PEPSICO PERFORMANCE-BASED LONG-TERM INCENTIVE AWARD STOCK OPTION / RESTRICTED STOCK UNITS TERMS AND CONDITIONS
Exhibit 10.2
PEPSICO PERFORMANCE-BASED LONG-TERM INCENTIVE AWARD
STOCK OPTION / RESTRICTED STOCK UNITS TERMS AND CONDITIONS
These Terms and Conditions, along with the PepsiCo Performance-Based Long-Term Incentive Award
Summary (the “Award Summary”) delivered herewith and signed by the individual named on the Award
Summary (the “Participant”) shall constitute an Agreement made as of the Grant Date (as indicated
on the Award Summary), by and between PepsiCo, Inc., a North Carolina corporation having its
principal office at 000 Xxxxxxxx Xxxx Xxxx, Xxxxxxxx, Xxx Xxxx 00000 (“PepsiCo,” and with its
divisions and direct and indirect subsidiaries, the “Company”), and the Participant.
WITNESSETH:
WHEREAS, the Board of Directors and shareholders of PepsiCo have approved the PepsiCo, Inc.
2007 Long-Term Incentive Plan (the “Plan”), for the purposes and subject to the provisions set
forth in the Plan; and
WHEREAS, pursuant to the authority granted to it in the Plan, the Compensation Committee of
the Board of Directors of PepsiCo (the “Committee”), by resolution duly adopted at a meeting held
on or prior to the Grant Date, authorized the grant to the Participant of the stock options and
restricted stock units set forth on the Award Summary; and
WHEREAS, awards granted under the Plan are to be evidenced by an Agreement in such form and
containing such terms and conditions as the Committee shall determine;
NOW, THEREFORE, it is mutually agreed as follows:
A. Terms and Conditions Applicable to Stock Options. These terms and conditions shall
apply with respect to the stock options granted to the Participant as indicated on the Award
Summary.
1. Grant. In consideration of the Participant remaining in the employ of the Company
and agreeing to be bound by the covenants of Paragraph C, PepsiCo hereby grants to the Participant,
on the terms and conditions set forth herein, the right and option to purchase the number of shares
of PepsiCo Common Stock, par value $.0167 per share, indicated on the Award Summary, at the
Grant/Exercise Price per share indicated on the Award Summary (the “Option Exercise Price”), which
was the Fair Market Value (as defined below) of PepsiCo Common Stock on the Grant Date, rounded up
to the nearest one-fourth. The right to purchase each such share is referred to herein as an
“Option.” All Options granted hereunder shall be “Non-Qualified Stock Options” as defined in the
Plan.
2. Vesting and Exercisability. Subject to the terms and conditions set forth herein,
the Options shall become fully vested on the vesting date set forth in the Award Summary (the
“Vesting Date”) and shall be exercisable from the Vesting Date through the expiration date set
forth in the Award Summary (the “Expiration Date”). Options may vest only while the Participant is
actively employed by the Company. Once vested and exercisable, and until terminated, all or any
portion of the Options may be exercised from time to time and at any time under procedures that the
Committee or its delegate shall establish from time to time, including, without limitation,
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procedures regarding the frequency of exercise and the minimum number of Options which may be
exercised at any time.
3. Exercise Procedure. Subject to terms and conditions set forth herein, Options may
be exercised by giving written notice of exercise to PepsiCo in the manner specified from time to
time by PepsiCo. The aggregate Option Exercise Price for the shares being purchased, together with
any amount which the Company may be required to withhold upon such exercise in respect of
applicable foreign, federal (including FICA), state and local taxes, must be paid in full at the
time of issuance of such shares.
4. Effect of Termination of Employment, Death, Retirement and Total Disability.
(a) Termination of Employment. Options may vest only while the Participant is actively
employed by the Company. Thus, no vesting shall occur following the termination of the
Participant’s active employment with the Company, and all unvested Options shall automatically be
forfeited and cancelled upon the date that the Participant’s active employment with the Company
terminates. Only vested Options may be exercised. Subject to subparagraphs 4(b), 4(c) and 4(d),
vested Options shall be exercisable until, and shall automatically be forfeited and cancelled upon,
the earlier of the Expiration Date and the date that is the last trading day on the New York Stock
Exchange during the 90-calendar day period after the date the Participant’s employment with the
Company terminates. It is intended that an authorized severance leave of absence may extend
employment for purposes of determining the period when vested Options may be exercised. However,
an authorized severance leave of absence will not be treated as active employment, and, as a
result, vesting of unvested Options will not be extended by any such period.
(b) Retirement Prior to Age 62. If the Participant’s employment terminates prior to
the Vesting Date, by reason of the Participant’s Retirement (as defined below) prior to attaining
at least age 62, then: (i) a portion of the Options shall vest on the Participant’s last day of
active employment with the Company, with such portion determined in proportion to the Participant’s
active service (measured in calendar days) during the period commencing on the Grant Date and
ending on the Vesting Date (the “Vesting Period”); (ii) the Options shall continue to become
exercisable in accordance with Paragraph A.2 of this Agreement, with no change in the earliest date
of exercise as a result of the vesting provided by this subparagraph 4(b); and (iii) the Options
may be exercised by the Participant prior to the Expiration Date in accordance with this Agreement.
