Document:

exhib10_18.htm

  
     

     

     

     

     

    YUM!
BRANDS, INC.

    LONG
TERM INCENTIVE PLAN

    (As
Amended Through the Fourth Amendment)

     

     

    SECTION
1

    GENERAL

     

    1.1           PURPOSE.  YUM!
Brands, Inc. Long Term Incentive Plan (the "Plan") has been established by
YUM! Brands, Inc. (the "Company" or "YUM!") to (i) attract and retain
persons eligible to participate in the Plan; (ii) motivate Participants, by
means of appropriate incentives, to achieve long-range goals; (iii) provide
incentive compensation opportunities that are competitive with those of other
similar companies; and (iv) align the interests of Participants with those
of the Company's shareholders.

     

    1.2           PARTICIPATION.  Subject
to the terms and conditions of the Plan, the Committee shall determine and
designate, from time to time, from among the Eligible Individuals, those persons
who will be granted one or more Awards under the Plan, and thereby become
"Participants" in the Plan.

     

    1.3           OPERATION, ADMINISTRATION, AND
DEFINITIONS.  The operation and administration of the Plan,
including the Awards made under the Plan, shall be subject to the provisions of
Section 4 (relating to operation and administration). Capitalized terms in
the Plan shall be defined as set forth in the Plan (including the definition
provisions of Section 8 of the Plan).

     

     

    SECTION
2

    OPTIONS
AND SARS

     

    2.1           DEFINITIONS.

     

    (a)  The
grant of an "Option" entitles the Participant to purchase shares of Stock at an
Exercise Price and during a specified time established by the Committee. Any
Option granted under this Section 2 may be either a non-qualified option
(an "NQO") or an incentive stock option (an "ISO"), as determined in the
discretion of the Committee. An "NQO" is an Option that is not intended to be an
"incentive stock option" as that term is described in section 422(b) of the
Code. An "ISO" is an Option that is intended to satisfy the requirements
applicable to an "incentive stock option" described in section 422(b) of
the Code.

     

    (b)  A
stock appreciation right (an "SAR") entitles the Participant to receive, in cash
or Stock (as determined in accordance with subsection 2.5), value equal to
(or otherwise based on) the excess of: (a) the Fair Market Value of a
specified number of shares of Stock at the time of exercise; over (b) an
Exercise Price established by the Committee.

     

    2.2           EXERCISE
PRICE.  The
"Exercise Price" of each Option and SAR granted under this Section 2 shall
be established by the Committee or shall be determined by a method established
by the Committee at the time the Option or SAR is granted; except that the
Exercise Price shall not be less than the closing price of a share of Stock on
the date of grant as reported on the composite tape for securities listed on the
New York Stock Exchange (or if no sales of stock were made on said exchange on
such date, on the next preceding day on which sales were made on such
exchange).

     

    

     

    
      
        
        

      

      
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    2.3           EXERCISE.  An
Option and an SAR shall be exercisable in accordance with such terms and
conditions and during such periods as may be established by the
Committee.

     

    2.4           PAYMENT OF OPTION EXERCISE
PRICE.  The payment of the Exercise Price of an Option granted
under this Section 2 shall be subject to the following:

     

    (a)  Subject
to the following provisions of this subsection 2.4, the full Exercise Price
for shares of Stock purchased upon the exercise of any Option shall be paid at
the time of such exercise (except that, in the case of an exercise arrangement
approved by the Committee and described in paragraph 2.4(c), payment may be
made as soon as practicable after the exercise).

     

    (b)  The
Exercise Price shall be payable in cash or by tendering, by either actual
delivery of shares or by attestation, shares of Stock acceptable to the
Committee, and valued at Fair Market Value as of the day of exercise, or in any
combination thereof, as determined by the Committee.

     

    (c)  The
Committee may permit a Participant to elect to pay the Exercise Price upon the
exercise of an Option by irrevocably authorizing a third party to sell shares of
Stock (or a sufficient portion of the shares) acquired upon exercise of the
Option and remit to the Company a sufficient portion of the sale proceeds to pay
the entire Exercise Price and any tax withholding resulting from such
exercise.

     

    2.5           SETTLEMENT OF
AWARD.  Settlement of Options and SARs is subject to
subsection 4.7.

     

    2.6           GRANTS OF OPTIONS AND
SARS.  An Option may but need not be in tandem with an SAR, and
an SAR may but need not be in tandem with an Option (in either case, regardless
of whether the original award was granted under this Plan or another plan or
arrangement). If an Option is in tandem with an SAR, the exercise price of both
the Option and SAR shall be the same, and the exercise of the Option or SAR with
respect to a share of Stock shall cancel the corresponding tandem SAR or Option
right with respect to such share. If an SAR is in tandem with an Option but is
granted after the grant of the Option, or if an Option is in tandem with an SAR
but is granted after the grant of the SAR, the later granted tandem Award shall
have the same exercise price as the earlier granted Award, but the exercise
price for the later granted Award may be less than the Fair Market Value of the
Stock at the time of such grant; provided, however, that an exercise price below
the Fair Market Value at the time of such grant shall not be permitted in the
case of a 409A Award if this would cause the award to be subject Code section
409A.

     

    2.7           NO REPRICING, CANCELLATION, OR
RE-GRANT OF OPTIONS.  Except for adjustments pursuant to
subsection 4.2(f) (relating to adjustment of shares), the Exercise Price
for any outstanding Option granted under the Plan may not be decreased after the
date of grant nor may an outstanding Option granted under the Plan be
surrendered to the Company as consideration in exchange for the grant of a new
Option with a lower exercise price.

     

    
      
         

      

      
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    SECTION
3

    OTHER
STOCK AWARDS

     

    3.1           DEFINITIONS.

     

    (a)  A
"Stock Unit" Award is the grant of a right to receive shares of Stock in the
future.

     

    (b)  A
"Performance Share" Award is a grant of a right to receive shares of Stock or
Stock Units which is contingent on the achievement of performance or other
objectives during a specified period.

     

    (c)  A
"Performance Unit" Award is a grant of a right to receive a designated dollar
value amount of Stock which is contingent on the achievement of performance or
other objectives during a specified period.

