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Exhibit 9
ESCROW AGREEMENT
ESCROW AGREEMENT, dated as of December 29, 1995 (this "Agreement"), by
and among WENDY'S INTERNATIONAL, INC., an Ohio corporation ("Wendy's"), 1149658
ONTARIO INC., an Ontario corporation and subsidiary of Wendy's (1149658 Ontario
Inc. and its successors being referred to herein as "Newco"), ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
("Seller"), and THE TRUST COMPANY OF BANK OF MONTREAL, a company incorporated
under the laws of Canada, as escrow agent (the "Escrow Agent").
W I T N E S S E T H
WHEREAS, pursuant to a Share Purchase Agreement, dated as of October 31,
1995, as amended (the "Purchase Agreement"), entered into among Wendy's, ▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Ltd., an Alberta corporation, continued as 1052106 Ontario
Limited, an Ontario corporation (the "Company"), and Seller, the parties thereto
have agreed, subject to the terms and conditions set forth therein, that Newco
shall acquire from Seller all of the issued and outstanding shares of the
Company, and Seller shall receive Non-Voting Exchangeable Shares of Newco (such
shares, and shares of any successor corporation having terms substantially
equivalent to those of the Non-Voting Exchangeable Shares of Newco, being
referred to herein as the "Newco Exchangeable Shares");
WHEREAS, pursuant to the Purchase Agreement, Seller has agreed to
indemnify the Wendy's Group (as defined in the Purchase Agreement), from and
against certain losses, liabilities, damages, costs or expenses that members of
the Wendy's Group may suffer, incur or pay;
WHEREAS, the Purchase Agreement provides that, subject to the terms of
this Agreement, after the closing of the transactions contemplated by the
Purchase Agreement any Wendy's Claim (as defined in the Purchase Agreement) may
only be satisfied out of an escrow fund (the "Escrow Fund") initially consisting
of 411,250 Newco Exchangeable Shares (rounded to the nearest whole number);
WHEREAS, pursuant to the Purchase Agreement, Seller is transferring
herewith to the Escrow Agent 411,250 Newco Exchangeable Shares to be held by the
Escrow Agent in the Escrow Fund upon the terms and conditions set forth herein;
WHEREAS, this Agreement is intended to support the right of
indemnification of the Wendy's Group against Seller upon the terms and subject
to the limitations set forth herein and in Article 7 of the Purchase Agreement;
and
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WHEREAS, the foregoing recitals are made by the parties hereto other than
the Escrow Agent;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements herein contained, the parties hereto agree as follows:
1. ESTABLISHMENT OF ESCROW. (a) Simultaneously with the execution of
this Agreement, Seller shall deposit with the Escrow Agent one or more
certificates registered in the name of Seller representing 411,250 Newco
Exchangeable Shares to be held by the Escrow Agent in the Escrow Fund. Each of
such certificates so deposited shall be in the form specified in Section 1(b)
hereof.
(b) The Newco Exchangeable Shares held by the Escrow Agent from
time to time and all other cash, securities and other property from time to time
held by the Escrow Agent in the Escrow Fund in accordance with the terms hereof,
including any common shares, without par value, of Wendy's (the "Wendy's Common
Shares") issued in respect of Newco Exchangeable Shares, and any stock or other
property issued in respect thereof in connection with stock splits, stock
dividends, distributions, combinations and like transactions shall be held by
the Escrow Agent in the Escrow Fund pursuant to the terms hereof and shall be
registered in the name of Seller and shall either be duly endorsed in blank by
Seller or accompanied by stock transfer powers duly executed in blank by Seller.
2. EXCHANGE OF NEWCO EXCHANGEABLE SHARES. (a) If at any time, and from
time to time, Newco Exchangeable Shares deposited in the Escrow Fund are to be
exchanged pursuant to the Articles of Incorporation of Newco ("Newco's
Articles") or the Share Exchange Agreement, Wendy's (in the event of an exchange
pursuant to the Share Exchange Agreement, including, but not limited to, Wendy's
exercise of any of its call rights thereunder) or Newco (in the event of any
other exchange pursuant to Newco's Articles) shall notify (the "Exchange
Notice") the Escrow Agent in writing, substantially in the form set out in
Exhibit A hereto, at least two Business Days prior to such exchange. The
Exchange Notice shall be accompanied by Seller's request, if any, to effect such
exchange and, in the case of Wendy's exercising any of its call rights pursuant
to the Share Exchange Agreement, Wendy's notice with respect to the exercise of
such call right. Wendy's or Newco, as the case may be, shall deliver a copy of
the Exchange Notice to Seller simultaneously with the delivery to the Escrow
Agent. Unless, prior to the time for delivery of the Newco Exchangeable Shares
specified in the Exchange Notice, the Escrow Agent shall have received a
subsequent notice, substantially in the form set out in Exhibit B hereto, signed
by Seller and either Newco or Wendy's, as the case may be, not to effect such
exchange, the Escrow Agent shall deliver the Newco Exchangeable Shares to be
exchanged to the person designated in the Exchange Notice in the manner and at
the time and place specified in the Exchange Notice. The terms and
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procedures for any such exchange shall be as set forth in the Share Exchange
Agreement or Newco's Articles (copies of which have been delivered to the Escrow
Agent).
