Exhibit
10.10

 

 

 

 

 

 

 

YUM! BRANDS

 

EXECUTIVE INCOME DEFERRAL

 

PROGRAM

 

 

 

 

 

 

As Effective October 7, 1997, with Amendments Through May 16, 2002

 

 

 

WSHLIB01 176812.4

 

 

 

 

 

YUM! BRANDS

 

 

EXECUTIVE INCOME DEFERRAL PROGRAM

 

 

TABLE OF CONTENTS

 

 

ARTICLE I INTRODUCTION

1

 

ARTICLE II DEFINITIONS

2

 

 

2.1 Account

 

2

 

 

2.2 Base Compensation

2

 

 

2.3 Beneficiary

2

 

 

2.4 Bonus Compensation

2

 

 

2.5 Code

3

 

 

2.6 Company

3

 

 

2.7 Deferral Subaccount

3

 

 

2.8 Deferral Subaccount

3

 

 

2.9 Effective Date

3

 

 

2.10 Election Form

3

 

 

2.11 Employee

3

 

 

2.12 Employer

3

 

 

2.13 ERISA

3

 

 

2.14 Participant

4

 

 

2.15 Participant

4

 

 

2.16 Performance Unit Payout

4

 

 

2.17 Plan

4

 

 

2.18 Plan Administrator

4

 

 

2.19 Plan Year

4

 

 

2.20 Prior Plan

4

 

 

2.21 Prior Plan

4

 

 

2.22 Retirement

5

 

 

2.23 Risk of Forfeiture Account

5

 

 

2.25 Stock Option Gains

5

 

 

2.26 Termination of Employment

5

 

 

2.27 Valuation Date

6

 

ARTICLE III PARTICIPATION

7

 

 

3.1 Eligibility to Participate

7

 

 

 

3.2 Deferral Election

7

 

 

3.3 Time and Manner of Deferral Election

8

 

 

3.4 Period of Deferral

9

 

ARTICLE IV INTERESTS OF PARTICIPANTS

11

 

 

 

 

 

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4.1 Accounting for Participants’ Interests

11

 

 

 

4.2 Vesting of a Participant’s Account

14

 

 

4.3 Risk of Forfeiture Accounts.

14

 

 

4.4 Distribution of a Participant’s Account

17

 

 

4.5 Acceleration of Payment During Employment

19

 

ARTICLE V PLAN ADMINISTRATOR

21

 

 

5.1 Members

21

 

 

 

5.2 Action

21

 

 

5.3 Right and Duties

21

 

 

5.4 Compensation, Indemnity and Liability

22

 

 

5.5 Taxes

22

 

ARTICLE VI CLAIMS PROCEDURE

23

 

 

6.1 Claims for Benefits

23

 

 

 

6.2 Appeals

23

 

ARTICLE VII AMENDMENT AND TERMINATION

24

 

 

7.1 Amendments

24

 

 

 

7.2 Termination of Plan

24

 

ARTICLE VIII MISCELLANEOUS

25

 

 

8.1 Limitation on Participant's Rights

25

 

 

 

8.2 Benefits Unfunded

25

 

 

8.3 Other Plans

25

 

 

8.4 Receipt or Release

25

 

 

8.5 Governing Law

25

 

 

8.6 Adoption of Plan by Related Employers

26

 

 

8.7 Gender, Tense, and Headings

26

 

 

8.8 Successors and Assigns; Nonalienation of Benefits

26

 

 

8.9 Facility of Payment

26

 

 

8.10 Separate Plans

26

 

APPENDIX

 i

 

 

ARTICLE A – SPINOFF FROM PEPSICO

1

 

 

ARTICLE B – ADDITIONAL AMOUNT CREDITED TO CERTAIN PARTICIPANTS’ ACCOUNTS

5

 

 

ARTICLE C – NEW PAYMENT TIMING ELECTION

6

 

 

 

ARTICLE D – RDC CONVERSION

7

 

 

 

 

 

 

 

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ARTICLE I

 

 

INTRODUCTION

 

YUM! Brands, Inc. (the "Company") has established the YUM! Brands Executive
Income Deferral Program (the “Plan”) to permit eligible executives to defer base
pay, certain cash awards made under its executive incentive compensation
programs, and Performance Unit Payouts and gains on options under the YUM!
Brands, Inc. 1997 and 1999 Long Term Incentive Plans (formerly known as the
Tricon Global Restaurants, Inc. 1997 and 1999 Long Term Incentive Plans). The
Plan is a successor to the PepsiCo Executive Income Deferral Program.

 

Except as otherwise provided, this document sets forth the terms of the Plan as
in effect on October 7, 1997. As of that date, it specifies the group of
executives of the Company and certain affiliated employers eligible to make
deferrals, the procedures for electing to defer compensation and the Plan’s
provisions for maintaining and paying out amounts that have been deferred.
Additional provisions applicable to certain executives are set forth in the
Appendix, which modifies and supplements the general provisions of the Plan.

 

Effective May 16, 2002, Tricon Global Restaurants, Inc. changed its name to YUM!
Brands, Inc. Where appropriate, the Plan has been amended to reflect this name
change.

 

The Plan is unfunded and unsecured. Amounts deferred by an executive are an
obligation of that executive’s individual employer. With respect to the
Participant’s employer, the executive has the rights of a general creditor.

 

 

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ARTICLE II

 

DEFINITIONS

 

When used in this Plan, the following underlined terms shall have the meanings
set forth below unless a different meaning is plainly required by the context:

 

2.1 Account: The account maintained for a Participant on the books of the
Employer to determine, from time to time, the Participant's interest under this
Plan. The balance in such Account shall be determined by the Plan Administrator.
Each Participant's Account shall consist of at least one Deferral Subaccount for
each separate deferral under Section 3.2. In accordance with Section 4.3, some
or all of a separate deferral may be held in a Risk of Forfeiture Subaccount.
The Plan Administrator may also establish such additional subaccounts as it
deems necessary for the proper administration of the Plan. Where appropriate, a
reference to a Participant’s Account shall include a reference to each
applicable subaccount that has been established thereunder.

 

2.2 Base Compensation: An eligible Employee’s adjusted base salary, as
determined by the Plan Administrator and to the extent paid in U.S. dollars from
an Employer’s U.S. payroll. For any applicable payroll period, an eligible
Employee’s adjusted base salary shall be determined after reductions for
applicable tax withholdings, Employee authorized deductions (including
deductions for the YUM! Brands 401(k) Plan (“401k”), welfare benefit plans and
charitable donations), tax levies, garnishments and such other amounts as the
Plan Administrator recognizes as reducing the amount of base salary available
for deferral.

 

2.3 Beneficiary: The person or persons who a Participant properly designates, as
determined by the Plan Administrator, to receive the amounts in one or more of
the Participant’s subaccounts in the event of the Participant's death. To be
effective, any Beneficiary designation must be in writing, signed by the
Participant, and filed with the Plan Administrator prior to the Participant’s
death, and it must meet such other standards as the Plan Administrator shall
require from time to time. If no designation is in effect at the time of a
Participant's death or if all designated Beneficiaries have predeceased the
Participant, then the Participant’s Beneficiary shall be the Participant’s
estate. A Beneficiary designation of an individual by name (or name and
relationship) remains in effect regardless of any change in the designated
individual’s relationship to the Participant. A Beneficiary designation solely
by relationship (for example, a designation of “spouse,” that does not give the
name of the spouse) shall designate whoever is the person in that relationship
to the Participant at the Participant’s death. An individual who is otherwise a
Beneficiary with respect to a Participant’s Account ceases to be a Beneficiary
when all payments have been made from the Account.

 

2.4 Bonus Compensation: An eligible Employee’s Adjusted Annual Incentive award
under the Employer’s annual incentive plan, as determined and adjusted by the
Plan

 

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Administrator and to the extent paid in U.S. dollars from an Employer’s U.S.
payroll. An eligible Employee’s annual incentive awards shall be adjusted to
reduce them for applicable tax withholdings, Employee authorized deductions
(including deductions for 401k, welfare benefit plans and charitable donations),
tax levies, garnishments and such other amounts as the Plan Administrator
recognizes as reducing the amount of such awards available for deferral.

 

 

2.5Code: The Internal Revenue Code, as amended.