     

    (d)  A
"Restricted Stock" Award is a grant of shares of Stock, and a "Restricted Stock
Unit" Award is the grant of a right to receive shares of Stock in the future,
with such shares of Stock or right to future delivery of such shares of Stock
subject to a risk of forfeiture or other restrictions that will lapse upon the
achievement of one or more goals relating to completion of service by the
Participant, or achievement of performance or other objectives, as determined by
the Committee. 

     

    3.2           RESTRICTIONS ON
AWARDS.  Each Stock Unit Award, Restricted Stock Award,
Restricted Stock Unit Award, Performance Share Award, and Performance Unit Award
shall be subject to the following:

     

    (a)  Any
such Award shall be subject to such conditions, restrictions and contingencies
as the Committee shall determine.

     

    (b)  If
the right to become vested in a Restricted Stock Award, Restricted Stock Unit
Award, Performance Share Award or Performance Unit Award is conditioned on the
completion of a specified period of service with the Company or the
Subsidiaries, without achievement of Performance Measures or other performance
objectives being required as a condition of vesting, and without it being
granted in lieu of other compensation, then the required period of service for
full vesting of the Award shall be not less than three years (provided that the
required period for full vesting shall, instead, not be less than two years in
the case of annual incentive deferrals payable in restricted shares) (subject to
acceleration of vesting, to the extent permitted by the Committee, in the event
of the Participant's death, disability, retirement, change in control or
involuntary termination). Awards to Directors may vest immediately.

     

    
      
         

      

      
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    (c)  The
Committee may designate whether any such Award being granted to any Participant
is intended to be "performance-based compensation" as that term is used in
section 162(m) of the Code. Any such Awards designated as intended to be
"performance-based compensation" shall be conditioned on the achievement of one
or more Performance Measures, to the extent required by Code
section 162(m). The Performance Measures that may be used by the Committee
for such Awards shall be based on any one or more of the following Company,
Subsidiary, operating unit or division performance measures, as selected by the
Committee: cash flow; earnings; earnings per share; market value added or
economic value added; profits; return on assets; return on equity; return on
investment; revenues; stock price; total shareholder return; customer
satisfaction metrics; or restaurant unit development. Each goal may be expressed
on an absolute and/or relative basis, may be based on or otherwise employ
comparisons based on internal targets, the past performance of the Company
and/or the past or current performance of other companies, and in the case of
earnings-based measures, may use or employ comparisons relating to capital,
shareholders' equity and/or shares outstanding, investments or to assets or net
assets. For Awards under this Section 3 intended to be "performance-based
compensation," the grant of the Awards and the establishment of the Performance
Measures shall be made during the period required under Code
section 162(m).

     

    (d)  To
the extent an Award is a 409A Award (as defined in Section 8) and is subject to
a substantial risk of forfeiture within the meaning of Code section 409A (or
will be granted upon the satisfaction of a condition that constitutes such a
substantial risk of forfeiture), any compensation due under the Award (or
pursuant to a commitment to grant an Award) shall be provided in full not later
than the 60th day following the date there is no longer such a substantial risk
of forfeiture with respect to the Award, unless the Committee shall clearly and
expressly provide otherwise with respect to the Award in the Award
agreement.

     

     

    SECTION
4

    OPERATION
AND ADMINISTRATION

     

    4.1           EFFECTIVE
DATE.  The Plan shall be effective as of May 20, 1999 (the
"Effective Date"). The Plan shall be unlimited in duration and, in the event of
Plan termination, shall remain in effect as long as any Awards under it are
outstanding; provided, however, that no Awards may be granted under the Plan on
or after the ten-year anniversary of May 15, 2008, the date on which the
Plan was amended by the Third Amendment.

     

    4.2           The
shares of Stock for which Awards may be granted under the Plan shall be subject
to the following:

     

    (a)  The
shares of Stock with respect to which Awards may be made under the Plan shall be
shares currently authorized but unissued or currently held or subsequently
acquired by the Company as treasury shares (to the extent permitted by law),
including shares purchased in the open market or in private
transactions.

     

    
      
         

      

      
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    (b)  Subject
to the following provisions of this subsection 4.2, the maximum number of
shares of Stock that may be delivered to Participants and their beneficiaries
under the Plan shall be 70,600,000 (which number
includes all shares delivered under the Plan since its establishment in 1999,
determined in accordance with the terms of the Plan); and for purposes of
applying the limitations of this paragraph (b), each share of Stock
delivered pursuant to Section 3 (relating to Other Stock Awards) shall be
counted as covering two shares of Stock, and shall reduce the number of shares
of Stock available for delivery under this paragraph (b) by two shares
except, however, in the case of restricted shares or restricted units delivered
pursuant to the settlement of earned annual incentives, each share of Stock
shall be counted as covering one share of Stock and shall reduce the number of
shares of Stock available for delivery by one share.

     

    (c)  To
the extent provided by the Committee, any Award may be settled in cash rather
than Stock. To the extent any shares of Stock covered by an Award are not
delivered to a Participant or beneficiary because the Award is forfeited or
canceled, or the shares of Stock are not delivered because the Award is settled
in cash or used to satisfy the applicable tax withholding obligation, such
shares shall not be deemed to have been delivered for purposes of determining
the maximum number of shares of Stock available for delivery under the
Plan.

     

    (d)  If
the exercise price of any stock option granted under the Plan is satisfied by
tendering shares of Stock to the Company (by either actual delivery or by
attestation), only the number of shares of Stock issued net of the shares of
Stock tendered shall be deemed delivered for purposes of determining the maximum
number of shares of Stock available for delivery under the Plan.

     

    (e)  Subject
to paragraph 4.2(f), the following additional maximums are imposed under
the Plan.

     

    (i)  The
maximum number of shares that may be covered by Awards granted to any one
individual pursuant to Section 2 (relating to Options and SARs) shall be
9,000,000 shares during any five calendar-year period. If an Option is in tandem
with an SAR, such that the exercise of the Option or SAR with respect to a share
of Stock cancels the tandem SAR or Option right, respectively, with respect to
such share, the tandem Option and SAR rights with respect to each share of Stock
shall be counted as covering one share of Stock for purposes of applying the
limitations of this paragraph (i).