(c) Death, Total Disability, or Retirement on or After Age 62. If the Participant’s
employment terminates by reason of the Participant’s death, Total Disability (as defined below), or
Retirement after attaining at least age 62, then: (i) the Options shall become fully vested on the
Participant’s last day of active employment with the Company (which, for purposes of Total
Disability, means the effective date of Total Disability); (ii) the Options shall continue to
become exercisable in accordance with Paragraph A.2 of this Agreement, with no change in the
earliest date of exercise as a result of the vesting provided by this subparagraph 4(c); and (iii)
the Options may be exercised by the Participant’s legal representative (or any person to whom the
Options may be transferred by will or the applicable laws of descent and distribution), in the
event of death, or the Participant, in the event of Retirement or Total Disability, prior to the
Expiration Date in accordance with this Agreement.
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(d) Transfers to a Related Entity. In the event the Participant transfers to a Related
Entity (as defined below) as a result of actions by PepsiCo, the Options shall continue to vest and
to become exercisable after such transfer and shall remain outstanding and be exercisable in
accordance with this Agreement by treating the Participant’s employment with the Related Entity as
employment with the Company for purposes of this Agreement.
5. Buy-Out of Option Gains. Except as provided in Paragraph D.2, at any time after any
Option becomes exercisable, the Committee shall have the right, in its sole discretion and without
the consent of the Participant, to cancel such Option and to cause PepsiCo to pay to the
Participant the excess of the Fair Market Value of the shares of Common Stock covered by such
Option over the Option Exercise Price of such Option as of the date the Committee provides written
notice (the “Buy Out Notice”) of its intention to exercise such right. Payments of such buy out
amounts pursuant to this provision shall be effected by PepsiCo as promptly as possible after the
date of the Buy Out Notice and shall be made in shares of Common Stock. The number of shares shall
be the greatest number of whole shares determined by dividing the amount of the payment to be made
by the Fair Market Value of a share of Common Stock at the date of the Buy Out Notice. Payments of
any such buy out amounts shall be made net of the minimum applicable foreign, federal (including
FICA), state and local withholding taxes, if any.
6. No Rights as Shareholder. The Participant shall have no rights as a holder of
PepsiCo Common Stock with respect to the Options granted hereunder unless and until such Options
are exercised and the shares have been registered in the Participant’s name as owner.
B. Terms and Conditions Applicable to Restricted Stock Units. These terms and
conditions shall apply with respect to the restricted stock units granted to the Participant as
indicated on the Award Summary.
1. Grant. In consideration of the Participant remaining in the employ of the Company
and agreeing to be bound by the covenants of Paragraph C, PepsiCo hereby grants to the Participant,
on the terms and conditions set forth herein, the target number of restricted stock units indicated
on the Award Summary (the “Restricted Stock Units”). All Restricted Stock Units granted hereunder
are intended to be Performance Awards (as defined in the Plan) that satisfy the conditions for the
Performance Based Exception (as defined in the Plan) under Section 162(m) of the Internal Revenue
Code of 1986, as amended (the “Code”).
2. Payment. Subject to Paragraphs B.3 and B.4 below, the Restricted Stock Units earned
in accordance with Paragraph B.3 shall vest on the Vesting Date and be paid as soon as practicable
after such date (the “Payment Date”). Restricted Stock Units that become earned and payable shall
be settled in shares of PepsiCo Common Stock with the Participant receiving one share of PepsiCo
Common Stock for each Restricted Stock Unit earned. No fractional shares shall be delivered under
this Agreement, and so any fractional share that may be payable shall be rounded to the nearest
whole share. Any amount that the Company may be required to withhold upon the settlement of
Restricted Stock Units and/or the payment of dividend equivalents (see Paragraph B.5 below) in
respect of applicable foreign, federal (including FICA), state and local taxes, must be paid in
full at the time of the issuance of shares or payment of cash. Unless the Participant makes other
arrangements to satisfy this withholding obligation in accordance with procedures approved by the
Company in its discretion, the Company will withhold shares to satisfy the required withholding
obligation related to the settlement of Restricted Stock Units.
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3. Earning and Forfeiture of Restricted Stock Units. The Participant can earn between
0% and 125% of the target number of Restricted Stock Units granted hereunder. The number of
Restricted Stock Units that are earned and payable shall be determined based on the achievement of
performance targets. Any Restricted Stock Units that are not earned in accordance with this
Paragraph B.3 shall be forfeited and cancelled. Subject to the terms and conditions set forth
herein, the Restricted Stock Units shall be earned as follows:
(a) One-third of the Restricted Stock Units shall be earned based on the achievement of
specific 2009 performance targets. The specific performance targets and the percentage, between 0%
and 125%, of the one-third of the target number of Restricted Stock Units that shall be earned
based on the percent achievement of such performance targets shall be established by the Committee
and communicated to the Participant in the first ninety (90) days of 2009.
(b) One-third of the Restricted Stock Units shall be earned based on the achievement of
specific 2010 performance targets. The specific performance targets and the percentage, between 0%
and 125%, of the one-third of the target number of Restricted Stock Units that shall be earned
based on the percent achievement of such performance targets shall be established by the Committee
and communicated to the Participant in the first ninety (90) days of 2010.
(c) One-third of the Restricted Stock Units shall be earned based on the achievement of
specific 2011 performance targets. The specific performance targets and the percentage, between 0%
and 125%, of the one-third of the target number of Restricted Stock Units that shall be earned
based on the percent achievement of such performance targets shall be established by the Committee
and communicated to the Participant in the first ninety (90) days of 2011.
