EXECUTION VERSION
SEPARATION AND DISTRIBUTION AGREEMENT
AMONG
CADBURY PLC,
CADBURY SCHWEPPES PLC
AND
DR PEPPER SNAPPLE GROUP, INC.
Dated as of May 1, 2008
Table of Contents
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ARTICLE I DEFINITIONS AND INTERPRETATION
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2
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Section 1.01 Certain Defined Terms
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2
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Section 1.02 Interpretation and Rules of Construction
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16
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ARTICLE II THE SEPARATION
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Section 2.01 Transfer of Assets
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Section 2.02 Assumption and Satisfaction of Liabilities
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19
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Section 2.03 Intercompany Balances
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19
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Section 2.04 Transfers Not Effected on or Prior to the Demerger Effective Time; Transfers Deemed Effective as of the
Demerger Effective Time
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19
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Section 2.05 Transfer Documents
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21
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Section 2.06 Further Assurances
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21
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Section 2.07 Replacement of Guarantors and Obligors
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22
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Section 2.08 Disclaimer of Representations and Warranties
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23
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ARTICLE III CERTAIN ACTIONS AT OR PRIOR TO THE DISTRIBUTION
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23
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Section 3.01 Certificate of Incorporation; Bylaws
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23
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Section 3.02 Directors
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23
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Section 3.03 Resignations
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24
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Section 3.04 Ancillary Agreements
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24
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ARTICLE IV THE DISTRIBUTION
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24
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Section 4.01 The Distribution
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24
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Section 4.02 Fractional Shares
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24
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Section 4.03 Actions in Connection with the Distribution
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25
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Section 4.04 Distribution Date
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26
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Section 4.05 Conditions to Distribution
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26
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Section 4.06 Consent to the Reduction
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27
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ARTICLE V CERTAIN COVENANTS
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27
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Section 5.01 Non-Solicitation of Employees
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27
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Section 5.02 Auditors and Audits; Annual and Quarterly Financial Statements and Accounting
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27
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Section 5.03 CS Obligations
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29
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ARTICLE VI INTELLECTUAL PROPERTY MATTERS
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30
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Section 6.01 Cadbury Names and Marks
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30
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Section 6.02 Beverages Names and Marks
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31
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Section 6.03 Memorabilia
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33
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Section 6.04 Additional Licenses
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33
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Section 6.05 Know-How Agreement
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34
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Section 6.06 Domain Names Agreement
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34
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ARTICLE VII INDEMNIFICATION
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34
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Section 7.01 Release of Pre-Distribution Claims
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34
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Section 7.02 Indemnification by CS
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36
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Section 7.03 Indemnification by DPS
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37
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Section 7.04 Procedures for Indemnification
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37
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Section 7.05 Cooperation in Defense and Settlement
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39
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Section 7.06 Indemnification Obligations Net of Insurance Proceeds and Other Amounts
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39
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Section 7.07 Additional Matters; Survival of Indemnities
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40
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ARTICLE VIII ACCESS TO RECORDS; ACCESS TO INFORMATION; LEGAL AND OTHER MATTERS
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40
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Section 8.01 Provision of Corporate Records
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40
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Section 8.02 Access to Information
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41
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Section 8.03 Disposition of Information
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41
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Section 8.04 Witness Services
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42
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Section 8.05 Reimbursement; Other Matters
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42
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Section 8.06 Confidentiality
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42
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Section 8.07 Privileged Matters
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43
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Section 8.08 Ownership of Information
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45
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Section 8.09 Other Agreements
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45
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Section 8.10 Control of Legal Matters
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45
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ARTICLE IX INSURANCE
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47
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Section 9.01 Policies and Rights Included Within Assets
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47
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Section 9.02 Administration; Other Matters
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48
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Section 9.03 Agreement for Waiver of Conflict and Shared Defense
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49
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ARTICLE X DISPUTE RESOLUTION
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49
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Section 10.01
Disputes
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49
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Section 10.02 Dispute Resolution
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50
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Section 10.03 Continuity of Service and Performance
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51
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ARTICLE XI TERMINATION
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51
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Section 11.01 Termination
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51
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Section 11.02 Effect of Termination
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51
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Section 11.03 Amendment
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51
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Section 11.04 Waiver
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51
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ARTICLE XII MISCELLANEOUS
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52
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Section 12.01 Limitation of Liability
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52
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Section 12.02 Expenses
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52
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Section 12.03 Notices
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52
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Section 12.04 Public Announcements
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53
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Section 12.05 Severability
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53
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Section 12.06 Entire Agreement
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53
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ii
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Section 12.07 Assignment
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54
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Section 12.08 Parties in Interest
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54
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Section 12.09 Currency
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54
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Section 12.10 Tax Matters
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54
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Section 12.11 Employee Matters
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54
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Section 12.12 Governing Law
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54
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Section 12.13 Waiver of Jury Trial
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54
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Section 12.14 Survival of Covenants
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55
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Section 12.15 Counterparts
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55
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iii
SEPARATION AND DISTRIBUTION AGREEMENT
SEPARATION AND DISTRIBUTION AGREEMENT (this
Agreement
), dated as of May 1, 2008,
among Cadbury Schweppes plc, a United Kingdom public limited company incorporated in England and
Wales with registered number 0052457 and whose registered office is at 25 Berkeley Square, London
W1J 6HB (
CS
), Dr Pepper Snapple Group, Inc., a Delaware corporation (
DPS
) and,
solely for the purposes of
Sections 4.01(a)
and
(b)
and
Section 5.03
,
Cadbury plc, a United Kingdom public limited company incorporated in England and Wales with
registered number 06497379 and whose registered office is at 25 Berkeley Square, London W1J 6HB.
Each of CS and DPS is sometimes referred to herein as a
Party
and together, as the
Parties
.
WHEREAS, CS, directly and through its various Subsidiaries, is engaged in the Cadbury plc
Business and the Beverages Business;
WHEREAS, the board of directors of CS has determined that it is in the best interests of CS
and its shareholders to separate CS into two separate, publicly traded companies, which shall
operate the Cadbury plc Business and the Beverages Business, respectively;
WHEREAS, for U.S. federal income tax purposes, the separation and certain related transactions
are intended to qualify as a tax-free transaction under Sections 355 and 368 of the Internal
Revenue Code of 1986, as amended;
WHEREAS, in order to effect such separation, the board of directors of CS has determined,
among other things, that it is in the best interests of CS and its shareholders to enter into
transactions pursuant to which (i) CS will become a wholly-owned subsidiary of Cadbury plc; (ii) CS
and/or one or more members of the Cadbury plc Group will, collectively, retain or acquire
beneficial ownership of all of the Cadbury plc Assets and Assume all of the Cadbury plc Liabilities
and DPS and/or one or more members of the DPS Group will, collectively, retain or acquire
beneficial ownership of all of the Beverages Assets and Assume all of the Beverages Liabilities;
and (iii) DPS will distribute to the holders of Cadbury plc Beverages Shares on a pro rata basis
(in each case without consideration being paid by such shareholders) all of the outstanding shares
of common stock, par value $0.01 per share, of DPS (the
DPS Common Stock
) (such
transactions as they may be amended or modified from time to time, collectively, the
Plan of
Separation
); and
WHEREAS, CS and DPS have determined that it is necessary and desirable to set forth the
agreements that will effect the Plan of Separation and to set forth certain other agreements that
will govern certain other matters following the Demerger Effective Time;
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements
herein contained, and intending to be legally bound hereby, CS and DPS hereby agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
Section 1.01
Certain Defined Terms
. For purposes of this Agreement:
Action
shall mean any demand, action, claim, suit, countersuit, arbitration,
inquiry, subpoena, proceeding or investigation by or before any Governmental Entity or any
arbitration or mediation tribunal.
Affiliate
shall mean, with respect to any specified Person, any other Person that
directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under
common control with, such specified Person. For the purposes of this definition, control, when
used with respect to any specified Person, shall mean the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of such Person, whether
through the ownership of voting securities or other interests, by Contract or otherwise.
Ancillary Agreements
shall mean the Transfer Documents, the Transition Services
Agreement, the Tax Sharing Agreement, the Employee Matters Agreement, the Domain Names Agreement
and the Know-How Agreement.
AsiaPac Territory
shall mean the countries as set forth in
Schedule 1.01(a)
.
Assets
shall mean all assets, properties, claims and rights (including goodwill),
wherever located (including in the possession of vendors or other third parties or elsewhere), of
every kind, character and description, whether real, personal or mixed, tangible, intangible or
contingent, in each case, whether or not recorded or reflected or required to be recorded or
reflected on the Records or financial statements of any Person, including the following:
(i) all accounting and other legal and business books, records, ledgers and files,
whether printed, electronic or written;
(ii) all apparatuses, computers and other electronic data processing and communications
equipment, fixtures, machinery, equipment, furniture, office equipment, automobiles, trucks,
aircraft and other transportation equipment, special and general tools, test devices,
prototypes and models and other tangible personal property;
(iii) all inventories of products, goods, materials, parts, raw materials, packaging,
ingredients and supplies, in each case, whether finished or in process;
(iv) all interests in real property of whatever nature, including easements, whether as
owner, mortgagee or holder of a Security Interest in real property, lessor, sublessor,
lessee, sublessee or otherwise;
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(v) (A) all interests in any capital stock or other equity interests of any Subsidiary
or any other Person, (B) all bonds, notes, debentures or other securities issued by any
Subsidiary or any other Person, and (C) all loans, advances or other extensions of credit or
capital contributions to any Subsidiary or any other Person;
(vi) all Contracts, including license Contracts, leases of personal property, open
purchase orders for raw materials, packaging, ingredients, supplies, parts or services,
unfilled orders for the manufacture and sale of products and other Contracts or commitments;
(vii) all deposits, letters of credit and performance and surety bonds;
(viii) all written (including in electronic form) technical information, data,
specifications, research and development information, engineering drawings and
specifications, operating and maintenance manuals, and materials and analyses prepared by
consultants and other third parties;
(ix) all Intellectual Property;
(x) all Software;
(xi) all cost information, sales and pricing data, customer prospect lists, supplier
records, customer and supplier lists, customer and vendor data, correspondence and lists,
product data and literature, artwork, design, development and business process files and
data, vendor and customer drawings, specifications, quality records and reports and other
books, records, studies, surveys, reports, plans and documents;
(xii) all prepaid expenses, trade accounts and other accounts and notes receivables;
(xiii) all claims, rights or benefits against any Person or pursuant to any Action,
choses in action or similar rights, whether accrued or contingent;
(xiv) all rights under insurance policies and all rights in the nature of insurance,
indemnification or contribution;
(xv) all licenses, permits, approvals and authorizations which have been issued by any
Governmental Entity;
(xvi) all cash or cash equivalents, bank accounts, lock boxes and other deposit
arrangements; and
(xvii) all interest rate, currency, commodity or other swap, collar, cap or other
hedging or similar Contracts or arrangements.
3
Beverages Assets
shall mean:
(i) the ownership interests in those Business Entities that are included in the
definition of the DPS Group and all of the Assets owned or held by such Business Entities
(other than any Assets that constitute Cadbury plc Assets);
(ii) all Beverages Contracts and any rights or claims arising thereunder;
(iii) any rights or claims or contingent rights or claims primarily relating to or
arising from the Beverages Business;
(iv) any and all Assets reflected on the Beverages Balance Sheet or the accounting
records supporting such balance sheet and any Assets acquired by or for DPS or any member of
the DPS Group subsequent to the date of such balance sheet which, had they been so acquired
on or before such date and owned as of such date, would have been reflected on such balance
sheet if prepared on a consistent basis, subject to any dispositions of any of such Assets
subsequent to the date of such balance sheet;
(v) subject to
ARTICLE IX
, any rights of any member of the DPS Group under any
Policies, including any rights thereunder arising after the Distribution Date in respect of
any Policies that are occurrence policies;
(vi) all Beverages Claims and, to the extent relating to the Beverages Business, Joint
Cadbury plc and Beverages Claims; and
(vii) the Assets set forth in
Schedule 1.01(b)
and any and all Assets that are
expressly contemplated by this Agreement or any Ancillary Agreement as Assets which have
been or are to be Transferred to DPS or any other member of the DPS Group.
Notwithstanding the foregoing, the Beverages Assets shall not include any Assets that are
expressly contemplated by this Agreement or any Ancillary Agreement (or the Schedules hereto or
thereto) as Assets to be retained by or Transferred to any member of the Cadbury plc Group.
Beverages Balance Sheet
shall mean the combined balance sheet of the DPS Group,
including the notes thereto, as of December 31, 2007, prepared to give effect to the Transactions
contemplated hereby, as set forth in
Schedule 1.01(c)
;
provided
that to the extent
any Assets or Liabilities are Transferred by CS or any member of the Cadbury plc Group to DPS or
any member of the DPS Group or vice versa in connection with the Plan of Separation and on or prior
to the Distribution Date, such Assets and/or Liabilities shall be deemed to be included or excluded
from the Beverages Balance Sheet, as the case may be.
Beverages Business
shall mean the business of (i) manufacturing, distributing,
selling, marketing and promoting carbonated and non-carbonated beverages and other food products
throughout the Territory bearing brands owned by or licensed to a member of the DPS Group and (ii)
licensing brands owned by or licensed to a member of the DPS Group, including for use with
confectionery and other products, to the extent permitted, in the Territory.
4
Beverages Contracts
shall mean the following Contracts to which any member of the
Cadbury plc Group or any member of the DPS Group is a party or by which any member of the Cadbury
plc Group or any member of the DPS Group or any of their respective Assets is bound, whether or not
in writing:
(i) any Contract that relates primarily to the Beverages Business;
(ii) any Contract or part thereof that is otherwise expressly contemplated pursuant to
this Agreement (including pursuant to
Section 2.01(c)
) or any of the Ancillary
Agreements to be assigned to any member of the DPS Group; and
(iii) any Beverages IP Agreement.
Beverages Indemnitees
shall mean each member of the DPS Group and each of their
directors, officers, employees and agents and each of the heirs, executors, successors and assigns
of any of the foregoing, other than the Cadbury plc Indemnitees.
Beverages Intellectual Property
shall mean the Beverages Owned Intellectual Property
and the Beverages Licensed Intellectual Property.
Beverages IP Agreements
shall mean all licenses of Intellectual Property (i) from
any member of the DPS Group to any other Person and (ii) to any member of the DPS Group from any
other Person.
Beverages Liabilities
shall mean:
(i) any Liabilities that are expressly contemplated by this Agreement or any Ancillary
Agreement (or the Schedules hereto or thereto, including
Schedule 1.01(d)
hereto) as
Liabilities to be Assumed by any member of the DPS Group, and all obligations and
Liabilities expressly Assumed by any member of the DPS Group under this Agreement or any of
the Ancillary Agreements;
(ii) any Liabilities to the extent relating to, arising out of or resulting from:
(A) the operation or conduct of the Beverages Business prior to, on or after
the Demerger Effective Time (including any such Liability to the extent relating to,
arising out of or resulting from any act or failure to act by any director, officer,
employee, agent or representative (whether or not such act or failure to act is or
was within such Persons authority) with respect to the Beverages Business);
(B) the operation or conduct of any business conducted by any member of the DPS
Group at any time after the Demerger Effective Time (including any such Liability to
the extent relating to, arising out of or resulting from any act or failure to act
by any director, officer, employee, agent or representative (whether or not such act
or failure to act is or was within such Persons authority) with respect to the
Beverages Business);
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(C) any Beverages Assets, whether arising before, on or after the Demerger
Effective Time;
(D) any terminated or divested Business Entity, business or operation formerly
and primarily owned or managed by or associated with DPS or any Beverages Business;
(E) any indebtedness (including debt securities and asset-backed debt) of any
member of the DPS Group or indebtedness (regardless of the issuer of such
indebtedness) exclusively relating to the Beverages Business or any indebtedness
(regardless of the issuer of such indebtedness) secured exclusively by any of the
Beverages Assets (including any Liabilities relating to, arising out of or resulting
from a claim by a holder of any such indebtedness, in its capacity as such); and
(F) any Beverages Litigation Matter, Future Beverages Litigation Matter and, to
the extent relating to the Beverages Business, any Future Joint Litigation Matter;
and
(iii) all Liabilities reflected as liabilities or obligations on the Beverages Balance
Sheet or the accounting records supporting such balance sheet, and all Liabilities arising
or Assumed after the date of such balance sheet which, had they arisen or been Assumed on or
before such date and been retained as of such date, would have been reflected on such
balance sheet or such records if prepared on a consistent basis, subject to any discharge of
such Liabilities subsequent to the date of the Beverages Balance Sheet.
Notwithstanding anything to the contrary herein, the Beverages Liabilities shall not include
any Cadbury plc Liabilities.
Beverages Licensed Intellectual Property
shall mean all Intellectual Property that a
member of the DPS Group is licensed to use pursuant to the Beverages IP Agreements.
Beverages Litigation Matters
means the Actions set forth in
Schedule 1.01(e)
hereto and any other Actions related to the Beverages Assets or Beverages Liabilities commenced on
or before the Distribution Date.
Beverages Owned Intellectual Property
shall mean all Intellectual Property owned by
a member of the DPS Group.
Beverages Policies
shall mean all Policies, current or past, that are owned or
maintained by or on behalf of any member of the Cadbury plc Group or any member of the DPS Group,
which relate exclusively to the Beverages Business and are either maintained by DPS or a member of
the DPS Group or assignable to DPS or a member of the DPS Group, including as set forth in
Schedule 1.01(f)
.
Beverages Shared Policies
shall mean all Policies, current or past, that are owned
or maintained by or on behalf of any member of the Cadbury plc Group or any member of the DPS Group
which relate to the Beverages Business, other than Beverages Policies, including
6
as set forth in
Schedule 1.01(g)
, and any claims-made Policies entered into after the
Distribution Date that are owned or maintained by any member of the Cadbury plc Group which relate
to the conduct or operation of the Beverages Business prior to the Distribution Date.
Beverages Shared Policy Insured Claims
shall mean those Liabilities that,
individually or in the aggregate, are covered within the terms and conditions of any of the
Beverages Shared Policies, whether or not subject to deductibles, co-insurance, uncollectibility or
retrospectively-rated premium adjustments.
Business Day
shall mean any day that is not a Saturday, a Sunday or any other day on
which banks are required or authorized by Law to be closed in The City of New York, United States
or London, England.
Business Entity
shall mean any Person (other than a natural person) which may
legally hold title to Assets.
Cadbury plc Assets
shall mean:
(i) the ownership interests in those Business Entities that are included in the
definition of the Cadbury plc Group and all of the Assets owned or held by such Business
Entities (other than any Assets that constitute Beverages Assets);
(ii) all Cadbury plc Contracts and any rights or claims arising thereunder;
(iii) any rights or claims or contingent rights or claims primarily relating to or
arising from the Cadbury plc Business;
(iv) any and all Assets reflected on the Cadbury plc Balance Sheet or the accounting
records supporting such balance sheet and any Assets acquired by or for CS or any member of
the Cadbury plc Group subsequent to the date of such balance sheet which, had they been so
acquired on or before such date and owned as of such date, would have been reflected on such
balance sheet if prepared on a consistent basis, subject to any dispositions of any of such
Assets subsequent to the date of such balance sheet;
(v) subject to
ARTICLE IX
, any rights of any member of the Cadbury plc Group
under any Policies, including any rights thereunder arising after the Distribution Date in
respect of any Policies that are occurrence policies;
(vi) all Cadbury plc Claims and, to the extent relating to the Cadbury plc Business,
Joint Cadbury plc and Beverages Claims; and
(vii) the Assets set forth in
Schedule 1.01(h)
and any and all Assets that are
expressly contemplated by this Agreement or any Ancillary Agreement as Assets which have
been or are to be Transferred to CS or any other member of the Cadbury plc Group.
7
Notwithstanding the foregoing, the Cadbury plc Assets shall not include any Assets that are
expressly contemplated by this Agreement or any Ancillary Agreement (or the Schedules hereto or
thereto) as Assets to be retained by or Transferred to any member of the DPS Group.
Cadbury plc Balance Sheet
shall mean the unaudited pro forma statement of net assets
of the Cadbury plc Group, as of December 31, 2007, prepared to give effect to the transactions
contemplated hereby, including the notes thereto, as set forth in
Schedule 1.01(i)
;
provided
that to the extent any Assets or Liabilities are Transferred by DPS or any member
of the DPS Group to CS or any member of the Cadbury plc Group or vice versa in connection with the
Plan of Separation and on or prior to the Distribution Date, such assets and/or liabilities shall
be deemed to be included or excluded from the Cadbury plc Balance Sheet, as the case may be.
Cadbury plc Beverages Shares
shall mean the issued and outstanding shares of 500
pence each of Cadbury plc.
Cadbury plc Business
shall mean the business of manufacturing, distributing,
selling, marketing and promoting (i) confectionery and other food products throughout the world and
(ii) carbonated and non-carbonated beverages outside of the Territory.
Cadbury plc Contracts
shall mean the following Contracts to which CS or any of its
Affiliates is a party as of the date hereof or by which it or any of its Affiliates as of the date
hereof or any of their respective Assets is bound, whether or not in writing:
(i) any Contract that relates primarily to the Cadbury plc Business; and
(ii) any Contract or part thereof that is otherwise expressly contemplated pursuant to
this Agreement (including pursuant to
Section 2.01(c)
) or any of the Ancillary
Agreements to be assigned to any member of the Cadbury plc Group.
Cadbury plc Group
shall mean Cadbury plc and each Business Entity that is a
Subsidiary of Cadbury plc immediately after the Demerger Effective Time, and each Business Entity
that becomes a Subsidiary of Cadbury plc after the Demerger Effective Time, which shall include
those entities identified as such in
Schedule 1.01(j)
.
Cadbury plc Indemnitees
shall mean each member of the Cadbury plc Group and each of
their respective directors, officers, employees and agents and each of the heirs, executors,
successors and assigns of any of the foregoing, other than the Beverages Indemnitees.
Cadbury plc Liabilities
shall mean:
(i) any and all Liabilities that are expressly contemplated by this Agreement or any
Ancillary Agreement (or the Schedules hereto or thereto, including
Schedule 1.01(k)
hereto) as Liabilities to be Assumed by any member of the Cadbury plc Group, and all
obligations and Liabilities expressly Assumed by any member of the Cadbury plc Group under
this Agreement or any of the Ancillary Agreements;
8
(ii) any and all Liabilities to the extent relating to, arising out of or resulting
from:
(A) the operation or conduct of the Cadbury plc Business prior to, on or after
the Demerger Effective Time (including any such Liability to the extent relating to,
arising out of or resulting from any act or failure to act by any director, officer,
employee, agent or representative (whether or not such act or failure to act is or
was within such Persons authority) with respect to the Cadbury plc Business);
(B) the operation or conduct of any business conducted by any member of the
Cadbury plc Group at any time after the Demerger Effective Time (including any such
Liability to the extent relating to, arising out of or resulting from any act or
failure to act by any director, officer, employee, agent or representative (whether
or not such act or failure to act is or was within such Persons authority) with
respect to the Cadbury plc Business);
(C) any Cadbury plc Assets, whether arising before, on or after the Demerger
Effective Time;
(D) any terminated or divested Business Entity, business or operation formerly
and primarily owned or managed by or associated with CS or any Cadbury plc Business;
(E) any indebtedness (including debt securities and asset-backed debt) of any
member of the Cadbury plc Group or indebtedness (regardless of the issuer of such
indebtedness) exclusively relating to the Cadbury plc Business or any indebtedness
(regardless of the issuer of such indebtedness) secured exclusively by any of the
Cadbury plc Assets (including any Liabilities relating to, arising out of or
resulting from a claim by a holder of any such indebtedness, in its capacity as
such); and
(F) any Cadbury plc Litigation Matter, any Future Cadbury plc Litigation Matter
and, to the extent relating to the Cadbury plc Business, any Future Joint Litigation
Matter; and
(iii) all Liabilities reflected as liabilities or obligations on the Cadbury plc
Balance Sheet or the accounting records supporting such balance sheet, and all Liabilities
arising or Assumed after the date of such balance sheet which, had they arisen or been
Assumed on or before such date and been retained as of such date, would have been reflected
on such balance sheet or such records if prepared on a consistent basis, subject to any
discharge of such Liabilities subsequent to the date of the Cadbury plc Balance Sheet.
Notwithstanding anything to the contrary herein, the Cadbury plc Liabilities shall not include
any Beverages Liabilities.
9
Cadbury plc Litigation Matters
means the Actions set forth in
Schedule
1.01(l)
hereto and any other Actions related to the Cadbury plc Assets or Cadbury plc
Liabilities commenced on or before the Distribution Date.
Cadbury plc Ordinary Shares
shall mean the issued and outstanding ordinary shares of
500 pence each of Cadbury plc.
Circular
shall mean the circular sent to holders of CS Ordinary Shares containing
details of the Plan of Separation.
Claims Administration
shall mean the processing of claims made under the Beverages
Shared Policies, including the reporting of claims to the insurance carriers, management and
defense of claims and providing for appropriate releases upon settlement of claims.
Confidential Information
shall mean confidential or proprietary Information
concerning a Party and/or its Subsidiaries which, prior to or following the Demerger Effective
Time, has been disclosed by a Party or its Subsidiaries to another Party or its Subsidiaries, in
written, oral (including by recording), electronic, or visual form to, or otherwise has come into
the possession of, the other Party or its Subsidiaries, including pursuant to the provisions of
Section 8.01
,
8.02
or
8.03
or any other provision of this Agreement (except
to the extent that such Information can be shown to have been (i) in the public domain through no
fault of such Party or its Subsidiaries or (ii) lawfully acquired from other sources by such Party
or its Subsidiaries to which it was furnished;
provided
,
however
, in the case of
clause (ii) that, to the furnished Partys knowledge, such sources did not provide such Information
in breach of any confidentiality obligations).
Consents
shall mean any consents, waivers or approvals from, or notification
requirements to, any Person other than a Governmental Entity, in each case, in connection with the
Plan of Separation.
Continuing Arrangements
shall mean those arrangements set forth in
Schedule 1.01(m)
and such other commercial arrangements among the Parties that are intended
to survive and continue following the Demerger Effective Time.
Contract
shall mean any agreement, contract, obligation, indenture, instrument,
lease, arrangement, commitment or undertaking (whether written or oral and whether express or
implied).
CS ADRs
shall mean the American Depositary Receipts evidencing the American
depository shares representing CS Ordinary Shares.
CS Ordinary Shares
shall mean the issued and outstanding ordinary shares of 12.5
pence each of CS.
Demerger Effective Time
shall mean the time at which the Plan of Separation becomes
effective, expected to be at or around 2:30 p.m. British Summer Time on May 7, 2008 or such other
time as the Court Order is registered.
10
Disclosure Documents
shall mean any registration statement or other document
(including the Form 10 and the Prospectus) filed with the SEC or the FSA by or on behalf of any
Party or any of its controlled Affiliates in connection with the Plan of Separation, and also
includes any information statement, prospectus, offering memorandum, offering circular (including
the Circular and any franchise offering circular or any similar disclosure statement), or similar
disclosure document, whether or not filed with the SEC or the FSA or any other Governmental Entity
related to the Plan of Separation, which offers for sale or registers the Transfer or distribution
of any security of such Party or any of its controlled Affiliates.
Distribution
shall mean the distribution by DPS on the Distribution Date to holders
of record of shares of Cadbury plc Beverages Shares as of the Distribution Record Date of the
issued and outstanding DPS Common Stock on the basis of 12 shares of DPS Common Stock for every 36
outstanding Cadbury plc Beverages Shares.
Distribution Date
shall mean the date which DPS distributes all of the issued and
outstanding shares of DPS Common Stock to the holders of Cadbury plc Beverages Shares.
Distribution Record Date
shall mean 6:00 p.m. Greenwich Mean Time or British Summer
Time, as applicable to the time of year, on the Business Day immediately preceding the date on
which the Court Order is registered by the UK Registrar of Companies at Companies House.
DPS Group
shall mean DPS and each Business Entity that is a Subsidiary of DPS
immediately after the Demerger Effective Time, and each Business Entity that becomes a Subsidiary
of DPS after the Demerger Effective Time, which shall include those entities identified as such in
Schedule 1.01(n)
.
DPS Transaction Costs
shall mean the categories of out-of-pocket transaction costs
and expenses incurred by CS, DPS or any member of their respective Groups in connection with the
Plan of Separation set forth in
Schedule 1.01(o)
.
Employee Matters Agreement
shall mean the Employee Matters Agreement among CS and
DPS and, solely for certain limited sections therein, Cadbury plc, substantially in the form of
attached hereto as
Exhibit 1.01(a)
.
Exchange Act
shall mean the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder, all as the same shall be in effect at the time that
reference is made thereto.
Form 10
shall mean the registration statement on Form 10 filed by DPS with the SEC
in connection with the Distribution, and all amendments and supplements thereto.
FSA
shall mean the UK Financial Services Authority.
Governmental Approvals
shall mean any notice or report to be submitted to, or other
filing to be made with, or any consent, registration, approval, permit or authorization to be
obtained from, any Governmental Entity, in each case in connection with the Plan of Separation.
11
Governmental Entity
shall mean any nation or government, any state, municipality or
other political subdivision thereof and any entity, body, agency, department, board, bureau or
court, whether domestic, foreign or multinational, exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government and any executive official
thereof.
Group
shall mean the Cadbury plc Group or the DPS Group, as the context may require.
Indemnifiable Loss
shall mean any and all damages, losses, Liabilities, penalties,
judgments, settlements, claims, payments, fines, interest, costs and expenses (including the costs
and expenses of any and all Actions and demands, assessments, judgments, settlements and
compromises relating thereto and the reasonable costs and expenses of attorneys, accountants,
consultants and other professionals fees and expenses incurred in the investigation or defense
thereof or the enforcement of rights hereunder), excluding special, consequential, indirect,
punitive damages (other than special, consequential, indirect and/or punitive damages awarded to
any third party against an indemnified party) and excluding Taxes. In addition, an
Indemnifiable Loss
shall not include any non-cash costs or charges, except to the extent
such non-cash costs or charges result in a cash payment by the applicable Indemnitee.
Information
shall mean all information, whether or not patentable or copyrightable,
in written, oral, electronic, visual or other tangible or intangible form, stored in any medium,
including studies, reports, Records, instruments, surveys, discoveries, ideas, concepts, know-how,
techniques, designs, specifications, drawings, blueprints, diagrams, models, prototypes, samples,
flow charts, data, computer data, disks, diskettes, tapes, computer programs or other Software,
marketing plans, customer names, communications by or to attorneys (including attorney-client
privileged communications), memos and other materials prepared by attorneys or under their
direction (including attorney work product), communications and materials otherwise related to or
made or prepared in connection with or in preparation for any legal proceeding, and other
technical, financial, employee or business information or data.
Information Statement
shall mean the Information Statement attached as an exhibit to
the Form 10 sent to the holders of CS Ordinary Shares in connection with the Distribution,
including any amendment or supplement thereto.
Insurance Administration
shall mean, with respect to each Beverages Shared Policy,
the accounting for premiums, retrospectively-rated premiums, defense costs, indemnity payments,
deductibles and retentions, as appropriate, under the terms and conditions of each of the Beverages
Shared Policies; and the reporting to excess insurance carriers of any losses or claims which may
cause the per-occurrence, per claim or aggregate limits of any Beverages Shared Policy to be
exceeded, and the distribution of Insurance Proceeds as contemplated by this Agreement.
12
Insurance Proceeds
shall mean those monies (i) received by an insured from an
insurance carrier or (ii) paid by an insurance carrier on behalf of an insured, in either case net
of any applicable premium adjustment, retrospectively-rated premium, deductible, retention, or cost
of reserve paid or held by or for the benefit of such insured.
Intellectual Property
shall mean (i) patents and patent applications;
(ii) Trademarks; (iii) copyrights and design rights, including registrations and applications for
registration thereof; (iv) database rights; and (v) confidential and proprietary information,
including trade secrets and know-how.
Intercompany Balances
shall mean all intercompany accounts receivable, accounts
payable, loans and corporate cross-charges (other than current intercompany accounts receivables
and accounts payable arising out of the ordinary course of business or any balances outstanding
under any Continuing Arrangement), including the interest accrued thereon as of the date hereof,
between any member of the DPS Group, on the one hand, and any member of the Cadbury plc Group, on
the other hand, including those set forth in
Schedule 1.01(p)
.
Law
shall mean any applicable U.S., English or other federal, national,
supranational, state, provincial, local or similar statute, law, ordinance, regulation, rule, code,
order, requirement or rule of law (including common law).
Liabilities
shall mean any and all debts, liabilities, costs, expenses and
obligations, whether accrued or fixed, absolute or contingent, matured or unmatured, reserved or
unreserved, or determined or determinable, including those arising under any Law, Action, whether
asserted or unasserted, or order, writ, judgment, injunction, decree, stipulation, determination or
award entered by or with any Governmental Entity and those arising under any Contract or any fines,
damages or equitable relief which may be imposed and including all costs and expenses related
thereto.
Listing Rules
shall mean the Listing Rules of the UKLA.
London Stock Exchange
shall mean the London Stock Exchange plc.
NYSE
shall mean the New York Stock Exchange.
Person
shall mean any natural person, firm, individual, corporation, business trust,
joint venture, association, company, limited liability company, partnership or other organization
or entity, whether incorporated or unincorporated, or any Governmental Entity.
Policies
shall mean insurance policies and insurance Contracts of any kind (other
than life and benefits policies or Contracts), including primary, excess and umbrella policies,
comprehensive general liability policies, director and officer liability, fiduciary liability,
automobile, aircraft, property and casualty, workers compensation and employee dishonesty
insurance policies, bonds and self-insurance and captive insurance company arrangements, together
with the rights, benefits and privileges thereunder.
13
Prospectus
shall mean the prospectus issued by Cadbury plc in relation to the
admission by the UKLA of the Cadbury plc Ordinary Shares and the admission of the Cadbury plc
Ordinary Shares to trading on the main market for listed securities of the London Stock Exchange,
prepared, published and approved by, and filed with, the FSA in accordance with the Prospectus
Rules.
Prospectus Rules
shall mean the Prospectus Rules of the FSA made under section 73A
of the Financial Services and Markets Act 2000, as amended.
Records
shall mean any Contracts, documents, books, records or files.
Scheme
shall mean the scheme of arrangement under Section 425 of the Companies Act
1985 between CS and the CS shareholders, with or subject to any modification, addition or condition
approved or imposed by the Court pursuant to which the CS Ordinary Shares will be cancelled, CS
will become a wholly-owned subsidiary of Cadbury plc and each holder of CS Ordinary Shares will be
entitled to receive 64 Cadbury plc Ordinary Shares and 36 Cadbury plc Beverages Shares for every
100 CS Ordinary Shares that such holder holds as of the Scheme Record Date.
Scheme Record Date
shall mean 6:00 p.m. Greenwich Mean Time or British Summer Time,
as applicable to the time of year, on the date of the Court hearing to confirm the reduction of
capital of CS provided under the Scheme.
SEC
shall mean the United States Securities and Exchange Commission or any successor
agency.
Securities Act
shall mean the Securities Act of 1933, as amended, and the rules and
regulations of the SEC thereunder, all as the same shall be in effect at the time that reference is
made thereto.
Security Interest
shall mean any mortgage, security interest, pledge, lien, charge,
claim, option, right to acquire, voting or other restriction, right-of-way, easement, encroachment,
restriction on transfer, or other encumbrance of any nature whatsoever, excluding (i) restrictions
on transfer under securities Laws and (ii) licenses of Intellectual Property.
Software
shall mean all computer programs, applications and code (including source
code and object code), and all media and documentation (including user manuals and training
materials) relating to or embodying any of the foregoing or on which any of the foregoing are
recorded.
Subsidiary
shall mean, with respect to any Person, (i) a corporation, 50% or more of
the voting or capital stock of which is, as of the time in question, directly or indirectly owned
by such Person and (ii) any other partnership, joint venture, association, joint stock company,
trust, unincorporated organization or other entity in which such Person, directly or indirectly,
owns 50% or more of the equity economic interest thereof or has the power to elect or direct the
election of 50% or more of the members of the governing body of such entity or otherwise has
control over such entity (
e.g.,
as the managing partner of a partnership).
14
Tax
shall have the meaning set forth in the Tax Sharing Agreement.
Tax Return
shall have the meaning set forth in the Tax Sharing Agreement.
Tax Sharing Agreement
shall mean the Tax Sharing and Indemnification Agreement among
CS and DPS and, solely for certain limited sections therein, Cadbury plc, substantially in the form
attached hereto as
Exhibit 1.01(b)
.
Territory
shall mean the countries listed across from the brands owned by or
licensed to a member of the DPS Group as of the Distribution Date or otherwise Transferred to a
member of the DPS Group after the Distribution Date pursuant to
Section 2.04
, as set forth
in
Schedule 1.01(q)
. For the avoidance of doubt, the Territory is specific as to each
brand identified in
Schedule 1.01(q)
.
Trademarks
means trademarks, service marks, trade names, trade dress and Internet
domain names, and registrations and applications for registration thereof, together with the
goodwill associated therewith.
Transaction Costs
shall mean all out-of-pocket costs and expenses incurred by CS,
DPS or any member of their respective Groups in connection with the Plan of Separation other than
the DPS Transaction Costs.
Transfer Agent
shall mean Computershare Trust Company, N.A.
Transfer Documents
shall mean, collectively, the various Contracts and other
documents heretofore entered into and to be entered into to effect the Transfer of Assets and the
Assumption of Liabilities in the manner contemplated by this Agreement and the Plan of Separation,
or otherwise relating to, arising out of or resulting from the transactions contemplated by this
Agreement, which shall be, as applicable, in such form or forms as the applicable Parties thereto
agree.
Transition Services Agreement
shall mean the Transition Services Agreement between
CS and DPS, substantially in the form attached hereto as
Exhibit 1.01(c)
.
UK
shall mean the United Kingdom of Great Britain and Northern Ireland.
UKLA
shall mean the FSA acting in its capacity as the competent authority for the
purposes of Part VI of the Financial Services and Markets Act 2000, as amended.
The following terms have the meanings set forth in the Sections set forth below:
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Definition
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Location
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Agreement
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Preamble
|
Agreement Disputes
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10.01
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American Samoa Business
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6.02(d)
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AsiaPac Licensed Intellectual Property
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6.04(c)
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Assume or Assumed
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2.02
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15
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Definition
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Location
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Audited Party
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5.02(d)
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Beverages Claims
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8.10(c)
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Beverages Names and Marks
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6.02(a)
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Cadbury Names and Marks
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6.01(a)
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Cadbury plc Claims
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8.10(c)
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Corporate Name
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6.01(b)
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Court
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4.01(a)
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Court Order
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4.01(b)
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CS
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Recitals
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Domain Names Agreement
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6.06
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DPS
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Preamble
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DPS Common Stock
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Recitals
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DPS Licensed Intellectual Property
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6.04(b)
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Escalation Notice
|
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10.02(a)
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Existing Stock
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6.01(c)
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Future Beverages Litigation Matter
|
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8.10(b)(ii)
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Future Cadbury plc Litigation Matter
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8.10(b)(i)
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Future Joint Litigation Matters
|
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8.10(b)(iii)
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Improvements
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6.04(b)
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Indemnifying Party
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7.04(b)
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Indemnitee
|
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7.04(b)
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Indemnity Payment
|
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7.06(a)
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Interim Financial Statements
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5.02(c)
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Internal Control Audit and Management Assessments
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5.02(b)
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Know-How Agreement
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6.05(a)
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Joint Cadbury plc and Beverages Claims
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8.10(c)
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Memorabilia
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6.03
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Other Partys Auditors
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5.02(b)
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Party
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Preamble
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Plan of Separation
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Recitals
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Reduction
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4.01(a)
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Shared Contract
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2.01(c)(i)
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Third Party Claim
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7.04(b)
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Third Party Proceeds
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7.06(a)
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Transfer
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2.01(a)(i)
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Section 1.02
Interpretation and Rules of Construction
. In this Agreement, except to
the extent otherwise provided or that the context otherwise requires:
(a) when a reference is made in this Agreement to an Article, Section, Exhibit or
Schedule, such reference is to an Article or Section of, or an Exhibit or Schedule to, this
Agreement unless otherwise indicated;
(b) the table of contents and headings for this Agreement are for reference purposes
only and do not affect in any way the meaning or interpretation of this Agreement;
16
(c) whenever the words include, includes or including are used in this Agreement,
they are deemed to be followed by the words without limitation;
(d) the words hereof, herein and hereunder and words of similar import, when used
in this Agreement, refer to this Agreement as a whole and not to any particular provision of
this Agreement;
(e) all terms defined in this Agreement have the defined meanings when used in any
Ancillary Agreement, or any certificate or other document made or delivered pursuant hereto,
unless otherwise defined therein;
(f) the definitions contained in this Agreement are applicable to the singular as well
as the plural forms of such terms; and
(g) references to a Person are also to its successors and permitted assigns.
ARTICLE II
THE SEPARATION
Section 2.01
Transfer of Assets
.
(a) On or prior to the Demerger Effective Time and to the extent not already completed:
(i) CS shall, on behalf of itself and the members of the Cadbury plc Group, as
applicable, transfer, contribute, assign and convey or cause to be transferred, contributed,
assigned and conveyed (
Transfer
) to DPS or another member of the DPS Group all of
its and its Subsidiaries right, title and interest, if any and to the extent of such right,
title and interest, in and to the Beverages Assets owned or held by a member of the Cadbury
plc Group as of the Distribution Date, including taking the actions necessary to consummate
the transactions set forth in
Schedule 2.01(a)
; and
(ii) DPS shall, on behalf of itself and the members of the DPS Group, as applicable,
Transfer to CS or another member of the Cadbury plc Group all of its and its Subsidiaries
right, title and interest, if any and to the extent of such right, title and interest, in
and to the Cadbury plc Assets owned or held by a member of the DPS Group as of the
Distribution Date, including taking the actions necessary to consummate the transactions set
forth in
Schedule 2.01(a)
.
(b) Unless otherwise agreed to by the Parties, each of CS and DPS shall be
entitled to designate the Business Entity within such Partys respective Group to which any
Assets are to be Transferred pursuant to this
Section 2.01
or
Section 2.04
.
17
(c) Without limiting the generality of the obligations set forth in
Section 2.01(a)
and
2.01(b)
:
(i) Unless the Parties otherwise agree or the benefits of any Contract described in
this Section are expressly conveyed to the applicable Party pursuant to an Ancillary
Agreement, to the extent any Contract is (1) a Cadbury plc Asset but inures in part to the
benefit or burden of any member of the DPS Group or (2) a Beverages Asset but inures in part
to the benefit or burden of any member of the Cadbury plc Group, including those contracts
listed in
Schedule 2.01(c)
(each, a
Shared Contract
), such Shared Contract
shall be assigned in part to the applicable member(s) of the applicable Group, if so
assignable, or appropriately amended prior to, on or after the Demerger Effective Time, so
that each Party or the members of their respective Groups shall be entitled to the rights
and benefits, and shall Assume the related portion of any Liabilities, inuring to their
respective businesses;
provided
,
however
, that (x) in no event shall any
member of any Group be required to assign (or amend) any Shared Contract in its entirety or
to assign a portion of any Shared Contract (including any Policy) which is not assignable
(or cannot be amended) by its terms (including any terms imposing consents or conditions on
an assignment where such consents or conditions have not been obtained or fulfilled) and
(y) if any Shared Contract cannot be so partially assigned by its terms or otherwise, or
cannot be amended or if such assignment or amendment would impair the benefit the Parties
thereto derive from such Shared Contract, the Parties shall, and shall cause each of their
respective Subsidiaries to, take such other reasonable and permissible actions to cause a
member of the DPS Group or the Cadbury plc Group, as the case may be, to receive the benefit
of that portion of each Shared Contract that relates to the Beverages Business or the
Cadbury plc Business (to the extent so related) as if such Shared Contract had been assigned
to (or amended to allow) a member of the applicable Group pursuant to this
Section
2.01
and to bear the burden of the corresponding Liabilities (including any Liabilities
that may arise by reason of such arrangement) as if such Liabilities had been Assumed by a
member of the applicable Group pursuant to this
Section 2.01
.
