Table of Contents       Page SECTION 1. Certain Definitions  1 SECTION 2. Appointment of Rights Agent  9 SECTION 3. Issue of Rights and Right Certificates  9 SECTION 4. Form of Right Certificates  12 SECTION 5. Execution, Countersignature and Registration  12 SECTION 6. Transfer, Split-Up, Combination and Exchange of Right Certificates;Mutilated, Destroyed, Lost or Stolen Right Certificates; Uncertificated Rights  13 SECTION 7. Exercise of Rights; Expiration Date of Rights  14 SECTION 8. Cancelation and Destruction of Right Certificates  16 SECTION 9. Reservation and Availability of Preferred Shares  16 SECTION 10. Preferred Shares Record Date  17 SECTION 11. Adjustments in Rights After There Is an Acquiring Person;Exchange of Rights for Shares; Business Combinations  18 SECTION 12. Certain Adjustments  22 SECTION 13. Certificate of Adjustment  23 SECTION 14. Additional Covenants  23 SECTION 15. Fractional Rights and Fractional Shares  24 SECTION 16. Rights of Action  25 SECTION 17. Transfer and Ownership of Rights and Right Certificates  26 SECTION 18. Right Certificate Holder Not Deemed a Stockholder  26 SECTION 19. Concerning the Rights Agent  27 SECTION 20. Merger or Consolidation or Change of Rights Agent  27 SECTION 21. Duties of Rights Agent  28 SECTION 22. Change of Rights Agent  31 SECTION 23. Issuance of Additional Rights and Right Certificates  32 SECTION 24. Redemption and Termination  33 SECTION 25. Notices  33 SECTION 26. Supplements and Amendments  34 SECTION 27. Successors  35 SECTION 28. Benefits of Rights Agreement; Determinations andActions by the Board, etc  35 SECTION 29. Severability  36 SECTION 30. Governing Law  36 SECTION 31. Counterparts; Effectiveness  36 SECTION 32. Descriptive Headings  36      Exhibits         A Certificate of Designation    B Form of Right Certificate    C Summary of Rights    

 

      RIGHTS AGREEMENT dated as of May 18, 2009 (the “RightsAgreement”), between THE PEPSI BOTTLING GROUP, INC., a Delawarecorporation (the “Company”), and MELLON INVESTOR SERVICES LLC, aNew Jersey limited liability company, as Rights Agent (the “RightsAgent”).          Reference is made to the Rights Agreement, dated as of May 4, 2009 (the “Existing RightsAgreement”), between the Company and the Rights Agent. Concurrently herewith, the Company andthe Rights Agent have duly executed and delivered an amendment to the Existing Rights Agreementterminating such Existing Rights Agreement effective as of the Close of Business (as hereinafterdefined) on the date hereof.          The Board of Directors of the Company (the “Board”) has authorized and declared adividend of one Right (as hereinafter defined) for each share of (i) Common Stock, par value $0.01per share, of the Company (the “Common Stock”) and (ii) Class B Common Stock, par value$0.01 per share, of the Company (the “Class B Common Stock”), in each case outstanding atthe Close of Business (as hereinafter defined) on May 28, 2009 (the “Record Date”), and hasauthorized the issuance of one Right (as such number may hereafter be adjusted pursuant to theprovisions of this Rights Agreement) with respect to each share of Common Stock and Class B CommonStock that shall become outstanding (whether originally issued or delivered from the Company’streasury) between the Record Date and the earliest of the Distribution Date, the Redemption Date orthe Expiration Date (as such terms are hereinafter defined); provided, however,that Rights may be issued with respect to shares of Common Stock and Class B Common Stock thatshall become outstanding after the Distribution Date (whether originally issued or delivered fromthe Company’s treasury) and prior to the earlier of the Redemption Date or the Expiration Date onlyin accordance with the provisions of Section 23. Each Right shall initially represent the right topurchase one one-thousandth (1/1,000th) of a share of Series A Preferred Stock, par value $0.01 pershare, of the Company (the “Preferred Shares”), having the powers, rights and preferencesset forth in the Certificate of Designation attached hereto as Exhibit A.          Accordingly, in consideration of the premises and the mutual agreements herein set forth, theparties hereby agree as follows:          SECTION 1. Certain Definitions. For purposes of this Rights Agreement, the followingterms have the meanings indicated:          “Acquiring Person” shall mean (1) any Person (other than PepsiCo, Inc. at any timeprior to the Major Pepsi Reduction Date) who or which, alone or together with all Affiliates andAssociates of such Person, shall be the Beneficial Owner of more than 15% of the Common Shares thenoutstanding, but not including (a) at any time prior to the Major Pepsi Reduction Date, PepsiCo,Inc., (b) the Company, any Subsidiary of the Company, any employee benefit or compensation plan ofthe Company or of any of its Subsidiaries or any Person organized, appointed or established by theCompany and

 

  2holding Common Shares for or pursuant to the terms of any such employee benefit orcompensation plan or (c) any such Person who has become and is the Beneficial Owner of more than15% of the Common Shares at the time outstanding solely as the result of a change in the aggregatenumber of Common Shares outstanding since the last date on which such Person acquired BeneficialOwnership of any Common Shares, and (2) PepsiCo, Inc., if at any time after the date of this RightsAgreement and prior to the Major Pepsi Reduction Date, PepsiCo, Inc. or any of its Affiliatesacquires Beneficial Ownership of any Common Shares , whether or not such acquisition results in anincrease in the percentage of Beneficial Ownership of Common Shares by PepsiCo, Inc., together withits Affiliates, relative to the percentage of Beneficial Ownership of Common Shares by PepsiCo,Inc., together with its Affiliates, as of the date of this Rights Agreement; provided,however, that the term “Acquiring Person” shall not include any Person who or which, aloneor together with all Affiliates and Associates of such Person, would have become an “AcquiringPerson” pursuant to clause (1) or (2) solely as the result of the acquisition by such Person or oneor more of its Affiliates or Associates of Beneficial Ownership of additional Common Shares if theBoard determines that such acquisition was made in good faith without the knowledge by such Personor one or more of its Affiliates or Associates that such Person would thereby become an AcquiringPerson, which determination of the Board shall be conclusive and binding on such Person, the RightsAgent, the holders of the Rights and all other Persons.Notwithstanding the proviso to the prior sentence, if any Person that is not an Acquiring Persondue to such proviso does not (x) in the case of a Person who or which otherwise would have becomean Acquiring Person pursuant to clause (1), reduce its percentage of Beneficial Ownership of CommonShares to 15% or less or (y) in the case of PepsiCo, Inc. prior to the Major Pepsi Reduction Date,divest itself (or cause any such Affiliates to divest itself) of such additional Common Shares, ineach case by the Close of Business on the tenth calendar day after notice from the Company (thedate of notice being the first day) that such Person’s Beneficial Ownership of Common Shares wouldmake it an Acquiring Person, such Person shall, at the end of such ten calendar day period, becomean Acquiring Person (and such proviso shall no longer apply to such Person).          “Affiliate” and “Associate”, when used with reference to any Person, shallhave the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules andRegulations under the Exchange Act, as in effect on the date of this Rights Agreement.          A Person shall be deemed the “Beneficial Owner” of, and shall be deemed to“beneficially own”, and shall be deemed to have “Beneficial Ownership” of, anysecurities:     (a) which such Person or any of such Person’s Affiliates or Associates is deemed to“beneficially own” within the meaning of Rule 13d-3 of the General Rules andRegulations under the Exchange Act, as in effect on the date of this Rights Agreement;

 

3     (b) which such Person or any of such Person’s Affiliates or Associates has, directlyor indirectly: (i) the right to acquire (whether such right is exercisable immediately oronly after the passage of time) pursuant to any agreement, arrangement or understanding(written or oral), or upon the exercise of conversion rights, exchange rights, rights(other than the Rights), warrants or options, or otherwise; provided,however, that a Person shall not be deemed under this clause (i) to be theBeneficial Owner of, or to beneficially own, or to have Beneficial Ownership of, anysecurities tendered pursuant to a tender or exchange offer made by or on behalf of suchPerson or any of such Person’s Affiliates or Associates until such tendered securities areaccepted for purchase or exchange thereunder or cease to be subject to withdrawal by thetendering security holder; or (ii) the right to vote or dispose of, including pursuant toany agreement, arrangement or understanding (written or oral); provided,however, that a Person shall not be deemed under this clause (ii) to be theBeneficial Owner of, or to beneficially own, or to have Beneficial Ownership of, anysecurity if (A) the agreement, arrangement or understanding (written or oral) to vote suchsecurity arises solely from a revocable proxy or consent given to such Person in responseto a public proxy or consent solicitation made generally to all holders of Common Shares ofthe Company pursuant to, and in accordance with, the applicable rules and regulations underthe Exchange Act and (B) the beneficial ownership of such security is not also thenreportable on Schedule 13D or 13G under the Exchange Act (or any comparable or successorreport);     (c) which are beneficially owned, directly or indirectly, by any other Person (or anAffiliate or Associate thereof) with which such Person (or any of such Person’s Affiliatesor Associates) has (i) any agreement, arrangement or understanding (written or oral) forthe purpose of acquiring, holding, voting (except pursuant to a revocable proxy asdescribed in the proviso to clause (b)(ii) of this definition) or disposing of any votingsecurities of the Company or (ii) any agreement, arrangement or understanding (written ororal) to cooperate in obtaining, changing or influencing the control of the Company; or     (d) which are the subject of, or the reference securities for, or that underlie, anyDerivative Interest of such Person or any of such Person’s Affiliates or Associates, withthe number of Common Shares deemed Beneficially Owned being the notional or other number ofCommon Shares specified in the documentation evidencing the Derivative Interest as beingsubject to be acquired upon the exercise or settlement of the Derivative Interest or as thebasis upon which the value or settlement amount of such Derivative Interest is to becalculated in whole or in part or, if no such number of Common Shares is specified in suchdocumentation, as determined by the Board in its sole discretion to be the number of CommonShares to which the Derivative Interest relates.Notwithstanding the foregoing, nothing contained in this definition shall cause a Person ordinarilyengaged in business as an underwriter of securities to be deemed the “Beneficial Owner” of,or to “beneficially own”, or to have “Beneficial Ownership” of,

 

4any securities acquired in a bona fide firm commitment underwriting pursuant to an underwritingagreement with the Company.          “Board” shall have the meaning set forth in the introductory paragraph of this RightsAgreement.          “Book Value”, when used with reference to Common Shares issued by any Person, shallmean the amount of equity of such Person applicable to each Common Share, determined (a) inaccordance with generally accepted accounting principles in effect on the date as of which suchBook Value is to be determined, (b) using all the consolidated assets and all the consolidatedliabilities of such Person on the date as of which such Book Value is to be determined, except thatno value shall be included in such assets for goodwill arising from consummation of a businesscombination, and (c) after giving effect to (i) the exercise of all rights, options and warrants topurchase such Common Shares (other than the Rights), and the conversion of all securitiesconvertible into such Common Shares, at an exercise or conversion price, per Common Share, which isless than such Book Value before giving effect to such exercise or conversion (whether or notexercisability or convertibility is conditioned upon occurrence of a future event), (ii) alldividends and other distributions on the capital stock of such Person declared prior to the date asof which such Book Value is to be determined and to be paid or made after such date, and (iii) anyother agreement, arrangement or understanding (written or oral), or transaction or other actioncontemplated prior to the date as of which such Book Value is to be determined that would have theeffect of thereafter reducing such Book Value.          “Business Combination” shall have the meaning set forth in Section 11(c)(i).          “Business Day” shall mean each Monday, Tuesday, Wednesday, Thursday and Friday that isnot a day on which banking institutions in the Borough of Manhattan, the City of New York, or theState of New Jersey are authorized or obligated by law or executive order to close.          “Certificate of Designation” shall mean the Certificate of Designation of thePreferred Shares, a copy of which is attached hereto as Exhibit A.          “Class B Common Stock” shall have the meaning set forth in the introductory paragraphof this Rights Agreement.          “Class B Common Shares” shall mean the shares of Class B Common Stock or any othershares of capital stock of the Company into which the Class B Common Stock shall be reclassified orchanged.          “Close of Business” on any given date shall mean 5:00 p.m., New York City time, onsuch date; provided, however, that, if such date is not a Business Day, “Closeof Business” shall mean 5:00 p.m., New York City time, on the next succeeding Business Day.

