Exhibit 2.01
SEPARATION AGREEMENT
SEPARATION AGREEMENT, dated as of _______ ___, 1997 (as amended,
supplemented or otherwise modified, this "Agreement"), by and between PepsiCo,
Inc., a North Carolina corporation ("PepsiCo"), and TRICON Global Restaurants,
Inc., a North Carolina corporation ("TRICON") and, as of the date hereof, a
wholly-owned subsidiary of PepsiCo.
W I T N E S S E T H:
WHEREAS, PepsiCo has engaged in the restaurant business through various
of its subsidiaries and affiliates (PepsiCo and its subsidiaries and affiliates
(other than the members of the TRICON Group (as such term is hereinafter
defined)) are collectively referred to herein as the "PepsiCo Group");
WHEREAS, PepsiCo has decided to consolidate the assets and operations of
its worldwide KFC, Pizza Hut and Taco Xxxx businesses (collectively, the
"Restaurant Businesses") into TRICON and TRICON's subsidiaries and affiliates
(TRICON and its subsidiaries and affiliates are collectively referred to herein
as the "TRICON Group"), and to distribute the Common Stock of TRICON on a
ten-for-one basis to the holders of PepsiCo Capital Stock (the "Distribution");
and
WHEREAS, on or before October 6, 1997 (the "Distribution Date"), PepsiCo
will transfer to the Agent (as such term is hereinafter defined), for the
benefit of the holders of record of PepsiCo Capital Stock at the close of
business on September 19, 1997 (the "Record Date"), without any consideration
being paid by such holders, the shares of TRICON Common Stock then owned by
PepsiCo;
NOW, THEREFORE, in consideration of the mutual promises contained
herein, the Parties (as such term is defined in Section 16 hereof) hereby agree
as follows:
Section 1. The Distribution. On or prior to the Distribution Date,
PepsiCo will transfer to BankBoston, N.A., as distribution agent (the "Agent"),
for the benefit of holders of record of PepsiCo Capital Stock at the close of
business on the Record Date, the shares of TRICON Common Stock then owned by
PepsiCo, together with an irrevocable voting rights proxy in favor of the Agent.
Prior to the Distribution Date, the Parties shall take such action with respect
to the TRICON Common Stock as is required to complete the Distribution on the
basis of one share of TRICON Common Stock for every ten shares of PepsiCo
Capital Stock outstanding at the close of business on the Record Date. PepsiCo
shall instruct the Agent to distribute such TRICON shares to the holders of
record of PepsiCo Capital Stock at the close of business on the Record Date. All
of the shares of TRICON so issued shall be fully paid and nonassessable. The
Distribution shall be effective as of 11:59:59 p.m. on the Distribution Date.
Section 2. Governance Documents. TRICON shall take all action necessary
such that, on the Distribution Date, the Restated Articles of Incorporation and
Bylaws of TRICON, and all benefit plans of TRICON, shall be substantially in the
forms filed with the Securities and Exchange Commission as exhibits to the Form
10 relating to the Distribution (as amended, supplemented or otherwise modified,
the "Form 10").
Section 3. Books, Records, Services and Access to Information. (a)
Except as otherwise provided in the attachments hereto, for a period of up to
twelve months from and after the Distribution Date (or such shorter period as
set forth on Schedule A hereto), each Party shall make available to the other,
during normal business hours and in a manner which will not unreasonably
interfere with such Party's business, the services set forth on Schedule A
hereto (collectively "Transitional Services") to the extent that the same are
reasonably required to assist in effecting an orderly transition following the
Distribution. Except as otherwise provided in the attachments hereto, the
initial terms upon which Transitional Services shall be provided to TRICON or
PepsiCo, as the case may be, are set forth on Schedule A hereto.
(b) From and after the Distribution Date, PepsiCo shall afford TRICON
and its authorized employees and representatives reasonable access (including
access to persons or firms possessing relevant information and records) and
reasonable duplicating rights during normal business hours to, or, at PepsiCo's
option, copies of, all records, books, contracts, instruments, data and other
information (collectively, "Information") within the PepsiCo Group's possession
relating to any member of the TRICON Group, insofar as such access or copies are
reasonably required by TRICON.
(c) TRICON shall afford to PepsiCo and its authorized employees and
representatives reasonable access (including access to persons or firms
possessing relevant information and records) and reasonable duplicating rights
during normal business hours to, or, at TRICON's option, copies of, all
Information within the TRICON Group's possession relating to any member of the
PepsiCo Group, insofar as such access or copies are reasonably required by
PepsiCo.
(d) Within 45 days after the Distribution Date, each of PepsiCo and
TRICON shall provide the other with such indices or descriptions of Information
as it may maintain relating to the other or the other's subsidiaries or
affiliates. Information may be required under this Section 3, without
limitation, for audit, accounting, claims, litigation and tax purposes, as well
as for purposes of fulfilling disclosure and reporting obligations. In lieu of
retaining any specific Information, either Party may, in writing, offer to
deliver such Information to the other Party. If such offer is not accepted
within 90 days, the Information so offered shall be retained or destroyed in
accordance with PepsiCo's Record Retention Policy. If such offer is accepted,
the Party accepting delivery shall pay the reasonable out-of-pocket costs of the
delivery. Each Party shall maintain the Information in accordance with the
manner it treats similar material relating to its ongoing business.
(e) At all times from and after the Distribution Date, each Party will
use its reasonable best efforts to make available to the other, upon written
request, its officers, directors, employees and agents as witnesses to the
extent that the same may reasonably be required in connection with any legal,
administrative or other proceedings in which the requesting Party may from time
to time be involved.
(f) Except as otherwise specifically provided for herein, a Party
providing Information, Transitional Services or witnesses to the other hereunder
shall be entitled to receive from the recipient, upon the presentation of
appropriate invoices therefor, payments for such amounts relating to supplies,
disbursements, and such other costs and out-of-pocket expenses as are provided
for on Schedule A hereto, or which may be reasonably incurred in providing such
Information, Transitional Services or witnesses. Invoices shall be due and
payable within thirty (30) days of receipt. Interest shall accrue on any unpaid
amount at the rate of eight percent (8%) per annum.
(g) PepsiCo shall arrange for the transportation of existing corporate
records in its possession relating exclusively to the Restaurant Businesses,
including original corporate minute books, stock ledgers and certificates, and
corporate seals of each corporation included in the group of which TRICON is the
parent corporation, and all active agreements, deeds to real property, active
litigation files and filings with foreign governments, if any, to TRICON's
address set forth in Section 23 hereof. PepsiCo shall provide TRICON with lists
of trademarks, patents and copyrights of TRICON and its subsidiaries.
