1
EXHIBIT 10.12
================================================================================
PBG
EXECUTIVE INCOME
DEFERRAL PROGRAM
As Effective
October 11, 2000
================================================================================
2
PBG
EXECUTIVE INCOME DEFERRAL PROGRAM
TABLE OF CONTENTS
ARTICLE I: INTRODUCTION.....................................................................1
ARTICLE II: DEFINITIONS.....................................................................2
2.1 Account.........................................................................2
2.2 Base Compensation...............................................................2
2.3 Beneficiary.....................................................................2
2.4 Bonus Compensation..............................................................3
2.5 Code............................................................................3
2.6 Company.........................................................................3
2.7 Deferral Subaccount.............................................................3
2.8 Disability......................................................................3
2.9 Distribution Date...............................................................3
2.10 Election Form..................................................................3
2.11 Employer.......................................................................3
2.12 ERISA..........................................................................4
2.13 Executive......................................................................4
2.14 Fair Market Value..............................................................4
2.15 Misconduct.....................................................................4
2.16 Participant....................................................................4
2.17 PBG............................................................................4
2.18 Performance Unit Payout........................................................5
2.19 Plan...........................................................................5
2.20 Plan Administrator.............................................................5
2.21 Plan Year......................................................................5
2.22 Prior Plan.....................................................................5
2.23 Retirement.....................................................................5
2.24 Risk of Forfeiture Subaccount..................................................5
2.25 Start Date.....................................................................5
2.26 Stock Option Gains.............................................................5
2.27 Termination of Employment......................................................6
2.28 Valuation Date.................................................................6
ARTICLE III: PARTICIPATION..................................................................7
3.1 Eligibility to Participate......................................................7
3.2 Deferral Election...............................................................8
-i-
3
3.3 Time and Manner of Deferral Election............................................8
3.4 Period of Deferral.............................................................10
ARTICLE IV: INTERESTS OF PARTICIPANTS......................................................12
4.1 Accounting for Participants' Interests.........................................12
4.2 Vesting of a Participant's Account.............................................16
4.3 Risk of Forfeiture Subaccounts.................................................17
4.4 Distribution of a Participant's Account........................................19
4.5 Acceleration of Payment in Certain Cases.......................................22
4.6 Conversion of Deferral Subaccounts by Certain Participants.....................23
ARTICLE V: PLAN ADMINISTRATOR..............................................................25
5.1 Plan Administrator.............................................................25
5.2 Action.........................................................................25
5.3 Powers of the Plan Administrator...............................................25
5.4 Compensation, Indemnity and Liability..........................................26
5.5 Taxes..........................................................................26
ARTICLE VI: CLAIMS PROCEDURE...............................................................28
6.1 Claims for Benefits............................................................28
6.2 Appeals........................................................................28
ARTICLE VII: AMENDMENT AND TERMINATION.....................................................29
7.1 Amendments.....................................................................29
7.2 Termination of Plan............................................................29
ARTICLE VIII: MISCELLANEOUS................................................................30
8.1 Limitation on Participant's Rights.............................................30
8.2 Unfunded Obligation of Individual Employer.....................................30
8.3 Other Plans....................................................................30
8.4 Receipt or Release.............................................................30
8.5 Governing Law..................................................................30
8.6 Adoption of Plan by Related Employers..........................................31
8.7 Gender, Tense and Examples.....................................................31
8.8 Successors and Assigns; Nonalienation of Benefits..............................31
8.9 Facility of Payment............................................................31
8.10 Separate Plans................................................................32
APPENDIX
ARTICLE A INITIAL PUBLIC OFFERING OF PBG...........................................35
ARTICLE B SUPPLEMENTAL EXECUTIVE INCENTIVE COMPENSATION AWARDS.....................39
-ii-
4
ARTICLE I
INTRODUCTION
The Pepsi Bottling Group, Inc. (the "Company") established the PBG
Executive Income Deferral Program (the "Plan") to permit eligible executives to
defer base pay, certain cash and stock awards made under its executive
compensation programs, and certain gains on stock options. The Plan is a
successor to the PepsiCo Executive Income Deferral Program and was originally
adopted effective as of April 7, 1999. Thereafter, the Plan was amended and
restated in its entirety effective as of October 11, 2000 (subject to other
specific effective dates set forth in this restatement).
This document sets forth the terms of the Plan, specifying the group of
executives of the Company and certain affiliated employers that are 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
Articles A and B of the Appendix, which modifies and supplements the general
provisions of the Plan.
The Plan is unfunded and unsecured, except as provided in Article B of
the Appendix. Amounts deferred by an executive are an obligation of that
executive's individual employer. With respect to his or her employer, the
executive has the rights of a general creditor.
1
5
ARTICLE II
DEFINITIONS
When used in this Plan, the following underlined terms shall have the
meanings set forth below unless a different meaning is plainly required by the
context:
2.1 Account: The account maintained for a Participant on the
books of his or her 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
Deferral Subaccounts as it deems necessary for the proper administration of the
Plan. The Plan Administrator may also combine Deferral Subaccounts to the extent
it deems separate accounts are not needed for sound recordkeeping. Where
appropriate, a reference to a Participant's Account shall include a reference to
each applicable Deferral Subaccount that has been established thereunder.
2.2 Base Compensation: An eligible Executive's adjusted base
salary, as determined by the Plan Administrator and to the extent paid in U.S.
dollars from an Employer's U.S. payroll. For any applicable payroll period, an
eligible Executive's adjusted base salary shall be determined after reductions
for applicable tax withholdings, Executive authorized deductions (including
deductions for the PBG 401(k) Plan, Benefits Plus and charitable donations), tax
levies, garnishments and such other amounts as the Plan Administrator recognizes
as reducing the amount of base salary available for deferral.
2.3 Beneficiary: The person or persons (including a trust or
trusts) properly designated by a Participant, as determined by the Plan
Administrator, to receive the amounts in one or more of the Participant's
Deferral 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 (including any requirement for spousal consent) 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 or her 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 or her death. An individual who is otherwise a
Beneficiary with respect to a Participant's Account ceases to be a Beneficiary
when all payments have been made from the Account.
2
6
2.4 Bonus Compensation: An eligible Executive's adjusted annual
incentive award under his or her Employer's annual incentive plan or the PBG
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 Executive's annual incentive awards shall be adjusted to
reduce them for applicable tax withholdings, Executive authorized deductions
(including deductions for the PBG 401(k) Plan, Benefits Plus and charitable
donations), tax levies, garnishments and such other amounts as the Plan
Administrator recognizes as reducing the amount of such awards available for
deferral.
2.5 Code: The Internal Revenue Code of 1986, as amended from
time to time.
2.6 Company: The Pepsi Bottling Group, Inc., a corporation
organized and existing under the laws of the State of Delaware, or its successor
or successors.
2.7 Deferral Subaccount: A subaccount of a Participant's Account
maintained to reflect his or her interest in the Plan attributable to each
deferral (or separately tracked portion of a deferral) of Base Compensation,
Bonus Compensation, Performance Unit Payout and Stock Option Gains,
respectively, and earnings or losses credited to such subaccount in accordance
with Section 4.1(b).
2.8 Disability: A Participant who is entitled to receive
benefits under the PBG Long Term Disability Plan shall be deemed to suffer from
a disability. Participants who are not covered by the PBG Long Term Disability
Plan shall be deemed to suffer from a disability if, in the judgment of the Plan
Administrator, they satisfy the standards for disability under the PBG Long Term
Disability Plan (determined using such plan's administrative procedures, as
selected by the Plan Administrator).
2.9 Distribution Date: Distribution Date shall have the same
meaning as Valuation Date; provided, however, if the Valuation Date is more
frequent than once per month, the Distribution Date shall mean the first day of
each month.
2.10 Election Form: The form prescribed by the Plan
Administrator on which a Participant specifies the amount of his or her Base
Compensation, Bonus Compensation, Performance Unit Payout or Stock Option Gains
to be deferred pursuant to the provisions of Article III. An Election Form need
not exist in a paper format, and it is expressly contemplated that the Plan
Administrator may adopt such technologies, including voice response systems and
electronic forms, as it deems appropriate from time to time.
2.11 Employer: Each division of the Company and each of the
Company's subsidiaries and affiliates (if any) that is currently designated as
an Employer by the Plan Administrator.
3
7
2.12 ERISA: Public Law 93-406, the Employee Retirement Income
Security Act of 1974, as amended from time to time.
2.13 Executive: Any person in an executive classification of an
Employer who (i) is receiving remuneration for personal services rendered in the
employment of the Employer, and (ii) is paid in U.S. dollars from the Employer's
U.S. payroll.
