**ARTICLE II****STATUS OF FRANCHISE AGREEMENTS**          2.1 Effect on the Franchise Agreements. Except as expressly provided in thisAgreement, all of the terms, conditions, restrictions and other provisions contained in theFranchise Agreements shall remain in full force and effect.          2.2 Franchise Agreements Enforceable. Franchisee acknowledges and agrees that eachof its obligations, liabilities and duties under the Franchise Agreements is and shall remainvalid and enforceable against it to the extent and as provided in the Franchise Agreements.          2.3 Notices of Failure To Timely Remodel. Franchisee acknowledges the fact that ithas not performed the remodels required by the Franchise Agreements and that Franchisor deliveredformal written notices memorializing the Franchisee’s non-compliance. Those notices entitleFranchisor to exercise all Franchisor’s rights and remedies under the Franchise Agreements orapplicable law in connection with the Franchisee’s non-compliance. No agreement existsdocumenting a cure of the Franchisee’s non-compliance or otherwise modifying or amending itsremodeling obligations under the Franchise Agreements.**ARTICLE III****NEGOTIATIONS**          3.1 Restructuring Proposal. Franchisee shall submit to Franchisor a writtenrestructuring plan (“Proposal”) within thirty (30) days of the date of this Agreement (the“Proposal Deadline”). The Proposal shall consist of a detailed written plan for how Franchiseewill obtain the necessary capital (including identifying all sources of capital funding) andotherwise restructure its business to enable it to comply with the remodeling requirements setforth in the Notices and meet Franchisee’s upgrading obligations for all Facilities under theFranchise Agreements. The Proposal shall include, without limitation, the following:               (a) Listing of all Facilities with: (i) cross reference between Franchisee and Franchisornumbering conventions; and (ii) indication of fee and leased properties;               (b) Store level P&L statements through November 7, 2010 or Franchisee’s equivalent period enddate;               (c) Updated (as of November 7, 2010) balance sheet for Franchisee’s businesses;               (d) Updated (as of November 7, 2010) accounts payable aging summary;               (e) Aggregated income statements (including above store/G&A expenses) for Franchisee’s:                    (i) KFC business;
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                    (ii) Single branded Taco Bell business; and                    (iii) Total Franchisee business               (f) Detail supporting G&A structure of KFC, single branded Taco Bell and overall Franchiseebusinesses.               (g) Detailed debt disclosure, including:                    (i) Amount of debt by lender for all Franchisee businesses;                    (ii) Amount of debt by line of business (e.g. KFC, Taco Bell, and any wholly ownedsubsidiaries);                    (iii) Amount of debt by store (for all brands — KFC, Taco Bell, etc.);                    (iv) How each loan is collateralized (e.g., by land only, land and real property,cross collateralization, etc.);                    (v) Interest rate and indication of floating or fixed for each loan;                    (vi) Maturity of each loan;                    (vii) Monthly payment of each loan in aggregate;                    (viii) Monthly payment of each loan by store; and                    (ix) Loan covenant schedule, including: (A) calculation formula; (B) frequency ofcalculation; and (C) an indication of whether required covenant levels are part of anyLoan Modification Agreement referenced in Franchisee’s 10-Q disclosure.               (h) Cash flow model for last 2 years and for the next 5 years with the following:                    (i) Same store sales assumption by brand;                    (ii) Inflation factor by food, labor, other;                    (iii) Capex schedule with cost assumptions;                    (iv) Debt service coverage ratio;                    (v) Fixed charge coverage ratio; and
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                    (vi) Assumptions of any cost controlling outcomes (e.g., rent decreases negotiated byPrime Locations).               (i) Sources of potential capital and anticipated terms;               (j) Up-to-date sale / leaseback candidate worksheet;               (k) Details of potential debt refinancing — assumptions on amortization, rate, pro-formamonthly repayment amounts, securitization, etc.               (l) Copies of all agreements with brokers, marketing companies and other consultants thatFranchisee has engaged or intends to engage to assist in the disposition of any Franchiseeproperties, buildings and other assets, such as sale leaseback transactions; and               (m) Bi-weekly updates on capital funding efforts, including, but not limited to, marketingreports, status of negotiations with potential purchasers and market research.          