**Exhibit 10.31****PBG****PENSION EQUALIZATION PLAN****(PEP)****2006 Restatement**
 

 
**PEP PENSION EQUALIZATION PLAN****Table of Contents**       **Page**  **No.**     **ARTICLE I – History and Purpose**  1      **ARTICLEII – Definitions and Construction**  1      2.1 Definitions  1  (a) Actuarial Equivalent  1  (b) Advance Election  1  (c) Annuity  1  (d) Code  1  (e) Company or PBG  1  (f) Compensation Limitation  1  (g) Effective Date  2  (h) ERISA  2  (i) Participant  2  (j) PBG Organization  2  (k) Salaried Plan Participant  2  (l) PEP Pension  2  (m) PEP Election  2  (n) PepsiCo Prior Plan  2  (o) Plan  2  (p) Plan Administrator  2  (q) Plan Year  2  (r) Primary Social Security Amount  2  (s) Salaried Plan  3  (t) Section 415 Limitation  3  (u) Single Lump Sum  3  (v) Vested Pension  3      2.2 Construction  3  (a) Gender and Number  3  (b) Compounds of the Word “Here”  3      **ARTICLE III – Participation**  3      **ARTICLE IV – Amount of Retirement Pension**  3      4.1 PEP Pension  3  (a) Same Form as Salaried Plan  4  (b) Different Form than Salaried Plan  4      4.2 PEP Guarantee  4  (a) Eligibility  4  (b) PEP Guarantee Formula  4      4.3 Certain Adjustments  6  (a) Adjustments for Rehired Participants  6  (b) Adjustment for Increased Pension Under Other Plans  6      4.4 Reemployment of Certain Participants  6 
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       **Page**  **No.**     4.5 Vesting; Misconduct  6      **ARTICLE V – Death Benefits**  7      5.1 Death Benefits  7      **ARTICLE VI – Distribution Options**  7      6.1 Form and Timing of Distributions  7  (a) No Advance Election  7  (b) Advance Election in Effect  7      6.2 Available Forms of Payment  8  (a) Available Options for Vested Benefits  8      6.3 Procedures for Elections  8  (a) In General  8  (b) Advance Election  8  (c) PEP Election  9  (d) Elections Rules for Annuity Starting Dates  9      6.4 Special Rules for Survivor Options  9  (a) Effect of Certain Deaths  9  (b) Nonspouse Beneficiaries  10      6.5 Designation of Beneficiary  10      6.6 Cashout Distributions  10  (a) Distribution of Participant’s Pension  10  (b) Distribution of Pre-Retirement Spouse’s Pension Benefit  10      6.7 Section 162(m) Postponement  10      **ARTICLE VII – Administration**  11      7.1 Authority to Administer Plan  11      7.2 Facility of Payment  11      7.3 Claims Procedure  11      7.4 Effect of Specific References  12      **ARTICLE VIII – Miscellaneous**  12      8.1 Nonguarantee of Employment  12      8.2 Nonalienation of Benefits  12      8.3 Unfunded Plan  12      8.4 Action by the Company  12      8.5 Indemnification  12      8.6 Applicable Law  12      8.7 Withholding  12      **ARTICLE IX – Amendment and Termination**  12      9.1 Continuation of the Plan  12 
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       **Page**  **No.**9.2 Amendments  13      9.3 Termination  13      **APPENDIX**  14      Foreword  14      Article IPO – Transferred and Transition Individuals  14 
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**ARTICLE I – History and Purpose**     The Pepsi Bottling Group, Inc. (the “Company”) established the PBG Pension Equalization Plan(“PEP” or “Plan”) effective April 6, 1999 for the benefit of salaried employees of the PBGOrganization who participate in the PBG Salaried Employees Retirement Plan (“Salaried Plan”). ThePlan was amended by a First Amendment effective as of May 26, 1999. The Plan provides benefits foreligible employees whose pension benefits under the Salaried Plan are limited by the provisions ofthe Internal Revenue Code of 1986, as amended. In addition, the Plan provides benefits for certaineligible employees based on the pre-1989 Salaried Plan formula. The Plan is intended as anonqualified unfunded deferred compensation plan for federal income tax purposes. For purposes ofthe Employee Retirement Income Security Act of 1974 (“ERISA”), the Plan is structured as two plans.The portion of the Plan that provides benefits based on limitations imposed by Section 415 of theInternal Revenue Code (the “Code”) is intended to be an “excess benefit plan” as described inSection 4(b)(5) of ERISA. The portion of the Plan that provides benefits based on limitationsimposed by Section 401(a)(17) of the Code is intended to be a plan described in Sections 201(2),301(a)(3) and 401(a)(1) of ERISA providing benefits to a select group of management orhighly-compensated employees.     The Plan was initially established as a successor plan to the PepsiCo Pension EqualizationPlan, due to PBG’s April 6, 1999 initial public offering and the Plan included historical PepsiCoprovisions which are relevant for eligibility and benefit determinations under the Plan.     The Company now wishes to amend and completely restate the Plan, effective as of January 1,2006, except as otherwise explicitly provided in the Plan.          The PBG Pension Equalization Plan is hereby amended and completely restated (the “2006Restatement”) as follows. This 2006 Restatement is not intended to conform the Plan to therequirements of Section 409A of the Code. Prior to adoption of such conforming amendments, theCompany intends to operate the Plan in a manner that complies with Section 409A and the publishedguidance under such section.**ARTICLE II – Definitions and Construction**     2.1 ***Definitions***: The following words and phrases, when used in this Plan, shall have themeaning set forth below unless the context clearly indicates otherwise. Unless otherwise expresslyqualified by the terms or the context of this Plan, the terms used in this Plan shall have the samemeaning as those terms in the Salaried Plan.          (a) **Actuarial Equivalent**: Except as otherwise specifically set forth in the Plan orany Appendix to the Plan with respect to a specific benefit determination, a benefit of equivalentvalue computed on the basis of the factors applicable for such purposes under the Salaried Plan.          (b) **Advance Election**: A Participant’s election to receive his PEP Pension as a SingleLump Sum or an Annuity, made in compliance with the requirements of Section 6.3.          (c) **Annuity**: A Pension payable as a series of monthly payments for at least the lifeof the Participant.          (d) **Code**: The Internal Revenue Code of 1986, as amended from time to time.          (e) **Company or PBG**: The Pepsi Bottling Group, Inc., a corporation organized andexisting under the laws of the State of Delaware, or its successor or successors.          (f) **Compensation Limitation**: Benefits not payable under the Salaried Plan because ofthe limitations on the maximum amount of compensation which may be considered in determining theannual benefit of the Salaried Plan Participant under Section 401(a)(17) of the Code.