     

    (ii)  For
Stock Unit Awards, Restricted Stock Awards, Restricted Stock Unit Awards and
Performance Share Awards that are intended to be "performance-based
compensation" (as that term is used for purposes of Code section 162(m)),
no more than 3,000,000 shares of Stock may be subject to such Awards granted to
any one individual during any five-calendar-year period (regardless of when such
shares are deliverable). If, after shares have been earned, the delivery is
deferred, any additional shares attributable to dividends during the deferred
period shall be disregarded.

     

    (iii)  The
maximum number of shares of Stock that may be issued in conjunction with Awards
granted pursuant to Section 3 (relating to Other Stock Awards) shall be
12,000,000 shares except that Stock Units or Restricted Shares granted with
respect to the deferral of annual cash incentive awards under the Company's
deferral plan will not count towards this maximum.

     

    
      
         

      

      
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    (iv)  For
Performance Unit Awards that are intended to be "performance-based compensation"
(as that term is used for purposes of Code section 162(m)), no more than
$4,000,000 may be subject to such Awards granted to any one individual during
any one-calendar-year period (regardless of when such amounts are deliverable).
If, after amounts have been earned with respect to Performance Unit Awards, the
delivery of such amounts is deferred, any additional amounts attributable to
earnings during the deferral period shall be disregarded.

     

    (f)  If
any change in corporate capitalization, such as a stock split, reverse stock
split, or stock dividend; or any corporate transaction such as a reorganization,
reclassification, merger or consolidation or separation, including a spin-off,
of the Company or sale or other disposition by the Company of all or a portion of its assets, any other
change in the Company's corporate structure, or any distribution to shareholders
(other than a cash dividend that is not an extraordinary cash dividend) results
in the outstanding shares of Stock, or any securities exchanged therefor or
received in their place, being exchanged for a different number or class of
shares or other securities of the Company, or for shares of stock or other
securities of any other corporation (or new, different or additional shares or
other securities of the Company or of any other corporation being received by
the holders of outstanding shares of Stock), or a material change in the market
value of the outstanding shares of Stock as a result of the change, transaction
or distribution, then equitable adjustments shall be made by the Committee, as
it determines are necessary and appropriate, in:

     

    (i)  the
number and type of Shares (or other property) with respect to which Awards may
be granted;

     

    (ii)  the
number and type of Shares (or other property) subject to outstanding
Awards;

     

    (iii)  the
grant or Exercise Price with respect to outstanding Awards; and

     

    (iv)  the
terms, conditions or restrictions of outstanding Awards and/or Award
agreements;

     

     

    provided,
however, that all such adjustments made in respect of each ISO shall be
accomplished so that such Option shall continue to be an incentive stock option
within the meaning of Section 422 of the Code. However, in no event shall
this paragraph (f) be construed to permit a modification (including a
replacement) of an Option or SAR if such modification either: (i) would
result in accelerated recognition of income or imposition of additional tax
under Code section 409A; or (ii) would cause the Option or SAR subject
to the modification (or cause a replacement Option or SAR) to be subject to Code
section 409A, provided that the restriction of this clause (ii) shall
not apply to any Option or SAR that, at the time it is granted or otherwise, is
designated as being deferred compensation subject to Code
section 409A.

     

    4.3           GENERAL
RESTRICTIONS.  Delivery of shares of Stock or other amounts
under the Plan shall be subject to the following:

     

    (a)  Notwithstanding
any other provision of the Plan, the Company shall have no liability to deliver
any shares of Stock under the Plan or make any other distribution of benefits
under the Plan unless such delivery or distribution would comply with all
applicable laws (including, without limitation, the requirements of the
Securities Act of 1933), and the applicable requirements of any securities
exchange or similar entity.

     

    

    
      
        
        

      

      
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    (b)  To
the extent that the Plan provides for issuance of stock certificates to reflect
the issuance of shares of Stock, the issuance may be effected on a
non-certificated basis, to the extent not prohibited by applicable law or the
applicable rules of any stock exchange.

     

    4.4           TAX
RESTRICTIONS.

     

    (a)  All
distributions under the Plan are subject to withholding of all applicable taxes,
and the Committee may condition the delivery of any shares or other benefits
under the Plan on satisfaction of the applicable withholding obligations. The
Committee, in its discretion, and subject to such requirements as the Committee
may impose prior to the occurrence of such withholding, may permit such
withholding obligations to be satisfied through cash payment by the Participant,
through the surrender of shares of Stock which the Participant already owns, or
through the surrender of shares of Stock to which the Participant is otherwise
entitled under the Plan.

     

    (b)  Subsections 4.5,
4.6 and 4.7 shall be subject to the following:

     

    (i)  Subsection 4.5
shall not be construed to permit the grant of a replacement Option or SAR if
such action would cause the Option or SAR being granted or the option or stock
appreciation right being replaced to be subject to Code section 409A,
provided that this paragraph (i) shall not apply to any Option or SAR (or option or stock appreciation right
granted under another plan) being replaced that, at the time it is granted, is
clearly and expressly designated as being deferred compensation subject to Code
section 409A.

     

    (ii)  Except
with respect to an Option or SAR that, at the time it is granted, is clearly and
expressly designated as being deferred compensation subject to Code
section 409A, no Option or SAR shall condition the receipt of dividends
(including dividend equivalents) with respect to an Option or SAR on the
exercise of such Award, or otherwise provide for payment of such dividends in a
manner that would cause the payment to be treated as an offset to or reduction
of the exercise price of the Option or SAR (or an increase to the compensation
payable under the Option or SAR) pursuant Treas. Reg.
§1.409A-1(b)(5)(i)(E).

     

    (iii)  Neither
subsection 4.5, 4.6 nor 4.7 shall be construed to permit a modification of
an Award, or to permit the payment of a dividend or dividend equivalent, if such
actions would result in accelerated recognition of taxable income or imposition
of additional tax under Code section 409A.

     

    (iv)  Except
for Options and SARs clearly and expressly designated at the time of grant as
intended to be subject to Code section 409A, subsections 4.5, 4.6, and
4.7 shall not be construed to permit the deferred settlement of Options or SARs,
if such settlement would result in deferral of compensation under Treas. Reg.
§1.409A-1(b)(5)(i)(A)(3).