(d) Notwithstanding the achievement of any performance targets established under Paragraphs
B.3(a), (b) and (c) above, the Committee has the discretion to reduce the number of Restricted
Stock Units paid. In the case of a Participant’s death or Total Disability (as defined below), the
Committee’s right to exercise this discretion shall expire with respect to each one-third of the
Restricted Stock Units at the later of: (i) the Participant’s death or Total Disability (whichever
applies), or (ii) the date the Committee certifies the results for the specific performance targets
that relate to such one-third of the Restricted Stock Units, which certification shall occur within
60 days of the end of the related performance year. In all other cases, the Committee’s right to
exercise this discretion with respect to all of the Restricted Stock Units earned shall continue
until the date on which the Restricted Stock Units are paid to the Participant. Except in the case
of death or Total Disability, the Restricted Stock Units for which a Participant has satisfied the
performance criteria will be payable in one payment on the Payment Date.
4. Effect of Termination of Employment, Death, Retirement and Total Disability.
(a) Termination of Employment. Restricted Stock Units may vest and become payable only
while the Participant is actively employed by the Company. Thus, vesting ceases upon the
termination of the Participant’s active employment with the Company. Subject to subparagraphs 4(b),
4(c) and 4(d), all unvested Restricted Stock Units shall automatically be forfeited and canceled
upon the date that the Participant’s active employment with the Company terminates regardless of
whether any such Restricted Stock Units have previously been earned in accordance with Paragraph
B.3 above. An authorized severance leave of absence will not be treated as active employment, and,
as a result, the vesting of Restricted Stock Units will not be extended by any such period.
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(b) Retirement Prior to Age 62. If the Participant’s employment terminates prior to
the Vesting Date, by reason of the Participant’s Retirement (as defined below) prior to attaining
at least age 62, then a whole number of the target Restricted Stock Units granted hereunder shall
vest on the Participant’s last day of active employment with the Company, with such number
determined in proportion to the Participant’s active service (measured in calendar days) during the
Vesting Period. All Restricted Stock Units that vest in accordance with the foregoing sentence
shall remain subject to the earning and forfeiture provisions of Paragraphs B.2 and B.3 with
subparagraphs 3(a), 3(b) or 3(c) of Paragraph B.3 each being applied to one-third of the Restricted
Stock Units that vest in accordance with the foregoing sentence. For purposes of illustrating this
subparagraph 4(b), if the Participant’s active employment ends at the time half the Vesting Period
has elapsed, one-half of the target Restricted Stock Units granted hereunder will vest pursuant to
this subparagraph 4(b), equal thirds of which will be subject to the earning and forfeiture
provisions established pursuant to subparagraphs 3(a), 3(b) and 3(c) of Paragraph B.3, and all of
which shall be subject to subparagraph 3(d) of Paragraph B.3.
(c) Death, Total Disability, or Retirement on or After Age 62. If the Participant’s
employment terminates by reason of the Participant’s death, Total Disability (as defined below), or
Retirement after attaining at least age 62, then the Restricted Stock Units granted hereunder shall
become fully vested on the Participant’s last day of active employment with the Company (which, for
purposes of Total Disability, means the effective date of Total Disability). All such vested
Restricted Stock Units shall remain subject to the earning and forfeiture provisions of Paragraphs
B.2 and B.3, except that in the case of death or Total Disability payment of each one-third of the
Restricted Stock Units granted hereunder will be made within fourteen (14) days after the
Committee’s right to exercise discretion with respect to such one-third expires in accordance with
Paragraph B.3(d).
(d) Transfers to a Related Entity. In the event the Participant transfers to a Related
Entity (as defined below) as a result of actions by PepsiCo, the Restricted Stock Units shall
continue to vest (and their time of payment shall be determined) after such transfer by treating
the Participant’s employment with the Related Entity as employment with the Company for purposes of
this Agreement. All such Restricted Stock Units shall remain subject to the earning and forfeiture
provisions of Paragraphs B.2 and B.3.
5. Dividend Equivalents. During the Vesting Period, the Participant shall accumulate
dividend equivalents with respect to the Restricted Stock Units, which dividend equivalents shall
be paid in cash (without interest) to the Participant only if and when the applicable Restricted
Stock Units vest and become payable. Dividend equivalents shall equal the dividends actually paid
with respect to PepsiCo Common Stock during the Vesting Period while (and to the extent) the
Restricted Stock Units remain outstanding and unpaid. For purposes of determining the dividend
equivalents accumulated under this Paragraph B.5, any Restricted Stock Units that become payable
hereunder shall be considered to have been outstanding from the Grant Date.
6. No Rights as Shareholder. The Participant shall have no rights as a holder of
PepsiCo Common Stock with respect to the Restricted Stock Units granted hereunder unless and until
such Restricted Stock Units have been settled in shares of Common Stock that have been registered
in the Participant’s name as owner.
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C. Prohibited Conduct.
In consideration of the Company disclosing and providing access to Confidential Information,
as more fully described in Paragraph C.2 below, after the date hereof, the grant by the Company of
the Options and Restricted Stock Units, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Participant and the Company, intending to be
legally bound, hereby agree as follows.
1. Non-Competition and Non-Solicitation. The Participant hereby covenants and agrees
that at all times during his or her employment with the Company and for a period of twelve months
after the termination of the Participant’s employment with the Company for any reason whatsoever
(including a termination due to the Participant’s Retirement or Total Disability), he or she will
not, without the prior written consent of PepsiCo’s chief personnel officer or chief legal officer,
either directly or indirectly, for himself/herself or on behalf of or in conjunction with any other
person, partnership, corporation or other entity, engage in any activities prohibited in the
following Paragraphs C.1(a) through (c):
(a) The Participant shall not, in any country in which the Company operates, accept any
employment, assignment, position or responsibility, or provide services in any capacity or acquire
any ownership interest which involves the Participant’s Participation in an entity that markets,
sells, distributes or produces Covered Products, unless such entity makes retail sales or consumes
Covered Products without in any way competing with the Company;
(b) With respect to Covered Products, the Participant shall not directly or indirectly solicit
for competitive business purposes any customer or Prospective Customer of the Company called on,
serviced by, or contacted by the Participant in any capacity during his or her employment; or
(c) The Participant shall not in any way, directly or indirectly (including through someone
else acting on the Participant’s recommendation, suggestion, identification or advice), solicit any
Company employee to leave the Company’s employment or to accept any position with any other entity.