 

2.6 Company: YUM! Brands, Inc., a North Carolina corporation, or its successor
or successors.

 

2.7 Deferral Subaccount: A subaccount of a Participant's Account maintained to
reflect the Participant’s interest in the Plan attributable to each deferral of
Base Compensation, Bonus Compensation, Performance Unit Payout and Stock Option
Gains, respectively, and earnings or losses credited to such subaccount in
accordance with Section 4.1(b). A separate Deferral Subaccount shall be
maintained with respect to a Participant’s interest in the Restaurant Deferred
Compensation Plan that is transferred to the Plan as set forth in Article D of
the Appendix to the Plan.

 

2.8 Discount Stock Subaccount: A Risk of Forfeiture Subaccount that permits an
eligible Employee to defer Bonus Compensation for investment solely in
discounted phantom YUM! Common Stock, in accordance with Section 4.3(a).

 

2.9 Effective Date: October 7, 1997, except where specifically provided
otherwise.

 

2.10 Election Form: The form prescribed by the Plan Administrator on which a
Participant specifies the amount of the Participant’s Base Compensation, Bonus
Compensation, Performance Unit Payout, or Stock Option Gains to be deferred
pursuant to the provisions of Article III.

 

2.11 Employee: Any person in a salaried classification of an Employer who (i) is
receiving remuneration for personal services rendered in the employment of the
Employer, (ii) is either a United States citizen or a resident alien lawfully
admitted for permanent residence in the United States, and (iii) is paid in U.S.
dollars from the Employer’s U.S. payroll.

 

2.12 Employer: The Company and each of the Company’s subsidiaries and affiliates
that is currently designated as an Employer by the Plan Administrator.

 

2.13 ERISA: The Employee Retirement Income Security Act of 1974, as amended.

 

 

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2.14 Fair Market Value: For purposes of converting a Participant’s deferrals to
YUM! Common Stock as of any date, the Fair Market Value of YUM! Common Stock is
determined as the average of the high and low price or, effective January 1,
2000, the closing price on such date for YUM! Common Stock as reported on the
composite tape for securities listed on the New York Stock Exchange, Inc.,
rounded to four decimal places. For purposes of determining the value of a Plan
distribution or for reallocating amounts between phantom investment options
under the Plan, the Fair Market Value of YUM! Common Stock or PepsiCo Capital
Stock is determined as the closing price on the applicable Valuation Date
(identified based on the Plan Administrator’s current procedures) for PepsiCo or
YUM! stock, whichever is applicable, as reported on the composite tape for
securities listed on the New York Stock Exchange, Inc., rounded to four decimal
places.

 

2.15 Participant: Any Employee eligible pursuant to Section 3.1 who has
satisfied the requirements for participation in this Plan and who has an
Account. A Participant includes any individual who deferred compensation under
the Prior Plan prior to the Effective Date and for whom any Employer maintains
on its books an Account for such deferred compensation as of the Effective Date.
An active Participant is one who is currently deferring under Section 3.2.

 

2.16 Performance Unit Payout: The adjusted performance unit award payable to an
Employee under the Company’s 1997 or 1999 Long Term Incentive Plan during a Plan
Year, to the extent paid in U.S. dollars from an Employer’s U.S. payroll. An
eligible Employee’s performance unit award shall be adjusted to reduce it for
applicable tax withholdings, Employee authorized deductions, tax levies,
garnishments and such other amounts as the Plan Administrator recognizes as
reducing the amount of such awards available for deferral.

 

2.17 Plan: The YUM! Brands Executive Income Deferral Program, as it may be
amended from time to time.

 

2.18 Plan Administrator: The Compensation Committee of the Board of Directors of
the Company, or its delegate or delegates.

 

2.19 Plan Year: The 12-month period from January 1 to December 31, provided that
the initial plan year shall be a short plan year that begins on the Effective
Date and ends on December 31 of the same year.

 

2.20 Prior Plan: The PepsiCo Executive Income Deferral Program, as in effect for
periods before the Effective Date.

 

2.21 Quarterly Date: Each March 31, June 30, September 30 and December 31.

 

 

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2.22 Retirement: Termination of service with the Company and its affiliates
after attaining eligibility for retirement. A Participant attains eligibility
for retirement when the Participant attains at least age 55 with 10 or more
years of service, at least age 65 with 5 or more years of service or at least
age 70 with 3 or more years of service (whichever occurs earliest) while in the
employment of the Company or its affiliates. A Participant’s Service is
determined under the terms of the YUM! Brands Retirement Plan. To the extent a
Participant is not eligible to participate in the YUM! Brands Retirement Plan,
the Participant’s Service shall be determined under rules substantially similar
to the rules of the YUM! Brands Retirement Plan.

 

2.23 Risk of Forfeiture Subaccount: The subaccount provided for by Section 4.3
to contain the portion of each separate deferral that is subject to forfeiture.

 

2.24 Stock Option Gains: The gains on an eligible Employee’s 1997 and 1999 Long
Term Incentive Plan Stock Options that are available for deferral under the Plan
pursuant to Section 3.3(c). With respect to any options that are made subject to
a Stock Option Gain deferral election, the gains on such options shall be
determined through a sale of related shares by the Plan Administrator net of:
(i) the exercise price of the options, (ii) any transaction costs incurred when
such gains are captured through the sale of related shares, and (iii) any
related taxes that the Plan Administrator determines will not otherwise be
satisfied by the Participant. For purposes of such sales, the Plan Administrator
may aggregate shares related to the options of different Participants, sell them
over one or more days and divide the net proceeds from such aggregate sales
between the Participants in a reasonable manner. The Plan Administrator shall
have absolute discretion with respect to the timing and aggregation of such
sales.

 

2.26 Termination of Employment: A Participant’s cessation of employment with the
Company, all Employers and all other Company subsidiaries and affiliates (as
defined for this purpose by the Plan Administrator). For purposes of determining
forfeitures under Section 4.3 and distributing a Participant’s Account under
Section 4.4, the following shall apply:

 

(a) A Participant does not have a Termination of Employment when the business
unit or division of the Company that employs him is sold if the Participant and
substantially all employees of that entity continue to be employed by the entity
or its successor after the sale. A Participant also does not have a Termination
of Employment when the subsidiary of the Company that employs him is sold if:
(i) the Participant continues to be employed by the entity or its successor
after the sale, and (ii) the Participant’s interest in the Plan continues to be
carried as a liability by that entity or its successor after the sale through a
successor arrangement. In each case, the Participant’s Termination of Employment
shall occur upon the Participant’s post-sale termination of employment from such
entity or its successor (and their related organizations, as determined by the
Plan Administrator).

 

 

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(b) With respect to any individual deferral, the term “Termination of
Employment” may encompass a Participant’s death or death may be considered a
separate event, depending upon the convention the Plan Administrator follows
with respect to such deferral.

 

2.27 Valuation Date: Each date as of which Participant Accounts are valued in
accordance with procedures of the Plan Administrator that are currently in
effect. Effective June 1, 2002, the Valuation Dates are the last day of each
calendar month. Prior to June 1, 2002, the Valuation Dates are each Quarterly
Date. Values are determined as of the close of a Valuation Date or, if such date
is not a business day, as of the close of the immediately preceding business
day.

 

 

2.28 YUM!: YUM! Brands, Inc.

 

 

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ARTICLE III

 

PARTICIPATION

 

 

3.1 Eligibility to Participate.

 

(a) An Employee shall be eligible to defer compensation under the Plan while
employed by the Employer and classified as being an executive (Level 12 or
above). Notwithstanding the preceding sentence, from time to time the Plan
Administrator may modify, limit or expand the class of Employees eligible to
defer hereunder, pursuant to criteria for eligibility that need not be uniform
among all or any group of Employees. During the period an individual satisfies
all of the eligibility requirements of this section, the individual shall be
referred to as an eligible Employee.

 

(b) Each eligible Employee becomes an active Participant on the date an amount
is first withheld from the Employee’s compensation pursuant to an Election Form
submitted by the Employee to the Plan Administrator under Section 3.3.

 

(c) An individual’s eligibility to participate actively by making deferrals
under Section 3.2 shall cease upon the earlier of:

 

(1) The date the individual ceases to be an Employee who is employed by the
Employer and classified as in executive status; or

 

(2) The date the Employee ceases to be eligible under criteria described in the
second sentence of subsection (a) above.

 

(d) An individual, who has been an active Participant under the Plan, ceases to
be a Participant on the date the Participant’s Account is fully paid out.

