EXHIBIT 10.46

PEPSICO

PENSION EQUALIZATION PLAN

(PEP)

Plan Document for the Section 409A Program

(January 1, 2005 Restatement, As Amended Through December 2008)

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PEPSICO PENSION EQUALIZATION PLAN

Table of Contents

 

         

Page No.

ARTICLE I FOREWORD

   I-1

ARTICLE II DEFINITIONS AND CONSTRUCTION

   II-1

2.1

  

Definitions

   II-1

2.2

  

Construction

   II-17

ARTICLE III PARTICIPATION AND SERVICE

   III-1

3.1

  

Participation

   III-1

3.2

  

Service

   III-1

3.3

  

Credited Service

   III-1

ARTICLE IV REQUIREMENTS FOR BENEFITS

   IV-1

4.1

  

Normal 409A Retirement Pension

   IV-1

4.2

  

Early 409A Retirement Pension

   IV-1

4.3

  

409A Vested Pension

   IV-1

4.4

  

Late 409A Retirement Pension

   IV-1

4.5

  

409A Disability Pension

   IV-2

4.6

  

Pre-Retirement Spouse’s 409A Pension

   IV-2

4.7

  

Vesting

   IV-3

4.8

  

Time of Payment

   IV-3

4.9

  

Cashout Distributions

   IV-4

4.10

  

Reemployment of Certain Participants

   IV-4

4.11

  

Forfeiture of Benefits

   IV-4

 

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ARTICLE V AMOUNT OF RETIREMENT PENSION

   V-1

5.1

  

Participant’s 409A Pension:

   V-1

5.2

  

PEP Guarantee

   V-2

5.3

  

Amount of Pre-Retirement Spouse’s 409A Pension

   V-8

5.4

  

Certain Adjustments

   V-10

5.5

  

Excludable Employment

   V-11

5.6

  

Pre- 409A Pension:

   V-12

5.7

  

Offset

   V-12

ARTICLE VI DISTRIBUTION OF BENEFITS

   VI-1

6.1

  

Form and Timing of Distributions

   VI-1

6.2

  

Available Forms of Payment

   VI-4

6.3

  

Procedures for Elections

   VI-7

6.4

  

Special Rules for Survivor Options

   VI-8

6.5

  

Designation of Beneficiary

   VI-9

6.6

  

Required Delay for Key Employees

   VI-10

6.7

  

Payment of FICA and Related Income Taxes

   VI-11

ARTICLE VII ADMINISTRATION

   VII-1

7.1

  

Authority to Administer Plan

   VII-1

7.2

  

Facility of Payment

   VII-1

7.3

  

Claims Procedure

   VII-1

7.4

  

Effect of Specific References

   VII-4

 

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ARTICLE VIII MISCELLANEOUS

   VIII-1

8.1

  

Nonguarantee of Employment

   VIII-1

8.2

  

Nonalienation of Benefits

   VIII-1

8.3

  

Unfunded Plan

   VIII-1

8.4

  

Action by the Company

   VIII-1

8.5

  

Indemnification

   VIII-2

8.6

  

Compliance with Section 409A:

   VIII-2

8.7

  

Authorized Transfers

   VIII-3

ARTICLE IX AMENDMENT AND TERMINATION

   IX-1

9.1

  

Continuation of the Plan

   IX-1

9.2

  

Amendments

   IX-1

9.3

  

Termination

   IX-1

9.4

  

Change in Control

   IX-2

ARTICLE X ERISA PLAN STRUCTURE

   X-1

ARTICLE XI APPLICABLE LAW

   XI-1

ARTICLE XII SIGNATURE

   XII-1

APPENDIX

   1

ARTICLE A TRANSITION PROVISIONS

   2

ARTICLE B

  

COMPUTATION OF HIGHEST AVERAGE MONTHLY EARNINGS DURING CERTAIN SEVERANCE WINDOWS

   15

ARTICLE C INTERNATIONAL TRANSFER PARTICIPANTS

   18

 

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ARTICLE I

Foreword

The PepsiCo Pension Equalization Plan (“PEP” or “Plan”) has been established by
PepsiCo for the benefit of salaried employees of the PepsiCo Organization who
participate in the PepsiCo Salaried Employees Retirement Plan (“Salaried Plan”).
PEP 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, PEP provides benefits for certain eligible
employees based on the pre-1989 Salaried Plan formula.

The Plan was last amended and restated in its entirety effective as of
January 1, 1989, and this restatement was subsequently amended.

This document is effective as of January 1, 2005 (the “Effective Date”). It sets
forth the terms of the Plan that are applicable to benefits that are subject to
Section 409A, i.e., generally, benefits that are earned or vested after
December 31, 2004 (the “409A Program”). All other benefits under the Plan shall
be governed by the document referenced in the preceding paragraph, which sets
forth the pre-Section 409A terms of the Plan (the “Pre-409A Program”). Together,
this document and the document for the Pre-409A Program describe the terms of a
single plan. However, amounts subject to the terms of this 409A Program and
amounts subject to the terms of the Pre-409A Program shall be tracked separately
at all times. The preservation of the terms of the Pre-409A Program, without
material modification, and the separation between the 409A Program amounts and
the Pre-409A Program amounts are intended to be sufficient to permit the
pre-409A Program to remain exempt from Section 409A as grandfathered benefits.

 

I-1

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ARTICLE II

Definitions and Construction

2.1 Definitions: This section provides definitions for certain words and phrases
listed below. These definitions can be found on the pages indicated.

 

         

Page

(a)

  

Accrued Benefit

   II-2  

(b)

  

Actuarial Equivalent

   II-2  

(c)

  

Annuity

   II-3  

(d)

  

Annuity Starting Date

   II-4  

(e)

  

Code

   II-4  

(f)

  

Company

   II-4  

(g)

  

Covered Compensation

   II-4  

(h)

  

Credited Service

   II-4  

(i)

  

Disability Retirement Pension

   II-4  

(j)

  

Early Retirement Pension

   II-4  

(k)

  

Effective Date

   II-4  

(l)

  

Elapsed Time Service

   II-5  

(m)

  

Eligible Spouse

   II-5  

(n)

  

Employee

   II-5  

(o)

  

Employer

   II-5  

(p)

  

ERISA

   II-5  

(q)

  

FICA Amount

   II-5  

(r)

  

409A Program

   II-6  

(s)

  

Highest Average Monthly Earnings

   II-6  

(t)

  

Key Employee

   II-6  

(u)

  

Late Retirement Date

   II-8  

(v)

  

Late 409A Retirement Pension

   II-8  

(w)

  

Normal Retirement Age

   II-8  

(x)

  

Normal Retirement Date

   II-8  

(y)

  

Normal 409A Retirement Pension

   II-8  

(z)

  

Participant

   II-8  

(aa)

  

Pension

   II-8  

(bb)

  

PepsiCo Organization

   II-9  

(cc)

  

Plan

   II-9  

(dd)

  

Plan Administrator

   II-9  

(ee)

  

Plan Year

   II-9  

(ff)

  

Pre-409A Program

   II-9  

(gg)

  

Pre-Retirement Spouse’s Pension

   II-9  

(hh)

  

Primary Social Security Amount

   II-10

(ii)

  

Prohibited Misconduct

   II-11

(jj)

  

Qualified Joint and Survivor Annuity

   II-13

(kk)

  

Retirement

   II-14

 

II-1

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(ll)

  

Retirement Date

   II-14

(mm)

  

Retirement Pension

   II-14

(nn)

  

Salaried Plan

   II-14

(oo)

  

Section 409A

   II-14

(pp)

  

Separation from Service

   II-14

(qq)

  

Service

   II-16

(rr)

  

Single Life Annuity

   II-16

(ss)

  

Single Lump Sum

   II-16

(tt)

  

Social Security Act

   II-17

(uu)

  

Taxable Wage Base

   II-17

(vv)

  

Vested Pension

   II-17

Where the following words and phrases, in boldface and underlined, appear in
this Plan (including the Foreword) with initial capitals they shall have the
meaning set forth below, unless a different meaning is plainly required by the
context.

(a) Accrued Benefit: The Pension payable at Normal Retirement Date determined in
accordance with Article V, based on the Participant’s Highest Average Monthly
Earnings and Credited Service at the date of determination.

(b) 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 set forth
below. The application of the following assumptions to the computation of
benefits payable under the Plan shall be done in a uniform and consistent
manner. In the event the Plan is amended to provide new rights, features or
benefits, the following actuarial factors shall not apply to these new elements
unless specifically adopted by the amendment.

(1) Annuities and Inflation Protection: To determine the amount of a Pension
payable in the form of a Qualified Joint and Survivor Annuity or optional form
of survivor annuity, as an annuity with inflation protection, or as a period
certain and life annuity, the Plan Administrator shall

 

II-2

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select the factors that are to be used. Effective January 1, 2009, the initial
factors selected by the Plan Administrator are set forth in Schedule 1, below
(prior factors appear in the Appendix). Thereafter, the Plan Administrator shall
review such initial factors from time to time and shall amend such factors in
its discretion. A Participant shall have no right to have any of the actuarial
factors specified under the Plan from time to time applied to his benefit (or
any portion thereof), except to the extent that a particular factor is currently
in effect at the time it is to be applied under the Plan. For the avoidance of
doubt, it is expressly intended and binding upon Participants that any actuarial
factors selected by the Plan Administrator from time-to-time may be applied
retroactively to already accrued benefits, and without regard to the actuarial
factors that may have applied previously for such purpose.

SCHEDULE 1

 

Date

 

Mortality Table Factors

 

Interest Rate Factor

January 1, 2009-Present   GAR 94   5%

(2) Lump Sums: To determine the lump sum value of a Pension, or a Pre-Retirement
Spouse’s Pension under Section 4.6, the factors applicable for such purposes
under the Salaried Plan shall apply.

(3) Other Cases: To determine the adjustment to be made in the Pension payable
to or on behalf of a Participant in other cases, the factors are those
applicable for such purpose under the Salaried Plan.

(c) Annuity: A Pension payable as a series of monthly payments for at least the
life of the Participant.

 

II-3

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(d) Annuity Starting Date: The Annuity Starting Date shall be the first day of
the first period for which an amount is payable under this Plan as an annuity or
in any other form. A Participant who: (1) is reemployed after his initial
Annuity Starting Date, and (2) is entitled to benefits hereunder after his
reemployment, shall have a subsequent Annuity Starting Date for such benefits
only to the extent provided in Section 6.3(b).

(e) Code: The Internal Revenue Code of 1986, as amended from time to time. All
references herein to particular Code Sections shall also refer to any successor
provisions and shall include all related regulations, interpretations and other
guidance.

(f) Company: PepsiCo, Inc., a corporation organized and existing under the laws
of the State of North Carolina or its successor or successors.

(g) Covered Compensation: “Covered Compensation” as that term is defined in the
Salaried Plan.

(h) Credited Service: The period of a Participant’s employment, calculated in
accordance with Section 3.3, which is counted for purposes of determining the
amount of benefits payable to, or on behalf of, the Participant.

(i) Disability Retirement Pension: The Retirement Pension available to a
Participant under Section 4.5.

(j) Early 409A Retirement Pension: The 409A Retirement Pension available to a
Participant under Section 4.2.

(k) Effective Date: The date upon which this document for the 409A Program is
effective, January 1, 2005. Certain identified provisions of the 409A Program or
the Plan may be effective on different dates, to the extent noted herein.

 

II-4

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(l) Elapsed Time Service: The period of time beginning with a Participant’s
first date of employment with the PepsiCo Organization and ending with the
Participant’s Final Separation from Service, irrespective of any breaks in
service between those two dates. By way of illustration, if a Participant began
employment with the PepsiCo Organization on January 1, 2000, left the employment
of the PepsiCo Organization from January 1, 2001 until December 31, 2004, and
was then reemployed by the PepsiCo Organization on January 1, 2005 until he had
a Final Separation from Service on December 31, 2008, the Participant would have
eight years of Elapsed Time Service as of his Final Separation from Service.

(m) Eligible Spouse: The spouse of a Participant to whom the Participant is
married on the earlier of the Participant’s Annuity Starting Date or the date of
the Participant’s death.

