Terms Agreement dated July 25, 2019 (incorporating the PepsiCo, Inc. Underwriting Agreement Standard Provisions dated as of June 30, 2017) among PepsiCo and J.P. Morgan Securities LLC and Citigroup Global Markets Inc. as representatives of the several underwriters named therein
2.625% Senior Notes due 2029
3.375% Senior Notes due 2049
July 25, 2019
700 Anderson Hill Road
Purchase, New York 10577
Ladies and Gentlemen:
We understand that PepsiCo, Inc., a North Carolina corporation (the “Company”), proposes to issue and sell $1,000,000,000 of its 2.625% Senior Notes due 2029 (the “2029 Notes”) and $1,000,000,000 of its 3.375% Senior Notes due 2049 (the “2049 Notes,” and together with the 2029 Notes, the “Underwritten Securities”) subject to the terms and conditions stated herein and in the PepsiCo, Inc. Underwriting Agreement Standard Provisions dated as of June 30, 2017 filed with the Securities and Exchange Commission on October 10, 2017 as Exhibit 1.2 to the Company’s Current Report on Form 8-K (the “Standard Provisions”). Each of the applicable provisions in the Standard Provisions (including defined terms) is incorporated herein by reference in its entirety, and shall be deemed to be a part of this Agreement to the same extent as if such provisions had been set forth in full herein. We, the underwriters named below (the “Underwriters”), offer to purchase, severally and not jointly, the amount of Underwritten Securities opposite our names set forth below at a purchase price equal to 99.253% of the principal amount thereof for the 2029 Notes and 98.396% of the principal amount thereof for the 2049 Notes.
|Underwriter||2029 Notes||2049 Notes|
|J.P. Morgan Securities LLC||$||500,000,000||$||500,000,000|
|Citigroup Global Markets Inc.||300,000,000||300,000,000|
|Mizuho Securities USA LLC||52,500,000||52,500,000|
|Morgan Stanley & Co. LLC||52,500,000||52,500,000|
|Barclays Capital Inc.||32,500,000||32,500,000|
|TD Securities (USA) LLC||32,500,000||32,500,000|
|CastleOak Securities, L.P.||10,000,000||10,000,000|
|Loop Capital Markets LLC||10,000,000||10,000,000|
|The Williams Capital Group, L.P.||10,000,000||10,000,000|
The Underwriters agree to reimburse the Company for $1,750,000 of its expenses incurred in connection with the offering of the Underwritten Securities; such reimbursement to occur simultaneously with the purchase and sale of the Underwritten Securities at the Closing Time.
Subsection (c) is added to Section 9 of the Standard Provisions:
(c) Recognition of the U.S. Special Resolution Regimes.
(i) In the event that any Underwriter is a Covered Entity that becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer from such Underwriter of this Agreement, and any interest and obligation in or under this Agreement, will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if this Agreement, and any such interest and obligation, were governed by the laws of the United States or a state of the United States.
(ii) In the event that any Underwriter is a Covered Entity or a BHC Act Affiliate of any Underwriter becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under this Agreement that may be exercised against such Underwriter are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if this Agreement were governed by the laws of the United States or a state of the United States.
For purposes of this subsection (c) a “BHC Act Affiliate” has the meaning assigned to the term “affiliate” in, and shall be interpreted in accordance with, 12 U.S.C. § 1841(k). “Covered Entity” means any of the following: (i) a “covered entity” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b); (ii) a “covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 47.3(b); or (iii) a “covered FSI” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b). “Default Right” has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable. “U.S. Special Resolution Regime” means each of (i) the Federal Deposit Insurance Act and the regulations promulgated thereunder and (ii) Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the regulations promulgated thereunder.
For purposes of Section 21 of the Standard Provisions, the identified provisions are: (i) the fifth paragraph of text under the caption “Underwriting” in such preliminary prospectus, Time of Sale Prospectus and the Prospectus; (ii) the third sentence of the seventh paragraph of text under the caption “Underwriting” in such preliminary prospectus, Time of Sale Prospectus and the Prospectus; (iii) the eighth paragraph of text under the caption “Underwriting” in such preliminary prospectus, Time of Sale Prospectus and the Prospectus; and (iv) the tenth and eleventh paragraphs of text under the caption “Underwriting” in such preliminary prospectus, Time of Sale Prospectus and the Prospectus.