 

5          “Common Shares”, when used with reference to the Company prior to a BusinessCombination, shall mean the shares of Common Stock or any other shares of capital stock of theCompany into which the Common Stock shall be reclassified or changed. “Common Shares”,when used with reference to any Person (other than the Company prior to a Business Combination),shall mean shares of capital stock of such Person (if such Person is a corporation) of any class orseries, or units of equity interests in such Person (if such Person is not a corporation) of anyclass or series, the terms of which do not limit (as a maximum amount and not merely inproportional terms) the amount of dividends or income payable or distributable on such class orseries or the amount of assets distributable on such class or series upon any voluntary orinvoluntary liquidation, dissolution or winding up of such Person and do not provide that suchclass or series is subject to redemption at the option of such Person, or any shares of capitalstock or units of equity interests into which the foregoing shall be reclassified or changed, andif there shall be more than one class or series of such shares of capital stock or units of equityinterests of such Person, then “Common Shares” of such Person shall mean the class orseries of capital stock of such Person or units of equity interests in such Person having votingpower (being the power under ordinary circumstances (and not merely upon the happening of acontingency) to vote in the election of directors of such Person (if such Person is a corporation)or to participate in the management and control of such Person (if such Person is not acorporation)), or in the case of multiple classes or series having voting power, having thegreatest voting power.          “Common Stock” shall have the meaning set forth in the introductory paragraph of thisRights Agreement.          “Company” shall have the meaning set forth in the heading of this Rights Agreement;provided, however, that if there is a Business Combination, “Company” shallhave the meaning set forth in Section 11(c)(iii).          The term “control” with respect to any Person shall mean the power to direct themanagement and policies of such Person, directly or indirectly, by or through stock ownership,agency or otherwise, or pursuant to or in connection with an agreement, arrangement orunderstanding (written or oral) with one or more other Persons by or through stock ownership,agency or otherwise; and the terms “controlling” and “controlled” shall havemeanings correlative to the foregoing.          “Distribution Date” shall have the meaning set forth in Section 3(b).          “Derivative Interest” shall mean any derivative securities (as defined under Rule16a-1 under the Exchange Act) that increase in value as the value of the underlying equityincreases, including, but not limited to, a long convertible security, a long call option and ashort put option position, in each case, regardless of whether (x) such interest conveys any votingrights in such security, (y) such interest is required to be, or is capable of being, settledthrough delivery of such security or (z) transactions hedge the economic effect of such interest.

 

6          “Exchange Act” shall mean the Securities Exchange Act of 1934, as in effect on thedate in question, unless otherwise specifically provided.          “Exchange Consideration” shall have the meaning set forth in Section 11(b)(i).          “Expiration Date” shall mean the Close of Business on the first anniversary of thedate of this Rights Agreement.          “including” shall mean including, without limitation.          “Major Part”, when used with reference to the assets of the Company and itsSubsidiaries as of any date, shall mean assets (a) having a fair market value aggregating 50% ormore of the total fair market value of all the assets of the Company and its Subsidiaries (taken asa whole) as of the date in question, (b) accounting for 50% or more of the total value (net ofdepreciation and amortization) of all the assets of the Company and its Subsidiaries (taken as awhole) as would be shown on a consolidated or combined balance sheet of the Company and itsSubsidiaries as of the date in question, prepared in accordance with generally accepted accountingprinciples then in effect, or (c) accounting for 50% or more of the total amount of earnings beforeinterest, taxes, depreciation and amortization or of the revenues of the Company and itsSubsidiaries (taken as a whole) as would be shown on, or derived from, a consolidated or combinedstatement of income or net earnings of the Company and its Subsidiaries for the period of 12 monthsending on the last day of the Company’s monthly accounting period next preceding the date inquestion, prepared in accordance with generally accepted accounting principles then in effect.          “Major Pepsi Reduction Date” shall mean the earliest date on which PepsiCo, Inc.,together with its Affiliates, shall Beneficially Own (i) a total number of Common Shares and ClassB Common Shares not exceeding 15% of the Common Shares then outstanding (after giving effect to theissuance of any Common Shares issuable upon conversion of the Class B Common Shares both forpurposes of calculating the Beneficial Ownership of PepsiCo, Inc. and its Affiliates and forpurposes of calculating the Common Shares then outstanding) and (ii) a total number of CommonShares and Class B Common Shares not exceeding 15% of the total voting power of all Common Sharesand Class B Common Shares then outstanding.          “Market Value”, when used with reference to Common Shares on any date, shall mean theaverage of the daily closing prices, per share, of such Common Shares for the period which is theshorter of (a) 30 consecutive Trading Days ending on the Trading Day immediately prior to the datein question or (b) the number of consecutive Trading Days beginning on the Trading Day immediatelyafter the date of the first public announcement of the event requiring a determination of theMarket Value of Common Shares and ending on the Trading Day immediately prior to the record date ofsuch event. The closing price for each Trading Day shall be the closing price quoted on thecomposite tape for securities listed on the New York Stock Exchange, or, if such securities are notquoted on such composite tape or if such securities are not listed on

 

7such exchange, on the principal United States securities exchange registered under theExchange Act (or any recognized foreign stock exchange) on which such securities are listed, or, ifsuch securities are not listed on any such exchange, the closing price (or, if no sale takes placeon such Trading Day, the average of the closing bid and asked prices on such Trading Day) as quotedon any reputable quotations system specified by the Board, or if no such quotations are available,the average of the closing bid and asked prices as furnished by a professional market maker makinga market in such securities selected by the Board, or if on any such Trading Day no market maker ismaking a market in such securities, the closing price of such securities on such Trading Day shallbe deemed to be the fair value of such securities as determined in good faith by the Board (whosedetermination shall be described in a statement filed with the Rights Agent and shall be binding onthe Rights Agent, the holders of Rights and all other Persons); provided, however,that if a Trading Day occurs during a period following an announcement of any action of the typedescribed in Section 12(a) that would require an adjustment thereunder by the issuer of thesecurities the closing price of which is to be determined, then, and in each such case, the closingprice of such securities shall be appropriately adjusted to reflect the effect of such action onthe market price of such securities; and provided further, however, that for thepurpose of determining the closing price of the Preferred Shares for any Trading Day on which thereis no market maker for the Preferred Shares, the closing price on such Trading Day shall be deemedto be the Formula Number (as defined in the Certificate of Designation) multiplied by the closingprice of the Common Shares of the Company on such Trading Day.          “Person” shall mean an individual, firm, corporation, partnership, limited liabilitycompany, joint venture, association, trust, unincorporated organization or other entity, and shallinclude any successor (by merger or otherwise) thereof or thereto.          “Post Transferee” shall have the meaning set forth in Section 7(e).          “Preferred Shares” shall have the meaning set forth in the introductory paragraph ofthis Rights Agreement. Any reference in this Rights Agreement to Preferred Shares shall be deemedto include any authorized fraction of a Preferred Share, unless the context otherwise requires.          “Principal Party” shall mean the Surviving Person in a Business Combination;provided, however, that, (i) if such Surviving Person is a direct or indirectSubsidiary of any other Person, “Principal Party” shall mean the Person which is theultimate parent of such Surviving Person, and (ii) in the event ultimate control of such SurvivingPerson is shared by two or more Persons, “Principal Party” shall mean that Person that isimmediately controlled by such two or more Persons.          “Prior Transferee” shall have the meaning set forth in Section 7(e).          “Purchase Price” with respect to each Right shall mean $100.00, as such amount mayfrom time to time be adjusted as provided in this Rights Agreement, and shall be payable in lawfulmoney of the United States of America. All references herein to the Purchase Price shall mean thePurchase Price as in effect at the time in question.

 

8          “Record Date” shall have the meaning set forth in the introductory paragraph of thisRights Agreement.          “Redemption Date” shall have the meaning set forth in Section 24(a).          “Redemption Price” with respect to each Right shall mean $0.01, as such amount mayfrom time to time be adjusted in accordance with Section 12. All references herein to theRedemption Price shall mean the Redemption Price as in effect at the time in question.          “Registered Common Shares” shall mean Common Shares that are, as of the date ofconsummation of a Business Combination, and have continuously been for the 12 months immediatelypreceding such date, registered under Section 12 of the Exchange Act, and if a Person has multipleclasses or series of Registered Common Shares outstanding, “Registered Common Shares” ofsuch Person shall mean the class or series of Registered Common Shares of such Person having votingpower (being the power under ordinary circumstances (and not merely upon the happening of acontingency) to vote in the election of directors of such Person (if such Person is a corporation)or to participate in the management and control of such Person (if such Person is not acorporation)), or in the case of multiple classes or series having voting power, having thegreatest voting power.          “Right Certificate” shall mean a certificate evidencing a Right in substantially theform attached hereto as Exhibit B.          “Rights” shall mean the rights to purchase Preferred Shares (or other securities) asprovided in this Rights Agreement.          “Securities Act” shall mean the Securities Act of 1933, as in effect on the date inquestion, unless otherwise specifically provided.          “Subsidiary” shall mean a Person, at least a majority of the total outstanding votingpower (being the power under ordinary circumstances (and not merely upon the happening of acontingency) to vote in the election of directors of such Person (if such Person is a corporation)or to participate in the management and control of such Person (if such Person is not acorporation)) of which is owned, directly or indirectly, by another Person or by one or more otherSubsidiaries of such other Person or by such other Person and one or more other Subsidiaries ofsuch other Person.          “Surviving Person” shall mean (a) the Person which is the continuing or survivingPerson in a consolidation or merger specified in Section 11(c)(i)(A) or 11(c)(i)(B) or (b) thePerson to which the Major Part of the assets of the Company and its Subsidiaries is sold, leased,exchanged or otherwise transferred or disposed of in a transaction specified in Section11(c)(i)(C); provided, however, that, if the Major Part of the assets of theCompany and its Subsidiaries is sold, leased, exchanged or otherwise transferred or disposed of inone or more related transactions specified in Section 11(c)(i)(C) to more than one Person, the“Surviving Person” in such case shall

