surviving corporation in the Merger. After the effective time of the Merger, Cable Car will be a wholly owned subsidiary of Triarc. The terms of the Merger are described in detail in the accompanying Proxy Statement/Prospectus. In the Merger, each share of common stock, par value $.01 per share, of Cable Car (the 'Cable Car Common Stock') issued and outstanding immediately prior to the effective time of the Merger will be converted into the right to receive 0.1722 of a share of Triarc's Class A common stock, par value $.10 per share ('Triarc Common Stock'), subject to certain adjustments described in the Proxy Statement/Prospectus, and any cash to be paid in lieu of fractional shares of Triarc Common Stock. YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE MERGER AND RECOMMENDS A VOTE FOR APPROVAL OF THE MERGER AND THE RELATED AGREEMENT AND PLAN OF MERGER. In reaching its determination to approve the Merger, the Board of Directors consulted with Cable Car's management, as well as its legal counsel and financial advisor, and considered several factors including those discussed at pages 40-41 of the accompanying Proxy Statement/Prospectus under the caption 'The Proposed Merger and Related Matters -- Cable Car's Reasons for the Merger; Recommendation of Cable Car's Board of Directors.' The Merger provides that the Cable Car stockholders will receive stock in Triarc, which has a higher market value than the recent trading value of the Cable Car Common Stock. Additionally, the Merger affords holders of Cable Car Common Stock the opportunity to reduce their exposure to the risks inherent in Cable Car's limited number of products, which are primarily premium soft drinks and waters, and the opportunity to achieve greater liquidity and stability through an equity interest in Triarc (a New York Stock Exchange listed company). You are urged to, and should, read the discussion set forth under the captions 'The Proposed Merger and Related Matters -- Cable Car's Reasons for the Merger; Recommendations of Cable Car's Board of Directors' at pages 40-41, ' -- Opinion of Financial Advisor to Cable Car' at pages 42-46, and ' -- Background of the Merger' at pages 38-40 of the accompanying Proxy Statement/Prospectus, each in its entirety. The attached Notice of Special Meeting and Proxy Statement/Prospectus contain detailed information concerning the Special Meeting. Please read the Notice and the Proxy Statement/Prospectus and consider this information carefully. THE MERGER CANNOT BE EFFECTED UNLESS IT IS APPROVED BY THE HOLDERS OF A MAJORITY OF THE SHARES OF CABLE CAR COMMON STOCK ENTITLED TO VOTE AT THE SPECIAL MEETING. IT IS IMPORTANT THAT YOUR SHARES OF CABLE CAR COMMON STOCK BE REPRESENTED AND VOTED AT THE SPECIAL MEETING, REGARDLESS OF THE SIZE OF YOUR HOLDINGS. ACCORDINGLY, WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING IN PERSON, PLEASE PROMPTLY MARK, SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT IN THE ACCOMPANYING POSTAGE PREPAID ENVELOPE. YOU MAY REVOKE YOUR PROXY IN THE MANNER DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT/PROSPECTUS AT ANY TIME BEFORE IT IS EXERCISED AT THE SPECIAL MEETING. Returning the proxy does NOT deprive you of your right to attend the Special Meeting and to vote your shares in person with respect to the matters to be acted upon at the Special Meeting. This solicitation is made on behalf of the Board of Directors of Cable Car. PLEASE DO NOT SEND ANY STOCK CERTIFICATES WITH YOUR PROXY CARD. We look forward to your attendance at the Special Meeting. Thank you for your consideration and your continued support. Sincerely, SAMUEL M. SIMPSON Chairman CABLE CAR BEVERAGE CORPORATION NOTICE OF SPECIAL MEETING OF STOCKHOLDERS TO BE HELD ON NOVEMBER 25, 1997 To the Stockholders of CABLE CAR BEVERAGE CORPORATION: Notice is hereby given that a Special Meeting of Stockholders of Cable Car Beverage Corporation, a Delaware corporation ('Cable Car'), will be held on Tuesday, November 25, 1997, 10:00 a.m., local time, at Norwest Bank Building, 1740 Broadway, Forum Room, Denver, Colorado 80274 for the following purposes: 1. To consider and vote upon the approval of the Agreement and Plan of Merger dated June 24, 1997, as amended (the 'Merger Agreement'), among Triarc Companies, Inc., a Delaware corporation ('Triarc'), CCB Merger Corporation, a Delaware corporation and a wholly owned subsidiary of Triarc ('Mergerco'), and Cable Car, that provides for the merger of Mergerco into Cable Car (the 'Merger'). After the effective time of the Merger, Cable Car will be the surviving corporation and a wholly owned subsidiary of Triarc. Upon consummation of the Merger, each share of common stock, par value $.01 per share, of Cable Car (the 'Cable Car Common Stock') issued and outstanding immediately prior to the effective time of the Merger (other than treasury shares and shares owned by Triarc and its subsidiaries and by subsidiaries of Cable Car, which shares will be canceled, and shares with respect to which the holder has properly exercised its appraisal rights under Delaware law) will be converted into the right to receive 0.1722 of a share (the 'Conversion Price') of Class A Common Stock, par value $.10 per share, of Triarc ('Triarc Common Stock'), subject to the adjustment described below, and any cash to be paid in lieu of fractional shares of Triarc Common Stock. The Conversion Price is subject to adjustment as follows: (i) if the Average Triarc Share Price (as defined under the caption 'The Merger Agreement -- Conversion of Securities' in the accompanying Proxy Statement/Prospectus) is less than $18.875, then the Conversion Price shall be adjusted to equal the quotient obtained by dividing $3.25 by such Average Triarc Share Price, and (ii) if the Average Triarc Share Price is greater than $24.50, then the Conversion Price shall be adjusted to equal the quotient obtained by dividing $4.22 by such Average Triarc Share Price. 2. To transact such other business as may properly come before the Special Meeting or any adjournment or postponement thereof. Cable Car does not currently intend to bring any business other than the approval of the Merger Agreement and the Merger before the Special Meeting or any adjournments or postponements thereof. THE BOARD OF DIRECTORS OF CABLE CAR HAS UNANIMOUSLY APPROVED THE MERGER AND BELIEVES THAT THE TERMS OF THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, CABLE CAR AND ITS STOCKHOLDERS. THE BOARD OF DIRECTORS OF CABLE CAR RECOMMENDS UNANIMOUSLY THAT CABLE CAR STOCKHOLDERS VOTE FOR APPROVAL OF THE MERGER AGREEMENT AND THE MERGER AT THE SPECIAL MEETING. Only stockholders of record at the close of business on October 23, 1997 are entitled to notice of, and to vote at, the Special Meeting and any adjournments or postponements thereof. Holders of Cable Car Common Stock have the right to dissent from the merger and seek an appraisal of their shares pursuant to court proceedings by following the procedures prescribed under Section 262 of the General Corporation Law of the State of Delaware as further described under the caption 'Appraisal Rights' in the accompanying Proxy Statement/Prospectus. The accompanying Proxy Statement/Prospectus describes in detail the Merger and the transactions contemplated by the Merger Agreement and contains certain other information regarding Cable Car and Triarc. The Merger is of great importance to Cable Car and its stockholders. Please read the Proxy Statement/Prospectus carefully and then complete, sign and date the enclosed proxy card and return it promptly in the enclosed self-addressed postage prepaid reply envelope whether or not you plan to attend the Special Meeting. By Order of the Board of Directors, SAMUEL M. SIMPSON Chairman October 24, 1997 YOUR VOTE IS IMPORTANT. ------------------------ ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE SPECIAL MEETING IN PERSON. WHETHER OR NOT YOU PLAN TO ATTEND, PLEASE MARK, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD PROMPTLY IN THE ENCLOSED POSTAGE PREPAID REPLY ENVELOPE. YOU MAY VOTE IN PERSON AT THE SPECIAL MEETING EVEN IF YOU HAVE PREVIOUSLY RETURNED A PROXY CARD. ------------------------ PLEASE DO NOT SEND ANY STOCK CERTIFICATES WITH YOUR PROXY CARD. PROXY STATEMENT/PROSPECTUS - -------------------------- [CABLE CAR LOGO] [TRIARC LOGO] PROXY STATEMENT FOR SPECIAL MEETING OF STOCKHOLDERS OF CABLE CAR BEVERAGE CORPORATION TO BE HELD ON NOVEMBER 25, 1997 ------------------------ PROSPECTUS OF TRIARC COMPANIES, INC. SHARES OF CLASS A COMMON STOCK PAR VALUE $.10 PER SHARE ------------------------ This Proxy Statement/Prospectus ('Proxy Statement/Prospectus') is being furnished to the stockholders of Cable Car Beverage Corporation, a Delaware corporation ('Cable Car'), in connection with the solicitation of proxies by the Board of Directors of Cable Car (the 'Cable Car Board') for use at the Special Meeting of Stockholders of Cable Car to be held on Tuesday, November 25, 1997 at 10:00 a.m., local time, at Norwest Bank Building, 1740 Broadway, Forum Room, Denver, Colorado 80274, or any adjournments or postponements thereof (the 'Special Meeting'). At the Special Meeting, holders of shares of Cable Car's common stock, par value $.01 per share ('Cable Car Common Stock'), will vote upon a proposal to approve the Agreement and Plan of Merger dated June 24, 1997, as amended (the 'Merger Agreement'), among Cable Car, Triarc Companies, Inc., a Delaware corporation ('Triarc'), and CCB Merger Corporation, a Delaware corporation and wholly owned subsidiary of Triarc ('Mergerco'), pursuant to which Mergerco will merge into Cable Car (the 'Merger'). Cable Car will be the surviving corporation of the Merger and will become a wholly owned subsidiary of Triarc. A copy of the Merger Agreement is attached to this Proxy Statement/Prospectus as Appendix B-1 and is incorporated herein by reference. At the Special Meeting, stockholders of Cable Car also will be asked to consider and vote upon such other business, if any, as may properly be brought before the Special Meeting or any adjournments or postponements thereof. Cable Car does not currently intend to bring any business other than the adoption of the Merger Agreement before the Special Meeting or any adjournments or postponements thereof. Pursuant to the Merger, each share of Cable Car Common Stock issued and outstanding immediately prior to the effective time of the Merger (other than treasury shares and shares held by Triarc and its subsidiaries and subsidiaries of Cable Car, all of which will be canceled, and shares with respect to which the holder has properly exercised its appraisal rights under Delaware law) will be converted into the right to receive 0.1722 of a share (the 'Conversion Price') of Class A common stock, par value $.10 per share, of Triarc (the 'Triarc Common Stock'), subject to the adjustment described below, and any cash to be paid in lieu of fractional shares of Triarc Common Stock. The Conversion Price is subject to adjustment as follows: (i) if the Average Triarc Share Price (as defined below in under the caption 'The Merger Agreement -- Conversion of Securities') is less than $18.875, then the Conversion Price shall be adjusted to equal the quotient obtained by dividing $3.25 by such Average Triarc Share Price, and (ii) if the Average Triarc Share Price is greater than $24.50, then the Conversion Price shall be adjusted to equal the quotient obtained by dividing $4.22 by such Average Triarc Share Price (the Conversion Price as so adjusted is referred to herein as the 'Adjusted Conversion Price'). For example, if the Average Triarc Share Price is (i) $18.875 or greater, but not greater than $24.50, then each share of Cable Car Common Stock will be converted at the Effective Time into the right to receive 0.1722 of a share of Triarc Common Stock; (ii) $18.00, then each share of Cable Car Common Stock will be converted at the Effective Time into the right to receive 0.18056 of a share of Triarc Common Stock; and (iii) $26.00, then each share of Cable Car Common Stock will be converted at the Effective Time into the right to receive 0.16231 of a share of Triarc Common Stock. Stockholders of Cable Car may obtain the most recent stock prices of Cable Car Common Stock and Triarc Common Stock by calling Triarc toll free at (800) 787-4272, Attention: Investor Relations. A description of the terms of the Merger is set forth in this Proxy Statement/Prospectus under the captions 'The Proposed Merger and Related Matters' and 'The Merger Agreement.' ------------------------ FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY INVESTORS IN EVALUATING THE MERGER AND THE SECURITIES OFFERED HEREBY, SEE 'RISK FACTORS,' BEGINNING ON PAGE 27. ------------------------ This Proxy Statement/Prospectus also constitutes the prospectus for the shares of Triarc Common Stock to be issued in the Merger. Triarc has filed a Registration Statement on Form S-4 (together with any amendments thereto, the 'Registration Statement') with the Securities and Exchange Commission (the 'Commission') regarding the registration of such shares, of which this Proxy Statement/Prospectus is a part. ------------------------ THE SHARES OF TRIARC COMMON STOCK TO BE ISSUED IN THE MERGER HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ------------------------ THIS PROXY STATEMENT/PROSPECTUS IS FIRST BEING MAILED TO CABLE CAR STOCKHOLDERS ON OR ABOUT OCTOBER 24, 1997. ------------------------ THE DATE OF THIS PROXY STATEMENT/PROSPECTUS IS OCTOBER 22, 1997. TABLE OF CONTENTS
PAGE ---- AVAILABLE INFORMATION...................................................................................... 2 INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE............................................................ 2 CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS................................................. 3 SUMMARY.................................................................................................... 5 The Companies......................................................................................... 5 The Special Meeting of Stockholders of Cable Car...................................................... 7 The Merger............................................................................................ 11 Risk Factors.......................................................................................... 19 Management............................................................................................ 19 COMPARATIVE MARKET PRICES AND DIVIDENDS -- TRIARC AND CABLE CAR....................................... 19 HISTORICAL AND PRO FORMA PER SHARE DATA -- TRIARC AND CABLE CAR....................................... 22 TRIARC -- SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA............................................. 23 CABLE CAR -- SUMMARY HISTORICAL FINANCIAL DATA........................................................ 26 RISK FACTORS............................................................................................... 27 Holding Company Structure............................................................................. 27 Substantial Leverage.................................................................................. 27 Net Losses............................................................................................ 28 Possible Price Volatility of Triarc Common Stock...................................................... 28 Dividends............................................................................................. 28 Successful Completion and Integration of Acquisitions................................................. 28 Environmental Liabilities............................................................................. 29 Weather Conditions Affect the Demand for Propane...................................................... 29 Energy Efficiency and Technology Trends May Affect Demand for Propane................................. 30 Royal Crown's Reliance on Certain Bottler's and Private Label Sales................................... 30 Competition........................................................................................... 30 Dependence on Key Personnel........................................................................... 31 Control by Certain Shareholders....................................................................... 31 Certain Federal Income Tax Consequences............................................................... 32 Additional Interests of Cable Car Management.......................................................... 32 Effect of Preferred Stock; Anti-Takeover Provisions................................................... 32 Effect of Triarc Stock Options........................................................................ 32 Comparative Rights of Cable Car Stockholders Before and After the Merger.............................. 33 COMPANIES.................................................................................................. 33 Triarc Companies, Inc................................................................................. 33 CCB Merger Corporation................................................................................ 34 Cable Car Beverage Corporation........................................................................ 34 Recent Developments................................................................................... 34 THE SPECIAL MEETING........................................................................................ 36 General............................................................................................... 36 Matters to Be Considered.............................................................................. 36 Vote Required......................................................................................... 36 Record Date; Proxies.................................................................................. 37 Solicitation of Proxies............................................................................... 37 THE PROPOSED MERGER AND RELATED MATTERS.................................................................... 37 General............................................................................................... 37 Background of the Merger.............................................................................. 38 Cable Car's Reasons for the Merger; Recommendation of Cable Car's Board of Directors.................. 40 Triarc's Reasons for the Merger....................................................................... 41 Effective Time........................................................................................ 41
i
PAGE ---- Conversion of Shares of Cable Car Common Stock........................................................ 42 Opinion of Financial Advisor to Cable Car............................................................. 42 Certain Federal Income Tax Consequences............................................................... 46 Accounting Treatment.................................................................................. 47 Resale of Triarc Common Stock by Affiliates........................................................... 47 Regulatory Approvals.................................................................................. 48 Section 203 of the DGCL............................................................................... 48 Stock Exchange Listing................................................................................ 49 Additional Interests of Cable Car Management.......................................................... 49 THE MERGER AGREEMENT....................................................................................... 52 Conversion of Securities.............................................................................. 52 Exchange Procedures................................................................................... 52 Distributions with Respect to Unexchanged Shares...................................................... 53 No Further Rights in Cable Car Common Stock........................................................... 53 No Fractional Shares.................................................................................. 53 Cable Car Stock Options............................................................................... 54 Termination of Exchange Fund.......................................................................... 54 Certain Representations and Warranties................................................................ 54 Conduct of Business Pending the Merger................................................................ 55 No Solicitation of Transactions....................................................................... 56 Indemnification of Directors and Officers............................................................. 57 Conditions to Consummation of the Merger.............................................................. 57 Termination........................................................................................... 59 Effect of Termination................................................................................. 60 Fees and Expenses..................................................................................... 60 Amendment and Waiver.................................................................................. 60 Stockholders Agreement................................................................................ 61 APPRAISAL RIGHTS........................................................................................... 61 MANAGEMENT OF SURVIVING CORPORATION........................................................................ 63 CERTAIN RELATIONSHIPS AMONG TRIARC, CABLE CAR AND THEIR AFFILIATES......................................... 65 DESCRIPTION OF TRIARC CAPITAL STOCK........................................................................ 65 PRINCIPAL HOLDERS OF CABLE CAR COMMON STOCK................................................................ 66 PRINCIPAL HOLDERS OF VOTING SECURITIES OF TRIARC COMPANIES, INC............................................ 67 TRIARC COMPANIES, INC. AND SUBSIDIARIES UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.... 69 CAPITALIZATION OF TRIARC................................................................................... 80 COMPARISON OF RIGHTS OF CABLE CAR AND TRIARC STOCKHOLDERS.................................................. 81 General............................................................................................... 81 Size and Classification of the Board of Directors..................................................... 81 Cumulative Voting for Directors....................................................................... 81 Removal of Directors.................................................................................. 81 Special Meetings of Stockholders...................................................................... 81 Preferred Stock....................................................................................... 82 Certain Voting Rights................................................................................. 82 Certain Business Combinations......................................................................... 82 Appraisal Rights...................................................................................... 83 Certain Anti-Takeover Provisions in the Triarc Charter................................................ 83 Amendment of Charter Documents........................................................................ 86 Indemnification of Officers and Directors............................................................. 87 LEGAL MATTERS.............................................................................................. 88 EXPERTS.................................................................................................... 88 STOCKHOLDER PROPOSALS...................................................................................... 88
ii Appendix A-1 -- Cable Car's Annual Report on Form 10-K for the year ended December 31, 1996 Appendix A-2 -- Cable Car's amendment on Form 10-K/A filed with the Commission on May 1, 1997 Appendix A-3 -- Cable Car's Quarterly Report on Form 10-Q for the quarter ended June 30, 1997 Appendix B-1 -- Agreement and Plan of Merger dated June 24, 1997 and Amendment No. 1 to Agreement and Plan of Merger dated as of September 30, 1997 Appendix B-2 -- Stockholders Agreement dated June 24, 1997 and Amendment No. 1 to Stockholders Agreement dated as of July 9, 1997 Appendix C -- Opinion of Montgomery Securities dated June 24, 1997 Appendix D -- Section 262 of the General Corporation Law of the State of Delaware
iii LIST OF DEFINED TERMS
PAGE ---- 1997 EBITDA................................................................................................ 44 1997 Transactions.......................................................................................... 6 Acquiring Person Termination............................................................................... 60 Acquisition Proposal....................................................................................... 57 Acquisition Proposal Termination........................................................................... 60 Adjusted Conversion Price.................................................................................. 1 AMCON...................................................................................................... 26 Antitrust Division......................................................................................... 48 Arby's Restaurants Sale.................................................................................... 5 Average Triarc Share Price................................................................................. 12 Beverage Companies......................................................................................... 44 Board Recommendation Termination........................................................................... 60 Business Combination....................................................................................... 85 C&C Sale................................................................................................... 6 Cable Car.................................................................................................. 1 Cable Car Acquisition...................................................................................... 69 Cable Car Board............................................................................................ 1 Cable Car Bylaws........................................................................................... 19 Cable Car Charter.......................................................................................... 19 Cable Car Common Stock..................................................................................... 1 Cable Car Default Termination.............................................................................. 60 Cable Car Options.......................................................................................... 12 Cable Car Subsidiaries..................................................................................... 6 Certificates............................................................................................... 53 Code....................................................................................................... 18 Commission................................................................................................. 1 Company.................................................................................................... 23 Competing Transaction Termination.......................................................................... 59 Consent Termination........................................................................................ 59 Continuing Director........................................................................................ 85 Conversion Price........................................................................................... 1 Cott....................................................................................................... 30 Cott Worldwide Agreement................................................................................... 30 Delaware Court............................................................................................. 61 DGCL....................................................................................................... 13 Dissenting Shares.......................................................................................... 52 DWG Acquisition............................................................................................ 31 EBITDA..................................................................................................... 44 Effective Time............................................................................................. 11 Equity Plan................................................................................................ 32 Exchange Act............................................................................................... 2 Exchange Agent............................................................................................. 52 Exchange Fund.............................................................................................. 52 Fractional Shares.......................................................................................... 53 FTC........................................................................................................ 48 HSR Act.................................................................................................... 18 Interested Shareholder..................................................................................... 85 IRS........................................................................................................ 32 Kelco...................................................................................................... 6 LTM EBITDA................................................................................................. 44 Merger..................................................................................................... 1 Merger Agreement........................................................................................... 1 Mergerco................................................................................................... 1 Mistic..................................................................................................... 5
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PAGE ---- Mr. Natural................................................................................................ 65 National Propane........................................................................................... 5 Note....................................................................................................... 73 NYSE....................................................................................................... 2 Operating Partnership...................................................................................... 5 Option Average Share Price................................................................................. 9 Option Conversion Price.................................................................................... 8 Optional Termination....................................................................................... 59 Other Entity............................................................................................... 87 Partnership................................................................................................ 5 Proxy Statement/Prospectus................................................................................. 1 Quaker..................................................................................................... 28 Ratification Percentage.................................................................................... 84 Record Date................................................................................................ 10 Registration Statement..................................................................................... 1 Royal Crown................................................................................................ 5 RTM........................................................................................................ 35 Sales...................................................................................................... 69 Section 203................................................................................................ 48 Section 262................................................................................................ 61 Securities Act............................................................................................. 2 September 29, 1997 Market Price............................................................................ 73 Simpson Employment Agreement............................................................................... 13 Snapple.................................................................................................... 5 Snapple Acquisition........................................................................................ 5 Snapple Financial Statements............................................................................... 69 Snapple March 1997 Financial Statements.................................................................... 69 Snapple May 22, 1997 Financial Statements.................................................................. 69 Snapple 1996 Financial Statements.......................................................................... 69 Special Meeting............................................................................................ 1 Stewart's Fountain Agreement............................................................................... 35 Stewart's Master Agreement................................................................................. 35 Stewart's Restaurants...................................................................................... 7 Stockholders Agreement..................................................................................... 8 Stockholder Vote Termination............................................................................... 59 Subject Stock.............................................................................................. 8 Subject Stockholders....................................................................................... 8 Substitute Option.......................................................................................... 54 Surviving Corporation...................................................................................... 11 Transaction Notice......................................................................................... 56 Transactions............................................................................................... 40 Triarc..................................................................................................... 1 Triarc Board............................................................................................... 19 Triarc Bylaws.............................................................................................. 19 Triarc Charter............................................................................................. 19 Triarc Class A Common Stock................................................................................ 65 Triarc Class B Common Stock................................................................................ 65 Triarc Common Shares....................................................................................... 65 Triarc Common Stock........................................................................................ 1 Triarc Default Termination................................................................................. 59 Triarc Form 10-K........................................................................................... 69 Triarc Form 10-Q........................................................................................... 69 Triarc Preferred Stock..................................................................................... 65 Triarc Share Price Termination............................................................................. 17 Voting Shares.............................................................................................. 83
v AVAILABLE INFORMATION Triarc and Cable Car are each subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the 'Exchange Act'), and in accordance therewith file reports, proxy statements and other information with the Commission. The reports, proxy statements and other information filed by Triarc and Cable Car with the Commission may be inspected and copied at the public reference facilities maintained by the Commission at Judiciary Plaza, Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and should be available at the Commission's Regional Offices at 7 World Trade Center, 13th Floor, New York, New York 10048, and 1801 California Street, Suite 4800, Denver, Colorado 80202-2648. Copies of such material also can be obtained at prescribed rates from the Public Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. The Commission maintains a site on the world wide web that contains reports, proxy and information statements and other information on registrants, such as Triarc and Cable Car, who must file such material with the Commission electronically. The Commission's internet address on the world wide web is http://www.sec.gov. Triarc Common Stock is listed on the New York Stock Exchange, Inc. ('NYSE'), Cable Car Common Stock is quoted on The Nasdaq SmallCap Market, and certain of Triarc's and Cable Car's reports, proxy materials and other information may be available for inspection at the offices of the NYSE at 20 Broad Street, New York, New York 10005, or of Nasdaq at 1735 K Street, N.W., Washington, D.C. 20006, respectively. Triarc has filed with the Commission a Registration Statement on Form S-4 under the Securities Act of 1933, as amended (the 'Securities Act'), with respect to the Triarc Common Stock to be issued pursuant to the Merger. This Proxy Statement/Prospectus does not contain all of the information set forth in the Registration Statement and the exhibits thereto, certain parts of which were omitted as permitted by the rules and regulations of the Commission. Such additional information may be obtained from the Commission's principal office in Washington, D.C. As to statements contained in this Proxy Statement/Prospectus or in any document incorporated in this Proxy Statement/Prospectus by reference pertaining to the content of any contract or other document referred to herein or therein, in each instance reference is made to the copy of such contract or other document filed as an exhibit to the Registration Statement or such other document, each such statement being qualified in all respects by such reference. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents filed with the Commission by Triarc (File No. 1-2207) are incorporated by reference in this Proxy Statement/Prospectus: 1. Triarc's Annual Report on Form 10-K for the fiscal year ended December 31, 1996, as amended by amendments thereto filed with the Commission on April 30, 1997 and May 12, 1997; 2. Triarc's Quarterly Reports on Form 10-Q for the fiscal quarters ended June 29, 1997, as amended by an amendment thereto filed with the Commission on September 29, 1997, and March 30, 1997; 3. Triarc's Current Reports on Form 8-K filed with the Commission on August 4, 1997, June 26, 1997, June 6, 1997 (as amended by an amendment thereto filed with the Commission on August 5, 1997), May 20, 1997 (as amended by an amendment thereto filed with the Commission on August 4, 1997), March 31, 1997, February 21, 1997 and January 10, 1997; and 4. The descriptions of Triarc Common Stock set forth in Triarc's Registration Statement on Form 8-A filed pursuant to Section 12 of the Exchange Act, and any amendment or report filed for the purpose of updating any such description. The following documents filed with the Commission by Cable Car (File No. 0-14784) are incorporated by reference in this Proxy Statement/Prospectus: 1. Cable Car's Annual Report on Form 10-K for the year ended December 31, 1996, as amended by an amendment thereto filed with the Commission on April 30, 1997, copies of which are attached hereto as Appendices A-1 and A-2, respectively; 2 2. Cable Car's Quarterly Reports on Form 10-Q for the quarters ended June 30, 1997, a copy of which is attached hereto as Appendix A-3, and March 31, 1997; and 3. Cable Car's Current Reports on Form 8-K filed with the Commission on August 21, 1997 and July 2, 1997. All documents and reports filed by Triarc or Cable Car with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Proxy Statement/Prospectus and prior to the date of the Special Meeting shall be deemed to be incorporated by reference in this Proxy Statement/Prospectus and to be a part hereof from the dates of filing of such documents or reports. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Proxy Statement/Prospectus to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Proxy Statement/Prospectus. THIS PROXY STATEMENT/PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. SUCH DOCUMENTS (OTHER THAN EXHIBITS TO SUCH DOCUMENTS, UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE TO SUCH DOCUMENTS) ARE AVAILABLE, WITHOUT CHARGE, TO ANY PERSON, INCLUDING ANY BENEFICIAL OWNER, TO WHOM THIS PROXY STATEMENT/PROSPECTUS IS DELIVERED, ON WRITTEN OR ORAL REQUEST, WITH RESPECT TO TRIARC DOCUMENTS, TO TRIARC COMPANIES, INC., 280 PARK AVENUE, NEW YORK, NEW YORK 10017, ATTENTION: INVESTOR RELATIONS, OR BY TELEPHONE AT (212) 451-3000; OR, WITH RESPECT TO CABLE CAR DOCUMENTS, TO CABLE CAR BEVERAGE CORPORATION, 717 17TH STREET, SUITE 1475, DENVER, COLORADO 80202, ATTENTION: INVESTOR RELATIONS, OR BY TELEPHONE AT (303) 298-9038. IN ORDER TO ENSURE DELIVERY OF THE DOCUMENTS PRIOR TO THE SPECIAL MEETING, REQUESTS MUST BE RECEIVED BY NOVEMBER 14, 1997. All information set forth or incorporated by reference herein concerning Cable Car has been furnished by Cable Car, and all information set forth or incorporated by reference herein concerning Triarc and Mergerco has been furnished by Triarc. All information set forth in this Proxy Statement/Prospectus is qualified in its entirety by the information and financial statements (including notes thereto) appearing in the documents incorporated herein or deemed to be incorporated herein by reference. NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROXY STATEMENT/PROSPECTUS OR IN THE DOCUMENTS INCORPORATED HEREIN BY REFERENCE IN CONNECTION WITH THE SOLICITATION AND THE OFFERING MADE HEREBY AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION SHOULD NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY CABLE CAR OR TRIARC. THIS PROXY STATEMENT/PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO PURCHASE, THE SECURITIES OFFERED BY THIS PROXY STATEMENT/PROSPECTUS OR THE SOLICITATION OF A PROXY FROM ANY PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH OFFER, SOLICITATION OF AN OFFER OR PROXY SOLICITATION. NEITHER THE DELIVERY OF THIS PROXY STATEMENT/PROSPECTUS NOR ANY DISTRIBUTION OF THE SECURITIES MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE INFORMATION SET FORTH HEREIN OR IN THE AFFAIRS OF CABLE CAR, TRIARC OR MERGERCO OR ANY OF THEIR AFFILIATES OR SUBSIDIARIES SINCE THE DATE OF THIS PROXY STATEMENT/PROSPECTUS OTHER THAN AS SET FORTH IN THE DOCUMENTS INCORPORATED HEREIN BY REFERENCE. CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS This Proxy Statement/Prospectus contains forward-looking statements, including, most importantly, information concerning possible or assumed future results of operations of Triarc and Cable Car set forth under 'Risk Factors,' 'Companies' and 'The Proposed Merger and Related Matters,' and those preceded by, followed by or that include the words 'may,' 'believes,' 'expects,' 'anticipates' or the 3 negation thereof, or similar expressions. The achievement of the outcomes described in such forward-looking statements is subject to both known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the industries in which they operate generally, and of Triarc and Cable Car in particular, to be materially different from any outcomes expressed or implied by such forward-looking statements. For those statements, Triarc and Cable Car claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Several important factors, in addition to those discussed under 'Risk Factors' herein and elsewhere in this document and in the documents which are incorporated herein by reference, could affect the future results of Triarc and Cable Car, and could cause those results to differ materially from those expressed in the forward-looking statements contained herein. Such additional factors include, among other things: success of operating initiatives; development and operating costs; advertising and promotional efforts; brand awareness; the existence or absence of adverse publicity; market acceptance of new product offerings; changing trends in customer tastes; changes in business strategy or development plans; quality of management; availability, terms and deployment of capital; business abilities and judgment of personnel; availability of qualified personnel; labor and employee benefit costs; availability and cost of raw materials and supplies; changes in, or failure to comply with, government regulations; the costs and other effects of legal and administrative proceedings; pricing pressures resulting from competitive discounting; general economic, business and political conditions in the countries and territories where Triarc operates; the impact of such conditions on consumer spending; and other risks and uncertainties affecting Triarc, Cable Car and their competitors (including those that may be taken in contemplation of the Merger), all of which are difficult or impossible to predict accurately and many of which are beyond the control of Triarc and Cable Car. Each of Triarc and Cable Car will not undertake and specifically declines any obligation to publicly release the result of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. 4 SUMMARY The following is a summary of certain information contained elsewhere in this Proxy Statement/Prospectus and the Exhibits hereto. This Summary is qualified in its entirety by the more detailed information and financial statements and related notes appearing elsewhere in this Proxy Statement/Prospectus or incorporated herein by reference. Stockholders are urged to read carefully this Proxy Statement/Prospectus and the Appendices hereto, and in particular the section herein entitled 'Risk Factors,' in their entirety. THE COMPANIES Triarc Companies, Inc. 280 Park Avenue New York, New York 10017 (212) 451-3000................................ Triarc is a holding company which, through its subsidiaries, is engaged in the following businesses: beverages, restaurants, dyes and specialty chemicals and liquefied petroleum gas. The beverage operations are conducted by the Triarc Beverage Group through Royal Crown Company, Inc. ('Royal Crown'), Mistic Brands, Inc. ('Mistic') and Snapple Beverage Corp. ('Snapple'), which was acquired by Triarc in May 1997; the restaurant operations are conducted by Arby's, Inc. (d/b/a the Triarc Restaurant Group), which is the franchisor for the Arby's restaurant system; the dyes and specialty chemical operations are conducted through C.H. Patrick & Co., Inc.; and the liquefied petroleum gas operations are conducted through National Propane Partners, L.P. (the 'Partnership'), and its operating subsidiary partnership, National Propane, L.P. (the 'Operating Partnership'). National Propane Corporation ('National Propane'), an indirect wholly owned subsidiary of Triarc, serves as the managing general partner of the Partnership and the Operating Partnership and owns approximately 43% of their combined equity interests with the remaining 57% owned by the public. See 'The Companies -- Triarc Companies, Inc.' On May 22, 1997, Triarc completed its acquisition of all of the outstanding capital stock of Snapple from The Quaker Oats Company (the 'Snapple Acquisition') for approximately $300 million in cash. Snapple, which markets and distributes ready-to-drink brewed iced teas and juice drinks, had sales in 1996 of approximately $550 million, and is considered a market leader in the premium beverage category. See 'The Companies -- Recent Developments -- Triarc.' On May 5, 1997, certain indirect subsidiaries of Triarc completed the sale of all of their 355 company owned Arby's restaurants (the 'Arby's Restaurants Sale') to RTM Restaurant Group, the largest franchisee in the
5 Arby's system, for approximately $71 million. Arby's continues as the franchisor of the more than 3,000 store Arby's restaurant system. See 'The Companies -- Recent Developments -- Triarc.' On July 18, 1997, Royal Crown and TriBev Corporation, subsidiaries of Triarc, completed the sale of their rights relating to the C&C beverage line, including the C&C trademark, to Kelco Sales & Marketing Inc. ('Kelco') (the 'C&C Sale'). In connection with the sale, Royal Crown also agreed to sell to Kelco concentrate for C&C products and to provide Kelco certain technical services for seven years. In consideration for the foregoing, Royal Crown and TriBev Corporation will receive an aggregate payment of approximately $9.4 million, payable over seven years. See 'The Companies -- Recent Developments -- Triarc.' The Snapple Acquisition, the Arby's Restaurants Sale and the C&C Sale are referred to herein collectively as the '1997 Transactions.' Triarc's corporate predecessor was incorporated in Ohio in 1929. Triarc was reincorporated in Delaware, by means of a merger, in June 1994. CCB Merger Corporation c/o Triarc Companies, Inc. 280 Park Avenue New York, New York 10017 (212) 451-3000................................ CCB Merger Corporation, a wholly owned subsidiary of Triarc ('Mergerco'), was formed under Delaware law in June 1997 by Triarc solely for the purpose of effecting the Merger. Upon consummation of the Merger, Mergerco will merge into Cable Car, and the separate corporate existence of Mergerco will thereupon cease. Cable Car Beverage Corporation 717 17th Street, Suite 1475 Denver, Colorado 80202 (303) 298-9038................................ Cable Car Beverage Corporation is a beverage marketing company. Cable Car's primary business is selling Stewart's premium soft drinks (Root Beer, Orange N' Cream, Cream Ale, Ginger Beer, Classic Key Lime and Cherries N' Cream) to beverage distributors throughout the United States and Canada. Cable Car also sells concentrate to soft drink bottlers who produce and distribute beverages made from the concentrate. In addition to Stewart's brand soft drinks, Cable Car also sells Aspen Mountain Spring Water, Aspen flavored waters, San Francisco Seltzer and Java Cola. Cable Car has two wholly owned subsidiaries (the 'Cable Car Subsidiaries'), Fountain Classics, Inc., which markets Stewart's fountain products, and Old San Francisco Seltzer, Inc.
6 On June 24, 1997, Cable Car entered into agreements amending its licensing agreements with Stewart's Restaurants, Inc. ('Stewart's Restaurants'), as further amended on August 11, 1997. Among other things, these amendments (i) gave Cable Car ownership of the formulas for and manufacturing rights to concentrates used to make Stewart's soft drinks, (ii) provide that Cable Car is permitted to use the Stewart's trademark on any other product of any type and (iii) granted to Cable Car the perpetual exclusive worldwide license to manufacture, distribute and sell post-mix syrups and pre-mixes for Stewart's beverages throughout the world (fountain-type beverages), subject to certain rights retained by Stewart's Restaurants. As consideration for these amendments, Cable Car will issue to Stewart's Restaurants prior to the Effective Time an aggregate of 150,000 shares of Cable Car Common Stock. In addition, Cable Car will pay to Stewart's Restaurants $400,000 in cash, of which $250,000 is payable on March 31, 1998 and $150,000 is payable on March 31, 1999. See 'The Companies -- Recent Developments -- Cable Car.' Cable Car was incorporated under the laws of the State of Delaware on April 1, 1968. THE SPECIAL MEETING OF STOCKHOLDERS OF CABLE CAR Time and Place.................................. The Special Meeting is scheduled to be held on Tuesday, November 25, 1997, at 10:00 a.m., local time, at Norwest Bank Building, 1740 Broadway, Forum Room, Denver, Colorado 80274. Matters To Be Considered........................ At the Special Meeting, holders of Cable Car Common Stock will consider and vote upon a proposal to approve the Merger Agreement and the Merger, and such other matters as may properly be brought before the Special Meeting or any adjournments or postponements thereof. Cable Car does not currently intend to bring any business other than the approval of the Merger Agreement and the Merger before the Special Meeting or any adjournments or postponements thereof. Vote Required................................... Approval of the Merger Agreement and the Merger requires the affirmative vote of a majority of the outstanding shares of Cable Car Common Stock. In determining whether the proposal regarding the Merger Agreement and the Merger has been approved, abstentions and broker nonvotes will be counted and will have the same effect as a vote against such proposal. Holders of Cable Car Common Stock are entitled to one vote at the Special Meeting for each
7 share of Cable Car Common Stock held of record at the close of business on the Record Date (as defined in ' -- Record Date; Shares Entitled to Vote' below). As of October 20, 1997, directors and executive officers of Cable Car and their affiliates, in the aggregate, were entitled to vote 1,803,609 shares of Cable Car Common Stock, representing approximately 20.2% of the total shares of Cable Car Common Stock entitled to vote at the Special Meeting. Stockholders Agreement.......................... As a condition to its entering into the Merger Agreement, Triarc required Samuel M. Simpson, the President and Chief Executive Officer of Cable Car, Susan L. Neff, Mr. Simpson's wife, William H. Rutter, a director of Cable Car, and Susan L. Fralick, Mr. Rutter's wife (collectively, the 'Subject Stockholders'), to enter into a Stockholders Agreement, as amended (the 'Stockholders Agreement'). As of October 20, 1997, the Subject Stockholders owned an aggregate of 1,766,409 shares of Cable Car Common Stock, or approximately 19.7% of the shares of Cable Car Common Stock entitled to vote at the Special Meeting, which are subject to the terms of the Stockholders Agreement (such amount does not include 12,200 shares owned by them but not subject to the Stockholders Agreement). Each Subject Stockholder has agreed that at any meeting of the holders of Cable Car Common Stock, he or she will, until the effective time of the Merger or the termination of the Merger Agreement, vote or cause to be voted such Cable Car Common Stock and any Cable Car Common Stock acquired by them after the date of the Stockholders Agreement (collectively, the 'Subject Stock') in favor of approval of the Merger Agreement and the Merger and against certain other actions. Moreover, each Subject Stockholder has also granted Triarc an irrevocable proxy to vote his or her shares of Subject Stock as specified above in the event that such Subject Stockholder fails to so vote his or her Subject Stock in the agreed upon manner. A copy of the Stockholders Agreement, including Amendment No. 1 thereto, is attached to this Proxy Statement/Prospectus as Appendix B-2 and is incorporated herein by reference. See 'The Proposed Merger and Related Matters -- Additional Interests of Cable Car Management -- Stockholders Agreement.' In addition, pursuant to the Stockholders Agreement, each Subject Stockholder has granted to Triarc an exclusive and irrevocable option to purchase his or her Subject Stock in whole but not in part under certain circumstances at a price per share in cash equal to the product obtained by multiplying 0.1722 (the 'Option
8 Conversion Price') times the average (without rounding) of the closing prices per share of Triarc Common Stock on the New York Stock Exchange ('NYSE') on the NYSE Composite Tape for the 15 consecutive NYSE trading days ending on the NYSE trading day immediately preceding the date of the closing of the exercise of the option (the 'Option Average Share Price'), subject to the following adjustment: if the Option Average Share Price is less than $18.875, then the Option Conversion Price will be adjusted to equal the quotient obtained by dividing $3.25 by the Option Average Share Price, and if the Option Average Share Price is greater than $24.50, then the Option Conversion Price will be adjusted to equal the quotient obtained by dividing $4.22 by the Option Average Share Price. See 'The Proposed Merger and Related Matters -- Additional Interests of Cable Car Management -- Stockholders Agreement.' The Stockholders Agreement, including the options granted by the Subject Stockholders thereunder, will terminate if (i) the effective time of the Merger occurs or (ii) the Merger Agreement is terminated pursuant to (A) a Consent Termination, an Optional Termination, a Triarc Default Termination or a Triarc Share Price Termination (as each such term is defined in 'The Merger Agreement -- Termination'), or (B) a Cable Car Default Termination or a Stockholder Vote Termination (as each such term is defined in 'The Merger Agreement -- Termination'), as long as Cable Car or its stockholders shall not have received an Acquisition Proposal (as defined in 'The Merger Agreement -- No Solicitation of Transactions') and the Cable Car Board shall not have withdrawn, or modified or changed in a manner adverse to Triarc or Mergerco, its approval or recommendation of the Merger Agreement or the Merger. See 'The Proposed Merger and Related Matters -- Additional Interests of Cable Car Management -- Stockholders Agreement.' Voting of Proxies............................... A proxy in the form accompanying this Proxy Statement/Prospectus is being solicited on behalf of the Cable Car Board. Shares of Cable Car Common Stock represented by properly executed proxy cards received prior to the vote at the Special Meeting and that have not been revoked will be voted in accordance with the instructions indicated thereon. IF NO INSTRUCTIONS ARE INDICATED, SUCH PROXIES WILL BE VOTED FOR APPROVAL OF THE MERGER AGREEMENT AND THE MERGER AND IN THE DISCRETION OF THE PROXY HOLDER, AS TO ANY OTHER MATTER
9 THAT MAY PROPERLY COME BEFORE THE SPECIAL MEETING. Revocability of Proxies......................... A Cable Car stockholder who has given a proxy may revoke such proxy at any time before it has been voted at the Special Meeting by (i) giving written notice of revocation bearing a later date than the proxy to the Secretary of Cable Car, (ii) properly submitting to Cable Car a duly executed proxy card relating to the same shares of Cable Car Common Stock and bearing a later date, or (iii) attending the Special Meeting and voting in person. Attendance at the Special Meeting will not in and of itself revoke a proxy. All written notices of revocation and other communications with respect to revocation of proxies by Cable Car stockholders should be addressed as follows: Cable Car Beverage Corporation, 717 17th Street, Suite 1475, Denver, Colorado 80202, Attention: Secretary, or hand-delivered to the Secretary of Cable Car before the vote is taken at the Special Meeting. Solicitation of Proxies......................... Cable Car will bear the expense of the proxy solicitation. In addition to the solicitation of proxies by mail, the directors, officers and employees of Cable Car may solicit proxies from stockholders personally or by telephone, telegraph or facsimile transmission. Such directors, officers and employees will not be compensated for such solicitation, but may be reimbursed for reasonable out-of-pocket expenses. Arrangements will also be made with banks, brokerage houses and other custodians, nominees and fiduciaries for forwarding proxy solicitation materials to beneficial owners of shares held of record by such persons, and Cable Car will reimburse such custodians, nominees and fiduciaries for their reasonable out-of-pocket expenses in connection therewith. Cable Car has engaged Georgeson & Company Inc. to assist in the solicitation of proxies at an anticipated cost of approximately $6,500 plus expenses. See 'The Special Meeting -- Solicitation of Proxies.' Record Date; Shares Entitled to Vote............ The close of business on October 23, 1997 has been fixed as the record date (the 'Record Date') for determining the holders of shares of Cable Car Common Stock entitled to notice of and to vote at the Special Meeting. As of September 30, 1997, 8,948,324 shares of Cable Car Common Stock were outstanding and held of record by approximately 1,025 holders. Quorum.......................................... The presence, in person or by proxy, of the holders of a majority of the outstanding shares of Cable Car Common Stock is necessary to constitute a quorum for the transaction of business at the Special Meeting. The Special Meeting may be adjourned if a quorum is not
10 present for the purpose of obtaining additional proxies or votes or for any other purpose and, at any subsequent reconvening of the Special Meeting, all proxies will be voted in the same manner as such proxies would have been voted at the original convening of the Special Meeting (except for any proxies that have theretofore been revoked or withdrawn), notwithstanding that they may have been voted on at the same or any other matter at a previous meeting. THE MERGER Terms of the Merger............................. At the effective time of the Merger (the 'Effective Time'), Mergerco will merge into Cable Car, with Cable Car to be the surviving corporation (the 'Surviving Corporation') and a wholly owned subsidiary of Triarc. The Merger Agreement (including Amendment No. 1 thereto) is attached as Appendix B-1 to this Proxy Statement/Prospectus and is incorporated herein by reference. See 'The Merger.' Each share of Cable Car Common Stock issued and outstanding immediately prior to the Effective Time (other than treasury shares and shares held by Triarc and its subsidiaries and subsidiaries of Cable Car, all of which will be canceled, and shares with respect to which the holder has properly exercised its appraisal rights under Delaware law) will be converted into the right to receive 0.1722 of a share (the 'Conversion Price') of Class A Common Stock, par value $.10 per share, of Triarc ('Triarc Common Stock'), subject to the adjustment described below, and any cash to be paid in lieu of fractional shares of Triarc Common Stock. The Conversion Price is subject to adjustment as follows: (i) if the Average Triarc Share Price (as defined below) is less than $18.875, then the Conversion Price shall be adjusted to equal the quotient of $3.25 divided by such Average Triarc Share Price, and (ii) if the Average Triarc Share Price is greater than $24.50, then the Conversion Price shall be adjusted to equal the quotient of $4.22 divided by such Average Triarc Share Price (the Conversion Price, as so adjusted, is referred to herein as the 'Adjusted Conversion Price'). For example, if the Average Triarc Share Price is (i) $18.875 or greater, but not greater than $24.50, then each share of Cable Car Common Stock will be converted at the Effective Time into the right to receive 0.1722 of a share of Triarc Common Stock; (ii) $18.00, then each share of Cable Car Common Stock will be converted at the Effective Time into the right to receive 0.18056 of a share of Triarc Common Stock; and (iii) $26.00, then each share of
11 Cable Car Common Stock will be converted at the Effective Time into the right to receive 0.16231 of a share of Triarc Common Stock. 'Average Triarc Share Price' means the average (without rounding) of the closing prices per share of Triarc Common Stock on the NYSE on the NYSE Composite Tape for the 15 consecutive NYSE trading days ending on the NYSE trading day immediately preceding the closing date under the Merger Agreement. All outstanding options to purchase Cable Car Common Stock (the 'Cable Car Options'), whether or not vested or exercisable at the Effective Time, will remain outstanding following the Effective Time. At the Effective Time, the Cable Car Options will, by virtue of the Merger and without any further action on the part of Cable Car or the holder thereof, be assumed by Triarc, and each Cable Car Option assumed by Triarc will become and represent an option exercisable for shares of Triarc Common Stock with the same vesting schedules, if any, and expiration dates as such Cable Car Option immediately prior to the Effective Time (but taking into account any acceleration of the vesting of such Cable Car Option as a result of the consummation of the Merger), except that (i) each such Cable Car Option will be exercisable for that number of shares of Triarc Common Stock (rounded to the nearest whole share) into which the number of shares of Cable Car Common Stock subject to such Cable Car Option immediately prior to the Effective Time would have been converted under the terms of the Merger Agreement applicable to the exchange of Cable Car Common Stock for Triarc Common Stock, and (ii) the option price per share of Triarc Common Stock will be an amount equal to the option price per share of Cable Car Common Stock subject to such Cable Car Option in effect immediately prior to the Effective Time divided by the Adjusted Conversion Price (rounded to the nearest full cent). As discussed in 'The Proposed Merger and Related Matters -- Additional Interests of Cable Car Management -- Acceleration of Vesting of Stock Options' below, all unvested Cable Car Options will immediately vest at the Effective Time. Triarc will file as soon as practicable after the Effective Time, but in no event later than 45 days after the Effective Time, and keep current, one or more registration statements on Form S-8 (or any successor or appropriate form) with respect to the shares of Triarc Common Stock subject to such substitute options so long as such options remain outstanding. See 'The Merger Agreement -- Cable Car Options.'
12 The Cable Car Board has determined that the terms of the Merger Agreement are fair to, and in the best interests of, Cable Car and its stockholders. Accordingly, the Cable Car Board has unanimously approved the Merger Agreement and the Merger and unanimously recommends that the stockholders of Cable Car vote FOR approval of the Merger Agreement and the Merger. The Cable Car Board's recommendation is based on the factors described in 'The Proposed Merger and Related Matters -- Cable Car's Reasons for the Merger; Recommendation of Cable Car's Board of Directors', ' -- Background of the Merger' and ' -- Opinion of Financial Advisor to Cable Car.' HOLDERS OF SHARES OF CABLE CAR COMMON STOCK ARE URGED TO, AND SHOULD, READ SUCH SECTIONS, AS WELL AS APPENDIX C ATTACHED HERETO, IN THEIR ENTIRETY. Effective Time of the Merger.................... The Effective Time will occur as promptly as practicable after the requisite approval of the Merger Agreement by Cable Car's stockholders and the satisfaction or waiver of all other conditions to the Merger. Upon the terms and subject to the conditions of the Merger Agreement, the Effective Time will occur at such time as the Certificate of Merger, in accordance with the relevant provisions of the General Corporation Law of the State of Delaware (the 'DGCL') shall have been accepted for filing by the Secretary of State of the State of Delaware (or at such later time as agreed to by the parties to the Merger Agreement and specified in the Certificate of Merger). Additional Interests of Cable Car Management.... In considering the recommendation of the Cable Car Board with respect to the Merger Agreement, holders of shares of Cable Car Common Stock should be aware that certain members of Cable Car's management and its Board of Directors have interests in the Merger that are in addition to the interests of Cable Car stockholders generally. Samuel M. Simpson, the President and Chief Executive Officer and a director of Cable Car, has a three-year employment contract with Cable Car which provides for an annual salary of $175,000 and annual bonuses based on Cable Car's revenues and profits. Mr. Simpson has entered into an agreement with Triarc that, upon the Effective Time, he will enter into an employment agreement (the 'Simpson Employment Agreement') with the Surviving Corporation which will supersede Mr. Simpson's existing employment agreement with Cable Car and provide for Mr. Simpson's employment as President and Chief
13 Executive Officer of the Surviving Corporation and the Cable Car Subsidiaries, as well as a representative for the Triarc Beverage Group for the western United States. The Simpson Employment Agreement will have a three-year term and provide that Mr. Simpson will receive an annual salary of $284,300 per year (subject to increase but not decrease during the initial term of the agreement) and be eligible to receive additional cash incentive compensation, Triarc stock options and other benefits as more fully described in 'Management of Surviving Corporation -- Simpson Employment Agreement.' Mr. Simpson will also be entitled to a $400,000 bonus upon signing the Simpson Employment Agreement which will be refundable on a pro rata basis should he leave his employment prior to the first anniversary of the Effective Time. See 'Management of Surviving Corporation -- Simpson Employment Agreement.' In accordance with the terms of their grant, all unvested Cable Car Options, including those granted to officers, directors and non-director employees of Cable Car, shall become immediately exercisable on the Effective Date of the Merger. As described under the caption 'The Proposed Merger and Related Matters -- Additional Interests of Cable Car Management -- Stockholders Agreement,' Triarc required as a condition to its entering into the Merger Agreement that the Subject Stockholders enter into the Stockholders Agreement for no additional consideration. The Subject Stockholders have agreed to vote the Subject Stock in favor of approval of the Merger Agreement and the Merger and against certain other actions, have granted to Triarc an irrevocable proxy to vote the Subject Stock as specified above in the event that such Subject Stockholder fails to vote his or her Subject Stock in the agreed upon manner, and have granted to Triarc an exclusive and irrevocable option to purchase his or her Subject Stock under certain circumstances. Under the Merger Agreement, Triarc has agreed that the certificate of incorporation and bylaws of the Surviving Corporation and each of the Cable Car Subsidiaries will contain provisions no less favorable with respect to the indemnification of directors, officers, agents and employees and other individuals than those set forth in the certification of incorporation and bylaws of Cable Car and the Cable Car Subsidiaries as in effect on the date of the Merger Agreement, and further agreed that such provisions will not be amended, repealed or otherwise modified for a period of five years after the
14 Effective Time in any manner that would adversely affect the rights thereunder of individuals who at or prior to the Effective Time were directors, officers, agents or employees of Cable Car or any of the Cable Car Subsidiaries or who were otherwise entitled to indemnification pursuant to the certificate of incorporation and bylaws of Cable Car or any of the Cable Car Subsidiaries. If the Surviving Corporation or any of the Cable Car Subsidiaries does not have the financial resources to satisfy its indemnification obligations to such persons as provided under its certificate of incorporation and bylaws, Triarc has agreed that it will provide such indemnification of such persons to the extent so provided. See 'The Merger Agreement -- Indemnification of Directors and Officers.' The Cable Car Board was aware of these interests and considered them, among other matters, in unanimously approving the Merger Agreement. See 'The Proposed Merger and Related Matters -- Additional Interests of Cable Car Management.' Conditions to Consummation of the Merger........ The obligations of Triarc and Cable Car to consummate the Merger are subject to various conditions, including the approval of the Merger Agreement by Cable Car's stockholders in accordance with the DGCL. See 'The Merger Agreement -- Conditions to Consummation of the Merger.' Termination..................................... The Merger Agreement may be terminated and the Merger may be abandoned at any time prior to the Effective Time, whether before or after the stockholders of Cable Car have approved the Merger Agreement: (a) by the mutual consent of the Boards of Directors of each of Triarc and Cable Car; or (b) by either of the Boards of Directors of Triarc or Cable Car if (i) the Effective Time has not occurred on or before December 31, 1997, provided that the right to so terminate the Merger Agreement will not be available to any party whose failure to fulfill any obligation under the Merger Agreement has been the cause of, or resulted in, the failure of the Effective Time to occur on or before such date, (ii) any governmental authority has issued an order, decree or ruling or taken any other action (which order, decree, ruling or other action the parties hereto shall use their best efforts to lift), in each case permanently restraining, enjoining or otherwise prohibiting the Merger and the other transactions contemplated by the Merger Agreement and such order, decree, ruling or other action shall have become final and non- appealable, or (iii) the Merger Agreement and the
15 Merger have not been approved at the Special Meeting by the requisite vote of the stockholders of Cable Car. The Merger Agreement may also be terminated by the Cable Car Board (a) if Triarc or Mergerco (i) breaches or fails in any material respect to perform or comply with any of its material covenants and agreements contained in the Merger Agreement, or (ii) breaches its representations and warranties in any material respect and such breach would have or would be reasonably likely to have a material adverse effect on Triarc and its subsidiaries taken as a whole, in each case such that the conditions precedent to Cable Car's obligations to consummate the Merger would not be satisfied, provided that if such breach is curable by the breaching party through the exercise of the breaching party's best efforts and for so long as the breaching party is using its best efforts to cure such breach, Cable Car may not so terminate the Merger Agreement; (b) if the Cable Car Board determines in good faith, after consultation with (i) outside legal counsel, that termination of the Merger Agreement is required for the Cable Car Board to satisfy its fiduciary obligations to the Cable Car stockholders under applicable law by reason of an unsolicited bona fide Acquisition Proposal (as defined in 'The Merger Agreement -- No Solicitation of Transactions') having been made, and (ii) its financial advisor, that such Acquisition Proposal would result in a transaction that is more favorable from a financial point of view to the Cable Car stockholders than the Merger, provided that Cable Car complies with certain provisions of the Merger Agreement and notifies Triarc at least five days in advance of its intention to terminate the Merger Agreement or to enter into a definitive agreement with respect to such Acquisition Proposal, and provided, further, that within such five day period Triarc has not made a competing proposal which is at least as favorable to the Cable Car's stockholders from a financial point of view as such Acquisition Proposal. The Merger Agreement may also be terminated by the Board of Directors of Triarc, (a) if Cable Car (i) breaches or fails in any material respect to perform or comply with any of its material covenants and agreements contained in the Merger Agreement, or (ii) breaches its representations and warranties in any material respect and such breach would have or would be reasonably likely to have a material adverse effect on Cable Car and its subsidiaries taken as a whole, in each case such that the conditions precedent to Triarc's and Mergerco's obligations to consummate the Merger would not be satisfied, provided, that if such breach is
16 curable by Cable Car through its exercise of best efforts and for so long as Cable Car is using its best efforts to cure such breach, Triarc may not so terminate the Merger Agreement; (b) if (i) the Cable Car Board withdraws, modifies or changes its approval or recommendation of the Merger Agreement or the Merger in a manner adverse to Triarc or Mergerco or recommends to the stockholders of Cable Car any Acquisition Proposal or other business combination, (ii) Cable Car receives a bona fide written Acquisition Proposal which has not been rejected by the Cable Car Board within 14 days after receipt thereof, or (iii) prior to the certification of the vote of Cable Car's stockholders to approve the Merger at the Special Meeting, it shall have been publicly disclosed or Triarc or Mergerco shall have learned that any person, entity or 'group' (as that term is defined in Section 13(d)(3) of the Exchange Act), other than Triarc or its subsidiaries or any of their affiliates or the Subject Stockholders, shall have acquired beneficial ownership (determined pursuant to Rule 13d-3 promulgated under the Exchange Act) of more than 20% of any class or series of capital stock of Cable Car (including the Cable Car Common Stock), through the acquisition of stock, the formation of a group or otherwise, or shall have been granted any option, right or warrant, conditional or otherwise, to acquire beneficial ownership of more than 20% of any class or series of capital stock of Cable Car (including the Cable Car Common Stock) other than as disclosed in a Schedule 13D on file with the Commission on the date of the Merger Agreement; or (c) if the Average Triarc Share Price is less than $15.00 per share (a 'Triarc Share Price Termination'). Fees and Expenses............................... All costs and expenses incurred in connection with the Merger Agreement and the Merger will be paid by the party incurring such costs and expenses, whether or not the Merger is consummated; provided, however, that if the Merger Agreement is terminated by Triarc pursuant to a Triarc Share Price Termination, Triarc will reimburse Cable Car for its reasonable costs and expenses (including, without limitation, reasonable attorneys' fees and expenses) incurred in connection with the Merger Agreement and the Merger in an aggregate amount not to exceed $225,000. See 'The Merger Agreement -- Fees and Expenses.' Stock Exchange Listing.......................... Triarc will file an application to list the shares of Triarc Common Stock to be issued in connection with the Merger on the NYSE. Approval of such listing, subject to official notice of issuance, is a condition to consummation of the Merger.
17 Regulatory Approvals............................ Other than the Commission declaring effective the Registration Statement containing this Proxy Statement/Prospectus, approvals in connection with compliance with applicable Blue Sky or state securities laws, expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the 'HSR Act'), and the filing of the Certificate of Merger with the Secretary of State of the State of Delaware, neither the management of Triarc nor the management of Cable Car believes that any filing with or approval of any governmental authority is necessary in connection with the consummation of the Merger. Triarc and Cable Car received notice that the waiting period under the HSR Act was terminated on October 15, 1997. See 'The Proposed Merger and Related Matters -- Regulatory Approvals.' Appraisal Rights................................ Holders of record of Cable Car Common Stock have the right to dissent from the Merger and seek an appraisal of their shares pursuant to Section 262 of the DGCL. See 'Appraisal Rights.' Accounting Treatment............................ The Merger will be accounted for by Triarc under the 'purchase' method of accounting in accordance with generally accepted accounting principles. Therefore, the aggregate merger consideration paid by Triarc will be allocated to the Cable Car assets acquired and liabilities assumed based on their fair values, and the results of operations of Cable Car will be included in the results of operations of Triarc only for periods subsequent to the Effective Time. See 'The Proposed Merger and Related Matters -- Accounting Treatment' and 'Unaudited Pro Forma Condensed Financial Information.' Certain Federal Income Tax Consequences......... The Merger is intended to qualify for federal income tax purposes as a 'reorganization' within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the 'Code'), so that no gain or loss would be recognized by Cable Car stockholders on the exchange of their Cable Car Common Stock for Triarc Common Stock, except in respect of cash received in lieu of fractional shares, and no gain or loss would be recognized by Triarc or Cable Car. No ruling has been (or will be) sought from the Internal Revenue Service as to the anticipated federal income tax consequences of the Merger. Under the Merger Agreement, Cable Car's obligation to consummate the Merger is conditioned on the receipt of an opinion from Sherman & Howard L.L.C. to the effect that the Merger will constitute a reorganization within the meaning of Section 368(a) of the Code.
18 ALL STOCKHOLDERS SHOULD READ CAREFULLY THE DISCUSSION UNDER 'THE PROPOSED MERGER AND RELATED MATTERS -- CERTAIN FEDERAL INCOME TAX CONSEQUENCES.' IN VIEW OF THE COMPLEXITIES OF FEDERAL INCOME AND OTHER TAX LAWS, EACH CABLE CAR STOCKHOLDER SHOULD CONSULT WITH HIS OR HER TAX ADVISOR REGARDING, AMONG OTHER THINGS, THE FEDERAL, STATE AND LOCAL INCOME TAX CONSEQUENCES OF THE MERGER APPLICABLE TO HIS OR HER SPECIFIC CIRCUMSTANCES. Comparison of Rights of Stockholders of Triarc and Cable Car................................. Upon the consummation of the Merger, Cable Car stockholders will become stockholders of Triarc and their rights as such will be governed by Triarc's certificate of incorporation, as amended to date (the 'Triarc Charter'), and Triarc's bylaws, as amended to date (the 'Triarc Bylaws'), as well as by Delaware law. For a description of the significant differences between the provisions of Cable Car's certificate of incorporation, as amended to date (the 'Cable Car Charter'), and Cable Car's bylaws, as amended to date (the 'Cable Car Bylaws'), and the Triarc Charter and Triarc Bylaws, see 'Comparison of Rights of Cable Car and Triarc Stockholders.' RISK FACTORS.................................... STOCKHOLDERS OF CABLE CAR SHOULD CAREFULLY EVALUATE THE MATTERS SET FORTH UNDER 'RISK FACTORS.' MANAGEMENT Directors....................................... At the Effective Time, the directors of Mergerco will become the directors of the Surviving Corporation. See 'Management of Surviving Corporation.' The Merger will not result in any change in the composition of the Board of Directors of Triarc (the 'Triarc Board'). Officers........................................ At the Effective Time, the officers of Mergerco will become the initial officers of the Surviving Corporation and, pursuant to the Simpson Employment Agreement, Samuel M. Simpson will become the President and Chief Executive Officer of the Surviving Corporation. See 'Management of Surviving Corporation.' COMPARATIVE MARKET PRICES AND DIVIDENDS -- TRIARC AND CABLE CAR............. The following tables set forth, for the quarters indicated (ended March 31, June 30, September 30 and December 31 for Cable Car, and for Triarc through
19 December 31, 1996, and ended March 30, June 29 and September 28 for Triarc in 1997), the high and low sales prices per share of Triarc Common Stock as reported on the NYSE and the high and low bid price per share of Cable Car Common Stock as quoted on the Nasdaq SmallCap Market. Shares of Triarc Common Stock are listed on the NYSE and shares of Cable Car Common Stock are quoted on the Nasdaq SmallCap Market under the symbols 'TRY' and 'DRNK,' respectively.
TRIARC COMMON STOCK HIGH LOW ------------ ------------ FISCAL YEAR 1995 1st Quarter..................................... $13 1/4 $11 1/8 2nd Quarter..................................... 16 3/4 13 1/8 3rd Quarter..................................... 15 5/8 12 3/8 4th Quarter..................................... 14 1/4 9 1/2 FISCAL YEAR 1996 1st Quarter..................................... $14 3/8 $10 7/8 2nd Quarter..................................... 13 3/8 11 1/2 3rd Quarter..................................... 12 7/8 10 4th Quarter..................................... 12 3/4 10 3/4 FISCAL YEAR 1997 1st Quarter..................................... $18 $11 1/2 2nd Quarter (1)................................. 23 5/8 15 7/8 3rd Quarter..................................... 23 1/8 18 CABLE CAR COMMON STOCK HIGH LOW ----- ----- FISCAL YEAR 1995 1st Quarter..................................... $1.41 $1.00 2nd Quarter..................................... 2.00 1.09 3rd Quarter..................................... 1.81 1.38 4th Quarter..................................... 1.66 1.19 FISCAL YEAR 1996 1st Quarter..................................... $1.88 $1.44 2nd Quarter..................................... 1.84 1.25 3rd Quarter..................................... 2.50 1.44 4th Quarter..................................... 2.84 2.00 FISCAL YEAR 1997 1st Quarter..................................... $2.69 $2.09 2nd Quarter (2)................................. 3.94 2.16 3rd Quarter .................................... 3.56 3.00
- ------------ (1) The high and low sales prices per share of Triarc Common Stock as reported on the NYSE between March 31, 1997 and June 23, 1997, the last full trading day prior to the public announcement of the execution of the Merger Agreement, were $23 5/8 and $16 1/8, respectively. (2) The high and low bid prices per share of Cable Car Common Stock as quoted on Nasdaq between April 1, 1997 and June 23, 1997, the last full trading day prior to the public announcement of the execution of the Merger Agreement, were $3.94 and $2.16, respectively. 20 As of June 23, 1997, the last full trading day preceding the day of the public announcement of the execution of the Merger Agreement, the closing sale price per share of Triarc Common Stock was $20.75, the closing bid price per share of Cable Car Common Stock was $3.88 and the equivalent pro forma price per share of Cable Car Common Stock, calculated by multiplying the closing sale price per share of Triarc Common Stock on such date by the Conversion Price of 0.1722, was $3.57. As of October 21, 1997, the closing sale price per share of Triarc Common Stock was $20.06, the closing bid price per share of Cable Car Common Stock was $3.25 and the equivalent pro forma price per share of Cable Car Common Stock was $3.45. No assurance can be given as to what the Conversion Price or Adjusted Conversion Price or the market price of Triarc Common Stock will be if and when the Merger is consummated. CABLE CAR STOCKHOLDERS MAY OBTAIN THE MOST RECENT STOCK PRICES OF CABLE CAR COMMON STOCK AND TRIARC COMMON STOCK BY CALLING TRIARC TOLL FREE AT (800) 787-4272, ATTENTION: INVESTOR RELATIONS. Triarc has not paid a dividend on Triarc Common Stock in the three most recently completed fiscal years or in the current fiscal year. Triarc currently intends to reinvest all of its earnings for use in its business and to finance future growth. Accordingly, Triarc does not anticipate paying cash dividends on Triarc Common Stock in the foreseeable future. Other than 266,469 shares of the common stock of Amcon Distributing Company distributed to holders of record of Cable Car Common Stock as of July 5, 1995, no dividends have been declared or paid on Cable Car Common Stock in 1995, 1996 or in the current year to date. Cable Car does not anticipate a change in this policy in the foreseeable future. 21 HISTORICAL AND PRO FORMA PER SHARE DATA -- TRIARC AND CABLE CAR The following table sets forth certain historical, pro forma and pro forma equivalent information giving effect to the Merger and the 1997 Transactions (see 'Summary Historical and Pro Forma Consolidated Financial Data'). The data is based on the historical and pro forma financial statements.
YEAR ENDED DECEMBER 31, 1996 SIX MONTHS ENDED JUNE 29, 1997 ---------------------------------------- --------------------------------------- CABLE CAR CABLE CAR PRO PRO FORMA PRO PRO FORMA HISTORICAL FORMA(1) EQUIVALENT(3) HISTORICAL FORMA(2) EQUIVALENT(3) ---------- -------- -------------- ---------- -------- ------------- PER SHARE(4) Net income per share of Common Stock Before Extraordinary Items Triarc........................... $ (.28) $ (.34) -- $(1.08) $(1.10) -- Cable Car........................ $ .14 -- $ (.06) $ .07 -- $(.19) Book value per share of Common Stock Triarc........................... $ .23 $ 1.14 -- $ (.81) $ .30 -- Cable Car........................ $ .67 -- $ .20 $ .75 -- $ .05
- ------------ (1) The pro forma weighted average shares outstanding during the year ended December 31, 1996 and the outstanding shares at December 31, 1996 used to compute the pro forma data after giving effect to the Merger and 1997 Transactions was 31,465,000 and 31,450,000, respectively. (2) The pro forma weighted average shares outstanding during the six months ended June 29, 1997 and the outstanding shares at June 29, 1997 used to compute the pro forma data after giving effect to the Merger and the 1997 Transactions was 31,498,000 and 31,564,000, respectively. (3) The Cable Car pro forma equivalent per share amounts are calculated by multiplying pro forma Net Income per Share of Common Stock Before Extraordinary Items and pro forma Book Value per Share of Common Stock by the Conversion Price (0.1722) so that the per share amounts are equated to the respective values for one share of Triarc Common Stock. (4) Triarc and Cable Car did not make any cash distributions for the periods presented. 22 TRIARC SUMMARY HISTORICAL AND PRO FORMA CONSOLIDATED FINANCIAL DATA The following table sets forth for the periods and as of the dates indicated summary historical consolidated financial data for Triarc and its subsidiaries (the 'Company') and summary consolidated pro forma financial data for the Company after giving effect to the 1997 Transactions, as applicable, and the Merger. The summary historical consolidated financial data of the Company (i) as of December 31, 1996 and December 31, 1995 and for each of the years in the three-year period ended December 31, 1996 are derived from the consolidated financial statements audited by Deloitte & Touche LLP incorporated by reference herein and should be read in conjunction therewith, (ii) as of December 31, 1994 are derived from the consolidated balance sheet audited by Deloitte & Touche LLP not included herein and (iii) as of December 31, 1993, April 30, 1993 and April 30, 1992 and for the eight months ended December 31, 1993 and each of the years in the two-year period ended April 30, 1993 are derived from the consolidated financial statements audited by a firm other than Deloitte & Touche LLP not included herein. The summary consolidated financial data presented as of and for the six-month periods ended June 30, 1996 and June 29, 1997 are derived from the unaudited condensed consolidated financial statements of the Company incorporated by reference herein and should be read in conjunction therewith. The Company's summary consolidated pro forma financial data are derived from the Unaudited Pro Forma Condensed Consolidated Financial Statements of the Company included elsewhere herein and should be read in conjunction therewith.
PRO HISTORICAL FORMA(10) ----------------------------------------------------------------------------- ------------ FISCAL YEAR ENDED EIGHT MONTHS APRIL 30, ENDED YEAR ENDED DECEMBER 31, ----------------------- DECEMBER 31, --------------------------------------------------- 1992(1) 1993 1993(3) 1994 1995 1996 1996 ---------- ---------- ------------ ---------- ---------- -------- ------------ (IN THOUSANDS EXCEPT PER SHARE AMOUNTS) STATEMENT OF OPERATIONS DATA Revenues.................... $1,074,703 $1,058,274 $703,541 $1,062,521 $1,184,221 $989,249 $1,328,909 Operating profit (loss)..... 58,552 34,459(4) 29,969(5) 68,933(6) 33,989(7) (6,979)(9) 10,696 Loss from continuing operations................ (10,207) (44,549)(4) (30,439)(5) (2,093)(6) (36,994)(7) (8,485)(9) (10,547) Income (loss) from discontinued operations, net....................... 2,705 (2,430) (8,591) (3,900) -- -- Extraordinary items......... -- (6,611) (448) (2,116) -- (5,416) Cumulative effect of changes in accounting principles, net....................... -- (6,388) -- -- -- -- Net loss.................... (7,502) (59,978)(4) (39,478)(5) (8,109)(6) (36,994)(7) (13,901)(9) Preferred stock dividend requirements(2)........... (11) (121) (3,889) (5,833) -- -- -- Net loss applicable to common stockholders....... (7,513) (60,099) (43,367) (13,942) (36,994) (13,901) Income (loss) per share: Continuing operations....... (.39) (1.73) (1.62) (.34) (1.24) (.28) (.34) Discontinued operations..... .10 (.09) (.40) (.17) -- -- Extraordinary items......... -- (.26) (.02) (.09) -- (.18) Cumulative effect of changes in accounting principles................ -- (.25) -- -- -- -- Net loss per share.......... (.29) (2.33) (2.04) (.60) (1.24) (.46) Weighted-average common shares outstanding........ 25,867 25,808 21,260 23,282 29,764 29,898 31,465 BALANCE SHEET DATA Total assets................ 821,170 910,662 897,246 922,167 1,085,966 854,404 Long-term debt.............. 289,758 488,654 575,161 612,118 763,346 500,529 Redeemable preferred stock..................... -- 71,794 71,794 71,794 --(8) -- Stockholders' equity (deficit)................. 86,482 (35,387) (75,981) (31,783) 20,650(8) 6,765
23
PRO HISTORICAL FORMA(10) --------------------------- ---------- SIX MONTHS ENDED ---------------------------------------------- JUNE 30, JUNE 29, JUNE 29, 1996 1997 1997 -------- ---------- ---------- (IN THOUSANDS EXCEPT PER SHARE AMOUNTS) STATEMENT OF OPERATIONS DATA Revenues.................................................... $575,370 $ 431,523 $ 539,316 Operating profit (loss)..................................... 43,130 (11,337)(12) (7,662) Loss from continuing operations............................. (1,798) (32,346)(12) (34,749) Income (loss) from discontinued operations, net............. -- -- Extraordinary items......................................... (8,538) (2,954) Cumulative effect of changes in accounting principles, net....................................................... -- -- Net loss.................................................... (10,336)(11) (35,300)(12) Preferred stock dividend requirements(2).................... -- -- Net loss applicable to common stockholders.................. (10,336) (35,300) Income (loss) per share: Continuing operations....................................... (.06) (1.08) (1.10) Discontinued operations..................................... -- -- Extraordinary items......................................... (.29) (.10) Cumulative effect of changes in accounting principles....... -- -- Net loss per share.......................................... (.35) (1.18) Weighted-average common shares outstanding.................. 29,916 29,931 31,498 BALANCE SHEET DATA Total assets................................................ 1,156,990 1,202,137 Long-term debt.............................................. 767,737 767,737 Redeemable preferred stock.................................. -- -- Stockholders' equity (deficit).............................. (24,396) 9,309
- ------------ (1) Selected Financial Data for the fiscal year ended April 30, 1992 has been retroactively restated to reflect the discontinuance of the Company's utility and municipal services and refrigeration operations in 1993. (2) The Company has not paid any dividends on its common shares during any of the periods presented. (3) The Company changed its fiscal year from a fiscal year ending April 30 to a calendar year ending December 31 effective for the eight-month transition period ended December 31, 1993 ('Transition 1993'). (4) Reflects certain significant charges recorded during the fiscal year ended April 30, 1993 as follows: $51,689,000 charged to operating profit representing $43,000,000 of facilities relocation and corporate restructuring relating to a change in control of the Company and $8,689,000 of other net charges; $48,698,000 charged to loss from continuing operations representing the aforementioned $51,689,000 charged to operating profit, $8,503,000 of other net charges, less $19,391,000 of income tax benefit and minority interest effect relating to the aggregate of the above charges, and plus $7,897,000 of provision for income tax contingencies and $67,060,000 charged to net loss representing the aforementioned $48,698,000 charged to operating profit, a $5,363,000 write-down relating to the impairment of certain unprofitable operations and accruals for environmental remediation and losses on certain contracts in progress, net of income tax benefit and minority interests, a $6,611,000 extraordinary charge from the early extinguishment of debt and $6,388,000 cumulative effect of changes in accounting principles. (5) Reflects certain significant charges recorded during Transition 1993 as follows: $12,306,000 charged to operating profit principally representing $10,006,000 of increased insurance reserves; $25,617,000 charged to loss from continuing operations representing the aforementioned $12,306,000 charged to operating profit, $5,050,000 of certain litigation settlement costs, $3,292,000 of reduction to net realizable value of certain assets held for sale other than discontinued operations, less $2,231,000 of (footnotes continued on next page) 24 (footnotes continued from previous page) income tax benefit and minority interest effect relating to the aggregate of the above charges, and plus a $7,200,000 provision for income tax contingencies; and $34,437,000 charged to net loss representing the aforementioned $25,617,000 charged to loss from continuing operations and an $8,820,000 loss on disposal of discontinued operations. (6) Reflects certain significant charges recorded during 1994 as follows: $9,972,000 charged to operating profit representing $8,800,000 of facilities relocation and corporate restructuring and $1,172,000 of advertising production costs that in prior periods were deferred; $4,782,000 charged to loss from continuing operations representing the aforementioned $9,972,000 charged to operating profit, $7,000,000 of costs of a proposed acquisition not consummated less $6,043,000 of gain on sale of natural gas and oil business, less income tax benefit relating to the aggregate of the above charges of $6,147,000; and $10,798,000 charged to net loss representing the aforementioned $4,782,000 charged to loss from continuing operations, $3,900,000 loss on disposal of discontinued operations and a $2,116,000 extraordinary charge from the early extinguishment of debt. (7) Reflects certain significant charges recorded during 1995 as follows: $19,331,000 charged to operating profit representing a $14,647,000 charge for a reduction in the carrying value of long-lived assets impaired or to be disposed of, $2,700,000 of facilities relocation and corporate restructuring and $1,984,000 of other net charges; and $15,199,000 charged to loss from continuing operations and net loss representing the aforementioned $19,331,000 charged to operating profit, $7,794,000 of equity in losses and write-down of investments in affiliates, less $15,088,000 of net gains consisting of $11,945,000 of gain on sale of excess timberland and $3,143,000 of other net gains, less $2,938,000 of income tax benefit relating to the aggregate of the above charges and plus a $6,100,000 provision for income tax contingencies. (8) In 1995 all of the redeemable preferred stock was converted into common stock and an additional 1,011,900 common shares were issued resulting in an $83,811,000 improvement in stockholders' equity (deficit). (9) Reflects certain significant charges and credits recorded during 1996 as follows: $73,100,000 charged to operating loss representing a $64,300,000 charge for a reduction in the carrying value of long-lived assets impaired or to be disposed of and $8,800,000 of facilities relocation and corporate restructuring; $1,279,000 charged to loss from continuing operations representing the aforementioned $73,100,000 charged to operating loss, $77,000,000 of gains on sale of businesses, net and plus $5,179,000 of income tax provision on the above net credits; and $6,695,000 charged to net loss representing the aforementioned $1,279,000 charged to loss from continuing operations and a $5,416,000 extraordinary charge from the early extinguishment of debt. (10) For a description of the adjustments and the assumptions used in preparing the Unaudited Pro Forma Summary Consolidated Financial Data, see Notes to the Unaudited Pro Forma Condensed Consolidated Balance Sheet and Notes to the Unaudited Pro Forma Condensed Consolidated Statements of Operations included elsewhere herein. (11) Reflects an $8,538,000 extraordinary charge from the early extinguishment of debt recorded during the six-month period ended June 30, 1996. (12) Reflects certain significant charges and credits recorded during the six months ended June 29, 1997 as follows: $39,790,000 charged to operating loss representing acquisition related costs of $32,440,000 related to the acquisition of Snapple and $7,350,000 of facilities relocation and corporate restructuring charges; $39,305,000 charged to loss from continuing operations representing the aforementioned $39,790,000 charged to operating loss and other net credits of $485,000; and $42,259,000 charged to net loss representing the aforementioned $39,305,000 charged to loss from continuing operations and a $2,954,000 extraordinary charge from the early extinguishment of debt. 25 CABLE CAR BEVERAGE CORPORATION SUMMARY HISTORICAL FINANCIAL DATA The following data, insofar as it relates to Cable Car's consolidated statement of operations for the years ended December 31, 1996, 1995 and 1994, and the balance sheet as of December 31, 1996 and 1995, has been derived from the consolidated financial statements audited by Price Waterhouse LLP, independent accountants appearing in Part IV of Cable Car's Annual Report on Form 10-K for the year ended December 31, 1996, as amended by an amendment thereto filed with the Commission on May 1, 1997, each of which is incorporated by reference in this Proxy Statement/Prospectus, and copies of which are attached hereto as Appendices A-1 and A-2, respectively. The consolidated statement of operations data for the six months ended December 31, 1993 and the fiscal years ended June 30, 1993 and 1992, and the consolidated balance sheet data as of December 31, 1994 and 1993, and June 30, 1993 and 1992 have been derived from the historical consolidated financial statements of Cable Car for such periods. The consolidated statements of operations data for the six months ended June 30, 1997 and 1996 and the consolidated balance sheet data as of June 30, 1997 are derived from unaudited consolidated financial statements incorporated by reference in this Proxy Statement/Prospectus, and copies of which are attached hereto as Appendix A-3. The interim financial data has been prepared on the same basis as the audited consolidated financial statements and, in the opinion of Cable Car, include all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of such information. Historical results are not necessarily indicative of results for any future period. The following table data should be read in conjunction with the consolidated financial statements and notes thereto, and management's commentary thereon contained in Item 7 of Cable Car's Annual Report on Form 10-K for the year ended December 31, 1996, as amended, attached hereto as Appendices A-1 and A-2, and Cable Car's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1997, attached hereto as Appendix A-3.
SIX MONTHS YEAR ENDED JUNE 30, ENDED YEAR ENDED DECEMBER 31, ---------------------- DECEMBER 31, ---------------------------- 1992 1993(1) 1993(2) 1994 1995(3) 1996 ------------------- ------------------- ------------ ------ ------- ------- (IN THOUSANDS, EXCEPT PER SHARE DATA) STATEMENT OF OPERATIONS DATA: Revenue................... $14,839 $15,538 $3,031 $8,322 $12,844 $18,873 Net income (loss)......... (22) (348) 143 722 883 1,257 Net income (loss) per common share:........... (.05) .02 .09 .10 .14 Weighted average common and common equivalent shares outstanding...... 7,057 7,641 7,797 8,319 8,916 9,255 BALANCE SHEET DATA: Total assets.............. 5,266 4,054 3,921 4,449 5,361 7,142 Long-term debt............ 108 3 10 6 -- -- Stockholders' equity...... 3,067 2,953 3,097 3,945 4,402 5,982 SIX MONTHS ENDED JUNE 30, ----------------------------------------------------------- 1996 1997 ---------------------------- ---------------------------- STATEMENT OF OPERATIONS DATA: Revenue................... $8,933 $12,747 Net income (loss)......... 603 693 Net income (loss) per common share:........... .07 .07 Weighted average common and common equivalent shares outstanding...... 9,022 9,603 BALANCE SHEET DATA: Total assets.............. 9,173 Long-term debt............ -- Stockholders' equity...... 6,752
- ------------ (1) On June 7, 1993, Cable Car sold its wholly owned subsidiary, Sheya Brothers Specialty Beverages ('SBCC'), to AMCON Distributing Company ('AMCON') in return for 12.5% of the then issued and outstanding shares of common stock of AMCON. SBCC had contributed $10.4 million and $10.6 million to annual revenue and a pretax loss of approximately $291,000 and pretax earnings of approximately $89,000 for the fiscal years ended June 30, 1993 and 1992, respectively. (2) In 1993, Cable Car elected to change its fiscal year end from June 30 to December 31. (3) In the third quarter of 1995, Cable Car wrote down its investment in AMCON stock and recorded a pretax charge of $848,342. Cable Car then distributed 266,469 shares of AMCON common stock as a dividend to Cable Car stockholders of record as of July 5, 1995. Also during 1995, Cable Car determined that, based upon Cable Car's then current and expected future earnings, it was more likely than not that Cable Car would realize its future income tax benefits. Based on this determination, Cable Car released its valuation allowance against deferred tax assets and recorded a tax benefit of $936,440. 26 RISK FACTORS This Proxy Statement/Prospectus contains forward-looking statements that involve risks and uncertainties. See 'Cautionary Statement Concerning Forward-Looking Statements.' Holders of Cable Car Common Stock should consider carefully all the information contained in this Proxy Statement/Prospectus and, in particular, the following risk factors: HOLDING COMPANY STRUCTURE Because Triarc is a holding company, its ability to service debt and pay dividends, including dividends on the Triarc Common Stock, is primarily dependent (in addition to its cash, cash equivalents and short-term investments on hand) upon cash flows from its subsidiaries, including loans, cash dividends and reimbursement by subsidiaries to Triarc in connection with its providing certain management services and payments by subsidiaries under certain tax sharing agreements. At June 29, 1997, Triarc's (parent only) cash, cash equivalents and short-term investments were approximately $95.2 million. Under the terms of various indentures and credit arrangements which govern Triarc's principal subsidiaries and which will govern them in the future, Triarc's principal subsidiaries are subject to certain restrictions on their ability to pay dividends and/or make loans or advances to Triarc. The ability of any of Triarc's subsidiaries to pay cash dividends and/or make loans or advances to Triarc is also dependent upon the respective abilities of such entities to achieve sufficient cash flows after satisfying their respective cash requirements, including debt service, to enable the payment of such dividends or the making of such loans or advances. In addition, the equity interests of Triarc in its subsidiaries rank junior to all of the respective indebtedness, whenever incurred, of such entities in the event of their respective liquidation or dissolution. As of June 29, 1997, the subsidiaries of Triarc had aggregate long-term indebtedness of approximately $780.5 million (excluding intercompany indebtedness). As a result of the foregoing contractual restrictions and structural subordination, Triarc may be unable to gain access to the cash flow or the assets of its subsidiaries in amounts sufficient to discharge its obligations under its indebtedness. See ' -- Substantial Leverage.' SUBSTANTIAL LEVERAGE Triarc is highly leveraged. On a pro forma basis giving effect to the 1997 Transactions and the Merger, total consolidated indebtedness of Triarc as of June 29, 1997, would have been approximately $783.5 million. On a pro forma basis giving effect to the 1997 Transactions and the Merger, Triarc's consolidated interest expense would have been approximately $93.5 million for the year ended December 31, 1996 and $42.0 million for the six months ended June 29, 1997. As of June 29, 1997, Triarc's (parent only) indebtedness was approximately $45.7 million (excluding intercompany indebtedness other than a $40.7 million note owed to the Operating Partnership). As a consequence of such leverage, (i) Triarc's ability to obtain additional financing in the future for working capital, capital expenditures, future acquisitions or other general corporate purposes may be limited; (ii) a substantial portion of Triarc's consolidated cash flow from operations may be dedicated to payments in respect of its indebtedness; (iii) Triarc's flexibility in responding to economic downturns and competitive pressures may be limited; (iv) Triarc may have difficulty discharging its obligations under its indebtedness, including, without limitation, the $40.7 million loan to the Company by the Operating Partnership and Triarc's guarantees of certain debt of its subsidiaries; and (v) Triarc's ability to pay dividends on the Triarc Common Stock may be limited. In addition, subject to any restrictions that may exist from time to time under certain agreements, Triarc and its subsidiaries may incur additional indebtedness in the future for general corporate purposes, which may include acquisitions, investments or capital expenditures. 27 NET LOSSES Triarc reported net losses (after preferred dividend requirements for fiscal years to 1994) for each fiscal year from 1989 through 1996 (including the transition period ended December 31, 1993) and for the six-month period ended June 29, 1997. Although the diversity of Triarc's business segments precludes overall generalizations about its operating results, Triarc believes that the losses for the three fiscal years ended December 31, 1996 were affected in large part by write downs of operating assets as required by FASB 121 (an aggregate of approximately $78.9 million for fiscal 1995 and 1996), charges related to the relocation of offices and management restructurings (an aggregate of approximately $20.3 million for the three years), extraordinary charges relating to the early extinguishment of indebtedness (an aggregate of approximately $7.5 million for fiscal 1994 and 1996), and operating problems incurred during fiscal 1995 and 1996 relating to the introduction of new beverage products and the operations of new restaurants that were unable to profitably cover their carrying costs. There can be no assurance that Triarc's operating results will improve in future periods. POSSIBLE PRICE VOLATILITY OF TRIARC COMMON STOCK The market price of Triarc Common Stock has been, and may continue to be, volatile. The market price of Triarc Common Stock may be significantly affected by factors such as actual or anticipated fluctuations in Triarc's operating results, new product or concept development by Triarc or its competitors, changing trends in customer tastes, changes in financial estimates by securities analysts, general market conditions and other factors. DIVIDENDS Triarc has not paid a dividend on the Triarc Common Stock in the three most recently completed fiscal years or in the current fiscal year. Triarc currently intends to reinvest all of its earnings for use in its business and to finance future growth. Accordingly, Triarc does not anticipate paying cash dividends on Triarc Common Stock in the foreseeable future. SUCCESSFUL COMPLETION AND INTEGRATION OF ACQUISITIONS One element of Triarc's business strategy is to continuously evaluate acquisitions and business combinations to augment its businesses. There can be no assurance that Triarc will identify and complete suitable acquisitions or if completed, that such acquisitions will be successfully integrated. Acquisitions involve numerous risks, including difficulties assimilating new operations and products. There can be no assurance that any acquisition would result in long-term benefits to Triarc or that management would be able to manage effectively the resulting business. ACQUISITION AND INTEGRATION OF SNAPPLE On May 22, 1997, Triarc acquired all of the outstanding capital stock of Snapple from The Quaker Oats Company ('Quaker') for approximately $300 million in cash. After being acquired by Quaker in December 1994 for approximately $1.7 billion, Snapple's performance deteriorated significantly. Case sales and revenues declined from 72 million cases and $675.8 million, respectively, in 1994 to 49.6 million cases and $498.3 million, respectively, for the 12 months ended March 1997. Triarc believes that Snapple's deteriorating results under prior ownership were largely attributable to the following factors: (i) Snapple's relationships with its distributors became strained because it failed to develop strong relationships with them; (ii) Snapple's frequency of new product introduction declined dramatically; (iii) Snapple replaced successful advertising personae with expensive marketing campaigns which proved to be ineffective; and (iv) Snapple attempted to expand international sales by investing heavily in marketing and infrastructure, which expenditures did not produce corresponding sales volumes. In order to stabilize and ultimately increase Snapple's sales and profitability, Triarc intends to capitalize on Snapple's continued strong brand equity, increase development of new products and packaging, utilize creative and more effective advertising and marketing to promote Snapple products and to develop stronger relationships with Snapple's distributors, many of whom also distribute Mistic and/or Royal Crown products. In addition, Triarc hopes to realize cost savings through more aggressive purchasing of 28 raw materials (such as glass bottles, flavors and other ingredients). Furthermore, Snapple has historically spent significantly more on advertising and marketing per case sold than the Triarc Beverage Group has spent with respect to Mistic products. While the Triarc Beverage Group has plans to spend significantly more per case on Snapple advertising and marketing than its historical spending levels for Mistic, it still intends to spend significantly less than the historical per case spending levels of Snapple's prior owner. Snapple also spent significantly more per case on general and administrative expenses than does the Triarc Beverage Group for its Mistic business. The Triarc Beverage Group intends to spend significantly less on general and administrative expenses than Snapple's prior owner. Triarc faces risks in integrating the operations of Snapple into the Triarc Beverage Group. There can be no assurance that case volume stabilization or growth or greater profitability can be achieved or that cost savings will be realized, that there will not be delays in achieving such cost savings or that the Triarc Beverage Group will not incur unanticipated costs in implementing its post-acquisition strategy with respect to Snapple. ACQUISITION AND INTEGRATION OF CABLE CAR Triarc faces risks associated with implementing its post-Merger strategy and integrating the operations of Cable Car into the Triarc Beverage Group. The Triarc Beverage Group hopes to be able to increase Cable Car's sales and profitability through improved distribution and increased purchasing efficiencies with respect to raw materials (such as glass bottles, flavors and other ingredients). There can be no assurance, however, that such cost savings will be realized, that there will not be delays in achieving such cost savings or that the Triarc Beverage Group will not incur unanticipated costs in implementing its post-Merger strategy and integrating the operations of Cable Car into the Triarc Beverage Group. ENVIRONMENTAL LIABILITIES Certain of Triarc's operations are subject to federal, state and local environmental laws and regulations concerning the discharge, storage, handling and disposal of hazardous or toxic substances. Such laws and regulations provide for significant fines, penalties and liabilities, in certain cases without regard to whether the owner or operator of the property knew of, or was responsible for, the release or presence of such hazardous or toxic substances. In addition, third parties may make claims against owners or operators of properties for personal injuries and property damage associated with releases of hazardous or toxic substances. Although Triarc believes that its operations comply in all material respects with all applicable environmental laws and regulations, it cannot predict what environmental legislation or regulations will be enacted in the future or how existing or future laws or regulations will be administered or interpreted. Triarc cannot predict the amount of future expenditures which may be required in order to comply with any environmental laws or regulations or to satisfy any such claims. Triarc believes that its operations comply in all material respects with all applicable environmental laws and regulations. WEATHER CONDITIONS AFFECT THE DEMAND FOR PROPANE Weather conditions, which can vary substantially from year to year, have a significant impact on the demand for propane for both heating and agricultural purposes. Many customers of the Operating Partnership rely heavily on propane as a heating fuel. Accordingly, the volume of propane sold is at its highest during the six-month peak heating season of October through March and is directly affected by the severity of the winter weather. Historically, approximately 66% of the Operating Partnership's retail propane volume has been sold during this peak heating season. Actual weather conditions, therefore, may significantly affect the Operating Partnership's financial performance. For example, warm weather during the winter of 1994-95 significantly decreased the overall demand for propane, and adversely affected the Operating Partnership's operating income. Furthermore, despite the fact that overall weather conditions may be normal variations in weather in one or more regions in which the Operating Partnership operates can significantly affect the total volume of propane sold by the Operating Partnership, and consequently, the Operating Partnership's results of operations. Variations in the weather in the Midwest, where the majority of the Operating Partnership's retail volume is sold, and in the Northeast, where the Operating Partnership has a greater concentration of higher margin residential 29 accounts, will generally have a greater impact on the Operating Partnership's revenues than variations in the weather in other markets. ENERGY EFFICIENCY AND TECHNOLOGY TRENDS MAY AFFECT DEMAND FOR PROPANE The national trend toward increased energy conservation and technological advances, including installation of improved insulation and the development of more efficient furnaces and other heating devices, has adversely affected, and may continue to adversely affect, demand for propane by retail customers. The Operating Partnership cannot predict the effect of future conservation measures or the effect that any technological advances in heating, conservation, fuel efficiency, energy generation or other devices might have on its operations. ROYAL CROWN'S RELIANCE ON CERTAIN BOTTLER'S AND PRIVATE LABEL SALES Royal Crown sells its soft drink concentrate to a number of independent bottlers who are granted exclusive licenses to sell RC Cola brand products within a defined territory. Two of Royal Crown's bottlers, Chicago Bottling Group and Beverage America, accounted for approximately 20.1% and 10.2%, respectively, of Royal Crown's domestic unit sales of concentrate for branded products during 1996. Royal Crown's ten largest bottler groups accounted for 63.6% and 68.4% of Royal Crown's domestic unit sales of concentrate for branded products during 1995 and 1996, respectively. If one or more of these major bottlers were to discontinue selling RC Cola brand products for any reason, Royal Crown's sales would be adversely affected in the areas serviced by such bottlers. Royal Crown provides concentrate to Cott Corporation ('Cott') pursuant to a concentrate supply agreement entered into in 1994 (the 'Cott Worldwide Agreement'). Under the Cott Worldwide Agreement, Royal Crown is Cott's exclusive worldwide supplier of cola concentrates for retailer-branded beverages in various containers. In addition, Royal Crown also supplies Cott with non-cola carbonated soft drink concentrates. Cott delivers the private label concentrate and packaging materials to independent bottlers for bottling. The finished private label product is then shipped to Cott's trade customers, including major retailers such as Wal-Mart, A&P and Safeway. The Cott Worldwide Agreement requires that Cott purchase at least 75% of its total worldwide requirements for carbonated soft drink concentrates from Royal Crown. The initial term of the Cott Worldwide Agreement is 21 years, with multiple six-year extensions. Although the Cott Worldwide Agreement provides that Royal Crown may manufacture and sell private label cola concentrate to other packagers or bottlers if Cott does not meet certain minimum purchase requirements, there can be no assurance that Royal Crown would be able to enter into satisfactory arrangements with an alternative private label concentrate purchaser. In 1994, 1995 and 1996, revenues from the Cott business represented approximately 14.2%, 12.1% and 12.6%, respectively, of Royal Crown's total revenues. If Cott's business declines, or if the Cott Worldwide Agreement is terminated, Royal Crown's sales could be adversely affected. COMPETITION Triarc's businesses operate in highly competitive industries. Triarc has major competitors in each of its business segments, many of which have significantly greater financial, marketing, personnel and other resources than does Triarc. The Triarc Beverage Group's premium and soft drink products compete generally with all liquid refreshments and in particular with numerous nationally-known soft drinks such as Coca-Cola and Pepsi-Cola. The Triarc Beverage Group also competes with regional soft drink producers and other 'private label' soft drink suppliers. The Triarc Beverage Group competes with other beverage companies not only for consumer acceptance but also for shelf space in retail outlets and for marketing focus by the Triarc Beverage Group's distributors, most of whom also distribute other beverage brands. The principal methods of competition in the beverage industry include product quality and taste, brand advertising, trade and consumer promotions, pricing, packaging and the development of new products. In recent years, price competition has been especially intense with respect to sales of beverages to food stores, with local bottlers granting significant discounts and allowances off wholesale prices in order to 30 maintain or increase market share in the food store segment. While price discounting by bottlers indirectly affects the Triarc Beverage Group's operating results, Triarc cannot quantify the impact of such price competition. Triarc completed the sale of all of its company owned Arby's restaurants in May 1997. Subsequent to such sale, Arby's revenues are primarily dependent on royalties based on sales at franchisees' restaurants. The Arby's restaurant system faces direct and indirect competition from numerous well-established competitors, including national and regional fast food chains. In addition, Arby's competes with locally owned restaurants, drive-ins, diners and numerous other establishments that offer low-priced food to the public. The principal means of competition in the fast food industry are price, the quality of products, quality and speed of service, advertising, name identification, restaurant location and attractiveness of facilities. Triarc believes that a number of fast food companies have in recent years experienced flattening growth rates and declines in average sales per domestic restaurant. In response, certain companies, including Arby's, have adopted price discounting strategies. During past periods of discount promotions, Arby's has experienced increases in sales, but, with respect to company owned restaurant operations, lower gross margins. As a result, Triarc cannot quantify the net impact of price competition on Arby's results of operations. Accordingly, continued price discounting in the fast food industry could have an adverse effect on Arby's results of operations. The Partnership, through its subsidiary partnership, the Operating Partnership, competes in each of its marketing areas with numerous other propane distributors. In addition, propane is sold in competition with all other commonly used fuels and energy sources, including electricity, fuel oil and natural gas. The primary competing energy source to propane is electricity, which is available in substantially all of the market areas served by the Partnership. Fuel oil is a major competitor for home heating and other purposes and is sold by a diversified group of companies throughout the marketing areas served by the Partnership. C.H. Patrick has many competitors, including large chemical companies and smaller concerns. No single manufacturer dominates the industry in which C.H. Patrick participates. The principal elements of competition in the dyes and specialty chemicals industry include quality, price and service. DEPENDENCE ON KEY PERSONNEL Triarc believes that its success has been and will continue to be dependent to a significant extent upon the efforts and abilities of its senior management team. The failure by Triarc to retain members of its senior management team could adversely affect Triarc's ability to build on the efforts undertaken by its current management to increase the efficiency and profitability of its businesses. The loss of Nelson Peltz, the Chairman and Chief Executive Officer of Triarc, or Peter May, the President and Chief Operating Officer of Triarc, other senior members of Triarc's senior management or the senior management of its subsidiaries could adversely affect Triarc. CONTROL BY CERTAIN SHAREHOLDERS DWG Acquisition Group, L.P. ('DWG Acquisition') owns directly or indirectly approximately 24.9% of the outstanding Triarc Common Stock as of September 28, 1997. Messrs. Peltz and May, as the sole general partners of DWG Acquisition, beneficially own all of the Triarc Common Stock owned by DWG Acquisition. In addition, Messrs. Peltz and May individually beneficially own certain additional shares of Triarc Common Stock which, when combined with the shares owned through DWG Acquisition, would constitute approximately 27.9% and 27.0%, respectively, of the Triarc Common Stock as of September 28, 1997. As a result of such ownership, Messrs. Peltz and May are able to exercise significant influence over the election of members of the Boards of Directors of Triarc and its subsidiaries and may also be able to influence significantly the outcome of certain corporate actions requiring stockholder approval, including, mergers, consolidations and the sale of all or substantially all of Triarc's assets, and may be in a position to prevent or cause a change in control of Triarc. 31 CERTAIN FEDERAL INCOME TAX CONSEQUENCES The Merger is expected to be a tax-free reorganization within the meaning of Section 368(a) of the Code for federal income tax purposes, so that no gain or loss will be recognized by Cable Car's stockholders on the exchange of Cable Car Common Stock for Triarc Common Stock, except in respect of cash received in lieu of fractional shares. The receipt of a tax opinion regarding the availability of such tax treatment is a condition to the consummation of the Merger, although such condition may be waived. Cable Car stockholders should be aware that such an opinion would not bind the Internal Revenue Service (the 'IRS'), and the IRS is therefore not precluded from asserting a contrary opinion. A successful IRS challenge to the tax-free status of the Merger would result in Cable Car stockholders recognizing taxable gain or loss with respect to each share of Cable Car Common Stock surrendered equal to the difference between the stockholder's tax basis in such share and the fair market value, as of the Effective Time, of the Triarc Common Stock received in exchange therefor. Cable Car stockholders are urged to consult their own tax advisors regarding the tax consequences of the Merger. See 'The Proposed Merger and Related Matters -- Certain Federal Income Tax Consequences.' ADDITIONAL INTERESTS OF CABLE CAR MANAGEMENT In considering the recommendation of the Cable Car Board with respect to the Merger Agreement and the Merger, holders of Cable Car Common Stock should be aware that certain directors and officers of Cable Car have certain interests in respect of the Merger that are in addition to the interests of Cable Car stockholders generally. The Cable Car Board was aware of these interests and considered them, among other matters, in approving the Merger Agreement and the Merger. See 'The Proposed Merger and Related Matters -- Additional Interests of Cable Car Management.' EFFECT OF PREFERRED STOCK; ANTI-TAKEOVER PROVISIONS The Triarc Charter 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 the Triarc Board. Accordingly, the Triarc Board is empowered, without stockholder approval, to issue preferred stock with dividend, liquidation, conversion, voting or other rights which could adversely affect the voting power and other rights of the holders of Triarc Common Stock. The preferred stock could be used to discourage, delay or prevent a change in control of Triarc which is determined by the Triarc Board to be undesirable. Although Triarc has no present intention to issue any shares of preferred stock, there can be no assurance that Triarc will not do so in the future. See 'Description of Triarc Capital Stock.' In addition, certain provisions in the Triarc Charter are intended to discourage or delay a hostile takeover of control of Triarc and are summarized in detail under the caption 'Comparison of Rights of Cable Car and Triarc Stockholders -- Certain Anti-Takeover Provisions in the Triarc Charter.' EFFECT OF TRIARC STOCK OPTIONS Triarc maintains the 1993 Equity Participation Plan (the 'Equity Plan'), which provides for the grant of stock options and restricted stock to certain officers, key employees, consultants and non-employee directors. In addition, non-employee directors are eligible to receive shares of Triarc Common Stock in lieu of retainer or meeting attendance fees. The Equity Plan provides for a maximum of 10,000,000 shares of Triarc Common Stock to be issued on the exercise of options, to be granted as restricted stock or to be issued to non-employee directors in lieu of fees. Under the Equity Plan, as of September 28, 1997, options to acquire an aggregate of 8,798,170 shares of Triarc Common Stock were outstanding, 500,775 restricted shares of Triarc Common Stock (the restrictions on which have lapsed) had been issued, 22,812 shares of Triarc Common Stock had been issued to non-employee directors and 521,750 shares of Triarc Common Stock were available for future grants. The exercise of outstanding options or the future issuance of options (and the exercise of such options) or restricted stock will dilute the beneficial ownership of holders of Triarc Common Stock after the Merger. 32 COMPARATIVE RIGHTS OF CABLE CAR STOCKHOLDERS BEFORE AND AFTER THE MERGER There are various differences between the rights of Cable Car's stockholders and the rights of Triarc's stockholders. See 'Description of Triarc Capital Stock' and 'Comparison of Rights of Cable Car and Triarc Stockholders.' COMPANIES TRIARC COMPANIES, INC. Triarc is a holding company which, through its subsidiaries, is engaged in the following businesses: beverages, restaurants, dyes and specialty chemicals and liquefied petroleum gas. The beverage operations are conducted by the Triarc Beverage Group through Royal Crown Company, Inc. ('Royal Crown'), Mistic Brands, Inc. ('Mistic') and Snapple Beverage Corp., which was acquired by Triarc in May 1997; the restaurant operations are conducted by the Arby's (d/b/a the Triarc Restaurant Group), which is the franchisor for the Arby's restaurant system; the dyes and specialty chemical operations are conducted through C.H. Patrick & Co., Inc.; and the liquefied petroleum gas operations are conducted through the Partnership and its operating subsidiary partnership, the Operating Partnership. In addition, prior to April 29, 1996, Triarc was also engaged in the textile business through Graniteville Company. On such date the textile related assets of Graniteville Company were sold. The Triarc Beverage Group oversees the operations of Triarc's beverage subsidiaries, Snapple, Mistic and Royal Crown. Snapple, acquired from Quaker in May 1997, markets and distributes ready-to-drink brewed iced teas and juice drinks and is a market leader in the premium beverage category. Triarc has undertaken and expects to continue to undertake measures designed to stabilize and ultimately increase Snapple's sales and profitability. Such measures include capitalizing on Snapple's continued strong brand equity, increasing the development of new products and packaging, utilizing creative and more effective advertising and marketing to promote Snapple products and developing stronger relationships with Snapple's distributors, many of whom also distribute Mistic and/or Royal Crown products. In addition, Triarc hopes to realize cost savings through more aggressive purchasing of raw materials (such as glass bottles, flavors and other ingredients) and increased efficiencies in advertising, marketing and general and administrative expenses. Since acquiring Snapple, Triarc has introduced four new products, including Orange Tropic -- Wendy's Tropical Inspiration and three herbal or green teas. Snapple's performance had deteriorated while owned by Quaker from December 1994 through May 1997. Mistic's premium beverage business, acquired by Triarc in August 1995, develops, produces and markets a wide variety of premium non-alcoholic beverages, including non-carbonated and carbonated fruit drinks, ready to drink brewed iced teas and naturally flavored sparkling waters under the Mistic, Royal Mistic, Mistic Rain Forest and Mistic Breeze brand names. Since acquiring Mistic, Triarc has introduced 34 new flavors, various bottle sizes and shapes and numerous new package designs. Royal Crown produces and sells concentrates used in the production of soft drinks which are sold domestically and internationally to independent, licensed bottlers who manufacture and distribute finished beverage products. Royal Crown's major products have significant recognition and include: RC COLA, DIET RC COLA, DIET RITE COLA, DIET RITE flavors, NEHI, UPPER 10 and KICK. Further, Royal Crown is the exclusive supplier of cola concentrate to Cott Corporation which sells private label soft drinks to major retailers in the United States, Canada, the United Kingdom, Australia, Japan, Spain and South Africa. Arby's is the world's largest franchise restaurant system specializing in slow-roasted meat sandwiches. In addition, Triarc believes that Arby's is the 10th largest quick service restaurant chain in the United States based on domestic system-wide sales. As of August 31, 1997, the Arby's restaurant system consisted of 3,050 restaurants of which 2,881 operated within the United States and 169 operated outside the United States. Currently, all of the Arby's restaurants are owned and operated by franchisees. Triarc believes that, as a franchisor, it will be able to reduce from recent historical levels the operating costs of the restaurant segment, and substantially reduce capital expenditure requirements, thereby improving the restaurant segment's cash flows. Arby's continues to pursue the development of a multi-brand strategy, which allows a single restaurant to offer the consumer distinct, but complemen- 33 tary, brands in the same restaurant. Arby's currently multi-brands with T.J. Cinnamons, Inc., which specializes in gourmet cinnamon rolls and related products, and P.T. Noodle's, which offers a variety of Asian, Italian and American dishes based on serving corkscrew noodles with a variety of different sauces. C.H. Patrick produces and markets dyes and specialty chemicals primarily to the textile industry. The majority of C.H. Patrick's dye products are used in the continuous dying of cotton and polyester/cotton blends. C.H. Patrick also manufactures various textile softeners, surfactants, dying auxiliaries and permanent press resins, as well as several acrylic polymers used in textile finishing as soil release agents. As previously announced, Triarc continues to review strategic alternatives to maximize the value of its dye and specialty chemical operations. There can be no assurance that any transaction will result from this review process. The Partnership and the Operating Partnership are engaged primarily in the retail marketing of liquefied petroleum gas ('propane') to residential, commercial and industrial, and agricultural customers and to dealers that resell propane to residential and commercial customers and the retail marketing of propane related supplies and equipment, including home and commercial appliances. Triarc believes that the Partnership is the sixth largest retail marketer of propane in terms of volume in the United States. National Propane, an indirect wholly owned subsidiary of Triarc, is the managing general partner of the Partnership and the Operating Partnership and owns approximately 43% of their combined equity interests with the remaining 57% owned by the public. The mailing address of Triarc's principal executive offices is 280 Park Avenue, New York, New York 10017, and its telephone number is (212) 451-3000. CCB MERGER CORPORATION Mergerco, a wholly owned subsidiary of Triarc, was formed in June 1997 by Triarc solely for the purpose of effecting the Merger. Upon consummation of the Merger, Mergerco will be merged into Cable Car, and Mergerco's separate corporate existence will thereupon cease. The mailing address of Mergerco's principal executive offices is c/o Triarc Companies, Inc., 280 Park Avenue, New York, New York 10017, and its telephone number is (212) 451-3000. CABLE CAR BEVERAGE CORPORATION Cable Car Beverage Corporation is a beverage marketing company. Cable Car's primary business is selling Stewart's brand premium soft drinks (Root Beer, Orange N' Cream, Cream Ale, Ginger Beer, Classic Key Lime and Cherries N' Cream) to beverage distributors throughout the United States and Canada. Cable Car also sells concentrate to soft drink bottlers, who produce and distribute beverages made from the concentrate. In addition to Stewart's brand soft drinks, Cable Car also sells Aspen Mountain Spring Water, Aspen flavored waters, San Francisco Seltzer and Java Cola. Cable Car has two wholly owned subsidiaries (the 'Cable Car Subsidiaries'), Fountain Classics, Inc., which markets Stewart's fountain products, and Old San Francisco Seltzer, Inc. The mailing address of Cable Car's principal executive offices is 717 17th Street, Suite 1475, Denver, Colorado 80202, and its telephone number is (303) 298-9038. Copies of Cable Car's Annual Report on Form 10-K for the year ended December 31, 1996, and the amendment thereto filed with the Commission on April 30, 1997, are attached to this Proxy Statement/Prospectus as Appendices A-1 and A-2, respectively. A copy of Cable Car's Quarterly Report on Form 10-Q for the quarter ended March 31, 1997 is attached to this Proxy Statement/Prospectus as Appendix A-3. RECENT DEVELOPMENTS TRIARC On May 22, 1997, Triarc completed its acquisition of Snapple from Quaker for approximately $300 million in cash. Snapple, which markets and distributes ready-to-drink brewed iced teas and juice 34 drinks, had sales for 1996 of approximately $550 million, and is a market leader in the premium beverage category. Snapple, together with Mistic and Royal Crown, operates as part of the Triarc Beverage Group. On May 5, 1997, Triarc completed the sale of all of its 355 company owned Arby's restaurants to RTM Restaurant Group ('RTM'), the largest franchisee in the Arby's system, for approximately $71 million. As part of the transaction, the selling companies received options to purchase an aggregate 20% interest in each of the RTM affiliates that own the restaurants. Arby's, a subsidiary of Triarc, continues as the franchisor of the more than 3,000 store Arby's restaurant system. On July 18, 1997, Royal Crown and TriBev Corporation, subsidiaries of Triarc, completed the sale of their rights relating to the C&C beverage line, including the C&C trademark, to Kelco Sales & Marketing Inc. ('Kelco'), a beverage distribution business based in Cranford, New Jersey, which will do business under the name of C&C Beverages, Inc. C&C is a line of mixers, colas and flavors. In connection with the sale, Royal Crown also agreed to sell to Kelco concentrate for C&C products and to provide Kelco certain technical services for seven years. In consideration for the foregoing, Royal Crown and TriBev Corporation will receive an aggregate payment of approximately $9.4 million, payable over seven years. On October 13, 1997, Triarc announced that its management had been authorized, when and if market conditions warrant, to purchase during the next twelve months, up to $20 million of Triarc Common Stock. Purchases under this program may not commence until after the consummation of the Merger and there can be no assurance that any such purchases of Triarc Common Stock will be made in the future. CABLE CAR On June 24, 1997, Cable Car entered into an agreement, as further amended on August 11, 1997, with Stewart's Restaurants, Inc. ('Stewart's Restaurants') amending and modifying its Master Agreement dated July 11, 1989 with Stewart's Restaurants (as amended previously and as so amended, the 'Stewart's Master Agreement'). Among other things, the amendment gave Cable Car ownership of the formulas for and manufacturing rights to concentrates used to make Stewart's soft drinks. The amendment also provides that Cable Car is permitted to use the Stewart's trademark on any other product of any type, provided that such products comply with certain quality standards, and that Stewart's Restaurants shall not, without Cable Car's consent, use the Stewart's trademark except to operate Stewart's Restaurants, Drive-Ins and mobile food and beverage concessions and on certain other products. On June 24, 1997, Cable Car also entered into an agreement, as further amended on August 11, 1997, with Stewart's Restaurants amending and modifying its agreement dated December 1, 1993 with Stewart's Restaurants (as amended previously and as so amended, the 'Stewart's Fountain Agreement'). Among other things the amendment to the Stewart's Fountain Agreement grants to Cable Car the perpetual exclusive worldwide license to manufacture, distribute and sell post mix syrups and pre mixes for Stewart's beverages throughout the world (fountain-type beverages), except that Stewart's Restaurants retains such rights in any of its company owned, licensed or franchised Stewart's Restaurants, Drive-Ins or mobile food and beverage concessions and subject to Cable Car meeting certain quality standards. Cable Car also agreed to certain minimum annual royalty payments to Stewart's Restaurants. As consideration for these amendments, Cable Car will issue to Stewart's Restaurants prior to the Effective Time an aggregate of 150,000 shares of Cable Car Common Stock. In addition, Cable Car will pay to Stewart's Restaurants $400,000 in cash, of which $250,000 is payable on March 31, 1998 and $150,000 is payable on March 31, 1999. Cable Car has entered into a lease to move to new office space in Denver on or about December 1, 1997. The new address of Cable Car's principal executive offices will be 555 17th Street, Suite 3550, Denver, Colorado 80202. 35 THE SPECIAL MEETING GENERAL This Proxy Statement/Prospectus is being furnished to stockholders of Cable Car in connection with the solicitation of proxies by the Cable Car Board for use at the Special Meeting to be held on Tuesday, November 25, 1997, at 10:00 a.m., local time, at Norwest Bank Building, 1740 Broadway, Forum Room, Denver, Colorado 80274, and any adjournments or postponements thereof. Representatives of Price Waterhouse L.L.P., Cable Car's independent accountants, are expected to be present at the Special Meeting with the opportunity to make a statement if they desire to do so and will be available to respond to appropriate questions. MATTERS TO BE CONSIDERED At the Special Meeting, holders of Cable Car Common Stock will consider and vote upon a proposal to approve the Merger Agreement, which provides for the merger of Mergerco into Cable Car with Cable Car being the Surviving Corporation, and such other matters as may properly be brought before the Special Meeting or any adjournments or postponements thereof. Cable Car does not currently intend to bring any business other than the approval of the Merger Agreement and the Merger before the Special Meeting or any adjournments or postponements thereof. See 'The Proposed Merger and Related Matters' and 'The Merger.' VOTE REQUIRED Approval of the Merger Agreement and the Merger requires the affirmative vote of a majority of the outstanding shares of Cable Car Common Stock. A vote by a stockholder of Cable Car to approve the Merger Agreement will constitute a vote to approve the terms of, and the transactions contemplated by, the Merger Agreement (including the Merger). A majority of the shares entitled to vote at the Special Meeting, represented in person or by proxy, constitutes a quorum. The Special Meeting may be adjourned if a quorum is not present for the purpose of obtaining additional proxies or votes or for any other purpose, and, at any subsequent reconvening of the Special Meeting, all proxies will be voted in the same manner as such proxies would have been voted at the original convening of the Special Meeting (except for any proxies that have theretofore been revoked or withdrawn), notwithstanding that they may have been voted on the same or any other matter at a previous meeting. Under the DGCL, in determining whether the proposal regarding the approval of the Merger Agreement has received the requisite number of affirmative votes, abstentions and broker nonvotes will be counted and will have the same effect as a vote against such proposal. Holders of Cable Car Common Stock are entitled to one vote at the Special Meeting for each share of Cable Car Common Stock held of record at the close of business on the Record Date. As of September 30, 1997, directors and executive officers of Cable Car and their affiliates, in the aggregate, were entitled to vote 1,803,609 shares of Cable Car Common Stock, representing approximately 20.2% of the total shares entitled to vote at the Special Meeting. Triarc has entered into the Stockholders Agreement with the Subject Stockholders, which governs an aggregate of approximately 19.7% of the outstanding Cable Car Common Stock beneficially owned by the Subject Stockholders (such amount does not include 12,200 shares of Cable Car Common Stock owned by them but not subject to the Stockholders Agreement) as of September 30, 1997. Each Subject Stockholder has agreed that at any meeting of the holders of Cable Car Common Stock, he or she will, until the Effective Time or the termination of the Merger Agreement, vote or cause to be voted the Subject Stock in favor of approval of the Merger Agreement and the Merger and against certain other actions. Moreover, each Subject Stockholder has also granted Triarc an irrevocable proxy to vote his or her shares of Subject Stock as specified above in the event that such Stockholder fails to so vote his or her Subject Stock in the agreed upon manner. A copy of the Stockholders Agreement is attached to this Proxy Statement/Prospectus as Appendix B-2 and incorporated herein by reference. See 'The Proposed 36 Merger and Related Matters -- Additional Interests of Cable Car Management -- Stockholders Agreement.' THE BOARD OF DIRECTORS OF CABLE CAR HAS UNANIMOUSLY APPROVED THE TERMS OF THE MERGER AGREEMENT AND THE MERGER AND RECOMMENDS THAT THE STOCKHOLDERS OF CABLE CAR VOTE FOR APPROVAL OF THE MERGER AGREEMENT AND THE MERGER. RECORD DATE; PROXIES The Cable Car Board has fixed the close of business on October 23, 1997 as the Record Date for determining the stockholders of Cable Car entitled to notice of and to vote at the Special Meeting. As of September 30, 1997, there were 8,948,324 shares of Cable Car Common Stock outstanding and entitled to vote, held of record by approximately 1,025 holders. Holders of shares of Cable Car Common Stock entitled to vote at the Special Meeting (including any adjournments or postponements thereof) and which are represented by properly executed proxies in the form enclosed with this Proxy Statement/Prospectus will, unless such proxies have previously been revoked, be voted in accordance with the instructions indicated in such proxies. To the extent instructions are not indicated on an otherwise properly executed proxy, shares will be voted in favor of the approval of the Merger Agreement and the Merger and in the discretion of the proxy holder as to any other matter that may properly come before the Special Meeting. A Cable Car stockholder who has given a proxy may revoke such proxy at any time prior to its exercise at the Special Meeting by (i) giving written notice of revocation bearing a later date than the proxy to the Secretary of Cable Car, (ii) properly submitting to Cable Car a duly executed proxy card relating to the same shares bearing a later date or (iii) attending the Special Meeting and voting in person. Attendance at the Special Meeting will not in and of itself revoke a proxy. All written notices of revocation and other communications with respect to the revocation of proxies by Cable Car stockholders should be addressed as follows: Cable Car Beverage Corporation, 717 17th Street, Suite 1475, Denver, CO 80202, Attention: Secretary, or hand-delivered to the Secretary of Cable Car before the vote is taken at the Special Meeting. HOLDERS OF CABLE CAR COMMON STOCK SHOULD NOT SEND ANY STOCK CERTIFICATES WITH THEIR PROXY CARDS. IF THE MERGER AGREEMENT AND THE MERGER ARE APPROVED, HOLDERS OF CABLE CAR COMMON STOCK WILL BE SENT A LETTER OF TRANSMITTAL WITH INSTRUCTIONS FOR SURRENDERING THEIR CERTIFICATES REPRESENTING SHARES OF CABLE CAR COMMON STOCK. SOLICITATION OF PROXIES Cable Car will bear the expense of the proxy solicitation. In addition to solicitation of proxies by mail, the directors, officers and employees of Cable Car may solicit proxies from stockholders personally or by telephone, telegraph or facsimile transmission. Such directors, officers and employees will not be compensated for such solicitation but may be reimbursed for reasonable out-of-pocket expenses. Arrangements will also be made with banks, brokerage houses and other custodians, nominees and fiduciaries for forwarding proxy solicitation materials to beneficial owners of shares held of record by such persons, and Cable Car will reimburse such custodians, nominees and fiduciaries for their reasonable out-of-pocket expenses in connection therewith. Cable Car has engaged Georgeson & Company Inc. to assist in the solicitation of proxies at an anticipated cost of approximately $6,500 plus expenses. THE PROPOSED MERGER AND RELATED MATTERS GENERAL The discussion in this Proxy Statement/Prospectus of the Merger Agreement and the Merger and the description of the principal terms of the Merger Agreement and the Merger are subject to and qualified in their entirety by reference to the Merger Agreement, a copy of which is attached to this Proxy Statement/Prospectus as Appendix B-1 and is incorporated herein by reference. 