Summary of Employment Arrangement with Irene Rosenfeld

Start Date: Your start date will be September 1, 2004.

Salary: Your starting annual base salary will be $775,000. Your annual base salary will be reviewed each year beginning in 2005.

Bonus: Each year you will be eligible to participate in our Executive Incentive Compensation Plan (EICP), which provides two bonus opportunities. First, an Annual Bonus with a target of 150% of your base salary and which is payable in the year following the bonus year. Second, a Premium Bonus with a target of 50% of your base salary and which vests and is payable in thirds over three years following the bonus year. Bonuses under the EICP are approved by the Compensation Committee of the Board of Directors and paid out at 0% - 200% of target, depending on business and personal performance.

Long-Term Incentive Program: You will be eligible to participate in Long-Term Incentives applicable to other similarly situated executives at PepsiCo. The size and terms of awards under the LTIP are determined by the Compensation Committee. The following is a summary of the Initial Grants and New Hire Grant that the Compensation Committee of PepsiCo’s Board of Directors has already approved for you, and a summary of Future Grants you would eligible for.

Initial Grants: On your hire date, you will receive an award under the terms of the LTIP with a value of $578,800 split 50%/50% between Stock Options and Restricted Stock Units. The Stock Options will have a face value of $1,157,500, and the actual number of options you are granted will be determined by dividing the face value by the fair market value of PepsiCo common stock on September 1, 2004. The Restricted Stock Units will have an award value of $289,400, and the actual number of units you are granted will be determined by dividing the award value by the fair market value of PepsiCo common stock on September 1, 2004.

New Hire Grant: On your hire date, you will receive an award under the terms of the LTIP with a value of $1,000,000, which will be entirely in restricted Stock Units. The actual number of units you are granted will be determined by dividing the award value by the fair market value of PepsiCo common stock on September 1, 2004.

Future Grants: Under the current terms of the LTIP, beginning in 2005, you will be eligible to receive an annual award with a target value of $1,378,000, or such other amount commensurate with similarly situated executives of PepsiCo, split 50%/50% between Stock Options and Restricted Stock Units. The actual value of the award will be determined by the Board of Directors, taking into account market conditions and individual and team performance.

Vesting: Under the current terms of the LTIP, on the third anniversary of the grant date, Stock Options become vested and exercisable. Also, Restricted Units become unrestricted and payable on the third anniversary, assuming that PepsiCo achieves its three-year RSU performance goals set by the Board of Directors.

Term: Options typically expire after 10 years. Because they are granted during the year, your 2004 options will have a 9 year and 5 month term and will expire February 1, 2014.

Exercisability: In the event of your retirement, death or disability, your vested options would remain exercisable for their entire term. In the event of any other termination of employment, your vested options would have to be exercised prior to your termination date.

SharePower: You will be eligible for additional grants of stock options under the LTIP equal to the options you would receive under PepsiCo’s SharePower Stock Option Program if you were eligible to participate in that program. You will first be eligible for SharePower grants in 2005. SharePower grants typically vest after three years, but would vest fully upon your retirement.

Deferred Compensation: You will be eligible to participate in PepsiCo’s Executive Income Deferral Program (EID), under which you are permitted to defer up to 100% of your base salary and annual bonus.

Executive Car Program: You will be eligible to participate in PepsiCo’s Executive Car Program, which generally covers your costs of leasing and maintaining an automobile of your choice (with certain limitations). In lieu of leasing an automobile, you may choose to receive a cash car allowance.

Active Health Benefits: You will be eligible to participate in PepsiCo’s benefits plan for salaried employees. Under this plan, PepsiCo pays a portion of the costs of medical, dental and vision / hearing coverage as well as basic disability and life insurance benefits.

Home Purchase Policy: You will be eligible for our standard policy for home sale / purchase / mortgage assistance.

Relocation Package: You will be covered by our standard relocation policy, which covers your actual relocation costs (e.g. traveling, shipping goods, temporary living) and provides you with a $62,500 cash allowance.

Pension: In accordance with applicable plans, you will be eligible for a retirement pension if you terminate employment (other than for cause) after completing at least ten years of service. Upon completion of ten years of service, you will receive ten years of “additional credited service” that will be added to your total years of actual service when calculating your total pension benefit. The amount of your pension benefit will be calculated in accordance with PepsiCo’s Pension Equalization Plan. Vesting occurs after five years, but vested benefits will not include the additional credited service mentioned above until ten years of actual service are completed.

Retiree Health Benefits: In accordance with applicable plans, if you terminate employment (other than for cause) after completing ten years of service, you will be eligible to participate in PepsiCo’s retiree medical benefits program. Under the current program, PepsiCo pays a portion of the costs of medical coverage.

Severance: In the event of your involuntary termination (other than for cause) during the first three years of employment, you will receive a lump sump severance payment equal to not less than one year of Base Salary and Target Annual Bonus (150% of Base Salary).

Term of Employment: Nothing in this offer serves as a guarantee of employment for any fixed length of time, and either you or PepsiCo may terminate your employment at any time.

Steve Reinemund

Peggy Moore

Irene Rosenfeld                            

            Date: 8/2/04