Exhibit 10.32
PBG
PENSION EQUALIZATION PLAN
(PEP)
2009 Restatement

 

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PEP PENSION EQUALIZATION PLAN
Table of Contents

              Page     No.
ARTICLE I — History and Purpose
    1  
 
       
1.1 History of Plan
    1  
 
       
ARTICLE II — Definitions and Construction
    2  
 
       
2.1 Definitions
    2  
(a) Actuarial Equivalent
    2  
(b) Annuity
    2  
(c) Code
    2  
(d) Company or PBG
    2  
(e) Compensation Limitation
    2  
(f) Effective Date
    2  
(g) ERISA
    2  
(h) Participant
    2  
(i) PBG Organization
    3  
(j) PEP Pension
    3  
(k) PepsiCo Prior Plan
    3  
(l) Plan
    3  
(m) Plan Administrator
    3  
(n) Plan Year
    3  
(o) Primary Social Security Amount
    3  
(p) Salaried Plan
    4  
(q) Salaried Plan Participant
    4  
(r) Section 409A
    4  
(s) Section 415 Limitation
    4  
(t) Separation from Service
    4  
(u) Single Lump Sum
    4  
(v) Specified Employee
    4  
(w) Vested Pension
    5  
 
       
2.2 Construction
    5  
(a) Gender and Number
    5  
(b) Compounds of the Word “Here”
    5  
 
       
ARTICLE III — Participation
    5  
 
       
ARTICLE IV — Amount of Retirement Pension
    6  

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              Page     No.
4.1 PEP Pension
    6  
(a) Same Form as Salaried Plan
    6  
(b) Different Form than Salaried Plan
    6  
 
       
4.2 PEP Guarantee
    7  
(a) Eligibility
    7  
(b) PEP Guarantee Formula
    7  
 
       
4.3 Certain Adjustments
    9  
(a) Adjustments for Rehired Participants
    9  
(b) Adjustment for Increased Pension Under Other Plans
    9  
 
       
4.4 Reemployment of Certain Participants
    10  
 
       
4.5 Vesting; Misconduct
    10  
 
       
ARTICLE V — Death Benefits
    10  
 
       
5.1 Death Benefits
    10  
 
       
ARTICLE VI — Distributions
    11  
 
       
6.1 Form and Timing of Distributions
    11  
(a) Time and Form of Payment of Grandfathered Benefit
    11  
(b) Time and Form of Payment of Non-Grandfathered Benefit
    11  
 
       
6.2 Special Rules for Survivor Options
    12  
(a) Effect of Certain Deaths
    12  
(b) Nonspouse Beneficiaries
    13  
 
       
6.3 Designation of Beneficiary
    13  
 
       
6.4 Determination of Single Lump Sum Amounts
    13  
(a) Vested Pensions
    13  
(b) 2008 Reorganization
    13  
 
       
6.5 Section 162(m) Postponement
    13  
 
       
ARTICLE VII — Administration
    14  
 
       
7.1 Authority to Administer Plan
    14  
 
       
7.2 Facility of Payment
    14  
 
       
7.3 Claims Procedure
    14  
 
       
7.4 Effect of Specific References
    15  
 
       
7.5 Limitations on Actions
    15  
 
       
ARTICLE VIII — Miscellaneous
    15  
 
       
8.1 Nonguarantee of Employment
    15  

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              Page     No.
8.2 Nonalienation of Benefits
    16  
 
       
8.3 Unfunded Plan
    16  
 
       
8.4 Action by the Company
    16  
 
       
8.5 Indemnification
    16  
 
       
8.6 Applicable Law
    16  
 
       
8.7 Withholding
    16  
 
       
ARTICLE IX — Amendment and Termination
    16  
 
       
9.1 Continuation of the Plan
    17  
 
       
9.2 Amendments
    17  
 
       
9.3 Termination
    17  
 
       
APPENDIX
    18  
 
       
Foreword
    18  
 
       
Article IPO — Transferred and Transition Individuals
    18  
 
       
Article B — Special Cases
    19  
 
       
Article C — Transfers From/To PepsiCo, Inc.
    20  

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ARTICLE I – History and Purpose
     1.1 History of Plan. The Pepsi Bottling Group, Inc. (the “Company”)
established the PBG Pension Equalization Plan (“PEP” or “Plan”) effective
April 6, 1999 for the benefit of salaried employees of the PBG Organization who
participate in the PBG Salaried Employees Retirement Plan (“Salaried Plan”). The
Plan was amended by a First Amendment effective as of May 26, 1999. The Plan was
further amended and completely restated effective January 1, 2006. The Plan
provides benefits for eligible employees whose pension benefits under the
Salaried Plan are limited by the provisions of the Internal Revenue Code of
1986, as amended. In addition, the Plan provides benefits for certain eligible
employees based on the pre-1989 Salaried Plan formula. The Plan is intended as a
nonqualified unfunded deferred compensation plan for federal income tax
purposes. For purposes of the Employee Retirement Income Security Act of 1974
(“ERISA”), the Plan is structured as two plans. The portion of the Plan that
provides benefits based on limitations imposed by Section 415 of the Internal
Revenue Code (the “Code”) is intended to be an “excess benefit plan” as
described in Section 4(b)(5) of ERISA. The portion of the Plan that provides
benefits based on limitations imposed by Section 401(a)(17) of the Code is
intended to be a plan described in Sections 201(2), 301(a)(3) and 401(a)(1) of
ERISA providing benefits to a select group of management or highly-compensated
employees.
     The Plan was initially established as a successor plan to the PepsiCo
Pension Equalization Plan, due to PBG’s April 6, 1999 initial public offering
and the Plan included historical PepsiCo provisions which are relevant for
eligibility and benefit determinations under the Plan. The Plan was amended and
completely restated effective as of January 1, 2006. Subsequent to October 3,
2004, the Plan has been administered in accordance with a good faith
interpretation of Section 409A of the Code and IRS regulations and other
guidance thereunder.
     The Company now wishes to further amend and completely restate the Plan,
effective as of January 1, 2009 except as otherwise explicitly provided in the
Plan, to comply with Section 409A of the Code.
     NOW, THEREFORE, the PBG Pension Equalization Plan is hereby amended and
completely restated (the “2009 Restatement”) as follows.
     1.2 Effect of Amendment and Restatement. The Plan as in effect on
October 3, 2004 is referred to herein as the Prior Plan.
     Except as otherwise explicitly provided in Section 6.1(b)(3) of this Plan,
a Participant’s benefit (including death benefits), determined under the terms
of the Plan as in effect on October 3, 2004 as if the Participant had terminated
employment on December 31, 2004, without regard to any compensation paid or
services rendered after 2004, or any other events affecting the amount of or the
entitlement to benefits (other than the Participant’s survival or the
Participant’s election under the terms of the Plan with respect to the time or
form of benefit) (the “Grandfathered Benefit”) shall be paid at the time and in
the form provided by the terms of the Plan as in effect on October 3, 2004.

