Dated 21 July 2006 PEPSICO, INC. as Issuer JPMORGAN CHASE BANK, N.A. as Agent as Paying Agent

AGENCY AGREEMENT

(amended and restated)

in respect of a U.S.$2,500,000,000

EURO MEDIUM TERM NOTE

PROGRAMME

CLAUSE

1.        DEFINITIONS AND INTERPRETATION

2.        APPOINTMENT OF AGENT AND PAYING AGENTS

3.        ISSUE OF GLOBAL NOTES

4.        DETERMINATION OF EXCHANGE DATE, ISSUE OF PERMANENT GLOBAL NOTES AND DEFINITIVE NOTES IN EXCHANGE FOR TEMPORARY GLOBAL NOTES AND DETERMINATION OF END OF RESTRICTED PERIOD

5.        ISSUE OF DEFINITIVE NOTES

6.        TERMS OF ISSUE

7.        PAYMENTS

8.        DETERMINATIONS AND NOTIFICATIONS IN RESPECT OF NOTES AND INTEREST DETERMINATION

9.        NOTICE OF ANY WITHHOLDING OR DEDUCTION

10.      DUTIES OF THE AGENT IN CONNECTION WITH EARLY REDEMPTION

11.      RECEIPT AND PUBLICATION OF NOTICES

12.      CANCELLATION OF NOTES, RECEIPTS, COUPONS AND TALONS

13.      ISSUE OF REPLACEMENT NOTES, RECEIPTS, COUPONS AND TALONS

14.      COPIES OF DOCUMENTS AVAILABLE FOR INSPECTION

15.      MEETINGS OF NOTEHOLDERS

16.      COMMISSIONS AND EXPENSES

17.      INDEMNITY

18.      REPAYMENT BY THE AGENT

19.      CONDITIONS OF APPOINTMENT

20.      COMMUNICATION BETWEEN THE PARTIES

21.      CHANGES IN AGENT AND OTHER PAYING AGENTS

22.      MERGER AND CONSOLIDATION

23.      NOTIFICATION OF CHANGES TO PAYING AGENTS

24.      CHANGE OF SPECIFIED OFFICE

25.      NOTICES

26.      TAXES AND STAMP DUTIES

27.      CURRENCY INDEMNITY

28.      AMENDMENTS

29.      DESCRIPTIVE HEADINGS

30.      GOVERNING LAW AND SUBMISSION TO JURISDICTION

31.      CONTRACTS (RIGHTS OF THIRD PARTIES) ▇▇▇ ▇▇▇▇

32.      COUNTERPARTS

APPENDIX

           FORM OF CALCULATION AGENCY AGREEMENT

SCHEDULE 1

           TERMS AND CONDITIONS OF THE NOTES

SCHEDULE 2

           FORMS OF GLOBAL AND DEFINITIVE NOTES, RECEIPTS, COUPONS AND TALONS

           PART I

                FORM OF TEMPORARY GLOBAL NOTE

           PART II

                FORM OF PERMANENT GLOBAL NOTE

           PART III

                FORM OF DEFINITIVE NOTE

           PART IV

                FORM OF COUPON

           PART V

                FORM OF RECEIPT

           PART VI

                FORM OF TALON

SCHEDULE 3

           FORM OF DEED OF COVENANT

SCHEDULE 4

           PROVISIONS FOR MEETINGS OF NOTEHOLDERS

SCHEDULE 5

           FORM OF PUT NOTICE

(1)

PEPSICO, INC. of ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (the Issuer);

(2)

JPMORGAN CHASE BANK, N.A. (previously known as The Chase Manhattan Bank) of ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇ (the Agent, which expression shall include any successor agent appointed in accordance with Clause 21); and

(3)

▇.▇. ▇▇▇▇▇▇ BANK LUXEMBOURG S.A. (previously known as Chase Manhattan Bank Luxembourg S.A.) of ▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇, ▇-▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ (together with the Agent, the Paying Agents, which expression shall include any additional or successor paying agent appointed in accordance with Clause 21 and Paying Agent shall mean any of the Paying Agents).

(B)

The parties hereto have agreed to make certain modifications to the Agency Agreement.

1.

DEFINITIONS AND INTERPRETATION

1.2

Without prejudice to the foregoing:

(a)

if appertaining to a Fixed Rate Note, in the form or substantially in the form set out in Part IV A of Schedule 2 or in such other form, having regard to the terms of issue of the Notes of the relevant Series, as may be agreed between the Issuer, the Agent and the relevant Dealer(s); or

(b)

if appertaining to a Floating Rate Note or an Indexed Interest Note, in the form or substantially in the form set out in Part IV B of Schedule 2 or in such other form, having regard to the terms of issue of the Notes of the relevant Series, as may be agreed between the Issuer, the Agent and the relevant Dealer(s); or

(c)

if appertaining to a Definitive Note which is neither a Fixed Rate Note nor a Floating Rate Note nor an Indexed Interest Note, in such form as may be agreed between the Issuer, the Agent and the relevant Dealer(s), and includes, where applicable, the Talon(s) appertaining thereto and any replacements for Coupons and Talons issued pursuant to Condition 10;

(a)

the right to attend and vote at any meeting of the Noteholders or any of them; and

(b)

the determination of how many and which Notes are for the time being outstanding for the purposes of paragraphs 2, 5, 6 and 9 of Schedule 4,

(a)

issued in exchange for the whole or part of any Temporary Global Note issued initially in respect of such Notes; or

(b)

in the case of Notes that meet the requirements of U.S. Treasury Regulations Section 1.163-5(c)(2)(i)(D)(3)(iii) or in the case of Notes with a maturity (at issue) of 183 days or less, issued initially in respect of such Notes;

2.

APPOINTMENT OF AGENT AND PAYING AGENTS

(a)

completing, authenticating and delivering Global Notes and (if required) completing, authenticating and delivering Definitive Notes;

(b)

giving effectuation instructions in respect of each Global Note which is a Eurosystem-eligible NGN;

(c)

exchanging Temporary Global Notes for Permanent Global Notes or Definitive Notes, as the case may be, in accordance with the terms of such Temporary Global Notes;

(d)

exchanging Permanent Global Notes for Definitive Notes in accordance with the terms of such Permanent Global Notes;

(e)

paying sums due on Global Notes and Definitive Notes, and Coupons and instructing Euroclear and Clearstream, Luxembourg to make appropriate entries in respect of all Global Notes which are NGNs;

(f)

exchanging Talons for Coupons in accordance with the Conditions;

(g)

determining the end of the restricted period applicable to each Tranche;

(h)

unless otherwise specified in the applicable Final Terms, determining the interest and/or other amounts payable in respect of the Notes in accordance with the Conditions;

(i)

arranging on behalf of the Issuer for notices to be communicated to the Noteholders;

(j)

preparing and sending monthly reports to the Bank of England and the Ministry of Finance of Japan and ensuring that, as directed by the Issuer, all necessary action is taken to comply with any reporting requirements of any competent authority in respect of any relevant currency as may be in force from time to time with respect to the Notes to be issued under the Programme;

(k)

subject to the Procedures Memorandum, submitting to the relevant Stock Exchange such number of copies of each Final Terms which relates to Notes which are to be listed as it may reasonably require;

(l)

receipt of certification required pursuant to United States Treasury Regulation 1.163-5(c)(2)(i)(D)(3) and the prompt onward delivery to the Issuer; and

(m)

performing all other obligations and duties imposed upon it by the Conditions and this Agreement.

3.

ISSUE OF GLOBAL NOTES

(a)

prepare a Temporary Global Note by attaching a copy of the applicable Final Terms to a copy of the applicable master Temporary Global Note and ensure that such Temporary Global Note bears the legend or legends required under Clause 2.4;

(b)

authenticate such Temporary Global Note;

(c)

deliver such Temporary Global Note to the specified common depositary (if the Temporary Global Note is a CGN) or specified common safekeeper (if the Temporary Global Note is an NGN) of Euroclear and/or Clearstream, Luxembourg and, in the case of a Temporary Global Note which is a Eurosystem-eligible NGN, instruct the common safekeeper to effectuate the same, against receipt from the common depositary or common safekeeper, as appropriate, of confirmation that such common depositary or common safekeeper, as appropriate, is holding the Temporary Global Note in safe custody for the account of Euroclear and/or Clearstream, Luxembourg;

(d)

if the Temporary Global Note is a CGN, instruct Euroclear or Clearstream, Luxembourg or both of them (as the case may be), unless otherwise agreed in writing between the Agent and the Issuer, (i) in the case of an issue of Notes not subscribed pursuant to a Subscription Agreement, to credit the Notes represented by such Temporary Global Note to the Agent’s distribution account, and (ii) in the case of Notes subscribed pursuant to a Subscription Agreement, to hold the Notes represented by such Temporary Global Note to the Issuer’s order;

(e)

if the Temporary Global Note is an NGN, instruct Euroclear and Clearstream, Luxembourg to make the appropriate entries in their records to reflect the initial outstanding aggregate principal amount of the relevant Tranche of Notes; and

(f)

ensure that the Notes of each Tranche are assigned a common code and ISIN by Euroclear and Clearstream, Luxembourg which are different from the common code and ISIN assigned to Notes of any other Tranche of the same Series until 40 days after the completion of the distribution of the Notes of such Tranche as notified by the Agent to the relevant Dealer.

(a)

in the case of the first Tranche of any Series of Notes, prepare and complete a Permanent Global Note by attaching a copy of the applicable Final Terms to a copy of the master Permanent Global Note and ensure that such Permanent Global Note bears the legend or legends required under Clause 2.4;

(b)

in the case of the first Tranche of any Series of Notes, authenticate such Permanent Global Note;

(c)

in the case of the first Tranche of any Series of Notes, deliver such Permanent Global Note if such Permanent Global Note is a CGN, to the common depositary for the time being on behalf of Euroclear and/or Clearstream, Luxembourg;

(d)

in any other case by attaching a copy of the applicable Final Terms to the Permanent Global Note applicable to the relevant Series (and such Permanent Global Note must bear the legend or legends required under Clause 2.4);

(e)

if the Permanent Global Note is an NGN, instruct Euroclear and Clearstream, Luxembourg to make the appropriate entries in their records to reflect the initial outstanding aggregate principal amount of the relevant Tranche of Notes;

(f)

in the case of a subsequent Tranche of any Series of Notes deliver the applicable Final Terms to the specified common depositary or common safekeeper, as the case may be, for attachment to the Permanent Global Note and, in the case where the Permanent Global Note is a CGN, make all appropriate entries on the relevant Schedule to the Permanent Global Note to reflect the increase in its nominal amount or, in the case where the Permanent Global Note is an NGN, instruct Euroclear and Clearstream, Luxembourg to make the appropriate entries in their records to reflect the increased outstanding aggregate principal amount of the relevant Series; and

(g)

ensure that the Notes of each Tranche are assigned a common code and ISIN by Euroclear and Clearstream, Luxembourg which are different from the

common code and ISIN assigned to the Notes of any other Tranche of the same Series until 40 days after the completion of the distribution of the Notes of such Tranche as notified by the Agent to the relevant Dealer.

