AMENDMENT NO. 2
TO RIGHTS AGREEMENT
Amendment, dated as of December 2, 2000 (the "Amendment No. 2"),
between THE QUAKER OATS COMPANY, a New Jersey corporation (the "Company"), and
HARRIS TRUST AND SAVINGS BANK, a national banking association (the "Rights
Agent") and at the direction of the Company.
WHEREAS, the Company and the Rights Agent entered into a Rights
Agreement, dated as of May 8, 1996 (the "Rights Agreement");
WHEREAS, the Rights Agreement was amended by Amendment No. 1 to
Rights Agreement ("Amendment No. 1") dated November 21, 2000 between the
Company and the Rights Agent;
WHEREAS, the Company desires to rescind Amendment No. 1 to Rights
Agreement;
WHEREAS, the Company desires to enter into an agreement providing
for the merger of the Company with a wholly-owned subsidiary of PepsiCo, Inc.
("Parent").
WHEREAS, there is not as of the date hereof any Acquiring Person
(as defined in the Rights Agreement);
WHEREAS, the Company desires to amend the Rights Agreement in
accordance with Section 27 thereof; and
WHEREAS, the effectiveness of this Amendment No. 2 is conditioned
upon approval of the terms set forth herein by the Company's Board of Directors
and the receipt by the Rights Agent of a Certificate of the Corporate Secretary
of the Company certifying such approval;
NOW, THEREFORE, in consideration of the premises and mutual
agreements set forth in the Rights Agreement and this Amendment No. 2, the
parties hereby agree as follows:
Section 1. Rescission of Amendment No. 1. Amendment No. 1 to
Rights Agreement is hereby rescinded and shall have no further force and
effect.
Section 2. Amendment to Definitions. Section 1 of the Rights
Agreement is amended to add the following paragraph as the last paragraph
thereof:
"Notwithstanding the foregoing, neither Parent nor any of its Affiliates
or Associates shall become an Acquiring Person, nor shall any Triggering
Event, Distribution Date or Shares Acquisition Date occur or be deemed to
occur, nor shall any holder of Rights be entitled to any rights or
benefits pursuant to Section 7(a), Section 11(a), Section 13(a) or any
other provision of this Agreement, in each case as a result of the
execution of the Agreement and Plan of Merger, dated as of December 2,
2000 by and among the Company, Merger Sub (as defined in the Merger
Agreement) and Parent (as the same may be amended from time to time, the
"Merger Agreement") or the related Stock Option Agreement dated as of
December 2, 2000 between the Company and Parent (the "Option Agreement")
or consummation of the transactions contemplated thereby pursuant to the
terms of the Merger Agreement or the Option Agreement."
Section 3. Rights Agreement as Amended. The term "Agreement" as used
in the Rights Agreement shall be deemed to refer to the Rights Agreement as
amended hereby. The foregoing amendments shall be effective as of the date
hereof and, except as set forth herein, the Rights Agreement shall remain in
full force and effect and shall be otherwise unaffected hereby.
Section 4. Counterparts. This Amendment No. 2 may be executed
in any number of counterparts, and each of such counterparts shall for all
purposes be deemed an original, but all such counterparts shall together
constitute but one and the same instrument.
Section 5. Governing Law. This Amendment No. 2 shall be deemed
to be a contract made under the laws of the State of New Jersey and for all
purposes shall be governed by and construed in accordance with the laws of
such State applicable to contracts made to be performed entirely within such
State.
Section 6. Descriptive Headings. Descriptive headings of the
several Sections of this Agreement are inserted for convenience only and
shall not control or affect the meaning or construction of any of the
provisions hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 2
to be duly executed as of the day and year first above written.
Attest: THE QUAKER OATS COMPANY
By: /s/ Dennis J. Block By: /s/ John G. Jartz
------------------------------- -------------------------
Name: Dennis J. Block Name: John G. Jartz
Title: Title: Senior Vice President
Attest: HARRIS TRUST AND SAVINGS BANK, as
Rights Agent
By: /s/ Jaclyn Saper By: /s/ Martin J. McHale
------------------------- -------------------------------
Name: Jaclyn Saper Name: Martin J. McHale
Title: V.P. & Counsel Title: Vice President