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     The benefit of a Participant accrued under this Plan based on all
compensation and services taken into account by the Prior Plan and this Plan,
less the Participant’s Grandfathered Benefit, shall be paid in the times and in
the form as provided in this Plan. Except as otherwise explicitly provided in
this Plan, this Plan supersedes the Prior Plan effective January 1, 2009, with
respect to amounts accrued and vested after 2004 by Participants who have not
commenced receiving benefits as of January 1, 2009. The Plan has been
administered in accordance with a good faith interpretation of Section 409A of
the Internal Revenue Code and IRS regulations and guidance thereunder since
January 1, 2005. Amounts accrued under this Plan after 2004 shall be treated as
payable under a separate Plan for purposes of Section 409A of the Internal
Revenue Code.
ARTICLE II – Definitions and Construction
     2.1 Definitions. The following words and phrases, when used in this Plan,
shall have the meaning set forth below unless the context clearly indicates
otherwise. Unless otherwise expressly qualified by the terms or the context of
this Plan, the terms used in this Plan shall have the same meaning as those
terms in the Salaried Plan.
          (a) Actuarial Equivalent. Except as otherwise specifically set forth
in the Plan or any Appendix to the Plan with respect to a specific benefit
determination, a benefit of equivalent value computed on the basis of the
factors applicable for such purposes under the Salaried Plan.
          (b) Annuity. A Pension payable as a series of monthly payments for at
least the life of the Participant.
          (c) Code. The Internal Revenue Code of 1986, as amended from time to
time.
          (d) Company or PBG. The Pepsi Bottling Group, Inc., a corporation
organized and existing under the laws of the State of Delaware, or its successor
or successors.
          (e) Compensation Limitation. Benefits not payable under the Salaried
Plan because of the limitations on the maximum amount of compensation which may
be considered in determining the annual benefit of the Salaried Plan Participant
under Section 401(a)(17) of the Code.
          (f) Effective Date. The date upon which this Plan was effective, which
is April 6, 1999 (except as otherwise provided herein).
          (g) ERISA. Public Law No. 93-406, the Employee Retirement Income
Security Act of 1974, as amended from time to time.
          (h) Participant. An Employee participating in the Plan in accordance
with the provisions of Section 3.1.

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          (i) PBG Organization. The controlled group of organizations of which
the Company is a part, as defined by Code section 414 and regulations issued
thereunder. An entity shall be considered a member of the PBG Organization only
during the period it is one of the group of organizations described in the
preceding sentence.
          (j) PEP Pension. One or more payments that are payable to a person who
is entitled to receive benefits under the Plan. The term “Grandfather Benefit”
shall be used to refer to the portion of a PEP Pension that is payable in
accordance with the Plan as in effect October 3, 2004 and is not subject to
Section 409A.
          (k) PepsiCo Prior Plan. The PepsiCo Pension Equalization Plan.
          (l) Plan. The PBG Pension Equalization Plan, the Plan set forth
herein, as it may be amended from time to time. The Plan is also sometimes
referred to as PEP. For periods before April 6, 1999, references to the Plan
refer to the PepsiCo Prior Plan.
          (m) Plan Administrator. The Company, which shall have authority to
administer the Plan as provided in Article VII.
          (n) Plan Year. The 12-month period ending on each December 31st.
          (o) Primary Social Security Amount. In determining Pension amounts,
Primary Social Security Amount shall mean:
          (1) For purposes of determining the amount of a Retirement, Vested or
Pre-Retirement Spouse’s Pension, the Primary Social Security Amount shall be the
estimated monthly amount that may be payable to a Participant commencing at age
65 as an old-age insurance benefit under the provisions of Title II of the
Social Security Act, as amended. Such estimates of the old-age insurance benefit
to which a Participant would be entitled at age 65 shall be based upon the
following assumptions:
          (i) That the Participant’s social security wages in any year prior to
Retirement or severance are equal to the Taxable Wage Base in such year, and
          (ii) That he will not receive any social security wages after
Retirement or severance.
However, in computing a Vested Pension under Section 4.2, the estimate of the
old-age insurance benefit to which a Participant would be entitled at age 65
shall be based upon the assumption that he continued to receive social security
wages until age 65 at the same rate as the Taxable Wage Base in effect at his
severance from employment. For purposes of this subsection, “social security
wages” shall mean wages within the meaning of the Social Security Act.

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          (2) For purposes of paragraph (1), the Primary Social Security Amount
shall exclude amounts that may be available because of the spouse or any
dependent of the Participant or any amounts payable on account of the
Participant’s death. Estimates of Primary Social Security Amounts shall be made
on the basis of the Social Security Act as in effect at the Participant’s
Severance from Service Date, without regard to any increases in the social
security wage base or benefit levels provided by such Act which take effect
thereafter.
          (p) Salaried Plan. The PBG Salaried Employees Retirement Plan, as it
may be amended from time to time. Any references herein to the Salaried Plan for
a period that is before the Effective Date shall mean the PepsiCo Salaried
Employees Retirement Plan.
          (q) Salaried Plan Participant. An Employee who is a participant in the
Salaried Plan.
          (r) Section 409A. Section 409A of the Code and the applicable
regulations and other guidance issued thereunder.
          (s) Section 415 Limitation. Benefits not payable under the Salaried
Plan because of the limitations imposed on the annual benefit of a Salaried Plan
Participant by Section 415 of the Code.
          (t) Separation from Service. A Participant’s separation from service
as defined in Section 409A; provided that for this purpose the term “service
recipient” shall include PepsiCo., Inc., so long as PepsiCo., Inc. or a member
of the PepsiCo., Inc. controlled group maintains an ownership interest in the
Company of at least 20%.
          (u) Single Lump Sum. The distribution of a Participant’s total PEP
Pension in excess of the Participant’s Grandfathered Benefit in the form of a
single payment.
          (v) Specified Employee. The individuals identified in accordance with
principles set forth below.
               (1) General. Any Participant who at any time during the
applicable year is:
                    (i) An officer of any member of the PBG Organization having
annual compensation greater than $130,000 (as adjusted under Section 416(i)(1)
of the Code);
                    (ii) A 5-percent owner of any member of the PBG
Organization; or
                    (iii) A 1-percent owner of any member of the PBG
Organization having annual compensation of more than $150,000.

