Exhibit 10(h)(2)


                             Employment Agreement

      This  Employment Agreement ("Agreement") is made and entered into by  and
between  Terence  D. Martin ("Martin") and The Quaker Oats Company  ("Quaker"),
collectively  the "parties."  The "Effective Date" of this Agreement  shall  be
Martin's  first day of active service with Quaker, which is presently  expected
to be November 11, 1998.

1.    Position:   On  the Effective Date, Martin will commence employment  with
Quaker as Senior Vice President and Chief Financial Officer ("CFO").

2.    Relocation Expenses:  To reimburse Martin for the expense of  moving  his
primary  residence to Chicago, Quaker shall provide Martin with the  relocation
benefits  described in the Quaker Relocation Policy For Transferring Employees,
and  shall reimburse him for any other reasonable expenses approved by Quaker's
Chief Executive Officer ("CEO").

3.    Base Salary:  From the Effective Date through December 31, 1999, Martin's
annual  base  salary  shall  be  four hundred  seventy  five  thousand  dollars
($475,000), paid in accordance with Quaker's standard payroll practices.  After
that  date,  his  salary  shall  be determined by  Quaker  through  its  normal
compensation practices; provided, during active service, his salary  cannot  be
reduced  below four hundred seventy five thousand dollars ($475,000).  Whenever
used  in  this Agreement, the phrase "normal compensation practices" refers  to
practices in effect on the date a decision is made; this phrase is not intended
to freeze Quaker's current practices.

4.    Bonuses:  Martin is eligible to receive an annual performance bonus based
on  the  terms and provisions of Quaker's Management Incentive Bonus Plan  (the
"MIB" plan).

     A.   1998  &  1999 MIB Bonuses:  For 1998 and 1999, Martin's target  bonus
          shall be seventy percent (70%) of his annualized base salary, and the
          maximum award will be two hundred percent (200%) of his target.   The
          actual amount of any bonus award shall be determined by applying  the
          terms of the MIB plan; provided, any award for 1998 shall be prorated
          based  on  the  percentage of the year that Martin  was  employed  by
          Quaker in active service.
     
     B.   Subsequent MIB Bonuses:  Any bonus targets and awards for years after
          1999  shall  be  determined by Quaker in its discretion  through  its
          normal  compensation practices and the terms of the  MIB  and/or  any
          other applicable plan.
     
     C.   Additional Bonuses:  Quaker shall have discretion to award additional
          bonuses to Martin, as it may deem appropriate.
     
5.    Group/Executive  Benefits:  Except as specifically provided  herein,  and
subject  to  its normal compensation practices and the terms and conditions  of
any  applicable plans, Quaker shall provide Martin and his family with benefits
comparable  to those enjoyed by other Quaker officers at a similar level,  such
as  group  and/or  executive  life, hospitalization and  disability  insurance;
health   program;  pension,  401(k),  and  similar  benefit  plans;  perquisite
allowance;  financial  counseling reimbursement;  and  similar  programs.   All
waiting periods shall be waived except with respect to the pension plan,  where
waiver of the one year waiting period is not permitted.

6.    Supplemental  Retirement Benefit:  Subject to the  terms  and  conditions
described  below,  including  vesting requirements,  upon  termination  of  his
employment  with Quaker, Martin will receive a supplemental retirement  benefit
pursuant to this Agreement.

     A.   Amount Of Supplemental Benefit:  This supplemental retirement benefit
          is  expressed as an annualized figure.  The annualized amount of this
          benefit shall be calculated by taking the Base Amount and subtracting
          the Setoff from it.
     
          i.   Base  Amount:   The  Base Amount shall be an  annualized  figure
               equal   to  the  greater  of  three  hundred  thousand   dollars
               ($300,000.00)  or  the  amount Martin would  receive  under  the
               formula  in The Quaker Supplemental Executive Retirement Program
               ("SERP"),  were  he eligible for SERP benefits;  provided,  this
               figure  may  be  prorated or actuarially reduced,  as  described
               below.   It  is understood that under the SERP's present  terms,
               for  an  executive who retired at age 60 after 5 years of active
               service,  the  SERP  formula would produce a  benefit  equal  to
               average  annual  earnings (as defined in the SERP)  times  forty
               five percent (45%) times five divided by fifteen (5/15).
          