2. Non-Disclosure. In order to assist the Participant with his or her duties, the
Company shall continue to provide the Participant with access to confidential and proprietary
operational information and other confidential information which is either information not known by
actual or potential competitors, customers and third parties of the Company or is proprietary
information of the Company (“Confidential Information”). Such Confidential Information shall
include all non-public information the Participant acquired as a result of his or her positions
with the Company which might be of any value to a competitor of the Company, or which might cause
any economic loss or substantial embarrassment to the Company or its customers, bottlers,
distributors or suppliers if used or disclosed. Examples of such Confidential Information include,
without limitation, non-public information about the Company’s customers, suppliers, distributors
and potential acquisition targets; its business operations, structure and methods of operation; its
product lines, formulae and pricing; its processes, machines and inventions; its research and
know-how; its production techniques; its financial data; its advertising and promotional ideas and
strategy; information maintained in its computer systems; devices, processes, compilations of
information and records; and its plans and strategies. The Participant agrees that such
Confidential Information remains confidential even if committed to the Participant’s memory. The
Participant agrees, during the term of his or her employment and at all
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times thereafter, not to use, divulge, or furnish or make accessible to any third party,
company, corporation or other organization (including but not limited to, customers, competitors,
or governmental agencies), without the Company’s prior written consent, any Confidential
Information of the Company, except as necessary in his or her position with the Company.
3. Return of Confidential Information and Company Property. The Participant agrees
that whenever the Participant’s employment with the Company ends for any reason, (a) all documents
containing or referring to the Company’s Confidential Information as may be in the Participant’s
possession, or over which the Participant may have control, and all other property of the Company
provided to the Participant by the Company during the course of the Participant’s employment with
the Company will be returned by the Participant to the Company immediately, with no request being
required; and (b) all Company computer and computer-related equipment and software, and all Company
property, files, records, documents, drawings, specifications, lists, equipment, and similar items
relating to the business of the Company, whether prepared by the Participant or otherwise, coming
into the Participant’s possession or control during the course of his employment shall remain the
exclusive property of the Company, and shall be delivered by the Participant to the Company
immediately, with no request being required.
4. Misconduct. The Participant shall not engage in any of the following acts that are
considered to be contrary to the Company’s best interests during the term of his or her employment
with the Company: (a) violating the Company’s Code of Conduct, Xxxxxxx Xxxxxxx Policy or any other
written policies of the Company, (b) unlawfully trading in the securities of PepsiCo or of any
other company based on information gained as a result of his or her employment with the Company, or
(c) engaging in any activity which constitutes gross misconduct.
5. Reasonableness of Provisions. The Participant agrees that: (a) the terms and
provisions of this Agreement are reasonable and constitute an otherwise enforceable agreement to
which the terms and provisions of this Paragraph C are ancillary or a part of; (b) the
consideration provided by the Company under this Agreement is not illusory; (c) the restrictions
contained in this Paragraph C are necessary and reasonable for the protection of the legitimate
business interests and goodwill of the Company; and (d) the consideration given by the Company
under this Agreement, including, without limitation, the provision by the Company of Confidential
Information to the Participant, gives rise to the Company’s interest in the covenants set forth in
this Paragraph C.
6. Repayment and Forfeiture. The Participant specifically recognizes and affirms that
each of the covenants contained in Paragraphs C.1 through C.4 of this Agreement is a material and
important term of this Agreement which has induced the Company to provide for the award of the
Options and/or Restricted Stock Units granted hereunder, the disclosure of Confidential Information
referenced herein, and the other promises made by the Company herein. The Participant further
agrees that in the event that (i) the Company determines that the Participant has breached any term
of Paragraphs C.1 through C.4 or (ii) all or any part of Paragraph C is held or found invalid or
unenforceable for any reason whatsoever by a court of competent jurisdiction in an action between
the Participant and the Company, in addition to any other remedies at law or in equity the Company
may have available to it, the Company may in its sole discretion:
(a) Cancel any unexercised Options or unpaid Restricted Stock Units granted hereunder;
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(b) Require the Participant to pay to the Company all gains realized from the exercise of any
Options granted hereunder; and/or
(c) Require the Participant to pay to the Company the value (determined as of the Payment
Date) of any Restricted Stock Units granted hereunder that have been paid out.
7. Equitable Relief. In the event the Company determines that the Participant has
breached or attempted or threatened to breach any term of Paragraph C, in addition to any other
remedies at law or in equity the Company may have available to it, it is agreed that the Company
shall be entitled, upon application to any court of proper jurisdiction, to a temporary restraining
order or preliminary injunction (without the necessity of (a) proving irreparable harm, (b)
establishing that monetary damages are inadequate or (c) posting any bond with respect thereto)
against the Participant prohibiting such breach or attempted or threatened breach by proving only
the existence of such breach or attempted or threatened breach.
8. Extension of Restrictive Period. The Participant agrees that the period during
which the covenants contained in this Paragraph C shall be effective shall be computed by excluding
from such computation any time during which the Participant is in violation of any provision of
Paragraph C.
