Wendy's International (WEN)

DCM derives a substantial portion of its revenues from contracts that may be terminated on short notice.

DCM derives a substantial portion of its revenues from investment management agreements with accounts that generally have the right to remove DCM as the investment manager of the account and replace it with a substitute investment manager. Some of these investment management agreements may be terminated for various reasons, including failure to follow the account’s investment guidelines, fraud, breach of fiduciary duty and gross negligence, or may not be renewed. With respect to DCM’s agreements with some of the CDOs it manages, DCM can be removed without cause by investors that hold a specified amount of the securities issued by the CDO. All of DCM’s agreements with CDOs allow investors that hold a specified amount of securities issued by the CDO to remove DCM for “cause,” which typically includes DCM’s violation of the management agreement or the CDO’s indenture, DCM’s breach of its representations and warranties under the agreement, DCM’s bankruptcy or insolvency, DCM’s fraud or a criminal offense by DCM or its employees, and the failure of certain of the CDO’s performance tests. With respect to DCM’s investment management agreement with the REIT, at the end of the initial term of the agreement (which occurs on December 31, 2007) or at the end of any one-year renewal term thereafter, DCM can be removed as manager by a vote of at least two-thirds of the REIT’s independent directors or holders of at least a majority of the outstanding common stock of the REIT based upon unsatisfactory performance that is materially detrimental to the REIT or a determination that the management fees payable to DCM are not fair (subject to DCM’s right to prevent such a termination by accepting a reduction of management fees that at least two-thirds of the REIT’s independent directors determine to be fair). During 2006, DCM generated approximately 22% of its revenue from managing the REIT. DCM’s investment management agreements with separate accounts are typically terminable by the client without penalty on 30 days’ notice or less. DCM may not be able to replace these agreements on favorable terms. The revenue loss that would result from any such termination could have a material adverse effect on DCM’s business.