EXHIBIT 10.1

PEPSICO

EXECUTIVE INCOME

DEFERRAL PROGRAM

Plan Document for the Pre-409A Program

As Amended and Restated Effective July 1, 1997

(with Revisions through September 12, 2008)

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PEPSICO

EXECUTIVE INCOME DEFERRAL PROGRAM

TABLE OF CONTENTS

 

ARTICLE I: INTRODUCTION AND ESTABLISHMENT

   1

ARTICLE II: DEFINITIONS

   3   

2.1  Account

   3   

2.2  Base Compensation

   3   

2.3  Beneficiary

   3   

2.4  Bonus Compensation

   3   

2.5  Code

   4   

2.6  Company

   4   

2.7  Deferral Subaccount

   4   

2.8  Disability

   4   

2.9  Effective Date

   4   

2.10  Election Form

   4   

2.11  Employee

   4   

2.12  Employer

   4   

2.13  ERISA

   4   

2.14  Fair Market Value

   4   

2.15  Participant

   5   

2.16  Performance Unit Payout

   5   

2.17  Plan

   5   

2.18  Plan Administrator

   5   

2.19  Plan Year

   5   

2.20  Retirement

   5   

2.21  Risk of Forfeiture Subaccount

   5   

2.22  Section 409A

   6   

2.23  Stock Option Gains

   6   

2.24  Termination of Employment

   6   

2.25  Valuation Date

   6

ARTICLE III: PARTICIPATION

   7   

3.1  Eligibility to Participate

   7   

3.2  Deferral Election

   7   

3.3  Time and Manner of Deferral Election

   8   

3.4  Period of Deferral

   9

ARTICLE IV: INTERESTS OF PARTICIPANTS

   11   

4.1  Accounting for Participants’ Interests

   11   

4.2  Vesting of a Participant’s Account

   14   

4.3  Risk of Forfeiture Subaccounts

   14

 

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4.4  Distribution of a Participant’s Account

  

16

  

4.5  Acceleration of Payment in Certain Cases

  

18

ARTICLE V: PLAN ADMINISTRATOR

  

19

  

5.1  Plan Administrator

  

19

  

5.2  Action

  

19

  

5.3  Rights and Duties

  

19

  

5.4  Compensation, Indemnity and Liability

  

20

  

5.5  Taxes

  

20

  

5.6  Section 16 Compliance

  

21

ARTICLE VI: CLAIMS PROCEDURE

  

23

  

6.1  Claims for Benefits

  

23

  

6.2  Appeals

  

23

  

6.3  Special Procedures for Disability Determinations

  

23

ARTICLE VII: AMENDMENT AND TERMINATION

  

24

  

7.1  Amendments

  

24

  

7.2  Termination of Plan

  

24

ARTICLE VIII: MISCELLANEOUS

  

25

  

8.1  Limitation on Participant’s Rights

  

25

  

8.2  Unfunded Obligation of Individual Employer

  

25

  

8.3  Other Plans

  

25

  

8.4  Receipt or Release

  

25

  

8.5  Governing Law and Compliance

  

25

  

8.6  Adoption of Plan by Related Employers

  

26

  

8.7  Gender, Tense, Headings and Examples

  

26

  

8.8  Successors and Assigns; Nonalienation of Benefits

  

26

  

8.9  Facility of Payment

  

26

  

8.10  Separate Plans

  

27

APPENDIX

     

Article A:  Spinoff of Tricon

  

  2

  

Article B:  Initial Public Offering of PBG

  

  6

 

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ARTICLE I

INTRODUCTION

PepsiCo, Inc. (the “Company”) established the PepsiCo Executive Income Deferral
Program in 1972 to permit eligible executives to defer certain cash awards made
under its executive compensation programs. Subsequently, the PepsiCo Executive
Income Deferral Program (the “Plan”) was expanded to permit eligible executives
to defer base pay, certain other categories of executive compensation and gains
on Performance Share Stock Options.

Except as otherwise provided, this document sets forth the terms of the Plan as
in effect on July 1, 1997. As of that date, it specifies the group of executives
of the Company and certain affiliated employers eligible to make deferrals, the
procedures for electing to defer compensation and the Plan’s provisions for
maintaining and paying out amounts that have been deferred. Additional
provisions applicable to certain executives are set forth in the Appendix, which
modifies and supplements the general provisions of the Plan.

Deferrals under the Plan that were earned and vested on or before December 31,
2004 are governed by a set of documents (which includes this document) that set
forth the pre-Section 409A terms of the Plan (the “Pre-409A Program”). The terms
of the Plan that are applicable to deferrals that are subject to Section 409A,
i.e., generally, deferred amounts that are earned or vested after December 31,
2004 (the “409A Program”) are governed by a separate document. This document
sets forth the terms of the Pre-409A Program as in effect on July 1, 1997 with
revisions through September 12, 2008, while terms in effect prior to July 1,
1997 are governed by other Pre-409A Program documents. Alternatively, the 409A
Program document reflects the provisions in effect from and after January 1,
2005, and the rights and benefits of individuals who are participants in the
Plan from and after that date (and of those claiming through or on behalf of
such individuals) shall be governed by the provisions of the 409A Program
document and not the Pre-409A Program documents in the case of actions and
events occurring on or after January 1, 2005 with respect to deferrals that are
subject to the 409A Program. For purposes of the preceding sentence, the term
“actions and events” shall include all distribution trigger events and dates.
The rights and benefits with respect to persons who only participated in the
Plan prior to January 1, 2005 shall be governed by this document and the other
applicable provisions of the Pre-409A Program documents that were in effect at
such time, and shall not be governed by the 409A Program documents.

Together, the documents for the 409A Program and the documents for the Pre-409A
Program describe the terms of a single plan. However, amounts subject to the
terms of the 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 permit the Pre-409A Program to remain exempt from Section 409A, and the
administration of the Plan shall be consistent with this intent.

 

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The Plan is unfunded and unsecured. Amounts deferred by an executive are an
obligation of that executive’s individual employer. With respect to his
employer, the executive has the rights of a general creditor.

 

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ARTICLE II

DEFINITIONS

When used in this Plan, the following underlined terms shall have the meanings
set forth below unless a different meaning is plainly required by the context:

2.1 Account: The account maintained for a Participant on the books of his
Employer to determine, from time to time, the Participant's interest under this
Plan. The balance in such Account shall be determined by the Plan Administrator.
Each Participant's Account shall consist of at least one Deferral Subaccount for
each separate deferral under Section 3.2. In accordance with Section 4.3, some
or all of a separate deferral may be held in a Risk of Forfeiture Subaccount.
The Plan Administrator may also establish such additional subaccounts as it
deems necessary for the proper administration of the Plan. Where appropriate, a
reference to a Participant’s Account shall include a reference to each
applicable subaccount that has been established thereunder.

2.2 Base Compensation: An eligible Employee’s adjusted base salary, as
determined by the Plan Administrator and to the extent paid in U.S. dollars from
an Employer’s U.S. payroll. For any applicable payroll period, an eligible
Employee’s adjusted base salary shall be determined after reductions for
applicable tax withholdings, Employee authorized deductions (including
deductions for SaveUp, Benefits Plus and charitable donations), tax levies,
garnishments and such other amounts as the Plan Administrator recognizes as
reducing the amount of base salary available for deferral.

2.3 Beneficiary: The person or persons (including a trust or trusts) properly
designated by a Participant, as determined by the Plan Administrator, to receive
the amounts in one or more of the Participant’s subaccounts in the event of the
Participant's death. To be effective, any Beneficiary designation must be in
writing, signed by the Participant, and filed with the Plan Administrator prior
to the Participant’s death, and it must meet such other standards as the Plan
Administrator shall require from time to time. If no designation is in effect at
the time of a Participant's death or if all designated Beneficiaries have
predeceased the Participant, then the Participant’s Beneficiary shall be his
estate. A Beneficiary designation of an individual by name (or name and
relationship) remains in effect regardless of any change in the designated
individual’s relationship to the Participant. A Beneficiary designation solely
by relationship (for example, a designation of “spouse,” that does not give the
name of the spouse) shall designate whoever is the person in that relationship
to the Participant at his death. An individual who is otherwise a Beneficiary
with respect to a Participant’s Account ceases to be a Beneficiary when all
payments have been made from the Account.

2.4 Bonus Compensation: An eligible Employee’s adjusted annual incentive award
under his Employer’s annual incentive plan or the Executive Incentive
Compensation Plan, as determined and adjusted by the Plan Administrator and to
the extent paid in U.S. dollars

 

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from an Employer’s U.S. payroll. An eligible Employee’s annual incentive awards
shall be adjusted to reduce them for applicable tax withholdings, Employee
authorized deductions (including deductions for SaveUp, Benefits Plus and
charitable donations), tax levies, garnishments and such other amounts as the
Plan Administrator recognizes as reducing the amount of such awards available
for deferral.

