PEPSICO
PENSION EQUALIZATION PLAN
(PEP)
As Restated
Effective as of August 29, 1997, Except as Otherwise Noted
I-2
PEPSICO PENSION EQUALIZATION PLAN
Table of Contents
Page No.
ARTICLE I. FOREWORD.......................................................I-1
ARTICLE II DEFINITIONS AND CONSTRUCTION..................................II-1
2.1 Definitions........................................................II-1
2.2 Construction.....................................................II-11
ARTICLE III PARTICIPATION AND SERVICE...................................III-1
3.1 Participation....................................................III-1
3.2 Service..........................................................III-1
3.3 Credited Service.................................................III-1
ARTICLE IV REQUIREMENTS FOR BENEFITS.....................................IV-1
4.1 Normal Retirement Pension.........................................IV-1
4.2 Early Retirement Pension..........................................IV-1
4.3 Vested Pension....................................................IV-1
4.4 Late Retirement Pension...........................................IV-1
4.5 Disability Pension................................................IV-2
4.6 Pre-Retirement Spouse's Pension...................................IV-2
4.7 Vesting...........................................................IV-3
4.8 Time of Payment...................................................IV-3
4.9 Cashout Distributions.............................................IV-3
4.10 Coordination with Long Term Disability Plan.......................IV-4
4.11 Reemployment of Certain Participants.............................IV-4
ARTICLE V AMOUNT OF RETIREMENT PENSION....................................V-1
5.1 PEP Pension........................................................V-1
5.2 PEP Guarantee......................................................V-3
5.3 Amount of Pre-Retirement Spouse's Pension..........................V-8
5.4 Certain Adjustments...............................................V-11
5.5 Excludable Employment.............................................V-12
ARTICLE VI DISTRIBUTION OPTIONS..........................................VI-1
6.1 Form and Timing of Distributions...................................VI-1
6.2 Available Forms of Payment.........................................VI-3
6.3 Procedures for Elections...........................................VI-7
6.4 Special Rules for Survivor Options................................VI-10
6.5 Designation of Beneficiary........................................VI-11
ARTICLE VII ADMINISTRATION..............................................VII-1
7.1 Authority to Administer Plan.....................................VII-1
7.2 Facility of Payment..............................................VII-1
7.3 Claims Procedure.................................................VII-2
7.4 Effect of Specific References....................................VII-3
ARTICLE VIII MISCELLANEOUS.............................................VIII-1
8.1 Nonguarantee of Employment......................................VIII-1
8.2 Nonalienation of Benefits.......................................VIII-1
8.3 Unfunded Plan...................................................VIII-1
8.4 Action by the Company...........................................VIII-2
8.5 Indemnification.................................................VIII-2
ARTICLE IX AMENDMENT AND TERMINATION.....................................IX-1
9.1 Continuation of the Plan..........................................IX-1
9.2 Amendments........................................................IX-1
9.3 Termination.......................................................IX-1
ARTICLE X ERISA PLAN STRUCTURE...........................................X-1
ARTICLE XI APPLICABLE LAW...............................................XI-1
ARTICLE XII SIGNATURES.................................................XII-1
ARTICLE A ACCRUALS FOR 1993 AND 1994.....................................A-1
ARTICLE PFS PFS SPECIAL EARLY RETIREMENT BENEFIT.......................PFS-1
II-3
ARTICLE I Foreword
The PepsiCo Pension Equalization Plan ("PEP" or "Plan") has been
established by PepsiCo for the benefit of salaried employees of the PepsiCo
Organization who participate in the PepsiCo Salaried Employees Retirement Plan
("Salaried Plan"). PEP provides benefits for eligible employees whose pension
benefits under the Salaried Plan are limited by the provisions of the Internal
Revenue Code of 1986, as amended. In addition, PEP provides benefits for certain
eligible employees based on the pre-1989 Salaried Plan formula.
This Plan document amends and restates in its entirety the Plan as
it was in effect prior to January 1, 1989, and conforms the terms of the Plan to
the practices of the Company on and after that date, in accordance with
decisions by the Company's board of directors in November, 1989. Except as
otherwise provided herein, this amended and restated Plan is effective as of
January 1, 1989 and applies to employees who receive Credited Service on or
after that date. The prior provisions of the Plan shall govern the rights and
benefits of other employees and shall govern for periods before the effective
date of any provision with a different effective date.
ARTICLE II Definitions and Construction : This section
provides definitions for certain words and phrases listed below. These
definitions can be found on the pages indicated.
Page
(a) Accrued Benefit II-2
(b) Actuarial Equivalent II-2
(c) Advance Election II-3
(d) Annuity II-3
(e) Annuity Starting Date II-3
(f) Authorized Leave of Absence II-4
(g) Code II-4
(h) Company II-4
(i) Covered Compensation II-4
(j) Credited Service II-4
(k) Disability Retirement Pension II-4
(l) Early Retirement Pension II-4
(m) Effective Date II-4
(n) Eligible Spouse II-4
(o) Employee II-5
(p) Employer II-5
(q) ERISA II-5
(r) Highest Average Monthly Earnings II-5
(s) Late Retirement Date II-5
(t) Late Retirement Pension II-5
(u) Normal Retirement Age II-5
(v) Normal Retirement Date II-5
(w) Normal Retirement Pension II-5
(x) Participant II-6
(y) PBGC II-6
(z) PBGC Rate II-6
(aa) Pension II-6
(bb) PEP Election II-6
(cc) PepsiCo Organization II-6
(dd) Plan II-6
(ee) Plan Administrator II-7
(ff) Plan Year II-7
(gg) Pre-Retirement Spouse's Pension II-7
(hh) Primary Social Security Amount II-7
(ii) Qualified Joint and Survivor Annuity II-9
(jj) Retirement II-9
(kk) Retirement Date II-9
(ll) Retirement Pension II-9
(mm) Salaried Plan II-9
(nn) Service II-10
(oo) Severance from Service Date II-10
(pp) Single Life Annuity II-10
(qq) Single Lump Sum II-10
(rr) Social Security Act II-10
(ss) Taxable Wage Base II-10
(tt) Vested Pension II-10
Where the following words and phrases, in boldface and underlined, appear in
this Plan with initial capitals they shall have the meaning set forth below,
unless a different meaning is plainly required by the context.
(a) ACCRUED BENEFIT: The Pension payable at Normal
Retirement Date determined in accordance with Article V, based on the
Participant's Highest Average Monthly Earnings and Credited Service at
the date of determination.
(b) ACTUARIAL EQUIVALENT: Except as otherwise specifically
set forth in the Plan or any Appendix to the Plan with respect to a
specific benefit determination, a benefit of equivalent value computed on
the basis of the factors set forth below. The application of the following
assumptions to the computation of benefits payable under the Plan shall be
done in a uniform and consistent manner. In the event the Plan is amended
to provide new rights, features or benefits, the following actuarial
factors shall not apply to these new elements unless specifically adopted
by the amendment.
(1) Annuities and Inflation Protection: To determine the
amount of a Pension payable in the form of a Qualified Joint and
Survivor Annuity or optional form of survivor annuity, or as an
annuity with inflation protection, the factors applicable for such
purposes under the Salaried Plan shall apply.
(2) Lump Sums: To determine the lump sum value of a
Pension, or a Pre-Retirement Spouse's Pension under Section 4.6, the
factors applicable for such purposes under the Salaried Plan shall
apply, except that when the term "PBGC Rate" is used in the Salaried
Plan in this context it shall mean "PBGC Rate" as defined in this
Plan.
(3) Other Cases: To determine the adjustment to be made
in the Pension payable to or on behalf of a Participant in other
cases, the factors are those applicable for such purpose under the
Salaried Plan.
(c) ADVANCE ELECTION: A Participant's election to receive
his PEP Retirement Pension as a Single Lump Sum or an Annuity, made in
compliance with the requirements of Section 6.3.
(d) ANNUITY: A Pension payable as a series of monthly
payments for at least the life of the Participant.
(e) ANNUITY STARTING DATE: The Annuity Starting Date shall
be the first day of the first period for which an amount is payable under
this Plan as an annuity or in any other form. A Participant who: (1) is
reemployed after his initial Annuity Starting Date, and (2) is entitled to
benefits hereunder after his reemployment, shall have a subsequent Annuity
Starting Date for such benefits only to the extent provided in Section
6.3(d).