 

9mean the Person that acquired assets of the Company and/or its Subsidiaries with the greatest fairmarket value in such transaction or transactions.          “Trading Day” shall mean a day on which the principal national securities exchange (orprincipal recognized foreign stock exchange, as the case may be) on which any securities or Rights,as the case may be, are listed or admitted to trading is open for the transaction of business or,if the securities or Rights in question are not listed or admitted to trading on any nationalsecurities exchange (or recognized foreign stock exchange, as the case may be), a Business Day.          SECTION 2. Appointment of Rights Agent. The Company hereby appoints the Rights Agentto act as agent for the Company in accordance with the terms and conditions hereof, and the RightsAgent hereby accepts such appointment. The Company may from time to time appoint one or moreco-Rights Agents as it may deem necessary or desirable (the term “Rights Agent” being usedherein to refer, collectively, to the Rights Agent together with any such co-Rights Agents). Inthe event the Company appoints one or more co-Rights Agents, the respective duties of the RightsAgent and any co-Rights Agents shall be as the Company shall determine, and shall be provided inwriting to the Rights Agent and any such co-Rights Agent. Subject to Section 21(c), the RightsAgent shall have no duty to supervise and shall not be liable for the acts or omissions of any suchco-Rights Agents.          SECTION 3. Issue of Rights and Right Certificates. (a) One Right shall beassociated with each Common Share and Class B Common Share outstanding on the Record Date, eachadditional Common Share and Class B Common Share that shall become outstanding between the RecordDate and the earliest of the Distribution Date, the Redemption Date or the Expiration Date and eachadditional Common Share and Class B Common Share with which Rights are issued after theDistribution Date but prior to the earlier of the Redemption Date or the Expiration Date asprovided in Section 23, subject to adjustment as provided in this Rights Agreement.     (b) Until the earlier of (i) such date on which the Company learns that a Person hasbecome an Acquiring Person and (ii) such date, if any, as may be designated by the Boardfollowing the commencement of, or first public disclosure of an intent to commence, atender or exchange offer by any Person (other than the Company, any Subsidiary of theCompany, any employee benefit or compensation plan of the Company or of any of itsSubsidiaries, or any Person organized, appointed or established by the Company and holdingCommon Shares for or pursuant to the terms of any such employee benefit or compensationplan) for outstanding Common Shares, if upon consummation of such tender or exchange offersuch Person could be the Beneficial Owner of more than 15% of the outstanding Common Shares(the Close of Business on the earlier of such dates being the “Distribution Date”),(x) the Rights shall, except as otherwise provided in Section 3(c), be evidenced by thecertificates for Common Shares or Class B Common Shares, as the case may be, registered inthe names of the holders thereof, or, in the case of Common Shares held in uncertificatedform, by the transaction statement or other record of ownership of such Common Shares,

 

10and not by separate Right Certificates, and (y) the Rights, including the right toreceive Right Certificates, shall be transferable only in connection with the transfer ofthe underlying Common Shares or Class B Common Shares, as the case may be. As soon aspracticable after the Distribution Date, the Company shall prepare and execute, the RightsAgent shall countersign, and the Company will send or cause to be sent (and the RightsAgent shall, if requested and provided with all necessary information, send) byfirst-class, postage-prepaid mail, to each record holder of Common Shares and each recordholder of Class B Common Shares, in each case as of the Close of Business on theDistribution Date, at the address of such holder shown on the records of the Company or thetransfer agent or registrar for the Common Shares, one or more Right Certificatesevidencing one whole Right for each Common Share and one whole Right for each Class BCommon Share held by such record holder, subject to the provisions of Section 15 and toadjustment as provided in this Rights Agreement. As of and after the Distribution Date,the Rights shall be evidenced solely by such Right Certificates. The Company shall, aspromptly as practicable, notify the Rights Agent in writing upon the occurrence of theDistribution Date and, if such notification is given orally, the Company shall confirm samein writing on or prior to the Business Day next following. Until such notice is receivedby the Rights Agent, the Rights Agent may presume conclusively for all purposes that theDistribution Date has not occurred.     (c) As soon as practicable after the Record Date, the Company will send a copy of aSummary of Rights to Purchase Preferred Shares, in substantially the form attached heretoas Exhibit C (the “Summary of Rights”), by first-class, postage-prepaid mail, toeach record holder of Common Shares and each record holder of Class B Shares in each caseas of the Close of Business on the Record Date at the address of such holder shown on therecords of the Company or the transfer agent or registrar for the Common Shares. Withrespect to any Common Shares and Class B Common Shares outstanding as of the Record Date,and until the earliest of the Distribution Date, the Redemption Date or the ExpirationDate, (i) in the case of certificated shares, (A) the Rights associated with the CommonShares or Class B Common Shares, as the case may be, represented by any certificate shallbe evidenced by such certificate for the Common Shares or Class B Common Shares, as thecase may be, with a copy of the Summary of Rights attached thereto and the registeredholders of the Common Shares and Class B Common Shares shall also be the registered holdersof the associated Rights and (B) the surrender for transfer of any such certificate, evenwithout a copy of the Summary of Rights attached thereto, shall also constitute thetransfer of the Rights associated with the Common Shares or Class B Common Shares, as thecase may be, represented thereby, and (ii) in the case of Common Shares held inuncertificated form, (A) the Rights associated with the Common Shares shall be evidenced bythe balances indicated in the book-entry account system of the transfer agent for suchCommon Shares and the registered holders of the Common Shares shall also be the registeredholders of the associated Rights and (B) the transfer of any Common Shares in thebook-entry account system of the transfer

 

11agent for such Common Shares shall also constitute the transfer of the Rightsassociated with such Common Shares.          (d) In the case of certificated Common Shares and Class B Common Shares, certificates issuedfor Common Shares and Class B Common Shares after the Record Date (including upon transfer orexchange of outstanding Common Shares and Class B Common Shares), but prior to the earliest of theDistribution Date, the Redemption Date or the Expiration Date, shall have printed on, written on orotherwise affixed to them a legend in substantially the following form:     This certificate also evidences and entitles the holder hereof to certain Rights asset forth in a Rights Agreement dated as of May 18, 2009 (as it may be amended from time totime (the “Rights Agreement”)), between THE PEPSI BOTTLING GROUP, INC. (the “Company”) andMELLON INVESTOR SERVICES LLC, as Rights Agent (the “Rights Agent”), the terms of which(including restrictions on the transfer of such Rights) are hereby incorporated herein byreference and a copy of which is on file at the principal executive offices of the Company.Under certain circumstances, as set forth in the Rights Agreement, such Rights shall beevidenced by separate certificates and shall no longer be evidenced by this certificate.The Company shall mail to the holder of this certificate a copy of the Rights Agreementwithout charge after receipt of a written request therefor. RIGHTS BENEFICIALLY OWNED BYACQUIRING PERSONS OR THEIR AFFILIATES OR ASSOCIATES (AS SUCH TERMS ARE DEFINED IN THERIGHTS AGREEMENT) AND BY ANY SUBSEQUENT HOLDER OF SUCH RIGHTS ARE NULL AND VOID ANDNONTRANSFERABLE.Notwithstanding this Section 3(d), neither the omission of a legend nor the inclusion of a legendthat makes reference to a rights agreement other than the Rights Agreement shall affect theenforceability of any part of this Rights Agreement or the rights of any holder of Rights.          (e) In the case of Common Shares held in uncertificated form, the Company shall cause theconfirmation and account statements sent to holders of Common Shares in book-entry form (includingupon transfer or exchange of outstanding Common Shares) prior to the earliest of the DistributionDate, the Redemption Date or the Expiration Date to bear a legend in substantially the followingform:     Each share of Common Stock, par value $0.01 per share, of THE PEPSI BOTTLING GROUP,INC. (the “Company”) entitles the holder thereof to certain Rights as set forth in a RightsAgreement dated as of May 18, 2009 (as it may be amended from time to time (the “RightsAgreement”)), between the Company and MELLON INVESTOR SERVICES LLC, as Rights Agent (the“Rights Agent”), the terms of which (including restrictions on the transfer of such Rights)are hereby incorporated herein by reference and a copy of which is on file at the principalexecutive offices of the Company. Under certain circumstances, as set forth in the RightsAgreement, such Rights shall be evidenced by separate

 

12certificates and shall no longer be evidenced by the shares to which this statementrelates. The Company shall mail to the holder of shares to which this statement relates acopy of the Rights Agreement without charge after receipt of a written request therefor.RIGHTS BENEFICIALLY OWNED BY ACQUIRING PERSONS OR THEIR AFFILIATES OR ASSOCIATES (AS SUCHTERMS ARE DEFINED IN THE RIGHTS AGREEMENT) AND BY ANY SUBSEQUENT HOLDER OF SUCH RIGHTS ARENULL AND VOID AND NONTRANSFERABLE.Notwithstanding this Section 3(e), neither the omission of a legend nor the inclusion of a legendthat makes reference to a rights agreement other than the Rights Agreement shall affect theenforceability of any part of this Rights Agreement or the rights of any holder of Rights.          SECTION 4. Form of Right Certificates. The Right Certificates (and the form ofelection to purchase and form of assignment to be printed on the reverse side thereof) shall be insubstantially the form set forth as Exhibit B hereto and may have such marks of identification ordesignation and such legends, summaries or endorsements printed thereon as the Company may deemappropriate (but which do not affect the rights, duties or responsibilities of the Rights Agent)and as are not inconsistent with the provisions of this Rights Agreement, or as may be required tocomply with any applicable law or with any rule or regulation made pursuant thereto or with anyrule or regulation of any stock exchange on which the Rights may from time to time be listed, or toconform to usage. Subject to the other provisions of this Rights Agreement (including Sections 7,11 and 23), the Right Certificates, whenever issued, shall be dated as of the Distribution Date andshall entitle the holders thereof to purchase such number of Preferred Shares as shall be set forththerein for the Purchase Price set forth therein, subject to adjustment as provided in this RightsAgreement.          SECTION 5. Execution, Countersignature and Registration. (a) The Right Certificatesshall be executed on behalf of the Company by (x) the Chairman, or any Vice President, and by theSecretary, any Assistant Secretary, the Treasurer or any Assistant Treasurer or (y) any twoofficers designated by the Board, either manually or by facsimile signature, and may have affixedthereto the Company’s seal or a facsimile thereof. The Right Certificates shall be countersignedby the Rights Agent either manually or, at the Company’s option, by facsimile signature, and shallnot be valid or obligatory for any purpose unless so countersigned. In the event that any officerof the Company who shall have signed any of the Right Certificates shall cease to be such anofficer of the Company before countersignature by the Rights Agent and issuance and delivery by theCompany, such Right Certificates may nevertheless be countersigned by the Rights Agent and issuedand delivered by the Company with the same force and effect as though the person who signed suchRight Certificates had not ceased to be such an officer of the Company; and any Right Certificatemay be signed on behalf of the Company by any person who, at the actual date of execution of suchRight Certificate, shall be a proper officer of the Company to sign such Right Certificate,although at the date of execution of this Rights Agreement any such person was not such an officerof the Company.