(b) If at any time Newco Exchangeable Shares deposited in the
Escrow Fund are to be delivered to Wendy's as payment for Wendy's Common Shares
pursuant to the Subscription Agreement and the Guaranty, Wendy's shall notify
the Escrow Agent and the Trustee in writing (with a copy to Seller),
substantially in the form set out in Exhibit C hereto, at least two Business
Days prior to the due date of such payment. Each of the Trustee and Seller
hereby acknowledges and agrees that all Wendy's Common Shares to be issued for
such Newco Exchangeable Shares shall be in the form specified in Section 2(c)
hereof and that such Wendy's Common Shares shall be deposited by Wendy's
directly into the Escrow Fund. The terms and conditions for any such delivery
and payment shall be as set forth in the Subscription Agreement and the Guaranty
(copies of which have been delivered to the Escrow Agent).
(c) All Wendy's Common Shares delivered by Wendy's to the Escrow
Agent upon any such exchange or in return for the delivery of such Newco
Exchangeable Shares pursuant to the Subscription Agreement and the Guaranty
shall be registered in the name of Seller but shall become a part of the Escrow
Fund as set forth in Section 3(a) or (b) hereof and shall be accompanied by a
stock transfer power endorsed in blank by Seller and shall be held by the Escrow
Agent in accordance with the provisions of this Agreement.
3. DIVIDENDS AND DISTRIBUTIONS OF SECURITIES HELD IN ESCROW;
INVESTMENTS. (a) Any cash, securities or other property issued with respect to,
or in exchange for, any property held in the Escrow Fund shall be deposited (net
of any applicable Taxes or U.S. Taxes required to be deducted or withheld by
Wendy's in respect thereof) in the Escrow Fund and shall be held by the Escrow
Agent on the same terms as the property with respect to or in exchange for which
such cash, securities or other property shall have been delivered; provided that
regular quarterly dividend payments made with respect to any Exchangeable Shares
or Wendy's Shares in the Escrow Fund shall be made directly to Seller by Newco
or Wendy's, as the case may be, and any income earned on any other assets or
property in the Escrow Fund (other than Newco Exchangeable Shares or Wendy's
Common Shares) shall be distributed to Seller by the Escrow Agent immediately
after receipt thereof.
(b) The Escrow Agent may, upon the written direction of Seller
(substantially in the form set out in Exhibit D hereto), invest any cash held in
the Escrow Fund in Canadian government obligations having a maturity of 91 days
or less, or in demand or term deposits or short term certificates of deposit
issued by any Canadian chartered bank. The Escrow Agent shall not be responsible
for investing any funds in the
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absence of a written direction from the Seller or for any loss incurred upon any
such investment made in good faith.
4. GRANT OF SECURITY INTEREST. (a) Seller hereby grants to Wendy's a
security interest in any and all cash, securities or other property contained in
the Escrow Fund from time to time and in any and all dividends or other
distributions paid or made with respect thereto while contained in the Escrow
Fund to secure the obligations of Seller to indemnify the Wendy's Group for
Wendy's Claims on the terms and subject to the limitations set forth in Article
7 of the Purchase Agreement.
(b) Seller will, in such manner and form as Wendy's may require,
execute, deliver, file and record any financing statement, continuation
statement, specific assignment or other paper and take any other action that
Wendy's may reasonably request in order to create, preserve, perfect or continue
the perfection of any security interest hereunder or to enable Wendy's to
exercise and enforce its rights hereunder with respect to its security interest
hereunder. To the extent permitted by applicable law, Seller hereby authorizes
Wendy's to execute and file, in the name of Seller or otherwise, financing
statements which Wendy's, in its sole discretion, may deem necessary or
appropriate to further perfect the security interest of Wendy's granted
hereunder.
(c) The security interest granted herein shall terminate upon
termination of this Agreement.
5. RELEASE OF THE ESCROW FUND. (a) Wendy's shall promptly notify the
Escrow Agent in writing, substantially in the form set out in Exhibit E hereto,
each time it notifies Seller of a Wendy's Claim pursuant to the Purchase
Agreement; provided, however, that any failure or delay in so notifying the
Escrow Agent shall not impair any rights of Wendy's hereunder. Upon resolution
of any Wendy's Claim that permits recovery from the Escrow Fund in accordance
with the terms of the Purchase Agreement, Wendy's shall notify the Escrow Agent
in writing (with a copy to Seller), substantially in the form set out in Exhibit
F hereto, of such resolution. Such notice shall be accompanied (i) in the case
of a Wendy's Claim submitted to a judicial proceeding, by a copy of the award
from such proceeding in a judgment which is non-appealable, specifying the
amount of such recovery; (ii) in the case of a Wendy's Claim settled by written
agreement between Wendy's (or a member of the Wendy's Group) and Seller, by a
copy of such agreement specifying the amount of such recovery; or (iii) in the
case of a Wendy's Claim where Seller is deemed to have agreed to a recovery
because he has not objected to such Wendy's Claim in the manner and within the
time set forth in Section 7.5(b) of the Purchase Agreement, by an Officer's
Certificate from Wendy's certifying that notice of such Wendy's Claim was given
in accordance with Section 7.5(a) of the Purchase Agreement and that the time
period set forth in Section 7.5(b) of the Purchase Agreement has expired and
Seller has not disputed such Wendy's Claim within such time period.