3.2 Franchisee acknowledges that, as of the date of this Agreement, Franchisee is current inall financial obligations required by the Franchise Agreements, and that Franchisee must remaincurrent on all financial obligations required under the Franchise Agreements during the term ofthis Agreement. Franchisee’s failure to remain current in such financial obligations shall bedeemed a breach of this Agreement, entitling the Franchisor to unilaterally and immediatelyterminate this Agreement.          3.3 Franchisee shall execute a written release of liability, in the form of Exhibit Cattached hereto, granted in favor of Franchisor as of the date of the Proposal.          3.4 Franchisee shall provide Franchisor with additional information as reasonably requestedby Franchisor.          3.5 No Prejudice from Discussions. Without liability for failing to do so,Franchisor and Franchisee each plan to discuss various courses of action which might be in theirmutual interest, including, but not limited to, the Proposal. All such discussions, meetings,negotiations and communications in connection therewith relating to the Franchise Agreements andoccurring either before or after the date of this Agreement shall be privileged and withoutprejudice to any party to this Agreement, and without exception, shall constitute settlementnegotiations which shall not be introduced or admissible as evidence in any administrative,judicial or other proceeding without the express written consent of all of the parties to thisAgreement. No action or proceeding of any kind (whether legal or equitable, whether based intort, contract, or otherwise) may be brought by any of the parties to this Agreement againstanyone based upon or relating to the negotiations contemplated by this Agreement.          3.6 No Obligations to Negotiate. Franchisee acknowledges and agrees that Franchisordoes not have any obligation to accept any Proposal or to modify, amend or enter into negotiationswith respect to the Franchise Agreements. No party is obligated to enter into or continuenegotiations relating to the Franchise Agreements, and any party, in its sole and absolutediscretion, may terminate negotiations at any time and for any reason if it so elects,
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without notice or liability to any other party. Franchisee acknowledges that Franchisorwould not enter into any negotiations or otherwise consider the Proposal without the partiesentering into this Agreement.          3.7 Only Written Agreements and Amendments. The negotiations and discussions by theparties may be lengthy and complex. While an agreement may be reached on one or more issues whichare part of the overall obligations of the Franchisee under the Franchise Agreements that theparties are trying to resolve, the parties agree that, except for the preliminary agreementscontained in this Agreement, none of the parties shall be bound by or rely upon any agreement onany issues until (a) agreement is reached on all issues, and (b) the agreement on all issues hasbeen reduced to a written agreement, signed and delivered by an authorized representative of eachof the parties to this Agreement. Furthermore, in order to avoid any confusion ormisunderstanding, each of the parties agrees that this Agreement may only be amended in a writing,signed by Franchisee and Franchisor. Nothing in this Agreement shall be construed to impose anyduty or obligation whatsoever upon any party to negotiate or enter into a settlement or agreement.          3.8 No Waivers or Estoppel. No negotiations or other action undertaken pursuant tothis Agreement shall constitute a waiver of any party’s rights under the Franchise Agreements,except to the extent specifically stated in a written agreement complying with the provisions ofparagraph 3.7 of this Agreement. Subject to Article VI of this Agreement, in addition,participation in negotiations concerning the Franchise Agreement shall not restrict, inhibit orestop any party from exercising any right, remedy or power available to such party at any time(whether or not settlement negotiations are continuing) including, but not limited to, all rights,remedies and powers granted under the Franchise Agreements or otherwise available at law or inequity, or require any delay in the exercise of any such, right, remedy or power. Franchisee alsoagrees that no failure to exercise and no delay in exercising any rights, remedies and powersunder the Franchise Agreements or otherwise available at law or in equity shall operate as awaiver of any such rights, remedies or powers.**ARTICLE IV****FRANCHISEE COOPERATION**          4.1 Access to Information. Franchisee and Franchisor including their respectiveagents and representatives, will cooperate in good faith to conduct physical assessments,appraisals or other evaluations of the properties and assets, real or personal, utilized inconnection with Franchisee’s performance under the Franchise Agreements. In connection therewith,Franchisee shall permit Franchisor, its agents and its representatives reasonable access toinspect and review all such properties and assets and all books, records and information relatingthereto at all reasonable times and shall permit them to make copies of all such books, recordsand information. Franchisee also agrees that it will furnish Franchisor current, complete andaccurate financial statements in a form satisfactory to Franchisor.