Section 4. Confidentiality. Each member of the PepsiCo Group and the
TRICON Group shall hold, and cause each of their respective officers, employees,
agents, consultants and advisors to hold, in strict confidence, all non-public
Information concerning the other Party furnished it by such other Party or its
representatives pursuant to this Agreement, unless compelled to disclose such
Information by judicial or administrative process or, in the opinion of counsel,
by other requirements of law (in which case such Party shall promptly notify the
other Party so that the other Party may seek a protective or other appropriate
remedy); and each Party shall not release or disclose such Information to any
other person, except its auditors, attorneys, financial advisors, bankers and
other consultants and advisors who shall be bound by the provisions of this
Section 4. Each Party shall be deemed to have satisfied its obligations
hereunder with respect to confidential Information supplied by the other Party
if it exercises the same care as it does with respect to preserving the
confidentiality of its own similar information.
Section 5. Indemnification. (a) Effective on the Distribution Date,
TRICON agrees to indemnify and hold harmless each member of the PepsiCo Group
and each of their respective officers, directors, employees and agents from and
against any and all losses, liabilities, claims, suits, damages, costs and
expenses (including, without limitation, reasonable attorneys' fees and any and
all expenses reasonably incurred in investigating, preparing or defending
against any pending or seriously threatened litigation or claim) (collectively,
"Losses") arising out of or related in any manner to any item set forth on
Schedule B hereto. Similarly, effective on the Distribution Date, except as
otherwise provided in the attachments hereto, PepsiCo agrees to indemnify and
hold harmless each member of the TRICON Group and each of their respective
officers, directors, employees and agents from and against any and all Losses
arising out of or related in any manner to any item set forth on Schedule C
hereto.
(b) If any action is brought or any claim is made against a Party or
person in respect of which indemnity may be sought pursuant to subsection 5(a)
above (the "Indemnitee"), the Indemnitee shall, within ten days after the
receipt of information indicating that an action or claim is likely, notify in
writing the Party from whom indemnification is sought (the "Indemnitor") of the
institution of the action or the making of the claim, and the Indemnitor shall
have the right, and at the request of the Indemnitee, shall have the obligation,
to assume the defense of the action or claim, including the employment of
counsel. If the Indemnitor assumes the defense of the action or claim, the
Indemnitor shall be entitled to settle the action or claim on behalf of the
Indemnitee without the prior written consent of the Indemnitee unless such
settlement would materially affect the ongoing business or employment of the
Indemnitee.
(c) The Indemnitee shall have the right to employ its own counsel, but
the fees and expenses of that counsel shall be the responsibility of the
Indemnitee unless (i) the employment of that counsel shall have been authorized
in writing by the Indemnitor in connection with the defense of the action or
claim; (ii) the Indemnitor shall not have employed counsel to have charge of the
defense of such action or claim; or (iii) such Indemnitee shall have reasonably
concluded that there may be defenses available to it which are different from or
additional to those available to the Indemnitor (in which case the Indemnitor
shall not have the right to direct any different defense of the action or claim
on behalf of the Indemnitee). The Indemnitee shall, in any event, be kept fully
informed of the defense of any such action or claim. Except as expressly
provided above, in the event that the Indemnitor shall not previously have
assumed the defense of an action or claim, at such time as the Indemnitor does
assume the defense of the action or claim, the Indemnitor shall not thereafter
be liable to any Indemnitee for legal or other expenses subsequently incurred by
the Indemnitee in investigating, preparing or defending against such action or
claim.
(d) Anything in this Section 5 to the contrary notwithstanding, the
Indemnitor shall not be liable for any settlement of any claim or action
effected without its written consent; provided, however, that if after due
notice the Indemnitor refuses to defend a claim or action, the Indemnitee shall
have the right to defend and/or settle such claim or action, and the Indemnitee
shall not be precluded from making a claim against the Indemnitor for reasonable
expenses and liabilities resulting from such defense and/or settlement in
accordance with this Section 5.
(e) Notwithstanding the foregoing provisions of this Section 5, there
may be particular actions or claims which reasonably could result in both
Parties being liable to the other under the indemnification provisions of this
Agreement. In such events, the Parties shall endeavor, acting reasonably and in
good faith, to agree upon a manner of conducting the defense and settlement of
the action or claim with a view to minimizing the legal expenses and associated
costs that might otherwise be incurred by the Parties, such as, by way of
illustration only, agreeing to use the same legal counsel.
(f) The indemnification provisions of this Section 5 shall not inure to
the benefit of any third party. By way of illustration only, an insurer who
would otherwise be obligated to pay any claim shall not be relieved of the
responsibility with respect thereto, or, solely by virtue of the indemnification
provisions hereof, have any subrogation rights with respect thereto, it being
expressly understood and agreed that no insurer or any other third party shall
be entitled to a "windfall" (i.e., a benefit they would not be entitled to
receive in the absence of the indemnification provisions) by virtue of these
indemnification provisions.
Section 6. Taxes. PepsiCo and TRICON have entered into a Tax Separation
Agreement, substantially in the form attached hereto as Attachment 1 (as
amended, supplemented or otherwise modified, the "Tax Agreement"), regarding
their respective rights and obligations with respect to taxes of the TRICON
Group for all periods through the Distribution Date and certain other
tax-related matters. In the event of a conflict between the terms of the Tax
Agreement and the terms of this Agreement, the terms of the Tax Agreement shall
govern.
Section 7. Employee Benefits. PepsiCo and TRICON have entered into an
Employee Programs Agreement, substantially in the form attached hereto as
Attachment 2 (as amended, supplemented or otherwise modified, the "Employee
Programs Agreement"), which allocates assets, liabilities and responsibilities
between them with respect to certain employee compensation and benefit plans and
programs and certain other related matters. In the event of a conflict between
the Employee Programs Agreement and the terms of this Agreement, the terms of
the Employee Programs Agreement shall govern.
Section 8. Telecommunications, Software and Computing Services. PepsiCo
and TRICON have entered into a Telecommunications, Software and Computing
Services Agreement, substantially in the form attached hereto as Attachment 3
(as amended, supplemented or otherwise modified, the "T,S&C Agreement"), setting
forth the arrangements between the Parties with respect to internal software,
third party agreements, telecommunications services and computing services. In
the event of a conflict between the T,S&C Agreement and the terms of this
Agreement, the terms of the T,S&C Agreement shall govern.