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(b) The Escrow Agent shall, within five Business Days after
receipt of such notice, substantially in the form of Exhibit F hereto,
distribute to Wendy's on behalf of the claiming member or members of the Wendy's
Group, out of the Escrow Fund, the Recovery Amount as determined by Wendy's
pursuant to Section 5(d) hereof in the manner set forth therein unless, prior to
the expiration of such five Business-Day period, (i) in the case of a notice
pursuant to Section 5(a)(i) hereof, Seller shall have objected in writing that
Wendy's notice does not comply with Section 5(a) hereof or that the Recovery
Amount has not been determined in accordance with Section 5(d), or (ii) in the
case of a notice pursuant to Section 5(a)(iii) hereof, Seller shall have
objected in writing (A) that Wendy's notice does not comply with Section 5(a)
hereof or (B) to either of the statements in the Officer's Certificate
accompanying such notice or (C) that the Recovery Amount has not been determined
in accordance with Section 5(d) or (iii) in the case of a notice pursuant to
Section 5(e) hereof, Seller shall have objected in writing that the Recovery
Amount has not been determined in accordance with Section 5(d); such objection
to be substantially in the form of Exhibit G hereto.
(c) In the event Seller shall have timely raised any of the
objections set forth in Section 5(b)(i) or (ii), the Escrow Agent shall promptly
notify Wendy's of such objection. Wendy's and Seller shall thereupon endeavour
to amicably resolve such dispute within ten Business Days. If Wendy's and Seller
are unable to resolve such dispute within such period, such dispute shall be
submitted to former ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ or, if former ▇▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ is unable to act, to former ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ or if
former ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ is unable to act to another retired justice
jointly selected by Wendy's and Seller, as sole arbitrator (the "Arbitrator").
If the parties fail to so agree within three Business Days after becoming aware
that former ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ is unable to act, either party may apply
to the Ontario Court, General Division, under the International Commercial
Arbitration Act (Ontario) to appoint another retired judge of the Ontario Court,
General Division, as Arbitrator. With respect to any such arbitration the
following shall apply: (i) Each of Wendy's and Seller shall set out its position
with respect to the disputed matter as specifically as possible and put before
the Arbitrator only those issues that are genuinely in dispute; (ii) the
Arbitrator shall be instructed that time is of the essence in determining the
dispute and that the Arbitrator shall use his best efforts to render the award
within ten Business Days after the dispute is submitted to arbitration; (iii)
the arbitration shall take place in Toronto, Ontario; (iv) Ontario law shall be
applied in connection with the arbitration, including its conflict of law rules
and the International Commercial Arbitration Act (Ontario); (v) the arbitration
award shall be rendered in writing and shall be final and binding on Wendy's and
Seller, not subject to any appeal; (vi) the prevailing party in such arbitration
shall be reimbursed by the losing party for all reasonable legal fees and
expenses and other reasonable costs and out of pocket expenses incurred by the
prevailing party in the arbitration. Within two Business Days after receipt from
Wendy's of a copy of such
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arbitration award (certified as to its authenticity by the secretary or any
assistant secretary of Wendy's), the Escrow Agent shall distribute to Wendy's
the Recovery Amount specified in Section 5(d) hereof in the manner set forth
therein.
(d) The number of Newco Exchangeable Shares, Wendy's Common
Shares, other securities, and/or the amount of cash and/or other property to be
distributed to Wendy's out of the Escrow Fund (the "Recovery Amount") shall be
determined by Wendy's. With respect to Wendy's Common Shares or Newco
Exchangeable Shares, such determination should be made by giving effect to the
method of calculating the value of Newco Exchangeable Shares or Wendy's Common
Shares set forth in Section 7.3(b) of the Purchase Agreement. Any other
securities or property other than cash shall be valued at their Fair Market
Value on a Business Day not more than two Business Days prior to the
distribution thereof to Wendy's. Whenever the Escrow Agent shall distribute a
Recovery Amount pursuant to Sections 5(b) or (c) hereof, the Escrow Agent shall
distribute such Recovery Amount to Wendy's on behalf of the claiming member of
the Wendy's Group if such Wendy's Claim was brought by a member of the Wendy's
Group other than Newco. In the case of a Wendy's Claim brought by Newco, such
Recovery Amount shall be distributed to Wendy's on its own behalf and not on
behalf of Newco and shall not be acquired or deemed to be acquired by Newco and
in such case the rights of Newco and Wendy's shall be settled by agreement
between Newco and Wendy's. Each such distribution shall be made through
instruments of transfer reasonably satisfactory to Wendy's.