(n) Employee: An individual who qualifies as an “Employee” as that term is
defined in the Salaried Plan.

(o) Employer: An entity that qualifies as an “Employer” as that term is defined
in the Salaried Plan.

(p) ERISA: Public Law No. 93-406, the Employee Retirement Income Security Act of
1974, including any amendments thereto, any similar subsequent federal laws, and
any rules and regulations from time to time in effect under any of such laws.

(q) FICA Amount: The Participant’s share of the Federal Insurance Contributions
Act (FICA) tax imposed on the 409A Pension and Pre-409A Pension of the
Participant under Code Sections 3101, 3121(a) and 3121(v)(2).

 

II-5

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(r) 409A Program: The program described in this document. The term “409A
Program” is used to identify the portion of the Plan that is subject to
Section 409A.

(s) Highest Average Monthly Earnings: “Highest Average Monthly Earnings” as that
term is defined in the Salaried Plan, but without regard to the limitation
imposed by section 401(a)(17) of the Code (as such limitation is interpreted and
applied under the Salaried Plan). Notwithstanding the foregoing, to the extent
that a Participant receives, during a leave of absence, earnings that would be
counted as Highest Average Monthly Earnings if they were received during a
period of active service, but that will be received after the Participant’s
Separation from Service, the Plan Administrator may provide for determining the
Participant’s 409A Pension at Separation from Service by projecting the benefit
the Participant would have if all such earnings were taken into account under
the Plan.

(t) Key Employee: The individuals identified in accordance with the following
paragraphs.

(1) In General. Any Participant who at any time during the applicable year is:

(i) An officer of any member of the PepsiCo Organization having annual
compensation greater than $130,000 (as adjusted for the applicable year under
Code Section 416(i)(1));

(ii) A 5-percent owner of any member of the PepsiCo Organization; or

(iii) A 1-percent owner of any member of the PepsiCo Organization having annual
compensation of more than $150,000.

 

II-6

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For purposes of subparagraph (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 Treas. 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 Key Employee in accordance with Code Section 416(i) (provided, that Code
Section 416(i)(5) shall not apply in making such determination), and provided
further than 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.

(2) Applicable Year. Effective from and after December 31, 2007, the Plan
Administrator shall determine Key Employees effective 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 (e.g., the Key Employee
determination by the Plan Administrator as of December 31, 2008 shall apply to
the period from April 1, 2009 to March 31, 2010).

(3) Rule of Administrative Convenience. Effective from and after December 31,
2007, in addition to the foregoing, the Plan Administrator shall treat all other
employees classified as Band IV and above on the applicable determination date
prescribed in paragraph (2) (i.e., the period commencing on April 1st of the
next following calendar year) as Key Employees for purposes of

 

II-7

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the Plan for the twelve-month period commencing on April 1st of the next
following calendar year; provided that if this would result in counting more
than 200 individuals as Key Employees as of any such determination date, then
the number treated as Key Employees will be reduced to 200 by eliminating from
consideration those employees otherwise added by this paragraph (3) in order by
their base compensation, from the lowest to the highest.

(u) Late Retirement Date: The Late Retirement Date shall be the first day of the
month coincident with or immediately following a Participant’s actual Retirement
Date occurring after his Normal Retirement Age.

(v) Late 409A Retirement Pension: The 409A Retirement Pension available to a
Participant under Section 4.4.

(w) Normal Retirement Age: The Normal Retirement Age under the Plan is age 65
or, if later, the age at which a Participant first has 5 Years of Elapsed Time
Service.

(x) Normal Retirement Date: A Participant’s Normal Retirement Date shall be the
first day of the month coincident with or immediately following a Participant’s
Normal Retirement Age.

(y) Normal 409A Retirement Pension: The Retirement Pension available to a
Participant under Section 4.1.

(z) Participant: An Employee participating in the Plan in accordance with the
provisions of Section 3.1.

(aa) Pension: One or more payments that are payable by the Plan to a person who
is entitled to receive benefits under the Plan. The term “409A Pension” shall

 

II-8

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be used to refer to the portion of a Pension that is derived from the 409A
Program. The term “Pre-409A Pension” shall be used to refer to the portion of a
Pension that is derived from the Pre-409A Program.

(bb) PepsiCo 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 PepsiCo Organization
only during the period it is one of the group of organizations described in the
preceding sentence.

(cc) Plan: The PepsiCo Pension Equalization Plan, the Plan set forth herein and
in the Pre-409A Program document(s), as the Plan may be amended from time to
time (subject to the limitations on amendment that are applicable hereunder and
under the Pre-409A Program). The Plan is also sometimes referred to as PEP, or
as the PepsiCo Pension Benefit Equalization Plan.

(dd) Plan Administrator: The PepsiCo Administration Committee (PAC), which shall
have authority to administer the Plan as provided in Article VII.

(ee) Plan Year: The 12-month period commencing on January 1 and ending on
December 31.

(ff) Pre-409A Program: The portion of the Plan that governs deferrals that are
not subject to Section 409A. The terms of the Pre-409A Program are set forth in
a separate document (or separate set of documents).

(gg) Pre-Retirement Spouse’s Pension: The Pension available to an Eligible
Spouse under the Plan. The term “Pre-Retirement Spouse’s 409A Pension” shall be
used to refer to the Pension available to an Eligible Spouse under Section 4.6
of this document.

 

II-9

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(hh) 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 Separation from Service are equal to the Taxable Wage Base in such year, and

(ii) That he will not receive any social security wages after Retirement or
Separation from Service.

However, in computing a Vested Pension under Formula A of Section 5.2, 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 Separation from Service. For purposes of this subsection,
“social security wages” shall mean wages within the meaning of the Social
Security Act.

 

II-10

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(2) For purposes of determining the amount of a Disability Pension, the Primary
Social Security Amount shall be (except as provided in the next sentence) the
initial monthly amount actually received by the disabled Participant as a
disability insurance benefit under the provisions of Title II of the Social
Security Act, as amended and in effect at the time of the Participant’s
Retirement due to disability. Notwithstanding the preceding sentence, for any
period that a Participant receives a Disability Pension before receiving a
disability insurance benefit under the provisions of Title II of the Social
Security Act, then the Participant’s Primary Social Security Amount for such
period shall be determined pursuant to paragraph (1) above.

(3) For purposes of paragraphs (1) and (2), 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
Separation from Service, without regard to any increases in the social security
wage base or benefit levels provided by such Act which take effect thereafter.

(ii) Prohibited Misconduct: Any of the following activities engaged in, directly
or indirectly, by a Participant shall constitute Prohibited Misconduct:

(1) The Participant accepting any employment, assignment, position or
responsibility, or acquiring any ownership interest, which involves the
Participant’s “Participation” (as defined below) in a business entity that
markets, sells, distributes or produces “Covered Products” (as defined below),
unless such business entity makes retail sales or consumes Covered Products
without in any way competing with the PepsiCo Organization.

 

II-11

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(2) The Participant, directly or indirectly (including through someone else
acting on the Participant’s recommendation, suggestion, identification or
advice), soliciting any PepsiCo Organization employee to leave the PepsiCo
Organization’s employment or to accept any position with any other entity.

(3) The Participant using or disclosing to anyone any confidential information
regarding the PepsiCo Organization other than as necessary in his or her
position with the PepsiCo Organization. Such confidential information shall
include all non-public information the Participant acquired as a result of his
or her positions with the PepsiCo Organization which might be of any value to a
competitor of the PepsiCo Organization, or which might cause any economic loss
or substantial embarrassment to the PepsiCo Organization or its customers,
bottlers, distributors or suppliers if used or disclosed. Examples of such
confidential information include non-public information about the PepsiCo
Organization’s customers, suppliers, distributors and potential acquisition
targets; its business operations and structure; its product lines, formulas and
pricing; its processes, machines and inventions; its research and know-how; its
financial data; and its plans and strategies.

(4) The Participant engaging in any acts that are considered to be contrary to
the PepsiCo Organization’s best interests, including violating the Company’s
Code of Conduct, engaging in unlawful trading in the securities of the

 

II-12

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Company or of any other company based on information gained as a result of his
or her employment with the PepsiCo Organization, or engaging in any other
activity which constitutes gross misconduct.

(5) The Participant engaging in any activity that constitutes fraud.

For purposes of this subsection, “Participation” shall be construed broadly to
include: (i) serving as a director, officer, employee, consultant or contractor
with respect to such a business entity; (ii) providing input, advice, guidance
or suggestions to such a business entity; or (iii) providing a recommendation or
testimonial on behalf of such a business entity or one or more products it
produces. For purposes of this subsection, “Covered Products” shall mean any
product that falls into one or more of the following categories, so long as the
PepsiCo Organization is producing, marketing, selling or licensing such product
anywhere in the world – beverages, including without limitation carbonated soft
drinks, tea, water, juice drinks, sports drinks, coffee drinks and value-added
dairy drinks; juices and juice products; snacks, including salty snacks, sweet
snacks meat snacks, granola and cereal bars, and cookies; hot cereals; pancake
mixes; value-added rice products; pancake syrups; value-added pasta products;
ready-to-eat cereals; dry pasta products; or any product or service that the
Participant had reason to know was under development by the PepsiCo Organization
during the Participant’s employment with the PepsiCo Organization.

(jj) Qualified Joint and Survivor Annuity: An Annuity which is payable to the
Participant for life with 50 percent of the amount of such Annuity payable after
the Participant’s death to his surviving Eligible Spouse for life. If the
Eligible

 

II-13

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Spouse predeceases the Participant, no survivor benefit under a Qualified Joint
and Survivor Annuity shall be payable to any person. The amount of a
Participant’s monthly payment under a Qualified Joint and Survivor Annuity shall
be reduced to the extent provided in Sections 5.1 and 5.2, as applicable.

(kk) Retirement: Separation from Service for reasons other than death after a
Participant has fulfilled the requirements for either a Normal, Early, Late, or
Disability Retirement Pension under Article IV.

(ll) Retirement Date: The date immediately following the Participant’s
Retirement.

(mm) Retirement Pension: The Pension payable to a Participant upon Retirement
under the Plan. The term “409A Retirement Pension” shall be used to refer to the
portion of a Retirement Pension that is derived from the 409A Program. The term
“Pre-409A Retirement Pension” shall be used to refer to the portion of a
Retirement Pension that is derived from the Pre-409A Program.

(nn) Salaried Plan: The PepsiCo Salaried Employees Retirement Plan, as it may be
amended from time to time.

(oo) Section 409A: Section 409A of the Code.

(pp) Separation from Service: A Participant’s separation from service with the
PepsiCo Organization, within the meaning of Section 409A(a)(2)(A)(i). The term
may also be used as a verb (i.e., “Separates from Service”) with no change in
meaning. Notwithstanding the preceding sentence, a Participant’s transfer to an
entity owned 20% or more by the Company will not constitute a Separation of
Service to the extent permitted by Section 409A. A Participant’s “Final
Separation from Service” is the

 

II-14

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date of his Separation from Service that most recently precedes his Annuity
Starting Date; provided, however, that to the extent a Participant is reemployed
after an Annuity Starting Date, he will have a new Final Separation from Service
with respect to any benefits to which he becomes entitled as a result of his
reemployment. The following principles shall generally apply in determining when
a Separation from Service occurs:

(1) A Participant separates from service with the Company if the Employee dies,
retires, or otherwise has a termination of employment with the Company. Whether
a termination of employment has occurred is determined based on whether the
facts and circumstance indicate that the Company and the Employee reasonably
anticipated that no further services would be performed after a certain date or
that the level of bona fide services the Employee would perform after such date
(as an employee or independent contractor) would permanently decrease to no more
than 20 percent of the average level of bona fide services performed over the
immediately preceding 36-month period (or the full period in which the Employee
provided services to the Company if the Employee has been providing services for
less than 36 months).