37 BACKGROUND OF THE MERGER The terms and conditions of the Merger were agreed upon as a result of arms'-length negotiations between the senior management and Boards of Directors of Triarc and Cable Car. The following is a summary of the primary contacts, meetings and negotiations which occurred in connection with this transaction: On March 31, 1997, a representative of Triarc contacted Samuel M. Simpson, President and Chief Executive Officer of Cable Car, and indicated to Mr. Simpson that Nelson Peltz, Chairman and Chief Executive Officer of Triarc, wished to schedule a meeting. This approach was made a few days following Triarc's March 27, 1997 announcement that it was acquiring the Snapple beverage business from Quaker. A meeting was scheduled for April 7, 1997 at Triarc's offices in New York City. In attendance at the April 7 meeting were Mr. Simpson, Mr. Peltz, Peter May, President of Triarc, and Eric Kogan, a Senior Vice President of Triarc. At that meeting, Messrs. Peltz and May outlined Triarc's plans to develop a premium beverage business consisting of Snapple, Mistic and other compatible brands. Mr. Peltz said he thought that the Stewart's brand was an excellent strategic fit with Triarc's premium beverage group and that Triarc would be interested in acquiring Cable Car. Mr. Simpson acknowledged that Stewart's would be a complementary brand for Triarc in light of the fact that a large percentage of Stewart's distribution is with Snapple and Mistic distributors. The parties also discussed the fact that if the Snapple acquisition were consummated, Triarc would soon be the Stewart's distributor in New York City through Mr. Natural, Inc., the Snapple owned distribution company that Triarc would be acquiring in connection with the transaction. Mr. Simpson relayed Triarc's interest in acquiring Cable Car to the Cable Car Board and the Board authorized Mr. Simpson to explore the possibility of a transaction with Triarc. Mr. Simpson met with Messrs. Peltz, May and Kogan again on April 9, 1997 at Triarc's offices. During that meeting, Mr. Simpson informed Triarc that Cable Car was interested in discussing a potential business combination. At this meeting, the parties also exchanged certain publicly available documents and information and it was agreed that a confidentiality agreement would be prepared and signed to facilitate the future exchange of non-public information. Mr. Kogan then spent time with Mr. Simpson discussing and reviewing the operations of each of Triarc's business units. For the next several days, Cable Car's management reviewed information on Triarc and continued to assess the merits of merging with Triarc. Also during that time, several discussions were held among the members of the Cable Car Board about a potential transaction with Triarc. During these discussions it was determined that a Cable Car/Triarc merger was potentially attractive, based upon both brand and distribution synergies. The Cable Car Board discussed the fact that Triarc does not currently own a beverage brand directly competitive with the Stewart's brand and that a large percentage of Stewart's distributors are either Snapple or Mistic distributors, or both. The Cable Car Board felt that by combining with Triarc, Cable Car would also be able to increase Stewart's sales in New York City, a very populous and important market, through Mr. Natural, Inc., which would soon be acquired by Triarc in the Snapple acquisition. The Cable Car Board further concluded that a Cable Car/Triarc merger should result in increased distribution of Cable Car products with third party distributors carrying Snapple or Mistic, based upon Triarc's access to and relationships with these independent distributors. Cable Car's directors also discussed the fact that Triarc could acquire or develop another brand to compete directly against the Stewart's brand should Cable Car elect to remain an independent company. Based on the foregoing, the Cable Car Board authorized Mr. Simpson to pursue a transaction with Triarc and to engage the services of a financial advisor. On April 17, 1997 Mr. Simpson contacted Montgomery Securities in San Francisco, California regarding this transaction. Montgomery Securities was asked to provide a limited financial review of Cable Car, Triarc and the proposed transaction for the Cable Car Board, and was not retained or authorized to consider alternatives for Cable Car to the proposed merger with Triarc or to solicit proposals or indications of interest from financial or other strategic buyers. On April 22, 1997 Mr. Simpson and Myron Stadler, Cable Car's chief accounting officer, met with representatives from Montgomery Securities at Cable Car's corporate headquarters in Denver, Colorado. Preliminary discussions were held at this meeting regarding the reasons for and against a sale of Cable Car to a strategic buyer such as Triarc. In the course of this discussion, Cable Car's historical financial results and 38 projected financial results were reviewed with Montgomery Securities. Cable Car's general business plans and the potential synergies which could result from a business combination with Triarc were also discussed at this meeting. Over the next three weeks, Mr. Simpson had numerous conversations with Mr. Kogan at Triarc regarding Cable Car's and Triarc's respective businesses. During that time Cable Car and Triarc continued to review information and documents relating to the other's company. On May 7, 1997, Mr. Simpson met with Messrs. Peltz, May and Kogan in New York. During this meeting, Triarc proposed the general terms of a merger transaction between Cable Car and Triarc. Mr. Simpson, Mr. Kogan and Brian Schorr, Triarc's Executive Vice President and General Counsel, also met on May 8, 1997 to discuss Triarc's proposal. On May 12, 1997 the Cable Car Board held a special meeting to review the proposed transaction. Mr. Simpson summarized the terms of Triarc's merger proposal to the other members of the Board. The Cable Car Board also participated in a conference call with Montgomery Securities to discuss the proposed transaction. Following these discussions, the Cable Car Board authorized Mr. Simpson to proceed with negotiations with Triarc. From May 13 until June 17, 1997, senior management and counsel for Cable Car and Triarc had several discussions and telephone conferences to negotiate terms and conditions of a merger agreement and a stockholders agreement between Triarc and the Subject Stockholders and to exchange due diligence related information and documents. In light of the time and expense that Triarc would be required to incur in connection with pursuing the proposed transaction with Cable Car, Triarc insisted on obtaining an agreement with the Subject Stockholders that provides that their shares of Cable Car Common Stock would be voted in favor of the proposed merger and that grants to Triarc the option to purchase such shares under certain circumstances. See 'The Proposed Merger and Related Matters -- Additional Interests of Cable Car Management -- Stockholders Agreement.' On June 3, the Cable Car Board held a special meeting to review the status of the proposed merger agreement. At that time, the Board authorized Mr. Simpson to schedule a meeting between the Cable Car Board, Montgomery Securities and senior management of Triarc for purposes of concluding due diligence and finalizing a merger agreement. On June 18, 1997, the Cable Car Board, along with representatives from Montgomery Securities, met with several members of Triarc's senior management team. In those meetings, Triarc's management provided additional detailed information about Triarc and responded to questions from Cable Car Board members and Montgomery Securities regarding Triarc's business operations, business plans and financial projections. During the June 18 meetings, the parties also discussed the remaining open issues on the Merger Agreement. On June 19, 1997, the Cable Car Board held a special meeting. At this board meeting, Montgomery Securities presented its financial analysis of the proposed merger with Triarc and its oral opinion to the Cable Car Board regarding the fairness of the consideration to be received by Cable Car stockholders, from a financial point of view. The Cable Car Board then reviewed the current draft of the Merger Agreement and discussed certain issues which remained unresolved. Following this review, and after considering the factors described in 'Cable Car's Reasons for the Merger; Recommendation of Cable Car's Board of Directors' below, the Cable Car Board unanimously (i) determined that the terms of the Merger were fair to, and in the best interests of, the holders of Cable Car Common Stock, (ii) approved the terms of the Merger Agreement (subject to satisfactory resolution of certain open issues) and authorized Cable Car's officers to execute the Merger Agreement and to undertake all acts necessary or desirable to complete the Merger, (iii) recommended approval of the Merger Agreement by holders of Cable Car Common Stock and (iv) approved and ratified for the purposes of Section 203 of the DGCL the Merger Agreement, the Merger and the other transactions contemplated thereby, including the execution, delivery and performance of the Stockholders Agreement, and determined that neither Triarc nor any of its affiliates would be subject to the restrictions of Section 203 as an 'interested stockholder' of Cable Car for purposes of Section 203 as result of such agreements or transactions. On June 20 and again on June 23, Samuel Simpson and William Rutter, a Cable Car director, met with Brian Schorr regarding the Merger Agreement. Conference calls were also held with Cable Car's 39 legal counsel and Triarc's outside legal advisors to finalize the terms of the Merger Agreement. On June 24, 1997, Montgomery Securities provided the Cable Car Board with its written opinion confirming its June 19, 1997 oral opinion as delivered previously to the Cable Car Board. On June 24, the Merger Agreement and the Stockholders Agreement were executed. On June 24, 1997, pursuant to a written consent in lieu of meeting, the Cable Car Board unanimously approved the final Merger Agreement and ratified and approved all actions taken previously by Cable Car's officers and directors in connection with the Merger. CABLE CAR'S REASONS FOR THE MERGER; RECOMMENDATION OF CABLE CAR'S BOARD OF DIRECTORS Cable Car has determined that the terms of the Merger Agreement and the transactions contemplated thereby (the 'Transactions') are fair to, and in the best interests of, Cable Car and its stockholders. Accordingly, the Cable Car Board has unanimously approved the Merger Agreement and recommends unanimously that the stockholders of Cable Car vote FOR approval of the Merger Agreement and the Merger. In reaching its determination, the Cable Car Board consulted with Cable Car's management, as well as its legal counsel and financial advisor, and considered the following material factors: 1. the opportunity that the Merger affords Cable Car's stockholders to reduce their exposure to the risks inherent in Cable Car's reliance on a limited number of products, primarily premium soft drinks and waters, and the difficulties in competing against larger companies with more diversified product lines and greater financial resources, and the fact that the consideration per share of Cable Car Common Stock appropriately recognizes the significant value of Cable Car's business; 2. the opportunity for Cable Car to gain greater market strength and market recognition for its products by combining with a large company; and the opportunity for Cable Car as a result of the Merger to offer its products as part of a broader range of premium beverages, including Snapple; 3. the ability the Merger affords Cable Car to utilize the resources of the combined companies to develop additional products and new flavors and formulations for existing products and to develop those products more rapidly; 4. potential revenue synergies, including the ability to market Cable Car's products through Triarc's distribution channels and to sell Cable Car's products together with Triarc's products; 5. potential cost synergies, through consolidation and integration of certain manufacturing, distribution, sales and administrative operations and functions; 6. the role that Cable Car's management, which the Cable Car Board believes is experienced and proven in the beverage industry, will play in the management of Triarc's Beverage Group; 7. the Merger would reduce the possibility of Cable Car losing distributors and/or market share due to Triarc's potential development or acquisition of a brand directly competitive with the Stewart's brand; 8. information concerning the financial performance and condition, business operations and prospects of each of Triarc and Cable Car; 9. the fact that the Merger would allow holders of Cable Car Common Stock (a Nasdaq SmallCap company) to obtain an equity interest in Triarc (a New York Stock Exchange listed company) and to achieve greater liquidity than could be achieved by continuing to hold Cable Car Common Stock; 10. the Conversion Price and the 1997 trading prices for Cable Car Common Stock and Triarc Common Stock and the fact that the consideration per share of Cable Car Common Stock that may be received under the Merger Agreement represents a premium over trading prices, during the last year, of Cable Car Common Stock and recognizes the significant value of Cable Car's business; 11. the opportunity to permit the stockholders of Cable Car to benefit from Triarc's anticipated turnaround of the Snapple business; 12. the expectation that the Merger will be nontaxable to the stockholders of Cable Car for federal income tax purposes; 40 13. the opinion of Montgomery Securities dated June 24, 1997 (see 'The Proposed Merger and Related Matters -- Opinion of Financial Advisor to Cable Car'); and 14. the opportunity for stockholders of Cable Car to vote on whether to approve the Merger Agreement and the Merger. In view of the wide variety of factors considered by the Cable Car Board, it did not find it practicable to quantify, or otherwise attempt to assign relative priorities or weights to the factors listed above. Consequently, the Cable Car Board did not quantify the assumptions and results of its analysis in reaching its determination that the terms of the Merger Agreement and the Transactions are fair to, and in the best interests of, Cable Car and its stockholders. THE CABLE CAR BOARD UNANIMOUSLY RECOMMENDS THAT CABLE CAR STOCKHOLDERS VOTE FOR APPROVAL OF THE MERGER AGREEMENT AND THE MERGER. TRIARC'S REASONS FOR THE MERGER The Triarc Board has determined that the Merger Agreement and the Transactions are fair to, and in the best interests of, Triarc. Accordingly, the Triarc Board has unanimously approved the Merger Agreement and the Merger. In reaching its determination, the Triarc Board consulted with Triarc's management, as well as its legal counsel, and considered the following material factors: 1. the opportunity to add the premium brands distributed and marketed by Cable Car, particularly the Stewart's brand, to the Triarc Beverage Group's premium beverage offerings, as well as optimizing use of the Stewart's trademark; 2. the potential to increase Cable Car's sales and profitability through improved distribution and potential cost savings through increased purchasing efficiencies; 3. that Cable Car's management, which Triarc believes is experienced and proven in the beverage industry, will enhance the management of the Triarc Beverage Group; 4. information concerning the financial performance and condition, business operations and prospects of Cable Car; 5. the opportunity to acquire Cable Car in a stock for stock transaction, thereby enabling Triarc to use its cash on hand to pursue additional acquisitions in the future; and 6. the opportunity to have a physical presence in the Western United States which will expand Triarc's exposure and access to new beverage products and brands. In connection with Triarc's review of Cable Car and in the course of the negotiations described in ' -- Background of the Merger' above, Cable Car and its representatives provided Triarc with certain financial projections, which Triarc believes are not publicly available, which projections forecast, for the year ended December 31, 1997, Cable Car's net sales, gross profit and net income to be approximately $26.0 million, $7.2 million and $1.9 million, respectively. EFFECTIVE TIME If the Merger Agreement and the Merger are approved by the requisite vote of Cable Car's stockholders and all other conditions to the Merger are satisfied or waived (other than those conditions that can be satisfied on the closing date), the Merger will be consummated and effected at such time as the Certificate of Merger, in accordance with the relevant provisions of the DGCL, shall have been accepted for filing by the Secretary of State of the State of Delaware (or at such later time as agreed to by the parties to the Merger Agreement and specified in the Certificate of Merger). The Merger Agreement provides that Triarc and Cable Car will cause the Effective Time to occur as promptly as practicable following the satisfaction or waiver of all of the conditions (other than those conditions that can be satisfied on the closing date) set forth in the Merger Agreement. The Merger Agreement also provides that the officers and directors of Mergerco immediately prior to the Effective Time will be the initial officers and directors of the Surviving Corporation, in each case until their respective successors are duly elected or appointed and qualified in the manner provided in the Certificate of Incorporation and Bylaws of the Surviving Corporation, or as otherwise provided by law. Pursuant to the Simpson Employment Agreement, Samuel M. Simpson will become the President and Chief Executive Officer of 41 the Surviving Corporation. See 'Management of Surviving Corporation -- Simpson Employment Agreement.' Subject to the terms of the Merger Agreement, at the Effective Time, (a) the Certificate of Incorporation of the Surviving Corporation will be the Restated Certificate of Incorporation as set forth in Exhibit A to the Merger Agreement and (b) the Bylaws of Mergerco, as in effect immediately prior to the Effective Time, will be the Bylaws of the Surviving Corporation until thereafter amended as provided by law, the Certificate of Incorporation of the Surviving Corporation and such Bylaws. The Merger Agreement may be terminated prior to the Effective Time by either Triarc or Cable Car in certain circumstances, whether before or after approval of the Merger Agreement by the Cable Car stockholders. See 'The Merger Agreement -- Termination.' CONVERSION OF SHARES OF CABLE CAR COMMON STOCK If the Merger Agreement and the Merger are approved by the requisite vote of Cable Car's stockholders and all other conditions to the Merger are satisfied or waived, then Mergerco will be merged into Cable Car, which will be the Surviving Corporation and which will thereupon become a wholly owned subsidiary of Triarc. In the Merger, each share of Cable Car Common Stock outstanding immediately prior to the Effective Time (other than treasury shares and shares held by Triarc and its subsidiaries and subsidiaries of Cable Car, all of which will be canceled, and shares with respect to which the holder has properly exercised its appraisal rights under Delaware law) will be converted into the right to receive 0.1722 shares of Triarc Common Stock, subject to the adjustment described below, and any cash to be paid in lieu of fractional shares of Triarc Common Stock. The Conversion Price is subject to adjustment as follows: (i) if the Average Triarc Share Price is less than $18.875, then the Conversion Price shall be adjusted to equal the quotient of $3.25 divided by such Average Triarc Share Price, and (ii) if the Average Triarc Share Price is greater than $24.50, then the Conversion Price shall be adjusted to equal the quotient of $4.22 divided by such Average Triarc Share Price (the Conversion Price, as so adjusted, is referred to herein as the 'Adjusted Conversion Price'). OPINION OF FINANCIAL ADVISOR TO CABLE CAR In connection with its consideration of the Merger, the Cable Car Board engaged Montgomery Securities to conduct a financial review of the Merger Agreement and of the businesses of Cable Car and Triarc. Montgomery Securities is an internationally recognized investment banking firm that regularly engages in the valuation of businesses and their securities in connection with mergers and acquisition transactions. The Cable Car Board selected Montgomery Securities to conduct this review for use by the directors in connection with their consideration of the Merger because Montgomery Securities is highly respected and is experienced in financial matters as they relate to the Merger. Cable Car had not previously retained Montgomery Securities to provide any valuation, financial advisory or other services to Cable Car or its directors other than as set forth above in connection with the Merger. The engagement of Montgomery Securities was limited to its analysis of the financial fairness of the aggregate consideration to be received by the holders of Cable Car Common Stock in the Merger. Such engagement did not extend to any other aspect of the Merger, including (without limitation) the relative merits of the Merger, any alternatives to the Merger or Cable Car's underlying decision to proceed with or effect the Merger. THE OPINION OF MONTGOMERY SECURITIES WAS DIRECTED SOLELY TO THE CABLE CAR BOARD FOR ITS CONSIDERATION IN CONNECTION WITH THE MERGER, AND IS NOT A RECOMMENDATION TO ANY HOLDER OF CABLE CAR COMMON STOCK AS TO WHETHER THE MERGER IS IN SUCH HOLDER'S BEST INTERESTS OR AS TO WHETHER HOLDERS OF CABLE CAR COMMON STOCK SHOULD VOTE FOR OR AGAINST THE MERGER. THE FULL TEXT OF SUCH WRITTEN OPINION OF MONTGOMERY SECURITIES DATED JUNE 24, 1997 IS ATTACHED HERETO AS APPENDIX C, AND SETS FORTH CERTAIN IMPORTANT QUALIFICATIONS, ASSUMPTIONS MADE, MATTERS CONSIDERED, AREAS OF RELIANCE ON OTHERS AND LIMITATIONS ON THE REVIEW UNDERTAKEN IN CONNECTION WITH SUCH OPINION. The summary description of such opinion set forth below is qualified in its entirety by the full text of the opinion attached hereto as Appendix C. 42 In connection with its opinion, Montgomery Securities (i) reviewed certain publicly available financial and other data with respect to Cable Car and Triarc, including the consolidated financial statements for recent years and interim periods to March 31, 1997, and certain other relevant financial and operating data relating to Cable Car and Triarc made available to it from published sources and from the internal records of Cable Car and Triarc; (ii) reviewed the financial terms and conditions of the Merger Agreement; (iii) reviewed certain publicly available information concerning the trading of, and the trading market for, Cable Car Common Stock and Triarc Common Stock; (iv) compared Cable Car and Triarc from a financial point of view with certain other companies in the beverage industry which Montgomery Securities deemed to be relevant; (v) considered the financial terms, to the extent publicly available, of selected recent business combinations of companies in the beverage industry which Montgomery Securities deemed to be comparable, in whole or in part, to the Merger; (vi) reviewed and discussed with representatives of the management of Cable Car and Triarc certain information of a business and financial nature regarding Cable Car and Triarc furnished by Cable Car and Triarc to Montgomery Securities, including financial forecasts and related assumptions of Cable Car and Triarc; (vii) made inquiries regarding and discussed the Merger and the Merger Agreement and other matters related thereto with Cable Car's counsel; and (viii) performed such other analyses and examinations as Montgomery Securities deemed appropriate. Based upon its review of the foregoing, but subject to the limitations set forth below and in reliance upon the assumptions set forth below, Montgomery Securities provided the Board of Directors with its opinion as investment bankers that as of the date of their opinions (June 24, 1997 and June 19, 1997), the aggregate consideration to be received by the holders of Cable Car Common Stock pursuant to the Merger was fair to such holders of Cable Car Common Stock from a financial point of view. In connection with its review, Montgomery Securities did not assume any obligation to verify the above described information reviewed by it, and relied on its being accurate and complete in all material respects. With respect to the financial forecasts for Cable Car and Triarc provided to Montgomery Securities by Cable Car's and Triarc's respective managements, Montgomery Securities assumed that the forecasts (including the assumptions made by Triarc's management regarding the recent acquisition of Snapple by Triarc) had been reasonably prepared on bases reflecting the best available estimates and judgements of the respective managements as to the future financial performance of Cable Car and Triarc, and that such projections provided a reasonable basis upon which Montgomery Securities could form its opinion. Montgomery Securities also assumed that there had been no material changes in Cable Car's or Triarc's assets, financial condition, results of operations, business or prospects since the respective dates of their last financial statements made available to Montgomery Securities. Montgomery Securities relied on advice of the counsel and the independent accountants to Cable Car as to all legal and financial reporting matters with respect to Cable Car, the Merger and the Merger Agreement. Montgomery Securities assumed that the Merger will be consummated in a manner that complies in all respects with the applicable provisions of the Securities Act, the Exchange Act and all other applicable federal and state statutes, rules and regulations. In addition, Montgomery Securities did not assume responsibility for making an independent evaluation, appraisal or physical inspection of any of the assets or liabilities (contingent or otherwise) of Cable Car or Triarc, nor was Montgomery Securities furnished with any such appraisals. Finally, Montgomery Securities' opinion was based on economic, monetary, market and other conditions as in effect on, and the information made available to Montgomery Securities as of, the date of the opinion (June 24, 1997). Accordingly, although subsequent developments may affect this opinion, Montgomery Securities did not assume and does not have any obligation to update, revise or reaffirm this opinion. Montgomery Securities further assumed that the Merger will be consummated in accordance with the terms described in the Merger Agreement, without any further amendments thereto, and without waiver by Cable Car of any of the conditions to its obligations thereunder. The full text of the Merger Agreement is attached hereto as Appendix B-1 and the terms described in the Merger Agreement and the conditions to Cable Car's obligations thereunder should be reviewed and understood by holders of Cable Car Common Stock in connection with their consideration of the Merger. Finally, Montgomery Securities did not and could not express any opinion regarding the price at which the Triarc Common Stock may trade at any future time. Since the aggregate consideration to be 43 received by the holders of Cable Car Common Stock pursuant to the Merger is based upon a fixed exchange ratio (subject to a collar), the market value of the aggregate consideration that holders of Cable Car Common Stock will receive in the Merger may vary significantly from what such holders would have received when the opinion of Montgomery Securities was presented to the Cable Car Board. Additionally, the market value of the aggregate consideration received by holders of Cable Car Common Stock in the Merger can be expected to change after the consummation of the Merger as the trading price of Triarc Common Stock changes in the ordinary course (or otherwise) of purchases and sales in the open market. Set forth below is a brief summary of the report presented by Montgomery Securities to the Cable Car Board on June 19, 1997 in connection with its opinion described above. Comparable Company Analysis. Using public and other available information, Montgomery Securities calculated the imputed per share value of the Cable Car Common Stock based on the multiples of last twelve months' earnings before interest, taxes, depreciation and amortization ('LTM EBITDA') at which six publicly traded beverage companies (the 'Beverage Companies') were trading on June 17, 1997. The Beverage Companies were Boston Beer Company, Inc., Hansen Natural Corp., National Beverage Corp., Odwalla, Inc., Redhook Ale Brewery and Seven UP RC Bottling Co. The June 17, 1997 stock prices of the Beverage Companies reflected a mean LTM EBITDA multiple of 9.8x and a median LTM EBITDA multiple of 9.7x. Montgomery Securities applied the mean and median multiples of LTM EBITDA for the Beverage Companies to the LTM EBITDA of Cable Car and to the earnings before interest, taxes, depreciation and amortization ('EBITDA') projected by Cable Car's management for its 1997 fiscal year (the '1997 EBITDA'). Montgomery Securities also made applicable adjustments to reflect that Cable Car did not have any long term debt and had a positive cash position (defined as cash minus debt) as of March 31, 1997 of $1.3 million. This analysis indicated an imputed equity value (defined as aggregate value plus the positive cash position) of Cable Car of between $27.9 million and $33.2 million, or between $3.11 and $3.71 per share. Comparable Transaction Analysis. Montgomery Securities reviewed the consideration paid in merger and acquisition transactions in the beverage industry that have been announced since 1990. Montgomery Securities analyzed the consideration paid in such transactions as a multiple of the target companies' LTM EBITDA. Such analysis yielded mean and median multiples of 10.9x and 11.5x LTM EBITDA, respectively. Montgomery Securities then applied the foregoing multiples to Cable Car's LTM EBITDA and 1997 EBITDA, and added Cable Car's positive cash position as of March 31, 1997 ($1.3 million). This analysis indicated an imputed equity value of Cable Car of between $31.1 million and $38.9 million, or between $3.47 and $4.35 per share. Premiums Paid Analysis. Montgomery Securities reviewed the consideration paid in comparable U.S. acquisitions involving cash consideration of between $25 million and $60 million that have been announced since January 1, 1994. Montgomery Securities calculated the premiums paid in these transactions over the applicable stock prices of the target companies one week prior to the announcement of the acquisition offer, and then calculated the mean and median of those premiums (which were 40.6% and 36.8%, respectively). Montgomery Securities then applied the mean and median premiums so derived to Cable Car's closing stock prices on April 25, 1997 ($2.38) and June 17, 1997 ($3.69), and added the positive cash position as of March 31, 1997 ($1.3 million). The share price of Cable Car as of April 25, 1997, was selected for this analysis because on that date an article appeared in Beverage Digest which discussed a potential merger involving Cable Car and Triarc. This analysis indicated an imputed equity value of Cable Car of between $30.4 million and $31.2 million, or between $3.40 and $3.49 per share, based on the price of Cable Car Common Stock prior to the Beverage Digest article, and between $46.4 million and $47.7 million, or between $5.18 and $5.33 per share, based on the price of Cable Car Common Stock on June 17, 1997. No other company or transaction used in the comparable company analysis, the comparable transactions analysis or the premiums paid analysis as a comparison is identical to Cable Car or the Merger. Accordingly, an analysis of the results of the foregoing is not mathematical; rather, it involves complex considerations and judgments concerning differences in financial and operating characteristics of the companies and other factors that could affect the public trading value of the companies to which Cable Car and the Merger are being compared. 44 Discounted Cash Flow Analysis. Montgomery Securities applied a discounted cash flow analysis to Cable Car's financial forecasts for 1997 (prepared by Cable Car's management and provided to Montgomery Securities) and for 1998 through 2002 (prepared by Montgomery Securities using 10% growth in revenues and constant margins as assumptions). Cable Car did not provide Montgomery Securities with any financial forecasts for periods beyond 1997. In conducting its discounted cash flow analysis, Montgomery Securities first calculated the estimated future streams of free cash flows that Cable Car would produce through 2002 (using Cable Car's management's 1997 financial forecasts for 1997, and applying the mathematical assumptions with respect to revenues and margins set forth above for 1998 through 2002). Second, Montgomery Securities estimated Cable Car's aggregate value at the end of 2002 by applying a range from multiples of 8.0x to 10.0x to Cable Car's estimated EBITDA (calculated as set forth from the mathematical assumptions set forth above) in 2002. Such cash flow streams and aggregate values were discounted to present values using discount rates ranging from 9.0% to 14.0%, chosen to reflect different assumptions regarding Cable Car's cost of capital. The amount of Cable Car's positive cash position was then added to such present values. This analysis indicated an imputed equity value of Cable Car of between $31.2 million and $44.9 million, or between $3.48 and $5.02 per share. Pro Forma Merger Analysis. Holders of Cable Car Common Stock will receive Triarc Common Stock in the Merger. Montgomery Securities reviewed and analyzed the pro forma financial impact of the Merger on the projected earnings per share for Triarc Common Stock forecast by Triarc's management for Triarc's 1997 fiscal year. Assuming the accuracy of the financial forecasts provided to Montgomery Securities by the management of Cable Car and Triarc, and without giving effect to any operating synergies that might be realized following the Merger, this analysis indicated that the Merger should be non-dilutive to Triarc's anticipated 1997 earnings per share. While the foregoing summary describes all analyses and examinations that Montgomery Securities deemed material to the preparation of its opinion to the Cable Car Board, it does not purport to be a comprehensive description of all analyses and examinations actually conducted by Montgomery Securities. The preparation of a fairness opinion necessarily is not susceptible to partial analysis or summary description; and selecting portions of the analyses and of the factors considered by Montgomery Securities, without considering all analyses and factors, would create an incomplete view of the process underlying the analyses set forth in the presentation of Montgomery Securities to the Cable Car Board on June 19, 1997. In addition, Montgomery Securities may have given some analyses more or less weight than other analyses, and may have deemed various assumptions more or less probable than other assumptions. Accordingly, the ranges of valuations resulting from any particular analysis described above should not be taken to be Montgomery Securities' view of the actual value of Cable Car or Cable Car Common Stock. To the contrary, Montgomery Securities expressed no opinion on the actual value of Cable Car or Cable Car Common Stock, and its opinion that is addressed and limited to the Cable Car Board extends only to the belief expressed by Montgomery Securities that the immediate value to holders of Cable Car Common Stock, from a financial point of view under the Merger, is within the range of values that might fairly be ascribed to the Cable Car Common Stock as of the date of the opinions of Montgomery Securities (June 24, 1997 and June 19, 1997). In performing its analyses, the Montgomery Securities made numerous assumptions with respect to industry performance, general business and economic conditions and other matters, many of which are beyond the control of Cable Car and Triarc. The analyses performed by Montgomery Securities are not necessarily indicative of actual values or actual future results, which may be significantly more or less favorable than those suggested by such analyses. Such analyses were prepared solely as part of Montgomery Securities' analysis for the Cable Car Board of the fairness of the Merger to Cable Car from a financial point of view, and were provided solely to the Cable Car Board in connection with the Cable Car Board's consideration of the Merger. The analyses do not purport to be appraisals or to reflect the prices at which a company might actually be sold or the prices at which any securities may trade at any time in the future. Montgomery Securities used in its analyses various projections of future performance prepared by the managements of Cable Car and Triarc. The projections are based on numerous variables and assumptions which are inherently unpredictable and must be considered not 45 certain of occurrence as projected. Accordingly, actual results could vary significantly from those set forth in such projections. As described above, the opinion of Montgomery Securities and the presentation to the Cable Car Board summarized above were among the many factors taken into consideration by the Cable Car Board in making its determination to approve, and to recommend that its stockholders approve the Merger. Montgomery Securities, however, does not make any recommendation to holders of Cable Car Common Stock (or to any other person or entity) as to whether such stockholders should vote for or against the Merger. CERTAIN FEDERAL INCOME TAX CONSEQUENCES The following summary describes the material federal income tax consequences of the Merger to Cable Car and holders of Cable Car Common Stock who are citizens or residents of the United States. It does not discuss all the tax consequences that may be relevant to Cable Car stockholders in special tax situations (such as insurance companies, financial institutions, dealers in securities, tax-exempt organizations or non-U.S. persons) or to Cable Car's stockholders who acquired their shares of Cable Car Common Stock pursuant to the exercise of employee stock options or warrants, or otherwise as compensation. The summary also does not discuss tax consequences to holders of outstanding Cable Car stock options. Neither Triarc nor Cable Car has obtained a ruling from the IRS with regard to any of the federal income tax consequences of the Merger. The opinion of counsel to Cable Car as to the federal income tax consequences of the Merger set forth in the next paragraph will not be binding on the IRS or the courts. Sherman & Howard L.L.C., of Denver, Colorado, special tax counsel to Cable Car, is of the opinion that, under present federal income tax law, and based on (i) certain representations regarding factual matters and certain covenants as to future actions made by Triarc, Cable Car and major holders of Cable Car Common Stock, and (ii) the assumption that the Merger and related transactions will take place as described in the Merger Agreement, the Merger will constitute a reorganization for federal income tax purposes within the meaning of Section 368(a) of the Code. Cable Car stockholders should be aware that if these representations are incorrect, if these covenants are not complied with, or if the transactions do not occur as described in the Merger Agreement, the conclusions reached by counsel in its opinion might be jeopardized. Under the Merger Agreement, it is a condition precedent to Cable Car's obligation to consummate the Merger that Sherman & Howard L.L.C. deliver to Cable Car an opinion to the effect of the foregoing. Provided that the Merger qualifies as a reorganization, (i) Cable Car will not recognize any taxable gain or loss as a result of the Merger, (ii) no gain or loss will be recognized by Cable Car's stockholders upon the conversion of their shares of Cable Car Common Stock into shares of Triarc Common Stock pursuant to the terms of the Merger (except to the extent cash is received in lieu of fractional shares), (iii) the aggregate tax basis of the shares of Triarc Common Stock into which shares of Cable Car Common Stock are converted pursuant to the Merger will be the same as the aggregate tax basis of such Cable Car Common Stock surrendered in the exchange (reduced by the portion of the stockholder's tax basis properly allocated to the fractional share interest, if any, for which the stockholder receives cash) and (iv) the holding period for shares of Triarc Common Stock into which shares of Cable Car Common Stock are converted pursuant to the Merger will include the period that such shares of Cable Car Common Stock were held by the holder, provided that such shares were held as a capital asset by the holder at the Effective Time. Any Cable Car stockholder who receives cash in lieu of a fractional share of Triarc Common Stock will be treated for federal income tax purposes as receiving cash in redemption of the fractional share interest. The cash payment will be treated as a distribution in redemption of Triarc Common Stock under Section 302 of the Code, so that such Cable Car stockholder will generally recognize gain or loss equal to the difference between the cash received and such stockholder's tax basis in the fractional share. Such gain or loss will be capital gain or loss if such Cable Car Common Stock is held as a capital asset at the Effective Time. If such Cable Car Common Stock was held for more than 12 months prior 46 to the Effective Time, such gain or loss recognized upon the receipt of cash in lieu of a fractional share will generally be long-term capital gain or loss. The distinction between capital gain or loss and ordinary income or loss is important for purposes of the limitations on a stockholder's ability to offset capital losses against ordinary income, and because Cable Car stockholders that are individuals may be entitled to a preferential rate on long-term capital gains. The Taxpayer Relief Act of 1997 further reduces tax rates on capital gains recognized by individuals in respect of assets held for more than 18 months. Cable Car stockholders are advised to consult with their own tax advisors regarding the application of the Taxpayer Relief Act of 1997 to their particular circumstances. A successful IRS challenge to the reorganization status of the Merger would result in Cable Car stockholders recognizing taxable gain or loss with respect to each share of Cable Car Common Stock surrendered equal to the difference between the stockholder's tax basis in such share and the fair market value, as of the Effective Time, of the Triarc Common Stock received in exchange therefor. In such event, a stockholder's aggregate basis in the Triarc Common Stock so received would equal the fair market value of such stock as of the Effective Time, and the stockholder's holding period for such stock would begin the day after the Effective Time. THE DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION ONLY. THE DISCUSSION IS BASED ON CURRENTLY EXISTING PROVISIONS OF THE CODE, EXISTING AND PROPOSED TREASURY REGULATIONS, AND CURRENT ADMINISTRATIVE RULINGS AND COURT DECISIONS. ALL THE FOREGOING IS SUBJECT TO CHANGE, AND ANY SUCH CHANGE COULD AFFECT THE CONTINUING VALIDITY OF THIS DISCUSSION. NO INFORMATION IS PROVIDED WITH RESPECT TO THE TAX CONSEQUENCES, IF ANY, OF THE MERGER UNDER APPLICABLE FOREIGN, STATE AND LOCAL LAWS. CABLE CAR'S STOCKHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE SPECIFIC TAX CONSEQUENCES TO THEM OF THE MERGER, INCLUDING TAX RETURN REPORTING REQUIREMENTS, THE APPLICABILITY AND EFFECT OF FOREIGN, STATE, LOCAL AND OTHER APPLICABLE TAX LAWS AND THE POSSIBLE EFFECT OF ANY PROPOSED CHANGES IN THE TAX LAWS. ACCOUNTING TREATMENT The Merger will be accounted for by Triarc under the 'purchase' method of accounting in accordance with generally accepted accounting principles. Therefore, the aggregate Merger Consideration paid by Triarc will be allocated to the Cable Car assets acquired and liabilities assumed based on their fair values; and the results of operations of Cable Car will be included in the results of operations of Triarc only for periods subsequent to the Effective Time. RESALE OF TRIARC COMMON STOCK BY AFFILIATES The shares of Triarc Common Stock to be issued in the Merger will be registered under the Securities Act pursuant to the Registration Statement of which this Proxy Statement/Prospectus is a part, thereby allowing such shares of Triarc Common Stock to be freely transferable under the Securities Act, except for shares issued pursuant to the terms of the Merger Agreement to any holder of Cable Car Common Stock who may be deemed to be an 'affiliate' of Cable Car or Triarc for purposes of Rule 145 under the Securities Act. Such affiliates may not sell their shares of Triarc Common Stock acquired in connection with the Merger, except pursuant to an effective registration statement under the Securities Act covering such shares, or in compliance with Rule 145, Rule 144 or another applicable exemption from the registration requirements of the Securities Act. Persons who may be deemed to be affiliates of an entity generally include individuals or entities that control, are controlled by or are under common control with such entity, and includes the directors, the executive officers and the principal stockholders of such entity. Cable Car has agreed in the Merger Agreement to use its best efforts to cause each director, executive officer and other person who may be deemed an affiliate (for the purposes of Rule 145) of Cable Car to execute and deliver a written agreement intended to ensure compliance with the Securities Act, the form of which is attached to the Merger Agreement as Exhibit B. 47 This Proxy Statement/Prospectus cannot be used for resales of Triarc Common Stock received by any person who may be deemed an affiliate of Cable Car. REGULATORY APPROVALS Under the HSR Act and the rules thereunder promulgated by the Federal Trade Commission (the 'FTC'), the Merger may not be consummated until notifications have been given and certain information has been furnished to the FTC and the Antitrust Division of the United States Department of Justice (the 'Antitrust Division') and specified waiting period requirements have been satisfied. Triarc and Cable Car filed the required notification and report forms under the HSR Act with the FTC and the Antitrust Division with a request for early termination of the waiting period with respect thereto and on October 15, 1997 were notified that the waiting period had been terminated. Other than the expiration or termination of the applicable waiting period under the HSR Act, the Commission declaring effective the Registration Statement containing this Proxy Statement/Prospectus, approvals in connection with compliance with applicable Blue Sky or state securities laws and the filing of the Certificate of Merger with the Secretary of State of the State of Delaware, neither the management of Triarc nor the management of Cable Car believes that any filing with or approval of any governmental authority is necessary in connection with the consummation of the Merger. Pursuant to the Merger Agreement, Triarc, Mergerco and Cable Car each have agreed to take all reasonable actions necessary to comply promptly with all legal requirements which may be imposed on it with respect to the Merger Agreement and the consummation of the Merger. Each of Triarc, Mergerco and Cable Car have agreed to take, and cause their subsidiaries to take, all reasonable actions necessary to obtain any consent, authorization, order or approval of, any governmental authority or other third party required to be obtained or made by Triarc, Mergerco or Cable Car or any of their subsidiaries in connection with the Merger and the transactions contemplated by the Merger Agreement. SECTION 203 OF THE DGCL Section 203 of the DGCL ('Section 203') prohibits a Delaware corporation from engaging in a 'business combination' with an 'interested stockholder' for three years following the time that such person becomes an interested stockholder. With certain exceptions, an interested stockholder is an individual, corporation, partnership, unincorporated association or other entity who or which owns 15% or more of the corporation's outstanding voting stock or is an affiliate or an associate of the corporation and was the owner of 15% or more of the corporation's outstanding voting stock at any time within the previous three years. For purposes of Section 203, the term 'business combination' is defined broadly to include mergers with or, with certain limitations, caused by the interested stockholder; sales or other dispositions to the interested stockholder (except proportionately with the corporation's other stockholders) of assets of the corporation or a majority-owned subsidiary equal to ten percent or more of the aggregate market value of the corporation's consolidated assets or its outstanding stock; the issuance or transfer by the corporation or a majority-owned subsidiary of stock of the corporation or of such subsidiary to the interested stockholder, with certain enumerated exceptions; most transactions involving the corporation or a majority-owned subsidiary having the effect of directly or indirectly increasing the interested stockholder's proportionate ownership of any class or series of the corporation's or such subsidiary's stock; or any receipt by the interested stockholder (except proportionately as a stockholder), directly or indirectly, of any loans, advances, guarantees, pledges or other financial benefits provided by or through the corporation or a majority-owned subsidiary. The three-year moratorium imposed on business combinations by Section 203 does not apply if (i) prior to the time when such stockholder becomes an interested stockholder the board of directors of the corporation approves either the business combination or the transaction which resulted in the person becoming an interested stockholder; (ii) upon consummation of the transaction which made him or her an interested stockholder the interested stockholder owns at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced (excluding from the calculation of outstanding shares those shares owned by directors who are also officers of the corporation and shares 48 held by employee stock plans which do not afford employees the right to decide confidentially whether to accept a tender or exchange offer); or (iii) on or after the time when such person becomes an interested stockholder, the board approves the business combination and it is also approved at the stockholder meeting by sixty-six and two-thirds percent (66 2/3%) of the outstanding voting stock not owned by the interested stockholder. Section 203 applies only to Delaware corporations which have a class of voting stock that is listed on a national securities exchange, authorized for quotation on NASDAQ or held of record by more than 2,000 stockholders. However, a Delaware corporation may elect not to be governed by Section 203 by a provision in its original certificate of incorporation or an amendment thereto or to the bylaws, which amendment must be approved by a majority of the shares entitled to vote. The Cable Car Charter does not include such a provision. The Cable Car Board believes that Section 203 will not be applicable to Triarc or its affiliates, as, prior to the time when Triarc or its affiliates would become an interested stockholder of Cable Car, the Cable Car Board approved the transaction which would result in Triarc or its affiliates becoming an interested stockholder. On June 19, 1997, the Cable Car Board approved the Merger Agreement, the Merger and all other transactions contemplated thereby, including the entering into and performance of the Stockholders Agreement, which, individually or collectively, constitute the transactions which will make Triarc or its affiliates an interested stockholder. In addition, on June 19, 1997, the Cable Car Board determined that neither Triarc nor any of its affiliates would be subject to the restrictions of Section 203 as an 'interested stockholder' of Cable Car as a result of the Merger Agreement, the Merger and all other transactions contemplated thereby, including the Stockholders Agreement. STOCK EXCHANGE LISTING Triarc will file an application to list the shares of Triarc Common Stock to be issued in connection with the Merger on the NYSE. Approval of such listing, subject to official notice of issuance, is a condition to consummation of the Merger. ADDITIONAL INTERESTS OF CABLE CAR MANAGEMENT In considering the recommendation of the Cable Car Board with respect to the Merger Agreement and the Transactions, holders of Cable Car Common Stock should be aware that certain members of Cable Car's management and of the Cable Car Board have interests in the Merger that are in addition to the interest of Cable Car stockholders generally. SIMPSON EMPLOYMENT AGREEMENT Samuel M. Simpson, the President and Chief Executive Officer and a director of Cable Car, currently has a three-year employment contract with Cable Car providing for an annual salary of $175,000 and annual bonuses based on Cable Car's revenues and profits. Mr. Simpson has entered into an agreement with Triarc that, upon the Effective Time, he will enter into the Simpson Employment Agreement with the Surviving Corporation which will supersede Mr. Simpson's existing employment agreement with Cable Car and provide for Mr. Simpson's employment as President and Chief Executive Officer of the Surviving Corporation and the Cable Car Subsidiaries, and a representative for the Triarc Beverage Group for the western United States. The Simpson Employment Agreement will have a three-year term. Pursuant to its terms, Mr. Simpson will receive an annual salary of $284,300 per year (subject to increase but not decrease during the initial term of the agreement) and be eligible to receive additional incentive cash compensation, Triarc stock options and other benefits as more fully described in 'Management of the Surviving Corporation -- Simpson Employment Agreement.' Mr. Simpson will also be entitled to a $400,000 bonus upon signing the Simpson Employment Agreement which will be refundable on a pro rata basis should he leave his employment prior to the first anniversary of the Effective Time. 49 ACCELERATION OF VESTING OF STOCK OPTIONS In accordance with the terms of their grant, all unvested Cable Car Stock Options, including those granted to officers, directors and non-director employees of Cable Car, will become immediately exercisable on the Effective Date of the Merger. The options for Triarc Common Stock to be issued by Triarc in the Merger to replace such Cable Car Stock Options will be immediately exercisable. See 'The Merger Agreement -- Cable Car Stock Options.' STOCKHOLDERS AGREEMENT In light of the time and expense Triarc would incur in pursuing the proposed transaction with Cable Car, as a condition to Triarc's execution of the Merger Agreement and for no separate consideration, Triarc required that Samuel M. Simpson, the President and Chief Executive Officer of Cable Car, Susan L. Neff, Mr. Simpson's wife, William H. Rutter, a director of Cable Car, and Susan L. Fralick, Mr. Rutter's wife (collectively, the 'Subject Stockholders'), execute the Stockholders Agreement with Triarc, which provides that the Cable Car Common Stock held by the Subject Stockholders will be voted in favor of the Merger. As of September 30, 1997, the Subject Stockholders owned an aggregate of 1,766,409 shares of Cable Car Common Stock, or approximately 19.7% of the shares of Cable Car Common Stock entitled to vote at the Special Meeting, which are subject to the terms of the Stockholders Agreement (such amount does not include 12,200 shares of Cable Car Common Stock owned by them but not subject to the Stockholders Agreement). Each Subject Stockholder has agreed that at any meeting of the holders of Cable Car Common Stock, he or she will, until the Effective Time or the termination of the Merger Agreement, vote or cause to be voted such Cable Car Common Stock and any Cable Car Common Stock acquired after the date of the Stockholders Agreement (collectively, the 'Subject Stock') in favor of approval of the Merger Agreement and the Merger and against any (i) action or agreement that would result in a breach of any of Cable Car's representations or warranties or obligations under the Merger Agreement, (ii) Acquisition Proposal, (iii) change in a majority of the Subject Stockholders who constitute the Cable Car Board, (iv) any change in the capitalization of Cable Car or any amendment of Cable Car's certificate of incorporation or bylaws, (v) any other material change in Cable Car's corporate structure or business, or (vi) any other action which is intended, or could reasonably be expected, to prevent or delay beyond December 31, 1997 the Merger or the other Transactions. Each Subject Stockholder has also granted Triarc an irrevocable proxy to vote his or her shares of Subject Stock as specified above in the event that such Stockholder fails to so vote his or her Subject Stock. In addition, pursuant to the Stockholders Agreement, each Subject Stockholder has granted to Triarc an exclusive and irrevocable option to purchase his or her Subject Stock in whole but not in part at any time after Cable Car has delivered to Triarc a Transaction Notice (as defined in 'The Merger Agreement -- No Solicitation of Transactions') or Cable Car has furnished confidential information to any person or entered into negotiations with any person with respect to an Acquisition Proposal (as defined in 'The Merger Agreement -- No Solicitation of Transactions'), at a price per share in cash equal to the product obtained by multiplying 0.1722 (the 'Option Conversion Price') and the average (without rounding) of the closing prices per share of Triarc Common Stock on the NYSE on the NYSE Composite Tape for the 15 consecutive NYSE trading days ending on the NYSE trading day immediately preceding the date of the closing of the exercise of the option (the 'Option Average Share Price'), subject to the following adjustment: if the Option Average Share Price is less than $18.875, then the Option Conversion Price will be adjusted to equal the quotient obtained by dividing $3.25 by the Option Average Share Price, and if the Option Average Share Price is greater than $24.50, then the Option Conversion Price will be adjusted to equal the quotient obtained by dividing $4.22 by the Option Average Share Price. All options granted to Triarc under the Stockholders Agreement must be exercised simultaneously. If the Merger Agreement is terminated pursuant to a Cable Car Default Termination or a Stockholder Vote Termination (as each such term is defined in 'The Merger Agreement -- Termination') and the Stockholders Agreement is not terminated as described in the next paragraph, then Triarc must exercise the options within 10 business days following such termination of the Merger Agreement, or the options will expire. 50 The Stockholders Agreement, including the options granted by the Subject Stockholders thereunder, will terminate if (i) the Effective Time occurs or (ii) the Merger Agreement is terminated pursuant to a (A) Consent Termination, an Optional Termination, a Triarc Default Termination or a Triarc Share Price Termination (as each such term is defined in 'The Merger Agreement -- Termination') or (B) a Cable Car Default Termination or a Stockholder Vote Termination (as each such term is defined in 'The Merger Agreement -- Termination') so long as Cable Car or its stockholders shall not have received an Acquisition Proposal (as defined in 'The Merger Agreement -- No Solicitation of Transactions') and the Cable Car Board shall not have withdrawn, or modified or changed in a manner adverse to Triarc or Mergerco its approval or recommendation of the Merger Agreement or the Merger. The Subject Stockholders received no separate consideration for executing the Stockholders Agreement and did so at Triarc's insistence in order for Triarc to agree to enter into the Merger Agreement. The Stockholders Agreement is attached as Appendix B-2 to this Proxy Statement/Prospectus and is incorporated herein by reference. The summary set forth above is qualified in its entirety by reference to the Stockholders Agreement. INDEMNIFICATION OF DIRECTORS AND OFFICERS Under the Merger Agreement, Triarc and the Surviving Corporation have agreed that the Certificate of Incorporation and Bylaws of the Surviving Corporation and each of the Cable Car Subsidiaries will contain provisions no less favorable with respect to indemnification of directors, officers, agents and employees and other individuals than those set forth in the certification of incorporation and Bylaws of Cable Car and the Cable Car Subsidiaries as in effect on the date of the Merger Agreement, and further agreed that such provisions will not be amended, repealed or otherwise modified for a period of five years after the Effective Time in any manner that would adversely affect the rights thereunder of individuals who at or prior to the Effective Time were directors, officers, agents or employees of Cable Car or any of the Cable Car Subsidiaries or who were otherwise entitled to indemnification pursuant to the certificate of incorporation and Bylaws of Cable Car or any of the Cable Car Subsidiaries. If the Surviving Corporation or any of the Cable Car Subsidiaries will not have the financial resources to satisfy its indemnification obligations to such persons as provided under its certificate of incorporation and Bylaws, Triarc has agreed that it will provide such indemnification of such persons to the extent so provided. 51 THE MERGER AGREEMENT The following is a summary of the material provisions of the Merger Agreement not summarized elsewhere in this Proxy Statement/Prospectus. The Merger Agreement is attached as Appendix B-1 to this Proxy Statement/Prospectus and is incorporated herein by reference. This summary is qualified in its entirety by reference to the Merger Agreement. CONVERSION OF SECURITIES At the Effective Time, by virtue of the Merger and without any action on the part of Mergerco, Cable Car or the holders of any of Cable Car's securities, each share of Cable Car Common Stock issued and outstanding immediately prior to the Effective Time (other than any shares of Cable Car Common Stock owned by Cable Car as treasury shares or by Triarc or any of its subsidiaries or any subsidiaries of Cable Car, which will be canceled, and shares of Cable Car Common Stock held by a person who has properly exercised his appraisal rights under Section 262 of the DGCL (the 'Dissenting Shares')) will be converted into the right to receive 0.1722 (the 'Conversion Price') of a share of Triarc Common Stock, subject to the adjustment described below, and any cash to be paid in lieu of fractional shares of Triarc Common Stock. The Conversion Price is subject to adjustment as follows: (i) if the Average Triarc Share Price (as defined below) is less than $18.875, then the Conversion Price shall be adjusted to equal the quotient of $3.25 divided by such Average Triarc Share Price, and (ii) if the Average Triarc Share Price is greater than $24.50, then the Conversion Price shall be adjusted to equal the quotient of $4.22 divided by such Average Triarc Share Price (the Conversion Price as so adjusted, is referred to herein as the 'Adjusted Conversion Price'). For example, if the Average Triarc Share Price is (i) $18.875 or greater, but not greater than $24.50, then each share of Cable Car Common Stock will be converted at the Effective Time into the right to receive 0.1722 of a share of Triarc Common Stock; (ii) $18.00, then each share of Cable Car Common Stock will be converted at the Effective Time into the right to receive 0.18056 of a share of Triarc Common Stock; and (iii) $26.00, then each share of Cable Car Common Stock will be converted at the Effective Time into the right to receive 0.16231 of a share of Triarc Common Stock. Under the Merger Agreement, the 'Average Triarc Share Price' means the average (without rounding) of the closing prices per share of Triarc Common Stock on the NYSE Composite Tape for the 15 consecutive NYSE trading days ending on the NYSE trading day immediately preceding the Closing Date. Holders of Dissenting Shares are entitled to exercise appraisal rights in connection with the Merger. See 'Appraisal Rights.' Each share of Cable Car Common Stock held in the treasury of Cable Car and each share of Cable Car Common Stock owned by Triarc or any direct or indirect wholly owned subsidiary of Triarc or any of the Cable Car Subsidiaries immediately prior to the Effective Time will, by virtue of the Merger, and without any action of the Company or the holder thereof, be canceled and extinguished without any conversion thereof and no payment will be made with respect thereto. Each share of the common stock, par value $1.00 per share, of Mergerco issued and outstanding immediately prior to the Effective Time will be converted into one validly issued, fully paid and non-assessable share of common stock, par value $1.00 per share, of the Surviving Corporation. EXCHANGE PROCEDURES As of the Effective Time, Triarc will deposit, or will cause to be deposited, with Harris Trust Company of New York or such other bank or trust company as may be designated by Triarc and approved by Cable Car, which approval will not be unreasonably withheld (the 'Exchange Agent'), for the benefit of the holders of Cable Car Common Stock, for exchange in accordance with the exchange procedures of the Merger Agreement through the Exchange Agent, certificates representing an aggregate number of shares of Triarc Common Stock as nearly as practicable equal to the product of the Adjusted Conversion Price and the number of outstanding shares of Cable Car Common Stock to be converted in accordance with the Merger Agreement (the 'Exchange Fund'). As promptly as practicable after the Effective Time, Triarc will cause the Exchange Agent to mail and/or make available to each holder of a certificate or certificates which immediately prior to the 52 Effective Time represented outstanding shares of Cable Car Common Stock (other than shares to be canceled without consideration pursuant to the Merger Agreement) (the 'Certificates') (i) a notice and letter of transmittal (which will advise the holder of the effectiveness of the Merger) and (ii) instructions for the procedure for effecting the surrender of the Certificates in exchange for certificates representing shares of Triarc Common Stock and cash in lieu of any fractional shares. Upon surrender to the Exchange Agent of a Certificate for cancellation, together with such letter of transmittal, duly executed and completed in accordance with the instructions thereon, and such other documents as may be reasonably required pursuant to such instructions, the holder of such Certificate will be entitled to receive in exchange therefor a certificate representing that number of whole shares of Triarc Common Stock which such holder has the right to receive in respect of the shares of Cable Car Common Stock formerly represented by such Certificate (after taking into account all shares of Cable Car Common Stock then held by such holder), cash in lieu of fractional shares of Triarc Common Stock to which such holder is entitled and any dividends or other distributions to which such holder is entitled, and the Certificate so surrendered will then be canceled. At the Effective Time, the Cable Car Common Stock transfer books will be closed and no further transfer of shares of Cable Car Common Stock will be made thereafter. Until surrendered as contemplated by these provisions of the Merger Agreement, each Certificate will be deemed at any time after the Effective Time to represent only the right to receive upon such surrender the certificate representing shares of Triarc Common Stock, cash in lieu of any fractional shares of Triarc Common Stock to which such holder is entitled and any dividends or other distributions to which such holder is entitled. DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES No dividends or other distributions declared or made after the Effective Time with respect to Triarc Common Stock with a record date at or after the Effective Time will be paid to the holder of any unsurrendered Certificate with respect to the shares of Triarc Common Stock represented thereby, and no cash payment in lieu of fractional shares will be paid to any such holder until the holder of such Certificate surrenders such Certificate. Upon surrender of any such Certificate, there will be paid to the person in whose name the shares of Triarc Common Stock is issued in exchange therefor, without interest, the amount of any dividends which will have become payable with respect to such shares of Triarc Common Stock between the Effective Time and the time of such surrender and at the appropriate payment date, the amount of dividends or other distributions, with a record date at or after the Effective Time but prior to surrender and a payment date occurring after surrender, payable with respect to such whole shares of Triarc Common Stock, subject in each case to deductions required by applicable law to be withheld and any applicable escheat laws or unclaimed property laws. NO FURTHER RIGHTS IN CABLE CAR COMMON STOCK All shares of Triarc Common Stock issued upon conversion of the shares of Cable Car Common Stock in accordance with the terms of the Merger Agreement (including any cash paid in respect of dividends, distributions and fractional shares) will be deemed to have been issued in full satisfaction of all rights pertaining to such shares of Cable Car Common Stock. NO FRACTIONAL SHARES Shares of the Triarc Common Stock shall be issued only in whole shares. A holder of Cable Car Common Stock immediately prior to the Effective Time will not be entitled to receive fractional shares of Triarc Common Stock (the 'Fractional Shares') but, instead, will be entitled to receive promptly from the Exchange Agent a cash payment in lieu of Fractional Shares in an amount equal to such stockholder's proportionate interest in the net proceeds from the sale or sales in the open market by the Exchange Agent, on behalf of all such stockholders, of the aggregate Fractional Shares. Such sales shall be made promptly after the Effective Time, or in the case of Dissenting Shares the holders of which have either withdrawn its demand for appraisal or failed to establish or lost or forfeit its appraisal rights, which become exchangeable for the Merger Consideration, promptly after such change in status of such Dissenting Shares. Such cash payments will be made to each such stockholder only upon proper 53 surrender of such stockholder's Certificates, together with a properly completed and duly executed transmittal form and any other required documents. CABLE CAR STOCK OPTIONS Each option issued by Cable Car that is exercisable for Cable Car Company Stock and outstanding immediately prior to the Effective Time (a 'Cable Car Option'), whether or not then vested or exercisable, shall, effective as of the Effective Time, and without any action on the part of the holder thereof, be assumed by Triarc and become and represent an option exercisable for shares of Triarc Common Stock (a 'Substitute Option') with the same expiration dates as such Cable Car Option immediately prior to the Effective Time (but taking into account any acceleration of the vesting of such Cable Car Option as a result of the consummation of the Merger), with the new exercise price thereof being determined by dividing the exercise price of such Cable Car Option by the Adjusted Conversion Price (with the result of such calculation rounded to the nearest whole cent), and the number of shares of Triarc Common Stock issuable upon exercise of the Substitute Options being determined by multiplying the number of shares to be issued upon exercise of such Cable Car Option by the Adjusted Conversion Price (with the result of such calculation rounded to the nearest whole number). As discussed in 'The Proposed Merger and Related Matters -- Additional Interests of Cable Car Management -- Acceleration of Vesting of Stock Options,' all unvested Cable Car Options will vest at the Effective Time. Triarc will file as soon as practicable after the Effective Time, but in no event later than 45 days after the Effective Time, and keep current, one or more registration statements on Form S-8 (or any successor or appropriate form) with respect to the shares of Triarc Common Stock subject to the Substitute Options so long as such Substitute Options remain outstanding. TERMINATION OF EXCHANGE FUND Any portion of the Exchange Fund which will not have been distributed to the holders of Cable Car Common Stock prior to the second anniversary of the Effective Time will be delivered to Triarc, and any holders of Cable Car Common Stock who have not previously complied with the exchange procedures set forth in the Merger Agreement will thereafter look only to Triarc for payment of the Merger Consideration to which they are entitled under the Merger Agreement, subject to escheat and similar laws. CERTAIN REPRESENTATIONS AND WARRANTIES The Merger Agreement contains various representations and warranties of Triarc, Mergerco and Cable Car relating to, among other things, the following matters (which representations and warranties are subject, in certain cases, to specified exceptions): (i) the due organization, power, authority and good standing of, and similar corporate matters with respect to, each of Triarc and Cable Car and their respective subsidiaries; (ii) the authorization, execution, delivery, performance and enforceability of the Merger Agreement by each party thereto; (iii) each of Triarc's and Cable Car's capital structure; (iv) the reports and other documents filed with the Commission and other regulatory authorities, the financial statements included therein and the accuracy of the information contained in each of them; (v) the absence of certain changes or events prior to the date of the Merger Agreement having a material adverse effect on Triarc and its subsidiaries, taken as a whole, or Cable Car and the Cable Car Subsidiaries, taken as a whole, as the case may be; and (vi) with respect to the Merger Agreement and the Merger, the absence of conflict with the certificate of incorporation and bylaws of each of Cable Car and the Cable Car Subsidiaries, the certificate of incorporation and bylaws of each of Triarc and its subsidiaries, and with applicable law or any material contracts to which Cable Car or Triarc or any of their respective subsidiaries, as the case may be, is a party or by which they may be bound. In addition, the Merger Agreement contains certain additional representations and warranties of Cable Car and the Cable Car Subsidiaries relating to (i) the vote required by Cable Car's stockholders to approve the Merger Agreement; (ii) the absence of undisclosed liabilities; (iii) the accuracy of the information provided by Cable Car for inclusion in the Registration Statement (including this Proxy Statement/Prospectus); (iv) compliance with laws; (v) the absence of pending or threatened litigation 54 affecting Cable Car or any of the Cable Car Subsidiaries; (vi) the payment of taxes, the filing of tax returns and other tax matters; (vii) compliance with contractual obligations; (viii) the absence of defaults under Cable Car's and the Cable Car Subsidiaries' contracts and the absence of contractual provisions limiting their right to compete; (ix) Cable Car's and the Cable Car Subsidiaries' ownership and right to use certain intellectual property and the absence of (A) any challenges to their intellectual property rights, or (B) any infringements or conflicts with their business and the intellectual property rights of third parties; (x) certain employee benefit plans and ERISA matters; (xi) the condition of Cable Car's inventory and receivables and the status of Cable Car's and the Cable Car Subsidiaries' ongoing relationship with their suppliers; (xii) historical case sales under the Stewart's Master Agreement and the worldwide scope of the territory subject to exclusive license thereunder; (xiii) transactions with affiliates; (xiv) the applicability of state takeover statutes to the Merger; and (xv) the absence of any brokerage, finder's or other fee due in connection with the Merger (except in the case of Montgomery Securities). The Merger Agreement contains certain additional representations and warranties of Triarc and Mergerco relating to (i) the accuracy of information contained in the Registration Statement (other than information provided by Cable Car for inclusion therein) and (ii) certain issues in connection Section 368(a) of the Code. CONDUCT OF BUSINESS PENDING THE MERGER Pursuant to the Merger Agreement, Cable Car has agreed that, between the date of the Merger Agreement and the Effective Time, except as provided in the Merger Agreement or unless Triarc shall have otherwise agreed in writing, (i) Cable Car's and the Cable Car Subsidiaries' business, including investment practices and policies, will be conducted only in, and Cable Car and the Cable Car Subsidiaries will not take any action except in, the ordinary course of business and in a manner consistent in all material respects with past practice; and (ii) each of Cable Car and the Cable Car Subsidiaries will use all reasonable efforts to preserve intact its business organization, and to maintain its existing relationships with material customers, distributors, suppliers, employees, creditors and business partners. Without limiting the generality of the foregoing, each of Cable Car and the Cable Car Subsidiaries will not, except as specified in the Merger Agreement or disclosed to Triarc on or before the date of the Merger Agreement, unless Triarc shall have otherwise agreed in writing: (i) amend its certificate of incorporation or bylaws or similar organizational documents; (ii) declare, set aside or pay any dividend or other distribution payable in cash, stock or property with respect to its capital stock other than dividends paid by Cable Car's wholly owned Subsidiaries to the Cable Car; (iii) issue, sell, transfer, pledge, dispose of or encumber any additional shares of, or securities convertible into or exchangeable for, or options, warrants, calls, commitments or rights of any kind to acquire, any shares of capital stock of any class of Cable Car or the Cable Car Subsidiaries, other than issuances pursuant to the exercise of stock options outstanding on the date of the Merger Agreement; (iv) transfer, lease, license, sell, mortgage, pledge, dispose of, or encumber any assets that are material to Cable Car and the Cable Car Subsidiaries taken as a whole other than sales of investment assets in the ordinary course of business consistent with past practice; (v) redeem, purchase or otherwise acquire directly or indirectly any of its capital stock; (vi) grant any increase in the compensation payable or to become payable by Cable Car or any of the Cable Car Subsidiaries to any officer or employee other than scheduled annual increases in the ordinary course of business consistent with past practice in an amount not to exceed five percent for any individual; (vii) adopt any new, or amend or otherwise increase, or accelerate the payment or vesting of the amounts payable or to become payable under any benefit plan; (viii) enter into any, or amend any existing, employment, consulting or severance agreement with or, except in accordance with the existing written policies of Cable Car, grant any severance or termination pay to any officer, director or employee of Cable Car or any of the Cable Car Subsidiaries; (ix) make any additional contributions to any grantor trust created by Cable Car to provide funding for non-tax-qualified employee benefits or compensation; or (x) provide any severance program to any Cable Car Subsidiary which does not have a severance program as of the date of the Merger Agreement; (xi) modify, amend or terminate any of the material contracts or waive, release or assign any material rights or claims; (xii) permit any material 55 insurance policy naming it as a beneficiary or a loss payable payee to be canceled or terminated; (xii) subject to certain specified exceptions, (A) incur or assume any debt except for borrowings under its existing credit facility in an amount exceeding $100,000, (B) assume, guarantee, endorse or otherwise become liable or responsible for the obligations of any other person, (C) make any loans, advances or capital contributions to, or investments in, any other person, or (D) enter into any material commitment (including, but not limited to, any capital expenditure, 'take-or-pay' contract or purchase of assets) in excess of $100,000; (xiii) change any of the accounting principles used by it except as required by generally accepted accounting principles; (xiv) pay, discharge or satisfy any material claims, liabilities or obligations; (xv) except as permitted in the Merger Agreement, adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other material reorganization of Cable Car or any of the Cable Car Subsidiaries or any agreement relating to an Acquisition Proposal (as defined in 'No Solicitation of Transactions' below) (other than the Merger); (xvi) engage in any transaction with, or enter into any agreement, arrangement, or understanding with any of Cable Car's affiliates; (xvii) make any tax election that would have a material adverse effect on Cable Car or any of the Cable Car Subsidiaries; and (xviii) enter into any agreement, commitment or arrangement to do any of the foregoing, or to authorize, recommend, propose or announce an intention to do any of the foregoing. Cable Car has also agreed that it will not, between the date of the Merger Agreement and the Effective Time, intentionally take or cause to be taken any action that would disqualify the Merger from constituting a tax-free 'reorganization' under Section 368(a) of the Code. NO SOLICITATION OF TRANSACTIONS Pursuant to the Merger Agreement, Cable Car has agreed that it will not directly or indirectly, and will not authorize or permit any of the Cable Car Subsidiaries or any officer, director, employee, agent, investment banker, financial advisor, attorney, accountant, broker, finder or other representative of Cable Car or any of the Cable Car Subsidiaries directly or indirectly to, (i) solicit, initiate, encourage or induce the making, submission or announcement of any Acquisition Proposal (as defined below) or take any action that could reasonably be expected to lead to an Acquisition Proposal, (ii) furnish any nonpublic information regarding any of Cable Car and the Cable Car Subsidiaries to any person in connection with or in response to an Acquisition Proposal, (iii) engage in discussions with any person with respect to any Acquisition Proposal, (iv) approve, endorse or recommend (or agree to approve, endorse or recommend) any Acquisition Proposal or (v) enter into any letter of intent or similar document or any agreement contemplating or otherwise relating to any Acquisition Proposal. Notwithstanding the foregoing, the Merger Agreement permits Cable Car to furnish nonpublic information regarding Cable Car and the Cable Car Subsidiaries to, or enter into discussions with, any person in response to an unsolicited bona fide written Acquisition Proposal submitted (and not withdrawn) by such person if (1) the Cable Car Board concludes in good faith, based upon the advice of its financial advisor, that such Acquisition Proposal would result in a transaction that is more favorable from a financial point of view to Cable Car's stockholders than the Merger, (2) the Cable Car Board concludes in good faith, after consultation with outside legal counsel, that such action is required in order for the Cable Car Board to comply with its fiduciary obligations to Cable Car's stockholders under applicable law, (3) prior to furnishing any such nonpublic information to, or entering into discussions with, such person, Cable Car gives Triarc written notice of the identity of such person and of Cable Car's intention to furnish nonpublic information to, or enter into discussions with, such person, (4) Cable Car receives from such person an executed confidentiality agreement, and (5) prior to furnishing any such nonpublic information to such person, Cable Car furnishes such nonpublic information to Triarc (to the extent such nonpublic information has not been previously furnished). The Merger Agreement also requires Cable Car to promptly advise Triarc orally and in writing of any Acquisition Proposal (including the identity of the person making or submitting such Acquisition Proposal and the terms thereof) that is made or submitted by any person (a 'Transaction Notice') and agrees that it will not furnish confidential information to any person or enter into negotiations with any person with respect to an Acquisition Proposal until it has delivered to Triarc a Transaction Notice and 48 hours have passed since Triarc's receipt of such Transaction Notice. 56 For the purposes of the Merger Agreement, 'Acquisition Proposal' means any tender or exchange offer involving the capital stock of Cable Car, any proposal for a merger, consolidation or other business combination involving Cable Car or any of the Cable Car Subsidiaries, any proposal or offer to acquire in any manner a substantial equity interest in, or a substantial portion of the business or assets of, Cable Car or any of the Cable Car Subsidiaries, any proposal or offer with respect to any recapitalization or restructuring with respect to Cable Car or any of the Cable Car Subsidiaries or any proposal or offer with respect to any other transaction similar to any of the foregoing with respect to Cable Car or any of the Cable Car Subsidiaries, other than pursuant to the transactions to be effected pursuant to the Merger Agreement or any other transaction with Triarc or any of its subsidiaries. The Merger Agreement provides that it may be terminated by the Cable Car Board if the Cable Car Board determines in good faith, after consultation with (i) outside legal counsel, that termination of the Merger Agreement is required for the Cable Car Board to satisfy its fiduciary obligations to the Cable Car stockholders under applicable law by reason of an unsolicited bona fide Acquisition Proposal having been made, and (ii) its financial advisor, that such Acquisition Proposal would result in a transaction that is more favorable than the Merger from a financial point of view to the Cable Car stockholders, provided that Cable Car has complied with the provisions of Section 5.4 of the Merger Agreement (relating to Acquisition Proposals) and notifies Triarc at least five days in advance of its intention to terminate the Merger Agreement or to enter into a definitive agreement with respect to such Acquisition Proposal, and provided, further, that within such five day period Triarc has not made a competing proposal which is at least as favorable to the Cable Car stockholders from a financial point of view as such Acquisition Proposal. The Merger Agreement may be terminated by the Triarc Board if (i) the Cable Car Board withdraws, modifies or changes its approval recommendation of the Merger Agreement or the Merger in a manner adverse to Triarc or Mergerco or recommends to the stockholders of Cable Car any Acquisition Proposal or other business combination, or (ii) Cable Car receives a bona fide written Acquisition Proposal which has not been rejected by the Cable Car Board within 14 days after receipt thereof. See 'The Merger Agreement -- Termination.' INDEMNIFICATION OF DIRECTORS AND OFFICERS Under the Merger Agreement, Triarc has agreed that the certificate of incorporation and bylaws of the Surviving Corporation and each of the Cable Car Subsidiaries will contain provisions no less favorable with respect to the indemnification of directors, officers, agents and employees and other individuals than those set forth in the certification of incorporation and bylaws of Cable Car and the Cable Car Subsidiaries as in effect on the date of the Merger Agreement, and further agreed that such provisions will not be amended, repealed or otherwise modified for a period of five years after the Effective Time in any manner that would adversely affect the rights thereunder of individuals who at or prior to the Effective Time were directors, officers, agents or employees of Cable Car or any of the Cable Car Subsidiaries or who were otherwise entitled to indemnification pursuant to the certificate of incorporation and bylaws of Cable Car or any of the Cable Car Subsidiaries. If the Surviving Corporation or any of the Cable Car Subsidiaries does not have the financial resources to satisfy its indemnification obligations to such persons as provided under its certificate of incorporation and bylaws, Triarc has agreed that it will provide such indemnification of such persons to the extent so provided. CONDITIONS TO CONSUMMATION OF THE MERGER The obligations of Cable Car, Triarc and Mergerco to consummate the Merger are subject to the satisfaction or, if permitted by applicable law, waiver of the following conditions: (i) the Merger Agreement and the Merger shall have been approved and adopted by the affirmative vote of the stockholders of Cable Car in accordance with the DGCL and the Cable Car Charter; (ii) no court, arbitrator or governmental body, agency or official shall have issued any order, decree or ruling and there shall not be any statute, rule or regulation, restraining, enjoining or prohibiting the consummation of the Merger; (iii) the Registration Statement shall have been declared effective, and no stop order suspending the effectiveness of the Registration Statement will be in effect and no proceedings for such purpose will have been initiated or threatened by the Commission; (iv) any waiting period applicable to 57 the Merger under the HSR Act shall have expired or been terminated; (e) all actions by or in respect of or filing with any governmental authority required to permit the consummation of the Merger will have been obtained and such approval shall be in full force and effect; and (f) the shares of Triarc Common Stock to be issued in the Merger shall have been approved for listing on the NYSE, subject to official notice of issuance. The obligations of Triarc and Mergerco to consummate the Merger are subject to the satisfaction or, if permitted by applicable law, waiver of the following further conditions: (i) (A) Cable Car will have performed in all material respects all of its obligations under the Merger Agreement required to be performed by it at or prior to the Effective Time, (B) each of the representations and warranties of Cable Car contained in the Merger Agreement will be true and correct as of the Effective Time as if made at and as of such time (except for those representations and warranties that address matters only as of a particular date or only with respect to a specific period of time which need only be true and accurate as of such date or with respect to such period), (C) since December 31, 1996, except as disclosed to Triarc pursuant to the Merger Agreement, there will not have occurred any event, change or effect having, or which would be reasonably likely to have, in the aggregate, a material adverse effect on Cable Car and the Cable Car Subsidiaries, taken as a whole, and (D) Triarc will have received a certificate signed by an executive officer of Cable Car to the foregoing effect; (ii) there shall not have been any action taken, or any statute, rule, regulation, legislation, interpretation, judgment, order or injunction enacted, entered, enforced, promulgated, amended, issued or deemed applicable to the Merger by any domestic legislative body, court, government or governmental, administrative or regulatory authority or agency (A) restraining or preventing the carrying out of the Merger and other Transactions, (B) prohibiting Triarc's ownership or operation of any material portion of Triarc's or Cable Car's businesses or assets, or compelling Triarc to dispose of or hold separate all or any material portion of Triarc's or Cable Car's businesses or assets as a result of the Transactions, (C) making acquisition of the shares of Cable Car Common Stock pursuant to the Merger illegal, (D) prohibiting Triarc effectively from acquiring or holding or exercising full rights of ownership of the shares of Cable Car Common Stock, including, without limitation, the right to vote the shares of Cable Car Common Stock acquired by it pursuant to the Merger on all matters properly presented to the stockholders of Cable Car, (E) prohibiting Triarc or any of its subsidiaries or affiliates from effectively controlling in any material respect the businesses or operations of Cable Car, Triarc or their respective subsidiaries, or (F) which would impose any condition which would materially adversely affect the business of the Cable Car or (as a condition of consummating the Transactions) the business of Triarc and its subsidiaries taken as a whole; (iii) the Cable Car Board will not have withdrawn or modified its position with respect to the Merger; (iv) Triarc shall have received an opinion of Cable Car's outside counsel in scope and substance substantially in the form agreed to prior to the date of the Merger Agreement; (v) the Average Triarc Share Price (the average (without rounding) of the closing prices per share of Triarc Common Stock on the NYSE Composite Tape for the fifteen (15) consecutive NYSE trading days ending on the NYSE trading day immediately preceding the Closing Date) shall not be less than $15.00 per share; (vi) the holders of no greater than 6% of the shares of Cable Car Common Stock outstanding on the Record Date shall have demanded appraisal rights pursuant to, and otherwise complied with the provisions of, subsection (d) of Section 262 of the DGCL, and shall not have voted in favor of or consented to the Merger; and (vii) no suit, claim, action or proceeding with respect to the Merger or the other Transactions, or Cable Car or any of the Cable Car Subsidiaries or any of their properties or assets, shall have been instituted or threatened which could reasonably be expected to have a material adverse effect on Cable Car and the Cable Car Subsidiaries taken as a whole or would, or would be reasonably likely to, materially impair the ability of Cable Car to consummate the Merger or the other Transactions. The obligations of Cable Car to consummate the Merger are subject to the satisfaction of the following conditions: (i) (A) Triarc and Mergerco shall have performed in all material respects all of their respective obligations under the Merger Agreement required to be performed by them at or prior to the Effective Time, (B) each of the representations and warranties of Triarc contained in the Merger Agreement will be true and correct, in each case as of the Effective Time as if made at and as of such time (except for those representations and warranties that address matters only as of a particular date or only with respect to a specific period of time which need only be true and accurate as of such date or 58 with respect to such period), (C) since December 31, 1996, there will not have occurred any event, change or effect having, or which would be reasonably likely to have, individually or in the aggregate, a material adverse effect on Triarc and its subsidiaries taken as a whole, and (D) Cable Car shall have received a certificate signed by an executive officer of Triarc to the foregoing effect; (ii) Cable Car shall have received the opinion of outside counsel to Triarc and Mergerco in scope and substance substantially in the form agreed to prior to the date of the Merger Agreement; (iii) Cable Car shall have received an opinion of Sherman & Howard L.L.C. to the effect that the Merger will be treated for federal income tax purposes as a 'reorganization' within the meaning of Section 368(a) of the Code; and (iv) no suit, claim, action or proceeding with respect to the Merger or the other Transactions, or Triarc or any of its subsidiaries or any of their properties or assets, shall have been instituted which could reasonably be expected to have a material adverse effect on Triarc and its subsidiaries taken as a whole, or would be reasonably likely to materially impair the ability of Triarc to consummate the Merger or the other Transactions. TERMINATION The Merger Agreement may be terminated and the Merger may be abandoned at any time prior to the Effective Time, whether before or after the stockholders of Cable Car have approved the Merger Agreement, (i) by the mutual consent of the Boards of Directors of each of Triarc and Cable Car (a 'Consent Termination'); (ii) by either of the Boards of Directors of Triarc or Cable Car (in each case, an 'Optional Termination'), if (A) the Effective Time has not occurred on or before December 31, 1997, provided that the right to so terminate the Merger Agreement will not be available to any party whose failure to fulfill any obligation under the Merger Agreement has been the cause of, or resulted in, the failure of the Effective Time to occur on or before such date, or (B) any governmental authority has issued an order, decree or ruling or taken any other action (which order, decree, ruling or other action the parties hereto shall use their best efforts to lift), in each case permanently restraining, enjoining or otherwise prohibiting the Merger and the other Transactions and such order, decree, ruling or other action shall have become final and non-appealable. The Merger Agreement may also be terminated by either of the Boards of Directors of Triarc or Cable Car if the Merger Agreement and the Merger has not been approved and adopted at the Special Meeting by the affirmative vote of the stockholders of Cable Car in accordance with the DGCL and the Cable Car Charter (a 'Stockholder Vote Termination'). The Merger Agreement may also be terminated by the Cable Car Board if (i) Triarc or Mergerco (A) breaches or fails in any material respect to perform or com ply with any of its material covenants and agreements contained in the Merger Agreement or (B) breaches its representations and warranties in any material respect and such breach would have or would be reasonably likely to have a material adverse effect on Triarc and its subsidiaries taken as a whole, in each case such that the conditions precedent to Cable Car's obligations to consummate the Merger would not be satisfied, provided, that if such breach is curable by the breaching party through the exercise of the breaching party's best efforts and for so long as the breaching party is using its best efforts to cure such breach, Cable Car may not so terminate the Merger Agreement pursuant to this clause (a 'Triarc Default Termination'); and (ii) the Cable Car Board determines in good faith, after consultation with (A) outside legal counsel, that termination of the Merger Agreement is required for the Cable Car Board to satisfy its fiduciary obligations to the Cable Car stockholders under applicable law by reason of an unsolicited bona fide Acquisition Proposal having been made, and (B) its financial advisor, that such Acquisition Proposal would result in a transaction that is more favorable than the Merger from a financial point of view to the Cable Car stockholders, provided that Cable Car has complied with the provisions of Section 5.4 of the Merger Agreement (relating to Acquisition Proposals) and notifies Triarc at least five days in advance of its intention to terminate the Merger Agreement or to enter into a definitive agreement with respect to such Acquisition Proposal, and provided, further, that within such five day period Triarc has not made a competing proposal which is at least as favorable to the Cable Car stockholders from a financial point of view as such Acquisition Proposal (a 'Competing Transaction Termination'). The Merger Agreement may also be terminated by the Triarc Board, if (i) Cable Car (A) breaches or fails in any material respect to perform or comply with any of its material covenants and agreements 59 contained in the Merger Agreement, or (B) breaches its representations and warranties in any material respect and such breach would have or would be reasonably likely to have a material adverse effect on Cable Car and its subsidiaries taken as a whole, in each case such that the conditions precedent to Triarc's and Mergerco's obligations to consummate the Merger would not be satisfied, provided, that if such breach is curable by Cable Car through its exercise of best efforts and for so long as Cable Car is using its best efforts to cure such breach, Triarc may not terminate the Merger Agreement pursuant to this clause (a 'Cable Car Default Termination'); (ii) (A) the Cable Car Board withdraws, modifies or changes its approval recommendation of the Merger Agreement or the Merger in a manner adverse to Triarc or Mergerco or recommends to the stockholders of Cable Car any Acquisition Proposal or other business combination (a 'Board Recommendation Termination'), (B) Cable Car receives a bona fide written Acquisition Proposal which has not been rejected by the Cable Car Board within 14 days after receipt thereof (an 'Acquisition Proposal Termination'), or (C) prior to the certification of the vote of the Cable Car's stockholders to approve the Merger at the Special Meeting, it shall have been publicly disclosed or Triarc or Mergerco shall have learned that any person, entity or 'group' (as that term is defined in Section 13(d)(3) of the Exchange Act), other than Triarc or its subsidiaries or any of their affiliates or the Subject Stockholders, shall have acquired beneficial ownership (determined pursuant to Rule 13d-3 promulgated under the Exchange Act) of more than 20% of any class or series of capital stock of Cable Car (including the Cable Car Common Stock), through the acquisition of stock, the formation of a group or otherwise, or shall have been granted any option, right or warrant, conditional or otherwise, to acquire beneficial ownership of more than 20% of any class or series of capital stock of Cable Car (including the Cable Car Common Stock) other than as disclosed in a Schedule 13D on file with the Commission on the as of the date of the Merger Agreement (an 'Acquiring Person Termination'); or (iii) the Average Triarc Share Price is less than $15.00 per share (a 'Triarc Share Price Termination'). EFFECT OF TERMINATION Except as otherwise provided in the Merger Agreement, in the event of the termination of the Merger Agreement as described above, the Merger Agreement will become null and void and there will be no liability under the Merger Agreement on the part of Triarc, Mergerco or Cable Car; provided, however, that nothing in the Merger Agreement will relieve (i) any party from liability for fraud or for willful breach of the Merger Agreement or (ii) Triarc from its obligation to hold any nonpublic information pertaining to Cable Car or the Cable Car Subsidiaries it has received in connection with the Merger Agreement in confidence. FEES AND EXPENSES All costs and expenses incurred in connection with the Merger Agreement and the Merger will be paid by the party incurring such costs and expenses, whether or not the Merger is consummated; provided, however, that if the Merger Agreement is terminated by Triarc pursuant to a Triarc Share Price Termination, Triarc will reimburse Cable Car for its reasonable costs and expenses (including, without limitation, reasonable attorneys' fees and expenses) incurred in connection with the Merger Agreement and the Merger in an aggregate amount not to exceed $225,000. AMENDMENT AND WAIVER The Merger Agreement may be amended by the parties to the Merger Agreement by action taken by their respective Boards of Directors at any time prior to the Effective Time; provided, however, that after the approval of the Merger Agreement by the stockholders of Cable Car, no amendment or modification may be made which would alter or change the amount or kind of shares, securities, cash, property and/or rights to be received in exchange for or on conversion of all or any of the capital stock of Cable Car, alter or change any term of the certificate of incorporation of the Surviving Corporation to be effected by the Merger, or alter or change any of the terms and conditions of the Merger Agreement if such alteration or change would adversely affect the holders of the capital stock of Cable Car. The Merger Agreement may not be amended except by written agreement signed by the parties to the Merger Agreement. 60 At any time prior to the Effective Time, any party to the Merger Agreement may, by action taken by its Board of Directors, extend the time for the performance of any obligation or other act of any other party thereto, waive any inaccuracy in the representations and warranties of the other party contained in the Merger Agreement or in any document delivered by the other party pursuant thereto, and waive compliance with any agreement or condition contained therein. Any such extension or waiver will be valid if set forth in an instrument in writing signed on behalf of such party. STOCKHOLDERS AGREEMENT As a condition to Triarc's execution of the Merger Agreement and to facilitate the consummation of the Merger, Triarc required the Subject Stockholders to enter into the Stockholders Agreement, the terms of which are summarized in 'The Proposed Merger and Related Matters -- Additional Interests of Cable Car Management -- Stockholders Agreement.' APPRAISAL RIGHTS Holders of Cable Car Common Stock who do not vote in favor of the approval and adoption of the Merger Agreement and who have met the conditions of, and properly complied with the requirements of, Section 262 of the DGCL ('Section 262') will be entitled to appraisal rights. To preserve their rights, stockholders who wish to exercise their statutory appraisal rights must submit to Cable Car a written demand for appraisal prior to the taking of the vote on the Merger Agreement at the Special Meeting and comply with the other procedural requirements of Section 262 described below. SECTION 262 IS REPRINTED IN ITS ENTIRETY AS APPENDIX D TO THIS PROXY STATEMENT/PROSPECTUS. THE FOLLOWING DISCUSSION OF THE MATERIAL TERMS OF THE LAW RELATING TO APPRAISAL RIGHTS IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO APPENDIX D. THIS DISCUSSION AND APPENDIX D SHOULD BE REVIEWED CAREFULLY BY ANY STOCKHOLDER WHO WISHES TO EXERCISE STATUTORY APPRAISAL RIGHTS, OR WHO WISHES TO PRESERVE THE RIGHT TO DO SO, AS FAILURE TO COMPLY WITH THE PROCEDURES SET FORTH IN SECTION 262 WILL RESULT IN THE LOSS OF APPRAISAL RIGHTS, IF AVAILABLE. A record holder of shares of Cable Car Common Stock who holds such shares of Cable Car Common Stock on the date of making the demand described below, who makes the demand described below with respect to such shares, who continuously is the record holder of such shares through the Effective Time, who otherwise complies with the statutory requirements of Section 262 and who neither votes in favor of the Merger Agreement nor consents thereto in writing may be entitled to an appraisal by the Delaware Court of Chancery (the 'Delaware Court') of the fair value of his or her shares of Cable Car Common Stock. All references in this summary of appraisal rights to a 'stockholder' are to the record holder or holders of shares of Cable Car Common Stock. Under Section 262, Cable Car must notify stockholders not less than 20 days prior to the Special Meeting that appraisal rights are available and must include in each such notice a copy of Section 262. This Proxy Statement/Prospectus shall constitute such notice to the record holders of Cable Car Common Stock. Holders of shares of Cable Car Common Stock who desire to exercise their appraisal rights must not vote in favor of the Merger Agreement and must deliver a separate written demand for appraisal to Cable Car prior to the vote by the Cable Car stockholders on the Merger Agreement. A stockholder who signs and returns a proxy without expressly directing, by checking the applicable boxes on the reverse side of the proxy card enclosed herewith or otherwise, that his or her shares of Cable Car Common Stock be voted against the proposal to approve the Merger Agreement or that an abstention be registered with respect to his or her shares of Cable Car Common Stock will not be entitled to appraisal rights as to those shares of Cable Car Common Stock because, in the absence of express contrary instructions, such shares of Cable Car Common Stock will be voted in favor of the proposal to approve the Merger Agreement. Accordingly, a stockholder who desires to perfect appraisal rights with respect to any of his or her shares of Cable Car Common Stock must either (i) refrain from executing and returning the enclosed proxy card and from voting, in person or otherwise, in favor of the proposal 61 to approve the Merger Agreement, or (ii) check either the 'Against' or the 'Abstain' box next to the proposal to approve the Merger Agreement on such card or affirmatively vote in person against the proposal to approve the Merger Agreement or register in person an abstention with respect thereto. However, an abstention or a vote against the Merger does not in and of itself constitute a demand for appraisal. A demand for appraisal must be executed by or on behalf of the stockholder of record and must reasonably inform Cable Car of the identity of the stockholder of record and that such record stockholder intends thereby to demand appraisal of his or her shares of Cable Car Common Stock. A person having a beneficial interest in shares of Cable Car Common Stock that are held of record in the name of another person, such as broker, fiduciary or other nominee, must act promptly to cause the record holder to follow the steps summarized herein properly and in a timely manner to perfect whatever appraisal rights are available. If the shares of Cable Car Common Stock are owned of record by a person other than the beneficial owner, including a broker, fiduciary (such as a trustee, guardian or custodian) or other nominee, such demand must be executed by or on behalf of the record owner. If the shares of Cable Car Common Stock are owned of record by more than one person, as in a joint tenancy or tenancy in common, such demand must be executed by or on behalf of all joint owners. An authorized agent, including an agent for two or more joint owners, may execute the demand for appraisal for a stockholder of record; provided, however, that the agent must identify the record owner and expressly disclose the fact that, in exercising the demand, such person is acting as agent for the record owner. A record owner, such as a broker, fiduciary or other nominee, who holds shares of Cable Car Common Stock as a nominee for others, may exercise appraisal rights with respect to the shares held for all or less than all beneficial owners of shares as to which such person is the record owner; provided, however, that if exercising appraisal rights with respect to less than all beneficial owners, the written demand should set forth the number of shares as to which appraisal is sought. Where the number of shares is not expressly stated, the demand will be presumed to cover all shares of Cable Car Common Stock outstanding in the name of such record owner. A stockholder who elects to exercise appraisal rights should mail or deliver his or her written demand to: Cable Car Beverage Corporation, 717 17th Street, Suite 1475, Denver, Colorado 80202, Attention: Secretary. Within ten days after the Effective Time, the Surviving Corporation must provide notice of the Effective Time to all stockholders who have complied with Section 262 and who have not voted in favor of or consented to the Merger Agreement. Within 120 days after the Effective Time, either the Surviving Corporation or any stockholder who has complied with the required conditions of Section 262, and who is otherwise entitled to appraisal rights, may file a petition in the Delaware Court demanding a determination of the value of the shares of all dissenting stockholders. There is no present intent on the part of Cable Car to file an appraisal petition and stockholders seeking to exercise appraisal rights should not assume that the Surviving Corporation will file such a petition or that the Surviving Corporation will initiate any negotiations with respect to the value of such shares. Accordingly, it is the obligation of all stockholders who desire to have their shares appraised to initiate any petitions or other actions necessary for the perfection of their appraisal rights within the time period and in the manner prescribed in Section 262. Within 120 days after the Effective Time, any stockholder who has theretofore complied with the applicable provisions of Section 262 will be entitled, upon written request, to receive from the Surviving Corporation a statement setting forth the aggregate number of shares of Cable Car Common Stock not voting in favor of the Merger Agreement and with respect to which demands for appraisal were received by Cable Car and the number of holders of such shares. Such statement must be mailed within ten days after the written request therefor has been received by the Surviving Corporation or within ten days after the expiration of the period for delivery of demands for appraisal, whichever is later. If a petition for an appraisal is timely filed, the Delaware Court is empowered, at the hearing on such petition, to determine which stockholders, if any, are entitled to appraisal rights. The Delaware Court may require the stockholders who have demanded an appraisal for their shares and who hold stock represented by certificates to submit their certificates of stock to the Register in Chancery for notation thereon of the pendency of the appraisal proceedings; and if any stockholder fails to comply 62 with such direction, the Delaware Court may dismiss the proceedings as to such stockholder. After determining the stockholders entitled to appraisal, the Delaware Court will appraise the shares of Cable Car Common Stock owned by such stockholders, determining the fair value of such shares (exclusive of any element of value arising from the accomplishment or expectation of the Merger), together with a fair rate of interest, if any, to be paid upon the amount determined to be the fair value. In determining fair value, the Delaware Court is to take into account all relevant factors. The Delaware Supreme Court has stated that, in determining value in an appraisal proceeding, 'proof of value by any techniques or methods which are generally considered acceptable in the financial community and otherwise admissible in court' should be considered. Holders of shares of Cable Car Common Stock considering seeking appraisal should recognize that the fair value of their shares determined under Section 262 could be more than, the same as or less than the consideration they are entitled to receive pursuant to the Merger Agreement if they do not seek appraisal of their shares. The cost of the appraisal proceeding may be determined by the Delaware Court and taxed against the parties as the Delaware Court deems equitable in the circumstances. Each party must bear his or her own expenses of the proceeding, although upon application of a dissenting stockholder of Cable Car, the Delaware Court may order that all or a portion of the expenses incurred by any dissenting stockholder in connection with the appraisal proceeding, including, without limitation, reasonable attorney's fees and the fees and expenses of experts, be charged pro rata against the value of all shares of stock entitled to appraisal. Any holder of shares of Cable Car Common Stock who has duly demanded appraisal in compliance with Section 262 will not, after the Effective Time, be entitled to vote for any purpose any shares subject to demand or to receive payment of dividends or other distributions on such shares, except for dividends or distributions payable to stockholders of record at a date prior to the Effective Time. At any time within 60 days after the Effective Time, any stockholder will have the right to withdraw such demand for appraisal and to accept the terms offered in the Merger Agreement; after this period, the stockholder may withdraw such demand for appraisal only with the written consent of the Surviving Corporation, provided that, no appraisal proceeding in the Delaware Court shall be dismissed as to any stockholder without approval of the Delaware Court. If no petition for appraisal is filed with the Delaware Court within 120 days after the Effective Time, stockholders' rights to appraisal shall cease, and all holders of shares of Cable Car Common Stock will be entitled to receive the consideration offered pursuant to the Merger Agreement. MANAGEMENT OF SURVIVING CORPORATION EXECUTIVE OFFICERS AND DIRECTORS OF THE SURVIVING CORPORATION Pursuant to the Merger Agreement, the officers and directors of Mergerco immediately prior to the Effective Time will become the officers and directors of the Surviving Corporation, each to hold office in accordance with the certificate of incorporation and bylaws of the Surviving Corporation then in effect and until the successor of each is duly elected and qualified. The following table sets forth certain information regarding those persons who will serve as the executive officers and directors of the Surviving Corporation, who have held such positions with Mergerco since September 1, 1997 all of whom are U.S. citizens:
NAME AGE POSITIONS ---- --- --------- John L. Barnes, Jr.................. 50 Director; Senior Vice President and Chief Financial Officer Brian L. Schorr..................... 39 Director; Executive Vice President and General Counsel Eric D. Kogan....................... 34 Director, President Francis T. McCarron................. 40 Senior Vice President -- Taxes Stuart I. Rosen..................... 38 Vice President and Secretary
63 In addition, at the Effective Time, pursuant to the Simpson Employment Agreement, Mr. Simpson will be appointed the President and Chief Executive Officer of the Surviving Corporation to replace Mr. Kogan as President. It is also expected that the other officers of Cable Car will remain in the same offices with the Surviving Corporation. Additional information concerning Messrs. Barnes, Kogan, McCarron, Schorr and Rosen is incorporated herein by reference from Triarc's Annual Report on Form 10-K for the fiscal year ended December 31, 1996, as amended by amendments thereto filed with the Commission on April 30, 1997 and May 21, 1997. Additional information concerning Mr. Simpson and the other current management of Cable Car is incorporated herein by reference from Cable Car's Annual Report on Form 10-K for the fiscal year ended December 31, 1996, as amended by an amendment thereto filed with the Commission on May 1, 1997, copies of which are attached hereto as Appendices A-1 and A-2, respectively. SIMPSON EMPLOYMENT AGREEMENT Samuel M. Simpson, the President and Chief Executive Officer and a director of Cable Car, currently has a three-year employment contract which provides for an annual salary of $175,000, an annual bonus based on Cable Car's revenues and earnings and certain other benefits. He has entered into an agreement with Triarc which provides that, upon the Effective Time, he will, and Triarc will cause the Surviving Corporation to, enter into the Simpson Employment Agreement, which will supersede Mr. Simpson's existing employment agreement with Cable Car and provide for Mr. Simpson's employment as President and Chief Executive Officer of the Surviving Corporation and the Cable Car Subsidiaries, and a representative for the Triarc Beverage Group for the western United States. The Simpson Employment Agreement will have a three year term, subject to renewal for additional one year periods. Mr. Simpson will receive an annual salary of $284,300 per year, which is subject to increase, but not decrease during the original term of the Simpson Employment Agreement in amounts determined by the Board of Directors of the Surviving Corporation, as well as certain other benefits. Mr. Simpson will also be eligible to receive cash incentive compensation, which for fiscal year 1997 is based on specified targets for Cable Car's net sales and adjusted net income and which for each of fiscal years 1998, 1999 and 2000 is comprised of a bonus of $120,000 for such year should Cable Car's net sales for such year exceed $25 million, $27.5 million and $30 million, respectively. Mr. Simpson will be eligible to receive additional cash incentive compensation commencing with fiscal year 1998 comparable to that of other senior executives of Triarc's operating subsidiaries, based on Cable Car's and Mr. Simpson's performance assessed for each fiscal year relative to objectives agreed to in advance between Mr. Simpson and the Cable Car Board, taking into account the financial profile of Cable Car compared to that of Triarc's other operating subsidiaries. Mr. Simpson will also participate in Triarc's stock option plan during the term of his employment in amounts comparable to that of other senior executives of Triarc's operating subsidiaries, taking into account the financial profile of Cable Car compared to that of Triarc's other operating subsidiaries. Mr. Simpson will also be entitled to a $400,000 cash bonus upon signing the Simpson Employment Agreement which is refundable to Cable Car on a pro rata basis should he leave his employment prior to the first anniversary of the Effective Time. The Simpson Employment Agreement also provides for the payment of a death benefit to Mr. Simpson's estate upon his death in an amount equal to one year of his then current base salary. The Simpson Employment Agreement may be terminated upon Mr. Simpson's death, in the event that he becomes Disabled (as defined in the Simpson Employment Agreement), for 'cause' (as defined in the Simpson Employment Agreement) or upon Mr. Simpson's resignation. If Mr. Simpson's employment with Cable Car terminates prior to the end of the then current term under the Simpson Employment Agreement by reason of his resignation or termination for cause, he will agree not to engage in (including as an employee, agent, consultant, manager, executive, owner or stockholder, except as a passive investor owning less than a two percent interest in a publicly held company) in any business or entity that is engaged in the beverage business for a period of 24 months, and if such termination occurs prior to the second anniversary of the Effective Time, he will be paid $10,000 per month during the term of the non-competition period. If Mr. Simpson chooses not to extend the Simpson Employment Agreement in accordance with its terms, he will agree not to engage in the beverage business for a period of 18 months. Mr. Simpson will also agree that he will keep confidential 64 all nonpublic information relating to Cable Car and its subsidiaries and affiliates for a period of four years after the termination of his employment. Mr. Simpson's current employment agreement with Cable Car does not include similar non-competition and confidentiality provisions. CERTAIN RELATIONSHIPS AMONG TRIARC, CABLE CAR AND THEIR AFFILIATES Cable Car is party to a Stewart's Brands Distributing Agreement, dated February 23, 1997, with Mr. Natural, Inc., a Delaware corporation and wholly owned subsidiary of Snapple ('Mr. Natural'). Pursuant to this agreement, Cable Car appointed Mr. Natural its exclusive distributor for Stewart's brand soft drinks packaged in bottles and cans for all five boroughs of New York City and Westchester County, New York. Triarc acquired all of the outstanding capital stock of Snapple on May 22, 1997. See 'The Companies -- Recent Developments -- Triarc.' DESCRIPTION OF TRIARC CAPITAL STOCK The authorized capital stock of Triarc consists of 100,000,000 shares of Triarc Class A common stock (referred to in this section as the 'Triarc Class A Common Stock'), 25,000,000 shares of Triarc Class B common stock (the 'Triarc Class B Common Stock' and, together with the Triarc Class A Common Stock, the 'Triarc Common Shares') and 25,000,000 shares of Preferred Stock (the 'Triarc Preferred Stock'). As of the close of business on September 28, 1997, there were outstanding 24,037,013 shares of Triarc Class A Common Stock, 5,997,662 shares of Triarc Class B Common Stock and no shares of Triarc Preferred Stock. The relative preferences and rights of the Triarc capital stock are set forth in the Triarc Charter. Set forth below is a summary description of the material terms of such rights and preferences, which is qualified by reference to the Triarc Charter. TRIARC COMMON SHARES The holders of shares of Triarc Class A Common Stock are entitled to one vote for each share held on record on all matters on which Triarc stockholders are entitled to vote, including the election of directors. Except as required by Delaware law, the holders of shares of Triarc Class B Common Stock are not entitled to vote. Shares of Triarc Class A Common Stock and Triarc Class B Common Stock share equally in any dividends or other distributions payable in either cash, capital stock of Triarc (other than Triarc Class A Common Stock or Triarc Class B Common Stock) or other property of Triarc when, as and if declared by the Triarc Board. If a dividend or distribution payable in Triarc Common Shares is declared on the Triarc Common Shares, such dividend or distribution shall be made to the holders of shares of Triarc Class A Common Stock in the form of shares of Triarc Class A Common Stock and shall be made to the holders of shares of Triarc Class B Common Stock in the form of shares of Triarc Class B Common Stock. No dividend, other than a stock dividend payable in Triarc Common Shares, may be paid on the Triarc Common Shares if Triarc is in arrears on the payment of dividends on any outstanding Triarc Preferred Stock. In the event that Triarc shall liquidate, dissolve or be wound up, whether voluntarily or involuntarily, to the extent assets remain after payment of creditors in full and after there shall have been paid or set aside for all Triarc Preferred Stock then outstanding the full preferential amounts to which they are entitled, the net assets of Triarc remaining will be divided ratably among the holders of the Triarc Class A Common Stock and the Triarc Class B Common Stock. The merger or consolidation of Triarc with or into any other corporation, the merger or consolidation of any other corporation with or into Triarc, or the sale, lease or conveyance of all or substantially all of its assets would not be deemed to be a liquidation, dissolution or winding up for this purpose. 65 The holders of Triarc Common Shares are not entitled as of right to purchase or subscribe for any shares of stock of any class whether heretofore or hereafter authorized or issued, whether issued for cash, property, services or by way of a dividend. Shares of Triarc Class A Common Stock are not convertible. Each share of Triarc Class B Common Stock is convertible, on a one-to-one basis, into one share of Triarc Class A Common Stock, provided that either (i) the holder of such share upon conversion is not an affiliate or relative of Victor Posner, or (ii) upon such conversion, such shares are placed into a voting trust and certain other conditions are met. TRIARC PREFERRED STOCK The Triarc Charter 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 the Triarc Board. Accordingly, the Triarc Board is empowered, without stockholder approval, to issue Triarc Preferred Stock with dividend, liquidation, conversion, voting or other rights which may adversely affect the voting power or other rights of the holders of Triarc Common Shares. As of the date of this Proxy Statement/Prospectus, there are no shares of Triarc Preferred Stock outstanding. PRINCIPAL HOLDERS OF CABLE CAR COMMON STOCK The following table sets the beneficial ownership as of September 30, 1997 by each person known by Cable Car to be the beneficial owner of more than 5% of the outstanding shares of Cable Car Common Stock (constituting the only class of capital stock of Cable Car), each director and 'named executive officer' (as defined in Item 402(a)(3) of Regulation S-K) of Cable Car as of September 30, 1997, and all directors and officers of Cable Car as a group:
AMOUNT OF SHARES AND NAME AND ADDRESS OF BENEFICIAL OWNER NATURE OF OWNERSHIP(1) PERCENT OF CLASS ------------------------------------ ---------------------- ---------------- Triarc Companies, Inc. ....................................... 1,766,409(2) 19.7% 280 Park Avenue New York, NY 10017 Samuel M. Simpson............................................. 1,104,877(3) 12.35 James P. McCloskey............................................ 0 William H. Rutter............................................. 673,732(4) 7.53 Myron D. Stadler.............................................. 25,000 * Directors and Executive Officers as group (4 persons)......... 1,803,609 20.15%
- ------------ * Less than 1% (1) The amounts reflected do not include options to purchase Cable Car Common Stock. The foregoing persons have each indicated that they intend to convert their Cable Car Options into options for Triarc Common Stock. (2) Comprised of the Subject Stock under the Stockholders Agreement, all of which shares are also reflected in the number of shares shown as held by Messrs. Simpson and Rutter. (3) Includes 381,234 shares held by Mr. Simpson's spouse as to which he disclaims beneficial ownership. (4) Includes 7,200 shares held by Mr. Rutter's spouse as to which he disclaims beneficial ownership. 66 PRINCIPAL HOLDERS OF VOTING SECURITIES OF TRIARC COMPANIES, INC. The following table sets forth the beneficial ownership as of September 28, 1997 by each person known by Triarc to be the beneficial owner of more than 5% of the outstanding shares of Class A Common Stock (constituting the only class of voting capital stock of Triarc), each director and 'named executive officer' (as defined in Item 402(a)(3) of Regulation S-K) of Triarc as of September 28, 1997, and all directors and executive officers as a group.
AMOUNT OF SHARES AND NAME AND ADDRESS OF BENEFICIAL OWNER NATURE OF OWNERSHIP(1) PERCENT OF CLASS - ----------------------------------------------------------------- ---------------------- ---------------- DWG Acquisition Group, L.P. ..................................... 5,982,867(2) 24.9% 1201 North Market Street Wilmington, DE 19801 Nelson Peltz .................................................... 6,975,767(2)(3)(4)(5) 27.9 280 Park Avenue New York, NY 10017 Peter W. May .................................................... 6,653,000(2)(3)(6) 27.0 280 Park Avenue New York, NY 10017 William Ehrman .................................................. 1,500,793(7)(8) 6.2 Frederick Ketcher Jonas Gertsl Frederic Greenberg James McLaren 300 Park Avenue New York, NY 10022 Hugh L. Carey.................................................... 28,036(9) * Clive Chajet..................................................... 27,300(10) * Stanley R. Jaffe................................................. 29,028(9) * Joseph A. Levato................................................. 148,000(11) * David E. Schwab II............................................... 23,000(9) * Raymond S. Troubh................................................ 39,500(9) * Gerald Tsai, Jr.................................................. 39,306(12) * Brian L. Schorr.................................................. 111,990(13) * John L. Cohlan................................................... 88,833(14) * Eric D. Kogan.................................................... 68,000(15) * Directors and Executive Officers as a group (22 persons)......... 8,668,460 32.8%
- ------------ * Less than 1% (1) Except as otherwise indicated, each person has sole voting and dispositive power with respect to such shares. (2) The Company is informed that DWG Acquisition has pledged such shares to a financial institution on behalf of Messrs. Peltz and May to secure loans made to them. (3) Includes 5,982,867 shares held by DWG Acquisition, of which Mr. Peltz and Mr. May are the sole general partners. (4) Includes 200 shares owned by a family trust of which Mr. Peltz is a general partner and 800 shares owned by minor children of Mr. Peltz. Mr. Peltz disclaims beneficial ownership of these shares. (5) Includes options to purchase 965,000 shares of Triarc Class A Common Stock which have vested or will vest within 60 days of September 28, 1997. (6) Includes options to purchase 643,333 shares of Triarc Class A Common Stock which have vested or will vest within 60 days of September 28, 1997. (footnotes continued on next page) 67 (footnotes continued from previous page) (7) The information set forth herein with respect to Messrs. Ehrman, Greenberg, Ketcher, Gertsl and McLaren is based solely on information contained in a Schedule 13D, dated July 16, 1996, filed pursuant to the Securities Exchange Act of 1934, as amended. (8) Includes an aggregate of 1,365,793 shares of Triarc Class A Common Stock that Messrs. Ehrman, Ketcher, Gertsl, Greenberg and McLaren may be deemed to beneficially own as general partners of EGS Associates, L.P., a Delaware limited partnership, EGS Partners, L.L.C., a Delaware limited liability company, Bev Partners, L.P., a Delaware limited partnership, and Jonas Partners, L.P., a Delaware limited partnership. Also includes (i) 55,150 shares of Triarc Class A Common Stock owned directly by Mr. Ehrman and 39,150 shares of Triarc Class A Common Stock owned by members of Mr. Ehrman's immediate family; (ii) 23,600 shares of Triarc Class A Common Stock owned directly by Mr. Ketcher and 1,100 shares of Triarc Class A Common Stock owned by a member of Mr. Ketcher's immediate family and his mother-in-law, (iii) 2,500 shares of Triarc Class A Common Stock owned directly by Mr. Gertsl and 8,500 shares of Triarc Class A Common Stock owned by a member of Mr. Gertsl's immediate family; and (iv) 2,000 shares of Triarc Class A Common Stock owned directly by Mr. Greenberg and 3,000 shares of Triarc Class A Common Stock owned by a member of Mr. Greenberg's immediate family. (9) Includes options to purchase 19,500 shares of Triarc Class A Common Stock which have vested or will vest within 60 days of September 28, 1997. (10) Includes options to purchase 19,500 shares of Triarc Class A Common Stock which have vested or will vest within 60 days of September 28, 1997 and 1,300 shares owned by Mr. Chajet's wife, as to which shares Mr. Chajet disclaims beneficial ownership. (11) Includes options to purchase 120,000 shares of Triarc Class A Common Stock which have vested or will vest within 60 days of September 28, 1997. (12) Includes options to purchase 22,500 shares of Triarc Class A Common Stock which have vested or will vest within 60 days of September 28, 1997. (13) Includes options to purchase 105,000 shares of Triarc Class A Common Stock which have vested or will vest within 60 days of September 28, 1997. (14) Includes options to purchase 76,333 shares of Triarc Class A Common Stock which have vested or will vest within 60 days of September 28, 1997. Mr. Cohlan resigned as an officer of Triarc as of September 1, 1997. (15) Includes options to purchase 59,000 shares of Triarc Class A Common Stock which have vested or will vest within 60 days of September 28, 1997. ------------------------ The foregoing table does not include 5,997,622 shares of Triarc's non-voting Class B Common Stock owned by Victor Posner and certain affiliates of Victor Posner as a result of a Settlement Agreement dated January 9, 1995 by and among Victor Posner, certain affiliates of Victor Posner and Triarc. For information regarding this Settlement Agreement, see 'Item 1. Business -- Introduction -- New Ownership; Posner Settlement' in Triarc's Annual Report on Form 10-K for the year ended December 31, 1995. The shares of Triarc Class B Common Stock can be converted without restriction into an equal number of shares of Triarc Class A Common Stock following a transfer to a non-affiliate of Mr. Posner. Triarc has certain rights of first refusal if such shares are proposed to be sold to an unaffiliated party. If the 5,997,622 currently outstanding shares of the Triarc Class B Common Stock were converted into shares of Triarc Class A Common Stock, such shares would constitute approximately 20.0% of the then outstanding shares of Triarc Class A Common Stock as of September 28, 1997. None of the directors or officers of Triarc beneficially owned any Triarc Class B Common Stock as of September 28, 1997. Except for the arrangements relating to the shares described in footnote (2) to the foregoing table, there are no arrangements known to Triarc the operation of which may at a subsequent date result in a change in control of Triarc. 68 TRIARC COMPANIES, INC. AND SUBSIDIARIES UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS The following unaudited pro forma (i) condensed consolidated balance sheet of Triarc Companies, Inc. and subsidiaries (the 'Company') as of June 29, 1997 and (ii) condensed consolidated statement of operations of the Company for the year ended December 31, 1996 and for the six months ended June 29, 1997 have been prepared by adjusting such financial statements, as derived and condensed, as applicable, from (i) the consolidated financial statements in Triarc's Annual Report on Form 10-K for the fiscal year ended December 31, 1996 (the 'Triarc Form 10-K'), audited by Deloitte & Touche LLP and (ii) the unaudited condensed consolidated financial statements in Triarc's Quarterly Report on Form 10-Q for the fiscal quarter ended June 29, 1997 (the 'Triarc Form 10-Q'). Such adjustments to the condensed consolidated balance sheet as of June 29, 1997 reflect first, the C&C Sale on July 18, 1997 as previously reported in Triarc's Current Report on Form 8-K filed on August 4, 1997 and second, the proposed Merger (referred to in these financial statements as the 'Cable Car Acquisition'). Such adjustments for the condensed consolidated statement of operations for the year ended December 31, 1996 and the six months ended June 29, 1997 reflect first, the 1997 Transactions, consisting of (a) the Arby's Restaurants Sale on May 5, 1997 as previously reported in Triarc's Current Report on Form 8-K/A filed on August 4, 1997, (b) the C&C Sale (collectively with the Arby's Restaurants Sale, the 'Sales') and (c) the Snapple Acquisition on May 22, 1997, and second, the Cable Car Acquisition. The combined statements of certain revenues and operating expenses of Snapple for the year ended December 31, 1996 and for the period from January 1, 1997 to the May 22, 1997 Acquisition date included in the unaudited pro forma condensed consolidated financial statements have been derived and condensed, as applicable, from (i) the combined financial statements for the year ended December 31, 1996 (the 'Snapple 1996 Financial Statements') audited by Arthur Andersen LLP and (ii) the combination of (a) unaudited combined financial statements for the three months ended March 31, 1997 (the 'Snapple March 1997 Financial Statements' and collectively with the Snapple 1996 Financial Statements, the 'Snapple Financial Statements') and (b) the Snapple unaudited combined statement of certain revenues and operating expenses for the period from April 1, 1997 to May 22, 1997 (the 'Snapple May 22, 1997 Financial Statements'). The Snapple Financial Statements are included in Triarc's Current Report on Form 8-K/A filed on August 5, 1997. The Snapple May 22, 1997 Financial Statements were provided to the Company by Quaker. The consolidated balance sheet of Cable Car as of June 30, 1997 and consolidated statements of operations of Cable Car for the year ended December 31, 1996 and for the six months ended June 30, 1997 included in the unaudited pro forma condensed consolidated financial statements have been derived and condensed, as applicable, from: (i) the consolidated financial statements for the year ended December 31, 1996 audited by Price Waterhouse L.L.P. as set forth in Cable Car's Annual Report on Form 10-K for the fiscal year ended December 31, 1996, a copy of which is attached hereto as Appendix A-1, and (ii) the unaudited consolidated financial statements for the six months ended June 30, 1997 as set forth in Cable Car's Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 1997, a copy of which is attached hereto as Appendix A-3. The allocation of the purchase price of Snapple and the pro forma adjustments for the allocation of the purchase price of Cable Car on the pro forma condensed consolidated balance sheet and the effect thereof on pro forma adjustments to the pro forma condensed consolidated statements of operations are based on preliminary estimates and are subject to finalization. The pro forma condensed consolidated financial statements have been prepared as if the Cable Car Acquisition and the C&C Sale had occurred as of June 29, 1997 for the pro forma condensed consolidated balance sheet and all of the above transactions had occurred as of January 1, 1996 for the pro forma condensed consolidated statements of operations. Such pro forma adjustments are described in the accompanying notes to the pro forma condensed consolidated balance sheet and statements of operations which should be read in conjunction with such statements. The Unaudited Pro Forma Condensed Consolidated Financial Statements should also be read in conjunction with the Company's audited consolidated financial statements and management's discussion and analysis of financial condition and results of operations appearing in the Triarc Form 10-K, the Company's unaudited condensed consolidated financial 69 statements and management's discussion and analysis of financial condition and results of operations appearing in the Triarc Form 10-Q, the Snapple Financial Statements and the Cable Car Financial Statements. The Unaudited Pro Forma Condensed Consolidated Financial Statements do not purport to be indicative of the actual financial position or results of operations of the Company had such transactions actually been consummated on June 29, 1997 and January 1, 1996, respectively, or of the future financial position or results of operations of the Company. 70 TRIARC COMPANIES, INC. AND SUBSIDIARIES UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET JUNE 29, 1997
ADJUSTMENTS ADJUSTMENTS PRO FORMA CABLE CAR FOR THE AS FOR THE C&C FOR THE AS CABLE CAR REPORTED SALE C&C SALE REPORTED ACQUISITION PRO FORMA ---------- ----------- ---------- --------- ----------- ---------- (IN THOUSANDS) ASSETS Current assets: Cash and cash equivalents................... $ 71,349 $ 750(a) $ 72,099 $1,229 $ -- $ 73,328 Short-term investments...................... 59,724 -- 59,724 -- -- 59,724 Receivables, net............................ 133,570 703(a) 134,273 2,694 -- 136,967 Inventories................................. 87,669 -- 87,669 3,247 -- 90,916 Deferred income tax benefit................. 43,647 -- 43,647 520 -- 44,167 Prepaid expenses and other current assets... 12,039 -- 12,039 86 -- 12,125 ---------- ----------- ---------- --------- ----------- ---------- Total current assets................... 407,998 1,453 409,451 7,776 -- 417,227 Investment in Cable Car.......................... -- -- -- -- 34,601(i) -- (34,601)(ii) Properties, net.................................. 121,926 (2)(a) 121,924 128 -- 122,052 Unamortized costs in excess of net assets of acquired companies............................. 290,593 -- 290,593 550 20,117(ii) 311,260 Trademarks....................................... 264,633 (1,575)(a) 263,058 193 11,107(ii) 274,358 Deferred costs, deposits and other assets........ 71,840 5,300(a) 77,140 121 (21)(ii) 77,240 ---------- ----------- ---------- --------- ----------- ---------- $1,156,990 $ 5,176 $1,162,166 $8,768 $ 31,203 $1,202,137 ---------- ----------- ---------- --------- ----------- ---------- ---------- ----------- ---------- --------- ----------- ----------
71 TRIARC COMPANIES, INC. AND SUBSIDIARIES UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET -- (CONTINUED) JUNE 29, 1997
ADJUSTMENTS PRO FORMA AS FOR THE FOR THE REPORTED C&C SALE C&C SALE ---------- ----------- ---------- (IN THOUSANDS) LIABILITIES AND STOCKHOLDERS' EQUITY DEFICIT Current liabilities: Current portion of long-term debt......... $ 15,777 $ -- $ 15,777 Accounts payable......... 60,905 -- 60,905 Accrued expenses and other current liabilities............ 177,879 681(a) 178,736 176(a) ---------- ----------- ---------- Total current liabilities....... 254,561 857 255,418 Long-term debt................ 767,737 -- 767,737 Deferred income taxes......... 78,834 -- 78,834 Deferred income and other liabilities................. 50,395 4,015(a) 54,410 Minority interests............ 29,859 -- 29,859 Stockholders' equity (deficit): Common stock............. 3,398 -- 3,398 Additional paid-in capital................ 163,752 -- 163,752 Accumulated deficit...... (147,124) 304(a) (146,820) Treasury stock........... (45,000) -- (45,000) Other.................... 578 -- 578 ---------- ----------- ---------- Total stockholders' equity (deficit)......... (24,396) 304 (24,092) ---------- ----------- ---------- $1,156,990 $ 5,176 $1,162,166 ---------- ----------- ---------- ---------- ----------- ---------- CABLE ADJUSTMENTS CAR FOR THE AS CABLE CAR REPORTED ACQUISITION PRO FORMA -------- ----------- ---------- (IN THOUSANDS) LIABILITIES AND STOCKHOLDERS' EQUITY DEFICIT Current liabilities: Current portion of long-term debt.........$ -- $ -- $ 15,777 Accounts payable......... 795 -- 61,700 Accrued expenses and other current liabilities............ 1,625 1,200(i) 181,561 -------- ----------- ---------- Total current liabilities....... 2,420 1,200 259,038 Long-term debt................ -- -- 767,737 Deferred income taxes......... (404) 3,354(ii) 81,784 Deferred income and other liabilities................. -- -- 54,410 Minority interests............ -- -- 29,859 Stockholders' equity (deficit): Common stock............. 90 157(i) 3,555 (90)(ii) Additional paid-in capital................ 9,899 33,244(i) 196,996 (9,899)(ii) Accumulated deficit...... (3,208) 3,208(ii) (146,820) Treasury stock........... (29) 29(ii) (45,000) Other.................... -- -- 578 -------- ----------- ---------- Total stockholders' equity (deficit)......... 6,752 26,649 9,309 -------- ----------- ---------- $ 8,768 $31,203 $1,202,137 -------- ----------- ---------- -------- ----------- ----------
72 NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET C&C SALE PRO FORMA ADJUSTMENTS (a) To reflect the C&C Sale consisting of the C&C trademark and equipment related to the operation of the C&C beverage line to Kelco for the proceeds of $750,000 in cash and an $8,650,000 note (the 'Note') with a discounted value of $6,003,000 consisting of $4,373,000 relating to the C&C Sale and $2,380,000 relating to future revenues. The Note is classified $703,000 as current receivables and $5,300,000 as non-current deferred costs, deposits and other assets. The $2,380,000 of deferred revenues consists of (i) $2,096,000 relating to minimum take-or-pay commitments for sales of concentrate for C&C products to Kelco and (ii) $284,000 relating to future technical services to be performed for Kelco by the Company, both under a contract with Kelco. Such deferred revenues are classified $231,000 as 'Accrued expenses and other current liabilities' and $2,149,000 as non-current 'Deferred income and other liabilities'. The excess of the proceeds of $4,373,000 over the carrying value of the C&C trademark of $1,575,000 and the related equipment of $2,000 resulted in a pretax gain of $2,796,000 which is being recognized pro-rata between the gain on sale and the carrying value of the assets sold based on the cash proceeds and collections under the Note since realization of the Note is not yet fully assured. As such, $480,000 of such pretax gain has been recognized currently which, less taxes of $176,000 at the incremental income tax rate of 36.6%, results in a net gain of $304,000. The remaining $2,316,000 has been deferred, of which $450,000 is classified as 'Accrued expenses and other current liabilities' and $1,866,000 is classified as non-current 'Deferred income and other current liabilities'. CABLE CAR ACQUISITION PRO FORMA ADJUSTMENTS (i) To reflect the Company's investment in Cable Car of $34,601,000 consisting of (a) the assumed value of $31,727,000 as of a recent date of 1,566,731 shares (including 25,830 shares in respect of 150,000 shares of Cable Car Common Stock to be issued prior to the Effective Time in connection with the amendment of Cable Car's license agreements with Stewart's Restaurants) of Triarc Common Stock, par value $.10 per share, to be issued in the Merger (based upon an assumed average Triarc share price of $20 1/4, which was the closing market price for Triarc Common Stock as reported in the consolidated transaction reporting system as of September 29, 1997 (the 'September 29, 1997 Market Price'), (b) the assumed value of $2,274,000 of 155,411 options to purchase an equal number of shares of Triarc Common Stock with below market option prices (as of the assumed issuance date of September 29, 1997) based upon the September 29, 1997 Market Price for Triarc Common Stock issued in exchange for all of the outstanding Cable Car Options and (c) $600,000 of an aggregate $1,200,000 of estimated expenses, of which the remaining $600,000 is attributable to this registration of the 1,566,731 shares of Triarc Common Stock under the Securities Act and, accordingly, charged to 'Additional paid-in capital'. The number of shares of Triarc Common Stock actually issued in the Merger may vary. See 'The Proposed Merger and Related Matters -- Conversion of Shares of Cable Car Stock'. 73 NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET -- (CONTINUED) (ii) To reflect the preliminary estimated allocation of the purchase price of Cable Car as follows (in thousands):
DEBIT (CREDIT) -------- Adjust 'Trademarks' to write up the trademarks and tradenames ($7,000) and distribution network ($4,107) to fair value in accordance with an independent appraisal................. $ 11,107 Adjust 'Deferred costs, deposits and other assets' to eliminate organization costs........... (21) Adjust 'Deferred income taxes' for the adjustments above and the effect of the converted Cable Car Options in (i) above............................................................. (3,354) Eliminate the 'Common stock' ($90), 'Additional paid-in-capital' ($9,899), Accumulated deficit' ($3,208) and 'Treasury stock' ($29) of Cable Car.................................. 6,752 Eliminate the Company's investment in Cable Car.............................................. (34,601) Adjust 'Unamortized costs in excess of net assets of acquired companies' to eliminate the historical Goodwill of Cable Car and record the excess of the Company's investment in Cable Car over the adjusted net assets of Cable Car.............................................. 20,117 -------- $ -- -------- --------
74 TRIARC COMPANIES, INC. AND SUBSIDIARIES UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1996
ADJUSTMENTS PRO FORMA FOR THE SALES FOR THE SALES AS AND THE SNAPPLE AND THE SNAPPLE REPORTED SNAPPLE ACQUISITION ACQUISITION -------- --------- --------------- --------------- (IN THOUSANDS EXCEPT PER SHARE DATA) Revenues: Net sales................. $931,920 $ 550,800 $(228,031)(a) $ 1,243,526 444(f) (11,607)(g) Royalties, franchise fees and other revenues...... 57,329 -- 9,121(b) 66,510 60(f) -------- --------- --------------- --------------- 989,249 550,800 (230,013) 1,310,036 -------- --------- --------------- --------------- Costs and expenses: Cost of sales............. 652,109 352,900 (187,535)(a) 807,354 178(f) (10,298)(g) Advertising, selling and distribution............ 139,662 188,400 (24,764)(a) 294,770 (1,702)(g) (6,826)(j) General and administrative.......... 131,357 93,900 (9,913)(a) 169,588 (434)(g) (45,322)(k) Reduction in carrying value of long-lived assets impaired or to be disposed of............. 64,300 -- (58,900)(a) 5,400 Facilities relocation and corporate restructuring........... 8,800 16,600 (2,400)(a) 23,000 -------- --------- --------------- --------------- 996,228 651,800 (347,916) 1,300,112 -------- --------- --------------- --------------- Operating profit (loss)... (6,979) (101,000) 117,903 9,924 Interest expense.............. (73,379) -- 8,421(c) (93,505) (273)(f) (28,274)(m) Gain on sale of businesses, net......................... 77,000 -- -- 77,000 Other income, net............. 7,996 -- 16(g) 8,695 683(h) -------- --------- --------------- --------------- Income (loss) before income taxes and minority interests...... 4,638 (101,000) 98,476 2,114 Provision for income taxes.... (11,294) -- (28,406)(e) (11,321) (578)(i) 28,957(n) Minority interests in income of consolidated subsidiary.................. (1,829) -- -- (1,829) -------- --------- --------------- --------------- Income (loss) before extraordinary items..... $ (8,485) $(101,000) $ 98,449 $ (11,036) -------- --------- --------------- --------------- -------- --------- --------------- --------------- Income (loss) before extraordinary items per share................... $ (.28) $ (.37) -------- --------------- -------- --------------- ADJUSTMENTS CABLE CAR FOR THE AS CABLE CAR REPORTED ACQUISITION PRO FORMA ---------- ----------- ---------- (IN THOUSANDS EXCEPT PER SHARE DATA) Revenues: Net sales.................$ 18,873 $ -- $1,262,399 Royalties, franchise fees and other revenues...... -- -- 66,510 ---------- ----------- ---------- 18,873 -- 1,328,909 ---------- ----------- ---------- Costs and expenses: Cost of sales............. 13,671 -- 821,025 Advertising, selling and distribution............ 1,994 -- 296,764 General and administrative.......... 1,197 1,239(i) 172,024 Reduction in carrying value of long-lived assets impaired or to be disposed of............. -- -- 5,400 Facilities relocation and corporate restructuring........... -- -- 23,000 ---------- ----------- ---------- 16,862 1,239 1,318,213 ---------- ----------- ---------- Operating profit (loss)... 2,011 (1,239) 10,696 Interest expense.............. -- -- (93,505) Gain on sale of businesses, net......................... -- -- 77,000 Other income, net............. 53 -- 8,748 ---------- ----------- ---------- Income (loss) before income taxes and minority interests...... 2,064 (1,239) 2,939 Provision for income taxes.... (807) 471(ii) (11,657) Minority interests in income of consolidated subsidiary.................. -- -- (1,829) ---------- ----------- ---------- Income (loss) before extraordinary items.....$ 1,257 $ (768) $ (10,547) ---------- ----------- ---------- ---------- ----------- ---------- Income (loss) before extraordinary items per share................... $ (.34)(iii) ---------- ----------
75 TRIARC COMPANIES, INC. AND SUBSIDIARIES UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 29, 1997
ADJUSTMENTS PRO FORMA ADJUSTMENTS PREACQUISITION FOR THE SALES FOR THE SALES CABLE CAR FOR THE AS PERIOD OF AND THE SNAPPLE AND THE SNAPPLE AS CABLE CAR REPORTED SNAPPLE ACQUISITION ACQUISITION REPORTED ACQUISITION -------- -------------- --------------- --------------- --------- ----------- (IN THOUSANDS EXCEPT PER SHARE DATA) Revenues: Net sales...................... $401,882 $ 172,400 $ (74,195)(a) $ 493,930 $12,747 $ -- 222(f) (6,379)(g) Royalties, franchise fees and other revenues............... 29,641 -- 2,968(b) 32,639 -- -- 30(f) -------- -------------- --------------- --------------- --------- ----------- 431,523 172,400 (77,354) 526,569 12,747 -- -------- -------------- --------------- --------------- --------- ----------- Costs and expenses: Cost of sales.................. 255,406 100,600 (59,127)(a) 291,180 9,124 -- 89(f) (5,788)(g) Advertising, selling and distribution................. 80,792 58,700 (8,145)(a) 127,944 1,386 -- (396)(g) (3,007)(j) General and administrative..... 66,872 28,200 (3,319)(a) 81,542 997 612(i) (256)(g) (9,955)(k) Facilities relocation and corporate restructuring...... 7,350 -- (5,597)(a) 1,753 -- -- Acquisition related............ 32,440 -- -- 32,440 -- -- Loss on assets held for sale... -- 1,414,600 (1,414,600)(l) -- -- -- -------- -------------- --------------- --------------- --------- ----------- 442,860 1,602,100 (1,510,101) 534,859 11,507 612 -------- -------------- --------------- --------------- --------- ----------- Operating profit (loss)........ (11,337) (1,429,700) 1,432,747 (8,290) 1,240 (612) Interest expense................... (33,963) -- 2,756(c) (42,036) -- -- 140(f) (10,969)(m) Other income, net.................. 6,912 -- 1,798(d) 8,427 31 -- 69(g) (352)(h) -------- -------------- --------------- --------------- --------- ----------- Income (loss) before income taxes and minority interests.................... (38,388) (1,429,700) 1,426,189 (41,899) 1,271 (612) Benefit from (provision for) income taxes............................ 9,213 -- (3,701)(e) 10,007 (578) 233(ii) (184)(i) 4,679(n) Minority interests in income of consolidated subsidiary.......... (3,171) -- -- (3,171) -- -- -------- -------------- --------------- --------------- --------- ----------- Income (loss) before extraordinary items.......... $(32,346) $ (1,429,700) $ 1,426,983 $ (35,063) $ 693 $(379) -------- -------------- --------------- --------------- --------- ----------- -------- -------------- --------------- --------------- --------- ----------- Income (loss) before extraordinary items per share........................ $ (1.08) $ (1.17) -------- --------------- -------- --------------- PRO FORMA -------- (IN THOUSANDS EXCEPT PER SHARE DATA) Revenues: Net sales...................... $506,677 Royalties, franchise fees and other revenues............... 32,639 -------- 539,316 -------- Costs and expenses: Cost of sales.................. 300,304 Advertising, selling and distribution................. 129,330 General and administrative..... 83,151 Facilities relocation and corporate restructuring...... 1,753 Acquisition related............ 32,440 Loss on assets held for sale... -- -------- 546,978 -------- Operating profit (loss)........ (7,662) Interest expense................... (42,036) Other income, net.................. 8,458 -------- Income (loss) before income taxes and minority interests.................... (41,240) Benefit from (provision for) income taxes............................ 9,662 Minority interests in income of consolidated subsidiary.......... (3,171) -------- Income (loss) before extraordinary items.......... $(34,749) -------- -------- Income (loss) before extraordinary items per share........................ $ (1.10)(iii) -------- --------
76 NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS ARBY'S RESTAURANTS SALE PRO FORMA ADJUSTMENTS (a) To reflect the elimination of the sales, cost of sales, advertising, selling and distribution expenses and allocated general and administrative expenses, the reduction in carrying value of long-lived assets impaired or to be disposed of for the year ended December 31, 1996 related to the sold restaurants and the portion of the facilities relocation and corporate restructuring charge associated with restructuring the restaurant segment in connection with the Arby's Restaurants Sale. The allocated general and administrative expenses reflect the portion of the Company's total general and administrative expenses allocable to the operating results associated with the restaurants sold as determined by management of the Company. Such allocated amounts consist of (i) salaries, bonuses, travel and entertainment expenses, supplies, training and other expenses related to area managers who had responsibility for the day-to-day operation of the sold restaurants and (ii) the portion of general corporate overhead (e.g. accounting, human resources, marketing, etc.) estimated to be avoided as a result of the Company no longer operating restaurants. Since the Company no longer owns Arby's restaurants but continues to operate as an Arby's franchisor, it is undertaking a reorganization of its restaurant segment eliminating 65 positions in its corporate and field administrative offices and significantly reducing leased office space. The effect of the elimination of income and expenses of the sold restaurants is significantly greater in the year ended December 31, 1996 as compared with the six months ended June 29, 1997 principally due to two 1996 eliminations which did not recur in the 1997 period for (i) the $58,900,000 reduction in carrying value of long-lived assets associated with the restaurants sold and (ii) depreciation and amortization on the long-lived restaurant assets sold, which had been written down to their estimated fair values as of December 31, 1996 and were no longer depreciated or amortized while they were held for sale. (b) To reflect royalties on the sales of the sold restaurants at the rate of 4%. (c) To reflect a reduction to interest expense relating to the debt assumed by RTM. (d) To reflect the elimination of the $2,342,000 loss on sale of restaurants and a $544,000 (only the portion related to the restaurant headquarters) gain on termination of a portion of the Fort Lauderdale, Florida headquarters lease for space no longer required by the restaurant segment as a result of the Arby's Restaurants Sale recorded in the six months ended June 29, 1997. (e) To reflect the income tax effects of the above at the incremental income tax rate of 38.9%. C&C SALE PRO FORMA ADJUSTMENTS (f) To reflect (i) realization of deferred revenues based on the portion of the minimum take-or-pay commitment for sales of concentrate for C&C products to Kelco to be fulfilled and fees related to the technical services to be performed, both under the contract with Kelco, (ii) imputation of interest on the deferred revenues and (iii) recognition of the estimated cost of the concentrate to be sold. (g) To reflect the elimination of sales, cost of sales, advertising, selling and distribution expenses, general and administrative expenses and other expense related to the C&C beverage line. (h) To reflect accretion of the discount on the portion of the Note relating to the C&C Sale. (i) To reflect the income tax effects of the above at the incremental income tax rate of 36.6%. 77 NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS -- (CONTINUED) SNAPPLE ACQUISITION PRO FORMA ADJUSTMENTS (j) Represents adjustments to 'Advertising, selling and distribution' expenses as follows (in thousands):
YEAR ENDED SIX MONTHS ENDED DECEMBER 31, 1996 JUNE 29, 1997 ----------------- ------------------ Record (reverse) net purchases (depreciation) of refrigerated display cases expensed when purchased and placed in service..................................................... $ 3,174 $ (879) Reverse reported take-or-pay expense for obligations associated with long-term production contracts as a result of adjustment to fair value................................. (10,000) (2,128) ----------------- ---------- $(6,826) $(3,007) ----------------- ---------- ----------------- ----------
(k) Represents adjustments to 'General and administrative' expenses as follows (in thousands):
YEAR ENDED SIX MONTHS ENDED DECEMBER 31, 1996 JUNE 29, 1997 ----------------- ------------------ Record amortization of trademarks and tradenames of $210,000 over an estimated life of 35 years.......................... $ 6,000 $ 2,334 Record amortization of Goodwill of $88,942 over an estimated life of 35 years............................................ 2,541 989 Reverse reported amortization of intangibles for which no amortization was recorded subsequent to March 31, 1997 when they were written down to their estimated fair values....... (54,200) (13,400) Record amortization relating to the excess of fair value of an equity investment over the underlying book value over an estimated life of 35 years.................................. 337 122 ----------------- ------------------ $(45,322) $ (9,955) ----------------- ------------------ ----------------- ------------------
(l) To reverse the historical loss on sale of assets for the six months ended June 29, 1997 related to the reduction of the carrying value of Snapple in connection with its sale to Triarc. (m) Represents adjustments to 'Interest expense' as follows (in thousands):
YEAR ENDED SIX MONTHS ENDED DECEMBER 31, 1996 JUNE 29, 1997 ----------------- ------------------ Record interest expense at weighted average rate of 10.2% on $330,000 of borrowings associated with the Credit Agreement................................................... $(33,424) $(12,811) Record amortization on $11,200 of deferred financing costs associated with the Credit Agreement........................ (1,889) (713) Reverse reported interest expense on Mistic's former bank facility.................................................... 6,086 2,231 Reverse reported amortization of deferred financing costs associated with Mistic's former bank facility............... 953 324 ----------------- ------------------ $(28,274) $(10,969) ----------------- ------------------ ----------------- ------------------
78 NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS -- (CONTINUED) (n) Represents adjustments to 'Benefit from (provision for) income taxes' (in thousands):
YEAR ENDED SIX MONTHS ENDED DECEMBER 31, 1996 JUNE 29,1997 ----------------- ------------------ To reflect an income tax benefit on the adjusted historical pretax loss at 39% (exclusive of nondeductible Goodwill write-off and/or amortization) since no income tax benefit is reflected in the reported historical results of operations.................................................. $26,286 $ 65,208 To reflect the estimated income tax effect of the above adjustments (exclusive of nondeductible Goodwill write-off and/or amortization) at 39%................................. 2,671 (60,529) ----------------- ---------- $28,957 $ 4,679 ----------------- ---------- ----------------- ----------
CABLE CAR ACQUISITION PRO FORMA ADJUSTMENTS (i) Represents adjustments to 'General and administrative' expenses as follows (in thousands):
YEAR ENDED SIX MONTHS ENDED DECEMBER 31, 1996 JUNE 29, 1997 ----------------- ------------------ Record amortization of Goodwill of $20,667 over an estimated useful life of 25 years..................................... $ 827 $413 Record amortization of trademarks and tradenames and distribution network of $11,300 over an estimated useful life of 25 years............................................ 452 226 Reverse reported amortization of intangibles.................. (40) (27) ------- ------ $1,239 $612 ------- ------ ------- ------
(ii) To reflect the income tax effects of the above at the incremental income tax rate of 38%. (iii) The loss before extraordinary items per share has been determined by dividing the loss before extraordinary items by the weighted average shares outstanding (29,898,000 and 29,931,000 for the year ended December 31, 1996 and the six-month period ended June 29, 1997, respectively) plus the 1,567,000 shares to be issued in connection with the Merger. INTEGRATION OF ACQUISITIONS The accompanying pro forma condensed consolidated statements of operations do not reflect cost savings that the Company believes it will achieve from changes in operating strategies subsequent to the acquisitions of Snapple and Cable Car and operational synergies with Mistic. Such savings include cost reductions in domestic advertising and marketing and general and administrative expenses and more cost-efficient international operations. With respect to Snapple's domestic advertising, the Company plans to reduce such expenditures to approximately $1.90 per case from the pre-Snapple Acquisition 1996 level of approximately $2.65 per case through elimination of programs, such as product giveaways, which it considers non-effective, and the reduction of advertising development costs including talent, production and agency costs. The Company believes it can achieve such levels since the 1996 advertising and marketing levels at Mistic were approximately $1.56 per case. Domestic general and administrative expenses relating to Snapple are being reduced through space reductions and elimination of excess personnel. The corporate office facilities related to Snapple have been reduced from approximately 50,000 square feet at the Quaker corporate facility to approximately 12,500 square feet at the Triarc Beverage Group in White Plains, New York. Further, the Company has reduced administrative personnel, facilitated in part by the integration with Mistic. With respect to international operations, Snapple incurred significant losses in 1996. The Company intends to rationalize its international advertising and marketing and general and administrative expenses similar to its domestic operations to eliminate such losses. 79 CAPITALIZATION OF TRIARC The following table sets forth the unaudited historical capitalization of Triarc as of June 29, 1997, the pro forma capitalization of Triarc adjusted to give effect to the C&C Sale and the pro forma capitalization of Triarc further adjusted to give effect to the Cable Car Acquisition. The adjustments made to Triarc's historical consolidated capitalization to arrive at the adjusted consolidated capitalization are described under 'Triarc Companies, Inc. and Subsidiaries -- Unaudited Pro Forma Condensed Consolidated Financial Statements.' This table should be read in conjunction with the consolidated financial statements of Triarc Companies, Inc. and its subsidiaries incorporated by reference herein and 'Triarc Companies, Inc. and Subsidiaries -- Unaudited Pro Forma Condensed Consolidated Financial Statements' and related notes thereto included elsewhere in this Proxy Statement/Prospectus.