9. Acknowledgments. The Company and the Participant agree that it was their intent to
enter into a valid and enforceable agreement. The Participant and the Company thereby acknowledge
the reasonableness of the restrictions set forth in Paragraph C, including the reasonableness of
the geographic area, duration as to time and scope of activity restrained. The Participant further
acknowledges that his or her skills are such that he or she can be gainfully employed in
noncompetitive employment and that the agreement not to compete will not prevent him or her from
earning a living. The Participant agrees that if any covenant contained in Paragraph C of this
Agreement is found by a court of competent jurisdiction to contain limitations as to time,
geographical area, or scope of activity that are not reasonable and impose a greater restraint than
is necessary to protect the goodwill or other business interest of the Company, then the court
shall reform the covenant to the extent necessary to cause the limitations contained in the
covenant as to time, geographical area, and scope of activity to be restrained to be reasonable and
to impose a restraint that is not greater than necessary to protect the goodwill and other business
interests of the Company and to enforce the covenants as reformed.
10. Provisions Independent. The covenants on the part of the Participant in this
Paragraph C shall be construed as an agreement independent of any other agreement, including any
employee benefit agreement, and independent of any other provision of this Agreement, and the
existence of any claim or cause of action of the Participant against the Company, whether
predicated upon this Agreement or otherwise, shall not constitute a defense to the enforcement by
the Company of such covenants.
11. Notification of Subsequent Employer. The Participant agrees that the Company may
notify any person or entity employing the Participant or evidencing an intention of employing the
Participant of the existence and provisions of this Agreement.
12. Transfers to a Related Entity. In the event the Participant transfers to a Related
Entity (as defined below) as a result of actions by PepsiCo, any reference to “Company” in this
Paragraph C shall be deemed to refer to such Related Entity in addition to the Company.
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D. Additional Terms and Conditions.
1. Adjustment for Change in Common Stock. In the event of any change in the
outstanding shares of PepsiCo Common Stock by reason of any stock split, stock dividend,
recapitalization, reorganization, merger, consolidation, combination or exchange of shares,
spin-off or other similar corporate change, (a) the number and type of shares which the Participant
may purchase pursuant to the Options and the Option Exercise Price at which the Participant may
purchase such shares shall be adjusted, and (b) the number and type of shares to which the
Restricted Stock Units held by the Participant relate shall be adjusted, in the case of (a) and
(b), as may be, and to such extent (if any), determined to be appropriate and equitable by the
Committee.
2. Effect of Change in Control. In the event of a Change in Control (as defined in the
Plan), the following provisions shall apply:
(a) If the successor corporation (or affiliate thereto) (1) assumes the outstanding Options
and Restricted Stock Units granted hereunder or (2) replaces the outstanding Options and Restricted
Stock Units with equity awards that preserve the existing value of such Options and Restricted
Stock Units at the time of the Change in Control and provide for subsequent payout in accordance
with a vesting schedule and performance targets, as applicable, that are the same or more favorable
to the Participant than the vesting schedule and performance targets applicable to such Options and
Restricted Stock Units, then the outstanding Options and Restricted Stock Units or such substitutes
thereof shall remain outstanding and be governed by their respective terms and the provisions of
the Plan, subject to Paragraph D.2(c) below.
(b) If the outstanding Options and Restricted Stock Units granted hereunder are not assumed or
replaced in accordance with Paragraph D.2(a) above, then upon the Change in Control, (1) the
outstanding Options granted hereunder shall immediately vest and become exercisable and shall
remain outstanding in accordance with their terms and the outstanding Restricted Stock Units
granted hereunder shall immediately vest and shall be paid, as if 100% of the performance targets
have been achieved, immediately in accordance with their terms or, if later, as of the earliest
permissible date under Code Section 409A and (2), notwithstanding Paragraph D.2(b)(1) but after
taking into account the accelerated vesting set forth therein, the Board may, in its sole
discretion, provide for cancellation of the outstanding Options and Restricted Stock Units at the
time of the Change in Control in which case a payment of cash, property or a combination thereof
shall be made to the Participant that is determined by the Board in its sole discretion and that,
in the case of the Restricted Stock Units, is at least equal to the value of the consideration that
would be received in such Change in Control by the holders of PepsiCo’s securities relating to such
awards and, in the case of the outstanding Options, is at least equal to the excess, if any, of the
value of such consideration over the Option Exercise Price for such Options.
(c) If the outstanding Options and Restricted Stock Units granted hereunder are assumed or
replaced in accordance with Paragraph D.2(a) and the Participant’s employment with the Company (or
if applicable, a successor corporation) is terminated by the Company or such successor for any
reasons other than Cause or by the Participant for Good Reason, in each case, within the two-year
period commencing on the Change in Control, then, as of the date of the Participant’s termination,
(1) the outstanding Options granted hereunder shall immediately vest and become exercisable and
shall remain outstanding until the Expiration Date and (2) the outstanding Restricted Stock Units
granted hereunder shall immediately vest and shall be paid, as if 100% of the performance targets
have been achieved, immediately in accordance with their
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terms or, if later, as of the earliest permissible date under Code Section 409A. For purposes
of this Paragraph D.2, “Cause” and “Good Reason” are defined in the Plan and a termination for
Cause or Good Reason is subject to the terms and conditions set forth in the Plan.
3. Nontransferability. Unless the Committee specifically determines otherwise: (a) the
Options and Restricted Stock Units are personal to the Participant and, with respect to Options,
during the Participant’s lifetime, such Options may be exercised only by the Participant, and (b)
the Options and Restricted Stock Units shall not be transferable or assignable, other than in the
case of the Participant’s death by will, the laws of descent and distribution.