(2) An Employee will not be deemed to have experienced a Separation from Service
if such Employee is on military leave, sick leave, or other bona fide leave of
absence, to the extent such leave does not exceed a period of six months or, if
longer, such longer period of time during which a right to re-employment is
protected by either statute or contract. If the period of leave exceeds six
months and the individual does not retain a right to re-employment under an
applicable statute or by contract, the employment relationship is deemed

 

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to terminate on the first date immediately following such six-month period.
Notwithstanding the foregoing, where a leave of absence is due to any medically
determinable physical or mental impairment that can be expected to result in
death or can be expected to last for a continuous period of not less than six
months, where such impairment causes the Employee to be unable to perform the
duties of his or her position of employment or any substantially similar
position of employment, a 29-month period of absence may be substituted for such
six-month period.

(3) If an Employee provides services both an as employee and as a member of the
Board of Directors of the Company, the services provided as a Director are
generally not taken into account in determining whether the Employee has
Separated from Service as an Employee for purposes of the Plan, in accordance
with final regulations under Section 409A.

(qq) Service: The period of a Participant’s employment calculated in accordance
with Section 3.2 for purposes of determining his entitlement to benefits under
the Plan.

(rr) Single Life Annuity: A level monthly Annuity payable to a Participant for
his life only, with no survivor benefits to his Eligible Spouse or any other
person.

(ss) Single Lump Sum: The distribution of a Participant’s total 409A Pension in
the form of a single payment, which payment shall be the Actuarial Equivalent of
the Participant’s 409A Pension as of the Participant’s Normal Retirement Date
(or Late Retirement Date, if applicable), but not less than the Actuarial
Equivalent of the Participant’s 409A Pension as of the Participant’s Early
Retirement Date, in the case of a Participant who is entitled to an immediate
Early 409A Retirement Pension.

 

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(tt) Social Security Act: The Social Security Act of the United States, as
amended, an enactment providing governmental benefits in connection with events
such as old age, death and disability. Any reference herein to the Social
Security Act (or any of the benefits provided thereunder) shall be taken as a
reference to any comparable governmental program of another country, as
determined by the Plan Administrator, but only to the extent the Plan
Administrator judges the computation of those benefits to be administratively
feasible.

(uu) Taxable Wage Base: The contribution and benefit base (as determined under
section 230 of the Social Security Act) in effect for the Plan Year.

(vv) Vested Pension: The Pension available to a Participant under Section 4.3.
The term “409A Vested Pension” shall be used to refer to the portion of a Vested
Pension that is derived from the 409A Program. The term “Pre-409A Vested
Pension” shall be used to refer to the portion of a Vested Pension that is
derived from the Pre-409A Program.

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.

 

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(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.

(c) Examples: Whenever an example is provided or the text uses the term
“including” followed by a specific item or items, or there is a passage having a
similar effect, such passages of the Plan shall be construed as if the phrase
“without limitation” followed such example or term (or otherwise applied to such
passage in a manner that avoids limits on its breadth of application).

(d) Subdivisions of the Plan Document: This Plan document is divided and
subdivided using the following progression: articles, sections, subsections,
paragraphs, subparagraphs, clauses, and sub-clauses. Articles are designated by
capital roman numerals. Sections are designated by Arabic numerals containing a
decimal point. Subsections are designated by lower-case letters in parentheses.
Paragraphs are designated by Arabic numerals in parentheses. Subparagraphs are
designated by lower-case roman numerals in parentheses. Clauses are designated
by upper-case letters in parentheses. Sub-clauses are designated by upper-case
roman numerals in parentheses. Any reference in a section to a subsection (with
no accompanying section reference) shall be read as a reference to the
subsection with the specified designation contained in that same section. A
similar rule shall apply with respect to paragraph references within a
subsection and subparagraph references within a paragraph.

 

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ARTICLE III

Participation and Service

3.1 Participation: An Employee shall be a Participant in the Plan during the
period:

(a) When he would be currently entitled to receive a Pension under the Plan if
his employment terminated at such time, or

(b) When he would be so entitled but for the vesting requirement of Section 4.7.

It is expressly contemplated that an Employee, who is entitled to receive a
Pension under the Plan as of a particular time, may subsequently cease to be
entitled to receive a Pension under the Plan.

3.2 Service: A Participant’s entitlement to a Pension and to a Pre-Retirement
Spouse’s Pension for his Eligible Spouse shall be determined under Article IV
based upon his period of Service. A Participant’s period of Service shall be
determined under Article III of the Salaried Plan. If a Participant’s period of
Service (as so determined) would extend beyond the Participant’s Separation from
Service date because of a leave of absence, the Plan Administrator may provide
for determining the Participant’s 409A Pension at Separation from Service by
projecting the benefit the Participant would have if all such Service were taken
into account under the Plan.

3.3 Credited Service: The amount of a Participant’s Pension and a Pre-Retirement
Spouse’s Pension shall be based upon the Participant’s period of Credited
Service, as determined under Article III of the Salaried Plan. If a
Participant’s period of Credited Service (as so determined) would extend beyond
the Participant’s Separation from Service date because

 

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of a leave of absence, the Plan Administrator may provide for determining the
Participant’s 409A Pension at Separation from Service by projecting the benefit
the Participant would have if all such Service were taken into account under the
Plan.

 

III-2

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ARTICLE IV

Requirements for Benefits

A Participant shall be eligible to receive a Pension and a surviving Eligible
Spouse shall be eligible for certain survivor benefits as provided in this
Article. The amount of any such Pension or survivor benefit shall be determined
in accordance with Article V.

4.1 Normal 409A Retirement Pension: A Participant shall be eligible for a Normal
409A Retirement Pension if he Separates from Service after attaining Normal
Retirement Age.

4.2 Early 409A Retirement Pension: A Participant shall be eligible for an Early
409A Retirement Pension if he Separates from Service prior to attaining Normal
Retirement Age but after attaining at least age 55 and completing 10 or more
years of Elapsed Time Service.

4.3 409A Vested Pension: A Participant who is vested under Section 4.7 shall be
eligible to receive a 409A Vested Pension if he Separates from Service before he
is eligible for a Normal 409A Retirement Pension or an Early 409A Retirement
Pension. A Participant who terminates employment prior to satisfying the vesting
requirement in Section 4.7 shall not be eligible to receive a Pension under this
Plan.

4.4 Late 409A Retirement Pension: A Participant who continues without a
Separation from Service after his Normal Retirement Age shall not receive a
Pension until his Late Retirement Date. Thereafter, a Participant shall be
eligible for a Late Retirement Pension determined in accordance with Section 4.4
of the Salaried Plan (but without regard to any requirement for notice of
suspension under ERISA section 203(a)(3)(B) or any adjustment as under
Section 5.5(d) of the Salaried Plan).

 

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4.5 409A Disability Pension: A Participant shall be eligible for a 409A
Disability Pension if he meets the requirements for a Disability Pension under
the Salaried Plan. A Participant’s 409A Disability Pension, if any, shall
generally be comprised of two parts. The first part shall represent the benefits
with respect to a disabled Participant’s Credited Service through the day of the
Participant’s Separation from Service (i.e., the Participant’s “Pre-Separation
Accruals”). In the event the disabled Participant continues to receive Credited
Service related to the disability after such Separation from Service, the
Participant’s 409A Disability Pension shall have a second part, which shall
represent all benefits accrued with respect to Credited Service from the date
immediately following the Participant’s Separation from Service until the
earliest of the Participant’s (i) attainment of age 65, (ii) benefit
commencement date under the Salaried Plan or (iii) recovery from the disability
(i.e., the Participant’s “Post-LTD Accruals”).

4.6 Pre-Retirement Spouse’s 409A Pension: A Pre-Retirement Spouse’s 409A Pension
is payable under this section only in the event the Participant dies prior to
his Annuity Starting Date. Any Pre-Retirement Spouse’s 409A Pension payable on
behalf of a Participant shall commence as of the first day of the month
following the later of (i) the Participant’s death and, (ii) the date the
Participant attains or would have attained age 55. Subject to Section 4.9, any
Pre-Retirement Spouse’s 409A Pension shall continue monthly for the life of the
Eligible Spouse.

(a) Active, Disabled and Retired Employees: A Pre-Retirement Spouse’s 409A
Pension shall be payable under this subsection to a Participant’s Eligible
Spouse (if any) who is entitled under the Salaried Plan to the pre-retirement
spouse’s pension for survivors of active, disabled and retired employees. The
amount (if any) of such Pension shall be determined in accordance with the
provisions of Section 5.3 (with the 409A Pension, if any, determined after
application of Section 5.6).

 

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(b) Vested Employees: A Pre-Retirement Spouse’s 409A Pension shall be payable
under this subsection to a Participant’s Eligible Spouse (if any) who is
entitled under the Salaried Plan to the pre-retirement spouse’s pension for
survivors of vested terminated Employees. The amount (if any) of such Pension
shall be determined in accordance with the provisions of Section 5.3 (with the
409A Pension, if any, determined after application of Section 5.6). If pursuant
to this Section 4.6(b) a Participant has Pre-Retirement Spouse’s coverage in
effect for his Eligible Spouse, any Pension calculated for the Participant under
Section 5.2(b) shall be reduced for each year such coverage is in effect by the
applicable percentage set forth below (based on the Participant’s age at the
time the coverage is in effect) with a pro rata reduction for any portion of a
year. No reduction shall be made for coverage in effect within the 90-day period
following a Participant’s termination of employment.

 

Attained Age

   Annual Charge  

Up to 35

   .0 %

35 — 39

   .075 %

40 — 44

   .1 %

45 — 49

   .175 %

50 — 54

   .3 %

55 — 59

   .5 %

60 — 64

   .5 %

4.7 Vesting: A Participant shall be fully vested in, and have a nonforfeitable
right to, his Accrued Benefit at the time he becomes fully vested in his accrued
benefit under the Salaried Plan.

4.8 Time of Payment: The distribution of a Participant’s 409A Pension shall
commence as of the time specified in Section 6.1, subject to Section 6.6.

 

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4.9 Cashout Distributions: Notwithstanding the availability or applicability of
a different form of payment under Article VI, the following rules shall apply in
the case of certain small benefit Annuity payments:

(a) Distribution of Participant’s Pension: If at a Participant’s Annuity
Starting Date the Actuarial Equivalent lump sum value of the Participant’s PEP
Pension is equal to or less than $15,000, the Plan Administrator shall
distribute to the Participant such lump sum value of the Participant’s PEP
Pension.

(b) Distribution of Pre-Retirement Spouse’s Pension Benefit: If at the time
payments are to commence to an Eligible Spouse under Section 4.6, the Actuarial
Equivalent lump sum value of the PEP Pre-Retirement Spouse’s Pension to be paid
is equal to or less than $15,000, the Plan Administrator shall distribute to the
Eligible Spouse such lump sum value of the PEP Pre-Retirement Spouse’s Pension.

Any lump sum distributed under this section shall be in lieu of the Pension that
otherwise would be distributable to the Participant or Eligible Spouse
hereunder.

4.10 Reemployment of Certain Participants: In the case of a current or former
Participant who is receiving his Pension as an Annuity under Section 6.1(b), and
who is reemployed and is eligible to re-participate in the Salaried Plan after
his Annuity Starting Date, payment of his 409A Pension will continue to be paid
in the same form as it was paid prior to his reemployment. Any additional 409A
Pension that is earned by the Participant shall be paid based on the Separation
from Service that follows the Participant’s re-employment.

4.11 Forfeiture of Benefits: Effective beginning with benefits accrued after
December 31, 2008 (“Post-2008 Accruals”), and notwithstanding any other
provision of this Plan to the contrary, if the Plan Administrator determines
that a Participant has engaged in Prohibited

 

IV-4

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Misconduct at any time prior to the second anniversary of his or her Separation
from Service, the Participant shall forfeit all Post-2008 Accruals (whether paid
previously, being paid currently or payable in the future), and his or her 409A
Pension shall be adjusted to reflect such forfeiture and previously paid
Post-2008 Accruals shall be recovered.

 

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ARTICLE V

Amount of Retirement Pension

When a 409A Pension becomes payable to or on behalf of a Participant under this
Plan, the amount of such 409A Pension shall be determined under Section 5.1 or
5.3 (whichever is applicable), subject to any adjustments required under
Sections 4.6(b) and 5.4.