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          (g) **Effective Date**: The date upon which this Plan was effective, which is April 6,1999 (except as otherwise provided herein).          (h) **ERISA**: Public Law No. 93-406, the Employee Retirement Income Security Act of1974, as amended from time to time.          (i) **Participant**: An Employee participating in the Plan in accordance with theprovisions of Section 3.1.          (j) **PBG Organization**: The controlled group of organizations of which the Company is apart, as defined by Code section 414 and regulations issued thereunder. An entity shall beconsidered a member of the PBG Organization only during the period it is one of the group oforganizations described in the preceding sentence.          (k) **Salaried Plan Participant**: An Employee who is a participant in the Salaried Plan.          (l) **PEP Pension**: One or more payments that are payable to a person who is entitled toreceive benefits under the Plan.          (m) **PEP Election**: A Participant’s election to receive his PEP Pension as provided inArticle VI.          (n) **PepsiCo Prior Plan**: The PepsiCo Pension Equalization Plan.          (o) **Plan**: The PBG Pension Equalization Plan, the Plan set forth herein, as it may beamended from time to time. The Plan is also sometimes referred to as PEP. For periods beforeApril 6, 1999, references to the Plan refer to the PepsiCo Prior Plan.          (p) **Plan Administrator**: The Company, which shall have authority to administer thePlan as provided in Article VII.          (q) **Plan Year**: The 12-month period ending on each December 31st.          (r) **Primary Social Security Amount**: In determining Pension amounts, Primary SocialSecurity Amount shall mean:          (1) For purposes of determining the amount of a Retirement, Vested or Pre-RetirementSpouse’s Pension, the Primary Social Security Amount shall be the estimated monthly amountthat may be payable to a Participant commencing at age 65 as an old-age insurance benefitunder the provisions of Title II of the Social Security Act, as amended. Such estimates ofthe old-age insurance benefit to which a Participant would be entitled at age 65 shall bebased upon the following assumptions:          (i) That the Participant’s social security wages in any year prior toRetirement or severance are equal to the Taxable Wage Base in such year, and          (ii) That he will not receive any social security wages after Retirement orseverance.However, in computing a Vested Pension under Section 4.2, the estimate of the old-ageinsurance benefit to which a Participant would be entitled at age 65 shall be based upon theassumption that he continued to receive social security wages until age 65 at the same rateas the Taxable Wage Base in effect at his severance from employment. For purposes of thissubsection, “social security wages” shall mean wages within the meaning of the SocialSecurity Act.
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          (2) For purposes of determining the amount of a Disability Pension, the Primary SocialSecurity Amount shall be (except as provided in the next sentence) the initial monthlyamount actually received by the disabled Participant as a disability insurance benefit underthe provisions of Title II of the Social Security Act, as amended and in effect at the timeof the Participant’s retirement due to disability. Notwithstanding the preceding sentence,for any period that a Participant receives a Disability Pension before receiving adisability insurance benefit under the provisions of Title II of the Social Security Act,then the Participant’s Primary Social Security Amount for such period shall be determinedpursuant to paragraph (1) above.          (3) For purposes of paragraphs (1) and (2), the Primary Social Security Amount shallexclude amounts that may be available because of the spouse or any dependent of theParticipant or any amounts payable on account of the Participant’s death. Estimates ofPrimary Social Security Amounts shall be made on the basis of the Social Security Act as ineffect at the Participant’s Severance from Service Date, without regard to any increases inthe social security wage base or benefit levels provided by such Act which take effectthereafter.          (s) **Salaried Plan**: The PBG Salaried Employees Retirement Plan, as it may be amendedfrom time to time. Any references herein to the Salaried Plan for a period that is before theEffective Date shall mean the PepsiCo Salaried Employees Retirement Plan.          (t) **Section 415 Limitation**: Benefits not payable under the Salaried Plan because ofthe limitations imposed on the annual benefit of a Salaried Plan Participant by Section 415 of theCode.          (u) **Single Lump Sum**: The distribution of a Participant’s total Pension in the form ofa single payment.          (v) **Vested Pension**: The PEP Pension available to a Participant who has a vested PEPPension and is not eligible for a Retirement Pension.     2.2 ***Construction***: The terms of the Plan shall be construed in accordance with this section.          (a) **Gender and Number**: The masculine gender, where appearing in the Plan, shall bedeemed to include the feminine gender, and the singular may include the plural, unless the contextclearly indicates to the contrary.          (b) **Compounds of the Word “Here”**: The words “hereof”, “hereunder” and other similarcompounds of the word “here” shall mean and refer to the entire Plan, not to any particularprovision or section.**ARTICLE III – Participation**     3.1 Each Salaried Plan Participant whose benefit under the Salaried Plan is curtailed by theCompensation Limitation or the Section 415 Limitation, or both, and each other Salaried PlanParticipant whose 1988 pensionable “earnings” under the Salaried Plan, as described in Section4.2(a), were $75,000 or more shall participate in this Plan.**ARTICLE IV – Amount of Retirement Pension**     4.1 ***PEP Pension***: Subject to Section 4.5, a Participant’s PEP Pension shall equal the amountdetermined under (a) or (b) of this Section 4.1, whichever is applicable.