4. Definitions. As used in this Agreement, the following terms shall have the meanings
set forth below:
(a) “Covered Products” means any product which falls into one or more of the following
categories, so long as the Company is producing, marketing, selling or licensing such product
anywhere in the world: beverages, including without limitation carbonated soft drinks, tea, water,
juice drinks, sports drinks, coffee drinks, and value added dairy drinks; juices and juice
products; snacks, including salty snacks, sweet snacks, meat snacks, granola and cereal bars, and
cookies; hot cereals; pancake mixes; value-added rice products; pancake syrup; value-added pasta
products; ready-to-eat cereals; dry pasta products; or any product or service which the Participant
had reason to know was under development by the Company during the Participant’s employment with
the Company.
(b) “Fair Market Value” of a share of PepsiCo Common Stock on any date shall mean an amount
equal to the mean of the high and low sales prices for a share of PepsiCo Common Stock as reported
on the composite tape for securities listed on The New York Stock Exchange, Inc. on the date in
question (or if no sales of Common Stock were made on said Exchange on such date, on the next
preceding day on which sales were made on such Exchange).
(c) “Participation” shall be construed broadly to include, without limitation: (i) serving as
a director, officer, employee, consultant or contractor with respect to such a business entity;
(ii) providing input, advice, guidance or suggestions to such a business entity; or (iii) providing
a recommendation or testimonial on behalf of such a business entity or one or more products it
produces.
(d) “Prospective Customer” shall mean any individual or entity of which the Participant has
gained knowledge as a result of the Participant’s employment with the Company and with which the
Participant dealt with or had contact with during the six (6) months preceding his or her
termination of employment with the Company.
(e) “Related Entity” shall mean any entity as to which the Company directly or indirectly owns
20% or more of the entity’s voting securities, general partnership interests, or other voting or
management rights at the relevant time.
(f) “Retirement” shall mean (i) early, normal or late retirement under the U.S. pension plan
of the Company in which the Participant participates (if any), (ii) retirement as explicitly set
out in an individual agreement between the Company and the Participant for this purpose in effect
on the Grant Date, (iii) termination of employment after attaining at least age 55 with at least 10
years of service with the Company (or, if earlier, after attaining at least age 65 and completing
10
at least five years of service with the Company), or (iv) retirement as otherwise determined by
the Committee.
(g) “Total
Disability” shall mean being considered disabled under the Company’s Long Term
Disability Plan (as amended and restated from time to time), with such status having resulted in
benefit payments from such plan or another PepsiCo disability plan and 12 months having elapsed
since the Participant was so considered to be disabled from the cause of the current disability.
The effective date of a Participant’s Total Disability shall be the first day that all of the
foregoing requirements are met.
5. Notices. Any notice to be given to PepsiCo in connection with the terms of this
Agreement shall be addressed to PepsiCo at 000 Xxxxxxxx Xxxx Xxxx, Xxxxxxxx, Xxx Xxxx 00000, Attention: Vice President,
Compensation, or such other address as PepsiCo may hereafter designate to the Participant. Any such
notice shall be deemed to have been duly given when personally delivered, addressed as aforesaid,
or when enclosed in a properly sealed envelope or wrapper, addressed as aforesaid, and deposited,
postage prepaid, with the federal postal service.
6. Binding Effect.
(a) This Agreement shall be binding upon and inure to the benefit of any assignee or successor
in interest to PepsiCo, whether by merger, consolidation or the sale of all or substantially all of
PepsiCo’s assets. PepsiCo will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business and/or assets of
PepsiCo expressly to assume and agree to perform this Agreement in the same manner and to the same
extent that PepsiCo would be required to perform it if no such succession had taken place.
(b) This Agreement shall be binding upon and inure to the benefit of the Participant or his or
her legal representative and any person to whom the Options and Restricted Stock Units may be
transferred by will or the applicable laws of descent and distribution.
7. No Contract of Employment; Agreement’s Survival. This Agreement is not a contract
of employment. This Agreement does not impose on the Company any obligation to retain the
Participant in its employ and shall not interfere with the ability of the Company to terminate the
Participant’s employment relationship at any time. This Agreement shall survive the termination of
the Participant’s employment for any reason.
8. Registration, Listing and Qualification of Shares. The Committee may require that
the Participant make such representations and agreements and furnish such information as the
Committee deems appropriate to assure compliance with or exemption from the requirements of any
securities exchange, any foreign, federal, state or local law, any governmental regulatory body, or
any other applicable legal requirement, and PepsiCo Common Stock shall not be issued unless and
until the Participant makes such representations and agreements and furnished such information as
the Committee deems appropriate.
9. Amendment; Waiver. The terms and conditions of this Agreement may be amended in
writing by the chief personnel officer or chief legal officer of PepsiCo (or either of their
delegates), provided, however, that (i) no such amendment shall be adverse to the Participant
without the Participant’s written consent (except to the extent the Committee reasonably determines
that such amendment is necessary or appropriate to comply with applicable law,
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including the provisions of Code Section 409A and the regulations thereunder pertaining to the
deferral of compensation, or the rules and regulations of any stock exchange on which PepsiCo
Common Stock is listed or quoted); and (ii) the amendment must be permitted under the Plan. The
Company’s failure to insist upon strict compliance with any provision of this Agreement or failure
to exercise, or any delay in exercising, any right, power or remedy under this Agreement shall not
be deemed to be a waiver of such provision or any such right, power or remedy which the Board, the
Committee or the Company has under this Agreement.