5.1 Participant’s 409A Pension:

(a) Calculating the 409A Pension: A Participant’s 409A Pension shall be
calculated as follows (on the basis specified in subsection (b) below and using
the definitions appearing in subsection (c) below):

(1) His Total Pension, reduced by

(2) His Salaried Plan Pension, and then further reduced by (but not below zero)

(3) His Pre-409A Pension.

(b) Basis for Determining: The 409A Pension Benefit amount in subsection
(a) above shall be determined on a basis that takes into account applicable
reductions for early commencement and that reflects, as applicable, the relative
value of forms of payment.

(c) Definitions: The following definitions apply for purposes of this section.

(1) A Participant’s “Total Pension” means the greater of:

(i) The amount of the Participant’s pension determined under the terms of the
Salaried Plan, but without regard to: (A) the limitations imposed by sections
401(a)(17) and 415 of the Code (as such

 

V-1

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limitations are interpreted and applied under the Salaried Plan), and (B) the
actuarial adjustment under Section 5.7(d) of the Salaried Plan (relating to
benefits that are deferred beyond the Participant’s Normal Retirement Date); or

(ii) The amount (if any) of the Participant’s PEP Guarantee determined under
Section 5.2.

As necessary to ensure the Participant’s receipt of a “greater of” benefit, the
foregoing comparison shall be made by reflecting, as applicable, the relative
value of forms of payment.

(2) A Participant’s “Salaried Plan Pension” means the amount of the
Participant’s pension determined under the terms of the Salaried Plan.

(3) A Participant’s “Pre-409A Pension” means the amount of the Participant’s
pension determined under Section 5.6.

5.2 PEP Guarantee: A Participant who is eligible under subsection (a) below
shall be entitled to a PEP Guarantee benefit determined under subsection
(b) below. In the case of other Participants, the PEP Guarantee shall not apply.

(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, within the meaning of 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.

 

V-2

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(b) PEP Guarantee Formula: The amount of a Participant’s PEP Guarantee shall be
determined under the applicable formula in paragraph (1), subject to the special
rules in paragraph (2).

(1) Formulas: The amount of a Participant’s Pension under this paragraph shall
be determined in accordance with subparagraph (i) below. However, if the
Participant was actively employed by the PepsiCo Organization in a
classification eligible for the Salaried Plan prior to July 1, 1975, the amount
of his Pension under this paragraph shall be the greater of the amounts
determined under subparagraphs (i) and (ii), provided that subparagraph (ii)(B)
shall not apply in determining the amount of a Vested Pension.

(i) Formula A: The Pension amount under this subparagraph shall be:

(A) 3 percent of the Participant’s Highest Average Monthly Earnings for the
first 10 years of Credited Service, plus

(B) 1 percent of the Participant’s Highest Average Monthly Earnings for each
year of Credited Service in excess of 10 years, less

(C) 1-2/3 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 under this Formula A, the Pension
shall first be calculated on the basis of (I) the Credited Service the

 

V-3

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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 Separation from Service, 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
Separation from Service and the denominator of which is the years of Credited
Service he would have earned had he remained in the employ of an Employer until
his Normal Retirement Age.

(ii) Formula B: The Pension amount under this subparagraph shall be the greater
of (A) or (B) below:

(A) 1-1/2 percent of Highest Average Monthly Earnings times the number of years
of Credited Service, less 50 percent of the Participant’s Primary Social
Security Amount, or

(B) 3 percent of Highest Average Monthly Earnings times the number of years of
Credited Service up to 15 years, less 50 percent of the Participant’s Primary
Social Security Amount.

In determining the amount of a Disability Pension under Formula A or B above,
the Pension shall be calculated on the basis of the Participant’s Credited
Service (determined in accordance with Section 3.3(d)(3) of the Salaried Plan),
and his Highest Average Monthly Earnings and Primary Social Security Amount at
the date of disability.

 

V-4

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(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, 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.

(ii) Reductions: The following reductions shall apply in determining a
Participant’s PEP Guarantee.

 

V-5

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(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 Section 4.6(b)
reductions for any Pre-Retirement Spouse’s coverage shall apply.

(C) This clause applies if the Participant will receive his Pension in a form
that provides an Eligible Spouse benefit, continuing for the life of the
surviving spouse, that is greater than that provided under subparagraph (i). In
this instance, the Participant’s Pension 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 Pension otherwise payable under the foregoing
provisions of this section.

(D) This clause applies if the Participant will receive his Pension in a form
that provides a survivor annuity for a beneficiary who is not his Eligible
Spouse. In this instance, the Participant’s Pension 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.

 

V-6

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(E) This clause applies if the Participant will receive his Pension in a Annuity
form that includes inflation protection described in Section 6.2(b). In this
instance, the Participant’s Pension 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 Retirement Pension 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.

For purposes of this paragraph (2), actuarial equivalence shall be determined
taking into account the PEP Guarantee’s purpose to preserve substantially the
value of a benefit under the pre-1989 terms of the Plan and the 409A Plan’s
design that offers alternative annuities that are considered actuarial
equivalent for purposes of Section 409A (taking into account, without
limitation, the special rule for subsidized joint and survivor annuities in
Treasury Regulation § 1.409A-3(b)(ii)(C)).

 

V-7

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5.3 Amount of Pre-Retirement Spouse’s 409A Pension: The monthly amount of the
Pre-Retirement Spouse’s 409A Pension payable to a surviving Eligible Spouse
under Section 4.6 shall be determined under subsection (a) below.

(a) Calculation: An Eligible Spouse’s Pre-Retirement Spouse’s 409A Pension shall
be equal to:

(1) The Eligible Spouse’s Total Pre-Retirement Spouse’s Pension, reduced by

(2) The Eligible Spouse’s Salaried Plan Pre-Retirement Spouse’s Pension, and
then further reduced by (but not below zero)

(3) The Eligible Spouse’s Pre-Retirement Spouse’s Pension derived from the
Pre-409A Program.

(b) Definitions: The following definitions apply for purposes of this section.

(1) An Eligible Spouse’s “Total Pre-Retirement Spouse’s Pension” means the
greater of:

(i) The amount of the Eligible Spouse’s pre-retirement spouse’s pension
determined under the terms of the Salaried Plan, but without regard to: (A) the
limitations imposed by sections 401(a)(17) and 415 of the Code (as such
limitations are interpreted and applied under the Salaried Plan), and (B) the
actuarial adjustment under Section 5.5(d) of the Salaried Plan; or

(ii) The amount (if any) of the Eligible Spouse’s PEP Guarantee Pre-Retirement
Spouse’s Pension determined under subsection (c).

 

V-8

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In making this comparison, the benefits in subparagraphs (i) and (ii) above
shall be calculated as if payable as of what would be the Normal Retirement Date
of the Participant related to the Eligible Spouse.

(2) An “Eligible Spouse’s Salaried Plan Pre-Retirement Spouse’s Pension” means
the Pre-Retirement Spouse’s Pension that would be payable to the Eligible Spouse
under the terms of the Salaried Plan.

(3) An “Eligible Spouse’s Pre-Retirement Spouse’s Pension derived from the
Pre-409A Program” means the Pre-Retirement Spouse’s Pension that would be
payable to the Eligible Spouse under the terms of the Pre-409A Program.

(c) PEP Guarantee Pre-Retirement Spouse’s Pension: An Eligible Spouse’s PEP
Guarantee Pre-Retirement Spouse’s Pension shall be determined in accordance with
paragraph (1) or (2) below, whichever is applicable, with reference to the PEP
Guarantee (if any) that would have been available to the Participant under
Section 5.2.

(1) Normal Rule: The Pre-Retirement Spouse’s Pension payable under this
paragraph shall be equal to the amount that would be payable as a survivor
annuity, under a Qualified Joint and Survivor Annuity, if the Participant had:

(i) Separated from Service on the date of death (or, if earlier, his actual
Separation from Service);

(ii) Commenced a Qualified Joint and Survivor Annuity on the same date payments
of the Qualified Pre-Retirement Spouse’s Pension are to commence; and

 

V-9

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(iii) Died on the day immediately following such commencement.

(2) Special Rule for Active and Disabled Employees: Notwithstanding paragraph
(1) above, the Pre-Retirement Spouse’s Pension paid on behalf of a Participant
described in Section 4.6(a) shall not be less than an amount equal to 25 percent
of such Participant’s PEP Guarantee determined under Section 5.2. For this
purpose, Credited Service shall be determined as provided in Section 3.3(d)(2)
of the Salaried Plan, and the deceased Participant’s Highest Average Monthly
Earnings, Primary Social Security Amount and Covered Compensation shall be
determined as of his date of death. A Pre-Retirement Spouse’s Pension under this
paragraph is not reduced for early commencement.

Principles similar to those applicable under – (i) Section 5.1(b), and (ii) the
last sentence of Section 5.2(b)(2) shall apply in determining the Pre-Retirement
Spouse’s 409A Pension under this section.

5.4 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 PepsiCo Organization and if its
benefits are not based on participant pay deferrals.

(a) Adjustments for Rehired Participants: This subsection shall apply to a
current or former Participant who is reemployed after his Annuity Starting Date
and

 

V-10

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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 to the maximum
extent permissible under Section 409A. For this purpose and to the maximum
extent permissible under Section 409A, the PEP Guarantee under Section 5.2 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), then the PEP benefit for the Participant shall be recalculated to
the maximum extent permissible under Section 409A. 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 to the maximum extent permissible under Section 409A.

5.5 Excludable Employment: An executive who has signed a written agreement with
the Company pursuant to which the individual either (i) waives eligibility under
the Plan (even if the individual otherwise meets the definition of Employee
under the Plan), or (ii) agrees not to participate in the Plan, shall not
thereafter become entitled to a benefit or to any increase in benefits in
connection with such employment (whichever applies). Written agreements may be
entered into either before or after the executive becomes eligible for or begins
participation in the Plan, and such written agreement may take any form that is
deemed effective by the Company. This Section 5.5 shall apply with respect to
agreements that are entered into on or after January 1, 2009.

 

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5.6 Pre-409A Pension: A Participant’s Pre-409A Pension is the portion of the
Participant’s Pension that is grandfathered under Treasury Regulation §
1.409A-6(a)(3)(i) and (iv). Principles similar to those applicable under –
(i) Section 5.1(b), and (ii) the last sentence of Section 5.2(b)(2) shall apply
in determining the Pre-409A Pension under this section.

5.7 Offset: Notwithstanding any other provision of the Plan, the Company may
reduce the amount of any payment or benefit that is or would be payable to or on
behalf of a Participant by the amount of any obligation of the Participant to
the Company that is or becomes due and payable, provided that (1) the obligation
of the Participant to the Company was incurred during the employment
relationship, (2) the reduction during any Plan Year may not exceed the amount
allowed under Code Section 409A and (3) the reduction is made at the same time
and in the same amount as the obligation otherwise would have been due and
collectable from the Participant.

 

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ARTICLE VI

Distribution of Benefits

The terms of this Article govern (i) the distribution of benefits to a
Participant who becomes entitled to a 409A Pension, and (ii) the continuation of
benefits (if any) to such Participant’s beneficiary following the Participant’s
death. A Pre-Retirement Spouse’s Pension derived from the 409A Program shall be
payable as an Annuity for the life of the Eligible Spouse in all cases, subject
to Section 4.9 (cashout distributions). The distribution of a Pre-409A Pension
is governed by the terms of the Pre-409A Program.

6.1 Form and Timing of Distributions: Benefits under the 409A Program shall be
distributed as follows:

(a) 409A Retirement Pension: The following rules govern the distribution of a
Participant’s 409A Retirement Pension:

(1) Generally: A Participant’s 409A Retirement Pension shall be distributed as a
Single Lump Sum on the first day of the month that is coincident with or next
follows the Participant’s Retirement Date, subject to paragraph (2) and
Section 6.6 (delay for Key Employees).