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               For purposes of (i) above, no more than 50 employees identified
in the order of their annual compensation shall be treated as officers. For
purposes of this section, annual compensation means compensation as defined in
Treas. Reg. § 1.415(c)-2(a), without regard to Treasury Reg. §§ 1.415(c)-2(d),
1.415(c)-2(e), and 1.415(c)-2(g). The Plan Administrator shall determine who is
a Specified Employee in accordance with Section 416(i) of the Code and the
applicable regulations and other guidance of general applicability issued
thereunder or in connection therewith, and provided further that the applicable
year shall be determined in accordance with Section 409A and that any
modification of the foregoing definition that applies under Section 409A shall
be taken into account.
               (1) Applicable Year. Except as otherwise required by
Section 409A, the Plan Administrator shall determine Specified Employees as of
the last day of each calendar year, based on compensation for such year, and
such designation shall be effective for purposes of this Plan for the twelve
month period commencing on April 1st of the next following calendar year.
               (2) Rule of Administrative Convenience. In addition to the
foregoing, the Plan Administrator shall treat all other Employees classified as
E5 and above on the applicable determination date prescribed in subsection (2)
(i.e., the last day of each calendar year) as a Specified Employee for purposes
of the Plan for the twelve-month period commencing of the applicable April 1st
date. However, if there are at least 200 Specified Employees without regard to
this provision, then it shall not apply. If there are less than 200 Specified
Employees without regard to this provision, but full application of this
provision would cause there to be more than 200 Specified Employees, then (to
the extent necessary to avoid exceeding 200 Specified Employees) those Employees
classified as E5 and above who have the lowest base salaries on such applicable
determination date shall not be Specified Employees.
          (w) Vested Pension. The PEP Pension available to a Participant who has
a vested PEP Pension and is not eligible for a Retirement Pension.
     2.2 Construction. The terms of the Plan shall be construed in accordance
with this section.
          (a) Gender and Number. The masculine gender, where appearing in the
Plan, shall be deemed to include the feminine gender, and the singular may
include the plural, unless the context clearly indicates to the contrary.
          (b) Compounds of the Word “Here”. The words “hereof”, “hereunder” and
other similar compounds of the word “here” shall mean and refer to the entire
Plan, not to any particular provision or section.
ARTICLE III – Participation

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     3.1 Each Salaried Plan Participant whose benefit under the Salaried Plan is
curtailed by the Compensation Limitation or the Section 415 Limitation, or both,
and each other Salaried Plan Participant whose 1988 pensionable “earnings” under
the Salaried Plan, as described in Section 4.2(a), were $75,000 or more shall
participate in this Plan.
ARTICLE IV – Amount of Retirement Pension
     4.1 PEP Pension. Subject to Section 4.5, a Participant’s PEP Pension shall
equal the amount determined under (a) or (b) of this Section 4.1, whichever is
applicable. Such amount shall be determined as of the date of the Participant’s
Separation from Service.
          (a) Same Form as Salaried Plan. If a Participant’s PEP Pension will be
paid in the same form and will commence as of the same time as his pension under
the Salaried Plan, then his monthly PEP Pension shall be equal to the excess of:
          (1) The greater of (i) the monthly pension benefit which would have
been payable to such Participant under the Salaried Plan without regard to the
Compensation Limitation and the Section 415 Limitation, and (ii) if applicable,
the amount determined in accordance with Section 4.2, expressed in such form and
payable as of such time; over
          (2) The amount of the monthly pension benefit that is in fact payable
to such Salaried Plan Participant under the Salaried Plan, expressed in such
form and payable as of such time.
     The amount of the monthly pension benefit so determined, less the portion
of such benefit that is the Participant’s Grandfathered Benefit, shall be
payable as provided in Section 6.2.
          (b) Different Form than Salaried Plan. If a Participant’s PEP Pension
will be paid in a different form (whether in whole or in part) or will commence
as of a different time than his pension benefit under the Salaried Plan, his PEP
Pension shall be the product of:
          (1) The greater of (i) the monthly pension benefit which would have
been payable to such Participant under the Salaried Plan without regard to the
Compensation Limitation and the Section 415 Limitation, and (ii) if applicable,
the amount determined in accordance with Section 4.2, expressed in the form and
payable as of such time as applies to his PEP Pension under this Plan,
multiplied by
          (2) A fraction, the numerator of which is the value of the amount
determined in Section 4.1(b)(1), reduced by the value of his pension under the
Salaried Plan, and the denominator of which is the value of the amount
determined in Section 4.1(b)(1) (with value determined on a reasonable and
consistent basis, in the discretion of the Plan Administrator, with respect to
similarly situated employees).