PRO FORMA FOR PRO FORMA THE CABLE CAR ACTUAL FOR THE C&C SALE ACQUISITION ------ ---------------- ------------- (IN MILLIONS) Current portion of long-term debt................................. $ 15.8 $ 15.8 $ 15.8 ------ ------- ------------- Long-term debt: 9 3/4% senior secured notes.................................. 275.0 275.0 275.0 8.54% first mortgage notes................................... 125.0 125.0 125.0 Term loans................................................... 323.0 323.0 323.0 Revolving loans.............................................. 38.5 38.5 38.5 Other........................................................ 6.2 6.2 6.2 ------ ------- ------------- Total long-term debt.................................... 767.7 767.7 767.7 ------ ------- ------------- Stockholders' equity (deficit).................................... (24.4) (24.1) 9.3 ------ ------- ------------- Total capitalization............................... $759.1 $759.4 $792.8 ------ ------- ------------- ------ ------- -------------
80 COMPARISON OF RIGHTS OF CABLE CAR AND TRIARC STOCKHOLDERS GENERAL As a result of the Merger, holders of shares of Cable Car Common Stock will own shares of Triarc Common Stock. The DGCL is the statute which governs Delaware corporations. Both Triarc and Cable Car are corporations incorporated under the laws of the State of Delaware, and there are no differences between the rights of Triarc and Cable Car stockholders arising out of the DGCL. The following is a summary of certain material similarities and differences between the rights of holders of shares of Cable Car Common Stock and holders of shares of Triarc Common Stock. These differences arise from differences between the Cable Car Charter and the Cable Car Bylaws, and the Triarc Charter and the Triarc Bylaws, the governing instruments of the two companies. The identification of specific differences is not intended to indicate that other equally or more significant differences do not exist. The summaries set forth herein are qualified in their entirety by reference to the Cable Car Charter and Cable Car Bylaws and the Triarc Charter and Triarc Bylaws. SIZE AND CLASSIFICATION OF THE BOARD OF DIRECTORS The Triarc Charter requires a Board comprised of not less than seven nor more than 15 members; provided, however, that such maximum number may be increased to reflect the right of holders of preferred stock to elect directors in certain circumstances with the exact number of directors to be fixed by a majority vote of the directors then in office and that such authority of the Triarc Board is exclusive. Triarc currently has nine directors. Triarc does not have a classified board and all directors stand for election on an annual basis. Each director serves until his or her successor is elected and qualified. The Cable Car Bylaws require a Board comprised of not less than three nor more than seven members, which number may be increased or decreased within such range by the Cable Car Board. Cable Car currently has three directors. Cable Car does not have a classified board and all directors stand for election on an annual basis. Each director serves until his or her successor is elected and qualified. CUMULATIVE VOTING FOR DIRECTORS Neither the Triarc Charter nor the Cable Car Charter provides for cumulative voting. REMOVAL OF DIRECTORS The Triarc Bylaws provide that a duly elected director of Triarc may be removed, without cause, by the affirmative vote of the holders of two-thirds of the voting power of the outstanding capital stock of Triarc entitled to vote in the election of directors, voting as a single class. As the Cable Car Bylaws is silent, Delaware law provides that a duly elected director of Cable Car may be removed only for cause by the holders of a majority of the shares of the outstanding capital stock of Cable Car entitled to vote in the election of directors. SPECIAL MEETINGS OF STOCKHOLDERS Under the Triarc Bylaws, a special meeting of stockholders of Triarc may be called only by the Chairman of the Board and Chief Executive Officer or the President and Chief Operating Officer or the Triarc Board. Business transacted at any special meeting is limited to the purposes stated in the notice of the special stockholders' meeting given to stockholders. Under the Cable Car Bylaws, a special meeting of stockholders may be called by (i) the President of Cable Car, (ii) the request in writing or by vote of a majority of the directors or (iii) the request in writing of stockholders holding a majority of the capital stock of Cable Car outstanding and entitled to vote. 81 PREFERRED STOCK The Triarc Charter 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 the Triarc Board. Accordingly, the Triarc Board is empowered, without stockholder approval, to issue preferred stock with dividend, liquidation, conversion, voting or other rights which may adversely affect the voting power or other rights of the holders of Triarc Common Shares. As of the date of this Proxy Statement/Prospectus, there are no shares of Triarc Preferred Stock outstanding. The Cable Car Charter does not authorize preferred stock for issuance by the Cable Car Board. CERTAIN VOTING RIGHTS The DGCL generally requires approval of any merger, consolidation or sale of substantially all of the assets of a corporation at a meeting of stockholders by vote of the holders of a majority of all outstanding shares of the corporation entitled to vote thereon, although a certificate of incorporation of a Delaware corporation may provide for a greater vote. Neither the Cable Car Charter nor Cable Car's By-laws address the vote required to approve a merger, consolidation or sale of substantially all of the corporation's assets. Accordingly, such transactions will be governed by the DGCL. The Triarc Charter provides for a 75% vote of the stockholders entitled to vote thereon in order to approve certain mergers or consolidations. See 'Description of Anti-Takeover Provisions in Triarc Charter -- Business Combination Provision' below. In addition to voting rights provided by Delaware law and under the Triarc Charter, the rules of the NYSE, on which the Triarc Common Stock is listed, also afford stockholders certain voting rights. For example, NYSE rules require stockholder approval prior to the issuance by Triarc of any common stock, or any securities convertible into common stock, if such shares are to be issued in connection with any transaction or series of related transactions, other than a public offering for cash, if (i) the voting power of such common stock would be equal to at least 20% of the voting power of the shares outstanding prior to the issuance of such shares, or (ii) the number of such shares would be equal to at least 20% of the number of shares of common stock outstanding prior to the issuance of such shares. The NYSE rules also require stockholder approval for certain transactions in which Triarc's common stock, or securities convertible into Triarc's common stock, are to be issued to a Triarc director, officer, substantial stockholder, or an entity in which any such person holds a substantial interest, if the number of shares of common stock so issued or into which the securities so issued are convertible exceeds one percent of the number of shares of common stock outstanding prior to such issuance or one percent of the outstanding voting power prior to such issuance. The NYSE also requires stockholder approval for any issuance of securities by Triarc that will result in a change of control of Triarc. CERTAIN BUSINESS COMBINATIONS The DGCL prohibits a corporation which has securities traded on a national securities exchange, authorized for quotation on Nasdaq or held of record by more than 2,000 stockholders from engaging in certain business combinations, including a merger, sale of substantial assets, loan or substantial issuance of stock, with an interested stockholder, or an interested stockholder's affiliates, for a three-year period beginning on the date the interested stockholder acquires 15% or more of the outstanding voting stock of the corporation. The restrictions on business combinations do not apply if the board of directors gives prior approval to the transaction in which the 15% ownership level is exceeded, the interested stockholder acquires at one time at least 85% of the corporation's stock (excluding those shares owned by persons who are directors and also officers as well as employee stock plans in which employees do not have a confidential right to vote), or the business combination is approved by the board of directors and authorized at a meeting of stockholders by the holders of at least two-thirds of the outstanding voting stock, excluding shares owned by the interested stockholder. Although a Delaware corporation may elect, pursuant to its certificate of incorporation or bylaws, not to be governed by this provision, none of the Triarc Charter, the Triarc Bylaws, the Cable Car Charter or the Cable Car Bylaws contain such an election. With respect to the Merger, the Cable Car Board approved the Merger Agreement and the Merger prior to the time that Triarc entered into the Stockholders Agreement (pursuant to 82 which Triarc became an 'interested stockholder' of Cable Car under the applicable provision of the DGCL). APPRAISAL RIGHTS Under the DGCL, a shareholder of a corporation participating in certain merger transactions may, under certain circumstances, receive cash in the amount of the fair market value of his shares (as determined by a court) in lieu of the consideration he would otherwise receive in the merger. See 'Appraisal Rights.' Unless a corporation's certificate of incorporation provides otherwise, the DGCL does not require that such dissenters' rights of appraisal be afforded to stockholders with respect to (i) a merger or consolidation by a corporation the shares of which are either listed on a national securities exchange or designated as a national market system security on an interdealer quotation system by the National Association of Securities Dealers, Inc. or widely held (by more than 2,000 stockholders), if the stockholders of such corporation receive only shares of the surviving corporation or of such a listed or widely held corporation; or (ii) those stockholders who are the stockholders of the surviving corporation in a merger if no vote of such stockholder is required because, among other things, the number of shares to be issued in the merger does not exceed 20% of the shares of the surviving corporation outstanding immediately prior to the merger (if certain other conditions are met). The Cable Car Common Stock is not listed on a national securities exchange or designated as a national market system security, nor is such stock held by more than 2,000 stockholders. Accordingly, the holders of Cable Car Common Stock are not subject to the exclusion from appraisal rights provided in Section 262. The Triarc Common Stock is listed on the NYSE and the holders of such stock are not afforded appraisal rights under Section 262 with respect to certain merger transactions. CERTAIN ANTI-TAKEOVER PROVISIONS IN THE TRIARC CHARTER Certain provisions in the Triarc Charter are intended to discourage or delay a hostile takeover of control of Triarc. These provisions, in general terms, (i) provide that the number of directors shall not be less than seven nor more than 15, with the exact number to be determined from time to time by a majority of the board of directors then in office; (ii) provide that vacancies on the Triarc Board resulting from an increase in size, removal of directors or otherwise may be filled only by a majority of the remaining directors then in office; and (iii) require the affirmative vote of the holders of shares representing at least 75% of the voting power of the Voting Shares (defined below) in order to enter into certain Business Combinations (defined below), unless (A) such Business Combinations are approved by at least a majority of the entire Triarc Board, but only if a majority of the directors acting favorably on the matter are Continuing Directors (defined below), or (B) certain minimum price, form of consideration and procedural requirements are met. The term 'Voting Shares' is defined in the provisions as any issued and outstanding shares of capital stock of Triarc entitled to vote generally in the election of directors. Each of these provisions has particular anti-takeover effects associated with it, and these effects together with a more detailed description of each provision are set forth below. In addition, the anti-takeover provisions are interrelated and have cumulative anti-takeover effects as described herein. Similar provisions are not included in the Cable Car Charter or the Cable Car Bylaws. The principal purpose of these provisions is to provide a measure of assurance that a shareholder or group of shareholders owning a controlling interest in the Triarc's stock do not exercise their voting power in a manner which the Triarc Board believes would be to the detriment of the remaining shareholders. The provisions are further intended to make it more difficult for a hostile or unfriendly party to obtain control of Triarc by replacing the Triarc Board. SIZE OF THE BOARD OF DIRECTORS AND FILLING VACANCIES ON THE BOARD OF DIRECTORS The Triarc Charter states that the Triarc Board consists of not less than seven nor more than 15 members, provided, however, that such maximum number may be increased to reflect the right of holders of preferred stock to elect directors in certain circumstances with the exact number of directors to be fixed by a majority vote of the directors then in office and that such authority of the Triarc Board is exclusive. The Triarc Charter provides that vacancies that may occur between annual meetings may 83 be filled only by a majority of the remaining directors then in office, even if less than a quorum, subject to the rights of holders of any class or series of preferred stock to elect directors. In addition, the provision provides that any new director elected to fill a vacancy on the Triarc Board will serve for the remainder of the full term of that director for which the vacancy occurred and no decrease in the number of directors shall shorten the term of any incumbent. Vacancies caused by an increase in the number of directors would be filled by the Triarc Board. The purpose of including these provisions with respect to the size of the Triarc Board and the filling of vacancies in the Triarc Charter is to prevent the elimination of such provisions through amendment of the Triarc Bylaws by a shareholder or group owning or controlling a substantial voting block so as to permit shareholders directly to increase the size of the Triarc Board and to fill vacancies resulting therefrom or otherwise, which would enable such shareholder or group of shareholders to elect its own nominees to the vacancies. This would be possible because, under Delaware law, shareholders may amend the Triarc Bylaws without prior approval of the Triarc Board, whereas the Triarc Charter may be amended only if the Triarc Board first approves and recommends such action to shareholders. BUSINESS COMBINATION PROVISION The Triarc Charter provides that the approval of the holders of shares representing at least 75% of the voting power of the Voting Shares be required in order to approve certain Business Combinations if an Interested Shareholder (defined below) is a party to the transaction or its percentage equity interest in Triarc or any subsidiary of Triarc would be increased by the transaction. The required 75% approval of any Business Combination must include the affirmative vote of the holders of shares representing at least a majority of the voting power of the Voting Shares exclusive of those shares beneficially owned by any Interested Shareholder. The voting requirements outlined above will not apply, however, if: (i) immediately prior to the time the Business Combination is consummated, Triarc is the Beneficial Owner (defined below) of a majority of each class of the outstanding equity securities of the Interested Shareholder; (ii) the Business Combination was approved by at least a majority of the Board of Directors (even though not the entire Board of Directors), but only if a majority of the directors acting favorably upon such matter are Continuing Directors; or (iii) the consideration to be received by the holders of each class of Triarc's outstanding Voting Shares acquired by the Interested Shareholder is at least equal to the greater of the highest per share price (including any brokerage commissions, transfer taxes and soliciting dealers' fees) paid by the Interested Shareholder for any shares of such class (A) within the two-year period immediately prior to the first public announcement of the proposal of the Business Combination or (B) in the transaction in which it became an Interested Shareholder, and is in cash or in the same form of consideration as the Interested Shareholder paid to acquire the largest number of Voting Shares previously acquired by it. The pricing provision does not guarantee that a shareholder will receive the highest market price paid for such shares, rather it insures that a shareholder will receive the highest price paid for such shares by an Interested Shareholder during the prior two years. If either the ownership or form of consideration requirements set forth in clauses (i) and (iii) above are satisfied, the Business Combination shall require the approval of the holders of at least two-thirds of the votes entitled to be cast by the holders of all the then outstanding Voting Shares (the 'Ratification Percentage') (and the additional majority vote). If the Triarc Board approves the Business Combination in accordance with the requirements set forth in clause (ii) above, the Triarc Board may, again in accordance with the voting provisions of such clause (ii), determine to require a vote of shareholders. If a shareholder vote is required for such Business Combination under law (such as, for example, in the case of a merger or liquidation), the Triarc Board shall require the affirmative vote of the then outstanding Voting Shares equal to the higher of: (1) the Ratification Percentage (such affirmative vote shall not require the additional majority vote), and (2) such other percentage as is required by law. If a shareholder vote is not required for such Business Combination under law, the Triarc Board may, in its discretion, either decide not to require a shareholder vote to approve the Business Combination or require the affirmative vote of the outstanding Voting Shares equal to (i) the Ratification Percentage (such affirmative vote shall not require the additional majority vote) or (ii) such other percentage as it so determines. 84 An 'Interested Shareholder' generally is defined under the Triarc Charter as the Beneficial Owner of 10% or more of the voting power of the outstanding Voting Shares (other than Triarc, its employee benefit plans, or its majority owned subsidiaries), excluding, however, DWG Acquisition or any 'Affiliate' or 'Associate' (each as defined in the Triarc Charter) thereof. The Triarc Board considers that a 10% holding, which causes a person to be classified as an 'insider' under Section 16 of the Exchange Act, and is double the percentage ownership required to trigger reporting obligations under Section 13(d) of the Exchange Act, for shareholders of public companies, is appropriate to define an Interested Shareholder. At the present time, Triarc is not aware of the existence of any shareholder or group of shareholders that would be an Interested Shareholder. However, if the currently outstanding shares of the Triarc Class B Common Stock were to be converted by a Beneficial Owner into shares of Triarc Class A Common Stock, such Beneficial Owner (if other than DWG Acquisition) would become, upon such conversion, an Interested Shareholder. 'Beneficial Owner' and 'Beneficial Ownership' are defined in accordance with the definition of beneficial ownership under Rule 13d-3 of the General Rules and Regulations under the Exchange Act, and include all shares as to which the Interested Shareholder in question has sole or shared voting or investment power. However, an Interested Shareholder is also deemed to own beneficially shares owned, directly or indirectly, by any 'Affiliate' or 'Associate' (each as defined in the Triarc Charter) of the Interested Shareholder, as well as (i) shares which it or any such Affiliate or Associate has a right to acquire, (ii) shares issuable upon the exercise of options or rights, or upon conversion of convertible securities, held by the Interested Shareholder, and (iii) shares beneficially owned by any other person with whom the Interested Shareholder or any of such shareholder's Affiliates or Associates acts as a partnership, syndicate or other group pursuant to an agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of shares of capital stock of the Company. A 'Business Combination' includes: (i) a merger or consolidation involving Triarc or any of its subsidiaries and an Interested Shareholder or an Affiliate or Associate of an Interested Shareholder, or an Affiliate thereof, (ii) a sale, lease or other disposition (in one or a series of transactions) of a 'Substantial Part' (as defined in the Triarc Charter) of the assets of Triarc or any of its subsidiaries to an Interested Shareholder or an Affiliate or Associate of any Interested Shareholder, or an Affiliate thereof; (iii) any sale or other disposition (in one or a series of transactions) to Triarc or any of its subsidiaries of any assets (excluding any Voting Shares, but including without limitation any securities whether outstanding, authorized but unissued or in treasury, issued by an Interested Shareholder, or by an Affiliate or Associate of an Interested Shareholder or by an Affiliate thereof) of (A) any Interested Shareholder or (B) an Affiliate or Associate of an Interested Shareholder, or an Affiliate thereof, if the amount paid therefor constitutes a Substantial Part of the assets of Triarc or any subsidiary; or (iv) an issuance (or a related series of issuances) of securities of Triarc or any of its subsidiaries (except upon conversion of convertible securities as a result of a pro rata stock dividend or stock split) to an Interested Shareholder or an Affiliate or Associate of an Interested Shareholder or an Affiliate thereof, for consideration aggregating $5,000,000 or more; (v) a liquidation, dissolution, spinoff, split up or split off of Triarc (if as of the record date for the determination of shareholders entitled to vote with respect thereto or, if no vote would otherwise be required, the date the transaction is planned to be consummated, any person is an Interested Shareholder); (vi) a reclassification or recapitalization of securities (including, without limitation, any combination of shares or reverse stock split) of Triarc or any of its subsidiaries or a reorganization, in any case having the effect, directly or indirectly, of increasing the percentage interest of an Interested Shareholder in any class of equity securities of Triarc or such subsidiary; and (vii) any agreement, contract or other arrangement providing for any of the transactions described in this definition of Business Combination. A 'Continuing Director' is defined as one serving as a director whose election or appointment or recommendation by the Triarc Board for election by Triarc's shareholders was approved of by at least a majority of the Continuing Directors then on the Triarc Board. The Business Combination provision described above is intended to provide safeguards to Triarc's shareholders by requiring a higher shareholder vote than required under Delaware law in the event another person first obtains a substantial interest in Triarc and then wishes to accomplish a combination of such person's business with that of Triarc, or otherwise eliminate the shareholdings of the other shareholders. The federal securities law and regulations issued thereunder govern the disclosure 85 required to be made to minority shareholders in such transactions but do not assure to shareholders the fairness of the terms of the Business Combination. Moreover, the statutory right of the remaining shareholders of Triarc to dissent in connection with certain Business Combinations and receive the 'fair value' of their shares in cash may involve significant expense, delay and uncertainty to dissenting shareholders. Further, the 'fair value' of a shareholder's shares, as determined under this standard, may not be equivalent to the minimum price as determined pursuant to the provisions. The Business Combination provision is to close partially these gaps in the federal and state laws and to minimize certain of the potential inequities of those Business Combinations that involve two or more steps by requiring that in order to complete a Business Combination that is not approved by the Continuing Directors, such Interested Shareholder must obtain the affirmative votes of at least 75% of the voting power of the outstanding Voting Shares prior to proposing the Business Combination (including the affirmative vote of the holders of shares representing at least a majority of the voting power of the outstanding Voting Shares exclusive of those shares beneficially owned by the Interested Shareholder), or meet the minimum price and procedural requirements of the provision and obtain the approval of at least two-thirds of the voting power of the outstanding Voting Shares (and the additional majority vote). The provision also is designed to protect those shareholders who have not tendered or otherwise sold their shares to a purchaser who is attempting to acquire control by ensuring that at least the same price and form of consideration are paid to such shareholders in a Business Combination as were paid to shareholders in the initial step of the acquisition. In the absence of the provision, an Interested Shareholder who acquired control of Triarc could subsequently, by virtue of such control, force minority shareholders to sell or exchange their shares at a price that would not reflect any premium such purchaser may have paid in order to acquire its controlling interest, but rather at a price set by such Interested Shareholder. Such a price might not only be lower than the price paid by such purchaser in acquiring control, but also could be in a less desirable form of consideration (e.g., equity or debt securities of the purchaser). In many situations, the minimum price, form of consideration and procedural requirements of the provision would require that a purchaser pay shareholders a higher price for their shares and/or structure the transaction differently from what would be the case without the provision. Accordingly, to the extent a Business Combination were involved as part of a plan to acquire control of Triarc, this provision would increase the likelihood that a purchaser would negotiate directly with the Triarc Board. Triarc believes that the Triarc Board normally is in a better position than the individual shareholders of Triarc to negotiate effectively on behalf of all shareholders in that the Triarc Board is likely to be more knowledgeable than any individual shareholder in assessing the business and prospects of Triarc. Accordingly, Triarc is of the view that negotiations between the Triarc Board and the purchaser would increase the likelihood that shareholders ultimately will receive a higher price for their shares from anyone desiring to obtain control of Triarc through a Business Combination or otherwise. Although not all acquisitions of Triarc's capital stock are made with the objective of acquiring control of Triarc through a subsequent Business Combination, a purchaser in many cases desires to have the option to consummate such a Business Combination. Assuming that to be the case, the provision would tend to discourage purchasers whose objective is to seek control of Triarc at a relatively low price, since acquiring the remaining equity interest may be difficult unless the minimum price, form of consideration and procedural requirements were satisfied or a majority of the Continuing Directors were to approve the transaction. The provision also should discourage the accumulation of large blocks of Triarc's capital stock, which Triarc believes to be disruptive to the stability of Triarc, and which can sometimes precipitate a change of control of Triarc on terms unfavorable to Triarc's other shareholders. AMENDMENT OF CHARTER DOCUMENTS The Triarc Charter may be amended in accordance with the DGCL, except that the Triarc Charter provides that the Business Combination provision described above may not be repealed, altered, changed or amended in any respect unless such action is approved by the affirmative vote of the holders of at least 75% of the Voting Shares (which 75% must include the affirmative vote of the holders of shares representing at least a majority of the voting power of the Voting Shares exclusive of those of which any Interested Shareholder is the Beneficial Owner), unless approved by a vote of a majority of 86 the entire Triarc Board (but only if a majority of the directors acting favorably on the matter are Continuing Directors), in which case the Business Combination provision may be amended by the affirmative vote of holders of at least a majority of the voting power of the Voting Shares (such affirmative vote does not require the additional majority vote); and provided, further, that the Ratification Percentage may be amended, altered, changed or repealed by the affirmative vote of the holders of at least two-thirds of the voting power of the Voting Shares (such affirmative vote does not require the additional majority vote). The Triarc Bylaws may be altered, amended or repealed, or new by-laws adopted, by (i) the affirmative vote of stockholders holding not less than two-thirds of the voting power of the shares entitled to vote on such issue, or (ii) the affirmative vote of not less than a majority of all of the directors then holding office and entitled to vote on such issue. The Cable Car Charter may be amended in accordance with the DGCL. The Cable Car Bylaws may be amended, altered or repealed or added to at any regular meeting of the stockholders or board of directors or at any special meeting called for such purpose, by the affirmative vote of a majority of the stock issued and outstanding and entitled to vote or of a majority all of the directors then holding office. INDEMNIFICATION OF OFFICERS AND DIRECTORS The Triarc Charter provides indemnification to the fullest extent permitted by Delaware law (including as such law may be amended in the future to be more favorable to directors and officers). The Triarc Charter (as well as the Triarc Bylaws) provides that, to the extent not prohibited by law, Triarc shall indemnify its directors and officers for expenses (including attorneys' fees and disbursements) and any liability or loss paid or incurred if such person is or was made, or threatened to be made, a party to any action by reason of the fact that such person is or was a director or officer of Triarc, or is or was serving in any capacity at the request of Triarc for any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise (an 'Other Entity'). Persons who are not directors or officers of Triarc may be similarly indemnified in respect of service to Triarc or to an Other Entity at the request of Triarc to the extent the Triarc Board at any time specifies that such persons are entitled to the benefits of the indemnification provisions of the Triarc Charter. The Triarc Charter specifies that any director or officer of Triarc serving in any capacity with a majority owned subsidiary or any employee benefit plan of Triarc or any majority owned subsidiary corporation shall be deemed to be doing so at the request of Triarc. The Triarc Charter and the Triarc Bylaws permit indemnification whether the basis of such proceeding is an alleged action in an official capacity or in any other capacity while serving as an officer or director. However, this provision is limited by reference to the DGCL, which specifically limits indemnification in the case of derivative suits (suits brought in the name and on behalf of Triarc) to the payment of expenses if the person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of Triarc. If a person is adjudged liable to Triarc in a derivative suit (but not in other suits) no indemnification payments may be made unless a court determines otherwise. The Triarc Charter also provides that expenses are to be advanced prior to the final disposition of a proceeding upon the receipt by Triarc of an undertaking that the director or officer will repay such advances if he or she is ultimately found not to be entitled to indemnification and provides that the right to indemnity and to receive advances continues as to a director or officer after such person has ceased to hold an office with Triarc. The right to indemnification under the Triarc Charter is a contract right and, therefore, cannot be retroactively eliminated by a later stockholder vote, and is not an exclusive right and, therefore, Triarc may provide other indemnification, if appropriate. In addition, the Triarc Charter permits Triarc, as provided in the DGCL, to purchase directors' and officers' liability insurance, and establish a trust fund to ensure payments of indemnification claims. Finally, the Triarc Charter permits a person entitled to indemnity to bring an action in court to obtain such indemnity and requires that in any such suit the court will not be bound by a decision of the Triarc Board, independent counsel or stockholders that such person is not entitled to indemnification. The purpose of this provision is to permit court determination of the issue, notwithstanding a negative 87 decision by the Triarc Board, its chosen counsel or the stockholders, which decision might be made, for example, following a change of control in Triarc. The Cable Car Bylaws provide that Cable Car will indemnify to the fullest extent permitted by law any person who is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding by reason of the fact that such person is or was a director or officer of the Cable Car, or while a director or officer of Cable Car is or was serving at its request as a director, officer, partner, trustee, employee or agent of any other foreign or domestic entity, against all expenses and liabilities actually and reasonably incurred by such person in connection with holding such positions. The Cable Car Bylaws provide that Cable Car may, by determination of the Cable Car Board, similarly indemnify any present or former employee or agent of Cable Car to the fullest extent permitted by law or any lesser extent. LEGAL MATTERS The legality of the Triarc Common Stock being offered hereby will be passed upon for Triarc by Paul, Weiss, Rifkind, Wharton & Garrison, New York, New York. The federal income tax consequences in connection with the Merger will be passed upon by Sherman & Howard, L.L.C., Denver, Colorado. Members of Paul, Weiss, Rifkind, Wharton & Garrison own approximately 1,600 shares of Triarc Common Stock. EXPERTS The consolidated financial statements of Triarc incorporated by reference and the related financial statement schedule incorporated in this Proxy Statement/ Prospectus by reference to Triarc's Annual Report on Form 10-K for the year ended December 31, 1996 have been audited by Deloitte & Touche LLP, independent auditors, as stated, which is in their report incorporated herein by reference, and have been so incorporated in reliance upon the report of such firm given upon their authority as experts in accounting and auditing. The financial statements of Snapple Beverage Corp. incorporated by reference in this Proxy Statement/Prospectus have been audited by Arthur Andersen LLP, independent public accountants, as indicated in their reports with respect thereto and are incorporated by reference herein in reliance upon the authority of said firm as experts in accounting and auditing in giving said reports. The consolidated financial statements of Cable Car incorporated in this Proxy Statement/Prospectus by reference to Cable Car's Annual Report on Form 10-K for the fiscal year ended December 31, 1996, have been so incorporated in reliance on the report of Price Waterhouse LLP, independent accountants, given on the authority of said firm as experts in accounting and auditing. STOCKHOLDER PROPOSALS If the Merger is not consummated, or is not consummated within the time period currently contemplated, Cable Car will hold its 1997 Annual Meeting of Stockholders. As described in Cable Car's proxy statement relating to its 1996 Annual Meeting of Stockholders, stockholder proposals for inclusion in Cable Car's proxy statement and form of proxy relating to the Cable Car 1997 Annual Meeting of Stockholders must have been received by Cable Car on or before January 1, 1997. 88 APPENDIX A-1 ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------------------- FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (Mark One) [x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM __________________ TO _________________ COMMISSION FILE NUMBER 0-14784 ------------------------ CABLE CAR BEVERAGE CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) ------------------------ DELAWARE 52-0880815 (STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.) 717 17TH STREET, SUITE 1475, DENVER, COLORADO 80202 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (303) 298-9038 ------------------------ SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NAME OF EACH EXCHANGE ON TITLE OF EACH CLASS WHICH REGISTERED ------------------- ----------------- None None SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: Common Stock, $.01 Par Value (TITLE OF CLASS) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes __X__ No ______ The aggregate market value of equity securities held by non-affiliates of the Registrant on March 25, 1997 was approximately $18,730,000. As of March 25, 1997 there were 8,905,324 shares of common stock outstanding. =============================================================================== CABLE CAR BEVERAGE CORPORATION AND SUBSIDIARIES 1996 FORM 10-K ANNUAL REPORT ------------------------ TABLE OF CONTENTS
PAGE ---- PART I Item 1. Business....................................................................................... 3 Item 2. Properties..................................................................................... 5 Item 3. Legal Proceedings.............................................................................. 5 Item 4. Submission of Matters to a Vote of Security Holders............................................ 5 PART II Item 5. Market for the Registrant's Common Stock and Related Stockholder Matters....................... 5 Item 6. Selected Financial Data........................................................................ 6 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.......... 6 Item 8. Financial Statements and Supplementary Data.................................................... 9 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure........... 9 PART III Item 10. Directors and Executive Officers of the Registrant............................................. 9 Item 11. Executive Compensation......................................................................... 9 Item 12. Security Ownership of Certain Beneficial Owners and Management................................. 9 Item 13. Certain Relationships and Related Transactions................................................. 9 PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K................................ 9
2 PART I ITEM 1. BUSINESS. GENERAL Cable Car Beverage Corporation, (the 'Company') was incorporated under the laws of Delaware on April 1, 1968. The Company's business consists of marketing its line of proprietary soft drinks and waters throughout the United States and in Canada. As discussed in more detail below, the Company's product line consists of Stewart's brand soft drinks, JAVA COLA, Fountain Classics Seltzer, San Francisco Seltzer, Aspen Mountain Spring Water and Aspen flavored waters. During 1996, the Company began marketing two new Stewart's flavors (Stewart's Classic Key Lime and Cherries N' Cream) as well as a new line of carbonated, coffee-flavored cola under the name of JAVA COLA. PROPRIETARY PRODUCTS MARKETING: General: The Company initially entered its current business of marketing beverages on August 27, 1987 when it acquired, through its subsidiary Old San Francisco Seltzer, Inc. ('SFS'), the assets and business of Old San Francisco, Inc. ('Old SF'), a California corporation that marketed a product line of flavored seltzers. The Company added to its line of beverages when, on July 11, 1989, it entered into a licensing agreement with Stewart's Restaurants, Inc. ('Stewart's'), a New Jersey based franchiser of Stewart's Drive-In Root Beer Stands, pursuant to which the Company has the exclusive right to produce and market Stewart's brand beverages for the entire United States. Pursuant to an addendum to the Stewart's licensing agreement dated April 11, 1994, the Company was granted the exclusive rights for Canada, and once the Company achieves cumulative sales of 4,000,000 cases, the license becomes worldwide provided the Company maintains annual sales of 1,000,000 cases. The agreement provides for a sliding scale royalty with a minimum annual royalty of $50,000. For the year ended December 31, 1996, the royalty payments exceeded the minimum royalty due and the Company expects the same in future years. Termination of the agreement may occur if the Company's annual sales of Stewart's Root Beer are less than 500,000 cases for each year. On December 1, 1993, the Company entered into a separate licensing agreement with Stewart's, whereby the Company has the exclusive right to market Stewart's brand beverages as a fountain product in 15 states. The agreement provided for a one time licensing fee of $29,250 and payment of a sliding scale royalty. The Company is marketing the Stewart's fountain product through its wholly-owned subsidiary, Fountain Classics, Inc. ('FCI'). On November 22, 1989, the Company acquired the assets and business of Aspen Mineral Water Corporation ('Aspen'), a Colorado corporation that marketed a sparkling water. Currently, the Company markets a line of non-carbonated fruit flavored beverages under the brand name of Aspen. The Company also markets a non-carbonated spring water under the Aspen name. Proprietary Products: The Company's proprietary product line currently consists of Stewart's premium soft drinks (Root Beer, Orange N' Cream, Cream Ale, Ginger Beer, Classic Key Lime, and Cherries N' Cream), JAVA COLA, San Francisco Seltzer, Aspen Mountain Spring Water and Aspen flavored waters. Stewart's products are packaged in original and diet and are sweetened using non-sugar sweeteners -- fructose in the original line and NutraSweet brand sweetener in the diet line. JAVA COLA is a unique coffee-flavored cola made with real coffee and is sold in four different flavors: Original, Diet, Mocha and Vanilla. San Francisco Seltzer is a naturally flavored soft drink which contains no sodium or preservatives and is available in regular and diet flavors that are sweetened with fructose and NutraSweet, respectively. Aspen Mountain Spring Water is a non-carbonated water. Aspen flavored waters are non-carbonated, fruit flavored beverages. For the years ended December 31, 1996 and 1995, the Stewart's brand accounted for approximately 98% and 96% of the Company's proprietary brand sales, respectively. The Company anticipates that the Stewart's brand will continue to account for a significant portion of sales for the year ending December 31, 1997. 3 Marketing and Distribution: The brand products business consists of both sales of concentrate to regional soft drink bottlers and the sale of finished goods to distributors. Where the Company sells concentrate to bottlers, the bottlers produce finished goods and sell through their own distribution network. When the Company sells finished goods directly to distributors, the Company has product produced for it by contract manufacturers. The Company does not directly manufacture any of the products it sells. The Company's products are retailed primarily in grocery, convenience and liquor stores and food service accounts. Consumer marketing consists of newspaper, magazine, outdoor and radio advertising, along with in-store product demonstrations and point of sale promotions. The Company presently sells product to numerous bottlers and distributors in the United States and Canada. Competition: The soft drink business is extremely competitive and there are numerous competing products. Most competitors are larger and have greater financial resources than the Company. The Company's principal means for competing within this category are its product line and flavors and through its advertising, packaging and promotions. Trademarks: The Company owns the trademark 'San Francisco Seltzer' which was registered with the United States Patent and Trademark Office on March 1, 1988. The Company also owns the trademark 'Fountain Classics' which is used on the Stewart's Premium Sodas line of products. The 'Fountain Classics' trademark was registered with the United States Patent and Trademark Office on June 18, 1991. The Company owns the trademark 'Aspen' which was registered on May 31, 1994 with the United States Patent and Trademark Office. The foregoing trademarks are registered for a 10-year period and may be extended thereafter for additional 10-year periods subject to compliance with federal statutory and regulatory provisions. Management is of the view that its trademarks are of significant importance to its operations and loss of such trademarks could adversely affect the Company to an indeterminable extent. The Company is taking appropriate steps to protect its trademarks. Stewart's Restaurants, Inc. owns the trademark 'Stewart's' which is registered with the United States Patent and Trademark Office. The Company has an exclusive trademark license agreement with Stewart's Restaurants. (See 'Proprietary Products Marketing -- General'.) WHOLESALE DISTRIBUTION -- DIVESTED ON JUNE 7, 1993 General: From 1987 until 1993, the Company was also engaged in the business of wholesale distribution of beverages through its former subsidiary, Sheya Brothers Specialty Beverages, Inc. ('SBSB'). On June 7, 1993, SBSB was merged into AMCON Distributing Company ('AMCON'), a then privately-held, Omaha-based wholesale distributor. In connection with the merger of SBSB into AMCON, the Company received 306,143 shares of common stock of AMCON. Pursuant to the Agreement and Plan of Merger with AMCON, on July 31, 1995, the Company distributed 266,469 AMCON shares to shareholders of the Company on a prorata basis. As of December 31, 1996, the Company holds 39,674 shares of AMCON. SEASONALITY: Due to the seasonality of the beverage industry, the Company's sales volumes are normally at their highest in the second and third calendar quarters. PROSPECTIVE PRODUCTS AND ACQUISITION ACTIVITIES: The Company continues to develop line extensions under its various brand names, primarily by adding new packages and flavors. As described above, the Company introduced the following new products during 1996: Stewart's Classic Key Lime and Cherries N' Cream. The Company intends to continue expanding into beverage products, through both internal development and acquisition, that are compatible with its existing brands and can be sold through the Company's existing bottling and distribution network. 4 MAJOR CUSTOMERS: For the year ended December 31, 1996, two customers, K.O. Lester -- Lebanon, TN and Mid-State Beverage Company -- New Brunswick, NJ, accounted for approxiamtely 14% and 18% of the Company's net sales, respectively. For the year ended December 31, 1995, the same two customers each accounted for approximately 20% of the Company's net sales. COMPANY EMPLOYEES: As of December 31, 1996, the Company had 17 employees. In addition, the Company has used certain consultants on an 'as needed' basis. ITEM 2. PROPERTIES. The Company is currently leasing, through September 1997, approximately 3,024 square feet of office space at 717 17th Street, Denver, Colorado 80202, at an annual cost of $28,350. ITEM 3. LEGAL PROCEEDINGS. The Company and its subsidiaries are not parties to, nor are any of their properties subject to, any pending legal proceedings which are expected to have any materially adverse effect on the Company's results of operations or financial position. Additionally, to the best of management's knowledge, no material legal proceeding is contemplated or has been threatened against the Company and its subsidiaries. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. There were no matters submitted to a vote of all security holders during the quarter ended December 31, 1996. PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS. The Company's Common Stock trades on the NASDAQ Small-Cap Market under the symbol DRNK. The following table reflects the range of the high and low bid prices per share of the Company's Common Stock as reported by NASDAQ through December 31, 1996. These quotations represent inter-dealer quotations, without adjustment for retail mark-ups, mark-downs or commissions and may not necessarily represent market transactions. As of March 25, 1997, the Company had approximately 1,100 holders of record of its shares and the Company is informed that approximately 3,000 additional persons hold shares beneficially.
COMMON STOCK -------------- HIGH LOW ----- ----- Year Ended December 31, 1996: December 1996 Quarter................................................... $2.84 $2.00 September 1996 Quarter.................................................. 2.56 1.44 June 1996 Quarter....................................................... 1.84 1.25 March 1996 Quarter...................................................... 1.88 1.44 Year Ended December 31, 1995: December 1995 Quarter................................................... $1.66 $1.19 September 1995 Quarter.................................................. 1.81 1.38 June 1995 Quarter....................................................... 2.00 1.09 March 1995 Quarter...................................................... 1.41 1.00
5 The Company has never declared or paid a cash dividend on its common stock and does not anticipate a change in this policy in the foreseeable future. The Board of Directors currently intends to retain earnings to finance the acquisition and development of new products, expansion of markets and for other corporate purposes. ITEM 6. SELECTED FINANCIAL DATA. The following data, insofar as they relate to the consolidated statement of operations for the years ended December 31, 1996, 1995 and 1994; and the balance sheet as of December 31, 1996 and 1995, have been derived from the consolidated financial statements appearing in Part IV of this Form 10-K. The consolidated statement of operations data for the six-months ended December 31, 1993 and the fiscal years ended June 30, 1993 and 1992; and the consolidated balance sheet data as of December 31, 1994 and 1993, and June 30, 1993 and 1992 have been derived from the historical consolidated financial statements of the Company for such periods. The following table data should be read in conjunction with the consolidated financial statements and notes thereto, and management's commentary thereon contained in Item 7 of this report.
SIX MONTHS YEAR ENDED DECEMBER 31, ENDED YEAR ENDED JUNE 30, -------------------------------------- DECEMBER 31, ------------------------- 1996 1995 1994 1993(1) 1993 1992 ----------- ----------- ---------- ------------ ----------- ----------- Statement of Operations Data: Revenue................ $18,872,556 $12,843,620 $8,322,301 $ 3,030,982 $15,537,997 $14,838,598 ----------- ----------- ---------- ------------ ----------- ----------- ----------- ----------- ---------- ------------ ----------- ----------- Net income (loss)...... $ 1,257,132 $ 882,600 $ 721,695 $ 143,449 $ (348,176) $ (22,384) ----------- ----------- ---------- ------------ ----------- ----------- ----------- ----------- ---------- ------------ ----------- ----------- Net income (loss) per common share:........ $ .14 $ .10 $ .09 $ .02 $ (.05) $ ----------- ----------- ---------- ------------ ----------- ----------- ----------- ----------- ---------- ------------ ----------- ----------- Weighted average common and common equivalent shares outstanding... 9,255,479 8,915,666 8,318,909 7,796,799 7,640,780 7,057,416 ----------- ----------- ---------- ------------ ----------- ----------- ----------- ----------- ---------- ------------ ----------- ----------- Balance Sheet Data: Total assets........... $ 7,141,782 $ 5,360,700 $4,448,832 $ 3,920,799 $ 4,054,120 $ 5,266,381 ----------- ----------- ---------- ------------ ----------- ----------- ----------- ----------- ---------- ------------ ----------- ----------- Long-term debt......... $ 0 $ 0 $ 5,970 $ 10,099 $ 2,817 $ 108,476 ----------- ----------- ---------- ------------ ----------- ----------- ----------- ----------- ---------- ------------ ----------- ----------- Stockholders' equity... $ 5,982,046 $ 4,402,421 $3,944,778 $ 3,096,886 $ 2,953,347 $ 3,066,613 ----------- ----------- ---------- ------------ ----------- ----------- ----------- ----------- ---------- ------------ ----------- -----------
- ------------ (1) In 1993, the Company elected to change its fiscal year end from June 30 to December 31. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. UNCERTAINTIES THAT MAY AFFECT FUTURE RESULTS The Company's future operating results are subject to a number of uncertainties, including the ability of the Company to market its beverage products and to develop and introduce new products, and the number, quantity and marketing forces behind products introduced by competitors. The Company expects the level of competition in the beverage industry to become even more intense and large beverage companies with greater resources have a competitive advantage over the Company. In addition, general economic conditions, the cost of raw materials and general conditions in the beverage business may have an impact on the Company's future operations. There can be no assurance the Company will continue to be successful nor that it will not encounter difficulties in retaining its current market niche due to a variety of factors such as market acceptance, costs of manufacturing and 6 marketing, and competition in the beverage industry, all of which are largely beyond the Company's ability to reasonably predict, much less control. GENERAL The Company entered into the business of non-alcoholic beverage marketing in fiscal 1988 when it acquired the assets and business of Old San Francisco Seltzer, Inc. Since that time, the Company added Stewart's Root Beer and Aspen Sparkling Mountain Spring Water to the proprietary brands that it markets nationally and has continued to grow its line of Stewart's soft drinks (Root Beer, Orange N' Cream, Cream Ale, Ginger Beer, Key Lime and Cherries N' Cream). Stewart's soft drinks are currently sold in over 43 states and Canada. In December 1993, the Company entered into a licensing agreement with Stewart's Restaurants, Inc., whereby the Company has the exclusive right to sell Stewart's brand beverages as a fountain product in 15 states. FINANCIAL CONDITION The Company's current ratio at December 31, 1996 is 5.0 to 1 as compared to 4.0 to 1 at December 31, 1995. Stockholders' equity at December 31, 1996 increased by $1,579,625 principally from net income of $1,257,132 for the year ended December 31, 1996 and the exercise of options of $322,493 which includes a tax benefit. LIQUIDITY AND CAPITAL RESOURCES For the year ended December 31, 1996, cash increased by $832,538. Operating activities provided cash of $773,658 primarily from net income of $1,257,132 and increases in accrued income taxes and other current liabilities of $116,998 and $239,209, respectively. These increases in cash were partially offset by increases in accounts receivable and inventory of $317,848 and $622,639, respectively and a decrease in accounts payable. Investing activities used cash of $257,653, primarily from the purchase of short-term investments and the acquisition of property and equipment. Financing activities generated $316,533, primarily from the exercise of stock options. Working capital increased $1,758,644 to a ratio of 5.0 to 1. For the comparable twelve month period ended December 31, 1995, investing and financing activities generated $14,004 and $365,653, respectively and operating activities used $384,124 for a net decrease in cash of $4,467. The Company intends to utilize cash from operations to meet its ongoing obligations. The Company has also maintained a bank line of credit in the amount of $500,000 which it may utilize from time to time to meet seasonal cash needs. Management does not expect liquidity problems during 1997 assuming the Company can maintain or exceed its current sales volume, and expenses as a percentage of sales remain relatively constant. RESULTS OF OPERATIONS COMPARISON OF THE YEAR ENDED DECEMBER 31, 1996 TO THE COMPARABLE TWELVE MONTH PERIOD ENDED DECEMBER 31, 1995: The Company had net income of $1,257,132 for the year ended December 31, 1996 versus net income of $882,600 for the comparable twelve month period ended December 31, 1995. This represents an increase in net income for 1996 of $374,532 or 42%. Revenue from the sale of products increased to $18,872,556 in 1996 from $12,843,620 in 1995. This increase of $6,028,936 or 47% was due primarily to the general expansion of the Company's customer base and from the introduction of two new Stewart's brand flavors: Key Lime and Cherries N' Cream. Cost of goods sold was $4,051,774 greater in 1996 than in 1995 due to higher revenue. The cost of goods sold as a percentage of sales, however, decreased from 75% to 72% primarily due to 7 increased unit sales price on certain Stewart's brand packages which was intended to offset increasing material costs over the last two years. General and administrative expense increased $297,221 from 1995 to 1996, and remained relatively constant as a percentage of total revenue at 6%. The increase in general and administrative expense in 1996 was primarily the result of the addition of 4 new employees, increased cost related to professional services, and an increase in bad debt expense. Selling expense increased $593,358 from 1995 to 1996, and remained relatively constant as a percentage of total revenue at 11%. The increased selling expense in 1996 was primarily the result of increased promotional spending and expenses related to development and introduction of two new Stewart's flavors and the JAVA COLA line. COMPARISON OF THE YEAR ENDED DECEMBER 31, 1995 TO THE COMPARABLE TWELVE MONTH PERIOD ENDED DECEMBER 31, 1994: The Company had net income of $882,600 for the year ended December 31, 1995 versus net income of $721,695 for the comparable twelve month period ended December 31, 1994. Revenue from the sale of products increased to $12,843,620 in 1995 from $8,322,301 in 1994. This increase of $4,521,319 or 54% was due primarily to an expanded customer base for the Stewart's brand products. Cost of goods sold was $3,588,613 greater in 1995 than in 1994 due to higher revenue. The cost of goods sold as a percentage of sales, however, increased from 73% to 75% primarily due to increased costs of certain raw materials which were not passed on to its customers through increased sales prices. General and administrative expense increased $100,188 from 1994 to 1995, but decreased as a percentage of total revenue from 9% to 6%. This percentage decrease is primarily a result of increased sales with nominal increases in corporate overhead. Selling expense increased $595,535 from 1994 to 1995, and increased as a percentage of sales from 10% to 11%. The increase is primarily due to increased promotional expenses used to introduce new brands and products, and the addition of two new sales representatives during 1995. Net income was impacted in the year 1995 by two non-recurring and unrelated items: a write-down of an investment and the recording of a deferred income tax benefit. During the third quarter 1995, the Company wrote-down its investment in AMCON Distributing Company, Inc. to the market price of AMCON common stock as reported by NASDAQ on August 4, 1995, the date upon which the stock was initially included on NASDAQ. The write-down resulted in a charge of $848,342. During the third quarter of 1995, the Company recorded an income tax benefit of $936,440 which primarily represents the future tax benefits associated with the Company's net operating loss carryforwards. The Company recorded the tax benefit based on management's determination in the third quarter of 1995 that it was more likely than not that the Company would utilize its future income tax benefits. 8 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. See financial statements listed in the index on page F1. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. None. PART III Information required in items 10, 11, 12 and 13 of Part III will be included in the Company's Proxy Statement for the Annual Meeting of Stockholders and will be filed in not more than 120 days after the Company's fiscal year end. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K. (a) The following documents are filed as a part of this report: FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES The financial statements and financial statement schedules filed with this report are listed in the Index to Financial Statements appearing on page F1. EXHIBITS The documents listed below have been filed as exhibits to this report:
EXHIBIT NUMBER EXHIBITS - -------- -------- (3)-A Certificate of Incorporation, as amended (Filed as Exhibit (3) with and incorporated by reference from Form 10-K dated October 9, 1987) (3)-B Certificate of Amendment -- July 20, 1989, changing name* (3)-C Bylaws, as amended (Filed as Exhibit (3) with and incorporated by reference from Form 10-K dated October 9, 1987) (10)-G Stewart's Master Agreement -- Stewart's Restaurants, Inc. as amended by Addendum, dated April 11, 1994 and incorporated by reference from Form 10-K dated May 4, 1994 (10)-S Employment Agreement with executive, Samuel M. Simpson (21) Subsidiaries of the Company (Filed as Exhibit (22) with and incorporated by reference to the current Form 10-K, Note 1 to the Consolidated Financial Statements.)
- ------------ * Incorporated by reference to Form S-1 filed September 25, 1989, SEC file #33-30480. ------------------------ (b) Reports on Form 8-K None. 9 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Cable Car Beverage Corporation has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized. CABLE CAR BEVERAGE CORPORATION By /s/ SAMUEL M. SIMPSON .................................. SAMUEL M. SIMPSON PRESIDENT AND CHIEF EXECUTIVE OFFICER March 27, 1997 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE - ------------------------------------------ ------------------------------------------------ ---------------- /s/ SAMUEL M. SIMPSON Chairman of the Board & President March 27, 1997 ......................................... (SAMUEL M. SIMPSON) /s/ JAMES P. MCCLOSKEY Director March 27, 1997 ......................................... (JAMES P. MCCLOSKEY) /s/ WILLIAM H. RUTTER Director March 27, 1997 ......................................... (WILLIAM H. RUTTER) /s/ MYRON D. STADLER Chief Accounting Officer March 27, 1997 ......................................... (MYRON D. STADLER)
10 CABLE CAR BEVERAGE CORPORATION AND SUBSIDIARIES INDEX TO FINANCIAL STATEMENTS
PAGE ---- Report of Independent Accountants.......................................................................... F-2 Consolidated Balance Sheet at December 31, 1996, and 1995.................................................. F-3 Consolidated Statement of Operations for the Years Ended December 31, 1996, 1995 and 1994.................. F-4 Consolidated Statement of Cash Flows for the Years Ended December 31, 1996, 1995 and 1994.................. F-5 Consolidated Statement of Changes in Stockholders' Equity for the Years Ended December 31, 1996, 1995 and 1994..................................................................................................... F-6 Notes to Consolidated Financial Statements................................................................. F-7
No financial statement schedules are required. F-1 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Stockholders of CABLE CAR BEVERAGE CORPORATION In our opinion, the accompanying consolidated balance sheet and the related consolidated statements of operations, of cash flows and of changes in stockholders' equity present fairly, in all material respects, the financial position of Cable Car Beverage Corporation and its subsidiaries (the 'Company') at December 31, 1996 and 1995, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1996, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. PRICE WATERHOUSE LLP Denver, Colorado March 14, 1997 F-2 CABLE CAR BEVERAGE CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET
DECEMBER 31, -------------------------- 1996 1995 ----------- ----------- ASSETS Current assets: Cash and cash equivalents...................................................... $ 1,408,729 $ 576,191 Short-term investments......................................................... 195,042 Accounts receivable, net of allowance for doubtful accounts of $100,743 at December 31, 1996 and $55,949 at December 31, 1995............................ 1,336,094 1,063,040 Inventories.................................................................... 2,430,896 1,808,257 Prepaid expenses and other current assets...................................... 23,582 40,394 Deferred income tax assets..................................................... 394,029 340,389 ----------- ----------- Total current assets...................................................... 5,788,372 3,828,271 Property and equipment, net Property and equipment, less accumulated depreciation of $144,441 at December 31, 1996 and $99,231 at December 31, 1995..................................... 130,778 116,466 Other assets: Goodwill and other intangibles, less accumulated amortization of $387,168 at December 31, 1996 and $347,007 at December 31, 1995........................... 591,265 631,426 Investment in AMCON Distributing Company....................................... 99,185 99,185 Other assets................................................................... 58,603 72,498 Deferred income tax assets..................................................... 473,579 612,854 ----------- ----------- $ 7,141,782 $ 5,360,700 ----------- ----------- ----------- ----------- LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued liabilities....................................... $ 231,408 $ 380,198 Accrued income taxes........................................................... 146,140 29,142 Other current liabilities...................................................... 782,188 542,979 Current portion of long-term debt.............................................. 5,960 ----------- ----------- Total current liabilities................................................. 1,159,736 958,279 ----------- ----------- ----------- ----------- Commitments: (see Note 8) Stockholders' equity: Common stock, $.01 par value; 25,000,000 shares authorized; 8,981,681 issued at December 31, 1996 and 8,658,349 shares issued at December 31, 1995............ $ 89,817 $ 86,584 Additional paid-in capital..................................................... 9,822,137 9,502,877 Accumulated deficit............................................................ (3,901,273) (5,158,405) Less -- 76,357 common shares in treasury....................................... (28,635) (28,635) ----------- ----------- 5,982,046 4,402,421 ----------- ----------- $ 7,141,782 $ 5,360,700 ----------- ----------- ----------- -----------
The accompanying notes are an integral part of these consolidated financial statements F-3 CABLE CAR BEVERAGE CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, ---------------------------------------- 1996 1995 1994 ----------- ----------- ---------- Revenue: Sales........................................................... $18,872,556 $12,843,620 $8,322,301 Cost and expenses: Cost of goods sold.............................................. 13,670,934 9,619,160 6,030,547 General and administrative...................................... 1,108,329 811,108 710,920 Selling and distribution........................................ 1,993,580 1,400,222 804,687 Depreciation and amortization................................... 88,460 66,388 57,485 ----------- ----------- ---------- 16,861,303 11,896,878 7,603,639 ----------- ----------- ---------- Income from operations............................................... 2,011,253 946,742 718,662 Other income and (expenses): Interest income and other....................................... 52,775 51,405 20,479 Interest expense................................................ (350) (1,114) (2,346) Loss on AMCON stock............................................. (848,342) ----------- ----------- ---------- Income before income taxes........................................... 2,063,678 148,691 736,795 Provision (benefit) for income taxes................................. 806,546 (733,909) 15,100 ----------- ----------- ---------- Net income........................................................... $ 1,257,132 $ 882,600 $ 721,695 ----------- ----------- ---------- ----------- ----------- ---------- Net income per common share.......................................... $ 0.14 $ 0.10 $ 0.09 ----------- ----------- ---------- ----------- ----------- ---------- Weighted average common and common equivalent shares................. 9,255,479 8,915,666 8,318,909 ----------- ----------- ---------- ----------- ----------- ----------
The accompanying notes are an integral part of these consolidated financial statements F-4 CABLE CAR BEVERAGE CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, ------------------------------------- 1996 1995 1994 ---------- ---------- --------- Cash flows from operating activities: Net Income.......................................................... $1,257,132 $ 882,600 $ 721,695 Adjustment to reconcile net income to net cash from operating activities: Loss on investment in AMCON.................................... 848,342 Depreciation and amortization.................................. 88,460 66,388 57,486 Provision for loss on accounts receivable...................... 44,794 (3,662) 32,111 Deferred income tax assets..................................... 85,635 (953,243) Change in current assets and liabilities: Accounts receivable............................................ (317,848) (401,554) (163,477) Inventories.................................................... (622,639) (1,209,320) (99,703) Prepaid expenses and other current assets...................... 16,812 (8,020) (21,359) Other assets................................................... 13,895 (68,677) 10,246 Accounts payable and accrued liabilities....................... (148,790) 276,714 (269,146) Accrued income taxes........................................... 116,998 26,042 3,100 Other current liabilities...................................... 239,209 160,266 69,316 ---------- ---------- --------- Net cash from (used in) operating activities.............. 773,658 (384,124) 340,269 Cash flows from investing activities: Cash paid for short-term investments................................ (195,042) (151,876) Proceeds from short-term investments................................ 151,876 Equipment acquisitions.............................................. (62,611) (97,872) (24,276) Other............................................................... (40,000) (12,500) ---------- ---------- --------- Net cash from (used in) investing activities.............. (257,653) 14,004 (188,652) ---------- ---------- --------- Cash flows from financing activities: Principal payments on debt.......................................... (5,960) (8,796) (11,339) Proceeds from issuance of stock..................................... 182,498 374,449 67,197 Tax benefit associated stock options................................ 139,995 ---------- ---------- --------- Net cash from financing activities........................ 316,533 365,653 55,858 ---------- ---------- --------- Net increase (decrease) in cash and cash equivalents..................... 832,538 (4,467) 207,475 Cash and cash equivalents at beginning of period......................... 576,191 580,658 373,183 ---------- ---------- --------- Cash and cash equivalents at end of period............................... $1,408,729 $ 576,191 $ 580,658 ---------- ---------- --------- ---------- ---------- --------- Supplemental disclosure of non-cash financing and investing activities: Property dividend of investment in AMCON stock...................... $ 799,407 Conversion of debt to equity........................................ $ 59,000 Capital lease obligations........................................... $ 7,000
The accompanying notes are an integral part of these consolidated financial statements F-5 CABLE CAR BEVERAGE CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
COMMON STOCK TREASURY STOCK -------------------- ADDITIONAL --------------------- NUMBER OF PAID IN ACCUMULATED NUMBER OF SHARES AMOUNT CAPITAL DEFICIT SHARES AMOUNT --------- ------- ---------- ----------- --------- -------- Balance, December 31, 1993........... 7,873,156 $78,732 $9,010,082 (5,963,293) 76,357 $(28,635) Exercise of stock options and warrants, net...................... 131,462 1,315 65,882 Conversion of debt to equity......... 100,000 1,000 58,000 Issuance of stock to retire warrants........................... 50,000 500 (500) Net income........................... 721,695 --------- ------- ---------- ----------- --------- -------- Balance, December 31, 1994........... 8,154,618 81,547 9,133,464 (5,241,598) 76,357 (28,635) Exercise of stock options and warrants, net...................... 503,731 5,037 369,413 Dividend of AMCON stock.............. (799,407) Net income........................... 882,600 --------- ------- ---------- ----------- --------- -------- Balance, December 31, 1995........... 8,658,349 86,584 9,502,877 (5,158,405) 76,357 (28,635) Exercise of stock options............ 323,332 3,233 179,265 Tax benefit associated stock options............................ 139,995 Net income........................... 1,257,132 --------- ------- ---------- ----------- --------- -------- Balance, December 31, 1996........... 8,981,681 $89,817 $9,822,137 $(3,901,273) $ 76,357 $(28,635) --------- ------- ---------- ----------- --------- -------- --------- ------- ---------- ----------- --------- --------
The accompanying notes are an integral part of these consolidated financial statements F-6 CABLE CAR BEVERAGE CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 -- ORGANIZATION AND OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: ORGANIZATION AND OPERATIONS -- Cable Car Beverage Corporation (the 'Company'), formerly Great Eastern International, Inc., was incorporated under the laws of Delaware on April 1, 1968. Since 1987, the Company's primary business has been the marketing and distribution of beverages and it has been engaged in the food and beverage business since 1986. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Principles of Consolidation -- The Company's consolidated financial statements include the accounts of its wholly-owned subsidiaries Old San Francisco Seltzer, Inc. ('SFS') and Fountain Classics, Inc. ('FCI'). All significant intercompany accounts and transactions have been eliminated. Revenue Recognition -- Revenue from beverage finished product and concentrate sales are recorded at the time of receipt and acceptance by the customer. Concentration of Credit Risk -- The Company's customers consist primarily of beverage distributors. Financial instruments which potentially subject the Company to concentrations of credit risk are primarily accounts receivable, short-term investments and cash equivalents. The Company performs ongoing credit evaluations of its customers' financial condition and generally requires no collateral from its customers. The Company's sales to major customers are discussed in Note 9. Inventories -- Inventories are recorded at the lower of cost or market. Cost is determined using the first-in, first-out (FIFO) method. Property and Equipment -- Property and equipment, primarily consisting of furniture and office equipment, is stated at cost and is generally depreciated on a straight-line method over the estimated useful lives of the respective depreciable assets of three to five years. Maintenance and repairs are expensed as incurred and improvements are capitalized. Goodwill -- Goodwill is recorded for the excess of the purchase price over the fair value of net tangible assets acquired. Goodwill is amortized on a straight-line basis over a 25-year period. The recoverability of goodwill is assessed quarterly, based on undiscounted projected cash flows. Impairment is recognized when a permanent diminution in value occurs. Net Income Per Common Share -- Net income per common share is computed under the treasury stock method using the weighted average number of common shares and dilutive common stock equivalent shares outstanding during the year. Cash Equivalents -- Generally, only highly liquid investments purchased with original maturities of three months or less are considered to be cash equivalents. Cash equivalents included in cash and cash equivalents at December 31, 1996 and 1995 are certificates of deposit which aggregated approximately $135,429 and $318,694, respectively. Cash equivalents are carried at cost which approximates fair value. The Company has a cash investment policy which generally restricts investments to ensure preservation of principal and maintenance of liquidity. Short-term Investments -- Short-term investments are stated at an amortized cost of $195,042 which, at December 31, 1996, approximates market value. Significant Estimates -- Certain estimates and assumptions that affect the reported amounts of assets and liabilities, and the reported amounts of revenue and expenses are made by management in the preparation of financial statements in conformity with generally accepted accounting principles. Actual results could differ from these estimates. NOTE 2 -- MERGER OF SHEYA BROTHERS SPECIALTY BEVERAGES, INC. AND INVESTMENT IN AMCON STOCK: On June 7, 1993, the Company merged its wholly-owned subsidiary, Sheya Brothers Specialty Beverages, Inc. ('SBSB'), into AMCON Distributing Company ('AMCON'), a then privately held, F-7 CABLE CAR BEVERAGE CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Omaha-based wholesale distributor. In exchange for the net assets of SBSB, the Company received 12.5% of the issued and outstanding common stock of AMCON. As part of the transaction, the Company agreed to distribute a minimum of two-thirds of the AMCON shares to its shareholders, representing approximately an 8% ownership interest in AMCON. During the third quarter of 1995, the Company wrote-down its investment in the market price of AMCON common stock as reported by NASDAQ on August 4, 1995, the date upon which the stock was initially included on NASDAQ, which resulted in a charge of $848,342. The Company then distributed 266,469 shares of AMCON common stock as a dividend to the Company's shareholders of record as of July 5, 1995. This distribution of 266,469 shares of AMCON represented 87% of the Company's holdings in AMCON. At December 31, 1996, the Company continued to hold 39,674 shares of AMCON common stock. NOTE 3 -- INVENTORIES: Inventories consist of the following:
DECEMBER 31, ------------------------ 1996 1995 ---------- ---------- Finished Goods.................................................... $1,330,990 $1,009,223 Raw Materials..................................................... 1,099,906 799,034 ---------- ---------- $2,430,896 $1,808,257 ---------- ---------- ---------- ----------
NOTE 4 -- OTHER CURRENT LIABILITIES: Other current liabilities consist of the following:
DECEMBER 31, -------------------- 1996 1995 -------- -------- Commitments for marketing and promotional programs.................... $397,474 $218,621 Unbilled inventory receipts........................................... 64,521 106,808 Bonuses............................................................... 141,800 75,000 Travel and entertainment.............................................. 36,186 53,500 Other, individually not material...................................... 142,207 89,050 -------- -------- $782,188 $542,979 -------- -------- -------- --------
NOTE 5 -- LINE OF CREDIT: During 1996, the Company extended for one year its $500,000 revolving line of credit collateralized by the Company's accounts receivable and inventory. No borrowings were outstanding under the line as of December 31, 1996. Borrowings made under the agreement bear interest at a variable rate of one point over prime. The line of credit agreement also includes certain financial and other covenants. The agreement is currently scheduled to expire in June 1997. F-8 CABLE CAR BEVERAGE CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NOTE 6 -- INCOME TAXES: The Company's net deferred income tax asset consists of the following:
DECEMBER 31, -------------------- 1996 1995 -------- -------- Net operating loss carryforwards...................................... $621,000 $742,000 Accrued liabilities and reserves...................................... 170,000 145,000 Other, net............................................................ 39,000 45,000 Allowance for doubtful accounts....................................... 38,000 21,000 -------- -------- $868,000 $953,000 -------- -------- -------- --------
The net operating loss carryforwards are subject to certain annual utilization limits. Previously, the Company had recorded a valuation allowance equal to the deferred income tax assets due to management's uncertainty about the likelihood that the Company would fully utilize these benefits. However, it was determined by the Company during 1995 that, based upon the Company's recent and expected future operating results, it was then more likely than not that the Company would realize its future income tax benefits. Based on this determination, the Company released the valuation allowance and provided an income tax benefit of $936,440 during 1995. As of December 31, 1996, the Company has net operating loss carryforwards of approximately $1,634,000 which expire from 2000 through 2005. Pursuant to Section 382 of the Internal Revenue Code, the Company is limited in the amount of net operating loss carryforwards it may use each year to offset taxable income. The Company's consolidated Section 382 annual limitation is approximately $343,000. The provision (benefit) for income taxes is comprised of the following:
YEAR ENDED DECEMBER 31, -------------------------------- 1996 1995 1994 -------- --------- ------- Current............................................................. $721,000 $ 219,000 $15,100 Deferred............................................................ 86,000 (953,000) 0 -------- --------- ------- $807,000 $(734,000) $15,100 -------- --------- ------- -------- --------- -------
The provision for income taxes differs from the amount computed by applying the U.S. federal income tax rate of 34% to pretax earnings as follows:
YEAR ENDED DECEMBER 31, -------------------------------------- 1996 1995 1994 ---------- ----------- --------- Income before income taxes.................................... $2,063,678 $ 148,691 $ 737,000 U.S. federal income tax at statutory rate..................... $ 702,000 $ 50,600 $ 251,000 Differences: State income taxes, net of federal tax benefit........... 43,000 5,200 Loss on dividend of AMCON stock............................... 318,100 Increase (decrease) in unrecognized net operating losses and future deductions........................................... (1,139,000) (271,000) Non-deductible items and other, net........................... 62,000 31,100 35,100 ---------- ----------- --------- Provision for income taxes.................................... $ 807,000 $ (734,000) $ 15,100 ---------- ----------- --------- ---------- ----------- ---------
NOTE 7 -- STOCK OPTIONS: The Company, on a discretionary basis, grants non-qualified stock options to directors, key employees, and consultants to purchase common stock of the Company. Stock options are granted at an exercise price not less than the fair market value of the common stock on the date of grant and generally vest over four or five years. The expiration period generally occurs between three to six years. F-9 CABLE CAR BEVERAGE CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The following table summarizes stock option activity for 1994, 1995 and 1996:
WEIGHTED AVERAGE SHARES EXERCISE PRICE --------- ---------------- Outstanding at December 31, 1993.............................. 1,224,996 $ .85 Granted during 1994...................................... 100,000 .75 Exercised during 1994.................................... (110,000) .45 Forfeited during 1994.................................... (15,000) .75 --------- ------ Outstanding at December 31, 1994.............................. 1,199,996 .88 Granted during 1995...................................... 312,500 1.23 Exercised during 1995.................................... (101,666) .70 Forfeited during 1995.................................... (275,000) .75 --------- ------ Outstanding at December 31, 1995.............................. 1,135,830 1.02 Granted during 1996...................................... 190,000 2.00 Exercised during 1996.................................... (323,332) .56 Forfeited during 1996.................................... (99,998) 2.37 --------- ------ Outstanding at December 31, 1996.............................. 902,500 $1.24 --------- ------ --------- ------
The weighted average fair values of options granted during 1996 and 1995 were $.448 and $.685, respectively. The following table summarizes information about stock options as of December 31, 1996:
OPTIONS OUTSTANDING OPTIONS EXERCISABLE -------------------------- ------------------------ WEIGHTED AVERAGE WEIGHTED REMAINING AVERAGE NUMBER CONTRACTUAL NUMBER EXERCISE RANGE OF EXERCISE PRICES OUTSTANDING LIFE EXERCISABLE PRICE - ------------------------------------------ ----------- ----------- ----------- --------- $0.70 - 0.75.............................. 215,000 2.86 years 215,000 0.70 $1.10..................................... 225,000 3.08 years 205,800 1.10 $1.25..................................... 272,500 3.65 years 184,300 1.25 $2.00..................................... 190,000 4.31 years ----------- ----------- ----------- --------- 902,500 3.46 years 605,100 1.00 ----------- ----------- ----------- --------- ----------- ----------- ----------- ---------
The Company applies APB 25 in accounting for its stock compensation plans, and no compensation expense has been recognized in the financial statements for options granted to employees and directors. Had compensation expense for the Company's stock option plan been determined based on the fair values at the grant dates for awards under the plan consistent with the method of accounting prescribed by FASB Statement 123, the Company's net income and income per share would have been decreased to the pro forma amounts indicated below for the years ended December 31:
1996 1995 ---------- -------- Net income: As reported.................................................... $1,257,132 $882,600 Pro forma...................................................... 1,221,278 805,378 Net income per share: As reported.................................................... $ 0.14 $ 0.10 Pro forma...................................................... 0.13 0.09
In accordance with the guidance provided under SFAS 123, the fair value of each option grant is estimated using the Black-Scholes option-pricing model with the following weighted-average assumptions: dividend yield of zero; expected volatility of 47% in 1996 and 36% in 1995; risk-free interest rate of 5.83% in 1996 and 5.59% in 1995; and an expected term of five years. The risk-free interest rate used F-10 CABLE CAR BEVERAGE CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) in the calculation in the yield on the grant date of the U.S. Treasury Strip with a maturity equal to the expected term of the option. NOTE 8 -- COMMITMENTS: The Company has commitments to lease office space through September 30, 1997. Rental expense of $41,339, $39,139 and $37,901 has been recognized for the years ended December 31, 1996, 1995 and 1994, respectively. At December 31, 1996, the minimum annual rental commitments under noncancellable operating leases were approximately $28,350 through September 1997. The Company has outstanding commitments to purchase raw materials (primarily glass) which aggregate approximately $2.6 million at December 31, 1996. The Company has a licensing agreement with Stewart's Restaurants, Inc. which provides for a sliding-scale royalty with a minimum annual royalty of $50,000. NOTE 9 -- MAJOR CUSTOMERS: Two customers accounted for approximately 18% and 14% individually of the Company's net sales for the year ended December 31, 1996. Two customers each accounted for approximately 20% of net sales for the years ended December 31, 1995 and 1994. NOTE 10 -- QUARTERLY INFORMATION (UNAUDITED)(1): The following interim financial information represents the 1996 and 1995 consolidated results of operations on a quarterly basis:
PER COMMON PRETAX SHARE GROSS INCOME NET NET QUARTER ENDED REVENUE PROFIT (LOSS) INCOME INCOME - --------------------------------------- ---------- ---------- --------- -------- ------ December 31, 1996...................... $4,275,088 $1,153,903 $ 339,092 $208,610 $.02 September 30, 1996..................... 5,664,924 1,579,016 758,762 445,115 .05 June 30, 1996.......................... 5,249,735 1,482,795 675,506 430,051 .05 March 31, 1996......................... 3,682,809 985,908 290,318 173,356 .02 December 31, 1995...................... $3,214,852 $ 699,116 $ 120,515 $102,054 $.01 September 30, 1995..................... 4,286,294 1,060,199 (502,320) 355,763 .04 June 30, 1995.......................... 3,453,111 957,094 397,313 322,001 .04 March 31, 1995......................... 1,889,363 508,051 133,182 102,782 .01
- ------------ (1) The Unaudited Quarterly Information for 1995 was not reviewed by the Company's independent accountants in accordance with standards established for such reviews. F-11 APPENDIX A-2 ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ FORM 10-K/A AMENDMENT NO. 1 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (Mark One) [x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM __________________ TO __________________ COMMISSION FILE NUMBER 0-14784 ------------------------ CABLE CAR BEVERAGE CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) ------------------------ DELAWARE 52-0880815 (STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.) 717 17TH STREET, SUITE 1475, DENVER, COLORADO 80202 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (303) 298-9038 ------------------------ SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NAME OF EACH EXCHANGE ON TITLE OF EACH CLASS WHICH REGISTERED ------------------- ---------------- None None SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: Common Stock, $.01 Par Value (TITLE OF CLASS) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes __X__ No ______ The aggregate market value of equity securities held by non-affiliates of the Registrant on April 23, 1997 was approximately $17,035,000. As of April 23, 1997 there were 8,905,324 shares of common stock outstanding. ================================================================================ PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT. Directors and Executive Officers The executive officers and directors of the Company are as follows:
YEAR BECAME NAME AGE DIRECTOR POSITION - ------------------------------------ --- ----------- -------------------------- Samuel M. Simpson................... 44 1986 President, Director James P. McCloskey.................. 46 1992 Director William H. Rutter................... 45 1995 Director Myron D. Stadler.................... 30 N/A Chief Accounting Officer
Set forth below is certain information regarding the directors and executive officers: Samuel M. Simpson has been President, Chief Executive Officer and a director of the Company since 1986. He has served as Chairman of the Board since 1992. He was employed as a consultant to reorganize the Company during 1983 prior to joining the Company first as its Vice President in 1984 and later as its President and Chief Executive Officer in 1986. From 1979 to 1984 Mr. Simpson was President of Energy Prospects, Inc. a Denver based privately owned oil and gas company. James P. McCloskey is Chief Financial Officer of Red Robin International, Inc. in Denver, Colorado and has been a director of the Company since 1992. From April 1994 to February 1996, Mr. McCloskey was the Chief Financial Officer for Avalon Software Company, in Tucson, Arizona. From 1988 until April 1994, he was Chief Financial Officer of the Famous Amos Chocolate Chip Cookie Corporation, San Francisco, California. From 1985 to 1988 he was Chief Financial Officer and President, respectively, of the William J. Ash Corporation and The James P. McCloskey Corporation, Denver, Colorado, both privately owned real estate development companies. Mr. McCloskey is a certified public accountant. William H. Rutter is a private investor and has been a director of the Company since 1995. From 1991 to 1993, Mr. Rutter was the president of Capstone Management Corporation which owns and operates restaurants in the Denver area. From 1984 to 1990, he was a partner in Sherman & Howard, a Denver, Colorado law firm. Myron D. Stadler has been employed by the Company since 1992 and was elected Chief Accounting Officer and Secretary in 1995. Prior to 1992, Mr. Stadler was a financial analyst for the City and County of Denver at Stapleton International Airport. ITEM 11. EXECUTIVE COMPENSATION. The following table provides summary information concerning compensation paid to or earned by the Company's Chief Executive Officer for the years ended December 31, 1996, 1995 and 1994. 2 SUMMARY COMPENSATION
LONG-TERM COMPENSATION ANNUAL COMPENSATION AWARDS PAYOUTS ------------------------ ------------------- ---------------------- NAME & OTHER ANNUAL RESTRICTED LTIP ALL OTHER PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(2) STOCK OPTIONS #PAYOUTS COMPENSATION - ----------------------------- ---- -------- -------- --------------- ---------- ------- -------- ------------ Samuel M. Simpson(1) President & Chairman of the Board............... 1996 $150,000 $140,000 $ 170,266 $0 0 $0 $0 1995 120,000 75,000 0 0 0 0 0 1994 115,137 40,000 0 0 0 0 0
- ------------ (1) As permitted by Commission rules, no amounts are shown for certain perquisites, where such amounts do not exceed the lesser of 10% of bonus plus salary or $50,000. (2) The amounts under 'Other Annual Compensation' represent the value realized from the exercise of stock options. The following table provides information with respect to the named officers concerning unexercised stock options held as of December 31, 1996. AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUES
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED OPTIONS AT IN THE MONEY OPTIONS SHARES DECEMBER 31, 1996(#) AT DECEMBER 31, 1996($)(1) ACQUIRED ON VALUE ---------------------------- --------------------------------- NAME EXERCISE(#) REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE - -------------------------- ----------- -------- ----------- ------------- --------------- -------------- Samuel M. Simpson President & Chairman of the Board............ 166,666 170,266 135,000 75,000 140,250 18,750 Myron D. Stadler Chief Accounting Officer & Secretary..... 25,000 20,428 27,200 42,800 31,980 28,520
- ------------ (1) Based on the closing bid price of the Company's common stock at December 31, 1996 as reported by the NASDAQ system. OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE VALUE AT ASSUMED ANNUAL RATES OF INDIVIDUAL GRANTS STOCK ----------------------------------------------------- PRICE % OF TOTAL OPTIONS APPRECIATION FOR NUMBER OF SECURITIES GRANTED TO EXERCISE OR OPTION TERM(1) UNDERLYING OPTIONS EMPLOYEES IN BASE PRICE ---------------- NAME GRANTED (#)(2) FISCAL YEAR ($/SH) EXPIRATION DATE 5% 10% - ----------------------- -------------------- ------------------ ----------- ----------------- ------ ------ McCloskey, James P..... 37,500 20% $2.00 December 31, 2000 11,822 24,825 Rutter, William H...... 37,500 20% $2.00 December 31, 2000 11,822 24,825 Simpson, Samuel M...... 75,000 39% $2.00 December 31, 2000 23,644 49,650 Stadler, Myron......... 20,000 11% $2.00 December 31, 2003 3,370 7,262
- ------------ (1) The potential realizable value is based on the term of the option at the date of grant. It is calculated by assuming that the stock price on the date of grant appreciates at the indicated annual rate, compounded annually for the entire term, and that the option is exercised and sold on the last day of the option term for the appreciated stock price. These amounts represent certain assumed rates of (footnotes continued on next page) 3 (footnotes continued from previous page) appreciation only, in accordance with the rules of the Commission, and do not reflect the Company's estimate or projection of future stock price performance. Actual gains, if any, are dependent on the actual future performance of the Common Stock. There can be no assurance that the amounts reflected in this table will be achieved. (2) These options become exercisable December 31, 1997 through December 31, 2000. COMPENSATION PURSUANT TO PLANS The Company presently has no proposed compensation plans such as pension, profit sharing, retirement plans, or other similar forms of executive compensation. EMPLOYMENT AGREEMENT The Company's President and Chief Executive Officer, Samuel M. Simpson, has an employment agreement with the Company which currently runs through December 31, 1999. Mr. Simpson's agreement provides for an annual base salary of $175,000 plus an annual bonus which is based on the Company achieving certain financial performance levels. DIRECTORS The Company compensates outside directors at the rate of $1,000 per quarter and reimburses direct expenses associated with attending meetings. The Board of Directors does not have committees. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. The table below sets forth information as of April 23, 1997 with respect to beneficial ownership of the Common Stock by all directors and officers, both individually and as a group, and by each person known by the Company to be the beneficial owner of more than five percent of the outstanding shares of the Common Stock. As of April 23, 1997 the Company had 8,905,324 shares of common stock outstanding.
AMOUNT AND NATURE OF PERCENT OF NAME BENEFICIAL OWNERSHIP(1) CLASS OWNED -------- -------------------------- ----------- OFFICERS & DIRECTORS Samuel M. Simpson........................................ 1,314,877 14.3% James P. McCloskey....................................... 143,625 1.57% William H. Rutter........................................ 761,232 8.39% Myron D. Stadler......................................... 95,000 1.05% Officers and Directors as a Group (4 persons)....... 2,314,734 24.4%
5% SHAREHOLDERS None - ------------ (1) Includes presently outstanding options to purchase shares of the Company's Common Stock held by each of the foregoing. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. On May 1, 1996, the Company loaned $75,000 to Samuel M. Simpson, the Company's President and CEO. The loan proceeds were used by Mr. Simpson to exercise 166,666 stock options in the Company. This loan was evidenced by a promissory note bearing interest of 8% per annum, with interest and principal due and payable on January 31, 1997. Mr. Simpson pledged 268,644 shares of common stock of the Company as security for this loan. The largest aggregate amount of indebtedness during 1996 was $79,016.39 which included $4,016.39 of accrued interest. The entire amount of the loan including interest was repaid on December 31, 1996. 4 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K. (a) The following documents are filed as a part of this report: FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES The financial statements and financial statement schedules filed with this report are listed in the Index to Financial Statements appearing on page F1. EXHIBITS The documents listed below have been filed as exhibits to this report:
EXHIBIT NUMBER EXHIBITS - --------- --------------------------------------------------------------------------------------------------------- (3)(a) -- Certificate of Incorporation, as amended (Filed as Exhibit (3) with and incorporated by reference from Form 10-K dated October 9, 1987) (3)(b) -- Certificate of Amendment -- July 20, 1989, changing name* (3)(c) -- Bylaws, as amended (Filed as Exhibit (3) with and incorporated by reference from Form 10-K dated October 9, 1987) (10)(g) -- Stewart's Master Agreement -- Stewart's Restaurants, Inc. as amended by Addendum, dated April 11, 1994 and incorporated by reference from Form 10-K dated May 4, 1994 (10)(s) -- Employment Agreement with executive, Samuel M. Simpson and incorporated by reference from Form 10-K dated April 14, 1995 (10)(t) -- Addendum to Employment Agreement with executive, Samuel M. Simpson (21) -- Subsidiaries of the Company (Filed as Exhibit (22) with and incorporated by reference to the current Form 10-K, Note 1 to the Consolidated Financial Statements)
- ------------ * Incorporated by reference to Form S-1 filed September 25, 1989, SEC file #33-30480. (b) Reports on Form 8-K None. 5 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Cable Car Beverage Corporation has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized. CABLE CAR BEVERAGE CORPORATION (Registrant) By /S/ SAMUEL M. SIMPSON ......................... SAMUEL M. SIMPSON PRESIDENT AND CHIEF EXECUTIVE OFFICER Date: April 23, 1997 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
SIGNATURE CAPACITY DATE - ------------------------------------------ -------------------------------------------- ------------------- /s/ SAMUEL M. SIMPSON Chairman of the Board and President April 23, 1997 ......................................... (SAMUEL M. SIMPSON) /s/ MYRON D. STADLER Chief Accounting Officer April 23, 1997 ......................................... (MYRON D. STADLER)
6 APPENDIX A-3 =============================================================================== SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ FORM 10-Q (Mark One) [x] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _________ TO _________ COMMISSION FILE NUMBER 0-14784 ------------------------ CABLE CAR BEVERAGE CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) ------------------------ DELAWARE 52-0880815 (STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER OF INCORPORATION) IDENTIFICATION NO.) 717 17TH STREET, SUITE 1475, DENVER, COLORADO 80202-3314 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) (303) 298-9038 (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE) (FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF CHANGED SINCE LAST REPORT) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes __X__ No _______ The Registrant had 8,948,324 shares of its $.01 par value common stock outstanding as of August 8, 1997. ================================================================================ FORM 10-Q 2ND QUARTER INDEX
PAGE ---- Part I -- Financial Information Item 1. Consolidated Financial Statements: Consolidated balance sheet at June 30, 1997 (Unaudited) and at December 31, 1996...................... 3 Consolidated statement of operations for the six-month and three-month periods ended June 30, 1997 and June 30, 1996 (Unaudited)............................................................................ 4 Consolidated statement of cash flows for the six-month periods ended June 30, 1997 and June 30, 1996 (Unaudited).......................................................................................... 5 Consolidated statement of changes in stockholders' equity (Unaudited)................................. 6 Notes to unaudited consolidated financial statements for the six-month period ended June 30, 1997..... 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.............. 7 Part II -- Other Information............................................................................... 9
2 PART I -- FINANCIAL INFORMATION ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS CABLE CAR BEVERAGE CORPORATION AND SUBSIDIARIES UNAUDITED CONSOLIDATED BALANCE SHEET
JUNE 30, DECEMBER 31, 1997 1996 ----------- ------------ ASSETS Current assets: Cash and cash equivalents...................................................... $ 1,229,406 $ 1,408,729 Short-term investments......................................................... 195,042 Accounts receivable, net of allowance for doubtful accounts of $143,025 at June 30, 1997 and $100,743 at December 31, 1996.................................... 2,694,410 1,336,094 Inventories, net............................................................... 3,246,493 2,430,896 Prepaid expenses and other current assets...................................... 86,012 23,582 Deferred income tax assets..................................................... 519,950 394,029 ----------- ------------ Total current assets...................................................... 7,776,271 5,788,372 Property and equipment, net Property and equipment less accumulated depreciation of $173,896 at June 30, 1997 and $144,441 at December 31, 1996........................................ 127,945 130,778 Other assets: Goodwill and other intangibles, less accumulated amortization of $414,842 at June 30, 1997 and $387,168 at December 31, 1996............................... 763,649 591,265 Investment in AMCON Distributing Co............................................ 99,185 99,185 Other assets................................................................... 1,312 58,603 Deferred income tax assets..................................................... 404,541 473,579 ----------- ------------ $ 9,172,903 $ 7,141,782 ----------- ------------ ----------- ------------ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued liabilities....................................... $ 795,227 $ 231,408 Accrued income taxes........................................................... 66,360 146,140 Other current liabilities...................................................... 1,559,292 782,188 ----------- ------------ Total current liabilities................................................. 2,420,879 1,159,736 ----------- ------------ Stockholders' equity: Common stock, $.01 par value; 25,000,000 shares authorized; 9,024,681 shares issued at June 30, 1997 and 8,981,681 issued at December 31, 1996............. 90,247 89,817 Additional paid-in capital..................................................... 9,898,687 9,822,137 Accumulated deficit............................................................ (3,208,275) (3,901,273) Less -- 76,357 common shares in treasury....................................... (28,635) (28,635) ----------- ------------ 6,752,024 5,982,046 ----------- ------------ $ 9,172,903 $ 7,141,782 ----------- ------------ ----------- ------------
See notes to unaudited consolidated financial statements 3 CABLE CAR BEVERAGE CORPORATION AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, ------------------------ ------------------------- 1997 1996 1997 1996 ---------- ---------- ----------- ---------- Revenue: Sales.............................................. $7,388,832 $5,249,735 $12,746,696 $8,932,544 Cost and expenses: Cost of goods sold................................. 5,283,393 3,766,940 9,123,558 6,463,841 General and administrative......................... 668,652 273,375 940,373 515,129 Selling and distribution........................... 735,603 521,183 1,385,775 965,331 Depreciation and amortization...................... 33,410 22,277 57,129 42,084 ---------- ---------- ----------- ---------- 6,721,058 4,583,775 11,506,835 7,986,385 ---------- ---------- ----------- ---------- Income from operations.................................. 667,774 665,960 1,239,861 946,159 Other income and (expenses): Interest income and other non-operating income..... 15,220 9,629 31,344 19,893 Interest expense................................... (83) (228) ---------- ---------- ----------- ---------- Income before income taxes.............................. 682,994 675,506 1,271,205 965,824 Provision for income taxes.............................. 340,988 245,455 578,207 362,417 ---------- ---------- ----------- ---------- Net income.............................................. $ 342,006 $ 430,051 $ 692,998 $ 603,407 ---------- ---------- ----------- ---------- Net income per common share............................. $ .04 $ .05 $ .07 $ .07 ---------- ---------- ----------- ---------- ---------- ---------- ----------- ---------- Weighted average common and common equivalent shares.... 9,687,764 9,050,647 9,602,700 9,022,000 ---------- ---------- ----------- ---------- ---------- ---------- ----------- ----------
See notes to unaudited consolidated financial statements 4 CABLE CAR BEVERAGE CORPORATION AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
SIX MONTHS ENDED SEPTEMBER 30, ------------------------- 1997 1996 ----------- --------- Cash flows from operating activities: Net income..................................................................... $ 692,998 $ 603,407 Adjustment to reconcile net income to net cash from operating activities: Depreciation and amortization............................................. 57,129 42,084 Provision for loss on accounts receivable................................. 42,282 21,332 Change in assets and liabilities: Accounts receivable....................................................... (1,492,886) (845,677) Inventories............................................................... (815,597) (545,604) Prepaid expenses and other current assets................................. (62,430) (14,749) Other assets.............................................................. 57,291 (72,161) Deferred income tax assets................................................ (56,883) 44,363 Accounts payable and accrued liabilities.................................. 563,819 597,424 Accrued income taxes...................................................... (79,780) 220,753 Other current liabilities................................................. 777,104 193,353 ----------- --------- Net cash from (used in) operating activities......................... (316,953) 244,525 ----------- --------- Cash flows from investing activities: Proceeds from short-term investments........................................... 195,042 Cash paid to reacquire certain distribution rights............................. (30,790) Property and equipment acquisitions............................................ (26,622) (39,141) ----------- --------- Net cash from (used in) investing activities......................... 137,630 (39,141) ----------- --------- Cash flows from financing activities: Principal payments on debt..................................................... (4,389) Proceeds from issuance of stock................................................ 134,998 ----------- --------- Net cash from financing activities................................... 130,609 ----------- --------- Net increase (decrease) in cash and cash equivalents................................ (179,323) 335,993 Cash and cash equivalents at beginning of period.................................... 1,408,729 576,191 ----------- --------- Cash and cash equivalents at end of period.......................................... $ 1,229,406 $ 912,184 ----------- --------- ----------- --------- Supplemental disclosure of non-cash financing and investing activities Issuance of stock to reacquire certain distribution rights..................... $ 76,980 Forgiveness of accounts receivable to reacquire certain distribution rights.... 92,288
See notes to unaudited consolidated financial statements 5 CABLE CAR BEVERAGE CORPORATION AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
COMMON STOCK ADDITIONAL TREASURY STOCK -------------------- PAID-IN ACCUMULATED ------------------ SHARES AMOUNT CAPITAL DEFICIT SHARES AMOUNT --------- ------- ---------- ----------- ------ -------- Balance, December 31, 1996............. 8,981,681 $89,817 $9,822,137 $(3,901,273) 76,357 $(28,635) Stock issued to reacquire certain distribution rights.................. 43,000 430 76,550 Net Income............................. 692,998 --------- ------- ---------- ----------- ------ -------- Balance June 30, 1997.................. 9,024,681 $90,247 $9,898,687 $(3,208,275) 76,357 $(28,635) --------- ------- ---------- ----------- ------ -------- --------- ------- ---------- ----------- ------ --------
See notes to unaudited consolidated financial statements 6 CABLE CAR BEVERAGE CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 -- FINANCIAL STATEMENTS PRESENTATION The consolidated interim financial statements of Cable Car Beverage Corporation (the 'Company') at June 30, 1997, and for the six-month and three-month periods ended June 30, 1997, and June 30, 1996 are unaudited. In the opinion of management, all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the consolidated financial position, results of operations and cash flows for all periods presented have been made. The Company's consolidated interim financial statements include the accounts of its wholly-owned subsidiaries, Old San Francisco Seltzer, Inc. and Fountain Classics, Inc. Certain information and substantially all footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted. It is suggested that these financial statements be read in conjunction with the fiscal year ended Company's consolidated financial statements, filed in Form 10-K for December 31, 1996. The results of operations for the period ended June 30, 1997 are not necessarily indicative of the operating results for the full year. Certain reclassifications have been reflected in the prior period financial statements to conform to the current year presentations. NOTE 2 -- NET INCOME PER COMMON SHARE Net income per common share was computed under the treasury stock method using the weighted average number of common shares and dilutive common stock equivalent shares outstanding during the period. In February 1997, the FASB issued SFAS No. 128, 'Earnings per Share,' which is effective for periods ending after December 15, 1997 and requires changes in the computation, presentation and disclosure of earnings per share. Earnings per share for all prior periods must be restated to conform with computation provisions of SFAS No. 128. The adoption of SFAS No. 128 for the year ended December 31, 1997 will not have a material impact on the Company's reported financial results. NOTE 3 -- INVENTORIES Inventories consisted of:
JUNE 30, DECEMBER 31, 1997 1996 ---------- ------------ Finished Goods................................................... $1,519,816 $1,330,990 Raw Materials.................................................... 1,726,677 1,099,906 ---------- ------------ $3,246,493 $2,430,896 ---------- ------------ ---------- ------------
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Certain statements in the following discussions regarding the Company's future product and business plans, financial results, performance and events are forward-looking statements and are based on current expectations. Actual results may differ materially due to a number of risks and uncertainties. CURRENT DEVELOPMENTS During the second quarter, the Company reacquired territorial marketing and distribution rights from certain of its distributors located in the northeastern United States. The cost to reacquire these territorial distribution rights totaled $200,058, of which $30,790 was paid in cash, $92,288 was accounts receivable forgiven, and the remainder was paid through the issuance of the Company's common stock. 7 RESULTS OF OPERATIONS COMPARISON OF THE SIX-MONTH PERIODS ENDED JUNE 30, 1997 AND JUNE 30, 1996 Revenue for the six-months ended June 30, 1997 was $12,746,696 versus revenue of $8,932,544 for the six-months ended June 30, 1996. This increase of $3,814,152, or 43%, was primarily due to increased sales of Stewart's brand products. Cost of goods sold increased by $2,659,717 for the comparative six-months ended June 30, 1997 and June 30, 1996. As a percentage of sales, cost of goods sold decreased to 71.6% for the six-months ended June 30, 1997 from 72.4% for the six-months ended June 30, 1996. The improved gross margin was primarily due to favorable sweetener costs compared with the six months ended June 30, 1996. General and administrative expenses increased by $425,244 for the six-months ended June 30, 1997 compared to the six-months ended June 30, 1996. General and administrative costs also increased as a percentage of sales to 7.4% from 5.8% for the six-months ended June 30, 1997 and 1996, respectively. This increase is primarily the result of approximately $313,000 of expenses related to the proposed merger with Triarc Companies, Inc. (see Part II, Item 5, below). These expenses are non-recurring and are not related to ongoing operations of the Company. Excluding these merger related expenses, general and administrative expenses would have been $627,557 or 4.9% of sales. Selling and distribution expenses increased $420,444 for the comparative six-months ended June 30, 1997 from June 30, 1996, primarily due to increased promotional spending on the Stewart's brand products. As a percentage of sales, selling expenses were relatively constant at 11%. Pre-tax income rose $305,381, or 32%, to $1,271,205 for the six-months ended June 30, 1997 from $965,824 for the six-months ended June 30, 1996. Net income rose $89,591, or 15%, to $692,998 from $603,407 for the comparative periods ending June 30, 1997 and 1996, respectively. Excluding merger related costs, pre-tax income would have risen 64% to $1,584,021 and net income would have increased 57% to $949,522 for the six-month period compared to the prior year period. COMPARISON OF THE THREE-MONTH PERIODS ENDED JUNE 30, 1997 AND JUNE 30, 1996 Revenue for the three-months ended June 30, 1997 was $7,388,832 versus revenue of $5,249,735 for the three-months ended June 30, 1996. This increase of $2,139,097, or 41%, was primarily due to increased sales of Stewart's brand products. Cost of goods sold increased by $1,516,453 for the comparative three-months ended June 30, 1997 and June 30, 1996. As a percentage of sales, cost of goods sold remained relatively constant at 72% for the comparative three-months ended June 30, 1997 and 1996. General and administrative expenses increased by $395,277 for the three-months ended June 30, 1997 compared to the three-months ended June 30, 1996. General and administrative costs also increased as a percentage of sales to 9% from 5.2% for the three-months ended June 30, 1997 and 1996, respectively. This increase is primarily the result of approximately $313,000 of expenses related to the proposed merger with Triarc Companies, Inc. (see Part II, Item 5, below). These expenses are non-recurring and are not related to ongoing operations of the Company. Excluding these merger related expenses, general and administrative expenses would have been $355,836 or 4.8% of sales. Selling and distribution expenses increased $214,420 for the comparative three-months ended June 30, 1997 from June 30, 1996, primarily due to increased promotional spending on the Stewart's brand products. As a percentage of sales, selling expenses were relatively constant at 10%. Pre-tax income rose $7,488, or 1%, to $682,994 for the three-months ended June 30, 1997 from $675,506 for the three-months ended June 30, 1996. Net income declined $88,045, or 20%, to $342,006 from $430,051 for the comparative three-month periods ended June 30, 1997 and 1996, respectively. Excluding merger related costs, pre-tax income would have rose 47% to $995,810 and net income would have increased 39% to $598,530 for the three-month period compared to the prior year period. Because the Triarc merger related expenses are not deductible for tax purposes, the Company's annual effective tax rate for 1997 is expected to be 45%. The effective tax rate of 50% and 45% for the 8 three-months and six-months ended June 30, 1997, respectively, reflect the impact of the nondeductible merger expenses. LIQUIDITY AND CAPITAL RESOURCES The Company's current ratio at June 30, 1997 was 3.21 as compared to 5.0 at December 31, 1996. Working capital at June 30, 1997 was $5,355,392 as compared to $4,628,636 at December 31, 1996. For the six-months ended June 30, 1997, cash decreased by $179,323. The principal use of cash during this period was for operating activities. Inventories and accounts receivable increased significantly as a result of increased sales. Net income adjusted for depreciation, amortization and other provisions generated approximately $792,000 in cash. Accounts receivable and inventories increased by a total of approximately $2,308,000, and accounts payable and other current liabilities increased approximately $1,341,000. Investing activities provided cash of approximately $138,000, primarily from the proceeds from short-term investments. The Company intends to utilize cash from operations to meet its ongoing obligations. The Company also maintains a bank line of credit in the amount of $500,000 which it may utilize from time to time to meet seasonal cash needs. Management does not expect liquidity problems for the next twelve months assuming the Company can maintain or exceed its current sales volume, and expenses as a percentage of sales remain relatively constant. FORWARD-LOOKING STATEMENTS This Quarterly Report of Form 10-Q contains certain statements, including statements under 'Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations,' that constitute 'forward-looking statements' within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results of the Company to be materially different from any future results implied by such forward-looking statements. Such factors include, but are not limited to general economic and business conditions; the costs of raw materials, the ability of the Company to maintain margins; continued or new relationships with distributors and brand support, changes in consumer preferences; government regulations and other factors. The Company undertakes no obligation to revise any forward-looking statements in order to reflect events or circumstances that may arise after the date of this report. PART II -- OTHER INFORMATION ITEM 5. OTHER INFORMATION MERGER AGREEMENT -- TRIARC COMPANIES, INC. On June 24, 1997 the Company entered into a definitive agreement with Triarc Companies, Inc. (NYSE:TRY) whereby the Company agreed to be merged with a wholly-owned subsidiary of Triarc (the 'Merger Agreement'). Approval of the Merger Agreement and the proposed merger (the 'Merger') requires the affirmative vote of a majority of the outstanding shares of the Company's common stock. Pursuant to the proposed Merger, each share of the Company's Common Stock issued and outstanding immediately prior to the effective time of the Merger (other than treasury shares and shares held by Triarc and its subsidiaries and subsidiaries of the Company, all of which will be canceled, and shares with respect to which the holder has exercised appraisal rights under Delaware law) will be converted into the right to receive 0.1722 of a share (the 'Conversion Price') of Class A common stock, par value $.10 per share, of Triarc (the 'Triarc Common Stock'), subject to the adjustment described below, and any cash to be paid in lieu of fractional shares of Triarc Common Stock. The Conversion Price is subject to adjustment as follows: (i) if the Average Triarc Share Price (based on the average closing price for 15 consecutive trading days immediately preceding closing) is less than $18.875, then the Conversion Price shall be adjusted to equal the quotient obtained by dividing $3.25 by such Average Triarc Share Price, and (ii) if the Average Triarc Share Price is greater than $24.50, then the Conversion 9 Price shall be adjusted to equal the quotient obtained by dividing $4.22 by such Average Triarc Share Price. Triarc is a holding company which, through its subsidiaries, is engaged in the following businesses: beverages, restaurants, dyes and specialty chemicals and liquefied petroleum gas. The beverage operations are conducted by the Triarc Beverage Group through Royal Crown Company, Inc., Mistic Brands, Inc. and, since its acquisition on may 22, 1997, Snapple Beverage Corp.; the restaurant operations are conducted by the Triarc Restaurant Group through Arby's, Inc.; the dyes and specialty chemical operations are conducted through C.H. Patrick & Co., Inc.; and the liquefied petroleum gas operations are conducted through National Propane Corporation, the managing general partner of National propane Partners, L.P., and its operating subsidiary partnership, National Propane, L.P. CHANGE OF CONTROL As a condition to its entering into the Merger Agreement, Triarc required Samuel M. Simpson, the President and Chief Executive Officer of the Company, Susan L. Neff, Mr. Simpson's wife, William H. Rutter, a director of the Company, and Susan L. Fralick, Mr. Rutter's wife (collectively, the 'Subject Stockholders'), to enter into a Stockholders Agreement, as amended (the 'Stockholders Agreement'). The Subject Stockholders own an aggregate of 1,766,409 shares of the Company's Common Stock, or approximately 19.7% of the shares of the Company's Common Stock, which are subject to the terms of the Stockholders Agreement (such amount does not include 12,200 shares owned by them but not subject to the Stockholders Agreement). Each Subject Stockholder has agreed that at any meeting of the holders of the Company's Common Stock, he or she will, until the effective time or the termination of the Merger Agreement, vote or cause to be voted such Cable Car Common Stock and any of the Company's Common Stock acquired by them after the date of the Stockholders Agreement in favor of approval of the Merger Agreement and the merger and against certain other actions. Moreover, each Subject Stockholder has also granted Triarc an irrevocable proxy to vote his or her shares of stock as specified above in the event that such Subject Stockholder fails to so vote his or her stock in the agreed upon manner. In addition, pursuant to the Stockholders Agreement, each Subject Stockholder has granted to Triarc an exclusive and irrevocable option to purchase his or her stock in whole but not in part under certain circumstances at a price per share in cash equal to the product obtained by multiplying 0.1722 (the 'Option Conversion Price') times the average (without rounding) of the closing prices per share of Triarc Common Stock on the NYSE on the NYSE Composite Tape for the 15 consecutive NYSE trading days ending on the NYSE trading day immediately preceding the date of the closing of the exercise of the option (the 'Option Average Share Price'), subject to the following adjustment: if the Option Average Share Price is less than $18.875, then the Option Conversion Price will be adjusted to equal the quotient obtained by dividing $3.25 by the Option Average Share Price, and if the Option Average Share Price is greater than $24.50, then the Option Conversion Price will be adjusted to equal the quotient obtained by dividing $4.22 by the Option Average Share Price. AGREEMENTS WITH STEWART'S On June 24, 1997 the Company entered into agreements with Stewart's Restaurants, Inc. ('Stewart's Restaurants') amending and modifying its licensing agreements with Stewart's Restaurants (the 'Stewart's Master Agreement') as further amended on August 11, 1997. Among other things, these amendments (i) gave the Company ownership of the formulas for and manufacturing rights to concentrates used to make Stewart's soft drinks; (ii) provide that the Company is permitted to use the Stewart's trademark on any other product of any type; and (iii) granted to the Company the perpetual exclusive worldwide license to manufacture, distribute and sell post-mix syrups and premixes for Stewart's beverages throughout the world (fountain-type beverages), subject to certain rights retained by Stewart's Restaurants. As consideration for these amendments, the Company agreed to issue to Stewart's Restaurants an aggregate of 150,000 shares of the Company's Common Stock and to pay Stewart's Restaurants $400,000 in cash, of which $250,000 is payable on March 31, 1998 and $150,000 is payable on March 31, 1999. 10 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits (2)-1 Agreement and Plan of Merger -- Triarc Company, Inc.*** 3 (i) Certificate of Incorporation* 3 (ii) Certificate of Amendment (Changing Name)** 3 (iii) By-Laws* (10)-V Agreement -- Stewart's Restaurants, Inc.*** (10)-W Agreement -- Stewart's Restaurants, Inc.*** (10)-X Stockholders Agreement -- Samuel M. Simpson and William H. Rutter*** * Incorporated by reference to Form 10-K dated 10/09/87 ** Incorporated by reference to Form S-1 filed 09/25/89 (SEC #33-30480) *** Incorporated by reference to Form 8-K filed July 2, 1997 (SEC #0-14784) (b) Reports on Form 8-K The Registrant filed a Report on Form 8-K on July 2, 1997 relating to the proposed merger with Triarc, the Stockholders' Agreement with Triarc and the agreements with Stewart's Restaurants, Inc. 11 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized. Date: August 13, 1997 CABLE CAR BEVERAGE CORPORATION (registrant) By: /s/ SAMUEL M. SIMPSON ................................... (SAMUEL M. SIMPSON) PRESIDENT By: /s/ MYRON D. STADLER .................................. (MYRON D. STADLER) CHIEF ACCOUNTING OFFICER 12 APPENDIX B-1 ================================================================================ AGREEMENT AND PLAN OF MERGER BY AND AMONG CABLE CAR BEVERAGE CORPORATION, TRIARC COMPANIES, INC. AND CCB MERGER CORPORATION ----------------------- Dated: June 24, 1997 ----------------------- ================================================================================ TABLE OF CONTENTS
PAGE ---- ARTICLE I THE MERGER SECTION 1.1 The Merger............................................................................... 1 SECTION 1.2 Closing.................................................................................. 1 SECTION 1.3 Certificate of Incorporation............................................................. 2 SECTION 1.4 By-laws.................................................................................. 2 SECTION 1.5 Board of Directors and Officers.......................................................... 2 SECTION 1.6 Meeting of Company Stockholders.......................................................... 2 SECTION 1.7 SEC Filings.............................................................................. 3 SECTION 1.8 Effective Time of the Merger............................................................. 3 ARTICLE II CONVERSION OF SHARES SECTION 2.1 Conversion of Shares..................................................................... 3 SECTION 2.2 No Further Transfers..................................................................... 5 SECTION 2.3 Exchange of Shares of Company Common Stock............................................... 5 ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY SECTION 3.1 Organization and Good Standing........................................................... 6 SECTION 3.2 Corporate Authorization; Validity of Agreement; Company Action........................... 6 SECTION 3.3 Capitalization........................................................................... 7 SECTION 3.4 Reports and Financial Statements......................................................... 7 SECTION 3.5 Absence of Certain Changes............................................................... 8 SECTION 3.6 Consents and Approvals; No Violations.................................................... 8 SECTION 3.7 No Undisclosed Liabilities............................................................... 8 SECTION 3.8 Registration Statement................................................................... 8 SECTION 3.9 Litigation; Compliance with Law.......................................................... 8 SECTION 3.10 Taxes.................................................................................... 9 SECTION 3.11 No Default............................................................................... 10 SECTION 3.12 Contracts................................................................................ 10 SECTION 3.13 Intellectual Property.................................................................... 10 SECTION 3.14 Employee Benefit Plans................................................................... 11 SECTION 3.15 Inventory and Supplies................................................................... 12 SECTION 3.16 Receivables.............................................................................. 12 SECTION 3.17 Case Sales............................................................................... 12 SECTION 3.18 Transactions with Affiliates............................................................. 12 SECTION 3.19 State Takeover Statutes.................................................................. 12 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PARENT AND MERGERCO SECTION 4.1 Organization and Good Standing........................................................... 12 SECTION 4.2 Corporate Authorization; Validity of Agreement........................................... 12 SECTION 4.3 Capitalization........................................................................... 13 SECTION 4.4 Reports and Financial Statements......................................................... 13 SECTION 4.5 Absence of Certain Changes............................................................... 13 SECTION 4.6 Consents and Approvals; No Violations.................................................... 14 SECTION 4.7 Registration Statement................................................................... 14 SECTION 4.8 Tax Representations...................................................................... 14 ARTICLE V COVENANTS SECTION 5.1 Interim Operations of the Company........................................................ 15 SECTION 5.2 Access to Information.................................................................... 16
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PAGE ---- SECTION 5.3 Consents and Approvals................................................................... 16 SECTION 5.4 No Solicitation.......................................................................... 17 SECTION 5.5 Additional Agreements.................................................................... 17 SECTION 5.6 Notification of Certain Matters.......................................................... 18 SECTION 5.7 Indemnification of Directors and Officers................................................ 18 SECTION 5.8 Rule 145 Affiliates...................................................................... 18 SECTION 5.9 Stock Exchange Listing................................................................... 18 SECTION 5.10 Tax-Free Reorganization.................................................................. 18 ARTICLE VI CONDITIONS PRECEDENT SECTION 6.1 Conditions to the Obligations of Each Party.............................................. 18 SECTION 6.2 Conditions to the Obligations of the Parent and Mergerco................................. 19 SECTION 6.3 Conditions to the Obligations of the Company............................................. 20 ARTICLE VII TERMINATION SECTION 7.1 Termination.............................................................................. 20 SECTION 7.2 Effect of Termination.................................................................... 22 ARTICLE VIII GENERAL AGREEMENTS SECTION 8.1 Definitions.............................................................................. 22 SECTION 8.2 Survival of Representations, Warranties and Agreements................................... 25 SECTION 8.3 Expenses................................................................................. 25 SECTION 8.4 Notice................................................................................... 25 SECTION 8.5 Amendments............................................................................... 26 SECTION 8.6 Waiver................................................................................... 26 SECTION 8.7 Brokers.................................................................................. 26 SECTION 8.8 Publicity................................................................................ 26 SECTION 8.9 Headings................................................................................. 26 SECTION 8.10 Non-Assignability........................................................................ 26 SECTION 8.11 Entire Agreement; No Third Party Beneficiaries; Rights of Ownership...................... 27 SECTION 8.12 Specific Performance..................................................................... 27 SECTION 8.13 Counterparts............................................................................. 27 SECTION 8.14 Governing Law............................................................................ 27 SECTION 8.15 Consent to Jurisdiction.................................................................. 27 SECTION 8.16 Waiver of Jury Trial..................................................................... 27 SECTION 8.17 Disclosure Schedule...................................................................... 27
Exhibit: A -- Form of Restated Certificate of Incorporation. B -- Form of Affiliate Agreement. Schedule: I -- Disclosure Schedule. ii EXHIBIT A TO AGREEMENT AND PLAN OF MERGER FORM OF RESTATED CERTIFICATE OF INCORPORATION CERTIFICATE OF INCORPORATION OF CABLE CAR BEVERAGE CORPORATION 1. Name. The name of the corporation is 'CABLE CAR BEVERAGE CORPORATION' (the 'Corporation'). 2. Address; Registered Office and Agent. The address of the Corporation's registered office is 1013 Centre Road, City of Wilmington, County of New Castle, State of Delaware 19805; and its registered agent at such address is The Prentice-Hall Corporation, Inc. 3. Purposes. The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law. 4. Number of Shares. The total number of shares of stock that the Corporation shall have authority to issue is: One Thousand (1,000), all of which shall be shares of Common Stock of the par value of One Dollar ($1.00) each. 5. Election of Directors. Members of the Board of Directors of the Corporation (the 'Board') may be elected either by written ballot or by voice vote. 6. Limitation of Liability. No director of the Corporation shall be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, provided that this provision shall not eliminate or limit the liability of a director (a) for any breach of the director's duty of loyalty to the Corporation or its stockholders, (b) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (c) under Section 174 of the General Corporation Law or (d) for any transaction from which the director derived any improper personal benefits. Any repeal or modification of the foregoing provision shall not adversely affect any right or protection of a director of the Corporation existing at the time of such repeal or modification. 7. Indemnification. 7.1 To the extent not prohibited by law, the Corporation shall indemnify any person who is or was made, or threatened to be made, a party to any threatened, pending or completed action, suit or proceeding (a 'Proceeding'), whether civil, criminal, administrative or investigative, including, without limitation, an action by or in the right of the Corporation to procure a judgment in its favor, by reason of the fact that such person, or a person of whom such person is the legal representative, is or was a director or officer of the Corporation, or, at the request of the Corporation, is or was serving as a director or officer of any other corporation or in a capacity with comparable authority or responsibilities for any partnership, joint venture, trust, employee benefit plan or other enterprise (an 'Other Entity'), against judgments, fines, penalties, excise taxes, amounts paid in settlement and costs, charges and expenses (including attorneys' fees, disbursements and other charges). Persons who are not directors or officers of the Corporation (or otherwise entitled to indemnification pursuant to the preceding sentence) may be similarly indemnified in respect of service to the Corporation or to an Other Entity at the request of the Corporation to the extent the Board at any time specifies that such persons are entitled to the benefits of this Section 7. 7.2 (a) The Corporation shall, from time to time, advance to any director or officer or other person entitled to indemnification hereunder the funds necessary for payment of expenses, including attorneys' fees and disbursements, incurred in connection with any Proceeding, in advance of the final disposition of such Proceeding; provided, however, that, if required by the General Corporation Law, such expenses incurred by or on behalf of any director or officer or other person may be paid in advance of the final disposition of a Proceeding only upon receipt by the Corporation of an undertaking, by or on behalf of such director or officer (or other person indemnified hereunder), to repay any such amount so advanced if it shall ultimately be determined by final judicial decision from which there is no further right of 1 appeal that such director, officer or other person is not entitled to be indemnified for such expenses; and provided, further, that such expenses incurred by or on behalf of any director or officer or other person shall not be paid in advance of the final disposition of a Proceeding if, in the reasonable judgment of the Board, it would not be proper for the Company to advance such expenses. (b) In addition to any advances made pursuant to Section 7.2(a), the Corporation may, from time to time, reimburse any director or officer or other person entitled to indemnification hereunder the funds necessary for payment of expenses, including attorneys' fees and disbursements, incurred in connection with any Proceeding, in advance of the final disposition of such Proceeding; provided, however, that, if required by the General Corporation Law, such expenses incurred by or on behalf of any director or officer or other person may be reimbursed in advance of the final disposition of a Proceeding only upon receipt by the Corporation of an undertaking, by or on behalf of such director or officer (or other person indemnified hereunder), to repay any such amount so reimbursed if it shall ultimately be determined by final judicial decision from which there is no further right of appeal that such director, officer or other person is not entitled to be indemnified for such expenses. 7.3 The rights to indemnification and reimbursement or advancement of expenses provided by, or granted pursuant to, this Section 7 shall not be deemed exclusive of any other rights to which a person seeking indemnification or reimbursement or advancement of expenses may have or hereafter be entitled under any statute, this Certificate of Incorporation, the By-laws of the Corporation (the 'By-laws'), any agreement, any vote of stockholders or disinterested directors or otherwise, both as to action in his or her official capacity and as to action in another capacity while holding such office. 7.4 The rights to indemnification and reimbursement or advancement of expenses provided by, or granted pursuant to, this Section 7 shall continue as to a person who has ceased to be a director or officer (or other person indemnified hereunder) and shall inure to the benefit of the executors, administrators, legatees and distributees of such person. 7.5 The Corporation shall have power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of an Other Entity, against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person's status as such, whether or not the Corporation would have the power to indemnify such person against such liability under the provisions of this Section 7, the By-laws or under Section 145 of the General Corporation Law or any other provision of law. 7.6 The provisions of this Section 7 shall be a contract between the Corporation, on the one hand, and each director and officer who serves in such capacity at any time while this Section 7 is in effect and any other person entitled to indemnification hereunder, on the other hand, pursuant to which the Corporation and each such director, officer, or other person intend to be, and shall be, legally bound. No repeal or modification of this Section 7 shall affect any rights or obligations with respect to any state of facts then or theretofore existing or there after arising or any proceeding theretofore or thereafter brought or threatened based in whole or in part upon any such state of facts. 7.7 The rights to indemnification and reimbursement or advancement of expenses provided by, or granted pursuant to, this Section 7 shall be enforceable by any person entitled to such indemnification or reimbursement or advancement of expenses in any court of competent jurisdiction. The burden of proving that such indemnification or reimbursement or advancement of expenses is not appropriate shall be on the Corporation. Neither the failure of the Corporation (including its Board, its independent legal counsel and its stockholders) to have made a determination prior to the commencement of such action that such indemnification or reimbursement or advancement of expenses is proper in the circumstances nor an actual determination by the Corporation (including its Board, its independent legal counsel and its stockholders) that such person is not entitled to such indemnification or reimbursement or advancement of expenses shall constitute a defense to the action or create a presumption that such person is not so entitled. Such a person shall also be indemnified for any expenses incurred in connection with successfully establishing his or her right to such indemnification or reimbursement or advancement of expenses, in whole or in part, in any such proceeding. 2 7.8 Any director or officer of the Corporation serving in any capacity of (a) another corporation of which a majority of the shares entitled to vote in the election of its directors is held, directly or indirectly, by the Corporation or (b) any employee benefit plan of the Corporation or any corporation referred to in clause (a) shall be deemed to be doing so at the request of the Corporation. 7.9 Any person entitled to be indemnified or to reimbursement or advancement of expenses as a matter of right pursuant to this Section 7 may elect to have the right to indemnification or reimbursement or advancement of expenses interpreted on the basis of the applicable law in effect at the time of the occurrence of the event or events giving rise to the applicable Proceeding, to the extent permitted by law, or on the basis of the applicable law in effect at the time such indemnification or reimbursement or advancement of expenses is sought. Such election shall be made, by a notice in writing to the Corporation, at the time indemnification or reimbursement or advancement of expenses is sought; provided, however, that if no such notice is given, the right to indemnification or reimbursement or advancement of expenses shall be determined by the law in effect at the time indemnification or reimbursement or advancement of expenses is sought. 8. Adoption, Amendment and/or Repeal of By-Laws. The Board may from time to time adopt, amend or repeal the By-laws of the Corporation; provided, however, that any By-laws adopted or amended by the Board may be amended or repealed, and any By-laws may be adopted, by the stockholders of the Corporation by vote of a majority of the holders of shares of stock of the Corporation entitled to vote in the election of directors of the Corporation. 3 AGREEMENT AND PLAN OF MERGER AGREEMENT AND PLAN OF MERGER dated June 24, 1997 (this 'Agreement'), by and among Cable Car Beverage Corporation, a Delaware corporation (the 'Company'), Triarc Companies, Inc., a Delaware corporation (the 'Parent'), and CCB Merger Corporation, a Delaware corporation and a wholly owned subsidiary of the Parent ('Mergerco'). The Boards of Directors of the Parent, Mergerco and the Company have approved, and deem it advisable and in the best interests of their respective stockholders to consummate, the merger of Mergerco with and into the Company (the 'Merger') upon the terms and subject to the conditions set forth herein and in accordance with the General Corporation Law of the State of Delaware (the 'DGCL'). The Parent and Mergerco are unwilling to enter into this agreement unless certain stockholders of the Company enter into a stockholders agreement (the 'Stockholders Agreement') among the Parent, Mergerco and such stockholders providing for, among other things, the granting to the Parent and Mergerco of the right to vote shares of Company Common Stock owned by such stockholders under the circumstances set forth in such agreement and the granting to Parent and Mergerco of an option to purchase such shares of Company Common Stock owned by such stockholders under the circumstances and at the price set forth in such agreement, and the Board of Directors of the Company has approved the Parent and Mergerco entering into the Stockholders Agreement. The Board of Directors of the Company, having received advice from Montgomery Securities, its investment advisor, and an opinion from such firm to the effect that the consideration to be received by the stockholders of the Company pursuant to the Merger is fair to such stockholders from a financial point of view (the 'Company Fairness Opinion'), has approved the transactions contemplated by this Agreement and the Stockholders Agreement (the 'Contemplated Transactions') in accordance with the provisions of Section 203 of the DGCL ('Section 203') and has resolved to recommend the approval of the Merger by the holders of shares of the Common Stock, par value $.01 per share, of the Company (the 'Company Common Stock'). For United States federal income tax purposes, it is intended that the Merger provided for herein shall qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the 'Code'). NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth herein, the parties hereto agree as follows (capitalized terms used herein have the meanings ascribed to them in Section 8.1): ARTICLE I THE MERGER SECTION 1.1 The Merger. Upon the terms and subject to the conditions hereof and in accordance with the provisions of the DGCL, at the Effective Time, Mergerco and the Company shall consummate the Merger pursuant to which Mergerco shall be merged with and into the Company in accordance with the applicable provisions of the DGCL and the separate existence of Mergerco shall thereupon cease, and the Company, as the surviving corporation in the Merger (the 'Surviving Corporation'), shall continue its corporate existence under the laws of the State of Delaware as a wholly owned subsidiary of the Parent. The Merger shall have the effects set forth in Section 259 of the DGCL. SECTION 1.2 Closing. The closing of the Merger (the 'Closing') shall take place at the offices of Paul, Weiss, Rifkind, Wharton & Garrison, 1285 Avenue of the Americas, New York, New York 10019-6064 on a date to be specified by the parties, which shall be no later than five (5) Business Days after all of the conditions set forth in Article VI hereof shall be fulfilled or waived in accordance with this Agreement and applicable law or at such other time, date and/or place as the Company, the Parent and Mergerco may agree (the 'Closing Date'). Subject to the provisions of Article VII hereof, failure to consummate the Merger on the date and time and at the place determined pursuant to this Section 1.2 shall not result in the termination of this Agreement and will not relieve any party of any obligations hereunder. 1 SECTION 1.3 Certificate of Incorporation. The certificate of incorporation of the Company as in effect immediately prior to the Effective Time (the 'Certificate of Incorporation') shall be amended in its entirety as set forth in Exhibit A hereto, and such Certificate of Incorporation, as so amended at the Effective Time, shall be the certificate of incorporation of the Surviving Corporation, until thereafter further changed or amended as provided therein or by applicable law. SECTION 1.4 By-laws. The by-laws of Mergerco as in effect immediately prior to the Effective Time shall be the by-laws of the Surviving Corporation until thereafter changed or amended as provided therein or as otherwise permitted or required by the Surviving Corporation's certificate of incorporation or by applicable law, except that at the Effective Time, the name in the heading thereof shall be changed to 'Cable Car Beverage Corporation.' SECTION 1.5 Board of Directors and Officers. (a) The directors of Mergerco immediately prior to the Effective Time shall be the initial directors of the Surviving Corporation and shall serve until their respective successors are duly elected or appointed and qualify in the manner provided in the certificate of incorporation and by-laws of the Surviving Corporation, or as otherwise provided by applicable law. (b) The officers of Mergerco immediately prior to the Effective Time shall be the initial officers of the Surviving Corporation and shall serve until their respective successors are duly elected or appointed and qualify in the manner provided in the certificate of incorporation and by-laws of the Surviving Corporation, or as otherwise provided by applicable law. SECTION 1.6 Meeting of Company Stockholders. (a) Subject to the provisions of Section 1.6(b) below, the Company shall take all necessary action in accordance with applicable law to convene a meeting of its stockholders (a 'Meeting') to consider and vote upon the Merger and this Agreement and shall use its best efforts to hold such Meeting as promptly as practicable after the date the Registration Statement becomes effective. Subject to the provisions of Section 1.6(b) below, the Company agrees that the Board of Directors of the Company shall recommend that the Company's stockholders vote in favor of the Merger and the approval and adoption of this Agreement. The Parent agrees that it shall vote, or cause to be voted, in favor of the Merger and the adoption and approval of this Agreement any shares of Company Common Stock held by it or by any of its Subsidiaries on the record date set by the Company for determining shares of Company Common Stock entitled to vote at the Meeting. (b) Nothing in Section 1.6(a) shall prevent the Board of Directors of the Company from withdrawing, amending or modifying its unanimous recommendation in favor of the Merger if (i) an unsolicited bona fide written Acquisition Proposal is submitted to the Company and is not withdrawn, (ii) the Board of Directors of the Company concludes in good faith, based upon the advice of its financial advisor, that such Acquisition Proposal would result in a transaction that is more favorable from a financial point of view to the Company's stockholders than the Merger, (iii) neither the Company nor any of its Representatives shall violate any of the restrictions set forth in Section 5.4(a), and (iv) the Board of Directors of the Company concludes in good faith, after consultation with its outside legal counsel, that the withdrawal, amendment or modification of such recommendation is required in connection with such Acquisition Proposal in order for the Board of Directors of the Company to comply with its fiduciary obligations to the Company's stockholders under applicable law. Nothing in Section 1.6(a) or in Section 5.4(a) shall prevent the Board of Directors of the Company from recommending that its stockholders accept an unsolicited tender offer or exchange offer commenced by a third party with respect to shares of Company Common Stock if (1) such tender offer or exchange offer constitutes an Acquisition Proposal, (2) the Board of Directors of the Company shall have withdrawn its recommendation in favor of the Merger in accordance with and as permitted by the preceding sentence, (3) the Board of Directors of the Company shall have concluded in good faith, based upon the advice of its financial advisor, that such tender offer or exchange offer is more favorable from a financial point of view to the Company's stockholders than the Merger, (4) neither the Company nor any of its Representatives shall have violated any of the restrictions set forth in Section 5.4, and (5) the Board of Directors of the Company shall have concluded in good faith, after consultation with its outside legal counsel, that the recommendation in favor of acceptance of such tender offer or exchange 2 offer is required in order for the Board of Directors of the Company to comply with its fiduciary obligations to the Company's stockholders under applicable law. Nothing contained in this Section 1.6 shall limit the Company's obligation to hold and convene the Meeting, it being understood that the Company shall be required to hold and convene the Meeting in accordance with this Section 1.6 unless the holding of such Meeting would constitute a violation of any applicable court order or statute. The Company shall use all reasonable efforts to ensure that the holding of the Meeting will not constitute a violation of any applicable court order or statute. SECTION 1.7 SEC Filings. (a) As soon as practicable after the date hereof, the Parent shall prepare and file with the SEC the Registration Statement on Form S-4 (such registration statement at the time it becomes effective, together with all amendments duly filed and mailed is referred to as the 'Registration Statement') under the Securities Act, which registers the Parent Class A Common Stock to be issued to the Company's stockholders pursuant to the Merger and in which the prospectus (the 'Prospectus') will be in the form of a proxy statement. The Company shall prepare and provide the Parent with information concerning the Company required to be included in the Registration Statement. Such information prepared and provided by the Company shall comply in all material respects with all applicable requirements of law. (b) Each of the Company and the Parent, as applicable, shall use its reasonable best efforts to (i) respond to any comments of the SEC, (ii) have the Registration Statement declared effective under the Securities Act as promptly as practicable after such filing and to keep the Registration Statement effective as long as is necessary to consummate the Merger and (iii) cause the Prospectus to be mailed to the stockholders of the Company as promptly as practicable after the Registration Statement is declared effective under the Securities Act. Each of the Parent and the Company shall notify the other promptly of the receipt of any comments from the SEC and of any request by the SEC for amendments or supplements to the Registration Statement or for additional information and will supply the other with copies of all correspondence between such party or any of its representatives and the SEC, with respect to the Registration Statement. The Registration Statement shall comply in all material respects with all applicable requirements of law. The Parent shall take any action required to be taken under state blue sky or securities laws in connection with the Merger and the issuance of the Merger Consideration in connection therewith. (c) No amendment or supplement to the Registration Statement will be made without the approval of the Company, which approval will not be unreasonably withheld or delayed. The Parent will advise the Company, promptly after it receives notice thereof, of the time when the Registration Statement or any amendment thereto has become effective or any amendment thereto, or the issuance of any stop order, or the suspension of the qualification of the Parent Class A Common Stock to be issued in the Merger for offering or sale in any jurisdiction or of any request by the NYSE for amendment of the Registration Statement. SECTION 1.8 Effective Time of the Merger. As soon as practicable following the satisfaction or waiver of the conditions set forth in Article VI hereof, a Certificate of Merger shall be duly executed by the Company and shall be duly filed with the Secretary of State of the State of Delaware in accordance with the DGCL. The Merger shall become effective on the date on which such Certificate of Merger is so filed with the Secretary of State of the State of Delaware. ARTICLE II CONVERSION OF SHARES SECTION 2.1 Conversion of Shares. At the Effective Time, by virtue of the Merger and without any action on the part of the holder thereof: (a) Each share of Company Common Stock owned by the Parent or Mergerco or by any direct or indirect Subsidiary of the Parent immediately prior to the Effective Time, and each share of Company Common Stock held in the treasury of the Company or by any direct or indirect Subsidiary of the Company immediately prior to the Effective Time (each of the foregoing shares being an 'Excluded 3 Share'), shall, by virtue of the Merger, and without any action on the Company or the holder thereof, be cancelled. (b) Each share of Company Common Stock issued and outstanding immediately prior to the Effective Time (other than the Excluded Shares and other than the Dissenting Shares) shall be by virtue of the Merger, and without any action on the part of the holder thereof, cancelled and converted solely into the right to receive, upon the surrender of the certificate formerly representing such share of Company Common Stock in accordance with Section 2.3 hereof, 0.1722 (the 'Conversion Price') of a validly issued, fully paid and non-assessable share of the Parent Class A Common Stock, without interest; provided, that (i) if the Average Parent Share Price shall be less than $18.875, then the Conversion Price shall be adjusted so that it shall equal the quotient obtained by dividing (A) $3.25 by (B) the Average Parent Share Price, and (ii) if the Average Parent Share Price shall be greater than $24.50, then the Conversion Price shall be adjusted so that it shall equal the quotient obtained by dividing (x) $4.22 by (y) the Average Parent Share Price (the Conversion Price to reflect such adjustment, if any, is hereinafter referred to as the 'Adjusted Conversion Price'). (c) Each share of Mergerco Common Stock issued and outstanding immediately prior to the Effective Time shall be converted into one validly issued, fully paid and non-assessable share of common stock, par value $1.00 per share, of the Surviving Corporation. (d) (i) Each Company Stock Option that is outstanding immediately prior to the Effective Time, whether or not then vested or exercisable, shall, effective as of the Effective Time, and without any action on the part of the holder thereof, be assumed by the Parent and become and represent an option exercisable for shares of Parent Class A Common Stock (a 'Substitute Option') with the same vesting schedules, if any, and expiration dates as such Company Stock Option immediately prior to the Effective Time (but taking into account any acceleration of the vesting of such Company Stock Option as a result of the consummation of the Merger), with (A) the new exercise price thereof being determined by dividing the exercise price of such Company Stock Option by the Adjusted Conversion Price (with the result of such calculation rounded to the nearest whole cent) and (B) the number of shares issuable upon exercise being determined by multiplying the number of shares to be issued upon exercise of such Company Stock Option by the Adjusted Conversion Price (with the result of such calculation rounded to the nearest whole number). (ii) The Parent shall take all corporate action necessary to reserve for issuance a sufficient number of the shares of Parent Class A Common Stock for delivery upon exercise of the Substitute Options. As soon as practicable after the Effective Time, but in no event later than 45 days after the Effective Time, the Parent shall file one or more registration statements on Form S-8 (or any successor or appropriate form (including a shelf registration statement on Form S-3 if Form S-8 is not available)) with respect to the shares of Parent Class A Common Stock subject to such Substitute Options and shall maintain the effectiveness of such registration statement or registration statements (and maintain the current status of the prospectus or prospectuses referred to therein) for so long as such Substitute Options remain outstanding. (e) Each share of Company Common Stock issued and outstanding immediately prior to the Effective Time and held by a stockholder of the Company who does not vote in favor of the Merger and who complies with all of the relevant provisions of Section 262 (each such share being a 'Dissenting Share') shall not be converted into the right to receive the Merger Consideration pursuant to the Merger, but instead the holders of Dissenting Shares shall be entitled to receive such consideration as shall be determined in accordance with the provisions of Section 262; provided, however, that (i) if any such holder of Dissenting Shares shall have failed to establish its entitlement to appraisal rights as provided in Section 262 or (ii) if any such holder of Dissenting Shares shall have effectively withdrawn its demand for appraisal of such shares of Company Common Stock, or lost its right to appraisal and payment as provided in Section 262, or (iii) if neither any holder of Dissenting Shares nor the Surviving Corporation shall have filed a petition demanding a determination of the value of all Dissenting Shares within the time period provided in Section 262, such holder or holders (as the case may be) shall forfeit the right to the appraisal of such shares of Company Common Stock and each such share of Company Common Stock shall thereupon be deemed to have been converted, as of the Effective Time, into and represent the right to receive the Merger Consideration upon surrender of the certificate or certificates 4 formerly representing such shares of Company Common Stock in accordance with Section 2.3 hereof. The Company shall not, except with the prior written consent of the Parent, voluntarily make or agree to make any payment with respect to, or settle or offer to settle, any such demands for payment. SECTION 2.2 No Further Transfers. At the Effective Time, the Company Common Stock transfer books shall be closed and no further transfer of shares of Company Common Stock shall be made thereafter. If, after the Effective Time, any certificate previously representing shares of Company Common Stock is presented for transfer, it shall be forwarded to the Exchange Agent (as defined in Section 2.3 hereof) for cancellation and exchange in accordance with Section 2.3 hereof. SECTION 2.3 Exchange of Shares of Company Common Stock. (a) Prior to the Effective Time, the Parent shall designate, subject to the approval of the Company which shall not be unreasonably withheld, a bank or trust company to act as exchange agent (the 'Exchange Agent') for the Merger. Immediately prior to the Effective Time, the Parent will instruct the transfer agent of the shares of the Parent Class A Common Stock to countersign and deliver to the Exchange Agent certificates representing an aggregate number of shares of the Parent Class A Common Stock as nearly as practicable equal to the product of the Adjusted Conversion Price and the number of shares of Company Common Stock to be converted into the Parent Class A Common Stock pursuant to Section 2.1(b) so as to allow for the issuance and delivery of the Merger Consideration on a timely basis. The Parent shall pay all reasonable charges or expenses, including those of the Exchange Agent, in connection with the exchange of the shares of Company Common Stock for the Merger Consideration. (b) As soon as practicable after the Effective Time, the Parent shall cause the Exchange Agent to mail and/or make available to each holder of a Certificate (other than holders of Certificates theretofore representing Excluded Shares) (a 'Stockholder') a notice and letter of transmittal advising such holder of the effectiveness of the Merger and the procedure for surrendering to the Exchange Agent such Certificate or Certificates for exchange for the Merger Consideration multiplied by the number of shares of Company Common Stock represented by such Certificate or Certificates. Upon the surrender to the Exchange Agent of such Certificate or Certificates, together with a letter of transmittal, duly executed and completed in accordance with the instructions thereon, the Stockholder shall be entitled to receive the Merger Consideration. From and after the Effective Time, until surrendered in accordance with the provisions of this Section 2.3, each Certificate evidencing shares of Company Common Stock (other than Certificates representing Excluded Shares and Dissenting Shares) shall represent for all purposes only the right to receive the Merger Consideration, without any interest thereon. Any portion of the Merger Consideration that shall not have been paid to Stockholders pursuant to this Section 2.3 prior to the second anniversary of the Effective Time (including any cash payable pursuant to Section 2.3(e) hereof) shall be paid to the Parent and any Stockholder who has not theretofore complied with this Section 2.3 thereafter shall look, subject to escheat and other similar laws, solely to the Parent for payment of the Merger Consideration to which they are entitled under this Agreement. (c) No dividends or other distributions that are otherwise payable on the shares of the Parent Class A Common Stock constituting any of the Merger Consideration shall be paid to the holder of any unsurrendered Certificate until such Certificate is properly surrendered as provided herein, but (i) upon such surrender, there shall be paid to the Person in whose name the shares of the Parent Class A Common Stock constituting any of the Merger Consideration shall be issued the amount of any dividends which shall have become payable with respect to such shares between the Effective Time and the time of such surrender and (ii) at the appropriate payment date or as soon thereafter as practicable, there shall be paid to such Person the amount of any dividends on such shares of the Parent Class A Common Stock which shall have a record or due date prior to such surrender and a payment date after such surrender, subject in each such case to (x) deduction therefrom of any amount required by applicable law to be withheld, and (y) any applicable escheat laws or unclaimed property laws. On surrender of a Certificate, no interest shall be payable with respect to the payment of such dividends and no interest shall be payable with respect to the amount of any cash payable in lieu of a fractional share of the Parent Class A Common Stock pursuant to Section 2.3(e). 