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          (a) **Same Form as Salaried Plan**: If a Participant’s PEP Pension will be paid in thesame form and will commence as of the same time as his pension under the Salaried Plan, then hismonthly PEP Pension shall be equal to the excess of:          (1) The greater of (i) the monthly pension benefit which would have been payable tosuch Participant under the Salaried Plan without regard to the Compensation Limitation andthe Section 415 Limitation, and (ii) if applicable, the amount determined in accordance withSection 4.2, expressed in such form and payable as of such time; over          (2) The amount of the monthly pension benefit that is in fact payable to such SalariedPlan Participant under the Salaried Plan, expressed in such form and payable as of suchtime.          (b) **Different Form than Salaried Plan**: If a Participant’s PEP Pension will be paid ina different form (whether in whole or in part) or will commence as of a different time than hispension benefit under the Salaried Plan, his PEP Pension shall be the product of:          (1) The greater of (i) the monthly pension benefit which would have been payable tosuch Participant under the Salaried Plan without regard to the Compensation Limitation andthe Section 415 Limitation, and (ii) if applicable, the amount determined in accordance withSection 4.2, expressed in the form and payable as of such time as applies to his PEP Pensionunder this Plan, multiplied by          (2) A fraction, the numerator of which is the value of the amount determined in Section4.1(b)(1), reduced by the value of his pension under the Salaried Plan, and thedenominator of which is the value of the amount determined in Section 4.1(b)(1) (with valuedetermined on a reasonable and consistent basis, in the discretion of the PlanAdministrator, with respect to similarly situated employees).     Notwithstanding the above, in the event any portion of the accrued benefit of a Participantunder this Plan or the Salaried Plan is awarded to an alternate payee pursuant to a qualifieddomestic relations order, as such terms are defined in Section 414(p) of the Code, theParticipant’s PEP Pension shall be adjusted, as the Plan Administrator shall determine, so that thecombined benefit payable to the Participant and the alternate payee from this Plan and the SalariedPlan is the amount determined pursuant to subsections 4.1(a) and (b) above.     4.2 ***PEP Guarantee***: A Participant who is eligible under subsection (a) below shall be entitledto a PEP Guarantee benefit determined under subsection (b) below, if any.          (a) **Eligibility**: A Participant shall be covered by this section if the Participanthas 1988 pensionable earnings from an Employer of at least $75,000. For purposes of this section,“1988 pensionable earnings” means the Participant’s remuneration for the 1988 calendar year thatwas recognized for benefit accrual received under the Salaried Plan as in effect in 1988. “1988pensionable earnings” does not include remuneration from an entity attributable to any period whenthat entity was not an Employer.          (b) **PEP Guarantee Formula**: The amount of a Participant’s PEP Guarantee shall bedetermined under paragraph (1), subject to the special rules in paragraph (2).          (1) Formula: The amount of a Participant’s PEP Guarantee under this paragraphshall be determined as follows:          (i) Three percent of the Participant’s Highest Average Monthly Earnings for thefirst 10 years of Credited Service, plus          (ii) One percent of the Participant’s Highest Average Monthly Earnings for eachyear of Credited Service in excess of 10 years, less
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     (iii) One and two-thirds percent of the Participant’s Primary Social SecurityAmount multiplied by years of Credited Service not in excess of 30 years.     In determining the amount of a Vested Pension, the PEP Guarantee shall first becalculated on the basis of (I) the Credited Service the Participant would haveearned had he remained in the employ of the Employer until his Normal RetirementAge, and (II) his Highest Average Monthly Earnings and Primary Social SecurityAmount at his Severance from Service Date, and then shall be reduced by multiplyingthe resulting amount by a fraction, the numerator of which is the Participant’sactual years of Credited Service on his Severance from Service Date and thedenominator of which is the years of Credited Service he would have earned had heremained in the employ of an Employer until his Normal Retirement Age.     In determining the amount of a Disability Pension under the formula above, thePEP Guarantee shall be calculated on the basis of the Participant’s CreditedService, and his Highest Average Monthly Earnings and Primary Social Security Amountat the date of disability.          (2) Calculation: The amount of the PEP Guarantee shall be determined pursuantto paragraph (1) above, subject to the following special rules:          (i) Surviving Eligible Spouse’s Annuity: Subject to subparagraph (iii)below and the last sentence of this subparagraph, if the Participant has an EligibleSpouse and has commenced receipt of an Annuity under this section, the Participant’sEligible Spouse shall be entitled to receive a survivor annuity equal to 50 percentof the Participant’s Annuity under this section, with no corresponding reduction insuch Annuity for the Participant. Annuity payments to a surviving Eligible Spouseshall begin on the first day of the month coincident with or following theParticipant’s death and shall end with the last monthly payment due prior to theEligible Spouse’s death. If the Eligible Spouse is more than 10 years younger thanthe Participant, the survivor benefit payable under this subparagraph shall beadjusted as provided below.          (A) For each full year more than 10 but less than 21 that the survivingEligible Spouse is younger than the Participant, the survivor benefitpayable to such spouse shall be reduced by 0.8 percent.          (B) For each full year more than 20 that the surviving Eligible Spouseis younger than the Participant, the survivor benefit payable to such spouseshall be reduced by an additional 0.4 percent.          This subparagraph applies only to a Participant who retires on or after hisEarly Retirement Date.          (ii) Reductions: The following reductions shall apply in determining aParticipant’s PEP Guarantee.          (A) If the Participant will receive an Early Retirement Pension, thepayment amount shall be reduced by 3/12ths of 1 percent for each month bywhich the benefit commencement date precedes the date the Participant wouldattain his Normal Retirement Date.          (B) If the Participant is entitled to a Vested Pension, the paymentamount shall be reduced to the Actuarial Equivalent of the amount payable athis Normal Retirement Date (if payment commences before such date), and thereductions set forth in the Salaried Plan for any Pre-Retirement Spouse’scoverage shall apply.