(ii) Each of CS and DPS shall, and shall cause the respective members of its Group to,
(A) treat for all Tax purposes the portion of each Shared Contract inuring to its respective
businesses as Assets owned by, and/or Liabilities of, as applicable, such Party not later
than the Demerger Effective Time and (B) neither report nor take any Tax position (on a Tax
Return or otherwise) inconsistent with such treatment (in the case of clauses (A) and (B),
unless required by Tax Law or any other Law or the good faith resolution of a contest or
other proceeding relating to Taxes).
(iii) Nothing in this
Section 2.01(c)
shall require any member of any Group to
make any payment (except to the extent advanced, Assumed or agreed in advance to be
reimbursed by any member of the other Group), incur any obligation or grant any concession
for the benefit of any member of any other Group in order to effect any transaction
contemplated by this
Section 2.01(c)
, in each case, other than an incidental
payment, obligation or concession.
18
Section 2.02
Assumption and Satisfaction of Liabilities
. Except as otherwise
specifically set forth in any Ancillary Agreement, from and after the Demerger Effective Time,
(a) CS shall, or shall cause a member of the Cadbury plc Group to, accept, assume (or, as
applicable, retain), perform, discharge and fulfill, in accordance with their respective terms
(
Assume
), all of the Cadbury plc Liabilities and (b) DPS shall, or shall cause a member
of the DPS Group to, Assume all the Beverages Liabilities, in each case, regardless of (i) when or
where such Liabilities arose or arise, (ii) whether the facts upon which they are based occurred
prior to, on or subsequent to the Demerger Effective Time, (iii) where or against whom such
Liabilities are asserted or determined and (iv) whether arising from or alleged to arise from
negligence, recklessness, violation of Law, fraud or misrepresentation by any member of the Cadbury
plc Group or the DPS Group, as the case may be, or any of their past or present respective
directors, officers, employees, agents, Subsidiaries or Affiliates.
Section 2.03
Intercompany Balances
.
(a) All of the Intercompany Balances, including those set forth on
Schedule 1.01(p)
shall, prior to or at the Demerger Effective Time, be repaid, settled or otherwise eliminated, by
means of cash payments, a dividend, capital contribution, a combination of the foregoing or
otherwise, as determined by CS.
(b) Except as may be contemplated by this Agreement or any Ancillary Agreement and the
transactions contemplated hereby and thereby, from May 1, 2008 until the Distribution Date, DPS
shall, and shall cause each member of the DPS Group to, manage its working capital in the ordinary
course of business consistent with past practice.
(c) As between the Parties (and the members of their respective Groups), all payments and
reimbursements received after the Demerger Effective Time by any Party (or member of its Group)
that relate to a Business, Asset or Liability of the other Party (or member of its Group) shall be
held by such Party in trust for the use and benefit of the Party entitled thereto (at the expense
of the Party entitled thereto) and, promptly upon receipt by such Party of any such payment or
reimbursement, such Party shall pay or shall cause the applicable member of its Group to pay over
to the applicable Party the amount of such payment or reimbursement without right of set-off, net
of any costs, including Tax costs, to the Party making the payment.
Section 2.04
Transfers Not Effected on or Prior to the Demerger Effective Time; Transfers
Deemed Effective as of the Demerger Effective Time
.
(a) To the extent that any Transfers contemplated by this Agreement (other than any Transfer
contemplated by
Section 2.01(c)
) shall not have been consummated on or prior to the
Demerger Effective Time, the Parties shall cooperate to effect such Transfers as promptly as
practicable following the Demerger Effective Time. Nothing herein shall be deemed to
require the Transfer of any Assets or the Assumption of any Liabilities which by their terms
or operation of Law cannot be Transferred;
provided
,
however
, that the Parties and
their respective Subsidiaries shall cooperate and use commercially reasonable efforts following the
Distribution Date to seek to obtain any necessary Consents or Governmental Approvals for the
Transfer of all Assets and the Assumption of all Liabilities contemplated to be Transferred and
Assumed pursuant to this Agreement.
19
(b) In the event that any such Transfer of Assets or Assumption of Liabilities has not been
consummated, from and after the Demerger Effective Time (i) to the extent permitted by applicable
Law, the Party whose Group retains such Asset shall thereafter hold, or cause the applicable member
of its Group to hold, such Asset (at no net Tax cost to such Party or such member) for the use and
benefit of the member of the other Group entitled thereto (at the expense of the member entitled
thereto) to the extent related to such other Partys business and (ii) to the extent permitted by
applicable Law, the Party intended to Assume such Liability shall, or shall cause the applicable
member of its Group to, pay or reimburse the member of the other Group retaining such Liability (at
no net Tax cost to such retaining member) for all amounts paid or incurred in connection with the
retention of such Liability to the extent related to such other Partys business. In addition, the
Party whose Group retains such Asset or Liability shall, insofar as reasonably possible and to the
extent permitted by applicable Law, treat such Asset or Liability in the ordinary course of
business in accordance with past practice and take such other actions as may be reasonably
requested by the Party to whose Group such Asset is to be Transferred or by the Party whose Group
will Assume such Liability in order to place such Party, insofar as reasonably possible, in the
same position as if such Asset or Liability had been Transferred or Assumed as contemplated hereby
and so that all the benefits and burdens relating to such Asset or Liability, including possession,
use, risk of loss, potential for gain, and dominion, control and command over such Asset or
Liability, are to inure from and after the Demerger Effective Time to the member or members of the
Cadbury plc Group or the DPS Group entitled to the receipt of such Asset or required to Assume such
Liability. In furtherance of the foregoing, the Parties agree that, as of the Demerger Effective
Time, each Party shall be deemed to have acquired complete and sole beneficial ownership over all
of the Assets, together with all rights, powers and privileges incident thereto, and shall be
deemed to have Assumed in accordance with the terms of this Agreement all of the Liabilities, and
all duties, obligations and responsibilities incident thereto, which such Party is entitled to
acquire or required to Assume pursuant to the terms of this Agreement.
(c) If and when the Consents, Governmental Approvals and/or conditions, the absence or
non-satisfaction of which caused the deferral of Transfer of any Asset or deferral of the
Assumption of any Liability pursuant to
Section 2.04(a)
, are obtained or satisfied, the
Transfer, assignment, Assumption or novation of the applicable Asset or Liability shall be effected
in accordance with and subject to the terms of this Agreement and/or the applicable Ancillary
Agreement.
(d) The Person retaining any Asset or Liability due to the deferral of the Transfer of such
Asset or the deferral of the Assumption of such Liability pursuant to
Section 2.04(a)
or
otherwise shall not be obligated, in connection with the foregoing, to expend any money unless the
necessary funds are advanced, assumed, or agreed in advance to be reimbursed by the Person entitled
to such Asset or the Person intended to be subject to such Liability and at
no net Tax cost to such retaining Person, other than reasonable attorneys fees and recording
or similar fees, all of which shall be promptly reimbursed by the Person entitled to such Asset or
the Person intended to be subject to such Liability.
(e) Each of CS and DPS shall, and shall cause the members of its respective Group to,
(i) treat for all Tax purposes (A) the deferred Assets as Assets having been Transferred to and
owned by the Party entitled to such Assets not later than the Demerger Effective Time and
20
(B) the
deferred Liabilities as Liabilities having been Assumed and owed by the Person intended to be
subject to such Liabilities not later than the Demerger Effective Time and (ii) neither report nor
take any Tax position (on a Tax Return or otherwise) inconsistent with such treatment (in the case
of clauses (i) and (ii), unless required by a Tax Law or any other Law or good faith resolution of
a contest or proceeding relating to Taxes).
(f) Nothing in this
Section 2.04
shall be deemed to modify the terms of any Beverages
IP Agreement entered into between any member of the DPS Group, on the one hand, and any member of
the Cadbury plc Group on the other.
Section 2.05
Transfer Documents
. In connection with, and in furtherance of, the
Transfer of Assets and the acceptance and Assumption of Liabilities contemplated by this Agreement,
to the extent necessary, the Parties shall execute or cause to be executed, on or prior to the
Demerger Effective Time, the Transfer Documents reasonably necessary to evidence the valid and
effective Assumption by the applicable Party or the members of its Group of the Cadbury plc
Liabilities or Beverages Liabilities, as applicable, and the valid Transfer to the applicable Party
or member of such Partys Group of all right, title and interest in and to the Cadbury plc Assets
or the Beverages Asset, as applicable, to be Transferred hereunder.
Section 2.06
Further Assurances
.
(a) In addition to and without limiting the actions specifically provided for elsewhere in
this Agreement, including
Section 2.04
, each of the Parties shall cooperate with each other
and use (and will cause their respective Subsidiaries and Affiliates to use) commercially
reasonable efforts, on and after the Demerger Effective Time, to take, or to cause to be taken, all
actions, and to do, or to cause to be done, all things reasonably necessary on its part under
applicable Law or contractual obligations to consummate and make effective the transactions
contemplated by this Agreement and the Ancillary Agreements.
(b) Without limiting the foregoing, on and after the Demerger Effective Time, each Party shall
cooperate with the other Parties, and without any further consideration, but at the expense of the
requesting Party from and after the Demerger Effective Time, to execute and deliver, or use
commercially reasonable efforts to cause to be executed and delivered, all instruments, including
instruments of Transfer, and to make all filings with, and to obtain all Consents and/or
Governmental Approvals, any permit, license, Contract, indenture or other instrument (including any
Consents or Governmental Approvals), and to take all such other actions as such Party may
reasonably be requested to take by the other Party from time to time, consistent with the terms of
this Agreement and the Ancillary Agreements, in order to effectuate
the provisions and purposes of this Agreement and the Ancillary Agreements and the Transfers
of the applicable Assets and the assignment and Assumption of the applicable Liabilities and the
other transactions contemplated hereby and thereby.
21
Section 2.07
Replacement of Guarantors and Obligors
.
(a) DPS shall (with the reasonable cooperation of CS) use its commercially reasonable efforts
to have any member of the Cadbury plc Group removed as guarantor of or obligor for any Beverages
Liability, including in respect of those guarantees and obligations set forth in
Schedule
2.07(a)
, to the extent that they relate to Beverages Liabilities.
(b) On or prior to the Demerger Effective Time, to the extent required to obtain a release
from a guaranty or obligation for any Beverages Liability of any member of the Cadbury plc Group, a
member of the DPS Group, as applicable, shall either (i) execute a guaranty agreement in the form
of the existing guaranty or such other form as is agreed to by the relevant Parties to such
guaranty agreement or (ii) execute an amendment to the agreement giving rise to such obligation in
such form as is necessary to obtain such release, except to the extent that such existing guaranty
or amendment contains representations, covenants or other terms or provisions either (1) with which
DPS would be reasonably unable to comply or (2) which would be reasonably expected to be breached.
(c) If DPS is unable to obtain, or to cause to be obtained, any such required removal as set
forth in clause (a) and (b) of this
Section 2.07
, (i) the relevant DPS Group beneficiary
and DPS shall, and shall cause the members of the DPS Group to, indemnify and hold harmless the
Cadbury plc Group guarantor or obligor for any Indemnifiable Loss arising from or relating thereto
(in accordance with the provisions of
ARTICLE VII
) and shall or shall cause one of its
Affiliates, as agent or subcontractor for such guarantor or obligor to pay, perform and discharge
fully all the obligations or other Liabilities of such guarantor or obligor thereunder.
(d) CS shall (with the reasonable cooperation of DPS) use its commercially reasonable efforts
to have any member of the DPS Group removed as guarantor of or obligor for any Cadbury plc
Liability, including in respect of the guarantees or obligations set forth in
Schedule
2.07(d)
, to the extent that they relate to Cadbury plc Liabilities.
(e) On or prior to the Demerger Effective Time, to the extent required to obtain a release
from a guaranty or obligation for any Cadbury plc Liability of any member of the DPS Group, a
member of the Cadbury plc Group, as applicable, shall either (i) execute a guaranty agreement in
the form of the existing guaranty or such other form as is agreed to by the relevant Parties to
such guaranty agreement or (ii) execute an amendment to the agreement giving rise to such
obligation in such form as is necessary to obtain such release, except to the extent that such
guaranty or amendment contains representations, covenants or other terms or provisions either (1)
with which CS would be reasonably unable to comply or (2) which would be reasonably expected to be
breached.
(f) If CS is unable to obtain, or to cause to be obtained, any such required
removal as set forth in clause (d) and (e) of this
Section 2.07
, (i) the relevant
Cadbury plc Group beneficiary and CS shall, and shall cause the other members of the Cadbury plc
Group to, indemnify and hold harmless the DPS Group guarantor or obligor for any Indemnifiable Loss
arising from or relating thereto (in accordance with the provisions of
ARTICLE VII
) and
shall or shall cause one of its Affiliates, as agent or subcontractor for such guarantor or obligor
to pay,
22
perform and discharge fully all the obligations or other Liabilities of such guarantor or
obligor thereunder.
Section 2.08
Disclaimer of Representations and Warranties
. EACH OF CS (ON BEHALF OF
ITSELF AND EACH MEMBER OF THE CADBURY PLC GROUP) AND DPS (ON BEHALF OF ITSELF AND EACH MEMBER OF
THE DPS GROUP) UNDERSTANDS AND AGREES THAT, EXCEPT AS EXPRESSLY SET FORTH HEREIN, IN ANY ANCILLARY
AGREEMENT OR IN ANY CONTINUING ARRANGEMENT, NO PARTY TO THIS AGREEMENT, ANY ANCILLARY AGREEMENT,
ANY CONTINUING ARRANGEMENT OR ANY OTHER AGREEMENT OR DOCUMENT CONTEMPLATED BY THIS AGREEMENT, ANY
ANCILLARY AGREEMENTS, ANY CONTINUING ARRANGEMENTS OR OTHERWISE, IS REPRESENTING OR WARRANTING IN
ANY WAY AS TO THE ASSETS, BUSINESSES, INFORMATION OR LIABILITIES CONTRIBUTED, TRANSFERRED OR
ASSUMED AS CONTEMPLATED HEREBY OR THEREBY, AS TO ANY CONSENTS OR GOVERNMENTAL APPROVALS REQUIRED IN
CONNECTION HEREWITH OR THEREWITH, AS TO THE VALUE OR FREEDOM FROM ANY SECURITY INTERESTS OF, OR ANY
OTHER MATTER CONCERNING, ANY ASSETS OF SUCH PARTY, OR AS TO THE ABSENCE OF ANY DEFENSES OR RIGHT OF
SET-OFF OR FREEDOM FROM COUNTERCLAIM WITH RESPECT TO ANY ACTION OR OTHER ASSET, INCLUDING ACCOUNTS
RECEIVABLE, OF ANY PARTY, OR AS TO THE LEGAL SUFFICIENCY OF ANY CONTRIBUTION, ASSIGNMENT, DOCUMENT,
CERTIFICATE OR INSTRUMENT DELIVERED HEREUNDER TO CONVEY TITLE TO ANY ASSET OR THING OF VALUE UPON
THE EXECUTION, DELIVERY AND FILING HEREOF OR THEREOF. EXCEPT AS MAY EXPRESSLY BE SET FORTH HEREIN
OR IN ANY ANCILLARY AGREEMENT OR CONTINUING ARRANGEMENT, ALL SUCH ASSETS ARE BEING TRANSFERRED ON
AN AS IS, WHERE IS BASIS (AND, IN THE CASE OF ANY REAL PROPERTY, BY MEANS OF A QUITCLAIM OR
SIMILAR FORM DEED OR CONVEYANCE) AND THE RESPECTIVE TRANSFEREES SHALL BEAR THE ECONOMIC AND LEGAL
RISKS THAT (I) ANY CONVEYANCE SHALL PROVE TO BE INSUFFICIENT TO VEST IN THE TRANSFEREE GOOD TITLE,
FREE AND CLEAR OF ANY SECURITY INTEREST AND (II) ANY NECESSARY CONSENTS OR GOVERNMENTAL APPROVALS
ARE NOT OBTAINED OR THAT ANY REQUIREMENTS OF LAWS OR JUDGMENTS ARE NOT COMPLIED WITH.
ARTICLE III
CERTAIN ACTIONS AT OR PRIOR TO THE DISTRIBUTION
Section 3.01
Certificate of Incorporation; Bylaws
. On or prior to the Distribution Date, all necessary actions shall be taken to adopt the
form of Certificate of Incorporation and Bylaws filed by DPS with the SEC as exhibits to the Form
10.
Section 3.02
Directors
. On or prior to the Distribution Date, CS shall take all
necessary actions to cause the board of directors of DPS to consist of the individuals identified
in the Information Statement as directors of DPS.
23
Section 3.03
Resignations
. On or prior to the Distribution Date, (i) CS shall cause
all its employees and any employees of any member of the Cadbury plc Group (excluding any employees
of any member of the DPS Group) to resign, effective as of the Distribution Date, from all
positions as officers or directors of any member of the DPS Group in which they serve and (ii) DPS
shall cause all its employees and any employees of any member of the DPS Group to resign, effective
as of the Distribution Date, from all positions as officers or directors of any members of the
Cadbury plc Group.
Section 3.04
Ancillary Agreements
. On or prior to the Distribution Date, each of CS
and DPS shall enter into, and/or (where applicable) shall cause a member or members of their
respective Group to enter into, the Ancillary Agreements and any other Contracts in respect of the
Distribution reasonably necessary or appropriate in connection with the transactions contemplated
hereby and thereby.
ARTICLE IV
THE DISTRIBUTION
Section 4.01
The Distribution
. Subject to
Sections 4.04
and
4.05
:
(a) Promptly following the sanction by the High Court of Justice of England and Wales (the
Court
) of the Scheme, Cadbury plc shall apply to the Court to approve a reduction in
capital pursuant to Section 135 of the Companies Act 1985 (the
Reduction
) under which the
share capital of Cadbury plc shall be reduced by decreasing the nominal value of each Cadbury plc
Ordinary Share from 500 to 10 pence and the Cadbury plc Beverages Shares will be cancelled in their
entirety.
(b) Promptly after receipt of the order (the
Court Order
) from the Court approving
the Reduction, Cadbury plc shall file the Court Order at Companies House.
(c) On the Distribution Date, DPS shall issue to each holder of a Cadbury plc Beverages Share
12 shares of DPS Common Stock for every 36 Cadbury plc Beverages Shares
held by such shareholder and the shares of DPS Common Stock held by CS shall be cancelled. No
action by any such shareholder shall be necessary for such shareholder (or such shareholders
designated transferee or transferees) to receive the applicable number of shares of (and, if
applicable, cash in lieu of any fractional shares) DPS Common Stock such shareholder is entitled to
in the Distribution. The Transfer Agent shall credit the appropriate class and number of such
shares of DPS Common Stock to book entry accounts for each such holder or designated transferee or
transferees of such holder of DPS Common Stock.
Section 4.02
Fractional Shares
. Shareholders holding a number of shares of Cadbury
plc Beverages Shares, on the Distribution Record Date, which would entitle such shareholders to
receive less than one whole share of DPS Common Stock in the applicable Distribution will receive
cash in lieu of fractional shares. Fractional shares of DPS Common Stock will not be distributed
in the Distribution nor credited to book-entry accounts. The Transfer Agent shall, as soon as
practicable after the applicable Distribution Date, (a) determine
24
the number of whole shares and
fractional shares of DPS Common Stock allocable to each holder of record or beneficial owner of
Cadbury plc Beverages Shares as of close of business on the Distribution Record Date, (b) aggregate
all such fractional shares into whole shares and sell the whole shares obtained thereby in open
market transactions, in each case, at then prevailing trading prices on behalf of holders who would
otherwise be entitled to fractional share interests and (c) distribute to each such holder, or for
the benefit of each such beneficial owner, such holder or owners ratable share of the net proceeds
of such sale, based upon the average gross selling price per share of DPS Common Stock after making
appropriate deductions for any amount required to be withheld for United States federal income tax
purposes. DPS shall bear the cost of brokerage fees incurred in connection with these sales of
fractional shares, which sales shall occur as soon after the applicable Distribution Date as
practicable and as determined by the Transfer Agent. Neither CS nor DPS or the Transfer Agent will
guarantee any minimum sale price for the fractional shares of DPS Common Stock. Neither CS nor DPS
will pay any interest on the proceeds from the sale of fractional shares. The Transfer Agent will
have the sole discretion to select the broker-dealers through which to sell the aggregated
fractional shares and to determine when, how and at what price to sell such shares. Neither the
Transfer Agent nor the broker-dealers through which the aggregated fractional shares are sold will
be Affiliates of CS or DPS.
Section 4.03
Actions in Connection with the Distribution
.
(a) DPS shall file such amendments and supplements to the Form 10 as CS may reasonably request
and such amendments as may be necessary in order to cause the same to become and remain effective
as required by Law, including filing such amendments and supplements to the Form 10 as may be
required by the SEC or federal, state or foreign securities Laws. A member of the Cadbury plc
Group, on behalf of DPS, shall mail to the holders of CS Ordinary Shares and CS ADRs, at such time
on or prior to the applicable Distribution Date as CS shall determine, the Information Statement
included in the Form 10, as well as any other information concerning DPS, its business, operations
and management, the Plan of Separation and such other matters as CS shall reasonably determine are
necessary and as may be required by Law.
(b) DPS shall cooperate with CS in preparing, filing with the SEC and causing to become
effective a registration statement or amendments thereof which are required to reflect the
establishment of, or amendments to, any employee benefit and other plans necessary or appropriate
in connection with the Plan of Separation or other transactions contemplated by this Agreement and
the Ancillary Agreements. Promptly after receiving a request from CS, to the extent requested, DPS
shall prepare and, in accordance with applicable Law, file with the SEC any such documentation that
CS determines is necessary or desirable to effectuate the Distribution, and CS and DPS shall each
use commercially reasonable efforts to obtain all necessary approvals from the SEC with respect
thereto as soon as practicable.
(c) DPS shall prepare and file, and shall use commercially reasonable efforts to have approved
and made effective, an application for the original listing of the DPS Common Stock to be
distributed in the Distribution on the NYSE, subject to official notice of distribution.
25
Section 4.04
Distribution Date
. CS shall, in its sole discretion, determine the
Distribution Date and all terms of the Distribution, including the form, structure and terms of any
transactions and/or offerings to effect the Distribution and the timing of and conditions to the
consummation thereof. In addition, regardless of whether the conditions to the consummation of the
Distribution set forth in
Section 4.05
have been satisfied or waived, CS may, in accordance
with
Section 11.01
, at any time and from time to time until the completion of the
Distribution, decide to modify or change the terms of the Distribution, including by accelerating
or delaying the timing of the consummation of all or part of the Distribution.
Section 4.05
Conditions to Distribution
. Subject to
Section 4.04
, the
consummation of the Distribution shall be subject to the satisfaction or waiver of the following
conditions which satisfaction or waiver shall be determined by CS in its sole discretion and which
conditions are for the sole benefit of the Cadbury plc Group and shall not give rise to or create
any duty on the part of CS or the board of directors of CS to waive or not waive any such
condition:
(a) The Form 10 shall have been declared effective by the SEC, with no stop order in effect
with respect thereto, and the Information Statement shall have been mailed to the holders of CS
Ordinary Shares;
(b) The DPS Common Stock to be delivered in the Distribution shall have been approved for
listing on the NYSE, subject to official notice of issuance;
(c) Any Governmental Approvals shall have been obtained and be in full force and effect;
(d) The Scheme shall have been sanctioned by the Court and office copies of the Scheme Court
Orders shall have been registered by the UK Registrar of Companies at Companies House;
(e) The Cadbury plc Ordinary Shares shall have been (i) admitted to the
official list of the UKLA and (ii) admitted to trading on the London Stock Exchanges main
market for listed Securities;
(f) Cadbury plc shall have received the Court Order approving the Reduction and such Court
Order shall have been delivered to the UK Registrar of Companies and been registered by him;
(g) No order, injunction or decree issued by any Governmental Entity of competent jurisdiction
or other legal restraint or prohibition preventing the consummation of the Distribution or any of
the transactions related thereto, including the transfers of Assets and Assumption of Liabilities
contemplated by this Agreement, shall be in effect;
(h) CS shall have completed the contribution/transfer of the Beverages Business to DPS;
26
(i) The financing transactions described in the Information Statement as having occurred prior
to the Distribution shall have been consummated on or prior to the Distribution;
(j) There shall not have occurred an event or development that, in the opinion of the board of
directors of CS, in its sole and absolute discretion, would result in the Distribution having a
material adverse effect on CS or any of its Subsidiaries or CS shareholders; and
(k) The Ancillary Agreements shall have been entered into by the applicable Parties.
Section 4.06
Consent to the Reduction
. DPS acknowledges that Cadbury plc is proposing
to undertake the Reduction and DPS, on behalf of itself and each member of the DPS Group, (i) shall
as soon as reasonably practicable after the date of this Agreement provide Cadbury plc with an
executed letter of consent to the Reduction in the form attached as
Exhibit 4.06
and agrees
that a copy of this letter may be presented to the Court as part of Cadbury plcs application for
confirmation by the Court of the Reduction; and (ii) undertakes that to the extent further consent
is requested by Cadbury plc in order to effect the Reduction, DPS shall (and shall procure that any
member of the DPS Group shall) give consent promptly on terms reasonably acceptable to Cadbury plc
and, for the avoidance of doubt, such consents shall not be conditional on the provision of any
third party guarantee or the deposit of any funds in any bank or escrow account or any other
security, fact, event or thing. This consent is (and any consent given after the date of this
letter shall be) irrevocable.
ARTICLE V
CERTAIN COVENANTS
Section 5.01
Non-Solicitation of Employees
. During the period ending on the 18-month anniversary of the Distribution Date, none of the
Parties or any member of their respective Groups shall solicit for employment or interfere with or
attempt to interfere with any officers, employees, representatives or agents of any member of the
other Group, or induce or attempt to induce any of them to leave the employ of the other Group or
violate the terms of their contracts, or any employment arrangements, with the other Group;
provided
,
however
, that the foregoing will not prohibit (x) any advertising in
publication or media of general circulation including trade journals or similar media or hiring any
officer, employee, representative or agent who responds to such advertisement or (y) the soliciting
or hiring of any officers, employees, representatives or agents of any member of the other Group
who are offered a position following the termination of employment by the other Group.
Section 5.02
Auditors and Audits; Annual and Quarterly Financial Statements and
Accounting
.
(a) DPS shall use its commercially reasonable efforts to cause its auditors to complete its
audit for the year ending December 31, 2008 such that the auditor will date its
27
opinion of the
audited 2008 annual financial statements on the same date that Cadbury plcs auditors date their
opinion on Cadbury plcs audited annual financial statements, such that Cadbury plc is able to meet
its timetable for the printing, filing and public dissemination of Cadbury plcs 2008 annual
financial statements. In addition, DPS shall use its commercially reasonable efforts to cause its
auditors to comply with the processes and procedures required by Cadbury plc Groups auditors to
permit Cadbury plc Groups auditors to opine on the 2008 audited financial statements of Cadbury
plc.
(b) Each Party shall provide, or provide access to the other Party on a timely basis, all
information reasonably required to meet its schedule for the preparation, printing, filing, and
public dissemination of its 2008 annual financial statements and for managements assessment of the
effectiveness of its disclosure controls and procedures and its internal control over financial
reporting in accordance with Items 307 and 308, respectively, of Regulation S-K and, to the extent
applicable to such Party, its auditors audit of its internal control over financial reporting and
managements assessment thereof in accordance with Section 404 of the Sarbanes-Oxley Act of 2002
and the SECs and Public Company Accounting Oversight Boards rules and auditing standards
thereunder, if required (such assessments and audit being referred to as the
Internal Control
Audit and Management Assessments
). Such information shall be provided in the form, time and
manner reasonably requested by CS, which shall not be materially different than the form, time and
manner required by CS prior to the Distribution Date pursuant to the CS Group Reporting Manual in
effect as of the Distribution Date. Without limiting the generality of the foregoing, each Party
will provide all required financial and other information with respect to itself and its
Subsidiaries to its auditors in a sufficient and reasonable time and in sufficient detail to permit
its auditors to take all steps and perform all reviews necessary to provide sufficient assistance
to the other Partys auditors (each such other Partys auditors, collectively, the
Other
Partys Auditors
) with respect to information to be included or contained in such other
Partys annual financial statements and to permit the Other Partys Auditors and management to
complete the Internal Control Audit and Management Assessments, if required.
(c) Each Party shall provide, or provide access to the other Party on a timely basis, all
information reasonably required to meet its schedule for the preparation, printing, filing, and
public dissemination of its financial results for the period ending June 30, 2008 (the
Interim
Financial Statements
) and for its Internal Control Audit and Management Assessments, if
required. Such information shall be provided in the form, time and manner reasonably requested by
CS, which shall not be materially different than the form, time and manner required by CS prior to
the Distribution Date pursuant to the CS Group Reporting Manual in effect as of the Distribution
Date. Without limiting the generality of the foregoing, each Party will provide all required
financial and other information with respect to itself and its Subsidiaries to its auditors in a
sufficient and reasonable time and in sufficient detail to permit its auditors to take all steps
and perform all reviews necessary to provide sufficient assistance to the Other Partys Auditors
with respect to information to be included or contained in the Interim Financial Statements and to
permit the Other Partys Auditors and management to complete the Internal Control Audit and
Management Assessments, if required.
(d) Each Party shall authorize its respective auditors to make reasonably available to the
Other Partys Auditors both the personnel who performed or are performing the annual audits of such
audited Party (each such Party with respect to its own audit, the
Audited
28
Party
) and work
papers related to the annual audits of such Audited Party, in all cases within a reasonable time
prior to such Audited Partys auditors opinion date, so that the Other Partys Auditors are able
to perform the procedures they reasonably consider necessary to take responsibility for the work of
the Audited Partys auditors as it relates to their auditors report on such other Partys
financial statements, all within sufficient time to enable such other Party to meet its timetable
for the printing, filing and public dissemination of its annual financial statements. Each Party
shall make reasonably available to the Other Partys Auditors and management its personnel and
Records in a reasonable time prior to the Other Partys Auditors opinion date and other Partys
managements assessment date so that the Other Partys Auditors and other Partys management are
able to perform the procedures they reasonably consider necessary to conduct the Internal Control
Audit and Management Assessments.
(e) To the extent it relates to a pre-Distribution Date period, (i) each of the Parties hereto
shall give the other Party hereto as much prior notice as is reasonably practicable of any changes
in, or proposed determination of, its accounting estimates from those in effect as of immediately
prior to the Distribution Date or of any other action with regard to its accounting estimates or
previously reported financial results which may affect the other Partys financial results, (ii)
each of the Parties hereto will consult with the other and, if requested by the Party contemplating
such changes, with the Other Partys Auditors and (iii) unless required by generally accepted
accounting principles or a reasonable interpretation thereof by either Partys auditors, Law or a
Governmental Entity, neither party shall make such determination or changes which would affect the
other Partys previously reported financial results without prior consent, which shall not be
unreasonably withheld. Further, each Party will give the other Party prompt notice of any
amendments or restatements of accounting statements with respect to pre-Distribution Date periods,
and will provide the other Party with access as provided in
Section 5.02(c)
hereof as
promptly as possible such that the other Party will be able to satisfy its financial reporting
requirements.
(f) In the event either Cadbury plc or DPS is the subject of any SEC, FSA or
other Governmental Entitys comment, review or investigation (formal or informal) relating to
a period prior to the Distribution Date and which in any way relates to the other Party or the
other Partys public filings, such Party shall provide the other Party with a copy of any comment
or notice of such review or investigation and shall give the other Party a reasonable opportunity
to be involved in responding to such comment, review or investigation, and such other Party shall
cooperate with such Party in connection with responding to such comment, review or investigation.
(g) Any Information exchanged pursuant to this
Section 5.02
is subject to
Section
8.06
.
Section 5.03
CS Obligations
. DPS and Cadbury plc agree that Cadbury plc shall not,
and shall cause CS not to, take any actions that would materially and adversely impact the ability
of CS to fulfill its obligations under this Agreement;
provided
that Cadbury plc may at any
time following the Distribution Date require CS to assign to Cadbury plc all of CS rights and
obligations under this Agreement in substitution for compliance by Cadbury plc and CS with the
aforementioned obligation in this Section 5.03, and upon such assignment, Cadbury plc shall assume
all of CS obligations under this Agreement.
29
ARTICLE VI
INTELLECTUAL PROPERTY MATTERS
Section 6.01
Cadbury Names and Marks
.
(a) DPS hereby acknowledges that all right, title and interest in and to the Cadbury name,
together with all variations and acronyms thereof and all Trademarks and other identifiers of
source or goodwill containing or incorporating any of the foregoing (the
Cadbury Names and
Marks
), are owned exclusively by the Cadbury plc Group, and that, except as expressly provided
below, any and all right of the DPS Group to use the Cadbury Names and Marks shall terminate as of
the Demerger Effective Time and shall immediately revert to the Cadbury plc Group, along with any
and all goodwill associated therewith. DPS acknowledges that (i) the Beverages Assets shall not
include any Cadbury Names and Marks, and (ii) it has no rights, and is not acquiring any rights, to
use the Cadbury Names and Marks, except as expressly provided herein.
(b) DPS shall, as soon as practicable after the Distribution Date, but in no event later than
10 Business Days thereafter, cause each member of the DPS Group to file amended certificates of
incorporation with the appropriate Governmental Entities changing its corporate name, doing
business as name, trade name and any other similar corporate identifier (each, a
Corporate
Name
) to a Corporate Name that does not contain any Cadbury Names and Marks and to supply
promptly any additional information, documents and materials that may be requested by CS with
respect to such filings.
(c) The DPS Group shall, for a period of 15 months after the Distribution Date, be entitled to
use, solely in connection with the operation of the Beverages Business as operated immediately
prior to the Demerger Effective Time, all of their existing stocks of product packaging, signs,
letterheads, business cards, invoice stock, advertisements and promotional materials (other than
Internet or intranet websites and web pages), inventory and other documents and materials
(
Existing Stock
) containing the Cadbury Names and Marks, after which 15-month period DPS
shall cause each member of the DPS Group to remove or obliterate all Cadbury Names and Marks from
such Existing Stock or cease using such Existing Stock;
provided
that the Cadbury Names and
Marks shall be removed from (i) all of the DPS Groups Internet websites and web pages within three
months following the Distribution Date and (ii) all of the DPS Groups intranet websites and web
pages within three months following the Distribution Date.
(d) Following the Distribution Date, except as expressly provided in this Agreement, (i) no
other right to use the Cadbury Names and Marks is granted by the Cadbury plc Group to DPS or the
DPS Group, whether by implication or otherwise, and (ii) nothing hereunder permits DPS or any
member of the DPS Group to use the Cadbury Names and Marks on or in connection with any documents,
materials, products or services. DPS shall ensure that all use of the Cadbury Names and Marks by
the DPS Group as provided in this
Section 6.01
shall be only with respect to goods and
services of a level of quality equal to or greater than the quality of goods and services with
respect to which the Cadbury Names and Marks were used in the Beverages Business prior to the
Distribution Date. Any and all goodwill generated by the
30
use of the Cadbury Names and Marks under
this
Section 6.01
shall inure solely to the benefit of the Cadbury plc Group. In no event
shall DPS or any member of the DPS Group use the Cadbury Names and Marks in any manner that may
damage or tarnish the reputation of the Cadbury plc Group, or the goodwill associated with the
Cadbury Names and Marks.
(e) DPS agrees that the Cadbury plc Group shall not have any responsibility for claims by
third parties arising out of, or relating to, the use by the DPS Group of any Cadbury Names and
Marks after the Distribution Date. DPS shall indemnify and hold harmless CS and its Affiliates,
and their respective officers, directors, employees, agents, successors and assigns from any and
all such claims that may arise out of the use of any Cadbury Names and Marks by DPS or any member
of the DPS Group (i) in accordance with the terms and conditions of this
Section 6.01
,
other than such claims that the Cadbury Names and Marks infringe the Intellectual Property rights
of any third party, or (ii) in violation of or outside the scope permitted by this
Section
6.01
. Notwithstanding anything in this Agreement to the contrary, including
Section
10.02(f)
, DPS hereby acknowledges that CS, in addition to any other remedies available to it
for any breach or threatened breach of this
Section 6.01
, shall be entitled to seek a
preliminary injunction, temporary restraining order or other equivalent relief restraining DPS and
any member of the DPS Group from any such breach or threatened breach.
(f) Notwithstanding anything in this Agreement to the contrary, and without limiting the
rights otherwise granted in this
Section 6.01
, DPS and the DPS Group shall have the right,
at all times after the Distribution Date, to (i) keep records and other historical or archived
documents containing or referencing the Cadbury Names and Marks, (ii) use the Cadbury Names and
Marks to the extent required by or permitted as a fair use under applicable Law, and (iii) refer to
the historical fact that the DPS Group previously conducted the Beverages Business
under the Cadbury Names and Marks.
Section 6.02
Beverages Names and Marks
.
(a) For a period of 15 months after the Distribution Date, the Cadbury plc Group shall be
entitled to use, solely in connection with the continued operation of the Cadbury plc Business, all
of their Existing Stock containing any Trademark included in the Beverages Intellectual Property
and/or Beverages Assets, any variation or acronym thereof, or any Trademark or other identifier of
source or goodwill containing, incorporating or associated with any such Trademark (collectively,
the
Beverages Names and Marks
);
provided
that the Beverages Names and Marks shall
be removed from (i) all of the Cadbury plc Groups Internet websites and web pages within three
months following the Distribution Date and (ii) all of the Cadbury plc Groups intranet websites
and web pages within three months following the Distribution Date. For the avoidance of doubt, (i)
Beverages Names and Marks does not include any Trademark owned by or licensed to the Cadbury plc
Group as of or following the Distribution Date and (ii) nothing in this
Section 6.02
shall
be deemed to limit or modify in any way any rights of the Cadbury plc Group in or to any
Intellectual Property (other than the Beverages Names and Marks) or under any agreement relating to
Intellectual Property to which any member of the Cadbury plc Group is or becomes a party or
beneficiary.
31
(b) Following the Distribution Date, except as expressly provided in this Agreement, (i) no
other right to use the Beverages Names and Marks is granted by DPS or the DPS Group to the Cadbury
plc Group, whether by implication or otherwise, and (ii) nothing hereunder permits the Cadbury plc
Group to use the Beverages Names and Marks on or in connection with any documents, materials,
products or services. CS shall ensure that all use of the Beverages Names and Marks as provided in
this
Section 6.02
shall be only with respect to goods and services of a level of quality
equal to or greater than the quality of goods and services with respect to which the Beverages
Names and Marks were used in the businesses of the Cadbury plc Group prior to the Distribution
Date. Any and all goodwill generated by the use of the Beverages Names and Marks under this
Section 6.02
shall inure solely to the benefit of the DPS Group following the Distribution
Date. In no event shall the Cadbury plc Group use the Beverages Names and Marks in any manner that
may damage or tarnish the reputation of DPS or the DPS Group or the goodwill associated with the
Beverages Names and Marks.
(c) CS agrees that DPS and the DPS Group shall not have any responsibility for claims by third
parties arising out of, or relating to, the use by the Cadbury plc Group of any Beverages Names and
Marks after the Distribution Date. CS shall, and shall cause each of the members of the Cadbury
plc Group to, indemnify and hold harmless DPS and the DPS Group, and their respective Affiliates,
officers, directors, employees, agents, successors and assigns, from any and all such claims that
may arise out of the Cadbury plc Groups use of any Beverages Names and Marks after the
Distribution Date (i) in accordance with the terms and conditions of this
Section 6.02
,
other than such claims that the Beverages Names and Marks infringe the Intellectual Property rights
of any third party or (ii) in violation of or outside the scope permitted by this
Section
6.02
. Notwithstanding anything in this Agreement to the contrary, including
Section
10.02(f)
, CS hereby acknowledges that DPS, in addition to any other remedies available
to it for any breach or threatened breach of this
Section 6.02
, shall be entitled to
seek a preliminary injunction, temporary restraining order or other equivalent relief restraining
the Cadbury plc Group from any such breach or threatened breach.
(d) Notwithstanding anything in this Agreement to the contrary, and without limiting the
rights otherwise granted in this
Section 6.02
, the Cadbury plc Group shall have the right,
at all times after the Distribution Date, to (i) keep records and other historical or archived
documents containing or referencing the Beverages Names and Marks, (ii) use the Beverages Names and
Marks to the extent required by or permitted as a fair use under applicable Law, (iii) refer to the
historical fact that the members of the Cadbury plc Group previously conducted their respective
businesses under the Beverages Names and Marks, (iv) use and sublicense the Beverages Names and
Marks in connection with the Cadbury plc Groups business of manufacturing, distributing, selling,
marketing and promoting carbonated and non-carbonated beverages and other food products throughout
American Samoa (the
American Samoa Business
), (v) use their Existing Stock, web pages and
Internet and intranet websites containing any Beverages Names and Marks in connection with the
Cadbury plc Groups business of manufacturing, distributing, selling, marketing and promoting
carbonated and non-carbonated beverages and other food products throughout the AsiaPac Territory
and (vi) use the Schweppes name in any and all jurisdictions outside of the United States, Canada
and Mexico as or as part of any Corporate Name;
provided
that, no later than 10 Business
Days after the Distribution Date, CS shall use commercially reasonable efforts to file amended
organizational documents with the appropriate Governmental Entities changing the Corporate Name of
any
32
Affiliate organized in any jurisdiction in the United States, Canada and Mexico to a Corporate
Name that does not contain the Schweppes name and to supply promptly any additional information,
documents and materials that may be requested by DPS with respect to such filings.
Section 6.03
Memorabilia
. As of the Distribution Date, any and all photographs,
artwork and similar objects and other physical assets owned by the DPS Group or the Cadbury plc
Group that relate to the history or historical activities of the Beverages Business
(
Memorabilia
) shall be deemed to be owned, as between CS and DPS, by (i) CS to the extent
located on the premises of any member of the Cadbury plc Group and (ii) DPS to the extent located
on the premises of any member of the DPS Group. DPS hereby grants the Cadbury plc Group from the
Distribution Date a worldwide, transferable, perpetual, royalty-free, irrevocable (with right to
sub-license) license to use any Memorabilia: (a) in documenting, memorializing and (if desired)
use in marketing its history; and (b) to the extent necessary to comply with the obligations of the
Cadbury plc Group under Section 18.14 of that certain Amended and Restated Sale and Purchase
Agreement by and between CS and Sapphire European Beverages Limited (among others), dated as of
January 30, 2006.
Section 6.04
Additional Licenses
.
(a) Effective as of the Distribution Date, CS hereby grants to DPS, solely for the benefit of
each member of the DPS Group, an exclusive, perpetual, irrevocable, royalty-free
license (with the right to grant sub-licenses) of the design known as the modern egg bottle
design for use solely in the Territory;
provided
that DPS shall, and shall procure that
each member of the DPS Group shall, only use such design in relation to beverages sold under the
Schweppes brand and for no other purpose. DPS shall indemnify and hold harmless CS and its
Affiliates, officers, directors, employees, agents, successors and assigns from any and all claims
that may arise out of the DPS or the DPS Groups exercise of any rights granted under, or breach
of, this
Section 6.04(a)
.
(b) Effective as of the Distribution Date, DPS hereby grants, and shall cause the DPS Group to
grant, to the Cadbury plc Group a perpetual, non-exclusive, transferable, royalty-free right and
license (with the right to grant sublicenses) in, to and under any and all copyrights and design
rights owned by or licensed to, to the extent permitted, the DPS Group as of the Distribution Date
in product packaging (including bottles), signs, business cards, letterheads, invoice stock,
advertisements and promotional materials and inventory (the
DPS Licensed Intellectual
Property
), to use the DPS Licensed Intellectual Property in connection with the operation
following the Distribution Date of the Cadbury plc Groups business of manufacturing, distributing,
selling, marketing and promoting carbonated and non-carbonated beverages and other food products
throughout the AsiaPac Territory and American Samoa, to the extent of any existing use or good
faith plans to use as of February 1, 2008 in the AsiaPac Territory or American Samoa. The
foregoing license includes the right for the Cadbury plc Group to make, and have made on their
behalf, modifications, enhancements, derivative works and improvements (
Improvements
) to
the DPS Licensed Intellectual Property, and as between the Parties to this Agreement, any and all
such Improvements shall be owned by a member of the Cadbury plc Group without a duty of accounting
or disclosure to DPS or the DPS Group.