2.14 Fair Market Value: For purposes of converting a
Participant's deferrals to phantom PBG Common Stock as of any date (or phantom
PepsiCo Capital Stock prior to January 1, 2001), the Fair Market Value of such
stock is determined as the average of the high and low price on such date (or if
such date is not a trading date, the immediately preceding date that is a
trading date) for PBG Common Stock (or 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 phantom PBG Common Stock (or phantom
PepsiCo Capital Stock prior to January 1, 2001) is determined as the closing
price on the applicable Valuation Date (identified based on the Plan
Administrator's current procedures) for PBG Common Stock (or PepsiCo Capital
Stock) as reported on the composite tape for securities listed on the New York
Stock Exchange, Inc., rounded to four decimal places.
2.15 Misconduct: A Termination of Employment that results from
the Participant's (a) criminal conduct, (b) deliberate continual refusal to
perform employment duties on substantially a full time basis, (c) deliberate and
continued refusal to act in accordance with any specific lawful instructions of
an authorized officer or more senior employee, or (d) deliberate conduct which
could be materially damaging to the Company or any of its business operations
without a reasonable good faith belief by the Employee that such conduct was in
the best interests of the Company. A Termination of Employment shall not be
deemed on account of Misconduct hereunder unless the senior personnel executive
of the Company shall confirm that any such termination is on account of
Misconduct as defined hereunder. Any voluntary termination in anticipation of an
involuntary Termination of Employment on account of Misconduct shall be deemed
to be a Termination of Employment on account of Misconduct.
2.16 Participant: Any Executive who is qualified to participate
in this Plan in accordance with Section 3.1 and who has an Account. A
Participant includes any individual who deferred compensation under the Prior
Plan prior to the Start Date and for whom any Employer maintains on its books an
Account for such deferred compensation as of the Start Date. An active
Participant is one who is currently deferring under Section 3.2.
2.17 PBG: The Pepsi Bottling Group, Inc., a corporation
organized and existing under the laws of the State of Delaware, or its successor
or successors.
4
8
2.18 Performance Unit Payout: The adjusted performance unit
award payable to an Executive under the Company's Long Term Incentive Plan or
any other plan that is designated by the Plan Administrator during a Plan Year,
to the extent paid in U.S. dollars from an Employer's U.S. payroll. An eligible
Executive's performance unit award shall be adjusted to reduce it for applicable
tax withholdings, Executive authorized deductions, tax levies, garnishments and
such other amounts as the Plan Administrator recognizes as reducing the amount
of such awards available for deferral.
2.19 Plan: The PBG Executive Income Deferral Program, the plan
set forth herein, as it may be amended and restated from time to time.
2.20 Plan Administrator: The Compensation and Management
Development Committee of the Board of Directors of the Company or its delegate
or delegates, which shall have the authority to administer the Plan as provided
in Article V.
2.21 Plan Year: Except with respect to the first Plan Year,
which begins on the Start Date and ends on December 31, 1999, the 12-consecutive
month period beginning on January 1 and ending on December 31.
2.22 Prior Plan: The PepsiCo Executive Income Deferral Program,
as in effect for periods before the Start Date.
2.23 Retirement: Termination of service with the Company and its
affiliates after attaining eligibility for retirement. A Participant attains
eligibility for retirement when he or she attains (i) at least age 55 with 10 or
more years of service, (ii) at least age 65 with 5 or more years of service, or
(iii) such other eligibility requirement for retirement under the PBG Salaried
Employees Retirement Plan as may apply to the Participant (whichever occurs
earliest) while in the employment of the Company or any of its affiliates that
are determined by the Plan Administrator to qualify for this purpose. A
Participant's service is determined under the terms of the PBG Salaried
Executives Retirement Plan.
2.24 Risk of Forfeiture Subaccount: The Deferral Subaccount
provided for by Section 4.3 to contain the portion of each separate deferral
that is subject to forfeiture.
2.25 Start Date: The date this Plan originally became effective,
12:00 A.M., Eastern Daylight Time, on the 1st day of April, 1999.
2.26 Stock Option Gains: The gains on an eligible Executive's
stock options that have been granted by PepsiCo or PBG and designated as
eligible for deferral under the Plan by the Plan Administrator 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 issuer of the underlying shares net of:
(i) the exercise price of the options, (ii) any transaction costs incurred when
such gains are
5
9
captured through the sale of related shares, and (iii) any related taxes that
the issuer determines will not otherwise be satisfied by the Participant. For
purposes of such sales, the issuer 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 issuer shall have absolute discretion with respect to the timing and
aggregation of such sales.
2.27 Termination of Employment: A Participant's cessation of
employment with the Company, all Employers and all other Company subsidiaries
and affiliates (as defined for this purpose by the Plan Administrator). For
purposes of determining forfeitures under Section 4.3 and distributing a
Participant's Account under Section 4.4, the following shall apply:
(a) A Participant does not have a Termination of
Employment when the business unit or division of the Company that
employs him is sold if the Participant and substantially all employees
of that entity continue to be employed by the entity or its successor
after the sale. A Participant also does not have a Termination of
Employment when the subsidiary of the Company that employs him is sold
if: (i) the Participant continues to be employed by the entity or its
successor after the sale, and (ii) the Participant's interest in the
Plan continues to be carried as a liability by that entity or its
successor after the sale through a successor arrangement. In each case,
the Participant's Termination of Employment shall occur upon the
Participant's post-sale termination of employment from such entity or
its successor (and their related organizations, as determined by the
Plan Administrator).
(b) With respect to any individual deferral, the term
"Termination of Employment" may encompass a Participant's death or death
may be considered a separate event, depending upon the convention the
Plan Administrator follows with respect to such deferral.
(c) A Participant who transfers to PepsiCo with the
approval of PBG shall not be deemed to have terminated employment.
2.28 Valuation Date: Each date as specified by the Plan
Administrator from time to time as of which Participant Accounts are valued in
accordance with Plan procedures that are currently in effect. As of the Start
Date, the Valuation Dates are March 31, June 30, September 30 and December 31.
In accordance with procedures that may be adopted by the Plan Administrator, any
current Valuation Date may be changed. 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.
6
10
ARTICLE III
PARTICIPATION
3.1 Eligibility to Participate.
(a) An Executive shall be eligible to defer compensation
under the Plan while employed by an Employer as an Executive classified
(or grandfathered) as Band II or above (or an equivalent level for
employees not under the band system). Notwithstanding the preceding
sentence, from time to time the Plan Administrator may modify, limit or
expand the class of Executives eligible to defer hereunder, pursuant to
criteria for eligibility that need not be uniform among all or any group
of Executives. During the period an individual satisfies all of the
eligibility requirements of this section, he or she shall be referred to
as an eligible Executive.
(b) Each eligible Executive becomes an active Participant
on the date an amount is first withheld from his or her compensation
pursuant to an Election Form submitted by the Executive 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 election
termination date (as defined below) occurring after the earlier of:
(1) The date he or she ceases to be an Executive
who is described in the first sentence of subsection (a) above
(unless a less restrictive eligibility standard has been adopted
in accordance with the second sentence of subsection (a), in
which case only Paragraph (2) below shall apply); or
(2) The date the Executive ceases to be eligible
under criteria described in the second sentence of subsection
(a) above.
For purposes of this subsection, an individual's election termination
date shall be a date as soon as administratively practicable following
the cessation of eligibility (or such other date as may be determined in
accordance with rules of the Plan Administrator).
(d) An individual, who has been an active Participant
under the Plan, ceases to be a Participant on the date his or her
Account is fully paid out.
7
11
3.2 Deferral Election.
(a) Each eligible Executive may make an election to defer
under the Plan any whole percentage (up to 100%) of his or her Base
Compensation, Bonus Compensation, Performance Unit Payout and Stock
Option Gains in the manner described in Section 3.3. The Plan
Administrator may also permit the Participant to specify two alternative
deferral percentages that will be applicable to Bonus Compensation; one
deferral percentage will apply to a Participant's Bonus Compensation if
his or her bonus is equal to or greater than the target amount, and the
other deferral percentage will apply to a Participant's Bonus
Compensation if his or her bonus is less than the target amount. Any
percentage of Base Compensation deferred by an eligible Executive for a
Plan Year will be deducted each pay period during the Plan Year for
which he or she has Base Compensation and is an eligible Executive. The
percentage of Bonus Compensation or Performance Unit Payout deferred by
an eligible Executive for a Plan Year will be deducted from his or her
payment under the applicable compensation program at the time it would
otherwise be made, provided he or she remains an eligible Executive at
such time. Any Stock Option Gains deferred by an eligible Executive
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 Executive's
rights in such options may still be recognized at such time.
(b) To be effective, an eligible Executive's Election Form
must set forth the percentage of Base Compensation, Bonus Compensation
or Performance Unit Payout to be deferred (or for a deferral of Stock
Option Gains, the specific options on which any gains are to be
deferred), the investment choice under Section 4.1 (which investment
must be stated in multiples of 5 percent), the deferral period under
Section 3.4, the eligible Executive'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.