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**ARTICLE V****FRANCHISEE REPRESENTATIONS AND WARRANTIES**          5.1 Authority; Non-Contravention. Franchisee has the requisite corporate power andauthority to execute and deliver this Agreement and to consummate the transactions contemplatedhereby. The execution and delivery of this Agreement and the consummation by Franchisee of thetransactions contemplated hereby have been duly and validly authorized by all necessary corporateaction and no other corporate proceedings on the part of Franchisee and no stockholder votes arenecessary to authorize this Agreement or to consummate the transactions contemplated hereby.          5.2 Business Not Viable Absent Franchise Agreements. Franchisee acknowledges thatits business is not viable absent the Franchise Agreements remaining in effect.          5.3 Use of Counsel. Franchisee acknowledges and represents that it (i) has fully andcarefully read this Agreement prior to signing it, (ii) has been, or has had the opportunity tobe, advised by independent legal counsel of its own choice at its own expense as to the legaleffect and meaning of each of the terms and conditions of this Agreement, and (iii) is signing andentering into this Agreement as a free and voluntary act without duress or undue pressure orinfluence of any kind or nature whatsoever and has not relied on any promises, representations orwarranties regarding the subject matter hereof other than those set forth in this Agreement.**ARTICLE VI****FORBEARANCE**          6.1 Forbearance. Subject to the terms of this Agreement, Franchisor agrees toforbear from terminating the Franchise Agreements or commencing any judicial proceedings toenforce the termination of the Franchise Agreements (to the extent applicable) until the earlierto occur of (a) January 31, 2011, and (b) the date upon which any of the Forbearance Conditions(as defined below) is not satisfied by the date required.          6.2 Forbearance Conditions. For purposes of this Agreement, “Forbearance Conditions”shall mean the requirement that each of the conditions set forth below shall be performed orsatisfied, as and when required, TIME BEING OF THE ESSENCE, in all respects:               (a) Franchisee shall timely and fully pay any and all amounts owing under the FranchiseAgreements, arising on and after the date of this Agreement.               (b) Franchisee shall not be in default of any of its obligations under this Agreement orunder the Franchise Agreements (except for the remodel obligations relating to the Facilitieslisted in Exhibit B).               (c) Franchisee shall submit the Proposal within thirty (30) days of the date of thisAgreement.
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               (d) By December 31, 2010, Franchisee shall establish a remodel fund account (“Account”) in amanner and form agreed to by Franchisor, but including the following:                    (i) The Account shall be established at a mutually agreed to financial institution, separatefrom other financial accounts of Franchisee.                    (ii) The Account shall be funded through a combination of (1) net proceeds, after repaymentof senior debt only, from the disbursements resulting from the disposition of any property,building, equipment, and the like owned by Franchisee through sale leaseback transactions, storeclosures, and sale of property, (2) free cash flows after debt payments (the definition of “freecash flow” must be mutually agreed to by the parties within thirty (30) days of the date of thisAgreement);                    (iii) Franchisee shall submit to Franchisor, in a format and manner agreed to by Franchisor,weekly Account balance reconciliations, including up-to-date reporting of any asset disbursementsand free cash flow calculation;                    (iv) Franchisee may only withdraw funds from the Account in accordance with specific terms,conditions and restrictions (“Account Agreement”) mutually agreed to by the parties within thirty(30) days of the date of this Agreement.                    (v) Franchisee shall use Account funds for the sole purpose of remodeling and upgrading theFacilities in accordance with the Franchise Agreements; unless the Account Agreement otherwiseallows Franchisee, with Franchisor’s prior written approval, to apply Account funds to otherpayments owed to Franchisor or to pay other business expenses necessary to continue to operateFranchisee’s KFC business in the event of adverse financial conditions; and                    (vi) The amount of the initial deposit into the Account must be mutually agreed to by thepartied within thirty (30) days of the date of this Agreement and be funded from Franchisee’sexisting cash balances and proceeds from its proposed restructuring deals.          (e) By December 31, 2010, Franchisee shall submit to KFCC for its approval: (i) a schedulefor remodeling, relocating or rebuilding (based on the required scope of work determined byFranchisor) (collectively “Remodel” or “Remodeling”) all of the Facilities listed in Exhibit A,and (ii) a list of specific Facilities that Franchisee commits to Remodel in 2011 (based on therequired scope of work determined by Franchisor), including the start and completion dates foreach Facility, and any anticipated Facility closures in 2011.          (f) No later than January 31, 2011, the parties must finalize and execute a comprehensiveagreement (“Remodel Agreement”) acceptable to Franchisor that addresses Remodeling commitments forall of the Facilities listed in Exhibit A, including the number and scope of each Remodel actionto be undertaken by Franchisee, including any anticipated Facility closures, during each year ofthe Remodel Agreement.