     

    
      
         

      

      
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    (c)  At
all times, this Plan shall be interpreted and operated (i) with respect to 409A
Awards (as defined in Section 8 below), in accordance with the requirements
of  Code section 409A, unless an exemption from Code section 409A is
available and applicable, (ii) to maintain the exemptions from Code section 409A
of Options, SARs and Restricted Stock, unless any such Award is expressly and
clearly designated as deferred compensation at the time of its grant, and any
Awards designed to meet the short-term deferral exception under Code section
409A, and (iii) to preserve the status of deferrals of compensation that were
earned and vested prior to January 1, 2005 as exempt from Code section 409A,
i.e., to preserve the
grandfathered status of such deferrals.  To the extent there is a
conflict between the provisions of the Plan relating to compliance with Code
section 409A and the provisions of any Award agreement issued under the Plan,
the provisions of the Plan control. Moreover, any discretionary authority that
the Committee may have pursuant to the Plan shall not be applicable to an Award
that is subject to Code section 409A to the extent such discretionary authority
would conflict with Code section 409A. In addition, to the extent required to
avoid a violation of the applicable rules under Code section 409A by reason of
Code section 409A(a)(2)(B)(i), any payment under an Award shall be delayed until
the earliest date of payment that will result in compliance with the rules of
Code section 409A(a)(2)(B)(i) (regarding the required six-month delay for
distributions to specified employees that are related to a separation from
service). In the event that any Award shall be deemed not to comply with Code
section 409A, then neither the Company, the Board of Directors, the Committee
nor its or their designees or agents, nor any of their affiliates, assigns or
successors (each a "protected party") shall be liable to any Award recipient or
other person for actions, inactions, decisions, indecisions or any other role in
relation to the Plan by a protected party if made or undertaken in good faith or
in reliance on the advice of counsel (who may be counsel for the Company), or
made or undertaken by someone other than a protected party.

     

    4.5           GRANT AND USE OF
AWARDS.  Subject to subsection 4.4: In the discretion of
the Committee, a Participant may be granted any Award permitted under the
provisions of the Plan, and more than one Award may be granted to a Participant.
Awards may be granted as alternatives to or replacement of awards granted or
outstanding under the Plan, or any other plan or arrangement of the Company or a
Subsidiary (including a plan or arrangement of a business or entity, all or a
portion of which is acquired by the Company or a Subsidiary). Subject to the
overall limitation on the number of shares of Stock that may be delivered under
the Plan, the Committee may use available shares of Stock as the form of payment
for compensation, grants or rights earned or due under any other compensation
plans or arrangements of the Company or a Subsidiary, including the plans and
arrangements of the Company or a Subsidiary assumed in business combinations.
Notwithstanding the provisions of subsection 2.2, Options and SARs granted
under the Plan in replacement for awards under plans and arrangements of the
Company, Subsidiaries, or other companies that are assumed in business
combinations may provide for exercise prices that are less than the Fair Market
Value of the Stock at the time of the replacement grants, if the Committee
determines that such exercise price is appropriate to preserve the economic
benefit of the award and that it will not impair the exemption of the Options or
SARS from Code section 409A (unless the Committee clearly and expressly foregoes
such exemption at the time the Options or SARs are granted).

     

    4.6           DIVIDENDS AND
DIVIDEND EQUIVALENTS.  Subject to
subsection 4.4: An Award (including without limitation an Option or SAR
Award) may provide the Participant with the right to receive dividend payments
or dividend equivalent payments with respect to Stock subject to the Award (both
before and after the Stock subject to the Award is earned, vested, or acquired),
which payments may be either made currently or credited to an account for the
Participant, and may be settled in cash or Stock, as determined by the
Committee. Any such settlements, and any such crediting of dividends or dividend
equivalents or reinvestment in shares of Stock, may be subject to such
conditions, restrictions and contingencies as the Committee shall establish,
including the reinvestment of such credited amounts in Stock
equivalents.

     

    

    
      
        
        

      

      
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    4.7           SETTLEMENT AND
PAYMENTS.  Subject to subsection 4.4: Awards may be
settled through cash payments, the delivery of shares of Stock, the granting of
replacement Awards, or combination thereof as the Committee shall determine. Any
Award settlement, including payment deferrals, may be subject to such
conditions, restrictions and contingencies as the Committee shall determine. The
Committee may permit or require the deferral of any Award payment, subject to
such rules and procedures as it may establish, which may include provisions for
the payment or crediting of interest, or dividend equivalents, including
converting such credits into deferred Stock equivalents. Each Subsidiary shall
be liable for payment of cash due under the Plan with respect to any Participant
to the extent that such benefits are attributable to
the services rendered for that Subsidiary by the Participant. Any disputes
relating to liability of a Subsidiary for cash payments shall be resolved by the
Committee.

     

    4.8           TRANSFERABILITY.  Except
as otherwise provided by the Committee, Awards under the Plan are not
transferable except as designated by the Participant by will or by the laws of
descent and distribution.

     

    4.9           FORM AND TIME OF
ELECTIONS.  Unless otherwise specified herein, each election
required or permitted to be made by any Participant or other person entitled to
benefits under the Plan, and any permitted modification, or revocation thereof,
shall be in writing filed with the Committee at such times, in such form, and
subject to such restrictions and limitations, not inconsistent with the terms of
the Plan, as the Committee shall require.

     

    4.10           AGREEMENT WITH
COMPANY.  An Award under the Plan shall be subject to such
terms and conditions, not inconsistent with the Plan, as the Committee shall, in
its sole discretion, prescribe. The terms and conditions of any Award to any
Participant shall be reflected in such form of written document as is determined
by the Committee. A copy of such document shall be provided to the Participant,
and the Committee may, but need not require that the Participant sign a copy of
such document. Such document is referred to in the Plan as an "Award Agreement"
regardless of whether any Participant signature is required.