 

 

3.2 Deferral Election.

 

(a) Effective on and after October 1, 2001, each eligible Employee may make an
election to defer under the Plan any whole percentage up to 85% of the
Employee’s Base Compensation and up to 100% of the Employee’s Bonus
Compensation, Performance Unit Payout or Stock Option Gains in the manner
described in Section 3.3. Effective prior to October 1, 2001, each eligible
Employee may make an election to defer under the Plan any whole percentage up to
100% of the Employee’s Base Compensation, Bonus Compensation, Performance Unit
Payout or Stock Option Gains in the manner described in Section 3.3. Any amount
of Base Compensation deferred by an eligible Employee for a Plan Year will be
deducted

 

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each pay period during the Plan Year for which the Employee has Base
Compensation and is an eligible Employee. The amount of Bonus Compensation or
Performance Unit Payout deferred by an Eligible Employee for a Plan Year will be
deducted from the Employee’s payment under the applicable compensation program
at the time it would otherwise be made, provided the Employee remains an
eligible Employee at such time. Any Stock Option Gains deferred by an eligible
Employee shall be captured as of the date or dates applicable for the category
of underlying options under procedures adopted by the Plan Administrator,
provided that the Plan Administrator determines the eligible Employee’s rights
in such options may still be recognized at such time.

 

(b) To be effective, an Eligible Employee’s Election Form must set forth the
percentage of Base Compensation, Bonus Compensation or Performance Unit Payout
to be deferred (or for a deferral of Stock Option Gains, the specific options on
which any gains are to be deferred), the investment choice under Section 4.1
(which investment choice shall be stated in multiples of 5 percent), the
deferral period under Section 3.4, the eligible Employee’s Beneficiary
designation, and any other information that may be requested by the Plan
Administrator from time to time. In addition, the Election Form must meet the
requirements of Section 3.3 below.

 

 

3.3 Time and Manner of Deferral Election.

 

(a) Deferrals of Base Compensation. Subject to the next two sentences, an
eligible Employee must make a deferral election for a Plan Year with respect to
Base Compensation at least two months prior to the Plan Year in which the Base
Compensation would otherwise be paid. An individual who newly becomes an
eligible Employee during a Plan Year (or less than three months prior to a Plan
Year) may make a deferral election with respect to Base Compensation to be paid
during the balance of the current Plan Year within 30 days of the date the
individual becomes an eligible Employee. Such an individual may also make an
election at this time with respect to Base Compensation to be paid during the
next Plan Year.

 

(b) Deferrals of Bonus Compensation and Performance Unit Payouts. Subject to the
next two sentences, an eligible Employee must make a deferral election for a
Plan Year with respect to the Employee’s Bonus Compensation or Performance Unit
Payout at least two months (or, prior to May 31, 2000, at least six months)
prior to the Plan Year in which the Bonus Compensation or Performance Unit
Payout would otherwise be paid. An individual who newly becomes an eligible
Employee may make a deferral election with respect to the individual’s Bonus
Compensation or Performance Unit Payout to be paid during the succeeding Plan
Year so long as the deferral election is made within 30 days of the date the
individual becomes an eligible Employee and prior to the first day of such
succeeding Plan Year. In the first Plan Year, an eligible Employee may make a
deferral election until October 31, 1997 with respect to Bonus Compensation
payable in the following year.

 

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(c) Deferrals of Stock Option Gains. From time to time, the Plan Administrator
shall notify eligible Employees with outstanding Long Term Incentive Plan
Options which options then qualify for deferral of their related Stock Option
Gains. An eligible Employee who has qualifying options must make a deferral
election with respect to the Employee’s related Stock Option Gains at least 6
months before such qualifying options’ proposed capture date (as defined below)
or, if earlier, in the calendar year preceding the year of the proposed capture
date. The “proposed capture date” for a set of options shall be the earliest
date that the Plan Administrator would capture a Participant’s Stock Option
Gains in accordance with the deferral agreement prepared for such purpose by the
Plan Administrator.

 

(d) General Provisions. A separate deferral election under (a), (b) or (c) above
must be made by an eligible Employee for each category of a Plan Year’s
compensation that is eligible for deferral. If an eligible Employee fails to
file a properly completed and executed Election Form with the Plan Administrator
by the prescribed time, the Employee will be deemed to have elected not to defer
any Base Compensation, Bonus Compensation, Performance Unit Payout or Stock
Option Gains, as the case may be, for the applicable Plan Year. An election is
irrevocable once received and determined by the Plan Administrator to be
properly completed. Increases or decreases in the amount or percentage a
Participant elects to defer shall not be permitted during a Plan Year.
Notwithstanding the preceding three sentences, to the extent necessary because
of extraordinary circumstances, the Plan Administrator may grant an extension of
any election period and may permit (to the extent necessary to avoid undue
hardship to an eligible Employee) the complete revocation of an election with
respect to future deferrals. Any such extension or revocation shall be available
only if the Plan Administrator determines it shall not trigger constructive
receipt of income and only upon such conditions as may be required by the Plan
Administrator.

 

(e) Beneficiaries. A Participant designates on the Election Form a Beneficiary
to receive payment in the event of the Participant’s death of amounts credited
to the Participant’s Account. A Beneficiary is paid in accordance with the terms
of a Participant's Election Form, as interpreted by the Plan Administrator in
accordance with the terms of this Plan. At any time, a Participant may change a
Beneficiary designation for any or all subaccounts in a writing that is signed
by the Participant and filed with the Plan Administrator prior to the
Participant’s death, and that meets such other standards as the Plan
Administrator shall require from time to time.

 

3.4 Period of Deferral. An eligible Employee making a deferral election shall
specify a deferral period on the Employee’s Election Form by designating a
specific payout date, one or more specific payout events or both a date and one
or more specific events from the choices that are made available to the eligible
Employee by the Plan Administrator.

 

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Subject to the next sentence, an eligible Employee’s elected period of deferral
shall run until the earliest occurring date or event specified on the Employee’s
Election Form. Notwithstanding an eligible Employee’s actual election, an
eligible Employee shall be deemed to have elected a period of deferral of not
less than:

 

(a) For Base Compensation, at least until January 1 of the second Plan Year
following the Plan Year during which the Base Compensation would have been paid
absent the deferral (until 6 months after the Plan Year during which the Base
Compensation would have been paid for deferral elections made before the
Effective Date);

 

(b) For Bonus Compensation, at least 2 years after the date the Bonus
Compensation would have been paid absent the deferral (1 year for deferral
elections made before the Effective Date);

 

(c) For Performance Unit Payouts, at least 2 years after the date the
Performance Unit Payout would have been paid absent the deferral (1 year for
deferral elections made before the Effective Date); and

 

(d) For Stock Option Gains, at least 2 years after the date the Stock Option
Gain is credited to a Deferral Subaccount for the benefit of the Participant (1
year for deferral elections made before the Effective Date).

 

 

 

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ARTICLE IV

 

INTERESTS OF PARTICIPANTS

 

 

4.1 Accounting for Participants’ Interests.

 

(a) Deferral Subaccounts. Each Participant shall have a separate Deferral
Subaccount credited with the amount of each separate deferral of Base
Compensation, Bonus Compensation, Performance Unit Payout or Stock Option Gains
made by the Participant under this Plan. A Participant’s deferral shall be
credited to the Participant’s Account as soon as practicable following the date
when the deferral of compensation actually occurs, as determined by the Plan
Administrator. A Participant’s Account is a bookkeeping device to track the
value of the Participant’s deferrals (and the Employer’s liability therefor). No
assets shall be reserved or segregated in connection with any Account, and no
Account shall be insured or otherwise secured.

 

(b) Account Earnings or Losses. As of each Valuation Date, a Participant’s
Account shall be credited with earnings and gains (and shall be debited for
expenses and losses) determined as if the amounts credited to the Participant’s
Account had actually been invested as directed by the Participant in accordance
with this section (as modified by Section 4.3). The Plan provides only for
“phantom investments,” and therefore such earnings, gains, expenses and losses
are hypothetical and not actual. However, they shall be applied to measure the
value of a Participant’s Account and the amount of the Employer’s liability to
make deferred payments to or on behalf of the Participant.