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          (C) This clause applies if the Participant will receive his PEPGuarantee in a form that provides an Eligible Spouse benefit, continuing forthe life of thesurviving spouse, that is greater than that provided under subparagraph(i). In this instance, the Participant’s PEP Guarantee under this sectionshall be reduced so that the total value of the benefit payable on theParticipant’s behalf is the Actuarial Equivalent of the PEP Guaranteeotherwise payable under the foregoing provisions of this section.          (D) This clause applies if the Participant will receive his PEPGuarantee in a form that provides a survivor annuity for a beneficiary whois not his Eligible Spouse. In this instance, the Participant’s PEPGuarantee under this section shall be reduced so that the total value of thebenefit payable on the Participant’s behalf is the Actuarial Equivalent of aSingle Life Annuity for the Participant’s life.          (E) This clause applies if the Participant will receive his PEPGuarantee in a Annuity form that includes inflation protection described inthe Salaried Plan. In this instance, the Participant’s PEP Guarantee underthis section shall be reduced so that the total value of the benefit payableon the Participant’s behalf is the Actuarial Equivalent of the electedAnnuity without such protection.          (iii) Lump Sum Conversion: The amount of the PEP Guarantee determinedunder this section for a Participant whose Retirement Pension will be distributed inthe form of a lump sum shall be the Actuarial Equivalent of the Participant’s PEPGuarantee determined under this section, taking into account the value of anysurvivor benefit under subparagraph (i) above and any early retirement reductionsunder subparagraph (ii)(A) above.     4.3 ***Certain Adjustments***: Pensions determined under the foregoing sections of this Article aresubject to adjustment as provided in this section. For purposes of this section, “specified plan”shall mean the Salaried Plan or a nonqualified pension plan similar to this Plan. A nonqualifiedpension plan is similar to this Plan if it is sponsored by a member of the PBG Organization and ifits benefits are not based on participant pay deferrals (this category of similar plans includesthe PepsiCo Prior Plan).          (a) **Adjustments for Rehired Participants**: This subsection shall apply to a current orformer Participant who is reemployed after his Annuity Starting Date and whose benefit under theSalaried Plan is recalculated based on an additional period of Credited Service. In the event ofany such recalculation, the Participant’s PEP Pension shall also be recalculated hereunder. Forthis purpose, the PEP Guarantee under Section 4.2 is adjusted for in-service distributions andprior distributions in the same manner as benefits are adjusted under the Salaried Plan, but bytaking into account benefits under this Plan and any specified plans.          (b) **Adjustment for Increased Pension Under Other Plans**: If the benefit paid under aspecified plan on behalf of a Participant is increased after PEP benefits on his behalf have beendetermined (whether the increase is by order of a court, by agreement of the plan administrator ofthe specified plan, or otherwise), the PEP benefit for the Participant shall be recalculated. Ifthe recalculation identifies an overpayment hereunder, the Plan Administrator shall take such stepsas it deems advisable to recover the overpayment. It is specifically intended that there shall beno duplication of payments under this Plan and any specified plans.     4.4 ***Reemployment of Certain Participants***. In the case of a current or former Participant whois reemployed and is eligible to reparticipate in the Salaried Plan after his Annuity StartingDate, payment of his PEP Pension will be suspended if payment of his Salaried Plan pension issuspended (or would have been if it were already in pay status). Thereafter, his PEP Pension shallrecommence at the time determined under Section 6.1 (even if the suspension of his Salaried Planpension ceases earlier).     4.5 ***Vesting; Misconduct***. A Participant shall be fully vested in his Accrued Benefit at thetime he becomes fully vested in his accrued benefit under the Salaried Plan. Notwithstanding thepreceding, or any other provision of the Plan to the contrary, a Participant shall forfeit his orher entire PEP Pension if the Plan Administrator determines that such Participant has engaged in“Misconduct” as defined below, determined without
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regard to whether the Misconduct occurred beforeor after the Participant’s Severance from Service. The Plan Administrator may, in its solediscretion, require the Participant to pay to the Employer any PEP Pension paid to theParticipant within the twelve month period immediately preceding a date on which theParticipant engaged in such Misconduct, as determined by the Plan Administrator.          “Misconduct” means any of the following, as determined by the Plan Administrator in goodfaith: (i) violation of any agreement between the Company or Employer and the Participant,including but not limited to a violation relating to the disclosure of confidential information ortrade secrets, the solicitation of employees, customers, suppliers, licensors or contractors, orthe performance of competitive services; (ii) violation of any duty to the Company or Employer,including but not limited to violation of the Company’s Code of Conduct; (iii) making, or causingor attempting to cause any other person to make, any statement (whether written, oral orelectronic), or conveying any information about the Company or Employer which is disparaging orwhich in any way reflects negatively upon the Company or Employer unless required by law orpursuant to a Company or Employer policy; (iv) improperly disclosing or otherwise misusing anyconfidential information regarding the Company or Employer; (v) unlawful trading in the securitiesof the Company or of another company based on information garnered as a result of thatParticipant’s employment or other relationship with the Company; (vi) engaging in any act which isconsidered to be contrary to the best interests of the Company or Employer, including but notlimited to recruiting or soliciting employees of the Employer; or (vii) commission of a felony orother serious crime or engaging in any activity which constitutes gross misconduct.**ARTICLE V – Death Benefits**     5.1 ***Death Benefits***: Each Participant entitled to a PEP Pension under this Plan who diesbefore his Annuity Starting Date shall be entitled to a death benefit equal in amount to theadditional death benefit to which the Participant would have been entitled under the Salaried Planif the PEP Pension as determined under Article IV was payable under the Salaried Plan instead ofthis Plan.          