 

13     (b) Following the Distribution Date, the Rights Agent shall keep or cause to be kept,at its office designated for such purpose, books for registration and transfer of the RightCertificates issued hereunder. Such books shall show the names and addresses of therespective holders of the Right Certificates, the number of Rights evidenced by each of theRight Certificates, the certificate number of each of the Right Certificates and the dateof each of the Right Certificates.          SECTION 6. Transfer, Split-Up, Combination and Exchange of Right Certificates; Mutilated,Destroyed, Lost or Stolen Right Certificates; Uncertificated Rights. (a) Subject to Sections7(e) and 15, at any time after the Distribution Date, and at or prior to the Close of Business onthe earlier of the Redemption Date or the Expiration Date, any Right Certificate or RightCertificates (other than Right Certificates representing Rights that have become null and voidpursuant to Section 7(e)) may be transferred, split-up, combined or exchanged for another RightCertificate or Right Certificates representing, in the aggregate, the same number of Rights as theRight Certificate or Right Certificates surrendered then represented. The Right Certificates aretransferable only on the registry books of the Rights Agent. Any registered holder desiring totransfer, split-up, combine or exchange any Right Certificate or Right Certificates shall make suchrequest in writing delivered to the Rights Agent and shall surrender the Right Certificate or RightCertificates to be transferred, split-up, combined or exchanged at the office of the Rights Agentdesignated for such purpose; provided, however, that neither the Rights Agent northe Company shall be obligated to take any action whatsoever with respect to the transfer of anyRight Certificate surrendered for transfer until the registered holder shall have properlycompleted and duly signed the certification contained in the form of assignment on the reverse sideof such Right Certificate and shall have provided such additional evidence of the identity of theBeneficial Owner (or former Beneficial Owner) or Affiliates or Associates thereof as the Company orthe Rights Agent shall reasonably request. Thereupon the Rights Agent shall, subject to Sections7(e) and 15, countersign and deliver to the Person entitled thereto a Right Certificate or RightCertificates, as the case may be, as so requested. The Company may require payment of a sumsufficient to cover any tax or governmental charge that may be imposed in connection with anytransfer, split-up, combination or exchange of Right Certificates. If and to the extent theCompany does require payment of any such taxes or charges, the Company shall give the Rights Agentprompt written notice thereof and the Rights Agent shall not deliver any Right Certificate unlessand until it is satisfied that all such payments have been made, and the Rights Agent shallpromptly forward any such sum collected by it to the Company or to such Persons as the Company mayspecify by written notice.     (b) Upon receipt by the Company and the Rights Agent of evidence reasonablysatisfactory to them of the loss, theft, destruction or mutilation of a valid RightCertificate, and, in case of loss, theft or destruction, of indemnity or securityreasonably satisfactory to them, and, at the Company’s request, reimbursement to theCompany and the Rights Agent of all reasonable expenses incidental thereto, and uponsurrender to the Rights Agent and cancelation of the Right Certificate if mutilated, theCompany shall execute a new Right Certificate

 

14of like tenor and deliver such new Right Certificate to the Rights Agent forcountersignature and delivery to the registered owner in lieu of the Right Certificate solost, stolen, destroyed or mutilated.     (c) Notwithstanding any other provision hereof, the Company and the Rights Agent mayamend this Rights Agreement to provide for uncertificated Rights in addition to or in placeof Rights evidenced by Right Certificates.          SECTION 7. Exercise of Rights; Expiration Date of Rights. (a) Subject to the otherprovisions of this Rights Agreement (including Section 7(e) and Section 11), each Right shallentitle the registered holder thereof, upon exercise thereof as provided in this Rights Agreement,to purchase for the Purchase Price, at any time after the Distribution Date and at or prior to theearlier of (i) the Expiration Date and (ii) the Redemption Date, one one-thousandth (1/1,000th) ofa Preferred Share, subject to adjustment as provided in this Rights Agreement.     (b) Subject to the other provisions of this Rights Agreement (including Section7(e)), the registered holder of any Right Certificate may exercise the Rights evidencedthereby (except as otherwise provided in this Rights Agreement) in whole or in part at anytime after the Distribution Date, upon surrender of the Right Certificate, with the form ofelection to purchase on the reverse side thereof properly completed and duly executed, tothe Rights Agent at the office of the Rights Agent designated for such purpose, togetherwith payment of the Purchase Price for each one one-thousandth (1/1,000th) of a PreferredShare (as such fraction may be adjusted as provided in this Rights Agreement) as to whichthe Rights are exercised, at or prior to the earlier of (i) the Expiration Date and (ii)the Redemption Date.     (c) Subject to the other provisions of this Rights Agreement (including Section7(e)), upon receipt of a Right Certificate representing exercisable Rights, with the formof election to purchase properly completed and duly executed, accompanied by payment of thePurchase Price for the Preferred Shares to be purchased together with an amount equal toany applicable transfer tax, in lawful money of the United States of America, in cash or bycertified check or money order payable to the order of the Company, the Rights Agent shallthereupon promptly (i) either (A) requisition from any transfer agent of the PreferredShares (or make available, if the Rights Agent is the transfer agent for such shares)certificates for the total number of Preferred Shares to be purchased and the Companyhereby irrevocably authorizes its transfer agent to comply with all such requests or (B) ifthe Company shall have elected to deposit the Preferred Shares with a depositary agentunder a depositary arrangement, requisition from the depositary agent depositary receiptsrepresenting the number of one one-thousandths (1/1,000ths) of a Preferred Share (as suchfraction may be adjusted as provided in this Rights Agreement) to be purchased (in whichcase certificates for the Preferred Shares to be represented by such receipts shall bedeposited by the transfer agent with the depositary agent) and the Company shall direct thedepositary agent to comply with all such requests, (ii) when necessary to comply

 

15with this Rights Agreement (or otherwise when appropriate, as determined by theCompany with notice to the Rights Agent), requisition from the Company the amount of cash,if any, to be paid in lieu of issuance of fractional shares in accordance with Section 15,(iii) after receipt of such certificates or depositary receipts, cause the same to bedelivered to or, upon the order of the registered holder of such Right Certificate,registered in such name or names as may be designated by such holder and (iv) whennecessary to comply with this Rights Agreement (or otherwise when appropriate, asdetermined by the Company with notice to the Rights Agent), after receipt thereof, deliversuch cash, if any, to or upon the order of the registered holder of such Right Certificate.     (d) In case the registered holder of any Right Certificate shall exercise fewer thanall the Rights evidenced thereby, a new Right Certificate evidencing Rights equivalent tothe Rights remaining unexercised shall be issued by the Rights Agent and delivered to theregistered holder of such Right Certificate or to such holder’s duly authorized assigns,subject to the provisions of Section 15.     (e) Notwithstanding anything in this Rights Agreement to the contrary, any Rightsthat are at any time beneficially owned by (i) an Acquiring Person or an Affiliate orAssociate of an Acquiring Person, (ii) a transferee of an Acquiring Person (or of anyAssociate or Affiliate of such Acquiring Person) who becomes a transferee after theAcquiring Person becomes such (a “Post Transferee”), (iii) a transferee of anAcquiring Person (or of any Associate or Affiliate of such Acquiring Person) who becomes atransferee prior to or concurrently with the Acquiring Person becoming such and receivessuch Rights pursuant to either (A) a transfer (whether or not for consideration) from theAcquiring Person (or from such Affiliate or Associate) to holders of equity interests insuch Acquiring Person or to any Person with whom the Acquiring Person (or such Affiliate orAssociate) has any continuing agreement, arrangement or understanding regarding thetransferred Rights or (B) a transfer which the Board has determined is part of a plan,arrangement or understanding which has as a primary purpose or effect the avoidance of thisSection 7(e) (a “Prior Transferee”), or (iv) any subsequent transferee receivingtransferred Rights from a Post Transferee or a Prior Transferee, either directly or throughone or more intermediate transferees, shall become null and void without any further actionand no holder of such Rights shall have any rights whatsoever with respect to such Rights,whether under any provision of this Rights Agreement or otherwise. The Company shall useall reasonable efforts to ensure that the provisions of this Section 7(e) are compliedwith, but shall have no liability to any holder of any Right Certificate or any otherPerson as a result of its failure to make any determinations with respect to an AcquiringPerson or its Affiliate or Associate, or any transferee thereof, hereunder. The Companyshall give the Rights Agent written notice of the identity of any Acquiring Person,Associate or Affiliate known to it, or the nominee of any of the foregoing, and the RightsAgent may rely on such notice in carrying out its duties under this Agreement and shall bedeemed not to have any knowledge of the identity of any such Acquiring Person, Associate orAffiliate, or

 

16the nominee of any of the foregoing unless and until it shall have received suchnotice.     (f) Notwithstanding anything in this Rights Agreement to the contrary, neither theRights Agent nor the Company shall be obligated to undertake any action with respect to aregistered holder of any Right Certificates upon the occurrence of any purported exerciseas set forth in this Section 7 unless such registered holder shall have (i) properlycompleted and duly signed the certificate contained in the form of election to purchase setforth on the reverse side of the Right Certificate surrendered for such exercise and (ii)provided such additional evidence of the identity of the Beneficial Owner (or formerBeneficial Owner) or Affiliates or Associates thereof as the Company shall reasonablyrequest.          SECTION 8. Cancelation and Destruction of Right Certificates. All Right Certificatessurrendered or presented for the purpose of exercise, transfer, split-up, combination or exchangeshall, and any Right Certificate representing Rights that have become null and void andnontransferable pursuant to Section 7(e) surrendered or presented for any purpose shall, ifsurrendered or presented to the Company or to any of its agents, be delivered to the Rights Agentfor cancelation or in canceled form, or, if surrendered or presented to the Rights Agent, shall becanceled by it, and no Right Certificates shall be issued in lieu thereof except as expresslypermitted by this Rights Agreement. The Company shall deliver to the Rights Agent for cancelationand retirement, and the Rights Agent shall so cancel and retire, any Right Certificate purchased oracquired by the Company. The Rights Agent shall deliver all canceled Right Certificates to theCompany, or shall, at the written request of the Company, destroy such canceled Right Certificates,and in such case shall deliver a certificate of destruction thereof to the Company.          SECTION 9. Reservation and Availability of Preferred Shares. (a) The Company shallcause to be reserved and kept available out of its authorized and unissued Preferred Shares or anyauthorized and issued Preferred Shares held in its treasury, free from preemptive rights or anyright of first refusal, a number of Preferred Shares sufficient to permit the exercise in full ofall outstanding Rights.     (b) If there are not sufficient Preferred Shares issued but not outstanding orauthorized but unissued to permit the exercise or exchange of Rights in accordance withthis Rights Agreement, the Company shall take all such action as may be necessary toauthorize additional Preferred Shares for issuance upon the exercise or exchange of Rightspursuant to this Rights Agreement; provided, however, that if the Companyis unable to cause the authorization of additional Preferred Shares, then the Companyshall, or, if action by the Company’s stockholders is necessary to cause suchauthorization, in lieu of seeking any such authorization, the Company may, to the extentnecessary and permitted by applicable law and any agreements or instruments in effect priorto the Distribution Date to which it is a party, (i) upon surrender of a Right, pay cashequal to the Purchase Price in lieu of issuing Preferred Shares and requiring paymenttherefor, (ii) upon due exercise of a Right and payment of the Purchase