(a)

a master Temporary Global Note for Sterling denominated Notes and a master Temporary Global Note for non-Sterling denominated Notes, each duly executed by a person or persons authorised to execute the same on behalf of the Issuer, which may be used by the Agent for the purpose of preparing a Temporary Global Note in accordance with Clause 3.2(a); and

(b)

a master Permanent Global Note for Sterling denominated Notes and a master Permanent Global for non-Sterling denominated Notes, each duly executed by a person or persons authorised to execute the same on behalf of the Issuer, which may be used by the Agent for the purpose of preparing a Permanent Global Note in accordance with Clause 4.

4.1

(a)        The Agent shall determine the Exchange Date for each Temporary Global Note in accordance with the terms thereof. Forthwith upon determining the Exchange Date in respect of any Tranche, the Agent shall notify such determination to the Issuer, the relevant Dealer, Euroclear and Clearstream, Luxembourg.

(b)

The Agent shall deliver, upon notice from Euroclear or Clearstream, Luxembourg, a Permanent Global Note or Definitive Notes, as the case may be, in accordance with the terms of the Temporary Global Note (which terms will include obtaining certification required for U.S. tax purposes pursuant to U.S. Treasury Regulation Section 1.163-5(c)(2)(i)(D)(3) for Notes other than (x) Notes meeting the requirements of U.S. Treasury Regulation Section 1.163-5(c)(2)(i)(D)(3)(iii) and (y) Notes with a maturity (at issue) of 183 days or less). Where a Temporary Global Note is to be exchanged for a Permanent Global Note, the Agent is hereby authorised on behalf of the Issuer:

(i)

in the case of the first Tranche of any Series of Notes, to prepare and complete a Permanent Global Note in accordance with the terms of the Temporary Global Note applicable to such Tranche by attaching a copy of the applicable Final Terms to a copy of the applicable master Permanent Global Note and ensure that such Permanent Global Note bears the legend or legends required under Clause 2.4;

(ii)

in the case of the first Tranche of any Series of Notes, to authenticate such Permanent Global Note;

(iii)

in the case of the first Tranche of any Series of Notes, to deliver such Permanent Global Note, if the applicable Final Terms indicate that this Global Note is not a New Global Note, to the common depositary which is holding the Temporary Global Note applicable to such Tranche for the time being on behalf of Euroclear and/or Clearstream, Luxembourg either in exchange for such Temporary Global Note or, in the case of a partial exchange, to enter details of such partial exchange of the Temporary Global Note in the relevant spaces in Schedule Two of both the Temporary Global Note and the Permanent Global Note, or, if the applicable Final Terms indicate that this Global Note is a New Global Note, to deliver to the common safekeeper; and

(iv)

in any other case, by attaching a copy of the applicable Final Terms to the Permanent Global Note applicable to the relevant Series and entering details of any exchange in whole or part as aforesaid. Such Permanent Global Note must bear the legend or legends required under Clause 2.4.

4.2

(a)        In the case of a Tranche in respect of which there is only one Dealer, the Agent will determine the end of the restricted period in respect of such Tranche as being the fortieth day following the date certified by the relevant Dealer to the Agent as being the date as of which distribution of the Notes of that Tranche was completed.

(b)

In the case of a Tranche in respect of which there is more than one Dealer but is not issued on a syndicated basis, the Agent will determine the end of the restricted period in respect of such Tranche as being the fortieth day following the latest of the dates certified by all the relevant Dealers to the Agent as being the respective dates as of which distribution of the Notes of that Tranche purchased by each such Dealer was completed.

(c)

In the case of a Tranche issued on a syndicated basis, the Agent will determine the end of the restricted period in respect of such Tranche as being the fortieth day following the date certified by the Lead Manager to the Agent as being the date as of which distribution of the Notes of that Tranche was completed.

(d)

Forthwith upon determining the end of the restricted period in respect of any Tranche, the Agent shall notify such determination to the Issuer, Euroclear, Clearstream, Luxembourg and the relevant Dealer(s) (in the case of a non-syndicated issue) or the Lead Manager (in the case of a syndicated issue).

5.

ISSUE OF DEFINITIVE NOTES

(a)

to authenticate such Definitive Note(s) in accordance with the provisions of this Agreement; and

(b)

to deliver such Definitive Note(s) to, or to the order of, Euroclear and/or Clearstream, Luxembourg either in exchange for such Global Notes or, in the case of a partial exchange of a Temporary Global Note, on entering details of any partial exchange of the Temporary Global Note in the relevant space in Schedule Two of such Temporary Global Note.

6.

TERMS OF ISSUE

7.

PAYMENTS

(a)

a day on which commercial banks and foreign exchange markets settle payments in London and any other place specified in the applicable Final Terms as an Additional Business Centre; and

(b)

either (1) in relation to a payment to be made in a Specified Currency other than euro, a day on which commercial banks and foreign exchange markets settle payments in the principal financial centre of the country of the relevant Specified Currency (if other than London) and which if the Specified Currency is Australian Dollars or New Zealand Dollars, shall be Sydney and Auckland respectively or (ii) in relation to a payment to be made in euro, is a Target Settlement Day. Target Settlement Day means any day on which the Trans-European Automated Real-Time Gross Settlement Express Transfer (TARGET) System is open.

7.3 (a)

The Agent shall ensure that no payments in respect of a Temporary Global Note will be made if certification of non-U.S. beneficial ownership as required by U.S. securities laws and U.S. Treasury regulations (in the form set out in the Temporary Global Note) has not been received from Euroclear and/or Clearstream, Luxembourg in accordance with the terms thereof and forwarded to the Issuer.

(b)

In the case of any Permanent Global Note that is issued initially in respect of any Notes (other than Notes with a maturity (at issue) of 183 days or less), the Agent shall ensure that no payments in respect of a Permanent Global Note will be made if the requirements of U.S. Treasury Regulations Section 1.163-5(c)(2)(i)(D)(3)(iii) are not met.

8.1

Determinations and Notifications

(a)

The Agent shall make all such determinations and calculations (howsoever described) as it is required to do under the Conditions, all subject to and in accordance with the Conditions.

(b)

The Agent shall not be responsible to the Issuer or to any third party (except in the event of negligence, default or bad faith of the Agent, as the case may be) as a result of the Agent having acted on any quotation given by any Reference Bank which subsequently may be found to be incorrect.

(c)

The Agent shall promptly notify (and confirm in writing to) the Issuer, the other Paying Agents and (in respect of a Series of Notes listed on a Stock Exchange) the relevant Stock Exchange of, inter alia, each Rate of Interest, Interest Amount and Interest Payment Date and all other amounts, rates and dates which it is obliged to determine or calculate under the Conditions as soon as practicable after the determination thereof and of any subsequent amendment thereto pursuant to the Conditions.

(d)

The Agent shall use its best endeavours to cause each Rate of Interest, Interest Amount and Interest Payment Date and all other amounts, rates and dates

which it is obliged to determine or calculate under the Conditions to be published as required in accordance with the Conditions as soon as possible after their determination or calculation.

(e)

If the Agent does not at any material time for any reason determine and/or calculate and/or publish the Rate of Interest, Interest Amount and/or Interest Payment Date in respect of any Interest Period or any other amount, rate or date as provided in this Clause, it shall forthwith notify the Issuer and the Paying Agents of such fact.

(f)

Determinations with regard to Notes (including, without limitation, Indexed Notes and Dual Currency Notes) shall be made by the Calculation Agent specified in the applicable Final Terms in the manner specified in the applicable Final Terms. Unless otherwise agreed between the Issuer and the relevant Dealer, such determinations shall be made on the basis of a Calculation Agency Agreement substantially in the form of the Appendix to this Agreement.

8.2

Interest Determination, Screen Rate Determination including Fallback Provisions

(a)

Where Screen Rate Determination is specified in the applicable Final Terms as the manner in which the Rate of Interest is to be determined, the Rate of Interest for each Interest Period will, subject as provided below, be either:

(i)

the offered quotation; or

(ii)

the arithmetic mean (rounded if necessary to the fourth decimal place, with 0.00005 being rounded upwards) of the offered quotations, is (expressed as a percentage rate per annum), for the Reference Rate which appears or appear, as the case may be, on the Relevant Screen Page as at 11.00 a.m. (London time) on the Interest Determination Date in question plus or minus (as indicated in the applicable Final Terms) the Margin (if any), all as determined by the Agent. If five or more such offered quotations are available on the Relevant Screen page, the highest (or, if there is more than one such highest quotation, one only of such quotations) and the lowest (or, if there is more than one such lowest quotation, one only of such quotations) shall be disregarded by the Agent for the purpose of determining the arithmetic mean (rounded as provided above) of such offered quotations.

(b)

If the Relevant Screen Page is not available or, if in the case of (a)(i) above, no such offered quotation appears or, in the case of (a)(ii) above, fewer than three such offered quotations appear, in each case as at the time specified in the preceding paragraph the Agent shall request the principal London office of each of the Reference Banks (as defined below) to provide the Agent with its offered quotation (expressed as a percentage rate per annum) for the Reference Rate at approximately 11.00 a.m. (London time) on the Interest Determination Date in question. If two or more of the Reference Banks provide the Agent with such offered quotations, the Rate of Interest for such Interest Period shall

be the arithmetic mean (rounded if necessary to the fourth decimal place with 0.00005 being rounded upwards) of such offered quotations plus or minus (as appropriate) the Margin (if any), all as determined by the Agent.

(c)

If on any Interest Determination Date one only or none of the Reference Banks provides the Agent with such offered quotations as provided in the preceding paragraph, the Rate of Interest for the relevant Interest Period shall be the rate per annum which the Agent determines as being the arithmetic mean (rounded if necessary to the fourth decimal place, with 0.00005 being rounded upwards) of the rates, as communicated to (and at the request of) the Agent by the Reference Banks or any two or more of them, at which such banks were offered, at approximately 11.00 a.m. (London time) on the relevant Interest Determination Date, deposits in the Specified Currency for a period equal to that which would have been used for the Reference Rate by leading banks in the London inter-bank market plus or minus (as appropriate) the Margin (if any) or, if fewer than two of the Reference Banks provide the Agent with such offered rates, the offered rate for deposits in the Specified Currency for a period equal to that-which would have been used for the Reference Rate, or the arithmetic mean (rounded as provided above) of the offered rates for deposits in the Specified Currency for a period equal to that which would have been used for the Reference Rate, at which, at approximately 11.00 a.m. (London time) on the relevant Interest Determination Date, any one or more banks (which bank or banks is or are in the opinion of the Issuer suitable for such purpose) informs the Agent it is quoting to leading banks in the London inter-bank market plus or minus (as appropriate) the Margin (if any), provided that, if the Rate of Interest cannot be determined in accordance with the foregoing provisions of this paragraph, the Rate of Interest shall be determined as at the last preceding Interest Determination Date (though substituting, where a different Margin is to be applied to the relevant Interest Period from that which applied to the last preceding Interest Period, the Margin relating to the relevant Interest Period, in place of the Margin relating to that last preceding Interest Period).

(d)

Reference Banks means, in the case of (a)(i) above, those banks whose offered rates were used to determine such quotation when such quotation last appeared on the Relevant Screen Page and, in the case of (a)(ii) above, those banks whose offered quotations last appeared on the Relevant Screen Page when no fewer than, three such offered quotations appeared.

(e)

If the Reference Rate from time to time in respect of Floating Rate Notes is specified in the applicable Final Terms as being other than the London inter-bank offered rate, the Rate of Interest in respect of such Notes will be determined as provided in the applicable Final Terms.