33
(c) Effective as of the Distribution Date, CS hereby grants, and shall cause the Cadbury plc
Group to grant, to the DPS Group a perpetual, non-exclusive, transferable, royalty-free right and
license (with the right to grant sublicenses) in, to and under any and all copyrights and design
rights owned by or licensed to, to the extent permitted, the Cadbury plc Group conducting its
beverages business in the AsiaPac Territory and American Samoa as of the Distribution Date in
product packaging (including bottles), signs, business cards, letterheads, invoice stock,
advertisements and promotional materials and inventory (the
AsiaPac Licensed Intellectual
Property
), to use the AsiaPac Licensed Intellectual Property in connection with the operation
of the Beverages Business by the DPS Group following the Distribution Date, to the extent of any
existing use or good faith plans to use as of February 1, 2008 in the Territory. The foregoing
license includes the right for the DPS Group to make, and have made on their behalf, Improvements
to the AsiaPac Licensed Intellectual Property, and as between the Parties to this Agreement, any
and all such Improvements shall be owned by DPS without a duty of accounting or disclosure to a
member of the Cadbury plc Group.
Section 6.05
Know-How Agreement
.
(a) Effective as of the Distribution Date, CS, DPS and the DPS Group shall enter into a
know-how agreement substantially in the form attached hereto as
Exhibit 6.06(a)
(the
Know-How Agreement
).
(b) At CS request, following the Distribution Date, DPS shall reasonably cooperate with CS
and negotiate in good faith to obtain an assignment and novation in favor of DPS of CS rights and
obligations under (i) that certain know-how agreement entered into by and among CS, The Coca-Cola
Company and Atlantic Industries, dated as of July 29, 1999, as amended, and (ii) that certain
know-how agreement entered into by and among CS and Sapphire European Beverages Limited (among
others), dated as of February 2, 2006.
Section 6.06
Domain Names Agreement
. Effective as of the Distribution Date, CS and
DPS shall enter into a domain names agreement substantially in the form attached hereto as
Exhibit 6.07
(the
Domain Names Agreement
).
ARTICLE VII
INDEMNIFICATION
Section 7.01
Release of Pre-Distribution Claims
.
(a) Except (i) as provided in
Section 7.01(b)
, (ii) as may be otherwise expressly
provided in this Agreement or any Ancillary Agreement and (iii) for any matter with respect to
which any Party is entitled to indemnification or contribution pursuant to this
ARTICLE
VII
, each Party, on behalf of itself and each member of its respective Group, its and their
respective Affiliates and all Persons who at any time prior to the Demerger Effective Time were
shareholders (other than the public shareholders of CS), directors, officers, agents or employees
of it or any member of its Group (in their respective capacities as such), in each case do hereby
remise, release and forever discharge the other Party and the other members of such
34
other Partys
Group, their respective Affiliates and all Persons who at any time prior to the Demerger Effective
Time were shareholders, directors, officers, agents or employees of any member of such other Party
(in their respective capacities as such), in each case from any and all Liabilities whatsoever,
whether at Law or in equity (including any right of contribution), whether arising under any
Contract, by operation of Law or otherwise, existing or arising from any acts or events occurring
or failing to occur or alleged to have occurred or alleged to have failed to occur or any
conditions, in each case, existing on or before the Demerger Effective Time, including in
connection with the Plan of Separation and all other activities to implement the Distribution and
any of the other transactions contemplated hereunder and under the Ancillary Agreements.
(b) Nothing contained in
Section 7.01(a)
shall release any Person from:
(i) any Liability Assumed, Transferred or allocated to a Party or a member of such
Partys Group pursuant to or contemplated by, or any other Liability of any member of such
Group arising under, this Agreement or any Ancillary Agreement;
(ii) any Liability for the sale or receipt of goods or property or services purchased,
obtained or used in the ordinary course of business by a member of one Group
from a member of the other Group prior to the Demerger Effective Time;
(iii) any Liability (other than the Intercompany Balances settled pursuant to
Section 2.03
) for unpaid amounts for products or services or refunds owing on
products or services due for work done by a member of one Group at the request or on behalf
of a member of the other Group;
(iv) any Liability provided in or resulting from any other Contract or understanding
that is entered into after the Demerger Effective Time between a Party (and/or a member of
such Partys Group), on the one hand, and the other Party (and/or a member of such Partys
Group), on the other hand;
(v) any Liability with respect to the Continuing Arrangements;
(vi) any Liability that the Parties have with respect to indemnification or
contribution pursuant to this Agreement or otherwise for claims brought against the Parties
by third Persons, which Liability shall be governed by the provisions of this
ARTICLE
VII
and, if applicable, the appropriate provisions of the Ancillary Agreements;
(vii) any Liability relating to any agreements, arrangements, commitments or
understandings to which any Person other than the Parties and their respective Affiliates is
a Party (it being understood that to the extent that the rights and obligations of the
Parties and the members of their respective Groups under any such Contracts constitute
Beverages Assets or Beverages Liabilities or Cadbury plc Assets or Cadbury plc Liabilities,
such Contracts shall be assigned or retained pursuant to
ARTICLE II
); or
(viii) any Liability relating to agreements, arrangements, commitments or
understandings to which any non-wholly-owned Subsidiary of CS or DPS, as the case may be, is
a Party.
35
(c) Neither Party shall permit any member of its Group to make any claim or demand, or
commence any Action asserting any claim or demand, including any claim of contribution or any
indemnification, against the other Party or any member of the other Partys Group, or any other
Person released pursuant to
Section 7.01(a)
, with respect to any Liabilities released
pursuant to
Section 7.01(a)
.
(d) It is the intent of each Party, pursuant to the provisions of this
Section 7.01
,
to provide for a full and complete release and discharge of all Liabilities existing or arising
from all acts and events occurring and all conditions existing on or before the Demerger Effective
Time, whether known or unknown, between or among any Party (and/or a member of such Partys Group),
on the one hand, and the other Party (and/or a member of such Partys Group), on the other hand
(including any contractual agreements or arrangements existing or alleged to exist between or among
any such members on or before the Demerger Effective Time), except as specifically set forth in
Section 7.01(a)
and
Section 7.01(b)
. At any time, at the reasonable request of the
other Party, each Party shall cause each member of its respective Group to execute and deliver
releases reflecting the provisions hereof.
(e) For the avoidance of doubt, neither Party shall have any Liability to the
other Party in the event that any information exchanged or provided to the other Party
pursuant to this Agreement (but excluding any such information included in a Disclosure Document)
which is an estimate or forecast, or which is based on an estimate or forecast, is found to be
inaccurate.
Section 7.02
Indemnification by CS
. Except as otherwise set forth in any provision of
this Agreement or any Ancillary Agreement or Continuing Arrangement, following the Demerger
Effective Time, CS shall and shall cause the other members of the Cadbury plc Group to indemnify,
defend and hold harmless the Beverages Indemnitees from and against any and all Indemnifiable
Losses of the Beverages Indemnitees to the extent arising out of, by reason of or otherwise in
connection with (i) the Cadbury plc Liabilities or alleged Cadbury plc Liabilities, (ii) any breach
by any member of the Cadbury plc Group of any of the Shared Contracts, (iii) with respect to
statements or omissions made or occurring after the Demerger Effective Time, any misstatement or
alleged misstatement of a material fact contained in any document filed with the SEC or the FSA by
any member of the DPS Group pursuant to the Securities Act, the Exchange Act, the Prospectus Rules
or the Listing Rules, or any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, in each case to the extent, but only (A) to the extent
that those Liabilities are caused by any misstatement or omission or alleged misstatement or
omission in any information that is furnished in writing to any member of the DPS Group by any
member of the Cadbury plc Group after the Demerger Effective Time, (B) if such member of the
Cadbury plc Group has been informed in writing in advance that such information will be used in
such filing and (C) if the information used by a member of the DPS Group in any such filing is not
materially different to the information furnished by a member of the Cadbury plc Group, or (iv) any
breach by CS or any member of the Cadbury plc Group of any provision of this Agreement or any
Ancillary Agreement or Continuing Arrangement unless such Ancillary Agreement or Continuing
Arrangement expressly provides for separate indemnification therein, in which case any such
indemnification claims shall be made thereunder.
36
Section 7.03
Indemnification by DPS
. Except as otherwise specifically set forth in
any provision of this Agreement or any Ancillary Agreement, following the Demerger Effective Time,
DPS shall and shall cause the other members of the DPS Group to indemnify, defend and hold harmless
the Cadbury plc Indemnitees from and against any and all Indemnifiable Losses of the Cadbury plc
Indemnitees to the extent arising out of, by reason of or otherwise in connection with (i) the
Beverages Liabilities or any alleged Beverages Liabilities, (ii) any breach by any member of the
DPS Group of any of the Shared Contracts, (iii) with respect to statements or omissions made or
occurring after the Demerger Effective Time, any misstatement or alleged misstatement of a material
fact contained in any document filed with the SEC or the FSA by any member of the Cadbury plc Group
pursuant to the Securities Act, the Exchange Act, the Prospectus Rules or the Listing Rules, or any
omission or alleged omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under which they were made,
not misleading, in each case to the extent, but only (A) to the extent that those
Liabilities are caused by any misstatement or omission or alleged misstatement or omission in
any information that is furnished in writing to any member of the Cadbury plc Group by any member
of the DPS Group after the Demerger Effective Time, (B) if such member of the DPS Group has been
informed in writing in advance that such information will be used in such filing and (C) if the
information used by a member of the Cadbury plc Group in any such filing is not materially
different to the information furnished by a member of the DPS Group, or (iv) any breach by DPS or
any member of the DPS Group of any provision of this Agreement or any Ancillary Agreement or
Continuing Arrangement unless such Ancillary Agreement or Continuing Arrangement expressly provides
for separate indemnification therein, in which case any such indemnification claims shall be made
thereunder.
Section 7.04
Procedures for Indemnification
.
(a) An Indemnitee shall give the Indemnifying Party notice of any matter that an Indemnitee
has determined has given, or reasonably anticipates could give rise to, a right of indemnification
under this Agreement (other than a Third Party Claim which shall be governed by
Section
7.04(b)
), within 30 days of such determination, stating the amount of the Indemnifiable Loss
claimed, if known, and method of computation thereof, and containing a reference to the provisions
of this Agreement in respect of which such right of indemnification is claimed by such Indemnitee
or arises;
provided
,
however
, that the failure to provide such notice shall not
release the Indemnifying Party from any of its obligations except to the extent the Indemnifying
Party shall have been actually materially prejudiced as a result of such failure.
(b) If an Action is made against a Cadbury plc Indemnitee or a Beverages Indemnitee (each, an
Indemnitee
) by any Person who is not a Party or a member of a Group of a Party (a
Third Party Claim
) as to which such Indemnitee is or may be entitled to indemnification
pursuant to this Agreement, such Indemnitee shall notify the other Party which is or may be
required pursuant to this
ARTICLE VII
or pursuant to any Ancillary Agreement or Continuing
Arrangement to make such indemnification (the
Indemnifying Party
) in writing, and in
reasonable detail, of the Third Party Claim promptly (and in any event within 30 days) after
receipt by such Indemnitee of written notice of the Third Party Claim;
provided
,
however
, that the failure to provide notice of any such Third Party Claim pursuant to this
sentence shall not release the Indemnifying Party from any of its obligations except to the extent
the
37
Indemnifying Party shall have been actually materially prejudiced as a result of such failure.
Thereafter, the Indemnitee shall deliver to the Indemnifying Party, promptly after the Indemnitees
receipt thereof (and in any event within 10 Business Days), copies of all notices and documents
(including court papers) received by the Indemnitee relating to the Third Party Claim.
(c) An Indemnifying Party shall be entitled (but shall not be required) to assume and control
the defense of any Third Party Claim, at such Indemnifying Partys own cost and expense and by such
Indemnifying Partys own counsel that is reasonably acceptable to the applicable Indemnitees, if it
gives notice of its intention to do so to the applicable Indemnitees within 30 days of the receipt
of notice of the Third Party Claim from such Indemnitees. After notice from an Indemnifying Party
to an Indemnitee of its election to assume the defense of a
Third Party Claim, such Indemnitee shall have the right to employ separate counsel and to
participate in (but not control) the defense, compromise, or settlement thereof, at its own expense
and, in any event, shall cooperate with the Indemnifying Party in such defense and make available
to the Indemnifying Party, at the Indemnifying Partys expense, all witnesses, pertinent
Information and materials in such Indemnitees possession or under such Indemnitees control
relating thereto as are reasonably required by the Indemnifying Party.
(d) If an Indemnifying Party elects not to assume responsibility for defending a Third Party
Claim, or fails to notify an Indemnitee of its election as provided in
Section 7.04(c)
,
such Indemnitee may defend such Third Party Claim at the cost and expense of the Indemnifying
Party. If the Indemnitee is conducting the defense against any such Third Party Claim, the
Indemnifying Party shall cooperate with the Indemnitee in such defense and make available to the
Indemnitee, at the Indemnifying Partys expense, all witnesses, pertinent Information, material in
such Indemnifying Partys possession or under such Indemnifying Partys control relating thereto as
are reasonably required by the Indemnitee.
(e) If the Indemnifying Party has assumed the defense of the Third Party Claim in accordance
with the terms of this Agreement, no Indemnitee may settle or compromise any Third Party Claim
without the consent of the Indemnifying Party.
(f) In the case of a Third Party Claim, no Indemnifying Party shall consent to entry of any
judgment or enter into any settlement of the Third Party Claim without the consent of the
Indemnitee;
provided
that consent from the Indemnitee shall not be required if such
settlement contains a full and unconditional release of the Indemnitee and does not permit any
injunction, declaratory judgment, other order or other non-monetary relief to be entered, directly
or indirectly, against any Indemnitee.
(g) Except as may otherwise be specifically provided for in the Ancillary Agreements and
except as set forth in of
Sections 10.02(d)
and
(f)
hereof, the indemnification
provisions of this
ARTICLE VII
shall be the sole and exclusive remedy of the Parties for
any failure by the other Party to perform and comply with any covenants and agreements in this
Agreement and any other dispute, controversy or claim (whether arising in contract, tort or
otherwise) that may arise out of or relate to, or arise under or in connection with, this Agreement
or any Ancillary Agreement or Continuing Arrangement, or the transactions contemplated
38
hereby or
thereby (including all actions taken in furtherance of the transactions contemplated hereby or
thereby on or prior to the Demerger Effective Time), between or among any member of the Cadbury plc
Group, on the one hand, and any member of the DPS Group, on the other hand.
Section 7.05
Cooperation in Defense and Settlement
. CS and DPS agree that, from and
after the Demerger Effective Time, if an Action is commenced by a third party (or any member of
either Partys respective Group) with respect to which one or both Parties (or any member of either
Partys respective Group) is a nominal defendant and/or such Action is otherwise not a Liability
allocated to such named Party under this Agreement or any Ancillary Agreement or Continuing
Arrangement, then the other Party shall use commercially reasonable efforts to cause such nominal
defendant to be removed
from such Action.
Section 7.06
Indemnification Obligations Net of Insurance Proceeds and Other Amounts
.
(a) Any Indemnifiable Loss subject to indemnification or contribution pursuant to this
ARTICLE VII
will be calculated (i) net of Insurance Proceeds received by the Indemnitee
that actually reduce the amount of the Indemnifiable Loss, and (ii) net of any proceeds received by
the Indemnitee from any third party for indemnification for such Liability that actually reduce the
amount of the Indemnifiable Loss (
Third Party Proceeds
). If an Indemnitee receives a
payment required by this Agreement from an Indemnifying Party in respect of any Indemnifiable Loss
(an
Indemnity Payment
) and subsequently receives Insurance Proceeds or Third Party
Proceeds, then the Indemnitee will pay to the Indemnifying Party an amount equal to the excess of
the Indemnity Payment received over the amount of the Indemnity Payment that would have been due if
the Insurance Proceeds or Third Party Proceeds had been received, realized or recovered before the
Indemnity Payment was made.
(b) Any insurer that would otherwise be obligated to pay any claim shall not be relieved of
the responsibility with respect thereto or, solely by virtue of the indemnification and
contributions provisions hereof, have any subrogation rights with respect thereto. The Indemnitee
shall use reasonable best efforts to seek to collect or recover any third party Insurance Proceeds
and any Third Party Proceeds (other than Insurance Proceeds under an arrangement where future
premiums are adjusted to reflect prior claims in excess of prior premiums) to which the Indemnitee
is entitled in connection with any Indemnifiable Loss for which the Indemnitee seeks contribution
or indemnification pursuant to this
ARTICLE VII
(it being understood that the obligation to
use reasonable best efforts to collect or recover any third party Insurance Proceeds or Third Party
Proceeds shall not require the Indemnitee to commence any litigation proceedings against any such
third party);
provided
that the Indemnitees inability to collect or recover any such
Insurance Proceeds or Third Party Proceeds shall not limit the Indemnifying Partys obligations
hereunder.
(c) CS and DPS agree that any indemnification payment made pursuant to this
ARTICLE
VII
shall be paid free and clear of any Tax deduction or withholding. If any deduction or
withholding is required by applicable Law to be made from any indemnification payment made pursuant
to this
ARTICLE VII
, the amount of the payment will be increased by such additional amount
as is necessary to ensure that the net amount received by the Indemnitee (after taking account of
all such deductions and withholdings) is equal to the amount which it
39
would have received had the
payment in question not been subject to any deductions or withholdings. Notwithstanding the
foregoing, the Parties agree to use commercially reasonable efforts (to the extent such efforts
will not result in materially adverse consequences to a Party) to mitigate or avoid such deductions
and withholdings.
(d) Any indemnification payment made under this
ARTICLE VII
will be subject to
adjustment for certain net Tax benefits and net Tax costs attributable to such
indemnification payment (including gross-up) and to amounts indemnified against as provided in
the Tax Sharing Agreement.
Section 7.07
Additional Matters; Survival of Indemnities
.
(a) The indemnity and contribution agreements contained in this
ARTICLE VII
shall
remain operative and in full force and effect, regardless of (i) any investigation made by or on
behalf of any Indemnitee; (ii) any knowledge prior to the date hereof by the Indemnitee of
Indemnifiable Losses for which it might be entitled to indemnification or contribution hereunder;
and (iii) any termination of this Agreement.
(b) The rights and obligations of each Party and their respective Indemnitees under this
ARTICLE VII
shall survive the sale or other Transfer by any Party or its respective
Subsidiaries of any Assets or businesses or the assignment by it of any Liabilities.
ARTICLE VIII
ACCESS TO RECORDS; ACCESS TO INFORMATION; LEGAL AND OTHER MATTERS
Section 8.01
Provision of Corporate Records
. Other than in circumstances in which
indemnification is or may be sought pursuant to
ARTICLE VII
(in which event the provisions
of such Article will govern), and subject to appropriate restrictions for privileged or
Confidential Information:
(a) After the Distribution Date until the earlier of (i) the seventh anniversary of the
Distribution Date or (ii) the date on which CS is entitled to destroy Information related to the
period prior to the Distribution Date pursuant to its record retention policies, upon the prior
written request by DPS for specific and identified Information which relates to (i) DPS (or a
member of its Group) or the conduct of the Beverages Business prior to the Distribution Date, or
(ii) any Ancillary Agreement or Continuing Arrangement to which CS and DPS (or any member of their
respective Groups) are parties, CS shall provide, as soon as reasonably practicable following the
receipt of such request, appropriate copies of such documents (or the originals thereof if the
Party making the request has a reasonable need for such originals) in the possession or control of
CS or any of its Affiliates or Subsidiaries, but only to the extent such items so relate and are
not already in the possession or control of the requesting Party. CS shall notify DPS at least 90
days in advance of destroying any such Information in order to provide DPS the opportunity to
access such Information in accordance with this
Section 8.01(a)
and if DPS fails
40
to request
that such Information be delivered to them, at their expense, within 90 days after receipt of such
notice, CS may destroy such Information.
(b) After the Distribution Date until the earlier of (i) the seventh anniversary
of the Distribution Date or (ii) the date on which DPS is entitled to destroy Information
related to the period prior to the Distribution Date pursuant to its record retention policies,
upon the prior written request by CS for specific and identified Information which relates to
(i) CS (or a member of its Group) or the conduct of the Cadbury plc Business, prior to the
Distribution Date, or (ii) any Ancillary Agreement or Continuing Arrangement to which DPS and CS
(or a member of their respective Groups) are parties, as applicable, DPS shall provide, as soon as
reasonably practicable following the receipt of such request, appropriate copies of such documents
(or the originals thereof if the Party making the request has a reasonable need for such originals)
in the possession or control of DPS or any of its Subsidiaries, but only to the extent such items
so relate and are not already in the possession or control of the requesting Party. DPS shall
notify CS at least 90 days in advance of destroying any such Information in order to provide CS the
opportunity to access such Information in accordance with this
Section 8.01(b)
and if CS
fails to request that such Information be delivered to them, at their expense, within 90 days after
receipt of such notice, DPS may destroy such Information.
Section 8.02
Access to Information
. Other than in circumstances in which
indemnification is sought pursuant to
ARTICLE VII
(in which event the provisions of such
Article will govern), from the Distribution Date and for so long as any access is required pursuant
to
Section 8.01
, each of CS and DPS shall afford to the other and its authorized
accountants, counsel and other designated representatives reasonable access during normal business
hours, subject to appropriate restrictions for privileged or Confidential Information and to
preserve the completeness and integrity of the Information, to the personnel, properties, and
Information of such Party and its Subsidiaries insofar as such access is reasonably required by the
other Party and relates to (x) such other Party or the conduct of its business prior to the
Demerger Effective Time or (y) any Ancillary Agreement or Continuing Arrangement. Nothing in this
Section 8.02
shall require any Party to violate any agreement with any third party
regarding the confidentiality of Confidential Information relating to that third party or its
business;
provided
,
however
, that in the event that a Party is required to disclose
any such Information, such Party shall use commercially reasonable efforts to seek to obtain such
third party Consent to the disclosure of such Information.
Section 8.03
Disposition of Information
.
(a) Each Party acknowledges that Information in its or in a member of its Groups possession,
custody or control as of the Demerger Effective Time may include Information owned by the other
Party or a member of such Partys Group and not related to (i) its Group or its business or
(ii) any Ancillary Agreement to which it or any member of its Group is a Party.
(b) Notwithstanding such possession, custody or control, such Information shall remain the
property of such other Party or member of such other Partys Group. Each Party agrees (i) that any
such Information is to be treated as Confidential Information of the Party or Parties to which it
relates and handled in accordance with
Section 8.07
(except that such
41
Information will not be used for any purpose other than a purpose permitted under this
Agreement) and (ii) following a reasonable request from the other Party, subject to applicable Law,
use commercially reasonable efforts within a reasonable time to (1) purge such Information from its
databases, files and other systems and not retain any copy of such Information (including, if
applicable, by transferring such Information to the Party to which such Information belongs), or
(2) if such purging is not practicable, to encrypt or otherwise make unreadable or inaccessible
such Information.
Section 8.04
Witness Services
. At all times from and after the Distribution Date,
each of CS and DPS shall use its commercially reasonable efforts to make available to the other,
upon reasonable written request, its and any member of its Groups officers, directors, employees
and agents as witnesses to the extent that (i) such Persons may reasonably be required to testify
in connection with the prosecution or defense of any Action in which the requesting Party may from
time to time be involved (except for claims, demands or Actions between members of each Group) and
(ii) there is no conflict of interest in the underlying Action between the requesting Party and CS
and DPS, as applicable;
provided
that the existence of a claim for indemnification under
ARTICLE VII
shall not in and of itself be deemed a conflict of interest. A Party providing
a witness to the other Party under this Section shall be entitled to receive from the recipient of
such services, upon the presentation of invoices therefor, payments for such amounts, relating to
disbursements and other out-of-pocket expenses (which shall not include the costs of salaries and
benefits of employees who are witnesses or any pro rata portion of overhead or other costs of
employing such employees which would have been incurred by such employees employer regardless of
the employees service as witnesses), as may be reasonably incurred and properly paid under
applicable Law.
Section 8.05
Reimbursement; Other Matters
. Except to the extent otherwise
contemplated by this Agreement, any Ancillary Agreement or any Continuing Arrangement, a Party
providing Information or access to Information to the other Party under this
ARTICLE VIII
shall be entitled to receive from the recipient, upon the presentation of invoices therefor,
payments for such amounts, relating to supplies, disbursements and other out-of-pocket expenses, as
may be reasonably incurred in providing such Information or access to such Information.
Section 8.06
Confidentiality
. Notwithstanding any termination of this Agreement, the
Parties shall hold, and shall cause each of the members of their respective Groups to hold, and
shall each cause their respective officers, employees, agents, consultants, representatives and
advisors to hold, in strict confidence, and not to disclose or release or use, without the prior
written consent of the other Party, any and all Confidential Information concerning the other
Party;
provided
that the Parties may disclose, or may permit disclosure of, Confidential
Information (i) to their respective auditors, attorneys, financial advisors, bankers and other
appropriate consultants and advisors who have a need to know such Information and are informed of
their obligation to hold such Information confidential to the same extent as is applicable to the
Parties and in respect of whose
failure to comply with such obligations, the applicable Party will be responsible, (ii) if the
Parties or any member of their respective Groups are required or compelled to disclose any such
Confidential Information by judicial or administrative process or by other requirements of Law or
stock exchange rule, (iii) as required in connection with any legal or other proceeding by one
Party against the other Party, or (iv) as
42
necessary in order to permit a Party to prepare and
disclose its financial statements, Tax Returns or other required disclosures. Notwithstanding the
foregoing, in the event that any demand or request for disclosure of Confidential Information is
made pursuant to clause (ii) above, each Party, shall promptly notify the other of the existence of
such request or demand and shall provide the other a reasonable opportunity to seek an appropriate
protective order or other remedy, which such Parties will cooperate in obtaining. In the event
that such appropriate protective order or other remedy is not obtained, the Party whose
Confidential Information is required to be disclosed shall or shall cause the other Party to
furnish, or cause to be furnished, only that portion of the Confidential Information that is
legally required to be disclosed and shall take commercially reasonable steps to ensure that
confidential treatment is accorded such Information.
Section 8.07
Privileged Matters
.
(a) The Parties recognize that certain legal and other professional services (both internal
and external) have been and will be provided prior to and after the Distribution Date and have been
and will be rendered for the collective benefit of each of the members of the Cadbury plc Group and
the DPS Group, and that each of the members of the Cadbury plc Group and the DPS Group should be
deemed to be the client with respect to such services for the purposes of asserting all privileges
which may be asserted under applicable Law;
provided
that with respect to such services the
Parties agree as follows:
(i) the Parties shall not be entitled to assert privilege with respect to such legal
and other professional services provided prior to the Distribution Date against the other
Party or any member of the other Partys Group;
(ii) CS shall be entitled, on behalf of itself or any member of the Cadbury plc Group,
in perpetuity, to control the assertion or waiver of all privileges in connection with
privileged information to the extent relating to the Cadbury plc Business, whether or not
the privileged information is in the possession of or under the control of CS or DPS. CS
shall also be entitled, on behalf of itself or any member of the Cadbury plc Group, in
perpetuity, to control the assertion or waiver of all privileges in connection with
privileged information that relates solely to the subject matter of any claims constituting
Cadbury plc Liabilities, now pending or which may be asserted in the future, in any lawsuits
or other proceedings initiated against or by any member of the Cadbury plc Group, whether or
not the privileged information is in the possession of or under the control of CS or DPS;
(iii) DPS shall be entitled, on behalf of itself or any member of the DPS Group, in
perpetuity, to control the assertion or waiver of all privileges in connection with
privileged information to the extent relating to the Beverages Business, whether or not
the privileged information is in the possession of or under the control of CS or DPS.
DPS shall also be entitled, on behalf of itself or any member of the DPS Group, in
perpetuity, to control the assertion or waiver of all privileges in connection with
privileged information that relates solely to the subject matter of any claims constituting
Beverages Liabilities, now pending or which may be asserted in the future, in any lawsuits
or other
43
proceedings initiated against or by any member of the DPS Group, whether or not the
privileged information is in the possession of or under the control of CS or DPS; and
(iv) the Parties shall have a shared privilege, with equal right to assert or waive,
subject to the restrictions in this
Section 8.07
, with respect to all privileges not
allocated pursuant to the terms of
Section 8.07(a)(ii)
and
(iii)
. All
privileges relating to any claims, proceedings, litigation, disputes, or other matters which
involve members of both the Cadbury plc Group and the DPS Group in respect of which such
Parties retain any responsibility or Liability under this Agreement, shall be subject to a
shared privilege among them.
(b) No Party may waive any privilege which could be asserted under any applicable Law, and in
which the other Party has a shared privilege, without the consent of the other Party, which shall
not be unreasonably withheld or delayed or as provided in
Section 8.07(c)
or
Section
8.07(d)
below. Consent shall be in writing, or shall be deemed to be granted unless written
objection is made within 10 Business Days after notice upon the other Party requesting such
consent.
(c) In the event of any litigation or dispute between or among the Parties, or any members of
their respective Groups, either Party may waive a privilege in which the other Party or member of
such Group has a shared privilege, without obtaining the consent of the other Party;
provided
that such waiver of a shared privilege shall be effective only as to the use of
Information with respect to the litigation or dispute between the relevant Parties and/or the
applicable members of their respective Groups, and shall not operate as a waiver of the shared
privilege with respect to third parties.
(d) If a dispute arises between or among the Parties or any member of their respective Groups
regarding whether a privilege should be waived to protect or advance the interest of any Party,
each Party agrees that it shall negotiate in good faith, shall endeavor to minimize any prejudice
to the rights of the other Party, and shall not unreasonably withhold consent to any request for
waiver by another Party. Each Party specifically agrees that it will not withhold consent to
waiver for any purpose except to protect its own legitimate interests.
(e) Upon receipt by any Party or by any member of a Partys Group of any subpoena, discovery,
court order or other request which arguably calls for the production or disclosure of Information
subject to a shared privilege or as to which another Party has the sole right hereunder to assert a
privilege, or if any Party obtains knowledge that any of its or any member of its Groups current
or former directors, officers, agents or employees have received any subpoena, discovery or other
requests which arguably calls for the production or disclosure of such privileged Information, such
Party shall promptly notify the other Party of the existence of the request and shall provide the
other Party a reasonable opportunity to review the Information and to assert any rights it or they
may have under this
Section 8.07
or otherwise to
prevent the production or disclosure of such privileged Information.
44
Section 8.08
Ownership of Information
.
(a) Any information owned by one Party or any of its Subsidiaries that is provided to a
requesting Party pursuant to this
ARTICLE VIII
shall be deemed to remain the property of
the providing Party. Unless specifically set forth herein, nothing contained in this Agreement
shall be construed as granting or conferring rights of license or otherwise in any such
information.
(b) Any Information provided by or on behalf of or made available by or on behalf of the other
Party hereto pursuant to this
ARTICLE VIII
shall be on an as is, where is basis and no
Party is making any representation or warranty with respect to such Information or the completeness
thereof.
Section 8.09
Other Agreements
. Except as otherwise provided in
Section 8.06
,
Sections 8.01
through
8.08
and
8.10
shall not apply with respect to
Information, Records, actions and other matters relating to Tax matters, all of which shall be
governed by the Tax Sharing Agreement.
Section 8.10
Control of Legal Matters
.
(a)
General.
(i) On or prior to the Distribution Date, CS shall assume (or, as applicable,
retain), or cause the applicable member of the Cadbury plc Group to assume (or, as applicable,
retain) control of each of the Cadbury plc Litigation Matters, and CS shall use its reasonable best
efforts to have a member of the Cadbury plc Group substituted for any member of the DPS Group named
as a defendant in any such Cadbury plc Litigation Matters;
provided
,
however
, that
no member of the Cadbury plc Group shall be required to make any such effort if the removal of any
member of the DPS Group would jeopardize insurance coverage or rights to indemnification from third
parties applicable to such Cadbury plc Litigation Matters.
(ii) On or prior to the Distribution Date, DPS shall assume (or, as applicable,
retain), or cause the applicable member of the DPS Group to assume (or, as applicable,
retain) control of each of the Beverages Litigation Matters, and DPS shall use its
reasonable best efforts to have a member of the DPS Group substituted for any member of the
Cadbury plc Group named as a defendant in any such Beverages Litigation Matters;
provided
,
however
, that no member of the DPS Group shall be required to make
any such effort if the removal of any member of the Cadbury plc Group would jeopardize
insurance coverage or rights to indemnification from third parties applicable to such
Beverages Litigation Matters.
(b) Except as provided in
Section 8.10(a)
, after the Distribution Date, the Parties
hereto agree that with respect to all Actions commenced against any member of the
Cadbury plc Group, any member of the DPS Group or members of both Groups relating to events
that take place before, on or after the Distribution Date, such demands, claims or Actions shall be
controlled by:
(i) A member of the Cadbury plc Group, if such Action relates solely to the Cadbury plc
Assets, Cadbury plc Liabilities or Cadbury plc Business (as the Cadbury plc Business is
conducted after the Distribution Date) (a
Future Cadbury plc Litigation
45
Matter
),
and CS shall use its reasonable best efforts to have a member of the Cadbury plc Group
substituted for any member of the DPS Group which may be named as a defendant in such Future
Cadbury plc Litigation Matter;
provided
,
however
, that no member of the
Cadbury plc Group shall be required to make any such effort if the removal of any member of
the DPS Group would jeopardize insurance coverage or rights to indemnification from third
parties applicable to such Future Cadbury plc Litigation Matter;
(ii) A member of the DPS Group, if such claim, demand or Action relates solely to the
Beverages Assets, Beverages Liabilities or Beverages Business (as the Beverages Business is
conducted after the Distribution Date) (a
Future Beverages Litigation Matter
), and
DPS shall use its reasonable best efforts to have a member of the DPS Group substituted for
any member of the Cadbury plc Group which may be named as a defendant in such Future
Beverages Litigation Matter;
provided
,
however
, that no member of the DPS
Group shall be required to make any such effort if the removal of any member of the Cadbury
plc Group would jeopardize insurance coverage or rights to indemnification from third
parties applicable to such Future Beverages Litigation Matter; and
(iii) Except as provided in subparagraphs (i) or (ii) above, or as may be otherwise
agreed by DPS and CS, a member of each of the DPS Group and the Cadbury plc Group jointly if
(A) members of both Groups jointly operate or operated at the relevant time the Business to
which such Action relates or such Action relates to both the Cadbury plc Assets, Cadbury plc
Liabilities or Cadbury plc Business and the Beverages Assets, Beverages Liabilities or
Beverages Business, (B) an Action arises from or relates to any Disclosure Document or any
other document filed with any Governmental Authority (including the SEC or the FSA) at or
prior to the Distribution Date by CS, Cadbury plc or DPS in connection with the
Distribution, (C) an Action is brought by or on behalf of the current or former stockholders
of CS, Cadbury plc or DPS and relates to any filing by CS, Cadbury plc or DPS with the SEC
or the FSA other than those described in clause (B), (D) an Action is brought by any person
against CS, Cadbury plc or DPS with respect to the Distribution, (the matters in clauses (A)
through (D) being
Future Joint Litigation Matters
);
provided
,
however
, that no member of either Group may settle a Future Joint Litigation Matter
without the prior written consent of the members of the other Group named or involved in
such Future Joint Litigation Matter, which consent shall not be unreasonably withheld or
delayed;
provided
further
that either party may settle a Future Joint
Litigation matter if such settlement is for money only and provides a full release from any
liability under such Future Joint Litigation Matter for the other party and, as applicable,
the members of the other partys Group.
(c)
Claims Against Third Parties.
Actions by any member of either Group against third
parties, and any proceeds or other benefits that may be received as a result of such Actions and
any Liabilities arising out of or resulting from such Actions, that are (i) listed in
Schedule
8.10(c)(i)
or that relate to the Cadbury plc Business and not to the Beverages Business shall
be the property of the applicable member of the Cadbury plc Group (
Cadbury plc Claims
),
(ii) listed in
Schedule 8.10(c)(ii)
or that relate to the Beverages Business and not to the
Cadbury plc Business shall be the property of the applicable member of the DPS Group
46
(
Beverages Claims
), and (iii) listed in
Schedule 8.10(c)(iii)
or that relate to
both the Cadbury plc Business and the Beverages Business shall be the property of, and shall be
shared by, CS and DPS in proportion to their respective interests (
Joint Cadbury plc and
Beverages Claims
).
(d)
Retention of Counsel.
The parties hereto agree that attorneys who have worked for any
member of the Cadbury plc Group or any member of the DPS Group prior to the Distribution Date are
not conflicted from representing any members of the Cadbury plc Group or the DPS Group, except to
the extent such representation is adverse to a member of the other Group.
(e)
Notice to Third Parties; Service of Process; Cooperation.
(i) To the extent necessary, to effectuate the provisions in this Agreement, CS and DPS
shall cause the members of their respective Groups to promptly notify their respective
agents for service of process and all other necessary parties, including plaintiffs and
courts and shall provide instructions for proper service of legal process and other
documents.
(ii) Each Party shall, and shall cause the members of its respective Groups to, attempt
in good faith to not accept service on behalf of any member of the other Partys Group, and
shall, and shall cause the members of their respective Groups to, use their reasonable best
efforts to deliver to each other any legal process or other documents incorrectly delivered
to them or their agents as soon as possible following receipt.
(f) Nothing in this
Section 8.10
shall effect in any way the indemnification
provisions in
ARTICLE VII
or the allocation of Liabilities between the Parties under this
Agreement.
ARTICLE IX
INSURANCE
Section 9.01
Policies and Rights Included Within Assets
. The Beverages Assets shall
include (i) any and all rights of an insured Party under each of the Beverages Shared Policies,
subject to the terms of such Beverages Shared Policies and any limitations or obligations of DPS
contemplated by this
ARTICLE IX
, specifically including rights of indemnity and the right
to be defended by or at the expense of the insurer, with respect to all alleged wrongful acts,
claims, suits, actions, proceedings, injuries,
losses, liabilities, damages and expenses incurred or claimed to have been incurred prior to
the Distribution Date by any Party in connection with the conduct of the Beverages Business or, to
the extent any claim is made against DPS or any of its Subsidiaries or conduct of the Cadbury plc
Business, and which alleged wrongful acts, claims, suits, actions, proceedings, injuries, losses,
liabilities, damages and expenses may arise out of an insured or insurable event, occurrence or
wrongful act under one or more of such Beverages Shared Policies;
provided
,
however
, that nothing in this clause shall be deemed to constitute (or to reflect) an
assignment of such Beverages Shared Policies, or any of them, to DPS, and (ii) the Beverages
Policies.
47
Section 9.02
Administration; Other Matters
.
(a) Administration.
Except as otherwise provided in
Section 9.02
hereof, from and
after the Demerger Effective Time, CS shall be responsible for (i) Insurance Administration of the
Beverages Shared Policies; and (ii) Claims Administration under such Beverages Shared Policies with
respect to Cadbury plc Liabilities and (iii) reasonable oversight of Claims Administration by DPS
under such Beverages Shared Policies with respect to Beverages Liabilities;
provided
that
the retention of such responsibilities by CS is in no way intended to limit, inhibit or preclude
any right to insurance coverage for any Beverages Shared Policy Insured Claim of a named insured
under such Policies as contemplated by the terms of this Agreement;
provided
further
that CS retention of the administrative responsibilities for the Beverages Shared
Policies shall not relieve the Party submitting any Beverages Shared Policy Insured Claim of the
primary responsibility for reporting such Beverages Shared Policy Insured Claim accurately,
completely and in a timely manner or of such Partys authority to settle any such Beverages Shared
Policy Insured Claim within any period permitted or required by the relevant Policy. CS may
discharge its administrative responsibilities under this
Section 9.02
by contracting for
the provision of services by independent parties. Each of the applicable Parties shall pay any
costs relating to defending its respective Beverages Shared Policy Insured Claims under Beverages
Shared Policies to the extent such costs including defense, out-of-pocket expenses, and direct and
indirect costs of employees or agents of CS related to Claims Administration and Insurance
Administration are not covered under such Policies.
(b) Claims Under Beverages Shared Policies.
Where Beverages Liabilities are specifically
covered under the same Beverages Shared Policy for periods prior to the Distribution Date, or where
such Beverages Shared Policies cover claims made after the Distribution Date with respect to an
occurrence or wrongful act prior to the Distribution Date, then from and after the Distribution
Date, DPS may claim coverage for Beverages Shared Policy Insured Claims under such Beverages Shared
Policy as and to the extent that such insurance is available up to the full extent of the
applicable limits of liability of such Beverages Shared Policy (and may receive any Insurance
Proceeds with respect thereto as contemplated by
Section 9.02(c)
hereof), subject to the
terms of this
Section 9.02
. Except as set forth in this
Section 9.02
, no member of
the Cadbury plc Group or the DPS Group, as applicable, shall be liable to a member of the other
Partys Group for claims not reimbursed by insurers for any reason not within the control of a
member of the Cadbury plc Group or the DPS Group, as the case may be, including coinsurance
provisions, deductibles, quota share deductibles, self-insured retentions, bankruptcy or insolvency
of an insurance carrier, Beverages Shared Policy limitations or
restrictions, any coverage disputes, any failure to timely claim by a member of the Cadbury
plc Group or the DPS Group or any defect in such claim or its processing. It is expressly
understood that the foregoing shall not limit any Partys liability to the other Party for
indemnification pursuant to
ARTICLE VII
.
(c) Allocation of Insurance Proceeds.
Except as otherwise provided in
Section 9.02
,
Insurance Proceeds received with respect to claims, costs and expenses under the Beverages Shared
Policies shall be paid to or on behalf of CS, which shall thereafter administer the Beverages
Shared Policies by paying the Insurance Proceeds, as appropriate, to CS with respect to Cadbury plc
Liabilities and to DPS with respect to Beverages Liabilities, net of the reasonable, documented
out-of-pocket costs incurred by CS in administering the applicable claim
48
(it being understood that
such costs shall fairly reflect the costs to CS of providing such administrative services,
including the costs incurred by CS in respects of any increased premiums resulting from any such
claims on such Beverages Shared Policy and a reasonable allocation for salary, wages, benefits,
Taxes and other expenses directly attributable thereto and without any markup for profit). CS will
provide documentation of any reasonable out-of-pocket costs incurred at the time of payment of the
allocable portions of the indemnity costs and Insurance Proceeds to DPS. Payment of the allocable
portions of indemnity costs of Insurance Proceeds resulting from such Policies will be made by CS
to the appropriate Party upon receipt from the insurance carrier. Each Party agrees to obtain for
itself and each member of its Group insurance policies (in forms and amounts determined by that
Party), which shall be effective as of the Distribution Date, to cover any Cadbury plc Liabilities
or Beverages Liabilities, as applicable, that exceed the Insurance Proceeds available from such
Beverages Shared Policies. Each of the Parties agrees to use commercially reasonable efforts to
maximize available coverage under those Beverages Shared Policies applicable to it, and to take all
commercially reasonable steps to recover from all other responsible parties in respect of an
Beverages Shared Policy Insured Claim to the extent coverage limits under a Beverages Shared Policy
have been exceeded or would be exceeded as a result of such Beverages Shared Policy Insured Claim
(it being understood that the obligation to use commercially reasonable efforts to recover from all
other responsible parties in respect of a Beverages Shared Policy Insured Claim shall not require
any Party to commence any litigation proceedings against any such other responsible party).
