PEPSI BOTTLING GROUP INC (Form: 10-Q, Received: 05/01/2006 15:39:21)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 25, 2006 (12 weeks)


o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 1-14893

THE PEPSI BOTTLING GROUP, INC.

(Exact name of registrant as specified in its charter)


Delaware		13-4038356
(State or other jurisdiction of		(I.R.S.
employer incorporation or organization)		Identification No.)


One Pepsi Way, Somers, New York		10589
(Address of principal executive offices)		(Zip Code)

914-767-6000
(Registrant’s telephone number, including area code)

N/A
(Former name, former address and former fiscal year, if changed since last report.)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES þ NO o

Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer þ Accelerated Filer o Non-Accelerated Filer o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES o NO þ

Number of shares of Common Stock outstanding as of April 22, 2006:
235,265,333

The Pepsi Bottling Group, Inc.
Index


			Page No.
Part I		Financial Information

	Item 1.	Financial Statements

		Condensed Consolidated Statements of Operations - 12 weeks ended March 25, 2006 and March 19, 2005		2

		Condensed Consolidated Statements of Cash Flows - 12 weeks ended March 25, 2006 and March 19, 2005		3

		Condensed Consolidated Balance Sheets - March 25, 2006 and December 31, 2005		4

		Notes to Condensed Consolidated Financial Statements		5-15

	Item 2.	Management’s Financial Review		16-24

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk		25

	Item 4.	Controls and Procedures		25

Part II		Other Information

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		26

	Item 6.	Exhibits		27

PART I — FINANCIAL INFORMATION

Item 1.

The Pepsi Bottling Group, Inc.
Condensed Consolidated Statements of Operations
in millions, except per share amounts, unaudited


	12 Weeks Ended
	March		March
	25, 2006		19, 2005
Net revenues	$	2,367	$	2,147
Cost of sales		1,253		1,116


Gross profit		1,114		1,031
Selling, delivery and administrative expenses		993		911


Operating income		121		120
Interest expense, net		61		55
Minority interest		6		6


Income before income taxes		54		59
Income tax expense		20		20


Net income	$	34	$	39


Basic earnings per share	$	0.14	$	0.16


Weighted-average shares outstanding		237		248

Diluted earnings per share	$	0.14	$	0.15


Weighted-average shares outstanding		243		254

Dividends declared per common share	$	0.08	$	0.05

See accompanying notes to Condensed Consolidated Financial Statements.

The Pepsi Bottling Group, Inc.
Condensed Consolidated Statements of Cash Flows
in millions, unaudited


	12 Weeks Ended
	March			March
	25, 2006			19, 2005
Cash Flows – Operations
Net income	$	34		$	39
Adjustments to reconcile net income to net cash provided by operations:
Depreciation		136			130
Amortization		3			3
Deferred income taxes		(17	)		4
Stock-based compensation		16			—
Other non-cash charges and credits, net		72			64
Changes in operating working capital, excluding effects of acquisitions:
Accounts receivable, net		(5	)		—
Inventories		(95	)		(48	)
Prepaid expenses and other current assets		(15	)		(45	)
Accounts payable and other current liabilities		(35	)		(62	)
Income taxes payable		17			2

Net change in operating working capital		(133	)		(153	)

Casualty insurance payments		(14	)		(17	)
Pension contributions		—			(20	)
Other, net		(16	)		(15	)


Net Cash Provided by Operations		81			35


Cash Flows – Investments
Capital expenditures		(175	)		(138	)
Acquisitions of bottlers, net of cash acquired		—			(1	)
Proceeds from sale of property, plant and equipment		3			1
Other investing activities, net		4			—


Net Cash Used for Investments		(168	)		(138	)


Cash Flows – Financing
Short-term borrowings – three months or less, net		106			147
Proceeds of long-term debt		—			23
Payments of long-term debt		(61	)		(4	)
Dividends paid		(19	)		(13	)
Excess tax benefit from exercise of stock options		3			—
Proceeds from exercise of stock options		15			13
Purchases of treasury stock		(125	)		(118	)


Net Cash (Used for) Provided by Financing		(81	)		48


Effect of Exchange Rate Changes on Cash and Cash Equivalents		2			—

Net Decrease in Cash and Cash Equivalents		(166	)		(55	)
Cash and Cash Equivalents – Beginning of Period		502			305

Cash and Cash Equivalents – End of Period	$	336		$	250


Supplemental Cash Flow Information

Interest paid	$	76		$	66

Income taxes paid	$	17		$	14

Changes in accounts payable related to capital expenditures	$	(35	)	$	(45	)

Capital lease additions	$	7		$	—

See accompanying notes to Condensed Consolidated Financial Statements.

The Pepsi Bottling Group, Inc.
Condensed Consolidated Balance Sheets
in millions, except per share amounts


	(Unaudited)
	March			December
	25, 2006			31, 2005
ASSETS
Current Assets
Cash and cash equivalents	$	336		$	502
Accounts receivable, less allowance of $49 at March 25, 2006 and $51 at December 31, 2005		1,196			1,186
Inventories		555			458
Prepaid expenses and other current assets		294			266

Total Current Assets		2,381			2,412
Property, plant and equipment, net		3,667			3,649
Other intangible assets, net		3,822			3,814
Goodwill		1,519			1,516
Other assets		132			133

Total Assets	$	11,521		$	11,524


LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Accounts payable and other current liabilities	$	1,524		$	1,583
Short-term borrowings		533			426
Current maturities of long-term debt		534			589

Total Current Liabilities		2,591			2,598

Long-term debt		3,939			3,939
Other liabilities		1,072			1,027
Deferred income taxes		1,415			1,421
Minority interest		504			496

Total Liabilities		9,521			9,481


Shareholders’ Equity
Common stock, par value $0.01 per share:
authorized 900 shares, issued 310 shares		3			3
Additional paid-in capital		1,705			1,709
Retained earnings		2,298			2,283
Accumulated other comprehensive loss		(230	)		(262	)
Deferred compensation		—			(14	)
Treasury stock: 74 shares and 71 shares at March 25, 2006 and December 31, 2005, respectively, at cost		(1,776	)		(1,676	)

Total Shareholders’ Equity		2,000			2,043

Total Liabilities and Shareholders’ Equity	$	11,521		$	11,524

See accompanying notes to Condensed Consolidated Financial Statements.

Notes to Condensed Consolidated Financial Statements
Tabular dollars in millions, except per share amounts

Note 1 – Basis of Presentation

The Pepsi Bottling Group, Inc. (“PBG” or the “Company”) is the world’s largest manufacturer, seller and distributor of Pepsi-Cola beverages. We have the exclusive right to manufacture, sell and distribute Pepsi-Cola beverages in all or a portion of the United States, Mexico, Canada and Europe, which consists of operations in Spain, Greece, Russia and Turkey. When used in these Condensed Consolidated Financial Statements, “PBG,” “we,” “our” and “us” each refers to The Pepsi Bottling Group, Inc. and, where appropriate, to Bottling Group, LLC (“Bottling LLC”), our principal operating subsidiary.

At March 25, 2006, PepsiCo, Inc. (“PepsiCo”) owned 95,617,515 shares of our common stock, consisting of 95,517,505 shares of common stock and 100,000 shares of Class B common stock. All shares of Class B common stock that have been authorized have been issued to PepsiCo. At March 25, 2006, PepsiCo owned approximately 40.5% of our outstanding common stock and 100% of our outstanding Class B common stock, together representing 46.3% of the voting power of all classes of our voting stock. In addition, PepsiCo owns approximately 6.7% of the equity of Bottling LLC. We fully consolidate the results of Bottling LLC and present PepsiCo’s share as minority interest in our Condensed Consolidated Financial Statements.

The accompanying Condensed Consolidated Balance Sheet at March 25, 2006 and the Condensed Consolidated Statements of Operations and Cash Flows for the 12 weeks ended March 25, 2006 and March 19, 2005 have not been audited, but have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. The preparation of our consolidated financial statements in conformity with U.S. GAAP often requires us to make judgments, estimates and assumptions that affect the results of operations, financial position and cash flows of the Company, as well as the related footnote disclosures. Actual results could differ from these estimates. These Condensed Consolidated Financial Statements should be read in conjunction with the audited consolidated financial statements for the fiscal year ended December 31, 2005 as presented in our Annual Report on Form 10-K. In the opinion of management, this interim information includes all material adjustments, which are of a normal and recurring nature, necessary for a fair presentation.

Our U.S. and Canadian operations report using a fiscal year that consists of fifty-two weeks, ending on the last Saturday in December. Every five or six years a fifty-third week is added. Fiscal year 2006 consists of fifty-two weeks. In 2005, our fiscal year consisted of fifty-three weeks (the additional week was added to the fourth quarter). Our remaining countries report using a calendar-year basis. Accordingly, we recognize our quarterly business results as outlined below:


Quarter	U.S. & Canada	Mexico & Europe
First Quarter	12 weeks	January and February
Second Quarter	12 weeks	March, April and May
Third Quarter	12 weeks	June, July and August
Fourth Quarter	16 weeks (FY 2006)/	September, October,
	17 weeks (FY 2005)	November and December

Certain reclassifications were made in our Condensed Consolidated Financial Statements to 2005 amounts to conform to the 2006 presentation.

Note 2 – Seasonality of Business

The results for the first quarter are not necessarily indicative of the results that may be expected for the full year because of business seasonality. The seasonality of our operating results arises from higher sales in the second and third quarters versus the first and fourth quarters of the year, combined with the impact of fixed costs, such as depreciation and interest, which are not significantly impacted by business seasonality. From a cash flow perspective, the majority of our cash flow from operations is generated in the third and fourth quarters.

Note 3 – Earnings per Share

The following table reconciles the numerators and denominators used in the computations of both basic and diluted earnings per share:


	12 Weeks Ended
	March 25,		March 19,
	2006		2005
Average number of shares outstanding during period on which basic earnings per share is based		237		248
Add – Incremental shares under stock compensation plans		6		6

Number of shares on which diluted earnings per share is based		243		254

Net earnings applicable to common shareholders	$	34	$	39

Net earnings on which diluted earnings per share is based	$	34	$	39

Basic earnings per share	$	0.14	$	0.16

Diluted earnings per share	$	0.14	$	0.15

Diluted earnings per share reflect the potential dilution that could occur if the stock options or other equity awards from our stock compensation plans were exercised and converted into common stock that would then participate in net income. Options to purchase 6.2 million shares at March 25, 2006 and 14.3 million shares at March 19, 2005 are not included in the computation of diluted earnings per share because the effect of including the options in the computation would be antidilutive.

Note 4 – Share-Based Compensation

Share-Based Long-term Incentive Compensation Plans

Under our share-based long-term incentive compensation plans (“incentive plans”) we grant non-qualified stock options to certain employees, including middle and senior management. We also grant restricted stock and restricted stock units to certain senior executives. Non-employee members of our Board (“Directors”) participate in a separate incentive plan and receive non-qualified stock options, shares of common stock or restricted stock.

Beginning in 2006, we will grant a mix of stock options and restricted stock units to Directors and middle and senior management employees under our incentive plans.

Shares available for future issuance to employees and Directors under existing plans were 11.7 million at March 25, 2006.

Accounting for Share-Based Compensation

Effective January 1, 2006, the Company adopted Financial Accounting Standards Board (“FASB”) Statement No. 123 (revised), “Share-Based Payment” (“SFAS 123R”). Among its provisions, SFAS 123R requires the Company to recognize compensation expense for equity awards over the vesting period based on their grant-date fair value. Prior to the adoption of SFAS 123R, the Company utilized the intrinsic-value based method of accounting under APB Opinion No. 25, “Accounting for Stock Issued to Employees” and related interpretations, and adopted the disclosure requirements of SFAS No. 123, “Accounting for Stock-Based Compensation” (“SFAS 123”). Under the intrinsic-value based method of accounting, compensation expense for stock options granted to the Company’s employees was measured as the excess of the quoted market price of common stock at the grant date over the amount the employee must pay for the stock. The Company’s policy is to grant stock options at fair value on the date of grant and as a result no compensation expense was historically recognized for stock options.

The Company adopted SFAS 123R in the first quarter of 2006 using the modified prospective approach. Under this transition method, the measurement and our method of amortization of costs for share-based payments granted prior to, but not vested as of January 1, 2006, would be based on the same estimate of the grant-date fair value and the same amortization method that was previously used in our SFAS 123 pro forma disclosure. Results for prior periods have not been restated as provided for under the modified prospective approach. For equity awards granted after the date of adoption, we will amortize share-based compensation expense on a straight-line basis over the vesting term.

Compensation expense is recognized only for share-based payments expected to vest. We estimate forfeitures at the date of grant based on the Company’s historical experience and future expectations. Prior to the adoption of SFAS 123R, the effect of forfeitures on the pro forma expense amounts was recognized based on estimated forfeitures.

The adoption of SFAS 123R reduced our basic and diluted earnings per share by $0.04 for the 12 weeks ended March 25, 2006. Total share-based compensation expense recognized in selling, delivery and administrative expenses in the Condensed Consolidated Statement of Operations for the 12 weeks ended March 25, 2006 was $16 million, which is before an income tax benefit of $5 million and minority interest of $1 million, resulting in a decrease to net income of $10 million.

The following table shows the effect on net income and earnings per share for the 12 weeks ended March 19, 2005 had compensation expense been recognized based upon the estimated fair value on the grant date of awards, in accordance with SFAS 123, as amended by SFAS No. 148 “Accounting for Stock-Based Compensation – Transition and Disclosure”:


	12 Weeks Ended
	March
	19, 2005
Net income:
As reported	$	39
Add: Total share-based employee compensation included in reported net income, net of taxes and minority interest		—
Less: Total share-based employee compensation determined under fair-value based method for all awards, net of taxes and minority interest		(11	)

Pro forma	$	28


Earnings per share:
Basic – as reported	$	0.16
Basic – pro forma	$	0.11

Diluted – as reported	$	0.15
Diluted – pro forma	$	0.11

As of March 25, 2006, there was approximately $127 million of total unrecognized compensation cost related to nonvested share-based compensation arrangements granted under the incentive plans. That cost is expected to be recognized over a weighted-average period of 2.4 years.

The fair value of PBG stock options was estimated at the date of grant using the Black-Scholes-Merton option-valuation model. The table below outlines the weighted average assumptions for options granted during the 12 weeks ended March 25, 2006 and March 19, 2005:


	12 Weeks Ended
	March 25,			March 19,
	2006			2005
Risk-free interest rate		4.6	%		4.1	%
Expected term (in years)		5.7			5.8
Expected volatility		27	%		28	%
Expected dividend yield		1.5	%		1.1	%

Estimated fair value per option granted	$	8.62		$	8.68

The expected term of the options represents the estimated period of time until exercise and is based on historical experience of similar awards, giving consideration to the contractual terms, vesting schedules and expectations of future employee behavior. Expected stock price volatility is based on a combination of historical volatility of the Company’s stock and the implied volatility of its traded options. The risk-free interest rate is based on the implied yield available on U.S. Treasury zero-coupon issues with an equivalent remaining term.

We receive a tax deduction for certain stock option exercises when the options are exercised, generally for the excess of the stock price when the options are sold over the exercise price of the options. Prior to the adoption of SFAS 123R, the Company presented all tax benefits resulting from the exercise of stock options as operating cash inflows in the Condensed Consolidated Statements of Cash Flows. SFAS 123R requires the benefits of tax deductions in excess of the grant-date fair value for those options to be classified as financing cash inflows rather than operating cash inflows, on a prospective basis. This amount is shown as “Excess Tax Benefit from Exercise of Stock Options” on the Condensed Consolidated Statements of Cash Flows. For the 12 weeks ended March 25, 2006, we recognized $5 million in tax benefits from the exercise of equity awards, of which $3 million was recorded as excess tax benefits in the Condensed Consolidated Statements of Cash Flows, resulting in a decrease of cash from operations and an increase in cash from financing of $3 million.

Stock Options

Stock options expire in 10 years and prior to the 2006 grant year were generally exercisable 25 percent in each of the first two years, and the remainder after three years. Beginning in 2006, new stock option grants will vest ratably over three years.

The following table summarizes option activity during the 12 weeks ended March 25, 2006:


						Weighted
				Weighted		Average
				Average		Remaining
				Exercise		Contractual		Aggregate
Shares in millions				Price per		Term		Intrinsic
Options	Shares			Share		(years)		Value
Outstanding at January 1, 2006		38.1		$	22.54
Granted		3.2		$	29.32
Exercised		(1.1	)	$	14.89
Forfeited or expired		(0.3	)	$	26.49

Outstanding at March 25, 2006		39.9		$	23.27		6.7	$	298

Exercisable at March 25, 2006		21.0		$	19.29		5.2	$	241

The aggregate intrinsic value in the table above is before income taxes, based on the Company’s closing stock price of $30.74 as of the last business day of the period ended March 25, 2006.

During the 12 weeks ended March 25, 2006, the total intrinsic value of stock options exercised was $16 million.

Restricted Stock and Restricted Stock Units

Restricted stock and restricted stock units granted to employees have vesting periods that range from two to five years. In addition, restricted stock unit awards to certain senior executives contain vesting provisions that are contingent upon the achievement of pre-established performance targets. The initial restricted stock award to Directors remains restricted while the individual serves on the Board. The annual grants to Directors vest immediately, but may be deferred. All restricted stock and restricted stock unit awards are settled in shares of PBG common stock.

The following table summarizes restricted stock and restricted stock unit activity during the 12 weeks ended March 25, 2006:


Shares in millions

Restricted Stocks and				Weighted Average
Restricted Stock Units	Shares			Grant-Date Fair Value
Nonvested at January 1, 2006		0.9		$	26.00
Granted		1.1		$	29.32
Vested		—		$	24.25
Forfeited		(0.3	)	$	23.50

Nonvested at March 25, 2006		1.7		$	28.67

The total fair value of shares vested during the 12 weeks ended March 25, 2006 was $1 million.

Note 5 – Accounts Receivable


	March			December
	25, 2006			31, 2005
Trade accounts receivable	$	1,032		$	1,018
Allowance for doubtful accounts		(49	)		(51	)
Accounts receivable from PepsiCo		166			143
Other receivables		47			76

	$	1,196		$	1,186

Note 6 – Inventories


	March		December
	25, 2006		31, 2005
Raw materials and supplies	$	209	$	173
Finished goods		346		285

	$	555	$	458

Note 7 – Property, Plant and Equipment, net


	March			December
	25, 2006			31, 2005
Land	$	288		$	277
Buildings and improvements		1,321			1,299
Manufacturing and distribution equipment		3,469			3,425
Marketing equipment		2,341			2,334
Other		192			177

		7,611			7,512
Accumulated depreciation		(3,944	)		(3,863	)

	$	3,667		$	3,649

Note 8 – Other Intangible Assets, net and Goodwill


	March			December
	25, 2006			31, 2005
Intangibles subject to amortization:
Gross carrying amount:
Customer relationships and lists	$	53		$	53
Franchise/distribution rights		46			46
Other identified intangibles		39			39

		138			138


Accumulated amortization:
Customer relationships and lists		(9	)		(9	)
Franchise/distribution rights		(24	)		(22	)
Other identified intangibles		(20	)		(18	)

		(53	)		(49	)


Intangibles subject to amortization, net		85			89


Intangibles not subject to amortization:
Carrying amount:
Franchise rights		3,096			3,093
Distribution rights		307			302
Trademarks		222			218
Other identified intangibles		112			112

Intangibles not subject to amortization		3,737			3,725

Total other intangible assets, net	$	3,822		$	3,814

For intangible assets subject to amortization, we calculate amortization expense over the period we expect to receive economic benefit. Total amortization expense was $3 million for the 12 weeks ended March 25, 2006 and March 19, 2005. The weighted-average amortization period for each category of intangible assets and its estimated aggregate amortization expense expected to be recognized over the next five years are as follows:


		Estimated Aggregate Amortization Expense to be Incurred
	Weighted-
	Average
	Amortization	Balance of				Fiscal Year Ending
	Period	2006		2007		2008		2009		2010
Customer relationships and lists	18 years	$	3	$	3	$	3	$	3	$	3
Franchise/distribution rights	7 years	$	4	$	3	$	2	$	2	$	2
Other identified intangibles	8 years	$	4	$	4	$	3	$	2	$	1

The changes in the carrying value of goodwill by reportable segment for the 12 weeks ended March 25, 2006 are as follows:


	U.S. &
	Canada			Europe		Mexico		Total
Balance at December 31, 2005	$	1,240		$	16	$	260	$	1,516
Impact of foreign currency translation		(1	)		—		4		3

Balance at March 25, 2006	$	1,239		$	16	$	264	$	1,519

Note 9 – Accounts Payable and Other Current Liabilities


	March		December
	25, 2006		31, 2005
Accounts payable	$	515	$	501
Trade incentives		139		185
Accrued compensation and benefits		168		211
Accounts payable to PepsiCo		226		176
Other current liabilities		476		510

	$	1,524	$	1,583

Note 10 – Pension and Postretirement Medical Benefit Plans

Pension Benefits

Our U.S. employees participate in noncontributory defined benefit pension plans, which cover substantially all full-time salaried employees, as well as most hourly employees. Benefits generally are based on years of service and compensation, or stated amounts for each year of service. All of our qualified plans are funded and contributions are made in amounts not less than the minimum statutory funding requirements and not more than the maximum amount that can be deducted for U.S. income tax purposes. Our net pension expense for the defined benefit plans for our operations outside the U.S. was not significant and is not included in the tables presented below.

Nearly all of our U.S. employees are also eligible to participate in our 401(k) savings plans, which are voluntary defined contribution plans. We make matching contributions to the 401(k) savings plans on behalf of participants eligible to receive such contributions. If a participant has one or more but less than 10 years of eligible service, our match will equal $0.50 for each dollar the participant elects to defer up to 4% of the participant’s pay. If the participant has 10 or more years of eligible service, our match will equal $1.00 for each dollar the participant elects to defer up to 4% of the participant’s pay.

Components of our U.S. pension expense for the 12 weeks ended March 25, 2006 and March 19, 2005 are as follows:


	12 Weeks Ended
	March			March
	25, 2006			19, 2005
Service cost	$	12		$	11
Interest cost		19			17
Expected return on plan assets		(22	)		(21	)
Amortization of prior service cost		2			2
Amortization of net loss		9			7

Net pension expense for the defined benefit plans		20			16


Defined contribution plans expense		5			4


Total U.S. pension expense recognized in the Condensed Consolidated Statements of Operations	$	25		$	20

There were no contributions made to our U.S. pension plans for the 12 weeks ended March 25, 2006.

Postretirement Medical Benefits

Our postretirement medical plans provide medical and life insurance benefits principally to U.S. retirees and their dependents. Employees are eligible for benefits if they meet age and service requirements and qualify for retirement benefits. The plans are not funded and since 1993 have included retiree cost sharing.

Components of our U.S. postretirement benefits expense for the 12 weeks ended March 25, 2006 and March 19, 2005 are as follows:


	12 Weeks Ended
	March		March
	25, 2006		19, 2005
Service cost	$	1	$	1
Interest cost		5		5
Amortization of net loss		1		1

U.S. postretirement benefits expense recognized in the Condensed Consolidated Statements of Operations	$	7	$	7

Note 11 – Segment Information

We operate in one industry, carbonated soft drinks and other ready-to-drink beverages and all of our segments derive revenue from these products. We conduct business in all or a portion of the United States, Mexico, Canada, Spain, Russia, Greece and Turkey. Beginning with the fiscal quarter ended March 25, 2006, PBG changed its financial reporting methodology to three reportable segments – U.S. & Canada, Europe (which includes Spain, Russia, Greece and Turkey) and Mexico. The operating segments of the U.S. and Canada are aggregated into a single reportable segment due to their economic similarity as well as similarity across products, manufacturing and distribution methods, types of customers and regulatory environments.

Operationally, the Company is organized along geographic lines with specific regional management teams having responsibility for the financial results in each geographic territory. Our Chief Executive Officer and Chairman is responsible for monitoring and addressing our diverse geographic challenges and allocating resources to these segments. We evaluate the performance of these segments based on operating income or loss. Operating income or loss is exclusive of net interest expense, minority interest, foreign exchange gains and losses and income taxes.


Net Revenues	12 Weeks Ended
	March		March
	25, 2006		19, 2005
U.S. & Canada	$	2,036	$	1,849
Europe		148		145
Mexico		183		153

Worldwide net revenues	$	2,367	$	2,147


Operating Income (Loss)	12 Weeks Ended
	March			March
	25, 2006			19, 2005
U.S. & Canada	$	141		$	142
Europe		(22	)		(16	)
Mexico		2			(6	)

Worldwide operating income		121			120
Net interest expense		61			55
Minority interest		6			6

Income before income taxes	$	54		$	59

For the 12 weeks ended March 25, 2006, operating income includes the impact of adopting SFAS 123R. The comparable quarter in 2005 has not been restated as described in Note 4.

Total Assets


	March		December
	25, 2006		31, 2005
U.S. & Canada	$	8,904	$	8,869
Europe		857		894
Mexico		1,760		1,761

Worldwide total assets	$	11,521	$	11,524

Note 12 – Comprehensive Income


	12 Weeks Ended
	March		March
	25, 2006		19, 2005
Net income	$	34	$	39
Net currency translation adjustment		24		13
Cash flow hedge adjustment (a)		8		(1	)

Comprehensive income	$	66	$	51


(a)		Net of minority interest and taxes of $6 million and $1 million for the 12 weeks ended March 25, 2006 and March 19, 2005, respectively.

Note 13 – Contingencies

We are subject to various claims and contingencies related to lawsuits, taxes and environmental and other matters arising out of the normal course of business. We believe that the ultimate liability arising from such claims or contingencies, if any, in excess of amounts already recognized is not likely to have a material adverse effect on our results of operations, financial condition or liquidity.

Note 14 – Subsequent Event

On March 30, 2006, Bottling LLC issued $800 million of 5.50% senior notes due 2016 (the “Notes”). The Notes were issued pursuant to an Indenture, dated as of March 30, 2006, between Bottling LLC and JPMorgan Chase Bank, N.A., as Trustee. The Notes have been registered under the Securities Act of 1933 pursuant to a registration statement on Form S-3 previously filed with the Securities and Exchange Commission.

The net proceeds received, after deducting the underwriting discount, but before offering expenses, were approximately $794 million. Bottling LLC distributed $356 million of the net proceeds to PBG to repay our outstanding commercial paper balance. The balance of Bottling LLC’s proceeds is currently invested in short-term investments and will be used to repay certain outstanding senior notes.

The Notes are general unsecured obligations and rank on an equal basis with all of Bottling LLC’s other existing and future unsecured indebtedness and are senior to all of Bottling LLC’s future subordinated indebtedness. The Indenture contains covenants that are similar to those contained under existing senior notes.

Item 2.

Management’s Financial Review
Tabular dollars in millions, except per share data

OVERVIEW

PBG operates in one industry, carbonated soft drinks and other ready-to-drink beverages and all of our segments derive revenue from these products. Since PBG’s Initial Public Offering in March 1999, the Company has operated and reported under one reportable segment and, where material to PBG’s overall results, provided both performance results and expected trends for volume, net revenues, cost of sales, selling, delivery and administrative expenses and operating income for each of PBG’s geographic territories (U.S., Canada, Europe and Mexico) and components thereof.

Beginning with the fiscal quarter ended March 25, 2006, PBG changed its financial reporting methodology to three reportable segments – U.S. & Canada, Europe and Mexico. Operationally, the Company is organized along geographic lines with specific regional management teams having responsibility for the financial results in each geographic territory with our Chief Executive Officer and Chairman monitoring and addressing diverse geographic challenges. See Note 11 of our Condensed Consolidated Financial Statements for further discussion on our segments.

Management’s Financial Review should be read in conjunction with the accompanying unaudited financial statements and our Annual Report on Form 10-K for the fiscal year ended December 31, 2005, which include additional information about our accounting policies, practices and the transactions that underlie our financial results.

CRITICAL ACCOUNTING POLICIES

The preparation of our consolidated financial statements in conformity with U.S. GAAP often requires us to make judgments, estimates and assumptions regarding uncertainties that affect the results of operations, financial position and cash flows of the Company, as well as the related footnote disclosures. Management bases its estimates on knowledge of our operations, markets in which we operate, historical trends, and other assumptions. Actual results could differ from these estimates under different assumptions or conditions.

As discussed in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005, management considers the Company’s policies on Allowance for Doubtful Accounts, Recoverability of Goodwill and Intangible Assets with Indefinite Lives, Pension and Postretirement Medical Benefit Plans, Casualty Insurance Costs and Income Taxes to be the most important to the portrayal of PBG’s financial condition and results of operations because they require the use of estimates, assumptions and the application of judgment.

Effective January 1, 2006, the Company adopted Financial Accounting Standards Board (“FASB”) Statement No. 123 (revised), “Share-Based Payment” (“SFAS 123R”). With the adoption of SFAS 123R, PBG has added “Share-Based Compensation” as a critical accounting policy.

Share-Based Compensation

Among its provisions, SFAS 123R requires the Company to recognize compensation expense for equity awards over the vesting period based on their grant-date fair value. The compensation expense is recognized only for share-based payments expected to vest and we estimate forfeitures at the date of grant based on the Company’s historical experience and future expectations.

The Company uses the Black-Scholes-Merton option-valuation model to value stock options, which requires the input of subjective assumptions. These assumptions include the length of time employees will retain their vested stock options before exercising them (“expected term”), the estimated volatility of the Company’s stock price, risk-free interest rate, the expected dividend yield and stock price. The expected term of the options is based on historical experience of similar awards, giving consideration to the contractual terms, vesting schedules and expectations of future employee behavior. The expected term determines the period for which the risk-free interest rate and volatility must be applied. The risk-free interest rate is based on the expected U.S. Treasury rate over the expected term. Expected stock price volatility is based on a combination of historical volatility of the Company’s stock price and the implied volatility of its traded options. Dividend yield is management’s long-term estimate of annual dividends to be paid as a percentage of share price.

For 2006, the impact of adopting SFAS 123R is expected to reduce our operating income by $70 million and our diluted earnings per share by $0.18. Future changes in the subjective assumptions used in the Black-Scholes-Merton option-valuation model or estimates associated with forfeitures could materially affect the share-based compensation expense and consequently, the related amounts recognized in the Condensed Consolidated Statement of Operations.

FINANCIAL PERFORMANCE SUMMARY


	12 Weeks Ended
	March		March		%
	25, 2006		19, 2005		Change
Net revenues	$	2,367	$	2,147		10	%

Gross profit	$	1,114	$	1,031		8	%

Operating income	$	121	$	120		0	%

Net income	$	34	$	39		(12	)%

Diluted earnings per share ¹	$	0.14	$	0.15		(9	)%


¹		– Percentage change for diluted earnings per share is calculated by using earnings per share data that is expanded to the fourth decimal place.

For the first quarter of 2006, diluted earnings per share decreased nine percent and net income decreased 12 percent when compared with the similar period in the prior year. These results included a pre-tax charge of $16 million or $0.04 of diluted earnings per share due to the adoption of SFAS 123R. Our results for the quarter reflected solid volume trends in each reportable segment, coupled with increases in net price per case, which helped drive double digit worldwide revenue growth and contribute to an eight-percent increase in worldwide gross profit. Operating income was

flat for the quarter versus the first quarter of 2005 due to the 13-percent negative impact of the Company’s adoption of SFAS 123R.

Worldwide physical case volume increased six percent in the first quarter of 2006 versus the prior year reflecting solid growth across all reportable segments. In the U.S., total volume growth was seven percent primarily due to double-digit growth in our non-carbonated portfolio.

Worldwide net revenue per case grew by four percent during the first quarter of 2006 versus the prior year, driven predominantly by increases in rate, coupled with the favorable impact of foreign currency translation in Mexico. In the U.S., net revenue per case increased three percent due to the favorable pricing environment, which enabled us to implement and maintain a majority of our 2006 rate increases. In Mexico, net revenue per case grew 14 percent due to the rate increases implemented in the prior year and the favorable impact of foreign currency translation.

Worldwide cost of sales per case for the quarter increased six percent versus the prior year driven primarily by increases in raw material costs and mix shifts into our non-carbonated portfolio, coupled with increases in manufacturing overhead costs. We expect our raw material cost increases to be more pronounced in the first half of 2006.

We were able to grow our gross profit per case by two percent in the quarter versus the prior year, driven by our strong net revenue performance and the favorable impact of foreign currency translation, partially offset by increases in our cost of sales per case.

PBG’s reported selling, delivery and administrative (“SD&A”) expenses increased nine percent in the first quarter versus the prior year, including a two-percent increase due to the adoption of SFAS 123R. In addition to the impact of SFAS 123R, increases in the Company’s SD&A expenses were driven primarily by strong volume growth and wage and benefit increases, coupled with rising fuel and pension costs and investments in high growth European markets.

Full-Year 2006 Outlook

In 2006, our fiscal year will consist of 52 weeks, while fiscal year 2005 consisted of 53 weeks. Our U.S. and Canadian operations report on a fiscal year that consists of 52 weeks, ending on the last Saturday in December. Every five or six years a 53 ^rd week is added. Our other countries report on a calendar-year basis. In order to provide comparable guidance for 2006, we have identified the impact that the 53rd week in 2005 has on our growth rates in the table below.

Additionally, as discussed in Note 4 in the Notes to the Condensed Consolidated Financial Statements, the Company adopted SFAS 123R in the first quarter of 2006. SFAS 123R requires that all stock-based payments be expensed based on the fair value of the awards. In accordance with existing accounting guidelines, the Company did not recognize compensation expense for stock options during fiscal year 2005.

PBG’s full-year 2006 guidance is unchanged from its previous guidance discussed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2005. The highlights of that discussion are described in the table below:


	Forecasted 2006 versus
	2005 growth
Worldwide Volume ⁽¹⁾		2%
U.S. Volume ⁽¹⁾	Flat to 1%
Operating Income ⁽²⁾	(2%) to (4%)

	Full-Year Forecasted
	2006 Results
Worldwide SD&A (in millions) ⁽²⁾	$	4,807 - $4,858
Diluted Earnings Per Share ⁽²⁾	$	1.76 to $1.84


(1)		The additional week of volume as a result of the 53rd week in 2005 reduced our worldwide and U.S. volume growth in 2006 by one percentage point.

(2)		The impact of adopting SFAS 123R in 2006 is expected to add approximately $70 million to our SD&A, resulting in a seven-percentage point reduction in our operating income or approximately $0.18 of diluted earnings per share.

First Quarter 2006 Results

Volume


	12 Weeks Ended
	March 25, 2006 vs.
	March 19, 2005
	Worldwide			U.S. & Canada			Europe			Mexico
Base volume		5	%		6	%		4	%		5	%

Acquisitions		1	%		1	%		0	%		0	%


Total Volume change		6	%		7	%		4	%		5	%

Our reported worldwide physical case volume increased six percent in the first quarter of 2006 versus the prior year, driven by strong growth across all of our reportable segments.

In our U.S. & Canada segment, volume increased seven percent.

Excluding the impact of acquisitions, volume in the U.S. increased six percent versus the prior year, reflecting a six-percent increase in both our take-home channel and our cold drink channel. Volume increases in our take-home channel were attributable to strong results across our large format businesses. Increases in our cold drink channel were driven by strong results in both our convenience and gas business and our foodservice businesses.

From a brand perspective, our carbonated soft drink (“CSD”) portfolio in the U.S. grew approximately one percent due primarily to our flavored CSD portfolio which included a seven-percent increase in Trademark Mountain Dew. In addition, our diet CSD portfolio increased three percent in the quarter. Our non-carbonated portfolio in the U.S. grew approximately 30 percent, driven by broad-based growth across the category including growth in Aquafina , Lipton , Tropicana and Frappuccino.

In Canada, overall volume growth of four percent versus the prior year was driven primarily by strong growth in the cold drink channel and positive volume in the take-home channel. These

results were driven largely by double-digit growth in Trademark Aquafina , coupled with growth in other non-carbonated brands.

In our Europe segment, overall volume grew four percent versus the prior year, driven primarily by strong increases in Russia, which was generated primarily by growth in Trademark Pepsi and in our bottled water brand , Aqua Minerale.

In our Mexico segment, overall volume increased five percent versus the prior year, driven by gains in our water business, coupled with positive improvement in our CSD portfolio. Volume growth in our water business included jug water growth of five percent and growth of 20 percent in our bottled water brand, Epura .

Net Revenues


	12 Weeks Ended
	March 25, 2006 vs.
	March 19, 2005
	Worldwide			U.S. & Canada			Europe			Mexico
Volume impact		5	%		6	%		4	%		5	%

Net price per case impact (rate/mix)		3	%		3	%		2	%		7	%

Acquisitions		1	%		1	%		0	%		0	%

Currency translation		1	%		0	%		(4	)%		7	%


Total Net Revenues change		10	%		10	%		2	%		19	%

Net revenues were $2.4 billion for the first quarter of 2006, a 10-percent increase over the similar period in the prior year. The increase in net revenues for the quarter was driven primarily by volume growth and increases in net price per case, coupled with acquisitions and the favorable impact of foreign currency translation. In the first quarter, our U.S. & Canada segment generated the majority of our revenues, at approximately 86 percent of our worldwide revenues. Our Europe segment generated six percent of our revenues and Mexico generated the remaining eight percent.

In the U.S. & Canada segment, net revenues increased 10 percent in the first quarter of 2006 versus the prior year, reflecting strong volume growth and increases in net price per case, driven primarily by rate improvements.

In Europe, strong volume growth and increases in net price per case were partially offset by the negative impact of foreign currency translation for the first quarter of 2006 when compared to the prior year.

Net revenues in Mexico grew approximately 19 percent in the first quarter of 2006 versus the prior year driven primarily by net price per case increases, volume growth and the favorable impact of foreign currency translation. Increases in net price per case were driven predominantly by rate increases implemented in the latter part of the prior year.

Cost of Sales


	12 Weeks Ended
	March 25, 2006 vs
	March 19, 2005
	Worldwide
Volume impact		5	%

Cost per case impact		5	%

Acquisitions		1	%

Currency translation		1	%


Total Cost of Sales change		12	%

Cost of sales was $1.3 billion in the first quarter of 2006, a 12-percent increase over the prior year. The growth in cost of sales was driven primarily by volume growth and cost per case increases, coupled with contributions from our prior year acquisitions and the negative impact of foreign currency translation.

In the U.S. & Canada segment, cost of sales increased 13 percent when compared to the prior year driven primarily by volume growth and increases in cost per case. The increases in cost per case resulted from rate increases in packaging and ingredients, coupled with the impact of mix shifts into higher cost products and the negative impact of foreign currency translation.

In Europe, cost of sales grew modestly over the prior year, reflecting volume growth and cost per case increases, partially offset by the favorable impact of foreign currency translation.

In Mexico, cost of sales increased versus the prior year, driven by cost per case increases, strong volume growth and the negative impact of foreign currency translation. Cost per case increases were primarily due to higher manufacturing overhead costs.

Selling, Delivery and Administrative Expenses


	12 Weeks Ended
	March 25, 2006 vs.
	March 19, 2005
	Worldwide
Cost impact		6	%

Adoption of SFAS 123R		2	%

Acquisitions		0	%

Currency translation		1	%


Total SD&A change		9	%

Worldwide SD&A expenses were $993 million in the first quarter of 2006, a nine-percent increase over the prior year. Across all segments, increases in SD&A expenses were driven primarily by strong volume growth which impacted the variable components of our SD&A expenses, higher wage and benefit costs and the impact of SFAS 123R. These increases were coupled with higher pension and fuel costs and planned investment spending in high growth European markets.

Operating Income

Worldwide operating income of $121 million in the first quarter of 2006 was relatively unchanged when compared to a comparable period in 2005. Our results were driven by strong gross profit in our U.S. & Canada and Mexico segments mainly due to double-digit revenue growth, offset by the 13-percent negative impact of adopting SFAS 123R and higher SD&A expenses in our Europe segment attributable to higher investment spending.

Interest Expense, net

Net interest expense increased $6 million in the first quarter of 2006 versus the prior year, largely due to higher effective interest rates from interest rate swaps, which convert our fixed-rate debt to variable-rate debt.

Income Tax Expense

Our effective tax rate for the first quarter of 2006 was 36.1%, compared with our effective tax rate of 33.7% in the first quarter of 2005. The increase in our effective tax rate versus the prior year is due largely to an increase in anticipated pre-tax income in jurisdictions with higher effective tax rates.

Liquidity and Financial Condition

Cash Flows

In the first quarter of 2006, PBG generated $81 million of net cash provided by operations, which was $46 million higher than the cash generated in the comparable period in 2005. The increase in net cash provided by operations was driven by strong operating profits before non-cash charges and credits, coupled with the timing of pension contributions.

In the first quarter of 2006, cash used for investments was $168 million, which is $30 million higher than the cash used for investments in the comparable period in 2005. The increase in cash used for investments reflects higher capital spending, primarily as a result of timing of our fleet spending in the U.S.

In the first quarter of 2006, we used $81 million for financing activities as compared with a source of $48 million in the comparable period of 2005. This decrease in cash from financing is driven primarily by the repayment of our Turkish debt and the lapping of the 2005 debt issuance in Turkey, lower short-term borrowings and higher dividend payment.

For the full year 2006, we expect cash provided by operations plus the excess tax benefits from exercise of stock options to be greater than $1.2 billion and capital expenditures of approximately $735 million. We are unable to separately estimate the excess tax benefits from the exercise of stock options.

Liquidity and Capital Resources

We believe that our future cash flows from operations and borrowing capacity will be sufficient to fund capital expenditures, acquisitions, dividends and working capital requirements for the foreseeable future.

In March 2006, we entered into a $450 million committed revolving credit facility (“2006 Agreement”) which expires in March 2011 and increased our existing facility, which expires in April 2009, from $500 million to $550 million. Our $1 billion of committed credit facilities, which are guaranteed by Bottling Group LLC, support our $1 billion commercial paper program. Subject to certain conditions stated in the 2006 Agreement, the Company may borrow, prepay and reborrow amounts under the 2006 Agreement at any time during the term of the 2006 Agreement. Funds borrowed may be used for general corporate purposes, including supporting our commercial paper program. The 2006 Agreement also provides that standby letters of credit may be issued on behalf of the Company up to $250 million.

The 2006 Agreement contains customary representations, warranties and events of default in addition to certain financial covenants. The 2006 Agreement is attached to this Form 10-Q.

We had $405 million and $355 million outstanding in commercial paper, at March 25, 2006 and December 31, 2005, respectively.

Due to the nature of our business, we require insurance coverage for certain casualty risks. Given the rapidly increasing costs associated with obtaining third-party insurance coverage for our casualty risks in the U.S., we moved to a self-insurance program in 2002. In 2006, we are self-insured for workers’ compensation and automobile risks for occurrences up to $10 million, and product and general liability risks for occurrences up to $5 million. For losses exceeding these self-insurance thresholds, we purchase casualty insurance from a third-party provider.

On March 23, 2006 the Company’s Board of Directors approved an increase in the Company’s quarterly dividend from $0.08 to $0.11 per share on the outstanding common stock of the Company. This action resulted in a 38-percent increase in our quarterly dividend.

Contractual Obligations

As of March 25, 2006, there have been no material changes outside the normal course of business in the contractual obligations disclosed in Item 7 to our Annual Report on Form 10-K for the fiscal year ended December 31, 2005, under the caption “Contractual Obligations.”

Cautionary Statements

Except for the historical information and discussions contained herein, statements contained in this Form 10-Q may constitute forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on currently available competitive, financial and economic data and our operating plans. These statements involve a number of risks, uncertainties and other factors that could cause actual results to be materially different. Among the events and uncertainties that could adversely affect future periods are:

•		changes in our relationship with PepsiCo that could have a material adverse effect on our long-term and short-term business and financial results;

•		material changes in expected levels of bottler incentive payments from PepsiCo;

•		restrictions imposed by PepsiCo on our raw material suppliers that could increase our costs;

•		material changes from expectations in the cost or availability of raw materials, ingredients or packaging materials;

•		limitations on the availability of water or obtaining water rights;

•		an inability to achieve cost savings;

•		material changes in capital investment for infrastructure and an inability to achieve the expected timing for returns on cold-drink equipment and related infrastructure expenditures;

•		decreased demand for our product resulting from changes in consumers’ preferences;

•		an inability to achieve volume growth through product and packaging initiatives;

•		impact of competitive activities on our business;

•		impact of customer consolidations on our business;

•		changes in product category consumption;

•		unfavorable weather conditions in our markets;

•		an inability to meet projections for performance in newly acquired territories;

•		loss of business from a significant customer;

•		failure or inability to comply with laws and regulations;

•		changes in laws, regulations and industry guidelines governing the manufacture and sale of food and beverages, including restrictions on the sale of carbonated soft drinks in schools;

•		litigation, other claims and negative publicity relating to the alleged unhealthy properties of soft drinks;

•		changes in laws and regulations governing the environment, transportation, employee safety, labor and government contracts;

•		changes in accounting standards and taxation requirements (including unfavorable outcomes from audits performed by various tax authorities);

•		unforeseen economic and political changes;

•		possible recalls of our products;

•		interruptions of operations due to labor disagreements;

•		changes in our debt ratings;

•		material changes in expected interest and currency exchange rates and unfavorable market performance of our pension plan assets; and

•		an inability to achieve strategic business plan targets that could result in an intangible asset impairment charge.

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

The overall risks to our international businesses include changes in foreign governmental policies and other political or economic developments. These developments may lead to new product pricing, tax or other policies and monetary fluctuations, which may adversely impact our business. In addition, our results of operations and the value of our foreign assets are affected by fluctuations in foreign currency exchange rates. Foreign currency gains and losses reflect transaction gains and losses as well as translation gains and losses arising from the re-measurement into U.S. dollars of the net monetary assets of businesses in highly inflationary countries. There have been no material changes to our market risks as disclosed in Item 7 to our Annual Report on Form 10-K for the year ended December 31, 2005.

Item 4.

