Exhibit 10.1
[Letterhead of Cynthia M. Trudell]
[Senior Vice President, Human Resources]
October 30, 2007               
BY HAND
Dawn E. Hudson
[Address]
     Dear Dawn:
     This letter agreement describes the terms and conditions of your continued
active employment with PepsiCo, Inc. (together with its subsidiaries, divisions,
affiliates, predecessors and successors, the “Company”) and confirms the
arrangements relating to your separation from the Company. The material terms
and conditions of this letter agreement have been approved by the Board of
Directors of the Company (the “Board’) upon recommendation by the Compensation
Committee of the Board.
     After the date of this letter agreement, you will not be entitled to
receive any further payments or benefits from the Company, except as
specifically set forth in this letter agreement or except as provided under the
indemnity provisions of the Company’s By-laws and director and officer and
professional liability insurance policies.
1. Status and Responsibilities.
     Effective as of November 5, 2007, you will relinquish your position as
President and CEO of Pepsi-Cola North America, all other appointments and
offices you hold with the Company and your position with any third-party
organizations in which you represent the Company. You will continue your active
employment with the Company through February 15, 2008 (your “Separation Date”)
and your employment with the Company will terminate on your Separation Date.
During the period from November 5, 2007 through your Separation Date (the
“Transition Period”), you shall provide such services as shall be requested by
the Chief Executive Officer of PepsiCo, Inc. Neither such services nor anything
in this letter agreement shall preclude you from engaging in any other
commercial or business activity in any capacity after November 5, 2007 provided
such activity would not otherwise result in a violation of Section 3 hereof or
is not prohibited by Section 4 hereof. In the event you commence employment with
another entity during the Transition Period, your employment will terminate and
the Separation Date shall occur seven (7) days after such other employment
commences.

 

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Dawn E. Hudson
October 30, 2007
Page 2
2. Payments.
     (a) Salary, Annual Bonus and Premium Bonus. You will continue to receive
your salary at your current rate and according to normal payroll procedures
during the Transition Period. Pursuant to the terms of the PepsiCo, Inc.
Executive Incentive Compensation Plan, you will also be eligible for a 2007
annual bonus, calculated in the normal course based on a 100% individual score
and actual team score for 2007. The amount of your 2007 annual bonus is subject
to approval by the Compensation Committee at its February 2008 meeting. You will
also be eligible for the remaining third of your 2005 Premium Bonus, the second
third of your 2006 Premium Bonus and the first third of your 2007 Premium Bonus.
Your 2007 annual bonus and the aforementioned Premium Bonus amounts will be paid
to you in the first quarter of 2008 (not later than March 15, 2008). You will
not be eligible for an annual bonus for 2008 or thereafter and will not be
eligible for any Premium Bonus amounts other than the aforementioned.
     (b) Lump Sum Cash Payment. In addition to the foregoing payments, as soon
as practicable after your Separation Date (but no later than March 15, 2008),
you will receive a lump sum cash payment in the amount of $4,137,500.
     (c) Personal Benefits (Health, etc.). You and your covered dependents will
continue to be covered under the Company’s personal benefit plans and programs
(medical insurance, dental insurance, vision insurance, health care
reimbursement account, group life insurance, dependent life insurance, accident
insurance, and group legal services) as are applicable to active employees
during the Transition Period, subject to your benefit elections and continued
payment of all applicable employee contributions. After your Separation Date,
you and your covered dependents will be eligible for continued health benefits
in accordance with the Consolidated Omnibus Budget Reconciliation Act of 1985
(“COBRA”). Personal benefit coverage applicable to active employees is neither
fixed nor guaranteed and may be amended or terminated by the Company at any
time.
     (d) Retirement Plans. You will continue to accrue benefits under the
PepsiCo Salaried Employees Retirement Plan and the PepsiCo Pension Equalization
Plan (the “Retirement Plans”) until your Separation Date. Because you will not
have reached age 55 on or before your Separation Date, you will not be eligible
for early retirement benefits under the Retirement Plans. Instead, you will be
eligible for deferred vested benefits under the Retirement Plans, the payment of
which will be in the form of an annuity commencing no earlier than your
attainment of age 55. You may make contributions to the PepsiCo 401(k) Plan for
Salaried Employees (the “401(k) Plan”), and will be eligible for employer
matching contributions, through your Separation Date in accordance with the
terms of the 401(k) Plan. After your Separation Date, you may continue to
participate in the 401(k)