(e) Seller hereby represents and warrants that Seller is not a
non-resident of Canada within the meaning of the Income Tax Act (Canada). Seller
shall notify the Escrow Agent and Wendy's in writing immediately after Seller
shall have become a non-resident of Canada within the meaning of the Income Tax
Act (Canada) and each ▇▇▇▇ ▇▇▇▇▇▇ moves to another jurisdiction outside of
Canada. Such notice shall specify Seller's new jurisdiction of residency. After
becoming a non-resident of Canada, Seller shall provide Wendy's and the Escrow
Agent, prior to any distribution by the Escrow Agent pursuant to this Agreement,
with a certificate pursuant to Section 116 of the Income Tax Act (Canada) or any
successor section thereto having a certificate limit in an amount which is not
less than the fair market value of the property recoverable from the Escrow Fund
to satisfy the Wendy's Claim and otherwise conforming in all respects with the
provisions of Section 116 of the Income Tax Act (Canada) or any successor
provision thereto. Failing the provision of such certificate, in case the Escrow
Agent shall be required to pay any Taxes pursuant to Section 116 of the Income
Tax Act (Canada), the Escrow Agent shall be entitled to indemnification from
Wendy's with respect to any such Taxes, and Seller shall be liable to Wendy's
with respect to any such Taxes which the Escrow Agent or Wendy's, as the case
may be, may be liable to pay pursuant to the provisions of Section 116 of the
Income Tax Act (Canada) or any successor section thereto. Wendy's shall be
entitled to recover against the Escrow Fund or from Seller's
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other assets an amount equal to any such Taxes for which Wendy's may be liable.
In the event Wendy's shall be entitled to seek recovery against the Escrow Fund
pursuant to this provision, Wendy's shall be entitled to make a claim against
the Escrow Fund in the manner set forth in Section 5(b) hereof. The Escrow Agent
shall be entitled to deduct or withhold any taxes required to be deducted or
withheld pursuant to the Income Tax Act (Canada) from income earned on any asset
or property, other than Newco Exchangeable Shares or Wendy's Common Shares,
which is to be distributed to Seller pursuant to this Agreement. Nothing herein
shall be construed as requiring the Escrow Agent to determine or withhold the
amount of any Taxes which Wendy's may be required to withhold or for which
Wendy's may be primarily liable.
(f) If any certificate representing Wendy's Common Shares or
Newco Exchangeable Shares distributed to Wendy's hereunder represents more than
the number of such shares required to be distributed to Wendy's hereunder, such
distribution shall only be made if Wendy's delivers or causes to be delivered to
the Escrow Agent, one or more certificates, issued in the name of Seller,
representing the Wendy's Common Shares or Newco Exchangeable Shares that are not
required to be distributed to Wendy's hereunder.
6. RIGHT TO RELY; INDEMNITY; PERFORMANCE; LIMITATION OF LIABILITY OF
ESCROW AGENT. (a) The Escrow Agent shall be protected in acting and relying
reasonably upon any written notice, direction, instruction, order, certificate,
confirmation, request, waiver, consent, receipt, statutory declaration or other
paper or document (collectively referred to as "Documents") furnished to it and
signed by any person required to or entitled to execute and deliver to the
Escrow Agent any such Documents in connection with this Agreement, not only as
to its due execution and the validity and effectiveness of its provisions, but
also as to the truth and accuracy of any information therein contained, which it
in good faith believes to be genuine. At the time of signing this Agreement,
Seller shall provide the Escrow Agent with a sample signature. Within 10 days of
the date of this Agreement, each of Wendy's and Newco shall provide the Escrow
Agent with a certificate of incumbency setting forth the names of persons
authorized to sign Documents to the Escrow Agent together with specimen
signatures of such persons.
The Escrow Agent shall be entitled to rely on the incumbency certificate
provided by each of Wendy's and Newco and the sample signature provided by
Seller until such time as it receives written notice of a change in such persons
accompanied by an updated incumbency certificate in the case of each of Wendy's
and Newco.
(b) Wendy's agrees to indemnify and hold harmless the Escrow
Agent and each of its directors, officers and agents appointed and acting in
accordance with this Agreement (collectively, the "Indemnified Parties") against
all claims, liabilities, losses,
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damages, costs, penalties, fines and reasonable expenses, including reasonable
legal expenses (collectively, "Damages") which, without fraud, gross negligence,
willful misconduct or bad faith on the part of such Indemnified Party, may be
paid, incurred or suffered by the Indemnified Party as a result of the Escrow
Agent's compliance with its duties set forth in this Agreement or reliance upon
any of the Documents provided hereunder. In no case shall Wendy's be liable
under this indemnity for any claim against any of the Indemnified Parties unless
Wendy's shall be notified by the Escrow Agent of the written assertion of a
claim or of any action commenced against the Indemnified Parties, as soon as
practicable after any of the Indemnified Parties shall have received any such
written assertion of a claim or shall have been served with a summons or other
first legal process giving information as to the nature and basis of the claim.
Subject to clause (ii) below, Wendy's shall be entitled to participate at its
own expense in the defense and, if Wendy's so elects at any time after receipt
of such notice, it may assume the defense of any suit brought to enforce any
such claim. The Escrow Agent shall have the right to employ separate counsel in
any such suit and participate in the defense thereof but the fees and expenses
of such counsel shall be at the expense of the Escrow Agent unless: (i) the
employment of such counsel has been authorized by Wendy's; or (ii) the counsel
retained by Wendy's would be inappropriate due to actual or potential difference
in interests between the Escrow Agent and any other party represented by such
counsel retained by Wendy's in such a proceeding (in which case Wendy's shall
not have the right to assume the defense of such suit on behalf of the Escrow
Agent but shall be liable to pay the reasonable fees and expenses of counsel for
the Escrow Agent). This provision shall survive the resignation or removal of
the Escrow Agent or the termination of this Agreement.
