Wendy's International (WEN)

Certain Relationships and Related Person Transactions

Review and Approval of Related Person Transactions

In accordance with the terms of its charter, the Audit Committee has the responsibility for the review and approval or ratification of (i) all related party and conflict of interest transactions involving a director, executive officer, nominee for director or any holder of 5% or more of any class of the Company’s Common Stock (or any member of the immediate family) of any of the foregoing persons and (ii) any related party or conflict of interest transaction involving any non-executive officer of the Company (or any member of the immediate family of a non-executive officer of the Company) if such related party or conflict of interest transaction involves more than $10,000, in each case using appropriate specialists and counsel as necessary. The Company’s legal department is primarily responsible for obtaining information from the applicable related person with respect to a proposed related person transaction and then determining, based on the facts and circumstances, whether the Company or a related person has a direct or indirect material interest in the transaction. To the extent required by the terms of the Audit Committee charter, the legal department then presents information relating to such transaction for the review and approval of the Audit Committee. In the course of its review and approval or ratification of a proposed related person transaction, the Audit Committee may consider: (i) the nature of the related person’s interest in the transaction; (ii) the material terms of the transaction, including, without limitation, the amount involved and type of transaction; (iii) the importance of the transaction to the related person; (iv) the importance of the transaction to the Company; (v) whether the transaction would impair the judgment of a director, executive officer or non-executive officer, as applicable, to act in the best interests of the Company; (vi) if applicable, whether such transaction would compromise a director’s status as an “independent director” under the Independence Guidelines or the New York Stock Exchange Listing Standards; and (vii) any other matters that the Audit Committee deems appropriate. To the extent that a proposed related person transaction involves any member of the Audit Committee (or an immediate family member), such director would not participate in the deliberations or vote respecting the approval or ratification of the proposed transaction.

Certain Related Person Transactions

As part of its overall retention efforts, the Company provided certain of its officers and employees with the opportunity to co-invest in some of the investment opportunities available to the Company. In connection therewith, prior to the enactment of the Sarbanes-Oxley Act of 2002, the Company advanced a portion of the funds for the purchases by certain of its officers and employees in four co- investments, EBT Holding Company, LLC (“EBT”), 280 KPE Holdings, LLC (“280 KPE”), K12 Inc. and 280 BT Holdings LLC (“280 BT”). In 2006, only the notes relating to the investments in K12 Inc. and 280 BT (in the aggregate principal amount of $1,889,776) remained outstanding. Each of these notes matured in 2006. One half of the principal amount of these notes was non-recourse. The notes bore interest at the prime rate adjusted annually. During 2006, the largest outstanding principal amount owed to the Company by Messrs. Peltz and May pursuant to the notes was $888,888 and $888,888, respectively, in connection with these investments. Under the Sarbanes-Oxley Act of 2002, the Company may not make any new loans to its executive officers and the Company’s co-investment policy no longer permits loans.

As of December 31, 2006, the Company owned 63.6% of the capital interests and of the membership interests of at least 52.5% in future profits (the “Profit Interests”) in D&C. As discussed

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above (see “Equity Arrangements”) in November 2005, the Compensation Committee authorized the Company to enter into equity arrangements pursuant to which members of the Company’s management subscribed for equity interests in the Company’s holding in D&C. In addition to the interests subscribed for by the Named Officers (see “Equity Arrangements” above), interests were subscribed for by Messrs. Essner, Rosen and Schaefer and Ms. Tarbell. The remaining economic interests in D&C were owned directly or indirectly by executives of Deerfield, including approximately 24.9% by Mr. Sachs. In connection with the acquisition of D&C, commencing July 22, 2009, the Company will have certain rights to acquire the economic interests of D&C owned by Mr. Sachs and another executive officer of Deerfield, which aggregate 35.5% of the capital interests and 34.3% of the Profit Interests. In addition, commencing July 22, 2007, Mr. Sachs, and another executive officer of Deerfield will have certain rights to require the Company to acquire their economic interests. In each case, the rights are generally exercisable at a price equal to the then current fair market value of those interests and are subject to acceleration under certain circumstances.

In November 2005 the Compensation Committee authorized the Company to enter into equity arrangements pursuant to which members of the Company’s management subscribed for equity interests in the Company’s holdings in Jurlique. In addition to the interests subscribed for by the Named Officers (see “Equity Arrangements” above), interests were subscribed for by Messrs. Essner, Rosen and Schaefer and Ms. Tarbell.

In connection with the July 2004 acquisition by the Company of its interest in D&C, the Company agreed to invest $100 million in Deerfield Opportunities Fund, LLC, an investment fund managed by Deerfield (the “Opportunities Fund”), and Mr. Sachs, through an affiliate, agreed to invest approximately $4.3 million in the Opportunities Fund. The Opportunities Fund commenced operations in October 2004. In February 2005, the Company withdrew approximately $4.8 million from the Opportunities Fund and effective as of March 1, 2005, such funds were invested in DM Fund, LLC, a newly formed investment fund managed by Deerfield (the “Macro Fund”). Certain executives of Deerfield, including Mr. Sachs who, through an affiliate, invested approximately $200,000, also invested in the Macro Fund. The Company redeemed its interest in the Opportunities Fund on September 29, 2006 and its investment in the Macro Fund on December 31, 2006.

Pursuant to his employment agreement, when traveling for business purposes Mr. Sachs is entitled to be reimbursed by Deerfield for up to $4,000 for each actual hour of flying time on an aircraft owned or leased by Mr. Sachs or an entity controlled by him (the “Aircraft”) or, if the Aircraft is not available, up to $4,000 for documented out-of-pocket expenses incurred by Mr. Sachs for each hour of actual flying time on a substitute aircraft, plus, in the case of either the Aircraft or a substitute aircraft, the reasonable cost of any food consumed on board and any overnight meals and lodging for aircraft crew members. In 2006, Deerfield reimbursed Mr. Sachs for $478,000 of such expenses.

