Guarantees and Collateral
Pursuant to the Guarantee and Collateral Agreement, dated June 1, 2015 (the “Guarantee and Collateral Agreement”), a copy of which is attached to the Company’s Current Report on Form 8-K filed on June 2, 2015 as Exhibit 10.2, by and among Wendy’s SPV Guarantor, LLC, Quality Is Our Recipe, LLC, and Wendy’s Properties, LLC, each as a guarantor of the Notes (collectively, the “Guarantors”), in favor of Citibank, N.A., as trustee, the Guarantors guarantee the obligations of the Master Issuer under the Indenture and related documents and secure the guarantee by granting a security interest in substantially all of their assets, except for certain real estate assets and subject to certain limitations as set forth therein.
The Notes are secured by a security interest in substantially all of the assets of the Master Issuer and the Guarantors (collectively, the “Securitization Entities”), except for certain real estate assets and subject to certain limitations as set forth in the Indenture and the Guarantee and Collateral Agreement. The assets of the Securitization Entities include most of the domestic and certain of the foreign revenue-generating assets of the Company and its subsidiaries, which principally consist of franchise-related agreements, real estate assets, intellectual property and license agreements for the use of intellectual property. Upon certain trigger events, mortgages will be required to be prepared and recorded on the real estate assets. The assets of the Securitization Entities, including real estate assets, are referred to herein as the “Securitized Assets.”
The Notes are obligations only of the Master Issuer pursuant to the Indenture and are unconditionally and irrevocably guaranteed by the Guarantors pursuant to the Guarantee and Collateral Agreement. The pledge and security interest provisions with respect to the Master Issuer are included in the Base Indenture. Except as described below, neither the Company nor any subsidiary of the Company, other than the Securitization Entities, will guarantee or in any way be liable for the obligations of the Master Issuer under the Indenture or the Notes.
Management of the Securitized Assets
None of the Securitization Entities has employees. Each of the Securitization Entities entered into a Management Agreement dated June 1, 2015, a copy of which is attached to the Company’s Current Report on Form 8-K filed on June 2, 2015 as Exhibit 10.3, as amended by the Management Agreement Amendment dated January 17, 2018, a copy of which is attached to the Company’s Current Report on Form 8-K filed on January 17, 2018 as Exhibit 10.2, the Second Amendment to the Management Agreement dated June 26, 2019, a copy of which is attached to the Company’s Current Report on Form 8-K filed on June 26, 2019 as Exhibit 10.2, the Third Amendment to the Management Agreement dated January 3, 2021, a copy of which is attached to the Company’s Annual Report on Form 10-K filed March 3, 2021 as Exhibit 10.31, and the Fourth Amendment to the Management Agreement (as defined below), a copy of which is attached to this Current Report on Form 8-K as Exhibit 10.2 (collectively, as so amended, the “Management Agreement”), among the Securitization Entities, the Manager and the Trustee.
Pursuant to the Management Agreement, Wendy’s International, LLC acts as the Manager with respect to the Securitized Assets. The primary responsibilities of the Manager are to perform certain franchising, real estate, intellectual property and operational functions on behalf of the Securitization Entities with respect to the Securitized Assets pursuant to the Management Agreement. The Manager is entitled to the payment of a weekly management fee, as set forth in the Management Agreement, which includes reimbursement of certain expenses, and is subject to the liabilities set forth in the Management Agreement. On June 22, 2021, the parties to the Management Agreement entered into a Fourth Amendment to the Management Agreement (the “Fourth Amendment to the Management Agreement”) pursuant to which the parties agreed, among other changes, to (i) amend the definition of “Change in Management”, (ii) amend the definition of “Weekly Management Fee” and (iii) modify the conditions to the incurrence by the Non-Securitization Entities (as such term is defined in the Indenture) of additional indebtedness to (x) permit the Specified Non-Securitization Debt Cap (as such term is defined in the Management Agreement) to increase from $25,000,000 to up to $100,000,000 under certain circumstances and (y) increase the maximum Holdco Leverage Ratio (as such term is defined in the Indenture) that may be in effect as of the date of the incurrence of any indebtedness by the Non-Securitization Entities in excess of the Specified Non-Securitization Debt Cap, from 7.0x to 7.5x. The amendments described in clauses (i), (ii) and (iii)(x) became effective on the Closing Date, and the amendment described in clause (iii)(y) will become effective on the earlier of (x) the Control Party (as such term is defined in the Indenture) designating a date for implementation and (y) the repayment in full of all of the Master Issuer’s Series 2018-1 Class A-2-II Notes and Series 2019-1 Class A-2 Notes.