(f) AUTHORIZED LEAVE OF ABSENCE: Any absence authorized by
an Employer under the Employer's standard personnel practices, whether
paid or unpaid.
(g) CODE: The Internal Revenue Code of 1986, as amended from
time to time.
(h) COMPANY: PepsiCo, Inc., a corporation organized and
existing under the laws of the State of North Carolina or its successor or
successors.
(i) COVERED COMPENSATION: "Covered Compensation" as
that term is defined in the Salaried Plan.
(j) CREDITED SERVICE: The period of a Participant's
employment, calculated in accordance with Section 3.3, which is counted
for purposes of determining the amount of benefits payable to, or on
behalf of, the Participant.
(k) DISABILITY RETIREMENT PENSION: The Retirement Pension
available to a Participant under Section 4.5.
(l) EARLY RETIREMENT PENSION: The Retirement Pension
available to a Participant under Section 4.2.
(m) EFFECTIVE DATE: The date upon which this amendment and
restatement is generally effective, January 1, 1989. Certain identified
provisions of the Plan are effective on different dates as noted herein.
(n) ELIGIBLE SPOUSE: The spouse of a Participant to whom the
Participant is married on the earlier of the Participant's Annuity
Starting Date or the date of the Participant's death.
(o) EMPLOYEE: An individual who qualifies as an "Employee"
as that term is defined in the Salaried Plan.
(p) EMPLOYER: An entity that qualifies as an "Employer" as
that term is defined in the Salaried Plan.
(q) ERISA: Public Law No. 93-406, the Employee Retirement
Income Security Act of 1974, as amended from time to time.
(r) HIGHEST AVERAGE MONTHLY EARNINGS: "Highest Average
Monthly Earnings" as that term is defined in the Salaried Plan, but
without regard to the limitation imposed by section 401(a)(17) of the Code
(as such limitation is interpreted and applied under the Salaried Plan).
(s) LATE RETIREMENT DATE: The Late Retirement Date shall be
the first day of the month coincident with or immediately following a
Participant's actual Retirement Date occurring after his Normal Retirement
Age.
(t) LATE RETIREMENT PENSION: The Retirement Pension
available to a Participant under Section 4.4.
(u) NORMAL RETIREMENT AGE: The Normal Retirement Age under
the Plan is age 65 or, if later, the age at which a Participant first has
5 Years of Service.
(v) NORMAL RETIREMENT DATE: A Participant's Normal
Retirement Date shall be the first day of the month coincident with or
immediately following a Participant's Normal Retirement Age.
(w) NORMAL RETIREMENT PENSION: The Retirement Pension
available to a Participant under Section 4.1.
(x) PARTICIPANT: An Employee participating in the Plan in
accordance with the provisions of Section 3.1.
(y) PBGC: The Pension Benefit Guaranty Corporation, a body
corporate within the Department of Labor established under the provisions
of Title IV of ERISA.
(z) PBGC RATE: The PBGC Rate is 120 percent of the interest
rate, determined on the Participant's Annuity Starting Date, that would be
used by the PBGC for purposes of determining the present value of a lump
sum distribution on plan termination.
(aa) PENSION: One or more payments that are payable to
a person who is entitled to receive benefits under the Plan.
(bb) PEP ELECTION: A Participant's election to receive his
PEP Retirement Pension in one of the Annuity forms available under Section
6.2, made in compliance with the requirements of Sections 6.3 and 6.4.
(cc) PEPSICO ORGANIZATION: The controlled group of
organizations of which the Company is a part, as defined by Code section
414 and regulations issued thereunder. An entity shall be considered a
member of the PepsiCo Organization only during the period it is one of the
group of organizations described in the preceding sentence.
(dd) PLAN: The PepsiCo Pension Equalization Plan, the Plan
set forth herein, as it may be amended from time to time. The Plan is also
sometimes referred to as PEP, or as the PepsiCo Pension Benefit
Equalization Plan.
(ee) PLAN ADMINISTRATOR: The Company, which shall have
authority to administer the Plan as provided in Article VII.
(ff) PLAN YEAR: The 12-month period commencing on
January 1 and ending on December 31.
(gg) PRE-RETIREMENT SPOUSE'S PENSION: The Pension
available to an Eligible Spouse under Section 4.6.
(hh) PRIMARY SOCIAL SECURITY AMOUNT: In determining
Pension amounts, Primary Social Security Amount shall mean:
(1) For purposes of determining the amount of a
Retirement, Vested or Pre-Retirement Spouse's Pension, the Primary
Social Security Amount shall be the estimated monthly amount that
may be payable to a Participant commencing at age 65 as an old-age
insurance benefit under the provisions of Title II of the Social
Security Act, as amended. Such estimates of the old-age insurance
benefit to which a Participant would be entitled at age 65 shall be
based upon the following assumptions:
(i) That the Participant's social security wages
in any year prior to Retirement or severance are equal to
the Taxable Wage Base in such year, and
(ii) That he will not receive any social security
wages after Retirement or severance.
However, in computing a Vested Pension under Formula A of Section
5.2, the estimate of the old-age insurance benefit to which a
Participant would be entitled at age 65 shall be based upon the
assumption that he continued to receive social security wages until
age 65 at the same rate as the Taxable Wage Base in effect at his
severance from employment. For purposes of this subsection, "social
security wages" shall mean wages within the meaning of the Social
Security Act.
(2) For purposes of determining the amount of a
Disability Pension, the Primary Social Security Amount shall be
(except as provided in the next sentence) the initial monthly amount
actually received by the disabled Participant as a disability
insurance benefit under the provisions of Title II of the Social
Security Act, as amended and in effect at the time of the
Participant's retirement due to disability. Notwithstanding the
preceding sentence, for any period that a Participant receives a
Disability Pension before receiving a disability insurance benefit
under the provisions of Title II of the Social Security Act, then
the Participant's Primary Social Security Amount for such period
shall be determined pursuant to paragraph (1) above.
(3) For purposes of paragraphs (1) and (2), the Primary
Social Security Amount shall exclude amounts that may be available
because of the spouse or any dependent of the Participant or any
amounts payable on account of the Participant's death. Estimates of
Primary Social Security Amounts shall be made on the basis of the
Social Security Act as in effect at the Participant's Severance from
Service Date, without regard to any increases in the social security
wage base or benefit levels provided by such Act which take effect
thereafter.
(ii) QUALIFIED JOINT AND SURVIVOR ANNUITY: An Annuity which
is payable to the Participant for life with 50 percent of the amount of
such Annuity payable after the Participant's death to his surviving
Eligible Spouse for life. If the Eligible Spouse predeceases the
Participant, no survivor benefit under a Qualified Joint and Survivor
Annuity shall be payable to any person. The amount of a Participant's
monthly payment under a Qualified Joint and Survivor Annuity shall be
reduced to the extent provided in sections 5.1 and 5.2, as applicable.
(jj) RETIREMENT: Termination of employment for reasons other
than death after a Participant has fulfilled the requirements for either a
Normal, Early, Late, or Disability Retirement Pension under Article IV.
(kk) RETIREMENT DATE: The date on which a Participant's
Retirement is considered to commence. Retirement shall be considered to
commence on the day immediately following: (i) a Participant's last day of
employment, or (ii) the last day of an Authorized Leave of Absence, if
later. Notwithstanding the preceding sentence, in the case of a Disability
Retirement Pension, Retirement shall be considered as commencing on the
Participant's retirement date applicable for such purpose under the
Salaried Plan.
(ll) RETIREMENT PENSION: The Pension payable to a
Participant upon Retirement under the Plan.
(mm) SALARIED PLAN: The PepsiCo Salaried Employees
Retirement Plan, as it may be amended from time to time.
(nn) SERVICE: The period of a Participant's employment
calculated in accordance with Section 3.2 for purposes of determining his
entitlement to benefits under the Plan.
(oo) SEVERANCE FROM SERVICE DATE: The date on which an
Employee's period of service is deemed to end, determined in accordance
with Article III of the Salaried Plan.
(pp) SINGLE LIFE ANNUITY: A level monthly Annuity
payable to a Participant for his life only, with no survivor benefits
to his Eligible Spouse or any other person.