Section 9. Transfer of Entities, Operations, Assets and Liabilities. (a)
Except as set forth on Schedule D hereto, prior to the Distribution Date,
PepsiCo and TRICON shall use reasonable efforts to cause the entities,
operations, assets and corresponding liabilities of the Restaurant Businesses to
be included as part of the TRICON Group. Both Parties agree to take such action
as may be necessary or appropriate, prior to the Distribution Date, to cause all
such restaurant-related assets and liabilities (including, without limitation,
all agreements relating thereto), except as provided on Schedule D hereto, to be
properly conveyed or assigned to TRICON or the appropriate subsidiary or
affiliate of TRICON. Except as otherwise provided in this Agreement (including,
without limitation, the Schedules and Attachments hereto), PepsiCo shall bear
the reasonable costs of such conveyances.
(b) Except as expressly provided herein, TRICON agrees to assume and pay
all contracts, obligations and liabilities of each member of the PepsiCo Group
associated in any way with the Restaurant Businesses and/or the Casual Dining
Businesses (as such term is hereinafter defined), whether accrued, absolute,
contingent or otherwise, and whether due or to become due, including, without
limitation, all obligations of any member of the PepsiCo Group acting as a
guarantor of obligations associated in any way with any of the Restaurant
Businesses and/or the Casual Dining Businesses, and all obligations under leases
and other executory contracts and liabilities, whether arising as a result of
the transactions contemplated hereby, existing on the date hereof, or based on
facts or actions arising on or prior to the Distribution Date, whether or not
such obligations shall have been disclosed herein, and whether or not reflected
on the opening balance sheet of the TRICON Group prepared pursuant to Section 13
hereof (the "Opening Balance Sheet"). For purposes of this Agreement, the term
"Casual Dining Businesses" shall mean California Pizza Kitchen, Chevys Mexican
Restaurants, Chimayo Grill, D'Angelo Sandwich Shops, East Side Mario's and Hot
`n Now.
(c) In the event that the transfer of all such assets and liabilities is
not accomplished by the Distribution Date, the Parties agree that TRICON shall
have de facto control and equitable ownership of the entities, operations and
assets, and de facto responsibility for the obligations and liabilities,
intended to be transferred to the TRICON Group; provided, however, that if any
uncompleted steps financially affect either PepsiCo or TRICON, the Parties agree
to use their respective best efforts to equitably resolve any such financial
impact.
(d) This Section 9 shall not inure to the benefit of any third party.
Section 10. Letters of Credit, Guarantees and Contingent Liabilities.
(a) TRICON shall use its best efforts to cause the beneficiaries of all of the
PepsiCo Group's letters of credit, guarantees and other contingent liabilities
relating to any of the Restaurant Businesses or the Casual Dining Businesses
(including, without limitation, commercial letters of credit, financing
guarantees, performance guarantees, lease guarantees, comfort letters, insurance
and workers' compensation liabilities, and the letters of credit, guarantees and
other contingent liabilities identified on Schedule E hereto) (collectively, the
"Restaurant Contingent Liabilities") which will not have expired on or prior to
the Distribution Date, to release and terminate all such Restaurant Contingent
Liabilities on or prior to the Distribution Date and, where necessary or
appropriate, to accept substitute letters of credit, guarantees or contingent
liabilities issued for the account of TRICON or to post sufficient cash
collateral on behalf of TRICON. TRICON hereby agrees to provide to PepsiCo,
prior to the Distribution Date, a schedule (the "PHI Contingent Liability
Schedule") listing all of Pizza Hut, Inc.'s letters of credit, guarantees and
other contingent liabilities relating to any of the Restaurant Businesses or the
Casual Dining Businesses which have not been released, terminated or replaced
with a Qualified Letter of Credit (as such term is hereinafter defined). The PHI
Contingent Liability Schedule shall supplement, and be incorporated by reference
into, Schedule E hereto. From and after the Distribution Date, TRICON will pay a
fee based upon the maximum exposure related to any Restaurant Contingent
Liabilities which were not released, terminated or replaced prior to the
Distribution Date. Such fee will be structured as follows: (i) for the first
year following the Distribution Date, the fee will be consistent with the
pricing of TRICON's senior credit facility as in effect from time to time and
will be expressed as a percentage of the value of the underlying exposure, and
(ii) thereafter, the fee will be equal to the current market value, as
determined by The Chase Manhattan Bank, for replacing all such Restaurant
Contingent Liabilities that have not yet been released, terminated or replaced
by a Qualified Letter of Credit. Such fee shall be payable monthly in advance
until such time as each such Restaurant Contingent Liability has been released,
terminated or replaced by a Qualified Letter of Credit (as such term is
hereinafter defined). Notwithstanding the foregoing, TRICON shall at all times
indemnify and hold harmless each member of the PepsiCo Group from and against
all losses, liabilities and obligations incurred with respect to such Restaurant
Contingent Liabilities. Without limiting the foregoing, TRICON shall, upon
demand, reimburse PepsiCo within ten days for any amounts actually paid by any
member of the PepsiCo Group with respect to any such Restaurant Contingent
Liabilities.
(b) For purposes of this Agreement, the term "Qualified Letter of
Credit" shall mean an irrevocable, transferable letter of credit issued to
PepsiCo or its relevant subsidiary or affiliate by a bank that is an A Credit
(as such term is hereinafter defined), substantially in the form attached as
Schedule F hereto, with a term extending to the last possible expiration date of
the Restaurant Contingent Liabilities covered thereby and with a maximum drawing
amount that shall equal the full amount of all remaining obligations and
foreseeable claims under the Restaurant Contingent Liabilities covered thereby
(assuming the exercise of all extension options with respect to the underlying
obligations). In the event of any change in the law regarding letters of credit
generally that affects the language in a Qualified Letter of Credit, TRICON
shall, at the request of PepsiCo, provide a new Qualified Letter of Credit
containing modifying language as approved by PepsiCo. The language contained in
the form of letter of credit attached as Schedule F hereto shall be deemed to be
approved by PepsiCo. For purposes of this Agreement, the term "A Credit" shall
mean a corporation or banking association whose long-term debt obligations are
rated A+ or A1 or better by Standard & Poor's or by Xxxxx'x, respectively, or
their successors in interest that are "nationally recognized statistical rating
organizations."