Controls and Procedures

PBG’s management carried out an evaluation, as required by Rule 13a-15(b) of the Securities Exchange Act of 1934 (the “Exchange Act”), with the participation of our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of our disclosure controls and procedures, as of the end of our last fiscal quarter. Based upon this evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this Quarterly Report on Form 10-Q, such that the information relating to PBG and its consolidated subsidiaries required to be disclosed in our Exchange Act reports filed with the SEC (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to PBG’s management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

In addition, PBG’s management carried out an evaluation, as required by Rule 13a-15(d) of the Exchange Act, with the participation of our Chief Executive Officer and our Chief Financial Officer, of changes in PBG’s internal control over financial reporting. Based on this evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that there were no changes in our internal control over financial reporting that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

PBG Purchases of Equity Securities

In the first quarter of 2006, we repurchased approximately 4 million shares of PBG common stock. Since the inception of our share repurchase program in October 1999, we have repurchased 105 million shares of PBG common stock. Our share repurchases for the first quarter of 2006, are as follows:


					Total Number of Shares		Maximum Number of
	Total Number of		Average Price		Purchased as Part of Publicly		Shares that May Yet Be
	Shares		Paid per		Announced Plans or		Purchased Under the Plans
Period	Purchased ¹		Share ²		Programs ³		or Programs ³
Period 1
01/01/06- 01/28/06		620,500	$	28.88		620,500		23,402,100
Period 2
01/29/06-02/25/06		1,704,600	$	28.89		1,704,600		21,697,500
Period 3
02/26/06-03/25/06		1,958,800	$	29.75		1,958,800		19,738,700

Total		4,283,900	$	29.28		4,283,900


		¹ Shares have only been repurchased through publicly announced programs.

		² Average share price excludes brokerage fees.

		³ The PBG Board has authorized the repurchase of shares of common stock on the open market and through negotiated transactions as follows:


	Number of Shares
	Authorized to be
Date Share Repurchase Program was Publicly Announced	Repurchased
October 14, 1999		20,000,000
July 13, 2000		10,000,000
July 11, 2001		20,000,000
May 28, 2003		25,000,000
March 25, 2004		25,000,000
March 24, 2005		25,000,000

Total shares authorized to be repurchased as of March 25, 2006		125,000,000

Unless terminated by resolution of the PBG Board, each share repurchase program expires when we have repurchased all shares authorized for repurchase thereunder.

Item 6.

Exhibits


Exhibit No.
4.1		Indenture, dated as of March 30, 2006 by and between Bottling Group, LLC, as Obligor and JPMorgan Chase Bank, N.A., as Trustee relating to $800,000,000 5.50% Senior Notes due April 1, 2016.

4.2		Form of Note for the $800,000,000 5.50% Senior Notes due April 1, 2016.

10.1		$450,000,000 5-Year Credit Agreement dated as of March 22, 2006 among, The Pepsi Bottling Group, Inc., Bottling Group, LLC, Citibank, N.A., as Agent, Citigroup Global Markets Inc and HSBC Securities (USA) Inc., as joint lead arrangers and joint book managers; HSBC Bank USA, N.A., as syndication agent; and Lehman Brothers Bank, FSB, Deutsche Bank AG New York Branch, and JPMorgan Chase Bank, National Association, as co-documentation agents.

31.1		Certification by the Chief Executive Officer pursuant to Section 302 of the Sarbanes–Oxley Act of 2002

31.2		Certification by the Chief Financial Officer pursuant to Section 302 of the Sarbanes–Oxley Act of 2002

32.1		Certification by the Chief Executive Officer pursuant to Section 906 of the Sarbanes–Oxley Act of 2002

32.2		Certification by the Chief Financial Officer pursuant to Section 906 of the Sarbanes–Oxley Act of 2002

99.1		Financial statements of Bottling LLC, which are incorporated herein by reference to Bottling LLC’s Quarterly Report on Form 10-Q for the quarter ended March 25, 2006, as required by the SEC as a result of Bottling LLC’s guarantee of up to $1,000,000,000 aggregate principal amount of our 7% Senior Notes due in 2029.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	THE PEPSI BOTTLING GROUP, INC.
		(Registrant)

Date: April 28, 2006		/s/ Andrea L. Forster

		Andrea L. Forster
		Vice President and Controller

Date: April 28, 2006		/s/ Alfred H. Drewes

		Alfred H. Drewes
		Senior Vice President and
		Chief Financial Officer

EXHIBIT 4.1

BOTTLING GROUP, LLC
(as Obligor)

and

JPMORGAN CHASE BANK, N.A.
(as Trustee)

Indenture

Dated as of March 30, 2006

SENIOR NOTES

TABLE OF CONTENTS


	Page
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION

Section 1.01. Definitions		1
Section 1.02. Officers’ Certificates and Opinions		9
Section 1.03. Form of Documents Delivered to Trustee		10
Section 1.04. Acts of Holders		10
Section 1.05. Notices, Etc., to Trustee and Obligor		11
Section 1.06. Notice to Holders; Waiver		12
Section 1.07. Conflict with Trust Indenture Act		12
Section 1.08. Effect of Headings and Table of Contents		12
Section 1.09. Successors and Assigns		12
Section 1.10. Separability Clause		12
Section 1.11. Benefits of Indenture		12
Section 1.12. Governing Law		13
Section 1.13. Counterparts		13
Section 1.14. Legal Holidays		13

ARTICLE II
THE NOTES

Section 2.01. Form and Dating		13
Section 2.02. Execution and Authentication		16
Section 2.03. Temporary Notes		18
Section 2.04. Registration, Transfer and Exchange		18
Section 2.05. Mutilated, Destroyed, Lost and Stolen Notes		21
Section 2.06. Payment of Interest; Interest Rights Preserved		21
Section 2.07. Persons Deemed Owners		23
Section 2.08. Cancellation		23
Section 2.09. Computation of Interest		23
Section 2.10. CUSIP Numbers		23

ARTICLE III
DISCHARGE OF INDENTURE

Section 3.01. Discharge of Indenture		24
Section 3.02. Defeasance and Discharge of Covenants upon Deposit of Moneys, U.S. Government Obligations		25
Section 3.03. Application of Trust Money		26
Section 3.04. Paying Agent to Repay Moneys Held		27
Section 3.05. Return of Unclaimed Amounts		27
Section 3.06. Reinstatement		27


	Page
ARTICLE IV
REMEDIES

Section 4.01. Events of Default		27
Section 4.02. Acceleration of Maturity; Rescission and Annulment		29
Section 4.03. Collection of Indebtedness and Suits for Enforcement		30
Section 4.04. Trustee May File Proofs of Claim		30
Section 4.05. Trustee May Enforce Claims Without Possession of Notes		31
Section 4.06. Application of Money Collected		31
Section 4.07. Limitation on Suits		32
Section 4.08. Unconditional Right of Holders to Receive Payment of Principal, Premium and Interest		32
Section 4.09. Restoration of Rights and Remedies		32
Section 4.10. Rights and Remedies Cumulative		33
Section 4.11. Delay or Omission Not Waiver		33
Section 4.12. Control by Holders		33
Section 4.13. Waiver of Past Defaults		33
Section 4.14. Undertaking for Costs		34
Section 4.15. Waiver of Stay or Extension Laws		34

ARTICLE V
THE TRUSTEE

Section 5.01. Certain Duties and Responsibilities of Trustee		34
Section 5.02. Notice of Defaults		35
Section 5.03. Certain Rights of Trustee		36
Section 5.04. Not Responsible for Recitals or Issuance of Notes		36
Section 5.05. May Hold Notes		37
Section 5.06. Money Held in Trust		37
Section 5.07. Compensation and Reimbursement		37
Section 5.08. Disqualification; Conflicting Interests		38
Section 5.09. Corporate Trustee Required; Eligibility		38
Section 5.10. Resignation and Removal; Appointment of Successor		39
Section 5.11. Acceptance of Appointment by Successor		40
Section 5.12. Merger, Conversion, Consolidation or Succession to Business		41
Section 5.13. Preferential Collection of Claims Against Obligor		41
Section 5.14. Appointment of Authenticating Agent		41

ARTICLE VI
HOLDERS’ LISTS AND REPORTS BY TRUSTEE AND OBLIGOR

Section 6.01. Obligor to Furnish Trustee Names and Addresses of Holders		43
Section 6.02. Preservation of Information; Communications to Holders		43


	Page
Section 6.03. Reports by Trustee		44
Section 6.04. Reports by Obligor		44

ARTICLE VII
CONSOLIDATION, MERGER OR TRANSFER

Section 7.01. Obligor May Consolidate, Etc., Only on Certain Terms		44
Section 7.02. Successor Entity Substituted		45

ARTICLE VIII
SUPPLEMENTAL INDENTURES

Section 8.01. Supplemental Indentures Without Consent of Holders		45
Section 8.02. Supplemental Indentures with Consent of Holders		46
Section 8.03. Execution of Supplemental Indentures		47
Section 8.04. Effect of Supplemental Indentures		48
Section 8.05. Conformity with Trust Indenture Act		48
Section 8.06. Documents to Be Given to Trustee		48
Section 8.07. Notation on Notes in Respect of Supplemental Indentures		48

ARTICLE IX
COVENANTS

Section 9.01. Payment of Principal, Premium and Interest		48
Section 9.02. Maintenance of Office or Agency		49
Section 9.03. Money for Note Payments to be Held in Trust		49
Section 9.04. Certificate to Trustee		50
Section 9.05. Existence		50
Section 9.06. Limitation on Liens		50
Section 9.07. Limitation on Sale-Leaseback Transactions		51

ARTICLE X
REDEMPTION OF NOTES

Section 10.01. Election to Redeem; Notice to Trustee		52
Section 10.02. Selection by Trustee of the Notes to be Redeemed		52
Section 10.03. Notice of Redemption		52
Section 10.04. Deposit of Redemption Price		53
Section 10.05. Notes Payable on Redemption Date		53
Section 10.06. Notes Redeemed in Part		54
Section 10.07. Optional Redemption		54
Section 10.08. Mandatory Redemption		54

iii

EXECUTION COPY

THIS INDENTURE, between Bottling Group, LLC, a Delaware limited liability company (the “Obligor”), having its principal office at One Pepsi Way, Somers, New York 10589, and JPMorgan Chase Bank, N.A., a national banking association organized and existing under the laws of the United States of America, as trustee (the “Trustee”), is made and entered into as of this 30 ^th day of March, 2006.

RECITALS OF THE OBLIGOR

WHEREAS, the Obligor has duly authorized the issuance from time to time of its Senior Notes in one or more series (the “Notes”) up to such principal amount or amounts as may from time to time be authorized in accordance with the terms of this Indenture and to provide, among other things, for the authentication, delivery and administration thereof, the Obligor has duly authorized the execution and delivery of this Indenture; and

WHEREAS, all things necessary to make this Indenture a valid agreement of the Obligor, in accordance with its terms, have been done.

NOW, THEREFORE:

In consideration of the premises and the purchases of the Notes by the Holders (as hereinafter defined) thereof, the Obligor and the Trustee mutually covenant and agree for the equal and proportionate benefit of the respective Holders from time to time of the Notes or any series thereof as follows:

ARTICLE I

DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION

SECTION 1.01. Definitions . For all purposes of this Indenture, and of any indenture supplemental hereto, except as otherwise expressly provided or unless the context otherwise requires:

(1) the terms defined in this Article have the meanings assigned to them in this Article, and include the plural as well as the singular;

(2) all other terms used herein which are defined in the Trust Indenture Act (as hereinafter defined), either directly or by reference therein, have the meanings assigned to them therein;

(3) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with U.S. GAAP; and

(4) all references in this instrument to designated “Articles,” “Sections” and other subdivisions are to the designated Articles, Sections and other subdivisions of this instrument as originally executed. The words “herein,” “hereof,” and “hereunder” and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section, or other subdivision.

“ Act ,” when used with respect to any Holder, has the meaning specified in Section 1.04.

“ Affiliate ” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, “control” when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract, or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

“ Attributable Debt ” for a lease means the aggregate of present values (discounted at a rate per annum equal to the weighted average interest rate borne by all Outstanding Notes and compounded semi-annually) of the obligations of the Obligor or any Restricted Subsidiary of the Obligor for net rental payments during the remaining term of such lease (including any period for which such lease has been extended or may, at the option of the lessor, be extended). The term “net rental payments” under any lease of any period shall mean the sum of the rental and other payments required to be paid in such period by the lessee thereunder, not including, however, any amounts required to be paid by such lessee on account of maintenance and repairs, reconstruction, insurance, taxes, assessments, water rates or similar charges required to be paid by such lessee thereunder or any amounts required to be paid by such lessee thereunder contingent upon the amount of sales, maintenance and repairs, reconstruction, insurance, taxes, assessments, water rates or similar charges. Attributable Debt may be reduced by the present value of the rental obligations, calculated on the same basis, that any sublessee has for all or part of the leased property.

“ Authenticating Agent ” means any Person authorized by the Trustee to authenticate Notes under Section 5.14.

“ Authentication Order ” has the meaning specified in Section 2.02(1).

“ Bankruptcy Code ” means title 11, U.S. Code, as amended, or any similar state or federal law for the relief of debtors.

“ Business Day ” means any day, other than a Saturday or Sunday, that is neither a legal holiday nor a day on which banking institutions in New York are authorized or required by law, regulation or executive order to be closed.

“ Commission ” means the Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act, or, if at any time after the execution of this instrument such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties on such date.

“ Company Request ” or “ Company Order ” means a written request or order, respectively, signed in the name of the Obligor by any Officer thereof and delivered to the Trustee.

“ Comparable Treasury Issue ” means the United States Treasury security selected by an Independent Investment Banker as having a maturity comparable to the remaining term of

the Notes to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of such Notes.

“ Comparable Treasury Price ” means, with respect to any Redemption Date for the Notes of any series, (a) the average of four Reference Treasury Dealer Quotations for such Redemption Date, after excluding the highest and lowest such Reference Treasury Dealer Quotations, or (b) if the Trustee obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such quotations.

“ Consolidated Net Tangible Assets ” means, with respect to any Person, the total amount of assets of such Person and its Subsidiaries minus (a) all applicable depreciation, amortization, and other valuation reserves, (b) the amount of assets resulting from write-ups of capital assets of such Person and its Subsidiaries (except write-ups in connection with accounting for acquisitions in accordance with U.S. GAAP), (c) all current liabilities of such Person and its Subsidiaries (excluding any intercompany liabilities) and (d) all goodwill, trade names, trademarks, patents, unamortized debt discount and expense and other like intangibles, all as set forth on the latest quarterly or annual consolidated balance sheet of such Person and its Subsidiaries prepared in accordance with U.S. GAAP.

“ Corporate Trust Office ” means the office of the Trustee in the City of New York at which at any particular time its corporate trust business shall be principally administered, which office at the date hereof is located at 4 New York Plaza, New York, New York 10004, except that with respect to the presentation of Notes for payment or registration of transfer or exchange and with respect to the location of the Security Register, such term shall mean the office or the agency of the Trustee in said city at which at any particular time its corporate agency business shall be conducted, which office at the date hereof is located at 4 New York Plaza, 15th Floor, New York, New York 10004.

“ Covenant Defeasance ” has the meaning specified in Section 3.02.

“ Custodian ” means the Person appointed by the Obligor to act as custodian for the Depositary, which Person shall be the Trustee unless and until a successor Person is appointed by the Obligor.

“ Debt ” means any indebtedness of the Obligor for borrowed money, capitalized lease obligations and purchase money obligations, or any guarantee of such debt, in any such case which would appear on the consolidated balance sheet of the Obligor as a liability.

“ Defaulted Interest ” has the meaning specified in Section 2.06.

“ Definitive Note ” means a certificated Note registered in the name of the Holder thereof and issued in accordance with this Indenture.

“ Depositary ” means with respect to the Notes of any series issuable or issued in whole or in part in global form, the Person designated as Depositary for such series by the Obligor pursuant to Section 2.01 or 2.04, unless and until a successor Depositary for such series shall have become such pursuant to the applicable provisions of this Indenture, and thereafter

“Depositary” with respect to the Notes of a series shall mean or include each Person who is then a Depositary hereunder with respect to such series.

“ Discharged ” has the meaning specified in Section 3.02.

“ DTC ” has the meaning specified in Section 2.04(2).

“ Entity ” means any corporation, limited liability company, partnership, joint venture, association, joint-stock company, trust or unincorporated organization.

“ Event of Default ” has the meaning specified in Section 4.01.

“ Exchange Act ” means the U.S. Securities Exchange Act of 1934 (or any successor Act), as amended, and the rules and regulations of the Commission promulgated thereunder.

“ Exempted Debt ” means the sum, without duplication, of the following items outstanding as of the date Exempted Debt is being determined: (a) Debt incurred after the date of this Indenture and secured by Liens created or assumed or permitted to exist on any Principal Property (as such term is defined with respect to the Obligor) or on any shares of stock of any Restricted Subsidiary of the Obligor, other than Debt secured by Liens described in clauses (1) through (7) of Section 9.06 and (b) Attributable Debt of the Obligor and its Restricted Subsidiaries in respect of all sale and lease-back transactions with regard to any Principal Property (as such term is defined with respect to the Obligor) entered into pursuant to Section 9.07(2).

“ Funded Debt ” means all Debt having a maturity of more than one year from the date of its creation or having a maturity of less than one year but by its terms being renewable or extendible, at the option of the obligor in respect thereof, beyond one year from its creation.

“ Global Note ” means each note in global form issued in accordance with this Indenture and bearing the Global Note Legend.

“ Global Note Legend ” means the legend set forth in Section 2.01, which is required to be placed on all Global Notes issued pursuant to this Indenture.

“ Holder ” and “ Holder of Notes ” means a Person in whose name a Note is registered in the Security Register.

“ Indenture ” or “ this Indenture ” means this Indenture, as amended or supplemented from time to time, including the Exhibits hereto.

“ Independent Investment Banker ” means one of the Reference Treasury Dealers appointed by the Trustee after consultation with the Obligor.

“ Interest Payment Date ,” when used with respect to any Note, means the date specified in such Note on which an installment of interest on such Note is scheduled to be paid.

“ Issue Date ” of any Note (or portion thereof) means the earlier of (a) the date of such Note or (b) the date of any Note (or portion thereof) for which such Note was issued (directly or indirectly) on registration of transfer, exchange or substitution.

“ Legal Defeasance ” has the meaning specified in Section 3.02.

“ Lien ” has the meaning specified in Section 9.06.

“ Managing Director-Delegatee ” means the Managing Director-Delegatee of the Obligor.

“ Managing Directors ” means (a) the Managing Directors of the Obligor or (b) any duly authorized committee of the Managing Directors of the Obligor.

“ Managing Directors Resolution ” means, with respect to the Obligor, a copy of a resolution of the Managing Directors certified by a Managing Director or a Managing Director-Delegatee of the Obligor to have been duly adopted by the Managing Directors and to be in full force and effect on the date of such certification, and delivered to the Trustee.

“ Maturity ,” when used with respect to any Note, means the date on which all or a portion of the principal amount outstanding under such Note becomes due and payable, whether on the Maturity Date or by declaration of acceleration, call for redemption, or otherwise.

“ Maturity Date ,” when used with respect to any Note or any installment of principal thereof means the date specified in such Note as the fixed date on which the principal of such Note or such installment of principal becomes due and payable.

“ Notes ” has the meaning specified in the Recitals of the Obligor on the first page of this Indenture, including any replacement Notes issued therefor in accordance with this Indenture.

“ Obligor ” means Bottling Group, LLC, a Delaware limited liability company, unless and until a successor Entity or assign shall have assumed the obligations of the Obligor under this Indenture and the Notes and thereafter “Obligor” shall mean such successor Entity or assign.

“ Officer ” means a Managing Director, a Managing Director-Delegatee, the principal financial officer or any other officer or officers of the Obligor designated pursuant to an applicable Managing Directors Resolution.

“ Officers’ Certificate ” means, with respect to any Person, a certificate signed on behalf of such Person by any two Officers of such Person that meets the applicable requirements of this Indenture.

“ Opinion of Counsel ” means, with respect to the Obligor or the Trustee, a written opinion of counsel to the Obligor or the Trustee, as the case may be, which counsel may be an employee of the Obligor or the Trustee, as the case may be.

“ Outstanding ,” when used with respect to the Notes or any series of Notes means, as of the date of determination, all Notes or all Notes of such series, as the case may be, theretofore authenticated and delivered under this Indenture, except:

(a) such Notes or such Notes of such series, as the case may be, theretofore cancelled by the Trustee or delivered to the Trustee for cancellation;

(b) such Notes or such Notes of such series, as the case may be, or portions thereof, for whose payment or redemption money in the necessary amount has been theretofore deposited in trust with the Trustee or with any Paying Agent other than the Obligor, or, if the Obligor shall act as its own Paying Agent, has been set aside and segregated in trust by the Obligor; provided, in any case, that if such Notes or such Notes of such series, as the case may be, are to be redeemed prior to their Maturity Date, notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made;

(c) such Notes or such Notes of such series, as the case may be, in exchange for or in lieu of which other Notes or other Notes of such series, as the case may be, have been authenticated and delivered pursuant to this Indenture, or which shall have been paid, in each case, pursuant to the terms of Section 2.05 (except with respect to any such Note or any such Note of such series, as the case may be, as to which proof satisfactory to the Trustee is presented that such Note or such Note of such series, as the case may be, is held by a person in whose hands such Notes or such Notes of such series, as the case may be, is a legal, valid, and binding obligation of the Obligor); and

(d) solely to the extent provided in Article III, Notes or Notes of such series, as the case may be, which are subject to Legal Defeasance or Covenant Defeasance as provided in Section 3.02. In determining whether the Holders of the requisite principal amount of such Notes or Notes of such series, as the case may be, Outstanding have given a direction concerning the time, method and place of conducting any proceeding for any remedy available to the Trustee, or concerning the exercise of any trust or power conferred upon the Trustee under this Indenture, or concerning a consent on behalf of the Holders of the Notes or the Holders of the Notes of such series, as the case may be, to the waiver of any past default and its consequences, Notes or the Notes of such series, as the case may be, owned by the Obligor, any other obligor upon the Notes or Notes of such series, as the case may be, or any Affiliate of the Obligor or such other obligor shall be disregarded and deemed not to be Outstanding. In determining whether the Trustee shall be protected in relying upon any request, demand, authorization, direction, notice, consent, or waiver hereunder, only Notes or Notes of such series, as the case may be, which a Responsible Officer assigned to the corporate trust department of the Trustee knows to be owned by the Obligor or any other obligor upon the Notes or the Notes of such series, as the case may be, or any Affiliate of the Obligor or such other obligor shall be so disregarded. Notes or Notes of such series, as the case may be, so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee’s right to act as owner with respect to such Notes or Notes of such series, as the case may be, and that the pledgee is

not the Obligor or any other obligor upon the Notes or the Notes of such series, as the case may be, or any Affiliate of the Obligor or such other obligor.

“ Paying Agent ” means any Person appointed by the Obligor to distribute amounts payable by the Obligor on the Notes. The Obligor may act as its own Paying Agent. As of the date of this Indenture, the Obligor has appointed JPMorgan Chase Bank, N.A. as Paying Agent with respect to all Notes issuable hereunder.

“ PBG ” means The Pepsi Bottling Group, Inc., a Delaware corporation.

“ Person ” means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization, or government, or any agency or political subdivision thereof.

“ Place of Payment ” means the place specified pursuant to Section 9.02.

“ Predecessor Notes ” of any particular Note means every previous Note evidencing all or a portion of the same debt as that evidenced by such particular Note; and, for the purposes of this definition, any Note authenticated and delivered under Section 2.05 in lieu of a lost, destroyed, mutilated, or stolen Note shall be deemed to evidence the same debt as the lost, destroyed, mutilated, or stolen Note.

“ Principal Property ” means any single manufacturing or processing plant, office building, or warehouse owned or leased by the Obligor or a Subsidiary of the Obligor, in each case, located in the 50 states of the United States of America, the District of Columbia or Puerto Rico, other than a plant, warehouse, office building, or portion thereof which, in the opinion of the Managing Directors evidenced by a Managing Directors Resolution, is not of material importance to the business conducted by the Obligor and its Subsidiaries taken as an entirety.

“ Record Date ” means any date as of which the Holder of a Note of any series will be determined for any purpose described herein, such determination to be made as of the close of business on such date by reference to the Security Register, and in relation to a determination of a payment of an installment of interest on the Notes of any series, shall have the meaning specified in such series of Notes.

“ Redemption Date ” when used with respect to any Notes to be redeemed, means the date fixed for such redemption in any notice of redemption issued pursuant to this Indenture.

“ Redemption Price ” when used with respect to any Notes to be redeemed, means the price specified in Section 10.07.

“ Reference Treasury Dealer ” means four primary U.S. Government securities dealers in New York City (each, a “Primary Treasury Dealer”), either named in the prospectus supplement relating to a series of Notes or appointed by the Trustee in consultation with the Obligor; provided, however, that if any of the foregoing shall cease to be a Primary Treasury Dealer, the Obligor shall substitute therefor another Primary Treasury Dealer.

“ Reference Treasury Dealer Quotations ” means, with respect to each Reference Treasury Dealer and any Redemption Date, the average, as determined by the Trustee, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m., New York City time, on the third Business Day preceding such Redemption Date.

“ Registrar ” means the Person who maintains the Security Register, which Person shall be the Trustee unless and until a successor Registrar is appointed by the Obligor.

“ Responsible Officer ,” when used with respect to the Trustee, means any officer of the Trustee having direct responsibility for the administration of this Indenture and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his or her knowledge of and familiarity with the particular subject.

“ Restricted Subsidiary ” means, with respect to the Obligor or PBG, any current or future Subsidiary of the Obligor or PBG, as the case may be, (i) substantially all of the property of which is located, or substantially all of the business of which is carried on, within the 50 states of the United States of America, the District of Columbia or Puerto Rico and which is not a foreign corporation, and (ii) which owns or leases any Principal Property.

“ Securities Act ” means the U.S. Securities Act of 1933 (or any successor Act), as amended, and the rules and regulations of the Commission promulgated thereunder.

“ Security Register ” has the meaning specified in Section 2.04.

“ Special Record Date ” for the payment of any Defaulted Interest means a date fixed by the Trustee pursuant to Section 2.06.

“ Subsidiary ” of any specified Person means any Person at least a majority of whose outstanding Voting Stock shall at the time be owned, directly or indirectly, by the specified Person or by one or more of its Subsidiaries, or both.

“ Treasury Rate ” means, with respect to any Redemption Date for the Notes: (i) the yield, under the heading which represents the average for the immediately preceding week, appearing in the most recently published statistical release designated “H.15(519)” or any successor publication which is published weekly by the Board of Governors of the Federal Reserve System and which establishes yields on actively traded United States Treasury securities adjusted to constant maturity under the caption “Treasury Constant Maturities,” for the maturity corresponding to the Comparable Treasury Issue (if no maturity is within three months before or after the remaining term of the Notes to be redeemed, yields for the two published maturities most closely corresponding to the Comparable Treasury Issue shall be calculated, and the Treasury Rate shall be interpolated or extrapolated from such yields on a straight line basis, rounding to the nearest month); or (ii) if such statistical release (or any successor statistical release) is not published during the week preceding the calculation date or does not contain such yields, the rate per annum equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue, calculated using a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such Redemption Date.

“ Trust Indenture Act ” or “ TIA ” means the Trust Indenture Act of 1939, as amended, as in force as of the date hereof; provided that, with respect to every supplemental indenture executed pursuant to this Indenture, “ Trust Indenture Act ” or “ TIA ” shall mean the Trust Indenture Act of 1939, as then in effect.

“ Trustee ” means the Person named as the “ Trustee ” in the first paragraph of this instrument until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter “ Trustee ” shall mean, or include each Person who is then a Trustee hereunder, and if at any time there is more than one such Person, “Trustee” as used with respect to the Notes of any series shall mean the Trustee with respect to the Notes of that series.

“ U.S. GAAP ” means accounting principles as are generally accepted in the United States of America at the date of any computation required or permitted under this Indenture.

“ U.S. Government Obligations ” means (a) securities that are direct obligations of the United States of America, the payment of which is unconditionally guaranteed by the full faith and credit of the United States of America and (b) securities that are obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America, the payment of which is unconditionally guaranteed by the full faith and credit of the United States of America, and also includes depository receipts issued by a bank or trust company as custodian with respect to any of the securities described in the preceding clauses (a) and (b), and any payment of interest or principal payable under any of the securities described in the preceding clauses (a) and (b) that is held by such custodian for the account of the holder of a depository receipt, provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt, or from any amount received by the custodian in respect of such securities, or from any specific payment of interest or principal payable under the securities evidenced by such depository receipt.

“ Vice President ” means, with respect to any Person, any vice president of that Person, whether or not designated by a number or a word or words added before or after the title “vice president.”

“ Voting Stock ” means, as applied to any Person, capital stock (or other interests, including partnership or membership interests) of any class or classes (however designated), the outstanding shares (or other interests) of which have, by the terms thereof, ordinary voting power to elect a majority of the members of the board of directors (or other governing body) of such Person, other than stock (or other interests) having such power only by reason of the happening of a contingency.

SECTION 1.02. Officers’ Certificates and Opinions . Every Officers’ Certificate, Opinion of Counsel and other certificate or opinion to be delivered to the Trustee under this Indenture with respect to any action to be taken by the Trustee shall include the following:

(1) a statement that each individual signing such certificate or opinion has read all covenants and conditions of this Indenture relating to such proposed action, including the definitions of all applicable capitalized terms;

(2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;

(3) a statement that, in the opinion of each such individual, he or she has made such examination or investigation as is necessary to enable him or her to express an informed opinion as to whether or not such covenant or condition has been complied with; and

(4) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with.

SECTION 1.03. Form of Documents Delivered to Trustee .

(1) In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to the other matters, and any such Person may certify or give an opinion as to such matters in one or several documents.

(2) Any certificate or opinion of an officer of the Obligor may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, legal counsel, unless such officer knows that any such certificate, opinion, or representation is erroneous. Any opinion of counsel for the Obligor may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Obligor, unless such counsel knows that any such certificate, opinion, or representation is erroneous.

(3) Where any Person is required to make, give, or execute two or more applications, requests, consents, certificates, statements, opinions, or other instruments under this Indenture, such instruments may, but need not, be consolidated and form a single instrument.

SECTION 1.04. Acts of Holders .

(1) Any request, demand, authorization, direction, notice, consent, waiver, or other action provided by this Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and (if expressly required by the applicable terms of this Indenture) to the Obligor. Such instrument or instruments (and the action

embodied therein and evidenced thereby) are herein sometimes referred to as the “Act” of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Section 5.01) conclusive in favor of the Trustee and the Obligor, if made in the manner provided in this Section 1.04.

(2) The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness to such execution or by the certificate of any notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Where such execution is by an officer of a corporation or a member of a partnership, on behalf of such corporation or partnership, such certificate or affidavit shall also constitute sufficient proof of his authority. The fact and date of the execution of any such instrument or writing, or the authority of the person executing the same, may also be proved in any other manner which the Trustee deems sufficient.

(3) The ownership of Notes shall for all purposes be determined by reference to the Security Register, as such register shall exist as of the applicable Record Date.

(4) If the Obligor shall solicit from the Holders any request, demand, authorization, direction, notice, consent, waiver or other action, the Obligor may, at its option, by Managing Directors Resolution, fix in advance a Record Date for the determination of Holders entitled to give such request, demand, authorization, direction, notice, consent, waiver or other action, but the Obligor shall have no obligation to do so. If such Record Date is fixed, such request, demand, authorization, direction, notice, consent, waiver or other action may be given before or after such Record Date, but only the Holders of record at the close of business on such Record Date shall be deemed to be Holders for the purpose of determining whether Holders of the requisite proportion of Notes Outstanding have authorized or agreed or consented to such request, demand, authorization, direction, notice, consent, waiver or other action, and for that purpose the Notes Outstanding shall be computed as of such Record Date; provided that no such authorization, agreement or consent by the Holders on such Record Date shall be deemed effective unless it shall become effective pursuant to the provisions of this Indenture not later than six months after such Record Date.

(5) Any request, demand, authorization, direction, notice, consent, waiver or other action by the Holder of any Note shall bind each subsequent Holder of such Note, and each Holder of any Note issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof, with respect to anything done or suffered to be done by the Trustee or the Obligor in reliance upon such action, whether or not notation of such action is made upon such Note.

SECTION 1.05. Notices, Etc., to Trustee and Obligor . Any request, order, authorization, direction, consent, waiver or other action to be taken by the Trustee, the Obligor or the Holders hereunder (including any Authentication Order), and any notice to be given to the Trustee or the Obligor with respect to any action taken or to be taken by the Trustee, the Obligor or the Holders hereunder, shall be sufficient if made in writing and

(1) if to be furnished or delivered to or filed with the Trustee by the Obligor or any Holder, delivered to the Trustee at its Corporate Trust Office, Attention: Worldwide Securities Services, or

(2) if to be furnished or delivered to the Obligor by the Trustee or any Holder, and except as otherwise provided in Section 4.01(3), mailed to the Obligor, first-class postage prepaid, at the following address: c/o The Pepsi Bottling Group, Inc., One Pepsi Way, Somers, New York 10589, Attention: Treasurer, or at any other address hereafter furnished in writing by the Obligor to the Trustee.

SECTION 1.06. Notice to Holders; Waiver . Where this Indenture or any Note provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise expressly provided herein or in such Note) if in writing and mailed, first-class postage prepaid, to each Holder affected by such event, at his or her address as it appears in the Security Register as of the applicable Record Date, if any, not later than the latest date or earlier than the earliest date prescribed by this Indenture or such Note for the giving of such notice. In any case where notice to Holders is given by mail, neither the failure to mail such notice nor any defect in any notice so mailed to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. Where this Indenture or any Note provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. In case, by reason of the suspension of regular mail service as a result of a strike, work stoppage or otherwise, it shall be impractical to mail notice of any event to any Holder when such notice is required to be given pursuant to any provision of this Indenture or the applicable Note, then any method of notification as shall be satisfactory to the Trustee and the Obligor shall be deemed to be sufficient for the giving of such notice.

SECTION 1.07. Conflict with Trust Indenture Act . If any provision hereof limits, qualifies or conflicts with another provision hereof which is required to be included in this Indenture by any of the provisions of the TIA, such required provision shall control.

SECTION 1.08. Effect of Headings and Table of Contents . The Article and Section headings herein and the Table of Contents hereof are for convenience only and shall not affect the construction of any provision of this Indenture.

SECTION 1.09. Successors and Assigns . All covenants and agreements in this Indenture by the Obligor shall bind its successors and assigns, whether so expressed or not.

SECTION 1.10. Separability Clause . In case any provision in this Indenture or in the Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

SECTION 1.11. Benefits of Indenture . Nothing in this Indenture or in any Notes, express or implied, shall give to any Person, other than the parties hereto, their successors hereunder, the Authenticating Agent, the Registrar, any Paying Agent, and the Holders of Notes

(or such of them as may be affected thereby), any benefit or any legal or equitable right, remedy or claim under this Indenture.

SECTION 1.12. Governing Law . This Indenture shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to rules governing the conflict of laws.

SECTION 1.13. Counterparts . This instrument may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original, but all of which shall together constitute but one and the same instrument.

SECTION 1.14. Legal Holidays . In any case where any Interest Payment Date or Redemption Date or Maturity Date shall not be a Business Day, then (notwithstanding any other provisions of this Indenture or of the Notes) payment of interest or principal (and premium, if any) need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on the Interest Payment Date, the Redemption Date or Maturity Date, provided that no interest shall accrue for the period from and after such Interest Payment Date, Redemption Date or Maturity Date, as the case may be.

ARTICLE II

THE NOTES

SECTION 2.01. Form and Dating .

(1) General .

(i) The Notes of each series shall be substantially in such form (not inconsistent with this Indenture) as shall be established by or pursuant to a Managing Directors Resolution or in one or more indentures supplemental hereto, in each case with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture and may have imprinted or otherwise reproduced thereon such legend or legends, not inconsistent with the provisions of this Indenture, as may be required to comply with any law, stock exchange rule or DTC rule or usage or with any rules or regulations pursuant thereto, all as may, consistently herewith, be determined by the Officers executing such Notes, as evidenced by their execution of the Notes. Any portion of the text of any Note may be set forth on the reverse thereof, with an appropriate reference thereto on the face of the Note. Each Note shall be dated the date of its authentication. The Obligor shall furnish any such legends to the Trustee in writing.

(ii) The Definitive Notes, if any, shall be printed, lithographed or engraved or produced by any combination of those methods on steel engraved borders or may be produced in any other manner permitted by the rules of any securities exchange, all as determined by the Officers executing such Notes, as evidenced by their execution of such Notes.

(iii) The terms and provisions contained in the Notes shall constitute, and are hereby expressly made, a part of this Indenture and the Obligor and the Trustee, by their execution and delivery of this Indenture expressly agree to such terms and provisions and to be bound thereby. Nothing in the preceding sentence shall, however, limit the effect of the second paragraph of Section 2.02(1). However, to the extent any provision of any Note conflicts with the express provisions of this Indenture, the provisions of this Indenture shall govern and be controlling. All Notes of any one series shall be substantially identical except as to denomination and except as may otherwise be provided in or pursuant to such resolution of the Managing Directors or in any such indenture supplemental hereto.

(iv) No Note shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Note a certificate of authentication substantially in the form provided for herein executed by the Trustee by manual signature of an authorized officer, and such certificate upon any Note shall be conclusive evidence, and the only evidence, that such Note has been duly authenticated and delivered hereunder.

(v) The aggregate principal amount of Notes which may be authenticated and delivered under this Indenture is unlimited. The Notes may be issued in one or more series. There shall be established in or pursuant to a resolution of the Managing Directors and set forth in an Officers’ Certificate, or established in one or more indentures supplemental hereto, prior to the issuance of Notes of any series:

(a) the title of the Notes of the series (which shall distinguish the Notes of the series from all other Notes);

(b) any limit upon the aggregate principal amount of the Notes of the series that may be authenticated and delivered under this Indenture (except for Notes authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Notes of the series pursuant to Section 2.03, 2.04, 2.05, 8.07 or 10.06);

(d) the rate or rates at which the Notes of the series shall bear interest, if any, or the method by which such rate shall be determined, the date or dates from which such interest shall accrue, the Interest Payment Dates on which such interest shall be payable and the Record Dates, if any, for the determination of Holders to whom interest is payable;

(e) the place or places where the principal of and any premium and interest on the Notes of the series shall be payable;

(f) if other than the principal amount thereof, the portion of the principal amount of Notes of the series which shall be payable upon declaration of acceleration of the Maturity thereof pursuant to Section 4.02;

(g) the issue date;

(h) the issue price (expressed as a percentage of the aggregate principal amount of the Notes) at which the Notes will be issued;

(i) if the Notes of the series are issuable in whole or in part in the form of Definitive Notes or as one or more Global Notes, and if so, the identity of the Depositary for such Global Notes if other than DTC;

(j) any other terms of the series (which terms shall not be inconsistent with the provisions of this Indenture);

(k) any Events of Default with respect to the Notes of a particular series if not set forth herein; and

(l) any covenants of the Obligor with respect to the Notes of a particular series if not set forth herein. Notwithstanding Section 2.01(1)(v)(b) and unless otherwise expressly provided with respect to a series of Notes, the aggregate principal amount of a series of Notes may be increased and additional Notes of such series may be issued up to the maximum aggregate principal amount authorized with respect to such series as increased; provided that, any such additional Notes shall have identical terms as the outstanding Notes of such series, other than with respect to the date of issuance, issue price, first Interest Payment Date, interest accrual date and amount of interest payable on the first Interest Payment Date applicable thereto; provided , further , that any such additional Notes shall be treated as a single class with the outstanding Notes of such series for all purposes under this Indenture.

(2) Global Notes .

(i) If the Obligor shall establish pursuant to Section 2.01(1) above that the Notes of a series or a portion thereof are to be issued in the form of one or more Global Notes, then the Obligor shall execute and the Trustee shall authenticate and make available for delivery one or more Global Notes that (a) shall represent and shall be denominated in an amount equal to the aggregate principal amount of all of the Notes of such series issued in such form and not yet cancelled, (b) shall be registered, in the name of the Depositary designated for such Global Note pursuant to Section 2.04, or in the name of a nominee of such Depositary, (c) shall be deposited with the Trustee, as Custodian for the Depositary, and (d) shall bear a legend substantially as follows (“Global Note Legend”):

THIS IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE REFERRED TO HEREINAFTER.

EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.

(ii) Each Depositary designated pursuant to Section 2.01 or 2.04 for a Global Note must, at the time of its designation and at all times while it serves as Depositary, be a clearing agency registered under the Exchange Act and any other applicable statute or regulation, provided that the Depositary is required to be so registered in order to act as depositary.

(iii) Any Global Note may be represented by more than one certificate. The aggregate principal amount of each Global Note may from time to time be increased or decreased by adjustments made on the records of the Registrar, as provided in this Indenture.

(3) Trustee’s Certificate of Authentication .

The Trustee’s Certificate of Authentication shall be in substantially the following form:

This is one of the Notes referred to in the within-mentioned Indenture.


		JPMorgan Chase Bank, N.A.
		as Trustee

		By:

				Authorized Officer

SECTION 2.02. Execution and Authentication.

(1) At any time and from time to time after the execution and delivery of this Indenture, the Obligor may deliver Notes of any series executed on behalf of the Obligor

by any two Officers to the Trustee for authentication, and the Trustee, upon receipt of a written order of the Obligor signed by an Officer (the “Authentication Order”) shall thereupon in accordance with the procedures acceptable to the Trustee set forth in the Authentication Order, and subject to the provisions hereof, authenticate and deliver such Notes to or upon the written order of the Obligor, without any further action by the Obligor except as set forth in this Section 2.02. The signature of any of the Officers on the Notes may be manual or facsimile. Typographical and other minor errors or defects in any such signature shall not affect the validity or enforceability of any Note that has been duly authenticated and delivered by the Trustee. In authenticating such Notes and accepting the additional responsibilities under this Indenture in relation to such Notes, the Trustee shall receive, and (subject to Section 5.01) shall be fully protected in relying upon:

(a) a copy of the Managing Directors Resolution relating to such series;

(b) an executed supplemental indenture, if any, and the documentation required to be delivered pursuant to Section 8.06;

(c) an Officers’ Certificate setting forth the form or forms and terms of the Notes of such series pursuant to Section 2.01(1)(v), and prepared in accordance with Section 1.02;

(d) an Opinion of Counsel, prepared in accordance with Section 1.02, to the effect that

(i) the form or forms and terms of such Notes have been established by or pursuant to a Managing Directors Resolution or by a supplemental indenture as permitted by Section 2.01 in conformity with the provisions of this Indenture; and

(ii) such Notes, when executed and issued by the Obligor and authenticated and delivered by the Trustee in the manner and subject to any conditions specified in such Opinion of Counsel, will constitute legal, valid and binding obligations of the Obligor enforceable against the Obligor in accordance with their terms except as any rights thereunder may be limited by bankruptcy, insolvency and other similar laws affecting the enforceability of creditors rights’ generally and by general equity principles. The Trustee shall have the right to decline to authenticate and deliver any Notes under this Section 2.02 if the Trustee, being advised by counsel, determines that such action may not lawfully be taken by the Obligor or if the Trustee in good faith by its board of directors or board of trustees, executive committee, or a trust committee of directors or trustees or Responsible Officers shall determine that such action would expose the Trustee to personal liability. If the Obligor shall establish pursuant to Section 2.01(1) that the Notes of a series or a portion thereof are to be issued in the form of one or more Global Notes, then the Obligor shall execute and the Trustee shall authenticate and make available for delivery one or more Global Notes as provided in Section 2.01(2)(i).

(2) Notes bearing the manual or facsimile signatures of individuals who were at any time on or after the date hereof the proper officers of the Obligor shall bind the Obligor, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Notes or did not hold such offices at the date of such Notes.

(3) The Notes shall be in fully registered form, without coupons, in minimum denominations of $2,000 and integral multiples of $1,000 in excess thereof.

SECTION 2.03. Temporary Notes . Until certificates representing Notes of a series are ready for delivery, the Obligor may prepare and the Trustee, upon receipt of an Authentication Order, shall authenticate and deliver temporary Notes of such series. Temporary Notes shall be substantially in the form of certificated Notes but may have variations that the Obligor considers appropriate for temporary Notes and as shall be reasonably acceptable to the Trustee. Without unreasonable delay, the Obligor shall prepare and the Trustee shall authenticate Definitive Notes of a series in exchange for temporary Notes of such series. Holders of temporary Notes shall be entitled to all of the benefits of this Indenture.

SECTION 2.04. Registration, Transfer and Exchange .

(1) Securities Register . The Trustee shall keep a register of the Notes (the “Security Register”) which shall provide for the registration of such Notes, and for transfers of such Notes in accordance with information, if any, to be provided to the Trustee by the Obligor, subject to such reasonable regulations as the Trustee may prescribe. Such register shall be in written form or in any other form capable of being converted into written form within a reasonable time. At all reasonable times the information contained in such register or registers shall be available for inspection at the Corporate Trust Office of the Trustee or at such other office or agency to be maintained by the Obligor pursuant to Section 9.02.

Upon due presentation for registration of transfer of any Note at the Corporate Trust Office of the Trustee or at any other office or agency maintained by the Obligor pursuant to Section 9.02, the Obligor shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Notes of authorized denominations, of a like aggregate principal amount, series and Maturity Date.

(2) Transfer of Global Notes . Any other provision of this Section 2.04 notwithstanding, unless and until it is exchanged in whole or in part for Definitive Notes, a Global Note representing all or a portion of the Notes of a series may not be transferred except as a whole by the Depositary to a nominee of such Depositary, or by a nominee of such Depositary to such Depositary or another nominee of such Depositary, or by such Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary.

The Obligor initially appoints The Depository Trust Company (“DTC”) to act as Depositary with respect to the Global Notes of each series.

(3) Legends .

Each Global Note shall bear the legend specified in clause (i) of Section 2.01(2) on the face thereof.

(4) Definitive Notes .

