Document:

Exhibit 10.2

 

EXECUTION COPY

 

 

 

GUARANTEE AND COLLATERAL AGREEMENT

 

made by

 

TACO BELL FRANCHISOR HOLDINGS, LLC,
 TACO BELL FRANCHISOR, LLC,
 TACO BELL FRANCHISE HOLDER 1, LLC and

TACO BELL IP HOLDER, LLC,
 each as a Guarantor

 

in favor of

 

CITIBANK, N.A., 
 as Trustee

 

Dated as of May 11, 2016

 

 

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
SECTION 1 DEFINED   TERMS
    	
1
    
	
1.1
    	
Definitions
    	
1
    
	
SECTION 2   GUARANTEE
    	
2
    
	
2.1
    	
Guarantee
    	
2
    
	
2.2
    	
No Subrogation
    	
2
    
	
2.3
    	
Amendments, etc.   with respect to the Issuer Obligations
    	
3
    
	
2.4
    	
Guarantee Absolute and   Unconditional
    	
3
    
	
2.5
    	
Reinstatement
    	
4
    
	
2.6
    	
Payments
    	
4
    
	
2.7
    	
Information
    	
4
    
	
SECTION 3   SECURITY
    	
4
    
	
3.1
    	
Grant of Security   Interest
    	
4
    
	
3.2
    	
Certain Rights and   Obligations of the Guarantors Unaffected
    	
6
    
	
3.3
    	
Performance of   Collateral Documents
    	
7
    
	
3.4
    	
Stamp, Other Similar   Taxes and Filing Fees
    	
7
    
	
3.5
    	
Direction to Establish   and Maintain Interest Reserve Accounts
    	
7
    
	
3.6
    	
Senior Notes Interest   Reserve Accounts
    	
8
    
	
3.7
    	
Authorization to File   Financing Statements; Other Filing and Recording Documents
    	
9
    
	
SECTION 4   REPRESENTATIONS AND WARRANTIES
    	
10
    
	
4.1
    	
Existence and Power
    	
10
    
	
4.2
    	
Company and   Governmental Authorization
    	
10
    
	
4.3
    	
No Consent
    	
10
    
	
4.4
    	
Binding Effect
    	
11
    
	
4.5
    	
Ownership of Equity   Interests; Subsidiaries
    	
11
    
	
4.6
    	
Security Interests
    	
11
    
	
4.7
    	
Other Representations
    	
12
    
	
SECTION 5   COVENANTS
    	
12
    
	
5.1
    	
Maintenance of Office   or Agency
    	
12
    
	
5.2
    	
Defaults or Events of   Default; Covenants in Base Indenture and Other Transaction Documents
    	
12
    
	
5.3
    	
Further Assurances
    	
12
    
	
5.4
    	
Legal Name, Location   Under Section 9-301 or 9-307
    	
13
    
	
5.5
    	
Equity Interests
    	
13
    
	
5.6
    	
Management Accounts
    	
13
    
	
SECTION 6 REMEDIAL   PROVISIONS
    	
13
    
	
6.1
    	
Rights of the Control   Party and Trustee upon Event of Default
    	
13
    
	
6.2
    	
Waiver of Appraisal,   Valuation, Stay and Right to Marshaling
    	
15
    
	
6.3
    	
Limited Recourse
    	
16
    
	
6.4
    	
Optional Preservation   of the Collateral
    	
16
    
	
6.5
    	
Control by the Control   Party
    	
16
    
	
6.6
    	
The Trustee   May File Proofs of Claim
    	
16
    

 

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6.7
    	
Undertaking for Costs
    	
17
    
	
6.8
    	
Restoration of Rights   and Remedies
    	
17
    
	
6.9
    	
Rights and Remedies   Cumulative
    	
17
    
	
6.10
    	
Delay or Omission Not   Waiver
    	
17
    
	
6.11
    	
Waiver of Stay or   Extension Laws
    	
17
    
	
SECTION 7 THE   TRUSTEE’S AUTHORITY
    	
18
    
	
SECTION 8   MISCELLANEOUS
    	
18
    
	
8.1
    	
Amendments
    	
18
    
	
8.2
    	
Notices
    	
18
    
	
8.3
    	
Governing Law
    	
19
    
	
8.4
    	
Successors
    	
19
    
	
8.5
    	
Severability
    	
20
    
	
8.6
    	
Counterpart Originals
    	
20
    
	
8.7
    	
Table of Contents,   Headings, etc.
    	
20
    
	
8.8
    	
[Reserved]
    	
20
    
	
8.9
    	
Waiver of Jury Trial
    	
20
    
	
8.10
    	
Submission to   Jurisdiction; Waivers
    	
20
    
	
8.11
    	
Additional Guarantors
    	
20
    
	
8.12
    	
Currency Indemnity
    	
21
    
	
8.13
    	
Acknowledgment of   Receipt; Waiver
    	
21
    
	
8.14
    	
Termination; Partial   Release
    	
21
    
	
8.15
    	
Third Party Beneficiary
    	
21
    
	
8.16
    	
Entire Agreement
    	
21
    
	
 
    	
 
    	
 
    
	
SCHEDULES
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Schedule 4.5
    	
—
    	
Guarantor Ownership   Relationships
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
EXHIBITS
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Exhibit A
    	
—
    	
Form of Assumption   Agreement for Future Securitization Entities
    	
 
    

 

ii

 

GUARANTEE AND COLLATERAL AGREEMENT

 

GUARANTEE AND COLLATERAL AGREEMENT (as amended, supplemented or otherwise modified from time to time in accordance with the terms hereof, this “Agreement”), dated as of May 11, 2016, made by TACO BELL FRANCHISOR HOLDINGS, LLC, a Delaware limited liability company (“Franchisor Holdco”), TACO BELL FRANCHISOR, LLC, a Delaware limited liability company (“Taco Bell Franchisor”), TACO BELL FRANCHISE HOLDER 1, LLC, a Delaware limited liability company (“Franchise Holder”), and TACO BELL IP HOLDER, LLC, a Delaware limited liability company (“IP Holder”  and, together with Franchisor Holdco, Taco Bell Franchisor, Franchise Holder and any Future Securitization Entities, the “Guarantors” and, each, a “Guarantor”), in favor of CITIBANK, N.A., a national banking association, as trustee under the Indenture referred to below (in such capacity, together with its permitted successors and assigns in such capacity, the “Trustee”) for the benefit of the Secured Parties.

 

W I T N E S S E T H:

 

WHEREAS, Taco Bell Funding, LLC, a Delaware limited liability company, and Citibank, N.A., in its capacities as the Trustee and the securities intermediary thereunder, have entered into the Base Indenture, dated as of the date of this Agreement (as amended, supplemented or otherwise modified from time to time, exclusive of any Series Supplements, the “Base Indenture” and, together with all Series Supplements, the “Indenture”), providing for the issuance from time to time of one or more Series of Notes thereunder; and

 

WHEREAS, the Indenture and the other Transaction Documents require that the parties hereto execute and deliver this Agreement;

 

NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, each Guarantor hereby agrees with the Trustee, for the benefit of the Secured Parties, as follows:

 

SECTION 1

 

DEFINED TERMS

 

1.1          Definitions.

 

(a)           Capitalized terms used and not otherwise defined herein shall have the meanings set forth or incorporated by reference in the Base Indenture Definitions List attached as Annex A to the Base Indenture.

 

(b)           Any terms used in this Agreement (including, without limitation, for purposes of Section 3) that are defined in the UCC and pertain to Collateral shall be construed and defined as set forth in the UCC, unless otherwise defined herein.

 

(c)           The following terms shall have the following meanings for purposes of this Agreement:

 

“Collateral” has the meaning assigned to such term in Section 3.1(a).

 

“Issuer Obligations” means all Obligations owed by the Issuer to the Secured Parties under the Indenture and the other Transaction Documents.

 

“Other Currency” has the meaning assigned to such term in Section 8.12.

 

 

“Termination Date” has the meaning assigned to such term in Section 2.1(d).

 

SECTION 2

 

GUARANTEE

 

2.1          Guarantee.

 

(a)           Each of the Guarantors hereby, jointly and severally, unconditionally and irrevocably, guarantees to the Trustee, for the benefit of the Secured Parties, the prompt and complete payment and performance by the Issuer when due (whether at the stated maturity, by acceleration or otherwise, but after giving effect to all applicable grace or cure periods) of the Issuer Obligations.  In furtherance of the foregoing and not in limitation of any other right that the Trustee or any other Secured Party has at law or in equity against any Guarantor by virtue hereof, upon the failure of the Issuer to pay any Issuer Obligation when and as the same shall become due, after giving effect to all applicable grace or cure periods, whether at maturity, by acceleration, after notice of prepayment or otherwise, each Guarantor hereby jointly and severally promises to and shall forthwith pay, or cause to be paid, to the Trustee for distribution to the applicable Secured Parties in accordance with the Indenture, in cash, the amount of such unpaid Issuer Obligation. This is a guarantee of payment and not merely of collection.

 

(b)           Anything herein or in any other Transaction Document to the contrary notwithstanding, the maximum liability of each Guarantor hereunder and under the other Transaction Documents shall in no event exceed the amount which can be guaranteed by such Guarantor under applicable federal and state laws relating to the insolvency of debtors.

 

(c)           Each Guarantor agrees that the Issuer Obligations may at any time and from time to time exceed the amount of the liability of such Guarantor hereunder without impairing the guarantee contained in this Section 2 or affecting the rights and remedies of the Trustee or any other Secured Party hereunder.

 

(d)           The guarantee contained in this Section 2 shall remain in full force and effect until the date (the “Termination Date”) on which this Agreement ceases to be of further effect in accordance with Article XII of the Base Indenture, notwithstanding that from time to time prior thereto the Issuer may be free from any Issuer Obligations.

 

(e)           No payment made by the Issuer, any of the Guarantors, any other guarantor or any other Person or received or collected by the Trustee or any other Secured Party from the Issuer, any of the Guarantors, any other guarantor or any other Person by virtue of any action or proceeding or any set-off or appropriation or application at any time or from time to time in reduction of or in payment of the Issuer Obligations shall be deemed to modify, reduce, release or otherwise affect the liability of any Guarantor which shall, notwithstanding any such payment (other than any payment made by such Guarantor in respect of the Issuer Obligations or any payment received or collected from such Guarantor in respect of the Issuer Obligations), remain liable hereunder for the Issuer Obligations up to the maximum liability of such Guarantor hereunder until the Termination Date.

 

2.2          No Subrogation.  Notwithstanding any payment made by any Guarantor hereunder or any set-off or application of funds of any Guarantor by the Trustee or any other Secured Party, no Guarantor shall be entitled to be subrogated to any of the rights of the Trustee or any other Secured Party against the Issuer or any other Guarantor or any collateral security or guarantee or right of offset held by the Trustee or any other Secured Party for the payment of the Issuer Obligations, nor shall any Guarantor seek or be entitled to seek any contribution or reimbursement from the Issuer or any other Guarantor in respect of payments made by such Guarantor hereunder, until the Termination Date.  If any amount shall be paid to any Guarantor on account of such subrogation, contribution or reimbursement rights at any time when all of the Issuer Obligations shall not have been paid in full, such amount shall be

 

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held by such Guarantor in trust for the Trustee and the other Secured Parties, segregated from other funds of such Guarantor, and shall, forthwith upon receipt by such Guarantor, be turned over to the Trustee in the exact form received by such Guarantor (duly endorsed by such Guarantor to the Trustee, if required), to be applied against the Issuer Obligations, whether matured or unmatured, in such order as the Trustee may determine in accordance with the Indenture.

 

2.3          Amendments, etc. with respect to the Issuer Obligations.  Each Guarantor shall remain obligated hereunder notwithstanding that, without any reservation of rights against any Guarantor and without notice to or further assent by any Guarantor, any demand for payment of any of the Issuer Obligations made by the Trustee or any other Secured Party may be rescinded by the Trustee or such other Secured Party and any of the Issuer Obligations continued, and the Issuer Obligations, or the liability of any other Person upon or for any part thereof, or any collateral security or guarantee therefor or right of offset with respect thereto, may, from time to time, in whole or in part, be renewed, extended, amended, modified, accelerated, compromised, waived, surrendered or released by the Trustee or any other Secured Party, and the Base Indenture and any other documents executed and delivered in connection therewith may be amended, modified, supplemented or terminated, in whole or in part, from time to time, and any collateral security, guarantee or right of offset at any time held by the Trustee or any other Secured Party for the payment of the Issuer Obligations may be sold, exchanged, waived, surrendered or released (it being understood that this Section 2.3 is not intended to affect any rights or obligations set forth in any other Transaction Document).

 

2.4          Guarantee Absolute and Unconditional.  Each Guarantor waives any and all notice of the creation, renewal, extension or accrual of any of the Issuer Obligations and notice of or proof of reliance by the Trustee or any other Secured Party upon the guarantee contained in this Section 2 or acceptance of the guarantee contained in this Section 2; the Issuer Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred, or renewed, extended, amended or waived, in reliance upon the guarantee contained in this Section 2 and the grant of the security interests pursuant to Section 3; and all dealings between the Issuer and any of the Guarantors, on the one hand, and the Trustee and the other Secured Parties, on the other hand, likewise shall be conclusively presumed to have occurred or been consummated in reliance upon the guarantee contained in this Section 2 and the grant of the security interests pursuant to Section 3.  Each Guarantor waives diligence, presentment, protest, demand for payment and notice of default or nonpayment to or upon the Issuer or any of the Guarantors with respect to the Issuer Obligations.  Each Guarantor understands and agrees that the guarantee contained in this Section 2 and the grant of the security interests pursuant to Section 3 shall be construed as a continuing, absolute and unconditional guarantee of payment without regard to (a) the validity or enforceability of the Indenture or any other Transaction Document, any of the Issuer Obligations or any other collateral security therefor or guarantee or right of offset with respect thereto at any time or from time to time held by the Trustee or any other Secured Party, (b) any defense, set-off or counterclaim (other than a defense of full payment or performance) which may at any time be available to or be asserted by the Issuer or any other Person against the Trustee or any other Secured Party, or (c) any other circumstance whatsoever (with or without notice to or knowledge of the Issuer or such Guarantor) which constitutes, or might be construed to constitute, an equitable or legal discharge of the Issuer for the Issuer Obligations, or of such Guarantor under the guarantee contained in this Section 2 and the grant of the security interests pursuant to Section 3, in bankruptcy or in any other instance.  When making any demand hereunder or otherwise pursuing its rights and remedies hereunder against any Guarantor, the Trustee or any other Secured Party may, but shall be under no obligation to, make a similar demand on or otherwise pursue such rights and remedies as it may have against the Issuer, any other Guarantor or any other Person or against any collateral security or guarantee for the Issuer Obligations or any right of offset with respect thereto, and any failure by the Trustee or any other Secured Party to make any such demand, to pursue such other rights or remedies or to collect any payments from the Issuer, any other Guarantor or any other Person or to realize upon any such collateral security or guarantee or to exercise any such right of offset, or any release of the Issuer, any other Guarantor or any other Person or any such collateral security, guarantee or right of offset, shall not relieve any Guarantor of any obligation or liability hereunder, and shall not impair or affect the rights and remedies, whether express, implied or available as

 

3

 

a matter of law, of the Trustee or any other Secured Party against any Guarantor.  Neither the Trustee nor any other Secured Party shall have any obligation to protect, secure, perfect or insure any Lien at any time held by it as security for the Issuer Obligations or for the guarantee contained in this Section 2 or any property subject thereto.  For the purposes hereof “demand” shall include the commencement and continuance of any legal proceedings.

 

2.5          Reinstatement.  The guarantee contained in this Section 2 shall continue to be effective, or be reinstated, as the case may be, if at any time payment, or any part thereof, of any of the Issuer Obligations is rescinded or must otherwise be restored or returned by the Trustee or any other Secured Party upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Issuer or any Guarantor, or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, the Issuer or any Guarantor or any substantial part of their respective property, or otherwise, all as though such payments had not been made.

 

2.6          Payments.  Each Guarantor hereby guarantees that payments hereunder shall be paid to the Trustee without set-off or deduction or counterclaim in immediately available funds in Dollars at the office of the Trustee.

 

2.7          Information.  Each Guarantor assumes all responsibility for being and keeping itself informed of the Issuer’s and each other Guarantor’s financial condition and assets, and of all other circumstances bearing upon the risk of nonpayment of the Issuer Obligations and the nature, scope and extent of the risks that such Guarantor assumes and incurs hereunder, and agrees that neither the Trustee nor any other Secured Party shall have any duty to advise such Guarantor of information known to it or any of them regarding such circumstances or risks.

 

SECTION 3

 

SECURITY

 

3.1          Grant of Security Interest.

 

(a)           To secure the Obligations, each Guarantor hereby pledges, assigns, conveys, delivers, transfers and sets over to the Trustee, for the benefit of the Secured Parties, and hereby grants to the Trustee, for the benefit of the Secured Parties, a security interest in such Guarantor’s right, title and interest in, to and under all of the following property, to the extent now owned or at any time hereafter acquired by such Guarantor (collectively, the “Collateral”):

 

(i)            with respect to Franchisor Holdco, the Equity Interests owned by Franchisor Holdco that represent the 100% ownership interests in Taco Bell Franchisor, Franchise Holder and any Future Securitization Entity owned by Franchisor Holdco;

 

(ii)           with respect to Taco Bell Franchisor, (A) all New Franchise Agreements for Branded Restaurants in the Securitization Jurisdiction and all Franchisee Payment Amounts thereon; (B) all rights to enter into New Franchise Agreements for Branded Restaurants in the Securitization Jurisdiction; (C) the Franchisee Notes, if any, with respect thereto; and (D) any and all other property of every nature, now or hereafter transferred, mortgaged, pledged or assigned as security for payment or performance of any obligation of the Franchisees or other Persons, as applicable, to Taco Bell Franchisor under the Franchise Agreements and all guarantees of such obligations and the rights evidenced by or reflected in the Franchise Agreements, including, without limitation, with respect to any Future Brand developed or acquired after the Closing Date and contributed to a Securitization Entity;

 

(iii)          with respect to Franchise Holder, (A) all Contributed Franchise Agreements and all Franchisee Payment Amounts thereon; (B) the Franchisee Notes, if any, with respect thereto; and (C) any and all other property of every nature, now or hereafter transferred, mortgaged, pledged or assigned

 

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as security for payment or performance of any obligation of the Franchisees or other Persons, as applicable, to Franchise Holder under the Franchise Agreements and all guarantees of such obligations and the rights evidenced by or reflected in the Franchise Agreements;

 

(iv)          with respect to IP Holder, (A) the Securitization IP and all U.S. Intellectual Property related to Future Brands contributed to the Securitization Entities and the right to bring an action at law or in equity for any infringement, misappropriation, dilution or other violation thereof occurring prior to, on or after the Closing Date and to collect all damages, settlements and proceeds relating thereto and (B) all IP License Agreements, all related payments thereon and all rights thereunder, it being agreed that title transfer recordations and collateral recordations will be filed with respect to the Securitization IP, where applicable;

 

(v)           the Accounts and all amounts on deposit in or otherwise credited to the Accounts, where applicable;

 

(vi)          any rights under or in respect of any Interest Reserve Letter of Credit;

 

(vii)         the books and records (whether in physical, electronic or other form) of such Guarantor, including those books and records maintained by the Manager on behalf of each Grantor relating to the Franchise Assets or the Securitization IP;

 

(viii)        the rights, powers, remedies and authorities of such Guarantor under (A) each of the Transaction Documents (other than the Indenture and the Notes) to which such Guarantor is a party and (B) each of the documents relating to the Franchise Assets to which such Guarantor is a party;

 

(ix)          any and all other property of such Guarantor now or hereafter acquired, including, without limitation, all accounts, chattel paper, commercial tort claims, deposit accounts, documents, equipment, fixtures, general intangibles, health-care-insurance receivables, instruments, inventory, securities, securities accounts and other investment property and letter-of-credit rights (in each case, as such term is defined in the New York UCC); and

 

(x)           all payments, proceeds, supporting obligations and accrued and future rights to payment with respect to the foregoing;

 

provided that (A) the Collateral shall exclude the Collateral Exclusions, (B) the Guarantors shall not be required to pledge, and the Collateral shall not include, more than 65% of the Voting Equity Interests (and any rights associated with such Voting Equity Interests) of any foreign Subsidiary (or any domestic Subsidiary, substantially all of the assets of which consist of equity (or equity and debt) of one or more foreign Subsidiaries) of any of the Guarantors that is a corporation for United States federal income tax purposes, (C) the Guarantors shall not be required to pledge any assets owned by a foreign Subsidiary and (D) the security interest in (1) the Senior Notes Interest Reserve Accounts, each Series Distribution Account with respect to the Senior Notes and the funds or securities deposited therein or credited thereto shall only be for the benefit of the Senior Noteholders (or, in the case of a Series Distribution Account, Holders of a Class thereof, as set forth in the applicable Series Supplement) and the Trustee, in its capacity as trustee for the Senior Noteholders (or, in the case of a Series Distribution Account, Holders of a Class thereof, as set forth in the applicable Series Supplement), (2) the Senior Subordinated Notes Interest Reserve Account, the Series Distribution Account with respect to the Senior Subordinated Notes and the funds or securities deposited therein or credited thereto shall only be for the benefit of the Senior Subordinated Noteholders and the Trustee, in its capacity as trustee for the Senior Subordinated Noteholders, and (3) the Series Distribution Account with respect to the Subordinated Notes and the funds or securities deposited therein or credited thereto shall only be for the benefit of the Subordinated Noteholders and the Trustee, in its capacity as trustee for the Subordinated Noteholders.  The Trustee, on

 

5

 

behalf of the Secured Parties, acknowledges that it shall have no security interest in any Collateral Exclusions.

 

(b)           The foregoing grant is made in trust to secure the Obligations and to secure compliance with the provisions of this Agreement, all as provided in this Agreement.  The Trustee, on behalf of the Secured Parties, acknowledges such grant, accepts the trusts under this Agreement in accordance with the provisions of this Agreement and agrees to perform its duties required in this Agreement.  The Collateral shall secure the Obligations equally and ratably without prejudice, priority or distinction (except, with respect to any Series of Notes, as otherwise stated in the applicable Series Supplement or in the applicable provisions of the Base Indenture).

 

(c)           The parties hereto agree and acknowledge that each certificated Equity Interest constituting Collateral may be held by a custodian on behalf of the Trustee.

 

(d)           To the extent that any real property, Company-Owned Restaurants or other assets are elected to be contributed by any Non-Securitization Entity to any Guarantor, such Guarantor shall do such acts and things, and execute and deliver to the Trustee and the Control Party such additional assignments, agreements, powers and instruments, if any, as the Control Party and such Guarantor shall agree, with respect to obtaining or maintaining the security interest of the Trustee in such real property, Company-Owned Restaurants or other assets on behalf of the Secured Parties as a perfected security interest subject to no prior Liens (other than Permitted Liens), or assuring and confirming to the Trustee, the Control Party or the other Secured Parties their rights, powers and remedies hereunder, including, without limitation, security agreements, mortgages, title insurance policies, surveys, environmental reports and Opinions of Counsel, in each case, in form and substance reasonably satisfactory to the Control Party and the Trustee.

 

3.2          Certain Rights and Obligations of the Guarantors Unaffected.

 

(a)           Notwithstanding the grant of the security interest in the Collateral hereunder to the Trustee, on behalf of the Secured Parties, the Guarantors acknowledge that the Manager, on behalf of the Securitization Entities, shall, subject to the terms and conditions of the Management Agreement, nevertheless have the right, subject to the Trustee’s right to revoke such right, in whole or in part, in the event of the occurrence of an Event of Default, (i) to give, in accordance with the Managing Standard, all consents, requests, notices, directions, approvals, extensions and waivers, if any, which are required or permitted to be given by any Guarantor under the Collateral Documents to which it is a party, and to enforce all rights, remedies, powers, privileges and claims of such Guarantor under the Collateral Documents to which it is a party, (ii) to give, in accordance with the Managing Standard, all consents, requests, notices, directions and approvals, if any, which are required or permitted to be given by any Guarantor under any IP License Agreement to which such Guarantor is a party and to enforce all rights, remedies, powers, privileges and claims of such Guarantor thereunder and (iii) to take any other actions required or permitted under the terms of the Management Agreement.

 

(b)           The grant of the security interest by the Guarantors in the Collateral to the Trustee on behalf of the Secured Parties hereunder shall not (i) relieve any Guarantor from the performance of any term, covenant, condition or agreement on such Guarantor’s part to be performed or observed under or in connection with any of the Collateral Documents to which it is a party or (ii) impose any obligation on the Trustee or any of the other Secured Parties to perform or observe any such term, covenant, condition or agreement on any Guarantor’s part to be so performed or observed or impose any liability on the Trustee or any of the other Secured Parties for any act or omission on the part of such Guarantor or from any breach of any representation or warranty on the part of such Guarantor.

 

(c)           Each Guarantor hereby jointly and severally agrees to indemnify and hold harmless the Trustee and each other Secured Party (including its respective directors, officers, employees and agents) from and against any and all losses, liabilities (including liabilities for penalties), claims,

 

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demands, actions, suits, judgments, reasonable and documented out-of-pocket costs and expenses arising out of or resulting from the security interest granted hereby, whether arising by virtue of any act or omission on the part of such Guarantor or otherwise, including, without limitation, the reasonable and documented out-of-pocket costs, expenses and disbursements (including reasonable attorneys’ fees and expenses) incurred by the Trustee or any other Secured Party in enforcing this Agreement or any other Transaction Document or preserving any of its rights to, or realizing upon, any of the Collateral; provided, however, that the foregoing indemnification shall not extend to any action by the Trustee or any other Secured Party which constitutes gross negligence, bad faith or willful misconduct by the Trustee or such other Secured Party or any other indemnified person hereunder.  The indemnification provided for in this Section 3.2 shall survive the removal of, or a resignation by, any Person as Trustee as well as the termination of this Agreement.

 

3.3          Performance of Collateral Documents.  Upon the occurrence of a default or breach (after giving effect to any applicable grace or cure periods) by any Person party to (a) a Transaction Document to which a Guarantor is a party or (b) a Franchise Document to which a Guarantor is a party (only if a Manager Termination Event or an Event of Default has occurred and is continuing), promptly following a request from the Trustee to do so and at such Guarantors’ expense, each such Guarantor shall take all such lawful action as permitted under this Agreement as the Trustee (acting at the direction of the Control Party (at the direction of the Controlling Class Representative)) may reasonably request to compel or secure the performance and observance by such Person of its obligations to any Guarantor, and to exercise any and all rights, remedies, powers and privileges lawfully available to any Guarantor to the extent and in the manner directed by the Trustee (acting at the direction of the Control Party (at the direction of the Controlling Class Representative)), including, without limitation, the transmission of notices of default and the institution of legal or administrative actions or proceedings to compel or secure performance by such Person of its obligations thereunder.  If (i) any Guarantor shall have failed, within ten (10) Business Days of receiving the direction of the Trustee, to take commercially reasonable action to accomplish such directions of the Trustee, (ii) any Guarantor refuses to take any such action, as reasonably determined by the Trustee in good faith, or (iii) the Control Party (at the direction of the Controlling Class Representative) reasonably determines that such action must be taken immediately, in any such case the Control Party (at the direction of the Controlling Class Representative) may, but shall not be obligated to, take, and the Trustee shall take (if so directed by the Control Party (at the direction of the Controlling Class Representative)), at the expense of the Guarantors, such previously directed action and any related action permitted under this Agreement which the Control Party (at the direction of the Controlling Class Representative) thereafter determines is appropriate (without the need under this provision or any other provision under this Agreement to direct the Guarantor to take such action), on behalf of the Guarantor and the Secured Parties.

 

3.4          Stamp, Other Similar Taxes and Filing Fees.  The Guarantors shall jointly and severally indemnify and hold harmless the Trustee and each other Secured Party from any present or future claim for liability for any stamp, documentary or other similar tax, and any penalties or interest and expenses with respect thereto, that may be assessed, levied or collected by any jurisdiction in connection with this Agreement, any other Transaction Document or any Collateral.  The Guarantors shall pay, and jointly and severally indemnify and hold harmless each Secured Party against, any and all amounts in respect of all search, filing, recording and registration fees, taxes, excise taxes and other similar imposts that may be payable or determined to be payable in respect of the execution, delivery, performance and/or enforcement of this Agreement or any other Transaction Document.