(c) TRICON agrees that no member of the TRICON Group shall modify, amend
or extend (including, without limitation, pursuant to any existing option to
extend) any of the leases for property of the TRICON Group which have been
guaranteed by a member of the PepsiCo Group (including, without limitation, the
leases identified on Schedule G hereto) (collectively, the "Leases") so as to
increase or in any way enlarge the duration of any of the obligations or
liabilities of any member of the PepsiCo Group pursuant to those guarantees
without first obtaining the prior written approval of PepsiCo, which approval
may be withheld by PepsiCo in its sole discretion. TRICON hereby agrees to
provide to PepsiCo, prior to the Distribution Date, a schedule (the "PHI Lease
Schedule") listing each lease for property of the TRICON Group which has been
guaranteed by Pizza Hut, Inc. The PHI Lease Schedule shall supplement, and be
incorporated by reference into, Schedule G hereto. TRICON further agrees that no
member of the TRICON Group shall default under or breach any of the Leases so as
to cause or give rise to any claims, actions, suits or proceedings against any
member of the PepsiCo Group arising out of such guarantees, and hereby agrees to
indemnify and hold harmless each member of the PepsiCo Group from and against
all such liabilities, costs and expenses (including, without limitation,
reasonable attorneys' fees and any and all expenses reasonably incurred in
investigating, preparing or defending against any pending or seriously
threatened litigation or claim) associated therewith in accordance with Section
5 hereof. TRICON shall immediately notify PepsiCo, in writing, of any allegation
or claim asserted by any person or entity which might give rise to any liability
or obligation of any member of the PepsiCo Group under any such guarantee.
Section 11. Insurance. (a) All policies of liability, fire, workers'
compensation and other forms of insurance maintained by the PepsiCo Group
insuring the products, properties, assets and/or operations of the TRICON Group
shall continue in full force and effect up to and through the Distribution Date,
and except as set forth on Schedule H hereto, shall be terminated effective
11:59:59 p.m. on the Distribution Date. Any refunds of prepaid premiums with
respect to such terminated insurance shall be for PepsiCo's account. PepsiCo
shall be responsible for obtaining such initial insurance coverage for TRICON
from and after the Distribution Date in such amounts as are agreed upon by the
Parties. TRICON shall be liable for payment of all premiums with respect to such
initial insurance coverage and all subsequent coverage which TRICON thereafter
elects to obtain. For purposes of this Section, insurance coverage does not
include any insurance for plans described in the Employee Programs Agreement,
but does include ERISA fidelity bonds and/or fiduciary insurance.
(b) With respect to any insurance programs relating to the TRICON Group
(including, without limitation, any casualty insurance programs such as public
and products liability insurance, insured or self-insured workers' compensation
insurance and automobile liability insurance), TRICON shall be liable for
payment of all claims arising out of incidents, known or unknown, reported or
unreported, which occur prior to, on or after the Distribution Date. Any
reserves under these insurance programs relating to the TRICON Group for periods
ending prior to, on or after the Distribution Date shall be for the account of
TRICON. Such reserves shall be included as liabilities of TRICON, and any charge
or credit to the reserves shall be for TRICON's account.
Section 12. Banking and Other Arrangements. The responsibility for bank
accounts used exclusively by the TRICON Group shall be transferred from PepsiCo
to TRICON on or prior to the Distribution Date. Normal procedures will be
followed for receipts and disbursements funding prior to the Distribution Date
as set forth on Schedule I hereto.
Section 13. Procedures for Closing and Delivery of Books and Balance
Sheet and Payment of Certain Amounts to PepsiCo. Financial statements of TRICON
as of the Distribution Date, which shall be summaries of the combined accounting
ledgers of the TRICON Group as of the close of the tenth accounting period of
the 1997 fiscal year, and which shall include an Opening Balance Sheet, shall be
prepared by PepsiCo within 45 days after the Distribution Date and reviewed and
agreed to by TRICON within 15 days after such financial statements are prepared.
Each Party shall bear its own expenses in connection with the preparation and
review of such financial statements. PepsiCo and TRICON agree that the
principles for determining the Opening Balance Sheet are as follows:
(a) Total Assets shall be determined through the normal reporting
process using U.S. generally accepted accounting principles ("GAAP") as applied
on a basis substantially consistent with the basis used in the preparation of
the financial statements of TRICON presented in the Form 10 and standard PepsiCo
definitions and accounting practice, consistently applied.
(b) Non-Interest Bearing Liabilities shall be determined through the
normal reporting process using GAAP as applied on a basis substantially
consistent with the basis used in the preparation of the financial statements of
TRICON presented in the Form 10 and standard PepsiCo definitions and accounting
practice, consistently applied. Accrued tax liabilities shall be treated in
accordance with the provisions of the Tax Agreement.
(c) Net Assets is the sum of total assets less non-interest bearing
liabilities. Net Assets shall be determined in accordance with the following
capitalization procedure:
(i) Short and Long-Term Debt shall be determined through the normal
reporting process using GAAP as applied on a basis substantially
consistent with the basis used in the preparation of the financial
statements of TRICON presented in the Form 10 and standard PepsiCo
definitions and accounting practice, consistently applied. The Opening
Balance Sheet will reflect $4.5 billion of debt obligations to be
incurred by TRICON on or prior to the Distribution Date. All of the
proceeds of such debt obligations will be transferred to PepsiCo prior
to the Distribution Date as repayment of certain amounts due to
PepsiCo from the TRICON Group and a dividend.
(ii) Stockholders' Equity of TRICON will equal the difference between the
total Net Assets less the Short and Long-Term Debt on TRICON's Opening
Balance Sheet as of the Distribution Date.
Any amounts due PepsiCo by the TRICON Group related to intercompany
accounts (other than those accounts which are defined as intercompany trade
receivables and payables in accordance with PepsiCo financial policies) or other
promissory notes in excess of the amount set forth in (i) immediately above,
which will cover repayment of certain amounts due to PepsiCo from the TRICON
Group, will be capitalized by PepsiCo.
Section 14. Operation Until Closing. TRICON agrees, on behalf of itself
and each member of the TRICON Group, that through the Distribution Date the
Restaurant Businesses shall be operated in the ordinary course of business,
consistent with past practice.
Section 15. De-Identification. As soon as practicable after the
Distribution Date, and in no event later than 120 days after such Date, TRICON
shall eliminate all exterior and interior signage and other identification in
its possession or control, and cease using any letterhead, which identifies
TRICON or any other entity within the TRICON Group as a subsidiary or affiliate
of PepsiCo.
Section 16. Parties. As used in this Agreement, the term "Parties" shall
include the PepsiCo Group and its successors, and the TRICON Group and its
successors. Each of PepsiCo and TRICON agrees that it shall cause each of its
subsidiaries and affiliates to comply fully with the terms of this Agreement.