9.

NOTICE OF ANY WITHHOLDING OR DEDUCTION

10.

DUTIES OF THE AGENT IN CONNECTION WITH EARLY REDEMPTION

11.

RECEIPT AND PUBLICATION OF NOTICES

12.

CANCELLATION OF NOTES, RECEIPTS, COUPONS AND TALONS

12.2

A certificate stating:

(a)

the aggregate nominal amount of Notes which have been redeemed and the aggregate amount paid in respect thereof;

(b)

the number of Notes cancelled together (in the case of Notes in definitive form) with details of all unmatured Receipts, Coupons or Talons (if any) attached thereto or delivered therewith;

(c)

the aggregate amount paid in respect of interest on the Notes;

(d)

the total number by maturity date of Receipts, Coupons and Talons so cancelled; and

(e)

(in the case of Definitive Notes) the serial numbers of such Notes,

13.

ISSUE OF REPLACEMENT NOTES, RECEIPTS, COUPONS AND TALONS

(a)

paid such costs and expenses as may be incurred in connection therewith;

(b)

furnished it with such evidence and indemnity as the Issuer may reasonably require; and

(c)

in the case of any mutilated or defaced Note, Receipt, Coupon or Talon, surrendered it to the Agent.

14.

COPIES OF DOCUMENTS AVAILABLE FOR INSPECTION

(a)

the Amended and Restated Articles of Incorporation of the Issuer;

(b)

the audit reports and consolidated audited financial statements of the Issuer in respect of the financial years ended 31st December, 2005 and 25th December, 2004 and the condensed consolidated unaudited interim financial statements of the Issuer in respect of the quarterly periods ended 17th June, 2006 and 25th March, 2006;

(c)

the Programme Agreement, this Agreement, the forms of the Temporary Global Notes, the Permanent Global Notes, the Definitive Notes, the Receipts, the Coupons, the Talons and the Deed of Covenant;

(d)

a copy of the Prospectus;

(e)

any future prospectuses, offering circulars, information memoranda and supplements including Final Terms (save that the Final Terms relating to a Note which is neither admitted to trading on a regulated market in the European Economic Area nor offered in the European Economic Area in circumstances where a Prospectus is required to be published under the Prospectus Directive will only be available for inspection by a holder of such Note and such holder must produce evidence satisfactory to the Paying Agent as to the identity of such holder) to the Prospectus and any other documents incorporated therein by reference; and

(f)

in the case of each issue of Notes admitted to trading on the Gilt Edged and Fixed Interest Market, the syndication agreement (or equivalent document).

(a)

this Agreement and the forms of the Temporary Global Notes, the Permanent Global Notes, the Definitive Notes, the Receipts, the Coupons and the Talons;

(b)

the Deed of Covenant; and

(c)

the Final Terms applicable to each Note save that Final Terms relating to an unlisted Note will only be available for inspection by a holder of such Note and such holder must produce evidence satisfactory to the relevant Paying Agent as to identity.

15.

MEETINGS OF NOTEHOLDERS

16.

COMMISSIONS AND EXPENSES

17.

INDEMNITY

18.

REPAYMENT BY THE AGENT

19.

CONDITIONS OF APPOINTMENT

(a)

that it shall not exercise any right of set-off, lien or similar claim in respect thereof;

(b)

as provided in Clause 19.2; and

(c)

that it shall not be liable to account to the Issuer for any interest thereon.

20.

COMMUNICATION BETWEEN THE PARTIES

21.

CHANGES IN AGENT AND OTHER PAYING AGENTS

(a)

so long as any Notes are listed on any Stock Exchange, there will at all times be a Paying Agent (which may be the Agent) with a specified office in such place as may be required by the rules and regulations of the relevant Stock Exchange;

(b)

there will at all times be a Paying Agent (which may be the Agent) with a specified office in a principal financial centre in continental Europe; and

(c)

there will at all times be an Agent.

(a)

shall, in the case of the Agent, forthwith transfer all moneys held by it hereunder and the records referred to in Clauses 12.3 and 13.7 to the successor Agent hereunder; and

(b)

shall be entitled to the payment by the Issuer of its commissions, fees and expenses for the services therefore rendered hereunder in accordance with the terms of Clause 16.

22.

MERGER AND CONSOLIDATION

23.

NOTIFICATION OF CHANGES TO PAYING AGENTS

24.

CHANGE OF SPECIFIED OFFICE

25.

NOTICES

(a)

if delivered in person to the relevant address specified on the signature pages hereof and, if so delivered, shall be deemed to have been delivered at time of receipt; or

(b)

if sent by facsimile or telex to the relevant number specified on the signature pages hereof and, if so sent, shall be deemed to have been delivered immediately after transmission provided such transmission is confirmed by the answerback of the recipient (in the case of telex) or when an acknowledgement of receipt is received (in the case of facsimile).

26.

TAXES AND STAMP DUTIES

27.

CURRENCY INDEMNITY

28.

AMENDMENTS

29.

DESCRIPTIVE HEADINGS

30.

GOVERNING LAW AND SUBMISSION TO JURISDICTION

31.

CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999

32.

COUNTERPARTS

CALCULATION AGENCY AGREEMENT

(a)

such notice shall not expire less than 45 days before any date upon which any payment is due in respect of any Relevant Notes; and

(b)

notice shall be given in accordance with the Conditions, to the holders of the Relevant Notes at least 30 days prior to any removal of the Calculation Agent

7.2

Notwithstanding the provisions of Clause 7.1 above, if at any time:

(a)

the Calculation Agent becomes incapable of acting, or is adjudged bankrupt or insolvent, or files a voluntary petition in bankruptcy or makes an agreement for the benefit of its creditors or consents to the appointment of an administrator, liquidator or administrative or other receiver of all or any substantial part of its property, or it admits in writing its inability to pay or meet its debts as they may mature or suspends payment thereof, or if any order of any court is entered approving any petition filed by or against it under the provisions of any applicable bankruptcy or insolvency law or if a receiver of it or of all or a substantial part of its property is appointed or if any officer takes charge or control of the Calculation Agent or of its property or affairs for the purpose of rehabilitation, conservation or liquidation; or

(b)

the Calculation Agent fails duly to perform any function or duty imposed upon it by the Conditions and this Agreement, the Issuer may forthwith without notice terminate the appointment of the Calculation Agent, in which event notice thereof shall be given to the holders of the Relevant Notes in accordance with the Conditions as soon as practicable thereafter.

(a)

if delivered in person to the relevant address specified on the signature pages hereof and, if so delivered, shall be deemed to have been delivered at time of receipt; or

(b)

if sent by facsimile or telex to the relevant number specified on the signature pages hereof and, if so sent, shall be deemed to have been delivered

immediately after transmission provided such transmission is confirmed by the answerback of the recipient (in the case of telex) or when an acknowledgement of receipt is received (in the case of facsimile).

Series number

Issue Date

Maturity Date

Title and

Nominal

Amount

Annotation by

Calculation

Agent/Issuer

Telex No:

    62848 PEPSICO

Telefax No:

    ▇▇▇ ▇▇▇ ▇▇▇▇

Attention:

    Treasurer

Telex No:

    [                    ]

Telefax No:

    [                    ]

Attention:

    [                    ]

1.

Form, Denomination and Title

The Notes are in bearer form and, in the case of definitive Notes, serially numbered, in the Specified Currency and the Specified Denomination(s). Notes of one Specified Denomination may not be exchanged for Notes of another Specified Denomination. In the case of any Notes which are to be admitted to trading on a regulated market within the European Economic Area or offered to the public in a Member State of the European Economic Area in

circumstances which require the publication of a Prospectus under the Prospectus Directive, the minimum Specified Denomination shall be €50,000 (or its equivalent in any other currency as at the date of issue of the relevant Notes). In the case of Notes with a maturity (at issue) of 183 days or less, the minimum Specified Denomination shall be U.S.$500,000 (or its equivalent in any other currency as at the date of issue of the relevant Notes).

So long as the Notes are represented by a temporary global Note or a permanent global Note, the Notes shall be tradeable only in principal amounts of at least the Specified Denomination (or if more than one Specified Denomination, the lowest Specified Denomination) and, provided the relevant clearing system(s) so permit, integral multiples of the Tradeable Amount in excess thereof provided in the relevant Final Terms.

This Note is a Fixed Rate Note, a Floating Rate Note, a Zero Coupon Note, an Indexed Interest Note, an Indexed Redemption Amount Note, a Dual Currency Note or a Partly Paid Note or a combination of any of the foregoing, depending upon the Interest/Payment Basis shown in the applicable Final Terms.

Notes in definitive form are issued with Coupons attached, unless they are Zero Coupon Notes in which case references to Coupons and Couponholders in these Terms and Conditions are not applicable.

Subject as set out below, title to the Notes, Receipts and Coupons will pass by delivery. The Issuer and any Paying Agent may deem and treat the bearer of any Note, Receipt or Coupon as the absolute owner thereof (whether or not overdue and notwithstanding any notice of ownership or writing thereon or notice of any previous loss or theft thereof) for all purposes but, in the case of any global Note, without prejudice to the provisions set out in the next succeeding paragraph.

For so long as any of the Notes is represented by a global Note held on behalf of Euroclear Bank S.A./N.V. as operator of the Euroclear System (“Euroclear”) and/or Clearstream Banking, société anonyme (“Clearstream, Luxembourg”), each person (other than Euroclear or Clearstream, Luxembourg) who is for the time being shown in the records of Euroclear or of Clearstream, Luxembourg as the holder of a particular nominal amount of such Notes (in which regard any certificate or other document issued by Euroclear or Clearstream, Luxembourg as to the nominal amount of such Notes standing to the account of any person shall be conclusive and binding for all purposes save in the case of manifest error) shall be treated by the Issuer and any Paying Agent as the holder of such nominal amount of such Notes for all purposes other than with respect to the payment of principal or interest on the Notes, for which purpose the bearer of the relevant global Note shall be treated by the Issuer and any Paying Agent as the holder of such Notes in accordance with and subject to the terms of the relevant global Note (and the expressions “Noteholder” and “holder of Notes” and related expressions shall be construed accordingly). Notes which are represented by a

global Note will be transferable only in accordance with the rules and procedures for the time being of Euroclear or of Clearstream, Luxembourg, as the case may be.

References to Euroclear and/or Clearstream, Luxembourg shall, whenever the context so permits, except in relation to Notes in NGN form, be deemed to include a reference to any additional or alternative clearing system approved by the Issuer and the Agent.

2.

Status of the Notes

The Notes and the relative Receipts and Coupons are direct, unconditional, unsubordinated and (subject to the provisions of Condition 3) unsecured obligations of the Issuer and rank pari passu without any preference among themselves and equally with all other outstanding unsecured and unsubordinated obligations of the Issuer, present and future, but, in the event of insolvency, only to the extent permitted by applicable laws relating to creditors’ rights.

3.

