As filed with the Securities and Exchange Commission on March 20, 2008
File No. 001-33829
 
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
 
 
Amendment No. 3
to
 
Form 10
 
GENERAL FORM FOR REGISTRATION OF SECURITIES
Pursuant to Section 12(b) or (g) of the Securities Exchange Act of 1934
 
 
 
 
DR PEPPER SNAPPLE GROUP
 
 
 
 
     
Delaware
  75-3258232
(State or other jurisdiction of
incorporation or organization)
  (I.R.S. employer
identification number)
     
5301 Legacy Drive, Plano, Texas
  75024
(Address of principal executive offices)
  (Zip Code)
(972) 673-7000
(Registrant’s telephone number, including area code)
 
 
 
 
Securities to be registered pursuant to Section 12(b) of the Act:
 
     
Title of Each Class to be so Registered
 
Name of Each Exchange on which Each Class is to be Registered
 
Common Stock, par value $0.01 per share
  New York Stock Exchange
 
 
 
 
Securities to be registered pursuant to Section 12(g) of the Act:
None
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
 
     
Large accelerated filer  o
  Accelerated filer  o
Non-accelerated filer  þ
  Smaller reporting company  o
 
(Do not check if a smaller reporting company)
 


 

EXPLANATORY NOTE
 
As previously announced, Cadbury Schweppes plc intends to separate the beverage business it owns in the United States, Canada, Mexico and the Caribbean (which it refers to as its Americas Beverages business) from its global confectionery business and its other beverages business (located principally in Australia). As a result of the separation, which has several steps, Cadbury Schweppes plc shareholders will receive shares of Cadbury plc, a new U.K. public company which will own Cadbury Schweppes’ global confectionery business and its other beverages business (located principally in Australia), and common stock of Dr Pepper Snapple Group, Inc., a new U.S. public company which will own Cadbury Schweppes’ Americas Beverages business. These two publicly-traded companies will be independent from each other after the separation. The information statement contained in this Form 10 relates to the distribution described above and the establishment of Dr Pepper Snapple Group, Inc. A vote of the shareholders of Cadbury Schweppes plc is required to effect the separation and the distribution of common stock of Dr Pepper Snapple Group, Inc. and related matters described herein. The information statement will be distributed to shareholders of Cadbury Schweppes plc after the vote of the shareholders of Cadbury Schweppes plc has occurred and the Form 10 to which the information statement relates has been declared effective by the Securities and Exchange Commission.
 
Dr Pepper Snapple Group, Inc. filed its initial Form 10 registration statement under its former name, CSAB Inc. CSAB Inc. changed its name to Dr Pepper Snapple Group, Inc. on January 2, 2008.


 

DR PEPPER SNAPPLE GROUP, INC.
INFORMATION REQUIRED IN REGISTRATION STATEMENT
CROSS-REFERENCE SHEET BETWEEN INFORMATION STATEMENT AND ITEMS OF FORM 10
 
Certain information required to be included herein is incorporated by reference to specifically identified portions of the body of the information statement filed herewith as Exhibit 99.1. None of the information contained in the information statement shall be incorporated by reference herein or deemed to be a part hereof unless such information is specifically incorporated by reference.
 
Item 1.    Business.
 
The information required by this item is contained under the sections of the information statement entitled “Information Statement Summary,” “Risk Factors,” “Special Note Regarding Forward-Looking Statements,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Industry,” “Business,” “Our Relationship with Cadbury plc After the Distribution,” “The Distribution,” “Where You Can Find More Information” and “Index to Financial Statements” (and the financial statements referenced therein). Those sections are incorporated herein by reference.
 
Item 1A.    Risk Factors.
 
The information required by this item is contained under the section of the information statement entitled “Risk Factors.” That section is incorporated herein by reference.
 
Item 2.    Financial Information.
 
The information required by this item is contained under the sections of the information statement entitled “Information Statement Summary,” “Risk Factors,” “Capitalization,” “Selected Historical Combined Financial Data,” “Unaudited Pro Forma Combined Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Index to Financial Statements” (and the financial statements referenced therein). Those sections are incorporated herein by reference.
 
Item 3.    Properties.
 
The information required by this item is contained under the section of the information statement entitled “Business — Real Property.” That section is incorporated herein by reference.
 
Item 4.    Security Ownership of Certain Beneficial Owners and Management.
 
The information required by this item is contained under the section of the information statement entitled “Ownership of Our Common Stock.” That section is incorporated herein by reference.
 
Item 5.    Directors and Executive Officers.
 
The information required by this item is contained under the section of the information statement entitled “Management.” That section is incorporated herein by reference.
 
Item 6.    Executive Compensation.
 
The information required by this item is contained under the section of the information statement entitled “Management.” That section is incorporated herein by reference.
 
Item 7.    Certain Relationships and Related Transactions.
 
The information required by this item is contained under the sections of the information statement entitled “Capitalization,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Our Relationship with Cadbury plc After the Distribution” and “Management.” Those sections are incorporated herein by reference.


 

Item 8.    Legal Proceedings.
 
The information required by this item is contained under the section of the information statement entitled “Business — Legal Matters.” That section is incorporated herein by reference.
 
Item 9.    Market Price of, and Dividends on, the Registrant’s Common Equity and Related Stockholder Matters.
 
The information required by this item is contained under the sections of the information statement entitled “Information Statement Summary,” “Dividend Policy,” “Description of Capital Stock” and “The Distribution.” Those sections are incorporated herein by reference.
 
Item 10.    Recent Sales of Unregistered Securities.
 
On October 24, 2007, Dr Pepper Snapple Group, Inc. sold one share of common stock, par value $0.01 per share, to Cadbury Schweppes plc pursuant to Section 4(2) of Securities Act of 1933, as amended.
 
Item 11.    Description of Registrant’s Securities to be Registered.
 
The information required by this item is contained under the section of the information statement entitled “Description of Capital Stock.” That section is incorporated herein by reference.
 
Item 12.    Indemnification of Directors and Officers.
 
The information required by this item is contained under the section of the information statement entitled “Description of Capital Stock — Anti-Takeover Effects of Various Provisions of Delaware Law and Our Certificate of Incorporation and By-laws — Limitations on Liability and Indemnification of Officers and Directors.” That section is incorporated herein by reference.
 
Item 13.    Financial Statements and Supplementary Data.
 
The information required by this item is contained under the sections of the information statement entitled “Information Statement Summary,” “Selected Historical Combined Financial Data,” “Unaudited Pro Forma Combined Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Index to Financial Statements” (and the financial statements referenced therein). Those sections are incorporated herein by reference.
 
Item 14.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
 
None.
 
Item 15.    Financial Statements and Exhibits.
 
(a)   Financial Statements
 
The information required by this item is contained under the section of the information statement entitled “Index to Financial Statements” (and the financial statements referenced therein). That section is incorporated herein by reference.
 
(b)   Exhibits
 
See below.
 
The following documents are filed as exhibits hereto:
 
         
Exhibit
   
Number
 
Exhibit Description
 
  2 .1*+   Form of Separation and Distribution Agreement between Cadbury Schweppes plc and Dr Pepper Snapple Group, Inc. and, solely for certain provisions set forth therein, Cadbury plc
  3 .1+   Form of Amended and Restated Certificate of Incorporation of Dr Pepper Snapple Group, Inc.


 

         
Exhibit
   
Number
 
Exhibit Description
 
  3 .2+   Form of Amended and Restated By-Laws of Dr Pepper Snapple Group, Inc.
  10 .1*   Form of Transition Services Agreement between Cadbury Schweppes plc and Dr Pepper Snapple Group, Inc.
  10 .2+   Form of Tax-Sharing and Indemnification Agreement between Cadbury Schweppes plc and Dr Pepper Snapple Group, Inc. and, solely for the certain provision set forth therein, Cadbury plc
  10 .3*+   Form of Employee Matters Agreement between Cadbury Schweppes plc and Dr Pepper Snapple Group, Inc. and, solely for certain provisions set forth therein, Cadbury plc
  10 .4*†   Agreement, dated June 15, 2004, between Cadbury Schweppes Bottling Group, Inc. (formerly Dr Pepper/Seven Up Bottling Group, Inc.) and CROWN Cork & Seal USA, Inc.
  10 .5*†   First Amendment to the Agreement between Cadbury Schweppes Bottling Group, Inc. and CROWN Cork & Seal USA, Inc., dated August 25, 2005
  10 .6*†   Second Amendment to the Agreement between Cadbury Schweppes Bottling Group, Inc. and CROWN Cork & Seal USA, Inc., dated June 21, 2006
  10 .7*†   Third Amendment to the Agreement between Cadbury Schweppes Bottling Group, Inc. and CROWN Cork & Seal USA, Inc., dated April 4, 2007
  10 .8*†   Fourth Amendment to the Agreement between Cadbury Schweppes Bottling Group, Inc. and CROWN Cork & Seal USA, Inc., dated September 27, 2007
  10 .9*   Form of Dr Pepper License Agreement for Bottles, Cans and Pre-mix
  10 .10*+   Form of Dr Pepper Fountain Concentrate Agreement
  10 .11*   Executive Employment Agreement, dated as of October 15, 2007, between CBI Holdings Inc. and Larry D. Young (1)
  10 .12*   Executive Employment Agreement, dated as of October 13, 2007, between CBI Holdings Inc. and John O. Stewart (1)
  10 .13*   Executive Employment Agreement, dated as of October 15, 2007, between CBI Holdings Inc. and Randall E. Gier (1)
  10 .14*   Executive Employment Agreement, dated as of October 15, 2007, between CBI Holdings Inc. and James J. Johnston, Jr. (1)
  10 .15*   Executive Employment Agreement, dated as of October 15, 2007, between CBI Holdings Inc. and Pedro Herrán Gacha (1)
  10 .16*   Executive Employment Agreement, dated as of October 1, 2007, between CBI Holdings Inc. and Gilbert M. Cassagne (1)
  10 .17*   Executive Employment Agreement, dated as of October 15, 2007, between CBI Holdings Inc. and John L. Belsito (1)
  10 .18*   Separation Letter, dated October 3, 2007, to Gilbert M. Cassagne
  10 .19*+   Form of Dr Pepper Snapple Group, Inc. Omnibus Stock Incentive Plan of 2008
  10 .20*+   Form of Dr Pepper Snapple Group, Inc. Annual Cash Incentive Plan
  10 .21*+   Form of Dr Pepper Snapple Group, Inc. Employee Stock Purchase Plan
  10 .22+   Credit Agreement among Dr Pepper Snapple Group, Inc., various lenders and JPMorgan Chase Bank, N.A., as administrative agent, dated March 10, 2008
  10 .23+   Bridge Credit Agreement among Dr Pepper Snapple Group, Inc., various lenders and JPMorgan Chase Bank, N.A., as administrative agent, dated March 10, 2008


 

         
Exhibit
   
Number
 
Exhibit Description
 
  21 .1**   List of Subsidiaries of Dr Pepper Snapple Group, Inc.
  99 .1+   Preliminary Information Statement of Dr Pepper Snapple Group, Inc. dated March 20, 2008
  99 .2+   Form of Letter to Cadbury Schweppes plc Shareholders
  99 .3+   Form of Letter to Dr Pepper Snapple Group, Inc. Stockholders
 
     
  *     Previously filed.
  **     To be filed by amendment.
      Portions of this Exhibit have been omitted and filed separately with the Securities and Exchange Commission as part of an application for confidential treatment pursuant to the Securities Exchange Act of 1934, as amended.
  +     Filed herewith.
  (1)     CBI Holdings Inc. will be a wholly-owned subsidiary of Dr Pepper Snapple Group, Inc. upon separation.


 

SIGNATURES
 
Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this Amendment No. 3 to the registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.
 
Dr Pepper Snapple Group, Inc.
 