(i) Notwithstanding any other provisions of this Indenture or the Notes, a Global Note may be exchanged for Notes of the same series registered in the names of any Person designated by the Depositary in the event that (a) the Depositary has notified the Obligor that it is unwilling or unable to continue as Depositary for such Global Note or such Depositary has ceased to be a “clearing agency” registered under the Exchange Act, at a time when the Depositary is required to be so registered in order to act as depositary, and the Obligor has not appointed a successor Depositary within 90 days of receiving such notice or of becoming aware of such cessation, (b) an Event of Default has occurred and is continuing with respect to the applicable Notes, or (c) the Obligor, in its sole discretion, determines that the applicable Notes issued in the form of Global Notes shall no longer be represented by such Global Notes as evidenced by a Company Order delivered to the Trustee. Any Global Note exchanged pursuant to clause (a) or (c) above shall be so exchanged in whole and not in part and any Global Note exchanged pursuant to clause (b) above may be exchanged in whole or from time to time in part as directed by the Depositary. Any Note issued in exchange for a Global Note of the same series or any portion thereof shall be a Global Note, provided that any such Note so issued that is registered in the name of a Person other than the Depositary or a nominee thereof shall not be a Global Note.

(ii) If at any time the Depositary for the Notes of any series notifies the Obligor that it is unwilling or unable to continue as Depositary for such Notes or if the Depositary has ceased to be a “clearing agency” registered under the Exchange Act at a time when the Depositary is required to be so registered in order to act as depositary, the Obligor may within 90 days of receiving such notice or of becoming aware of such cessation appoint a successor Depositary with respect to such Notes.

(iii) If, in accordance with this Section 2.04(4), Notes of any series in global form will no longer be represented by Global Notes, the Obligor will execute, and the Trustee, upon receipt of an Authentication Order, will authenticate and make available for delivery, Definitive Notes of such series in an aggregate principal amount equal to the principal amount of the Global Notes of such series, in exchange for such Global Notes.

(iv) If a Definitive Note is issued in exchange for any portion of a Global Note after the close of business at the office or agency where such exchange occurs on any Record Date for the payment of interest and before the opening of business at such office or agency on the next succeeding Interest Payment Date, interest shall not be payable on such Interest Payment Date in respect of such Definitive Notes, but shall be payable on such Interest Payment Date only to the Person to whom interest in respect of such portion of such Global Note is payable in accordance with the provisions of this Indenture.

(v) Definitive Notes issued in exchange for a Global Note pursuant to this Section 2.04(4) shall be registered in such names and in such authorized denominations as the Depositary, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Trustee. Upon execution and authentication, the Trustee shall deliver such Definitive Notes to the Persons in whose names such Notes are so registered. To permit registrations of transfers and exchanges, the Obligor shall execute and the Trustee (or an Authenticating Agent appointed pursuant to this Indenture) shall authenticate and make available for delivery Definitive Notes at the Registrar’s request, and upon direction of the Obligor. No service charge shall be made for any registration of transfer or exchange, but the Obligor or the Trustee may require payment of a sum sufficient to cover any transfer tax or other governmental charge payable in connection with any registration of transfer or exchange.

(vi) When Definitive Notes are presented to the Trustee with a request to register the transfer of such Definitive Notes or to exchange such Definitive Notes for an equal principal amount of Definitive Notes of other authorized denominations of the same series, the Trustee shall register the transfer or make the exchange as requested if its requirements for such transaction are met; provided, however, that the Definitive Notes surrendered for transfer or exchange shall be duly endorsed or accompanied by a written instrument of transfer in form reasonably satisfactory to the Obligor and the Trustee, duly executed by the Holder thereof or his attorney duly authorized in writing.

(vii) At such time as all interests in Global Notes of any series have either been exchanged for Definitive Notes of such series or cancelled, such Global Notes shall be cancelled by the Trustee in accordance with the standing procedures and instructions existing between the Depositary and the Custodian. At any time prior to such cancellation, if any interest in a Global Note of any series is exchanged for Definitive Notes of such series or cancelled, the principal amount of such Global Note shall, in accordance with the standing procedures and instructions existing between the Depositary and the Custodian, be reduced and an endorsement shall be made on such Global Note, by the Trustee or the Custodian, at the direction of the Trustee, to reflect such reduction.

(5) Notwithstanding anything in this Indenture to the contrary, (i) all Notes issued upon any registration of transfer or exchange of Notes shall be the valid obligations of the Obligor, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Notes surrendered upon such registration of transfer or exchange, (ii) all transfers and exchanges of the Notes may be made only in accordance with the procedures set forth in this Indenture, and (iii) the transfer and exchange of a beneficial interest in a Global Note may only be effected through the Depositary in accordance with the procedures promulgated by the Depositary.

(6) The Obligor shall not be required to (i) issue, register the transfer of, or exchange any Note during a period beginning at the opening of business 15 days before the day of the mailing of a notice of redemption of Notes under Section 10.03 and ending at the close of business on the date of such mailing or (ii) register the transfer of or exchange any Note so selected for redemption in whole or in part, except, in the case of any Note to be redeemed in part, the portion thereof not to be redeemed.

SECTION 2.05. Mutilated, Destroyed, Lost and Stolen Notes .

(1) If (i) any mutilated Note is surrendered to the Trustee, or the Obligor and the Trustee receive evidence to their satisfaction of the destruction, loss or theft of any Note and (ii) there is delivered to the Obligor and the Trustee such security or indemnity as may be required by them to save each of them harmless, then, in the absence of notice to the Obligor or the Trustee that such Note has been acquired by a protected purchaser, the Obligor may in its discretion execute and, upon request of the Obligor, the Trustee shall authenticate and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Note, a new Note of like tenor, series, Maturity Date, and principal amount, bearing a number not contemporaneously outstanding.

(2) In case any such mutilated, destroyed, lost or stolen Note has become or is about to become due and payable, the Obligor in its discretion may, instead of issuing a new Note, pay such Note.

(3) Upon the issuance of any new Note under this Section 2.05, the Obligor may require the payment by the Holder thereof of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith.

(4) Every new Note issued pursuant to this Section 2.05 in lieu of any mutilated, destroyed, lost or stolen Note shall constitute an original contractual obligation of the Obligor, whether or not the mutilated, destroyed, lost or stolen Note shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Notes duly issued hereunder.

(5) The provisions of this Section 2.05 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes.

SECTION 2.06. Payment of Interest; Interest Rights Preserved .

(1) Interest on any Note which is payable and is punctually paid or duly provided for on any Interest Payment Date shall, if so provided in such Note, be paid to the Person in whose name that Note (or one or more Predecessor Notes) is registered at the close of business on the applicable Record Date, notwithstanding any transfer or exchange of such Note subsequent to such Record Date and prior to such Interest Payment Date (unless, if so provided in such Note, such Interest Payment Date is also the Maturity Date, in which case such interest shall be payable to the Person to whom principal is payable).

(2) Any interest on any Note which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date (herein called “Defaulted Interest”) shall forthwith cease to be payable to the registered Holder on the applicable Record Date by virtue of his having been such Holder; and, except as hereinafter provided, such Defaulted Interest may be paid by the Obligor, at its election in each case, as provided in clause (i) or (ii) below:

(i) The Obligor may elect to make payment of any Defaulted Interest to the Persons in whose names any such Notes (or their respective Predecessor Notes) are registered at the close of business on a Special Record Date for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Obligor shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each such Note and the date of the proposed payment, and at the same time the Obligor shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this clause provided. Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 nor less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Obligor of such Special Record Date and, in the name and at the expense of the Obligor, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first-class postage prepaid, to the Holder of each such Note at his address as it appears in the Security Register, not less than 10 days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been mailed as aforesaid, such Defaulted Interest shall be paid to the Persons in whose names such Notes (or their respective Predecessor Notes) are registered on such Special Record Date and shall no longer be payable pursuant to the following clause (ii).

(ii) The Obligor may make payment of any Defaulted Interest in any other lawful manner if, after notice given by the Obligor to the Trustee of the proposed payment pursuant to this clause (ii), such manner of payment shall be deemed practicable by the Trustee.

(3) If any installment of interest on any Note called for redemption pursuant to Article X is due and payable on or prior to the Redemption Date and is not paid or duly provided for on or prior to the Redemption Date in accordance with the foregoing provisions of this Section 2.06, such interest shall be payable as part of the Redemption Price of such Notes.

(4) Interest on Notes may be paid at the office or agency maintained by the Obligor in New York City pursuant to Section 9.02 or, at the Obligor’s option, through DTC, Clearstream Banking, S.A., Luxembourg, or Euroclear System to the Person entitled thereto or by such other means as may be specified in the form of such Note.

(5) Subject to the foregoing provisions of this Section 2.06 and the provisions of Section 2.04, each Note delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Note shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Note.

SECTION 2.07. Persons Deemed Owners.

(1) Prior to due presentment of a Note for registration of transfer, the Obligor, the Trustee, and any agent of the Obligor or the Trustee may treat the Person in whose name any Note is registered on the Security Register as the owner of such Note for the purpose of receiving payment of principal, premium, if any, and (subject to Section 2.06) interest, and for all other purposes whatsoever, whether or not such Note is overdue and neither the Obligor, the Trustee, nor any agent of the Obligor or the Trustee shall be affected by notice to the contrary.

(2) None of the Obligor, the Trustee, any Authenticating Agent, any Paying Agent, the Registrar or any Co-Registrar will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests of a Global Note or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests and each of them may act or refrain from acting without liability on any information relating to such records provided by the Depositary.

SECTION 2.08. Cancellation . All Notes surrendered for payment, redemption, registration of transfer or exchange shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee and, if not already cancelled, shall be promptly cancelled by it. The Obligor may at any time deliver to the Trustee for cancellation any Notes previously authenticated and delivered hereunder which the Obligor may have acquired in any manner whatsoever, and all Notes so delivered shall be promptly cancelled by the Trustee. Acquisition of such Notes by the Obligor shall not operate as a redemption or satisfaction of the indebtedness represented by such Notes unless and until the same are delivered to the Trustee for cancellation. No Note shall be authenticated in lieu of or in exchange for any Notes cancelled as provided in this Section 2.08, except as expressly permitted by this Indenture. The Trustee shall dispose of all cancelled Notes in accordance with its customary procedures and, upon written request, deliver a certificate of such disposition to the Obligor.

SECTION 2.09. Computation of Interest . Interest on the Notes shall be calculated on the basis of a 360-day year of twelve 30-day months.

SECTION 2.10. CUSIP Numbers . The Obligor in issuing the Notes may use “CUSIP” and “ISIN” numbers (if then generally in use), and, if so, the Trustee shall use the CUSIP or ISIN numbers, as the case may be, in notices of redemption as a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness or accuracy of the CUSIP or ISIN number, as the case may be, either as printed on the Notes or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Notes. The Obligor will promptly notify the Trustee in writing of any change in the CUSIP or ISIN number.

ARTICLE III

DISCHARGE OF INDENTURE

SECTION 3.01. Discharge of Indenture . This Indenture will be discharged with respect to the Notes of a series and will cease to be of further effect as to all such Notes (except as to any surviving rights of transfer or exchange of such Notes expressly provided for herein), and the Trustee, on demand of and at the expense of the Obligor, shall execute proper instruments acknowledging the discharge of this Indenture with respect to the Notes of such series, when

(1) either

(i) all Notes of such series theretofore authenticated and delivered (except (a) mutilated, lost, stolen or destroyed Notes which have been replaced or paid, as provided in Section 2.05, and (b) Notes for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Obligor and thereafter repaid to the Obligor or discharged from such trust, as provided in Section 3.05) have been delivered to the Trustee cancelled or for cancellation; or

(ii) all such Notes of such series not theretofore delivered to the Trustee cancelled or for cancellation

(a) have become due and payable, or

(b) will, in accordance with their Maturity Date, become due and payable within one year, or

(c) are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Obligor, and, in any of the cases described in (a) or (b) above or in this clause (c), the Obligor has deposited or caused to be deposited with the Trustee, as trust funds in trust for the benefit of the Holders of such Notes for that purpose, U.S. dollars or non-callable U.S. Government Obligations or a combination thereof in such amounts sufficient to pay and discharge the entire indebtedness on the Notes of such series not theretofore delivered to the Trustee cancelled or for cancellation, for principal of and interest and premium, if any, on the Notes of such series to the date of such deposit (in the case of Notes of such series that have become due and payable), or to the Maturity Date or the Redemption Date, as the case may be;

(2) the Obligor has paid or caused to be paid all other sums payable by it with respect to the Notes of such series under this Indenture;

(3) in the event of a deposit and defeasence under Section 3.01(1)(ii), no Event of Default or event which with notice or lapse of time would become an Event of Default has occurred and is continuing with respect to the Notes of such series on the date of such deposit; and

(4) the Obligor has delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel each stating that all conditions precedent to the discharge of this Indenture with respect to the Notes of such series have been complied with, and in the event of a deposit and defeasance under Section 3.01(1)(ii), in the case of the Opinion of Counsel, stating:

(i) either that no requirement to register under the Investment Company Act of 1940, as amended, will arise as a result of the Obligor’s exercise of its option under this Section 3.01 or that any such registration requirement has been complied with; and

(ii) such deposit and defeasance will not result in a material breach or violation of, or constitute a default under, any material agreement or instrument to which the Obligor is a party. Notwithstanding the discharge of this Indenture with respect to the Notes of such series, the obligations of the Obligor under Section 3.01(1) and the obligations of the Obligor to the Trustee under Section 5.07 and to any Authenticating Agent under Section 5.14 shall survive, and the obligations of the Trustee under Sections 3.03 and 3.05 shall survive.

SECTION 3.02. Defeasance and Discharge of Covenants upon Deposit of Moneys, U.S. Government Obligations . At the Obligor’s option, either (a) the Obligor shall be deemed to have been Discharged (as defined below) from its obligations with respect to the Notes of any series on the 123rd day after the applicable conditions set forth below have been satisfied (“Legal Defeasance”) and/or (b) the Obligor shall cease to be under any obligation to comply with any term, provision or condition set forth in Sections 7.01, 9.06 and 9.07 with respect to the Notes of such series at any time after the applicable conditions set forth below have been satisfied (“Covenant Defeasance”):

(1) The Obligor shall have deposited or caused to be deposited irrevocably with the Trustee, as trust funds, in trust, specifically pledged as security for, and dedicated solely to, the benefit of the Holders of the Notes of such series, an amount of money, in cash in U.S. dollars sufficient, or in non-callable U.S. Government Obligations, the principal of and interest on which, when due, will be sufficient, or a combination thereof, sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay and discharge the entire indebtedness on the Notes of such series with respect to principal, premium, if any, and accrued and unpaid interest to the date of such deposit (in the case of Notes of any series that have become due and payable), or to the Maturity Date or Redemption Date, as the case may be;

(2) No Event of Default, or event which with notice or lapse of time would become an Event of Default with respect to the Notes of such series, shall have occurred and be continuing on the date of such deposit;

(3) The Obligor shall have delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel each stating that all conditions precedent to the defeasance and discharge contemplated by this Section 3.02 have been complied with, and, in the case of the Opinion of Counsel stating that:

(i) the deposit and defeasance contemplated by this Section 3.02 will not cause the Holders of the Notes of such series to recognize income, gain or loss for Federal income tax purposes as a result of the Obligor’s exercise of its option under this Section 3.02 and such Holders will be subject to Federal income tax on the same amount and in the same manner and at the same times as would have been the case if such option had not been exercised, which Opinion of Counsel (in the case of a Legal Defeasance) must be based upon a ruling of the Internal Revenue Service to the same effect or a change in applicable Federal income tax law or related treasury regulations after the date of this Indenture; and

(ii) either no requirement to register under the Investment Company Act of 1940, as amended, will arise as a result of the Obligor’s exercise of its option under this Section 3.02 or any such registration requirement has been complied with; and

(4) with respect to a Legal Defeasance, 123 days shall have passed during which no Event of Default under clauses (4) and (5) of Section 4.01 has occurred.

If in connection with the exercise by the Obligor of any option under this Section 3.02, any series of Notes is to be redeemed, either notice of such redemption shall have been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee shall have been made.

Notwithstanding the exercise by the Obligor of its option under Section 3.02(b) with respect to Section 7.01, the obligation of any successor Entity to assume the obligations to the Trustee under Section 5.07 shall not be discharged.

“Discharged” means, as to any series of Notes, that the Obligor shall be deemed to have paid and discharged the entire indebtedness represented by, and obligations under, the Notes of such series and to have satisfied all the obligations under this Indenture relating to such series of Notes (and the Trustee, at the expense of the Obligor, shall execute proper instruments acknowledging the same), except (A) the rights of Holders of Notes of such series to receive, from the trust fund described in clause (1) above, payment of the principal of, premium, if any, and the interest, if any, on such series of Notes when such payments are due; (B) the Obligor’s obligations with respect to such Notes under Sections 2.04, 2.05, 3.02(1), 3.03, and 9.02 and its obligations under Section 5.07; and (C) the rights, powers, trusts, duties and immunities of the Trustee hereunder.

SECTION 3.03. Application of Trust Money . All money and U.S. Government Obligations deposited with the Trustee pursuant to Section 3.01 or Section 3.02 and all proceeds of such U.S. Government Obligations and the interest thereon shall be held in trust and applied by it, in accordance with the provisions of this Indenture, to the payment, either directly or through any Paying Agent (including the Obligor acting as its own Paying Agent), as the Trustee may determine, to the Persons entitled thereto, of the principal, premium, if any, and interest, for whose payment such money and U.S. Government Obligations have been deposited with the Trustee; but such money and U.S. Government Obligations need not be segregated from other funds except to the extent required by law.

SECTION 3.04. Paying Agent to Repay Moneys Held . Upon the discharge of this Indenture or a Legal Defeasance, in each case, with respect to the Notes of a series, all moneys then held by any Paying Agent under the provisions of this Indenture with respect to such Notes (other than the Trustee) shall, upon demand of the Obligor, be repaid to it or paid to the Trustee, and thereupon such Paying Agent shall be released from all further liability with respect to such moneys.

SECTION 3.05. Return of Unclaimed Amounts . Any amounts deposited with or paid to the Trustee or any Paying Agent for payment of the principal of, premium, if any, or interest on any series of Notes or then held by the Obligor, in trust for the payment of the principal of, premium, if any, or interest on any series of Notes and not applied but remaining unclaimed by the Holders of such series of Notes for two years after the date upon which the principal of, premium, if any, or interest on such series of Notes, as the case may be, shall have become due and payable, shall be repaid to the Obligor by the Trustee on demand or (if then held by the Obligor) shall be discharged from such Trust; and the Holder of any Notes of such series shall thereafter, as an unsecured general creditor, look only to the Obligor for any payment which such Holder may be entitled to collect (until such time as such unclaimed amounts shall escheat, if at all, to any applicable jurisdiction) and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Obligor as trustee thereof, shall thereupon cease. Notwithstanding the foregoing, the Trustee or Paying Agent, before being required to make any such repayment, may at the expense of the Obligor cause to be published once a week for two successive weeks (in each case on any day of the week) in a newspaper printed in the English language and customarily published at least once a day at least five days in each calendar week and of general circulation in the Borough of Manhattan, in the City and State of New York, a notice that said amounts have not been so applied and that after a date named therein any unclaimed balance of said amounts then remaining will be promptly returned to the Obligor.

SECTION 3.06. Reinstatement . If the Trustee or any Paying Agent is unable to apply any money in accordance with Section 3.03 by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Obligor’s obligations under this Indenture and the Holders of Notes shall be revived and reinstated as though no deposit had occurred pursuant to Section 3.01 until such time as the Trustee or such Paying Agent is permitted to apply all such money in accordance with Section 3.03.

ARTICLE IV

REMEDIES

SECTION 4.01. Events of Default . “Event of Default,” wherever used herein, means with respect to Notes of any series, any of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):

(1) default in the payment of any principal of or premium, if any, on the Notes of such series when due (whether at maturity, upon redemption or otherwise);

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

(3) default in the performance or breach of any covenant or warranty of the Obligor under this Indenture in respect of the Notes of such series, 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 Obligor by the Trustee or to the Obligor and the Trustee by the Holders of at least a majority in aggregate principal amount of the Outstanding Notes of such series, 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;

(4) the entry of an order for relief against the Obligor, PBG or any Restricted Subsidiary of PBG under the Bankruptcy Code by a court having jurisdiction in the premises or a decree or order by a court having jurisdiction in the premises adjudging the Obligor, PBG or any Restricted Subsidiary of PBG as bankrupt or insolvent under any other applicable Federal or state law, or the entry of a decree or order approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Obligor, PBG or any Restricted Subsidiary of PBG under the Bankruptcy Code or any other applicable Federal or state law, or appointing a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the Obligor, PBG or any Restricted Subsidiary of PBG or of any substantial part of their respective properties, or ordering the winding up or liquidation of their respective affairs, and the continuance of any such decree or order unstayed and in effect for a period of 90 consecutive days;

(5) the consent by the Obligor, PBG or any Restricted Subsidiary of PBG to the institution of bankruptcy or insolvency proceedings against any of them, or the filing by the Obligor, PBG or any Restricted Subsidiary of PBG of a petition or answer or consent seeking reorganization or relief under the Bankruptcy Code or any other applicable Federal or state law, or the consent by the Obligor, PBG or any Restricted Subsidiary of PBG to the filing of any such petition or to the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the Obligor, PBG or any Restricted Subsidiary of PBG or of any substantial part of their respective properties, or the making by the Obligor, PBG or any Restricted Subsidiary of PBG of an assignment for the benefit of creditors, or the admission by the Obligor, PBG or any Restricted Subsidiary of PBG in writing of the Obligor’s, PBG’s or any Restricted Subsidiary of PBG’s inability to pay debts generally as they become due, or the taking of corporate action by the Obligor, PBG or any Restricted Subsidiary of PBG in furtherance of any such action; and

(6) the maturity of any Debt of the Obligor, PBG or any Restricted Subsidiary of PBG having a then outstanding principal amount in excess of $75 million shall have been accelerated by any holder or holders thereof or any trustee or agent acting on behalf of such holder or holders, in accordance with the provisions of any contract evidencing, providing for the creation of or concerning such Debt or failure to pay at the stated

maturity (and the expiration of any grace period) any Debt of the Obligor, PBG or any Restricted Subsidiary of PBG having a then outstanding principal amount in excess of $75 million.

No Event of Default with respect to a single series of Notes issued hereunder (and under or pursuant to any Supplemental Indenture or Managing Directors Resolution) necessarily constitutes an Event of Default with respect to any other series of Notes.

SECTION 4.02. Acceleration of Maturity; Rescission and Annulment .

(1) If any Event of Default (other than an Event of Default specified in clause (4) or (5) of Section 4.01) with respect to the Notes of any series occurs and is continuing, then either the Trustee or the Holders of a majority in aggregate principal amount of the Outstanding Notes of such series may declare the principal of all Outstanding Notes of such series, and the interest, if any, accrued thereon, to be immediately due and payable by notice in writing to the Obligor (and to the Trustee if given by Holders). If an Event of Default described in clause (4) or (5) of Section 4.01 occurs, then the principal amount of all the Notes then outstanding and interest accrued thereon, if any, will become and be immediately due and payable without any declaration or other act on the part of the Trustee or the Holders of the Notes, to the full extent permitted by applicable law.

(2) At any time after such a declaration of acceleration has been made with respect to the Notes of any series and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter in this Article IV provided, the Holders of a majority in aggregate principal amount of the Outstanding Notes of such series by written notice to the Obligor and the Trustee, may rescind and annul such declaration or waive past defaults and its consequences, except with respect to a default in respect of a covenant or provision of this Indenture which cannot be modified or amended without the consent of the Holder of each Outstanding Note affected thereby, if:

(i) the Obligor has paid or deposited with the Trustee a sum sufficient to pay:

(a) all overdue installments of interest, if any, on such series of Notes,

(b) the principal of (and premium, if any, on) any such series of Notes which have become due otherwise than by such declaration of acceleration, and interest thereon at the rate prescribed therefor by the Notes of such series, to the extent that payment of such interest is lawful,

(c) interest on overdue installments of interest at the rate prescribed therefor by the Notes of such series to the extent that payment of such interest is lawful, and

(d) the reasonable compensation, expenses, disbursements and advances of the Trustee and its agents and counsel, and all other amounts due the Trustee under Section 5.07; and

(ii) all Events of Default, other than the nonpayment of the principal of the Notes of such series which have become due solely by such acceleration, have been cured or waived as provided in Section 4.13.

(3) No such rescission shall affect any subsequent default or impair any right consequent thereon.

SECTION 4.03. Collection of Indebtedness and Suits for Enforcement .

(1) The Obligor covenants that if:

(i) default is made in the payment of any installment of interest on any Note of any series when such interest becomes due and payable, or

(ii) default is made in the payment of (or premium, if any, on) the principal of any Note of any series at the Maturity thereof, and

(iii) any such default continues for any period of grace provided in relation to such default pursuant to Section 4.01, then, with respect to such series of Notes, the Obligor will, upon demand of the Trustee, pay to it, for the benefit of the Holders of the Notes of such series, the whole amount then due and payable on all Notes of such series for principal (and premium, if any) and interest, together with interest (to the extent that payment of such interest shall be legally enforceable) upon the overdue principal (and premium, if any) and upon overdue installments of interest at the rate of interest prescribed therefor by the Notes of such series; and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel and all other amounts due the Trustee under Section 5.07.

(2) If the Obligor fails to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, and may prosecute such proceeding to judgment or final decree, and may enforce the same against the Obligor or any other obligor upon such Notes and collect the money adjudged or decreed to be payable in the manner provided by law out of the property of the Obligor or any other obligor upon such Notes, wherever situated.

(3) If an Event of Default occurs and is continuing with respect to any series of Notes, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders of such series of Notes by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy.

SECTION 4.04. Trustee May File Proofs of Claim .

(1) In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition, or other judicial

proceeding relative to the Obligor or any obligor upon the Notes or the property of the Obligor or of such other obligor or their creditors, the Trustee (irrespective of whether the principal of the Notes shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand on the Obligor for the payment of overdue principal or interest) shall be entitled and empowered, by intervention in such proceedings or otherwise,

(i) to file and prove a claim for the whole amount of principal, premium, if any, and interest owing and unpaid in respect of the Notes, and to file such other papers or documents as may be necessary and advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements, and advances of the Trustee, its agents and counsel, and all other amounts due the Trustee under Section 5.07) and of the Holders allowed in such judicial proceedings, and

(ii) to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same; and any receiver, assignee, trustee, liquidator, sequestrator (or other similar official) in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee, and in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee and its agent and counsel, and any other amounts due the Trustee under Section 5.07.

(2) Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding.

SECTION 4.05. Trustee May Enforce Claims Without Possession of Notes . All rights of action and claims under this Indenture or the Notes of any series may be prosecuted and enforced by the Trustee without the possession of any of the Notes of such series or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee and its agents and counsel, be for the ratable benefit of the Holders of the Notes of such series.

SECTION 4.06. Application of Money Collected . Any money collected by the Trustee from the Obligor pursuant to this Article IV shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money on account of principal, premium, if any, or interest, if any, upon presentation of the Notes of any series and the notation thereon of the payment, if only partially paid, and upon surrender thereof, if fully paid:

First: To the payment of all amounts due the Trustee under Section 5.07.

Second: To the payment of the amounts then due and unpaid upon such series of Notes for principal, premium, if any, and interest, in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind.

SECTION 4.07. Limitation on Suits . No Holder of any Note of any series may institute any action under this Indenture, unless and until:

(1) such Holder has given the Trustee written notice of a continuing Event of Default with respect to the Notes of such series;

(2) the Holders of a majority in aggregate principal amount of the Outstanding Notes of such series have requested the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder;

(3) such Holder or Holders has or have offered the Trustee such reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request as the Trustee may require;

(4) the Trustee has failed to institute any such proceeding for 60 days after its receipt of such notice, request and offer of indemnity; and

(5) no inconsistent direction has been given to the Trustee during such 60-day period by the Holders of a majority in aggregate principal amount of the Outstanding Notes of such series; it being understood and intended that no one or more Holders of Notes of any series shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other Holders of Notes of such series, or to obtain or to seek to obtain priority or preference over any other such Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and proportionate benefit of all the Holders of all Notes of such series.

SECTION 4.08. Unconditional Right of Holders to Receive Payment of Principal, Premium and Interest . Notwithstanding any other provision in this Indenture, the Holder of any Note shall have the right, which is absolute and unconditional, to receive payment of the principal, premium, if any, and (subject to Section 2.06) interest on such Note on or after the Maturity Date (or, in the case of redemption, on or after the Redemption Date) and to institute suit for the enforcement of any such payment on or after such respective date, and such right shall not be impaired or affected without the consent of such Holder.

SECTION 4.09. Restoration of Rights and Remedies . If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, then and in every such case the Obligor, the Trustee and the Holders shall, subject to any determination in such proceeding, be restored severally and respectively to their former positions hereunder, and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted.

SECTION 4.10. Rights and Remedies Cumulative . Except as provided in Section 2.05(5), no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right or remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.

SECTION 4.11. Delay or Omission Not Waiver . No delay or omission of the Trustee or of any Holder of any Note to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article IV or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be.

SECTION 4.12. Control by Holders . The Holders of not less than a majority in aggregate principal amount of the Outstanding Notes of any series shall have the right to direct the time, method, and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee with respect to the Notes of such series provided that:

(1) the Trustee shall have the right to decline to follow any such direction if the Trustee, being advised by counsel, determines that the action so directed may not lawfully be taken or would conflict with this Indenture or if the Trustee in good faith shall, by a Responsible Officer, determine that the proceedings so directed would involve it in personal liability or be unjustly prejudicial to the Holders not taking part in such direction, and

(2) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction.

SECTION 4.13. Waiver of Past Defaults . Subject to Section 4.02, the Holders of not less than a majority in aggregate principal amount of the Outstanding Notes of any series may, on behalf of the Holders of all Notes of such series, waive any past default hereunder with respect to the Notes of such series, except a default not theretofore cured:

(1) in the payment of principal, premium, if any, or interest on any Notes of such series, or

(2) in respect of a covenant or provision in this Indenture which, under Article VIII, cannot be modified without the consent of the Holder of each Outstanding Note of such series.

Upon any such waiver, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon.

SECTION 4.14. Undertaking for Costs . All parties to this Indenture agree, and each Holder of any Note by his acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys’ fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section 4.14 shall not apply to any suit instituted by the Trustee, to any suit instituted by any Holder or group of Holders holding in the aggregate more than 10% in principal amount of the Outstanding Notes of any series to which the suit relates, or to any suit instituted by any Holder pursuant to Section 4.08.

SECTION 4.15. Waiver of Stay or Extension Laws . The Obligor covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law (other than any bankruptcy law) wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Obligor (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted.

ARTICLE V

THE TRUSTEE

SECTION 5.01. Certain Duties and Responsibilities of Trustee .

(1) Except during the continuance of an Event of Default with respect to a series of Notes:

(i) the Trustee undertakes to perform such duties and only such duties with respect to such series of Notes as are specifically set forth in this Indenture, and no implied covenants or obligations with respect to such series of Notes shall be read into this Indenture against the Trustee; and

(ii) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture.

(2) In case an Event of Default with respect to a series of Notes has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by

this Indenture with respect to such series of Notes, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs.

(3) No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that:

(i) this Subsection shall not be construed to limit the effect of Section 5.01(1);

(ii) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts;

(iii) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of not less than a majority in aggregate principal amount of the Outstanding Notes of any series relating to the time, method, and place of conducting any proceeding for any remedy available to the Trustee with respect to such series of Notes, or exercising any trust or power conferred upon the Trustee, under this Indenture with respect to such series of Notes; and

(iv) no provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it.

(4) Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section 5.01.

SECTION 5.02. Notice of Defaults . Within 90 days after the occurrence of any default hereunder with respect to any series of Notes, the Trustee shall transmit by mail to all Holders of Notes of such series, as their names and addresses appear in the Security Register, notice of such default hereunder known to the Trustee, unless such default shall have been cured or waived; provided, however, that, except in the case of a default in the payment of the principal of or interest or premium, if any, on any Note of such series, the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee or a trust committee of directors, and/or Responsible Officers of the Trustee determine in good faith that the withholding of such notice is in the interests of the Holders of the Outstanding Notes of such series and; provided, further, that, in the case of any default of the character specified in clause (3) of Section 4.01, no such notice to Holders of Notes of such series shall be given until at least 60 days after the occurrence thereof. For the purpose of this Section 5.02, the term “default” means any event which is, or after notice or lapse of time or both would become, an Event of Default.

SECTION 5.03. Certain Rights of Trustee . Except as otherwise provided in Section 5.01:

(1) the Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties;

(2) any request or direction of the Obligor described herein shall be sufficiently evidenced by a Company Request or Company Order and any resolution of the Managing Directors may be sufficiently evidenced by a Managing Directors Resolution;

(3) whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers’ Certificate;

(4) the Trustee may consult with counsel of its selection and any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon;

(5) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction;

(6) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Obligor, personally or by agent or attorney;

(7) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder; and

(8) the permissive rights of the Trustee enumerated herein shall not be construed as duties.

SECTION 5.04. Not Responsible for Recitals or Issuance of Notes . The recitals contained herein and in the Notes, except the certificates of authentication, shall be taken as the statements of the Obligor, and the Trustee assumes no responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the

Notes. The Trustee shall not be accountable for the use or application by the Obligor of the Notes or the proceeds thereof. The Trustee shall not be charged with notice or knowledge of any Event of Default under clause (6) of Section 4.01 or of the identity of a Restricted Subsidiary of the Obligor or PBG unless either (i) a Responsible Officer of the Trustee assigned to and working in its Corporate Trust Office shall have actual knowledge thereof or (ii) notice thereof shall have been given to the Trustee in accordance with Section 1.05 from the Obligor or any Holder.

SECTION 5.05. May Hold Notes . The Trustee or any Paying Agent, Registrar, or other agent of the Obligor, in its individual or any other capacity, may become the owner or pledgee of Notes and, subject to Sections 5.08 and 5.12, may otherwise deal with the Obligor with the same rights it would have if it were not Trustee, Paying Agent, Registrar, or such other agent.

SECTION 5.06. Money Held in Trust . Money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law. The Trustee shall be under no liability for interest on any money received by it hereunder except as otherwise agreed with the Obligor.

SECTION 5.07. Compensation and Reimbursement . The Obligor covenants and agrees:

(1) to pay the Trustee from time to time, and the Trustee shall be entitled to, reasonable compensation for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust);

(2) except as otherwise expressly provided herein, to reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the reasonable expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence or bad faith; and

(3) to indemnify the Trustee for, and to hold it harmless against, any loss, liability or expense incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of this trust, including the reasonable costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder.

The Trustee shall have a lien prior to the Notes upon all property and funds held by it hereunder for any amount owing it or any retiring Trustee pursuant to this Section 5.07, except with respect to funds held in trust for the benefit of the Holders of particular Notes.

Without prejudice to any other rights available to the Trustee under applicable law, when the Trustee incurs expenses or renders services in connection with an Event of Default specified in clause (4) or (5) of Section 4.01, such expenses (including the reasonable charges and expenses of its counsel) and compensation for such services are intended to constitute

expenses of administration under any applicable Federal or State bankruptcy, insolvency, reorganization, or other similar law.

The provisions of this Section shall survive the termination of this Indenture and the resignation or removal of the Trustee.

SECTION 5.08. Disqualification; Conflicting Interests . If the Trustee has or shall acquire any conflicting interest within the meaning of the Trust Indenture Act, it shall either eliminate such interest or resign as Trustee, to the extent and in the manner provided by, and subject to the provisions of, the Trust Indenture Act and this Indenture. To the extent permitted by such Act, the Trustee shall not be deemed to have a conflicting interest by virtue of being a trustee under this Indenture with respect to Notes of more than one series or by virtue of being a Trustee under:

(i) the Indenture, dated as of February 8, 1999, among Pepsi Bottling Holdings, Inc., PepsiCo, Inc., as guarantor, and the Trustee, as supplemented by the Supplemental Indenture, dated as of February 9, 1999, among Pepsi Bottling Holdings, Inc., PepsiCo, Inc., as guarantor, and the Obligor relating to the Obligor’s Senior Notes due 2009,

(ii) the Indenture, dated as of March 8, 1999, among PBG, the Obligor, as guarantor, and the Trustee relating to the Senior Notes due 2029 of PBG and the Series B Senior Notes due 2029 of PBG,

(iii) the Indenture, dated as of November 15, 2002, among the Obligor, PepsiCo, Inc., as guarantor, and the Trustee relating to the Senior Notes due 2012 and the Series B Senior Notes due 2012 of the Obligor,

(iv) the Indenture, dated as of June 10, 2003, between the Obligor and the Trustee relating to the Senior Notes due 2015 of the Obligor and the Series B Senior Notes due 2015 of the Obligor, and

(v) the Indenture, dated as of October 1, 2003, among the Obligor and the Trustee relating to Senior Notes in one or more series of the Obligor.

SECTION 5.09. Corporate Trustee Required; Eligibility . There shall at all times be a Trustee hereunder that shall be a corporation organized and doing business under the laws of the United States of America or of any State or Territory thereof or of the District of Columbia, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least $50,000,000, and subject to supervision or examination by Federal or State authority. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of the aforesaid supervising or examining authority, then for the purposes of this Section 5.09, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section 5.09, it shall resign immediately in the manner and with the effect hereinafter specified in this Article V.

SECTION 5.10. Resignation and Removal; Appointment of Successor .

(1) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article V shall become effective until the acceptance of appointment by the successor Trustee in accordance with the applicable requirements of Section 5.11.

(2) The Trustee may resign at any time with respect to the Notes of one or more series by giving written notice thereof to the Obligor. If the instrument of acceptance by a successor Trustee required by Section 5.11 shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Notes of such series.

(3) The Trustee may be removed at any time with respect to the Notes of any series by Act of the Holders of 66 2/3% in aggregate principal amount of the Outstanding Notes of such series, delivered to the Trustee and to the Obligor.

(4) If at any time:

(i) the Trustee shall fail to comply with Section 5.08 after written request therefor by the Obligor or by any Holder who has been a bona fide Holder of a Note for at least six months, or

(ii) the Trustee shall cease to be eligible under Section 5.09 and shall fail to resign after written request therefor by the Obligor or by any such Holder, or

(iii) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then, in any such case, (A) the Obligor by a Managing Directors Resolution may remove the Trustee with respect to all Notes, or (B) subject to Section 4.14, any Holder who has been a bona fide Holder of a Note for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee with respect to all Notes and the appointment of a successor Trustee or Trustees.

(5) If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause, with respect to the Notes of one or more series, the Obligor, by a Managing Directors Resolution, shall promptly appoint a successor Trustee or Trustees with respect to the Notes of that or those series (it being understood that any such successor Trustee may be appointed with respect to the Notes of one or more or all of such series and that at any time there shall be only one Trustee with respect to the Notes of any particular series) and shall comply with the applicable requirements of Section 5.11. If, within one year after such resignation, removal or incapability, or the occurrence of such vacancy, a successor Trustee with respect to the Notes of any series shall be appointed by Act of the Holders of 66 2/3% in aggregate principal amount of the Outstanding Notes of such series delivered to the

Obligor and the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment in accordance with the applicable requirements of Section 5.11, become the successor Trustee with respect to the Notes of such series and to that extent supersede the successor Trustee appointed by the Obligor. If no successor Trustee with respect to the Notes of any series shall have been so appointed by the Obligor or the Holders and accepted appointment in the manner required by Section 5.11, any Holder who has been a bona fide Holder of a Note of such series for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Notes of such series.

(6) The Obligor shall give notice of each resignation and each removal of the Trustee with respect to the Notes of any series and each appointment of a successor Trustee with respect to the Notes of any series to all Holders of Notes of such series in the manner provided in Section 1.06. Each notice shall include the name of the successor Trustee with respect to the Notes of such series and the address of its Corporate Trust Office.

SECTION 5.11. Acceptance of Appointment by Successor . In case of the appointment hereunder of a successor Trustee with respect to all Notes, every such successor Trustee so appointed shall execute, acknowledge and deliver to the Obligor and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on the request of the Obligor or the successor Trustee, such retiring Trustee shall, upon payment of its reasonable charges and subject to its lien, if any, provided by Section 5.07, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder.

In case of the appointment hereunder of a successor Trustee with respect to the Notes of one or more (but not all) series, the Obligor, the retiring Trustee and each successor Trustee with respect to the Notes of one or more series shall execute and deliver an indenture supplemental hereto wherein each successor Trustee shall accept such appointment and which (1) shall contain such provisions as shall be necessary or desirable to transfer and confirm to, and to vest in, each successor Trustee all the rights, powers, trusts and duties of the retiring Trustee with respect to the Notes of that or those series to which the appointment of such successor Trustee relates, (2) if the retiring Trustee is not retiring with respect to all Notes, shall contain such provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of the retiring Trustee with respect to the Notes of that or those series as to which the retiring Trustee is not retiring shall continue to be vested in the retiring Trustee, and (3) shall add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, it being understood that nothing herein or in such supplemental indenture shall constitute such Trustees co-trustees of the same trust and that each such Trustee shall be trustee of a trust or trusts hereunder separate and apart from any trust or trusts hereunder administered by any other such Trustee; and upon the execution and delivery of such supplemental indenture the resignation or

removal of the retiring Trustee shall become effective to the extent provided therein and each such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee with respect to the Notes of that or those series to which the appointment of such successor Trustee relates; but, on request of the Obligor or any successor Trustee, such retiring Trustee shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder with respect to the Notes of that or those series to which the appointment of such successor Trustee relates.

Upon request of any such successor Trustee, the Obligor shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts referred to in the first or second preceding paragraph, as the case may be.

No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article V.

SECTION 5.12. Merger, Conversion, Consolidation or Succession to Business . Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided that such corporation shall be otherwise qualified and eligible under this Article V, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Notes shall have been authenticated, but not delivered, by the Trustee then in office, any successor Trustee by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Notes so authenticated with the same effect as if such successor Trustee had itself authenticated such Notes.

SECTION 5.13. Preferential Collection of Claims Against Obligor . If and when the Trustee shall be or shall become a creditor of the Obligor (or of any other obligor upon the Notes), the Trustee shall be subject to the provisions of the Trust Indenture Act regarding the collection of claims against the Obligor (or against any such other obligor, as the case may be).

SECTION 5.14. Appointment of Authenticating Agent .

(1) At any time when any of the Notes remain Outstanding the Trustee, with the approval of the Obligor, may appoint an Authenticating Agent or Agents with respect to one or more series of Notes which shall be authorized to act on behalf of the Trustee to authenticate Notes of such series issued upon exchange, registration of transfer or partial redemption thereof or pursuant to Section 2.05, and Notes so authenticated shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the Trustee hereunder. Wherever reference is made in this Indenture to the authentication and delivery of Notes by the Trustee or the Trustee’s certificate of authentication, such reference shall be deemed to include authentication and delivery on behalf of the Trustee by an Authenticating Agent and a certificate of authentication executed on behalf of the Trustee by an Authenticating Agent. Each

Authenticating Agent shall be acceptable to the Obligor and shall at all times be a corporation organized and doing business under the laws of the United States of America, any state thereof or the District of Columbia, authorized under such laws to act as an Authenticating Agent, having a combined capital and surplus of not less than $50,000,000 and, if other than the Obligor itself, subject to supervision or examination by Federal or State authority. If such Authenticating Agent publishes reports of condition at least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section 5.14, the combined capital and surplus of such Authenticating Agent shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time an Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section 5.14, such Authenticating Agent shall resign immediately in the manner and with the effect specified in this Section 5.14.

(2) Any corporation into which an Authenticating Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which such Authenticating Agent shall be a party, or any corporation succeeding to the corporate agency or corporate trust business of an Authenticating Agent, shall continue to be an Authenticating Agent, provided such corporation shall be otherwise eligible under this Section 5.14, without the execution or filing of any paper or any further act on the part of the Trustee or the Authenticating Agent.

(3) An Authenticating Agent may resign at any time by giving written notice thereof to the Trustee and, if other than the Obligor, to the Obligor. The Trustee may at any time terminate the agency of an Authenticating Agent by giving written notice thereof to such Authenticating Agent and, if other than the Obligor, to the Obligor. Upon receiving such a notice of resignation or upon such a termination, or in case at any time such Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section 5.14, the Trustee, with the approval of the Obligor, may appoint a successor Authenticating Agent which shall be acceptable to the Obligor and shall mail written notice of such appointment by first-class mail, postage prepaid, to all Holders of Notes of the series with respect to which such Authenticating Agent will serve, as their names and addresses appear in the Security Register. Any successor Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all the rights, powers and duties of its predecessor hereunder, with like effect as if originally named as an Authenticating Agent. No successor Authenticating Agent shall be appointed unless eligible under the provisions of this Section 5.14.

(4) The Obligor agrees to pay to each Authenticating Agent from time to time reasonable compensation for its services under this Section 5.14.

(5) If an appointment is made pursuant to this Section 5.14, the Notes may have endorsed thereon, in addition to the Trustee’s certificate of authentication, an alternate certificate of authentication in the following form:

This is one of the Notes referred to in the within-mentioned Indenture.


		JPMorgan Chase Bank, N.A.
		as Trustee

		By:

				As Authenticating Agent

		By:

				Authorized Officer

ARTICLE VI

HOLDERS’ LISTS AND REPORTS BY TRUSTEE AND OBLIGOR

SECTION 6.01. Obligor to Furnish Trustee Names and Addresses of Holders . The Obligor will furnish or cause to be furnished to the Trustee:

(1) semi-annually, not more than 15 days after the Record Date for the payment of interest in respect of each series of Notes, in such form as the Trustee may reasonably require, a list of the names and addresses of the Holders of such Notes as of such date,

(2) at such other times as the Trustee may request in writing, within 30 days after the receipt by the Obligor of any such request, a list of similar form and content as of a date not more than 15 days prior to the time such list is furnished,

provided that, in the case of (1) and (2), if the Trustee shall be the Registrar, such list shall not be required to be furnished.

SECTION 6.02. Preservation of Information; Communications to Holders .

(1) The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders of Notes of each series contained in the most recent list furnished to the Trustee as provided in Section 6.01 and the names and addresses of Holders of Notes received by the Trustee. The Trustee may destroy any list furnished to it as provided in Section 6.01 upon receipt of a new list so furnished.

(2) Holders of Notes may communicate as provided in Section 312(b) of the Trust Indenture Act with other Holders of Notes with respect to their rights under this Indenture or under the Notes.