     

    4.11           ACTION BY COMPANY OR
SUBSIDIARY.  Any action required or permitted to be taken by
the Company or any Subsidiary shall be by resolution of its board of directors,
or by action of one or more non-employee members of the board (including a
committee of the board) who are duly authorized to act for the board, or (except
to the extent prohibited by applicable law or applicable rules of any stock
exchange) by a duly authorized officer of such company, or by any employee of
the Company or any Subsidiary who is delegated by the board of directors
authority to take such action.

     

    4.12           GENDER AND
NUMBER.  Where the context admits, words in any gender shall
include any other gender, words in the singular shall include the plural and the
plural shall include the singular.

     

    4.13           LIMITATION OF IMPLIED
RIGHTS.

     

    (a)  Neither
a Participant nor any other person shall, by reason of participation in the
Plan, acquire any right in or title to any assets, funds or property of the
Company or any Subsidiary whatsoever, including, without limitation, any
specific funds, assets, or other property which the Company or any Subsidiary,
in its sole discretion, may set aside in anticipation of a liability under the
Plan. A Participant shall have only a contractual right to the Stock or amounts,
if any, payable under the Plan, unsecured by any assets of the Company or any
Subsidiary, and nothing contained in the Plan shall constitute a guarantee that
the assets of the Company or any Subsidiary shall be sufficient to pay any
benefits to any person.

     

    
      
         

      

      
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    (b)  The
Plan does not constitute a contract of employment, and selection as a
Participant will not give any participating employee or other individual the
right to be retained in the employ of the Company or any Subsidiary or the right
to continue to provide services to the Company or any Subsidiary, nor any right
or claim to any benefit under the Plan, unless such right or claim has
specifically accrued under the terms of the Plan. Except as otherwise provided
in the Plan, no Award under the Plan shall confer upon the holder thereof any
rights as a shareholder of the Company prior to the date on which the individual
fulfills all conditions for receipt of such rights.

     

    4.14           EVIDENCE.  Evidence
required of anyone under the Plan may be by certificate, affidavit, document or
other information which the person acting on it considers pertinent and
reliable, and signed, made or presented by the proper party or
parties.

     

     

    SECTION 5

    CHANGE
IN CONTROL

     

    Subject
to the provisions of paragraph 4.2(f) (relating to the adjustment of
shares), and except as otherwise provided in the Plan or the Award Agreement
reflecting the applicable Award, the Committee may provide under the terms of
any Award that upon the occurrence of a Change in Control:

     

    (a)  All
outstanding Options (regardless of whether in tandem with SARs) shall become
fully exercisable.

     

    (b)  All
outstanding SARs (regardless of whether in tandem with Options) shall become
fully exercisable.

     

    (c)  All
Stock Units, Restricted Stock, Restricted Stock Units, and Performance Shares
(including any Award payable in Stock which is granted in conjunction with a
Company deferral program) shall become fully vested.

     

    Notwithstanding
anything in this Plan or any Award agreement to the contrary, to the extent any
provision of this Plan or an Award agreement would cause a payment of deferred
compensation that is subject to Code section 409A to be made upon the occurrence
of a Change in Control, then such payment shall not be made unless such Change
in Control also constitutes a "change in ownership", "change in effective
control" or "change in ownership of a substantial portion of the Company's
assets" within the meaning of Code section 409A.  Any payment that
would have been made except for the application of the preceding sentence shall
be made in accordance with the payment schedule that would have applied in the
absence of a Change in Control.

     

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

     

     

    SECTION
6

    COMMITTEE

     

    6.1           ADMINISTRATION.  The authority to control
and manage the operation and administration of the Plan shall be vested in a
committee (the "Committee") in accordance with this Section 6. The
Committee shall be selected by the Board, and shall consist solely of two or
more non-employee members of the Board. If the Committee does not exist, or for
any other reason determined by the Board, the Board may take any action under
the Plan that would otherwise be the responsibility of the Committee. As of the
date this Plan is adopted, the Committee shall mean the Compensation Committee
of the Board of Directors.

     

    6.2           POWERS OF
COMMITTEE.  The Committee's administration of the Plan shall be
subject to the following:

     

    (a)  Subject
to the provisions of the Plan, the Committee will have the authority and
discretion to select from among the Eligible Individuals those persons who shall
receive Awards, to determine the time or times of receipt, to determine the
types of Awards and the number of shares covered by the Awards, to establish the
terms, conditions, performance criteria, restrictions, and other provisions of
such Awards, and (subject to the restrictions imposed by Section 7) to
cancel or suspend Awards.

     

    (b)  To
the extent that the Committee determines that the restrictions imposed by the
Plan preclude the achievement of the material purposes of the Awards in
jurisdictions outside the United States, the Committee will have the authority
and discretion to modify those restrictions as the Committee determines to be
necessary or appropriate to conform to applicable requirements or practices of
jurisdictions outside of the United States.

     

    (c)  The
Committee will have the authority and discretion to interpret the Plan, to
establish, amend, and rescind any rules and regulations relating to the Plan, to
determine the terms and provisions of any Award Agreement made pursuant to the
Plan, and to make all other determinations that may be necessary or advisable
for the administration of the Plan.

     

    (d)  Any
interpretation of the Plan by the Committee and any decision made by it under
the Plan is final and binding on all persons.

     

    (e)  In
controlling and managing the operation and administration of the Plan, the
Committee shall take action in a manner that conforms to the articles and
by-laws of the Company, and applicable state corporate law.

     

    6.3           DELEGATION BY
COMMITTEE.  Except to the extent prohibited by applicable law
or the applicable rules of a stock exchange, the Committee may allocate all or
any portion of its responsibilities and powers to any
one or more of its members and may delegate all or any part of its
responsibilities and powers to any person or persons selected by it. Any such
allocation or delegation may be revoked by the Committee at any time. Until
action to the contrary is taken by the Board or the Committee, the Committee's
authority with respect to Awards and other matters concerning Participants below
the Partners Council or Executive Officer level is delegated to the Chief
Executive Officer or the Chief People Officer of the Company.