(c) In performing its duties hereunder, the Escrow Agent shall
exercise that degree of care, skill and diligence that a prudent professional
agent would exercise in comparable circumstances.
(d) It is further agreed that if any controversy arises, between
the parties hereto or with any third person, with respect to the Escrow Fund or
any part of the subject matter of this Agreement, its terms or conditions, the
Escrow Agent shall not be required to determine the same or take any action in
the premises, but may await the settlement of any such controversy by final
appropriate legal proceedings or otherwise as it may require, notwithstanding
anything in this Agreement to the contrary, and in such event the Escrow Agent
shall not be liable for interest or damages.
(e) The Escrow Agent shall have no duties or responsibilities
except as expressly provided in this Agreement and shall have no liability or
responsibility arising under any other agreement, including any agreement
referred to in this Agreement, to which the Escrow Agent is not a party.
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(f) With the prior written consent of Wendy's, such consent not
to be unreasonably withheld, the Escrow Agent may retain legal counsel and
advisors as may be reasonably required for the purposes of discharging its
duties or determining its rights under this Agreement, and may rely and act upon
the advice of such counsel or advisor. Seller shall pay or reimburse the Escrow
Agent for any reasonable fees, expenses and disbursements of such counsel or
advisors.
(g) In the event that Wendy's shall be obligated to indemnify the
Escrow Agent pursuant to Section 6(b) hereof as a result of acts or omissions of
Seller, Seller agrees to indemnify and hold harmless Wendy's against all Damages
paid, incurred or suffered by Wendy's as a result of Wendy's compliance with
Section 6(b) hereof, including, but not limited to, any costs and expenses
(including reasonable legal expenses) incurred in connection with the
enforcement of Wendy's rights under this provision.
7. RESIGNATION, REMOVAL, SUCCESSOR. (a) The Escrow Agent may resign
as escrow agent under this Agreement and thereby become discharged from the
obligations hereby created, by notice in writing given to Wendy's and Seller not
less than thirty days before such resignation is to take effect.
(b) The Escrow Agent may be removed at any time by an instrument
or concurrent instruments in writing delivered to the Escrow Agent and signed by
Wendy's and Seller.
(c) If at any time hereafter the Escrow Agent shall give notice
of its resignation pursuant to Section 7(a), shall be removed pursuant to
Section 7(b), or shall be dissolved or otherwise become incapable of acting, or
the position of the Escrow Agent shall become vacant for any other reason,
Wendy's, Newco and Seller shall promptly appoint a successor Escrow Agent. Upon
such appointment such successor shall execute, acknowledge and deliver to its
predecessor and also to Wendy's, Newco and Seller, an instrument in writing
accepting such appointment hereunder and agreeing to be bound by the terms and
provisions of this Agreement. Thereupon such successor Escrow Agent, without any
further act, shall become fully vested with all the rights, immunities, and
powers, and shall be subject to all of the duties and obligations of its
predecessor and such predecessor Escrow Agent shall promptly deliver the Escrow
Fund to such successor.
(d) In the event that a successor Escrow Agent has not been
appointed within thirty days of the date of any such resignation, removal,
dissolution, incapacity or vacancy, the Escrow Agent shall deposit the Escrow
Fund with the clerk of a court of competent jurisdiction in the City of Toronto,
Canada and shall interplead all of the
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parties hereto. Upon so depositing the Escrow Fund and filing its pleading, this
Agreement shall terminate as to the Escrow Agent.
(e) In the event the Escrow Agent is merged, consolidated or
amalgamated with any other entity and, as a result thereof, the Escrow Agent
ceases to exist as a separate entity, then such surviving entity, without any
further act, shall become fully vested with all the rights, immunities, and
powers, and shall be subject to all of the duties and obligations of the Escrow
Agent.
8. TERMINATION. (a) The Escrow Fund shall terminate on the first
Business Day following the end of the Survival Period; provided, however, that
if Wendy's has provided notice to the Escrow Agent and Seller prior to 5:00
p.m., Toronto time, on such day, of one or more Wendy's Claims to be satisfied
out of the Escrow Fund, and such Wendy's Claim remains unresolved as of such
time and date, then the Escrow Fund shall continue in effect until all such
Wendy's Claims shall have been resolved in accordance with the Purchase
Agreement. After all remaining Wendy's Claims under the Purchase Agreement have
been resolved, and not before, and after any and all property which is to be
distributed to Wendy's in satisfaction of such claims pursuant to the terms
hereof and the Purchase Agreement, the Escrow Agent shall distribute any
property remaining in the Escrow Fund to Seller. Neither Wendy's nor Newco shall
have any responsibility to distribute all or any portion of the property
remaining in the Escrow Fund to Seller.
(b) This Agreement shall terminate on the latest of the
distributions to occur pursuant to subsection 8(a).