(c) Notwithstanding subsection (a) above, the Plan
Administrator in its discretion may implement rules and procedures from
time to time that allow Participants (i) to elect to defer Base
Compensation and/or Bonus Compensation in amounts other than whole
percentages, such as in whole dollar amounts, or (ii) to specify a
dollar maximum that would limit their percentage deferral elections of
Base Compensation and/or Bonus Compensation.
3.3 Time and Manner of Deferral Election.
(a) Deferrals of Base Compensation. Subject to the next
sentence, an eligible Executive 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
8
12
Compensation would otherwise be paid. An individual who newly becomes an
eligible Executive will have 30 days from the date the individual
becomes an eligible Executive to make an election with respect to
compensation for payroll cycles that begin after the election is
received (if this 30-day period is a longer election period than applies
under the preceding sentence).
(b) Deferrals of Bonuses and Performance Unit Payouts.
Subject to the next two sentences, an eligible Executive must make a
deferral election for a Plan Year with respect to his or her 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
Executive may make a deferral election with respect to his or her Bonus
Compensation or Performance Unit Payout to be paid during the succeeding
Plan Year later than the date applicable under the previous sentence so
long as the deferral election is made: (i) within 30 days of the date
the individual becomes an eligible Executive, and (ii) sufficiently
prior to the first day of such succeeding Plan Year to ensure, in the
discretionary judgment of the Plan Administrator, that the amount to be
deferred will not have been constructively received (under all the facts
and circumstances).
(c) Deferrals of Stock Option Gains. With respect to each
grant of PepsiCo or PBG stock options that are held by eligible
Executives, the Plan Administrator shall designate at such time as it
deems appropriate whether gains on the grant shall be eligible for
deferral. Such designation may apply to all (or less than all) of the
Executives that hold such grant. Thereafter, the Plan Administrator
shall notify Executives holding designated options that such options
then qualify for deferral of their related Stock Option Gains. Subject
to the next sentence, an eligible Executive who has such qualifying
options must make a deferral election with respect to his or her 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
issuer of the underlying stock 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 Executive for each
category of a Plan Year's compensation that is eligible for deferral. If
an eligible Executive fails to file a properly completed and executed
Election Form with the Plan Administrator by the prescribed time, he or
she 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.
9
13
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
circumstances beyond the control of the Executive, the Plan
Administrator may grant an extension of any election period and may
permit (to the extent deemed necessary for orderly Plan administration
or to avoid undue hardship to an eligible Executive) 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 or
her death, of the amounts credited to his or her applicable Deferral
Subaccount; provided, however, the Plan Administrator may require a
Participant to make an aggregate Beneficiary designation, which shall
apply to some or all of his or her Deferral Subaccounts (as specified in
the discretion of the Plan Administrator) on a uniform basis. 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 his or her Deferral 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 Executive making a deferral
election shall specify a deferral period on his or her 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 Executive by the Plan Administrator. From time to time in its
discretion, the Plan Administrator may condition a Participant's right to
designate one or more specific payout events on the Participant also specifying
a payout date. Subject to the next sentence, an eligible Executive's elected
period of deferral shall run until the earliest occurring date or event
specified on his or her Election Form. Notwithstanding an eligible Executive's
actual election, an eligible Executive shall be deemed to have elected a period
of deferral of not less than:
(a) For Base Compensation, at least until January 1 of the
second Plan Year following the Plan Year during which the Base
Compensation would have been paid absent the deferral (until 6 months
after the Plan Year during which the Base Compensation would have been
paid for deferral elections made before the Start Date);
10
14
(b) For Bonus Compensation, at least 2 years after the
date the Bonus Compensation would have been paid absent the deferral (1
year for deferral elections made before the Start Date);
(c) For Performance Unit Payouts, at least 2 years after
the date the Performance Unit Payout would have been paid absent the
deferral (1 year for deferral elections made before the Start Date); and
(d) For Stock Option Gains, at least 2 years after the
date the Stock Option Gain is credited to a Deferral Subaccount for the
benefit of the Participant (1 year for deferral elections made before
the Start Date).
11
15
ARTICLE IV
INTERESTS OF PARTICIPANTS
4.1 Accounting for Participants' Interests.
(a) Deferral Subaccounts. Each Participant shall have at
least one separate Deferral Subaccount for 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 or her 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 or her deferrals (and his
or her 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 or her Account had actually been invested as directed by
the Participant in accordance with this section (as modified by Section
4.3, if applicable). The Plan provides only for "phantom investments,"
and therefore such earnings, gains, expenses and losses are hypothetical
and not actual. However, they shall be applied to measure the value of a
Participant's Account and the amount of his or her Employer's liability
to make deferred payments to or on behalf of the Participant.
(c) Investment Options. Each of a Participant's Deferral
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 or her Beneficiary) from those offered by the Plan
Administrator for this purpose from time to time. Subsection (e) below
governs the phantom investment options available for deferrals of Stock
Option Gains. The Plan Administrator may discontinue any phantom
investment option with respect to some or all Accounts, and it may
provide rules for transferring 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).
12
16
(1) Phantom Investment Options Beginning January 1,
2001. Effective as of January 1, 2001, the phantom investment
options offered under the Plan are as follows:
(i) Phantom PBG Stock Account. Participant
Accounts invested in this phantom option are adjusted to
reflect an investment in PBG Common Stock. An amount
deferred or transferred into this option is converted to
phantom shares (or units) of PBG Common Stock of
equivalent value by dividing such amount by the Fair
Market Value of a share of PBG Common Stock (or of a unit
in the Account) on the date as of which the amount is
treated as invested in this option by the Plan
Administrator. The Plan Administrator shall adopt a fair
valuation methodology for valuing a phantom investment in
this option, such that the value shall reflect the
complete value of an investment in PBG Common Stock in
accordance with Clause (A) or (B) below.
(A) The Plan Administrator may value
a phantom investment in PBG Common Stock pursuant
to an accounting methodology which unitizes partial
shares as well as any amounts that would be
received by the Account as dividends (if dividends
were paid on phantom shares/units of PBG Common
Stock as they are on actual shares of equivalent
value). For the time period this methodology is
chosen, partial shares and the above dividends
shall be converted to units and credited to the
Participant's Phantom PBG Stock Account.
(B) The Plan Administrator may also
value a phantom investment in PBG Common Stock by
separately accounting for partial shares and any
amounts that would be received by the Account as
dividends (if dividends were paid on phantom shares
of PBG Common Stock as they are on actual shares).
For the time period this methodology is chosen, a
dividend subaccount shall be created to separately
account for the dollar value of the partial shares
and the dividends and such dividend subaccount
shall be invested in a phantom investment option
designated by the Plan Administrator from those
currently in effect.
A Participant's interest in the Phantom PBG Stock Account
is valued as of a Valuation Date by multiplying the number
of phantom shares (or units) credited to his or her
Account on such date by the Fair Market Value of a share
of PBG Common Stock (or of a unit in the Account) on such
date, and then adding the value of the Participant's
dividend
13
17
subaccount (if the methodology in clause (B) above is
used). If shares of PBG Common Stock change by reason of
any stock split, stock dividend, recapitalization, merger,
consolidation, spin-off, combination or exchange of shares
or other any other corporate change treated as subject to
this provision by the Plan Administrator, such equitable
adjustment shall be made in the number and kind of phantom
shares/units credited to an Account or subaccount as the
Plan Administrator may determine to be necessary or
appropriate. In no event will shares of PBG Common Stock
actually be purchased or held under this Plan, and no
Participant shall have any rights as a shareholder of PBG
Common Stock on account of an interest in this phantom
option.
(ii) PBG 401(k) Accounts. From time to time,
the Plan Administrator shall designate which (if any) of
the investment options under the Company's 401(k) Plan
shall be available as phantom investment options under
this Plan. Effective as of January 1, 2001, such available
phantom options are the Security Plus Fund, Bond Index
Fund, Total U.S. Equity Index Fund, Large Cap Equity Index
Fund, Mid Cap Equity Index Fund, Small Cap Equity Index
Fund and the International Equity Index Fund. Participant
Accounts invested in these phantom options are adjusted to
reflect an investment in the corresponding investment
options under the PBG 401(k) Plan. An amount deferred or
transferred into one of these options is converted to
phantom units in the applicable PBG 401(k) fund of
equivalent value by dividing such amount by the value of a
unit in such fund on the date as of which the amount is
treated as invested in this option by the Plan
Administrator. Thereafter, a Participant's interest in
each such phantom option is valued as of a Valuation Date
by multiplying the number of phantom units credited to his
or her Account on such date by the value of a unit in the
applicable PBG 401(k) fund on such date.