     

    6.4           INFORMATION TO BE FURNISHED TO
COMMITTEE.  The Company and Subsidiaries shall furnish the
Committee with such data and information as it determines may be required for it
to discharge its duties. The records of the Company and Subsidiaries as to an
employee's or Participant's employment (or other provision of services),
termination of employment (or cessation of the provision of services), leave of
absence, reemployment and compensation shall be conclusive on all persons unless
determined to be incorrect. Participants and other persons entitled to benefits
under the Plan must furnish the Committee such evidence, data or information as
the Committee considers desirable to carry out the terms of the
Plan.

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

    

     

    6.5            MISCONDUCT.  If
the Committee determines that a present or former employee has (i) used for
profit or disclosed to unauthorized persons, confidential or trade secrets of
YUM!; (ii) breached any contract with or violated any fiduciary obligation
to YUM!; or (iii) engaged in any conduct which the Committee determines is
injurious to the Company, the Committee may cause that employee to forfeit his
or her outstanding awards under the Plan, provided, however, that during the
pendency of a Potential Change in Control and as of and following the occurrence
a Change in Control, no outstanding awards under the Plan shall be subject to
forfeiture pursuant to this Section 6.5.

     

    A
"Potential Change in Control" shall exist during any period in which the
circumstances described in items (i), (ii), (iii) or (iv), below,
exist (provided, however, that a Potential Change in Control shall cease to
exist not later than the occurrence of a Change in Control):

     

    (i)  The
Company or any successor or assign thereof enters into an agreement, the
consummation of which would result in the occurrence of a Change in Control;
provided that a Potential Change in Control described in this item (i)
shall cease to exist upon the expiration or other termination of all such
agreements.

     

    (ii)  Any
Person (including the Company) publicly announces an intention to take or to
consider taking actions which if consummated would constitute a Change in
Control; provided that a Potential Change in Control described in this
item (ii) shall cease to exist upon the withdrawal of such intention, or
upon a reasonable determination by the Board that there is no reasonable chance
that such actions would be consummated.

     

    (iii)  Any
Person becomes the Beneficial Owner, directly or indirectly, of securities of
the Company representing 15% or more of the combined voting power of the
Company's then outstanding securities (not including in the securities
beneficially owned by such Person any securities acquired directly from the
Company or any of its affiliates). However, a Potential Change in Control shall
not be deemed to exist by reason of ownership of securities of the Company by
any person, to the extent that such securities of the Company are acquired
pursuant to a reorganization, recapitalization, spin-off or other similar
transactions (including a series of prearranged related transactions) to the
extent that immediately after such transaction or transactions, such securities
are directly or indirectly owned in substantially the same proportions as the
proportions of ownership of the Company's securities immediately prior to the
transaction or transactions.

     

    (iv)  The
Board adopts a resolution to the effect that, for purposes of this Plan, a
potential change in control exists; provided that a Potential Change in Control
described in this item (iv) shall cease to exist upon a reasonable
determination by the Board that the reasons that give rise to the resolution
providing for the existence of a Potential Change in Control have expired or no
longer exist.

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

     

     

     

    SECTION 7

    AMENDMENT
AND TERMINATION

     

    The Board
may, at any time, amend or terminate the Plan, provided that (i) no
amendment or termination may, in the absence of written consent to the change by
the affected Participant (or, if the Participant is not then living, the
affected beneficiary), adversely affect the rights of any Participant or
beneficiary under any Award granted under the Plan prior to the date such
amendment is adopted by the Board; (ii) no amendments may increase the
limitations on the number of shares set forth in subsections 4.2(b) and
4.2(e) or decrease the minimum Option or SAR Exercise Price set forth in
subsection 2.2 unless any such amendment is approved by the Company's
shareholders; (iii) the provisions of subsection 2.6 (relating to
Option repricing) may not be amended, unless any such amendment is approved by
the Company's shareholders; (iv) no amendment may expand the definition of
Eligible Individual in subsection 8(e), unless any such amendment is
approved by the Company's shareholders; (v) no amendment may decrease the
minimum restriction or performance period set forth in subsection 3.2(b),
unless any such amendment is approved by the Company's shareholders;
(vi) adjustments pursuant to subsection 4.2(f) shall not be subject to
the foregoing limitations of this Section 7; and (vii) no amendment or
termination shall be adopted or effective if it would result in accelerated
recognition of income or imposition of additional tax under Code
section 409A or, except as otherwise provided in the amendment, would cause
amounts that were not otherwise subject to Code section 409A to become
subject to Code section 409A.

     

     

    SECTION
8

    DEFINED
TERMS

     

    In
addition to the other definitions contained herein, the following definitions
shall apply:

     

    (a)  409A AWARD.  The
term "409A Award" shall mean each Plan Award that was not both earned and vested
as of December 31, 2004, and all other Plan Awards that were materially modified
after October 3, 2004, determined in each case within the meaning of Code
section 409A.

     

    (b)  AWARD.  The term
"Award" shall mean any award or benefit granted under the Plan, including,
without limitation, the grant of Options, SARs, Stock Unit Awards, Restricted
Stock Awards, Restricted Stock Unit Awards, Performance Unit Awards, and
Performance Share Awards.

     

    (c)  BOARD.  The term
"Board" shall mean the Board of Directors of the Company.

     

    (d)  CHANGE IN
CONTROL.  Except as otherwise provided by the Committee, a
"Change in Control" shall be deemed to have occurred if the event set forth in
any one of the following paragraphs shall have occurred:

     

    (i)  any
Person is or becomes the Beneficial Owner, directly or indirectly, of securities
of the Company (not including in the securities beneficially owned by such
Person any securities acquired directly from the Company or its Affiliates)
representing 20% or more of the combined voting power of the Company's then
outstanding securities, excluding any Person who becomes such a Beneficial Owner
in connection with a transaction described in clause (I) of
paragraph (iii) below; or

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

     

    

     

    (ii)  the
following individuals' cease for any reason to constitute a majority of the
number of directors then serving; individuals who, on the date hereof,
constitute the Board and any new director (other than a director whose initial
assumption of office is in connection with an actual or threatened election
contest, including but not limited to a consent solicitation, relating to the
election of directors of the Company), whose appointment or election by the
Board or nomination for election by the Company's stockholders was approved or
recommended by a vote of at least two-thirds (2/3) of
the directors then still in office who either were directors on the date hereof
or whose appointment, election or nomination for election was previously so
approved or recommended; or

     

    (iii)  there
is consummated a merger or consolidation of the Company or any direct or
indirect Subsidiary with any other corporation, other than (I) a merger or
consolidation immediately following which those individuals who immediately
prior to the consummation of such merger or consolidation, constituted the
Board, constitute a majority of the board of directors of the Company or the
surviving or resulting entity or any parent thereof,
or (II) a merger or consolidation effected to implement a recapitalization
of the Company (or similar transaction) in which no Person is or becomes the
Beneficial Owner, directly or indirectly, of securities of the Company (not
including in the securities beneficially owned by such Person any securities
acquired directly from the Company or its Affiliates) representing 20% or more
of the combined voting power of the Company's then outstanding
securities.