 

(c) Investment Options. Each of a Participant’s Subaccounts (other than those
containing Stock Option Gains) shall be invested on a phantom basis in any
combination of phantom investment options specified by the Participant from
those offered by the Plan Administrator from time to time. Subsection (e) below
governs the phantom investment options available for deferrals of Stock Option
Gains. The Plan Administrator may discontinue any phantom investment option with
respect to some or all Accounts, and it may provide for shifting a Participant’s
phantom investment from the discontinued option to a specified replacement
option (unless the Participant selects another replacement option in accordance
with such requirements as the Plan Administrator may apply). As of the Effective
Date, except as otherwise noted below, the phantom investment options are:

 

(1) YUM! Common Stock Account. Participant Accounts invested in this phantom
option are adjusted to reflect an investment in YUM! Common Stock. An amount
deferred or transferred into this option is converted to phantom shares of YUM!
Common Stock of equivalent value by dividing such amount by the Fair Market
Value of a share of YUM!

 

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Common Stock on the date that is determined by the Plan Administrator to be the
date as of which the amount is invested.

 

(i)         Effective June 1, 2002, partial shares are determined for this
purpose. Prior to June 1, 2002, only whole shares were determined for this
purpose, rounded to the next lowest whole number of shares. Any remaining amount
was credited to a dividend subaccount. Also credited to the dividend subaccount
(both before and after June 1, 2002) are all amounts that would be received by
the Account as dividends, if dividends were paid on phantom shares of YUM!
Common Stock as they are on actual shares. Effective October 1, 2000, the amount
invested in the dividend subaccount is credited at the rate of return under the
Stable Value Account. Effective January 1, 1999 through September 30, 2000, the
amount invested in the dividend subaccount was credited at the rate of return
under the Security Plus Account. Prior to January 1, 1999, the amount invested
in the dividend subaccount was credited at the rate of return under the Prime
Rate Account.

(ii)       A Participant’s interest in the YUM! Common Stock Account is valued
as of a Valuation Date by multiplying the number of phantom shares credited to
the Participant’s Account on such date by the Fair Market Value of a share of
YUM! Common Stock on such date, and then adding the value of the Participant’s
dividend subaccount.

 

(iii)     If shares of YUM! Common Stock change by reason of any stock split,
stock dividend, recapitalization, merger, consolidation, spinoff, combination or
exchange of shares, complete or partial liquidation or other similar corporate
change, such equitable adjustment shall be made in the number of shares credited
to an Account or subaccount as the Plan Administrator may determine to be
necessary or appropriate.

 

(iv)      Effective January 1, 2000, amounts deferred or transferred into the
YUM! Common Stock Account must remain invested in phantom YUM! Common Stock and
may not be transferred into another phantom investment option.

 

In no event will shares of YUM! Common Stock actually be purchased or held under
this Plan, and no Participant shall have any rights as a shareholder of YUM!
Common Stock on account of an interest in this phantom option.

 

(2) 401k. From time to time, the Plan Administrator shall designate which of the
investment options under the 401k shall be available as

 

12

 

WSHLIB01 176812.4

 

 

phantom investment options under the Plan. Participant Accounts invested in
these phantom options are adjusted to reflect an investment in the corresponding
investment options under the 401k.

 

(i) Effective October 1, 2001, such available phantom investment option is the
Stable Value Account. Any amounts invested in the Security Plus Account on
September 30, 2001 were transferred to the Stable Value Account on October 1,
2001.

 

(ii) Effective prior to October 1, 2001 and on or after January 1, 2000, such
available phantom investment option was the Security Plus Account. Any amounts
invested in the Equity-Index Account and the Equity-Income Account on December
31, 1999 and not directed by the Participant to be invested in the YUM! Common
Stock Account or the Security Plus Account were automatically transferred to the
Security Plus Account on January 1, 2000.

 

(iii) Effective prior to January 1, 2000 and on and after the Effective Date,
but subject to subparagraph (iv) below, such available phantom options were the
Equity-Index Account, Equity-Income Account, and the Security Plus Account.

 

(iv) Effective January 1, 1999 in the case of 1999 salary deferrals, such
available phantom investment option was the Security Plus Account.

 

(3) Prime Rate Account. Effective for periods before January 1, 1999,
Participant Accounts invested in this phantom option accrue a return based upon
the prime rate of interest announced from time to time by Citibank, N.A. (or
another bank designated by the Plan Administrator from time to time). Returns
accrue during the period since the last Valuation Date based on the prime rate
in effect on the first business day after such Valuation Date and are compounded
annually. An amount deferred or transferred into this option is credited with
the applicable rate of return beginning with the date as of which the amount is
invested in this option by the Plan Administrator.

 

(d) Method of Allocation. With respect to any deferral election by a
Participant, the Participant must use the Participant’s Election Form to
allocate the deferral in 5 percent increments among the phantom investment
options then offered by the Plan Administrator. Thereafter, except for amounts
invested in the Discount Stock Subaccount and, effective January 1, 2000, the
YUM! Common Stock Account, a Participant may reallocate previously deferred
amounts in a subaccount by properly completing and submitting a fund transfer
form provided by the Plan Administrator and specifying, in 5 percent increments,
the reallocation of the Participant’s

 

13

 

WSHLIB01 176812.4

 

 

Subaccount among the phantom investment options then offered by the Plan
Administrator. Any such transfer form shall be effective as of the Valuation
Date that follows its receipt by at least the number of days that the Plan
Administrator specifies for this purpose from time to time. If more than one
transfer form is received on a timely basis for a subaccount, the transfer form
that the Plan Administrator determines to be the most recent shall be followed.

 

(e) Investment Choices for Stock Option Gains. Deferrals of Stock Option gains
initially may be invested only in the YUM! Common Stock Account. In the case of
a Participant who has attained Retirement, the Plan Administrator may make
available some or all of the other phantom investment options described in
subsection (c) above. In this case, any election to reallocate the balance in
the Participant’s applicable Deferral Subaccount shall be governed by the
foregoing provisions of this section.

 

4.2 Vesting of a Participant’s Account. Except as provided in Section 4.3, a
Participant’s interest in the value of the Participant’s Account shall at all
times be 100 percent vested, which means that it will not forfeit as a result of
Termination of Employment.

 

4.3 Risk of Forfeiture Subaccounts. This section provides opportunities for
eligible Participants to invest their deferrals subject to a risk of forfeiture
for certain Terminations of Employment.

 

(a) Discount Stock. Beginning after the Effective Date, a Participant may elect
to defer the Participant’s Bonus Compensation for each year to a separate
Discount Stock Subaccount in accordance with this subsection. For investment
purposes, any such deferral shall be treated as if it were invested in the YUM!
Common Stock Account, except that the number of phantom shares allocated to the
Participant’s Discount Stock Subaccount shall initially be determined by
dividing the Participant’s deferral amount by 75 percent of the Fair Market
Value of YUM! Common Stock on the date as of which the amount is credited to the
Discount Stock Subaccount by the Plan Administrator.

 

(1) Forfeitures. A Participant shall forfeit the entire amount credited to the
Participant’s Discount Stock Subaccount (as adjusted for changes in value under
Section 4.1(b)) if the Participant has a Termination of Employment prior to the
second anniversary of the date as of which the Participant’s deferral was
credited to the subaccount (the “Second Anniversary”). Notwithstanding the prior
sentence, if the Plan Administrator determines that the Participant’s
termination prior to the Second Anniversary was:

 

(i) An involuntary termination without cause, the amount in the subaccount shall
be recalculated to equal the original

 

14

 

WSHLIB01 176812.4

 

 

amount of the Participant’s deferral to the subaccount (and such amount shall be
distributed to the Participant on the Second Anniversary of the deferral), but
there shall be no other forfeiture;

 

(ii) On account of total disability or death, no forfeiture shall occur;

 

(iii) On account of Retirement after attaining at least age 65, no forfeiture
shall occur;

 

(iv) On account of Retirement before age 65 but on or after the first
anniversary of the date as of which the deferral was credited to the
Participant’s subaccount (the “First Anniversary”), no forfeiture shall occur;

 

(v) On account of Retirement before age 65 and before the First Anniversary, the
amount in the subaccount shall be recalculated to eliminate a prorated portion
of the total value of the discount (which shall include any related phantom
stock appreciation and dividend equivalents), but there shall be no other
forfeiture; or

 

(vi)       Effective October 1, 1998, on account of an involuntary termination
without cause pursuant to a restructuring designated by the Chief People Officer
of YUM! as a “Reduction in Force,” no forfeiture shall occur.