(iii) Other Accounts. From time to time, the
Plan Administrator shall designate which (if any) other
investment options shall be available as phantom
investment options under this Plan. These may be in
addition to those provided for above. They may also be in
lieu of some or all of them. Any of these phantom
investment options shall be administered under procedures
implemented from time to time by the Plan Administrator.
(2) Phantom Investment Options Before January 1,
2001. For Plan Years ending before January 1, 2001, the phantom
investment options
14
18
offered under the Plan shall be those phantom investment options
provided for in Section 4.1(c)(1), except as modified and
supplemented below:
(i) Phantom PBG Stock Account. Investments
in the Phantom PBG Stock Account shall be governed by the
provisions of Section 4.1(c)(1)(i), except that the
valuation methodology in Section 4.1(c)(1)(i)(B) shall be
used and that amounts credited to the dividend subaccount
shall be invested in the phantom Interest Bearing Cash
Account.
(ii) PBG 401(k) Accounts. Investments in any
phantom options based on the Company's 401(k) Plan shall
be governed by the provisions of Section 4.1(c)(1)(ii),
except that the available phantom options shall be the
Equity-Index Account, the Equity-Income Account and the
Security Plus Account.
(iii) Phantom Interest Bearing Cash Account.
Participant Accounts may be invested in this phantom
option and shall accrue a return based upon the prime rate
of interest announced from time to time by Citibank, N.A.
(or another bank designated by the Plan Administrator from
time to time). Returns accrue during the period since the
last Valuation Date based on the prime rate in effect on
the first business day after such Valuation Date and are
compounded annually. An amount deferred or transferred
into this option is credited with the applicable rate of
return beginning with the date as of which the amount is
treated as invested in this option by the Plan
Administrator.
(3) Transfer Rules for 2001 Investment Option
Change. Unless a Participant selects another replacement option
prior to January 1, 2001 in accordance with such requirements as
the Plan Administrator may implement, the Plan Administrator
shall transfer and convert a Participant's phantom investments
effective as of January 1, 2001 as follows:
(i) Phantom investments in the Interest
Bearing Cash Account shall be converted and transferred
into the Security Plus Fund;
(ii) Phantom investments in the Security
Plus Account shall be converted and transferred into the
Security Plus Fund;
(iii) Phantom investments in the
Equity-Index Account shall be converted and transferred
into the Large Cap Index Fund; and
15
19
(iv) Phantom investments in the
Equity-Income Account shall be converted and transferred
into the Total U.S. Equity Index Fund.
All the above conversions and transfers shall be effectuated
pursuant to procedures implemented by the Plan Administrator.
(d) Method of Allocation. With respect to any deferral
election by a Participant, the Participant must use his or her 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 Deferral
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 or her Deferral Subaccount among the
phantom investment options then offered by the Plan Administrator for
this purpose. The Plan Administrator may provide that such allocations
or reallocations are to be made in such different increment as is
selected by the Plan Administrator. Any such transfer form shall be
effective as of the date specified by the Plan Administrator in its
discretion from time to time. The Plan Administrator may specify any
date as the effective date of such transfer forms, including the
Valuation Date, and the Plan Administrator may also specify a minimum
number of days in advance of which such transfer form must be received
in order for the form to become effective as of the specified effective
date. Notwithstanding the preceding provisions of this subsection, the
Plan Administrator may at any time alter the effective date of any
allocation pursuant to Section 5.3(j). If more than one transfer form is
received on a timely basis for a Deferral Subaccount, the transfer form
that the Plan Administrator determines to be the most recent shall be
followed. In the case of a Participant who is determined by the Plan
Administrator to be subject to Section 16 of the Securities Exchange Act
of 1934, as amended (the "Act"), the reallocation of any Subaccount of
the Participant may be delayed to the extent the Plan Administrator
deems it necessary to satisfy Rule 16b-3 promulgated under the Act. The
preceding sentence shall apply notwithstanding any provision of the Plan
to the contrary.
(e) Investment Choices for Stock Option Gains. Deferrals
of Stock Option Gains initially may be invested only in the Phantom PBG
Stock Account. In the case of a Participant who has attained eligibility
for 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.
4.2 Vesting of a Participant's Account. Except as provided in
Section 4.3, a Participant's interest in the value of his or her Account shall
at all times be 100 percent
16
20
vested, which means that it will not forfeit as a result of his or her
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 or she had, as of June 1, 1994, a
deferred compensation subaccount under the Prior Plan maintained under a
forfeiture agreement (as defined below), and (ii) he or she has not yet attained
eligibility for Retirement when the first amount would be deferred pursuant to
his or her 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
or her Base Compensation, Bonus Compensation or Performance Unit Payouts to a
Risk of Forfeiture Subaccount subject to the following terms. (The date when a
Participant attains eligibility for Retirement is specified in the definition of
"Retirement.")
(a) A Risk of Forfeiture Subaccount will be terminated and
forfeited in the event that the Participant has a Termination of
Employment that is voluntary or because of his or her Misconduct prior
to the earliest of:
(1) The end of the deferral period designated in
his or her Election Form for such deferral (or if later, the end
of such minimum period as may be required under Section 3.4);
(2) The date the Participant attains eligibility
for Retirement; or
(3) The date indicated on his or her 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 (as defined by the Plan Administrator for this
purpose), or
(2) On the date the Participant terminates
involuntarily from his or her Employer (including death and
termination for Disability), provided that such termination is
not for his or her Misconduct.
17
21
(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 or her 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 Phantom PBG Stock Account:
(A) If the Plan Administrator is using the
dividend subaccount valuation methodology of Section
4.1(c)(1)(i)(B), 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 PBG Common Stock for the 30 business days
preceding the end of the Company's fiscal year multiplied
by the number of phantom shares of PBG Common Stock
credited to the Participant's Account as of the end of the
year. In addition, the Participant's dividend subaccount
shall earn interest at a rate that is 2 percent above the
rate ordinarily applicable under the phantom investment
option in which the dividend subaccount is invested for
the period that it is contained within a Risk of
Forfeiture Subaccount.
(B) If the Plan Administrator is using the
unit valuation methodology of Section 4.1(c)(1)(i)(A), the
Participant's interest in the PBG Phantom Stock Account
shall be increased in value by 2% as of the end of the
Plan 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 Phantom PBG Stock Account after the
beginning of the year), the above additional investment return
for the year will be prorated down appropriately, as determined
by the Plan Administrator.
(2) In the case of any other available phantom
investment option for the Plan Year, 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).
18
22
4.4 Distribution of a Participant's Account. A Participant's
Account shall be distributed as provided in this Section 4.4, subject to Section
5.3(j). The portion of any Deferral Subaccount that is invested in the Phantom
PBG Stock Account may be distributed, at the option of the Plan Administrator,
either in the form of cash or in whole shares of PBG Common Stock (with cash for
any partial share and, if applicable, the value of the dividend subaccount). The
Plan Administrator may also adopt a rule that eliminates the option to pay out
cash under the prior sentence (except for any partial share and, if applicable,
the value of the dividend subaccount). All other Deferral Subaccount balances
shall be distributed in cash.
(a) Scheduled Payout Date. With respect to a specific
deferral, a Participant's "Scheduled Payout Date" shall be the earlier
of:
(1) The first day of the calendar quarter (or at
the Plan Administrator's Option, the first Distribution Date)
that follows the date selected by the Participant for such
deferral in accordance with Section 3.4, or
(2) The first day of the calendar quarter (or at
the Plan Administrator's Option, the first Distribution Date)
that follows the earliest to occur event selected by the
Participant for such deferral in accordance with Section 3.4.
With respect to any deferral, if a Participant selects only a payout
event that might not occur (such as Retirement) and then terminates
employment before the occurrence of the event, the Plan Administrator
may adopt rules to specify the Scheduled Payout Date that shall apply to
the deferral, notwithstanding the terms of the Participant's election.
Unless an election has been made in accordance with subsection (b) below
(or unless subsection (f) requires an earlier distribution), the
Participant's Deferral 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. Unless subsection (f) below requires
an earlier payout, a Participant may delay receipt of a Deferral
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 end of the
calendar year immediately preceding the calendar year containing the
Scheduled Payout Date (or if earlier, at least 6 months before the
Scheduled Payout Date). This deadline applies without regard to whether
the Participant has received any notice of the deadline or the
availability of a payment election. Any payment election to receive a
lump sum at a later time must specify a revised payout date that is at
least 2 years 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 2 years
19
23
after the Scheduled Payout Date. With respect to any Deferral
Subaccount, only one election may be made under this subsection.
Beneficiaries are not permitted to make elections under this subsection.
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), (b) or (f), the Participant's
Deferral 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
or earlier payout date for such distribution (whichever is applicable).