 

17Price for each Preferred Share as to which such Right is exercised, issue common stockor other equity and/or debt securities having a value equal to the value of the PreferredShares that otherwise would have been issuable pursuant to this Rights Agreement, whichvalue shall be determined by a nationally recognized investment banking firm selected bythe Board, or (iii) upon due exercise of a Right and payment of the Purchase Price for eachPreferred Share as to which such Right is exercised, distribute a combination of PreferredShares, cash and/or other equity and/or debt securities having an aggregate value equal tothe value of the Preferred Shares that otherwise would have been issuable pursuant to thisRights Agreement, which value shall be determined by a nationally recognized investmentbanking firm selected by the Board. To the extent that any legal or contractualrestrictions (pursuant to agreements or instruments in effect prior to the DistributionDate to which it is party) prevent the Company from paying the full amount payable inaccordance with the foregoing sentence, the Company shall pay to holders of the Rights asto which such payments are being made all amounts that are not then restricted on a prorata basis as such payments become permissible under such legal or contractual restrictionsuntil such payments have been paid in full.     (c) The Company shall take all actions as may be necessary to ensure that allPreferred Shares delivered upon exercise or exchange of Rights shall, at the time ofdelivery of the certificates for such Preferred Shares (subject to payment of the PurchasePrice), be duly and validly authorized and issued and fully paid and nonassessable shares.     (d) The Company shall pay when due and payable any and all Federal and state transfertaxes and charges which may be payable in respect of the issuance or delivery of RightCertificates or of any Preferred Shares or Common Shares or other securities upon theexercise or exchange of the Rights. The Company shall not, however, be required to pay anytransfer tax which may be payable in respect of any transfer or delivery of RightCertificates to a Person other than, or in respect of the issuance or delivery ofcertificates or depositary receipts for the Preferred Shares or Common Shares or othersecurities, as the case may be, in a name other than that of, the registered holder of theRight Certificate evidencing Rights surrendered for exercise or exchange or to issue ordeliver any certificates or depositary receipts for Preferred Shares or Common Shares orother securities, as the case may be, upon the exercise or exchange of any Rights until anysuch tax shall have been paid (any such tax being payable by the holder of such RightCertificate at the time of surrender) or until it has been established to the Company’ssatisfaction that no such tax is due.          SECTION 10. Preferred Shares Record Date. Each Person in whose name any certificatefor Preferred Shares or Common Shares or other securities is issued upon the exercise or exchangeof Rights shall for all purposes be deemed to have become the holder of record of the PreferredShares or Common Shares or other securities, as the case may be, represented thereby on, and suchcertificate shall be dated, the date on which the Right Certificate evidencing such Rights was dulysurrendered and payment of

 

18any Purchase Price (and any applicable transfer taxes) was made; provided,however, that, if the date of such surrender and payment is a date upon which the transferbooks of the Company for the Preferred Shares or Common Shares or other securities, as the case maybe, are closed, such Person shall be deemed to have become the record holder of such PreferredShares or Common Shares or other securities, as the case may be, on, and such certificate shall bedated, the next succeeding Business Day on which the transfer books of the Company for thePreferred Shares or Common Shares or other securities, as the case may be, are open.          SECTION 11. Adjustments in Rights After There Is an Acquiring Person; Exchange of Rightsfor Shares; Business Combinations. (a) Subject to the other provisions of this RightsAgreement (including Section 7(e)), upon a Person becoming an Acquiring Person, each holder of aRight shall thereafter have a right to receive, upon exercise thereof for the Purchase Price inaccordance with the terms of this Rights Agreement, such number of one one-thousandths (1/1,000ths)of a Preferred Share (as such fraction may be adjusted as provided in this Rights Agreement) asshall equal the result obtained by multiplying the Purchase Price by a fraction, the numerator ofwhich is the number of one one-thousandths (1/1,000ths) of a Preferred Share (as such fraction maybe adjusted as provided in this Rights Agreement) for which such Right is then exercisable and thedenominator of which is 50% of the Market Value of the Common Shares on the date on which suchPerson became an Acquiring Person.     (b) (i) The Board may, at its option, at any time after a Person becomes anAcquiring Person, mandatorily exchange all or part of the then outstanding and exercisableRights (which shall not include Rights that shall have become null and void andnontransferable pursuant to Section 7(e)) for consideration per Right consisting of either(A) one-half of the securities that would be issuable at such time upon the exercise of oneRight in accordance with Section 11(a) or, if applicable, Section 9(b)(ii) or 9(b)(iii) or(B) if applicable, the cash consideration specified in Section 9(b)(i) (the considerationissuable per Right pursuant to this Section 11(b)(i) being the “ExchangeConsideration”). The Board may, at its option, issue a number of Common Shares in lieuof each Preferred Share equal to the Formula Number (as defined in the Certificate ofDesignation) if there are sufficient Common Shares issued but not outstanding or authorizedbut unissued. If the Board elects to exchange all the Rights for Exchange Considerationpursuant to this Section 11(b)(i) prior to the physical distribution of the RightCertificates, the Company may distribute the Exchange Consideration in lieu of distributingRight Certificates, in which case for purposes of this Rights Agreement holders of Rightsshall be deemed to have simultaneously received and surrendered for exchange RightCertificates on the date of such distribution. Notwithstanding the foregoing, the Boardmay not effect such exchange at any time after any Person (other than the Company, anySubsidiary of the Company or any employee benefit plan of the Company or any of itsSubsidiaries or any Person holding Common Shares for or pursuant to the terms of any suchemployee benefit or compensation plan), together with all Affiliates and Associates of suchPerson, becomes the Beneficial Owner of more than 50% of the Common Shares thenoutstanding.

 

19          (ii) Any action of the Board ordering the exchange of any Rights pursuant to Section 11(b)(i)shall be irrevocable and, immediately upon the taking of such action and without any further actionand without any notice, the right to exercise any such Right so exchanged pursuant to Section 11(a)shall terminate and the only right thereafter of a holder of such Right shall be to receive theExchange Consideration in exchange for each such Right held by such holder or, if the ExchangeConsideration shall not have been paid or issued, to exercise any such Right pursuant to Section11(c)(i). The Company shall promptly give public notice of any such exchange (with prompt writtennotice thereof to the Rights Agent); provided, however, that the failure to give,or any defect in, such notice shall not affect the validity of such exchange. The Company shallpromptly mail a notice of any such exchange to all holders of the Rights to be exchanged at theirlast addresses as they appear upon the registry books of the Rights Agent. Any notice which ismailed in the manner herein provided shall be deemed given, whether or not the holder receives thenotice. Each such notice of exchange shall state the method by which the exchange of the Rightsfor the Exchange Consideration will be effected and, in the event of any partial exchange, thenumber of Rights which will be exchanged. Any partial exchange shall be effected pro rata based onthe number of Rights (other than Rights which shall have become null and void and nontransferablepursuant to the provisions of Section 7(e)) held by each holder of Rights.     (c) (i) In the event that, directly or indirectly, any transactions specified in thefollowing clause (A), (B) or (C) of this Section 11(c)(i) (each such transaction being a“Business Combination”) shall be consummated:     (A) the Company shall consolidate with, or merge with and into, any AcquiringPerson or any Affiliate or Associate of an Acquiring Person;     (B) any Acquiring Person or any Affiliate or Associate of an Acquiring Personshall merge with and into the Company and, in connection with such merger, all orpart of the outstanding Common Shares of the Company shall be changed into orexchanged for capital stock or other securities of the Company or of any AcquiringPerson or Affiliate or Associate of an Acquiring Person or cash or any otherproperty; or     (C) the Company shall sell, lease, exchange or otherwise transfer or disposeof (or one or more of its Subsidiaries shall sell, lease, exchange or otherwisetransfer or dispose of), in one or more transactions, the Major Part of the assetsof the Company and its Subsidiaries to any Acquiring Person or any Affiliate orAssociate of an Acquiring Person,then, in each such case, proper provision shall be made so that each holder of a Right, except asprovided in Section 7(e), shall thereafter have the right to receive, upon the exercise thereof forthe Purchase Price in accordance with the terms of this Rights Agreement, the securities specifiedbelow (or, at such holder’s option, the securities

 

20specified in Section 11(a) if the Company is the surviving corporation in such BusinessCombination):     (1) if the Principal Party in such Business Combination has RegisteredCommon Shares outstanding, each Right shall thereafter represent the right toreceive, upon the exercise thereof for the Purchase Price in accordance withthe terms of this Rights Agreement, such number of Registered Common Shares ofsuch Principal Party, free and clear of all liens, encumbrances or otheradverse claims, as shall have an aggregate Market Value as of the time ofexercise thereof equal to the result obtained by multiplying the Purchase Priceby two;     (2) if the Principal Party involved in such Business Combination does nothave Registered Common Shares outstanding, each Right shall thereafterrepresent the right to receive, upon the exercise thereof for the PurchasePrice in accordance with the terms of this Rights Agreement, at the election ofthe holder of such Right at the time of the exercise thereof, any of:     (i) such number of Common Shares of the Surviving Person in suchBusiness Combination (if the Principal Party is also the SurvivingPerson in such Business Combination) as shall have an aggregate BookValue immediately after giving effect to such Business Combinationequal to the result obtained by multiplying the Purchase Price by two;     (ii) such number of Common Shares of the Principal Party in suchBusiness Combination (if the Principal Party is not also the SurvivingPerson in such Business Combination) as shall have an aggregate BookValue immediately after giving effect to such Business Combinationequal to the result obtained by multiplying the Purchase Price by two;or     (iii) if the Principal Party in such Business Combination is anAffiliate of one or more Persons that has Registered Common Sharesoutstanding, such number of Registered Common Shares of whichever ofsuch Affiliates of the Principal Party has Registered Common Shareswith the greatest aggregate Market Value on the date of consummationof such Business Combination as shall have an aggregate Market Valueon the date of such Business Combination equal to the result obtainedby multiplying the Purchase Price by two.          (ii) The Company shall not consummate any Business Combination unless each issuer of CommonShares for which Rights may be exercised, as set forth in this Section 11(c), shall have sufficientauthorized Common Shares that have not been issued or reserved for issuance (and which shall, whenissued upon exercise thereof in

 