 

For purposes of subparagraph (v) above, the portion of the discount that shall
be eliminated shall be calculated by taking (I) the total value of the discount,
multiplying it by (II) the number of days from the Participant’s Termination of
Employment to the First Anniversary, and dividing this product by (III) 365.

 

(2) Transfer Restrictions: Amounts deferred into the Discount Stock Subaccount
must remain invested in phantom YUM! Common Stock and may not be transferred
into another phantom investment.

 

(b) Grandfathered Risk of Forfeiture. A Participant may elect to defer Base
Compensation, Bonus Compensation or Performance Unit Payouts to a Risk of
Forfeiture Subaccount provided for in this subsection (a “Grandfathered Risk of
Forfeiture Subaccount”) only if: (i) the Participant had, as of June 1, 1994, a
deferred compensation subaccount under the Prior Plan maintained under a
forfeiture agreement (as defined below), and (ii) the Participant is not yet
eligible to retire when the first amount would be deferred pursuant to the
Participant’s current risk-of-forfeiture election. A “forfeiture agreement” is
an agreement with the Company, any Employer, or one of their predecessors
providing that the subaccount would be

 

15

 

WSHLIB01 176812.4

 

 

forfeited if the employee terminated employment voluntarily or on account of
misconduct prior to Retirement. A Participant who meets these requirements may
elect under Article III to defer some or all of the Participant’s eligible
compensation to a Grandfathered Risk of Forfeiture Subaccount subject to the
following terms. Effective January 1, 2000, the Grandfathered Risk of Forfeiture
Subaccount described in this subsection will no longer be available. The
subaccount of Participants invested in a Grandfathered Risk of Forfeiture
Subaccount as of December 31, 1999 will become fully vested (and will cease to
be a Risk of Forfeiture Subaccount) on January 1, 2000.

 

(1) A Grandfathered Risk of Forfeiture Subaccount will be terminated and
forfeited in the event that the Participant has a Termination of Employment that
is voluntary or because of the Participant’s misconduct prior to the earliest
of:

 

(i) The end of the deferral period designated in the Participant’s Election Form
for such deferral;

 

(ii) The date the Participant becomes eligible for Retirement; or

 

(iii) The date indicated on the Participant’s Election Form as the end of the
risk of forfeiture condition (but not before completing the minimum risk of
forfeiture period required by the Plan Administrator from time to time).

 

(2) A Grandfathered Risk of Forfeiture Subaccount shall become fully vested (and
shall cease to be a Risk of Forfeiture Subaccount) when:

 

(i) The Participant reaches any of the dates in paragraph (1) above while still
employed by the Company or one of its affiliates, or

 

(ii) On the date the Participant terminates involuntarily from the Employer
(including death and termination for disability), provided that such termination
is not for the Participant’s misconduct.

 

(3) No amounts credited to a Grandfathered Risk of Forfeiture Subaccount may be
transferred to a subaccount of the Participant that is not a Grandfathered Risk
of Forfeiture Subaccount. No amounts credited to a subaccount of the Participant
that is not a Grandfathered Risk of Forfeiture Subaccount may be transferred to
a Grandfathered Risk of Forfeiture Subaccount.

 

16

 

WSHLIB01 176812.4

 

 

 

(4) A Participant may initially direct and then reallocate the Participant’s
Grandfathered Risk of Forfeiture Subaccount to any of the phantom investment
options under the Plan that are currently available for such direction or
reallocation, whichever applies. During the period before a Grandfathered Risk
of Forfeiture Subaccount ceases to be a Risk of Forfeiture Subaccount, the
return under any such phantom investment option shall be supplemented as
follows.

 

(i) In the case of the YUM! Common Stock Account, the Participant’s dividend
subaccount thereunder shall be credited with an additional year-end dividend
amount equal to 2 percent of the average closing price of YUM! Common Stock for
the 30 business days preceding the end of the Company’s fiscal year multiplied
by the number of phantom shares of YUM! Common Stock credited to the
Participant’s Account as of the end of the year. If the Participant’s subaccount
was not a Grandfathered Risk of Forfeiture Subaccount for the entire year (or if
the Participant reallocated amounts to the YUM! Common Stock Account after the
beginning of the year), this 2 percent additional dividend will be prorated down
appropriately, as determined by the Plan Administrator. In addition, the
Participant’s dividend subaccount shall earn interest at a rate that is 2
percent above the rate ordinarily applicable under the Prime Rate Account for
the period that it is contained within a Risk of Forfeiture Subaccount.

 

(ii) In the case of any other available phantom investment option, the return on
each such option shall be supplemented with an additional 2% annual return for
the period that it is held within a Grandfathered Risk of Forfeiture Subaccount
(but prorated for periods of such investment of less than a year).

 

4.4 Distribution of a Participant’s Account. A Participant's Account shall be
distributed as provided in this Section 4.4. Any Discount Stock Subaccount and
the portion of any other subaccount that is invested in the YUM! Common Stock
Account may be distributed, at the option of the Plan Administrator, either in
the form of cash or in whole shares of YUM! Common Stock (with cash for any
partial share and the value of the dividend account). All other subaccount
balances shall be distributed in cash. Effective January 1, 1999, the portion of
a Participant’s Account attributable to the Discount Stock Subaccount will be
distributed in whole shares of YUM Common Stock. Effective January 1, 2000, the
portion of a Participant’s Account attributable to the YUM! Common Stock Account
will be distributed in whole shares of YUM! Common Stock.

 

(a) Scheduled Payout Date. With respect to a specific deferral, a Participant’s
“Scheduled Payout Date” shall be the earliest to occur date or event of

 

17

 

WSHLIB01 176812.4

 

 

those selected by the Participant for such deferral in accordance with Section
3.4. Notwithstanding the prior sentence:

 

(1) In the case of a deferral of Stock Option Gains, a Participant’s Scheduled
Payout Date for such deferral shall be the date the Participant has a
Termination of Employment other than for death, disability or Retirement (or two
years after the date of the deferral, if that would be later than such
Termination of Employment), and

 

(2) In the case of a deferral into a Discount Stock Subaccount that (under
Section 4.3(a)(1)(i)) has been recalculated to equal the original amount of the
deferral in connection with an involuntary termination without cause, a
Participant’s Scheduled Payout Date for the recalculated amount shall be the
date of such termination (or two years after the date of the deferral, if that
would be later than such termination).

 

Unless an election has been made in accordance with subsection (b) below, the
Participant’s subaccount containing the deferral shall be distributed to the
Participant in a single lump sum as soon as practicable following the Scheduled
Payout Date.

 

(b) Payment Election. A Participant may delay receipt of a subaccount beyond its
Scheduled Payout Date, or elect to receive installments rather than a lump sum,
by making a payment election under this subsection. A payment election must be
made by the calendar year before the year containing the Scheduled Payout Date
(or if earlier, at least 6 months before the Scheduled Payout Date). Any payment
election to receive a lump sum at a later time must specify a revised payout
date that is at least 2 years after the Scheduled Payout Date. Any payment
election to receive installment payments in lieu of a lump sum shall specify the
amount (or method for determining) each installment and a set of revised payout
dates, the last of which must be at least 2 years after the Scheduled Payout
Date. With respect to any subaccount, only one election may be made under this
subsection. Beneficiaries are not permitted to make elections under this
subsection. In addition, an election under this subsection may not delay the
distribution of an amount for which the Scheduled Payment Date is determined
under subsection (a)(1) or (2) above. Actual payment shall be made on the
Quarterly Date occurring as soon as practicable following the revised payout
date.

 

(c) Valuation. In determining the amount of any individual distribution pursuant
to subsection (a) or (b) above, the Participant's subaccount shall continue to
be credited with earnings and gains (and debited for expenses and losses) under
Sections 4.1 and 4.3 until the Valuation Date preceding the Scheduled Payout
Date or revised payout date for such distribution (whichever is applicable). In
determining the value of a Participant’s remaining subaccount following an
installment distribution, such installment distribution shall reduce the value
of the Participant’s

 

18

 

WSHLIB01 176812.4

 

 

subaccount as of the close of the Valuation Date preceding the revised payout
date for such installment.

 

(d) Limitations. The following limitations apply to distributions from the Plan.

 

(1) Installments may only be made quarterly, semi-annually or annually, for a
period of no more than 20 years, and not later than the Participant’s 80th
birthday (or what would have been the Participant’s 80th birthday, if the
Participant dies earlier).