10. Severability or Reform by Court. In the event that any provision of this Agreement
is deemed by a court to be broader than permitted by applicable law, then such provision shall be
reformed (or otherwise revised or narrowed) so that it is enforceable to the fullest extent
permitted by applicable law. If any provision of this Agreement shall be declared by a court to be
invalid or unenforceable to any extent, the validity or enforceability of the remaining provisions
of this Agreement shall not be affected.
11. Plan Controls. The Options, Restricted Stock Units and the terms and conditions
set forth herein are subject in all respects to the terms and conditions of the Plan and any
guidelines, policies or regulations which govern administration of the Plan, which shall be
controlling. The Committee reserves its rights to amend or terminate the Plan at any time without
the consent of the Participant; provided, however, that Options and Restricted Stock Units
outstanding under the Plan at the time of such action shall not, without the Participant’s written
consent, be adversely affected thereby (except to the extent the Committee reasonably determines
that such amendment is necessary or appropriate to comply with applicable law, including the
provisions of Code Section 409A and the regulations thereunder pertaining to the deferral of
compensation, or the rules and regulations of any stock exchange on which PepsiCo Common Stock is
listed or quoted). All interpretations or determinations of the Committee or its delegate shall be
final, binding and conclusive upon the Participant (and his or her legal representatives and any
recipient of a transfer of the Options or Restricted Stock Units permitted by this Agreement) on
any question arising hereunder or under the Plan or other guidelines, policies or regulations which
govern administration of the Plan.
12. Participant Acknowledgements. By entering into this Agreement, the Participant
acknowledges and agrees that:
(a) the Option and/or Restricted Stock Unit grant will be exclusively governed by the terms of
the Plan, including the right reserved by the Company to amend or cancel the Plan at any time
without the Company incurring liability to the Participant (except for Options and Restricted Stock
Units already granted under the Plan);
(b) the Participant has been provided a copy of PepsiCo’s Prospectus relating to the Plan, the
Options and the shares covered thereby, and the Restricted Stock Units;
(c) stock options and restricted stock units are not a constituent part of the Participant’s
salary and that the Participant is not entitled, under the terms and conditions of his/her
employment, or by accepting or being awarded the Options and/or Restricted Stock Units pursuant to
this Agreement to require options, restricted stock units or other awards to be granted to him/her
in the future under the Plan or any other plan;
(d) upon exercise of the Options or vesting of Restricted Stock Units the Participant will
arrange for payment to the Company an estimated amount to cover employee payroll taxes
12
resulting from the exercise and/or, to the extent necessary, any balance may be withheld from
the Participant’s wages;
(e) benefits received under the Plan will be excluded from the calculation of termination
indemnities or other severance payments;
(f) in the event of termination of the Participant’s employment, a severance or notice period
to which the Participant may be entitled under local law and which follows the date of termination
specified in a notice of termination or other document evidencing the termination of the
Participant’s employment will not be treated as active employment for purposes of this Agreement
and, as a result, vesting of unvested Options or Restricted Stock Units will not be extended by any
such period;
(g) the Participant will seek all necessary approval under, make all required notifications
under and comply with all laws, rules and regulations applicable to the ownership of stock options
and stock and the exercise of stock options, including, without limitation, currency and exchange
laws, rules and regulations; and, in the event that any of the Participant’s Options or Restricted
Stock Units, including any such awards previously granted, become subject to the Indian fringe
benefit tax (“FBT”), the Participant will be responsible for the FBT imposed on such awards and
consents to provide payment to the Company of the applicable FBT at the time such FBT is due in
accordance with the procedures specified from time to time by the Company; and
(h) this Agreement will be interpreted and applied so that the Options, in all cases, and
Restricted Stock Units, to the extent possible, will not be subject to Code Section 409A. To the
extent the Restricted Stock Units are subject to Code Section 409A because of the Participant’s
eligibility for Retirement, then payments limited to the earliest permissible payment date under
Code Section 409A shall be made following a Change in Control only (i) upon a Change in Control if
it qualifies under Code Section 409A(a)(2)(A)(v) (a “409A CIC”), and (ii) upon a termination of
employment if it occurs after a 409A CIC and it constitutes a Section 409A separation from service
(and in this case, the six-month delay of Code Section 409A(a)(2)(B)(i) shall apply to “specified
employees,” determined under the default rules of Section 409A or such other rules as apply
generally under the Company’s Section 409A plans). Notwithstanding any other provisions of this
Agreement, this Agreement will be modified to the extent the Committee reasonably determines that
is necessary or appropriate for such Options or Restricted Stock Units to comply with Code Section
409A.
13. Right of Set-Off. The Participant agrees, in the event that the Company in its
reasonable judgment determines that the Participant owes the Company or any Related Entity any
amount due to any loan, note, obligation or indebtedness, including but not limited to amounts owed
to the Company pursuant to the Company’s tax equalization program or the Company’s policies with
respect to travel and business expenses, and if the Participant has not satisfied such
obligation(s), then the Company may instruct the plan administrator to withhold and/or sell shares
of PepsiCo Common Stock acquired by the Participant upon exercise of his or her Options or
settlement of the Restricted Stock Units (to the extent such Options or Restricted Stock Units are
not subject to Code Section 409A), or the Company may deduct funds equal to the amount of such
obligation from other funds due to the Participant from the Company to the maximum extent permitted
by Code Section 409A.