(3) Every Holder of Notes, by receiving and holding the same, agrees with the Obligor that the Obligor shall not be held accountable by reason of the disclosure of any

such information as to the names and addresses of the Holders of Notes in accordance with Section 6.02(2), regardless of the source from which such information was derived.

SECTION 6.03. Reports by Trustee .

(1) Within 60 days after May 15 of each year commencing with the first May 15 following the date of the initial issuance of Notes under this Indenture, the Trustee shall transmit by mail to the Holders of Notes as their names and addresses appear in the Security Register, a brief report dated as of such May 15, to the extent required under Section 313(a) of the Trust Indenture Act.

(2) The Trustee shall comply with Sections 313(b) and 313(c) of the Trust Indenture Act.

(3) A copy of each such report shall, at the time for such transmission to Holders of Notes, be filed by the Trustee with the Obligor, with each stock exchange upon which any Notes are listed (if so listed) and also with the Commission. The Obligor agrees to promptly notify the Trustee when any Notes become listed on any stock exchange and of any delisting thereof.

SECTION 6.04. Reports by Obligor .

The Obligor shall comply with the provisions of Section 314(a) and 314(c) of the TIA.

ARTICLE VII

CONSOLIDATION, MERGER OR TRANSFER

SECTION 7.01. Obligor May Consolidate, Etc., Only on Certain Terms . The Obligor may consolidate or merge with or into, or transfer or lease all or substantially all of its assets to, any Entity that is organized and validly existing under the laws of any state of the United States of America or the District of Columbia, and may permit any such Entity to consolidate with or merge into the Obligor or transfer or lease all or substantially all of its assets to the Obligor, provided that:

(1) the Obligor will be the surviving Entity or, if not, that the successor Entity will expressly assume by a supplemental indenture, executed and delivered to the Trustee, in form satisfactory to the Trustee, the due and punctual payment of the principal of and premium, if any, and interest on all the Notes and the performance of every covenant of the Indenture to be performed or observed by the Obligor;

(2) immediately after giving effect to such transaction, no Event of Default, and no default or other event which, after notice or lapse of time, or both, would become an Event of Default, will have happened and be continuing; and

(3) the Obligor shall have delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that such consolidation, merger, transfer or lease and

any such assumption involving the Obligor complies with the provisions of this Article VII.

SECTION 7.02. Successor Entity Substituted . Upon any consolidation or merger, or any transfer or lease of all or substantially all of the properties and assets of the Obligor, in accordance with Section 7.01, the successor Entity will succeed to and be substituted for the Obligor as obligor on the Notes with the same effect as if it had been named in this Indenture as the Obligor, and the Obligor shall thereupon, except in the case of a lease, be released from all obligations hereunder and under the Notes. Such successor Entity may cause to be signed, and may issue either in its own name or in the name of the Obligor prior to such succession any or all of the Notes issuable hereunder which theretofore shall not have been signed by the Obligor and delivered to the Trustee; and, upon the order of such successor Entity instead of the Obligor and subject to all the terms, conditions and limitations in this Indenture prescribed, the Trustee, pursuant to the terms hereof, shall authenticate and shall deliver any Notes which previously shall have been signed and delivered by the Officers of the Obligor to the Trustee for authentication, and any Notes which such successor Entity thereafter shall cause to be signed and delivered to the Trustee for that purpose. All of the Notes so issued shall in all respects have the same legal rank and benefit under this Indenture as the Notes theretofore or thereafter issued in accordance with the terms of this Indenture as though all of such Notes had been issued at the date of the execution hereof.

ARTICLE VIII

SUPPLEMENTAL INDENTURES

SECTION 8.01. Supplemental Indentures Without Consent of Holders . Without the consent of the Holders of any Notes, the Obligor and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto (which shall conform to the provisions of the TIA as in force at the date of execution thereof), in form satisfactory to the Trustee, for any of the following purposes:

(1) to evidence the succession of another Entity to the Obligor or successive successions, and the assumption by any such successor of the covenants, agreements and obligations of the Obligor pursuant to Article VII; or

(2) to add to the covenants of the Obligor such further covenants, restrictions or conditions for the protection of the Holders of the Notes as the Obligor and the Trustee shall consider to be for the protection of the Holders of the Notes (and if such covenants are to be for the benefit of less than all series of Notes, stating that such covenants are expressly being included solely for the benefit of such series); or

(3) to evidence the surrender of any right or power of the Obligor; or

(4) to cure any defect or ambiguity, to correct or supplement any provision herein which may be inconsistent with any other provision herein or in any supplemental indenture, or to make any other provisions with respect to matters or questions arising under this Indenture; or

(5) to add to this Indenture such provisions as may be expressly permitted by the TIA as in effect at the date as of which this instrument is executed or any corresponding provision in any similar federal statute hereafter enacted; or

(6) to comply with any requirements of the Commission in connection with qualifying, or maintaining the qualification of, this Indenture under the TIA; or

(7) to evidence and provide for the acceptance of appointment hereunder by a successor Trustee with respect to the Notes of one or more series and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, pursuant to the requirements of Section 5.11; or

(8) to add to the rights of the Holders of the Notes; or

(9) to provide for the issuance of and establish the form or forms and terms and conditions of Notes of any series as permitted by this Indenture; or

(10) to add any additional Events of Default for the benefit of the Holders of all or any series of Notes (and if such additional Events of Default are to be for the benefit of less than all series of Notes, stating that such additional Events of Default are expressly being included solely for the benefit of such series); or

(11) to conform this Indenture to the section entitled “Description of Debt Securities” in the prospectus dated March 24, 2006 or any prospectus supplement to such prospectus relating to the Notes or any corresponding section of such prospectus or prospectus supplement pursuant to which any additional series of Notes is issued under this Indenture.

No supplemental indenture for the purposes identified in clause (2), (3), (4), (8) or (10) above may be entered into if to do so would adversely affect the interest of the Holders of Notes.

Any such supplemental indenture authorized by the provisions of this Section 8.01 may be executed without the consent of the Holders of any of the Notes at the time outstanding, notwithstanding any of the provisions of Section 8.02.

SECTION 8.02. Supplemental Indentures with Consent of Holders . With the consent of the Holders of not less than a majority in aggregate principal amount of the Outstanding Notes of all series affected by such supplemental indenture (voting as one class), the Obligor, when authorized by a resolution of its Managing Directors, and the Trustee may from time to time and at any time enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of any supplemental indenture or of modifying in any manner the rights of the Holders of the Notes of each such series under this Indenture; provided, however, that no such supplemental indenture shall, without the consent of the Holder of each Outstanding Note affected thereby:

(1) change the Maturity Date or the stated payment date of any payment of premium or interest payable on such Note, or reduce the principal amount thereof, or any amount of interest payable thereon, or change the method of computing the amount of interest payable thereon on any date, or change any Place of Payment where, or the coin or currency in which, any such Note or any payment of principal, premium or interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment on or after the same shall become due and payable, whether at Maturity or, in the case of redemption, on or after the Redemption Date; or

(2) reduce the percentage in principal amount of the Outstanding Notes of the relevant series, the consent of whose Holders is required for any such supplemental indenture, or the consent of whose Holders is required for any waiver of certain defaults hereunder and their consequences, provided for in this Indenture; or

(3) modify any of the provisions of this Section 8.02, Section 4.08 or Section 4.13, except to increase any such percentage set forth in this Section 8.02 or Section 4.13 or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Outstanding Note affected thereby, provided, however, that this clause shall not be deemed to require the consent of any Holder with respect to changes in the references to the “Trustee” and concomitant changes in this Section, or the deletion of this proviso, in accordance with the requirements of Section 5.11 and 8.01(7).

A supplemental indenture which changes or eliminates any covenant or other provision of this Indenture which has expressly been included solely for the benefit of one or more particular series of Notes, or which modifies the rights of the Holders of Notes of such series with respect to such covenant or other provision, shall be deemed not to affect the rights under this Indenture of the Holders of Notes of any other series.

It shall not be necessary for any Act of Holders under this Section 8.02 to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof.

SECTION 8.03. Execution of Supplemental Indentures . In executing, or accepting the additional trusts created by, any supplemental indenture permitted by this Article VIII or the modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and (subject to Section 5.01) shall be fully protected in relying upon, in addition to the documents required by Section 1.02, an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture. Upon request of the Obligor and, in the case of Section 8.02, upon filing with the Trustee of evidence of an Act of Holders as aforementioned, the Trustee shall join with the Obligor in the execution of such supplemental indenture unless such supplemental indenture affects the Trustee’s own rights, powers, trusts, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such supplemental indenture.

SECTION 8.04. Effect of Supplemental Indentures . Upon the execution of any supplemental indenture under this Article VIII, this Indenture shall be and be deemed to be modified and amended in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and the respective rights, limitation of rights, duties, powers, trusts and immunities under this Indenture of the Trustee, the Obligor and every Holder of Notes theretofore or thereafter authenticated and delivered hereunder shall be determined, exercised and enforced thereunder to the extent provided therein.

SECTION 8.05. Conformity with Trust Indenture Act . Every supplemental indenture executed pursuant to this Article VIII shall conform to the requirements of the TIA as then in effect.

SECTION 8.06. Documents to Be Given to Trustee . The Trustee, subject to the provisions of Section 5.01, may receive an Officers’ Certificate and an Opinion of Counsel as conclusive evidence that any supplemental indenture executed pursuant to this Article VIII complies with the applicable provisions of this Indenture.

SECTION 8.07. Notation on Notes in Respect of Supplemental Indentures . Notes of any series authenticated and delivered after the execution of any supplemental indenture pursuant to the provisions of this Article may bear a notation in form approved by the Trustee for such series as to any matter provided for by such supplemental indenture. If the Obligor or the Trustee shall so determine, new Notes of any series so modified as to conform, in the opinion of the Trustee and the Managing Directors, to any modification of this Indenture contained in any such supplemental indenture may be prepared by the Obligor, authenticated by the Trustee and delivered in exchange for the Notes of such series then Outstanding.

ARTICLE IX

COVENANTS

SECTION 9.01. Payment of Principal, Premium and Interest . The Obligor covenants and agrees for the benefit of each series of Notes that it will duly and punctually pay or cause to be paid the principal, premium, if any, and interest on such series of Notes on the dates and in the manner provided in such series of Notes, and will duly comply with all the other terms, agreements and conditions contained in this Indenture for the benefit of such series of Notes.

The Obligor shall pay interest (including post-petition interest in any proceeding under any Federal or state bankruptcy, insolvency, reorganization, or other similar law) on overdue principal and premium, if any, from time to time on demand at the applicable rate of interest determined from time to time in the manner provided for in each series of Notes; it shall pay interest (including post-petition interest in any proceeding under any Federal or State bankruptcy, insolvency, reorganization, or other similar law) on overdue installments of interest and (without regard to any applicable grace periods) from time to time on demand at the same rates to the extent lawful.

SECTION 9.02. Maintenance of Office or Agency . So long as any of the Notes remain outstanding, the Obligor will maintain an office or agency in the City of New York where Notes may be presented or surrendered for payment, where Notes may be surrendered for transfer or exchange, and where notices and demands to or upon the Obligor in respect of the Notes and this Indenture may be served. The Obligor will give prompt written notice to the Trustee of the location, and of any change in the location, of such office or agency. If at any time the Obligor shall fail to maintain such office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee, and the Obligor hereby appoints the Trustee its agent to receive all such presentations, surrenders, notices and demands.

The Obligor may also from time to time designate one or more other offices or agencies where one or more series of Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Obligor of its obligation to maintain an office or agency in the City of New York for such purposes. The Obligor shall give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency.

SECTION 9.03. Money for Note Payments to be Held in Trust . If the Obligor shall at any time act as its own Paying Agent, it will, on or before each due date of the principal, premium, if any, or interest on any series of Notes, segregate and hold in trust for the benefit of the Holders of such series of Notes a sum sufficient to pay such principal, premium or interest so becoming due until such sums shall be paid to such Holders of the Notes of such series or otherwise disposed of as herein provided, and will promptly notify the Trustee of its action or failure so to act.

Whenever the Obligor shall have one or more Paying Agents, it will, on or prior to each due date of the principal, premium, if any, or interest, on any series of Notes, deposit with a Paying Agent a sum sufficient to pay such principal, premium, or interest so becoming due, such sum to be held in trust for the benefit of the Holders of the Notes of such series entitled to the same and (unless such Paying Agent is the Trustee) the Obligor will promptly notify the Trustee of its action or failure so to act.

The Obligor will cause each Paying Agent other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section 9.03, that such Paying Agent will:

(1) hold all sums held by it for the payment of principal, premium, if any, or interest, on Notes of any series in trust for the benefit of the Holders of the Notes of such series entitled thereto until such sums shall be paid to such Holders or otherwise disposed of as herein provided;

(2) give the Trustee prompt notice of any default by the Obligor (or any other obligor upon the Notes of such series) in the making of any such payment of principal, premium, if any, or interest, on such Notes; and

(3) at any time during the continuance of any such default, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying Agent.

The Obligor may, at any time, for the purpose of obtaining the discharge of this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Obligor or such Paying Agent or, if for any other purpose, all sums so held in trust by the Obligor in respect of all series of Notes, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by the Obligor or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money.

SECTION 9.04. Certificate to Trustee . The Obligor will deliver to the Trustee, within 120 days after the end of each fiscal year of the Obligor ending after the initial issuance of Notes under this Indenture, an Officers’ Certificate that complies with TIA Section 314(a)(4) stating that in the course of the performance by the signers of their duties as officers of the Obligor, they would normally have knowledge of any default by the Obligor in the performance of any of its covenants or agreements contained herein, stating whether or not they have knowledge of any such default and, if so, specifying each such default of which the signers have knowledge and the nature thereof.

SECTION 9.05. Existence . Subject to Article VII, the Obligor will do or cause to be done all things necessary to preserve and keep in full force and effect its limited liability company existence.

SECTION 9.06. Limitation on Liens . So long as any of the Notes shall be Outstanding, neither the Obligor nor any Restricted Subsidiary of the Obligor will incur, suffer to exist or guarantee any Debt, secured by a mortgage, pledge or lien (a “Lien”) on any Principal Property (as such term is defined with respect to the Obligor) or on any shares of stock of (or other interests in) any Restricted Subsidiary of the Obligor unless the Obligor or such first mentioned Restricted Subsidiary secures or the Obligor causes such Restricted Subsidiary to secure the Notes (and any other Debt of the Obligor or such Restricted Subsidiary, at the option of the Obligor or such Restricted Subsidiary, as the case may be, not subordinate to the Notes), equally and ratably with (or prior to) such secured Debt, for so long as such secured Debt shall be so secured. This restriction will not, however, apply to Debt secured by:

(1) Liens existing prior to the initial issuance of Notes hereunder;

(2) Liens on property of or shares of stock of (or other interests in) any Entity existing at the time such Entity becomes a Restricted Subsidiary of the Obligor;

(3) Liens on property of or shares of stock of (or other interests in) any Entity existing at the time of acquisition thereof (including acquisition through merger or consolidation);

(4) Liens securing indebtedness incurred to finance all or any part of the purchase price of property or the cost of construction of such property (or additions, substantial repairs, alterations or substantial improvements thereto), provided that such

Lien and the indebtedness secured thereby are incurred within 365 days after the later of (a) acquisition of such property or the completion of construction (or addition, repair, alteration or improvement) thereon and (b) the commencement of full operation thereof;

(5) Liens in favor of the Obligor or any of its Restricted Subsidiaries;

(6) Liens in favor of, or required by contracts with, governmental entities; or

(7) any extension, renewal, or refunding referred to in any of the preceding clauses (1) through (6), provided that in the case of a Lien permitted under clause (1), (2), (3), (4) or (5), the Debt secured is not increased nor the Lien extended to any additional assets.

Notwithstanding the foregoing, the Obligor or any of its Restricted Subsidiaries may incur, suffer to exist or guarantee any Debt secured by a Lien on any Principal Property (as such term is defined with respect to the Obligor) or on any shares of stock of (or other interests in) any Restricted Subsidiary of the Obligor if, after giving effect thereto, the aggregate amount of Exempted Debt does not exceed 15% of Consolidated Net Tangible Assets of the Obligor.

SECTION 9.07. Limitation on Sale-Leaseback Transactions .

(1) The Obligor will not, and will not permit any of its Restricted Subsidiaries to, sell or transfer, directly or indirectly, except to the Obligor or a Restricted Subsidiary of the Obligor, any Principal Property (as such term is defined with respect to the Obligor) as an entirety, or any substantial portion thereof, with the intention of taking back a lease of all or part of such property, except a lease for a period of three years or less at the end of which it is intended that the use of such property by the lessee will be discontinued; provided that, notwithstanding the foregoing, the Obligor or any of its Restricted Subsidiaries may sell a Principal Property (as such term is defined with respect to the Obligor) and lease it back for a period longer than three years (i) if the Obligor or such Restricted Subsidiary would be entitled, pursuant to Section 9.06, to create a Lien on the property to be leased securing Debt in an amount equal to the Attributable Debt with respect to the sale and lease-back transaction without equally and ratably securing the Outstanding Notes or (ii) if (A) the Obligor promptly informs the Trustee of such transactions, (B) the net proceeds of such transactions are at least equal to the fair value (as determined by a Managing Directors Resolution) of such property and (C) the Obligor causes an amount equal to the net proceeds of the sale to be applied either (x) to the retirement (whether by redemption, cancellation after open-market purchases, or otherwise), within 365 days after receipt of such proceeds, of Funded Debt having an outstanding principal amount equal to such net proceeds or (y) to the purchase or acquisition (or in the case of property, the construction) of property or assets used in the business of the Obligor or any Restricted Subsidiary, within 365 days after receipt of such proceeds.

(2) Notwithstanding Section 9.07(1), the Obligor or any Restricted Subsidiary of the Obligor may enter into sale and lease-back transactions in addition to those permitted by Section 9.07(1), and without any obligation to retire any outstanding Funded

Debt or to purchase property or assets, provided that at the time of entering into such sale and lease-back transactions and after giving effect thereto, Exempted Debt does not exceed 15% of Consolidated Net Tangible Assets of the Obligor.

ARTICLE X

REDEMPTION OF NOTES

SECTION 10.01. Election to Redeem; Notice to Trustee . If the Obligor elects to redeem any series of Notes pursuant to the optional redemption provisions of Section 10.07 or any other optional redemption provision provided for with respect to such series of Notes, it shall furnish to the Trustee, at least 45 days but not more than 60 days before the Redemption Date, an Officers’ Certificate setting forth (1) the Redemption Date, and (2) the CUSIP and/or ISIN numbers of the series of Notes to be redeemed.

SECTION 10.02. Selection by Trustee of the Notes to be Redeemed . If fewer than all the Notes of any series are to be redeemed, the particular Notes of such series to be redeemed shall be selected not more than 60 days prior to the Redemption Date by the Trustee from the Outstanding Notes of such series not previously called for redemption, by such method as the Trustee shall deem fair and appropriate. The portions of the principal of Notes of such series so selected for partial redemption shall be equal to $2,000, or an integral multiple of $1,000 in excess thereof, and the principal amount which remains Outstanding shall not be less than $2,000.

The Trustee shall promptly notify the Obligor in writing of the Notes selected for redemption and, in the case of any Notes selected for partial redemption, the principal amount thereof to be redeemed.

For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Notes shall relate, in the case of any Note redeemed or to be redeemed only in part, to the portion of the principal of such Note which has been or is to be redeemed.

SECTION 10.03. Notice of Redemption .

(1) Notice of redemption to the Holders of Notes to be redeemed as a whole or in part at the option of the Obligor shall be given by first-class mail, postage prepaid, mailed not fewer than 30 nor more than 60 days prior to the Redemption Date, to each such Holder at such Holder’s last address appearing in the Security Register.

(2) All notices of redemption shall state:

(i) the Redemption Date;

(ii) the Redemption Price, or if not then ascertainable, the manner of calculating the Redemption Price;

(iii) if fewer than all Outstanding Notes of any series are to be redeemed, the identification (and, in the case of partial redemption, the respective principal amounts) of the Notes of such series to be redeemed from the Holder to whom the notice is given and that on and after the Redemption Date, upon surrender of such Note, a new Note or Notes of such series in the aggregate principal amount equal to the unredeemed portion thereof will be issued in accordance with Section 10.06;

(iv) that on the Redemption Date the Redemption Price will become due and payable upon each Note of such series called for redemption, and that interest, if any, thereon shall cease to accrue from and after said date;

(v) the place where Notes of such series called for redemption are to be surrendered for payment of the Redemption Price, which shall be the office or agency maintained by the Obligor pursuant to Section 9.02;

(vi) the name and address of the Paying Agent;

(vii) that the Notes called for redemption must be surrendered to the Paying Agent to collect the Redemption Price; and

(viii) the CUSIP and/or ISIN number, and that no representation is made as to the correctness or accuracy of the CUSIP and/or ISIN number, if any, listed in such notice or printed on the series of Notes.

(3) Notice of redemption of Notes shall be given by the Obligor or, at the Obligor’s request, by the Trustee in the name and at the expense of the Obligor.

SECTION 10.04. Deposit of Redemption Price . On or prior to 10 a.m., New York City time, on any Redemption Date, the Obligor shall deposit with the Trustee or with a Paying Agent (or, if the Obligor is acting as its own Paying Agent, segregate and hold in trust as provided in Section 9.03) an amount of money sufficient to pay the Redemption Price of all the Notes of such series which are to be redeemed on that date.

SECTION 10.05. Notes Payable on Redemption Date .

(1) Notice of redemption having been given as aforesaid, the Notes so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price therein specified and from and after such date (unless the Obligor shall default in the payment of the Redemption Price) such Notes shall cease to bear interest. Upon surrender of such Notes for redemption in accordance with the notice, such Notes shall be paid by the Obligor at the Redemption Price. Any installment of interest due and payable on or prior to the Redemption Date shall be payable to the Holders of such Notes registered as such on the relevant Record Date according to the terms and the provisions of Section 2.06.

(2) If any Note called for redemption shall not be so paid upon surrender thereof for redemption, the principal shall, until paid, bear interest from the Redemption Date at the rate prescribed therefor by the Note.

SECTION 10.06. Notes Redeemed in Part . Any Note that is to be redeemed only in part shall be surrendered at the office or agency maintained by the Obligor pursuant to Section 9.02 (with, if the Obligor or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Obligor and the Trustee duly executed by, the Holder thereof or his attorney duly authorized in writing) and the Obligor shall execute and the Trustee shall authenticate and deliver to the Holder of such Note without service charge and at the expense of the Obligor, a new Note or Notes of the same series, of any authorized denomination as requested by such Holder in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of such Note so surrendered.

SECTION 10.07. Optional Redemption . The Notes of any series will be redeemable at any time in whole or from time to time in part at the option of the Obligor, regardless of whether the Notes of any other series are to be redeemed, at the Redemption Price equal to the greater of:

(1) 100% of the principal amount of the Notes being redeemed, or

(2) as determined by an Independent Investment Banker, the sum of the present values of the remaining scheduled payments of principal and interest on the Notes being redeemed (not including any portion of such payments of interest on the Notes accrued to the Redemption Date) from the Redemption Date to the Maturity Date discounted to the Redemption Date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at a discount rate equal to the Treasury Rate plus the number of basis points, if any, provided for with respect to such series of Notes being redeemed; plus, for (1) or (2) above, whichever is applicable, accrued and unpaid interest on the Notes to be redeemed to, but not including, the Redemption Date. The Treasury Rate shall be calculated on the third Business Day preceding the Redemption Date and notice thereof shall promptly be given by the Obligor to the Trustee.

Any redemption pursuant to this Section 10.07 shall be made pursuant to the provisions of Section 10.01 through 10.06.

Notwithstanding anything in this Section 10.07 to the contrary, the Obligor may provide pursuant to Section 2.01(1)(v)(j) for optional redemption provisions with respect to a series of Notes in addition to, or in substitution of, the provision contained in this Section 10.07 and may provide with respect to a series of Notes for an optional redemption provision identical to the provision contained in this Section but providing for different definitions of the terms “Comparable Treasury Issue,” “Comparable Treasury Price,” “Reference Treasury Dealer,” “Reference Treasury Dealer Quotations” and “Treasury Rate.”

SECTION 10.08. Mandatory Redemption . Unless otherwise provided pursuant to Section 2.01(1)(v)(j), the Obligor shall not be required to make mandatory redemption or sinking fund payments with respect to the Notes of any series.

IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed as of the day and year first above written.


BOTTLING GROUP, LLC
By:	/s/ David Yawman
	Name:	David Yawman
	Title:	Managing Director-Delegatee

JPMORGAN CHASE BANK, N.A., as Trustee
By:	/s/ Francine Springer
	Name:	Francine Springer
	Title:	Vice President

EXHIBIT 4.2

THIS IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE REFERRED TO HEREINAFTER.

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), NEW YORK, NEW YORK, TO THE OBLIGOR OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

BOTTLING GROUP, LLC
5 ¹ / 2 % Senior Note due 2016


Registered

No. R-1		CUSIP: 10138M AG 0

		ISIN: US10138MAG06

		PRINCIPAL AMOUNT: $800,000,000

BOTTLING GROUP, LLC, a Delaware limited liability company (herein called the “Obligor”), for value received, hereby promises to pay to Cede & Co. as nominee for The Depository Trust Company (the “Holder”) or to its registered assigns, the principal sum listed on the Schedule of Exchanges of Interests in the Global Note on April 1, 2016 (the “Maturity Date”), and to pay interest on said principal sum (computed on the basis of a 360-day year of twelve 30-day months) semi-annually on April 1 and October 1 of each year (each, an “Interest Payment Date”), commencing October 1, 2006, at the rate of 5 ¹ / 2 % per annum of the principal amount then outstanding from the original issuance date of this Note, until payment of the principal sum has been made or duly provided for.

The interest so payable and punctually paid or duly provided for on any Interest Payment Date will, as provided in the Indenture, be paid to the person in whose name this Note (or one or more Predecessor Notes) is registered at the close of business on the Record Date for such

Interest Payment Date, which shall be the 15th day (whether or not a Business Day) next preceding such Interest Payment Date, provided that interest payable on an Interest Payment Date that is a Redemption Date or the Maturity Date shall be payable to the Person to whom principal is payable. Any such interest that is payable but is not so punctually paid or duly provided for shall forthwith cease to be payable to the registered Holder on such Record Date and may be paid to the Person in whose name this Note (or one or more Predecessor Notes) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Notes not less than 10 days prior to such Special Record Date.

Payment of the principal and interest on this Note will be made at the Place of Payment in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts.

Reference is made to the further provisions of this Note and to certain definitions set forth on the reverse hereof, which shall have the same effect as though fully set forth at this place. Unless the certificate of authentication hereon has been executed by or on behalf of the Trustee by manual signature, this Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

IN WITNESS WHEREOF, the Obligor has caused this instrument to be duly executed by manual or facsimile signature.

Dated: March 30, 2006.


		BOTTLING GROUP, LLC,

		by:

				Authorized Officer

		by:

				Authorized Officer

This is one of the Notes designated herein and referred to in the within-mentioned Indenture.


		JPMORGAN CHASE BANK, N.A., as Trustee,

		by:

				Authorized Officer

BOTTLING GROUP, LLC

5 ¹ / 2 % Senior Note due 2016

Capitalized terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated; provided, that the term “Notes” shall mean the Obligor’s 5 ¹ / 2 % Senior Notes due 2016, issued under the Indenture hereinafter referred to.

1. INTEREST. Bottling Group, LLC, a Delaware limited liability company (the “Obligor”), promises to pay interest on the principal amount of this Note at the rate of 5 ¹ / 2 % per annum from March 30, 2006, until payment of the principal amount hereof has been made or duly provided for. The Obligor shall pay interest on each Interest Payment Date (or if such day is not a Business Day, on the next succeeding Business Day and no interest on the amount payable on such Interest Payment Date shall accrue for the intervening period). Interest on the Notes shall accrue from the most recent date to which interest has been paid or duly provided for or, if no interest has been paid, from the Issue Date; provided that if there is no existing default or Event of Default relating to the payment of interest, and if this Note is authenticated between a Record Date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date; provided, further, that the first Interest Payment Date shall be October 1, 2006. The Obligor shall pay interest (including post-petition interest in any proceeding under any Federal or State bankruptcy, insolvency, reorganization, or other similar law) on overdue principal and premium, if any, from time to time on demand at the rate borne by this Note. The Obligor shall pay interest (including post-petition interest in any proceeding under any Federal or State bankruptcy, insolvency, reorganization, or other similar law) on overdue installments of interest (without regard to any applicable grace periods) from time to time on demand at the same rate to the extent lawful. Interest shall be computed on the basis of a 360-day year of twelve 30-day months.

2. METHOD OF PAYMENT. The Obligor shall pay interest on the Notes (except Defaulted Interest) to the Persons who are registered Holders of Notes on the Record Date therefor, even if such Notes are cancelled after such Record Date and on or before such Interest Payment Date, except as provided in Section 2.06 of the Indenture, provided that interest payable on an Interest Payment Date that is a Redemption Date or the Maturity Date shall be payable to the Person to whom principal is payable. The Notes shall be payable as to principal, premium, if any, and interest at the office or agency of the Obligor maintained for such purpose as set forth in Section 9.02 of the Indenture, or, at the option of the Obligor, payment of interest may be made through DTC, Clearstream International, or Euroclear Bank S.A./N.V., as operator of the Euroclear System, to the Holders thereof. Payment of principal of, premium, if any, and interest on the Notes shall be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts.

3. PAYING AGENT AND REGISTRAR. Initially, JPMorgan Chase Bank, N.A., the Trustee under the Indenture, shall act as Paying Agent and Registrar. The Obligor may appoint and change any Paying Agent or Registrar without notice to any Holder. The Obligor or any of its Subsidiaries may act in any such capacity.

4. INDENTURE. The Obligor issued the Notes under an Indenture dated as of (as it may be amended or supplemented from time to time in accordance with the terms thereof, the “Indenture”) between the Obligor and the Trustee. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act. The Notes are subject to all such terms, and Holders are referred to the Indenture and the Trust Indenture Act for a statement of such terms. To the extent any provision of this Note conflicts with the express provisions of the Indenture, the provisions of the Indenture shall govern and be controlling. The Indenture provides for the issuance of senior notes in one or more series (the “Senior Notes”) and reference is made to the Indenture for a statement of the respective rights, limitation of rights, duties and immunities thereunder of the Obligor, the Trustee and the Holders of the Senior Notes and of the terms upon which the Senior Notes are, and are to be, authenticated and delivered. This Note is one of the series designated on the face hereof.

5. OPTIONAL REDEMPTION. The Notes will be redeemable, in whole or in part, upon not less than 30 nor more than 60 days’ notice, at any time at the option of the Obligor, at the Redemption Price equal to the greater of: (1) 100% of the principal amount of the Notes being redeemed or (2) as determined by one of the Reference Treasury Dealers appointed by the Trustee after consultation with the Obligor, the sum of the present values of the remaining scheduled payments of principal and interest on the Notes being redeemed (not including any portion of such payments of interest on the Notes accrued to the Redemption Date) from the Redemption Date to the Maturity Date discounted to the Redemption Date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at a discount rate equal to the Treasury Rate plus 15 basis points; plus, for (1) or (2) above, whichever is applicable, accrued and unpaid interest on such Notes to, but not including, the Redemption Date.

6. MANDATORY REDEMPTION. The Obligor shall not be required to make mandatory redemption or sinking fund payments with respect to the Notes.

7. NOTICE OF REDEMPTION. Notice of redemption shall be mailed at least 30 days but not more than 60 days before the Redemption Date to each Holder whose Notes are to be redeemed at its registered address. Notes in denominations larger than $2,000 may be redeemed in part but only in whole multiples of $1,000.

8. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form without coupons in minimum denominations of $2,000 and integral multiples of $1,000 in excess thereof. The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Obligor may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The Obligor need not exchange or register the transfer of any Note or portion of a Note selected for redemption, except for the unredeemed portion of any Note being redeemed in part. Also, the Obligor need not exchange or register the transfer of any Notes for a period of 15 days before the day of the mailing of a notice of redemption.

9. PERSONS DEEMED OWNERS. Except as provided in the Indenture, the registered Holder of a Note on the Registrar’s books may be treated as its owner for all purposes under the Indenture.

10. AMENDMENT, SUPPLEMENT AND WAIVER. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Obligor and the rights of the Holders of the Notes under the Indenture and the Notes at any time by the Obligor and the Trustee with the consent of the Holders of a majority in aggregate principal amount of the Outstanding Senior Notes of all series affected thereby. The Indenture also contains provisions permitting the Holders of a majority in aggregate principal amount of the Notes at the time Outstanding, on behalf of the Holders of all Notes, to waive certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Note shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Note issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Note.

11. DEFAULTS AND REMEDIES. The Indenture provides that each of the following events constitutes an Event of Default: (i) failure to make any payment of any principal of, or premium, if any, when due (whether at maturity, upon redemption or otherwise) on the Notes; (ii) failure to make any payment of interest when due on the Notes, which failure is not cured within 30 days; (iii) failure of the Obligor to observe or perform any of its other covenants or warranties under the Indenture for the benefit of the holders of the Notes, which failure is not cured within 90 days after notice is given as specified in the Indenture; (iv) certain events of bankruptcy, insolvency, or reorganization of the Obligor, PBG or any Restricted Subsidiary of PBG; and (v) the maturity of any Debt of the Obligor, PBG or any Restricted Subsidiary of PBG having a then outstanding principal amount in excess of $75 million shall have been accelerated by any holder or holders thereof or any trustee or agent acting on behalf of such holder or holders, in accordance with the provisions of any contract evidencing, providing for the creation of or concerning such Debt or failure to pay at the stated maturity (and the expiration of any grace period) any Debt of the Obligor, PBG or any Restricted Subsidiary of PBG having a then outstanding principal amount in excess of $75 million.

If an Event of Default shall occur and be continuing, the principal amount hereof may be declared due and payable in the manner and with the effect provided in the Indenture.

12. AUTHENTICATION. This Note shall not be valid until authenticated by the manual signature of the Trustee or an authenticating agent.

13. ABBREVIATIONS. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entirety), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).

14. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Obligor has caused CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers in notices of redemption as a

convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon.

15. GOVERNING LAW. This Note shall be governed by, and construed in accordance with, the laws of the State of New York, without giving effect to rules governing the conflict of laws.

ASSIGNMENT FORM

To assign this Note, fill in the form below: (I) or (we) assign and transfer this Note to

(Insert assignee’s social security or tax identification number)

(Print or type assignee’s name, address and zip code)


and irrevocably appoint

to transfer this Note on the books of the Obligor. The agent may substitute another to act for him.


Date:						Your Signature:


						(Sign exactly as your name appears on the face of this Note)

						Tax Identification No:

						SIGNATURE GUARANTEE:


						Signatures must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.

SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE

The following exchanges of a part of this Global Note for a Global Note or a Definitive Note, or exchanges of a Definitive Note for an interest in this Global Note, have been made:

Amount of

Principal of this

decrease in

increase in

Global Note

Signature of

Principal Amount

Principal

following such

authorized

Date of

of this Global

Amount of this

decrease (or

officer of Trustee

Exchange

Note

Global Note

increase)

or Custodian

EXHIBIT 10.1

U.S. $450,000,000
5-YEAR CREDIT AGREEMENT

Dated as of March 22, 2006

among

THE PEPSI BOTTLING GROUP, INC.

BOTTLING GROUP, LLC

THE LENDERS NAMED HEREIN

THE ISSUING LENDERS NAMED HEREIN

CITIBANK, N.A.,
as Agent,

CITIGROUP GLOBAL MARKETS INC. and
HSBC SECURITIES (USA) INC.
as Joint Lead Arrangers and Book Managers

HSBC BANK USA, N.A.,
as Syndication Agent

and

LEHMAN BROTHERS BANK, FSB,
DEUTSCHE BANK SECURITIES, INC. and
JPMORGAN CHASE BANK, NATIONAL ASSOCIATION
as Co-Documentation Agents

TABLE OF CONTENTS


	Page
ARTICLE I DEFINITIONS AND ACCOUNTING		1
SECTION 1.01. Certain Defined Terms		1
SECTION 1.02. Computation of Time Periods		13
SECTION 1.03. Accounting Terms		13
ARTICLE II AMOUNTS AND TERMS OF THE ADVANCES		13
SECTION 2.01. The Revolving Credit Advances		14
SECTION 2.02. Making the Revolving Credit Advances.		14
SECTION 2.03. The Competitive Bid Advances.		16
SECTION 2.04. Issuance of Letters of Credit		19
SECTION 2.05. L/C Payments		21
SECTION 2.06. Fees		23
SECTION 2.07. Termination, Reduction or Increase of the Commitments.		24
SECTION 2.08. Repayment of Revolving Credit Advances; Evidence of Indebtedness; Extension of Termination Date.		27
SECTION 2.09. Interest on Revolving Credit Advances and Letters of Credit		28
SECTION 2.10. Interest Rate Determination.		29
SECTION 2.11. Optional Conversion of Revolving Credit Advances		30
SECTION 2.12. Optional Prepayments of Revolving Credit Advances		30
SECTION 2.13. Increased Costs.		31
SECTION 2.14. Illegality		32
SECTION 2.15. Payments and Computations.		32
SECTION 2.16. Taxes.		33
SECTION 2.17. Sharing of Payments, Etc		35
SECTION 2.18. Use of Proceeds		36
SECTION 2.19. Borrowings by Borrowing Subsidiaries; Substitution of Borrower.		36
SECTION 2.20. Mitigation Obligations		37
ARTICLE III CONDITIONS TO EFFECTIVENESS AND ARTICLE II		38
SECTION 3.01. Conditions Precedent to Effectiveness of Sections 2.01, 2.03 and 2.04		38
SECTION 3.02. Conditions Precedent to Each Revolving Credit Borrowing and Letter of Credit Issuance		39
SECTION 3.03. Conditions Precedent to Each Competitive Bid Borrowing		40
SECTION 3.04. Determinations Under Section 3.01		40
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE LOAN PARTIES		41
SECTION 4.01. Representations and Warranties of the Loan Parties		41
ARTICLE V COVENANTS		42
SECTION 5.01. Affirmative Covenants		42
SECTION 5.02. Negative Covenants		44
SECTION 5.03. Financial Covenants		45
ARTICLE VI EVENTS OF DEFAULT		46
SECTION 6.01. Events of Default		46
ARTICLE VII THE AGENT		48

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	Page
ARTICLE VIII MISCELLANEOUS		50
SECTION 8.01. Amendments, Etc.		50
SECTION 8.02. Notices, Etc.		51
SECTION 8.03. No Waiver; Remedies		53
SECTION 8.04. Costs and Expenses		53
SECTION 8.05. Right of Set-off		54
SECTION 8.06. Binding Effect		54
SECTION 8.07. Assignments and Participations		54
SECTION 8.08. Confidentiality		57
SECTION 8.09. Governing Law		58
SECTION 8.10. Execution in Counterparts		58
SECTION 8.11. Jurisdiction, Etc.		58
SECTION 8.12. WAIVER OF JURY TRIAL		58
SECTION 8.13. USA PATRIOT Act		59
ARTICLE IX COMPANY GUARANTEE		59
SECTION 9.01. Company Guarantee		59
ARTICLE X SUBSIDIARY GUARANTEE		60
SECTION 10.01. Subsidiary Guarantee		60
SECTION 10.02. Limitation of Guarantor’s Liability		62


SCHEDULE 1		- Lending Offices
SCHEDULE 2		- Pricing Schedule

EXHIBIT A-1		- Form of Notice of Revolving Credit Borrowing
EXHIBIT A-2		- Form of Notice of Competitive Bid Borrowing
EXHIBIT A-3		- Form of Extension Agreement
EXHIBIT B		- Form of Assignment and Acceptance
EXHIBIT C-1		- Form of Opinion of Special New York Counsel to the Company and the Guarantor
EXHIBIT C-2		- Form of Opinion of Assistant General Counsel of the Company and the Guarantor
EXHIBIT C-3		- Form of Opinion of Special New York Counsel for the Agent
EXHIBIT D		- Form of Designation Letter
EXHIBIT E		- Form of Substitution Letter
EXHIBIT F		- Form of Termination Letter

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CREDIT AGREEMENT

Dated as of March 22, 2006

THE PEPSI BOTTLING GROUP, INC., a Delaware corporation (the “ Company ”), BOTTLING GROUP, LLC, a Delaware limited liability company (the “ Guarantor ”), the banks, financial institutions and other institutional lenders (the “ Initial Lenders ”) listed on the signature pages hereof, and CITIBANK, N.A. (“ Citibank ”), as administrative agent (in such capacity, the “ Agent ”) for the Lenders (as hereinafter defined), agree as follows:

ARTICLE I

DEFINITIONS AND ACCOUNTING

SECTION 1.01. Certain Defined Terms . As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):

“ Advance ” means a Revolving Credit Advance or a Competitive Bid Advance.

“ Affiliate ” means, as to any Person, any other Person that, directly or indirectly, controls, is controlled by or is under common control with such Person or is a director or officer of such Person. For purposes of this definition, the term “control” (including the terms “controlling”, “controlled by” and “under common control with”) of a Person means the possession, direct or indirect, of the power to vote 5% or more of the Voting Stock of such Person or to direct or cause the direction of the management and policies of such Person, whether through the ownership of Voting Stock, by contract or otherwise.

“ Agent’s Account “ means the account of the Agent maintained by the Agent at Citibank with its office at 2 Penn’s Way, Suite 200, New Castle, Delaware 19720, ABA# 021000089, Account No. 36852248, Account Name Agency/Medium Term Finance, Reference: Pepsi Bottling Group, Inc. Attention: Carin Seals.

“ Aggregate L/C Exposure ” means, at any time, the sum of (i) the aggregate Available Amount of all outstanding Letters of Credit plus (ii) the aggregate unreimbursed amount of all L/C Payments.

“ Alternate Covenant Date ” means any day on which the Index Debt of Pepsi shall be rated less than A- by S&P or less than A3 by Moody’s.

“ Applicable Facility Fee Rate ” means, for any Rating Level Period, the rate per annum set forth in Schedule 2 opposite the reference to such Rating Level Period under the heading “Applicable Facility Fee Rate”. Each change in the Applicable Facility Fee Rate

5-Year Credit Agreement

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resulting from a Rating Level Change shall be effective on the date of such Rating Level Change.

“ Applicable Lending Office ” means, with respect to each Lender, such Lender’s Domestic Lending Office in the case of the Base Rate Advance and such Lender’s Eurodollar Lending Office in the case of a Eurodollar Rate Advance and, in the case of a Competitive Bid Advance, the office of such Lender notified by such Lender to the Agent as its Applicable Lending Office with respect to such Competitive Bid Advance.

“ Applicable Margin ” means, with respect to any Eurodollar Rate Advance, for any Rating Level Period, the rate per annum set forth in Schedule 2 opposite the reference to such Rating Level Period under the heading “Applicable Margin”. Each change in the Applicable Margin resulting from a Rating Level Change shall be effective on the date of such Rating Level Change.

“ Applicable Percentage ” means, with respect to any Lender, the percentage of the total Commitments represented by such Lender’s Commitment. If the Commitments have terminated or expired, the Applicable Percentages shall be determined based upon the Commitments most recently in effect, giving effect to any assignments.

“ Applicable Utilization Fee Rate ” means, for any Rating Level Period, the rate per annum set forth in Schedule 2 opposite the reference to such Rating Level Period under the heading “Applicable Utilization Fee Rate”. Each change in the Applicable Utilization Fee Rate resulting from a Rating Level Change shall be effective on the date of such Rating Level Change.

“ Available Amount ” means, at any time, with respect to any Letter of Credit, the maximum amount available to be drawn under such Letter of Credit at such time (assuming compliance at such time with all conditions to drawing).

“ Assignment and Acceptance ” means an assignment and acceptance entered into by a Lender and an Eligible Assignee, and accepted by the Agent and each Issuing Lender, in substantially the form of Exhibit B hereto.

“ Base Rate ” means a fluctuating interest rate per annum in effect from time to time, which rate per annum shall at all times be equal to the higher of:

(a) the rate of interest announced publicly by Citibank in New York, New York, from time to time, as Citibank’s base rate; and

(b) ¹ / 2 of one percent per annum above the Federal Funds Rate.

“ Base Rate Advance ” means a Revolving Credit Advance that bears interest as provided in Section 2.09(a).

5-Year Credit Agreement

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“ Borrowers ” means, at any time, collectively, the Company unless the Substitution Date has occurred pursuant to Section 2.19, each Borrowing Subsidiary and, on and after the Substitution Date has occurred pursuant to Section 2.19, the Guarantor.

“ Borrowing ” means a Revolving Credit Borrowing or a Competitive Bid Borrowing.

“ Borrowing Subsidiary ” means any Subsidiary of the Company as to which a Designation Letter has been delivered to the Agent and as to which a Termination Letter has not been delivered to the Agent in accordance with Section 2.19.

“ Business Day ” means a day of the year on which banks are not required or authorized by law to close in New York City and, if the applicable Business Day relates to any Eurodollar Rate Advances, on which dealings are carried on in the London interbank market.

“ Change of Control ” means (a) the acquisition of ownership, directly or indirectly, beneficially or of record, by any Person or group (within the meaning of the Securities Exchange Act of 1934, as amended, and the rules of the Securities and Exchange Commission thereunder as in effect on the date hereof) other than Pepsi, of shares representing more than 25% of the aggregate ordinary voting power represented by the issued and outstanding capital stock of the Company; or (b) occupation of a majority of the seats (other than vacant seats) on the board of directors of the Company by Persons who were neither (i) nominated by the board of directors of the Company nor (ii) appointed by directors so nominated.

“ Commitment ” has the meaning specified in Section 2.01.

“ Competitive Bid Advance ” means an advance by a Lender to a Borrower as part of a Competitive Bid Borrowing resulting from the auction bidding procedure described in Section 2.03 and refers to a Fixed Rate Advance or a LIBO Rate Advance.

“ Competitive Bid Borrowing ” means a borrowing consisting of simultaneous Competitive Bid Advances from each of the Lenders whose offer to make one or more Competitive Bid Advances as part of such borrowing has been accepted under the auction bidding procedure described in Section 2.03.