     

    Notwithstanding
the foregoing, a "Change in Control" shall not be deemed to have occurred by
virtue of the consummation of any transaction or series of integrated
transactions immediately following which the record holders of the common stock
of the Company immediately prior to such transaction or series of transactions
continue to have substantially the same proportionate ownership in an entity
which owns all or substantially all of the assets of the Company immediately
following such transaction or series of transactions.

     

    "Affiliate"
shall have the meaning set forth in Rule 12b-2 under Section 12 of the
Exchange Act.

     

    "Beneficial
Owner" shall have the meaning set forth in Rule 13d-3 under the Exchange
Act, except that a Person shall not be deemed to be the Beneficial Owner of any
securities which are properly filed on a Form 13-G.

     

    "Exchange
Act" shall mean the Securities Exchange Act of 1934, as amended from time to
time.

     

    "Person"
shall have the meaning given in Section 3(a)(9) of the Exchange Act, as
modified and used in Sections 13(d) and 14(d) thereof, except that such
term shall not include (i) YUM! or any of its Affiliates; (ii) a
trustee or other fiduciary holding securities under an employee benefit plan of
YUM! or any of its subsidiaries; (iii) an underwriter temporarily holding
securities pursuant to an offering of such securities; or (iv) a
corporation owned, directly or indirectly, by the stockholders of YUM! in
substantially the same proportions as their ownership of stock of
YUM!.

     

    (e)  CODE.  The term
"Code" means the Internal Revenue Code of 1986, as amended. A reference to any
provision of the Code shall include reference to any successor provision of the
Code.

     

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

     

    

     

    (f)  ELIGIBLE
INDIVIDUAL.  For purposes of the Plan, the term "Eligible
Individual" shall mean any employee of the Company or a Subsidiary, and any
director of the Company. An Award may be granted to an employee, in connection
with hiring, retention or otherwise, prior to the date the employee first
performs services for the Company or the Subsidiaries, provided that such Awards
shall not become vested prior to the date the employee first performs such
services.

     

    (g)  FAIR MARKET
VALUE.  For purposes of determining the "Fair Market Value" of
a share of Stock as of any date, Fair Market Value shall mean the average
between the lowest and highest reported sale prices of the Stock on that date on
the principal exchange on which the Stock is then listed or admitted to trading.
If the day is not a business day, the Fair Market Value of the Stock shall be
determined as of the last preceding business day.

     

    (h)  SUBSIDIARIES.  The
term "Subsidiary" means any corporation, partnership, joint venture or other
entity during any period in which at least a fifty percent voting or profits
interest is owned, directly or indirectly, by the Company (or by any entity that
is a successor to the Company), and any other business venture designated by the
Committee in which the Company (or any entity that is a successor to the
Company) has a significant interest, as determined in the discretion of the
Committee; provided, however, that except for options and SARs designated as
intended to be subject to Code section 409A, options and SARs shall not be
granted to employees or directors of Subsidiaries unless the ownership of the
Subsidiary satisfies Treas. Reg. §1.409A-1(b)(5)(iii).

     

    (i)  STOCK.  The term
"Stock" shall mean shares of common stock of the Company.

     

    

      15exhib10_31-1.htm

  
    

      YUM! CHANGE IN CONTROL
SEVERANCE AGREEMENT

      409A
Addendum

      
 

      THIS
AGREEMENT, dated December 31, 2008, (the "409A Agreement") is made by and
between YUM! Brands Inc., a North Carolina corporation (the Company"), and Emil
Brolick (the "Executive").

      WHEREAS,
the Company and the Executive have previously entered into a change in control
severance agreement (the “Severance Agreement”); and

      WHEREAS,
the Company and the Executive wish to ensure that the Severance Agreement
complies to the extent necessary with Section 409A of the Internal Revenue Code
of 1986, as amended (the “Code”), and thereby to avoid adverse tax consequences
to the Executive (including avoiding an additional tax of 20% on compensation
payable under the Severance Agreement); and

      WHEREAS,
ensuring Code Section 409A compliance requires the addition of certain
provisions to the Severance Agreement;

      NOW,
THEREFORE, in consideration of the pre­mises and the mutual covenants herein
contained, the Company and the Executive hereby agree as follows:

      1.           The
provisions of this 409A Agreement supplement the provisions of the Severance
Agreement.  At all times, this 409A Agreement and the Severance
Agreement shall be construed together so as to permit full compliance with Code
Section 409A of any compensation subject to Code Section 409A that is provided
by the Severance Agreement.

      2.           With
respect to salary, compensation and benefits provided by the Severance Agreement
in the event the Executive fails to perform the Executive's full-time duties
with the Company as a result of incapacity due to physical or mental illness, to
the extent these items constitute deferred compensation that is subject to
Section 409A, the payment of such salary, compensation and benefits shall occur
upon Executive’s "disability" or "separation from service", in each case as
defined in Section 409A, whichever occurs earlier (but subject to Section
16(A)).  In this case, the rate of payment shall be based on the
normal rules for the salary, compensation or benefit in question, with a lump
sum catch up for any amounts that would have been paid previously under such
rules.

