Exhibit 10.31
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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.
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Dated as of May 5, 1997
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TABLE OF CONTENTS
Page
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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
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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
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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:
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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 xxxxx cash at the Restaurants (the "Xxxxx 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
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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
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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 "0000-000000-00 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
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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
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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.
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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:
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(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
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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;
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(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
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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.
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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 Xxxxxx Xxxxxxxx & 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 Xxxxx Xxx, Xxxxx 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.
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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
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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 0000 Xxxxxxxx Xxxx,
Xxxxxxx, Xxxxxxx 00000.
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.
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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/ Xxxxxx X. Xxxxxxx
----------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Vice President
RTM HOLDING COMPANY, INC.
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Vice President
RTM PARTNERS, INC.
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Vice President
RTM MANAGEMENT CO., LLC
By: RTM Enterprises, Inc.,
Managing Member
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Vice President
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RTM OPERATING COMPANY
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Vice President