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     The amount of the monthly pension benefit so determined, less the portion
of such benefit that is the Participant’s Grandfathered Benefit, shall be
payable as provided in Section 6.2.
     Notwithstanding the above, in the event any portion of the accrued benefit
of a Participant under this Plan or the Salaried Plan is awarded to an alternate
payee pursuant to a qualified domestic relations order, as such terms are
defined in Section 414(p) of the Code, the Participant’s total PEP Pension shall
be adjusted, as the Plan Administrator shall determine, so that the combined
benefit payable to the Participant and the alternate payee from this Plan and
the Salaried Plan is the amount determined pursuant to subsections 4.1(a) and
(b) above.
     4.2 PEP Guarantee. A Participant who is eligible under subsection (a) below
shall be entitled to a PEP Guarantee benefit determined under subsection
(b) below, if any.
          (a) Eligibility. A Participant shall be covered by this section if the
Participant has 1988 pensionable earnings from an Employer of at least $75,000.
For purposes of this section, “1988 pensionable earnings” means the
Participant’s remuneration for the 1988 calendar year that was recognized for
benefit accrual received under the Salaried Plan as in effect in 1988. “1988
pensionable earnings” does not include remuneration from an entity attributable
to any period when that entity was not an Employer.
          (b) PEP Guarantee Formula. The amount of a Participant’s PEP Guarantee
shall be determined under paragraph (1), subject to the special rules in
paragraph (2).
          (1) Formula. The amount of a Participant’s PEP Guarantee under this
paragraph shall be determined as follows:
          (i) Three percent of the Participant’s Highest Average Monthly
Earnings for the first 10 years of Credited Service, plus
          (ii) One percent of the Participant’s Highest Average Monthly Earnings
for each year of Credited Service in excess of 10 years, less
          (iii) One and two-thirds percent of the Participant’s Primary Social
Security Amount multiplied by years of Credited Service not in excess of
30 years.
     In determining the amount of a Vested Pension, the PEP Guarantee shall
first be calculated on the basis of (I) the Credited Service the Participant
would have earned had he remained in the employ of the Employer until his Normal
Retirement Age, and (II) his Highest Average Monthly Earnings and Primary Social
Security Amount at his Severance from Service Date, and then shall be reduced by
multiplying the resulting amount by a fraction, the numerator of which is the
Participant’s actual years of Credited Service on his Severance from Service
Date and the denominator of which is the years of Credited Service he would

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     have earned had he remained in the employ of an Employer until his Normal
Retirement Age.
          (2) Calculation. The amount of the PEP Guarantee shall be determined
pursuant to paragraph (1) above, subject to the following special rules:
          (i) Surviving Eligible Spouse’s Annuity: Subject to subparagraph (iii)
below and the last sentence of this subparagraph, if the Participant has an
Eligible Spouse and has commenced receipt of an Annuity under this section, the
Participant’s Eligible Spouse shall be entitled to receive a survivor annuity
equal to 50 percent of the Participant’s Annuity under this section, with no
corresponding reduction in such Annuity for the Participant. Annuity payments to
a surviving Eligible Spouse shall begin on the first day of the month coincident
with or following the Participant’s death and shall end with the last monthly
payment due prior to the Eligible Spouse’s death. If the Eligible Spouse is more
than 10 years younger than the Participant, the survivor benefit payable under
this subparagraph shall be adjusted as provided below.
          (A) For each full year more than 10 but less than 21 that the
surviving Eligible Spouse is younger than the Participant, the survivor benefit
payable to such spouse shall be reduced by 0.8 percent.
          (B) For each full year more than 20 that the surviving Eligible Spouse
is younger than the Participant, the survivor benefit payable to such spouse
shall be reduced by an additional 0.4 percent.
          This subparagraph applies only to a Participant who retires on or
after his Early Retirement Date.
          (ii) Reductions. The following reductions shall apply in determining a
Participant’s PEP Guarantee.
          (A) If the Participant will receive an Early Retirement Pension, the
payment amount shall be reduced by 3/12ths of 1 percent for each month by which
the benefit commencement date precedes the date the Participant would attain his
Normal Retirement Date.
          (B) If the Participant is entitled to a Vested Pension, the payment
amount shall be reduced to the Actuarial Equivalent of the amount payable at his
Normal Retirement Date (if payment commences before such date), and the
reductions set forth in the Salaried Plan for any Pre-Retirement Spouse’s
coverage shall apply.
          (C) This clause applies if the Participant will receive his PEP
Guarantee in a form that provides an Eligible Spouse benefit, continuing for the
life of the surviving spouse, that is greater than that

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provided under subparagraph (i). In this instance, the Participant’s PEP
Guarantee under this section shall be reduced so that the total value of the
benefit payable on the Participant’s behalf is the Actuarial Equivalent of the
PEP Guarantee otherwise payable under the foregoing provisions of this section.
          (D) This clause applies if the Participant will receive his PEP
Guarantee in a form that provides a survivor annuity for a beneficiary who is
not his Eligible Spouse. In this instance, the Participant’s PEP Guarantee under
this section shall be reduced so that the total value of the benefit payable on
the Participant’s behalf is the Actuarial Equivalent of a Single Life Annuity
for the Participant’s life.
          (E) This clause applies if the Participant will receive his PEP
Guarantee in a Annuity form that includes inflation protection described in the
Salaried Plan. In this instance, the Participant’s PEP Guarantee under this
section shall be reduced so that the total value of the benefit payable on the
Participant’s behalf is the Actuarial Equivalent of the elected Annuity without
such protection.
          (iii) Lump Sum Conversion. The amount of the PEP Guarantee determined
under this section for a Participant whose Retirement Pension will be
distributed in the form of a lump sum shall be the Actuarial Equivalent of the
Participant’s PEP Guarantee determined under this section, taking into account
the value of any survivor benefit under subparagraph (i) above and any early
retirement reductions under subparagraph (ii)(A) above.
     4.3 Certain Adjustments. Pensions determined under the foregoing sections
of this Article are subject to adjustment as provided in this section. For
purposes of this section, “specified plan” shall mean the Salaried Plan or a
nonqualified pension plan similar to this Plan. A nonqualified pension plan is
similar to this Plan if it is sponsored by a member of the PBG Organization and
if its benefits are not based on participant pay deferrals (this category of
similar plans includes the PepsiCo Prior Plan).
          (a) Adjustments for Rehired Participants. This subsection shall apply
to a current or former Participant who is reemployed after his Annuity Starting
Date and whose benefit under the Salaried Plan is recalculated based on an
additional period of Credited Service. In the event of any such recalculation,
the Participant’s PEP Pension shall also be recalculated hereunder. For this
purpose, the PEP Guarantee under Section 4.2 is adjusted for in-service
distributions and prior distributions in the same manner as benefits are
adjusted under the Salaried Plan, but by taking into account benefits under this
Plan and any specified plans.
          (b) Adjustment for Increased Pension Under Other Plans. If the benefit
paid under a specified plan on behalf of a Participant is increased after PEP
benefits on his behalf have been determined (whether the increase is by order of
a court, by agreement of the plan administrator of the specified plan, or
otherwise), the PEP benefit for the Participant shall