(qq) SINGLE LUMP SUM: The distribution of a
Participant's total Pension in the form of a single payment.
(rr) SOCIAL SECURITY ACT: The Social Security Act of
the United States, as amended, an enactment providing governmental
benefits in connection with events such as old age, death and disability.
Any reference herein to the Social Security Act (or any of the benefits
provided thereunder) shall be taken as a reference to any comparable
governmental program of another country, as determined by the Plan
Administrator, but only to the extent the Plan Administrator judges the
computation of those benefits to be administratively feasible.
(ss) TAXABLE WAGE BASE: The contribution and benefit
base (as determined under section 230 of the Social Security Act) in
effect for the Plan Year.
(tt) VESTED PENSION: The Pension available to a
Participant under Section 4.3.
: The terms of the Plan shall be construed in accordance with this section.
(a) Gender and Number: The masculine gender, where
appearing in the Plan, shall be deemed to include the feminine gender, and
the singular may include the plural, unless the context clearly indicates
to the contrary.
(b) Compounds of the Word "Here": The words "hereof",
"hereunder" and other similar compounds of the word "here" shall mean and
refer to the entire Plan, not to any particular provision or section.
(c) Examples: Whenever an example is provided or the text
uses the term "including" followed by a specific item or items, or there
is a passage having a similar effect, such passages of the Plan shall be
construed as if the phrase "without limitation" followed such example or
term (or otherwise applied to such passage in a manner that avoids limits
on its breadth of application).
(d) Subdivisions of the Plan Document: This Plan document is
divided and subdivided using the following progression: articles,
sections, subsections, paragraphs, subparagraphs, and clauses. Articles
are designated by capital roman numerals. Sections are designated by
Arabic numerals containing a decimal point. Subsections are designated by
lower-case letters in parentheses. Paragraphs are designated by Arabic
numerals in parentheses. Subparagraphs are designated by lower-case roman
numerals in parentheses. Clauses are designated by upper-case letters in
parentheses. Any reference in a section to a subsection (with no
accompanying section reference) shall be read as a reference to the
subsection with the specified designation contained in that same section.
A similar rule shall apply with respect to paragraph references within a
subsection and subparagraph references within a paragraph.
ARTICLE III Participation and Service : An Employee shall be
a Participant in the Plan during the period:
(a) When he would be currently entitled to receive a Pension
under the Plan if his employment terminated at such time, or
(b) When he would be so entitled but for the vesting
requirement of Section 4.7.
: A Participant's entitlement to a Pension and to a Pre-Retirement Spouse's
Pension for his Eligible Spouse shall be determined under Article IV based upon
his period of Service. A Participant's period of Service shall be determined
under Article III of the Salaried Plan. : The amount of a Participant's Pension
and a Pre-Retirement Spouse's Pension shall be based upon the Participant's
period of Credited Service, as determined under Article III of the Salaried
Plan.
ARTICLE IV Requirements for Benefits
A Participant shall be entitled to receive a Pension and a
surviving Eligible Spouse shall be entitled to certain survivor benefits as
provided in this Article. The amount of any such Pension or survivor benefit
shall be determined in accordance with Article V. : A Participant shall be
eligible for a Normal Retirement Pension if he meets the requirements for a
Normal Retirement Pension in Section 4.1 of the Salaried Plan. : A Participant
shall be eligible for an Early Retirement Pension if he meets the requirements
for an Early Retirement Pension in Section 4.2 of the Salaried Plan. : A
Participant who is vested under Section 4.7 shall be eligible to receive a
Vested Pension if his employment in an eligible classification under the
Salaried Plan is terminated before he is eligible for a Normal Retirement
Pension or an Early Retirement Pension. A Participant who terminates employment
prior to satisfying the vesting requirement in Section 4.7 shall not be eligible
to receive a Pension under this Plan. : A Participant who continues employment
after his Normal Retirement Age shall not receive a Pension until his Late
Retirement Date. Thereafter, a Participant shall be eligible for a Late
Retirement Pension determined in accordance with Section 4.4 of the Salaried
Plan (but without regard to any requirement for notice of suspension under ERISA
section 203(a)(3)(B) or any adjustment as under Section 5.5(d) of the Salaried
Plan). : A Participant shall be eligible for a Disability Pension if he meets
the requirements for a Disability Pension under the Salaried Plan. : Any
Pre-Retirement Spouse's Pension payable under this section shall commence as of
the same time as the corresponding pre-retirement spouse's pension under the
Salaried Plan and, subject to Section 4.9, shall continue monthly for the life
of the Eligible Spouse.
(a) Active, Disabled and Retired Employees: A Pre-Retirement
Spouse's Pension shall be payable under this subsection to a Participant's
Eligible Spouse (if any) who is entitled under the Salaried Plan to the
special pre-retirement spouse's pension for survivors of active, disabled
and retired employees. The amount of such Pension shall be determined in
accordance with the provisions of Section 5.3.
(b) Vested Employees: A Pre-Retirement Spouse's Pension
shall be payable under this subsection to a Participant's Eligible Spouse
(if any) who is entitled under the Salaried Plan to the pre-retirement
spouse's pension for survivors of vested terminated Employees. The amount
of such Pension shall be determined in accordance with the provisions of
Section 5.3. If pursuant to this Section 4.6(b) a Participant has
Pre-Retirement Spouse's coverage in effect for his Eligible Spouse, any
Pension calculated for the Participant under Section 5.2(b) shall be
reduced for each year such coverage is in effect by the applicable
percentage set forth below (based on the Participant's age at the time the
coverage is in effect) with a pro rata reduction for any portion of a
year. No reduction shall be made for coverage in effect within the 90-day
period following a Participant's termination of employment.
Attained Age Annual Charge
Up to 35 .0%
35 -- 39 .075%
40 -- 44 .1%
45 -- 49 .175%
50 -- 54 .3%
55 -- 59 .5%
60 -- 64 .5%
: A Participant shall be fully vested in, and have a nonforfeitable right
to, his Accrued Benefit at the time he becomes fully vested in his accrued
benefit under the Salaried Plan.
: The distribution of a PEP Pension to a Participant shall commence as of
the time specified in Section 6.1.
: 4.9 Cashout Distributions
(a) Distribution of Participant's Pension: If at a
Participant's Annuity Starting Date the Actuarial Equivalent lump sum
value of the Participant's PEP Pension is equal to or less than $10,000,
the Plan Administrator shall distribute to the Participant such lump sum
value of the Participant's PEP Pension.
(b) Distribution of Pre-Retirement Spouse's Pension Benefit:
If at the time payments under the Salaried Plan commence to an Eligible
Spouse the Actuarial Equivalent lump sum value of the PEP Pre-Retirement
Spouse's Pension to be paid is equal to or less than $10,000, the Plan
Administrator shall distribute to the Eligible Spouse such lump sum value
of the PEP Pre-Retirement Spouse's Pension.
Any lump sum distributed under this section shall be in lieu of the Pension that
otherwise would be distributable to the Participant or Eligible Spouse
hereunder. : The terms of this section apply notwithstanding the preceding
provisions of this Article. At any time prior to April 14, 1991, a Participant
shall not be eligible to receive a Normal, Early, Vested or Disability Pension
for any month or period of time for which he is eligible for, and receiving,
benefits under a long term disability plan maintained by an Employer. However, a
Participant's Eligible Spouse shall not be ineligible for a Pre-Retirement
Spouse's Pension or benefits under a Qualified Joint and Survivor Annuity
because the Participant was receiving benefits under a long term disability plan
at the date of his death. : In the case of a current or former Participant who
is reemployed and is eligible to reparticipate in the Salaried Plan after his
Annuity Starting Date, payment of his Pension will be suspended if payment of
his Salaried Plan pension is suspended (or would have been if it were already in
pay status). Thereafter, his Pension shall recommence at the time determined
under Section 6.1 (even if the suspension of his Salaried Plan pension ceases
earlier).
V-12
ARTICLE V Amount of Retirement Pension
When a Pension becomes payable to or on behalf of a Participant
under this Plan, the amount of such Pension shall be determined under Section
5.1, 5.2 or 5.3 (whichever is applicable), subject to any adjustments
required under Sections 4.6(b), 5.4 and 5.5.
