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Exhibit 7
SUBSCRIPTION AGREEMENT
This is a Subscription Agreement made to be effective as of
December 29, 1995, by and between the undersigned Irrevocable Trust for the
Benefit of Xxxxxx X. Xxxxx, an Ohio Trust ("SUBSCRIBER"), and Wendy's
International, Inc., an Ohio corporation ("ISSUER");
WITNESSETH:
WHEREAS, pursuant to a Share Purchase Agreement, dated as of
October 31, 1995, as amended, among Wendy's International, Inc., an Ohio
corporation ("ISSUER"), 1149658 Ontario Inc., an Ontario corporation and a
subsidiary of ISSUER, 632687 Alberta Ltd., an Alberta corporation, continued as
1052106 Ontario Limited, an Ontario corporation (the "Company"), and the
SHAREHOLDER (the "Purchase Agreement"), the parties thereto have agreed, subject
to the terms and conditions set forth therein, that 1149658 Ontario Inc. shall
acquire from the SHAREHOLDER all of the issued and outstanding shares of the
Company and SHAREHOLDER shall receive 16,450,000 Non-Voting Exchangeable Shares
of 1149658 Ontario Inc. (such shares, and shares of any successor corporation
having terms substantially equivalent to those of the Non-Voting Exchangeable
Shares of 1149658 Ontario Inc., being referred to herein as the "Newco
Exchangeable Shares" and such entities being referred to herein as "NEWCO")
which initially shall be exchangeable for 16,450,000 of the common shares,
without par value, of the ISSUER (the "Wendy's Common Shares");
WHEREAS, pursuant to NEWCO's Articles of Incorporation
("NEWCO's Articles") and a Share Exchange Agreement, dated as of the date hereof
(the "Share Exchange Agreement"), among ISSUER, NEWCO and the Shareholder, the
Newco Exchangeable Shares held by the Shareholder may be exchanged from time to
time for Wendy's Common Shares and the number of Wendy's Common Shares for which
each of the Shareholder's Newco Exchangeable Shares may be exchanged from time
to time (the "Specified Number") may be adjusted in certain circumstances set
forth in NEWCO's Articles;
WHEREAS, ISSUER desires to give the Shareholder rights, as
provided in this Subscription Agreement, equal to those of a holder of the
number of Wendy's Common Shares for which the Newco Exchangeable Shares held by
the Shareholder may be exchanged from time to time other than the right to
receive dividends and the right to receive any amount in the event of the
liquidation, dissolution or winding up of ISSUER; and
WHEREAS, on the date hereof, the Shareholder and SUBSCRIBER
have entered into a Guaranty Agreement (the "Guaranty") pursuant to which the
Shareholder has agreed to deliver to SUBSCRIBER the requisite number of Newco
Exchangeable Shares in order to enable SUBSCRIBER to pay the purchase price
hereunder.