5 (d) If any cash is to be paid pursuant to Section 2.3(e), or certif icates representing shares of the Parent Class A Common Stock are to be issued, to a Person other than the Person in whose name the Certificate so surrendered in exchange therefor is registered, it shall be a condition of the payment or issuance thereof that the Certificate so surrendered shall be properly endorsed and otherwise in proper form for transfer and that the Person requesting such exchange shall pay to the Exchange Agent any transfer or other taxes required by reason of the payment of cash to a Person other than, or if the issuance of certificates representing the shares of the Parent Class A Common Stock in any name other than that of, the registered holder of the Certificate surrendered, or otherwise required, or shall establish to the satisfaction of the Exchange Agent that such tax has been paid or is not payable. (e) Shares of the Parent Class A Common Stock shall be issued only in whole shares. A Stockholder will not be entitled to receive Fractional Shares but, instead, will be entitled to receive promptly from the Exchange Agent a cash payment in lieu of Fractional Shares in an amount equal to such Stockholder's proportionate interest in the net proceeds from the sale or sales in the open market by the Exchange Agent, on behalf of all such Stockholders, of the aggregate Fractional Shares. Such sales shall be made promptly after the Effective Time, or in the case of Dissenting Shares which become exchangeable for the Merger Consideration pursuant to Section 2.1(e) hereof, promptly after such change in status of such Dissenting Shares. Such cash payments will be made to each such Stockholder only upon proper surrender of such Stockholder's Certificates, together with a properly completed and duly executed transmittal form and any other required documents. ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY The Company represents and warrants to the Parent and Mergerco as follows: SECTION 3.1 Organization and Good Standing. Each of the Company and its Subsidiaries is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation, and has all requisite corporate or other power and authority and all necessary governmental approvals to own, lease and operate its properties and to carry on its business as now being conducted, except where the failure to be so organized, existing and in good standing or to have such power, authority and governmental approvals would not have a Material Adverse Effect on the Company and its Subsidiaries taken as a whole. Section 3.1 of the Disclosure Schedule sets forth a complete list of the Company's Subsidiaries, their state of incorporation and each state in which they are qualified to do business. SECTION 3.2 Corporate Authorization; Validity of Agreement; Company Action. (a) The Company has full corporate power and authority to execute and deliver this Agreement and, subject to obtaining any necessary approval of its stockholders as contemplated by Section 1.6 hereof with respect to the Merger, to consummate the Contemplated Transactions. The execution, delivery and performance by the Company of this Agreement, and the consummation by it of the Contemplated Transactions, have been duly and validly authorized by its Board of Directors and, except for obtaining the approval of its stockholders as contemplated by Section 1.6 hereof with respect to the Merger, no other corporate action or proceedings on the part of the Company is necessary to authorize the execution and delivery by the Company of this Agreement, and the consummation by it of the Contemplated Transactions. This Agreement has been duly executed and delivered by the Company and, assuming this Agreement constitutes a valid and binding obligation of the Parent and Mergerco, constitutes a valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except that (i) such enforcement may be subject to applicable bankruptcy, insolvency or other similar laws, now or hereafter in effect, affecting creditors' rights generally, and (ii) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought. (b) The affirmative vote of the holders of a majority of the shares of Company Common Stock outstanding (the 'Required Stockholder Vote') is the only vote of the holders of any class or series of Company capital stock necessary to approve the Merger. 6 SECTION 3.3 Capitalization. (a) The authorized capital stock of the Company consists of 25,000,000 shares of Company Common Stock. As of the date hereof, (i) 9,024,681 shares of Company Common Stock are issued, of which 8,948,324 shares are outstanding and 76,357 shares are held in treasury and (ii) options to acquire an aggregate of 902,500 shares of Company Common Stock have been issued pursuant to Company Stock Options. The Company has previously delivered to the Parent a true and correct list of all outstanding Company Stock Options setting forth in each case the name of the optionholder, the number of shares of Company Common Stock subject thereto, the exercise price, the vesting schedule and the expiration date. All the outstanding shares of the Company's capital stock are duly authorized, validly issued, fully paid and non-assessable. There is no Voting Debt of the Company or any of its Subsidiaries issued and outstanding. Except as set forth above, as set forth in Section 3.3(a) of the Disclosure Schedule, and for the Contemplated Transactions, (i) there are no shares of capital stock of the Company authorized, issued or outstanding and (ii) there are no existing options, warrants, calls, pre-emptive rights, subscriptions or other rights, convertible securities, agreements, arrangements or commitments of any character, relating to the issued or unissued capital stock of the Company or any of its Subsidiaries, obligating the Company or any of its Subsidiaries to issue, transfer or sell or cause to be issued, transferred or sold any shares of capital stock or Voting Debt of, or other equity interest in, the Company or any of its Subsidiaries or securities convertible into or exchangeable for such shares or equity interests or obligations of the Company or any of its Subsidiaries to grant, extend or enter into any such option, warrant, call, subscription or other right, convertible security, agreement, arrangement or commitment. Except as set forth in Section 3.3(a) of the Disclosure Schedule, there are no outstanding contractual obligations of the Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire any shares of the capital stock of the Company or any Subsidiary or affiliate of the Company or to provide funds to make any investment (in the form of a loan, capital contribution or otherwise) in any Subsidiary or any other entity. Following the Merger neither the Company nor any of its Subsidiaries will have any obligation to issue, transfer or sell any shares of its capital stock. (b) All of the outstanding shares of capital stock of each of the Subsidiaries are directly owned by the Company, and all such shares have been validly issued and are fully paid and non-assessable and are owned by either the Company or one of its Subsidiaries free and clear of all liens, charges, security interests, options, claims or encum brances of any nature whatsoever. (c) Except as set forth in Section 3.3(c) of the Disclosure Schedule, there are no voting trusts or other agreements or understandings to which the Company or any of its Subsidiaries is a party with respect to the voting of the capital stock of the Company or any of the Subsidiaries. None of the Company or its Subsidiaries is required to redeem, repurchase or otherwise acquire shares of capital stock of the Company, or any of its Subsidiaries, respectively, as a result of the Contemplated Transactions. SECTION 3.4 Reports and Financial Statements. The Company has filed with the SEC, and has heretofore made available to the Parent true and complete copies of, all forms, reports, schedules, statements and other documents required to be filed by it and its Subsidiaries since December 31, 1993 under the Exchange Act and the Securities Act (as such documents have been amended since the time of their filing, collectively, the 'Company SEC Documents'). As of their respective dates or, if amended, as of the date of the last such amendment, the Company SEC Documents, including, without limitation, any financial statements or schedules included therein (a) did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading and (b) complied in all material respects with the applicable requirements of the Exchange Act and the Securities Act, as the case may be, and the applicable rules and regulations of the SEC thereunder. Each of the consolidated financial statements included in the Company SEC Documents have been prepared from, and are in accordance with, the books and records of the Company and/or its consolidated Subsidiaries, comply in all material respects with applicable accounting requirements and with the published rules and regulations of the SEC with respect thereto, have been prepared in accordance with GAAP applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto) and fairly present in all material respects the con solidated financial position and the consolidated results of operations and cash flows (and changes in financial position, if any) of the Company and its consolidated Subsidiaries as at the dates thereof or for the periods 7 presented therein (subject, in the case of unaudited interim financial statements, to normal year end adjustments). SECTION 3.5 Absence of Certain Changes. Except as disclosed in the Company SEC Documents or as set forth in Section 3.5 of the Disclosure Schedule, since December 31, 1996, the Company and its Subsidiaries have conducted their respective businesses and operations in the ordinary course of business consistent with past practice. Since December 31, 1996, there has not occurred (i) any event, change or effect (including the incurrence of any liabilities of any nature, whether or not accrued, contingent or otherwise) having or, which would be reasonably likely to have, in the aggregate, a Material Adverse Effect on the Company and its Subsidiaries taken as a whole; (ii) any declaration, setting aside or payment of any dividend or other distribution (whether in cash, stock or property) with respect to the equity interests of the Company or of any of its Subsidiaries, other than regular quarterly cash dividends or dividends paid by its Subsidiaries; or (iii) any change by the Company or any of its Subsidiaries in accounting principles or methods, except insofar as may be required by a change in GAAP. SECTION 3.6 Consents and Approvals; No Violations. Except as set forth in Section 3.6 of the Disclosure Schedule and for (a) the filing of a pre-merger notification and report form by the Company under the HSR Act and the expiration or termination of the applicable waiting period thereunder, (b) the filing of a Certificate of Merger with the Secretary of State of the State of Delaware in accordance with the DGCL, (c) filings with the SEC and any applicable national securities exchanges or Nasdaq, (d) filings under state securities, 'Blue Sky' or anti-takeover laws, (e) any applicable filings required under the laws of foreign jurisdictions and (f) filings, authorizations, consents or approvals relating to matters which, in the aggregate, are not material to the Company and its Subsidiaries taken as a whole, neither the execution, delivery or performance of this Agreement nor the consummation by the Company of the Contemplated Transactions nor compliance by the Company with any of the provisions hereof will (i) conflict with or result in any breach of any provision of the certificate of incorporation or by-laws or similar organizational documents of the Company or of any of its Subsidiaries, (ii) require any material filing with, or permit, authorization, consent or approval of, any Governmental Authority, (iii) result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, amendment, cancellation or acceleration) under, any of the terms, conditions or provisions of any material Company Agreement or (iv) violate any order, writ, injunction, decree, statute, rule or regulation applicable to the Company, any of its Subsidiaries or any of their properties or assets. SECTION 3.7 No Undisclosed Liabilities. Except (a) as disclosed in Section 3.7 of the Disclosure Schedule, (b) to the extent disclosed in the Company SEC Documents filed prior to the date of this Agreement and (c) for liabilities and obligations incurred in the ordinary course of business consistent with past practice, since December 31, 1996, neither the Company nor any of its Subsidiaries has incurred any liabilities or obligations of any nature, whether or not accrued, contingent or otherwise. Section 3.7 of the Disclosure Schedule sets forth each instrument evidencing indebtedness of the Company and its Subsidiaries which will accelerate or become due or payable, or result in a right of redemption or repurchase on the part of the holder of such indebtedness, or with respect to which any other payment or amount will become due or payable, in any such case with or without due notice or lapse of time, as a result of this Agreement, the Merger or the other Contemplated Transactions. SECTION 3.8 Registration Statement. None of the information provided by the Company for inclusion in the Registration Statement will be false or misleading with respect to any material fact or will omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. SECTION 3.9 Litigation; Compliance with Law. (a) Except (i) as disclosed in Section 3.9(a) of the Disclosure Schedule or (ii) to the extent disclosed in the Company SEC Documents filed prior to the date of this Agreement, there is no suit, claim, action, proceeding, review or investigation pending or, to the knowledge of the Company, threatened against or affecting, the Company or any of its Subsidiaries. (b) The Company and its Subsidiaries have complied in all material respects with all laws, statutes, regulations, rules, ordinances, and judgments, decrees, orders, writs and injunctions, of any court or Governmental Authority relating to any of the property owned, leased or used by them, or applicable 8 to their business, including, but not limited to, equal employment opportunity, discrimination, occupational safety and health, environmental, insurance regulatory, antitrust laws, ERISA and laws relating to Taxes (as defined in Section 3.10). SECTION 3.10 Taxes. (a) All material federal, state, county, local, foreign, and other taxes (including, without limitation, income, profits, premium, estimated, excise, sales, use, occupancy, gross receipts, franchise, ad valorem, severance, capital levy, production, transfer, license, stamp, environmental, withholding, employment, unemployment compensation, payroll related and property taxes, import duties, and other governmental charges and assessments), whether or not measured in whole or in part by net income, and including deficiencies, interest, additions to tax or interest, and penalties with respect thereto (hereinafter 'Taxes' or, individually, a 'Tax'), required to be paid on or before the date hereof by or with respect to the Company or any of its Subsidiaries, including amounts, other than amounts being contested in good faith and for payment of which adequate reserves are reflected in the Company's financial statements included in its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 1997, required to be paid on or before the date hereof with respect to Taxes as a result of any tax sharing agreement or similar arrangement ('Tax Sharing Agreement Amounts') of the Company or any of its Subsidiaries, have been timely paid. (b) All material returns and reports required to be filed by or with respect to the Company or any of its Subsidiaries with respect to Taxes (hereinafter 'Tax Returns' or, individually, a 'Tax Return') on or before the date hereof have been timely filed. No penalties or other charges in a material amount are or will become due with respect to the late filing of any Tax Return of the Company or any of its Subsidiaries or payment of any Tax of the Company or any of its Subsidiaries required to be filed or paid on or before the date hereof. (c) With respect to all Tax Returns filed by or with respect to the Company or any its Subsidiaries, (i) Section 3.10(c) of the Disclosure Schedule sets forth the periods for which the statute of limitations for the assessment of federal Taxes have expired; (ii) except as set forth in Section 3.10(c) of the Disclosure Schedule, no audit is in progress and no extension of time has been executed with respect to any date on which any Tax Return was or is to be filed and no waiver or agreement has been executed for the extension of time for the assessment or payment of any Tax; and (iii) except as set forth in Section 3.10(c) of the Disclosure Schedule, there is no material unassessed deficiency proposed or threatened against the Company or any of its Subsidiaries. (d) Except as set forth in Section 3.10(d) of the Disclosure Schedule, neither the Company nor any of its Subsidiaries has not been and is not a party to any tax sharing agreement, tax indemnification agreement or similar arrangement. (e) Section 3.10(e) of the Disclosure Schedule identifies (i) the common parent of each group of affiliated corporations that filed a consolidated federal income tax return, and the period to which such returns related, that included the Company or any of its Subsidiaries since 1987 and (ii) all material Tax liabilities or issues that have been asserted or proposed by a taxing authority with respect to any such return and all claims with respect to Taxes in a material amount that have been asserted against the Company or any of its Subsidiaries. (f) With regard to any assets or property held or acquired by the Company or any of its Subsidiaries, the Company or such Subsidiary has not filed a consent to the application of Section 341(f) of the Code, or agreed to have Section 341(f)(2) of the Code apply to any disposition of a subsection (f) asset (as such term is defined in Section 341(f)(4) of the Code) owned by the Company or such Subsidiary. (g) The Company and its Subsidiaries have not agreed, and are not required to make, any adjustment under Section 481(a) of the Code by reason of a change in accounting method or otherwise, and there is no application to change any accounting method by the Company or any of its Subsidiaries pending with any taxing authority. The Internal Revenue Service has not proposed any such adjustment or change in method. (h) Reserves and provisions for Taxes reflected in the Company's financial statements included in its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 1997 are adequate. 9 (i) The Company and its Subsidiaries have not been and are not in violation (or with notice or lapse of time or both, would be in violation) of any applicable law relating to the payment or withholding of Taxes relating to employment and have duly and timely withheld from employee salaries, wages and other compensation and timely paid over to the appropriate taxing authorities all amounts required to be so withheld and paid over for all periods under all applicable laws. (j) There are no liens or encumbrances of any kind with respect to Taxes upon any of the assets of the Company and its Subsidiaries (except for liens for Taxes not yet due) or on the capital stock of the Company or any of its Subsidiaries. SECTION 3.11 No Default. Except as disclosed in the Company SEC Documents, the business of the Company and each of its Subsidiaries is not being conducted in default or violation of any term, condition or provision of (a) its respective certificate of incorporation or by-laws or similar organizational documents, or (b) any Company Agreement, excluding from the foregoing clause (b), defaults or violations that would not have a Material Adverse Effect on the Company and its Subsidiaries taken as a whole or would not, or would not be reasonably likely to, materially impair the ability of the Company to consummate the Merger or the other Contemplated Transactions. SECTION 3.12 Contracts. (a) The Company has previously delivered to the Parent true and complete copies of all material Company Agreements and true and correct summaries of all material oral agreements to which the Company or any of its Subsidiaries is a party. Each material Company Agreement is valid, binding and enforceable and in full force and effect in accordance with its terms. Neither the Company nor any of its Subsidiaries is in default in any material respect under any such Company Agreement, nor does any condition exist that with notice or lapse of time or both would constitute such a material default thereunder. To the knowledge of the Company or any of the Subsidiaries, no other party to any such Company Agreement is in default thereunder in any material respect, nor does any condition exist that with notice or lapse of time or both would constitute such a material default thereunder, nor is any such material default threatened. (b) Except as set forth in Section 3.12(b) of the Disclosure Schedule, neither the Company nor any Subsidiary is a party to any Company Agreement that (i) includes any 'change of control' or similar provision which, as a result of the Merger or any other Contemplated Transaction, would result in a violation or breach of, or default (with or without due notice or lapse of time or both) under, such Company Agreement, or give rise to a right to accelerate the terms of payment or the provision of benefits, or enhance the amount of payment or the provision of benefits, thereunder, or (ii) expressly and materially limits the ability of the Company or any of its Subsidiaries to compete in or conduct any line of business or compete with any person or in any geographic area or during any period of time. (c) The Company (i) has satisfied the sales requirements under paragraph 3 of the Stewart's Master Agreement such that the territory subject to the Stewart's Master Agreement is worldwide and (ii) has not failed to achieve the sales requirements under said paragraph 3 which would permit Stewart's to terminate the Stewart's Master Agreement with respect to any territory. SECTION 3.13 Intellectual Property. (a) Section 3.13(a) of the Disclosure Schedule lists (i) all Copyrights, Patents, Trademarks and formulae and processes (other than unregistered Trademarks for which no application for registration is pending) (collectively, the 'Intellectual Property') owned by the Company or any of its Subsidiaries, specifying as to each such item, as applicable: (A) the category of Intellectual Property; (B) the owner of the item; (C) the jurisdictions in which the item is issued or registered or in which any applica tion for issuance or registration has been filed, including the respective issuance, registration or application number; (D) the date of application, issuance or registration and the expiration date of the item; and (E) with respect to any Trademarks, the class or classes of goods or services on which each such Trademark is or is intended to be used; (ii) all material licenses, sublicenses and other agreements ('IP Licenses') under which the Company or any of its Subsidiaries is either a licensor or licensee of any Intellectual Property; and (iii) all agreements involving Intellectual Property that are currently in negotiation or proposed by the Company or any of its Subsidiaries. Neither the Company nor any of its Subsidiaries owns any Copyrights or Patents or is a party to any license for a Copyright or Patent either as a licensor or as a licensee. The Company has previously delivered to the Parent true and complete 10 copies of all material documents evidencing Intellectual Property and IP Licenses (including all modifications, amendments and supplements). (b) Except as set forth in Section 3.13(b) of the Disclosure Schedule, the Company and its Subsidiaries own or have a license for all the Intellectual Property that is material to the business of the Company and its Subsidiaries as presently conducted or being developed, free and clear of any liens. (c) None of the Company or its Subsidiaries or, to the knowledge of the Company, any other party is in breach of or default under any IP License. Each IP License is now, and immediately following the consummation of the Contemplated Transactions will be, valid and in full force and effect. (d) No Claim is pending or, to the knowledge of the Company, threatened, that challenges the validity, enforceability, ownership of or right to use, sell, license or dispose of any Intellectual Property, nor does the Company know of any valid grounds for any such Claim. (e) To the knowledge of the Company, neither the Company nor any of its Subsidiaries has infringed upon or otherwise violated the intellectual property rights of third parties or has received or has been the subject of any Claim, charge or notice alleging any such infringement or other violation, and the Company knows of no basis for any such Claim. To the knowledge of the Company, the continued use of the Intellectual Property by the Company or the relevant Subsidiary after the Effective Time will not infringe upon or otherwise violate any intellectual property rights of third parties as a result of the continued operation of the businesses of the Company and its Subsidiaries as presently conducted. (f) To the knowledge of the Company, no third party is infringing upon or otherwise violating the Intellectual Property rights of the Company or any of its Subsidiaries. (g) All registered Trademarks held by the Company or any of its Subsidiaries are valid and subsisting. The Company and its Subsidiaries have taken all necessary action to maintain and protect each item of Intellectual Property owned or used by the Company or any of its Subsidiaries. (h) To the knowledge of the Company, no Patent, statute, rule, regulation, code or standard is pending or proposed that would have a material adverse effect on the validity, enforceability, ownership of or right to use, sell, license or dispose of any Intellectual Property. (i) None of the material formulae and processes of the Company or any of its Subsidiaries has been disclosed to any Person other than its bottlers, suppliers and consultants and Stewart's. SECTION 3.14 Employee Benefit Plans. (a) With respect to each Company Benefit Plan, the Company has previously provided to the Parent true and complete copies of (i) all plan texts and agreements and related trust agreements, if any, (ii) all summary plan descriptions, if any, (iii) the most recent annual report (including all schedules thereto), if any, (iv) the most recent annual audited financial statement, if any, (v) if the plan is intended to qualify under Code Section 401(a) or 403(a), the most recent determination letter, if any, received from the IRS and (vi) all material communications with any Governmental Authority (including, without limitation, the PBGC and the IRS). (b) There are no Company Benefit Plans that provide retiree medical or life or pension coverage (other than coverage mandated by law) or that are subject to any of Code Section 412, ERISA Section 302 or Title IV of ERISA. (c) Each Company Benefit Plan conforms in all material respects to, and its administration is in all material respects in compliance with, all applicable laws and regulations, except for such failures to conform or comply that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect with respect to the Company and its Subsidiaries taken as a whole. (d) Except as disclosed in the Company SEC Documents or as set forth in Section 3.14(d) of the Disclosure Schedule, the consummation of the Contemplated Transactions will not (a) entitle any current or former Company Employee to severance pay, unemployment compensation or any similar payment or (b) accelerate the time of payment or vesting, or increase the amount of any compensation due to, any current or former Company Employee. 11 SECTION 3.15 Inventory and Supplies. Except as set forth on Section 3.15 of the Disclosure Schedule, the inventory of each of the Company and its Subsidiaries is in good and merchantable condition, and suitable and usable or salable in the ordinary course of business for the purposes for which it is intended and none of such inventory is obsolete, damaged, or defective, subject to an inventory reserve computed in a manner consistent with past practice and reasonably estimated to reflect inventory values. Section 3.15 of the Disclosure Schedule sets forth the location of all of the inventory of the Company and its Subsidiaries. The Company has no knowledge of any adverse condition affecting the supply of materials available to the Company and its Subsidiaries. SECTION 3.16 Receivables. All accounts and notes receivable of the Company and its Subsidiaries (a) have arisen in the ordinary course of business of the Company and its Subsidiaries and (b) subject only to a reserve for bad debts computed in a manner consistent with past practice and reasonably estimated to reflect the probable results of collection, have been collected or are collectible in the ordinary course of business of the Company and its Subsidiaries in the aggregate recorded amounts thereof in accordance with their terms. SECTION 3.17 Case Sales. Section 3.17 of the Disclosure Schedule sets forth the true and correct amount of the Company's aggregate sales of cases of soft drinks under the 'Stewart's' trademark for the eighteen (18) months ended December 31, 1991, each of fiscal years 1992, 1993, 1994, 1995 and 1996 and the first five (5) months of 1997. SECTION 3.18 Transactions with Affiliates. Except to the extent disclosed in the Company SEC Documents filed prior to the date of this Agreement, since December 31, 1996, there have been no material transactions, agreements, arrangements or understandings between the Company or its Subsidiaries, on the one hand, and the Company's affiliates (other than wholly owned Subsidiaries of the Company) or any other Person, on the other hand, that would be required to be disclosed under Item 404 of Regulation S-K under the Securities Act. SECTION 3.19 State Takeover Statutes. The Board of Directors of the Company has approved the Merger and this Agreement, and the entering into, and performance, by the Parent and Mergerco of the Stockholders Agreement. Such approval is sufficient to render inapplicable to the Merger, this Agreement and the entering into, and performance, by the Parent and Mergerco of the Stockholders Agreement and any other transactions contemplated by this Agreement and the Stockholders Agreement, the restrictions on business combinations provided for in Section 203. Other than Section 203, no state takeover statute or similar statute or regulation applies or purports to apply to the Merger, this Agreement or the Stockholders Agreement. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PARENT AND MERGERCO The Parent and Mergerco, jointly and severally, represent and warrant to the Company as follows: SECTION 4.1 Organization and Good Standing. Each of the Parent and its Subsidiaries is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation, and has all requisite corporate or other power and authority and all necessary governmental approvals to own, lease and operate its properties and to carry on its business as now being conducted, except where the failure to be so organized, existing and in good standing or to have such power, authority and governmental approvals would not have a Material Adverse Effect on the Parent and its Subsidiaries taken as a whole. Each of the Parent and its Subsidiaries is duly qualified or licensed to do business and in good standing in each jurisdiction in which the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification or licensing necessary, except where the failure to be so duly qualified or licensed and in good standing would not have a Material Adverse Effect on the Parent and its Subsidiaries taken as a whole. Mergerco has not heretofore conducted any business other than in connection with this Agreement and the Contemplated Transactions. SECTION 4.2 Corporate Authorization; Validity of Agreement; Necessary Action. Each of the Parent and Mergerco has full corporate power and authority to execute and deliver this Agreement and to 12 consummate the Contemplated Transactions. The execution, delivery and performance by the Parent and Mergerco of this Agreement and the consummation by the Parent and Mergerco of the Contemplated Transactions have been duly and validly authorized by their respective Boards of Directors and no other corporate action or proceedings on the part of the Parent and Mergerco is necessary to authorize the execution and delivery by the Parent and Mergerco of this Agreement, and the consummation by the Parent and Mergerco of the Contemplated Transactions. This Agreement has been duly executed and delivered by the Parent and Mergerco, and assuming this Agreement constitutes a valid and binding obligation of the Company, constitutes a valid and binding obligation of each of the Parent and Mergerco, enforceable against each of them in accordance with its terms, except that (i) such enforcement may be subject to applicable bankruptcy, insolvency or other similar laws, now or hereafter in effect, affecting creditors rights generally, and (ii) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought. SECTION 4.3 Capitalization. (a) The authorized capital stock of the Parent consists of 60,000,000 shares of Parent Class A Common Stock, 16,000,000 shares of Parent Class B Common Stock, par value $.10 per share, 25,000,000 shares of Preferred Stock, of which 5,982,866 shares have been designated Redeemable Preferred Stock. As of June 17, 1997, 23,998,221 shares of Parent Class A Common Stock and 5,997,662 shares of Parent Class B Common Stock were issued and outstanding, and no shares of Preferred Stock were issued or outstanding. As of March 31, 1997, options to acquire an aggregate of 8,849,499 shares of Parent Class A Common Stock had been issued. The authorized capital stock of Mergerco consists solely of 1,000 shares of Mergerco Common Stock, all of which, as of the date hereof, are issued and outstanding and held by the Parent. All of the outstanding shares of capital stock of the Parent and Mergerco (including Mergerco) have been duly authorized and validly issued and are fully paid and non-assessable. (b) The shares of the Parent Class A Common Stock to be issued pursuant to the Merger will be duly authorized, validly issued, fully paid and non-assessable and not subject to preemptive rights. SECTION 4.4 Reports and Financial Statements. The Parent has filed with the SEC, and has heretofore made available to the Company true and complete copies of, all forms, reports, schedules, statements and other documents required to be filed by it and its Subsidiaries since December 31, 1993 under the Exchange Act or the Securities Act (as such documents have been amended since the time of their filing, collectively, the 'Parent SEC Documents'). As of their respective dates or, if amended, as of the date of the last such amendment, the Parent SEC Documents, including, without limitation, any financial statements or schedules included therein (a) did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading and (b) complied in all material respects with the applicable requirements of the Exchange Act and the Securities Act, as the case may be, and the applicable rules and regulations of the SEC thereunder. Each of the consolidated financial statements included in the Parent SEC Documents have been prepared from, and are in accordance with, the books and records of the Parent and/or its consolidated Subsidiaries, comply in all material respects with applicable accounting requirements and with the published rules and regulations of the SEC with respect thereto, have been prepared in accordance with GAAP applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto) and fairly present in all material respects the consolidated financial position and the consolidated results of operations and cash flows (and changes in financial position, if any) of the Parent and its consolidated Subsidiaries as at the dates thereof or for the periods presented therein (subject, in the case of unaudited interim financial statements, to normal year end adjustments). SECTION 4.5 Absence of Certain Changes. Except to the extent set forth in the Parent SEC Documents filed prior to the date of this Agreement, since December 31, 1996, the Parent and its Subsidiaries have conducted their respective businesses in the ordinary course of business consistent with past practice. Since December 31, 1996, there has not occurred (a) any event, change or effect (including the incurrence of any liabilities of any nature, whether or not accrued, contingent or otherwise) having or, which would be reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on the Parent and its Subsidiaries taken as a whole; (b) any declaration, setting 13 aside or payment of any dividend or other distribution (whether in cash, stock or property) with respect to the equity interests of the Parent or of any of its Subsidiaries other than regular quarterly cash dividends or dividends paid by wholly owned Subsidiaries; or (c) any change by the Parent or any of its Subsidiaries in accounting principles or methods, except insofar as may be required by a change in GAAP. SECTION 4.6 Consents and Approvals; No Violations. Except for (a) the filing of a pre-merger notification and report form by the Parent under the HSR Act, and the expiration or termination of the applicable waiting period thereunder, (b) the filing of a Certificate of Merger with the Secretary of the State of the State of Delaware in accordance with the DGCL, (c) filings with the SEC and any applicable national securities exchanges, (d) filings under state securities, 'Blue Sky' or antitakeover laws, (e) any applicable filings required under the laws of foreign jurisdictions and (f) filings, authorizations, consents or approvals relating to matters which, in the aggregate, are not material to the Parent and its Subsidiaries (including Mergerco but excluding the Company and its Subsidiaries) taken as a whole, neither the execution, delivery or performance of this Agreement by the Parent and Mergerco nor the consummation by the Parent and Mergerco of the Contemplated Trans actions nor compliance by the Parent and Mergerco with any of the provisions hereof will (i) conflict with or result in any breach of any provision of the certificate of incorporation or by-laws of the Parent and any of its Subsidiaries, (ii) require any filing with, or permit, authorization, consent or approval of, any Governmental Authority (except where the failure to obtain such permits, authorizations, consents or approvals or to make such filings would not have a Material Adverse Effect on the Parent and its Subsidiaries taken as a whole or would not, or would not be reasonably likely to, materially impair the ability of the Parent and Mergerco to consummate the Merger or the other Contemplated Transactions), (iii) result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, amendment, cancellation or acceleration) under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, guarantee, other evidence of indebtedness, lease, license, contract, agreement or other in strument or obligation to which the Parent or any of its Subsidiaries is a party or by which any of them or any of their properties or assets may be bound or (iv) violate any order, writ, injunction, decree, statute, rule or regulation applicable to the Parent, any of its Subsidiaries or any of their properties or assets, except in the case of clauses (iii) and (iv) for violations, breaches or defaults which would not have a Material Adverse Effect on the Parent and its Subsidiaries taken as a whole or would not, or would not be reasonably likely to, materially impair the ability of the Parent or Mergerco to consummate the Merger or the other Contemplated Transactions. SECTION 4.7 Registration Statement. The Registration Statement (and any amendment thereof or supplement thereto), at the date it becomes effective and at the time of the Meeting, will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading; provided, however, that no representation is made by the Parent or Mergerco with respect to statements made therein based on information supplied by the Company for inclusion in the Registration Statement. Subject to the proviso set forth in the preceding sentence, the Registration Statement will comply in all material respects with the provisions of the Securities Act and the rules and regulations thereunder. SECTION 4.8 Tax Representations. (a) Mergerco is a wholly owned subsidiary of the Parent organized for the purpose of consummating the Merger and has no assets other than (i) Parent Class A Common Stock, if any, and (ii) assets permitted under Treasury Regulation 1.368-2(j)(3)(iii). (b) The Parent has no plan or intention not to (i) continue at least a principal historic business line of the Company or (ii) use at least a significant portion of the Company's historical assets in a business of the Parent, in each case within the meaning of Treasury Regulation 1.368-1(d). 14 ARTICLE V COVENANTS SECTION 5.1 Interim Operations of the Company. The Company covenants and agrees that, except (i) as expressly provided in this Agreement, (ii) with the prior written consent of the Parent or (iii) as set forth on Section 5.1 of the Disclosure Schedule, after the date hereof and prior to the Effective Time: (a) the business of the Company and its Subsidiaries, including, without limitation, investment practices and policies, shall be conducted only in the ordinary course of business consistent with past practice and, each of the Company and its Subsidiaries shall use all reasonable efforts to preserve its business organization intact and maintain its existing relations with material customers, distributors, suppliers, employees, creditors and business partners; (b) the Company will not, directly or indirectly, split, combine or reclassify the outstanding Company Common Stock, or any outstanding capital stock of any of the Subsidiaries of the Company; (c) neither the Company nor any of its Subsidiaries shall (i) amend its certificate of incorporation or by-laws or similar organizational documents; (ii) declare, set aside or pay any dividend or other distribution payable in cash, stock or property with respect to its capital stock other than dividends paid by the Company's wholly owned Subsidiaries to the Company; (iii) issue, sell, transfer, pledge, dispose of or encumber any additional shares of, or securities convertible into or exchangeable for, or options, warrants, calls, commitments or rights of any kind to acquire, any shares of capital stock of any class of the Company or its Subsidiaries, other than issuances pursuant to exercise of stock options outstanding on the date hereof as disclosed in Section 3.3 hereof; (iv) transfer, lease, license, sell, mortgage, pledge, dispose of, or encumber any assets that are material to the Company and its Subsidiaries taken as a whole other than sales of investment assets in the ordinary course of business consistent with past practice; or (v) redeem, purchase or otherwise acquire directly or indirectly any of its capital stock; (d) neither the Company nor any of its Subsidiaries shall (i) grant any increase in the compensation payable or to become payable by the Company or any of its Subsidiaries to any officer or employee other than scheduled annual increases in the ordinary course of business consistent with past practice in an amount not to exceed five percent (5%) for any individual; (ii) adopt any new, or amend or otherwise increase, or accelerate the payment or vesting of the amounts payable or to become payable under any Company Benefit Plan; (iii) enter into any, or amend any existing, employment, consulting or severance agreement with or, except in accordance with the existing written policies of the Company, grant any severance or termination pay to any officer, director or employee of the Company or any of its Subsidiaries; (iv) make any additional contributions to any grantor trust created by the Company to provide funding for non-tax-qualified employee benefits or compensation; or (v) provide any severance program to any Subsidiary which does not have a severance program as of the date of this Agreement; (e) neither the Company nor any of its Subsidiaries shall modify, amend or terminate any of the material Company Agreements or waive, release or assign any material rights or claims, except in the ordinary course of business consistent with past practice; (f) neither the Company nor any of its Subsidiaries shall permit any material insurance policy naming it as a beneficiary or a loss payable payee to be cancelled or terminated, except in the ordinary course of business consistent with past practice; (g) neither the Company nor any of its Subsidiaries shall: (i) incur or assume any debt except for borrowings under its existing credit facility in an amount exceeding $100,000 without the written consent of the Parent, which consent shall not be unreasonably withheld, provided that the Company may extend the term of its existing credit facility for a period not to exceed one (1) year so long as the commitment thereunder is not increased; (ii) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other Person; (iii) make any loans, advances or capital contributions to, or 15 investments in, any other Person (other than to wholly owned Subsidiaries of the Company, or customary loans or advances to employees in accordance with past practice not to exceed $25,000 in the aggregate); or (iv) enter into any material commitment (including, but not limited to, any capital expenditure, 'take-or-pay' contract or purchase of assets) in excess of $100,000, provided that the Company may (x) purchase inventory in the ordinary course of business consistent with past practice (without any 'take-or-pay' commitment) and (y) enter into a lease for office space in the greater Denver, Colorado area not to exceed 4,500 square feet, at a cost per square foot per year not to exceed $17.00 and for a term not to exceed three (3) years; (h) neither the Company nor any of its Subsidiaries shall change any of the accounting principles used by it unless required by GAAP; (i) neither the Company nor any of its Subsidiaries shall pay, discharge or satisfy any material claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction of any such claims, liabilities or obligations, (x) reflected or reserved against in, or contemplated by, the consolidated financial statements (or the notes thereto) of the Company and its consolidated Subsidiaries, (y) incurred in the ordinary course of business consistent with past practice or (z) which are legally required to be paid, discharged or satisfied; (j) neither the Company nor any of its Subsidiaries will adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other material reorganization of the Company or any of its Subsidiaries or any agreement relating to a Acquisition Proposal (other than the Merger); (k) neither the Company nor any of its Subsidiaries will engage in any transaction with, or enter into any agreement, arrangement, or understanding with, directly or indirectly, any of the Company's affiliates, including, without limitation, any transactions, agreements, arrangements or understandings with any affiliate or other Person covered under Item 404 of Regulation S-K under the Securities Act that would be required to be disclosed under such Item 404 other than such transactions of the same general nature, scope and magnitude as are disclosed in the Company SEC Documents; (l) except upon the prior written consent of the Parent, the Company shall not make any Tax election that would have a Material Adverse Effect on the Company or any of its Subsidiaries; and (m) neither the Company nor any of its Subsidiaries will enter into an agreement, contract, commitment or arrangement to do any of the foregoing, or to authorize, recommend, propose or announce an intention to do any of the foregoing. SECTION 5.2 Access to Information. The Company shall (and shall cause each of its Subsidiaries to) afford to the officers, employees, accountants, counsel, financing sources and other representatives of the Parent, reasonable access, during normal business hours, during the period prior to the Effective Time, to all of its and its Subsidiaries' properties, books, contracts, commitments and records (including any Tax Returns or other Tax related information pertaining to the Company and its Subsidiaries) and, during such period, the Company shall (and shall cause each of its Subsidiaries to) furnish promptly to the Parent (a) a copy of each report, schedule, registration statement and other document filed or received by it during such period pursuant to the requirements of the federal securities laws or any insurance regulatory laws and (b) all other information concerning its business, properties and personnel as the Parent may reasonably request (including any Tax Returns or other Tax related information pertaining to the Company and its Subsidiaries). The Parent will hold any such information which is nonpublic in confidence in accordance with the provisions of the Confidentiality Agreement. SECTION 5.3 Consents and Approvals. Each of the Company, the Parent and Mergerco will take all reasonable actions necessary to comply promptly with all legal requirements which may be imposed on it with respect to this Agreement and the Contemplated Transactions which actions shall include, without limitation, furnishing all information in connection with approvals of or filings with any Governmental Authority, including, without limitation, any schedule, or reports required to be filed with the SEC, and will promptly cooperate with and furnish information to each other in connection with any such requirements imposed upon any of them or any of their Subsidiaries in connection with 16 this Agreement and the Contemplated Transactions. Each of the Company, the Parent and Mergerco will, and will cause its Subsidiaries to, take all reasonable actions necessary to obtain any consent, authorization, order or approval of, or any exemption by, any Governmental Authority or other public or private third party, required to be obtained or made by the Parent, Mergerco, the Company or any of their Subsidiaries in connection with the Merger or the taking of any action contemplated thereby or by this Agreement. SECTION 5.4 No Solicitation. (a) The Company shall not directly or indirectly, and shall not authorize or permit any of its Subsidiaries or any officer, director, employee, agent, investment banker, financial advisor, attorney, accountant, broker, finder or other representative (collectively, 'Representatives') of any of the Company or any of its Subsidiaries (collectively, the 'Acquired Corporations') directly or indirectly to, (i) solicit, initiate, encourage or induce the making, submission or announcement of any Acquisition Proposal or take any action that could reasonably be expected to lead to an Acquisition Proposal, (ii) furnish any nonpublic information regarding any of the Acquired Corporations to any Person in connection with or in response to an Acquisition Proposal, (iii) engage in discussions with any Person with respect to any Acquisition Proposal, (iv) approve, endorse or recommend (or agree to approve, endorse or recommend) any Acquisition Proposal or (v) enter into any letter of intent or similar document or any agreement contemplating or otherwise relating to any Acquisition Proposal; provided, however, that this Section 5.4(a) shall not prohibit the Company from furnishing nonpublic information regarding the Acquired Corporations to, or entering into discussions with, any Person in response to an unsolicited bona fide written Acquisition Proposal submitted (and not withdrawn) by such Person if (1) the Board of Directors of the Company concludes in good faith, based upon the advice of its financial advisor, that such Acquisition Proposal would result in a transaction that is more favorable from a financial point of view to the Company's stockholders than the Merger, (2) the Board of Directors from the Company concludes in good faith, after consultation with outside legal counsel, that such action is required in order for the Board of Directors of the Company to comply with its fiduciary obligations to the Company's stockholders under applicable law, (3) prior to furnishing any such nonpublic information to, or entering into discussions with, such Person, the Company gives the Parent written notice of the identity of such Person and of the Company's intention to furnish nonpublic information to, or enter into discussions with, such Person, and the Company receives from such Person an executed confidentiality agreement containing customary limitations on the use and disclosure of all nonpublic written and oral information furnished to such Person by or on behalf of the Company, and (4) prior to furnishing any such nonpublic information to such Person, the Company furnishes such nonpublic information to the Parent (to the extent such nonpublic information has not been previously furnished by the Company to the Parent). (b) The Company shall promptly advise the Parent orally and in writing of any Acquisition Proposal (including the identify of the Person making or submitting such Acquisition Proposal and the terms thereof) that is made or submitted by any Person (such Notification referred to as a 'Transaction Notice'). The Company agrees that it will not furnish confidential information to any Person or enter into negotiations with any Person with respect to an Acquisition Proposal until it has delivered to the Parent a Transaction Notice and forty-eight (48) hours have passed since the Parent's receipt of such Transaction Notice. (c) As of the date of this Agreement, the Company shall immediately cease and cause to be terminated any existing discussions with any Person that relate to any Acquisition Proposal. (d) Notwithstanding anything to the contrary contained in this Agreement, the Company may give a copy of this Section 5.4 to any Person who submits an unsolicited bona fide written Acquisition Proposal to the Company if, prior to giving a copy of this Section 5.4 to such Person, the Company gives the Parent written notice that the Company intends to give copy of this Section 5.4 to such Person. SECTION 5.5 Additional Agreements. Subject to the terms and conditions herein provided, each of the parties hereto agrees to use its best efforts to take, or cause to be taken, all action and to do, or cause to be done, all things necessary, proper or advisable, whether under applicable laws and regulations or otherwise, or to remove any injunctions or other impediments or delays, legal or otherwise, to consummate and make effective the Merger and the other Contemplated Transactions. In 17 case at any time after the Effective Time any further action is necessary or desirable to carry out the purposes of this Agreement, the proper officers and directors of the Company, the Parent and Mergerco shall use their best efforts to take, or cause to be taken, all such necessary actions. SECTION 5.6 Notification of Certain Matters. The Company shall give prompt notice to the Parent, and the Parent shall give prompt notice to the Company, of (a) the occurrence, or non-occurrence of any event the occurrence or non-occurrence of which would cause any representation or warranty contained in this Agreement to be untrue or inaccurate in any material respect at or prior to the Effective Time and (b) any material failure of the Company or the Parent, as the case may be, to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it hereunder; provided, however, that the delivery of any notice pursuant to this Section 5.6 shall not limit or otherwise affect the remedies available hereunder to the party receiving such notice. SECTION 5.7 Indemnification of Directors and Officers. The certificate of incorporation and by-laws of the Surviving Corporation and each of its Subsidiaries shall contain provisions no less favorable with respect to indemnification of directors, officers, agents and employees and other individuals than those set forth in the certification of incorporation and by-laws of the Company and its Subsidiaries as in effect on the date hereof, which provisions shall not be amended, repealed or otherwise modified for a period of five (5) years after the Effective Time in any manner that would adversely affect the rights thereunder of individuals who at or prior to the Effective Time were directors, officers, agents or employees of the Company or any of its Subsidiaries or who were otherwise entitled to indemnification pursuant to the certificate of incorporation and by-laws (or equivalent governing instruments) of the Company or any of its Subsidiaries; provided, that if the Surviving Corporation or any of its subsidiaries shall not have the financial resources to satisfy its indemnification obligations to such directors, officers, agents or employees or other individuals as provided under its certificate of incorporation and by-laws in accordance with this Section 5.7, the Parent agrees that it shall provide such indemnification of such Persons to the extent set forth in such certificate of incorporation and by-laws in accordance with this Section 5.7. SECTION 5.8 Rule 145 Affiliates. At least 30 days prior to the Closing Date, the Company shall deliver to the Parent a letter identifying, to the best of the Company's knowledge, all Persons who are, at the time of the Meeting, deemed to be 'affiliates' of the Company for purposes of Rule 145 under the Securities Act (the 'Company Affiliates'). The Company shall use all reasonable efforts to cause each Person who is identified as a Company Affiliate to deliver to the Parent prior to the Closing Date an agreement substantially in the form of Exhibit B to this Agreement. SECTION 5.9 Stock Exchange Listing. The Parent shall use all reasonable efforts to cause the shares of the Parent Class A Common Stock issued in the Merger and the shares of the Parent Class A Common Stock to be reserved for issuance upon exercise of the Substitute Options to be approved for listing on the NYSE prior to the Closing Date. SECTION 5.10 Tax-Free Reorganization. The Company shall not intentionally take or cause to be taken any action before the Effective Time which would disqualify the Merger as a 'reorganization' within the meaning of Section 368(a) of the Code. ARTICLE VI CONDITIONS PRECEDENT SECTION 6.1 Conditions to the Obligations of Each Party. The obligations of the Company, on the one hand, and the Parent, and Mergerco on the other hand, to consummate the Merger are subject to the satisfaction (or, if permissible, waiver by the party for whose benefit such conditions exist) of the following conditions at or prior to the Effective Time: (a) this Agreement and the Merger shall have been approved and adopted by the Required Stockholder Vote in accordance with the DGCL; (b) no court, arbitrator or governmental body, agency or official shall have issued any order, decree or ruling and there shall not be any statute, rule or regulation, restraining, enjoining or prohibiting the consummation of the Merger; 18 (c) the Registration Statement shall have become effective under the Securities Act and no stop order suspending effectiveness of the Registration Statement shall have been issued and no proceeding for that purpose shall have been initiated or threatened by the SEC; (d) any waiting period applicable to the Merger under the HSR Act shall have expired or been terminated; (e) all actions by or in respect of or filing with any Governmental Authority required to permit the consummation of the Merger shall have been obtained and such approval shall be in full force and effect; and (f) the shares of Parent Class A Common Stock to be issued in the Merger shall have been approved for listing on the NYSE, subject to official notice of issuance. SECTION 6.2 Conditions to the Obligations of the Parent and Mergerco. The obligations of the Parent and Mergerco to consummate the Merger are subject to the satisfaction (or waiver by the Parent) of the following further conditions: (a) the representations and warranties of the Company shall have been true and accurate in all material respects as of the Effective Time as if made at and as of such time (except for those representations and warranties that address matters only as of a particular date or only with respect to a specific period of time which need only be true and accurate as of such date or with respect to such period); (b) the Company shall have performed in all material respects its obligations hereunder required to be performed by it at or prior to the Effective Time; (c) since December 31, 1996, except as set forth in Section 3.5 of the Disclosure Schedule, there shall not have occurred any event, change or effect having, or which would be reasonably likely to have, in the aggregate, a Material Adverse Effect on the Company and its Subsidiaries, taken as a whole; (d) the Parent shall have received a certificate signed by an executive officer of the Company to the effect of Sections 6.2(a), (b) and (c); (e) there shall not have been any action taken, or any statute, rule, regulation, legislation, interpretation, judgment, order or injunction enacted, entered, enforced, promulgated, amended, issued or deemed applicable to the Merger by any domestic legislative body, court, government or governmental, administrative or regulatory authority or agency (i) restraining or preventing the carrying out of the Contemplated Transactions, (ii) prohibiting the Parent's ownership or operation of all or any material portion of its or the Company's businesses or assets, or compelling the Parent to dispose of or hold separate all or any material portion of the Parent's or the Company's businesses or assets as a result of the Contemplated Transactions; (iii) making acquisition of the shares of Company Common Stock pursuant to the Merger illegal; (iv) prohibiting the Parent effectively from acquiring or holding or exercising full rights of ownership of the shares of Company Common Stock, including, without limitation, the right to vote the shares of Company Common Stock acquired by it pursuant to the Merger on all matters properly presented to the stockholders of the Company; (v) prohibiting the Parent or any of its Subsidiaries or affiliates from effectively controlling in any material respect the businesses or operations of the Company, the Parent or their respective subsidiaries; or (vi) which would impose any condition which would materially adversely affect the business of the Company or (as a condition of consummating the Contemplated Transactions) the business of the Parent and its Subsidiaries taken as a whole; (f) the Company's Board of Directors shall not have withdrawn or modified its position with respect to the Merger; (g) the Parent shall have received an opinion of Krys Boyle Freedman Scott & Sawyer, P.C. in scope and substance substantially in the form agreed to by the Company and the Parent prior to the date hereof; (h) the Average Parent Share Price shall not be less than $15.00 per share; (i) the holders of no greater than seven and one-half percent (7.5%) of the shares of Company Common Stock outstanding on the record date for the Meeting (x) shall have demanded their 19 appraisal rights with respect to their shares of Company Common Stock pursuant to, and otherwise complied with the provisions of, subsection (d) of Section 262, and (y) shall not have voted in favor of or consented to the Merger; or (j) no suit, claim, action or proceeding with respect to the Merger or the other Contemplated Transactions, or the Company or any of its Subsidiaries or any of their properties or assets, shall have been instituted or threatened which could reasonably be expected to have a Material Adverse Effect on the Company and its Subsidiaries taken as a whole or would, or would be reasonably likely to, materially impair the ability of the Company to consummate the Merger or the other Contemplated Transactions. SECTION 6.3 Conditions to the Obligations of the Company. The obligations of the Company to consummate the Merger are subject to the satisfaction (or waiver by the Company) of the following further conditions: (a) the representations and warranties of the Parent and Mergerco shall be true and accurate in all material respects as of the Effective Time as if made at and as of such time (except for those representations and warranties that address matters only as of a particular date or only with respect to a specific period of time which need only be true and accurate as of such date or with respect to such period); (b) each of the Parent and Mergerco shall have performed in all material respects all of the respective obligations hereunder required to be performed by the Parent or Mergerco, as the case may be, at or prior to the Effective Time; (c) since December 31, 1996, there shall not have occurred any event, change or effect having, or which would be reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on the Parent and its Subsidiaries taken as a whole; (d) the Company shall have received a certificate signed by an executive officer of the Parent as to Sections 6.3(a), (b) and (c); (e) the Company shall have received an opinion of Paul, Weiss, Rifkind, Wharton & Garrison in scope and substance substantially in the form agreed to by the Parent and the Company prior to the date hereof; (f) the Company shall have received an opinion of Sherman & Howard L.L.C. to the effect that the Merger will qualify as a 'reorganization' within the meaning of Section 368 of the Code; and (g) no suit, claim, action or proceeding with respect to the Merger or the other Contemplated Transactions, or the Parent or any of its Subsidiaries or any of their properties or assets, shall have been instituted which could reasonably be expected to have a Material Adverse Effect on the Parent and its Subsidiaries taken as a whole, or would be reasonably likely to materially impair the ability of the Parent to consummate the Merger or the other Contemplated Transactions. ARTICLE VII TERMINATION SECTION 7.1 Termination. Anything herein or elsewhere to the contrary notwithstanding, this Agreement may be terminated and the Merger contemplated herein may be abandoned at any time prior to the Effective Time, whether before or after stockholder approval thereof: (a) By the mutual consent of the Board of Directors of the Parent and the Board of Directors of the Company; (b) By either of the Board of Directors of the Company or the Board of Directors of the Parent: (i) if the Merger shall not have occurred on or prior to December 31, 1997; provided, however, that the right to terminate this Agreement under this Section 7.1(b)(i) shall not be available to any party whose failure to fulfill any obligation under this Agreement has been the cause of, or resulted in, the failure of the Merger to occur on or prior to such date; 20 (ii) if a complete Registration Statement shall not have been filed with the SEC on or before October 1, 1997; or (iii) if any Governmental Authority shall have issued an order, decree or ruling or taken any other action (which order, decree, ruling or other action the parties hereto shall use their best efforts to lift), in each case permanently restraining, enjoining or otherwise prohibiting the Contemplated Transactions and such order, decree, ruling or other action shall have become final and non-appealable; (c) By the Board of Directors of the Company: (i) if the Parent or Mergerco (x) breaches or fails in any material respect to perform or comply with any of its material covenants and agreements contained herein or (y) breaches its representations and warranties in any material respect and such breach would have or would be reasonably likely to have a Material Adverse Effect on the Parent and its Subsidiaries taken as a whole, in each case such that the conditions set forth in Section 6.1 or Section 6.3 would not be satisfied; provided, however, that if any such breach is curable by the breaching party through the exercise of the breaching party's best efforts and for so long as the breaching party shall be so using its best efforts to cure such breach, the Company may not terminate this Agreement pursuant to this Section 7.1(c)(i); (ii) if the Board of Directors of the Company determines in good faith, after consultation with (x) outside legal counsel, that termination of the Agreement is required for the Board of Directors of the Company to satisfy its fiduciary obligations to the Company's stockholders under applicable law by reason of an unsolicited bona fide Acquisition Proposal having been made and (y) its financial advisor that such Acquisition Proposal would result in a transaction that is more favorable than the Merger from a financial point of view to the Company's stockholders; provided that the Company shall have complied with the provisions of Section 5.4 and shall notify the Parent at least five (5) days in advance of its intention to terminate this Agreement pursuant to this Section 7.1(c)(ii) or to enter into a definitive agreement with respect to such Acquisition Proposal; and provided, further, that within such five (5) day period the Parent has not made a competing proposal which is at least as favorable to the Company's stockholders from a financial point of view as such Acquisition Proposal; (iii) if the Company fails to obtain the Required Stockholder Vote at the Meeting. (d) By the Board of Directors of the Parent: (i) if the Company (x) breaches or fails in any material respect to perform or comply with any of its material covenants and agreements contained herein or (y) breaches its representations and warranties in any material respect and such breach would have or would be reasonably likely to have a Material Adverse Effect on the Company and its Subsidiaries taken as a whole, in each case such that the conditions set forth in Section 6.1 or Section 6.2 would not be satisfied; provided, however, that if any such breach is curable by the Company through the exercise of the Company's best efforts and for so long as the Company shall be so using its best efforts to cure such breach, the Parent may not terminate this Agreement pursuant to this Section 7.1(d)(i); (ii) if (A) the Board of Directors of the Company shall have withdrawn, or modified or changed in a manner adverse to the Parent or Mergerco its approval or recommendation of this Agreement or the Merger or shall have recommended an Acquisition Proposal or other business combination, (B) the Company shall have received a bona fide written Acquisition Proposal which has not been rejected by the Board of Directors of the Company within fourteen (14) days after receipt thereof, or (C) prior to the certification of the vote of the Company's stockholders to approve the Merger at the Meeting, it shall have been publicly disclosed or the Parent or Mergerco shall have learned that any person, entity or 'group' (as that term is defined in Section 13(d)(3) of the Exchange Act) (an 'Acquiring Person'), other than the Parent or its Subsidiaries or any of their affiliates or the stockholders of the Company party to the Stockholders Agreement, shall have acquired beneficial ownership (determined pursuant to Rule 13d-3 promulgated under the Exchange Act) of more than 20% of any class 21 or series of capital stock of the Company (including the Shares), through the acquisition of stock, the formation of a group or otherwise, or shall have been granted any option, right or warrant, conditional or otherwise, to acquire beneficial ownership of more than 20% of any class or series of capital stock of the Company (including the Shares) other than as disclosed in a Schedule 13D on file with the SEC on the date hereof; (iii) if the Company fails to obtain the Required Stockholder Vote at the Meeting; or (iv) the condition set forth in 6.2(h) is not fulfilled. SECTION 7.2 Effect of Termination. In the event of the termination of this Agreement as provided in Section 7.1, written notice thereof shall forthwith be given to the other party or parties specifying the provision hereof pursuant to which such termination is made, and this Agreement shall forthwith become null and void, and there shall be no liability on the part of the Parent, Mergerco or the Company except (A) for fraud or for willful breach of this Agreement and (B) as set forth in Section 8.3 hereof and in the last sentence of Section 5.2. ARTICLE VIII GENERAL AGREEMENTS SECTION 8.1 Definitions. For the purposes of this Agreement, the following terms have the meanings ascribed to them in this Section 8.1: 'Agreement' has the meaning specified in the recitals hereto. 'Acquired Corporations' has the meaning specified in Section 5.4(a). 'Acquiring Person' has the meaning specified in Section 7.1(d)(ii). 'Acquisition Proposal' means any tender or exchange offer involving the capital stock of the Company, any proposal for a merger, consolidation or other business combination involving the Company or any of its Subsidiaries, any proposal or offer to acquire in any manner a substantial equity interest in, or a substantial portion of the business or assets of, the Company or any of its Subsidiaries, any proposal or offer with respect to any recapitalization or restructuring with respect to the Company or any of its Subsidiaries or any proposal or offer with respect to any other transaction similar to any of the foregoing with respect to the Company or any of its Subsidiaries, other than pursuant to the transactions to be effected pursuant to this Agreement or any other transaction with the Parent or a Subsidiary of the Parent. 'Adjusted Conversion Price' has the meaning specified in Section 2.1(b). 'Average Parent Share Price' means the average (without rounding) of the closing prices per share of Parent Class A Common Stock on the NYSE on the NYSE Composite Tape for the fifteen (15) consecutive NYSE trading days ending on the NYSE trading day immediately preceding the Closing Date. 'Business Day' means any day that is not a Saturday or Sunday or a day on which banks located in New York City are authorized or required to be closed. 'Certificate' means a stock certificate which immediately prior to the Effective Time represents shares of the Company Common Stock. 'Certificate of Incorporation' has the meaning specified in Section 1.3. 'Claims' means any actions, causes of action, suits, claims, complaints, demands, litigations or legal, administrative or arbitral proceedings or investigations. 'Closing' has the meaning specified in Section 1.2. 'Closing Date' has the meaning specified in Section 1.2. 'Code' has the meaning specified in the recitals. 'Company' means Cable Car Beverage Corporation, a Delaware corporation. 'Company Affiliates' has the meaning specified in Section 5.8. 22 'Company Agreement' means any note, bond, mortgage, indenture, guarantee, other evidence of indebtedness, lease, license, contract, agreement or other instrument or obligation to which the Company or any of its Subsidiaries is a party or by which any of them or any of their properties or assets may be bound. 'Company Benefit Plan' means any material employee benefit plan, arrangement, policy or commitment, including, without limitation, any employment, consulting, severance or deferred compensation agreement, executive compensation, bonus, incentive, pension, profit-sharing, savings, retirement, stock option, stock purchase or severance pay plan, any life, health, disability or accidental death and dismemberment insurance plan, any holiday or vacation practice or any other employee benefit plan within the meaning of section 3(3) of ERISA, that is maintained, administered or contributed to by the Company or any of its affiliates for the benefit of their current or former employees. 'Company Common Stock' has the meaning specified in the recitals hereto. 'Company Employee' means any individual employed by the Company or any of its Subsidiaries. 'Company Fairness Opinion' has the meaning specified in the recitals hereto. 'Company SEC Documents' has the meaning specified in Section 3.4. 'Company Stock Option' means an option issued by the Company that is exercisable for Company Common Stock. 'Confidentiality Agreement' means the confidentiality agreement between the Company and the Parent, dated April 23, 1997, as amended or modified from time to time. 'Contemplated Transactions' has the meaning specified in the recitals hereto. 'Conversion Price' has the meaning specified in Section 2.1(b). 'Copyrights' means any foreign or United States copyright registrations and applications for registration thereof, and any non-registered copyrights. 'DGCL' has the meaning specified in the recitals hereto. 'Disclosure Schedule' means the disclosure schedule delivered by the Company to the Parent prior to the date hereof. 'Dissenting Share' has the meaning specified in Section 2.1(e). 'Effective Time' means the time and date at which the Certificate of Merger is filed with the Secretary of State of the State of Delaware pursuant to Section 1.8. 'ERISA' means the Employee Retirement Income Security Act of 1974, as amended, together with the rules and regulations promulgated thereunder. 'Exchange Act' means the Securities and Exchange Act of 1934, as amended. 'Exchange Agent' has the meaning specified in Section 2.3(a). 'Excluded Share' has the meaning specified in Section 2.1(a). 'Fractional Shares' means fractional shares of Parent Class A Common Stock. 'GAAP' means United States generally accepted accounting principles as in effect from time to time. 'Governmental Authority' means any nation or government, any state or other political subdivision thereof, and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government. 'HSR Act' means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. 'Intellectual Property' has the meaning specified in Section 3.13(a). 'IP Licenses' has the meaning specified in Section 3.13(a). 'IRS' means the United States Internal Revenue Service. 23 'Material Adverse Effect' means, with respect to any Person (or group of Persons taken as a whole), such event, change or effect, in the aggregate with such other events, changes or effects, which is materially adverse to the condition (financial or otherwise), business, results of operations or prospects of such Person. 'Meeting' has the meaning specified in Section 1.6(a). 'Merger' has the meaning specified in the recitals hereto. 'Merger Consideration' means the shares of Parent Class A Common Stock to be issued pursuant to the Merger in exchange for Certificates, together with any cash to be received pursuant to Section 2.3(e) in lieu of issuing Fractional Shares. 'Mergerco' means CCB Merger Corporation, a Delaware corporation. 'Mergerco Common Stock' means the Common Stock, par value $1.00 per share, of Mergerco. 'NYSE' means the New York Stock Exchange. 'Order' means any order, judgment, injunction, award, decree or writ of any Governmental Authority. 'Parent' means Triarc Companies, Inc., as Delaware corporation. 'Parent Class A Common Stock' means the Class A Common Stock, par value $.10 per share, of Parent. 'Parent Class B Common Stock' means the Class B Common Stock, par value $.10 per share, of Parent. 'Parent Disclosure Schedule' means the disclosure schedule delivered by the Parent to the Company on or prior to the date hereof. 'Parent SEC Documents' has the meaning specified in Section 4.4. 'Patents' means any foreign or United States patents and patent applications including any divisions, continuations, continuations-in-part, substitutions or reissues thereof, whether or not patents are issued on such applications and whether or not such applications are modified, withdrawn or resubmitted. 'PBGC' means the Pension Benefit Guaranty Corporation. 'Person' means any individual, corporation (including any non-profit corporation), general or limited partnership, limited liability company, joint venture, estate, trust, association, organization or other entity or Governmental Entity. 'Prospectus' has the meaning specified in Section 1.7(a). 'Registration Statement' has the meaning specified in Section 1.7(a). 'Representatives' has the meaning specified in Section 5.4(a). 'Required Stockholder Vote' has the meaning specified in Section 3.2(b). 'SEC' means the Securities and Exchange Commission. 'Section 203' has the meaning specified in the recitals hereto. 'Section 262' shall mean Section 262 of the DGCL. 'Securities Act' means the Securities Act of 1933, as amended. 'Software' means any computer software programs, source code, object code, data and documentation. 'Stewart's' means Stewart's Restaurants Inc. 'Stewart's Master Agreement' means the Stewart's Master Agreement, dated July 11, 1989, between Stewart's and the Company, as amended. 'Stockholder' has the meaning specified in Section 2.3(b). 'Stockholders Agreement' has the meaning specified in the recitals thereto. 24 'Subsidiary' means, with respect to any Person, any corporation 50% or more of the outstanding voting power of which, or any partnership, joint venture, limited liability company or other entity 50% or more of the total equity interest of which, is directly or indirectly owned by such Person. 'Substitute Option' has the meaning specified in Section 2.1(d)(i). 'Surviving Corporation' has the meaning specified in Section 1.1. 'Tax' has the meaning specified in Section 3.10(a). 'Tax Return' has the meaning specified in Section 3.10(b). 'Tax Sharing Agreement Amounts' has the meaning specified in Section 3.10(a). 'Trademarks' means any foreign or United States trademarks, service marks, trade dress, trade names, brand names, designs and logos, corporate names, product or service identifiers, whether registered or unregistered, and all registrations and applications for registration thereof. 'Transaction Notice' has the meaning specified in Section 5.4(b). 'Voting Debt' means bonds, debentures, notes or other indebtedness having voting rights (or convertible into securities having such rights). SECTION 8.2 Survival of Representations, Warranties and Agreements. All representations, warranties and agreements in this Agreement or in any instrument delivered pursuant to this Agreement shall survive the Effective Time. SECTION 8.3 Expenses. (a) Except as set forth in Section 8.3(b), whether or not the Merger is consummated, all costs and expenses incurred in connection with this Agreement and the Contemplated Transactions shall be paid by the party incurring such costs and expenses. (b) If the Board of Directors of the Parent shall terminate this Agreement pursuant to Section 7.1(d)(iv) in respect of the condition set forth in Section 6.2(h), then the Parent shall reimburse the Company for its reasonable costs and expenses (including, without limitation, reasonable attorneys' fees and expenses) incurred in connection with this Agreement and the Contemplated Transactions in an amount not to exceed $225,000 in the aggregate. SECTION 8.4 Notice. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if delivered by messenger, transmitted by telecopier, telex or telegram or mailed by registered or certified mail, postage prepaid, as follows: (a) If to the Parent or Mergerco, to: Triarc Companies, Inc. 280 Park Avenue New York, New York 10017 Attention: Brian L. Schorr, Esq. Telecopy No.: (212) 451-3216 with a copy to: Paul, Weiss, Rifkind, Wharton & Garrison 1285 Avenue of the Americas New York, New York 10019-6064 Attention: Neale M. Albert, Esq. Telecopy No.: (212) 373-2315 (b) If to the Company, to: Cable Car Beverage Corporation 717 17th Street, Suite 1475 Denver, Colorado 80202 Attention: Samuel M. Simpson Telecopy No.: (303) 298-1150 25 with a copy to: Krys Boyle Freedman Scott & Sawyer, P.C. Dominion Plaza 600 Seventeenth Street Suite 2700 South Tower Denver, Colorado 80202 Attention: Thomas Boyle, Esq. Telecopy No.: (303) 893-2882 Except as otherwise specified herein, all notices and other communications shall be considered to have been duly given on the first to occur of (a) the date of delivery if delivered personally on a Business Day during normal business hours, and if not, on the next occurring Business Day, (b) five (5) days following posting if transmitted by mail, (c) the date of transmission with confirmed answer-back if transmitted by telex on a Business Day during normal business hours, and if not, on the next occurring Business Day, or (d) the date of receipt if transmitted by telecopier or facsimile on a Business Day during normal business hours, and if not, on the next occurring Business Day. Any party may change his or its address for purposes hereof by notice to the other party given as provided in this Section 8.4. SECTION 8.5 Amendments. Subject to applicable law, this Agreement may be amended by the parties hereto, by action taken by their respective Boards of Directors, at any time prior to the Effective Time, provided, however, that after approval of this Agreement by the stockholders of the Company, no amendment or modification shall (a) alter or change the amount or kind of shares, securities, cash, property and/or rights to be received in exchange for or on conversion of all or any of the shares of any class or series thereof of the Company, (b) alter or change any term of the certificate of incorporation of the Surviving Corporation to be effected by the Merger, or (c) alter or change any of the terms and conditions of this Agreement if such alteration or change would adversely affect the holders of any class or series of capital stock of the Company. This Agreement may not be amended, modified or supplemented except by written agreement of the parties hereto. SECTION 8.6 Waiver. At any time prior to the Effective Time, the parties hereto by action taken by their respective Boards of Directors may (a) extend the time for the performance of any of the obligations or other acts of the other parties hereto, (b) waive any inaccuracies in the representations and warranties contained herein or in any document delivered pursuant hereto, and (c) waive compliance with any of the agreements or conditions contained herein. Any agreement on the part of a party hereto to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party. SECTION 8.7 Brokers. The Company represents and warrants that no broker, finder or investment banker is entitled to any brokerage, finder's or other fee or commission in connection with the Merger based upon arrangements made by or on behalf of the Company other than the fee payable to Montgomery Securities in connection with its providing financial advice to the Company and the Company's Board of Directors and delivery of the Company Fairness Opinion. The Parent and Mergerco represent and warrant that no broker, finder or investment banker is entitled to any brokerage, finder's or other fee or commission in connection with the Merger based upon arrangements made by or on behalf of the Parent and Mergerco. SECTION 8.8 Publicity. So long as this Agreement is in effect, neither the Company nor the Parent nor any of their respective affiliates shall issue or cause the publication of any press release or other public statement or announcement with respect to this Agreement or the Contemplated Transaction without prior consultation with the other party, except as may be required by law or by obligations pursuant to any listing agreement with a national securities exchange or Nasdaq, provided that the Company and the Parent may include this Agreement and the Stockholders Agreement as exhibits to a report on Form 8-K filed with the SEC, and in each such case shall use all reasonable efforts to consult with the other party prior to such release or announcement being issued or such filing being made. SECTION 8.9 Headings. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. SECTION 8.10 Non-Assignability. This Agreement shall not be assigned by operation of law or otherwise, except that at the election of the Parent, any direct or indirect wholly owned Subsidiary of 26 the Parent may be substituted for Mergerco in the Merger for all purposes of this Agreement (including, but not limited to, the representations and warranties of Mergerco herein). SECTION 8.11 Entire Agreement; No Third Party Beneficiaries; Rights of Ownership. This Agreement and the Confidentiality Agreement (including the exhibits hereto and the documents and the instruments referred to herein and therein): (a) constitute the entire agreement and supersede all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof, and (b) except as provided in Section 5.7 with respect to the obligations of the Parent thereunder, are not intended to confer upon any Person other than the parties hereto any rights or remedies hereunder. SECTION 8.12 Specific Performance. The parties hereto agree that irreparable damage would occur in the event any provision of this Agreement was not performed in accordance with the terms hereof and that the parties shall be entitled to the remedy of specific performance of the terms hereof, in addition to any other remedy at law or equity. SECTION 8.13 Counterparts. This Agreement may be executed in two or more counterparts each of which shall be deemed to constitute an original and shall become effective when one or more counterparts have been signed by each of the parties hereto and delivered to the other parties. SECTION 8.14 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to contracts made and to be performed wholly within such state except to the extent the provisions of the DGCL apply. SECTION 8.15 Consent to Jurisdiction. Any action or proceeding seeking to enforce any provision of, or based on any right arising out of, this Agreement may be brought against any of the parties in the courts of the State of New York, County of New York, or, if it has or can acquire jurisdiction, in the United States District Court for the Southern District of New York, and each of the parties consents to the jurisdiction of such courts (and of the appropriate appellate courts) in any such action or proceeding and waives any objection to venue laid therein. Process in any action or proceeding referred to in the preceding sentence may be served on any party anywhere in the world. SECTION 8.16 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE MERGER OR ANY OTHER CONTEMPLATED TRANSACTIONS. SECTION 8.17 Disclosure Schedule. The Disclosure Schedule is a part of this Agreement as if fully set forth herein and all references to this Agreement shall be deemed to include the Disclosure Schedule. 27 IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by their respective duly authorized officers as of the date first above written. CABLE CAR BEVERAGE CORPORATION By: /s/ SAMUEL M. SIMPSON ................................... Name: Samuel M. Simpson Title: President TRIARC COMPANIES, INC. By: /s/ BRIAN L. SCHORR ................................... Name: Brian L. Schorr Title: Executive Vice President CCB MERGER CORPORATION By: /s/ BRIAN L. SCHORR ................................... Name: Brian L. Schorr Title: Executive Vice President 28 EXHIBIT B TO AGREEMENT AND PLAN OF MERGER FORM OF AFFILIATE AGREEMENT , 1997 Triarc Companies, Inc. 280 Park Avenue New York, NY 10017 Ladies and Gentlemen: I have been advised that as of the date of this letter I may be deemed to be an 'affiliate' of Cable Car Beverage Corporation, a Delaware corporation (the 'Company'), as the term 'affiliate' is defined for purposes of paragraphs (c) and (d) of Rule 145 of the rules and regulations (the 'Rules and Regulations') of the Securities and Exchange Commission (the 'Commission') under the Securities Act of 1933, as amended (the 'Act'). Pursuant to the terms of the Agreement and Plan of Merger, dated June 24, 1997 (the 'Agreement'), by and among the Company, Triarc Companies, Inc., a Delaware corporation (the 'Parent'), and CCB Merger Corporation, a Delaware corporation and a wholly owned subsidiary of the Parent ('Mergerco'), the Company will be merged with and into Mergerco (the 'Merger'). As a result of the Merger, I will receive shares of Class A Common Stock, par value $.10 per share, of the Parent (the 'Parent Stock') in exchange for shares owned by me of Common Stock, $.01 par value per share, of the Company. I represent, warrant, and covenant to the Parent that in the event I receive any Parent Stock as a result of the Merger: A. I shall not make any sale, transfer, or other disposition of the Parent Stock in violation of the Act or the Rules and Regulations. B. I have carefully read this letter and the Agreement and discussed the requirements of such documents and other applicable limitations upon my ability to sell, transfer, or otherwise dispose of the Parent Stock to the extent I felt necessary, with my counsel or counsel for the Company. C. I have been advised that the issuance of the Parent Stock to me pursuant to the Merger has been registered with the Commission under the Act on a Registration Statement on Form S-4. However, I have also been advised that, since at the time the Merger was submitted for a vote of the stockholders of the Company, I may be deemed to have been an affiliate of the Company and the distribution by me of the Parent Stock has not been registered under the Act, I may not sell, transfer or otherwise dispose of the Parent Stock issued to me in the Merger unless (i) such sale, transfer, or other disposition has been registered under the Act, (ii) such sale, transfer, or other disposition is made in conformity with Rule 145 promulgated by the Commission under the Act, or (iii) in the opinion of counsel reasonably acceptable to the Parent, or a 'no action' letter obtained by the undersigned from the staff of the Commission, such sale, transfer, or other disposition is otherwise exempt from registration under the Act. D. I understand that the Parent is under no obligation to register the sale, transfer, or other disposition of the Parent Stock by me or on my behalf under the Act or to take any other action necessary in order to make compliance with an exemption from such registration available. E. I also understand that stop transfer instructions will be given to the Parent's transfer agent with respect to the Parent Stock and that there will be placed on the certificates for the Parent Stock issued to me, or any substitutions therefor, a legend stating in substance: THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF 1933 APPLIES. THE SHARES REPRESENTED BY THIS CERTIFICATE MAY ONLY BE TRANSFERRED IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT DATED BETWEEN THE REGISTERED HOLDER HEREOF 1 AND , A COPY OF WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICES OF TRIARC COMPANIES, INC. F. I also understand that unless the transfer by me of my Parent Stock has been registered under the Act or is a sale made in conformity with the provisions of Rule 145, the Parent reserves the right to put the following legend on the certificates issued to my transferee: THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND WERE ACQUIRED FROM A PERSON WHO RECEIVED SUCH SHARES IN A TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF 1933 APPLIES. THE SHARES HAVE BEEN ACQUIRED BY THE HOLDER NOT WITH A VIEW TO, OR FOR RESALE IN CONNECTION WITH, ANY DISTRIBUTION THEREOF WITHIN THE MEANING OF THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933. It is understood and agreed that the legends set forth in paragraphs E and F above shall be removed by delivery of substitute certificates without such legend if such legend is not required for purposes of the Act or the Agreement, including sales under Rule 145(d). It is also understood and agreed that such legends and the stop orders referred to above will be removed if (i) one (1) year shall have elapsed from the date the undersigned became the beneficial owner of the Parent Stock received in the Merger and the provisions of Rule 145(d)(2) are then available to the undersigned, (ii) two (2) years shall have elapsed from the date the undersigned became the beneficial owner of the Parent Stock received in the Merger and the provisions of Rule 145(d)(3) are then applicable to the undersigned, or (iii) Parent has received either an opinion of counsel, which opinion of counsel shall be reasonably satisfactory to the Parent, or a 'no action' letter obtained by the undersigned from the staff of the Commission, to the effect that the restrictions imposed by Rule 145 under the Act no longer apply to the undersigned. Execution of this letter should not be considered an admission on my part that I am an 'affiliate' of the Company as described in the first paragraph of this letter or as a waiver of any rights I may have to object to any claim that I am such an affiliate on or after the date of this letter. Very truly yours, ..................................... Accepted this day of , 1997 by By: .................................. Name: Title: 2 AMENDMENT NO. 1 TO AGREEMENT AND PLAN OF MERGER Amendment No. 1, dated as of September 30, 1997 ('Amendment'), by and among Cable Car Beverage Corporation, a Delaware corporation (the 'Company'), Triarc Companies, Inc., a Delaware corporation (the 'Parent'), and CCB Merger Corporation, a Delaware corporation ('Mergerco'), to the Agreement and Plan of Merger, dated June 24, 1997 (the 'Agreement'), by and among the Company, the Parent and Mergerco. Each of the parties to the Agreement have determined that it would be in its best interest to amend the terms thereof to the extent set forth in this Amendment. Capitalized terms used in this Amendment and not otherwise defined herein shall have the meanings ascribed to them in the Agreement. Accordingly, the parties hereto agree as follows: 1. Amendments to the Agreement. The Agreement is hereby amended as follows: (a) Clause (y) of the second proviso contained in Section 5.1(g) of the Agreement is hereby amended and restated in its entirety to read as follows: '(y) enter into a lease for office space in the greater Denver, Colorado area not to exceed 4,500 square feet, at a cost per square foot not to exceed $17.50 and for a term not to exceed four (4) years;' (b) Section 6.2 (i) of the Agreement is hereby amended by deleting the phrase 'seven and one-half percent (7.5%)' appearing therein and substituting in lieu thereof the phrase 'six percent (6%).' 2. Effective Date. Upon the execution and delivery hereof by each party hereto, this Amendment shall have effect as and from the date on which the Agreement was executed and delivered. 3. Confirmation of the Agreement. Except to the extent amended specifically by this Amendment, the provisions of the Agreement are hereby confirmed and shall remain in full force and effect. This Amendment is limited as written and shall not be deemed (a) to be a consent under or a waiver of any other term or condition of the Agreement or any of the documents referred to therein or (b) to prejudice any right or rights which any of the parties to the Agreement now has or may have in the future under or in connection with the Agreement or any of the documents referred to therein. Each reference to the 'Agreement' in the Agreement shall be a reference to the Agreement as amended hereby. 4. Successors and Assigns. This Amendment shall be binding upon and inure to the benefit of the parties hereto and their permitted successors and assigns. 5. Representations and Warranties. Each party represents and warrants to the others as follows: Such party has full corporate power and authority to execute and deliver this Amendment. This Amendment has been duly executed and delivered by such party and, assuming this Amendment constitutes a valid and binding obligation of the other parties hereto, constitutes a valid and binding obligation of such party enforceable against such party in accordance with its terms, except that (i) such enforcement may be subject to applicable bankruptcy, insolvency or other similar laws, now or hereafter in effect, affecting creditors' rights generally, and (ii) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought. 6. Governing Law. This Amendment, including, without limitation, the validity hereof and the right and obligations of the parties hereunder, shall be governed by and construed in accordance with the laws of the State of New York applicable to contracts made and to be performed wholly within such state except to the extent the provisions of the DGCL apply. 7. Counterparts. This Amendment may be executed in two or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first above written. CABLE CAR BEVERAGE CORPORATION By: /S/ SAMUEL M. SIMPSON .................................. Name: Samuel M. Simpson Title: President TRIARC COMPANIES, INC. By: /S/ BRIAN L. SCHORR .................................. Name: Brian L. Schorr Title: Executive Vice President CCB MERGER CORPORATION By: /S/ BRIAN L. SCHORR .................................. Name: Brian L. Schorr Title: Executive Vice President 2 APPENDIX B-2 STOCKHOLDERS AGREEMENT STOCKHOLDERS AGREEMENT, dated June 24, 1997 (this 'Agreement'), by and among Triarc Companies, Inc., a Delaware corporation (the 'Parent') and each of the other parties signatory hereto (each, a 'Stockholder' and, collectively, the 'Stockholders'). RECITALS A. Concurrently herewith, the Parent, CCB Merger Corporation, a Delaware corporation and wholly owned subsidiary of the Parent ('Mergerco'), and Cable Car Beverage Corporation, a Delaware corporation (the 'Company'), are entering into an Agreement and Plan of Merger (as amended or modified from time to time, the 'Merger Agreement'; capitalized terms used herein without definition shall have the respective meanings ascribed to them in the Merger Agreement) pursuant to which Mergerco will be merged with and into the Company (the 'Merger'). B. As of the date hereof, each of the Stockholders Beneficially Owns (as defined below) the number of shares of the Common Stock, par value $.01 per share, of the Company ('Company Common Stock') set forth opposite such Stockholder's name on Schedule I hereto. C. As an inducement and a condition to entering into the Merger Agreement, the Parent has required that the Stockholders agree, and the Stockholders have agreed, to enter into this Agreement. NOW, THEREFORE, in consideration of the foregoing and the mutual premises, representations, warranties, covenants and agreements contained herein, the parties hereto hereby agree as follows: 1. Provisions Concerning Company Common Stock. Each Stockholder hereby agrees that during the period commencing on the date hereof and continuing until the first to occur of (i) the Effective Time and (ii) the termination of the Merger Agreement in accordance with Section 7.1 thereof, at any meeting of the holders of Company Common Stock, however called, or in connection with any written consent of the holders of Company Common Stock, such Stockholder shall vote (or cause to be voted) the Company Common Stock held of record or Beneficially Owned by such Stockholder (but excluding the Company Common Stock identified as Excluded Shares on Schedule I hereto), whether heretofore owned or hereafter acquired (collectively, the 'Shares'), (i) in favor of approval of the Merger Agreement and the transactions contemplated thereby (the 'Contemplated Transactions'), including, without limitation, the Merger, and any actions required in furtherance thereof; (ii) against any action or agreement that would result in a breach in any respect of any covenant, representation or warranty or any other obligation or agreement of the Company under the Merger Agreement or the Contemplated Transactions; and (iii) except as otherwise agreed to in writing in advance by the Parent, against the following actions (other than the Merger and the other Contemplated Transactions): (A) any Acquisition Proposal; or (B) (1) any change in a majority of the Stockholders who constitute the board of directors of the Company; (2) any change in the present capitalization of the Company or any amendment of the Company's certificate of incorporation or by-laws; (3) any other material change in the Company's corporate structure or business; or (4) any other action which is intended, or could reasonably be expected, to prevent, or delay beyond the date specified in Section 7.1(b)(1) of the Merger Agreement, the Merger or the Contemplated Transactions. Such Stockholder shall not enter into any agreement or understanding with any Person the effect of which would be inconsistent or violative of the provisions and agreements contained in Section 1 or 3 hereof. For purposes of this Agreement, 'Beneficially Own' or 'Beneficial Ownership' with respect to any securities shall mean having 'beneficial ownership' of such securities (as determined pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the 'Exchange Act')), including pursuant to any agreement, arrangement or understanding, whether or not in writing. Without duplicative counting of the same securities by the same holder, securities Beneficially Owned by a Person shall include securities Beneficially Owned by all other Persons with whom such Person would constitute a 'group' as within the meanings of Section 13(d)(3) of the Exchange Act. For the purposes of this Agreement, 'Person' means any individual, corporation (including any non-profit corporation), 1 general or limited partnership, limited liability company, joint venture, estate, trust, association, organization or other entity or Governmental Authority. 2. Irrevocable Proxy. In the event the Stockholder shall fail to comply with the provisions of Section 1, the Stockholder hereby agrees that such failure shall result, without any further action by the Stockholder, in the irrevocable appointment of the Parent and each of its officers, as its attorney and proxy pursuant to the provisions of Section 212 of the General Corporation Law of the State of Delaware, with full power of substitution, to vote and otherwise act (by written consent or otherwise) with respect to the Shares which the Stockholder is entitled to vote at any meeting of the holders of Company Common Stock (whether annual or special and whether or not an adjourned or postponed meeting) or consent in lieu of any such meeting or otherwise, on the matters and in the manner specified in Section 1 (the 'Proxy'). This Proxy and power of attorney is irrevocable and coupled with an interest. The Stockholder hereby revokes all other proxies and powers of attorney with respect to such Shares that it may have heretofore appointed or granted, and no subsequent proxy or power of attorney shall be given or written consent executed (and if given or executed, shall not be effective) by the Stockholder with respect thereto. All obligations of the Stockholder under this Agreement shall be binding upon the heirs, personal representatives, successors and/or assigns of the Stockholder. 3. Grant of Option. Each Stockholder severally grants to the Parent an exclusive and irrevocable option (an 'Option') to purchase such Stockholder's Shares in whole but not in part, subject to the provisions of Section 4 hereof, at the Option Price (as defined below) at any time after the Company shall have (a) delivered to the Parent a Transaction Notice or (b) shall have furnished confidential information to any Person or entered into negotiations with any Person with respect to an Acquisition Proposal; provided, that if the Merger Agreement is terminated pursuant to Section 7.1(c)(iii), 7.1(d)(i) or 7.1(d)(iii) of the Merger Agreement and this Agreement does not terminate in accordance with Section 5 hereof, then the Options granted hereunder shall expire at 5:00 p.m. (New York City time) on the tenth (10th) Business Day following such termination of the Merger Agreement unless the Parent shall have delivered a written notice to each Stockholder of its exercise of the Options in accordance with Section 4 hereof. For purposes of this Agreement, the 'Option Price' with respect to each share of Company Common Stock to be purchased by the exercise of any Option shall be an amount in cash equal to the product obtained by multiplying (a) 0.1722 (the 'Option Conversion Price') times (b) the Option Average Parent Share Price (as defined below); provided, that (i) if the Option Average Parent Share Price shall be less than $18.875, then the Option Conversion Price shall be adjusted so that it shall equal the quotient obtained by dividing (A) $3.25 by (B) the Option Average Parent Share Price, and (ii) if the Option Average Parent Share Price shall be greater than $24.50, then the Option Conversion Price shall be adjusted so that it shall equal the quotient obtained by dividing (x) $4.22 by (y) the Option Average Share Price. For the purposes of this Section 3, 'Option Average Share Price' means the average (without rounding) of the closing prices per share of Parent Class A Common Stock on the NYSE on the NYSE Composite Tape for the fifteen (15) consecutive trading days ending on the NYSE trading day immediately preceding the date of the closing of the exercise of the Option. 4. Exercise of Option. The Parent shall exercise each and every Option granted hereunder simultaneously. In the event the Parent wishes to exercise the Options, the Parent shall send a written notice to each Stockholder specifying the place (which shall be either Denver, Colorado or New York, New York), time and date (which, to the extent practicable in the reasonable judgment of the Parent, shall be no earlier than forty-eight (48) hours after the delivery of such notice) for the closing of such purchase. At the closing for the exercise of the Options: (a) the Parent shall deliver to each Stockholder a certified or bank check or checks payable to or upon the order of such Stockholder in an amount equal to the aggregate Option Price of the Shares being purchased from such Stockholder; and (b) each Stockholder shall deliver to the Parent a duly executed certificate or certificates representing the number of Shares being purchased duly endorsed in blank or accompanied by appropriate stock powers duly endorsed in blank. 5. Termination. This Agreement, including the Options granted hereunder, shall terminate on the earlier to occur of (a) the Effective Time; (b) the termination of the Merger Agreement pursuant to the following provisions of the Merger Agreement: Section 7.1(a), 7.1(b), 7.1(c)(i) or 7.1(d)(iv), or Section 2 7.1(c)(iii), 7.1(d)(i) or 7.1(d)(iii), provided that in the case of a termination of the Merger Agreement pursuant to Section 7.1(c)(iii), 7.1(d)(i) or 7.1(d)(iii) of the Merger Agreement, this Agreement shall terminate only if the Company or its stockholders shall not have received an Acquisition Proposal, and the Board of Directors of the Company shall not have withdrawn, or modified or changed in a manner adverse to the Parent or Mergerco, its approval or recommendation of the Merger Agreement or the Merger; and (c) the date that is 31 days after the date set forth in Section 7.1(b)(i) of the Merger Agreement, as such date as set forth in Section 7.1(b)(i) of the Merger Agreement may be extended, modified or waived from time to time in accordance with the provisions of the Merger Agreement. 6. Representations and Warranties. Each Stockholder hereby represents and warrants to the Parent and Mergerco as follows: (a) Ownership of Company Common Stock. Such Stockholder is, as of the date hereof, the record and Beneficial Owner of the number of shares of Company Common Stock set forth opposite such Stockholder's name on Schedule I hereto. On the date hereof, the Company Common Stock set forth opposite such Stockholder's name on Schedule I hereto constitutes all of the Company Common Stock owned of record or Beneficially Owned by such Stockholder. Such Stockholder has good and valid title, and sole voting power and sole power to issue instructions with respect to the matters set forth in Section 1 hereof, sole power of disposition, sole power of conversion, sole power to demand appraisal rights and sole power to agree to all of the matters set forth in this Agreement (including, without limitation, to execute and deliver the Proxy), in each case with respect to all of the Company Common Stock set forth opposite such Stockholder's name on Schedule I hereto, with no limitations, qualifications, encumbrances or restrictions on such rights (other than those created under this Agreement) except as set forth on Schedule I hereto. (b) Power, Binding Agreement. Such Stockholder has the legal capacity, power and authority to enter into and perform all of such Stockholder's obligations under this Agreement. The execution, delivery and performance of this Agreement by such Stockholder will not violate any other agreement to which such Stockholder is a party. This Agreement has been duly and validly executed and delivered by such Stockholder and constitutes a valid and binding agreement of such Stockholder, enforceable against such Stockholder in accordance with its terms, except that (i) such enforcement may be subject to applicable bankruptcy, insolvency or other similar laws, now or hereafter in effect, affecting creditors' rights generally, and (ii) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought. There is no beneficiary or holder of a voting trust certificate or other interest of any trust of which such Stockholder is trustee who is not a party to this Agreement and whose consent is required for the execution and delivery of this Agreement or the consummation by such Stockholder of the transactions contemplated hereby. The Stockholder has not entered into any voting agreement or trust or other stockholder agreement with respect to any Company Common Stock Beneficially Owned or held of record by such Stockholder or granted to any Person any proxy (revocable or irrevocable) or power-of-attorney with respect to such Company Common Stock other than the Proxy expressly contemplated hereby. If such Stockholder is married and such Stockholder's Company Common Stock constitutes community property, this Agreement has been duly authorized, executed and delivered by, and constitutes a valid and binding agreement of, such Stockholder's spouse. (c) No Conflicts. (i) Other than the filing of Forms 13-D pursuant to the Securities Exchange Act of 1934, as amended, and such other filings, consents, authorizations and approvals as are contemplated by the Merger Agreement, no filing with, and no permit, authorization, consent or approval of, any Governmental Authority is necessary for the execution of this Agreement by such Stockholder and the consummation by such Stockholder of the transactions contemplated hereby. (ii) None of the execution and delivery of this Agreement by such Stockholder, the consummation by such Stockholder of the transactions contemplated hereby or compliance by such Stockholder with any of the provisions hereof shall (A) result in a violation or breach of, or constitute (with or without notice or lapse of time or both) a default (or give rise to any third party right of termination, cancellation, material modification or acceleration) under any of the terms, 3 conditions or provisions of its governing documents (as applicable) or any note, bond, mortgage, indenture, license, contract, commitment, arrangement, understanding, agreement or other instrument or obligation of any kind to which such Stockholder is a party or by which such Stockholder or any of such Stockholder's properties or assets may be bound, or (B) violate any order, writ, injunction, decree, judgment, order, statute, rule or regulation applicable to such Stockholder or any of such Stockholder's properties or assets. (d) As of the date hereof, there is (i) no suit, claim, action, proceeding, review or investigation pending, or to the knowledge of such Stockholder, threatened against the Stockholder, and (ii) no judgment, decree, order, writ or injunction of any Governmental Authority to which the Stockholder or his or her assets are subject, that could materially impair the ability of the Stockholder to perform his or her obligations hereunder or to consummate the transactions contemplated hereby. (e) No Finder's Fees. No broker, investment banker, financial advisor or other Stockholder is entitled to any broker's, finder's, financial advisor's or other similar fee or commission in connection with the Merger or the other Contemplated Transactions based upon arrangements made by or on behalf of such Stockholder or any of his or her affiliates or, to the knowledge of such Stockholder, the Company or any of its affiliates, other than the fee payable to Montgomery Securities in connection with its providing financial advice to the Company and the Company's Board of Directors and delivery of the Company Fairness Opinion. (f) Reliance by the Parent. Such Stockholder understands and acknowledges that the Parent is entering into the Merger Agreement in reliance upon such Stockholder's execution and delivery of this Agreement. 7. Covenants. (a) Other Potential Acquirors. Such Stockholder (i) shall immediately cease any existing discussions or negotiations, if any, with any parties conducted heretofore with respect to any potential Acquisition Proposal, in his or her capacity as such, and (ii) from and after the date hereof shall not, in such capacity, directly or indirectly, initiate, solicit or encourage (including by way of furnishing non-public information or assistance), engage in any discussions or negotiations with respect to, or take any other action to facilitate, any inquiries or the making of any proposal that constitutes, or may reasonably be expected to lead to, an Acquisition Proposal, or agree to or endorse any Acquisition Proposal, or authorize or permit any of such Stockholder's agents to do so, and such Stockholder shall promptly notify the Parent of any offers, proposals, inquiries or Acquisition Proposals and shall provide a copy of any such written proposal and a summary of any oral proposal to the Parent immediately after receipt thereof (and shall specify the material terms and conditions of such proposal and identify the Person making such proposal) and thereafter keep the Parent promptly advised of any developments with respect thereto. (b) Restriction on Transfer, Proxies and Non-Interference. Such Stockholder shall not, directly or indirectly, except as contemplated by the Merger Agreement and this Agreement: (i) offer for sale, sell, transfer, tender, pledge, encumber, assign or otherwise dispose of, or enter into any contract, option or other arrangement or understanding with respect to or consent to the offer for sale, sale, transfer, tender, pledge, encumbrance, assignment or other disposition of, any or all of such Stockholder's Shares or any interest therein; (ii) grant any proxies or powers of attorney, deposit any Shares into a voting trust or enter into a voting agreement with respect to any Shares; or (iii) take any action that would make any representation or warrant of such Stockholder contained herein untrue or incorrect or have the effect of preventing or disabling such Stockholder from performing such Stockholder's obligations under this Agreement. 8. Further Assurances. From time to time, at the Parent's request and without further consideration, each Stockholder shall execute and deliver such additional documents and take all such further lawful action as may be reasonably necessary or desirable to consummate and make effective, in the most expeditious manner practicable, the transactions contemplated by this Agreement. 9. Stop Transfer. Each Stockholder agrees with, and covenants to, the Parent that such Stockholder shall not request that the Company register the transfer (book-entry or otherwise) of any certificate or 4 uncertificated interest representing any of such Stockholder's Shares, unless such transfer is made in compliance with this Agreement. In the event of a stock dividend or distribution, or any change in the Company Common Stock by reason of any stock dividend, split-up, recapitalization, combination, exchange of Company Common Stock or the like, the term 'Company Common Stock' shall be deemed to refer to and include the Company Common Stock as well as all such stock dividends and distributions and any Company Common Stock into which or for which any or all of the Company Common Stock may be changed or exchanged. 10. Disclosure. Each Stockholder hereby agrees to permit the Parent to publish and disclose in the S-4 and the Proxy Statement (including all documents and schedules filed with the SEC), and any press release or other disclosure document which the Parent, in its sole discretion, determines to be necessary or desirable in connection with the Merger and any transactions related thereto, such Person's identity and ownership of Company Common Stock and the nature of his or her commitments, arrangements and understandings under this Agreement. 11. Miscellaneous. (a) Entire Agreement. This Agreement constitutes the entire agreement among the parties with respect to the subject matter hereof and supersedes all other prior agreements and understandings, both written and oral, between the parties with respect to the subject matter hereof. (b) Certain Events. Each Stockholder agrees that this Agreement and the obligations hereunder shall attach to such Stockholder's Shares and shall be binding upon any person or entity to which legal or beneficial ownership of such Shares shall pass, whether by operation of law or otherwise, including, without limitation, such Stockholder's heirs, guardians, administrators or successors. Notwithstanding any transfer of his or her Shares, the transferor shall remain liable for the performance of all obligations under this Agreement of the transferor. (c) Assignment. This Agreement shall not be assigned by the Company or any Stockholder by operation of law or otherwise without the prior written consent of the other party. The Parent may assign, in its sole discretion, its rights and obligations hereunder to any direct or indirect wholly owned subsidiary of the Parent. (d) Amendments, Waivers, Etc. This Agreement may not be amended, changed, supplemented, waived or otherwise modified or, except as expressly provided herein, terminated, with respect to any Stockholder, except upon the execution and delivery of a written agreement executed by such Stockholder and the Parent; provided that Schedule I hereto may be supplemented by the Parent by adding the name and other relevant information concerning any Stockholder of the Company who agrees to be bound by the terms of this Agreement without the agreement of any other party hereto, and thereafter such added Stockholder shall be treated as a 'Stockholder' for all purposes of this Agreement. (e) Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if delivered by messenger, transmitted by telecopier, telex or telegram or mailed by registered or certified mail, postage prepaid, as follows: If to any Stockholder: At the addresses set forth on Schedule I hereto with a copy to: Krys Boyle Freedman Scott & Sawyer, P.C. Dominion Plaza 600 Seventeenth Street Suite 2700, South Tower Denver, Colorado 80202 Attention: Thomas Boyle, Esq. Telecopy: (303) 893-2882 If to the Parent: Triarc Companies, Inc. 280 Park Avenue New York, New York 10017 Attention: Brian L. Schorr, Esq. Telecopy: (212) 451-3216 5 with a copy to: Paul, Weiss, Rifkind, Wharton & Garrison 1285 Avenue of the Americas New York, New York 10019-6064 Attention: Neale M. Albert, Esq. Telecopy: (212) 373-2315 Except as otherwise specified herein, all notices and other communications shall be considered to have been duly given on the first to occur of (a) the date of delivery if delivered personally on a Business Day during normal business hours, and if not, on the next occurring Business Day, (b) five (5) days following posting if transmitted by mail, (c) the date of transmission with confirmed answer-back if transmitted by telex on a Business Day during normal business hours, and if not, on the next occurring Business Day, or (d) the date of receipt if transmitted by telecopier or facsimile on a Business Day during normal business hours, and if not, on the next occurring Business Day. Any party may change his, her or its address for purposes hereof by notice to the other party given as provided in this Section 9(e). (f) Severability. Whenever possible, each provision or portion of any provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law but if any provision or portion of any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or portion of any provision in such jurisdiction, and this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision or portion of any provision had never been contained herein. (g) Specific Performance. Each of the parties hereto recognizes and acknowledges that a breach by it of any covenants or agreements contained in this Agreement will cause the other party to sustain damages for which it would not have an adequate remedy at law for money damages, and therefore each of the parties hereto agrees that in the event of any such breach, the aggrieved party shall be entitled to the remedy of specific performance of such covenants and agreements and injunctive and other equitable relief in addition to any other remedy to which it may be entitled, at law or in equity. (h) Remedies Cumulative. All rights, powers and remedies provided under this Agreement or otherwise available in respect hereof at law or in equity shall be cumulative and not alternative, and the exercise of any thereof by any party shall not preclude the simultaneous or later exercise of any other such right, power or remedy by such party. (i) No Waiver. The failure of any party hereto to exercise any right, power or remedy provided under this Agreement or otherwise available in respect hereof at law or in equity, or to insist upon compliance by any other party hereto with his, her or its obligations hereunder, and any custom or practice of the parties at variance with the terms hereof, shall not constitute a waiver by such party of his, her or its right to exercise any such or other right, power or remedy or to demand such compliance. (j) No Third Party Beneficiaries. This Agreement is not intended to be for the benefit of, and shall not be enforceable by, any person or entity who or which is not a party hereto. (k) Descriptive Headings. The descriptive headings used herein are inserted for convenience of reference only and are not intended to be part of or to affect the meaning or interpretation of this Agreement. (l) Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original, but all of which, taken together shall constitute one and the same Agreement. (m) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF, EXCEPT TO THE EXTENT THAT THE GENERAL CORPORATION LAW OF THE STATE OF DELAWARE APPLY. (N) NO LIMITATION OF FIDUCIARY DUTIES. THE PARTIES HERETO ACKNOWLEDGE AND AGREE THAT NONE OF THE PROVISIONS HEREIN SHALL BE DEEMED TO RESTRICT OR LIMIT ANY FIDUCIARY DUTY ANY OF THE STOCKHOLDERS MAY HAVE AS A MEMBER OF THE BOARD OF DIRECTORS OF THE COMPANY; PROVIDED, THAT 6 NO SUCH DUTY SHALL EXCUSE ANY OF THE STOCKHOLDERS FROM HIS OBLIGATIONS AS A STOCKHOLDER TO VOTE THE SHARES OF THE COMPANY COMMON STOCK AS HEREIN PROVIDED, AND TO OTHERWISE COMPLY WITH EACH OF THE TERMS AND CONDITIONS OF THIS AGREEMENT. IN WITNESS WHEREOF, the Parent and each Stockholder have caused this Agreement to be duly executed as of the day and year first above written. TRIARC COMPANIES, INC. By: /s/ BRIAN L. SCHORR ................................... Name: Brian L. Schorr Title: Executive Vice President STOCKHOLDERS: /s/ SAMUEL M. SIMPSON ..................................... Samuel M. Simpson /s/ SUSAN L. NEFF ..................................... Susan L. Neff /s/ WILLIAM H. RUTTER ..................................... William H. Rutter /s/ SUSAN L. FRALICK ..................................... Susan L. Fralick ACKNOWLEDGMENT: The undersigned hereby acknowledges the terms and provisions of Section 9 of this Agreement. CABLE CAR BEVERAGE CORPORATION By: /s/ SAMUEL M. SIMPSON ................................... Name: Samuel M. Simpson Title: President 7 SCHEDULE I
SHARES OF COMPANY EXCLUDED STOCKHOLDER NAME AND ADDRESS COMMON STOCK SHARES SHARES - ----------------------------------------------------------------------- ------------ ---------- ------- Samuel M. Simpson ..................................................... 723,643 0 723,643(1) 3005 Cherry Ridge Road Cherry Hills Village, CO 80110 Susan L. Neff ......................................................... 381,234 0 381,234 3005 Cherry Ridge Road Cherry Hills Village, CO 80110 William H. Rutter ..................................................... 666,532 10,000(2) 656,532 1868 South Highland Drive Moab, UT 84532 Susan L. Fralick ...................................................... 7,200 5,000(3) 2,200 1868 South Highland Drive Moab, UT 84532
- ------------ (1) 60,000 of Mr. Simpson's Shares have been pledged to William H. Rutter as security. (2) Mr. Rutter's Excluded Shares are comprised of 10,000 shares in a trust for his benefit, for which Cynthia S. Rutter is trustee. (3) Ms. Fralick's Excluded Shares are comprised of 5,000 shares in an IRA account. AMENDMENT NO. 1 TO STOCKHOLDERS AGREEMENT AMENDMENT NO. 1, dated as of July 9, 1997 (this 'Amendment'), to Stockholders Agreement, dated June 24, 1997 (the 'Stockholders Agreement'), by and among Triarc Companies, Inc., a Delaware corporation (the 'Parent'), and Samuel M. Simpson, Susan L. Neff, William H. Rutter and Susan L. Fralick (collectively, the 'Stockholders'). The Parent and each of the Stockholders desire to amend and restate Schedule I to the Stockholders Agreement to correct an inadvertent error therein and hereby agree as follows: 1. Amendment. Schedule I to the Stockholders Agreement is hereby amended and restated in its entirety in the the form attached hereto as Exhibit A. 2. Entire Agreement. This Agreement sets forth the entire understanding and agreement of the parties hereto in relation to the subject matter hereof. None of the terms or conditions of this Amendment may be changed, modified, waived or canceled except by a writing signed by all parties hereto. 3. Full Force and Effect. Except as hereby specifically amended, the Stockholders Agreement is hereby confirmed and ratified in all respects and shall remain in full force and effect according to its terms. All references in the Stockholders Agreement to the 'Agreement' shall mean the Stockholders Agreement as amended hereby. 4. Counterparts. This Amendment may be executed in any number of counterparts, each of which shall be deemed an original and all of which together constitute one and the same instrument. 5. Governing Law. This Amendment shall be construed in accordance with and governed by the laws of the State of New York without giving effect to its principles of conflicts of law. IN WITNESS WHEREOF, the Parent and each Stockholder have caused this Amendment No. 1 to be duly executed as of the day and year first above written. TRIARC COMPANIES, INC. By: /s/ BRIAN L. SCHORR ................................. Name: Brian L. Schorr Title: Executive Vice President STOCKHOLDERS: /s/ SAMUEL M. SIMPSON ..................................... Samuel M. Simpson /s/ SUSAN L. NEFF ..................................... Susan L. Neff /s/ WILLIAM H. RUTTER ..................................... William H. Rutter /s/ SUSAN L. FRALICK ..................................... Susan L. Fralick EXHIBIT A SCHEDULE I
SHARES OF COMPANY EXCLUDED STOCKHOLDER NAME AND ADDRESS COMMON STOCK SHARES SHARES - ----------------------------------------------------------------------- ------------ ---------- ------- Samuel M. Simpson ..................................................... 723,643 0 723,643(1) 3005 Cherry Ridge Road Cherry Hills Village, CO 80110 Susan L. Neff ......................................................... 381,234 0 381,234 3005 Cherry Ridge Road Cherry Hills Village, CO 80110 William H. Rutter ..................................................... 666,532 10,000(2) 656,532 1868 South Highland Drive Moab, UT 84532 Susan L. Fralick ...................................................... 7,200 2,200(3) 5,000 1868 South Highland Drive Moab, UT 84532
- ------------ (1) 60,000 of Mr. Simpson's Shares have been pledged to William H. Rutter as security. (2) Mr. Rutter's Excluded Shares are comprised of 10,000 shares in a trust for his benefit, for which Cynthia S. Rutter is trustee. (3) Ms. Fralick's Excluded Shares are comprised of 2,200 shares in an IRA account. APPENDIX C [LETTERHEAD OF MONTGOMERY SECURITIES] June 24, 1997 Board of Directors Cable Car Beverage Corporation 717 17th Street, Suite 1475 Denver, Colorado 80202 Gentlemen: We understand that Cable Car Beverage Corporation, a Delaware corporation ('Seller'), and Triarc Companies, Inc., a Delaware corporation ('Buyer'), have entered into a Merger Agreement dated June 24, 1997 (the 'Merger Agreement'), pursuant to which Seller will be merged with and into Buyer, which will be the surviving entity (the 'Merger'). Pursuant to the Merger, as more fully described in the Merger Agreement and as further described to us by management of Seller, we understand that each outstanding share of the common stock, $.01 par value per share ('Seller Common Stock'), of Seller will be converted into and exchangeable for 0.1722 shares of the Class A common stock, $.10 par value per share ('Buyer Common Stock'), of Buyer, subject to certain adjustments (the 'Consideration'). The terms and conditions of the Merger are set forth in more detail in the Merger Agreement. You have asked for our opinion as investment bankers as to whether the Consideration to be received by the stockholders of Seller pursuant to the Merger is fair to such stockholders from a financial point of view, as of the date hereof. In connection with this assignment, on June 19, 1997 we presented to the Board of Directors of Seller a summary of our financial analysis and our oral opinion as to the matters set forth in this letter. As you are aware, we were not retained to nor did we advise Seller with respect to alternatives to the Merger or Seller's underlying decision to proceed with or effect the Merger. Further, we were not requested to nor did we solicit or assist Seller in soliciting indications of interest from third parties for all or any part of Seller. In connection with our opinion, we have, among other things: (i) reviewed certain publicly available financial and other data with respect to Seller and Buyer, including the consolidated financial statements for recent years and interim periods to March 31, 1997 and certain other relevant financial and operating data relating to Seller and Buyer made available to us from published sources and from the internal records of Seller and Buyer, (ii) reviewed the financial terms and conditions of the Merger Agreement; (iii) reviewed certain publicly available information concerning the trading of, and the trading market for, Seller Common Stock and Buyer Common Stock; (iv) compared Seller and Buyer from a financial point of view with certain other companies in the beverage industry which we deemed to be relevant; (v) considered the financial terms, to the extent publicly available, of selected recent business combinations of companies in the beverage industry which we deemed to be comparable, in whole or in part, to the Merger; (vi) reviewed and discussed with representatives of the management of Seller and Buyer certain information of a business and financial nature regarding Seller and Buyer, furnished to us by them, including financial forecasts and related assumptions of Seller and Buyer; (vii) made inquiries regarding and discussed the Merger and the Merger Agreement and other matters related thereto with Seller's counsel; and (viii) performed such other analyses and examinations as we have deemed appropriate. In connection with our review, we have not assumed any obligation independently to verify the foregoing information and have relied on its being accurate and complete in all material respects. With respect to the financial forecasts for Seller and Buyer provided to us by their respective managements, upon their advice and with your consent we have assumed for purposes of our opinion that the forecasts (including the assumptions regarding the recent acquisition of Snapple Beverage Corp. by Buyer) have been reasonably prepared on bases reflecting the best available estimates and judgments of their respective managements at the time through the date hereof as to the future financial performance of Seller and Buyer and that they provide a reasonable basis upon which we can form our opinion. We C-1 have also assumed that there have been no material changes in Seller's or Buyer's assets, financial condition, results of operations, business or prospects since the respective dates of their last financial statements made available to us. We have relied on advice of the counsel and the independent accountants to Seller as to all legal and financial reporting matters with respect to Seller, the Merger and the Merger Agreement. We have assumed that the Merger will be consummated in a manner that complies in all respects with the applicable provisions of the Securities Act of 1933, as amended (the 'Securities Act'), the Securities Exchange Act of 1934 and all other applicable federal and state statutes, rules and regulations. In addition, we have not assumed responsibility for making an independent evaluation, appraisal or physical inspection of any of the assets or liabilities (contingent or otherwise) of Seller or Buyer, nor have we been furnished with any such appraisals. Finally, our opinion is based on economic, monetary and market and other conditions as in effect on, and the information made available to us as of, the date hereof. Accordingly, although subsequent developments may affect this opinion, we have not assumed any obligation to update, revise or reaffirm this opinion. We have further assumed with your consent that the Merger will be consummated in accordance with the terms described in the Merger Agreement, without any further amendments thereto, and without waiver by Seller of any of the conditions to its obligations thereunder. Based upon the foregoing and in reliance thereon, it is our opinion as investment bankers that the Consideration to be received by the stockholders of Seller pursuant to the Merger is fair to such stockholders from a financial point of view, as of the date hereof. We are not expressing (and cannot express) an opinion regarding the price at which the Buyer Common Stock may trade at any future time. The Consideration to be received by the stockholders of Seller pursuant to the Merger is based upon a fixed exchange ratio (subject to a collar) and, accordingly, the market value of the Consideration may vary significantly from what such stockholder would receive if the Merger were completed today. Additionally, the market value of the Consideration received in the Merger can be expected to change after consummation of the Merger as the trading price of Buyer's Securities changes in the ordinary course (or otherwise) of purchases and sales in the open market. This opinion is directed to the Board of Directors of Seller in its consideration of the Merger and is not a recommendation to any stockholder as to how such stockholder should vote with respect to the Merger. Further, this opinion addresses only the financial fairness of the Consideration to the stockholders and does not address any other aspect of the Merger including, without limitation, the relative merits of the Merger, any alternatives to the Merger or Seller's underlying decision to proceed with or effect the Merger. This opinion may not be used or referred to by Seller, or quoted or disclosed to any person in any manner, without our prior written consent, which consent is hereby given to the inclusion of this opinion in any proxy statement or prospectus filed with the Securities and Exchange Commission in connection with the Merger. In furnishing this opinion, we do not admit that we are experts within the meaning of the term 'experts' as used in the Securities Act and the rules and regulations promulgated thereunder, nor do we admit that this opinion constitutes a report or valuation within the meaning of Section 11 of the Securities Act. Very truly yours, MONTGOMERY SECURITIES C-2 APPENDIX D APPRAISAL RIGHTS PROVISIONS OF THE DELAWARE GENERAL CORPORATION LAW Section 262. Appraisal Rights. (a) Any stockholder of a corporation of this State who holds shares of stock on the date of the making of a demand pursuant to subsection (d) of this section with respect to such shares, who continuously holds such shares through the effective date of the merger or consolidation, who has otherwise complied with subsection (d) of this section and who has neither voted in favor of the merger or consolidation nor consented thereto in writing pursuant to sec. 228 of this title shall be entitled to an appraisal by the Court of Chancery of the fair value of his shares of stock under the circumstances described in subsections (b) and (c) of this section. As used in this section, the word 'stockholder' means a holder of record of stock in a stock corporation and also a member of record of a nonstock corporation; the words 'stock' and 'share' mean and include what is ordinarily meant by those words and also membership or membership interest of a member of a nonstock corporation; and the words 'depository receipt' mean a receipt or other instrument issued by a depository representing an interest in one or more shares, or fractions thereof, solely of stock of a corporation, which stock is deposited with the depository. (b) Appraisal rights shall be available for the shares of any class or series of stock of a constituent corporation in a merger or consolidation to be effected pursuant to sec. 251 (other than a merger effected pursuant to subsection (g) of sec. 251), 252, 254, 257, 258, 263 or 264 of this title: (1) Provided, however, that no appraisal rights under this section shall be available for the shares of any class or series of stock, which stock, or depository receipt in respect thereof, at the record date fixed to determine the stockholders entitled to receive notice of and to vote at the meeting of stockholders to act upon the agreement of merger or consolidation, were either (i) listed on a national securities exchange or designated as a national market system security on an interdealer quotation system by the National Association of Securities Dealers, Inc. or (ii) held of record by more than 2,000 holders; and further provided that no appraisal rights shall be available for any shares of stock of the constituent corporation surviving a merger if the merger did not require for its approval the vote of the stockholders of the surviving corporation as provided in subsection (f) of sec. 251 of this title. (2) Notwithstanding paragraph (1) of this subsection, appraisal rights under this section shall be available for the shares of any class or series of stock of a constituent corporation if the holders thereof are required by the terms of an agreement of merger or consolidation pursuant to sec. 251, 252, 254, 257, 258, 263 and 264 of this title to accept for such stock anything except: a. Shares of stock of the corporation surviving or resulting from such merger or consolidation, or depository receipts in respect thereof; b. Shares of stock of any other corporation, or depository receipts in respect thereof, which shares of stock (or depository receipts in respect thereof) or depository receipts at the effective date of the merger or consolidation will be either listed on a national securities exchange or designated as a national market system security on an interdealer quotation system by the National Association of Securities Dealers, Inc. or held of record by more than 2,000 holders; c. Cash in lieu of fractional shares or fractional depository receipts described in the foregoing subparagraphs a. and b. of this paragraph; d. Any combination of the shares of stock, depository receipts and cash in lieu of fractional shares or fractional depository receipts described in the foregoing subparagraphs a., b. and c. of this paragraph. D-1 (3) In the event all of the stock of a subsidiary Delaware corporation party to a merger effected under sec. 253 of this title is not owned by the parent corporation immediately prior to the merger, appraisal rights shall be available for the shares of the subsidiary Delaware corporation. (c) Any corporation may provide in its certificate of incorporation that appraisal rights under this section shall be available for the shares of any class or series of its stock as a result of an amendment to its certificate of incorporation, any merger or consolidation in which the corporation is a constituent corporation or the sale of all or substantially all of the assets of the corporation. If the certificate of incorporation contains such a provision, the procedures of this section, including those set forth in subsections (d) and (e) of this section, shall apply as nearly as is practicable. (d) Appraisal rights shall be perfected as follows: (1) If a proposed merger or consolidation for which appraisal rights are provided under this section is to be submitted for approval at a meeting of stockholders, the corporation, not less than 20 days prior to the meeting, shall notify each of its stockholders who was such on the record date for such meeting with respect to shares for which appraisal rights are available pursuant to subsection (b) or (c) hereof that appraisal rights are available for any or all of the shares of the constituent corporations, and shall include in such notice a copy of this section. Each stockholder electing to demand the appraisal of his shares shall deliver to the corporation, before the taking of the vote on the merger or consolidation, a written demand for appraisal of his shares. Such demand will be sufficient if it reasonably informs the corporation of the identity of the stockholder and that the stockholder intends thereby to demand the appraisal of his shares. A proxy or vote against the merger or consolidation shall not constitute such a demand. A stockholder electing to take such action must do so by a separate written demand as herein provided. Within 10 days after the effective date of such merger or consolidation, the surviving or resulting corporation shall notify each stockholder of each constituent corporation who has complied with this subsection and has not voted in favor of or consented to the merger or consolidation of the date that the merger or consolidation has become effective; or (2) If the merger or consolidation was approved pursuant to 'SS' 228 or 'SS' 253 of this title, each constituent corporation, either before the effective date of the merger or consolidation or within ten days thereafter, shall notify each of the holders of any class or series of stock of such constituent corporation who are entitled to appraisal rights of the approval of the merger or consolidation and that appraisal rights are available for any or all shares of such class or series of stock of such constituent corporation, and shall include in such notice a copy of this section; provided that, if the notice is given on or after the effective date of the merger or consolidation, such notice shall be given by the surviving or resulting corporation to all such holders of any class or series of stock of a constituent corporation that are entitled to appraisal rights. Such notice may, and, if given on or after the effective date of the merger or consolidation, shall, also notify such stockholders of the effective date of the merger or consolidation. Any stockholder entitled to appraisal rights may, within twenty days after the date of mailing of such notice, demand in writing from the surviving or resulting corporation the appraisal of such holder's shares. Such demand will be sufficient if it reasonably informs the corporation of the identity of the stockholder and that the stockholder intends thereby to demand the appraisal of such holder's shares. If such notice did not notify stockholders of the effective date of the merger or consolidation, either (i) each such constituent corporation shall send a second notice before the effective date of the merger or consolidation notifying each of the holders of any class or series of stock of such constituent corporation that are entitled to appraisal rights of the effective date of the merger or consolidation or (ii) the surviving or resulting corporation shall send such a second notice to all such holders on or within 10 days after such effective date; provided, however, that if such second notice is sent more than 20 days following the sending of the first notice, such second notice need only be sent to each stockholder who is entitled to appraisal rights and who has demanded appraisal of such holder's shares in accordance with this subsection. An affidavit of the secretary or assistant secretary or of the transfer agent of the corporation that is required to give either notice that such notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein. For purposes of determining the stockholders entitled to receive either notice, each D-2 constituent corporation may fix, in advance, a record date that shall be not more than 10 days prior to the date the notice is given; provided that, if the notice is given on or after the effective date of the merger or consolidation, the record date shall be such effective date. If no record date is fixed and the notice is given prior to the effective date, the record date shall be the close of business on the day next preceding the day on which the notice is given. (e) Within 120 days after the effective date of the merger or consolidation, the surviving or resulting corporation or any stockholder who has complied with subsections (a) and (d) hereof and who is otherwise entitled to appraisal rights, may file a petition in the Court of Chancery demanding a determination of the value of the stock of all such stockholders. Notwithstanding the foregoing, at any time within 60 days after the effective date of the merger or consolidation, any stockholder shall have the right to withdraw his demand for appraisal and to accept the terms offered upon the merger or consolidation. Within 120 days after the effective date of the merger or consolidation, any stockholder who has complied with the requirements of subsections (a) and (d) hereof, upon written request, shall be entitled to receive from the corporation surviving the merger or resulting from the consolidation a statement setting forth the aggregate number of shares not voted in favor of the merger or consolidation and with respect to which demands for appraisal have been received and the aggregate number of holders of such shares. Such written statement shall be mailed to the stockholder within 10 days after his written request for such a statement is received by the surviving or resulting corporation or within 10 days after expiration of the period for delivery of demands for appraisal under subsection (d) hereof, whichever is later. (f) Upon the filing of any such petition by a stockholder, service of a copy thereof shall be made upon the surviving or resulting corporation, which shall within 20 days after such service file in the office of the Register in Chancery in which the petition was filed a duly verified list containing the names and addresses of all stockholders who have demanded payment for their shares and with whom agreements as to the value of their shares have not been reached by the surviving or resulting corporation. If the petition shall be filed by the surviving or resulting corporation, the petition shall be accompanied by such a duly verified list. The Register in Chancery, if so ordered by the Court, shall give notice of the time and place fixed for the hearing of such petition by registered or certified mail to the surviving or resulting corporation and to the stockholders shown on the list at the addresses therein stated. Such notice shall also be given by 1 or more publications at least 1 week before the day of the hearing, in a newspaper of general circulation published in the City of Wilmington, Delaware, or such publication as the Court deems advisable. The forms of the notices by mail and by publication shall be approved by the Court, and the costs thereof shall be borne by the surviving or resulting corporation. (g) At the hearing on such petition, the Court shall determine the stockholders who have complied with this section and who have become entitled to appraisal rights. The Court may require the stockholders who have demanded an appraisal for their shares and who hold stock represented by certificates to submit their certificates of stock to the Register in Chancery for notation thereon of the pendency of the appraisal proceedings; and if any stockholder fails to comply with such direction, the Court may dismiss the proceedings as to such stockholder. (h) After determining the stockholders entitled to an appraisal, the Court shall appraise the shares, determining their fair value exclusive of any element of value arising from the accomplishment or expectation of the merger or consolidation, together with a fair rate of interest, if any, to be paid upon the amount determined to be the fair value. In determining such fair value, the Court shall take into account all relevant factors. In determining the fair rate of interest, the Court may consider all relevant factors, including the rate of interest which the surviving or resulting corporation would have had to pay to borrow money during the pendency of the proceeding. Upon application by the surviving or resulting corporation or by any stockholder entitled to participate in the appraisal proceeding, the Court may, in its discretion, permit discovery or other pretrial proceedings and may proceed to trial upon the appraisal prior to the final determination of the stockholder entitled to an appraisal. Any stockholder whose name appears on the list filed by the surviving or resulting corporation pursuant to subsection (f) of this section and who has submitted his certificates of stock to the Register in Chancery, if such is required, may participate fully in all proceedings until it is finally determined that he is not entitled to appraisal rights under this section. D-3 (i) The Court shall direct the payment of the fair value of the shares, together with interest, if any, by the surviving or resulting corporation to the stockholders entitled thereto. Interest may be simple or compound, as the Court may direct. Payment shall be so made to each such stockholder, in the case of holders of uncertified stock forthwith, and the case of holders of shares represented by certificates upon the surrender to the corporation of the certificates representing such stock. The Court's decree may be enforced as other decrees in the Court of Chancery may be enforced, whether such surviving or resulting corporation be a corporation of this State or of any state. (j) The costs of the proceeding may be determined by the Court and taxed upon the parties as the Court deems equitable in the circumstances. Upon application of a stockholder, the Court may order all or a portion of the expenses incurred by any stockholder in connection with the appraisal proceeding, including, without limitation, reasonable attorney's fees and the fees and expenses of experts, to be charged pro rata against the value of all the shares entitled to an appraisal. (k) From and after the effective date of the merger or consolidation, no stockholder who has demanded his appraisal rights as provided in subsection (d) of this section shall be entitled to vote such stock for any purpose or to receive payment of dividends or other distributions on the stock (except dividends or other distributions payable to stockholders of record at a date which is prior to the effective date of the merger or consolidation); provided, however, that if no petition for an appraisal shall be filed within the time provided in subsection (e) of this section, or if such stockholder shall deliver to the surviving or resulting corporation a written withdrawal of his demand for an appraisal and an acceptance of the merger or consolidation, either within 60 days after the effective date of the merger or consolidation as provided in subsection (e) of this section or thereafter with the written approval of the corporation, then the right of such stockholder to an appraisal shall cease. Notwithstanding the foregoing, no appraisal proceeding in the Court of Chancery shall be dismissed as to any stockholder without the approval of the Court, and such approval may be conditioned upon such terms as the Court deems just. (1) The shares of the surviving or resulting corporation to which the shares of such objecting stockholders would have been converted had they assented to the merger or consolidation shall have the status of authorized and unissued shares of the surviving or resulting corporation. D-4 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS The Triarc Charter provides indemnification to the extent not prohibited by Delaware law (including as such law may be amended in the future to be more favorable to directors and officers). Section 145 of the DGCL provides that a corporation may indemnify any person who was or is a party or is threatened to be made and party to any threatened, pending or completed civil, criminal, administrative or investigative action, suit or proceeding (other than an action by or in the right of the corporation, such as a derivative action) by reason of the fact that he or she is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of an Other Entity. The Triarc Charter provides that its officers and directors, and any person serving in any capacity at the request of Triarc for an Other Entity shall be entitled to such indemnification; however, the Triarc Board may specifically grant such indemnification to other persons in respect of service to Triarc or an Other Entity. The Triarc Charter specifies that any director or officer of Triarc serving in any capacity with a majority owned subsidiary or any employee benefit plan of Triarc or of any majority owned subsidiary shall be deemed to be doing so at the request of Triarc. Under Section 145 of the DGCL, depending on the nature of the proceeding, a corporation may indemnify against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred in connection with such action, suit or proceeding if the person so indemnified acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe that his or her conduct was unlawful. In the case of a derivative action, no indemnification may be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation, unless and only to the extent that the Delaware Court or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability, such person is fairly and reasonable entitled to indemnity for such expenses as such court shall deem proper. Section 145 further provides that to the extent that a director or officer of a corporation is successful in the defense of any action, suit or proceeding referred to above or in the defense of any claim, issue or matter therein, he or she shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred in connection therewith. However, if such director or officer is not successful in the defense of any such action, suit or proceeding, or in the defense of any claim, issue or matter therein, he or she shall only be indemnified by the corporation as authorized in the specific case upon a determination that indemnification is proper because he or she met the applicable standard set forth above as determined by a majority of the disinterested directors, by independent legal counsel or by the stockholders. 