: 5.1 PEP Pension
(a) Same Form as Salaried Plan: If a Participant's Pension
will be paid in the same form and will commence as of the same time as his
pension under the Salaried Plan, then his Pension hereunder shall be the
difference between:
(1) His Total Pension expressed in such form and payable
as of such time, minus
(2) His Salaried Plan Pension expressed in such form and
payable as of such time.
(b) Different Form than Salaried Plan: If a Participant's
Pension will be paid in a different form (whether in whole or in part) or
will commence as of a different time than his pension under the Salaried
Plan, his Pension shall be the product of:
(1) The amount of the Participant's Total Pension
expressed in the form and payable as of such time as applies to his
Pension under this Plan, multiplied by
(2) A fraction, the numerator of which is the value of
his Total Pension reduced by the value of his Salaried Plan Pension,
and the denominator of which is the value of his Total Pension (with
value determined on a reasonable and consistent basis, in the
discretion of the Plan Administrator, with respect to similarly
situated employees).
(c) Definitions: The following definitions apply for
purposes of this section.
(1) A Participant's "Total Pension" means the greater
of:
(i) The amount of the Participant's pension
determined under the terms of the Salaried Plan, but without
regard to: (A) the limitations imposed by sections
401(a)(17) and 415 of the Code (as such limitations are
interpreted and applied under the Salaried Plan), and (B)
the actuarial adjustment under Section 5.5(d) of the
Salaried Plan; or
(ii) The amount (if any) of the Participant's PEP
Guarantee determined under Section 5.2.
In making this comparison, the benefits in subparagraphs (i) and
(ii) above shall be calculated with reference to the specific form
and time of payment that is applicable. If the applicable form of
payment is a lump sum, the Actuarial Equivalent factors in Section
2.1(b)(2) shall apply for purposes of subparagraph (i) in lieu of
those in the Salaried Plan.
(2) A Participant's "Salaried Plan Pension" means the
amount of the Participant's pension determined under the terms of
the Salaried Plan.
: A Participant who is eligible under subsection (a) below shall be entitled to
a PEP Guarantee benefit determined under subsection (b) below. In the case of
other Participants, the PEP Guarantee shall not apply.
(a) Eligibility: A Participant shall be covered by this
section if the Participant has 1988 pensionable earnings from an Employer
of at least $75,000. For purposes of this section, "1988 pensionable
earnings" means the Participant's remuneration for the 1988 calendar year,
within the meaning of the Salaried Plan as in effect in 1988. "1988
pensionable earnings" does not include remuneration from an entity
attributable to any period when that entity was not an Employer.
(b) PEP Guarantee Formula: The amount of a Participant's PEP
Guarantee shall be determined under the applicable formula in paragraph
(1), subject to the special rules in paragraph (2).
(1) Formulas: The amount of a Participant's Pension
under this paragraph shall be determined in accordance with
subparagraph (i) below. However, if the Participant was actively
employed by the PepsiCo Organization in a classification eligible
for the Salaried Plan prior to July 1, 1975, the amount of his
Pension under this paragraph shall be the greater of the amounts
determined under subparagraphs (i) and (ii), provided that
subparagraph (ii)(B) shall not apply in determining the amount of a
Vested Pension.
(i) Formula A: The Pension amount under this
subparagraph shall be:
(A) 3 percent of the Participant's Highest
Average Monthly Earnings for the first 10 years of
Credited Service, plus
(B) 1 percent of the Participant's Highest
Average Monthly Earnings for each year of Credited
Service in excess of 10 years, less
(C) 1-2/3 percent of the Participant's
Primary Social Security Amount multiplied by years of
Credited Service not in excess of 30 years.
In determining the amount of a Vested Pension under this
Formula A, the Pension shall first be calculated on the basis
of (I) the Credited Service the Participant would have earned
had he remained in the employ of the Employer until his Normal
Retirement Age, and (II) his Highest Average Monthly Earnings
and Primary Social Security Amount at his Severance from
Service Date, and then shall be reduced by multiplying the
resulting amount by a fraction, the numerator of which is the
Participant's actual years of Credited Service on his
Severance from Service Date and the denominator of which is
the years of Credited Service he would have earned had he
remained in the employ of an Employer until his Normal
Retirement Age.
(ii) Formula B: The Pension amount under this
subparagraph shall be the greater of (A) or (B) below:
(A) 1-1/2 percent of Highest Average Monthly
Earnings times the number of years of Credited Service,
less 50 percent of the Participant's Primary Social
Security Amount, or
(B) 3 percent of Highest Average Monthly
Earnings times the number of years of Credited Service
up to 15 years, less 50 percent of the Participant's
Primary Social Security Amount.
In determining the amount of a Disability Pension under Formula A or
B above, the Pension shall be calculated on the basis of the
Participant's Credited Service (determined in accordance with
Section 3.3(d)(3) of the Salaried Plan), and his Highest Average
Monthly Earnings and Primary Social Security Amount at the date of
disability.
(2) Calculation: The amount of the PEP Guarantee shall
be determined pursuant to paragraph (1) above, subject to the
following special rules:
(i) Surviving Eligible Spouse's Annuity: Subject
to subparagraph (iii) below and the last sentence of this
subparagraph, if the Participant has an Eligible Spouse, the
Participant's Eligible Spouse shall be entitled to receive a
survivor annuity equal to 50 percent of the Participant's
Annuity under this section, with no corresponding reduction
in such Annuity for the Participant. Annuity payments to a
surviving Eligible Spouse shall begin on the first day of
the month coincident with or following the Participant's
death and shall end with the last monthly payment due prior
to the Eligible Spouse's death. If the Eligible Spouse is
more than 10 years younger than the Participant, the
survivor benefit payable under this subparagraph shall be
adjusted as provided below.
(A) For each full year more than 10 but less
than 21 that the surviving Eligible Spouse is younger
than the Participant, the survivor benefit payable to
such spouse shall be reduced by 0.8 percent.
(B) For each full year more than 20 that the
surviving Eligible Spouse is younger than the
Participant, the survivor benefit payable to such spouse
shall be reduced by an additional 0.4 percent.
(ii) Reductions: The following reductions shall
apply in determining a Participant's PEP Guarantee.
(A) If the Participant will receive an Early
Retirement Pension, the payment amount shall be reduced
by 3/12ths of 1 percent for each month by which the
benefit commencement date precedes the date the
Participant would attain his Normal Retirement Date.
(B) If the Participant is entitled to a
Vested Pension, the payment amount shall be reduced to
the Actuarial Equivalent of the amount payable at his
Normal Retirement Date (if payment commences before such
date), and the Section 4.6(b) reductions for any
Pre-Retirement Spouse's coverage shall apply.
(C) This clause applies if the Participant
will receive his Pension in a form that provides an
Eligible Spouse benefit, continuing for the life of the
surviving spouse, that is greater than that provided
under subparagraph (i). In this instance, the
Participant's Pension under this section shall be
reduced so that the total value of the benefit payable
on the Participant's behalf is the Actuarial Equivalent
of the Pension otherwise payable under the foregoing
provisions of this section.
(D) This clause applies if the Participant
will receive his Pension in a form that provides a
survivor annuity for a beneficiary who is not his
Eligible Spouse. In this instance, the Participant's
Pension under this section shall be reduced so that the
total value of the benefit payable on the Participant's
behalf is the Actuarial Equivalent of a Single Life
Annuity for the Participant's life.
(E) This clause applies if the Participant
will receive his Pension in a Annuity form that includes
inflation protection described in Section 6.2(b). In
this instance, the Participant's Pension under this
section shall be reduced so that the total value of the
benefit payable on the Participant's behalf is the
Actuarial Equivalent of the elected Annuity without such
protection.
(iii) Lump Sum Conversion: The amount of the
Retirement Pension determined under this section for a
Participant whose Retirement Pension will be distributed in
the form of a lump sum shall be the Actuarial Equivalent of
the Participant's PEP Guarantee determined under this
section, taking into account the value of any survivor
benefit under subparagraph (i) above and any early
retirement reductions under subparagraph (ii)(A) above.
: The monthly amount of the Pre-Retirement Spouse's Pension payable to a
surviving Eligible Spouse under Section 4.6 shall be determined under subsection
(a) below.