 

3.5          Direction to Establish and Maintain Interest Reserve Accounts.

 

(a)           Taco Bell Franchisor hereby directs the Trustee to establish and maintain the Senior Notes Interest Reserve Account I in the name of and for the benefit of Taco Bell Franchisor

 

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and Franchisor Holdco hereby directs the Trustee to establish and maintain the Senior Notes Interest Reserve Account II in the name and for the benefit of Franchisor Holdco, in each case on or prior to the Closing Date pursuant to Section 5.2(a) of the Base Indenture.  Taco Bell Franchisor and Franchisor Holdco hereby further direct the Trustee to administer the Senior Notes Interest Reserve Accounts in the manner provided in the Base Indenture.

 

(b)           If the Issuer issues one or more Series of Senior Subordinated Notes, Taco Bell Franchisor may direct the Trustee to establish and maintain the Senior Subordinated Notes Interest Reserve Account in its name and for its benefit from time to time following the Closing Date pursuant to Section 5.3 of the Base Indenture.  Taco Bell Franchisor hereby further directs the Trustee to administer the Senior Subordinated Notes Interest Reserve Account in the manner provided in the Base Indenture.

 

3.6          Senior Notes Interest Reserve Accounts

 

(a)           The Trustee agrees that:

 

(i)            the Senior Notes Interest Reserve Accounts are accounts to which “financial assets” within the meaning of Section 8-102(a)(9) (“Financial Assets”) of the UCC in effect in the State of New York (the “New York UCC”) will or may be credited;

 

(ii)           the Senior Notes Interest Reserve Accounts are “securities accounts” within the meaning of Section 8-501 of the New York UCC and the Trustee qualifies as a “securities intermediary” under Section 8-102(a) of the New York UCC;

 

(iii)          all property delivered to the Trustee pursuant to the Base Indenture will be promptly credited to the appropriate Senior Notes Interest Reserve Account;

 

(iv)          each item of property (whether investment property, security, instrument or cash) credited to a Senior Notes Interest Reserve Account shall be treated as a Financial Asset under Article 8 of the New York UCC;

 

(v)           the Senior Notes Interest Reserve Accounts shall be governed by the laws of the State of New York, regardless of any provision of any other agreement; for purposes of all applicable UCCs, New York shall be deemed to be the Trustee’s jurisdiction, and the Senior Notes Interest Reserve Accounts (as well as the “securities entitlements” (as defined in Section 8-102(a)(17) of the New York UCC) related thereto) shall be governed by the laws of the State of New York;

 

(vi)          the Trustee has not entered into, and until termination of this Agreement will not enter into, any agreement with any other Person relating to the Senior Notes Interest Reserve Accounts and/or any Financial Assets credited thereto pursuant to which it has agreed to comply with entitlement orders (as defined in Section 8-102(a)(8) of the New York UCC) of such other Person and the Trustee has not entered into, and until the termination of  this Agreement will not enter into, any agreement with the Issuer purporting to limit or condition the obligation of the Trustee to comply with entitlement orders as set forth in this Agreement; and

 

(vii)         except for the claims and interest of the Trustee, the Secured Parties, the Issuer and the other Securitization Entities in the Senior Notes Interest Reserve Accounts, neither the Trustee nor, in the case of the Trustee, any Trust Officer knows of any claim to, or interest in, the Senior

 

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Notes Interest Reserve Accounts or any Financial Asset credited thereto; if the Trustee has Actual Knowledge of the assertion by any other person of any Lien, encumbrance or adverse claim (including any writ, garnishment, judgment, warrant of attachment, execution or similar process) against any Senior Notes Interest Reserve Account or any Financial Asset carried therein, the Trustee will promptly notify the Servicer, the Manager, the Back-Up Manager and the Issuer thereof.

 

(b)           At any time after the occurrence and during the continuation of an Event of Default, the Trustee shall possess all right, title and interest in all funds on deposit from time to time in the Senior Notes Interest Reserve Accounts and in all Proceeds thereof, and (acting at the direction of the Controlling Class Representative) shall be the only Person authorized to originate entitlement orders in respect of the Senior Notes Interest Reserve Accounts; provided that at all other times the Issuer (or the Manager acting on behalf of the Issuer) shall, subject to the terms of the Base Indenture and the other Transaction Documents, be authorized to instruct the Trustee to originate entitlement orders in respect of the Senior Notes Interest Reserve Accounts.

 

3.7          Authorization to File Financing Statements; Other Filing and Recording Documents

 

(a)           Each Guarantor hereby irrevocably authorizes the Control Party on behalf of the Secured Parties at any time and from time to time to file or record in any filing office in any applicable jurisdiction financing statements and other filing or recording documents or instruments with respect to the Collateral, including, without limitation, any and all Securitization IP (to the extent set forth in Section 8.25(c) and Section 8.25(d) of the Base Indenture), to perfect the security interests of the Trustee for the benefit of the Secured Parties under this Agreement.  In connection therewith, each Guarantor authorizes the filing of any such financing statement, document or instrument naming the Trustee as secured party and indicating that the collateral covered thereby includes the Collateral (other than the Collateral Exclusions) regardless of whether any particular assets comprised in the Collateral fall within the scope of Article 9 of the UCC, including, without limitation, any and all Securitization IP.  Each Guarantor agrees to furnish any information necessary to accomplish the foregoing promptly upon the Control Party’s request.  Each Guarantor also hereby ratifies and authorizes the filing on behalf of the Secured Parties of any financing statement with respect to the Collateral made prior to the date hereof.

 

(b)           The IP Holder hereby agrees to execute, deliver and file within fifteen (15) Business Days after the Closing Date, instruments substantially in the form of Exhibit C-1 to the Base Indenture with respect to Trademarks, Exhibit C-2 to the Base Indenture with respect to Patents and Exhibit C-3 to the Base Indenture with respect to Copyrights, or otherwise in form and substance satisfactory to the Control Party, and any other instruments or documents as may be reasonably necessary or, in the Control Party’s opinion, desirable to perfect or protect the Trustee’s security interest granted under the Base Indenture and this Agreement in the Trademarks, Patents and Copyrights included in the Securitization IP in the United States, in each case pursuant to Section 8.25(c) of the Base Indenture.  If any Guarantor, either itself or through any agent, licensee or designee, files or otherwise acquires an application for the registration of any Patent, Trademark or Copyright with the USPTO or USCO, such Guarantor (i) shall give the Trustee and the Control Party written notice thereof on the later of (A) fifteen (15) Business Days thereafter and (B) the following Quarterly Payment Date and (ii) upon reasonable request of the Control Party, solely with respect to such applications filed in the United States, in a reasonable time after such filing (and in any event within ninety (90) days thereof), shall execute and deliver all instruments and documents, and take all further action, that the Control Party may reasonably request in order to continue, perfect or protect the security interest granted hereunder or under the Guarantee and Collateral Agreement in the United States, including, without limitation, executing and delivering (x) the Supplemental Notice of Grant of Security Interest in Trademarks substantially in the form attached as Exhibit D-1 to the Base Indenture, (y) the Supplemental Notice of Grant of Security Interest in Patents substantially in the form attached as Exhibit D-2 to the Base Indenture and/or (z) the

 

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Supplemental Grant of Security Interest in Copyrights substantially in the form attached as Exhibit D-3 to the Base Indenture, as applicable, in each case pursuant to Section 8.25(d) of the Base Indenture.

 

(c)           Each Guarantor acknowledges that the Collateral under this Agreement may include certain rights of such Guarantor as a secured party under the Transaction Documents.  To the extent a Guarantor is a secured party under the Transaction Documents, such Guarantor hereby irrevocably appoints the Trustee as its representative with respect to all financing statements filed to perfect or record evidence of such security interests and authorizes the Control Party on behalf of the Secured Parties to make such filings as it deems necessary to reflect the Trustee as secured party of record with respect to such financing statements.

 

SECTION 4

 

REPRESENTATIONS AND WARRANTIES

 

Each Guarantor hereby represents and warrants, for the benefit of the Trustee and the other Secured Parties, as follows as of the date hereof and as of each Series Closing Date:

 

4.1          Existence and Power. Each Guarantor (a) is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, (b) is duly qualified to do business as a foreign entity and in good standing under the laws of each jurisdiction where the character of its property, the nature of its business or the performance of its obligations under the Transaction Documents make such qualification necessary, except to the extent that the failure to so qualify is not reasonably likely to result in a Material Adverse Effect, and (c) has all limited liability company, corporate or other powers and all governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted, except to the extent that the failure to so qualify is not reasonably likely to result in a Material Adverse Effect, and for purposes of the transactions contemplated by this Agreement and the other Transaction Documents.

 

4.2          Company and Governmental Authorization. The execution, delivery and performance by each Guarantor of this Agreement and the other Transaction Documents to which it is a party (a) is within such Guarantor’s limited liability company, corporate or other powers and has been duly authorized by all necessary limited liability company, corporate or other action, (b) requires no action by or in respect of, or filing with, any Governmental Authority which has not been obtained (other than any actions or filings that may be undertaken after the Closing Date pursuant to the terms of the Base Indenture or any other Transaction Document) and (c) does not contravene, or constitute a default under, any Requirements of Law with respect to such Guarantor or any Contractual Obligation with respect to such Guarantor or result in the creation or imposition of any Lien on any property of any Guarantor, except for Permitted Liens and Liens created by this Agreement or the other Transaction Documents, except in the case of clauses (b) and (c) above, the violation of which could not reasonably be expected to have a Material Adverse Effect.  This Agreement and each of the other Transaction Documents to which each Guarantor is a party has been executed and delivered by a duly Authorized Officer of such Guarantor.

 

4.3          No Consent. Except as set forth on Schedule 7.3 of the Base Indenture, no consent, action by or in respect of, approval or other authorization of, or registration, declaration or filing with, any Governmental Authority or other Person is required for the valid execution and delivery by each Guarantor of this Agreement or any Transaction Document to which it is a party or for the performance of any of the Guarantors’ obligations hereunder or thereunder other than such consents, approvals, authorizations, registrations, declarations or filings (a) as shall have been obtained or made by such Guarantor prior to the Closing Date or as are permitted to be obtained subsequent to the Closing Date in accordance with Section 4.6 hereof or Section 7.13 or Section 8.25 of the Base Indenture or (b) relating to

 

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the performance of any Franchise Document the failure of which to obtain is not reasonably likely to have a Material Adverse Effect.

 

4.4          Binding Effect.  This Agreement, and each other Transaction Document to which a Guarantor is a party is a legal, valid and binding obligation of each such Guarantor enforceable against such Guarantor in accordance with its terms (except as may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws affecting creditors’ rights generally or by general equitable principles, whether considered in a proceeding at law or in equity, or by an implied covenant of good faith and fair dealing).

 

4.5          Ownership of Equity Interests; Subsidiaries.  All of the issued and outstanding Equity Interests of each Guarantor are owned as set forth in Schedule 4.5 to this Agreement, all of which interests have been duly authorized and validly issued, are fully paid and non-assessable and are owned of record by such Person as set forth on Schedule 4.5, and with respect to Equity Interests owned by each Guarantor, free and clear of all Liens other than Liens in favor of the Trustee for the benefit of the Secured Parties and Permitted Liens.  No Guarantor has any subsidiaries or owns any Equity Interests in any other Person, other than as set forth in such Schedule 4.5 and other than any Future Securitization Entity.

 

4.6          Security Interests.

 

(a)           Each Guarantor owns and has good title to its Collateral, free and clear of all Liens other than Permitted Liens.  This Agreement constitutes a valid and continuing Lien on the Collateral in favor of the Trustee on behalf of and for the benefit of the Secured Parties, which Lien on the Collateral has been perfected (except as described on Schedule 8.11 of the Base Indenture and as subject to Section 8.25(c) and Section 8.25(d) of the Base Indenture) and is prior to all other Liens (other than Permitted Liens), and is enforceable as such as against creditors of and purchasers from each Guarantor in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws affecting creditors’ rights generally or by general equitable principles, whether considered in a proceeding at law or in equity, or by an implied covenant of good faith and fair dealing.  Except as set forth in Schedule 8.11 of the Base Indenture, the Guarantors have received all consents and approvals required by the terms of the Collateral to the pledge of the Collateral to the Trustee hereunder and under the Base Indenture.  Subject to Section 8.25(c) and Section 8.25(d) of the Base Indenture, the Guarantors have filed, or have caused the filing of, all appropriate financing statements in the proper filing office in the appropriate jurisdictions under applicable law in order to perfect the first-priority security interest (subject to Permitted Liens) in the Collateral (other than Intellectual Property) granted to the Trustee hereunder within ten (10) days of the date of this Agreement or such Series Closing Date.

 

(b)           Other than the security interest granted to the Trustee hereunder, pursuant to the other Transaction Documents or any other Permitted Lien, none of the Guarantors has pledged, assigned, sold or granted a security interest in the Collateral.  All action necessary (including the filing of UCC-1 financing statements) to protect and evidence the Trustee’s security interest in the Collateral in the United States has been duly and effectively taken, subject to Section 4.6(a) above and Sections 7.13(a), 8.25(c) and 8.25(d) of the Base Indenture, and except as described on Schedule 8.11 of the Base Indenture.  No security agreement, financing statement, equivalent security or lien instrument or continuation statement authorized by any Guarantor and listing such Guarantor as debtor covering all or any part of the Collateral is on file or of record in any jurisdiction, except in respect of Permitted Liens or such as may have been filed, recorded or made by such Guarantor in favor of the Trustee on behalf of the Secured Parties in connection with this Agreement, and no Guarantor has authorized any such filing.

 

(c)           All authorizations in this Agreement for the Trustee to endorse checks, instruments and securities and to execute financing statements, continuation statements, security

 

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agreements and other instruments with respect to the Collateral and to take such other actions with respect to the Collateral authorized by this Agreement are powers coupled with an interest and are irrevocable.

 

4.7          Other Representations.  All representations and warranties of or about (if made by the Issuer) each Guarantor made in the Base Indenture and in each other Transaction Document to which the Issuer or such Guarantor is a party are true and correct (i) if qualified as to materiality, in all respects, and (ii) if not qualified as to materiality, in all material respects (unless stated to relate solely to an earlier date, in which case such representations and warranties were true and correct in all respects or in all material respects, as applicable, as of such earlier date) and are repeated herein as though fully set forth herein.

 

SECTION 5

 

COVENANTS

 

5.1          Maintenance of Office or Agency.  Each Guarantor shall maintain an office or agency (which may be an office of the Manager) where notices and demands to or upon such Guarantor in respect of this Agreement may be served.  The Guarantors shall give prompt written notice to the Trustee and the Servicer of the location, and any change in the location, of such office or agency. If at any time the Guarantors shall fail to maintain any such required office or agency or shall fail to furnish the Trustee and the Servicer with the address thereof, such notices and demands may be delivered or served at the address of such Guarantor set forth in Section 8.2.

 

5.2          Defaults or Events of Default; Covenants in Base Indenture and Other Transaction Documents. Each Guarantor shall take, or shall refrain from taking, as the case may be, each action that is necessary to be taken or not taken, as the case may be, so that no Default or Event of Default is caused by the failure to take such action or to refrain from taking such action by such Guarantor or any of its Subsidiaries.  All covenants of each Guarantor made in the Base Indenture and in each other Transaction Document including, without limitation, the covenants of IP Holder relating to the Closing Date Securitization IP set forth in Section 8.25(c) of the Base Indenture and the covenants of each of the Guarantors relating to the After-Acquired Securitization IP set forth in Section 8.25(d) of the Base Indenture, are repeated herein as though fully set forth herein.

 

5.3          Further Assurances.

 

(a)           Each Guarantor shall do such further acts and things, and execute and deliver to the Trustee and the Control Party such additional assignments, agreements, powers and instruments, as are necessary or desirable to obtain or maintain the security interest of the Trustee in the Collateral on behalf of the Secured Parties as a first priority perfected security interest subject to no prior Liens (other than Permitted Liens and except as set forth on Schedule 8.11 of the Base Indenture and as subject to Section 8.25 of the Base Indenture), to carry into effect the purposes of this Agreement or the other Transaction Documents or to better assure and confirm unto the Trustee, the Control Party, the Noteholders or the other Secured Parties their rights, powers and remedies hereunder, including, without limitation, the filing of any financing or continuation statements or amendments under the UCC in effect in any jurisdiction with respect to the liens and security interests granted hereby, except as set forth on Schedule 8.11 of the Base Indenture and as subject to Sections 8.25(c) and 8.25(d) of the Base Indenture.  If any Guarantor fails to perform any of its agreements or obligations under this Section 5.3(a), then the Control Party may perform such agreement or obligation, and the expenses of the Control Party incurred in connection therewith shall be payable by the Guarantors upon the Control Party’s demand therefor.  The Control Party is hereby authorized to execute and file any financing statements, continuation statements, amendments or other instruments necessary or appropriate to perfect or maintain the perfection of the Trustee’s security interest in the Collateral.

 

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(b)           If any amount payable under or in connection with any of the Collateral shall be or become evidenced by any promissory note, chattel paper or other instrument, such note, chattel paper or instrument shall be deemed to be held in trust and immediately pledged and within three (3) Business Days physically delivered to the Trustee hereunder, and shall, subject to the rights of any Person in whose favor a prior Permitted Lien has been perfected, be duly endorsed in a manner satisfactory to the Trustee and delivered to the Trustee promptly; provided that no Guarantor shall be required to deliver any Franchisee Note.

 

(c)           Notwithstanding the provisions set forth in clauses (a) and (b) above, the Guarantors shall not be required to perfect any security interest in any fixtures (other than through a central filing of a UCC financing statement) or any Franchisee Notes.

 

(d)           If during any Quarterly Fiscal Period any Guarantor shall obtain an interest in any commercial tort claim or claims (as such term is defined in the New York UCC), such Guarantor shall comply with Section 8.11(d) of the Base Indenture.

 

(e)           Each Guarantor shall warrant and defend the Trustee’s right, title and interest in and to the Collateral and the income, distributions and Proceeds thereof, for the benefit of the Trustee on behalf of the Secured Parties, against the claims and demands of all Persons whomsoever.

 

5.4          Legal Name, Location Under Section 9-301 or 9-307.  No later than thirty (30) days’ following the effectiveness of any change in the location (within the meaning of Section 9-301 or 9-307 of the applicable UCC) of a Guarantor or its legal name, such Guarantor shall provide written notice thereof to each of the Trustee, the Servicer, the Manager, the Back-Up Manager and each Rating Agency with respect to each Series of Notes Outstanding.  In the event that any Guarantor desires to so change its location or change its legal name, such Guarantor shall make any required filings and shall deliver to the Trustee and the Servicer (i) an Officer’s Certificate and an Opinion of Counsel confirming that all required filings have been made, subject to Section 5.3(c), to continue the perfected interest of the Trustee on behalf of the Secured Parties in the Collateral under Article 9 of the applicable UCC in respect of the new location or new legal name of such Guarantor and (ii) copies of all such required filings with the filing information duly noted thereon by the office in which such filings were made, in each case, not later than thirty (30) days following the effectiveness of such change.

 

5.5          Equity Interests.  No Guarantor shall sell, transfer, assign, pledge, hypothecate or otherwise dispose, in whole or in part, of any Equity Interest of the Issuer or, except as provided in the Transaction Documents, any Securitization Entity.

 

5.6          Management Accounts.  To the extent that it owns any Management Account (including any lock-box related thereto), each Guarantor shall comply with Section 5.1 of the Base Indenture with respect to each such Management Account (including any lock-box related thereto).

 

SECTION 6

 

REMEDIAL PROVISIONS

 

6.1          Rights of the Control Party and Trustee upon Event of Default.

 

(a)           Proceedings To Collect Money. In case any Guarantor shall fail forthwith to pay any amounts due on this Guaranty upon demand, the Trustee at the direction of the Control Party (subject to Section 11.4(e) of the Base Indenture, at the direction of the Controlling Class Representative), in its own name and as trustee of an express trust, may institute a Proceeding for the collection of the sums so due and unpaid, and may prosecute such Proceeding to judgment or final decree, and may enforce the same against any Guarantor and collect in the manner provided by law out of the property of any Guarantor, wherever situated, the moneys adjudged or decreed to be payable.

 

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(b)           Other Proceedings. If and when an Event of Default shall have occurred and be continuing, the Trustee, at the direction of the Control Party (subject to Section 11.4(e) of the Base Indenture, at the direction of the Controlling Class Representative), shall take one or more of the following actions:

 

(i)            proceed to protect and enforce its rights and the rights of the Noteholders and the other Secured Parties, by such appropriate Proceedings as the Control Party (at the direction of the Controlling Class Representative) shall deem most effective to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Agreement or any other Transaction Document or in aid of the exercise of any power granted therein, or to enforce any other proper remedy or legal or equitable right vested in the Trustee by this Agreement or any other Transaction Document or by law, including any remedies of a secured party under applicable law;

 

(ii)           (A) direct the Guarantors to exercise (and each Guarantor agrees to exercise) all rights, remedies, powers, privileges and claims of any Guarantor against any party to any Collateral Document to which such Guarantor is a party arising as a result of the occurrence of such Event of Default or otherwise, including the right or power to take any action to compel performance or observance by any such party of its obligations to any Guarantor, and any right of any Guarantor to take such action independent of such direction shall be suspended, and (B) if (x) the Guarantors shall have failed, within ten (10) Business Days of receiving the direction of the Trustee (given at the direction of the Control Party (at the direction of the Controlling Class Representative)), to take commercially reasonable action to accomplish such directions of the Trustee, (y) any Guarantor refuses to take such action or (z) the Control Party (at the direction of the Controlling Class Representative) reasonably determines that such action must be taken immediately, take (or the Control Party on behalf of the Trustee shall take) such previously directed action (and any related action as permitted under this Agreement thereafter determined by the Trustee or the Control Party to be appropriate without the need under this provision or any other provision under this Agreement to direct the Guarantors to take such action);

 

(iii)          institute Proceedings from time to time for the complete or partial foreclosure of this Agreement or, to the extent applicable, any other Transaction Document with respect to the Collateral; provided that the Trustee shall not be required to take title to any real property in connection with any foreclosure or other exercise of remedies hereunder or under such Transaction Documents and title to such property shall instead be acquired in an entity designated and (unless owned by a third party) controlled by the Control Party; and/or

 

(iv)          sell all or a portion of the Collateral at one or more public or private sales called and conducted in any manner permitted by law; provided that the Trustee shall not proceed with any such sale without the prior written consent of the Control Party (at the direction of the Controlling Class Representative), and the Trustee shall provide notice to the Guarantors and each Holder of Subordinated Notes and Senior Subordinated Notes of a proposed sale of Collateral.

 

(c)           Sale of Collateral. In connection with any sale of the Collateral hereunder (which may proceed separately and independently from the exercise of remedies under the Indenture), under any judgment, order or decree in any judicial proceeding for the foreclosure or involving the enforcement of this Agreement or any other Transaction Document:

 

(i)            any of the Trustee, any Noteholder, any Hedge Counterparty and/or any other Secured Party may bid for and purchase the property being sold, and upon compliance with the terms of the sale may hold, retain, possess and dispose of such property in its own absolute right without further accountability;

 

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(ii)           the Trustee (at the direction of the Control Party (at the direction of the Controlling Class Representative)) may make and deliver to the purchaser or purchasers a good and sufficient deed, bill of sale and instrument of assignment and transfer of the property sold;

 

(iii)          all right, title, interest, claim and demand whatsoever, either at law or in equity or otherwise, of any Guarantor of, in and to the property so sold shall be divested; and such sale shall be a perpetual bar both at law and in equity against such Guarantor and its successors and assigns, and against any and all Persons claiming or who may claim the property sold or any part thereof from, through or under such Guarantor or its successors or assigns; and

 

(iv)          the receipt of the Trustee or of the officer thereof making such sale shall be a sufficient discharge to the purchaser or purchasers at such sale for his or their purchase money, and such purchaser or purchasers, and his or their assigns or personal representatives, shall not, after paying such purchase money and receiving such receipt of the Trustee or of such officer therefor, be obliged to see to the application of such purchase money or be in any way answerable for any loss, misapplication or non-application thereof.

 

(d)           Application of Proceeds. Any amounts obtained by the Trustee or the Control Party on account of or as a result of the exercise by the Trustee or the Control Party of any right hereunder or under the Base Indenture shall be held by the Trustee as additional collateral for the repayment of the Obligations, shall be deposited into the Collection Account and shall be applied in accordance with the Priority of Payments; provided that unless otherwise provided in this Section 6 or Article IX of the Base Indenture, with respect to any distribution to any Class of Notes, notwithstanding the provisions of Article V of the Base Indenture, such amounts shall be distributed sequentially in order of alphabetical (as opposed to alphanumerical) designation and pro rata among each Class of Notes of the same alphabetical designation based upon the Outstanding Principal Amount of the Notes of each such Class.

 

(e)           Additional Remedies.  In addition to any rights and remedies now or hereafter granted hereunder or under applicable law with respect to the Collateral, the Trustee shall have all of the rights and remedies of a secured party under the UCC and similar laws as enacted in any applicable jurisdiction.

 

(f)            Proceedings.  The Trustee may maintain a Proceeding even if it does not possess any of the Notes or does not produce any of them in the Proceeding, and any such Proceeding instituted by the Trustee shall be in its own name as trustee.  All remedies are cumulative to the extent permitted by law.

 

6.2          Waiver of Appraisal, Valuation, Stay and Right to Marshaling. To the extent it may lawfully do so, each Guarantor for itself and for any Person who may claim through or under it hereby:

 

(a)           agrees that neither it nor any such Person shall step up, plead, claim or in any manner whatsoever take advantage of any appraisal, valuation, stay, extension or redemption laws, now or hereafter in force in any jurisdiction, which may delay, prevent or otherwise hinder (i) the performance, enforcement or foreclosure of this Agreement, (ii) the sale of any of the Collateral or (iii) the putting of the purchaser or purchasers thereof into possession of such property immediately after the sale thereof;

 

(b)           waives all benefit or advantage of any such laws;

 

(c)           waives and releases all rights to have the Collateral marshaled upon any foreclosure, sale or other enforcement of this Agreement; and

 

15

 

(d)           consents and agrees that, subject to and in accordance with the terms of this Agreement, all the Collateral may at any such sale be sold by the Trustee as an entirety or in such portions as the Trustee may (upon direction by the Control Party (at the direction of the Controlling Class Representative)) determine.

 

6.3          Limited Recourse. Notwithstanding any other provision of this Agreement or any other Transaction Document or otherwise, the liability of the Guarantors to the Noteholders and any other Secured Parties under or in relation to this Agreement or any other Transaction Document or otherwise, is limited in recourse to the Collateral.  The proceeds of the Collateral having been applied in accordance with the terms hereof, none of the Noteholders or any other Secured Parties shall be entitled to take any further steps against any Guarantor to recover any sums due but still unpaid hereunder, under the Notes or under any of the other agreements or documents described in this Section 6.3, all claims in respect of which shall be extinguished.

 

6.4          Optional Preservation of the Collateral. If the maturity of the Outstanding Notes of each Series has been accelerated pursuant to Section 9.2 of the Base Indenture following an Event of Default, and such declaration and its consequences have not been rescinded and annulled, the Trustee, at the direction of the Control Party (acting at the direction of the Controlling Class Representative), shall elect to maintain possession of such portion, if any, of the Collateral as the Control Party (acting at the direction of the Controlling Class Representative) shall in its discretion determine.