2 The Triarc Charter provides that expenses are to be advanced prior to the final disposition of a proceeding upon the receipt by Triarc of an undertaking, as required by the DGCL, that the director or officer or other indemnified person will repay such advances if he or she is ultimately found not to be entitled to indemnification under the DGCL. The Triarc Charter permits a person entitled to indemnity to bring an action in court to obtain such indemnity and provides that, in any such action, the court will not be bound by a decision of the Triarc Board, independent counsel or stockholders that such person is not entitled to indemnification. Such person is also indemnified for any expenses incurred in connection with successfully establishing his or her right to indemnification in any such proceeding. The Triarc Charter expressly provides that the right to indemnification thereunder is a contract right and, therefore, cannot be retroactively eliminated by a later stockholder vote, and is not an exclusive right and, therefore, Triarc may provide other indemnification, if appropriate. Triarc also enters into indemnification agreements with its directors and officers indemnifying them against liability they may incur in their capacity as such. The indemnification agreements do not provide indemnification to the extent that the indemnitee is indemnified by Triarc under the Triarc Charter, the Triarc Bylaws, its directors' and officers' liability insurance, or otherwise. Additionally, the indemnification agreements do not provide indemnification (i) for the return by the indemnitee of any illegal remuneration paid to him or her; (ii) for any profits payable by the indemnitee to Triarc pursuant to Section 16(b) of the Exchange Act; (iii) for any liability resulting from the indemnitee's fraudulent, dishonest or willful misconduct; (iv) for any amount the payment of which is not permitted by applicable law; (v) for any liability resulting from conduct producing unlawful personal benefit; or (vi) if a final court adjudication determines such indemnification is not lawful. Determinations as to whether an indemnitee is entitled to be paid under the indemnification agreements may be made by the majority vote of a quorum of disinterested directors, independent legal counsel selected by the Triarc Board, a majority of disinterested Triarc stockholders or by a final adjudication of a court of competent jurisdiction. In the event that Triarc undergoes a 'Change of Control' (as defined in the indemnification agreements) all such determinations shall be made by special independent counsel selected by the indemnitee and approved by Triarc, which consent may not be unreasonably withheld. In certain circumstances, an indemnitee may require Triarc to establish a trust fund to assure that funds will be available to pay any amounts which may be due such indemnitee under an indemnification agreement. As permitted by Section 102(b)(7) of the DGCL, the Triarc Charter includes a provision which eliminates the personal liability of a director to Triarc or its stockholders for monetary damages for breach of fiduciary duty as a director, other than liability (i) for the breach of a director's duty of loyalty to Triarc and it stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing 3 violation of law, (iii) under Section 174 of the DGCL (relating to unlawful payment of a dividend and unlawful stock purchase and redemption) or (iv) for any transaction from which the director derived any improper personal benefit. Finally, the Triarc Charter authorizes Triarc, as permitted by the DGCL, to purchase directors' and officers' liability insurance. Triarc carries directors' and officers' liability insurance covering losses up to $25,000,000. ITEM 21. EXHIBITS EXHIBIT NO. DESCRIPTION ------- ------------------------------------------------------------------ 2.1 -- Agreement and Plan of Merger, dated June 24, 1997, among Cable Car Beverage Corporation, Triarc and CCB Merger Corporation (included as Appendix B-1 to the Proxy Statement/Prospectus filed as part of this Registration Statement). 2.2 -- Amendment No. 1 to Agreement and Plan of Merger, dated as of September 30, 1997 (included as Appendix B-1 to the Proxy Statement/Prospectus filed as part of this Registration Statement). 3.1 -- Certificate of Incorporation of Triarc, as in effect.* 3.3 -- By-laws of Triarc, incorporated herein by reference to Exhibit 3.1 to Triarc's Current Report on Form 8-K dated March 31, 1997 (SEC file No. 1-2207). 4.1 -- Note Purchase Agreement dated as of April 23, 1993 among RCAC, Triarc, RCRB Funding, Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated, incorporated herein by reference to Exhibit 4 to Triarc's Current Report on Form 8-K dated April 23, 1993 (SEC file No. 1-2207). 4.2 -- Indenture dated as of August 1, 1993 among RC/Arby's Corporation ('RCAC'), Royal Crown, Arby's, Inc. ('Arby's') and The Bank of New York, as Trustee, relating to the 9-3/4% Senior Secured Notes Due 2000.* 4.3 -- Amended and Restated Loan Agreement dated as of October 13, 1995 by and between FFCA Acquisition Corporation and Arby's Restaurant Development Corporation ('ARDC'), incorporated herein by reference to Exhibit 10.1 to RCAC's Quarterly Report on Form 10-Q for the quarter ended September 30, 1995 (SEC file No. 0-20286). 4.4 -- Loan Agreement dated as of October 13, 1995 by and between FFCA Acquisition Corporation ('FFCAAC') and Arby's Restaurant Holding Company ('ARHC'), incorporated herein by reference to Exhibit 10.2 to RCAC's Quarterly Report on Form 10-Q for the quarter ended September 30, 1995 (SEC file No. 0-20286). 4.5 -- Credit Agreement, dated as of June 26, 1996, among National Propane, L.P., The First National Bank of Boston, as administrative agent and a lender, Bank of America NT & SA, as a lender, and BA Securities, Inc., as syndication agent, incorporated herein by reference to Exhibit 10.1 to Current Report of National Propane Partners, L.P. (the 'Partnership') on Form 8-K dated August 13, 1996 (SEC file No. 1-11867). 4.6 -- Note Purchase Agreement, dated as of June 26, 1996 ('Note Purchase Agreement'), among National Propane, L.P. and each of the Purchasers listed in Schedule A thereto relating to $125 million aggregate principal amount of 8.54% First Mortgage Notes due June 30, 2010, incorporated herein by reference to 4 Exhibit 10.2 to the Partnership's Current Report on Form 8-K dated August 13, 1996 (SEC file No. 1-11867). 4.7 -- Consent, Waiver and Amendment dated November 5, 1996 among National Propane, L.P. and each of the Purchasers under the Note Purchase Agreement, incorporated herein by reference to Exhibit 4.1 to Triarc's Current Report on Form 8-K dated March 31, 1997 (SEC file No. 1-2207). 4.8 -- Second Consent, Waiver and Amendment dated January 14, 1997 among National Propane, L.P. and each of the Purchasers under the Note Purchase Agreement, incorporated herein by reference to Exhibit 4.2 to Triarc's Current Report on Form 8-K dated March 31, 1997 (SEC file No. 1-2207). 4.9 -- Credit Agreement dated as of May 16, 1996 between: C.H. Patrick & Co., Inc., the Registrant, each of the lenders party thereto, Internationale Nederlanden (U.S.) Capital Corporation, as agent, and The First National Bank of Boston, as co-agent, incorporated herein by reference to Exhibit 4.3 to Triarc's Current Report on Form 8-K dated March 31, 1997 (SEC file No. 1-2207). 4.10 -- Note dated July 2, 1996 of Triarc, payable to the order of National Propane, L.P., incorporated herein by reference to Exhibit 10.5 to the Partnership's Current Report on Form 8-K dated August 13, 1996 (SEC file No. 1-11867). 4.11 -- Loan Agreement dated as of September 5, 1996 by and between FFCA Mortgage Corporation and ARHC, incorporated herein by reference to Exhibit 4.1 to RC/Arby's Corporation's Current Report on Form 8-K dated November 14, 1996 (SEC file No. 0-20286). 4.12 -- Supplement to Loan Agreement as of June 26, 1996 among FFCA Acquisition Corporation, ARHC, ARDC and Arby's, incorporated herein by reference to Exhibit 4.2 to RCAC's Current Report on Form 8-K dated November 14, 1996 (SEC file No. 0-20286). 4.13 -- Agreement Regarding Cross Collateralization and Cross-Default Provisions as of June 26, 1996 by and among FFCA Acquisition Corporation, ARDC, ARHC and Arby's, Inc., incorporated herein by reference to Exhibit 4.3 to RCAC's Current Report on Form 8-K dated November 14, 1996 (SEC file No. 0- 020286). 4.14 -- First Amendment dated as of March 27, 1997, to the Credit Agreement dated as of June 26, 1996, among National Propane, L.P., The First National Bank of Boston, as administrative agent and a lender, Bank of America NT & SA, as a lender, and BA Securities, Inc., as syndication agent, incorporated herein by reference to Exhibit 10.3 to the Partnership's Current Report on Form 8-K dated March 31, 1997 (SEC file No. 1-11867). 4.15 -- Amended and Restated Credit Agreement dated as of August 15, 1997 among Mistic Brands, Inc., Snapple Beverage Corp. and Triarc Beverage Holdings Corp., as the Borrowers, various financial institutions as the Lenders, Donaldson, Lufkin & Jenrette Securities Corporation, as the arranger for the Lenders, Morgan Stanley Senior Funding, as co-arranger and the Documentation Agent for the Lenders, DLJ Capital Funding, Inc., as the Syndication Agent for the Lenders, and The Bank of New York, as the Administrative Agent for the Lenders, incorporated herein by reference to Exhibit 10.1 to Triarc's Quarterly Report on Form 10-Q/A for the quarterly period ended June 29, 1997, dated September 29, 1997 (SEC file No. 1-2207). 4.16 -- Master Agreement dated as of May 5, 1997, among Franchise Finance Corporation of America, Franchise Finance, FFCAAC, FFCA Mortgage Corporation, Triarc, ARDC, ARHC, Arby's Restaurant Operations Company ('AROC'), Arby's, RTM Operating Company ('RTMOC'), RTM Development Company, RTM Partners, Inc. ('Holdco'), RTM Holding Company, Inc. ('RTM Parent'), RTM Management Company, LLC ('RTMM') and RTM, Inc. ('RTM').* 5 5.1 -- Opinion of Paul, Weiss, Rifkind, Wharton & Garrison, as to the legality of the Parent Class A Common Stock being registered hereby.* 8.1 -- Tax Opinion of Sherman & Howard, LLC.* 9.1 -- Stockholders Agreement dated June 24, 1997 by and among Triarc and each of the parties signatory thereto (included as Appendix B-2 to the Proxy Statement/Prospectus filed as part of this Registration Statement). 9.2 -- Amendment No. 1 to Stockholders Agreement date as of July 9, 1997 by and among Triarc and each of the parties signatory thereto (included in Appendix B-2 to the Proxy Statement/Prospectus filed as part of this Registration Statement). 10.1 -- Employment Agreement dated as of April 24, 1993 between Donald L. Pierce and Arby's, incorporated herein by reference to Exhibit 7 to Triarc's Current Report on Form 8-K dated April 23, 1993 (SEC file No. 1-2207). 10.2 -- Employment Agreement dated as of April 24, 1993 among John C. Carson, Royal Crown and Triarc, incorporated herein by reference to Exhibit 8 to Triarc's Current Report on Form 8-K dated April 23, 1993 (SEC file No. 1-2207). 10.3 -- Employment Agreement dated as of April 24, 1993 between Ronald D. Paliughi and National Propane Corporation (the 'Paliughi Employment Agreement'), incorporated herein by reference to Exhibit 9 to Triarc's Current Report on Form 8-K dated April 23, 1993 (SEC file No. 1-2207). 10.4 -- Triarc's 1993 Equity Participation Plan, as amended and restated, incorporated herein by reference to Exhibit 10.1 to Triarc's Current Report on Form 8-K dated March 31, 1997 (SEC file No. 1-2207). 10.5 -- Form of Non-Incentive Stock Option Agreement under Triarc's Amended and Restated 1993 Equity Participation Plan, incorporated herein by reference to Exhibit 10.2 to Triarc's Current Report on Form 8-K dated March 31, 1997 (SEC file No. 1-2207). 10.6 -- Form of Restricted Stock Agreement under Triarc's Amended and Restated 1993 Equity Participation Plan, incorporated herein by reference to Exhibit 13 to Triarc's Current Report on Form 8-K dated April 23, 1993 (SEC file No. 1-2207). 10.7 -- Consulting Agreement dated as of April 23, 1993 between Triarc and Steven Posner, incorporated herein by reference to Exhibit 10.8 to Triarc's Annual Report on Form 10-K for the fiscal year ended April 30, 1993 (SEC file No. 1-2207). 10.8 -- Concentrate Sales Agreement dated as of January 28, 1994 between Royal Crown and Cott,-- Confidential treatment has been granted for portions of the agreement -- incorporated herein by reference to Exhibit 10.12 to Amendment No. 1 to Triarc's Registration Statement on Form S-4 dated March 11, 1994 (SEC file No. 1-2207). 10.9 -- Form of Indemnification Agreement, between Triarc and certain officers, directors, and employees of Triarc, incorporated herein by reference to Exhibit F to the 1994 Proxy (SEC file No. 1-2207). 10.10 -- Amendment No. 1, dated December 7, 1994 to the Paliughi Employment Agreement, incorporated herein by reference to Exhibit 10.1 to Triarc's Current Report on Form 8-K dated March 29, 1995 (SEC file No. 1-2207). 10.11 -- Settlement Agreement, dated as of January 9, 1995, among Triarc, Security Management Corp., Victor Posner Trust No. 6 and Victor Posner, incorporated herein by reference to Exhibit 99.1 to Triarc's Current Report on Form 8-K dated January 11, 1995 (SEC file No. 1-2207). 10.12 -- Employment Agreement, dated as June 29, 1994, between Brian L. Schorr and Triarc, incorporated herein by reference to Exhibit 10.2 to Triarc's Current Report on Form 8-K dated March 29, 1995 (SEC file No. 1-2207). 6 10.13 -- Amendment No. 2, dated as of March 27, 1995, to the Paliughi Employment Agreement, incorporated herein by reference to Exhibit 10.20 to Triarc's Annual Report on Form 10-K for the year ended December 31, 1995 (SEC file No. 1-2207). 10.14 -- Letter Agreement, dated as of January 1, 1996 between Triarc and Leon Kalvaria incorporated herein by reference to Exhibit 10.21 to Triarc's Annual Report on Form 10-K for the year ended December 31, 1995 (SEC file No. 1-2207). 10.15 -- Employment and SAR Agreement dated as of August 9, 1995 between Mistic Brands, Inc. and Michael Weinstein, incorporated herein by reference to Exhibit 10.2 to Triarc's Annual Report on Form 10-K for the year ended December 31, 1995 (SEC file No. 1-2207). 10.16 -- Employment and SAR Agreement dated as of August 9, 1995 between Mistic Brands, Inc. and Ernest J. Cavallo, incorporated herein by reference to Exhibit 10.23 to Triarc's Annual Report on Form 10-K for the year ended December 31, 1995 (SEC file No. 1-2207). 10.17 -- Amendment to Employment Agreement of Ronald D. Paliughi dated of June 10, 1996, incorporated herein by reference to Exhibit 10.7 to Partnership's Current Report on Form 8-K dated August 13, 1996. (SEC file No. 1-11867). 10.18 -- Stock Purchase Agreement dated February 13, 1997 by and among Arby's, ARDC, ARHC, AROC, Holdco and RTM, incorporated herein by reference to Exhibit 10.1 to RCAC's Current Report on Form 8-K dated February 13, 1997 (SEC file No. 0-20286). 10.19 -- Purchase Agreement among the Partnership, Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Donaldson, Lufkin & Jenrette Securities Corporation, Janney Montgomery Scott Inc., Rauscher Pierce Refsnes, Inc. and the Robinson-Humphrey Company, Inc., incorporated herein by reference to Exhibit 1.1 to the Partnership's Current Report on Form 8-K dated August 13, 1996 (SEC file No. 1-11867). 10.20 -- Contribution and Assumption Agreement among the Partnership, National Propane, National Propane SGP, Inc. and National Sales & Service, Inc., incorporated herein by reference to Exhibit 10.4 to the Partnership's Current Report on Form 8-K dated August 13, 1996 (SEC file No. 1-11867). 10.21 -- Conveyance, Contribution and Assumption Agreement among the Partnership, National Propane and National Propane SGP, Inc., incorporated herein by reference to Exhibit 10.3 to the Partnership's Current Report on Form 8-K dated August 13, 1996 (SEC file No. 1-11867). 10.22 -- Supply Agreement dated as of March 31, 1996 by and between Avondale Mills, Inc. and C.H. Patrick & Co., Inc. -- Confidential treatment has been granted for portions of the Supply Agreement -- incorporated herein by reference to Exhibit 10 to Triarc's Current Report on Form 8-K/A dated June 25, 1996 (SEC file No. 1-2207). 10.23 -- Employment Agreement dated as of April 29, 1996 between Triarc and John L. Barnes, Jr., incorporated herein by reference to Exhibit 10.3 to Triarc's Current Report on Form 8-K dated March 31, 1997 (SEC file No. 1-2207). 10.24 -- Stock Purchase Agreement dated as of October 1, 1992 among DWG Acquisition, Victor Posner, Security Management Corp. and Victor Posner Trust No. 20, incorporated herein by reference to Exhibit 10 to Amendment No. 4 to Triarc's Current Report on Form 8-K dated October 5, 1992 (SEC file No. 1-2207). 10.25 -- Amendment dated as of October 1, 1992 between Triarc and DWG Acquisition, incorporated herein by reference to Exhibit 11 to Amendment No. 4 to Triarc's Current Report on Form 8-K dated October 5, 1992 (SEC file No. 1-2207). 7 10.26 -- Exchange Agreement dated as of October 1, 1992 between Triarc and Security Management Corp., incorporated herein by reference to Exhibit 12 to Amendment No. 4 to Triarc's Current Report on Form 8-K dated October 5, 1992 (SEC file No. 1-2207). 10.27 -- Asset Purchase Agreement dated as of March 31, 1996 by and among Avondale Mills Inc., Avondale Incorporated, Graniteville Company and the Registrant incorporated herein by reference to Exhibit 2.1 to the Triarc's Current Report on Form 8-K dated April 18, 1996 (SEC file No. 1-2207). 10.28 -- Asset Purchase Agreement dated as of August 9, 1995 among Mistic Brands, Inc., Joseph Victori Wines, Inc., Best Flavors, Inc., Nature's Own Beverage Company and Joseph Umbach, the Companies, and Joseph Umbach, incorporated herein by reference to Exhibit 2.1 to Triarc's Quarterly Report on Form 8-K dated August 9, 1995 (SEC file No. 1-2207). 10.29 -- Stock Purchase Agreement dated as of March 27, 1997 between The Quaker Oats Company and Triarc, incorporated herein by reference to Exhibit 2.1 to Triarc's Current Report on Form 8-K dated March 31, 1997 (SEC file No. 1-2207). 10.30 -- Option granted by Holdco in favor of ARHC, together with a schedule identifying other documents omitted and the material details in which such documents differ.* 10.31 -- Guaranty dated as of May 5, 1997 by RTM, RTM Parent, Holdco, RTMM and RTMOC in favor of Arby's ARDC, ARHC, AROC and Triarc.* 10.32 -- Settlement Agreement dated as of June 6, 1997 between Triarc, Victor Posner, Security Management Corporation and APL Corporation, incorporated herein by reference to Exhibit 10.5 to Triarc's Quarterly Report on Form 10-Q for the quarter ended June 29, 1997 (SEC file No. 1-2207). 21.1 -- Subsidiaries of the Registrant.* 23.1 -- Consent of Paul, Weiss, Rifkind, Wharton & Garrison, with respect to the legality of securities being registered (contained in Exhibit 5.1). 23.2 -- Consent of Sherman & Howard, LLC, with respect to certain tax matters (contained in Exhibit 5.2). 23 3 -- Consent of Deloitte & Touche LLP.* 23.4 -- Consent of Arthur Andersen LLP. * 23.5 -- Consent of Price Waterhouse LLP.* 23.6 -- Consent of Nationsbanc Montgomery Securities, Inc.* 99.1 -- Order of the United States District Court for the Northern District of Ohio, dated February 7, 1995, incorporated herein by reference to Exhibit 99.1 to Triarc's Current Report on Form 8-K dated March 29, 1995 (SEC file No. 1-2207). 99.2 -- Opinion of Montgomery Securities, Inc. dated June 24,1997 (included as Appendix C to the Proxy Statement/Prospectus filed as part of this Registration Statement) - ----------------------- * Filed herewith ITEM 22. UNDERTAKINGS. (a) The undersigned Registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: (i) to include any prospectus required by Section 10(a)(3) of the Securities Act of 1933, as amended (the 8 'Securities Act'); (ii) to reflect in the prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement; and (iii) to include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement. (2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (b) The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended (the 'Exchange Act') (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Exchange Act), that is incorporated by reference in the Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (c) The undersigned Registrant hereby undertakes as follows: that prior to any public reoffering of the securities registered hereunder through use of a prospectus which is a part of this Registration Statement, by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c), the issuer undertakes that such reoffering prospectus will contain the information called for by the applicable registration form with respect to reofferings by persons who may be deemed underwriters, in addition to the information called for by the other Items of the applicable form. (d) The undersigned Registrant undertakes that every prospectus (i) that is filed pursuant to paragraph (c) immediately preceding, or (ii) that purports to meet the requirements of section lO(a)(3) of the Securities Act and is used in connection with an offering of securities subject to Rule 415 under the Securities Act, will be filed as a part of an amendment to the Registration Statement and will not be used until such amendment is effective, and that, for purposes of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the 9 offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (e) Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. (f) The undersigned Registrant hereby undertakes to respond to requests for information that is incorporated by reference into the Proxy Statement/ Prospectus pursuant to Items 4, lO(b), 11 or 13 of this Form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the Registration Statement through the date of responding to the request. (g) The undersigned Registrant hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the Registration Statement when it became effective. SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-4 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York, State of New York, on October 22, 1997. TRIARC COMPANIES, INC. (Registrant) By: /s/ Nelson Peltz --------------------------------- Nelson Peltz Chairman and Chief Executive Officer POWER OF ATTORNEY The officers and directors of Triarc Companies, Inc. whose signatures appear below hereby constitute and appoint Nelson Peltz and Peter W. May, and each of them (with full power to each of them to act alone), their true and lawful attorneys-in-fact, with full powers of substitution and resubstitution, to sign and execute on behalf of the undersigned any and all amendments, including any post-effective amendments, to this Registration Statement, and to file the same, with exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, and each of the undersigned does hereby ratify and confirm all that said attorneys-in-fact shall do or cause to be done by virtue thereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below on October 22, 1997 by the following persons in the capacities indicated. Signature Titles --------- ------- /s/ Nelson Peltz Chairman and Chief Executive Officer and Director - ---------------------------- (Principal Executive Officer) Nelson Peltz /s/ Peter W. May President and Chief Operating Officer and Director - ---------------------------- (Principal Operating Officer) Peter W. May Signature Titles --------- ------- /s/ John L. Barnes. Jr. Senior Vice President and Chief Financial Officer - --------------------------- (Principal Financial Officer) John L. Barnes, Jr. /s/ Fred H. Schaefer Vice President and Chief Accounting Officer - --------------------------- (Principal Accounting Officer) Fred H. Schaefer /s/ Hugh L. Carey Director - --------------------------- Hugh L. Carey /s/ Clive Chajet Director - --------------------------- Clive Chajet /s/ Stanley R. Jaffe Director - --------------------------- Stanley R. Jaffe /s/ Joseph A. Levato Director - --------------------------- Joseph A. Levato /s/ David E. Schwab II Director - --------------------------- David E. Schwab II /s/ Raymond S. Troubh Director - --------------------------- Raymond S. Troubh /s/ Gerald Tsai, Jr. Director - --------------------------- Gerald Tsai, Jr. STATEMENT OF DIFFERENCES ------------------------ The section symbol shall be expressed as ...................'SS' EX-3 2 EXHIBIT 3.1 EXHIBIT 3.1 CERTIFICATE OF INCORPORATION OF TRIARC MERGER CORPORATION ------------------------ The undersigned incorporator, in order to form a corporation under the General Corporation Law of the State of Delaware, certifies as follows: ARTICLE I NAME The name of the corporation shall be Triarc Merger Corporation (the 'Corporation'). ARTICLE II ADDRESS; REGISTERED AGENT The address of the Corporation's registered office is 1209 Orange Street, City of Wilmington, County of New Castle, State of Delaware; and its registered agent at such address is The Corporation Trust Company. ARTICLE III PURPOSES The purpose or purposes for which the Corporation is formed are: 1. To purchase or otherwise acquire real estate, and any interest or right therein and to hold, own, control, manage and develop the same; to purchase or otherwise acquire leaseholds, shares of stock, mortgages and bonds and other securities; for its own account to erect, construct, maintain, improve, rebuild, alter, manage and control, either directly or through ownership of stock in any corporation, any and all kinds of buildings, stores, offices or other structures; to sell, manage, improve, develop, assign, transfer, convey, lease, alienate or dispose of land, buildings, or other process of the corporation, real and personal. 2. To manufacture or cause to be manufactured, produce, buy, import and otherwise acquire, and to sell, export, deal and traffic in, at wholesale and retail, and either as principal or agent or otherwise, goods, wares, commodities, merchandise and personal property of every kind, nature and description. 3. To apply for, obtain, register, purchase, lease or otherwise acquire any concessions, rights, options, patents, privileges, inventions, improvements and processes, copyrights, trade names and trade marks, trade labels, or any right, option or contract in relation thereto, and to perform, carry out and fulfill the terms and conditions thereof, and to develop, maintain, lease, sell, transfer, dispose of, and otherwise deal with the same. It is the intention that the purposes specified in any clause or subdivision contained in this Article III, except as otherwise expressed, shall be in no way limited or restricted by reference to or inference from the terms of any other clause or subdivision of this Article III and that the purposes specified in 1 each of the clauses and subdivisions of this Article III shall be deemed to be independent purposes. This corporation reserves the right substantially to change and add to any of the purposes for which it is formed, pursuant to the Delaware General Corporation. ARTICLE IV CAPITALIZATION The total number of shares of stock (the 'Capital Stock') that the corporation shall have authority to issue is One Hundred and Fifty Million (150,000,000) of which (a) One Hundred Million (100,000,000) shall be shares of Class A Common Stock, par value ten cents ($.10) per share (the 'Class A Common Stock'); (b) Twenty-Five Million (25,000,000) shall be shares of Class B Common Stock, par value ten cents ($.10) per share (the 'Class B Common Stock, and together with the Class A Common Stock, the 'Common Stock'); and (c) Twenty Five Million (25,000,000) shall be shares of Preferred Stock, par value ten cents ($.10) per share (the 'Preferred Stock'), of which 5,982,866 shares are herein designated Cumulative Convertible Redeemable Preferred Stock (the 'Cumulative Convertible Preferred Stock'). Subject to the provisions of this Certificate of Incorporation and except as otherwise provided by law, the stock of the Corporation, regardless of class, may be issued for such consideration and for such corporate purposes as the Board of Directors may from time to time determine. A statement of the powers, preferences, and rights, and the qualifications, limitations or restrictions thereof, in respect of each class of stock is as set forth below: A. Powers and Rights of the Class A Common Stock and the Class B Common Stock. The Class A Common Stock and the Class B Common Stock shall be identical in all respects except as expressly set forth below and shall have the following terms: SECTION 1. Voting. The holders of Class A Common Stock shall possess voting power for the election of directors and for all other corporate purposes, each share of Class A Common Stock being entitled to one vote. The holders of the Class B Common Stock shall possess no voting rights except as required by law. SECTION 2. Dividends and Distributions. As and when dividends or other distributions payable in either cash, capital stock of the Corporation (other than Class A Common Stock or Class B Common Stock) or other property of the Corporation may be declared by the Board of Directors, the amount of any such dividend payable on each share of Class A Common Stock shall be equal in all cases to the amount of such dividend payable on each share of Class B Common Stock, and the amount of any such dividend payable on each share of Class B Common Stock shall be equal in all cases to the amount of such dividend payable on each share of Class A Common Stock. If a distribution payable in shares of voting capital stock of any Subsidiary (as defined in Part D) shall be made on shares of Class A Common Stock, a distribution payable in the same number of shares of nonvoting capital stock of such Subsidiary shall be made simultaneously on the shares of Class B Common Stock. Such nonvoting capital stock shall be identical to the voting capital stock distributed in all respects except as to voting power and shall be convertible into voting capital stock pursuant to the terms of Section 3(a) of this Part A which shall apply mutatis mutandis. Dividends and distributions payable in shares of Class A 2 Common Stock may not be made on or to shares of any class of the Corporation's capital stock other than the Class A Common Stock. If a dividend or distribution payable in shares of Class A Common Stock shall be made on the shares of Class A Common Stock, a dividend or distribution payable in shares of Class B Common Stock shall be made simultaneously on the shares of Class B Common Stock, and the number of shares of Class B Common Stock payable on each share of Class B Common Stock pursuant to such dividend or distribution shall be equal to the number of shares of Class A Common Stock payable on each share of Class A Common Stock pursuant to such dividend or distribution. Similarly, if a dividend or distribution payable in shares of Class B Common Stock shall be made on the shares of Class B Common Stock, a dividend or distribution payable in shares of Class A Common Stock shall be made simultaneously on the shares of Class A Common Stock, and the number of shares of Class A Common Stock payable on each share of Class A Common Stock pursuant to such dividend or distribution shall be equal to the number of shares of Class B Common Stock payable on each share of Class B Common Stock pursuant to such dividend or distribution. If the Corporation shall (A) subdivide the outstanding shares of Class A Common Stock or Class B Common Stock, (B) combine the outstanding shares of Class A Common Stock or Class B Common Stock or (C) issue by reclassification any shares of Class A Common Stock or Class B Common Stock, then, and in each such case, such subdivision, combination or issuance shall be deemed to occur simultaneously with respect to the shares of the class of Common Stock not affected by such subdivision, combination or issuance. SECTION 3. Conversion. Shares of the Class B Common Stock shall be convertible into Class A Common Stock on the following terms and conditions: (a) Conversion Right. Subject to and upon compliance with the provisions of this Section 3, any holder of shares of Class B Common Stock may at such holder's option, at any time, or from time to time, convert each such share into one fully paid and non-assessable share of Class A Common Stock. The right of any holder of any shares of Class B Common Stock that is a member of the Exchange Group (as defined in Part D) to exercise the conversion rights pursuant to this Section 3(a) is conditioned upon (i) such holder immediately disposing of such shares pursuant to a registered public offering or a private sale to a Person (as defined in Part D) that is not a member of the Exchange Group or (ii) such holder entering into a voting trust agreement on terms reasonably satisfactory to such holder and the Buyer (as defined in Part C) in respect of such shares for ten years, which voting trust agreement will provide that the voting of the Class A Common Stock held by such holder will require the mutual agreement of Steven Posner and the Buyer; provided, however, if at the time of any such conversion or subsequent to any such conversion at any time during such ten-year period (i) Steven Posner shall die or neither Nelson Peltz nor Peter W. May is a general partner of the Buyer, (ii) the voting trust ceases to be effective or (iii) the voting trust would disqualify for listing, or would constitute a cause for delisting, the Class A Common Stock on the New York Stock Exchange or any other national stock exchange (or the National Association of Securities Dealers Automated Quotation System) on which the Corporation determines to list such stock (or to have such stock quoted), then such member of the Exchange Group would have no such rights to convert any shares of Class B Common Stock for so long as such condition exists, or if conversion has theretofore occurred, the shares of Class A Common Stock held by such member of the Exchange Group shall automatically be converted into Class B Common Stock. (b) Dividend Upon Conversion. No payment or adjustment shall be made by the Corporation to any holder of shares of Class B Common Stock surrendered for conversion into Class A Common Stock in respect of dividends accrued since the last preceding dividend payment date on 3 the shares of Class B Common Stock surrendered for conversion; provided, however, that if shares of Class B Common Stock shall be converted subsequent to the record date for any dividend and prior to the payment date for such dividend, notwithstanding such conversion, the dividend falling due on such dividend payment date shall be payable (whether or not punctually paid or duly provided for) to the Person in whose name such shares are registered at the close of business on such record date. (c) Method of Conversion. (1) The surrender of any shares of Class B Common Stock for conversion shall be made by the holder thereof by delivering (a) the certificate or certificates evidencing ownership of such shares with proper endorsement or instruments of transfer and (b)(i) a certificate representing and warranting that the holder is not a member of the Exchange Group, or (ii) evidence that the holder has complied with and remains subject to the voting trust described in Section 3(a) of this Part A, to the Corporation at the office or agency to be maintained by the Corporation for that purpose, and such holder shall give written notice to the Corporation at said office or agency that he elects to convert such shares of Class B Common Stock in accordance with the provisions of such notice and of this Section 3. Such notice shall also state the number of whole shares of Class B Common Stock to be converted and the name or names (with addresses) in which the certificate or certificates evidencing ownership of Class A Common Stock which shall be issuable on such conversion shall be issued. In the case of lost or destroyed certificates evidencing ownership of shares of Class B Common Stock to be surrendered for conversion, the holder shall submit proof of loss or destruction and such indemnity as shall be required by the Corporation. (2) As soon as practicable after its receipt of such notice, the certificate or certificates evidencing ownership of such shares of Class B Common Stock and the certificate or evidence referred to in clause (1) above, the Corporation shall issue and shall deliver at said office or agency to the Person for whose account such shares of Class B Common Stock were so surrendered, or on his or her written order, a certificate or certificates for the number of such shares of Class A Common Stock and a check or cash payment (if any) to which such holder is entitled with respect to fractional shares as determined by the Corporation, in accordance with Section 3(d) hereof, at the close of business on the date of conversion. (3) Such conversion shall be deemed to have been effected on the date on which the Corporation shall have received such notice and the certificate or certificates for such shares of Class B Common Stock; and the Person or Persons in whose name or names any certificate or certificates for Class A Common Stock shall be issuable upon such conversion shall be deemed to have become on said date the holder or holders of record of the shares represented thereby; provided that any such surrender on any date when the stock transfer books of the Corporation shall be closed shall become effective for all purposes on the next succeeding day on which such stock transfer books are open. (d) Fractional Shares. No fractional shares or scrip representing fractional shares shall be issued upon the conversion of any shares of Class B Common Stock, but the holder thereof will receive in cash an amount equal to the value of such fractional share of Class A Common Stock based on the Current Market Price (as set forth in Section 5(e)(iv) of Part C). If more than one share of Class B Common Stock shall be surrendered for conversion at one time by the same 4 holder, the number of full shares issuable upon conversion thereof shall be computed on the basis of the aggregate number of such shares so surrendered. (e) Payment of Taxes. The Corporation shall pay any tax in respect of the issue of stock certificates on conversion of shares of Class B Common Stock. The Corporation shall not, however, be required to pay any tax which may be payable in respect of any transfer involved in the issue and delivery of stock in any name other than that of the holder of the shares converted, and the Corporation shall not be required to issue or deliver any such stock certificate unless and until the Person or Persons requesting the issuance thereof shall have paid the Corporation the amount of any such tax or shall have established to the satisfaction of the Corporation that such tax has been paid. (f) Class A Common Stock Reserved for Conversion. The Corporation shall at all times reserve and keep available out of its authorized and unissued Class A Common Stock or have available in its treasury the full number of shares of Class A Common Stock deliverable upon the conversion of all outstanding shares of Class B Common Stock and shall take all such action as may be required from time to time in order that it may validly and legally issue fully paid and non-assessable shares of Class A Common Stock upon conversion of the Class B Common Stock. SECTION 4. Distribution of Assets Upon Liquidation. In the event the Corporation shall be liquidated, dissolved or wound up, whether voluntarily or involuntarily, after there shall have been paid or set aside for the holders of all shares of the Preferred Stock then outstanding the full preferential amounts to which they are entitled hereunder or under the resolutions authorizing the issuance of such Preferred Stock, the net assets of the Corporation remaining shall be divided among the holders of the Class A Common Stock and the Class B Common Stock in such a manner that the amount and kind of such net assets distributed to the holder of each share of Class A Common Stock shall be equal to the amount and kind of such net assets distributed to the holder of each share of Class B Common Stock. The merger or consolidation of the Corporation into or with any other corporation, the merger of any other corporation with or into the Corporation, or the sale, lease, or conveyance of all or substantially all of the assets of the Corporation, shall not be deemed to be a dissolution, liquidation or winding up for purposes of this Section 4. B. Preferred Stock. SECTION 1. Issuance in Series. The shares of Preferred Stock may be issued from time to time in one or more series of any number of shares, provided that the aggregate number of shares issued and not cancelled of any and all such series shall not exceed the total number of shares of Preferred Stock hereinabove authorized, and with distinctive serial designations, all as shall hereafter be stated and expressed in the resolution or resolutions providing for the issue of such shares of Preferred Stock from time to time adopted by the Board of Directors pursuant to authority so to do which is hereby vested in the Board of Directors. Each series of shares of Preferred Stock (a) may have such voting powers, full or limited, or may be without voting powers; (b) may be subject to redemption at such time or times and at such prices; (c) may be entitled to receive dividends (which may be cumulative or non-cumulative) at such rate or rates, on such conditions and at such times, and payable in preference to, or in such relation to, the dividends payable on any other class or classes or series of stock; (d) may have such rights upon the dissolution of, or upon any distribution of the assets of, the Corporation; (e) may be made convertible into or exchangeable for, shares of any other class or classes or of any other series of the same or any other class or classes of shares of the Corporation at such price or prices or at such rates of exchange and with such adjustments; (f) may be entitled to the benefit of a sinking fund to be 5 applied to the purchase or redemption of shares of such series in such amount or amounts; (g) may be entitled to the benefit of conditions and restrictions upon the creation of indebtedness of the Corporation or any Subsidiary, upon the issue of any additional shares (including additional shares of such series or of any other series) and upon the payment of dividends or the making of other distributions on, and the purchase, redemption or other acquisition by the Corporation or any Subsidiary of, any outstanding shares of the Corporation and (h) may have such other relative, participating, optional or other special rights, qualifications, limitations or restrictions thereof; all as shall be stated in said resolution or resolutions providing for the issue of such shares of Preferred Stock. The Corporation shall take all such actions as are necessary to cause shares of Preferred Stock of any series that have been redeemed (whether through the operation of a sinking fund or otherwise) or that if convertible or exchangeable, have been converted into or exchanged for shares of any other class or classes to have the status of authorized and unissued shares of Preferred Stock of the same series and may be reissued as a part of the series of which they were originally a part or may be reclassified and reissued as part of a new series of shares of Preferred Stock to be created by resolution or resolutions of the Board of Directors or as part of any other series of shares of Preferred Stock, all subject to the conditions or restrictions on issuance set forth in the resolution or resolutions adopted by the Board of Directors providing for the issue of any series of shares of Preferred Stock. SECTION 2. Limitation on Issuance of Shares Ranking on a Parity with the Cumulative Convertible Preferred Stock. Except as otherwise expressly authorized by the holders of at least two-thirds of the shares of the Cumulative Convertible Preferred Stock at the time outstanding in accordance with Section 4(b) of Part C, the Aggregate Dollar Amount (as defined below) of the Shares ranking on a parity with the Cumulative Convertible Preferred Stock (as defined in Part D) of all series issued and outstanding from time to time by the Corporation shall not exceed $50,000,000. 'Aggregate Dollar Amount' shall mean the aggregate Stated Value (as defined in Part C) of such shares or liquidation preference (excluding accrued and unpaid dividends or any amount measured by reference thereto) for such shares, whichever is greater. SECTION 3. No Vote Unless Expressly Provided or Required by Law; Dividends. Subject to the provisions of any applicable law or of the By-laws of the Corporation, as from time to time amended, with respect to the closing of the stock transfer books or the fixing of a record date for the determination of stockholders entitled to vote and except as otherwise provided by law, in this Certificate of Incorporation or by the Certificate of Designation relating to the issue of any series of shares of Preferred Stock, the holders of outstanding shares of Preferred Stock shall not possess voting power for the election of directors or for any other purposes. Except as otherwise provided in the Certificate of Incorporation or by the Certificate of Designation relating to the issue of any series of shares of Preferred Stock, the holders of shares of Common Stock shall be entitled, to the exclusion of the holders of shares of Preferred Stock of any and all series, to receive such dividends as from time to time may be declared by the Board of Directors. C. Designation of Cumulative Convertible Redeemable Preferred Stock. The Cumulative Convertible Preferred Stock shall have a stated value of $12.00 per share ('Stated Value'), shall rank prior to all shares of the Corporation other than the Shares ranking on a parity with the Cumulative Convertible Preferred Stock, shall rank on a parity with and only with shares ranking on a parity with the Cumulative Convertible Preferred Stock, and shall have the following terms: 6 SECTION 1. Dividends. (a) The holders of Cumulative Convertible Preferred Stock, in preference to the holders of Common Stock of any class and of any other class of shares ranking junior to the Cumulative Convertible Preferred Stock (as defined in Part D), shall be entitled to receive out of any funds legally available therefor, and when, as and if declared by the Board of Directors, dividends in cash at the annual rate of 8.125% of Stated Value, or $.975 per share. Dividends on Cumulative Convertible Preferred Stock shall be payable in arrears semi-annually on the last day of each Dividend Period (as defined in Part D) commencing September 30, 1994. The dividends payable for each full Dividend Period on each share of Cumulative Convertible Preferred Stock shall be $.4875. Such dividends on each such share shall accrue and be cumulative from and after April 23, 1993, or, if later, the most recent date prior to the Effective Date on which dividends were paid in respect of the shares of Predecessor Convertible Preferred Stock (as defined in Part D). No interest shall be payable on accrued dividends. No dividends shall be paid upon or declared or set apart for Cumulative Convertible Preferred Stock for any dividend period unless at the same time a like proportionate dividend for the dividend periods terminating on the same or any earlier date, ratably in proportion to the respective dividend rates fixed therefor, shall have been paid upon or declared or set apart for all shares ranking on a parity with the Cumulative Convertible Preferred Stock of all series then issued and outstanding and entitled to receive such dividend. (b) So long as any Cumulative Convertible Preferred Stock shall be outstanding, unless all accrued and unpaid dividends on the Cumulative Convertible Preferred Stock and each and every series of shares ranking on a parity with the Cumulative Convertible Preferred Stock for all prior Dividend Periods shall have been declared and paid in full, no dividend, except a dividend payable in Common Stock of any class or in shares of any other class ranking junior to the Cumulative Convertible Preferred Stock, shall be paid or declared or any distribution be made, on or in respect of the Common Stock of any class, any Shares ranking on a parity with the Cumulative Convertible Preferred Stock or any Shares ranking junior to the Cumulative Convertible Preferred Stock (as defined in Part D), nor shall any Common Stock of any class or any Shares ranking on a parity with the Cumulative Convertible Preferred Stock or any Shares ranking junior to the Cumulative Convertible Preferred Stock be purchased, redeemed, retired or otherwise acquired by the Corporation, except out of proceeds of the sale of Common Stock or other Shares of the Corporation ranking junior to the Cumulative Convertible Preferred Stock received by the Corporation subsequent to the date of first issuance of Cumulative Convertible Preferred Stock. The foregoing restrictions on the payment of dividends or other distributions on, and on the purchase, redemption, retirement or other acquisition of, Common Stock or any other Shares ranking on a parity with the Cumulative Convertible Preferred Stock or Shares ranking junior to the Cumulative Convertible Preferred Stock shall be inapplicable to (i) any payments in lieu of issuance of fractional shares thereof, whether upon any merger, conversion, stock dividend or otherwise; (ii) the acquisition of any shares of Common Stock or any other capital stock of the Corporation in connection with the settlement of disputes arising out of acquisitions by the Corporation pursuant to which such stock was issued or the rescission of any acquisition by the Corporation pursuant to which such stock was issued in each case provided that no payment is made to DWG Acquisition Group, L.P. (the 'Buyer') or any Affiliate or Associate (as such terms are defined in Part D hereof) thereof; (iii) the conversion of shares of Cumulative Convertible Preferred Stock, or Preferred Stock into Common Stock; or (iv) the conversion of shares of Class 7 A Common Stock into Class B Common Stock or the conversion of shares of Class B Common Stock into Class A Common Stock. SECTION 2. Redemption. (a) Optional Redemption. (i) The Corporation may not redeem the Cumulative Convertible Preferred Stock prior to April 23, 1998. (ii) The Corporation may, on and after April 23, 1998, at the option of the Board of Directors, redeem all but not part of the Cumulative Convertible Preferred Stock at the time outstanding at a price per share equal to the applicable redemption price set forth below plus an amount equal to accrued and unpaid dividends:
IF REDEEMED DURING THE TWELVE MONTHS BEGINNING ON THE PER SHARE FOLLOWING APRIL 23 REDEMPTION PRICE ------------------ ---------------- 1998 $12.84 1999 12.72 2000 12.60 2001 12.48 2002 12.36 2003 12.24 2004 12.12
(b) Mandatory Redemption. All outstanding shares of Cumulative Convertible Preferred Stock must be redeemed by the Corporation on April 23, 2005 at a price per share equal to the amount of the Stated Value plus an amount equal to accrued and unpaid dividends. (c) Redemption Procedures. (i) In case the Corporation shall desire to exercise its right to redeem the Cumulative Convertible Preferred Stock in accordance with Section 2(a) of this Part C or shall be required to redeem the Cumulative Convertible Preferred Stock in accordance with Section 2(b) of this Part C, it shall mail first class postage prepaid (or, if the Cumulative Convertible Preferred Stock to be redeemed is held of record by 10 Persons or less, by certified mail), a notice of such redemption, not less than 30 nor more than 60 days prior to the date fixed for redemption (the 'Redemption Date'), to each holder's last address as it shall appear upon the stock transfer books of the Corporation. Any notice which is mailed in the manner herein provided shall be conclusively presumed to have been duly given, whether or not the holder receives notice. In any case, failure duly to give notice by mail, or any defect in the notice, to the holder of any shares of Cumulative Convertible Preferred Stock shall not affect the validity of the proceedings for the redemption of any other shares of Cumulative Convertible Preferred Stock. (ii) Each such notice shall specify the Redemption Date, the place of redemption (which shall be a location either in New York City or Miami, Florida), and the redemption price at which the Cumulative Convertible Preferred Stock is to be redeemed (including the amount of accrued and unpaid dividends to be paid), and shall state that payment of the redemption price of the Cumulative Convertible Preferred Stock will be made on surrender of the Cumulative 8 Convertible Preferred Stock at said place of redemption, and that from and after the Redemption Date the Cumulative Convertible Preferred Stock will cease to be outstanding. Such notice shall also state the current Conversion Price (as defined in Section 5(a)(i) of this Part C) and the date on which the right to convert the Cumulative Convertible Preferred Stock into Common Stock will expire as provided in Section 5(a)(iv) of this Part C. (iii) If notice of redemption shall have been given as provided herein, the Cumulative Convertible Preferred Stock, unless converted into Common Stock pursuant to Section 5 of this Part C on or prior to the fifth Business Day (as defined in Part D) prior to the Redemption Date, shall be redeemed by the Corporation on the Redemption Date and at the place stated in such notice at the applicable redemption price, together with accrued and unpaid dividends for each Dividend Period ended prior to the Redemption Date plus a pro rata portion of the dividend which would otherwise have accrued for the portion of the Dividend Period ended on the Redemption Date. On and after such Redemption Date, provided that cash sufficient for the redemption thereof shall then be irrevocably deposited with the Redemption Agent (as defined in part D) for that purpose for a period of one year from and after the Redemption Date, the Cumulative Convertible Preferred Stock shall cease to be outstanding. On presentation and surrender of Cumulative Convertible Preferred Stock to the Redemption Agent for redemption as provided in such notice, there shall be paid to the holder the applicable redemption price, together with accrued and unpaid dividends determined as provided above. (iv) At least one Business Day prior to the Redemption Date, the Corporation shall deposit with the Redemption Agent an amount of money sufficient to pay on the Redemption Date in immediately available funds the applicable redemption price of, and an amount equal to accrued and unpaid dividends, if any, determined as provided above, on, all the Cumulative Convertible Preferred Stock then outstanding. Any moneys which shall have been deposited for redemption of Cumulative Convertible Preferred Stock and not required for that purpose by reason of conversion of Cumulative Convertible Preferred Stock on or prior to the Redemption Date or which are held by the Redemption Agent for a period of one year shall be promptly repaid to the Corporation. Any interest accrued on the funds so deposited shall belong to the Corporation and be paid to the Corporation from time to time on demand. (d) Any share of Cumulative Convertible Preferred Stock which is (i) redeemed by the Corporation pursuant to the provisions of this Section 2, (ii) converted in accordance with the express terms of Section 5 of this Part C, or (iii) otherwise acquired by the Corporation, may not be reissued. The Corporation shall take all such actions as are necessary to cause such stock to resume the status of authorized but unissued Preferred Stock without designation as to series. (e) The Corporation may not purchase less than all of the shares of the Cumulative Convertible Preferred Stock then outstanding except in accordance with a stock purchase offer made to all holders of record of Cumulative Convertible Preferred Stock. (f) Notwithstanding the foregoing provisions of this Section 2, the Corporation may not and shall not be required to redeem any shares of the Corporation in violation of applicable law. SECTION 3. Liquidation. (a) In the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation, the holders of Cumulative Convertible Preferred Stock shall be entitled 9 to receive in full out of the assets of the Corporation available for distribution to its shareholders after satisfaction of indebtedness and other liabilities, including out of its capital, before any amount shall be paid or distributed among the holders of the Common Stock of any class or any other Shares ranking junior to the Cumulative Convertible Preferred Stock, the amount of the Stated Value per share, plus an amount equal to all dividends accrued and unpaid thereon for each Dividend Period or portion thereof ended prior to the date of payment of the amount due pursuant to such liquidation, dissolution or winding up of the affairs of the Corporation. In the event the net assets of the Corporation legally available therefor are insufficient to permit the payment upon all outstanding shares of Cumulative Convertible Preferred Stock and shares on a parity with the Cumulative Convertible Preferred Stock of the full preferential amount to which they are respectively entitled, then such net assets shall be distributed ratably upon all outstanding shares of Cumulative Convertible Preferred Stock and shares on a parity with the Cumulative Convertible Preferred Stock in proportion to the full preferential amount to which each such share is entitled. (b) After payment to the holders of Cumulative Convertible Preferred Stock of the full preferential amounts provided for in Section 3(a) of this Part C the holders of Cumulative Convertible Preferred Stock, as such, shall have no right or claim to any of the remaining assets of the Corporation. (c) The merger or consolidation of the Corporation into or with any other corporation, the merger of any other corporation with or into the Corporation, or the sale, lease or conveyance of all or substantially all the assets of the Corporation, shall not be deemed to be a dissolution, liquidation or winding up for the purpose of this Section 3. SECTION 4. Voting Rights. (a) General. Except as expressly provided in this Section 4, or as otherwise from time to time required by applicable law, the Cumulative Convertible Preferred Stock shall have no voting rights. (b) Voting Rights on Extraordinary Matters. The affirmative vote of the holders of at least two-thirds of the shares of the Cumulative Convertible Preferred Stock at the time outstanding, voting separately as a class, given in person or by proxy at a meeting called for the purpose shall be necessary to effect any one or more of the following: (i) Any amendment, alteration or repeal, whether by merger, consolidation or otherwise, of any of the provisions of the Certificate of Incorporation or of the By-laws of the Corporation which would adversely affect the preferences or voting or other rights of the holders of Cumulative Convertible Preferred Stock which are set forth anywhere in the Certificate of Incorporation; provided, however, any amendment of the Certificate of Incorporation to authorize, create or change the authorized or outstanding shares of any shares ranking junior to the Cumulative Convertible Preferred Stock, shall not be deemed to adversely affect the preferences or voting or other rights of the holders of Cumulative Convertible Preferred Stock; or (ii) The issuance of any Shares, or any security convertible into such shares, ranking prior to or on a parity with (subject to the ability of the Corporation to issue certain Preferred Stock as provided in Section 4(b)(iii)) the Cumulative Convertible Preferred Stock; or (iii) The issuance of any Shares ranking on a parity with the Cumulative Convertible Preferred Stock, or any security convertible into Shares ranking on a parity with the Cumulative Convertible Preferred Stock, except and to the extent that the Aggregate Dollar 10 Amount of such Shares ranking on a party with the Cumulative Convertible Preferred Stock is equal to or below the $50 million limit provided for in Part B, Section 2 (it being understood that the vote of any holder of Cumulative Convertible Preferred Stock is required only with respect to the issuance of Shares ranking on a parity with the Cumulative Convertible Preferred Stock in excess of such $50 million Aggregate Dollar Amount); or (iv) The increase in the authorized or issued number of shares of Cumulative Convertible Preferred Stock or the authorization, creation, increase in the authorized number of or issuance of any security convertible into such shares; or (v) The purchase or redemption of less than all of the shares of the Cumulative Convertible Preferred Stock then outstanding except in accordance with a stock purchase offer made to all holders of record of Cumulative Convertible Preferred Stock. Holders of Cumulative Convertible Preferred Stock may act by written consent as permitted by applicable law. SECTION 5. Conversion. Each share of the Cumulative Convertible Preferred Stock shall be convertible into Common Stock at any time until the close of business on the fifth Business Day prior to the Redemption Date (unless the Corporation shall default in any payment due upon redemption thereof in which case each such share shall continue to be convertible), as set forth below, on the following terms and conditions: (a) Conversion Right of Holder. (i) Subject to and upon compliance with the provisions of this Section 5, the holder of any shares of Cumulative Convertible Preferred Stock which is a member of the Exchange Group, at such holder's option, at any time or from time to time, shall have the unconditional right to convert any such shares into the number of fully paid and non-assessable shares of Class B Common Stock determined by dividing (A) the product of the Stated Value and the number of shares of Cumulative Convertible Preferred Stock to be converted on the Conversion Date (as defined in Section 5(a)(vii) hereof) by (B) the Conversion Price in effect on the Conversion Date. The initial conversion price shall be an amount per share equal to the Predecessor Conversion Price (as defined in Part D) in effect immediately prior to the Effective Date and such price shall be subject to adjustment as set forth in Section 5(e) of this Part C (the conversion price, as it may be so adjusted, the 'Conversion Price'). (ii) Subject to and upon compliance with the provisions of this Section 5, the holder of any shares of Cumulative Convertible Preferred Stock which is not a member of the Exchange Group, upon presentation of a certificate reasonably satisfactory to the Corporation that such holder is not a member of the Exchange Group, at such holder's option, at any time or from time to time, shall have the unconditional right to convert any such shares into the number of fully paid and non-assessable shares of Class A Common Stock determined by dividing (A) the product of the Stated Value and the number of shares of Cumulative Convertible Preferred Stock to be converted on the Conversion Date by (B) the Conversion Price in effect on the Conversion Date. (iii) Subject to and upon compliance with the provisions of this Section 5, the holder of any shares of Cumulative Convertible Preferred Stock which is a member of the Exchange Group, at such holder's option, at any time or from time to time, shall have the right to convert any such shares into the number of fully paid and nonassessable shares of Class A Common 11 Stock determined by dividing (A) the product of the Stated Value and the number of shares of Cumulative Convertible Preferred Stock to be converted on the Conversion Date by (B) the Conversion Price in effect on the Conversion Date; provided that any such member of the Exchange Group converting shares of Cumulative Convertible Preferred Stock into Class A Common Stock, as the sole condition precedent to such conversion, shall comply with and remain subject to the voting trust provisions of Part A, Section 3(a). (iv) If notice of redemption of any shares of Cumulative Convertible Preferred Stock shall be given as provided herein, the right to convert such shares pursuant to this Section 5 shall terminate and expire at the close of business on the fifth Business Day prior to the Redemption Date (unless the Corporation shall default in any payment due upon redemption thereof in which case each of such shares shall continue to be convertible). (v) The surrender of any shares of Cumulative Convertible Preferred Stock for conversion shall be made by the holder thereof by delivering to the Corporation at the office or agency to be maintained by the Corporation for that purpose (A) the certificate or certificates evidencing ownership of such shares with proper endorsement or instruments of transfer, (B) if the conversion is being made pursuant to Section 5(a)(ii) above, a certificate representing and warranting that the holder is not a member of the Exchange Group, (C) if the conversion is being made pursuant to Section 5(a)(iii) above, evidence that the holder has complied with and remains subject to the voting trust provisions of Part A, Section 3(a), and (D) a written statement of election under the last sentence of Section 5(a)(vi). Such holder shall give written notice to the Corporation at said office or agency that he elects to convert such shares of Cumulative Convertible Preferred Stock in accordance with the provisions of this Section 5. Such notice shall also state the number of whole shares of Cumulative Convertible Preferred Stock to be converted, whether Class A Common Stock or Class B Common Stock is to be issued upon conversion, and the name or names (with addresses) in which the certificate or certificates evidencing ownership of the Class A Common Stock or the Class B Common Stock, as the case may be, which shall be issuable on such conversion shall be issued. In the case of lost or destroyed certificates evidencing ownership of shares of Cumulative Convertible Preferred Stock to be surrendered for conversion, the holder shall submit proof of loss or destruction and such indemnity as shall be reasonably required by the Corporation. (vi) As soon as practicable after its receipt of such notice, the certificate or certificates evidencing ownership of such shares of Cumulative Convertible Preferred Stock, and, if conversion is being made pursuant to Sections 5(a)(ii) or 5(a)(iii) above, the certificate or evidence referred to in Section 5(a)(v), the Corporation shall issue and shall deliver at said office or agency to the person for whose account such shares of Cumulative Convertible Preferred Stock were so surrendered, or on his or her written order, a certificate or certificates for the number of such shares of Class A Common Stock or Class B Common Stock, as the case may be, and a check or cash payment (if any) to which such holder is entitled with respect to fractional shares as determined by the Corporation, in accordance with Section 5(f) of this Part C, at the close of business on the Conversion Date and any accrued and unpaid dividends through the Conversion Date in accordance with Section 5(d) of this Part C. Notwithstanding the foregoing, if, on any Conversion Date, the Corporation shall be in arrears in the payment of dividends on the Cumulative Convertible Preferred Stock for three or more Dividend Periods, each holder of such stock shall have the right to elect either (A) (1) to have all or part of such accrued and unpaid dividends credited against the Conversion Price, provided, 12 however, that in no event shall such Conversion Price be reduced below the amount per share equal to the amount below which the Predecessor Conversion Price (as defined in Part D) could not be lowered immediately prior to the Effective Date (subject to adjustment on the same basis as the Conversion Price is subject to adjustment) and (2) to receive in cash, to the extent funds are legally available and not contractually restricted under agreements with Persons who are not the Buyer or Affiliates or Associates of the Buyer and to the extent not then paid in full, to retain the right to receive in cash, as soon thereafter as funds are legally available and not so contractually restricted, all accrued and unpaid dividends in excess of the amount, if any, credited as provided in clause (i) or (B) to retain the right to receive in cash, as soon thereafter as funds are legally available and not so contractually restricted, all accrued and unpaid dividends. (vii) Such conversion shall be deemed to have been effected on the date (the 'Conversion Date') on which the Corporation shall have received such notice and the certificate or certificates for such shares of Cumulative Convertible Preferred Stock and, if conversion is made pursuant to Section 5(a)(ii) or 5(a)(iii) above, the certificate or evidence referred to in Section 5(a)(v); and the person or persons in whose name or names any certificate or certificates for Common Stock shall be issuable upon such conversion shall be deemed to have become on said date the holder or holders of record of the shares represented thereby; provided that any such surrender on any date when the stock transfer books of the Corporation shall be closed shall become effective for all purposes on the next succeeding day on which such stock transfer books are open. (b) Call for Conversion by the Corporation. (i) If, at any time during the period beginning on April 23, 1996 and ending on April 22, 1998, the Closing Price (as defined in Part D) per share of Class A Common Stock is equal to or greater than the Predecessor Call Threshold Price (as defined in Part D), subject to adjustment as set forth in Section 5(e) of this Part C (such amount, as it may be so adjusted, the 'Call Threshold Price'), for any 20 out of 30 consecutive Trading Days (as defined in Part D) during such period (a 'Call Threshold'), within the first 30 days following any Call Threshold, the Corporation may issue a notice to call for conversion into Common Stock all (but not less than all) of the Cumulative Convertible Preferred Stock at the time outstanding on the terms and conditions and in accordance with the procedures set forth in this Section 5(b). (ii) Upon such call for conversion, each share of Cumulative Convertible Preferred Stock that is held by a member of the Exchange Group shall be converted in accordance herewith into the number of fully paid and non-assessable shares of Class B Common Stock, or Class A Common Stock if the holder of such shares elects to comply with the voting trust provisions of Part A, Section 3(a), determined by dividing (A) the product of the Stated Value and the number of such holder's shares of Cumulative Convertible Preferred Stock by (B) the Conversion Price in effect on the Conversion Call Date (as defined in clause (iv) below). (iii) Upon such call for conversion, each share of Cumulative Convertible Preferred Stock that is held by a person which is not a member of the Exchange Group shall be converted in accordance herewith into the number of fully paid and non-assessable shares of Class A Common Stock determined by dividing (A) the product of the Stated Value and the number of 13 such holder's shares of Cumulative Convertible Preferred Stock by (B) the Conversion Price in effect on the Conversion Call Date. (iv) If the Corporation shall desire to exercise its right to call for conversion all of the Cumulative Convertible Preferred Stock, it shall give notice of such call by first class mail postage prepaid (or, if such shares are held of record by 10 Persons or less, by certified mail), not less than 10 nor more than 45 days prior to the date fixed for conversion in such notice (the 'Conversion Call Date'), to each holder's last address as it shall appear upon the stock transfer books of the Corporation. Any notice which is mailed in the manner herein provided shall be conclusively presumed to have been duly given, whether or not the holder receives the notice. In any case, failure duly to give notice by mail, or any defect in the notice, to the holder of any Cumulative Convertible Preferred Stock shall not affect the validity of the call for conversion of any other Cumulative Convertible Preferred Stock. Each such notice shall specify the Conversion Call Date, the place of conversion (which must be in New York City or Miami, Florida), and the Conversion Price at which such Cumulative Convertible Preferred Stock is to be converted and shall state that issuance and delivery of the certificate or certificates for the Common Stock to be issued on conversion of the Cumulative Convertible Preferred Stock will be made on surrender of the Cumulative Convertible Preferred Stock at said place of conversion and that from and after the Conversion Call Date such Cumulative Convertible Preferred Stock shall cease to be outstanding. (v) If notice of call for conversion shall have been given as provided hereinabove, the Cumulative Convertible Preferred Stock outstanding on the Conversion Call Date shall be converted into Class A Common Stock or Class B Common Stock, as the case may be, by the Corporation on the Conversion Call Date and at the place stated in such notice at the applicable Conversion Price. On and after the Conversion Call Date, the Cumulative Convertible Preferred Stock shall cease to be outstanding. (vi) The surrender of shares of Cumulative Convertible Preferred Stock for conversion pursuant to a call for conversion made by the Corporation pursuant to Section 5(b) shall be made by the holder thereof by delivering the certificate or certificates evidencing ownership of such shares with proper endorsement or instruments of transfer and the certificate or evidence referred to in Section 5(a)(v) above, as applicable, to the Corporation at the office or agency to be maintained by the Corporation for that purpose. In the case of lost or destroyed certificates evidencing ownership of shares of Cumulative Convertible Preferred Stock to be surrendered for conversion pursuant to a call for conversion, the holder shall submit proof of loss or destruction and such indemnity as shall be reasonably required by the Corporation. (vii) As soon as practicable after its receipt of the certificate or certificates evidencing ownership of such shares of Cumulative Convertible Preferred Stock and, if applicable, the certificate or evidence referred to in Section 5(a)(v) above, the Corporation shall issue and deliver at said office or agency to the person for whose account such shares of Cumulative Convertible Preferred Stock were so surrendered, or on such person's written order, a certificate or certificates for the number of such shares of Class A Common Stock or Class B Common Stock, as the case may be, and a check or cash payment (if any) to which such holder is entitled with respect to fractional shares as determined by the Corporation in accordance with Section 5(f) of this Part C and with respect to any accrued and unpaid dividends in 14 accordance with Section 5(d) of this Part C. Notwithstanding the foregoing, if, on the Conversion Call Date, the Corporation shall be in arrears in the payment of dividends on the Cumulative Convertible Preferred Stock for three or more Dividend Periods, each holder of such stock shall have the right to elect either (A) (1) to have all or part of such accrued and unpaid dividends credited against the Conversion Price, provided, however, that in no event shall such Conversion Price per share be reduced below the amount per share equal to the amount below which the Predecessor Conversion Price could be lowered immediately prior to the Effective Date (subject to adjustment on the same basis as the Conversion Price is subject to adjustment) and (2) to receive in cash, to the extent funds are legally available and not contractually restricted under agreements with Persons who are not the Buyer or Affiliates or Associates of the Buyer and to the extent not then paid in full, to retain the right to receive in cash, as soon thereafter as funds are legally available and not so contractually restricted, all accrued and unpaid dividends in excess of the amount, if any, credited as provided in clause (i) or (B) to retain the right to receive in cash, as soon thereafter as funds are legally available and not so contractually restricted, all accrued and unpaid dividends. (viii) Conversion of all Cumulative Convertible Preferred Stock then outstanding shall be deemed to have been effected on the Conversion Call Date and the person or persons in whose name or names any certificate or certificates for Class A Common Stock or the Class B Common Stock, as the case may be, shall be issuable upon such conversion shall be deemed to have become on said date the holder or holders of record of the shares of Class A Common Stock or Class B Common Stock, as the case may be, into which such person's or persons' Cumulative Convertible Preferred Stock shall be deemed to be converted on said date. (c) Holder's Right to Put After Call for Conversion. If the Corporation calls for the conversion of the Cumulative Convertible Preferred Stock pursuant to Section 5(b) of this Part C then within 30 days after the Conversion Call Date, each holder of Common Stock into which such Cumulative Convertible Preferred Stock was converted as of such date shall have the unconditional right to require the Corporation to purchase all or part of such holder's Common Stock at a purchase price per share equal to the Predecessor Put Price (as defined in Part D), subject to adjustment in accordance with Section 5(e) of this Part C (such purchase price, as so adjusted, the 'Put Price'). If such holder of Common Stock desires to require the Corporation to purchase such holder's shares of Common Stock in accordance herewith, such holder shall give written notice to the Corporation at said office or agency that such holder elects to have the Corporation purchase such holder's shares of Class A Common Stock or Class B Common Stock, as the case may be, in accordance with the provisions of this Section 5(c). Such notice shall also state the number of whole shares of Class A Common Stock or Class B Common Stock to be purchased by the Corporation pursuant to this Section 5(c). In the case of lost or destroyed certificates evidencing ownership of shares of Class A Common Stock or Class B Common Stock, as the case may be, to be purchased by the Corporation pursuant to this Section 5(c), such holder shall submit proof of loss or destruction and such indemnity as shall be reasonably required by the Corporation. On delivery of the certificate or certificates evidencing ownership of the Common Stock to be purchased by the Corporation pursuant to this Section 5(c), with proper endorsement or instruments of transfer to the Corporation, to the office or agency to be maintained by the Corporation for that purpose, the Corporation or its designee shall pay to such holder of such Class A Common Stock or Class B Common Stock, as the case may be, in immediately available funds the Put Price for each share of such stock delivered pursuant to this Section 5(c). 15 (d) Dividend Upon Conversion. No payment or adjustment shall be made to any holder of shares of Cumulative Convertible Preferred Stock surrendered by the holder thereof at such holder's option in respect of any dividends which would have accrued for the portion of the Dividend Period ended on the Conversion Date on the shares of Cumulative Convertible Preferred Stock surrendered for conversion; provided, however, that (i) if shares of Cumulative Convertible Preferred Stock shall be converted subsequent to the record date for any dividend thereon and prior to the payment date for such dividend, notwithstanding such conversion the dividend shall be payable on the payment date for such dividend to the person in whose name such shares of Cumulative Convertible Preferred Stock were held of record at the close of business on such record date and (ii) all accrued and unpaid dividends for each Dividend Period ended prior to such Conversion Call Date or date of surrender shall be paid to the person in whose name such shares were held of record at the close of business on such record date. If either (A) the shares of Cumulative Convertible Preferred Stock are called for conversion by the Corporation, or (B) a record date shall be set by the Corporation with respect to Common Stock for any purpose other than a cash dividend not requiring an adjustment under Section 5(e)(iii) and shares of Cumulative Convertible Preferred Stock are converted into Common Stock on or before such record date, then in either case holders of such shares shall be entitled to receive on the Conversion Call Date in the case of clause (A) or at the time of conversion in the case of clause (B) all accrued and unpaid dividends thereon for each Dividend Period ended prior to the Conversion Call Date in the case of clause (A) or the time of conversion in the case of clause (B) plus a pro rata portion of the dividend thereon which would otherwise have accrued for the portion of the Dividend Period ended on such Conversion Call Date or at the time of conversion, as the case may be. If the Corporation shall at such time be in arrears in the payment of dividends on the Cumulative Convertible Preferred Stock for three or more Dividend Periods, each holder shall have the right to elect either (Y) (1) to have all or part of such accrued and unpaid dividends credited against the Conversion Price, provided, however, that in no event shall the Conversion Price per share be reduced below an amount per share equal to the amount below which the Predecessor Conversion Price cold not be lowered immediately prior to the Effective Date (subject to adjustment on the same basis as the Conversion Price is subject to adjustment) and (2) to receive in cash, to the extent funds are legally available and not contractually restricted under agreements with Persons who are not the Buyer or Affiliates or Associates of the Buyer and to the extent not then paid in full, to retain the right to receive in cash, as soon thereafter as funds are legally available and not so contractually restricted, all accrued and unpaid dividends in excess of the amount, if any, credited as provided in clause (i) or (Z) to retain the right to receive in cash, as soon thereafter as funds are legally available and not so contractually restricted, all accrued and unpaid dividends. (e) Adjustments to Conversion Price, Call Threshold Price And Put Price. The Conversion Price, Call Threshold Price and Put Price shall each be subject to adjustments from time to time as follows: (i) In case the Corporation shall at any time or from time to time after the Effective Date (A) pay a dividend or make a distribution on the outstanding shares of Common Stock in shares of Common Stock, (B) subdivide the outstanding shares of Common Stock into a greater number of shares, (C) combine the outstanding shares of Common Stock into a smaller number of shares or (D) issue by reclassification of the shares of Common Stock any shares of capital stock of the Corporation, then, and in each such case, the Conversion Price in effect immediately prior to such event or the record date therefor, whichever is earlier, shall be 16 adjusted so that the holder of any shares of Cumulative Convertible Preferred Stock thereafter surrendered for conversion shall be entitled to receive the number of shares of Common Stock or other securities of the Corporation which such holder would have owned or have been entitled to receive immediately following any of the events described above had such shares of Cumulative Convertible Preferred Stock been surrendered for conversion immediately prior to the happening of such event or the record date therefor, whichever is earlier, and the Call Threshold Price and the Put Price with respect to the Common Stock shall be proportionately adjusted so as to result in a new Call Threshold Price and a new Put Price equal to the product of (i) the initial Call Threshold Price or initial Put Price, as the case may be, in either case as adjusted theretofore, and (ii) a fraction the numerator of which is the number of shares of Common Stock outstanding immediately prior to the applicable event listed above and the denominator of which is the number of shares of Common Stock outstanding immediately following such event. An adjustment made pursuant to this Section 5(e)(i) shall become effective (x) in the case of any such dividend or distribution, immediately after the close of business on the record date for the determination of holders of shares of Common Stock entitled to receive such dividend or distribution, or (y) in the case of such subdivision, reclassification or combination, at the close of business on the day upon which such corporate action becomes effective. No adjustment shall be made pursuant to this Section 5(e)(i) in connection with any transaction to which Section 5(e)(v) applies. (ii) In case, at any time or from time to time after the Effective Date, the Corporation shall issue or sell any shares of Common Stock (except as provided in Section 5(e)(i) of this Part C) for a consideration per share less than the Current Market Price (as defined in Section 5(e)(iv)) in effect immediately prior to such issue or sale, including the issuance or exchange of any shares of Common Stock as consideration for the acquisition by the Corporation of any shares of capital stock of any Subsidiary in connection with the settlement of any litigation or otherwise and whether or not such Subsidiary is merged with or into the Corporation contemporaneously therewith or thereafter, then forthwith upon such issue or sale, the Conversion Price in effect immediately prior to such issue or sale shall be adjusted (calculated to the nearest cent) by dividing the Conversion Price in effect immediately prior to such issue or sale by a fraction, the numerator of which shall be an amount equal to the sum of the number of shares of Common Stock issued and outstanding immediately prior to such issue or sale plus the number of additional shares of Common Stock issued or to be issued and the denominator of which shall be the number of shares of Common Stock outstanding immediately prior to such issue or sale plus the number of shares of Common Stock which the aggregate consideration for the total number of such additional shares of Common Stock would purchase at the Current Market Price immediately prior to such issue or sale. If at any time an adjustment is made in the Conversion Price pursuant to this Section 5(e)(ii), then the Call Threshold Price and the Put Price shall be similarly adjusted by dividing the Call Threshold Price and the Put Price by the fraction determined as provided above. No adjustment shall be made pursuant to this Section 5(e)(ii) in connection with any transaction to which Section 5(e)(v) applies. (A) For the purposes of Section 5(e)(ii) above, the following paragraphs (1) to (5), inclusive, shall also be applicable: (1) In case at any time the Corporation shall grant any rights to subscribe for, or any rights, warrants, or options to purchase, Common Stock or any stock or other 17 securities convertible into or exchangeable for Common Stock (such convertible or exchangeable stock or securities being herein called 'Convertible Securities'), whether or not such rights or options or the right to convert or exchange any such Convertible Securities are immediately exercisable, and the price per share for which Common Stock is issuable upon the exercise of such rights or options or upon conversion or exchange of such Convertible Securities (determined by dividing (A) the total amount, if any, received or receivable by the Corporation as consideration for the granting of such rights or options, plus the minimum aggregate amount of additional consideration payable to the Corporation upon the exercise of such rights or options, plus, in the case of any such rights or options which relate to such Convertible Securities, the minimum aggregate amount of additional consideration, if any, payable upon the issue or sale of such Convertible Securities and upon the conversion or exchange thereof, by (B) the total maximum number of shares of Common Stock issuable upon the exercise of such rights or options or upon the conversion or exchange of all such Convertible Securities issuable upon the exercise of such rights or options) shall be less than the Current Market Price immediately prior to the time of the granting of such rights or options, then the total maximum number of shares of Common Stock issuable upon the exercise of such rights or options or upon conversion or exchange of the total maximum amount of such Convertible Securities issuable upon the exercise of such rights or options shall (as of the date of granting of such rights or options) be deemed to be outstanding and to have been issued for such price per share. Except as provided in clause (B) of this Section 5(e)(ii), no further adjustments of the Conversion Price shall be made upon the actual issue of such Common Stock or of such Convertible Securities upon exercise of such rights or options or upon the actual issue of such Common Stock upon conversion or exchange of such Convertible Securities. (2) In case at any time the Corporation shall issue or sell any Convertible Securities, whether or not the rights to exchange or convert thereunder are immediately exercisable, and the price per share for which Common Stock is issuable upon such conversion or exchange (determined by dividing (A) the total amount received or receivable by the Corporation as consideration for the issue or sale of such Convertible Securities, plus the minimum aggregate amount of additional consideration, if any, payable to the Corporation upon the conversion or exchange thereof, by (B) the total maximum number of shares of Common Stock issuable upon the conversion or exchange of all such Convertible Securities) shall be less than the Current Market Price immediately prior to the time of such issue or sale, then the total maximum number of shares of Common Stock issuable upon conversion or exchange of all such Convertible Securities shall (as of the date of the issue or sale of such Convertible Securities) be deemed to be outstanding and to have been issued for such price per share, provided that (i) except as provided in clause (B) of this Section 5(e)(ii), no further adjustments of the Conversion Price shall be made upon the actual issue of such Common Stock upon conversion or exchange of such Convertible Securities, and (ii) if any such issue or sale of such Convertible Securities is made upon exercise of any rights to subscribe for or to purchase or any option to purchase any such Convertible Securities for which adjustments of the Conversion Price have 18 been or are to be made pursuant to other provisions of this Section 5(e)(ii), no further adjustment of Conversion Price shall be made by reason of such issue or sale. (3) In case at any time the Corporation shall declare a dividend or make any other distribution upon any stock of the Corporation payable in Convertible Securities, any Convertible Securities issuable in payment of such dividend or distribution shall be deemed to have been issued or sold without consideration. (4) In case at any time any shares of Common Stock or Convertible Securities or any rights or options to purchase any such Common Stock or Convertible Securities shall be issued or sold for cash, the consideration received therefor shall be deemed to be the amount received by the Corporation therefor, without deduction therefrom of any expenses incurred or any underwriting commissions or concessions or discounts paid or allowed by the Corporation in connection therewith. In case any shares of Common Stock or Convertible Securities or any rights or options to purchase any such Common Stock or Convertible Securities shall be issued or sold for a consideration other than cash, the amount of the consideration other than cash received by the Corporation shall be deemed to be the fair market value of such non-cash consideration as determined (i) in the case of Common Stock, Convertible Securities, rights or options having a fair market value (as determined in good faith by the Board of Directors) of $10,000,000 or less, in good faith by the Board of Directors of the Corporation, and (ii) in the case of such Common Stock, Convertible Securities, rights or options having a fair market value in excess of $10,000,000, in good faith by the Board of Directors of the Corporation based on, among other things, a valuation of such non-cash consideration by a nationally-recognized, independent investment banking firm, in each case without deduction therefrom of any expenses incurred or any underwriting commissions or concessions or discounts paid or allowed by the Corporation in connection therewith. In case any shares of Common Stock or Convertible Securities or any rights or options to purchase any such Common Stock or Convertible Securities shall be issued in connection with any merger of another corporation (other than the Predecessor Corporation) into the Corporation, the amount of consideration therefor shall be deemed to be the fair market value of the net assets of such merged corporation as determined (i) in the case of net assets having a fair market value (as determined in good faith by the Board of Directors) of $10,000,000 or less, in good faith by the Board of Directors of the Corporation, and (ii) in the case of net assets having a fair market value in excess of $10,000,000, in good faith by the Board of Directors of the Corporation based on, among other things, a valuation opinion by a nationally-recognized, independent investment banking firm, in each case after deducting therefrom all cash and other consideration (if any) paid by the Corporation in connection with any such merger, but without deducting therefrom any expenses incurred in connection therewith. (5) In case at any time the Corporation shall take a record of the holders of Common Stock for the purpose of entitling them (i) to receive a dividend or other distribution payable in Convertible Securities, or (ii) to subscribe for or purchase Common Stock or Convertible Securities, then such record date shall be deemed to be the date of the issue or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other 19 distribution or the date of the granting of such right of subscription or purchase, as the case may be. (B) If the purchase price provided for in any right or option referred to in paragraph (1) of clause (A) of this Section 5(e)(ii), or the rate at which any Convertible Securities referred to in paragraphs (1) or (2) of said clause (A) are convertible into or exchangeable for Common Stock, shall change or a different purchase price or rate shall become effective at any time or from time to time (other than under or by reason of provisions set forth in this Section 5(e) designed to protect against dilution), then, upon such change becoming effective, the Conversion Price then in effect hereunder shall forthwith be increased or decreased to such Conversion Price as would have obtained had the adjustments made upon the granting or issuance of such rights or options or Convertible Securities been made upon the basis of (1) the issuance of the number of shares of Common Stock theretofore actually delivered upon the exercise of such options or rights or upon the conversion or exchange of such Convertible Securities, and the total consideration received therefor, and (2) the granting or issuance at the time of such change of any such options, rights, or Convertible Securities then still outstanding for the consideration, if any, received by the Corporation therefor and to be received on the basis of such changed price. On the expiration of any right, warrant or option referred to in paragraph (1) of clause (A) of this Section 5(e)(ii), or on the termination of any right to convert or exchange any Convertible Securities referred to in paragraphs (1) or (2) of said clause (A), the Conversion Price shall forthwith be readjusted to such amount as would have been obtained had the adjustment made upon the granting or issuance of such rights or options or Convertible Securities been made upon the basis of the issuance or sale of only the number of shares of Common Stock actually issued upon the exercise of such options or rights or upon the conversion or exchange of such Convertible Securities. If the purchase price provided for in any such right or option, or the rate at which any such Convertible Securities are convertible into or exchangeable for Common Stock, shall change at any time under or by reason of provisions with respect thereto designed to protect against dilution, then in case of the delivery of Common Stock upon the exercise of any such right or option or upon conversion or exchange of any such Convertible Security, the Conversion Price then in effect hereunder shall forthwith be decreased to such Conversion Price as would have been obtained had the adjustments made upon the issuance of such right or option or Convertible Security been made upon the basis of the issuance of (and the total consideration received for) the shares of Common Stock delivered as aforesaid. (iii) In case the Corporation shall at any time or from time to time after the Effective Date declare, order, pay or make a dividend or other distribution in cash or otherwise (including, without limitation, any distribution of stock or other securities or property or rights or warrants to subscribe for securities of the Corporation or any of its Subsidiaries (as defined in Part D hereof) by way of dividend or spinoff), on its Common Stock, other than (A) dividends payable in cash not in excess of 50% of Earnings (as defined in Part D hereof) on an accumulated basis commencing on May 1, 1993, or (B) dividends or distributions of shares of Common Stock which are referred to in Section 5(e)(i), then, and in each such case, the Conversion Price shall be adjusted by multiplying (1) the applicable Conversion Price on the day immediately prior to the record date fixed for the determination of stockholders entitled to 20 receive such dividend or distribution by (2) a fraction, the denominator of which shall be the Current Market Price per share of Common Stock, and the numerator of which shall be such Current Market Price per share of Common Stock less the fair market value per share of Common Stock of such dividend or distribution (as determined in good faith by the Board of Directors of the Corporation, a certified resolution with respect to which shall be mailed to each holder of shares of Cumulative Convertible Preferred Stock and, in each case where such fair market value is in excess of $10,000,000, a valuation opinion of a nationally-recognized, independent investment banking firm), and the Call Threshold Price and the Put Price shall be similarly adjusted by multiplying the Call Threshold Price and the Put Price by such fraction. No adjustment shall be made pursuant to this Section 5(e)(iii) in connection with any transaction to which Section 5(e)(v) applies. For purposes of determining the percentage of Earnings distributed by dividend in excess of the limitation set forth in Section 5(e)(iii) above, the Corporation shall deliver to the holders of record of the Cumulative Convertible Preferred Stock substantially contemporaneously with the filing of the Annual Report on Form 10-K of the Corporation with the Securities and Exchange Commission a certificate prepared by the regular independent certified public accountants of the Corporation that shall set forth the Earnings of the Corporation (including for such purpose the Predecessor Corporation (as defined in Part D)) on a cumulative basis commencing May 1, 1993, the dividends paid by the Corporation and the Predecessor Corporation on its shares of capital stock on a cumulative basis from and after such date both in absolute amount and as a percentage of such Earnings, and the amount of the adjustment, if any, which would be required under Section 5(e)(iii) if conversion of the Cumulative Convertible Preferred Stock had occurred as of the close of business on the last day of the most recently concluded fiscal year of the Corporation. Notwithstanding anything herein to the contrary, no adjustment shall be made pursuant to this Section 5(e)(iii) in connection with any payment of cash dividends by the Corporation unless one or more holders of Cumulative Convertible Preferred Stock have elected to convert their Cumulative Convertible Preferred Stock pursuant to Section 5(a) of this Part C or the Corporation has exercised its right to require conversion pursuant to Section 5(b) of this Part C, in which case the adjustment, if any, required by this Section 5(e)(iii) shall be made immediately prior to the Conversion Date and shall be certified by the Corporation's regular independent certified public accountants. (iv) For the purpose of any computation under Sections 5(e)(ii) and 5(e)(iii) (and under Section 3(d) of Part A), the Current Market Price per share of the Common Stock on any date shall be deemed to be the average of the daily Closing Prices of such stock for the twenty consecutive Trading Days commencing thirty Trading Days prior to the date in question. (v) In the case of any consolidation of the Corporation with, or merger of the Corporation into, any other entity, any merger of another entity into the Corporation (other than a merger which does not result in any reclassification, conversion, exchange or cancellation of outstanding shares of Common Stock of the Corporation, other than a change in par value or from par value to no par value or from no par value to par value, or as a result of a subdivision or combination) or any sale or transfer of all or substantially all of the assets of the Corporation, each holder of a share of Cumulative Convertible Preferred Stock then outstanding shall have the right thereafter to convert such share only into the kind and amount of securities, cash and other property receivable upon such consolidation, merger, sale or transfer by a holder of the number of shares of Common Stock of the Corporation into which 21 such shares of Cumulative Convertible Preferred Stock might have been converted immediately prior to such consolidation, merger, sale or transfer, assuming such holder of Common Stock of the Corporation is not an entity with which the Corporation consolidated or into which the Corporation merged or which merged into the Corporation or to which such sale or transfer was made, as the case may be ('constituent entity'), or an affiliate of a constituent entity, and failed to exercise his rights of election, if any, as to the kind or amount of securities, cash and other property receivable upon such consolidation, merger, sale or transfer (provided that if the kind or amount of securities, cash and other property receivable upon such consolidation, merger, sale or transfer is not the same for each share of Common Stock of the Corporation held immediately prior to such consolidation, merger, sale or transfer by other than a constituent entity or an affiliate thereof and in respect of which such rights of election shall not have been exercised ('non-electing share'), then for the purpose of this Section (5)(e) the kind and amount of securities, cash and other property receivable upon such consolidation, merger, sale or transfer by each non-electing share shall be deemed to be the kind and amount so receivable per share by a plurality of the non-electing shares). If necessary, appropriate adjustment shall be made in the application of the provisions set forth herein with respect to the rights and interests thereafter of the holders of shares of Cumulative Convertible Preferred Stock to the end that the provisions set forth herein shall thereafter correspondingly be made applicable, as nearly as may reasonably be appropriate, in relation to any shares of stock or other securities or property thereafter deliverable on the conversion of the shares. The above provisions shall similarly apply to successive consolidations, mergers, sales or transfers. The Corporation shall not effect any such consolidation, merger, sale or transfer, unless prior to or simultaneously with the consummation thereof the successor corporation (if other than the Corporation) resulting from such consolidation or merger or the corporation purchasing such assets or other appropriate corporation or entity shall assume, by written instrument, the obligation to deliver to the holder of each share of Cumulative Convertible Preferred Stock such shares of stock, securities or assets as, in accordance with the foregoing provisions, such holder may be entitled to receive under this Section 5(e). (vi) The Corporation may make such adjustments in the Conversion Price, Call Threshold Price or Put Price, in addition to those required by subparagraphs (i) through (v) of this Section 5(e), as it considers to be advisable in order that any event treated for Federal income tax purposes as a dividend of stock or stock rights shall not be taxable to the recipients. (vii) No adjustment in the Conversion Price, Call Threshold Price or Put Price will be made for the issuance of shares of capital stock (or rights, warrants or other securities convertible into or exchangeable for shares of capital stock) (i) to employees, officers, directors or consultants pursuant to the Corporation's or any Subsidiaries' employee benefit plans, employee compensation arrangements or stock option plans or programs in effect from time to time or (ii) pursuant to underwritten public offerings of shares of capital stock of the Corporation. (viii) No adjustment will be required to be made in the Conversion Price, Call Threshold Price or Put Price until cumulative adjustments require an adjustment of at least 1% of such Conversion Price, Call Threshold Price or Put Price. (ix) For purposes of this Section 5(e), the number of shares of Common Stock at any time outstanding shall not include any shares of Common Stock then owned or held by or for the 22 account of the Corporation but the sale or issue of such shares shall be a sale or issue for the purposes of Section 5(e)(ii). (x) The certificate of any firm of independent public accountants of recognized standing selected by the Board of Directors of the Corporation (which may be the firm of independent public accountants regularly employed by the Corporation) shall be presumptively correct for any computation made under this Section 5(e). (xi) If the Corporation shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend or other distribution, and shall thereafter and before the distribution to stockholders thereof legally abandon its plan to pay or deliver such dividend or distribution, then no adjustment pursuant to this Section 5(e) in the number of shares of Common Stock issuable upon exercise of the right of conversion granted by this Section 5(e) or in the Conversion Price, Call Threshold Price or Put Price then in effect shall be required by reason of the taking of such record. (f) Fractional Shares. No fractional shares or scrip representing fractional shares shall be issued upon the conversion of any shares of Cumulative Convertible Preferred Stock, but the holder thereof will receive in cash an amount equal to the value of such fractional share of Common Stock based on the Current Market Price. If more than one share of Cumulative Convertible Preferred Stock shall be surrendered for conversion at one time by the same holder, the number of full shares issuable upon conversion thereof shall be computed on the basis of the aggregate number of such shares so surrendered. (g) Payment of Taxes. The Corporation shall pay any tax in respect of the issue of stock certificates on conversion of shares of Cumulative Convertible Preferred Stock. The Corporation shall not, however, be required to pay any tax which may be payable in respect of any transfer involved in the issue and delivery of stock in any name other than that of the holder of the shares converted, and the Corporation shall not be required to issue or deliver any such stock certificate unless and until the person or persons requesting the issuance thereof shall have paid the Corporation the amount of any such tax or shall have established to the satisfaction of the Corporation that such tax has been paid. (h) Class A Common Stock and Class B Common Stock Reserved for Conversion. The Corporation shall at all times reserve and keep available out of its authorized and unissued Class A Common Stock and Class B Common Stock or have available in its treasury the full number of shares of Class A Common Stock and Class B Common Stock deliverable upon the conversion of all outstanding shares of Cumulative Convertible Preferred Stock and Class B Common Stock and shall take all such action as may be required from time to time in order that it may validly and legally issue fully paid and non-assessable shares of Class A Common Stock and shares of Class B Common Stock, as the case may be, upon conversion of the Cumulative Convertible Preferred Stock or Class B Common Stock, as the case may be. (i) Notice of Adjusted Conversion Price, Call Threshold Price and Put Price. If, and at any time, the Conversion Price, Call Threshold Price or Put Price is adjusted as herein provided a notice stating that the Conversion Price, Call Threshold Price or Put Price, as the case may be, has been adjusted and setting forth the adjusted Conversion Price, Call Threshold Price or Put Price, as the case may be, shall be mailed forthwith by the Corporation by first class mail postage prepaid (or, if such shares are held of record by 10 Persons or less, by certified mail) to the holders of Cumulative Convertible Preferred Stock at their last addresses as they shall appear upon the 23 Corporation's stock transfer books. Failure to mail the notice or any defect in such notice shall not affect the validity of any transaction referred to in such notice. (j) Notice of Certain Events. In the event: (i) the Corporation shall declare a dividend (or any other distribution, including a spinoff or distribution of stock of any Subsidiary) on its Common Stock (other than a cash dividend payable out of Earnings not requiring an adjustment pursuant to Section 5(e)(iii)); or (ii) the Corporation shall authorize the issuance to holders of its Common Stock of rights or warrants to subscribe for or purchase Common Stock or convertible securities; or (iii) of any reclassification of the Common Stock or of any consolidation or merger to which the Corporation is a party or of the sale or transfer of all or substantially all of the assets of the Corporation and for which approval of any stockholders of the Corporation is required; or (iv) of the voluntary or involuntary dissolution, liquidation or winding up of the Corporation; then, and in each event, the Corporation shall cause to be mailed to each holder of Cumulative Convertible Preferred Stock, at his address as the same shall appear on the books of the Corporation, as promptly as possible but in any event at least fifteen days prior to the applicable date hereinafter specified, by first class mail postage prepaid (or, if such shares are held of record by 10 Persons or less, by certified mail), a notice stating (A) the date on which a record is to be taken for the purpose of such dividend, distribution, issuance, or, if a record is not to be taken, the date as of which the holders of Class A Common Stock or Class B Common Stock of record to be entitled to such dividend, distribution or issuance are to be determined, and the nature and amount of such dividend, distribution or issuance or (B) the date on which such reclassification, consolidation, merger, sale, transfer, dissolution, liquidation or winding up is expected to become effective, and the date as of which it is expected that holders of Class A Common Stock or Class B Common Stock of record shall be entitled to exchange their Class A Common Stock or Class B Common Stock, as the case may be, for securities or other property deliverable upon such reclassification, consolidation, merger, sale, transfer, dissolution, liquidation or winding up. D. Definitions. As used herein the following terms shall have the following meanings: (a) 'Affiliate' of a specified Person shall mean any other Person who directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with the Person specified. (b) 'Associate' when used to indicate a relationship with any Person shall mean (i) any corporation or organization of which such Person is an officer or partner or is, directly or indirectly, the beneficial owner of ten (10) percent or more of any class of equity securities, (ii) any trust or other estate in which such Person has a substantial beneficial interest or as to which such Person serves as trustee or in a similar fiduciary capacity, (iii) any spouse, parents, children, siblings, mothers-and fathers-in-law, sons-and daughters-in-law, and brothers-and sisters-in-law or (iv) any officer or director of any corporation controlling or controlled by such Person. (c) 'Business Day' shall mean each Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on which banking organizations in New York, New York are authorized or obligated by law or executive order to close. 24 (d) 'Closing Price' shall mean the reported last sale price regular way or, in case no such reported sale takes place on such day, the average of the reported closing bid and asked prices regular way, in either case on the New York Stock Exchange, Inc. or, if the Class A Common Stock or Class B Common Stock, as the case may be, is not listed or admitted to trading on such exchange, on the principal national securities exchange on which the Class A Common Stock or Class B Common Stock, as the case may be, is listed or admitted to trading, or, if not listed or admitted to trading on any national securities exchange, on the National Association of Securities Dealers Automated Quotations National Market System, or, if the Class A Common Stock or Class B Common Stock, as the case may be, is not listed or admitted to trading on any national securities exchange or quoted on such National Market System, the average of the closing bid and asked prices in the over-the-counter market as furnished by any New York Stock Exchange member firm selected from time to time by the Board for that purpose, or, if the Corporation's Class A Common Stock is not priced in such a market, the value determined, in good faith by the Board of Directors or, if the Corporation's Class B Common Stock is not priced in such a market, the value of the Class A Common Stock determined in accordance herewith. (e) 'Common Stock' shall mean stock of the Corporation of any class, whether now or hereafter authorized, which has the right to participate in the distribution of either earnings or assets of the Corporation without limit as to the amount or percentage, including, without limitation, the Class A Common Stock and the Class B Common Stock. (f) 'Dividend Period' shall mean the six-month period ending on March 30 or September 30, as the case may be, of each year, commencing with the period ending September 30, 1994. (g) 'Earnings' shall mean the consolidated net income of the Corporation (including the Predecessor Corporation) and the Subsidiaries as reflected on the statement of operations and retained earnings prepared in accordance with generally accepted accounting principles and reported in the Corporation's (including the Predecessor Corporation's) financial statements as filed with the Securities and Exchange Commission. (h) 'Effective Date' means the date on which the merger of the Predecessor Corporation with and into the Corporation shall have been consummated and become effective pursuant to the provisions of the Agreement and Plan of Merger by and between the Predecessor Corporation and the Corporation. (i) 'Exchange Group' shall mean Security Management Corp., a Maryland corporation ('SMC'), Victor Posner Trust No. 20, a trust organized under the laws of the State of Florida (the 'Trust'), beneficiaries of the Trust, Victor Posner ('Posner') and any person (including any individual, corporation, partnership, firm, joint venture, association, joint-stock company, trust, unincorporated organization, governmental or regulatory body or other entity) controlling, controlled by, or under common control with SMC, Posner, the Trust or beneficiaries of the Trust and the spouse, lineal descendants and other relatives or family members of Posner. (j) 'Original Issue Date' means April 23, 1993. (k) 'Person' shall mean any individual, corporation, partnership, firm, joint venture, association, joint-stock company, trust, unincorporated organization, governmental or regulatory body or other entity. (l) 'Predecessor Call Threshold Price' means the Call Threshold Price for the Predecessor Convertible Preferred Stock in effect immediately prior to the Effective Date. 25 (m) 'Predecessor Common Stock' means the shares of Class A Common Stock, par value $.10 per share, and Class B Common Stock, par value $.10 per share, of the Predecessor Corporation. (n) 'Predecessor Conversion Price' means the price per share at which shares of Predecessor Convertible Preferred Stock were convertible into shares of Predecessor Common Stock immediately prior to the Effective Date. (o) 'Predecessor Convertible Preferred Stock' means the shares of Cumulative Convertible Preferred Stock, par value $.10 per share, of the Predecessor Corporation. (p) 'Predecessor Corporation' means Triarc Companies, Inc., an Ohio corporation. (q) 'Predecessor Put Price' means the 'put price' (as defined in the Articles of Incorporation of the Predecessor Corporation) for the Predecessor Convertible Preferred Stock in effect immediately prior to the Effective Date. (r) 'Redemption Agent' shall mean any individual, corporation (including the Corporation), partnership, joint venture, trust or unincorporated organization that is identified in any notice of redemption provided for herein and that is authorized by the Corporation to pay the redemption price of, and accrued and unpaid dividends determined under Section 2 of Part C on the Cumulative Convertible Preferred Stock on presentation and surrender to such agent. (s) 'Shares ranking junior to the Cumulative Preferred Stock' shall mean and include each and every series of Preferred Stock and all other shares of the Corporation other than those defined under this Section as shares 'ranking prior to' or 'on a parity with' the Cumulative Convertible Preferred Stock. (t) 'Shares ranking on a parity with the Cumulative Convertible Preferred Stock' shall mean and include shares of each and every series of Preferred Stock (up to the Aggregate Dollar Amount) and all other shares (including shares of Preferred Stock in excess of the Aggregate Dollar Amount), if authorized and issued as provided in Section 4(b) of Part C, of the Corporation in respect of which the rights of the holders thereof as to the payment of dividends or as to distributions in the event of a voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation rank equally (except as to the amounts fixed therefor) with the rights of the holders of Cumulative Convertible Preferred Stock. (u) 'Shares ranking prior to the Cumulative Convertible Preferred stock' shall mean and include all shares of the Corporation in respect of which the rights of the holders thereof as to the payment of dividends or as to distributions in the event of a voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation are given preference over the rights of the holders of Cumulative Convertible Preferred Stock. (v) 'Subsidiary' shall mean any corporation whose shares of capital stock having ordinary voting power to elect a majority of the directors of such corporation are owned, directly or indirectly, by the Corporation. (w) 'Trading Day' shall mean each Monday, Tuesday, Wednesday, Thursday and Friday which is a day on which the New York Stock Exchange or the American Stock Exchange, as the case may be, is open for trading in securities or a day on which securities are quoted on the National Association of Securities Dealers Automated Quotation National Market System. 26 ARTICLE V BOARD OF DIRECTORS; STOCKHOLDERS MEETINGS SECTION 1. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors. SECTION 2. The Board of Directors shall consist of not less than ten (10) nor more than twenty (20) persons, the exact number to be fixed from time to time by the Board of Directors pursuant to a resolution adopted by a majority of directors then in office; provided, however, that such maximum number may be increased from time to time to reflect the rights of holders of Preferred Stock to elect directors in accordance with the terms of this Certificate of Incorporation or of the Certificate of Designation pursuant to which any class or series of Preferred Stock is issued or to the extent provided in any resolution or resolutions adopted by the Board of Directors providing for the issuance of any class or series of Preferred Stock pursuant to Article IV of this Certificate of Incorporation. Notwithstanding anything to the contrary contained in this Certificate of Incorporation, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting if all of the members of the Board of Directors or the committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board of Directors or committee. Members of the Board of Directors or any committee thereof designated by the Board of Directors, may participate in a meeting of the Board of Directors, or of such committee, as the case may be, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting in such a manner shall constitute presence in person at such meeting. SECTION 3. Subject to the rights of the holders of any class or series of Preferred Stock, any vacancy in the Board of Directors caused by death, resignation, removal, retirement, disqualification or any other cause (including an increase in the number of directors) may be filled solely by resolution adopted by the affirmative vote of a majority of the directors then in office, whether or not such majority constitutes less than a quorum, or by a sole remaining director. Any new director elected to fill a vacancy on the Board of Directors will serve for the remainder of the full term of that director for which the vacancy occurred. No decrease in the size of the Board of Directors shall have the effect of shortening the term of any incumbent director. SECTION 4. Except as otherwise provided by law or by this Certificate of Incorporation, a majority of the directors in office at the time of a duly assembled meeting shall be necessary to constitute a quorum for the transaction of business, and the act of a majority of the directors present at such meeting shall be the act of the Board of Directors. SECTION 5. Except as otherwise provided by law, at any annual or special meeting of stockholders only such business shall be conducted as shall have been properly brought before the meeting. Except as otherwise provided in this Article V, in order to be properly brought before the meeting, such business must have either been (A) specified in the written notice of the meeting (or any supplement thereto) given to stockholders of record on the record date for such meeting by or at the direction of the Board of Directors, (B) brought before the meeting at the direction of the Chairman, the President or the Board of Directors or (C) specified in a written notice given by or on behalf of a stockholder of record on the record date for such meeting entitled to vote thereat or a duly authorized proxy for such stockholder, in accordance with all of the following requirements. A notice referred to in clause (C) of the preceding sentence must be delivered personally to, or mailed to and received at, the principal 27 executive office of the Corporation, addressed to the attention of the Secretary, not less than 45 days nor more than 60 days prior to the meeting; provided, however, that in the event that less than 55 days' notice or prior public disclosure of the date of the meeting is given or made to stockholders, notice by the stockholder to be timely must be so received not later than the close of business on the 10th day following the day on which such notice of the date of the annual or special meeting was mailed or such public disclosure was made, whichever first occurs. Such notice referred to in clause (C) of the first sentence of this Section 5 shall set forth (i) a full description of each such item of business proposed to be brought before the meeting and the reasons for conducting such business at such meeting, (ii) the name and address of the person proposing to bring such business before the meeting, (iii) the class and number of shares held of record, held beneficially and represented by proxy by such person as of the record date for the meeting (if such date has then been made publicly available) and as of the date of such notice, (iv) if any item of such business involves a nomination for director, all information regarding each such nominee that would be required to be set forth in a definitive proxy statement filed with the SEC pursuant to Section 14 of the Securities Exchange Act of 1934, as amended, or any successor thereto, and the written consent of each such nominee to serve if elected, (v) any material interest of the stockholder in such item of business and (vi) all other information that would be required to be filed with the SEC if, with respect to the business proposed to be brought before the meeting, the person proposing such business was a participant in a solicitation subject to Section 14 of the Securities Exchange Act of 1934, as amended, or any successor thereto. No business shall be brought before any meeting of stockholders of the Corporation otherwise than as provided in this Section 5. The Corporation may require a proposed nominee for director to furnish such other information as may be required to be set forth in a stockholder's notice of nomination which pertains to the nominee or which may be reasonably required to determine the eligibility of such proposed nominee to serve as a director of the Corporation. At the request of the Board of Directors, any individual nominated by the Board of Directors for election as a director shall furnish to the Secretary of the Corporation that information required to be set forth in a stockholder's notice of nomination which pertains to a nominee. The Chairman of the meeting may, if the facts warrant, determine that a nomination or stockholder proposal was not made in accordance with the foregoing procedure, and if he should so determine, he shall so declare to the meeting and the defective nomination or proposal shall be disregarded. SECTION 6. The annual meeting of stockholders of the Corporation for the election of directors and the transaction of such other business as may be brought before the meeting in accordance with this Certificate of Incorporation shall be held on the date and the time fixed from time to time by the Board of Directors, by a resolution adopted by the affirmative vote of a majority of the Entire Board (as defined in Article VI of this Certificate of Incorporation). SECTION 7. Except as otherwise provided by law or by Article VI of this Certificate of Incorporation, at any meeting of stockholders of the Corporation the presence in person or by proxy of the holders of a majority in voting power of the outstanding stock of the Corporation entitled to vote shall constitute a quorum for the transaction of business brought before the meeting in accordance with this Certificate of Incorporation and, a quorum being present, the affirmative vote of the holders of a majority in voting power present in person or represented by proxy and entitled to vote shall be required to effect action by stockholders; provided, however, that the affirmative vote of a plurality in voting power present in person or represented by proxy and entitled to vote shall be required to effect elections of directors. SECTION 8. At every meeting of stockholders, the Chairman or, in the absence of such officer, the President or, in the absence of both such officers, such person as shall have been designated by the 28 Chairman, or if he has not done so, then by the President, or if he has not done so, by resolution adopted by the affirmative vote of a majority of the Entire Board, shall act as chairman of the meeting. The chairman of the meeting shall have sole authority to prescribe the agenda and rules of order for the conduct of such meeting of stockholders and to determine all questions arising thereat relating to the order of business and the conduct of the meeting, except as otherwise required by law. SECTION 9. Any class or series of Preferred Stock may exercise the special voting rights, if any, of such class or series to elect directors upon the occurrence of certain events specified in the Certificate of Designation pursuant to which any such class or series of Preferred Stock is issued or in this Certificate of Incorporation, as the case may be, in any manner now or hereafter permitted by this Certificate of Incorporation, Delaware law or the applicable Certificate of Designation for such class or series of Preferred Stock. SECTION 10. The exercise by the Board of Directors of the powers conferred in this Article V shall at all times be subject to any statutory or other limitations upon such powers provided by the laws of the State of Delaware. SECTION 11. Members of the Board of Directors may be elected either by written ballot or by voice vote. SECTION 12. The Corporation may in its by-laws confer powers upon its Board of Directors in addition to the foregoing, and in addition to the powers and authorities expressly conferred upon it by statute. ARTICLE VI BUSINESS COMBINATIONS SECTION 1. In addition to any affirmative vote required by law or under any other provisions of this Certificate of Incorporation or required in a specific case by the Board of Directors, and except as otherwise expressly provided in this Article VI, a Business Combination (as hereinafter defined) shall require the approval of the holders of the then outstanding Voting Shares (as hereinafter defined) entitled to cast at least 75% of the votes entitled to be cast by the holders of all of the then outstanding Voting Shares (and such affirmative vote must include the affirmative vote of the holders of Voting Shares entitled to cast at least a majority of the votes entitled to be cast by the holders of all the then outstanding Voting Shares which are not Beneficially Owned (as hereinafter defined) by any Interested Stockholder (as hereinafter defined). Each such affirmative vote shall be required notwithstanding the fact that no vote may be required, or that some lesser percentage may be specified, by law or in any agreement with any national securities exchange or otherwise. SECTION 2. The provisions of Section 1 of this Article VI shall not be applicable if: (i) immediately prior to the time the Business Combination is consummated, the Corporation is the Beneficial Owner (as hereinafter defined) of a majority of each class of the outstanding Equity Securities (as hereinafter defined) of the Interested Stockholder; (ii) the Business Combination was approved by at least a majority of the Board of Directors (even though not the Entire Board (as hereinafter defined)), but only if a majority of the directors acting favorably upon such matter are Continuing Directors (as hereinafter defined); or (iii) the consideration to be received in or as a result of the Business Combination by the holders of each class of the Voting Shares acquired by the Interested Stockholder is at least equal to the greater of the highest per share price (including any brokerage commissions, transfer taxes and soliciting dealers' fees and with appropriate adjustments for recapitalizations and for 29 stock splits, reverse stock splits and stock dividends) paid by the Interested Stockholder for any shares of such class (A) within the two-year period immediately prior to the first public announcement of the proposal of the Business Combination or (B) in the transaction in which it became an Interested Stockholder, and is in cash or in the same form of consideration as the Interested Stockholder paid to acquire the largest number of Voting Shares previously acquired by it. If the ownership or form of consideration requirements set forth in clauses (i) and (iii) of this Section 2 are satisfied, the Business Combination shall require the approval of the holders of then outstanding Voting Shares entitled to cast at least two-thirds of the votes entitled to be cast by the holders of all of the then outstanding Voting Shares (the 'Ratification Percentage') (and such approval must include the affirmative vote of the holders of Voting Shares entitled to cast at least a majority of the votes entitled to be cast by the holders of all the then outstanding Voting Shares which are not Beneficially Owned by any Interested Stockholder). If the Board of Directors approves the Business Combination in accordance with the requirements set forth in clause (ii) of the preceding sentence, the Board of Directors may, again in accordance with the voting provisions of such clause (ii), determine to require a vote of stockholders. If a stockholder vote is required for such Business Combination under law, the Board of Directors shall require the affirmative vote of the then outstanding Voting Shares equal to the higher of: (1) the Ratification Percentage (such affirmative vote shall not require the affirmative vote of the holders of Voting Shares entitled to cast a majority of the votes entitled to be cast by the holders of all the then outstanding Voting Shares which are not Beneficially Owned by any Interested Stockholder) and (2) such other percentage as is required by law. If a stockholder vote is not required for such Business Combination under law, the Board of Directors may, in its discretion, (x) decide not to require a stockholder vote to approve the Business Combination or (y) require the affirmative vote of the outstanding Voting Shares equal to (i) the Ratification Percentage (such affirmative vote shall not require the affirmative vote of the holders of Voting Shares entitled to cast a majority of the votes entitled to be cast by the holders of all the then outstanding Voting Shares which are not Beneficially Owned by any Interested Stockholder) or (ii) such other percentage as it so determines. Each such affirmative vote shall be required notwithstanding the fact that no vote may be required, or that some lesser percentage may be specified, by law or in any agreement with any national securities exchange or otherwise. SECTION 3. For the purposes of this Article VI: (1) 'Business Combination' shall mean: (A) any merger or consolidation of the Corporation or any Subsidiary (as hereinafter defined) with or into (whether or not the Corporation is the surviving corporation) (i) any Interested Stockholder or an Affiliate or Associate (as hereinafter defined) of an Interested Stockholder, or an Affiliate thereof, or (ii) any other corporation (whether or not itself an Interested Stockholder), which, after such merger or consolidation, would be an Affiliate or Associate of an Interested Stockholder or an Affiliate thereof; or (B) any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of related transactions) to or with any Interested Stockholder or an Affiliate or Associate of an Interested Stockholder, or an Affiliate thereof, of any Substantial Part (as hereinafter defined) of the assets of the Corporation or of any Subsidiary; or (C) any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of related transactions) to the Corporation or any Subsidiary of any assets (excluding any Voting Shares, but including without limitation any securities, whether 30 outstanding, authorized but unissued or in treasury, issued by an Interested Stockholder or by an Affiliate or Associate of an Interested Stockholder or by an Affiliate thereof) of (i) any Interested Stockholder or (ii) an Affiliate or Associate of an Interested Stockholder, or an Affiliate thereof, if the amount paid therefor constitutes a Substantial Part of the assets of the Corporation or any Subsidiary; or (D) the issuance or transfer by the Corporation or by any Subsidiary (in one transaction or a series of related transactions) of any securities of the Corporation or any Subsidiary (except upon conversion of convertible securities as a result of a pro rata stock dividend or stock split) to any Interested Stockholder or an Affiliate or Associate of an Interested Stockholder, or an Affiliate thereof, in exchange for cash, securities or other property (or a combination thereof) having an aggregate fair market value of $5,000,000 or more; or (E) the adoption of any plan or proposal for the liquidation, dissolution, spinoff, split-up or split-off of the Corporation if, as of the record date for the determination of stockholders entitled to notice thereof and to vote thereon or, if no vote would otherwise be required, the date the transaction is planned to be consummated, any Person (as hereinafter defined) shall be an Interested Stockholder; or (F) any reclassification of securities (including, without limitation, any combination of shares or reverse stock split) or recapitalization of the Corporation, or any reorganization, merger or consolidation of the Corporation with any of its Subsidiaries or any similar transaction (whether or not with or into or otherwise involving an Interested Stockholder), which has the effect, directly or indirectly, of increasing the proportionate share of the outstanding securities of any class of Equity Securities of the Corporation or any Subsidiary of which any Interested Stockholder is, directly or indirectly, the Beneficial Owner; or (G) any agreement, contract or other arrangement providing for any of the transactions described in this definition of Business Combination. (2) A 'Person' shall mean any individual, firm, corporation or other entity. (3) 'Interested Stockholder' shall mean any Person (other than the Corporation or any Subsidiary and other than any pension, profit sharing, employee stock ownership or other employee benefit plan of the Corporation or any Subsidiary or any trustee of or fiduciary with respect to any such plan when acting in such capacity) who or which, as of the record date for the determination of stockholders entitled to notice of and to vote on any Business Combination, or immediately prior to the consummation of any such Business Combination (other than a Business Combination referred to in subparagraph (1)(E) of this Section 3) is the Beneficial Owner of more than ten (10) percent of the voting power of the Voting Shares (determined solely on the basis of the total number of Voting Shares so beneficially owned in relation to the total number of Voting Shares issued and outstanding); provided, however, that DWG Acquisition Group, L.P., a Delaware limited partnership, or any Affiliate or Associate thereof, shall not be considered an Interested Stockholder for purposes of this Article VI. (4) 'Beneficial Ownership' shall be determined, and a Person shall be the 'Beneficial Owner' of all securities which such Person is deemed to own beneficially, pursuant to Rule 13d-3 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended (or any successor rule or statutory provision) or, if said Rule 13d-3 shall be rescinded and there shall be no successor rule or statutory provision thereto, pursuant to said Rule 13d-3 as in effect on the date of 31 the merger of Triarc Companies, Inc., an Ohio corporation, with and into the Corporation (the 'Merger'); provided, however, that a Person shall, in any event, also be deemed to be the 'Beneficial Owner' of any Voting Shares: (A) of which such Person or any of its Affiliates or Associates is, directly or indirectly, the Beneficial Owner, or (B) of which such Person or any of its Affiliates or Associates has (i) the right to acquire (whether such right is exercisable immediately or only after the passage of time), pursuant to any agreement, arrangement or understanding (but shall not be deemed to be the Beneficial Owner of any Voting Shares solely by reason of an agreement, arrangement or understanding with the Corporation to effect a Business Combination) or upon the exercise of conversion rights, exchange rights, warrants, or options, or otherwise, or (ii) sole or shared voting or investment power with respect thereto pursuant to any agreement, arrangement, understanding, relationship or otherwise (but shall not be deemed to be the Beneficial Owner of any Voting Shares solely by reason of a revocable proxy granted for a particular meeting of stockholders, pursuant to a public solicitation of proxies for such meeting, with respect to shares of which neither such Person nor any such Affiliate or Associate is otherwise deemed the Beneficial Owner), or (C) of which any other Person is, directly or indirectly, the Beneficial Owner if such first mentioned Person or any of its Affiliates or Associates acts with such other Person as a partnership, syndicate or other group pursuant to any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of any shares of capital stock of the Corporation; and provided further, however, that (i) no director or officer of the Corporation, nor any Associate or Affiliate of any such director or officer, shall, solely by reason of any or all of such directors and officers acting in their capacities as such, be deemed for any purposes hereof, to be the Beneficial Owner of any Voting Shares of which any other such director or officer (or any Associate or Affiliate thereof) is the Beneficial Owner and (ii) no trustee of an employee stock ownership or similar plan of the Corporation or any Subsidiary ('Employee Plan Trustee') nor any Associate or Affiliate of any such Employee Plan Trustee, shall, solely by reason of being an Employee Plan Trustee or Associate or Affiliate of an Employee Plan Trustee, be deemed for any purposes hereof, to be the Beneficial Owner of any Voting Shares held by or under any such plan. (5) 'Continuing Director' shall mean a Person who was a member of the Board of Directors of the Corporation as of the date of the Merger, or a person thereafter elected by the stockholders or appointed by the Board of Directors whose election or appointment or recommendation by the Board of Directors for election by the Corporation's stockholders was approved of by at least a majority of the Continuing Directors then on the Board of Directors. (6) 'Entire Board' shall mean the number of directors determined from time to time by the Board of Directors pursuant to a resolution adopted pursuant to Section 2 of Article V of this Certificate of Incorporation. (7) An 'Affiliate' of a specified Person is a Person who directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the Person specified. The term 'Associate' used to indicate a relationship with any Person shall mean (i) any corporation or organization (other than the Corporation or a Subsidiary) of which such Person is 32 an officer or partner or is, directly or indirectly, the Beneficial Owner of ten (10) percent or more of any class of Equity Securities, (ii) any trust or other estate in which such Person has a substantial beneficial interest or as to which such Person serves as trustee or in a similar fiduciary capacity (other than an Employee Plan Trustee, as defined above), (iii) any Relative (as hereinafter defined) of such Person or (iv) any officer or director of any corporation controlling or controlled by such Person. (8) 'Relative' shall mean a Person's spouse, parents, children, siblings, mothers-and fathers-in-law, sons-and daughters-in-law, and brothers-and sisters-in-law. (9) 'Subsidiary' shall mean any corporation of which a majority of any class of Equity Security is owned, directly or indirectly, by the Corporation; provided, however, that for the purposes of the definition of Interested Stockholder set forth in paragraph (3) of this Section 3, the term 'Subsidiary' shall mean only a corporation of which a majority of each class or series of Equity Security is owned, directly or indirectly, by the Corporation. (10) 'Substantial Part' shall mean assets having a book value (determined in accordance with generally accepted accounting principles) in excess of 10% of the book value (determined in accordance with generally accepted accounting principles) of the total consolidated assets of the entity in question and its consolidated Subsidiaries, at the end of its most recent fiscal year ending prior to the time the determination is made. (11) 'Voting Shares' shall mean any issued and outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors; provided, however, that for purposes of computing the number of Voting Shares of which a Person is a Beneficial Owner in order to determine whether such Person is an Interested Stockholder, the outstanding Voting Shares owned by the Interested Stockholder shall include shares deemed owned by such Person through the application of paragraph (4) of this Section 3. (12) 'Equity Security' shall have the meaning given to such term under Rule 3a11-1 of the General Rules and Regulations under the Securities Exchange Act of 1934, as in effect on January 1, 1994. SECTION 4. A majority of the Entire Board shall have the power to determine, but only if a majority of the Entire Board shall then consist of Continuing Directors, or, if a majority of the Entire Board shall not then consist of Continuing Directors, a majority of the then Continuing Directors shall have the power to determine, for the purposes of this Article VI on the basis of information known to them, (i) the number of Voting Shares of which any Person is the Beneficial Owner, (ii) whether a Person is an Affiliate or Associate of another, (iii) whether a Person has an agreement, arrangement or understanding with another as to any matter referred to in subparagraph (4)(C) of Section 3 of this Article VI, (iv) whether the assets subject to any Business Combination constitute a Substantial Part of the assets of the entity in question, and/or (v) any other factual matter relating to the applicability or effect of this Article VI. Any determinations made by the Board of Directors, or by the Continuing Directors, as the case may be, pursuant to this Article VI in good faith and the basis of such information and assistance as was then reasonably available for such purpose shall be conclusive and binding upon the Corporation and its stockholders, including any Interested Stockholder. SECTION 5. Any amendment, alteration, change or repeal of this Article VI, or any other amendment of this Certificate of Incorporation made at a time when the Corporation has an Interested Stockholder, shall, in addition to any other vote or approval required by law or by this Certificate of 33 Incorporation, require the affirmative vote of the holders of the then outstanding Voting Shares entitled to cast at least 75% of the votes entitled to be cast by the holders of all of the then outstanding Voting Shares (and such affirmative vote must include the affirmative vote of the holders of Voting Shares entitled to cast at least a majority of the votes entitled to be cast by the holders of all Voting Shares exclusive of those of which any Interested Stockholder is the Beneficial Owner); provided, however, that such 75% vote (and such additional affirmative vote of the holders of Voting Shares entitled to cast at least a majority of the votes entitled to be cast by the holders of all Voting Shares exclusive of those of which any Interested Stockholder is the Beneficial Owner) shall not be required for any amendment, alteration, change or repeal declared advisable by the Board of Directors by the affirmative vote of a majority of the Entire Board and submitted to the stockholders for their consideration, but only if a majority of the members of the Board of Directors acting favorably upon such matter shall be Continuing Directors, in which case this Article VI, or any other provision of this Certificate of Incorporation, may be amended by the affirmative vote of stockholders holding at least a majority of the voting power of the outstanding Voting Shares (such affirmative vote shall not require the affirmative vote of the holders of Voting Shares entitled to cast at least a majority of the votes entitled to be cast by the holders of all the then outstanding Voting Shares exclusive of those of which any Interested Stockholder is the Beneficial Owner); and provided, further, that the Ratification Percentage may be amended, altered, repealed or changed by the affirmative vote of the holders of at least two-thirds of the voting power of the outstanding Voting Shares (such affirmative vote shall not require the affirmative vote of the holders of Voting Shares entitled to cast at least a majority of the votes entitled to be cast by the holders of all the then outstanding Voting Shares exclusive of those of which any Interested Stockholder is the Beneficial Owner). ARTICLE VII INDEMNIFICATION SECTION 1. To the extent not prohibited by law, the Corporation shall indemnify any person who is or was made, or threatened to be made, a party to any threatened, pending or completed action, suit or proceeding (a 'Proceeding'), whether civil, criminal, administrative or investigative, including, without limitation, an action by or in the right of the Corporation to procure a judgment in its favor, by reason of the fact that such person, or a person of whom such person is the legal representative, is or was a Director or officer of the Corporation, or is or was serving in any capacity at the request of the Corporation for any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise (an 'Other Entity'), against judgments, fines, penalties, excise taxes, amounts paid in settlement and costs, charges and expenses (including attorneys' fees and disbursements). Persons who are not Directors or officers of the Corporation may be similarly indemnified in respect of service to the Corporation or to an Other Entity at the request of the Corporation to the extent the Board at any time specifies that such persons are entitled to the benefits of this Article VII. SECTION 2. The Corporation shall, from time to time, reimburse or advance to any Director or officer or other person entitled to indemnification hereunder the funds necessary for payment of expenses, including attorneys' fees and disbursements, incurred in connection with any Proceeding, in advance of the final disposition of such Proceeding; provided, however, that, if required by the Delaware General Corporation Law, such expenses incurred by or on behalf of any Director or officer or other person may be paid in advance of the final disposition of a Proceeding only upon receipt by the Corporation of an undertaking, by or on behalf of such Director or officer (or other person indemnified 34 hereunder), to repay any such amount so advanced if it shall ultimately be determined by final judicial decision from which there is no further right of appeal that such Director, officer or other person is not entitled to be indemnified for such expenses. SECTION 3. The rights to indemnification and reimbursement or advancement of expenses provided by, or granted pursuant to, this Article VII shall not be deemed exclusive of any other rights to which a person seeking indemnification or reimbursement or advancement of expenses may have or hereafter be entitled under any statute, this Certificate of Incorporation, the By-laws of the Corporation (the 'By-laws'), any agreement, any vote of stockholders or disinterested Directors or otherwise, both as to action in his or her official capacity and as to action in another capacity while holding such office. SECTION 4. The rights to indemnification and reimbursement or advancement of expenses provided by, or granted pursuant to, this Article VII shall continue as to a person who has ceased to be a Director or officer (or other person indemnified hereunder) and shall inure to the benefit of the executors, administrators, legatees and distributees of such person. SECTION 5. The Corporation shall have power to purchase and maintain insurance on behalf of any person who is or was a Director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of an Other Entity, against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person's status as such, whether or not the Corporation would have the power to indemnify such person against such liability under the provisions of this Article VII, the By-laws or under Section 145 of the Delaware General Corporation Law or any other provision of law. SECTION 6. The provisions of this Article VII shall be a contract between the Corporation, on the one hand, and each Director and officer who serves in such capacity at any time while this Article VII is in effect and any other person indemnified hereunder, on the other hand, pursuant to which the Corporation and each such Director, officer, or other person intend to be legally bound. No repeal or modification of this Article VII shall affect any rights or obligations with respect to any state of facts then or theretofore existing or thereafter arising or any proceeding theretofore or thereafter brought or threatened based in whole or in part upon any such state of facts. SECTION 7. The rights to indemnification and reimbursement or advancement of expenses provided by, or granted pursuant to, this Article VII shall be enforceable by any person entitled to such indemnification or reimbursement or advancement of expenses in any court of competent jurisdiction. The burden of proving that such indemnification or reimbursement or advancement of expenses is not appropriate shall be on the Corporation. Neither the failure of the Corporation (including its Board of Directors, its independent legal counsel and its stockholders) to have made a determination prior to the commencement of such action that such indemnification or reimbursement or advancement of expenses is proper in the circumstances nor an actual determination by the Corporation (including its Board of Directors, its independent legal counsel and its stockholders) that such person is not entitled to such indemnification or reimbursement or advancement of expenses shall constitute a defense to the action or create a presumption that such person is not so entitled. Such a person shall also be indemnified for any expenses incurred in connection with successfully establishing his or her right to such indemnification or reimbursement or advancement of expenses, in whole or in part, in any such proceeding. SECTION 8. Any Director or officer of the Corporation serving in any capacity (a) another corporation of which a majority of the shares entitled to vote in the election of its directors is held, 35 directly or indirectly, by the Corporation or (b) any employee benefit plan of the Corporation or any corporation referred to in clause (a) shall be deemed to be doing so at the request of the Corporation. SECTION 9. Any person entitled to be indemnified or to reimbursement or advancement of expenses as a matter of right pursuant to this Article VII may elect to have the right to indemnification or reimbursement or advancement of expenses interpreted on the basis of the applicable law in effect at the time of the occurrence of the event or events giving rise to the applicable Proceeding, to the extent permitted by law, or on the basis of the applicable law in effect at the time such indemnification or reimbursement or advancement of expenses is sought. Such election shall be made, by a notice in writing to the Corporation, at the time indemnification or reimbursement or advancement of expenses is sought; provided, however, that if no such notice is given, the right to indemnification or reimbursement or advancement of expenses shall be determined by the law in effect at the time indemnification or reimbursement or advancement of expenses is sought. ARTICLE VIII LIMITATION ON LIABILITY OF DIRECTORS SECTION 1. A director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived any improper personal benefit. If the Delaware General Corporation Law is amended after approval by the stockholders of this Article VIII to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent authorized by the Delaware General Corporation Law, as so amended. SECTION 2. Any repeal or modification of the foregoing paragraph by the stockholders of the Corporation shall be prospective only and shall not adversely affect any right or protection of a director of the Corporation existing at the time of such repeal or modification. ARTICLE IX ADOPTION, AMENDMENT AND/OR REPEAL OF BY-LAWS The Board of Directors may from time to time (after adoption by the undersigned of the original By-laws) make, alter or repeal the By-laws by a vote of two-thirds of the entire Board of Directors that would be in office if no vacancy existed, whether or not present at a meeting; provided, however, that any By-laws made, amended or repealed by the Board of Directors may be amended or repealed, and any By-laws may be made, by the stockholders of the Corporation by vote of a majority of the holders of shares of stock of the Corporation entitled to vote in the election of Directors of the Corporation. 36 ARTICLE X INCORPORATOR The name and mailing address of the incorporator are: Mary C. Wade, c/o Triarc Companies, Inc., 900 Third Avenue, 31st Floor, N.Y., N.Y. 10022. WITNESS the signature of this Certificate this 6th of May, 1994. /s/ MARY C. WADE ..................................... Incorporator 37 CERTIFICATE OF MERGER OF TRIARC COMPANIES, INC. (an Ohio Corporation) WITH AND INTO TRIARC MERGER CORPORATION (a Delaware Corporation) ************************************ The undersigned corporation, organized and existing under and by virtue of the General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY: FIRST: That the name and state of incorporation of each of the constitutent corporations of ther merger (the "Merger") are as follows: Name State of Incorporation Triarc Companies, Inc. Ohio Triarc Merger Corporation Delaware SECOND: That an Agreement and Plan of Merger between the parties to the Merger has been approved, adapted, certified, executed and acknowledged by each of Triarc Companies, Inc. and Triarc Merger Corporation in accordance with the requirements of subsection (c) of Section 252 of the General Corporation Law of the State of Delaware. THIRD: That Triarc Merger Corporation shall be the surviving corporation. FOURTH: That the Certificate of Incorporation of Triarc Merger Corporation shall be the Certificate of Incorporation of the surviving corporation, and the following amendment to such Certificate of Incorportion shall be effected by the Merger: 1. ARTICLE I is amended in its entirety to read as follows: "ARTICLE I Name The name of the corporation shall be Triarc Companies, Inc. (the "Corporation")." FIFTH: That the executed Agreement and Plan of Merger is on file at the principal place of business of the surviving corporation. The address of said principal 2 place of business is 777 South Flagler Drive, Suite 1000E, West Palm Beach, Florida 33401. SIXTH: That a copy of the Agreement and Plan of Merger will be furnished by Triarc Merger Corporation, on request and without cost, to any stockholder of Triarc Companies, Inc. SEVENTH: The authorized capital stock of the Ohio corporation which is a party to the merger is as follows: Class Number of Shares Par Value Class A Common 75,000,000 $.10 Class B Common 12,000,000 $.10 Cumulative Convertible Redeemable Preferred 6,000,000 $.10 Serial Preferred 5,000,000 $.10 Junior Serial Preferred 2,000,000 $.10 IN WITNESS WHEREOF, Triarc Merger Corporation has caused this certificate to be signed by Joseph A. Levato, its Executive Vice President, and attested by Mary C. Wade, its Assistant Secretary, on the 30th day of June, 1994. TRIARC MERGER CORPORATION, a Delaware Corporation By: /s/ Joseph A. Levato ------------------------------- Name: Joseph A. Levato Title: Executive Vice President ATTEST: By: /s/ Mary C. Wade ----------------------------- Name: Mary C. Wade Title: Assistant Secretary CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION OF TRIARC COMPANIES, INC. ------------------------------------ (Pursuant to Section 242 of the General Corporation Law of the State of Delaware) Triarc Companies, Inc., a corporation organized and existing under the laws of the State of Delaware (the "Corporation"), does hereby certify as follows: 1. The name of the Corporation is Triarc Companies, Inc. 2. The date of filing of the Certificate of Incorporation of the Corporation with the Secretary of State was May 6, 1994. 3. This Certificate of Amendment amends the Certificate of Incorporation, as now in effect, to change the minimum required number of directors and the maximum number of directors of the Corporation. 4. The first sentence of Section 2 of Article V of the Certificate of Incorporation is hereby amended to read in its entirety as follows: "The Board of Directors shall consist of not less than seven (7) nor more than fifteen (15) persons, the exact number to be fixed from time to time by the Board of Directors pursuant to a resolution adopted by a majority of directors then in office; provided, however, that such maximum number may be increased from time to time to reflect the rights of holders of Preferred Stock to elect directors in accordance with the terms of the Certificate of Incorporation or of the Certificate of Designation pursuant to which any class or series of Preferred Stock is issued or to the extent provided in any resolution or resolutions adopted by the Board of Directors providing for the issuance of any class or series of Preferred Stock pursuant to Article IV of this Certificate of Incorporation." 5. Such amendment was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware. IN WITNESS WHEREOF, the Corporation has authorized the undersigned to execute this Certificate of Amendment of the Certificate of Incorporation of the Corporation this 4th day of June, 1997. TRIARC COMPANIES, INC. By: /s/ Brian L. Schorr -------------------------------- Brian L. Schorr Executive Vice President By: /s/ Stuart I. Rosen --------------------------------- Stuart I. Rosen Vice President and Secretary EX-4 3 EXHIBIT 4.2 Exhibit 4.2 - -------------------------------------------------------------------------------- ROYAL CROWN CORPORATION, Issuer ROYAL CROWN COLA CO. and ARBY'S, INC., Guarantors and THE BANK OF NEW YORK, Trustee Indenture Dated as of August 1, 1993 --------------- 9 3/4% SENIOR SECURED NOTES DUE 2000 - -------------------------------------------------------------------------------- TABLE OF CONTENTS
Page ARTICLE I DEFINITIONS SECTION 1.1 Certain Terms Defined....................................8 ARTICLE II ISSUE, EXECUTION, FORM AND REGISTRATION OF SENIOR NOTES SECTION 2.1 Authentication and Delivery of Senior Notes............................................21 SECTION 2.2 Execution of Senior Notes...............................22 SECTION 2.3 Certificate of Authentication...........................22 SECTION 2.4 Form, Denomination and Date of Senior Notes; Payments of Interest....................................23 SECTION 2.5 Registration, Transfer and Exchange.....................23 SECTION 2.6 Mutilated, Defaced, Destroyed, Lost and Stolen Senior Notes.....................................24 SECTION 2.7 Cancellation of Senior Notes; Destruction Thereof.......25 SECTION 2.8 Temporary Senior Notes..................................25 ARTICLE III COVENANTS OF THE ISSUER AND THE GUARANTORS SECTION 3.1 Payment of Principal and Interest.......................26 SECTION 3.2 Offices for Payments, etc...............................26 SECTION 3.3 Appointment to Fill a Vacancy in Office of Trustee......27 SECTION 3.4 Paying Agents...........................................27 SECTION 3.5 Certificate to Trustee; Notice to Trustee...............28 SECTION 3.6 Senior Noteholders Lists................................28 SECTION 3.7 Furnishing of Information by the Issuer; SEC Filings....28 SECTION 3.8 Further Assurances......................................30 SECTION 3.9 Maintenance of Property, Insurance......................30 SECTION 3.10 Taxes...................................................30 SECTION 3.11 Corporate Existence.....................................30 SECTION 3.12 Compliance with Statutes, etc...........................31 SECTION 3.13 Limitation on Indebtedness..............................31