“ Competitive Bid Reduction ” has the meaning specified in Section 2.01.

“ Confidential Information ” means information that the Company furnishes to the Agent or any Lender in a writing designated as confidential, but does not include any such information that is or becomes generally available to the public or that is or becomes rightfully available to the Agent or such Lender from a source other than the Company.

“ Consolidated ” refers to the consolidation of accounts in accordance with GAAP. The Company shall cause the Guarantor at all times to remain a Consolidated Subsidiary.

5-Year Credit Agreement

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“ Consolidated EBITDA ” means, for any period, Consolidated Net Income for such period plus , without duplication and to the extent reflected as a charge in the statement of such Consolidated Net Income for such period, the sum of (a) income tax expense, (b) interest expense, amortization or writeoff of debt discount with respect to Debt (including the Advances), (c) depreciation and amortization expense, (d) amortization of intangibles (including, but not limited to, goodwill) and organization costs, (e) any extraordinary expenses or losses (including, whether or not otherwise includable as a separate item in the statement of such Consolidated Net Income for such period, losses on sales of assets outside of the ordinary course of business), and (f) any other non-cash charges, and minus , to the extent included in the statement of such Consolidated Net Income for such period, the sum of (a) any extraordinary income or gains (including, whether or not otherwise includable as a separate item in the statement of such Consolidated Net Income for such period, gains on the sales of assets outside of the ordinary course of business) and (b) any other non-cash income, all as determined on a Consolidated basis; in each case exclusive of the cumulative effect of foreign currency gains or losses. For the purposes of calculating Consolidated EBITDA for any period pursuant to any determination of the Consolidated Leverage Ratio, if during such period the Company or any Subsidiary, including the Guarantor, shall have made an acquisition or incurred or assumed (without duplication of any Debt incurred to refinance such assumed Debt) any Debt, Consolidated EBITDA for such period shall be calculated after giving pro forma effect thereto as if such acquisition occurred and such Debt had been incurred or assumed or refinanced on the first day of such period.

“ Consolidated Leverage Ratio ” means, as at the last day of any Fiscal Quarter, the ratio of (a) Consolidated Total Debt on such day to (b) Consolidated EBITDA for the four consecutive fiscal quarters then ended (taken as one accounting period).

“ Consolidated Net Income ” means, for any period, the consolidated net income (or loss) of the Company, its Restricted Subsidiaries and the Guarantor, determined on a consolidated basis in accordance with GAAP, before deduction of any minority interests in the Guarantor and excluding the cumulative effect of any foreign currency gains or losses.

“ Consolidated Net Tangible Assets ” means the total assets of the Company, its Restricted Subsidiaries and the Guarantor (less applicable depreciation, amortization, and other valuation reserves), except to the extent resulting from write-ups of capital assets (other than writeups in connection with accounting for acquisitions, in accordance with GAAP), less all current liabilities (excluding intercompany liabilities) and all intangible assets of the Company, its Restricted Subsidiaries and the Guarantor, all as set forth on the then most recent Consolidated balance sheet of the Company, its Restricted Subsidiaries and the Guarantor, prepared in accordance with GAAP, but before deduction of any minority interests in the Guarantor and exclusive of any foreign currency translation adjustments.

“ Consolidated Net Worth ” means, as of any date of determination, all items which in conformity with GAAP would be included under shareholders’ equity on a Consolidated balance sheet of the Company and its Subsidiaries, including the Guarantor, at such date plus amounts representing mandatorily redeemable preferred securities issued by Subsidiaries of the Company, including the Guarantor, but before deduction of any minority interests in the Guarantor and exclusive of any foreign currency translation adjustments.

5-Year Credit Agreement

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“ Consolidated Total Debt ” means, at any date (i) the aggregate principal amount of all Debt of the Company and its Subsidiaries, including the Guarantor minus (ii) the aggregate amount (not in excess of $500,000,000) of all cash and cash equivalents of the Company and its Subsidiaries, in each case at such date and determined on a Consolidated basis in accordance with GAAP.

“ Control ” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “ Controlling ” and “ Controlled ” have meanings correlative thereto.

“ Convert ”, “ Conversion ” and “ Converted ” each refers to a conversion of Revolving Credit Advances of one Type into Revolving Credit Advances of the other Type pursuant to Section 2.10 or 2.11.

“ Debt ” of any Person means, without duplication, (a) all indebtedness of such Person for borrowed money, (b) all obligations of such Person for the deferred purchase price of property or services (other than trade accounts payable arising in the ordinary course of business), (c) all obligations of such Person evidenced by notes, bonds, debentures or other similar instruments, (d) all obligations (other than trade accounts payable arising in the ordinary course of business) of such Person created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (e) all obligations of such Person as lessee under leases that have been or should be, in accordance with GAAP, recorded as capital leases, (f) all Debt of others referred to in clauses (a) through (e) above or clause (g) below guaranteed directly or indirectly in any manner by such Person, or in effect guaranteed directly or indirectly by such Person through (i) an agreement (1) to pay or purchase such Debt or to advance or supply funds for the payment or purchase of such Debt, (2) to purchase, sell or lease (as lessee or lessor) property, or to purchase or sell services, primarily for the purpose of enabling the debtor to make payment of such Debt or to assure the holder of such Debt against loss, (3) to supply funds to or in any other manner invest in the debtor (including any agreement to pay for property or services irrespective of whether such property is received or such services are rendered) or (4) otherwise to assure a creditor against loss, or (ii) a standby letter of credit and (g) all Debt referred to in clauses (a) through (f) above secured by (or for which the holder of such Debt has an existing right, contingent or otherwise, to be secured by) any Lien on property (including, without limitation, accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Debt.

“ Debt to Capitalization Ratio ” means at any time the ratio of (x) Consolidated Total Debt to (y) the sum of (i) Consolidated Total Debt plus (ii) Consolidated Net Worth.

“ Declining Lender ” has the meaning specified in Section 2.08(c).

5-Year Credit Agreement

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“ Default ” means any Event of Default or any event that would constitute an Event of Default but for the requirement that notice be given or time elapse or both.

“ Designation Letter ” has the meaning specified in Section 2.19(a).

“ Domestic Lending Office ” means, with respect to any Lender, the office of such Lender specified as its “Domestic Lending Office” opposite its name on Schedule 1 hereto or in the Assignment and Acceptance pursuant to which it became a Lender, or such other office of such Lender as such Lender may from time to time specify to the Company and the Agent.

“ Effective Date ” has the meaning specified in Section 3.01.

“ Eligible Assignee ” means (i) a Lender; (ii) an Affiliate of a Lender; (iii) a commercial bank organized under the laws of the United States, or any State thereof, and having total assets in excess of $15,000,000,000 and a combined capital and surplus of at least $1,000,000,000; (iv) a savings and loan association or savings bank organized under the laws of the United States, or any State thereof, and having total assets in excess of $15,000,000,000 and a combined capital and surplus of at least $1,000,000,000; (v) a commercial bank organized under the laws of any other country that is a member of the Organization for Economic Cooperation and Development or has concluded special lending arrangements with the International Monetary Fund associated with its General Arrangements to Borrow or of the Cayman Islands, or a political subdivision of any such country, and having total assets in excess of $l5,000,000,000 and a combined capital and surplus of at least $1,000,000,000 so long as such bank is acting through a branch or agency located in the United States or in the country in which it is organized or another country that is described in this clause (v); (vi) the central bank of any country that is a member of the Organization for Economic Cooperation and Development; provided , however , that each Person described in clauses (ii) through (vi) shall have a short term public debt rating of not less than A by S&P or Moody’s or shall be approved by the Company; and (vii) any other Person approved by the Company, such approval not to be unreasonably withheld or delayed; provided , however , that neither the Company nor an Affiliate of the Company shall qualify as an Eligible Assignee.

“ Environmental Law ” means any federal, state, local or foreign statute, law, ordinance, rule, regulation, code, order, judgment, decree or judicial or agency interpretation, policy or guidance relating to the environment, health, safety or Hazardous Materials.

“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated and rulings issued thereunder.

“ Eurodollar Lending Office ” means, with respect to any Lender, the office of such Lender specified as its “Eurodollar Lending Office” opposite its name on Schedule 1 hereto or in the Assignment and Acceptance pursuant to which it became a Lender (or, if no such office is specified, its Domestic Lending Office), or such other office of such Lender as such Lender may from time to time specify to the Company and the Agent.

5-Year Credit Agreement

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“ Eurodollar Rate ” means, for any Interest Period for each Eurodollar Rate Advance comprising part of the same Revolving Credit Borrowing, an interest rate per annum appearing on Page 3750 of the Telerate Service (or on any successor or substitute page of such Service, or any successor to or substitute for such Service, providing rate quotations comparable to those currently provided on such page of such Service, as determined by the Agent from time to time for purposes of providing quotations of interest rates applicable to Dollar deposits in the London interbank market) as of 11:00 A.M. (London time) on the date two Business Days prior to the first day of such Interest Period as the rate for Dollar deposits having a term comparable to such Interest Period, or in the event such offered rate is not available from said Page 3750, the average (rounded to the nearer whole multiple of 1/16 of 1% per annum, if such average is not such a multiple) of the rate per annum at which deposits in U.S. dollars are offered by the principal office of each of the Reference Banks in London, England to prime banks in the London interbank market at 11:00 A.M. (London time) two Business Days before the first day of such Interest Period in an amount substantially equal to such Reference Bank’s Eurodollar Rate Advance comprising part of such Revolving Credit Borrowing to be outstanding during such Interest Period and for a period equal to such Interest Period. If the Eurodollar Rate does not appear on said Page 3750 (or any successor page), the Eurodollar Rate for any Interest Period for each Eurodollar Rate Advance comprising part of the same Revolving Credit Borrowing shall be determined by the Agent on the basis of applicable rates furnished to and received by the Agent from the Reference Banks two Business Days before the first day of such Interest Period, subject , however , to the provisions of Section 2.10.

“ Eurodollar Rate Advance ” means a Revolving Credit Advance that bears interest as provided in Section 2.09(b).

“ Events of Default ” has the meaning specified in Section 6.01.

“ Extending Lender ” has the meaning specified in Section 2.08(c).

“ Extension Agreement ” means an Extension Agreement substantially in the form contained in Exhibit A-3 hereto.

“ Federal Funds Rate ” means, for any period, a fluctuating interest rate per annum equal for each day during such period to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for such day on such transactions received by the Agent from three Federal funds brokers of recognized standing selected by it.

“ Fiscal Quarter ” means a period of 13 or (or 14) weeks treated by the Company as a fiscal quarter.

“ Fiscal Year ” means the period of 52 (or 53) weeks ending on the last Saturday of any calendar year and treated by the Company as its fiscal year.

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“ Fixed Rate Advances ” has the meaning specified in Section 2.03(b).

“ GAAP ” means generally accepted accounting principles as in effect from time to time, applied on a basis consistent (except for changes concurred in by the Company’s independent public accountants) with the most recent audited Consolidated financial statements of the Company and its Subsidiaries delivered to the Lenders.

“ Granting Lender ” has the meaning specified in Section 8.07(e).

“ Guaranteed Party ” has the meaning specified in Section 9.01.

“ Hazardous Materials ” means petroleum and petroleum products, byproducts or breakdown products, radioactive materials, asbestos-containing materials, radon gas and any other chemicals, materials or substances designated, classified or regulated as being “hazardous” or “toxic”, or words of similar import, under any federal, state, local or foreign statute, law, ordinance, rule, regulation, code, order, judgment, decree or judicial or agency interpretation, policy or guidance.

“ Index Debt ” of any Person means senior, unsecured, long-term indebtedness for borrowed money of such Person that is not guaranteed by any other Person (other than, in the case of the Company, the Guarantor) or subject to any other credit enhancement.

“ Information Memorandum ” means the information memorandum dated March 2006 used by the Agent in connection with the syndication of the Commitments.

“ Interest Period ” means, for each Eurodollar Rate Advance comprising part of the same Revolving Credit Borrowing, the period commencing on the date of such Eurodollar Rate Advance or the date of the Conversion of any Base Rate Advance into such Eurodollar Rate Advance and ending on the last day of the period selected by the Company pursuant to the provisions below and, thereafter, each subsequent period commencing on the last day of the immediately preceding Interest Period and ending on the last day of the period selected by the Company pursuant to the provisions below. The duration of each such Interest Period shall be one, two, three, six or, to the extent available from all the Lenders, nine or twelve months, as the Company may, upon notice received by the Agent not later than 11:00 A.M. (New York City time) on the third Business Day prior to the first day of such Interest Period, select; provided , however , that:

(1) the Company may not select any Interest Period that ends after the Termination Date;

(2) Interest Periods commencing on the same date for Eurodollar Rate Advances comprising part of the same Revolving Credit Borrowing shall be of the same duration;

(3) whenever the last day of any Interest Period would otherwise occur on a day other than a Business Day, the last day of such Interest Period shall be extended to occur on the next succeeding Business Day, provided , however , that, if such extension would

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cause the last day of such Interest Period to occur in the next following calendar month, the last day of such Interest Period shall occur on the next preceding Business Day; and

(4) whenever the first day of any Interest Period occurs on a day of an initial calendar month for which there is no numerically corresponding day in the calendar month that succeeds such initial calendar month by the number of months equal to the number of months in such Interest Period, such Interest Period shall end on the last Business Day of such succeeding calendar month.

“ Internal Revenue Code ” means the Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated and rulings issued thereunder.

“ Issuing Lender ” means any Lender designated as an Issuing Lender in a writing signed by such Lender, the Company and the Agent.

“ L/C Payment ” means a payment by an Issuing Lender of a draft drawn under any Letter of Credit.

“ L/C Reimbursement Obligation ” means the obligation of a Borrower to reimburse an Issuing Lender for an L/C Payment pursuant to Section 2.05.

“ L/C Related Documents ” has the meaning specified in Section 2.04(c)(i).

“ Lenders ” means the Initial Lenders and each Person that shall become a party hereto pursuant to Sections 2.07(c) or 8.07.

“ Letter of Credit ” has the meaning specified in Section 2.04(a)(i).

“ Letter of Credit Commission Rate ” means a rate per annum equal to the Applicable Margin.

“ Letter of Credit Facility Amount ” means $250,000,000.

“ LIBO Rate Advances ” has the meaning specified in Section 2.03(b).

“ Lien ” means any lien, security interest or other charge or encumbrance of any kind, or any other type of preferential arrangement, including, without limitation, the lien or retained security title of a conditional vendor.

“ Loan Documents ” means, collectively, this Agreement, each promissory note issued thereunder, each Designation Letter and each Termination Letter.

“ Loan Party ” has the meaning specified in Section 4.01.

“ Margin Stock ” means margin stock within the meaning of Regulation U of the Board of Governors of the Federal Reserve System.

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“ Master Bottling Agreement ” means the Master Bottling Agreement dated March 30, 1999, between the Company and Pepsi or any successor or replacement agreement that confers substantially the same benefits on the Company as the Master Bottling Agreement conferred on the date hereof.

“ Material Adverse Change ” means any material adverse change in the financial condition, operations or properties of the Company or the Company and its Subsidiaries (including the Guarantor) taken as a whole.

“ Material Adverse Effect ” means a material adverse effect on (a) the financial condition, operations or properties of the Company and its Subsidiaries (including the Guarantor) taken as a whole, (b) the rights and remedies of the Agent or any Lender under this Agreement or any promissory note or (c) the ability of the Company to perform its obligations under this Agreement or any promissory note.

“ Material Subsidiary ” means each Subsidiary of the Company which is a “significant subsidiary” as that term is defined in Rule 1-02(w) of the Regulation S-X under the Securities Act of 1933, as amended, as such rule is in effect as of the date hereof.

“ Moody’s ” means Moody’s Investors Service, Inc. and any successor thereto.

“ Moody’s Rating ” means, at any time, the rating of the Company’s Index Debt then most recently announced by Moody’s.

“ New Lender ” means, for purposes of Section 2.07(c), an Eligible Assignee (which may be a Lender) selected by the Company with (in the case of a New Lender that is not already a Lender) prior consultation with the Agent.

“ Notice of Competitive Bid Borrowing ” has the meaning specified in Section 2.03(b).

“ Notice of L/C Issuance ” has the meaning specified in Section 2.04(c).

“ Notice of Revolving Credit Borrowing ” has the meaning specified in Section 2.02(a).

“ Pepsi ” means PepsiCo, Inc., a North Carolina corporation.

“ Person ” means an individual, partnership, corporation (including a business trust), joint stock company, trust, unincorporated association, joint venture, limited liability company or other entity, or a government or any political subdivision or agency thereof.

“ Principal Property ” means any single manufacturing or processing plant, office building, or warehouse owned or leased by the Company, a Restricted Subsidiary or the Guarantor other than a plant, warehouse, office building, or portion thereof which, in the opinion

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of the Company’s Board of Directors, is not of material importance to the business conducted by the Company, its Restricted Subsidiaries and the Guarantor as an entirety.

“ Quarterly Dates ” means the last Business Day of each March, June, September and December, commencing on the first such date to occur after the Effective Date.

“ Rating ” means the Moody’s Rating or the S&P Rating, as the case may be.

“ Rating Level Change ” means a change in the Moody’s Rating or the S&P Rating that results in a change from one Rating Level Period to another, which Rating Level Change shall be deemed to take effect on the date on which the relevant change in rating is first announced by Moody’s or S&P.

“ Rating Level Period ” means a Rating Level 1 Period, a Rating Level 2 Period, a Rating Level 3 Period, a Rating Level 4 Period or a Rating Level 5 Period; provided that:

	(i)		“ Rating Level 1 Period ” means a period during which the Moody’s Rating is at or above Aa3 or the S&P Rating is at or above AA-;

	(ii)		“ Rating Level 2 Period ” means a period that is not a Rating Level 1 Period, during which the Moody’s Rating is at or above A1 or the S&P Rating is at or above A+;

	(iii)		“ Rating Level 3 Period ” means a period that is not a Rating Level 1 Period or a Rating Level 2 Period, during which the Moody’s Rating is at or above A2 or the S&P Rating is at or above A;

	(iv)		“ Rating Level 4 Period ” means a period that is not a Rating Level 1 Period, a Rating Level 2 Period or a Rating Level 3 Period, during which the Moody’s Rating is at or above A3 or the S&P Rating is at or above A-; and

	(v)		“ Rating Level 5 Period ” means a period that is not a Rating Level 1 Period, a Rating Level 2 Period, a Rating Level 3 Period or a Rating Level 4 Period;

and provided , further, that if the Moody’s rating and the S&P Rating differ by more than one Rating Level, then the applicable Rating Level Period shall be one Rating Level lower than the Rating Level resulting from the application of the higher of such ratings (for which purpose Rating Level 1 is the highest and Rating Level 5 is the lowest); and provided , further, that any period during which there is no Moody’s Rating or there is no S&P Rating shall be a Rating Level 5 Period.

“ Reference Banks ” means Citibank and HSBC Bank USA, N.A. (and any successors thereof).

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“ Related Parties ” means, with respect to any specified Person, such Person’s Affiliates and the respective directors, officers, employees, agents and advisors of such Person and such Person’s Affiliates.

“ Register ” has the meaning specified in Section 8.07(d).

“ Required Lenders ” means at any time Lenders owed more than 50% of the then aggregate unpaid principal amount of the Advances (excluding Competitive Bid Advances) owing to Lenders, or, if no such principal amount is then outstanding, Lenders having more than 50% of the aggregate amount of the Commitments; provided that, for purposes solely of this definition, each Lender’s participation in each Letter of Credit shall be counted as an Advance by such Lender to the extent of such Lender’s Applicable Percentage of the Available Amount of such Letter of Credit.

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

“ Revolving Credit Advance ” means an advance by a Lender to a Borrower as part of a Revolving Credit Borrowing and refers to a Base Rate Advance or a Eurodollar Rate Advance (each of which shall be a “ Type ” of Revolving Credit Advance).

“ Revolving Credit Borrowing ” means a borrowing consisting of simultaneous Revolving Credit Advances of the same Type made by each of the Lenders pursuant to Section 2.01.

“ S&P ” means Standard & Poors Rating Services or any successor thereto.

“ S&P Rating ” means, at any time, the rating of the Company’s Index Debt then most recently announced by S&P.

“ SPC ” has the meaning specified in Section 8.07(e).

“ Subsidiary ” of any Person means any corporation, partnership, joint venture, limited liability company, trust or estate of which (or in which) more than 50% of (a) the issued and outstanding capital stock having ordinary voting power to elect a majority of the Board of Directors of such corporation (irrespective of whether at the time capital stock of any other class or classes of such corporation shall or might have voting power upon the occurrence of any contingency), (b) the interest in the capital or profits of such partnership or joint venture or (c) the beneficial interest in such trust or estate is at the time directly or indirectly owned or controlled by such Person, by such Person and one or more of its other Subsidiaries or by one or more of such Person’s other Subsidiaries. The term “Subsidiary” shall refer to Subsidiaries of the Company unless otherwise specified.

“ Substitution Date ” has the meaning specified in Section 2.19(c).

“ Substitution Letter ” has the meaning specified in Section 2.19(c).

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“ Termination Date ” means March 22, 2011 or, if earlier, the date of termination in whole of the Commitments pursuant to Section 2.07(a) or 6.01 or, in the case of any Lender whose Commitment is extended pursuant to Section 2.08(c), the date to which such Commitment is extended; provided in each case that if any such date is not a Business Day, the relevant Termination Date of such Lender shall be the immediately preceding Business Day.

“ Termination Letter ” has the meaning specified in Section 2.19(b).

“ Type ” has the meaning specified in the definition of “Revolving Credit Advance.”

“ Unrestricted Subsidiary ” means (a) any Subsidiary of the Company (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 continuation 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 Company’s Board of Directors and (b) the Guarantor. Any Subsidiary designated as a Restricted Subsidiary may be designated as an Unrestricted Subsidiary.

“ Voting Stock ” means capital stock issued by a corporation, or equivalent interests in any other Person, the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similar actions) of such Person, even if the right so to vote has been suspended by the happening of such a contingency.

SECTION 1.02. Computation of Time Periods . In this Agreement in the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” each mean “to but excluding”.

SECTION 1.03. Accounting Terms . Unless otherwise specified herein, all accounting terms used herein shall be interpreted, all accounting determinations hereunder shall be made, and all financial statements required to be delivered hereunder shall be prepared in accordance with GAAP; provided that, if the Company notifies the Agent that the Company wishes to amend any provisions hereof to eliminate the effect of any change in GAAP (or if the Agent notifies the Company that the Required Lenders wish to amend any provision hereof for such purpose), then such provision shall be applied on the basis of GAAP in effect immediately before the relevant change in GAAP became effective, until either such notice is withdrawn or such provision is amended in a manner satisfactory to the Company and the Required Lenders.

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ARTICLE II

AMOUNTS AND TERMS OF THE ADVANCES

SECTION 2.01. The Revolving Credit Advances . (a) Each Lender severally agrees, on the terms and conditions hereinafter set forth, to make Revolving Credit Advances to the Company or any Borrowing Subsidiary from time to time on any Business Day during the period from the Effective Date until the Termination Date in an aggregate amount not to exceed at any time outstanding the amount set forth opposite such Lender’s name on the signature pages hereof or, if such Lender has entered into any Assignment and Acceptance, set forth for such Lender in the Register maintained by the Agent pursuant to Section 8.07(d), as such amount may be reduced pursuant to Section 2.07(a) or increased pursuant to Section 2.07(c) (such Lender’s “ Commitment ”); provided that the aggregate amount of the Commitments of the Lenders shall be deemed used from time to time to the extent of the aggregate amount of the Competitive Bid Advances then outstanding and such deemed use of the aggregate amount of the Commitments shall be allocated among the Lenders ratably according to their respective Commitments (such deemed use of the aggregate amount of the Commitments being a “ Competitive Bid Reduction ”); and provided , further , that the sum of the aggregate outstanding principal amount of the Advances plus the Aggregate L/C Exposure shall not at any time exceed the aggregate amount of the Commitments.

(b) Each Revolving Credit Borrowing shall be in an aggregate amount of $5,000,000 or an integral multiple of $1,000,000 in excess thereof (or, if less, (i) an aggregate amount equal to the amount by which the aggregate amount of a proposed Competitive Bid Borrowing requested by the Company exceeds the aggregate amount of Competitive Bid Advances offered to be made by the Lenders and accepted by the Company in respect of such Competitive Bid Borrowing, if such Competitive Bid Borrowing is made on the same date as such Revolving Credit Borrowing or (ii) the aggregate amount of the unused Commitments, after giving effect to any Competitive Bid Reductions then in effect) and shall consist of Revolving Credit Advances of the same Type made on the same day by the Lenders ratably according to their respective Commitments.

(c) Within the limits of each Lender’s Commitment and the limitation set forth in Section 2.01(a), each Borrower may borrow under this Section 2.01, prepay pursuant to Section 2.12 and reborrow under this Section 2.01.

SECTION 2.02. Making the Revolving Credit Advances .

(a) (i) Each Revolving Credit Borrowing shall be made on notice, given not later than 11:00 A.M. (New York City time) on the third Business Day prior to the date of the proposed Revolving Credit Borrowing in the case of a Revolving Credit Borrowing consisting of Eurodollar Rate Advances, or the date of the proposed Revolving Credit Borrowing in the case of a Revolving Credit Borrowing consisting of Base Rate Advances, by the Company (on its own behalf and on behalf of any Borrowing Subsidiary) to the Agent, which shall give to each Lender prompt notice thereof by telecopier or email. Each such notice (a “ Notice of Revolving Credit Borrowing ”) shall be by telecopier or email, confirmed promptly by hard copy, in substantially the form of Exhibit A-1 hereto, specifying therein the requested (i) date of such Revolving Credit Borrowing, (ii) Type of Advances comprising such Revolving Credit Borrowing, (iii) aggregate amount of such Revolving Credit Borrowing, (iv) in the case of a Revolving Credit Borrowing consisting of Eurodollar Rate Advances, initial Interest Period for each such Revolving Credit

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Advance and (v) name of the relevant Borrower (which shall be the Company or a Borrowing Subsidiary).

(ii) Each Lender shall, before 11:00 A.M. (New York City time), in the case of a Revolving Credit Borrowing consisting of Eurodollar Rate Advances, or before 1:00 P.M. (New York City time), in the case of a Revolving Credit Borrowing consisting of Base Rate Advances, on the date of such Revolving Credit Borrowing, make available for the account of its Applicable Lending Office to the Agent at the Agent’s Account, in same day funds, such Lender’s ratable portion of such Revolving Credit Borrowing.

(iii) After the Agent’s receipt of such funds and upon fulfillment of the applicable conditions set forth in Article III, the Agent will make such same day funds available to the relevant Borrower at such Borrower’s account at the Agent’s address referred to in Section 8.02, provided , however , that the Agent shall first apply such funds, to the extent required, to reimburse any L/C Payment that has not theretofore been reimbursed.

(b) Anything in subsection (a) above to the contrary notwithstanding, (i) the Company may not select Eurodollar Rate Advances for any Revolving Credit Borrowing if the aggregate amount of such Revolving Credit Borrowing is less than $10,000,000 or if the obligation of the Lenders to make Eurodollar Rate Advances shall then be suspended pursuant to Section 2.10 and (ii) the Eurodollar Rate Advances may not be outstanding as part of more than six separate Revolving Credit Borrowings.

(c) Each Notice of Revolving Credit Borrowing shall be irrevocable and binding on the relevant Borrower. In the case of any Revolving Credit Borrowing that the related Notice of Revolving Credit Borrowing specifies is to be comprised of Eurodollar Rate Advances, the Company shall indemnify each Lender against any loss, cost or expense incurred by such Lender as a result of any failure to fulfill on or before the date specified in such Notice of Revolving Credit Borrowing for such Revolving Credit Borrowing the applicable conditions set forth in Article III, including, without limitation, any loss, cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Lender to fund the Revolving Credit Advance to be made by such Lender as part of such Revolving Credit Borrowing when such Revolving Credit Advance, as a result of such failure, is not made on such date.

(d) Unless the Agent shall have received notice from a Lender prior to the date of any Revolving Credit Borrowing that such Lender will not make available to the Agent such Lender’s ratable portion of such Revolving Credit Borrowing, the Agent may assume that such Lender has made such portion available to the Agent on the date of such Revolving Credit Borrowing in accordance with subsection (a) of this Section 2.02 and the Agent may, in reliance upon such assumption, make available to the relevant Borrower on such date a corresponding amount. If and to the extent that such Lender shall not have so made such ratable portion available to the Agent, such Lender and such Borrower severally agree to repay to the Agent forthwith on demand such corresponding amount together with interest thereon, for each day from the date such amount is made available to such Borrower until the date such amount is repaid to the Agent, at (i) in the case of a Borrower, the interest rate applicable at the time to Revolving Credit Advances comprising such Revolving Credit Borrowing and (ii) in the case of

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such Lender, the Federal Funds Rate. If such Lender shall repay to the Agent such corresponding amount, such amount so repaid shall constitute such Lender’s Revolving Credit Advance as part of such Revolving Credit Borrowing for purposes of this Agreement and shall be made available in same day funds to the relevant Borrower’s account at the Agent’s address referred to in Section 8.02.

(e) The failure of any Lender to make the Revolving Credit Advance to be made by it as part of any Revolving Credit Borrowing shall not relieve any other Lender of its obligation, if any, hereunder to make its Revolving Credit Advance on the date of such Revolving Credit Borrowing, but no Lender shall be responsible for the failure of any other Lender to make the Revolving Credit Advance to be made by such other Lender on the date of any Revolving Credit Borrowing.

SECTION 2.03. The Competitive Bid Advances .

(a) Each Lender severally agrees that each Borrower may make Competitive Bid Borrowings under this Section 2.03 from time to time on any Business Day during the period from the date hereof until the date occurring 7 days prior to the Termination Date in the manner set forth below; provided that, following the making of each Competitive Bid Borrowing, the aggregate amount of the Advances then outstanding plus the Aggregate L/C Exposure shall not exceed the aggregate amount of the Commitments of the Lenders (computed without regard to any Competitive Bid Reduction).

(b) The Company (on its own behalf and on behalf of any Borrowing Subsidiary) may request a Competitive Bid Borrowing under this Section 2.03 by delivering to the Agent, by telecopier or email, confirmed promptly by hard copy, a notice of a Competitive Bid Borrowing (a “ Notice of Competitive Bid Borrowing ”), in substantially the form of Exhibit A-2 hereto, specifying therein (i) the date of such proposed Competitive Bid Borrowing, (ii) the aggregate amount of such proposed Competitive Bid Borrowing, (iii) the maturity date for repayment of each Competitive Bid Advance to be made as part of such Competitive Bid Borrowing (which maturity date may not be earlier than the date occurring 7 days after the date of such Competitive Bid Borrowing or later than the Termination Date), (iv) the interest payment date or dates relating thereto, (v) the name of the Borrower, and (vi) any other terms to be applicable to such Competitive Bid Borrowing, not later than 10:00 A.M. (New York City time) (A) at least one Business Day prior to the date of the proposed Competitive Bid Borrowing, if the Company shall specify in the Notice of Competitive Bid Borrowing that the rates of interest to be offered by the Lenders shall be fixed rates per annum (the Advances comprising any such Competitive Bid Borrowing being referred to herein as “ Fixed Rate Advances ”) and (B) at least four Business Days prior to the date of the proposed Competitive Bid Borrowing, if the Company shall instead specify in the Notice of Competitive Bid Borrowing another basis to be used by the Lenders in determining the rates of interest to be offered by them (the Advances comprising such Competitive Bid Borrowing being referred to herein as “ LIBO Rate Advances ”). The Agent shall in turn promptly notify each Lender of each request for a Competitive Bid Borrowing received by it from the Company by sending such Lender a copy of the related Notice of Competitive Bid Borrowing.

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(c) Each Lender may, if, in its sole discretion, it elects to do so, irrevocably offer to make one or more Competitive Bid Advances to the relevant Borrower as part of such proposed Competitive Bid Borrowing at a rate or rates of interest specified by such Lender in its sole discretion, by notifying the Agent (which shall give prompt notice thereof to the Company), before 10:00 A.M. (New York City time) on the date of such proposed Competitive Bid Borrowing, in the case of a Competitive Bid Borrowing consisting of Fixed Rate Advances, and three Business Days before the date of such proposed Competitive Bid Borrowing, in the case of a Competitive Bid Borrowing consisting of LIBO Rate Advances, of the minimum amount and maximum amount of each Competitive Bid Advance which such Lender would be willing to make as part of such proposed Competitive Bid Borrowing (which amounts may, subject to the proviso to the first sentence of Section 2.03(a), exceed such Lender’s Commitment, if any), the rate or rates of interest therefor and such Lender’s Applicable Lending Office with respect to such Competitive Bid Advance; provided that if the Agent in its capacity as a Lender shall, in its sole discretion, elect to make any such offer, it shall notify the Company of such offer before 9:00 A.M. (New York City time) on the date on which notice of such election is to be given to the Agent by the other Lenders. If any Lender shall elect not to make such an offer, such Lender shall so notify the Agent, before 10:00 A.M. (New York City time) on the date on which notice of such election is to be given to the Agent by the other Lenders, and such Lender shall not be obligated to, and shall not, make any Competitive Bid Advance as part of such Competitive Bid Borrowing; provided that the failure by any Lender to give such notice shall not cause such Lender to be obligated to make any Competitive Bid Advance as part of such proposed Competitive Bid Borrowing.

(d) The Company shall, in turn, before 11:00 A.M. (New York City time) on the date of such proposed Competitive Bid Borrowing, in the case of a Competitive Bid Borrowing consisting of Fixed Rate Advances, and before 1:00 P.M. (New York City time) three Business Days before the date of such proposed Competitive Bid Borrowing, in the case of a Competitive Bid Borrowing consisting of LIBO Rate Advances, either:

(x) cancel such Competitive Bid Borrowing by giving the Agent notice to that effect, or

(y) accept one or more of the offers made by any Lender or Lenders pursuant to paragraph (c) above, by giving notice to the Agent of the amount of each Competitive Bid Advance (which amount shall be equal to or greater than the minimum amount, and equal to or less than the maximum amount, notified to the Company by the Agent on behalf of such Lender for such Competitive Bid Advance pursuant to paragraph (c) above) to be made by each Lender as part of such Competitive Bid Borrowing, and reject any remaining offers made by Lenders pursuant to paragraph (c) above by giving the Agent notice to that effect. If the Company accepts any offers made by Lenders pursuant to paragraph (c) above, such offers shall be accepted in the order of the lowest to highest interest rates or, if two or more Lenders offer to make Competitive Bid Advances at the same interest rate, such offers, if any, shall be accepted in proportion to the amount offered by each such Lender at such interest rate notwithstanding any minimum specified by such Lender in its notice given pursuant to paragraph (c) above. The

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Company may not accept offers in excess of the amount specified in accordance with paragraph (a) above.

(e) If the Company notifies the Agent that such Competitive Bid Borrowing is cancelled pursuant to paragraph (d)(x) above, the Agent shall give prompt notice thereof to the Lenders and such Competitive Bid Borrowing shall not be made.

(f) If the Company accepts one or more of the offers made by any Lender or Lenders pursuant to paragraph (d)(y) above, the Agent shall in turn promptly notify (A) each Lender that has made an offer as described in paragraph (c) above, of the date and aggregate amount of such Competitive Bid Borrowing and whether or not any offer or offers made by such Lender pursuant to paragraph (c) above have been accepted by the Company, (B) each Lender that is to make a Competitive Bid Advance as part of such Competitive Bid Borrowing, of the amount of each Competitive Bid Advance to be made by such Lender as part of such Competitive Bid Borrowing, and (C) each Lender that is to make a Competitive Bid Advance as part of such Competitive Bid Borrowing, upon receipt, that the Agent has received forms of documents appearing to fulfill the applicable conditions set forth in Article III. Each Lender that is to make a Competitive Bid Advance as part of such Competitive Bid Borrowing shall, before 12:00 noon (New York City time) on the date of such Competitive Bid Borrowing specified in the notice received from the Agent pursuant to clause (A) of the preceding sentence or any later time when such Lender shall have received notice from the Agent pursuant to clause (C) of the preceding sentence, make available for the account of its Applicable Lending Office to the Agent at the Agent’s Account, in same day funds, such Lender’s portion of such Competitive Bid Borrowing. Upon fulfillment of the applicable conditions set forth in Article III and after receipt by the Agent of such funds, the Agent will make such same day funds available to the relevant Borrower at such Borrower’s account at the Agent’s address referred to in Section 8.02. Promptly after each Competitive Bid Borrowing the Agent will notify each Lender of the amount of the Competitive Bid Borrowing, the consequent Competitive Bid Reduction and the dates upon which such Competitive Bid Reduction commenced and will terminate.

(g) Each Competitive Bid Borrowing shall be in an aggregate amount of $5,000,000 or an integral multiple of $1,000,000 in excess thereof and, following the making of each Competitive Bid Borrowing, the Company shall be in compliance with the limitation set forth in the proviso to the first sentence of paragraph (a) above.

(h) Within the limits and on the conditions set forth in this Section 2.03, each Borrower may from time to time borrow under this Section 2.03, repay or prepay pursuant to subsection (i) below, and reborrow under this Section 2.03, provided that a Competitive Bid Borrowing shall not be made within three Business Days of the date of any other Competitive Bid Borrowing.

(i) Each Borrower shall repay to the Agent for the account of each Lender that has made a Competitive Bid Advance to such Borrower, on the maturity date of such Competitive Bid Advance (such maturity date being that specified by the Company for repayment of such Competitive Bid Advance in the related Notice of Competitive Bid Borrowing delivered pursuant to paragraph (b) above and provided in the promissory note, if

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any, evidencing such Competitive Bid Advance), the then unpaid principal amount of such Competitive Bid Advance. No Borrower shall have any right to prepay any principal amount of any Competitive Bid Advance unless (x) such Borrower obtains the prior written consent of the Lender which made such Competitive Bid Advance, or (y), such prepayment is made on the terms, specified by the Company for such Competitive Bid Advance in the related Notice of Competitive Bid Borrowing delivered pursuant to paragraph (b) above and set forth in the promissory note, if any, evidencing such Competitive Bid Advance.

(j) Each Borrower shall pay interest on the unpaid principal amount of each Competitive Bid Advance to such Borrower from the date of such Competitive Bid Advance to the date the principal amount of such Competitive Bid Advance is repaid in full, at the rate of interest for such Competitive Bid Advance specified by the Lender making such Competitive Bid Advance in its notice with respect thereto delivered pursuant to paragraph (c) above, payable on the interest payment date or dates specified by such Borrower for such Competitive Bid Advance in the related Notice of Competitive Bid Borrowing delivered pursuant to paragraph (b) above, as provided in the promissory note, if any, evidencing such Competitive Bid Advance.

(k) At its option, the Company (on its own behalf and on behalf of any Borrower) may request a Competitive Bid Borrowing directly from the Lenders; provided that it follows the procedures set forth in this Section 2.03 and promptly delivers, by telecopier or telex, a copy of the Notice of Competitive Bid Borrowing and notice in writing of the results of such request to the Agent.

(l) The indebtedness of each Borrower resulting from each Competitive Bid Advance made to such Borrower as part of a Competitive Bid Borrowing shall, if requested by the applicable Lender, be evidenced by a separate promissory note of such Borrower payable to the order of the Lender making such Competitive Bid Advance.

SECTION 2.04. Issuance of Letters of Credit .

(a) Each Issuing Lender agrees, on the terms and conditions hereinafter set forth, to issue one or more letters of credit (each, a “ Letter of Credit ”) for the account of the Company or any Borrowing Subsidiary from time to time on any Business Day during the period from the Effective Date until the date 10 Business Days before the Termination Date, provided that the Aggregate L/C Exposure shall not at any time exceed the Letter of Credit Facility Amount. Within the foregoing limits, and subject to the terms and conditions hereof, the Borrowers’ ability to obtain Letters of Credit shall be fully revolving, and accordingly any Borrower may, during the foregoing period, obtain Letters of Credit to replace Letters of Credit that have expired or that have been drawn upon and reimbursed.

(b) (i) Each Letter of Credit shall (x) be in a form reasonably satisfactory to the relevant Issuing Lender, (y) be denominated in U.S. dollars, and (z) have a stated expiration date that is no later than the earlier of (1) one year after its date of issuance and (2) five Business Days prior to the Termination Date, provided that any Letter of Credit with a one-year tenor may provide for the renewal thereof for additional one-year periods (which shall in no event extend beyond the date referred to in clause (2) above).

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(ii) No Issuing Lender shall be under any obligation to issue any Letter of Credit if:

(x) any order, judgment or decree of any governmental authority or arbitrator shall by its terms purport to enjoin or restrain such Issuing Lender from issuing such Letter of Credit, or any law applicable to such Issuing Lender or any request or directive (whether or not having the force of law) from any governmental authority with jurisdiction over such Issuing Lender shall prohibit, or request that such Issuing Lender refrain from, the issuance of letters of credit generally or such Letter of Credit in particular; or

(y) the issuance of such Letter of Credit would violate one or more policies of such Issuing Lender generally applicable to account parties.

(c) (i) Each Letter of Credit shall be issued upon notice, given not later than 11:00 A.M. (New York City time) on the third Business Day prior to date of the proposed issuance of such Letter of Credit by the Company (on its own behalf or on behalf of any Borrowing Subsidiary) to the relevant Issuing Lender (or such shorter notice as shall be acceptable to such Lender), with a copy to the Agent, which shall give to each Lender prompt notice thereof by telecopier or email. Each such notice (a “ Notice of L/C Issuance ”) shall be by telecopier or email, confirmed promptly by hard copy specifying therein the requested date of issuance (which shall be a Business Day) of such Letter of Credit and its face amount and expiration date and the name and address of the beneficiary thereof, and shall attach the proposed form thereof (or such other information as shall be necessary to prepare such Letter of Credit). If requested by the applicable Issuing Lender, the Company shall supply such application and agreement for letter of credit as the relevant Issuing Lender may require in connection with such requested Letter of Credit (“ L/C Related Documents ”).

(ii) If the proposed Letter of Credit complies with the requirements of this Section 2.04, such Issuing Lender will, subject to the applicable conditions set forth in Article III, make such Letter of Credit available to the Company or the relevant Borrowing Subsidiary as agreed with the Company (on its own behalf and on behalf of any Borrower) in connection with such issuance. In the event and to the extent that the provisions of any L/C Related Documents shall conflict with this Agreement, the provisions of this Agreement shall govern.

(iii) Each Issuing Lender shall furnish (A) to the Agent on the first Business Day of each week a written report summarizing the issuance and expiration dates of Letters of Credit issued by it during the previous week and drawings during such week under all Letters of Credit issued by it, (B) to each Lender and the Company on the first Business Day of each month a written report summarizing the issuance and expiration dates of Letters of Credit issued by it during the preceding month and drawings during such month under all Letters of Credit issued by it and (C) to the Agent, the Company and each Lender on the first Business Day of each fiscal quarter a written report setting forth

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the average daily aggregate Available Amount during the preceding fiscal quarter of all Letters of Credit issued by it.

SECTION 2.05. L/C Payments .

(a) (i) Upon receipt from the beneficiary of any Letter of Credit of any notice of drawing under such Letter of Credit, the relevant Issuing Lender shall notify the relevant Borrower and the Agent thereof. Not later than 2:00 p.m. on the date of any L/C Payment by an Issuing Lender if any Borrower receives notice thereof by 9:00 a.m. on such date, and otherwise on the next Business Day (the “ Honor Date ”), such Borrower agrees to reimburse such Issuing Lender directly in an amount equal to the amount of such L/C Payment.

(ii) If any Borrower fails to so reimburse such Issuing Lender by such time, such Issuing Lender shall promptly notify the Agent and the Agent shall promptly notify each Lender of the Honor Date, the unreimbursed amount of such L/C Payment (the “ Unreimbursed Amount ”), and the amount of such Lender’s pro rata share thereof. In such event, such Borrower shall be irrevocably deemed to have requested a Revolving Credit Borrowing of Base Rate Advances to be disbursed on the Honor Date in an aggregate amount equal to the Unreimbursed Amount, without regard to the minimum and multiples specified in Section 2.01(b). Any notice given by an Issuing Lender or the Agent pursuant to this Section 2.05(a)(i) may be given by telephone if immediately confirmed in writing; provided that the lack of such an immediate confirmation shall not affect the conclusiveness or binding effect of such notice.

(iii) Each Lender (including any Lender acting as an Issuing Lender) shall upon any notice pursuant to Section 2.05(a)(i) make funds available to the Agent for the account of the relevant Issuing Lender at the Agent’s Account in an amount equal to its Applicable Percentage of the Unreimbursed Amount not later than 1:00 p.m. on the Business Day specified in such notice by the Agent, whereupon each Lender that so makes funds available shall be deemed to have made a Base Rate Advance to the applicable Borrower in such amount. The Agent shall remit the funds so received to the relevant Issuing Lender.

(iv) The Borrower agrees to pay interest on the unreimbursed amount of any L/C Payment to the relevant Issuing Lender, for each day from the date of such L/C Payment until such L/C Payment is reimbursed or refinanced in full as herein provided, at the Base Rate from time to time, payable on demand.

(v) Each Lender’s obligation to make the payments provided in clause (iii) above to reimburse an Issuing Lender for any L/C Payment shall be absolute and unconditional and shall not be affected by any circumstance, including (A) any set-off, counterclaim, recoupment, defense or other right which such Lender may have against an Issuing Lender, any Borrower or any other Person for any reason whatsoever, (B) the occurrence or continuance of a Default or termination of the Commitments or any of

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them, or (C) any other occurrence, event or condition, whether or not similar to any of the foregoing.

(vi) If any Lender fails to make available to the Agent for the account of an Issuing Lender any amount required to be paid by such Lender pursuant to the foregoing provisions of this Section 2.05(a) by the time specified in Section 2.05(a)(iii), such Issuing Lender shall be entitled to recover from such Lender (acting through the Agent), on demand, such amount with interest thereon for the period from the date such payment is required to the date on which such payment is immediately available to such Issuing Lender at a rate per annum equal to the Federal Funds Rate from time to time in effect (without duplication of amounts paid by the Borrower under clause (iv) above). A certificate of such Issuing Lender submitted to any Lender (through the Agent) with respect to any amounts owing under this clause (vi) shall be conclusive absent manifest error.