 

6.5          Control by the Control Party. Notwithstanding any other provision hereof, the Control Party (subject to Section 11.4(e) of the Base Indenture, at the direction of the Controlling Class Representative) may cause the institution of and direct the time, method and place of conducting any proceeding in respect of any enforcement of the Collateral, in respect of any enforcement of Liens on the Collateral or conducting any proceeding for any remedy available to the Trustee and to direct the exercise of any trust or power conferred on the Trustee; provided that:

 

(a)           such direction of time, method and place shall not be in conflict with any rule of law, the Servicing Standard, the Indenture or this Agreement;

 

(b)           the Control Party (at the direction of the Controlling Class Representative) may take any other action deemed proper by the Control Party (at the direction of the Controlling Class Representative) that is not inconsistent with such direction (as the same may be modified by the Control Party (with the consent of the Controlling Class Representative)); and

 

(c)           such direction shall be in writing;

 

provided, further, that, subject to Section 10.1 of the Base Indenture, the Trustee need not take any action that it determines might involve it in liability unless it has received an indemnity for such liability as provided in the Base Indenture.  The Trustee shall take no action referred to in this Section 6.5 unless instructed to do so by the Control Party (at the direction of the Controlling Class Representative).

 

6.6          The Trustee May File Proofs of Claim. The Trustee is authorized to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel), the Noteholders and any other Secured Party (as applicable) allowed in any judicial proceedings relative to any Guarantor (or any other obligor upon the Notes), its creditors or its property, and shall be entitled and empowered to collect, receive and distribute any money or other property payable or deliverable on any such claim and any custodian in any such judicial proceeding is hereby authorized by each Noteholder and each other Secured Party to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Noteholders or any other Secured Party, to pay the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel,

 

16

 

and any other amounts due the Trustee under Section 10.5 of the Base Indenture. To the extent that the payment of any such compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 10.5 of the Base Indenture out of the estate in any such proceeding, shall be denied for any reason, payment of the same shall be secured by a Lien on, and shall be paid out of, any and all distributions, dividends, money and other properties which any of the Noteholders or any other Secured Party may be entitled to receive in such proceeding whether in liquidation or under any plan of reorganization or arrangement or otherwise. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Noteholder or any other Secured Party any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Noteholder or any other Secured Party, or to authorize the Trustee to vote in respect of the claim of any Noteholder or any other Secured Party in any such proceeding.

 

6.7          Undertaking for Costs. In any suit for the enforcement of any right or remedy under this Agreement or in any suit against the Trustee for any action taken or omitted by it as a Trustee, a court in its discretion may require the filing by any party litigant in the suit of any undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys’ fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant.  This Section 6.7 does not apply to a suit by the Trustee, a suit by a Noteholder pursuant to Section 9.9 of the Base Indenture, the Control Party or a suit by Noteholders of more than 10% of the Aggregate Outstanding Principal Amount of all Series of Notes.

 

6.8          Restoration of Rights and Remedies. If the Trustee, any Noteholder or any other Secured Party has instituted any Proceeding to enforce any right or remedy under this Agreement or any other Transaction Document and such Proceeding has been discontinued or abandoned for any reason or has been determined adversely to the Trustee or to such Noteholder or other Secured Party, then and in every such case the Trustee and the Noteholders shall, subject to any determination in such proceeding, be restored severally and respectively to their former positions hereunder, and thereafter all rights and remedies of the Trustee, the Noteholders and the other Secured Parties shall continue as though no such Proceeding had been instituted.

 

6.9          Rights and Remedies Cumulative. No right or remedy herein conferred upon or reserved to the Trustee or to the Holders of Notes or any other Secured Party is intended to be exclusive of any other right or remedy, and every right or remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given under this Agreement or any other Transaction Document or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy under this Agreement or any other Transaction Document, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.

 

6.10        Delay or Omission Not Waiver. No delay or omission of the Trustee, the Control Party, the Controlling Class Representative, any Holder of any Note or any other Secured Party to exercise any right or remedy accruing upon any Potential Rapid Amortization Event, Rapid Amortization Event, Default or Event of Default shall impair any such right or remedy or constitute a waiver of any such Potential Rapid Amortization Event, Rapid Amortization Event, Default or Event of Default or an acquiescence therein. Every right and remedy given by this Section 6 or by law to the Trustee, the Control Party, the Controlling Class Representative, the Holders of Notes or any other Secured Party may be exercised from time to time to the extent not inconsistent with the Indenture or this Agreement, and as often as may be deemed expedient, by the Trustee, the Control Party, the Controlling Class Representative, the Holders of Notes or any other Secured Party, as the case may be.

 

6.11        Waiver of Stay or Extension Laws. Each Guarantor covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time

 

17

 

hereafter in force, that may affect the covenants or the performance of this Agreement or any other Transaction Document; and each Guarantor (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantages of any such law, and covenants that it shall not hinder, delay or impede the execution of any power herein granted to the Trustee, the Control Party or the Controlling Class Representative, but shall suffer and permit the execution of every such power as though no such law had been enacted.

 

SECTION 7

 

THE TRUSTEE’S AUTHORITY

 

Each Guarantor acknowledges that the rights and responsibilities of the Trustee under this Agreement with respect to any action taken by the Trustee or the exercise or non-exercise by the Trustee of any option, voting right, request, judgment or other right or remedy provided for herein or resulting or arising out of this Agreement shall, as between the Trustee and the other Secured Parties, be governed by the Indenture and by such other agreements with respect thereto as may exist from time to time among them, but, as between the Trustee and the Guarantors, the Trustee shall be conclusively presumed to be acting as agent for the Secured Parties with full and valid authority so to act or refrain from acting, it being understood that the Trustee (at the direction of the Control Party (at the direction of the Controlling Class  Representative)) and the Control Party (at the direction of the Controlling Class Representative) directly shall be the only parties entitled to exercise remedies under this Agreement; and no Guarantor shall be under any obligation, or entitlement, to make any inquiry respecting such authority.

 

SECTION 8

 

MISCELLANEOUS

 

8.1          Amendments.  None of the terms or provisions of this Agreement may be amended, supplemented, waived or otherwise modified except in accordance with Article XIII of the Base Indenture.

 

8.2          Notices.

 

(a)           Any notice or communication by any Guarantor or the Trustee to any other party hereto shall be in writing and delivered in person, delivered by e-mail (provided that any e-mail notice to the Trustee shall be in the form of an attachment of a .pdf or similar file), posted on a password protected internet website for which the recipient has granted access or mailed by first-class mail (registered or certified, return receipt requested) or overnight air courier guaranteeing next day delivery, to such other party’s address:

 

If to any Guarantor:

 

c/o Taco Bell Corp. 
 1900 Colonel Sanders Lane
 Louisville, KY 40213
 Attention: General Counsel
 Phone:  (502) 874-1000

 

with a copy to:

 

Mayer Brown LLP

1221 Avenue of the Americas

New York, NY 10019-6064

 

18

 

Attention: Barbara Goodstein
 Email: bgoodstein@mayerbrown.com

 

If to the Trustee:

 

Citibank, N.A.
 388 Greenwich Street, 14th Floor
 New York, NY 10013
 Attention: Agency & Trust — Taco Bell Funding, LLC
 E-mail: anthony.bausa@citi.com or
 E-mail: jacqueline.suarez@citi.com or contact Citibank, N.A.’s customer service desk at (888) 855-9695

Phone: (212) 816-5527
 Fax: (212) 816-5530

 

If to the Rating Agency:

 

Standard & Poor’s Ratings Services
 a Division of the McGraw-Hill Companies, Inc.

55 Water Street 
 New York, NY  10004
 Attention: Structured Credit Surveillance Group
 Email: servicer_reports@sandp.com

 

Notices with respect to any additional Rating Agencies with respect to any Additional Notes will be sent to the address for such Rating Agency set forth in the related Series Supplement or amendment to the existing Series Supplement, as applicable.

 

(b)           The Guarantors or the Trustee by notice to each other party may designate additional or different addresses for subsequent notices or communications; provided, however, that the Guarantors may not at any time designate more than a total of three (3) addresses to which notices must be sent in order to be effective.

 

(c)           Any notice (i) given in person shall be deemed delivered on the date of delivery of such notice, (ii) given by first-class mail shall be deemed given five (5) days after the date that such notice is mailed, (iii) delivered by overnight air courier shall be deemed delivered one (1) Business Day after the date that such notice is delivered to such overnight courier, (iv) when posted on a password-protected internet website shall be deemed delivered after notice of such posting has been provided to the recipient and (v) delivered by e-mail shall be deemed delivered on the date of delivery of such notice.

 

(d)           Notwithstanding any provisions of this Agreement to the contrary, the Trustee shall have no liability based upon or arising from the failure to receive any notice required by or relating to this Agreement or any other Transaction Document.

 

8.3          Governing Law.  THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES (OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK).

 

8.4          Successors.  All agreements of each of the Guarantors in this Agreement and each other Transaction Document to which it is a party shall bind its successors and assigns; provided that 

 

19

 

no Guarantor may assign its obligations or rights under this Agreement or any other Transaction Document, except with the written consent of the Control Party.  All agreements of the Trustee in the Indenture and in this Agreement shall bind its successors as permitted by the Transaction Documents.

 

8.5          Severability.  In case any provision in this Agreement or any other Transaction Document shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

 

8.6          Counterpart Originals. The parties may sign any number of copies of this Agreement. Each signed copy shall be an original, but all of them together represent the same agreement.

 

8.7          Table of Contents, Headings, etc. The Table of Contents and headings of the Sections of this Agreement have been inserted for convenience of reference only, are not to be considered a part hereof, and shall in no way modify or restrict any of the terms or provisions hereof.

 

8.8          [Reserved].

 

8.9          Waiver of Jury Trial.  EACH OF THE GUARANTORS AND THE TRUSTEE HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER TRANSACTION DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY.

 

8.10        Submission to Jurisdiction; Waivers.  Each of the Guarantors and the Trustee hereby irrevocably and unconditionally:

 

(a)           submits for itself and its property in any legal action or proceeding relating to this Agreement and the other Transaction Documents to which it is a party, or for recognition and enforcement of any judgment in respect thereof, to the non-exclusive general jurisdiction of the courts of the State of New York sitting in New York County, the courts of the United States for the Southern District of New York, and appellate courts from any thereof;

 

(b)           consents that any such action or proceeding may be brought in such courts and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same;

 

(c)           agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to the Guarantors or the Trustee, as the case may be, at its address set forth in Section 8.2 or at such other address of which the Trustee shall have been notified pursuant thereto;

 

(d)           agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law or shall limit the right to sue in any other jurisdiction; and

 

(e)           waives, to the maximum extent not prohibited by law, any right it may have to claim or recover in any legal action or proceeding referred to in this Section 8.10 any special, exemplary, punitive or consequential damages.

 

8.11        Additional Guarantors.  Each Future Securitization Entity shall become a Guarantor for all purposes of this Agreement upon execution and delivery by such Future Securitization Entity of an Assumption Agreement in substantially the form of Exhibit A attached hereto.  Upon the execution and delivery by any Future Securitization Entity of such an Assumption Agreement, the supplemental schedules attached to such Assumption Agreement shall be incorporated into and become a 

 

20

 

part of and supplement the Schedules to this Agreement, and each reference to such Schedules shall mean and be a reference to such Schedules as supplemented pursuant to each Assumption Agreement.

 

8.12        Currency Indemnity. Each Guarantor shall make all payments of amounts owing by it hereunder in Dollars. If a Guarantor makes any such payment to the Trustee or any other Secured Party in a currency (the “Other Currency”) other than Dollars (whether voluntarily or pursuant to an order or judgment of a court or tribunal of any jurisdiction), such payment shall constitute a discharge of the liability of such party hereunder in respect of such amount owing only to the extent of the amount of Dollars which the Trustee or such Secured Party is able to purchase, with the amount it receives on the date of receipt. If the amount of Dollars which the Trustee or such Secured Party is able to purchase is less than the amount of such currency originally so due in respect of such amount, such Guarantor shall indemnify and save the Trustee or such Secured Party, as applicable, harmless from and against any loss or damage arising as a result of such deficiency. This indemnity shall constitute an obligation separate and independent from the other obligations contained in this Agreement, shall give rise to a separate and independent cause of action, shall survive termination hereof, shall apply irrespective of any indulgence granted by the Trustee or such Secured Party and shall continue in full force and effect notwithstanding any judgment or order in respect of any amount due hereunder or under any judgment or order.

 

8.13        Acknowledgment of Receipt; Waiver. Each Guarantor acknowledges receipt of an executed copy of this Agreement and, to the extent permitted by applicable law, waives the right to receive a copy of any financing statement, financing change statement or verification statement in respect of any registered financing statement or financing change statement prepared, registered or issued in connection with this Agreement.

 

8.14        Termination; Partial Release.

 

(a)           This Agreement and any grants, pledges and assignments hereunder shall become effective on the date hereof and shall terminate on the Termination Date.

 

(b)           On the Termination Date, the Collateral shall be automatically released from the Liens created hereby, and this Agreement and all obligations (other than those expressly stated to survive such termination) of the Trustee and each Guarantor shall automatically terminate, all without delivery of any instrument or performance of any act by any party, and all rights to the Collateral shall revert to the Guarantors. At the request and sole expense of any Guarantor following any such termination, the Trustee shall deliver to such Guarantor any Collateral held by the Trustee hereunder, and execute and deliver to such Guarantor such documents as such Guarantor shall reasonably request to evidence such termination.

 

(c)           Any partial release of Collateral hereunder requested by the Issuer in connection with any Permitted Asset Disposition shall be governed by Section 14.18 of the Base Indenture.

 

8.15        Third Party Beneficiary.  Each of the Secured Parties and the Controlling Class Representative is an express third party beneficiary of this Agreement.

 

8.16        Entire Agreement.     This Agreement, together with the schedule hereto, the Indenture and the other Transaction Documents, contain a final and complete integration of all prior expressions by the parties hereto with respect to the subject matter hereof and shall constitute the entire agreement among the parties hereto with respect to the subject matter hereof, superseding all previous oral statements and writings with respect thereto.

 

[Signature pages follow]

 

21

 

IN WITNESS WHEREOF, each of the Guarantors and the Trustee has caused this Guarantee and Collateral Agreement to be duly executed and delivered by its duly authorized officer as of the date and year first above written.

 

	
 
    	
TACO BELL FUNDING, LLC,   as a Guarantor
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ William L. Gathof
    
	
 
    	
 
    	
Name: William L. Gathof
    
	
 
    	
 
    	
Title: Authorized   Signatory
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
TACO BELL IP HOLDER,   LLC, as a Guarantor
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ William L. Gathof
    
	
 
    	
 
    	
Name: William L. Gathof
    
	
 
    	
 
    	
Title: Authorized   Signatory
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
TACO BELL FRANCHISOR   HOLDINGS, LLC, 
    
	
 
    	
as a Guarantor
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ William L. Gathof
    
	
 
    	
 
    	
Name: William L. Gathof
    
	
 
    	
 
    	
Title: Authorized   Signatory
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
TACO BELL FRANCHISOR,   LLC, as a Guarantor
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ William L. Gathof
    
	
 
    	
 
    	
Name: William L. Gathof
    
	
 
    	
 
    	
Title: Authorized   Signatory
    

 

[Signature Page to Guarantee and Collateral Agreement]

 

 

	
 
    	
TACO BELL FRANCHISE   HOLDER 1, LLC, 
    
	
 
    	
as a Guarantor
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ William L. Gathof
    
	
 
    	
 
    	
Name: William L. Gathof
    
	
 
    	
 
    	
Title: Authorized   Signatory
    

 

[Signature Page to Guarantee and Collateral Agreement]

 

 

	
AGREED AND ACCEPTED:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
CITIBANK, N.A., in   its capacity as the Trustee
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/ Anthony Bausa
    	
 
    	
 
    
	
Name:
    	
Anthony Bausa
    	
 
    	
 
    
	
Title:
    	
Vice President
    	
 
    	
 
    

 

[Signature Page to Guarantee and Collateral Agreement]

 

 

Schedule 4.5

 

GUARANTOR OWNERSHIP RELATIONSHIPS

 

	
ENTITY
    	
 
    	
OWNED BY
    	
 
    	
SUBSIDIARIES
    
	
Taco Bell IP Holder, LLC
    	
 
    	
Taco Bell Funding, LLC
    	
 
    	
N/A
    
	
Taco Bell Franchisor Holdings, LLC
    	
 
    	
Taco Bell Funding, LLC
    	
 
    	
Taco Bell Franchisor, LLC ; Taco Bell Franchise   Holder 1, LLC
    
	
Taco Bell Franchisor, LLC
    	
 
    	
Taco Bell Franchisor Holdings, LLC
    	
 
    	
N/A
    
	
Taco Bell Franchise Holder 1, LLC
    	
 
    	
Taco Bell Franchisor Holdings, LLC
    	
 
    	
N/A
    

 

 

Exhibit A to
 Guarantee and Collateral Agreement

 

FORM OF ASSUMPTION AGREEMENT

 

ASSUMPTION AGREEMENT, dated as of                               , 20    (this “Assumption Agreement”), made by                                a                                (the “Additional Guarantor”), in favor of CITIBANK, N.A., as Trustee under the Indenture referred to below (in such capacity, together with its successors, the “Trustee”).  All capitalized terms not defined herein shall have the meaning ascribed to them in the Base Indenture Definitions List attached to the Base Indenture (as defined below) as Annex A thereto.

 

W  I  T  N  E  S  S  E  T  H:

 

WHEREAS, Taco Bell Funding, LLC, a Delaware limited liability company, the Trustee and  Citibank, N.A., as securities intermediary, have entered into a Base Indenture dated as of May 11, 2016 (as amended, modified or supplemented from time to time in accordance with the terms thereof, exclusive of any Series Supplements, the “Base Indenture” and, together with all Series Supplements, the “Indenture”), providing for the issuance from time to time of one or more Series of Notes thereunder; and

 

WHEREAS, in connection with the Base Indenture, the Guarantors and the Trustee have entered into the Guarantee and Collateral Agreement, dated as of May 11, 2016 (as amended, supplemented or otherwise modified from time to time in accordance with the terms thereof, the “Guarantee and Collateral Agreement”) in favor of the Trustee for the benefit of the Secured Parties;

 

WHEREAS, the Base Indenture requires the Additional Guarantor to become a party to the Guarantee and Collateral Agreement; and

 

WHEREAS, the Additional Guarantor has agreed to execute and deliver this Assumption Agreement in order to become a party to the Guarantee and Collateral Agreement;

 

NOW, THEREFORE, IT IS AGREED:

 

1.                                      Guarantee and Collateral Agreement.  By executing and delivering this Assumption Agreement, the Additional Guarantor, as provided in Section 8.11 of the Guarantee and Collateral Agreement, hereby becomes a party to the Guarantee and Collateral Agreement as a Guarantor thereunder with the same force and effect as if originally named therein as a Guarantor and, without limiting the generality of the foregoing, hereby expressly assumes all obligations and liabilities of a Guarantor thereunder. In furtherance of the foregoing, the Additional Guarantor, as security for the payment and performance in full of the Obligations, does (x) hereby create and grant to the Trustee for the benefit of the Secured Parties a security interest in all of the Additional Guarantor’s right, title and interest in and to the Collateral of the Additional Guarantor in accordance with the terms of the Guarantee and Collateral Agreement and subject to the exceptions set forth therein and (y) jointly and severally with the other Guarantors, unconditionally and irrevocably hereby guarantee the prompt and complete payment and performance by the Issuer when due (whether at the stated maturity, by acceleration or otherwise, but after giving effect to all applicable grace periods) of the Issuer Obligations. Each reference to a “Guarantor” in the Guarantee and Collateral Agreement shall be deemed to include the Additional Guarantor. The Guarantee and Collateral Agreement is hereby incorporated herein by reference. The information set forth in Annex 1-A hereto (A) is true and correct as of the date hereof in all material respects and (B) is hereby added to the information set forth in Schedule 4.5 to the Guarantee and Collateral Agreement and such Schedule shall be deemed so amended. The Additional Guarantor hereby represents and warrants that each of the representations and warranties contained in Section 4 of the Guarantee and Collateral Agreement applicable to it is true and correct on and as the date hereof (after giving effect to this Assumption Agreement) as if made on and as of such date.

 

A-1

 

2.                                      Representations of Additional Guarantor. The Additional Guarantor represents and warrants to the Trustee for the benefit of the Secured Parties that this Assumption Agreement has been duly authorized, executed and delivered by it and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.

 

3.                                      Counterparts; Binding Effect. This Assumption Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which taken together shall constitute a single contract. This Assumption Agreement shall become effective when (a) the Trustee shall have received a counterpart of this Assumption Agreement that bears the signature of the Additional Guarantor and (b) the Trustee has executed a counterpart hereof. Delivery of an executed counterpart of a signature page of this Assumption Agreement by telecopy or .pdf file shall be effective as delivery of a manually executed counterpart of this Assumption Agreement.

 

4.                                      Full Force and Effect.  Except as expressly supplemented hereby, the Guarantee and Collateral Agreement shall remain in full force and effect.

 

5.                                      Severability.  In case any provision in this Agreement or any other Transaction Document shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

 

6.                                      Notices.  All communications and notices hereunder shall be in writing and given as provided in Section 8.2 of the Guarantee and Collateral Agreement. All communications and notices hereunder to the Additional Guarantor shall be given to it at the address set forth under its signature below.

 

7.                                      Fees and Expenses.  The Additional Guarantor agrees to reimburse the Trustee for its reasonable and documented out-of-pocket expenses in connection with the execution and delivery of this Assumption Agreement, including the reasonable fees and disbursements of outside counsel for the Trustee.

 

8.                                      Governing Law.  THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES (OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK).

 

A-2

 

IN WITNESS WHEREOF, the undersigned has caused this Assumption Agreement to be duly executed and delivered as of the date first above written.

 

	
 
    	
[ADDITIONAL   GUARANTOR]
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
[Address]:
    	
 
    
	
 
    	
Attention:
    	
 
    
	
 
    	
Email:
    	
 
    
	
 
    	
 
    	
 
    
	
AGREED TO AND   ACCEPTED
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
CITIBANK, N.A., in   its capacity as Trustee
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
 
    
	
Name:
    	
 
    	
 
    	
 
    
	
Title:
    	
 
    	
 
    	
 
    

 

A-3

 

Annex 1-A

 

GUARANTOR OWNERSHIP RELATIONSHIPS

 

	
ENTITY
    	
 
    	
OWNED BY
    	
 
    	
SUBSIDIARIES
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    

 

A-4Exhibit 10.3

 

EXECUTION VERSION

 

MANAGEMENT AGREEMENT

 

Dated as of May 11, 2016

 

by and among

 

TACO BELL FUNDING, LLC, as Issuer,

 

THE OTHER SECURITIZATION ENTITIES PARTY HERETO,

 

TACO BELL CORP., as the Manager,

 

and

 

CITIBANK, N.A., as the Trustee

 

 

TABLE OF CONTENTS

 

	
 
    	
Page
    
	
 
    	
 
    
	
Article I
    	
DEFINITIONS
    	
2
    
	
 
    	
 
    	
 
    
	
Section 1.1
    	
Certain Definitions
    	
2
    
	
 
    	
 
    	
 
    
	
Section 1.2
    	
Other Defined Terms
    	
13
    
	
 
    	
 
    	
 
    
	
Section 1.3
    	
Other Terms
    	
13
    
	
 
    	
 
    	
 
    
	
Section 1.4
    	
Computation of Time   Periods
    	
13
    
	
 
    	
 
    	
 
    
	
Article II
    	
ADMINISTRATION AND   SERVICING OF MANAGED ASSETS
    	
13
    
	
 
    	
 
    	
 
    
	
Section 2.1
    	
Taco Bell Corp
    	
13
    
	
 
    	
 
    	
 
    
	
Section 2.2
    	
Accounts
    	
15
    
	
 
    	
 
    	
 
    
	
Section 2.3
    	
Records
    	
16
    
	
 
    	
 
    	
 
    
	
Section 2.4
    	
Administrative Duties   of Manager
    	
17
    
	
 
    	
 
    	
 
    
	
Section 2.5
    	
No Offset
    	
18
    
	
 
    	
 
    	
 
    
	
Section 2.6
    	
Compensation and   Expenses
    	
18
    
	
 
    	
 
    	
 
    
	
Section 2.7
    	
Indemnification
    	
18
    
	
 
    	
 
    	
 
    
	
Section 2.8
    	
Nonpetition Covenant
    	
20
    
	
 
    	
 
    	
 
    
	
Section 2.9
    	
Franchisor Consent
    	
20
    
	
 
    	
 
    	
 
    
	
Section 2.10
    	
Appointment of   Sub-managers
    	
20
    
	
 
    	
 
    	
 
    
	
Section 2.11
    	
Permitted Asset   Dispositions
    	
21
    
	
 
    	
 
    	
 
    
	
Section 2.12
    	
Manager Advances
    	
22
    
	
 
    	
 
    	
 
    
	
Article III
    	
STATEMENTS AND REPORTS
    	
22
    
	
 
    	
 
    	
 
    
	
Section 3.1
    	
Reporting by the   Manager
    	
22
    
	
 
    	
 
    	
 
    
	
Section 3.2
    	
Appointment of   Independent Auditor
    	
23
    
	
 
    	
 
    	
 
    
	
Section 3.3
    	
Annual Accountants’   Reports
    	
23
    
	
 
    	
 
    	
 
    
	
Section 3.4
    	
Available Information
    	
24
    
	
 
    	
 
    	
 
    
	
Section 3.5
    	
Weekly Manager’s   Certificate
    	
24
    
	
 
    	
 
    	
 
    
	
Article IV
    	
THE MANAGER
    	
24
    
	
 
    	
 
    	
 
    
	
Section 4.1
    	
Representations and   Warranties Concerning the Manager
    	
24
    
	
 
    	
 
    	
 
    
	
Section 4.2
    	
Existence; Status as   Manager
    	
27
    
	
 
    	
 
    	
 
    
	
Section 4.3
    	
Taxes
    	
27
    
	
 
    	
 
    	
 
    
	
Section 4.4
    	
Performance of   Obligations
    	
28
    
	
 
    	
 
    	
 
    
	
Section 4.5
    	
Merger and Resignation
    	
31
    
	
 
    	
 
    	
 
    
	
Section 4.6
    	
Notice of Certain   Events
    	
32
    
	
 
    	
 
    	
 
    
	
Section 4.7
    	
Capitalization
    	
33
    
					

 

ii

 

TABLE OF CONTENTS

 

	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
Section 4.8
    	
Maintenance of   Separateness
    	
33
    
	
 
    	
 
    	
 
    
	
Section 4.9
    	
No Competitive Business
    	
34
    
	
 
    	
 
    	
 
    
	
Article V
    	
REPRESENTATIONS,   WARRANTIES AND COVENANTS
    	
34
    
	
 
    	
 
    	
 
    
	
Section 5.1
    	
Representations and   Warranties Made in Respect of New Assets
    	
34
    
	
 
    	
 
    	
 
    
	
Section 5.2
    	
Assets Acquired After   the Closing Date
    	
35
    
	
 
    	
 
    	
 
    
	
Section 5.3
    	
Securitization IP
    	
36
    
	
 
    	
 
    	
 
    
	
Section 5.4
    	
Specified   Non-Securitization Debt Cap
    	
36
    
	
 
    	
 
    	
 
    
	
Section 5.5
    	
Restrictions on Liens
    	
37
    
	
 
    	
 
    	
 
    
	
Section 5.6
    	
Future Brands
    	
37
    
	
 
    	
 
    	
 
    
	
Article VI
    	
MANAGER TERMINATION   EVENTS
    	
37
    
	
 
    	
 
    	
 
    
	
Section 6.1
    	
Manager Termination   Events
    	
37
    
	
 
    	
 
    	
 
    
	
Section 6.2
    	
Manager’s Transitional   Role
    	
39
    
	
 
    	
 
    	
 
    
	
Section 6.3
    	
Intellectual Property
    	
41
    
	
 
    	
 
    	
 
    
	
Section 6.4
    	
Third Party   Intellectual Property
    	
41
    
	
 
    	
 
    	
 
    
	
Section 6.5
    	
No Effect on Other   Parties
    	
41
    
	
 
    	
 
    	
 
    
	
Section 6.6
    	
Rights Cumulative
    	
42
    
	
 
    	
 
    	
 
    
	
Article VII
    	
CONFIDENTIALITY
    	
42
    
	
 
    	
 
    	
 
    
	
Section 7.1
    	
Confidentiality
    	
42
    
	
 
    	
 
    	
 
    
	
Article VIII
    	
MISCELLANEOUS   PROVISIONS
    	
43
    
	
 
    	
 
    	
 
    
	
Section 8.1
    	
Termination of   Agreement
    	
43
    
	
 
    	
 
    	
 
    
	
Section 8.2
    	
Survival
    	
43
    
	
 
    	
 
    	
 
    
	
Section 8.3
    	
Amendment
    	
44
    
	
 
    	
 
    	
 
    
	
Section 8.4
    	
Governing Law
    	
45
    
	
 
    	
 
    	
 
    
	
Section 8.5
    	
Notices
    	
45
    
	
 
    	
 
    	
 
    
	
Section 8.6
    	
Acknowledgement
    	
45
    
	
 
    	
 
    	
 
    
	
Section 8.7
    	
Severability of   Provisions
    	
45
    
	
 
    	
 
    	
 
    
	
Section 8.8
    	
Delivery Dates
    	
46
    
	
 
    	
 
    	
 
    
	
Section 8.9
    	
Limited Recourse
    	
46
    
	
 
    	
 
    	
 
    
	
Section 8.10
    	
Binding Effect;   Assignment; Third Party Beneficiaries
    	
46
    
	
 
    	
 
    	
 
    
	
Section 8.11
    	
Article and   Section Headings
    	
46
    
	
 
    	
 
    	
 
    
	
Section 8.12
    	
Concerning the Trustee
    	
46
    
	
 
    	
 
    	
 
    
	
Section 8.13
    	
Counterparts
    	
46
    
						

 

iii

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
Section 8.14
    	
Entire Agreement
    	
46
    
	
 
    	
 
    	
 
    
	
Section 8.15
    	
Waiver of Jury Trial;   Jurisdiction; Consent to Service of Process
    	
46
    
	
 
    	
 
    	
 
    
	
Section 8.16
    	
Joinder of Future   Securitization Entities
    	
47
    

 

iv

 

MANAGEMENT AGREEMENT

 

This MANAGEMENT AGREEMENT, dated as of May 11, 2016 (as the same may be amended, supplemented or otherwise modified from time to time in accordance with the terms hereof, this “Agreement”), is entered into by and among Taco Bell Funding, LLC, a Delaware limited liability company (together with its successors and assigns, the “Issuer”), Taco Bell IP Holder, LLC, a Delaware limited liability company (“IP Holder”), Taco Bell Franchisor Holdings, LLC, a Delaware limited liability company (“Franchisor Holdco”), Taco Bell Franchisor, LLC, a Delaware limited liability company (the “Taco Bell Franchisor”) and Taco Bell Franchise Holder 1, LLC, a Delaware limited liability company (the “Franchise Holder” and, together with Franchisor Holdco, IP Holder and Taco Bell Franchisor, the “Guarantors” and together with the Issuer, the “Securitization Entities”); Taco Bell Corp., a California corporation, as Manager (together with its successors and assigns, the “Manager”); and Citibank, N.A., not in its individual capacity but solely as the indenture trustee under the Indenture (as defined below) (together with its successor and assigns, the “Trustee”). Capitalized terms used herein but not otherwise defined herein shall have the meanings assigned to such terms or incorporated by reference in Annex A to the Base Indenture.