2.5 Code: The Internal Revenue Code, as amended.

2.6 Company: PepsiCo, Inc., a North Carolina corporation, or its successor or
successors.

2.7 Deferral Subaccount: A subaccount of a Participant's Account maintained to
reflect his interest in the Plan attributable to each deferral of Base
Compensation, Bonus Compensation, Performance Unit Payout and Stock Option
Gains, respectively, and earnings or losses credited to such subaccount in
accordance with Section 4.1(b).

2.8 Disability: A Participant who is entitled to receive benefits under the
PepsiCo Long Term Disability Plan shall be deemed to suffer from a disability.
Participants who are not eligible to participate in the PepsiCo Long Term
Disability Plan shall be deemed to suffer to from a disability if, in the
judgment of the Plan Administrator, they satisfy the standards for disability
under the PepsiCo Long Term Disability Plan.

2.9 Effective Date: July 1, 1997.

2.10 Election Form: The form prescribed by the Plan Administrator on which a
Participant specifies the amount of his Base Compensation, Bonus Compensation,
Performance Unit Payout or Stock Option Gains to be deferred pursuant to the
provisions of Article III.

2.11 Employee: Any person in a salaried classification of an Employer who (i) is
receiving remuneration for personal services rendered in the employment of the
Employer, (ii) is either a United States citizen or a resident alien lawfully
admitted for permanent residence in the United States, and (iii) is paid in U.S.
dollars from the Employer’s U.S. payroll.

2.12 Employer: Each division of the Company and each of the Company’s
subsidiaries and affiliates that is currently designated as an Employer by the
Plan Administrator.

2.13 ERISA: The Employee Retirement Income Security Act of 1974, as amended.

2.14 Fair Market Value: For purposes of converting a Participant’s deferrals to
PepsiCo Capital Stock as of any date, the Fair Market Value of PepsiCo Capital
Stock is determined as the average of the high and low price on such date for
PepsiCo Capital Stock

 

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as reported on the composite tape for securities listed on the New York Stock
Exchange, Inc., rounded to four decimal places. For purposes of determining the
value of a Plan distribution or for reallocating amounts between phantom
investment options under the Plan, the Fair Market Value of PepsiCo Capital
Stock is determined as the closing price on the applicable Valuation Date
(identified based on the Plan Administrator’s current procedures) for PepsiCo
Capital Stock, as reported on the composite tape for securities listed on the
New York Stock Exchange, Inc., rounded to four decimal places.

2.15 Participant: Any Employee eligible pursuant to Section 3.1 who has
satisfied the requirements for participation in this Plan and who has an
Account. A Participant includes any individual who deferred compensation prior
to the Effective Date and for whom any Employer maintains on its books an
Account for such deferred compensation as of the Effective Date. An active
Participant is one who is currently deferring under Section 3.2.

2.16 Performance Unit Payout: The adjusted performance unit award payable to an
Employee under the Company’s Long Term Incentive Plan during a Plan Year, to the
extent paid in U.S. dollars from an Employer’s U.S. payroll. An eligible
Employee’s performance unit award shall be adjusted to reduce it for applicable
tax withholdings, Employee authorized deductions, tax levies, garnishments and
such other amounts as the Plan Administrator recognizes as reducing the amount
of such awards available for deferral.

2.17 Plan: The PepsiCo Executive Income Deferral Program, the plan set forth
herein and in the 409A Program document, as it may be amended and restated from
time to time (subject to the limitations on amendment that are applicable
hereunder and under the 409A Program). The portion of the Plan that governs
deferrals that are subject to Section 409A is referred to as the “409A Program,”
while the portion of the Plan that governs deferrals that are not subject to
Section 409A, which includes this document, is referred to as the “Pre-409A
Program.”

2.18 Plan Administrator: The Compensation Committee of the Board of Directors of
the Company or its delegate or delegates.

2.19 Plan Year: The 12-month period from January 1 to December 31.

2.20 Retirement: Termination of service with the Company and its affiliates
after attaining eligibility for retirement. A Participant attains eligibility
for retirement when he attains at least age 55 with 10 or more years of service,
or at least age 65 with 5 or more years of service (whichever occurs earliest)
while in the employment of the Company or its affiliates. A Participant’s
service is determined under the terms of the PepsiCo Salaried Employees
Retirement Plan.

2.21 Risk of Forfeiture Subaccount: The subaccount provided for by Section 4.3
to contain the portion of each separate deferral that is subject to forfeiture.

 

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2.22 Section 409A: Section 409A of the Code and the applicable regulations and
other guidance of general applicability that are issued thereunder.

2.23 Stock Option Gains: The gains on an eligible Employee’s Performance Share
Stock Options that are available for deferral under the Plan pursuant to
Section 3.3(c). With respect to any options that are made subject to a Stock
Option Gain deferral election, the gains on such options shall be determined
through a sale of related shares by the Plan Administrator net of: (i) the
exercise price of the options, (ii) any transaction costs incurred when such
gains are captured through the sale of related shares, and (iii) any related
taxes that the Plan Administrator determines will not otherwise be satisfied by
the Participant. For purposes of such sales, the Plan Administrator may
aggregate shares related to the options of different Participants, sell them
over one or more days and divide the net proceeds from such aggregate sales
between the Participants in a reasonable manner. The Plan Administrator shall
have absolute discretion with respect to the timing and aggregation of such
sales.

2.24 Termination of Employment: A Participant’s cessation of employment with the
Company, all Employers and all other Company subsidiaries and affiliates (as
defined for this purpose by the Plan Administrator). For purposes of determining
forfeitures under Section 4.3 and distributing a Participant’s Account under
Section 4.4, the following shall apply:

(a) A Participant does not have a Termination of Employment when the business
unit or division of the Company that employs him is sold if the Participant and
substantially all employees of that entity continue to be employed by the entity
or its successor after the sale. A Participant also does not have a Termination
of Employment when the subsidiary of the Company that employs him is sold if:
(i) the Participant continues to be employed by the entity or its successor
after the sale, and (ii) the Participant’s interest in the Plan continues to be
carried as a liability by that entity or its successor after the sale through a
successor arrangement. In each case, the Participant’s Termination of Employment
shall occur upon the Participant’s post-sale termination of employment from such
entity or its successor (and their related organizations, as determined by the
Plan Administrator).

(b) With respect to any individual deferral, the term “Termination of
Employment” may encompass a Participant’s death or death may be considered a
separate event, depending upon the convention the Plan Administrator follows
with respect to such deferral.

2.25 Valuation Date: Each date as of which Participant Accounts are valued in
accordance with procedures of the Plan Administrator that are currently in
effect. As of the Effective Date, the Valuation Dates are
March 31, June 30, September 30 and December 31. Values are determined as of the
close of a Valuation Date or, if such date is not a business day, as of the
close of the immediately preceding business day.

 

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ARTICLE III

PARTICIPATION

3.1 Eligibility to Participate.

(a) An Employee shall be eligible to defer compensation under the Plan while
employed by an Employer at salary grade level 14 or above. Notwithstanding the
preceding sentence, from time to time the Plan Administrator may modify, limit
or expand the class of Employees eligible to defer hereunder, pursuant to
criteria for eligibility that need not be uniform among all or any group of
Employees. During the period an individual satisfies all of the eligibility
requirements of this section, he shall be referred to as an eligible Employee.

(b) Each eligible Employee becomes an active Participant on the date an amount
is first withheld from his compensation pursuant to an Election Form submitted
by the Employee to the Plan Administrator under Section 3.3.

(c) An individual’s eligibility to participate actively by making deferrals
under Section 3.2 shall cease upon the earlier of:

(1) The date he ceases to be an Employee who is employed by an Employer at
salary grade level 14 or above; or

(2) The date the Employee ceases to be eligible under criteria described in the
last sentence of subsection (a) above.

(d) An individual, who has been an active Participant under the Plan, ceases to
be a Participant on the date his Account is fully paid out.

3.2 Deferral Election.

(a) Each eligible Employee may make an election to defer under the Plan any
whole percentage (up to 100%) of his Base Compensation, Bonus Compensation,
Performance Unit Payout or Stock Option Gains in the manner described in
Section 3.3. Any percentage of Base Compensation deferred by an eligible
Employee for a Plan Year will be deducted each pay period during the Plan Year
for which he has Base Compensation and is an eligible Employee. The percentage
of Bonus Compensation or Performance Unit Payout deferred by an Eligible
Employee for a Plan Year will be deducted from his payment under the applicable
compensation program at the time it would otherwise be made, provided he remains
an eligible Employee at such time. Any Stock Option Gains deferred by an
eligible Employee shall be captured as of the date or dates applicable for the
category

 

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of underlying options under procedures adopted by the Plan Administrator,
provided that the Plan Administrator determines the eligible Employee’s rights
in such options may still be recognized at such time.