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Page SECTION 3.14 Limitation on Liens.....................................32 SECTION 3.15 Limitation on Sales of Assets and Restricted Subsidiary Stock.............................34 SECTION 3.16 Limitation on Investments, Loans and Advances...........34 SECTION 3.17 Limitation on Restricted Payments.......................35 SECTION 3.18 Limitation on Transactions with Affiliates..............36 SECTION 3.19 Limitation on Restrictions on Distributions from Restricted Subsidiaries............................37 SECTION 3.20 Limitation on Certain Capital Stock.....................37 SECTION 3.21 Restricted and Unrestricted Subsidiaries................37 SECTION 3.22 Additional Guarantors...................................38 SECTION 3.23 Regarding the Existing Subordinated Debentures..........38 ARTICLE IV REMEDIES OF THE TRUSTEE AND SENIOR NOTEHOLDERS ON EVENT OF DEFAULT SECTION 4.1 Event of Default Defined; Acceleration of Maturity; Waiver of Default.............39 SECTION 4.2 Collection of Indebtedness by Trustee; Trustee May Prove Debt..................................42 SECTION 4.3 Application of Proceeds.................................44 SECTION 4.4 Suits for Enforcement...................................45 SECTION 4.5 Restoration of Rights on Abandonment of Proceedings.............................................45 SECTION 4.6 Limitations on Suits by Senior Noteholders..............45 SECTION 4.7 Powers and Remedies Cumulative; Delay or Omission Not Waiver of Default.................45 SECTION 4.8 Control by Senior Noteholders...........................46 SECTION 4.9 Waiver of Past Defaults.................................46 ARTICLE V CONCERNING THE TRUSTEE SECTION 5.1 Duties and Responsibilities of the Trustee; During Default; Prior to Default........................47 SECTION 5.2 Certain Rights of the Trustee...........................48 SECTION 5.3 Trustee Not Responsible for Recitals, Disposition of Senior Notes or Application of Proceeds Thereof.........................49 SECTION 5.4 Trustee and Agents May Hold Senior Notes; Collections, etc........................................49 SECTION 5.5 Moneys Held by Trustee..................................49
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Page SECTION 5.6 Compensation and Indemnification of Trustee and Its Prior Claim.....................................49 SECTION 5.7 Right of Trustee to Rely on Officers' Certificate, etc..50 SECTION 5.8 Persons Eligible for Appointment as Trustee.............50 SECTION 5.9 Resignation and Removal: Appointment of Successor Trustee.......................................51 SECTION 5.10 Acceptance of Appointment by Successor Trustee..........52 SECTION 5.11 Merger, Conversion......................................52 SECTION 5.12 Reports by the Trustee..................................53 ARTICLE VI CONCERNING THE SENIOR NOTEHOLDERS SECTION 6.1 Evidence of Action Taken by Senior Noteholders..........53 SECTION 6.2 Proof of Execution of Instruments and of Holding of Senior Notes; Record Date............................53 SECTION 6.3 Holders to Be Treated as Owners.........................54 SECTION 6.4 Senior Notes Owned by Issuer Deemed Not Outstanding.............................................54 ARTICLE VII SUPPLEMENTAL INDENTURES SECTION 7.1 Supplemental Indentures Without Consent of Senior Noteholders.............................................55 SECTION 7.2 Supplemental Indentures With Consent of Senior Noteholders.............................................56 SECTION 7.3 Effect of Supplemental Indenture........................57 SECTION 7.4 Documents to Be Given to Trustee........................57 SECTION 7.5 Notation on Senior Notes in Respect of Supplemental Indentures..............................................57 ARTICLE VIII CONSOLIDATION, MERGER, SALE OR CONVEYANCE SECTION 8.1 When Issuer and Principal Guarantors May Merge or Transfer Assets.........................................58
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Page ARTICLE IX SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS SECTION 9.1 Satisfaction and Discharge of Indenture.................59 SECTION 9.2 Application by Trustee of Funds Deposited for Payment of Senior Notes.............................60 SECTION 9.3 Repayment of Moneys Held by Paying Agent................60 SECTION 9.4 Return of Moneys Held by Trustee and Paying Agent Unclaimed for Two Years...........................60 ARTICLE X GUARANTEES SECTION 10.1 The Guarantees..........................................61 SECTION 10.2 Guarantees Unconditional................................61 SECTION 10.3 Discharge Only Upon Payment In Full; Reinstatement In Certain Circumstances..................62 SECTION 10.4 Waiver by the Guarantors................................62 SECTION 10.5 Subrogation; Contribution...............................62 SECTION 10.6 Stay of Acceleration....................................63 SECTION 10.7 Limit of Liability......................................63 ARTICLE XI REDEMPTION OF SENIOR NOTES SECTION 11.1 Right of Optional Redemption............................63 SECTION 11.2 Notice of Redemption; Partial Redemptions...............63 SECTION 11.3 Payment of Senior Notes Called for Redemption...........64 SECTION 11.4 Exclusion of Certain Senior Notes from Eligibility for Selection for Redemption............................65 ARTICLE XII REDEMPTION UPON CHANGE OF CONTROL SECTION 12.1 Change of Control.......................................65
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Page ARTICLE XIII NET PROCEEDS OFFER SECTION 13.1 Net Proceeds Offer......................................67 ARTICLE XIV COLLATERAL AND SECURITY SECTION 14.1 Collateral Documents....................................69 SECTION 14.2 Release of Collateral...................................69 SECTION 14.3 Certificates of the Issuer..............................70 SECTION 14.4 Certificates of the Trustee.............................70 SECTION 14.5 Opinion of Counsel to the Issuer........................71 ARTICLE XV MISCELLANEOUS PROVISIONS SECTION 15.1 Incorporators, Stockholders, Officers and Directors of Issuer and Restricted Subsidiaries Exempt from Individual Liability........................71 SECTION 15.2 Provisions of Indenture for the Sole Benefit of Parties and Senior Noteholders.......................72 SECTION 15.3 Successors and Assigns of Issuer and Guarantors Bound by Indenture......................................72 SECTION 15.4 Notices and Demands on Issuer, Guarantors, Trustee and Senior Noteholders..........................72 SECTION 15.5 Officers' Certificates and opinions of Counsel; Statements to Be Contained Therein......................73 SECTION 15.6 Payments Due on Saturdays, Sundays and Holidays.........73 SECTION 15.7 Effect of Headings......................................74 SECTION 15.8 NEW YORK LAW TO GOVERN..................................74 SECTION 15.9 Counterparts............................................74 SECTION 15.10 Conflict with the Trust Indenture Act...................74 Schedule 3.13 - Existing Indebtedness Schedule 3.14 - Existing Liens Schedule 3.18 - Existing Transactions with Affiliates Schedule 3.19 - Existing Restrictions on Distributions from Restricted Subsidiaries
v THIS INDENTURE, dated as of August 1, 1993 among ROYAL CROWN CORPORATION, a Florida corporation (the "Issuer"), ROYAL CROWN COLA CO., a Delaware corporation ("RC Cola"), ARBY'S, INC., an Ohio corporation ("Arby's") (RC Cola and Arby's as Guarantors pursuant to Article X hereof), and THE BANK OF NEW YORK, a New York banking corporation (the "Trustee"), W I T N E S S E T H : WHEREAS, the Issuer has duly authorized the issue of its 9 3/4% Senior Secured Notes Due 2000 (the "Senior Notes"), and to provide, among other things, for the authentication, delivery and administration thereof, the Issuer has duly authorized the execution and delivery of this Indenture; WHEREAS, the Issuer has duly determined to secure its obligations in respect of the Senior Notes and duly authorized the execution and delivery of the Collateral Documents (as defined herein) to which it is a party; WHEREAS, each of RC Cola and Arby's has (i) duly authorized its unconditional guarantee of the Senior Notes on the terms hereinafter set forth, (ii) duly determined to secure its obligations in respect of the Senior Notes and duly authorized the execution and delivery of the Collateral Documents to which it is a party and (iii) duly authorized the execution and delivery of this Indenture; WHEREAS, the Issuer has made or intends to make a public offering of the Senior Notes, the proceeds of which are intended to be used among other things to redeem in full the Issuer's Senior Secured Step-Up Rate Notes Due 2000; WHEREAS, this Indenture is subject to the provisions of the Trust Indenture Act of 1939, as amended, and the rules and regulations of the Securities and Exchange Commission promulgated thereunder that are required to be part of this Indenture and, to the extent applicable, shall be governed by such provisions; and WHEREAS, the Senior Notes and the Trustee's certificate of authentication shall be in substantially the following form: 2 [FORM OF FACE OF SENIOR NOTE] Number $ ROYAL CROWN CORPORATION 9 3/4% SENIOR SECURED NOTES DUE 2000 ROYAL CROWN CORPORATION, a Florida corporation (the "Issuer"), for value received hereby promises to pay to or registered assigns the principal sum of Dollars at the Issuer's office or agency for said purpose on August 1, 2000, in such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts, and to pay interest on said principal sum in like coin or currency at the rate per annum set forth above at said office or agency, semi-annually on February 1 and August 1 (each, an "Interest Payment Date") of each year commencing on February 1, 1994, from the date of the most recent Interest Payment Date to which interest has been duly paid or provided for (including, if applicable, the date hereof) or, if no interest has been paid or provided for, the original issue date of this Senior Note, until the principal hereof is paid or made available for payment; provided, that if the Issuer shall default in the payment of interest due on any such Interest Payment Date, then this Senior Note shall bear interest from the next preceding Interest Payment Date to which interest on the Senior Notes has been paid or duly provided for, or, if no interest has been paid or duly provided for on the Senior Notes since the original issue date of this Senior Note, from such original issue date. The interest so payable on any Interest Payment Date will, except as otherwise provided in the Indenture referred to on the reverse hereof, be paid to the person in whose name this Senior Note is registered at the close of business on the Regular Record Date; provided that interest may be paid, at the option of the Issuer, by mailing a check therefor payable to the registered holder entitled thereto at his last address as it appears on the Senior Note register; and provided further that if the Issuer shall default in the payment of the interest due on any Interest Payment Date, then such defaulted interest shall be paid to the Persons in whose names outstanding Senior Notes are registered at the close of business on a subsequent record date established by the Issuer in accordance with the provisions of the Indenture referred to on the reverse hereof. Interest will be computed on the basis of a 360-day year of twelve 30-day months. If the Issuer shall fail to pay when due (without regard to any applicable grace period) any principal of or premium or interest on this Senior Note, such overdue payment shall bear interest at the rate borne by the Senior Notes plus 1% per annum. Pursuant to the Indenture referred to on the reverse hereof, the payment of principal of and premium and interest on the Senior Notes is unconditionally guaranteed, jointly and severally, by Royal Crown Cola Co., a Delaware corporation ("RC Cola"), and Arby's, Inc., an Ohio corporation 3 ("Arby's"). Reference is made to the further provisions of such Indenture in respect of the guarantees of RC Cola, Arby's and such other subsidiaries of the Issuer as may furnish a guarantee of the Senior Notes as provided in such Indenture. This Senior Note shall not be valid or obligatory until the certificate of authentication hereon shall have been duly signed by the Trustee acting under the Indenture referred to on the reverse hereof. IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly executed under its corporate seal. Dated: [Seal] ROYAL CROWN CORPORATION, as Issuer By: ______________________________ Senior Vice President and Chief Financial Offer By: ______________________________ Treasurer 4 [FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION] This is one of the Senior Notes described in the within-mentioned Indenture. THE BANK OF NEW YORK, as Trustee -------------------------------- Authorized Signatory [FORM OF REVERSE OF SENIOR NOTE] ROYAL CROWN CORPORATION 9 3/4% SENIOR SECURED NOTES DUE 2000 This Senior Note is one of a duly authorized issue of debt securities of the Issuer issued or to be issued pursuant to an indenture dated as of August 1, 1993 (as amended or supplemented from time to time, the "Indenture"), duly executed and delivered by the Issuer, RC Cola and Arby's to The Bank of New York, as Trustee (the "Trustee"). Except as otherwise provided in the Indenture, the aggregate amount of debt securities that may be issued pursuant to the Indenture is limited to $275,000,000. Reference is hereby made to the Indenture and all indentures supplemental thereto for a description of the rights, limitations of rights, obligations, duties and immunities thereunder of the Trustee, the Issuer, the Guarantors and the holders (the words "holders" or "holder" meaning the registered holders or registered holder) of the Senior Notes. All terms used in this senior Note which are defined in the Indenture and not otherwise defined herein have the meanings assigned to them in the Indenture. The obligations of the Issuer and the Guarantors in respect of the Senior Notes are secured by the Collateral Documents. Reference is hereby made to the Collateral Documents for a description of the Collateral, the nature and extent of the security and the provisions regarding release of the Collateral. In case an Event of Default, as defined in the Indenture, shall have occurred and be continuing, the principal of all the Senior Notes may be declared due and payable, in the manner and with the effect, and subject to the conditions, provided in the Indenture. The Indenture provides that in certain events such declaration and its consequences may be waived by the holders of a majority in aggregate principal amount of the Senior Notes then outstanding, and that, prior to any such declaration, such holders may waive any past default under the Indenture and its consequences except a default in the payment of principal of or premium or 5 interest on any of the Senior Notes. Any such waiver shall be conclusive and binding upon the holder of this Senior Note and upon all future holders and owners of this Senior Note and any Senior Note which may be issued in exchange or substitution therefor, whether or not any notation thereof is made upon this Senior Note or such other Senior Notes. The Indenture permits the Issuer, the Guarantors and the Trustee, with the consent of the holders of not less than a majority in aggregate principal amount of the Senior Notes at the time outstanding, evidenced as in the Indenture provided, to execute supplemental indentures adding any provisions to or changing in any manner or eliminating any of the provisions of the Indenture or of any supplemental indenture or modifying in any manner the rights of the holders of the Senior Notes; provided that no such supplemental indenture shall, without the consent of each holder of Senior Notes affected thereby, (i) reduce the percentage in principal amount of Senior Notes the holders of which must consent to an amendment, supplement or waiver, (ii) reduce the rate of or extend the time for payment of interest on any Senior Note, (iii) reduce the principal or extend the fixed maturity of any Senior Note, (iv) reduce any price at which any Senior Note may be redeemed at the option of the Issuer, or at which any Senior Note is to be repurchased by the Issuer at the option of the holder in connection with a Change of Control Offer or a Net Proceeds Offer, (v) waive a default in the payment of the principal of or premium or interest on any Senior Note, (vi) make any Senior Note payable in money other than that stated in the Senior Note, (vii) release any Guarantor from its unconditional obligation to guarantee payment in respect of the principal of and interest on any Senior Note (except in accordance with the Indenture), (viii) consent to the assignment or transfer by the Issuer or any Guarantor of any of their rights and obligations under the Indenture (except in accordance with the Indenture), (ix) add provisions to the Indenture that subordinate the obligations of the Issuer or any Guarantor in respect of any Senior Note to other Indebtedness of the Issuer or such Guarantor, as the case may be, (x) amend, modify or waive any provision of Section 7.2 of the Indenture or (xi) consent to the release of all of the Collateral from the Lien created by the Collateral Documents. No reference herein to the Indenture and no provision of this Senior Note or of the Indenture shall alter or impair the obligation of the Issuer, which is absolute and unconditional, to pay the principal of and premium (if any) and interest on this Senior Note at the place, times and rate, and in the currency, herein prescribed. The Senior Notes are issuable only as registered Senior Notes without coupons in denominations of $1,000 and any integral multiple of $1,000. At the office or agency of the Issuer referred to on the face hereof and in the manner and subject to the limitations provided in the Indenture, Senior Notes may be exchanged for a like aggregate principal amount of Senior Notes of other authorized denominations. Upon due presentment for registration of transfer of this Senior Note at the above-mentioned office or agency of the Issuer, a new Senior Note or Senior 6 Notes of authorized denominations, for a like aggregate principal amount, will be issued to the transferee as provided in the Indenture, except that the Trustee shall not be required to exchange or register a transfer of (i) any Senior Notes for a period of 15 days next preceding the first mailing of notice of redemption of Senior Notes to be redeemed or (ii) any Senior Notes selected, called or being called for redemption except, in the case of any Senior Note where notice has been given to registered holders of Senior Notes that such Senior Note is to be redeemed in part, the portion thereof not so to be redeemed. No service charge shall be made for any such transfer, but the Issuer may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto. Subject to the next succeeding paragraph, the Senior Notes may not be redeemed at the option of the Issuer on or before July 31, 1998. Thereafter, the Senior Notes may be redeemed at the option of the Issuer as a whole, or from time to time in part, upon the mailing of a notice to the holders of Senior Notes to be redeemed, all as provided in the Indenture, at the following redemption prices (expressed in percentages of principal amount), together in each case with accrued interest to the date fixed for redemption: If redeemed during the twelve-month period beginning August 1, Redemption Price - ---------------------- ----------------- 1998......................................... 102.786% 1999......................................... 101.393% Notwithstanding the foregoing, at any time prior to August 1, 1996, the Issuer may redeem up to 33.3% of the original aggregate principal amount of the Senior Notes with the net proceeds of an Initial Public Equity Offering of the Issuer at a redemption price of 110% of par, plus accrued and unpaid interest to the redemption date. In accordance with the Indenture, notice of redemption shall be given to the holders of the Senior Notes to be redeemed no less than 30 nor more than 60 days prior to the date fixed for redemption. Except as otherwise provided in the Indenture, if the date fixed for redemption is an Interest Payment Date, then the interest payable on such date shall be paid to the holder of record on the first day of the month in which the date fixed for redemption falls, notwithstanding any transfer or exchange of this Senior Note after the record date and before the date fixed for redemption. Subject to payment by the Issuer of a sum sufficient to pay the amount due on redemption, interest on this Senior Note (or portion hereof if this Senior Note is redeemed in part) shall cease to accrue upon the date duly fixed for redemption of this Senior Note (or portion hereof if this Senior Note is redeemed in part). 7 In the event of a Change of Control, the Issuer will make a Change of Control Offer to purchase all of the Senior Notes outstanding at a price equal to 101% of the principal amount of the Senior Notes to be purchased plus accrued interest thereon to the date of purchase. In the event of certain dispositions of assets, the Issuer will make a Net Proceeds Offer to purchase outstanding Senior Notes with the Net Proceeds from such dispositions at a price equal to 100% of the principal amount of Senior Notes to be purchased plus accrued interest thereon to the date of purchase, all as provided in the Indenture. The Senior Notes are subject to defeasance as described in the Indenture. The Issuer, the Trustee and any authorized agent of the Issuer or the Trustee may deem and treat the registered holder hereof as the absolute owner of this Senior Note (whether or not this Senior Note shall be overdue and notwithstanding any notation of ownership or other writing hereon made by anyone other than the Issuer or the Trustee or any authorized agent of the Issuer or the Trustee) for the purpose of receiving payment of, or on account of, the principal hereof, premium (if any) hereon and, subject to the provisions on the face hereof, interest hereon and for all other purposes, and neither the Issuer nor the Trustee nor any authorized agent of the Issuer or the Trustee shall be affected by any notice to the contrary. No recourse shall be had for the payment of the principal of or premium or interest on this Senior Note, for any claim based hereon, or otherwise in respect hereof, or based on or in respect of the Indenture or any indenture supple mental thereto, against any incorporator, shareholder, officer or director, as such, past, present or future, of the Issuer, any Guarantor or any successor corporation, either directly or through the Issuer, any Guarantor or any respective successor corporation, whether by virtue of any constitution, statute or rule of law or by the enforcement of any assessment or penalty or otherwise, all such liability being, by the acceptance hereof and as part of the consideration for the issue hereof, expressly waived and released. THIS SENIOR NOTE IS GOVERNED BY AND IS TO BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. 8 AND WHEREAS, all things necessary to make the Senior Notes, when executed by the Issuer and authenticated and delivered by the Trustee as in this Indenture provided, the valid, binding and legal obligations of the Issuer, and to constitute these presents a valid indenture and agreement according to its terms, have been done; NOW, THEREFORE: In consideration of the premises and the purchases of the Senior Notes by the holders thereof, the Issuer, each Guarantor and the Trustee mutually covenant and agree for the equal and proportionate benefit of the respective holders from time to time of the Senior Notes as follows: ARTICLE I DEFINITIONS SECTION 1.1 Certain Terms Defined. The following terms (except as otherwise expressly provided or unless the context otherwise clearly requires) for all purposes of this Indenture and of any indenture supplemental hereto have the respective meanings specified in this Section. All other terms used in this Indenture which are defined in the Trust Indenture Act of 1939 or the definitions of which in the Securities Act of 1933 are referred to in the Trust Indenture Act of 1939 (except as herein otherwise expressly provided or unless the context otherwise clearly requires), have the meanings assigned to such terms in said Trust Indenture Act and in said Securities Act as in force on the Issue Date. All accounting terms used herein and not expressly defined have the meanings given to them in accordance with generally accepted accounting principles, and the term "generally accepted accounting principles" means, unless otherwise specified herein, such accounting principles which are generally accepted on the Issue Date. The words "herein" , "hereof" and "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision, and section and subsection references are to this Indenture unless otherwise specified. The terms defined in this Article include the plural as well as the singular. "Adjusted EBITDA" means, for any period, Consolidated Net Income for such period, plus, without duplication, the sum of (i) to the extent deducted in determining such Consolidated Net Income, income tax expense, depreciation and amortization expense and charges relating to any Specified Write-Off (net of related tax effect), (ii) Adjusted Interest Expense for such period and (iii) to the extent not otherwise reflected in Adjusted EBITDA for such period, Cash Interest Income for such period. "Adjusted Interest Expense" means, for any period, the amount deducted in determining Consolidated Net Income for such period in respect of interest expense of the Issuer and its Restricted Subsidiaries for such period as determined in accordance with generally accepted accounting principles, minus any 9 portion thereof attributable to amortization of debt financing costs, plus, to the extent deducted in determining such interest expense, interest income of the Issuer and its Restricted Subsidiaries. In determining Adjusted Interest Expense for any period prior to the Reorganization Date, it shall be assumed that (x) the Step-Up Notes issued on the Reorganization Date were issued at the beginning of such period and bore interest throughout such period at a rate of 11.25% per annum and (y) any Indebtedness of the Issuer that was repaid on the Reorganization Date with the proceeds of the Step-Up Notes was repaid at the beginning of such period. In determining Adjusted Interest Expense for any period through March 31, 1994, there shall be added, to the extent deducted in determining Adjusted Interest Expense, amounts provided for in the quarter ended March 31, 1993 in respect of interest relating to income taxes for the Issuer and its Restricted Subsidiaries. "Affiliate" means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under direct or indirect common control with, such Person. For purposes of this Indenture, Nelson Peltz and Peter W. May and their Affiliates, and Victor Posner and his Affiliates, shall be deemed Affiliates of the Issuer and DWG. A Person shall be deemed to control a corporation if such Person possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of such corporation, whether through the ownership of voting securities, by contract or otherwise. "Asset Sale" means any direct or indirect sale, conveyance, transfer, lease or other disposition (including without limitation by means of a sale-leaseback transaction) to any Person other than the Issuer, a Wholly Owned Restricted Subsidiary or, to the extent permitted under Section 3.17, an Unrestricted Subsidiary, in one transaction or a series of related transactions, of any Capital Stock of any Restricted Subsidiary or any other property or asset of the Issuer or a Restricted Subsidiary, other than Ordinary Course Sales. "Assumed Investment Rate" means, at any date, the offered rate on such date in the London interbank market for one-month deposits in U.S. dollars, as published by the Board of Governors of the Federal Reserve System in "Statistical Release H.15(519), Selected Interest Rates", or any successor publication of the Board of Governors of the Federal Reserve System, under the heading "Eurodollar Deposits". "Average Life" means, as of the date of determination, with respect to any Indebtedness, the quotient obtained by dividing (i) the sum of the products of the numbers of years from the date of determination to the dates of each successive scheduled principal payment of such Indebtedness multiplied by the amount of such principal payment by (ii) the sum of all such scheduled principal payments. "Board of Directors" means, with respect to any corporation, the Board of Directors of such corporation or any committee of such Board duly authorized to act on behalf of such Board. 10 "Bottling Business" means any soft drink bottling or distribution business. "Business Day" means a day which in New York City is neither a legal holiday nor a day on which banking institutions are authorized by law or regulation to close. "Capital Lease Obligations" means obligations under a lease that are required to be capitalized in accordance with generally accepted accounting principles, and the amount of Indebtedness represented by such obligations shall be the capitalized amount of such obligations, as determined in accordance with generally accepted accounting principles. "Capital Stock" means, with respect to any Person, any capital stock of such Person (including without limitation preferred stock), any shares, interests, participations or other ownership interests (however designated) of or in such Person and any rights (other than debt securities convertible into corporate stock), warrants or options to purchase any of the foregoing. "Cash Interest Income" means, for any period, the consolidated interest income of the Issuer and its Restricted Subsidiaries for such period as determined in accordance with generally accepted accounting principles, minus any portion thereof not received in cash during the relevant period. In determining Cash Interest Income for any period prior to the Reorganization Date, it shall be assumed that the net proceeds to the Issuer from the initial issuance and sale of the Step-Up Notes, to the extent not used to repay Indebtedness of the Issuer on the Reorganization Date, to pay transaction costs incurred in connection with the issue and sale of the Step-Up Notes and the other transactions occurring on the Reorganization Date or to make a $75,000,000 advance to DWG, generated cash interest income from the beginning of such period at the Assumed Investment Rate in effect at the beginning of such period. "CFC Holdings" means CFC Holdings Corp., a Florida corporation, and its successors and assigns. "Change of Control" means the occurrence with respect to any of the Issuer, DWG, Arby's or RC Cola (a "Specified Person") of one or more of the following events: (i) the Issuer or, prior to a Spin-Off or an Initial Public Equity Offering, DWG shall sell, transfer or otherwise convey all or substantially all its assets to any person or group of persons (as such terms are used for purposes of Section 13 (d) (3) of the Exchange Act) in one transaction or series of related transactions, or shall merge or consolidate with or into another person, and immediately after giving effect thereto, the beneficial owners of the Voting Capital Stock of such Specified Person immediately prior to the transaction or series of related transactions own, directly or indirectly, in the aggregate, and in the same proportion with respect to each other, less 11 than a majority of the total voting power of the Voting Capital Stock of the transferee or surviving entity; or (ii) any Specified Person shall be liquidated or dissolved, except, in the case of the Issuer, Arby's or RC Cola, following the sale of all or substantially all of its assets in accordance with Article VIII and except in the case of DWG subsequent to a Spin-Off or an Initial Public Equity Offering; or (iii) with respect to the Issuer or, prior to a Spin-Off or an Initial Public Equity Offering, DWG, any person or group of persons (as such terms are used for purposes of Section 13(d)(3) of the Exchange Act), other than Nelson Peltz and Peter W. May and their Affiliates, shall become the beneficial owner (as that term is used in Rule 13d-3 under the Exchange Act, except that a person shall be deemed to have beneficial ownership of all Capital Stock that any such person has the right to acquire, regardless of when such right is exercisable), directly or indirectly, of 50% or more of the total voting power of the Voting Capital Stock then outstanding of such Specified Person; or (iv) with respect to the Issuer or, prior to a Spin-Off or an Initial Public Equity offering, DWG, during any period of 24 consecutive months beginning on or after (x) the date of a Spin-Off or an Initial Public Equity offering, in the case of the Issuer, or (y) the Reorganization Date, in the case of DWG, individuals who at the beginning of such period constituted the Board of Directors of such Specified Person (together with any new directors whose election by such Board or whose nomination for election by the shareholders of such Specified Person was approved by a vote of a majority of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved), cease for any reason to constitute a majority of the Board of Directors of such Specified Person then in office; or (v) with respect to Arby's or RC Cola, the Issuer for any reason shall cease to own directly 100% of the issued and outstanding Capital Stock of such Specified Person; or (vi) with respect to the Issuer, a Substantial Asset Transfer shall occur. For purposes of this definition, a "Substantial Asset Transfer" shall occur if, after giving effect to a Subject Transfer, either (x) the Attributable EBITDA of all Subject Transfers exceeds the Maximum Percentage of Adjusted EBITDA for the relevant Reference Period or (y) the book value of the assets transferred pursuant to all Subject Transfers exceeds the Maximum Percentage of the book value of the consolidated assets of the Issuer and its Restricted Subsidiaries as of the end of the relevant Reference Period. A "Subject Transfer" is a transfer of assets (including, without limitation, Capital Stock of a Restricted Subsidiary) made after the Issue Date by the Issuer or a Restricted Subsidiary to a Person other than the Issuer, any Wholly 12 Owned Restricted Subsidiary or, to the extent permitted by Section 3.17, any Unrestricted Subsidiary. The "Attributable EBITDA" for any Subject Transfer is an amount equal to the portion of Adjusted EBITDA for the Reference Period which is properly allocable to the assets transferred, as determined in good faith by the chief financial officer of the Issuer with, in the event such portion of Adjusted EBITDA exceeds $5,000,000, the concurrence of the independent public accountants of the Issuer. The "Reference Period" with respect to any Subject Transfer is the period of four consecutive fiscal quarters of the Issuer ending on the most recent date prior to the date of such Subject Transfer for which financial statements are delivered or required to be delivered pursuant to Section 3.7 hereof. The "Maximum Percentage" means (i) with reference to all Subject Transfers made after the Issue Date, 40%, and (ii) with reference to all Subject Transfers made during any period of twelve consecutive calendar months, 20%. "Change of Control Offer" has the meaning specified in Section 12.1. "Code" means the Internal Revenue Code of 1986, as amended from time to time. "Collateral" means all property in which a security interest is granted or purported to be granted to the Collateral Trustee pursuant to the Collateral Documents and not released pursuant to the terms hereof or thereof. "Collateral Documents" means the Collateral Trust Agreement and the other Collateral Documents referred to therein. "Collateral Trust Agreement" means the Collateral Trust Agreement dated as of August 1, 1993 among the Issuer, RC Cola, Arby's, CFC Holdings and the Collateral Trustee, as such Collateral Trust Agreement may be amended or supplemented from time to time. "Collateral Trustee" has the meaning specified in the Collateral Trust Agreement. "Collateral Trustee Fees" means all fees, costs, indemnification and expenses of the Collateral Trustee of the types described in Sections 4.3, 4.4, 4.5 and 4.6 of the Collateral Trust Agreement. "Commission" means the Securities and Exchange Commission. "Consolidated Net Income" means, for any period, the consolidated net income (or loss) of the Issuer and its Restricted Subsidiaries for such period as determined in accordance with generally accepted accounting principles; provided that there shall be excluded therefrom, without duplication, (i) all non-cash gains or losses which are either extraordinary (as determined in accordance with generally accepted accounting principles) or relate to the sale of assets outside the ordinary course of business, (ii) the net income (or loss) of any Person (other than a Restricted Subsidiary) in which the Issuer or a Restricted subsidiary has an interest, except to the 13 extent of the amount of any dividends or distributions actually paid in cash to the Issuer or a Restricted Subsidiary during such period out of funds legally available therefor, (iii) the net income (or loss) of any Person accrued or attributable to any period prior to the date it became a Restricted Subsidiary or was merged with or into the Issuer or a Restricted Subsidiary or whose property was acquired by the Issuer or a Restricted Subsidiary, (iv) the net income, if positive, of any Restricted Subsidiary to the extent that the declaration of dividends or similar distributions by such Restricted Subsidiary is not at the time permitted, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, law, rule or governmental regulations applicable to such Restricted Subsidiary or its stockholders, and (v) any interest income, other than Cash Interest Income. "Consolidated Net Worth" of any person means the total of the amounts shown on the balance sheet of such person and its Restricted Subsidiaries, determined on a consolidated basis in accordance with generally accepted accounting principles, as of the end of the most recent fiscal quarter of such person ending at least 45 days prior to the taking of any action for the purpose of which the determination is being made, as (i) the par or stated value of all outstanding Capital Stock of such person plus (ii) paid-in capital or capital surplus relating to such Capital Stock plus (iii) any retained earnings or earned surplus less (A) any accumulated deficit and (B) any amounts attributable to redeemable Capital Stock. "Core Business" means those businesses conducted by the Issuer and its Restricted Subsidiaries on the Issue Date and any similar lines of business conducted by the Issuer and its Restricted Subsidiaries after the Issue Date. "Corporate Trust Office" means the office of the Trustee at which the corporate trust business of the Trustee shall, at any particular time, be administered, which office is, at the date as of which this Indenture is dated, located at 101 Barclay Street, New York, New York 10286. "Default" means any event, act or condition which with notice or lapse of time, or both, would constitute an Event of Default. "DWG" means DWG Corporation, an Ohio corporation, and its successors and assigns. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, or any successor statute. "ERISA Group" means the Issuer, any Subsidiary and all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control which, together with the Issuer or any Subsidiary, are treated as a single employer under Section 414 of the Code. "Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder. 14 "Expiration Date" has the meaning specified in Section 6.2. "Existing Subordinated Debentures" means the Issuer's 16 7/8% Subordinated Debentures due 1996. "Guarantees" means the joint and several guarantees of the Guarantors as set forth in Article X, as such Guarantees may be amended or supplemented from time to time. "Guarantors" means, collectively, at any time RC Cola and Arby's, (ii) any other Restricted Subsidiary that has prior to such time furnished a Guarantee pursuant to Section 3.22(a) which Guarantee has not been released prior to such time pursuant to Section 3.22(b) and (iii) the respective permitted successors and assigns of the foregoing. "Holder", "holder of Senior Notes", "Senior Noteholder" or other similar terms means the registered holder of any Senior Note. "Indebtedness" of any Person means, at any date, without duplication, (i) all obligations of such Person for borrowed money, (ii) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (iii) all obligations of such Person in respect of letters of credit or bankers' acceptances or other similar instruments (or reimbursement obligations with respect thereto), (iv) all obligations of such Person to pay the deferred purchase price of property or services (except trade accounts payable arising in the ordinary course of business), (v) all Capital Lease Obligations of such Person, (vi) all obligations of such Person in respect of interest rate and foreign currency protection or hedging arrangements, (vii) all Indebtedness secured by a Lien on any asset of such Person, whether or not such Indebtedness is otherwise an obligation of such Person, and (viii) all Indebted ness and Preferred Stock Obligations of others guaranteed by such Person. "Indenture" means this instrument as originally executed and delivered or, if amended or supplemented as herein provided, as so amended or supplemented. "Independent Director" of the Board of Directors of DWG or the Issuer, as the case may be, means any director other than a director who is an officer or employee of DWG, the Issuer or any of their respective Affiliates. "Initial Public Equity Offering" means the first public offering for cash of common stock of the Issuer after the Issue Date. "Interest Payment Date" means any date specified in a Senior Note as a fixed date upon which payment of an installment of interest is due and payable. "Investment" means any loan or advance to any other person, payment of any guarantee of the obligations of any other person, any acquisition of any Capital Stock of any other person, any capital contribution to any other person, or any other investment in any other person, except for: (i) negotiable instruments endorsed for collection in the ordinary course of business and (ii) demand or overnight deposit accounts which do not contain any restriction on the transfer or withdrawal of funds 15 therefrom. The amount of any Investment shall be the original cost of such Invest ment, plus the cost of all additions thereto and minus the amount of any portion of such Investment repaid to such person in cash as a repayment of principal or a return of capital, as the case may be, but without any other adjustments for increases or decreases in value, or write-ups, write-downs or write-offs with respect to such Investment. In determining the amount of any Investment involving a transfer of any property other than cash, such property shall be valued at its fair market value at the time of such transfer, as determined in good faith by the Board of Directors of the person making such transfer, whose determination will be conclusive and evidenced by a board resolution. "Issue Date" means August 12, 1993, the date of the original issuance of the Senior Notes under this Indenture. "Issuer" means Royal Crown Corporation, a Florida corporation, and its permitted successors and assigns. "Lien" means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), or preference, priority or other security agreement of any kind or nature whatsoever (including, without limita tion, any conditional sale or other title retention agreement and any financing lease having substantially the same effect as any of the foregoing). "Management Services Agreement" means, collectively, (i) the Management Services Agreement dated as of April 23, 1993 between DWG and RC Cola and (ii) the Management Services Agreement dated as of April 23, 1993 between DWG and Arby's, in each case as in effect on the Issue Date. "Material Plan" means at any time a Plan having Unfunded Liabilities exceeding $2,000,000. "Multiemployer Plan" means at any time an employee pension benefit plan within the meaning of Section 4001(a)(3) of ERISA to which any member of the ERISA Group is then making or accruing an obligation to make contributions or has within the preceding five plan years made contributions, including for these purposes any Person which ceased to be a member of the ERISA Group during such five year period. "Net Proceeds" means the proceeds received by the Issuer or a Restricted Subsidiary in connection with an Asset Sale, which proceeds shall consist of the sum of (i) cash (including any cash received by way of deferred payment of principal pursuant to a note or installment received or otherwise, but only as and when received) and (ii) marketable securities issued to the Issuer or a Restricted Subsidiary, in each case net of all legal, title and recording tax expenses, commis sions and other fees and expenses incurred, and all Federal, state, local and foreign tax liability (including, without limitation, withholding taxes) arising or which will arise in connection with such disposition and any subsequent transfer to the Issuer 16 (such taxes to be determined at the time of the Asset Sale and assumed payable at the then applicable maximum statutory rates). "Net Proceeds Offer" has the meaning specified in Section 3.15(b). "Notice of Acceleration" has the meaning specified in the Collateral Trust Agreement. "Officers' Certificate" means a certificate signed by the Chairman of the Board of Directors or the President or any Vice President (whether or not designated by a number or numbers or a word or words added before or after the title "Vice President") and by the Treasurer or the Secretary or any Assistant Secretary or Assistant Treasurer of the Issuer and delivered to the Trustee. Each such certificate shall conform to the requirements of Section 314 of the Trust Indenture Act of 1939 and include the statements provided for in Section 15.5 if and to the extent required hereby. "Opinion of Counsel" means an opinion in writing signed by legal counsel (who may be an employee of or counsel to the Issuer). Each such opinion shall conform to the requirements of Section 314 of the Trust Indenture Act and include the statements provided for in Section 15.5 if and to the extent required hereby. "Ordinary Course Sales" means sales of inventory or other property or assets by the Issuer or any Restricted Subsidiary in the ordinary course of business. For purposes of this Indenture, sales of Arby's stores by the Issuer or any Restricted Subsidiary shall not be considered ordinary Course Sales. "original issue date" of any Senior Note (or portion thereof) means the earlier of (i) the date of such Senior Note and (ii) the date of any Senior Note (or portion thereof) for which such Senior Note was issued (directly or indirectly) on registration of transfer, exchange or substitution. "outstanding", when used with reference to Senior Notes, shall, subject to the provisions of Section 6.4, mean, as of any particular time, all Senior Notes authenticated and delivered by the Trustee under this Indenture, except (a) Senior Notes theretofore canceled by the Trustee or delivered to the Trustee for cancellation; (b) on or after the date on which the conditions set forth in Section 9.1(a) or 9.1(b) hereof have been satisfied, Senior Notes theretofore authenticated and delivered by the Trustee under this Indenture; and (c) Senior Notes in substitution for which other Senior Notes shall have been authenticated and delivered, or which shall have been paid, pursuant to the terms of Section 2.6 (unless proof satisfactory to the Trustee is 17 presented that any of such Senior Notes is held by a Person in whose hands such Senior Note is a legal, valid and binding obligation of the Issuer). "Paying Agent" means any Person appointed by the Issuer to pay the principal of or any premium or interest on any Senior Notes on behalf of the Issuer and, if no Person shall be so appointed, then the Issuer. "PBGC" means the Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions under ERISA. "Person" means any individual, partnership, joint venture, firm, corporation, association, trust or other enterprise or any government or political subdivision or agency, department or instrumentality thereof. "Plan" means at any time an employee pension benefit plan (other than a Multiemployer Plan) which is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Code and either (i) is maintained, or contributed to, by any member of the ERISA Group for employees of any member of the ERISA Group or (ii) has at any time within the preceding five years been maintained, or contributed to, by any Person which was at such time a member of the ERISA Group for employees of any Person which was at such time a member of the ERISA Group. "Preferred Stock Obligations" of any Person means all obligations of such Person to make payments on or in respect of its preferred stock, including, without limitation, dividend payments, liquidation preference payments and payments in respect of the redemption (mandatory or optional) of such preferred stock. "Pro Forma Interest Coverage Ratio" means, for any period of four consecutive fiscal quarters (the "Reference Period"), the ratio of Adjusted EBITDA to Adjusted Interest Expense for such period; provided that: (i) to the extent that the proceeds of any Indebtedness proposed to be incurred pursuant to Section 3.13(j) (the "Proposed Indebtedness") on the date of the transaction giving rise to the need to calculate the Pro Forma Interest Coverage Ratio (the "Transaction Date") are to be used to finance the purchase price of a substantially concurrent acquisition of assets or a business in the Core Business, Adjusted EBITDA for the Reference Period shall be adjusted to give effect to such acquisition as if it had occurred on the first day of the Reference Period; (ii) if, during the Reference Period, the Issuer or any of its Restricted Subsidiaries shall have consummated any Asset Sale, Adjusted EBITDA and Adjusted Interest Expense for the Reference Period shall be adjusted to give effect to such Asset Sale and to the retirement of any related Indebtedness of the Issuer or such Restricted Subsidiary as if the same had occurred on the first day of the Reference Period; 18 (iii) in calculating Adjusted Interest Expense for purposes of this ratio, (A) the incurrence of the Proposed Indebtedness shall be assumed to have occurred on the first day of the Reference Period and (B) to the extent the proceeds from the incurrence of the Proposed Indebtedness are to be used simultaneously to retire outstanding Indebtedness, the application of such net proceeds shall be assumed to have occurred on the first day of the Reference Period; and (iv) in calculating Cash Interest Income for purposes of this ratio, to the extent the proceeds from the incurrence of the Proposed Indebtedness are not to be used as contemplated by clause (i) or (iii) above, such proceeds shall be assumed to have generated interest income from the first day of the Reference Period at the Assumed Investment Rate in effect on such day. In calculating the Pro Forma Interest Coverage Ratio for the Reference Period in connection with any proposed incurrence of Indebtedness pursuant to Section 3.13(j), any pro forma adjustments made in calculating the Pro Forma Interest Coverage Ratio for such Reference Period (or any portion thereof) in connection with any prior incurrence of Indebtedness pursuant to Section 3.13(j) shall be given effect. "Pro Forma Restricted Payment Capacity" exists on any date of determination when the Pro Forma Interest Coverage Ratio for the most recent four-quarter period prior to the date of determination for which financial statements are available exceeds (A) 2.0 to 1.0, for any date of determination on or prior to August 1, 1996, or (B) 2.5 to 1.0, for any date of determination after August 1, 1996. "Qualified Capital Stock" means any and all shares of Capital Stock of the Issuer issued after the Issue Date, provided that such shares are not subject to any mandatory redemption or other mandatory purchase obligation on the part of the Issuer prior to the final maturity of the Senior Notes. "Regular Record Date" means, with respect to the interest payable on the Senior Notes on any Interest Payment Date, the fifteenth day of the month immediately preceding the month in which such Interest Payment Date falls, whether or not such fifteenth day is a Business Day. "Reorganization Date" means April 23, 1993. "Repurchase Payments" has the meaning specified in Section 3.17. "Responsible Officer" when used with respect to the Trustee means the chairman of the Board of Directors, any vice chairman of the Board of Directors, the chairman of the trust committee, the chairman of the executive committee, any vice chairman of the executive committee, the president, any vice president (whether or not designated by numbers or words added before or after the title "vice president"), the cashier, the secretary, the treasurer, any trust officer, any assistant trust officer, any assistant vice president, any assistant cashier, any assistant secretary, any 19 assistant treasurer, or any other officer or assistant officer of the Trustee customarily performing functions similar to those performed by the persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of his knowledge of and familiarity with the particular subject. "Restricted Payment" means (i) any dividend or other distribution on any shares of the Capital Stock of the Issuer or any Restricted Subsidiary (other than dividends payable solely in shares of such Capital Stock or options, warrants or other rights to acquire such Capital Stock), (ii) any payment on account of the purchase, redemption, retirement or acquisition of (A) any shares of the Capital Stock of the Issuer or any Restricted Subsidiary or (B) any option, warrant or other right to acquire shares of such Capital Stock, (iii) any purchase, redemption, defeasance or other acquisition or retirement for value of any Subordinated Indebtedness prior to the scheduled maturity, scheduled repayment of principal or scheduled sinking fund payment, as the case may be, of such Subordinated Indebtedness and (iv) any Investment in any Person (other than Investments permitted by paragraphs (a) through (e) of Section 3.16); provided that the term "Restricted Payment" shall not include (x) any dividend, distribution or other payment on the Capital Stock of any Restricted Subsidiary to the Issuer or any Wholly Owned Restricted Subsidiary or (y) any payment made pursuant to the Tax Sharing Agreement. "Restricted Subsidiary" means (i) any Subsidiary that exists on the Issue Date and (ii) any other Subsidiary that the Issuer has not designated as an Unrestricted subsidiary pursuant to Section 3.21. "Security Register" and "Security Registrar" have the respective meanings specified in Section 2.5. "Senior Note" or "Senior Notes" means any 9 3/4% Senior Secured Notes Due 2000 authenticated and delivered under this Indenture. "Senior Note Obligations" means at any time all principal of and premium and interest (including, without limitation, any interest which accrues after the commencement of any case, proceeding or other action relating to the bankruptcy, insolvency or reorganization of the Issuer) on the outstanding Senior Notes and all other amounts payable by the Issuer hereunder. "Specified Write-offs" means, without duplication, (i) all non-recurring, non-cash write-offs taken by the Issuer and its Restricted Subsidiaries after December 31, 1992 and before the end of the twelve-month period following the Reorganization Date, (ii) all expenses incurred by the Issuer and its Restricted Subsidiaries after December 31, 1992 resulting from the application of Statement of Financial Accounting Standards No. 106 ("SFAS 106") to the extent exceeding the cash payments for benefits covered by SFAS 106 for the relevant period, (iii) all non-cash writeoffs taken by the Issuer and its Restricted Subsidiaries after December 31, 1992 resulting from the application of Statement of Financial Accounting Standards No. 109, (iv) all charges taken by the Issuer and its Restricted Subsidiaries after December 31, 1992 in respect of prepayment premiums, and payments made in lieu 20 of participating interest obligations, on Indebtedness of the Issuer that was refinanced on the Reorganization Date, (v) all other non-recurring write-offs taken by the Issuer and its Restricted Subsidiaries in the quarter ended March 31, 1993 and (vi) all other non-recurring write-offs not in excess of $5,250,000 taken by the Issuer and its Restricted Subsidiaries in the nine months ended December 31, 1993. "Spin-Off" means a transaction or series of related transactions whereby all Capital Stock of the Issuer held directly or indirectly by DWG is distributed ratably to the holders of the Capital Stock of DWG and, after giving effect thereto, the holders of Voting Capital Stock of DWG prior to such transactions or series of related transactions own, in the aggregate, an identical percentage of the Voting Capital Stock of the Issuer. "Step-Up Notes" means the Issuer's Senior Secured Step-Up Rate Notes Due 2000 issued pursuant to an indenture dated as of April 23, 1993 among the Issuer, as issuer, RC Cola and Arby's, as joint and several guarantors, and The Bank of New York, as trustee. "Subordinated Indebtedness" means any Indebtedness of the Issuer which is subordinate or junior in right of payment to the Senior Notes (whether pursuant to its terms or by operation of law). "Subsidiary" means, with respect to any Person, any corporation or other entity of which a majority of the Capital Stock or other ownership interests having ordinary voting power to elect a majority of the board of directors (or other persons performing similar functions) are directly or indirectly owned by such Person. Unless the context indicates otherwise, all references herein to Subsidiaries are references to Subsidiaries of the Issuer. "Tax Sharing Agreement" means the Tax Sharing Agreement dated as of April 23, 1993 between DWG and the Issuer as in effect on the Issue Date. "Temporary Cash Investments" means (i) securities issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof (provided that the full faith and credit of the United States of America is pledged in support thereof) having maturities of not more than one year from the date of acquisition, (ii) time deposits and certificates of deposit having maturities of not more than one year from the date of acquisition with any U.S. branch of a commercial bank so long as the unsecured senior long-term debt of such bank or of such bank's holding company is rated at least A by Standard & Poor's Corporation ("S&P") or Moody's Investors Service, Inc. ("Moody's"), (iii) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clause (i) entered into with any bank meeting the qualifications specified in clause (ii) above, (iv) commercial paper rated at least A-1 or the equivalent thereof by S&P or at least P-1 or the equivalent thereof by Moody's and in each case maturing within six months after the date of acquisition, (v) investments in money market funds substantially all the assets of which are comprised of securities of the types described in clauses (i) through (iv) above, and 21 (vi) debt securities of an issuer incorporated under the laws of the United States of America or any state thereof which are issued pursuant to an effective registration statement under the Securities Act of 1933 and which are rated at least BBB by S&P or Baa2 by Moody's. "Trustee" means the entity identified as "Trustee" in the first paragraph hereof and, subject to the provisions of Article Five, shall also include any successor trustee. "Trust Indenture Act of 1939" means the Trust Indenture Act of 1939 as in force at the date as of which this Indenture was originally executed, except to the extent that any subsequent amendment of the Trust Indenture Act of 1939 shall apply retroactively to this Indenture. "Unfunded Liabilities" means, with respect to any Plan at any time, the amount (if any) by which (i) the value of all benefit liabilities under such Plan, determined on a plan termination basis using the assumptions prescribed by the PBGC for purposes of Section 4044 of ERISA, exceeds (ii) the fair market value of all Plan assets allocable to such liabilities under the Title IV or ERISA (excluding any accrued but unpaid contributions), all determined as of the then most recent valuation date for such Plan, but only to the extent that such excess represents a potential liability of a member of the ERISA Group to the PBGC or any other Person under Title IV of ERISA. "Unrestricted Subsidiary" means any Subsidiary that the Issuer has classified pursuant to Section 3.21 as an Unrestricted Subsidiary and that has not been reclassified as a Restricted Subsidiary pursuant to such Section. "Voting Capital Stock" means, with respect to any Person, any Capital Stock of such Person which has ordinary power to vote in elections of the board of directors (or other persons performing similar functions) of such Person. "Wholly Owned Restricted Subsidiary" means, at any time, any Restricted Subsidiary all of the Capital Stock of which (except directors' qualifying shares) is at the time owned by the Issuer or another Wholly Owned Restricted Subsidiary. ARTICLE II ISSUE, EXECUTION, FORM AND REGISTRATION OF SENIOR NOTES SECTION 2.1 Authentication and Delivery of Senior Notes. Upon the execution and delivery of this Indenture, or from time to time thereafter, Senior Notes in an aggregate principal amount not exceeding the amount specified in the form of Senior Note hereinabove recited (except as otherwise provided in Section 2.6) may be executed by the Issuer and delivered to the Trustee for authentication, and the 22 Trustee shall thereupon authenticate and deliver said Senior Notes to or upon the written order of the Issuer (a "Company Order"), signed by both (i) its President or any Vice President (whether or not designated by a number or numbers or a word or words added before or after the title "Vice President") and (ii) its Secretary, its Treasurer or any Assistant Secretary or Assistant Treasurer without any further action by the Issuer. The Trustee shall be entitled to receive and be fully protected in relying upon an Opinion of Counsel stating that such Senior Notes, when authenticated and delivered by the Trustee and issued by the Issuer in the manner and subject to customary conditions and qualifications specified in such Opinion of counsel, will constitute valid and legally binding obligations of the Issuer. Notwithstanding any other provision of this Indenture, if all Senior Notes are not to be originally issued at one time, all officers' Certificates, Company orders and opinions of Counsel required to be delivered to the Trustee in connection with the authentication of Senior Notes shall be delivered prior to the authentication upon original issuance of such Senior Notes and shall not be thereafter required to be delivered to the Trustee. SECTION 2.2 Execution of Senior Notes. The Senior Notes shall be signed on behalf of the Issuer by (i) the President or any Vice President (whether or not designated by a number or numbers or a word or words added before or after the title "Vice President") of the Issuer and (ii) by the Treasurer or any Assistant Treasurer or the Secretary or any Assistant Secretary of the Issuer under its corporate seal, which may, but need not, be attested. Such signatures may be the manual or facsimile signatures of the present or any future such officers. The seal of the Issuer may be in the form of a facsimile thereof and may be impressed, affixed, imprinted or otherwise reproduced on the Senior Notes. Typographical and other minor errors or defects in any such reproduction of the seal or any such signature shall not affect the validity or enforceability of any Senior Note which has been duly authenticated and delivered by the Trustee. In case any officer of the Issuer who shall have signed any of the Senior Notes shall cease to be such officer before the Senior Note so signed shall be authenticated and delivered by the Trustee or disposed of by the Issuer, such Senior Note nevertheless may be authenticated and delivered or disposed of as though the person who signed such Senior Note had not ceased to be such officer of the Issuer; and any Senior Note may be signed on behalf of the Issuer by such persons as, at the actual date of the execution of such Senior Note, shall be the proper officers of the Issuer, although at the date of the execution and delivery of this Indenture any such person was not such officer. SECTION 2.3 Certificate of Authentication. Only such Senior Notes as shall bear thereon a certificate of authentication substantially in the form herein before recited, executed by the Trustee by manual signature of one of its authorized signatories, shall be entitled to the benefits of this Indenture or be valid or obligatory for any purpose. Such certificate by the Trustee upon any Senior Note executed by 23 the Issuer shall be conclusive evidence that the Senior Note so authenticated has been duly authenticated and delivered hereunder and that the Holder is entitled to the benefits of this Indenture. SECTION 2.4 Form, Denomination and Date of Senior Notes; Payments of Interest. The Senior Notes and the Trustee's certificates of authentica tion shall be substantially in the form recited above. The Senior Notes shall be issuable as registered securities without coupons and in denominations provided for in the form of Senior Note above recited. The Senior Notes shall be numbered, lettered or otherwise distinguished in such manner or in accordance with such plans as the officers of the Issuer executing the same may determine with the approval of the Trustee. Any of the Senior Notes may be issued with appropriate insertions, omissions, substitutions and variations, and may have imprinted or otherwise reproduced thereon such legend or legends, not inconsistent with the provisions of this Indenture, as may be required to comply with any law or with any rules or regula tions pursuant thereto, or with the rules of any securities market in which the Senior Notes are admitted to trading, or to conform to general usage. Each Senior Note shall be dated the date of its authentication, shall bear interest from the applicable date and shall be payable on the dates specified in the form of Senior Note recited above. The Person in whose name any Senior Note is registered at the close of business on any Regular Record Date with respect to any Interest Payment Date shall be entitled to receive the interest, if any, payable on such Interest Payment Date notwithstanding any transfer or exchange of such Senior Note subsequent to the Regular Record Date and prior to such Interest Payment Date, except if and to the extent the Issuer shall default in the payment of the interest due on such Interest Payment Date, in which case such defaulted interest shall be paid to the Persons in whose names outstanding Senior Notes are registered at the close of business on a subsequent record date (which shall be not less than five Business Days prior to the date of payment of such defaulted interest) established by notice given by mail by or on behalf of the Issuer to the Holders of Senior Notes not less than 15 days preceding such subsequent record date. SECTION 2.5 Registration, Transfer and Exchange. The Issuer shall cause to be kept at the Corporate Trust Office of the Trustee a register (the register maintained in such office and in any other office or agency of the Issuer maintained pursuant to Section 3.2 being herein sometimes collectively referred to as the "Security Register") in which, subject to such reasonable regulations as it may prescribe, the Issuer shall provide for the registration and transfer of Senior Notes. The Trustee is hereby appointed as the initial "Security Registrar" for the purpose of registering Senior Notes and transfers of Senior Notes as herein provided. Upon due presentation for registration of transfer of any Senior Note at each such office or agency, the Issuer shall execute and the Trustee shall authenticate 24 and deliver in the name of the transferee or transferees a new Senior Note or Senior Notes in authorized denominations for a like aggregate principal amount. Any Senior Note or Senior Notes may be exchanged for a Senior Note or Senior Notes in other authorized denominations, in an equal aggregate principal amount. Senior Notes to be exchanged shall be surrendered at each office or agency to be maintained by the Issuer for the purpose as provided in Section 3.2, and the Issuer shall execute and the Trustee shall authenticate and deliver in exchange therefor the Senior Note or Senior Notes which the Senior Noteholder making the exchange shall be entitled to receive, each bearing numbers not contemporaneously outstanding. All Senior Notes presented for registration of transfer, exchange, redemption or payment shall (if so required by the Issuer or the Trustee) be duly endorsed by, or be accompanied by a written instrument or instruments of transfer in form satisfactory to the Issuer and the Trustee duly executed by, the Holder or his attorney duly authorized in writing. The Issuer may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any exchange or registration of transfer of Senior Notes. No service charge shall be made to such Holder for any such transaction. The Trustee shall not be required to exchange or register a transfer of (i) any Senior Notes for a period of 15 days next preceding the first mailing of notice of redemption of Senior Notes to be redeemed or (ii) any Senior Notes selected, called or being called for redemption except, in the case of any Senior Note where notice has been given to Senior Noteholders that such Senior Note is to be redeemed in part, the portion thereof not so to be redeemed. All Senior Notes issued upon any transfer or exchange of Senior Notes shall be valid obligations of the Issuer evidencing the same debt, and entitled to the same benefits under this Indenture, as the Senior Notes surrendered upon such transfer or exchange. SECTION 2.6 Mutilated, Defaced, Destroyed, Lost and Stolen Senior Notes. In case any temporary or definitive Senior Note shall become mutilated, defaced or be apparently destroyed, lost or stolen, the Issuer in its discretion may execute, and upon the written request of any officer of the Issuer, the Trustee shall authenticate and deliver, a new Senior Note bearing a number not contemporaneously outstanding, in exchange and substitution for the mutilated or defaced Senior Note, or in lieu of and substitution for the Senior Note so apparently destroyed, lost or stolen. In every case the applicant for a substitute Senior Note shall furnish to the Issuer and to the Trustee and any agent of the Issuer or the Trustee such security or indemnity as may be required by them to indemnify and defend and to save each of them harmless and, in every case of destruction, loss or theft evidence to their satisfaction of the apparent destruction, loss or theft of such Senior Note and of the ownership thereof. 25 Upon the issuance of any substitute Senior Note, the Issuer may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith. In case any Senior Note which has matured or is about to mature, or has been called for redemption in full, shall become mutilated or defaced or be apparently destroyed, lost or stolen, the Issuer may, instead of issuing a substitute Senior Note, pay or authorize the payment of the same (without surrender thereof except in the case of a mutilated or defaced Senior Note), if the applicant for such payment shall furnish to the Issuer and to the Trustee and any agent of the Issuer or the Trustee such security or indemnity as any of them may require to save each of them harmless from all risks, however remote, and, in every case of apparent destruction, loss or theft, the applicant shall also furnish to the Issuer and the Trustee and any agent of the Issuer or the Trustee evidence to their satisfaction of the apparent destruction, loss or theft of such Senior Note and of the ownership thereof. Every substitute Senior Note issued pursuant to the provisions of this Section by virtue of the fact that any Senior Note is apparently destroyed, lost or stolen shall constitute an additional contractual obligation of the Issuer, whether or not the apparently destroyed, lost or stolen Senior Note shall be at any time enforceable by anyone, and shall be entitled to all the benefits of (but shall be subject to all the limitations of rights set forth in) this Indenture equally and proportionately with any and all other Senior Notes duly authenticated and delivered hereunder. All Senior Notes shall be held and owned upon the express condition that, to the extent permitted by law, the foregoing provisions are exclusive with respect to the replacement or payment of mutilated, defaced, or apparently destroyed, lost or stolen senior Notes and shall preclude any and all other rights or remedies notwithstanding any law or statute existing or hereafter enacted to the contrary with respect to the replacement or payment of negotiable instruments or other securities without their surrender. SECTION 2.7 Cancellation of Senior Notes; Destruction Thereof. All Senior Notes surrendered for payment, redemption, registration of transfer or exchange, if surrendered to the Issuer or any agent of the Issuer or the Trustee, shall be delivered to the Trustee for cancellation or, if surrendered to the Trustee, shall be cancelled by it; and no Senior Notes shall be issued in lieu thereof except as expressly permitted by any of the provisions of this Indenture. The Trustee shall, in accordance with its normal procedures, dispose of all Senior Notes delivered or surrendered to the Trustee, unless the Issuer, by order signed by the President or any Vice President (whether or not designated by a number or numbers or a word or words added before or after the title "Vice President") and its Secretary, its Treasurer or any Assistant Secretary or Assistant Treasurer directs that such cancelled Senior Notes be returned to the Issuer. If the Issuer shall acquire any of the Senior Notes, such acquisition shall not operate as a redemption or satisfaction of the indebtedness represented by such Senior Notes unless and until the same are delivered to the Trustee for cancellation. SECTION 2.8 Temporary Senior Notes. Pending the preparation of definitive Senior Notes, the Issuer may execute and the Trustee shall authenticate and 26 deliver temporary Senior Notes (printed, lithographed, typewritten or otherwise reproduced, in each case in form satisfactory to the Trustee). Temporary Senior Notes shall be issuable as registered Senior Notes without coupons, of any authorized denomination, and substantially in the form of the definitive Senior Notes but with such omissions, insertions and variations as may be appropriate for temporary Senior Notes, all as may be determined by the Issuer with the concurrence of the Trustee. Temporary Senior Notes may contain such reference to any provisions of this Indenture as may be appropriate. Every temporary Senior Note shall be executed by the Issuer and authenticated by the Trustee upon the same conditions and in substantially the same manner, and with like effect, as the definitive Senior Notes. Without unreasonable delay the Issuer shall execute and shall furnish definitive Senior Notes and thereupon temporary Senior Notes may be surrendered in exchange therefor without charge at each office or agency to be maintained by the Issuer for the purpose pursuant to Section 3.2, and the Trustee shall authenticate and deliver in exchange for such temporary Senior Notes a like aggregate principal amount of definitive Senior Notes of authorized denominations. Until so exchanged the temporary Senior Notes shall be entitled to the same benefits under this Indenture as definitive Senior Notes. ARTICLE III COVENANTS OF THE ISSUER AND THE GUARANTORS SECTION 3.1 Payment of Principal and Interest. (a) The Issuer covenants and agrees that it will duly and punctually pay or cause to be paid the principal of, and premium and interest on, each of the Senior Notes at the place or places, at the respective times and in the manner provided in the Senior Notes. Each installment of interest on the Senior Notes may be paid by mailing checks for such interest payable to or upon the written order of the Holders of Senior Notes entitled thereto as they shall appear on the registry books of the Issuer or the Trustee, as the case may be. (b) The Issuer covenants and agrees that if it shall fail to pay when due (without regard to any applicable grace period) any principal of or premium or interest on any Senior Note, then the Issuer will pay interest on such overdue payment at the rate borne by the Senior Notes plus 1% per annum. SECTION 3.2 Offices for Payments, etc. So long as any of the Senior Notes remain outstanding, the Issuer will maintain in The City of New York the following: (i) an office or agency where the Senior Notes may be presented for the payment of principal thereof and premium and interest thereon, (ii) an office or agency where the Senior Notes may be presented for registration of transfer and for exchange as in this Indenture provided and (iii) an office or agency where notices and demands to or upon the Issuer in respect of the Senior Notes or this Indenture may be served. The Issuer will give to the Trustee written notice of the location of any such office or agency and of any change in the location thereof. The Issuer hereby initially 27 designates the Corporate Trust Office of the Trustee as the office or agency for each such purpose. In case the Issuer shall fail to maintain any such office or agency or shall fail to give such notice of the location or of any change in the location thereof, presentations and demands may be made and notices may be served at the Corporate Trust Office. SECTION 3.3 Appointment to Fill a Vacancy in Office of Trustee. The Issuer, whenever necessary to avoid or fill a vacancy in the office of Trustee, will appoint, in the manner provided in Section 5.9, a Trustee, so that there shall at all times be a Trustee hereunder. SECTION 3.4 Paying Agents. The Issuer hereby appoints the Trustee as initial "Paying Agent". Whenever the Issuer shall appoint a Paying Agent other than the Trustee, it will cause such Paying Agent to execute and deliver to the Trustee an instrument in which such agent shall agree with the Trustee, subject to the provisions of this Section, (a) that it will hold all sums received by it as such agent for the payment of the principal of or premium or interest on the Senior Notes (whether such sums have been paid to it by the Issuer or by any other obligor on the senior Notes) in trust for the benefit of the Holders of the Senior Notes or of the Trustee, (b) that it will give the Trustee written notice of any failure by the Issuer (or by any other obligor on the Senior Notes) to make any payment of the principal of or premium or interest on the Senior Notes when the same shall be due and payable, and (c) that it will pay any such sums so held in trust by it to the Trustee upon the Trustee's written request at any time during the continuance of the failure referred to in clause (b) above. The Issuer shall, prior to each due date of the principal of or premium or interest on the Senior Notes, deposit with the Paying Agent a sum sufficient to pay such principal, premium or interest, and (unless such Paying Agent is the Trustee) the Issuer will promptly notify the Trustee in writing of any failure to take such action. In no event shall the Paying Agent (if other than the Issuer) be responsible for making any payment of principal of or premium or interest on the Senior Notes on the due date thereof if the Issuer shall not have made such deposit as aforesaid. If the Issuer determines to act as its own Paying Agent, it shall, on or before each due date of the principal of or premium or interest on the Senior Notes, set aside, segregate and hold in trust for the benefit of the Holders of the Senior Notes a sum sufficient to pay such principal, premium or interest so becoming due. The Issuer shall promptly notify the Trustee in writing of any failure to take such action. Anything in this Section to the contrary notwithstanding, the Issuer may at any time, for the purpose of obtaining a satisfaction and discharge of this Indenture 28 or for any other reason, pay or cause to be paid to the Trustee all sums held in trust by the Issuer or any Paying Agent hereunder, as required by this Section, such sums to be held by the Trustee upon the trusts herein contained. Upon such payment to the Trustee, the Paying Agent, and any predecessor Paying Agents, if any, shall be released from any liability with respect to such sums. Anything in this Section to the contrary notwithstanding, the agreement to hold sums in trust as provided in this Section is subject to the provisions of Sections 9.3 and 9.4. SECTION 3.5 Certificate to Trustee; Notice to Trustee. The Issuer will furnish to the Trustee: (a) at the time of the furnishing to the Trustee of the financial statements required by clauses (i) and (ii) of Section 3.7(a), a certificate (which need not comply with Section 15.5) from the principal executive, financial or accounting officer of the Issuer (i) stating that a review of the activities of the Issuer and its Subsidiaries has been made with a view to determining whether the Issuer's obligations under the Indenture have been complied with and (ii) stating whether such officer has obtained knowledge (from such review or otherwise) of any Default under the Indenture during the 12-month period ended on the date of such financial statements; and (b) promptly, and in any event within three Business Days after the Issuer obtains knowledge thereof, notice of (i) any payment default in excess of $100,000 by the Issuer or any of its Restricted Subsidiaries on any Indebtedness, (ii) the occurrence of any event which constitutes a Default or Event of Default and (iii) any litigation or governmental proceeding pending against the Issuer or any of its Restricted Subsidiaries which is likely to have a material adverse effect on the Issuer and its Restricted Subsidiaries taken as a whole. SECTION 3.6 Senior Noteholders Lists. If and so long as the Trustee shall not be the Security Registrar, the Issuer will furnish or cause to be furnished to the Trustee a list in such form as the Trustee may reasonably require of the names and addresses of the Holders of the Senior Notes (i) semiannually, not more than 15 days after the Regular Record Date for the payment of interest in the first and third quarters of each year on the Senior Notes as hereinabove specified, as of such Regular Record Date, and (ii) at such other times as the Trustee may request in writing, within 30 days after receipt by the Issuer of any such request as of a date not more than 15 days prior to the time such information is furnished. The Trustee may destroy any list provided to it pursuant to this Section upon the receipt of a new list provided to it pursuant to this Section. SECTION 3.7 Furnishing of Information by the Issuer; SEC Filings. (a) The Issuer will furnish to the Trustee and to each Senior Noteholder: (i) within 50 days after the end of each of the first three fiscal quarters in each fiscal year of the Issuer, commencing with the quarter 29 ending June 30, 1993, the unaudited consolidated balance sheet of the Issuer and its Restricted Subsidiaries as of the end of such quarterly period and the related consolidated statements of operations, cash flows and stockholders' equity for such quarterly period and for the elapsed portion of the fiscal year ended with the last day of such quarterly period, and in each case setting forth comparative figures for the related periods in the prior fiscal year, all of which shall be certified by the chief financial officer of the Issuer (in each case subject to year-end audit adjustments); (ii) within 95 days after the end of each fiscal year of the Issuer, the consolidated balance sheet of the Issuer and its Restricted Subsidiaries as of the end of such fiscal year and the related consolidated statements of operations, cash flows and stockholders' equity for such fiscal year, in each case setting forth comparative figures for the preceding fiscal year and certified by Arthur Andersen & Co. or other independent certified public accountants of recognized national standing, and in each case together with a report of such accounting firm stating that in the course of its audit of such financial statements, which audit was conducted in accordance with generally accepted auditing standards, such accounting firm has obtained no knowledge of any Default or Event of Default which has occurred and is continuing or, if in the opinion of such accounting firm such a Default or Event of Default has occurred and is continuing, a statement as to the nature thereof; and (iii) within 15 days after the Issuer or any Restricted Subsidiary is required to file the same with the Commission by virtue of being subject to the reporting requirements of Section 13 or 15 (d) of the Exchange Act (or, if earlier, within 15 days after the same are filed with the commission), copies of the annual reports and of the information, documents and other reports which the Issuer or such Restricted Subsidiary may be required to file with the Commission pursuant to Section 13 or Section 15(d) of the Exchange Act. Any financial statements of the Issuer and its Restricted Subsidiaries that are filed with the Trustee pursuant to this Section may be prepared in accordance with generally accepted accounting principles as in effect on the date of such financial statements, provided that the Issuer shall have filed with the Trustee simultaneously therewith a certificate (which need not comply with Section 15.5) from the principal financial or accounting officer of the Issuer setting forth in reasonable detail the reconciliations necessary to make any determination hereunder involving financial terms, including, without limitation, the determination of Consolidated Net Income, Adjusted EBITDA, Adjusted Interest Expense or Cash Interest Income for the period then ending. (b) The Issuer shall furnish to the holders of the Senior Notes copies of any reports that the Issuer is required to file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act, and if the Issuer shall at any time cease to be subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act 30 after having previously been subject to such requirements, it shall nevertheless file with the Commission, within the time periods prescribed by the Exchange Act or the rules of the Commission promulgated thereunder, annual reports consisting of audited financial statements (including footnotes) and management's discussion and analysis of financial condition and results of operations, quarterly reports consisting of unaudited interim financial statements (including footnotes) and management's discussion and analysis of financial condition and results of operations and provide such reports to the holders of Senior Notes within 15 days after it files them with the Commission. (c) The Issuer shall file with the Trustee and the Commission, in accordance with rules and regulations prescribed from time to time by the Commission, such additional information, documents and reports with respect to compliance by the Issuer with the conditions and covenants of this Indenture as may be required from time to time by such rules and regulations. (d) The Issuer shall transmit by mail to all Holders, as their names and addresses appear in the Security Register, within 30 days after the filing thereof with the Trustee, in the manner and to the extent required by Section 313(c) of the Trust Indenture Act, such summaries of any information, documents and reports required to be filed by the Issuer pursuant to paragraphs (a) and (b) of this Section 3.7 as may be required by rules and regulations prescribed from time to time by the Commission. SECTION 3.8 Further Assurances. The Issuer and each Guarantor will promptly execute and deliver such additional instruments and do such further acts as in the opinion of the Trustee may be reasonably necessary or proper to carry out the purposes of this Indenture. SECTION 3.9 Maintenance of Property, Insurance. The Issuer will, and will cause each of its Restricted Subsidiaries to, (i) keep all material property useful and necessary in its business in good working order and condition in accordance with prevailing industry practice, (ii) maintain with financially sound and reputable insurance companies insurance on all its material properties in at least such amounts and against at least such risks as are usually insured against by companies of similar size and established repute engaged in the same or a similar business and (iii) furnish to the Trustee, upon written request, full information as to the insurance carried. SECTION 3.10 Taxes. The Issuer will, and will cause each of its Restricted Subsidiaries to, pay when due all taxes, assessments and governmental levies, except (i) as contested in good faith and by appropriate proceedings if adequate reserves (in the good faith judgment of the management of the Issuer) have been established with respect thereto or (ii) where the failure to pay would not have a material adverse effect on the Issuer and its Restricted Subsidiaries taken as a whole. SECTION 3.11 Corporate Existence. Subject to Article VIII hereof, the Issuer will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence and the corporate existence of each Restricted 31 Subsidiary in accordance with the respective organizational documents of the Issuer and each such Restricted Subsidiary and the rights (charter and statutory), licenses and franchises of the Issuer and such Restricted Subsidiary; provided, however, that the Issuer shall not be required to preserve any such right, license or franchise, or the corporate existence of any such Restricted Subsidiary (excluding RC Cola and Arby's), if the preservation thereof is no longer desirable in the conduct of the business of the Issuer and its Restricted Subsidiaries taken as a whole and the loss thereof is not adverse in any material respect to the Holders; and provided further that if the corporate existence of any such Restricted Subsidiary is to be terminated and such Restricted Subsidiary has more than a de minimis amount of assets, the Board of Directors of the Issuer shall be required to make a determination that the preservation of the corporate existence of such Restricted Subsidiary is no longer desirable or in the best interests of the Issuer. SECTION 3.12 Compliance with Statutes, etc. The Issuer will, and will cause each of its Restricted Subsidiaries to, comply with all applicable statutes, regulations and orders of, and all applicable restrictions imposed by, all governmental bodies, federal or state, in respect of the conduct of its business and the ownership of its property (including applicable statutes, regulations, orders and restrictions relating to environmental standards and controls), except such noncompliance as would not be likely to, in the aggregate, have a material adverse effect on the Issuer and its Restricted Subsidiaries taken as a whole. SECTION 3.13 Limitation on Indebtedness. The Issuer will not, and will not permit any of its Restricted subsidiaries to, create, incur, assume or suffer to exist any Indebtedness, except: (a) Indebtedness evidenced by the Senior Notes or otherwise arising under this Indenture or the Collateral Documents; (b) Indebtedness of the Issuer and its Restricted Subsidiaries outstanding on the Issue Date and identified on Schedule 3.13 hereto; (c) Indebtedness incurred by the Issuer or any Restricted Subsidiary for the purpose of financing all or any part of the purchase price of assets acquired in the ordinary course of business ("Purchase Money Indebtedness") and/or in respect of Capital Lease Obligations not in excess of $15,000,000 in any fiscal year and not prohibited under Section 3.15; (d) Indebtedness of the Issuer to any Wholly Owned Restricted Subsidiary or of any Wholly Owned Restricted Subsidiary to any other Wholly owned Restricted Subsidiary or to the Issuer; (e) obligations under standby letters of credit incurred by the Issuer or any Restricted Subsidiary in the ordinary course of business; provided that the aggregate undrawn stated amount of all such letters of credit, when added to the aggregate amount of all unreimbursed drawings in respect thereof, shall at no time exceed $5,000,000; 32 (f) Indebtedness incurred by the Issuer or any Guarantor in connection with a purchase of the Senior Notes pursuant to a Change of Control offer; provided that the aggregate principal amount of such Indebtedness does not exceed the aggregate unpaid principal amount of the Senior Notes thereby purchased (plus the amount of reasonable fees and expenses, including underwriting discounts and commissions, incurred in connection with obtaining such Indebtedness), and such Indebtedness requires no repayment of the principal thereof prior to the final maturity of the Senior Notes; (g) Indebtedness in respect of interest rate hedging arrangements with respect to up to one half of the original principal amount of the Senior Notes, provided that any such hedging arrangements are entered into with counterparties whose senior unsecured debt securities are rated investment grade by at least two nationally recognized statistical rating organizations; (h) Indebtedness incurred by the Issuer or any Restricted Subsidiary in exchange for or to repay, prepay, repurchase, redeem, defease, retire or refinance ("refinance") any Indebtedness of the Issuer or such Restricted Subsidiary, as the case may be, permitted by clauses (a) through (g) above or any successor or replacement Indebtedness, provided that (i) the principal amount of the Indebtedness so incurred shall not exceed the unpaid principal amount of the Indebtedness so exchanged or refinanced and (ii) the Indebtedness so incurred (A) does not mature prior to the Stated Maturity of the Indebtedness so exchanged or refinanced, (B) has an Average Life equal to or greater than the remaining Average Life of the Indebtedness so exchanged or refinanced and (C) does not have an effective carrying cost greater than the carrying cost of the Indebtedness so exchanged or refinanced; (i) additional Indebtedness of the issuer in an aggregate principal amount not to exceed $25,000,000 at any time outstanding; and (j) additional Indebtedness of the issuer or any Guarantor so long as (i) after giving effect to the incurrence of such Indebtedness and the application of the proceeds therefrom, the Pro Forma Interest Coverage Ratio for the most recent four-quarter period in respect of which financial statements are available exceeds (A) 2.25 to 1 (for Indebtedness incurred through August 1, 1994), (B) 2.5 to 1 (for Indebtedness incurred on or after August 2, 1994 and prior to August 1, 1995) or (C) 2.75 to 1 (for Indebtedness incurred on or after August 2, 1995) and (ii) such additional Indebtedness requires no repayment of the principal thereof prior to the final maturity of the Senior Notes. SECTION 3.14 Limitation on Liens. The Issuer will not, and will not permit any of its Restricted Subsidiaries to, create, incur, assume or suffer to exist any Lien upon any of its property, assets, income or profits, whether owned on the Issue Date or thereafter acquired, except: (a) Liens for taxes, assessments or other governmental charges not yet due or which are being contested in good faith and by appropriate proceedings if adequate reserves with respect thereto are maintained on the books of the Issuer or 33 such Restricted Subsidiary, as the case may be, in accordance with generally accepted accounting principles; (b) carriers', warehousemen's, mechanics', landlords', material- men's, repairmen's or other like Liens arising by operation of law in the ordinary course of business if (i) the underlying obligations are not overdue for a period of more than 60 days, (ii) such Liens are being contested in good faith and by appropriate proceedings and adequate reserves with respect thereto are maintained on the books of the Issuer or such Restricted Subsidiary, as the case may be, in accordance with generally accepted accounting principles or (iii) the underlying obligations do not exceed $1,000,000 in the aggregate at any time for the issuer and its Restricted Subsidiaries; (c) pledges or deposits in connection with workmen's compensation, unemployment insurance and other social security legislation; (d) deposits to secure the performance of bids, trade contracts (other than for borrowed money), leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business; (e) easements, rights-of-way, zoning and similar restrictions and other similar encumbrances or title defects incurred in the ordinary course of business which, in the aggregate, are not substantial in amount, and which do not in any case materially detract from the value of the property subject thereto or interfere with the ordinary conduct of the business of the Issuer or any of its Restricted Subsidiaries; (f) Liens arising by virtue of Capital Lease Obligations permitted to be incurred under Section 3.13; (g) Liens arising by operation of law in connection with judgments, except to the extent an Event of Default exists with respect thereto; (h) Liens on assets securing only Indebtedness incurred concurrently with, or within 90 days after, the acquisition or construction thereof to finance the cost of such acquisition or construction, provided that such Indebtedness is permitted to be incurred under Section 3.13; (i) Liens on assets existing at the time of acquisition thereof by the Issuer or a Restricted Subsidiary and Liens on assets of a Person existing at the time such Person becomes a Restricted Subsidiary, in either case not created in contemplation of such event, provided that any Indebtedness secured thereby is permitted under Section 3.13; (j) Liens created by the Collateral Documents; and (k) Liens existing on the Issue Date and identified on Schedule 3.14 hereto (i) securing Indebtedness which is to remain outstanding after the Issue Date or 34 (ii) securing the Step-Up Notes, which Liens shall cease to be of record not later than thirty days after the Issue Date. SECTION 3.15 Limitation on Sales of Assets and Restricted Subsidiary Stock. (a) The Issuer will not, and will not permit any of its Restricted Subsidiaries to, consummate any Asset Sale unless (i) the Issuer or such Restricted Subsidiary, as the case may be, receives consideration at the time of such Asset Sale at least equal to the fair market value, as determined in good faith by the Board of Directors of the Issuer (including as to the value of all non-cash consideration), of the shares and/or assets subject to such Asset Sale and (ii) at least 80% of the considera tion therefor received by the Issuer or such Restricted Subsidiary is in the form of cash. For the purposes of this provision, any liabilities (as shown on the Issuer's or such Restricted Subsidiary's balance sheet or notes thereto) of the Issuer or any Restricted Subsidiary that are assumed by the transferee in any such Asset Sale (or that otherwise cease to be obligations of the Issuer and any Restricted Subsidiary after such Asset Sale), and any notes, obligations or other marketable securities received by the Issuer or any Restricted Subsidiary from such transferee that are promptly converted by the Issuer or such Restricted Subsidiary into cash, will be deemed to be cash. (b) Within 180 days after the receipt by the Issuer or any of its Restricted Subsidiaries of any Net Proceeds, the Issuer or such Restricted Subsidiary, as the case may be, may (i) reinvest such Net Proceeds in Core Business assets or (ii) designate such Net Proceeds as having been used to finance the acquisition cost of Core Business assets acquired within 180 days prior to the Asset sale giving rise to such Net Proceeds (but only if, at the time of the acquisition of such Core Business assets, the Issuer or a Restricted Subsidiary was bound by a written agreement to consulate such Asset Sale). Any Net Proceeds that are not so used or designated as having been used within the specified time period provided in the preceding sentence shall constitute "Excess Proceeds". At such time as the aggregate amount of Excess Proceeds received by the Issuer and its Restricted Subsidiaries and not previously applied to a purchase offer for Senior Notes aggregate $5,000,000 or more (an "Asset Sale Trigger"), the issuer shall make an offer to purchase any outstanding Senior Notes (up to the aggregate amount of such Net Proceeds) (a "Net Proceeds offer"), on a date not less than 30 nor more than 45 days following the date of such Asset Sale Trigger, at 100% of the principal amount thereof, together with accrued interest to the date of repurchase, in accordance with Section 13.1 of this Indenture. SECTION 3.16 Limitation on Investments, Loans and Advances. The Issuer will not, and will not permit any of its Restricted Subsidiaries to, make any Investment in any other Person after the Issue Date, except: (a) any Restricted Subsidiary of the Issuer may make advances or loans to the Issuer; 35 (b) the Issuer and each of its Restricted Subsidiaries may acquire and hold accounts receivable owing to it, if credited or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms; provided that nothing in this clause (b) shall prevent the Issuer or any Restricted Subsidiary from providing such concessionary trade terms as management deems reasonable in the circumstances; (c) the Issuer and each of its Restricted Subsidiaries may make payroll advances in the ordinary course of business; (d) the Issuer may make Investments in Guarantors, and Guarantors may make Investments in other Guarantors; (e) the issuer and its Restricted Subsidiaries may make Temporary Cash Investments; and (f) the Issuer and its Restricted Subsidiaries may make Investments in Unrestricted Subsidiaries, Core Business assets or Bottling Business assets (or any entity which is primarily engaged in a Core Business or the Bottling Business) to the extent permitted by Section 3.17. SECTION 3.17 Limitation on Restricted Payments. The Issuer will not, and will not permit any of its Restricted Subsidiaries to, make any Restricted Payment unless at the time of and after giving effect to the proposed Restricted Payment on a pro forma basis (the value of any such payment, if other than cash, to be determined by a majority of the Independent Directors of the Issuer, whose determination shall be conclusive and evidenced by a board resolution), (i) no Default or Event of Default shall have occurred and be continuing, (ii) there shall exist Pro Forma Restricted Payment Capacity and (iii) the aggregate amount of Restricted Payments declared or made after the Issue Date shall not exceed the sun of (A) 50% of Consolidated Net Income accrued during the period (treated as one accounting period) beginning on July 1, 1993 and ending on the last day of the most recent fiscal quarter ending prior to the date of such proposed Restricted Payment (or if such Consolidated Net Income shall be a deficit, less loot of such deficit) plus (B) the aggregate net cash proceeds received by the Issuer after the Issue Date from the issuance or sale (other than to a Subsidiary) of its Qualified Capital Stock (or of any convertible debt securities of the Issuer that have been converted into shares of its Qualified Capital Stock) or from contributions made by holders of its outstanding Capital Stock to its common equity capital accounts (to the extent such net cash proceeds are not applied in the manner described in clause (a) of the next paragraph) plus (C) $1,000,000. The foregoing provisions do not prohibit: (a) the defeasance, redemption, purchase or other acquisition of Capital Stock or Subordinated Indebtedness of the Issuer with the net cash proceeds received by the Issuer from the substantially concurrent sale of Qualified Capital Stock of the Issuer or in exchange for Qualified Capital Stock of the Issuer; (b) any defeasance, redemption, purchase or other acquisition of Subordinated Indebtedness of the Issuer made by exchange for, or 36 out the proceeds of the substantially concurrent sale of, Indebtedness of the Issuer, so long as such Indebtedness is permitted to be incurred pursuant to Section 3.13(h); (c) the payment of any dividend on or redemption of Capital Stock of the Issuer within 60 days after the date of its declaration or authorization, if such dividend or redemption could have been made on the date of its declaration or authorization in compliance with the foregoing provisions; (d) Investments made in Unrestricted Subsidiaries, Core Business assets or Bottling Business assets (or any entity which is primarily engaged in a Core Business or the Bottling Business), and payments made to purchase Existing Subordinated Debentures prior to the scheduled maturity thereof (other than scheduled sinking fund payments) ("Repurchase Payments"), so long as, after giving effect to any such Investment or Repurchase Payment, the aggregate amount of Investments and Repurchase Payments so made after the Reorganization Date shall not exceed $25,000,000 in the aggregate; and (e) additional Investments made in Unrestricted Subsidiaries after the Issue Date with the cash proceeds of any capital contribution received by the Issuer after the Issue Date, so long as such proceeds are so invested within 30 days after the Issuer's receipt thereof. Restricted Payments permitted to be made as described in this paragraph will be excluded in calculating the amount of Restricted Payments which shall be permitted thereafter, except such Restricted Payments made as described in clause (d) or (e), which will be included in calculating the amount of Restricted Payments which shall be permitted thereafter. Notwithstanding the immediately preceding sentence, if the Issuer shall have made any Repurchase Payments as permitted by clause (d) above, then the amount of Restricted Payments which shall be permitted to be made after the date on which the aggregate principal amount of Existing Subordinated Debentures shall have been paid in full or otherwise retired shall be increased by an amount equal to the lesser of (x) the aggregate amount of Repurchase Payments theretofore made or (y) the aggregate principal amount of Existing Subordinated Debentures purchased in connection with the making of such Repurchase Payments. SECTION 3.18 Limitation on Transactions with Affiliates. The Issuer will not, and will not permit any of its Restricted Subsidiaries to, enter into or suffer to exist any transaction or arrangement with any Affiliate (other than the Issuer and its Restricted Subsidiaries), including, without limitation, any purchase, sale, lease or exchange of property or the rendering of any service or any Investment, except for (i) transactions or arrangements entered into in good faith which are upon fair and reasonable terms no less favorable to the Issuer or such Restricted Subsidiary than it would obtain in a comparable arm's length transaction with a Person not an Affiliate (such determination, (A) in the case of any transaction or arrangement (or series of related transactions or arrangements) involving amounts exceeding $1,000,000, to be evidenced by a board resolution of the Board of Directors of the Issuer and, prior to a Spin-Off or an Initial Public offering DWG, such resolutions to have been approved by a majority of the Independent Directors of the Issuer and, if applicable, DWG and delivered to the Trustee), and (B) in the case of any transaction or arrangement (or series of related transactions or arrangements) involving amounts exceeding $10,000,000, to be further evidenced by an opinion letter, delivered to the Trustee, of a nationally recognized investment banking firm stating that such transaction or arrangement (or series of related transactions or arrangements) is fair to the Issuer or such Restricted Subsidiary from a financial point of view), (ii) the Tax 37 Sharing Agreement, (iii) the Management Services Agreement, (iv) the transactions and arrangements existing on the Issue Date and identified on Schedule 3.18 hereto (in each case as in effect on the Issue Date) and (v) amendments to the agreements described in (ii), (iii) and (iv) above, provided that any such material amendments meet the standards described in (i) above. SECTION 3.19 Limitation on Restrictions on Distributions from Restricted Subsidiaries. The Issuer will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to exist or become effective, or enter into any agreement with any Person that would cause to become effective, any consensual encumbrance or restriction of any kind on the ability of any Restricted Subsidiary to (i) pay dividends, in cash or otherwise, or make any other distributions on or in respect of its Capital Stock, (ii) pay any Indebtedness or other obligation owed to the Issuer or any Wholly Owned Restricted Subsidiary, (iii) make any loans or advances to the Issuer or any Wholly Owned Restricted Subsidiary or (iv) transfer any of its property or assets to the Issuer or any Wholly Owned Restricted Subsidiary, except for encumbrances or restrictions in effect on the Issue Date and identified on Schedule 3.19 hereto. SECTION 3.20 Limitation on Certain Capital Stock. The Issuer will not issue or at any time have outstanding any Capital Stock other than common stock and Qualified Capital Stock. No Restricted Subsidiary will be permitted to issue or at any time have outstanding any shares of Capital Stock other than common stock. SECTION 3.21 Restricted and Unrestricted Subsidiaries. (a) The Issuer may designate a newly formed or newly acquired Subsidiary of the Issuer or of any of its Restricted Subsidiaries (other than Subsidiaries of a Guarantor) as an Unrestricted Subsidiary if at the time of such designation (and after giving effect thereto): (i) no Default or Event of Default has occurred and is continuing and (ii) such designation is effective immediately upon such person becoming a Subsidiary of either the Issuer or any of its Restricted Subsidiaries; provided, however, that the restriction referred to in clause (i) above shall not apply to the designation of any such Subsidiary as an Unrestricted Subsidiary in connection with an Investment in such Subsidiary that is permitted by clause (d) or (e) of the second paragraph of Sec tion 3.17. Unless so designated as an Unrestricted Subsidiary, any person that becomes a Subsidiary of the issuer or any of its Restricted Subsidiaries shall be classified as a Restricted Subsidiary thereof. No Restricted Subsidiary may be redesignated as an Unrestricted Subsidiary. Subject to the next succeeding paragraph, an Unrestricted Subsidiary may be redesignated as a Restricted Subsidiary. The designation of an Unrestricted Subsidiary or the removal of such designation in compliance with the next succeeding paragraph shall be made by the Board of Directors of the Issuer pursuant to a certified board resolution delivered to the Trustee and shall be effective as of the date specified in the applicable certified board resolution, which shall not be prior to the date such certified board resolution is delivered to the Trustee. (b) The Issuer will not, and will not permit any of its Restricted Subsidiaries to, take any action or enter into any transaction or series of transactions 38 that would result in an Unrestricted Subsidiary becoming a Restricted Subsidiary unless, after giving effect to such action, transaction or series of transactions, on a pro forma basis, (i) the Issuer could incur at least $1.00 of additional Indebtedness pursuant to Section 3.13(j) and (ii) no Default or Event of Default would occur or be continuing. SECTION 3.22 Additional Guarantors. (a) The Issuer may from time to time after the Issue Date cause one or more Restricted Subsidiaries to become a Guarantor hereunder by causing such Restricted Subsidiary to execute such instruments and to take such other actions as the Trustee may require in order to evidence the Guarantee by such Restricted Subsidiary under Article X of the Indenture, the agreement by such Restricted Subsidiary to be bound by the other terms of this Indenture and the agreement by such Restricted Subsidiary to secure its obligations in respect of the Senior Notes by granting to the Collateral Trustee a security interest in collateral of the type pledged by the other Guarantors pursuant to the Collateral Documents. (b) In the event that the Capital Stock of any Restricted Subsidiary which theretofore became a Guarantor pursuant to Section 3.22(a) is thereafter disposed of in its entirety by the Issuer and its Restricted Subsidiaries, such Guarantor shall be released and discharged from any obligation under this Indenture and the Collateral Documents; provided that no such disposition shall be made unless, immediately after such disposition and after giving effect thereto, (i) no Event of Default shall have occurred and be continuing and (ii) no Change of Control shall result therefrom. SECTION 3.23 Regarding the Existing Subordinated Debentures. (a) Notwithstanding anything to the contrary contained in section 3.15, the Issuer will not, and will not permit any Restricted Subsidiary to, consummate any sale or other disposition of assets if, after giving effect thereto, (i) the Issuer would be required by the provisions of the indenture pursuant to which the Existing Subordinated Debentures were issued to make an offer to purchase Existing Subordinated Debentures and (ii) the sum of the aggregate purchase price of the Existing Subordinated Debentures to be purchased pursuant to such offer (without regard to whether such purchase offer is accepted by any holders of such Existing Subordinated Debentures) plus the aggregate amount of Restricted Payments theretofore made by the Issuer as permitted by clause (d) of the second paragraph of Section 3.17 would exceed an amount equal to $25,000,000. (b) The Issuer covenants and agrees that (i) it will cause the aggregate principal amount of Existing subordinated Debentures held by it on the Issue Date to be presented for cancellation and retired and (ii) it will cause any portion of the Existing Subordinated Debentures so presented for cancellation and retirement to be applied as a credit to future scheduled amortizations of the Existing Subordinated Debentures in inverse order of maturity. The Issuer further covenants and agrees that it will cause any of the Existing Subordinated Debentures purchased with Repurchase Payments to be promptly presented for cancellation and retired. 39 ARTICLE IV REMEDIES OF THE TRUSTEE AND SENIOR NOTEHOLDERS ON EVENT OF DEFAULT SECTION 4.1 Event of Default Defined; Acceleration of Maturity; Waiver of Default. In case one or more of the following Events of Default (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body) shall have occurred and be continuing, that is to say: (a) default in the payment of all or any part of the principal of or premium on any of the Senior Notes as and when the same shall become due and payable, whether at stated maturity, upon any redemption, pursuant to a Net Proceeds offer or a Change of Control offer, by declaration or otherwise; or (b) default in the payment of any installment of interest upon any of the Senior Notes, or any other amount payable under this Indenture, as and when the same shall become due and payable, and continuance of such default for a period of 10 days; or (c) the Issuer or any Guarantor shall fail to observe or perform any of its covenants or agreements contained in the Senior Notes or this Indenture (other than those covered by clause (a) or (b) above) for a period of 20 days after the date on which written notice specifying such failure, stating that such notice is a "Notice of Default" hereunder and demanding that the Issuer or such Guarantor, as the case may be, remedy the same, shall have been given by registered or certified mail, return receipt requested, to the Issuer or such Guarantor, as the case may be, by the Trustee, or to the Issuer or such Guarantor, as the case may be, and the Trustee by the Holders of at least 25% in aggregate principal amount of the Senior Notes at the time outstanding; or (d) one or more judgments or decrees shall be entered against the Issuer or any of its Restricted Subsidiaries requiring the payment of an aggregate amount (excluding any portion thereof covered by insurance) of $2,000,000 or more and such judgments or decrees shall not have been paid, vacated, discharged, stayed or bonded within 60 days after the entry of such judgment or decrees; or (e) the Issuer or any Restricted Subsidiary shall commence a voluntary case concerning itself under Title 11 of the United States Code entitled "Bankruptcy" as now or hereafter in effect, or any successor thereto (the "Bankruptcy Code"); or an involuntary case shall be commenced against the Issuer or any Restricted Subsidiary, and the petition is not controverted within 10 days, or is not dismissed within 60 days, after commencement of the case; or a custodian (as defined in the Bankruptcy Code) is appointed for, or takes charge of, all or substantially all of the property of the Issuer or any Restricted Subsidiary, or the Issuer or any Restricted Subsidiary commences any other proceeding under any reorganization, arrangement, 40 adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction whether now or hereafter in effect relating to the Issuer or any Restricted Subsidiary, or there is commenced against the Issuer or any Restricted Subsidiary any such proceeding which remains undismissed for a period of 60 days, or the Issuer or any Restricted Subsidiary is adjudicated insolvent or bankrupt; or any order of relief or other order approving any such case or proceeding is entered; or the Issuer or any Restricted Subsidiary suffers any appointment of any custodian or the like for it or any substantial part of its property to continue undischarged or unstayed for a period of 60 days; or the Issuer or any Restricted Subsidiary makes a general assignment for the benefit of creditors; or any corporate action is taken by the Issuer or any Restricted Subsidiary for the purpose of effecting any of the foregoing; or (f) any of the Collateral Documents shall cease in any material respect to be in full force and effect or shall cease in any material respect to give the Collateral Trustee the Liens, rights, powers and privileges purported to be created thereby (including, without limitation, a perfected security interest in, and Lien on, all of the Collateral) in favor of the Collateral Trustee for the benefit of the Secured Parties (as defined in the Collateral Trust Agreement), superior to and prior to the rights of all third Persons and subject to no other Liens (in each case, except as permitted by such Collateral Documents and by Section 3.14 of this Indenture and other than as a result of any action on the part of the Collateral Trustee); or (g) the Issuer, any Guarantor or CFC Holdings shall default in the due performance or observance of any term, covenant or agreement on its part to be performed or observed pursuant to any of the Collateral Documents and such default shall continue for a period of 20 days after the date on which written notice thereof shall have been given as provided in clause (c) above; or (h) the Issuer or any of its Restricted Subsidiaries shall fail to pay when due (after giving effect to any applicable grace period) any payment of principal of or premium or interest on any Indebtedness (other than under this Indenture or the Senior Notes) with an aggregate principal amount exceeding $5,000,000, or any other default shall occur with respect to any Indebtedness (other than under this Indenture or the Senior Notes) with an aggregate principal amount exceeding $5,000,000, the effect of which is to cause, or to permit the holders of such Indebtedness to cause, such Indebtedness to become due prior to its stated maturity; or (i) any provision of Article X shall cease to be in full force and effect with respect to any Guarantor, or any Guarantor or any Person acting by or on behalf of such Guarantor shall deny or disaffirm such Guarantor's obligations thereunder; or (j) any member of the ERISA Group shall fail to pay when due an amount or amounts aggregating in excess of $1,000,000 which it shall have become liable to pay under Title IV of ERISA; or notice of intent to terminate a Material Plan shall be filed under Title IV of ERISA by any member of the ERISA Group, any plan administrator or any combination of the foregoing; or the PBGC shall institute proceedings under Title IV of ERISA to terminate, to impose liability (other than for 41 premiums under Section 4007 of ERISA) in respect of, or to cause a trustee to be appointed to administer any Material Plan; or a condition shall exist by reason of which the PBGC would be entitled to obtain a decree adjudicating that any Material Plan must be terminated; or there shall occur a complete or partial withdrawal from, or a default, within the meaning of Section 4219(c)(5) of ERISA, with respect to, one or more Multiemployer Plans which causes one or more members of the ERISA Group to incur a current payment obligation in excess of $2,500,000; then, and in each and every such case, unless the principal of all of the Senior Notes shall have already become due and payable, the Trustee may, and upon notice in writing from Holders of a majority in aggregate principal amount of Senior Notes outstanding shall, by notice in writing to the Issuer, declare the entire principal of all the Senior Notes and the interest accrued thereon to be due and payable immediately, and upon any such declaration the same shall become immediately due and payable; provided that, if an Event of Default specified in clause (e) above shall occur with respect to the Issuer or any Guarantor, the Senior Notes shall become due and payable automatically without the giving of any such notice or any other action by any Person. Upon the occurrence of any such event, the Trustee shall, if the Collateral Trustee and the Trustee are not the same Person, deliver a Notice of Acceleration to the Collateral Trustee. Subject to the provisions of Sections 5.1 and 5.2, the Trustee shall not be charged with knowledge of any Event of Default under the Indenture unless written notice thereof shall have been given to the Trustee by the Issuer or by the Holders of not less than a majority in aggregate principal amount of the Senior Notes at the time outstanding. Notwithstanding the foregoing, if, at any time after the principal of the Senior Notes shall have been so declared due and payable, and before any judgment or decree for the payment of the moneys due shall have been obtained or entered as hereinafter provided, (i) the Issuer shall pay or shall deposit with the Trustee a sum sufficient to pay all matured installments of interest upon all the Senior Notes and the principal of and any premium on any and all Senior Notes which shall have become due otherwise than by acceleration (with interest upon such principal, premium and, to the extent that payment of such interest is enforceable under applicable law, on overdue installments of interest, at the rate of interest specified in the Senior Notes to the date of such payment or deposit) and such amount as shall be sufficient to cover reasonable compensation to the Trustee and each predecessor Trustee, their respective agents, attorneys and counsel, and all other expenses and liabilities incurred, and all advances made, by the Trustee and each predecessor Trustee except as a result of negligence or bad faith of the Trustee or any predecessor Trustee and (ii) if any and all Events of Default under this Indenture, other than the non-payment of the principal of Senior Notes which shall have become due by acceleration, shall have been cured, waived or otherwise remedied as provided herein, then and in every such case the Holders of a majority in aggregate principal amount of Senior Notes outstanding, by written notice to the Issuer and to the Trustee, may waive all defaults and rescind and annul such declaration and its consequences, but no such waiver or rescission and annulment shall extend to or shall affect any subsequent default or shall impair any right consequent thereon. If such declaration and its consequences are rescinded and annulled as provided in the immediately preceding sentence and the Trustee had given a Notice of Acceleration to the Collateral Trustee, the Trustee shall promptly cancel the Notice of Acceleration previously delivered to 42 the Collateral Trustee by delivering a written notice of cancellation to the Collateral Trustee (A) before the Collateral Trustee takes any action to exercise any remedy with respect to the Collateral or (B) thereafter, if the Collateral Trustee believes that all actions it has taken to exercise any remedy or remedies with respect to the Collateral can be reversed without undue difficulty. SECTION 4.2 Collection of Indebtedness by Trustee; Trustee May Prove Debt. The Issuer and each of the Guarantors covenant that (i) in case default shall be made in the payment of any installment of interest on any of the Senior Notes when such interest shall have become due and payable, and such default shall have continued for a period of 10 days, or (ii) in case default shall be made in the payment of all or any part of the principal of or premium on any of the Senior Notes when the same shall have become due and payable, whether at maturity or upon any redemption or by declaration or otherwise, then upon demand of the Trustee, the Issuer shall pay to the Trustee for the benefit of the Holders of the Senior Notes the whole amount that then shall have become due and payable on all such Senior Notes for principal, premium or interest, as the case may be (with interest to the date of such payment upon the overdue principal and, to the extent that payment of such interest is enforceable under applicable law, on overdue installments of interest at the rate of interest specified in the Senior Notes); and in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including reasonable compensation to the Trustee and each predecessor Trustee, their respective agents, attorneys and counsel, and any expenses and liabilities incurred, and all advances made, by the Trustee and each predecessor Trustee except as a result of its negligence or bad faith. Until such demand is made by the Trustee, the Issuer may pay the principal of and premium and interest on the Senior Notes to the registered Holders, whether or not the Senior Notes be overdue. In the event the Issuer shall fail forthwith to pay such amounts upon such demand, the Trustee, in its own name and as trustee of an express trust, shall be entitled and empowered to institute any action or proceedings at law or in equity for the collection of the sums so due and unpaid, and may prosecute any such action or proceedings to judgment or final decree, and may enforce any such judgment or final decree against the Issuer, any Guarantor or any other obligor upon the Senior Notes and collect in the manner provided by law out of the property of the Issuer, any Guarantor or any other obligor upon the Senior Notes, wherever situated, the moneys adjudged or decreed to be payable. In the event there shall be pending proceedings relative to the Issuer, any Guarantor or any other obligor upon the Senior Note's under Title 11 of the United States Code or any other applicable Federal or state bankruptcy, insolvency or similar law, or in the event a receiver, assignee or trustee in bankruptcy or reorganization, liquidator, sequestrator or similar official shall have been appointed for or taken possession of the Issuer, any Guarantor or any such other obligor or their respective properties, or in case of any other comparable judicial proceedings relative to the Issuer, any Guarantor or any other such obligor, or to the creditors or property 43 of the Issuer, any Guarantor or any other such obligor, the Trustee, irrespective of whether the principal of the Senior Notes shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand pursuant to the provisions of this Section, shall be entitled and empowered, by intervention in such proceedings or otherwise: (a) to file and prove a claim or claims for the whole amount of principal, premium and interest owing and unpaid in respect of the Senior Notes, and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for reasonable compensation to the Trustee and each predecessor Trustee, and their respective agents, attorneys and counsel, and for reimbursement of all expenses and liabilities incurred, and all advances made, by the Trustee and each predecessor Trustee, except as a result of negligence or bad faith) and of the Senior Noteholders allowed in any judicial proceedings relative to the Issuer, any Guarantor or any other obligor upon the Senior Notes, or to the creditors or property of the Issuer, any Guarantor or any such other obligor, (b) unless prohibited by applicable law and regulations, to vote on behalf of the Holders of the Senior Notes in any election of a trustee or a standby trustee in arrangement, reorganization, liquidation or other bankruptcy or insolvency proceedings or of a person performing similar functions in comparable proceedings, and (c) to collect and receive any moneys or other property payable or deliverable on any such claims, and to distribute all amounts received with respect to the claims of the Senior Noteholders and of the Trustee on their behalf; and any trustee, receiver, or liquidator, custodian or other similar official is hereby authorized by each of the Senior Noteholders to make payments to the Trustee, and, in the event that the Trustee shall consent to the making of payments directly to the Senior Noteholders, to pay to the Trustee such amounts as shall be sufficient to cover reasonable compensation to the Trustee, each predecessor Trustee and their respective agents, attorneys and counsel, and all other expenses and liabilities incurred, and all advances made, by the Trustee and each predecessor Trustee except as a result of negligence or bad faith. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or vote for or accept or adopt on behalf of any Senior Note holder any plan of reorganization, arrangement, adjustment or composition affecting the Senior Notes or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Senior Noteholder in any such proceeding except, as aforesaid, to vote for the election of a trustee in bankruptcy or similar person. All rights of action and of asserting claims under this Indenture, or under any of the Senior Notes, may be enforced by the Trustee without the possession of any of the Senior Notes or the production thereof at any trial or other proceedings relative thereto, and any such action or proceedings instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment, 44 subject to the payment of the allowed expenses, disbursements and compensation of the Trustee, each predecessor Trustee and their respective agents and attorneys, shall be for the ratable benefit of the Holders of the Senior Notes. In any proceedings brought by the Trustee (and also any proceedings involving the interpretation of any provision of this Indenture to which the Trustee shall be a party) the Trustee shall be held to represent all the Holders of the Senior Notes, and it shall not be necessary to make any Holders of the Senior Notes parties to any such proceedings. SECTION 4.3 Application of Proceeds. Any moneys collected by the Trustee pursuant to this Article shall be applied in the following order at the date or dates fixed by the Trustee and, in case of the distribution of such moneys on account of principal, premium or interest, upon presentation of the several Senior Notes and stamping (or otherwise noting) thereon the payment, or issuing Senior Notes in reduced principal amounts in exchange for the presented Senior Notes if only partially paid, or upon surrender thereof if fully paid: First: To the payment of all amounts due to the Collateral Trustee and each predecessor Collateral Trustee, if any, under the Collateral Trust Agreement; Second: To the payment of all amounts due to the Trustee and each predecessor Trustee, if any, under Section 5.6; Third: In case the principal of or any premium on the Senior Notes shall not have become and be then due and payable, to the payment of interest in default in the order of the maturity of the installments of such interest, with interest (to the extent that such interest has been collected by the Trustee) upon the overdue installments of interest at the rate of interest specified in the Senior Notes, such payments to be made ratably to the persons entitled thereto, without discrimination or preference; Fourth: In case the principal of or any premium on the Senior Notes shall have become and shall be then due and payable, to the payment of the whole amount then owing and unpaid upon all the Senior Notes for principal, premium and interest, with interest upon the overdue principal, any overdue premium and (to the extent that such interest has been collected by the Trustee) upon overdue installments of interest at the rate of interest specified in the Senior Notes; and in case such moneys shall be insufficient to pay in full the whole amount so due and unpaid upon the Senior Notes, then to the payment of such principal, premium and interest, without preference of any kind, ratably to the aggregate of such principal, premium and accrued and unpaid interest, respectively; and Fifth: To the payment of the remainder, if any, to the Issuer or any other person lawfully entitled thereto. 45 SECTION 4.4 Suits for Enforcement. In case an Event of Default has occurred, has not been waived and is continuing, the Trustee may in its discretion proceed to protect and enforce the rights vested in it by this Indenture by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any of such rights, either at law or in equity or in bankruptcy or otherwise, whether for the specific enforcement of any covenant or agreement contained in this Indenture or in aid of the exercise of any power granted in this Indenture or to enforce any other legal or equitable right vested in the Trustee by this Indenture or by law. SECTION 4.5 Restoration of Rights on Abandonment of Proceedings. In case the Trustee shall have proceeded to enforce any right under this Indenture and such proceedings shall have been discontinued or abandoned for any reason, or shall have been determined adversely to the Trustee, then and in every such case the Issuer, each of the Guarantors and the Trustee shall be restored respectively to their former positions and rights hereunder, and all rights, remedies and powers of the Issuer, each of the Guarantors, the Trustee and the Senior Noteholders shall continue as though no such proceedings had been taken. SECTION 4.6 Limitations on Suits by Senior Noteholders. No Holder of any Senior Note shall have any right by virtue or by availing of any provision of this Indenture to institute any action or proceeding at law or in equity or in bankruptcy or otherwise upon or under or with respect to this Indenture, or for the appointment of a trustee, receiver, liquidator, custodian or other similar official or for any other remedy hereunder, unless such Holder previously shall have given to the Trustee written notice of default and of the continuance thereof, as hereinbefore provided, and unless also the Holders of not less than 25% in aggregate principal amount of the Senior Notes then outstanding shall have made written request upon the Trustee to institute such action or proceedings in its own name as trustee hereunder and shall have offered to the Trustee such reasonable indemnity as it may require against the costs, expenses and liabilities to be incurred therein or thereby and the Trustee for 60 days after its receipt of such notice, request and offer of indemnity shall have failed to institute any such action or proceedings and no direction inconsistent with such written request shall have been given to the Trustee pursuant to Section 4.8; it being understood and intended, and being expressly covenanted by the taker and Holder of every Senior Note with every other taker and Holder and the Trustee, that no one or more Holders of Senior Notes shall have any right in any manner whatever by virtue or by availing of any provision of this Indenture to affect, disturb or prejudice the rights of any other Holder of Senior Notes, or to obtain or seek to obtain priority over or preference to any other such Holder or to enforce any right under this Indenture, except in the manner herein provided and for the equal, ratable and common benefit of all Holders of Senior Notes. For the protection and enforcement of the provisions of this Section, each and every Senior Noteholder and the Trustee shall be entitled to such relief as can be given either at law or in equity. SECTION 4.7 Powers and Remedies Cumulative; Delay or Omission Not Waiver of Default. Except as provided in Section 2.6, no right or remedy herein conferred upon or reserved to the Trustee or to the Senior Noteholders is intended to 46 be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. No delay or omission of the Trustee or of any Holder of any of the Senior Notes to exercise any right or power accruing upon any Event of Default occurring and continuing as aforesaid shall impair any such right or power or shall be construed to be a waiver of any such Event of Default or an acquiescence therein; and, subject to Section 4.6, every power and remedy given by this Indenture or by law to the Trustee or to the Senior Noteholders may be exercised from time to time, and as often as shall be deemed expedient, by the Trustee or by the Senior Noteholders. SECTION 4.8 Control by Senior Noteholders. The Holders of a majority in aggregate principal amount of the Senior Notes at the time outstanding shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee by this Indenture; provided that such direction shall not be otherwise than in accordance with law and the provisions of this Indenture and provided further that (subject to the provisions of Section 5.1) the Trustee shall have the right to decline to follow any such direction if the Trustee, being advised by counsel, shall determine that the action or proceeding so directed may not lawfully be taken or if the Trustee in good faith by its board of directors, the executive committee, or a trust committee of directors or Responsible Officers of the Trustee shall determine that the action or proceedings so directed would involve the Trustee in personal liability. Nothing in this Indenture shall impair the right of the Trustee in its discretion to take any action deemed proper by the Trustee and which is not inconsistent with such direction by Senior Noteholders. SECTION 4.9 Waiver of Past Defaults. Prior to the declaration of the maturity of the Senior Notes as provided in Section 4.1, the Holders of a majority in aggregate principal amount of the Senior Notes at the time outstanding may on behalf of the Holders of all the Senior Notes waive any past Default or Event of Default hereunder and its consequences, except a default (i) in the payment of principal of or premium or interest on any of the Senior Notes or any other amount payable to Holders of Senior Notes under this Indenture or (ii) in respect of a covenant or provision hereof which cannot be modified or amended without the consent of the Holder of each Senior Note affected. In the case of any such waiver, the Issuer, each of the Guarantors, the Trustee and the Holders of the Senior Notes shall be restored to their former positions and rights hereunder, respectively, but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon. 47 Upon any such waiver, such default shall cease to exist and be deemed to have been cured and not to have occurred, and any Event of Default arising therefrom shall be deemed to have been cured, and not to have occurred for every purpose of this Indenture, but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent thereon. ARTICLE V CONCERNING THE TRUSTEE SECTION 5.1 Duties and Responsibilities of the Trustee; During Default; Prior to Default. The Trustee, prior to the occurrence of an Event of Default and after the curing or waiving of all Events of Default which may have occurred, undertakes to perform such duties and only such duties as are specifically set forth in this Indenture. In case an Event of Default has occurred (which has not been cured or waived), the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act or its own wilful misconduct, except that: (a) prior to the occurrence of an Event of Default and after the curing or waiving of all such Events of Default which may have occurred: (i) the duties and obligations of the Trustee shall be determined solely by the express provisions of this Indenture, and the Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (ii) in the absence of bad faith on the part of the Trustee, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any statements, certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; (b) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer or Responsible Officers of the Trustee, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts; and (c) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of not less than a majority in aggregate principal amount of the Senior Notes 48 at the time outstanding relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture. None of the provisions contained in this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur personal financial liability in the performance of any of its duties or in the exercise of any of its rights or powers, if the Trustee determines that the repayment of such funds or adequate indemnity against such liability is not reasonably assured to it. SECTION 5.2 Certain Rights of the Trustee. Subject to Section 5.1: (a) the Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, Officers' certificate or any other certificate, statement, instrument, opinion, report, notice, request, consent, order, bond, debenture, note, coupon, security or other paper or document reasonably believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) any request, direction, order or demand of the Issuer mentioned herein shall be sufficiently evidenced by an Officers' Certificate (unless other evidence in respect thereof is herein specifically prescribed, and any resolution of the Board of Directors of the Issuer may be evidenced to the Trustee by a copy thereof certified by the secretary or an assistant secretary of the Issuer; (c) the Trustee may consult with counsel and any advice or Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted to be taken by it hereunder so long as such action is taken, suffered or omitted to be taken in good faith and in reliance on such advice or Opinion of Counsel; (d) the Trustee shall be under no obligation to exercise any of the trusts or powers vested in it by this Indenture at the request, order or direction of any of the Senior Noteholders pursuant to the provisions of this Indenture, unless such Senior Noteholders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred therein or thereby; (e) the Trustee shall not be liable for any action taken or omitted to be taken by it in good faith and reasonably believed by it to be authorized or within the discretion, rights or powers conferred upon it by this Indenture; (f) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, appraisal, bond, debenture, note, coupon, security, or other paper or document unless requested in writing so to do by the Holders of not less than a majority in aggregate principal amount of the Senior Notes then outstanding; provided that, if the Trustee determines in its sole and absolute discretion to make any such investigation, then it shall be entitled, upon 49 reasonable prior notice and during normal business hours, to examine the books and records and the premises of the Issuer, personally or by agent or attorney, and the reasonable expenses of every such examination shall be paid by the Issuer or, if paid by the Trustee or any predecessor trustee, shall be reimbursed by the Issuer upon demand; and (g) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys not regularly in its employ and the Trustee shall not be responsible for any misconduct or negligence on the part of any such agent or attorney appointed with due care by it hereunder. SECTION 5.3 Trustee Not Responsible for Recitals, Disposition of Senior Notes or Application of Proceeds Thereof. The recitals contained herein and in the Senior Notes, except the Trustee's certificates of authentication, shall be taken as the statements of the Issuer and the Guarantors and the Trustee assumes no responsibility for the correctness of the same. The Trustee makes no representation as to the validity or sufficiency of this Indenture or of the Senior Notes. The Trustee shall not be accountable for the use or application by the Issuer of any of the Senior Notes or of the proceeds thereof. SECTION 5.4 Trustee and Agents May Hold Senior Notes; Collections, etc. The Trustee or any agent of the Issuer or the Trustee, in its individual or any other capacity, may become the owner or pledgee of Senior Notes with the same rights it would have if it were not the Trustee or such agent and may otherwise deal with the Issuer and receive, collect, hold and retain collections from the Issuer with the same rights it would have if it were not the Trustee or such agent. SECTION 5.5 Moneys Held by Trustee. Subject to the provisions of Section 9.4 hereof, all moneys received by the Trustee shall, until used or applied as herein provided, be held in trust for the purposes for which they were received, but need not be segregated from other funds except to the extent required by mandatory provisions of law. Neither the Trustee nor any agent of the Issuer or the Trustee shall be under any liability for interest on any moneys received by it hereunder. SECTION 5.6 Compensation and Indemnification of Trustee and Its Prior Claim. The Issuer and each of the Guarantors jointly and severally covenant and agree to pay to the Trustee from time to time, and the Trustee shall be entitled to, reasonable compensation (which shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust), and the Issuer and each of the Guarantors jointly and severally covenant and agree to pay or reimburse the Trustee and each predecessor Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by or on behalf of it in accordance with any of the provisions of this Indenture (including the reasonable compensation and the expenses and disbursements of its counsel and of all agents and other persons not regularly in its employ) except any such expense, disbursement or advance as may arise from its negligence or bad faith. 50 Notwithstanding the foregoing, if the payment or reimbursement of any such expense, disbursement or advance is subject to allowance by a court having jurisdiction over a proceeding described in Section 4.2, the Issuer shall not be required to make such payment or reimbursement prior to the allowance thereof and thereafter only to the extent of the allowed amount thereof. The Issuer and each of the Guarantors also jointly and severally covenant, subject to applicable law, to indemnify the Trustee and each predecessor Trustee for, and to hold it harmless against, any loss, liability or expense incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of this Indenture or the trusts hereunder and its duties hereunder, including the costs and expenses of defending itself against or investigating any claim of liability in the premises. The obligations of the issuer and the Guarantors under this Section to compensate and indemnify the Trustee and each predecessor Trustee and to pay or reimburse the Trustee and each predecessor Trustee for expenses, disbursements and advances shall constitute additional indebtedness hereunder and shall survive the satisfaction and discharge of this Indenture. Such additional indebtedness shall be a senior claim to that of the Senior Notes and the Guarantees upon all property and funds held or collected by the Trustee as such, except funds held in trust for the benefit of the Holders of particular Senior Notes, and the Senior Notes and the Guarantees are hereby subordinated to such senior claim. As security for the performance of the obligations of the Issuer and the Guarantors under this Section, the Trustee shall have a lien prior to the Senior Notes and the Guarantees upon all property and funds held or collected by the Trustee as such, except funds held in trust for the payment of principal of (and premium, if any) or interest on the Senior Notes. Any expenses and compensation for any services rendered by the Trustee after the occurrence of an Event of Default specified in Section 4.1(e) shall, to the extent permitted by applicable law, constitute expenses and compensation for service of administration under all applicable Federal or State bankruptcy, insolvency, reorganization or other similar laws. SECTION 5.7 Right of Trustee to Rely on Officers' Certificate, etc. Subject to Sections 5.1 and 5.2, whenever in the administration of the trusts of this Indenture the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering or omitting any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of negligence or bad faith on the part of the Trustee, be deemed to be conclusively proved and established by an Officers' Certificate delivered to the Trustee, and such certificate, in the absence of negligence or bad faith on the part of the Trustee, shall be full warrant to the Trustee for any action taken, suffered or omitted by it under the provisions of this Indenture upon the faith thereof. SECTION 5.8 Persons Eligible for Appointment as Trustee. The Trustee hereunder shall at all times be a corporation having a combined capital and 51 surplus of at least $50,000,000, and which is eligible in accordance with the provisions of Section 310(a) of the Trust Indenture Act of 1939. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of a Federal, State or District of Columbia supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. SECTION 5.9 Resignation and Removal: Appointment of Successor Trustee. (a) The Trustee may at any time resign by giving written notice of resignation to the Issuer and by mailing notice thereof by first-class mail to Holders of Senior Notes at their last addresses as they shall appear on the Senior Note register. Upon receiving such notice of resignation, the Issuer shall promptly appoint a successor trustee by written instrument in duplicate, executed by authority of their respective Boards of Directors, one copy of which instrument shall be delivered to the resigning Trustee and one copy to the successor trustee. If no successor Trustee shall have been so appointed and have accepted appointment within 30 days after the mailing of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor trustee, or any Senior Noteholder who has been a bona fide Holder of a Senior Note or Senior Notes for at least six months may, on be-half of himself and all others similarly situated, petition any such court for the appointment of a successor trustee. Such court may thereupon, after such notice, if any, as it may deem proper and prescribe, appoint a successor trustee. (b) In case at any time any of the following shall occur: (i) the Trustee shall fail to comply with the provisions of Section 310(b) of the Trust Indenture Act of 1939, after written request therefor by the Issuer, any Guarantor or any Senior Noteholder who has been a bona fide Holder of a Senior Note or Senior Notes for at least six months; or (ii) the Trustee shall cease to be eligible in accordance with the provisions of Section 5.8 And shall fail to resign after written request therefor by the Issuer, any Guarantor or any such Senior Noteholder; or (iii) the Trustee shall become incapable of acting, or shall be adjudged a bankrupt or insolvent, or a receiver or liquidator of the Trustee or of its property shall be appointed, or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation; then, in any such case, the Issuer may remove the Trustee and appoint a successor trustee by written instrument, in duplicate, executed by order of its Boards of Directors, one copy of which instrument shall be delivered to the Trustee so removed and one copy to the successor trustee, or, subject to Section 315(e) of the Trust Indenture Act of 1939, any Senior Noteholder who has been a bona fide Holder of a Senior Note or Senior Notes for at least six months may, on behalf of himself and all 52 others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor trustee. Such court may thereupon, after such notice, if any, as it may deem proper and prescribe, remove the Trustee and appoint a successor trustee. (c) The Holders of a majority in aggregate principal amount of the Senior Notes at the time outstanding may at any time remove the Trustee and appoint a successor trustee by delivering to the Trustee so removed, to the successor trustee so appointed and to the Issuer the evidence provided for in Section 6.1 of the action in that regard taken by the Senior Noteholders. (d) Any resignation or removal of the Trustee and any appointment of a successor trustee pursuant to any of the provisions of this Section 5.9 shall become effective upon acceptance of appointment by the successor trustee as provided in Section 5.10. SECTION 5.10 Acceptance of Appointment by Successor Trustee. Any successor trustee appointed as provided in Section 5.9 shall execute and deliver to the Issuer and to its predecessor trustee an instrument accepting such appointment hereunder, and thereupon the resignation or removal of the predecessor trustee shall become effective and such successor trustee, without any further act, deed or conveyance, shall become vested with all rights, powers, duties and obligations of its predecessor hereunder, with like effect as if originally named as trustee herein; but, nevertheless, on the written request of the issuer or of the successor trustee, upon payment of its charges then unpaid, the trustee ceasing to act shall, subject to Section 9.4, pay over to the successor trustee all moneys at the time held by it hereunder and shall execute and deliver an instrument transferring to such successor trustee all such rights, powers, duties and obligations. Upon request of any such successor trustee, the Issuer and each of the Guarantors shall execute any and all instruments in writing for more fully and certainly vesting in and confirming to such successor trustee all such rights and powers. Any trustee ceasing to act shall, nevertheless, retain a prior claim upon all property or funds held or collected by such trustee to secure any amounts then due it pursuant to the provisions of Section 5.6. Upon acceptance of appointment by a successor trustee as provided in this Section 5.10, the Issuer shall mail notice thereof by first-class mail to the Holders of Senior Notes at their last addresses as they shall appear in the Senior Note register. If the acceptance of appointment is substantially contemporaneous with the resignation, then the notice called for by the preceding sentence may be combined with the notice called for by Section 5.9. If the Issuer fails to mail such notice within 10 days after acceptance of appointment by the successor trustee, the successor trustee shall cause such notice to be mailed at the expense of the Issuer. SECTION 5.11 Merger, Conversion. Consolidation or Succession to Business of Trustee. Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to the corporate trust business of the Trustee, shall be the 53 successor of the Trustee hereunder, provided that such corporation shall be eligible under the provisions of Section 5.8, without the execution or filing of any paper or any further act on the part of any of the parties hereto, anything herein to the contrary notwithstanding. In case at the time such successor to the Trustee shall succeed to the trusts created by this Indenture any of the Senior Notes shall have been authenticated but not delivered, any such successor to the Trustee may adopt the certificate of authentication of any predecessor Trustee and deliver such Senior Notes so authenticated; and, in case at that time any of the Senior Notes shall not have been authenticated, any successor to the Trustee may authenticate such Senior Notes either in the name of any predecessor hereunder or in the name of the successor Trustee; and in all such cases such certificate shall have the full force which it is anywhere in the Senior Notes or in this Indenture provided that the certificate of the Trustee shall have; provided, that the right to adopt the certificate of authentication of any predecessor Trustee or to authenticate Senior Notes in the name of any predecessor Trustee shall apply only to its successor or successors by merger, conversion or consolidation. SECTION 5.12 Reports by the Trustee. Any Trustee's report required under Section 313(a) of the Trust Indenture Act of 1939 shall be transmitted on or before the first date for the regular payment of semi-annual interest on the Senior Notes next succeeding May 15 in each year, and shall be dated as of a date convenient to the Trustee no more than 60 nor less than 45 days prior thereto. ARTICLE VI CONCERNING THE SENIOR NOTEHOLDERS SECTION 6.1 Evidence of Action Taken by Senior Noteholders. Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Senior Noteholders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Senior Noteholders in person or by an agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when the last instrument required to effect such action is delivered to the Trustee. Proof of execution of any instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Sections 5.1 and 5.2) conclusive in favor of the Trustee, the Issuer and each of the Guarantors, if made in the manner provided in this Article. SECTION 6.2 Proof of Execution of Instruments and of Holding of Senior Notes; Record Date. Subject to Sections 5.1 and 5.2, the execution of any instrument by a Senior Noteholder or his agent or proxy may be proved in accordance with such reasonable rules and regulations as may be prescribed by the Trustee or in such manner as shall be satisfactory to the Trustee. The holding of Senior Notes shall be proved by the Security Register or by a certificate of the Security Registrar. The 54 Issuer may set in advance a record date for purposes of determining the identity of Holders of Senior Notes entitled to vote or consent to any action referred to in Section 6.1, which record date may be set at any time or from time to time by notice to the Trustee, for any date or dates (in the case of any adjournment or resolicitation) not more than 60 days prior to the date on which such notice is sent to the Trustee; provided that the Issuer may not set a record date for, and the provisions of this Section shall not apply with respect to, the giving or making of any notice, declaration, request or direction referred to in Article IV. If any record date is set pursuant to this Section, the Holders of outstanding Senior Notes on such record date, and no other Holders, shall be entitled to take the relevant action, whether or not such Holders remain Holders after such record date; provided further that no such action shall be effective hereunder unless taken on or prior to the 180th day after such record date by Holders of the requisite principal amount of outstanding Senior Notes on such record date. Nothing in this Section shall be construed to render ineffective any action duly taken by Holders of the requisite principal amount of outstanding Senior Notes on the date such action is taken. Promptly after any record date is set pursuant to this Section, the Issuer, at its own expense, shall cause notice of such record date and, the proposed action by Holders to be given in writing to the Trustee and to each Holder of Senior Notes in the manner set forth in Section 15.4. SECTION 6.3 Holders to Be Treated as Owners. The Issuer, each of the Guarantors, the Trustee and any agent of the Issuer, any Guarantor or the Trustee may deem and treat the Person in whose name any Senior Note shall be registered upon the Security Register as the absolute owner of such Senior Note (whether or not such Senior Note shall be overdue and notwithstanding any notation of ownership or other writing thereon) for the purpose of receiving payment of or on account of the principal of, premium on and, subject to the provisions of this Indenture, interest on such Senior Note and for all other purposes; and neither the Issuer, the Guarantors nor the Trustee nor any agent of the Issuer, any Guarantor or the Trustee shall be affected by any notice to the contrary. All such payments so made to any such Person, or upon his order, shall be valid, and, to the extent of the sum or sums so paid, effectual to satisfy and discharge the liability for moneys payable upon any such Senior Note. SECTION 6.4 Senior Notes Owned by Issuer Deemed Not Outstanding. In determining whether the Holders of the requisite aggregate principal amount of Senior Notes have concurred in any direction, consent or waiver under this Indenture, Senior Notes which are owned by the Issuer or any of its Affiliates shall be disregarded and deemed not to be outstanding for the purpose of any such determination, except that for the purpose of determining whether the Trustee shall be protected in relying on any such direction, consent or waiver only Senior Notes which the Trustee knows are so owned shall be so disregarded. Senior Notes so owned which have been pledged in good faith may be regarded as outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Senior Notes and that the pledgee is not the Issuer or any of its Affiliates. In case of a dispute as to such right, the advice of counsel shall be full protection in respect of any decision made by the Trustee in accordance with such advice. Upon request of the Trustee, the Issuer shall furnish to the Trustee promptly an officers' 55 Certificate listing and identifying all Senior Notes, if any, known by the Issuer to be owned or held by or for the account of any of the above-described persons; and, subject to Sections 5.1 and 5.2, the Trustee shall be entitled to accept such officers' Certificate as conclusive evidence of the facts therein set forth and of the fact that all Senior Notes not listed therein are outstanding for the purpose of any such determination. ARTICLE VII SUPPLEMENTAL INDENTURES SECTION 7.1 Supplemental Indentures Without Consent of Senior Noteholders. The Issuer and each of the Guarantors, when authorized by a resolution of their respective Boards of Directors, and the Trustee may from time to time and at any time enter into an indenture or indentures supplemental hereto for one or more of the following purposes: (a) to convey, transfer, assign, mortgage or pledge to the Trustee or the Collateral Trustee as security for the Senior Notes any property or assets; (b) to evidence the succession, or successive successions, of another corporation to the Issuer or to a Guarantor, and the assumption by the successor corporation of the covenants, agreements and obligations of the Issuer or such Guarantor hereunder; or to evidence the agreement by any Restricted Subsidiary after the Issue Date to become a Guarantor and to be bound by the terms of this Indenture pursuant to Section 3.22; (c) to add to the covenants of the Issuer or a Guarantor such further covenants, restrictions, conditions or provisions as their respective Boards of Directors and the Trustee shall consider to be for the protection of the Holders of Senior Notes, and to make the occurrence, or the occurrence and continuance, of a default in any such additional covenants, restrictions, conditions or provisions an Event of Default permitting the enforcement of all or any of the several remedies provided in this Indenture as herein set forth; provided that, in respect of any such additional covenant, restriction, condition or provision, such supplemental indenture may provide for a particular period of grace after default (which period may be shorter or longer than that allowed in the case of other defaults) or may provide for an immediate enforcement upon such an Event of Default or may limit the remedies available to the Trustee upon such an Event of Default or may limit the right of the Holders of a majority in aggregate principal amount of the Senior Notes to waive such an Event of Default; (d) to cure any ambiguity or to correct or supplement any provision contained herein or in any supplemental indenture which may be defective or inconsistent with any other provision contained herein or in any supplemental indenture; or to make such other provisions in regard to matters or questions arising under this Indenture or under any supplemental indenture as the Boards of Directors 56 of the Issuer and the Guarantors may deem necessary or desirable and which shall not adversely affect the interests of the Holders of the Senior Notes; and (e) to provide for the issuance under this Indenture of Senior Notes in coupon form (including Senior Notes registrable as to principal only) and to provide for exchangeability of such Senior Notes with Senior Notes issued hereunder in fully registered form, and to make all appropriate changes for such purpose. The Trustee is hereby authorized to join in the execution of any such supplemental indenture, to make any further appropriate agreements and stipulations which may therein contained and to accept the conveyance, transfer, assignment, mortgage or pledge of any property thereunder, but the Trustee shall not be obligated to enter into any such supplemental indenture which affects the Trustee's own rights, duties or immunities under this Indenture or otherwise. Any supplemental indenture authorized by the provisions of this Section may be executed without the consent of the Holders of any of the Senior Notes at the time outstanding, notwithstanding any of the provisions of Section 7.2. SECTION 7.2 Supplemental Indentures With Consent of Senior Noteholders. With the consent (evidenced as provided in Article VI) of the Holders of not less than a majority in aggregate principal amount of the Senior Notes at the time outstanding, the Issuer and each of the Guarantors, when authorized by a resolution of their respective Boards of Directors, and the Trustee may, from time to time and at any time, enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of any supplemental indenture or of modifying in any manner the rights of the Holders of the Senior Notes; provided that no such supplemental indenture shall, without the consent of each Holder of Senior Notes affected thereby, (i) reduce the percentage in principal amount of Senior Notes the Holders of which must consent to an amendment, supplement or waiver, (ii) reduce the rate of or extend the time for payment of interest on any Senior Note, (iii) reduce the principal or extend the fixed maturity of any Senior Note, (iv) reduce the price at which any Senior Note may be redeemed at the option of the Issuer or at which any Senior Note is to be repurchased by the Issuer at the option of the holder in connection with a Change of Control Offer or a Net Proceeds offer, (v) waive a default in the payment of the principal of or premium or interest on any Senior Note, (vi) make any Senior Note payable in money other than that stated in the Senior Note, (vii) release any Guarantor from its unconditional obligation to guarantee payment in respect of the principal of and interest on any Senior Note (except in accordance with this Indenture), (viii) consent to the assignment or transfer by the Issuer or any Guarantor of any of their rights and obligations under this Indenture (except in accordance with this Indenture), (ix) add provisions to this Indenture that subordinate the obligations of the Issuer or any Guarantor in respect of any Senior Note to other Indebtedness of the Issuer or such Guarantor, as the case may be, (x) amend, modify or waive any provision of this Section or (xi) consent to the release of all of the Collateral from the Lien created by the Collateral Documents. 