 

RECITALS

 

WHEREAS, the Issuer has entered into the Base Indenture, dated as of the date hereof, with the Trustee (together with the Series Supplements thereto, and as the same may be amended, supplemented, or otherwise modified from time to time in accordance with the terms thereof, the “Indenture”), pursuant to which the Issuer issued the Series 2016-1 Class A-1 Notes, Series 2016-1 Class A-2-I Notes, the Series 2016-1 Class A-2-II Notes and the Series 2016-1 Class A-2-III Notes and may issue additional series of notes from time to time (collectively, the “Notes”) on the terms described therein;

 

WHEREAS, the Issuer has granted to the Trustee on behalf of the Secured Parties a Lien on the Collateral owned by it pursuant to the terms of the Indenture;

 

WHEREAS, the Guarantors have guaranteed the obligations of the Issuer under the Indenture, the Notes and the other Transaction Documents and have granted to the Trustee on behalf of the Secured Parties a Lien in the Collateral owned by each of them pursuant to the terms of the Guarantee and Collateral Agreement dated as of the date hereof (as the same may be amended, supplemented, or otherwise modified from time to time in accordance with the terms thereof, the “Guarantee and Collateral Agreement”)

 

WHEREAS, each of the Securitization Entities desires to engage the Manager as manager as hereinafter provided, and each of the Securitization Entities desires to have the Manager enforce such Securitization Entity’s rights and powers and perform such Securitization Entity’s duties and obligations under the Managed Documents (as defined below) and the Transaction Documents to which it is party in accordance with the Managing Standard (as defined below), in each case as hereinafter provided;

 

WHEREAS, IP Holder desires to appoint the Manager as its agent for providing comprehensive Intellectual Property services, including filing for registration, clearance,

 

 

maintenance, protection, enforcement, licensing, and recording transfers of the Securitization IP in accordance with the Managing Standard and as provided in Section 2.1(c) and Section 4.3(b);

 

WHEREAS, each of the Securitization Entities desires to enter into this Agreement to provide for, among other things, the managing of the respective rights, powers, duties and obligations of such Securitization Entity under or in connection with the Contribution Agreements, the Franchise Assets, the Securitization IP, all other Securitized Assets and each Securitization Entity’s equity interests in each other Securitization Entity owned by it and in connection with any other assets acquired by or transferred to such Securitization Entity (collectively, the “Managed Assets”), all in accordance with the Managing Standard; and

 

WHEREAS, the Manager desires to enforce such rights and powers and perform such obligations and duties, all in accordance with the Managing Standard.

 

NOW THEREFORE, in consideration of the premises and the mutual agreements hereinafter set forth, the parties hereto agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

Section 1.1            Certain Definitions.  Capitalized terms used herein but not otherwise defined in Annex A to the Base Indenture shall have the following meanings:

 

“Agreement” has the meaning set forth in the preamble.

 

“Change in Management” means the termination or resignation of more than 50% of the Leadership Team within twelve (12) months after the date of the occurrence of a Change of Control; provided, in each case, that termination and/or resignation of any such member of the Leadership Team will not include (i) a change in such member’s status in the ordinary course of succession so long as such member remains affiliated with the Manager or any Affiliate thereof or its direct or indirect holding companies or subsidiaries as an officer or director, or in a similar capacity (ii) retirement of any such member, (iii) death or incapacitation of any such member, or (iv) the replacement of any such member of the Leadership Team, in the case of part (iv), with the prior written consent of the Controlling Class Representative.

 

“Change of Control” means an event or a series of events by which (a) individuals who on the date hereof constituted the Board of Directors of the Manager, together with any new directors whose election by the Board of Directors or whose nomination for election by the equity holders of the Manager was approved by a majority of the directors then still in office who were either directors or whose election or nomination for election was previously approved by a majority of the Board of Directors then still in office, cease for any reason to constitute a majority of the Board of Directors of the Manager then in office; or (b) any “person” or “group” (as such terms are used for purposes of Sections 13(d) and 14(d) of the Exchange Act) is or becomes the “beneficial owner” (as such term is used in Rule 13d-3 under the Exchange Act), directly or indirectly, of more than 50% of the total voting power of the Voting Equity Interests of the Manager. For purposes of this definition, a Person will not be deemed to have beneficial ownership of voting power of the Voting Equity Interests subject to a stock purchase agreement,

 

2

 

merger agreement or similar agreement until the consummation of the transactions contemplated by such agreement.

 

“Competitive Business” means any business that, in the good faith determination of the Manager in accordance with the Managing Standard, is intended to compete against the Taco Bell Brand in the United States, to the extent such Competitive Business is not contributed or expected to be contributed to a Securitization Entity or Future Securitization Entity substantially contemporaneously with entering into or acquiring such Competitive Business.  For the avoidance of doubt, the operation of Company-Owned Restaurants in accordance with the Transaction Documents will not be deemed a Competitive Business.

 

“Controlled Group” means a group of trades or businesses (whether or not incorporated) under common control that is treated as a single employer for purposes of Section 302 or Title IV of ERISA.

 

“Closing Date” means the date of this Agreement.

 

“Confidential Information” means trade secrets and other information (including, without limitation, know how, ideas, techniques, recipes, formulas, customer lists, customer information, financial information, business methods and processes, marketing plans, specifications, and other similar information as well as internal materials prepared by the owner of such information containing or based, in whole or in part, on any such information) that is confidential and proprietary to its owner and that is disclosed by one party to an agreement to another party thereto whether in writing or disclosed orally, and whether or not designated as confidential.

 

“Current Practice” means, in respect of any action or inaction, the practices, standards and procedures of the Non-Securitization Entities as performed on or that would have been performed immediately prior to the Closing Date.

 

“Defective New Asset” means any New Asset that does not satisfy the applicable representations and warranties of Article V hereof on the New Asset Addition Date for such New Asset.

 

“Discloser” has the meaning set forth in Section 7.1.

 

“Disentanglement” has the meaning set forth in Section 6.2(a).

 

“Disentanglement Period” has the meaning set forth in Section 6.2(c).

 

“Disentanglement Services” has the meaning set forth in Section 6.2(a).

 

“Employee Benefit Plan” means any “employee benefit plan”, as such term is defined in Section 3(3) of ERISA, established, maintained or contributed to by the Manager, or with respect to which the Manager has any liability.

 

“ERISA” means the U.S. Employee Retirement Income Security Act of 1974, as amended, and any successor statute of similar import, in each case as in effect from time to time. References to sections of ERISA also refer to any successor sections.

 

3

 

“ERISA Event” means (a) a “reportable event” within the meaning of Section 4043 of ERISA and the regulations issued thereunder with respect to any Pension Plan (other than those events as to which the thirty day notice period is waived); (b) the failure to meet the minimum funding standard of Section 412 of the Code or Section 302 of ERISA with respect to any Pension Plan (whether or not waived in accordance with Section 412(c) of the Code) or the failure to make by its due date a required installment under Section 430 of the Code and Section 303(j) of ERISA with respect to any Pension Plan; (c) the provision by the administrator of any Pension Plan pursuant to Section 4041(a)(2) of ERISA of a written notice of intent to terminate such Pension Plan in a standard termination described in Section 4041(b) of ERISA or a distress termination described in Section 4041(c) of ERISA; (d) the complete or partial withdrawal by the Manager, or any company in the Controlled Group of the Manager, from any Pension Plan with two or more contributing sponsors or the termination of any such Pension Plan, in each case, which results in liability pursuant to Section 4063 or 4064 of ERISA; (e) formal written notice from the PBGC of its intent to commence proceedings to terminate any Pension Plan; (f) the imposition of liability on the Manager, or any company in the Controlled Group of the Manager, pursuant to Section 4062(e) or 4069 of ERISA or by reason of the application of Section 4212(c) of ERISA; (g) the filing of a material claim (other than routine claims for benefits) against any Pension Plan or the assets thereof, or against the Manager or any company in the Controlled Group of the Manager, in connection with any Pension Plan; (h) receipt from the Internal Revenue Service of notice of the failure of any Pension Plan to qualify under Section 401(a) of the Code or the failure of any trust forming part of any Pension Plan to qualify for exemption from taxation under Section 501(a) of the Code; (i) the imposition of a lien in favor of the PBGC or a Pension Plan pursuant to Section 430(k) of the Code or pursuant to Section 303(k) of ERISA with respect to any Pension Plan or (j) the complete or partial withdrawal by the Manager or any member of its Controlled Group from any Multiemployer Plan that has resulted or could reasonably be expected to result in a material liability to the Manager under ERISA.

 

“Franchise Holder” has the meaning set forth in the preamble.

 

“Future Brand” means (1) any franchise brand that Taco Bell or any of its affiliates acquires or develops after the Closing Date and elects to contribute to one or more Securitization Entities in a manner consistent with the terms of the Transaction Documents and (2) any National Mexican Quick Service Restaurant Brand of a Non-Securitization Entity that the Manager is required to cause to be contributed to a Securitization Entity pursuant to the terms of this Agreement.  At the time any Future Securitization Entities are created or acquired, or any Future Brand is contributed into any Future Securitization Entity or any other Securitization Entity, the definitions of “Issuer Subsidiaries” and “Taco Bell Brand” shall be read to include such Future Securitization Entities and Future Brands, respectively, and the definition of “Securitization IP” shall be read to include U.S. Intellectual Property related to those Future Securitization Entities and Future Brands.

 

“Guarantors” has the meaning set forth in the preamble.

 

“Holdco Specified Non-Securitization Debt Cap” has the meaning set forth in Section 5.4.

 

4

 

“Indemnitee”  has the meaning set forth in Section 2.7(a).

 

“Indenture” has the meaning set forth in the recitals.

 

“Independent Auditors” has the meaning set forth in Section 3.2.

 

“IP Services” means performing IP Holder’s obligations as licensor under the IP License Agreements; exercising IP Holder’s rights under the IP License Agreements (and under any other agreements pursuant to which IP Holder licenses the use of any Securitization IP); and acquiring, developing, managing, maintaining, protecting, enforcing, defending, licensing, sublicensing and undertaking such other duties and services as may be necessary in connection with the Securitization IP, on behalf of IP Holder, in each case in accordance with and subject to the terms of this Agreement (including, without limitation, the Managing Standard, unless IP Holder determines, in its sole discretion, that additional action is necessary or desirable in furtherance of the protection of the Securitization IP, in which case the Manager shall perform such IP Services and additional related services as are reasonably requested by IP Holder), the Indenture, the other Transaction Documents and the Managed Documents, as agent for IP Holder, including, without limitation, the following activities: (a) searching, screening and clearing After-Acquired Securitization IP to assess patentability, registrability and the risk of potential infringement; (b) filing, prosecuting, defending and maintaining applications and registrations for the Securitization IP in IP Holder’s name in the Securitization Jurisdiction, including timely filing of evidence of use, applications for renewal and affidavits of use and/or incontestability, timely paying of all registration and maintenance fees, responding to third-party oppositions of applications or challenges to registrations, and responding to any office actions, reexaminations, interferences, inter partes reviews, post grant reviews, or other office or examiner requests, reviews, or requirements; (c) monitoring third-party use and registration of Intellectual Property, as applicable, and taking actions the Manager deems appropriate to oppose or contest the use and any application or registration for Intellectual Property, as applicable, that could reasonably be expected to infringe, dilute or otherwise violate the Securitization IP or IP Holder’s rights therein; (d) confirming IP Holder’s legal title in and to any or all of the Securitization IP, including obtaining written assignments of Securitization IP to IP Holder, recording transfers of title in the USPTO and USCO and transferring internet domain name registrations; (e) with respect to IP Holder’s rights and obligations under the IP License Agreements and any Transaction Documents, monitoring the licensee’s use of each licensed Trademark and the quality of its goods and services offered in connection with such Trademarks, rendering any approvals (or disapprovals) that are required under the applicable license agreement(s), and employing reasonable means to ensure that any use of any such Trademarks by any such licensee satisfies the quality control standards and usage provisions of the applicable license agreement; (f) protecting, policing, and, in the event that the Manager becomes aware of any unlicensed copying, imitation, infringement, dilution, misappropriation, unauthorized use or other violation of the Securitization IP, or any portion thereof, enforcing such Securitization IP, including, (i) preparing and responding to cease-and-desist, demand and notice letters, and requests for a license; and (ii) commencing, prosecuting and/or resolving claims or suits involving imitation, infringement, dilution, misappropriation, the unauthorized use or other violation of such Securitization IP, and seeking monetary and equitable remedies as the Manager deems appropriate in connection therewith; provided that IP Holder will, and agrees to, join as a party to any such suits to the extent necessary to maintain standing; (g) performing such

 

5

 

functions and duties, and preparing and filing such documents, as are required under the Indenture or any other Transaction Document to be performed, prepared and/or filed by IP Holder, including (i) executing and recording such financing statements (including continuation statements) or amendments thereof or supplements thereto or such other instruments as the Issuer or the Control Party may, from time to time, reasonably request (consistent with the obligations of IP Holder to perfect the Trustee’s lien in the applicable jurisdictions within the Securitization Jurisdiction) in connection with the security interests in the Securitization IP granted by IP Holder to the Trustee under the Indenture and (ii) preparing, executing and delivering grants of security interests or any similar instruments as the Issuer or the Control Party may, from time to time, reasonably request (consistent with the obligations of IP Holder to perfect the Trustee’s lien in the applicable jurisdictions within the Securitization Jurisdiction) that are intended to evidence such security interests in the Securitization IP and recording such grants or other instruments with the relevant Governmental Authority including the USPTO and USCO; (h) taking such actions as any licensee under an IP License Agreement may request that are required by the terms, provisions and purposes of such IP License Agreement (or by any other agreements pursuant to which IP Holder licenses the use of any Securitization IP) to be taken by IP Holder, and preparing (or causing to be prepared) for execution by IP Holder all documents, certificates and other filings as IP Holder will be required to prepare and/or file under the terms of such IP License Agreements (or such other agreements); (i) establishing a fair market value for the royalties or other payments payable to IP Holder under any licenses of Securitization IP that are required under the Transaction Documents to include such payments; (j) paying or causing to be paid or discharged, from funds of the Securitization Entities, any and all taxes, charges and assessments that may be levied, assessed or imposed upon any of the Securitization IP or contesting the same in good faith; (k) obtaining licenses of third-party Intellectual Property for use and sublicense in connection with the Contributed Franchise Business and any other assets of the Securitization Entities; (l) sublicensing the Securitization IP to suppliers, manufacturers, advertisers and other service providers in connection with the provision of products and services for the Contributed Franchise Business; (m) with respect to Trade Secrets and other confidential information of IP Holder, taking reasonable measures to maintain confidentiality and to prevent non-confidential disclosures thereof, and (n) managing passwords for and access to social media accounts, website hosting accounts, mobile app accounts, and other similar online accounts.

 

“Issuer” has the meaning set forth in the preamble.

 

“Leadership Team” means the persons holding the following offices of Taco Bell Corp.: (i) Chief Executive Officer, (ii) Chief Operating Officer, (iii) Chief Financial Officer, (iv) Chief Legal Officer, (v) Chief People Officer, (vi) Chief R&D/QA Officer, (vii) Chief Product Marketing Officer, (viii) Chief Marketing Officer, (ix) Chief Development Officer, (x) Chief Information Officer, (xi) Chief Food Innovation Officer, (xii) any Vice President and (xiii) any other position that contains substantially the same responsibilities as of any of the positions listed above or reports to the Chief Executive Officer, other than administrative assistants.

 

“Managed Assets” has the meaning set forth in the recitals.

 

“Managed Document” means any contract, agreement, arrangement or undertaking relating to any of the Managed Assets, including, without limitation, the Contribution Agreements, the Franchise Documents and the IP License Agreements.

 

6

 

“Manager” means Taco Bell Corp., in its capacity as manager hereunder, unless a successor Person shall have become the Manager pursuant to the applicable provisions of the Indenture and this Agreement, and thereafter “Manager” shall mean such successor Person.

 

“Manager Advance” means certain advances of funds made by the Manager to (in its sole discretion), or on behalf of, a Securitization Entity in connection with the operation of the Managed Assets and reimbursed pursuant to the Priority of Payments.

 

“Manager Termination Event” has the meaning set forth in Section 6.1(a).

 

“Managing Standard” means standards that (a) are consistent with Current Practice or, to the extent of changed circumstances, practices, technologies, strategies or implementation methods, consistent with the standards as the Manager would implement or observe if the Managed Assets were owned by the Manager at such time; (b) will enable the Manager to comply in all material respects with all of the duties and obligations of the Securitization Entities under the Transaction Documents and the New Franchise Agreements, Contributed Franchise Agreements, New Development Agreements and Contributed Development Agreements (and all agreements or obligations ancillary to any of the foregoing); (c) are in material compliance with all applicable Requirements of Law; and (d) with respect to the use and maintenance of IP Holder’s rights in and to the Securitization IP, are consistent with the standards imposed by the IP License Agreements.

 

“Multiemployer Plan” means a “multiemployer plan” as defined in Section 4001(a)(3) of ERISA as to which any company in the same Controlled Group as the Manager is making or accruing an obligation to contribute or has within any of the preceding five plan years made or accrued an obligation to make contributions.

 

“NAFA Account” means the National Advertising Fund Administration account relating to the Taco Bell Brand.

 

“National Mexican Quick Service Restaurant Brand” means a franchise brand for a national chain of quick service restaurants, which brand satisfies each of the following conditions: (i) derives at least 85% of its revenue from the sale of Mexican-style ready-to-eat food products, (ii) offers drive-thru food service from at least 85% of its restaurants, (iii) does not offer waiters or wait staff to take customer orders or provide customer table service, and (iv) has at least 85% of its restaurants located in the United States. The term “quick service restaurants” specifically excludes “casual dining” or “fast casual” restaurants.

 

“New Asset Addition Date” means, with respect to any New Asset, the earliest of (i) the date on which such New Asset is acquired by the applicable Securitization Entity, (ii) the later of (a) the date upon which the closing occurs under the applicable contract giving rise to such New Asset and (b) the date upon which all of the diligence contingencies, if any, in the contract for purchase of the applicable New Asset expire and the Securitization Entity acquiring such New Asset no longer has the right to cancel such contract and (iii) if such New Asset is a New Franchise Agreement or a New Development Agreement, the date on which Taco Bell Franchisor begins receiving Franchisee Payment Amounts from the applicable Franchisee or counterparty to a New Development Agreement, as applicable, in respect of such New Asset.

 

7

 

“New Assets” means a New Franchise Agreement, a New Development Agreement or any other Managed Asset contributed to, or otherwise entered into or acquired by, the Securitization Entities after the Closing Date.

 

“PBGC” means the Pension Benefit Guaranty Corporation established under Section 4002 of ERISA.

 

“Pension Plan” means any “employee pension benefit plan,” as such term is defined in Section 3(2) of ERISA, that is subject to Title IV of ERISA (other than a Multiemployer Plan) and to which any company in the same Controlled Group as the Manager has liability, including any liability by reason of having been a substantial employer within the meaning of Section 4063 of ERISA for any time within the preceding five years or by reason of being deemed to be a contributing sponsor under Section 4064 of ERISA.

 

“Post-Opening Services” means the services required to be performed under the applicable Franchise Documents by the applicable Securitization Entities after the opening of a Branded Restaurant, in each case in accordance with and subject to the terms of this Agreement (including, for the avoidance of doubt, the Managing Standard), the Indenture, the other Transaction Documents and the Managed Documents, including, as may be required under the applicable Franchise Document, (a) providing such Restaurant Operator with the standards established or approved by Taco Bell Franchisor or Franchise Holder, as applicable, for use by Restaurant Operators; (b) inspecting such Branded Restaurant; (c) providing such Restaurant Operator with the Manager’s ongoing operating standards and materials designed for use in the Branded Restaurants; and (d) such other Post-Opening Services as are required to be performed under applicable Franchise Documents; provided that such Post-Opening Services provided by the Manager under this Agreement will not include any “add-on” type corporate services provided by a Non-Securitization Entity to a Restaurant Operator, whether pursuant to the related Franchise Agreement or otherwise, the cost of which is not included in the royalties payable to Taco Bell Franchisor or Franchise Holder, as applicable, under the related Franchise Agreement, including, without limitation, repairs and maintenance, gift card administration, employee training, point-of-sale system maintenance and support and maintenance of other information technology systems.

 

“Power of Attorney” means the authority granted by a Securitization Entity to the Manager pursuant to a Power of Attorney in substantially the form set forth as Exhibit A-1 or Exhibit A-2 hereto.

 

“Pre-Opening Services” means the services required to be performed under the applicable Franchise Documents by the applicable Securitization Entities prior to the opening of a Branded Restaurant, in each case in accordance with and subject to the terms of this Agreement (including, for the avoidance of doubt, the Managing Standard), the Indenture, the other Transaction Documents and the Managed Documents, including, as may be required under the applicable Franchise Document, (a) providing the applicable Restaurant Operator with standards for the design, construction, equipping and operation of such Branded Restaurant and the approval of locations meeting such standards; (b) providing such Restaurant Operator with the Manager’s programs and materials designed for use in the Branded Restaurants; (c) providing such Restaurant Operator with a loaned copy of the Taco Bell Manual, and (d) providing such

 

8

 

Restaurant Operator with such other assistance in the pre-opening, opening and initial operation of such Branded Restaurant, as may be required to be provided under applicable Franchise Documents; provided that such Pre-Opening Services provided by the Manager under this Agreement will not include any “add-on” type corporate services provided by a Non-Securitization Entity to a Restaurant Operator, whether pursuant to the related Franchise Agreement or otherwise, the cost of which is not included in the development fee, initial license fee or royalties payable to Taco Bell Franchisor or Franchise Holder under the related Franchise Documents, including, without limitation, repairs and maintenance, gift card administration, employee training and support and maintenance of information technology systems.

 

“Quarterly Fiscal Period” means each of the following quarterly fiscal periods of the Securitization Entities: (i) the first three quarterly fiscal periods of each fiscal year will consist of 12 weeks (three 4-week periods) and (ii) the fourth quarterly fiscal period of each fiscal year with 52-weeks consists of 16 weeks (four 4-week periods) and each fiscal year with 53-weeks consists of 17 weeks (three 4-week periods and one 5-week period).  References to “weeks” in “Quarterly Fiscal Period” means the Manager’s fiscal weeks, which begin on each Wednesday and end on each Tuesday.

 

“Recipient” has the meaning ascribed to such term in Section 7.1.

 

“Securitization Entities” has the meaning set forth in the preamble.

 

“Services” means the servicing and administration by the Manager of the Managed Assets, in each case in accordance with and subject to the terms of this Agreement (including, for the avoidance of doubt, the Managing Standard), the Indenture, the other Transaction Documents and the Managed Documents, on behalf of the applicable Securitization Entity, including, without limitation:

 

(a)           calculating and compiling information required in connection with any report or certificate to be delivered pursuant to the Transaction Documents;

 

(b)           preparing and filing all tax returns and tax reports required to be prepared by any Securitization Entity;

 

(c)           paying or causing to be paid or discharged, in each case from funds of the Securitization Entities, any and all taxes, charges and assessments attributable to and required to be paid under applicable Requirements of Law by any Securitization Entity;

 

(d)           performing the duties and obligations of, and exercising and enforcing the rights of, the Securitization Entities under the Transaction Documents, including, without limitation, performing the duties and obligations of each applicable Securitization Entity under the IP License Agreements;

 

(e)           taking those actions that are required under the Transaction Documents and Requirements of Law to maintain continuous perfection and priority (subject to Permitted Liens and the exclusions from perfection requirements under the Indenture, the Guarantee and Collateral Agreement and the Transaction Documents) of any Securitization Entity’s and the Trustee’s respective interests in the Collateral;

 

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(f)            making or causing the collection of amounts owing under the terms and provisions of each Managed Document and the Transaction Documents, including, without limitation, managing (i) Taco Bell Franchisor’s or Franchise Holder’s rights and obligations, as applicable, as franchisor under the Franchise Agreements, the Company-Owned Restaurant Master Franchise Agreements and the Development Agreements (including performing Pre-Opening Services and Post-Opening Services) or taking actions to maintain Taco Bell Franchisor’s net worth for purposes of state franchisor requirements, including enforcing Franchisor Holdco’s obligations under the Performance Guaranty and directing the Trustee in writing to allocate amounts between the Senior Notes Interest Reserve Accounts and (ii) the right to approve amendments, waivers, modifications and terminations of (including extensions, modifications, write-downs and write-offs of obligations owing under) Franchise Documents and other Managed Documents (which amendments to Franchise Documents may be effected by replacing a franchise agreement with a new franchise agreement (which new franchise agreement may be executed by any Securitization Entity)) and to exercise all rights of the applicable Securitization Entities under such Franchise Documents and other Managed Documents;

 

(g)           performing due diligence with respect to, selecting and approving new Franchisees and providing personnel to manage the due diligence, selection and approval process;

 

(h)           preparing, offering and entering into New Franchise Agreements and New Development Agreements, in each case, in its own name on behalf of the Securitization Entities (including in its capacity as franchise broker/franchise sales agent for the Securitization Entities) or in the name of a Securitization Entity (pursuant to the applicable Power of Attorney), including, among other things, adopting variations to the forms of agreements used in documenting such agreements and preparing and executing documentation of franchise transfers, terminations, renewals, site relocations and ownership changes, in all cases, subject to and in accordance with the terms of the Transaction Documents (and performing such filings as may be required by law to serve as franchise broker/franchise sales agent for any Securitization Entity);

 

(i)            evaluating and approving assignments of Franchise Agreements, Company-Owned Restaurant Master Franchise Agreements, Development Agreements and other Franchise Documents by Restaurant Operators to third-party franchisee candidates or existing Franchisees;

 

(j)            preparing and filing franchise disclosure documents with respect to Development Agreements, Franchise Agreements and Company-Owned Restaurant Master Franchise Agreements to comply, in all material respects, with applicable Requirements of Law;

 

(k)           complying with franchise industry specific government regulation and applicable Requirements of Law;

 

(l)            making Manager Advances in its sole discretion;

 

(m)          administering the Management Accounts;

 

(n)           performing the duties and obligations and enforcing the rights of the Securitization Entities under the Managed Documents, including entering into new Managed Documents from time to time;

 

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(o)           arranging for legal services with respect to the Managed Assets, including with respect to the enforcement of the Franchise Documents;

 

(p)           arranging for or providing accounting and financial reporting services;

 

(q)           establishing and/or providing quality control services and standards for food, equipment, suppliers and distributors in connection with the Branded Restaurants and monitoring compliance with such standards;

 

(r)            developing new products and services (or modifying any existing products and services) to be offered in connection with the Branded Restaurants and the other assets of the Securitization Entities;

 

(s)            in connection with Branded Restaurants, developing, modifying, amending and disseminating (i) specifications and standards for restaurant operations, (ii) operations procedures manuals and (iii) new service or menu offerings;

 

(t)            performing the IP Services;

 

(u)           acting on behalf of the Securitization Entities with respect to the NAFA Account and in such capacity, or in any other capacity agreed with the Franchisees or other Restaurant Operators from time to time, developing and executing advertising, marketing and promotional strategies, programs and materials relating to the Taco Bell Brand and Branded Restaurants;

 

(v)           managing the Taco Bell website, social media presence and mobile app; and

 

(w)          performing such other services as may be necessary or appropriate from time to time and consistent with the Managing Standard and the Transaction Documents in connection with the Managed Assets.