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be recalculated. If the recalculation identifies an overpayment hereunder, the
Plan Administrator shall take such steps as it deems advisable to recover the
overpayment. It is specifically intended that there shall be no duplication of
payments under this Plan and any specified plans.
     4.4 Reemployment of Certain Participants. In the case of a current or
former Participant who is reemployed and is eligible to reparticipate in the
Salaried Plan after his Annuity Starting Date, payment of his non-Grandfathered
PEP Pension will not be suspended. If such Participant accrues an additional PEP
Pension for service after such reemployment, his PEP Pension on his subsequent
Separation from Service shall be reduced by the present value of PEP benefits
previously distributed to such Participant, as determined by the Plan
Administrator.
     4.5 Vesting; Misconduct. A Participant shall be fully vested in his Accrued
Benefit at the time he becomes fully vested in his accrued benefit under the
Salaried Plan. Notwithstanding the preceding, or any other provision of the Plan
to the contrary, a Participant shall forfeit his or her entire PEP Pension if
the Plan Administrator determines that such Participant has engaged in
“Misconduct” as defined below, determined without regard to whether the
Misconduct occurred before or after the Participant’s Severance from Service.
The Plan Administrator may, in its sole discretion, require the Participant to
pay to the Employer any PEP Pension paid to the Participant within the twelve
month period immediately preceding a date on which the Participant engaged in
such Misconduct, as determined by the Plan Administrator.
          “Misconduct” means any of the following, as determined by the Plan
Administrator in good faith: (i) violation of any agreement between the Company
or Employer and the Participant, including but not limited to a violation
relating to the disclosure of confidential information or trade secrets, the
solicitation of employees, customers, suppliers, licensors or contractors, or
the performance of competitive services; (ii) violation of any duty to the
Company or Employer, including but not limited to violation of the Company’s
Code of Conduct; (iii) making, or causing or attempting to cause any other
person to make, any statement (whether written, oral or electronic), or
conveying any information about the Company or Employer which is disparaging or
which in any way reflects negatively upon the Company or Employer unless
required by law or pursuant to a Company or Employer policy; (iv) improperly
disclosing or otherwise misusing any confidential information regarding the
Company or Employer; (v) unlawful trading in the securities of the Company or of
another company based on information garnered as a result of that Participant’s
employment or other relationship with the Company; (vi) engaging in any act
which is considered to be contrary to the best interests of the Company or
Employer, including but not limited to recruiting or soliciting employees of the
Employer; or (vii) commission of a felony or other serious crime or engaging in
any activity which constitutes gross misconduct.
ARTICLE V – Death Benefits
     5.1 Death Benefits. Each Participant entitled to a PEP Pension under this
Plan who dies before his Annuity Starting Date shall be entitled to a death
benefit equal in amount to the additional death benefit to which the Participant
would have been entitled under the Salaried

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Plan if the PEP Pension as determined under Article IV was payable under the
Salaried Plan instead of this Plan. The death benefit with respect to a
Participant’s PEP Pension in excess of the Grandfathered Benefit shall become
payable on the Participant’s date of death in a Single Lump Sum payment.
          Payment of any death benefit of a Participant who dies before his
Annuity Starting Date under the Plan shall be made to the persons and in the
proportions to which any death benefit under the Salaried Plan is or would be
paid.
ARTICLE VI – Distributions
     The terms of this Article govern the distribution of benefits to a
Participant who becomes entitled to payment of a PEP Pension under the Plan.
     6.1 Form and Timing of Distributions. Subject to Section 6.5, this Section
shall govern the form and timing of PEP Pensions.
          (a) Time and Form of Payment of Grandfathered Benefit. The
Grandfathered Benefit of a Participant shall be paid in the form and at the time
or times provided by the terms of the Plan as in effect on October 3, 2004.
          (b) Time and Form of Payment of Non-Grandfathered Benefit. Except as
provided below, the PEP Pension payable to a Participant in excess of the
Grandfathered Benefit shall be become payable in a Single Lump Sum on the
Separation from Service of the Participant.
          (1) Certain Vested Pensions. A Participant (i) who incurred a
Separation from Service during the period January 1, 2005 through December 31,
2008 (other than a Participant described in (3) below); and (ii) whose Annuity
Starting Date has not occurred as of January 1, 2009, shall receive his PEP
Pension in excess of his Grandfathered Benefit in a Single Lump Sum which shall
become payable on January 1, 2009.
          (2) Annuity Election. A Participant who (i) attained age 50 on or
before January 1, 2009, (ii) on or before December 31, 2008 irrevocably elected
to receive a Single Life Annuity, a 50%, 75% or 100% Joint and Survivor Annuity,
or a 10 Year Certain and Life Annuity; and (iii) incurs a Termination of
Employment on or after July 1, 2009 after either attainment of age 55 and the
tenth anniversary of the Participant’s initial employment date or attainment of
age 65 and the fifth anniversary of the Participant’s initial employment date,
shall receive his PEP Pension in excess of his Grandfathered Benefit in the form
elected commencing on the first day of the month coincident with or next
following his Separation from Service. If such Participant Separates from
Service prior to July 1, 2009 or prior to attainment of age 55 and the tenth
anniversary of the Participant’s employment date, or prior to attainment of age
65 and the fifth anniversary of the Participant’s employment, the Participant’s
PEP Pension in

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excess of his Grandfathered Pension shall be payable in a Single Lump Sum on the
Participant’s Separation from Service.
          (3) 2008 Reorganization. The entire PEP Pension of a Participant who
(i) was involuntarily Separated from Service on or after November 1, 2008 and on
or before December 19, 2008; (ii) at the time of Separation from Service had
attained age 50 and had not attained age 55, and had 10 or more years of
Service; and (iii) is eligible for special retirement benefits as described in
the letter agreement executed and not revoked by the Participant, shall become
payable in a Single Lump Sum on the last day of the Participant’s “Transition
Period” as defined in the letter agreement.
          (4) Specified Employees. If a Participant is classified as a Specified
Employee at the time of the Participant’s Separation from Service (or at such
other time for determining Specified Employee status as may apply under
Section 409A), then no amount shall be payable pursuant to this Section 6.1(b)
until at least six (6) months after such a Separation from Service. Any payment
otherwise due in such six month period shall be suspended and become payable at
the end of such six month period, with interest at the applicable interest rates
used for computing a Single Lump Sum payment on the date of Separation from
Service.
               (5) Actual Date of Payment. An amount payable on a date specified
in this Article VI or in Article V shall be paid as soon as administratively
feasible after such date; but no later than the later of (a) the end of the
calendar year in which the specified date occurs; or (b) the 15th day of the
third calendar month following such specified date and the Participant (or
Beneficiary) is not permitted to designate the taxable year of the payment. The
payment date may be postponed further if calculation of the amount of the
payment is not administratively practicable due to events beyond the control of
the Participant (or Beneficiary), and the payment is made in the first calendar
year in which the calculation of the amount of the payment is administratively
practicable.
     6.2 Special Rules for Survivor Options.
          (a) Effect of Certain Deaths. If a Participant makes an Annuity
election described in Section 6.1(b)(2) and the Participant dies before his
Separation from Service, the election shall be disregarded. Such a Participant
may change his coannuitant of a Joint and Survivor Annuity at any time prior to
his Separation from Service, and may change his beneficiary of a Ten Years
Certain and Life Annuity at any time. If the Participant dies after such
election becomes effective but before his non-Grandfathered PEP Pension actually
commences, the election shall be given effect and the amount payable to his
surviving Eligible Spouse or other beneficiary shall commence on the first day
of the month following his death (any back payments due the Participant shall be
payable to his estate). In the case of a Participant who elected a 10 Year
Certain and Life Annuity, if such Participant dies: (i) after benefits have
commenced; (ii) without a surviving primary or contingent beneficiary, and
(iii) before receiving 120 payments under the form of payment, then the
remaining payments due under such form of payment shall be paid to the
Participant’s estate. If payments have commenced under such form of payment to a
Participant’s primary or contingent beneficiary and