 

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Dawn E. Hudson
October 30, 2007
Page 3
Plan in accordance with its terms; however, you will not be entitled to make any
additional contributions.
     (e) Equity Awards.
     (i) The Company has provided you with a schedule of your outstanding equity
awards, and you and the Company have confirmed the accuracy of that schedule. By
action of the Board, the options to purchase PepsiCo common stock (“Options”)
awarded to you on February 1, 2005 and February 3, 2006 pursuant to the PepsiCo,
Inc. 2003 Long-Term Incentive Plan (the “2003 LTIP”), but not including your
SharePower Program awards made on such dates, will all vest on the Effective
Date (as defined in Section 9 below) and will remain outstanding and exercisable
until, and will expire upon, the date that is ninety (90) days after your
Separation Date. In addition, by action of the Board, the performance-based
restricted stock units (“RSUs”) awarded to you on February 1, 2005 and
February 3, 2006 pursuant to the 2003 LTIP will all vest on your Effective Date,
subject to the subsequent achievement of the applicable pre-established
performance targets in accordance with the terms of your related long-term
incentive award agreement. Upon certification by the Compensation Committee of
achievement of such pre-established performance targets, such 2005 RSUs and 2006
RSUs will convert to shares of PepsiCo common stock and will be distributed to
you as soon as practicable following the certification date on or about
February 1, 2008 and February 1, 2009, respectively.
     (ii) Except as otherwise set forth in (i) above, (1) all of your Options
and RSUs that are unvested as of the Effective Date will expire and be cancelled
on the Effective Date and (2) your remaining Options and RSUs will continue to
be subject to the applicable terms and conditions of the Company’s long-term
incentive plans and your related long-term incentive award agreements, including
the provisions related to prohibited conduct set forth therein. Through your
Separation Date, you will continue to be subject to PepsiCo’s Insider Trading
Policy and any limitations on option exercises for cash imposed by PepsiCo’s
Exercise and Hold Policy; it being understood that any obligation to hold
PepsiCo common stock under such policy shall expire on your Separation Date. As
such, you may only perform transactions in PepsiCo common stock prior to your
Separation Date during defined window periods and after obtaining approval from
the General Counsel of PepsiCo.
3. Non-Disclosure.
     In the course of your employment with the Company, you acknowledge that you
have received Confidential Information. “Confidential Information” consists of
information relating to the Company’s business that derives economic value,
actual or potential, from not being generally known to others, including, but
not limited to, technical or non-technical data, a formula (including cost
and/or pricing formula), pattern (including pricing and discount

 