(b) At any time after an Issuing Lender has made an L/C Payment and has received funds from a Lender in respect of such payment in accordance with Section 2.05(a)(iii), if the Agent receives for the account of such Issuing Lender any payment in respect of the related Unreimbursed Amount or interest thereon (whether directly from any Borrower or otherwise, including proceeds of cash collateral applied thereto by the Agent), the Agent will distribute to such Lender its pro rata share thereof in the same funds as those received by the Agent.

(c) The obligation of each Borrower to reimburse each Issuing Lender for each L/C Payment under each Letter of Credit issued for account of such Borrower shall be absolute, unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement under all circumstances, including the following:

(i) any lack of validity or enforceability of such Letter of Credit, this Agreement, or any other agreement or instrument relating thereto;

(ii) the existence of any claim, counterclaim, set-off, defense or other right that such Borrower may have at any time against any beneficiary or any transferee of such Letter of Credit (or any Person for whom any such beneficiary or any such transferee may be acting), such Issuing Lender or any other Person, whether in connection with this Agreement, the transactions contemplated hereby or by such Letter of Credit or any agreement or instrument relating thereto, or any unrelated transaction;

(iii) any sight draft, demand, certificate or other document presented under such Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect, or any loss or delay in the transmission or otherwise of any document required in order to make an L/C Payment under such Letter of Credit;

(iv) any payment by such Issuing Lender under such Letter of Credit against presentation of a sight draft or certificate that does not strictly comply with the terms of such Letter of Credit or any payment made by such Issuing Lender under such Letter of

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Credit to any Person purporting to be a trustee in bankruptcy, debtor-in-possession, assignee for the benefit of creditors, liquidator, receiver or other representative of or successor to any beneficiary or any transferee of such Letter of Credit, including any arising in connection with any proceeding under any bankruptcy, insolvency, reorganization or similar law; or

(v) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including any other circumstance that might otherwise constitute a defense available to, or a discharge of, any Borrower.

(d) Each Lender and each Borrower agrees that, in making any L/C Payment under a Letter of Credit, the relevant Issuing Lender shall not have any responsibility to obtain any document (other than any sight draft, certificates and documents expressly required by the Letter of Credit) or to ascertain or inquire as to the validity or accuracy of any such document or the authority of the Person executing or delivering any such document. None of the Issuing Lenders, nor the Agent, nor any of the respective correspondents, participants or assignees of any Issuing Lender shall be liable to any Lender for (i) any action taken or omitted in connection herewith at the request or with the approval of the Lenders or the Required Lenders, as applicable; (ii) any action taken or omitted in the absence of gross negligence or willful misconduct; or (iii) the due execution, effectiveness, validity or enforceability of any document or instrument related to any Letter of Credit or L/C Related Document. None of the Issuing Lenders, nor the Agent, nor any of the respective correspondents, participants or assignees of the Issuing Lenders, shall be liable or responsible for any of the matters described in clauses (i) through (v) of Section 2.05(c); provided , however , that anything in such clauses or elsewhere in this Agreement to the contrary notwithstanding, each Borrower may have a claim against an Issuing Lender, and such Issuing Lender may be liable to the Borrowers, to the extent, but only to the extent, of any direct (as opposed to special, indirect, consequential or punitive) damages suffered by a Borrower which were caused by such Issuing Lender’s willful misconduct or gross negligence. In furtherance and not in limitation of the foregoing, each Issuing Lender may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary.

(e) Applicability of ISP98 and UCP . Unless otherwise expressly agreed by an Issuing Lender and the Company when a Letter of Credit is issued, either the “International Standby Practices 1998” published by the Institute of International Banking Law & Practice (or such later version thereof as may be in effect at the time of issuance) or, at the option of the Company, the Uniform Customs and Practice for Documentary Credits (“ UCP ”), as most recently published by the International Chamber of Commerce (the “ ICC ”) at the time of issuance shall apply to each Letter of Credit.

SECTION 2.06. Fees .

(a) Facility Fee . The Company agrees to pay to the Agent for the account of each Lender a facility fee on the amount of such Lender’s Commitment, irrespective of usage, from the Effective Date in the case of each Initial Lender and from the effective date specified in the Assignment and Acceptance pursuant to which it became a Lender in the case of each other

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Lender until the Termination Date (on a daily basis), at the Applicable Facility Fee Rate, payable in arrears quarterly on the last day of each March, June, September and December and on the Termination Date, commencing on March 31, 2006.

(b) Agent’s Fees . The Company shall pay to the Agent for its own account such fees as may from time to time be agreed between the Company and the Agent.

(c) Utilization Fee . The Company shall pay to the Agent for the account of each Lender a utilization fee on the aggregate outstanding principal amount of such Lender’s Advances for each day on which the aggregate outstanding amount of the Advances plus the Aggregate L/C Exposure exceeds 50% of the aggregate Commitments, from the Effective Date in the case of each Initial Lender and from the effective date specified in the Assignment and Acceptance pursuant to which it became a Lender in the case of each other Lender until the Termination Date (on a daily basis), at the Applicable Utilization Fee rate, payable on each day on which interest is payable under Section 2.09, and on the Termination Date.

(d) Letter of Credit Fees .

(i) The Company agrees to pay to the Agent, for the pro rata account of each Lender based on the respective Commitments of the Lenders, a commission on the average daily Available Amount of each Letter of Credit outstanding from time to time, at a rate per annum equal to the Letter of Credit Commission Rate, payable in arrears quarterly on each Quarterly Date and on the Termination Date, commencing on the first Quarterly Date after the date hereof.

(ii) The Company agrees to pay to each Issuing Lender, for its own account, (x) a fronting fee with respect to each Letter of Credit issued by such Issuing Lender, payable quarterly in arrears on each Quarterly Date and on the Termination Date, in an amount equal to 0.10% per annum of the average daily Available Amount of such Letter of Credit and (y) such customary fees and charges in connection with the issuance or administration of each Letter of Credit issued by such Issuing Lender as may be agreed in writing between the Company and such Issuing Lender from time to time.

SECTION 2.07. Termination, Reduction or Increase of the Commitments .

(a) The Company shall have the right, upon at least three Business Days’ notice to the Agent, to terminate in whole or reduce ratably in part the unused portions of the respective Commitments of the Lenders, provided that each partial reduction shall be in the aggregate amount of $5,000,000 or an integral multiple of $1,000,000 in excess thereof and provided further that (x) the aggregate amount of the Commitments of the Lenders shall not be reduced to an amount that is less than the sum of the aggregate principal amount of the Advances then outstanding, plus the Aggregate L/C Exposure, and (y) once terminated, a portion of a Commitment shall not be reinstated except pursuant to Section 2.07(c).

(b) If any Lender shall make a demand under Section 2.13 or 2.16 or if the obligation of any Lender to make Eurodollar Rate Advances shall have been suspended pursuant to Section 2.14, the Company shall have the right, upon at least ten Business Days’ notice, to

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terminate in full the Commitment of such Lender or to demand that such Lender assign to one or more Eligible Assignees all of its rights and obligations under this Agreement in accordance with Section 8.07. If the Company shall elect to terminate in full the Commitment of any Lender pursuant to this Section 2.07(b), the Company shall pay to such Lender, on the effective date of such Commitment termination, an amount equal to the aggregate outstanding principal amount of the Advances owing to such Lender, together with accrued interest thereon to the date of payment of such principal amount and all other amounts payable to such Lender under this Agreement, whereupon such Lender shall cease to be a party hereto.

(c) (i) Not more than once in any calendar year, the Company may propose to increase the aggregate amount of the Commitments by an aggregate amount of $25,000,000 or an integral multiple of $1,000,000 in excess thereof (a “ Proposed Aggregate Commitment Increase ”) in the manner set forth below, provided that:

(1) no Default shall have occurred and be continuing either as of the date on which the Company shall notify the Agent of its request to increase the aggregate amount of the Commitments or as of the related Increase Date (as hereinafter defined); and

(2) after giving effect to any such increase, the aggregate amount of the Commitments shall not exceed $800,000,000 (and no increase in the aggregate amount of the Commitments hereunder shall result in a change in the Letter of Credit Facility Amount).

(ii) The Company may request an increase in the aggregate amount of the Commitments by delivering to the Agent a notice (an “ Increase Notice ”; the date of delivery thereof to the Agent being the “ Increase Notice Date ”) specifying (1) the Proposed Aggregate Commitment Increase, (2) the proposed date (the “ Increase Date ”) on which the Commitments would be so increased (which Increase Date may not be fewer than 30 nor more than 60 days after the Increase Notice Date) and (3) the New Lenders, if any, to whom the Company desires to offer the opportunity to commit to all or a portion of the Proposed Aggregate Commitment Increase. The Agent shall in turn promptly notify each Lender of the Company’s request by sending each Lender a copy of such notice.

(iii) Not later than the date five days after the Increase Notice Date, the Agent shall notify each New Lender, if any, identified in the related Increase Notice of the opportunity to commit to all or any portion of the Proposed Aggregate Commitment Increase. Each such New Lender may irrevocably commit to all or a portion of the Proposed Aggregate Commitment Increase (such New Lender’s “ Proposed New Commitment ”) by notifying the Agent (which shall give prompt notice thereof to the Company) before 11:00 A.M. (New York City time) on the date that is 10 days after the Increase Notice Date; provided that:

(1) the Proposed New Commitment of each New Lender shall be in an amount of $25,000,000 or an integral multiple of $1,000,000 in excess thereof; and

(2) each New Lender that submits a Proposed New Commitment shall enter into an agreement in form and substance satisfactory to the Company and the Agent pursuant to which such New Lender shall undertake a Commitment (and, if any such New Lender

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is already a Lender, its Commitment shall be in addition to such Lender’s Commitment hereunder on such date), and shall pay to the Agent a processing and recordation fee of $3,500.

(iv) If the aggregate Proposed New Commitments of all of the New Lenders shall be less than the Proposed Aggregate Commitment Increase, then (unless the Company otherwise requests) the Agent shall, on or prior to the date that is 15 days after the Increase Notice Date, notify each Lender of the opportunity to so commit to all or any portion of the Proposed Aggregate Commitment Increase not committed to by New Lenders pursuant to Section 2.07(c)(iii). Each Lender may, if, in its sole discretion, it elects to do so, irrevocably offer to commit to all or a portion of such remainder (such Lender’s “ Proposed Increased Commitment ”) by notifying the Agent (which shall give prompt notice thereof to the Company) no later than 11:00 A.M. (New York City time) on the date five days before the Increase Date.

(v) If the aggregate amount of Proposed New Commitments and Proposed Increased Commitments (such aggregate amount, the “ Total Committed Increase ”) equals or exceeds $25,000,000, then, subject to the conditions set forth in Section 2.07(c)(i):

(1) effective on and as of the Increase Date, the aggregate amount of the Commitments shall be increased by the lesser of the proposed aggregate Committed Increase and the Total Committed Increase and shall be allocated among the New Lenders and the Lenders as provided in Section 2.07(c)(vi); and

(2) on the Increase Date, if any Revolving Loans are then outstanding, the Company shall borrow Revolving Loans from all or certain of the Lenders and/or (subject to compliance by the Company with Section 8.04(d)) prepay Revolving Loans of all or certain of the Lenders such that, after giving effect thereto, the Revolving Loans (including, without limitation, the Types and Interest Periods thereof) shall be held by the Lenders (including for such purposes New Lenders) ratably in accordance with their respective Commitments.

If the Total Committed Increase is less than $25,000,000, then the aggregate amount of the Commitments shall not be changed pursuant to this Section 2.07(c).

(vi) The Total Committed Increase shall be allocated among New Lenders having Proposed New Commitments and Lenders having Proposed Increased Commitments as follows:

(1) If the Total Committed Increase shall be at least $25,000,000 and less than or equal to the Proposed Aggregate Commitment Increase, then (x) the initial Commitment of each New Lender shall be such New Lender’s Proposed New Commitment and (y) the Commitment of each Lender shall be increased by such Lender’s Proposed Increased Commitment.

(2) If the Total Committed Increase shall be greater than the Proposed Aggregate Commitment Increase, then the Total Committed Increase shall be allocated:

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(x) first to New Lenders (to the extent of their respective Proposed New Commitments) in such a manner as the Company shall agree; and

(y) then to Lenders on a pro rata basis based on the ratio of each Lender’s Proposed Increased Commitment (if any) to the aggregate amount of the Proposed Increased Commitments of all of the Lenders.

(vii) No increase in the Commitments contemplated hereby shall become effective until the Agent shall have received (x) promissory notes in respect of the Revolving Loans payable to each New Lender and each other Lender whose Commitment is being increased that, in either case, shall have requested such promissory notes at least two Business Days prior to the Increase Date, and (y) evidence satisfactory to the Agent (including an update of the opinion of counsel provided pursuant to Section 3.01(g)(v)) that such increases in the Commitments, and borrowings thereunder, have been duly authorized.

SECTION 2.08. Repayment of Revolving Credit Advances; Evidence of Indebtedness; Extension of Termination Date .

(a) The Company and each Borrower shall repay to the Agent for the ratable account of the Lenders on the Termination Date the aggregate principal amount of the Revolving Credit Advances then outstanding.

(b) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrowers to such Lender resulting from each Advance made by such Lender, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder. The Agent shall maintain accounts in which it shall record (i) the amount of each Advance made hereunder, the Type thereof and the Interest Period, if any, applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrowers to each Lender hereunder and (iii) the amount of any sum received by the Agent hereunder for the account of the Lenders and each Lender’s share thereof. The entries made in the accounts maintained pursuant to this Section shall be prima facie evidence of the existence and amounts of the obligations recorded therein; provided that the failure of any Lender or the Agent to maintain such accounts or any error therein shall not in any manner affect the obligation of any Borrower to repay the Advances in accordance with the terms of this Agreement. Any Lender may request that Advances made by it be evidenced by a promissory note. In such event, the applicable Borrower shall prepare, execute and deliver to such Lender a promissory note payable to the order of such Lender (or, if requested by such Lender, to such Lender and its registered assigns) and in a form approved by the Agent. Thereafter, the Advances evidenced by such promissory note and interest thereon shall at all times (including after assignment pursuant to Section 8.07) be represented by one or more promissory notes in such form payable to the order of the payee named therein (or, if such promissory note is a registered note, to such payee and its registered assigns).

(c) The Company may by written notice to the Agent, not more than 90 nor less than 60 days prior to the Termination Date then in effect, request that the Termination Date then in effect be extended for a further period of one year. Such request shall be irrevocable and

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binding upon the Company. The Agent shall promptly notify each Lender of such request. If a Lender agrees, in its individual and sole discretion, to so extend its Commitment (an “ Extending Lender ”), it will notify the Agent, in writing, of its decision to do so not more than 30 nor less than 20 days before said date. The Commitment of any Lender that fails to accept (or fails to respond to) the Company’s request for extension of the Termination Date (a “ Declining Lender ”) shall be terminated on the Termination Date theretofore in effect (without regard to extension by other Lenders). The Extending Lenders, or any of them, shall then have the right to increase their respective Commitments by an aggregate amount up to the amount of all Declining Lenders’ Commitments, and, to the extent of any shortfall, the Company shall have the right to require any Declining Lender to assign in full its rights and obligations under this Agreement to an Eligible Assignee designated by the Company that agrees to accept all of such rights and obligations (a “ Replacement Lender ”), provided that (i) such increase and/or such assignment is otherwise in compliance with Section 8.07, (ii) such Declining Lender receives payment in full of an amount equal to the principal amount of all Advances owing to such Declining Lender, together with accrued interest thereon to the date of such assignment and all other amounts payable to such Declining Lender under this Agreement and (iii) any such increase shall be effective on the Termination Date theretofore in effect and any such assignment shall be effective on the date specified by the Company and agreed to by the Replacement Lender and the Agent. If (i) Extending Lenders and/or Replacement Lenders provide Commitments in an aggregate amount equal to 51% of the aggregate amount of the Commitments outstanding immediately prior to the Termination Date in effect at the time the Company requests such extension, and (ii) no Default shall have occurred and be continuing immediately prior to said Termination Date, the Termination Date shall be extended by one year (the “ New Termination Date ”) (except that, if the date on which the Termination Date is to be extended is not a Business Day, such Termination Date as so extended shall be the next preceding Business Day) from the effective date set forth in an Extension Agreement, in substantially the form in Exhibit A-3 hereto, which has been duly completed and signed by the Company, the Agent and the Extending Lenders and Replacement Lenders party thereto; and (iii) the Agent shall notify the Issuing Lenders of the New Termination Date and the Lenders whose Termination Dates are the New Termination Date and each Issuing Lender shall determine whether or not, acting in its sole discretion, it shall elect to extend its Termination Date to the New Termination Date and shall so notify the Agent, at which time such Issuing Lender’s obligation to issue Letters of Credit pursuant to Sections 2.04 and 2.05 shall be extended to the date 10 Business Days before the New Termination Date. Such Extension Agreement shall be executed and delivered no earlier than 30 days prior to the Termination Date then in effect and the effective date shall be no earlier than 29 days prior to the Termination Date then in effect. No extension of the Commitments pursuant to this Section 2.08(c) shall be legally binding on any party hereto unless and until such party executes and delivers a counterpart of such Extension Agreement.

SECTION 2.09. Interest on Revolving Credit Advances and Letters of Credit Advances . Each Borrower shall pay interest on the unpaid principal amount of each Revolving Credit Advance made to such Borrower from the date of such Revolving Credit Advance until such principal amount shall be paid in full, at the following rates per annum:

(a) Base Rate Advances . During such periods as such Revolving Credit Advance is a Base Rate Advance, a rate per annum equal at all times to the Base Rate in effect from time

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to time, payable in arrears quarterly on each Quarterly Date during such periods and on the date such Base Rate Advance shall be Converted or paid in full.

(b) Eurodollar Rate Advances . During such periods as such Revolving Credit Advance is a Eurodollar Rate Advance, a rate per annum equal at all times during each Interest Period for such Revolving Credit Advance to the sum of (x) the Eurodollar Rate for such Interest Period for such Revolving Credit Advance plus (y) the Applicable Margin, payable in arrears on the last day of such Interest Period and, if such Interest Period has a duration of more than three months, on each day that occurs during such Interest Period every three months from the first day of such Interest Period and on the date such Eurodollar Rate Advance shall be Converted or paid in full.

SECTION 2.10. Interest Rate Determination .

(a) If the Eurodollar Rate does not appear on Page 3750 of the Telerate Service (or any successor page), each Reference Bank agrees to furnish to the Agent timely information for the purpose of determining each Eurodollar Rate. If the Eurodollar Rate does not appear on said Page 3750 (or any successor page), and if any one or more of the Reference Banks shall not furnish such timely information to the Agent for the purpose of determining any such interest rate, the Agent shall determine such interest rate on the basis of timely information furnished by the remaining Reference Banks. The Agent shall give prompt notice to the Company and the Lenders of the applicable interest rate determined by the Agent for purposes of Section 2.09, and the rate, if any, furnished by each Reference Bank for the purpose of determining the interest rate under Section 2.09(b).

(b) If, due to a major disruption in the interbank funding market with respect to any Eurodollar Rate Advances, the Required Lenders notify the Agent that the Eurodollar Rate for any Interest Period for such Advances will not adequately reflect the cost to such Required Lenders of making, funding or maintaining their respective Eurodollar Rate Advances for such Interest Period, the Agent shall forthwith so notify the Borrower and the Lenders, whereupon (i) each Eurodollar Rate Advance will automatically, on the last day of the then existing Interest Period therefor, Convert into a Base Rate Advance, and (ii) the obligation of the Lenders to make, or to Convert Revolving Credit Advances into, Eurodollar Rate Advances shall be suspended until the Agent shall notify the Company and the Lenders that the circumstances causing such suspension no longer exist.

(c) If the Company shall fail to select the duration of any Interest Period for any Eurodollar Rate Advances in accordance with the provisions contained in the definition of “Interest Period” in Section 1.01, the Agent will forthwith so notify the Company and the Lenders and the Company will be deemed to have selected an Interest Period of one month.

(d) If the aggregate unpaid principal amount of Eurodollar Rate Advances comprising any Borrowing shall be reduced, by payment or prepayment or otherwise, to less than $10,000,000, such Advances shall automatically Convert into Base Rate Advances on the last day of the Interest Period applicable thereto.

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(e) Upon the occurrence and during the continuance of any Event of Default, (i) each Eurodollar Rate Advance will automatically, on the last day of the then existing Interest Period therefor, Convert into a Base Rate Advance and (ii) the obligation of the Lenders to make, or to Convert Advances into, Eurodollar Rate Advances shall be suspended.

(f) If the Eurodollar Rate does not appear on Page 3750 of the Telerate Service (or any successor page) and fewer than two Reference Banks furnish timely information to the Agent for determining the Eurodollar Rate for any Eurodollar Rate Advances,

(i) the Agent shall forthwith notify the Company and the Lenders that the interest rate cannot be determined for such Eurodollar Rate Advances,

(ii) each such Advance will automatically, on the last day of the then existing Interest Period therefor, Convert into a Base Rate Advance (or if such Advance is then a Base Rate Advance, will continue as a Base Rate Advance), and

(iii) the obligation of the Lenders to make, or to Convert Revolving Credit Advances into, Eurodollar Rate Advances shall be suspended until the Agent shall notify the Company and the Lenders that the circumstances causing such suspension no longer exist.

SECTION 2.11. Optional Conversion of Revolving Credit Advances . The Company may on any Business Day, upon notice given to the Agent not later than 11:00 A.M. (New York City time) on the third Business Day prior to the date of the proposed Conversion and subject to the provisions of Sections 2.10 and 2.14, Convert all Revolving Credit Advances of one Type comprising the same Borrowing into Revolving Credit Advances of the other Type; provided , however , that any Conversion of Eurodollar Rate Advances into Base Rate Advances shall be made only on the last day of an Interest Period for such Eurodollar Rate Advances, any Conversion of Base Rate Advances into Eurodollar Rate Advances shall be in an amount not less than the minimum amount specified in Section 2.02(b) and no Conversion of any Revolving Credit Advances shall result in more separate Revolving Credit Borrowings than permitted under Section 2.02(b). Each such notice of a Conversion shall, within the restrictions specified above, specify (i) the date of such Conversion, (ii) the Revolving Credit Advances to be Converted, and (iii) if such Conversion is into Eurodollar Rate Advances, the duration of the initial Interest Period for each such Advance. Each notice of Conversion shall be irrevocable and binding on the Company.

SECTION 2.12. Optional Prepayments of Revolving Credit Advances . The Company may, upon notice not later than 11:00 A.M. (New York City time) on the date of such payment, in the case of Base Rate Advances, and two Business Days’ notice, in the case of Eurodollar Rate Advances, to the Agent stating the proposed date and aggregate principal amount of the prepayment, and if such notice is given the Company shall, prepay the outstanding principal amount of the Revolving Credit Advances comprising part of the same Revolving Credit Borrowing in whole or ratably in part, together with accrued interest to the date of such prepayment on the principal amount prepaid; provided , however, that (x) each partial prepayment shall be in

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an aggregate principal amount of $5,000,000 or an integral multiple of $1,000,000 in excess thereof and (y) in the event of any such prepayment of a Eurodollar Rate Advance, the Company shall be obligated to reimburse the Lenders in respect thereof pursuant to Section 8.04(d).

SECTION 2.13. Increased Costs .

(a) If, due to either (i) the introduction of or any change in any law or regulation or in the interpretation or administration of any law or regulation by any governmental authority charged with the interpretation or administration thereof or (ii) the compliance with any guideline or request from any central bank or other governmental authority that would be complied with generally by similarly situated banks acting reasonably (whether or not having the force of law), there shall be any increase in the cost to any Lender of agreeing to make or making, funding or maintaining Eurodollar Rate Advances or LIBO Rate Advances by an amount deemed by such Lender to be material, then the Company shall from time to time, upon demand by such Lender (with a copy of such demand to the Agent), pay to the Agent for the account of such Lender additional amounts sufficient to compensate such Lender for such increased cost. A certificate as to the amount of such increased cost, submitted to the Company and the Agent by such Lender, shall be conclusive and binding for all purposes, absent manifest error. Notwithstanding the foregoing, no Lender shall be entitled to request compensation under this paragraph with respect to any Competitive Bid Advance if the change giving rise to such request was applicable to such Lender at the time of submission of such Lender’s offer to make such Competitive Bid Advance.

(b) If, due to either (i) the introduction of or any change in or in the interpretation of any law or regulation or (ii) compliance with any guideline or request from any central bank or other governmental or regulatory authority which becomes effective after the date hereof, there shall be any increase in the amount of capital required or expected to be maintained by any Lender (including any Issuing Lender) or any corporation controlling such Lender and the amount of such capital is increased by or based upon the existence of such Lender’s Advances or participation in Letters of Credit or commitment to lend or, in the case of an Issuing Lender, issue Letters of Credit hereunder and other commitments of this type by an amount deemed by such Lender to be material, then, upon demand by such Lender (with a copy of such demand to the Agent), the Company shall pay to the Agent for the account of such Lender, from time to time as specified by such Lender, additional amounts sufficient to compensate such Lender or such corporation in the light of such circumstances, to the extent that such Lender reasonably determines such increase in capital to be allocable to the existence of such Lender’s Advances or participation in Letters of Credit or commitment to lend or issue Letters of Credit hereunder. A certificate as to such amounts submitted to the Company and the Agent by such Lender shall be conclusive and binding for all purposes as to the calculations therein, absent manifest error. Such certificate shall be in reasonable detail and shall certify that the claim for additional amounts referred to therein is generally consistent with such Lender’s treatment of similarly situated customers of such Lender whose transactions with such Lender are similarly affected by the change in circumstances giving rise to such payment, but such Lender shall not be required to disclose any confidential or proprietary information therein.

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SECTION 2.14. Illegality . Notwithstanding any other provision of this Agreement, if any Lender (including any Issuing Lender) shall notify the Agent (and provide to the Company an opinion of counsel to the effect) that the introduction of or any change in or in the interpretation of any law or regulation makes it unlawful, or any central bank or other governmental authority asserts that it is unlawful, for such Lender or its Eurodollar Lending Office to perform its obligations hereunder to make Eurodollar Rate Advances or LIBO Rate Advances or to fund or maintain Eurodollar Rate Advances or LIBO Rate Advances hereunder, (i) each Eurodollar Rate Advance or LIBO Rate Advance, as the case may be, of such Lender will automatically, upon such demand, Convert into a Base Rate Advance or an Advance that bears interest at the rate set forth in Section 2.09(a), as the case may be, and (ii) the obligation of such Lender to make, or to Convert Revolving Credit Advances into, Eurodollar Rate Advances shall be suspended until the Agent shall notify the Company and such Lender that the circumstances causing such suspension no longer exist and such Lender shall make the Base Rate Advances in the amount and on the dates that it would have been requested to make Eurodollar Rate Advances had no such suspension been in effect.

SECTION 2.15. Payments and Computations .

(a) Each Borrower shall make each payment hereunder not later than 11:00 A.M. (New York City time) on the day when due in U.S. dollars to the Agent at the Agent’s Account in same day funds. The Agent will promptly thereafter cause to be distributed like funds relating to the payment of principal or interest or facility fees or utilization fees ratably (other than amounts payable pursuant to Section 2.03, 2.05, 2.06(b), 2.07(b), 2.13, 2.16 or 8.04(d) to be distributed to the respective parties entitled thereto) to the Lenders for the account of their respective Applicable Lending Offices, and like funds relating to the payment of any other amount payable to any Lender to such Lender for the account of its Applicable Lending Office, in each case to be applied in accordance with the terms of this Agreement. Upon its acceptance of an Assignment and Acceptance and recording of the information contained therein in the Register pursuant to Section 8.07(d), from and after the effective date specified in such Assignment and Acceptance, the Agent shall make all payments hereunder in respect of the interest assigned thereby to the Lender assignee thereunder, and the parties to such Assignment and Acceptance shall make all appropriate adjustments in such payments for periods prior to such effective date directly between themselves.

(b) All computations of interest based on the Base Rate and of facility fees, letter of credit fees under Section 2.06(d) and of utilization fees shall be made by the Agent on the basis of a year of 365 or 366 days, as the case may be, and all computations of interest based on the Eurodollar Rate or the Federal Funds Rate shall be made by the Agent on the basis of a year of 360 days, in each case for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest or facility fees or usage fees are payable. Each determination by the Agent of an interest rate hereunder shall be conclusive and binding for all purposes, absent manifest error.

(c) Whenever any payment hereunder shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of payment of interest

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or facility fee, letter of credit fees under Section 2.06(d) or utilization fee, as the case may be; provided , however , that, if such extension would cause payment of interest on or principal of Eurodollar Rate Advances or LIBO Rate Advances to be made in the next following calendar month, such payment shall be made on the next preceding Business Day.

(d) Unless the Agent shall have received notice from the Company prior to the date on which any payment is due to the Lenders hereunder that a Borrower will not make such payment in full, the Agent may assume that such Borrower has made such payment in full to the Agent on such date and the Agent may, in reliance upon such assumption, cause to be distributed to each Lender on such due date an amount equal to the amount then due such Lender. If and to the extent such Borrower shall not have so made such payment in full to the Agent, each Lender shall repay to the Agent forthwith on demand such amount distributed to such Lender together with interest thereon, for each day from the date such amount is distributed to such Lender until the date such Lender repays such amount to the Agent, at the Federal Funds Rate.

SECTION 2.16. Taxes .

(a) Each Lender is exempt from any withholding imposed under the laws of the United States in respect of any fees, interest or other payments to which it is entitled pursuant to this Agreement or any promissory notes issued hereunder (the “ Income ”) because (i) the Lender is organized under the laws of the United States; (ii) the Income is effectively connected with the conduct of a trade or business within the United States within the meaning of Section 871 of the Internal Revenue Code; or (iii) the Income is eligible for an exemption by reason of a tax treaty. The Agent is exempt from any withholding tax imposed under the laws of the United States in respect of the Income because the Agent is organized under the laws of the United States.

(b) Each Lender organized under the laws of a jurisdiction outside the United States (each, a “ Foreign Lender ”) shall, on or prior to the date of its execution and delivery of this Agreement in the case of each Initial Lender, and on the date of the Assignment and Acceptance pursuant to which it became a Lender in the case of each other Foreign Lender and from time to time thereafter if requested in writing by the Company or the Agent, provide the Agent and the relevant Borrower with Internal Revenue Service Form W-8BEN or W-8ECI, as appropriate, or any successor or other form prescribed by the Internal Revenue Service, certifying that such Foreign Lender is exempt or entitled to a reduced rate of United States withholding tax on any Income that is the subject of such forms. If the form provided by a Foreign Lender at the time such Foreign Lender first becomes a party to this Agreement indicates a United States interest withholding tax rate in excess of zero, or in excess of the rate applicable to the Foreign Lender assignor on the date of the Assignment and Acceptance pursuant to which it became a Foreign Lender, in the case of each other Foreign Lender, withholding tax at such rate shall be considered excluded from Taxes as defined in Section 2.16(c).

(c) Based on Section 2.16(a) and (b), any and all payments by any Borrower hereunder or under any promissory notes issued hereunder shall be made free and clear of and without deduction for any present United States federal income withholding taxes imposed on a

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Foreign Lender under the Internal Revenue Code (such withholding taxes being hereinafter referred to as “ Taxes ”).

(d) If, as a result of the enactment, promulgation, execution or ratification of, or any change in or amendment to, any United States law or any tax treaty (or in the application or official interpretation of any law or any tax treaty) that occurs on or after the date a Foreign Lender first becomes a party to this Agreement (a “ Change in Law ”), a Foreign Lender cannot comply with Section 2.16(b) or, if despite such compliance, any Borrower shall be required to deduct any Taxes from or in respect of any Income, then: (i) the sum payable to such Foreign Lender shall be increased as may be necessary so that after making all required deductions for such Taxes (including deductions applicable to additional sums payable under this Section 2.16) such Foreign Lender receives an amount equal to the sum it would have received had no such deductions been made, (ii) such Borrower shall make such deductions and (iii) such Borrower shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law. Notwithstanding the foregoing, each Borrower shall be entitled to pay any Taxes in any lawful manner so as to reduce any deductions and such Foreign Lender shall to the extent it is reasonably able provide any documentation or file any forms as may be required by the Internal Revenue Service or any other foreign governmental agency. In addition, if any Foreign Lender or the Agent (in lieu of such Foreign Lender), as the case may be, is required to pay directly any Taxes as a result of a Change in Law because a Borrower cannot or does not legally or timely do so, the Company shall indemnify such Foreign Lender or Agent for payment of such Taxes, without duplication of, or increase in, the amount of Taxes otherwise due to the Foreign Lender.

(e) In addition, the Company agrees to pay any present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies (excluding any income or franchise taxes, business taxes or capital taxes of any nature) that arise from the execution, delivery or registration of, or otherwise with respect to, this Agreement (hereinafter referred to as “ Other Taxes ”). If a Lender is required to pay directly Other Taxes because a Borrower cannot or does not legally or timely do so, the Company shall indemnify such Lender for such payment of Other Taxes.

(f) Within 30 days after the date of any payment of Taxes or foreign withholding taxes, the Company shall furnish to the Agent, at its address referred to in Section 8.02, the original or a certified copy of a receipt evidencing payment thereof. Prior to making any payment hereunder by or on behalf of any Borrower through an account or branch outside the United States or on behalf of any Borrower by a payor that is not a United States person (a “ Foreign Payment ”), such Borrower shall determine that no foreign withholding taxes are payable in respect thereof, and at its expense, shall furnish, or shall cause such payor to furnish, to the Agent, at such address, a certificate from each appropriate taxing authority, or an opinion of counsel acceptable to the Agent, in either case stating that such Foreign Payment is exempt from or not subject to foreign withholding taxes. Each Lender shall cooperate with each Borrower’s efforts described in this subsection by providing to the extent reasonably within its means any forms requested by such Borrower substantiating an exemption from foreign withholding taxes required by any governmental agency. For purposes of this subsection (f), the terms “United States” and “United States person” shall have the meaning specified in Section 7701 of the

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Internal Revenue Code. If, as a result of the enactment, promulgation, execution or ratification of, or any change in or amendment to, any applicable foreign law or any tax treaty (or in the application or official interpretation of any law or any tax treaty) that occurs on or after the date a tax opinion is rendered pursuant to the terms of this subsection, and which renders such tax opinion incorrect as to the absence of any foreign withholding tax (a “ Foreign Change in Law ”), any Borrower shall be required to deduct any foreign withholding taxes from or in respect of any Income, then: (i) the sum payable to the applicable Lender shall be increased as may be necessary so that after making all required deductions for foreign withholding taxes (including deductions applicable to additional sums payable under this Section 2.16) such Lender receives an amount equal to the sum it would have received had no such deductions been made, (ii) such Borrower shall make such deductions and (iii) such Borrower shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law. Notwithstanding the foregoing, each Borrower shall be entitled to pay any foreign withholding taxes in any lawful manner so as to reduce any deductions and such Lender shall to the extent it is reasonably able provide any documentation or file any forms as may be required by the Internal Revenue Service or any other foreign governmental agency. In addition, if any Lender is required to pay directly any foreign withholding tax in respect of any Foreign Payments made pursuant to this Agreement because a Borrower cannot or does not legally or timely do so, the Company shall indemnify such Lender for payment of such tax.

(g) For any period with respect to which a Lender has failed to comply with the requirements of subsection (b) or (f) relating to certain forms intended to reduce withholding taxes (other than if such failure is due to a Change in Law or a Foreign Change in Law), such Lender shall not be entitled to indemnification under subsection (d) or (f).

(h) Upon a Change in Law or the imposition of any foreign withholding tax in respect of Foreign Payments, a Lender shall, upon the written request of and at the expense of the Company, use reasonable efforts to change the jurisdiction of its Applicable Lending Office if the making of such a change would avoid the need for, or reduce the amount of, any such taxes that may thereafter accrue and would not, in the reasonable judgment of such Lender, cause the imposition on such Lender of any material legal or regulatory burdens.

(i) Without prejudice to the survival of any other agreement of any Borrower hereunder, the agreements and obligations of the Company contained in this Section 2.16 shall survive the payment in full of principal and interest hereunder until the applicable statute of limitations relating to the payment of any Taxes under Section 2.16(d) has expired.

(j) Any request by any Lender for payment of any amount under this Section 2.16 shall be accompanied by a certification that such Lender’s claim for said amount is generally consistent with such Lender’s treatment of similarly situated customers of such Lender whose transactions with such Lender are similarly affected by the change in circumstances giving rise to such payment, but such Lender shall not be required to disclose any confidential or proprietary information therein.

SECTION 2.17. Sharing of Payments, Etc . If any Lender shall obtain any payment (whether voluntary, involuntary, through the exercise of any right of set-off, or

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otherwise) on account of the Revolving Credit Advances owing to it (other than pursuant to Section 2.07(b), 2.13, 2.16 or 8.04(d)) in excess of its ratable share of payments on account of the Revolving Credit Advances obtained by all the Lenders, such Lender shall forthwith purchase from the other Lenders such participations in the Revolving Credit Advances or the owing to them as shall be necessary to cause such purchasing Lender to share the excess payment ratably with each of them; provided , however , that if all or any portion of such excess payment is thereafter recovered from such purchasing Lender, such purchase from each Lender shall be rescinded and such Lender shall repay to the purchasing Lender the purchase price to the extent of such recovery together with an amount equal to such Lender’s ratable share (according to the proportion of (i) the amount of such Lender’s required repayment to (ii) the total amount so recovered from the purchasing Lender) of any interest or other amount paid or payable by the purchasing Lender in respect of the total amount so recovered. Each Borrower agrees that any Lender so purchasing a participation from another Lender pursuant to this Section 2.17 may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of setoff) with respect to such participation as fully as if such Lender were the direct creditor of such Borrower in the amount of such participation.

SECTION 2.18. Use of Proceeds . The proceeds of the Advances and the Letters of Credit shall be available (and the Company agrees that such proceeds shall be used) for general corporate purposes of the Company and its Subsidiaries, including commercial paper backstop.

SECTION 2.19. Borrowings by Borrowing Subsidiaries; Substitution of Borrower .

(a) The Company may, at any time or from time to time, designate one or more Subsidiaries (including the Guarantor) as Borrowers hereunder by furnishing to the Agent a letter (a “ Designation Letter ”) in duplicate, in substantially the form of Exhibit D, duly completed and executed by the Company and such Subsidiary. Upon any such designation of a Subsidiary, such Subsidiary shall be a Borrowing Subsidiary and a Borrower entitled to borrow Revolving Credit Advances and Competitive Bid Advances and to request the issuance of Letters of Credit on and subject to the terms and conditions of this Agreement.

(b) If all principal of and interest on all Advances made to any Borrowing Subsidiary have been paid in full, the Company may terminate the status of such Borrowing Subsidiary as a Borrower hereunder by furnishing to the Agent a letter (a “ Termination Letter ”) in substantially the form of Exhibit F, duly completed and executed by the Company. Any Termination Letter furnished hereunder shall be effective upon receipt by the Agent, which shall promptly notify the Lenders, whereupon the Lenders shall, upon payment in full of all amounts owing by such Borrower hereunder, promptly deliver to the Company (through the Agent) the promissory notes, if any, of such former Borrower. If at the time of such termination any Letter of Credit is outstanding for account of such Borrowing Subsidiary, the Company shall, automatically upon the effectiveness of such termination, be deemed to have assumed, and to have agreed to pay and perform, as primary obligor, all of the obligations of such Borrowing Subsidiary hereunder and under any L/C Related

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Documents relating to such Letter of Credit. Notwithstanding the foregoing, the delivery of a Termination Letter with respect to any Borrower shall not terminate (i) any obligation of such Borrower that remains unpaid at the time of such delivery (including without limitation any obligation arising thereafter in respect of such Borrower under Section 2.13 or 2.16) or (ii) the obligations of the Company under Article IX with respect to any such unpaid obligations; provided , that if the status of such Borrowing Subsidiary has been terminated as aforesaid because the Company has sold or transferred its interest in such Subsidiary, and the Company so certifies to the Agent at the time of delivery of such Termination Letter, and subject to payment of said principal and interest, (i) such Subsidiary shall, automatically upon the effectiveness of the delivery of such Termination Letter and certification, cease to have any obligation under this Agreement and (ii) the Company shall automatically be deemed to have unconditionally assumed, as primary obligor, and hereby agrees to pay and perform, all of such obligations.

(c) In addition to the foregoing, the Company may, at any time when there are no Advances outstanding hereunder and upon not less than 10 Business Days’ notice, irrevocably elect to terminate its right to be a Borrower hereunder as of the date (which shall be a Business Day) specified in such Substitution Letter (the “ Substitution Date ”) and designate the Guarantor as a Borrower hereunder by furnishing to the Agent (x) a letter (a “ Substitution Letter ”), in substantially the form of Exhibit E duly completed and executed by the Company and the Guarantor, (y) a certificate signed by a duly authorized officer of the Company, and a certificate signed by a duly authorized officer of the Guarantor, each dated the Substitution Date, stating that:

(i) the representations and warranties contained in Section 4.01 (except the representations set forth in the last sentence of subsection (e) thereof and in subsection (f) thereof (other than clause (ii) thereof)) are correct in all material respects on and as of the Substitution Date, as though made on and as of such date, and

(ii) no event has occurred and is continuing, or would result from such designation, that constitutes a Default;

and (z) the Agent shall have received such other corporate documents, resolutions and legal opinions relating to the foregoing as it, or any Lender through the Agent, may reasonably request. If at the time of such termination any Letter of Credit is outstanding for the account of the Company, the Guarantor shall, automatically upon the effectiveness of such termination, be deemed to have assumed, and to have agreed to pay and perform, as primary obligor, all of the obligations of the Company hereunder and under all L/C Related Documents relating to such Letter of Credit.

SECTION 2.20. Mitigation Obligations . If any Lender requests compensation under Section 2.13, or if the obligation of any Lender to make or continue Advances as, or Convert Advances into, Eurodollar Rate Advances is suspended pursuant to Section 2.14, then, upon the written request of the Company, such Lender shall use reasonable efforts to designate a different lending office for funding or booking its Advances hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such

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Lender, such designations or assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.13 or would cause such Lender not to be subject to such suspension, as the case may be, in the future and (ii) would not subject such Lender to any unreimbursed cost or expense and would not, in the reasonable judgment of such Lender, cause imposition on such Lender of any material legal or regulatory burdens or otherwise be disadvantageous to such Lender. The Company hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.

ARTICLE III

CONDITIONS TO EFFECTIVENESS AND ARTICLE II

SECTION 3.01. Conditions Precedent to Effectiveness of Sections 2.01, 2.03 and 2.04 . Sections 2.01, 2.03, and 2.04 of this Agreement shall become effective on and as of the first date (the “ Effective Date ”) on which the following conditions precedent have been satisfied:

(a) As of the Effective Date, there shall have occurred no Material Adverse Change since December 31, 2005 that has not been publicly disclosed.

(b) As of the Effective Date, there shall exist no action, suit, investigation, litigation or proceeding affecting the Company, or any of its Subsidiaries (including the Guarantor) pending or, to the knowledge of the Company’s or the Guarantor’s executive officers, threatened before any court, governmental agency or arbitrator that (i) could be reasonably likely to have a Material Adverse Effect or (ii) could reasonably be likely to affect the legality, validity or enforceability of this Agreement or the consummation of the transactions contemplated hereby.

(c) As of the Effective Date, nothing shall have come to the attention of the Lenders during the course of their due diligence investigation to lead them to believe that the Information Memorandum was or has become misleading, incorrect or incomplete in any material respect.

(d) As of the Effective Date, all governmental and third party consents and approvals necessary in connection with the transactions contemplated hereby shall have been obtained (without the imposition of any conditions that are not acceptable to the Lenders) and shall remain in effect.

(e) As of the Effective Date, the Company shall have paid all accrued fees and, to the extent invoiced, expenses of the Agent and the Lenders payable hereunder (including the accrued fees and expenses of counsel to the Agent, to the extent invoiced at least one Business Day prior to the Effective Date).

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(f) On the Effective Date, the following statements shall be true and the Agent shall have received a certificate signed by a duly authorized officer of the Company dated the Effective Date, stating that:

(i) The representations and warranties contained in Section 4.01 are correct in all material aspects on and as of the Effective Date, and

(ii) No event has occurred and is continuing that constitutes a Default.

(g) The Agent shall have received on or before the Effective Date the following, each dated such day, in form and substance satisfactory to the Agent and (except for any notes requested by the Lenders):

(i) To the extent any Lender shall have requested, at least one Business day prior to the Effective Date that its Revolving Credit Advances be evidenced by a promissory note, a note payable to the order of such Lender.

(ii) Certified copies of the resolutions of the Board of Directors of the Company and of the Guarantor approving this Agreement, and of all documents evidencing other necessary corporate action and governmental approvals, if any, with respect to this Agreement.

(iii) A certificate of the Secretary or an Assistant Secretary of the Company certifying the names and true signatures of the officers of the Company authorized to sign this Agreement and the other documents to be delivered hereunder.

(iv) A certificate of the Secretary or an Assistant Secretary of the Guarantor certifying the names and true signatures of the officers of the Guarantor authorized to sign this Agreement and the other documents to be delivered hereunder.

(v) An opinion of Cravath, Swaine & Moore LLP, special New York counsel to the Company and the Guarantor, substantially in the form of Exhibit C-1 hereto and an opinion of the Assistant General Counsel of each of the Company and the Guarantor, substantially in the form of Exhibit C-2, and as to such other matters as the Agent may reasonably request.

(vi) A favorable opinion of Milbank, Tweed, Hadley & McCloy LLP, special New York counsel for the Agent, substantially in the form of Exhibit C-3 hereto.

(vii) Such other approvals, opinions or documents as any Lender through the Agent may reasonably request.