NOW THEREFORE, in consideration of the premises contained
herein, the SUBSCRIBER and the ISSUER hereby make the following agreement,
intending to be legally bound thereby:
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(1) The undersigned SUBSCRIBER hereby subscribes for and
purchases from ISSUER, and ISSUER hereby sells and agrees to issue to
SUBSCRIBER, 16,450,000 Wendy's Common Shares (the "SUBSCRIBED SHARES") on the
terms and subject to the conditions set forth herein. The number of SUBSCRIBED
SHARES subject to this Subscription Agreement shall be adjusted as follows:
(A) The number of SUBSCRIBED SHARES subject to
this Subscription Agreement shall be reduced
from time to time (such reduction to take
effect automatically, without further action
by any party, immediately upon the
occurrence of any event requiring such
reduction) by (i) the number of Wendy's
Common Shares issued pursuant to the terms
of the Share Exchange Agreement or NEWCO's
Articles, (ii) the number equal to the
Specified Number (as of the date of such
withdrawal) multiplied by the number of
Newco Exchangeable Shares withdrawn by
Wendy's from time to time from the Escrow
Funds (as defined) pursuant to the terms of
the Escrow Agreement, dated as of the date
hereof, among the ISSUER, NEWCO, the
Shareholder and The Trust Company of Bank of
Montreal as Escrow Agent; and (iii) the
number equal to the Specified Number (as of
the date of such purchase for cancellation)
multiplied by the number of Newco
Exchangeable Shares purchased for
cancellation by NEWCO from time to time
pursuant to NEWCO's Articles;
(B) If and whenever at any time during the term
of this Subscription Agreement, the ISSUER
shall take any action affecting or relating
to the outstanding Wendy's Common Shares
which results in an adjustment pursuant to
Article 12 of the provisions attaching to
the Newco Exchangeable Shares of the
Specified Number, the number of SUBSCRIBED
SHARES subscribed for pursuant to this
Subscription Agreement at such time shall be
correspondingly adjusted (such adjustment to
take effect automatically, without further
action by any party, simultaneously with the
effectiveness of the adjustment of the
Specified Number) so that the number of
SUBSCRIBED SHARES subject to this Agreement
thereafter shall be equal to the Specified
Number multiplied by the number of Newco
Exchangeable Shares then held by the
Shareholder; and
(C) If and whenever at any time during the term
of this Subscription Agreement, the
outstanding Wendy's Common Shares shall be
reclassified, exchanged or converted into
other shares, securities or property,
otherwise than as a result of a Common Share
Reorganization (as defined in Section 12.1
of the provisions attaching to the Newco
Exchangeable Shares), or if the designation
of or rights, privileges, restrictions and
conditions attached to the
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Wendy's Common Shares are changed, of if
there shall be an amalgamation, merger,
reorganization, liquidation, dissolution,
winding-up or other similar transaction
affecting ISSUER (other than a transaction
which does not result in any
reclassification of the outstanding Wendy's
Common Shares or a change of the Wendy's
Common Shares into other assets, securities
or property), or a transfer of all or
substantially all of the assets of ISSUER to
another corporation or entity (any such
event being hereinafter referred to as a
"Reclassification"), then, in the absence of
any other event causing adjustment to the
number of Wendy's Common Shares subject to
this Subscription Agreement, SUBSCRIBER
shall be entitled to receive and shall
accept and ISSUER shall deliver to
SUBSCRIBER at the time SUBSCRIBER would
otherwise have received the SUBSCRIBED
SHARES, in lieu of the number of SUBSCRIBED
SHARES which SUBSCRIBER would have received
at such time if there had been no
Reclassification, the aggregate number and
kind of shares or other securities or amount
of other property which SUBSCRIBER would
have been entitled to receive as a result of
the Reclassification if, on the effective
date thereof, SUBSCRIBER had held
certificates evidencing the number of
Wendy's Common Shares then subject to this
Subscription Agreement.
In the event that the number of SUBSCRIBED SHARES shall be adjusted or this
Subscription Agreement shall terminate pursuant to paragraph 8(b) hereof, ISSUER
shall promptly give written notice of such adjustment or termination, as the
case may be, to SUBSCRIBER.