9. DEFINITIONS. Except as otherwise defined herein, capitalized terms
used herein shall have the meaning ascribed to such terms in the Purchase
Agreement. As used herein, the following terms shall have the following
meanings:
"Agreement" shall have the meaning ascribed to such term in the first
paragraph of the preamble.
"Arbitrator" shall have the meaning ascribed to such term in Section
5(c).
"Business Day" means any day other than a Saturday, a Sunday or any other
day when banks are not open for business in ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇.
"Company" shall have the meaning ascribed to such term in the second
paragraph of the preamble.
"Damages" shall have the meaning ascribed to such term in Section 6(b).
"Documents" shall have the meaning ascribed to such term in Section 6(a).
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"Escrow Agent" shall have the meaning ascribed to such term in the first
paragraph of the preamble.
"Escrow Fund" shall have the meaning ascribed to such term in the fourth
paragraph of the preamble.
"Exchange Notice" shall have the meaning ascribed to such term in Section
2.
"Fair Market Value" shall mean, as of the date of determination thereof,
with respect to one Newco Exchangeable Share or a Wendy's Common Share, the
Wendy's Share Value and, with respect to all other property or assets, the fair
market value of such property or asset as determined in good faith by Wendy's.
"Indemnified Parties" shall have the meaning ascribed to such term in Section
6(b).
"Newco" shall have the meaning ascribed to such term in the first
paragraph of the preamble.
"Newco Exchangeable Shares" shall have the meaning ascribed to such term
in the second paragraph of the preamble.
"Newco's Articles" shall have the meaning ascribed to such term in
Section 2(a).
"Officer's Certificate" shall mean a certificate signed by the Chief
Executive Officer, the President or any Vice President of Wendy's.
"Purchase Agreement" shall have the meaning ascribed to such term in the
second paragraph of the preamble.
"Recovery Amount" shall have the meaning ascribed to such term in Section
5(d).
"Seller" shall have the meaning ascribed to such term in the first
paragraph of the preamble.
"Taxes" shall have the meaning ascribed to such term in the Share
Exchange Agreement.
"Trustee" shall mean The Huntington Trust Company, N.A., as trustee under
the Irrevocable Trust Agreement for the Benefit of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, dated the
date hereof.
"U.S. Taxes" shall have the meaning ascribed to such term in the Share
Exchange Agreement.
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"Wendy's" shall have the meaning ascribed to such term in the first
paragraph of the preamble.
"Wendy's Common Shares" has the meaning ascribed thereto in Section 1(b).
10. CONFLICT WITH PURCHASE AGREEMENT. In the case of a conflict between
the provisions of this Agreement and the Purchase Agreement, the provisions of
the Purchase Agreement shall govern.
11. VOTES ATTACHED TO ESCROWED SHARES. Notwithstanding that a Newco
Exchangeable Share or Wendy's Common Share is held in the Escrow Fund, nothing
contained in this Agreement shall in any way limit the rights of Seller or the
Trustee to exercise the votes attaching to such Newco Exchangeable Shares and
Wendy's Common Share, if any, nor in any way limit the rights of a Seller to
exercise his right to instruct the Trustee pursuant to the Trust Agreement with
respect to the exercise of the votes attached to the Subscribed Shares (as
defined in the Subscription Agreement).
12. FEES. Wendy's agrees to pay the Escrow Agent's fees in such amounts
as may be agreed from time to time, together with the Escrow Agent's expenses
and disbursements.
13. AMENDMENTS AND SUPPLEMENTS. This Agreement may not be amended,
modified or supplemented by the parties hereto in any manner, except by an
instrument in writing signed on behalf of Wendy's, Newco, Seller and the Escrow
Agent.
14. NO WAIVER. The failure of any party hereto to enforce at any time
any of the provisions of this Agreement shall in no way be construed to be a
waiver of any such provision, nor in any way to affect the validity of this
Agreement or any part hereof or the right of such party thereafter to enforce
each and every such provision. No waiver of any breach of or non-compliance with
this Agreement shall be held to be a waiver of any other or subsequent breach or
non-compliance.
15. GOVERNING LAW. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the Province of Ontario (and the
laws of Canada applicable therein), without regard to their respective conflict
of law rules.
16. NOTICE. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered in person or sent by facsimile or
via a reputable international overnight courier service to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice), and shall be deemed given on the date on which delivered by
hand or otherwise on the date of receipt; provided that any notice delivered to
the Escrow Agent by facsimile shall be deemed to be delivered on
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the date and time confirmed by the Escrow Agent (in writing or by telephone) to
the sender and any other recipients of such notice:
To Wendy's or Newco:
Wendy's International, Inc.
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile No: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Lang ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attn.: ▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
and
Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
To the Seller:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
13
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With a copy to:
Tory ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ & Binnington
Suite 3000 Aetna Tower
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attn.: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq., Q.C.
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
To the Escrow Agent:
The Trust Company of Bank of Montreal
▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attn.: Senior Manager, Indenture Trust
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
To the Trustee:
The Huntington Trust Company, N.A.
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attn.: Candada ▇. ▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
17. CONSTRUCTION OF AGREEMENT. A reference to a Section shall mean a
Section in this Agreement unless otherwise expressly stated. The titles and
headings herein are for reference purposes only and shall not in any manner
limit the construction of this Agreement which shall be considered as a whole.