(b) To be effective, an Eligible Employee’s Election Form must set forth the
percentage of Base Compensation, Bonus Compensation or Performance Unit Payout
to be deferred (or for a deferral of Stock Option Gains, the specific options on
which any gains are to be deferred), the investment choice under Section 4.1
(which investment must be stated in multiples of 5 percent), the deferral period
under Section 3.4, the eligible Employee’s Beneficiary designation, and any
other information that may be requested by the Plan Administrator from time to
time. In addition, the Election Form must meet the requirements of Section 3.3
below.

3.3 Time and Manner of Deferral Election.

(a) Deferrals of Base Compensation. Subject to the next two sentences, an
eligible Employee must make a deferral election for a Plan Year with respect to
Base Compensation at least two months prior to the Plan Year in which the Base
Compensation would otherwise be paid. An individual who newly becomes an
eligible Employee during a Plan Year (or less than three months prior to a Plan
Year) may make a deferral election with respect to Base Compensation to be paid
during the balance of the current Plan Year within 30 days of the date the
individual becomes an eligible Employee. Such an individual may also make an
election at this time with respect to Base Compensation to be paid during the
next Plan Year.

(b) Deferrals of Bonuses and Performance Unit Payouts. Subject to the next
sentence, an eligible Employee must make a deferral election for a Plan Year
with respect to his Bonus Compensation or Performance Unit Payout at least six
months prior to the Plan Year in which the Bonus Compensation or Performance
Unit Payout would otherwise be paid. An individual who newly becomes an eligible
Employee may make a deferral election with respect to his Bonus Compensation or
Performance Unit Payout to be paid during the succeeding Plan Year later than
the date applicable under the previous sentence so long as the deferral election
is made: (i) within 30 days of the date the individual becomes an eligible
Employee, and (ii) sufficiently prior to the first day of such succeeding Plan
Year to ensure, in the discretionary judgment of the Plan Administrator, that
the amount to be deferred will not have been constructively received (under all
the facts and circumstances).

(c) Deferrals of Stock Option Gains. From time to time, the Plan Administrator
shall notify eligible Employees with outstanding Performance Share Options which
options then qualify for deferral of their related Stock Option Gains. An
eligible Employee who has qualifying options must make a deferral election with
respect to his related Stock Option Gains at least 6 months before such
qualifying options’ proposed capture date (as defined below) or, if earlier, in
the calendar year

 

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preceding the year of the proposed capture date. The “proposed capture date” for
a set of options shall be the earliest date that the Plan Administrator would
capture a Participant’s Stock Option Gains in accordance with the deferral
agreement prepared for such purpose by the Plan Administrator.

(d) General Provisions. A separate deferral election under (a), (b) or (c) above
must be made by an eligible Employee for each category of a Plan Year’s
compensation that is eligible for deferral. If an eligible Employee fails to
file a properly completed and executed Election Form with the Plan Administrator
by the prescribed time, he will be deemed to have elected not to defer any Base
Compensation, Bonus Compensation, Performance Unit Payout or Stock Option Gains,
as the case may be, for the applicable Plan Year. An election is irrevocable
once received and determined by the Plan Administrator to be properly completed.
Increases or decreases in the amount or percentage a Participant elects to defer
shall not be permitted during a Plan Year. Notwithstanding the preceding three
sentences, to the extent necessary because of extraordinary circumstances, the
Plan Administrator may grant an extension of any election period and may permit
(to the extent necessary to avoid undue hardship to an eligible Employee) the
complete revocation of an election with respect to future deferrals. Any such
extension or revocation shall be available only if the Plan Administrator
determines that it shall not trigger constructive receipt of income and is
desirable for plan administration, and only upon such conditions as may be
required by the Plan Administrator.

(e) Beneficiaries. A Participant designates on the Election Form a Beneficiary
to receive payment in the event of his death of amounts credited to his
subaccount for such deferral. A Beneficiary is paid in accordance with the terms
of a Participant's Election Form, as interpreted by the Plan Administrator in
accordance with the terms of this Plan. At any time, a Participant may change a
Beneficiary designation for any or all subaccounts in a writing that is signed
by the Participant and filed with the Plan Administrator prior to the
Participant’s death, and that meets such other standards as the Plan
Administrator shall require from time to time.

3.4 Period of Deferral. An eligible Employee making a deferral election shall
specify a deferral period on his Election Form by designating a specific payout
date, one or more specific payout events or both a date and one or more specific
events from the choices that are made available to the eligible Employee by the
Plan Administrator. From time to time in its discretion, the Plan Administrator
may condition a Participant’s right to designate one or more specific payout
events on the Participant’s also specifying a payout date. Subject to the next
sentence, an eligible Employee’s elected period of deferral shall run until the
earliest occurring date or event specified on his Election Form. Notwithstanding
an eligible Employee’s actual election, an eligible Employee shall be deemed to
have elected a period of deferral of not less than:

(a) For Base Compensation, at least 6 months after the Plan Year during which
the Base Compensation would have been paid absent the deferral;

 

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(b) For Bonus Compensation, at least 1 year after the date the Bonus
Compensation would have been paid absent the deferral;

(c) For Performance Unit Payouts, at least 1 year after the date the Performance
Unit Payout would have been paid absent the deferral; and

(d) For Stock Option Gains, at least 1 year after the date the Stock Option Gain
is credited to a Deferral Subaccount for the benefit of the Participant.

 

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ARTICLE IV

INTERESTS OF PARTICIPANTS

4.1 Accounting for Participants’ Interests.

(a) Deferral Subaccounts. Each Participant shall have a separate Deferral
Subaccount credited with the amount of each separate deferral of Base
Compensation, Bonus Compensation, Performance Unit Payout or Stock Option Gains
made by the Participant under this Plan. A Participant’s deferral shall be
credited to his Account as soon as practicable following the date when the
deferral of compensation actually occurs, as determined by the Plan
Administrator. A Participant’s Account is a bookkeeping device to track the
value of his deferrals (and his Employer’s liability therefor). No assets shall
be reserved or segregated in connection with any Account, and no Account shall
be insured or otherwise secured.

(b) Account Earnings or Losses. As of each Valuation Date, a Participant’s
Account shall be credited with earnings and gains (and shall be debited for
expenses and losses) determined as if the amounts credited to his Account had
actually been invested as directed by the Participant in accordance with this
section (as modified by Section 4.3, if applicable). The Plan provides only for
“phantom investments,” and therefore such earnings, gains, expenses and losses
are hypothetical and not actual. However, they shall be applied to measure the
value of a Participant’s Account and the amount of his Employer’s liability to
make deferred payments to or on behalf of the Participant.

(c) Investment Options. Each of a Participant’s Subaccounts (other than those
containing Stock Option Gains) shall be invested on a phantom basis in any
combination of phantom investment options specified by the Participant (or
following the Participant’s death, by his Beneficiary) from those offered by the
Plan Administrator for this purpose from time to time. Subsection (e) below
governs the phantom investment options available for deferrals of Stock Option
Gains. The Plan Administrator may discontinue any phantom investment option with
respect to some or all Accounts, and it may provide for shifting a Participant’s
phantom investment from the discontinued option to a specified replacement
option (unless the Participant selects another replacement option in accordance
with such requirements as the Plan Administrator may apply). As of the Effective
Date, the phantom investment options are:

(1) Interest Bearing Account.

(i) Effective from and after December 29, 2006, Participant Accounts invested in
this phantom option accrue a return based upon an interest rate that is 120% of
the applicable Federal long-term rate

 

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(pursuant to Code Section 1274(d) or any successor provision) applicable for
annual compounding, as published by the U.S. Internal Revenue Service from time
to time. Returns accrue during the period since the last Valuation Date based
upon 120% of the applicable Federal long-term rate (applicable for annual
compounding) in effect on the first business day after such Valuation Date and
are compounded annually. An amount deferred or transferred into this option is
credited with the applicable rate of return beginning with the date as of which
the amount is treated as invested in this option by the Plan Administrator.

(ii) Effective for periods ending on December 28, 2006, Participant Accounts
invested in this phantom option accrue a return based upon the prime rate of
interest announced from time to time by Citibank, N.A. (or another bank
designated by the Plan Administrator from time to time). Returns accrue during
the period since the last Valuation Date based on the prime rate in effect on
the first business day after such Valuation Date and are compounded annually. An
amount deferred or transferred into this option is credited with the applicable
rate of return beginning with the date as of which the amount is treated as
invested in this option by the Plan Administrator.