Negative Pledge

For so long as Notes of any Series shall be outstanding neither the Issuer nor any Restricted Subsidiary (as defined below) will incur, suffer to exist or guarantee any indebtedness for borrowed money (“Debt”), secured by a mortgage, pledge or lien (a “Mortgage”) on any Principal Property (as defined below) or on any shares of stock of any Restricted Subsidiary unless the Issuer or such Restricted Subsidiary secures or causes such Restricted Subsidiary to secure the Notes of such Series (and any other Debt of the Issuer or such Restricted Subsidiary, at the option of the Issuer or such Restricted Subsidiary, not subordinate to the Notes) equally and rateably with or prior to such secured Debt for as long as such Debt remains so secured, unless after giving effect thereto the aggregate amount of all such secured Debt does not exceed 15% of Consolidated Net Tangible Assets (as defined below). This restriction will not, however, apply to Debt secured by:

(i)

Mortgages existing prior to the Issue Date of such Notes; or

(ii)

Mortgages on property of or shares of stock of (or other interests) or Debt of, any corporation existing at the time such corporation becomes a Restricted Subsidiary; or

(iii)

Mortgages in favour of the Issuer or a Restricted Subsidiary; or

(iv)

Mortgages in favour of, or required by, any governmental bodies; or

(v)

Mortgages on property or shares of stock (or other interests) or Debt of any corporation existing at the time of the acquisition thereof (including acquisition through merger or consolidation) or to secure the payment of all or any part of the purchase price thereof or construction or improvement thereon or to secure any Debt incurred

prior to, at the time of, or within 365 days after the later of the acquisition, the completion of construction or improvement, or the commencement of full operation of such property or within 365 days after the acquisition of such shares or Debt for the purpose of financing all or any part of the purchase price thereof of construction or improvement thereon; and

(vi)

any extension, renewal, or replacement of any Mortgage referred to in any of the preceding subparagraphs (i) to (v) inclusive.

“Consolidated Net Tangible Assets” means the total amount of assets (less applicable depreciation, amortisation, and other valuation reserves) of the Company and its Restricted Subsidiaries, after deducting therefrom (i) all current liabilities of the Company and its Restricted Subsidiaries (excluding any such liabilities that are intercompany items) and (ii) all goodwill, trade names, trademarks, patents, unamortised debt discount and expense and other like intangibles, all as set forth on the latest consolidated balance sheet of the Company and its Restricted Subsidiaries prepared in accordance with US GAAP.

“Principal Property” means any single manufacturing or processing plant, office building, or warehouse owned or leased by the Issuer or a Restricted Subsidiary other than a plant, warehouse, office building, or portion thereof which, in the opinion of the Issuer’s Board of Directors, is not of material importance to the business conducted by the Issuer and its Restricted Subsidiaries as an entirety.

“Restricted Subsidiary” means at any time any subsidiary of the Issuer except a subsidiary which is at the time an Unrestricted Subsidiary.

“Unrestricted Subsidiary” means any other subsidiary of the Issuer (not at the time designated a Restricted Subsidiary) (i) the major part of whose business consists of finance, banking, credit, leasing, insurance, financial services, or other similar operations, or any combination thereof, (ii) substantially all the assets of which consist of the capital stock of one or more such subsidiaries, or (iii) designated as such by the Issuer’s Board of Directors; provided that such designation will not constitute a violation of the terms of the Notes. Any subsidiary designated as a Restricted Subsidiary may be designated as an Unrestricted Subsidiary unless such designation will constitute a violation of these Terms and Conditions.

The transfer of a Principal Property to an Unrestricted Subsidiary and the change in designation of a subsidiary owning a Principal Property from a Restricted Subsidiary to an Unrestricted Subsidiary is not restricted by the terms of the Notes, save that such a change in designation shall not be permitted if such change in designation would result in a violation of the foregoing negative pledge provision.

4.

  Interest

(a)

Interest on Fixed Rate Notes

Each Fixed Rate Note bears interest on its nominal amount (or, if it is a Partly Paid Note, the amount paid up) from (and including) the Interest Commencement Date at the rate(s) per annum equal to the Rate(s) of Interest so specified in the applicable Final Terms payable in arrear on the Interest Payment Date(s) in each year and on the Maturity Date so specified if that does not fall on the Interest Payment Date. The first payment of interest will be made on the Interest Payment Date next following the Interest Commencement Date and, if the first anniversary of the Interest Commencement Date is not an Interest Payment Date, will amount to the Initial Broken Amount. If the Maturity Date is not an Interest Payment Date, interest from (and including) the preceding Interest Payment Date (or the Interest Commencement Date, as the case may be) to (but excluding) the Maturity Date will amount to the Final Broken Amount.

If interest is required to be calculated for a period ending other than on an Interest Payment Date, such interest shall be calculated by applying the Rate of Interest to each Specified Denomination, multiplying such sum by the applicable Fixed Day Count Fraction, and rounding the resultant figure to the nearest sub-unit of the relevant Specified Currency, half of any such sub-unit being rounded upwards or otherwise in accordance with applicable market convention.

In these Terms and Conditions:

“Day Count Fraction” means, in respect of the calculation of an amount of interest in accordance with this Condition 4(a):

(i)

if “Actual/Actual (ICMA)” is specified in the applicable Final Terms:

(a)

in the case of Notes where the number of days in the relevant period from (and including) the most recent Interest Payment Date (or, if none, the Interest Commencement Date) to (but excluding) the relevant payment date (the “Accrual Period”) is equal to or shorter than the Determination Period during which the Accrual Period ends, the number of days in such Accrual Period divided by the product of (1) the number of days in such Determination Period and (2) the number of Determination Dates that would occur in one calendar year assuming interest was to be payable in respect of the whole of that year; or

(b)

in the case of Notes where the Accrual Period is longer than the Determination Period during which the Accrual Period ends, the sum of:

(1)

the number of days in such Accrual Period falling in the Determination Period in which the Accrual Period

begins divided by the product of (x) the number of days in such Determination Period and (y) the number of Determination Dates that would occur in one calendar year assuming interest was to be payable in respect of the whole of that year; and

(2)

the number of days in such Accrual Period falling in the next Determination Period divided by the product of (x) the number of days in such Determination Period and (y) the number of Determination Dates that would occur in one calendar year assuming interest was to be payable in respect of the whole of that year; and

(ii)

if “30/360” is specified in the applicable Final Terms, the number of days in the period from (and including) the most recent Interest Payment Date (or, if none, the Interest Commencement Date) to (but excluding) the relevant payment date (such number of days being calculated on the basis of 12 30-day months) divided by 360; and

“Determination Period” means, the period from (and including) a Determination Date to (but excluding) the next Determination Date (including, where either the Interest Commencement Date or the final Interest Payment Date is not a Determination Date, the period commencing on the first Determination Date prior to, and ending on the first Determination Date following after, such date); and

“sub-unit” means, with respect to any currency other than euro, the lowest amount of such currency that is available as legal tender in the country of such currency and means, with respect to euro, one cent.

(b)

  Interest on Floating Rate Notes and Indexed Interest Notes

(i)

Interest Payment Dates

Each Floating Rate Note and Indexed Interest Note bears interest on its nominal amount (or, if it is a Partly Paid Note, the amount paid up) from (and including) the Interest Commencement Date and such interest will be payable in arrear on either:

(A)

the Interest Payment Date(s) in each year (the period from (and including) the Interest Commencement Date to (but excluding) the first Interest Payment Date and each successive period from (and including) an Interest Payment Date to (but excluding) the next Interest Payment Date each being an “Interest Period”); or

(B)

if no express Interest Payment Date(s) is/are specified in the applicable Final Terms, each date (each an “Interest Payment Date”) which falls the number of months or other period specified as the Specified Period in the applicable Final Terms after the preceding Interest Payment

Date or, in the case of the first Interest Payment Date, after the Interest Commencement Date.

If a business day convention is specified in the applicable Final Terms and (x) if there is no numerically corresponding day on the calendar month in which an Interest Payment Date should occur or (y) if any Interest Payment Date would otherwise fall on a day which is not a Business Day, then, if the business day convention specified is:

(1)

in any case where Interest Periods are specified in accordance with Condition 4(b)(i)(B) above, the Floating Rate Convention, such Interest Payment Date (i) in the case of (x) above, shall be the last day that is a Business Day in the relevant month and the provisions of (B) below shall apply mutatis mutandis or (ii) in the case of (y) above, shall be postponed to the next day which is a Business Day unless it would thereby fall into the next calendar month, in which event (A) such Interest Payment Date shall be brought forward to the immediately preceding Business Day and (B) each subsequent Interest Payment Date shall be the last Business Day in the month which falls the number of months or other period specified as the Interest Period in the applicable Final Terms after the preceding applicable Interest Payment Date occurred; or

(2)

the Following Business Day Convention, such Interest Payment Date shall be postponed to the next day which is a Business Day; or

(3)

the Modified Following Business Day Convention, such Interest Payment Date shall be postponed to the next day which is a Business Day unless it would thereby fall into the next calendar month, in which event such Interest Payment Date shall be brought forward to the immediately preceding Business Day; or

(4)

the Preceding Business Day Convention, such Interest Payment Date shall be brought forward to the immediately preceding Business Day.

In this Condition, “Business Day” means a day which is both:

(A)

a day on which commercial banks and foreign exchange markets settle payments and are open for general business (including dealing in foreign exchange and foreign currency deposits) in London and any Additional Business Centre specified in the applicable Final Terms; and

(B)

either (1) in relation to any sum payable in a Specified Currency other than euro, a day on which commercial banks and foreign exchange markets settle payments in the principal financial centre of the country of the relevant Specified Currency (if other than London and which if the Specified Currency is Australian dollars or New Zealand dollars shall be Sydney or Auckland, respectively) or (2) in relation to any sum payable in euro, a day on which the TARGET System is open. In

these Terms and Conditions, “TARGET System” means the Trans-European Automated Real-Time Gross Settlement Express Transfer (TARGET) System.

(ii)

Rate of Interest

The Rate of Interest payable from time to time in respect of Floating Rate Notes and Indexed Interest Notes will be determined in the manner specified in the applicable Final Terms.

(A)

ISDA Determination for Floating Rate Notes

Where ISDA Determination is specified in the applicable Final Terms as the manner in which the Rate of Interest is to be determined, the Rate of Interest for each Interest Period will be the relevant ISDA Rate plus or minus (as indicated in the applicable Final Terms) the Margin (if any). For the purposes of this sub-paragraph (A), “ISDA Rate” for an Interest Period means a rate equal to the Floating Rate that would be determined by the Agent or other person specified in the applicable Final Terms under an interest rate swap transaction if the Agent or that other person were acting as Calculation Agent for that swap transaction under the terms of an agreement incorporating the 2000 ISDA Definitions, each as amended and updated as at the Issue Date of the first Tranche of the Notes, published by the International Swaps and Derivatives Association, Inc. (the “ISDA Definitions”) and under which:

(1)

the Floating Rate Option is as specified in the applicable Final Terms;

(2)

the Designated Maturity is a period specified in the applicable Final Terms; and

(3)

the relevant Reset Date is either (i) if the applicable Floating Rate Option is based on the London inter-bank offered rate (LIBOR) or on the Euro-zone inter-bank offered rate (EURIBOR) for a currency, the first day of that Interest Period or (ii) in any other case, as specified in the applicable Final Terms.

For the purposes of this sub-paragraph (A), “Floating Rate”, “Calculation Agent”, “Floating Rate Option”, “Designated Maturity” and “Reset Date” have the meanings given to those terms in the ISDA Definitions.

When this sub-paragraph (A) applies, in respect of each relevant Interest Period the Agent will be deemed to have discharged its obligations under Condition 5(b)(iv) in respect of the determination of the Rate of Interest if it has determined the Rate of Interest in respect

of such Interest Period in the manner provided in this sub-paragraph (A).

