Exhibit 10.04
TRICON Global Restaurants, Inc.
June 25, 1997
Xx. Xxxxxxx X. Xxxxxxx
Xxxxxxx Xxxxxxxx & Xxxx, Inc.
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Andy:
This letter agreement (the "Agreement") confirms the terms and
conditions of your employment as Chairman and Chief Executive Officer of TRICON
Global Restaurants, Inc. ("TRICON"), a newly formed North Carolina corporation
and wholly owned subsidiary of PepsiCo, Inc. ("PepsiCo"). TRICON was formed to
be the parent company for PepsiCo's quick service restaurant businesses. Subject
to certain conditions, in October 1997, PepsiCo intends to spin off TRICON to
PepsiCo's shareholders (the "Spin-off").
1. Employment and Term. You are hereby employed as Chairman and Chief
Executive Officer of TRICON for a term of three years, commencing July 1, 1997.
Such term may, however, be modified pursuant to Paragraph 5 hereof.
2. Duties. Prior to the Spin-off, you shall be responsible for assisting
with and facilitating the Spin-off, including, without limitation, matters
relating to TRICON's capital structure, staffing, investor relations, public
relations, benefits, compensation and operating structure. You will perform such
duties consistent with the direction and decisions of PepsiCo's Board of
Directors and senior management.
At and after the Spin-off, you shall have supervision of the
policies, business and affairs of TRICON, and such other powers and duties as
are commonly incident to the offices of Chairman and Chief Executive Officer.
3. Compensation. As compensation for your services hereunder, you shall
be paid a salary of $900,000 per year, in equal bi-weekly installments.
You shall also receive annual incentive compensation in amounts
to be determined by the Compensation Committee (the "Committee") of the TRICON
Board of Directors based on performance objectives established by the Committee.
The target incentive compensation for each year of this Agreement is $900,000
and bonus awards may range from zero to 200% of such target. However, the bonus
for 1997 (payable in early 1998) shall be $450,000. In addition, you shall be
paid, by year end 1997, a one-time bonus of $850,000.
4. Long-Term Incentives. As soon as practicable after the Spin-off, the
Committee shall grant to you options to purchase 1,050,000 shares of TRICON
Common Stock, par value $.05 per share (the "Options"). Such grant shall be made
pursuant to a separate option agreement (the "Option Agreement"), the form of
which is annexed hereto as Exhibit A. Subject to the terms and conditions of the
Option Agreement, 350,000 Options shall vest on each of July 1, 1998, July 1,
1999 and July 1, 2000, and, once vested, shall be exercisable for a period of
ten years from the date of grant. The exercise price for all Options shall be
the mean of the closing prices for TRICON Common Stock for the fifth through the
twentieth trading day after the Spin-off.
5. Modification of Term. You agree that, in order to effect an early
succession plan, the Committee may reduce the term of your employment hereunder
and, in connection therewith, have the discretion to vest all unvested Options
granted pursuant to the Option Agreement, and pay 100% of the special retirement
payment provided for in Paragraph 6 hereof.
6. Special Retirement Payment. TRICON shall make a special $1,000,000
retirement payment to you at the conclusion of your three-year employment term
hereunder or such shorter term as may be determined by the Committee pursuant to
Paragraph 5. In the event of death or total disability (as determined by the
Committee), you, your designated beneficiary or estate shall receive a
retirement payment which is in proportion to your service during the term of
this Agreement.
7. Benefits and Perquisites.
a. TRICON shall reimburse you for dues, initiation fees and
capital or other special assessments at a country club of your choice.
b. TRICON shall reimburse you for expenses, not to exceed $5,000
per year, for personal financial planning.
c. TRICON shall provide you with the use of an executive
automobile, and reimburse expenses related to such automobile consistent with
the PepsiCo executive car program for its most senior executives.
d. You may participate in any income deferral and long-term
savings (401(k)) plans, as well as any medical, dental, life insurance,
disability insurance or other benefit or welfare plans adopted by TRICON with
respect to its full-time employees.
8. Death or Disability. In the event of your death or disability (as
determined by the Committee), no additional amounts shall be due or payable
hereunder except as provided in Paragraph 6 and in your Option Agreement, and
except for payments under TRICON's insurance programs.
9. Non-Competition. You agree that, while employed by TRICON, and for a
period of two years following the end of such employment, you shall not directly
or indirectly participate or have any interest in, or own, manage, operate or
control, or otherwise engage, invest or participate in any business that is
competitive with the business conducted by TRICON or any of its subsidiaries or
affiliates. The provisions of this Paragraph 9 shall not apply to stock
ownership in a publicly traded company which is not in excess of 5% of that
company's outstanding equity securities.
10. Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be telecopied, delivered by overnight
delivery service or mailed to the intended recipient at the address specified
below, or at such other address as either party may hereafter designate to the
other.
a. If to Xx. Xxxxxxx, to:
Xx. Xxxxxxx X. Xxxxxxx
00 Xxxxxx Xxxx Xxxxx
Xxxxxxxxx, XX 00000
b. If to TRICON, to:
TRICON Global Restaurants, Inc.
c/o PepsiCo, Inc.
000 Xxxxxxxx Xxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: Secretary
11. Entire Agreement. This Agreement contains all the understandings and
representations between you and TRICON concerning your employment, and
supersedes all agreements and understandings, whether oral or written, between
TRICON and you with respect to such matters.
12. Binding Agreement. This Agreement shall be binding upon and shall be
for the benefit of TRICON, its successors and assigns, and you and, in the event
of your death, your estate or legal representative. No rights or obligations
under this Agreement can be assigned or transferred by you without the express
prior written consent of TRICON.
13. Amendment; Waiver. No provision of this Agreement may be amended,
modified, supplemented or waived unless such amendment, modification, supplement
or waiver is agreed to in writing, and signed by you and an authorized employee
of TRICON. TRICON is not authorized to amend this Agreement in any material
manner except as directed by the Committee.
14. Governing Law. This Agreement is deemed a contract made under, and
for all purposes to be governed by and construed in accordance with, the laws of
the State of New York, without reference to principles of conflicts of laws.
Please indicate your understanding and acceptance of this
Agreement by signing as indicated below.
Very truly yours,
TRICON Global Restaurants, Inc.
By /s/Xxxxxxxx X. Xxxxxx
--------------------------
Xxxxxxxx X. Xxxxxx
Vice President & Secretary
AGREED TO AND ACCEPTED:
/s/Xxxxxxx X. Xxxxxxx
----------------------
Xxxxxxx X. Xxxxxxx