Section 17. Expenses. Except as set forth on Schedule J hereto or as
otherwise provided in this Agreement (including, without limitation, the
Schedules and Attachments hereto), all expenses in connection with the
Distribution shall be borne by PepsiCo and all expenses in connection with the
ongoing operations and/or businesses of the TRICON Group shall be borne by
TRICON.
Section 18. Tax Gross-Up. If any amount paid by any member of the
PepsiCo Group or the TRICON Group, as the case may be, pursuant to this
Agreement results in any increased Tax liability or reduction of any Tax Asset
of the TRICON Group or the PepsiCo Group, respectively, then PepsiCo or TRICON,
as appropriate, shall indemnify the other Party and hold it harmless from and
against any interest or penalty attributable to such increased Tax liability or
the reduction of such Tax Asset and shall pay to the other Party, in addition to
amounts otherwise owed, the After-Tax Amount. Capitalized terms used in this
Section 18 but not otherwise defined in this Agreement shall have the meanings
assigned to such terms in the Tax Agreement.
Section 19. Survival. All of the provisions of this Agreement shall
survive the Distribution Date.
Section 20. Other Provisions. This Agreement shall be governed by and
construed in accordance with the laws of the State of North Carolina, may not be
assigned by either Party without the written consent of the other, and shall
bind and inure to the benefit of the Parties hereto and their respective
successors and permitted assignees. This Agreement may not be amended,
supplemented or otherwise modified except by an agreement in writing signed by
PepsiCo and TRICON. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original and all of which together shall
constitute one and the same instrument.
Section 21. Arbitration. (a) Except as otherwise provided in the
attachments hereto, any controversy or claim arising out of or relating to this
Agreement, or the breach hereof, shall be settled by arbitration in accordance
with the then prevailing Commercial Arbitration Rules of the American
Arbitration Association (the "AAA") as such rules may be modified herein.
(b) An award rendered in connection with an arbitration pursuant to this
Section shall be final and binding and judgment upon such an award may be
entered and enforced in any court of competent jurisdiction.
(c) The forum for arbitration under this Section shall be agreed upon by
the Parties, or, failing such agreement, shall be New York, New York.
(d) Arbitration shall be conducted by a single arbitrator selected
jointly by PepsiCo and TRICON. If within 30 days after a demand for arbitration
is made, PepsiCo and TRICON are unable to agree on a single arbitrator, three
arbitrators shall be appointed. Within 30 days after such inability to agree,
PepsiCo and TRICON shall each select one arbitrator and those two arbitrators
shall then select a third arbitrator unaffiliated with either Party. In
connection with the selection of the third arbitrator, consideration shall be
given to familiarity with corporate divestiture transactions and experience in
dispute resolution between parties, as a judge or otherwise. If the arbitrators
selected by PepsiCo and TRICON cannot agree on the third arbitrator within such
30 day period, they shall promptly thereafter discuss the qualifications of such
third arbitrator with the AAA prior to selection of such arbitrator, which
selection shall be in accordance with the Commercial Arbitration Rules of the
AAA.
(e) If an arbitrator cannot continue to serve, a successor to an
arbitrator selected by PepsiCo or TRICON, as the case may be, also shall be
selected by the same Party, and a successor to the neutral arbitrator shall be
selected as specified in subsection (d) of this Section. A full rehearing will
be held only if the neutral arbitrator is unable to continue to serve or if the
remaining arbitrators unanimously agree that such a rehearing is appropriate.
(f) The arbitrator or arbitrators shall be guided, but not bound, by the
Federal Rules of Evidence and by the procedural rules, including discovery
provisions, of the Federal Rules of Civil Procedure. Any discovery shall be
limited to information directly relevant to the controversy or claim in
arbitration.
Section 22. Limitation on Subsequent Activities. PepsiCo agrees, without
any separately bargained for consideration, but rather as an integral part of
the transfer of the Restaurant Businesses to the TRICON Group and the
Distribution provided for in this Agreement, that it shall not directly, through
a subsidiary or affiliate, or otherwise, through October 1, 2000, open anywhere
in the United States or Canada a restaurant substantially identical to the
restaurant concepts operated by the TRICON Group at the opening of business on
the day following the Distribution Date. PepsiCo acknowledges that the remedy at
law for any breach of the foregoing covenant would be inadequate and in the
event of any such breach TRICON shall be entitled to injunctive relief.
Section 23. Notices. Any notice, demand, claim or other communication
under this Agreement shall be in writing and shall be deemed to have been given
(i) upon the delivery thereof if delivered personally (including, without
limitation, by courier), (ii) three days after being sent by certified mail,
return receipt requested, postage prepaid, or (iii) upon receipt of confirmation
of a telecopy transmission, in each case to the Parties at the following
addresses (or at such other address as a Party may specify by notice to the
other):
If to PepsiCo:
PepsiCo, Inc.
000 Xxxxxxxx Xxxx Xxxx
Xxxxxxxx, XX 00000-0000
Telecopy No.: (000) 000-0000
Attention: General Counsel
If to TRICON:
TRICON Global Restaurants, Inc.
0000 Xxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Telecopy No.: (000) 000-0000
Attention: General Counsel
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be duly executed as of the date and year first above written.
PepsiCo, Inc.
By _____________________________
[Name and Title]
TRICON Global Restaurants, Inc.
By _____________________________
[Name and Title]
INDEX TO SCHEDULES AND ATTACHMENTS
SCHEDULES
Schedule A - Transitional Services
Schedule B - TRICON Indemnification Obligations
Schedule C - PepsiCo Indemnification Obligations
Schedule D - Restaurant Entities, Operations, Assets and Liabilities not
being Transferred to the TRICON Group
Schedule E - Letters of Credit, Guarantees and Other Contingent
Liabilities Issued by the PepsiCo Group
Schedule F - Form of Qualified Letter of Credit
Schedule G - Restaurant Leases which have been Guaranteed by the PepsiCo
Group
Schedule H - Restaurant Insurance which will not be Terminated as of the
Distribution Date
Schedule I - Restaurant Funding Structure Prior to the Distribution Date
Schedule J - Expenses
ATTACHMENTS
Attachment 1 - Tax Separation Agreement
Attachment 2 - Employee Programs Agreement
Attachment 3 - Telecommunications, Software and Computing Services Agreement
Schedule A
TRANSITIONAL SERVICES
Expected
Department Date Service Cost Estimate or
Providing Service Services Provided to TRICON Will Terminate Billing Procedure
-------------------- ---------------------------------- ----------------- -----------------------
Treasury - Global Cash Desk and Operations training 10/31/97 T&E Expenses will be
Cash Management for all software packages and daily charged to TRICON
and Operations transactional activity
-------------------- ---------------------------------- ----------------- -----------------------
Guarantee Tracking 10/31/97 N/A
-------------------- ---------------------------------- ----------------- -----------------------
SCHEDULE B
TRICON INDEMNIFICATION OBLIGATIONS
Items with respect to which TRICON will indemnify the PepsiCo Group in
accordance with Section 5 of this Separation Agreement:
(1) All Losses arising out of or related in any manner to any of the
Restaurant Businesses, as such businesses have been conducted in the past, are
currently conducted or may in the future be conducted, whether or not such
Losses are asserted prior to the Distribution Date and whether or not such
Losses are based upon PepsiCo or any of its subsidiaries or affiliates being a
direct party to a transaction or agreement.