  By: 
/s/   Larry D. Young
Name:     Larry D. Young
  Title:  President and Chief Executive Officer
 
Date: March 20, 2008


 

INDEX TO EXHIBITS
 
         
Exhibit
   
Number
 
Exhibit Description
 
  2 .1*+   Form of Separation and Distribution Agreement between Cadbury Schweppes plc and Dr Pepper Snapple Group, Inc. and, solely for certain provisions set forth therein, Cadbury plc
  3 .1+   Form of Amended and Restated Certificate of Incorporation of Dr Pepper Snapple Group, Inc.
  3 .2+   Form of Amended and Restated By-Laws of Dr Pepper Snapple Group, Inc.
  10 .1*   Form of Transition Services Agreement between Cadbury Schweppes plc and Dr Pepper Snapple Group, Inc.
  10 .2+   Form of Tax-Sharing and Indemnification Agreement between Cadbury Schweppes plc and Dr Pepper Snapple Group, Inc., and solely for the certain provision set forth therein, Cadbury plc
  10 .3*+   Form of Employee Matters Agreement between Cadbury Schweppes plc and Dr Pepper Snapple Group, Inc. and, solely for certain provisions set forth therein, Cadbury plc
  10 .4*†   Agreement, dated June 15, 2004, between Cadbury Schweppes Bottling Group, Inc. (formerly Dr Pepper/Seven Up Bottling Group, Inc.) and CROWN Cork & Seal USA, Inc.
  10 .5*†   First Amendment to the Agreement between Cadbury Schweppes Bottling Group, Inc. and CROWN Cork & Seal USA, Inc., dated August 25, 2005
  10 .6*†   Second Amendment to the Agreement between Cadbury Schweppes Bottling Group, Inc. and CROWN Cork & Seal USA, Inc., dated June 21, 2006
  10 .7*†   Third Amendment to the Agreement between Cadbury Schweppes Bottling Group, Inc. and CROWN Cork & Seal USA, Inc., dated April 4, 2007
  10 .8*†   Fourth Amendment to the Agreement between Cadbury Schweppes Bottling Group, Inc. and CROWN Cork & Seal USA, Inc., dated September 27, 2007
  10 .9*   Form of Dr Pepper License Agreement for Bottles, Cans and Pre-mix
  10 .10*+   Form of Dr Pepper Fountain Concentrate Agreement
  10 .11*   Executive Employment Agreement, dated as of October 15, 2007, between CBI Holdings Inc. and Larry D. Young(1)
  10 .12*   Executive Employment Agreement, dated as of October 13, 2007, between CBI Holdings Inc. and John O. Stewart(1)
  10 .13*   Executive Employment Agreement, dated as of October 15, 2007, between CBI Holdings Inc. and Randall E. Gier(1)
  10 .14*   Executive Employment Agreement, dated as of October 15, 2007, between CBI Holdings Inc. and James J. Johnston, Jr.(1)
  10 .15*   Executive Employment Agreement, dated as of October 15, 2007, between CBI Holdings Inc. and Pedro Herrán Gacha(1)
  10 .16*   Executive Employment Agreement, dated as of October 1, 2007, between CBI Holdings Inc. and Gilbert M. Cassagne(1)
  10 .17*   Executive Employment Agreement, dated as of October 15, 2007, between CBI Holdings Inc. and John L. Belsito(1)
  10 .18*   Separation Letter, dated October 3, 2007, to Gilbert M. Cassagne
  10 .19*+   Form of Dr Pepper Snapple Group, Inc. Omnibus Stock Incentive Plan of 2008
  10 .20*+   Form of Dr Pepper Snapple Group, Inc. Annual Cash Incentive Plan
  10 .21*+   Form of Dr Pepper Snapple Group, Inc. Employee Stock Purchase Plan
  10 .22+   Credit Agreement among Dr Pepper Snapple Group, Inc., various lenders and JPMorgan Chase Bank, N.A., as administrative agent, dated March 10, 2008
  10 .23+   Bridge Credit Agreement among Dr Pepper Snapple Group, Inc., various lenders and JPMorgan Chase Bank, N.A., as administrative agent, dated March 10, 2008
  21 .1**   List of Subsidiaries of Dr Pepper Snapple Group, Inc.
  99 .1+   Preliminary Information Statement of Dr Pepper Snapple Group, Inc. dated March 20, 2008
  99 .2+   Form of Letter to Cadbury Schweppes plc Shareholders


 

         
Exhibit
   
Number
 
Exhibit Description
 
  99 .3+   Form of Letter to Dr Pepper Snapple Group, Inc. Stockholders
 
     
  *     Previously filed.
  **     To be filed by amendment.
      Portions of this Exhibit have been omitted and filed separately with the Securities and Exchange Commission as part of an application for confidential treatment pursuant to the Securities Exchange Act of 1934, as amended.
  +     Filed herewith.
  (1)     CBI Holdings Inc. will be a wholly-owned subsidiary of Dr Pepper Snapple Group, Inc. upon separation.

 

Exhibit 2.1
FORM OF
SEPARATION AND DISTRIBUTION AGREEMENT
AMONG
CADBURY PLC,
CADBURY SCHWEPPES PLC
AND
DR PEPPER SNAPPLE GROUP, INC.
Dated as of [_______], 2008

 


 

Table of Contents
                 
            Page
 
               
ARTICLE I DEFINITIONS AND INTERPRETATION     1  
 
  Section 1.01   Certain Defined Terms     1  
 
  Section 1.02   Interpretation and Rules of Construction     16  
 
               
ARTICLE II THE SEPARATION     16  
 
  Section 2.01   Transfer of Assets     16  
 
  Section 2.02   Assumption and Satisfaction of Liabilities     18  
 
  Section 2.03   Intercompany Balances     18  
 
  Section 2.04   Transfers Not Effected on or Prior to the Demerger Effective Time; Transfers Deemed Effective as of the Demerger Effective Time     19  
 
  Section 2.05   Transfer Documents     20  
 
  Section 2.06   Further Assurances     20  
 
  Section 2.07   Replacement of Guarantors and Obligors     21  
 
  Section 2.08   Disclaimer of Representations and Warranties     22  
 
               
ARTICLE III CERTAIN ACTIONS AT OR PRIOR TO THE DISTRIBUTION     23  
 
  Section 3.01   Certificate of Incorporation; Bylaws     23  
 
  Section 3.02   Directors     23  
 
  Section 3.03   Resignations     23  
 
  Section 3.04   Ancillary Agreements     23  
 
               
ARTICLE IV THE DISTRIBUTION     23  
 
  Section 4.01   The Distribution     23  
 
  Section 4.02   Fractional Shares     24  
 
  Section 4.03   Actions in Connection with the Distribution.     24  
 
  Section 4.04   Distribution Date     25  
 
  Section 4.05   Conditions to Distribution     25  
 
  Section 4.06   Consent to the Reduction     26  
 
               
ARTICLE V CERTAIN COVENANTS     26  
 
  Section 5.01   Non-Solicitation of Employees     26  
 
  Section 5.02   Auditors and Audits; Annual and Quarterly Financial Statements and Accounting     27  
 
  Section 5.03   CS Obligations     29  
 
               
ARTICLE VI INTELLECTUAL PROPERTY MATTERS     29  
 
  Section 6.01   Cadbury Names and Marks     29  
 
  Section 6.02   Beverages Names and Marks     30  
 
  Section 6.03   Memorabilia     32  
 
  Section 6.04   Additional Licenses     32  
 
  Section 6.05   Know-How Agreement     33  
 
  Section 6.06   Domain Names Agreement     33  

i


 

                 
            Page
ARTICLE VII INDEMNIFICATION     33  
 
  Section 7.01   Release of Pre-Distribution Claims     33  
 
  Section 7.02   Indemnification by CS     35  
 
  Section 7.03   Indemnification by DPS     36  
 
  Section 7.04   Procedures for Indemnification     36  
 
  Section 7.05   Cooperation in Defense and Settlement     38  
 
  Section 7.06   Indemnification Obligations Net of Insurance Proceeds and Other Amounts     38  
 
  Section 7.07   Additional Matters; Survival of Indemnities     39  
 
               
ARTICLE VIII ACCESS TO RECORDS; ACCESS TO INFORMATION; LEGAL AND OTHER MATTERS     39  
 
  Section 8.01   Provision of Corporate Records     39  
 
  Section 8.02   Access to Information     40  
 
  Section 8.03   Disposition of Information     40  
 
  Section 8.04   Witness Services     41  
 
  Section 8.05   Reimbursement; Other Matters     41  
 
  Section 8.06   Confidentiality     41  
 
  Section 8.07   Privileged Matters     42  
 
  Section 8.08   Ownership of Information     43  
 
  Section 8.09   Other Agreements     44  
 
  Section 8.10   Control of Legal Matters     44  
 
               
ARTICLE IX INSURANCE     46  
 
  Section 9.01   Policies and Rights Included Within Assets     46  
 
  Section 9.02   Administration; Other Matters     47  
 
  Section 9.03   Agreement for Waiver of Conflict and Shared Defense     48  
 
               
ARTICLE X DISPUTE RESOLUTION     48  
 
  Section 10.01   Disputes     48  
 
  Section 10.02   Dispute Resolution     48  
 
  Section 10.03   Continuity of Service and Performance     50  
 
               
ARTICLE XI TERMINATION     50  
 
  Section 11.01   Termination     50  
 
  Section 11.02   Effect of Termination     50  
 
  Section 11.03   Amendment     50  
 
  Section 11.04   Waiver     50  
 
               
ARTICLE XII MISCELLANEOUS     50  
 
  Section 12.01   Limitation of Liability     50  
 
  Section 12.02   Expenses     51  
 
  Section 12.03   Notices     51  
 
  Section 12.04   Public Announcements     52  
 
  Section 12.05   Severability     52  
 
  Section 12.06   Entire Agreement     52  
 
  Section 12.07   Assignment     52  

ii


 

                 
            Page
 
  Section 12.08   Parties in Interest     52  
 
  Section 12.09   Currency     52  
 
  Section 12.10   Tax Matters     52  
 
  Section 12.11   Employee Matters     53  
 
  Section 12.12   Governing Law     53  
 
  Section 12.13   Waiver of Jury Trial     53  
 
  Section 12.14   Survival of Covenants     53  
 
  Section 12.15   Counterparts     53  
 
               
SCHEDULES        
 
               
 
  Schedule 1.01(a)   AsiaPac Territory        
 
  Schedule 1.01(b)   Beverages Assets        
 
  Schedule 1.01(c)   Beverages Balance Sheet        
 
  Schedule 1.01(d)   Beverages Liabilities        
 
  Schedule 1.01(e)   Beverages Litigation Matters        
 
  Schedule 1.01(f)   Beverages Policies        
 
  Schedule 1.01(g)   Beverages Shared Policies        
 
  Schedule 1.01(h)   Cadbury plc Assets        
 
  Schedule 1.01(i)   Cadbury plc Balance Sheet        
 
  Schedule 1.01(j)   Cadbury plc Entities        
 
  Schedule 1.01(k)   Cadbury plc Liabilities        
 
  Schedule 1.01(l)   Cadbury plc Litigation Matters        
 
  Schedule 1.01(m)   Continuing Arrangements        
 
  Schedule 1.01(n)   DPS Entities        
 
  Schedule 1.01(o)   DPS Transaction Costs        
 
  Schedule 1.01(p)   Intercompany Balances        
 
  Schedule 1.01(q)   Territory        
 
  Schedule 2.01(a)   Transfer of Assets        
 
  Schedule 2.01(c)   Shared Contracts        
 
  Schedule 2.07(a)   DPS Guarantees and Obligations        
 
  Schedule 2.07(d)   Cadbury plc Guarantees and Obligations        
 
  Schedule 8.10(c)(i)   Cadbury plc Claims        
 
  Schedule 8.10(c)(ii)   Beverages Claims        
 
  Schedule 8.10(c)(iii)   Joint Cadbury plc and Beverages Claims        
 
               
EXHIBITS        
 
               
 
  Exhibit 1.01(a)   Form of Employee Matters Agreement        
 
  Exhibit 1.01(b)   Form of Tax Sharing Agreement        
 
  Exhibit 1.01(c)   Form of Transition Services Agreement        
 
  Exhibit 4.06   Form of Letter of Consent to Reduction        
 
  Exhibit 6.06(a)   Form of Know-How Agreement        
 
  Exhibit 6.07   Form of Domain Names Agreement        

iii


 

SEPARATION AND DISTRIBUTION AGREEMENT
          SEPARATION AND DISTRIBUTION AGREEMENT (this “ Agreement ”), dated as of [___], 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;
     (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;

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          (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.
          “ 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

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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.
          “ 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.

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          “ 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 Person’s 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 Person’s authority) with respect to the Beverages Business);
     (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

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     (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 the 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, as set forth in Schedule 1.01(f) .
          “ Beverages Shared Policies ” shall mean the 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, as set forth in Schedule 1.01(g) .
          “ 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;

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     (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.
          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.

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          “ 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;
     (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 Person’s 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 Person’s 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

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     (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.
          “ 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 Party’s 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.

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          “ 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.
          “ 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) .

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          “ 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.
          “ 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.

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          “ 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.
          “ 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 the 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, 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

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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.
          “ 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.

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          “ 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).
          “ 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.

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          “ 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:
         
Definition   Location  
“Agreement”
  Preamble
“Agreement Disputes”
    10.01  
“American Samoa Business”
    6.02 (d)
“AsiaPac Licensed Intellectual Property
    6.04 (c)
“Assume” or “Assumed”
    2.02  
“Audited Party”
    5.02 (d)
“Beverages Claims”
    8.10 (c)
“Beverages Names and Marks”
    6.02 (a)
“Cadbury Names and Marks”
    6.01 (a)
“Cadbury plc Claims”
    8.10 (c)
“Corporate Name”
    6.01 (b)
“Court”
    4.01 (a)
“Court Order”
    4.01 (b)
“CS”
  Recitals
“Domain Names Agreement”
    6.06  
“DPS”
  Preamble
“DPS Common Stock”
  Recitals
“DPS Licensed Intellectual Property
    6.04 (b)
“Escalation Notice”
    10.02 (a)
“Existing Stock”
    6.01 (c)
“Future Beverages Litigation Matter”
  8.10(b)(ii)
“Future Cadbury plc Litigation Matter”
    8.10 (b)(i)
“Future Joint Litigation Matters”
  8.10(b)(iii)
“Improvements”
    6.04 (b)
“Indemnifying Party”
    7.04 (b)
“Indemnitee”
    7.04 (b)
“Indemnity Payment”
    7.06 (a)
“Interim Financial Statements”
    5.02 (c)
“Internal Control Audit and Management Assessments”
    5.02 (b)
“Know-How Agreement”
    6.05 (a)
“Joint Cadbury plc and Beverages Claims”
    8.10 (c)
“Memorabilia”
    6.03  
“Other Party’s Auditors”
    5.02 (b)
“Party”
  Preamble
“Plan of Separation”
  Recitals

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Definition   Location  
“Reduction”
    4.01 (a)
“Shared Contract”
    2.01 (c)(i)
“Third Party Claim”
    7.04 (b)
“Third Party Proceeds”
    7.06 (a)
“Transfer”
    2.01 (a)(i)
          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;
     (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

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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 Party’s respective Group to which any Assets are to be Transferred pursuant to this Section 2.01 or Section 2.04 .
          (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

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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.
          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 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 [______], 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

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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.
          (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) 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 Party’s business and (ii) 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 Party’s 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

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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 (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 Party’s 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

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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.
          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

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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, 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.