Section 9.03
Agreement for Waiver of Conflict and Shared Defense
. In the event that
Beverages Shared Policy Insured Claims of both Parties exist relating to the same occurrence, the
Parties shall jointly defend and waive any conflict of interest necessary to the conduct of the
joint defense. Nothing in this
ARTICLE IX
shall be construed to limit or otherwise alter
in any way the obligations of the Parties to this Agreement, including those created by this
Agreement, by operation of Law or otherwise.
ARTICLE X
DISPUTE RESOLUTION
Section 10.01
Disputes
. Except as otherwise specifically provided in any Ancillary Agreement or Continuing
Arrangement (the terms of which, to the extent so provided therein, shall govern the resolution of
disputes, controversies or claims that are the subject of such Ancillary Agreement or Continuing
Arrangement), the procedures for discussion, negotiation and arbitration set forth in this
ARTICLE X
shall apply to all disputes, controversies or claims (whether arising in
contract, tort or otherwise) that may arise out of or relate to, or arise under or in connection
with, this Agreement or any Ancillary Agreement or Continuing Arrangement, or the transactions
contemplated hereby or thereby (including all actions taken in furtherance of the transactions
contemplated hereby or thereby on or prior to the Demerger Effective Time), between or among any
member of the Cadbury plc Group, on the one hand, and any member of the DPS Group, on the other
hand (collectively,
Agreement Disputes
).
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Section 10.02
Dispute Resolution
.
(a) CS and DPS will use their respective commercially reasonable efforts to resolve
expeditiously any Agreement Dispute on a mutually acceptable negotiated basis. In furtherance of
the foregoing, any member of the DPS Group or the Cadbury plc Group involved in an Agreement
Dispute may deliver a notice (an
Escalation Notice
) demanding an in-person meeting
involving senior level management representatives of Cadbury plc and DPS (or, if CS and DPS agree,
of the appropriate strategic business unit or division within each such entity). A copy of any
such Escalation Notice shall be given to the Chief Legal Officer of each of Cadbury plc and DPS
(which copy shall state that it is an Escalation Notice pursuant to this
Section 10.02
).
Any agenda, location or procedures for such discussions or negotiations between CS and DPS may be
established by CS and DPS from time to time;
provided
,
however
, that the
representatives of Cadbury plc and DPS shall use their reasonable efforts to meet within 30 days of
the Escalation Notice.
(b) If the senior level management representatives of Cadbury plc and DPS are not able to
resolve the Agreement Dispute within 30 days after the date of receipt of the Escalation Notice (or
such shorter time as is necessary to avoid immediate irreparable injury), then the Agreement
Dispute shall be submitted to the chief executive officers of both Cadbury plc and DPS.
(c) If CS and DPS are not able to resolve the Agreement Dispute through the processes set
forth in subsections (a) and (b) of this
Section 10.02
within 60 days after the date of the
Escalation Notice, such Agreement Dispute shall be determined, at the request of either CS or DPS
by arbitration, which shall be conducted (i) by three arbitrators, consisting of one arbitrator
appointed by CS, one arbitrator appointed by DPS and a third arbitrator appointed by the two
arbitrators appointed by CS and DPS or, if the arbitrators appointed by Cadbury plc and DPS cannot
agree on a third arbitrator, the third arbitrator shall be appointed by the chief executive
officers of both CS and DPS, and (ii) in accordance with the Commercial Rules of the American
Arbitration Association (except with respect to the selection of arbitrators) in effect at the time
of filing of the demand for arbitration.
(d) The decision of the arbitrators (which, notwithstanding any other
provision of this Agreement to the contrary, may include an order to specifically perform any
provision of this Agreement) shall be final and binding upon the Parties hereto, and the expense of
the arbitration (including the award of attorneys fees to the prevailing party) shall be paid as
the arbitrators determine. The decision of the arbitrators shall be executory, and judgment
thereon may be entered by any court of competent jurisdiction. The seat of the arbitration shall
be New York, New York.
(e) The existence of, and any discussions, negotiations, arbitrations or other proceedings
relating to, any Agreement Dispute shall be considered by each Party hereto as Confidential
Information until such time as a judgment thereon is entered in a court of competent jurisdiction.
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(f) Notwithstanding anything contained in this Agreement to the contrary, no member of the DPS
Group and no member of the Cadbury plc Group shall have the right to institute judicial proceedings
against the other Party or any Person acting by, through or under such other Party, in order to
enforce the instituting Partys rights hereunder, except that any such member shall be permitted to
seek an injunction in aid of arbitration with respect to an Agreement Dispute to preserve the
status quo during the pendency of any arbitration proceeding pursuant to paragraph (c) of this
Section 10.02
. All judicial proceedings arising out of or relating to this Agreement shall
be heard and determined exclusively in any New York state or federal court sitting in the Borough
of Manhattan in The City of New York.
Section 10.03
Continuity of Service and Performance
. Unless otherwise agreed in
writing, the Parties will continue to provide service and honor all other commitments under this
Agreement and each Ancillary Agreement during the course of dispute resolution pursuant to the
provisions of this
ARTICLE X
with respect to all matters not subject to such Agreement
Dispute.
ARTICLE XI
TERMINATION
Section 11.01
Termination
. This Agreement may be terminated and the Distribution may
be abandoned at any time prior to the Distribution Date by and in the sole discretion of CS.
Section 11.02
Effect of Termination
. In the event of termination of this Agreement in
accordance with
Section 11.01
, this Agreement shall forthwith become void and there shall
be no Liability on the part of either Party hereto.
Section 11.03
Amendment
. This Agreement may not be amended or modified except (a) by
an instrument in
writing signed by, or on behalf of, the Parties hereto or (b) by a waiver in accordance with
Section 11.04
.
Section 11.04
Waiver
. Either Party to this Agreement may (a) extend the time for the
performance of any of the obligations or other acts of the other Party and (b) waive compliance
with any of the agreements of the other Party or conditions to such Partys obligations contained
herein. Any such extension or waiver shall be valid only if set forth in an instrument in writing
signed by the Party to be bound thereby. Any waiver of any term or condition shall not be
construed as a waiver of any subsequent breach or a subsequent waiver of the same term or
condition, or a waiver of any other term or condition of this Agreement. The failure of either
Party hereto to assert any of its rights hereunder shall not constitute a waiver of any of such
rights.
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ARTICLE XII
MISCELLANEOUS
Section 12.01
Limitation of Liability
. IN NO EVENT SHALL ANY MEMBER OF THE CADBURY
PLC GROUP OR THE DPS GROUP BE LIABLE TO ANY MEMBER OF THE DPS GROUP OR THE CADBURY PLC GROUP,
RESPECTIVELY, FOR ANY SPECIAL, CONSEQUENTIAL, INDIRECT, INCIDENTAL OR PUNITIVE DAMAGES OR LOST
PROFITS, HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY (INCLUDING NEGLIGENCE) ARISING IN ANY WAY
OUT OF THIS AGREEMENT OR ANY ANCILLARY AGREEMENT, WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES;
PROVIDED
,
HOWEVER
, THAT THE FOREGOING LIMITATIONS
SHALL NOT LIMIT EACH PARTYS INDEMNIFICATION OBLIGATIONS FOR LIABILITIES TO THIRD PARTIES AS SET
FORTH IN
ARTICLE VII
.
Section 12.02
Expenses
. Notwithstanding anything in this Agreement or in any
Ancillary Agreement to the contrary, all DPS Transaction Costs shall be borne by DPS and all
Transaction Costs shall be borne by CS.
Section 12.03
Notices
. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given or made (and shall be deemed to
have been duly given or made upon receipt) by delivery in person, by an internationally recognized
overnight courier service, by facsimile or registered or certified mail (postage prepaid, return
receipt requested) to the respective Parties hereto at the following addresses (or at such other
address for a Party as shall be specified in a notice given in accordance with this
Section
12.03
):
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(a)
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if to Cadbury plc or CS:
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Cadbury plc
25 Berkeley Square
London W1J 6HB
Facsimile: 44-20-7830-5015
Attention: Henry Udow, Esq.
Chief Legal Officer
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with a copies to:
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Shearman & Sterling LLP
599 Lexington Avenue
New York, NY 10022-6069
Telecopy: (212) 848-7179
Attention: Creighton OM. Condon, Esq.
Scott Petepiece, Esq.
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and
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Slaughter and May
One Bunhill Row
London EC1Y 8YY
Facsimile: 44-20-7090-5000
Attention: Tim Boxell
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(b)
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if to DPS:
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5301 Legacy Drive
Plano, TX 75024
Facsimile: (972) 673-8130
Attention: James L. Baldwin, Jr.
General Counsel
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Section 12.04
Public Announcements
. Following the Demerger Effective Time, neither
Party to this Agreement shall make, or cause to be made, any press release or public announcement
in respect of this Agreement or the transactions contemplated by this Agreement without the prior
written consent of the other Party unless otherwise required by Law or applicable stock exchange
regulation, and the Parties to this Agreement shall cooperate as to the timing and contents of any
such press release or public announcement. The Parties shall use commercially reasonable efforts
to agree on the timing and content of any announcement or communication relating to the financial
results and/or results of operations of the quarters ending March 31, 2008 and June 30, 2008 for
DPS and the period ending June 30, 2008 for Cadbury plc.
Section 12.05
Severability
. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any Law or public policy, all other terms and
provisions of this Agreement shall nevertheless remain in full force and effect for so long as the
economic or legal substance of the transactions contemplated by this Agreement is not affected in
any manner materially adverse to either Party hereto. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the Parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties
as closely as possible in an acceptable manner in order that the transactions contemplated by this
Agreement are consummated as originally contemplated to the greatest extent possible.
Section 12.06
Entire Agreement
. This Agreement, the Ancillary Agreements and the
Continuing Arrangements constitute the entire agreement of the Parties hereto and their Affiliates
with respect to the subject matter hereof and thereof and supersede all prior agreements and
undertakings, both written and oral, between the Parties hereto with respect to the subject matter
hereof and thereof.
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Section 12.07
Assignment
. This Agreement may not be assigned by a Party hereto without the
consent of the other Party hereto;
provided
that a merger shall not be deemed to be an
assignment under this Agreement; and
provided
further
, that any Party may assign
this Agreement or any of its rights and obligations hereunder to one or more Affiliates of such
Party without the consent of the other Party
provided
that no such assignment shall relieve
the assignor of any of its obligations hereunder.
Section 12.08
Parties in Interest
. This Agreement shall be binding upon and inure
solely to the benefit of the Parties hereto and their respective successors and permitted assigns,
and nothing herein, express or implied (including the provisions of
ARTICLE VII
relating to
indemnified parties), is intended to or shall confer upon any other Person any legal or equitable
right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.
Section 12.09
Currency
. Unless otherwise specified in this Agreement, all references
to currency, monetary values and dollars set forth herein means United States dollars and all
payments hereunder shall be made in United States dollars unless otherwise mutually agreed upon by
the Parties.
Section 12.10
Tax Matters
. Except as otherwise specifically provided herein, this
Agreement (including
ARTICLE VII
(other than
Section 7.06
)) shall not govern Tax
matters, which shall be governed by the Tax Sharing Agreement.
Section 12.11
Employee Matters
. Except as otherwise provided herein and not
inconsistent with the Employee Matters Agreement, this Agreement shall not govern any employee
matters, which shall be exclusively governed by the Employee Matters Agreement.
Section 12.12
Governing Law
. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York.
Section 12.13
Waiver of Jury Trial
. EACH OF THE PARTIES HERETO HEREBY WAIVES TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO
ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR
THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH OF THE PARTIES HERETO HEREBY (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTY HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS
SECTION 12.13
.
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Section 12.14
Survival of Covenants
. Except as expressly set forth in any Ancillary
Agreement, the covenants and agreements contained in this Agreement and each Ancillary Agreement,
and Liability for the breach of any obligations contained herein or therein, shall survive the
Distribution Date and shall remain in full force and effect.
Section 12.15
Counterparts
. This Agreement may be executed and delivered (including
by facsimile transmission or portable document format (
.pdf
)) in counterparts, and by the
different Parties hereto in separate counterparts, each of which when executed shall be deemed to
be an original, but all of which taken together shall constitute one and the same agreement.
[
Remainder of page intentionally left blank
]
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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed as of the
date first written above by their respective officers thereunto duly authorized.
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CADBURY SCHWEPPES PLC
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By:
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/s/ Henry Udow
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Name: Henry Udow
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Title: Chief Legal Officer and Group Secretary
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DR PEPPER SNAPPLE GROUP, INC.
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By:
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/s/ James L. Baldwin
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Name: James L. Baldwin
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Title: Executive Vice President and Secretary
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CADBURY PLC, solely for the purposes of Sections
4.01(a) and (b) and Section 5.03
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By:
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/s/ Henry Udow
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Name: Henry Udow
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Title: Chief Legal Officer and Group Secretary
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EXECUTION VERSION
TRANSITION SERVICES AGREEMENT
This Transition Services Agreement
(
Agreement
) is dated as of May 1, 2008, between Cadbury Schweppes plc, a United Kingdom public limited company (
Cadbury
),
and Dr Pepper Snapple Group, Inc., a Delaware corporation (
DPS
).
RECITALS
WHEREAS, the board of directors of Cadbury has determined that it is in the best interests of
Cadbury and its shareholders to separate Cadbury into two separate, publicly traded companies,
which shall operate the Cadbury plc Business and the Beverages Business, respectively (the
Separation
); and
WHEREAS, Cadbury plc, a United Kingdom public limited company, and DPS have entered into a
Separation and Distribution Agreement (the
Separation Agreement
), dated as of May 1,
2008, which sets forth, among other things, the assets, liabilities, rights and obligations of each
of the parties thereto following the Separation; and
WHEREAS, in connection with the Separation, Cadbury will continue to provide, or cause to be
provided, to DPS, and DPS will continue to provide, or cause to be provided, to Cadbury, certain
services for a limited period of time after the Separation pursuant to this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained herein, the signatories
covenant and agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1
. Capitalized terms used herein and not otherwise defined herein shall
have the meanings set forth in the Separation Agreement. The following terms used herein shall
have the following meanings:
Affiliate
shall have the meaning set forth in the Separation Agreement and for purposes of
this Agreement, shall refer to Cadburys Affiliates or DPS Affiliates, as the case may be,
post-Separation.
Cadbury Providing Party
shall have the meaning set forth in Section 5.2.
Cadbury Receiving Party
shall have the meaning set forth in Section 5.6.
Cadbury Services
shall have the meaning set forth in Section 2.1.
Confidential Information
shall have the meaning set forth in Section 2.5(a).
Consents
shall have the meaning set forth in Section 2.3.
Disclosing Party
shall have the meaning set forth in Section 2.5(a).
DPS Providing Party
shall have the meaning set forth in Section 5.5.
DPS Receiving Party
shall have the meaning set forth in Section 5.3.
DPS Services
shall have the meaning set forth in Section 2.2.
Force Majeure Event
shall have the meaning set forth in Section 9.1.
Incoming Service Fee
shall have the meaning set forth in Section 4.1.
Indemnified Party
shall have the meaning set forth in Section 7.3.
Indemnifying Party
shall have the meaning set forth in Section 7.3.
Outgoing Service Fee
shall have the meaning set forth in Section 4.1.
Providing Party
shall have the meaning set forth in Section 3.2.
Receiving Party
shall have the meaning set forth in Section 3.2.
Recipient
shall have the meaning set forth in Section 2.5(a).
Representatives
shall have the meaning set forth in Section 2.5(a).
SAS
shall have the meaning set forth in Section 5.3.
Senior Managers
shall mean the individuals appointed by the Chief Legal Officers
of each party hereto.
Services
shall have the meaning set forth in Section 2.2.
Transition Representative
shall mean Thomas Whitten, in the case of Cadbury, and Angie
Wallander, in the case of DPS, or their respective replacements or designees.
VAT
shall have the meaning set forth in Section 4.1(c).
ARTICLE II
DESCRIPTION OF SERVICES; STANDARD OF PERFORMANCE
Section 2.1
On the terms and subject to the conditions contained herein, Cadbury shall
provide, or cause to be provided, to DPS and its Affiliates the services identified in
Schedule
A
hereto, as such
Schedule A
may be from time to time supplemented or modified in
accordance with the provisions of this Agreement (the
Cadbury Services
).
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Section 2.2
On the terms and subject to the conditions contained herein, DPS shall
provide, or cause to be provided, to Cadbury and its Affiliates the services identified in
Schedule B
hereto, as such
Schedule B
may be from time to time supplemented or
modified in accordance with the provisions of this Agreement (the
DPS Services
, and together with
Cadbury Services, the
Services
).
Section 2.3
. Each party shall, and shall cause its respective Affiliates to, provide
the Services in a commercially reasonable manner and with reasonable skill and care.
Notwithstanding the foregoing, the standard of care for provision of the Services shall in all
material respects be no less than the level of care, skill and quality as are currently being
provided to and by such party and its Affiliates and have been provided in the preceding twelve
months,
provided
that, in the case where the Services are not currently being provided,
each party shall provide the Services in a commercially reasonable manner and with reasonable skill
and care. The relevant measurement of performance of the Services shall be the measurement
metrics, if any, currently used by DPS and its Affiliates or by Cadbury and its Affiliates, as the
case may be. Cadbury and DPS shall, and shall cause each of its Affiliates that is a Providing
Party to, use commercially reasonable efforts to cooperate with each other in all matters relating
to the provision of the Services. With respect to actions taken by the Receiving Party in
connection with the Services received, the Receiving Party shall use the Services in a commercially
reasonable manner in compliance with all applicable Laws. The Providing Party hereby grants the
Receiving Party a license under all of its Intellectual Property used in the performance of
Services solely to the extent required for the Receiving Party to receive the Services hereunder.
Section 2.4
. Cadbury and DPS shall each use its (and shall cause its applicable
Affiliates to use their) reasonable best efforts to obtain all required consents, licenses or
approvals necessary to perform the Services (the
Consents
) (that have not already been procured
prior to the Distribution Date) as soon as reasonably practicable following the date hereof;
provided
that, each party shall notify the other in writing of any terms to which a
proposed Consent is to be subject and shall use its reasonable best efforts to agree with the
relevant third party any reasonable amendments to a proposed Consent requested by Cadbury or DPS,
as the case may be. If the parties are unable to obtain any required Consents, the parties shall
negotiate in good faith reasonable modifications of the Services so that such Consents are not
required.
Section 2.5
. (a) Each party recognizes that in the performance of its obligations
under this Agreement, or as a result of the parties ongoing relationship pursuant to this
Agreement, non-public, confidential and/or proprietary information (
Confidential Information
)
belonging or relating to the other party or its Affiliates (each, a
Disclosing Party
), including
Confidential Information regarding the Services may be disclosed or become known to the other party
or its Affiliates or its officers, directors, controlling persons, employees, lenders, agents,
representatives, accountants and counsel (collectively,
Representatives
) (each, a
Recipient
).
Each party acknowledges that all Confidential Information disclosed in connection with the
provision of Services remains the property of the Disclosing Party. Unless otherwise expressed in
writing to the other party, information, including any information expressed orally, that is
exchanged between the parties or their respective Affiliates in connection with the performance of
their respective obligations under this Agreement shall be
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presumed to be Confidential Information. Each party shall, and shall cause its Affiliates and
Representatives to, keep the Disclosing Partys Confidential Information confidential and take such
precautions with respect to the Disclosing Partys Confidential Information as it normally takes
with its own non-public, confidential and/or proprietary information, which shall be no less than a
reasonable standard of care under the circumstances. This obligation shall not apply to:
(i) information that, at the time of disclosure, is in the public domain or generally
known in the industry, other than as a result of a breach by the other party or its
Affiliates or Representatives of any of the provisions of this Agreement or of any other
duty of confidentiality owed to the other party or its Recipients;
(ii) information that, after disclosure to the Recipient hereunder, is published or
otherwise becomes part of the public domain or generally known in the industry through no
fault of the party (or such partys Recipients) to whom the information was disclosed;
(iii) information that a party can demonstrate through its records was in its lawful
possession or the lawful possession of a Recipient at the time such party received such
information (except for Confidential Information regarding DPS or its Affiliates in
Cadburys possession or Confidential Information regarding Cadbury or its Affiliates in the
possession of Representatives that are transferred to DPS or its Affiliates, each of which
shall continue to be confidential); and
(iv) information that may be received by a Recipient in good faith from a source other
than the Disclosing Party, which source either has no duty of confidentiality to such other
party or, if such source does have a duty of confidentiality, the Recipient of such
Confidential Information was unaware of or had no reasonable basis for knowing thereof
(provided that, if a Recipient later becomes aware or reasonably should know of such duty,
this exception shall no longer apply).
(b) Each party shall inform any and all of its Recipients that receive Confidential
Information of a Disclosing Party of the confidential and proprietary nature of such Confidential
Information and shall inform such Recipients that such Confidential Information is to be kept
strictly proprietary and confidential pursuant to the terms of this Agreement. Each party shall
explain to each such Recipient his or her responsibilities and obligations under this Section 2.5,
and shall establish commercially reasonable procedures to ensure that the Confidential Information
is properly protected and monitored for purposes of adhering to the terms of this Section 2.5.
Except to the extent otherwise specifically provided in this Section 2.5, the Confidential
Information will be kept confidential by each party and its Recipients. Each party agrees to be
responsible for any breach of this Section 2.5 by any of its Recipients.
(c) Each party and its Recipients shall maintain, however, the right to disclose the
Confidential Information of a Disclosing Party if required to do so by Law, subpoena or other legal
process, provided that, in the case of any such potential disclosure pursuant to this Section
2.5(c), the Recipient shall provide the Disclosing Party with prompt notice of such requirement and
shall use its reasonable best efforts to keep and assist the Disclosing Party in keeping it
confidential by all appropriate means, and shall, to the extent reasonably practical, afford the
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Disclosing Party the opportunity to contest the disclosure obligation and cooperate with any
Recipients in seeking any such protective order or other appropriate legal remedy, in each case, at
the Disclosing Partys request and expense. If a Recipient finds it necessary to disclose any
Confidential Information, such Person will disclose only that portion of the Confidential
Information that it is advised in writing by counsel is legally required to be disclosed and will
use its reasonable best efforts, at the Disclosing Partys request and expense, to ensure that all
Confidential Information so disclosed will be accorded confidential treatment.
(d) Upon termination of this Agreement for any reason, no Recipient shall disclose nor make
any further use of a Disclosing Partys Confidential Information and upon written request shall
immediately return or destroy all such Confidential Information as shall be in written or other
tangible form (including all copies thereof),
provided
,
however
, that each party
shall be entitled to retain one record copy in its legal department, to be held in strict
confidence, subject to the above exceptions; and
provided
,
further
, that if such
Confidential Information is destroyed, upon written request, shall certify the same to the
Disclosing Party.
(e) The parties acknowledge that in the event of any breach or threatened breach of this
Agreement pertaining to Confidential Information, the non-breaching party will not have an adequate
remedy at law and may suffer irreparable injury as a result of any such breach. Therefore, in the
event of any such breach or threatened breach, the non-breaching party shall, in addition to any
other remedies available at law or in equity, be entitled to specific performance, without posting
bond or other security.
Section 2.6
. The Transition Representatives shall meet regularly in person,
telephonically, or as they otherwise agree at least monthly for the first year following the date
hereof, to discuss any issues arising under this Agreement and the need for any modifications or
additions hereto.
Section 2.7
. Subject to Section 2.8, except with respect to any services of the type
described on
Schedule D
, if either party can demonstrate that, by virtue of the
transactions contemplated by the Separation Agreement, either party requires a service not
currently provided for under this Agreement that was provided by or to a member of the Cadbury and
its Affiliates by or to DPS and its Affiliates, as the case may be, in the twenty-four (24) month
period prior to the Distribution Date, the parties shall cooperate and endeavor in good faith to
modify and supplement the schedules to this Agreement (including any other attachments thereto, if
any) to accurately identify those services, and to specify the manner and term in which such
services shall be performed and, as appropriate, to enter into ancillary transition services
agreements addressing the provision of certain critical services or the provision of the Services
in certain jurisdictions (including price calculated pursuant to Section 4), in order to refine and
further effect the understandings set forth in this Agreement. Unless otherwise so agreed, in no
event shall any such modification or supplement to the schedules (other than the election by a
party to identify a Service which it does not elect to receive and for which service fees shall not
be payable) or the execution of any ancillary agreements result in any change in the fees for the
Services.
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Section 2.8
. Where a service that was provided by a third party to Cadbury or its
Affiliates (including DPS and its Affiliates) prior to the Distribution Date is not otherwise
provided for in this Agreement and is reasonably required by DPS or Cadbury to continue DPS or
Cadburys remaining businesses, as applicable, in substantially the same manner as that carried on
in the twenty-four month period prior to the Distribution Date, Cadbury or DPS, as applicable, will
provide such assistance as is reasonable under the circumstances so as to enable the other party to
put in place similar arrangements with such third party.
Section 2.9
. Except as otherwise specified in this Agreement, all costs and expenses,
including fees and disbursements of counsel, financial advisors and accountants, incurred in
connection with this Agreement and the transactions contemplated by this Agreement shall be paid by
the party incurring such costs and expenses.
Section 2.10
. Subject to Section 2.3 of this Agreement, the Cadbury Providing Party
and DPS Providing Party (each, as defined below), as applicable, shall be responsible for selecting
and supervising in good faith the personnel who will perform any particular Cadbury Service or DPS
Service, respectively, and performing all administrative services with respect to such personnel,
including establishing compensation structure and work load balancing.
Section 2.11
. Cadbury and DPS shall, or shall cause their respective Affiliates to,
make available on a timely basis to the Providing Party all information reasonably requested by
such Providing Party to enable it to provide the Services and provide reasonable access to the
Providing Party of such partys premises to the extent necessary for the purpose of providing the
Services.
ARTICLE III
PERIOD OF SERVICES: TERM
Section 3.1
. The parties agree that, except as otherwise designated in this
Agreement, all services covered by this Agreement shall terminate on the date indicated on
Schedule A
or
Schedule B
, as applicable, unless earlier terminated by the Receiving
Party upon such prior written notice as set forth on
Schedule A
or
Schedule B
, as
applicable, or pursuant to Section 3.2(c) of this Agreement or extended by the mutual written
agreement of the Providing Party and Receiving Party. This Agreement shall terminate when the
terms for all Services have terminated; provided, however, that Sections 2.5, 2.9 and Articles 5,
7, 8 and 9 shall survive any such termination; provided further that Sections 5.4 and 5.7 shall
continue for one year only.
Section 3.2
. (a) Each party shall, or shall cause its Affiliate that is providing
the Services hereunder (a
Providing Party
) to, cooperate in a commercially reasonable manner with
the party receiving the Services hereunder (a
Receiving Party
) to facilitate the transfer of
responsibility for the Services to the Receiving Party or its designee. Each party shall use its
commercially reasonable efforts to: (i) assume performance of the Services within shorter time
periods than those specified on
Schedule A
or
Schedule B
, as applicable, and (ii)
make or obtain any approvals, permits and licenses and implement such systems as may be necessary
for
-6-
such party to provide the Services independently as soon as reasonably practicable following
the Distribution Date.
(b) As soon as reasonably practicable following the termination of this Agreement or the
discontinuation of any Services, the Providing Party shall deliver to the Receiving Party, at the
Receiving Partys expense, copies of any books, records, data and reports reasonably requested by
the Receiving Party in connection with such Services. Subject to the requirements of any
applicable Laws, each Receiving Party agrees to keep any information it receives pursuant to this
Section 3.2(b) that relates to a Disclosing Party confidential in accordance with Section 2.5.
(c) Notwithstanding anything to the contrary in this Agreement, a party may terminate any
Service or all Services immediately upon notice to the other party in the event of a material
breach of this Agreement by the breaching party that is not cured within thirty (30) days following
written notice from the non-breaching party.
ARTICLE IV
COMPENSATION; PAYMENT TERMS
Section 4.1
. (a) DPS shall pay to Cadbury a fee for each Service that is provided to
DPS and its Affiliates hereunder (collectively, the
Incoming Service Fee
) and Cadbury shall pay
to DPS a fee for each Service that is provided to Cadbury and its Affiliates hereunder
(collectively, the
Outgoing Service Fee
). The costs for each Service (the
Costs
) shall be the
actual direct cost incurred by the Providing Party in performing such Service, calculated as set
forth on
Schedule C
, which shall include a reasonable allocation for overhead salary,
wages, benefits, taxes and other expenses attributable thereto (but shall exclude, for the
avoidance of doubt, any overhead expenses for branding, marketing and other similar expenses) and
without any markup for profit, calculated in a manner consistent with past custom and practice of
the Providing Party with respect to such Service (or Cadbury Schweppes SBS, Inc. in the case of the
Services which were not historically provided by the Providing Party);
provided
,
however
, that such Costs shall be adjusted to reflect any termination or expiration of any
Transition Service pursuant to Article 3 of this Agreement.
(b) The Incoming Service Fee and the Outgoing Service Fee shall include all out-of-pocket
charges and costs of performing the Services hereunder, including, without limitation, license
fees, royalties or provider services fees.
(c) The fees payable by a Receiving Party to a Providing Party shall, in each case, be taken
to be exclusive of any value added Taxes, sales Taxes, or similar Taxes (
VAT
) properly chargeable
in respect of the transactions hereunder, and an amount equal to such Taxes so chargeable shall,
subject to receipt of a valid VAT receipt or invoice in accordance with Section 4.1(f) below, be
paid by the Receiving Party to the Providing Party in addition to the fees otherwise payable under
this Agreement.
(d) In the event that applicable Law requires that any amount in respect of Taxes be withheld
from any payment by a Receiving Party to a Providing Party under this Agreement,
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the Receiving Party shall withhold the required amounts and pay such withheld amounts over to
the applicable Governmental Authority in accordance with the requirements of the applicable Law,
and any amount so withheld and paid over shall be treated as having been paid to the Providing
Party, and the Receiving Party shall not be required to pay any additional amount as a result of or
in respect of such withholding.
(e) In each case where an amount in respect of VAT is payable by the Receiving Party in
respect of a service provided by the Providing Party, DPS or Cadbury (as the case may be) shall
ensure that the Providing Party shall furnish in a timely manner a valid VAT receipt or invoice to
the Receiving Party in the form and manner required by Law to allow the Receiving Party or, as the
case may be, any of its affiliates to recover such Tax to the extent allowable by Law.
(f) Except in the event the Receiving Party disputes a charge, the Receiving Party shall pay,
or cause payment to be made to, the Providing Party, within 30 days of receipt of a reasonably
detailed written invoice from the Providing Party, for the Cost of each Service rendered hereunder,
which invoice shall be delivered by the Providing Party to Cadbury or DPS, as applicable, by the
30th day of each month for the Services provided during the preceding month. Payments shall be
made by wire transfer to an account designated in writing from time to time by Cadbury or DPS, as
applicable.
ARTICLE V
ACCESS TO RECORDS
Section 5.1
. During the term of this Agreement, each party shall, for the lesser of a
period of seven years after the Distribution Date or a period specified by such partys record
retention policies, retain the books and records of each party and their respective Affiliates
relating to the Services provided hereunder in accordance with the record retention policies of
such party;
provided
,
however
, that each party shall notify the other party at
least 60 days in advance of destroying any such books and records in order to provide the other
party the opportunity to access such books and records and if the other party fails to request that
such books and records be delivered to them at the requesting partys expense, within 60 days after
receipt of such notice, each party may destroy such books and records.
Section 5.2
. Subject to Section 2.5 above, Cadbury shall provide, or cause to be
provided, to DPS and its Representatives reasonable access to the books, records (including, but
not limited to, records and documentation referred to in Section 5.1), premises, systems and
personnel of each Providing Party of Cadbury (a
Cadbury Providing Party
) to permit DPS to audit
Cadburys or a Cadbury Providing Partys compliance with this Agreement,
provided
that this
right of access is exercised with reasonable prior notice and DPS uses its reasonable efforts to
cause as little disruption as is reasonably possible to the performance of the Services and Cadbury
Providing Partys other businesses,
provided
further
that DPS may only undertake
two such audits per calendar year.
Section 5.3
. In addition to the rights set out in Section 5.2, Cadbury shall comply
and shall cause each Cadbury Providing Party to comply with any reasonable request of
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DPS, including any review in accordance with the Statement of Auditing Standards No. 70 (Type
11) (the
SAS
), of any third party service provider of Cadbury for information relating to the
Services that may be required by DPS or any Receiving Party of DPS (a
DPS Receiving Party
) to
enable them to comply with the Sarbanes-Oxley Act of 2002 (and any resultant, similar or
replacement legislation, rules or guidance).
Section 5.4
. If, based upon any audit performed in accordance with Sections 5.2 or
5.3, there has been either an overcharge or undercharge for the costs of the Services, then Cadbury
Providing Party or DPS, as the case may be, will promptly reimburse or pay to the other Party such
difference. All the costs of any audit conducted under Sections 5.2 or 5.3 shall be borne by DPS.
Section 5.5
. Subject to Section 2.5 above, DPS shall provide, or cause to be
provided, to Cadbury and its Representatives reasonable access to the books, records (including,
but not limited to, records and documentation referred to in Section 5.1), premises, systems and
personnel of the Providing Party of DPS (the
DPS Providing Party
) to permit Cadbury to audit DPS
or a DPS Providing Partys compliance with this Agreement,
provided
that this right of
access is exercised with reasonable prior notice and Cadbury uses its reasonable efforts to cause
as little disruption as is reasonably possible to the performance of the Services and DPS Providing
Partys other businesses,
provided
further
that Cadbury may only undertake two such
audits per calendar year.
Section 5.6
. In addition to the rights set out in Section 5.5, DPS shall comply and
shall cause each relevant DPS Providing Party to comply with any reasonable request of Cadbury,
including any review in accordance with the SAS, of any third party service provider of DPS for
information relating to the Services that may be required by Cadbury or any Receiving Party of
Cadbury (a
Cadbury Receiving Party
) to enable them to comply with the Sarbanes-Oxley Act of 2002
(and any resultant, similar or replacement legislation, rules or guidance).
Section 5.7
. If, based upon any audit performed in accordance with Sections 5.5 or
5.6, there has been either an overcharge or undercharge for the costs of the Services, then DPS
Providing Party or Cadbury, as the case may be, will promptly reimburse or pay to the other Party
such difference. All the costs of any audit conducted under Sections 5.5 and 5.6 shall be borne by
Cadbury.
ARTICLE VI
ASSIGNMENT
Section 6.1
. Except as otherwise provided in this Article 6, neither party shall
assign its rights or obligations under this Agreement, or any part hereof, without the prior
written consent of the other party (which consent shall not be unreasonably withheld). Either
party may, at its election, assign its rights and corresponding obligations under this Agreement in
whole or in one or more parts to any one or more of its Affiliates so long as such assigning party
agrees to remain fully obligated for the performance of the terms and provisions of this Agreement
as they relate to the Services being assigned.
-9-
Section 6.2
. Notwithstanding anything to the contrary in this Agreement, a party
shall be entitled to assign its rights and/or obligations under this Agreement in whole or in part
to an unrelated party in one or more locations in connection with the sale, transfer or other
disposal by it or any of its Affiliates of its business or operations that receives and/or provides
the Services under this Agreement in such location and this Agreement shall thereafter be read and
construed as if it were a separate and independent contract between the unrelated party and the
party hereto as regarding the services and facilities to be received and/or provided under this
Agreement in such locations. Notwithstanding the foregoing, in the event a party assigns its
rights and/or obligations hereunder upon a sale or transfer to an unrelated party as set forth
above, (a) such transferor shall be entitled to continue to receive the Services (other than the
Services that are the subject of such assignment) from the other party in accordance with the terms
of this Agreement following any such assignment, and the other party shall have no right to
terminate this Agreement as a result of such assignment, and (b) no such assignment shall relieve
the transferor of any obligations hereunder in the event that such transferee fails to perform in
any manner or breaches this Agreement.
Section 6.3
. Any attempted or purported assignment in violation of this Section 6
shall be null and void ab initio. In the event of a permitted assignment hereunder, this Agreement
shall be binding upon and shall inure to the benefit of the parties and their respective successors
and permitted assigns.
ARTICLE VII
LIMITATION ON LIABILITY; THIRD PARTY CLAIMS
Section 7.1
. Except with respect to damages included in an award against an
Indemnified Party (as defined herein) resulting from a Third Party Claim for which such party is
indemnified hereunder, in no event shall either party or its respective Representatives and
Affiliates have any liability whether in contract or tort (including negligence and strict
liability) or otherwise, at law or equity, for loss of profit, diminution in value, loss of
goodwill, claims of customers, or consequential, incidental or punitive damages or other special
damages as a result of, provision of or failure to provide the services under the terms of this
Agreement. Subject to such other remedies permitted by Section 2.5 above and except as
specifically provided in the previous sentence or in the event of bad faith or willful misconduct
of such party, the maximum liability of each party and its Representatives and Affiliates to, and
the sole remedy of, the other party or its Affiliates or Representatives for any act or failure to
act in connection herewith (including but not limited to, the performance or breach of this
Agreement) shall be the greater of (i) a refund of price paid for the particular Service, (ii) such
other partys incremental cost of performing the Service itself or (iii) such other partys
incremental cost of obtaining the Service from a third party.
Section 7.2
. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT (INCLUDING
SECTION 2.3), AND WITHOUT LIMITING ANY REPRESENTATIONS OR WARRANTIES IN THE SEPARATION AGREEMENT,
THE PARTIES MAKE NO EXPRESS REPRESENTATIONS OR WARRANTIES WITH RESPECT TO THE SERVICES, AND NO
REPRESENTATION OR WARRANTY SHALL BE IMPLIED UNDER THIS AGREEMENT OR AT LAW, INCLUDING, WITHOUT
LIMITATION,
-10-
RELIABILITY, ACCURACY, SUITABILITY, COMPLETENESS, WARRANTY OF MERCHANTABILITY OR WARRANTY OF
FITNESS FOR A PARTICULAR PURPOSE, AS TO THE SERVICES TO BE PERFORMED HEREUNDER.
Section 7.3
. Subject to the limitations set forth in Section 7.1, each party (the
Indemnifying Party
) agrees that it shall protect, indemnify and hold the other party and its
Affiliates and their Representatives (each, the
Indemnified Party
) harmless from and against all
Indemnifiable Losses and shall defend such party at the Indemnifying Partys expense (to the extent
of any Third Party Claims) in any Action for injuries to or death of any Person or Persons or loss
of or damage to the property of any Person or Persons whomsoever (including without limitation the
agents and employees of the Indemnified Party) or infringement of any Persons or Persons
Intellectual Property arising out of the actions of the Indemnifying Party, or its Representatives,
in connection with or as a result of this Agreement or the performance of the Indemnifying Partys
Services, the unauthorized use by the Indemnifying Party of the Services or other obligations
hereunder.
Section 7.4
. The Indemnified Party shall give the Indemnifying Party prompt notice of
any indemnifiable Action asserted against it.
Section 7.5
. Except with respect to any Third Party Claims, the receipt by a
Receiving Party or its Affiliates of the Services shall be an unqualified acceptance of, and a
waiver by, the Receiving Party and its Affiliates of their rights to make any claim (other than
based on gross negligence or fraud) with respect to such Services unless the Receiving Party gives
written notice of the claim to the Providing Party within the later of (i) sixty (60) days after
receipt of the Service by the Receiving Party or its Affiliates or (ii) thirty (30) days after the
date on which the Receiving Party became, or should have become, aware of the facts, events,
occurrences or circumstances underlying such claim;
provided
, that, in no event shall the
Receiving Party be entitled to give notice of a claim more than one (1) year after receipt of the
Service by the Receiving Party or its Affiliates.
ARTICLE VIII
DISPUTE RESOLUTION
Section 8.1
. Prior to the initiation of formal dispute resolution procedures, the
parties shall first attempt to resolve any dispute arising out of or in connection with this
Agreement or the transactions contemplated hereby informally, as follows:
(a) The parties shall first attempt in good faith to resolve all disputes on a local level and
shall attempt to initiate such efforts within two Business Days after receipt of notice of any such
dispute. If the parties are unable to resolve a dispute in an amount of time that either party
deems reasonable under the circumstances, such party may refer the dispute for resolution to the
Senior Managers pursuant to the provisions of Section 8.1(b).
(b) Within five Business Days of a notice under Section 8.1(a) referring a dispute for
resolution by Senior Managers, the Transition Representatives (or other employees of the parties)
shall each prepare and provide to the Senior Managers of each party summaries of the
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relevant information and background of the dispute, along with any appropriate supporting
documentation. The designated Senior Managers will confer as often as they deem reasonably
necessary in order to gather and exchange information, discuss the dispute and negotiate in good
faith, in an effort to resolve the dispute without the need for any formal proceedings.
(c) Formal proceedings for the resolution of a dispute pursuant to Section 8.2 may not be
initiated until at least ten Business Days after the receipt by a party of a notice under Section
8.1(a) referring a dispute to Senior Managers.
Section 8.2
. All disputes arising out of or in connection with this Agreement and the
transactions contemplated hereby which cannot be resolved through the procedures described herein
or therein shall be finally resolved solely and exclusively by means of arbitration to be conducted
in English in the City of New York. The arbitration shall be conducted by a sole arbitrator
appointed by agreement of the parties, or failing such agreement, under the Commercial Rules of the
American Arbitration Association and the arbitration will proceed under such Rules. The decision
of the arbitrator shall be final, conclusive and binding upon the parties, and a judgment upon the
award may be obtained and entered in any federal or state court of competent jurisdiction. The
parties agree that any arbitration shall be kept confidential and any element of such arbitration
(including but not limited to any pleadings, briefs or other documents submitted or exchanged, any
testimony or other oral submissions, and any awards) shall not be disclosed beyond the arbitral
tribunal, the parties, their counsel and any Person necessary to conduct the arbitration, except as
may be required in recognition and enforcement proceedings, if any, or in order to satisfy
disclosure obligations imposed by any applicable Law. The parties agree to cooperate in providing
each other with all discovery, including but not limited to the exchange of documents and
depositions of parties and non-parties, reasonably related to the issues in the arbitration. If
the parties are unable to agree on any matter relating to such discovery, any such difference shall
be determined by the arbitrator. The parties also agree to submit to the non-exclusive personal
jurisdiction of the federal and state courts sitting in New York, New York, for the limited purpose
of enforcing this arbitration agreement (including, where appropriate, issuing injunctive relief)
or any award resulting from arbitration pursuant to this Section 8.2. The parties agree that the
arbitration proceeding described in this Section 8.2 is the sole and exclusive manner in which the
parties may resolve disputes arising out of or in connection with this Agreement;
provided
,
however
, that the parties expressly agree that nothing herein shall prevent the parties
from applying to a court having jurisdiction over any of the parties hereto for provisional,
injunctive or interim relief to preserve the status quo or otherwise to prevent irreparable harm to
a party pending the outcome of arbitration. The prevailing party in any arbitration shall be
entitled to attorneys fees and costs and the non-prevailing party shall be responsible for all
expenses of the arbitration.
Section 8.3
. If there is a dispute between the parties, each party shall continue to
perform all of their obligations under this Agreement (including the obligations in dispute).
-12-
ARTICLE IX
MISCELLANEOUS
Section 9.1
Force Majeure
. (a) The obligations of Cadbury or DPS and their
respective Affiliates, as the Providing Party, shall be suspended during the period, but only to
the extent that Cadbury or DPS and their respective Affiliates, as the case may be, is prevented or
hindered from complying therewith by any of the following causes beyond its reasonable control:
(i) acts of God, (ii) weather, fire or explosion, (iii) war, invasion, riot, domestic insurrection,
acts of terrorism or other civil unrest, (iv) national or regional emergency, (v) shortage of
adequate power or transportation facilities, or (vi) any other event which is beyond the reasonable
control of the Providing Party (each, a
Force Majeure Event
). In such event, the
Providing Party shall give notice of suspension as soon as reasonably practicable to the other
stating the date and extent of such suspension and the cause thereof, and such Providing Party
shall resume the performance of such obligations as soon as reasonably practicable after the
removal of the cause.