          ii.  Setoff:   The Setoff shall be an amount equal to the  annualized
               value  of any and all other retirement benefits to which  Martin
               is  entitled  (or  which he receives) under any defined  benefit
               plan(s)  (qualified or non-qualified), including Quaker's  plans
               and those of Martin's former employers.
          
          iii. "Annualized"  Value:   All  annualized  calculations   of   this
               supplemental retirement benefit and of other retirement benefits
               shall  assume  that Martin elects to receive each benefit  on  a
               straight  line  annuity basis, without regard  to  the  form  of
               payment  he actually elects or elected (including any  lump  sum
               payment), and without regard to any actuarial reduction that may
               apply  based  on  the  date he elects to  commence  receiving  a
               benefit.
     
     B.   Form  Of Payment:  Martin may elect to take this supplemental benefit
          in  any form permitted under either the SERP or The Quaker Retirement
          Plan,  subject  to the applicable actuarial adjustment prescribed  by
          the plan in question for electing such an alternative form of payment
          instead of a straight life annuity.
     
     C.   Actuarial   Reduction:    If  Martin  commences   receipt   of   this
          supplemental  retirement benefit before reaching  age  60,  the  Base
          Amount shall be actuarially reduced to adjust for this early receipt,
          in accordance with the terms of the SERP.
     
     D.   Vesting:
     
          i. Full  Vesting:   This supplemental retirement benefit  shall  vest
             when  Martin  completes sixty (60) months of active  service  with
             Quaker.
          
          ii.Prorated  Vesting:  If, before Martin completes sixty (60)  months
             of  active service with Quaker, his employment terminates for  any
             reason  that  triggers  the  payment  of  supplemental  separation
             benefits  and/or  benefits  under The Quaker  Officers'  Severance
             Program  ("Program"),  or  due  to his  death  or  his  retirement
             immediately  following  an approved long  term  disability  leave,
             then  this supplemental retirement benefit shall vest on  Martin's
             last  day  of  employment with Quaker (i.e., at  the  end  of  his
             inactive  service  period, if applicable), but shall  be  prorated
             based  on  the  number  of months he was  actively  employed.   To
             prorate  this  benefit, both the Base Amount and the Setoff  shall
             be  multiplied by a fraction:  (a) whose numerator is  the  number
             of  full months Martin was employed in active service by Quaker or
             thirty  (30) months, whichever is lower; and (b) whose denominator
             is thirty (30) months.
          
          iii.     No  Vesting:  If Martin's employment with Quaker  terminates
             before  he  completes  sixty (60) months of  active  service  with
             Quaker  for any reason that does not result in a prorated  benefit
             under  subsection  (D)(ii), this supplemental  retirement  benefit
             shall not vest.
          
     E.   Survivor Benefit:  If Martin dies before payment of this supplemental
          retirement  benefit  commences,  then  subject  to  the  vesting  and
          proration rules in subsections (D)(i) and (D)(ii), and commencing  on
          the first day of the month following the date of death, his wife will
          receive  a survivor annuity for the rest of her life equal in  amount
          to  seventy  five  percent (75%) of the straight life  annuity  which
          would  have been payable to Martin if, on the date immediately before
          his  death, he had terminated his employment for Good Reason,  taking
          into  account  all setoffs that would have applied  to  his  benefit,
          except  that  if his spouse only receives a reduced survivor  annuity
          under  The Quaker Retirement Plan, then that amount, rather than  the
          full  straight life annuity which would have been payable to  Martin,
          shall be setoff with respect to The Quaker Retirement Plan.