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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.
          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 shareholder’s 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

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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 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 owner’s 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

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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.
          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 Exchange’s 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

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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;
          (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 plc’s 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

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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 opinion of the audited 2008 annual financial statements on the same date that Cadbury plc’s auditors date their opinion on Cadbury plc’s audited annual financial statements, such that Cadbury plc is able to meet its timetable for the printing, filing and public dissemination of Cadbury plc’s 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 Group’s auditors to permit Cadbury plc Group’s 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 management’s 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 auditor’s audit of its internal control over financial reporting and management’s assessment thereof in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 and the SEC’s and Public Company Accounting Oversight Board’s 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 Party’s auditors (each such other Party’s auditors, collectively, the “ Other Party’s Auditors ”) with respect to information to be included or contained in such other Party’s annual financial statements and to permit the Other Party’s 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 Party’s Auditors

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with respect to information to be included or contained in the Interim Financial Statements and to permit the Other Party’s 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 Party’s 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 Party ”) and work papers related to the annual audits of such Audited Party, in all cases within a reasonable time prior to such Audited Party’s auditors’ opinion date, so that the Other Party’s Auditors are able to perform the procedures they reasonably consider necessary to take responsibility for the work of the Audited Party’s auditors as it relates to their auditors’ report on such other Party’s 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 Party’s Auditors and management its personnel and Records in a reasonable time prior to the Other Party’s Auditors’ opinion date and other Party’s management’s assessment date so that the Other Party’s Auditors and other Party’s 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 Party’s 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 Party’s Auditors and (iii) unless required by generally accepted accounting principles or a reasonable interpretation thereof by either Party’s auditors, Law or a Governmental Entity, neither party shall make such determination or changes which would affect the other Party’s 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 Entity’s 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 Party’s 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 .

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          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.
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 Group’s Internet websites and web pages within three months following the Distribution Date and (ii) all of the DPS Group’s intranet websites and web pages within three months following the Distribution Date.

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          (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 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 Group’s Internet websites and web pages within three months following the Distribution Date and (ii) all of the Cadbury plc Group’s intranet websites and web pages within three months following the

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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.
          (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, shall 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 Group’s 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 Group’s 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

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any Beverages Names and Marks in connection with the Cadbury plc Group’s 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 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 Group’s 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 Group’s 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

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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.
          (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

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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 other Party’s 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 Party’s 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 Party’s Group), on the one hand, and the other Party (and/or a member of such Party’s 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

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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.
          (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 Party’s 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 Party’s Group), on the one hand, and the other Party (and/or a member of such Party’s 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

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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.
          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)

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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 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 Indemnitee’s 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 Party’s own cost and expense and by such Indemnifying Party’s 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 Party’s expense, all witnesses, pertinent Information and materials in such Indemnitee’s possession or under such Indemnitee’s 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 Party’s expense, all witnesses, pertinent Information, material in such Indemnifying Party’s possession or under such Indemnifying Party’s 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 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

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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.
          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 Party’s respective Group) with respect to which one or both Parties (or any member of either Party’s 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 Indemnitee’s inability to collect or recover any such Insurance Proceeds or Third Party Proceeds shall not limit the Indemnifying Party’s 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

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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 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

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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 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 Group’s possession, custody or control as of the Demerger Effective Time may include Information owned by the other Party or a member of such Party’s 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

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shall remain the property of such other Party or member of such other Party’s 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 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 Group’s 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

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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 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 Party’s 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

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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 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 Group’s, 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 Party’s 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 Group’s 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.
          Section 8.08 Ownership of Information .

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          (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 Matter ”), and CS shall use its reasonable best efforts to have a member of the Cadbury

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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 not 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 party’s 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 (“ Beverages Claims ”), and (iii) listed in Schedule 8.10(c)(iii) or that relate to both the Cadbury

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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 Party’s 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.

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          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 Party’s 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 Party’s 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 Party’s 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 (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

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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 ”).
          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

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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 CS 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.
          (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 Party’s 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.

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          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 Party’s 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.
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 PARTY’S

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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 ):
  (a)   if to Cadbury plc or CS:
 
      Cadbury plc
25 Berkeley Square
London W1J 6HB
Facsimile: 44-20-7830-5015
Attention: Henry Udow, Esq.
                   Chief Legal Officer
 
      with a copies to:
 
      Shearman & Sterling LLP
599 Lexington Avenue
New York, NY 10022-6069
Telecopy: (212) 848-7179
Attention: Creighton O’M. Condon, Esq.
                    Scott Petepiece, Esq.
 
      and
 
      Slaughter and May
One Bunhill Row
London EC1Y 8YY
Facsimile: 44-20-7090-5000
Attention: Tim Boxell
 
  (b)   if to DPS:
 
      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 Transfer Documents 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.
          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,

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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 .
          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.
         
  CADBURY SCHWEPPES PLC
 
 
  By      
    Name:      
    Title:      
 
  DR PEPPER SNAPPLE GROUP, INC.
 
 
  By      
    Name:      
    Title:      
 
  CADBURY PLC, solely for the purposes of
Sections 4.01(a) and (b) and Section 5.03
 
 
  By:      
    Name:      
    Title:      
 

 

 

Exhibit 3.1
FORM OF
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
DR PEPPER SNAPPLE GROUP, INC.
Pursuant to Sections 242 and 245
of the Delaware General Corporation Law
          Dr Pepper Snapple Group, Inc., a corporation organized and existing under the laws of the State of Delaware, hereby certifies that:
          First: the name of the corporation is Dr Pepper Snapple Group, Inc.;
          Second: the original certificate of incorporation of Dr Pepper Snapple Group, Inc. was filed in the Office of the Secretary of State of the State of Delaware on October 24, 2007 pursuant to the Delaware General Corporation Law;
          Third: pursuant to Sections 242 and 245 of the Delaware General Corporation Law, this Amended and Restated Certificate of Incorporation restates, integrates and further amends the provisions of the current Certificate of Incorporation of the corporation;
          Fourth: the directors and the stockholders of Dr Pepper Snapple Group, Inc., in accordance with Sections 242 and 245 of the Delaware General Corporation Law, have adopted and approved this Amended and Restated Certificate of Incorporation; and
          Fifth: the certificate of incorporation of Dr Pepper Snapple Group, Inc. is hereby amended and restated to read in its entirety as follows:
          FIRST. Name . The name of this corporation is Dr Pepper Snapple Group, Inc. (the “ Corporation ”).
          SECOND. Registered Office . The registered office of the Corporation in the State of Delaware is located at 1209 Orange Street, City of Wilmington, County of New Castle. The name and address of the Corporation’s registered agent for service of process in Delaware is The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801.
          THIRD. Corporate Purpose . The nature of the business or purposes of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware as it now exists and may hereinafter be amended (the “ DGCL ”).
          FOURTH. Shares, Classes and Series Authorized . The total number of shares of all classes of stock which the Corporation shall have authority to issue is 815,000,000 shares, consisting of 15,000,000 shares of Preferred Stock, par value $0.01 per share, as more fully described in Article Fifth, Section A below (the “ Preferred Stock ”), and 800,000,000 shares of

 


 

Common Stock, par value $0.01 per share, as more fully described in Article Fifth, Section B below (the “ Common Stock ”).
          FIFTH. A. Preferred Stock .
          The shares of Preferred Stock may be divided and issued from time to time in one or more series as may be designated by the Board of Directors of the Corporation (the “ Board ”), each such series to be distinctly titled and to consist of the number of shares designated by the Board. Subject to any limitations prescribed by applicable law or this Certificate of Incorporation, the Board is hereby expressly vested with authority to fix by resolution the powers, designations, preferences and relative, participating, optional or other special rights (if any), and the qualifications, limitations or restrictions thereof (if any), of the Preferred Stock and each series thereof which may be designated by the Board, including, but without limiting the generality of the foregoing, the following:
     (a) the maximum number of shares to constitute such series, which may subsequently be increased or decreased (but not below the number of shares of that series then outstanding) by resolution of the Board, the distinctive designation thereof and the stated value thereof if different than the par value thereof;
     (b) whether the shares of such series shall have voting powers, full or limited, or no voting powers and, if any, the terms of such voting powers;
     (c) the dividend rate, if any, on the shares of such series, the conditions and dates upon which such dividends shall be payable, the preference or relation which such dividends shall bear to the dividends payable on any other class or classes or on any other series of capital stock and whether such dividend shall be cumulative or noncumulative;
     (d) whether the shares of such series shall be subject to redemption by the Corporation and, if made subject to redemption, the times, prices and other terms, limitations, restrictions or conditions of such redemption;
     (e) the relative amounts and the relative rights or preference, if any, of payment in respect of shares of such series, which the holders of shares of such series shall be entitled to receive upon the liquidation, dissolution or winding-up of the Corporation;
     (f) whether or not the shares of such series shall be subject to the operation of a retirement or sinking fund and, if so, the extent to and manner in which any such retirement or sinking fund shall be applied to the purchase or redemption of the shares of such series for retirement or to other corporate purposes and the terms and provisions relative to the operation thereof;
     (g) whether or not the shares of such series shall be convertible into, or exchangeable for, shares of any other class, classes or series, or other securities, whether or not issued by the Corporation, and if so convertible or exchangeable,

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the price or prices or the rate or rates of conversion or exchange and the method, if any, of adjusting same;
     (h) the limitations and restrictions, if any, to be effective while any shares of such series are outstanding upon the payment of dividends or the making of other distributions on, and upon the purchase, redemption or other acquisition by the Corporation of, the Common Stock or any other class or classes of stock of the Corporation ranking junior to the shares of such series either as to dividends or upon liquidation, dissolution or winding-up;
     (i) the conditions or restrictions, if any, upon the creation of indebtedness of the Corporation or upon the issuance of any additional stock (including additional shares of such series or of any other series or of any other class) ranking on a parity with or prior to the shares of such series as to dividends or distributions of assets upon liquidation, dissolution or winding-up; and
     (j) any other preference and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions thereof, as shall not be inconsistent with applicable law, this Article Fifth or any resolution of the Board pursuant hereto.
          B. Common Stock.
          All shares of Common Stock shall be identical and shall entitle the holders thereof to the same rights and privileges. The voting, dividend and liquidation rights of the holders of the Common Stock are subject to and qualified by the rights of the holders of Preferred Stock of any series as may be designated from time to time by the Board upon any issuance of Preferred Stock of any series.
     (a) Dividends . Dividends may be declared and paid on the Common Stock then outstanding from funds lawfully available therefor as and when determined by the Board and subject to any preferential dividend or other rights of any then outstanding Preferred Stock. The holders of Common Stock then outstanding shall be entitled to share equally, share for share, in such dividends, whether payable in cash, in property or in shares of stock of the Corporation.
     (b) Voting Rights . Each holder of Common Stock then outstanding shall be entitled to one vote per share held by such holder at all meetings of stockholders. There shall be no cumulative voting.
     (c) Liquidation . In the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, after payment shall have been made to holders of the Preferred Stock then outstanding of the full amounts to which they shall be entitled as stated and expressed herein or as may be stated and expressed pursuant hereto, the holders of Common Stock then outstanding shall be entitled, to the exclusion of the holders of the Preferred Stock then outstanding, to share ratably according to the number of shares of the Common Stock then outstanding held by them in all remaining assets of the Corporation available for distribution to its stockholders.

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          SIXTH. Perpetual Existence . The Corporation shall have perpetual existence.
          SEVENTH. Director Liability .
     (a) To the fullest extent permitted by the DGCL, no director of the Corporation shall be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director.
     (b) Notwithstanding clause (a) of this Article Seventh, a director shall be liable to the extent provided by applicable law (i) for breach of the director’s duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) pursuant to Section 174 of the DGCL or (iv) for any transaction from which the director derived an improper personal benefit. No amendment to or repeal of this Article Seventh shall apply to or have any effect on the liability or alleged liability of any director of the Corporation for or with respect to any acts or omissions of such director occurring prior to such amendment.
     (c) If the DGCL is amended to authorize corporate action further eliminating or limiting the liability of directors, then a director of the Corporation shall be free of liability to the fullest extent permitted by the DGCL.
          EIGHTH. Indemnification .
     (a) Actions, Suits and Proceedings Other than by or in the Right of the Corporation . The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that the person is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other entity (including any employee benefit plan) (all such persons being referred to hereafter as an “ Indemnitee ”), or by reason of any action alleged to have been taken or omitted in such person’s capacity as a director, officer, employee or agent of the Corporation or in any other capacity while serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other entity (including any employee benefit plan), against all expenses (including attorneys’ fees), judgments, fines, taxes or penalties and amounts paid in settlement actually and reasonably incurred by or on behalf of Indemnitee in connection with such action, suit or proceeding if Indemnitee acted in good faith and in a manner which Indemnitee reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe the Indemnitee’s conduct was unlawful. The termination of any action, suit or