(b) During the duration of a Force Majeure Event, the affected party shall use commercially
reasonable efforts to avoid, mitigate, remedy or remove such Force Majeure Event (including the
expenditure of reasonable sums), and shall use commercially reasonable efforts to resume its
performance under this Agreement with the least practicable delay.
Section 9.2
Independent Contractor
. The parties and each of their respective
Affiliates shall each be an independent contractor in the performance of its obligations hereunder
and not as the agent of the Receiving Party in performing Services, and no employee of a Providing
Party performing Services shall be considered an employee of the Receiving Party. No third party,
including any employee of any party or any of such partys Affiliates, shall have or acquire any
rights by reason of this Agreement.
Section 9.3
Public Announcement
. None of the parties hereto shall make, or
cause to be made, any press release or public announcement in respect of this Agreement or the
services contemplated hereby or otherwise communicate with any news media without the prior written
consent of the other party (unless otherwise required by Law or applicable stock exchange
regulation), and the parties hereto shall cooperate as to the timing and contents of any such press
release, public announcement or communication.
Section 9.4
Notices
. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given or made (and shall be deemed to
have been duly given or made upon receipt) by delivery in person, by an internationally recognized
overnight courier service, by facsimile or registered or certified mail (postage prepaid, return
receipt requested) to the respective parties hereto at the following addresses (or at such other
address for a party as shall be specified in a notice given in accordance with this Section 9.4):
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if to Cadbury:
Cadbury Schweppes plc
25 Berkeley Square
London W1J 6HB
Facsimile: 44-20-7830-5015
Attention: Henry Udow, Esq.
Chief Legal Officer
with a copy to:
Cadbury Adams USA
389 Interpace Parkway
Parsippany, NJ 07054
Facsimile: (973) 909-3976
Attention: Thomas Whitten
if to DPS:
5301 Legacy Drive, 3
rd
Floor
Plano, TX 75024
Facsimile: (972) 673-8130
Attention: James L. Baldwin, Jr.
General Counsel
with a copy to:
Dr Pepper Snapple Group, Inc.
5301 Legacy Drive
Plano, TX 75024
Facsimile: (972) 673-8130
Attention: Angie Wallander
Section 9.5
Governing Law
. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York, without giving effect to the choice of law
or conflicts of law principles that would cause the application of the laws of any other
jurisdiction.
Section 9.6
Counterparts
. This Agreement may be executed and delivered
(including by facsimile transmission or portable document format (.pdf)) in one or more
counterparts, and by the different parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original, but all of which taken together shall constitute one
and the same agreement.
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Section 9.7
Headings
. The headings contained in this Agreement are for
reference purposes only and shall not in any way affect the meaning or interpretation of this
Agreement.
Section 9.8
Modifications
. This Agreement contains the entire understanding
and agreement between the parties hereto as to the services being performed hereunder. It may not
be amended or modified except by a written instrument executed by the parties hereto.
Section 9.9
Cumulative Effect
. The rights and obligations of the parties
under this Agreement shall be cumulative to and not exclusive of the rights and obligations of the
parties contained in the Separation Agreement.
Section 9.10
Interpretation
. All references in this Agreement to
Cadbury
or
DPS
or a
party
shall be deemed to include such partys Affiliates unless the context requires
otherwise. All references in this Agreement to services to be supplied or similar language shall
be defined to include facilities to be provided unless the context requires otherwise. To the
extent that this Agreement purports to impose any obligation on the Affiliates of a party, such
party shall cause its Affiliates to fulfill such obligation.
Section 9.11
Insurance
. As regards employees, agents or representatives of a
Providing Party who shall be performing the Services on or at properties of a Receiving Party, the
Receiving Party will be designated as an additional insured under the Providing Partys liability
insurance.
Section 9.12
Amendment
. This Agreement may not be amended or modified except
(a) by an instrument in writing signed by, or on behalf of, Cadbury and DPS or (b) by a waiver in
accordance with Section 9.13.
Section 9.13
Waiver
. Either party to this Agreement may (a) extend the time
for the performance of any of the obligations or other acts of the other party, (b) waive any
inaccuracies in the representations and warranties of the other party contained herein or in any
document delivered by the other party pursuant hereto or (c) waive compliance with any of the
agreements of the other party or conditions to such partys obligations contained herein. Any such
extension or waiver shall be valid only if set forth in an instrument in writing signed by the
party to be bound thereby. Any waiver of any term or condition shall not be construed as a waiver
of any subsequent breach or a subsequent waiver of the same term or condition, or a waiver of any
other term or condition of this Agreement. The failure of either party hereto to assert any of its
rights hereunder shall not constitute a waiver of any of such rights.
Section 9.14
Severability
. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any Law or public policy, all other terms and
provisions of this Agreement shall nevertheless remain in full force and effect for so long as the
economic or legal substance of the transactions contemplated by this Agreement is not affected in
any manner materially adverse to either party hereto. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original intent of the parties
-15-
as closely as possible in an acceptable manner in order that the transactions contemplated by
this Agreement are consummated as originally contemplated to the greatest extent possible.
Section 9.15
No Additional Rights
. Except as expressly provided in this
Agreement, the parties agree that this Agreement shall not grant to either party any additional
rights to the other partys proprietary information, technology or know-how.
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]
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IN WITNESS WHEREOF, Cadbury and DPS have caused this Agreement to be executed as of the date
first written above by their respective officers thereunto duly authorized.
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CADBURY SCHWEPPES PLC
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By:
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/s/
Henry Udow
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Name:
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Henry Udow
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Title:
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Chief Legal Officer and Group Secretary
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DR PEPPER SNAPPLE GROUP, INC.
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By:
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/s/
James L. Baldwin
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Name:
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James L. Baldwin
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Title:
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Executive Vice President and Secretary
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EXECUTION VERSION
TAX SHARING AND INDEMNIFICATION AGREEMENT
This Tax Sharing and Indemnification Agreement (this Agreement), dated as of May 1, 2008,
among Cadbury Schweppes plc (CS), a United Kingdom public limited company, on behalf of itself
and the members of the Cadbury Group, as defined below (other than Cadbury plc (Cadbury), a
United Kingdom public limited company), and Dr Pepper Snapple Group, Inc. (DPS), a Delaware
corporation, on behalf of itself and the members of the DPS Group, as defined below, and, solely
for purposes of Section 20, Cadbury.
WITNESSETH:
WHEREAS, CS and DPS have entered into a Separation and Distribution Agreement, dated as of May
1, 2008 (the Separation Agreement), relating to the demerger by Cadbury of Cadbury Schweppes
Americas, Inc., a Delaware corporation, that along with its subsidiaries and various affiliated
companies operates the Cadbury beverages business in North America (CSAI), and certain related
transactions (collectively, the Demerger);
WHEREAS, pursuant to the Demerger, (i) CS, will become a wholly-owned subsidiary of Cadbury,
(ii) the stock of CSAI will be transferred by Cadbury or CS to DPS, and (iii) DPS will issue its
common stock to Cadbury shareholders (collectively, the Principal Separation Transactions);
WHEREAS, prior to, and in contemplation of, the Demerger, (i) the Cadbury Group will sell,
distribute or otherwise transfer certain assets relating to (or comprising part of) the beverages
business, including the Beverage Entities, as defined below, to the DPS Group, and (ii) the DPS
Group will sell, distribute or otherwise transfer certain assets relating to (or comprising part
of) the confectionery business, including the Confectionery Entities, as defined below, to the
Cadbury Group;
WHEREAS, for U.S. federal income tax purposes, the substance of the Principal Separation
Transactions is intended to be characterized as follows: (a) Cadbury is formed and all of the
outstanding ordinary shares of CS are exchanged by the CS shareholders for all of the Cadbury
ordinary shares after which CS elects, pursuant to Treasury regulation section 301.7701-3, to be a
treated as a disregarded entity in a transaction qualifying as a reorganization under 368(a)(1)(F)
of the United States Internal Revenue Code of 1986, as amended (the Code); (b) Cadbury
distributes the shares of CSAI to Cadbury shareholders in a transaction qualifying under Code
section 355; and (c) the CSAI shareholders exchange all of their CSAI shares for DPS shares,
immediately after which CSAI is converted to a limited liability company and a disregarded entity,
in a transaction qualifying as a reorganization under Code section 368(a)(1)(F);
WHEREAS, CS has received from the United States Internal Revenue Service (IRS) a private
letter ruling providing that, subject to the representations and information submitted by CS, the
Principal Separation Transactions will be treated for U.S. federal income tax purposes in the
manner set forth above in the foregoing whereas clause (the Ruling), which Ruling was received
pursuant to a private letter ruling request submitted by CS (together with all
attachments, exhibits and supplements to the private letter ruling request, in each case, that
were submitted by CS to the IRS, the Ruling Request);
WHEREAS, in connection with the Demerger, CS and DPS desire to set forth their agreement on
the rights and obligations of CS, DPS and the members of the Cadbury Group and the DPS Group,
respectively, with respect to certain Tax matters as set forth below;
NOW, THEREFORE, in consideration of the foregoing and the terms, conditions, covenants and
provisions of this Agreement, the parties mutually covenant and agree as follows:
1. Definitions
.
(a) As used in this Agreement:
Active Business
shall mean an active trade or business relied upon in the Ruling
Request and the Ruling for Code section 355 treatment in connection with the Demerger.
Affiliate
shall have the meaning set forth in the Separation Agreement.
ATOB DPS Entity
shall mean Dr Pepper/Seven Up, Inc., a Delaware corporation and the
member of the DPS Group conducting an Active Business.
Beverage Assets
shall mean those assets, as set forth on Schedule A, relating to (or
comprising part of) the beverages business that are sold, distributed or otherwise transferred by
the Cadbury Group to the DPS Group prior to, and in contemplation of, the Demerger, including any
equity interests in the Beverage Entities.
Beverage Entities
shall mean those entities, as set forth on Schedule B, relating to
(or comprising part of) the beverages business the equity of which is sold, distributed or
otherwise transferred (in whole or in part) by the Cadbury Group to the DPS Group and that become
wholly-owned by the DPS Group prior to, and in contemplation of, the Demerger.
C Election
shall mean a joint election by CS (or one or more of its Subsidiaries)
and DPS (or one or more of its subsidiaries) to have the provisions of subsection 85(1) of the
Income Tax Act (Canada) (and any equivalent or corresponding provision under applicable Canadian
provincial or territorial Tax law) apply with respect to the transfer of assets of Cadbury
Beverages Canada Inc., a Canadian corporation (CBCI), to Canada Dry Motts Inc., a Canadian
corporation (CDMI).
Cadbury Group
shall mean Cadbury and any Person that is a Subsidiary of Cadbury
immediately after the Demerger Date (for the avoidance of doubt, including the Confectionery
Entities but excluding the Beverage Entities), and each Person that becomes a Subsidiary of Cadbury
after the Demerger Date.
Cadbury Group Taxes
shall mean any Taxes of the Cadbury Group (including Taxes for
which any member of the Cadbury Group is primarily liable under applicable Tax law but excluding
Taxes for which any such member is secondarily liable under such law) for any Pre-
2
Demerger Period, Straddle Period or Post-Demerger Period. For the avoidance of doubt, Cadbury
Group Taxes shall (a) include any Taxes (i) shown as due on Tax Returns of the Cadbury Group for
Pre-Demerger Periods and Straddle Periods (including Taxes imposed in respect of the sale,
distribution or other transfer of the Beverage Assets by the Cadbury Group to the DPS Group but
excluding Taxes of the Beverage Entities), (ii) imposed in respect of the Beverage Assets while
owned by the Cadbury Group prior to the sale, distribution or other transfer of the Beverage Assets
to the DPS Group, and (iii) of the Confectionery Entities for all taxable periods; and (b) exclude
Taxes (i) of the Beverage Entities for all taxable periods, (ii) of a member of the DPS Group for
which a member of the Cadbury Group is responsible for (A) under Treasury Regulation 1.1502-6 (or
similar provision of U.S. state or local or non-U.S. Tax law) solely as a result of such Cadbury
Group member being or having been included in a Tax Return with any member of the DPS Group or
otherwise joining in a fiscal unity or other combined group or (B) as a consequence of the failure
of any member of the DPS Group to discharge a liability for Tax for which a member of the DPS Group
is primarily liable under applicable Tax law or (C) because such member of the Cadbury Group acted
as a representative of a group of companies to the extent that the Cadbury Group Tax liability
would have been a liability of a member of the DPS Group if such member of the Cadbury Group did
not act as a representative, and (iii) Taxes described in Section 6(b)(iv).
CFC Legislation
means (i) that legislation contained in Chapter IV of Part XVII of
the Income and Corporation Taxes Act 1988 of the United Kingdom (or any comparable successor or
additional legislation), together with all related statutory instruments, orders, judgments
(including of the European Court of Justice or the Courts of England and Wales), enactments, laws,
directives and Taxing Authority practice relating to the same, and (ii) any provision of any
taxation statute in the Netherlands of similar effect to the United Kingdom Legislation referred to
in clause (i) above, together with all Taxing Authority practice relating to the same.
CFC Questions
means any information required by the Cadbury Group in order to comply
with any obligations under any CFC Legislation.
Confectionery Assets
shall mean those assets, as set forth on Schedule C, relating
to (or comprising part of) the confectionery business that are sold, distributed or otherwise
transferred by the DPS Group to the Cadbury Group prior to, and in contemplation of, the Demerger,
including any equity interests in the Confectionery Entities.
Confectionery Entities
shall mean those entities, as set forth on Schedule D,
relating to (or comprising part of) the confectionery business the equity of which is sold,
distributed or otherwise transferred (in whole or in part) by the DPS Group to the Cadbury Group
and that become wholly-owned by the Cadbury Group prior to, and in contemplation of, the Demerger.
Confectionery Transactions
shall mean (i) the sales, distributions or other
transfers, as set forth on Schedule E, which include sales, distributions or other transfers of the
Confectionery Assets or of the Confectionery Entities by a member of the DPS Group to the Cadbury
Group prior to, and in contemplation of, the Demerger, (ii) the Cross-Border Financing
Transactions, and (iii) the transfer of assets of CBCI to CDMI.
3
Cross-Border Financing Transactions
shall mean the transactions entered into prior
to the Demerger Date, involving an amount loaned or other financing (including a preferred equity
investment), directly or indirectly, by a borrower (or issuer of the debt or preferred equity
investment) which is a member of the CSAB Group or a Subsidiary of the CSAB Group and the lending
party (or the holder of the debt or preferred equity investment) is a Subsidiary of Cadbury other
than a member of the CSAB Group or a Subsidiary of the CSAB Group. For the avoidance of doubt,
Cross-Border Financing Transactions shall not include any amount loaned or other financing
(including a preferred equity investment), directly or indirectly, between the members of the CSAB
Group or a U.S. Subsidiary thereof.
CSAB Group
shall mean the affiliated group, within the meaning of Code section
1504(a), the common parent of which was either CSAI or Cadbury Schweppes Holdings (US) (CSH) and
the common parent of which upon the Demerger will be DPS, treating for such purposes, the stock of
CSAI, CSH and DPS as widely held by the public.
Damages
shall mean any damage, liability, loss, cost, charge, assessments,
settlements, judgments or expense (including, without limitation, reasonable expenses of
investigation and attorneys and accountants fees and expenses).
Demerger Date
shall mean May 7, 2008, the date on which the Demerger is effected and
the stock of DPS is issued by DPS to Cadbury shareholders.
DPS Group
shall mean DPS and any Person that is a Subsidiary of DPS immediately
after the Demerger Date (for the avoidance of doubt, including the Beverage Entities and any CSAB
Group members but excluding the Confectionery Entities), and each Person that becomes a Subsidiary
of DPS after the Demerger Date.
DPS Group Taxes
shall mean any Taxes of the DPS Group (including Taxes for which any
member of the DPS Group is primarily liable under applicable Tax law but excluding Taxes for which
any such member is secondarily liable under such law) for any Pre-Demerger Period, Straddle Period
or Post-Demerger Period. For the avoidance of doubt, DPS Group Taxes shall (a) include any Taxes
(i) shown as due on the DPS Transition Returns and Tax Returns of the DPS Group described in
Section 3(b)(i) (excluding Income Taxes imposed in respect of the Confectionery Transactions in
excess of $22,194,000 and excluding Taxes of the Confectionery Entities), (ii) imposed in respect
of the Confectionery Assets while owned by the DPS Group prior to the sale, distribution or other
transfer of the Confectionery Assets to the Cadbury Group, and (iii) of the Beverage Entities for
all taxable periods; and (b) exclude (i) Income Taxes imposed in respect of the Confectionery
Transactions in excess of $22,194,000, (ii) Taxes of the Confectionery Entities for all taxable
periods, and (iii) Taxes of a member of the Cadbury Group for which a member of the DPS Group is
responsible for (A) under Treasury Regulation 1.1502-6 (or similar provision of U.S. state, local
or Non-U.S. Tax law) solely as a result of such DPS Group member being or having been included in a
Tax Return with any member of the Cadbury Group or otherwise joining in a fiscal unity or other
combined group or (B) as a consequence of the failure of any member of the Cadbury Group to
discharge a liability for Tax for which a member of the Cadbury Group is primarily liable under
applicable Tax law or (C) because such member of the DPS Group acted as a representative of a group
of companies to the extent that
4
the DPS Group Tax liability would have been a liability of a member of the Cadbury Group if
such member of the DPS Group did not act as a representative.
DPS Transaction Costs
shall have the meaning set forth in the Separation Agreement
but excluding rating agency costs set forth on Schedule 1.01(o) of the Separation Agreement.
Final Determination
shall mean any final determination of a liability in respect of
Taxes that, under applicable Tax law, is no longer subject to further appeal, review or
modification through proceedings or otherwise (including the expiration of the statute of
limitations or a period for the filing of claims for refunds, amended Tax Returns or appeals from
adverse determinations).
Income Taxes
shall mean Taxes based upon, measured by, or calculated with respect to
(i) net income or net profits (including any capital gains, minimum taxes and any Taxes on items of
Tax preference, but not including sales, use, real or personal property transfer, value added or
other similar Taxes), (ii) multiple bases (including corporate franchise, doing business or
occupation Taxes imposed by a jurisdiction in lieu of Taxes on net income or net profits) if one or
more of the bases upon which such Tax may be imposed on, measured by, or calculated with respect
to, is net income or net profits and (iii) withholding Taxes imposed under Code section 1442, 1445
or 1446 (or comparable provisions of non-U.S. Tax law) on any payments or distributions (except for
wages or other remuneration for services).
Income Tax Return
shall mean Tax Returns that relate to Income Taxes.
Incremental DPS Group Taxes
shall mean (i) the amount of Income Taxes in respect of
the Confectionery Transactions that are imposed on the DPS Group, determined in accordance with the
Tax Return preparation provisions set forth in Section 3 and computed as if the relevant taxable
year of the DPS Group closed on the Demerger Date, in excess of $22,194,000, plus (ii) the amount
of Income Taxes in respect of the Confectionery Transactions in excess of the sum of (A) the amount
computed pursuant to clause (i), and (B) $22,194,000, to the extent that, in accordance with
Section 3(d)(ii), there is a confirmed material change in applicable Tax law after the Demerger
Date but prior to the due date for timely filing of the applicable Tax Return of the DPS Group
(including valid extensions obtained), and, as a result, the Income Tax reporting position for such
Confectionery Transaction that was based on the opinions (or substantially equivalent written
advice) described in Section 3(d)(ii) is no longer applicable or otherwise not followed or adopted,
plus (iii) without duplication in respect of clauses (i) and (ii), the amount of Income Taxes, as
determined pursuant to a Final Determination, in respect of the Confectionery Transactions imposed
on the DPS Group (or any member thereof) in excess of the sum of (A) the amount of Income Taxes for
such Confectionery Transactions that were computed pursuant to clauses (i) and (ii), and (B)
$22,194,000.
Person
shall mean any natural person, corporation, limited liability company, trust,
estate, joint venture, association, company, partnership, governmental authority or other entity.
Post-Demerger Period
shall mean any taxable period beginning after the Demerger
Date.
5
Pre-Demerger Period
shall mean any taxable period ending on or before the Demerger
Date.
Specified Entity
shall mean each of the entities as set forth on Schedule F.
Straddle Period
shall mean any taxable period that begins on or before and ends
after the Demerger Date. For avoidance of doubt, the term Straddle Period shall include the Tax
year of the affiliated group within the meaning of Code section 1504(a) that includes CSAI and the
ATOB DPS Entity as members that begins in January 2008 and ends in December 2008 or otherwise after
the Demerger Date.
Subsidiary
shall have the meaning set forth in the Separation Agreement.
Tax
or
Taxes
shall mean any and all federal, state, local, foreign duties
or other taxes imposed by a Taxing Authority in the United States, United Kingdom, Canada, the
Netherlands or Mexico or any other jurisdiction, including any net income, gross income, gross
receipts, alternative or add-on minimum, sales, use, business and occupation, value-added, trade,
goods and services, ad valorem, franchise, profits, license, business royalty, withholding,
payroll, employment, capital, excise, transfer, recording, severance, stamp, occupation, premium,
property, asset, real estate acquisition, environmental or other tax or duty, together with any
interest, penalty, addition to tax or other additional amount imposed by a Taxing Authority.
Taxing Authority
shall mean any governmental authority (domestic or foreign),
including, without limitation, any state, municipality, political subdivision or governmental
agency, responsible for the imposition of any Tax.
Tax Benefit Attribute
shall mean any net operating loss (including carrybacks and
carryforwards), credit, refund, deduction, depreciation, amortization, allowance or other item that
can be used to reduce or offset a Tax liability.
Tax Proceeding
shall mean any Tax audit, examination, dispute or proceeding (whether
administrative, judicial or contractual).
Tax Return
shall mean any Tax return, statement, report, form, election, claim or
surrender (including estimated Tax returns and reports, extension requests and forms, and
information returns and reports) required to be filed with any Taxing Authority.
Transition Services Agreement
shall mean the agreement entered into by Cadbury and
DPS, dated as of May 1, 2008, in respect of certain services (including Tax, accounting and legal
services) to be provided by the Cadbury Group to the DPS Group for an interim period beginning
after the Demerger Date.
Underpayment Rate
shall mean the underpayment rate as set forth in Code section
6621.
(b) Any term used in this Agreement which is not defined in this Agreement shall, to the
extent the context requires, have the meaning assigned to it in the Code or the applicable
6
Treasury regulations thereunder (as interpreted in administrative pronouncements and judicial
decisions), in comparable provisions of applicable Tax law or in the Ruling or Separation
Agreement. In this Agreement, except to the extent otherwise provided or that the context
otherwise requires: (i) when a reference is made in this Agreement to an Article, Section, Exhibit
or Schedule, such reference is to an Article or Section of, or an Exhibit or Schedule to, this
Agreement unless otherwise indicated; (ii) the table of contents and headings for this Agreement
are for reference purposes only and do not affect in any way the meaning or interpretation of this
Agreement; (iii) whenever the words include, includes or including are used in this
Agreement, they are deemed to be followed by the words without limitation; (iv) the words
hereof, herein and hereunder and words of similar import, when used in this Agreement, refer
to this Agreement as a whole and not to any particular provision of this Agreement; and (v) the
definitions contained in this Agreement are applicable to the singular as well as the plural forms
of such terms.
2. Sole Tax Sharing Agreement
. Any and all existing Tax sharing agreements or arrangements,
written or unwritten, between any member of the Cadbury Group and any member of the DPS Group shall
be or shall have been terminated upon the consummation of the Demerger. Upon the consummation of
the Demerger, neither the members of the DPS Group nor the members of the Cadbury Group shall have
any further rights or liabilities with respect to such Tax agreements or arrangements, and this
Agreement shall be the sole Tax sharing agreement and arrangement between the members of the DPS
Group and the members of the Cadbury Group. CS and DPS shall act in good faith in the performance
of this Agreement.
3. Tax Return Filing
.
(a) (i) For Pre-Demerger Periods, to the extent the Income Tax Returns have not been filed on
or before the Demerger Date, and, to the extent provided in this Section 3(a)(i), for Straddle
Periods, CS shall prepare or cause to be prepared and shall deliver to DPS for timely filing and
DPS shall timely file (or review if a member of the Cadbury Group is permitted under applicable Tax
law to file the relevant Income Tax Return) the following Income Tax Returns for the DPS Group and
its members: (A) U.S. federal, state and local Income Tax Returns (separate and consolidated,
combined, unitary or other group Income Tax Returns) other than for Straddle Periods, and (B) all
other non-U.S. Income Tax Returns for the DPS Group (including the Netherlands) except for Income
Tax Returns of any subsidiary organized in Mexico of Bebidas Americas Investments B.V., a Dutch
entity (BAI BV) and Canadian federal and provincial Income Tax Returns for CDMI (collectively,
those Income Tax Returns prepared by CS are referred to as DPS Transition Returns). For the
avoidance of doubt, the preparation of any consolidated, combined, unitary or other group Tax
Return of the Cadbury Group that includes or reflects a Beverage Entity as a member shall be
governed by Section 3(c). Any and all out-of-pocket expenses incurred in preparing a DPS
Transition Return for a Pre-Demerger Period shall be for the account of CS. Any and all
out-of-pocket expenses incurred by CS in preparing a DPS Transition Return for a Straddle Period
shall be for the account of DPS and DPS shall reimburse CS within 45 days of DPS receipt of a
written invoice from CS setting forth the amount of such expenses.
7
(ii) CS shall provide DPS with a copy of any completed DPS Transition
Return at least 30 days prior to the due date (including any extensions) for the filing of
such DPS Transition Return, in the case of a Pre-Demerger Period, and at least 45 days prior to the
due date (including any extensions) for the filing of such DPS Transition Return, in the case of a
Straddle Period. DPS shall have the right to review, comment on and propose amending any items set
forth on such DPS Transition Return except to the extent relating to a Confectionery Entity or
Confectionery Transaction or other transaction or item that is the subject of a previously issued
opinion (or substantially equivalent written advice) described in Section 3(d); provided that DPS
will notify CS in writing of any proposed changes to such DPS Transition Return at least 20 days
prior to the due date of such DPS Transition Return. In the event that, subject to Section 3(d),
DPS disputes the treatment by CS on a DPS Transition Return of a Confectionery Entity or
Confectionery Transaction that is not the subject of a previously issued opinion (or substantially
equivalent written advice) described in Section 3(d) or CS disputes any other proposed change by
DPS to any such DPS Transition Return, CS or DPS, as the case may be, will provide the disputing
party with an opinion (or substantially equivalent written advice) of a law firm or accounting firm
of internationally recognized standing and expert in the Tax matters at issue, reasonably
acceptable to the disputing party, supporting the treatment by CS or the proposed change by DPS, as
the case may be, on no less than a more likely than not basis. The fees and expenses of such law
firm or accounting firm, as well as the fees and expenses of the accounting firm for revising the
applicable DPS Transition Return(s) to reflect such proposed change, shall be borne by the
disputing party. For the avoidance of doubt, no changes to a DPS Transition Return may be made or
proposed by DPS with respect to any Confectionery Entity or any Confectionery Transaction so long
as DPS has been provided with an opinion (or substantially equivalent written advice) of a law firm
or accounting firm pursuant to this Section 3(a) or Section 3(d).
(iii) DPS shall prepare or cause the relevant members of the DPS Group to prepare, in a manner
consistent with the past practices of the relevant members of the DPS Group, Tax work paper
preparation packages necessary to enable CS to prepare the DPS Transition Returns described in this
Section 3(a) and such packages shall be delivered to CS (i) at least 90 days prior to the due date
of DPS Transition Returns for Pre-Demerger Periods, (ii) no later than 10 days prior to the due
date for estimated and other periodic Income Tax Returns filed during or within 30 days after the
Straddle Periods, and (iii) within 90 days of the end of the relevant taxable year of the relevant
members of the DPS Group with respect to other DPS Transition Returns for Straddle Periods.
(iv) DPS shall pay, or cause to be paid, and shall be responsible for, any and all Taxes shown
as due or otherwise reported on, any DPS Transition Return; provided that CS shall pay, or cause to
be paid, and shall be responsible for (A) Incremental DPS Group Taxes, and (B) Taxes imposed on a
Confectionery Entity, in each case, shown as due or otherwise reported on any DPS Transition
Return; provided further that such Confectionery Entity is not a pass-through or other fiscally
transparent entity for Tax purposes.
(b) (i) DPS shall, at its expense, prepare or cause to be prepared and file or cause to be
filed all Tax Returns of the DPS Group (or any member thereof) for Pre-Demerger and Straddle
Periods that are not filed as of the Demerger Date and that are not described in Section 3(a),
including, for the avoidance of doubt, any (A) U.S. federal, state and local Income Tax
8
Returns (separate and consolidated, combined, unitary or other group Income Tax Returns) for
Straddle Periods, (B) Canadian federal and provincial Income Tax Returns for CDMI, and (C) Income
Tax Returns of any subsidiary of BAI BV; provided that in the case of Income Tax Returns described
in clause (A) of this Section 3(b)(i), DPS shall engage and employ the same accounting firm to
prepare such Tax Returns that CS uses for the preparation of the DPS Transition Returns. With
respect to a Confectionery Entity or a Confectionery Transaction or other transaction or item that
is the subject of a previously issued opinion (or substantially equivalent written advice)
described in Section 3(d), or to the extent that the treatment of a Confectionery Entity or a
Confectionery Transaction or other transaction or item was determined pursuant to the dispute
resolution procedures involving obtaining an opinion (or substantially equivalent written advice)
of a law firm or accounting firm of internationally recognized standing and expert in the Tax
matters at issue set forth in Section 3(a), the DPS Group shall prepare the Tax Returns described
in this Section 3(b) consistently with the conclusions set forth in such opinions (or substantially
equivalent written advice).
(ii) DPS shall provide CS with a copy of any completed Tax Return described in this Section
3(b) for CS review, comment and approval at least 30 days prior to the due date (including any
extensions) for the filing of such Tax Return, in the case of a Pre-Demerger Period, and at least
45 days prior to the due date (including any extensions) for the filing of such Tax Return, in the
case of a Straddle Period. DPS shall reflect on such Tax Return any comments provided by CS
(including in respect of the treatment of any Confectionery Entity or Confectionery Transaction)
within 10 days following CS receipt of the Tax Return; provided that, except to the extent
relating to a Confectionery Entity or Confectionery Transaction or other transaction or item that
is the subject of a previously issued opinion (or substantially equivalent written advice)
described in Section 3(a) or Section 3(d), if DPS disputes any comments provided by CS, the dispute
resolution procedures involving obtaining an opinion (or substantially equivalent written advice)
set forth in Section 3(a) shall apply; provided, further, that, for the avoidance of doubt, DPS
shall not make any changes to a Tax Return described in this Section 3(b) with respect to any
Confectionery Entity or Confectionery Transaction or other transaction or item so long as DPS has
been provided with an opinion (or substantially equivalent written advice) of a law firm or
accounting firm pursuant to Section 3(a) or Section 3(d) unless there has been a material change in
applicable Tax law as described in Section 3(d).
(iii) DPS shall pay, or cause to be paid, and shall be responsible for, any and all Taxes due
or required to be paid with respect to, or required to be reported on, any Tax Returns described in
this Section 3(b); provided that CS shall pay, or cause to be paid, and shall be responsible for
(A) Incremental DPS Group Taxes, and (B) Taxes imposed on a Confectionery Entity, in each case,
shown as due or otherwise reported on any Tax Returns described in this Section 3(b); provided
further that such Confectionery Entity is not a pass-through or other fiscally transparent entity
for Tax purposes.
(iv) The parties acknowledge and agree that to the extent that the aggregate Income Taxes of
the DPS Group in respect of the Confectionery Transactions shown as due on the DPS Transition
Returns and the Tax Returns described in this Section 3(b), as prepared in accordance with this
Section 3 (including Section 3(d)(ii)) and originally filed, is less than $22 million, DPS shall
pay to CS an amount equal to such difference within 5 days of the
9
latest due date for timely filing of the Tax Returns of the DPS Group described in this
Section 3(b)(iv) (including valid extensions obtained).
(c) CS shall prepare or cause to be prepared and file or cause to be filed any Tax Returns for
the Cadbury Group that are filed after the Demerger Date, including Tax Returns for the
Confectionery Entities other than Tax Returns that include the Confectionery Entities and that are
prepared pursuant to Section 3(a) or 3(b). CS shall pay, or cause to be paid, and shall be
responsible for, any Taxes shown as due or otherwise reported on, any Tax Returns described in this
Section 3(c); provided that DPS shall pay, or cause to be paid, and shall be responsible for, Taxes
imposed on a Beverage Entity shown as due or otherwise reported on any Tax Returns described in
this Section 3(c); provided further that such Beverage Entity is not a pass-through or other
fiscally transparent entity for Tax purposes.
(d) (i) Tax Returns referred to in this Section 3 shall be prepared in a manner consistent
with past Tax accounting practices used with respect to prior Tax Returns (taking into account any
changes in applicable Tax law), in each case, as reasonably determined by the party preparing the
Tax Return. All Tax Returns and Taxes referred to in this Section 3 shall be timely filed with and
timely paid to the applicable Taxing Authority, and
(ii) Notwithstanding anything to the contrary set forth in this agreement, the parties
acknowledge and agree that, with respect to Confectionery Transactions and other transactions and
items supported by the issuance to CS and/or one of its Subsidiaries by a law firm or accounting
firm prior to the Demerger Date, of a no less than more likely than not opinion (or substantially
equivalent written advice) supporting the Tax treatment thereof, the DPS Group will follow, adopt
and fully support Income Tax reporting positions that are consistent with the conclusions in those
opinions (or substantially equivalent written advice), in each case absent a material change in
applicable Tax law after the Demerger Date, which change invalidates one or more of such
conclusions and which change is confirmed in writing by independent, nationally recognized Tax
counsel selected by CS and reasonably acceptable to DPS. Without limiting the foregoing, each
member of the DPS Group will file (and support the filing by the Cadbury Group of) Tax Returns
consistently with such positions and opinions (or substantially equivalent written advice), which
Tax Returns do not include either (x) a Form 8275 (or the substantial equivalent form for state,
local or foreign purposes) with respect to any such Confectionery Transaction or other transaction
or item or (y) a Form 8886 (or the substantial equivalent form for state, local or foreign
purposes) with respect to any such transaction or item. The DPS Group will promptly notify CS in
writing of any legislation or other item that may represent such a material change in applicable
Tax law. For the avoidance of doubt, the DPS Group acknowledges and agrees that, absent such a
material change in applicable Tax law that is confirmed pursuant to this Section 3(d)(ii), with
respect to any Confectionery Transaction or other transaction or item supported by the issuance to
CS of a no less than more likely than not opinion (or substantially equivalent written advice),
the DPS Group shall not procure the services of any law firm or accounting firm to issue an opinion
(or substantially equivalent written advice) in respect of such Confectionery Transaction or other
transaction or item that is inconsistent with the conclusions set forth in such opinion (or
substantially equivalent written advice) or otherwise challenge the treatment of such Confectionery
Transaction or other transaction or item.
10
(e) The filing of any Tax Return not otherwise expressly dealt with in this Section 3 shall be
filed by the Person who is responsible for filing such Tax Return under applicable Tax law and the
payment of any Taxes shown as due or otherwise required to be reported on such Tax Returns shall be
the responsibility of the Person who is primarily liable for such Taxes under applicable Tax law.
In the case of a consolidated, combined, unitary or other group Tax Return, the member or other
entity whose activity or operations generate the Taxes for which payment is due (computed on a
stand alone basis) shall be treated as the Person who is primarily liable for such Taxes under
applicable Tax Law for purposes of this Agreement.
4. Carrybacks; Amended Tax Returns; Refunds; Transaction Costs; CDMI.
(a) Notwithstanding anything to the contrary contained in this Agreement, (i) to the extent
permitted under applicable Tax law, each member of the DPS Group shall take all actions required to
waive any carryback period with respect to any Tax Benefit Attribute that arises or otherwise
becomes available after the Demerger, and (ii) no member of the DPS Group shall amend any Income
Tax Return for a Pre-Demerger Period or a Straddle Period (including, for the avoidance of doubt,
for purposes of carrying back any Tax Benefit Attribute from a Post-Demerger Period to a
Pre-Demerger Period or Straddle Period) without the prior written consent of CS (which consent
shall not be unreasonably withheld). In the event that (A) CS consents to amending an Income Tax
Return of the DPS Group, (B) a member of the DPS Group is not permitted under applicable Tax law to
waive a carryback period in respect of a Tax Benefit Attribute and is required to carry back the
Tax Benefit Attribute to a Pre-Demerger Period or Straddle Period, or (C) in the case of a Straddle
Period, a Tax Benefit Attribute generated during the portion of the Straddle Period beginning after
the Demerger Date reduces Taxes that were imposed during the portion of the Straddle Period ending
on the Demerger Date (for this purpose, treating the two portions of the Straddle Period as
separate taxable years), CS shall be entitled to any refund, credit or similar benefit (including
by way of being allowable as an offset and any interest with respect thereto) that results from the
actions referred to in clauses (A), (B) or (C) to the extent that any incremental Taxes or other
costs are incurred by any member of the Cadbury Group and the excess, if any, shall be the property
of the DPS Group; provided, however, that DPS will indemnify the Cadbury Group to the extent that
the incremental Taxes or other costs incurred by the Cadbury Group pursuant to the CFC Legislation
or otherwise exceeds the amount of the refund, credit or similar benefit.
(b) Except as provided in Section 4(a), any refund of DPS Group Taxes (including by way of
being allowable as an offset and any interest with respect thereto) shall be the property of the
DPS Group and, if received by a member of the Cadbury Group, such refund shall promptly be paid
over to DPS. Any refund of Cadbury Group Taxes and Incremental DPS Group Taxes (including by way
of being allowable as an offset and any interest with respect thereto) shall be the property of the
Cadbury Group and, if received by a member of the DPS Group, such refund shall promptly be paid
over to CS. In the event of a subsequent disallowance by a Tax Authority of any refund that has
been paid over to CS or DPS pursuant to this Section 4(b), CS or DPS, as the case may be, shall
return such payment together with any applicable interest.
(c) (i) Notwithstanding anything contained in Section 3 to the contrary, no later
11
than 45 days following the Demerger Date, CS shall consult with DPS in respect of the Tax
treatment by any member of the DPS Group of DPS Transaction Costs to be reflected on the IRS Form
1120 for CSAI and its U.S. Subsidiaries for the taxable year ending on December 31, 2007, and no
later than 90 days prior to the timely filing of the IRS Form 1120 for the DPS Group for the
taxable year that includes the Demerger Date and each taxable year thereafter, DPS shall consult
with CS in respect of the Tax treatment by any member of the DPS Group of DPS Transaction Costs to
be reflected in such IRS Form 1120 and subsequent IRS Form 1120s of the DPS Group. In the event
that DPS disputes the proposed Tax treatment by CS of DPS Transaction Costs, CS, at the joint
expense of DPS and CS, will provide DPS with an opinion (or substantially equivalent written
advice) of a law firm or accounting firm of internationally recognized standing and expert in the
Tax matters at issue, reasonably acceptable to DPS, supporting the Tax treatment of such DPS
Transaction Costs on no less than a should basis. In respect of the taxable year ending on
December 31, 2007, and each taxable year thereafter, DPS shall, in accordance with Section
4(c)(ii), make a payment to CS in an amount, if any, equal to 50% of the actual reduction in Taxes
of, in the case of the taxable year ending on December 31, 2007, CSAI and its U.S. Subsidiaries
and, in the case of the taxable year that includes the Demerger Date and each taxable year
thereafter, the DPS Group (or any member thereof), in each case, determined on a with and without
basis, for such taxable year resulting from the use of any Tax Benefit Attributes related to one or
more DPS Transaction Costs.
(ii) Within 10 days of the timely filing of the IRS Form 1120 for CSAI and its U.S.
Subsidiaries for the taxable year that ends on December 31, 2007, and within 10 days of the timely
filing of the IRS Form 1120 for the DPS Group (or corresponding successor Tax Return) for the
taxable year that includes the Demerger Date and each taxable year thereafter, DPS shall (A)
provide CS with an executed officers certificate setting forth in reasonable detail the amount of
any actual reduction in Taxes described in Section 4(c)(i) for such taxable year, and (B) pay to CS
the amount of such reduction in Taxes; provided that the DPS Group shall provide CS, in accordance
with Section 8, access to any documents or other information that CS reasonably determines is
necessary to confirm the statements set forth in the officers certificate and the amount of such
payment. Any amount paid by DPS to CS pursuant to this Section 4(c)(ii) shall be adjusted to
reflect any Final Determination with respect to the Tax treatment of DPS Transaction Costs and
payments between CS and DPS to reflect any such adjustment shall be made as necessary within 10
days of such determination.
(d) (i) If, on or prior to June 30, 2009, CS (or one or more of its Subsidiaries) notifies
DPS (or one or more of its Subsidiaries) that a C Election will be made in respect of eligible
capital property, DPS agrees to pay CS an amount equal to C$7,000,000 per year (each, an Initial
Tax Benefit Amount) in respect of the calendar year that includes the Demerger Date and each of
the next 9 succeeding calendar years, and an amount equal to C$20,250,000 (the Final Tax Benefit
Amount) in respect of the 10th succeeding calendar year (such 10th succeeding calendar year, the
Final Year) following the calendar year that includes the Demerger Date (such calendar years, in
the aggregate, the Applicable Period) in accordance with the provisions of this Section 4(d).
DPS and CS acknowledge and agree that the Initial Tax Benefit Amounts and the Final Tax Benefit
Amount are based on a C Election that results in a cumulative eligible capital amount of
C$420,000,000; provided that, to the extent that the actual amount of the resulting cumulative
eligible capital amount is greater than or less than
12
C$420,000,000, the Initial Tax Benefit Amounts and the Final Tax Benefit Amount shall be
proportionately adjusted (e.g., if the actual amount of the cumulative eligible capital amount is
C$210,000,000, the Initial Tax Benefit Amounts and the Final Tax Benefit Amount would each be
reduced by 50%); provided further that, to the extent that, pursuant to a Final Determination, the
amount of the cumulative eligible capital amount is determined to be greater than or less than
C$420,000,000, the Initial Tax Benefit Amounts and the Final Tax Benefit Amount shall be
proportionately adjusted in a similar manner. Subject to this Section 4(d), an amount equal to
each Initial Tax Benefit Amount, in the case of a calendar year in the Applicable Period (other
than the Final Year), and, in the case of the Final Year, the Final Tax Benefit Amount, shall be
paid by DPS to CS (or a Subsidiary of CS pursuant to Section 4(e)) within 30 days of the due date
for the timely filing of the Canadian federal Income Tax Return for CDMI (or its successors) or, if
no longer CDMI, that of the principal Subsidiary of DPS organized or doing business in Canada, for
the taxable year that ends on the close of or in such calendar year (the Canadian Tax Return) but
in no event shall the payment by DPS to CS of each Initial Tax Benefit Amount and, in the case of
the Final Year, the Final Tax Benefit Amount, be made later than September 1st of the each
succeeding calendar year beginning in 2009.
(ii) Notwithstanding Section 4(d)(i), the full amount of the Initial Tax Benefit Amount in
respect of a calendar year in the Applicable Period (other than the Final Year) and, in the case of
the Final Year, the Final Tax Benefit Amount shall be paid by DPS only if the gross revenues
(computed without taking into account discounts) of CDMI (or its successors) and any other
Subsidiaries of DPS organized or doing business in Canada (including their branches) for such
calendar year or Final Year, as applicable, determined in accordance with Canadian generally
accepted accounting principles (the Actual Gross Revenues Amount) equals or exceeds C$200,000,000
(the Threshold Gross Revenues Amount); provided that the Actual Gross Revenues Amount for the
Final Year shall be increased by an amount equal to the Excess Actual Gross Revenues Amount (as
defined below); provided, further, that if CDMI (or its successors) or one or more such
Subsidiaries of DPS (including their branches) sells or otherwise transfers a substantial portion
of its assets to any Person (other than another Subsidiary of the DPS Group), CS and DPS shall
negotiate in good faith to proportionately adjust the Threshold Gross Receipts Amount for the
calendar year in which the sale or transfer occurs and subsequent calendar years to reflect such
sale or transfer. The Excess Actual Gross Revenues Amount shall be an aggregate amount equal to
the total amount, if any, by which the Actual Gross Revenues Amount for each calendar year during
the Applicable Period (other than the Final Year) exceeds C$200,000,000, less any Actual Gross
Revenues Amount in excess of C$200,000,000 for a calendar year that was used in calendar years
prior to the Final Year to increase the amount payable to CS pursuant to Section 4(d)(iii) in
respect of any carryforwards of Initial Tax Benefit Amounts.