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          (g) Franchisee shall not commence any judicial proceedings against or involving Franchisor,including arbitration or mediation proceedings, or formal or informal proceedings for thedissolution or rehabilitation of Franchisee.          (h) Franchisee shall be in compliance with the Franchise Agreements on and after the date ofthis Agreement, except with respect to the matters listed on Exhibit D.          6.3 Upon completion of the Forbearance Conditions above, Franchisor will rescind the Noticesof non-compliance issued to Franchisee.**ARTICLE VII****CONFIDENTIALITY**Franchisee and its present and prospective affiliates, and its and their respective directors,officers, employees, agents or advisors (including, without limitation, attorneys, accountants,consultants, financial advisors and equity holders) (collectively, “Representatives”), agree totreat, with the utmost strictest confidence, and not to disclose in any manner whatsoever, in wholeor in part, the terms of this Agreement, the fact that this Agreement exists, the negotiations anddiscussions leading up to this Agreement, and any other information relating to this Agreement(collectively, the “Confidential Information”). The Confidential Information shall not, withoutthe prior written consent of Franchisor, be disclosed to any person or entity other thanFranchisee’s Representatives who need to know such information for the purpose of providing legalor financial advice to the Franchisee (and in those instances only to the extent justifiable bythat need), who are informed by Franchisee of the confidential nature of the ConfidentialInformation and who are provided with a copy of this Article VII and agree to be bound by the termshereof. Notwithstanding the foregoing, Franchisee and its representatives shall not, under anycircumstances, disclose the Confidential Information to any other franchisee of Franchisor orfranchisees of any affiliates of Franchisor. In any event, Franchisee shall be responsible for anybreach of this Agreement by any of Franchisee’s Representatives for prohibited or unauthorizeddisclosure or use of the Confidential Information, and Franchisee agrees, at its sole expense, totake all reasonable measures to restrain its Representatives from prohibited or unauthorizeddisclosure or use of the Confidential Information. In the event that Franchisee or itsRepresentatives are requested pursuant to, or required by, applicable law or regulation or by legalprocess to disclose any Confidential Information, Franchisee agrees that it will provide Franchisorwith prompt written notice (and copies, if applicable) of such request or requirement in order toenable Franchisor to seek an appropriate protective order or other remedy, to consult withFranchisee with respect to Franchisor taking steps to resist or narrow the scope of such request orlegal process, or to waive compliance, in whole or in part, with the terms of this Article VII ofthe Agreement. In any such event, Franchisee and its Representatives agree to (i) furnish onlythat portion of the Confidential Information for which Franchisor has waived compliance or forwhich Franchisee is advised by counsel is legally required to be furnished and (ii) use theirreasonable best efforts to ensure that all Confidential Information and other information that isso disclosed will be accorded confidential treatment. Immediately upon termination of thisAgreement, or at any time upon the request of Franchisor, Franchisee and its Representatives shallpromptly deliver to Franchisor all written material containing or reflecting any ConfidentialInformation (including all copies, extracts or other reproductions in whole or in
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part) and agree to destroy all documents, memoranda, notes and other writings whatsoever (includingall copies, extracts or other reproductions in whole or in part) prepared by Franchisee or itsRepresentatives based on the Confidential Information. Upon the written request of Franchisor,Franchisee shall certify in writing to Franchisor Franchisee’s destruction of such documents,memoranda, notes and other writings. Notwithstanding the return or destruction of the ConfidentialInformation, Franchisee and its Representatives will continue to be bound by the obligationsimposed by this Article VII. It is further understood and agreed that money damages would not be asufficient remedy for any breach of this Agreement by Franchisee or its Representatives, and thatFranchisor would be entitled to specific performance and injunctive or other equitable relief as aremedy for any such breach. Such remedy shall not be deemed to be the exclusive remedy forFranchisee’s or its Representatives’ breach of this Agreement, but shall be in addition to allother remedies available at law or equity to Franchisor. Franchisee shall be responsible to pay orreimburse Franchisor for any costs and expenses (including reasonable attorney’s fees and costs)incurred by Franchisor in connection with the enforcement of this Article VII if it is determinedthat Franchisee or its Representatives has breached this Article VII; provided, however the partiesagree that nothing in this Article VII shall be interpreted to restrain Franchisee from makingdisclosures required of it by law or regulation as an SEC reporting company.