(a) Calculation: An Eligible Spouse's Pre-Retirement
Spouse's Pension shall be the difference between:
(1) The Eligible Spouse's Total Pre-Retirement
Spouse's Pension, minus
(2) The Eligible Spouse's Salaried Plan
Pre-Retirement Spouse's Pension.
(b) Definitions: The following definitions apply for
purposes of this section.
(1) An Eligible Spouse's "Total Pre-Retirement
Spouse's Pension" means the greater of:
(i) The amount of the Eligible Spouse's
pre-retirement spouse's pension determined under the terms
of the Salaried Plan, but without regard to: (A) the
limitations imposed by sections 401(a)(17) and 415 of the
Code (as such limitations are interpreted and applied under
the Salaried Plan), and (B) the actuarial adjustment under
Section 5.5(d) of the Salaried Plan; or
(ii) The amount (if any) of the Eligible Spouse's
PEP Guarantee Pre-Retirement Spouse's Pension determined
under
subsection (c).
In making this comparison, the benefits in subparagraphs (i) and
(ii) above shall be calculated with reference to the specific time
of payment applicable to the Eligible Spouse.
(c) PEP Guarantee Pre-Retirement Spouse's Pension: An
Eligible Spouse's PEP Guarantee Pre-Retirement Spouse's Pension shall be
determined in accordance with paragraph (1) or (2) below, whichever is
applicable, with reference to the PEP Guarantee (if any) that would
have been available to the Participant under
Section 5.2.
(1) Normal Rule: The Pre-Retirement Spouse's Pension
payable under this paragraph shall be equal to the amount that would
be payable as a survivor annuity, under a Qualified Joint and
Survivor Annuity, if the Participant had:
(i) Separated from service on the date of death
(or, if earlier, his actual Severance from Service Date);
(ii) Commenced a Qualified Joint and Survivor
Annuity on the same date payments of the Qualified
Pre-Retirement Spouse's Pension are to commence; and
(iii) Died on the day immediately following such
commencement.
If payment of a Pre-Retirement Spouse's Pension under this paragraph
commences prior to the date which would have been the Participant's
Normal Retirement Date, appropriate reductions for early
commencement shall be applied to the Qualified Joint and Survivor
Annuity upon which the Pre-Retirement Spouse's Pension
is based.
(2) Special Rule for Active and Disabled Employees:
Notwithstanding paragraph (1) above, the Pre-Retirement Spouse's
Pension paid on behalf of a Participant described in Section 4.6(a)
shall not be less than an amount equal to 25 percent of such
Participant's PEP Guarantee determined under Section 5.2. For this
purpose, Credited Service shall be determined as provided in Section
3.3(d)(2) of the Salaried Plan, and the deceased Participant's
Highest Average Monthly Earnings, Primary Social Security Amount and
Covered Compensation shall be determined as of his date of death. A
Pre-Retirement Spouse's Pension under this paragraph is not reduced
for early commencement.
: Pensions determined under the foregoing sections of this Article are subject
to adjustment as provided in this section. For purposes of this section,
"specified plan" shall mean the Salaried Plan or a nonqualified pension plan
similar to this Plan. A nonqualified pension plan is similar to this Plan if it
is sponsored by a member of the PepsiCo Organization and if its benefits are not
based on participant pay deferrals.
(a) Adjustments for Rehired Participants: This subsection
shall apply to a current or former Participant who is reemployed after his
Annuity Starting Date and whose benefit under the Salaried Plan is
recalculated based on an additional period of Credited Service. In the
event of any such recalculation, the Participant's PEP Pension shall also
be recalculated hereunder. For this purpose, the PEP Guarantee under
Section 5.2 is adjusted for in-service distributions and prior
distributions in the same manner as benefits are adjusted under the
Salaried Plan, but by taking into account benefits under this Plan and any
specified plans.
(b) Adjustment for Increased Pension Under Other Plans: If
the benefit paid under a specified plan on behalf of a Participant is
increased after PEP benefits on his behalf have been determined (whether
the increase is by order of a court, by agreement of the plan
administrator of the specified plan, or otherwise), the PEP benefit for
the Participant shall be recalculated. If the recalculation identifies an
overpayment hereunder, the Plan Administrator shall take such steps as it
deems advisable to recover the overpayment. It is specifically intended
that there shall be no duplication of payments under this Plan and any
specified plans.
: Effective for periods of employment on or after June 30, 1997, an executive
classified as level 22 or above whose employment by an Employer is for a limited
duration assignment shall not become entitled to a benefit or to any increase in
benefits in connection with such employment.
VI-12
ARTICLE VI Distribution Options
The terms of this Article govern the distribution of benefits to a
Participant who becomes entitled to payment of a Pension under the Plan. : This
section shall govern the form and timing of distributions of PEP Pensions that
begin on or after March 1, 1992. Plan distributions that begin before that date
shall be governed by the prior terms of the Plan. The provisions of this Section
6.1 are in all cases subject to the cashout rules set forth in Section 4.9.
(a) No Advance Election: This subsection shall apply to a
Participant: (i) who does not have an Advance Election in effect as of the
close of business on the day before his Retirement Date, or (ii) who
terminates employment prior to Retirement. Subject to the next sentence, a
Participant described in this subsection shall be paid his PEP Pension in
the same form and at the same time as he is paid his Pension under the
Salaried Plan. If a Participant's Salaried Plan Annuity Starting Date
occurs while he is still an employee of the PepsiCo Organization (because
of the time of payment provisions in Code section 401(a)(9)), payment
under the Plan shall not begin until the first of the month next following
the Participant's Severance from Service Date. In this instance, the form
of payment under this Plan shall remain that applicable under the Salaried
Plan.
(b) Advance Election in Effect: This subsection shall apply
to a Participant: (i) who has an Advance Election in effect as of the
close of business on the day before his Retirement Date, and (ii) whose
Retirement Date is after 1993. To be in effect, an Advance Election must
meet the advance receipt and other requirements of Section 6.3(b).
(1) Lump Sum Election: If a Participant covered by this
subsection has an Advance Election to receive a Single Lump Sum in
effect as of the close of business on the day before his Retirement
Date, the Participant's Retirement Pension under the Plan shall be
paid as a Single Lump Sum as of the first of the month coincident
with or next following his Retirement Date.
(2) Annuity Election: If a Participant covered by this
subsection has an Advance Election to receive an Annuity in effect
as of the close of business on the day before his Retirement Date,
the Participant's Retirement Pension under the Plan shall be paid in
an Annuity beginning 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 of a
Participant described in this paragraph.
(i) Salaried Plan Election: A Participant who has
a qualifying Salaried Plan election shall receive his
distribution in the same form of Annuity the Participant
selected in such qualifying Salaried Plan election. For this
purpose, a "qualifying Salaried Plan election" is a written
election of a form of payment by the Participant that: (A)
is currently in effect under the Salaried Plan as 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's Retirement
Pension under the Salaried Plan. For purposes of the
preceding sentence, a Participant who elects a combination
lump sum and Annuity under the Salaried Plan is 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 day before his
Retirement Date shall receive his distribution in the form
of Annuity the Participant selects in such PEP Election.
(iii) No PEP Election: A Participant who is not
covered by subparagraph (i) or (ii) above shall receive his
distribution in the form of a Qualified Joint and Survivor
Annuity if he is married, or in the form of a Single Life
Annuity if he is not married. For purposes of this
subparagraph (iii), a Participant shall be considered
married if he is married on the day before his Retirement
Date.
: The forms of payment set forth in subsections (a) and (b) may be provided to
any Participant who is entitled to a Retirement Pension. The forms of payment
for other Participants are set forth in subsection (c) below. The provisions of
this section are effective for Annuity Starting Dates after 1989 and earlier
distributions shall be governed by prior terms of the Plan.
(a) Basic Forms of Payment: A Participant's Retirement
Pension shall be distributed in one of the forms of payment listed in this
subsection. The particular form of payment applicable to a Participant
shall be determined in accordance with Section 6.1. Payments shall
commence on the date specified in Section 6.1 and shall end on the date
specified in this subsection.
(1) Single Life Annuity Option: A Participant may
receive his Pension in the form of a Single Life Annuity, which
provides monthly payments ending with the last payment due prior to
his death.
(2) Survivor Options: A Participant may receive his
Pension in accordance with one of the following survivor options:
(i) 100 Percent Survivor Option: The Participant
shall receive a reduced Pension payable for life, ending
with the last monthly payment due prior to his death.