The words "include," includes" and "including" when used herein shall be deemed
in each case to be followed by the words "without limitation."
18. ENTIRE AGREEMENT, ASSIGNABILITY. This Agreement and the Purchase
Agreement constitute the entire agreement, and supersede all other prior
agreements and understandings, both written and oral, between the parties with
respect to the subject matter hereof. This Agreement is not intended to confer
upon any person other than the parties hereto any rights or remedies hereunder,
except as otherwise expressly provided herein, and shall not be assignable by
operation of law or otherwise. Neither the cash, securities or other property
contained in the Escrow Funds nor any interest therein shall be sold, pledged,
charged or otherwise transferred by Seller without the consent of Wendy's so
long as certificates evidencing such securities are held by the Escrow Agent.
14
15
Such certificates may bear a legend to that effect and to the effects set forth
in the Purchase Agreement.
19. VALIDITY. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof or affecting the validity or enforceability of such
provision in any other jurisdiction.
20. CURRENCY. Except where otherwise expressly provided, all amounts in
this Agreement are stated and shall be paid in Canadian currency.
21. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which together shall constitute one and the same Agreement.
15
16
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
WENDY'S INTERNATIONAL, INC.
BY: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President, Chief Executive Officer
and Chief Operating Officer
1149658 ONTARIO INC.
BY: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chairman of the Board and President
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇ /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------- ---------------------------------------------------
WITNESS TO SIGNATURE OF ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
THE TRUST COMPANY OF BANK OF MONTREAL,
AS ESCROW AGENT
BY: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Senior Manager, Indenture Trust
BY: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President, Trust Product
Development and Administration
17
ACKNOWLEDGED AND AGREED TO WITH RESPECT TO SECTION 2:
THE HUNTINGTON TRUST COMPANY, N.A.
BY: /s/ Candada ▇. ▇▇▇▇▇
---------------------------------
Name: Candada ▇. ▇▇▇▇▇
Title: Vice President
18
EXHIBIT A
FORM OF EXCHANGE NOTICE
To: The Trust Company of Bank of Montreal
cc: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
The undersigned hereby notifies you, as escrow agent (the "Escrow
Agent") under that certain Escrow Agreement, dated as of December 29, 1995 (the
"Escrow Agreement"), among Wendy's International, Inc., 1149658 Ontario Inc.,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, and the Escrow Agent, pursuant to Section 2(a) of the Escrow
Agreement that ____________ Newco Exchangeable Shares are to be exchanged
pursuant to [Newco's Articles] [the Share Exchange Agreement].
Provided that no written objection, substantially in the form of
Exhibit B to the Escrow Agreement, is made prior to [date of delivery of
Exchangeable Shares], delivery of the certificate or certificates representing
________ Newco Exchangeable Shares shall be made at [time] on [date] at the
offices of __________ located at_______________.
Capitalized terms used herein and not defined herein have the
meanings assigned thereto in the Escrow Agreement.
DATED this _____ day of __________.
[WENDY'S INTERNATIONAL, INC.]
or
[1149658 ONTARIO INC.]
By: __________________________
Name:
Title:
19
EXHIBIT B
FORM OF SUBSEQUENT NOTICE
PURSUANT TO SECTION 2(a)
To: The Trust Company of Bank of Montreal
The undersigned hereby notify you, as escrow agent (the "Escrow
Agent") under that certain Escrow Agreement, dated as of December 29, 1995 (the
"Escrow Agreement"), among Wendy's International, Inc., 1149658 Ontario Inc.,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, and the Escrow Agent, pursuant to Section 2(a) of the Escrow
Agreement that [the Newco Exchangeable Shares specified in the Exchange Notice
from [Wendy's] [Newco], dated _________ are not to be exchanged.] [of the ______
Newco Exchangeable Shares specified in the Exchange Notice from [Wendy's]
[Newco], dated __________, only _____ Newco Exchangeable Shares are to be
exchanged at the time and place indicated in such Exchange Notice.]
Capitalized terms used herein and not defined herein have the
meanings assigned thereto in the Escrow Agreement.
DATED this _____ day of __________.
[WENDY'S INTERNATIONAL, INC.]
or
[1149658 ONTARIO INC.]
_______________________________ By: __________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Name:
Title:
20
EXHIBIT C
FORM OF WENDY'S NOTICE
OF PAYMENT FOR WENDY'S COMMON SHARES
To: The Trust Company of Bank of Montreal
cc: Huntington Trust Company, N.A.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
The undersigned hereby notifies you, as escrow agent (the "Escrow
Agent") under that certain Escrow Agreement, dated as of December 29, 1995 (the
"Escrow Agreement"), among Wendy's International, Inc., 1149658 Ontario Inc.,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, and the Escrow Agent, pursuant to Section 2(b) of the Escrow
Agreement that __________ Newco Exchangeable Shares deposited in the Escrow Fund
are to be delivered to Wendy's as payment for Wendy's Common Shares pursuant to
the Subscription Agreement and the Guaranty.