**ARTICLE VIII****RELEASE**          8.1 Release. Franchisee, on behalf of itself and each of its Affiliates, herebyreleases and forever discharges Franchisor and each of its past, present and futureRepresentatives, Affiliates, members, controlling persons, subsidiaries, successors and assigns(individually, a “Releasee” and collectively, “Releasees”) from any and all claims, demands,proceedings, causes of action, suits, liens, losses, costs, expenses, orders, obligations,contracts, debts and liabilities of any kind, character or nature whatsoever, whether known orunknown, suspected or unsuspected, asserted or unasserted, fixed or contingent, both at law and inequity, that Franchisee or any of its Affiliates now has, has ever had, or may hereafter havearising contemporaneously with or prior to the date of this Agreement or on account of or arisingout of any matter, cause or event occurring contemporaneously with or prior to the date of thisAgreement; *provided, however,*that nothing contained herein shall operate to release anyobligations of the Franchisor arising under the Franchise Agreements after the date of thisAgreement. Franchisee hereby irrevocably covenants to refrain from, directly or indirectly,asserting any claim or demand, or commencing, instituting or causing to be commenced, anyproceeding of any kind against any Releasee, based upon any matter purported to be released hereby.          8.2 Indemnification. Without in any way limiting any of the rights and remediesotherwise available to any Releasee, Franchisee shall indemnify and hold harmless each Releaseefrom and against all loss, liability, claim, damage (including incidental and consequentialdamages) or expense (including costs of investigation and defense and reasonable attorney’s fees)whether or not involving third party claims, arising directly or indirectly from or
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in connection with (i) the assertion by or on behalf of Franchisee or any of its Affiliates ofany claim or other matter purported to be released pursuant to this Article VIII and (ii) theassertion by any third party of any claim or demand against any Releasee which claim or demandarises directly or indirectly from, or in connection with, any assertion by or on behalf ofFranchisee or any of its Affiliates against such third party of any claims or other matterspurported to be released pursuant to this Article VIII, or arises directly or indirectly from or inconnection with any Default, any default under this Agreement, or any other obligation ofFranchisee or its Affiliates.          8.3 Waiver of Unknown Claims. Franchisee hereby expressly waives all rights affordedby Section 1542 of the Civil Code of California or any statute or common law principle of similareffect in any jurisdiction with respect to the Releasees (collectively, “Section 1542”). Section1542 of the Civil Code of California states as follows:**A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW ORSUSPECT TO EXIST IN ITS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWNBY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.**Notwithstanding the provisions of Section 1542, and for the purpose of implementing a full andcomplete release, Franchisee expressly waives and relinquishes any rights and benefits that it mayhave under Section 1542. Franchisee understands and agrees that the release contained in thisArticle V is intended to include all claims, if any, which Franchisee may have and which Franchiseedoes not now know or suspect to exist in its favor against the Releasees and that this releaseextinguishes those claims. Franchisee represents and warrants to the Releasees that it has beenadvised by its attorney of the effect and import of the provisions of Section 1542, and thatFranchisee has not assigned or otherwise transferred or subrogated any interest in any claims,demands or causes of action that are the subject of this release. Franchisee agrees to indemnify,defend and hold the Releasees harmless for any liability, loss, claims, demands, damages, costs,expenses or attorneys’ fees incurred as a result of any person or entity asserting such assignment,transfer or subrogation. Franchisee further agrees that in the event of litigation relating to thesubject matter of this release contained in Article VIII, each Releasee shall be entitled toreasonable attorneys’ fees and costs if it is the prevailing party in such litigation.**ARTICLE IX****GENERAL PROVISIONS**          9.1 Binding Effect, Etc. This Agreement shall be binding upon and inure to thebenefit of and be enforceable by the parties hereto and their respective successors, assigns(including any direct or indirect successor by purchase, merger, consolidation or otherwise to allor substantially all of the business and/or assets of either party), spouses, heirs, executors andpersonal and legal representatives.          9.2 Severability. The provisions of this Agreement shall be severable in the eventthat any of the provisions hereof (including any provision within a single section,
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paragraph or sentence) are held by a court of competent jurisdiction to be invalid, void orotherwise unenforceable in any respect, and the validity and enforceability of any such provisionin every other respect and of the remaining provisions hereof shall not be in any way impaired andshall remain enforceable to the fullest extent permitted by law.          9.3 Survival. The provisions of Articles VII and VIII shall remain in full force andeffect and shall survive any termination of this Agreement.          9.4 Notices. All notices, consents, waivers, and other communications under thisAgreement must be in writing and will be deemed to have been duly given when (a) delivered by hand(with written confirmation of receipt), (b) sent by telecopier (with written confirmation ofreceipt) or (c) when received by the addressee, if sent by a nationally recognized overnightdelivery service (receipt requested), in each case to the appropriate addresses and telecopiernumbers set forth below (or to such other addresses and telecopier numbers as a party maydesignate by notice to the other parties):**Franchisor:**