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such beneficiary dies before payments are completed, then the remaining payments
due under such form of payment shall be paid to such beneficiary’s estate.
          (b) Nonspouse Beneficiaries. If a Participant’s beneficiary is not his
Eligible Spouse, he may not elect:
          (1) The 100 percent survivor option described in Section 6.1(b)(2)
with a nonspouse beneficiary more than 10 years younger than he is, or
          (2) The 75 percent survivor option described in Section 6.1(b)(2) with
a nonspouse beneficiary more than 19 years younger than he is.
     6.3 Designation of Beneficiary. A Participant who has elected to receive
all or part of his pension in a form of payment that includes a survivor option
shall designate a beneficiary who will be entitled to any amounts payable on his
death. Such designation shall be made on a PEP Election Form. A Participant
shall have the right to change or revoke his beneficiary designation at any time
prior to when his election is finally effective. The designation of any
beneficiary, and any change or revocation thereof, shall be made in accordance
with rules adopted by the Plan Administrator. A beneficiary designation shall
not be effective unless and until filed with the Plan Administrator
     6.4 Determination of Single Lump Sum Amounts. Except as otherwise provided
below, a Single Lump Sum payable under Article V or Section 6.1 shall be
determined in the same manner as the single lump sum payment option prescribed
in Section 6.1(b)(3) of the Salaried Plan.
          (a) Vested Pensions. If on the date of Separation from Service of a
Participant such Participant is not entitled to retire with an immediate pension
under the Salaried Plan, the Single Lump Sum payable to the Participant under
Section 6.1 shall be determined in the same manner as the single lump sum
payment option prescribed in Section 6.1(b)(3) of the Salaried Plan but
substituting (for Plan Years beginning before 2012) the applicable segment rates
for the blended 30 year Treasury and segment rates that would otherwise be
applicable.
          (b) 2008 Reorganization. Notwithstanding subsection (a) above, the
Single Lump Sum payment for a Participant whose employment was involuntarily
terminated as a result of the 2008 Reorganization on or after November 1, 2008
and on or before December 19, 2008 shall be determined based on the applicable
interest rates and mortality used by the Salaried Plan for optional lump sum
distributions in December 2008, provided that in no event shall such Single Lump
Sum payment be less than the Single Lump Sum determined based on the applicable
interest rates and mortality used by the Salaried Plan for lump sum
distributions for the month in which the Single Lump Sum is distributed to the
Participant.
     6.5 Section 162(m) Postponement. Notwithstanding any other provision of
this Plan to the contrary, no PEP Pension shall be paid to any Participant prior
to the earliest date on which the Company’s federal income tax deduction for
such payment is not precluded by Section 162(m) of the Code. In the event any
payment is delayed solely as a result of the preceding restriction, such

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payment shall be made as soon as administratively feasible following the first
date as of which Section 162(m) of the Code no longer precludes the deduction by
the Company of such payment. Amounts deferred because of the Section 162(m)
deduction limitation shall be increased by simple interest for the period of
delay at the annual rate of six percent (6%).
ARTICLE VII – Administration
     7.1 Authority to Administer Plan. The Plan shall be administered by the
Plan Administrator, which shall have the authority to interpret the Plan and
issue such regulations as it deems appropriate. The Plan Administrator shall
maintain Plan records and make benefit calculations, and may rely upon
information furnished it by the Participant in writing, including the
Participant’s current mailing address, age and marital status. The Plan
Administrator’s interpretations, determinations, regulations and calculations
shall be final and binding on all persons and parties concerned. The Company, in
its capacity as Plan Administrator or in any other capacity, shall not be a
fiduciary of the Plan for purposes of ERISA, and any restrictions that apply to
a party in interest under section 406 of ERISA shall not apply to the Company or
otherwise under the Plan.
     7.2 Facility of Payment. Whenever, in the Plan Administrator’s opinion, a
person entitled to receive any payment of a benefit or installment thereof
hereunder is under a legal disability or is incapacitated in any way so as to be
unable to manage his financial affairs, the Plan Administrator may make payments
to such person or to the legal representative of such person for his benefit, or
the Plan Administrator may apply the payment for the benefit of such person in
such manner as it considers advisable. Any payment of a benefit or installment
thereof in accordance with the provisions of this section shall be a complete
discharge of any liability for the making of such payment under the provisions
of the Plan.
     7.3 Claims Procedure. The Plan Administrator shall have the exclusive
discretionary authority to construe and to interpret the Plan, to decide all
questions of eligibility for benefits and to determine the amount of such
benefits, and its decisions on such matters are final and conclusive. This
discretionary authority is intended to be absolute, and in any case where the
extent of this discretion is in question, the Plan Administrator is to be
accorded the maximum discretion possible. Any exercise of this discretionary
authority shall be reviewed by a court, arbitrator or other tribunal under the
arbitrary and capricious standard (i.e., the abuse of discretion standard). If,
pursuant to this discretionary authority, an assertion of any right to a benefit
by or on behalf of a Participant or beneficiary is wholly or partially denied,
the Plan Administrator, or a party designated by the Plan Administrator, will
provide such claimant within the 90-day period following the receipt of the
claim by the Plan Administrator, a comprehensible written notice setting forth:
          (a) The specific reason or reasons for such denial;
          (b) Specific reference to pertinent Plan provisions on which the
denial is based;