7.   Equity Based Incentive Compensation:
     
          A.   Signing  Bonus:  As of the Effective Date, and pursuant  to  the
               terms  of  The  Quaker Long Term Incentive  Plan  of  1999  (the
               "LTIP"), Quaker shall grant Martin a 10-year option with respect
               to  two hundred fifty thousand (250,000) shares of Quaker common
               stock.   In accordance with the terms of the LTIP, the  exercise
               price for these shares will be equal to the fair market value on
               the Effective Date.  The following vesting rules shall apply  to
               these options:
     
               i.While  Martin is employed in active service or on an  approved
                 disability leave, or if his active service terminates  due  to
                 his  death, one-fifth (1/5) of these options shall  vest  each
                 year  for five years, on the first five anniversaries  of  the
                 Effective  Date (e.g., the first 50,000 options will  vest  on
                 November 11, 1999, and the last 50,000 options
                 will  vest  on  November  11,  2003,  based  on  the  expected
                 Effective Date);
               
               ii.     If  Martin's employment terminates in circumstances that
                 trigger  an  award  of  Program benefits  and/or  supplemental
                 separation benefits, a prorated number of these options  shall
                 vest  (the  "Prorated  Award").  The Prorated  Award  will  be
                 calculated   by   multiplying  two  hundred   fifty   thousand
                 (250,000) options by a fraction:  (a) whose numerator  is  the
                 number  of  full months Martin was employed in active  service
                 by  Quaker or thirty (30) months, whichever is lower; and  (b)
                 whose  denominator is thirty (30) months.  These options shall
                 vest according to the schedule in subsection (A)(i) (i.e.,  in
                 increments  of  up  to  50,000, and on  anniversaries  of  the
                 Effective Date) until the Prorated Award is exhausted;
               
               iii.    If  Martin's employment terminates in circumstances  not
                 covered by subsection (A)(ii), then any of these options  that
                 have  not  yet vested by his last day of active service  shall
                 not vest.
          
     B.   Subsequent Stock Option Awards:  Martin shall be eligible to  receive
          an  award  of  options under the LTIP commencing in 1999.   In  1999,
          Martin shall be awarded at least fifty thousand (50,000) options,  so
          long  as  he  is actively employed by Quaker on the date when  Quaker
          grants  options to its executives.  In subsequent years,  the  actual
          number  of  options granted to Martin shall be determined  by  Quaker
          pursuant to its normal compensation practices.

     C.   ESOP:   Martin  shall immediately be eligible to participate  in  any
          award  of  stock  under  The  Quaker Employee  Stock  Ownership  Plan
          ("ESOP").  The size, terms, and conditions of any award to him  shall
          be  determined by the provisions of the ESOP.  Martin's first  award,
          to  be allocated as of June 1999, will be prorated in accordance with
          the terms of the ESOP.
     
     D.   Other:  Quaker may, in its discretion, grant Martin additional equity
          incentive compensation, pursuant to its normal compensation practices
          and the terms and conditions of any applicable plans.
     
8.    Vacation:  Beginning in 1999, Martin shall be entitled to four (4)  weeks
of  vacation per calendar year.  He is subject to Quaker's standard  plans  and
policies regarding related issues, such as unused vacation days.
     
9.    Events  Triggering  Supplemental  Separation  Benefits:   The  employment
relationship  between  Quaker and Martin may be terminated  at-will  by  either
party (i.e., at any time, for any reason).  The following rules shall determine
whether,   upon  termination,  Martin  qualifies  for  supplemental  separation
benefits:

     A.   Eligibility:    Martin  shall  qualify  for  supplemental   separation
          benefits  under  this  Agreement if, but only  if,  he  qualifies  for
          severance  benefits under the Program; provided, if he resigns  within
          six  (6) months following any event that constitutes "Good Reason" (as
          defined  below), then for purposes of the Program and this  Agreement,
          Quaker  shall  treat  him  as  involuntarily  terminated  due  to  job
          elimination.   The  determination as to whether Martin  qualifies  for
          Program  benefits shall be made by the Committee that administers  the
          Program   ("Committee"),  pursuant  to  its  regular  procedures   and
          practices; provided, if the Committee denies benefits based  on  gross
          misconduct,  then the CEO and the Compensation Committee  of  Quaker's
          Board  of  Directors  ("Compensation  Committee")  shall  review  that
          decision,  and benefits will be denied only if the CEO and a  majority
          of  the  Compensation  Committee vote to deny  benefits;  and  further
          provided,  this  internal review process shall not eliminate  Martin's
          right  to judicial review of the Committee's decision, so long  as  he
          first  allows  a  reasonable time for the  CEO  and  the  Compensation
          Committee to review it.  Martin understands that based on the  current
          terms of the Program, eligibility is contingent not only on the reason
          for  termination  (e.g., not discharged for "gross  misconduct"),  but
          also  on  executing  a  waiver  and release  of  claims,  among  other
          conditions.  Martin is not hereby committing to execute such a  waiver
          and  release  in the future; rather, if terminated, he will  have  the
          option   of  doing  so  to  qualify  for  Program  benefits  and   for
          supplemental   separation  benefits.   Nothing  in   this   provision,
          including  its  non-exhaustive summary of  the  Program's  eligibility
          rules,  shall  be construed as modifying, superseding or limiting  the
          Program's  terms, except that the procedure for deciding claims  under
          the  Program  is  modified  by  adding  the  internal  review  process
          described above.
     
     B.   Termination Due To Change In Control:
     
          i.   Notwithstanding any other provision in this Agreement, if Martin
               qualifies  for  benefits  under his ESA,  he  will  not  receive
               supplemental separation benefits under this Agreement.  In  that
               event,  his  separation benefits would be  limited  to  what  is
               provided under the ESA and the Program.
          
          ii.  Notwithstanding anything to the contrary in section 9(A),  Martin
               shall  be  paid double (2 times) the separation benefit described
               in  section  10(A)  if, but only if, all of the following  occur:
               (a)  there is a change in control of Quaker (as that term, or any
               similar term, is defined under his ESA); and (b) Martin fails  to
               qualify for benefits under both his ESA and the Program; and  (c)
               he resigns or retires for any reason during the thirteenth (13th)
               month following the change in control.
          
     C.   Definition  Of  "Good Reason":  "Good Reason" for  Martin  to  resign
          shall exist if any of the following events occur without his consent:
          (i)   Quaker   intentionally  fails  to  pay  or   provide   required
          compensation,  and does not cure the situation despite  a  reasonable
          opportunity after Martin calls the omission to Quaker's attention  in
          writing;  (ii)  Quaker reduces Martin's title,  duties  or  authority
          (compared  to  what they were on the Effective Date) so significantly
          that   his  position  is  materially  diminished;  or  (iii)   Quaker
          materially breaches the terms of this Agreement and fails or  refuses
          to  cure  the  situation, provided that Martin calls  the  breach  to
          Quaker's attention in writing and allows a reasonable opportunity  to
          cure it.

10.   Supplemental Separation Benefits:  If, due to an involuntary termination,
Martin  qualifies for supplemental separation benefits under section 9 of  this
Agreement, then the following terms and conditions shall apply:
     
     A.   One  Additional Year Of Benefits:  In addition to benefits under  the
          Program,  and  subject to section 11(E), Quaker shall pay  Martin  an
          amount equal to one (1) year of Program payments.  This sum shall  be
          paid in a lump sum within thirty (30) days following his last day  of
          active  service or within thirty (30) days following a  determination
          of  his  eligibility for Program benefits, whichever is later.   This
          payment  is  consideration for the covenants and other provisions  in
          section 11, not for anything else.
     
     B.   Calculating  His  Annual Compensation:  Both under  the  Program  and
          under  this Agreement, in calculating the bonus component of Martin's
          annual  compensation, Quaker shall use his MIB bonus  target  at  the
          time  of  termination or his most recent MIB bonus payment, whichever
          is greater.
     
     C.   Pro-Rata  Bonus  For  Final  Year:  Within  thirty  (30)  days  after
          Martin's last day of active service, Quaker shall pay him a lump  sum
          that represents a pro-rated annual bonus for the year of termination.
          This  amount shall be calculated by taking his bonus target  for  the
          year  of termination and multiplying it times a fraction:  (i)  whose
          numerator  is  the number of days elapsed in the fiscal  year  during
          which  Martin is terminated, from the first day of that  fiscal  year
          through  his  final day of active service; and (ii) whose denominator
          is  365  (e.g., based on Quaker's current fiscal year, which  is  the
          same as the calendar year, if Martin's last day of active service was
          February  5, then this fraction would be 0.10, calculated as follows:
          36 days elapsed in current fiscal year divided by 365 days).
     