Payments in the same reduced amount shall continue after the
Participant's death to his beneficiary for life, beginning
on the first day of the month coincident with or following
the Participant's death and ending with the last monthly
payment due prior to the beneficiary's death.
(ii) 75 Percent Survivor Option: The Participant
shall receive a reduced Pension payable for life, ending
with the last monthly payment due prior to his death.
Payments in the amount of 75 percent of such reduced Pension
shall be continued after the Participant's death to his
beneficiary for life, beginning on the first day of the
month coincident with or following the Participant's death
and ending with the last monthly payment due prior to the
beneficiary's death.
(iii) 50 Percent Survivor Option: The Participant
shall receive a reduced Pension payable for life, ending
with the last monthly payment due prior to his death.
Payments in the amount of 50 percent of such reduced Pension
shall be continued after the Participant's death to his
beneficiary for life, beginning on the first day of the
month coincident with or following the Participant's death
and ending with the last monthly payment due prior to the
beneficiary's death. A 50 percent survivor option under this
paragraph shall be a Qualified Joint and Survivor Annuity if
the Participant's beneficiary is his Eligible Spouse.
(iv) Ten Years Certain and Life Option: The
Participant shall receive a reduced Pension which shall be
payable monthly for his lifetime but for not less than 120
months. If the retired Participant dies before 120 payments
have been made, the monthly Pension amount shall be paid for
the remainder of the 120 month period to the Participant's
primary beneficiary (or if the primary beneficiary has
predeceased the Participant, the Participant's contingent
beneficiary).
(3) Single Lump Sum Payment Option: A Participant may
receive payment of his Pension in the form of a Single Lump Sum
payment.
(4) Combination Lump Sum/Monthly Benefit Option: A
Participant who does not have an Advance Election in effect may
receive a portion of his Pension in the form of a lump sum payment,
and the remaining portion in the form of one of the monthly benefits
described in paragraphs (1) and (2) above. The Pension is divided
between the two forms of payment based on the whole number
percentages designated by the Participant on a form provided for
this purpose by the Plan Administrator. For the election to be
effective, the sum of the two percentages designated by the
Participant must equal 100 percent.
(i) The amount of the Pension paid in the form of
a lump sum is determined by multiplying: (A) the amount that
would be payable to the Participant as a Single Lump Sum
payment if the Participant's entire benefit were payable in
that form, by (B) the percentage that the Participant has
designated for receipt in the form of a lump sum.
(ii) The amount of the Pension paid in the form of
a monthly benefit is determined by multiplying: (A) the
amount of the monthly benefit elected by the Participant,
determined in accordance with paragraph (1) or (2) above
(whichever applies), by (B) the percentage that the
Participant has designated for receipt in the form of a
monthly benefit. (b) Inflation Protection: The following
levels of
inflation protection may be provided to any Participant who is entitled to
a Retirement Pension (except to the extent such Pension is paid as a lump
sum).
(1) 5 Percent Inflation Protection: A Participant's
monthly benefit shall be initially reduced, but thereafter shall be
increased if inflation in the prior year exceeds 5 percent. The
amount of the increase shall be the difference between inflation in
the prior year and 5 percent.
(2) 7 Percent Inflation Protection: A Participant's
monthly benefit shall be initially reduced, but thereafter shall be
increased if inflation in the prior year exceeds 7 percent. The
amount of the increase shall be the difference between inflation in
the prior year and 7 percent.
Benefits shall be subject to increase in accordance with this subsection
each January 1, beginning with the second January 1 following the
Participant's Annuity Starting Date. The amount of inflation in the prior
year shall be determined based on inflation in the 12-month period ending
on September 30 of such year, with inflation measured in the same manner
as applies on the Effective Date for adjusting Social Security benefits
for changes in the cost of living. Inflation protection that is in effect
shall carry over to any survivor benefit payable on behalf of a
Participant, and shall increase the otherwise applicable survivor benefit
as provided above. Any election by a Participant to receive inflation
protection shall be irrevocable by such Participant or his surviving
beneficiary.
(c) Available Options for Vested Benefits: The forms of
payment available for a Participant with a Vested Pension are a Qualified
Joint and Survivor Annuity for married Participants and a Single Life
Annuity for both married and unmarried Participants. The applicable form
of payment shall be determined in accordance with Section 6.1(a).
: This section sets forth the procedures for making Advance Elections and
PEP Elections.
(a) In General: To qualify as an Advance Election or PEP
Election for purposes of Section 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 such
elections. Spousal consent is not required for any election (or revocation
of election) under the Plan.
(b) Advance Election: To qualify as an Advance Election, an
election must be made on or after July 15, 1993 and meet the following
requirements.
(1) Election: The Participant shall designate on the
Advance Election form whether the Participant elects to take his
Pension in the form of an Annuity or a Single Lump Sum.
(2) Receipt by Plan Administrator: The Advance Election
must be received by the Plan Administrator before the start of the
calendar year containing the Participant's Retirement Date, and at
least 6 months before that Retirement Date. An election that meets
the foregoing requirements shall remain effective until it is
changed or revoked.
(3) Change or Revocation of Election: A Plan Participant
may change an Advance Election by filing a new Election that meets
the foregoing requirements. A Plan Participant may revoke an Advance
Election only by filing a revocation that is received by the Plan
Administrator before the start of the calendar year containing the
Plan Participant's Retirement Date, and at least 6 months before
that Retirement Date.
Any Advance Election by a Participant shall be void if the Participant is
not entitled to a Retirement Pension.
(c) PEP Election: A PEP Election may only be made by a
Participant who has an Advance Election to receive an Annuity in effect at
the time his PEP Election is received by the Plan Administrator. In
determining whether an Advance Election is in effect for this purpose, the
advance receipt requirement of subsection (b)(2) shall be considered met
if it will be met by the Participant's proposed Retirement Date.
(1) Election: The Participant shall designate on the PEP
Election form the Annuity form of benefit the Participant selects
from those described in Section 6.2, including the Participant's
choice of inflation protection, subject to the provisions of this
Article VI. The forms of payment described in Section 6.2(a)(3) and
(4) are not available pursuant to a PEP Election.
(2) Receipt by the Plan Administrator: The PEP Election
must be received by the Plan Administrator no earlier than 90 days
before the Participant's Retirement Date, and no 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 Eligible Spouse if applicable), to the
Plan Administrator by the day before the Participant's Retirement
Date, for any form of payment which is subject to reduction in
accordance with subsection 6.2(c) above.
A Participant may change his PEP Election by filing a new Election with
the Plan Administrator that meets the foregoing requirements. The
Participant's PEP Election shall become effective at the close of business
on the day before the Participant's Retirement Date. Any PEP Election by a
Participant shall be void if the Participant does not have an Advance
Election in effect at such time.
(d) Elections Rules for Annuity Starting Dates: When amounts
become payable to a Participant in accordance with Article IV, they shall
be payable as of the Participant's Annuity Starting Date and the election
procedures (in this section and Sections 6.1 and 6.5) shall apply to all
of the Participant's unpaid accruals as of such Annuity Starting Date,
with the following exception. In the case of a Participant who is rehired
after his initial Annuity Starting Date and who (i) is currently receiving
an Annuity that remained in pay status upon rehire, or (ii) was previously
paid a lump sum distribution (other than a cashout distribution described
in Section 4.9(a)), the Participant's subsequent Annuity Starting Date (as
a result of his termination of reemployment), and the election procedures
at such subsequent Annuity Starting Date, shall apply only to the portion
of his benefit that accrues after his rehire. Any prior accruals that
remain to be paid as of the Participant's subsequent Annuity Starting Date
shall continue to be payable in accordance with the elections made at his
initial Annuity Starting Date.
For purposes of this section, an election shall be treated as received on a
particular day if it 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 by the Plan
Administrator.