(2) Prior Payment Election: Notwithstanding paragraph (1), a Participant who is
entitled to a 409A Retirement Pension and who made an election (i) up to and
including December 31, 2007, and (ii) at least six months prior to and in a
calendar year prior to the Participant’s Annuity Starting Date shall receive his
benefit in accordance with such payment election. A payment election allowed a
Participant to choose either (i) to receive a distribution of his benefit in an
Annuity form, (ii) to commence distribution of his benefit at a time

 

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other than as provided in paragraph 6.1(a)(1), or both (i) and (ii). A payment
election made by a Participant who is only eligible to receive a Vested Pension
on his Separation from Service shall be disregarded. Subject to Section 4.9
(cashouts), a Participant who has validly elected to receive an Annuity shall
receive his benefit as a Qualified Joint and Survivor Annuity if he is married
or as a Single Life Annuity if he is unmarried, unless he elects one of the
optional forms of payment described in Section 6.2 in accordance with the
election procedures in Section 6.3(a). A Participant shall be considered married
if he is married on his Annuity Starting Date (with such Annuity Starting Date
determined taking into account any election applicable under this subsection).
To the extent a Participant’s benefit commences later than it would under
paragraph 6.1(a)(1) as a result of an election under this paragraph 6.1(a)(2),
the Participant’s benefit will be paid with interest equal to that specified in
Section 2.1(b)(3), which interest shall be paid at the time elected by the
Participant under this paragraph 6.1(a)(2).

(b) 409A Vested Pension: Subject to Sections 4.9, Section 6.6 and subsection
(c) below, a Participant’s 409A Vested Pension shall be distributed in
accordance with paragraph (1) or (2) below, unless, in the case of a married
Participant (as determined under the standards in paragraph 6.1(a)(2), above),
he elects one of the optional forms of payment distributions in Section 6.2 in
accordance with the election procedures in Section 6.3(a):

(1) Separation Prior to Age 55: In the case of a Participant who Separates from
Service with at least five years of Service prior to attaining

 

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age 55, the Participant’s 409A Vested Pension shall be distributed as an Annuity
commencing on the first of the month that is coincident with or immediately
follows the date he attains age 55, which shall be the Annuity Starting Date of
his 409A Vested Pension. A distribution under this subsection shall be in the
form of a Qualified Joint and Survivor Annuity if the Participant is married, or
as a Single Life Annuity if he is not married. A Participant shall be considered
married for purposes of this paragraph if he is married on the Annuity Starting
Date of his 409A Vested Pension.

(2) Separation at Ages 55 Through 64: In the case of a Participant who Separates
from Service with at least five years but less than ten years of Service and on
or after attaining age 55 but prior to attaining age 65, the Participant’s 409A
Vested Pension shall be distributed as an Annuity (as provided in paragraph
(1) above) commencing on the first of the month that follows his Separation from
Service.

(c) Disability Pension: The portion of a Participant’s 409A Disability Pension
representing Pre-Separation Accruals shall be paid on the first day of the month
following the later of (i) the Participant’s attainment of age 55 and (ii) the
Participant’s Separation from Service. The available forms of payment for the
portion of a Participant’s 409A Disability Pension representing Pre-Separation
Accruals shall be those forms available to a Participant who is entitled to a
Vested Pension, as set forth in Section 6.2, below (including the different
forms available to a married versus an unmarried Participant). The portion of a
Participant’s 409A Disability Pension representing Post-LTD Accruals shall be
paid on the first day of the month following the Participant’s attainment of age
65 in a lump sum.

 

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6.2 Available Forms of Payment: This section sets forth the payment options
available to a Participant who is entitled to a Retirement Pension under
paragraph 6.1(a)(2) above or a Vested Pension under subsection 6.1(b) above.

(a) Basic Forms: A Participant who is entitled to a Retirement Pension may
choose one of the following optional forms of payment by making a valid election
in accordance with the election procedures in Section 6.3(a). A Participant who
is entitled to a Vested Pension and who is married on his Annuity Starting Date
may choose one of the optional forms of payment available under paragraphs (1),
2(ii) or 2(iii) below with his Eligible Spouse as his beneficiary (and no other
optional form of payment available under this subsection (a) shall be permitted
to such a Participant). A Participant who is entitled to a Vested Pension and
who is not married on his Annuity Starting Date shall receive a Single Life
Annuity. Each optional annuity is the actuarial equivalent of the Single Life
Annuity:

(1) Single Life Annuity Option: A Participant may receive his 409A Pension in
the form of a Single Life Annuity, which provides monthly payments ending with
the last payment due prior to his death.

(2) Survivor Options: A Participant may receive his 409A Pension in accordance
with one of the following survivor options:

(i) 100 Percent Survivor Option: The Participant shall receive a reduced 409A
Pension payable for life, ending with the last monthly payment due prior to his
death. Payments in the same reduced

 

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amount shall continue after the Participant’s death to his beneficiary for life,
beginning on the first day of the month coincident with or following the
Participant’s death and ending with the last monthly payment due prior to the
beneficiary’s death.

(ii) 75 Percent Survivor Option: The Participant shall receive a reduced 409A
Pension payable for life, ending with the last monthly payment due prior to his
death. Payments in the amount of 75 percent of such reduced 409A Pension shall
be continued after the Participant’s death to his beneficiary for life,
beginning on the first day of the month coincident with or following the
Participant’s death and ending with the last monthly payment due prior to the
beneficiary’s death.

(iii) 50 Percent Survivor Option: The Participant shall receive a reduced 409A
Pension payable for life, ending with the last monthly payment due prior to his
death. Payments in the amount of 50 percent of such reduced 409A Pension shall
be continued after the Participant’s death to his beneficiary for life,
beginning on the first day of the month coincident with or following the
Participant’s death and ending with the last monthly payment due prior to the
beneficiary’s death. A 50 percent survivor option under this paragraph shall be
a Qualified Joint and Survivor Annuity if the Participant’s beneficiary is his
Eligible Spouse.

(iv) Ten Years Certain and Life Option: The Participant shall receive a reduced
409A Pension which shall be payable monthly for his lifetime but for not less
than 120 months. If the retired Participant dies

 

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before 120 payments have been made, the monthly 409A Pension amount shall be
paid for the remainder of the 120 month period to the Participant’s primary
beneficiary (or if the primary beneficiary has predeceased the Participant, the
Participant’s contingent beneficiary).

(b) Inflation Protection: The following levels of inflation protection may be
provided to any Participant who elects to receive all or a part of his 409A
Retirement Pension as an Annuity:

(1) 5 Percent Inflation Protection: A Participant’s monthly benefit shall be
initially reduced, but thereafter shall be increased if inflation in the prior
year exceeds 5 percent. The amount of the increase shall be the difference
between inflation in the prior year and 5 percent.

(2) 7 Percent Inflation Protection: A Participant’s monthly benefit shall be
initially reduced, but thereafter shall be increased if inflation in the prior
year exceeds 7 percent. The amount of the increase shall be the difference
between inflation in the prior year and 7 percent.

Benefits shall be subject to increase in accordance with this subsection each
January 1, beginning with the second January 1 following the Participant’s
Annuity Starting Date. The amount of inflation in the prior year shall be
determined based on inflation in the 12-month period ending on September 30 of
such year, with inflation measured in the same manner as applies on the
Effective Date for adjusting Social Security benefits for changes in the cost of
living. Inflation protection that is in effect shall carry over to any survivor
benefit payable on behalf of a Participant, and shall increase the otherwise
applicable survivor benefit as provided above. Any election by a Participant to
receive inflation protection shall be irrevocable by such Participant or his
surviving beneficiary.

 

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6.3 Procedures for Elections: This section sets forth the procedures for making
Annuity Starting Date elections (i.e., elections under Section 6.2). Subsection
(a) sets forth the procedures for making a valid election of an optional form of
payment under Section 6.2 and subsection (b) includes special rules for
Participants with multiple Annuity Starting Dates. An election under this
Article VI shall be treated as received on a particular day if it is:
(i) postmarked that day, or (ii) actually received by the Plan Administrator on
that day. Receipt under (ii) must occur by the close of business on the date in
question, which time is to be determined by the Plan Administrator. Spousal
consent is not required for an election to be valid.

(a) Election of an Optional Form of Payment: To be valid, an election of an
optional form of Annuity under Section 6.2, for (i) a Participant’s 409A
Retirement Pension (if a proper election was made under paragraph 6.1(a)(2)) or
(ii) a Participant’s 409A Vested Terminated Pension, must be in writing, signed
by the Participant, and received by the Plan Administrator at least one day
prior to the Annuity Starting Date that applies to the Participant’s Pension in
accordance with Section 6.1. In addition, an election under this subsection must
specify one of the optional forms of payment available under Section 6.2 and a
beneficiary, if applicable, in accordance with Section 6.5 below. To the extent
permitted by the Plan Administrator, an election made through electronic media
shall be considered to satisfy the requirement for a written election, and an
electronic affirmation of such an election shall be considered to satisfy the
requirement for a signed election.

 

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(b) Multiple Annuity Starting Dates: When amounts become payable to a
Participant in accordance with Article IV, they shall be payable as of the
Participant’s Annuity Starting Date and the election procedures (in this section
and Sections 6.1 and 6.5) shall apply to all of the Participant’s unpaid
accruals as of such Annuity Starting Date, with the following exception. In the
case of a Participant who is rehired after his initial Annuity Starting Date and
who (i) is currently receiving an Annuity that remained in pay status upon
rehire, or (ii) was previously paid a lump sum distribution (other than a
cashout distribution described in Section 4.9(a)), the Participant’s subsequent
Annuity Starting Date (as a result of his subsequent Separation from Service),
and the election procedures at such subsequent Annuity Starting Date, shall
apply only to the portion of his benefit that accrues after his rehire. Any
prior accruals that remain to be paid as of the Participant’s subsequent Annuity
Starting Date shall continue to be payable in accordance with the elections made
at his initial Annuity Starting Date.

6.4 Special Rules for Survivor Options: The following special rules shall apply
for the survivor options available under Section 6.2.

(a) Effect of Certain Deaths: If a Participant makes an election under
Section 6.3(a) to receive his 409A Retirement Pension in the form of an optional
Annuity that includes a benefit for a surviving beneficiary under Section 6.2
and the Participant or his beneficiary (beneficiaries in the case of the
optional form of payment in Section 6.2(a)(2)(iv)) dies prior to the Annuity
Starting Date of such Annuity, the election shall be disregarded. If the
Participant dies after this Annuity Starting Date but before his 409A Retirement
Pension actually commences, the election shall be given effect and the

 

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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 has elected the form of payment described in
Section 6.2(a)(2)(iv), if such Participant: (i) dies after his Annuity Starting
Date, (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 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) Non-Spouse Beneficiaries: If a Participant’s beneficiary is not his Eligible
Spouse, he may not elect:

(1) The 100 percent survivor option described in Section 6.2(a)(2)(i) if his
non-spouse beneficiary is more than 10 years younger than he is, or

(2) The 75 percent survivor option described in Section 6.2(a)(2)(ii) if his
non-spouse beneficiary is more than 19 years younger than he is.

6.5 Designation of Beneficiary: A Participant who has elected under Section 6.2
to receive all or part of his Retirement 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 the election
form used to choose such optional form of payment or an approved election form
filed under the Salaried Plan, whichever is applicable. In

 

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the case of the survivor option described in Section 6.2(a)(2)(iv), the
Participant shall be entitled to name both a primary beneficiary and a
contingent beneficiary. A Participant (whether active or former) shall have the
right to change or revoke his beneficiary designation at any time prior to his
Annuity Starting Date. 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. If no beneficiary is properly designated and
a Participant’s elects a survivor’s option described in Section 6.2(a)(2), the
Participant’s beneficiary shall be his Eligible Spouse. A Participant entitled
to a Vested Pension does not have the right or ability to name a beneficiary; if
the Participant is permitted under Section 6.2 to elect an optional form of
payment, then his beneficiary shall be his Eligible Spouse on his Annuity
Starting Date.

6.6 Required Delay for Key Employees: Notwithstanding Section 6.1 above, if a
Participant is classified as a Key Employee upon his Separation from Service (or
at such other time for determining Key Employee status as may apply under
Section 409A), then distributions to the Participant shall commence as follows:

(a) Distribution of a Retirement Pension: In the case of a Key Employee
Participant who is entitled to a 409A Retirement Pension, distributions shall
commence on the earliest first of the month that is at least six months after
the date the Participant Separates from Service (or, if earlier, the
Participant’s death). For periods before 2009, commencement of distributions,
however, shall not be delayed under the preceding sentence if the Participant’s
409A Retirement Pension commences at the same time as his pension under the
Salaried Plan in accordance with Section 6.1(b)(3)(i).