(B)

Screen Rate Determination for Floating Rate Notes

Where Screen Rate Determination is specified in the applicable Final Terms as the manner in which the Rate of Interest is to be determined for each Interest Period the Rate of Interest for each Interest Period will, subject as provided below, be either:

(1)

the offered quotation; or

(2)

the arithmetic mean (rounded if necessary to the fourth decimal place, with 0.00005 being rounded upwards) of the offered quotations,

(expressed as a percentage rate per annum) for the Reference Rate which appears or appear, as the case may be, on the Relevant Screen Page as at 11.00 a.m. (London time, in the case of LIBOR, or Brussels time, in the case of EURIBOR) on the Interest Determination Date in question plus or minus (as indicated in the applicable Final Terms) the Margin (if any), all as determined by the Agent. If five or more such offered quotations are available on the Relevant Screen Page, the highest (or, if there is more than one such highest quotation, one only of such quotations) and the lowest (or, if there is more than one such lowest quotation, one only of such quotations) shall be disregarded by the Agent for the purpose of determining the arithmetic mean (rounded as provided above) of such offered quotations.

The Agency Agreement contains provisions for determining the Rate of Interest in the event that the Relevant Screen Page is not available or if, in the case of (1) above, no such quotation appears or, in the case of (2) above, fewer than three such offered quotations appear, in each case as at the time specified in the preceding paragraph.

If the Reference Rate from time to time in respect of Floating Rate Notes is specified in the applicable Final Terms as being other than LIBOR or EURIBOR, the Rate of Interest in respect of such Notes will be determined as provided in the applicable Final Terms.

(iii)

Minimum and/or Maximum Interest Rate

If the applicable Final Terms specifies a Minimum Rate of Interest for any Interest Period, then, in the event that the Rate of Interest in respect of such Interest Period determined in accordance with the above provisions is less than such Minimum Rate of Interest, the Rate of Interest for such Interest Period shall be such Minimum Rate of Interest. If the applicable Final Terms specifies a Maximum Rate of Interest for any Interest Period, then, in the event that the Rate of Interest in respect of such Interest Period determined in accordance with the above provisions is greater than such Maximum Rate of

Interest, the Rate of Interest for such Interest Period shall be such Maximum Interest Rate.

(iv)

Determination of Rate of Interest and Calculation of Interest Amounts

The Agent, in the case of Floating Rate Notes, and the Calculation Agent, in the case of Indexed Interest Notes, will, at or as soon as practicable after each time at which the Rate of Interest is to be determined, determine the Rate of Interest for the relevant Interest Period Subject to any Minimum Rate of Interest or Maximum Rate of Interest specified in the applicable Final Terms. In the case of Indexed Interest Notes, the Calculation Agent will notify the Agent of the Rate of Interest for the relevant Interest Period as soon as practicable after calculating the same.

The Agent will calculate the amount of interest (the “Interest Amount”) payable on the Floating Rate Notes or Indexed Interest Notes in respect of each Specified Denomination for the relevant Interest Period. Each Interest Amount shall be calculated by applying the Rate of Interest to the Specified Denomination, multiplying such sum by the applicable Day Count Fraction, and rounding the resultant figure to the nearest U.S. cent (or its approximate equivalent in the relevant Specified Currency), half a U.S. cent (or its approximate equivalent in the relevant Specified Currency) being rounded upwards.

“Day Count Fraction” means, in respect of the calculation of an amount of interest for any Interest Period:

(i)

if “Actual/365” or “Actual/Actual” is specified in the applicable Final Terms, the actual number of days in the Interest Period divided by 365 (or, if any portion of that Interest Period falls in a leap year, the sum of (A) the actual number of days in that portion of the Interest Period falling in a leap year divided by 366 and (B) the actual number of days in that portion of the Interest Period falling in a non-leap year divided by 365);

(ii)

if “Actual/365 (Fixed)” is specified in the applicable Final Terms, the actual number of days in the Interest Period divided by 365;

(iii)

if “Actual/360” is specified in the applicable Final Terms, the actual number of days in the Interest Period divided by 360;

(iv)

if “30/360”, “360/360” or “Bond Basis” is specified in the applicable Final Terms, the number of days in the Interest Period divided by 360 (the number of days to be calculated on the basis of a year of 360 days with 12 30-day months (unless (a) the last day of the Interest Period is the 31st day of a month but the first day of the Interest Period is a day other than the 30th or 31st day of a month, in which case the month that includes that last day shall not be considered to be shortened to a 30-day month, or (b) the last day of the Interest Period is the last day

of the month of February, in which case the month of February shall not be considered to be lengthened to a 30-day month)); and

(v)

if “30E/360” or “Eurobond Basis” is specified in the applicable Final Terms, the number of days in the Interest Period divided by 360 (the number of days to be calculated on the basis of a year of 360 days with 12 30-day months, without regard to the date of the first day or last day of the Interest Period unless, in the case of an Interest Period ending on the Maturity Date, the Maturity Date is the last day of the month of February, in which case the month of February shall not be considered to be lengthened to a 30-day month).

(v)

Notification of Rate of Interest and Interest Amounts

The Agent will cause the Rate of Interest and each Interest Amount for each Interest Period and the relevant Interest Payment Date to be notified to the Issuer and any stock exchange on which the relevant Floating Rate Notes or Indexed Interest Notes are for the time being listed and notice thereof to be published in accordance with Condition 13 as soon as possible after their determination but in no event later than the fourth London Business Day (as defined in Condition 6(c)) thereafter. Each Interest Amount and Interest Payment Date so notified may subsequently be amended (or appropriate alternative arrangements made by way of adjustment) without prior notice in the event of an extension or shortening of the Interest Period. Any such amendment will be promptly notified to each stock exchange on which the relevant Floating Rate Notes or Indexed Interest Notes are for the time being listed and to the Noteholders in accordance with Condition 14.

(vi)

Certificates to be Final

All certificates, communications, opinions, determinations, calculations, quotations and decisions given, expressed, made or obtained for the purposes of the provisions of this Condition 4(b), whether by the Agent or, if applicable, the Calculation Agent, shall (in the absence of negligence, wilful misconduct, bad faith or manifest error) be binding on the Issuer, the Agent, the Calculation Agent (if applicable), the other Paying Agents and all Noteholders, Receiptholders and Couponholders and (in the absence as aforesaid) no liability to the Issuer, the Noteholders, the Receiptholders or the Couponholders shall attach to the Agent or the Calculation Agent (if applicable) in connection with the exercise or non-exercise by it of its powers, duties and discretions pursuant to such provisions.

(c)

Dual Currency Notes

In the case of Dual Currency Notes, if the rate or amount of interest falls to be determined by reference to an exchange rate, the rate or amount of interest payable shall be determined in the manner specified in the applicable Final Terms.

(d)

Partly Paid Notes

In the case of Partly Paid Notes (other than Partly Paid Notes which are Zero Coupon Notes), interest will accrue as aforesaid on the paid-up nominal amount of such Notes and otherwise as specified in the applicable Final Terms.

(e)

Accrual of Interest

Each Note (or in the case of the redemption of part only of a Note, that part only of such Note) will cease to bear interest (if any) from the date for its redemption unless, upon due presentation thereof, payment of principal is improperly withheld or refused. In such event, interest will continue to accrue until whichever is the earlier of:

(1)

the date on which all amounts due in respect of such Note have been paid; and

(2)

five days after the date on which the full amount of the moneys payable has been received by the Agent and notice to that effect has been given in accordance with Condition 13 or individually.

5.

Payments

(a)

  Method of Payment

Subject as provided below:

(i)

payments in a Specified Currency other than euro will be made by transfer to an account in the relevant Specified Currency (which, in the case of a payment in Japanese Yen to a non-resident of Japan, shall be a non-resident account) maintained by the payee with, or by a cheque in such Specified Currency drawn on, a bank (which, in the case of a payment in Japanese Yen to a nonresident of Japan, shall be an authorised foreign exchange bank) in the principal financial centre of the country of such Specified Currency (which, if the Specified Currency is Australian dollars or New Zealand dollars, shall be Sydney or Auckland, respectively); and

(ii)

payments in euro will be made by credit or transfer to an euro account (or any other amount to which euro may be credited or transferred) specified by the payee or, at the option of the payee, by a euro cheque.

Payments will be subject in all cases to any fiscal or other laws and regulations applicable thereto in the place of payment, but without prejudice to the provisions of Condition 7.

Subject to the final paragraph of Condition 5(b) below, no payment on any Note or Coupon will be made at any office of a Paying Agent or any other agency maintained by the Issuer in the United States (as defined in Condition 7) nor will any payment be made by any transfer to an account in, or by mail to an address in, the United States except as may be permitted by U.S. tax law

in effect at the time of such payment without detriment to the Issuer in the opinion of the Issuer.

(b)

Presentation of Notes, Receipts and Coupons

Payments of principal in respect of definitive Notes will (subject as provided below) be made in the manner provided in paragraph (a) above only against surrender of Receipts and definitive Notes, and payments of interest in respect of definitive Notes will (subject as provided below) be made as aforesaid only against surrender of Coupons, in each case at the specified office of any Paying Agent outside the United States.

Payments of instalments of principal (if any), other than the final instalment, will (subject as provided below) be made in the manner provided in paragraph (a) above against surrender of the relevant Receipt. Payment of the final instalment will be made in the manner provided in paragraph (a) above only against surrender of the relevant Note. Each Receipt must be presented for payment of the relevant instalment together with the definitive Note to which it appertains. Receipts presented without the definitive Note to which they appertain do not constitute valid obligations of the Issuer. Upon the date on which any definitive Note becomes due and repayable, unmatured Receipts (if any) relating thereto (whether or not attached) shall become void and no payment shall be made in respect thereof.

Fixed Rate Notes in definitive form (other than Dual Currency Notes or Indexed Redemption Amount Notes) should be presented for payment together with all unmatured Coupons appertaining thereto (which expression shall for this purpose include Coupons falling to be issued on exchange of mature Talons), failing which the amount of any missing unmatured Coupon (or, in the case of payment not being made in full, the same proportion of the amount of such missing unmatured Coupon as the sum so paid bears to the sum due) will be deducted from the sum due for payment. Each amount of principal so deducted will be paid in the manner mentioned above against surrender of the relative missing Coupon at any time before the expiry of 10 years after the Relevant Date (as defined in Condition 7) in respect of such principal (whether or not such Coupon would otherwise have become void under Condition 8) or, if later, five years from the date on which such Coupon would otherwise have become due, but in no event thereafter.

Upon any Fixed Rate Note becoming due and repayable prior to its Maturity Date, all unmatured Talons (if any) appertaining thereto will become void and no further Coupons will be issued in respect thereof.

Upon the date on which any Floating Rate Note, Dual Currency Note or Indexed Note in definitive form becomes due and repayable, unmatured Coupons and Talons (if any) relating thereto (whether or not attached) shall become void and no payment or, as the case may be, exchange for further Coupons shall be made in respect thereof.

If the due date for redemption of any definitive Note is not an Interest Payment Date, interest (if any) accrued in respect of such Note from (and including) the preceding Interest Payment Date or, as the case may be, the Interest Commencement Date shall be payable only against surrender of the relevant definitive Note.