 

“Specified Non-Securitization Debt” has the meaning set forth in Section 5.4.

 

“Sub-management Arrangement” means an arrangement whereby the Manager engages any other Person (including any Affiliate) to perform certain of its duties under this Agreement excluding the fundamental corporate functions of the Manager; provided that (i) master franchise arrangements with Restaurant Operators and temporary arrangements with Restaurant Operators with respect to the management of one or more Branded Restaurants immediately following the termination of the former Restaurant Operators, and (ii) any agreement between the Manager and third-party vendors pursuant to which the Manager purchases a specific product or service or outsources routine administrative functions, including any products, services or administrative functions listed on Schedule 1 hereto or any other products, services or administrative functions that are substantially similar thereto, shall not constitute a Sub-management Arrangement.

 

“Successor” means any successor to the Manager selected by the Control Party (at the direction of the Controlling Class Representative) upon the resignation or removal of the Manager pursuant to the terms of this Agreement.

 

“Term” shall have the meaning set forth in Section 8.1.

 

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“Termination Notice” has the meaning set forth in Section 6.1(a).

 

“Trustee” has the meaning set forth in the preamble.

 

“Weekly Allocation Date” means, in respect of any Weekly Collection Period, the last Business Day of the calendar week following the week in which such Weekly Collection Period ends.

 

“Weekly Collection Period” means with respect to Collections, each weekly period commencing at 12:00 a.m. (New York time) on each Wednesday per week and ending at 11:59 p.m. (New York time) on each Tuesday per week.

 

“Weekly Manager’s Certificate” has the meaning set forth in Section 3.5.

 

“Weekly Management Fee” means, with respect to each Weekly Allocation Date, the amount determined by dividing:

 

(i)            an amount equal to the sum of (A) a base fee of $35,000,000, plus (B) a fee of $15,100 for every $100,000 of aggregate Retained Collections over the preceding four (4) Quarterly Fiscal Periods; by

 

(ii)           52;

 

provided that the dollar amounts set forth in clauses (i)(A) will be subject to successive 2% annual increases on the first day of the first Quarterly Fiscal Period of the fiscal year of the Securitization Entities; provided, further, that the incremental increased portion of such fees will be payable only to the extent that the sum of the amounts set forth in clauses (i)(A) and (i)(B) as so increased will not exceed 35% of the aggregate Retained Collections over the preceding four (4) Quarterly Fiscal Periods; provided, further, that Retained Collections for the Quarterly Fiscal Period ended (i) June 9, 2015 will be deemed to be $121,743,000, (ii) September 1, 2015 will be deemed to be $121,575,000,  (iii) December 22, 2015 will be deemed to be $158,245,000 and (iv) March 15, 2016 will be deemed to be $113,098,000 respectively.

 

“Welfare Plan” means any “employee welfare benefit plan” as such term is defined in Section 3(1) of ERISA.

 

“YBI”  has the meaning set forth in Section 6.2(a).

 

Section 1.2            Other Defined Terms.

 

(a)           Each term defined in the singular form in Section 1.1 or elsewhere in this Agreement shall mean the plural thereof when the plural form of such term is used in this Agreement and each term defined in the plural form in Section 1.1 or elsewhere in this Agreement shall mean the singular thereof when the singular form of such term is used herein.

 

(b)           The words “hereof”, “herein”, “hereunder” and similar terms when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and article, section, subsection, schedule and exhibit references herein are

 

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references to articles, sections, subsections, schedules and exhibits to this Agreement unless otherwise specified.

 

(c)           Unless as otherwise provided herein, the word “including” as used herein shall mean “including without limitation.”

 

(d)           All accounting terms not specifically or completely defined in this Agreement shall be construed in conformity with GAAP.

 

(e)           Where the character or amount of any asset or liability or item of income or expense is required to be determined, or any accounting computation is required to be made, for the purpose of this Agreement, such determination or calculation shall be made, to the extent applicable and except as otherwise specified in this Agreement or the other Transaction Documents, in accordance with GAAP.  When used herein, the term “financial statement” shall include  the  notes  and  schedules  thereto.  All  accounting  determinations  and  computations hereunder shall be made without duplication.

 

Section 1.3            Other Terms.  All terms used in Article 9 of the UCC as in effect from time to time in the State of New York, and not specifically defined herein, are used herein as defined in such Article 9.

 

Section 1.4            Computation of Time Periods.  Unless otherwise stated in this Agreement, in the computation of a period of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” each means “to but excluding.”

 

ARTICLE II

 

ADMINISTRATION AND SERVICING OF MANAGED ASSETS

 

Section 2.1            Taco Bell Corp. to act as Manager.

 

(a)           Engagement of the Manager. The Manager is hereby authorized by each Securitization Entity, and hereby agrees, to perform the Services (or refrain from the performance of the Services) subject to and in accordance with the Managing Standard and the terms of this Agreement, the other Transaction Documents and the Managed Documents. With respect to the IP Services, the Manager shall perform such IP Services in accordance with the Managing Standard and the IP License Agreements, unless IP Holder determines, in its sole discretion, that additional action is necessary or desirable in furtherance of the protection of the Securitization IP, in which case the Manager shall perform such IP Services and additional related services as are reasonably requested by IP Holder. The Manager, on behalf of each of the Securitization Entities, shall have full power and authority, acting alone and subject only to the specific requirements and prohibitions of this Agreement and in accordance with the Managing Standard, the Indenture and the other applicable Transaction Documents, to do and take any and all actions, or to refrain from taking any such actions, and to do any and all things in connection with performing the Services that the Manager determines are necessary or desirable. Without limiting the generality of the foregoing, but subject to the provisions of this Agreement, including Section 2.8, the Indenture and the other Transaction Documents, the Manager, in

 

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connection with performing the Services, is hereby authorized and empowered to execute and deliver, in the Manager’s own name (in its capacity as agent for the applicable Securitization Entity) or in the name of any Securitization Entity (pursuant to the applicable Power of Attorney), on behalf of any Securitization Entity any and all instruments of satisfaction or cancellation, or of partial or full release or discharge, and all other comparable instruments, with respect to the Managed Assets, including, without limitation, consents to sales, transfers or encumbrances of a franchise by any Restaurant Operator or consents to assignments and assumptions of the Franchise Arrangements by any Restaurant Operator in accordance with the terms thereof. For the avoidance of doubt, the parties hereto acknowledge and agree that the Manager is providing Services directly to each applicable Securitization Entity. Nothing in this Agreement shall preclude any of the Securitization Entities from performing the Services or any other act on their own behalf at any time and from time to time.

 

(b)           Actions to Create and Perfect Security Interests. Subject to the terms of the Base Indenture, including any applicable Series Supplement, the Manager shall take those actions that  are  required  under  the  Transaction  Documents  and  Requirements  of  Law  to  maintain continuous perfection and priority (subject to Permitted Liens and the exclusions from perfection requirements under the Transaction Documents) of the Trustee’s Lien in the Collateral to the extent required by the Indenture and the Guarantee and Collateral Agreement. Without limiting the foregoing, the Manager shall file or cause to be filed with the appropriate government office the financing statements on Form UCC-1, assignments of financing statements on Form UCC-3, any filings related to the Securitization IP as set forth in Section 8.25 of the Base Indenture and other filings required to be filed in connection with the Indenture and the other Transaction Documents.

 

(c)           Ownership of Manager-Developed IP. The Manager acknowledges and agrees that all Securitization IP, including any Manager-Developed IP arising during the Term, shall, as between the parties, be owned by and inure exclusively to IP Holder. Any copyrightable material included in such Manager-Developed IP shall, to the fullest extent allowed by law, be considered a “work made for hire” as that term is defined in Section 101 of the U.S. Copyright Act of 1976, as amended, and owned by IP Holder. The Manager hereby irrevocably assigns and transfers, without further consideration, all right, title and interest in such Manager-Developed IP (and all goodwill connected with the use of and symbolized by Trademarks included therein) to IP Holder. Notwithstanding the foregoing, the Manager-Developed IP to be transferred to IP Holder shall include rights to use third-party Intellectual Property only to the extent (but to the fullest extent) that such rights are assignable or sublicensable to IP Holder. All applications to register Manager-Developed IP shall be filed in the name of IP Holder.

 

The Manager agrees to cooperate in good faith with IP Holder for the purpose of securing and preserving IP Holder’s rights in and to the applicable Manager-Developed IP, including executing any documents and taking any actions, at IP Holder’s reasonable request, or as deemed necessary or advisable by the Manager, to confirm, file and record in any appropriate registry IP Holder’s sole legal title in and to such Manager-Developed IP, it being acknowledged and agreed that any expenses in connection therewith shall be paid by IP Holder. The Manager hereby appoints IP Holder as its attorney-in-fact authorized to execute such documents in the event that Manager fails to execute the same within twenty (20) days following IP Holder’s written request

 

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to do so (it being understood that such appointment is a power coupled with an interest and therefore irrevocable) with full power of substitution and delegation.

 

(d)           Grant of Power of Attorney. In order to provide the Manager with the authority to perform and execute its duties and obligations as set forth herein, each of the Securitization Entities shall execute and deliver on the Closing Date a Power of Attorney in substantially the form set forth as Exhibit A-1 (with respect to IP Holder) and Exhibit A-2 (with respect to the other Securitization Entities) hereto to the Manager, which Powers of Attorney shall terminate in the event that the Manager’s rights under this Agreement are terminated as provided herein.

 

(e)           Manager Insurance. The Manager agrees to maintain adequate insurance consistent with the type and amount maintained by the Manager as of the Closing Date, subject, in each case, to any adjustments or modifications made in accordance with clause (a) of the definition of the Managing Standard. Such insurance shall cover each of the Securitization Entities, as an additional insured, to the extent that such Securitization Entity has an insurable interest therein.

 

Section 2.2            Accounts.

 

(a)           Collection of Payments; Remittances; Collection Account. The Manager shall maintain and manage the Management Accounts (and certain other accounts from time to time) in the name of, and for the benefit of, each of the Securitization Entities. The Manager shall (on behalf of each of the Securitization Entities) (i) cause the collection of Collections in accordance with the Managing Standard and subject to and in accordance with the Transaction Documents and (ii) make all deposits to and withdrawals from the Management Accounts in accordance with this Agreement (including, for the avoidance of doubt, the Managing Standard), the Indenture and the applicable Managed Documents. The Manager shall (on behalf of each of the Securitization Entities) make all deposits to the Collection Account in accordance with the terms of the Indenture.

 

(b)           Deposit of Misdirected Funds; No Commingling; Misdirected Payments. The Manager shall promptly deposit into a Lock-Box Account, a Concentration Account, the Collection Account or such other appropriate account within three (3) Business Days immediately following Actual Knowledge of the Manager of the receipt thereof and in the form received with any necessary endorsement or in cash, all payments in respect of the Managed Assets incorrectly deposited into another account. In the event that any funds not constituting Collections are incorrectly deposited in any Account, the Manager shall promptly withdraw such amounts after obtaining Actual Knowledge thereof and shall pay such amounts to the Person legally entitled to such funds. Except as otherwise set forth herein or in the Base Indenture, the Manager shall not commingle any monies that relate to Managed Assets with its own assets and shall keep separate, segregated and appropriately marked and identified all Managed Assets and any other property comprising any part of the Collateral, and for such time, if any, as such Managed Assets or such other property are in the possession or control of the Manager to the extent such Managed Assets or such other property is Collateral, the Manager shall hold the same in trust for the benefit of the Trustee and the Secured Parties (or, following termination of the Indenture, the applicable Securitization Entity).  Additionally, the Manager, promptly after

 

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obtaining Actual Knowledge thereof, shall notify the Trustee in the Weekly Manager’s Certificate of any amounts incorrectly deposited into any Indenture Trust Account and arrange for the prompt remittance by the Trustee of such funds from the applicable Indenture Trust Account to the Manager. The Trustee shall have no obligation to verify any information provided to it by the Manager in any Weekly Manager’s Certificate and shall remit such funds to the Manager based solely on such Weekly Manager’s Certificate.

 

(c)           Investment of Funds in Management Accounts. The Manager shall have the right to invest and reinvest funds deposited in any Management Account in Eligible Investments maturing no later than the Business Day preceding each Weekly Allocation Date. All income or other gain from such Eligible Investments will be credited to the related Management Account, and any loss resulting from such investments will be charged to the related Management Account. The Investment Income available on deposit in the Management Accounts will be withdrawn on each Weekly Allocation Date for deposit to the Collection Account for application as Collections on such Weekly Allocation Date.

 

(d)           The Manager will instruct Restaurant Operators (other than Franchisees that are licensees under the applicable Franchise Agreement) to pay certain advertising fees based on a percentage of sales in accordance with the Company-Owned Restaurant Master Franchise Agreement or Franchise Agreement, as applicable (“Advertising Fees”), to the NAFA Account.

 

Section 2.3            Records.

 

(a)           The Manager shall, in accordance with the Managing Standard, retain all material data (including computerized records) relating directly to, or maintained in connection with, the servicing of the Managed Assets at its address indicated in Section 8.5 (or at an off-site storage facility reasonably acceptable to each of the Securitization Entities, the Servicer and the Back-Up Manager) or, upon thirty (30) days’ notice to each of the Securitization Entities, the Rating Agency, the Back-Up Manager, the Trustee and the Servicer, at such other place where the servicing office of the Manager is located (provided that the servicing office of the Manager shall at all times be located in the United States), and shall give the Trustee, the Back-Up Manager and the Servicer access to all such data in accordance with the terms and conditions of the Transaction Documents; provided, however, that the Trustee shall not be obligated to verify, recalculate or review any such data. The Manager acknowledges that IP Holder shall own the Intellectual Property rights in all such data.

 

(b)           If the rights of Taco Bell Corp., shall have been terminated in accordance with Section 6.1, the Manager, shall, upon demand of the Trustee (based upon the written direction  on the Control Party), deliver to the Successor Manager all data in its possession or under its control (including computerized records) necessary or desirable for the servicing of the Managed Assets; provided, however, that the Manager may retain a single set of copies of any books and records that the Manager reasonably believes will be required by it for the purpose of performing any of the Manager’s accounting, public reporting or other administrative functions that are performed in the ordinary course of the Manager’s business; and provided, further, that the Manager shall have access, during normal business hours and upon reasonable notice, to all books and records that the Manager reasonably believes would be necessary or desirable for the

 

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Manager in connection with the preparation of any tax or other governmental reports and filings and other uses; and provided, further, that if the Issuer shall desire to dispose of any of such books and records at any time within five (5) years of the Manager’s termination, the Issuer shall, prior to such disposition, give the Manager a reasonable opportunity, at the Manager’s expense, to segregate and remove such books and records as the Manager may select. The provisions of this Section 2.3 shall not require the Manager to transfer any proprietary material or computer programs unrelated to the servicing of the Managed Assets.

 

Section 2.4            Administrative Duties of Manager.

 

(a)           Duties with Respect to the Transaction Documents. The Manager, in accordance with the Managing Standard, shall perform the duties of the applicable Securitization Entities under the Transaction Documents except for those duties that are required to be performed by the equity holders, stockholders, directors, or managers of such Securitization Entity pursuant to applicable law. In furtherance of the foregoing, the Manager shall consult with the managers or the directors, as the case may be, of each Securitization Entity as the Manager deems appropriate regarding the duties of such Securitization Entity under the applicable Transaction Documents. The Manager shall monitor the performance of the Securitization Entities and, promptly upon obtaining Actual Knowledge thereof, shall advise the applicable Securitization Entity when action is necessary to comply with such Securitization Entity’s duties under the applicable Transaction Documents. The Manager shall prepare for execution by the Securitization Entities or shall cause the preparation by other appropriate Persons of all such documents, reports, filings, instruments, certificates, notices and opinions as it shall be the duty of the Securitization Entities to prepare, file or deliver pursuant to the applicable Transaction Documents.

 

(b)           Duties with Respect to the Securitization Entities. In addition to the duties of the Manager set forth in this Agreement or any of the Transaction Documents, the Manager, in accordance with the Managing Standard, shall perform such calculations and shall prepare for execution by each of the Securitization Entities or shall cause the preparation by other appropriate Persons of all such documents, reports, filings, instruments, certificates, notices and opinions as it shall be the duty of each of the Securitization Entities to prepare, file or deliver pursuant to applicable law, including, for the avoidance of doubt, securities laws and franchise laws. Pursuant to the directions of each of the Securitization Entities and in accordance with the Managing Standard, the Manager shall administer, perform or supervise the performance of such other activities in connection with each of the Securitization Entities as are not covered by any of the foregoing provisions and as are expressly requested by any Securitization Entity and are reasonably within the capability of the Manager.

 

(c)           Records.  The Manager shall maintain appropriate books of account and records relating to the Services performed under this Agreement, which books of account and records shall be accessible for inspection by each of the Securitization Entities during normal business hours, and upon reasonable notice, by the Trustee, the Back-Up Manager, the Servicer and the Controlling Class Representative in accordance with Section 3.1(d).

 

(d)           Election of Controlling Class Representative.  Pursuant to Section 11.1(d) of the Base Indenture, if a CCR Election results in a tie, the Manager shall have the right to

 

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direct the Trustee to appoint one of such tied CCR Candidates selected by the Manager as the Controlling Class Representative.

 

Section 2.5            No Offset.  The payment obligations of the Manager under this Agreement shall not be subject to, and the Manager hereby waives, in connection with the performance of such obligations, any right of offset that the Manager has or may have against the Trustee, the Servicer or any of the Securitization Entities, whether in respect of this Agreement, the other Transaction Documents or any document governing any Managed Asset or otherwise.

 

Section 2.6            Compensation and Expenses.  As compensation for the performance of its obligations under this Agreement, the Manager will be entitled to receive (i) the Weekly Management Fee, and (ii) with the written consent of the Control Party (such consent not to be unreasonably withheld or delayed), the Supplemental Management Fee, if any, on each Weekly Allocation Date out of amounts available therefor under the Indenture on such Weekly Allocation Date in accordance with the Priority of Payments.  The Manager is required to pay from its own funds all expenses it may incur in performing its obligations hereunder.

 

Section 2.7            Indemnification.

 

(a)           The Manager agrees to indemnify and hold each of the Securitization Entities, the Trustee, the Back-Up Manager and the Servicer (both in its capacity as Servicer and as Control Party) and their respective members, officers, directors, managers, employees and agents (each, an “Indemnitee”) harmless against all claims, losses, penalties, fines, forfeitures, liabilities, obligations, damages, actions, suits and related costs and judgments and other costs, fees and reasonable expenses, including reasonable and documented fees, out-of-pocket charges and disbursements of counsel (other than the allocated costs of in-house counsel), that any of them may incur as a result of (i) the breach by the Manager of any representation, warranty or covenant under this Agreement or any other Transaction Document to which it is a party in its capacity as Manager or (ii) the Manager’s bad faith, gross negligence or willful misconduct in the performance of its duties under this Agreement and the other Transaction Documents; provided, however, that there shall be no indemnification under this Section 2.7(a) in respect of losses on the value of any Collateral for a breach of any representation, warranty or covenant relating to any New Asset provided in Article V so long as the Manager has complied with Section 2.7(b) and Section 2.7(c) hereunder; provided, further, that the Manager shall have no obligation of indemnity to an Indemnitee to the extent any such claims, losses, penalties, fines, forfeitures, liabilities, obligations, damages, actions, suits and related costs and judgments and other costs, fees and reasonable expenses are caused by the bad faith, gross negligence, willful misconduct, or breach of this Agreement by such Indemnitee (unless caused by the Manager with respect to a Securitization Entity). In the event the Manager is required to make an indemnification payment pursuant to this Section 2.7(a) the Manager shall promptly pay such indemnification payment directly to the applicable Indemnitee (or, if due to a Securitization Entity, shall deposit such indemnification payment directly to the Collection Account).

 

(b)           In the event of a breach of any representation, warranty or covenant relating to any New Asset provided in Article V that is not remedied within thirty (30) days of the Manager having obtained Actual Knowledge of such breach or written notice thereof, the Manager, in its capacity as transferor, shall promptly notify the Trustee and the Servicer and

 

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cause the New Assets to be reassigned or pay the Indemnification Amount to the applicable Securitization Entity; provided that if the applicable breach affects only a portion of such New Asset without a Material Adverse Effect on the cash flow generated by or in connection with such New Asset, the Manager shall only be required to pay the Indemnification Amount with respect to such affected portion of such New Asset.

 

(c)           In addition to the rights provided in Section 2.7(b), the Manager, in its capacity as transferor, agrees to indemnify and hold each Indemnitee harmless if any action or proceeding (including any governmental investigation and/or the assessment of any fines or similar items) shall be brought or asserted against such Indemnitee in respect of a material breach of any representation, warranty or covenant relating to any New Asset provided in Article V to the extent provided in Section 2.7(a).

 

(d)           Any Indemnitee that proposes to assert the right to be indemnified under this Section 2.7 shall promptly, after receipt of notice of the commencement of any action, suit or proceeding against such party in respect of which a claim is to be made against the Manager, notify the Manager of the commencement of such action, suit or proceeding, enclosing a copy of all papers served. In the event that any action, suit or proceeding shall be brought against any Indemnitee, such Indemnitee shall notify the Manager of the commencement thereof and the Manager shall be entitled to participate in, and to the extent that it shall wish, to assume the defense thereof, with its counsel reasonably satisfactory to such Indemnitee (which, in the case of a Securitization Entity, shall be reasonably satisfactory to the Control Party, as well), and after notice from the Manager to such Indemnitee of its election to assume the defense thereof, the Manager shall not be liable to such Indemnitee for any legal expenses subsequently incurred by such Indemnitee in connection with the defense thereof; provided that the Manager shall not enter into any settlement with respect to any claim or proceeding unless such settlement includes a release of such Indemnitee from all liability on claims that are the subject matter of such settlement; and provided, further, that the Indemnitee shall have the right to employ its own counsel in any such action the defense of which is assumed by the Manager in accordance with this Section 2.7(d), but the fees and expenses of such counsel shall be at the expense of such Indemnitee unless (i) the employment of counsel by such Indemnitee has been specifically authorized by the Manager, (ii) the Manager is advised in writing by counsel to such Indemnitee or the Control Party that joint representation would give rise to a conflict of interest between such Indemnitee’s position and the position of the Manager in respect of the defense of the claim, (iii) the Manager shall have failed within a reasonable period of time to assume the defense of such action or proceeding and employ counsel reasonably satisfactory to the Indemnitee in any such action or proceeding or (iv) the named parties to any such action or proceeding (including any impleaded parties) include both the Indemnitee and the Manager, and the Indemnitee shall have been advised by counsel that there may be one or more legal defenses available to it which are different from or additional to those available to the Manager (in which case, the Indemnitee notifies the Manager in writing that it elects to employ separate counsel at the expense of the Manager, the reasonable fees and expenses of such Indemnitee’s counsel shall be borne by the Manager and the Manager shall not have the right to assume the defense of such action or proceeding on behalf of such Indemnitee, it being understood, however, that the Manager shall not, in connection with any one such action or proceeding or separate but substantially similar or related actions or proceedings in the same jurisdiction arising out of the same general allegations or circumstances, be liable for such fees and expenses of more than one separate firm of

 

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attorneys at any time for the Indemnitee). The provisions of this Section 2.7 shall survive the termination of this Agreement or the earlier resignation or removal of any party hereto; provided, however, that no Successor Manager shall be liable under this Section 2.7 with respect to any Defective New Asset or any other matter occurring prior to its succession hereunder. Notwithstanding anything in this Section 2.7 to the contrary, any delay or failure by an Indemnitee in providing the Manager with notice of any action shall not relieve the Manager of its indemnification obligations except to the extent the Manager is materially prejudiced by such delay or failure of notice.

 

Section 2.8            Nonpetition Covenant.  Until the date that is one year and one day after the date upon which the Issuer has paid in full all Series of Notes Outstanding (and the Transaction Documents have been terminated), the Manager will not institute against any Securitization Entity, or join with any other Person in instituting against any Securitization Entity, any arrangement, Insolvency or receivership proceeding under any federal or state Insolvency or similar law or consent to, or make application for or institute or maintain any action for, the dissolution of any Securitization Entity under the Delaware LLC Act or any other applicable Requirements of Law.

 

Section 2.9            Franchisor Consent.  Subject to the Managing Standard and the terms of the Indenture, the Manager shall have the authority, on behalf of the applicable Securitization Entities, to grant or withhold consents of the “franchisor” or “licensor” required under the Franchise Documents.

 

Section 2.10          Appointment of Sub-managers.   The Manager may enter into Sub-management Arrangements with third parties (including Affiliates) (each, a “Sub-manager”) to provide any of the Services hereunder; provided that, other than with respect to a Sub-management Arrangement with an Affiliate of the Manager, that no Sub-management Arrangement shall be effective unless and until (i) the Manager receives the consent of the Control Party (not unreasonably withheld or delayed), (ii) such Sub-manager executes and delivers an agreement, in form and substance reasonably satisfactory to the Control Party, to perform and observe, or in the case of an assignment, an assumption by such successor entity of the due and punctual performance and observance of, the applicable covenants and conditions to be performed or observed by the Manager under this Agreement; provided that such Sub-management Arrangement shall be terminable by the Control Party upon a Manager Termination Event and shall contain transitional servicing provisions substantially similar to those provided in Section 6.2 and intellectual property provisions substantially similar to those provided in Section 6.3, and (iii) a written notice has been provided to the Trustee, the Back-Up Manager, the Sub-manager and the Control Party. The Manager shall not enter into any Sub-management Arrangement which delegates the performance of any fundamental business operations such as responsibility for the franchise development, operations and marketing strategies for Franchise Holder, Taco Bell Franchisor, IP Holder and Branded Restaurants as a whole to any Person that is not an Affiliate without receiving the prior written consent of the Control Party. The Manager may delegate to any Sub-management administration of any Management Account; provided that, prior to accepting instructions from any such Sub-manager regarding any such Managed Account, the Trustee may require that such Sub-manager provide all applicable know-your-customer documentation required by the Trustee. Notwithstanding anything to the contrary

 

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herein or in any Sub-management Arrangement, the Manager shall remain primarily and directly liable for its obligations hereunder and in connection with any Sub-management Arrangement.