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          (c) A description of any additional material or information necessary
for the claimant to submit to perfect the claim and an explanation of why such
material or information is necessary; and
          (d) A description of the Plan’s claim review procedure. The claim
review procedure is available upon written request by the claimant to the Plan
Administrator, or the designated party, within 60 days after receipt by the
claimant of written notice of the denial of the claim, and includes the right to
examine pertinent documents and submit issues and comments in writing to the
Plan Administrator, or the designated party. The decision on review will be made
within 60 days after receipt of the request for review, unless circumstances
warrant an extension of time not to exceed an additional 60 days, and shall be
in writing and drafted in a manner calculated to be understood by the claimant,
and include specific reasons for the decision with references to the specific
Plan provisions on which the decision is based.
          If within a reasonable period of time after the Plan receives the
claim asserted by the Participant, the Plan Administrator, or the designated
party, fails to provide a comprehensible written notice stating that the claim
is wholly or partially denied and setting forth the information described in
(a) through (d) above, the claim shall be deemed denied. Once the claim is
deemed denied, the Participant shall be entitled to the claim review procedure
described in subsection (d) above. Such review procedure shall be available upon
written request by the claimant to the Plan Administrator, or the designated
party, within 60 days after the claim is deemed denied. Any claim under the Plan
that is reviewed by a court shall be reviewed solely on the basis of the record
before the Plan Administrator at the time it made its determination.
     7.4 Effect of Specific References. Specific references in the Plan to the
Plan Administrator’s discretion shall create no inference that the Plan
Administrator’s discretion in any other respect, or in connection with any other
provision, is less complete or broad.
     7.5 Limitations on Actions. Any claim filed under this Article VII and any
action brought in state or federal court by or on behalf of a Participant or a
Beneficiary for the alleged wrongful denial of Plan benefits or for the alleged
interference with ERISA-protected rights must be brought within three years of
the date the Participant’s or Beneficiary’s cause of action first accrues.
Failure to bring any such cause of action within this three-year time frame
shall preclude a Participant or Beneficiary, or any representative of the
Participant or Beneficiary, from bringing the claim or cause of action.
Correspondence or other communications following the mandatory appeals process
described in this Article VII shall have no effect on this three-year time
frame.
ARTICLE VIII– Miscellaneous
     8.1 Nonguarantee of Employment. Nothing contained in this Plan shall be
construed as a contract of employment between an Employer and any Employee, or
as a right of any Employee to be continued in the employment of an Employer, or
as a limitation of the right of an Employer to discharge any of its Employees,
with or without cause.

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     8.2 Nonalienation of Benefits. Benefits payable under the Plan or the right
to receive future benefits under the Plan shall not be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance,
charge, garnishment, execution, or levy of any kind, either voluntary or
involuntary, and any attempt to anticipate, alienate, sell, transfer, assign,
pledge, encumber, charge or otherwise dispose of any right to benefits payable
hereunder, including any assignment or alienation in connection with a divorce,
separation, child support or similar arrangement, shall be null and void and not
binding on the Company. The Company shall not in any manner be liable for, or
subject to, the debts, contracts, liabilities, engagements or torts of any
person entitled to benefits hereunder.
     8.3 Unfunded Plan. The Company’s obligations under the Plan shall not be
funded, but shall constitute liabilities by the Company payable when due out of
the Company’s general funds. To the extent the Participant or any other person
acquires a right to receive benefits under this Plan, such right shall be no
greater than the rights of any unsecured general creditor of the Company.
     8.4 Action by the Company. Any action by the Company under this Plan may be
made by the Board of Directors of the Company or by the Compensation Committee
of the Board of Directors, with a report of any actions taken by it to the Board
of Directors. In addition, such action may be made by any other person or
persons duly authorized by resolution of said Board to take such action.
     8.5 Indemnification. Unless the Board of Directors of the Company shall
determine otherwise, the Company shall indemnify, to the full extent permitted
by law, any employee acting in good faith within the scope of his employment in
carrying out the administration of the Plan.
     8.6 Applicable Law. All questions pertaining to the construction, validity
and effect of the Plan shall be determined in accordance with the provisions of
ERISA. In the event ERISA is not applicable or does not preempt state law, the
laws of the state of New York shall govern.
     If any provision of this Plan is, or is hereafter declared to be, void,
voidable, invalid or otherwise unlawful, the remainder of the Plan shall not be
affected thereby.
     8.7 Withholding. The Employer shall withhold from amounts due under this
Plan the amount necessary to enable the employer to remit to the appropriate
government entity or entities on behalf of the Participant as may be required by
the federal income tax withholding provisions of the Code, by an applicable
state’s income tax, or by an applicable city, county or municipality’s earnings
or income tax act. The Employer may withhold from the compensation of, or
collect from, a Participant the amount necessary to remit on behalf of the
Participant any FICA taxes which may be required with respect to amounts accrued
by a Participant hereunder as determined by the Employer.
ARTICLE IX – Amendment and Termination

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     9.1 Continuation of the Plan. While the Company and the Employers intend to
continue the Plan indefinitely, they assume no contractual obligation as to its
continuance. In accordance with Section 8.4, the Company hereby reserves the
right, in its sole discretion, to amend, terminate, or partially terminate the
Plan at any time.
     9.2 Amendments. The Company may, in its sole discretion, make any amendment
or amendments to this Plan from time to time, with or without retroactive
effect, at any time before the Participant’s Separation from Service. An
Employer (other than the Company) shall not have the right to amend the Plan.
Any amendments made to the Plan shall be subject to any restrictions on
amendment that are applicable to ensure continued compliance under Section 409A.
     9.3 Termination. The Company may terminate the Plan and all other plans
aggregated with the Plan pursuant to Treas. Reg. §1.409A-1(c), subject to the
Section 409A distribution timing provisions and the restrictions on maintaining
future deferred compensation arrangements set forth in Treas. Reg.
§1.409A-3(h)(2)(viii) (no new nonqualified plan within three years).
     The Company also may terminate the Plan and distribute all vested accrued
benefits in a lump sum payment within twelve months after a change in control as
permitted under Section 409A.
     The Company also may terminate the Plan and distribute all vested accrued
benefits in a lump sum payment as of the date of the corporate dissolution of
the Company in a transaction taxable under Section 331 of the Code or in the
event of the bankruptcy of the Company with the approval of the Bankruptcy Court
pursuant to 11 U.S.C. §504(b)(1).
     In addition, the Company may terminate the Plan and distribute all vested
benefits as may otherwise be permitted by the Commissioner of the Internal
Revenue Service under Section 409A.
     A termination of the Plan must comply with the provisions of Section 409A,
including, but not limited to, restrictions on the timing of final distributions
and the adoption of future deferred compensation arrangements.