(iii) In respect of each of the 11 calendar years included in the Applicable Period, DPS
shall, within 10 days of the timely filing of the Canadian Tax Return for the taxable year that
ends on the close of or in each such calendar year but in no event later than August 1st of the
next succeeding calendar year, provide CS with an executed officers certificate (A) stating the
Actual Gross Revenues Amount and (B) setting forth in reasonable detail the determination that the
Actual Gross Revenues Amount is either greater than or less than the Threshold Gross Receipts
Amount; provided that, DPS shall provide CS, in accordance with
13
Section 8, access to any documents or other information that CS reasonably determines is
necessary to confirm the statements set forth in the officers certificate. If the Actual Gross
Revenues Amount is less than the Threshold Gross Revenues Amount for a calendar year in the
Applicable Period other than the Final Year, (A) the amount of the Initial Tax Benefit Amount
payable by DPS for such calendar year shall be proportionately reduced (e.g., if the Actual Gross
Revenues Amount for a calendar year is C$100,000,000, the amount of the Initial Tax Benefit Amount
currently required to be paid by DPS to CS in respect of such calendar year would be reduced by
50%), and (B) the portion of the Initial Tax Benefit Amount not required to currently be paid shall
be carried forwarded and added to the Initial Tax Benefit Amount or the Final Tax Benefit Amount,
as applicable, that is due in respect of the next succeeding calendar year in the Applicable Period
and shall be payable in accordance with this Section 4(d)(iii). Any remaining amount of an Initial
Tax Benefit Amount not paid pursuant to the limitation described in the preceding sentence shall be
carried forward and shall be paid in respect of the first succeeding calendar year in the
Applicable Period in which the Actual Gross Revenues Amount is more than C$200,000,000 but, except
with respect to the Final Year, only to the extent of the excess Initial Tax Benefit Amount for
such calendar year determined on a proportionate basis to the Actual Gross Revenues Amount (e.g.,
if the Actual Gross Revenues Amount is C$400,000,000 for a calendar year and the Initial Tax
Benefit Amount (not including carryforwards) is C$7,000,000, then up to C$7,000,000 of carried
forward Initial Tax Benefit Amounts shall be due and payable along with the amount of the Initial
Tax Benefit Amount for such calendar year). With respect to the Final Year, (A) if the Actual
Gross Revenues Amount plus any Excess Actual Gross Revenues Amount exceed the Threshold Gross
Revenues Amount, the Final Tax Benefit Amount and any carried forward Initial Tax Benefit Amounts
shall be paid in full by DPS to CS, and (B) if the Actual Gross Revenues Amount plus any Excess
Actual Gross Revenues Amount is less than the Threshold Gross Revenues Amount the amount of the
aggregate of the Final Tax Benefit Amount and any carried forward Initial Tax Benefit Amounts that
is required to be paid in full by DPS to CS shall be reduced on a proportionate basis and the
amount of the reduction shall be ratably allocated over the next 5 succeeding calendar years and
shall be computed on a present value basis using a discount rate equal to the rate on 5-year U.S.
Treasury securities (in effect at the time of the computation) plus 4% and the aggregate amount so
computed shall be paid by DPS to CS on the payment date for the Final Year (as set forth in Section
4(d)(i)) (e.g., if, in the Final Year, the Actual Gross Revenues Amount plus any Excess Actual
Gross Revenues Amount is C$100,000,000 and the total amount of the Final Tax Benefit Amount and the
carried forward Initial Tax Benefit Amounts are C$40,000,000, then C$20,000,000 is required to be
paid in full and the remaining C$20,000,000 would be ratably allocated over the next five years and
subject to the net present value computation described above and such computed amount, together
with the C$20,000,000, would be paid by DPS and CS in respect of the Final Year).
(iv) Notwithstanding Sections 4(d)(i), (ii) and (iii), to the extent that (A) a substantial
portion of the assets of CDMI (or its successors) or one or more other Subsidiaries of DPS
organized or doing business in Canada (including their branches) is sold or otherwise transferred
to any Person (other than another Subsidiary of the DPS Group) during the Applicable Period and the
proceeds of such sale or transfer (or a portion thereof) are applied to reduce the cumulative
eligible capital account that is created by the C Election described in this Section 4(d), an
amount equal to the reduction in such capital account multiplied by the
14
applicable Canadian tax rate in effect for the calendar year in which the sale or transfer
occurs shall be paid by DPS to CS within 30 days of the closing of the sale or transfer and the
parties shall negotiate in good faith to determine the appropriate reductions in the Initial Tax
Benefit Amount for such calendar year and subsequent calendar years and the Final Tax Benefit
Amount, or (B) the stock, or substantially all of the assets, of CDMI (or its successors) or one or
more other Subsidiaries of DPS organized or doing business in Canada (including their branches) is
sold or otherwise transferred to any Person (other than another Subsidiary of the DPS Group) during
the Applicable Period, the remaining Initial Tax Benefit Amounts and the Final Tax Benefit Amount
shall be computed on a present value basis using a discount rate equal to the rate on 5-year U.S.
Treasury securities (in effect at the time of the computation) plus 4% and the aggregate computed
amount shall be paid by DPS to CS within 30 days of the closing of the sale or transfer.
(v) CS and DPS acknowledge and agree that on or before each of the 5th and 7th anniversaries
of the Demerger Date, CS and DPS shall negotiate in good faith to determine a payment by DPS to CS
that terminates any remaining Initial Tax Benefit Amounts and the Final Tax Benefit Amount that
would be payable by DPS pursuant to and subject to the limitations of this Section 4(d); provided
that, for the avoidance of doubt, if an agreement is not reached by CS and DPS, the provisions of
this Section 4(d) shall continue to apply in accordance with their terms.
(vi) DPS acknowledges and agrees that the DPS Group (and any member thereof as required by
applicable Tax law) shall make a timely election pursuant to Code section 338(g) in respect of the
acquisition of stock of CDMI from the Cadbury Group and shall timely file all corresponding IRS
Forms required to be filed with the IRS in connection with the Code section 338(g) election and,
except pursuant to a Final Determination, the DPS Group shall not take any action inconsistent with
the Code section 338(g) election and the step-up in Tax basis of the assets of CDMI in respect of
any Tax Return, audit or other proceeding or otherwise. For the avoidance of doubt, the treatment
and reporting of the Code section 338(g) election in respect of CDMI on the IRS Form 1120 for the
DPS Group for the taxable year that includes the Demerger Date shall be governed by this Section
4(d)(vi) and Section 3(b)(ii).
(vii) In the event that, pursuant to a Final Determination, it is determined that CDMI was not
entitled, pursuant to the Code section 338(g) election described in Section 4(d)(vi) or otherwise,
to step-up the Tax basis of its assets to their respective values at the time of their acquisition
by CDMI for U.S. federal income tax purposes in connection with the transfer of such assets from
CBCI to CDMI and/or the various transactions pursuant to which the stock of CDMI was sold to the
DPS Group prior to, and in connection with the Demerger, CS shall (i) repay to DPS the actual
amounts of any Initial Tax Benefit Amounts or Final Tax Benefit Amount previously paid to CS
pursuant to Section 4(d) and, for the avoidance of doubt, no further Initial Tax Benefit Amounts or
Final Tax Benefit Amount shall be required to be paid by DPS to CS pursuant to this Section 4(d),
and (ii) indemnify and hold the DPS Group harmless against any interest and penalties charged by
the IRS pursuant to the Final Determination that are attributable to incremental U.S. federal
income taxes, if any, that the DPS Group is required to pay in respect of previous distributions
from CDMI as a result of recomputing the earnings and profits of CDMI for U.S. federal income tax
purposes to reflect the disallowance of the step-up
15
adjustment of the Tax basis of the assets of CDMI; provided that, for the avoidance of doubt,
CS, pursuant to and in accordance with the provisions of Section 9(b), shall have full control over
any Tax Proceeding relating to or involving the Tax basis step-up or adjustment thereto in respect
of the assets of CDMI for U.S. federal income tax purposes.
(e) If requested by CS, DPS agrees to make any payment due under Section 4(c) or 4(d) to a
Subsidiary of CS. In the event that a payment from DPS to CS (or one or more of its Subsidiaries)
pursuant to Section 4(c) or 4(d) is subject to Tax deductions or withholdings under applicable Tax
law or any Taxes are imposed on CS (or one or more of its Subsidiaries) in respect of such payment,
DPS shall not be required to increase the payment or otherwise provide a gross-up to CS (or one or
more of its Subsidiaries); provided that DPS agrees to cooperate with CS and to use commercially
reasonable efforts (to the extent such efforts will not result in materially adverse consequences
to the DPS Group (or any member thereof)) to mitigate or avoid any applicable Tax deductions or
withholdings or other Taxes imposed.
5. Representations and Covenants of DPS
.
(a) DPS, on behalf of the DPS Group, represents that as of the date hereof, and covenants that
on the Demerger Date, there is no plan or intention by the DPS Group to:
(i) liquidate DPS or merge or consolidate DPS or the ATOB DPS Entity with any other Person or
sell, issue or otherwise dispose of, directly or indirectly, the ATOB DPS Entity or any equity
interest, or an instrument convertible into an equity interest, in the ATOB DPS Entity;
(ii) take any action inconsistent with the written statements and representations furnished to
the IRS in connection with the Ruling Request or set forth by the IRS in the Ruling;
(iii) repurchase stock of DPS in a manner contrary to the requirements of IRS Revenue
Procedure 96-30, as modified by IRS Revenue Procedure 2003-48, or in a manner contrary to the
representations set forth by the IRS in the Ruling;
(iv) issue any class of nonvoting stock of DPS; and
(v) fail to preserve and maintain the separate legal existence, entity classification for Tax
purposes and ownership structure of the Specified Entities (other than a Specified Entity that is
listed as the predecessor of another Specified Entity on Schedule F), in each case, as in effect on
the Demerger Date.
(b) DPS covenants to CS that, without either (i) the prior written consent of CS, (ii) a
supplemental private letter ruling issued by the IRS with respect to the Ruling Request, based upon
a request for supplemental private letter ruling filed with the prior written consent of CS, or
(iii) an unqualified written opinion of nationally recognized Tax counsel selected by DPS and
acceptable to CS in its sole discretion exercised in good faith (in the case of (iii), such opinion
shall be satisfactory to CS in its sole discretion exercised in good faith):
16
(i) throughout the twelve-month period following the Demerger Date, neither DPS nor the ATOB
DPS Entity will liquidate, merge or consolidate with any other Person, DPS will continue to
wholly-own the ATOB DPS Entity and no member of the DPS Group will sell, issue or otherwise dispose
of, directly or indirectly, any equity interest, or an instrument convertible into an equity
interest, in the ATOB DPS Entity;
(ii) following the Demerger, the DPS Group will, for a minimum of twelve months, continue the
conduct of Active Business;
(iii) throughout the twelve-month period following the Demerger Date, DPS will not issue any
class of nonvoting stock of DPS;
(iv) DPS will not, nor will it permit any member of the DPS Group to, take any action
inconsistent with the written statements and representations furnished to the IRS in connection
with the Ruling Request or set forth by the IRS in the Ruling;
(v) throughout the two-year period following the Demerger Date, DPS will not repurchase stock
of DPS in a manner contrary to the requirements of IRS Revenue Procedure 96-30, as modified by IRS
Revenue Procedure 2003-48, or in a manner contrary to the representations set forth in the Ruling;
(vi) on or after the Demerger Date, except as otherwise provided by this Agreement and except
for the transactions listed on Schedule G, DPS will not, nor will it permit any member of the DPS
Group to (A) make or change any accounting method or amend any Tax Return, or (B) take any Tax
position on an Income Tax Return that is outside the ordinary course of business or inconsistent
with past practice, in each case, that results in an increased Tax liability or a reduction of Tax
Benefit Attributes of the Cadbury Group or any member thereof in respect of any Pre-Demerger Period
or Straddle Period including pursuant to the CFC Legislation; and
(vii) DPS will preserve and maintain the separate legal existence, entity classification for
Tax purposes and ownership structure of the Specified Entities (other than a Specified Entity that
is listed as the predecessor of another Specified Entity on Schedule F), in each case, as in effect
on the Demerger Date, until after the calendar year that includes the second anniversary of the
Demerger Date.
(c) DPS agrees that, regardless of whether CS consents to, or DPS receives a private letter
ruling from the IRS or an opinion of Tax counsel with respect to, any action referred to in Section
5(b), CS is to have no liability for any Taxes or Damages (including pursuant to any
indemnification obligations under this Agreement) resulting from any such action and DPS agrees to
indemnify and hold harmless the Cadbury Group against any such Taxes or Damages including Damages
of the Cadbury Group relating to Taxes of shareholders of Cadbury and/or DPS incurred as a result
of such actions. DPS shall also bear all reasonable out-of-pocket costs incurred by CS in
connection with obtaining any private letter ruling from the IRS or an opinion of Tax counsel or in
connection with CS determination of whether or not to grant any written consent required under
Section 5(b).
17
6. Indemnities
.
(a) Subject to the provisions of this Section 6, CS and each member of the Cadbury Group will
jointly and severally indemnify DPS and the members of the DPS Group against, and hold them
harmless from and shall pay any:
(i) Cadbury Group Taxes;
(ii) Incremental DPS Group Taxes (except for any Incremental DPS Group Taxes that are
attributable to actions taken by a member of the DPS Group after the Demerger Date other than
actions that CS has expressly consented to in writing or actions taken pursuant to a Final
Determination or required by this Agreement);
(iii) Taxes of a member of the Cadbury Group for which a member of the DPS Group is
responsible for (A) under Treasury Regulation 1.1502-6 (or similar provision of U.S. state or local
or non-U.S. Tax law) solely as a result of such member of the DPS Group being or having been
included in a Tax Return with any member of the Cadbury Group or otherwise joining in a fiscal
unity or other combined group, or (B) as a consequence of the failure of any member of the Cadbury
Group to discharge a liability for Tax for which a member of the Cadbury Group is primarily liable
under applicable Tax law or (C) because a member of the DPS Group acted as a representative of a
group of companies to the extent that the DPS Group Tax liability would have been a liability of a
member of the Cadbury Group if the relevant member of the DPS Group did not act as representative;
(iv) Damages resulting from or that are otherwise attributable to a breach by CS or any member
of the Cadbury Group of any covenant made by CS in this Agreement; and
(v) Out-of-pocket legal, accounting or similar expenses resulting from the imposition,
assessment or assertion of any Taxes or Damages indemnified against and described in (i), (ii),
(iii) or (iv), including those incurred in the contest in good faith in appropriate proceedings
relating to the imposition, assessment or assertion of any such Taxes or Damages.
(b) Subject to the provisions of this Section 6, DPS and each member of the DPS Group will
jointly and severally indemnify CS and the members of the Cadbury Group against, and hold them
harmless from and shall pay any:
(i) DPS Group Taxes (other than Incremental DPS Group Taxes);
(ii) Taxes of a member of the DPS Group for which a member of the Cadbury Group is responsible
for (A) under Treasury Regulation 1.1502-6 (or similar provision of U.S. state or local or non-U.S.
Tax law) solely as a result of such member of the Cadbury Group being or having been included in a
Tax Return with any member of the DPS Group or otherwise joining in a fiscal unity or other
combined group, or (B) as a consequence of the failure of any member of the DPS Group to discharge
a liability for Tax for which a member of the DPS Group is primarily liable under applicable Tax
law or (C) because a member of the Cadbury Group acted as a representative of a group of companies
to the extent that the Cadbury
18
Group Tax liability would have been a liability of a member of the DPS Group if the relevant
member of the Cadbury Group did not act as a representative;
(iii) Damages resulting from or that are otherwise attributable to a breach by DPS or any
member of the DPS Group of any representation set forth in Section 5 or any covenant made by DPS in
this Agreement (including Section 5), including Damages of the Cadbury Group relating to Taxes of
shareholders of Cadbury and/or DPS incurred as a result of such breach;
(iv) Taxes of or otherwise imposed on CBCI in respect of transactions or operations in the
ordinary course of business for taxable periods (or portions thereof) ending on or prior to
December 31, 2007; and
(v) Out-of-pocket legal, accounting or similar expenses resulting from the imposition,
assessment or assertion of any Taxes or Damages indemnified against and described in (i), (ii),
(iii) or (iv), including those incurred in the contest in good faith in appropriate proceedings
relating to the imposition, assessment or assertion of any such Taxes or Damages.
(c) (i) For purposes of this Section 6, (A) to the extent that a Confectionery Entity was
included in a Tax Return of the DPS Group or a Beverage Entity was included in a Tax Return of the
Cadbury Group, as the case may be, the Taxes of the Confectionery Entity or the Beverage Entity
shall be computed on a stand-alone basis taking into account as an offset any Taxes (including
estimated) paid on account of such Confectionery Entity or Beverage Entity prior to the Demerger
Date, and (B) in the case of a Confectionery Entity or Beverage Entity that is a pass-through or
other fiscally transparent entity for Tax purposes, the pass-through or other fiscally transparent
status of such entity shall be respected so that the Taxes, including Taxes resulting from a Tax
adjustment or other change in respect of such entity shall, pursuant to applicable Tax law, be
treated as imposed on the members (or other equityholders) of the Confectionery Entity or Beverage
Entity and nothing in this Agreement shall be read to require indemnification of such entity on
account of such Taxes (including an adjustment to such Taxes) on the grounds that such Taxes (or
adjustment) are Taxes of such entity (as opposed to its members).
(ii) As a supplement to, but without duplication of the rights and obligations provided in
Section 6(a), if, pursuant to a Final Determination in respect of a Pre-Demerger Period of Cadbury
Adams USA LLC, there is an adjustment in respect of Cadbury Adams USA LLC that results in (A) an
increase to DPS Group Taxes, computed on a with and without basis in respect of such adjustment, CS
shall pay to DPS an amount equal to such increase in DPS Group Taxes, or (B) a decrease to DPS
Group Taxes, computed on a with and without basis in respect of such adjustment, DPS shall pay to
CS an amount equal to such decrease in DPS Group Taxes. Any payment required to be made pursuant
to this Section 6(c)(ii) shall be made within 10 days of the Final Determination in respect of the
adjustment.
(iii) Notwithstanding Sections 6(a) and 6(b), except as provided in Section 6(c)(ii), neither
the DPS Group nor the Cadbury Group shall be required to indemnify the other party against a loss
or reduction of a Tax Benefit Attribute arising as a result of an amended Tax Return, audit, agreed
determination or other adjustment, claim or decision in respect of a Pre-
19
Demerger Period or a Straddle Period. For the avoidance of doubt, the parties acknowledge and
agree that the Cadbury Group is not representing or warranting to the amount of any Tax basis in
respect of the DPS Group or its members or assets.
(d) Notwithstanding anything to the contrary contained in this Agreement, the DPS Group or the
Cadbury Group, as the case may be, shall not be liable for any Taxes or Damages pursuant to this
Section 6 if the Damages and Taxes for which indemnification is being claimed pursuant to this
Section 6 do not exceed the amount of $350,000 for (i) a single claim, or (ii) related claims
involving one or more jurisdictions and arising out of the same or similar facts.
(e) The DPS Group and the Cadbury Group shall discharge their respective obligations under
Section 6, by paying the relevant amount no later than 5 days after (i) the due date of the
applicable estimated or final Tax Return of the Cadbury Group or the DPS Group for a Pre-Demerger
Period or Straddle Period, as the case may be, that reports an amount of Tax that is indemnified
against under this Agreement, (ii) an agreement between CS and DPS that a payment is due or (iii) a
Final Determination in respect of the relevant Tax matter or a final decision in respect of another
amount indemnified against; provided that, in the case of a written Tax assessment or other similar
written claim from a Taxing Authority that is required to be paid prior to contesting such Tax
assessment or claim, payment under this Section 6(e) shall be due no later than 5 days prior to the
due date for payment of such Tax assessment. Any indemnification payment for Taxes pursuant to
this Agreement shall be made in the currency of the jurisdiction that imposes the Taxes indemnified
against. Any indemnification payment made pursuant to this Section 6 will be treated as a
contribution to DPS or CSAI, or as a distribution from DPS or CSAI to CS or Cadbury or other type
of payment as is consistent with applicable Tax law, occurring immediately prior to and in
connection with the Demerger, and shall be paid free and clear of any Tax deduction or withholding.
The parties agree to use commercially reasonable efforts (to the extent such efforts will not
result in materially adverse consequences to a party) to mitigate or avoid such Tax deductions or
withholdings.
(f) (i) Any indemnification payment made pursuant to this Section 6 or Article VII of the
Separation Agreement shall, subject to this Section 6(f), be (A) decreased by the amount of any net
Tax benefit (including, to the extent provided in Section 6(f)(ii), an increase to Tax basis)
realized by the indemnified party (including the consolidated, combined, unitary or other Tax group
of which the indemnified party is a member) arising in connection with the accrual, incurrence or
payment of the amount indemnified against, and (B) increased by the amount of any net Tax cost
incurred (including a gross-up for any amounts required to be deducted or withheld from the
indemnity payment under applicable Tax law) by the indemnified party (including the consolidated,
combined, unitary or other Tax group of which the indemnified party is a member) arising in
connection with the accrual or receipt of any indemnification payment pursuant to this Section 6 or
such Article VII.
(ii) In computing the amount of any net Tax benefit or net Tax cost, the indemnified party
shall be deemed to recognize all other items of income, gain, loss, deduction or credit before
recognizing any item arising in connection with the accrual, incurrence or payment of any
indemnifiable amount or arising in connection with the accrual or receipt of any indemnification
payment pursuant to this Section 6 or Article VII of the Separation Agreement.
20
For these purposes, an indemnified party shall be deemed to have realized a net Tax benefit
or incurred a net Tax cost to the extent that, and at such time as, the amount of Taxes payable
by such indemnified party is reduced below or increased above, as the case may be, the amount of
Taxes that such indemnified party would be required to pay but for incurrence or payment of the
indemnifiable amount or the receipt of the indemnity payment; provided that the parties acknowledge
and agree that in the event that the net Tax benefit includes an increase in Tax basis (A) in
respect of an asset for which amortization, depreciation or similar deductions are allowable, the
parties shall compute such net Tax benefit on a present value basis using a discount rate equal to
the rate on 5-year U.S. Treasury securities (in effect at the time the parties are computing the
applicable net Tax benefit) plus 4%; provided, however, that if the present value of the net Tax
benefit exceeds $20 million then until the net present value of the unrealized net Tax benefit does
not exceed $20 million, the indemnified party shall make periodic reimbursements to the
indemnifying party in respect of such net Tax benefit to the extent that such net Tax benefit is
realized by the indemnified party (as determined pursuant to the general principles of this
Section 6(f)(ii)), or (B) in respect of an equity interest or other asset for which amortization,
depreciation or similar deductions are not allowable, the amount of the indemnification payment
shall be subject to adjustment on account of such increase in Tax basis only if a net Tax benefit
in respect of such increase to Tax basis is realized prior to or within the 5-year period following
the later of the end of the calendar year in which the indemnity payment is made or in which there
is a Final Determination with respect to the matter indemnified against in accordance with Section
6(f)(iii). The parties shall make any adjusting payment between each other as is required pursuant
this Section 6(f) within 10 days of the date an indemnified party is deemed to have realized a net
Tax benefit or incurred a net Tax cost. The amount of any increase or reduction hereunder shall be
adjusted to reflect any Final Determination with respect to the indemnified partys liability for
Taxes. Payments between the indemnified party and the indemnifying party to reflect any such
adjustment shall be made as necessary within 10 days of such determination. For the avoidance of
doubt, in computing the amount of Incremental DPS Group Taxes indemnified against, any Tax Benefit
Attribute that becomes available to the DPS Group (or any member thereof) as a result of the
additional Income Taxes imposed in respect of a Confectionery Transaction shall be taken into
account when realized (as determined pursuant to the principles of this Section 6(f)) and shall
reduce the amount of Incremental DPS Group Taxes indemnified against under Section 6(a).
(iii) The parties acknowledge and agree that in the event that, pursuant to this Section 6(f),
there is a net Tax benefit that includes an increase in Tax basis in respect of an equity interest
or other asset for which amortization, depreciation or similar deductions are not allowable, DPS
shall, on an annual basis during the applicable 5-year period set forth in Section 6(f)(ii),
provide CS with an executed officers certificate, satisfactory to CS in its reasonable discretion,
specifying in reasonable detail whether or not the DPS Group realized a net Tax benefit in respect
of such increase in Tax basis; provided that if the asset disposition occurs, or the Tax basis
benefit is otherwise realized in respect of a taxable period, prior to such 5-year period, DPS
shall provide CS with such an executed officers certificate within 10 days of the event (including
a Final Determination) in respect of which the Tax basis was increased and the net Tax benefit was
realized; provided further that the DPS Group shall provide CS, in accordance with Section 8,
access to any documents or other information that CS reasonably determines is necessary to confirm
the statements set forth in any officers certificate provided
21
pursuant to this Section 6(f)(iii). In the event that the DPS Group realizes a net Tax
benefit in respect of such an increase in Tax basis in respect of a taxable period prior to or
during the first year of the applicable 5-year period, DPS shall pay to CS an amount equal to 50%
of such net Tax benefit and, if such a net Tax benefit is realized during any succeeding year of
such 5-year period, the amount that DPS is required to pay CS shall decrease by 5% each year so
that the payment would be 30% of the next Tax benefit if realized during the fifth year of the
5-year period. For the avoidance of doubt, the parties acknowledge and agree that in the event
that a payment from DPS to CS pursuant to Section 6(f)(ii) or this Section 6(f)(iii) is subject to
Tax deductions or withholdings under applicable Tax law or any Taxes are imposed on CS in respect
of such payment, DPS shall not be required to increase the payment or otherwise provide a gross-up
to CS; provided that DPS agrees to cooperate with CS and to use commercially reasonable efforts (to
the extent such efforts will not result in materially adverse consequences to the DPS Group (or any
member thereof)) to mitigate or avoid any applicable Tax deductions or withholdings or other Taxes
imposed.
(iv) Without duplication, if, as a result of an amended Tax Return, claim for refund, audit,
agreed determination or other adjustment, claim or decision, the amounts indemnified against by the
Cadbury Group pursuant to Section 6(a) or DPS Group pursuant to Section 6(b), as the case may be,
is increased and there is a Tax benefit (including an adjustment to the Tax basis of an asset) that
is realized by the other party, such other party shall promptly pay to CS or DPS, as the case may
be, the amount of the Tax benefit less any incremental Tax or other cost of such other party,
computed in accordance with the provisions of this Section 6(f).
(g) Each member of the DPS Group shall act in a commercially reasonable manner in respect of
their Tax matters and shall not proactively disclose to any person any material information
regarding the Income Tax reporting positions or Income Tax Returns of any member of the DPS Group
in respect of a Pre-Demerger or Straddle Period except (i) to any of its legal, accounting and tax
personnel, outside legal and tax advisors, and auditors, but only to the extent necessary for tax
and financial reporting purposes, provided that such persons are instructed to keep such
information confidential, or to such other persons as is otherwise required to comply with
applicable law; or (ii) in response to a request by a Taxing Authority (in connection with an audit
or other proceeding), to the extent that the DPS Group determines, in its good faith discretion,
which shall be presumed, that such information should be disclosed. If any member of the DPS Group
makes any such disclosure to any person (including a Taxing Authority) in circumstances other than
permitted above, the Cadbury Group shall not be required to indemnify the DPS Group for any
associated Taxes that the Cadbury Group otherwise would be required to indemnify the DPS Group
against pursuant to this Section 6.
(h) For purposes of this Agreement (taking into account the responsibility for Taxes under
this Agreement), in computing amounts indemnified against and for purposes of preparing DPS
Transition Returns and other Tax Returns, if an allocation of Taxes is required for a member of the
Cadbury Group or the DPS Group (or a Subsidiary thereof) for a Straddle Period or other taxable
period then the amount of such Tax that is allocable to the portion of such taxable period ending
on the Demerger Date or other date for which the allocation is relevant shall be: (i) in the case
of income Taxes, sales Taxes, employment Taxes and other Taxes that are readily apportionable based
on an actual or deemed closing of the books, the portion of any
22
such Tax equal to the amount that would be payable if the taxable year (including, for the
avoidance of doubt, the taxable year of any entity that is a partnership for U.S. federal income
tax purposes) ended on the Demerger Date or other relevant date, and (ii) in the case of property
and other Taxes that are imposed on a periodic basis, the portion of any such Tax equal to the
amount of such Tax for the entire taxable period multiplied by a fraction, the numerator of which
is the number of days in the portion of the taxable period ending on the Demerger Date or other
relevant date, and the denominator of which is the number of days in the entire taxable period.
Any Tax Benefit Attribute for a Straddle Period or other taxable period for which an allocation is
required for a member of the Cadbury Group or the DPS Group (or a Subsidiary thereof) shall be
allocated in the same manner as provided in this Section 6(h) as the Tax to which the Tax Benefit
Attribute relates.
(i) The indemnification obligations contained in this Section 6 or otherwise in this Agreement
shall remain in effect until 30 days after the expiration of all applicable statutes of limitation
(giving effect to any extension, waiver or mitigation thereof) and, with respect to any claim
hereunder initiated prior to the end of such period, until such claim has been satisfied or
otherwise resolved.
7. Guarantees.
CS shall guarantee or otherwise perform the obligations of each member of the
Cadbury Group under this Agreement. DPS shall guarantee or otherwise perform the obligations of
each member of the DPS Group under this Agreement.
8. Cooperation.
(a) CS and DPS shall each, at their own expense, cooperate with each other (and shall cause
each member of the Cadbury Group and the DPS Group, respectively, to cooperate) and make available
to each other, their officers, agents and personnel and such Tax and accounting data and other
information as may be reasonably required in connection with (i) the preparation or filing of any
Tax Return, election, consent, certification, declaration or authorization of representative, or
any claim for refund, including executing such items where required, (ii) any determinations of
liability for Taxes, or (iii) any audit or other proceeding in respect of Taxes including
cooperating in connection with the exercise of contest rights under Section 9. Without limiting
the foregoing, the members of the DPS Group and the Cadbury Group, as the case may be, shall not be
entitled to assert privilege or any similar argument against the members of the other group with
respect to legal and other professional services or documents (both internal and external), in each
case, in respect of Tax matters of the Cadbury Group and the DPS Group for Pre-Demerger Periods or
Straddle Periods. At the request of CS and in connection with a Confectionery Transaction, DPS
shall make (or cause to be made or permit CS to make) one or more Tax elections, as directed by CS
(for the avoidance of doubt, nothing in this sentence shall limit the obligations of the Cadbury
Group to indemnify the DPS Group for Confectionery Transactions pursuant to Section 6 of this
Agreement). The Cadbury Group and the DPS Group shall retain all Tax Returns, work papers and all
Tax and accounting records or other documents in their possession relating to material Tax and
accounting matters of the DPS Group for any Pre-Demerger Period or Straddle Period until the later
of (i) seven years after the Demerger Date or (ii) one year after the expiration of all applicable
statutes of limitations (including extensions thereof). After such time, before the Cadbury Group
or the
23
DPS Group shall dispose of any such documents in their possession, the other party shall be
given an opportunity, after 90 days prior written notice, to remove and retain all or any part of
such documents as such other party may select (at such other partys expense). The parties agree
to use their best efforts to maintain privilege or other protection in respect of third parties
regarding any documents or other information relating to Tax matters provided by the Cadbury Group
or the DPS Group, as the case may be, to the other group.
(b) (i) (A) Without limiting Section 8(a), the DPS Group shall provide the Cadbury Group and
its officers, agents and personnel with access to and the right to copy such documents, and shall
provide such other information, as are reasonably necessary to allow the Cadbury Group to determine
and report their Taxes for any Pre-Demerger Period or Straddle Period and to prepare any applicable
Tax Return or other required filings of the Cadbury Group. The DPS Group acknowledges and agrees
that the rights afforded to the Cadbury Group under this Section 8(b)(i) are, among other things,
intended to enable the Cadbury Group to prepare, at its expense, profit and loss statements,
balance sheets and other financial statements or accounting information with respect to each member
of the DPS Group on a stand-alone or legal entity basis as of or prior to the Demerger Date and, in
the case of a jurisdiction in which the Taxable year of a DPS Group member does not end on the
Demerger Date, as of the end of the Taxable year in which the Demerger Date occurs.
(B) DPS shall deliver or cause to be delivered to CS, or otherwise make available to CS,
information in respect of the accounting systems of the DPS Group for Pre-Demerger Periods and
Straddle Periods to enable CS to create the DPS Statements (as defined below) no later than 45 days
after the Demerger Date. Based on the information in respect of the accounting systems of the DPS
Group for Pre-Demerger Periods and Straddle Periods (the DPS Information) that CS is entitled to
download or otherwise acquire pursuant to this Section 8, CS will create profits and loss
statements and balance sheets for each legal entity of the DPS Group for the period beginning on
January 1, 2008 and ending on the Demerger Date in accordance with the accounting policies of the
DPS Group as of, and prior to, the Demerger Date (the DPS Statements) and shall deliver the DPS
Information and DPS Statements to DPS within 90 days of the Demerger Date (or such other time as CS
shall determine and notify DPS in writing); provided that DPS, at its expense, shall provide any
reasonable cooperation requested by CS in preparing the DPS Statements, including the provision of
any other information that CS determines is reasonably necessary to prepare the DPS Statements in
accordance with such accounting policies of the DPS Group. Within 45 days of the receipt of the
DPS Information and DPS Statements by DPS, DPS shall confirm in writing to CS that (A) the DPS
Information downloaded or otherwise acquired by DPS was properly extracted from the DPS accounting
systems, is accurate and complete in all material respects and is properly identified on an
entity-by-entity basis, and (B) the accounting policies used by CS in preparing the DPS Statements
are consistent in all material respects with the accounting policies of the DPS Group as of, and
prior to, the Demerger Date; provided that if DPS is unable to provide such written confirmation,
(X) DPS shall provide CS, within 45 days of the receipt of the DPS Information and DPS Statements
by DPS, with a written statement setting forth in detail the reasons that such confirmation could
not be made, (Y) DPS shall, at its expense, cooperate with CS to correct the DPS Information or DPS
Statements, including any improper extraction of the DPS Information or any inconsistencies in the
accounting policies used by CS to prepare the
24
DPS Statements, and (Z) within 20 days of the receipt of revised DPS Information and DPS
Statements, DPS shall provide the written confirmation contemplated by this Section 8(b)(iii) to
CS; provided, further, that the principles of the preceding proviso shall continue to apply until
CS receives such written confirmation.
(ii) Without limiting Sections 8(a) and 8(b)(i), the DPS Group shall provide the Cadbury Group
and its officers, agents and personnel all such cooperation, access and assistance, as may
reasonably be necessary for the Cadbury Group to comply with any CFC Legislation, including causing
the DPS Group to, as soon as reasonably practicable, (i) respond to any CFC Questions asked by CS
and its officers, agents and personnel, and (ii) provide CS with copies of any accounts or
financial statements or other information in respect of the members of the DPS Group that may be
reasonably required or reasonably necessary to enable the Cadbury Group to comply with any CFC
Legislation in relation to the DPS Group in respect of any Pre-Demerger Period or Straddle Period
(including permitting the Cadbury Group to download any information in respect of accounting
systems of the DPS Group for Pre-Demerger Periods and Straddle Periods).
(iii) With respect to Controladora de Marcas Internacionales, S.A. de C.V. and Adams Mecca
B.V., DPS shall deliver to CS, in the case of a Pre-Demerger Period within 45 days following the
Demerger Date and in the case of a Straddle Period within 45 days following the end of such
Straddle Period, copies or originals of all Tax and accounting data and other information or
documents relating to Tax matters of the applicable company for the applicable taxable period.
With respect to the prior ownership of preferred shares of Cadbury Aguas Minerales, S.A. de C.V.
(CAMSA) by Cadbury Adams Canada, Inc., DPS agrees to provide CS, within 45 days of a request by
CS, with any Tax and accounting data and other information or documents relating to Tax matters of
CAMSA that may be reasonably required or reasonably necessary to enable the Cadbury Group to
satisfy its Tax compliance obligations or in respect of a Tax Proceeding, including, for the
avoidance of doubt, any information that is required to be reported (or used to calculate items
that are required to be reported) or otherwise disclosed to a Taxing Authority or other
governmental entity.
(iv) DPS agrees to provide CS, within 45 days of a request by CS, with any Tax and accounting
data and other information or documents relating to Tax matters of CBCI that may be reasonably
required or reasonably necessary to enable the Cadbury Group to satisfy its Tax compliance
obligations or in respect of a Tax Proceeding, including, for the avoidance of doubt, any
information that is required to be reported (or used to calculate items that are required to be
reported) or otherwise disclosed to a Taxing Authority or other governmental entity. CS agrees to
provide DPS, within 45 days of a request by DPS, with any Tax and accounting data and other
information or documents relating to Tax matters of CDMI that may be reasonably required or
reasonably necessary to enable the DPS Group to satisfy its Tax compliance obligations or in
respect of a Tax Proceeding, including, for the avoidance of doubt, any information that is
required to be reported (or used to calculate items that are required to be reported) or otherwise
disclosed to a Taxing Authority or other governmental entity.
25
9. Audits and Contest
.
(a) CS or DPS shall notify the other in writing upon the receipt of any notice of a Tax
Proceeding that could reasonably result in a right to indemnification of a party under this
Agreement together with a description in reasonable detail of the Tax Proceeding and the underlying
claim within 30 days of the receipt of such notice or such earlier time that would allow the
indemnifying party to timely respond to such notice; provided, that a partys right to
indemnification under this Agreement shall not be limited in any way by a failure to so notify,
except to the extent that the indemnifying party is materially prejudiced by such failure.
(b) Notwithstanding anything in this Agreement to the contrary, except as otherwise provided
in this Section 9(b), CS shall have full control over any Tax Proceeding in respect of Cadbury
Group Taxes and Taxes indemnified against by CS pursuant to this Agreement including any Tax
Proceeding involving the DPS Group or any of its members relating to a Confectionery Transaction or
a Specified Entity. CS shall have absolute discretion with respect to any decisions to be made
(including choice of counsel, venue or judicial forum), or the nature of any action to be taken,
with respect to such Tax Proceeding and the contest thereof (including whether to litigate,
compromise or otherwise settle the dispute or contest and the amount of any settlement) and DPS
shall cooperate with CS in accordance with the provisions of Section 8 and this Section 9; provided
that DPS may, at its own expense, participate in any such Tax Proceeding and CS shall consult with
and take reasonable direction from DPS in respect of any decisions to be made or actions to be
taken in respect of Tax matters of the DPS Group other than with respect to Cadbury Group Taxes,
Confectionery Transactions, one or more Specified Entities or other matters relating to Taxes
indemnified against by CS pursuant to this Agreement.
(c) With respect to Tax Proceedings not described in Section 9(b) but that could result in a
right to indemnification for Taxes or Damages by the DPS Group or the Cadbury Group, as the case
may be, under this Agreement, the indemnified party shall control the Tax Proceeding and contest
the claim indemnified against in good faith as directed by the indemnifying party; provided further
that to the extent relating to the claim indemnified against, (i) the indemnified party shall keep
the indemnifying party informed of the status and progress of the Tax Proceeding and shall consult
with the indemnified party regarding decisions relating to the Tax Proceeding, and (ii) the
indemnified party shall not settle or compromise any such Tax Proceeding without the prior written
consent of the indemnified party (such consent not to be unreasonably withheld or delayed).
(d) With respect to any Tax Proceeding involving issues relating solely to a Tax Return or
Taxes of one or more members of the DPS Group for which the DPS Group has no right to
indemnification under this Agreement or Taxes indemnified against by DPS under Section 6(b)(iv),
DPS shall have control over such Tax Proceeding and shall have discretion with respect to any
decisions to be made, or the nature of any action to be taken, with respect to such Tax Proceeding;
provided that to the extent that the outcome of the Tax Proceeding can affect the Taxes of the
Cadbury Group under the CFC Legislation or otherwise, (i) CS shall have the right, at its own
expense, to participate and DPS shall keep CS informed of the status and progress of the Tax
Proceeding and shall consult with CS regarding decisions relating to the Tax Proceeding,
26
and (ii) DPS shall not settle or compromise any such Tax Proceeding without the prior written
consent of CS (such consent not to be unreasonably withheld or delayed).
(e) The DPS Group acknowledges and agrees that with respect to any Tax Proceeding including or
involving the DPS Group that CS controls pursuant to this Section 9, (i) the DPS Group shall
cooperate fully with CS, (ii) the DPS Group shall act in good faith and use its best efforts to
support the defense of the Tax Proceeding, and (iii) in no event shall the DPS Group interfere with
CS control of the Tax Proceeding or otherwise fail to support, or take any action that is
inconsistent with, the Tax reporting positions for the relevant transaction or item unless
otherwise directed by CS in writing.
10. Notices
. All notices, requests, claims, demands and other communications hereunder shall
be in writing and shall be given or made (and shall be deemed to have been duly given or made upon
receipt) by delivery in person, by an internationally recognized overnight courier service, by
facsimile or registered or certified mail (postage prepaid, return receipt requested) to the
respective parties hereto at the following addresses (or at such other address for a party as shall
be specified in a notice given in accordance with this Section 10):
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(a)
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If to CS or Cadbury:
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Cadbury plc
25 Berkeley Square
London W1J 6HB
Facsimile: 44-20-7830-5015
Attention: Henry Udow, Esq. Chief Legal Officer
Lisa M. Longo Senior Vice President of Tax
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with a copy to:
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Shearman & Sterling LLP
599 Lexington Avenue
New York, NY 10022-6069
Facsimile: (212) 848-7179
Attention: Laurence M. Bambino, Esq.
Creighton OM. Condon, Esq.
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and
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Slaughter and May
One Bunhill Row
London EC1Y 8YY
Facsimile: 44-20-7090-5000
Attention: Tim Boxell
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(b)
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If to DPS:
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Dr Pepper Snapple Group, Inc.
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27
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5301 Legacy Drive
3
rd
Floor
Plano, TX 75024
Facsimile:
Attention: James L. Baldwin, Jr. General Counsel
Taun Dimatteo Senior Vice President of Tax
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with a copy to:
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Sullivan & Cromwell LLP
125 Broad Street
New York, New York 10004-2498
Facsimile: (212) 558-3588
Attention: Ronald E. Creamer, Jr., Esq.
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11. Costs and Expenses
. Except as expressly set forth in this Agreement or the Transition
Services Agreement, each of the Cadbury Group and the DPS Group shall bear its own costs and
expenses (including reasonable attorneys fees, accountant fees and other related professional fees
and disbursements) incurred in preparing and filing any Tax Return, in complying with the
provisions of this Agreement and in connection with any Tax Proceeding.
12. Interest
. Any payment required to be made pursuant to this Agreement that is not paid
when due shall bear interest at the Underpayment Rate.
13. Effectiveness; Termination; Survival and Change of Control
.
(a) This Agreement shall become effective upon the consummation of the Demerger. All rights
and obligations arising hereunder shall survive until they are fully effectuated or performed in
accordance with the terms thereof. The rights and obligations of the Cadbury Group and the DPS
Group under this Agreement shall survive the sale or other transfer by any member of the Cadbury
Group or the DPS Group, as the case may be, of any assets or businesses or the assignment by such
member of any liabilities.