Payments of principal and interest (if any) in respect of Notes represented by any global Note will (subject as provided below) be made in the manner specified above in relation to definitive Notes and otherwise in the manner specified in the relevant global Note against presentation or surrender, as the case may be, of such global Note at the specified office of any Paying Agent outside the United States. A record of each payment made against presentation or surrender of such global Note, distinguishing between any payment of principal and any payment of interest, will be made on such global Note by such Paying Agent and such record shall be prima facie evidence that the payment in question has been made.

The holder of a global Note shall be the only person entitled to receive payments in respect of Notes represented by such global Note and the Issuer will be discharged by payment to, or to the order of, the holder of such global Note in respect of each amount so paid. Each of the persons shown in the records of Euroclear or Clearstream, Luxembourg as the beneficial holder of a particular nominal amount of Notes represented by such global Note must look solely to Euroclear or Clearstream, Luxembourg, as the case may be, for his share of each payment so made by the Issuer to, or to the order of, the holder of such global Note. No person other than the holder of such global Note shall have any claim against the Issuer in respect of any payments due on that global Note.

Notwithstanding the foregoing, U.S. dollar payments of principal and interest in respect of the Notes will be made at the specified office of a Paying Agent in the United States if:

(i)

the Issuer has appointed Paying Agents with specified offices outside the United States with the reasonable expectation that such Paying Agents would be able to make payment in U.S. dollars at such specified offices outside the United States of the full amount of principal and interest on the Notes in the manner provided above when due;

(ii)

payment of the full amount of such principal and interest at all such specified offices outside the United States is illegal or effectively precluded by exchange controls or other similar restrictions on the full payment or receipt of principal and interest in U.S. dollars; and

(iii)

such payment is then permitted under United States law without involving, in the opinion of the Issuer, adverse tax consequences to the Issuer.

(c)

Payment Day

If the date for payment of any amount in respect of any Note, Receipt or Coupon is not a Payment Day, the holder thereof shall not be entitled to payment until the next following Payment Day in the relevant place and shall not be entitled to further interest or other payment in respect of such delay. For these purposes, “Payment Day” means any day which is both:

(i)

a day on which commercial banks and foreign exchange markets settle payments in the relevant place of presentation; and

(ii)

a Business Day (as defined in Condition 4(b)(i)).

(d)

Interpretation of Principal and Interest

Any reference in these Terms and Conditions to principal in respect of the Notes shall be deemed to include, as applicable:

(i)

any additional amounts which may be payable with respect to principal under Condition 7;

(ii)

the Final Redemption Amount of the Notes;

(iii)

the Early Redemption Amount of the Notes;

(iv)

the Optional Redemption Amount(s) (if any) of the Notes;

(v)

in relation to Notes redeemable in instalments, the Instalment Amounts;

(vi)

in relation to Zero Coupon Notes, the Amortised Face Amount; and

(vii)

any premium and any other amounts which may be payable by the Issuer under or in respect of the Notes.

Any reference in these Terms and Conditions to interest in respect of the Notes shall be deemed to include, as applicable, any additional amounts which may be payable with respect to interest under Condition 7.

6.

Redemption and Purchase

(a)

At Maturity

Unless previously redeemed or purchased and cancelled as specified below, each Note will be redeemed by the Issuer at its Final Redemption Amount specified in, or determined in the manner specified in, the applicable Final Terms in the relevant Specified Currency on the Maturity Date.

(b)

Redemption for Tax Reasons

(i)

If as a result of:

(I)

any actual or proposed change in or amendment to the laws (or any regulations or rulings promulgated thereunder) of the United States or any political subdivision or taxing authority thereof or therein, or any change in the application, official interpretation or enforcement of such laws, regulations or rulings;

(II)

any action taken by a taxing authority which action is generally applied or is taken with respect of the Issuer;

(III)

a decision rendered by a court of competent jurisdiction in the United States or any political subdivision thereof, whether or not such decision was rendered with respect to the Issuer; or

(IV)

a technical advice memorandum or letter ruling, or other administrative pronouncement issued by the United States Internal Revenue Service on substantially the same facts as those pertaining to the Issuer,

which change, amendment, action, decision, memorandum, letter ruling or pronouncement becomes effective or issued on or after the Issue Date of the first Tranche of the Notes (such laws, regulations, rulings, actions, decisions, memoranda or letter rulings being hereinafter collectively referred to as “United States Law”), there is a substantial likelihood that the Issuer on the occasion of the next payment due in respect of the Notes (in accordance with Condition 5) will be required to pay any additional amounts (as defined in Condition 7, the “Additional Amounts”), and such obligation cannot be avoided by the Issuer taking, in the view of the Issuer, reasonable measures available to it that require no material cost to the Issuer, the Issuer may at its option redeem such Notes in whole, but not in part, at any time (in the case of Notes other than Floating Rate Notes or Indexed Interest Notes) or on any Interest Payment Date (in the case of Floating Rate Notes or Indexed Interest Notes). Notice of such redemption of the Notes will be given to the holders of the Notes not more than 60 nor less than 30 days prior to the date fixed for redemption by publication in accordance with Condition 13.

(ii)

Notes redeemed pursuant to this Condition 6(b) will be redeemed at their Early Redemption Amount referred to in paragraph (e) below together (if appropriate) with interest accrued to (but excluding) the date of redemption.

(c)

Redemption at the Option of the Issuer

If the Issuer is specified in the applicable Final Terms as having an option to redeem, the Issuer may, having given:

(i)

not less than 30 nor more than 60 days’ notice to the Noteholders in accordance with Condition 13; and

(ii)

not less than 15 days before the giving of the notice referred to in (i), notice to the Agent;

(which notices shall be irrevocable), redeem all or some only of the Notes then outstanding on the Optional Redemption Date(s) and at the Optional Redemption Amount(s) specified in, or determined in the manner specified in, the applicable Final Terms together, if appropriate, with interest accrued to (but excluding) the Optional Redemption Date(s). Any such redemption must be of a nominal amount equal to the Minimum Redemption Amount or a Higher Redemption Amount, both as indicated in the applicable Final Terms. In the case of a partial redemption of Notes, the Notes to be redeemed (“Redeemed Notes”) will be selected individually by lot, in the case of Redeemed Notes represented by definitive Notes, and in accordance with the rules of Euroclear and/or Clearstream, Luxembourg (to be reflected in the records of Euroclear and Clearstream, Luxembourg as either a pool factor or a reduction in nominal amount, at their discretion), in the case of Redeemed Notes represented by a global Note, not more than 60 days prior to the date fixed for redemption (such date of selection being hereinafter called the “Selection Date”). In the case of Redeemed Notes represented by definitive Notes, a list of the serial numbers of such Redeemed Notes will be published in accordance with Condition 13 not less than 30 days prior to the date fixed for redemption. The aggregate nominal amount of Redeemed Notes represented by definitive Notes shall bear the same proportion to the aggregate nominal amount of all Redeemed Notes as the aggregate nominal amount of definitive Notes outstanding bears to the aggregate nominal amount of the Notes outstanding, in each case on the Selection Date, provided that such first mentioned nominal amount shall, if necessary, be rounded downwards to the nearest integral multiple of the Specified Denomination, and the aggregate nominal amount of Redeemed Notes represented by a global Note shall be equal to the balance of the Redeemed Notes. No exchange of the relevant global Note will be permitted during the period from (and including) the Selection Date to (and including) the date fixed for redemption pursuant to this sub-paragraph (c) and notice to that effect shall be given by the Issuer to the Noteholders in accordance with Condition 13 at least 10 days prior to the Selection Date.

(d)

Redemption at the Option of the Noteholders

If the Noteholders are specified in the applicable Final Terms as having an option to redeem, upon the holder of any Note giving to the Issuer in accordance with Condition 13 not less than 30 nor more than 60 days’ notice (which notice shall be irrevocable) or such other period of notice as is specified in the applicable Final Terms, the Issuer will upon the expiry of such notice redeem, subject to, and in accordance with, the terms specified in the applicable Final Terms, in whole (but not in part), such Note on the Optional Redemption Date and at the Optional Redemption Amount specified in, or determined in the manner specified in, the applicable Final Terms together, if appropriate, with interest accrued to (but excluding) the Optional Redemption Date.

If this Note is in definitive form, to exercise the right to require redemption of this Note the holder of this Note must deliver such Note at the specified office outside the United States of any Paying Agent at any time during normal business hours of such Paying Agent falling within the notice period, accompanied by a duly completed and signed notice of exercise in the form (for the time being current) obtainable from any specified office of any Paying Agent (a “Put Notice”) and in which the holder must specify a bank account (or, if payment is by cheque, an address) to which payment is to be made under this Condition.

Any Put Notice given by a holder of any Note pursuant to this paragraph shall be irrevocable except where prior to the due date of redemption an Event of Default shall have occurred and be continuing in which event such holder, at its option, may elect by notice to the Issuer to withdraw the notice given pursuant to this paragraph and instead to declare such Note forthwith due and payable pursuant to Condition 9.

(e)

Early Redemption Amounts

For the purpose of paragraph (b) above and Condition 9, the Notes will be redeemed at the Early Redemption Amount calculated as follows:

(i)

in the case of Notes with a Final Redemption Amount equal to the Issue Price, at the Final Redemption Amount thereof; or

(ii)

in the case of Notes (other than Zero Coupon Notes but including Instalment Notes and Partly Paid Notes) with a Final Redemption Amount which is or may be less or greater than the Issue Price or which is payable in a Specified Currency other than that in which the Notes are denominated, at the amount specified in, or determined in the manner specified in, the applicable Final Terms or, if no such amount or manner is so specified in the Final Terms, at their nominal amount; or

(iii)

in the case of Zero Coupon Notes, at an amount (the “Amortised Face Amount”) equal to the product of:

(A)

the Reference Price; and

(B)

the sum of the figure 1 and the Accrual Yield, raised to the power of x, where “x” is a fraction the numerator of which is equal to the number of days (calculated on the basis of a 360-day year consisting of 12 months of 360 days each) from (and including) the Issue Date of the first Tranche of the Notes to (but excluding) the date fixed for redemption or (as the case may be) the date upon which such Note becomes due and repayable and the denominator of which is 360.

Where such calculation is to be made for a period which is not a whole number of years, it shall be made on the basis of a 360-day year

consisting of 12 months of 30 days each and, in the case of an incomplete month, the actual number of days elapsed or such other calculation basis as may be specified in the applicable Final Terms.

(f)

Instalments

If the Notes are repayable in instalments, they will be redeemed in the Instalment Amounts and on the Instalment Dates. In the case of early redemption, the Early Redemption Amount will be determined pursuant to paragraph (e) above.

(g)

Partly Paid Notes

If the Notes are Partly Paid Notes, they will be redeemed, whether at maturity, early redemption or otherwise, in accordance with the provisions of this Condition and the applicable Final Terms.

(h)

Purchases

The Issuer or any of its subsidiaries may at any time purchase Notes (provided that, in the case of definitive Notes, all unmatured Receipts, Coupons and Talons appertaining thereto are purchased therewith) at any price in the open market or otherwise. Such Notes may be held, reissued, resold or, at the option of the Issuer, surrendered to any Paying Agent for cancellation.