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Dawn E. Hudson
October 30, 2007
Page 4
history), compilation, program, device, method (including cost and/or pricing
methods, marketing programs and operating methods), technique, drawing, process,
financial data, or a list of actual or potential customers or suppliers. You
agree that you will hold and maintain all Confidential Information, in
confidence, and you will not use or disclose in any manner whatsoever (other
than within the scope of your employment with the Company) any such Confidential
Information to any third party except (i) with the prior written consent of the
Company or (ii) as legally required by law under compulsion of judicial or
administrative subpoena, after notice by you to the Company of such legally
required disclosure. The foregoing provision in this Section 3 is not intended
to supersede or limit your obligations under any confidentiality,
non-disclosure, trade secret or assignment-of-invention agreement previously
executed by you in favor of the Company, and any such agreement shall remain in
full force and effect.
4. Non-Competition and Non-Solicitation.
     (a) You covenant and agree that, prior to the second anniversary of the
Effective Date, you will not, without the prior written consent of the Company,
either directly or indirectly:
     (i) participate or have any interest in, own, manage, operate, control, be
connected with as a stockholder, director, officer, employee, partner or
consultant, or otherwise engage, invest or participate (collectively,
“Participate”) in any Prohibited Entity or in any Competing Entity; provided,
however, that, with the prior written consent of the Company, which consent
shall not be unreasonably withheld, you shall be permitted to Participate in
(A) a division or subsidiary of a Competing Entity that is not engaged in any
way in marketing, selling, distributing, developing or producing Covered
Products or (B) a business entity that makes retail sales or consumes Covered
Products;
     (ii) Participate in any of the bottling entities with which the Company
does business as of the date of this letter agreement, including the Company’s
anchor bottlers;
     (iii) solicit, anywhere in the world where the Company conducts its
business, any business comprising or related to the marketing, selling,
distributing or producing of Covered Products (as defined below) for any
Prohibited Entity or Competing Entity from any of the Company’s customers or
suppliers; or otherwise do any act which diverts, or is intended to divert,
customers or suppliers from the Company; or
     (iv) solicit any person who is employed by the Company, or who was an
employee of the Company within six months of such solicitation, to leave the
Company’s employment or to accept any position with any other entity.

 

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Dawn E. Hudson
October 30, 2007
Page 5
     (b) The provisions of this Section 4 shall not apply to prevent you and
your immediate family from collectively being holders of up to five percent (5%)
in the aggregate of any class of securities of any corporation engaged in the
prohibited activities described in paragraphs (i) or (ii) in Section 4(a) above,
provided that such securities are listed on a national securities exchange or
registered under securities laws of Canada or the United States. You agree that
the covenants you have made in this Section 4 are reasonable with respect to
their scope, duration and terms and are necessary to protect the legitimate
business interests of the Company. You acknowledge that you have received
substantial consideration, including but not limited to the Company’s
obligations under Section 2(e) of this letter agreement, in exchange for your
agreement to the non-compete, confidentiality and non-solicitation covenants set
forth in this letter agreement.
     (c) If the non-competition covenants contained in this Section 4 or in any
other agreement between you and the Company should be held by any court or other
constituted legal authority to be effective in any particular area or
jurisdiction only if said covenants are modified to limit their duration or
scope, then the parties hereto shall consider such non-competition covenants to
be amended and modified with respect to that particular area or jurisdiction so
as to comply with the order of any court or other constituted legal authority,
and as to all other political subdivisions of the United States, the
non-competition covenants contained herein shall remain in full force and effect
as originally written.
     (d) For purposes of this Section 4, in addition to other terms defined
under this letter agreement, the following capitalized terms have the following
meaning:
     (i) “Competing Entity” means any firm, corporation or other business
entity, other than a Prohibited Entity, that markets, sells, distributes,
develops or produces Covered Products anywhere in the world where the Company
conducts its business.
     (ii) “Covered Products” means any non-alcoholic beverages, including
without limitation, carbonated soft drinks, coffee, tea, milk, water, juice
drinks, sports drinks, energy drinks, coffee drinks and juices.
     (iii) “Prohibited Entity” means each of The Coca-Cola Company, Coca-Cola
Enterprises, Cadbury Schweppes plc, Cott Corporation, Hanson Natural
Corporation, Red Bull GmbH, and any subsidiary, affiliate or divisions of the
foregoing entities.