 

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(b) Distribution of a Vested Pension. In the case of a Participant who is
entitled to a 409A Vested Pension, distributions shall commence as provided in
Section 6.1(b), or if later, on the earliest first of the month that is at least
six months after the Participant’s Separation from Service (or, if earlier, the
Participant’s death). For periods before 2009, commencement of distributions,
however, shall not be delayed under the preceding sentence if the Participant’s
409A Vested Pension commences at the same time as his pension under the Salaried
Plan in accordance with Section 6.1(b)(3)(i).

(c) Interest Paid for Delay. Any payments to the Participant that are delayed in
accordance with the provisions of this Section 6.6 shall be accumulated and paid
as a lump sum payment, with interest equal to that specified in
Section 2.1(b)(3), on the date payment occurs in accordance with subsection
(a) or (b) above, whichever is applicable. If a Participant’s beneficiary or
estate is paid under subsection (a) or (b) above as a result of his death, then
any payments that would have been made to the Participant and that were delayed
in accordance with the provisions of this Section 6.6 shall be paid as otherwise
provided in the Plan, with interest equal to that specified in
Section 2.1(b)(3).

6.7 Payment of FICA and Related Income Taxes: As provided in subsections
(a) through (c) below, a portion of a Participant’s 409A Pension shall be paid
as a single lump sum and remitted directly to the Internal Revenue Service
(“IRS”) in satisfaction of the Participant’s FICA Amount and the related
withholding of income tax at source on wages (imposed under Code Section 3401 or
the corresponding withholding provisions of the applicable state, local or
foreign tax laws as a result of the payment of the FICA Amount) and the
additional withholding of income tax at source on wages that is attributable to
the pyramiding of wages and taxes.

 

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(a) Timing of Payment: As of the date that the Participant’s FICA Amount and
related income tax withholding are due to be deposited with the IRS, a lump sum
payment equal to the Participant’s FICA Amount and any related income tax
withholding shall be paid from the Participant’s 409A Pension and remitted to
the IRS (or other applicable tax authority) in satisfaction of such FICA Amount
and income tax withholding related to such FICA Amount. The classification of a
Participant as a Key Employee (as defined in Section 2.1(t)) shall have no
effect on the timing of the lump sum payment under this subsection (a).

(b) Reduction of 409A Pension. To reflect the payment of a Participant’s FICA
Amount and any related income tax liability, the Participant’s 409A Pension
shall be reduced, effective as of the date for payment of the lump sum in
accordance with subsection (a) above, with such reduction being the Actuarial
Equivalent of the lump sum payment used to satisfy the Participant’s FICA Amount
and related income tax withholding. It is expressly contemplated that this
reduction may occur effective as of a date that is after the date payment of a
Participant’s 409A Pension commences.

(A) No Effect on Commencement of 409A Pension. The Participant’s 409A Pension
shall commence in accordance with the terms of this Plan. The lump sum payment
to satisfy the Participant’s FICA Amount and related income tax withholding
shall not affect the time of payment of the

 

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Participant’s actuarially reduced 409A Pension, including not affecting any
required delay in payment to a Participant who is classified as a Key Employee.

 

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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 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. As a
result, benefits under this Plan will be paid only if the Plan

 

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Administrator decides in its discretion that the person claiming such benefits
is entitled to them. 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 (a
“claimant”) 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;

(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 (including the time
limits applicable to such process and a statement of the claimant’s right to
bring a civil action under ERISA following a further denial on review).

If the Plan Administrator determines that special circumstances require an
extension of time for processing the claim it may extend the response period
from 90 to 180 days. If this occurs, the Plan Administrator will notify the
claimant before the end of the initial 90-day period, indicating the special
circumstances requiring the extension and the date by which the Plan Committee

 

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expects to make the final decision. 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. Upon review, the Plan Administrator shall provide the
claimant a full and fair review of the claim, including the opportunity to
submit to the Plan Administrator comments, document, records and other
information relevant to the claim and the Plan Administrator’s review shall take
into account such comments, documents, records and information regardless of
whether it was submitted or considered at the initial determination. 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. If this occurs, notice of the extension will be furnished to
the claimant before the end of the initial 60-day period, indicating the special
circumstances requiring the extension and the date by which the Plan
Administrator expects to make the final decision. The final decision shall be in
writing and drafted in a manner calculated to be understood by the claimant;
include specific reasons for the decision with references to the specific Plan
provisions on which the decision is based; and provide that the claimant is
entitled to receive, upon request ad free of charge, reasonable access to, and
copies of, all documents, records, and other information relevant to his or her
claim for benefits.

Any claim under the Plan that is reviewed by a court, arbitrator or any other
tribunal shall be reviewed solely on the basis of the record before the Plan
Administrator at the time it made its determination. In addition, any such
review shall be conditioned on the claimant’s having fully exhausted all rights
under this section. Any notice or other notification that is required to be sent
to a claimant under this section may be sent pursuant to any method approved
under Department of Labor Regulation Section 2520.104b-1 or other applicable
guidance.

 

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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.

 

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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.

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.

 

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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 Compliance with Section 409A:

(a) General: It is the intention of the Company that the Plan shall be construed
in accordance with the applicable requirements of Section 409A. Further, in the
event that the Plan shall be deemed not to comply with Section 409A, then
neither the Company, the Board of Directors, the Plan Administrator nor its or
their designees or agents shall be liable to any Participant or other person for
actions, decisions or determinations made in good faith.

(b) Non-duplication of benefits: In the interest of clarity, and to determine
benefits in compliance with the requirements of Section 409A, provisions have
been included in this 409A Document describing the calculation of benefits under
certain specific circumstances, for example, provisions relating to the
inclusion of salary continuation during certain window severance programs in the
calculation of Highest Average Monthly Earnings, as specified in Appendix C.
Notwithstanding this or any similar provision, no duplication of benefits may at
any time occur under the Plan. Therefore, to the extent that a specific
provision of the Plan provides for recognizing a benefit determining element
(such as pensionable earnings or service) and this same element is or could be
recognized in some other way under the Plan, the specific

 

VIII-2

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provision of the Plan shall govern and there shall be absolutely no duplicate
recognition of such element under any other provision of the Plan, or pursuant
to the Plan’s integration with the Salaried Plan. This provision shall govern
over any contrary provision of the Plan that might be interpreted to support
duplication of benefits.

8.7 Authorized Transfers: If a Participant transfers to an entity that is not
part of the PepsiCo Organization, the liability for any benefits accrued while
the Participant was employed by the PepsiCo Organization shall remain with the
Company.

 

VIII-3

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ARTICLE IX

Amendment and Termination

This Article governs the Company’s right to amend and or terminate the Plan. The
Company’s amendment and termination powers under this Article shall be subject,
in all cases, to the restrictions on amendment and termination in Section 409A
and shall be exercised in accordance with such restrictions to ensure continued
compliance with Section 409A.

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 provided, however, that no such amendment or termination shall
adversely affect the amount of benefit to which a Participant or his beneficiary
is entitled under Article IV on the date of such amendment or termination,
unless the Participant becomes entitled to an amount equal to such benefit under
another plan or practice adopted by the Company (except as necessary to comply
with Section 409A). Specific forms of payment are not protected under the
preceding sentence.

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,
including any amendment necessary to ensure continued compliance with
Section 409A. An Employer (other than the Company) shall not have the right to
amend the Plan.

9.3 Termination: The Company may terminate the Plan, either as to its
participation or as to the participation of one or more Employers. If the Plan
is terminated with respect to fewer than all of the Employers, the Plan shall
continue in effect for the benefit of the Employees of the remaining Employers.
Upon termination, the distribution of Participants’ 409A Pensions shall be
subject to restrictions applicable under Section 409A.

 

IX-1

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9.4 Change in Control: The Company intends to have the maximum discretionary
authority to terminate the Plan and make distributions in connection with a
Change in Control (defined as provided in Section 409A), and the maximum
flexibility with respect to how and to what extent to carry this out following a
Change in Control as is permissible under Section 409A. The previous sentence
contains the exclusive terms under which a distribution shall be made in
connection with any Change in Control in the case of benefits that are derived
from this 409A Program.

 

IX-2

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ARTICLE X

ERISA Plan Structure

This Plan document in conjunction with the plan document(s) for the Pre-409A
Program encompasses three separate plans within the meaning of ERISA, as are set
forth in subsections (a), (b) and (c). This division into separate plans became
effective as of July 1, 1996; previously the plans set forth in subsections
(b) and (c) were a single plan within the meaning of ERISA.

(a) Excess Benefit Plan: An excess benefit plan within the meaning of section
3(36) of ERISA, maintained solely for the purpose of providing benefits for
Salaried Plan participants in excess of the limitations on benefits imposed by
section 415 of the Code.

(b) Excess Compensation Top Hat Plan: A plan maintained by the Company primarily
for the purpose of providing deferred compensation for a select group of
management or highly compensated employees within the meaning of sections 201(2)
and 401(a)(1) of ERISA. The plan provides benefits for Salaried Plan
participants in excess of the limitations imposed by section 401(a)(17) of the
Code on benefits under the Salaried Plan (after taking into account any benefits
under the Excess Benefit Plan). For ERISA reporting purposes, this portion of
PEP may be referred to as the PepsiCo Pension Equalization Plan I.

(c) Preservation Top Hat Plan: A plan maintained by the Company primarily for
the purpose of providing deferred compensation for a select group of management
or highly compensated employees within the meaning of sections 201(2) and
401(a)(1) of ERISA. The plan provides preserves benefits for those Salaried Plan

 

X-1

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participants described in section 5.2(a) hereof, by preserving for them the
pre-1989 level of benefit accrual that was in effect before the Salaried Plan’s
amendment effective January 1, 1989 (after taking into account any benefits
under the Excess Benefit Plan and Excess Compensation Top Hat Plan). For ERISA
reporting purposes, this portion of PEP shall be referred to as the PepsiCo
Pension Equalization Plan II.

Benefits under this Plan shall be allocated first to the Excess Benefit Plan, to
the extent of benefits paid for the purpose indicated in (a) above; then any
remaining benefits shall be allocated to the Excess Compensation Top Hat Plan,
to the extent of benefits paid for the purpose indicated in (b) above; then any
remaining benefits shall be allocated to the Preservation Top Hat Plan. These
three plans are severable for any and all purposes as directed by the Company.

 

X-2

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ARTICLE XI

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.

 

XI-1

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ARTICLE XII

SIGNATURE

The above Plan is hereby adopted and approved, to be effective as of January 1,
2005, this 12th day of December, 2008.

 

PepsiCo, Inc.

By:

 

/s/    Cynthia M. Trudell

 

APPROVED

By:

 

/s/ Chris Bellanca

 

Law Department

By:

 

/s/ Maryanne Bifulco

 

Tax Department

 

XII-1

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APPENDIX

The following Appendix articles modify particular terms of the Plan. Except as
specifically modified in the Appendix, the foregoing main provisions of the Plan
shall fully apply in determining the rights and benefits of Participants and
beneficiaries (and of any other individual claiming a benefit through or under
the foregoing). In the event of a conflict between the Appendix and the
foregoing main provision of the Plan, the Appendix shall govern.

 

1

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APPENDIX ARTICLE A

Transition Provisions

 

A.1

Scope.

This Article A provides the transition rules for the Plan that were effective at
some time during the period beginning January 1, 2005 and ending December 31,
2008 (the “Transition Period”). The time period during which each provision in
this Article A was effective is set forth below.

 

A.2

Transition Rules for Article II (Definitions).

(a) Actuarial Equivalent. In addition to the provisions provided in Article II
for determining actuarial equivalence under the Plan, for the duration of the
Transition Period, to determine the amount of a Pension payable in the form of a
Qualified Joint and Survivor Annuity or optional form of survivor annuity, as an
annuity with inflation protection, or as a Single Life Annuity, the Plan
Administrator used the actuarial factors under the Salaried Plan.