(i)

Cancellation

All Notes which are redeemed will forthwith be cancelled (together with all unmatured Receipts and Coupons attached thereto or surrendered therewith at the time of redemption). All Notes so cancelled and the Notes purchased and cancelled pursuant to paragraph (h) above (together with all unmatured Receipts and Coupons cancelled therewith) shall be forwarded to the Agent and cannot be reissued or resold.

(j)

Late Payment on Zero Coupon Notes

If the amount payable in respect of any Zero Coupon Note upon redemption of such Zero Coupon Note pursuant to paragraph (a), (b), (c) or (d) above or upon its becoming due and repayable as provided in Condition 9 is improperly withheld or refused, the amount due and repayable in respect of such Zero Coupon Note shall be the amount calculated as provided in paragraph (e) (iii) above as though the references therein to the date fixed for the redemption or the date upon which such Zero Coupon Note becomes due and payable were replaced by references to the date which is the earlier of:

(i)

the date on which all amounts due in respect of such Zero Coupon Note have been paid; and

(ii)

five days after the date on which the full amount of the moneys payable has been received by the Agent and notice to that effect has

been given to the Noteholder either in accordance with Condition 13 or individually.

7.

Taxation

The Issuer will, subject to the exceptions and limitations set forth below, pay such Additional Amounts as are necessary in order that the net payment by the Issuer or any Paying Agent of the principal of and interest (made in accordance with Condition 5) (including any discount) on a Note or Coupon to a holder who is a United States Alien (as such term is defined below), after deduction or withholding for or on account of any present or future tax, assessment or governmental charge of the United States (as such term is defined below), or a political subdivision or authority thereof or therein, imposed by withholding with respect to the payment, will not be less than the amount provided for in such Note or such Coupon to be then due and payable; provided, however, that the foregoing obligation to pay Additional Amounts shall not apply to:

(i)

any tax, assessment or governmental charge that would not have been so imposed but for the existence of any present or former connection between such holder (or between a fiduciary, settlor, beneficiary, member or shareholder of, or holder of power over, such holder, if such holder is an estate, trust, partnership or corporation) and the United States, including, without limitation, such holder (or fiduciary, settlor, beneficiary, member, shareholder or holder of a power):

(A)

being or having been present or engaged in a trade or business in the United States or having or having had a permanent establishment therein; or

(B)

having a current or former relationship with the United States, including a relationship as a citizen or resident or being treated as a resident thereof; or

(C)

being or having been a personal holding company, a controlled foreign corporation, a passive foreign investment company, a foreign personal holding company with respect to the United States, a corporation that has accumulated earnings to avoid United States federal income tax or a private foundation or other tax-exempt organisation; or

(D)

being or having been an actual or a constructive “10-per-cent. shareholder” of the Issuer as defined in Section 871(h)(3) of the Code, a bank receiving interest described under Section 881(c)(3)(A) of the Code or a direct or indirect subsidiary of the Issuer; or

(ii)

any holder who is a fiduciary or partnership or other than the sole beneficial owner of the Note or Coupon, but only to the extent that a beneficiary or settlor with respect to such fiduciary or member of such

partnership or a beneficial owner of the Note or Coupon would not have been entitled to the payment of an additional amount had such beneficiary, settlor, member or beneficial owner been the holder of such Note or Coupon; or

(iii)

any tax, assessment or governmental charge that would not have been imposed or withheld but for the failure of the holder, if required, to comply with certification, identification or information reporting requirements under United States income tax laws, without regard to any tax treaty, with respect to the payment, concerning the nationality, residence, identity or connection with the United States of the holder or a beneficial owner of such Note or Coupon, if such compliance is required by United States income tax laws, without regard to any tax treaty, as a precondition to relief or exemption from such tax, assessment or governmental charge; or

(iv)

any tax, assessment or governmental charge that would not have been so imposed or withheld but for the presentation by the holder of such Note or Coupon for payment on a date more than 30 days after the Relevant Date; or

(v)

any estate, inheritance, gift, sales, transfer, excise, wealth or personal property tax or any similar tax, assessment or governmental charge; or

(vi)

any tax, assessment or governmental charge that is (a) payable otherwise than by withholding by the Issuer or a Paying Agent from the payment of the principal of or interest on such Note or Coupon or (b) required to be withheld by any Paying Agent from any such payment if such payment can be made without such withholding by any other Paying Agent; or

(vii)

any withholding or deduction that is imposed on a payment to an individual and is required to be made pursuant to European Council Directive 2003/48/EC on the taxation of savings income or any law implementing or complying with, or introduced in order to conform to, such Directive; or

(viii)

any Note or Coupon presented for payment by or on behalf of a holder who would have been able to avoid such withholding or deduction by presenting the relevant Note or Coupon to another Paying Agent in a Member State of the EU; or

(ix)

any combination of items (i), (ii), (iii), (iv), (v), (vi), (vii) or (viii).

As used with this Condition, “United States” means the United States of America (including the States and the District of Columbia), the Commonwealth of Puerto Rico and each possession of the United States of America and place subject to its jurisdiction and “United States Alien” means any person that is for United States federal income tax purposes (A) a foreign corporation, (B) a foreign partnership one or more of the members of which is,

for United States federal income tax purposes, a foreign corporation, a non-resident alien individual or a non-resident alien fiduciary of a foreign estate or trust, (C) a non-resident alien individual or (D) a non-resident alien fiduciary of a foreign estate or trust.

As used herein, the “Relevant Date” means the date on which such payment first becomes due, except that, if the full amount of the moneys payable has not been duly received by the Agent on or prior to such due date, it means the date on which, the full amount of such moneys having been so received, notice to that effect is duly given to the Noteholders in accordance with Condition 13.

8.

Prescription

The Notes, Receipts and Coupons will become void unless presented for payment within a period of 10 years (in the case of principal) and five years (in the case of interest) after the Relevant Date (as defined in Condition 7) therefor.

There shall not be included in any Coupon sheet issued on exchange of a Talon any Coupon the claim for payment in respect of which would be void pursuant to this Condition or Condition 5(b) or any Talon which would be void pursuant to Condition 5(b).

9.

Events of Default

If any one or more of the following events (each an “Event of Default”) shall have occurred and be continuing:

(i)

default in the payment of any interest on any Note when it becomes due and payable, and continuance of such default for a period of 30 days; or

(ii)

default in the payment of the principal amount of (or premium, if any, on) any Note as and when the same shall become due by the terms of the Note and continuance of such default for a period of 7 days; or

(iii)

default in the performance or breach of any covenant, warranty or other obligation of the Issuer in respect of the Notes (other than a covenant or warranty in respect of the Notes a default in the performance of which or the breach of which is elsewhere in this Condition specifically dealt with), and continuance of such default or breach for a period of 90 days after there has been given, by registered or certified mail, to the Issuer by the Noteholder a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a “Notice of Default” hereunder; or

(iv)

the entry of an order for relief against the Issuer under the Federal Bankruptcy Code of the United States (11 U.S.C. § 1 et seq.) (the “U.S. Bankruptcy Code”) by a court of competent jurisdiction or a

decree or order by a court of competent jurisdiction adjudging the Issuer bankrupt or insolvent under any other applicable United States law, or the entry of a decree or order approving as properly filed a petition seeking reorganisation, arrangement, adjustment or composition of or in respect of the Issuer under the U.S. Bankruptcy Code or any other applicable United States law, or appointing a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the Issuer or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order unstayed and in effect for a period of 90 consecutive days; or

(v)

the consent by the Issuer to the institution of bankruptcy or insolvency proceedings against it, or the filing by it of a petition or answer or consent seeking reorganisation or relief under the U.S. Bankruptcy Code or any other applicable United States law, or the consent by it to the filing of any such petition or to the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the Issuer or of any substantial part of its property, or the making by it of a general assignment for the benefit of creditors, or the admission by it in writing of its inability to pay its debts generally as they become due, or the taking of corporate action by the Issuer in furtherance of any such action,

then any Noteholder may, by written notice to the Issuer at the specified office of the Agent, effective upon the date of receipt thereof by the Agent, declare the Note held by the holder to be forthwith due and payable whereupon the same shall become forthwith due and payable at the Early Redemption Amount (as described in Condition 6(e)), together with accrued interest (if any) to the date of repayment, without presentment, demand, protest or other notice of any kind.

A default under any indebtedness of the Issuer other than the Notes will not constitute an Event of Default, and a default under one Series of Notes will not constitute a default under any other Series of Notes. No declaration of acceleration by the Noteholders with respect to any Series of Notes shall constitute a declaration of acceleration with respect to any other Series of Notes.

10.

Replacement of Notes, Receipts, Coupons and Talons

Should any Note, Receipt, Coupon or Talon be lost, stolen, mutilated, defaced or destroyed, it may be replaced at the specified office of the Replacement Agent upon payment by the claimant of such costs and expenses as may be incurred in connection therewith and on such terms as to evidence and indemnity as the Issuer may reasonably require. Mutilated or defaced Notes, Receipts, Coupons or Talons must be surrendered before replacements will be issued.

11.

Agent and Paying Agents

The names of the initial Agent and the other initial Paying Agents and their initial specified offices are set out below.

The Issuer is entitled to vary or terminate the appointment of any Paying Agent and/or additional or other Paying Agents and/or approve any change in the specified office through which any Paying Agent acts, provided that:

(i)

so long as the Notes are listed on any stock exchange, there will at all times be a Paying Agent with a specified office in such place as may be required by the rules and regulations of the relevant stock exchange or competent authority;

(ii)

there will at all times be a Paying Agent with a specified office in a city in continental Europe;

(iii)

there will at all times be an Agent; and

(iv)

the Issuer will ensure that it maintains a Paying Agent in a European Union Member State (if any) that is not obliged to deduct tax pursuant to European Council Directive 2003/48/EC or any law implementing or complying with, or introduced in order to conform to, such Directive.

In addition, the Issuer shall forthwith appoint a Paying Agent having a specified office in New York City in the circumstances described in the final paragraph of Condition 5(b). Any variation, termination, appointment or change shall only take effect (other than in the case of insolvency, when it shall be of immediate effect) after not less than 30 nor more than 45 days’ prior notice thereof shall have been given to the Noteholders in accordance with Condition 13.

12.

Exchange of Talons

On and after the Fixed Interest Date or the Interest Payment Date, as appropriate, on which the final Coupon comprised in any Coupon sheet matures, the Talon (if any) forming part of such Coupon sheet may be surrendered at the specified office of the Agent or any other Paying Agent in exchange for a further Coupon sheet including (if such further Coupon sheet does not include Coupons to (and including) the final date for the payment of interest due in respect of the Note to which it appertains) a further Talon, subject to the provisions of Condition 8. Each Talon shall, for the purposes of these Terms and Conditions, be deemed to mature on the Fixed Interest Date or the Interest Payment Date (as the case may be) on which the final Coupon comprised in the relative Coupon sheet matures.

13.

Notices

All notices regarding the Notes shall be published in a leading English language daily newspaper of general circulation in London. It is expected that such publication will be made in the Financial Times in London. The Issuer

shall also ensure that notices are duly published in a manner which complies with the rules and regulations of any stock exchange (or other relevant authority) on which the Notes are for the time being listed or by which they have been admitted to trading. Any such notice will be deemed to have been given on the date of the first publication in both such newspapers.