 

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Dawn E. Hudson
October 30, 2007
Page 6
5. Irreparable Harm.
     You acknowledge that a breach or threatened breach by you of the terms of
Sections 3 or 4 of this letter agreement would result in material and
irreparable injury to the Company, and that it would be difficult or impossible
to establish the full monetary value of such damage. Therefore, the Company
shall be entitled to injunctive relief in the event of any such breach or
threatened breach. The undertakings and obligations contained in Sections 3, 4
and 5 shall continue as written even if other provisions of this letter
agreement terminate sooner.
6. Future Cooperation.
     You agree that you will provide accurate information or testimony or both
in connection with any legal matters, if so requested by the Company. You
further agree to make yourself available upon request to provide information
and/or testimony, in a formal and/or informal setting in accordance with the
Company’s request, subject to reasonable accommodation of your schedule and
reimbursement of reasonable expenses incurred by you, including reasonable and
necessary attorney fees (if independent legal counsel is reasonably necessary).
Notwithstanding the foregoing, the Company’s agreement and obligations pursuant
to the foregoing sentence shall be subject to the provisions and limitations set
forth in Section 10 of this letter agreement.
7. Non-Disparagement.
     You agree that you will not make any statement, written or verbal, in any
forum or media, or take any action in disparagement of the Company, including
but not limited to negative references to the Company or its products, services,
corporate policies, or current or former officers or employees, customers,
suppliers, or business partners or associates.
8. Releases.
     (a) You agree to release and discharge the Company, and all of its
respective past, present and future officers, directors, employees, agents,
plans, trusts, administrators, stockholders and trustees (collectively, the
“Released Parties”) from any and all claims, losses or expenses you may have or
have had or may later claim to have had against them, whether known or unknown,
arising out of anything that has occurred up through the date you sign this
letter agreement (both initially and on the Separation Date), including without
limitation, any claims, losses or expenses arising out of your employment with
or separation from the Company; provided, however, that you expressly do not
release or discharge the Company from any claims, losses or expenses you may
have for (i) workers’ compensation benefits, (ii) all amounts or payments owed
to you as contemplated by Section 2 of this letter agreement, (iii) the
indemnification or insurance described in Section 10 below or (iv) all of your
accrued and vested pension benefits, health care, life insurance, disability or
other similar benefits as determined through the Separation Date under the
Company’s applicable and governing plans and programs.

 

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Dawn E. Hudson
October 30, 2007
Page 7
     (b) You understand and agree that, except for the claims expressly excluded
from this release, you will not be entitled hereafter to pursue any claims
arising out of any alleged violation of your rights while employed by the
Company, including, but not limited to, claims for reinstatement, back pay,
losses or other damages to you or your property resulting from any alleged
violations of state or federal law, such as (but not limited to) claims arising
under Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq., as
amended; (prohibiting discrimination on account of race, sex, national origin or
religion); the Worker Adjustment and Retraining Notification Act (requiring that
advance notice be given for certain workforce reductions); the Americans With
Disabilities Act of 1990, 42 U.S.C. §12101 et seq. (prohibiting discrimination
on account of disability); the Age Discrimination in Employment Act, 29 U.S.C. §
621, et seq. (prohibiting discrimination on account of age); the Family and
Medical Leave Act, 29 U.S.C. § 2601 et seq.; the Equal Pay Act, 29 U.S.C. §
206(d); the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et
seq. (protecting employee benefits); the New York Human Rights Law; the
Westchester County Human Rights Law, as these laws may be amended from time to
time; and any other federal, state or local law, rule, regulation,
administrative guidance or common law doctrine claim relating to your
employment.
     (c) By signing this letter agreement and accepting the benefits provided,
you agree that, except for any claims expressly excluded from this release and
except as provided in Section 8(e) below, you will not hereafter pursue any
individual claims (whether brought by you, an administrative agency, or any
other person on your behalf or which includes you in any class) against the
Released Parties, by means of a lawsuit, complaint, charge or otherwise, in any
state or federal court or before any state or federal agency, including, by way
of example and not limitation, the Equal Employment Opportunity Commission, the
Department of Labor or any state Human Rights Agencies, for or on account of
anything, whether known or unknown, foreseen or unforeseen, which has occurred
up to the date you sign this letter agreement (both initially and on the
Separation Date) and which relates to your employment with the Company. You
agree not to seek or accept any equitable or monetary relief in any action,
suit, proceeding or charge filed by you or on your behalf against the Company,
and agree to opt out of any class action filed against the Company with respect
to any period during which you were employed by the Company. This release does
not include any claims for breach of this letter agreement or any claims that
may arise after the date you sign this letter agreement (both initially and on
the Separation Date).
     (d) You agree that you will re-execute the release set forth above in this
Section 8 on your Separation Date as a condition to receiving the lump sum cash
payment referenced in Section 2(b). You further agree that you shall forfeit,
and, to the extent already paid, the Company shall be entitled to repayment of,
the lump sum payment referenced in Section 2(b) and any stock option or RSU
proceeds that, absent this letter agreement, you otherwise would not have been
entitled to, in the event (i) the Company