(b) Notwithstanding anything to the contrary contained in this Agreement, upon the occurrence
of (i) the acquisition of ownership, directly or indirectly, beneficially or of record, by any
Person or group (within the meaning of the Securities Exchange Act of 1934 and the rules of the
Securities Exchange Commission thereunder as in effect on the date hereof), of capital stock
(whether denominated as common stock or preferred stock) of DPS representing more than 35% of the
aggregate ordinary voting power represented by the issued and outstanding capital stock of DPS,
(ii) the occupation of a majority of the seats (other than vacant seats) on the board of directors
of DPS by Persons who were neither (A) nominated by the board of directors of DPS nor (B) appointed
by directors so nominated, or (iii) DPS consolidating with, or merging with or into, any Person
(other than another member of the DPS Group), or any Person (other than a member of the DPS Group)
consolidating with, or merging with or into, DPS, in any such event pursuant to a transaction in
which any of the outstanding voting capital stock (whether denominated as common stock or preferred
stock) of DPS or such other Person is converted into or exchanged for cash, securities or other
property, other than any such transaction where the
28
shares of the voting capital stock (whether denominated as common stock or preferred stock) of
DPS outstanding immediately prior to such transaction constitute, or are converted into or
exchanged for, a majority of the voting capital stock (whether denominated as common stock or
preferred stock) of the surviving Person immediately after giving effect to such transaction, the
indemnification obligations of the Cadbury Group to indemnify against Incremental DPS Group Taxes,
and the right of the DPS Group to be so indemnified, shall terminate without any action of the
parties hereto and none of the members of the Cadbury Group shall have any further liabilities or
obligations, and none of the members of the DPS Group shall have any further rights, with respect
to Incremental DPS Group Taxes. Unless otherwise prohibited by this Agreement, any member of the
DPS Group shall be permitted to undertake wholly internal reorganizations, consolidations, or
mergers involving DPS and any Person that is a Subsidiary of DPS after the Demerger Date.
14. Entire Agreement; Amendments and Waivers
.
(a) This Agreement contains the entire understanding of the parties hereto with respect to the
subject matter contained herein.
(b) This Agreement may not be amended or modified except (i) by an instrument in writing
signed by, or on behalf of, the parties hereto or (ii) by a waiver in accordance with Section
14(c).
(c) Either party to this Agreement may (i) extend the time for the performance of any of the
obligations or other acts of the other party and (ii) waive compliance with any of the agreements
of the other party or conditions to such partys obligations contained herein. Any such extension
or waiver shall be valid only if set forth in an instrument in writing signed by the party to be
bound thereby. Any waiver of any term or condition shall not be construed as a waiver of any
subsequent breach or a subsequent waiver of the same term or condition, or a waiver of any other
term or condition of this Agreement. The failure of either party hereto to assert any of its
rights hereunder shall not constitute a waiver of any of such rights
15. Governing law
. This Agreement shall be governed by, and construed in accordance with, the
laws of the State of New York.
16. Dispute Resolution
. (a) The procedures for discussion, negotiation and arbitration set
forth in this Section 16 shall apply to all disputes, controversies or claims that may arise out of
or relate to, or arise under or in connection with, this Agreement between or among any member of
the Cadbury Group, on the one hand, and any member of the DPS Group, on the other hand
(collectively,
Agreement Disputes
).
(b) CS and DPS will use their respective commercially reasonable efforts to resolve
expeditiously any Agreement Dispute on a mutually acceptable negotiated basis. In furtherance of
the foregoing, any member of the DPS Group or the Cadbury Group involved in an Agreement Dispute
may deliver a notice (an
Escalation Notice
) demanding an in-person meeting involving the
senior tax director of each CS and DPS. A copy of any such Escalation Notice shall be given to the
chief legal officer of each of CS and of DPS (which copy shall state that it is an Escalation
Notice pursuant to this Section 16(b)). Any agenda, location or
29
procedures for such discussions or negotiations between CS and DPS may be established by CS
and DPS from time to time; provided, however, that the representatives of CS and DPS shall use
their reasonable efforts to meet within 30 days of the Escalation Notice.
(c) If the senior tax director of each CS and DPS are not able to resolve the Agreement
Dispute within 30 days after the date of the Escalation Notice (or such shorter time as is
necessary to avoid immediate irreparable injury), then the Agreement Dispute shall be submitted to
the chief financial officer of each of CS and DPS.
(d) If CS and DPS are not able to resolve the Agreement Dispute through the processes set
forth in subsections (b) and (c) of this Section 16 within 60 days after the date of the Escalation
Notice, such Agreement Dispute shall be determined, at the request of either CS or DPS by
arbitration, which shall be conducted (i) by three arbitrators, consisting of one arbitrator
appointed by CS, one arbitrator appointed by DPS and a third arbitrator appointed by the two
arbitrators appointed by CS and DPS or, if the arbitrators appointed by CS and DPS cannot agree on
a third arbitrator, the third arbitrator shall be appointed by the chief financial officer of each
CS and DPS, and (ii) in accordance with the Commercial Rules of the American Arbitration
Association (except with respect to the selection of arbitrators) in effect at the time of filing
of the demand for arbitration.
(e) The decision of the arbitrators shall be final and binding upon the parties hereto, and
the expense of the arbitration (including the award of attorneys fees to the prevailing party)
shall be paid as the arbitrators determine. The decision of the arbitrators shall be executory,
and judgment thereon may be entered by any court of competent jurisdiction. The seat of the
arbitration shall be New York, New York.
(f) The existence of, and any discussions, negotiations, arbitrations or other proceedings
relating to, any Agreement Dispute shall be considered by each party hereto as confidential
information until such time as a judgment thereon is entered in a court of competent jurisdiction.
(g) Notwithstanding anything contained in this Agreement to the contrary, no member of the DPS
Group and no member of the Cadbury Group shall have the right to institute judicial proceedings
against the other party or any Person acting by, through or under such other party, in order to
enforce the instituting partys rights hereunder, except that any such member shall be permitted to
seek an injunction in aid of arbitration with respect to an Agreement Dispute to preserve the
status quo during the pendency of any arbitration proceeding pursuant to paragraph (d) of this
Section 16. All judicial proceedings arising out of or relating to this Agreement shall be heard
and determined exclusively in any New York state or federal court sitting in the Borough of
Manhattan in The City of New York.
(h) Unless otherwise agreed in writing, the parties will continue to provide service and honor
all other commitments under this Agreement during the course of dispute resolution pursuant to the
provisions of this Section 16 with respect to all matters not subject to such Agreement Dispute.
30
17. Counterparts
. This Agreement may be executed and delivered (including by facsimile
transmission or portable document format (
.pdf
)) in counterparts, and by the different
Parties hereto in separate counterparts, each of which when executed shall be deemed to be an
original, but all of which taken together shall constitute one and the same agreement.
18. Assignments; Third Party Beneficiaries
. This Agreement may not be assigned by a party
hereto without the consent of the other party hereto; provided that a merger shall not be deemed to
be an assignment under this Agreement; and provided further, that any party may assign this
Agreement or any of its rights and obligations hereunder to one or more Affiliates of such party
without the consent of the other party provided that no such assignment shall relieve the assignor
of any of its obligations hereunder. This Agreement shall be binding upon and inure solely to the
benefit of the parties hereto (including the members of the Cadbury Group and the DPS Group as the
case may be) and their respective successors and permitted assigns, and nothing herein, express or
implied (including the provisions of Section 6 relating to indemnified parties), is intended to or
shall confer upon any other Person (including any shareholders of Cadbury and/or DPS) any legal or
equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.
If, during the period beginning on the Demerger Date and ending upon the expiration of the survival
period set forth in Section 13, any Person becomes an Affiliate of CS or DPS, such Affiliate shall
be bound by the terms of this Agreement and CS or DPS, as the case may be, shall provide evidence
to the other party of such Affiliates agreement to be bound by the terms of this Agreement upon
the request of such other party.
19. Severability
. If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any Law or public policy, all other terms and provisions of this
Agreement shall nevertheless remain in full force and effect for so long as the economic or legal
substance of the transactions contemplated by this Agreement is not affected in any manner
materially adverse to either party hereto. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the parties as closely
as possible in an acceptable manner in order that the transactions contemplated by this Agreement
are consummated as originally contemplated to the greatest extent possible.
20. CS Obligations
. DPS and Cadbury agree that Cadbury shall not, and shall cause CS not to,
take any actions that would materially and adversely impact the ability of CS to fulfill its
obligations under this Agreement; provided that Cadbury may at any time following the Demerger Date
require CS to assign to Cadbury all of CS rights and obligations under this Agreement in
substitution for compliance by Cadbury and CS with the aforementioned obligation in this Section
20, and upon such assignment, Cadbury shall assume all of CS obligations under this Agreement.
21. Authorization, etc
. Each of the parties hereto hereby represents and warrants that it has
the power and authority to execute, deliver and perform this Agreement, that this Agreement has
been duly authorized by all necessary corporate action on the part of such party, that this
Agreement constitutes a legal, valid and binding obligation of each such party, and that the
execution, delivery and performance of this Agreement by such party does not contravene or
31
conflict with any provision or law or of its charter or bylaws or any agreement, instrument or
order binding on such party.
* * *
32
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement on the day and year
first written above.
CADBURY SCHWEPPES PLC on its own behalf and on behalf of the members of the Cadbury Group
(other than Cadbury)
By: /s/
Henry Udow
Name: Henry Udow
Title: Chief Legal Officer and Group Secretary
DR PEPPER SNAPPLE GROUP, INC. on its own behalf and on behalf of the members of the DPS Group
By: /s/ John O. Stewart
Name: John O. Stewart
Title: Executive
Vice President and Chief Financial Officer
CADBURY PLC, solely for purposes of Section 20
By: /s/ Henry Udow
Name: Henry Udow
Title: Chief
Legal Officer and Group Secretary
33
EXECUTION VERSION
EMPLOYEE MATTERS AGREEMENT
among
CADBURY PLC
CADBURY SCHWEPPES, PLC
and
DR PEPPER SNAPPLE GROUP, INC.
Dated as of May 1, 2008
TABLE OF CONTENTS
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PAGE
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ARTICLE 1
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SCOPE AND DEFINITIONS
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Section 1.01 Scope
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1
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Section 1.02 Definitions
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2
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Section 1.03 Interpretation
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5
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ARTICLE 2
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ASSIGNMENT OF EMPLOYEES
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Section 2.01 Active Employees
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6
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Section 2.02 Former Employees
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6
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Section 2.03 Employment Law Obligations
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7
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Section 2.04 Employee Records
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7
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ARTICLE 3
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EQUITY COMPENSATION PLANS
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Section 3.02 Share Option Plans
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9
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Section 3.03 Long Term Incentive Plan
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10
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Section 3.04 Bonus Share Retention Plan
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10
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Section 3.05 International Share Award Plan
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11
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Section 3.06 Employee Share Option Plans
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11
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Section 3.07 Responsibility for Tax Withholding, Reporting, and Social Insurance
Contributions
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12
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Section 3.08 No Change of Control
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12
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Section 3.09 Compliance with Section 409A
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12
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ARTICLE 4
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GENERAL PRINCIPLES FOR ALLOCATION OF LIABILITIES
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Section 4.01 General Principle
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12
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Section 4.02 Establishment of DPSG Plans
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14
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Section 4.03 Transfer of Assets and Liabilities
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14
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Section 4.04 Service Credit
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14
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Section 4.05 Plan Administration
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15
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i
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PAGE
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ARTICLE 5
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U.S. PENSION PLAN SPIN-OFF
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Section 5.01 General Principle
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16
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Section 5.02 Determination and Transfer of Initial Transfer Amount
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16
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Section 5.03 Determination of the Final Pension Transfer Amount
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17
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Section 5.04 True-Up Adjustment
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18
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Section 5.05 Form and Selection of Assets to be Transferred
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18
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ARTICLE 6
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U.S. 401(K) PLAN
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Section 6.01 General Principle
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18
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Section 6.02 Transfer of Accounts
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19
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Section 6.03 Funding of 2008 Matching Contribution
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19
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ARTICLE 7
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U.S. WELFARE BENEFIT PLANS
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Section 7.01 General Principle.
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20
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Section 7.02 Establishment of DPSG Plans
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20
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Section 7.03 Insurance Contracts
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21
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Section 7.04 Third Party Vendors
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21
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ARTICLE 8
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FRINGE BENEFIT AND OTHER U.S. PLANS AND PROGRAMS
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ARTICLE 9
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WORKERS COMPENSATION AND UNEMPLOYMENT COMPENSATION
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ARTICLE 10
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COMPENSATION MATTERS AND GENERAL BENEFIT AND EMPLOYEE MATTERS
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Section 10.01 Restrictive Covenants in Employment and Other Agreements
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22
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Section 10.02 Severance
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22
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Section 10.03 Accrued Vacation Days Off
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23
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Section 10.04 Leaves of Absence
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23
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Section 10.05 Cadbury Obligations
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23
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Section 10.06 Collective Bargaining Agreements
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23
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ii
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PAGE
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ARTICLE 11
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CANADIAN EMPLOYEE MATTERS
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ARTICLE 12
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GENERAL PROVISIONS
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Section 12.01 Preservation of Rights to Amend
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24
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Section 12.02 Confidentiality
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24
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Section 12.03 Administrative Complaints/Litigation
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24
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Section 12.04 Reimbursement and Indemnification
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24
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Section 12.05 Costs of Compliance with Agreement
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ARTICLE 13
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MISCELLANEOUS
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Section 13.01 Notices
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25
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Section 13.02 Amendments; No Waivers
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26
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Section 13.03 Successors and Assigns
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26
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Section 13.04 Governing Law
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26
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Section 13.05 Counterparts; Effectiveness; Third-Party Beneficiaries
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26
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Section 13.06 Entire Agreement
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27
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Section 13.07 Jurisdiction
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27
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Section 13.08 Waiver of Jury Trial
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27
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Section 13.09 Severability
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27
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Section 13.10 Survival
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27
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Section 13.11 Captions
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28
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Section 13.12 Specific Performance
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28
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Section 13.13 Mutual Drafting
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28
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Section 13.14 Operating Committee
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28
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Section 13.15 Effect if Distribution Does Not Occur
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29
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Section 13.16 Corporate Authorization
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iii
EMPLOYEE MATTERS AGREEMENT
THIS EMPLOYEE MATTERS AGREEMENT dated as of May 1, 2008 among Cadbury Schweppes, plc, a United
Kingdom public limited company incorporated in England and Wales with the registered number 0052457
and whose registered office is at 25 Berkley Square, London W1J 6HB (
Cadbury
), Dr Pepper Snapple
Group, Inc., a Delaware corporation (
DPSG
) and, solely for the purposes of Section 10.05, Cadbury
plc, a United Kingdom public limited company incorporated in England and Wales with the registered
number 0052457 and whose registered office is at 25 Berkley Square, London W1J 6HB (
Cadbury plc
).
Each of Cadbury and DPSG is sometimes referred to herein as a
Party
and together, as the
Parties
.
RECITALS
WHEREAS, Cadbury, Cadbury plc and DPSG have entered into a Separation and Distribution
Agreement as of the date hereof (the
Separation Agreement
) pursuant to which (i) Cadbury will
become a wholly-owned subsidiary of Cadbury plc; (ii) Cadbury and/or one or more members of the
Cadbury plc Group will, collectively, retain or acquire beneficial ownership of all of the Cadbury
plc Assets and Assume all of the Cadbury plc Liabilities and DPSG and/or one or more members of the
DPSG Group will, collectively, retain or acquire beneficial ownership of all of the Beverages
Assets and Assume all of the Beverages Liabilities (as such terms are defined in the Separation
Agreement); and (iii) DPSG will distribute to the holders of Cadbury plc Ordinary Shares on a pro
rata basis, without any consideration being paid by such holders, all of the outstanding shares of
Common Stock, par value $0.01 per share, of DPSG..
WHEREAS, in connection with the Distribution, Cadbury, Cadbury plc and DPSG desire to enter
into this Employee Matters Agreement as a complement to the Separation Agreement.
NOW THEREFORE, in consideration of the mutual covenants contained herein and in the Separation
Agreement, Cadbury, Cadbury plc and DPSG hereto agree as follows:
ARTICLE 1
SCOPE AND DEFINITIONS
Section 1.01
Scope
. Notwithstanding anything to the contrary contained herein (i)
this Agreement shall not apply with respect to any Employee whose primary employer within the
Cadbury Group or DPSG Group is or was an entity domiciled in Mexico and (ii) the terms of this
Agreement shall apply only to the extent relevant with respect to the appropriate treatment of any
Employee whose primary employer within the Cadbury Group or DPSG Group is or was an entity
domiciled in a country other than Canada or the U.S. (including Puerto Rico). For the avoidance of
doubt, any relevant portions of this Agreement shall apply with respect to the Employees listed on
Schedule 1.01(i) hereof (who are Employees who are or have been located
1
outside the U.S., but are or have been covered under U.S. compensation and benefit plans and
arrangements).
Section 1.02
Definitions
. Unless otherwise defined herein, each capitalized term
shall have the meaning specified for such term in the Separation Agreement. As used in this
Agreement:
Agreement
means this Employee Matters Agreement together with those parts of the Separation
Agreement referenced herein, all Schedules hereto and all amendments, modifications and changes
hereto and thereto.
BSRP
means the Cadbury Schweppes Bonus Share Retention Plan 2004.
Business Day
means any day, other than a Saturday, a Sunday or a day on which banks in New
York, New York are authorized or obligated by law to close.
Cadbury 401(k) Plan
means the Cadbury Adams Holdings LLC Employees Savings Incentive Plan.
Cadbury Business Employee
means any individual who is, immediately prior to the
Distribution, employed by Cadbury or any of its Subsidiaries or Affiliates and is not a DPSG
Business Employee.
Cadbury Committee
shall mean the Remuneration Committee of the Board of Directors of Cadbury
or another duly authorized committee of the Board.
Cadbury Employee Share Schemes
means the BSRP, the LTIP, the ISAP, the Share Option Plans
and the Employees Share Option Plans.
Cadbury Initial Price
shall mean the market value (within the meaning of section 272(3) of
the UK Taxation of Chargeable Gains Act 1992) of Cadbury plc Ordinary Shares on the first day of
dealings in Cadbury plc Ordinary Shares on the London Stock Exchange following the Scheme becoming
effective or such other value of a Cadbury plc Ordinary Share on or about that date as the Cadbury
Committee may agree with HMRC for the purposes of determining the number of Cadbury plc Ordinary
Shares over which replacement options may be granted as referred to in clause (i) of the definition
of Exchange Ratio.
Cadbury Final Price
shall mean the market value (within the meaning of section 272(3) of the
UK Taxation of Chargeable Gains Act 1992) of Cadbury Ordinary Shares on the last day of dealings in
Cadbury Ordinary Shares immediately prior to the Scheme becoming effective or such other value of a
Cadbury Ordinary Share on or about that date as the Cadbury Committee may agree with HMRC for the
purposes of determining the number of Cadbury Ordinary Shares over which a replacement option may
be granted as referred to in clause (i) of the definition of Exchange Ratio.
Cadbury Non-ERISA U.S. Benefit Arrangement
means any Non-ERISA U.S. Benefit Arrangement
sponsored or maintained by Cadbury.
Cadbury Ordinary Shares
means the ordinary shares of 12.5 pence each in the capital of
Cadbury.
Cadbury Pension Plan
means the Cadbury Adams Holdings LLC Personal Pension Account Plan, the
Cadbury Adams Holdings LLC Supplemental Executive Retirement Plan and the Cadbury Adams Holdings
LLC Pension Equalization Plan.
Cadbury Pension and Welfare Benefit Plan
means any Pension Plan or Welfare Plan sponsored or
maintained by Cadbury or a Cadbury Subsidiary.
Cadbury plc Ordinary Shares
means the ordinary shares of Cadbury plc.
Cadbury Retiree Medical Plan
means that portion of the Cadbury Health and Welfare Benefits
Plan that provides post-employment medical benefits beyond those required to be provided pursuant
to COBRA. This includes the Cadbury Schweppes $25,000 Retiree Health Plan and the Cadbury
Schweppes Retiree Health Plan.
Cadbury Subsidiary
means any entity of which securities or other ownership interests having
ordinary voting power to elect a majority of the board of directors or other persons performing
similar functions are expected to be directly or indirectly owned by Cadbury immediately after the
Distribution.
Circular
means the circular and explanatory statement dated March 19, 2008 to the holders of
Cadbury Ordinary Shares.
COBRA
means the Consolidated Omnibus Budget Reconciliation Act of 1985, as codified at Part
6 of Subtitle B of Title I of ERISA and at IRS Code Section 4980B, as amended.
Code
means the U.S. Internal Revenue Code of 1986, as amended.
Distribution
shall have the meaning set forth in Section 1.01 of the Separation Agreement.
Distribution Date
shall have the meaning set forth in Section 1.01 of the Separation
Agreement.
DPSG Business Employee
means any individual who is, immediately prior to the Distribution,
employed by DPSG or any of their respective Subsidiaries. A DPSG Business Employee may not be a
Cadbury Business Employee.
DPSG Legacy Equity Plans
shall mean one or more plans adopted by DPSG and approved by
Cadbury, as sole shareholder of DPSG, under the authority of which the DPSG equity awards described
in Article 3 shall be issued.
DPSG Non-ERISA U.S. Benefit Arrangement
means any Non-ERISA U.S. Benefit Arrangement
sponsored or maintained by DPSG.
DPSG Pension and Welfare Benefit Plan
means any Pension Plan or Welfare Plan sponsored or
maintained by DPSG or a DPSG Subsidiary.
DPSG Subsidiary
means any entity of which securities or other ownership interests having
ordinary voting power to elect a majority of the board of directors or other persons performing
similar functions are expected to be directly or indirectly owned by DPSG immediately after the
Distribution.
Employee
means any Cadbury Business Employee or Former Cadbury Employee or DPSG Business
Employee or Former DPSG Employee.
Employees Share Option Plans
means the Cadbury Schweppes plc US Employees Share Option Plan
2005 and the Cadbury Schweppes plc Americas Employees Share Option Plan 2005.
ERISA
means the U.S. Employee Retirement Income Security Act of 1974, as amended.
Exchange Ratio
means:
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(i)
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where an option granted under a Cadbury Employee Share Scheme,
or a part thereof, which is approved by HMRC, is exchanged for an option over
Cadbury plc Ordinary Shares, the ratio agreed by HMRC for determining the
number of Cadbury plc Ordinary Shares over which the replacement option is
granted; and
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(ii)
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where an option or award granted under any other Cadbury
Employee Share Scheme, or a part thereof, is exchanged or converted into an
option or award over Cadbury plc Ordinary Shares or DPSG Common Stock, such
ratio as is determined by the Cadbury Committee which is, in its opinion,
consistent with the ratio referred to in clause (i) or the basis for
determining the ratio in clause (i).
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FMLA
means the U.S. Family Medical Leave Act, as amended.
Former DPSG Employees
has the meaning set forth in Section 2.02(c).
Former Cadbury Employees
has the meaning set forth in Section 2.02(b).
HMRC
means HM Revenue & Customs.
IRS
means the U.S. Internal Revenue Service.
ISAP
means the Cadbury Schweppes International Share Award Plan.
LTIP
means the Cadbury Schweppes Long Term Incentive Plans 1997 and 2004.
Non-ERISA U.S. Benefit Arrangement
means any contract, agreement, policy, practice, program,
plan, trust or arrangement, other than a Pension Plan or Welfare Plan, providing for benefits,
perquisites or compensation of any nature to any Employee, or to any family member, dependent or
beneficiary of any such Employee, including, without limitation, disability, severance, health,
dental, life, accidental death and dismemberment, travel and accident, tuition reimbursement,
vacation, sick, personal or bereavement days, holidays, retirement, deferred compensation, profit
sharing, bonus, stock-based compensation or other forms of incentive compensation.
Pension Plan
means any pension plan as defined in Section 3(2) of ERISA, without regard to
Section 4(b)(4) or 4(b)(5) of ERISA.
Scheme
means the proposed scheme of arrangement under Section 425 of the United Kingdom
Companies Act 1985 between Cadbury and its shareholders as set forth in the Circular.
Share Option Plans
means the Cadbury Schweppes Share Option Plan 2004 and the Cadbury
Schweppes (New Issue) Share Option Plan 2004.
Welfare Plan
means any employee welfare plan as defined in Section 3(1) of ERISA, without
regard to Section 4(b)(4) of ERISA.
WARN
means the U.S. Workers Adjustment Retraining and Notification Act, as amended and any
applicable state or local law equivalent.
Section 1.03
Interpretation
. In this Agreement, unless the context clearly indicates
otherwise:
(a) words used in the singular include the plural and words used in the plural include the
singular;
(b) references to any Person include such Persons successors and assigns but, if applicable,
only if such successors and assigns are permitted by this Agreement, and a reference to such
Persons Affiliates shall be deemed to mean such Persons Affiliates following the Distribution;
(c) references to any gender include the other gender;
(d) accounting terms used herein shall have the meanings historically ascribed to them by
Cadbury and its Subsidiaries, including DPSG, in its and their internal accounting and financial
policies and procedures in effect prior to the date of this Agreement;
(e) if there is any conflict between the provisions of the Separation Agreement and this
Agreement, the provisions of this Agreement shall control with respect to the subject matter
hereof; if there is any conflict between the provisions of the body of this Agreement and the
Schedules hereto, the provisions of the body of this Agreement shall control unless explicitly
stated otherwise in such Schedule;
(f) the titles to Articles and headings of Sections contained in this Agreement have been
inserted for convenience of reference only and shall not be deemed to be a part of or to affect the
meaning or interpretation of this Agreement; and
(g) unless otherwise specified in this Agreement, all references to dollar amounts herein
shall be in respect of lawful currency of the United States.
ARTICLE 2
ASSIGNMENT OF EMPLOYEES
Section 2.01
Active Employees
.
(a)
DPSG Business Employees
. Except as otherwise set forth in this Agreement,
effective not later than the Distribution Date, the employment of each DPSG Business Employee who
is employed by Cadbury or a Cadbury Subsidiary shall be assigned and transferred to DPSG or a DPSG
Subsidiary. As of the Distribution Date, DPSG shall and shall cause each DPSG Subsidiary to
continue the employment of each DPSG Business Employee who is employed by DPSG or a DPSG
Subsidiary.
(b)
Cadbury Business Employees
. Effective not later than the Distribution Date, the
employment of each Cadbury Business Employee who is employed by DPSG or a DPSG Subsidiary shall be
assigned and transferred to Cadbury or a Cadbury Subsidiary. As of the Distribution Date, Cadbury
shall and shall cause each Cadbury Subsidiary to continue the employment of each Cadbury Business
Employee who is employed by Cadbury or a Cadbury Subsidiary.
(c)
At-Will Status
. Notwithstanding the above or any other provision of this
Agreement, nothing in this Agreement shall create any obligation on the part of Cadbury, DPSG or
any of their respective Affiliates to continue the employment of any employee for any definite
period following the Distribution Date or to change the employment status of any employee from
at
will,
to the extent such employee is an
at will
employee under applicable law.
(d)
Severance
. The Distribution and the assignment, transfer or continuation of the
employment of employees in connection therewith shall not be deemed a severance of employment of
any employee for purposes of any plan, policy, practice or arrangement of Cadbury, DPSG or any of
their respective Subsidiaries, except as otherwise provided herein.
Section 2.02
Former Employees
.
(a)
General Principal
. Except as otherwise provided in this Agreement, each former
employee of Cadbury or any Cadbury Subsidiary or DPSG or any DPSG Subsidiary as of the Distribution
Date will be considered a former employee of the business as to which his or her duties were
primarily related immediately prior to his or her termination of employment with all of Cadbury,
DPSG and their respective Affiliates.
(b)
Former Cadbury Employees
. For these purposes, former employees of Cadbury and the
Cadbury Subsidiaries shall be deemed to include all employees who, as of their last day
of employment with all of Cadbury, DPSG and their respective Affiliates, had employment duties
primarily related to the Cadbury Business (collectively, the
Former Cadbury Employees
).
(c)
Former DPSG Employees
. Except with respect to those individuals set forth on
Schedule 2.02(c), former employees of DPSG and the DPSG Subsidiaries shall be deemed to include all
employees who, as of their last day of employment with all of Cadbury, DPSG and their respective
Affiliates, had employment duties primarily related to the DPSG Business (collectively, the
Former
DPSG Employees
).
Section 2.03
Employment Law Obligations
.
(a)
WARN Act
. Cadbury and the Cadbury Subsidiaries shall be responsible for providing
any necessary WARN notice (and meeting any similar state law notice requirements) with respect to
any termination of any Cadbury Business Employee. DPSG and the DPSG Subsidiaries shall be
responsible for providing any necessary WARN notice (and meeting any similar state law notice
requirements) with respect to any termination of any DPSG Business Employee;
provided
,
however
, that Cadbury and the Cadbury Subsidiaries shall be responsible for providing any
necessary WARN notice (and any similar state law notice requirements) to any DPSG Business Employee
or any governmental authority in connection with any transfer of the employment of any DPSG
Business Employee from a Cadbury Group entity to a DPSG Group entity in contemplation of the
Distribution.
(b)
Compliance With Employment Laws
. On and after the Distribution Date (i) Cadbury
and the Cadbury Subsidiaries shall be responsible for adopting and maintaining any policies or
practices, and for all other actions and inactions, necessary to comply with employment-related
laws and requirements relating to the employment of the Cadbury Business Employees and the
treatment of the Former Cadbury Employees in respect of their former employment with Cadbury and
its Affiliates and (ii) DPSG and the DPSG Subsidiaries shall be responsible for adopting and
maintaining any policies or practices, and for all other actions and inactions, necessary to comply
with employment-related laws and requirements relating to the employment of the DPSG Business
Employees and the treatment of the Former DPSG Employees in respect of their former employment with
DPSG and their respective Affiliates.
Section 2.04
Employee Records
.
(a)
Records Relating to Cadbury Business Employees and Former Cadbury Employees
. All
records and data in any form relating to Cadbury Business Employees and Former Cadbury Employees
shall be the property of Cadbury, except that data pertaining to such an employee and relating to
any period that such employee was employed by DPSG or a DPSG Subsidiary prior to the Distribution
shall be jointly owned by Cadbury and DPSG.
(b)
Records Relating to DPSG Business Employees and Former DPSG Employees
. All
records and data in any form relating to DPSG Business Employees and Former DPSG Employees shall be
the property of DPSG, except that data pertaining to such an employee and relating to any period
that such employee was employed by Cadbury, DPSG or any of their respective Subsidiaries prior to
the Distribution shall be jointly owned by Cadbury and DPSG.
(c)
Sharing of Records
. The Parties shall use their respective reasonable commercial
efforts to provide each other such records and information only as necessary or appropriate to
carry out their obligations under applicable law (including, without limitation, any relevant
privacy protection laws or regulations in any applicable jurisdictions), this Agreement or the
Separation Agreement or the Transition Services Agreement, or for the purposes of administering
their respective employee benefit plans and policies. Subject to applicable law, all information
and records regarding employment and personnel matters of DPSG Business Employees and Former DPSG
Employees shall be accessed, retained, held, used, copied and transmitted after the Distribution
Date by DPSG in accordance with all laws and policies relating to the collection, storage,
retention, use, transmittal, disclosure and destruction of such records. The Parties shall
reimburse each other for any reasonable costs incurred in copying or transmitting any records
requested pursuant to this Section 2.04.
(d)
Access to Records
. To the extent consistent with this Agreement and any
applicable privacy protection laws or regulations, access to such records after the Distribution
Date will be provided to Cadbury and DPSG in accordance with the Separation Agreement. In
addition, notwithstanding anything to the contrary, Cadbury shall retain reasonable access to those
records necessary for Cadburys continued administration of any plans or programs on behalf of
Employees after the Distribution Date,
provided
that such access shall be limited to
individuals who have a job-related need to access such records. Cadbury shall also retain copies
of all restrictive covenant agreements with any DPSG Business Employee or Former DPSG Employee in
which Cadbury has a valid business interest.
(e)
Maintenance of Records
. With respect to retaining, destroying, transferring,
sharing, copying and permitting access to all such information, Cadbury and DPSG shall each comply
with all applicable laws, regulations and internal policies, and each Party shall indemnify and
hold harmless the other Party from and against any and all liability, claims, actions, and damages
that arise from a failure (by the indemnifying party or its agents) to so comply with all
applicable laws, regulations and internal policies applicable to such information.
(f)
No Access to Computer Systems or Files
. Except as set forth in the Separation
Agreement or the Transition Services Agreement, no provision of this Agreement shall give either
Party direct access to the computer systems or other files, records or databases of the other
Party, unless specifically permitted by the owner of such systems, files, records or databases.
(g)
Relation to Separation Agreement
. The provisions of this Section 2.04 shall be in
addition to, and not in derogation of, the provisions of the Separation Agreement governing
Confidential Information and access to and use of employees, information and records, including
Sections of the Separation Agreement.
(h)
Confidentiality
. Except as otherwise set forth in this Agreement, all records and
data relating to Employees shall, in each case, be subject to the confidentiality provisions of the
Separation Agreement.
(i)
Cooperation
. DPSG and Cadbury and their respective Affiliates shall use reasonable
commercial efforts to cooperate to share, retain and maintain data and records that are necessary
or appropriate to further the purposes of this Section 2.04 and for each other to
administer their respective benefit plans to the extent consistent with this Agreement and
applicable law. Except as provided under the Transition Services Agreement, neither DPSG nor
Cadbury shall charge the other any fee for such cooperation. The parties agree to cooperate as
long as is reasonably necessary to further the purposes of this Section 2.04.
ARTICLE 3
EQUITY COMPENSATION PLANS
Section 3.01
General Principles
.
(a) For the avoidance of doubt, the provisions of this Article 3 shall not apply unless the
Distribution takes place. Cadbury and DPSG shall take any and all action as shall be necessary and
appropriate to further the provisions of Article 3.
(b) Each DPSG Business Employee shall be treated for the purposes of the Cadbury Employee
Share Schemes as having ceased to be an employee of Cadbury at the Distribution Date.
(c) Where an award granted under the DPSG Legacy Equity Plans replaces an award under the
Cadbury Employee Share Schemes in accordance with the provisions of this Article 3, such award
shall be on terms which are in all material respects identical to the terms of the award which it
replaces having regard to the fact that those terms are the terms which are applicable to a good
leaver under the relevant Cadbury Employee Share Scheme but subject to any necessary changes to
take into account that (i) the award relates to DPSG Common Stock, (ii) the DPSG Legacy Equity Plan
is administered by DPSG and (iii) the award is not subject to any performance conditions.
Section 3.02
Share Option Plans
. Each unexercised option of a DPSG Business Employee
on the Distribution Date shall be converted in accordance with the rules of the applicable Share
Option Plan into an option over Cadbury plc Ordinary Shares. The number of Cadbury plc Ordinary
Shares shall be determined based on the Exchange Ratio. The aggregate exercise price of the
substitute option shall be the same as the aggregate exercise price of the option that it replaces
except (i) that it shall be in US dollars and (ii) for any adjustments that the Cadbury Committee
determines to be appropriate if the Exchange Ratio does not result in a whole number of Cadbury plc
Ordinary Shares. Such substituted options shall, in the sole discretion of the Cadbury Committee,
preserve the aggregate intrinsic value of the original options for which they are substituted and
the ratio in the original option of the exercise price to the fair market value of the stock by
adjusting the number of shares purchasable and the exercise price, based on the a comparison of the
Cadbury Final Price and the Cadbury Initial Price. Such substitute options shall:
(i) if they represent options granted before May 2005, be fully vested and exercisable for a
period of 12 months after the Distribution Date; and
(ii) if they represent options granted after April 2005, be fully vested and exercisable for a
period of 12 months starting on the third anniversary of the grant date of the options that they
represent.
Section 3.03
Long Term Incentive Plan
.
(a)
Contingent Share Awards
. Subject to the Scheme becoming effective, each
Contingent Share Award (as defined in the rules of the relevant LTIP) of a DPSG Business Employee
shall be converted based on the Exchange Ratio into a Contingent Share Award over Cadbury plc
Ordinary Shares in accordance with the rules of the relevant LTIP and those shares shall be
released to the DPSG Business Employee in accordance with the rules of the relevant LTIP within
sixty (60) days following the Distribution Date.
(b)
Basic Awards
.
(i) The performance conditions applying to Basic Awards (as defined in the rules of the
relevant LTIP) of each DPSG Business Employee participating in the LTIPs shall be measured
using the fair value methodology basis described in paragraph 16 of Part I of the Circular
to determine the number of Cadbury Ordinary Shares that shall (subject to the following
provisions) become payable under those awards at the end of the relevant performance
periods.
(ii) The number of Cadbury Ordinary Shares subject to each Basic Award held by each
DPSG Business Employee, as determined in accordance with Section 3.03(a), shall then be
reduced on a time pro-rated basis having regard to the proportion of the relevant
performance period applicable to that Basic Award completed prior to the Distribution Date
and converted based on the Exchange Ratio into an award over DPSG Common Stock to be granted
by DPSG under the applicable DPSG Legacy Equity Plan. The DPSG Common Stock subject to the
replacement award shall be released to the DPSG Business Employee within sixty (60) days
following the end of the performance period originally applicable to the relevant Basic
Award.
Section 3.04
Bonus Share Retention Plan
.
(a) Each Matching Award (as defined in the rules of the BSRP) consists of a service-related
element and a performance-related element. The performance conditions applying to the
performance-related element of the Matching Award of each DPSG Business Employee shall be measured
using the fair value methodology basis described in paragraph 16 of Part I of the Circular to
determine the number of Cadbury Ordinary Shares that shall (subject to the following provisions)
become due under that performance-related element of those awards at the end of the relevant
performance period.
(b) The number of Cadbury Ordinary Shares subject to each Matching Award held by each DPSG
Business Employee, (being the aggregate of the Cadbury Ordinary Shares subject to the
service-related element and the Cadbury Ordinary Shares subject to the performance-related element
as determined in accordance with Section 3.04(a), shall then be reduced on a pro-rated basis having
regard to the proportion of the relevant performance period applicable to that Matching Award
completed prior to the Distribution Date and converted based on the Exchange Ratio into an award
over DPSG Common Stock to be granted by DPSG under the applicable DPSG Legacy Equity Plan. The
DPSG Common Stock shall be released to the DPSG Business
Employee within sixty (60) days following the end of the original performance period
applicable to the relevant Matching Award.
(c) Each Basic Award held by a DPSG Business Employee shall be converted based on the Exchange
Ratio into an award over DPSG Common Stock to be granted by DPSG under the applicable DPSG Legacy
Equity Plan. The DPSG Common Stock shall be released to the DPSG Business Employee within sixty
(60) days following the end of the original performance period applicable to the Matching Award
that is related to that Basic Award.
Section 3.05
International Share Award Plan
.
(a)
Awards with Performance Conditions
. This Section 3.05(a) shall apply to
Conditional Awards (as each is defined in the rules of the ISAP) which are subject to performance
conditions.
(i) The performance conditions applicable to the Conditional Awards shall be measured
using the fair value methodology basis described in paragraph 16 of Part I of the Circular
to determine the number of Cadbury Ordinary Shares that shall (subject to the following
provisions) become payable under those awards at the end of the relevant performance period.
(ii) The number of Cadbury Ordinary Shares subject to each award held by a DPSG
Business Employee, as determined in accordance with Section 3.05(b), shall then be reduced
on a pro-rated basis having regard to the proportion of the relevant performance period
applicable to that award completed prior to the Distribution Date and converted based on the
Exchange Ratio into an award over DPSG Common Stock to be granted by DPSG under the
applicable DPSG Legacy Equity Plan. The DPSG Common Stock shall be distributed to the DPSG
Business Employee within sixty (60) days following the end of the original performance
period applicable to the relevant Conditional Award.
(b)
Awards without Performance Conditions
. This Section 3.05(b) shall apply to
Conditional Awards (as each is defined in the rules of the ISAP) which are not subject to
performance conditions. Each award held by a DPSG Business Employee shall be converted based on
the Exchange Ratio into an award over DPSG Common Stock to be granted by DPSG under the applicable
DPSG Legacy Equity Plan. The DPSG Common Stock shall be released to the DPSG Business Employee
within sixty (60) days following the date on which the Conditional Award would otherwise have
vested under the ISAP but for the Distribution.
(c)
Restricted Awards
. All restrictions applicable to the Cadbury Ordinary Shares
subject to the Restricted Awards (as defined in the rules of the ISAP) of each DPSG Business
Employee shall lapse on the date on which the Scheme is sanctioned by the Court and such shares
shall be subject to the terms of the Scheme.
Section 3.06
Employee Share Option Plans
. Each unexercised option of a DPSG Business
Employee on the Distribution Date shall be converted in accordance with the rules of the applicable
Share Option Plan into an option over Cadbury plc Ordinary Shares. The number of Cadbury plc
Ordinary Shares shall be determined based on the Exchange Ratio. The
aggregate exercise price of the substitute option shall be the same as the aggregate exercise
price of the option that it replaces except (i) that it shall be in US dollars and (ii) for any
adjustments that the Cadbury Committee determines to be appropriate if the Exchange Ratio does not
result in a whole number of Cadbury plc Ordinary Shares. Such substituted options shall, in the
sole discretion of the Cadbury Committee, preserve the aggregate intrinsic value of the original
options for which they are substituted and the ratio in the original option of the exercise price
to the fair market value of the stock by adjusting the number of shares purchasable and the
exercise price, based on a comparison of the Cadbury Final Price and the Cadbury Initial Price.
Such substitute options shall be exercisable in accordance with the rules of the relevant Employee
Share Option Plan.
Section 3.07
Responsibility for Tax Withholding, Reporting, and Social Insurance
Contributions
. Cadbury and DPSG agree that, unless prohibited by applicable law, DPSG shall be
responsible for all tax withholding and reporting obligations and shall pay the employers share of
any social insurance tax obligations that arise in connection with the vesting, exercise, transfer
or other settlement of the adjusted awards held by DPSG Business Employees. Cadbury and DPSG
further agree that, unless prohibited by applicable law, Cadbury shall be responsible for all tax
withholding and reporting obligations and shall pay the employers share of any social insurance
tax obligations that arise in connection with the vesting, exercise, transfer or other settlement
of the equity awards held by Cadbury Business Employees, Former Cadbury Business Employees and
Former DPSG Business Employees. Cadbury and DPSG agree to enter into any necessary agreements
regarding the subject matter of this Section 3.07 to enable them to fulfill their respective
obligations hereunder, including but not limited to compliance with all applicable laws and
regulations regarding the reporting, withholding or remitting of income and social insurance taxes.
Section 3.08
No Change of Control
. For the avoidance of doubt, the Distribution shall
not constitute a change of ownership or a change in control for purposes of Cadbury equity
awards which are outstanding as of the Distribution Date.
Section 3.09
Compliance with Section 409A
. Notwithstanding any provision in this
Agreement, if any provision of this Article 3 contravenes any regulations or guidance promulgated
under Code Section 409A or could cause the awards subject to this Article 3 to be subject to
additional taxes, accelerated taxation, interest or penalties under Code Section 409A, the parties
will make reasonable commercial efforts to agree how to modify this Article 3: (i) to comply with,
or avoid being subject to, Code Section 409A, or to avoid the imposition of any taxes, accelerated
taxation, interest or penalties under Code Section 409A, and (ii) to maintain, to the maximum
extent practicable, the original intent of the applicable provision without contravening the
provisions of Code Section 409A.
ARTICLE 4
GENERAL PRINCIPLES FOR ALLOCATION OF LIABILITIES
Section 4.01
General Principle
.
(a)
Cessation of Participation in Cadbury Pension and Welfare Benefit Plans and Non-ERISA
U.S. Benefit Arrangements
. Cadbury and DPSG shall take any and all action as shall be
necessary or appropriate so that participation in Cadbury Pension and Welfare Benefit Plans and
Cadbury Non-ERISA U.S. Benefit Arrangements by all DPSG Business Employees and Former DPSG
Employees shall terminate in connection with the Distribution as and when provided under this
Agreement (or if not specifically provided under this Agreement, as of the close of business on the
Distribution Date) and DPSG and each DPSG Subsidiary shall cease to be a participating employer
under the terms of such Cadbury Pension and Welfare Benefit Plans and Cadbury Non-ERISA U.S.