(iii) Amounts that are invested in the phantom option under clause (ii) above at
the end of the day on December 28, 2006 shall be transferred to the phantom
investment option under clause (i) above effective as of the beginning of the
day on December 29, 2006, and thereafter the phantom investment option under
clause (ii) above shall be terminated.

(iv) For the periods during which the phantom investment options under clauses
(i) and (ii) above are in effect, such phantom investment options are the
“default” option to the extent a default option is needed in order to make
certain a Participant’s Account is 100% invested.

(2) PepsiCo Capital Stock Account. Participant Accounts invested in this phantom
option are adjusted to reflect an investment in PepsiCo Capital Stock. An amount
deferred or transferred into this option is converted to phantom shares of
PepsiCo Capital Stock of equivalent value by dividing such amount by the Fair
Market Value of a share of PepsiCo Capital Stock on the date as of which the
amount is treated as invested in this option by the Plan Administrator. Only
whole shares are determined. Any remaining amount (and all amounts that would be
received by the Account as dividends, if dividends were paid on phantom shares
of PepsiCo Capital Stock as they are on actual shares) are credited to a
dividend subaccount that is invested in the phantom option in paragraph
(1) above (the Interest Bearing Account).

 

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(i) A Participant’s interest in the PepsiCo Capital Stock Account is valued as
of a Valuation Date by multiplying the number of phantom shares credited to his
Account on such date by the Fair Market Value of a share of PepsiCo Capital
Stock on such date, and then adding the value of the Participant’s dividend
subaccount.

(ii) If shares of PepsiCo Capital Stock change by reason of any stock split,
stock dividend, recapitalization, merger, consolidation, spinoff, combination or
exchange of shares or other any other corporate change treated as subject to
this provision by the Plan Administrator, such equitable adjustment shall be
made in the number of shares credited to an Account or subaccount as the Plan
Administrator may determine to be necessary or appropriate.

In no event will shares of PepsiCo Capital Stock actually be purchased or held
under this Plan, and no Participant shall have any rights as a shareholder of
PepsiCo Capital Stock on account of an interest in this phantom option. While
this Plan refers to PepsiCo Capital Stock and the phantom PepsiCo Capital Stock
Account, such references to capital stock shall mean and refer to PepsiCo common
stock from and after the date when the Company changed to a common stock
structure.

(3) SaveUp Accounts. From time to time, the Plan Administrator shall designate
which of the investment options under the Company’s Long Term Savings Plan
(SaveUp) shall be available as phantom investment options under this Plan. As of
the Effective Date, such available phantom options are the Equity-Index Account,
Equity-Income Account, and the Security Plus Account. Participant Accounts
invested in these phantom options are adjusted to reflect an investment in the
corresponding investment options under SaveUp. An amount deferred or transferred
into one of these options is converted to phantom units in the applicable SaveUp
fund of equivalent value by dividing such amount by the value of a unit in such
fund on the date as of which the amount is treated as invested in this option by
the Plan Administrator. Thereafter, a Participant’s interest in each such
phantom option is valued as of a Valuation Date by multiplying the number of
phantom units credited to his Account on such date by the value of a unit in the
applicable SaveUp fund.

(d) Method of Allocation. With respect to any deferral election by a
Participant, the Participant must use his Election Form to allocate the deferral
in 5 percent increments among the phantom investment options then offered by the
Plan

 

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Administrator. Thereafter, a Participant may reallocate previously deferred
amounts in a subaccount by properly completing and submitting a fund transfer
form provided by the Plan Administrator and specifying, in 5 percent increments,
the reallocation of his Subaccount among the phantom investment options then
offered by the Plan Administrator for this purpose. Any such transfer form shall
be effective as of the Valuation Date that follows its receipt by at least the
number of days that the Plan Administrator specifies for this purpose from time
to time. If more than one transfer form is received on a timely basis for a
subaccount, the transfer form that the Plan Administrator determines to be the
most recent shall be followed.

(e) Investment Choices for Stock Option Gains. Deferrals of Stock Option gains
initially may be invested only in the PepsiCo Capital Stock Account. In the case
of a Participant who has attained his Retirement or, effective as of
September 12, 2008, upon a Participant’s death or Disability, the Plan
Administrator may make available some or all of the other phantom investment
options described in subsection (c) above. In this case, any election to
reallocate the balance in the Participant’s applicable Deferral Subaccount shall
be governed by the foregoing provisions of this section.

4.2 Vesting of a Participant’s Account. Except as provided in Section 4.3, a
Participant’s interest in the value of his Account shall at all times be 100
percent vested, which means that it will not forfeit as a result of his
Termination of Employment.

4.3 Risk of Forfeiture Subaccounts. A Participant may elect to defer Base
Compensation, Bonus Compensation or Performance Unit Payouts to a Risk of
Forfeiture Subaccount only if: (i) he had, as of June 1, 1994, a deferred
compensation subaccount maintained under a forfeiture agreement (as defined
below), and (ii) he has not yet attained eligibility for Retirement when the
first amount would be deferred pursuant to his current risk-of-forfeiture
election. A “forfeiture agreement” is an agreement with the Company, any
Employer, or one of their predecessors providing that the subaccount would be
forfeited if the employee terminated employment voluntarily or on account of
misconduct prior to Retirement. A Participant who meets these requirements may
elect under Article III to defer some or all of his eligible compensation to a
Risk of Forfeiture Subaccount subject to the following terms. (The date when a
Participant attains eligibility for Retirement is specified in the definition of
“Retirement.”)

(a) A Risk of Forfeiture Subaccount will be terminated and forfeited in the
event that the Participant has a Termination of Employment that is voluntary or
because of his misconduct prior to the earliest of:

(1) The end of the deferral period designated in his Election Form for such
deferral (or if later, the end of such minimum period as may be required under
Section 3.4);

 

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(2) The date the Participant attains eligibility for Retirement; or

(3) The date indicated on his Election Form as the end of the risk of forfeiture
condition (but not before completing the minimum risk of forfeiture period
required by the Plan Administrator from time to time).

(b) A Risk of Forfeiture Subaccount shall become fully vested (and shall cease
to be a Risk of Forfeiture Subaccount) when:

(1) The Participant reaches any of the dates in subsection (a) above while still
employed by the Company or one of its affiliates, or

(2) On the date the Participant terminates involuntarily from his Employer
(including death and termination for Disability), provided that such termination
is not for his misconduct.

(c) No amounts credited to a Risk of Forfeiture Subaccount may be transferred to
a subaccount of the Participant that is not a Risk of Forfeiture Subaccount. No
amounts credited to a subaccount of the Participant that is not a Risk of
Forfeiture Subaccount may be transferred to a Risk of Forfeiture Subaccount.

(d) A Participant may initially direct and then reallocate his Risk of
Forfeiture Subaccount to any of the phantom investment options under the Plan
that are currently available for such direction or reallocation, whichever
applies. During the period before a Risk of Forfeiture Subaccount ceases to be a
Risk of Forfeiture Subaccount, the return under any such phantom investment
option shall be supplemented as follows.

(1) In the case of the PepsiCo Capital Stock Account, the Participant’s dividend
subaccount thereunder shall be credited with an additional year-end dividend
amount equal to 2 percent of the average closing price of PepsiCo Capital Stock
for the 30 business days preceding the end of the Company’s fiscal year
multiplied by the number of phantom shares of PepsiCo Capital Stock credited to
the Participant’s Account as of the end of the year. If the Participant’s
subaccount was not a Risk of Forfeiture Subaccount for the entire year (or if
the Participant reallocated amounts to the PepsiCo Capital Stock Account after
the beginning of the year), this 2 percent additional dividend will be prorated
down appropriately, as determined by the Plan Administrator. In addition, the
Participant’s dividend subaccount shall earn interest at a rate that is 2
percent above the rate ordinarily applicable under the Interest Bearing Account
for the period that it is contained within a Risk of Forfeiture Subaccount.

 

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(2) In the case of any other available phantom investment option, the return on
each such option shall be supplemented with an additional 2% annual return for
the period that it is held within a Risk of Forfeiture Subaccount (but prorated
for periods of such investment of less than a year).

4.4 Distribution of a Participant’s Account. A Participant's Account shall be
distributed in cash as provided in this Section 4.4.

(a) Scheduled Payout Date. With respect to a specific deferral, a Participant’s
“Scheduled Payout Date” shall be the earlier of:

(1) The date selected by the Participant for such deferral in accordance with
Section 3.4, or

(2) The first day of the calendar quarter that follows the earliest to occur
event selected by the Participant for such deferral in accordance with
Section 3.4.