 

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Dawn E. Hudson
October 30, 2007
Page 8
terminates your employment for Cause (as defined in Section 8(f) below) prior to
your Separation Date, (ii) you materially breach the terms of this letter
agreement, including a failure to re-execute the release set forth above in this
Section 8, or (iii) you file or assert any claim related to your employment
with, or separation from, the Company against the Released Parties for any
reason other than claims for workers compensation benefits, retirement benefits,
health case benefits, life, disability or other similar benefits or for
violation of the terms of this letter agreement. In addition, you agree to
indemnify and hold harmless the Released Parties from any claim, loss or expense
(including attorneys’ fees) incurred by them arising out of your breach of any
portion of this letter agreement.
     (e) Nothing contained in this Section 8 or in Section 7 is intended to
restrict you in any way from (i) making any disclosure of information required
by law; (ii) providing information to, or testifying or otherwise assisting in
any investigation or proceeding brought by any federal regulatory or law
enforcement agency or legislative body, any self-regulatory organization, or the
Company’s legal, compliance or human resources officers; (iii) filing,
testifying or participating in or otherwise assisting in a proceeding relating
to an alleged violation of any federal, state or municipal law relating to fraud
or any rule or regulation of the Securities and Exchange Commission or any
self-regulatory organization; or (iv) filing any claims that are not permitted
to be waived or released under the Fair Labor Standards Act or other applicable
law.
     (f) For purposes of this Section 8, “Cause” means (i) your willful
misconduct that materially injures the Company; (ii) your conviction of a felony
or your plea of nolo contendere with respect to a felony related to the
Company’s business; (iii) your willful violation of any fiduciary obligation to
the Company or your willful violation of the Company’s code of conduct;
(iv) your engagement in any unlawful trading in the securities of PepsiCo or of
another company based on information gained as a result of your employment or
other relationship with the Company; or (v) your material breach of the terms of
this letter agreement.  
9. Review and Revocation.
     This letter agreement affects important rights and obligations, and we
advise you to consult with an attorney before you sign this letter agreement. In
order to give you time to review and consider these arrangements, we will hold
this offer open for twenty-one (21) calendar days. For a period of up to and
including seven (7) days after the date you sign this letter agreement (the end
of such seven (7) day revocation period, the “Effective Date”), you may revoke
it entirely. No rights or obligations contained in this letter agreement shall
become enforced before the end of the seven-day revocation period. If you decide
to revoke this letter agreement, you must deliver to the undersigned a signed
notice of revocation on or before the end of this seven-day period. Upon
delivery to the undersigned of a timely notice of revocation, this letter
agreement shall be canceled and rescinded in all respects, and all benefits
granted under the terms of this letter agreement

 