57 Upon the request of the Issuer and each of the Guarantors, accompanied by a copy of a resolution of their respective Boards of Directors certified by the Secretary or an Assistant Secretary of the Issuer or the relevant Guarantor, as the case may be, authorizing the execution of any such supplemental indenture, and upon the filing with the Trustee of evidence of the consent of Senior Noteholders and other documents, if any, required by Section 6.1, the Trustee shall join with the Issuer and the Guarantors in the execution of such supplemental indenture unless such supplemental indenture affects the Trustee's own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such supplemental indenture. It shall not be necessary for the consent of the Senior Noteholders under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such consent shall approve the substance thereof. Promptly after the execution by the Issuer, each of the Guarantors and the Trustee of any supplemental indenture pursuant to the provisions of this Section, the Trustee shall mail a notice thereof (prepared by the Issuer) by first-class mail to the Holders of Senior Notes at their addresses as they shall appear in the Security Register, setting forth in general terms the substance of such supplemental indenture. Any failure of the Trustee to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture. SECTION 7.3 Effect of Supplemental Indenture. Upon the execution of any supplemental indenture pursuant to the provisions hereof, this Indenture shall be and be deemed to be modified and amended in accordance therewith and the respective rights, limitations of rights, obligations, duties and immunities under this Indenture of the Trustee, the Issuer, each of the Guarantors and the Holders of Senior Notes shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such supplemental indenture shall be and be deemed to be part of the terms and conditions of this Indenture for any and all purposes. SECTION 7.4 Documents to Be Given to Trustee. The Trustee, subject to the provisions of Sections 5.1 and 5.2, may receive an Officers' Certificate and an Opinion of Counsel satisfactory in form and substance to the Trustee as conclusive evidence that any such supplemental indenture complies with the applicable provisions of this Indenture. SECTION 7.5 Notation on Senior Notes in Respect of Supplemental Indentures. Senior Notes authenticated and delivered after the execution of any supplemental indenture pursuant to the provisions of this Article may bear a notation in form approved by the Trustee as to any matter provided for by such supplemental indenture or as to any action taken at any such meeting. If the Issuer or the Trustee shall so determine, new Senior Notes so modified as to conform, in the opinion of the Trustee and the Board of Directors of the Issuer, to any modification of this Indenture contained in any such supplemental indenture may be prepared by the Issuer, 58 authenticated by the Trustee and delivered in exchange for the Senior Notes then outstanding. ARTICLE VIII CONSOLIDATION, MERGER, SALE OR CONVEYANCE SECTION 8.1 When Issuer and Principal Guarantors May Merge or Transfer Assets. None of the Issuer, Arby's or RC Cola (the "Subject obligor") may consolidate with or merge with or into any other Person, or directly and/or indirectly through its Subsidiaries, sell, convey, assign, transfer, lease or otherwise dispose of all or substantially all of its properties and assets (determined on a consolidated basis for the Subject Obligor and its Subsidiaries taken as a whole) to any Person, unless: (i) either (A) the Subject Obligor or the Issuer shall be the continuing person or (B) the Person (if other than the Subject Obligor or the Issuer) (the "Surviving Entity") formed by such consolidation or into which the Subject obligor is merged or that acquires, by sale, assignment, conveyance, transfer, lease or disposition, all or substantially all of the properties and assets of the Subject Obligor (determined as aforesaid) as an entirety shall be a corporation organized and validly existing under the laws of the United States or any State thereof or the District of Columbia and shall expressly assume by a supplemental indenture executed and delivered to the Trustee, in form satisfactory to the Trustee, all the obligations of the Subject Obligor pursuant to this Indenture; (ii) immediately before and after giving effect to such transaction (and treating any Indebtedness which becomes an obligation of the Issuer or the Surviving Entity or any Restricted Subsidiary as a result of such transaction as having been incurred by the Issuer, such Surviving Entity or such Restricted Subsidiary at the time of such transaction), no Default or Event of Default shall have occurred and be continuing; (iii) immediately after giving effect to such transaction the Issuer or the Surviving Entity, as the case may be, could incur at least $1.00 of additional Indebtedness pursuant to Section 3.13(j) hereof; (iv) immediately after giving effect to such transaction, the Subject Obligor or the Surviving Entity, as the case may be, shall have a Consolidated Net Worth which is not less than the Consolidated Net Worth of the Subject Obligor immediately prior to such transaction; and (v) the Issuer shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such supplemental indenture (if any) comply with this Indenture. Notwithstanding the foregoing, any Subject Obligor may merge with any of its Restricted Subsidiaries where the purpose of such merger is to change its state of incorporation, provided that (x) the Surviving Entity shall not, after giving effect to such merger, have Indebtedness greater than that of the Subject Obligor (or, in cases where the Restricted Subsidiary involved in such merger is a Guarantor, Indebtedness greater than that of the Subject Obligor and such Restricted Subsidiary) immediately prior to such merger and (y) the conditions specified in clauses (ii), (iv) and (v) above are satisfied. The resulting, surviving or transferee Person of any such transaction shall be the successor Subject Obligor and in any such case other than a lease the 59 predecessor Subject Obligor (if other than the successor Subject Obligor) shall be released from the obligation to pay the principal of and premium and interest on the Senior Notes. ARTICLE IX SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS SECTION 9.1 Satisfaction and Discharge of Indenture. (a) If at any time (A) the Issuer shall have paid or caused to be paid the principal of and premium and interest on all the Senior Notes outstanding hereunder, as and when the same shall have become due and payable, or (B) the Issuer shall have delivered to the Trustee for cancellation all Senior Notes theretofore authenticated (other than any Senior Notes which shall have been destroyed, lost or stolen and which shall have been replaced or paid as provided in Section 2.6), and if, in any such case, the Issuer shall also have paid or caused to be paid all other sums payable by the Issuer under this Indenture, the Senior Notes and the Collateral Documents, then this Indenture shall cease to be of further effect, and the Trustee, on demand of the Issuer, accompanied by an Officers' Certificate and an Opinion of Counsel and at the cost and expense of the Issuer, shall execute proper instruments acknowledging such satisfaction of and discharge of this Indenture. The Issuer agrees to reimburse the Trustee for any costs or expenses thereafter reasonably and properly incurred and to compensate the Trustee for any services thereafter reasonably and properly rendered by the Trustee in connection with this Indenture, the Senior Notes or the Collateral Documents. (b) The Issuer shall be deemed to have paid and discharged the entire indebtedness on all Senior Notes outstanding on the 91st day after the date of the deposit referred to in subparagraph (A) below, and the provisions of this Indenture with respect to the Senior Notes shall no longer be in effect (except as to (i) rights of registration of transfer and exchange and the Issuer's right of optional redemption, (ii) substitution of mutilated, defaced, destroyed, lost or stolen Senior Notes, (iii) rights of Holders of Senior Notes to receive payments of principal thereof and premium (if any) and interest thereon, upon the original stated due dates therefor (but not upon acceleration), (iv) the rights, obligations, duties and immunities of the Trustee hereunder and (v) the rights of such Senior Noteholders as beneficiaries hereof with respect to the property so deposited with the Trustee payable to all or any of them), and the Trustee, at the expense of the Issuer, shall at the Issuer's request, execute proper instruments acknowledging the same, if: (A) the Issuer has irrevocably deposited or caused to be irrevocably deposited with the Trustee as trust funds in trust, specifically pledged as security for, and dedicated solely to, the benefit of the Senior Noteholders (i) cash in an amount, (ii) direct non-callable obligations of, or non-callable obligations guaranteed by, the United States of America, backed by its full faith and credit ("U.S. Government obligations"), maturing as to 60 principal and interest at such times and in such amounts as will ensure the availability of cash or (iii) a combination thereof, sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay the principal of and premium (if any) and interest on all Senior Notes outstanding on each date that such principal, premium or interest is due and payable; (B) no Default or Event of Default under Section 4.1(e) shall have occurred or been continuing at any time during such 91-day period; (C) such deposit will not result in a breach or violation of, or constitute a default under, any agreement or instrument to which the Issuer or any Guarantor is a party or by which it is bound; (D) such deposit will not cause the Trustee to have a conflicting interest as defined in Section 310 of the Trust Indenture Act of 1939 with respect to any securities of the Issuer; (E) the Issuer has delivered to the Trustee an opinion of Counsel to the effect that the Senior Noteholders will not recognize income, gain or loss for Federal income tax purposes as a result of such deposit, defeasance and discharge and will be subject to Federal income tax on the same amount and in the same manner and at the same times, as would have been the case if such deposit, defeasance and discharge had not occurred; and (F) the Issuer has delivered to the Trustee an officer's Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for relating to the defeasance contemplated by this provision have been complied with. SECTION 9.2 Application by Trustee of Funds Deposited for Payment of Senior Notes. Subject to Section 9.4, all moneys and obligations and proceeds thereof deposited with the Trustee pursuant to Section 9.1 shall be held in trust (but not segregated from other funds except to the extent required by law) and applied by it to the payment, either directly or through any Paying Agent (including the Issuer acting as its own Paying Agent), to the Holders of the particular Senior Notes for the payment or redemption of which such cash and obligations have been deposited with the Trustee, of all sums due and to become due thereon for principal, premium and interest. SECTION 9.3 Repayment of Moneys Held by Paying Agent. In connection with the satisfaction and discharge of this Indenture all moneys then held by any Paying Agent under the provisions of this Indenture shall, upon demand of the Issuer, be repaid to it or paid to the Trustee and thereupon such paying agent shall be released from all further liability with respect to such moneys. SECTION 9.4 Return of Moneys Held by Trustee and Paying Agent Unclaimed for Two Years. Any moneys deposited with or paid to the Trustee or any 61 Paying Agent for the payment of the principal of or premium or interest on any Senior Note and not applied but remaining unclaimed for two years after the date upon which such principal, premium or interest shall have become due and payable, shall, upon the written request of the Issuer and unless otherwise required by mandatory provisions of applicable escheat or abandoned or unclaimed property law, be repaid to the Issuer by the Trustee or such Paying Agent, and the Holder of such Senior Note shall, unless otherwise required by mandatory provisions of applicable escheat or abandoned or unclaimed property laws, thereafter look only to the Issuer for any payment which such Holder may be entitled to collect, and all liability of the Trustee or any Paying Agent with respect to such moneys shall thereupon cease. ARTICLE X GUARANTEES SECTION 10.1 The Guarantees. Each Guarantor hereby unconditionally guarantees, jointly and severally, the full and punctual payment (whether at stated maturity, upon acceleration or otherwise) of the principal of and premium and interest on each Senior Note issued by the Issuer pursuant to this Indenture, and the full and punctual payment of all other amounts payable by the Issuer under this Indenture and the Collateral Documents. Upon failure by the Issuer to pay punctually any such amount, such Guarantor shall forthwith on demand pay the amount not so paid at the place and in the manner specified in this Indenture and the Collateral Documents. SECTION 10.2 Guarantees Unconditional. The obligations of each Guarantor hereunder shall be unconditional and absolute and, without limiting the generality of the foregoing, shall not be released, discharged or otherwise affected by: (i) any extension, renewal, settlement, compromise, waiver or release in respect of any obligation of the Issuer or any other Guarantor under this Indenture, any Senior Note or any Collateral Document, by operation of law or otherwise; (ii) any modification or amendment of or supplement to this Indenture, any Senior Note or any Collateral Document; (iii) any release, non-perfection or invalidity of any direct or indirect security for any obligation of the Issuer or any other Guarantor under this Indenture, any Senior Note or any Collateral Document; (iv) any change in the corporate existence, structure or ownership of the Issuer or any other Guarantor, or any insolvency, bankruptcy, reorganization or other similar proceeding affecting the Issuer or any other Guarantor or their respective assets or any resulting release or discharge of any obligation of the Issuer or any other Guarantor contained in this Indenture, any Senior Note or any Collateral Document; 62 (v) the existence of any claim, set-off or other rights which such Guarantor may have at any time against the Issuer, any other Guarantor, the Trustee, any Senior Noteholder, the Collateral Agent or any other Person, whether in connection herewith or any unrelated transactions; provided that nothing herein shall prevent the assertion of any such claim by separate suit or compulsory counterclaim; (vi) any invalidity or unenforceability relating to or against the Issuer or any other Guarantor for any reason of this Indenture, any Senior Note or any Collateral Document, or any provision of applicable law or regulation purporting to prohibit the payment by the Issuer or any other Guarantor of the principal of or premium or interest on any Senior Note or any other amount payable by the Issuer or any other Guarantor under this Indenture or any Collateral Document; or (vii) any other act or omission to act or delay of any kind by the Issuer, any other Guarantor, the Trustee, any Senior Noteholder, the Collateral Agent or any other Person or any other circumstance whatsoever which might, but for the provisions of this paragraph, constitute a legal or equitable discharge of such Guarantor's obligations hereunder. SECTION 10.3 Discharge Only Upon Payment In Full; Reinstatement In Certain Circumstances. Subject to Section 3.22(b), each Guarantor's obligations hereunder shall remain in full force and effect until the Indenture shall have terminated and the principal of and premium and interest on the Senior Notes and all other amounts payable by the Issuer under this Indenture and the Collateral Documents shall have been paid in full. If at any time any payment of the principal of or premium or interest on any Senior Note or any other amount payable by the Issuer under this Indenture or any Collateral Document is rescinded or must be otherwise restored or returned upon the insolvency, bankruptcy or reorganization of the Issuer or otherwise, each Guarantor's obligations hereunder with respect to such payment shall be reinstated as though such payment had been due but not made at such time. SECTION 10.4 Waiver by the Guarantors. Each Guarantor irrevocably waives acceptance hereof, presentment, demand, protest and any notice not provided for herein, as well as any requirement that at any time any action be taken by any Person against the Issuer or any other Person. SECTION 10.5 Subrogation; Contribution. (a) Upon making any payment hereunder in respect of its Guarantee, each Guarantor (i) shall be subrogated to the rights of the payee against the Issuer with respect to such payment and (ii) shall be entitled to a contribution from each other Guarantor in an amount pro rata based upon the net assets of each Guarantor at the time of the payment giving rise to such right of contribution (determined in accordance with generally accepted accounting principles as in effect on the date of such determination). Upon making any contribution hereunder to a Guarantor that has made any payment in respect of its Guarantee (a "Paying Guarantor"), each Guarantor shall become vested with the 63 Paying Guarantor's subrogation rights against the Issuer to the extent of the amount of such contribution. (b) No Guarantor shall enforce any right against the Issuer or any other Guarantor or receive any payment by way of subrogation or contribution until all amounts of principal of and premium and interest on the Senior Notes and all other amounts payable by the Issuer under this Indenture and the Collateral Documents have been paid in full. SECTION 10.6 Stay of Acceleration. If acceleration of the time for payment of any amount payable by the Issuer under this Indenture, any Senior Note or any Collateral Document is stayed upon the insolvency, bankruptcy or reorganization of the Issuer, all such amounts otherwise subject to acceleration under the terms of this Indenture shall nonetheless be payable by each Guarantor hereunder forthwith on demand by the Trustee made at the request of the requisite number of Senior Noteholders. SECTION 10.7 Limit of Liability. The obligations of each Guarantor under this Article X shall be limited to an aggregate amount equal to the largest amount that would not render its obligations hereunder subject to avoidance under Section 548 of the United States Bankruptcy Code or any comparable provisions of any applicable state law. ARTICLE XI REDEMPTION OF SENIOR NOTES SECTION 11.1 Right of Optional Redemption. Subject to the next succeeding paragraph, the Issuer at its option may at any time after August 1, 1998 redeem all, or from time to time any part of, the Senior Notes, upon payment of the applicable optional redemption price set forth in the form of Senior Note hereinabove recited, together with accrued interest to the date fixed for redemption. Notwithstanding the foregoing, at any time prior to August 1, 1996, the Issuer may redeem up to 33.3% of the original aggregate principal amount of the Senior Notes with the net proceeds of an Initial Public Equity Offering of the Issuer at a redemption price of 110% of par, plus accrued and unpaid interest to the redemption date. SECTION 11.2 Notice of Redemption; Partial Redemptions. Notice of redemption to the Holders of Senior Notes to be redeemed as a whole or in part shall be given by mailing notice of such redemption by first class mail, postage prepaid, at least 30 days and not more than 60 days prior to the date fixed for redemption to such Holders of Senior Notes at their last addresses as they shall appear in the Security Register. Any notice which is mailed in the manner herein provided shall be conclusively presumed to have been duly given, whether or not the Holder receives the notice. Failure to give notice by mail, or any defect in the notice to the 64 Holder of any Senior Note designated for redemption as a whole or in part, shall not affect the validity of the proceedings for the redemption of any other Senior Note. The notice of redemption to each such Holder shall specify the principal amount of each Senior Note held by such Holder to be redeemed, the date fixed for redemption, the redemption price, the place or places of payment, that payment will be made upon presentation and surrender of such Senior Notes, that interest accrued to the date fixed for redemption will be paid as specified in said notice and that on and after said date interest thereon or on the portions thereof to be redeemed will cease to accrue. In case any Senior Note is to be redeemed in part only, the notice of redemption shall state the portion of the principal amount thereof to be redeemed and shall state that on and after the date fixed for redemption, upon surrender of such Senior Note, a new Senior Note or Senior Notes in principal amount equal to the unredeemed portion thereof will be issued. The notice of redemption of Senior Notes to be redeemed at the option of the Issuer shall be given by the Issuer or, at the Issuer's request, by the Trustee in the name and at the expense of the Issuer. At least one Business Day prior to the redemption date specified in the notice of redemption given as provided in this Section, the Issuer will deposit with the Trustee or with one or more paying agents (or, if the Issuer is acting as its own paying agent, set aside, segregate and hold in trust as provided in Section 3.4) an amount of money sufficient to redeem on the redemption date all the Senior Notes so called for redemption at the appropriate redemption price, together with accrued and unpaid interest to the date fixed for redemption. If less than all the outstanding Senior Notes are to be redeemed, the Issuer will deliver to the Trustee, not later than five days prior to the date on which notice of such redemption is to be mailed to Holders of Senior Notes pursuant to this Section, an Officers' Certificate stating the aggregate principal amount of Senior Notes to be redeemed. If less than all the Senior Notes are to be redeemed, the Senior Notes to be redeemed shall be redeemed on a pro rata basis. Senior Notes may be redeemed in part in multiples of $1,000 only. The Trustee shall, upon the written request of the Issuer, promptly notify the Issuer in writing of the Senior Notes selected for redemption and, in the case of any Senior Notes selected for partial redemption, the principal amount thereof to be redeemed. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Senior Notes shall relate, in the case of any Senior Note redeemed or to be redeemed only in part, to the portion of the principal amount of such Senior Note which has been or is to be redeemed. SECTION 11.3 Payment of Senior Notes Called for Redemption. If notice of redemption has been given as above provided, the Senior Notes or portions of Senior Notes specified in such notice shall become due and payable on the date and at the place stated in such notice at the applicable redemption price, together with interest accrued to the date fixed for redemption, and on and after said date (unless the Issuer shall default in the payment of such Senior Notes at the redemption price, 65 together with interest accrued to said date) interest on the Senior Notes or portions of Senior Notes so called for redemption shall cease to accrue and, except as provided in Sections 5.5 and 9.4, such Senior Notes shall cease from and after the date fixed for redemption to be entitled to any benefit or security under this Indenture, and the Holders thereof shall have no right in respect of such Senior Notes except the right to receive the redemption price thereof and accrued interest to the date fixed for redemption. On presentation and surrender of such Senior Notes at a place of payment specified in said notice, said Senior Notes or the specified portions thereof shall be paid and redeemed by the Issuer at the applicable redemption price, together with interest accrued thereon to the date fixed for redemption; provided that any semi-annual payment of interest becoming due on the date fixed for redemption shall be payable to the Holders of such Senior Notes registered as such on the relevant Regular Record Date subject to the terms and provisions of Section 2.4 hereof. If any Senior Note called for redemption shall not be so paid upon surrender thereof for redemption, the principal thereof and premium (if any) thereon shall, until paid or duly provided for, bear interest from the date fixed for redemption at the rate specified in the Senior Note. Upon presentation of any Senior Note redeemed in part only, the Issuer shall execute and the Trustee shall authenticate and deliver to or on the order of the Holder thereof, at the expense of the Issuer, a new Senior Note or Senior Notes, of authorized denominations, in principal amount equal to the unredeemed portion of the Senior Note so presented. SECTION 11.4 Exclusion of Certain Senior Notes from Eligibility for Selection for Redemption. Senior Notes shall be excluded from eligibility for selection for redemption if they are identified by registration and certificate number in a written statement signed by an authorized officer of the Issuer and delivered to the Trustee at least 35 days prior to the last date on which notice of redemption may be given as being owned of record and beneficially by, and not pledged or hypothecated by either (a) the Issuer or (b) an entity specifically identified in such written statement directly or indirectly controlling or controlled by or under direct or indirect common control with the Issuer. ARTICLE XII REDEMPTION UPON CHANGE OF CONTROL SECTION 12.1 Change of Control. (a) Upon a Change of Control, each Senior Noteholder shall have the right to require that the Issuer repurchase any or all of such Holder's Senior Notes at a repurchase price in cash equal to 101% of the principal amount thereof, plus accrued interest to the date of repurchase, in accordance with the terms contemplated in Section 12.1(b) (a "Change of Control Offer"). 66 (b) Within 15 days following any such Change of Control, the Issuer shall mail a notice and election form to each Senior Noteholder with a copy to the Trustee or, at the Issuer's request, the Trustee shall mail such notice and election form, stating: (1) that such Change of Control has occurred and that such Senior Noteholder has the right to require the Issuer to repurchase such Holder's Senior Notes at a repurchase price in cash equal to 101% of the principal amount thereof plus accrued interest to the date of repurchase; (2) the circumstances and relevant facts regarding such Change of Control (including information with respect to pro forma historical income, cash flow and capitalization after giving effect to such Change of Control); (3) the repurchase date (which shall not be earlier than 30 days nor later than 60 days after the date such notice is mailed) (the "Repurchase Date"); (4) the date on or before which Senior Noteholders must make an election in order to have their Senior Notes repurchased in connection with the Change of Control Offer, which date shall not be less than 15 days after the date of such notice or less than 10 days before the Repurchase Date; (5) that any Senior Note not tendered will continue to accrue interest; (6) that any Senior Note accepted for payment pursuant to the Change of Control Offer shall cease to accrue interest after the Repurchase Date; (7) that Senior Noteholders electing to have a Senior Note purchased pursuant to the Change of Control Offer will be required to surrender the Senior Note to the Paying Agent at the address specified in the notice prior to the close of business on the third Business Day prior to the Repurchase Date; (8) that Senior Noteholders will be entitled to withdraw their election in whole or in part if the Paying Agent receives, not later than the close of business on the third Business Day (or such shorter period as may be required by applicable law) preceding the Repurchase Date, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of Senior Notes the Holder delivered for purchase, and a statement that such Holder is so withdrawing his election to have such Senior Notes purchased; and (9) that Senior Noteholders which elect to have their Senior Notes purchased only in part (in integral multiples of $1,000) will be issued 67 new Senior Notes in a principal amount equal to the unpurchased portion of the Senior Notes surrendered. Notwithstanding the foregoing, any such Change of Control Offer shall remain open for a period of not less than twenty (20) Business Days commencing on the earliest date on which an election to repurchase may be made. (c) On the Repurchase Date, the Issuer shall (i) accept for payment Senior Notes or portions thereof (in integral multiples of $1,000) properly tendered (and not subsequently withdrawn), (ii) deposit with the Trustee money sufficient to pay the purchase price of all Senior Notes or portions thereof so accepted for payment and (iii) deliver or cause to be delivered to the Trustee Senior Notes so accepted together with an Officers' Certificate (which need not comply with Section 15.5) identifying the Senior Notes or portions thereof so tendered to the Issuer. The Trustee shall promptly mail to the holders of Senior Notes so accepted payment in an amount equal to the purchase price, and promptly authenticate and mail to such Holders a new Senior Note in a principal amount equal to any unpurchased portion of the Senior Notes surrendered. The Issuer will publicly announce the results of the Change of Control Offer on or as soon as practicable after the Repurchase Date. ARTICLE XIII NET PROCEEDS OFFER SECTION 13.1 Net Proceeds Offer. (a) Whenever the Issuer is required under Section 3.15(b) to make a Net Proceeds Offer, the Issuer shall make such Net Proceeds Offer in accordance with the procedures set forth in Section 13.1(b). If the aggregate purchase price of Senior Notes tendered pursuant to the Net Proceeds Offer is less than the Net Proceeds required by Section 3.15(b) and this Section 13.1 to be allotted to the purchase of the Senior Notes then, subject to the provisions of Article XIV and the Collateral Documents, the Issuer may use the remaining Net Proceeds for general corporate purposes and such Net Proceeds shall no longer constitute "Excess Proceeds" within the meaning of Section 3.15(b). (b) (i) Promptly, and in any event within the time period specified in Section 3.15(b), the Issuer shall be obligated to deliver to the Trustee and send, by first-class mail to each Senior Noteholder in whose name a Senior Note is then registered, or, at the request of the Issuer, the Trustee shall send, a written notice stating that: (1) such Holder may elect to have his Senior Notes purchased by the Issuer either in whole or in part (subject to prorationing as hereinafter described in the event the Net Proceeds Offer is oversubscribed in multiples of $1,000 principal amount, at a purchase price equal to 100% of the principal amount thereof plus accrued interest to the Purchase Date (as defined below); 68 (2) any Senior Note not tendered or accepted for payment will continue to accrue interest; (3) any Senior Note accepted for payment pursuant to the Net Proceeds offer shall cease to accrue interest after the Purchase Date; (4) the date on or before which Holders must make an election in order to have their Senior Notes repurchased in connection with the Net Proceeds Offer, which date shall not be less than 15 days after the date of such notice or less than 10 days before the Purchase Date; and (5) Holders will be entitled to withdraw their election in the manner described in clause (iii) below. The notice shall also specify a purchase date not less than 30 days nor more than 45 days after the date of such notice (the "Purchase Date") and shall include all instructions and materials necessary to enable each Holder to tender Senior Notes pursuant to the Net Proceeds Offer. (ii) Not later than the date upon which written notice of a Net Proceeds Offer is delivered to the Trustee as provided above, the Issuer shall deliver to the Trustee an officers' Certificate stating the amount of the Net Proceeds Offer (the "Net Proceeds Offer Amount"). Not later than one Business Day prior to the Purchase Date, the Issuer shall irrevocably deposit with a Paying Agent (or, if the Issuer is acting as its own Paying Agent, segregate and hold in trust) in immediately available funds an amount sufficient to pay the Purchase Price of all Senior Notes or portions thereof so accepted for payment, such funds to be held for payment in accordance with the provisions of this Section. As soon as practicable after the expiration of the period for which the Net Proceeds Offer re-mains open (the "Net Proceeds Offer Period"), the Issuer shall deliver to the Trustee the Senior Notes or portions thereof which have been properly tendered to and are to be accepted by the Issuer. The Issuer shall accept all Senior Notes properly tendered and the Paying Agent shall, on the Purchase Date, mail or deliver payment to each Holder who has tendered Senior Notes so accepted, subject to clauses (iii) and (iv) below, in the amount of the purchase price. (iii) Holders electing to have a Senior Note purchased will be required to surrender the Senior Note, with an appropriate form duly completed, to the Trustee at the address specified in the notice at least three Business Days prior to the Purchase Date. Holders will be entitled to withdraw their election if the Trustee or Paying Agent receives not later than the close of business on the third Business Day prior to the Purchase Date a telegram, telex, facsimile transmission or letter setting forth the name of the Holder and a statement that such Holder is withdrawing its or his election to have all or a portion of its or his Senior Notes purchased. 69 (iv) If at the expiration of the Net Proceeds Offer Period the aggregate purchase price of Senior Notes surrendered for purchase exceeds the Net Proceeds Offer Amount, the Senior Notes to be purchased shall be purchased on a pro rata basis (with such adjustments as may be deemed appropriate by the Trustee so that only Senior Notes in denominations of $1,000 or multiples thereof shall be purchased). Holders whose Senior Notes are purchased only in part will be issued new Senior Notes equal in principal amount to the unpurchased portion of the Senior Notes surrendered. (v) At the time the Issuer delivers Senior Notes to the Trustee which are to be accepted for purchase, the Issuer will also deliver an officers' Certificate stating that such Senior Notes are to be accepted by the Issuer pursuant to and in accordance with the terms of this Section. ARTICLE XIV COLLATERAL AND SECURITY SECTION 14.1 Collateral Documents. Each Holder of a Senior Note, by its acceptance thereof, (i) consents and agrees to the terms of the Collateral Documents, (ii) authorizes and ratifies the entering into by the Collateral Trustee of each of the Collateral Documents to which it is a party and (iii) authorizes and directs the Collateral Trustee to perform its obligations and exercise its rights thereunder in accordance therewith. SECTION 14.2 Release of Collateral. (a) Subject to Sections 14.2(b) and 14.2(c) hereof and the requirements of the Collateral Documents, Collateral may be released from the security interest created by the Collateral Documents at any time or from time to time in accordance with Section 5.02 of the Collateral Trust Agreement. (b) No Collateral shall be released pursuant to Section 5.02 of the Collateral Trust Agreement if: (i) such release is in connection with the disposition of inventory (as defined in the Uniform Commercial Code as in effect from time to time in the State of New York) and (A) if the Trustee and the Collateral Trustee are not the same Person, the Trustee shall have delivered to the Collateral Trustee the certificate required by Section 14.4(a) hereof and shall not thereafter have delivered the certificate required by Section 14.4(b) hereof, or (B) if the Trustee and the Collateral Trustee are the same Person, the Issuer shall have failed to deliver the Officers' Certificate required by Section 14.3(a) hereof and the Issuer shall not have subsequently cured such failure; or (ii) in any other case or if such release occurs with the consent of the Required Secured Parties (as defined in the Collateral Trust Agreement) and (A) if the Trustee and the Collateral Trustee are not the same 70 Person, the Trustee shall not have delivered to the Collateral Trustee the Officers' Certificate required by Section 14.4(c) hereof, or (B) if the Trustee and the Collateral Trustee are the same Person, the Issuer shall have failed to deliver to the Trustee all of the certificates, documents and opinions required by Section 14.3. No provision of this Section is intended or shall be construed to prohibit the collection of accounts receivable by the Issuer or any Guarantor; provided that neither the Issuer nor any Guarantor shall collect any account receivable (A) if the Trustee and the Collateral Trustee are not the same Person, the Trustee shall have delivered to the Collateral Trustee the certificate required by Section 14.4(a) hereof and shall not thereafter have delivered the certificate required by Section 14.4(b) hereof, or (B) if the Trustee and the Collateral Trustee are the same Person, the Issuer shall have failed to deliver the Officers' Certificate required by Section 14.3(a) hereof and the Issuer shall not have subsequently cured such failure. (c) At any time when a Notice of Acceleration shall be in effect under the Collateral Trust Agreement, no release of Collateral pursuant to Section 5.02 of the Collateral Trust Agreement shall be effective as against the Holders of the Senior Notes. SECTION 14.3 Certificates of the Issuer. The Issuer will furnish to the Trustee: (a) within 15 days after the end of each of the six-month periods ended on June 30 or December 31 in each year, a certificate from the principal executive, financial or accounting officer of the Issuer stating that all dispositions of inventory (as defined in the Uniform Commercial Code as in effect from time to time in the State of New York) and all collections of accounts receivable during such six-month period were made in the ordinary course of business and that all proceeds therefrom were used by the Issuer in connection with its business or other-wise as permitted herein; and (b) prior to each proposed release of Collateral pursuant to Section 5.02 of the Collateral Trust Agreement other than by reason of transactions referred to in the preceding clause (a), (i) all documents required by Section 314(d) of the Trust Indenture Act of 1939, (ii) an Officers' Certificate requesting a release of Collateral and describing the property to be so released and (iii) an opinion of Counsel to the effect that such accompanying documents constitute all documents required by Section 314(d) of the Trust Indenture Act of 1939 in connection with such release. The Trustee may, to the extent permitted by Sections 5.1 and 5.2 hereof, accept as conclusive evidence of compliance with the foregoing provisions the appropriate statements contained in such instruments. SECTION 14.4 Certificates of the Trustee. The Trustee shall deliver to the Collateral Trustee: 71 (a) in the event that the Issuer has failed to deliver the Officers' Certificate required by Section 14.3(a) hereof, within five days of the date on which such Officers' Certificate was required to be delivered, a certificate notifying the Collateral Trustee of such failure; (b) in the event that the Issuer shall subsequently cure such failure described in the preceding clause (a), within five days of the receipt by the Trustee of such Officers' Certificate, a certificate stating that the Issuer has cured such failure; and (c) in the event that the Issuer wishes to release Collateral in accordance with Section 5.2 of the Collateral Trust Agreement and Section 14.2 hereof and has delivered the certificates and documents required by Section 14.3 hereof, a certificate stating that the Trustee has received all documentation required by Section 314(d) of the Trust Indenture Act of 1939 in connection with such release. The Trustee shall have no obligation to deliver the foregoing documents if it shall also be the Collateral Trustee. SECTION 14.5 Opinion of Counsel to the Issuer. The Issuer shall deliver to the Trustee: (a) promptly after the execution and delivery of this Indenture, an Opinion of Counsel either stating that in the opinion of such counsel this Indenture has been properly recorded and filed so as to make effective the lien intended to be created thereby, and reciting the details of such action, or stating that in the opinion of such counsel no such action is necessary to make such lien effective; and (b) on June 30 of each year, an Opinion of Counsel either stating that in the opinion of such counsel all such action has been taken with respect to the recording, filing, re-recording, and refiling of this Indenture and the Collateral Documents as is necessary to maintain the lien of this Indenture and the Collateral Documents, and reciting the details of such action, or stating that in the opinion of such counsel no such action is necessary to maintain such lien. ARTICLE XV MISCELLANEOUS PROVISIONS SECTION 15.1 Incorporators, Stockholders, Officers and Directors of Issuer and Restricted Subsidiaries Exempt from Individual Liability. No recourse under or upon any obligation, covenant or agreement contained in this Indenture, or in any Senior Note, or because of any indebtedness evidenced thereby, shall be had against any incorporator, as such or against any past, present or future stockholder, officer or director, as such, of the Issuer or any Restricted Subsidiary or of any successor of any such Person, either directly or through any such Person, under any rule of law, statute or constitutional provision or by the enforcement of any 72 assessment or by any legal or equitable proceeding or otherwise, all such liability being expressly waived and released by the acceptance of the Senior Notes by the Holders thereof and as part of the consideration for the issue of the Senior Notes. SECTION 15.2 Provisions of Indenture for the Sole Benefit of Parties and Senior Noteholders. Nothing in this Indenture or in the Senior Notes, express or implied, shall give or be construed to give to any Person, other than the parties hereto and their successors and the Holders of the Senior Notes, any legal or equitable right, remedy or claim under this Indenture or under any covenant or provision herein contained, all such covenants and provisions being for the sole benefit of the parties hereto and their successors and of the Holders of the Senior Notes. SECTION 15.3 Successors and Assigns of Issuer and Guarantors Bound by Indenture. All the covenants, stipulations, promises and agreements in this Indenture contained by or in behalf of the Issuer and any Guarantor shall bind their respective successors and assigns, whether so expressed or not. SECTION 15.4 Notices and Demands on Issuer, Guarantors, Trustee and Senior Noteholders. Any notice or demand which by any provision of this Indenture is required or permitted to be given or served by the Trustee or by the Holders of Senior Notes to or on the Issuer or a Guarantor may be given or served by being deposited postage prepaid, first-class mail (except as otherwise specifically provided herein) addressed (until another address of the Issuer or the relevant Guarantor is filed by the Issuer or such Guarantor with the Trustee) to 6917 Collins Avenue, Miami Beach, Florida 33141, Attention: Chief Financial Officer. Any notice, direction, request or demand by the Issuer, any Guarantor or any Senior Noteholder to or upon the Trustee shall be deemed to have been sufficiently given or made, for all purposes, if given pr made at the Corporate Trust Office. Where this Indenture provides for notice to Holders, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to each Holder entitled thereto, at his last address as it appears in the Security Register. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. In case, by reason of the suspension of or irregularities in regular mail service, it shall be impracticable to mail notice to the Issuer, the Guarantors and the Senior Noteholders when such notice is required to be given pursuant to any provision of this Indenture, then any manner of giving such notice as shall be satisfactory to the Trustee shall be deemed to be a sufficient giving of such notice. 73 SECTION 15.5 Officers' Certificates and opinions of Counsel; Statements to Be Contained Therein. Upon any application or demand by the Issuer to the Trustee to take any action under any of the provisions of this Indenture, the Issuer shall furnish to the Trustee an Officers' Certificate stating that all conditions precedent provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent have been complied with, except that in the case of any such application or demand as to which the furnishing of such documents is specifically required by any provision of this Indenture relating to such particular application or demand, no additional certificate or opinion need be furnished. Each certificate or opinion provided for in this Indenture and delivered to the Trustee with respect to compliance with a condition or covenant provided for in this Indenture shall include (i) a statement that the person making such certificate or opinion has read such covenant or condition, (ii) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based, (iii) a statement that, in the opinion of such person, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with and (iv) a statement as to whether or not, in the opinion of such person, such condition or covenant has been complied with. Any certificate, statement or opinion of an officer of the Issuer may be based, insofar as it relates to legal matters, upon a certificate or opinion of or representations by counsel, unless such officer knows that the certificate or opinion or representations with respect to the matters upon which his certificate, statement or opinion may be based as aforesaid are erroneous. Any certificate, statement or opinion of counsel may be based, insofar as it relates to factual matters or information which is in the possession of the Issuer, upon the certificate, statement or opinion of or representations by an officer or officers of the Issuer, unless such counsel knows that the certificate, statement or opinion or representations with respect to the matters upon which his certificate, statement or opinion may be based as aforesaid are erroneous. Any certificate, statement or opinion of an officer of the Issuer or of counsel may be based, insofar as it relates to accounting matters, upon a certificate or opinion of or representations by an accountant or firm of accountants in the employ of the Issuer, unless such officer or counsel, as the case may be, knows that the certificate or opinion or representations with respect to the accounting matters upon which his certificate, statement or opinion may be based as aforesaid are erroneous. Any certificate or opinion of any independent firm of public accountants filed with the Trustee shall contain a statement that such firm is independent. SECTION 15.6 Payments Due on Saturdays, Sundays and Holidays. If the scheduled due date of any principal of or premium or interest on the Senior Notes or the date fixed for redemption of any Senior Note shall not be a Business 74 Day, then payment of such principal, premium or interest need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on the scheduled due date or the date fixed for redemption, and no interest shall accrue for the period after such date. SECTION 15.7 Effect of Headings. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. SECTION 15.8 NEW YORK LAW TO GOVERN. THIS INDENTURE AND RACE SENIOR NOTE SHALL BE DEEMED TO BE A CONTRACT UNDER THE LAWS OF THE STATE OF NEW YORK, AND FOR ALL PURPOSES SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF SAID STATE. SECTION 15.9 Counterparts. This Indenture may be executed in any number of counterparts, each of which shall be an original, but such counterparts shall together constitute but one and the same instrument. SECTION 15.10 Conflict with the Trust Indenture Act. If any provision hereof limits, qualifies or conflicts with a provision of the Trust Indenture Act which is required under such Act to be a part of and govern this Indenture, the latter provision shall control. If any provision of this Indenture modifies or supersedes any provision of the Trust Indenture Act which may be so modified or superseded, the latter provision shall be deemed to apply to this Indenture as so modified. 75 IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and attested, all as of the date first above written. ROYAL CROWN CORPORATION, as Issuer By: /s/ Joseph A. Levato ------------------------------- [CORPORATE SEAL] Title: Senior Vice President Attest: /s/ Curtis S. Gimson --------------------- ROYAL CROWN COLA CO., as Guarantor By: /s/ Joseph A. Levato ------------------------------ [CORPORATE SEAL] Title: Executive Vice President Attest: /s/ Curtis S. Gimson ------------------------- ABBY'S, INC., as Guarantor By: /s/ Joseph A. Levato ----------------------------- [CORPORATE SEAL] Title: Executive Vice President Attest: /s/ Curtis S. Gimson ------------------------- THE BANK OF NEW YORK, as Trustee By: /s/ Todd N. Niemy ---------------------------- [CORPORATE SEAL] Title: Assistant Vice President Attest: /s/ C. Wenz ---------------------------- EX-4 4 EXHIBIT 4.16 Exhibit 4.16 MASTER AGREEMENT MASTER AGREEMENT (this "Agreement"), dated as of May 5, 1997, among Franchise Finance Corporation of America, a Delaware corporation ("Franchise Finance"), Franchise Finance, as Master Servicer and Special Servicer pursuant to the P&S Agreement (as defined below) ("Servicer"), FFCA Acquisition Corporation, a Delaware corporation ("Acquisition"), FFCA Mortgage Corporation, a Delaware corporation (the "Lender" and together with Acquisition, Franchise Finance and Servicer collectively, "FFCA"), Triarc Companies, Inc., a Delaware corporation ("Triarc"), Arby's Restaurant Development Corporation, a Delaware corporation ("ARDC"), Arby's Restaurant Holding Company, a Delaware corporation ("ARHC"), Arby's Restaurant Operations Company, a Delaware corporation ("AROC"), Arby's, Inc., a Delaware corporation ("Arby's"), RTM Operating Company (f/k/a Triarc Restaurants Disposition 1, Inc.), a Delaware corporation ("RTMOC"), RTM Development Company (f/k/a Triarc Restaurants Disposition 2, Inc.), a Delaware corporation ("RTMDC"), RTM Partners, Inc., a Georgia corporation ("Holdco"), RTM Holding Company, Inc., a Georgia corporation ("Parent"), RTM Management Company, LLC, a Georgia limited liability company ("RTMM"), and RTM, Inc., a Georgia corporation ("RTM"). Capitalized terms used herein without definition shall have the meanings ascribed thereto in the Loan Documents, the Sale-Leaseback Documents or the Pension Documents (all as defined below), as applicable. The term Loan Documents shall have the meaning ascribed thereto in the applicable Loan Agreement (as defined below). PRELIMINARY STATEMENTS Pursuant to the Amended and Restated Loan Agreement, dated as of October 13, 1995 and effective as of May 1, 1995, as supplemented (the "ARDC Loan Agreement"), by and between Acquisition and ARDC, Acquisition has advanced to ARDC certain mortgage loans in the original aggregate principal amount of $31,706,974 (the "ARDC Mortgage Loans") and certain equipment loans in the original aggregate principal amount of $3,042,405 (the "ARDC Equipment Loans" and together with the ARDC Mortgage Loans, collectively, the "ARDC Loans"). The ARDC Mortgage Loans are evidenced by 51 separate Notes identified on Schedule I hereto (collectively, the "ARDC Notes") and are secured by a first priority security interest in 51 related Sites identified on Schedule II hereto (the "ARDC Sites") pursuant to the several Deeds of Trust corresponding thereto (collectively, the "ARDC Deeds of Trust"). The ARDC Equipment Loans are evidenced by 16 separate Equipment Notes identified on Schedule I hereto (collectively, the "ARDC Equipment Notes") and secured by a first priority security interest in the related Equipment pursuant to the Equipment Security Agreements corresponding thereto 2 (collectively, the "ARDC Equipment Security Agreements") and certain related UCC-1 Financing Statements. The ARDC Sites are leased to AROC pursuant to a separate Lease with respect to each ARDC Site (collectively, the "ARDC Leases") and a separate Equipment Lease with respect to the Equipment at such ARDC Site (collectively, the "ARDC Equipment Leases") and managed on behalf of AROC by Arby's pursuant to the Management Agreement, dated as of May 1, 1995 (the "AROC Management Agreement"), between Arby's and ARDC. In addition, AROC and Arby's have entered into a License Agreement with respect to each ARDC Site (collectively, the "ARDC License Agreements"). AROC has collaterally assigned the ARDC License Agreements to ARDC pursuant to a Collateral Assignment of License Agreement with respect to each ARDC Site (collectively, the "AROC Collateral Assignments"), and ARDC has collaterally assigned all of its right, title and interest in and to the AROC Collateral Assignments to Acquisition pursuant to a Collateral Assignment of License Agreement with respect to each ARDC Site (the "ARDC Collateral Assignments"). Pursuant to the Loan Agreement, dated as of October 13, 1995, as supplemented (the "ARHC Loan Agreement"), by and between Acquisition and ARHC, Acquisition has advanced to ARHC certain mortgage loans in the original aggregate principal amount of $19,822,907 (the "ARHC Initial Mortgage Loans") and certain equipment loans in the original aggregate principal amount of $4,065,280 (the "ARHC Equipment Loans"). In addition, pursuant to the Loan Agreement, dated as of September 5, 1996 (the "1996 Loan Agreement" and together with the ARDC Loan Agreement and the ARHC Loan Agreement, collectively, the "Loan Agreements"), by and between the Lender and ARHC, the Lender has advanced to ARHC certain additional mortgage loans in the original aggregate principal amount of $1,600,000 (the "ARHC Additional Mortgage Loans" and together with the ARHC Initial Mortgage Loans, collectively the "ARHC Mortgage Loans"). The ARHC Mortgage Loans and the ARHC Equipment Loans are referred to collectively as the "ARHC Loans." The ARHC Mortgage Loans are evidenced by separate Notes identified on Schedule I hereto (the "ARHC Notes") and secured by a first priority security interest in the 30 related Sites identified on Schedule II hereto (the "ARHC Sites") pursuant to the several Deeds of Trust corresponding thereto (the "ARHC Deeds of Trust"). The ARHC Equipment Loans are evidenced by 23 separate Equipment Notes identified on Schedule I hereto (the "ARHC Equipment Notes") and secured by a first priority security interest in the related Equipment pursuant to the several Equipment Security Agreements corresponding thereto (collectively, the "ARHC Equipment Security Agreements") and certain UCC-1 Financing Statements. The ARHC Sites are managed on behalf of ARHC by Arby's pursuant to the Management Agreement, dated as of May 1, 1995, as amended (the "ARHC Management Agreement"), between Arby's and ARHC. In addition, ARHC and Arby's have entered into a License Agreement with respect to each ARHC Site (collectively, the "ARHC License Agreements"). ARHC has collaterally assigned the ARHC License Agreements to Acquisition or the Lender, as applicable, pursuant to a Collateral Assignment of License Agreement with respect to each ARHC Site 3 (the "ARHC Collateral Assignments"). The AROC Collateral Assignments, the ARDC Collateral Assignments and the ARHC Collateral Assignments are referred to herein collectively as the "Collateral Assignments." The Collateral Assignments have been consented to by Arby's and entitle Acquisition or the Lender, as applicable, upon an Event of Default and the exercise by Acquisition or the Lender as applicable, of its remedies under the Loan Documents, to operate such ARHC Sites and ARDC Sites as Arby's Restaurants in accordance with the terms of such License Agreements. Triarc has (i) guaranteed (x) the obligations of ARHC under the Loan Documents (the "ARHC Debt Guaranties") and (y) the obligations of AROC under the ARDC Leases and the ARDC Equipment Leases (the "AROC Lease Guaranties" and together with the ARHC Debt Guaranties, collectively, the "Guaranties"), pursuant to an Unconditional Guaranty of Payment and Performance with respect to each Site and (ii) agreed to pay the royalty fees payable under the ARHC License Agreements and the ARDC License Agreements pursuant to the Amended and Restated Royalties Payment Agreement, dated as of October 13, 1995, among Triarc, Arby's and Acquisition (the "ARHC Royalties Payment Agreement"), and the Amended and Restated Royalties Payment Agreement, dated as of October 13, 1995, among Triarc, Arby's and Acquisition (the "AROC Royalties Payment Agreement"), as the case may be, in the event Acquisition or the Lender, as applicable, exercises its remedies under the Loan Documents and elects to operate the ARHC Sites or the ARDC Sites, as the case may be, as Arby's restaurants or Dual Concepts in accordance with the terms of the applicable License Agreements. Effective as of June 1, 1996, Acquisition and the Lender, directly or indirectly, assigned and conveyed, inter alia, certain of the ARDC Loans, the ARHC Loans and the Pension Obligations (as defined below) and the corresponding ARDC Notes, ARHC Notes, ARDC Equipment Notes, ARHC Equipment Notes and Pension Notes (as defined below) listed on Schedule III hereto, mortgages, deeds of trust, deeds to secure debt, security agreements and similar documents securing such ARDC Loans, ARHC Loans, ARDC Notes, ARHC Notes, ARDC Equipment Notes, ARHC Equipment Notes and Pension Notes, to LaSalle National Bank, Trustee (the "Trustee"), pursuant to the Pooling and Servicing Agreement, dated as of June 1, 1996 (the "P&S Agreement") among FFCA Secured Assets Corporation, Depositor; Franchise Finance, Master Servicer and Special Servicer; Trustee; and ABN AMRO Bank N.V., Fiscal Agent. As a result of such transfer, such ARDC Loans, ARHC Loans and certain of the Pension Loan Obligations are included in a segregated pool of assets held by a trust fund or grantor trust (collectively, the "Trust Fund") in which pass-through certificates (collectively, the "Certificates") have been issued (the "Securitization") to certain investors (the "Certificate Holders"), in multiple classes, and which evidence the entire beneficial ownership interest in the Trust Fund. Franchise Finance and Acquisition are lessors under those certain leases with Arby's described on the attached Schedule IV (the "Sale-Leaseback Leases") with respect to the properties described on Schedule IV (the "Sale-Leaseback Sites"). 4 The Sale-Leaseback Leases were entered into by Franchise Finance, one or more of its predecessors in interest or Acquisition, as lessor, and Arby's or one or more of its predecessors in interest, as lessee, and are evidenced by certain purchase agreements or sale-leaseback agreements (the "Sale-Leaseback Agreements") and by certain memoranda of lease recorded in the applicable real property records (the "Memoranda"). The Sale-Leaseback Leases, the Sale-Leaseback Agreements, the Memoranda and the other documents described on Schedule IV are referred to collectively as the "Sale-Leaseback Documents"). The obligations of the lessee under the Sale-Leaseback Documents are referred to herein collectively as the "Sale-Leaseback Obligations." Franchise Finance leases to Arby's certain parcels of land (the "Pension Sites") pursuant to those ground leases described on the attached Schedule V (the "Pension Leases"). Franchise Finance holds a first priority security interest in the buildings and improvements located on the Pension Sites pursuant to those certain mortgages, deeds of trust and deeds to secure debt described on Schedule V (the "Pension Security Instruments"), which Pension Security Instruments secure certain indebtedness of Arby's to Franchise Finance evidenced by the promissory notes described on Schedule V (the "Pension Notes"). The Pension Leases, the Pension Security Instruments, the Pension Notes and the other documents described in Schedule V are referred to collectively as the "Pension Documents." The obligations of the lessee under the Pension Leases are referred to herein as the "Pension Lease Obligations." The obligations of the borrower under the Pension Notes, Pension Security Instruments and the other loan documents related thereto are referred to as the "Pension Loan Obligations." The Pension Lease Obligations and the Pension Loan Obligations are referred to herein collectively as the "Pension Obligations." On February 13, 1997, Arby's, ARDC, ARHC, AROC and Holdco, and, for certain limited purposes, RTM and Triarc, entered into a Stock Purchase Agreement (the "RTM Purchase Agreement") pursuant to which ARDC, ARHC and AROC will sell (the "RTM Sale") to Holdco, and Holdco will purchase from ARDC, ARHC and AROC, all of the shares of capital stock of RTMOC and RTMDC. RTMDC's Certificate of Incorporation will contain at the RTM Closing (as defined below) substantially identical provisions as those contained in ARDC's Certificate of Incorporation. In connection with, and immediately prior to, the consummation of the RTM Sale (the "RTM Closing"), subject to the execution and delivery of this Agreement by FFCA and the other parties hereto and the satisfaction or waiver of the conditions contained in Section 1 hereof, (i) ARHC will assign and convey to RTMOC all of its rights, title and interest in and to all of the Assets (as defined in the RTM Purchase Agreement), including, without limitation, the assets and properties comprising the ARHC Sites as more fully described in the RTM Purchase Agreement (the "ARHC Assets Transfer"), other than the Assets in respect of any Restaurant owned by ARHC that is subject to a ground lease for which consent to such transfer 5 shall not have been obtained at or prior to the RTM Closing ("Retained Restaurants"), (ii) AROC will assign and convey to RTMOC all of its rights, title and interest in and to the ARDC Leases and the ARDC Equipment Leases pertaining to the ARDC Sites (the "AROC Transfer"), (iii) ARDC will assign and convey to RTMDC all of its rights, title and interest in and to all of the Assets (as defined in the RTM Purchase Agreement), including, without limitation, the assets and properties comprising the ARDC Sites as more fully described in the RTM Purchase Agreement, including the ARDC Leases and the ARDC Equipment Leases (the "ARDC Assets Transfer"), (iv) Arby's will assign and convey all of its rights, title and interest in and to the Sale-Leaseback Sites and the Sale-Leaseback Documents to its parent, which will immediately thereafter assign and convey such rights, title and interest to ARHC or AROC, which will immediately thereafter assign and convey such rights, title and interest to RTMOC (the "Sale-Leaseback Transfer"), and (v) Arby's will assign and convey all of its rights, title and interest in and to the Pension Sites and the Pension Documents to its parent, which will immediately thereafter assign and convey such rights, title and interest to ARHC or AROC, which will immediately thereafter assign and convey such rights, title and interest to RTMOC (the "Pension Transfer"). The ARDC Assets Transfer, the ARHC Assets Transfer, the AROC Transfer, the Sale-Leaseback Transfer and the Pension Transfer are referred to collectively as the "Transfers". Title to the Retained Restaurants will not be transferred by ARHC to RTMOC but instead will be retained by ARHC, and the Retained Restaurants will be managed by RTMOC pursuant to the terms of a Managing and Operating Agreement, substantially in the form attached as Exhibit 5.8 to the RTM Purchase Agreement (the "Operating Agreement"), until such time as FFCA shall have received satisfactory evidence that all necessary landlord consents to the transfer of the Retained Restaurants have been obtained. The ARHC Loans pertaining to the Retained Restaurants are listed on Schedule VI-A hereto and are referred to herein collectively as the "Retained Restaurant Loans." Simultaneously with the Transfers, subject to execution and delivery of this Agreement by FFCA and the other parties hereto and satisfaction or waiver of the conditions contained in Section 1 hereof, ARHC will assign, and RTMOC will assume, pursuant to a separate instrument for each Site, all obligations of ARHC arising and accruing from and after the date of the RTM Closing under the applicable ARHC Loans and under any of the Loan Document pertaining thereto (other than (a) all of the ARHC Retained Loans (as defined herein), except that RTMOC will assume such obligations with respect to the Assumed ARHC Retained Loan (as defined below), and (b) all of the Retained Restaurant Loans), pursuant to an instrument of assignment and assumption or such other documentation as is reasonably required by and is reasonably acceptable to FFCA and Triarc (each, an "ARHC Assignment and Assumption"), and ARHC will thereupon be released and discharged from all obligations under such ARHC Loans (other than the ARHC Retained Loans and the Retained Restaurant Loans) and the Loan Documents related thereto that arise and accrue from and after the date of RTM Closing (except that ARHC will not be released from any payment obligation under the Loan Documents 6 that arose or accrued and was due and payable prior to the date of the RTM Closing and any obligation for indemnification under the Loan Documents in respect of third party claims that are based on facts and circumstances occurring prior to the date of the RTM Closing) (the "ARHC Release"). The "ARHC Retained Loans" means the loans and other obligations under the Loan Documents pertaining to the ARHC Sites listed on Schedules VI-B and VI-C hereto. The ARHC Retained Loan with respect to Unit #354 located at Northwood, Ohio and listed as No. 1 on Schedule VI-C hereto is referred to as the "Assumed ARHC Retained Loan." None of the Retained Restaurant Loans are ARHC Retained Loans. Without the prior written consent of FFCA, ARHC will not be released from any obligation for payment or indemnification under the Loan Documents pertaining to the ARHC Retained Loans regardless of whether such obligation arises or accrues prior to or subsequent to the RTM Closing and regardless of whether RTMOC has assumed the obligations of ARHC under such Loan Documents as contemplated by Section 4(x) below. Simultaneously with the Transfers, subject to execution and delivery of this Agreement by FFCA and the other parties hereto and the satisfaction or waiver of the conditions contained in Section 1 hereof, AROC will assign, and RTMOC will assume, pursuant to a separate instrument for each Site, all obligations of AROC arising and accruing from and after the date of the RTM Closing under the applicable ARDC Loans and/or under any of the Loan Documents pertaining thereto (including, without limitation, the ARDC Leases and the ARDC Equipment Leases) pursuant to an instrument of assignment and assumption or such other documentation as is reasonably required by and is reasonably acceptable to FFCA (each, an "AROC Assignment and Assumption"), and thereupon AROC will be released and discharged from all obligations under such ARDC Loans and the Loan Documents related thereto (including, without limitation, the ARDC Leases and the ARDC Equipment Leases) that arise and accrue from and after the date of the RTM Closing (except that AROC will not be released from any payment obligation under the Loan Documents that arose or accrued and was due and payable prior to the date of the RTM Closing and any obligation for indemnification under the Loan Documents in respect of third party claims that are based on facts and circumstances occurring prior to the date of the RTM Closing) (the "AROC Release"). The Collateral with respect to the ARHC Retained Loans will be transferred to RTMOC in connection with the Transfers but such loans will not be assumed by RTMOC. The Collateral with respect to the Retained Restaurant Loans will not be transferred to RTMOC in connection with the Transfers but will instead will be operated by RTMOC under the Operating Agreement and will be transferred to RTMOC at such time as FFCA shall have received satisfactory evidence that all necessary landlord consents to such transfer shall have been obtained, and at such time RTMOC shall assume all of ARHC's obligations under such Retained Restaurant Loan arising and accruing from and after the date of the RTM Closing pursuant to documentation in form and substance reasonably satisfactory to FFCA and ARHC shall be released from its obligations under such Retained Restaurant Loans and the 7 Loan Documents related thereto that arise and accrue from and after the date of such transfer (except that ARHC will not be released from any payment obligation under the Loan Documents that arose or accrued and was due and payable prior to the date of such transfer and any obligation for indemnification under the Loan Documents in respect of third party claims that are based on facts and circumstances occurring prior to the date of such transfer). Simultaneously with the Transfers, subject to the execution and delivery of this Agreement by FFCA and the other parties hereto and the satisfaction or waiver of the conditions contained in Section 1 hereof, ARDC will assign, and RTMDC will assume, pursuant to a separate instrument for each Site, all obligations of ARDC arising and accruing from and after the date of the RTM Closing under the applicable ARDC Loans or any of the Loan Documents pertaining thereto and the ARDC Leases and the ARDC Equipment Leases pursuant to an instrument of assignment and assumption or such other documentation as is required by and is acceptable to FFCA (each, an "ARDC Assignment and Assumption"), and thereupon ARDC will be released and discharged from all obligations under such ARDC Loans and the Loan Documents related thereto that arise and accrue from and after the date of the RTM Closing (except that ARDC will not be released from any payment obligation under the Loan Documents that arose or accrued and was payable prior to the date of the RTM Closing and any obligation for indemnification under the Loan Documents in respect of third party claims that are based on facts and circumstances occurring prior to the date of the RTM Closing) (the "ARDC Release"). Simultaneously with the Transfers, subject to execution and delivery of this Agreement by FFCA and the other parties hereto and satisfaction or waiver of the conditions contained in Section 1 hereof, Arby's will assign to its parent and its parent will assume and immediately thereafter assign to ARHC or AROC, which will assume and immediately thereafter assign to RTMOC, and RTMOC will assume, pursuant to a separate instrument for each Sale-Leaseback Site, all Sale-Leaseback Obligations of Arby's arising and accruing from and after the date of the RTM Closing under the applicable Sale-Leaseback Documents pursuant to an instrument of assignment and assumption or such other documentation as is required by and is acceptable to FFCA (each, a "Sale-Leaseback Assignment and Assumption"). Simultaneously with the Transfers, subject to execution and delivery of this Agreement by FFCA and the other parties hereto and satisfaction or waiver of the conditions contained in Section 1 hereof, Arby's will assign to its parent and its parent will assume and immediately thereafter assign to ARHC or AROC, which will assume and immediately thereafter assign to RTMOC, and RTMOC will assume pursuant to a separate instrument for each Pension Site, all Pension Obligations of Arby's arising and accruing from and after the date of the RTM Closing under the applicable Pension Documents pursuant to an instrument of assignment and assumption or such other documentation as is required by and is acceptable to FFCA (each, a "Pension Assignment and Assumption"). 8 The ARDC Assignments and Assumptions, the ARHC Assignments and Assumptions, the AROC Assignments and Assumptions, the Sale-Leaseback Assignments and Assumptions and the Pension Assignments and Assumptions are referred to collectively as the "Assignments and Assumptions"). The ARDC Releases, the ARHC Releases and the AROC Releases are referred to collectively herein as the "Releases." The Releases will be effected pursuant to both a separate instrument for each applicable Site and a single instrument for all applicable Sites. Triarc, Arby's, ARDC, AROC, ARHC, RTMOC, RTMDC, Holdco, Parent, RTMM and RTM have requested that FFCA consent and agree to the RTM Sale, the Transfers, the Assignments and Assumptions and the Releases, and FFCA, having all requisite authority, is willing to consent and agree to all of the foregoing and to grant releases on the terms and conditions set forth herein. In addition to the documents to be executed and delivered as described above, Triarc, ARDC, AROC, ARHC, Arby's, RTMOC, RTMDC, RTM, RTMM, Parent and FFCA, as applicable, will execute and deliver such other documents as are contemplated by Sections 1, 3 and 4, including, without limitation, certain new license agreements and collateral assignments of license agreements, certain terminations of license agreements, consents to collateral assignments of license agreements, certain terminations of Guaranties, the New Triarc Guaranties (as defined in Section 3), and certain guaranties with respect to the ARHC Loans and the ARDC Leases and the ARDC Equipment Leases and collateral assignments of such guaranties with respect to the ARDC Leases and the ARDC Equipment Leases. ACCORDINGLY, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows: AGREEMENT 1. Conditions to Effectiveness; Effective Time. The consents, waivers, amendments, agreements, terminations and releases contained in this Agreement are hereby made and granted by FFCA and the other parties to this Agreement, but the same are subject to, and shall become effective only upon (the "Effective Time"), the satisfaction of the following conditions, which are for the benefit of, and may be waived by, FFCA: (i) the Certificate of Incorporation of RTMDC shall have been amended in a manner reasonably satisfactory to FFCA; (ii) RTMOC and ARHC shall have executed and delivered a separate ARHC Assignment and Assumption with respect to each of the ARHC Loans (other than (a) each of the ARHC Retained Loans, except that RTMOC and ARHC shall have executed and delivered a separate ARHC 9 Assignment and Assumption with respect to the Assumed ARHC Retained Loan, and (b) each of the Retained Restaurant Loans), in form and substance reasonably satisfactory to FFCA; (iii) RTMOC and AROC shall have executed and delivered a separate AROC Assignment and Assumption with respect to each of the AROC Leases, in form and substance reasonably satisfactory to FFCA; (iv) RTMDC and ARDC shall have executed and delivered a separate ARDC Assignment and Assumption with respect to each of the ARDC Loans, the ARDC Leases and the ARDC Equipment Leases, all in form and substance reasonably satisfactory to FFCA; (v) RTM shall have executed and delivered a separate Guaranty of RTMOC's obligations to RTMDC under each of the ARDC Leases and ARDC Equipment Leases assumed pursuant to the corresponding AROC Assignment and Assumption, and each such Guaranty shall have been collaterally assigned pursuant to a separate instrument by RTMDC to FFCA, all in a form substantially identical to the AROC Lease Guaranties executed by Triarc and the collateral assignments of same and otherwise reasonably satisfactory to FFCA and Triarc; (vi) RTM shall have executed and delivered a separate Guaranty of RTMOC's obligations under each of the ARHC Notes and ARHC Equipment Notes and related Loan Documents assumed pursuant to the corresponding ARHC Assignment and Assumption, in a form substantially identical to the ARHC Debt Guaranties executed by Triarc and otherwise reasonably satisfactory to FFCA and Triarc (and RTM hereby acknowledges that the AROC Lease Guaranties are being terminated as contemplated by Section 3(v) below), in form and substance reasonably satisfactory to FFCA and Triarc; (vii) FFCA shall have received evidence reasonably satisfactory to it of receipt of all necessary third party consents from ground lessors to effect the Assignments and Assumptions (except with respect to the Retained Restaurants); (viii) Triarc shall have executed and delivered the New Triarc Guaranties and an amendment and restatement of each of the ARHC Debt Guaranties (collectively, the "Triarc Guaranties"), all in form and substance reasonably satisfactory to FFCA; (ix) Arby's and RTMOC shall have executed and delivered the New Licenses (as hereinafter defined) and RTMOC shall have executed and delivered a collateral assignment of each of the New Licenses in favor of 10 RTMDC or FFCA, as applicable, and RTMDC, to the extent applicable shall have executed and delivered a Collateral Assignment of each such collateral assignment granted to it for the benefit of FFCA, which collateral assignments shall have been consented to by Arby's, all in form and substance reasonably satisfactory to FFCA; (x) RTM and Triarc each shall have executed and delivered a Royalties Payment Agreement with respect to the obligations of RTMOC under the New Licenses corresponding to the ARDC Loans and the ARHC Loans (the "Royalties Payment Agreements"), in a form substantially identical to the AROC Royalties Payment Agreement executed and delivered by Triarc and otherwise reasonably satisfactory to FFCA and Triarc; (xi) RTMOC and ARHC shall have executed and delivered the Operating Agreement with respect to the Retained Restaurants, in form and substance reasonably satisfactory to FFCA; (xii) the representations and warranties of each party (other than FFCA) contained in this Agreement or any document or instrument expressly contemplated in this Agreement to be delivered in connection herewith shall be true and correct in all material respects as of such date as if made on such date (except for any representation and warranty expressly made as of an earlier date); (xiii) FFCA shall have received the confirmation by Duff & Phelps of the rating assigned to the Securitization after giving effect to the completion of the Transfers and the execution and delivery of the Assignments and Assumptions and the Releases as contemplated in this Agreement; (xiv) FFCA shall have received endorsements to each of the loan policies of title insurance issued to the Lender or Acquisition, as applicable, with respect to each of the ARDC Loans and the ARHC Loans, which endorsements shall date down the effective date of each such policy through the Effective Time, and insure the continued first priority of the liens granted in favor of the Lender or Acquisition, as applicable, pursuant to the instruments insured by such policies, without exception for any matters not originally shown in such policies unless approved by Lender or Acquisition, as applicable, which approval shall not be unreasonably withheld, delayed or conditioned; (xv) FFCA shall have received UCC search results reasonably satisfactory to FFCA evidencing the continued first priority of the liens granted to Franchise Finance, Acquisition or the Lender, as applicable, in personal property of ARDC, ARHC or AROC, as applicable, pursuant to the Loan Documents; 11 (xvi) FFCA shall have received opinions of counsel to each of the other parties to this Agreement (and at their sole cost and expense) in form and substance reasonably satisfactory to FFCA with respect to the matters addressed in Section 5(iii) of this Agreement; (xvii) each of the Pension Leases and the Sale-Leaseback Leases shall have been amended in form and substance reasonably acceptable to FFCA to include references to the applicable New Licenses (as defined in Section 3(iii)); (xviii) RTMOC shall have entered into a New License with Arby's with respect to each of the Sale-Leaseback Sites and Pension Sites; (xix) RTMOC and RTM shall have entered into a management services agreement pertaining to certain services as specified therein, and RTMOC and RTMM shall have entered into a management services agreement pertaining to certain services as specified therein, with respect to the Sites, the Sale-Leaseback Sites and the Pension Sites, which management services agreements (collectively, the "Management Service Agreements") shall be in form and substance reasonably satisfactory to FFCA; (xx) FFCA shall have received from or on behalf of the other parties to this Agreement such other documents, legal opinions and other instruments as FFCA shall reasonably require, including, without limitation, UCC financing statements, all in form and substance reasonably satisfactory to FFCA, which documents, legal opinions and other instruments shall be delivered at the sole cost and expense of the parties to this Agreement other than FFCA; and (xxi) Notation shall have been made on the deeds or other instruments conveying the Sites related to the ARHC Retained Loans and the bills of sale conveying the Equipment corresponding to such Sites that such assets shall be subject to the Deeds of Trust and Equipment Security Agreements (and related UCC-1 Financing Statements) encumbering such Sites. If the RTM Closing does not occur on the same day as FFCA indicates that the foregoing conditions have been satisfied or waived, the consents, amendments, agreements, terminations and releases contained in this Agreement shall be null and void and of no force and effect. 2. Consent. (a) Effective as of the Effective Time and subject to the satisfaction or waiver of each of the conditions set forth in Section 1 hereof, FFCA hereby consents and agrees to, and, only as to the transactions specifically 12 described in this Agreement, waives any provisions of the Loan Documents to the extent necessary to permit, the following: (i) the consummation of the Transfers and the RTM Sale; (ii) the consummation of the ARHC Assignments and Assumptions, including without limitation, the assignment by ARHC to, and the assumption by RTMOC of, all of ARHC's rights and obligations under (a) the ARHC Notes, (b) the ARHC Equipment Notes, (c) the ARHC Deeds of Trust, and (d) the ARHC Equipment Security Agreements; (iii) the consummation of the AROC Assignments and Assumptions, including without limitation, the assignment by AROC to, and the assumption by RTMOC of, all of AROC's rights and obligations under (a) the ARDC Leases and (b) the ARDC Equipment Leases; (iv) the consummation of the ARDC Assignments and Assumptions, including without limitation, the assignment by ARDC to, and the assumption by RTMDC of, all of ARDC's rights and obligations under (a) the ARDC Notes, (b) the ARDC Equipment Notes, (c) the ARDC Deeds of Trust, (d) the ARDC Equipment Security Agreements, (e) the ARDC Leases and (f) the ARDC Equipment Leases; (v) the consummation of the Sale-Leaseback Assignments and Assumptions, including, without limitation, the assignment by Arby's to, and the assumption by RTMOC of, all of Arby's rights and obligations under the Sale-Leaseback Documents; (vi) the consummation of the Pension Assignments and Assumptions, including, without limitation, the assignment by Arby's to, and the assumption by RTMOC of, all of Arby's rights and obligations under the Pension Documents; (vii) the terminations of certain agreements referred to in Section 3; and (viii) the consummation of the transfer to RTMOC of all of the Assets comprising any Retained Restaurant, and the assignment by ARHC to RTMOC, and the assumption by RTMOC, of all obligations of ARHC under the applicable Loan Documents relating to the corresponding Retained Restaurant Loans, upon receipt by FFCA of evidence to its reasonable satisfaction that all necessary landlord consents to such transfer have been obtained. 13 (b) Effective as of the Effective Time, each of ARDC, ARHC, AROC, Arby's and Triarc hereby consents and agrees to the events described in the preceding subsection (a), the releases and terminations described in Section 3, the further agreements described in Section 4 and the events otherwise described in the Preliminary Statements of this Agreement. Triarc acknowledges and agrees to its obligations under the Triarc Guaranties and the Royalties Payment Agreement, and acknowledges and agrees that it has not been released as to its payment obligations under the AROC Lease Guaranties which arose or accrued and were due and payable before the date of the RTM Closing and any obligation for indemnification under the AROC Lease Guaranties in respect of third party claims that are based on facts and circumstances occurring prior to the date of the RTM Closing. (c) Effective as of the Effective Time, each of RTM, RTMOC, RTMDC, RTMM, Parent and Holdco hereby consents and agrees to the events described in the preceding subsection (a), the releases and terminations described in Section 3, the further agreements described in Section 4 and the events otherwise described in the Preliminary Statements of this Agreement. 3. Releases and Terminations. Effective as of the Effective Time and subject to the satisfaction or waiver of the conditions contained in Section 1 hereof: (i) FFCA and ARHC, ARDC and AROC agree to deliver to each other appropriate instruments (a separate instrument for each of the Sites and one instrument for all of the Sites (other than with respect to the Retained Restaurants Loans and the ARHC Retained Loans)) in a form reasonably satisfactory to FFCA and ARHC, ARDC and AROC, effecting the Releases and the release of FFCA from all obligations to ARHC, ARDC and AROC under the Loan Documents which arise or accrue from and after the date of the RTM Closing; (ii) FFCA and ARHC agree that, upon receipt of evidence reasonably satisfactory to FFCA that all necessary landlord consents required to transfer to RTMOC the Assets comprising a Retained Restaurant have been obtained, to execute and deliver to each other appropriate instruments for each of the subject Sites in a form reasonably satisfactory to FFCA and ARHC releasing each other from their respective obligations under the promissory notes and the other Loan Documents relating to such Retained Restaurant Loan which arise or accrue from and after the date of such transfer (except that ARHC shall not be released from any payment obligation under the Loan Documents pertaining to such Retained Restaurant Loan that arose or accrued and was due and payable prior to the date of such transfer and any obligations under such Loan Documents in respect of third party claims that are based on facts and circumstances occurring prior to the date of such transfer; 14 (iii) FFCA agrees that upon the consummation of the Assignments and Assumptions, and the execution and delivery by RTMOC and Arby's of license agreements as provided in Section 5.12 of the RTM Purchase Agreement (the "New Licenses") and the satisfaction or waiver of all of the conditions specified in Section 1, the ARHC License Agreements and the ARDC License Agreements (other than with respect to the Retained Restaurants) shall be terminated and cancelled and be of no further force or effect (the "License Agreement Termination") and the Collateral Assignments (other than with respect to the Retained Restaurants, until such time as such Retained Restaurant is transferred to RTMOC as contemplated herein) shall be terminated and cancelled and be of no further force and effect; (iv) FFCA agrees that upon the consummation of the Assignments and Assumptions and the satisfaction or waiver of all of the conditions specified in Section 1, the AROC Management Agreement and the ARHC Management Agreement (other than with respect to the Retained Restaurants, until such time as such Retained Restaurant is transferred to RTMOC as contemplated herein) may be terminated and cancelled and be of no further force and effect (the "Management Agreement Termination"); (v) FFCA agrees that upon the consummation of the Assignments and Assumptions, and upon the execution and delivery by Triarc of the Royalties Payment Agreement as contemplated by Section 2(x) and the satisfaction or waiver of all the conditions specified in Section 1, the obligations of Triarc under the AROC Royalties Payment Agreement and the ARHC Royalties Payment Agreement shall be terminated and cancelled and be of no further force and effect (the "Royalties Payment Agreement Termination"); (vi) FFCA agrees that upon the consummation of the Assignments and Assumptions, and upon the execution and delivery by Triarc of an Unconditional Guaranty of Payment and Performance (the "New Triarc Guaranties") with respect to each ARDC Note and ARDC Equipment Note (substantially in the form of the ARHC Debt Guaranties and otherwise reasonably satisfactory to FFCA and Triarc) and the satisfaction or waiver of all of the conditions specified in Section 1, the obligations of Triarc under the AROC Lease Guaranties which arise and accrue from and after the date of the RTM Closing shall be terminated and cancelled and be of no further force or effect (the "AROC Lease Guaranties Termination"), except that Triarc shall not be released from any payment obligation under the AROC Lease Guaranties that arose or accrued and was due and payable prior to the date of the RTM Closing and any obligations for indemnification under the AROC Lease Guaranties in respect of third party claims that are based on facts and circumstances occurring prior to the date of the RTM Closing; 15 (vii) RTMOC agrees that, upon the satisfaction or waiver of all the conditions specified in Section 1, it shall comply with the provisions of Sections 10.B., 10.C., 10.D., 10.E., 10.F., 10.G., 10.I., 10.J. and 10.K. of the ARHC Loan Agreements with respect to each ARHC Retained Loan and Retained Restaurant Loan. 4. Further Agreements. (i) Effective as of the Effective Time and subject to the satisfaction or waiver of the conditions set forth in Section 1 hereof, FFCA agrees: (a) to consent to the execution and delivery by Triarc of an amendment and restatement of each of the ARHC Debt Guaranties in form and substance mutually satisfactory to FFCA and Triarc; (b) (x) to deliver to Triarc simultaneously with, and in the same manner as, delivery to, or receipt from, RTMOC, RTMDC or RTM, as applicable, written notice of any breach, default or event of default under any of the Loan Documents, and (y) that no notice from FFCA shall constitute a notice of default under any Loan Document or shall commence the running of any applicable cure or grace period unless and until such notice is received by Triarc; (c) with respect to the Retained Restaurant Loans and ARHC Retained Loans, (x) to deliver to RTM simultaneously with, and in the same manner as delivery from, ARHC or Triarc, as applicable, written notice of any breach, default or event of default under any of the Loan Documents pertaining to such loans and (y) that no notice from FFCA shall constitute a notice of default under any Loan Document pertaining to such loans or commence the running of any applicable cure or grace period unless and until such notice is received by RTM; (d) to permit Triarc or any of its affiliates to cure any default or event of default arising under any of the Loan Documents; provided that it is understood that any such right to cure will not increase the applicable cure period under the Loan Documents; (e) to permit RTM or any of its affiliates to cure any default or event of default arising under any of the Loan Documents pertaining to the ARHC Retained Loans; provided that it is understood that any such right to cure will not increase the applicable cure period under the applicable Loan Documents; (f) to make no further loans or advances under any of the Loan Documents without the prior written consent of Triarc (and, in the 16 case of loans and advances with respect to an ARHC Retained Loan, the prior written consent of RTM) except that FFCA's rights to make advances under the Loan Documents as are contemplated by such Loan Documents to protect its rights in the collateral thereunder shall not be limited or affected in any manner; (g) (x) not to amend any provision of any of the Loan Documents (or any documents executed by RTMOC, RTMDC or RTM in replacement of any of such documents or otherwise in connection with the ARDC Loans, ARDC Leases or ARHC Loans) without Triarc's prior written consent, in the case of any amendment that (A) increases the rate of interest or changes the amount of rental payments or time for payment of principal, rent or interest on any of the ARHC Loans, ARDC Leases or ARDC Loans (collectively, the "FFCA Obligations"), or (B) changes the principal amount or timing of scheduled payments of any of the FFCA Obligations, or (C) adds provisions that subordinate the FFCA Obligations to any other obligations of any person; and (y) not to amend any other provision of the Loan Documents (or any documents executed by RTMOC, RTMDC or RTM in replacement of any such documents or otherwise in connection with the ARDC Loans, ARDC Leases or ARHC Loans) without Triarc's prior written consent, which consent shall be deemed given by Triarc if it shall fail to deliver to FFCA written objection to any proposed amendment within 20 days after receipt of documentation containing the proposed form of such amendment and which consent shall not be unreasonably withheld (except that, such consent may be given or withheld by Triarc in its sole discretion in the case of any amendment that is reasonably likely to increase the amount of Triarc's (or its successor's or assign's) liability under, or that is reasonably likely to increase the likelihood that a claim will be made against such person under, the Triarc Guaranties, the Royalties Payment Agreement, any other Loan Document or any of its other obligations in respect of the FFCA Obligations); (h) (x) not to amend any provision of any of the Sale-Leaseback Documents or Pension Documents (or any documents executed by RTMOC or RTM in replacement of any such documents or otherwise in connection with the Sale-Leaseback Obligations or Pension Obligations) without Arby's prior written consent, in the case of any amendment that (A) increases the rate of interest, or changes the amount of rental payments or time for payment of principal, rent or interest on any of the Sale-Leaseback Obligations or Pension Obligations (collectively, the "Arby's FFCA Obligations"), or (B) changes the principal amount or timing of scheduled payments of any of the Pension Loan Obligations, or (C) adds provisions that subordinate the Arby's FFCA Obligations to any other obligations of any person; and (y) not to amend any other provision of any of the Sale-Leaseback Documents or Pension Documents (or any documents executed by RTMOC or RTM in replacement of any such documents or otherwise in connection with 17 the Sale-Leaseback Obligations or Pension Obligations) without Arby's prior written consent, which consent shall be deemed given by Arby's if it shall fail to deliver to FFCA written objection to any proposed amendment within 20 days after receipt of documentation containing the proposed form of such amendment and which consent shall not be unreasonably withheld (except that, such consent may be given or withheld by Arby's in its sole discretion in the case of any amendment that is reasonably likely to increase the amount of Arby's (or its successor's or assign's) liability under, or that is reasonably likely to increase the likelihood that a claim will be made against such person under, the Sale-Leaseback Documents or the Pension Documents or any of its other obligations in respect of the Arby's FFCA Obligations); (i) not to amend any provision contained in any Guaranty or Royalties Payment Agreement made by RTM or its assigns in connection with the ARHC Loans, ARDC Loans, ARDC Leases, Sale-Leaseback Obligations or Pension Obligations without Triarc's prior written consent; (j) without the prior written consent of Triarc and RTM, not to consent to the release of any obligor under the Loan Documents or Pension Loan Documents, as applicable or any collateral from the liens created by the Loan Documents or Pension Loan Documents, as applicable other than pursuant to the terms of such documents as currently in effect or pursuant to this Agreement or to consent to the granting of any consensual lien on any of the collateral securing the obligations under the Loan Documents or the Pension Loan Documents; and (k) without the prior written consent of Arby's, not to consent to the release of any obligor under the Sale-Leaseback Documents or Pension Leases other than pursuant to the terms of such documents as currently in effect or pursuant to this Agreement. (ii) Simultaneously with the execution and delivery of this Agreement, FFCA agrees to deliver to ARDC, ARHC, AROC, Arby's, Triarc, RTMOC, RTMDC or their designees an opinion of counsel in form and substance reasonably satisfactory to the person requesting the same with respect to the matters addressed in Section 5(i) and (ii)(a) and (b) hereof. (iii) Subject to the limitations set forth in Section 13, the parties to this Agreement (other than FFCA) agree, jointly and severally, to pay or reimburse FFCA for all transaction fees and expenses to the extent paid by or invoiced to FFCA as a result of the Transfers, the Assignments and Assumptions, the Releases and the other matters contemplated by this Agreement, whether incurred before, on or after the RTM Closing, including without limitation, transfer taxes, 18 recording and filing fees, documentary stamp taxes, escrow fees, reasonable attorneys fees and expenses and the cost of title insurance endorsements. (iv) RTM and RTMM hereby agree that until all obligations under the ARHC Loans, ARDC Loans, Sale-Leaseback Obligations and Pension Obligations (collectively, the "Senior Obligations") shall have been indefeasibly repaid in full, upon the occurrence and during the continuance of an event of default under any of the Loan Documents, the Sale-Leaseback Documents or the Pension Documents, its right to collect and receive any payments under the applicable Management Service Agreement shall be, and hereby are, subordinated to the payment in full of the Senior Obligations. If any amount shall be collected and received by RTM or RTMM in violation of the foregoing, such amount shall be held by RTM or RTMM, as applicable, in trust for FFCA and shall forthwith upon receipt be turned over to FFCA in the exact form received, to be applied against the Senior Obligations. Notwithstanding the foregoing, neither RTM nor RTMM shall be obligated to continue to provide their respective management services to RTMOC at any time on terms that they are not being paid for such services on a current basis in accordance with the terms of the applicable Management Services Agreement. Notwithstanding the foregoing, FFCA acknowledges and agrees that (a) at all times other than after the occurrence and during the continuance of such an event of default, RTM and RTMM may collect and retain all payments received under the Management Services Agreement and (b) RTM and RTMM may grant to Triarc and its affiliates as security in all of their rights under the applicable Management Services Agreements and upon a foreclosure upon such security interests, Triarc or its affiliates may receive and retain such payments, but Triarc acknowledges and agrees that its rights to so receive and retain such payments shall be subject to this Section 4(iv). (v) ARDC, ARHC, AROC, Arby's and Triarc hereby agree, so long as any obligations remain outstanding under the ARDC Loans, that such persons, whether acting alone or in concert, shall not exercise any right of subrogation, indemnity or reimbursement, or make any other claim, against RTMDC. Each of RTM, RTMM, RTMOC and Parent hereby acknowledge and agree that nothing in this Section 4(v) shall in any way diminish or constitute a defense against any obligation of such party to indemnify and hold Triarc and its affiliates harmless against, or otherwise be liable for, any Losses (as defined in the Stock Purchase Agreement) incurred by them based upon, arising out of or otherwise in respect of the operation of RTMDC from and after the date of the RTM Closing. (vi) ARHC hereby agrees that until (i) all obligations under the ARHC Retained Loans are paid in full and (ii) all obligations under the Retained Restaurant Loans are paid in full or assumed by RTMOC upon receipt of necessary consents to the transfer of the collateral related thereto as contemplated herein, it will not effect a liquidation or dissolution of ARHC. 19 (vii) Without Triarc's prior written consent, RTMDC, RTMOC, Holdco and Parent hereby agree that they shall not amend, and FFCA agrees that it shall not consent to any amendment of, Section 3, 6, 8, 9, 10, 11, 12 or 13 of the Restated Certificate of Incorporation of RTMDC as in effect on the date hereof. (viii) FFCA hereby waives, with Triarc's consent, any requirement in any of the Loan Documents, Pension Documents or Sale-Leaseback Documents that RTMOC, RTMDC or RTM deliver audited financial statements to FFCA in respect of their fiscal years ended May 1997. (ix) It is understood and agreed by the parties that the term "arise and accrue from and after the date of the RTM Closing" or another specified date, or any variation thereof, when used in this Agreement or any Release delivered pursuant hereto, shall include all obligations that become due and payable on and after such specified date (notwithstanding the fact that the obligation to make such payment arose or was accrued prior to such date). (x) (a) The parties hereto acknowledge and agree that, upon satisfaction or waiver of all of the conditions specified in Section 1, ARHC shall convey each of the Sites and the Equipment corresponding to the ARHC Retained Loans to RTMOC (the "Conveyances") subject to the corresponding Deeds of Trust and Equipment Security Agreements (and the related UCC-1 Financing Statements) but the corresponding ARHC Loans will not be assumed by RTMOC (except as may be required in the future by Section 4(x)(d) or (f) and except for the Assumed ARHC Retained Loan) RTMOC agrees with and for the benefit of FFCA that from and after such conveyances, it shall: (i) comply with and perform each of the covenants of ARHC under the Loan Documents applicable to such ARHC Retained Loans (other than the covenant to make payment of principal and interest under such Loan Documents), including, without limitation, the covenants set forth in Section 10 of the ARHC Loan Agreement, Article II of the Deeds of Trust corresponding to such ARHC Retained Loans and Section 3 of the Equipment Security Agreements corresponding to such ARHC Retained Loans; and (ii) comply with and perform each of the provisions of Article III of the Deeds of Trust and Section 3.7 of the Equipment Security Agreements corresponding to such ARHC Loans, including, without limitation, applying the proceeds of all casualties and condemnations affecting the Sites and Equipment corresponding to such ARHC Retained Loans in accordance with the terms and conditions of such Article III and Section 3.7. 20 (b) ARHC, ARDC, AROC, Arby's and Triarc stipulate and agree for the benefit of FFCA not to assert any claims, counterclaims, offsets or defenses to the performance of ARHC's obligations under the Loan Documents pertaining to the ARHC Retained Loans that are not otherwise available to them (without giving effect to the Conveyances but after giving effect to all written waivers made by such persons) that arise solely as a result of: (i) the conveyance of the Sites and Equipment corresponding to such ARHC Retained Loans to RTMOC; (ii) the ownership, use, operation and maintenance of the Sites and Equipment corresponding to such ARHC Retained Loans by RTMOC, including, without limitation, the compliance by RTMOC with the terms and conditions of this Section; or (iii) any failure, omission, delay or lack on the part of FFCA to enforce, assert or exercise any provision of the Loan Documents pertaining to the ARHC Retained Loans, including any right, power or remedy conferred on FFCA in any of such Loan Documents or any action on the part of FFCA granting indulgence or extension in any form, and agree that such failure, omission, delay or inaction shall not diminish, impair or limit the obligations of ARHC under such Loan Documents. ARHC, ARDC, AROC, Arby's and Triarc further stipulate and agree for the benefit of FFCA not to contest the validity or enforceability of any provision of this Agreement or any of the Loan Documents pertaining to the ARHC Retained Loans or the validity or perfection of any lien upon the Sites or Equipment related to such ARHC Retained Loans. (c) RTM, RTMOC, RTMDC, RTMM, Parent and Holdco stipulate and agree for the benefit of FFCA (i) not to assert any defense to the exercise and enforcement by FFCA of its rights and remedies under the Loan Documents pertaining to the ARHC Retained Loans, including, without limitation, the commencement and prosecution to completion of a nonjudicial or a judicial foreclosure action or the appointment of a receiver; and (ii) that the first priority of the liens of the Deeds of Trust and Equipment Security Agreements (and related UCC-1 Financing Statements) corresponding to such ARHC Retained Loans shall not be affected or impaired by reason of the happening from time to time of the following, all without notice to, or the further consent of, RTM, RTMOC, RTMDC, RTMM, Parent and Holdco (except as otherwise expressly provided in this Agreement): (1) the waiver by FFCA of the observance or performance by ARHC of any of the obligations, undertakings, conditions or other provisions contained in any of the Loan Documents pertaining to the ARHC Retained Loans; (2) the extension, in 21 whole or in part, of the time for payment of any amount owing or payable under the Loan Documents pertaining to the ARHC Retained Loans; (3) the modification or amendment (whether material or otherwise) or any of the obligations of ARHC under, or any other provisions of, any of the Loan Documents pertaining to the ARHC Retained Loans; (4) the taking or the omission of any of the actions referred to in any of the Loan Documents pertaining to the ARHC Retained Loans (including, without limitation, the giving of any consent referred to therein); and (5) any failure, omission, delay or lack on the part of FFCA to enforce, assert or exercise any provision of the Loan Documents pertaining to the ARHC Retained Loans, including any right, power or remedy conferred on FFCA in any of such Loan Documents or any action on the part of FFCA granting indulgence or extension in any form. (d) If, at any time subsequent to the Effective Time, (i) FFCA elects to include one or more of the ARHC Retained Loan in one or more securitizations, and the written opinion of outside counsel to FFCA or the advice of FFCA's underwriter with respect to such securitization is that RTMOC must assume as co-obligor the obligations of ARHC under the ARHC Retained Loans in order for such ARHC Retained Loans to be included in such securitization, or (ii) FFCA receives a written opinion of outside counsel to FFCA that RTMOC must assume as co-obligor the obligations of ARHC under the ARHC Retained Loans in order for FFCA to meet or satisfy any legal requirement applicable to FFCA, ARHC shall, upon receipt of notice from FFCA, assign to RTMOC and RTMOC shall assume from ARHC as co-obligor, all of the obligations of ARHC arising and accruing under the Loan Documents pertaining to the ARHC Retained Loans to be included in such securitization or to meet or satisfy any legal requirement applicable to FFCA; provided, however, notwithstanding such assignment and assumption, ARHC and Triarc shall not be released from the respective obligations with respect to such Loan Documents. ARHC and RTMOC agree to execute a separate ARHC Assignment and Assumption with respect to each ARHC Retained Loan assumed by RTMOC, Triarc agrees to execute a separate New Triarc Guaranty with respect to each such ARHC Retained Loan, RTM agrees to execute a separate Guaranty of RTMOC's obligations under each such ARHC Retained Loan, and each of the parties to this Agreement agrees to execute such other documents with respect to such assignment and assumption as are consistent with the obligations being assumed and as are otherwise consistent with the documents executed pursuant to Section 1 (but without releasing or terminating any of the obligations of ARHC or Triarc with respect to such ARHC Retained Loans all in form substantially identical to those being executed and delivered on the date hereof with respect to the ARHC Loans that are not ARHC Retained Loans). All of the costs and expenses incurred by or on behalf of FFCA as a result of the preceding provisions shall be paid by the parties to this Agreement other than FFCA as contemplated by Section 4(iii). 22 (e) The parties hereto acknowledge and agree for the benefit of FFCA that a breach of any of the stipulations, agreements, terms and conditions of Section 4(x) shall constitute an Event of Default under the ARHC Loan Agreement and the Loan Documents pertaining to the ARHC Retained Loans and shall entitle FFCA to immediately exercise its rights and remedies under such ARHC Loan Agreement and Loan Documents without the obligation to provide any of ARHC, ARDC, AROC, Arby's, Triarc, RTM or RTMOC with any notice, grace or cure rights (subject, in the case of Section 4(x)(a)(i) and (ii) to the cure periods applicable under the Loan Documents and in the case of Section 4(x)(d) and (f), to a ten day cure period after receipt of written notice by Triarc and RTM). The parties to this Agreement other than FFCA agree and acknowledge that a material inducement to FFCA entering into and performing the terms and conditions of this Agreement are the stipulations and agreements set forth in this Section 4(x). (f) If after time after the Effective Time FFCA is advised by Florida or Pennsylvania counsel that it is unable to deliver a written legal opinion in form and substance reasonably satisfactory to FFCA advising that RTMOC's failure to assume the ARHC Retained Loans will not materially impair FFCA's ability to proceed against the related collateral, FFCA shall notify ARHC and RTMOC, and ARHC shall assign, and RTMOC shall assume, the applicable ARHC Retained Loans with respect to the ARHC Sites in the applicable state in the manner provided in Section 4(x)(d) above. 5. Representations and Warranties. (i) Each of Franchise Finance, Acquisition, Servicer and the Lender represents and warrants to the other parties hereto that: (a) it is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware with all corporate power and authority necessary to own, lease and operate its properties and carry on its business as now conducted and to execute, deliver and perform this Agreement; (b) all necessary corporate action has been taken on its part to authorize the execution, delivery and performance of this Agreement and this Agreement has been duly executed and delivered by it; (c) the authorization, execution, delivery and performance of this Agreement and the documents, instruments and agreements provided for herein will not result in any breach or default under any other document, instrument or agreement to which it is a party or by which it is subject or bound, except for any breach or default that would not 23 have a material adverse effect on the business, properties or financial condition of any of the parties hereto or on the consummation of any of the transactions contemplated under this Agreement; and (d) this Agreement constitutes its legal, valid and binding obligations enforceable against it in accordance with its terms. (ii) Servicer, in its capacity as Master Servicer and Special Servicer under the P&S Agreement and the other applicable documents pertaining to the Securitization, represents and warrants to the other parties (other than Acquisition, Franchise Finance and the Lender) as follows with respect to the ARDC Loans, the ARHC Loans and the Pension Loan Obligations listed on the attached Schedule III hereto: (a) it has all requisite authority under the applicable documents relating to the Securitization and otherwise to execute, deliver and perform this Agreement and all documents to be delivered by it pursuant to this Agreement and no consent or approval is required under the documents relating to the Securitization or otherwise in connection therewith; (b) the consents, waivers, amendments, releases and terminations made by Servicer under this Agreement are binding and irrevocable on the Trust Fund, the Certificate Holders, any successor to Servicer as Master Servicer or Special Servicer under the Securitization and each other Person that has or may acquire any interest in the ARHC Loans, ARDC Loans or Pension Loan Obligations listed on the attached Schedule III hereto; and (c) Schedule III attached hereto is a true and complete list of all of the ARDC Loans, ARHC Loans and Pension Loan Obligations that have been conveyed to the Trust Fund and are included in the Securitization. All representations and warranties of Franchise Finance, Acquisition, Servicer and the Lender made in this Agreement shall be and will remain true and complete in all material respects as of the Effective Time as if made and restated in full as of such Effective Time and shall survive the execution and delivery of the documents contemplated by this Agreement, including without limitation, those contemplated by Section 1. (iii) Each party to this Agreement (other than FFCA) represents and warrants to the other parties hereto that: (a) it is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation (as set 24 forth in the introductory paragraph of this Agreement) with all corporate power and authority necessary to own, lease and operate its properties and carry on its business as now conducted and execute, deliver and perform this Agreement; (b) all necessary corporate action has been taken by it to authorize the execution, delivery and performance of this Agreement and this Agreement has been duly executed and delivered by it; (c) there are no suits, actions, proceedings or investigations pending or threatened against or involving it before any court, arbitrator, or administrative or governmental body which might reasonably result in any material adverse change in its business, properties or condition; (d) the authorization, execution, delivery and performance of this Agreement and the documents, instruments and agreements provided for herein will not result in any breach or default under any other document, instrument or agreement to which it is a party or by which it is subject or bound except where such breach or default would not have a material adverse effect on such party or the consummation of the transactions contemplated under the Agreement; (e) the authorization, execution, delivery and performance of this Agreement and the documents, instruments and agreements provided for herein will not violate any applicable law, statute, regulation, rule, ordinance, code, rule or order applicable to it, except for such violations that would not have a material adverse effect on such party or the consummation of the transactions contemplated under this Agreement; and (f) this Agreement constitutes the legal, valid and binding obligation of such entity, enforceable against such entity in accordance with its terms; and (g) except for those consents which have already been obtained and delivered in writing to FFCA or that pertain to a Retained Restaurant or the absence of which would not have a material adverse effect on its consolidated business, operations, assets or financial condition, no consent, license, permit, approval or authorization of any Person, entity or governmental authority is required in connection with its execution, delivery or performance of this Agreement. Each of Arby's, ARDC, AROC ARHC and Triarc, severally and not jointly, further represent and warrant to FFCA that the representations and warranties made by such Person in the Loan Documents, the Sale-Leaseback Documents and the Pension Documents are true and correct in all material respects as of the date of this 25 Agreement (except for such representations and warranties expressly made as of an earlier date). All representations and warranties of Arby's, ARDC, AROC, ARHC, Triarc, RTM, RTMOC, RTMDC, RTMM, Parent and Holdco made in this Agreement shall be and will remain true and complete in all material respects as of the Effective Time as if made and restated in full as of such Effective Time and shall survive the execution and delivery of the documents contemplated by this Agreement, including without limitation, those contemplated by this Agreement, including without limitation, those contemplated by Section 1. 6. Further Assurances. Each party agrees, any time and from time to time, at the reasonable request of any of the parties hereto, to promptly and duly execute, deliver, file and record any financing statement, specific assignment, instrument, document or other paper and take such further actions that may be necessary or desirable or that any of the parties hereto, may reasonably request, to effect the intent of the parties. 7. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Arizona (regardless of the laws that might otherwise govern under applicable principles of conflicts of law) as to all matters, including but not limited to matters of validity, construction, effect, performance and remedies; provided, however, the parties to this Agreement do not intend that the preceding choice of law provision modify or amend the choice of law provisions set forth in the Loan Documents, the Sale-Leaseback Documents, the Pension Documents or the documents evidencing the Securitization. 8. Specific Performance. The parties hereto acknowledge and agree that any breach of the terms of this Agreement would give rise to irreparable harm for which money damages would not be an adequate remedy and accordingly the parties hereto agree that, in addition to any other remedies, each shall be entitled to enforce the terms of this Agreement by a decree of specific performance without the necessity of proving the inadequacy of money damages as a remedy or posting a bond or other security. 9. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original, but all of which together shall Constitute one and the same Agreement. 10. Entire Agreement; Reaffirmation. This Agreement, and the Schedules hereto, and the Loan Documents, Sale-Leaseback Documents, Pension Documents and other documents and instruments referred to herein, constitute the entire agreement among the parties with respect to the subject matter hereof and supersedes all prior agreements and understandings, both written and oral, of the parties or any of them with respect to the subject matter hereof, if any. This Agreement shall not constitute a waiver of any rights or remedies in respect of the ARDC Loans, ARHC Loans, Sale-Leaseback Documents or Pension Documents 26 except as specifically provided herein, and, except to the extent of the (i) modifications to the Loan Documents, the Sale-Leaseback Documents and the Pension Documents specifically referenced in this Agreement, and (ii) waivers and consents expressly provided for in this Agreement, the Loan Documents, the Sale-Leaseback Documents and the Pension Documents are ratified and reaffirmed in all respects and are and shall remain in full force and effect. 11. Termination of Commitment Letter. Each of the parties to this Agreement agrees and acknowledges that effective as of the Effective Time that certain Commitment Letter dated May 1, 1995 between Franchise Finance and the Lender and ARDC and ARHC is terminated and of no further force and effect, including, without limitation, the obligations of Franchise Finance and the Lender to make any loans pursuant to such Commitment Letter. 12. Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns and shall bind all current holders of any interest in the ARDC Loans, ARDC Leases, ARHC Loans, Sale-Leaseback Obligations or Pension Obligations and their successors in interest. 13. Indemnity. Triarc, ARDC, ARHC, AROC and Arby's, jointly and severally, shall indemnify and hold harmless FFCA and each of their shareholders, directors, officers, employees, Affiliates, trustees, successors and assigns from and against up to an aggregate of $200,000 of reasonable attorneys' fees and costs and associated professionals' fees and costs which are actually incurred by such indemnified persons as a result of claims, actions and/or proceedings by one or more Certificate Holders asserting losses incurred by such Certificate Holders as a result of the transactions described in this Agreement, including, without limitation, the Transfers, the Assignments and Assumptions and the Releases. 27 IN WITNESS WHEREOF, the parties hereto have entered into this Agreement as of the date first above written. FRANCHISE FINANCE CORPORATION OF AMERICA By: /s/ Dennis L. Ruben ------------------------------------------ Name: Dennis L. Ruben Title: Executive Vice President and General Counsel FFCA ACQUISITION CORPORATION By: /s/ Dennis L. Ruben ------------------------------------------ Name: Dennis L. Ruben Title: Executive Vice President and General Counsel FFCA MORTGAGE CORPORATION By: /s/ Dennis L. Ruben ------------------------------------------ Name: Dennis L. Ruben Title: Executive Vice President and General Counsel FRANCHISE FINANCE CORPORATION OF AMERICA, as Master Servicer and Special Servicer By: /s/ Dennis L. Ruben ------------------------------------------ Name: Dennis L. Ruben Title: Executive Vice President and General Counsel ARBY'S RESTAURANT DEVELOPMENT CORPORATION By: /s/ Christine C. Marshall ------------------------------------------ Name: Christine C. Marshall Title: Vice President and Associate General Counsel 28 ARBY'S RESTAURANT HOLDING COMPANY By: /s/ Christine C. Marshall ----------------------------------------- Name: Christine C. Marshall Title: Vice President and Associate General Counsel ARBY'S RESTAURANT OPERATIONS COMPANY By: /s/ Christine C. Marshall ----------------------------------------- Name: Christine C. Marshall Title: Vice President and Associate General Counsel ARBY'S, INC. By: /s/ Christine C. Marshall ----------------------------------------- Name: Christine C. Marshall Title: Vice President and Associate General Counsel TRIARC COMPANIES, INC. By: /s/ Stuart I. Rosen ----------------------------------------- Name: Stuart I. Rosen Title: Vice President and Secretary RTM PARTNERS, INC. By: /s/ Philip G. Skinner ----------------------------------------- Name: Philip G. Skinner Title: Vice President RTM, INC. By: /s/ Philip G. Skinner ----------------------------------------- Name: Philip G. Skinner Title: Vice President 29 RTM DEVELOPMENT COMPANY By: /s/ Stuart I. Rosen ----------------------------------------- Name: Stuart I. Rosen Title: Vice President and Secretary RTM OPERATING COMPANY By: /s/ Stuart I. Rosen ----------------------------------------- Name: Stuart I. Rosen Title: Vice President and Secretary RTM MANAGEMENT COMPANY, LLC By: RTM ENTERPRISES, INC., its Managing Member By: /s/ Philip G. Skinner ----------------------------------------- Name: Philip G. Skinner Title: Vice President RTM HOLDING COMPANY, INC. By: /s/ Philip G. Skinner ----------------------------------------- Name: Philip G. Skinner Title: Vice President EX-5 5 EXHIBIT 5.1 Exhibit 5.1 [Letterhead of Paul, Weiss, Rifkind, Wharton & Garrison] October 21, 1997 Triarc Companies, Inc. 280 Park Avenue New York, New York 10017 Ladies and Gentlemen: In connection with Registration Statement on Form S-4 (the "Registration Statement") of Triarc Companies, Inc., a Delaware corporation ("Triarc"), filed with the Securities and Exchange Commission (the "Commission") pursuant to the Securities Act of 1933, as amended (the "Act"), and the rules and regulations promulgated thereunder, we have been requested by Triarc to render this opinion as to the validity of up to 1,971,350 shares of Class A Common Stock, par value $.10 per share (the "Merger Shares"), of Triarc to be issued as merger consideration in exchange for 9,098,324 outstanding shares of the Common Stock, par value $.01 per share, of Cable Car Beverage Corporation, a Delaware corporation ("Cable Triarc Companies, Inc. 2 Car"), pursuant to the terms and conditions of the Agreement and Plan of Merger, dated June 24, 1997, as amended (the "Merger Agreement"), by and among Cable Car, Triarc and CCB Merger Corporation, a Delaware corporation and wholly owned subsidiary of Triarc ("Mergerco") (assuming that there are no dissenting shareholders). In connection with furnishing this opinion, we have examined originals, or copies certified or otherwise identified to our satisfaction, of (i) the Certificate of Incorporation of Triarc, as amended on or prior to the date hereof, (ii) the By-laws of Triarc, as amended on or prior to the date hereof, (iii) the Merger Agreement, (iv) the Registration Statement and (v) all such corporate records, agreements and other instruments of Triarc, and all such other certificates, agreements and documents as we deemed relevant and necessary as a basis for the opinion hereinafter expressed. In our examination of the aforesaid documents, we have assumed, without independent investigation, that the Merger Shares will be issued in accordance with the terms of the Merger Agreement and the resolutions authorizing their issuance. In such examination, we have also assumed, without independent investigation, the genuineness of all signatures, the legal capacity of all individuals who have executed any of the documents reviewed by us, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as certified, photostatic, reproduced or conformed copies Triarc Companies, Inc. 3 of valid existing agreements or other documents, and the authenticity of all of such latter documents. In expressing our opinion herein, we have relied, as to certain matters of fact, on representations, statements or certificates of officers of Triarc and public officials. Based upon the foregoing, and subject to the assumptions, exceptions and qualifications stated herein, we are of the opinion that, at the time the Merger (as defined in the Merger Agreement) becomes effective, the Merger Shares will have been duly authorized, validly issued, fully paid and non-assessable. Our opinion expressed above is limited to the General Corporation Laws of the State of Delaware. Our opinion is rendered only with respect to the laws and the rules, regulations and orders thereunder, which are currently in effect. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to this firm under the heading "Legal Matters" in the Prospectus included in the Registration Statement. In giving our consent, we do not thereby admit that we are in the category of persons whose Triarc Companies, Inc. 4 consent is required by the Act or the rules and regulations of the Commission thereunder. Very truly yours, PAUL, WEISS, RIFKIND, WHARTON & GARRISON EX-8 6 EXHIBIT 8.1 Exhibit 8.1 [Letterhead of Sherman & Howard L.L.C.] October 22, 1997 The Board of Directors Cable Car Beverage Corporation 717 Seventeenth Street, Suite 1475 Denver, Colorado 80202 Ladies and Gentlemen: You have requested our opinion regarding certain federal income tax consequences of the proposed merger of CCB Merger Corporation, a Delaware corporation ("Mergerco"), with and into Cable Car Beverage Corporation ("Company"). Mergerco is a wholly-owned subsidiary of Triarc Companies, Inc., a Delaware corporation ("Parent"). FACTS ----- The terms of the proposed merger (the "Merger") are contained in the Agreement and Plan of Merger dated June 24, 1997 (the "Plan of Merger"). Terms not otherwise defined in this letter will have the meanings assigned to them in the Plan of Merger. In preparing this opinion, you have directed us to assume that (a) the Merger will be consummated in accordance with the terms, conditions and other provisions of the Plan of Merger, and (b) all of the factual information, descriptions, representations and assumptions set forth or referred to in this letter, in the Officer's Certificates from Parent and the Company dated October 21, 1997 (the "Officer's Certificates"), in the Shareholder's Certificates from major Company shareholders dated October 21, 1997 (the "Shareholder's Certificates") and in the Form S-4 Registration Statement of Parent dated October 22, 1997 as filed with the Securities and Exchange Commission ("Registration Statement"), and mailed to the Company's shareholders in connection with the special meetings of shareholders to approve the Merger, are accurate and complete and will be accurate and complete at the Effective Time. We have not independently verified any factual matters relating to the Merger in connection with or apart from our preparation of this opinion and, accordingly, our Page 2 opinion does not take into account any matters not set forth in this letter which might have been disclosed by independent verification. With your permission, we have also relied on the following additional representations and assumptions: 1. The Merger will be a statutory merger under the applicable provisions of the Delaware General Corporation Law, duly approved by any required board of directors and shareholder action. The Merger will be carried out in accordance with the Plan of Merger and as described in the Registration Statement. 2. The Company has no issued or outstanding stock other than 8,948,324 shares of Company Common Stock. Except for options to acquire an aggregate 902,500 shares of Company Common Stock pursuant to Company Stock Options, no options or warrants to purchase Company Stock, and no securities or other instruments convertible into Company Common Stock, will be outstanding at the Effective Time. 3. All shares of Parent Class A Common Stock into which shares of Company Common Stock will be converted pursuant to the Merger will be voting stock of Parent, will be newly issued or treasury shares, and will be issued (or reissued) by Parent directly or through Mergerco to the exchanging Company shareholders in the Merger. 4. The fair market value of the Parent Class A Common Stock and other consideration received by each Company shareholder will be approximately equal to the fair market value of Company Common Stock surrendered pursuant to the Merger. Except for holders of no greater than 6% of Company Common Stock who exercise dissenters' rights, no holder of Company Common Stock will receive, in exchange for such stock and pursuant to any consideration other than Parent Class A Common Stock and cash paid in lieu of a fractional share of Parent Class A Common Stock. No fractional share of Parent Class A Common Stock will be issued in the Merger. 5. There is no plan or intention by the shareholders of the Company who own 5% or more of Company Common Stock, and to the best knowledge of the management of the Company, there is no plan or intention on the part of the remaining shareholders of the Company to sell, exchange or otherwise dispose of a number of shares of Parent Class A Common Stock received in the Merger that would reduce the ownership by the Company's shareholders of the Parent Class A Common Stock received in the Merger to a number of shares having an aggregate value, as of the Effective Time, of less than 50% of the value of all of the formerly outstanding Company Common Stock as of the same date. For purposes of this paragraph, shares of Company Common Stock surrendered by dissenters or exchanged for cash in lieu of fractional shares of Parent Class A Common Stock will be treated as outstanding Page 3 Company Common Stock as of the Effective Time. Moreover, shares of Company Common Stock and Parent Class A Common Stock held by the Company's shareholders that are sold, redeemed, or disposed of prior or subsequent to the Merger and in contemplation or as part of the Merger are considered for purposes of this paragraph. 6. Immediately following the Merger, the Company will hold at least 90% of the fair market value of its net assets and at least 70% of the fair market value of its gross assets held immediately prior to the Merger, and at least 90% of the fair market value of Mergerco's net assets and at least 70% of the fair market value of Mergerco's gross assets held immediately prior to the Merger. For purposes of this paragraph, amounts paid by the Company or Mergerco to dissenters, amounts paid by the Company or Mergerco to shareholders who receive cash or other property, amounts used by the Company or Mergerco to pay reorganization expenses, and all redemptions and distributions (except for regular, normal dividends) will be included as assets of the Company or Mergerco, respectively, that are held immediately prior to the Merger. 7. Immediately prior to the Merger, Parent will be in direct control of Mergerco within the meaning of Section 368(c) of the Code(1) (which provides that control means the ownership of stock possessing at least 80% of the total combined voting power of all classes of stock entitled to vote and at least 80% of the total number of shares of all other classes of stock of the corporation). 8. The Company has no plan or intention to issue additional shares of its stock that would result in Parent losing control of the Company within the meaning of Section 368(c) of the Code. 9. In the Merger, shares of Company Common Stock representing control of the Company within the meaning of Section 368(c) of the Code will be exchanged solely for voting stock of Parent. 10. Following the Merger, the Company will not have outstanding any options, warrants, convertible securities or any other type of right pursuant to which any person could acquire stock in the Company that, if exercised or converted, would affect Parent's acquisition or control of the Company within the meaning of Section 368(c) of the Code. 11. Neither Parent nor any of its affiliates has any plan or intention to reacquire any of the Parent Class A Common Stock to be issued in the Merger. - ----------------- (1) Unless otherwise specifically indicated, all references to "Section" are to sections of the Internal Revenue Code of 1986, as amended (the "Code"). Page 4 Following the Merger, any acquisition of Parent Class A Common Stock pursuant to any stock repurchase program of Parent will be directed to Parent shareholders generally and will not be directed specifically to the Company shareholders who receive Parent Class A Common Stock pursuant to the Merger. 12. Parent has no current plan or intention to liquidate the Company, to merge the Company with and into another corporation (other than pursuant to the Merger), to sell or otherwise dispose of any stock of the Company, or to sell or otherwise dispose of any of the assets of the Company or Mergerco, except for dispositions made in the ordinary course of business or transfers to corporations controlled by Parent. 13. The Company has not disposed of assets in the two years prior to the Merger representing more than 50% of its historical business assets. Parent will continue at least a principal historic business line of the Company or use at least a significant portion of the Company's historical assets in a business of the Parent, in each case conducted or held by the Company at the time of the Merger and in each case within the meaning of Treasury Regulation 1.368-1(d) under Section 368 of the Code. 14. Mergerco will have no liabilities assumed by the Company pursuant to the Merger, and will not transfer to the Company any assets subject to liabilities, except in each case liabilities attributed to the Company by operation of law by reason of its membership in a controlled or combined group. 15. Parent, the Company and the shareholders of the Company will pay their respective expenses, if any, incurred in connection with the Merger. 16. There is no intercorporate indebtedness existing between Parent and the Company, or between Mergerco and the Company, that was issued, acquired or will be settled at a discount. 17. Parent does not own, nor has it owned during the past five years, any shares of stock of the Company. 18. At the Effective Time, the fair market value of the assets of the Company will exceed the sum of its liabilities, if any, to which the assets are subject. 19. Neither Parent, Mergerco nor the Company is an investment company within the meaning of Section 368(a)(2)(F) of the Code (which generally provides that a corporation is an investment company if it is a regulated investment company, a real estate investment trust, or a corporation 50% or more of the value of whose total assets are stock and securities and 80% or more of the value of whose assets are held for investment; with cash, cash equivalents, government securities and certain other Page 5 property described in Treasury Regulations excluded from assets, and with look- through principles applying to subsidiaries). 20. The Company is not under the jurisdiction of a court in a title 11 or similar case within the meaning of Section 368(a)(3)(A) of the Code. 21. No dividends or distributions, other than regular or normal dividends or distributions, will be made with respect to any stock of the Company prior to the Merger. Other than such normal dividends or distributions, the Company has not redeemed its stock, made any distribution with respect to its stock or disposed of any assets in contemplation or as part of the Merger. Following the Merger, no dividends or distributions will be made to the former Company shareholders by Parent, other than regular or normal dividend distributions with respect to their shares made with regard to all shares of Parent Class A Common Stock. 22. None of the compensation received by any Company shareholder- employee for services performed for the Company or any of its affiliates is or will be separate consideration for, or allocable to, any of their shares of Company Common Stock to be surrendered in the Merger. None of the Parent Class A Common Stock received pursuant to the Merger by any shareholder-employee of the Company in exchange for shares of Company Common Stock is or will be in exchange for, or in consideration of, any employment, consulting or similar arrangement between such shareholder-employee and Parent or any of its affiliates for services rendered or to be rendered by such shareholder-employee. Any compensation paid or to be paid to any Company shareholder who will be an employee of or perform advisory services for Parent or any of its affiliates after the Merger, and any amount paid to a Company shareholder as consideration for agreements not to disclose confidential information about, or compete with, Parent or any of its affiliates, will be in consideration of services or agreements actually performed or to be performed, will be commensurate with amounts paid to third parties bargaining at arm's length for similar services or agreements. 23. The payment of cash in lieu of issuing fractional shares of Parent Class A Common Stock is solely for the purpose of avoiding the expense and inconvenience to Parent of issuing fractional shares of Parent Class A Common Stock and does not represent separately bargained for consideration. In addition, this cash payment will not be made pro rata to all Company shareholders. The total cash consideration that will be paid in the Merger to Company shareholders in lieu of issuing fractional shares of Parent Class A Common Stock will not exceed 1% of the total consideration that will be issued in the Merger to the Company shareholders in exchange for their shares of Company Common Stock. The fractional share interests of each Company shareholder will be aggregated, and no Company shareholder will receive cash in an Page 6 amount equal to or greater than the value of one full share of Parent Class A Common Stock. 24. The Company shareholders that will receive cash in lieu of fractional shares of Parent Class A Common Stock will not have control of Parent, for purposes of Section 302(b) of the Code, following the Merger. 25. The Merger is being effected for bona fide business reasons as described in the Registration Statement. OPINION ------- Assuming that the Merger is consummated in accordance with the terms and conditions set forth in the Plan of Merger and based on the facts set forth or referred to in the Registration Statement, the Officer's Certificates, the Shareholder's Certificates and this letter (an advance copy of which has been provided to you), including all representations and assumptions in any such documents, and subject to the qualifications and other matters set forth in this letter, it is our opinion that for federal income tax purposes: 1. The Merger will qualify as a reorganization within the meaning of Section 368(a) of the Code. 2. The Company will not recognize any taxable gain or loss as a result of the Merger. 3. No gain or loss will be recognized by the shareholders of the Company who exchange all of their Company Common Stock solely for Parent Class A Common Stock pursuant to the Merger (except with respect to cash received in lieu of a fractional share interest in Parent Class A Common Stock). 4. The aggregate tax basis of the Parent Class A Common Stock received by the shareholders of the Company who, pursuant to the Merger, exchange all of their Company Common Stock solely for Parent Class A Common Stock (plus cash in lieu of a fractional share) will be the same as the aggregate tax basis of the Company Common Stock surrendered in exchange (reduced by any amount allocable to a fractional share interest in Parent Class A Common Stock for which cash is received). 5. Any cash received by a holder of Company Common Stock in lieu of a fractional share interest in Parent Class A Common Stock will be treated as received in exchange for such fractional share. Such gain or loss generally will be recognized for federal income tax purposes measured by the difference between the amount of cash received and the portion of the shareholder's tax basis allocable to such fractional Page 7 share. The cash payment will be treated as a distribution in redemption of Parent Class A Common Stock under Section 302 of the Code, so that a shareholder of the Company who is an individual will be taxed at a maximum federal income tax rate of 20% on such gain if the Company Common Stock has been held as a capital asset for more than eighteen months prior to the Effective Time. 6. The holding period of the Parent Class A Common Stock received pursuant to the Merger in exchange for Company Common Stock will include the holding period of the Company Common Stock surrendered in exchange if such Company Common Stock was a capital asset in the hands of the exchanging shareholder at the Effective Time. Our opinion is limited to the foregoing federal income tax consequences of the Merger as a reorganization within the meaning of Section 368(a) of the Code, which are the only matters as to which you have requested our opinion. We do not address any other federal income tax consequences of the Merger or other matters of federal law. Additionally, we have not considered matters (including state or local tax consequences) arising under the laws of any jurisdiction other than matters of federal law arising under the laws of the United States. Our opinion is based on the understanding that the relevant facts are, and will be as of the Effective Time, as set forth or referred to in this letter. If this understanding is incorrect or incomplete in any respect, our opinion could be affected. Our opinion is also based on the Code, Treasury Regulations, case law, and Internal Revenue Service rulings as they now exist. These authorities are all subject to change and such change may be made with retroactive effect. We can give no assurance that after any such change, our opinion would not be different. Moreover, our opinion will not be binding on the Internal Revenue Service or the courts. We undertake no responsibility to update or supplement our opinion. Only the Company and its shareholders may rely on this opinion, and only with respect to the proposed Merger described above. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the use of our name under the captions "Summary--The Merger--Certain Federal Income Tax Consequences," "The Proposed Merger and Related Matters--Certain Federal Income Tax Consequences" and "Legal Matters" in the Registration Statement and the prospectus included therein. Very truly yours, SHERMAN & HOWARD L.L.C. EX-10 7 EXHIBIT 10.30 Exhibit 10.30 THIS OPTION AND ANY SECURITIES ACQUIRED UPON THE EXERCISE OF THIS OPTION HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS AND NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR SUCH LAWS OR AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND SUCH LAWS. THIS OPTION IS ALSO SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AS SET FORTH HEREIN. ----------------------------------- OPTION ----------------------------------- This certifies that, for good and valuable consideration, RTM Partners, Inc. (the "Company"), grants to Arby's Restaurant Holding Company, a Delaware corporation, or its registered assigns (the "Optionholder"), the right to subscribe for and purchase from the Company one hundred fifty-three (153) validly issued, fully paid and nonassessable shares (the "Option Shares") of the Common Stock, par value $1.00 per (the "Common Stock" of RTM Operating Company ("Newco"), at a purchase price per Option Share of $3,038.49 (the "Exercise Price"), at any time and from time to time, beginning on the date which is two years from the date of issuance of this Option (the "Commencement Date") and ending at 5:00 PM Eastern time on the date which is three years from the date of issuance of this Option (the "Expiration Date"), all subject to the terms, conditions and adjustments herein set forth. Certificate No. 1 1. Duration and Exercise of Option; Limitation on Exercise; Payment of Taxes. 1.1 Duration and Exercise of Option. Subject to the terms and conditions set forth herein, the Option may be exercised, in whole but not in part, by the Optionholder by: (a) the surrender of this Option to the Company, with a duly executed Exercise Form specifying the number of Option Shares to be purchased, during normal business hours on any Business Day from and including the Commencement Date through and including the Expiration Date; and (b) the delivery of payment to the Company, for the account of the Company, by cash or by certified or bank cashier's check, of the Exercise Price for the number of Option Shares specified in the Exercise Form in lawful money of the United States of America. The Company agrees that such Option Shares shall be deemed to be transferred to the Optionholder as the record holder of such Option Shares as of the close of business on the date on which this Option shall have been surrendered and payment made for the Option Shares as aforesaid. 1.2 Limitations on Exercise. Notwithstanding anything to the contrary herein, this Option may be exercised only (i) if all Similar Options are also exercised on the same date that this Option is exercised and (ii) upon the delivery to the Company of any certificates, legal opinions, or other documents reasonably requested by the Company to satisfy the Company that the proposed exercise of this Option may be effected without registration under the Securities Act. 1.3 Option Shares Certificate. A stock certificate or certificates for the Option Shares specified in the Exercise Form shall be delivered to the Optionholder within ten (10) Business Days after receipt of the Exercise Form and receipt of payment of the purchase price. 1.4 Payment of Taxes. The issuance of certificates for Option Shares shall be made without charge to the Optionholder for any stock transfer or other issuance tax in respect thereto; provided, however, that the Optionholder shall be required to pay any and all taxes which may be payable in respect of any transfer involved in the issuance and delivery of any certificate in a name other than that of the then Optionholder as reflected upon the books of the Company. 1.5 Divisibility of Option; Transfer of Option. (a) Subject to the provisions of this Section 1.6, this Option may be divided into Options of one thousand shares or multiples thereof, upon surrender at the principal office of the Company, without charge to any Optionholder. Upon such division, the Options may be transferred of record as the then Optionholder may specify without charge to such Optionholder (other than any applicable transfer taxes). In addition, subject to the provisions of this Section 1.5, the Optionholder shall not have the right to transfer this Option, except that Optionholder shall have the right to transfer this Option in its entirety to Triarc Companies, Inc. or any of its Subsidiaries or Affiliates. (b) Upon surrender of this Option to the Company with a duly executed Assignment Form and funds sufficient to pay any transfer tax, the Company shall, without charge, execute and deliver a new Option or Options of like tenor in the name of the assignee named in such Assignment Form, and this Option shall promptly be canceled. Any such transfer shall be subject, if requested by the Company, to the receipt by the Company of a written opinion of legal counsel, which opinion shall be addressed to the Company and be reasonably satisfactory in form and substance to the Company's counsel, to the effect that the proposed transfer of this Option may be effected without registration under the Securities Act. In addition, the Optionholder and the transferee shall execute any documentation reasonably required by the Company to ensure compliance with the Securities Act. The Optionholder shall not be entitled to transfer this Option, or any part thereof, if such legal opinion is not acceptable to the Company or if such documentation is not provided. The term "Option" as used in this Agreement shall be deemed to include any Options issued in substitution or exchange for this Option. 1.6 Right of First Refusal. (a) If the Holders of Registrable Securities make a request for demand registration in accordance with Section 7.1 hereof, or if the Holders wish to sell Registrable Securities to a third party, the Company shall have the right, exercisable in accordance with the provisions of this Section 1.6, to purchase all (but not less than all) of the Registrable Securities proposed to be included in the registration by the Holders, or all of the Registrable Securities proposed to be sold to a third party, as the case may be, (the "Subject Shares") at a price per share equal to the Fair Market Value. In order to exercise such right, the Company must send notice (the "Section 1.6 Notice") to the Company within 15 Business Days after the receipt by Company of a notice from the Holders of the Subject Shares demanding registration in accordance with Section 7.1 hereof, or seeking to sell Subject Shares to a third party, as the case may be, which notice shall state that the Company is exercising its right to purchase the Subject Shares and shall specify the date for the settlement of the sale and purchase, which shall be no less than 10 Business Days nor more than 15 Business Days after the date of the Section 1.6 Notice. The delivery of the Section 1.6 Notice by the Company shall constitute the irrevocable exercise of the rights of the Company hereunder, shall create a binding contract of sale and purchase between the Holders of the Subject Shares and the Company and shall relieve the Company of its obligations to register the Subject Shares in accordance with Section 7.1 hereof. The Company and the Holders shall consummate the purchase of the Subject Shares under this Section 1.6 by delivery of immediately available funds against delivery of duly endorsed certificates at such time as is specified by the Company in the Section 1.6 Notice. The Company may at its option require the Holders to sell the Subject Shares under this Section 1.6 to a third party designee. (b) If the Company (by itself or through any designee) declines or fails to purchase all of the Subject Shares in accordance with Section 1.6 (a), then the Company shall proceed with the registration with respect to such Subject Shares in accordance with Section 7.1 hereof. 2. Restrictions on Transfer; Restrictive Legends. 2.1 Restrictive Legends. Except as otherwise permitted by this Section 2, each Option shall (and each Option issued upon direct or indirect transfer or in substitution for any Option pursuant to Section 1.6 or Section 4 shall) be stamped or otherwise imprinted with a legend in substantially the following form: THIS OPTION AND ANY SECURITIES ACQUIRED UPON THE EXERCISE OF THIS OPTION HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR SUCH LAWS OR AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND SUCH LAWS. THIS OPTION IS ALSO SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AS SET FORTH HEREIN. Except as otherwise permitted by this Section 2, each stock certificate for Option Shares transferred to the Optionholder upon the exercise of any Option and each stock certificate issued upon the direct or indirect transfer of any such Option Shares shall be stamped or otherwise imprinted with a legend in substantially the following form: THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR SUCH LAWS OR AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND SUCH LAWS. THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO CERTAIN RESTRICTIONS SET FORTH IN THE OPTION DATED MAY 5, 1997. Notwithstanding the foregoing, the Optionholder may require the Company to issue an Option or to cause Newco to issue a stock certificate for Option Shares, in each case without a legend, if the Option or the Option Shares, as the case may be, are no longer subject to the restrictions on transfer set forth herein and either (i) such Option or such Option Shares, as the case may be, have been registered for resale under the Securities Act or (ii) the Optionholder has delivered to the Company an opinion of legal counsel, which opinion shall be addressed to the Company and be reasonably satisfactory in form and substance to the Company's counsel, to the effect that such registration is not required with respect to such Option or such Option Shares, as the case may be. 2.2 Come Along Rights. Until the tenth anniversary of the date hereof, the Company shall not Transfer more than 20% of the shares of Common Stock owned by the Company to an unaffiliated third party without complying with the terms and conditions set forth in this Section 2.2, as applicable. (a) If the Company desires to Transfer more than 20% of the shares of Common Stock owned by it, the Company shall give not less than twenty (20) days prior written notice (the "Participation Notice") of such intended Transfer to each Optionholder and each Holder of Option Shares. The Participation Notice shall set forth the terms and conditions of such proposed Transfer, including the name of the prospective transferee, the number of the shares of Common Stock proposed to be transferred by the Company, the purchase price per share of Common Stock proposed to be paid therefor and the payment terms and type of Transfer to be effectuated. Within ten (10) days following the delivery of a Notice by the Company, each Optionholder and each Holder of Option Shares may, by notice in writing to the Company, have the opportunity and right to sell to the purchasers in such proposed Transfer (upon the same terms and conditions as the Company) up to that number of Option Shares transferable to such Optionholder upon exercise of its Option or that number of Option Shares owned by such Holder of Option Shares, as the case may be, as shall equal the product of (x) a fraction, the numerator of which is the number of Option Shares owned by such Holder, or the number of Option Shares transferable to such Optionholder upon exercise of its Option, as the case may be, as of the date of such proposed Transfer and the denominator of which is the aggregate number of shares of Common Stock beneficially owned as of the date of the Participation Notice by the Company and by all Optionholders and Holders of Option Shares, multiplied by (y) the number of shares of Common Stock proposed to be transferred by the Company. The number of shares of Common Stock to be sold by the Company shall be reduced to the extent necessary to provide for such sales of Option Shares and Options by Holders of Option Shares and Optionholders, respectively. (b) At the closing of any proposed Transfer in respect of which a Participation Notice has been delivered, the Company, together with all Optionholders and Holders of Option Shares electing to sell Options and Option Shares, shall deliver to the proposed transferee certificates evidencing the Option Shares and Options to be sold, duly endorsed, in the case of Option Shares, with stock powers and in the case of Options, with assignment forms. Holders of Option Shares shall receive in exchange therefor the consideration per share to be paid or delivered by the proposed transferee in respect of such Option Shares as described in the Participation Notice. Holders of Options shall receive in exchange therefor the consideration per share to be paid or delivered by the proposed transferee in respect of Option Shares, less the exercise price per Option Share of the Option. 2.3 Take Along Rights (a) Until the tenth anniversary of the date hereof, if the Company determines to sell or exchange (in a business combination or otherwise), in one or a series of bona fide arms length transactions to an unaffiliated third party, all of the shares of Common Stock held by the Company, then, upon thirty (30) days' written notice from the Company to the Optionholders and the Holders of Option Shares, which notice shall include reasonable details of the proposed sale or exchange, including the proposed time and place of closing and the consideration to be received by the Company in respect of their shares of Common Stock, each Optionholder and each Holder of Option Shares shall be obligated to, and shall sell, transfer and deliver to such third party all of its Options and Option Shares in the same transaction at the closing thereof (and will deliver certificates for all of such Options and Option Shares at the closing, free and clear of all claims, liens and encumbrances). Each Holder of Option Shares shall receive the same consideration per share of Common Stock upon such sale as the Company receives and each Optionholder shall receive the same consideration per share of Common Stock upon such sale, less the exercise price per share of Common Stock of the Option. If stockholder approval of the transaction if required, each Holder of Option Shares shall vote his Option Shares in favor thereof. (b) The provisions of this Section 2.3 shall not apply to any transfer pursuant to a public offering. 2.4 Corporate Governance Until the tenth anniversary of the date hereof, the Company and the Optionholders and each Holder of Option Shares shall take all action, including but not limited to the Company and the Holders of Option Shares voting so that neither the Company nor any Optionholder or Holder of Option Shares shall enter into any agreements or arrangements of any kind with any person with respect to the Common Stock of Newco or the governance of Newco on terms which conflict with the provisions of this Option. 3. Title to Option Shares. The Company covenants and agrees that all Option Shares which are transferred upon the exercise of this Option will, upon such transfer, be validly issued, fully paid, and nonassessable, not subject to any preemptive rights, and free from all taxes, liens, security interests, charges, and other encumbrances. 4. Loss or Destruction of Option. Subject to the terms and conditions hereof, upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Option and, in the case of loss, theft or destruction, of such bond or indemnification as the Company may reasonably require, and, in the case of such mutilation, upon surrender and cancellation of this Option, the Company will execute and deliver a new Option of like tenor. 5. Ownership of Option. The Company may deem and treat the person in whose name this Option is registered as the holder and owner hereof (notwithstanding any notations of ownership or writing hereon made by anyone other than the Company) for all purposes and shall not be affected by any notice to the contrary, until presentation of this Option for registration of transfer. 6. Anti-dilution Provisions. 