21accordance with this Rights Agreement, be validly issued, fully paid and nonassessable andfree of preemptive rights, rights of first refusal or any other restrictions or limitations on thetransfer or ownership thereof) to permit the exercise in full of the Rights in accordance with thisSection 11(c) and unless prior thereto:     (A) a registration statement under the Securities Act on an appropriate form,with respect to the Rights and the Common Shares of such issuer purchasable uponexercise of the Rights, shall be effective under the Securities Act; and     (B) the Company and each such issuer shall have:     (1) executed and delivered to the Rights Agent a supplemental agreementproviding for the assumption by such issuer of the obligations set forth inthis Section 11(c) (including the obligation of such issuer to issue CommonShares upon the exercise of Rights in accordance with the terms set forth inSections 11(c)(i) and 11(c)(iii)) and further providing that such issuer, atits own expense, shall use its best efforts to:     (i) cause a registration statement under the Securities Act onan appropriate form, with respect to the Rights and the Common Sharesof such issuer purchasable upon exercise of the Rights, to remaineffective (with a prospectus at all times meeting the requirements ofthe Securities Act) until the Expiration Date;     (ii) qualify or register the Rights and the Common Shares ofsuch issuer purchasable upon exercise of the Rights under the blue skyor securities laws of such jurisdictions as may be necessary orappropriate; and     (iii) list the Rights and the Common Shares of such issuerpurchasable upon exercise of the Rights on each national securitiesexchange on which the Common Shares were listed prior to theconsummation of the Business Combination or, if the Common Shares werenot listed on a national securities exchange prior to the consummationof the Business Combination, on a national securities exchange;     (2) furnished to the Rights Agent a written opinion of independentcounsel stating that such supplemental agreement is a valid, binding andenforceable agreement of such issuer; and     (3) filed with the Rights Agent a certificate of a nationally recognizedfirm of independent accountants setting forth the number of Common Shares ofsuch issuer that may be purchased upon the

 

22exercise of each Right after the consummation of such BusinessCombination.          (iii) After consummation of any Business Combination and subject to the provisions of Section11(c)(ii), (A) each issuer of Common Shares for which Rights may be exercised as set forth in thisSection 11(c) shall be liable for, and shall assume, by virtue of such Business Combination, allthe obligations and duties of the Company pursuant to this Rights Agreement, (B) the term“Company” shall thereafter be deemed to refer to such issuer, (C) each such issuer shalltake such steps in connection with such consummation as may be necessary to assure that theprovisions of this Rights Agreement (including Sections 11(a) and 11(c)) shall thereafter beapplicable, as nearly as reasonably may be, in relation to its Common Shares thereafter deliverableupon the exercise of the Rights, (D) the number of Common Shares of each such issuer thereafterreceivable upon exercise of any Right shall be subject to adjustment from time to time in a mannerand on terms as nearly equivalent as practicable to the provisions of Sections 11 and 12 and (E)the other provisions of this Rights Agreement (including Sections 7, 9 and 10) with respect to thePreferred Shares shall apply, as nearly as reasonably may be, on like terms to any such CommonShares.          SECTION 12. Certain Adjustments. (a) To preserve the actual or potential economicvalue of the Rights, if at any time after the date of this Rights Agreement there shall be anychange in the Common Shares, the Class B Common Shares or the Preferred Shares, whether by reasonof stock dividends, stock splits, reclassifications, recapitalizations, mergers, consolidations,combinations or exchanges of securities, split-ups, split-offs, spin-offs, liquidations, othersimilar changes in capitalization, any distribution or issuance of cash, assets, evidences ofindebtedness or subscription rights, options or warrants to holders of Common Shares, the Class BCommon Shares or Preferred Shares, as the case may be (other than distribution of the Rights orregular quarterly cash dividends), or otherwise, then, in each such event the Board shall make suchappropriate adjustments in the number of Preferred Shares (or the number and kind of othersecurities) issuable upon exercise of each Right, the Purchase Price and Redemption Price in effectat such time and the number of Rights outstanding at such time (including the number of Rights orfractional Rights associated with each Common Share or Class B Common Share, as the case may be)such that following such adjustment such event shall not have had the effect of reducing orlimiting the benefits the holders of the Rights would have had absent such event.     (b) If, as a result of an adjustment made pursuant to Section 12(a), the holder ofany Right thereafter exercised shall become entitled to receive any securities other thanPreferred Shares, thereafter the number of such securities so receivable upon exercise ofany Right shall be subject to adjustment from time to time in a manner and on terms asnearly equivalent as practicable to the provisions of Sections 11 and 12 and the otherprovisions of this Rights Agreement (including Sections 7, 9 and 10) with respect to thePreferred Shares shall apply, as nearly as reasonably may be, on like terms to any suchother securities.

 

23     (c) All Rights originally issued by the Company subsequent to any adjustment made tothe amount of Preferred Shares or other securities relating to a Right shall evidence theright to purchase, for the Purchase Price, the adjusted number and kind of securitiespurchasable from time to time hereunder upon exercise of the Rights, all subject to furtheradjustment as provided in this Rights Agreement.     (d) Irrespective of any adjustment or change in the Purchase Price or the number ofPreferred Shares or number or kind of other securities issuable upon the exercise of theRights, the Right Certificates theretofore and thereafter issued may continue to expressthe terms that were expressed in the initial Right Certificates issued hereunder.     (e) In any case in which action taken pursuant to Section 12(a) requires that anadjustment be made effective as of a record date for a specified event, the Company mayelect to defer (with prompt written notice thereof to the Rights Agent) until theoccurrence of such event the issuing to the holder of any Right exercised after such recorddate the Preferred Shares and/or other securities, if any, issuable upon such exercise overand above the Preferred Shares and/or other securities, if any, issuable before givingeffect to such adjustment; provided, however, that the Company shalldeliver to such holder a due bill or other appropriate instrument evidencing such holder’sright to receive such additional securities upon the occurrence of the event requiring suchadjustment.          SECTION 13. Certificate of Adjustment. Whenever an adjustment is made or any eventoccurs affecting the Rights or their exercisability (including an event which causes the Rights tobecome null and void) as provided in Section 11 or 12, the Company shall (a) promptly prepare acertificate setting forth such adjustment or describing such event and a brief, reasonably detailedstatement of the facts, computations and methodology accounting for such adjustment, (b) promptlyfile with the Rights Agent and with each transfer agent for the Preferred Shares, a copy of suchcertificate and (c) mail a brief summary thereof to each holder of a Right Certificate (or, ifprior to the Distribution Date, to each holder of Common Shares and each holder of Class B CommonShares) in accordance with Section 25, provided that the failure to prepare, file or mail suchcertificate or summary shall not affect the validity of such adjustment. The Rights Agent shall befully protected in relying on any such certificate and on any adjustment or statement thereincontained and, subject to Section 21(c) shall have no duty or liability with respect to, and shallnot be deemed to have knowledge of, any adjustment or any such event unless it shall have receivedsuch a certificate.          SECTION 14. Additional Covenants. (a) Notwithstanding any other provision of thisRights Agreement, no adjustment to the number of Preferred Shares (or fractions of a share) orother securities for which a Right is exercisable or the number of Rights outstanding or associatedwith each Common Share and Class B Common Share or any similar or other adjustment shall be made orbe effective if such adjustment would have the effect of reducing or limiting the benefits theholders of the Rights would have

 

24had absent such adjustment, including the benefits under Sections 11 and 12, unless the termsof this Rights Agreement are amended so as to preserve such benefits.     (b) The Company covenants and agrees that, after the Distribution Date, except aspermitted by Section 26, it shall not take (or permit any Subsidiary of the Company totake) any action if at the time such action is taken it is intended or reasonablyforeseeable that such action will reduce or otherwise limit the benefits the holders ofRights would have had absent such action, including the benefits under Sections 11 and 12.Any action taken by the Company during any period after any Person becomes an AcquiringPerson but prior to the Distribution Date shall be null and void unless such action couldbe taken under this Section 14(b) from and after the Distribution Date. The Company shallnot consummate any Business Combination if any issuer of Common Shares for which Rights maybe exercised after such Business Combination in accordance with Section 11(c) shall havetaken any action that reduces or otherwise limits the benefits the holders of Rights wouldhave had absent such action, including the benefits under Sections 11 and 12.          SECTION 15. Fractional Rights and Fractional Shares. (a) The Company may, but shallnot be required to, issue fractions of Rights or distribute Right Certificates which evidencefractional Rights. In lieu of such fractional Rights, the Company may pay to the registeredholders of the Right Certificates with regard to which such fractional Rights would otherwise beissuable an amount in cash equal to the same fraction of the current market value of a whole Right.For purposes of this Section 15(a), the current market value of a whole Right shall be the closingprice of the Rights (as determined pursuant to the second sentence of the definition of MarketValue contained in Section 1) for the Trading Day immediately prior to the date on which suchfractional Rights would have been otherwise issuable.     (b) The Company may, but shall not be required to, issue fractions of PreferredShares upon exercise of the Rights or distribute certificates that evidence fractionalPreferred Shares. In lieu of fractional Preferred Shares, the Company may elect to (i)utilize a depository arrangement as provided by the terms of the Preferred Shares or (ii)in the case of a fraction of a Preferred Share (other than one one-thousandths (1/1,000ths)of a Preferred Share (as such fraction may adjusted as provided in this Rights Agreement)or any integral multiple thereof), pay to the registered holders of Right Certificates atthe time such Rights are exercised as herein provided an amount in cash equal to the samefraction of the current market value of one Preferred Share, if any are outstanding andpublicly traded (or the same fraction of the current market value of one Common Share timesthe Formula Number (as defined in the Certificate of Designation) if the Preferred Sharesare not outstanding and publicly traded). For purposes of this Section 15(b), the currentmarket value of a Preferred Share (or Common Share) shall be the closing price of aPreferred Share (or Common Share) (as determined pursuant to the second sentence of thedefinition of Market Value contained in Section 1) for the Trading Day immediately prior tothe date of such exercise. If, as a result of an adjustment made pursuant to Section12(a),

 

25the holder of any Right thereafter exercised shall become entitled to receive anysecurities other than Preferred Shares, the provisions of this Section 15(b) shall apply,as nearly as reasonably practicable, on like terms to such other securities.     (c) The Company may, but shall not be required to, issue fractions of Common Sharesupon exchange of Rights pursuant to Section 11(b), or to distribute certificates thatevidence fractional Common Shares. In lieu of such fractional Common Shares, the Companymay pay to the registered holders of the Right Certificates with regard to which suchfractional Common Shares would otherwise be issuable an amount in cash equal to the samefraction of the current Market Value of one Common Share as of the date on which a Personbecame an Acquiring Person.     (d) Each holder of Rights by the acceptance of such Rights expressly waives suchholder’s right to receive any fractional Rights or any fractional shares upon exercise of aRight except as provided in this Section 15.     (e) Whenever a payment for fractional Rights or fractional shares is to be made bythe Rights Agent, the Company shall (i) promptly prepare and deliver to the Rights Agent acertificate setting forth in reasonable detail the facts related to such payments and theprices and/or formulas utilized in calculating such payments, and (ii) provide sufficientmonies to the Rights Agent in the form of fully collected funds to make such payments. TheRights Agent shall be fully protected in relying upon such a certificate and shall have noduty with respect to, and shall not be deemed to have knowledge of any payment forfractional Rights or fractional shares under any Section of this Agreement relating to thepayment of fractional Rights or fractional shares unless and until the Rights Agent shallhave received such a certificate and sufficient monies.          SECTION 16. Rights of Action. (a) All rights of action in respect of this RightsAgreement, excepting the rights of action given to the Rights Agent under Sections 19 and 21, arevested in the respective registered holders of the Right Certificates (and, prior to theDistribution Date, the registered holders of the Common Shares and Class B Common Shares); and anyregistered holder of any Right Certificate (or, prior to the Distribution Date, of the CommonShares or Class B Common Shares), without the consent of the Rights Agent or of the holder of anyother Right Certificate (or, prior to the Distribution Date, of the Common Shares or Class B CommonShares) may, in such holder’s own behalf and for such holder’s own benefit, enforce, and mayinstitute and maintain any suit, action or proceeding against the Company to enforce, or otherwiseact in respect of, such holder’s right to exercise the Rights evidenced by such Right Certificatein the manner provided in such Right Certificate and in this Rights Agreement. Without limitingthe foregoing or any remedies available to the holders of Rights, it is specifically acknowledgedthat the holders of Rights would not have an adequate remedy at law for any breach of this RightsAgreement and shall be entitled to specific performance of the obligations of any Person under, andinjunctive relief against actual or threatened violations of the obligations of any Person subjectto, this Rights Agreement. Notwithstanding anything in this Rights Agreement to the contrary,neither

