PEPSICO
EXECUTIVE INCOME DEFERRAL
PROGRAM
As Amended and Restated
Effective July 1, 1997
-ii-
PEPSICO
EXECUTIVE INCOME DEFERRAL PROGRAM
TABLE OF CONTENTS
ARTICLE I: INTRODUCTION AND ESTABLISHMENT...................................1
ARTICLE II: DEFINITIONS.....................................................2
2.1 Account...........................................................2
2.2 Base Compensation.................................................2
2.3 Bonus Compensation................................................2
2.4 Beneficiary.......................................................2
2.5 Code..............................................................3
2.6 Company...........................................................3
2.7 Deferral Subaccount...............................................3
2.8 Disability........................................................3
2.9 Effective Date....................................................3
2.10 Election Form....................................................3
2.11 Employee.........................................................3
2.12 Employer.........................................................3
2.13 ERISA............................................................3
2.14 Fair Market Value................................................4
2.15 Participant......................................................4
2.16 Performance Unit Payout..........................................4
2.17 Plan.............................................................4
2.18 Plan Administrator...............................................4
2.19 Plan Year........................................................4
2.20 Retirement.......................................................4
2.21 Risk of Forfeiture Account.......................................4
2.22 Stock Option Gains...............................................5
2.23 Termination of Employment........................................5
2.24 Valuation Date...................................................5
ARTICLE III: PARTICIPATION..................................................6
3.1 Eligibility to Participate........................................6
3.2 Deferral Election.................................................6
3.3 Time and Manner of Deferral Election..............................7
3.4 Period of Deferral................................................8
ARTICLE IV: INTEREST OF PARTICIPANTS.......................................10
4.1 Accounting for Participants' Interests...........................10
4.2 Vesting of a Participant's Account...............................12
4.3 Risk of Forfeiture Accounts......................................12
4.4 Distribution of a Participant's Account..........................14
4.5 Acceleration of Payment During Employment........................16
ARTICLE V: PLAN ADMINISTRATOR..............................................17
5.1 Members..........................................................17
5.2 Action...........................................................17
5.3 Right and Duties.................................................17
5.4 Compensation, Indemnity and Liability............................18
5.5 Taxes............................................................18
ARTICLE VI: CLAIMS PROCEDURE...............................................19
6.1 Claims for Benefits..............................................19
6.2 Appeals..........................................................19
ARTICLE VII: AMENDMENT AND TERMINATION.....................................20
7.1 Amendments.......................................................20
7.2 Termination of Plan..............................................20
ARTICLE VIII: MISCELLANEOUS................................................21
8.1 Limitation on Participant's Rights...............................21
8.2 Benefits Unfunded................................................21
8.3 Other Plans......................................................21
8.4 Receipt or Release...............................................21
8.5 Governing Law....................................................21
8.6 Adoption of Plan by Related Employers............................22
8.7 Gender, Tense, and Headings......................................22
8.8 Successors and Assigns; Nonalienation of Benefits................22
8.9 Facility of Payment..............................................22
8.10 Separate Plans..................................................22
APPENDIX
Article A: Spinoff of Tricon..........................................2
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.
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.
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:
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.
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.
: An eligible Employee's adjusted annual incentive award under the 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 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.
: The person or persons who a Participant properly designates, 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.
: The Internal Revenue Code, as amended.
: PepsiCo, Inc., a North Carolina corporation, or its successor or
successors.
: 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).
: 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.
: July 1, 1997. Effective Date
: 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.
: 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.
: The Company and each of the Company's subsidiaries and affiliates that is
currently designated as an Employer by the Plan Administrator.
: The Employee Retirement Income Security Act of 1974, as amended.
: 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 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 Captial
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, whichever is applicable, as reported on the composite tape for
securities listed on the New York Stock Exchange, Inc., rounded to four decimal
places.
: 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.
: 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.
: The PepsiCo Executive Income Deferral Program, as it may be amended from
time to time.
: The Compensation Committee of the Board of Directors of the Company or its
delegate or delegates.
: The 12-month period from January 1 to December 31.
: 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.
: The subaccount provided for by Section 4.3 to contain the portion of each
separate deferral that is subject to forfeiture.
: 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.
: 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.
: 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.
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 amount 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 amount 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 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 (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 so long as the deferral
election is made within 30 days of the date the individual becomes an
eligible Employee and prior to the first day of such succeeding Plan Year.
(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
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 Account. 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. 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;
(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.
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). 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
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. 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 invested in this option by the Plan Administrator.
(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 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).
(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 similar corporate change, 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.
(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 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 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. 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, 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.
. Except as provided in Section 4.3, a Participant's interest in the value of
his Account shall at all times be 100 percent 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 is not yet eligible 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.
(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;
(2) The date the Participant becomes eligible for
Retirement (as specified above); 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.
(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).
. 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 quater 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). 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.
(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.
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 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 approval for
accelerated payment is granted.
ARTICLE V
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.
. 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.
. 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
(i) To hire agents, accountants, actuaries, consultants and
legal counsel to assist in operating and administering the Plan.
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.
. 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. 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.
. 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. 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.
ARTICLE VI
CLAIMS PROCEDURE
. If a Participant or Beneficiary (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.
. 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.
ARTICLE VII
AMENDMENT AND TERMINATION
. 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.
. 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.
ARTICLE VIII
MISCELLANEOUS
. 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.
. 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. 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. 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).
. 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.
. 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.
. 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 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.
. The Plan Administrator may select any corporation related to the Company by
stock ownership as an Employer and permit or cause such 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.
. 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.
. 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 Company 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 due to the Account of a Participant and credited against such Account.
. Whenever, in the Plan Administrator's opinion, a Participant or Beneficiary
entitled to receive any payment hereunder is under a legal disability or is
incapacitated in any way so as to be unable to manage his financial affairs, the
Plan Administrator may 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.
. This Plan document encompasses three separate plans of deferred compensation
for all legal purposes, including ERISA and federal and state tax law, 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.
This _____ day of ____________________, 1997, the above restated Plan is
hereby adopted and approved by the Company's duly authorized officer to be
effective as stated herein.
PEPSICO, INC.
By:_____________________________________
APPROVED
By: _____________________________
Law Department
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.
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.
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) nonterminated Transferred Individuals shall be
transferred to the Tricon Executive Income Deferral Program. 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)
Tricon and any of its affiliates, as of the end of the day on the Distribution
Date.
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 corporate
group (Tricon and its affiliates, as determined by the Plan Administrator) 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.
A.4 Employment Transfers by Transition Individuals. If a Participant
is transferred to Tricon under circumstances that cause him to be a Transition
Individual (a "Transition Transfer"), such transfer to Tricon 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 transferred to the Tricon Executive Income Deferral
Program. 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.
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 divident 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).
(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 as the mean
of the high and low price on such date for Tricon Common Stock as
reported on the composite tape for securities listed on the New York
Stock Exchange, Inc., rounded to four decimal places.
(2) If shares of Tricon Common Stock change by
reason of any stock split, stock dividend, recapitalization, merger,
consolidation, spin-off, combination or exchange of shares, complete
or partial liquidation or other similar corporate change, 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.
(c) Termination of the Tricon Common Stock Account. Effective
as of the end of the day on December 31, 1998 (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.
(b) The fair market value of a share of Tricon Common Stock on
the Distribution Date.