     D.   Five  Days  Of  Salary:  Within thirty (30) days  following  Martin's
          termination from active service, Quaker shall pay him an amount equal
          to five (5) days of pay at his then-current base salary rate.
     
11.  Prohibited Conduct:

     A.   Covenants:   Martin  covenants and agrees  that  during  the  periods
          specified  below,  he  shall  not engage  in  any  of  the  following
          activities anywhere in the world:

          i.   Non-competition.   During  the two (2) year  period  immediately
               following   the   termination   of   Martin's   employment    in
               circumstances  that  qualify  him  for  supplemental  separation
               benefits  under sections 9 and 10, or during the  one  (1)  year
               period  immediately  following  his  termination  in  any  other
               circumstances,  Martin  shall  not  undertake  any   employment,
               consulting  position or ownership interest  which  involves  his
               Participation  in  the  management of  a  business  entity  that
               markets,  sells,  distributes,  licenses  or  produces   Covered
               Products,  unless  that business entity's sole involvement  with
               Covered  Products  is  that it makes retail  sales  or  consumes
               Covered Products, without competing in any way against Quaker.

          ii.  Raiding  Employees.  During the three (3) year period immediately
               following the termination of Martin's employment in circumstances
               that  qualify  him  for  supplemental separation  benefits  under
               sections  9 and 10, or during the two (2) year period immediately
               following  his  termination  in any other  circumstances,  Martin
               shall  not in any way, directly or indirectly (including  through
               someone  else  acting  on  Martin's  recommendation,  suggestion,
               identification  or  advice), facilitate or solicit  any  Existing
               Quaker  Employee to leave the employment of Quaker or  to  accept
               any position with any other company or corporation.

          iii. Non-disclosure.   During  the three (3) year  period  immediately
               following the termination of Martin's employment in circumstances
               that  qualify  him  for  supplemental separation  benefits  under
               sections  9 and 10, or during the two (2) year period immediately
               following  his  termination  in any other  circumstances,  Martin
               shall not use or disclose to anyone any Confidential Information.
          
     B.   Definitions:   For  purposes of section 11  of  this  Agreement,  the
          following definitions shall apply:
     
          i.   "Participation"  shall be construed broadly to  include,  without
               limitation:   (1) holding a position in which he directly manages
               such  a  business entity; (2) holding a position in which  anyone
               else  who  directly manages such a business entity is in Martin's
               reporting chain or chain-of-command (regardless of the number  of
               reporting  levels  between  them); (3) providing  input,  advice,
               guidance,  or  suggestions regarding the  management  of  such  a
               business  entity to anyone responsible therefor; (4) providing  a
               testimonial  on  behalf of such an operation or  the  product  it
               produces; or (5) doing anything else which falls within a  common
               sense  definition of the term "participation,"  as  used  in  the
               present context.

          ii.  "Covered Products" mean any product which falls into one or  more
               of  the  following  categories, so long as Quaker  is  producing,
               marketing,  distributing,  selling  or  licensing  such   product
               anywhere  in  the  world:   sports  beverages;  thirst  quenching
               beverages;  hot  cereals;  ready-to-eat cereals;  pancake  mixes;
               grain-based  snacks;  value-added rice products;  pancake  syrup;
               value-added pasta products; dry pasta products; and items  Quaker
               produces  for  the food service market.  In addition,  if  Quaker
               adds to its portfolio a new business or category of products with
               annual  sales  exceeding  fifty  million  dollars   ($50,000,000)
               worldwide,   such  product(s)  shall  be  included  within   this
               definition.

          iii.       "Existing  Quaker  Employee" means  someone:   (1)  who  is
               employed by Quaker on or before the date when Martin's employment
               terminates;  (2) who is still employed by Quaker as of  the  date
               when  the facilitating act or solicitation takes place;  and  (3)
               who holds a manager, director or officer level position at Quaker
               (or an equivalent position based on job duties and/or Hay points,
               regardless of the employee's title).
          