 

Section 2.11          Permitted Asset Dispositions.  The Manager (acting on behalf of each of the Securitization Entities), in accordance with Section 8.16 of the Base Indenture and the Managing Standard, may dispose of property of any of the Securitization Entities from time to time pursuant to a Permitted Asset Disposition. Upon receipt of any Asset Disposition Proceeds from any Permitted Asset Disposition, the Manager (on behalf of the applicable Securitization Entities), in accordance with Section 5.10 of the Base Indenture, shall deposit or cause the deposit of such Asset Disposition Proceeds to the Asset Disposition Proceeds Account. At the election of the Manager (on behalf of the applicable Securitization Entity) and so long as no Rapid Amortization Event shall have occurred and be continuing, the Manager (on behalf of the Securitization Entities) may reinvest such Asset Disposition Proceeds in Eligible Assets within the applicable Asset Disposition Reinvestment Period.

 

Section 2.12          Manager Advances.  The Manager may, but is not obligated to, make Manager Advances to, or on behalf of, any Securitization Entity in connection with the operation of the Managed Assets. Manager Advances will accrue interest at the Advance Interest Rate and shall be reimbursable on each Weekly Allocation Date in accordance with the Priority of Payments.

 

ARTICLE III

 

STATEMENTS AND REPORTS

 

Section 3.1            Reporting by the Manager.

 

(a)           Reports Required Pursuant to the Indenture. The Manager, on behalf of each of the Securitization Entities, shall furnish, or cause to be furnished, to the Trustee, all reports and notices required to be delivered to the Trustee by any Securitization Entity pursuant to the Indenture (including pursuant to Article IV of the Base Indenture) or any other Transaction Document.

 

(b)           Instructions as to Withdrawals and Payments. The Manager, on behalf of the Issuer, will furnish, or cause to be furnished, to the Trustee or the Paying Agent, as applicable, written instructions to make withdrawals and payments from the Collection Account and any other Base Indenture Accounts or any Series Account, as contemplated herein, in the Base Indenture and in any Series Supplement. The Trustee and the Paying Agent shall follow any such written instructions in accordance with the terms and conditions of the Base Indenture and any applicable Series Supplement.

 

(c)           Delivery of Financial Statements. The Manager shall provide the financial statements of the Issuer and each of the Securitization Entities as required under Section 4.1(f) of the Base Indenture.

 

(d)           Franchisee Termination Notices. The Manager shall send to the Trustee, the Servicer and the Back-Up Manager, as soon as reasonably practicable but in no event later than 15 Business Days of the transmittal thereof, a copy of any notices of termination of one or

 

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more Franchise Agreements sent by the Manager on behalf of any Securitization Entity to any Franchisee unless (i) the related Franchised Restaurant(s) generated less than $1,000,000 in Franchisee Royalty Payments during the immediately preceding fiscal year or (ii) the related Franchised  Restaurant  continues  to  operate  pursuant to an agreement between any Securitization Entity  or the Manager on its behalf and such Franchisee or any other Franchisee.

 

(e)           Additional Information; Access to Books and Records. The Manager shall furnish from time to time such additional information regarding the Collateral or compliance with the covenants and other agreements of any Securitization Entity under the Transaction Documents as the Trustee, the Back-Up Manager or the Servicer may reasonably request, subject at all times to compliance with the Exchange Act, the Securities Act and any other applicable law and appropriate confidentiality requirements. The Manager shall, and shall cause each Securitization Entity to, permit, at reasonable times upon reasonable notice, the Servicer, the Controlling Class Representative and the Trustee or any Person appointed by any of them as its agent to visit and inspect any of its properties, examine its books and records and discuss its affairs with its officers, directors, managers, employees and independent certified public accountants, and up to one such visit and inspection by any of the Servicer, the Controlling Class Representative and the Trustee, or any Person appointed by them shall be reimbursable as a Securitization Operating Expense per calendar year, with any additional visit or inspection by any such Person being at such Person’s sole cost and expense; provided, however, that during the continuance of a Warm Back-Up Management Trigger Event or Manager Termination Event, or to the extent expressly required without the instruction of any other party under the terms of any Transaction Documents, any such Person may visit and conduct such activities at any time and all such visits and activities will constitute a Securitization Operating Expense; provided, further that the Servicer, the Trustee and the Controlling Class Representative shall use commercially reasonable efforts to coordinate their visit and inspection such that they will occur concurrently. Notwithstanding the foregoing, the Manager shall not be required to disclose or make available communications protected by the attorney-client privilege.

 

(f)            Leadership Team Changes. The Manager shall promptly notify the Trustee, the Back-Up Manager and the Servicer of any termination or resignation of three or more persons included in the Leadership Team that occurs within twelve (12) months of a Change of Control.

 

Section 3.2            Appointment of Independent Auditor.  On or before the Closing Date, the Securitization Entities shall appoint a firm of independent public accountants of recognized national reputation that is reasonably acceptable to the Control Party to serve as the independent auditors (“Independent Auditors”) for purposes of preparing and delivering the reports required under Section 3.3. It is hereby acknowledged that the accounting firm of KPMG LLP is acceptable for purposes of serving as Independent Auditors. The Securitization Entities may not remove the Independent Auditors without first giving thirty (30) days’ prior written notice to the Independent Auditors, with a copy of such notice also given concurrently to the Trustee, the Rating Agency, the Control Party, the Manager (if applicable) and the Servicer. Upon any resignation by such firm or removal of such firm, the Securitization Entities shall promptly appoint a successor thereto that shall also be a firm of independent public accountants of recognized national reputation to serve as the Independent Auditors hereunder. If the Securitization Entities shall fail to appoint a successor firm of Independent Auditors within thirty

 

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(30) days after the effective date of any such resignation or removal, the Control Party shall promptly appoint a successor firm of independent public accountants of recognized national reputation that is reasonably satisfactory to the Manager to serve as the Independent Auditors hereunder.  The fees of any Independent Auditors shall be payable by the Securitization Entities.

 

Section 3.3            Annual Accountants’ Reports.  The Manager shall furnish, or cause to be furnished to the Trustee, the Servicer and the Rating Agency, within one hundred and twenty (120) days after the end of each fiscal year of the Manager, commencing with the fiscal year ending on or about December 27, 2016, (i) a report of the Independent Auditors (who may also render other services to the Manager) or the Back-Up Manager summarizing the findings of a set of agreed-upon procedures performed by the Independent Auditors or the Back-Up Manager with respect to compliance with the Quarterly Noteholders’ Reports for such fiscal year (or other period) with the standards set forth herein, and (ii) a report of the Independent Auditors or the Back-Up Manager to the effect that such firm has examined the assertion of the Manager’s management as to its compliance with its management requirements for such fiscal year (or other period), and that (x) in the case of the Independent Auditors, such examination was made in accordance with standards established by the American Institute of Certified Public Accountants and (y) except as described in the report, management’s assertion is fairly stated in all material respects. In the case of the Independent Auditors, the report will also indicate that the firm is independent of the Manager within the meaning of the Code of Professional Ethics of the American Institute of Certified Public Accountants (each, an “Annual Accountants’ Report”). In the event such Independent Auditors require the Trustee to agree to the procedures to be performed by such firm in any of the reports required to be prepared pursuant to this Section 3.3, the Manager shall direct the Trustee in writing to so agree as to the procedures described therein; it being understood and agreed that the Trustee shall deliver such letter of agreement (which shall be in a form reasonably satisfactory to the Trustee) in conclusive reliance upon the direction of the Manager, and the Trustee has not made any independent inquiry or investigation as to, and shall have no obligation or liability in respect of, the sufficiency, validity or correctness of such procedures.

 

Section 3.4            Available Information.  The Manager, on behalf of each of the Securitization Entities, shall make available the information requested by prospective purchasers necessary to satisfy the requirements of Rule 144A under the Securities Act, as amended, subject to the Manager’s confidentiality requirements. The Manager shall deliver such information, and shall promptly deliver copies of all Quarterly Noteholders’ Reports and Annual Accountants’ Reports, to the Trustee as contemplated under Section 4.4 of the Base Indenture, to enable the Trustee to redeliver such information to purchasers or prospective purchasers of the Notes as contemplated by Section 4.4 of the Base Indenture.

 

Section 3.5            Weekly Manager’s Certificate.  The Manager shall deliver a weekly certificate in the form of Exhibit C to the Trustee as required under the terms of this Agreement and the Indenture.

 

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ARTICLE IV

 

THE MANAGER

 

Section 4.1            Representations and Warranties Concerning the Manager.  The Manager represents and warrants to each Securitization Entity, the Trustee and the Servicer, as of the Closing Date (except if otherwise expressly noted), as follows:

 

(a)           Organization and Good Standing. The Manager (i) is a corporation, duly formed and organized, validly existing and in good standing under the laws of the State of California, (ii) is duly qualified to do business as a foreign corporation and in good standing under the laws of each jurisdiction where the character of its property, the nature of its business or the performance of its obligations under the Transaction Documents make such qualification necessary and (iii) has the power and authority (x) to own its properties and to conduct its business as such properties are currently owned and such business is currently conducted and (y) to perform its obligations under this Agreement, except in each case referred to in clause (ii) or (iii) to the extent that a failure to do so would not reasonably be expected to result in a Material Adverse Effect on the Manager.

 

(b)           Power and Authority; No Conflicts. The execution and delivery by the Manager of this Agreement and its performance of, and compliance with, the terms hereof are within the power of the Manager and have been duly authorized by all necessary corporate action on the part of the Manager. Neither the execution and delivery of this Agreement, nor the consummation of the transactions herein, nor compliance with the provisions hereof, shall conflict with or result in a breach of, or constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, any order of any Governmental Authority or any of the provisions of any Requirement of Law binding on the Manager or its properties, or the charter or bylaws or other organizational documents of the Manager, or any of the provisions of any material indenture, mortgage, lease, contract or other instrument to which the Manager is a party or by which it or its property is bound or result in the creation or imposition of any Lien upon any of its property pursuant to the terms of any such indenture, mortgage, leases, contract or other instrument, except, in each case, (i) pursuant to the Indenture and the other Transaction Documents or (ii) to the extent such default, creation or imposition would not reasonably be expected to result in a Material Adverse Effect on the Manager, the Collateral, taken as a whole, or any of the Securitization Entities.

 

(c)           Consents. Except (i) for filings and/or registrations as a franchise broker or franchise sales agent as may be required under state franchise statutes and regulations, (ii) to the extent that a state or foreign franchise law requires filing and other compliance actions by virtue of considering the Manager as a “subfranchisor”, (iii) for any consents, licenses, approvals, authorizations, registrations, notifications, waivers or declarations that have been obtained or made and are in full force and effect and (iv) to the extent that a failure to do so would not reasonably be expected to result in a Material Adverse Effect on the Manager, the Collateral, taken as a whole, or any of the Securitization Entities, the Manager is not required to obtain the consent of any other party or the consent, license, approval or authorization of, or file any registration or declaration with, any Governmental Authority in connection with the execution,

 

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delivery or performance by the Manager of this Agreement, or the validity or enforceability of this Agreement against the Manager.

 

(d)           Due Execution and Delivery. This Agreement has been duly executed and delivered by the Manager and constitutes a legal, valid and binding obligation of the Manager enforceable against the Manager in accordance with its terms (subject to applicable insolvency laws and to general principles of equity).

 

(e)           No Litigation. There are no actions, suits, investigations or proceedings pending or, to the Actual Knowledge of the Manager, threatened against or affecting the Manager, before or by any Governmental Authority having jurisdiction over the Manager or any of its properties or with respect to any of the transactions contemplated by this Agreement asserting the illegality, invalidity or unenforceability, or seeking any determination or ruling that would affect the legality, binding effect, validity or enforceability of this Agreement or which would reasonably be expected to result in a Material Adverse Effect on the Manager, the Collateral, taken as a whole, or any of the Securitization Entities.

 

(f)            Compliance with Requirements of Law. The Manager is in compliance with all Requirements of Law except to the extent that the failure to comply therewith would not, in the aggregate, reasonably be expected to result in a Material Adverse Effect on the Manager, the Collateral, taken as a whole, or any of the Securitization Entities.

 

(g)           No Default. The Manager is not in default under any agreement, contract, instrument or indenture to which the Manager is a party or by which it or its properties is or are bound, or with respect to any order of any Governmental Authority, except to the extent such default would not reasonably be expected to result in a Material Adverse Effect on the Manager or the Collateral, taken as a whole; and no event has occurred which with notice or lapse of time or both would constitute such a default with respect to any such agreement, contract, instrument or indenture, or with respect to any such order of any Governmental Authority.

 

(h)           Taxes. The Manager has filed or caused to be filed and shall file or cause to be filed all federal tax returns and all material state and other tax returns that are required to be filed except where the failure to do so would not reasonably be expected to result in a Material Adverse Effect. The Manager has paid or caused to be paid, and shall pay or cause to be paid, all material taxes owed by the Manager pursuant to said returns or pursuant to any assessments made against it or any of its property (other than any amount of tax the validity of which is currently being contested in good faith by appropriate proceedings and with respect to which reserves in accordance with GAAP, to the extent required, have been provided on the books of the Manager).

 

(i)            Accuracy of Information. No written report, financial statements, certificate or other information furnished (other than projections, budgets, other estimates and general market, industry and economic data) to the Servicer by or on behalf of the Manager in connection with the transactions contemplated hereby or pursuant to any provision of this Agreement or any other Transaction Document (when taken together with all other information furnished by or on behalf of the Manager to the Servicer), contains any material misstatement of fact as of the date furnished or omits to state any material fact necessary to make the statements

 

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therein not materially misleading in each case when taken as a whole and in the light of the circumstances under which they were made; and with respect to its projected financial information, the Manager represents only that such information was prepared in good faith based on assumptions believed to be reasonable at the time.

 

(j)            Financial Statements. As of the Closing Date, the consolidated balance sheet of YBI included in the Offering Memorandum reported on and accompanied by a report from the Independent Auditors, presents fairly in all material respects the financial condition of YBI as of such date. Such financial statement, including the related schedules and notes thereto, has been prepared in accordance with GAAP (except as otherwise stated therein).

 

(k)           No Material Adverse Change. Since May 11, 2016, except as otherwise set forth in the Offering Memorandum, there has been no development or event that has had or would reasonably be expected to result in a Material Adverse Effect on the Manager or the Collateral, taken as a whole.

 

(l)            ERISA. During the five-year period prior to the date on which this representation is made or deemed made with respect to any Pension Plan or Multiemployer Plan, no ERISA Event has occurred which would reasonably be expected to have a Material Adverse Effect. Except as would not reasonably be expected to have a Material Adverse Effect, neither the Manager nor any of its Subsidiaries has any contingent liability with respect to any post-retirement medical benefits under a Welfare Plan, other than liability for continuation coverage described in Part 6 of Subtitle B of Title I of ERISA or other applicable similar continuation of coverage laws. Except as would not reasonably be expected to have a Material Adverse Effect, (i) no Multiemployer Plan is insolvent (as defined in Section 4245 of ERISA) and (ii) no non-exempt prohibited transaction (as defined in Section 406 of ERISA or Section 4975 of the Code) has occurred involving any Employee Benefit Plan.

 

(m)          No Manager Termination Event. No Manager Termination Event has occurred or is continuing, and, to the Actual Knowledge of the Manager, there is no event which, with notice or lapse of time, or both, would constitute a Manager Termination Event.

 

(n)           Location of Records. The offices at which the Manager keeps its records concerning the Managed Assets are located at the addresses indicated in Section 8.5.

 

(o)           DISCLAIMER. EXCEPT FOR THE MANAGER’S REPRESENTATIONS AND WARRANTIES SET FORTH HEREIN AND IN ANY OTHER TRANSACTION DOCUMENT, THE MANAGER MAKES NO WARRANTIES, EXPRESS OR IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW, STATUTORY OR OTHERWISE, WITH RESPECT TO THE SUBJECT MATTER HEREOF TO ANY OTHER PARTY, AND EACH PARTY EXPRESSLY DISCLAIMS ANY IMPLIED WARRANTIES, INCLUDING WARRANTY OF TITLE, NON-INFRINGEMENT, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

 

Section 4.2            Existence; Status as Manager.  The Manager shall (a) keep in full effect its existence under the laws of the state of its incorporation, (b) maintain all rights and privileges necessary or desirable in the normal conduct of its business and the performance of its

 

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obligations hereunder except to the extent that failure to do so would not reasonably be expected to result in a Material Adverse Effect and (c) obtain and preserve its qualification to do business in each jurisdiction in which the failure to so qualify either individually or in the aggregate would reasonably be expected to result in a Material Adverse Effect.

 

Section 4.3            Taxes.  The Manager shall file or cause to be filed all federal tax returns and all material state and other tax returns which, to the Actual Knowledge of the Manager, are required to be filed by the Manager, except where the failure to do so would not reasonably be expected to result in a Material Adverse Effect. The Manager shall pay or make adequate provisions for the payment of all taxes shown as due on such returns, and all assessments made against it or any of its property (other than any amount of such tax the validity of which is being contested in good faith by appropriate proceedings and with respect to which reserves in accordance with GAAP have been provided on the books of the Manager).

 

Section 4.4            Performance of Obligations.

 

(a)           Performance. The Manager shall perform and observe all of its obligations and agreements contained in this Agreement and the other Transaction Documents in all material respects in accordance with the terms hereof and thereof and in accordance with the Managing Standard, as applicable.

 

(b)           Special Provisions as to Securitization IP.  The Manager acknowledges and agrees that IP Holder has the right and duty to control the quality of the goods and services offered under IP Holder’s Trademarks included in the Securitization IP and the manner in which such Trademarks are used in order to maintain the validity and enforceability of and its ownership of the Trademarks included in the Securitization IP. The Manager shall not take any action contrary to the express written instruction of IP Holder with respect to: (A) the promulgation of standards with respect to the operation of the Branded Restaurants, including quality of food, cleanliness, appearance, and level of service (or the making of material changes to the existing standards), (B) the promulgation of standards with respect to new businesses, products and services which IP Holder approves for inclusion in the license granted under any IP License Agreement (or other license agreement or sublicense agreement for which the Manager is performing IP Services), (C) the nature and implementation of means of monitoring and controlling adherence to the standards, (D) the terms of any Franchise Agreements or other sublicense agreements relating to the quality standards which licensees must follow with respect to businesses, products, and services offered under the Trademarks included in the Securitization IP and the usage of such Trademarks, (E) the commencement and prosecution of enforcement actions with respect to the Trademarks included in the Securitization IP and the terms of any settlements thereof, (F) the adoption of any variations on the Taco Bell Brand which are not in use on the date hereof, or other new Trademarks to be included in the Securitization IP, (G) the abandonment of any Securitization IP and (H) any uses of the Securitization IP that are not consistent with the Managing Standard. IP Holder shall have the right to monitor the Manager’s compliance with the foregoing and its performance of the IP Services and, in furtherance thereof, Manager shall provide IP Holder, at its written request from time to time, with copies of Franchise Documents and other sublicenses, samples of products and materials bearing the Trademarks included in the Securitization IP used by Franchisees and other licensees and sublicensees. Nothing in this Agreement shall limit IP Holder’s rights or the licensees’

 

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obligations under the IP License Agreements or any other agreement with respect to which the Manager is performing IP Services.

 

(d)           IP Holder hereby grants to the Manager a non-exclusive, royalty-free sublicensable license to use the Securitization IP in connection with the performance of the Services under this Agreement, including a license to modify and develop Securitization IP consistent with the Managing Standard. In connection with the Manager’s or any Sub-manager’s use of any Trademark included in the Securitization IP pursuant to the foregoing license, the Manager agrees to adhere to the quality control provisions and sublicensing provisions, with respect to sublicenses issued hereunder, which are contained in each IP License Agreement, as applicable to the product or service to which such Trademark pertains, as if such provisions were incorporated by reference herein.

 

(e)           License from Manager and Sub-manager to IP Holder. The Manager and each Sub-manager hereby grant IP Holder and any Successor Manager a perpetual, non- exclusive, royalty-free, sublicensable, worldwide right and license to use any proprietary software owned by the Manager or such Sub-manager, as applicable, for use in connection with operation of the Branded Restaurants.

 

(f)            Right to Receive Instructions. Without limiting the Manager’s obligations under Section 4.4(b) above, in the event that the Manager is unable to decide between alternative courses of action, or is unsure as to the application of any provision of this Agreement, the other Transaction Documents or any Managed Documents, or any such provision is, in the good faith judgment of the Manager, ambiguous as to its application, or is, or appears to be, in conflict with any other applicable provision, or in the event that this Agreement, any other Transaction Document or any Managed Document permits any determination by the Manager or is silent or is incomplete as to the course of action which the Manager is required to take with respect to a particular set of facts, the Manager may make a Consent Request to the Control Party for written instructions in accordance with the Indenture and the other Transaction Documents and, to the extent that the Manager shall have acted or refrained from acting in good faith in accordance with instructions, if any, received from the Control Party with respect to such Consent Request, the Manager shall not be liable on account of such action or inaction to any Person; provided that the Control Party shall be under no obligation to provide any such instruction if it is unable to decide between alternative courses of action. Subject to the Managing Standard, if the Manager shall not have received appropriate instructions from the Control Party within ten (10) Business Days of such notice (or within such shorter period of time as may be specified in such notice), the Manager may, but shall be under no duty to, take or refrain from taking such action, not inconsistent with this Agreement or the Transaction Documents, as the Manager shall deem to be in the best interests of the Noteholders and each of the Securitization Entities. The Manager shall have no liability to any Secured Party or the Controlling Class Representative for such action or inaction taken in reliance on the preceding sentence except for the Manager’s own bad faith, gross negligence or willful misconduct.

 

(g)           Limitation on Manager’s Duties and Responsibilities. The Manager shall not have any duty or obligation to manage, make any payment in respect of, register, record, sell, reinvest, dispose of, create, perfect or maintain title to, or any security interest in, or otherwise deal with the Collateral, to prepare or file any report or other document or to otherwise take or

 

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refrain from taking any action under, or in connection with, any document contemplated hereby to which the Manager is a party, except as expressly provided by the terms of this Agreement or the other Transaction Documents and consistent with the Managing Standard, and no such implied duties or obligations shall be read into this Agreement against the Manager. The Manager nevertheless agrees that it shall, at its own cost and expense, promptly take all action as may be necessary to discharge any Liens (other than Permitted Liens) on any part of the Managed Assets which result from valid claims against the Manager personally and not related to the ownership or administration of the Managed Assets or the transactions contemplated by the Transaction Documents. Except as otherwise set forth herein and in the other Transaction Documents, the Manager shall have no responsibility under this Agreement other than to render the Services in good faith and consistent with the Managing Standard.

 

(h)           Dealing with Collateral.  The Manager shall not manage, control, use, sell, reinvest, dispose of or otherwise deal with any part of the Collateral except in accordance with the powers granted to, and the authority conferred upon, the Manager pursuant to this Agreement or the other Transaction Documents.

 

(i)            Limitations on the Manager’s Liabilities, Duties and Responsibilities. Subject to Section 2.7 and except for any loss, liability, expense, damage, action, suit or injury arising out of, or resulting from, (i) the breach by the Manager of any representation, warranty or covenant made by it herein or any other Transaction Document to which it is a party in its capacity as Manager or (ii) acts or omissions constituting the Manager’s own bad faith, gross negligence or willful misconduct in the performance of its duties hereunder or under the other Transaction Documents to which it is a party in its capacity as Manager, neither the Manager nor any of its Affiliates, managers, officers, members or employees shall be liable to any Securitization Entity, the Noteholders or any other Person under any circumstances, including, without limitation:

 

(1)       for any action taken or omitted to be taken by the Manager in good faith in accordance with the instructions of the Trustee or the Control Party;

 

(2)       for any representation, warranty, covenant, agreement or Indebtedness of any Securitization Entity under the Notes, any other Transaction Documents or the Managed Documents, or for any other liability or obligation of any Securitization Entity;

 

(3)       for the validity or sufficiency of this Agreement or the due execution hereof by any party hereto other than the Manager, or the form, character, genuineness, sufficiency, value or validity of any part of the Collateral (including the creditworthiness of any Franchisee, lessee or other obligor thereunder), or for, or in respect of, the validity or sufficiency of the Transaction Documents;

 

(4)       for any action or inaction of the Trustee, the Back-Up Manager or the Servicer or  for  the  performance  of,  or  the  supervision  of  the  performance  of,  any obligation under this Agreement or any other Transaction Document that is required to be performed by the Trustee, the Back-Up Manager or the Servicer; and

 

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(5)       for any error of judgment made in good faith that does not violate the Managing Standard.

 

(j)            No Financial Liability. Notwithstanding anything in this Agreement to the contrary, no provision of this Agreement (other than Section 2.7, 4.4(g) and 4.4(k)) shall require the Manager to expend or risk its funds or otherwise incur any financial liability in the performance of any of its rights or powers hereunder, if the Manager shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not compensated by the payment of the Weekly Management Fees and is otherwise not reasonably assured or provided to the Manager. The Manager shall not be liable under the Notes and shall not be responsible for any amounts required to be paid by the Issuer under or pursuant to the Indenture.

 

(k)           Reliance. The Manager may, reasonably and in good faith, conclusively rely on, and shall be protected in acting or refraining from acting when doing so, in each case in accordance with any signature, instrument, notice, resolution, request, consent, order, certificate, report, opinion, bond or other document or paper reasonably believed by it to be genuine and believed by it to be signed by the proper party or parties other than its Affiliates. The Manager may reasonably accept a certified copy of a resolution of the board of directors or other governing body of any corporate or other entity other than its Affiliates as conclusive evidence that such resolution has been duly adopted by such body and that the same is in full force and effect. As to any fact or matter the manner or ascertainment of which is not specifically prescribed herein, the Manager may in good faith for all purposes hereof reasonably rely on a certificate, signed by any Authorized Officer of the relevant party, as to such fact or matter, and such certificate reasonably relied upon in good faith shall constitute full protection to the Manager for any action taken or omitted to be taken by it in good faith in reliance thereon.

 

(l)            Consultations with Third Parties; Advice of Counsel. In the exercise and performance of its duties and obligations hereunder or under any of the Transaction Documents, the Manager (A) may act directly or through agents or attorneys pursuant to agreements entered into with any of them; provided that the Manager shall remain primarily liable hereunder for the acts or omissions of such agents or attorneys and (B) may, at the expense of the Manager, consult with external counsel or accountants selected and monitored by the Manager in good faith and in the absence of gross negligence, and the Manager shall not be liable for anything done, suffered or omitted in good faith by it in accordance with the advice or opinion of any such external counsel or accountants with respect to legal or accounting matters.

 

(m)          Independent Contractor. In performing its obligations as manager hereunder the Manager acts solely as an independent contractor of each of the Securitization Entities, except to the extent the Manager is deemed to be an agent of any of the Securitization Entities by virtue of engaging in franchise sales activities, as a broker, or receiving payments on behalf of each of the Securitization Entities, as applicable. Nothing in this Agreement shall, or shall be deemed to, create or constitute any joint venture, partnership, employment, or any other relationship between any of the Securitization Entities and the Manager other than the independent contractor contractual relationship established hereby.   Nothing herein shall be deemed to vest in the Manager title to, or ownership or property interest in, any of the Securitization IP. Except as otherwise expressly provided herein or in the other Transaction

 

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Documents, the Manager shall not be, nor shall be deemed to be, liable for any acts or obligations of the Securitization Entities, the Trustee, the Back-Up Manager or the Servicer.

 

Section 4.5            Merger and Resignation.