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proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that Indemnitee did not act in good faith and in a manner which Indemnitee reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that the Indemnitee’s conduct was unlawful.
     (b) Actions or Suits by or in the Right of the Corporation . The Corporation shall indemnify any Indemnitee who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that Indemnitee is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other entity (including any employee benefit plan) , or by reason of any action alleged to have been taken or omitted in such person’s capacity as a director, officer, employee or agent of the Corporation or in any other capacity while serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other entity (including any employee benefit plan), against all expenses (including attorneys’ fees) actually and reasonably incurred by or on behalf of Indemnitee in connection with the defense or settlement of such action or suit if Indemnitee acted in good faith and in a manner which Indemnitee reasonably believed to be in or not opposed to the best interests of the Corporation, except that no indemnification shall be made under this Article Eighth in respect of any claim, issue or matter as to which Indemnitee shall have been adjudged to be liable to the Corporation, unless, and only to the extent that the Court of Chancery of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of such liability but in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnity for such expenses (including attorneys’ fees) which the Court of Chancery of Delaware or such other court shall deem proper.
     (c) Indemnification for Expenses . Notwithstanding any other provisions of this Article Eighth, to the extent that an Indemnitee has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in clauses (a) and (b) of this Article Eighth, or in defense of any claim, issue or matter therein, Indemnitee shall be indemnified against all expenses (including attorneys’ fees) actually and reasonably incurred by or on behalf of Indemnitee in connection therewith. Without limiting the foregoing, if any action, suit or proceeding is disposed of, on the merits or otherwise (including a disposition without prejudice), without (i) the disposition being adverse to Indemnitee, (ii) an adjudication that Indemnitee was liable to the Corporation, (iii) a plea of guilty or nolo contendere by Indemnitee, (iv) an adjudication that Indemnitee did not act in good faith and in a manner the Indemnitee reasonably believed to be in or not opposed to the best interests of the Corporation, and (v) with respect to any criminal proceeding, an adjudication that Indemnitee had

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reasonable cause to believe his or her conduct was unlawful, Indemnitee shall be considered for the purposes hereof to have been wholly successful with respect thereto.
     (d) Notification and Defense of Claim . As a condition precedent to an Indemnitee’s right to be indemnified, such Indemnitee must notify the Corporation in writing as soon as practicable of any action, suit or proceeding involving such Indemnitee for which indemnification will or could be sought. With respect to any action, suit or proceeding of which the Corporation is so notified, the Corporation will be entitled to participate therein at its own expense and/or to assume the defense thereof at its own expense, with legal counsel reasonably acceptable to Indemnitee. After notice from the Corporation to Indemnitee of its election so to assume such defense, the Corporation shall not be liable to Indemnitee for any legal or other expenses subsequently incurred by Indemnitee in connection with such action, suit or proceeding, other than as provided below in this Article Eighth. Indemnitee shall have the right to employ his or her own counsel in connection with such action, suit or proceeding, but the fees and expenses of such counsel incurred after notice from the Corporation of its assumption of the defense thereof shall be at the expense of Indemnitee unless (i) the employment of counsel by Indemnitee has been authorized by the Corporation, (ii) counsel to Indemnitee shall have reasonably concluded that there may be a conflict of interest or position on any significant issue between the Corporation and Indemnitee in the conduct of the defense of such action, suit or proceeding or (iii) the Corporation shall not in fact have employed counsel to assume the defense of such action, suit or proceeding, in each of which cases, the fees and expenses of one counsel for Indemnitee shall be at the expense of the Corporation, except as otherwise expressly provided by this Article Eighth. The Corporation shall not be required to indemnify Indemnitee under this Article Eighth for any amounts paid in settlement of any action, suit or proceeding effected without its written consent. The Corporation shall not settle any action, suit or proceeding in any manner which would impose any judgment, penalty, admission or limitation on Indemnitee without Indemnitee’s written consent. Neither the Corporation nor Indemnitee will unreasonably withhold or delay its consent to any proposed settlement.
     (e) Advancement of Expenses . In the event of any threatened or pending action, suit or proceeding of which the Corporation receives notice under this Article Eighth, any expenses (including attorneys’ fees for attorneys retained in accordance with clause (d) above) incurred by or on behalf of Indemnitee in defending an action, suit or proceeding or any appeal therefrom shall be paid by the Corporation in advance of the final disposition of such matter; provided , however , that the payment of such expenses incurred by or on behalf of Indemnitee in advance of the final disposition of such matter shall be made only upon receipt of an undertaking by or on behalf of Indemnitee to repay all amounts so advanced in the event that it shall ultimately be determined by final judicial decision from which there is no further right to appeal that Indemnitee is not entitled to be indemnified by the Corporation as authorized in this Article

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Eighth. Such undertaking shall be accepted without reference to the financial ability of Indemnitee to make such repayment. Any advances or undertakings to repay pursuant to this clause (e) shall be unsecured and interest-free.
     (f) Procedure for Indemnification . In order to obtain indemnification or advancement of expenses pursuant to clauses (a), (b), (c), (d) or (e) of this Article Eighth, an Indemnitee shall submit to the Corporation a written request. Any such indemnification or advancement of expenses shall be made as soon as practicable after written demand by Indemnitee therefor is presented to the Corporation, and in any event within (i) in the case of indemnification under clause (c) or advancement of expenses, 20 business days after receipt by the Corporation, of the written request of Indemnitee, or (ii) in the case of all other indemnification, 45 business days after receipt by the Corporation of the written request of Indemnitee, unless with respect to requests under this subclause (ii), the Corporation (y) has assumed the defense pursuant to clause (d) of this Article Eighth (and none of the circumstances described in clause (d) of this Article Eighth that would nonetheless entitle Indemnitee to indemnification for the fees and expenses of separate counsel have occurred) or (z) determined, by clear and convincing evidence, within such 45 business day period referred to above that Indemnitee did not meet the applicable standard of conduct. Such determination in clause (z), and any determination that advanced expenses must be repaid to the Corporation, shall be made in each instance (a) by a majority vote of the directors consisting of persons who are not at that time parties to the action, suit or proceeding in question (“ disinterested directors ”), whether or not a quorum, (b) by a committee of disinterested directors designated by majority vote of disinterested directors, whether or not a quorum, (c) if there are no disinterested directors, or if the disinterested directors so direct, by independent legal counsel (who may, to the extent permitted by applicable law, be regular legal counsel to the Corporation) in a written opinion, or (d) by the stockholders of the Corporation. Any determination made under this clause (f) shall not create any presumption or bind any court in determining whether indemnification or repayment of advanced expenses is required.
     (g) Limitations . Notwithstanding anything to the contrary in this Article Eighth, the Corporation shall not indemnify an Indemnitee pursuant to this Article Eighth (i) in connection with an action, suit or proceeding (or part thereof) initiated by such Indemnitee unless the initiation thereof was approved by the Board, or (ii) to the extent such Indemnitee is reimbursed from the proceeds of insurance, and in the event the Corporation makes any indemnification payments to an Indemnitee and such Indemnitee is subsequently reimbursed from the proceeds of such insurance, such Indemnitee shall promptly refund indemnification payments to the Corporation to the extent of such insurance reimbursement.
     (h) Subsequent Amendment . No amendment, termination or repeal of this Article Eighth or of the relevant provisions of the DGCL or any other applicable laws shall adversely affect or diminish in any way the rights of any

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Indemnitee to indemnification under the provisions hereof with respect to any action, suit or proceeding arising out of or relating to any actions, transactions or facts occurring prior to the final adoption of such amendment, termination or repeal.
     (i) Other Rights . The indemnification and advancement of expenses provided by this Article Eighth shall not be deemed exclusive of any other rights to which an Indemnitee seeking indemnification or advancement of expenses may be entitled under any law (common or statutory), agreement or vote of stockholders or disinterested directors or otherwise, both as to action in Indemnitee’s official capacity and as to action in any other capacity while holding office for the Corporation. In addition, the Corporation may, to the extent authorized from time to time by its Board, grant indemnification rights to other employees or agents of the Corporation or other persons serving the Corporation and such rights may be equivalent to, or greater or less than, those set forth in this Article Eighth.
     (j) Insurance . The Corporation may purchase and maintain insurance on behalf of any person who is or was a director or officer of the Corporation, or is or was serving at the request of the Corporation as a director, officer, manager, member, employee or agent of another corporation, partnership, limited liability company, joint venture, trust or other entity against any liability asserted against him or her and incurred by him or her in any such capacity, or arising out of his or her status as such, whether or not the Corporation would have the power to indemnify him or her against such liability under the provisions of Section 145 of the DGCL.
     (k) Savings Clause . If this Article Eighth or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Corporation shall nevertheless indemnify each Indemnitee as to any expenses (including attorneys’ fees), liabilities, losses, judgments, fines, ERISA taxes or penalties and amounts paid in settlement in connection with any action, suit or proceeding, whether civil, criminal, administrative or investigative, including an action by or in the right of the Corporation, to the fullest extent permitted by any applicable portion of this Article Eighth that shall not have been invalidated and to the fullest extent permitted by applicable law.
     (l) Definitions . For purposes of this Article Eighth references to the “Corporation” shall include, in addition to the resulting corporation, any constituent corporation, partnership, limited liability company or joint venture, trust or other entity (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, managers, members, and employees or agents so that any person who is or was a director, officer, manager, member, employee or agent of such constituent, or is or was serving at the request of such constituent as a director, officer, manager, member, employee or agent of another corporation, partnership, limited liability company,

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joint venture, trust or other entity, shall stand in the same position under the provisions of this Article Eighth with respect to the resulting or surviving corporation, partnership, limited liability company, or joint venture or other enterprise as such person would have with respect to such constituent if its separate existence had continued.
     (m) Scope . The Corporation shall indemnify any Indemnitee to the fullest extent permitted by the DGCL, and if the DGCL is amended after adoption of this Article Eighth to expand further the indemnification permitted to Indemnitees, then the Corporation shall indemnify such persons to the fullest extent permitted by the DGCL, as so amended.
     (n) Continuation of Rights . The indemnification and advancement of expenses provided by, or granted pursuant to, this Article Eighth shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person.
          NINTH. Management . For the management of the business and for the conduct of the affairs of the Corporation, and in further definition, limitation and regulation of the powers of the Corporation and of its directors and of its stockholders or any class thereof, as the case may be, it is further provided that:
     (a) General Powers . The business and affairs of the Corporation shall be managed by the Board, which may exercise all such powers of the Corporation and do all such lawful acts and things as are not by applicable law, this Certificate of Incorporation or the By-Laws of the Corporation, as amended and restated to date (the “ By-Laws ”) directed or required to be exercised or done by stockholders.
     (b) Number of Directors; Election of Directors . Subject to the rights of the holders of any series of Preferred Stock then outstanding, the number of directors which shall constitute the whole Board shall be fixed by the Board. Except as otherwise provided by applicable law or the By-Laws, directors shall be elected at the annual meeting of stockholders, and the election of directors need not be by written ballot.
     (c) Classes of Directors . The Board shall be and is divided into three classes: Class I, Class II and Class III.
     (d) Terms of Office . Each director shall serve for a term ending on the date of the third annual meeting following the annual meeting at which such director was elected; provided , however , that each director initially appointed to Class I shall serve for a term expiring at the Corporation’s annual meeting of stockholders held in 2009; each director initially appointed to Class II shall serve for a term expiring at the Corporation’s annual meeting of stockholders held in 2010; and each director initially appointed to Class III shall serve for a term

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expiring at the Corporation’s annual meeting of stockholders held in 2011; provided further , that the term of each director shall continue until the election and qualification of his successor and shall be subject to his earlier death, resignation, retirement or removal. At each annual election, the directors chosen to succeed those whose terms then expired shall be of the same class as the directors they succeed, unless, by reason of any intervening changes in the authorized number of directors, the Board shall have designated one or more directorships whose term then expires as directorships of another class in order to more nearly achieve equality of number of directors among the classes.
     (e) Quorum and Manner of Acting . Unless otherwise provided by applicable law, the presence of a majority of the members of the Board shall be necessary to constitute a quorum for the transaction of business. In the absence of a quorum, a majority of the directors present may adjourn the meeting from time to time until the quorum shall be present. Notice of any adjourned meeting need not be given. At all meetings of the Board at which a quorum is present, all matters shall be decided by the affirmative vote of the majority of the directors present, except as otherwise required by law. The Board may hold its meetings at such place or places within or without the State of Delaware as the Board may from time to time determine or as shall be specified in the respective notices, or waivers of notice, thereof.
     (f) Removal . Subject to the rights of the holders of any series of Preferred Stock then outstanding, directors may be removed only for cause and only by the affirmative vote of at least two-thirds of the votes which all the stockholders would be entitled to cast in any annual election of directors or class of directors at a special meeting of stockholders called in accordance with this Certificate of Incorporation and the By-Laws expressly for that purpose; provided that, any director may be removed from office by the affirmative vote of a majority of the Board, at any time prior to the expiration of their term of office, as provided by applicable law, in the event a director is in breach of any agreement between such director and the Corporation relating to such director’s service as a director or employee of the Corporation.
     (g) Vacancies . Subject to the rights of the holders of any series of Preferred Stock then outstanding, any vacancy or newly created directorships in the Board, however occurring, shall be filled only by vote of a majority of the directors then in office, although less than a quorum, or by a sole remaining director, and shall not be filled by the stockholders. A director elected to fill a vacancy shall hold office until the next election of the class for which such director shall have been chosen, subject to the election and qualification of a successor and to such director’s earlier death, resignation, retirement or removal.
     (h) Stockholder Nominations and Introduction of Business, Etc . Advance notice of stockholder nominations for election of directors and other business to be brought by stockholders before a meeting of stockholders shall be given in the manner provided by the By-laws.