In determining the value of a Participant's remaining Deferral
Subaccount following an installment distribution, such installment
distribution shall reduce the value of the Participant's Deferral
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 at the time
intervals as specified by the Plan Administrator in its
discretion for this purpose from time to time. Specifically, the
Plan Administrator may allow monthly, quarterly, semi-annual or
annual installments. However, installments may be paid over a
period of no more than 20 years, and not later than the
Participant's 80th birthday (or what would have been his or her
80th birthday, if the Participant dies earlier).
(2) If a Participant has elected a Scheduled Payout
Date that would be after his or her 80th birthday, the
Participant shall be deemed to have elected his or her 80th
birthday as his or her 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.
20
24
(4) In the case of a Participant who is determined
by the Plan Administrator to be subject to Section 16 of the
Securities Exchange Act of 1934, as amended (the "Act"), the
Participant's Scheduled Payout Date and related distribution may
be delayed to the extent the Plan Administrator deems it
necessary to satisfy Rule 16b-3 promulgated under the Act. This
paragraph shall apply notwithstanding any provision of the Plan
to the contrary.
(e) Upon a Participant's death, his or her Beneficiary
shall be paid each Deferral 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 or her payment election under subsection (b) above, whichever is
applicable. Any claim to be paid any amounts standing to the credit of a
Participant in connection with the Participant's death must be received
by the Plan Administrator at least 14 days before any such amount is
paid out by the Plan Administrator. Any claim received thereafter is
untimely, and it shall not lie against the Plan, the Company, any
Employer, the Plan Administrator or any other party acting for one or
more of them.
(f) Notwithstanding subsections (a) and (b) above, if a
Participant's Termination of Employment is voluntary (but not counting a
Retirement) or is on account of his or her Misconduct, all of the
Participant's Deferral Subaccounts shall be distributed as provided in
this subsection.
(1) If the total balance of all of the
Participant's Deferral Subaccounts as of the end of the calendar
quarter (or such other period as the Plan Administrator
specifies from time to time) during which the Termination of
Employment occurs equals $25,000 or less, all Deferral
Subaccounts shall be distributed to the Participant as a single
lump sum as soon as practicable after the first day of the
calendar quarter (or at the Plan Administrator's option, the
first Distribution Date) that follows the Participant's last day
of employment.
(2) If the total balance of all of the
Participant's Deferral Subaccounts as of the end of the calendar
quarter (or such other period as the Plan Administrator
specifies from time to time) during which the Termination of
Employment occurs is greater than $25,000, all Deferral
Subaccounts shall be distributed to the Participant as a single
lump sum as soon as practicable after the first day of the
calendar quarter (or at the Plan Administrator's option, the
first Distribution Date) that follows at least one year after
the Participant's last day of employment.
Notwithstanding (1) and (2) above, a Deferral Subaccount shall not be
distributed under this subsection before the end of the minimum period
of deferral that is
21
25
applicable to the Deferral Account under Section 3.4. If the preceding
sentence delays payout of a distribution, payout shall be made as soon
as practicable after the minimum period of deferral.
4.5 Acceleration of Payment in Certain Cases. Except as
expressly provided in this Section 4.5, no payments shall be made under this
Plan prior to the date (or dates) applicable under Section 4.4.
(a) A Participant who is suffering severe financial
hardship resulting from extraordinary and unforeseeable events beyond
the control of the Participant (and who does not have other funds
reasonably available that could satisfy the severe financial hardship)
may file a written request with the Plan Administrator for accelerated
payment of all or a portion of the amount credited to his or her
Account. A committee composed of representatives from the Company's
Compensation Department, Tax Department and Law Department, or such
other parties as the Plan Administrator may specify from time to time,
shall have sole discretion to determine whether a Participant satisfies
the requirements for a hardship request and the amount that may be
distributed (which shall not exceed the amount reasonably necessary to
alleviate the Participant's hardship).
(b) After a Participant has filed a written request
pursuant to this section, along with all supporting material, the
committee shall grant or deny the request within 60 days (or such other
number of days as is customarily applied from time to time) unless
special circumstances warrant additional time.
(c) The Plan Administrator may adjust the standards for
hardship withdrawals from time to time to the extent it determines such
adjustment to be necessary to avoid triggering constructive receipt of
income under the Plan.
(d) A Beneficiary may also request a hardship distribution
upon satisfaction of the foregoing requirements and subject to the
foregoing limitations.
(e) When determined to be necessary in the interest of
sound plan administration, the Plan Administrator may accelerate the
payment of a class of Participants' Deferral Subaccounts hereunder. This
shall only occur to the extent the Plan Administrator determines that
such acceleration will not trigger constructive receipt of Deferral
Subaccounts that are not paid out.
(f) When some or all of a Participant's Deferral
Subaccount is distributed pursuant to this section, the distribution and
such 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
22
26
the date on which the decision to make accelerated payment is made (or
if later, the date on which it is deemed to be effective).
4.6 Conversion of Deferral Subaccounts by Certain Participants.
Participants who are employed as an Executive classified as Band VI or above (or
an equivalent level for employees not under the band system) may elect to
convert all or any portion of one or more Deferral Subaccounts (other than a
Risk of Forfeiture Subaccount) to a form of split-dollar life insurance pursuant
to the terms and conditions of this section.
(a) To convert a Deferral Subaccount, the Participant must
make a conversion election in the manner specified by the Plan
Administrator from time to time. Any such election for a Deferral
Subaccount must be made prior to making a payment election under Section
4.4(b) for the Deferral Subaccount and not later than the earlier of:
(i) the end of the calendar year immediately preceding the calendar year
containing the Scheduled Payout Date applicable to such subaccount as
set forth in Section 4.4(a) above, and (ii) the date 6 months before the
Scheduled Payout Date. This deadline applies without regard to whether
the Participant has received any notice of the deadline or the
availability of a conversion election. In addition to other items or
information that the Plan Administrator may require or request from time
to time, the Participant must specify which Deferral Subaccounts the
Participant desires to convert, the portion of each such Deferral
Subaccount to be converted and the Participant must relinquish in
writing all of his or her rights to the converted portion of such
Deferral Subaccounts.
(b) To implement a conversion election, the Participant
must also execute a split-dollar life insurance agreement with the
Company in a form to be determined by the Plan Administrator. Such
agreement shall set forth the interests of the Company and the
Participant in the life insurance policy and, in addition to any other
provisions that the Plan Administrator or Company shall require, such
agreement shall (i) provide for the Company to receive, out of the life
insurance policy's death proceeds, an amount equal to the cash value of
the policy (or if greater, the total amount of premiums paid for the
policy), (ii) require the Company to purchase and pay the premiums on a
life insurance policy on the life of the Participant (or, at the
Participant's election, on the joint lives of the Participant and the
Participant's spouse), and (iii) specify the owner of the life insurance
policy.
(c) The conversion of a Participant's Deferral Subaccounts
shall be administered under rules and procedures implemented from time
to time by the Plan Administrator. The Plan Administrator may require
the Participant from time to time to execute other agreements, forms or
elections as may be necessary to properly effectuate the conversion.
23
27
(d) The conversion election provided by this Section 4.6
may be eliminated or otherwise restricted at any time in the discretion
of the Plan Administrator.
24
28
ARTICLE V
PLAN ADMINISTRATOR
5.1 Plan Administrator. The Plan Administrator is the
Compensation and Management Development Committee of the Company's Board of
Directors (the "Committee") or its delegate or delegates, who shall act within
the scope of their delegation pursuant to such operating guidelines as the
Committee shall establish from time to time. The Plan Administrator is
responsible for the administration of the Plan.
5.2 Action. Action by the Committee may be taken in accordance
with procedures that the Committee adopts from time to time or that the
Company's Law Department determines are legally permissible.
5.3 Powers of the Plan Administrator. 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;
25
29
(h) To establish or to change the phantom investment
options or arrangements under Article IV;
(i) To hire agents, accountants, actuaries, consultants
and legal counsel to assist in operating and administering the Plan; and
(j) Notwithstanding any other provision of this Plan, the
Plan Administrator may take any action it deems appropriate in
furtherance of any policy of the Company respecting insider trading as
may be in effect from time to time. Such actions may include, but are
not limited to, altering the effective date of allocations or
distributions of Accounts or Deferral Subaccounts.
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. As a result, benefits under this Plan will be paid only if the
Plan Administrator decides in its discretion that the applicant is entitled to
them. In the event of a review by a court, arbitrator or any other tribunal, any
exercise of the Plan Administrator's discretionary authority shall not be
disturbed unless it is clearly shown to be arbitrary and capricious.