(b) Key Employee. In addition to the provisions provided in Article II for
identifying Key Employees, the following operating rules were in effect for the
indicated time periods –

(1) Operating Rules for 2005. To ensure that the Company did not fail to
identify any Key Employees, in the case of Separation from Service distributions
during the 2005 Plan Year, the Company treated as Key Employees all Participants
(and former Participants) classified (or grandfathered) for any portion of the
2005 Plan Year as Band IV and above.

(2) Operating Rules for 2006 and 2007. To ensure that the Company did not fail
to identify any Key Employees, in the case of Separation from Service
distributions during the 2006 Plan Year and 2007 Plan Year, the Company treated
as Key Employees for such applicable Plan Year of their Separation from Service
those individuals who met the provisions of (3) or (4) below (or both).

 

2

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(3) The Company shall treat as Key Employees all Participants (and former
Participants) who are classified (or grandfathered) as Band IV and above for any
portion of the Plan Year prior to the Plan Year of their Separation from
Service; and

(4) The Company shall treat as a Key Employee any Participant who would be a Key
Employee as of his or her Separation from Service date based on the standards in
this paragraph (4). For purposes of this paragraph (4), the Company shall
determine Key Employees based on compensation (as defined in Code
Section 415(c)(3)) that is taken into account as follows:

(A) If the determination is in connection with a Separation from Service in the
first calendar quarter of a Plan Year, the determination shall be made using
compensation earned in the calendar year that is two years prior to the current
calendar year (e.g., for a determination made in the first quarter of 2006,
compensation earned in the 2004 calendar year shall be used); and

(B) If the determination is in connection with a Separation from Service in the
second, third or fourth calendar quarter of a Plan Year, the determination shall
be made using the compensation earned in the prior calendar year (e.g., for a
determination made in the second quarter of 2006, compensation earned in the
2005 calendar year shall be used).

 

3

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A.3

Transition Rules for Article VI (Distributions):

409A Pensions that would have been paid out during the Transition Period under
the provisions set forth in the main body of the Plan (but for the application
of permissible transition rules under Section 409A) shall be paid out on
March 1, 2009.

 

A.4

Transition Rules for Article VII (Administration):

Effective during the Transition Period, the language of Section 8.6(a) shall be
replaced in its entirety with the following language:

“8.6(a) Compliance with Section 409A:

At all times during each Plan Year, this Plan shall be operated (i) in
accordance with the requirements of Section 409A, and (ii) to preserve the
status of deferrals under the Pre-409A Program as being exempt from
Section 409A, i.e., to preserve the grandfathered status of the Pre-409A
Program. Any action that may be taken (and, to the extent possible, any action
actually taken) by the Plan Administrator or the Company shall not be taken (or
shall be void and without effect), if such action violates the requirements of
Section 409A or if such action would adversely affect the grandfather of the
Pre-409A Program. If the failure to take an action under the Plan would violate
Section 409A, then to the extent it is possible thereby to avoid a violation of
Section 409A, the rights and effects under the Plan shall be altered to avoid
such violation. A corresponding rule shall apply with respect to a failure to
take an action that would adversely affect the grandfather of the Pre-409A
Program. Any provision in this Plan document that is determined to violate the
requirements of Section 409A or to adversely affect the grandfather of the
Pre-409A Program shall be void and without effect. In addition, any provision
that is required to appear in this Plan document to satisfy the

 

4

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requirements of Section 409A, but that is not expressly set forth, shall be
deemed to be set forth herein, and the Plan shall be administered in all
respects as if such provision were expressly set forth. A corresponding rule
shall apply with respect to a provision that is required to preserve the
grandfather of the Pre-409A Program. In all cases, the provisions of this
Section shall apply notwithstanding any contrary provision of the Plan that is
not contained in this Section.”

 

A.5

Transition Rules for Severance Benefits.

Effective during the Transition Period, the following provisions shall apply
according to their specified terms.

(a) Definitions:

(1) Where the following words and phrases, in boldface and underlined, appear in
this Section A.5 with initial capitals they shall have the meaning set forth
below, unless a different meaning is plainly required by the context. Any terms
used in this Article A of the Appendix with initial capitals and not defined
herein shall have the same meaning as in the main Plan, unless a different
meaning is plainly required by the context.

(2) “Special Early Retirement” shall mean the Participant’s attainment of at
least age 50 but less than age 55 with 10 years of Elapsed Time Service as of
the date of his Retirement, provided, however, that with respect to the 2008
Severance at Section A.5(d), for purposes of determining whether a Participant
has met the age and service requirements, a Participant’s age and years of
Elapsed Time Service are rounded up to the nearest whole year.

 

5

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(b) 2005 Severance:

(1) Non-Retirement Eligible Employees: With respect to any Participant who
terminated in 2005 as a result of a severance window program and who was not
eligible for Retirement as of the date of his Separation from Service, the
Participant’s 409A Pension shall be paid as a Vested Pension under
Section 6.1(b) of the Plan document, provided, however, that the Participant’s
409A Pension will be paid at the same time as his Salaried Plan benefit. The
available forms of payment shall be those forms available to a Participant who
is entitled to a Vested Pension, as set forth in Section 6.2 of the Plan
document.

(2) Non-Retirement Eligible Employees with Payments in 2007: With respect to any
Participant who terminated in 2005 as a result of a severance window program,
who was not eligible for Retirement as of the date of his Separation from
Service, and whose 409A Pension Payment would otherwise be paid during 2007, the
Participant’s 409A Pension shall be paid as a Vested Pension under
Section 6.1(b) of the Plan document, provided, however, that the Participant’s
409A Pension will be paid at the later of (i) January 1, 2007 or (ii) when the
Participant attained age 55. The available forms of payment shall be those forms
available to a Participant who is entitled to a Vested Pension, as set forth in
Section 6.2 of the Plan document.

(3) Retirement Eligible Employees: With respect to any Participant who
terminated in 2005 as a result of a severance window program and who fulfilled
the requirements for either a Normal or Early Retirement Pension under Article
IV of the Plan document as of February 5, 2006, the Participant’s 409A Pension
shall be paid on the first day of the month following the Participant’s
Separation from Service in a lump sum.

 

6

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(4) Retirement Eligible Employees (With Credit): With respect to any Participant
who terminated in 2005 as a result of a severance window program and who
fulfilled the requirements for either a Normal or Early Retirement Pension under
Article IV of the Plan document as of his Separation from Service as a result of
being provided additional Credited Service time by the Company, the
Participant’s 409A Pension shall be paid on the first day of the month following
the Participant’s Separation from Service in a lump sum.

(5) Special Early Retirement Eligible: With respect to any Participant who
terminated in 2005 as a result of a severance window program and who fulfilled
the requirements to be eligible for Special Early Retirement as of his
Separation from Service, the Participant’s 409A Pension shall be paid on the
first day of the month following the Participant’s Separation from Service in a
lump sum.

(c) 2007 Severance:

(1) Non-Retirement Eligible Employees: With respect to any Participant who
terminated in 2007 as a result of a severance window program and who was not
eligible for Retirement as of the date of his Separation from Service, the
Participant’s 409A Pension shall be paid as a Vested Pension under
Section 6.1(b) of the Plan document. The available forms of payment shall be
those forms available to a Participant who is entitled to a Vested Pension, as
set forth in Section 6.2 of the Plan document.

(2) Retirement Eligible Employees: With respect to any Participant who
terminated in 2007 as a result of a severance window program and who fulfilled
the requirements for either a Normal or Early Retirement Pension under Article
IV of the Plan document as of his Separation from Service, the Participant’s
409A Pension shall be

 

7

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paid on the first day of the month following the Participant’s Separation from
Service in a lump sum; provided, however, that if a Participant made a valid
Prior Payment Election under Section 6.1(a)(2) of the Plan document, his 409A
Pension shall be paid according to such election.

(3) Employee Who Become Retirement Eligible:

(i) 409A Pension: With respect to any Participant who terminated in 2007 as a
result of a severance window program and who fulfilled the requirements for
either a Normal or Early Retirement Pension under Article IV of the Plan
document between his Separation from Service and the last day of his paid leave
of absence (if any), the Participant’s 409A Pension shall be paid on the first
day of the month following the later of (i) Participant’s attainment of age 55
and (ii) his Separation from Service; the 409A Pension shall be paid as a Vested
Pension under Section 6.1(b) of the Plan document. The available forms of
payment shall be those forms available to a Participant who is entitled to a
Vested Pension, as set forth in Section 6.2 of the Plan document.

(ii) PEP Kicker: Any amount paid to a Participant otherwise described under this
paragraph (3) as a replacement for benefits that the Participant could have
earned under the Plan but for his Separation from Service shall be paid as a
single lump sum, provided, however, that if a Participant made a valid Prior
Payment Election under Section 6.1(a)(2) of the Plan document, the amounts
described in this subparagraph (ii) shall be paid according to such election.
All amounts to be paid shall be paid on the first day of the month following the
later of (i) the Participant’s attainment of age 55 or (ii) the Participant’s
Separation from Service.

 

8

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(4) Special Retirement Eligible Employees:

(i) 409A Pension: With respect to any Participant who terminated in 2007 as a
result of a severance window program and who fulfilled the requirements to be
eligible for Special Early Retirement as of his Separation from Service, the
Participant’s 409A Pension shall be paid on the first day of the month following
the Participant’s attainment of age 55 as a Vested Pension under Section 6.1(b)
of the Plan document. The available forms of payment shall be those forms
available to a Participant who is entitled to a Vested Pension, as set forth in
Section 6.2 of the Plan document.

(ii) PEP Kicker: Any amount paid to a Participant otherwise described under this
paragraph (4) as a replacement for benefits that the Participant could have
earned under the Plan but for his Separation from Service shall be paid as a
single lump sum, provided, however, that if a Participant made a valid Prior
Payment Election under Section 6.1(a)(2) of the Plan document, the amounts
described in this subparagraph (ii) shall be paid according to such election.
All amounts to be paid shall be paid on the first day of the month following the
Participant’s attainment of age 55.

(5) Employees Who Become Special Retirement Eligible:

(i) 409A Pension: With respect to any Participant who terminated in 2007 as a
result of a severance window program and who fulfilled the requirements to be
eligible for Special Early Retirement during the period between his Separation
from Service and the last day of his paid leave of absence

 

9

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(if any), the Participant’s 409A Pension shall be paid on the first day of the
month following the Participant’s attainment of age 55 as a Vested Pension under
Section 6.1(b) of the Plan document. The available forms of payment shall be
those forms available to a Participant who is entitled to a Vested Pension, as
set forth in Section 6.2 of the Plan document.

(ii) PEP Kicker: Any amount paid to a Participant otherwise described under this
paragraph (5) as a replacement for benefits that the Participant could have
earned under the Plan but for his Separation from Service shall be paid as a
single lump sum, provided, however, that if a Participant made a valid Prior
Payment Election under Section 6.1(a)(2) of the Plan document, the amounts
described in this subparagraph (ii) shall be paid according to such election.
All amounts to be paid shall be paid on the first day of the month following the
Participant’s attainment of age 55.

(d) 2008 Severance:

(1) Non-Retirement Eligible Employees: With respect to any Participant who
terminated in 2008 as a result of a severance window program and who was not
eligible for Retirement as of the date of his Separation from Service, the
Participant’s 409A Pension shall be paid as a Vested Pension under
Section 6.1(b) of the Plan document. The available forms of payment shall be
those forms available to a Participant who is entitled to a Vested Pension, as
set forth in Section 6.2 of the Plan document.

(2) Retirement Eligible Employees: With respect to any Participant who
terminated in 2008 as a result of a severance window program and who fulfilled
the requirements for either a Normal or Early Retirement Pension under Article
IV of the

 

10

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Plan document as of his Separation from Service, the Participant’s 409A Pension
shall be paid on the first day of the month following the Participant’s
Separation from Service in a lump sum; provided, however, that if a Participant
made a valid Prior Payment Election under Section 6.1(a)(2) of the Plan
document, his 409A Pension shall be paid according to such election.