(2) The purchase price for all, but not less than all,
SUBSCRIBED SHARES shall be payable in full, upon five (5) business days advance
written notice by SUBSCRIBER to ISSUER (unless payment is made on January 8,
2006, only by SUBSCRIBER'S conveyance to ISSUER of a number of Newco
Exchangeable Shares equal to the number of SUBSCRIBED SHARES divided by the
Specified Number (as of such date). Notwithstanding the foregoing, ISSUER shall
not be obligated to issue fractional shares, and in lieu thereof ISSUER shall
pay an amount in cash equal to the same fraction of the fair market value of a
Wendy's Common Share at the date of payment. Unless this Subscription Agreement
is earlier terminated in accordance with the provisions of paragraph (8) below,
the SUBSCRIBER shall be obligated to make payment of the full purchase price
hereunder on or before 5:00 p.m., Columbus, Ohio, time, on January 8, 2006. Upon
payment of the purchase price hereunder by delivery of certificates evidencing
Newco Exchangeable Shares duly endorsed for transfer to ISSUER at its principal
executive offices, ISSUER shall cause its transfer agent to issue one or more
certificate(s) to SUBSCRIBER representing SUBSCRIBER'S ownership of fully paid
and nonassessable Wendy's Common Shares; provided, however, if SUBSCRIBER
directs in writing that the certificate(s) be issued in the name of the
BENEFICIARY (as defined in the Irrevocable Trust Agreement for the Benefit of
Xxxxxx X. Xxxxx of even date hereof), ISSUER shall cause the certificate(s) to
be issued in the name of the BENEFICIARY upon receipt of written
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representations and warranties from the BENEFICIARY in substantially the form
set forth in paragraph (3) below. If any Newco Exchangeable Shares delivered to
the ISSUER hereunder shall have been deposited with the Escrow Agent under the
Escrow Agreement, dated as of the date hereof, among the Shareholder, the ISSUER
and The Trust Company of Bank of Montreal, as Escrow Agent, immediately prior to
such delivery, ISSUER shall cause the certificate(s) representing the SUBSCRIBED
SHARES to be issued for such Newco Exchangeable Shares to be issued in the name
of the BENEFICIARY and to be delivered to the Escrow Agent in accordance with
the terms of the Escrow Agreement.
(3) SUBSCRIBER hereby acknowledges, represents and warrants to
ISSUER that:
(A) SUBSCRIBER is
purchasing the SUB-SCRIBED SHARES for the
purpose of investment and has no present
intention of selling, transferring or
otherwise distributing the SUBSCRIBED
SHARES, except in compliance with applicable
securities laws;
(B) SUBSCRIBER has such
knowledge and experience in financial and
business matters that it is capable of
evaluating the merits and risks of its
investment in the SUBSCRIBED SHARES;
(C) SUBSCRIBER is aware
that (i) the SUBSCRIBED SHARES have not been
registered under the Securities Act of 1933
(the "Act") and (ii) the SUBSCRIBED SHARES
cannot be sold, transferred, pledged or
otherwise distributed by SUBSCRIBER unless a
registration statement registering the
SUBSCRIBED SHARES under the Act has been
filed with the Securities and Exchange
Commission and has become effective or
unless the SUBSCRIBED SHARES are sold or
otherwise distributed in a transaction in
respect of which ISSUER has previously
received an opinion of U.S. counsel,
satisfactory to ISSUER, stating that such
registration is not required;
(D) The SUBSCRIBED SHARES
are subject to the restrictions on transfer
in Section 5.6 of the Share Exchange
Agreement; and
(E) ISSUER may prevent
transfer and registration of transfer of the
SUBSCRIBED SHARES unless ISSUER shall have
received an opinion from U.S. counsel
satisfactory to it to the effect that any
such transfer would not violate the Act or
the applicable laws of any state. ISSUER may
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cause each certificate evidencing the
SUBSCRIBED SHARES to bear a legend
reflecting all applicable restrictions on
transfer.
SUBSCRIBER agrees to, and shall be bound by, Section 5.6 of the Share Exchange
Agreement.
(4) Upon acceptance of the Subscription Agreement by ISSUER,
the following will occur:
(A) ISSUER shall list
SUBSCRIBER as the record holder of the
SUBSCRIBED SHARES on its record of
shareholders in accordance with the
provisions of Ohio Revised Code ("R.C.")
section 1701.37(A);
(B) SUBSCRIBER will be a
shareholder of ISSUER entitled to exercise
the rights specified in paragraph (5) below
automatically by operation of Section
1701.01(F) of the R.C.; and
(C) The SUBSCRIBED SHARES
will be deemed to be outstanding only for
the purposes specified in paragraph (5)
below.