5.4 Compensation, Indemnity and Liability. The Plan
Administrator will serve without bond and without compensation for services
hereunder. All expenses of the Plan and the Plan Administrator will be paid by
the Employer. To the extent deemed appropriate by the Plan Administrator, any
such expense may be charged against specific Participant Accounts, thereby
reducing the obligation of the Employer. No member of the Committee, and no
individual acting as the delegate of the Committee, shall be liable for any act
or omission of any other member or individual, nor for any act or omission on
his or her own part, excepting his or her own willful Misconduct. The Employer
will indemnify and hold harmless each member of the Committee and any employee
of PBG (or a PBG affiliate, if recognized as an affiliate for this purpose by
the Plan Administrator) acting as the delegate of the Committee against any and
all expenses and liabilities, including reasonable legal fees and expenses,
arising out of his or her membership on the Committee (or his or her serving as
the delegate of the Committee), excepting only expenses and liabilities arising
out of his or her own willful Misconduct.
5.5 Taxes. If the whole or any part of any Participant's Account
becomes liable for the payment of any estate, inheritance, income, employment,
or other tax which the
26
30
Employer may be required to pay or withhold, the Employer will have the full
power and authority to withhold and pay such tax out of any moneys or other
property in its hand for the account of the Participant. To the extent
practicable, the Employer will provide the Participant notice of such
withholding. Prior to making any payment, the Employer may require such releases
or other documents from any lawful taxing authority as it shall deem necessary.
27
31
ARTICLE VI
CLAIMS PROCEDURE
6.1 Claims for Benefits. If a Participant, Beneficiary or other
person (hereafter, "Claimant") does not receive timely payment of any benefits
which he or she believes are due and payable under the Plan, he or she 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 or her claim, and the steps which the Claimant must take to have his
or her claim for benefits reviewed.
6.2 Appeals. Each Claimant whose claim for benefits has been
denied may file a written request for a review of his or her claim by the Plan
Administrator. The request for review must be filed by the Claimant within 60
days after he or she received the written notice denying his or her 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.
28
32
ARTICLE VII
AMENDMENT AND TERMINATION
7.1 Amendments. The Compensation and Management Development
Committee of the Board of Directors of the Company, or its delegate, has the
right in its sole discretion to amend this Plan in whole or in part at any time
and in any manner, including the manner of making deferral elections, the terms
on which distributions are made, and the form and timing of distributions.
However, except for mere clarifying amendments necessary to avoid an
inappropriate windfall, no Plan 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
and Beneficiaries shall be bound by such amendment.
7.2 Termination of Plan. The Company expects to continue this
Plan, but does not obligate itself to do so. The Company, acting by the
Compensation and Management Development Committee of its Board of Directors (or
its delegate), 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.
29
33
ARTICLE VIII
MISCELLANEOUS
8.1 Limitation on Participant's Rights. Participation in this
Plan does not give any Participant the right to be retained in the Employer's or
Company's employ (or any right or interest in this Plan or any assets of the
Company or Employer other than as herein provided). The Company and Employer
reserve the right to terminate the employment of any Participant without any
liability for any claim against the Company or Employer under this Plan, except
for a claim for payment of deferrals as provided herein.
8.2 Unfunded Obligation of Individual Employer. The benefits
provided by this Plan are unfunded. All amounts payable under this Plan to
Participants are paid from the general assets of the Participant's individual
Employer. Nothing contained in this Plan requires the Company or Employer to set
aside or hold in trust any amounts or assets for the purpose of paying benefits
to Participants. Neither a Participant, Beneficiary, nor any other person shall
have any property interest, legal or equitable, in any specific Employer asset.
This Plan creates only a contractual obligation on the part of a Participant's
individual Employer, and the Participant has the status of a general unsecured
creditor of this Employer with respect to amounts of compensation deferred
hereunder. Such a Participant shall not have any preference or priority over,
the rights of any other unsecured general creditor of the Employer. No other
Employer guarantees or shares such obligation, and no other Employer shall have
any liability to the Participant or his or her Beneficiary. In the event, a
Participant transfers from the employment of one Employer to another, the former
Employer shall transfer the liability for deferrals made while the Participant
was employed by that Employer to the new Employer (and the books of both
Employers shall be adjusted appropriately).
8.3 Other Plans. This Plan shall not affect the right of any
eligible Executive or Participant to participate in and receive benefits under
and in accordance with the provisions of any other employee benefit plans which
are now or hereafter maintained by any Employer, unless the terms of such other
employee benefit plan or plans specifically provide otherwise or it would cause
such other plan to violate a requirement for tax favored treatment.
8.4 Receipt or Release. Any payment to a Participant in
accordance with the provisions of this Plan shall, to the extent thereof, be in
full satisfaction of all claims against the Plan Administrator, the Employer and
the Company, and the Plan Administrator may require such Participant, as a
condition precedent to such payment, to execute a receipt and release to such
effect.
8.5 Governing Law. This Plan shall be construed, administered,
and governed in all respects in accordance with applicable federal law and, to
the extent not preempted by
30
34
federal law, in accordance with the laws of the State of New York. 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.
8.6 Adoption of Plan by Related Employers. The Plan
Administrator may select as an Employer any division of the Company, as well as
any corporation related to the Company by stock ownership, and permit or cause
such division or corporation to adopt the Plan. The selection by the Plan
Administrator shall govern the effective date of the adoption of the Plan by
such related Employer. The requirements for Plan adoption are entirely within
the discretion of the Plan Administrator and, in any case where the status of an
entity as an Employer is at issue, the determination of the Plan Administrator
shall be absolutely conclusive.
8.7 Gender, Tense and Examples. In this Plan, whenever the
context so indicates, the singular or plural number and the masculine, feminine,
or neuter gender shall be deemed to include the other. Whenever an example is
provided or the text uses the term "including" followed by a specific item or
items, or there is a passage having a similar effect, such passage of the Plan
shall be construed as if the phrase "without limitation" followed such example
or term (or otherwise applied to such passage in a manner that avoids limitation
on its breadth of application).
8.8 Successors and Assigns; Nonalienation of Benefits. This Plan
inures to the benefit of and is binding upon the parties hereto and their
successors, heirs and assigns; provided, however, that the amounts credited to
the Account of a Participant are not (except as provided in Section 5.5) subject
in any manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, charge, garnishment, execution or levy of any kind, either
voluntary or involuntary, and any attempt to anticipate, alienate, sell,
transfer, assign, pledge, encumber, charge or otherwise dispose of any right to
any benefits payable hereunder, including, without limitation, any assignment or
alienation in connection with a separation, divorce, child support or similar
arrangement, will be null and void and not binding on the Plan or the Company or
Employer. Notwithstanding the foregoing, the Plan Administrator reserves the
right to make payments in accordance with a divorce decree, judgment or other
court order as and when cash payments are made in accordance with the terms of
this Plan from the Deferral Subaccount of a Participant. Any such payment shall
be charged against and reduce the Participant's Account.
8.9 Facility of Payment. Whenever, in the Plan Administrator's
opinion, a Participant or Beneficiary entitled to receive any payment hereunder
is under a legal disability or is incapacitated in any way so as to be unable to
manage his or her 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 or her 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
31
35
of any liability for the making of such payment to the Participant or
Beneficiary under the Plan.
8.10 Separate Plans. This Plan document encompasses two separate
plans of deferred compensation for all legal purposes (including ERISA, federal
tax law, and state tax law) as set forth in subsections (a) and (b) below.
(a) The portion of the Plan that provides for deferrals of
Base Compensation, Bonus Compensation and Performance Unit Payouts
(which shall be known as the "PBG Executive Income Deferral Plan").
(b) The portion of the Plan that provides for deferrals of
Stock Option Gains (which shall be known as the "PBG Option Gains
Deferral Plan").
Together, these two separate plans of deferred compensation are referred to as
the PBG Executive Income Deferral Program, and are severable for any and all
purposes as directed by the Company. (However, see Section B.6(a) of Article B
which also provides for a separate plan.)
32
36
The above restated Plan is hereby adopted and approved by the Company's
duly authorized officer to be effective as stated herein.
THE PEPSI BOTTLING GROUP, INC.
Submitted by:
---------------------------------------
Mr. David Kasiarz
Vice President, Compensation & Benefits
Consented to by:
---------------------------------------
Ms. Pamela McGuire
Senior Vice President, General Counsel
& Secretary
Executed by:
---------------------------------------
Mr. Kevin Cox
Senior Vice President & Chief Personnel
Officer
33
37
PBG EXECUTIVE INCOME DEFERRAL PROGRAM
APPENDIX
The following Appendix articles modify and supplement the general terms
of the Plan as it applies to certain executives as provided therein.
34
38
ARTICLE A
INITIAL PUBLIC OFFERING OF PBG
This Article sets forth provisions that apply in connection with the
Company's initial public offering. Except as specifically modified in this
Appendix Article A, the foregoing provisions of the Plan shall fully apply.
In the event of a conflict between this Article A and the foregoing provisions
of the Plan, this Article A shall govern with respect to the conflict.