 

(a)           Preservation of Existence. The Manager shall not merge into any other Person or convey, transfer or lease substantially all of its assets; provided, however, that nothing contained in this Agreement shall be deemed to prevent (i) the merger into the Manager of another Person, (ii) the consolidation of the Manager and another Person, (iii) the merger of the Manager into another Person or (iv) the sale of substantially all of the property or assets of the Manager to another Person, so long as (A) the surviving Person of the merger or consolidation or the purchaser of the assets of the Manager shall continue to be engaged in the same line of business as the Manager and shall have the capacity to perform its obligations hereunder with at least the same degree of care, skill and diligence as measured by customary practices with which the Manager is required to perform such obligations hereunder, (B) in the case of a merger, consolidation or sale, the surviving Person of the merger or the purchaser of the assets of the Manager shall expressly assume the obligations of the Manager under this Agreement and expressly agree to be bound by all other provisions applicable to the Manager under this Agreement in a supplement to this Agreement in form and substance reasonably satisfactory to the Trustee and the Control Party and (C) with respect to such event, in and of itself, the Rating Agency Condition has been satisfied.

 

(b)           Resignation. The Manager shall not resign from the rights, powers, obligations and duties hereby imposed on it except upon determination that (A) the performance of its duties hereunder is no longer permissible under applicable Requirements of Law and (B) there is no reasonable action that the Manager could take to make the performance of its duties hereunder permissible under applicable Requirements of Law. Any such determination permitting the resignation of the Manager pursuant to clause (A) above shall be evidenced by an Opinion of Counsel to such effect delivered to the Trustee, the Back-Up Manager and the Control Party. No such resignation shall become effective until a Successor Manager shall have been appointed by the Control Party (acting at the direction of the Controlling Class Representative) and shall have assumed the responsibilities and obligations of the Manager in accordance with Section 6.1(a). The Trustee, the Securitization Entities, the Back-Up Manager, the Control Party, the Servicer and the Rating Agency shall be notified of such resignation in writing by the Manager. From and after such effectiveness, the Successor Manager shall be, to the extent of the assignment, the “Manager” hereunder. Except as provided above in this Section 4.5 the Manager may not assign this Agreement or any of its rights, powers, duties or obligations hereunder.

 

(c)           Term of Manager’s Obligations. Except as provided in Section 4.5(b), the duties and obligations of the Manager under this Agreement shall commence on the date hereof and continue until this Agreement shall have been terminated as provided in Section 6.1 or Section 8.1, and shall survive the exercise by any Securitization Entity, the Trustee or the Control Party of any right or remedy under this Agreement (other than the right of termination pursuant to Section 6.1), or the enforcement by any Securitization Entity, the Trustee,  the  Servicer,  the  Back-Up  Manager,  the  Control  Party,  the  Controlling  Class Representative or any

 

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Noteholder of any provision of the Indenture, the Notes, this Agreement or the other Transaction Documents.

 

Section 4.6            Notice of Certain Events.  The Manager shall give written notice to the Trustee, the Back-Up Manager, the Servicer and the Rating Agency promptly upon the occurrence of any of the following events (but in any event no later than five (5) Business Days after the Manager has Actual Knowledge of the occurrence of such an event): (a) an ERISA Event, (b) notice of the institution of proceedings or the taking of any other action by the PBGC or the Manager or any member of its Controlled Group that is intended to result in the withdrawal from, or the termination or insolvency of, any Pension Plan or Multiemployer Plan, (c) any other event or condition shall occur or exist with respect to a Plan (but in each case in clauses (a) through (c) above, only if such event or condition, together with all other such events or conditions, if any, would reasonably be expected to result in a Material Adverse Effect); (d) a Manager Termination Event, an Event of Default, a Hot Back-Up Management Trigger Event, a Warm Back-Up Management Trigger Event or a Rapid Amortization Event or any event which would, with the passage of time or giving of notice or both, would become one or more of the same; or (e) any action, suit, investigation or proceeding pending or, to the Actual Knowledge of the Manager, threatened against or affecting the Manager, before or by any court, administrative agency, arbitrator or governmental body having jurisdiction over the Manager or any of its properties either asserting the illegality, invalidity or unenforceability of any of the Transaction Documents, seeking any determination or ruling that would affect the legality, binding effect, validity or enforceability of any of the Transaction Documents or that would reasonably be expected to result in a Material Adverse Effect.

 

Section 4.7            Capitalization.  The Manager shall  have  sufficient  capital  to perform all of its obligations under this Agreement at all times from the Closing Date and until the Indenture has been terminated in accordance with the terms thereof.

 

Section 4.8            Maintenance of Separateness.  The Manager covenants that, except as otherwise contemplated by the Transaction Documents:

 

(a)           the books and records of the Securitization Entities shall be maintained in such a manner as to permit them to be readily and inexpensively separated from those of the Manager and each of its Affiliates that is not a Securitization Entity;

 

(b)           the Manager shall observe (and shall cause each of its Affiliates that is not a Securitization Entity to observe) corporate and limited liability company formalities in its dealings with any Securitization Entity;

 

(c)           in the event there shall be separate financial statements for the Manager, all such financial statements of the Manager that are consolidated to include any Securitization Entity and that are distributed to any party shall contain detailed notes clearly stating that (i) all of such Securitization Entity’s assets are owned by such Securitization Entity and (ii) such Securitization Entity is a separate entity and has separate creditors;

 

(d)           except as contemplated under Sections 2.2(d)-(e) of this Agreement, the Manager shall not (and shall not permit any of its Affiliates that is not a Securitization Entity to)

 

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commingle its funds with any funds of any Securitization Entity; provided that the foregoing shall not prohibit the Manager or any successor to or assignee of the Manager from holding funds of any of the Securitization Entities in its capacity as Manager for such entity in a segregated account identified for such purpose;

 

(e)           the Manager shall (and shall cause each of its Affiliates that is not a Securitization Entity to) maintain arm’s length relationships with each Securitization Entity, and each of the Manager and each of its Affiliates that is not a Securitization Entity shall be compensated at market rates for any services it renders or otherwise furnishes to any Securitization Entity, it being understood that the Weekly Management Fee, the Supplemental Management Fee and this Agreement are representative of such arm’s length relationship;

 

(f)            the Manager shall not be, and shall not hold itself out to be, liable for the debts of any Securitization Entity or the decisions or actions in respect of the daily business and affairs of any of the Securitization Entities and the Manager shall not permit any of the Securitization Entities to hold the Manager out to be liable for the debts of such Securitization Entity or the decisions or actions in respect of the daily business and affairs of such Securitization Entity; and

 

(g)           upon an officer or other responsible party of the Manager obtaining Actual Knowledge that any of the foregoing provisions in this Section 4.8 has been breached or violated in any material respect, the Manager shall promptly notify the Trustee, the Back-Up Manager, the Control Party and the Rating Agency of same and shall take such actions as may be reasonable and appropriate under the circumstances to correct and remedy such breach or violation as soon as reasonably practicable under such circumstances.

 

Section 4.9            No Competitive Business.  The Manager shall (i) not engage in any Competitive Business and (ii) cause the applicable Non-Securitization Entities to contribute to one or more Securitization Entities any National Mexican Quick Service Restaurant Brand that, in the good faith determination of the Manager in accordance with the Managing Standard, is intended to compete with and will have a material adverse effect on the Taco Bell Brand or any Future Brand.

 

ARTICLE V

 

REPRESENTATIONS, WARRANTIES AND COVENANTS

 

Section 5.1            Representations and Warranties Made in Respect of New Assets.

 

(a)           New Franchise Agreements. As of the applicable New Asset Addition Date with respect to a New Franchise Agreement acquired or entered into on such New Asset Addition Date, the Manager represents and warrants to the Securitization Entities, the Trustee and the Servicer that: (i) such New Franchise Agreement does not contain terms and conditions that are reasonably expected to result in (A) a material decrease in the amount of Collections constituting Franchisee Royalty Payments, taken as a whole, (B) a material adverse change in the nature, quality or timing of Collections constituting Franchisee Royalty Payments, taken as a whole, or (C) a material adverse change in the types of underlying assets generating Collections

 

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constituting Franchisee Royalty Payments, taken as a whole, in each case when compared to the amount, nature or quality of, or types of assets generating, Collections that would have been reasonably expected to result had such New Franchise Agreement been entered into in accordance with the then-current Franchise Documents; (ii) such New Franchise Agreement is genuine, and is the legal, valid and binding obligation of the parties thereto and is enforceable against the parties thereto in accordance with its terms (except as such enforceability may be limited by bankruptcy or Insolvency Laws and by general principles of equity, regardless of whether such enforceability shall be considered in a proceeding in equity or at law); (iii) such New Franchise Agreement complies in all material respects with all applicable Requirements of Law; (iv) the Franchisee related to such New Franchise Agreement is not, to the Actual Knowledge of the Manager, the subject of a bankruptcy proceeding; (v) royalty fees payable pursuant to such New Franchise Agreement are payable by the related Franchisee at least monthly; (vi) except as required by applicable Requirements of Law, such New Franchise Agreement contains no contractual rights of set-off in favor of Franchisees; and (vii) except as required by applicable Requirements of Law, such New Franchise Agreement is freely assignable by the applicable Securitization Entities.

 

(b)           New Development Agreements. As of the applicable New Asset Addition Date with respect to a New Development Agreement acquired or entered into on such New Asset Addition Date, the Manager represents and warrants to the Securitization Entities, the Trustee and the Servicer that: (i) such New Development Agreement does not contain terms and conditions that are reasonably expected to result in (A) a material decrease in the amount of Collections or Retained Collections, taken as a whole, (B) a material adverse change in the nature, quality or timing of Collections, taken as a whole, or (C) a material adverse change in the types of underlying assets generating Collections, taken as a whole, in each case when compared to the amount, nature or quality of, or types of assets generating Collections that would have been reasonably expected to result had such New Development Agreement been entered into in accordance with the then-current Franchise Documents; (ii) such New Development Agreement is genuine, and is the legal, valid and binding obligation of the parties thereto and is enforceable against the parties thereto in accordance with its terms (except as such enforceability may be limited by bankruptcy or insolvency laws and by general principles of equity, regardless of whether such enforceability shall be considered in a proceeding in equity or at law); (iii) such New Development Agreement complies in all material respects with all applicable Requirements of Law; (iv) the counterparty related to such New Development Agreement is not, to the Actual Knowledge of the Manager, the subject of a bankruptcy proceeding; (v) except as required by applicable Requirements of Law, such New Development Agreement contains no contractual rights of set-off; and (vi) except as required by applicable Requirements of Law, such New Development Agreement is freely assignable by the applicable Securitization Entities.

 

(c)           New Franchisee Notes. As of the applicable New Asset Addition Date with respect to a Franchisee Note entered into on such New Asset Addition Date, the Manager represents and warrants to the Securitization Entities, the Trustee and the Servicer that: (i) to its Actual Knowledge, such agreement is genuine, and is the legal, valid and binding obligation of the Franchisee and is enforceable against such Franchisee in accordance with its terms (except as such enforceability may be limited by bankruptcy or insolvency laws and by general principles of equity, regardless of whether such enforceability shall be considered in a proceeding in equity or at law); (ii) such agreement complies in all material respects with all applicable Requirements

 

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of Law; (iii) the Franchisee related to such agreement is not, to the Actual Knowledge of the Manager, the subject of a bankruptcy proceeding; and (iv) except as required by applicable Requirements of Law, such agreement is freely assignable by the applicable Securitization Entities.

 

(d)           Leases of Securitization-Owned Restaurants. If any Securitization-Owned Restaurants are acquired or opened by the Securitization Entities after the Closing Date, no lease under which a Securitization Entity is lessee with respect to any such Securitization-Owned Restaurant shall (i) require any Non-Securitization Entity to provide a guaranty of any obligation of any Securitization Entity or (ii) include any event of default under such lease on the part of any Securitization Entity due to a bankruptcy of any Non-Securitization Entity.

 

Section 5.2            Assets Acquired After the Closing Date.

 

(a)           The Manager shall cause the applicable Securitization Entity to enter into or acquire each of the following after the Closing Date: (a) all Franchise Agreements and all Development Agreements in the Securitization Jurisdictions, (b) all New Franchise Agreements and New Development Agreements and (c) all After-Acquired Securitization IP, excluding, in each case, any Non-Contributed Property and any Licensee-Developed IP and Manager-Developed IP on the Closing Date. The Manager may, but shall not be obligated to, cause any of the Securitization Entities to enter into, develop or acquire assets other than the foregoing from time to time; provided that the entry into, development or acquisition by any Securitization Entity of any material assets that are not reasonably ancillary to the restaurant business or the foodservice industry will require the prior satisfaction of the Rating Agency Condition and the prior written consent of the Control Party.

 

(b)           Unless otherwise agreed to in writing by the Control Party, any contribution to, or development or acquisition by, any Securitization Entity of assets after the Closing Date described in Section 5.2(a) shall be subject to all applicable provisions of the Indenture, this Agreement  (including the applicable representations and warranties and covenants in Articles II and V of this Agreement), the IP License Agreements and the other Transaction Documents.

 

Section 5.3            Securitization IP.  All Securitization IP shall be owned solely by IP Holder, and shall not be assigned, transferred or licensed out by IP Holder to any other entity other than another Securitization Entity or as otherwise permitted or provided under the Transaction Documents.

 

Section 5.4            Specified Non-Securitization Debt Cap.  Following the closing of the Securitization Transaction, but provided such Manager Termination Event shall not be cured within forty-five (45) days of the Actual Knowledge thereof of the Manager, a Manager Termination Event (and therefore a Rapid Amortization Event) will occur if the Non-Securitization Entities incur (such incurrence to be tested on the initial incurrence thereunder (and not in connection with any subsequent borrowings or reborrowings under any existing commitment under any revolving facility), but assuming any variable funding or revolving facility is fully drawn) any Indebtedness for borrowed money (“Specified Non-Securitization Debt”) if, after giving effect to such incurrence (and any repayment of Specified Non-

 

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Securitization Debt on such date), such incurrence would cause the Holdco Leverage Ratio to be greater than 7.00x (the “Holdco Specified Non-Securitization Debt Cap”); provided, that the creditors (if any) of the Initial Manager with respect to any such Indebtedness that causes the Holdco Leverage Ratio to exceed 6.50x (calculated in the manner set forth above, including creditors benefiting from a guarantee of the Initial Manager with respect to such Indebtedness, but excluding any creditor in respect of an aggregate amount of outstanding Indebtedness of less than $500,000) will be required to execute a non-disturbance agreement with the Trustee with respect to such Indebtedness, as directed by the Manager and in a form reasonably satisfactory to the Servicer and the Trustee, that acknowledges the bankruptcy remote status of the Securitization Entities; provided, further, that the Holdco Specified Non-Securitization Debt Cap will not be applicable to Specified Non-Securitization Debt that is (i) issued or incurred to refinance the Series 2016-1 Notes in whole, (ii) considered Indebtedness due solely to a change in accounting rules that takes effect subsequent to the Closing Date, but was not considered Indebtedness prior to such date, (iii) in respect of any obligation of any Non-Securitization Entity to reimburse the Issuer for any draws under one or more Letters of Credit, (iv) in respect of intercompany notes among Non-Securitization Entities, or (v) any letter of credit that is 100% cash collateralized.

 

Section 5.5            Restrictions on Liens.  The Manager shall not, and shall not permit any of its Subsidiaries to, create, incur, assume, permit or suffer to exist any Lien (other than Liens in favor of the Trustee for the benefit of the Secured Parties and any Permitted Lien set forth in clauses (a), (g) and (i) of the definition thereof) upon the Equity Interests of any Securitization Entity.

 

Section 5.6            Future Brands.  The Manager may, but shall not be obligated to, create or acquire additional subsidiaries of the Issuer (“Future Securitization Entities”) after the Closing Date, in respect of (a) any non-U.S. operations or assets, (b) new Franchise Agreements and (c) acquisitions of additional franchise brand subsidiaries (which may include non-U.S. subsidiaries) in connection with Future Brands. To the extent, a franchise brand that is substantially different from the then-current business of the Securitization Entities is contributed to a Securitization Entity, the Manager and the Securitization Entities will request that the definition of “National Mexican Quick Service Restaurant Brand” herein and the Base Indenture be amended accordingly to incorporate such franchise brand.

 

ARTICLE VI

 

MANAGER TERMINATION EVENTS

 

Section 6.1            Manager Termination Events.

 

(a)           Manager Termination Events. Each of the following events shall constitute a “Manager Termination Event” under this Agreement, the assertion as to the occurrence of which may be made, and notice of which may be given, by either a Securitization Entity, the Back-Up Manager, the Servicer or the Trustee (acting at the direction of the Control Party):

 

(i)            the Interest-Only DSCR as calculated as of any Quarterly Calculation Date is less than 1.20x;

 

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(ii)           any failure by the Manager to remit a payment required to be deposited from a Concentration Account to the Collection Account or any other Indenture Trust Account, within three (3) Business Days of the later of (a) its Actual Knowledge of its receipt thereof and (b) the date such deposit is required to be made pursuant to the Transaction Documents; provided that any inadvertent failure to remit such a payment shall not be a breach of this clause (ii) if in an amount less than $5 million and corrected within three (3) Business Days after the Manager obtains Actual Knowledge thereof (it being understood that the Manager will not be responsible for the failure of the Trustee to remit funds that were received by the Trustee from or on behalf of the Manager in accordance with the applicable Transaction Documents);

 

(iii)          any failure by the Manager to provide certain certificates or reports as required by Section 4.4 of the Indenture that shall not be cured within ten (10) Business Days (or solely with respect to Quarterly Noteholders’ Reports and the Quarterly Compliance Certificates, five (5) Business Days) of the Manager’s Actual Knowledge thereof;

 

(iv)          a material default by the Manager in the due performance and observance of any covenant set forth herein or any other Transaction Document to which it is party (other than a default subject to subpart (ii) above) that shall have a Material Adverse Effect shall have occurred, and such default shall not be cured within thirty (30) days after the Manager’s Actual Knowledge thereof, provided, however, that as long as the Manager is diligently attempting to cure such default (so long as such default is capable of being cured), such cure period shall be extended by an additional period as may be required to cure such default, but in no event by more than an additional thirty (30) days; including, if applicable, by payment of liquidated damages in an amount equal to the Indemnification Amount and provided further that no Manager Termination Event shall occur under this clause (iv) due to the breach of any covenant relating to a New Asset set forth in Article V as long as the Manager has complied with Section 2.7(b) or 2.7(c) in respect thereof;

 

(v)           any representation, warranty or statement of the Manager herein or in any other Transaction Document that is not qualified by materiality or the definition of “Material Adverse Effect” proves to be incorrect in any material respect, or any such representation, warranty or statement of the Manager that is qualified by materiality or the definition of “Material Adverse Effect” proves to be incorrect in any respect and such breach is not cured within thirty (30) days after the Manager has obtained Actual Knowledge thereof;

 

(vi)          an Event of Bankruptcy with respect to the Manager;

 

(vii)         any final, non-appealable order against the Manager decreeing the dissolution of the Manager that is in effect for more than ten (10) Business Days;

 

(viii)        a final, non-appealable judgment for an amount in excess of $200,000,000 (exclusive of any portion thereof which is insured) is rendered against the Manager and is not discharged or stayed within forty-five (45) days of the date when due;

 

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(ix)          an acceleration of more than $200,000,000 of the Indebtedness of the Manager, which Indebtedness has not been discharged or which acceleration has not been rescinded and annulled;

 

(x)           this Agreement or a material portion thereof ceases to be in full force and effect or enforceable in accordance with its terms (other than in accordance with the express termination provisions hereof) or the Manager asserts as much in writing;

 

(xi)          a failure by the Initial Manager to comply or cause compliance with the Holdco Specified Non-Securitization Debt Cap, and such failure has continued for a period of forty-five (45) days after the Initial Manager has been notified in writing by any Securitization Entity, the Control Party, the Back-Up Manager or the Trustee, or otherwise has obtained Actual Knowledge of such non-compliance; and/or

 

(xii)         the occurrence of a Change in Management following the occurrence of a Change of Control.

 

If a Manager Termination Event has occurred and is continuing, the Control Party (acting at the direction of the Controlling Class Representative) may (i) waive such Manager Termination Event (except for a Manager Termination Event described in clauses (vi) or (vii) above) or (ii) direct the Trustee to terminate the Manager in its capacity as such by the delivery of a termination notice (a “Termination Notice”) to the Manager (with a copy to each of the Securitization Entities, the Back-Up Manager and the Rating Agency); provided, that the delivery of a Termination Notice will not be required in respect of any Manager Termination Event relating to the Manager Termination Events described in clauses (vi) or (vii) above. If the Trustee, acting at the direction of the Control Party (acting at the direction of the Controlling Class Representative), delivers a Termination Notice to the Manager pursuant to this Agreement (or automatically upon the occurrence of any Manager Termination Event relating to the Manager Termination Events described in clauses (vi) or (vii) above), all rights, powers, duties, obligations and responsibilities of the Manager under this Agreement and the other Transaction Documents (other than with respect to the payment of Indemnification Amounts or its obligations with respect to Disentanglement), including with respect to the Accounts or otherwise, shall vest in and be assumed by the Successor Manager appointed by the Control Party (acting at the direction of the Controlling Class Representative). If no Successor Manager has been appointed by the Control Party (acting at the direction of the Controlling Class Representative), the Back-Up Manager shall serve as the Successor Manager and will work with the Servicer to implement the Transition Plan until a Successor Manager (other than the Back-Up Manager) has been appointed by the Control Party (acting at the direction of the Controlling Class Representative).

 

(b)           From the occurrence and during the continuation of a Manager Termination Event, each Securitization Entity and the Trustee (acting at the direction of the Control Party) are hereby irrevocably authorized and empowered to execute and deliver, on behalf of the Manager, as attorney-in-fact or otherwise, all documents and other instruments (including any notices to Franchisees deemed necessary or advisable by the applicable Securitization Entity or the Control Party), and to do or accomplish all other acts or take other measures reasonably necessary or appropriate, to effect such vesting and assumption.

 

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Section 6.2            Manager’s Transitional Role.

 

(a)           Disentanglement. Following the delivery of a Termination Notice to the Manager pursuant to Section 6.1(a) above or notice of resignation of the Manager pursuant to Section 4.5(b) and for the duration of the Disentanglement Period, the Manager shall (and provided such Manager Termination Event shall occur as a result of a Change in Management following a Change of Control, for a period ending not later than the twelfth (12th) month after the date of consummation of any transaction in which YUM! Brands, Inc. (“YBI”) ceases to own a majority of the equity in the Initial Manager, the Initial Manager shall enter into sub-management arrangements with YBI such that YBI and its affiliates shall be required to, for reasonable compensation and subject to reimbursement of its out-of-pocket costs and expenses), (x) (i) cooperate with the Back-Up Manager and the Control Party in connection with the implementation of the Transition Plan and the transition to a Successor Manager, without material interruption or adverse impact on the provision of Services (the “Disentanglement”), (ii) use its commercially reasonable efforts to maintain as appropriate and as needed to assist in the Transition Plan the existing staffing and resources of the Manager devoted to or shared with the provision of the Services prior to the date of such Termination Notice and (iii) allow for reasonable access to the Manager’s premises, systems and offices during the Disentanglement Period (such activities the “Continuity of Services”).  During the period beginning on the date of (A) delivery of the Termination Notice to the Manager or (B) delivery of a resignation notice by the Manager, and in each case ending no later than twelve (12) months after the date of such termination or resignation, as applicable (the “Disentanglement Period”), the Manager will (and provided such Manager Termination Event shall occur as a result of a Change in Management following a Change of Control, for a period ending not later than the twelfth (12th) month after the date of consummation of any transaction in which YBI ceases to own a majority of the equity of the Initial Manager), the Initial Manager shall enter into sub-management arrangements with YBI such that YBI and its affiliates shall be required to, for reasonable compensation and subject to reimbursement of its out-of-pocket costs and expenses) (x) cooperate with the Successor Manager and otherwise promptly take all actions reasonably required to assist in effecting a Disentanglement while using commercially reasonable efforts to maintain Continuity of Services and shall follow any reasonable directions that may be provided by the Back-Up Manager and the Control Party in connection therewith, (y) provide all information and assistance regarding the terminated Services reasonably required for Disentanglement and Continuity of Services, including data conversion and migration, interface specifications, and related professional services, and (z) provide for the prompt and orderly conclusion of all work, as the Control Party and the Back-Up Manager may reasonably direct, including completion or partial completion of projects, documentation of all work in progress, and other measures to assure an orderly transition to the Successor Manager. All services relating to Disentanglement and Continuity of Services (collectively, the “Disentanglement Services”), including all reasonable training for personnel of the Back-Up Manager, the Successor Manager or the Successor Manager’s designated alternate service provider in the performance of the Services, shall be deemed a part of the Services to be performed by the Manager.

 

(b)           Fees and Charges for the Disentanglement Services. So long as the Manager continues to provide the Services (whether or not the Manager has been terminated as the Manager) during the Disentanglement Period, the Manager will continue to be paid the Weekly Management Fee. The Manager shall be entitled to reimbursement from time to time of

 

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its actual costs for the provision of any Disentanglement Services, other than those related to Continuity of Services, which shall remain separate obligations of the Manager.

 

(c)           Duration of Obligations. The Manager’s obligation to provide Disentanglement Services will begin on the date of the delivery of a Termination Notice to the Manager pursuant to Section 6.1(a) above or the Manager’s delivery of notice of its resignation pursuant to Section 4.5(b), and shall end no later than twelve (12) months after the date of such termination or resignation, as applicable (the “Disentanglement Period”).

 

(d)           Sub-manager Arrangements; Authorizations.

 

With respect to each Sub-management Arrangement and unless the Control Party elects to terminate such Sub-management Arrangement in accordance with Section 2.10, the Manager shall, during the Disentanglement Period:

 

(x)           assign to the Successor Manager (or such Successor Manager’s designated alternate service provider) all of the Manager’s rights under such Sub-management Arrangement to which it is party used by the Manager in performance of the transitioned Services; and

 

(y)           procure any third party authorizations necessary to grant the Successor Manager (or such Successor Manager’s designated alternate service provider) the use and benefit of such Sub-management Arrangement to which it is party (used by the Manager in performing the transitioned Services), pending their assignment to the Successor Manager under this Agreement.

 

If the Control Party elects to terminate such Sub-management Arrangement in accordance with Section 2.10, the Manager shall take all reasonable actions necessary or reasonably requested by the Control Party to accomplish a complete transition of the Services performed by such Sub-management to the Successor Manager, or to any alternate service provider designated by the Control Party, without material interruption or adverse impact on the provision of Services.

 

Section 6.3            Intellectual Property.  Within sixty (60) days of termination of this Agreement for any reason, the Manager shall deliver and surrender up to IP Holder (with a copy to the Successor Manager and the Servicer) and shall terminate all use of all Securitization IP, including Trade Secrets; provided that (for the avoidance of doubt) any rights granted to the Manager and the other Non-Securitization Entities as licensees pursuant to the IP License Agreements shall continue pursuant to the terms thereof notwithstanding the termination of this Agreement and/or its role as Manager.

 

Section 6.4            Third Party Intellectual Property.  During the Disentanglement Period, the Manager shall assist and cooperate with the Successor Manager or its designated alternate service provider in obtaining any necessary licenses or consents to use any third party Intellectual Property then being used by the Manager or any Sub-manager. During the Disentanglement Period, the Manager shall assign, and shall cause each Sub-manager to assign, any such license or sublicense directly to the Successor Manager or its designated alternate

 

40

 

service provider to the extent the Manager, or each Sub-manager as applicable, has the rights to assign such agreements to the Successor Manager without incurring any additional cost.

 

Section 6.5            No Effect on Other Parties.  Upon any termination of the rights and powers of the Manager from time to time pursuant to Section 6.1 or upon any appointment of a Successor Manager, all the rights, powers, duties, obligations, and responsibilities of each of the Securitization Entities or the Trustee under this Agreement, the Indenture and the other Transaction Documents shall remain unaffected by such termination or appointment and shall remain in full force and effect thereafter, except as otherwise expressly provided in this Agreement or in the Indenture.

 

Section 6.6            Rights Cumulative.  All rights and remedies from time to time conferred upon or reserved to any of the Securitization Entities, the Trustee, the Servicer, the Control Party, the Back-Up Manager and the Noteholders or to any or all of the foregoing are cumulative, and none is intended to be exclusive of another or any other right or remedy which they may have at law or in equity. Except as otherwise expressly provided herein, no delay or omission in insisting upon the strict observance or performance of any provision of this Agreement, or in exercising any right or remedy, shall be construed as a waiver or relinquishment of such provision, nor shall it impair such right or remedy. Every such right and remedy may be exercised from time to time and as often as deemed expedient.