 

(2) If a Participant has elected a Scheduled Payout Date that would be after the
Participant’s 80th birthday, the Participant shall be deemed to have elected
such 80th birthday as his or her Scheduled Payout Date.

 

(3) If a Participant has elected to defer income, which would qualify as
performance-based compensation under Code section 162(m), into a Risk of
Forfeiture Subaccount, then such subaccount may not be paid out at any time
while the Participant is a covered employee under Code section 162(m)(3), to the
extent the Plan Administrator determines it would result in compensation being
paid to the Participant in such year that would not be deductible under Code
section 162(m). The payout of any such amount shall be deferred until a year
when the Participant is no longer a section 162(m) covered employee. The Plan
Administrator may waive the foregoing provisions of this paragraph to the extent
necessary to avoid an undue hardship to the Participant. This paragraph shall
apply notwithstanding any provision of the Plan to the contrary.

 

(e) Prior to September 15, 1998, upon a Participant’s death, the Participant’s
Beneficiary shall be paid each subaccount still standing to the Participant’s
credit under the Plan in accordance with the terms of the Participant’s payout
election for such subaccount under Section 3.4, or the Participant’s payment
election under subsection (b) above, whichever is applicable. Effective
September 15, 1998, upon a Participant’s death, the Participant’s Beneficiary
shall be paid in a single lump sum in an amount equal to each subaccount still
standing to the Participant’s credit under the Plan as soon as administratively
practicable following the Participant’s death.

 

4.5 Acceleration of Payment for Certain Hardships. Except as expressly provided
in this Section 4.5, no payments shall be made under this Plan prior to the date
(or dates) applicable under Section 4.4.

 

(a) A Participant who is suffering severe financial hardship resulting from
extraordinary and unforeseeable events beyond the control of the Participant

 

19

 

WSHLIB01 176812.4

 

 

(and who does not have other funds reasonably available that could satisfy the
severe financial hardship) may file a written request with the Plan
Administrator for accelerated payment of all or a portion of the amount credited
to the Participant’s Account. A committee composed of representatives from the
Company's Compensation Department and Law Department, or such other parties as
the Plan Administrator may specify from time to time, shall have sole discretion
to determine whether a Participant satisfies the requirements for a hardship
request and the amount that may be distributed (which shall not exceed the
amount reasonably necessary to alleviate the Participant’s hardship).

 

(b) The Plan Administrator may adjust the standards for hardship withdrawals
from time to time to the extent it determines such adjustment to be necessary to
avoid triggering constructive receipt of income under the Plan.

 

(c) When some or all of a Participant’s subaccount is distributed pursuant to
this section, the distribution and the subaccount shall be valued as provided by
the Plan Administrator, using rules patterned after those in Section 4.4(c)
above.

 

(d) Effective prior to September 15, 1998, a Beneficiary could request a
hardship distribution upon satisfaction of the foregoing requirements and
subject to the foregoing limitations.

 

 

20

 

WSHLIB01 176812.4

 

 

 

ARTICLE V

 

PLAN ADMINISTRATOR

 

5.1 Plan Administrator. The Plan Administrator is the Compensation Committee of
the Company’s Board of Directors (the “Committee”) or its delegate or delegates,
who shall act within the scope of their delegation pursuant to such operating
guidelines as the Committee shall establish from time to time. The Plan
Administrator is responsible for the administration of the Plan.

 

5.2 Action. Action by the Committee may be taken in accordance with procedures
that the Committee adopts from time to time or that the Company’s Law Department
determines are legally permissible.

 

5.3 Right and Duties. The Plan Administrator shall administer and manage the
Plan and shall have all powers necessary to accomplish that purpose, including
(but not limited to) the following:

 

(a) To exercise its discretionary authority to construe, interpret, and
administer this Plan;

 

(b) To exercise its discretionary authority to make all decisions regarding
eligibility, participation and deferrals, to make allocations and determinations
required by this Plan, and to maintain records regarding Participants' Accounts;

 

(c) To compute and certify to the Employer the amount and kinds of payments to
Participants or their Beneficiaries, and to determine the time and manner in
which such payments are to be paid;

 

(d) To authorize all disbursements by the Employer pursuant to this Plan;

 

(e) To maintain (or cause to be maintained) all the necessary records for
administration of this Plan;

 

(f) To make and publish such rules for the regulation of this Plan as are not
inconsistent with the terms hereof;

 

(g) To delegate to other individuals or entities from time to time the
performance of any of its duties or responsibilities hereunder;

 

(h) To establish or to change the phantom investment options or arrangements
under Article IV; and

 

21

 

WSHLIB01 176812.4

 

 

 

(i) To hire agents, accountants, actuaries, consultants and legal counsel to
assist in operating and administering the Plan.

 

The Plan Administrator has the exclusive and discretionary authority to construe
and to interpret the Plan, to decide all questions of eligibility for benefits,
to determine the amount and manner of payment of such benefits and to make any
determinations that are contemplated by (or permissible under) the terms of this
Plan, and its decisions on such matters will be final and conclusive on all
parties. Any such decision or determination shall be made in the absolute and
unrestricted discretion of the Plan Administrator, even if (A) such discretion
is not expressly granted by the Plan provisions in question, or (B) a
determination is not expressly called for by the Plan provisions in question,
and even though other Plan provisions expressly grant discretion or call for a
determination. In the event of a review by a court, arbitrator or any other
tribunal, any exercise of the Plan Administrator’s discretionary authority shall
not be disturbed unless it is clearly shown to be arbitrary and capricious.

 

5.4 Compensation, Indemnity and Liability. The Plan Administrator will serve
without bond and without compensation for services hereunder. All expenses of
the Plan and the Plan Administrator will be paid by the Employer. No member of
the Committee, and no individual acting as the delegate of the Committee, shall
be liable for any act or omission of any other member or individual, nor for any
act or omission on the member’s own part, excepting the member’s own willful
misconduct. The Employer will indemnify and hold harmless each member of the
Committee and any individual or individuals acting as the delegate of the
Committee against any and all expenses and liabilities, including reasonable
legal fees and expenses, arising out of membership on the Committee (or serving
as the delegate of the Committee), excepting only expenses and liabilities
arising out of the member’s own willful misconduct.

 

5.5 Taxes. If the whole or any part of any Participant's Account becomes liable
for the payment of any estate, inheritance, income, or other tax which the
Employer may be required to pay or withhold, the Employer will have the full
power and authority to withhold and pay such tax out of any moneys or other
property in its hand for the account of the Participant. The Employer will
provide the Participant notice of such withholding. Prior to making any payment,
the Employer may require such releases or other documents from any lawful taxing
authority as it shall deem necessary.

 

22

 

WSHLIB01 176812.4

 

 

 

ARTICLE VI

 

CLAIMS PROCEDURE

 

6.1 Claims for Benefits. If a Participant or Beneficiary (hereafter, "Claimant")
does not receive timely payment of any benefits which he or she believes are due
and payable under the Plan, such person may make a claim for benefits to the
Plan Administrator. The claim for benefits must be in writing and addressed to
the Plan Administrator or to the Company. If the claim for benefits is denied,
the Plan Administrator will notify the Claimant in writing within 90 days after
the Plan Administrator initially received the benefit claim. However, if special
circumstances require an extension of time for processing the claim, the Plan
Administrator will furnish notice of the extension to the Claimant prior to the
termination of the initial 90-day period and such extension may not exceed one
additional, consecutive 90-day period. Any notice of a denial of benefits should
advise the Claimant of the basis for the denial, any additional material or
information necessary for the Claimant to perfect a claim, and the steps which
the Claimant must take to have such claim for benefits reviewed.

 

6.2 Appeals. Each Claimant whose claim for benefits has been denied may file a
written request for a review of such claim by the Plan Administrator. The
request for review must be filed by the Claimant within 60 days after the
Claimant received the written notice denying such claim. The decision of the
Plan Administrator will be made within 60 days after receipt of a request for
review and will be communicated in writing to the Claimant. Such written notice
shall set forth the basis for the Plan Administrator's decision. If there are
special circumstances which require an extension of time for completing the
review, the Plan Administrator's decision may be rendered not later than 120
days after receipt of a request for review.

 

 

23

 

WSHLIB01 176812.4

 

 

 

                ARTICLE VII

 

                AMENDMENT AND TERMINATION

 

7.1 Amendments. The Compensation Committee of the Board of Directors of the
Company has the right in its sole discretion to amend this Plan in whole or in
part at any time and in any manner; provided, however, that no such amendment
shall reduce the amount credited to the Account of any Participant as of the
date such amendment is adopted. Any amendment shall be in writing and adopted by
the Committee or an officer of the Company who is authorized by the Committee
for this purpose. All Participants shall be bound by such amendment.