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) Employee Programs Agreement: The 1999 Employee Programs
Agreement between PepsiCo and PBG.
(b) Offering Date: The "Offering Date" as that term is
defined in the 1999 Separation Agreement between PepsiCo and PBG.
(c) PepsiCo: PepsiCo, Inc., a North Carolina Corporation.
(d) PepsiCo Group: PepsiCo and its subsidiaries and
affiliates, as determined by the Plan Administrator.
(e) Transferred Individual: A nonterminated "Transferred
Individual" as that term is defined in the Employee Programs Agreement.
For this purpose, a Transferred Individual shall be considered
"nonterminated" if he or she is actively employed by (or on a leave of
absence from and expected to return to) the Company and any of its
affiliates, as of the end of the day on the Offering Date.
(f) Transition Individuals: A "Transition Individual" as
that term is defined in the Employee Programs Agreement.
A.2 Assumption of Benefits and Liabilities. Effective as of the
beginning of the day on the Start Date, all interests in the Prior Plan of
(and Prior Plan liabilities with respect to) Transferred Individuals shall be
assumed by this Plan.
(a) In the case of a Transferred Individual, effective as of
the beginning of the day on the Start Date, his or her Account shall
be credited with the amount that stood to his or her credit under the
Prior Plan immediately prior to the
35
39
Start Date. The allocation of this amount to phantom investment
options under this Plan shall mirror the allocation then in effect
for the Transferred Individual under the Prior Plan (except to the
extent the Plan Administrator permits, and an authorized Executive
makes, an investment change at a special Valuation Date offered to
such Executive in connection with PBG's initial public offering).
(b) Any deferral election made under the Prior Plan for a
Transferred Individual shall be carried over and continued under this
Plan, subject to the provisions of this Plan (as interpreted by the
Plan Administrator). Notwithstanding the prior sentence, following
the Start Date, to the extent permitted by the Plan Administrator, a
Transferred Individual may revise any Prior Plan deferral election
during the period before the deadline for making such election has
been reached.
(c) A Transferred Individual who has made a deferral election
with respect to a performance unit award payable to him under the
PepsiCo Long Term Incentive Plan shall, once the deferral occurs, be
credited with such deferral solely under this Plan. Any designation
to have some or all of this deferral invested in the PepsiCo capital
stock account under the Prior Plan shall be converted to a
designation for investment in a phantom investment option under this
Plan (other than the Phantom PepsiCo Stock Account) which is
designated by the Plan Administrator for this purpose.
A.3 Special PepsiCo Stock Investment Option. As of the Start Date,
the Plan Administrator shall establish a temporary phantom investment option
under the Plan, the Phantom PepsiCo Stock Account. 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 the Phantom PepsiCo Stock Account.
(a) General Principles: The Phantom PepsiCo Stock Account
shall be administered under rules that are similar to those
applicable to the Phantom PBG Stock Account, but with such
modifications as the Plan Administrator may apply from time to time.
(b) Valuation and Adjustment: A Participant's interest in
the Phantom PepsiCo Stock Account is valued as of a Valuation Date by
multiplying the number of phantom shares credited to his or her
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. If shares of PepsiCo capital 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
corporate change treated as subject to this provision by the Plan
Administrator, such
36
40
equitable adjustment shall be made in the number and kind of phantom
shares credited to an Account or subaccount as the Plan Administrator
may determine to be necessary or appropriate.
(c) Investment Allocations and Reallocations. No deferrals
after the Start Date may be directed for investment in the Phantom
PepsiCo Stock Account, except for a deferral of a Transferred
Individual's 1999 base salary that he or she directed for investment
in the Phantom PepsiCo Stock Account prior to the Start Date. In
accordance with Section 4.1(d), a Participant with an interest in the
Phantom PepsiCo Stock Account may reallocate amounts from his or her
Subaccounts in the Phantom PepsiCo Stock Account to other phantom
investment options under the Plan that are available for this purpose
(e.g., in the case of Stock Option Gains, no other phantom options
are available for this purpose). No Participant may reallocate
amounts into the Phantom PepsiCo Stock Account.
(d) Termination of the Phantom PepsiCo Stock Account.
Effective as of the end of the day on December 31, 2000 (the
"effective time"), the Phantom PepsiCo Stock Account shall cease to
be available under the Plan. Unless a Participant selects another
phantom investment option prior to the effective time, in accordance
with such requirements as the Plan Administrator may implement, the
Participant's phantom investment in the Phantom PepsiCo Stock Account
shall be transferred and converted by the Plan Administrator into an
investment in the Phantom Security Plus Fund as of the effective
time. Notwithstanding the prior sentence, any Stock Option Gains that
are invested in the Phantom PepsiCo Stock Account shall be
automatically transferred and converted by the Plan Administrator
into an investment in the Phantom PBG Stock Account as of the
effective time.
A.4 Employment Transfers by Transition Individuals. This section
shall apply to individuals who transfer between PBG and PepsiCo under
circumstances that cause them to be Transition Individuals.
(a) Transfers to PepsiCo. If a Participant, who is a
Transition Individual, is transferred to the PepsiCo Group, such
transfer to the PepsiCo Group shall not be considered a Termination
of Employment or other event that could trigger distribution of the
Participant's interest in the Plan. In this case, the Participant's
interest in the Plan (and all Plan liabilities with respect to the
Participant) may be retained by the Plan, or they may be transferred
to the PepsiCo Executive Income Deferral Program as determined by the
Plan Administrator in its discretion. If a transfer of the
Participant's interest occurs, this transfer shall constitute a
complete payout of the Participant's Account for purposes of
determining who is a Participant or Beneficiary under the Plan. If a
transfer does not occur, for purposes of determining the distribution
of such Participant's interest in the Plan, the Participant's
37
41
Termination of Employment shall not be deemed to occur before his or
her termination of employment with the PepsiCo Group.
(b) Transfers from PepsiCo. If an individual is transferred
by the PepsiCo Group to an Employer under circumstances that cause
him to be a Transition Individual and such individual's interest in
the PepsiCo Executive Income Deferral Program is transferred to this
Plan, such Transition Individual shall become a Participant in this
Plan. In connection with any such transfer of the individual's
interest, the individual's phantom investment in PepsiCo capital
stock under the PepsiCo Executive Income Deferral Program shall be
carried over and replicated hereunder until December 31, 2000 (except
to the extent the Plan Administrator permits, and an authorized
Executive makes, an investment change at a special Valuation Date
offered to such Executive in connection with the transfer). Any other
phantom investment of the individual under the PepsiCo Executive
Income Deferral Program may be carried over and replicated hereunder,
or it may be converted to a phantom investment available under the
Plan (depending upon the procedures then applied by the Plan
Administrator). In determining the time of payout of a Transition
Individual who has an interest transferred to this Plan, the
elections of the Participant under the PepsiCo Executive Income
Deferral Program shall be given effect, subject to this Plan's
provisions on payouts (as interpreted by the Plan Administrator).
38
42
ARTICLE B
SUPPLEMENTAL EXECUTIVE INCENTIVE COMPENSATION AWARDS
Effective as of December 21, 1999, this Article B sets forth
provisions that apply in connection with cash and stock awards that have been
granted to certain executives under the 1999 Executive Incentive Compensation
Plan. Except as specifically modified in this Appendix Article B, the
foregoing provisions of the Plan shall fully apply. In the event of a conflict
between this Article B and the foregoing provisions of the Plan, this Article
B shall govern with respect to the conflict.
B.1 Definitions: When used in this Article B, the following
underlined terms shall have the meanings set forth below. Except as otherwise
provided in this Article B, all terms that are defined in Article II of the
Plan shall have the meaning assigned to them by Article II.
(a) PBG Group: The group of corporations or other entities
comprised of (i) PBG and all of its divisions, subsidiaries and
affiliates, (ii) PepsiCo, and (iii) such other corporations and entities
as the Plan Administrator designates from time to time.
(b) Cash Award: The Supplemental Executive Incentive
Compensation award that PBG granted in cash to certain executives under
the 1999 Executive Incentive Compensation Plan.
(c) Change of Control: A Change of Control occurs on a date
when (1) any individual, corporation, partnership, group, associate or
other entity, other than PepsiCo, is or becomes the "beneficial owner"
(as defined in Rule 13D-3 under the Securities Exchange Act of 1934),
directly or indirectly, of 50% or more of the combined voting power of
PBG's outstanding securities ordinarily having the right to vote at
elections of directors, (2) any individual, corporation, partnership,
group, associate or other entity is or becomes the "beneficial owner" (as
defined in Rule 13D-3 under the Securities Exchange Act of 1934),
directly or indirectly, of 50% or more of the combined voting power of
PepsiCo's outstanding securities ordinarily having the right to vote at
elections of directors, (3) the approval by the shareholders of PBG of a
plan or agreement providing for a merger or consolidation of PBG, other
than with PepsiCo, or for a sale, exchange or other disposition of all or
substantially all of the assets of PBG, or (4) the approval by the
shareholders of PepsiCo of a plan or agreement providing for a merger or
consolidation of PepsiCo, other than with PBG, or for a sale, exchange or
other disposition of all or substantially all of the assets of PepsiCo.