          iv.  "Confidential  Information"  shall be  construed  as  broadly  as
               Illinois law permits and shall include all non-public information
               Martin  acquired by virtue of his relationship with Quaker  which
               might  be  of any value to a competitor or which might cause  any
               economic  loss  (directly  or  via loss  of  an  opportunity)  or
               substantial   embarrassment   to   Quaker   or   its   customers,
               distributors or suppliers if disclosed.  Examples of Confidential
               Information  include, without limitation, non-public  information
               about  Quaker's customers, suppliers, distributors and  potential
               acquisition  targets; its business operations and structure;  its
               product lines, formulas and pricing; its processes, machines  and
               inventions;  its research and know-how; its financial  data;  and
               its plans and strategies.

     C.   Injunctive  Relief:  In the event of a breach, threatened  breach  or
          situation that creates an inevitable breach by Martin of any covenant
          in   section  11(A),  Quaker  shall  be  entitled  to  an  injunction
          compelling  specific performance, restraining any  future  violations
          and/or  requiring affirmative acts to undo or minimize  the  harm  to
          Quaker,  in  addition to damages for any actual breach  that  occurs.
          The  parties  stipulate and represent that breach of any covenant  in
          section  11(A)  would cause irreparable injury to Quaker,  for  which
          there would be no adequate remedy at law, due among other reasons  to
          the inherent difficulty of determining the precise causation for loss
          of  customers,  confidential  information  and/or  employees  and  of
          determining the amount and ongoing effects of such losses.

     D.   Other  Remedies:  In the event Martin breaches any covenant contained
          in  section 11(A), Quaker shall have the option of seeking injunctive
          relief  or cancelling the supplemental separation payments due  under
          sections  9  and 10 of this Agreement.  Quaker's right  to  terminate
          Program  benefits is spelled out in the Program, and is not  affected
          by this provision.

     E.   Repayment Of Supplemental Separation Benefit:  If Martin breaches any
          covenant(s)  set  forth in section 11(A), then  in  addition  to  any
          injunctive relief or actual damages awarded by a court, Martin  shall
          repay  to  Quaker an amount equal to the lump sum payment he received
          under  section 10(A).  Martin shall make this repayment within thirty
          (30)  days  following a final judgment against him.  For purposes  of
          this  provision, a judgment shall not be considered final  until  all
          potential appeals are exhausted or waived (expressly or by expiration
          of the time for filing an appeal).

     F.   Recitals:   Martin  acknowledges that by virtue of the  positions  he
          will  hold,  he  will  acquire  Confidential  Information,  including
          without   limitation  knowledge  of  financial  details  and   plans,
          operational   plans,   strategic  long  range  plans,   new   product
          development,  marketing plans, sales plans, and  distribution  plans.
          Martin  also  acknowledges that by virtue of his positions,  he  will
          learn  which  Existing  Quaker Employees  are  critical  to  Quaker's
          success  and will develop relationships he otherwise would  not  have
          had with such employees.
     
12.  Advance Determination Of Permitted/Prohibited Conduct:  Martin may request
an  advance written determination from Quaker's Chief Executive Officer  as  to
whether  taking a proposed action or job would, in Quaker's opinion, constitute
a  breach  of any covenant in section 11(A).  In that event, and provided  that
Martin  discloses  in writing all material facts about the proposed  action  or
job,  Quaker  shall make a reasonable effort to respond to the request  for  an
advance  written  determination within ten (10)  business  days;  PROVIDED,  if
circumstances materially change after the advance determination is made  (e.g.,
if  the duties of a job change after Martin accepts it), the determination  may
be  reconsidered and revised or reversed upon thirty (30) days advance  written
notice   to   Martin.   Quaker  shall  treat  as  confidential  any  non-public
information  that  Martin  communicates as part of a  request  for  an  advance
determination.