: 6.4 Special Rules for Survivor Options
(a) Effect of Certain Deaths: If a Participant makes a PEP
Election for a form of payment described in Section 6.2(a)(2) and the
Participant or his beneficiary (beneficiaries in the case of Section
6.2(a)(2)(iv)) dies before the PEP Election becomes effective, the
election shall be disregarded. If the Participant dies after such PEP
Election becomes effective but before his Retirement Pension actually
commences, the election shall be given effect and the amount payable to
his surviving Eligible Spouse or other beneficiary shall commence on the
first day of the month following his death (any back payments due the
Participant shall be payable to his estate). In the case of a Participant
who has elected the form of payment described in Section 6.2(a)(2)(iv), if
such Participant dies: (i) after the PEP Election has become effective,
(ii) without a surviving primary or contingent beneficiary, and (iii)
before receiving 120 payments under the form of payment, then the
remaining payments due under such form of payment shall be paid to the
Participant's estate. If payments have commenced under such form of
payment to a Participant's primary or contingent beneficiary and such
beneficiary dies before payments are completed, then the remaining
payments due under such form of payment shall be paid to such
beneficiary's estate.
(b) Nonspouse Beneficiaries: If a Participant's beneficiary
is not his Eligible Spouse, he may not elect:
(i) The 100 percent survivor option described in
Section 6.2(a)(2)(i) if his nonspouse beneficiary is more
than 10 years younger than he is, or
(ii) The 75 percent survivor option described in
Section 6.2(a)(2)(ii) if his nonspouse beneficiary is more
than 19 years younger than he is.
: A Participant who has elected to receive all or part of his pension in a form
of payment that includes a survivor option shall designate a beneficiary who
will be entitled to any amounts payable on his death. Such designation shall be
made on a PEP Election Form or an approved election form filed under the
Salaried Plan, whichever is applicable. In the case of the survivor option
described in Section 6.2(a)(2)(iv), the Participant shall be entitled to name
both a primary beneficiary and a contingent beneficiary. A Participant (whether
active or former) shall have the right to change or revoke his beneficiary
designation at any time prior to when his election is finally effective. The
designation of any beneficiary, and any change or revocation thereof, shall be
made in accordance with rules adopted by the Plan Administrator. A beneficiary
designation shall not be effective unless and until filed with the Plan
Administrator. If no beneficiary is properly designated, then a Participant's
election of a survivor's option described in Section 6.2(a)(2) shall not be
given effect.
VII-3
ARTICLE VII Administration
: The Plan shall be administered by the Plan Administrator, which shall have the
authority to interpret the Plan and issue such regulations as it deems
appropriate. The Plan Administrator shall maintain Plan records and make benefit
calculations, and may rely upon information furnished it by the Participant in
writing, including the Participant's current mailing address, age and marital
status. The Plan Administrator's interpretations, determinations, regulations
and calculations shall be final and binding on all persons and parties
concerned. The Company, in its capacity as Plan Administrator or in any other
capacity, shall not be a fiduciary of the Plan and any restrictions that apply
to a party in interest under section 406 of ERISA shall not apply to the Company
or otherwise under the Plan. : Whenever, in the Plan Administrator's opinion, a
person entitled to receive any payment of a benefit or installment thereof
hereunder is under a legal disability or is incapacitated in any way so as to be
unable to manage his financial affairs, the Plan Administrator may make payments
to such person or to the legal representative of such person for his benefit, or
the Plan Administrator may apply the payment for the benefit of such person in
such manner as it considers advisable. Any payment of a benefit or installment
thereof in accordance with the provisions of this section shall be a complete
discharge of any liability for the making of such payment under the provisions
of the Plan. : The Plan Administrator shall have the exclusive discretionary
authority to construe and to interpret the Plan, to decide all questions of
eligibility for benefits and to determine the amount of such benefits, and its
decisions on such matters are final and conclusive. This discretionary authority
is intended to be absolute, and in any case where the extent of this discretion
is in question, the Plan Administrator is to be accorded the maximum discretion
possible. Any exercise of this discretionary authority shall be reviewed by a
court, arbitrator or other tribunal under the arbitrary and capricious standard
(i.e., the abuse of discretion standard). If, pursuant to this discretionary
authority, an assertion of any right to a benefit by or on behalf of a
Participant or beneficiary is wholly or partially denied, the Plan
Administrator, or a party designated by the Plan Administrator, will provide
such claimant within the 90-day period following the receipt of the claim by the
Plan Administrator, a comprehensible written notice setting forth:
(a) The specific reason or reasons for such denial; (b)
Specific reference to pertinent Plan provisions on
which the denial is based;
(c) A description of any additional material or information
necessary for the claimant to submit to perfect the claim and an
explanation of why such material or information is necessary; and
(d) A description of the Plan's claim review procedure. The
claim review procedure is available upon written request by the claimant
to the Plan Administrator, or the designated party, within 60 days after
receipt by the claimant of written notice of the denial of the claim, and
includes the right to examine pertinent documents and submit issues and
comments in writing to the Plan Administrator, or the designated party.
The decision on review will be made within 60 days after receipt of the
request for review, unless circumstances warrant an extension of time not
to exceed an additional 60 days, and shall be in writing and drafted in a
manner calculated to be understood by the claimant, and include specific
reasons for the decision with references to the specific Plan provisions
on which the decision is based.
If within a reasonable period of time after the Plan receives the claim asserted
by the Participant, the Plan Administrator, or the designated party, fails to
provide a comprehensible written notice stating that the claim is wholly or
partially denied and setting forth the information described in (a) through (d)
above, the claim shall be deemed denied. Once the claim is deemed denied, the
Participant shall be entitled to the claim review procedure described in
subsection (d) above. Such review procedure shall be available upon written
request by the claimant to the Plan Administrator, or the designated party,
within 60 days after the claim is deemed denied. Any claim under the Plan that
is reviewed by a court shall be reviewed solely on the basis of the record
before the Plan Administrator at the time it made its determination. : Specific
references in the Plan to the Plan Administrator's discretion shall create no
inference that the Plan Administrator's discretion in any other respect, or in
connection with any other provision, is less complete or broad.
IX-1
ARTICLE VIII Miscellaneous
: Nothing contained in this Plan shall be construed as a contract of employment
between an Employer and any Employee, or as a right of any Employee to be
continued in the employment of an Employer, or as a limitation of the right of
an Employer to discharge any of its Employees, with or without cause. : Benefits
payable under the Plan or the right to receive future benefits under the Plan
shall not be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, charge, garnishment, execution, or levy of any
kind, either voluntary or involuntary, and any attempt to anticipate, alienate,
sell, transfer, assign, pledge, encumber, charge or otherwise dispose of any
right to benefits payable hereunder, including any assignment or alienation in
connection with a divorce, separation, child support or similar arrangement,
shall be null and void and not binding on the Company. The Company shall not in
any manner be liable for, or subject to, the debts, contracts, liabilities,
engagements or torts of any person entitled to benefits hereunder. : The
Company's obligations under the Plan shall not be funded, but shall constitute
liabilities by the Company payable when due out of the Company's general funds.
To the extent the Participant or any other person acquires a right to receive
benefits under this Plan, such right shall be no greater than the rights of any
unsecured general creditor of the Company. : Any action by the Company under
this Plan may be made by the Board of Directors of the Company or by the
Compensation Committee of the Board of Directors, with a report of any actions
taken by it to the Board of Directors. In addition, such action may be made by
any other person or persons duly authorized by resolution of said Board to take
such action. : Unless the Board of Directors of the Company shall determine
otherwise, the Company shall indemnify, to the full extent permitted by law, any
employee acting in good faith within the scope of his employment in carrying out
the administration of the Plan.
ARTICLE IX Amendment and Termination
: While the Company and the Employers intend to continue the Plan indefinitely,
they assume no contractual obligation as to its continuance. In accordance with
Section 8.4, the Company hereby reserves the right, in its sole discretion, to
amend, terminate, or partially terminate the Plan at any time provided, however,
that no such amendment or termination shall adversely affect the amount of
benefit to which a Participant or his beneficiary is entitled under Article IV
on the date of such amendment or termination, unless the Participant becomes
entitled to an amount equal to such benefit under another plan or practice
adopted by the Company. Specific forms of payment are not protected under the
preceding sentence. : The Company may, in its sole discretion, make any
amendment or amendments to this Plan from time to time, with or without
retroactive effect, including any amendment or amendments to eliminate available
distribution options under Article VI hereof at any time before the 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. : The Company may terminate the Plan, either as to its participation or as
to the participation of one or more Employers. If the Plan is terminated with
respect to fewer than all of the Employers, the Plan shall continue in effect
for the benefit of the Employees of the remaining Employers.