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          TENTH. No Action by Written Consent . Stockholders of the Corporation may not take any action by written consent in lieu of a meeting.
          ELEVENTH. Special Meetings . Special meetings of stockholders may be held at such time and place, within or without the State of Delaware, as shall be stated in the notice of the meeting or in a waiver of notice thereof. Special meetings of the stockholders may be called only by the Chairman of the Board, the Chief Executive Officer or by resolution duly adopted by the affirmative vote of the majority of the members of the Board. Any such resolution shall be sent to the Chairman of the Board or the Chief Executive Officer and the Secretary or Assistant Secretary and shall state the purpose or purposes of the proposed meeting. Business transacted at any special meeting is limited to the purposes stated in the notice.
          TWELFTH. Denial of Pre-Emptive Rights . Subject to the rights of the holders of any series of Preferred Stock or any other class of capital stock of the Corporation (other than the Common Stock) then outstanding, no holder of any class of capital stock of the Corporation shall be entitled, as such, as a matter of right, to subscribe for or purchase any part of any new or additional issues of capital stock of the Corporation of any class whatsoever, or of securities convertible into or exchangeable for capital stock of the Corporation of any class whatsoever, whether now or hereafter authorized, or whether issued for cash, property or services.
          THIRTEENTH. Amendment of By-Laws . The Board shall have the power to adopt, amend or repeal the By-Laws at any valid meeting of the Board by the affirmative vote of a majority of the whole Board. The By-Laws may also be altered, amended or repealed at any annual meeting of stockholders, or at any special meeting of the holders of shares of stock entitled to vote thereon called for that purpose, by the affirmative vote of not less than a majority of the voting power of all outstanding shares of capital stock of the Corporation entitled to vote thereon; provided however , that with respect to Sections 2, 6, 7 and 11 of Article II, Sections 2, 3, 4, 8, 9 and 11 of Article III and Article VIII of the By-Laws, such provisions may only be altered, amended or repealed at any annual meeting of stockholders, or at any special meeting of the holders of shares of stock entitled to vote thereon called for that purpose, by an affirmative vote of not less than two-thirds of the voting power of all outstanding shares of capital stock of the Corporation entitled to vote thereon.
          FOURTEENTH. Amendment of Certification of Incorporation . The Certificate of Incorporation may be altered, amended or repealed at any annual meeting of stockholders, or at any special meeting of the holders of shares of stock entitled to vote thereon called for that purpose, by the affirmative vote of not less than a majority of the voting power of all outstanding shares of capital stock of the Corporation entitled to vote thereon; provided however , that with respect to Articles Seventh, Eighth, Ninth, Tenth, Eleventh, Thirteenth and this Fourteenth, such provisions may only be altered, amended or repealed at any annual meeting of stockholders, or at any special meeting of the holders of shares of stock entitled to vote thereon called for that purpose, by an affirmative vote of not less than two-thirds of the voting power of all outstanding shares of capital stock of the Corporation entitled to vote thereon.
[signature page follows]

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          IN WITNESS WHEREOF, the Corporation has caused this Amended and Restated Certificate of Incorporation to be executed by the President and Chief Executive Officer of the Corporation on this ___day of ___2008.
         
  DR PEPPER SNAPPLE GROUP, INC.
 
 
  By:      
    Name:      
    Title:   President and Chief Executive Officer   
 

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Exhibit 3.2
FORM OF
AMENDED AND RESTATED
BY-LAWS
OF
DR PEPPER SNAPPLE GROUP, INC.
ARTICLE I
OFFICE
     Section 1. Registered Office . The registered office of Dr Pepper Snapple Group, Inc. (the “ Corporation ”) shall be in the City of Wilmington, County of New Castle, State of Delaware.
     Section 2. Other Offices . The Corporation may also have offices at such other places both within and without the State of Delaware as the Board of Directors of the Corporation (the “ Board ”) may from time to time determine or the business of the Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
     Section 1. Annual Meeting . The annual meeting of the stockholders of the Corporation shall be held for the purpose of electing directors and conducting such other business as may properly come before the meeting. The date, time and place, within or without the State of Delaware, of the annual meeting shall be determined by the Board and stated in the notice of the meeting or in a waiver of notice of such annual meeting.
     Section 2. Special Meetings . Special meetings of stockholders may be held at such date, time and place, within or without the State of Delaware, as shall be stated in the notice of the meeting or in a waiver of notice thereof. Special meetings of the stockholders may be called only by the Chairman of the Board, the Chief Executive Officer or by resolution duly adopted by the affirmative vote of the majority of the members of the Board. Any such resolution shall be sent to the Chairman of the Board or the Chief Executive Officer and the Secretary or Assistant Secretary and shall state the purpose or purposes of the proposed meeting. Business transacted at any special meeting is limited to the purposes stated in the notice.
     Section 3. Notice . (a) Except as otherwise provided by applicable law, notice of each meeting of stockholders, whether annual or special, shall be given not less than 10 nor more than 60 days before the date of the meeting to each stockholder entitled to vote at such meeting. Without limiting the manner by which notice otherwise may be given to stockholders, any notice shall be effective if given by a form of electronic transmission consented to (in a manner consistent with the General Corporation Law of the State of Delaware as it now exists and may hereinafter be amended (the “ DGCL ”)) by the stockholder to whom the notice is given. The notices of all meetings shall state the place, date and time of the meeting and the

 


 

means of remote communications, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such meeting. The notice of a special meeting shall state, in addition, the purpose or purposes for which the meeting is called.
          (b) When a meeting is adjourned to another place, date or time, written notice need not be given of the adjourned meeting if the place, date and time thereof are announced at the meeting at which the adjournment is taken; provided , however , that if the adjournment is for more than 30 days, or if after the adjournment, a new record date is fixed for the adjourned meeting, written notice of the new place, date and time of the adjourned meeting shall be given in conformity herewith.
          (c) If notice is given by mail, such notice shall be deemed given when deposited in the United States mail, postage prepaid, directed to the stockholder at such stockholder’s address as it appears on the records of the Corporation. If notice is given by electronic transmission, such notice shall be deemed given at the time specified in Section 232 of the DGCL.
     Section 4. Stockholders List . The officer having charge of the stock ledger of the Corporation shall make, at least 10 days before every meeting of the stockholders, a complete list of the stockholders entitled to vote at such meeting arranged in alphabetical order, specifying the address of and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least 10 days prior to the meeting, at the principal place of business of the Corporation. The list shall also be produced and kept open at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present.
     Section 5. Quorum . The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders, except as otherwise provided by statute or by the Certificate of Incorporation of the Corporation, as amended and restated to date (the “ Certificate of Incorporation ”). If a quorum is not present, the holders of the shares present in person or represented by proxy at the meeting, and entitled to vote thereat, shall have the power, by the affirmative vote of the holders of a majority of such shares, to adjourn the meeting to another time and/or place, without notice, other than as required in Section 3(b) above and other than announcement at the meeting at which the adjournment was taken, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified.
     Section 6. Advance Notice Provisions for Business to be Transacted at Annual Meeting . (a) No business may be transacted at an annual meeting of stockholders, other than business that is either (A) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board (or any duly authorized committee thereof), (B) otherwise properly brought before the annual meeting by or at the direction of the Board (or any duly authorized committee thereof) or (C) otherwise properly brought before the annual meeting by any stockholder of the Corporation who (1) is a stockholder of record on both (x) the date of the

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giving of the notice provided for in this Section 6 and (y) the record date for the determination of stockholders entitled to vote at such annual meeting and (2) complies with the notice procedures set forth in this Section 6.
          (b) In addition to any other applicable requirements, for business to be properly brought before an annual meeting by a stockholder, such stockholder must have given timely notice thereof in proper written form to the Secretary and the business must constitute a proper matter under the DGCL for stockholder action.
          (c) To be timely, a stockholder’s notice shall be delivered to the Secretary at the principal executive offices of the Corporation not less than 90 days nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting; provided , however , that in the event that the date of the annual meeting is advanced by more than 30 days or delayed by more than 60 days from such anniversary date, notice by the stockholder to be timely must be delivered not earlier than the 120th day prior to such annual meeting and not later than the close of business on the later of (i) the 90th day prior to such annual meeting or (ii) the 10th day following the day on which notice of such annual meeting was mailed or public announcement of the date of such meeting is first made, whichever first occurs; provided further that for purposes of the annual meeting of stockholders held following the end of the fiscal year 2008, the date of the preceding year’s annual meeting shall be deemed to be April 23, 2008.
          (d) To be in proper written form, a stockholder’s notice to the Secretary must set forth as to each matter such stockholder proposes to bring before the annual meeting (1) a brief description of the business desired to be brought before the annual meeting, including the complete text of any resolutions to be presented at the annual meeting, and the reasons for conducting such business at the annual meeting, (2) the name and record address of such stockholder, (3) the class or series and number of shares of capital stock of the Corporation which are owned beneficially and of record by such stockholder, (4) a description of all arrangements or understandings between such stockholder and any other person or persons (including their names) in connection with the proposal of such business by such stockholder and any material interest of such stockholder in such business, (5) a representation that such stockholder intends to appear in person or by proxy at the annual meeting to bring such business before the meeting and (6) a representation whether the stockholder or the beneficial owner, if any, intends or is part of a group which intends (x) to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the Corporation’s outstanding capital stock required to approve or adopt the proposal and/or (y) otherwise to solicit proxies from stockholders in support of such proposal. As used in these by-laws, “ beneficially owned ” means all shares which such person is deemed to beneficially own pursuant to Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”).
          (e) No business shall be conducted at the annual meeting of stockholders except business brought before the annual meeting in accordance with the procedures set forth in this Section 6; provided , however , that, once business has been properly brought before the annual meeting in accordance with such procedures, nothing in this Section 6 shall be deemed to preclude discussion by any stockholder of any such business. If the presiding officer of an annual meeting determines that business was not properly brought before the annual meeting in accordance with the foregoing procedures, the presiding officer shall declare to the meeting that

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the business was not properly brought before the meeting and such business shall not be transacted.
     Section 7. Advance Notice Provisions for Election of Directors . (a) In addition to any other applicable requirements, for a nomination for election of a director to be made by a stockholder of the Corporation, such stockholder must (A) be a stockholder of record on both (1) the date of the giving of the notice provided for in this Section 7 and (2) the record date for the determination of stockholders entitled to vote at such annual meeting and (B) have given timely notice thereof in proper written form to the Secretary. If a stockholder is entitled to vote only for a specific class or category of directors at a meeting of the stockholders, such stockholder’s right to nominate one or more persons for election as a director at the meeting shall be limited to such class or category of directors.
          (b) To be timely in connection with the annual meeting of the stockholders, a stockholder’s notice shall be delivered to the Secretary at the principal executive offices of the Corporation not less than 90 days nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting; provided , however , that in the event that the date of the annual meeting is advanced by more than 30 days or delayed by more than 60 days from such anniversary date, notice by the stockholder to be timely must be delivered not earlier than the 120th day prior to such annual meeting and not later than the close of business on the later of (i) the 90th day prior to such annual meeting or (ii) the 10th day following the day on which notice of such annual meeting was marked or public announcement of the date of such meeting is first made, whichever first occurs; provided further that for purposes of the annual meeting of stockholders held following the end of the fiscal year 2008, the date of the preceding year’s annual meeting shall be deemed to be April 23, 2008. In the event the Corporation calls a special meeting of stockholders for the purpose of electing one or more directors to the Board, any stockholder entitled to vote for the election of such director(s) at such meeting and satisfying the requirements specified in Section 7(a) may nominate a person or persons (as the case may be) for election to such position(s) as are specified in the Corporation’s notice of such meeting, but only if the stockholder notice required by Section 7(c) hereof shall be delivered to the Secretary at the principal executive office of the Corporation not earlier than the 120th day prior to such special meeting and not later than the close of business on the later of (x) the 90th day prior to such special meeting and (y) the tenth day following the day on which notice of the date of such special meeting was mailed or public disclosure of the date of such special meeting was made, whichever first occurs.
          (c) To be in proper written form, a stockholder’s notice to the Secretary must be set forth (A) as to each person whom the stockholder proposes to nominate for election as a director (1) the name, age, business address and residence address of the person, (2) the principal occupation or employment of the person, (3) the class or series and number of shares of capital stock of the Corporation, if any, which are owned beneficially and of record by the person and (4) any other information relating to the person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Exchange Act; and (B) as to both the stockholder giving notice and the beneficial owners of such shares, (1) the name and record address of such stockholder, (2) the class or series and number of shares of capital stock of the Corporation which are owned beneficially and of record by such stockholder, (3) a description of

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all arrangements or understandings between such stockholder and each proposed nominee and any other person or persons (including their names) pursuant to which the nomination(s) are to be made by such stockholder, (4) a representation that such stockholder intends to appear in person or by proxy at the annual meeting to nominate the person(s) named in its notice and (5) any other information relating to such stockholder that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder. Such notice must be accompanied by a written consent of each proposed nominee to being named as a nominee and to serve as a director if elected.
          (d) No person nominated by a stockholder shall be eligible for election as a director of the Corporation unless nominated in accordance with the procedures set forth in this Section 7. If the presiding officer of an annual meeting determines that such a stockholder nomination was not made in accordance with the foregoing procedures, the presiding officer shall declare to the meeting that the nomination was defective and such defective nomination shall be disregarded.
          (e) Adjournment . In no event shall the adjournment of an annual or special meeting of the stockholders, or any announcement thereof, commence a new period for the giving of notice under this Section 7.
          (f) Definition of Publicly Announced . For purposes of this Section 7, a matter shall be deemed to have been “publicly announced” if such matter is disclosed in a press release reported by the Dow Jones News Service, the Associated Press or a comparable national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission and a “public announcement” shall be deemed to have been made on such date.
     Section 8. Inspectors . The Board shall appoint inspectors of election to act as judges of the voting and to determine those entitled to vote at any meeting of stockholders, or any adjournment thereof, in advance of such meeting, but if the Board fails to make such appointments or if an appointee fails to serve, the presiding officer of the meeting of stockholders may appoint substitute inspectors.
     Section 9. Voting . Except as otherwise provided by applicable law or in the Certificate of Incorporation, each stockholder entitled to vote at any meeting of stockholders shall be entitled to one vote for each share of stock held by such stockholder on the record date for the meeting. The ability of the stockholders to engage in cumulative voting is specifically denied. If the Certificate of Incorporation provides for more or less than one vote for any share on any matter, every reference in these By-Laws to a majority or other proportion of shares of stock shall refer to such majority or other proportion of the votes of such shares of stock. Each stockholder entitled to vote at a meeting of stockholders may authorize another person or persons to act for such stockholder by proxy, but no such proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period. Such proxy shall be filed with the Secretary before such meeting of stockholders. A duly executed proxy shall be irrevocable if it states that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power, regardless of whether the interest with which it is coupled is an interest in the stock itself or an interest in the Corporation generally. A stockholder may