(2) All Losses arising out of or related in any manner to any of the
Casual Dining Businesses and/or any other restaurant business in which PepsiCo
or any of its subsidiaries or affiliates has been involved, as such businesses
were conducted by any member of the PepsiCo Group or the TRICON Group, whether
or not such Losses are asserted prior to the Distribution Date and whether or
not such Losses are based upon PepsiCo or any of its subsidiaries or affiliates
being a direct party to a transaction or agreement.
(3) All Losses arising out of or related in any manner to any letters of
credit, guarantees or contingent liabilities relating to (i) any of the
Restaurant Businesses, the Casual Dining Businesses and/or any other restaurant
business in which PepsiCo or any of its subsidiaries or affiliates has been
involved, or (ii) any obligations of any member of the TRICON Group (including,
without limitation, commercial letters of credit, financing guarantees,
performance guarantees, lease guarantees, comfort letters, and insurance and
workers' compensation liabilities), whether or not such Losses are asserted
prior to the Distribution Date.
(4) All Losses arising out of or related in any manner to (i) the
Borrower Receivable Purchase and Sale Agreement, dated as of December 13, 1995,
among Taco Xxxx Corp., as Seller, Corporate Asset Funding Company, Inc., as
Investor, and Citicorp North America, Inc., as Investor Agent, or (ii) the
Parent Undertaking Agreement, dated as of December 13, 1995, related thereto.
(5) All Losses arising out of or related in any manner to (i) the
Commitment Letter, dated August __, 1997 (the "Commitment Letter"), among
TRICON, PepsiCo, The Chase Manhattan Bank, Chase Securities Inc., Citibank,
N.A., Citicorp Securities, Inc., Xxxxxx Guaranty Trust Company of New York, X.X.
Xxxxxx Securities, Inc., Nationsbank, N.A., and Nationsbank Capital Markets,
Inc., (ii) the Summary of Terms and Conditions referred to therein (the "Term
Sheet"), and/or (iii) any of the credit facilities referred to in the Commitment
Letter and/or the Term Sheet.
Schedule C
PEPSICO INDEMNIFICATION OBLIGATIONS
Items with respect to which PepsiCo will indemnify the TRICON Group in
accordance with Section 5 of this Separation Agreement:
(1) All Losses arising out of or related in any manner to either of the
Pepsi-Cola or Frito-Lay businesses as such businesses have been conducted in the
past, are currently conducted or may in the future be conducted, whether or not
such Losses are asserted prior to the Distribution Date.
(2) All losses arising out of or related in any manner to any contingent
liabilities relating to (i) either of the Pepsi-Cola or Frito-Lay businesses, or
(ii) any obligations of any member of the PepsiCo Group, whether or not such
losses are asserted prior to the Distribution Date.
Schedule D
RESTAURANT ENTITIES, OPERATIONS, ASSETS AND LIABILITIES
NOT BEING TRANSFERRED TO THE TRICON GROUP
Entities
Pizza Hut, Inc., a Delaware corporation
Xxxx Taco Funding Syndicate, an Australian partnership (financing vehicle)
PFS de Mexico X.X.xx C.V., a corporation organized under the laws of Mexico
Kentucky Fried Chicken Nederland, B.V., a corporation organized under the laws
of the Netherlands
Operations
None
Assets
None
Liabilities
None
Schedule E
LETTERS OF CREDIT, GUARANTEES AND OTHER CONTINGENT LIABILITIES ISSUED BY THE
PEPSICO GROUP
To Be Completed Prior to Execution
of this Agreement
Schedule F
FORM OF QUALIFIED LETTER OF CREDIT
Date XXXXXXXX
---------------------------------- --------------------------------- ---------------------------------
Irrevocable Standby Our No.
Letter of Credit
XXXXXX
---------------------------------- -------------------------------------------------------------------
Advising Bank Applicant
---------------------------------- -------------------------------------------------------------------
Beneficiary Amount
XXXXXXX*****
[PepsiCo, Inc.
000 Xxxxxxxx Xxxx Xxxx
Xxxxxxxx, XX 00000-0000]
-------------------------------------------------------------------
Expiry
XXXXXXX*****
---------------------------------- -------------------------------------------------------------------
Gentlemen: We hereby issue in your favor our Irrevocable Standby Letter of
Credit No. XXXXX in an amount not to exceed in the aggregate US $XXXXXXX,
effective immediately, and expiring at the office of [Insert name and address of
bank], Attention: ____________________________ at our close of business on
XXXXXX.
This Letter of Credit is being issued to secure your obligations under those
letter(s) of credit, guarantee(s) and/or other contingent liabilit(ies) which
are listed on the attached Schedule 1, which Schedule forms and integral part of
this Letter of Credit.
Funds under this Letter of Credit are available for drawing on any Business Day
subject to presentation, at the Bank's office at the address set forth below of
the following documents:
1) A sight draft substantially in the form of Annex 1 hereto;
2) A drawing certificate executed by one of the beneficiary's officials and
substantially in the form of Annex 2 hereto, appropriately completed;
and
3) The original of this Letter of Credit and any amendments thereto.
Such demand shall be dated no later than the date of presentation and shall be
made by delivery as indicated below in the paragraph covering notices. As used
herein, "Business Day" shall mean any day other than a Saturday, Sunday or other
day on which commercial banks in the State of ____________ are authorized or
required by law or order to be closed.
Partial drawings are permitted.
It is a condition of this Letter of Credit that it shall be reduced
automatically and without amendment, from time to time in the following manner:
A) By any amount claimed by you under this Letter of Credit; or
B) Upon our receipt of a written statement signed by an officer of PepsiCo,
Inc. stating that our Letter of Credit can be reduced by a stated
amount, as a result of a cancellation of letter(s) of credit,
guarantee(s) or other contingent liabilit(ies) set forth on Schedule 1.