Notwithstanding the prior sentence, in the case of a deferral of Stock Option
Gains, a Participant’s Scheduled Payout Date for such deferral shall be first
day of the calendar quarter following his Termination of Employment other than
for death, Disability or Retirement (or 12 months after the date of the
deferral, if that would be later than such first day). With respect to any
deferral, if a Participant selects only a payout event that might not occur
(such as Retirement) and then terminates employment before the occurrence of the
event, the Plan Administrator may adopt rules to specify the Scheduled Payout
Date that shall apply to the deferral, notwithstanding the terms of the
Participant’s election. Unless an election has been made in accordance with
subsection (b) below, the Participant’s subaccount containing the deferral shall
be distributed to the Participant in a single lump sum as soon as practicable
following the Scheduled Payout Date.

(b) Payment Election. A Participant may delay receipt of a subaccount beyond its
Scheduled Payout Date, or elect to receive installments rather than a lump sum,
by making a payment election under this subsection. A payment election must be
made by the calendar year before the year containing the Scheduled Payout Date
(or if earlier, at least 6 months before the Scheduled Payout Date). Any payment
election to receive a lump sum at a later time must specify a revised payout
date that is at least 12 months after the Scheduled Payout Date. Any payment
election to receive installment payments in lieu of a lump sum shall specify the
amount (or method for determining) each installment and a set of revised payout
dates, the last of which must be at least 12 months after the Scheduled Payout
Date. With respect to any subaccount, only one election may be made under this
subsection. Beneficiaries are not permitted to make elections under this
subsection. In addition, an election under this subsection may not delay the
distribution of a deferral of Stock Option Gains made by a Participant whose
employment has terminated other than for death, Disability or Retirement. Actual
payments shall be made as soon as practicable following a revised payout date.

 

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(c) Valuation. In determining the amount of any individual distribution pursuant
to subsection (a) or (b) above, the Participant's subaccount shall continue to
be credited with earnings and gains (and debited for expenses and losses) under
Sections 4.1 and 4.3 until the Valuation Date preceding the Scheduled Payout
Date or revised payout date for such distribution (whichever is applicable). In
determining the value of a Participant’s remaining subaccount following an
installment distribution, such installment distribution shall reduce the value
of the Participant’s subaccount as of the close of the Valuation Date preceding
the revised payout date for such installment.

(d) Limitations. The following limitations apply to distributions from the Plan.

(1) Installments may only be made quarterly, semi-annually or annually, for a
period of no more than 20 years, and not later than the Participant’s 80th
birthday (or what would have been his 80th birthday, if the Participant dies
earlier).

(2) If a Participant has elected a Scheduled Payout Date that would be after his
80th birthday, the Participant shall be deemed to have elected his 80th birthday
as his Scheduled Payout Date.

(3) If a Participant has elected to defer income, which would qualify as
performance-based compensation under Code section 162(m), into a Risk of
Forfeiture Subaccount, then such subaccount may not be paid out at any time
while the Participant is a covered employee under Code section 162(m)(3), to the
extent the Plan Administrator determines it would result in compensation being
paid to the Participant in such year that would not be deductible under Code
section 162(m). The payout of any such amount shall be deferred until a year
when the Participant is no longer a section 162(m) covered employee. The Plan
Administrator may waive the foregoing provisions of this paragraph to the extent
necessary to avoid an undue hardship to the Participant. This paragraph shall
apply notwithstanding any provision of the Plan to the contrary.

(e) Upon a Participant’s death, his Beneficiary shall be paid each subaccount
still standing to the Participant’s credit under the Plan in accordance with the
terms of the Participant’s payout election for such subaccount under
Section 3.4, or his payment election under subsection (b) above, whichever is
applicable.

 

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4.5 Acceleration of Payment in Certain Cases. Except as expressly provided in
this Section 4.5, no payments shall be made under this Plan prior to the date
(or dates) applicable under Section 4.4.

(a) A Participant who is suffering severe financial hardship resulting from
extraordinary and unforeseeable events beyond the control of the Participant
(and who does not have other funds reasonably available that could satisfy the
severe financial hardship) may file a written request with the Plan
Administrator for accelerated payment of all or a portion of the amount credited
to his Account. A committee composed of representatives from the Company’s
Compensation Department, Tax Department and Law Department, or such other
parties as the Plan Administrator may specify from time to time, shall have sole
discretion to determine whether a Participant satisfies the requirements for a
hardship request and the amount that may be distributed (which shall not exceed
the amount reasonably necessary to alleviate the Participant’s hardship).

(b) After a Participant has filed a written request pursuant to this section,
along with all supporting material, the committee shall grant or deny the
request within 60 days (or such other number of days as is customarily applied
from time to time) unless special circumstances warrant additional time.

(c) The Plan Administrator may adjust the standards for hardship withdrawals
from time to time to the extent it determines such adjustment to be necessary to
avoid triggering constructive receipt of income under the Plan.

(d) A Beneficiary may also request a hardship distribution upon satisfaction of
the foregoing requirements and subject to the foregoing limitations.

(e) When determined to be necessary in the interest of sound plan
administration, the Plan Administrator may accelerate the payment of a class of
Participants’ subaccounts hereunder. This shall only occur to the extent the
Plan Administrator determines that such acceleration will not trigger
constructive receipt of subaccounts that are not paid out.

(f) When some or all of a Participant’s subaccount is distributed pursuant to
this section, the distribution and the subaccount shall be valued as provided by
the Plan Administrator, using rules patterned after those in Section 4.4(c)
above, on the Valuation Date coincident with or immediately preceding the date
on which the decision to make accelerated payment is made (or if later, the date
on which it is deemed to be effective).

 

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ARTICLE V

PLAN ADMINISTRATOR

5.1 Plan Administrator. The Plan Administrator is the Compensation Committee of
the Company’s Board of Directors (the “Committee”) or its delegate or delegates,
who shall act within the scope of their delegation pursuant to such operating
guidelines as the Committee shall establish from time to time. The Plan
Administrator is responsible for the administration of the Plan.

5.2 Action. Action by the Committee may be taken in accordance with procedures
that the Committee adopts from time to time or that the Company’s Law Department
determines are legally permissible.

5.3 Rights and Duties. The Plan Administrator shall administer and manage the
Plan and shall have all powers necessary to accomplish that purpose, including
(but not limited to) the following:

(a) To exercise its discretionary authority to construe, interpret, and
administer this Plan;

(b) To exercise its discretionary authority to make all decisions regarding
eligibility, participation and deferrals, to make allocations and determinations
required by this Plan, and to maintain records regarding Participants’ Accounts;

(c) To compute and certify to the Employer the amount and kinds of payments to
Participants or their Beneficiaries, and to determine the time and manner in
which such payments are to be paid;

(d) To authorize all disbursements by the Employer pursuant to this Plan;

(e) To maintain (or cause to be maintained) all the necessary records for
administration of this Plan;

(f) To make and publish such rules for the regulation of this Plan as are not
inconsistent with the terms hereof;

(g) To delegate to other individuals or entities from time to time the
performance of any of its duties or responsibilities hereunder;

(h) To establish or to change the phantom investment options or arrangements
under Article IV; and

 

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(i) To hire agents, accountants, actuaries, consultants and legal counsel to
assist in operating and administering the Plan.

(j) Notwithstanding any other provision of this Plan except Section 8.5
(relating to compliance with Section 409A), the Plan Administrator may take any
action the Plan Administrator deems is necessary to assure compliance with any
policy of the Company respecting insider trading as may be in effect from time
to time. Such actions may include altering the effective date of phantom
investment option transfers or the distribution date of Deferral Subaccounts.
Any such actions shall alter the normal operation of the Plan to the minimum
extent necessary.

The Plan Administrator has the exclusive and discretionary authority to construe
and to interpret the Plan, to decide all questions of eligibility for benefits,
to determine the amount and manner of payment of such benefits and to make any
determinations that are contemplated by (or permissible under) the terms of this
Plan, and its decisions on such matters will be final and conclusive on all
parties. Any such decision or determination shall be made in the absolute and
unrestricted discretion of the Plan Administrator, even if (A) such discretion
is not expressly granted by the Plan provisions in question, or (B) a
determination is not expressly called for by the Plan provisions in question,
and even though other Plan provisions expressly grant discretion or call for a
determination. In the event of a review by a court, arbitrator or any other
tribunal, any exercise of the Plan Administrator’s discretionary authority shall
not be disturbed unless it is clearly shown to be arbitrary and capricious.