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Dawn E. Hudson
October 30, 2007
Page 9
shall be voided in their entirety, retroactively effective as of the date you
originally signed this letter agreement.
10. Indemnification and Insurance.
     The Company shall indemnify you and provide for the advance of expenses in
connection therewith, subject to and in accordance with Section 3.7 of the
PepsiCo, Inc. By-Laws. The Company shall maintain customary director and officer
liability insurance covering you for acts and omissions during the time of your
employment with the Company to the same extent as it does so for similarly
situated executives.
11. Miscellaneous.
     (a) Anything to the contrary herein notwithstanding, the Company shall, and
is hereby authorized to, withhold or deduct from any amounts payable by the
Company to you, your beneficiary or your legal representative under this letter
agreement, any federal, state or municipal taxes, social security contributions
or other amounts required to be withheld by law, and to remit such amounts to
the proper authorities. The Company is also hereby authorized to withhold or
deduct appropriate amounts with respect to any benefit plans or programs or
other elections made by you.
     (b) This letter agreement contains all of the undertakings and agreements
between the Company and you pertaining to your separation from the Company and
supersedes all previous undertakings and agreements, whether oral or in writing,
between the Company and you on the same subject. No provision of this letter
agreement may be changed or waived unless such change or waiver is agreed to in
writing, signed by you and a duly authorized employee of the Company. Except as
otherwise specifically provided in this letter agreement, no waiver by either
the Company or you of any breach by the other of any condition or provision
shall be deemed a waiver of a similar or dissimilar provision or condition at
the same time or any prior or subsequent time.
     (c) No rights or obligations under this letter agreement can be assigned or
transferred by you, except as they may be transferred by will or by operation of
law. This letter agreement shall be binding upon and shall be for the benefit of
the Company, its successors and assigns and you and, in the event of your death,
your estate or legal representative.
     (d) In the event that any portion of this letter agreement shall be
determined to be invalid or unenforceable for any reason, the remaining portions
of this letter agreement will be unaffected thereby and will remain in full
force and effect to the fullest extent permitted by law.

 

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Dawn E. Hudson
October 30, 2007
Page 10
     (e) The parties intend that this letter agreement will be interpreted so
that the payments and benefits provided hereunder will be exempt from
Section 409A of the Internal Revenue Code of 1986 other than the Pension
Equalization Plan benefits which are intended to comply with Section 409A.
However, notwithstanding the foregoing, you acknowledge and agree that the
Company does not guarantee any particular tax treatment and that you are solely
responsible for any taxes that you owe as a result of this letter agreement.
     (f) This letter agreement shall be deemed a contract made under, and for
all purposes to be governed by and construed in accordance with, the laws of the
State of New York, without reference to principles of conflicts of laws, and any
and all disputes arising under this letter agreement are to be resolved
exclusively by courts sitting in New York. By signing this letter agreement, you
consent to the jurisdiction of such courts. The captions are utilized for
convenience only, and do not operate to explain or limit the provisions of this
letter agreement.
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Dawn E. Hudson
October 30, 2007
Page 11
     By signing below, you acknowledge that you understand and voluntarily
accept the arrangements described herein. You acknowledge and agree that you
have had the opportunity to review this letter agreement with an attorney, that
you fully understand this letter agreement, that you were not coerced into
signing it, and that you signed it knowingly and voluntarily. You also
acknowledge that you have not received any promise or inducement to sign this
letter agreement except as expressly set forth herein. Finally, you represent
that, during your Transition Period, you are committed to carrying out your
responsibilities in a diligent and professional manner and in accordance with
PepsiCo’s Worldwide Code of Conduct.

            Very truly yours,

PepsiCo, Inc.
      By:   /s/ Cynthia Trudell         Cynthia Trudell        Senior Vice
President, Human Resources     

The undersigned agrees to and accepts the terms and provisions of the foregoing
letter agreement:

         
/s/ Dawn E. Hudson
  11/02/07          
Dawn E. Hudson
  Date    

The undersigned hereby re-executes this letter agreement, as of the Separation
Date, for purposes of the release set forth in Section 8:

               
Dawn E. Hudson
  Separation Date