It is further a condition of this Letter of Credit that it shall be
automatically extended for an additional period of one year from the expiration
date hereof or any future expiration date, unless at least sixty (60) days prior
to such date we send you written notice by certified mail, returned receipt
requested mail or hand delivery that we elect not to renew this Letter of Credit
for any such additional period.
All notices, demands, presentations and other communications (collectively,
"Notices") to us in respect of this Letter of Credit shall be addressed and
delivered as follows: [Insert name and address of bank], Attention:
_______________________.
All Notices to you in respect of this Letter of Credit shall be addressed and
delivered as follows: PepsiCo, Inc., 000 Xxxxxxxx Xxxx Xxxx, Xxxxxxxx, XX
00000-0000, Attention: XXXXX, or such other address as you may from time to time
designate by written notice to us.
All Notices in respect of this Letter of Credit shall be effective upon receipt.
Any and all banking charges associated with this Letter of Credit are for the
account of TRICON Global Restaurants, Inc.
This Letter of Credit sets forth in full the terms of our undertaking. Such
undertaking shall not in any way be modified, amended or amplified by reference
to any document or instrument referred to herein or in which this Letter of
Credit is referred to or to which this Letter of Credit relates and any such
reference shall not be deemed to incorporate herein by reference any document or
instrument.
We hereby undertake to promptly honor your sight drafts(s) drawn on us,
indicating our Letter of Credit No. XXXXX, for all or any part of this Letter of
Credit if presented at the office of [Insert name and address of bank],
Attention: _____________________ on or before the expiration date or any
automatically extended expiry date.
This Letter of Credit is subject to the Uniform Customs and Practice for
Documentary Credits (1993 Revision) International Chamber of Commerce
Publication No. 500.
Should you have an occasion to communicate with us regarding this credit, kindly
direct your communication to the Attention of our ___________ Department, (___)
___-____, making specific reference to our Letter of Credit No. XXXXX.
--------------------------
Authorized Signature
Schedule 1
to
Irrevocable Standby Letter of Credit
No. XXXXX
L/C, Guarantee or
Contingent Obligation
Number Beneficiary Amount Expiry Date
Annex 1
to
Irrevocable Standby Letter of Credit
No. XXXXX
Form of Sight Draft
[Insert date]
US$
Pay to the order of the undersigned the amount of $__________ drawn on [Insert
name of bank] as issuer of Irrevocable Standby Letter of Credit No. XXXXX, dated
XXXXX, to Account No._______, [Insert name of bank].
PepsiCo, Inc.
By:__________________________
Title:
Annex 2
to
Irrevocable Standby Letter of Credit
No. XXXXX
Drawing Certificate
[Insert name of bank]
[Insert address of bank]
Attention: _______________________
Gentlemen:
The undersigned individual, a duly authorized officer of PepsiCo, Inc.,
hereby certifies as follows with respect to that certain Letter of Credit No.
XXXXX ("L/C") dated XXXXXX issued by [Insert name and address of bank] in favor
of PepsiCo, Inc.:
The amount of this drawing represents funds due PepsiCo, Inc. as
reimbursement for the drawing(s) under the following letter(s) of
credit, guarantee(s) or other contingent liabilit(ies) set forth on
Schedule "1" to Letter of Credit No. XXXXX and PepsiCo, Inc. is entitled
to receive the amount of the sight draft accompanying this certificate:
L/C, Guarantee or
Contingent Obligation
Number Beneficiary Amount Expiry Date
[Insert relevant information]
In witness whereof, the beneficiary has executed and delivered this
Certificate as of the ___ day of ---------, ----.
PepsiCo, Inc.
By: _____________________
Title:
Schedule G
RESTAURANT LEASES WHICH HAVE BEEN
GUARANTEED BY THE PEPSICO GROUP
--------------------------------------------------------------------------------
Guarantee Maturity Effective
Lessee Number Seq Date Date Lessor
--------------------------------------------------------------------------------
KFC of California 211 1 10/28/11 10/28/91 Solomon Real Estate
- 00 Xxxxxxxxx Xxx., Xxxxxxxxx, XX, Xxxxxx Xxxxxx
- 000 X. Xxxx Xx, Xxxxxxx Xxx, Xxxxxxxx, XX, Xxxxxxx, Xxxxxx
- 000 X. Xxxx Xx., Xxxxxxxx, XX, Nassau County
- 0000 Xxxxxxx Xxxx, Xxxxxxx (Xxxxxxxxx, XX), Xxxxxxx Xxxxxx
- 000 X. Xxxx Xx., Xxxxxxxxx, XX, Suffok County
- 0000 Xxxxxxxxx Xxxx, Xxxxxxxxxxx, XX, Xxxxxx Xxxxxx
- 000 X. Xxxxxxx Xxx., Xxxxxxx Xxxxx, XX, Suffolk County
- 0000 Xxxxxx Xxxx Xxx., Xxxxxx Xxxxxx, XX, Xxxxxxxx, XX
- 00 Xxxx Xxxx Xx., Xxxxxxxxx, XX, Xxxxxx Xxxxxx
- 000 Xxxxxxx Xxxx, Xxxxxxxxxx, XX, Suffolk County
- 000 Xxx Xxxxxxx Xxxx, Xxxxxxxx, XX, Xxxxxx Xxxxxx
- 000 Xxxxxxxx, Xxxxxxxxxx, XX, Suffolk County
- 0000 Xxxx Xxxx Xxx., Xxxx Xxxx, XX, Suffolk County
- 0000 Xxxxxxxx Xxxx, Xxxxxxxxx, XX, Xxxxxxx Xxxxxx
Nudelmacher GmbH 1260 3 10/21/97 10/21/96 Volksbank Ludwigsburg
eG
-Xxxxxxxxx-Xxxxx-Xxx. 000, 00000 Xxxxxxx, Xxxxxxx
Pizza Hut of Cincinnati 87 1 6/30/04 1/25/90 NEK Partners
- 0000 Xxxxxxxxx Xxx., Xxxxxxxx Xxxxxxxx, Xxxxxxxx Xxxxxx, Xxxx
Pizza Hut of Cincinnati 203 1 3/25/05 2/1/92 Xxxxxxx X. Xxxxxxx
and Xxxx X. Xxxxxxx
Pizza Hut of Cincinnati 90 1 3/31/09 1/25/90 Patrician Center
Associates
- K Mart, Edgewood, KY
Pizza Hut of Cincinnati 86 1 3/31/14 1/25/90 NEK Partners