 

7.2 Termination of Plan. The Company expects to continue this Plan, but does not
obligate itself to do so. The Company, acting by the Compensation Committee of
its Board of Directors, reserves the right to discontinue and terminate the Plan
at any time, in whole or in part, for any reason (including a change, or an
impending change, in the tax laws of the United States or any State).
Termination of the Plan will be binding on all Participants (and a partial
termination shall be binding upon all affected Participants), but in no event
may such termination reduce the amounts credited at that time to any
Participant's Account. If this Plan is terminated (in whole or in part), amounts
theretofore credited to affected Participants' Accounts may either be paid in a
lump sum immediately, or distributed in some other manner consistent with this
Plan, as determined by the Plan Administrator in its sole discretion.

 

 

24

 

WSHLIB01 176812.4

 

 

 

ARTICLE VIII

 

MISCELLANEOUS

 

8.1 Limitation on Participant's Rights. Participation in this Plan does not give
any Participant the right to be retained in the Employer's or Company's employ
(or any right or interest in this Plan or any assets of the Company or Employer
other than as herein provided). The Company and Employer reserve the right to
terminate the employment of any Participant without any liability for any claim
against the Company or Employer under this Plan, except for a claim for payment
of deferrals as provided herein.

 

8.2 Unfunded Obligation of Individual Employer. The benefits provided by this
Plan are unfunded. All amounts payable under this Plan to Participants are paid
from the general assets of the Participant’s individual Employer. Nothing
contained in this Plan requires the Company or Employer to set aside or hold in
trust any amounts or assets for the purpose of paying benefits to Participants.
This Plan creates only a contractual obligation on the part of a Participant’s
individual Employer, and the Participant has the status of a general unsecured
creditor of this Employer with respect to amounts of compensation deferred
hereunder. No other Employer guarantees or shares such obligation, and no other
Employer shall have any liability to the Participant or the Participant’s
Beneficiary. In the event, a Participant transfers from the employment of one
Employer to another, the former Employer shall transfer the liability for
deferrals made while the Participant was employed by that Employer to the new
Employer (and the books of both Employers shall be adjusted appropriately).

 

8.3 Other Plans. This Plan shall not affect the right of any eligible Employee
or Participant to participate in and receive benefits under and in accordance
with the provisions of any other employee benefit plans which are now or
hereafter maintained by any Employer, unless the terms of such other employee
benefit plan or plans specifically provide otherwise or it would cause such
other plan to violate a requirement for tax favored treatment.

 

8.4 Receipt or Release. Any payment to a Participant in accordance with the
provisions of this Plan shall, to the extent thereof, be in full satisfaction of
all claims against the Plan Administrator, the Employer and the Company, and the
Plan Administrator may require such Participant, as a condition precedent to
such payment, to execute a receipt and release to such effect.

 

8.5 Governing Law. This Plan shall be construed, administered, and governed in
all respects in accordance with applicable federal law and, to the extent not
preempted by federal law, in accordance with the laws of the State of North
Carolina. If any provisions of this instrument shall be held by a court of
competent jurisdiction to be invalid or unenforceable, the remaining provisions
hereof shall continue to be fully effective.

 

25

 

WSHLIB01 176812.4

 

 

 

8.6 Adoption of Plan by Related Employers. The Plan Administrator may select any
corporation related to the Company by stock ownership as an Employer and permit
or cause such corporation to adopt the Plan. The selection by the Plan
Administrator shall govern the effective date of the adoption of the Plan by
such related Employer.

 

8.7 Gender, Tense, and Headings. In this Plan, whenever the context so
indicates, the singular or plural number and the masculine, feminine, or neuter
gender shall be deemed to include the other. Headings and subheadings in this
Plan are inserted for convenience of reference only and are not considered in
the construction of the provisions hereof.

 

8.8 Successors and Assigns; Nonalienation of Benefits. This Plan inures to the
benefit of and is binding upon the parties hereto and their successors, heirs
and assigns; provided, however, that the amounts credited to the Account of a
Participant are not (except as provided in Section 5.5) subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance,
charge, garnishment, execution or levy of any kind, either voluntary or
involuntary, and any attempt to anticipate, alienate, sell, transfer, assign,
pledge, encumber, charge or otherwise dispose of any right to any benefits
payable hereunder, including, without limitation, any assignment or alienation
in connection with a separation, divorce, child support or similar arrangement,
will be null and void and not binding on the Plan or the Company or Employer.
Notwithstanding the foregoing, the Company reserves the right to make payments
in accordance with a divorce decree, judgment or other court order as and when
cash payments are made in accordance with the terms of this Plan due to the
Account of a Participant and credited against such Account.

 

8.9 Facility of Payment. Whenever, in the Plan Administrator's opinion, a
Participant or Beneficiary entitled to receive any payment hereunder is under a
legal disability or is incapacitated in any way so as to be unable to manage his
or her financial affairs, the Plan Administrator may direct the Employer to make
payments to such person or to the legal representative of such person for his or
her benefit, or to apply the payment for the benefit of such person in such
manner as the Plan Administrator considers advisable. Any payment in accordance
with the provisions of this section shall be a complete discharge of any
liability for the making of such payment to the Participant or Beneficiary under
the Plan.

 

8.10 Separate Plans. This Plan document encompasses two separate plans of
deferred compensation for all legal purposes, including ERISA and federal and
state tax law, as set forth in subsections (a) and (b) below.

 

(a) The portion of the Plan that provides for deferrals of Base Compensation,
Bonus Compensation and Performance Unit Payouts (which shall be known as the
“YUM! Brands Executive Income Deferral Plan”).

 

 

26

 

WSHLIB01 176812.4

 

 

 

(b) The portion of the Plan that provides for deferrals of Stock Option Gains
(which shall be known as the “YUM! Brands Option Gains Deferral Plan”).

 

Together, these two separate plans of deferred compensation are referred to as
the YUM! Brands Executive Income Deferral Program.

 

 

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WSHLIB01 176812.4

 

 

 

This _____ day of ____________________, 2003, the above restated Plan is hereby
adopted and approved by the Company’s duly authorized officer to be effective as
stated herein.

 

 

 

YUM! BRANDS, INC.

 

 

 

 

By:_____________________________________

 

 

APPROVED

 

By: _____________________________

 

Law Department

 

 

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WSHLIB01 176812.4

 

 

 

YUM! BRANDS EXECUTIVE INCOME DEFERRAL PROGRAM

 

APPENDIX

 

 

The following Appendix articles modify or supplement the general terms of the
Plan as it applies to certain executives.

 

Except as specifically modified in the Appendix, the foregoing provisions of the
Plan shall fully apply. In the event of a conflict between this Appendix and the
foregoing provisions of the Plan, the Appendix shall govern with respect to the
conflict.

 

 

App-i

 

WSHLIB01 176812.4

 

 

 

ARTICLE A  

 

SPINOFF FROM PEPSICO

 

This Article sets forth provisions that apply in connection with the Company’s
spinoff from PepsiCo, Inc.

 

A.1 Definitions: When used in this Article, the following underlined terms shall
have the meanings set forth below. Except as otherwise provided in this Article,
all terms that are defined in Article II of the Plan shall have the meaning
assigned to them by Article II.

 

(a) 1997 Agreement: The 1997 Employee Programs Agreement between PepsiCo and
Tricon (dated as of August 26, 1997).

 

(b) Distribution Date: The “Distribution Date” as that term is defined in the
1997 Separation Agreement between PepsiCo and Tricon.

 

(c) PepsiCo Account Holder: A Participant who had an interest in the PepsiCo
Capital Stock Account under the Prior Plan immediately prior to the Effective
Date.

 

(d) Transferred Individual: A nonterminated “Transferred Individual” as that
term is defined in the 1997 Agreement. For this purpose, a Transferred
Individual shall be considered “nonterminated” if he or she is actively employed
by (or on a leave of absence from and expected to return to) the Company and any
of its affiliates, as of the end of the day on the Distribution Date.

 

(e) Transition Individuals: A “Transition Individual” as that term is defined in
the 1997 Agreement.

 

(f) PepsiCo: PepsiCo, Inc., a North Carolina Corporation.