Payment of any death benefit of a Participant who dies before his Annuity Starting Date underthe Plan shall be made to the persons and in the proportions to which any death benefit under theSalaried Plan is or would be paid.**ARTICLE VI – Distribution Options**     The terms of this Article govern the distribution of benefits to a Participant who becomesentitled to payment of a PEP Pension under the Plan.     6.1 ***Form and Timing of Distributions***: Subject to Sections 6.6 and 6.7, this Section shallgovern the form and timing of PEP Pensions.          (a) **No Advance Election**: This subsection shall apply to a Participant: (i) who doesnot have an Advance Election in effect as of the close of business on the day before his RetirementDate, or (ii) who terminates employment prior to Retirement. Subject to the next sentence, aParticipant described in this subsection shall be paid his PEP Pension in the same form and at thesame time as he is paid his pension under the Salaried Plan.          (b) **Advance Election in Effect**: This subsection shall apply to a Participant who hasan Advance Election in effect as of the close of business on the day before his Retirement Date.To be in effect, an Advance Election must meet the advance receipt and other requirements ofSection 6.3(b).          (1) Lump Sum Election: If a Participant covered by this subsection has anAdvance Election to receive a Single Lump Sum in effect as of the close of business on theday before his Retirement Date, the Participant’s PEP Pension shall be paid as a Single LumpSum as of the first of the month coincident with or next following his Retirement Date.
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          (2) Annuity Election: If a Participant covered by this subsection has anAdvance Election to receive an Annuity in effect as of the close of business on the daybefore his Retirement Date, the Participant’s PEP Pension shall be paid in an Annuitybeginning on the first of the month coincident with or next following his Retirement Date.The following provisions of this paragraph govern the form of Annuity payable in the case ofa Participant described in this paragraph.          (i) Salaried Plan Election: A Participant who has a qualifyingSalaried Plan election shall receive his distribution in the same form of Annuitythe Participant selected in such qualifying Salaried Plan election. For thispurpose, a “qualifying Salaried Plan election” is a written election of a form ofpayment by the Participant that: (A) is currently in effect under the Salaried Planas of the close of business on the day before the Participant’s Retirement Date, and(B) specifies an Annuity as the form of payment for all or part of the Participant’sretirement pension under the Salaried Plan. For purposes of the preceding sentence,a Participant who elects a combination lump sum and Annuity under the Salaried Planis considered to have specified an Annuity for part of his Salaried Plan pension.          (ii) PEP Election: A Participant who is not covered by subparagraph(i) and who has a PEP Election in effect as of the close of business on the daybefore his Retirement Date shall receive his distribution in the form of Annuity theParticipant selects in such PEP Election.          (iii) No PEP Election: A Participant who is not covered bysubparagraph (i) or (ii) above shall receive his distribution in the form of aQualified Joint and Survivor Annuity if he is married, or in the form of a SingleLife Annuity if he is not married.     6.2 **Available Forms of Payment**: The forms of payment under this Plan shall be the form ofpayment available under the Salaried Plan.          (a) **Available Options for Vested Benefits**: The forms of payment available for aParticipant with a Vested Pension are a Qualified Joint and Survivor Annuity for marriedParticipants and a Single Life Annuity for both married and unmarried Participants. The applicableform of payment shall be determined in accordance with Section 6.1(a).     6.3 ***Procedures for Elections***: This section sets forth the procedures for making AdvanceElections and PEP Elections.          (a) **In General**: To qualify as an Advance Election or PEP Election for purposes ofSection 6.1, an election must be made in writing, on the form designated by the Plan Administrator,and must be signed by the Participant. These requirements also apply to any revocations of suchelections. Spousal consent is not required for any election (or revocation of election) under thePlan.          (b) **Advance Election**: To qualify as an Advance Election, an election must be madeunder this Plan on or after July 15, 1993 and meet the following requirements.          (1) Election: The Participant shall designate on the Advance Election formwhether the Participant elects to take his PEP Pension in the form of an Annuity or a SingleLump Sum.          (2) Receipt by Plan Administrator: The Advance Election must be received bythe Plan Administrator before the start of the calendar year containing the Participant’sRetirement Date, and at least 6 months before that Retirement Date. An electionthat meets the foregoing requirements shall remain effective until it is changed or revoked.          (3) Change or Revocation of Election: A Participant may change an AdvanceElection by filing a new Election that meets the foregoing requirements. A Participant mayrevoke an
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Advance Election only by filing a revocation that is received by the PlanAdministrator before the start ofthe calendar year containing the Participant’s Retirement Date, and at least 6months before that Retirement Date.Any Advance Election by a Participant shall be void if the Participant is not entitled to a PEPPension.          (c) **PEP Election**: A PEP Election may only be made by a Participant who has an AdvanceElection to receive an Annuity in effect at the time his PEP Election is received by the PlanAdministrator. In determining whether an Advance Election is in effect for this purpose, theadvance receipt requirement of subsection (b)(2) shall be considered met if it will be met by theParticipant’s proposed Retirement Date.          (1) Election: The Participant shall designate on the PEP Election form theAnnuity form of benefit the Participant selects from those described in the Salaried Plan,including the Participant’s choice of inflation protection, subject to the provisions ofthis Article VI; provided that the Single Lump Sum Option and the Combination Lump Sum /Monthly Benefit Option are not available pursuant to a PEP Election.          (2) Receipt by the Plan Administrator: The PEP Election must be received bythe Plan Administrator no earlier than 90 days before the Participant’s Retirement Date, andno later than the close of business on the day before the Participant’s Retirement Date.The Participant shall furnish proof of the age of his beneficiary (including his EligibleSpouse if applicable), to the Plan Administrator by the day before the Participant’sRetirement Date, for any form of payment which is subject to reduction.A Participant may change his PEP Election by filing a new Election with the Plan Administrator thatmeets the foregoing requirements. The Participant’s PEP Election shall become effective at theclose of business on the day before the Participant’s Retirement Date. Any PEP Election by aParticipant shall be void if the Participant does not have an Advance Election in effect at suchtime.          (d) **Elections Rules for Annuity Starting Dates**: When amounts become payable to aParticipant in accordance with Article IV, they shall be payable as of the Participant’s AnnuityStarting Date and the election procedures (in this section and Sections 6.1 and 6.5) shall apply toall of the Participant’s unpaid accruals as of such Annuity Starting Date, with the followingexception. In the case of a Participant who is rehired after his initial Annuity Starting Date andwho (i) is currently receiving an Annuity that remained in pay status upon rehire, or (ii) waspreviously paid a lump sum distribution (other than a cashout distribution described in Section4.9(a)), the Participant’s subsequent Annuity Starting Date (as a result of his termination ofreemployment), and the election procedures at such subsequent Annuity Starting Date, shall applyonly to the portion of his benefit that accrues after his rehire. Any prior accruals that remainto be paid as of the Participant’s subsequent Annuity Starting Date shall continue to be payable inaccordance with the elections made at his initial Annuity Starting Date.     For purposes of this section, an election shall be treated as received on a particular day ifit is: (A) postmarked that day, or (B) actually received by the Plan Administrator on that day.Delivery under clause (B) must be made by the close of business, which time is to be determined bythe Plan Administrator.     6.4 ***Special Rules for Survivor Options***:          (a) **Effect of Certain Deaths**: If a Participant makes a PEP Election for a form ofpayment described in Section 6.2(a)(2) and the Participant or his beneficiary (beneficiaries in thecase of Section 6.2(a)(2)(iv)) dies before the PEP Election becomes effective, the election shallbe disregarded. If the Participant dies after such PEP Election becomes effective but before hisRetirement Pension actually commences, the election shall be given effect and the amount payable tohis surviving Eligible Spouse or other beneficiary shall commence on the first day of the monthfollowing his death (any back payments due the Participant shall be payable to his estate). In thecase of a Participant who has elected the form of payment described in Section 6.2(a)(2)(iv), ifsuch Participant dies: (i) after the PEP Election has become effective, (ii) without a survivingprimary or contingent beneficiary, and (iii) before receiving 120 payments under the form ofpayment, then the remaining payments due under such form of payment shall be paid to theParticipant’s estate. If payments have commenced under such form
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of payment to a Participant’s primary or contingent beneficiary and such beneficiary diesbefore payments are completed, then the remaining payments due under such form of payment shall bepaid to such beneficiary’s estate.          (b) **Nonspouse Beneficiaries**: If a Participant’s beneficiary is not his EligibleSpouse, he may not elect:          (1) The 100 percent survivor option described in Section 6.2(a)(2)(i) if his nonspousebeneficiary is more than 10 years younger than he is, or          (2) The 75 percent survivor option described in Section 6.2(a)(2)(ii) if his nonspousebeneficiary is more than 19 years younger than he is.     6.5 ***Designation of Beneficiary***: A Participant who has elected to receive all or part of hispension in a form of payment that includes a survivor option shall designate a beneficiary who willbe entitled to any amounts payable on his death. Such designation shall be made on a PEP ElectionForm or an approved election form filed under the Salaried Plan, whichever is applicable. In thecase of the survivor option described in Section 6.2(a)(2)(iv), the Participant shall be entitledto name both a primary beneficiary and a contingent beneficiary. A Participant (whether active orformer) shall have the right to change or revoke his beneficiary designation at any time prior towhen his election is finally effective. The designation of any beneficiary, and any change orrevocation thereof, shall be made in accordance with rules adopted by the Plan Administrator. Abeneficiary designation shall not be effective unless and until filed with the Plan Administrator(or for periods before the Effective Date, the Plan Administrator under the Prior Plan). If nobeneficiary is properly designated, then a Participant’s election of a survivor’s option describedin Section 6.2(a)(2) shall not be given effect.     6.6 ***Cashout Distributions***:          (a) **Distribution of Participant’s Pension**: If at a Participant’s Annuity StartingDate the Actuarial Equivalent lump sum value of the Participant’s PEP Pension is equal to or lessthan $10,000, the Plan Administrator shall distribute to the Participant such lump sum value of theParticipant’s PEP Pension.          (b) **Distribution of Pre-Retirement Spouse’s Pension Benefit**: If at the time paymentsunder the Salaried Plan commence to an Eligible Spouse the Actuarial Equivalent lump sum value ofthe PEP Pre-Retirement Spouse’s Pension to be paid is equal to or less than $10,000, the PlanAdministrator shall distribute to the Eligible Spouse such lump sum value of the PEP Pre-RetirementSpouse’s Pension.     Any lump sum distributed under this section shall be in lieu of the Pension that otherwisewould be distributable to the Participant or Eligible Spouse hereunder.     6.7 ***Section ******162(m)******Postponement***: Notwithstanding any other provision of this Plan to thecontrary, no PEP Pension shall be paid to any Participant prior to the earliest date on which theCompany’s federal income tax deduction for such payment is not precluded by Section 162(m) of theCode. In the event any payment is delayed solely as a result of the preceding restriction, suchpayment shall be made as soon as administratively feasible following the first date as of whichSection 162(m) of the Code no longer precludes the deduction by the Company of such payment.Amounts deferred because of the Section 162(m) deduction limitation shall be increased by simpleinterest for the period of delay at the annual rate of six percent (6%).