Until such time as any definitive Notes are issued, there may (provided that, in the case of Notes listed on a stock exchange, the stock exchange agrees), so long as the global Note(s) is or are held in its/their entirety on behalf of Euroclear and Clearstream, Luxembourg, be substituted for such publication in such newspaper(s) the delivery of the relevant notice to Euroclear and Clearstream, Luxembourg for communication by them to the holders of the Notes. Any such notice shall be deemed to have been given to the holders of the Notes on the seventh day after the day on which the said notice was given to Euroclear and Clearstream, Luxembourg.

Notices to be given by any holder of the Notes shall be in writing and given by lodging the same, together with the relative Note or Notes, with the Agent. Whilst any of the Notes are represented by a global Note, such notice may be given by any holder of a Note to the Agent via Euroclear and/or Clearstream, Luxembourg, as the case may be, in such manner as the Agent and Euroclear and/or Clearstream, Luxembourg, as the case may be, may approve for this purpose.

14.

Meetings of Noteholders, Modification and Waiver

The Agency Agreement contains provisions for convening meetings of the Noteholders to consider any matter affecting their interests, including the sanctioning by Extraordinary Resolution of a modification of the Notes, the Receipts, the Coupons or any of the provisions of the Agency Agreement. Such a meeting may be convened by the Issuer or Noteholders holding not less than five per cent. in nominal amount of the Notes for the time being remaining outstanding. The quorum at any such meeting for passing an Extraordinary Resolution is one or more persons holding or representing not less than 50 per cent. in nominal amount of the Notes for the time being outstanding, or at any adjourned meeting one or more persons being or representing Noteholders whatever the nominal amount of the Notes so held or represented, except that at any meeting the business of which includes the modification of certain provisions of the Notes, Receipts or Coupons (including modifying the date of maturity of the Notes or any date for payment of interest thereof, reducing or cancelling the amount of principal or the rate of interest payable in respect of the Notes or altering the currency of payment of the Notes, Receipts or Coupons), the quorum shall be one or more persons holding or representing not less than 75 per cent. in nominal amount of the Notes for the time being outstanding, or at any adjourned such meeting one or more persons holding or representing a clear majority in nominal amount of the Notes for the time being outstanding. An Extraordinary Resolution passed at any meeting of the Noteholders shall be binding on all the Noteholders,

whether or not they are present at the meeting, and on all Receiptholders and Couponholders.

The Agent and the Issuer may agree, without the consent of the Noteholders, Receiptholders or Couponholders, to:

(i)

any modification (except as mentioned above) of the Agency Agreement which is not prejudicial to the interests of the Noteholders; or

(ii)

any modification of the Notes, the Receipts, the Coupons or the Agency Agreement which is of a formal, minor or technical nature or is made to correct a manifest error or to comply with mandatory provisions of the law of the jurisdiction in which the Issuer is incorporated.

Any such modification shall be binding on the Noteholders, the Receiptholders and the Couponholders and any such modification shall be notified to the Noteholders in accordance with Condition 13 as soon as practicable thereafter.

15.

Further Issues

The Issuer shall be at liberty from time to time without the consent of the Noteholders, Receiptholders or Couponholders to create and issue further notes having terms and conditions the same as the Notes or the same in all respects save for the amount and date of the first payment of interest thereon and so that the same shall be consolidated and form a single Series with the outstanding Notes.

16.

Redenomination of the Notes into Euro

(a)

Contractual Right of Redenomination

The Issuer, may, without the consent of the Noteholders, by giving a redenomination notice pursuant to subparagraph (c) of this Condition 16, with effect from a date to be determined by the Issuer (the “Redenomination Date”, which shall be an Interest Payment Date, unless specified otherwise in the Final Terms), redenominate into euro all, but not some only, of the Notes, provided that the Specified Currency is the official currency of a participating member state of European Economic and Monetary Union on the Redenomination Date. Simultaneously, the Issuer may alter the Specified Denomination(s) of the Notes and adjust the provisions regarding the Day Count Fraction, the Reference Rate (where applicable) and the Business Day definition to the existing or anticipated market practice.

(b)

Amendment of Conditions

The redenomination and any additional measures which may be taken in this connection will, to the extent not governed by mandatory laws or regulations,

occur by way of an amendment to the Conditions as the Issuer may determine in its reasonable discretion, taking into account the interests of the Noteholders. Any conversion of the principal amount of each Note into euro shall be made in accordance with existing or anticipated market practice and, if consistent therewith, may be made by (i) converting the principal amount of each Note into euro by using the fixed conversion rate between the Specified Currency and the euro, and rounding the resultant figure to the nearest 0.01 euro (with 0.005 euro being rounded upwards) and (ii) altering the Specified Denomination(s) of the Notes to 0.01 euro if the regulations and procedures of the relevant Clearing System(s) so permit, otherwise one euro. Upon the redenomination, all references in the Notes to the Specified Currency will be deemed references to “euro”. This does not apply if the Notes are Dual Currency Notes.

(c)

Redenomination Notice

The redenomination notice will be given in accordance with Condition 12 at least 30 calendar days prior to the Redenomination Date. It will:

(i)

specify the Redenomination Date; and

(ii)

describe any amendments to the Conditions and specify the wording of the amended or additional provisions.

(d)

Statutory Right of Redenomination

To the extent that applicable provisions of law permit the Issuer to redenominate the Notes into the euro and to take additional measures, the Issuer may exercise the rights provided by law instead or in addition to the rights set out above.

(e)

Consolidation

The Issuer reserves the right, in connection with, and as part of, the redenomination notice in respect of any Series of Notes without the consent of the Noteholders or Couponholders consolidate such Series with other notes of the Issuer, which are, or as of the Redenomination Date, will be, denominated in euro and have otherwise identical terms, so that the same form a single series with the Series comprising the Notes.

17.

Governing Law and Submission to Jurisdiction

(a)

The Agency Agreement, the Notes, the Receipts and the Coupons are governed by, and shall be construed in accordance with, English law.

(b)

The Issuer agrees, for the exclusive benefit of the Paying Agents, the Noteholders, the Receiptholders and the Couponholders that the courts of England are to have jurisdiction to settle any disputes which may arise out of or in connection with the Agency Agreement, the Notes, the Receipts and/or the Coupons and that accordingly any suit, action or proceedings (together

referred to as “Proceedings”) arising out of or in connection with the Agency Agreement, the Notes, the Receipts and the Coupons may be brought in such courts. The Issuer hereby irrevocably waives any objection which it may have now or hereafter to the laying of the venue of any such Proceedings in any such court and any claim that any such Proceedings have been brought in an inconvenient forum and hereby further irrevocably agrees that a judgment in any such Proceedings brought in the English courts shall be conclusive and binding upon it and may be enforced in the courts of any other jurisdiction. Nothing contained in this Condition shall limit any right to take Proceedings against the Issuer in any other court of competent jurisdiction, nor shall the taking of Proceedings in one or more jurisdictions preclude the taking of Proceedings in any other jurisdiction, whether concurrently or not. The Issuer appoints PepsiCo International Limited at its registered office at ▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇: Attention: Division Counsel as its agent for service of process, and undertakes that, in the event of PepsiCo International Limited ceasing so to act or ceasing to be registered in England, it will appoint another person as its agent for service of process in England in respect of any Proceedings. Nothing herein shall affect the right to serve proceedings in any other manner permitted by law. The Issuer hereby irrevocably and unconditionally waives with respect to the Agency Agreement, the Notes, the Receipts and/or the Coupons any right to claim immunity from jurisdiction or execution and any similar defence and irrevocably and unconditionally consents to the giving of any relief or the issue of any process, including without limitation, the making, enforcement or execution against any property whatsoever (irrespective of its use or intended use) of any order or judgment made or given in connection with any Proceedings.

18.

Contracts (Rights of Third Parties) Act 1999

No person shall have any right to enforce any term or condition of the Notes under the Contracts (Rights of Third Parties) ▇▇▇ ▇▇▇▇.

(i)

if the applicable Final Terms indicate that this Global Note is intended to be a New Global Note, details of the payment of interest shall be entered in the records of the relevant Clearing System, while details of redemption or purchase and cancellation (as the case may be) shall be entered pro rata in the records of the relevant Clearing Systems and, upon any such entry being made, the nominal amount of the Notes recorded in the records of the relevant Clearing Systems and represented by this Global Note shall be reduced by the aggregate nominal amount of the Notes so redeemed or purchased and cancelled or by the aggregate amount of such instalment so paid, or

(ii)

if the applicable Final Terms indicate that this Global Note is not intended to be a New Global Note, details of such redemption, payment or purchase and cancellation (as the case may be) shall be entered by or on behalf of the Issuer in Schedule One hereto and the relevant space in Schedule One hereto recording any such redemption, payment or purchase and cancellation (as the case may be) shall be signed by or on behalf of the Issuer. Upon any such redemption, payment of an instalment or purchase and cancellation, as aforesaid, the nominal amount of the Notes represented by this Global Note shall be reduced by the nominal amount of such Notes so redeemed or purchased and cancelled or the amount of such instalment. The nominal amount of this Global Note and of the Notes represented hereby following any such redemption, payment of an instalment or purchase and cancellation as aforesaid or any exchange as referred to below shall be the nominal amount most recently entered by or on behalf of the Issuer in the relevant column in Part II, III or IV of Schedule One or in Schedule Two hereto. Prior to the Exchange Date (as defined below), all payments (if any) on this Global Note

will only be made to the bearer hereof to the extent that there is presented to the Agent by Clearstream Banking, société anonyme (Clearstream, Luxembourg) or Euroclear Bank S.A./N.V., as operator of the Euroclear System (Euroclear) a certificate to the effect that it has received from or in respect of a person entitled to a beneficial interest in a particular nominal amount of the Notes represented by this Global Note (as shown by its records) a certificate of non-US beneficial ownership in the form required by the Issuer. The bearer of this Global Note will not be entitled to receive any payment of interest hereon due on or after the Exchange Date.

(i)

if the applicable Final Terms indicate that this Global Note is intended to be a New Global Note, details of such exchange shall be entered pro rata in the records of the relevant Clearing Systems; or

(ii)

if the applicable Final Terms indicate that this Global Note is not intended to be a New Global Note, details of such exchange shall be entered by or on behalf of the Issuer in Schedule Two hereto and the relevant space in Schedule Two hereto recording such exchange shall be signed by or on behalf of the Issuer, whereupon the nominal amount of this Global Note and the Notes represented by this Global Note shall be reduced by the nominal amount so exchanged and upon any such exchange of this Global Note for a Permanent Global Note, details of such exchange shall be entered by or on behalf of the Issuer in Schedule Two to the Permanent Global Note and the relevant space in Schedule Two thereto recording such exchange shall be signed by or on behalf of the Issuer.

Date made

Total amount of

interest payable

Amount of

interest paid

Confirmation of

payment on behalf

of the Issuer

__________

__________

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*

*

Schedule One should only be completed where the applicable Final Terms indicate that this Global Note is not intended to be a New Global Note.

Date made

Total amount of

Instalment

Amounts

payable

Amount of

Instalment

Amounts Paid

Remaining

nominal amount

of this Global Note

following such

payment*

Confirmation of

payment on

behalf of the

Issuer

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*

See most recent entry in Part II, III or IV of Schedule One or in Schedule Two in order to determine this amount.

Date made

Total amount of

principal

payable

Amount of

principal paid

Remaining

nominal amount

of this Global Note

following such

redemption*

Confirmation of

payment on

behalf of the

Issuer

__________

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