The reference in Section 6(a)(i)(B) of the Standard Provisions to “the New York Stock Exchange, Inc. (the ‘NYSE’)” is replaced with “The Nasdaq Stock Market LLC (‘Nasdaq’),” and the reference in each of Section 6(a)(ii)(A) and Section 10(vii) of the Standard Provisions to “the NYSE” is replaced with “Nasdaq.”
All references in the Standard Provisions and exhibits thereto to “Womble Carlyle Sandridge & Rice, LLP” are deemed replaced by “Womble Bond Dickinson (US) LLP.”
The undersigned are acting as the “Representative” under the Standard Provisions (the “Representatives”). The Representatives represent and warrant that they are duly authorized to execute and deliver this Terms Agreement on behalf of the several Underwriters named above.
The Underwritten Securities and the offering thereof shall have the following additional terms:
|Trade Date:||July 25, 2019|
|Time of Sale:||4:00 p.m. New York time on the Trade Date|
|Settlement Date (T+2):||July 29, 2019|
|Closing Time:||9:00 a.m. New York time on the Settlement Date|
|Closing Location:||New York, New York|
|Time of Sale Prospectus:||Base prospectus dated February 15, 2017, preliminary prospectus supplement dated July 25, 2019 and free writing prospectus dated July 25, 2019|
|Title of Securities:||2.625% Senior Notes due 2029||3.375% Senior Notes due 2049|
|Aggregate Principal Amount Offered:||$1,000,000,000||$1,000,000,000|
|Maturity Date:||July 29, 2029||July 29, 2049|
|Interest Payment Dates:||Semi-annually on each January 29 and July 29, commencing on January 29, 2020||Semi-annually on each January 29 and July 29, commencing on January 29, 2020|
|Benchmark Treasury:||2.375% due May 15, 2029||3.000% due February 15, 2049|
|Benchmark Treasury Yield:||2.079%||2.614%|
|Spread to Treasury:||+58 basis points||+80 basis points|
|Price to Public:||99.703%||99.271%|
|Optional Redemption:||Prior to April 29, 2029, make-whole call at Treasury rate plus 10 basis points; par call at any time on or after April 29, 2029||Prior to January 29, 2049, make-whole call at Treasury rate plus 15 basis points; par call at any time on or after January 29, 2049|
|Net Proceeds to PepsiCo (Before Expenses):||$992,530,000||$983,960,000|
|Use of Proceeds:||PepsiCo intends to use the net proceeds from this offering for general corporate purposes, including the repayment of commercial paper.|
|Day Count Fraction:||30/360||30/360|
|CUSIP / ISIN:||713448EL8 / US713448EL82||713448EM6 / US713448EM65|
|Minimum Denomination:||$2,000 and integral multiples of $1,000|
|Joint Book-Running Managers:||J.P. Morgan Securities LLC|
Citigroup Global Markets Inc.
|Senior Co-Managers:||Mizuho Securities USA LLC|
Morgan Stanley & Co. LLC
Barclays Capital Inc.
TD Securities (USA) LLC
|Co-Managers:||CastleOak Securities, L.P.|
Loop Capital Markets LLC
The Williams Capital Group, L.P.
|Address for Notices to the Representatives:|| |
J.P. Morgan Securities LLC
Citigroup Global Markets Inc.
IN WITNESS WHEREOF, the parties hereto have executed this Terms Agreement as of the date first above written.
|By:||/s/ Hugh F. Johnston|
Hugh F. Johnston
|Title:||Executive Vice President and Chief Financial Officer|
|By:||/s/ Kenneth Smith|
|Title:||Senior Vice President, Finance and Treasurer|
CONFIRMED AND ACCEPTED, as of the date first above written:
J.P. MORGAN SECURITIES LLC
CITIGROUP GLOBAL MARKETS INC.
as Representatives of the several Underwriters
|By:||J.P. MORGAN SECURITIES LLC|
|By:||/s/ Robert Bottamedi|
|By:||CITIGROUP GLOBAL MARKETS INC.|
|By:||/s/ Adam D. Bordner|
|Name:||Adam D. Bordner|
Time of Sale Prospectus:
|1.||Preliminary Prospectus dated July 25, 2019 (including the Base Prospectus dated February 15, 2017)|
|2.||Any free writing prospectuses approved by the Representatives and filed by the Company under Rule 433(d) under the Securities Act|
|3.||Final Term Sheet dated July 25, 2019 to be filed by the Company pursuant to Rule 433 under the Securities Act setting forth certain terms of the Underwritten Securities|