X-2
ARTICLE X ERISA Plan Structure This Plan document
encompasses three separate plans within the
meaning of ERISA, as are set forth in subsections (a), (b) and (c). This
division into separate plans shall be effective as of July 1, 1996; previously
the plans set forth in subsections (b) and (c) were a single plan within the
meaning of ERISA.
(a) Excess Benefit Plan: An excess benefit plan within the
meaning of section 3(36) of ERISA, maintained solely for the purpose of
providing benefits for Salaried Plan participants in excess of the
limitations on benefits imposed by section 415 of the Code.
(b) Excess Compensation High Hat Plan: A plan maintained by
the Company primarily for the purpose of providing deferred compensation
for a select group of management or highly compensated employees within
the meaning of sections 201(2) and 401(a)(1) of ERISA. The plan provides
benefits for Salaried Plan participants in excess of the limitations
imposed by section 401(a)(17) of the Code on benefits under the Salaried
Plan (after taking into account any benefits under the excess benefit
plan). For ERISA reporting purposes, this portion of PEP may be referred
to as the PepsiCo Pension Equalization Plan I.
(c) Grandfather High Hat Plan: A plan maintained by the
Company primarily for the purpose of providing deferred compensation for a
select group of management or highly compensated employees within the
meaning of sections 201(2) and 401(a)(1) of ERISA. The plan provides
grandfather benefits to those Salaried Plan participants described in
section 5.2(a) hereof, by preserving for them the pre-1989 level of
benefit accrual that was in effect before the Salaried Plan's amendment
effective January 1, 1989 (after taking into account any benefits under
the excess benefit plan and excess compensation high hat plan). For ERISA
reporting purposes, this portion of PEP shall be referred to as the
PepsiCo Pension Equalization Plan II.
Benefits under this Plan shall be allocated first to the excess benefit plan, to
the extent of benefits paid for the purpose indicated in (a) above; then any
remaining benefits shall be allocated to the excess compensation high hat plan,
to the extent of benefits paid for the purpose indicated in (b) above; then any
remaining benefits shall be allocated to the grandfather high hat plan. These
three plans are severable for any and all purposes as directed by the Company.
XI-1
ARTICLE XI Applicable Law
All questions pertaining to the construction, validity and effect of
the Plan shall be determined in accordance with the provisions of ERISA. In the
event ERISA is not applicable or does not preempt state law, the laws of the
state of New York shall govern.
If any provision of this Plan is, or is hereafter declared to be,
void, voidable, invalid or otherwise unlawful, the remainder of the Plan shall
not be affected thereby.
XII-1
ARTICLE XII Signature
The above restated Plan is hereby adopted and approved, to be
effective as of August 29, 1997 (except as otherwise provided), this of
______________________, 1998.
PEPSICO, INC.
By:
APPROVED
By:
APPENDIX
Foreword
This Appendix sets forth additional provisions applicable to
individuals specified in the Articles of this Appendix. In any case where there
is a conflict between the Appendix and the main text of the Plan, the Appendix
shall govern.
A-3
ARTICLE A
Accruals for 1993 and 1994
This Article A of the Appendix shall be effective on the date the
Plan is adopted.
A.1 Accruals for 1993 and 1994: This section shall apply to any
individual: (i) who is a Salaried Plan Participant and employed by the PepsiCo
Organization on December 31, 1993, (ii) whose Salaried Plan Pension is vested
during 1993 (or would become vested in 1994 if his Service included the assumed
period of continued service specified in (a)(1) below), and (iii) whose minimum
1993 Pension in subsection (a) below is not derived solely from that portion of
the Plan described in (c) of Article X. In determining the amount of the 1993
and 1994 Pension amounts for any such individual, the provisions set forth in
subsections (a) and (b) below shall apply.
(a) Minimum 1993 Pension: Any individual who is covered by
this section shall accrue a minimum 1993 Pension as of December 31, 1993.
In determining the amount of such individual's minimum 1993 Pension, the
following shall apply.
(1) An individual's Service and Credited Service as of
the end of 1993 shall be assumed to equal the respective Service and
Credited Service he would have if his Service continued through
December 31, 1994. Notwithstanding the preceding sentence, the
assumed period of continued Service shall be less to the extent the
Corporation's human resource records on December 31, 1993 reflect a
scheduled termination date in 1994 for such individual. In this
case, the individual's assumed period of continued service shall be
the portion of 1994 that ends with such scheduled termination date.
(2) An individual's Highest Average Monthly Earnings as
of the end of 1993 shall be adjusted by the actuary's salary scale
assumption which is used under the Salaried Plan, so that they equal
the amount such scale projects for the individual as of the end of
1994. Notwithstanding the preceding sentence, the following special
rules shall apply.
(i) A higher salary scale assumption shall be used
for anyone whose projected 1994 earnings as reflected on the
"Special PEP Salary Scale" of the PepsiCo Benefits
Department on December 31, 1993 are higher than would be
assumed under the first sentence of this paragraph. In this
case, the individual's 1993 earnings shall be adjusted using
such higher salary scale.
(ii) In the case of an individual whose assumed
period of service under paragraph (1) above is less than all
of 1994, the salary adjustment under the preceding
provisions of this paragraph shall be reduced to the amount
that would apply if the individual had no earnings after his
scheduled termination date.
(3) An individual's attained age as of the end of 1993
shall be assumed to be the age he would have at the end of the
assumed period of continued service applicable under paragraph (1)
above.
Any individual who is covered by this section, and who is not otherwise
vested as of December 31, 1993, shall be vested as of such date in both
his Pension (determined without regard to this subsection) and his minimum
1993 Pension. For purposes of this subsection, Code section 401(a)(17)
shall be applied in 1993 by giving effect to the amendments to such Code
section made by the Omnibus Budget Reconciliation Amendments of 1993.
(b) Determination of 1994 Accrual: If a participant in the
Salaried Plan accrues a minimum 1993 Pension under subsection (a) above,
the amount of any PEP Pension for 1994 that accrues shall be only the
amount by which the PEP Pension that would otherwise accrue for 1994
exceeds his minimum 1993 Pension under subsection (a).
PFS-2
ARTICLE PFS
PFS Special Early Retirement Benefit
PFS.1 Scope: This Article supplements the main portion of the
Plan document with respect to the rights and benefits of Covered Employees on
and after the Effective Date.
PFS.2 Definitions: This section provides definitions for the
following words or phrases in boldface and underlined. Where they appear in this
Article with initial capitals they shall have the meaning set forth below.
Except as otherwise provided in this Article, all defined terms shall have the
meaning given to them in Section 2.1 of the Plan.
(a) Article: This Article PFS of the Appendix to the Plan.
(b) Covered Employee: An Employee who does not meet the
eligibility requirements for the Salaried Plan Early Retirement Benefit
solely because he is a highly compensated employee within the meaning of
Section PFS.11(c) of the Salaried Plan Appendix.
(c) Effective Date: The date the provisions of this Article
are effective, which shall be July 11, 1997.
(d) Salaried Plan Special Early Retirement Benefit: The
special early retirement benefit for certain PFS employees described in
Section PFS.11 of the Salaried Plan Appendix.
(e) Severance Date: The involuntary termination of
employment described in Section PFS.11(a) of the Salaried Plan Appendix
that qualifies an Employee for status as a Covered Employee.
(f) PFS: PepsiCo Foods Systems, a division of PepsiCo, Inc.
prior to the Effective Date.
PFS.3 Special Early Retirement Benefit: In addition to any benefits
he would otherwise be entitled to under this Plan, a Covered Employee shall
receive a single lump sum benefit as soon as administratively practical
following his Severance Date. The amount of such lump sum shall be the excess
of:
(a) The Actuarial Equivalent present value under Section
2.1(b)(2) of the Covered Employee's Total Pension under this Plan, for
this purpose treating the Covered Employee as eligible for the Salaried
Plan Special Early Retirement Benefit, over
(b) The Actuarial Equivalent present value under Section
2.1(b)(2) of the Covered Employee's Total Pension under this Plan
determined without regard to this Appendix.
Such calculation shall be made as of the Covered Employee's Severance Date.
Except as specifically modified by this Article, the Early Retirement Pension
provided by this section is subject to all the usual limitations and provisions
set forth in the Plan.