SECTION 3.02. Conditions Precedent to Each Revolving Credit Borrowing and Letter of Credit Issuance . The obligation of each Lender to make a Revolving Credit Advance on the occasion of each Revolving Credit Borrowing and of an Issuing Lender to issue any Letter of Credit shall be subject to the conditions precedent that the Effective Date shall have

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occurred and on the date of such Revolving Credit Borrowing or issuance (a) the following statements shall be true (and each of the giving of the applicable Notice of Revolving Credit Borrowing and the acceptance by any Borrower of the proceeds of such Revolving Credit Borrowing or of the benefit of issuance of such Letter of Credit shall constitute a representation and warranty by the Company and such Borrower that on the date of such Borrowing or issuance such statements are true):

(i) The representations and warranties contained in Section 4.01 (except the representations set forth in the last sentence of subsection (e) thereof and in subsection (f) thereof (other than clause (ii) thereof)) are correct in all material respects on and as of the date of such Revolving Credit Borrowing or issuance, before and after giving effect to such Revolving Credit Borrowing or issuance and to the application of the proceeds therefrom, as though made on and as of such date, and

(ii) No event has occurred and is continuing, or would result from such Revolving Credit Borrowing or issuance or from the application of the proceeds therefrom, that constitutes a Default;

and (b) in the case of the first Borrowing by or issuance of a Letter of Credit for account of a Borrowing Subsidiary, the Agent shall have received such corporate documents, resolutions and legal opinions relating to such Borrowing Subsidiary as the Agent may reasonably require.

SECTION 3.03. Conditions Precedent to Each Competitive Bid Borrowing . The obligation of each Lender that is to make a Competitive Bid Advance on the occasion of a Competitive Bid Borrowing to make such Competitive Bid Advance as part of such Competitive Bid Borrowing is subject to the conditions precedent that (i) the Agent shall have received the written confirmatory Notice of Competitive Bid Borrowing with respect thereto, and (ii) on the date of such Competitive Bid Borrowing the following statements shall be true (and each of the giving of the applicable Notice of Competitive Bid Borrowing and the acceptance by any Borrower of the proceeds of such Competitive Bid Borrowing shall constitute a representation and warranty by the Company and such Borrower that on the date of such Competitive Bid Borrowing such statements are true):

(a) The representations and warranties contained in Section 4.01 (except the representations set forth in the last sentence of subsection (e) thereof and in subsection (f) thereof (other than clause (ii) thereof)) are correct in all material respects on and as of the date of such Competitive Bid Borrowing, before and after giving effect to such Competitive Bid Borrowing and to the application of the proceeds therefrom, as though made on and as of such date; and

(b) No event has occurred and is continuing, or would result from such Competitive Bid Borrowing or from the application of the proceeds therefrom, that constitutes a Default.

SECTION 3.04. Determinations Under Section 3.01 . For purposes of determining compliance with the conditions specified in Section 3.01, each Lender shall be deemed to

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have consented to, approved or accepted or to be satisfied with each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to the Lenders unless an officer of the Agent responsible for the transactions contemplated by this Agreement shall have received notice from such Lender prior to the proposed Effective Date, as notified by the Company to the Lenders, specifying its objection thereto. The Agent shall promptly notify the Lenders of the occurrence of the Effective Date.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE LOAN PARTIES

SECTION 4.01. Representations and Warranties of the Loan Parties . Each of the Company and the Guarantor (each, a “ Loan Party ”) represents and warrants as follows:

(a) The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and the Guarantor is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware.

(b) The execution, delivery and performance by each Loan Party of this Agreement and the consummation of the transactions contemplated hereby are within such Loan Party’s powers, have been duly authorized by all necessary corporate or other action on its part, and do not contravene (i) its charter, by-laws or other organizational documents or (ii) any law or contractual restriction binding on or materially affecting such Loan Party.

(c) No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body or any other third party is required for the due execution, delivery and performance by either Loan Party of this Agreement.

(d) This Agreement has been duly executed and delivered by each Loan Party. This Agreement is the legal, valid and binding obligation of each Loan Party enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally and equitable principles of general applicability.

(e) The Consolidated balance sheet of the Company and its Subsidiaries as at December 31, 2005, and the related Consolidated statements of operations and cash flows of the Company and its Subsidiaries for the fiscal year then ended, accompanied by an opinion of Deloitte & Touche, independent public accountants, fairly present the Consolidated financial condition of the Company and its Subsidiaries as at such date and the Consolidated results of the operations of the Company and its Subsidiaries for the period ended on such date, all in accordance with generally accepted accounting principles consistently applied. Since December 31, 2005, there has been no Material Adverse Change that has not been publicly disclosed.

(f) There is no action, suit, investigation, litigation or proceeding pending against or, to the knowledge of either Loan Party, threatened against or affecting such Loan Party before

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any court, governmental agency or arbitrator that (i) except as disclosed in Schedule 4.01 is reasonably likely to have a Material Adverse Effect or (ii) would reasonably be likely to affect the legality, validity or enforceability of this Agreement or any promissory note issued under this Agreement, if any, or the consummation of the transactions contemplated hereby.

(g) It is not engaged in the business of extending credit for the purpose of purchasing or carrying Margin Stock and no proceeds of any Advance, and no Letter of Credit, will be used for the purpose (whether immediate, incidental or ultimate) of buying or carrying any Margin Stock or to extend credit to others for the purpose (whether immediate, individual or ultimate) of buying or carrying any Margin Stock, in either case in a manner that would cause the Advances or the L/C Payments or any Lender to be in violation of Regulation U.

(h) Following application of the proceeds of each Advance and the making of each L/C Payment, not more than 25 percent of the value of the assets (either of any Borrower only or of the Company and its Subsidiaries or the Guarantor and its Subsidiaries, in each case on a Consolidated basis) subject to the provisions of Section 5.02(a) or (b)(ii) or subject to any restriction contained in any agreement or instrument between it and any Lender or any Affiliate of any Lender relating to Debt and within the scope of Section 6.01(d) will be Margin Stock.

(i) Neither Loan Party is an “investment company”, a company “controlled by”, or “promoter” or “principal underwriter” for, an “investment company”, as such terms are defined in the Investment Company Act of 1940, as amended. Neither the making of any Advances nor the making of any L/C Payment nor the application of the proceeds or repayment thereof by any Borrower will violate any provision of such Act or any rule, regulation or order of the Securities and Exchange Commission thereunder.

ARTICLE V

COVENANTS

SECTION 5.01. Affirmative Covenants . So long as any Advance or L/C Reimbursement Obligation shall remain unpaid, any Letter of Credit shall be outstanding or any Lender shall have any Commitment hereunder, each Loan Party will:

(a) Compliance with Laws, Etc. Comply, and cause each of its Subsidiaries to comply, in all material respects, with all applicable laws, rules, regulations and orders, such compliance to include, without limitation, compliance with ERISA and Environmental Laws, except where failure to so comply would not, and would not be reasonably likely to, have a Material Adverse Effect.

(b) Payment of Taxes, Etc. Pay and discharge, and cause each of its Subsidiaries to pay and discharge, before the same shall become delinquent, (i) all taxes, assessments and governmental charges or levies imposed upon it or upon its property and (ii) all lawful claims that, if unpaid, might by law become a Lien upon its property; provided , however , that neither Loan Party nor any of its Subsidiaries shall be required to pay or discharge any such tax,

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assessment, charge, levy or claim that is being contested in good faith and by proper proceedings and as to which appropriate reserves are being maintained, unless and until any Lien resulting therefrom attaches to its property and becomes enforceable against its other creditors and such Lien would be reasonably likely to have a Material Adverse Effect.

(c) Preservation of Corporate Existence, Etc. Preserve and maintain, and cause each of its Material Subsidiaries to preserve and maintain, its corporate existence, rights (charter and statutory) and franchises; provided , however , that each Loan Party and its Material Subsidiaries may consummate any merger or consolidation permitted under Section 5.02(b) and provided , further , that neither Loan Party nor any of its Material Subsidiaries shall be required to preserve any right or franchise if the preservation thereof is no longer desirable in the conduct of the business of such Loan Party or such Subsidiary, as the case may be, and the loss thereof is not disadvantageous in any material respect to such Loan Party, such Subsidiary or the Lenders.

(d) Reporting Requirements . Furnish to the Lenders:

(i) as soon as available and in any event within 45 days after the end of each of the first three Fiscal Quarters of each Fiscal Year of the Company, the Consolidated balance sheet of the Company and its Subsidiaries as of the end of such quarter and Consolidated statements of operations and cash flows of the Company and its Subsidiaries for the period commencing at the end of the previous Fiscal Year and ending with the end of such Fiscal Quarter, duly certified (subject to year-end audit adjustments) by the chief financial officer of the Company as having been prepared in accordance with GAAP, it being agreed that delivery of the Company’s Quarterly Report on Form 10-Q will satisfy this requirement;

(ii) as soon as available and in any event within 90 days after the end of each Fiscal Year of the Company, a copy of the annual audit report for such year for the Company and its Subsidiaries, containing the Consolidated balance sheet of the Company and its Subsidiaries as of the end of such Fiscal Year and Consolidated statements of operations and cash flows of the Company and its Subsidiaries for such Fiscal Year, in each case accompanied by an opinion by Deloitte & Touche or other independent public accountants of nationally recognized standing, it being agreed that delivery of the Company’s Annual Report on Form 10-K will satisfy this requirement;

(iii) as soon as possible and in any event within five days after obtaining knowledge of each Default continuing on the date of such statement, a statement of the chief financial officer of the Company setting forth details of such Default and the action that the Company has taken and proposes to take with respect thereto; and

(iv) promptly after the sending or filing thereof, copies of all annual reports and proxy solicitations that the Company sends to any of its securityholders, and copies of all reports on Form 8-K that the Company or any Subsidiary files with the Securities and Exchange Commission.

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SECTION 5.02. Negative Covenants . So long as any Advance, L/C Reimbursement Obligation shall remain unpaid, any Letter of Credit shall be outstanding or any Lender shall have any Commitment hereunder, neither Loan Party will:

(a) Secured Debt . Create or suffer to exist, or permit any of its Restricted Subsidiaries or the Guarantor to create or suffer to exist, any Debt secured by a Lien on any Principal Property or on any shares of stock of or Debt of any Restricted Subsidiary or the Guarantor unless such Loan Party or such Restricted Subsidiary secures or causes such Restricted Subsidiary or the Guarantor to secure the Advances and all other amounts payable under this Agreement equally and ratably with such secured Debt, so long as such secured Debt shall be so secured, unless after giving effect thereto the aggregate amount of all such Debt so secured does not exceed 15% of Consolidated Net Tangible Assets; provided that the foregoing restriction does not apply to Debt secured by:

(i) Liens existing prior to the date hereof;

(ii) Liens on property of, or on shares of stock of or Debt of, any corporation existing at the time such corporation becomes a Restricted Subsidiary and not created with a view to circumventing the restrictions of this Section 5.02(a);

(iii) Liens in favor of a Loan Party or any Restricted Subsidiary;

(iv) Liens in favor of any governmental bodies to secure progress or advance payments;

(v) Liens on property, shares of stock or Debt existing at the time of acquisition thereof (including acquisition through merger or consolidation) or liens securing Debt incurred to finance all or any part of the purchase price or cost of construction of property (or additions, substantial repairs, alterations or substantial improvements thereto), provided that such Lien and the Debt secured thereby are incurred within 365 days of the later of acquisition or completion of construction (or addition, repair, alteration or improvement) and full operation thereof; and

(vi) any extension, renewal or refunding of Debt referred to in the foregoing clauses (i) to (v), inclusive.

(b) Mergers, Etc. (i) Merge or consolidate with or into any corporation or (ii) sell, lease, transfer or otherwise dispose of all or substantially all of the assets of the Company and its Subsidiaries, taken as a whole, unless the Company or the Guarantor would be the acquiring or surviving party in such transaction and no Event of Default shall have occurred and be continuing at the time of such proposed transaction or would result therefrom.

(i) Debt of the Borrowing Subsidiaries, if any, created hereunder;

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(ii) Debt existing on the Effective Date;

(iii) Debt of any Subsidiary to any Loan Party or any other Subsidiary;

(iv) Debt of any Person that becomes a Subsidiary after the date hereof; provided that such Debt exists at the time such Person becomes a Subsidiary and is not created in contemplation of or in connection with such Person becoming a Subsidiary;

(v) any refinancing, refunding or replacement of any Debt permitted under clause (ii) through (iv) above; and

(vi) other Debt in an aggregate principal amount not exceeding 15% of Consolidated Net Tangible Assets, computed as of the last day of the then most recently concluded Fiscal Quarter, at any time outstanding.

(d) Restrictive Agreements . Enter into, incur or permit to exist any agreement or other arrangement that prohibits or restricts the ability of any Subsidiary to pay dividends or other distributions with respect to any shares of its capital stock or to make or repay loans or advances to, or otherwise transfer assets to the Company; provided that the foregoing shall not apply to (i) restrictions and conditions imposed by law or by this Agreement, (ii) customary restrictions and conditions contained in agreements relating to the sale of a Subsidiary pending such sale, provided such restrictions and conditions apply only to the Subsidiary that is to be sold and such sale is permitted hereunder, (iii) restrictions or conditions imposed by any agreement relating to secured Debt permitted by this Agreement if such restrictions or conditions apply only to the property or assets securing such Debt, (iv) customary provisions in leases and other contracts restricting the assignment thereof, (v) any agreement in effect on the Effective Date, as any such agreement is in effect on such date, (vi) any agreement binding upon such Subsidiary prior to the date on which such Subsidiary was acquired by the Company and outstanding on such date, (vii) customary net worth and other financial maintenance covenants in an agreement relating to Debt or other obligations incurred in compliance with this Agreement, and (viii) any agreement refinancing, renewing or replacing any agreement or Debt referred to in (i) through (vii) above, provided that the relevant provisions are no more restrictive than those in the agreement or Debt being refinanced, renewed or replaced.

(e) Ownership . In the case of the Company, cease to own, legally and beneficially, 75% or more of the membership interests in the Guarantor.

SECTION 5.03. Financial Covenants . So long as any Advance, L/C Reimbursement Obligation shall remain unpaid, any Letter of Credit shall be outstanding or any Lender shall have any Commitment hereunder, the Company will not:

(a) Debt to Capitalization Ratio . Permit the Debt to Capitalization Ratio as at the last day of any Fiscal Quarter that is not an Alternate Covenant Date to exceed 0.75 to 1.0.

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(b) Consolidated Leverage Ratio . Permit the Consolidated Leverage Ratio as at the last day of any Fiscal Quarter that is an Alternate Covenant Date to exceed 5.0 to 1.0.

ARTICLE VI

EVENTS OF DEFAULT

SECTION 6.01. Events of Default . If any of the following events (“ Events of Default ”) shall occur and be continuing:

(a) Any Borrower shall fail to pay any principal of any Advance or to reimburse in full any L/C Payment in each case within five days after the same becomes due and payable; or any Borrower shall fail to pay any interest, fees or any other amount under this Agreement within five Business Days after the same becomes due and payable; or

(b) Any representation or warranty made by any Loan Party herein or by any Borrower (or any of its officers) in connection with this Agreement (including without limitation by any Borrowing Subsidiary pursuant to any Designation Letter) shall prove to have been incorrect in any material respect when made; or

(c) (i) Any Loan Party shall fail to perform or observe any term, covenant or agreement contained in Section 5.01(d)(iii), 5.02 or 5.03, or (ii) any Loan Party shall fail to perform or observe any other term, covenant or agreement contained in this Agreement on its part to be performed or observed if such failure shall remain unremedied for 30 days after written notice thereof shall have been given to either Loan Party by the Agent or any Lender; or

(d) Any Loan Party or any of its Subsidiaries shall fail to pay any principal of or premium or interest on any Debt that is outstanding in a principal or notional amount of at least $75,000,000 in the aggregate (but excluding Debt outstanding hereunder) of such Loan Party or such Subsidiary (as the case may be), when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise), and such failure shall continue after the applicable grace period, if any, specified in the agreement or instrument relating to such Debt; or any other event shall occur or condition shall exist under any agreement or instrument relating to any such Debt and shall continue after the applicable grace period, if any, specified in such agreement or instrument, if the effect of such event or condition is to accelerate the maturity of such Debt or permit (with or without the giving of notice, the lapse of time or both) the holder or holders of such Debt or any trustee or agent on its or their behalf to cause any such Debt to become due prior to its scheduled maturity; or any such Debt shall be declared to be due and payable, or required to be prepaid or redeemed (other than by a regularly scheduled required prepayment or redemption), purchased or defeased, or an offer to prepay, redeem, purchase or defease such Debt shall be required to be made, in each case prior to the stated maturity thereof; or

(e) Any Loan Party or any of its Material Subsidiaries shall generally not pay its debts as such debts become due, or shall admit in writing its inability to pay its debts generally,

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or shall make a general assignment for the benefit of creditors; or any proceeding shall be instituted by or against such Loan Party or any of its Material Subsidiaries seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for it or for any substantial part of its property and, in the case of any such proceeding instituted against it (but not instituted by it), such proceeding shall remain undismissed or unstayed for a period of 30 days, or any of the actions sought in such proceeding (including, without limitation, the entry of an order for relief against, or the appointment of a receiver, trustee, custodian or other similar official for, it or for any substantial part of its property) shall occur; or such Loan Party of any of its Material Subsidiaries shall take any corporate action to authorize any of the actions set forth above in this subsection (e); or

(f) Any judgment or order for the payment of money in excess of $75,000,000 shall be rendered against any Loan Party or any of its Material Subsidiaries and either (i) enforcement proceedings shall have been commenced by any creditor upon such judgment or order or (ii) there shall be any period of 30 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; provided , however , that any such judgment or order shall not be an Event of Default under this Section 6.01(f) if and for so long as (i) the amount of such judgment or order is covered by a valid and binding policy of insurance between the defendant and the insurer covering payment thereof and (ii) such insurer, which shall be rated at least “A” by A.M. Best Company, has been notified of, and has not disputed the claim made for payment of, the amount of such judgment or order; or

(g) Any event, action or condition with respect to an employee benefit plan of the Company subject to Title IV of ERISA results in any penalty or action pursuant to ERISA that has a material adverse effect on the business or financial condition of either Loan Party and its Subsidiaries, taken as a whole; or

(h) The Master Bottling Agreement ceases to be valid and binding and in full force and effect; or Pepsi denies that it has any liability or obligation under the Master Bottling Agreement and Pepsi ceases performance thereunder; or

(i) A Change of Control shall occur;

then, and in any such event, the Agent (i) shall at the request, or may with the consent, of the Required Lenders, by notice to the Company, declare the obligation of each Lender to make Advances and of the Issuing Lenders to issue Letters of Credit to be terminated, whereupon the same shall forthwith terminate, and (ii) shall at the request, or may with the consent, of the Required Lenders, by notice to the Company, declare the Advances, all interest thereon and all other amounts payable under this Agreement to be forthwith due and payable, whereupon the Advances, all such interest and all such amounts shall become and be forthwith due and payable, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by the Company and (iii) demand cash cover for the full amount of the

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Aggregate L/C Exposure; provided , however , that in the event of an actual or deemed entry of an order for relief with respect to any Loan Party or any Borrowing Subsidiary under the Federal Bankruptcy Code, (A) the obligation of each Lender to make Advances and of each Issuing Lender to issue Letters of Credit shall automatically be terminated and (B) the Advances, all such interest and all such amounts shall automatically become and be due and payable, and the Company shall automatically become obligated to provide such cash cover, all without presentment, protest or any notice of any kind, all of which are hereby expressly waived by each Loan Party.

ARTICLE VII

THE AGENT

SECTION 7.01. Authorization and Action . Each Lender hereby appoints and authorizes the Agent to take such action as Agent on its behalf and to exercise such powers under this Agreement as are delegated to the Agent by the terms hereof, together with such powers as are reasonably incidental thereto. As to any matters not expressly provided for by this Agreement (including, without limitation, enforcement or collection of the promissory notes), the Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Required Lenders, and such instructions shall be binding upon all Lenders and all holders of promissory notes; provided , however , that the Agent shall not be required to take any action which exposes the Agent to personal liability or which is contrary to this Agreement or applicable law. The Agent agrees to give to each Lender prompt notice of each notice given to it by any Borrower pursuant to the terms of this Agreement.

SECTION 7.02. Agent’s Reliance, Etc. Neither the Agent nor any of its directors, officers, agents or employees shall be liable to the Lenders for any action taken or omitted to be taken by it or them under or in connection with the Loan Documents, except for its or their own gross negligence or willful misconduct. Without limitation of the generality of the foregoing, the Agent: (i) may treat the payee of any promissory note as the holder thereof until the Agent receives and accepts an Assignment and Acceptance entered into by the Lender which is the payee of such promissory note, as assignor, and an Eligible Assignee, as assignee, as provided in Section 8.07; (ii) may consult with legal counsel (including counsel for a Borrower), independent public accountants and other experts selected by it and shall not be liable to the Lenders for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts; (iii) makes no warranty or representation to any Lender and shall not be responsible to any Lender for any statements, warranties or representations (whether written or oral) made in or in connection with this Agreement; (iv) shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of this Agreement on the part of any Borrower; or to inspect the property (including the books and records) of any Borrower; (v) shall not be responsible to any Lender for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other instrument or document furnished pursuant hereto; and (vi) shall incur no liability to the Lenders under or in respect of this Agreement by acting upon any notice,

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consent, certificate or other instrument or writing (which may be by telecopier, telegram, cable, telex or email) believed by it to be genuine and signed or sent by the proper party or parties.

SECTION 7.03. Citibank and Affiliates . With respect to its Commitment, the Advances made by it, and any Letters of Credit issued by it as Issuing Lender and the promissory notes issued to it, Citibank shall have the same rights and powers under this Agreement as any other Lender and/or Issuing Lender and may exercise the same as though it were not the Agent; and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated, include Citibank in its individual capacity. Citibank and its Affiliates may accept deposits from, lend money to, act as trustee under indentures of, and generally engage in any kind of business with any Borrower and any Person who may do business with or own securities of any Borrower, all as if Citibank were not the Agent and without any duty to account therefor to the Lenders or Issuing Lenders.

SECTION 7.04. Lender Credit Decision . Each Lender acknowledges that it has, independently and without reliance upon the Agent or any other Lender and based on the financial statements referred to in Section 4.01 and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender and each Issuing Lender also acknowledges that it will, independently and without reliance upon the Agent or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement.

SECTION 7.05. Indemnification . The Lenders agree to indemnify the Agent (to the extent not reimbursed by the Company) and all Related Parties ratably according to their respective Applicable Percentages from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by, or asserted against the Agent in any way relating to or arising out of this Agreement or any action taken or omitted by the Agent under this Agreement, provided that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the Agent’s gross negligence or willful misconduct. Without limiting the foregoing, each Lender agrees to reimburse the Agent promptly upon demand for its ratable share of any out-of-pocket expenses (including counsel fees) incurred by the Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement, to the extent that the Agent is not reimbursed for such expenses by the Company.

SECTION 7.06. Successor Agent . The Agent may resign at any time by giving written notice thereof to the Lenders and the Company and may be removed at any time with or without cause by the Required Lenders. Upon any such resignation or removal, the Required Lenders shall have the right to appoint a successor Agent that, unless an Event of Default shall have occurred and then be continuing, is reasonably acceptable to the Company. If no successor Agent shall have been so appointed by the Required Lenders, and shall have accepted such appointment, within 30 days after the retiring Agent’s giving of notice of resignation or the Required Lenders’ removal of the retiring Agent, then the retiring Agent may, on behalf of the

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Lenders, appoint a successor Agent, which shall, unless an Event of Default shall have occurred and then be continuing, be reasonably acceptable to the Company, and shall be a commercial bank organized under the laws of the United States of America or of any State thereof and having total assets of at least $1,000,000,000. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations under this Agreement. After any retiring Agent’s resignation or removal hereunder as Agent, the provisions of this Article VII shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement.

SECTION 7.07. Arrangers, Etc . None of the Persons identified on the cover page hereof as Joint Lead Arrangers and Book Managers or Syndication Agents shall, in their roles as such, have any responsibilities or liabilities under this Agreement.

ARTICLE VIII

MISCELLANEOUS

SECTION 8.01. Amendments, Etc. No amendment or waiver of any provision of this Agreement, nor consent to any departure by any Borrower therefrom, shall in any event be effective unless the same shall be in writing and signed by the Required Lenders, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided , however , that no amendment, waiver or consent shall (a) unless in writing and signed by each Lender affected thereby, do any of the following: (i) except pursuant to Section 2.07(b), 2.07(c), 2.17 or 2.19, increase the Commitments of the Lenders or subject the Lenders to any additional obligations, (ii) reduce the principal of, or interest on, the Revolving Credit Advances or any fees or other amounts payable hereunder, (iii) postpone any date fixed for any payment of principal of, or interest on, the Revolving Credit Advances or any fees or other amounts payable hereunder, and (b) unless in writing and signed by all of the Lenders, do any of the following: (i) change the percentage of the Commitments or of the aggregate unpaid principal amount of the Revolving Credit Advances, or the number of Lenders, that shall be required for the Lenders or any of them to take any action hereunder, (ii) release the guarantee as set forth in Section 9.01 or 10.01, or (iii) amend this Section 8.01; and provided further that no amendment, waiver or consent shall, unless in writing and signed by the Agent in addition to the Lenders required above to take such action, affect the rights or duties of the Agent under this Agreement, and no amendment, waiver or consent shall modify the rights or obligations of any Issuing Lender without the written consent of such Issuing Lender.

SECTION 8.02. Notices, Etc. (a) Subject to clauses (b) through (e) below, all notices and other communications provided for hereunder shall be in writing (including telecopier) and mailed, telecopied, emailed or delivered by hand:

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(i) if to the Company, any Borrower or the Guarantor, to the Company at its address at:

The Pepsi Bottling Group, Inc.
One Pepsi Way
Somers, New York 10589

Attention: General Counsel
Telecopier No. (914) 767-1161

with a copy to Secretary
Telecopier No. (914) 767-1161

(ii) if to the Agent:

Citibank, N.A.
2 Penns Way, Suite 200
New Castle, Delaware 19720

Attention: Carin Seals

Telephone No.: 302-894-6076

Telecopier No.: 212-994-1410

(iii) if to any Lender, at the office of such Lender specified on the signature page hereto of such Lender under the heading “Address for Notices” or in the Assignment and Acceptance pursuant to which such Lender became a party hereto;

or, as to the Company or the Agent, at such other address as shall be designated by such party in a written notice to the other parties and, as to each other party, at such other address as shall be designated by such party in a written notice to the Company and the Agent. All such notices and communications shall be deemed to have been duly given or made (i) in the case of hand deliveries, when delivered by hand, (ii) in the case of mailed notices, three Business Days after being deposited in the mail, postage prepaid, and (iii) in the case of telecopier or email notice, when transmitted and confirmed during normal business hours (or, if delivered after the close of normal business hours, at the beginning of business hours on the next Business Day), except that notices and communications to the Agent pursuant to Article II or VII shall not be effective until received by the Agent.

(b) The Company (on behalf of itself and the Borrowing Subsidiaries) hereby agrees that it will provide to the Agent all information, documents and other materials that it is obligated to furnish to the Agent pursuant to this Agreement, including, without limitation, all notices, requests, financial statements, financial and other reports, certificates and other information materials, but excluding any such communication that (i) relates to the payment of any principal or other amount due under this Agreement prior to the scheduled date therefor, (ii)

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provides notice of any Default or Event of Default under this Agreement or (iii) is required to be delivered to satisfy any condition precedent to the occurrence of the Effective Date and/or any Revolving Credit Borrowing (all such non-excluded communications being referred to herein collectively as “ Communications ”), by transmitting the Communications in an electronic/soft medium in a format acceptable to the Agent to oploanswebadmin@citigroup.com. In addition, the Company agrees to continue to provide the Communications to the Agent in the manner specified in this Agreement but only to the extent requested by the Agent.

(c) The Company further agrees that the Agent may make the Communications available to the Lenders by posting the Communications on Intralinks or a substantially similar electronic transmission system (the “ Platform ”). THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE”. THE AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE COMMUNICATIONS, OR THE ADEQUACY OF THE PLATFORM AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS OR OMISSIONS IN THE COMMUNICATIONS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY THE AGENT PARTIES IN CONNECTION WITH THE COMMUNICATIONS OR THE PLATFORM. IN NO EVENT SHALL THE AGENT OR ANY OF ITS RELATED PARTIES (COLLECTIVELY, THE “ AGENT PARTIES ”) HAVE ANY LIABILITY TO ANY BORROWER, ANY LENDER OR ANY OTHER PERSON OR ENTITY FOR DAMAGES OF ANY KIND, INCLUDING, WITHOUT LIMITATION, DIRECT OR INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, LOSSES OR EXPENSES (WHETHER IN TORT, CONTRACT OR OTHERWISE) ARISING OUT OF SUCH BORROWER’S OR THE AGENT’S TRANSMISSION OF COMMUNICATIONS THROUGH THE INTERNET, EXCEPT TO THE EXTENT THE LIABILITY OF ANY AGENT PARTY IS FOUND IN A FINAL NON-APPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED PRIMARILY FROM SUCH AGENT PARTY’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.

(d) The Agent agrees that the receipt of the Communications by the Agent at its e-mail address set forth above shall constitute effective delivery of the Communications to the Agent for purposes of this Agreement. Each Lender and Issuing Lender agrees that notice to it (as provided in the next sentence) specifying that the Communications have been posted to the Platform shall constitute effective delivery of the Communications to such Lender for purposes of this Agreement. Each Lender and Issuing Lender agrees (i) to provide to the Agent in writing (including by electronic communication), promptly after the date of this Agreement, an e-mail address to which the foregoing notice may be sent by electronic transmission and (ii) that the foregoing notice may be sent to such e-mail address.

(e) Nothing herein shall prejudice the right of the Agent or any Lender to give any notice or other communication pursuant to this Agreement in any other manner specified in this Agreement.

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SECTION 8.03. No Waiver; Remedies . No failure on the part of any Lender or the Agent to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law.

SECTION 8.04. Costs and Expenses .

(a) The Company agrees to pay on demand all costs and expenses of the Agent as set forth in the fee letter between the Company and the Agent. The Company further agrees to pay on demand all reasonable costs and expenses of the Agent and the Lenders, if any (including, without limitation, reasonable counsel fees and expenses), in connection with the enforcement (whether through negotiations, legal proceedings or otherwise) of this Agreement and the other documents to be delivered hereunder, including, without limitation, reasonable fees and expenses of counsel for the Agent and each Lender in connection with the enforcement of rights under this Section 8.04(a).

(b) The Company agrees to indemnify and hold harmless the Agent and each Lender and each of their Affiliates and their officers, directors, employees, agents and advisors (each, an “ Indemnified Party ”) from and against any and all claims, damages, losses, liabilities and expenses (including, without limitation, reasonable fees and expenses of counsel) that may be incurred by or asserted or awarded against any Indemnified Party, in each case arising out of or in connection with or by reason of, or in connection with the preparation for a defense of, any investigation, litigation or proceeding arising out of, related to or in connection with this Agreement, any promissory note issued hereunder, any of the transactions contemplated herein or the actual or proposed use of the proceeds of the Advances, whether or not such investigation, litigation or proceeding is brought by any Borrower, the Guarantor, their directors, shareholders or creditors or an Indemnified Party or any other Person or any Indemnified Party is otherwise a party thereto and whether or not the transactions contemplated hereby are consummated, except to the extent such claim, damage, loss, liability or expense is found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted from such Indemnified Party’s gross negligence or willful misconduct. In no event shall any party hereto be liable on any theory of liability for any special, indirect, consequential or punitive damages (including, without limitation, any loss of profits, business or anticipated savings).

(c) To the extent that the Company fails to pay any amount required to be paid by it to the Agent under paragraph (a) or (b) of this Section 8.04, each Lender severally agrees to pay to the Agent such Lender’s Applicable Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount; provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Agent in its capacity as such.

(d) If any payment of principal of, or Conversion of, any Eurodollar Rate Advance or LIBO Rate Advance is made by any Borrower to or for the account of a Lender other than on the last day of the Interest Period for such Advance, as a result of a payment or Conversion

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pursuant to Section 2.10(d) or (e), 2.12 or 2.14, acceleration of the maturity of the Advances pursuant to Section 6.01 or for any other reason, the Company shall, upon demand by such Lender (with a copy of such demand to the Agent), pay to the Agent for the account of such Lender any amounts required to compensate such Lender for any additional losses, costs or expenses that it may reasonably incur as a result of such payment or Conversion, including, without limitation, any loss, cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by any Lender to fund or maintain such Advance.

(e) Without prejudice to the survival of any other agreement of any Borrower hereunder, the agreements and obligations of the Company contained in Sections 2.13, 2.16 and 8.04 shall survive the payment in full of principal, interest and all other amounts payable hereunder.

SECTION 8.05. Right of Set-off . Upon (i) the occurrence and during the continuance of any Event of Default and (ii) the making of the request or the granting of the consent specified by Section 6.01 to authorize the Agent to declare the Advances due and payable pursuant to the provisions of Section 6.01, each Lender and each of its Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by such Lender or such Affiliate to or for the credit or the account of any Loan Party or any Borrower against any and all of the obligations of such Loan Party or such Borrower now or hereafter existing under this Agreement, whether or not such Lender shall have made any demand under this Agreement and although such obligations may be unmatured. Each Lender agrees promptly to notify the Company after any such set-off and application, provided that the failure to give such notice shall not affect the validity of such set-off and application. The rights of each Lender and its Affiliates under this Section are in addition to other rights and remedies (including, without limitation, other rights of set-off) that such Lender and its Affiliates may have.

SECTION 8.06. Binding Effect . This Agreement shall become effective (other than Sections 2.01, 2.03 and 2.04, which shall only become effective upon satisfaction of the conditions precedent set forth in Section 3.01) when it shall have been executed by the Loan Parties and the Agent and when the Agent shall have been notified by each Initial Lender that such Initial Lender has executed it and thereafter shall be binding upon and inure to the benefit of the Loan Parties, each Subsidiary Borrower (if any), the Agent and each Lender and their respective successors and assigns, except that no Borrower shall have the right to assign its rights hereunder or any interest herein without the prior written consent of the Lenders.

SECTION 8.07. Assignments and Participations .

(a) Each Lender may, upon ten days’ notice to the Agent and with the consent of the Company (which shall not be unreasonably withheld) and, if demanded by the Company (following a demand by such Lender pursuant to Section 2.13 or Section 2.16 or a suspension of such Lender’s obligation to make or continue Advances as, or convert Advances into, Eurodollar

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Rate Advances pursuant to Section 2.14) upon at least ten days’ notice to such Lender and the Agent, will assign to one or more Persons all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Commitment and the Revolving Credit Advances owing to it); provided , however , that (i) each such assignment shall be of a constant, and not a varying, percentage of all rights and obligations under this Agreement (other than any right to make Competitive Bid Advances or Competitive Bid Advances owing to it), (ii) except in the case of an assignment to a Person that, immediately prior to such assignment, was a Lender or an assignment of all of a Lender’s rights and obligations under this Agreement, the amount of the Commitment of the assigning Lender being assigned pursuant to each such assignment (determined as of the date of the Assignment and Acceptance with respect to such assignment) shall in no event be less than the lesser of (x) $25,000,000 (and, if greater, shall be in an integral multiple of $1,000,000 in excess thereof) and (y) the smallest initial Commitment of any Initial Lender, (iii) each such assignment shall be to an Eligible Assignee, (iv) each such assignment made as a result of a demand by the Company pursuant to this Section 8.07(a) shall be arranged by the Company after consultation with the Agent and shall be either an assignment of all of the rights and obligations of the assigning Lender under this Agreement or an assignment of a portion of such rights and obligations made concurrently with another such assignment or other such assignments that together cover all of the rights and obligations of the assigning Lender under this Agreement, (v) no Lender shall be obligated to make any such assignment as a result of a demand by the Company pursuant to this Section 8.07(a) unless and until such Lender shall have received one or more payments from either the Company or one or more Eligible Assignees in an aggregate amount at least equal to the aggregate outstanding principal amount of the Revolving Credit Advances owing to such Lender, together with accrued interest thereon to the date of payment of such principal amount and all other amounts (other than Competitive Bid Advances) payable to such Lender under this Agreement and (vi) the parties to each such assignment (other than any Borrower) shall execute and deliver to the Agent, for its acceptance and recording in the Register (as defined in clause (d) below), an Assignment and Acceptance, together with a processing and recordation fee of $3,500. Upon such execution, delivery, acceptance and recording, from and after the effective date specified in each Assignment and Acceptance, (x) the assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Acceptance, have the rights and obligations of a Lender hereunder and (y) the Lender assignor thereunder shall, to the extent that rights and obligations hereunder have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights and be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto).

(b) By executing and delivering an Assignment and Acceptance, the Lender assignor thereunder and the assignee thereunder confirm to and agree with each other and the other parties hereto as follows: (i) other than as provided in such Assignment and Acceptance, such assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other instrument or document furnished pursuant hereto; (ii) such assigning Lender makes no representation or warranty and assumes no responsibility with

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respect to the financial condition of any Borrower or the performance or observance by any Borrower of any of its obligations under this Agreement or any other instrument or document furnished pursuant hereto; (iii) such assignee confirms that it has received a copy of this Agreement, together with copies of the financial statements referred to in Section 4.01 and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance; (iv) such assignee will, independently and without reliance upon the Agent, such assigning Lender or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement; (v) such assignee confirms that it is an Eligible Assignee; (vi) such assignee appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers and discretion under this Agreement as are delegated to the Agent by the terms hereof, together with such powers and discretion as are reasonably incidental thereto; and (vii) such assignee agrees that it will perform in accordance with their terms all of the obligations that by the terms of this Agreement are required to be performed by it as a Lender.

(c) Upon its receipt of an Assignment and Acceptance executed by an assigning Lender and an assignee representing that it is an Eligible Assignee, the Agent shall, if such Assignment and Acceptance has been completed and is in substantially the form of Exhibit B hereto, (i) accept such Assignment and Acceptance, (ii) record the information contained therein in the Register and (iii) give prompt notice thereof to the Company.

(d) The Agent shall maintain at its address referred to in Section 8.02 a copy of each Assignment and Acceptance delivered to and accepted by it and a register for the recordation of the names and addresses of the Lenders and, with respect to Lenders, the Commitment of, and principal amount of the Advances owing to, each Lender from time to time (the “ Register ”). The entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and each Borrower, the Agent and the Lenders may treat each Person whose name is recorded in the Register as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Loan Parties or any Lender at any reasonable time and from time to time upon reasonable prior notice.

(e) Notwithstanding anything to the contrary contained herein, any Lender (a “ Granting Lender ”) may grant to a special purpose funding vehicle (a “ SPC ”), identified as such in writing from time to time by the Granting Lender to the Agent and the Company, the option to provide to the Company all or any part of any Advance that such Granting Lender would otherwise be obligated to make to the Company pursuant to this Agreement; provided that (i) nothing herein shall constitute a commitment by any SPC to make any Advance, (ii) if an SPC elects not to exercise such option or otherwise fails to provide all or any part of such Advance, the Granting Lender shall be obligated to make such Advance pursuant to the terms hereof. The making of an Advance by an SPC hereunder shall utilize the Commitment of the Granting Lender to the same extent, and as if, such Advance were made by such Granting Lender. Each party hereto agrees that no SPC shall be liable for any indemnity or similar payment obligation under this Agreement (all liability for which shall remain with the Granting Lender). In furtherance of the foregoing, each party hereto hereby agrees (which agreement shall survive the termination of this Agreement) that, prior to the date that is one year and one day after the

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payment in full of all outstanding commercial paper or other senior indebtedness of any SPC, it will not institute against, or join any other person in instituting against, such SPC any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings under the laws of the United States or any State thereof. In addition, notwithstanding anything to the contrary contained in this Section 8.07(e), any SPC may (i) with notice to, but without the prior written consent of, the Company and the Agent and without paying any processing fee therefor, assign all or a portion of its interests in any Advances to the Granting Lender or to any financial institutions (consented to by the Company and the Agent) providing liquidity and/or credit support to or for the account of any SPC to support the funding or maintenance of Advances and (ii) disclose on a confidential basis any non-public information relating to its Advances to any rating agency, commercial paper dealer or provider of any surety, guarantee or credit or liquidity enhancement to such SPC.

(f) Each Lender may, upon notice to the Agent and the Company, sell participations to one or more banks or other entities in or to all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Commitment and the Advances owing to it); provided , however , that (i) such Lender’s obligations under this Agreement (including, without limitation, its Commitment hereunder) shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, (iii) such Lender shall remain the holder of any promissory note issued or assigned to it hereunder, (iv) the Borrowers, the Guarantor, the Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement and (v) no participant under any such participation shall have any right to approve any amendment or waiver of any provision of this Agreement, or any consent to any departure by any Borrower therefrom, except to the extent that such amendment, waiver or consent would reduce the principal of, or interest on, the Advances or any fees or other amounts payable hereunder, in each case to the extent subject to such participation, or postpone any date fixed for any payment of principal of, or interest on, the Advances or any fees or other amounts payable hereunder, in each case to the extent subject to such participation.

(g) Any Lender may, in connection with any assignment or participation or proposed assignment or participation pursuant to this Section 8.07, disclose to the assignee or participant or proposed assignee or participant any information relating to any Loan Party or any Borrower furnished to such Lender by or on behalf of any Loan Party or any Borrower; provided that, prior to any such disclosure, the assignee or participant or proposed assignee or participant shall agree to preserve the confidentiality of any Confidential Information relating to the Loan Parties or the Borrowers received by it from such Lender.

(h) Notwithstanding any other provision set forth in this Agreement, any Lender may at any time create a security interest in all or any portion of its rights under this Agreement or any promissory note issued to such Lender hereunder (including, without limitation, the Advances owing to it) in favor of any Federal Reserve Bank in accordance with Regulation A of the Board of Governors of the Federal Reserve System.

SECTION 8.08. Confidentiality . Neither the Agent nor any Lender shall disclose any Confidential Information to any Person without the consent of the Company, other than (a)

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to the Agent’s or such Lender’s Affiliates and their officers, directors, employees, agents and advisors and to actual or prospective assignees and participants, and then only on a confidential basis, (b) as required by any law, rule or regulation or judicial process, (c) to any rating agency when required by it and (d) as requested or required by any state, federal or foreign authority or examiner regulating banks or banking.

SECTION 8.09. Governing Law . This Agreement shall be governed by, and construed in accordance with, the law of the State of New York.

SECTION 8.10. Execution in Counterparts . This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Agreement by telecopier shall be effective as delivery of a manually executed counterpart of this Agreement.

SECTION 8.11. Jurisdiction, Etc.

(a) Each of the parties hereto hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of any New York State court or federal court of the United States of America sitting in New York City, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in any such New York State court or, to the extent permitted by law, in such federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement shall affect any right that any party may otherwise have to bring any action or proceeding relating to this Agreement in the courts of any jurisdiction.

(b) Each of the parties hereto irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement in any New York State or federal court sitting in New York City. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

SECTION 8.12. WAIVER OF JURY TRIAL . EACH BORROWER, THE AGENT, EACH ISSUING LENDER AND EACH OF THE LENDERS HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO ANY OF THE LOAN

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DOCUMENTS, THE ADVANCES, THE LETTERS OF CREDIT OR THE ACTIONS OF THE AGENT, ANY ISSUING LENDER OR ANY LENDER IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT THEREOF .

SECTION 8.13. USA PATRIOT Act . Each Lender hereby notifies each Borrower that pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “ Act ”), it is required to obtain, verify and record information that identifies the Borrowers, which information includes the name and address of the Borrowers and other information that will allow such Lender to identify the Borrowers in accordance with the Act.

ARTICLE IX

COMPANY GUARANTEE

SECTION 9.01. Company Guarantee . Subject to the provisions of this Article IX, the Company unconditionally and irrevocably guarantees to each Lender and the Agent and their respective successors and assigns, that: (i) the principal of, premium, if any, and interest on the Advances to and all L/C Reimbursement Obligations of each Borrowing Subsidiary and, following the Substitution Date, the Guarantor (each a “ Guaranteed Party ”) and any promissory notes issued by any Guaranteed Party hereunder will be duly and punctually paid in full when due, whether at maturity, by acceleration, by redemption or otherwise, and interest on overdue principal, and premium, if any, and (to the extent permitted by law) interest on any interest, if any, on the Advances and all L/C Reimbursement Obligations and all other obligations of the Guaranteed Parties to the Lenders or the Agent hereunder (including fees and expenses) will be promptly paid in full, all in accordance with the terms hereof; and (ii) in case of any extension of time of payment or renewal of any of the Advances to any Guaranteed Party or any of such other obligations, the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise. Failing payment when due of any amount so guaranteed, or failing performance of any other obligation of the Guaranteed Parties to the Lenders or the Agent, for whatever reason, the Company will be obligated to pay, or to perform or to cause the performance of, the same immediately. An Event of Default under this Agreement shall constitute an event of default under this Guarantee, and shall entitle the Lenders to accelerate the obligations of the Company under this Guarantee in the same manner and to the same extent as the obligations of the Guaranteed Parties.

The Company hereby agrees that its obligations under this Guarantee shall be unconditional, irrespective of the validity, regularity or enforceability of this Agreement, any Designation Letter or the Substitution Letter, the absence of any action to enforce the same, any waiver or consent by any Lender or the Agent of this Agreement any Designation Letter or the Substitution Letter, with respect to any thereof, the entry of any judgment against any Guaranteed Party, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of the Company. The Company hereby waives and relinquishes: (a) any right to require the Agent, the Lenders or any

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Guaranteed Party (each, a “ Benefitted Party ”) to proceed against any Guaranteed Party or any other Person or to proceed against or exhaust any security held by a Benefitted Party at any time or to pursue any other remedy in any secured party’s power before proceeding against the Company; (b) any defense that may arise by reason of the incapacity, lack of authority, death or disability of any other Person or Persons or the failure of a Benefitted Party to file or enforce a claim against the estate (in administration, bankruptcy or any other proceeding) of any other Person or Persons; (c) demand, protest and notice of any kind (except as expressly required by this Agreement), including but not limited to notice of the existence, creation or incurring of any new or additional Debt or obligation or of any action or non-action on the part of the Company, any Benefitted Party, any creditor of the Company or any Guaranteed Party or on the part of any other Person whomsoever in connection with any obligations the performance of which are guaranteed under this Guarantee; (d) any defense based upon an election of remedies by a Benefitted Party, including but not limited to an election to proceed against the Company or any other Guaranteed Party for reimbursement; (e) any defense based upon any statute or rule of law which provides that the obligation of a surety must be neither larger in amount nor in other respects more burdensome than that of the principal; (f) any defense arising because of a Benefitted Party’s election, in any proceeding instituted under the Bankruptcy Code, of the application of Section 1111(b)(2) of the Bankruptcy Code; and (g) any defense based on any borrowing or grant of a security interest under Section 364 of the Bankruptcy Code. The Company hereby covenants that this Guarantee will not be discharged except by payment in full of all principal, premium, if any, and interest on the Advances made to each Guaranteed Party and all other costs provided for under this Agreement in respect thereof. This is a Guarantee of payment and not of collectibility.