Prior to the July 2004 acquisition by the Company of its interest in D&C, certain members of D&C’s management, including Mr. Sachs and his affiliates (who invested an aggregate of approximately $1.5 million in three transactions), acquired all or a portion of the equity tranche of securities issued in connection with the formation of certain of the CDOs (collateralized debt obligations) that are currently managed by Deerfield.

Prior to November 2006, Mr. May and the Company’s wholly-owned subsidiary, Sybra, Inc., had an interest in a franchisee that owned one Arby’s restaurant. That franchisee was a party to a standard Arby’s franchise license agreement and paid to Arby’s fees and royalty payments that unaffiliated third-party franchisees pay. Mr. May acquired his interest in the franchisee prior to the acquisition by the

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Company of Sybra in December 2002. Under an arrangement that pre-dated the Sybra acquisition, Mr. May contributed all of the capital in the franchisee and Sybra managed the restaurant for the franchisee. Under the pre-existing arrangement, Sybra Inc. agreed to waive its management fee until Mr. May’s capital was returned. In November 2006, Sybra, Inc. acquired the assets of the franchise for $121,000 in cash, which was entirely used to satisfy the outstanding liabilities of the franchisee. Mr. May did not receive any portion of the proceeds from the sale.

On November 1, 2005, Messrs. Peltz, May and Garden (collectively, the “Principals”) started a series of equity investment funds (the “Funds”) that are separate and distinct from the Company and that are being managed by the Principals and other senior officers of the Company (the “Employees”) through a management company (the “Management Company”) formed by the Principals. The Principals and the Employees continue to serve as officers of, and receive compensation from, the Company. The Company is making available the services of the Principals and the Employees, as well as certain support services including investment research, legal, accounting and administrative services, to the Management Company. The Company is currently being reimbursed by the Management Company for the allocable cost of these services, including an allocable portion of salaries, rent and various overhead costs for periods both before and after the launch of the Funds. Such reimbursement with respect to 2006 amounted to $4,345,000. In addition, the Management Company paid directly to the Employees or reimbursed the Company for approximately $4,200,000, in the aggregate, of incentive compensation with respect to 2006. The Special Committee and the Compensation Committee, each of which is comprised of independent members of the Company’s Board of Directors, have reviewed and considered these arrangements and unanimously approved the allocation of costs and reimbursement for 2006. As discussed in the Compensation Discussion and Analysis above, in connection with the corporate restructuring, the Management Company has agreed to provide certain strategic transition services to the Company commencing June 30, 2007.

In December 2005, the Company invested $75,000,000 in an account which is managed by the Management Company and co-invests on a parallel basis with the Funds. The Principals and certain Employees have invested in the Funds and certain Employees may invest additional amounts in the Funds or in an account to be managed by the Management Company. The Management Company has agreed not to charge the Company, the Principals or the Employees any management fees with respect to their investments. Further, the Principals and the Employees will not pay any incentive fees and the Company will not pay any incentive fees for the first two years and, thereafter, will pay lower incentive fees than those generally charged to other investors in the Funds. The Company is entitled to withdraw its investment quarterly upon 65 days’ prior written notice. The Special Committee unanimously recommended the Company’s investment on these terms to the executive committee of the Company’s Board of Directors, which in turn unanimously approved such investment, with the Executives abstaining from the vote. As discussed in the Compensation Discussion and Analysis above, as part of the overall agreement with Messrs. Peltz and May in connection with the corporate restructuring, the Company has agreed, commencing January 1, 2008, that it will be subject to standard withdrawal restrictions and will pay to the Management Company the standard management fee and incentive fee charges paid by any unaffiliated, third party investors with a similarly sized investment in the Funds.

In connection with the RTM Acquisition, the Company provided certain management services to certain affiliates of RTM that the Company did not acquire in July 2005 (the “RTM Affiliates”) including information technology, risk management, accounting, tax and other management services. Mr. Umphenour has an equity interest in such RTM Affiliates. The Company charged a monthly fee of $36,000 plus out-of-pocket expenses for such services which aggregated $150,000 during 2006. This

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services agreement was terminated on May 7, 2006. In addition, the Company continued to have limited transactions with certain of the RTM Affiliates, which during 2006, resulted in the Company receiving rental income of $22,000 for a restaurant leased to one of the RTM Affiliates and paying royalties of $10,000 related to the use of a brand owned by one of the RTM Affiliates in four Company- owned restaurants. RTM remains contingently liable for certain lease obligations aggregating approximately $33,000,000 that it had guaranteed prior to the RTM Acquisition on behalf of certain affiliates, including entities in which Mr. Umphenour has an equity interest. However, the Company has been indemnified by the selling stockholders of RTM, including Mr. Umphenour, for any future payments the Company may be required to make under such guarantees.

In 2006, the Company made charitable contributions of $100,000 to The Arby’s Foundation, Inc., a not-for-profit charitable foundation in which the Company has non-controlling representation on the board of directors, and ARG paid $502,000 of expenses on behalf of the foundation. ARG was reimbursed for $500,000 of those expenses pursuant to the terms of a supply contract with a third party vendor.

In 2006, the Company made contributions aggregating $157,915 to certain not-for-profit entities of which Mr. Peltz is a director or trustee, $160,000 to certain not-for-profit entities of which Mr. May (or a member of his immediate family) is a director, trustee or officer, and $25,000 to a not-for-profit entity of which both Mr. Peltz and Mr. May serve as trustees.