39
43
(d) Employee: Any person who received a Cash Award or Stock
Award under the Trust Agreement and is currently rendering services to a
member of the PBG Group.
(e) Extension Form: The form prescribed by the Plan
Administrator on which an Employee extends the Vesting Date of his or her
Stock Award pursuant to the provisions of this Article B.
(f) PepsiCo: PepsiCo, Inc., a North Carolina corporation,
and any successor or successors thereto.
(g) Stock Award: The Supplemental Executive Incentive
Compensation award that PBG granted to certain executives under the 1999
Executive Incentive Compensation Plan that is invested and payable in PBG
Common Stock. If an Employee completes an Extension Form pursuant to
Section B.3 below and elects a Vesting Date to apply to the award, each
portion of the award that has a different Vesting Date (whether future or
current) shall be considered to be a separate Stock Award hereunder.
(h) Trust Agreement: The Trust Agreement (including any and
all appendices), by and between PBG and Boston Safe Deposit and Trust
Company, as amended and restated from time to time.
(i) Vesting Date: The date on which a Stock Award will no
longer be subject to a risk of forfeiture as provided in the Trust
Agreement or Section B.4, whichever applies.
B.2 Deferral of Cash Awards and Stock Awards.
(a) An Employee's Cash Award shall be deferred under this
Plan pursuant to the terms and conditions of the Trust Agreement and
shall become vested and distributed to the Employee or his or her
beneficiary in the amount and at the time as provided by the Trust
Agreement.
(b) Prior to February 1, 2003, an Employee's Stock Award
shall be deferred under this Plan pursuant to the terms and conditions of
the Trust Agreement and, unless the Vesting Date is extended pursuant to
this Article B, the Stock Award shall become vested and distributed to
the Employee or his or her beneficiary in the amount and form and at the
time as provided by the Trust Agreement. If the Employee extends the
Vesting Date of the Stock Award pursuant to this Article B (so that the
Vesting Date extends beyond February 1, 2003), such extension shall be
governed by the terms and conditions of this Article B. Except as
specifically
40
44
modified in this Article B, the provisions of the Trust Agreement shall
fully apply. In the event of a conflict between this Article B and the
provisions of the Trust Agreement, this Article B shall govern with
respect to the conflict.
B.3 Extension of Vesting for Stock Awards.
(a) Manner of Election. Each Employee with a Stock Award may
elect to extend the vesting under the Plan of his or her Stock Award by
completing and filing with the Plan Administrator an Extension Form for
such purpose. Such Extension Form must be completed in the manner and
within the time limits prescribed by this Article B and the Plan
Administrator from time to time. The Extension Form shall permit the
Employee to elect a delayed Vesting Date to apply to all or only a
portion of the Stock Award. To be effective, an Employee's Extension Form
must set forth the Vesting Date that will be applicable to the Stock
Award, the Employee's Beneficiary designation and any other information
that may be requested by the Plan Administrator from time to time. In
addition, the Extension Form must meet the requirements of Sections
B.3(b) and (c) below. If permitted by the Plan Administrator, an Employee
may select a different Beneficiary for his or her Stock Awards than the
Beneficiary selected for his or her Deferral Subaccounts.
(b) Timing of Election. If an Employee desires to extend the
vesting and receipt of his or her Stock Award beyond February 1, 2003, an
Employee must initially so elect by completing and filing an Extension
Form with the Plan Administrator by July 31, 2002. Subsequent vesting
extensions (if any) of a Stock Award must be made by an Employee at least
6 months prior to the then applicable Vesting Date or, if earlier, in the
calendar year preceding the calendar year of the then applicable Vesting
Date. If an Employee fails to file a properly completed and executed
Extension Form with the Plan Administrator by the prescribed time, he or
she will be deemed to have elected not to extend the vesting and receipt
of his or her Stock Award. An Extension Form is irrevocable once received
and determined by the Plan Administrator to be properly completed, and
changes or modifications thereafter shall not be permitted.
Notwithstanding the preceding, to the extent necessary because of
circumstances beyond the control of the Employee, the Plan Administrator
may grant a delay of any extension period and may permit (to the extent
deemed necessary for orderly Plan administration or to avoid undue
hardship to an Employee) the complete revocation of an Extension Form.
Any such delay or revocation shall be available only if the Plan
Administrator determines that it shall not trigger constructive receipt
of income (or other early taxation of income) and that it is desirable
for Plan administration, and only upon such conditions as may be required
by the Plan Administrator.
41
45
(c) Period of Extension. An Employee shall specify a Vesting
Date on his or her Extension Form by designating a specific date from the
choices that are then made available to the Employee by the Plan
Administrator. Notwithstanding an Employee's actual election, an Employee
shall be deemed to have elected a Vesting Date that is not less than 24
months from the previous Vesting Date, but no later than September 30,
2009. In addition, notwithstanding an Employee's actual election, if an
Employee selects a Vesting Date that is later than September 30, 2009, an
Employee shall be deemed to have elected a Vesting Date of September 30,
2009.
B.4 Forfeiture. An Employee's interest in a Stock Award shall be
terminated and the Stock Award shall be forfeited in the event that the
Employee's employment is terminated with the PBG Group and such termination is
voluntary or on account of his or her Misconduct prior to the date the Stock
Award vests in accordance with Section B.5(a) below.
B.5 Vesting and Distribution.
(a) Vesting. A Stock Award shall become fully vested (and
shall cease to be subject to forfeiture) on the earliest of the following
to occur:
(1) When the Employee reaches the Vesting Date
applicable to the Stock Award while employed by a member of the PBG
Group or while on an approved leave of absence (as determined by the
Plan Administrator);
(2) When the Employee terminates employment,
voluntarily or involuntarily, from any and all members of the PBG
Group on account of the Employee's death or Disability;
(3) When the Employee is involuntarily terminated
from the PBG Group following a Change of Control (regardless of
whether such termination is on account of Misconduct), unless it is
determined otherwise by a majority of the "Outside Directors" (within
the meaning of Code section 162(m)) serving on the PBG Board of
Directors on December 23, 1999 (the "Incumbent Outside Directors") or
subsequently elected to the PBG Board of Directors by a vote of at
least three-fourths of the directors constituting the Incumbent
Outside Directors;
(4) When the Employee is involuntarily terminated
from the PBG Group and such involuntary termination is not on account
of Misconduct; or
(5) September 30, 2009.
42
46
(b) Distribution.
(1) Once an Employee's Stock Award becomes fully
vested as provided in Section B.5(a) above, the Stock Award, in the
amount and form determined pursuant to the Trust Agreement, shall be
distributed in a lump sum to the Employee or his or her Beneficiary
as soon as practicable after the first Distribution Date coincident
with or next following the full vesting of such Stock Award as
provided in Section B.5(a) above.
(2) In the case of a Participant who is determined
by the Plan Administrator to be subject to Section 16 of the
Securities Exchange Act of 1934, as amended (the "Act"), a
distribution required under paragraph (1) above may be delayed to the
extent the Plan Administrator deems it necessary to satisfy Rule
16b-3 promulgated under the Act. This paragraph shall apply
notwithstanding any provision of this Article B to the contrary.
B.6 General Provisions.
(a) This Article B (which together with the corresponding
provisions of the Trust Agreement shall be known as the "PBG SEIC
Deferral Plan") shall encompass a plan of deferred compensation that is
separate and distinct from the PBG Executive Income Deferral Plan and the
PBG Option Gains Deferral Plan (as defined in Section 8.10) for all legal
purposes (including ERISA, federal tax law and state tax law). Together,
these three plans of deferred compensation shall be referred to as the
PBG Executive Income Deferral Program, and all three such plans are
severable for any and all purposes as directed by the Company.
Additionally, Cash Awards may only be deferred for a maximum time period
of 27 months and Stock Awards may only be deferred for a maximum time
period of ten years. Therefore, since the Cash Awards and Stock Awards do
not provide retirement income to the Employees and do not result in a
deferral of income by Employees for periods extending to the termination
of their covered employment or beyond, the PBG SEIC Deferral Plan is not
subject to ERISA.
(b) In addition to those Plan provisions which may be in
conflict with this Article B (and therefore the provisions of this
Article B governs pursuant to the first paragraph of this Article B),
Section 4.2, Section 4.5, Section 4.6, Section 8.2 and Article VI of this
Plan shall neither apply to this Article B nor to any Cash Award or Stock
Award.
43