Benefit Arrangements as of such time.
Except as otherwise agreed below, DPSG shall have all liabilities and their share of assets
relating to employee benefits for DPSG Business Employees and Former DPSG Employees and Cadbury
shall have all liabilities and their share of assets relating to employee benefits for Cadbury
Business Employees and Former Cadbury Employees.
(b)
Assumption of Certain Obligations by DPSG Group
. Except as otherwise provided in
this Agreement, effective on or before the Distribution Date, DPSG shall assume or continue the
sponsorship of, and none of Cadbury or any Cadbury Subsidiary shall have any further liability for
or under, the following agreements, obligations and liabilities, and DPSG shall indemnify Cadbury
and the Cadbury Subsidiaries, and the officers, directors, and employees of each, and hold them
harmless with respect to such agreements, obligations or liabilities:
(i) Agreements entered into between Cadbury, its Subsidiaries or Affiliates and DPSG
Business Employees and Former DPSG Employees;
(ii) Agreements entered into between Cadbury, its Subsidiaries or Affiliates and
independent contractors providing services primarily to the DPSG Business;
(iii) All collective bargaining agreements, collective agreements, trade union, or
works council agreements entered into between Cadbury, its Subsidiaries or Affiliates and
any union, works council, or other body representing only DPSG Business Employees and Former
DPSG Employees;
(iv) All wages, salary, incentive compensation, commissions and bonuses payable to DPSG
Business Employees and Former DPSG Employees on or after the Distribution Date, without
regard to when such wages, salary, incentive compensation, commissions and bonuses are or
may have been earned;
(v) All moving expenses and obligations related to relocation, repatriation, transfers,
or similar items incurred by or owed to DPSG Business Employees and Former DPSG Employees;
(vi) All immigration-related, visa, work application, or similar rights, obligations
and liabilities related to DPSG Business Employees; and
(vii) All liabilities and obligations whatsoever of the DPSG Business with respect to
claims made by or with respect to DPSG Business Employees and Former
DPSG Employees or any other persons who at any time prior to the Distribution Date had
employment duties primarily related to the DPSG Business relating to any employee benefit
plan, program or policy not otherwise retained or assumed by Cadbury pursuant to this
Agreement, including such liabilities relating to actions or omissions of or by DPSG or any
officer, director, employee or agent thereof prior to the Distribution Date.
Section 4.02
Establishment of DPSG Plans
. Except as otherwise provided in this
Agreement, sponsorship of Cadbury benefit plans that cover solely DPSG Business Employees and
Former DPSG Employees shall be transferred to DPSG on or before the Distribution Date. Cadbury
benefit plans that cover DPSG Business Employees and Former DPSG Employees and that also cover
Cadbury Business Employees and/or Former Cadbury Employees shall be split into two separate plans,
one covering DPSG Business Employees and Former DPSG Employees and one covering Cadbury Business
Employees and/or Former Cadbury Employees, and sponsorship of the plans covering DPSG Business
Employees and Former DPSG Employees shall be transferred to DPSG on or before the Distribution
Date.
Section 4.03
Transfer of Assets and Liabilities
. To the extent necessary to
effectuate the foregoing, on or before the Distribution Date, DPSG and Cadbury shall, in compliance
with applicable law, transfer assets (if any) and liabilities of any such benefit plans to each
other, including under the following plans:
CBI Holdings Inc. Health & Welfare Benefits Plan
CBI Holdings Inc. Premium Payment Plan
CBI Holdings Inc. Flexible Spending Account Plan
CBI Holdings Inc. Dependent Care Spending Account Plan
CBI Holdings Inc. Severance Pay Plan
Dr Pepper Bottling Company of Texas, ETAL Occupational Injury Benefit Plan
Cadbury Adams Holdings LLC Personal Pension Account Plan
Cadbury Adams Holdings LLC Pension Equalization Plan
Cadbury Adams Holdings LLC Supplemental Savings Plan
Cadbury Adams Holdings LLC Supplemental Executive Retirement Plan
Cadbury Adams Holdings LLC Supplemental Incentive Plan
Section 4.04
Service Credit
.
(a)
Service for Eligibility and Vesting
. Except as otherwise provided in any other
provision of this Agreement (i) for purposes of participation, eligibility and vesting under the
DPSG Pension and Welfare Benefit Plans, DPSG shall, and shall cause the DPSG Subsidiaries to, give
to each DPSG Business Employee and Former DPSG Employee service credit for any employment with
Cadbury or any Cadbury Affiliate prior to the Distribution Date to the extent that such service is
taken into account pursuant to the terms of the comparable Cadbury plan and (ii) for purposes of
participation, eligibility and vesting under the Cadbury Pension and Welfare Benefit Plans, Cadbury
shall, and shall cause the Cadbury Subsidiaries to, give to each Cadbury Business Employee and
Former Cadbury Employee service credit for any employment with DPSG or any DPSG Affiliate prior to
the Distribution Date (to the extent available to employees generally).
(b)
Service for Benefit Purposes
. Except as otherwise provided in any other provision
of this Agreement (i) for purposes of benefit levels and accruals, post-retirement welfare benefit
contribution rates and benefit commencement entitlements under the DPSG Pension and Welfare Benefit
Plans, DPSG shall, and shall cause the DPSG Subsidiaries to, give to each DPSG Business Employee
and Former DPSG Employee service credit for any employment with Cadbury or any Cadbury Affiliate
prior to the Distribution Date to the extent that such service is taken into account pursuant to
the terms of the comparable Cadbury plan and (ii) for purposes of benefit levels and accruals,
post-retirement welfare benefit contribution rates and benefit commencement entitlements under the
Cadbury Pension and Welfare Benefit Plans, Cadbury shall, and shall cause the Cadbury Subsidiaries
to, give to each Cadbury Business Employee and Former Cadbury Employee service credit for any
employment with DPSG or any DPSG Affiliate prior to the Distribution Date (to the extent available
to employees generally).
(c)
Evidence of Prior Service
. Notwithstanding anything to the contrary, but subject
to applicable law, upon reasonable request by one Party to the other Party, the first Party will
provide to the other copies of any records available to the first Party to document such service,
plan participation and membership and cooperate with the first Party to resolve any discrepancies
or obtain any missing data for purposes of determining benefit eligibility, participation, vesting
and calculation of benefits with respect to such DPSG Business Employees and Former DPSG Employees.
Section 4.05
Plan Administration
.
(a)
Transition Services
. DPSG will administer Cadburys benefit programs for a
transitional period under the terms of the Transition Services Agreement. The Parties agree to
enter into a business associate agreement in connection with such Transition Services Agreement,
which shall be set forth substantially in the form of Appendix 1 to this Agreement.
(b)
Administration
. DPSG shall, and shall cause the DPSG Subsidiaries to, administer
its benefit plans in a manner that does not jeopardize the tax favored status of the tax favored
benefit plans maintained by Cadbury and the Cadbury Subsidiaries. Cadbury shall, and shall cause
the Cadbury Subsidiaries to, administer its benefit plans in a manner that does not jeopardize the
tax favored status of the tax favored benefit plans maintained by DPSG and the DPSG Subsidiaries.
(c)
Participant Elections and Beneficiary Designations
. All participant elections and
beneficiary designations made under any Cadbury benefit plan prior to the date as of which assets
or liabilities relating to that plan are transferred to DPSG shall continue in effect under any
plan maintained by DPSG or any DPSG Subsidiary to which liabilities are transferred pursuant to
this Agreement until such time as the participant changes his or her elections or beneficiary
designations in accordance with the procedures of the relevant plan, as the case may be.
ARTICLE 5
U.S. PENSION PLAN SPIN-OFF
Section 5.01
General Principle
. Effective on or before the Distribution Date, DPSG
shall establish and adopt a defined benefit pension benefit plan and trust (the
DPSG Pension
Plan
) intended to be qualified under IRS Code Section 401(a) and containing provisions that will
provide to each DPSG Business Employee and Former DPSG Employee (and each alternate payee or
beneficiary of such person) (the
DPSG Pension Beneficiaries
) benefits identical to those accrued
with respect to such person under the Cadbury Pension Plan as of December 31, 2007 (the
Pension
Measurement Date
). On or before the Distribution Date, Cadbury shall (i) determine the Initial
Transfer Amount (as defined below) and (ii) cause assets equal to the Initial Transfer Amount
(adjusted as provided below) to be transferred to the trust under the DPSG Pension Plan in the form
described below (the
Initial Transfer
). As of the date of such transfer of the Initial Transfer
Amount (the
Initial Transfer Date
), DPSG shall commence making the required benefit payments
under the terms of the DPSG Pension Plan and shall assume all liabilities with respect to the
payment of benefits previously accrued by the DPSG Pension Beneficiaries under the Cadbury Pension
Plan. A DPSG Business Employee shall not accrue benefits under the Cadbury Pension Plan after the
date on which such employee becomes eligible to participate under the DPSG Pension Plan, unless
such DPSG Pension Beneficiary shall become employed by Cadbury or a Cadbury Subsidiary after such
date. A Cadbury Business Employee shall not accrue benefits under the DPSG Pension Plan, unless
such Cadbury Business Employee shall become employed by DPSG or a DPSG Subsidiary. Following the
Initial Transfer Date (i) an enrolled actuary appointed by Cadbury (the
Cadbury Actuary
) shall
determine the Final Pension Transfer Amount (as defined below) and (ii) a True-Up Adjustment shall
be made with respect to the Cadbury Pension Plan and the DPSG Pension Plan, as provided below. The
Parties shall use reasonable commercial efforts to cause the determination of the Final Pension
Transfer Amount and the True-Up Adjustment to be completed as reasonably promptly as practicable,
subject to the time frames established under Section 5.03, but in no event later than December 31,
2008. Before or promptly after the date hereof, Cadbury and DPSG shall file requests with the IRS
for qualification determination letters under IRS Code Section 401(a) with respect to the Cadbury
Pension Plan and the DPSG Pension Plan and shall take any and all reasonable action, including the
adoption of any amendments requested by the IRS, as shall be necessary to obtain such determination
letters. The transfers hereunder shall occur prior to, but subject to the subsequent receipt of,
favorable determination letters issued by the IRS with respect to the Cadbury Pension Plan and DPSG
Pension Plan, copies of which shall be shared among Cadbury and DPSG promptly upon issuance.
Section 5.02
Determination and Transfer of Initial Transfer Amount
. On or before the
Distribution Date, with the assistance of the Cadbury Actuary, Cadbury shall establish and
communicate to DPSG the amount equal to 90% of the estimated asset transfer amount calculated as of
January 1, 2008 in accordance with IRS Code Section 414(l) but based on January 1, 2007 census data
and November 30, 2007 trust assets as attributable to benefits accrued by DPSG Pension
Beneficiaries under the Cadbury Pension Plan as of the Pension Measurement Date, adjusted for
contributions, distributions, trust gains and losses, payments and other appropriate items
occurring between the Pension Measurement Date and the Initial Transfer Date, all as estimated in
good faith by Cadbury (the
Initial Transfer Amount
).
Following the determination of the Initial Transfer Amount by Cadbury, Cadbury shall cause to
be transferred from the trust under the Cadbury Pension Plan to the trust under the DPSG Pension
Plan assets having an aggregate Value (as defined below) equal to the Initial Transfer Amount.
Such assets shall be in the form of cash, securities and other property, determined in accordance
with the provisions below.
Section 5.03
Determination of the Final Pension Transfer Amount
.
(a)
Calculation of the Cadbury Actuary
. Following the Distribution Date, the Cadbury
Actuary shall determine the Final Pension Transfer Amount, which shall be equal to the amount
required to be transferred from the Cadbury Pension Plan to the DPSG Pension Plan in respect of the
assumption by the DPSG Pension Plan of the benefit obligations of the Cadbury Pension Plan of
benefits accrued by the DPSG Pension Beneficiaries as of the Pension Measurement Date, as
determined in accordance with IRS Code Section 414(l) and the regulations thereunder and the
actuarial assumptions and methods set forth in Schedule 6.03 hereof, as appropriately adjusted to
reflect the following amounts arising after the Pension Measurement Date and before the True-Up
Adjustment: (A) any distributions and contributions made in respect of the DPSG Pension
Beneficiaries, (B) administrative expenses of the Cadbury Pension Plan reasonably allocable to the
DPSG Pension Beneficiaries, (C) earnings realized by the Cadbury Pension Plan allocable to the DPSG
Pension Beneficiaries, (D) the net gain or loss (realized and unrealized) of the Cadbury Pension
Plan allocable to the DPSG Pension Beneficiaries and (E) other appropriate items. Cadbury and DPSG
shall each be responsible for the funding of their respective pension plans. It is anticipated
that each pension plan will have underfunding under ERISA Section 4044. Each party shall be
responsible for funding such underfunding under their respective pension plan. Promptly upon
determination of the Final Pension Transfer Amount, Cadbury shall cause the Cadbury Actuary to
provide to DPSG a written statement of the Final Pension Transfer Amount, a summary of the
calculation of such amount (the
Pension Statement
) and a written statement that the sum of the
Initial Transfer Amount and the Final Pension Transfer Amount satisfies the requirements of IRS
Code Section 414(l).
(b)
Resolution of Differences
. Cadbury shall provide DPSG with all information
reasonably necessary to review the calculation of the Final Pension Transfer Amount in all material
respects and to verify that such calculations have been performed in a manner consistent with the
terms of this Agreement. The determination of the Final Pension Transfer Amount by the Cadbury
Actuary shall be final, conclusive and binding for all purposes under this Agreement, unless DPSG
provides to Cadbury, within thirty (30) days after receipt of the Pension Statement, a written
objection prepared by an enrolled actuary retained by DPSG setting forth in detail a reasonable
basis for the conclusion that the Final Pension Transfer Amount set forth in the Pension Statement
is understated by an amount in excess of 5%. Upon receipt of such objection, Cadbury and DPSG
shall make a good faith attempt to resolve their dispute as to the Final Pension Transfer Amount.
Should such dispute remain unresolved for more than thirty (30) days, Cadbury and DPSG shall
promptly select and appoint a third enrolled actuary who is mutually satisfactory to both Parties.
The third actuary shall recalculate the Final Pension Transfer Amount and if such recalculated
amount exceeds the Final Pension Transfer Amount set forth in the Pension Statement by more than
5%, then such recalculated amount shall serve as the Final Pension Transfer Amount for all purposes
under this Agreement. If such recalculated
amount does not exceed the Final Pension Transfer Amount set forth in the Pension Statement by
more than 5%, then for all purposes under this Agreement the Final Pension Transfer Amount shall be
the Final Pension Transfer Amount as set forth in the Pension Statement. The recalculation of such
third party actuary shall be completed within thirty (30) days of the retention of such third party
actuary and shall be conclusive as to any dispute with respect to the Final Pension Transfer
Amount, except as set forth in Section 5.05 below. The cost of such third party actuary shall be
divided equally between Cadbury and DPSG. Each Party shall be responsible for the cost of its own
actuary.
Section 5.04
True-Up Adjustment
. The following transfer shall be made promptly after
the date that the Final Pension Transfer Amount is determined as set forth above: (A) if the Final
Pension Transfer Amount exceeds the Initial Transfer Amount, Cadbury shall promptly cause to be
transferred from the Cadbury Pension Plan trust to the DPSG Pension Plan trust assets having a
Value equal to such excess and (B) if the Initial Transfer Amount exceeds the Final Pension
Transfer Amount, DPSG shall promptly cause to be transferred from the DPSG Pension Plan trust to
the Cadbury Pension Plan trust assets having a Value equal to such excess.
Section 5.05
Form and Selection of Assets to be Transferred
. The assets to be
transferred in the Initial Transfer and the True-Up Adjustment Assets will be transferred in-kind
or in cash pro rata from each investment manager under the transferring plan in a manner that
represents, as closely as commercially practical, a pro rata portion of each asset and position
held by the manager as of the date of such transfer, except that reasonable adjustments shall be
made where Cadbury determines such transfers cannot reasonably be made by the Cadbury Pension Plan
due to investment manager account minimums or where other considerations prevent such pro rata
transfers or render such pro rata transfers impractical. For purposes of the Agreement, the
"
Value
of all pension assets shall be the value of such assets as determined in good faith by
Cadbury based on all relevant information known to Cadbury at the time of such determination,
including the most recent account statements or schedules of asset values provided to Cadbury by
any service providers maintaining or overseeing any such assets or any investment vehicles which
represent or hold the relevant plan assets. Cadbury shall select the assets to be transferred and
provide a schedule of such assets to DPSG 14 days prior to the transfer of such assets. DPSG shall
communicate to Cadbury any objection to the schedule of the assets to be transferred promptly, and
upon receipt by Cadbury of such objection, Cadbury and DPSG shall make a good faith attempt to
resolve their dispute as to the assets to be transferred within the period remaining prior to the
transfer of the assets. Should such dispute remain unresolved upon the asset transfer date, the
assets shall be transferred in accordance with the schedule provided by Cadbury. Any assets that
are liquidated prior to transfer shall be reduced by the asset liquidation expenses actually
incurred.
ARTICLE 6
U.S. 401(K) PLAN
Section 6.01
General Principle
. Effective on or before the Distribution Date, DPSG
shall establish and adopt a qualified employee cash or deferred arrangement under IRS Code Section
401(k) (the
DPSG 401(k) Plan
) intended to be qualified under IRS Code Section 401(a) and
containing provisions that will provide benefits for each DPSG Business
Employee and Former DPSG Employee (and each beneficiary and alternate payee of such person)
(the
DPSG DC Plan Beneficiaries
) identical to those in effect for the DPSG DC Plan Beneficiaries
as of the date of transfer of assets and liabilities with respect to such plan (as described
below). Before or as soon as reasonably practicable after the Distribution Date, the assets and
liabilities relating to the DPSG DC Plan Beneficiaries under the Cadbury 401(k) Plan and shall be
transferred to the DPSG 401(k) Plan. DPSG Business Employees shall not make or receive additional
contributions under the Cadbury 401(k) Plan after the effective date of the DPSG 401(k) Plan,
unless such DPSG Business Employee shall become employed by Cadbury or a Cadbury Subsidiary after
such date. A Cadbury Business Employee shall not participate in the DPSG 401(k) Plan after the
effective date of the DPSG 401(k) Plan, unless such Cadbury Business Employee shall become employed
by DPSG or a DPSG Subsidiary after such date.
Section 6.02
Transfer of Accounts
. Effective before or as soon as practical following
the Distribution Date, but in no event later than six months following the Distribution Date,
Cadbury shall cause to be transferred from trusts under the Cadbury 401(k) Plan to the trust under
the DPSG 401(k) Plan the aggregate amount that is credited to the accounts of the DPSG DC Plan
Beneficiaries (disregarding any participant loans from the plans) as of the date of transfer, but
not less than or more than permitted by law, as determined by Cadbury. The transfer shall be an
in-kind transfer, subject to the reasonable consent of the trustee of the DPSG 401(k) Plan and
shall include the transfer of the aggregate assets held in the accounts relating to each DPSG DC
Plan Beneficiary under the Cadbury 401(k) Plan and any participant loan notes held under such
plans. Any assets that are liquidated prior to transfer shall be reduced by the asset liquidation
expenses, such as commissions or early withdrawal penalties, actually incurred. Cadbury shall
cause the DPSG 401(k) Plan to allocate the portion of any forfeiture account under the Cadbury
401(k) Plan that relates to forfeiture by Former DPSG Employees consistent with Cadburys past
practice regarding allocation of forfeitures under the Cadbury 401(k) Plan. Before or promptly
after the date hereof, Cadbury and DPSG shall file requests with the IRS for qualification
determination letters under IRS Code Section 401(a) and 401(k) (as applicable) with respect to the
Cadbury 401(k) Plan and DPSG 401(k) Plan and shall take any and all reasonable actions, including
the adoption of amendments requested by the IRS, as shall be necessary to obtain such determination
letters. The transfers under this Section 6.02 shall occur prior to, but subject to the subsequent
receipt of favorable determination letters issued by the IRS with respect to the Cadbury 401(k)
Plan and DPSG 401(k) Plan, copies of which shall be shared among Cadbury and DPSG promptly upon
issuance.
Section 6.03
Funding of 2008 Matching Contribution
. DPSG shall fund and allocate the
full amount of any 2008 matching contribution accrued under the terms of the Cadbury 401(k) Plan to
eligible DPSG DC Plan Beneficiaries under the DPSG 401(k) Plan within the time permitted by law
(determined based on the terms of the Cadbury 401(k) Plan immediately prior to the transfer to the
DPSG 401(k) Plan as if the transfer to the DPSG 401(k) Plan did not occur, but paid and contributed
by DPSG to the DPSG 401(k) Plan).
ARTICLE 7
U.S. WELFARE BENEFIT PLANS
Section 7.01
General Principle
. Except as provided below, on or about the
Distribution Date, liabilities relating to DPSG Business Employees and Former DPSG Employees shall
be transferred to newly established DPSG welfare benefit plans that shall contain the same benefit
provisions as in effect for DPSG Business Employees and Former DPSG Employees immediately prior to
such date, and DPSG Business Employees and Former DPSG Employees shall cease to participate in the
Cadbury welfare benefit plans. Welfare benefit plans include health, welfare, and wellness
benefits plans (including, medical, dental, prescription drug and vision benefits, life insurance,
accidental death and disability insurance, business travel accident insurance, disability (STD and
LTD), long term care, flexible spending accounts, severance, Employee Assistance Plan, and similar
types of plans). DPSG Business Employees and Former DPSG Employees shall not participate in
Cadbury welfare benefit plans following the effective date of the DPSG plans described in this
Section 7.01, unless they shall become employed by Cadbury after such date. Cadbury Business
Employees and Former Cadbury Employees shall not participate in any DPSG welfare benefit plans
following the effective date of such plans, unless they shall become employed by DPSG after such
date.
Section 7.02
Establishment of DPSG Plans
.
(a)
General Rule
. DPSG Business Employees and Former DPSG Employees shall cease to
participate in the Cadbury welfare benefit plans on or about the Distribution Date.
(b)
Treatment of Claims Incurred
. DPSG shall assume and shall be responsible for the
liability for payment of all covered claims (including medical, dental, life insurance and
long-term disability) and eligible expenses incurred by any DPSG Business Employee and
beneficiaries thereof under the Cadbury Welfare Plans and Cadbury Non-ERISA U.S. Benefit
Arrangements prior to the Distribution Date, and Cadbury shall not be responsible for any liability
with respect to any such claims or expenses.
(c)
Credit for Deductibles and Other Limits
. With respect to each DPSG Business
Employee and Former DPSG Employee, and each covered dependent, beneficiary, or other related party
of such individual (the
DPSG Welfare Plan Participants
), the DPSG welfare benefit plans will give
credit in the year of the Distribution Date for any amount paid under the comparable type Cadbury
plan by such DPSG Welfare Plan Participant in the year of the Distribution Date toward deductibles,
out-of-pocket maximum, or other, similar limitations to the extent such amounts are taken into
account under the comparable type Cadbury plan. For purposes of any life-time maximum
out-of-pocket limit on expenses paid by a covered participant, the DPSG welfare plans will
recognize any expenses incurred by a DPSG Welfare Plan Participant prior to the Distribution to the
same extent such expenses would be recognized in respect of an active plan participant under the
comparable type Cadbury plan.
(d)
COBRA
. Effective as of the date of cessation of participation in the Cadbury
welfare benefit plans by the DPSG Business Employees and Former DPSG Employees (as provided above),
DPSG shall assume and satisfy all requirements under COBRA with respect to
all DPSG Business Employees and Former DPSG Employees and their qualified beneficiaries,
including for individuals who are already receiving benefits as of such date under COBRA.
(e)
Disabled Persons
. The Parties intend that any Employee who has, prior to the
Distribution Date, become eligible to receive any long-term disability benefits pursuant to any
third-party insurance policy applicable under any welfare benefit plan shall continue to be
eligible to receive such benefits in accordance with the terms of such plan and policy.
Section 7.03
Insurance Contracts
. To the extent any Cadbury welfare benefit plan is
funded through the purchase of an insurance contract or is subject to any stop loss contract,
Cadbury and DPSG will cooperate and use their reasonable commercial efforts to
clone
such
insurance contracts for DPSG and to maintain any pricing discounts or other preferential terms for
both Cadbury and DPSG through the end of the term of the Transition Services Agreement. Neither
party shall be liable for failure to obtain such pricing discounts or other preferential terms for
DPSG. The cost of
cloning
, including any increases in premiums, charges or administrative fees
relating to DPSG Business Employees and Former DPSG Employees shall be the obligation of DPSG.
Each party shall be responsible for any additional premiums, charges or administrative fees that
such party may incur pursuant to this Section 7.03.
Section 7.04
Third Party Vendors
. Except as provided below, to the extent any Cadbury
welfare benefit plan is administered by a third-party vendor, Cadbury and DPSG will cooperate and
use their reasonable commercial efforts to
clone
any contract with such third-party vendor for
DPSG and to maintain any pricing discounts or other preferential terms for both Cadbury and DPSG.
Neither party shall be liable for failure to obtain such pricing discounts or other preferential
terms for DPSG. The cost of
cloning
, including any increases in premiums, charges or
administrative fees relating to DPSG Business Employees and Former DPSG Employees shall be the
obligation of DPSG. Each party shall be responsible for any additional premiums, charges or
administrative fees that such party may incur pursuant to this Section 7.04.
ARTICLE 8
FRINGE BENEFIT AND OTHER U.S. PLANS AND PROGRAMS
Except as otherwise provided under this Agreement, effective as of the Distribution Date, DPSG
Business Employees and Former DPSG Employees shall not be eligible to participate in any plan,
policy or arrangement of Cadbury or a Cadbury Subsidiary providing fringe benefits to employees or
former employees.
ARTICLE 9
WORKERS COMPENSATION AND UNEMPLOYMENT COMPENSATION
DPSG shall have and assume the obligations for all claims and liabilities relating to workers
compensation and unemployment compensation benefits for all DPSG Business Employees and Former DPSG
Employees. Cadbury shall have and assume the obligations for all claims and liabilities relating
to workers compensation and unemployment compensation benefits for all Cadbury Business Employees
and Former Cadbury Employees. DPSG and
Cadbury shall make reasonable commercial efforts to provide that workers compensation and
unemployment insurance costs are not adversely affected for either of them by reason of the
Distribution.
ARTICLE 10
COMPENSATION MATTERS AND GENERAL BENEFIT AND EMPLOYEE
MATTERS
Section 10.01
Restrictive Covenants in Employment and Other Agreements
. To the
fullest extent permitted by the agreements and applicable law, Cadbury shall assign, or cause its
Affiliates to assign, to DPSG or one of its Affiliates as designated by DPSG all agreements
containing restrictive covenants (including but not limited to confidentiality and non-competition
provisions) between Cadbury (or a Cadbury Affiliate) and a DPSG Business Employee, with such
assignment to be effective no later than the Distribution Date. To the extent that assignment of
such agreements is not permitted, following the Distribution, DPSG and its Subsidiaries and
Affiliates shall be considered to be successors to Cadbury and its Subsidiaries and Affiliates for
purposes of, and third-party beneficiaries with respect to, all agreements containing restrictive
covenants (including but not limited to confidentiality and non-competition provisions) between
Cadbury (or a Cadbury Subsidiary or Affiliate) and DPSG Business Employees and between Cadbury (or
a Cadbury Subsidiary or Affiliate) and Cadbury Employees whom DPSG reasonably determines have
substantial knowledge of the DPSG Business, such that each of Cadbury, DPSG and their respective
Subsidiaries and Affiliates shall all enjoy the rights and benefits under such agreements
(including, without limitation, rights and benefits as a third-party beneficiary), with respect to
such Partys and its respective Subsidiaries and Affiliates business operations;
provided
,
however
, that (a) in no event shall Cadbury be permitted to enforce the
restrictive covenant agreements against DPSG Business Employees for action taken in their capacity
as employees of DPSG or its Subsidiaries, and (b) in no event shall DPSG be permitted to enforce
the restrictive covenants agreements of Cadbury Business Employees for action taken in their
capacity as employees of Cadbury or its Subsidiaries.
Section 10.02
Severance
.
(a) Effective as of the Distribution Date, DPSG may establish one or more severance plans and
policies with respect to DPSG Business Employees as DPSG deems appropriate in its discretion.
Cadbury shall have no liability or obligation under any Cadbury severance plan or policy with
respect to DPSG Business Employees who remain employed or whose employment terminates on or after
the Distribution Date.
(b) Following the Distribution Date, DPSG shall assume and shall be responsible for
administering all payments and benefits under the applicable Cadbury severance policies or any
termination agreements with Former DPSG Employees whose employment has terminated prior to the
Distribution Date for an eligible reason under such policies or in accordance with such agreements.
(c) It is not intended that any DPSG Business Employee will be eligible for termination or
severance payments or benefits from Cadbury or its Subsidiaries or Affiliates as a
result of the transfer or change of employment from Cadbury to DPSG or their respective
Subsidiaries or Affiliates. Notwithstanding the preceding sentence, in the event that any such
termination or severance payments or benefits become payable on account of such transfer, change or
the refusal of a DPSG Business Employee to accept employment with DPSG, DPSG shall indemnify
Cadbury, and its Subsidiaries and Affiliates, for the amount of such termination or severance
payments or benefits.
Section 10.03
Accrued Vacation Days Off
. DPSG shall recognize and assume all
liability for all vacation, holiday, sick leave, flex days, personal days and Paid-Time Off,
including banked time accrued by DPSG Business Employees as of the Distribution Date and DPSG shall
credit each DPSG Business Employee with such accrual.
Section 10.04
Leaves of Absence
. DPSG will continue to apply the leave of absence
policies maintained by Cadbury to inactive DPSG Business Employees who are on an approved leave of
absence as of the Distribution Date. Leaves of absence taken by DPSG Business Employees prior to
the Distribution Date shall be deemed to have been taken as employees of DPSG.
Section 10.05
Cadbury Obligations
. DPSG and Cadbury plc agree that Cadbury plc shall
not, and shall cause Cadbury not to, take any actions that would materially and adversely impact
the ability of Cadbury to fulfill its obligations under this Agreement;
provided
that
Cadbury plc may at any time following the Distribution Date require Cadbury to assign to Cadbury
plc all of Cadburys rights and obligations under this Agreement in substitution for compliance by
Cadbury plc and Cadbury with the aforementioned obligation in this Section 10.05, and upon such
assignment, Cadbury plc shall assume all of Cadburys obligations under this Agreement.
Section 10.06
Collective Bargaining Agreements
. Except as otherwise provided in this
Agreement, effective as of the close of business on the Distribution Date, DPSG shall assume, and
Cadbury shall have no further liability for, all collective bargaining agreements, collective
agreements, multiemployer plans, pension and welfare plans and arrangements, trade union or works
council agreements entered into with Cadbury, any union, works council, or other body representing
only DPSG Business Employees.
ARTICLE 11
CANADIAN EMPLOYEE MATTERS
The treatment of employee matters with respect to an Employee whose primary employer within
the Cadbury Group or the DPSG Group is or was an entity domiciled in Canada shall be set forth as
Appendix 2 to this Agreement.
ARTICLE 12
GENERAL PROVISIONS
Section 12.01
Preservation of Rights to Amend
. The rights of Cadbury or DPSG to amend
or terminate any plan, program, or policy referred to herein shall not be limited in any way by
this Agreement.
Section 12.02
Confidentiality
. Each Party agrees that any information conveyed or
otherwise received by or on behalf of a Party in conjunction herewith is confidential and is
subject to the terms of the confidentiality provisions set forth in the Separation Agreement.
Section 12.03
Administrative Complaints/Litigation
. Except as otherwise provided in
this Agreement, as of and after the Distribution Date, DPSG shall assume, and be solely liable for,
the handling, administration, investigation and defense of actions, including, without limitation,
ERISA, occupational safety and health, employment standards, union grievances, wrongful dismissal,
discrimination or human rights and unemployment compensation claims, asserted at any time against
Cadbury, or DPSG or their respective Affiliates by any DPSG Business Employee or Former DPSG
Employee (including any dependent or beneficiary of any such Employee) or any other person, to the
extent such actions or claims arise out of or relate to employment or the provision of services
(whether as an employee, contractor, consultant, or otherwise) to or with the DPSG Business. To
the extent that any legal action relates to a putative or certified class of plaintiffs, which
includes both Cadbury Business Employees (or Former Cadbury Employees) and DPSG Business Employees
(or Former DPSG Employees) and such action involves employment or benefit plan related claims,
reasonable costs and expenses incurred by the Parties in responding to such legal action shall be
allocated among the Parties equitably in proportion to a reasonable assessment of the relative
proportion of Cadbury Business Employees (or Former Cadbury Employees) and DPSG Business Employees
(or Former DPSG Employees) included in or represented by the putative or certified plaintiff class.
The procedures contained in the indemnification and related litigation cooperation provisions of
the Separation Agreement shall apply with respect to each Partys indemnification obligations under
this Section 12.03.
Section 12.04
Reimbursement and Indemnification
. The Parties hereto agree to
reimburse each other, within 60 days of receipt from the other Party of reasonable verification,
for all costs and expenses which each may incur on behalf of the other as a result of any of the
Welfare Plans, Pension Plans and Non-ERISA U.S. Benefit Arrangements and, as contemplated by
Section 10.02, any termination or severance payments or benefits. All liabilities retained,
assumed or indemnified against by DPSG pursuant to this Agreement, and all liabilities retained,
assumed or indemnified against by Cadbury pursuant to this Agreement, shall in each case be subject
to the indemnification provisions of the Separation Agreement. Notwithstanding anything to the
contrary, no provision of this Agreement shall require DPSG or any DPSG Subsidiary to pay or
reimburse to Cadbury or any Cadbury Affiliate any benefit-related cost item that DPSG or any DPSG
Subsidiary has previously paid or reimbursed to Cadbury or any Cadbury Affiliate.
Section 12.05
Costs of Compliance with Agreement
. Except as otherwise provided in
this Agreement or any other Distribution document, each Party shall pay its own expenses in
fulfilling its obligations under this Agreement.
ARTICLE 13
MISCELLANEOUS
Section 13.01
Notices
. Any notice, instruction, direction or demand under the terms
of this Agreement required to be in writing shall be duly given upon delivery, if delivered by
hand, facsimile transmission, or mail, to the following addresses:
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(a)
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If to Cadbury
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|
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25 Berkeley Square
London W1J 6HB
Facsimile: 44-20-7830-5015
Attention: Henry Udow, Esq.
Chief Legal Officer
|
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With a copy to:
|
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Shearman & Sterling LLP
599 Lexington Avenue
New York, NY 10022-6069
Telecopy: 212-848-6069
Attention: Creighton OM. Condon, Esq.
|
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(b)
|
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If to Cadbury plc:
|
|
|
|
|
25 Berkeley Square
London W1J 6HB
Facsimile: 44-20-7830-5015
Attention: Henry Udow, Esq.
Chief Legal Officer
|
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With a copy to:
|
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Shearman & Sterling LLP
599 Lexington Avenue
New York, NY 10022-6069
Telecopy: 212-848-6069
Attention: Creighton OM. Condon, Esq.
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(b)
|
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If to DPSG to:
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5301 Legacy Drive
Plano, TX 75024
Facsimile: 972-673-8130
Attention: James. L. Baldwin, Jr.
General Counsel
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or to such other addresses or telecopy numbers as may be specified by like notice to the other
Party. All such notices, requests and other communications shall be deemed given, (a) when
delivered in person or by courier or a courier services, (b) if sent by facsimile transmission
(receipt confirmed) on a Business Day prior to 5 p.m. in the place of receipt, on the date of
transmission (or, if sent after 5 p.m., on the following Business Day) or (c) if mailed by
certified mail (return receipt requested), on the date specified on the return receipt.
Section 13.02
Amendments; No Waivers
. From and after the Distribution, any provision
of this Agreement may be amended or waived if, and only if, such amendment or waiver is in writing
and signed, in the case of an amendment, by Cadbury and DPSG, or in the case of a waiver, by the
Party against whom the waiver is to be effective.
(a) No failure or delay by any Party in exercising any right, power or privilege hereunder
shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right, power or privilege. The
rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
Section 13.03
Successors and Assigns
. The provisions of this Agreement shall be
binding upon and inure to the benefit of the Parties hereto and their respective successors and
permitted assigns;
provided
that neither Party may assign, delegate or otherwise transfer
any of its rights or obligations under this Agreement without the consent of the other Party
hereto. If any Party or any of its successors or permitted assigns (i) shall consolidate with or
merge into any other Person and shall not be the continuing or surviving corporation or entity of
such consolidation or merger or (ii) shall transfer all or substantially all of its properties and
assets to any Person, then, and in each such case, proper provisions shall be made so that the
successors and assigns of such Party shall assume all of the obligations of such Party under the
Separation Agreement.
Section 13.04
Governing Law
. This Agreement shall be construed in accordance with and
governed by the law of the State of New York, without regard to the conflicts of laws rules
thereof.
Section 13.05
Counterparts; Effectiveness; Third-Party Beneficiaries
. This Agreement
may be signed in any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument. This Agreement shall
become effective when each party hereto shall have received a counterpart hereof signed by the
other party hereto. Neither this Agreement nor any provision hereof is intended to confer any
rights, benefits, remedies, obligations, or liabilities hereunder upon any
Person other than the parties hereto and their respective successors and permitted assigns.
No Employee or other current or former employee of Cadbury or DPSG or any Subsidiary or Affiliate
of either (or his/her spouse, dependent or beneficiary), or any other person not a party to this
Agreement, shall be entitled to assert any claim hereunder. Without limiting the foregoing, the
provisions of this Agreement are not intended to, nor shall they confer upon any Person other than
the Parties hereto any right or expectation as to the adoption, amendment, maintenance,
continuation, operation or funding of any employee benefit plan, policy or arrangement.
Section 13.06
Entire Agreement
. This Agreement and the other Distribution documents
constitute the entire understanding of the parties with respect to the subject matter hereof and
thereof and supersede all prior agreements, understandings and negotiations, both written and oral,
between the parties with respect to the subject matter hereof and thereof. Regardless of anything
else contained herein, the parties do not intend for this Agreement to amend any employee benefit
plans or arrangements.
Section 13.07
Jurisdiction
. Any Action seeking to enforce any provision of, or based
on any matter arising out of or in connection with, this Agreement or the transactions contemplated
hereby may be brought in the United States District Court for the Southern District of New York or
any other New York State court sitting in New York County, and each of the Parties hereby consents
to the jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such
suit, action or proceeding and irrevocably waives, to the fullest extent permitted by law, any
objection which it may now or hereafter have to the laying of the venue of any such suit, action or
proceeding in any such court or that any such suit, action or proceeding which is brought in any
such court has been brought in an inconvenient forum. Process in any such suit, action or
proceeding may be served on any Party anywhere in the world, whether within or without the
jurisdiction of any such court. Without limiting the foregoing, each Party agrees that service of
process on such Party as provided in Section 13.01 shall be deemed effective service of process on
such Party.
Section 13.08
Waiver of Jury Trial
. The parties hereto hereby irrevocably waive any
and all right to trial by jury in any legal proceeding arising out of or related to this Agreement
or the transactions hereby contemplated.
Section 13.09
Severability
. If any one or more of the provisions contained in this
Agreement should be declared invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained in this Agreement shall not in
any way be affected or impaired thereby so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner materially adverse to any Party.
Upon such a declaration, the Parties shall modify this Agreement so as to effect the original
intent of the Parties as closely as possible in an acceptable manner so that the transactions
contemplated hereby are consummated as originally contemplated to the fullest extent possible.
Section 13.10
Survival
. All covenants and agreements of the Parties contained in this
Agreement shall survive the Distribution Date indefinitely, unless a specific survival or other
applicable period is expressly set forth herein.
Section 13.11
Captions
. The captions herein are included for convenience of reference
only and shall be ignored in the construction or interpretation hereof.
Section 13.12
Specific Performance
. Each Party to this Agreement acknowledges and
agrees that damages for a breach or threatened breach of any of the provisions of this Agreement
would be inadequate and irreparable harm would occur. In recognition of this fact, each Party
agrees that, if there is a breach or threatened breach, in addition to any damages, the other
nonbreaching Party to this Agreement, without posting any bond, shall be entitled to seek and
obtain equitable relief in the form of specific performance, temporary restraining order, temporary
or permanent injunction, attachment, or any other equitable remedy which may then be available to
obligate the breaching Party (i) to perform its obligations under this Agreement or (ii) if the
breaching Party is unable, for whatever reason, to perform those obligations, to take any other
actions as are necessary, advisable or appropriate to give the other Party to this Agreement the
economic effect which comes as close as possible to the performance of those obligations
(including, but not limited to, transferring, or granting liens on, the assets of the breaching
Party to secure the performance by the breaching Party of those obligations).
Section 13.13
Mutual Drafting
. This Agreement shall be deemed to be the joint work
product of Cadbury and DPSG and any rule of construction that a document shall be interpreted or
construed against a drafter of such document shall not be applicable.
Section 13.14
Operating Committee
.
(a) The parties shall use an operating committee (the
Operating Committee
) to implement the
terms of this Agreement. Each of Cadbury and DPSG shall appoint two employees to the Operating
Committee and designate one of such employees to be such partys lead representative (each, a
Lead
Representative
) for the purpose of fielding queries from representatives of the relevant Group
concerning the implementation and ongoing operation of this Agreement. In addition, the Lead
Representatives shall have such other functions and responsibilities as may be determined by the
Operating Committee from time to time. The Operating Committee will oversee the implementation and
ongoing operation of this Agreement and shall attempt in good faith to resolve disputes between the
parties. Each of the parties shall have the right to (i) replace one or more of its Operating
Committee members at any time with employees or officers with comparable knowledge, expertise and
decision-making authority and (ii) designate an alternative Lead Representative.
(b) The Operating Committee shall act by a majority vote of its members. If the Operating
Committee fails to make a decision, resolve a dispute or agree upon any necessary action, the
unresolved matters shall be handled by the dispute resolution procedures contained in the
Separation Agreement.
(c) During the term of this Agreement, the full Operating Committee shall meet at such times
as may be required by either Lead Representative. Meetings of the Operating Committee may be in
person or via teleconference and shall be convened and held in accordance with such procedures as
the Operating Committee may determine from time to time.
Section 13.15
Effect if Distribution Does Not Occur
. Notwithstanding anything in this
Agreement to the contrary, if the Separation Agreement or Transition Services Agreement is
terminated prior to the Distribution Date, this Agreement shall be of no further force and effect.
Section 13.16
Corporate Authorization
. The officers of Cadbury and DPSG are hereby
authorized, empowered and directed, in the name and on behalf of each of Cadbury and DPSG,
respectively, to take or cause to be taken all such further action, to execute and deliver or cause
to be executed and delivered all such further agreements, certificates, instruments and documents,
to make or cause to be made all such filings with governmental or regulatory authorities, and to
pay or cause to be paid all such fees and expenses, in each case which shall in such officers
judgment be deemed necessary, proper or advisable to effect and carry out the intent of this
Agreement, such determination to be evidenced conclusively by such officers execution and delivery
thereof or taking of action in respect thereto.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed in their names by a
duly authorized officer as of the date first written above.
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CADBURY SCHWEPPES, PLC
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By:
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/s/ Henry Udow
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Name: Henry Udow
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Title: Chief Legal Officer and Group Secretary
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DR PEPPER SNAPPLE GROUP, INC.
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By:
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/s/ James L. Baldwin
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Name: James L. Baldwin
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Title: Executive Vice President and Secretary
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CADBURY PLC, solely for the purposes of Section 10.05
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By:
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/s/ Henry Udow
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Name: Henry Udow
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Title: Chief Legal Officer and Group Secretary
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