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revoke any proxy which is not irrevocable by attending the meeting and voting in person or by filing an instrument in writing revoking the proxy or another duly executed proxy bearing a later date with the Secretary. When a quorum is present at any meeting, the vote of the holders of a majority of the stock which has voting power present in person or represented by proxy and which has actually voted shall decide any question properly brought before such meeting. Voting at meetings of stockholders need not be by written ballot unless so directed by the presiding officer of the meeting or the Board.
     Section 10. Order of Business . (a) Unless otherwise determined by the Board prior to the meeting, the presiding officer of the meeting of stockholders shall determine the order of business and shall have the authority in his or her discretion to regulate the conduct of any such meeting, including, without limitation, by imposing restrictions on the persons (other than stockholders of the Corporation or their duly appointed proxies) who may attend any such meeting of stockholders, by ascertaining whether any stockholder or his or her proxy may be excluded from any meeting of stockholders based upon any determination by the presiding officer, in his or her sole discretion, that any such person has unduly disrupted or is likely to disrupt the proceedings thereat, and by determining the circumstances in which any person may make a statement or ask questions at any meeting of stockholders.
          (b) Meetings of stockholders shall be presided over by the Chairman of the Board or, in the Chairman’s absence, by the Chief Executive Officer, or in the Chief Executive Officer’s absence, by an officer of the Corporation designated by the Board, or in the absence of such designation by a Chairman chosen by vote of the stockholders at the meeting. The Secretary or Assistant Secretary shall act as secretary of the meeting, but in the Secretary’s or Assistant Secretary’s absence, the Chairman of the meeting may appoint any person to act as secretary of the meeting.
     Section 11. Action without a Meeting . No action shall be taken by the stockholders except at an annual or special meeting of stockholders called in accordance with these By-Laws, and no action shall be taken by the stockholders by written consent.
     Section 12. Waiver of Notice . Whenever notice is required to be given by law, by the Certificate of Incorporation or by these By-Laws, a written waiver signed by the person entitled to notice, or a waiver by electronic transmission by the person entitled to notice, whether before, at or after the time stated in such notice, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened.
ARTICLE III
BOARD OF DIRECTORS
     Section 1. Powers . The business and affairs of the Corporation shall be managed by the Board, which may exercise all such powers of the Corporation and do all such lawful acts and things as are not by law, the Certificate of Incorporation or these By-Laws directed or required to be exercised or done by stockholders.

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     Section 2. Number, Election and Qualification . Subject to the rights of the holders of any series of Preferred Stock then outstanding to elect directors, the number of directors of the Corporation shall be established by resolution of the Board. Except as otherwise provided by applicable law or the Certificate of Incorporation, directors shall be elected at the annual meeting of stockholders and the election of directors need not be by written ballot. Directors need not be stockholders of the Corporation.
     Section 3. Classes of Directors . The Board shall be and is divided into three classes: Class I, Class II and Class III. The allocation of directors among classes shall be determined by resolution of the Board.
     Section 4. Terms of Office . Each director shall serve for a term ending on the date of the third annual meeting following the annual meeting at which such director was elected; provided , that each director initially appointed to Class I shall serve for a term expiring at the Corporation’s annual meeting of stockholders held in 2009; each director initially appointed to Class II shall serve for a term expiring at the Corporation’s annual meeting of stockholders held in 2010; and each director initially appointed to Class III shall serve for a term expiring at the Corporation’s annual meeting of stockholders held in 2011; provided further , that the term of each director shall continue until the election and qualification of a successor and shall be subject to such director’s earlier death, resignation, retirement or removal.
     Section 5. Quorum and Manner of Acting . Unless otherwise provided by law or the Certificate of Incorporation, the presence of a majority of the members of the Board shall be necessary to constitute a quorum for the transaction of business. In the absence of a quorum, a majority of the directors present may adjourn the meeting from time to time until the quorum shall be present. Notice of any adjourned meeting need not be given. At all meetings of the Board at which a quorum is present, all matters shall be decided by the affirmative vote of the majority of directors present, except as otherwise required by law. The Board may hold its meetings at such place or places within or without the State of Delaware as the Board may from time to time determine or as shall be specified in the respective notices, or waivers of notice, thereof.
     Section 6. Annual Board Meeting . In connection with each annual meeting of stockholders for the election of directors, the Board shall meet at the place of the annual meeting of the stockholders for the purpose of organization, the election of officers and the transaction of other business. Notice of such meeting need not be given. If such meeting is held at any other time or place, notice thereof must be given as hereinafter provided for special meetings of the Board, subject to the execution of a waiver of the notice thereof signed by, or the attendance at such meeting of, all directors who may not have received such notice.
     Section 7. Regular Meetings . Regular meetings of the Board may be held, without notice, at such time and place, within or without the State of Delaware, as shall from time to time be determined by resolution of the Board. At such meetings, the Board may transact such business as may be brought before the meeting.
     Section 8. Special Meetings . Special meetings of the Board shall be held whenever called by the Chairman of the Board, the Chief Executive Officer or the President or by a

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majority of the directors. Notice of each such meeting shall be given orally or in writing, by telephone, including a voice messaging system or other system or technology designed to record and communicate messages, facsimile, telegraph or telex, or by electronic mail or other electronic means, at least 24 hours before the date and time of the meeting, or sent in writing to each director either by first class mail, charges prepaid, at least three days before the date of the meeting or by a reputable overnight delivery service, at least two days before the date of the meeting. Each such notice shall state the time and place of the meeting and, as may be required, the purposes thereof. Notice of any meeting of the Board need not be given to any director if he or she shall sign a written waiver thereof either before or after the time stated therein for such meeting, or if he or she shall be present at the meeting. Unless limited by law, the Certificate of Incorporation, these By-Laws or terms of the notice thereof, any and all business may be transacted at any meeting even though no notice shall have been given.
     Section 9. Removal . Subject to the rights of the holders of any series of Preferred Stock then outstanding, directors may be removed only for cause and only by the affirmative vote of the holders of at least two-thirds of the votes which all the stockholders would be entitled to cast in any annual election of directors or class of directors at a special meeting of stockholders called in accordance with the Certificate of Incorporation and these By-Laws expressly for that purpose; provided that, any director may be removed from office by the affirmative vote of a majority of the Board, at any time prior to the expiration of their term of office, as provided by applicable law, in the event a director is in breach of any agreement between such director and the Corporation relating to such director’s service as a director or employee of the Corporation.
     Section 10. Resignations . Any director may resign at any time by giving notice to the Chairman of the Board, the President, the Secretary or any committee to which the Board has delegated the authority to accept resignations. The resignation of any director shall take effect upon receipt of notice thereof or at such later time as shall be specified in such notice, and acceptance of such resignation shall not be necessary to make it effective.
     Section 11. Vacancies . Subject to the rights of the holders of any series of Preferred Stock then outstanding, any vacancy or newly created directorships in the Board, however occurring, shall be filled only by vote of a majority of the directors then in office, although less than a quorum, or by a sole remaining director and shall not be filled by the stockholders. A director elected to fill a vacancy shall hold office until the next election of the class for which such director shall have been chosen, subject to the election and qualification of a successor and to such director’s earlier death, resignation, retirement or removal.
     Section 12. Compensation . Unless otherwise restricted by the Certificate of Incorporation or these By-Laws, directors shall be entitled to such compensation for their services, in the form of cash or equity of the Corporation or other compensation, or a combination thereof, as may be approved by the Board from time to time, including, if so approved, reasonable annual fees and reasonable fees for attending meetings of the Board and meetings of any committee of the Board. Directors may also be reimbursed by the Corporation for all reasonable expenses incurred in traveling to and from any such meetings. Nothing herein contained shall be construed to preclude any director from serving the Corporation in any other capacity as an officer, agent, employee, or otherwise and receiving compensation therefor.

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     Section 13. Action without a Meeting . Any action required or permitted to be taken at any meeting of the Board (including any committee) may be taken without a meeting if written consent thereto is signed or transmitted electronically by all members of the Board (or all members of such committee), and such written consent is filed with the minutes or proceedings of the Board or committee, as applicable.
     Section 14. Telephonic Participation in Meetings . Any member of the Board, or any committee thereof, may participate in a meeting of the Board or any committee thereof by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation shall constitute presence in person at such meetings.
ARTICLE IV
COMMITTEES OF DIRECTORS
     Section 1. Designation of Committees . The Board may, by resolution passed by a majority of the Board, designate one or more committees, each committee to consist of one or more of the directors. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. Except as otherwise provided in the Certificate of Incorporation, these By-Laws or the resolution of the Board designating the committee, a committee may create one or more subcommittees, each subcommittee to consist of one or more members of the committee, and delegate to a subcommittee any or all of the powers and authority of the committee.
     Section 2. Vacancies . In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or she or they constitute a quorum, may unanimously appoint another member of the Board to act at the meeting in the place of any such absent or disqualified member.
     Section 3. Powers . Any such committee, to the extent provided in the resolution of the Board, shall have and may exercise all the powers and authority of the Board to the extent provided by Section 141(c) of the DGCL as it exists now or may hereafter be amended.
     Section 4. Minutes . Each committee of the Board shall keep regular minutes of its meetings and report the same to the Board when required.
ARTICLE V
OFFICERS
     Section 1. Principal Officers . The Board shall elect, if and when designated by the Board, a Chairman of the Board, a Chief Executive Officer, a President, a Secretary and a Treasurer, and may in addition elect one or more Executive Vice Presidents, Senior Vice Presidents, Vice Presidents or one or more Assistant Secretaries and Assistant Treasurers and such other officers as it deems fit; the Chairman of the Board, the Chief Executive Officer, the

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President, the Secretary, the Treasurer, the Executive Vice President(s), if any, being the principal officers of the Corporation. No officer need be a stockholder and one person may hold, and perform the duties of, any two or more of the said offices.
     Section 2. Election and Term of Office . The principal officers of the Corporation shall be elected annually by the Board at the meeting thereof held in connection with the annual meeting of stockholders. Each such officer shall hold office until his or her successor shall have been elected and shall qualify, or until his or her earlier death, resignation, retirement or removal.
     Section 3. Other Officers . In addition, the Board may elect, or the Chairman of the Board or Chief Executive Officer may appoint, such other officers as they deem fit. Any such other officers chosen by the Board shall be subordinate officers and shall hold office for such period, have such authority and perform such duties as the Board, the Chairman of the Board or the Chief Executive Officer may from time to time determine.
     Section 4. Removal and Resignation . Any officer may be removed, either with or without cause, at any time, by resolution adopted by the Board at any regular meeting of the Board, or at any special meeting of the Board called for that purpose, at which a quorum is present. Any officer may resign at any time by giving written notice to the Chairman of the Board, the Chief Executive Officer, the President, the Secretary or the Board. Any such resignation shall take effect upon receipt of such notice or at any later time specified therein, and the acceptance of such resignation shall not be necessary to make it effective. Except as the Board may otherwise determine, no officer who resigns or is removed shall have any right to any compensation as an officer for any period following such officer’s resignation or removal, or any right to damages on account of such removal, whether such officer’s compensation be by the month or by the year or otherwise, unless such compensation is expressly provided for in a duly authorized written agreement with the Corporation.
     Section 5. Vacancies . A vacancy in any office may be filled for the unexpired portion of the term in the manner prescribed in these By-Laws for election or appointment to such office for such term.
     Section 6. Chairman of the Board . The Chairman of the Board shall have general powers and duties of supervision and management usually vested in the office of the Chairman of the Board of a corporation. The Chairman of the Board shall preside, if present, at all meetings of the Board and at all meetings of the stockholders. He or she shall have and perform such other duties as from time to time may be assigned to him by the Board.
     Section 7. Chief Executive Officer . The Chief Executive Officer shall be the chief executive officer of the Corporation and shall have general supervision, direction and control of the business of the Corporation. He or she shall, in the absence of the Chairman, preside at all meetings of the stockholders and the Board. The Chief Executive Officer shall have such other powers and be subject to such other duties as the Board or the Chairman of the Board may from time to time assign.
     Section 8. President . Unless some other officer has been elected Chief Executive Officer, the President shall be the chief executive officer of the Corporation with the powers and