13.       Choice Of Law And Forum

     A.   Law:  This Agreement shall be governed by and construed in accordance
          with  the  laws  of  Illinois,  without  regard  to  choice  of   law
          principles.
     
     B.   Forum:   In any litigation over this Agreement, both parties  consent
          to  submit  to  the  personal jurisdiction of  any  court,  state  or
          federal, in the State of Illinois.  Such courts in Illinois shall  be
          the exclusive jurisdiction for any litigation over this Agreement  or
          an alleged breach thereof.

14.   Attorney Fees And Other Expenses:

     A.   For  This  Agreement:  Quaker will pay all reasonable legal fees  and
          related  expenses Martin incurred in connection with the  negotiation
          and preparation of this Agreement.
     
     B.   Subsequent  Litigation:   If  Martin and Quaker  become  involved  in
          litigation regarding the terms of his employment with Quaker  or  the
          termination  thereof, the party which prevails shall be  entitled  to
          reimbursement  of  all  reasonable  litigation  costs  and  expenses,
          including  attorney  fees.  If each party prevails  on  one  or  more
          litigated issues, the court shall exercise its equitable judgment  to
          determine which, if either, should be considered the prevailing party
          and  the  percentage  of  that  party's  expenses  which  should   be
          reimbursed, taking into account such factors as the significance  and
          number   of   the  issue(s)  on  which  each  party  prevailed,   the
          reasonableness of each party's position(s), and ability to pay.

15.       Indemnification:  To the fullest extent permitted by law and Quaker's
by-laws,  Quaker shall indemnify Martin (including the advancement of expenses)
for  any  judgments,  fines,  amounts  paid  in  settlement  and/or  reasonable
expenses, including attorneys' fees, incurred by Martin in connection with  the
defense of any lawsuit or other claim to which he is made a party by reason  of
being an officer, director or employee of Quaker or any of its subsidiaries.

16.        Gross-Up  Payment for Golden Parachute Taxes:  If it  is  determined
that  any  payment  Quaker makes to or for the benefit of  Martin,  under  this
Agreement  or  otherwise,  is subject to the federal excise  taxes  imposed  on
golden  parachute payments, then regardless of whether Martin has declared  his
ESA  effective,  Quaker will make an additional payment to  him  (a  "gross-up"
payment) in accordance with the terms of his ESA (presently  Section 8  of  the
ESA),  as  determined by the terms of the ESA on the Effective Date or  on  the
date of the payment in question, whichever is more favorable to Martin.

17.   Representation  By Martin:  Martin represents that he  is  not  presently
subject  to any non-competition agreement or employment agreement that prevents
him  from  accepting this job with Quaker and performing the  duties  of  Chief
Financial Officer.

18.       Scope of Agreement:

     A.   This  Agreement supersedes any other document or oral agreement  that
          conflicts  with  it  regarding any of the matters set  forth  herein.
          However, it is not intended to pre-empt or supersede other documents,
          including  plan  documents, that provide additional,  non-conflicting
          rules  or terms.  Without limitation, nothing in this Agreement shall
          eliminate or reduce Martin's obligation to comply with Quaker's  Code
          Of Ethics.

     B.   No  promises or inducements have been made other than those reflected
          herein.   This  Agreement  cannot be  amended  except  by  a  written
          agreement  signed by both parties, and only Quaker's highest  ranking
          Human  Resources officer or his/her direct superior has authority  to
          sign such an amendment on behalf of Quaker.

19.        Severability:  Each term of this Agreement is deemed  severable,  in
whole or in part, and if any provision of this Agreement or its application  in
any  circumstance  is  found  to  be illegal, unlawful  or  unenforceable,  the
remaining  terms and provisions shall not be affected thereby and shall  remain
in  full  force  and  effect; in addition, a court  may  re-write  the  invalid
provision(s)  so  as to be consistent with applicable law  and  still,  to  the
extent possible, achieve the intended effect of this Agreement.




Date: November 11, 1998        /s/ Robert S. Morrison
                                   The Quaker Oats Company,
                                   by an authorized signing officer




Date: November 11, 1998        /s/ Terence D. Martin
                                   Terence D. Martin