6.1 Adjustment of Number of Shares Purchasable and Exercise Price. Subject to the provisions of this Section 6, the Exercise Price and the number and type of shares of Common Stock transferable to the Optionholder upon exercise of this Option shall be subject to adjustment at any time prior to the Expiration Date. (a) Adjustment of Exercise Price. In the event Newco shall issue, sell, or distribute any shares of Common Stock for a consideration per share less than the Fair Market Value per share of Common Stock, in effect immediately prior to the time of such issue or sale, or for no consideration, then, forthwith upon such issue or sale, the Exercise Price shall be reduced to the lower of the prices calculated by: (1) dividing (A) an amount equal to the sum of (x) the number of shares of Common Stock outstanding immediately prior to such issue or sale multiplied by the then existing Exercise Price, plus (y) the aggregate consideration, if any, received by Newco upon such issue or sale, by (B) the total number of shares of Common Stock outstanding immediately after such issue or sale; (2) multiplying the then existing Exercise Price by a fraction, the numerator of which is the sum of (x) the number of shares of Common Stock outstanding immediately prior to such issue or sale multiplied by the Fair Market Value per share of Common Stock immediately prior to such issue or sale plus (y) the cash consideration received by Newco upon such issue or sale, the denominator of which is the total number of shares of Common Stock outstanding immediately after such issue or sale times the Fair Market Value per share of Common Stock immediately prior to such issue or sale. For purposes of this subsection (a), the date as of which the Fair Market Value per share of Common Stock shall be computed shall be the earlier of the dates on which Newco shall have (i) entered into a firm contract for the issuance of such shares or (ii) issued such shares. (b) Adjustment of Number of Shares Purchasable. Upon any adjustment of the Exercise Price as provided in this Section 6.1 or in Section 6.2, the holder hereof shall thereafter be entitled to purchase, at the Exercise Price resulting from such adjustment, the number of shares of Common Stock (calculated to the nearest .001 of a share) obtained by multiplying the Exercise Price in effect immediately prior to such adjustment by the number of shares of Common Stock purchasable hereunder immediately prior to such adjustment and dividing the product thereof by the Exercise Price resulting from such adjustment. (c) Minimum Adjustment. In the event any adjustment of the Exercise Price pursuant to this section shall result in an adjustment of less than $.01 per share of Common Stock, no such adjustment shall be made, but any such lesser adjustment shall be carried forward and shall be made at the time and together with the next subsequent adjustment which, together with any adjustment so carried forward, shall amount to $.01 or more per share of Common Stock; provided however, upon any adjustment of the Exercise Price resulting from (i) the declaration of a dividend upon, or the making of any distribution in respect of, any stock of Newco payable in Common Stock or Convertible Securities or (ii) the reclassification by subdivision, combination or otherwise, of the Common Stock into a greater or smaller number of shares, the foregoing figure of $.01 per share (or such figure as last adjusted) shall be proportionately adjusted and provided further, upon the exercise of this Option, the Company shall make all necessary adjustments (to the nearest .001 of a cent) not theretofore made to the Exercise Price up to and including the date upon which this Option is exercised. 6.2 Provisions Applicable to Section 6.1. For purposes of Section 6.1, the following subsections (a) through (j), inclusive, shall be applicable: (a) Options, Other Rights or Convertible Securities. (1) Issuance. In case at any time Newco shall in any manner grant (whether directly or by assumption in a merger or otherwise) any options or other rights to subscribe for or to purchase Common Stock or Convertible Securities, or shall in any manner issue or sell Convertible Securities, whether or not such rights or options or rights to convert or exchange any such Convertible Securities are immediately exercisable, and the consideration per share (as determined under subsection 6.2(f)) for which shares of Common Stock are issuable upon the exercise of such rights or options or upon conversion or exchange of such Convertible Securities shall be less than (i) the Exercise Price in effect immediately prior to the time of the granting of such rights or options or such Convertible Securities, or (ii) the Fair Market Value per share of Common Stock existing immediately prior to the time of the granting of such rights or options or such Convertible Securities, then the maximum number of shares of Common Stock issuable upon the exercise of such rights or options or upon conversion or exchange of the maximum amount of such Convertible Securities shall be deemed to be outstanding and to have been issued for such consideration per share. No further adjustments of the Exercise Price shall be made upon the actual issue of Common Stock or of Convertible Securities upon exercise of options or rights or upon the actual issue of Common Stock upon conversion or exchange of Convertible Securities if adjustments pursuant to this Section 6.2(a)(1) have been made previously in respect of the grant of such options or rights, or in respect of issuance or sale of such Convertible Securities, except as otherwise provided in subsection (2) below. For purposes of this subsection (1), the date as of which the Fair Market Value per share of Common Stock shall be computed shall be the earlier of the dates on which Newco shall have (i) entered into a firm contract for the issuance of such rights or other options or (ii) issued such rights or other options. (2) Readjustment of Exercise Price. In the event (i) the purchase price per share provided for in any rights, options or Convertible Securities referred to in subsection (1) above, (ii) the number of shares of Convertible Securities that would be delivered under such rights, options or Convertible Securities, (iii) the additional consideration, if any, payable upon exercise of such rights or options or the conversion or exchange of such Convertible Securities, or (iv) the rate at which any Convertible Securities above are convertible into or exchangeable for Common Stock, in any case, shall change, the Exercise Price in effect at the time of such event shall forthwith be readjusted to the Exercise Price which would have been in effect at such time had such rights, options or Convertible Securities still outstanding provided for such changed purchase price, additional consideration or conversion rate, as the case may be, at the time initially granted, issued or sold. On the expiration of any such option or right not exercised, or the termination of any such unexercised right to convert or exchange Convertible Securities, the Exercise Price then in effect hereunder shall forthwith be increased to the Exercise Price which would have been in effect at the time of such expiration or termination had such right, option or Convertible Security never been issued, and the Common Stock issuable thereunder shall no longer be deemed to be outstanding. No readjustment of the Exercise Price pursuant to this subsection (2) shall have the effect of increasing the Exercise Price by an amount in excess of the adjustment initially made to the Exercise Price in respect to the issue, sale, grant or assumption of the applicable options, rights or Convertible Securities. (b) Splits and Combinations. In case Newco shall at any time subdivide any of its outstanding shares of Common Stock into a greater number of shares, the Exercise Price in effect immediately prior to such subdivision shall be proportionately reduced and, conversely, in case the outstanding shares of Common Stock of Newco shall be combined into a smaller number of shares, the Exercise Price in effect immediately prior to such combination shall be proportionately increased. (c) Reorganization, Reclassification or Recapitalization of Newco. In the case of any capital reorganization or reclassification or recapitalization of the capital stock of Newco (other than that referred to in subsection (b) of this Section 6.2), or in the case of the consolidation or merger of Newco with or into another corporation, or in the case of the sale or transfer of all or substantially all of the property of Newco, upon the exercise of this Option or any portion thereof (in lieu of or in addition to the number of shares of Common Stock theretofore deliverable, as appropriate) the amount of stock, other securities, or property which the Optionholder would have received had he exercised this Option or such portion thereof immediately prior to such capital reorganization or reclassification of capital stock, consolidation, merger, or sale shall be delivered, and the aggregate Exercise Price shall remain unchanged. Prior to and as a condition of the consummation of any transaction described in the preceding sentence, the Company shall make equitable, written adjustments in the application of the provisions set forth herein with respect to the rights and interests of the Optionholders so that the provisions set forth herein shall thereafter be applicable, in a manner as similar as possible to the methods used herein, to any shares of stock or other securities or other property thereafter deliverable upon exercise of this Option, which adjustments are satisfactory to the Optionholders entitled to purchase not less than 51% of the total number of Option Shares not yet purchased. (d) Dilution in Case of Issuance of Other Securities. In case any Other Securities shall be issued or sold or shall become subject to issue or sale upon the conversion or exchange of any stock (or Other Securities) of Newco (or any issuer of Other Securities or any other Person referred to in subsection (c)) or to subscription, purchase or other acquisition pursuant to any options or rights issued or granted by Newco (or any such other issuer or Person) for a consideration such as to dilute, within the standards established in the other provisions of this Section 6, the purchase rights granted by this Option, then, and in each such case, the computations, adjustments and readjustments provided for in this Section 6 with respect to the Exercise Price shall be made in a manner as similar as possible to the method so provided and shall be applied to determine the amount of Other Securities from time to time receivable upon the exercise of the Option so as to protect the Optionholders against such dilution of the purchase right. (e) Other Dilutive Events. In case any event shall occur as to which the other provisions of this Section 6 are not applicable strictly, but with respect to which the failure to make any adjustment would not protect fairly the purchase rights represented by this Option in accordance with the essential intent and principles hereof then, in each such case, the Company shall appoint a firm of independent public accountants of recognized national standing (which may be the regular auditors of the Company or Newco), which shall give their opinion upon the adjustment, if any, on a basis consistent with the essential intent and principles established in this Section 6, necessary to preserve, without dilution, the purchase rights represented by this Option. Upon receipt of such opinion, the Company will promptly mail a copy thereof to the holder of this Option and shall make the adjustments described therein. (f) Determination of Consideration. For purposes of this Section 6, the consideration received by Newco for the issue, sale, grant or assumption of additional shares of Common Stock, rights, options or Convertible Securities, irrespective of the accounting treatment of such consideration, shall be valued as follows: (1) Cash Payment. In the case of cash, the net amount received by Newco after deduction of any accrued interest, dividends or any expenses paid or incurred or any underwriting commissions or concessions paid or allowed by Newco; (2) Securities or Other Property. In the case of securities or other property, as of the date immediately preceding such issue, sale, grant or assumption, the lesser of (i) the Fair Market Value per share of the security for which such consideration was received, and (ii) the Fair Value of such consideration; (3) Allocation Related to Common Stock. In the event additional shares of Common Stock are issued or sold together with other securities or other assets of Newco for a consideration which covers both, the consideration received (computed as provided in (1) and (2) above) shall be allocable to such additional shares of Common Stock as determined in good faith by the Board of Directors of Newco (except as otherwise provided in (4) below); (4) Allocation Related to Options, Other Rights and Convertible Securities. In case any options or other rights to purchase any shares of Common Stock or Convertible Securities shall be issued or sold together with other securities or other assets of Newco, in one integral transaction such that no specific consideration is allocated to the rights or options, such rights, options or Convertible Securities shall be deemed to have been issued without consideration; (5) Dividends in Securities. In case Newco shall declare a dividend or make any other distribution upon any stock of Newco payable, in either case, in Common Stock or Convertible Securities, such Common Stock or Convertible Securities, as the case may be, issuable in payment of such dividend or distribution shall be deemed to have been issued or sold without consideration; (6) Warrants, Options, Other Rights and Convertible Securities. The price per share for which shares of Common Stock are issuable upon the exercise of rights or options to purchase any shares of Common Stock or upon conversion or exchange of Convertible Securities shall be determined by dividing (i) the sum of (x) the total amount, if any, received or receivable by Newco as consideration for the granting of such rights or options or the issuance of such Convertible Securities, plus (y) the minimum aggregate amount of additional consideration payable to Newco upon the exercise of such rights or options, or, in the case of such Convertible Securities, the minimum aggregate amount of additional consideration, if any, payable upon the conversion or exchange thereof, in each case after deducting any accrued interest, dividends or any expenses paid or incurred or any underwriting commissions or concessions paid or allowed by Newco by, (ii) the maximum number of shares of Common Stock issuable upon the exercise of such rights or options or upon the conversion or exchange of all such Convertible Securities; (7) Merger, Consolidation or Sale of Assets. In case any shares of Common Stock or Convertible Securities or any rights or options to purchase such Common Stock or Convertible Securities shall be issued in connection with any merger or consolidation in which Newco is the surviving corporation, the amount of consideration therefor shall be deemed to be the Fair Value of such portions of the assets and business of the acquired corporation as the Fair Value opinion shall attribute to such Common Stock, Convertible Securities, rights or options, as the case may be. In the event of any merger or consolidation of Newco in which Newco is not the surviving corporation or in the event of any sale of all or substantially all of the assets of Newco for stock or other securities of any corporation, Newco shall be deemed to have issued a number of shares of its Common Stock for stock or securities of the other corporation computed on the basis of the actual exchange ratio on which the transaction was predicated and for a consideration equal to the Fair Value on the date of such transaction of such stock or securities of the other corporation, and if any such calculation results in adjustment of the Exercise Price, the determination of the number of shares of Common Stock issuable upon exercise of this Option immediately prior to such merger, consolidation or sale, for the purposes of subsection (c) above, shall be made after giving effect to such adjustment of the Exercise Price. (g) Record Date. In case Newco shall take a record of the holders of the Common Stock for the purpose of entitling them (i) to receive a dividend or other distribution payable in Common Stock or in Convertible Securities, or (ii) to subscribe for or purchase Common Stock or Convertible Securities, then all references in this Section 6 to the date of the issue or sale of the shares of Common Stock deemed to be issued or sold pursuant to the declaration of such dividend or making of such other distribution or to the date of the granting of such right of subscription or purchase, as the case may be, shall be deemed to be references to such record date; (h) Shares Outstanding. The number of shares of Common Stock deemed to be outstanding at any given time shall not include (i) shares of Common Stock in the treasury of Newco or any subsidiary; (i) Maximum Exercise Price. At no time shall the Exercise Price per share of Common Stock exceed the Exercise Price specified on the cover of this Option except as provided in subsection (b) or (c) of this Section 6.2; and (j) Application. Except as otherwise provided herein, all subsections of this Section 6.2 are intended to operate independently of one another. If an event occurs that requires the application of more than one subsection, all applicable subsections shall be given independent effect. 6.3 Dilution in Case of Distribution of Indebtedness, Dividends or Assets. In the event Newco shall fix a record date for making to all holders of its Common Stock a distribution of evidence of its indebtedness, securities (other than shares of Common Stock) whether issued by Newco or not, property, rights, assets (including all cash dividends or other cash distributions whether payable out of earnings or out of surplus legally available for dividends under the laws of the jurisdiction governing Newco or otherwise), or any other thing of value, then the Optionholder shall be entitled to receive, subject to applicable law, upon exercise of the Option, that portion of such distribution to which it would have been entitled had Optionholder exercised its Option immediately prior to the date of such distribution. At the time Newco fixes the record date for such distribution, the Company shall allocate sufficient reserves to ensure the timely and full performance of the provisions of this Section 6.3. The payments of any amounts by Newco pursuant to management agreements between Newco and RTM, Inc. and RTM Management Co., LLC, as such agreements are in effect as of the date of issuance of this Option, shall not be considered distributions subject to this Section 6.3. 6.4 Rights Offering. In the event Newco shall effect an offering of Common Stock pro rata among its stockholders, the Optionholder shall be entitled, subject to applicable law, to elect to participate in each and every such offering as if this Option had been exercised immediately prior to each such offering. The Company shall promptly (but in any case no later than 5 Business Days prior to such rights offering) cause Newco to mail by first class, postage prepaid, to the Optionholder, notice that such rights offering will take place. 6.5 No Adjustments under Certain Circumstances. Anything herein to the contrary notwithstanding, the Company shall not be required to make any adjustment of the Exercise Price in the case of: (a) the transfer of shares of Common Stock to the Optionholder upon the exercise of this Option; or (b) the issuance of shares of Common Stock pursuant to a rights offering in which the Optionholder elects to participate under the provisions of Section 6.4. 6.6 Notices of Adjustments and of Extraordinary Corporate Events. (a) Adjustments to Exercise Price. Upon any adjustment of the Exercise Price, a certificate signed (i) by the President of the Company, or (ii) by any independent firm of certified public accountants of recognized national standing selected by the Company and at its expense, shall be mailed promptly to each Optionholder, which certificate sets forth in reasonable detail the events requiring the adjustment and the method by which such adjustment was calculated and specifies the Exercise Price and the number of shares of Common Stock purchasable upon exercise of such Optionholder's Option, in each case, adjusted pursuant to this Section 6. The certificate of any independent firm of certified public accountants of recognized national standing selected by the Board of Directors of the Company shall be conclusive evidence of the correctness of any computation made under Section 6.1. (b) Extraordinary Corporate Events. In case Newco after the date hereof shall propose to (i) distribute any dividend (whether stock or cash or otherwise) to the holders of shares of Common Stock or to make any other distribution to the holders of shares of Common Stock, (ii) offer to the holders of shares of Common Stock rights to subscribe for or purchase any additional shares of any class of stock or any other rights or options, or (iii) effect any reclassification of the Common Stock (other than a reclassification involving merely the subdivision or combination of outstanding shares of Common Stock), any capital reorganization, any consolidation or merger (other than a merger in which no distribution of securities or other property is to be made to holders of shares of Common Stock), any sale, transfer or other disposition of all or substantially all of its property, assets and business, or the liquidation, dissolution or winding up of Newco, then, in each such case, the Company shall mail to each Optionholder notice of such proposed action, which notice shall specify the date on which (a) the books of Newco shall close, or (b) a record shall be taken for determining the holders of Common Stock entitled to receive such stock dividends or other distribution or such rights or options, or (c) such reclassification, reorganization, consolidation, merger, sale, transfer, other disposition, liquidation, dissolution or winding up shall take place or commence, as the case may be, and the date, if any, as of which it is expected that holders of record of Common Stock shall be entitled to receive securities or other property deliverable upon such action. Such notice shall be mailed in the case of any action covered by clause (i) or (ii) above at least 10 days prior to the record date for determining holders of Common Stock for purposes of receiving such payment or offer, or in the case of any action covered by clause (iii) above at least 30 days prior to the date upon which such action takes place and 20 days prior to any record date to determine holders of Common Stock entitled to receive such securities or other property. (c) Effect of Failure. Failure to file any certificate or notice or to mail any notice, or any defect in any certificate or notice, pursuant to this Section 6.6 shall not affect the legality or validity of the adjustment of the Exercise Price, the number of shares purchasable upon exercise of this Option, or any transaction giving rise thereto. 7. Registration Rights. The holder shall be entitled to the following registration rights: 7.1 Demand Registration. 7.1.1 At any time after Newco completes a public offering of the Common Stock and is eligible to register securities on Form S-3 or any similar successor form, the Holders of a majority in interest of the Registrable Securities shall have the right to make a written request for registration under the Securities Act (a "Demand Registration") of all or part of its or their Registrable Securities. Upon receipt of the written request (the "Request") of any such Holder or Holders, the Company shall cause Newco to use its best efforts to effect the registration under the Securities Act of all Registrable Securities that the Company has been so requested to cause Newco to register by such Holder or Holders, provided, however, that the Company need only cause Newco to effect one Demand Registration under the Securities Act of Registrable Securities. Within 10 days after receipt of a Request, the Company will give written notice (the "Notice") of such Request to all other Holders advising such Holders of their right to include Registrable Securities in the registration requested, and the Company will cause Newco to include in such registration all Registrable Securities of such class or type covered by written requests for inclusion received by the Company during the 15 business days following the receipt by the applicable Holder of the Notice. All requests made pursuant to this subsection 7.1.1 will specify the aggregate number of Registrable Securities to be registered. 7.1.2 The Holders of a majority in interest of the Registrable Securities shall have the right to select the managing underwriters, if any, for such registration, subject to the approval of Newco, which shall not be unreasonably withheld. If the managing underwriter of any underwritten offering under this Section 7.1 shall inform Newco by letter that, in its opinion, the number or type of Registrable Securities requested to be included in such registration would adversely affect such offering, and Newco has so advised the Holders in writing, then the Company will cause Newco to include in such registration, to the extent of the number and type that Newco is so advised can be sold in (or during the time of) such offering, first, such Registrable Securities requested to be included in such registration by the Holders, pro rata among such Holders on the basis of the estimated proceeds from the sale thereof, and second, all other securities proposed to be registered. 7.1.3 Notwithstanding the foregoing, the Company shall not be obligated to cause Newco to effect a registration pursuant to Section 7.1.1 (i) during any lock-up period to which the Holders are subject pursuant to Section 9.6 or (ii) if within 30 days following a Request, Newco delivers a notice to the Holders that it intends to initiate a public offering of Common Stock under the Securities Act (other than on a Form S-4 or S-8). If Newco shall furnish to the Holders a certificate stating that in the good faith judgment of the Board of Directors of Newco a registration would require the premature disclosure of material non-public information which disclosure would be seriously detrimental to Newco, the Company's obligation to cause Newco to use its best efforts to file a registration statement shall be deferred for a period not to exceed 90 days; provided, however, that in such event, the Holders of a majority in interest of the Registrable Securities shall have the right to withdraw the Request without penalty or incurring any costs otherwise required to be borne by Newco or the Company in connection with a Demand Registration. 7.1.4 If the Holders of a majority in interest of the Registrable Securities elect to withdraw a Request, then the Company shall be relieved of its obligations under this Section 7.1 if such withdrawal is not attributable to the fault of the Company. If the Company exercises its right of first refusal under Section 1.6 (a) hereof following a Request, the Company shall have no further obligation under Section 7.1 hereof. 7.2 Incidental Registration. 7.2.1 If at any time following the second anniversary of the issuance of this Option, Newco proposes to register any of its Common Stock under the Securities Act by registration on any form other than Form S-4 or S-8 or any similar successor form, whether or not for sale for its own account, the Company shall cause Newco, at each such time to give prompt written notice to all registered Holders of Registrable Securities of its intention to do so and of such Holders' rights under this Section 7.2. Upon the written request of any such Holder (a "Requesting Holder") made as promptly as practicable and in any event within 10 days after the receipt of any such notice (which request shall specify the Registrable Securities intended to be disposed of by such Requesting Holder and the intended method of disposition), the Company shall cause Newco to use its best efforts to effect the registration under the Securities Act of all Registrable Securities that the Company has been so requested to register by the Requesting Holders thereof to the extent required to permit the disposition of such Registrable Securities in accordance with the intended methods thereof described as aforesaid; provided, however, that prior to the effective date of the registration statement filed in connection with such registration, immediately upon notification to Newco from the managing underwriter of the price at which such securities are to be sold, if such price is below the price which any Requesting Holder shall have indicated to be acceptable to such Requesting Holder, and if such price is below the range of prices indicated on the cover of the most recent preliminary prospectus relating to such registration, the Company shall cause Newco to so advise such Requesting Holder of such price, and such Requesting Holder shall then have the right to withdraw its request to have its Registrable Securities included in such registration statement without penalty; provided further, that if, at any time after giving written notice of its intention to register any securities and prior to the effective date of the registration statement filed in connection with such registration, Newco shall determine for any reason not to register or to delay registration of such securities, the Company may, at its election, give written notice of such determination to each Requesting Holder of Registrable Securities and (i) in the case of a determination not to register, shall be relieved of its obligation to cause Newco to register any Registrable Securities in connection with such registration (but not from any obligation of the Company to cause Newco to pay the registration expenses in connection therewith), and (ii) in the case of a determination to delay registering, shall be permitted to delay registering any Registrable Securities, for the same period as the delay in registering such other securities. 7.2.2 If the managing underwriter of any underwritten offering under this Section 7.2 shall inform Newco by letter that, in its opinion, the number or type of Registrable Securities requested to be included in such registration would adversely affect such offering, and Newco has so advised the Requesting Holders in writing, then the Company will cause Newco to include in such registration, to the extent of the number and type that Newco is so advised can be sold in (or during the time of) such offering, (i) all securities proposed by Newco to be sold for its own account and (ii) such Registrable Securities requested to be included in such registration pursuant to this Agreement or a Similar Option and all other securities proposed to be registered pro rata among all such securities on the basis of the estimated proceeds from the sale thereof. 8. Obligations of the Company. In connection with the registration of the Registrable Securities as contemplated by Section 7.1 or 7.2, the Company shall cause Newco to: 8.1 prepare and file with the SEC a registration statement or statements or similar documents (the "Registration Statement") with respect to (i) in the case of registration contemplated by Section 7.1, all Registrable Securities, and thereafter use its best efforts to cause the Registration Statement to become effective as soon as practicable and in any event within 90 days after the Request, and (ii) in the case of incidental registration pursuant to Section 7.2, the securities to be sold by Newco together with the Registrable Securities to be sold by the Requesting Holders and the other securities referred to in Section 7.2.2, and thereafter use its best efforts to cause the Registration Statement to become effective as soon as practicable, which Registration Statement (including any amendments or supplements thereto and prospectuses contained therein), in each case, shall not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein, or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading; 8.2 prepare and file with the SEC such amendments (including post-effective amendments) and supplements to the Registration Statement and the prospectus used in connection with the Registration Statement as may be necessary to keep the Registration Statement effective and to comply with the provisions of the Securities Act with respect to the disposition of all Registrable Securities covered by the Registration Statement until such time as all of such Registrable Securities have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof set forth in the Registration Statement; 8.3 furnish to each Holder whose Registrable Securities are included in the Registration Statement such number of copies of a prospectus, including a preliminary prospectus and all amendments and supplements thereto and such other documents, as such Holder may reasonably request in order to facilitate the disposition of the Registrable securities owned by such Holder; 8.4 use its best efforts to (i) register and qualify the Registrable Securities covered by the Registration Statement under such other securities or Blue Sky laws of such jurisdictions as the Holders who hold a majority in interest of the Registrable Securities reasonably request, (ii) prepare and file in those jurisdictions all required amendments (including post-effective amendments) and supplements, (iii) take such other actions as may be necessary to maintain such registrations and qualifications in effect at all times the Registration Statement is in effect and (iv) take all other actions necessary or advisable to enable the disposition of such securities in all such jurisdictions; provided, however, that Newco shall not be required in connection therewith or as a condition thereto to qualify to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 8.4; 8.5 (i) in the case of registration contemplated by Section 7.1, in the event Holders who hold a majority in interest of the Registrable Securities select underwriters for the offering, and (ii) in the case of registration contemplated by Section 7.2, in the case of an underwritten offering, enter into and perform its obligations under an underwriting agreement with the managing underwriter of such offering, in usual and customary form, including, without limitation, customary indemnification and contribution obligations, and (ii) in the case of any non-underwritten offering, provide to broker-dealers participating in any distribution of Registrable Securities reasonable indemnification substantially similar to that provided by Section 11.1; 8.6 promptly notify each Holder of the happening of any event of which Newco has knowledge, as a result of which Newco believes the prospectus included in the Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances then existing, not misleading, and use its best efforts to prepare promptly a supplement or amendment to the Registration Statement to correct such untrue statement or omission, and deliver a number of copies of such supplement or amendment to each Holder as such Holder may reasonably request; 8.7 promptly notify each Holder who holds Registrable Securities being sold (or, in the event of an underwritten offering, the managing underwriters) of the issuance by the SEC of any stop order or other suspension of effectiveness of the Registration Statement, and make every reasonable effort to obtain the withdrawal of any order suspending the effectiveness of the Registration Statement at the earliest possible time; 8.8 permit a single firm of counsel designated as selling stockholders' counsel by the Holders who hold a majority in interest of the Registrable Securities being sold to review the Registration Statement and all amendments and supplements thereto a reasonable period of time prior to their filing with the SEC, and shall not file any document in a form to which such counsel reasonably objects; 8.9 make generally available to its security holders as soon as practical, but not later than 90 days after the close of the period covered thereby, an earnings statement (in form complying with the provisions of Rule 158 under the Securities Act) covering a twelve-month period beginning not later than the first day of the Company's fiscal quarter next following the effective date of the Registration Statement; 8.10 at the request of the Holders who hold a majority in interest of the Registrable Securities being sold, furnish on the date that Registrable Securities are delivered to an underwriter for sale in connection with the Registration Statement (i) a letter, dated such date, from Newco's independent certified public accountants, in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering, addressed to the underwriters; and (ii) an opinion, dated such date, from counsel representing Newco for purposes of such Registration Statement, in form and substance as is customarily given to underwriters in an underwritten public offering, addressed to the underwriters; 8.11 make available for inspection by any Holder, any underwriter participating in any disposition pursuant to the Registration Statement, and any attorney, accountant, or other agent retained by any such Holder or underwriter (collectively, the "Inspectors"), all pertinent financial and other records, pertinent corporate documents and properties of Newco, as shall be reasonably necessary to enable each Inspector to exercise its due diligence responsibility, and cause Newco's officers, directors and employees to supply all information reasonably requested by any such Inspector in connection with the Registration Statement; 8.12 use its best efforts either to (i) cause all the Registrable Securities covered by the Registration Statement to be listed on a national securities exchange and on each additional national securities exchange on which similar securities issued by Newco are then listed, if any, if the listing of such Registrable Securities is then permitted under the rules of such exchange or (ii) secure designation of all the Registrable Securities covered by the Registration Statement as a NASDAQ "National Market Security" within the meaning of Rule 11Aa2-l of the SEC and the quotation of the Registrable Securities on the NASDAQ National Market; 8.13 provide a transfer agent and registrar, which may be a single entity, for the Registrable Securities not later than the effective date of the Registration Statement; 8.14 cooperate with the Holders who hold Registrable Securities being sold and the managing underwriter or underwriters, if any, to facilitate the timely preparation and delivery of certificates (not bearing any restrictive legends) representing Registrable Securities to be sold pursuant to the Registration Statement and enable such certificates to be in such denominations or amounts, as the case may be, and registered in such names as the managing underwriter or underwriters, if any, or the Holders may reasonably request; and 8.15 take all other reasonable actions necessary to expedite and facilitate disposition by the Holders of the Registrable Securities pursuant to the Registration Statement. 9. Obligations of the Holders. 9.1 It shall be a condition precedent to the obligations of the Company to take any action pursuant to this Agreement with respect to each Holder that such Holder shall furnish to Newco such information regarding itself, the Registrable Securities held by it and the intended method of disposition of such securities as shall be reasonably required to effect the registration of the Registrable Securities and shall execute such documents and agreements in connection with such registration as Newco may reasonably request. At least ten days prior to the first anticipated filing date of the Registration Statement, the Company shall cause Newco to notify each Holder of the information Newco requires from each such Holder (the "Requested Information") if he elects to have any of his Registrable Securities included in the Registration Statement. If within three Business Days of the filing date Newco has not received the Requested Information from a Holder (a "Non-Responsive Holder"), then the Company may permit Newco to file the Registration Statement without including Registrable Securities of such Non-Responsive Holders; 9.2 Each Holder, by his acceptance of the Registrable Securities, agrees to cooperate with Newco in connection with the preparation and filing of any registration statement hereunder, unless such Holder has decided not to participate; 9.3 In the case of registration contemplated by Section 7.1, in the event Holders holding a majority in interest of the Registrable Securities select underwriters for the offering, and in the case of registration contemplated by Section 7.2, in the event of an underwritten offering, each Holder agrees to enter into and perform his obligations under an underwriting agreement, in usual and customary form, including without limitation customary indemnification and contribution obligations, with the managing underwriter of such offering and take such other actions as are reasonably required in order to expedite or facilitate the disposition of the Registrable Securities, unless (i) in the case of registration contemplated by Section 7.1, such Holder has notified Newco in writing of his election to exclude all of his Registrable Securities from the Registration Statement, or (ii) in the case of registration contemplated by Section 7.2, such Holder has decided not to participate; 9.4 Each Holder agrees that, upon receipt of any notice from Newco of the happening of any event of the kind described in Section 8.6, such Holder will immediately discontinue disposition of Registrable Securities pursuant to the Registration Statement covering such Registrable Securities until such Holder's receipt of the copies of the supplemented or amended prospectus contemplated by Section 8.6 and, if so directed by Newco, such Holder shall deliver to Newco (at the expense of Newco) or destroy (and deliver to Newco a certificate of such destruction) all copies, other than permanent file copies then in such Holder's possession, of the prospectus covering such Registrable Securities current at the time of receipt of such notice; 9.5 No Holder may participate in any underwritten registration hereunder unless such Holder (i) agrees to sell such Holder's Registrable Securities on the basis provided in any underwriting arrangements approved by the Holders entitled hereunder to approve such arrangements, (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements and (iii) agrees to pay such Holder's pro rata portion of all underwriting discounts and commissions; and 9.6 In consideration of the Company's agreements hereunder, each Holder agrees that, upon the request of Newco or any managing underwriter for any public offering of Newco's securities, it shall not sell, effect any short sale of, loan, pledge, grant any option for the purchase of, or otherwise dispose of any Common Stock (other than shares included in any registration effected hereunder) without the prior written consent of Newco or such managing underwriter, as the case may be, for such period of time (not to exceed 180 days) from the effective date of such registration as Newco or the managing underwriter may specify. 10. Expenses of Registration. The Company shall cause all expenses other than underwriting discounts and commissions incurred in connection with registration, filings or qualifications pursuant to Section 8, including, without limitation, all registration, listing, filing and qualification fees, printing and accounting fees, the fees and disbursements of counsel for Newco and the reasonable fees and disbursements of one firm of counsel for the Holders, to be borne by Newco, except as otherwise required by applicable rules or regulations of the National Association of Securities Dealers or by applicable federal or state securities laws. 11. Indemnification. In the event any Registrable Securities are included in a Registration Statement under this Agreement: 11.1 To the extent permitted by law, the Company will cause Newco to indemnify and hold harmless each Holder who holds such Registrable Securities, the directors, if any, of such Holder, the officers, if any, of such Holder, who sign the Registration Statement, each person, if any, who controls such Holder, any underwriter (as defined in the Securities Act) for the Holders, and each person, if any, who controls any such underwriter within the meaning of the Securities Act or the Securities Exchange Act of 1934, as amended (the "Exchange Act") (each, an "Indemnified Holder") against any losses, claims, damages, expenses, liabilities (joint or several) (collectively, "Claims") to which any of them may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such Claims (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon any of the following statements, omissions or violations (collectively, a "Violation"): (i) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or any post-effective amendment thereof, or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, (ii) any untrue statement or alleged untrue statement of a material fact contained in any preliminary prospectus if used prior to the effective date of such Registration Statement, or contained in the final prospectus (as amended or supplemented if Newco files any amendment thereof or supplement thereto with the SEC), or the omission or alleged omission to state therein a material fact required to be stated therein, or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, or (iii) any violation or alleged violation by Newco of the Securities Act, the Exchange Act, any state securities law, or any rule or regulation promulgated under the Securities Act, the Exchange Act, or any state securities law. Subject to the restrictions set forth in Section 11.4 with respect to the number of legal counsel, the Company shall cause Newco to reimburse the Holders and each such underwriter or controlling person, promptly as such expenses are incurred and are due and payable, for any legal fees or other reasonable expenses incurred by them in connection with investigating or defending any such Claim, whether or not such claim, investigation or proceeding is brought or initiated by Newco or a third party. If multiple claims are brought against an Indemnified Holder in an arbitration proceeding, and indemnification is permitted under applicable law and is provided for under this Section 11 with respect to at least one such claim, the Company will cause Newco to agree that any arbitration award shall be conclusively deemed to be based on claims as to which indemnification is permitted and provided for, except to the extent the arbitration award expressly states that the award, or any portion thereof, is based solely on a claim as to which indemnification is not available. Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section 11.1 (a) as to any Indemnified Holder shall not apply to a Claim arising out of or based upon a Violation which occurs in reliance upon and in conformity with information furnished in writing to Newco by such Indemnified Holder expressly for use in connection with the preparation of the Registration Statement or any such amendment thereof or supplement thereto; and (b) shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of Newco. The Company shall cause Newco to not withhold such consent unreasonably. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Indemnified Holder and shall survive the transfer of the Registrable Securities by the Holders pursuant to Section 14. 11.2 In connection with any Registration Statement in which a Holder is participating, each such Holder agrees to indemnify and hold harmless, to the same extent and in the same manner set forth in Section 11.1, Newco, each of its directors, each of its officers who sign the Registration Statement, each person, if any, who controls Newco within the meaning of the Securities Act or the Exchange Act, any underwriter and any other stockholder selling securities pursuant to the Registration Statement or any of its directors or officers or any person who controls such stockholder or underwriter (collectively and together with an Indemnified Holder, an "Indemnified Party"), against any Claim to which any of them may become subject, under the Securities Act, the Exchange Act or otherwise, insofar as such Claim arises out of or is based upon any Violation, in each case to the extent (and only to the extent) that such Violation occurs in reliance upon and in conformity with written information furnished to Newco by such Holder expressly for use in connection with such Registration Statement; and such Holder will reimburse any legal or other expenses reasonably incurred by them in connection with investigating or defending any such Claim; provided, however, that the indemnity agreement contained in this Section 11.2 shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of such Holder, which consent shall not be unreasonably withheld; provided, further, that the Holder shall be liable under this Section 11.2 for only that amount of a Claim as does not exceed the net proceeds to such Holder as a result of the sale of Registrable Securities pursuant to such Registration Statement. 11.3 Newco shall be entitled to receive indemnities from underwriters, selling brokers, dealer managers, and similar securities industry professionals participating in the distribution to the same extent as provided above, with respect to information about such persons so furnished in writing by such persons expressly for inclusion in the Registration Statement. 11.4 Promptly after receipt by an Indemnified Party under this Section 11 of notice of the commencement of any action (including any governmental action), such Indemnified Party shall, if a Claim in respect thereof is to be made against any indemnifying Party under this Section 11, deliver to the indemnifying Party a written notice of the commencement thereof, and the indemnifying Party shall have the right to participate in, and, to the extent the indemnifying Party so desires, jointly with any other indemnifying Party similarly noticed, to assume control of the defense thereof with counsel satisfactory to the Indemnified Parties; provided, however, that an Indemnified Party shall have the right to retain its own counsel, with the fees and expenses to be paid by the indemnifying Party, if, in the reasonable opinion of counsel for the Indemnified Party, representation of such Indemnified Party by the counsel retained by the indemnifying Party would be inappropriate due to actual or potential differing interests between such Indemnified Party and any other party represented by such counsel in such proceeding. The Company shall cause Newco to pay for only one legal counsel for the Holders; such legal counsel shall be selected by the Holders holding a majority in interest of the Registrable Securities. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action shall not relieve such indemnifying party of any liability to the Indemnified Party under this Section 11, except to the extent that such failure to notify results in the forfeiture by the indemnifying party of substantive rights or defenses. The indemnification required by this Section 11 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as such expense, loss, damage or liability is incurred and is due and payable. 12. Contribution. To the extent any indemnification by an indemnifying party is prohibited or limited by law, the indemnifying party agrees to make the maximum contribution with respect to any amounts for which it would otherwise be liable under Section 11 to the fullest extent permitted by law; provided, however, that (i) no contribution shall be made under circumstances where the maker would not have been liable for indemnification under the fault standards set forth in Section 11, (ii) no seller of Registrable Securities guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any seller of Registrable Securities who was not guilty of such fraudulent misrepresentation and (iii) contribution by any seller of Registrable Securities shall be limited in amount to the net amount of proceeds received by such seller from the sale of such Registrable Securities. 13. Reports Under Securities Exchange Act of 1934. With a view to making available to the Holders the benefits of Rule 144 promulgated under the Securities Act or any other similar rule or regulation of the SEC that may at any time permit the Holders to sell securities of Newco to the public without registration ("Rule 144"), the Company agrees to cause Newco to: 13.1 make and keep public information available, as those terms are understood and defined in Rule 144; 13.2 file with the SEC in a timely manner all reports and other documents required of Newco under the Securities Act and the Exchange Act; and 13.3 furnish to each Holder so long as such Holder owns Registrable Securities, promptly upon request, (i) a written statement by Newco that it has complied with the reporting requirements of Rule 144 (at any time after 90 days after the effective date of the first registration statement filed by Newco), the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements), (ii) a copy of the most recent annual or quarterly report of Newco and such other reports and documents so filed by Newco, and (iii) such other information as may be reasonably requested to permit the Holders to sell such securities without registration. 14. Assignment of Registration Rights. The right to have the Company cause Newco to register Registrable Securities pursuant to this Option shall be automatically assigned by the Holders to transferees or assignees of this Option or such Registrable Securities, provided that immediately following such transfer or assignment, the further disposition of such securities by the transferee or assignee would be subject to restrictions under the Securities Act. The term "Holders" as used herein shall include permitted assignees and transferees. 15. Holdco Public Offering. In the event that the Company or any direct or indirect parent of the Company completes a public offering (a "Company IPO") of its common or common equivalent equity (the "Company Common Stock"), and at such time the Common Stock is not publicly traded, then, at the request of Optionholders entitled to purchase not less than 51% of the total number of Option Shares not yet purchased, the Company shall issue to each Optionholder an option (a "Replacement Option") to purchase shares of Company Common Stock in exchange for his Option to purchase Common Stock. The Replacement Option shall contain provisions so that the provisions set forth herein shall thereafter be applicable, in a manner as similar as possible to the methods used herein, to any shares of stock or other securities or other property thereafter deliverable upon exercise of the Replacement Option. For example, the Replacement Option shall obligate the Company to undertake all responsibilities and obligations to be undertaken hereunder by the Company or by Newco and all references herein to Newco shall be replaced in the Replacement Options by analogous references to the Company and all references herein to the Common Stock shall be replaced in the Replacement Options by analogous references to the Company Common Stock. The Replacement Option shall bind the Company, shall be accompanied by an opinion of counsel as to the enforceability of the Replacement Option and shall be approved by Optionholders entitled to purchase not less than 51% of the total number of Option Shares not yet purchased. The Replacement Option shall be exercisable for a percentage of the shares of Company Common Stock outstanding on a fully diluted basis on the date of issuance of the of the Replacement Option equal to the percentage of the outstanding shares of Common Stock on a fully diluted basis represented by the Option Shares underlying this Option at the time of issuance of the Replacement Option transferable to the Optionholder upon exercise of this Option, multiplied by a fraction, the numerator of which is the Fair Value of Newco on the date of completion of the Company IPO and the denominator of which is the Fair Value of the Company on the date of completion of the Company IPO. For the purposes of this Section 15, "fully diluted basis" means the number of shares of Company Common Stock outstanding on the date of exercise of the Replacement Option, after giving effect to the exercise of all Replacement Options and the conversion or exercise of any securities convertible into or exchangeable for Company Common Stock and any outstanding options, warrants or other rights to purchase or subscribe for Company Common Stock which have been issued by the Company. Upon issuance of the Replacement Options, the Company covenants and agrees that during the period within which the Replacement Option may be exercised, the Company will at all times have authorized and reserved, and keep available free from preemptive rights, a sufficient number of shares of Company Common Stock to provide for the exercise of the rights represented by all Replacement Options. The Company further covenants and agrees that all shares of Company Common Stock which are issued upon the exercise of the Replacement Options will, upon issuance, be validly issued, fully paid, and nonassessable, not subject to any preemptive rights, and free from all taxes, liens, security interests, charges, and other encumbrances. 16. Amendments. Any provision of this Option (including registration rights) may be amended and the observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the Holders who hold a majority in interest of the Registrable Securities. Any amendment or waiver effected in accordance with this Section 15 shall be binding upon each Holder and the Company. 17. Expiration of the Option. Except with respect to Sections 2, 7, 8, 9, 10, 11, 12, 13, 14, 15, 17, 18 and 19 the obligations of the Company pursuant to this Option shall terminate on the Expiration Date, unless the Option is not exercised, in which case all of the obligations of the Company under this Agreement shall terminate on the Expiration Date. 18. Definitions. As used herein, unless the context otherwise requires, the following terms have the following respective meanings: Affiliate: of any person or entity means any other person or entity directly or indirectly controlling, controlled by or under direct or indirect common control with such person or entity. For the purposes of this definition, "control," when used with respect to any person or entity, means the power to direct or cause the direction of the management or policies of such person or entity, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. Assignment Form: an Assignment Form in the form annexed hereto as Exhibit B. Book Value: per share of Common Stock as of any date herein shall mean the Consolidated Net Worth of Newco and its Subsidiaries as of such date divided by the number of shares of Common Stock outstanding as of such date. Business Day: any day other than a Saturday, Sunday or a day on which national banks are authorized by law to close in The City of New York, State of New York. Claims: the meaning specified in Section 11.1. Common Stock: the meaning specified on the cover of this Option. Company: the meaning specified on the cover of this Option. Company Common Stock: the meaning specified in Section 15. Company IPO: the meaning specified in Section 15. Convertible Securities: evidences of indebtedness, shares of stock or other securities which are convertible into or exchangeable for, with or without payment of additional consideration, additional shares of Common Stock, either immediately or upon the arrival of a specified date or the happening of a specified event. Consolidated Net Worth: as of any date herein specified, the total consolidated assets of Newco and its Subsidiaries minus the total consolidated liabilities of Newco and its Subsidiaries (exclusive of any liabilities associated with the Option) as determined from the consolidated balance sheet of Newco and its Subsidiaries from the most recent fiscal quarter, which consolidated balance sheet shall be prepared in accordance with generally accepted accounting principles consistently applied, shall be in reasonable detail, and shall be certified as complete and correct by the chief financial or accounting officer of Newco. Demand Registration: the meaning specified in Section 7.1. Exchange Act: the meaning specified in Section 11.1 or any successor Federal statute, and the rules and regulations of the SEC thereunder, all as the same shall be in effect at the time. Reference to a particular section of the Exchange Act shall include a reference to a comparable section, if any, of any such successor Federal statute. Exercise Form: an Exercise Form in the form annexed hereto as Exhibit A. Exercise Price: the meaning specified on the cover of this Option. Expiration Date: the meaning specified on the cover of this Option. Fair Market Value: Fair Market Value of a share of Common Stock as of a particular date (the "Determination Date") shall mean: (i) If the Common Stock is listed on a national securities exchange, then the Fair Market Value shall be the average of the closing prices of the Common Stock on the principal national securities exchange on which the Common Stock is listed or admitted for trading on the last twenty Business Days prior to the Determination Date, or if not listed or traded on any such exchange, then the Fair Market Value shall be the average of the closing prices of the Common Stock on the National Market System (the "National Market System") of the National Association of Securities Dealers Automated Quotations System ("NASDAQ") on the last twenty Business Days prior to the Determination Date; or, if the Common Stock is not listed on any national securities exchange or quoted on the National Market System, the average of the highest bid and lowest asked prices in the over-the-counter market as reported by the National Quotation Bureau or any similar successor organization on the last twenty Business Days prior to the Determination Date; or (ii) If the Common Stock is not so listed or admitted to unlisted trading privileges, then the Fair Market Value shall be the higher of (x) the Book Value per share, and (y) the fair value as reasonably determined by an Independent Financial Expert selected by the independent certified public accountants of Newco (which determination shall be reasonably described in the written notice delivered to the Optionholder together with the Common Stock certificates). Where the term "Fair Market Value" is used in reference to securities other than Common Stock (as is the case in Section 6.2(f)), all references to Common Stock in this Section 1.2(c) shall be read to mean such securities. Fair Value: as reasonably calculated by the Company's Board of Directors or a duly appointed committee of such Board and agreed to by the Optionholders (who shall agree among themselves by a majority in interest) or, failing such agreement within 15 days after such Board's or the committee's calculation, the fair value as determined by an Independent Financial Expert selected by the independent certified public accountants of the Company. Such firm shall determine the fair value of the security, property, or assets, as the case may be, in question and deliver its opinion in writing to the Company and to such holders. Holder(s): holder(s) of Registrable Securities. Indemnified Holder: the meaning specified in Section 11.1. Indemnified Party: the meaning specified in Section 11.2. Independent Financial Expert: means a nationally recognized investment banking firm (a) that does not (and whose directors, officers, employees and Affiliates do not) have a direct or indirect material financial interest in the Company or Newco, (b) that has not been, and, at the time it is called upon to serve as an Independent Financial Expert under this Agreement is not (and none of whose directors, officers, employees or Affiliates is) a promoter, director or officer of the Company or Newco, (c) that has not been retained by the Company or Newco for any purpose, other than to perform an equity valuation, within the preceding 12 months and (d) that is otherwise qualified to serve as an independent financial advisor. Inspectors: the meaning specified in Section 8.11. NASDAQ: the meaning specified in the definition of Fair Market Value. National Market System: the meaning specified in the definition of Fair Market Value. Non-Responsive Holder: the meaning specified in Section 9.2. Other Securities: any stock and other securities of Newco (other than Common Stock) or of any other entity which shall become subject to issue or sale upon the conversion or exchange of any stock or other securities of Newco. Participation Notice: the meaning specified in Section 2.2. Registrable Securities: (i) the Option Shares and other securities transferred or transferable to the Optionholder upon exercise of this Option and (ii) any securities issued or issuable with respect to any Common Stock or other securities referred to in subdivision (i) by way of stock dividend or stock split or in connection with a combination or other reorganization or otherwise. Any shares constituting Registrable Securities shall cease to be such if and when they (i) are distributed to the public pursuant to a registration statement under the Securities Act or Rule 144, (ii) become subject to resale pursuant to Rule 144(k) under the Securities Act (or any successor provision) or (iii) shall have otherwise been transferred and the new certificate evidencing ownership thereof does not bear a restrictive legend pursuant to the Securities Act and is not subject to a stop transfer order delivered by or on behalf of Newco. Registration Statement: the meaning specified in Section 8.1. Replacement Option: the meaning specified in Section 15. Requested Information: the meaning specified in Section 9.1. Requesting Holder: the meaning specified in Section 7.2.1. Rule 144: the meaning specified in Section 13. SEC: the Securities and Exchange Commission or any other Federal agency at the time administering the Securities Act or the Exchange Act, whichever is the relevant statute for the particular purpose. Securities Act: the meaning specified on the cover of this Option, or any successor Federal statute, and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time. Reference to a particular section of the Securities Act, shall include a reference to the comparable section, if any, of any such successor Federal statute. Similar Options: any Option substantially in the same form as this Option. Subsidiary: any corporation or other entity (a) more than 50% (by number of votes) owned by Newco and/or by one or more of its Subsidiaries, or any other business entity in which Newco and/or one or more of its Subsidiaries owns more than a 50% interest in either the capital or profits of such business entity, or (b) whose net earnings or portions thereof are consolidated with the net earnings of Newco and are recorded in the books of Newco for financial reporting purposes in accordance with generally accepted accounting principles or (c) of which a majority of the capital stock or other ownership interests having ordinary voting power to elect a majority of the board of directors (or other persons performing similar functions) are directly or indirectly owned by Newco and/or one or more of its Subsidiaries. Transfer: for purposes of Section 2.2, to transfer, sell, assign, pledge, hypothecate, give, create a security interest or lien on, place in trust (voting or otherwise), assign or in any other way encumber or dispose of, directly or indirectly and whether or not by operation of law or for value, any share of Common Stock. Violation: the meaning specified in Section 11.1. Optionholder: the meaning specified on the cover of this Option. Option Shares: the meaning specified on the cover of this Option. 19. Miscellaneous. 19.1 Entire Agreement. This Option constitutes the entire agreement between the Company and the Optionholder with respect to the Options. 19.2 Binding Effects; Benefits. This Option shall inure to the benefit of and shall be binding upon the Company and the Optionholder and their respective heirs, legal representatives, successors and assigns. Nothing in this Option, expressed or implied, is intended to or shall confer on any person other than the Company and the Optionholder, or their respective heirs, legal representatives, successors or assigns, any rights, remedies, obligations or liabilities under or by reason of this Option. 19.3 Section and Other Headings. The section and other headings contained in this Option are for reference purposes only and shall not be deemed to be a part of this Option or to affect the meaning or interpretation of this Option. 19.4 Pronouns. All pronouns and any variations thereof refer to the masculine, feminine or neuter, singular or plural, as the context may require. 19.5 Further Assurances. Each of the Company and the Optionholder shall do and perform all such further acts and things and execute and deliver all such other certificates, instruments and documents as the Company or the Optionholder may, at any time and from time to time, reasonably request in connection with the performance of any of the provisions of this Agreement. 19.6 Notices. All notices and other communications required or permitted to be given under this Option shall be in writing and shall be by telecopier, courier service or personal delivery, to the parties hereto at the following addresses or to such other address as any party hereto shall hereafter specify by notice to the other party hereto: (a) if to the Company, addressed to: c/o RTM Restaurant Group 5995 Barfield Road Atlanta, GA 30328 Attention: General Counsel (b) if to the Optionholder, addressed to: the address of such Optionholder appearing on the books of the Company. Except as otherwise provided herein, all such notices and communications shall be deemed to have been duly given when delivered by hand, if personally delivered; by courier, if delivered by commercial overnight courier service; and when receipt is acknowledged, if telecopied. 19.7 Separability. Any term or provision of this Option which is invalid or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the terms and provisions of this Option or affecting the validity or enforceability of any of the terms or provisions of this Option in any other jurisdiction. 19.8 Governing Law. This Option shall be deemed to be a contract made under the laws of Delaware and for all purposes shall be governed by and construed in accordance with the laws of such State applicable to such agreements made and to be performed entirely within such State. 19.9 No Rights or Liabilities as Stockholder. Nothing contained in this Option shall be determined as conferring upon the Optionholder any rights as a stockholder of Newco or as imposing any liabilities on the Optionholder to purchase any securities whether such liabilities are asserted by Newco or by creditors or stockholders of Newco or otherwise. IN WITNESS WHEREOF, the Company has caused this Option to be signed by its duly authorized officer. RTM PARTNERS, INC. By: /s/ Philip G. Skinner Name: Philip G. Skinner Title: Vice President Dated: May 5, 1997 Exhibit A EXERCISE FORM (To be executed upon exercise of this Option) The undersigned hereby irrevocably elects to exercise the right, represented by this Option, to purchase _________ of the Option Shares and herewith tenders (i) payment for such Option Shares to the order of [ ] in the amount of $__________ in accordance with the terms of this Option. The undersigned requests that a certificate for such Option Shares be registered in the name of __________________ and that such certificates be delivered to __________________ whose address is _______________________. Dated:______________ Signature_____________________________ ----------------------------- (Print Name) ----------------------------- (Street Address) ----------------------------- (City) (State) (Zip Code) Signed in the Presence of: - ------------------------- Exhibit B FORM OF ASSIGNMENT (To be executed only upon transfer of this Option) For value received, the undersigned registered holder of the within Option hereby sells, assigns and transfers unto _________________ the right represented by such Option to purchase ________________ shares of Common Stock of [ ] to which such Option relates and all other rights of the Optionholder under the within Option (including, without limitation, the registration rights provided in Section 7 of the within Option), and appoints ______________________ Attorney to make such transfer on the books of [ ] maintained for such purpose, with full power of substitution in the premises. Dated: ___________________ Signature_____________________________ ----------------------------- (Print Name) ----------------------------- (Street Address) ----------------------------- (City) (State) (Zip Code) Signed in the presence of: - ------------------------- Exhibit 10.30 Schedule of Omitted Documents and Summary of Material Differences 1. Option Dated May 5, 1997 pursuant to which RTM Partners, Inc. granted to Arby's Restaurant Operating Company the right to purchase forty-seven (47) shares of the Common Stock, par value $1.00 per share, of RTM Operating Company at a purchase price of $3,038.49 per share, expiring May 5, 1999 (Certificate No. 2). 2. Option dated May 5, 1997 pursuant to which RTM Partners, Inc. granted to Arby's Restaurant Development Company the right to purchase two hundred (200) shares of the Common Stock, par value $1.00 per share, of RTM Development Company at a purchase price of $7,971.52 per share, expiring May 5, 1999 (Certificate No. 1). EX-10 8 EXHIBIT 10.31 Exhibit 10.31 ================================================================================ GUARANTY by RTM, INC. RTM HOLDING COMPANY, INC. RTM PARTNERS, INC. RTM OPERATING COMPANY RTM MANAGEMENT CO., LLC in favor of ARBY'S, INC., ARBY'S RESTAURANT DEVELOPMENT CORPORATION, ARBY'S RESTAURANT HOLDING COMPANY, ARBY'S RESTAURANT OPERATIONS COMPANY AND TRIARC COMPANIES, INC. --------------------------------------- Dated as of May 5, 1997 --------------------------------------- ================================================================================ TABLE OF CONTENTS
Page ---- 1. Definitions ................................................................ 2 2. The Guaranty ............................................................... 5 2.1 Guaranty by RTM, Parent, Holdco, RTM Management and Newco One ........................................ 5 2.2 Guaranty by RTM, Parent Holdco, and RTM Management .................. 5 2.3 Guaranty by RTM, Parent, Holdco, RTM Management and Newco One ............................................ 5 2.4 Guaranty by RTM, Holdco, RTM Management and Newco One ............... 6 2.5 Guaranty by RTM, Parent, Holdco and Newco One ....................... 6 2.6 Guaranty by Parent, Holdco, RTM Management and Newco One ............ 6 2.7 Guaranty by RTM Management .......................................... 6 2.8 Guaranteed Obligations .............................................. 7 3. Liability of the Guarantor ................................................. 7 3.1 Guaranty of Payment ................................................. 7 3.2 Continuing Guaranty ................................................. 7 3.3 Absolute and Unconditional Guaranty ................................. 7 4. Waivers of Notices and Defenses ............................................ 9 5. Bankruptcy and Related Matters ............................................. 10 5.1 No Proceedings Against RTM, Parent, Holdco, RTM Management, Newco One or Newco Two ........................................................ 10 5.2 Guarantors Remain Obligated ......................................... 10 5.3 Stay of Acceleration ................................................ 10 5.4 Post-Petition Interest .............................................. 11 5.5 Reinstatement of Guaranty ........................................... 11 5.6 Limitation of Guarantor's Liability ................................. 11 6. No Subrogation ............................................................. 11 7. Subordination of Other Obligations ......................................... 12 8. Setoff; Security Arrangements .............................................. 12 8.1 Setoff .............................................................. 12 8.2 Security Arrangements ............................................... 13 8.3 RTM Fee1 ............................................................ 14 9. Taxes ...................................................................... 14 9.1 Payments Free of Taxes .............................................. 14 9.2 Payment of Taxes Withheld ........................................... 14 9.3 Indemnification ..................................................... 14
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Page ---- 10. Representations and Warranties ............................................. 15 10.1 Existence and Power ................................................. 15 10.2 Authorization; No Contravention ..................................... 15 10.3 Binding Obligation .................................................. 15 10.4 Not an Investment Company or Holding Company ........................ 16 10.5 Relationship of RTM to Parent, Holdco Newco One or Newco Two ........ 16 10.6 Financial Condition ................................................. 16 10.7 Net Worth ........................................................... 16 11. Covenants .................................................................. 17 11.1 Financial Condition of RTM, Parent, Holdco, RTM Management, Newco One or Newco Two ........................................................ 17 11.2 Financial Statements and Other Reports .............................. 17 11.3 Maintenance of Consolidated Net Worth ............................... 18 11.4 Notice of Events .................................................... 18 11.5 Management Agreements ............................................... 19 11.6 Board Member ........................................................ 19 11.7 Dividends and Distributions ......................................... 19 11.8 Mergers or Sales .................................................... 19 11.9 Development of New Restaurants....................................... 19 12. Events of Default .......................................................... 20 12.1 Default in Transaction Documents; Other Defaults .................... 20 12.2 Default in Other Agreements ......................................... 20 12.3 Involuntary Bankruptcy; Appointment of Custodian, Etc ............... 21 12.4 Voluntary Bankruptcy; Appointment of Custodian, Etc ................. 21 12.5 Judgments and Attachments ........................................... 21 12.6 Dissolution ......................................................... 22 12.7 Business Interruption ............................................... 22 12.8 Change of Control ................................................... 22 13. Miscellaneous .............................................................. 23 13.1 Survival of Warranties .............................................. 23 13.2 Notices ............................................................. 23 13.3 No Waivers .......................................................... 23 13.4 Expenses ............................................................ 23 13.5 Amendments and Waivers .............................................. 24 13.6 Successors and Assigns; No Third Party Beneficiaries ................ 24 13.7 APPLICABLE LAW ...................................................... 24 13.8 JURISDICTION ........................................................ 24 13.9 Severability ........................................................ 25 13.10 Interpretation ...................................................... 25 13.11 Further Assurances .................................................. 25
ii GUARANTY GUARANTY, dated as of May 5, 1997, by RTM, Inc., a Georgia corporation ("RTM"), RTM Holding Company, Inc., a Georgia subchapter S corporation ("Parent"), RTM Partners, Inc., a Georgia corporation ("Holdco"), RTM Management Co., LLC, a Georgia limited liability company ("RTM Management") and RTM Operating Company, a Delaware corporation ("Newco One") (collectively, the "Guarantors") in favor of Arby's, Inc., a Delaware corporation ("Arby's"), Arby's Restaurant Development Corporation, a Delaware corporation ("ARDC"), Arby's Restaurant Holding Company, a Delaware corporation ("ARHC"), Arby's Restaurant Operations Company, a Delaware corporation ("AROC," and, together with ARDC and ARHC, the "Sellers") and Triarc Companies, Inc., a Delaware corporation ("Triarc," and, together with the Sellers, the "Beneficiaries"). R E C I T A L S A. Pursuant to the Stock Purchase Agreement (the "Stock Purchase Agreement"), dated as of February 13, 1997, among Holdco, the Sellers and RTM, the Sellers have agreed to sell to Holdco, and Holdco has agreed to acquire from Sellers, all of the issued and outstanding shares of common stock, par value $1.00 per share of Newco One, (the "Newco One Shares"), and all of the issued and outstanding shares of common stock, par value $1.00 per share of Triarc Restaurants Disposition 2, Inc., a Delaware corporation ("Newco Two") (the "Newco Two Shares" and, together with Newco One Shares, the "Shares"), on the terms and conditions set forth therein (the "Sale"). B. The Sellers have required, as a condition precedent to their obligation to consummate the Sale under the Stock Purchase Agreement, that the Guarantors execute and deliver this Guaranty. The Sellers would not sell the Shares to Holdco but for the execution and delivery of this Guaranty by each of the Guarantors. C. In furtherance of the business purposes of each of the Guarantors, each of the Guarantors desires to irrevocably and unconditionally guarantee all of the Guaranteed Obligations (as hereafter defined). D. Affiliates of RTM (the "Principals") are the direct owners of all of the outstanding stock of Parent and all of the membership (equity) interests in RTM Management. Upon consummation of the Sale, Holdco will be the direct owner of all of the capital stock of Newco One and Newco Two. NOW, THEREFORE, based upon the foregoing, and in order to induce the Beneficiaries to enter into the Stock Purchase Agreement and to sell the Shares to Holdco, the Guarantors hereby agree as follows: 2 1. Definitions. Capitalized terms not otherwise defined in this Guaranty shall have the meanings ascribed to them in the Stock Purchase Agreement. As used in this Guaranty, the following terms have the following meanings unless the context otherwise requires: "Assets" means (A) except for those Assets that are (a) subject to security interests in favor of FFCA pursuant to any FFCA Loan Agreement, or (b) related to the Restaurants identified as Unit Nos. 897, 1452 and 1453 on Schedule 1 to this Guaranty, all of Newco One's right, title and interest in and to the restaurants listed on Schedule 1 to this Guaranty and any other restaurants hereafter owned or leased by Newco One (the "Restaurants"), all of the assets of any kind, tangible or intangible, located at the Restaurants that are now or hereafter used by Newco One in the operation of the Restaurants or associated therewith, whether owned or leased by Newco One, including, without limitation, the following: (i) all of Newco One's right, title, and interest in and to the leases of land and buildings or land, buildings and equipment, including without limitation, the leases that are listed on Schedule 2 to this Guaranty (the "Restaurant Leases"); (ii) all security deposits under leases relating to the Assets and all utility deposits and any other prepaid amounts (other than tax-related deposits) ("Security Deposits"); (iii) all leasehold improvements ("Leasehold Improvements") owned by Newco One with respect to leased Restaurants (if not included in the Restaurant Leases); (iv) all furniture, fixtures, equipment and personal property, including, without limitation, cash registers (to the extent not included under the Term Lease Master Agreement, dated December 27, 1994, between Arby's and IBM Credit Corporation and each of the leases entered into in accordance therewith (the "POS Agreements")), owned or leased by Newco One and used in the business of and located at the Restaurants (the "FF&E"); (v) all rights of Newco One under all equipment leases including, without limitation, those listed on Schedule 2 to this Guaranty (the "Equipment Leases); (vi) all of Newco One's right, title and interest in and to those certain tracts or parcels of land, together with improvements located thereon, owned by Newco One, including, without limitation, those listed on Schedule 3 to this Guaranty; (vii) all of Newco One's right, title and interest in and to all of the Contracts to which Newco One is now or hereafter a party, or shall have assumed, including, without limitation, the Licenses; (viii) all of Newco One's rights under the POS Agreements, including, without limitation, the right to use the software described therein; (ix) all of Newco One's rights under the Master Lease, dated February , 1994 between Arby's and International Leasing Corporation and all equipment schedules thereto (the "ILC Agreement"); (x) all merchandise inventory of food, beverages and other consumables, paper and supplies, as well as uniforms and promotional items located or otherwise used at the Restaurants (the "Inventory"); (xi) the sum of all amounts maintained as petty cash at the Restaurants (the "Petty Cash"); and (xii) all personal property owned or leased by Newco One and utilized by the area managers or directors of operations in connection with the ownership and/or operation of the Restaurants; in all cases whether now owned or hereafter acquired and (B) all rights of RTM Management under the Management Agreements, including without limitation, all 3 rights to receive the RTM Fees and all rights of Newco One and Newco Two under the Management Agreements. "Bankruptcy Code" means the Bankruptcy Code of 1978, as amended. "Change of Control" means, with respect to any Guarantor, (i) the sale, lease or transfer of all or substantially all of the Guarantor's assets to any other person or group (as such term is used in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")), (ii) the liquidation or dissolution of the Guarantor, or (iii) the acquisition by any person or group (as such term is used in Section 13(d)(3) of the Exchange Act) of a direct or indirect majority in interest (more than 50%) of the aggregate voting power of the Guarantor by way of merger or consolidation or otherwise, provided, however, that no "Change of Control," as herein defined, shall be deemed to have occurred as the result of (a) the merger of any two or more of the Guarantors and/or, unless prohibited by any provision of the FFCA Loan Agreements that is not waived, Newco Two, (b) the transfer of shares of Parent, among the Principals, interesse, (c) a transfer of shares of Holdco by the Parent to the Principals (or, if following such a transfer, the transfer of shares of Holdco among the Principals), or (d) a public offering of shares of common stock of any of the Guarantors if (i) following such public offering, the Principals, collectively, and the Parent and/or Holdco (in the case of a public offering of common stock of Newco One or Newco Two) continue to be controlling Affiliates, or the controlling Affiliate, of the entity the shares of which are the subject of such public offering and (ii) if such public offering occurs following the exercise by Sellers of their options under the Option Agreements and each Seller has been accorded the opportunity to participate on a pro rata basis as a seller in such public offering (other than where the issuer is RTM Management, Parent or RTM as long as there is no breach of the provisions of Section 15 of the Option Agreement). "Contracts" means each material contract or any other material agreement to which Newco One is a party, as the same may from time to time be amended, supplemented or otherwise modified, and including, without limitation, (a) all rights of Newco One to receive moneys due and to become due to it thereunder or in connection therewith, (b) all rights of Newco One to damages arising out of, or for, breach or default in respect thereof and (c) all rights of Newco One to perform and to exercise all remedies thereunder. "Event of Default" has the meaning ascribed to such term in Section 12. "FFCA" means FFCA Acquisition Corporation and FFCA Mortgage Corporation. "FFCA Loan Agreements" means, collectively, the Amended and Restated Loan Agreement dated as of October 13, 1995 by and between FFCA Acquisition Corporation (n/k/a FFCA Mortgage Corporation) ("FFCA Acquisition") and ARDC, the Loan Agreement dated as of October 13, 1995 by and between FFCA Acquisition and ARHC, the Loan Agreement dated as of September 5, 1996 by and 4 between FFCA Acquisition and ARHC, each as amended and supplemented, and each of the promissory notes issued thereunder, other than the Excluded FFCA Liabilities, and each of the documents and agreements entered into in connection therewith. "Guaranteed Obligations" has the meaning ascribed to such term in Section 2. "Guaranty" means this Guaranty, as it may be amended, supplemented or otherwise modified from time to time. "Licenses" means collectively, (i) new Arby's license agreements, in the form of the "1002-080188-40 LA" license (the "Arby's Licenses"), to be executed and delivered by Arby's and Newco One, which shall remain in effect until such time as a new license agreement reasonably acceptable to RTM Partners, Inc. (the "New Arby's License") becomes effective under applicable franchise laws, and thereafter, upon execution and delivery thereof, such New Arby's Licenses, and (ii) the new T.J. Cinnamons, ZuZu and P.T. Noodle's license agreements (the "Multi-Brand Licenses"), between Newco One and Arby's which shall remain in effect until such time as a new license agreement reasonably acceptable to RTM Partners, Inc. (also a "New Arby's License") becomes effective under applicable franchise laws, and thereafter, upon execution and delivery thereof, such New Arby's License and all New Arby's Licenses and Multi-Brand Licenses issued for each of the Restaurants. "Management Agreements" means the Management Agreement, dated as of the date hereof between RTM Management and Newco One and the Management Agreement dated as of the date hereof, between RTM Management and Newco Two. "RTM Fees" means the fee of 5% of net sales of Newco One and Newco Two to be paid by Newco One and Newco Two to RTM Management to cover RTM Management's expenses for corporate overhead attributable to Newco One and/or Newco Two pursuant to the Management Agreements. "Security Documents" means the (i) the Pledge Agreement, dated as of the date hereof, among Holdco and the Beneficiaries, (ii) the Security Agreements, each dated as of the date hereof, (a) between RTM Management and the Beneficiaries and (b) between Newco One and the Beneficiaries, and (iii) any and all other documents, instruments and agreements contemplated by, or now or hereafter delivered in connection with any of the foregoing, including any extensions, modifications, substitutions, amendments and renewals thereof. "Transaction Documents" means the Stock Purchase Agreement, the Notes, this Guaranty, the Security Documents, the Debt Documents, the Assumption Agreements and any and all other documents, instruments and agreements contemplated by, or now or hereafter delivered in connection with any of the foregoing including any 5 extensions, modifications, substitutions, amendments and renewals thereof, but not including the Licenses or any Market Development Agreements. "UCC" means the Uniform Commercial Code as in effect from time to time in the applicable jurisdiction. 2. The Guaranty. 2.1. Guaranty by RTM, Parent, Holdco, RTM Management and Newco One. Each of RTM, Parent, Holdco, RTM Management and Newco One, jointly and severally, hereby irrevocably guaranties the due and punctual payment in full when due (whether at stated maturity, upon acceleration, demand or otherwise, including amounts that would become due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code, or any successor provision), of any and all sums, whether of principal, interest (including any interest payable subsequent to a default), fees, expenses, indemnities and other amounts (including all reasonable fees, disbursements and other charges of counsel actually incurred by each of the Beneficiaries), payable by Newco Two pursuant to or arising under, out of or in connection with the Transaction Documents (other than the Notes), whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter incurred, including, without limitation, the payment of the Assumed Liabilities. 2.2. Guaranty by RTM, Parent Holdco, and RTM Management. Each of RTM, Parent, Holdco, and RTM Management, jointly and severally, hereby irrevocably guaranties the due and punctual payment in full when due (whether at stated maturity, upon acceleration, demand or otherwise, including amounts that would become due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code, or any successor provision), of any and all sums, whether of principal, interest (including any interest payable subsequent to a default), fees, expenses, indemnities and other amounts (including all reasonable fees, disbursements and other charges of counsel actually incurred by each of the Beneficiaries), payable by Newco One pursuant to or arising under, out of or in connection with the Transaction Documents (other than the Notes), whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter incurred, including, without limitation, the payment of the Assumed Liabilities. 2.3. Guaranty by RTM, Parent, Holdco, RTM Management and Newco One. Each of RTM, Parent, Holdco, RTM Management and Newco One, jointly and severally, hereby irrevocably guaranties the due and punctual payment in full when due (whether at stated maturity, upon acceleration, demand or otherwise, including amounts that would become due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code, or any successor provision), of any and all sums, whether of principal, interest (including any interest payable subsequent to a default), fees, expenses, indemnities and other amounts (including all reasonable fees, disbursements and other charges of counsel actually incurred by each of the Beneficiaries), payable by Holdco pursuant to or arising under, out of or in connection 6 with the Transaction Documents (other than the Notes), whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter incurred. 2.4. Guaranty by RTM, Holdco, RTM Management and Newco One. Each of RTM, Holdco, RTM Management and Newco One, jointly and severally, hereby irrevocably guaranties the due and punctual payment in full when due (whether at stated maturity, upon acceleration, demand or otherwise, including amounts that would become due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code, or any successor provision), of any and all sums, whether of principal, interest (including any interest payable subsequent to a default), fees, expenses, indemnities and other amounts (including all reasonable fees, disbursements and other charges of counsel actually incurred by each of the Beneficiaries), payable by Parent pursuant to or arising under, out of or in connection with the Transaction Documents (other than the Notes), whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter incurred. 2.5. Guaranty by RTM, Parent, Holdco and Newco One. Each of RTM, Parent, Holdco and Newco One, jointly and severally, hereby irrevocably guaranties the due and punctual payment in full when due (whether at stated maturity, upon acceleration, demand or otherwise, including amounts that would become due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code, or any successor provision), of any and all sums, whether of principal, interest (including any interest payable subsequent to a default), fees, expenses, indemnities and other amounts (including all reasonable fees, disbursements and other charges of counsel actually incurred by each of the Beneficiaries), payable by RTM Management pursuant to or arising under, out of or in connection with the Transaction Documents (other than the Notes), whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter incurred. 2.6. Guaranty by Parent, Holdco, RTM Management and Newco One. Each of Parent, Holdco, RTM Management and Newco One, jointly and severally, hereby irrevocably guaranties the due and punctual payment in full when due (whether at stated maturity, upon acceleration, demand or otherwise, including amounts that would become due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code, or any successor provision), of any and all sums, whether of principal, interest (including any interest payable subsequent to a default), fees, expenses, indemnities and other amounts (including all fees, disbursements and other charges of counsel to each of the Beneficiaries), payable by RTM pursuant to or arising under, out of or in connection with the Transaction Documents (other than the Notes), whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter incurred. 2.7. Guaranty by RTM Management. RTM Management hereby irrevocably guarantees the due and punctual payment in full of the principal of, and interest upon, the Notes when they become due upon the stated maturity date thereof or by acceleration or otherwise. 7 2.8. Guaranteed Obligations. The obligations to pay all such sums and perform all such payment terms and provisions set forth in this Section 2 are hereafter collectively referred to as the "Guaranteed Obligations." The Guarantors acknowledge that there are no conditions whatsoever to the effectiveness of this Guaranty. 3. Liability of the Guarantors. Each of the Guarantors agrees that its obligations hereunder are irrevocable, continuing, absolute, independent and unconditional and shall not be affected by any circumstance whatsoever (other than the indefeasible payment in full and the complete performance of the Guaranteed Obligations) which may constitute a defense or a legal or equitable discharge (whether in whole or in part) of a guarantor or surety, whether foreseen or unforeseen and whether similar or dissimilar to any circumstance described in this Guaranty. In furtherance of the foregoing and without limiting the generality thereof, each of the Guarantors agrees as follows: 3.1. Guaranty of Payment. This Guaranty is a guaranty of payment and performance of payment obligations, and not of collection only. Each Guarantor waives any requirement that the Beneficiaries, as a condition of payment by such Guarantor, (i) proceed against RTM, Parent, Holdco, RTM Management or Newco One, as the case may be, any other guarantor of the Guaranteed Obligations or any other person, (ii) proceed against or exhaust any security received from RTM, Parent, Holdco, RTM Management or Newco One, as the case may be, any other guarantor of the Guaranteed Obligations or any other person, or (iii) pursue any other remedy whatsoever in the power of the Beneficiaries. Each of the Guarantees set forth in this Section 2 shall be, and be deemed to be, an agreement by the Guarantors identified therein to exonerate, and to hold and save harmless, the Beneficiaries, and each of them, of, from and against all obligations or liabilities for payment of the Guaranteed Obligations. 3.2. Continuing Guaranty. This Guaranty shall remain in full force and effect until all of the Guaranteed Obligations have been completely performed and indefeasibly paid in full, notwithstanding that from time to time prior thereto RTM, Parent, Holdco, RTM Management, Newco One or Newco Two, as the case may be, may be free from any of the Guaranteed Obligations. A Guarantor's payment of a portion, but not all, of the Guaranteed Obligations shall in no way limit, affect, modify or abridge such Guarantor's liability for any portion of the Guaranteed Obligations that has not been completely performed or indefeasibly paid in full. 3.3. Absolute and Unconditional Guaranty. This Guaranty and the obligations of the Guarantors hereunder are not subject to any reduction, limitation, impairment, discharge or termination for any reason (other than the complete performance of payment obligations and the indefeasible payment in full of the Guaranteed Obligations), including, without limitation, the occurrence of any one or more of the following, whether or not such Guarantors shall have had notice or knowledge of any of them: 8 (i) any change in the manner, place or terms of payment (including the currency thereof) of any of the Guaranteed Obligations; (ii) any settlement, compromise, release or discharge of, or acceptance or refusal of any offer of performance with respect to, or substitutions for, the Guaranteed Obligations or any agreement relating thereto or any subordination of the payment of the Guaranteed Obligations to the payment of any other obligations; (iii) any rescission, waiver, extension, renewal, alteration, amendment or modification of, or any consent to departure from, any of the terms or provisions of the Guaranteed Obligations or any agreement relating thereto, or any other guaranties or security for the Guaranteed Obligations, in each case whether or not in accordance with the terms thereof; (iv) the Guaranteed Obligations, this Guaranty or any other agreement relating thereto at any time being found to be illegal, invalid or unenforceable in any respect or the existence or invocation of any provision of applicable law or regulation purporting to prohibit the payment by RTM, Parent, Holdco, RTM Management, Newco One or Newco Two, as the case may be, of any of the Guaranteed Obligations; (v) any request or acceptance of other guaranties of the Guaranteed Obligations or the taking and holding of any security for the payment of the Guaranteed Obligations, this Guaranty, or any other guaranty of the Guaranteed Obligations or any release, impairment, surrender, exchange, substitution, compromise, settlement, rescission or subordination thereof; (vi) any failure to perfect or continue perfection of a security interest in any collateral which secures any of the Guaranteed Obligations; or any enforcement and application of any security now or hereafter held by the Beneficiaries in respect of this Guaranty or the Guaranteed Obligations and any direction of the order or manner of sale thereof, or the exercise of any other right or remedy that the Beneficiaries may have with respect to any such security, as the Beneficiaries in their sole discretion may determine, including foreclosure on any such security pursuant to one or more judicial or nonjudicial sales; (vii) any failure or omission to exercise, assert or enforce, or any agreement or election not to assert or enforce, or the stay or enjoining, by order of court, by operation of law or otherwise, of the exercise or enforcement of, any claim or demand or any right, power or remedy (whether arising under the Transaction Documents, at law, in equity or otherwise) with respect to the Guaranteed Obligations or any agreement relating thereto, or with respect to any other guaranties of or any security for the payment of the Guaranteed Obligations; (viii) any change in or reorganization of the corporate structure of RTM, Parent, Holdco, RTM Management, Newco One or Newco Two or any 9 of their subsidiaries or any dissolution, termination, consolidation or merger or sale or other disposition, whether or not for fair consideration, of all or substantially all of the assets of any of the foregoing or any consent by each of the Beneficiaries thereto or to any restructuring of the Guaranteed Obligations; (ix) the election by the Beneficiaries in any proceeding instituted under the Bankruptcy Code of the application of Section 1111(b)(2) of the Bankruptcy Code; any borrowing or grant of a security interest by RTM, Parent, Holdco, RTM Management, Newco One or Newco Two, as debtor-in-possession, under Section 364 of the Bankruptcy Code; or the disallowance under Section 502 of the Bankruptcy Code of all or any portion of the claims of the Beneficiaries for repayment of the Guaranteed Obligations; or (x) any other act or thing or omission, or delay to do any other act or thing, which may or might in any manner or to any extent vary the risk of any Guarantor as an obligor in respect of the Guaranteed Obligations. 4. Waivers of Notices and Defenses. Each of the Guarantors hereby waives, for the benefit of the Beneficiaries: (i) any defense arising by reason of the incapacity, lack of authority or any disability of RTM, Parent, Holdco, RTM Management, Newco One or Newco Two, as the case may be; (ii) any notice of the creation, renewal, extension or accrual of any of the Guaranteed Obligations and notice of or proof of reliance by the Beneficiaries upon this Guaranty or acceptance of this Guaranty (the Guaranteed Obligations and all dealings between RTM, Parent, Holdco, RTM Management, Newco One or Newco Two, as the case may be, and the Guarantor, on the one hand, and the Beneficiaries, on the other hand, being conclusively deemed to have been created, incurred or conducted in reliance upon this Guaranty); (iii) any setoff or counterclaim (other than a setoff or counterclaim that is acknowledged by the Beneficiaries, or judicially determined by a court of competent jurisdiction, not subject to further appeal, to be valid) any demand for performance, notice of nonperformance, diligence, presentment, protest, notice of protest, notice of dishonor, notice of defaults under the Stock Purchase Agreement or any other Transaction Document, notice of any amendment, renewal, extension or modification of the Guaranteed Obligations or any agreement related thereto, notice that any portion of the Guaranteed Obligations is due, notice of any collection proceedings, and notice of any other fact which might increase the risk of any Guarantor; (iv) any defense based upon any statute or rule of law that provides that the obligation of a surety cannot be larger in amount or in other respects more burdensome than that of the principal; 10 (v) any benefit of, or any right to participate in, or any notices of exchange, sale, surrender or other handling of, any security or collateral given to the Beneficiaries to secure payment or performance of the Guaranteed Obligations or any other liability of RTM, Parent, Holdco, RTM Management, Newco One or Newco Two, as the case may be, to any of the Beneficiaries; and (vi) to the fullest extent permitted by law, any other defenses or benefits that may be derived from or afforded by law which limit the liability of, or exonerate, guarantors or sureties, or which may conflict with the terms of this Guaranty, including, without limitation, failure of consideration, breach of warranty, statute of frauds, statute of limitations, accord and satisfaction, and usury. 5. Bankruptcy and Related Matters. 5.1. No Proceedings Against RTM, Parent, Holdco, RTM Management, Newco One or Newco Two. So long as any of the Guaranteed Obligations remain outstanding, the Guarantors shall not, without the prior written consent of each of the Beneficiaries, commence or join with any other person in commencing any bankruptcy, liquidation, reorganization or insolvency proceedings of, or against, RTM, Parent, Holdco, RTM Management, Newco One or Newco Two, as the case may be. 5.2. Guarantors Remain Obligated. The obligations of the Guarantors under this Guaranty shall not be reduced, limited, impaired, discharged, deferred, suspended or terminated by any proceeding or action, voluntary or involuntary, involving the bankruptcy, insolvency, receivership, reorganization, marshaling of assets, assignment for the benefit of creditors, composition with creditors, readjustment, liquidation or arrangement of RTM, Parent, Holdco, Management, Newco One or Newco Two, as the case may be, or similar proceedings or actions or by any defense which RTM, Parent, Holdco, Management, Newco One or Newco Two, as the case may be, may have by reason of the order, decree or decision of any court or administrative body resulting from any such proceeding or action. Without limiting the generality of the foregoing, each of the Guarantors' liability shall extend to all amounts and obligations that constitute the Guaranteed Obligations and would be owed by RTM, Parent, Holdco, Management, Newco One or Newco Two, as the case may be, but for the fact that they are unenforceable or not allowable due to the existence of any such proceeding or action. 5.3. Stay of Acceleration. Each of the Guarantors agrees that, notwithstanding anything to the contrary herein, if, after the occurrence and during the continuance of an Event of Default, the Beneficiaries are prevented by applicable law from exercising their respective rights to accelerate the maturity of the Guaranteed Obligations, to collect interest on the Guaranteed Obligations or to enforce or exercise any other right or remedy with respect to the Guaranteed Obligations, or the Beneficiaries are prevented from taking any action to realize on any security or collateral or are prevented from collecting any of the Guaranteed Obligations, such Guarantor shall pay to the Beneficiaries upon demand therefor the amount that would otherwise have been due 11 and payable had such rights and remedies been permitted to be exercised by the Beneficiaries. 5.4. Post-Petition Interest. Pursuant to, and without limiting, the foregoing, each of the Guarantors acknowledges and agrees that any interest on any portion of the Guaranteed Obligations which accrues after the commencement of any proceeding or action referred to in Section 5.2 (or, if interest on any portion of the Guaranteed Obligations ceases to accrue by operation of law by reason of the commencement of said proceeding or action, such interest as would have accrued on such portion of the Guaranteed Obligations if said proceedings or actions had not been commenced) shall be included in the Guaranteed Obligations, it being the intention of each of the Guarantors and the Beneficiaries that the Guaranteed Obligations which are guarantied by the Guarantors pursuant to this Guaranty shall be determined without regard to any rule of law or order which may relieve RTM, Parent, Holdco, RTM Management, Newco One or Newco Two, as the case may be, of any portion of such Guaranteed Obligations. The Guarantors will permit any trustee in bankruptcy, receiver, debtor in possession, assignee for the benefit of creditors or similar person to pay the Beneficiaries, or allow the claim of the Beneficiaries, in respect of, any such interest accruing after the date on which such proceeding is commenced. 5.5. Reinstatement of Guaranty. Notwithstanding anything to the contrary contained herein, in the event that all or any portion of the Guaranteed Obligations are paid by RTM, Parent, Holdco, RTM Management or Newco One, as the case may be, the obligations of the Guarantors hereunder shall continue and remain in full force and effect or be reinstated, as the case may be, if all or any part of such payment(s) are rescinded or recovered, directly or indirectly, from the Beneficiaries as a preference, fraudulent transfer or otherwise, and any such payments which are so rescinded or recovered shall constitute Guaranteed Obligations for all purposes under this Guaranty. 5.6. Limitation of Guarantor's Liability. Each Guarantor and by its acceptance hereof each of the Beneficiaries hereby confirms that it is the intention of all parties hereto that the guarantee by such Guarantor pursuant to this Guaranty not constitute a fraudulent transfer or conveyance for purposes of any bankruptcy law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar federal or state law. To effectuate the foregoing intention, each of the Beneficiaries and the Guarantors hereby irrevocably agree that the obligations of such Guarantor under this Guaranty shall be limited to the maximum amount as will, after giving effect to all other contingent and fixed liabilities of such Guarantor and after giving effect to any collections from or payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under this Guaranty, result in the obligations of such Guarantor under this Guaranty not constituting such fraudulent transfer or conveyance. 6. No Subrogation. Notwithstanding any payment or payments made by the Guarantors hereunder, or any set-off or application of funds of the Guarantors by 12 the Beneficiaries, the Guarantors hereby irrevocably waive any claim or other rights that they may now or hereafter acquire against RTM, Parent, Holdco, RTM Management, Newco One or Newco Two, as the case may be, or any other insider guarantor that arise from the existence, payment, performance or enforcement of the Guarantors' obligations under this Guaranty or any other Transaction Document, including, without limitation, any right of subrogation, reimbursement, exoneration, contribution or indemnification and any right to participate in any claim or remedy of the Beneficiaries against RTM, Parent, Holdco, RTM Management, Newco One or Newco Two, as the case may be, or any other insider guarantor or any collateral security, whether or not such claim, remedy or right arises in equity or under contract, statute or common law, including, without limitation, the right to take or receive from RTM, Parent, Holdco, RTM Management, Newco One or Newco Two, as the case may be, or any other insider guarantor, directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security on account of such claim, remedy or right. If any amount shall be paid to any Guarantor in violation of the preceding sentence, such amount shall be held by such Guarantor in trust for the Beneficiaries, segregated from other funds of such Guarantor, and shall, forthwith upon receipt by such Guarantor, be turned over to the Beneficiaries in the exact form received by such Guarantor (duly endorsed by such Guarantor to the Beneficiaries, if so requested by the Beneficiaries), to be applied against the Guaranteed Obligations, whether matured or unmatured, in such order as the Beneficiaries may determine. 7. Subordination of Other Obligations. Each of the Guarantors hereby agrees that any indebtedness of RTM, Parent, Holdco, RTM Management, Newco One or Newco Two, as the case may be, now or hereafter held by the Guarantors, other than indebtedness for borrowed money, is hereby subordinated in right of payment to the Guaranteed Obligations, and any such indebtedness of RTM, Parent, Holdco, RTM Management, Newco One or Newco Two, as the case may be, to the Guarantors collected or received by the Guarantors after an Event of Default has occurred and is continuing shall be held in trust for the Beneficiaries and shall forthwith be paid over to the Beneficiaries to be credited and applied against the Guaranteed Obligations, whether matured or unmatured, without in any way affecting, impairing or limiting the liability of the Guarantors under this Guaranty. 8. Setoff; Security Arrangements. 8.1. Setoff. In addition to any rights and remedies of the Beneficiaries provided by law or otherwise, upon the occurrence of a default and acceleration of the obligations owing in connection with the Transaction Documents, each Beneficiary shall have the right, without prior notice to the Guarantors any such notice being expressly waived to the extent permitted by applicable law, to set off and apply against any amounts due under the Transaction Documents, whether matured or unmatured, of each of the Guarantors to such or any other Beneficiary, and other amounts owing from such Beneficiary to such Guarantor, whether matured or unmatured, at, or at any time after, the happening of any of the above-mentioned events, and such right of set-off may be exercised by such Beneficiary against such Guarantor or against any 13 trustee in bankruptcy, debtor in possession, assignee for the benefit of creditors, receiver, custodian or execution, judgment of attachment creditor of such Guarantor, or against anyone else claiming through or against such Guarantor or such trustee in bankruptcy, debtor in possession, assignee for the benefit of creditors, receivers, or execution, judgment or attachment creditor, notwithstanding the fact that such right of set-off shall not have been exercised by such Beneficiary prior to the making, filing or issuance, or service upon such Beneficiary of, or of notice of, any such petition, assignment for the benefit of creditors, appointment or application for the appointment of a receiver, or issuance of execution, subpoena, order or warrant. Each Beneficiary agrees promptly to notify the Guarantors after any such set-off and application made by such Beneficiary, provided that the failure to give such notice shall not affect the validity of such set-off and application. 8.2. Security Arrangements. Holdco has given the Beneficiaries a pledge of the stock of Newco One and Newco Two, Parent has given the Beneficiaries a pledge of stock of Holdco, RTM Management has granted to the Beneficiaries security interests in the RTM Fees and Newco One has granted to the Beneficiaries security interests in the Assets, in each case as collateral security for the Guaranteed Obligations and such other obligations as are specified in the Security Documents. Holdco, Parent, RTM Management and Newco One will take all actions necessary or desirable, including the execution and delivery of all agreements, mortgages, indentures, trust deeds and other documents evidencing liens on real property and interests therein (collectively, "Real Property Lien Documents"), assignments, documents and instruments and the filing of appropriate financing statements and Real Property Lien Documents under the provisions of the UCC or applicable governmental requirements in each of the offices where such filings are necessary or appropriate, to grant the Beneficiaries a duly perfected lien on the stock of Newco One and/or Newco Two and/or the stock of Holdco and/or the Assets and/or the RTM Fees, as the case may be, pursuant to the Security Documents. Holdco has pledged all of the capital stock of Newco One and Newco Two as collateral security for the Guaranteed Obligations and such other obligations as are specified in the Security Documents. Holdco has delivered on the date hereof stock certificates representing all of the issued and outstanding shares of capital stock of Newco One and Newco Two accompanied by stock powers duly executed by Holdco in blank with signatures guaranteed. Parent has pledged all the capital stock of Holdco as collateral security for the Guarantied Obligations and such other obligations as are specified in the Security Documents. Parent has delivered on the date hereof stock certificates representing all of the issued and outstanding shares of capital stock of Holdco accompanied by stock powers duly executed by Parent in blank with signatures guaranteed. Reference is hereby made to Schedule 8.2 for the material terms of the Security Documents, which shall also have such other and further terms and provisions as are normally included in similar Security Documents and are mutually agreed upon by the parties. 14 8.3. RTM Fees. Parent, Holdco, RTM Management, Newco One and Newco Two, and each of them, hereby agree that upon the occurrence and continuance of an Event of Default, Newco One and Newco Two shall pay the RTM Fees to the Beneficiaries, instead of to RTM Management, which shall be relieved of any obligation to perform services under the Management Agreements so long as the RTM Fees are being paid to the Beneficiaries. The Beneficiaries shall have the right (but not the obligation) to use the RTM Fees to provide (or cause to be provided) all services which RTM Management would otherwise be required to provide and to pay amounts then due under the Transaction Documents. Any amounts received by the Beneficiaries in excess of amounts used to provide such services (or cause them to be provided) or to pay amounts then due under the Transaction Documents, shall be held in escrow by the Beneficiaries in an interest bearing account and shall be returned to RTM Management together with all accrued interest thereon when all Events of Default have been remedied or waived by Triarc Companies, Inc. or, if earlier, when all Guaranteed Obligations have been satisfied. 9. Taxes. 9.1. Payments Free of Taxes. All payments hereunder (including, without limitation, payments on account of principal, interest and fees) shall be made by the Guarantors free and clear of, and without deduction for, or on account of, any present or future tax, duty, levy, impost, fee, assessment or other charge of whatever nature now or hereafter imposed by any jurisdiction or by any political subdivision or taxing authority thereof or therein, together with any interest, additions to tax or interest, and penalties or other liabilities with respect thereto, but excluding therefrom in the case of each Beneficiary, taxes imposed on or measured by the overall net income of such Beneficiary (all such tax or taxes, other than such excluded tax or taxes, being referred to herein as a "Tax" or "Taxes"). If any of the Guarantors is required by law to make any deduction or withholding of any Taxes from any payment due hereunder, then the amount payable will be increased as may be necessary so that, after making all required deductions and taking account of any Taxes and excluded taxes imposed on such increased amount the Beneficiaries receive an amount equal to the sum it would have received had no such deduction or withholding been required. 9.2. Payment of Taxes Withheld. If any of the Guarantors makes any payment hereunder in respect of which it is required by law to make any deduction or withholding of any Taxes or excluded taxes, it shall pay the full amount to be deducted or withheld to the relevant taxation or other authority within the time allowed for such payment under applicable law and shall deliver to the Beneficiary within 30 days after it has made such payment to the applicable authority a receipt issued by such authority evidencing the payment to such authority of all amounts so required to be deducted or withheld from such payment. 9.3. Indemnification. Without prejudice to the provisions of Section 9.1, if any Beneficiary is required by law to make any payment on account of Taxes on or in relation to any sum received or receivable hereunder by such Beneficiary 15 or any liability for Tax in respect of any such payment is imposed, levied or assessed against such Beneficiary, the Guarantors will promptly indemnify the Beneficiaries against such Tax payment or liability, together with any interest, penalties and expenses (including counsel fees, disbursements and other charges) payable or incurred in connection therewith, including any Tax or excluded tax or taxes on the Beneficiaries arising by virtue of payments under this Section 9.3, computed in a manner consistent with Section 9.1. A certificate as to the amount of such payment by any Beneficiary, absent manifest error, shall be final, conclusive and binding upon all parties hereto for all purposes. 10. Representations and Warranties. Each of the Guarantors, jointly and severally, hereby represents and warrants to the Beneficiaries that the following statements are true and correct: 10.1. Existence and Power. Each of RTM, Parent, Holdco and Newco One is a is a corporation, and RTM Management is a limited liability company. Each of them is duly organized, validly existing and in good standing under the laws of its state of organization; has all necessary power and all material governmental licenses, authorizations, consents and approvals required to own its property and to carry on its business as now conducted and is qualified to do business in all jurisdictions in which such qualification is necessary. 10.2. Authorization; No Contravention. The execution, delivery and performance by such Guarantor of this Guaranty and each other Transaction Document to which it is a party, are within such Guarantor's power under its governance documents, have been duly authorized by all necessary corporate or membership action, require no action by or in respect of, filing with or notice to, any governmental authority (other than a filing pursuant to the HSR Act) and do not contravene, or constitute a default under, or require the consent of any creditor, stockholder or other person under, any provision of applicable law or regulation or of the certificate of incorporation, by-laws or other governance documents of such Guarantor or of any agreement, judgment, injunction, order, decree or other instrument binding upon such Guarantor or its subsidiaries or to which any of their respective assets are subject, or result in the creation or imposition of any lien on any asset of such Guarantor or any of its subsidiaries. 10.3. Binding Obligation. This Guaranty and each other Transaction Document to which such Guarantor is a party has been duly and validly executed and delivered by such Guarantor and constitutes the legal, valid and binding obligation of such Guarantor enforceable against such Guarantor in accordance with its terms, except as the enforceability thereof may be limited by bankruptcy, insolvency or other similar laws affecting the enforcement of creditors' rights generally and by equitable principles relating to the availability of equitable remedies. 16 10.4. Not an Investment Company or Holding Company. Such Guarantor is not an "investment company" within the meaning of the Investment Company Act of 1940, as amended, or a "holding company" within the meaning of the Public Utility Holding Company Act of 1935, as amended. 10.5. Relationship of RTM to Parent, Holdco Newco One or Newco Two. The Principals are the controlling persons of RTM, and the Principals are the direct owners of all of the capital stock of Parent (which owns all of the capital stock of Holdco) and of all of the membership interests in RTM Management; the agreement of the Sellers to sell the Shares to Holdco is of substantial and material benefit to RTM and RTM Management, each of which will receive substantial management fees following the sale of the shares to Holdco; RTM and RTM Management induced the Sellers to enter into, and the Sellers would not have entered into, the agreement to sell the Shares to Holdco without issuance of the Notes and execution of this Guaranty by RTM and RTM Management; and RTM and RTM Management have each reviewed and approved copies of the Stock Purchase Agreement and all other Transaction Documents and each is fully informed of the remedies the Beneficiaries may pursue upon the occurrence of a default under any of the Transaction Documents. 10.6. Financial Condition. The audited consolidated balance sheets of RTM and its subsidiaries as at May 26, 1996 (the "May 26, 1996 Balance Sheet") and May 28, 1995 and the related consolidated statements of operations, common stockholders' equity and cash flows of RTM and its subsidiaries for the years then ended, certified by RTM's independent certified public accounts, copies of which have been delivered to the Beneficiaries, were prepared in accordance with generally accepted accounting principles, have been prepared from, and are consistent with, the books and records of RTM and its subsidiaries and fairly present in all material respects the consolidated financial position of RTM and its subsidiaries as at such dates and the consolidated results of operations and cash flows of RTM and its subsidiaries for the years then ended. The consolidated balance sheet of RTM and its subsidiaries as at November 10, 1996 and the related consolidated statements of operations and stockholders' equity of RTM and its subsidiaries for the 26 weeks then ended, copies of which have been delivered to the Beneficiaries, were prepared in accordance with generally accepted accounting principles, have been prepared from, and are consistent with, the books and records of RTM and its subsidiaries and fairly present in all material respects the consolidated financial position of RTM and its subsidiaries as at such date and the consolidated results of operations of RTM and its subsidiaries for the period then ended. No events which have had or could reasonably be expected to have a Material Adverse Effect on RTM have occurred since November 10, 1996. 10.7. Net Worth. The consolidated net worth of RTM as of the date hereof, computed in a manner consistent with the May 26, 1996 Balance Sheet is not less than $35 million. 17 11. Covenants. 11.1. Financial Condition of RTM, Parent, Holdco, RTM Management, Newco One or Newco Two. Each of the Guarantors agrees that the Beneficiaries shall have no obligation to disclose or discuss with any Guarantor their assessment, or such Guarantor's assessment, of the financial condition of RTM, Parent, Holdco, RTM Management, Newco One or Newco Two, as the case may be. Each of the Guarantors represents and warrants that it has adequate means to obtain information from RTM, Parent, Holdco, RTM Management, Newco One or Newco Two, as the case may be, on a continuing basis concerning the financial condition of RTM, Parent, Holdco, RTM Management, Newco One or Newco Two, as the case may be, and their ability to perform their obligations under the Transaction Documents, and each of the Guarantors covenants and agrees to keep informed of the financial condition of RTM, Parent, Holdco, RTM Management, Newco One and Newco Two, as the case may be, and of all circumstances bearing upon the risk of nonpayment of the Guaranteed Obligations. 11.2. Financial Statements and Other Reports. The Guarantors will deliver to each of the Beneficiaries: (i) as soon as available and in any event within forty-five days after the end of each of the first three fiscal quarters of each year and the end of the fiscal year ending May 31, 1997 (the latter being herein called the "Stub Year"), (1) the consolidated balance sheets of each of RTM, Parent, Holdco, Newco One and Newco Two and their subsidiaries as at the end of such fiscal quarter and (2) the related consolidated statements of operations and stockholders' equity for such fiscal quarter or the Stub Year, as the case may be, in reasonable detail and certified by the chief financial officer of each of RTM, Parent, Holdco, Newco One and Newco Two that they were prepared in accordance with generally accepted accounting principles, consistently applied, have been prepared from and are consistent with, the books and records of each of RTM, Parent, Holdco, Newco One, Newco Two and their subsidiaries, and fairly present in all material respects the consolidated financial position of each of RTM, Parent, Holdco, Newco One, Newco Two and their respective subsidiaries, as at the dates indicated and the results of their operations for the periods indicated, subject only to changes resulting from audit and normal year-end adjustments; (ii) as soon as available and in any event within ninety days after the end of each fiscal year (other than the Stub Year), (1) the consolidated balance sheets of each of RTM, Parent, Holdco, Newco One, Newco Two and their respective subsidiaries as at the end of such fiscal year, (2) the related consolidated statements of operations, stockholders' equity and cash flows for such fiscal year, in reasonable detail and certified by the chief financial officer of each of RTM, Parent, Holdco, Newco One and Newco Two that they were prepared in accordance with generally accepted accounting principles, consistently applied, have been prepared from 18 and are consistent with, the books and records of each of RTM, Parent, Holdco, Newco, Newco One, Newco Two and their subsidiaries, and fairly present in all material respects the consolidated financial position of each of RTM, Parent, Holdco, Newco One, Newco Two and their respective subsidiaries, as at the dates indicated and the results of their operations and their cash flows for the periods indicated and (3) a report thereon of Arthur Andersen & Co. or other independent certified public accountants of recognized national standing, which report shall express no doubts about the ability of each of RTM, Parent, Holdco, Newco One, Newco Two and their respective subsidiaries to continue as a going concern, and shall state that such consolidated financial statements fairly present the consolidated financial positions of each of RTM, Parent, Holdco, Newco One, Newco Two and their respective subsidiaries as at the dates indicated and the results of their operations and their cash flows for the period indicated in conformity with generally accepted accounting principles applied on a consistent basis with prior years (except as otherwise disclosed in such financial statements) and that the examination by such accountants in connection with such consolidated financial statements has been made in accordance with generally accepted auditing standards; and (iii) together with each delivery of financial statements pursuant to Sections 11.2(i) and (ii) above, (1) an officers' certificate of each of RTM, Parent, Holdco, RTM Management, Newco One and Newco Two stating that the signers have reviewed the terms of this Guaranty and have made, or caused to be made under their supervision, a review in reasonable detail of the transactions and condition of each of RTM, Parent, Holdco, RTM Management and Newco One, and their subsidiaries during the accounting period covered by such financial statements and that such review has not disclosed the existence during or at the end of such accounting period, and that the signers do not have knowledge of the existence as at the date of the officers' certificate, of any condition or event which constitutes an Event of Default, or, if any such condition or event existed or exists, specifying the nature and period of existence thereof and what action each of RTM, Parent, Holdco, RTM Management and Newco One have taken, are taking and propose to take with respect thereto and (2) a compliance certificate demonstrating in reasonable detail compliance (as determined in accordance with generally accepted accounting principles, consistently applied) during and at the end of such accounting periods with the restrictions contained in Section 11.3. 11.3. Maintenance of Consolidated Net Worth. RTM shall not permit its consolidated net worth computed in accordance with generally accepted accounting principles as in effect from time to time hereafter (but excluding from the computation any after tax writeoffs of non-cash charges) shall be not less than $25 million. 11.4. Notice of Events. As soon as any Guarantor obtains knowledge thereof, such Guarantor shall give the Beneficiaries written notice of any condition or event which has resulted or might reasonably be expected to result in (i) a 19 Material Adverse Effect with respect to any of the Guarantors, (ii) a breach of, or noncompliance by any of the Guarantors with, any term, condition or covenant contained herein or in any other Transaction Document or (iii) an Event of Default. 11.5. Management Agreements. The Guarantors agree that each of the Beneficiaries is a third party beneficiary of the Management Agreements and Newco One, Newco Two and RTM Management shall not amend, modify, assign, alter, waive any provision of, or terminate, the Management Agreements without the prior written consent of Triarc Companies, Inc., which consent shall not be unreasonably withheld. 11.6. Board Member. Until the tenth anniversary of the date hereof, Parent and Holdco shall take any and all actions necessary to ensure that the Board of Directors of Newco One and the Board of Directors of Newco Two, or any successor to, or direct or indirect public parent of, Newco One and Newco Two, as the case may be, shall each always include at least one member who shall be designated by the Beneficiaries. 11.7. Dividends and Distributions. Parent, Holdco and Newco One agree that until the occurrence of the indefeasible payment in full and the complete performance of all obligations under the FFCA Loan Agreements, each of them shall not, without the prior written consent of each of the Beneficiaries, declare or pay, and Parent and Holdco will not permit Newco Two to declare or pay, any dividend, or make any other payment or distribution, of any kind to its respective shareholders or members on account of Parent's, Holdco's, Newco One's or Newco Two's equity or membership interests, as the case may be. 11.8. Mergers or Sales. Until the occurrence of the indefeasible payment in full and the complete performance of the Guaranteed Obligations hereunder, each of RTM, Parent, Holdco, RTM Management, Newco One and Newco Two will be prohibited from selling, transferring or otherwise conveying all or substantially all of its assets or merging or otherwise combining with any other entity, except for a merger that would not result in a Change of Control and is one of the following: (a) the merger of any two or more of the Guarantors, (b) the merger of Holdco with Newco One and (c) the merger of RTM with an unrelated entity so long as (i) RTM is the defacto survivor of such merger, and (ii) such merger does not result in a violation of the covenant contained in Section 11.3 hereof. 11.9. Development of New Restaurants. The Guarantors (including, without limitation, Parent and Holdco) shall not permit Newco Two to acquire, build or otherwise develop any Restaurants or other retail outlets of any kind, which are not owned by Newco Two on the date of this Guaranty, it being intended 20 that, as between Newco One and Newco Two, all development of new Restaurants or other retail outlets shall occur in Newco One. 12. Events of Default. If any of the following conditions or events ("Events of Default") shall occur and be continuing: 12.1. Default in Transaction Documents; Other Defaults. (i) Failure to make payment when due under the FFCA Loan Agreements, which failure shall have continued for a period longer than one-half of the number of days in the grace or cure period applicable to such payment under the FFCA Loan Agreements, (ii) failure by Newco One or Newco Two to pay when due any uncontested license fees or franchise fees to any Beneficiary, which failure shall have continued for more than twenty days after written notice, (iii) the validity or enforceability of this Guaranty or any of the Security Documents is challenged by any of the Guarantors or any of their Affiliates and such challenge is not effectively withdrawn within twenty days, (iv) this Guaranty and/or any of the Security Agreements referred to herein shall have been determined by any court having jurisdiction to be invalid or unenforceable against any of the Guarantors, (v) any violation of any of the covenants set forth in Sections 11.3, 11.5, 11.6, 11.7, 11.8 and 11.9 shall have occurred and such violation shall have continued for twenty days after written notice, (vi) any other failure or failures to pay any uncontested amounts required to be paid under the Transaction Documents if such payment or payments, alone or in the aggregate, equal $2 million or more, and such failure or failures to pay shall not have been remedied or waived by Triarc Companies, Inc. within thirty days after the date of written notice from one or more of the Beneficiaries or (vii) any failure or failures to pay $2 million or more when due under the Debt Documents other than the FFCA Loan Agreements, which failure shall have continued for a period longer than one-half of the number of days in the grace or cure period applicable to such payment under such Debt Documents. 12.2. Default in Other Agreements. Failure of any Guarantor or Newco Two to pay at final maturity any principal on one or more issues of indebtedness or contingent obligations of such Guarantor or Newco Two (other than the Assumed Liabilities) or breach or default by such Guarantor or Newco Two with respect to any other material term of any one or more issues of indebtedness or contingent obligations of such Guarantor or Newco Two or any agreement or instrument evidencing or securing such indebtedness or contingent obligations and such default or breach (i) if it is a payment default permits the acceleration of that indebtedness or contingent obligation prior to its stated maturity (whether or not such an acceleration occurs) or (ii) if it is a breach or default of a non-payment term, actually results in such an acceleration, and, in either case, the principal amount of such indebtedness or contingent obligation and all other such indebtedness or contingent obligations of Parent, Holdco, Newco One or Newco Two in respect of which there is a failure to pay principal or interest, or a default or breach that permits acceleration of indebtedness, which equals $5 million or more. 21 12.3. Involuntary Bankruptcy; Appointment of Custodian, Etc. A court of competent jurisdiction enters a bankruptcy order under any bankruptcy law that: (i) is for relief against any of the Guarantors or Newco Two any material subsidiary of any of the Guarantors or Newco Two in an involuntary case or proceeding, or (ii) appoints a custodian of any of the Guarantors or Newco Two or any material subsidiary of any of the Guarantors or Newco Two for all or substantially all of its properties, or (iii) orders the liquidation of any of the Guarantors or Newco Two or any material subsidiary of any of the Guarantors or Newco Two, and in each case the order or decree remains unstayed and in effect for 90 days. 12.4. Voluntary Bankruptcy; Appointment of Custodian, Etc. Any of the Guarantors or Newco Two or any material subsidiary of any of the Guarantors or Newco Two pursuant to or within the meaning of any bankruptcy law: (i) commences a voluntary case or proceeding, or (ii) consents to the entry of a bankruptcy order for relief against it in an involuntary case or proceeding, or (iii) consents to the appointment of a custodian of it or for all or substantially all of its property, or (iv) makes a general assignment for the benefit of its creditors or files a proposal or scheme of arrangement involving the rescheduling or composition of its indebtedness, or (v) consents to the filing of a petition in bankruptcy against it, or (vi) shall generally not pay its debts when such debts become due or shall admit in writing its inability to pay its debts generally. 12.5. Judgments and Attachments. Any money judgment, or post-judgment writ or warrant of attachment, or similar process involving in any individual case or in the aggregate at any time an amount in excess of $5 million (to the extent not covered by third-party insurance as to which the insurance company has 22 acknowledged coverage) shall be entered or filed against any of the Guarantors or Newco Two, or any of their respective properties or assets and shall remain undischarged, unvacated, unbonded or unstayed for a period of 90 days or in any event later than ten days prior to the date of any proposed sale thereunder. 12.6. Dissolution. Any order, judgment or decree shall be entered against any of the Guarantors or Newco Two or any material subsidiary of any of the Guarantors or Newco Two decreeing the dissolution or split-up of any of the Guarantors or Newco Two or any material subsidiary of any of the Guarantors or Newco Two and such order shall remain undischarged or unstayed for a period in excess of 60 days. 12.7. Business Interruption. Any of the Guarantors or Newco Two, or any material subsidiary of any of the Guarantors or Newco Two is required permanently to discontinue all or substantially all of the business, or is prevented from conducting all or substantially all of its business for a period of such prolonged duration as is likely to render it unable to fulfill its obligations under this Guaranty, whether by reason of (i) any injunction, order or decree of any tribunal, or (ii) material damage to, or the loss, theft or destruction of, any material portion of its assets, or (iii) any strike, lockout or other labor dispute, or (iv) any act of God or public enemy or other casualty or (v) the loss, suspension, forfeiture or inability to renew any license or permit essential to its business, provided, that to the extent that the loss, suspension, forfeiture or inability to renew any such license or permit is dependent upon a decision by any Beneficiary of this Guaranty, such Beneficiary's decision shall have been made in a manner substantially consistent with the standards applied by it in making similar decisions in respect of the granting, revoking, renewing, or refusing renewal of, licenses or permits of its other franchisees, generally. 12.8. Change of Control. The occurrence of a Change of Control of any of the Guarantors. THEN (i) upon the occurrence of any Event of Default described in the foregoing Sections 12.3 or 12.4, all of the amounts due under this Guaranty shall automatically become immediately due and payable, without presentment, demand, protest or other requirements of any kind, all of which are hereby expressly waived by each of the Guarantors, and (ii) upon the occurrence of any other Event of Default, any of the Beneficiaries shall, by written notice to the Guarantors, declare all of the amounts due under this Guaranty to be, and the same shall forthwith become, due and payable; provided, however, that if any declaration of acceleration under this Guaranty occurs solely because an Event of Default set forth in Section 12.2 has occurred and is continuing, such declaration of acceleration shall be automatically annulled if the holders of the indebtedness which are the subject of such Event of Default have rescinded their declaration of acceleration in respect of such indebtedness within thirty days of such 23 acceleration of such indebtedness and the Beneficiaries have received written notice thereof within such time and if no other Event of Default has occurred during such thirty-day period which has not been cured or waived in accordance with this Agreement. Nevertheless, if at any time after acceleration all Events of Default shall be remedied or waived, then the Beneficiaries shall, by written notice to Guarantors rescind and annul the acceleration and its consequences; but such action shall not affect any subsequent Event of Default or Potential Event of Default or impair any right consequent thereon. In addition to the rights and remedies granted to the Beneficiaries pursuant to this Guaranty, the Beneficiaries have the rights and remedies granted to them pursuant to the Security Documents. 13. Miscellaneous. 13.1. Survival of Warranties. All agreements, covenants, representations and warranties made herein shall survive the execution and delivery of this Guaranty, and the execution and delivery of the Stock Purchase Agreement and the other Transaction Documents. 13.2. Notices. All notices, requests and other communications to any party hereunder shall be in writing (including bank wire, facsimile transmission, telex or similar writing) and shall be given to such party at its address set forth in the Stock Purchase Agreement and in the case of Parent, Newco One and Newco Two, c/o RTM, Inc. at 5995 Barfield Road, Atlanta, Georgia 30328. 13.3. No Waivers. No failure or delay by the Beneficiaries in exercising any right, power or privilege hereunder or under any other Transaction Document shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law. 13.4. Expenses. Each of the Guarantors agrees to pay, or cause to be paid, on demand, and to save the Beneficiaries harmless against liability for, any and all costs and expenses (including, without limitation, fees and disbursements of counsel and fees, costs and expenses incurred in connection with any bankruptcy proceeding) incurred or expended by each of the Beneficiaries in connection with the enforcement, amendment, modification or waiver of or preservation of any rights under this Guaranty and the collection of amounts payable hereunder, and until so paid, such fees, costs, disbursements and expenses shall be added to, and constitute, Guaranteed Obligations. 24 13.5. Amendments and Waivers. This writing is intended by the Guarantors and the Beneficiaries as the final expression of this Guaranty and is also intended as a complete statement of the terms of their agreement with respect to the matters covered hereby. No amendment, modification, termination or waiver of any provision of this Guaranty, or consent to any departure by any Guarantor therefrom, shall in any event be effective without the written consent of each of the Beneficiaries. 13.6. Successors and Assigns; No Third Party Beneficiaries. This Guaranty is a continuing guaranty and shall be binding upon the Guarantors and their successors and assigns; provided, however, that the Guarantors may not assign this Guaranty or any of the rights or obligations of the Guarantors hereunder without the prior written consent of the Beneficiaries. This Guaranty shall inure to the benefit of the Beneficiaries and their respective successors and assigns. Nothing contained in this Guaranty shall be deemed to confer upon anyone other than the parties hereto (and their permitted successors and assigns) any right to insist upon or to enforce the performance or observance of any of the obligations contained herein. 13.7. APPLICABLE LAW. THIS GUARANTY SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK. 13.8. JURISDICTION. (a) ANY ACTION OR PROCEEDING AGAINST THE GUARANTORS RELATING IN ANY WAY TO THIS GUARANTY OR ANY OTHER TRANSACTION DOCUMENT MAY BE BROUGHT AND ENFORCED IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND THE GUARANTORS IRREVOCABLY CONSENTS TO THE JURISDICTION OF EACH SUCH COURT IN RESPECT OF ANY SUCH ACTION OR PROCEEDING. THE GUARANTORS FURTHER IRREVOCABLY CONSENT TO THE SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, RETURN RECEIPT REQUESTED, TO EACH OF THE GUARANTORS AT ITS ADDRESS AS PROVIDED FOR NOTICES HEREUNDER. THE FOREGOING SHALL NOT LIMIT THE RIGHT OF ANY BENEFICIARY TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING ANY ACTION OR PROCEEDING, OR TO OBTAIN EXECUTION OF ANY JUDGMENT, IN ANY OTHER JURISDICTION. (b) THE GUARANTORS HEREBY IRREVOCABLY WAIVE ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING 25 UNDER OR RELATING TO THIS GUARANTY OR ANY OTHER TRANSACTION DOCUMENT IN ANY COURT LOCATED IN ANY JURISDICTION CHOSEN BY THE BENEFICIARY IN ACCORDANCE WITH CLAUSE (A) OF THIS SUBSECTION, AND HEREBY FURTHER IRREVOCABLY WAIVE ANY CLAIM THAT A COURT LOCATED IN SUCH JURISDICTION IS NOT A CONVENIENT FORUM FOR ANY SUCH ACTION OR PROCEEDING. (c) THE GUARANTORS HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE UNITED STATES FEDERAL AND STATE LAW, ALL IMMUNITY (WHETHER ON THE BASIS OF SOVEREIGNTY OR OTHERWISE) FROM JURISDICTION, SERVICE OF PROCESS, ATTACHMENT (BOTH BEFORE AND AFTER JUDGMENT) AND EXECUTION TO WHICH IT MIGHT OTHERWISE BE ENTITLED IN ANY ACTION OR PROCEEDING RELATING IN ANY WAY TO THIS GUARANTY OR ANY OTHER TRANSACTION DOCUMENT IN THE COURTS OF THE STATE OF NEW YORK, OF THE UNITED STATES OR OF ANY OTHER COUNTRY OR JURISDICTION, AND THE GUARANTORS HEREBY WAIVE ANY RIGHT IT MIGHT OTHERWISE HAVE TO RAISE OR CLAIM OR CAUSE TO BE PLEADED ANY SUCH IMMUNITY AT OR IN RESPECT OF ANY SUCH ACTION OR PROCEEDING. 13.9. Severability. If any provision in or obligation under this Guaranty shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby. 13.10. Interpretation. Section headings in this Guaranty are included herein for convenience of reference only and shall not constitute a part of this Guaranty for any other purpose or be given any substantive effect. As used in this Guaranty, the words "including" and "include" mean including without limiting the generality of any description preceding such term. 13.11. Further Assurances. At any time or from time to time, upon the request of the Beneficiaries, the Guarantors shall execute and deliver such 26 further documents and do such other acts and things as the Beneficiaries may reasonably request in order to effect fully the purposes of this Guaranty. IN WITNESS WHEREOF, each of the Guarantors has executed this Guaranty by its duly authorized officer as of the date first above written. GUARANTORS: RTM, INC. By: /s/ Philip G. Skinner ---------------------------------------- Name: Philip G. Skinner Title: Vice President RTM HOLDING COMPANY, INC. By: /s/ Philip G. Skinner ---------------------------------------- Name: Philip G. Skinner Title: Vice President RTM PARTNERS, INC. By: /s/ Philip G. Skinner ---------------------------------------- Name: Philip G. Skinner Title: Vice President RTM MANAGEMENT CO., LLC By: RTM Enterprises, Inc., Managing Member By: /s/ Philip G. Skinner ---------------------------------------- Name: Philip G. Skinner Title: Vice President 27 RTM OPERATING COMPANY By: /s/ Philip G. Skinner ---------------------------------------- Name: Philip G. Skinner Title: Vice President EX-21 9 EXHIBIT 21.1 Exhibit 21.1 TRIARC COMPANIES, INC. AND SUBSIDIARIES SUBSIDIARIES OF THE REGISTRANT September 28, 1997 The subsidiaries of Triarc Companies, Inc., their respective states or jurisdictions of organization and the names under which such subsidiaries do business are as follows:
STATE OR JURISDICTION UNDER WHICH ORGANIZED ----------------------- National Propane Corporation* ............................................... Delaware National Propane SGP, Inc. .............................................. Delaware National Propane Partners, L.P.** ..................................... Delaware National Propane, L.P.** ........................................... Delaware National Sales & Service, Inc............... .................... Delaware Carib Gas Corporation of St. Croix (formerly LP Gas Corporation of St. Croix) ............................... Delaware Carib Gas Corporation of St. Thomas (formerly LP Gas Corporation of St.Thomas) ............................... Delaware NPC Leasing Corp ............................................................ New York Citrus Acquisition Corporation .............................................. Florida Adams Packing Association, Inc. (formerly New Adams, Inc.) ......................................................... Delaware Groves Company, Inc. (formerly New Texsun, Inc.) ........................ Delaware Home Furnishing Acquisition Corporation ..................................... Delaware 1725 Contra Costa Property, Inc. (formerly Couroc of Monterey, Inc.) ................................................... Delaware Hoyne Industries, Inc. (formerly New Hoyne, Inc.) ....................... Delaware Hoyne International (U.K.), Inc.......................................... Delaware GS Holdings, Inc............................................................. Delaware GVT Holdings, Inc.***.................................................... Delaware TXL Corp.............................................................. South Carolina TXL International Sales, Inc.......................................... South Carolina GTXL, Inc............................................................. Delaware TXL Holdings, Inc..................................................... Delaware C.H. Patrick & Co., Inc............................................ South Carolina Southeastern Public Service Company ..................................... Delaware Crystal Ice & Cold Storage, Inc.................................... Delaware Southeastern Gas Company .......................................... Delaware Geotech Engineers, Inc......................................... West Virginia Triarc Holdings 1, Inc....................................................... Delaware Triarc Holdings 2, Inc....................................................... Delaware Triarc Development Corporation .............................................. Delaware Triarc Acquisition Corporation .............................................. Delaware
TRIARC COMPANIES, INC. AND SUBSIDIARIES SUBSIDIARIES OF THE REGISTRANT September 29, 1997
STATE OR JURISDICTION UNDER WHICH ORGANIZED ----------------------- Triarc Beverage Holdings Corp................................................ Delaware Mistic Brands, Inc....................................................... Delaware Snapple Beverage Corp.................................................... Delaware Snapple International Corp............................................ Delaware Snapple Beverages de Mexico, S.A. de C.V****...................... Mexico Snapple Beverage (UK) Holdings Limited............................ United Kingdom Snapple Beverage (Europe) Limited.............................. United Kingdom Snapple Europe Limited................................................ United Kingdom Snapple Canada, Ltd................................................... Canada Snapple Worldwide Corp................................................ Delaware Southwest Snapple Corp................................................ Delaware Southwest Snapple Holdings Corp....................................... Delaware Snapple Finance Corp.................................................. Delaware Pacific Snapple Distributors, Inc..................................... Delaware Mr. Natural, Inc...................................................... Delaware Snapple Caribbean Corp................................................ Delaware Rhode Island Beverage Corp.*****...................................... Delaware Rhode Island Beverage Packing Co., L.P.******...................... Delaware CFC Holdings Corp.*******.................................................... Florida Chesapeake Insurance Company Limited********.............................. Bermuda RC/Arby's Corporation (formerly Royal Crown Corporation).............................................................. Delaware RCAC Asset Management, Inc............................................ Delaware Arby's, Inc........................................................... Delaware Arby's Building and Construction Co............................... Georgia Arby's Canada Inc................................................. Canada Daddy-O's Express, Inc............................................ Georgia Arby's (Hong Kong) Limited........................................ Hong Kong Arby's De Mexico S.A. de CV....................................... Mexico Arby's Immobiliara............................................ Mexico Arby's Servicios.............................................. Mexico TJ Holding Company, Inc........................................... Delaware Arby's Restaurants, Limited........................................... United Kingdom Arby's Limited........................................................ United Kingdom Arby's Restaurant Construction Company................................ Delaware Arby's Restaurant Development Corporation............................. Delaware Arby's Restaurant Holding Company..................................... Delaware Arby's Restaurants, Inc............................................... Delaware Arby's Restaurant Operations Company.................................. Delaware RC-8, Inc. (formerly Tyndale, Inc.)................................... Indiana RC-11, Inc. (formerly National Picture & Frame Co.)........................................................... Mississippi Promociones Corona Real, S.A. de C.V.................................. Mexico RC Leasing, Inc....................................................... Delaware Royal Crown Nederland B.V............................................. Netherland RC Cola Canada Limited (formerly Nehi Canada Limited)............................................................. Canada Royal Crown Bottling Company of Texas (formerly Royal Crown Bottlers of Texas, Inc.).................................. Delaware
TRIARC COMPANIES, INC. AND SUBSIDIARIES SUBSIDIARIES OF THE REGISTRANT September 29, 1997
STATE OR JURISDICTION UNDER WHICH ORGANIZED ----------------------- Royal Crown Company, Inc. (formerly Royal Crown Cola Co.)............................................................ Delaware RC Services Limited*********....................................... Ireland Retailer Concentrate Products, Inc................................. Florida TriBev Corporation ................................................ Delaware CCB Merger Corporation ...................................................... Delaware
- ------------- * 24.3% owned by Southeastern Public Service Company and 75.7% owned by Triarc Companies, Inc. ** National Propane Corporation is the managing general partner of both partnerships and holds a combined 2% unsubordinated general partner interest therein and a 38.7% subordinated general partner interest in National Propane Partners, L.P. National Propane SGP, Inc. is the special general partner of both partnerships and holds a combined 2% unsubordinated general partner interest therein. The public owns a 57.3% limited partner interest in National Propane Partners, L.P. National Propane Partners, L.P. is the sole limited partner of National Propane, L.P. *** 50% owned by GS Holdings, Inc. and 50% owned by Southeastern Public Service Company. **** 99% owned by Snapple International Corp. and 1% owned by Snapple Worldwide Corp. ***** 50% owned by Snapple Beverage Corp. and 50% owned by Jeffrey Honickman, individually and as Trustee under the Harold A. Honickman December 1992 Indenture of Trust. ****** Rhode Island Beverage Corp. is the managing general partner of Rhode Island Beverage Packing Co., L.P. and holds a 1% general partnership interest therein. Snapple Beverage Corp. owns a 49.5% limited partner interest in Rhode Island Beverage Packing Co., L.P. The remaining limited partnership interest is owned by Jeffrey Honickman, as Trustee under the Harold A. Honickman December 1992 Indenture of Trust. ******* 94.6% owned by Triarc Companies, Inc. and 5.4% owned by Southeastern Public Service Company. ******** Common Stock 100% owned by CFC Holdings; Preferred Stock is owned 38.5% by RC/Arby's Corporation, 23% by Southeastern Public Service Company and 38.5% by TXL Corp. ********* 99% owned by Royal Crown Company, Inc. and 1% owned by RC/Arby's Corporation. EX-23 10 EXHIBIT 23.3 Exhibit 23.3 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in this Registration Statement of Triarc Companies, Inc. on Form S-4 of our reports dated March 31, 1997, appearing in and incorporated by reference in the Annual Report on Form 10-K of Triarc Companies, Inc. for the year ended December 31, 1996 and to the references to us under the headings "Experts", "Triarc Companies, Inc. and Subsidiaries--Unaudited Pro Forma Condensed Consolidated Financial Statements" and "Summary--Triarc Summary Historical and Pro Forma Consolidated Financial Data" in the Prospectus, which is part of this Registration Statement. DELOITTE & TOUCHE LLP New York, New York October 20, 1997 EX-23 11 EXHIBIT 23.4 Exhibit 23.4 Consent of Independent Public Accountants ----------------------------------------- As independent public accountants, we hereby consent to the incorporation by reference in this registration statement of our report dated June 20, 1997 and to all references to our Firm included in this registration statement. ARTHUR ANDERSEN LLP October 20, 1997 EX-23 12 EXHIBIT 23.5 Exhibit 23.5 CONSENT OF INDEPENDENT ACCOUNTANTS ---------------------------------- We hereby consent to the incorporation by reference and the use in the Proxy Statement/Prospectus constituting part of this Registration Statement on Form S-4 of our report dated March 14, 1997 appearing on page F2 of Cable Car Beverage Corporation's Annual Report on Form 10-K for the year ended December 31, 1996, which report also appears in such Proxy Statement/Prospectus. We also consent to the reference to us under the headings "CABLE CAR BEVERAGE CORPORATION--Summary Historical Financial Data," "THE SPECIAL MEETING--General" and "EXPERTS" in such Proxy Statement/Prospectus. PRICE WATERHOUSE LLP Denver, Colorado October 20, 1997 EX-23 13 EXHIBIT 23.6 Exhibit 23.6 [Letterhead of NationsBanc Montgomery Securities, Inc.] We hereby consent to the inclusion of the opinion letter of Montgomery Securities (our predecessor in interest) dated June 24, 1997 to the Board of Directors of Cable Car Beverage Corporation (the "Company") regarding the acquisition of the Company by Triarc Companies, Inc. ("Triarc") in Triarc's Registration Statement on Form S-4 (the "Registration Statement") to be filed with the Securities and Exchange Commission on October 22, 1997, and to the references therein to our firm and to our opinion under the headings "The Proposed Merger and Related Matters--Background of the Merger," "--Cable Car's Reasons for the Merger; Recommendation of Cable Car's Board of Directors," "--Opinion of Financial Advisor to Cable Car" and "The Merger Agreement--Certain Representations and Warranties." In giving the foregoing consent, we do not admit and we hereby disclaim (i) that we come within the category of persons whose consent is required under Section 7 of the Securities Act of 1933, as amended (the "Securities Act"), or the rules and regulations of the Securities and Exchange Commission promulgated thereunder, and (ii) that we are experts with respect to any part of the Registration Statement within the meaning of the term "experts" as used in the Securities Act and the rules and regulations of the Securities and Exchange Commission promulgated thereunder. Very truly yours, NATIONSBANC MONTGOMERY SECURITIES, INC. Dated: October 21, 1997 -----END PRIVACY-ENHANCED MESSAGE-----