(5) Except as provided in paragraph (6) below, SUBSCRIBER
shall be entitled to all of the rights of a record holder of Wendy's Common
Shares with respect to the SUBSCRIBED SHARES, including but not limited to, the
following:
(A) all voting rights on
any matter, question or proposition
whatsoever that may properly come before the
holders of Wendy's Common Shares, including
the right to vote in person or by proxy and
to execute consents, waivers and releases
(through the exercise of such rights by
SUBSCRIBER'S Trustee pursuant to the terms
of the Irrevocable Trust Agreement for the
Benefit of Xxxxxx X. Xxxxx of even date
herewith);
(B) the right to receive
copies of any notice or other communication
which the ISSUER provides all of its
shareholders;
(C) dissenter's rights in
accordance with the provisions of R.C.
sections 1701.74, 1701.76, 1701.80,
1701.801, 1701.84, 1701.85, as currently in
effect or as amended during the term hereof,
or any successor provisions, Ohio common law
and the Regulations of ISSUER; provided, in
the event that SUBSCRIBER becomes entitled
to relief as a dissenting shareholder
pursuant to R.C. section 1701.85, or any
successor provision,
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SUBSCRIBER'S right to receive the fair cash
value of the SUBSCRIBED SHARES will be
contingent upon SUB-XXXXXXX'X prior payment
of the full purchase price under this
Subscription Agreement as defined in
paragraph (2) above;
(D) the right to inspect
books and records in accordance with the
provisions of R.C. section 1701.37(C), as
currently in effect or as amended during the
term hereof, or any successor provision,
Ohio common law and the Regulations of
ISSUER; and
(E) the right to call a
meeting in accordance with the provisions of
R.C. section 1701.40, as currently in effect
or as amended during the term hereof, or any
successor provision, Ohio common law and the
Regulations of ISSUER.
(6) ISSUER and SUBSCRIBER agree that, prior to the payment of
the full purchase price for all SUBSCRIBED SHARES covered by this Subscription
Agreement from time to time, SUBSCRIBER shall not acquire any rights as a
shareholder of ISSUER to receive the following:
(A) any dividends or
distributions paid on the Wendy's Common
Shares;
(B) any amounts available
for distribution to shareholders of ISSUER
in the event of the liquidation, dissolution
or winding up of ISSUER; and
(C) any Wendy's Common
Shares, rights, options or warrants,
evidences of indebtedness or other
securities or property to which shareholders
of ISSUER may become entitled in any of the
transactions described in Article 12 of the
provisions attaching to the Newco
Exchangeable Shares contained in NEWCO's
Articles.
In addition, SUBSCRIBER may not sell, transfer, exchange, pledge, hypothecate or
otherwise dispose of the SUBSCRIBED SHARES or any interest therein or any of its
rights under this Subscription Agreement.
(7) Pursuant to the Guaranty, Shareholder has agreed to
deliver to SUBSCRIBER Shareholder's Newco Exchangeable Shares in order to enable
SUBSCRIBER to pay the purchase price hereunder. Unless this Subscription
Agreement is earlier terminated in accordance with paragraph (8)(a) or (b)
hereof, SUBSCRIBER agrees to take all action consistent with this Subscription
Agreement, the Guaranty and applicable laws that is necessary, desirable or
appropriate to acquire the Newco Exchangeable Shares in order to satisfy its
obligation under paragraph (2) above to pay the full purchase price on or before
January 8, 2006.
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(8) This Subscription Agreement shall terminate only upon the
occurrence of either of the following events: (a) payment of the full purchase
price hereunder or (b) there are no Newco Exchangeable Shares outstanding except
Newco Exchangeable Shares held by ISSUER.
(9) This Subscription Agreement shall be construed in
accordance with and governed in all respects by the laws of the State of Ohio.
(10) This Subscription Agreement may not be assigned by either
party except with the written consent of both parties.
IN WITNESS WHEREOF, this Subscription Agreement has been
executed by or on behalf of SUBSCRIBER on December 29, 1995.
SUBSCRIBER:
IRREVOCABLE TRUST FOR THE
BENEFIT OF XXXXXX X. XXXXX
Accepted by ISSUER The Huntington Trust Company, N.A.,
on December 29, 1995 Trustee
By: /s/ Candada X. Xxxxx
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Title: Vice President
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By: /s/ Xxxxxx X. Xxxxx
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Its President, Chief Executive Officer
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and Chief Operating Officer
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