 

26the Company nor the Rights Agent shall have any liability to any holder of a Right or otherPerson as a result of its inability to perform any of its obligations under this Rights Agreementby reason of any preliminary or permanent injunction or other order, judgment decree or ruling(whether interlocutory or final) issued by a court of competent jurisdiction or by a governmental,regulatory, self-regulatory or administrative agency or commission, or any statute, rule,regulation or executive order promulgated or enacted by any governmental authority, prohibiting orotherwise restraining performance of such obligation; provided, however, theCompany must use reasonable efforts to have any such injunction, order, judgment, decree or rulinglifted or otherwise overturned as soon as possible.     (b) Any holder of Rights who prevails in an action to enforce the provisions of thisRights Agreement shall be entitled to recover the reasonable costs and expenses, includingattorneys’ fees, incurred in such action.          SECTION 17. Transfer and Ownership of Rights and Right Certificates. (a) Prior tothe Distribution Date, the Rights shall be transferable only in connection with the transfer of theCommon Shares and Class B Common Shares and the Right associated with each such Common Share orClass B Common Share shall be automatically transferred upon the transfer of each such Common Shareor Class B Common Share, as the case may be.     (b) After the Distribution Date, the Right Certificates shall be transferable,subject to Section 7(e), only on the registry books of the Rights Agent if surrendered atthe principal office of the Rights Agent, duly endorsed or accompanied by a properinstrument of transfer and with the appropriate forms and certificates properly completedand duly executed.     (c) The Company and the Rights Agent may deem and treat the Person in whose name aRight Certificate (or, prior to the Distribution Date, the associated Common Shares orClass B Common Shares certificate) is registered as the absolute owner thereof and of theRights evidenced thereby (notwithstanding any notations of ownership or writing on theRight Certificates or the associated certificate for Common Shares or Class B Common Sharesmade by anyone other than the Company or the Rights Agent) for all purposes whatsoever, andneither the Company nor the Rights Agent shall be affected by any notice to the contrary.          SECTION 18. Right Certificate Holder Not Deemed a Stockholder. No holder, as such,of any Right Certificate shall be entitled to vote or receive dividends or other distributions orbe deemed, for any purpose, the holder of the Preferred Shares or of any other securities of theCompany which may at any time be issuable on the exercise of the Rights represented thereby, norshall anything contained herein or in any Right Certificate be construed to confer upon the holderof any Right Certificate, as such, any of the rights of a stockholder of the Company, including anyright to vote for the election of directors or upon any matter submitted to stockholders at anymeeting thereof, or to give or withhold consent to any corporate action, or to receive notice ofmeetings or other actions affecting stockholders, or to receive dividends or other distributions or

 

27subscription rights, or otherwise, until the Right or Rights evidenced by such RightCertificate shall have been exercised in accordance with the provisions hereof.          SECTION 19. Concerning the Rights Agent. (a) The Company agrees to pay to theRights Agent reasonable compensation for all services rendered by it hereunder and, from time totime, on demand of the Rights Agent, its reasonable expenses and counsel fees and otherdisbursements incurred in the preparation, negotiation, delivery, amendment, administration andexecution of this Rights Agreement and the exercise and performance of its duties hereunder,including any taxes or governmental charges imposed as a result of the action taken by it hereunder(other than any taxes on the fees payable to it). The provisions of this Section 19 and Section 21below shall survive the termination of this Agreement, the exercise or expiration of the Rights andthe resignation, replacement or removal of the Rights Agent.     (b) The Rights Agent shall be protected and shall incur no liability for or inrespect of any action taken, suffered or omitted by it in connection with its acceptanceand administration of this Rights Agreement and the exercise and performance of its dutieshereunder (other than matters arising out of or resulting from a conflict of interest ofthe Rights Agent or other business interests of the Rights Agent) in reliance upon anyRight Certificate or certificate for the Common Shares, Class B Common Shares, or for othersecurities of the Company, instrument of assignment or transfer, power of attorney,endorsement, affidavit, letter, notice, direction, consent, certificate, statement, orother paper or document believed by it to be genuine and to be signed, executed and, wherenecessary, verified or acknowledged, by the proper Person or Persons, or upon the writtenadvice or opinion of counsel as set forth in Section 21. The Rights Agent shall not bedeemed to have knowledge of any event of which it was supposed to receive notice thereofhereunder and, subject to Section 21(c), the Rights Agent shall be fully protected andincur no liability for failing to take action in connection therewith unless and until ithas received such notice in writing.          SECTION 20. Merger or Consolidation or Change of Rights Agent.(a) Any Person into which the Rights Agent or any successor Rights Agent may be merged orwith which it may be consolidated, or any Person resulting from any merger or consolidation towhich the Rights Agent or any successor Rights Agent shall be a party, or any Person succeeding tothe shareholder services or stock transfer or corporate trust business of the Rights Agent or anysuccessor Rights Agent, shall be the successor to the Rights Agent under this Rights Agreementwithout the execution or filing of any paper or any further act on the part of any of the partieshereto; provided, however, that such Person would be eligible for appointment as asuccessor Rights Agent under the provisions of Section 22. In case, at the time such successorRights Agent shall succeed to the agency created by this Rights Agreement, any of the RightCertificates shall have been countersigned but not delivered, any such successor Rights Agent mayadopt the countersignature of the predecessor Rights Agent and deliver such Right Certificates socountersigned; and, in case at that time any of the Right Certificates shall not have beencountersigned, any successor Rights Agent may countersign such Right Certificates either in thename of the predecessor Rights Agent or in the name of the successor Rights

 

28Agent; and in all such cases such Right Certificates shall have the full force provided in theRight Certificates and in this Rights Agreement.     (b) In case at any time the name of the Rights Agent shall be changed and at suchtime any of the Right Certificates shall have been countersigned but not delivered, theRights Agent may adopt the countersignature under its prior name and deliver RightCertificates so countersigned; and, in case at that time any of the Right Certificatesshall not have been countersigned, the Rights Agent may countersign such Right Certificateseither in its prior name or in its changed name; and in all such cases such RightCertificates shall have the full force provided in the Right Certificates and in thisRights Agreement.          SECTION 21. Duties of Rights Agent. The Rights Agent undertakes to perform only theduties and obligations expressly imposed by this Rights Agreement (and no implied duties) upon thefollowing terms and conditions, by all of which the Company and the holders of Right Certificates(or, prior to the Distribution Date, of the Common Shares and Class B Common Shares), by theiracceptance thereof, shall be bound:     (a) The Rights Agent may consult with legal counsel (who may be legal counsel for theCompany or legal counsel for the Rights Agent), and the written advice or opinion of suchcounsel shall be full and complete authorization and protection to the Rights Agent and,subject to Section 21(c), the Rights Agent shall incur no liability for or in respect ofany action taken, suffered or omitted by it in accordance with such written advice oropinion.     (b) Whenever in the performance of its duties under this Rights Agreement the RightsAgent shall deem it necessary or desirable that any fact or matter (including the identityof any Acquiring Person and the determination of the current per share market price of anysecurity) be proved or established by the Company prior to taking, suffering or omitting totake any action hereunder, such fact or matter (unless other evidence in respect thereof beherein specifically prescribed) may be deemed to be conclusively proved and established bya certificate signed by any one of the Chairman of the Board, any Vice Chairman of theBoard, the Chief Executive Officer, the President, a Vice President (whether preceded byany additional title), the Treasurer or the Secretary of the Company and delivered to theRights Agent; and such certificate shall be full and complete authorization and protectionto the Rights Agent and, subject to Section 21(c), the Rights Agent shall incur noliability for or in respect of any action taken, suffered or omitted by it in reliance uponsuch certificate.     (c) The Rights Agent shall be liable hereunder to the Company and any other Persononly for its own gross negligence, bad faith or intentional misconduct (which grossnegligence, bad faith or willful misconduct must be determined by a final, non-appealablejudgment of a court of competent jurisdiction). Anything to the contrary notwithstanding,in no event shall the Rights Agent be liable for special, punitive, indirect, consequentialor incidental loss or damage of any kind whatsoever (including but not limited to lostprofits),

 
 29even if the Rights Agent has been advised of the likelihood of such loss or damage.     (d) Subject to Section 21(c), the Rights Agent shall not be liable for or by reasonof any of the statements of fact or recitals contained in this Rights Agreement or in theRight Certificates (except as to its countersignature thereof) or be required to verify thesame, but all such statements and recitals are and shall be deemed to have been made by theCompany only.     (e) The Rights Agent shall not be under any responsibility in respect of the validityof this Rights Agreement or the execution and delivery hereof (except the due executionhereof by the Rights Agent) or in respect of the validity or execution of any RightCertificate (except its countersignature thereof) and, subject to Section 21(c), shall haveno liability therefor; nor shall it be responsible for any breach by the Company of anycovenant or condition contained in this Rights Agreement or in any Right Certificate; norshall it be responsible for any change in the exercisability of the Rights (including theRights becoming null and void pursuant to Section 7(e)) or any change or adjustment in theterms of Rights as required under the provisions of Section 11 or 12 or responsible for themanner, method or amount of any such change or adjustment or the ascertaining of theexistence of facts that would require any such change or adjustment (except with respect tothe exercise of Rights evidenced by Right Certificates after actual notice of any suchadjustment pursuant to Section 13); nor shall it by any act hereunder be deemed to make anyrepresentation or warranty as to the authorization or reservation of any Preferred Sharesor Common Shares to be issued pursuant to this Rights Agreement or any Right Certificate oras to whether any Preferred Shares or Common Shares will, when so issued, be validlyauthorized and issued, fully paid and nonassessable.     (f) The Company agrees that it shall perform, execute, acknowledge and deliver orcause to be performed, executed, acknowledged and delivered all such further and otheracts, instruments and assurances as may reasonably be required by the Rights Agent for thecarrying out or performing by the Rights Agent of the provisions of this Rights Agreement.     (g) The Rights Agent is hereby authorized and directed to accept instructions withrespect to the performance of its duties hereunder from any one of the Board of Directors,the Chairman of the Board, any Vice Chairman of the Board, the Chief Executive Officer, thePresident, a Vice President (whether preceded by any additional title), the Secretary orthe Treasurer of the Company, in connection with its duties and such instructions shall befull authorization and protection to the Rights Agent and, subject to Section 21(c), theRights Agent shall not be liable for or in respect of any action taken, suffered or omittedby it in accordance with any such instructions or for any delay in acting while waiting forsuch instructions. In the event of any conflict or inconsistency between or among any suchinstructions, the later in time shall govern. Any application by the Rights Agent forwritten instructions from the Company may, at the option of the