If any Lender or the Agent is required by any court or otherwise to return to either the Company or any Guaranteed Party, or any trustee or similar official acting in relation to either the Company or any Guaranteed Party, any amount paid by the Company or any Guaranteed Party to the Agent or such Lender, this Guarantee, to the extent theretofore discharged, shall be reinstated in full force and effect. The Company agrees that it will not be entitled to any right of subrogation in relation to the Lenders or the Agent in respect of any obligations guaranteed under this Guarantee until payment in full of all obligations guaranteed hereby. The Company agrees that, as between it, on the one hand, and the Lenders and the Agent, on the other hand, (x) the maturity of the obligations guaranteed under this Guarantee may be accelerated as provided in Article VI hereof for the purposes hereof, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (y) in the event of any acceleration of such obligations as provided in Article VI hereof, such obligations (whether or not due and payable) shall forthwith become due and payable by such Company for the purpose of this Guarantee.

ARTICLE X

SUBSIDIARY GUARANTEE

SECTION 10.01. Subsidiary Guarantee . Subject to the provisions of this Article X, the Guarantor unconditionally and irrevocably guarantees to each Lender and the Agent and

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their respective successors and assigns, that: (i) the principal of, premium, if any, and interest on the Advances and all L/C Reimbursement Obligations and any promissory note issued hereunder will be duly and punctually paid in full when due, whether at maturity, by acceleration, by redemption or otherwise, and interest on overdue principal, and premium, if any, and (to the extent permitted by law) interest on any interest, if any, on the Advances, and all L/C Reimbursement Obligations and any promissory note issued hereunder and all other obligations of the Company to the Lenders or the Agent hereunder (including fees and expenses) will be promptly paid in full, all in accordance with the terms hereof; and (ii) in case of any extension of time of payment or renewal of any of the Advances or any of such other obligations, the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise. Failing payment when due of any amount so guaranteed, or failing performance of any other obligation of the Company to the Lenders or the Agent, for whatever reason, the Guarantor will be obligated to pay, or to perform or to cause the performance of, the same immediately. An Event of Default under this Agreement shall constitute an event of default under this Guarantee, and shall entitle the Lenders to accelerate the obligations of the Guarantor under this Guarantee in the same manner and to the same extent as the obligations of the Company.

The Guarantor hereby agrees that its obligations under this Guarantee shall be unconditional, irrespective of the validity, regularity or enforceability of this Agreement, the absence of any action to enforce the same, any waiver or consent by any Lender or the Agent of this Agreement with respect to any thereof, the entry of any judgment against the Company, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of the Guarantor. The Guarantor hereby waives and relinquishes: (a) any right to require the Agent, the Lenders or the Company (each, a “ Benefitted Person ”) to proceed against the Company or any other Person or to proceed against or exhaust any security held by a Benefitted Person at any time or to pursue any other remedy in any secured party’s power before proceeding against the Guarantor; (b) any defense that may arise by reason of the incapacity, lack of authority, death or disability of any other Person or Persons or the failure of a Benefitted Person to file or enforce a claim against the estate (in administration, bankruptcy or any other proceeding) of any other Person or Persons; (c) demand, protest and notice of any kind (except as expressly required by this Agreement), including but not limited to notice of the existence, creation or incurring of any new or additional Debt or obligation or of any action or non-action on the part of the Guarantor, the Company, any Benefitted Person, any creditor of the Guarantor, the Company or on the part of any other Person whomsoever in connection with any obligations the performance of which are guaranteed under this Guarantee; (d) any defense based upon an election of remedies by a Benefitted Person, including but not limited to an election to proceed against the Guarantor for reimbursement; (e) any defense based upon any statute or rule of law which provides that the obligation of a surety must be neither larger in amount nor in other respects more burdensome than that of the principal; (f) any defense arising because of a Benefitted Person’s election, in any proceeding instituted under the Bankruptcy Code, of the application of Section 1111(b)(2) of the Bankruptcy Code; and (g) any defense based on any borrowing or grant of a security interest under Section 364 of the Bankruptcy Code. The Guarantor hereby covenants that this Guarantee will not be discharged except by payment in full of all principal, premium, if any, and interest on the Advances and all other costs provided for under this Agreement. This is a Guarantee of payment and not of collectibility.

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If any Lender or the Agent is required by any court or otherwise to return to either the Company or the Guarantor, or any trustee or similar official acting in relation to either the Company or the Guarantor, any amount paid by the Company or the Guarantor to the Agent or such Lender, this Guarantee, to the extent theretofore discharged, shall be reinstated in full force and effect. The Guarantor agrees that it will not be entitled to any right of subrogation in relation to the Lenders or the Agent in respect of any obligations guaranteed under this Guarantee until payment in full of all obligations guaranteed hereby. The Guarantor agrees that, as between it, on the one hand, and the Lenders and the Agent, on the other hand, (x) the maturity of the obligations guaranteed under this Guarantee may be accelerated as provided in Article VI hereof for the purposes hereof, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (y) in the event of any acceleration of such obligations as provided in Article VI hereof, such obligations (whether or not due and payable) shall forthwith become due and payable by such Guarantor for the purpose of this Guarantee.

SECTION 10.02. Limitation of Guarantor’s Liability . The Guarantor, and by its acceptance hereof, each Lender, hereby confirms that it is the intention of the parties hereto that this Guarantee not constitute a fraudulent transfer or conveyance for purposes of the Bankruptcy Code, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar Federal or State law. To effectuate the foregoing intention, the Lenders and the Guarantor hereby irrevocably agree that the obligations of the Guarantor under this Article X shall be limited to the maximum amount as will, after giving effect to all other contingent and fixed liabilities of the Guarantor, result in the obligations of the Guarantor under the Guarantee not constituting a fraudulent transfer or conveyance under federal or state law.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized as of the date first above written.


THE PEPSI BOTTLING GROUP, INC., as Borrower
By:	/s/ Kenneth Smith
	Name:	Kenneth Smith
	Title:	Treasurer

BOTTLING GROUP, LLC, as Guarantor
By:	/s/ David Yawman
	Name:	David Yawman
	Title:	Managing Director-Delegatee

CITIBANK, N.A., as Agent
By:	/s/ William S. Timmons, III
	Name:	William S. Timmons, III
	Title:	Vice President

5- Year Credit Agreement


COMMITMENT	INITIAL LENDERS
$53,125,000	CITIBANK, N.A.

	By:	/s/ William S. Timmons, III

		Name: William S. Timmons, III
		Title: Vice President

$68,125,000	HSBC BANK USA, N.A.

	By:	/s/ Thomas Foley

		Name: Thomas Foley
		Title: Senior Vice President

$53,125,000	BANK OF AMERICA, N.A.

	By:	/s/ David Catherall

		Name: David Catherall
		Title: Vice President

$53,125,000	CREDIT SUISSE, CAYMAN ISLANDS BRANCH

	By:	/s/ Karl Studer

		Name: Karl Studer
		Title: Director

	By:	/s/ Yvonne Guntlin

		Name: Yvonne Guntlin
		Title: Assistant Vice President

Initial Lenders


COMMITMENT	INITIAL LENDERS
$53,125,000	DEUTSCHE BANK AG NEW YORK BRANCH

	By:	/s/ Frederick W. Laird

		Name: Frederick W. Laird
		Title: Managing Director

	By:	/s/ Ming K. Chu

		Name: Ming K. Chu
		Title: Vice President

$53,125,000	JPMORGAN CHASE BANK, NATIONAL ASSOCIATION

	By:	/s/ Thomas T. Hou

		Name: Thomas T. Hou
		Title: Vice President

$63,125,000	LEHMAN BROTHERS BANK, FSB

	By:	/s/ Janine M. Shugan

		Name: Janine M. Shugan
		Title: Authorized Signatory

$53,125,000	MORGAN STANLEY BANK

	By:	/s/ Daniel Twenge

		Name: Daniel Twenge
		Title: Vice President

$450,000,000 TOTAL OF THE COMMITMENTS

Initial Lenders

SCHEDULE 1

LENDING OFFICES


Lender	Domestic Lending Office	Eurodollar Lending Office
CITIBANK, N.A.	2 Penns Way Suite 100 New Castle, DE 19720	2 Penns Way Suite 100 New Castle, DE 19720

HSBC BANK USA, N.A.	452 Fifth Avenue New York, New York 10018	452 Fifth Avenue New York, New York 10018

BANK OF AMERICA, N.A	901 Main Street, 14 ^th Floor Dallas, Texas 75202	901 Main Street, 14 ^th Floor Dallas, Texas 75202

CREDIT SUISSE, CAYMAN ISLANDS BRANCH	11 Madison Avenue New York, New York 10010	11 Madison Avenue New York, New York 10010

DEUTSCHE BANK AG NEW YORK BRANCH	90 Hudson Street Mailstop JCY05-0511 Jersey City, NJ 07302	90 Hudson Street Mailstop JCY05-0511 Jersey City, NJ 07302

JPMORGAN CHASE BANK, NATIONAL ASSOCIATION	270 Park Avenue New York, New York 10017	270 Park Avenue New York, New York 10017

LEHMAN BROTHERS BANK, FSB	745 7 ^th Avenue, 16 ^th Floor New York, NY 10019	745 7 ^th Avenue, 16 ^th Floor New York, NY 10019

MORGAN STANLEY BANK	2500 Lake Park Blvd., Suite 300C West Valley City, Utah 84120	2500 Lake Park Blvd., Suite 300C West Valley City, Utah 84120

Schedule 1

SCHEDULE 2

PRICING SCHEDULE

Applicable

Applicable Facility

Utilization Fee

Rating Level Period

Fee Rate

Applicable Margin

Rate ¹

4.0 bps

16.0 bps

5.0 bps

20.0 bps

5.0 bps

6.0 bps

24.0 bps

5.0 bps

8.0 bps

27.0 bps

10.0 bps

40.0 bps

10.0 bps


¹		Applicable if utilization exceeds 50% of Commitment amount.

Schedule 2

EXHIBIT A-1

[FORM OF NOTICE OF REVOLVING CREDIT BORROWING]

Citibank, N.A., as Agent
     for the Lenders parties to the
     5-Year Credit Agreement
     referred to below
2 Penn’s Way, Suite 200
New Castle, Delaware 19720

[Date]

Ladies and Gentlemen:

The undersigned, The Pepsi Bottling Group, Inc. (the “ Company ”), refers to the 5-Year Credit Agreement, dated as of March 22, 2006 (as amended or modified from time to time, the “ Credit Agreement ”, the terms defined therein being used herein as therein defined), among the undersigned, Bottling Group, LLC (the “ Guarantor ”), certain Lenders parties thereto and Citibank, N.A., as administrative agent for said Lenders, and hereby gives you notice, irrevocably, pursuant to Section 2.02 of the Credit Agreement that the undersigned hereby requests a Revolving Credit Borrowing under the Credit Agreement, and in that connection sets forth below the information relating to such Revolving Credit Borrowing (the “ Proposed Revolving Credit Borrowing ”) as required by Section 2.02(a) of the Credit Agreement:

(i) The Business Day of the Proposed Revolving Credit Borrowing is , .

(ii) The Type of Advances comprising the Proposed Revolving Credit Borrowing is [Base Rate Advances] [Eurodollar Rate Advances].

(iii) The aggregate amount of the Proposed Revolving Credit Borrowing is $ .

(iv) The identity of the Borrower is , a corporation.

[(v)] [The initial Interest Period for each Eurodollar Rate Advance made as part of the Proposed Revolving Credit Borrowing is ___month[s].]

The undersigned hereby certifies that the following statements are true on the date hereof, and will be true on the date of the Proposed Revolving Credit Borrowing:

(A) the representations and warranties contained in Section 4.01 of the Credit Agreement (except the representations set forth in the last sentence of subsection (e) thereof and in subsection (f) thereof (other than clause (ii) thereof)) are correct in all material respects, on and as of the date of the Proposed Revolving Credit Borrowing, before and after giving effect to the

Form of Notice of Revolving Credit Borrowing

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Proposed Revolving Credit Borrowing and to the application of the proceeds therefrom, as though made on and as of such date; and

(B) no event has occurred and is continuing, or would result from such Proposed Revolving Credit Borrowing or from the application of the proceeds therefrom, that constitutes a Default.


		Very truly yours,

		THE PEPSI BOTTLING GROUP, INC.

		By:

				Name:
				Title:

Form of Notice of Revolving Credit Borrowing

EXHIBIT A-2

[FORM OF NOTICE OF COMPETITIVE BID BORROWING]

Citibank, N.A, as Agent
  for the Lenders parties
  to the 5-Year Credit Agreement
  referred to below

2 Penn’s Way, Suite 200
New Castle, Delaware 19720

[Date]

Ladies and Gentlemen:

The undersigned, The Pepsi Bottling Group, Inc. (the “ Company ”), refers to the 5-Year Credit Agreement, dated as of March 22, 2006 (as amended or modified from time to time, the “ Credit Agreement ”, the terms defined therein being used herein as therein defined), among the undersigned, Bottling Group, LLC (the “ Guarantor ”), certain Lenders parties thereto and Citibank, N.A, as administrative agent for said Lenders, and hereby gives you notice pursuant to Section 2.03 of the Credit Agreement that the undersigned hereby requests a Competitive Bid Borrowing under the Credit Agreement, and in that connection sets forth the terms on which such Competitive Bid Borrowing (the “ Proposed Competitive Bid Borrowing ”) is requested to be made:


		(A)		Date of Proposed
				Competitive Bid Borrowing

		(B)		Aggregate Amount of Proposed
				Competitive Bid Borrowing

		(C)		Maturity Date

		(D)		Interest Rate Basis

		(E)		Interest Payment Date(s)

		(F)		Identity of Borrower

The undersigned hereby certifies that the following statements are true on the date hereof, and will be true on the date of the Proposed Competitive Bid Borrowing:

(a) the representations and warranties contained in Section 4.01 (except the representations set forth in the last sentence of subsection (e) thereof and in subsection (f) thereof (other than clause (ii) thereof)) are correct in all material respects, on and as of the date of the Proposed Competitive Bid Borrowing, before and after giving effect to the Proposed Competitive Bid Borrowing and to the application of the proceeds therefrom, as though made on and as of such date; and

Form of Notice of Issuance

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(b) no event has occurred and is continuing, or would result from the Proposed Competitive Bid Borrowing or from the application of the proceeds therefrom, that constitutes a Default.

The undersigned hereby confirms that the Proposed Competitive Bid Borrowing is to be made available to it in accordance with Section 2.03(b) of the Credit Agreement.


	Very truly yours, THE PEPSI BOTTLING GROUP, INC.
	By:
		Name:
		Title:

Form of Notice of Competitive Bid Borrowing

EXHIBIT A-3

[FORM OF EXTENSION AGREEMENT]

The Pepsi Bottling Group, Inc.
One Pepsi Way
Somers, New York 10589
Attention: Treasurer

Citibank, N.A, as Agent
under the 5-Year Credit Agreement referred to below
2 Penn’s Way, Suite 200
New Castle, Delaware 19720

[DATE]

Ladies and Gentlemen:

Each undersigned Lender hereby agrees to extend, effective on [insert effective date, which shall be no more than 29 days prior to the existing Termination Date] (the “ Extension Date ”), the Termination Date under the 5-Year Credit Agreement dated as of March 22, 2006 (as the same may be amended, supplemented or otherwise modified from time to time, the “ Credit Agreement ”) among The Pepsi Bottling Group, Inc., Bottling Group, LLC, the Lenders and agents party thereto and Citibank, N.A, as administrative agent for the Lenders, to [one year from the effective date of this Extension Agreement]. Terms defined in the Credit Agreement are used herein as therein defined.

This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument.

[Remainder of this page intentionally left blank]

Form of Extension Agreement

EXHIBIT B

FORM OF ASSIGNMENT AND ACCEPTANCE

Reference is made to the 5-Year Credit Agreement dated as of March 22, 2006 (as amended or modified from time to time, the “ Credit Agreement ”), among THE PEPSI BOTTLING GROUP, INC., a Delaware corporation (the “ Company ”), Bottling Group, LLC (the “ Guarantor ”), the Lenders (as defined in the Credit Agreement) and Citibank, N.A, as administrative agent for the Lenders (the “ Agent ”). Terms defined in the Credit Agreement are used herein with the same meaning.

The “Assignor” and the “Assignee” referred to on Schedule 1 hereto agree as follows:

(1) The Assignor hereby sells and assigns to the Assignee, and the Assignee hereby purchases and assumes from the Assignor, an interest in and to the Assignor’s rights and obligations under the Credit Agreement as of the date hereof (other than in respect of Competitive Bid Advances) equal to the percentage interest specified on Schedule 1 hereto of all outstanding rights and obligations under the Credit Agreement (other than in respect of Competitive Bid Advances). After giving effect to such sale and assignment, the Assignee’s Commitment and the amount of the Revolving Credit Advances owing to the Assignee will be as set forth on Schedule 1 hereto.

(2) The Assignor (i) represents and warrants that it is the legal and beneficial owner of the interest being assigned by it hereunder and that such interest is free and clear of any adverse claim; (ii) makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Credit Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Agreement or any other instrument or document furnished pursuant thereto; and (iii) makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Company or the performance or observance by the Company of any of its obligations or the obligations of any Borrower under the Credit Agreement or any other instrument or document furnished pursuant thereto.

(3) The Assignee (i) confirms that it has received a copy of the Credit Agreement, together with copies of the financial statements referred to in Section 4.01 thereof and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Acceptance; (ii) agrees that it will, independently and without reliance upon the Agent, the Assignor or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement; (iii) confirms that it is an Eligible Assignee; (iv) appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers and discretion under the Credit Agreement as are delegated to the Agent by the terms thereof, together with such powers and discretion as are reasonably incidental thereto; (v) agrees that it will perform in accordance with their terms all of the obligations that by the terms of the Credit Agreement are required to be performed by it as a Lender; and (vi)

Form of Assignment and Acceptance

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attaches any U.S. Internal Revenue Service forms required under Section 2.16 of the Credit Agreement.

(4) Following the execution of this Assignment and Acceptance, it will be delivered to the Agent for acceptance and recording by the Agent. The effective date for this Assignment and Acceptance (the “ Effective Date ”) shall be the date of acceptance hereof by the Agent, unless otherwise specified on Schedule 1 hereto.

(5) Upon such acceptance and recording by the Agent, as of the Effective Date, (i) the Assignee shall be a party to the Credit Agreement and, to the extent provided in this Assignment and Acceptance, have the rights and obligations of a Lender thereunder and (ii) the Assignor shall, to the extent provided in this Assignment and Acceptance, relinquish its rights and be released from its obligations under the Credit Agreement.

(6) Upon such acceptance and recording by the Agent, from and after the Effective Date, the Agent shall make all payments under the Credit Agreement in respect of the interest assigned hereby (including, without limitation, all payments of principal, interest and facility fees with respect thereto) to the Assignee. The Assignor and Assignee shall make all appropriate adjustments in payments under the Credit Agreement for periods prior to the Effective Date directly between themselves.

(7) This Assignment and Acceptance shall be governed by, and construed in accordance with, the law of the State of New York.

(8) This Assignment and Acceptance may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of Schedule 1 to this Assignment and Acceptance by telecopier shall be effective as delivery of a manually executed counterpart of this Assignment and Acceptance.

IN WITNESS WHEREOF, the Assignor and the Assignee have caused Schedule 1 to this Assignment and Acceptance to be executed by their officers thereunto duly authorized as of the date specified thereon.

Form of Assignment and Acceptance

Schedule 1
to
Assignment and Acceptance


Percentage interest assigned:		___%

Assignee’s Commitment:		$

Aggregate outstanding principal amount of Revolving Credit Advances assigned:		$

Effective Date ² :	, ___


		[NAME OF ASSIGNOR], as Assignor

		By
		Title:

		Dated: ,

		[NAME OF ASSIGNEE], as Assignee

		By
		Title:

		Dated: ,

		Domestic Lending Office:
		[Address]

		Eurodollar Lending Office:
		[Address]


²		This date should be no earlier than five Business Days after the delivery of this Assignment and Acceptance to the Agent.

Schedule 1 to Assignment and Acceptance

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Accepted and Approved this
____ day of ________, ____

CITIBANK, N.A, as Agent


By:
		Name:
		Title:

Approved this ____ day
of ________, ____

THE PEPSI BOTTLING GROUP, INC.


By:
		Name:
		Title:

[ISSUING LENDER]


By:
		Name:
		Title:

Schedule 1 to Assignment and Acceptance

EXHIBIT C-1

[FORM OF OPINION OF SPECIAL NEW YORK COUNSEL OF THE COMPANY AND THE GUARANTOR]

March 17, 2006

The Pepsi Bottling Group, Inc.
Bottling Group, LLC
Credit Agreement dated as of March [•], 2006
(212) 474-1682

Dear Ladies and Gentlemen:

We have acted as special New York counsel to The Pepsi Bottling Group, Inc., a Delaware corporation (the “ Borrower ”), and Bottling Group, LLC, a Delaware limited liability company (the “ Guarantor ” and, together with the Borrower, the “ Companies ”), in connection with the Credit Agreement dated as of March [ • ], 2006 (the “ Credit Agreement ”), among the Borrower, the Guarantor, the lending institutions party thereto (the “ Lenders ”) and Citibank, N.A., as administrative agent for the Lenders (the “ Agent ”). This opinion is being delivered to you pursuant to paragraph (g)(v) of Section 3.01 of the Credit Agreement. Capitalized terms used but not defined herein have the meanings assigned to them in the Credit Agreement.

In that connection, we have examined originals, or copies certified or otherwise identified to our satisfaction, of such documents, corporate records and other instruments as we have deemed necessary or appropriate for purposes of this opinion, including:

	i.		the Credit Agreement,

	ii.		the articles of incorporation of the Borrower, as amended,

	iii.		the by-laws of the Borrower, as amended,

	iv.		the limited liability company agreement of the Guarantor, as amended, and

	v.		the certificate of formation of the Guarantor, as amended.

We have also relied, with respect to certain factual matters, on the representations and warranties of the Companies contained in the Credit Agreement and have assumed compliance by the Companies with the terms of the Credit Agreement.

In rendering our opinion, we have assumed (a) the due authorization, execution and delivery of the Credit Agreement by all parties thereto (including the Companies), (b) the genuineness of all signatures, (c) that, except as addressed in our opinions set forth in paragraphs 1 and 2 below, each of the Companies has all necessary power, authority and legal right to execute and deliver the Credit Agreement and to perform its obligations thereunder, (d) the authenticity of all documents submitted to us as originals, (e) the conformity to original documents of all documents submitted to us as copies and (f) that the execution and delivery by each of the

Form of Opinion of Special New York Counsel of the Company and the Guarantor

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Companies of the Credit Agreement and the performance by each of the Companies of its obligations thereunder (i) do not violate any law, rule or regulation, other than those addressed in our opinion set forth in paragraph 3 below, (ii) do not require any authorization, approval or other action by, or notice to or filing with, any governmental authority, other than those addressed in our opinion set forth in paragraph 5 below, and (iii) do not result in a breach of or constitute a default under any indenture, agreement or other instrument binding upon either Company or its assets.

Based on the foregoing, and subject to the qualifications hereinafter set forth, we are of opinion as follows:

1. Based solely on a certificate from the Secretary of State of the State of Delaware, the Borrower is a corporation validly existing and in good standing under the laws of the State of Delaware. The Borrower has all necessary corporate power to execute and deliver the Credit Agreement and to perform its obligations thereunder.

2. Based solely on a certificate from the Secretary of State of the State of Delaware, the Guarantor is a limited liability company validly existing and in good standing under the laws of the State of Delaware. The Guarantor has all necessary limited liability company power to execute and deliver the Credit Agreement and to perform its obligations thereunder.

3. The execution and delivery by each Company of the Credit Agreement and the performance by such Company of its obligations thereunder do not violate (i) the articles of incorporation or the by-laws of the Company or the limited liability company agreement or certificate of formation of the Guarantor, or (ii) any law, rule or regulation of the United States of America or the State of New York or the General Corporation Law of the State of Delaware.

4. The Credit Agreement constitutes a valid and binding obligation of each Company, enforceable against such Company in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and other similar laws relating to or affecting creditor’s rights generally from time to time in effect and to general principles of equity (including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing), regardless of whether considered in a proceeding in equity or at law. The foregoing opinion is subject to the following qualifications: (i) insofar as provisions contained in the Credit Agreement provide for indemnification or limitations on liability, the enforceability thereof may be limited by public policy considerations, (ii) the availability of a decree for specific performance or an injunction is subject to the discretion of the court requested to issue any such decree or injunction and (iii) we express no opinion as to the effect of the laws of any jurisdiction other than the State of New York where any Lender may be located or where enforcement of the Credit Agreement may be sought that limits the rates of interest legally chargeable or collectible.

5. No authorization, approval or other action by, and no notice to or filing with, any United States Federal or New York governmental authority is required to be made or obtained by either Company in connection with the execution, delivery and performance by such Company of the Credit Agreement, other than (i) such reports to United States governmental authorities regarding international capital and foreign currency transactions as may be required

Form of Opinion of Special New York Counsel of the Company and the Guarantor

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pursuant to 31 C.F.R. Part 128, (ii) those that have been made or obtained and are in full force and effect or as to which the failure to be made or obtained or to be in full force and effect would not result, individually or in the aggregate, in a material adverse effect on the Borrower and its subsidiaries, taken as a whole, and (iii) such registrations, filings and approvals that may be required because of the legal or regulatory status of any Lender or because of any other facts specifically pertaining to any Lender.

We express no opinion herein as to any provision in the Credit Agreement that (a) relates to the subject matter jurisdiction of any Federal court of the United States of America, or any Federal appellate court, to adjudicate any controversy related to the Credit Agreement (such as the provision found in Section 8.11(a) of the Credit Agreement), (b) contains a waiver of an inconvenient forum (such as the provision found in Section 8.11(b) of the Credit Agreement), (c) relates to a right of setoff in respect of purchases of interests in loans (such as the provision found in Section 2.17 of the Credit Agreement) or with respect to parties that may not hold mutual debts (such as the provision found in Section 8.05 of the Credit Agreement), (d) provides for liquidated damages, (e) relates to the waiver of rights to jury trial (such as the provision found in Section 8.12 of the Credit Agreement) or (f) relates to any arrangement or similar fee payable to any arranger (including the Agent) of the commitments or loans under the Credit Agreement or any fee not set forth in the Credit Agreement.

We understand that you are satisfying yourselves as to the status under Section 548 of the Bankruptcy Code and applicable state fraudulent conveyance laws of the obligations of the Borrower and the Guarantor under the Credit Agreement and we express no opinion thereon.

We are admitted to practice only in the State of New York, and we express no opinion as to matters governed by any laws other than the laws of the State of New York, the General Corporation Law of the State of Delaware and the Federal law of the United States of America.

This opinion is rendered only to the Agent and the Lenders under the Credit Agreement and is solely for their benefit in connection with the above transactions. In addition, we hereby consent to reliance on this opinion by a permitted assign of a Lender’s interest in the Credit Agreement, provided that such permitted assign becomes a Lender on or prior to the 30th day after the date of this opinion. We are opining as to the matters herein only as of the date hereof, and, while you are authorized to deliver copies of this opinion to such permitted assigns and they are permitted to rely on this opinion, the rights to do so do not imply any obligation on our part to update this opinion. This opinion may not be relied upon by any other person or for any other purpose or used, circulated, quoted or otherwise referred to for any other purpose.

Very truly yours,

Form of Opinion of Special New York Counsel of the Company and the Guarantor

-4-

To the Lenders identified
on Schedule I hereto
In care of Citibank, N.A., as Agent,

Citibank, N.A.
2 Penns Way, Suite 200
New Castle, Delaware 19720

Form of Opinion of Special New York Counsel of the Company and the Guarantor

EXHIBIT C-2

[FORM OF OPINION OF ASSISTANT GENERAL COUNSEL OF THE COMPANY AND THE GUARANTOR]

[Effective Date]

To each of the Lenders parties
to the 5-Year Credit Agreement dated
as of March 22, 2006
among The Pepsi Bottling Group, Inc.,
said Lenders and Citibank, N.A,
as Agent for said Lenders, and
to Citibank, N.A, as Agent

The Pepsi Bottling Group, Inc.

Ladies and Gentlemen:

This opinion is furnished to you pursuant to Section 3.01(g)(v) of the 5-Year Credit Agreement, dated as of March 22, 2006 (the “ Credit Agreement ”), among The Pepsi Bottling Group, Inc. (the “ Company ”), Bottling Group, LLC, (the “ Guarantor ”), the Lenders parties thereto and Citibank, N.A, as Agent for said Lenders, providing for extensions of credit to be made by said Lenders to the Company in an aggregate principal amount at any one time outstanding of up to $500,000,000. Terms defined in the Credit Agreement are used herein as therein defined.

I am the Assistant General Counsel of the Company and have acted as counsel to the Company and the Guarantor in connection with the Credit Agreement. In connection with this opinion, I have examined:

(1) The Credit Agreement.

(2) The documents furnished by the Company and the Guarantor pursuant to subsections 3.01(g)(i)-(iv) of the Credit Agreement.

(3) The Articles of Incorporation of the Company and all amendments thereto (the “ Charter ”).

(4) The by-laws of the Company and all amendments thereto (the “ By-laws ”).

Form of Opinion of Assistant General Counsel of the Company and the Guarantor

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(5) A certificate of the Secretary of State of Delaware, dated , 2006, attesting to the continued corporate existence and good standing of the Company in that State.

(6) The Amended and Restated Limited Liability Company Agreement of the Guarantor, dated as of March 30, 1999, and all amendments thereto (the “ LLC Agreement ”).

(7) The Certificate of Formation of the Guarantor and all amendments thereto (the “ Certificate of Formation ”).

(8) A certificate of the Secretary of State of Delaware dated ___, 2006, attesting to the continued existence and good standing of the Guarantor in that State.

(9) Resolutions of the Board of Directors of the Company adopted on .

(10) Resolutions of the Managing Directors of the Guarantor adopted on .

In addition, I have examined the originals, or copies certified or otherwise identified to my satisfaction, of such other corporate records of the Company and the Guarantor, certificates of public officials and of officers of the Company and the Guarantor, and agreements, instruments and other documents, as I have deemed necessary as a basis for the opinions expressed below. I have assumed the due execution and delivery, pursuant to due authorization, of the Credit Agreement by the Initial Lenders and the Agent.

The opinions expressed below are limited to the law of the State of New York, the Delaware corporate law, the Federal law of the United States.

Based upon the foregoing and upon such investigation as I have deemed necessary and subject to the qualifications set forth herein, I am of the following opinion:

(1) The execution and delivery by each Company of the Credit Agreement and the performance by each Company of its obligations thereunder have been duly authorized by all requisite corporate or limited liability company (as the case may be) action on the part of such Company and the Credit Agreement has been duly executed and delivered by each Company.

(2) The execution, delivery and performance by the Company and the Guarantor of the Credit Agreement do not contravene to the best of my knowledge any contractual or legal restriction contained in any material judgment, decree, mortgage, agreement, indenture or other instrument to which the Company or the Guarantor is a party.

(3) To the best of my knowledge and except as disclosed in the Company’s consolidated financial statements and Schedule 4.01 of the Credit Agreement, there are no pending or overtly threatened actions or proceedings against the Company or any of its

Form of Opinion of Assistant General Counsel of the Company and the Guarantor

-3-

Subsidiaries, before any court, governmental agency or arbitrator that purport to affect the legality, validity, binding effect or enforceability of the Credit Agreement or that are likely to have a materially adverse effect upon the financial condition or operations of the Company or any of its Subsidiaries.

The opinions set forth above are subject to the following qualifications:

(1) I express no opinion as to the effect (if any) of the law of any jurisdiction (other than the State of New York) wherein any Lender may be located or wherein enforcement of the Credit Agreement may be sought that limits the rates of interest that such Lender may charge or collect.

(2) I express no opinion as to the effect of Section 548 of the United States Bankruptcy Code or any similar provision of State law.

I am opining as to the matters herein only as of the date hereof and there exists no obligation on my part to update this opinion. In all respects and for all purposes, this opinion is given solely for the benefit of the Agent and the Lenders and may not be relied upon by any other person or entity without my prior written consent.

Very truly yours,

Form of Opinion of Assistant General Counsel of the Company and the Guarantor

EXHIBIT C-3

[Form of Opinion of Special New York Counsel for the Agent]

March 22, 2006

To each of the Banks
and the Agent party
to the Credit Agreement referred to below

Ladies and Gentlemen:

We have acted as special New York counsel to Citibank, N.A, as administrative agent (in such capacity, the “ Agent ”) in connection with the 5-Year Credit Agreement dated as of March 22, 2006 (the “ Credit Agreement ”), among The Pepsi Bottling Group, Inc. (the “ Borrower ”), Bottling Group, LLC (the “ Guarantor ” and, together with the Borrower, the “ Credit Parties ”), the banks and other financial institutions from time to time parties thereto (the “ Banks ”) and the Agent.

This opinion is furnished to you pursuant to Section 3.01(g)(vi) of the Credit Agreement. Unless otherwise defined herein, terms defined in the Credit Agreement are used herein as therein defined.

In arriving at the opinions expressed below, we have examined and relied on the Credit Agreement and we have made such investigations of law as we have deemed appropriate for purposes of this opinion.

In our examination, we have assumed the authenticity of all documents submitted to us as originals and the conformity with authentic original documents of all documents submitted to us as copies. When relevant facts were not independently established, we have relied upon representations made in or pursuant to the Credit Agreement.

In rendering the opinions expressed below, we have assumed, with respect to the Credit Agreement, that:

(i) the Credit Agreement has been duly authorized by, has been duly executed and delivered by, and (except to the extent set forth in the opinions below as to the Credit

Form of Opinion of Special New York Counsel for the Agent

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Parties) constitutes the legal, valid, binding and enforceable obligation of, all of the parties thereto;

(ii) all signatories to the Credit Agreement have been duly authorized;

(iii) all of the parties to the Credit Agreement are duly organized and validly existing under the laws of their respective jurisdictions of incorporation and have the power and authority (corporate or other) to execute, deliver and perform the Credit Agreement.

Based upon and subject to the foregoing and subject also to the comments and qualifications set forth below, and having considered such questions of law as we have deemed necessary as a basis for the opinions expressed below, we are of the opinion that the Credit Agreement constitutes the legal, valid and binding obligation of each of the Credit Parties party thereto, enforceable against such Credit Party in accordance with its terms, except as may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium or other similar laws relating to or affecting the rights of creditors generally and except as the enforceability thereof is subject to the application of general principles of equity (regardless of whether considered in a proceeding in equity or at law), including, without limitation, (a) the possible unavailability of specific performance, injunctive relief or any other equitable remedy and (b) concepts of materiality, reasonableness, good faith and fair dealing.

The foregoing opinions are subject to the following comments and qualifications:

(A) The enforceability of Section 8.04(b) of the Credit Agreement may be limited by (i) laws rendering unenforceable indemnification contrary to Federal or state securities laws and the public policy underlying such laws and (ii) laws limiting the enforceability of provisions releasing, exculpating or exempting a party, or requiring indemnification of a party for, liability for its own action or inaction, to the extent the action or inaction involves gross negligence, recklessness, wilful misconduct or unlawful conduct.

(B) The enforceability of provisions in the Credit Agreement to the effect that terms may not be waived or modified except in writing may be limited under certain circumstances.

(C) We express no opinion as to (i) the effect of the laws of any jurisdiction in which any Bank is located (other than the State of New York) that limit the interest, fees or other charges such Bank may impose, (ii) Section 8.05 of the Credit Agreement to the extent it purports to grant a right of set-off, (iii) Section 8.12(a) of the Credit Agreement, insofar as it relates to the subject matter jurisdiction of any court of the United States of America sitting in New York City to adjudicate any controversy related to the Credit Agreement, (iv) Section 8.12(b) of the Credit Agreement insofar as it relates to inconvenient forum with respect to any Federal court and (v) Section 10.02 of the Credit Agreement.

(D) We express no opinion as to the applicability to the obligations of the Guarantor under Article X of the Credit Agreement (or the enforceability of such obligations under) Section 548 of the Bankruptcy Code, Article 10 of the New York Debtor and Creditor

Form of Opinion of Special New York Counsel for the Agent

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Law or any other provision of law relating to fraudulent conveyances, transfers or obligations, or the provisions of the law of the jurisdiction of incorporation of the Guarantor restricting dividends, loans or other distributions by a corporation for the benefit of its stockholders.

The foregoing opinions are limited to matters involving the Federal laws of the United States of America and the law of the State of New York, and we do not express any opinion as to the laws of any other jurisdiction.

This opinion letter is, pursuant to Section 3.01(g)(vi) of the Credit Agreement, provided to you by us in our capacity as special New York counsel to the Agent and may not be relied upon by any Person for any purpose other than in connection with the transactions contemplated by the Credit Agreement without, in each instance, our prior written consent.

Very truly yours,

WFC/RJW

Form of Opinion of Special New York Counsel for the Agent

EXHIBIT D

[FORM OF DESIGNATION LETTER]

____________, ____

To Citibank, N.A
as Agent

Attention: [___]

Ladies and Gentlemen:

We make reference to the 5-Year Credit Agreement (as amended, supplemented and otherwise modified and in effect from time to time, the “ Credit Agreement ”) dated as of March 22, 2006 among The Pepsi Bottling Group, Inc. (the “ Company ”), Bottling Group, LLC (the “ Guarantor ”), Citibank, N.A, as administrative agent (the “ Agent ”), and the banks party thereto (the “ Initial Lenders ”). Terms defined in the Credit Agreement are used herein as defined therein.

The Company hereby designates [ ] (the “ Borrowing Subsidiary ”), a Subsidiary of the Company and a corporation duly incorporated under the laws of [ ] as a Borrower in accordance with Section 2.19 of the Credit Agreement until such designation is terminated in accordance with said Section 2.19.

The Borrowing Subsidiary hereby accepts the above designation and hereby expressly and unconditionally accepts the obligations of a Borrower under the Credit Agreement, adheres to the Credit Agreement and agrees and confirms that, upon your execution and return to the Company of the enclosed copy of this letter, such Borrowing Subsidiary shall be a Borrower for purposes of the Credit Agreement and agrees to be bound by and perform and comply with the terms and provisions of the Credit Agreement applicable to it as if it had originally executed the Credit Agreement as a Borrower. The Borrowing Subsidiary hereby authorizes and empowers the Company to act as its representative and attorney-in-fact for the purposes of signing documents and giving and receiving notices (including notices of Borrowing under the Credit Agreement) and other communications in connection with the Credit Agreement and the transactions contemplated thereby and for the purposes of modifying or amending any provision of the Credit Agreement and further agrees that the Agent and each Lender may conclusively rely on the foregoing authorization.

The Borrowing Subsidiary represents and warrants that each of the representations and warranties set forth in Section 4.01(a) (as if the reference therein to Delaware were a reference to its jurisdiction of organization), (b), (c) and (d) of the Credit Agreement are true as if each reference therein to the Company were a reference to the Borrowing Subsidiary

Form of Designation Letter

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and as if each reference therein to the Loan Documents were a reference to this Designation Letter.

The Borrowing Subsidiary hereby agrees that this Designation Letter and the Credit Agreement shall be governed by, and construed in accordance with, the law of the State of New York. The Borrowing Subsidiary hereby submits to the nonexclusive jurisdiction of any New York state court or Federal court of the United States of America sitting in New York City, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Designation Letter, the Credit Agreement or for recognition or enforcement of any judgment. The Borrowing Subsidiary irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of the venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum. The Borrowing Subsidiary further agrees that service of process in any such action or proceeding brought in New York may be made upon it by service upon the Borrower at the “Address for Notices” specified below its name on the signature pages to the Credit Agreement.

Without limiting the foregoing, the Borrowing Subsidiary joins in the submission, agreements, waivers and consents in Section 8.12 and 8.13 of the Credit Agreement.


	THE PEPSI BOTTLING GROUP, INC.
	By:
		Name:
		Title:


	[NAME OF BORROWING SUBSIDIARY]
	By:
		Name:
		Title:

Form of Designation Letter

-3-

ACCEPTED:

CITIBANK, N.A,
as Agent


By:
		Name:
		Title:

Form of Designation Letter

EXHIBIT E

[FORM OF SUBSTITUTION LETTER]

, ____

To Citibank, N.A
as Agent

Attention: Cherry Arnaez

Ladies and Gentlemen:

The Company hereby elects to terminate its rights as a Borrower under the Credit Agreement and designates the Guarantor as Borrower thereunder in place of the Guarantor in accordance with Section 2.19 of the Credit Agreement.

The Guarantor hereby accepts the above substitution and hereby expressly and unconditionally accepts the obligations of the Company under the Credit Agreement, adheres to the Credit Agreement and agrees and confirms that, as of the date hereof, the Guarantor shall become a Borrower for purposes of the Credit Agreement and agrees to be bound by and perform and comply with the terms and provisions of the Credit Agreement applicable to it as if it had originally executed the Credit Agreement as the Company.

The Company and the Guarantor hereby represent and warrant to the Agent and each Lender that, before and after giving effect to this Substitution Letter, (i) the representations and warranties set forth in Section 4.01 of the Credit Agreement (except the representations set forth in the last sentence of subsection (e) thereof and in subsection (f) thereof (other than clause (ii) thereof)) are true and correct in all material respects on the date hereof and after giving effect to the substitution contemplated hereby as if made on and as of the date hereof and (ii) no Default has occurred and is continuing.

The Company and the Guarantor hereby agree that this Substitution Letter shall be governed by, and construed in accordance with, the law of the State of New York. The Company and the Guarantor hereby submit to the nonexclusive jurisdiction of the United States District Court for the Southern District of New York and of any New York state court sitting in New

Form of Substitution Letter

-2-

York City for the purposes of all legal proceedings arising out of or relating to this Substitution Letter or the transactions contemplated hereby.


	THE PEPSI BOTTLING GROUP, INC.
	By:
		Name:
		Title:


	BOTTLING GROUP, LLC
	By:
		Name:
		Title:

Form of Substitution Letter

EXHIBIT F

[FORM OF TERMINATION LETTER]

, ___

To Citibank, N.A,
as Agent

Attention: Cherry Arnaez

Ladies and Gentlemen:

We make reference to the 5-Year Credit Agreement (as amended, supplemented and otherwise modified and in effect from time to time, the “ Credit Agreement ”) dated as of March 22, 2006 by and among The Pepsi Bottling Group, Inc. (the “ Company ”), Bottling Group, LLC (the “ Guarantor ”), Citibank, N.A, as administrative agent, and the banks party thereto. Terms defined in the Credit Agreement are used herein as defined therein.

The Company hereby terminates the status as a Borrowing Subsidiary of [ ], a corporation incorporated under the laws of [ ], in accordance with Section 2.19 of the Credit Agreement, effective as of the date of receipt of this notice by the Agent. The undersigned hereby represents and warrants that all principal of and interest on any Advance of the above-referenced Borrowing Subsidiary and all other amounts payable by such Borrowing Subsidiary pursuant to the Credit Agreement have been paid in full on or prior to the date hereof. Notwithstanding the foregoing, this Termination Letter shall not affect any obligation which by the terms of the Credit Agreement survives termination thereof


	THE PEPSI BOTTLING GROUP, INC.
	By:
		Name:
		Title:

Form of Termination Letter

Exhibit 31.1

CERTIFICATION
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, John T. Cahill, certify that:

1.		I have reviewed this quarterly report on Form 10-Q of The Pepsi Bottling Group, Inc.;

2.		Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.		Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.		The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

	a)		Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	b)		Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	c)		Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	d)		Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

	a)		All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	b)		Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date: April 28, 2006		/s/ John T. Cahill
		John T. Cahill
		Chief Executive Officer

Exhibit 31.2

CERTIFICATION
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Alfred H. Drewes, certify that:

1.		I have reviewed this quarterly report on Form 10-Q of The Pepsi Bottling Group, Inc.;

2.		Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.		Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.		The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

	a)		Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	b)		Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	c)		Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	d)		Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

	a)		All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	b)		Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date: April 28, 2006		/s/ Alfred H. Drewes

		Alfred H. Drewes
		Senior Vice President and
		Chief Financial Officer

Exhibit 32.1

CERTIFICATION
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsection (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), the undersigned officer of The Pepsi Bottling Group, Inc. (the “Company”) certifies to his knowledge that:

	(1)		The Quarterly Report on Form 10-Q of the Company for the quarter ended March 25, 2006 (the “Form 10-Q”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (the “Act”); and

	(2)		The information contained in the Form 10-Q fairly presents, in all material respects, the financial conditions and results of operations of the Company as of the dates and for the periods referred to in the Form 10-Q.


		/s/ John T. Cahill
		John T. Cahill
		Chief Executive Officer
		April 28, 2006

The foregoing certification (the “Certification”) is being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsection (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code).

A signed original of the Certification has been provided to the Company and will be retained by the Company in accordance with Rule 12b-11(d) of the Act and furnished to the Securities and Exchange Commission or its staff upon request.

Exhibit 32.2

CERTIFICATION
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

	(1)		The Quarterly Report on Form 10-Q of the Company for the quarter ended March 25, 2006 (the “Form 10-Q”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (the “Act”); and

	(2)		The information contained in the Form 10-Q fairly presents, in all material respects, the financial conditions and results of operations of the Company as of the dates and for the periods referred to in the Form 10-Q.


		/s/ Alfred H. Drewes
		Alfred H. Drewes
		Senior Vice President and
		Chief Financial Officer
		April 28, 2006