 

ARTICLE VII

 

CONFIDENTIALITY

 

Section 7.1            Confidentiality.

 

(a)           Each of the parties hereto acknowledges that during the Term such party (the “Recipient”) may receive Confidential Information from another party hereto (the “Discloser”). Each such party (except for the Trustee, whose confidentiality obligations shall be governed in accordance with the Indenture) agrees to maintain the Confidential Information of the other party in the strictest of confidence and shall not, except as otherwise contemplated herein, at any time, use,  disseminate or disclose any Confidential Information to any Person other than (i) its officers, directors, managers, employees, agents, advisors, Affiliates or representatives (including legal counsel and accountants) who have a “need to know” and who have been apprised of this restriction or (ii) Franchisees and prospective Franchisees, suppliers or other service providers under written confidentiality agreements that contain provisions at least as protective as those set forth in this Agreement. The Recipient shall be liable for any breach of this Section 7.1 by any of its officers, directors, managers, employees, agents, advisors, representatives, Franchisees and prospective Franchisees, suppliers or other services providers and shall immediately notify Discloser in the event of any loss or disclosure of any Confidential Information of the Discloser. Upon termination of this Agreement, Recipient shall return to the Discloser, or at Discloser’s request, destroy, all documents and records in its possession containing the Confidential Information of the Discloser. Confidential Information shall not include information that: (A) is already known to Recipient without restriction on use or disclosure prior to receipt of such information from the Discloser; (B) is or becomes part of the public domain other than by breach of this Agreement by, or other wrongful act of, the Recipient;

 

41

 

(C) is developed by the Recipient independently of and without reference to any Confidential Information of the Discloser; (D) is received by the Recipient from a third party who is not under any obligation to the Discloser to maintain the confidentiality of such information; or (E) is required to be disclosed by applicable law, statute, rule, regulation, subpoena, court order or legal process; provided that the Recipient shall promptly inform the Discloser of any such requirement and cooperate with any attempt by the Discloser to obtain a protective order or other similar treatment. It shall be the obligation of Recipient to prove that such an exception to the definition of Confidential Information exists.

 

(b)           Notwithstanding anything to the contrary contained in Section 7.1(a), the parties hereto may use, disseminate or disclose Confidential Information (other than Trade Secrets) to any Person in connection with the enforcement of rights of the Trustee or the Noteholders under the Indenture or the Transaction Documents; provided, however, that prior to disclosing any such Confidential Information:

 

to any such Person other than in connection with any judicial or regulatory proceeding, such Person shall agree in writing to maintain such Confidential Information in a manner at least as protective of the Confidential Information as the terms of Section 7.1(a) and Recipient shall provide Discloser with the written opinion  of counsel that such disclosure contains Confidential Information only to the extent necessary to facilitate the enforcement of such rights of the Trustee or the Noteholders; or

 

to any such Person or entity in connection with any judicial or regulatory proceeding, Recipient shall (x) promptly notify Discloser of each such requirement and identify the documents so required thereby so that Discloser may seek an appropriate protective order or similar treatment and/or waive compliance with the provisions of this Agreement; (y) use reasonable efforts to assist Discloser in obtaining such protective order or other similar treatment protecting such Confidential Information prior to any such disclosure; and (z) consult with Discloser on the advisability of taking legally available steps to resist or narrow the scope of such requirement. If, in the absence of such a protective order or similar treatment, the Recipient is nonetheless required by law to disclose any part of Discloser’s Confidential Information, then the Recipient may disclose such Confidential Information without liability under this Agreement, except that the Recipient shall furnish only that portion of the Confidential Information which is legally required.

 

ARTICLE VIII

 

MISCELLANEOUS PROVISIONS

 

Section 8.1            Termination of Agreement.  The respective duties and obligations of the Manager and each of the Securitization Entities created by this Agreement shall commence on the date hereof and shall, unless earlier terminated pursuant to Section 6.1(a), terminate upon the earlier to occur of (x) the final payment or other liquidation of the last Managed Asset included in the Collateral or (y) satisfaction and discharge of the Indenture pursuant to Section 12.1 of the Base Indenture (the “Term”). Upon termination of this Agreement pursuant to this Section 8.1, the Manager shall pay over to the applicable

 

42

 

Securitization Entity or any other Person entitled thereto all proceeds of the Managed Assets held by the Manager.

 

Section 8.2            Survival.  The provisions of Section 2.1(c), Section 2.7, Section 2.8, Section 5.1, Article VI or Article VII, this Section 8.2, Section 8.4, Section 8.5 and Section 8.9 shall survive termination of this Agreement.

 

Section 8.3            Amendment.

 

(a)           This Agreement may only be amended, from time to time, in writing, upon the written consent of the Trustee (acting at the direction of the Control Party), the Securitization Entities and the Manager; provided that any amendment that would materially adversely affect the interests of the Noteholders shall require the consent of the Control Party, which consent shall not be unreasonably withheld or delayed; provided, further, that no consent of the Trustee or the Control Party shall be required in connection with any amendment to accomplish any of the following:

 

(i)            to correct or amplify the description of any required activities of the Manager;

 

(ii)           to add to the duties or covenants of the Manager for the benefit of any Noteholders or any other Secured Parties, or to add provisions to this Agreement so long as such action does not modify the Managing Standard, materially adversely affect the enforceability of the Securitization IP (taken as a whole), or materially adversely affect the interests of the Noteholders;

 

(iii)          to correct any manifest error or to cure any ambiguity, defect or provision that may be inconsistent with the terms of the Base Indenture or any other Transaction Document, or to correct or supplement any provision herein that may be inconsistent with the terms of the Base Indenture or any offering memorandum for the Notes;

 

(iv)          to evidence the succession of another Person to any party to this Agreement;

 

(v)           to comply with Requirements of Law;

 

(vi)          to allow any Future Brand or other assets to be contributed to, or acquired by, the Securitization Entities in a manner that does not violate the Managing Standard and to provide for any applicable provisions with respect thereto; or

 

(vii)         to take any action necessary and appropriate to facilitate the origination of New Franchise Agreements or the management and preservation of the Franchise Documents, in each case, in accordance with the Managing Standard.

 

(b)           Promptly after the execution of any such amendment, the Manager shall send to the Trustee, the Servicer, the Back-Up Manager and each Rating Agency a conformed copy of such amendment, but the failure to do so shall not impair or affect its validity.

 

43

 

(c)           Any such amendment or modification effected contrary to the provisions of this Section 8.3 shall be null and void.

 

The Issuer and the Trustee each agree not to amend the Indenture or the Transaction Documents to which it is a party without the Manager’s consent if such amendment would materially increase the Manager’s obligations or liabilities, or materially decrease the Manager’s rights or remedies under this Agreement, the Indenture or any other Transaction Document.

 

Section 8.4            Governing Law.  THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CHOICE OF LAW RULES (OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW).

 

Section 8.5            Notices.  All notices, requests or other communications desired or required to be given under this Agreement shall be in writing and shall be sent by (a) certified or registered mail, return receipt requested, postage prepaid, (b) national prepaid overnight delivery service, (c) electronic mail (of a pdf or similar file) or (d) personal delivery with receipt acknowledged in writing, to the address set forth in Section 14.1 of the Base Indenture. If the Indenture or this Agreement permits reports to be posted to a password-protected website, such reports shall be deemed delivered when posted on such website. Any party hereto may change its address for notices hereunder by giving notice of such change to the other parties hereto, with a copy to the Control Party. Any change of address of a Noteholder shown on a Note Register shall, after the date of such change, be effective to change the address for such Noteholder hereunder. All notices and demands to any Person hereunder shall be deemed to have been given either at the time of the delivery thereof at the address of such Person for notices hereunder, or on the third day after the mailing thereof to such address, as the case may be.

 

Section 8.6            Acknowledgement.  Without limiting the foregoing, the Manager hereby acknowledges that, on the date hereof, each of the Securitization Entities will pledge to the Trustee under the Indenture and the Guarantee and Collateral Agreement, as applicable, all of such Securitization Entity’s right and title to, and interest in, this Agreement and the Collateral, and such pledge includes all of such Securitization Entity’s rights, remedies, powers and privileges, and all claims of such Securitization Entity against the Manager, under or with respect to this Agreement (whether arising pursuant to the terms of this Agreement  or  otherwise available at law or in equity), including (i) the rights of such Securitization Entity and the obligations of the Manager hereunder and (ii) the right, at any time, to give or withhold consents, requests, notices, directions, approvals, demands, extensions or waivers under or with respect to this Agreement or the obligations in respect of the Manager hereunder to the same extent as such Securitization Entity may do. The Manager hereby consents to such pledges described above, acknowledges and agrees that (x) the Control Party and the Controlling Class Representative shall be third-party beneficiaries of the rights of such Securitization Entity arising hereunder and (y) during the continuance of an Event of Default, the Control Party and the Controlling Class Representative may, to the extent provided in the Indenture and the Guarantee and Collateral Agreement, enforce the provisions of this Agreement, exercise the rights of such Securitization Entity and enforce the obligations of the Manager hereunder without the consent of such Securitization Entity.

 

44

 

Section 8.7            Severability of Provisions.  If one or more of the provisions of this Agreement shall be for any reason whatever held invalid or unenforceable, such provisions shall be deemed severable from the remaining covenants, agreements and provisions of this Agreement and such invalidity or unenforceability shall in no way affect the validity or enforceability of such remaining provisions, or the rights of any parties hereto. To the extent permitted by law, the parties hereto waive any provision of law that renders any provision of this Agreement invalid or unenforceable in any respect.

 

Section 8.8            Delivery Dates.  If the due date of any notice, certificate or report required to be delivered by the Manager hereunder falls on a day that is not a Business Day, the due date for such notice, certificate or report shall be automatically extended to the next succeeding day that is a Business Day.

 

Section 8.9            Limited Recourse.  The obligations of each of the Securitization Entities under this Agreement are solely the limited liability company obligations of such Securitization Entity. The Manager agrees that each of the Securitization Entities shall be liable for any claims that it may have against such Securitization Entity only to the extent that funds or assets are available to pay such claims pursuant to the Indenture and that, to the extent that any such claims remain unpaid after the application of such funds and assets in accordance with the Indenture, such claims shall be extinguished.

 

Section 8.10          Binding Effect; Assignment; Third Party Beneficiaries.  The provisions of this Agreement shall be binding upon and inure to the benefit of the respective successors and assigns of the parties hereto. Any assignment of this Agreement without the written consent of the Control Party shall be null and void. Each of the Back-Up Manager and the Servicer (in its capacities as Control Party and Servicer) is an intended third party beneficiary of this Agreement and may enforce the Agreement as though a party hereto to the extent provided in Section 8.6. The Control Party and the Controlling Class Representative are third party beneficiaries to the extent set forth in Section 8.6.

 

Section 8.11          Article and Section Headings.  The Article and Section headings herein are for convenience of reference only, and shall not limit or otherwise affect the meaning hereof.

 

Section 8.12          Concerning the Trustee.  In acting under this  Agreement,  the Trustee shall be afforded the rights, privileges, protections, immunities and indemnities set forth in the Indenture as if fully set forth herein.

 

Section 8.13          Counterparts.  This Agreement may be executed by the parties hereto in several counterparts (including by facsimile or other electronic means of communication), each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute but one and the same agreement.

 

Section 8.14          Entire Agreement.  This Agreement, together with the Indenture and the other Transaction Documents and the Managed Documents constitute the entire agreement and understanding among the parties with respect to the subject matter hereof. Any

 

45

 

previous agreement among the parties with respect to the subject matter hereof is superseded by this Agreement, the Indenture, the other Transaction Documents and the Managed Documents.

 

Section 8.15          Waiver of Jury Trial; Jurisdiction; Consent to Service of Process.

 

(a)           The parties hereto each hereby waives any right to have a jury participate in resolving any dispute, whether in contract, tort or otherwise, arising out of, connected with, relating to or incidental to the transactions contemplated by this Agreement.

 

(b)           The parties hereto each hereby irrevocably submits (to the fullest extent permitted by applicable law) to the non-exclusive jurisdiction of any New York state or federal court sitting in the borough of Manhattan, New York City, State of New York, over any action or proceeding arising out of or relating to this Agreement or any Transaction Documents, and the parties hereto hereby irrevocably agree that all claims in respect of such action or proceeding shall be heard and determined in such New York state or federal court. The parties hereto each hereby irrevocably waive, to the fullest extent permitted by applicable law, any objection each may now or hereafter have, to remove any such action or proceeding, once commenced, to another court on the grounds of forum non conveniens or otherwise.

 

(c)           Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 8.5. Nothing in this Agreement shall affect the right of any party to this Agreement to serve process in any other manner permitted by law.

 

Section 8.16          Joinder of Future Securitization Entities.

 

(a)           In the event that the Issuer, or the Manager on its behalf, shall form a Future Securitization Entity pursuant to Section 8.30 of the Base Indenture, such Future Securitization Entity shall execute and deliver to the Manager and the Trustee (i) a Joinder Agreement substantially in the form of Exhibit B and (ii) Power of Attorney(s) in the form of Exhibit A-1 (in the case of any Future Securitization Entity that holds any Securitization IP) and Exhibit A-2 (in the case of any Future Securitization Entity that does not hold any Securitization IP), and such New Securitization Entity shall thereafter for all purposes be a party hereto and have the same rights, benefits and obligations as a Securitization Entity party hereto on the Closing Date.

 

[The remainder of this page is intentionally left blank.]

 

46

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective officers thereunto duly authorized as of the day and year first above written.

 

 

	
 
    	
TACO BELL CORP., as   Manager
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Elizabeth Williams
    
	
 
    	
 
    	
Name: Elizabeth   Williams
    
	
 
    	
 
    	
Title: President and   Treasurer
    

 

[Signature Page to Management Agreement]

 

 

	
 
    	
TACO BELL FUNDING, LLC
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ William L. Gathof
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
TACO BELL IP HOLDER,   LLC
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ William L. Gathof
    
	
 
    	
 
    	
Name: William L. Gathof
    
	
 
    	
 
    	
Title: Authorized   Signatory
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
TACO BELL FRANCHISOR   HOLDINGS, LLC
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ William L. Gathof
    
	
 
    	
 
    	
Name: William L. Gathof
    
	
 
    	
 
    	
Title: Authorized   Signatory
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
TACO BELL FRANCHISOR,   LLC
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ William L. Gathof
    
	
 
    	
 
    	
Name: William L. Gathof
    
	
 
    	
 
    	
Title: Authorized   Signatory
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
TACO BELL FRANCHISE   HOLDER 1, LLC
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ William L. Gathof
    
	
 
    	
 
    	
Name: William L. Gathof
    
	
 
    	
 
    	
Title: Authorized   Signatory
    

 

[Signature Page to Management Agreement]

 

 

	
 
    	
CITIBANK, N.A., not in   its individual capacity, but solely as Trustee
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Anthony Bausa
    
	
 
    	
 
    	
Name: Anthony Bausa
    
	
 
    	
 
    	
Title: Vice President
    

 

[Signature Page to Management Agreement]

 

 

SCHEDULE 1

 

LIST OF PRODUCTS OR SERVICES PURCHASED FROM THIRD PARTY VENDORS BY THE MANAGER

 

None.

 

Schedule 1-1

 

EXHIBIT A-1

 

POWER OF ATTORNEY OF IP HOLDER

 

KNOW ALL PERSONS BY THESE PRESENTS, that in connection with the Management Agreement, dated as of the Closing Date, among Taco Bell Funding, LLC (the “Issuer”), Taco Bell SPV Guarantor, LLC (“Funding Holdco”), Taco Bell IP Holder, LLC (“IP Holder”), Taco Bell Franchisor, LLC (“Franchise Holder” and, together with Funding Holdco and IP Holder, the “Guarantors” and, together with the Issuer and each future Subsidiary of the Issuer or Funding Holdco, the “Securitization Entities”) and Citibank, N.A., not in its individual capacity but solely as the indenture trustee (together with its successor and assigns, the “Trustee”), IP Holder hereby appoints Taco Bell Corp. (the “Manager”) and any and all officers thereof as its true and lawful attorney in fact, with full power of substitution, in connection with the IP Services described below being performed with respect to the Securitization IP, with full irrevocable power and authority in the place of IP Holder that is the owner thereof and in the name of IP Holder or in its own name as agent of IP Holder, to take any and all appropriate action and to execute any and all documents and instruments which may be necessary or desirable to accomplish the foregoing, subject to the Management Agreement, including, without limitation, the full power to perform:

 

(a)           searching, screening and clearing After-Acquired Securitization IP to assess patentability, registrability and the risk of potential infringement;

 

(b)           filing, prosecuting, defending and maintaining applications and registrations for the Securitization IP in IP Holder’s name in the Securitization Jurisdiction, including timely filing of evidence of use, applications for renewal and affidavits of use and/or incontestability, timely paying of all registration and maintenance fees, responding to third-party oppositions of applications or challenges to registrations, and responding to any office actions, reexaminations, interferences, inter partes reviews, post grant reviews, or other office or examiner requests, reviews, or requirements;

 

(c)           monitoring third-party use and registration of Intellectual Property, as applicable, and taking actions the Manager deems appropriate to oppose or contest the use and any application or registration for Intellectual Property, as applicable, that could reasonably be expected to infringe, dilute or otherwise violate the Securitization IP or IP Holder’s rights therein;

 

(d)           confirming IP Holder’s legal title in and to any or all of the Securitization IP, including obtaining written assignments of Securitization IP to IP Holder, recording transfers of title in the USPTO and USCO and transferring internet domain name registrations;

 

(e)           with respect to IP Holder’s rights and obligations under the IP License Agreements and any Transaction Documents, monitoring the licensee’s use of each licensed Trademark and the quality of its goods and services offered in connection with such Trademarks, rendering any approvals (or disapprovals) that are required under the applicable license agreement(s), and employing reasonable means to ensure that any use of any such Trademarks

 

A-1-1

 

by any such licensee satisfies the quality control standards and usage provisions of the applicable license agreement;

 

(f)            protecting, policing, and, in the event that the Manager becomes aware of any unlicensed copying, imitation, infringement, dilution, misappropriation, unauthorized use or other violation of the Securitization IP, or any portion thereof, enforcing such Securitization IP, including, (i) preparing and responding to cease-and-desist, demand and notice letters, and requests for a license; and (ii) commencing, prosecuting and/or resolving claims or suits involving imitation, infringement, dilution, misappropriation, the unauthorized use or other violation of such Securitization IP, and seeking monetary and equitable remedies as the Manager deems appropriate in connection therewith; provided that IP Holder will, and agrees to, join as a party to any such suits to the extent necessary to maintain standing;

 

(g)           performing such functions and duties, and preparing and filing such documents, as are required under the Indenture or any other Transaction Document to be performed, prepared and/or filed by IP Holder, including (i) executing and recording such financing statements (including continuation statements) or amendments thereof or supplements thereto or such other instruments as the Issuer or the Control Party may, from time to time, reasonably request (consistent with the obligations of IP Holder to perfect the Trustee’s lien in the applicable jurisdictions within the Securitization Jurisdiction) in connection with the security interests in the Securitization IP granted by IP Holder to the Trustee under the Indenture and (ii) preparing, executing and delivering grants of security interests or any similar instruments as the Issuer or the Control Party may, from time to time, reasonably request (consistent with the obligations of IP Holder to perfect the Trustee’s lien in the applicable jurisdictions within the Securitization Jurisdiction) that are intended to evidence such security interests in the Securitization IP and recording such grants or other instruments with the relevant Governmental Authority including the USPTO and USCO;

 

(h)           taking such actions as any licensee under an IP License Agreement may request that are required by the terms, provisions and purposes of such IP License Agreement (or by any other agreements pursuant to which IP Holder licenses the use of any Securitization IP) to be taken by IP Holder, and preparing (or causing to be prepared) for execution by IP Holder all documents, certificates and other filings as IP Holder will be required to prepare and/or file under the terms of such IP License Agreements (or such other agreements);

 

(i)            establishing a fair market value for the royalties or other payments payable to IP Holder under any licenses of Securitization IP that are required under the Transaction Documents to include such payments;

 

(j)            paying or causing to be paid or discharged, from funds of the Securitization Entities, any and all taxes, charges and assessments that may be levied, assessed or imposed upon any of the Securitization IP or contesting the same in good faith;

 

(k)           obtaining licenses of third-party Intellectual Property for use and sublicense in connection with the Contributed Franchise Business and any other assets of the Securitization Entities;

 

A-1-2

 

(l)            sublicensing the Securitization IP to suppliers, manufacturers, advertisers and other service providers in connection with the provision of products and services for the Contributed Franchise Business;

 

(m)          with respect to Trade Secrets and other confidential information of IP Holder, taking reasonable measures to maintain confidentiality and to prevent non-confidential disclosures thereof; and

 

(n)           managing passwords for and access to social media accounts, website hosting accounts, mobile app accounts, and other similar online accounts.

 

THIS POWER OF ATTORNEY IS GOVERNED BY THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO POWERS OF ATTORNEY MADE AND TO BE EXERCISED WHOLLY WITHIN SUCH STATE.

 

Dated:                 , 2016

 

	
 
    	
TACO BELL IP HOLDER
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

A-1-3

 

	
STATE OF              
    	
)
    
	
 
    	
)  ss.:
    
	
COUNTY OF              )
    	
 
    

 

On the      day of         ,     , before me the undersigned, personally appeared, personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his capacity, and that by his signature on the instrument, the individual, or the person upon behalf of which the individual acted, executed the instrument.

 

	
 
    	
 
    
	
 
    	
Notary Public
    

 

A-1-4

 

EXHIBIT A-2

 

POWER OF ATTORNEY OF THE SECURITIZATION ENTITIES

 

KNOW ALL PERSONS BY THESE PRESENTS, that in connection with the Management Agreement, dated as of the Closing Date, among Taco Bell Funding, LLC (the “Issuer”), Taco Bell SPV Guarantor, LLC (“Funding Holdco”), Taco Bell IP Holder, LLC (“IP Holder”), Taco Bell Franchisor, LLC (“Franchise Holder” and, together with Funding Holdco and IP Holder and the, the “Guarantors” and, together with the Issuer and each future Subsidiary of the Issuer or Funding Holdco, the “Securitization Entities”) and Citibank, N.A., not in its individual capacity but solely as the indenture trustee (together with its successor and assigns, the “Trustee”), each of the Securitization Entities hereby appoints Taco Bell Corp. (the “Manager”) and any and all officers thereof as its true and lawful attorney in fact, with full power of substitution, in connection with the Services (as defined in the Management Agreement) being performed with respect to the Managed Assets, with full irrevocable power and authority in the place of each Securitization Entity and in the name of each Securitization Entity or in its own name as agent of each Securitization Entity, to take any and all appropriate action and to execute any and all documents and instruments that may be necessary or desirable to accomplish the foregoing, subject to the Management Agreement, including, without limitation, the full power to:

 

(a)           perform such functions and duties, and prepare and file such documents, as are required under the Indenture and the other Transaction Documents to be performed, prepared and/or filed by any of the Securitization Entities, including: (i) recording such financing statements (including continuation statements) or amendments thereof or supplements thereto or other instruments as the Trustee and any of the Securitization Entities may from time to time reasonably request in order to perfect and maintain the Lien in the Collateral granted by any of the Securitization Entities to the Trustee under the Transaction Documents in accordance with the UCC; and (ii) executing grants of security interests or any similar instruments required under the Transaction Documents to evidence such Lien in the Collateral; and

 

(b)           take such actions on behalf of each Securitization Entity as such Securitization Entity or Manager may reasonably request that are expressly required by the terms, provisions and purposes of the Management Agreement; or cause the preparation by other appropriate Persons, of all documents, certificates and other filings as each Securitization Entity shall be required to prepare and/or file under the terms of the Transaction Documents.

 

A-2-5

Management Agreement

 

 

This power of attorney is coupled with an interest. Capitalized terms used herein, and not defined herein shall have the meanings applicable to such terms in the Management Agreement.

 

THIS POWER OF ATTORNEY IS GOVERNED BY THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO POWERS OF ATTORNEY MADE AND TO BE EXERCISED WHOLLY WITHIN SUCH STATE.

 

Dated:                 , 2016

 

	
 
    	
TACO BELL FUNDING, LLC,   as Issuer
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
TACO BELL IP HOLDER,   LLC, as IP Holder
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
TACO BELL FRANCHISOR HOLDINGS, LLC, as Franchisor   Holdco
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
TACO BELL FRANCHISOR,   LLC, as Taco Bell Franchisor
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
TACO BELL FRANCHISE HOLDER 1, LLC, as Franchise   Holder
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

A-2-6

Management Agreement

 

 

	
STATE OF              
    	
)
    
	
 
    	
)  ss.:
    
	
COUNTY OF             
    	
)
    

 

On the      day of            ,     , before me the undersigned, personally Appeared personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his capacity, and that by his signature on the instrument, the individual, or the person upon behalf of which the individual acted, executed the instrument.

 

	
 
    	
 
    
	
 
    	
Notary Public
    

 

A-2-7

Management Agreement

 

 

EXHIBIT B

 

JOINDER AGREEMENT

 

JOINDER AGREEMENT, dated as of               , 20   (this “Joinder Agreement”), made by                 a              (the “Future Securitization Entity”), in favor of Taco Bell Corp., a California corporation, as Manager (the “Manager”), and Citibank, N.A., as Trustee (in such capacity, together with its successors, the “Trustee”). All capitalized terms not defined herein shall have the meaning ascribed to them in the Management Agreement (as defined below).

 

W I T N E S S E T H:

 

WHEREAS, Taco Bell Funding, LLC, a Delaware limited liability company (the “Issuer”), and the Trustee, have entered into a Base Indenture dated as of May 11, 2016 (as amended, restated, supplemented or otherwise modified from time to time, exclusive of any Series Supplements, the “Base Indenture” and, together with all Series Supplements, the “Indenture”), providing for the issuance from time to time of one or more Series of Notes thereunder; and

 

WHEREAS, in connection with the Indenture, the Issuer, the other Securitization Entities party thereto from time to time, the Manager and the Trustee have entered into the Management Agreement, dated as of May 11, 2016 (as amended, restated, supplemented or otherwise modified from time to time, the “Management Agreement”); and

 

WHEREAS, the Future Securitization Entity has agreed to execute and deliver this Joinder Agreement in order to become a party to the Management Agreement;

 

NOW, THEREFORE, IT IS AGREED:

 

1.             Management Agreement. By executing and delivering this Joinder Agreement, the Future Securitization Entity, as provided in Section 8.16 of the Management Agreement, hereby becomes a party to the Management Agreement as a Securitization Entity thereunder with the same force and effect as if originally named therein as a Securitization Entity and, without limiting the generality of the foregoing, hereby expressly assumes all obligations and liabilities of a Securitization Entity thereunder. Each reference to a “Securitization Entity” in the Management Agreement shall be deemed to include the Future Securitization Entity. The Management Agreement is hereby incorporated herein by reference.

 

2.             Counterparts; Binding Effect. This Joinder Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which taken together shall constitute a single contract. This Joinder Agreement shall become effective when each of the Additional Franchise Entity, the Manager and the Trustee has executed a counterpart hereof. Delivery of an executed counterpart of a signature page of this Joinder Agreement (including by facsimile or other electronic means of communication) shall be effective as delivery of a manually executed counterpart of this Joinder Agreement.

 

B-1

 

3.             Full Force and Effect. Except as expressly supplemented hereby, the Management Agreement shall remain in full force and effect.

 

4.             Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES (OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK).

 

[The remainder of this page is intentionally left blank.]

 

B-2

 

IN WITNESS WHEREOF, the undersigned has caused this Joinder Agreement to be duly executed and delivered as of the date first above written.

 

	
 
    	
[FUTURE SECURITIZATION   ENTITY]
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
 
    
	
AGREED TO AND ACCEPTED
    	
 
    
	
 
    	
 
    
	
TACO BELL CORP., as   Manager
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
CITIBANK,   N.A., in its capacity as Trustee
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

B-3

 

EXHIBIT C

 

FORM OF WEEKLY MANAGER’S CERTIFICATE

 

C-1

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