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**ARTICLE VII – Administration**     7.1 ***Authority to Administer Plan***: The Plan shall be administered by the Plan Administrator,which shall have the authority to interpret the Plan and issue such regulations as it deemsappropriate. The Plan Administrator shall maintain Plan records and make benefit calculations, andmay rely upon information furnished it by the Participant in writing, including the Participant’scurrent mailing address, age and marital status. The Plan Administrator’s interpretations,determinations, regulations and calculations shall be final and binding on all persons and partiesconcerned. The Company, in its capacity as Plan Administrator or in any other capacity, shall notbe a fiduciary of the Plan for purposes of ERISA, and any restrictions that apply to a party ininterest under section 406 of ERISA shall not apply to the Company or otherwise under the Plan.     7.2 ***Facility of Payment***: Whenever, in the Plan Administrator’s opinion, a person entitled toreceive any payment of a benefit or installment thereof hereunder is under a legal disability or isincapacitated in any way so as to be unable to manage his financial affairs, the Plan Administratormay make payments to such person or to the legal representative of such person for his benefit, orthe Plan Administrator may apply the payment for the benefit of such person in such manner as itconsiders advisable. Any payment of a benefit or installment thereof in accordance with theprovisions of this section shall be a complete discharge of any liability for the making of suchpayment under the provisions of the Plan.     7.3 ***Claims Procedure***: The Plan Administrator shall have the exclusive discretionary authorityto construe and to interpret the Plan, to decide all questions of eligibility for benefits and todetermine the amount of such benefits, and its decisions on such matters are final and conclusive.This discretionary authority is intended to be absolute, and in any case where the extent of thisdiscretion is in question, the Plan Administrator is to be accorded the maximum discretionpossible. Any exercise of this discretionary authority shall be reviewed by a court, arbitrator orother tribunal under the arbitrary and capricious standard (i.e., the abuse of discretionstandard). If, pursuant to this discretionary authority, an assertion of any right to a benefit byor on behalf of a Participant or beneficiary is wholly or partially denied, the Plan Administrator,or a party designated by the Plan Administrator, will provide such claimant within the 90-dayperiod following the receipt of the claim by the Plan Administrator, a comprehensible writtennotice setting forth:          (a) The specific reason or reasons for such denial;          (b) Specific reference to pertinent Plan provisions on which the denial is based;          (c) A description of any additional material or information necessary for the claimant tosubmit to perfect the claim and an explanation of why such material or information is necessary;and          (d) A description of the Plan’s claim review procedure. The claim review procedure isavailable upon written request by the claimant to the Plan Administrator, or the designated party,within 60 days after receipt by the claimant of written notice of the denial of the claim, andincludes the right to examine pertinent documents and submit issues and comments in writing to thePlan Administrator, or the designated party. The decision on review will be made within 60 daysafter receipt of the request for review, unless circumstances warrant an extension of time not toexceed an additional 60 days, and shall be in writing and drafted in a manner calculated to beunderstood by the claimant, and include specific reasons for the decision with references to thespecific Plan provisions on which the decision is based.          If within a reasonable period of time after the Plan receives the claim asserted by theParticipant, the Plan Administrator, or the designated party, fails to provide a comprehensiblewritten notice stating that the claim is wholly or partially denied and setting forth theinformation described in (a) through (d) above, the claim shall be deemed denied. Once the claimis deemed denied, the Participant shall be entitled to the claim review procedure described insubsection (d) above. Such review procedure shall be available upon written request by theclaimant to the Plan Administrator, or the designated party, within 60 days after the claim isdeemed denied. Any claim under the Plan that is reviewed by a court shall be reviewed solely onthe basis of the record before the Plan Administrator at the time it made its determination.