      

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

      

      3.           With
respect to the Company’s payment of the Execu­tive's full salary to the
Executive through the Date of Termination (as defined in the Severance
Agreement) in the event the Executive's employment shall be terminated for any
reason following a Change in Control (as defined in the Severance Agreement) and
during the term of the Severance Agreement, to the extent any resulting salary,
compensation and benefits constitute deferred compensation that is subject to
Section 409A, the payment of such salary, compensation and benefits shall occur
upon Executive’s "separation from service", as defined in Section 409A, but
subject to Section 16(A).  In this case, the rate of payment shall be
based on the normal rules for the salary, compensation or benefit in question,
with a lump sum catch up for any amounts that would have been paid previously
under such rules.

      4.           In
the event that Severance Payments (as defined in the Severance Agreement) shall
be reduced pursuant to the terms of the Severance Agreement, then Severance
Payments shall be reduced in the order that the Severance Payments are described
in the Severance Agreement (but disregarding for this purpose any Severance
Payments that would not be considered “parachute payments” under the provisions
and procedures of the Severance Agreement) and to the extent necessary so that
no portion of the Total Payments will be subject to the Excise Tax (as these
capitalized terms are defined in the Severance Agreement).

      5.           To
the extent the Company pays to the Executive, pursuant to the Severance
Agreement, an estimate of the minimum amount of pay­ments to which the
Executive is entitled and the amount of the estimated payments exceeds the
amount subsequently determined to have been due, such excess shall be repaid to
the Company promptly thereafter (together with interest at 120% of the rate
provided in section 1274(b)(2)(B) of the Code).  Each payment required
to be made by the Company to the Executive hereunder that relates to the Excise
Tax and each repayment required to be made by the Executive to the Company in
accordance with the preceding sentence shall in no event be paid later than the
end of the calendar year next following the calendar year in which the Executive
(or the Company on the Executive’s behalf) remits the corresponding taxes to the
Internal Revenue Service or other taxing authority.

      

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

      

      6.           To
the extent the Company is to pay the Execu­tive for legal fees and expenses
incurred by the Execu­tive (i) in disputing in good faith any issue under
the Severance Agreement relating to the termination of the Executive's
employ­ment, or (ii) in seeking in good faith to obtain or enforce any
benefit or right provided by the Severance Agreement, or (iii) in
connec­tion with any tax audit or proceeding to the extent attributable to
the application of section 4999 of the Code to any payment or benefit provided
hereunder (the “Legal Expenses”), such  Legal Expenses must be
incurred during the period (A) beginning on the commencement date of the
Severance Agreement and, (B) ending on the date that is five years after the
Date of Termination of the Executive.  The amount of Legal Expenses
that are eligible for reimbursement during an Executive’s taxable year may not
affect the Legal Expenses eligible for reimbursement in any other taxable
year.   Such payments shall be made within ten (10) business days
after delivery of the Executive's written requests for payment accompanied with
such evidence of fees and ex­penses incurred as the Company reasonably may
require; provided, however, that in no event will the reimbursement of any Legal
Expenses be made after the last day of the Executive’s taxable year following
the Executive’s taxable year in which the Legal Expense in question was
incurred.  The right to reimbursement of Legal Expenses provided
hereunder is not subject to liquidation or exchange for another
benefit.

      7.           If
a pur­ported termination occurs following a Change in Control and during the
term of the Severance Agreement and the Executive provides the Company with a
Dispute Notification (as defined in the Severance Agreement),  subject
to providing all payments in compliance with Code Section 409A and avoiding all
duplication of payment, the Company shall act within fifteen (15) days to
restore fully the disputed benefits (so that all benefits are provided as of
such date as would have been provided had there been no delay in providing such
benefits) and to continue to provide such benefits as contemplated by this
Agreement thereafter, but subject to termination and recapture from the
Executive of these disputed benefits in accordance with the terms of a mutual
written agreement of the parties, a binding arbitration award, or a final
judgment, order or decree of a court of competent jurisdiction (which is not
appealable or with respect to which the time for appeal therefrom has expired
and no appeal has been perfected).

      

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

      

      8.           Notwithstanding
any other provision of this 409A Agreement or the Severance Agreement, to the
extent the Company determines in good faith that (i) one or more payments or
benefits received or to be received by the Executive pursuant to the Severance
Agreement (including but not limited to the Gross-Up Payment) would constitute
deferred compensation subject to the rules of Code Section 409A, and (b) that
the Executive is a "specified employee" under Code Section 409A, then only to
the extent required to avoid the Executive’s incurrence of any additional tax or
interest under Section 409A, such payment or benefit will be delayed until the
date that is six (6) months after the Executive’s "separation from service"
within the meaning of Section 409A.  Any amounts that are postponed
pursuant to this Section 8 will be paid in a lump sum payment within 10 days
after the end of the six-month period.  If the Executive dies during
the six-month period, prior to the payment of the delayed amount, the amounts
delayed on account of this Section 8 will be paid to the Executive’s
estate.  In addition, to the extent the Company determines in good
faith that one or more payments or benefits received or to be received by an
Executive upon a termination of employment pursuant to the Agreement would
constitute deferred compensation subject to the rules of Code Section 409A then
in determining the time of payment of such deferred compensation a termination
of employment shall be deemed to occur only if such termination of employment
constitutes a "separation from service" as defined in Code Section 409A, as
determined by the Company in accordance with such rules and policies adopted by
it from time to time.  Further, in this case, the Date of Termination
shall be the date of such separation from service.

      9.           This
409A Agreement shall be delivered to the Executive in advance of December 31,
2008. To permit timely and sufficient documentary compliance with Code Section
409A, the provisions of this 409A Agreement shall automatically apply to amend
the Severance Agreement unless the Executive expressly rejects the application
of these provisions in writing.   However, to provide an enhanced
record of documentary compliance with Code Section 409A, the Company requests
that the Executive sign and return a copy of this Agreement to the Company at
his/her earliest convenience.

      

       

      

      
        
           

        

        
          4

          
            

          

        

        
           

        

      

      

      

      

      
        
          	 
      	
                  YUM! BRANDS,
      INC.

                
	 
      	 
      
	 
      	
                  By:

                	 
      
	 
      	
                  Name:

                	
                  John
      P. Daly

                
	 
      	
                  Title:

                	
                  Corporate
      Counsel and Assistant Secretary

                
	 
      	 
      
	 
      	 
      
	 
      	
                  Emil
      Brolick

                
	 
      	 
      

        

      

      

      

      5

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