5.4 Compensation, Indemnity and Liability. The Plan Administrator will serve
without bond and without compensation for services hereunder. All expenses of
the Plan and the Plan Administrator will be paid by the Employer. To the extent
deemed appropriate by the Plan Administrator, any such expense may be charged
against specific Participant Accounts, thereby reducing the obligation of the
Employer. No member of the Committee, and no individual acting as the delegate
of the Committee, shall be liable for any act or omission of any other member or
individual, nor for any act or omission on his own part, excepting his own
willful misconduct. The Employer will indemnify and hold harmless each member of
the Committee and any individual or individuals acting as the delegate of the
Committee against any and all expenses and liabilities, including reasonable
legal fees and expenses, arising out of his membership on the Committee (or his
serving as the delegate of the Committee), excepting only expenses and
liabilities arising out of his own willful misconduct.

5.5 Taxes. If the whole or any part of any Participant’s Account becomes liable
for the payment of any estate, inheritance, income, or other tax which the
Employer may be required to pay or withhold, the Employer will have the full
power and authority to withhold and pay such tax out of any moneys or other
property in its hand for the account of the Participant. To the extent
practicable, the Employer will provide the Participant notice of such
withholding. Prior to making any payment, the Employer may require such releases
or other documents from any lawful taxing authority as it shall deem necessary.

 

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5.6 Section 16 Compliance:

(a) General. To the maximum extent possible, this Plan is intended to be a
formula plan for purposes of Section 16 of the Securities Exchange Act of 1934,
as amended, (the “Act”). Accordingly, in the case of a deferral or other action
under the Plan that constitutes a transaction that could be covered by Rule
16b-3(d) or (e), if it were approved by the Company’s Board of Directors or
Compensation Committee (“Board Approval”), it is intended that the Plan shall be
administered by delegates of the Compensation Committee, in the case of a
Participant who is subject to Section 16 of the Act, in a manner that will
permit the Board Approval of the Plan to avoid any additional Board Approval of
specific transactions to the maximum possible extent.

(b) Approval of Distributions: From and after January 1, 2005, this Plan remains
subject to the Company’s policies requiring compliance with Section 16 of the
Act. Accordingly, this Subsection shall govern the distribution of a deferral
that (i) is wholly or partly invested in the phantom PepsiCo Capital Stock
Account at the time the deferral would be valued to determine the amount of cash
to be distributed to a Participant, (ii) either was the subject of a re-deferral
election or was not covered by an agreement, made at the time of the
Participant’s original deferral election, that any investments in the phantom
PepsiCo Capital Stock Account would, once made, remain in that account until
distribution of the deferral, (iii) is made to a Participant who is subject to
Section 16 of the Act at the time the interest in the phantom PepsiCo Capital
Stock Account would be liquidated in connection with the distribution, and
(iv) if paid at the time the distribution would be made without regard to this
subsection, could result in a violation of Section 16 of the Act because there
is an opposite way transaction that would be matched with the liquidation of the
Participant’s interest in the PepsiCo Capital Stock Account (either as a
“discretionary transaction,” within the meaning of Rule 16b-3(b)(1), or as a
regular transaction, as applicable) (a “Covered Distribution”). In the case of a
Covered Distribution, if the liquidation of the Participant’s interest in the
phantom PepsiCo Capital Stock Account in connection with the distribution has
not received Board Approval by the time the distribution would be made if it
were not a Covered Distribution, or if it is a discretionary transaction, then
provided that there is no material modification for Section 409A purposes, the
actual distribution to the Participant shall be delayed only until the earlier
of:

(1) In the case of a transaction that is not a discretionary transaction, Board
Approval of the liquidation of the Participant’s interest in the phantom PepsiCo
Capital Stock Account in connection with the distribution, and

 

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(2) The date the distribution would no longer violate Section 16 of the Act,
e.g., when the Participant is no longer subject to Section 16 of the Act, when
the Deferral Subaccount related to the distribution is no longer invested in the
phantom PepsiCo Capital Stock Account or when the time between the liquidation
and an opposite way transaction is sufficient.

 

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ARTICLE VI

CLAIMS PROCEDURE

6.1 Claims for Benefits. If a Participant, Beneficiary or other person
(hereafter, “Claimant”) does not receive timely payment of any benefits which he
believes are due and payable under the Plan, he may make a claim for benefits to
the Plan Administrator. The claim for benefits must be in writing and addressed
to the Plan Administrator or to the Company. If the claim for benefits is
denied, the Plan Administrator will notify the Claimant in writing within 90
days after the Plan Administrator initially received the benefit claim. However,
if special circumstances require an extension of time for processing the claim,
the Plan Administrator will furnish notice of the extension to the Claimant
prior to the termination of the initial 90-day period and such extension may not
exceed one additional, consecutive 90-day period. Any notice of a denial of
benefits should advise the Claimant of the basis for the denial, any additional
material or information necessary for the Claimant to perfect his claim, and the
steps which the Claimant must take to have his claim for benefits reviewed.

6.2 Appeals. Each Claimant whose claim for benefits has been denied may file a
written request for a review of his claim by the Plan Administrator. The request
for review must be filed by the Claimant within 60 days after he received the
written notice denying his claim. The decision of the Plan Administrator will be
made within 60 days after receipt of a request for review and will be
communicated in writing to the Claimant. Such written notice shall set forth the
basis for the Plan Administrator’s decision. If there are special circumstances
which require an extension of time for completing the review, the Plan
Administrator’s decision may be rendered not later than 120 days after receipt
of a request for review.

6.3 Special Procedures for Disability Determinations: Notwithstanding Sections
6.1 and 6.2, for claims and appeals relating to Disability benefits that are
filed from and after January 1 2002, such claim or appeal shall be processed
pursuant to the applicable provisions of Department of Labor Regulation
Section 2560.503-1 relating to Disability benefits, including Sections
2560.503-1(d), 2560.503-1(f)(3), 2560.503-1(h)(4) and 2560.503-1(i)(3).

 

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ARTICLE VII

AMENDMENT AND TERMINATION

7.1 Amendments. The Compensation Committee of the Board of Directors of the
Company has the right in its sole discretion to amend this Plan in whole or in
part at any time and in any manner; provided, however, that no such amendment
shall reduce the amount credited to the Account of any Participant as of the
date such amendment is adopted. Any amendment shall be in writing and adopted by
the Committee or an officer of the Company who is authorized by the Committee
for this purpose. All Participants shall be bound by such amendment.

7.2 Termination of Plan. The Company expects to continue this Plan, but does not
obligate itself to do so. The Company, acting by the Compensation Committee of
its Board of Directors, reserves the right to discontinue and terminate the Plan
at any time, in whole or in part, for any reason (including a change, or an
impending change, in the tax laws of the United States or any State).
Termination of the Plan will be binding on all Participants (and a partial
termination shall be binding upon all affected Participants), but in no event
may such termination reduce the amounts credited at that time to any
Participant’s Account. If this Plan is terminated (in whole or in part), amounts
theretofore credited to affected Participants’ Accounts may either be paid in a
lump sum immediately, or distributed in some other manner consistent with this
Plan, as determined by the Plan Administrator in its sole discretion.

 

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ARTICLE VIII

MISCELLANEOUS

8.1 Limitation on Participant’s Rights. Participation in this Plan does not give
any Participant the right to be retained in the Employer’s or Company’s employ
(or any right or interest in this Plan or any assets of the Company or Employer
other than as herein provided). The Company and Employer reserve the right to
terminate the employment of any Participant without any liability for any claim
against the Company or Employer under this Plan, except for a claim for payment
of deferrals as provided herein.

8.2 Unfunded Obligation of Individual Employer. The benefits provided by this
Plan are unfunded. All amounts payable under this Plan to Participants are paid
from the general assets of the Participant’s individual Employer. Nothing
contained in this Plan requires the Company or Employer to set aside or hold in
trust any amounts or assets for the purpose of paying benefits to Participants.
Neither a Participant, Beneficiary, nor any other person shall have any property
interest, legal or equitable, in any specific Employer asset. This Plan creates
only a contractual obligation on the part of a Participant’s individual
Employer, and the Participant has the status of a general unsecured creditor of
this Employer with respect to amounts of compensation deferred hereunder. Such a
Participant shall not have any preference or priority over, the rights of any
other unsecured general creditor of the Employer. No other Employer guarantees
or shares such obligation, and no other Employer shall have any liability to the
Participant or his Beneficiary. In the event, a Participant transfers from the
employment of one Employer to another, the former Employer shall transfer the
liability for deferrals made while the Participant was employed by that Employer
to the new Employer (and the books of both Employers shall be adjusted
appropriately).