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14. Electronic Delivery and Acceptance. The Participant hereby consents and agrees to
electronic delivery of any Plan documents, proxy materials, annual reports and other related
documents. The Participant hereby consents to any and all procedures that the Company has
established or may establish for an electronic signature system for delivery and acceptance of Plan
documents (including documents relating to any programs adopted under the Plan), and agrees that
his or her electronic signature is the same as, and shall have the same force and effect as, his or
her manual signature. Participant consents and agrees that any such procedures and delivery may be
effected by a third party engaged by the Company to provide administrative services related to the
Plan, including any program adopted under the Plan.
15. Data Privacy. Participant hereby acknowledges and consents to the collection, use,
processing and transfer of personal data as described in this paragraph. Participant is not
obliged to consent to such collection, use, processing and transfer of personal data. However,
failure to provide the consent may affect Participant’s ability to participate in the Plan. The
Company and Participant’s employer hold certain personal information about Participant, that may
include his/her name, home address and telephone number, date of birth, social security number or
other employee identification number, salary grade, hire data, salary, nationality, job title, any
shares of stock held in PepsiCo, or details of all options, restricted stock units or any other
entitlement to shares of stock awarded, canceled, purchased, vested, or unvested, for the purpose
of managing and administering the Plan (“Data”). PepsiCo and/or its subsidiaries will transfer
Data amongst themselves as necessary for the purpose of implementation, administration and
management of Participant’s participation in the Plan, and PepsiCo and/or any of its subsidiaries
may each further transfer Data to any third parties assisting PepsiCo in the implementation,
administration and management of the Plan. These recipients may be located throughout the world,
including the United States. Participant’s authorizes them to receive, possess, use, retain and
transfer the Data, in electronic or other form, for the purposes of implementing, administering and
managing Participant’s participation in the Plan, including any requisite transfer of such Data as
may be required for the administration of the Plan and/or the subsequent holding of shares of stock
on Participant’s behalf to a broker or other third party with whom Participant may elect to deposit
any shares of stock acquired pursuant to the Plan. Participant may, at any time, review Data,
require any necessary amendments to it or withdraw the consents herein in writing by contacting the
Company; however, withdrawing consent may affect Participant’s ability to participate in the Plan.
16. Stock Ownership / Exercise & Hold Guidelines. The Participant agrees as a
condition of this grant that, in the event that the Participant is subject to the Company’s Stock
Ownership or Exercise & Hold Guidelines, the Participant shall not sell any shares obtained upon
exercise of the Options or settlement of the Restricted Stock Units unless such sale complies with
the Stock Ownership and Exercise & Hold Guidelines as in effect from time to time.
17. Governing Law. Notwithstanding the provisions of Paragraphs D.11 and D.12, this
Agreement shall be governed, construed and enforced in accordance with the laws of the State of New
York, without giving effect to conflict of law rules or principles.
18. Choice of Venue. Notwithstanding the provisions of Paragraphs D.11 and D.12, any
action or proceeding seeking to enforce any provision of or based on any right arising out of this
Agreement may be brought against the Participant or the Company only in the courts of the State of
New York or, if it has or can acquire jurisdiction, in the United States District Court for the
Southern District of New York, and the Participant and the Company consents to the jurisdiction
14
of such courts (and of the appropriate appellate courts) in any such action or proceeding and
waives any objection to venue laid therein.
19. Entire Agreement. This Agreement contains all the understanding and agreements
between the Participant and the Company regarding the subject matter hereof.
15
PepsiCo Performance-Based Long-Term Incentive Award Summary
Executive Name:
Grant Date:
Xxxxx Xxxxx: $
Xxxxx Xxxxx: $
CORE ANNUAL AWARD
Restricted Stock Units:
Stock Options:
Stock Options:
CORE ANNUAL AWARD DETAILS
RESTRICTED STOCK UNITS AWARD
US Dollar Value Core Annual Award:
Percentage RSU:
Restricted Stock Unit Award Value:
Xxxxx Xxxxx: $
Number of Restricted Stock Units Granted:
Vesting Date*:
US Dollar Value Core Annual Award:
Percentage RSU:
Restricted Stock Unit Award Value:
Xxxxx Xxxxx: $
Number of Restricted Stock Units Granted:
Vesting Date*:
STOCK OPTIONS AWARD
US Dollar Value Core Annual Award:
Percentage Stock Options:
Stock Option Award Value:
Conversion Factor: 4x
Stock Option Award Face Value:
Option Exercise (Grant) Price: $
Number of Options Granted:
Vesting Date*:
Expiration Date:
US Dollar Value Core Annual Award:
Percentage Stock Options:
Stock Option Award Value:
Conversion Factor: 4x
Stock Option Award Face Value:
Option Exercise (Grant) Price: $
Number of Options Granted:
Vesting Date*:
Expiration Date:
| * | Vesting and exercisability are subject to the terms and conditions of the award |
AWARD ACCEPTANCE
This PepsiCo Performance-Based Long-Term Incentive Award (“Award”) is not considered valid unless
you accept it on or before [insert date 180 days after notification]. At the bottom of this Award
Summary, you can indicate that you either “Accept” or “Reject” the Award. By pressing the “Accept”
button below and accepting your Award, you acknowledge having received and read this Award Summary,
the Terms and Conditions document and the Plan under which this Award was granted and you agree to
comply with, and be bound by, the terms and conditions of the Plan, this Award Summary and the
Terms and Conditions document. If you “Reject” this Award, the Award will be null and void and
will NOT become yours. Likewise, if you do not either “Accept” or “Reject” this Award on or before
[insert date 180 days after notification], the Award will be null and void and will NOT become
yours.
| ACCEPT | REJECT |
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