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APPENDIX
Foreword
     This Appendix sets forth additional provisions applicable to individuals
specified in the Articles of this Appendix. In any case where there is a
conflict between the Appendix and the main text of the Plan, the Appendix shall
govern.
Article IPO – Transferred and Transition Individuals
     IPO.1 Scope. This Article supplements the main portion of the Plan document
with respect to the rights and benefits of Transferred and Transition
Individuals following the spinoff of this Plan from the PepsiCo Prior Plan.
     IPO.2 Definitions. This section provides definitions for the following
words or phrases in boldface and underlined. Where they appear in this Article
with initial capitals they shall have the meaning set forth below. Except as
otherwise provided in this Article, all defined terms shall have the meaning
given to them in Section 2.1 of the Plan.
          (a) Agreement. The 1999 Employee Programs Agreement between PepsiCo,
Inc. and The Pepsi Bottling Group, Inc.
          (b) Close of the Distribution Date. This term shall take the
definition given it in the Agreement.
          (c) Transferred Individual. This term shall take the definition given
it in the Agreement.
          (d) Transition Individual. This term shall take the definition given
it in the Agreement.
     IPO.3 Rights of Transferred and Transition Individuals. All Transferred
Individuals who participated in the PepsiCo Prior Plan immediately prior to the
Effective Date shall be Participants in this Plan as of the Effective Date. The
spinoff of this Plan from the PepsiCo Prior Plan shall not result in a break in
the Service or Credited Service of Transferred Individuals or Transition
Individuals. Notwithstanding anything in the Plan to the contrary, and as
provided in Section 2.04 of the Agreement, all service, all compensation, and
all other benefit-affecting determinations for Transferred Individuals that, as
of the Close of the Distribution Date, were recognized under the PepsiCo Prior
Plan for periods immediately before such date, shall as of the Effective Date
continue to receive full recognition, credit and validity and shall be taken
into account under this Plan as if such items occurred under this Plan, except
to the extent that duplication of benefits would result. Similarly,
notwithstanding anything to the contrary in the Plan, the benefits of Transition
Individuals shall be determined in accordance with section 8.02 of the
Agreement.

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Article B – Special Cases
     B.1 This Article B of the Appendix supplements the main portion of the Plan
document and is effective as of January 28, 2002.
     B.2 This Article shall apply to certain highly compensated management
individuals who were (i) hired as a Band IV on or about January 28, 2002 and
(ii) designated by the Senior Vice President of Human Resources as eligible to
receive a supplemental retirement benefit (the “Participant”).
     B.3 Notwithstanding Article IV of the Plan, the amount of the total PEP
Pension under this Plan shall be equal to the excess of (1) the monthly pension
benefit which would have been payable to such individual under the Salaried Plan
without regard to the Compensation Limitation and the Section 415 Limitation,
determined as if such individual’s employment commencement date with the Company
were September 10, 1990; (2) the sum of (i) the amount of the monthly pension
benefit that is in fact payable under the Salaried Plan; and (ii) the monthly
amount of such individual’s deferred, vested benefit under any qualified or
nonqualified defined benefit pension plan maintained by PepsiCo., Inc. or any
affiliate of PepsiCo., Inc., Tricom or YUM!, as determined by the administrator
using reasonable assumptions to adjust for different commencement dates so that
the total benefit of such individual does not exceed the amount described in
(1) above.
     B.4 In the event of the death of such individual while employed by the
Company, the individual’s beneficiary shall be entitled to a death benefit as
provided in Article V, determined based on the formula for the total benefit
described above, and reduced by the survivor benefits payable by the Salaried
Plan and the other plans described above. The net amount so determined shall be
payable in a Single Lump Sum as prescribed in Article V.
     B.5 The Plan Administrator shall, in its sole discretion, adjust any
benefit determined pursuant to this Article B to the extend necessary or
appropriate to ensure that such individual’s benefit in the aggregate does not
exceed the Company’s intent to ensure overall pension benefits equal to the
benefits that would be applicable if such individual had been continuously
employed by the Company for the period commencing September 10, 1990 to the date
of Separation from Service.

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Article C – Transfers From/To PepsiCo, Inc.
     C.1 This Article supplements and overrides the main portion of the Plan
with respect to Participants who (i) transfer from the Company to PepsiCo, Inc.;
and (ii) transfer from PepsiCo, Inc. to the Company.
     C.2 Notwithstanding Article IV of the Plan, the PEP Pension of a
Participant who (i) transfers from the Company to PepsiCo., Inc. or
(ii) transfers to PepsiCo, Inc. from the Company shall be determined as set
forth below.
     C.3 Transfers to PepsiCo, Inc. The PEP Pension of a Participant who
transfers to PepsiCo, Inc. shall be determined as of the date of such transfer
in the manner described in Article IV, including the Salaried Plan offset
regardless of whether such benefit under the Salaried Plan is transferred to a
qualified plan of PepsiCo, Inc. On such Participant’s Separation from Service,
the PEP Pension so determined shall become payable in accordance with
Article VI.
     C.4 Transfers from PepsiCo., Inc. The PEP Pension of a Participant who
transfers from PepsiCo, Inc. shall be determined as of the date of the
Participant’s Separation from Service in the manner described in Article IV and
shall be reduced by any benefit accrued by the Participant under any qualified
or nonqualified plan maintained by PepsiCo, Inc. that is based on credited
service included in the determination of the Participant’s benefit under this
Plan so that the total benefit from all plans does not exceed the benefit the
Participant would have received had the Participant been solely employed by the
Company. The Plan Administrator shall make such adjustments as the Plan
Administrator deems appropriate to effectuate the intent of this Section C.4.

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