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duties set forth in Section 8 of Article V. If a Chief Executive Officer has been elected, the President shall have such powers and shall perform such duties as shall be assigned to him or her by the Board, the Chairman of or the Chief Executive Officer.
     Section 9. Vice President(s) . Each Executive Vice President, Senior Vice President and Vice President shall have such powers and shall perform such duties as shall be assigned to him or her by the Board, the Chairman of the Board, the Chief Executive Officer or the President.
     Section 10. Treasurer and Assistant Treasurers . (a) The Treasurer shall have charge and custody of, and be responsible for, all funds and securities of the Corporation and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the Corporation. He or she shall exhibit at all reasonable times his or her books of account and records to any of the directors upon application during business hours at the office of the Corporation where such books and records shall be kept; when requested by the Board, he or she shall render a statement of the condition of the finances of the Corporation at any meeting of the Board or at the annual meeting of stockholders; he or she shall receive, and give receipt for, moneys due and payable to the Corporation from any source whatsoever; in general, he or she shall perform all the duties incident to the office of Treasurer and such other duties as from time to time may be assigned to him or her by the Board, the Chairman of the Board, the Chief Executive Officer or the President. The Treasurer shall give such bond, if any, for the faithful discharge of his or her duties as the Board may require.
     (b) The Assistant Treasurers shall perform such duties and possess such powers as the Board, the Chief Executive Officer, the President or the Treasurer may from time to time prescribe. In the event of the absence, inability or refusal to act of the Treasurer, the Assistant Treasurer (or if there shall be more than one, the Assistant Treasurers in the order determined by the Board or, if there be no such determination, in the order of their election) shall perform the duties and exercise the powers of the Treasurer.
     Section 11. Secretary and Assistant Secretaries . (a) The Secretary, if present, shall act as secretary at all meetings of the Board and of the stockholders and keep the minutes thereof in a book or books to be provided for that purpose; he or she shall see that all notices required to be given by the Corporation are duly given and served; he or she shall have charge of the stock records of the Corporation, he or she shall see that all reports, statements and other documents required by law are properly kept and filed; and in general he or she shall perform all the duties incident to the office of Secretary and such other duties as from time to time may be assigned to him or her by the Board, the Chairman of the Board, the Chief Executive Officer or the President.
     (b) The Assistant Secretaries shall perform such duties and possess such powers as the Board, the Chief Executive Officer, the President or the Secretary may from time to time prescribe. In the event of the absence, inability or refusal to act of the Secretary, the Assistant Secretary (or if there shall be more than one, the Assistant Secretaries in the order determined by the Board) shall perform the duties and exercise the powers of the Secretary.
     (c) In the absence of the Secretary or any Assistant Secretary at any meeting of stockholders or directors, the Chairman of the meeting shall designate a temporary secretary to keep a record of the meeting.

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ARTICLE VI
TRANSFERS OF STOCK
     Section 1. General . Unless otherwise provided by resolution of the Board, each class or series of the shares of capital stock in the Corporation shall be issued in uncertificated form pursuant to the customary arrangements for issuing shares in such form. Shares shall be transferable only on the books of the Corporation by the holder thereof in person or by attorney or legal representative upon presentment of proper evidence of succession, assignation or authority to transfer in accordance with the customary procedures for transferring shares in uncertificated form.
     Section 2. Record Date . In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof or entitled to receive payment of any dividend or other distribution, or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board may fix, in advance, a record date, which shall not be more than 60 nor less than 10 days before the date of such meetings, nor more than 60 days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided , however , that the Board may fix a new record date for the adjourned meeting.
     Section 3. Registered Stockholders . The Corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the DGCL.
ARTICLE VII
MISCELLANEOUS
     Section 1. Corporate Seal . The Board shall provide a corporate seal, which shall be in the form of a circle and shall bear the name of the Corporation and words and figures showing that it was incorporated in the State of Delaware in the year 2007. The Secretary shall be the custodian of the seal. The Board may authorize a duplicate seal to be kept and used by any other officer.
     Section 2. Voting of Stock Owned by the Corporation . The Board may authorize any person on behalf of the Corporation to attend, vote and grant proxies to be used at any meeting of stockholders of any corporation (except the Corporation) in which the Corporation may hold stock.

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     Section 3. Dividends . Subject to applicable law and the provisions of the Certificate of Incorporation, the Board may, out of funds legally available therefor, at any regular or special meeting, declare dividends upon the capital stock of the Corporation as and when they deem expedient. Before declaring any dividend, there may be set apart out of any funds of the Corporation available for dividends such sum or sums as the directors from time to time in their discretion deem proper for working capital or as a reserve fund to meet contingencies or for equalizing dividends or for such other purposes as the Board shall deem conducive to the interests of the Corporation.
     Section 4. Fiscal Year . Except as from time to time otherwise designated by the Board, the fiscal year of the Corporation shall begin on the first day of January of each year and end on the last day of December in each year.
     Section 5. Certificate of Incorporation . All references in these By-Laws to the Certificate of Incorporation shall be deemed to refer to the Certificate of Incorporation of the Corporation, as amended and in effect from time to time.
     Section 6. Severability . If any provision of these By-Laws is illegal or unenforceable as such, such illegality or unenforceability shall not affect any other provision of these By-Laws and such other provisions shall continue in full force and effect.
ARTICLE VIII
AMENDMENTS
     Section 1. General . The Board shall have the power to adopt, amend or repeal these By-Laws at any valid meeting by the affirmative vote of a majority of the whole Board. These By-Laws may also be altered, amended or repealed at any annual meeting of stockholders, or at any special meeting of holders of shares of stock entitled to vote thereon called for that purpose, by the affirmative vote of not less than a majority of the voting power of all outstanding shares of capital stock of the Corporation entitled to vote thereon; provided however , that with respects to Sections 2, 6, 7 and 11 of Article II, Sections 2, 3, 4, 8, 9 and 11 of Article III and this Article VIII, such provisions may only be altered, amended or repealed at any annual meeting of stockholders, or at any special meeting called for that purpose of holders of shares of stock entitled to vote thereon, by an affirmative vote of not less than two-thirds of the voting power of all outstanding shares of capital stock of the Corporation entitled to vote thereon.

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Exhibit 10.2
FORM OF
TAX SHARING AND INDEMNIFICATION AGREEMENT
          This Tax Sharing and Indemnification Agreement (this “Agreement”) is entered into on [          ], 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.
W I T N E S S E T H:
          WHEREAS, CS and DPS have entered into a Separation and Distribution Agreement, dated [          ], 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

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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.
     “ 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-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

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taxable periods; and (b) exclude Taxes (i) of the Beverage Entities for all taxable periods, and (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.
     “ 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, and (ii) the Cross-Border Financing Transactions.
     “ 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

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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 [          ], 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 million 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 million, (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 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.
     “ 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).

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     “ 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(d) and computed as if the relevant taxable year of the DPS Group closed on the Demerger Date, in excess of $22 million, 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 million, 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 million.
     “ 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.
     “ 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.

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     “ 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 [          ], 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 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)

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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, (B) Canadian federal and provincial Income Tax Returns for Cadbury Beverages Canada Inc., a Canadian corporation (“CBCI”) other than for Straddle Periods, and (C) 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”) (collectively, those Income Tax Returns prepared by Cadbury are referred to as “DPS Transition Returns”). For the avoidance of doubt, (x) Schedule G lists DPS Transition Returns and (y) 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 Cadbury. 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 Cadbury within 45 days of DPS’ receipt of a written invoice from Cadbury setting forth the amount of such expenses.
               (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 Cadbury on a DPS Transition Return of a Confectionery Entity or

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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 Returns (separate and consolidated, combined, unitary or other group Income Tax Returns) and Canadian federal and provincial Income Tax Returns for CBCI, in each case for Straddle Periods, and (B) 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

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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 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

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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.
          (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.

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      4. Carrybacks; Amended Tax Returns; Refunds. (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.
      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;

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               (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, 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):
               (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 H, 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

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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, 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).
      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 Cadbury 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

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               (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 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; and
               (iv) 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) or (iii), 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 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 adjustment on the grounds that such adjustment increases the Taxes of such entity (as opposed to its members).

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               (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, Cadbury 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 Cadbury 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-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

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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. 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 party’s 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).

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               (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 officer’s 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 officer’s 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 officer’s certificate provided 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.
               (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

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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 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 Cadbury and in connection with a Confectionery Transaction or in respect of CBCI, DPS shall make (or cause to be made or permit CS to make) one or more Tax elections, as directed by CS and, in the case of CBCI, at no net Tax cost to the DPS Group (for the avoidance of doubt,

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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 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 party’s 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 [30] 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

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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 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 30 days following the Demerger Date and in the case of a Straddle Period within 30 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.
      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 party’s 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 Cadbury 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

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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 Cadbury pursuant to this Agreement.
          (c) With respect to Tax Proceedings not described in Section 9(b) but that could result in 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, 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, 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 Cadbury 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

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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):
  (a)   If to CS or Cadbury:
 
      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
      with a copy to:
 
      Shearman & Sterling LLP
599 Lexington Avenue
New York, NY 10022-6069
Facsimile: (212) 848-7179
  Attention:   Laurence M. Bambino, Esq.
Creighton O’M. Condon, Esq.
      and
 
      Slaughter and May
One Bunhill Row
London EC1Y 8YY
Facsimile: 44-20-7090-5000
Attention: Tim Boxell
 
  (b)   If to DPS:
 
      Dr Pepper Snapple Group, Inc.
5301 Legacy Drive
3 rd Floor
Plano, TX 75024
Facsimile:
  Attention:   James L. Baldwin, Jr. — General Counsel
Taun Dimatteo — Senior Vice President of Tax
      with a copy to:
 
      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, or (ii) 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, 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. Notwithstanding the foregoing, 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

23


 

agreements of the other party or conditions to such party’s 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 Cadbury 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 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

24


 

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 party’s 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.
      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 Affiliate’s agreement to be bound by the terms of this Agreement upon the request of such other party.

25


 

      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 conflict with any provision or law or of its charter or bylaws or any agreement, instrument or order binding on such party.
* * *

26


 

IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of 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:    
Name:    
Title:    
     DR PEPPER SNAPPLE GROUP on its own behalf and on behalf of the members of the DPS Group
By:    
Name:    
Title:    
     CADBURY PLC, solely for purposes of Section 20
By:    
Name:    
Title:    

27

 

Exhibit 10.3
FORM OF EMPLOYEE MATTERS AGREEMENT
among
CADBURY PLC
CADBURY SCHWEPPES, PLC
and
DR PEPPER SNAPPLE GROUP, INC.
Dated as of [            ], 2008

 


 

TABLE OF CONTENTS
             
        PAGE
ARTICLE 1
SCOPE AND DEFINITIONS
 
           
Section 1.01
  Scope     1  
Section 1.02
  Definitions     2  
Section 1.03
  Interpretation     5  
 
           
ARTICLE 2
 
           
ASSIGNMENT OF EMPLOYEES
 
           
Section 2.01
  Active Employees     6  
Section 2.02
  Former Employees     6  
Section 2.03
  Employment Law Obligations     7  
Section 2.04
  Employee Records     7  
 
           
ARTICLE 3
 
           
EQUITY COMPENSATION PLANS
 
           
Section 3.02
  Share Option Plans     9  
Section 3.03
  Long Term Incentive Plan     10  
Section 3.04
  Bonus Share Retention Plan     10  
Section 3.05
  International Share Award Plan     11  
Section 3.06
  Employee Share Option Plans     11  
Section 3.07
  Responsibility for Tax Withholding, Reporting, and     12  
 
  Social Insurance Contributions        
Section 3.08
  No Change of Control     12  
Section 3.09
  Compliance with Section 409A     12  
 
           
ARTICLE 4
 
           
GENERAL PRINCIPLES FOR ALLOCATION OF LIABILITIES
 
           
Section 4.01
  General Principle     13  
Section 4.02
  Establishment of DPSG Plans     14  
Section 4.03
  Transfer of Assets and Liabilities     14  
Section 4.04
  Service Credit     14  
Section 4.05
  Plan Administration     15  

 


 

             
        PAGE
 
           
ARTICLE 5
 
           
U.S. PENSION PLAN SPIN-OFF
Section 5.01
  General Principle     16  
Section 5.02
  Determination and Transfer of Initial Transfer Amount     16  
Section 5.03
  Determination of the Final Pension Transfer Amount     17  
Section 5.04
  True-Up Adjustment     18  
Section 5.05
  Form and Selection of Assets to be Transferred     18  
 
           
ARTICLE 6
 
           
U.S. 401(K) PLAN
 
           
Section 6.01
  General Principle     18  
Section 6.02
  Transfer of Accounts     19  
Section 6.03
  Funding of 2008 Matching Contribution     19  
 
           
ARTICLE 7
 
           
U.S. WELFARE BENEFIT PLANS
 
           
Section 7.01
  General Principle.     20  
Section 7.02
  Establishment of DPSG Plans     20  
Section 7.03
  Insurance Contracts     21  
Section 7.04
  Third Party Vendors     21  
 
           
ARTICLE 8
 
           
FRINGE BENEFIT AND OTHER U.S. PLANS AND PROGRAMS
 
           
ARTICLE 9
 
           
WORKERS COMPENSATION AND UNEMPLOYMENT COMPENSATION
 
           
ARTICLE 10
 
           
COMPENSATION MATTERS AND GENERAL BENEFIT AND EMPLOYEE MATTERS
 
           
Section 10.01
  Restrictive Covenants in Employment and Other Agreements     22  
Section 10.02
  Severance     22  
Section 10.03
  Accrued Vacation Days Off     23  
Section 10.04
  Leaves of Absence     23  
Section 10.05
  Cadbury Obligations.     23  
Section 10.06
  Collective Bargaining Agreements     23  

 


 

             
        PAGE
 
           
ARTICLE 11
 
           
CANADIAN EMPLOYEE MATTERS
 
           
ARTICLE 12
 
           
GENERAL PROVISIONS
 
           
Section 12.01
  Preservation of Rights to Amend     24  
Section 12.02
  Confidentiality     24  
Section 12.03
  Administrative Complaints/Litigation     24  
Section 12.04
  Reimbursement and Indemnification     24  
Section 12.05
  Costs of Compliance with Agreement     25  
 
           
ARTICLE 13
 
           
MISCELLANEOUS
 
           
Section 13.01
  Notices     25  
Section 13.02
  Amendments; No Waivers     26  
Section 13.03
  Successors and Assigns     26  
Section 13.04
  Governing Law     26  
Section 13.05
  Counterparts; Effectiveness; Third-Party Beneficiaries     26  
Section 13.06
  Entire Agreement     27  
Section 13.07
  Jurisdiction     27  
Section 13.08
  Waiver of Jury Trial     27  
Section 13.09
  Severability     27  
Section 13.10
  Survival     27  
Section 13.11
  Captions     28  
Section 13.12
  Specific Performance     28  
Section 13.13
  Mutual Drafting     28  
Section 13.14
  Operating Committee     28  
Section 13.15
  Effect if Distribution Does Not Occur     29  
Section 13.16
  Corporate Authorization     29  

 


 

EMPLOYEE MATTERS AGREEMENT
          THIS EMPLOYEE MATTERS AGREEMENT dated as of [       ], 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.