 

30Rights Agent, set forth in writing any action proposed to be taken, suffered oromitted by the Rights Agent under this Agreement and the date on and/or after which suchaction shall be taken or suffered or such omission shall be effective. Subject to Section21(c), the Rights Agent shall not be liable for any action taken or suffered by, oromission of, the Rights Agent in accordance with a proposal included in any suchapplication on or after the date specified in such application (which date shall not beless than five Business Days after the date any officer of the Company actually receivessuch application, unless any such officer shall have consented in writing to an earlierdate) unless, prior to the later of (i) the expiry of such five Business Day period and(ii) the Right’s Agent taking any such action (or the effective date in the case of anomission), the Rights Agent shall have received either a written instructions in responseto such application specifying the action to be taken, suffered or omitted, or a written ororal objection by the Company to such proposal.     (h) The Rights Agent and any stockholder, affiliate, director, officer or employee ofthe Rights Agent may buy, sell or deal in any of the Rights or other securities of theCompany or become pecuniarily interested in any transaction in which the Company or itsSubsidiaries may be interested, or contract with or lend money to the Company or itsSubsidiaries or otherwise act as fully and freely as though it were not the Rights Agentunder this Rights Agreement. Nothing herein shall preclude the Rights Agent or anystockholder, affiliate, director, officer or employee from acting in any other capacity forthe Company or for any other Person.     (i) If, with respect to any Right Certificate surrendered to the Rights Agent forexercise or transfer, the certificate contained in the form of assignment or the form ofelection to purchase set forth on the reverse thereof, as the case may be, has either notbeen properly completed or indicates an affirmative response to any clause thereof, theRights Agent shall not take any further action with respect to such requested exercise ortransfer without first consulting with the Company.     (j) The Rights Agent may execute and exercise any of the rights or powers herebyvested in it or perform any duty hereunder either itself (through its directors, officersand employees) or by or through its attorneys or agents, and the Rights Agent shall not beanswerable or accountable for any act, default, neglect or misconduct of any such attorneysor agents or for any loss to the Company resulting from any such act, default, neglect ormisconduct, provided that reasonable care was exercised in the selection and continuedemployment thereof.     (k) The Company shall indemnify the Rights Agent for, and hold the Rights Agentharmless against, any loss, liability, damage, claim or expense (including reasonable feesand expenses of legal counsel) that the Rights Agent may incur resulting from any actiontaken, suffered or omitted by the Rights Agent in connection with the acceptance,administration, exercise and performance of its duties under this Rights Agreement (otherthan matters arising

 

31out of or resulting from a conflict of interest of the Rights Agent or other businessinterests of the Rights Agent); provided, however, that the Rights Agentshall not be indemnified or held harmless with respect to any such loss, liability, damageor expense incurred by the Rights Agent as a result of, or arising out of, its own grossnegligence, bad faith or intentional misconduct. In no case shall the Company be liablewith respect to any action, proceeding, suit or claim against the Rights Agent unless theRights Agent shall have notified the Company, by letter or by facsimile confirmed byletter, of the assertion of any action, proceeding, suit or claim against the Rights Agent,promptly after the Rights Agent shall have notice of any such assertion of an action,proceeding, suit or claim or have been served with the summons or other first legal processgiving information as to the nature and basis of the action, proceeding, suit or claim.The Company shall be entitled to participate at its own expense in the defense of any suchaction, proceeding, suit or claim, and, if the Company so elects, the Company shall assumethe defense of any such action, proceeding, suit or claim. In the event that the Companyassumes such defense, the Company shall not thereafter be liable for the fees and expensesof any additional counsel retained by the Rights Agent, so long as the Company shall retaincounsel satisfactory to the Rights Agent, in the exercise of its reasonable judgment, todefend such action, proceeding, suit or claim. The Rights Agent agrees not to settle anylitigation in connection with any action, proceeding, suit or claim with respect to whichit may seek indemnification from the Company without the prior written consent of theCompany. If a final, non-appealable judgment of a court of competent jurisdiction shall beissued in favor of the Rights Agent in respect of an action by the Rights Agent to enforcethe indemnification provisions of this Section 21(k), then the Company shall reimburse theRights Agent’s for its costs and expenses in enforcing such indemnification provisions.     (l) No provision of this Agreement shall require the Rights Agent to expend or riskits own funds or otherwise incur any financial liability in the performance of any of itsduties hereunder or in the exercise of its rights if it believes that repayment of suchfunds or adequate indemnification against such risk or liability is not reasonably assuredto it.          SECTION 22. Change of Rights Agent. The Rights Agent or any successor Rights Agentmay resign and be discharged from its duties under this Rights Agreement upon 30 days’ notice inwriting mailed to the Company and to each transfer agent of the Common Shares, the Class B CommonShares and the Preferred Shares known to the Rights Agent, after due inquiry, by registered orcertified mail, and to the holders of the Right Certificates (or, prior to the Distribution Date,of the Common Shares and the Class B Common Shares ) by first-class mail. The Company may removethe Rights Agent or any successor Rights Agent upon 30 days’ notice in writing, mailed to theRights Agent or successor Rights Agent, as the case may be, and to each transfer agent of theCommon Shares, the Class B Common Shares and the Preferred Shares by registered or certified mail,and to the holders of the Right Certificates (or, prior to the Distribution Date, of the CommonShares and the Class B Common Shares) by first-class mail. If the Rights Agent shall resign or beremoved or shall otherwise become incapable

 

32of acting, the Company shall appoint a successor to the Rights Agent. If the Company shallfail to make such appointment within a period of 30 days after giving notice of such removal orafter it has been notified in writing of such resignation or incapacity by the resigning orincapacitated Rights Agent or by the holder of a Right Certificate (or, prior to the DistributionDate, of the Common Shares and the Class B Common Shares) (who shall, with such notice, submit suchholder’s Right Certificate or, prior to the Distribution Date, the certificate representing suchholder’s Common Shares or Class B Common Shares, for inspection by the Company), then theregistered holder of any Right Certificate (or, prior to the Distribution Date, of the CommonShares and the Class B Common Shares) may apply to any court of competent jurisdiction for theappointment of a new Rights Agent. Any successor Rights Agent, whether appointed by the Company orby such a court, shall be a Person organized and doing business under the laws of the United Statesor of the State of New York (or of any other state of the United States so long as such entity isauthorized to conduct a stock transfer or corporate trust business in the State of New York), ingood standing, which is authorized under such laws to exercise stock transfer or corporate trustpowers and is subject to supervision or examination by Federal or state authority and which has atthe time of its appointment as Rights Agent a combined capital and surplus of at least$100,000,000; provided, however, that the principal transfer agent for the CommonShares shall in any event be qualified to be the Rights Agent. After appointment, the successorRights Agent shall be vested with the same powers, rights, duties and responsibilities as if it hadbeen originally named as Rights Agent without further act or deed; but the predecessor Rights Agentshall deliver and transfer to the successor Rights Agent any property at the time held by ithereunder, and execute and deliver any further assurance, conveyance, act or deed necessary for thepurpose. Not later than the effective date of any such appointment, the Company shall file noticethereof in writing with the predecessor Rights Agent and each transfer agent of the Common Shares,the Class B Common Shares and the Preferred Shares, and mail a notice thereof in writing to theregistered holders of the Right Certificates (or, prior to the Distribution Date, of the CommonShares and the Class B Common Shares). Failure to give any notice provided for in this Section 22,however, or any defect therein shall not affect the legality or validity of the resignation orremoval of the Rights Agent or the appointment of the successor Rights Agent, as the case may be.          SECTION 23. Issuance of Additional Rights and Right Certificates. Notwithstandingany of the provisions of this Rights Agreement or of the Rights to the contrary, the Company may,at its option, issue new Right Certificates evidencing Rights in such form as may be approved byits Board to reflect any adjustment or change made in accordance with the provisions of this RightsAgreement. In addition, in connection with the issuance or sale of Common Shares or Class B CommonShares following the Distribution Date and prior to the earlier of the Redemption Date and theExpiration Date, the Company (a) shall, with respect to Common Shares so issued or sold pursuant tothe exercise of stock options or under any employee plan or arrangement, or upon the exercise,conversion or exchange of securities, notes or debentures issued by the Company, and (b) may, inany other case, if deemed necessary or appropriate by the Board, issue Right Certificatesrepresenting the appropriate number of Rights in connection with such issuance or sale;provided, however, that (i) no such Right Certificate shall be issued if, and tothe extent that, the Company shall be advised by

 

33counsel that such issuance would create a significant risk of material adverse taxconsequences to the Company or the Person to whom such Right Certificate would be issued, (ii) nosuch Right Certificate shall be issued if, and to the extent that, appropriate adjustment shallotherwise have been made in lieu of the issuance thereof and (iii) no such Right Certificate shallbe issued to an Acquiring Person or an Affiliate or Associate of an Acquiring Person.          SECTION 24. Redemption and Termination. (a) The Board may, at its option, at anytime prior to the earlier of (i) the Distribution Date and (ii) the Expiration Date, order theredemption of all, but not fewer than all, the then outstanding Rights at the Redemption Price (thedate of such redemption being the “Redemption Date”), and the Company, at its option, maypay the Redemption Price either in cash or Common Shares or other securities of the Company deemedby the Board, in the exercise of its sole discretion, to be at least equivalent in value to theRedemption Price.     (b) Immediately upon the action of the Board ordering the redemption of the Rights,and without any further action and without any notice, the right to exercise the Rightswill terminate and the only right thereafter of the holders of Rights shall be to receivethe Redemption Price. Promptly after the action of the Board ordering the redemption ofthe Rights, the Company shall give notice of such redemption to the Rights Agent and theholders of the then outstanding Rights by mailing such notice to all such holders at theirlast addresses as they appear upon the registry books of the Rights Agent or, prior to theDistribution Date, on the registry books of the transfer agent for the Common Shares andClass B Common Shares. Each such notice of redemption shall state the method by whichpayment of the Redemption Price will be made. The notice, if mailed in the manner hereinprovided, shall be conclusively presumed to have been duly given, whether or not the holderof Rights receives such notice. In any case, failure to give such notice by mail, or anydefect in the notice, to any particular holder of Rights shall not affect the sufficiencyof the notice to other holders of Rights. Neither the Company nor any of its Affiliates orAssociates may redeem, acquire or purchase for value any Rights at any time in any mannerexcept as specifically set forth in this Section or in Section 11(b) or in connection withthe purchase of Common Shares or Class B Common Shares prior to the Distribution Date.          SECTION 25. Notices. Notices or demands authorized by this Rights Agreement to begiven or made by the Rights Agent or by the holder of a Right Certificate (or, prior to theDistribution Date, of the Common Shares or Class B Common Shares) to or on the Company shall besufficiently given or made if sent by first-class mail, postage-prepaid, addressed (until anotheraddress is filed in writing with the Rights Agent) as follows:The Pepsi Bottling Group, Inc.