8.3 Other Plans. This Plan shall not affect the right of any eligible Employee
or Participant to participate in and receive benefits under and in accordance
with the provisions of any other employee benefit plans which are now or
hereafter maintained by any Employer, unless the terms of such other employee
benefit plan or plans specifically provide otherwise or it would cause such
other plan to violate a requirement for tax favored treatment.

8.4 Receipt or Release. Any payment to a Participant in accordance with the
provisions of this Plan shall, to the extent thereof, be in full satisfaction of
all claims against the Plan Administrator, the Employer and the Company, and the
Plan Administrator may require such Participant, as a condition precedent to
such payment, to execute a receipt and release to such effect.

8.5 Governing Law and Compliance. This Plan shall be construed, administered,
and governed in all respects in accordance with applicable federal law and, to
the extent not preempted by federal law, in accordance with the laws of the
State of North

 

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Carolina. If any provisions of this instrument shall be held by a court of
competent jurisdiction to be invalid or unenforceable, the remaining provisions
hereof shall continue to be fully effective. In addition, at all times during
each Plan Year, this Plan shall be operated to preserve the status of deferrals
under this Pre-409A Program as being exempt from Section 409A, i.e., to preserve
the grandfathered status of this Pre-409A Program. In all cases, the provisions
of the prior sentence shall apply notwithstanding any contrary provision of the
Plan.

8.6 Adoption of Plan by Related Employers. The Plan Administrator may select as
an Employer any division of the Company, as well as any corporation related to
the Company by stock ownership, and permit or cause such division or corporation
to adopt the Plan. The selection by the Plan Administrator shall govern the
effective date of the adoption of the Plan by such related Employer. The
requirements for Plan adoption are entirely within the discretion of the Plan
Administrator and, in any case where the status of an entity as an Employer is
at issue, the determination of the Plan Administrator shall be absolutely
conclusive.

8.7 Gender, Tense, Headings and Examples. In this Plan, whenever the context so
indicates, the singular or plural number and the masculine, feminine, or neuter
gender shall be deemed to include the other. Headings and subheadings in this
Plan are inserted for convenience of reference only and are not considered in
the construction of the provisions hereof. 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 passage 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 limitation on its
breadth of application).

8.8 Successors and Assigns; Nonalienation of Benefits. This Plan inures to the
benefit of and is binding upon the parties hereto and their successors, heirs
and assigns; provided, however, that the amounts credited to the Account of a
Participant are not (except as provided in Section 5.5) 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 any benefits
payable hereunder, including, without limitation, any assignment or alienation
in connection with a separation, divorce, child support or similar arrangement,
will be null and void and not binding on the Plan or the Company or Employer.
Notwithstanding the foregoing, the Plan Administrator reserves the right to make
payments in accordance with a divorce decree, judgment or other court order as
and when cash payments are made in accordance with the terms of this Plan from
the subaccount of a Participant. Any such payment shall be charged against and
reduce the Participant’s Account.

8.9 Facility of Payment. Whenever, in the Plan Administrator’s opinion, a
Participant or Beneficiary entitled to receive any payment hereunder is under a
legal

 

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disability or is incapacitated in any way so as to be unable to manage his
financial affairs, the Plan Administrator may direct the Employer to make
payments to such person or to the legal representative of such person for his
benefit, or to apply the payment for the benefit of such person in such manner
as the Plan Administrator considers advisable. Any payment in accordance with
the provisions of this section shall be a complete discharge of any liability
for the making of such payment to the Participant or Beneficiary under the Plan.

8.10 Separate Plans. This Plan document encompasses three separate plans of
deferred compensation for all legal purposes (including federal tax law, state
tax law and, effective January 1, 1999, ERISA) as set forth in subsections (a),
(b) and (c) below.

(a) The portion of the Plan that provides for deferrals of Base Compensation and
Bonus Compensation (which shall be known as the “PepsiCo Executive Income
Deferral Plan”).

(b) The portion of the Plan that provides for deferrals of Performance Unit
Payouts (which shall be known as the “PepsiCo Performance Unit Deferral Plan”).

(c) The portion of the Plan that provides for deferrals of Stock Option Gains
(which shall be known as the “PepsiCo Option Gains Deferral Plan”).

Together, these three separate plans of deferred compensation are referred to as
the PepsiCo Executive Income Deferral Program.

 

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PEPSICO EXECUTIVE INCOME DEFERRAL PROGRAM

APPENDIX

The following Appendix articles modify or supplement the general terms of the
Plan as it applies to certain executives.

Except as specifically modified in the Appendix, the foregoing provisions of the
Plan shall fully apply. In the event of a conflict between this Appendix and the
foregoing provisions of the Plan, the Appendix shall govern with respect to the
conflict.

 

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ARTICLE A

SPINOFF OF TRICON

This Article sets forth provisions that apply in connection with the Company’s
spinoff of Tricon Global Restaurants, Inc.

A.1 Definitions. When used in this Article, the following underlined terms shall
have the meanings set forth below. Except as otherwise provided in this Article,
all terms that are defined in Article II of the Plan shall have the meaning
assigned to them by Article II.

(a) Distribution Date: The “Distribution Date” as that term is defined in the
1997 Separation Agreement between PepsiCo, Inc. and Tricon.

(b) PepsiCo Account Holder: A Participant who has an interest in the PepsiCo
Capital Stock Account on the Reference Date.

(c) Reference Date: The date specified by the Plan Administrator for purposes of
determining who shall be credited with an interest in the Tricon Common Stock
Account.

(d) Transferred Individual: A “Transferred Individual” as that term is defined
in the 1997 Employee Programs Agreement between PepsiCo, Inc. and Tricon.

(e) Transition Individuals: A “Transition Individual” as that term is defined in
the 1997 Employee Programs Agreement between PepsiCo, Inc. and Tricon.

(f) Tricon: Tricon Global Restaurants, Inc., a North Carolina Corporation.

(g) Tricon Account Holder: A PepsiCo Account Holder whose interest in the
PepsiCo Capital Stock Account on the Reference Date includes at least 10 phantom
shares of PepsiCo Capital Stock.

(h) Tricon EID: Tricon Executive Income Deferral Program.

(i) Tricon Group: Tricon and its subsidiaries and affiliates, as determined by
the Plan Administrator.

A.2 Transfer of Benefits and Liabilities. Effective as of the end of the day on
the Distribution Date, all interests in the Plan of (and Plan liabilities with
respect to)

 

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nonterminated Transferred Individuals shall be transferred to the Tricon EID.
This transfer shall constitute a complete payout of these individuals’ Accounts
for purposes of determining who is a Participant or Beneficiary under the Plan.
For this purpose, a Transferred Individual shall be considered “nonterminated”
if he is actively employed by (or on a leave of absence from and expected to
return to) the Tricon Group. Following the Distribution Date, Tricon shall
succeed to all of PepsiCo’s authority to affect and govern Plan interests
transferred in accordance with this section (including through interpretation,
plan amendment or plan termination).

A.3 Cessation of Employer Status. Effective as of the end of the day on the
Distribution Date, any Employer who is a member of the Tricon Group shall no
longer qualify as Employers hereunder. Any individual whose Account is
transferred in accordance with Section A.2 shall not thereafter be able to defer
any compensation (including Stock Option Gains) under this Plan, unless he
returns to employment with an Employer following the Distribution Date (and is
an eligible Employee at the time of the deferral).

A.4 Employment Transfers by Transition Individuals. If a Participant is
transferred to the Tricon Group under circumstances that cause him to be a
Transition Individual, such transfer to the Tricon Group shall not be considered
a Termination of Employment or other event that could trigger distribution of
the Participant’s interest in the Plan. In this case, the Participant’s interest
in the Plan (and all Plan liabilities with respect to the Participant) shall be
retained by the Plan. For purposes of determining the distribution of such
Participant’s interest in the Plan, the Participant’s Termination of Employment
shall not be deemed to occur before his termination of employment with the
Tricon Group.

A.5 Special Tricon Stock Investment Option. As of the Distribution Date, the
Plan Administrator shall establish a temporary phantom investment option under
the Plan, the Tricon Common Stock Account, and each Tricon Account Holder shall
be credited with an interest in such account.

(a) Establishing the Account Holder’s Interest. The amount of a Tricon Account
Holder’s interest is determined by dividing by 10 the number of phantom shares
of PepsiCo Capital Stock standing to his credit in the PepsiCo Capital Stock
Account on the Reference Date. The portion of the resulting quotient that is an
integer shall be the number of phantom shares of Tricon Common Stock that is
credited to the Participant’s Tricon Common Stock Account as of the Distribution
Date. A Tricon Stock Holder’s interest in the Tricon Common Stock Account shall
also include a dividend subaccount. The initial balance in the dividend
subaccount shall be zero, but it shall thereafter be credited with all amounts
that would be received for the Participant by the Tricon Common Stock Account as
dividends, if dividends were paid on phantom shares of Tricon Common Stock as
they are on actual shares. All amounts credited to this dividend subaccount
shall be invested in the phantom option described in Section 4.1(c)(1) (the
Interest Bearing Account).