(3) Employee Who Become Retirement Eligible:

(i) 409A Pension: With respect to any Participant who terminated in 2008 as a
result of a severance window program and who fulfilled the requirements for
either a Normal or Early Retirement Pension under Article IV of the Plan
document between his Separation from Service and the last day of his paid leave
of absence (if any), the Participant’s 409A Pension shall be paid on the first
day of the month following the later of (i) Participant’s attainment of age 55
and (ii) his Separation from Service; the 409A Pension shall be paid as a Vested
Pension under Section 6.1(b) of the Plan document. The available forms of
payment shall be those forms available to a Participant who is entitled to a
Vested Pension, as set forth in Section 6.2 of the Plan document.

(ii) PEP Kicker: Any amount paid to a Participant otherwise described under this
paragraph (3) as a replacement for benefits that the Participant could have
earned under the Plan but for his Separation from Service shall be paid as a
single lump sum, provided, however, that if a Participant made a valid Prior
Payment Election under Section 6.1(a)(2) of the Plan document, the amounts
described in this subparagraph (ii) shall be paid according to such election.
All amounts to be paid shall be paid on the first day of the month following the
later of (i) Participant’s attainment of age 55 or (ii) the Participant’s
Separation from Service.

 

11

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(4) Employees Who Are or Become Special Retirement Eligible:

(i) 409A Pension: With respect to any Participant who terminated in 2008 as a
result of a severance window program and who fulfilled the requirements to be
eligible for Special Early Retirement as of his Separation from Service or
during the period between his Separation from Service and the last day of his
paid leave of absence (if any), the Participant’s 409A Pension shall be paid on
the first day of the month following the Participant’s attainment of age 55 as a
Vested Pension under Section 6.1(b) of the Plan document. The available forms of
payment shall be those forms available to a Participant who is entitled to a
Vested Pension, as set forth in Section 6.2 of the Plan document.

(ii) PEP Kicker: Any amount paid to a Participant otherwise described under this
paragraph (4) as a replacement for benefits that the Participant could have
earned under the Plan but for his Separation from Service shall be paid as a
single lump sum, provided, however, that if a Participant made a valid Prior
Payment Election under Section 6.1(a)(2) of the Plan document, the amounts
described in this subparagraph (ii) shall be paid according to such election.
All amounts to be paid shall be paid on the first day of the month following the
Participant’s attainment of age 55.

(e) Delay for Key Employees: To the extent that a Participant is a Key Employee
(as defined in Section A.2(b), above) with respect to any payment provided under
this Section A.5, and to the extent that payment of his 409A Pension is on
account of his Separation from Service, his 409A Pension shall be subject to the
delay in payment provided under Section 6.6 of the main Plan document.

 

12

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(f) Compliance with 19(c): All payments that are to be made under this Section
A.5 were scheduled to made during the calendar year in which the Participant
terminated employment, with payments to be made as provided herein. All
elections made by the Company with respect to such payments were made in
compliance with Notice 2005-1 and other provisions of Code Section 409A.

 

A.6

Certain Participants

The following transition rules shall apply only with respect to the following
described Participants:

(a) A Participant’s PEP Credited Service shall be deemed to be five years if the
Participant terminates employment in 2005 while classified as Band VI (or
equivalent), and his employment with an Employer was for a limited duration
assignment of less than five years. A Participant shall be deemed to be vested
for purposes of this Plan if the Participant terminates employment in 2005 while
classified as Band VI (or equivalent), and his employment with an Employer was
for a limited duration assignment of less than five years.

(b) In the case of a Participant who on October 9, 2007 selects an Annuity
Starting Date of November 1, 2007 for the Participant’s Pension under the
Salaried Plan which is payable in a single lump sum (after taking into account
the special rule in Section 6.3(a)(2), if necessary), the portion of the
Participant’s benefit under the Plan that is not subject to Section 409A of the
Code shall be paid in a single lump sum six months after the Participant’s
Annuity Starting Date under the Salaried Plan.

 

13

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(c) In the case of a Participant who on September 3, 2004 selects a fixed date
of payment of February 1, 2005 for the Participant’s Pension under the Plan, the
following provisions shall apply:

(1) such fixed date shall be the commencement date for the Participant’s benefit
under the Plan, and

(2) the calculation of the Participant’s benefit under the Plan shall be made
taking into account service to be performed during any period for which the
Participant is to provide consulting services to the Company, even if such
services are to be performed after the payment date specified in paragraph (1).

 

14

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APPENDIX ARTICLE B

Computation of Earnings and Service During Certain Severance Windows

 

B.1

Definitions:

Where the following words and phrases, in boldface and underlined, appear in
this Appendix C with initial capitals they shall have the meaning set forth
below, unless a different meaning is plainly required by the context. Any terms
used in this Article B of the Appendix with initial capitals and not defined
herein shall have the same meaning as in the main Plan, unless a different
meaning is plainly required by the context.

(a) “Severance Program” shall mean a program providing certain severance
benefits that are paid while the program’s participants are on a severance leave
of absence that is determined by the Plan Administrator to qualify for
recognition as Service under Section B.3 and Credited Service under Section B.4
of Article B.

(b) “Eligible Bonus” shall mean an annual incentive payment that is payable to
the Participant under the Severance Program and that is identified under the
terms of the Severance Program as eligible for inclusion in determining the
Participant’s Highest Average Monthly Earnings.

 

B.2

Inclusion of Salary and Eligible Bonus:

The Plan Administrator may specify that, pursuant to a Participant’s
participation in a severance window program provided by the Company, if a
Participant receives a severance benefit pursuant to a Severance Program, all
salary continuation and any Eligible Bonus earned or to be earned during the
first 12 months of a leave of absence period provided to the Participant under
such Severance Program will be counted toward the Participant’s Highest Average
Monthly Earnings, even if such salary or other earnings are to be received after
a Participant’s Separation from Service. In particular, if payment of a
Participant’s 409A Pension is to be made

 

15

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at Separation from Service and prior to the Participant’s receipt of all of the
salary continuation or Eligible Bonus that is payable to the Participant from
the Severance Program, the Participant’s Highest Average Monthly Earnings shall
be determined by taking into account the full salary continuation and eligible
bonus that is projected to be payable to the Participant during the first 12
months of a period of leave of absence that is granted to the Participant under
the Severance Program.

 

B.3

Inclusion of Credited Service:

The Plan Administrator may specify that, pursuant to a Participant’s
participation in a severance window program provided by the Company, if a
Participant receives a severance benefit under a Severance Program, all Credited
Service earned or to be earned during the first 12 months of the period of
severance will be counted toward the Participant’s Credited Service for purposes
of determining the Participant’s Pension and a Pre-Retirement Spouse’s Pension,
even if the period of time counted as Credited Service under the Severance
Program occurs after a Participant’s Separation from Service.

 

B.4

Inclusion of Service:

The Plan Administrator may specify that, pursuant to a Participant’s
participation in a severance window program provided by the Company, if a
Participant receives a severance benefit under a Severance Program, all Service
earned or to be earned during the first 12 months of the period of severance
will be counted toward the Participant’s Service for purposes of determining the
Participant’s Pension and a Pre-Retirement Spouse’s Pension, even if the period
of time counted as Service under the Severance Program occurs after a
Participant’s Separation from Service.

 

16

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B.5

Reduction to Reflect Early Payment:

If the Participant receives either (1) additional Credited Service or
(2) additional earnings that are included in Highest Average Monthly Earnings
under Sections B.2 or B.3 of this Article B, as a result of a severance benefit
provided under a Severance Program and such additional Credited Service or
earnings are included in the calculation of the Participant’s Pension prior to
the time that the Credited Service is actually performed by the Participant, or
the earnings are actually paid to the Participant, the Pension paid to the
Participant shall be adjusted actuarially to reflect the receipt of the portion
of the Pension attributable to such Credited Service or earnings received on
account of the Severance Program prior to the time such Credited Service is
performed or such earnings are actually paid to the Participant. For purposes of
determining the adjustment to be made, the Plan shall use the rate provided
under the Salaried Plan for early payment of benefits.

 

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APPENDIX ARTICLE C

International Transfer Participants

 

C.1

Scope:

This Article provides special rules for calculating the benefit of an individual
who is an “International Transfer Participant” under Section C.2 below. The
benefit of an International Transfer Participant shall be determined under
Section C. 3 below, subject to Section C.4 below. Once a benefit is determined
for an International Transfer Participant under this Article, such benefit shall
be subject to the Plan’s normal conditions and shall be paid in accordance with
the Plan’s normal terms. All benefits paid under this Article are subject to
Code section 409A, including those accrued prior to January 1, 2005. This
Article is effective April 1, 2007.

 

C.2

International Transfer Participants:

An International Transfer Participant is a Participant who is:

(a) General Rule: An individual who, following a transfer to an April 2007
Foreign Subsidiary (as defined under Section 2.1(r)(5) of the Salaried Plan),
would qualify as an Employee within the meaning of Section 2.1(q)(2)(vi) of the
Salaried Plan (U.S. citizen or resident alien on qualifying temporary
international assignment) but for the fact that his assignment with the April
2007 Foreign Subsidiary is in a position of employment that is classified as
Band 4 (or its equivalent) or higher; or

(b) Special Rule for Certain Permanent Assignments to Mexico: Notwithstanding
subsection (a) above, an International Transfer Participant also includes an
individual who was transferred to an April 2007 Foreign Subsidiary based in
Mexico, and who would qualify as an Employee within the meaning of
Section 2.1(q)(2)(vi) of the Salaried Plan but for the fact that:

(1) His assignment with the April 2007 Foreign Subsidiary is in a position that
is classified as Band 4 (or its equivalent) or higher;

 

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(2) Mexico is his home country on the records of the Expat Centre for Excellence
group or its successor (in accordance with Section 2.1(q)(2)(vi) of the Salaried
Plan); and

(3) The duration of his assignment with the April 2007 Foreign Subsidiary in
Mexico is not limited to 5 years or less.

An individual described in subsection (a) or (b) above may still qualify as an
International Transfer Participant if his transfer to an April 2007 Foreign
Subsidiary occurred prior to April 1, 2007 (the effective date of this Article),
provided he satisfied the terms of subsection (a) or (b) above on the date of
his transfer.

 

C.3

Benefit Formula for International Transfer Participants:

Except as provided in this Section C.3, an International Transfer Participant’s
benefit under the Plan shall be determined using a calculation methodology that
is substantially similar to that which applies under Section 5.1 of the Plan.

(c) Total Pension for International Transfer Participant: Notwithstanding the
preceding sentence, an International Transfer Participant’s “Total Pension” (as
defined in Section 5.1(c)(1) of the Plan) shall be calculated as if he continued
to receive Credited Service and Earnings under the Salaried Plan while working
for the April 2007 Foreign Subsidiary to which he transferred following his
employment with an Employer based in the United States, without regard to the
actual date on which he ceased receiving Credited Service and Earnings under the
Salaried Plan. However, the Total Pension of an International Transfer
Participant whose transfer to an April 2007 Foreign Subsidiary occurred prior to
1992 shall not take into account Credited Service and Earnings for employment
with the April 2007 Foreign Subsidiary prior to 1992.

 

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(d) Calculation of International Transfer Participant’s Benefit: The
International Transfer Participant’s benefit under the Plan shall be calculated
by reducing his Total Pension as determined under subsection (a) above
(expressed as a lump sum as of his benefit commencement date under the Plan) by
the following amounts:

(1) The amount of his actual benefit under the Salaried Plan (expressed as a
lump sum amount on his benefit commencement date), and

(2) Any amounts paid to him from a “qualifying plan” as that term is defined
under Section 3.6(c)(4) of the Salaried Plan (Transfers and Non-Duplication)
with respect to his assignment with the April 2007 Foreign Subsidiary (with such
amounts expressed as a lump sum on his benefit commencement date under this
Plan).

 

C.4

Alternative Arrangements Permitted:

Notwithstanding any provision of this Article or the Plan to the contrary, the
Company and a Participant who would qualify as an International Transfer
Participant under Section C.2 above may agree in writing to disregard the
provisions of this Article in favor of another mutually agreed upon benefit
arrangement under the Plan, in which case this Article shall not apply.

 

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