- Eight Mile Rd., Xxxxxxxx Township, Xxxxxxxx County, Ohio
--------------------------------------------------------------------------------
Guarantee Maturity Effective
Lessee Number Seq Date Date Lessor
--------------------------------------------------------------------------------
Pizza Hut of Cincinnati 91 1 8/31/14 1/25/90 NEK Partners
- Sharon Rd., Sharronville, Xxxxxxxx Xxxxxx, XX 00000
Pizza Hut of Cincinnati 85 1 3/31/15 1/25/90 NEK Partners
- 0000 Xxxxxx Xx., Xxxxxxxxxx, Xxxx 00000
- 0000 Xxxx Xxxx, Xxxxxx, Xxxx 00000
Pizza Hut of Cincinnati 94 1 3/31/15 1/25/90 A.J.N/S.D.K. Realty
- 000 Xxxxxxxxx Xxx., Xxxxxxxx, Xxxx 00000
- 0000 Xxxxxxxx Xxx., Xxxxxxxxxx, Xxxx 00000
Pizza Hut of Cincinnati 93 1 3/31/15 1/25/90 NEK Partners
- 000 Xxxx Xx., Xxxxxxx, Xxxx
Pizza Hut of Cincinnati 89 1 3/31/15 1/25/90 NEK Partners
- 0000 Xxxxx Xxxx Xx., Xxxxxxxxxx, Xxxx 00000
Pizza Hut of Cincinnati 96 1 3/31/15 1/25/90 Xxxxxxx X. Xxxxxxx
and Xxxx X. Xxxxxxx
- 00000 Xxxxxxxx Xxxx, Xxxxxxxxxx, Xxxx
Pizza Hut of Cincinnati 95 1 3/31/15 1/25/90 A.J.N/S.D.K. Realty
- 0000 Xxxxxxxx Xx., Xxx Xxxx, XX 00000
- 0000 Xxxx Xxxxxxxx Xx., Xxxxxxxxxx, Xxxx 00000
- 0000 Xxxxx Xxxxxxx, Xxxxxxxx, XX 00000
- 0000 Xxxxx Xx., Xxxxxxxxxx, Xxxx 00000
- 0000 Xxxxxxxx Xxx., Xxxxxxxxxx, Xxxx 00000
Pizza Hut of Cincinnati 92 1 8/31/20 1/25/90 NEK Partners
- Zayre Plaza, Fort Xxxxxx, KY
Pizza Hut, Inc. 1083 1 12/31/99 2/15/94 Norwest Bank
PRI 1265 4 10/21/97 10/21/96 Dresdner Bank A.G.
- 4330 Mulheim Xx Xxx Xxxx 0, Xxxxxxxxxx Xxxxxxx, Xxxxxxx
--------------------------------------------------------------------------------
Guarantee Maturity Effective
Lessee Number Seq Date Date Lessor
--------------------------------------------------------------------------------
Taco Xxxx Corp. 401 1 2/15/99 3/15/79 First National Realty
- Hilltop Plaza, Bolingbrook, IL
Schedule H
RESTAURANT INSURANCE WHICH WILL NOT BE
TERMINATED AS OF THE DISTRIBUTION DATE
Insured Policy Type Insurance Company Policy Number Policy Term
--------- ----------- ------------------- --------------- -----------
Taco Xxxx Contaminated National Union Fire 649-6350 2/1/97-2/28/98
Products Insurance
Taco Xxxx Surety Bond Travelers/Aetna 86S100605626 Continuous
KFC Surety Bond Federal Insurance All Surety Bonds Continuous
Pizza Hut Surety Bond Firemans Fund All Surety Bonds Continuous
Schedule I
RESTAURANT FUNDING STRUCTURE
PRIOR TO THE DISTRIBUTION DATE
[Graphic material omitted] Organizational chart evidencing restaurant funding
structure prior to the Distribution Date:
Current Funding Structure:
PepsiCo funds all restaurant disbursements and collects all restaurant
sales via the following mechanisms:
1. Cash is automatically collected from restaurant depository accounts
into a Concentration Account for each concept. Money is then moved automatically
to PepsiCo's Master Concentration Account via PepsiCo's cash concentration
system and drawdown wires.
2. Cash required to fund payroll and accounts payable disbursements on
behalf of the restaurants is funded by wire transfer from PepsiCo's Master
Concentration Account into a PepsiCo Master Disbursement Funding Account on a
daily basis. The PepsiCo Master Disbursement Funding Account will then
automatically fund checks which have been written off restaurant controlled
disbursement accounts.
Funding Structure Just Prior to Distribution Date (on or about 9/22/97):
PepsiCo funds all restaurant disbursements and collects all restaurant
sales via the following mechanisms:
1. Cash is automatically collected from restaurant depository accounts
into a Concentration Account for each concept. Money is then moved automatically
to TRICON's Master Concentration Account via PepsiCo's cash concentration system
and drawdown wires and then automatically to PepsiCo's Master Concentration
Account via zero balance accounts.
2. Cash required to fund payroll and accounts payable disbursements on
behalf of the restaurants is moved automatically to TRICON's Master
Concentration Account via zero balance accounts and then is funded by wire
transfer from TRICON's Master Concentration Account into a TRICON Master
Disbursement Funding Account on a daily basis. The TRICON Master Disbursement
Funding Account will then automatically fund checks which have been written off
restaurant controlled disbursement accounts.
Anticipated Funding Structure Post Distribution Date:
TRICON funds all restaurant disbursements and collects all restaurant
sales via the following mechanisms:
1. Cash is automatically collected from restaurant depository accounts
into a Concentration Account for each concept. Money is then moved automatically
to TRICON's Master Concentration Account via ACH Debits and drawdown wires.
2. Cash required to fund payroll and accounts payable disbursements on
behalf of the restaurants is funded by wire transfer from TRICON's Master
Concentration Account into a TRICON Master Disbursement Funding Account on a
daily basis. The TRICON Master Disbursement Funding Account will then
automatically fund checks which have been written off restaurant controlled
disbursement accounts.
Schedule J
EXPENSES
TRICON shall bear the following expenses in connection with the
Distribution:
1. The fees in connection with the TRICON bank credit facilities.
2. Special management incentive arrangements (the Stay/Performance bonuses)
for the management of KFC, Pizza Hut, Taco Xxxx and PRI which are
incremental to the regular division bonuses.