Delivery of the certificate or certificates representing ________
Newco Exchangeable Shares shall be made at [time] on [date] at the offices of
__________ located at ___________.
Capitalized terms used herein and not defined herein have the
meanings assigned thereto in the Escrow Agreement.
DATED this _____ day of __________.
WENDY'S INTERNATIONAL, INC.
By: __________________________
Name:
Title:
21
EXHIBIT D
FORM OF WRITTEN DIRECTION
OF SELLER FOR INVESTMENT OF CASH
To: The Trust Company of Bank of Montreal
cc: Wendy's International, Inc.
The undersigned hereby notifies you, as escrow agent (the "Escrow
Agent") under that certain Escrow Agreement, dated as of December 29, 1995 (the
"Escrow Agreement"), among Wendy's International, Inc., 1149658 Ontario Inc.,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, and the Escrow Agent, pursuant to Section 3(b) of the Escrow
Agreement that you are directed to invest Cdn. $_____ held in cash in the Escrow
Fund in [Canadian government obligations having a maturity of 91 days or less]
[demand deposits issued by any Canadian chartered bank] [term deposits issued by
any Canadian chartered bank] [short term certificates of deposit issued by any
Canadian chartered bank].
Capitalized terms used herein and not defined herein have the
meanings assigned thereto in the Escrow Agreement.
DATED this _____ day of __________.
--------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
22
EXHIBIT E
FORM OF NOTICE TO ESCROW
AGENT OF A WENDY'S CLAIM
To: The Trust Company of Bank of Montreal
cc: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
The undersigned hereby notifies you, as escrow agent (the "Escrow
Agent") under that certain Escrow Agreement, dated as of December 29, 1995 (the
"Escrow Agreement"), among Wendy's International, Inc., 1149658 Ontario Inc.,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, and the Escrow Agent, pursuant to Section 5(a) of the Escrow
Agreement that on ____________ we notified Seller of a Wendy's Claim pursuant to
the Purchase Agreement. A copy of such notice is attached as Exhibit 1 hereto.
Capitalized terms used herein and not defined herein have the
meanings assigned thereto in the Escrow Agreement.
DATED this _____ day of __________.
WENDY'S INTERNATIONAL, INC.
By: __________________________
Name:
Title:
23
EXHIBIT F
FORM OF NOTICE OF RESOLUTION
OF WENDY'S CLAIM
To: The Trust Company of Bank of Montreal
cc: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
The undersigned hereby notifies you, as escrow agent (the "Escrow
Agent") under that certain Escrow Agreement, dated as of December 29, 1995 (the
"Escrow Agreement"), among Wendy's International, Inc., 1149658 Ontario Inc.,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, and the Escrow Agent, pursuant to [Section 5(a) of the Escrow
Agreement that the Wendy's Claim of which you have been notified on __________
has been resolved and that Wendy's makes the following claim against the Escrow
Fund] [Wendy's makes the following claim against the Escrow Fund pursuant to
Section 5(e) of the Escrow Agreement]:
[insert number of Newco Exchangeable Shares or Wendy's Common Shares
or amount of cash, other securities or property claimed]
[As required pursuant to Section 5(a) of the Purchase Agreement,
attached as Exhibit 1 hereto is a copy of [non-appealable judgment] [agreement
between Wendy's and Seller] [Officer's Certificate].]
Provided that no written objection to this claim, substantially in
the form of Exhibit G to the Escrow Agreement, is made prior to [date of
delivery of Newco Exchangeable Shares, Wendy's Common Shares or cash, other
securities or property], delivery of the [certificate or certificates
representing __________ Newco Exchangeable Shares or Wendy's Common Shares]
[cash, other securities or property] from the Escrow Fund shall be made at
[time] on [date] at the offices of ________________ located at_________________.
Capitalized terms used herein and not defined herein have the
meanings assigned thereto in the Escrow Agreement.
DATED this _____ day of __________.
WENDY'S INTERNATIONAL, INC.
By: __________________________
Name:
Title:
24
EXHIBIT G
FORM OF SELLER OBJECTION
TO WENDY'S SECTION 5(a)(i) OR 5(a)(iii) NOTICE
To: The Trust Company of Bank of Montreal
cc: Wendy's International, Inc.
The undersigned hereby notifies you, as escrow agent (the "Escrow
Agent") under that certain Escrow Agreement, dated as of December 29, 1995 (the
"Escrow Agreement"), among Wendy's International, Inc., 1149658 Ontario Inc.,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, and the Escrow Agent, pursuant to Section 5(b)[(i) or (ii)] of
the Escrow Agreement that he objects to Wendy's Claim to withdraw _____ [Newco
Exchangeable Shares] [Wendy's Shares] [other cash, securities or property] from
the Escrow Fund on the grounds that [Wendy's notice did not comply with Section
5(a) of the Escrow Agreement] [the Recovery Amount has not been determined in
accordance with Section 5(d)] [notice of Wendy's Claim was not given in
accordance with Section 7.5(a) of the Purchase Agreement or that Seller disputed
Wendy's Claim within the time period set forth in Section 7.5(b) of the Purchase
Agreement].
Capitalized terms used herein and not defined herein have the
meanings assigned thereto in the Escrow Agreement.
DATED this _____ day of __________.
--------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