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     7.4 ***Effect of Specific References***: Specific references in the Plan to the PlanAdministrator’s discretion shall create no inference that the Plan Administrator’s discretion inany other respect, or in connection with any other provision, is less complete or broad.**ARTICLE VIII– Miscellaneous**     8.1 ***Nonguarantee of Employment***: Nothing contained in this Plan shall be construed as acontract of employment between an Employer and any Employee, or as a right of any Employee to becontinued in the employment of an Employer, or as a limitation of the right of an Employer todischarge any of its Employees, with or without cause.     8.2 ***Nonalienation of Benefits***: Benefits payable under the Plan or the right to receive futurebenefits under the Plan shall not be subject in any manner to anticipation, alienation, sale,transfer, assignment, pledge, encumbrance, charge, garnishment, execution, or levy of any kind,either voluntary or involuntary, and any attempt to anticipate, alienate, sell, transfer, assign,pledge, encumber, charge or otherwise dispose of any right to benefits payable hereunder, includingany assignment or alienation in connection with a divorce, separation, child support or similararrangement, shall be null and void and not binding on the Company. The Company shall not in anymanner be liable for, or subject to, the debts, contracts, liabilities, engagements or torts of anyperson entitled to benefits hereunder.     8.3 ***Unfunded Plan***: The Company’s obligations under the Plan shall not be funded, but shallconstitute liabilities by the Company payable when due out of the Company’s general funds. To theextent the Participant or any other person acquires a right to receive benefits under this Plan,such right shall be no greater than the rights of any unsecured general creditor of the Company.     8.4 ***Action by the Company***: Any action by the Company under this Plan may be made by the Boardof Directors of the Company or by the Compensation Committee of the Board of Directors, with areport of any actions taken by it to the Board of Directors. In addition, such action may be madeby any other person or persons duly authorized by resolution of said Board to take such action.     8.5 ***Indemnification***: Unless the Board of Directors of the Company shall determine otherwise,the Company shall indemnify, to the full extent permitted by law, any employee acting in good faithwithin the scope of his employment in carrying out the administration of the Plan.     8.6 ***Applicable Law***: All questions pertaining to the construction, validity and effect of thePlan shall be determined in accordance with the provisions of ERISA. In the event ERISA is notapplicable or does not preempt state law, the laws of the state of New York shall govern.     If any provision of this Plan is, or is hereafter declared to be, void, voidable, invalid orotherwise unlawful, the remainder of the Plan shall not be affected thereby.     8.7 ***Withholding***: The Employer shall withhold from amounts due under this Plan the amountnecessary to enable the employer to remit to the appropriate government entity or entities onbehalf of the Participant as may be required by the federal income tax withholding provisions ofthe Code, by an applicable state’s income tax, or by an applicable city, county or municipality’searnings or income tax act. The Employer may withhold from the compensation of, or collect from, aParticipant the amount necessary to remit on behalf of the Participant any FICA taxes which may berequired with respect to amounts accrued by a Participant hereunder as determined by the Employer.**ARTICLE IX – Amendment and Termination**     9.1 ***Continuation of the Plan***: While the Company and the Employers intend to continue the Planindefinitely, they assume no contractual obligation as to its continuance. In accordance withSection 8.4, the
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Company hereby reserves the right, in its sole discretion, to amend, terminate, or partiallyterminate the Plan at any time.     9.2 ***Amendments***: The Company may, in its sole discretion, make any amendment or amendments tothis Plan from time to time, with or without retroactive effect, including any amendment oramendments to eliminate available distribution options under Article VI hereof at any time beforethe earlier of the Participant’s Annuity Starting Date under this Plan or under the Salaried Plan.An Employer (other than the Company) shall not have the right to amend the Plan.     9.3 ***Termination***: The Company may terminate the Plan, either as to its participation or as tothe participation of one or more Employers. If the Plan is terminated with respect to fewer thanall of the Employers, the Plan shall continue in effect for the benefit of the Employees of theremaining Employers.
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**APPENDIX****Foreword**     This Appendix sets forth additional provisions applicable to individuals specified in theArticles of this Appendix. In any case where there is a conflict between the Appendix and the maintext of the Plan, the Appendix shall govern.**Article IPO – Transferred and Transition Individuals**     IPO.1 ***Scope***: This Article supplements the main portion of the Plan document with respect tothe rights and benefits of Transferred and Transition Individuals following the spinoff of thisPlan from the PepsiCo Prior Plan.     IPO.2 ***Definitions***: This section provides definitions for the following words or phrases inboldface and underlined. Where they appear in this Article with initial capitals they shall havethe meaning set forth below. Except as otherwise provided in this Article, all defined terms shallhave the meaning given to them in Section 2.1 of the Plan.          (a) **Agreement****:**The 1999 Employee Programs Agreement between PepsiCo, Inc. and ThePepsi Bottling Group, Inc.          (b) **Close of the Distribution Date****:**This term shall take the definition given it inthe Agreement.          (c) **Transferred Individual****:**This term shall take the definition given it in theAgreement.          (d) **Transition Individual****:**This term shall take the definition given it in theAgreement.     IPO.3 ***Rights of Transferred and Transition Individuals***: All Transferred Individuals whoparticipated in the PepsiCo Prior Plan immediately prior to the Effective Date shall beParticipants in this Plan as of the Effective Date. The spinoff of this Plan from the PepsiCoPrior Plan shall not result in a break in the Service or Credited Service of TransferredIndividuals or Transition Individuals. Notwithstanding anything in the Plan to the contrary, andas provided in Section 2.04 of the Agreement, all service, all compensation, and all otherbenefit-affecting determinations for Transferred Individuals that, as of the Close of theDistribution Date, were recognized under the PepsiCo Prior Plan for periods immediately before suchdate, shall as of the Effective Date continue to receive full recognition, credit and validity andshall be taken into account under this Plan as if such items occurred under this Plan, except tothe extent that duplication of benefits would result. Similarly, notwithstanding anything to thecontrary in the Plan, the benefits of Transition Individuals shall be determined in accordance withsection 8.02 of the Agreement.
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