 

 

A.2 Assumption of Benefits and Liabilities. Effective as of the beginning of the
day on the Effective Date, all interests in the Prior Plan of (and Prior Plan
liabilities with respect to) Transferred Individuals shall be assumed by this
Plan.

 

(a) In the case of a Transferred Individual, effective as of the beginning of
the day on the Effective Date, the Transferred Individual’s Account shall be
credited with the amount that stood to his or her credit under the Prior Plan
immediately prior to the Effective Date, and the allocation of this amount to
phantom investment options under this Plan shall mirror the allocation then in
effect for the Transferred Individual under the Prior Plan.

 

 

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WSHLIB01 176812.4

 

 

 

(b) Any deferral election made under the Prior Plan for a Transferred Individual
shall be carried over and continued under this Plan. Notwithstanding the prior
sentence:

 

(1) A Transferred Individual may revise his or her Prior Plan deferral election
for Bonus Compensation payable in 1998 by making a new election not later than
October 31, 1997, and

 

(2) A Transferred Individual’s Prior Plan election to defer Stock Option Gains
on any stock options that, under the 1997 Agreement, remain options on PepsiCo
capital stock shall be void (and no election may be made under this Plan with
respect to deferring Stock Option Gains on such options).

 

(c) A Transferred Individual who has made a deferral election with respect to
the performance unit award payable to him under the PepsiCo Long Term Incentive
Plan for the 1994 award year shall, once the deferral occurs, be credited with
such deferral solely under this Plan. Any designation to have some or all of
this deferral invested in the PepsiCo capital stock account under the Prior Plan
shall be converted to a designation for investment in a phantom investment
option under this Plan (other than the PepsiCo Capital Stock Account) which is
designated by the Plan Administrator for this purpose.

 

A.3 Special PepsiCo Stock Investment Option. As of the Effective Date, the Plan
Administrator shall establish a temporary phantom investment option under the
Plan, the PepsiCo Capital Stock Account. In no event will shares of PepsiCo
capital stock actually be purchased or held under this Plan, and no Participant
shall have any rights as a shareholder of PepsiCo capital stock on account of an
interest in the PepsiCo Capital Stock Account.

 

(a) Valuation and Adjustment: A Participant’s interest in the PepsiCo Capital
Stock Account is valued as of a Valuation Date by multiplying the number of
phantom shares credited to the Participant’s Account on such date by the Fair
Market Value of a share of PepsiCo capital stock on such date, and then adding
the value of the Participant’s dividend subaccount. If shares of PepsiCo capital
stock change by reason of any stock split, stock dividend, recapitalization,
merger, consolidation, spin-off, combination or exchange of shares, complete or
partial liquidation or other similar corporate change, such equitable adjustment
shall be made in the number of shares credited to an Account or subaccount as
the Plan Administrator may determine to be necessary or appropriate.

 

(b) Investment Reallocations. In accordance with Section 4.1(e), a PepsiCo
Account Holder may reallocate amounts from his or her Subaccounts in the PepsiCo
Capital Stock Account to other phantom investment options under the Plan

 

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WSHLIB01 176812.4

 

 

that are available for this purpose. No Participant may reallocate amounts into
the PepsiCo Capital Stock Account.

 

(c) Termination of the PepsiCo Capital Stock Account. Effective as of the end of
the day on December 31, 1998 (or such later date as the Plan Administrator shall
specify), the PepsiCo Capital Stock Account shall cease to be available under
the Plan. Any amount under the Plan still standing to the credit of a PepsiCo
Account Holder on such date shall automatically be reallocated to the phantom
investment option described in Section 4.1(c)(3) (the EC Plus Prime Rate
Account) unless the Participant selects a different replacement option in
accordance with such requirements as the Plan Administrator may apply.

 

A.4 Employment Transfers by Transition Individuals. This section shall apply to
individuals who transfer between Tricon and PepsiCo under circumstances that
cause them to be Transition Individuals.

 

(a) If a Participant, who is a Transition Individual, is transferred to PepsiCo,
such transfer to PepsiCo shall not be considered a Termination of Employment or
other event that could trigger distribution of the Participant’s interest in the
Plan. In this case, the Participant’s interest in the Plan (and all Plan
liabilities with respect to the Participant) shall be transferred to the PepsiCo
Executive Income Deferral Program. This transfer shall constitute a complete
payout of the Participant’s Account for purposes of determining who is a
Participant or Beneficiary under the Plan.

 

(b) If a Transition Individual, who is a participant in the PepsiCo Executive
Income Deferral Program, is transferred from PepsiCo to Tricon, this Plan shall
accept a transfer of such Transition Individual’s interest in the PepsiCo
Executive Income Deferral Program, and the amount transferred shall become the
initial balance in the Transition Individual’s Account hereunder. To the extent
that any phantom investment option available under the PepsiCo Executive Income
Deferral Program is not also available under this Plan, the Plan Administrator
shall adopt rules for reallocating the transferred amount to phantom investment
options under this Plan. Otherwise, the allocation of this amount to phantom
investment options under this Plan shall mirror the allocation then in effect
for the Transition Individual under the PepsiCo Executive Income Deferral
Program.

 

A.5 Limit on Stock Distributions. Notwithstanding that Section 4.4 permits
certain distributions to be made in Tricon Common Stock, during the two year
period following the Effective Date, the number of shares of Tricon Common Stock
delivered or purchased under this Plan (when aggregated with shares of Tricon
Common Stock delivered or purchased under other plans or programs of the
Company) shall at all times be less than the number of shares that would result
in PepsiCo not having “control” of Tricon

 

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WSHLIB01 176812.4

 

 

(immediately before distribution of Tricon Common Stock to PepsiCo’s
shareholders) within the meaning of Sections 355(a)(1)(A) and 368(c) of the
Internal Revenue Code.

 

 

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WSHLIB01 176812.4

 

 

 

ARTICLE B

 

ADDITIONAL AMOUNT CREDITED TO CERTAIN PARTICIPANTS’ ACCOUNTS

 

Each Participant who is an active employee of the Company or its wholly owned
subsidiaries on January 1, 2000 and who has directed that the Participant’s
entire Account be invested in either the YUM! Discount Stock Subaccount, YUM!
Common Stock Account or Security Plus Account by December 31, 1999 will receive
an additional credit (Described below) to the Participant’s account on January
1, 2000. To receive this credit, each Participant must sign an election and
release form designated by the Plan Administrator for this purpose and submit it
to the Plan Administrator no later than November 15, 1998.

 

Participants will not receive the additional credit for the portion of their
Account invested in the YUM! Discount Stock Subaccount or representing the 1999
base salary subaccount.

 

The additional credit will be equal to 10% of each of the Participant’s December
31, 1999 Account balances excluding amounts deferred in the YUM! Discount Stock
Subaccount and 1999 base salary subaccount.

 

 

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WSHLIB01 176812.4

 

 

 

ARTICLE C

 

NEW PAYMENT TIMING ELECTION

 

Each Participant who has an Account under the Plan as of September 15, 1998, may
elect to change the Scheduled Payout Date with respect to each subaccount that
is scheduled for payout on or after January 1, 2000, except that for such an
election to be valid the Participant must execute an election and release form
provided by the Plan Administrator for this purpose by October 31, 1998.

 

The earliest Scheduled Payout Date a Participant may elect is January 1, 2000.
The election available under this Article C of the Appendix is in addition to
the election available under Section 4.4(b) of the Plan. However, making an
election under this Article does not increase a Participant’s rights under
Section 4.4(b). Therefore, if a Participant has previously made an election
under Section 4.4(b) with respect to any subaccount, the Participant is not
entitled to another election under Section 4.4(b) with respect to that
subaccount as a result of any election under this Appendix C.

 

 

 

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WSHLIB01 176812.4

 

 

 

ARTICLE D

 

RDC CONVERSION

 

In the case of an individual who becomes a Participant and who previously
participated in the Restaurant Deferred Compensation Plan (“RDC Plan”), then his
or her undistributed RDC Plan balance (if any) will be transferred to this Plan
on the January 1 following the date on which the Employee becomes a Participant,
and thereafter it will be maintained under this Plan. All elections made by a
Participant under the RDC Plan with respect to the Participant’s transferred
balance will be preserved and shall apply under this Plan, to the fullest extent
practicable, with respect to such transferred balance.

 

 

App-7

 

WSHLIB01 176812.4