 

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(b) Valuation and Adjustment: A Participant’s interest in the Tricon Common
Stock Account is valued as of a Valuation Date by multiplying the number of
phantom shares credited to his Account on such date by the fair market value of
a share of Tricon Common Stock on such date, and then adding the value of the
Participant’s dividend subaccount.

(1) As of any date, the fair market value of Tricon Common Stock is determined
for purposes of this Article using procedures comparable to those used in
determining the Fair Market Value of PepsiCo Capital Stock, but with such
modifications as the Plan Administrator may apply from time to time.

(2) If shares of Tricon Common Stock change by reason of any stock split, stock
dividend, recapitalization, merger, consolidation, spinoff, combination or
exchange of shares or other any other corporate change treated as subject to
this provision by the Plan Administrator, such equitable adjustment shall be
made in the number of shares credited to an Account or subaccount as the Plan
Administrator may determine to be necessary or appropriate

In no event will shares of Tricon Common Stock actually be purchased or held
under this Plan, and no Participant shall have any rights as a shareholder of
Tricon Common Stock on account of an interest in the Tricon Common Stock
Account.

(c) Investment Reallocations. In accordance with Section 4.1(e), a Tricon
Account Holder may reallocate amounts from his Subaccounts in the Tricon Common
Stock Account to other phantom investment options under the Plan that are
available for this purpose. No Participant may reallocate amounts into the
Tricon Common Stock Account.

(d) Termination of the Tricon Common Stock Account. Effective as of the end of
the day on December 31, 1999 (or such later date as the Plan Administrator shall
specify), the Tricon Common Stock Account shall cease to be available under the
Plan. Any amount under the Plan still standing to the credit of a Participant on
such date shall automatically be reallocated to the phantom investment option
described in Section 4.1(c)(1) (the Interest Bearing Account) unless the
Participant selects a different replacement option in accordance with such
requirements as the Plan Administrator may apply.

A.6 PepsiCo Account Holders with Less Than 10 Shares: The interest in the
PepsiCo Capital Stock Account of any PepsiCo Account Holder who does not qualify
to be a Tricon Account Holder shall be adjusted as of the Distribution Date.
Pursuant to this adjustment, the value of his dividend subaccount under the
PepsiCo Capital Stock Account shall be increased by the product of (a) and
(b) below:

(a) The number of phantom shares of PepsiCo stock credited to the Participant’s
Account under the PepsiCo Capital Stock Account divided by 10.

 

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(b) The fair market value of a share of Tricon Common Stock on the Distribution
Date.

 

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ARTICLE B

INITIAL PUBLIC OFFERING OF PBG

This Article sets forth provisions that apply in connection with PBG’s initial
public offering.

B.1 Definitions. When used in this Article, the following underlined terms shall
have the meanings set forth below. Except as otherwise provided in this Article,
all terms that are defined in Article II of the Plan shall have the meaning
assigned to them by Article II.

(a) Offering Date: The “Offering Date” as that term is defined in the Separation
Agreement between PepsiCo, Inc. and PBG.

(b) PBG: Pepsi Bottling Group, Inc.

(c) PBG EID: PBG Executive Income Deferral Program.

(d) PBG Group: PBG and its subsidiaries and affiliates, as determined by the
Plan Administrator.

(e) Transferred Individual: A “Transferred Individual” as that term is defined
in the Employee Programs Agreement between PepsiCo, Inc. and PBG.

(f) Transition Individuals: A “Transition Individual” as that term is defined in
the Employee Programs Agreement between PepsiCo, Inc. and PBG.

B.2 Transfer of Benefits and Liabilities. Effective as of the end of the day on
the Offering Date, all interests in the Plan of (and Plan liabilities with
respect to) nonterminated Transferred Individuals shall be transferred to the
PBG EID. This transfer shall constitute a complete payout of these individuals’
Accounts for purposes of determining who is a Participant or Beneficiary under
the Plan. For this purpose, a Transferred Individual shall be considered
“nonterminated” if he is actively employed by (or on a leave of absence from and
expected to return to) the PBG Group, as of the end of the day on the Offering
Date.

B.3 Cessation of Employer Status. Effective as of the end of the day on the
Offering Date, any Employer who is a member of the PBG Group shall no longer
qualify as an Employer hereunder. Any individual whose Account is transferred in
accordance with Section B.2 shall not thereafter be able to defer any
compensation (including Stock Option Gains) under this Plan, unless he returns
to employment with an Employer following the Offering Date (and is an eligible
Employee at the time of the deferral). Following the Offering Date, PBG shall
succeed to all of PepsiCo’s authority to affect and govern Plan interests
transferred in accordance with this section (including through interpretation,
plan amendment or plan termination).

 

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B.4 Employment Transfers by Transition Individuals.

(a) Transfers to PBG. If a Participant is transferred to the PBG Group under
circumstances that cause him to be a Transition Individual, such transfer to the
PBG Group shall not be considered a Termination of Employment or other event
that could trigger distribution of the Participant’s interest in the Plan. In
this case, the Participant’s interest in the Plan (and all Plan liabilities with
respect to the Participant) may be retained by the Plan, or they may be
transferred to the PBG EID, as determined by the Plan Administrator in its
discretion. If a transfer of the Participant’s interest occurs, this transfer
shall constitute a complete payout of the Participant’s Account for purposes of
determining who is a Participant or Beneficiary under the Plan. If a transfer
does not occur, for purposes of determining the distribution of such
Participant’s interest in the Plan, the Participant’s Termination of Employment
shall not be deemed to occur before his termination of employment with the PBG
Group.

(b) Transfers from PBG. If an individual is transferred by the PBG Group to an
Employer under circumstances that cause him to be a Transition Individual and
such individual’s interest in the PBG EID is transferred to this Plan, such
Individual shall become a Participant in this Plan. In connection with any such
transfer of the individual’s interest, the individual’s phantom investment in
PBG capital stock under the PBG EID shall be carried over and replicated
hereunder until December 31, 2000 (or such other date as may be specified by the
Plan Administrator). Any other phantom investment of the individual under the
PBG EID may be carried over and replicated hereunder, or it may be converted to
a phantom investment available under the Plan (depending upon the procedures
then applied by the Plan Administrator).

B.5 Special PBG Stock Investment Option. To the extent required by Section B.4
(and as otherwise made available by the Plan Administrator from time to time),
the Plan Administrator shall establish a temporary phantom investment option
under the Plan, the PBG Capital Stock Account.

(a) General Principles. The PBG Capital Stock Account shall be administered
under rules that are similar to those applicable to the PepsiCo Capital Stock
Account, but with such modifications as the Plan Administrator may apply from
time to time.

(b) Valuation and Adjustment: A Participant’s interest in the PBG Capital Stock
Account is valued as of a Valuation Date by multiplying the number of phantom
shares credited to his Account on such date by the fair market value of a

 

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share of PBG Capital Stock on such date, and then adding the value of the
Participant’s dividend subaccount. If shares of PBG Capital Stock change by
reason of any stock split, stock dividend, recapitalization, merger,
consolidation, spinoff, combination or exchange of shares or other any other
corporate change treated as subject to this provision by the Plan Administrator,
such equitable adjustment shall be made in the number of shares credited to an
Account or subaccount as the Plan Administrator may determine to be necessary or
appropriate. In no event will shares of PBG Capital Stock actually be purchased
or held under this Plan, and no Participant shall have any rights as a
shareholder of PBG Capital Stock on account of an interest in the PBG Capital
Stock Account.

(c) Investment Reallocations. In accordance with Section 4.1(e), a PBG Account
Holder may reallocate amounts from his Subaccounts in the PBG Capital Stock
Account to other phantom investment options under the Plan that are available
for this purpose. Except as expressly authorized by the Plan Administrator, no
Participant may reallocate amounts into the PBG Capital Stock Account.

(d) Termination of the PBG Capital Stock Account. Effective as of the end of the
day on December 31, 2000 (or such later date as the Plan Administrator shall
specify), the PBG Capital Stock Account shall cease to be available under the
Plan. Any amount under the Plan still standing to the credit of a Participant on
such date shall automatically be reallocated to the phantom investment option
described in Section 4.1(c)(1) (the Interest Bearing Account) unless the
Participant selects a different replacement option in accordance with such
requirements as the Plan Administrator may apply.

 

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