2


 

          “ 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.

3


 

          “ 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:
  (i)   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
 
  (ii)   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).
          “ 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.

4


 

          “ 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 Person’s successors and assigns but, if applicable, only if such successors and assigns are permitted by this Agreement, and a reference to such Person’s “Affiliates” shall be deemed to mean such Person’s 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;

5


 

     (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

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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.

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     (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 Cadbury’s 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

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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.

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          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

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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

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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 employer’s 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 employer’s 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.

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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

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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).

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     (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 Cadbury’s 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.

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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 ”).

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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

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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

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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 Cadbury’s 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).

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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

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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

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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 Party’s 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

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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 Cadbury’s 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 Cadbury’s 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.

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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 Party’s 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.

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          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:
  (a)   If to Cadbury
 
      25 Berkeley Square
London W1J 6HB
Facsimile: 44-20-7830-5015
  Attention:   Henry Udow, Esq.
Chief Legal Officer
      With a copy to:
 
      Shearman & Sterling LLP
599 Lexington Avenue
New York, NY 10022-6069
Telecopy: 212-848-6069
Attention: Creighton O’M. Condon, Esq.
 
  (b)   If to Cadbury plc:
 
      25 Berkeley Square
London W1J 6HB
Facsimile: 44-20-7830-5015
  Attention:   Henry Udow, Esq.
Chief Legal Officer
      With a copy to:
 
      Shearman & Sterling LLP
599 Lexington Avenue
New York, NY 10022-6069
Telecopy: 212-848-6069
Attention: Creighton O’M. Condon, Esq.

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  (b)   If to DPSG to:
 
      5301 Legacy Drive
Plano, TX 75024
Facsimile: 972-673-8130
      Attention: James. L. Baldwin, Jr.
General Counsel
          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

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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.

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          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 party’s 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.

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          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.
         
  CADBURY SCHWEPPES, PLC
 
 
  By:      
    Name:      
    Title:      
 
  DR PEPPER SNAPPLE GROUP, INC.
 
 
  By:      
    Name:      
    Title:      
 
  CADBURY PLC, solely for the purposes of Section 10.05
 
 
  By:      
    Name:      
    Title:      
 

29

 

Exhibit 10.10
[LICENSOR]
FORM OF DR PEPPER FOUNTAIN CONCENTRATE AGREEMENT
     BY THIS AGREEMENT, [Licensor], Plano, Texas (“Company”) does hereby grant to the undersigned ________________________ (“Grantee”) the non-exclusive right to manufacture DR PEPPER fountain syrup, prepared according to specifications furnished by Company from DR PEPPER fountain concentrate acquired from Company, and to package, sell and distribute under the DR PEPPER trademark such syrup in Transfer Tanks, in five-gallon bag-in-box containers, and in one gallon containers only, as approved by Company and no other, only in the territory set out in the Dr Pepper Bottler’s License Agreement No. ______ and not elsewhere. Company reserves the right to manufacture and sell DR PEPPER fountain syrup in any form directly to any customer within said territory and the right to appoint others to do so.
     Company will sell DR PEPPER fountain concentrate to Grantee. Grantee hereby further agrees:
     1. To use only those containers, bags, boxes, pumps, tubing/fittings, labels and closures approved by Company in the packaging of said syrup.
     2. To maintain a production facility in full compliance with all pure food, sanitation and public health laws. In the event that Grantee is asked to manufacture Dr Pepper products for or on behalf of any other Dr Pepper licensee, and/or in the event Grantee is asked to produce Dr Pepper concentrate or syrup for any other Dr Pepper licensee, then in any such event Grantee shall report that request to Company as soon as possible, and in any event by no later than one week after such request is made of Grantee, and in no event may Grantee produce or ship Dr Pepper concentrate to any other Dr Pepper licensee without Company’s prior written consent. Company reserves the right to determine, in its sole and absolute discretion, whether and when to approve or consent to allow Grantee to manufacture Dr Pepper products or concentrate for any other licensed Dr Pepper bottler, and Company reserves the right in its sole and absolute discretion to determine any terms or conditions pursuant to which or upon which any such consent may be conditioned or contingent. In the event that Grantee should decide or determine for any reason that it will stop manufacturing or producing any Dr Pepper trademarked product, including Dr Pepper concentrate and syrup, then in any such event Grantee shall provide to Company written notification at least six months prior to the date on which Grantee will stop such manufacturing or producing.
     3. To allow Company personnel to inspect from time to time all production facilities and all materials used in connection with this Agreement.

 


 

     4. To furnish Company, at Grantee’s expense, samples of the finished fountain syrup from time to time as required by Company.
     5. Not to sell DR PEPPER fountain syrup to any purchaser for sale or distribution by such purchaser outside of the territory set out in the said Dr Pepper Bottler’s License Agreement, without prior written approval from Company.
     6. That, except where this Agreement contains different terms, to abide by all of the terms and conditions of said Dr Pepper Bottler’s License Agreement.
     Any violation of any of the above terms shall be sufficient cause for Company to cancel this Agreement immediately. In addition, Company may also cancel this Agreement at any time and for any or no reason upon three (3) months prior written notice. In the event that sufficient cause does not exist which would otherwise entitle the Company to invoke its right to cancel the Agreement immediately, the cancellation shall be effective on the ninety-first (91 st ) day following the Company’s mailing or sending of its written notice of termination.
     Notwithstanding the foregoing, any termination of the said Dr Pepper Bottler’s License Agreement shall operate to terminate this Agreement effective automatically and at the same time as the termination of the said Dr Pepper Bottler’s License Agreement. However, this Agreement may be terminated, with or without sufficient cause, without terminating the said Dr Pepper Bottler’s License Agreement.
     WITNESS THE HANDS in duplicate of the parties this ___day of _______________, 20___.
             
[LICENSOR]   [BOTTLER]
        (City, State)
 
           
By
      By    
 
           
 
           
Title
      Title    
 
           

 

 

Exhibit 10.19
FORM OF
DR PEPPER SNAPPLE GROUP, INC.
OMNIBUS STOCK INCENTIVE PLAN OF 2008
          1. Plan . This Dr Pepper Snapple Group, Inc. Omnibus Stock Incentive Plan of 2008 (this “Plan”) was adopted by Dr Pepper Snapple Group, Inc., a Delaware corporation (the “Company”), to reward certain employees, consultants and nonemployee directors of the Company or its Subsidiaries by enabling them to acquire shares of common stock of the Company.
          2. Objectives . This Plan is designed to attract and retain employees and consultants of the Company and its Subsidiaries, to attract and retain qualified nonemployee directors of the Company, to encourage the sense of proprietorship of such employees, consultants and nonemployee directors and to stimulate the active interest of such persons in the development and financial success of the Company and its Subsidiaries. These objectives are to be accomplished by making Awards under this Plan and thereby providing Participants with a proprietary interest in the growth and performance of the Company and its Subsidiaries. All Performance Awards payable under the Plan to Executive Officers are intended to be deductible by the Company under Section 162(m) (as such terms are defined below).
          3. Definitions . As used herein, the terms set forth below shall have the following respective meanings:
     “Authorized Officer” means the Chairman of the Board or the Chief Executive Officer of the Company (or any other senior officer of the Company to whom either of them shall delegate the authority to execute any Award Agreement).
     “Award” means the grant of any Option, Stock Appreciation Right, Stock Award or Performance Award, whether granted singly, in combination or in tandem, to a Participant pursuant to such applicable terms, conditions and limitations as the Committee may establish in accordance with the objectives of the Plan.
     “Award Agreement” means any written agreement (including in electronic form) between the Company and a Participant setting forth the terms, conditions and limitations applicable to an Award.
     “Board” means the board of directors of the Company.
     “Cadbury Board” means the board of directors of Cadbury Schweppes plc.
     “Code” means the Internal Revenue Code of 1986, as amended from time to time.
     “Committee” means, on and after the Separation Date, the Compensation Committee of the Board, any successor committee thereto or such other committee of the Board as may be

 


 

designated by the Board to administer the Plan and, prior to the Separation Date, a committee of the Cadbury Board appointed by the Cadbury Board.
     “Common Stock” means the Common Stock, par value $         per share, of the Company.
     “Consultant” means any consultant or independent contractor of the Company or any Subsidiary, but not including any Employee or Nonemployee Director.
     “Dividend Equivalents” means, with respect to shares of Restricted Stock or Restricted Stock Units, with respect to which shares are to be issued at the end of the Restriction Period, an amount equal to all dividends and other distributions (or the economic equivalent thereof) that are payable to shareholders of record during the Restriction Period on a like number of shares of Common Stock.
     “Employee” means an employee of the Company or any of its Subsidiaries and an individual who has agreed to become an employee of the Company or any of its Subsidiaries and actually becomes such an employee within the following six months.
     “Executive Officer” means a “covered employee” within the meaning of Section 162(m)(3) or any other executive officer designated by the Committee for purposes of exempting compensation payable under the Plan from the deduction limitations of Section 162(m).
     “Fair Market Value” of a share of Common Stock means, as of a particular date, (i) if shares of Common Stock are listed on a national securities exchange, the closing sales price per share of Common Stock on the consolidated transaction reporting system for the principal national securities exchange on which shares of Common Stock are listed on that date, or, if there shall have been no such sales reported on that date, on the last preceding date on which such a sale was so reported, (ii) if the Common Stock is not so listed but is traded on an over-the-counter market, the mean between the closing bid and asked price on that date, or, if there are no such prices available for such date, on the last preceding date on which such prices shall be available, as reported by the National Quotation Bureau Incorporated, or (iii) if shares of Common Stock are not publicly traded, the most recent value determined by an independent appraiser appointed by the Company for such purpose. Notwithstanding the foregoing, in the case of any Initial Award the price shall be equal to the Company’s fair market value, as determined by the Committee in good faith based upon the available facts and circumstances at the time.
     “Incentive Option” means an Option that is intended to comply with the requirements set forth in Section 422 of the Code.
     “Initial Awards” means those Awards granted by the Committee prior to but contingent upon and effective only as of the Publicly Traded Date.
     “Option” means a right to purchase a specified number of shares of Common Stock at a specified price.
     “Nonemployee Director” means an individual serving as a member of the Board who is not an employee of the Company or any of its Subsidiaries.

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     “Nonqualified Option” means an Option that is not intended to comply with the requirements set forth in Section 422 of the Code.
     “Participant” means an Employee, Consultant or Nonemployee Director to whom an Award has been made under this Plan.
     “Performance Award” means an award made pursuant to this Plan to a Participant who is an Employee, which Award is subject to the attainment of one or more Performance Goals.
     “Performance Goal” means a standard established by the Committee, to determine in whole or in part whether a Performance Award shall be earned.
     “Publicly Traded Date” means the first day the U.S. Securities and Exchange Commission declares the Form 10 registration statement effective.
     “Restricted Stock” means any Common Stock that is restricted or subject to forfeiture provisions.
     “Restricted Stock Unit” means a unit evidencing the right to receive one share of Common Stock or equivalent value (as determined by the Committee) that is restricted or subject to forfeiture provisions.
     “Restriction Period” means a period of time beginning as of the date upon which an Award of Restricted Stock or Restricted Stock Units is made pursuant to this Plan and ending as of the date upon which the Common Stock subject to such Award is issued (if not previously issued) no longer restricted or subject to forfeiture provisions.
     “Section 162(m)” means Section 162(m) of the Code and any Treasury Regulations and guidance promulgated thereunder.
     “Section 409A” means Section 409A of the Code and any Treasury Regulations and guidance promulgated thereunder.
     “Separation Date” means [         ], 2008.
     “Stock Appreciation Right” means a right to receive a payment, in cash or Common Stock, equal to the excess of the Fair Market Value or other specified valuation of a specified number of shares of Common Stock on the date the right is exercised over a specified strike price, in each case, as determined by the Committee.
     “Stock Award” means an award in the form of shares of Common Stock or units denominated in shares of Common Stock.
     “Subsidiary” means (i) in the case of a corporation, any corporation of which the Company directly or indirectly owns shares representing 50% or more of the combined voting power of the shares of all classes or series of capital stock of such corporation which have the right to vote generally on matters submitted to a vote of the shareholders of such corporation and (ii) in the case of a partnership or other business entity not organized as a corporation, any such

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business entity of which the Company directly or indirectly owns 50% or more of the voting, capital or profits interests (whether in the form of partnership interests, membership interests or otherwise).
     “Substitute Award” means a Stock Award granted by the Committee prior to but contingent upon and effective only as of the Publicly Traded Date in replacement for an equity based award previously granted by Cadbury Schweppes plc.
          4. Eligibility .
     (a) Employees . All Employees are eligible for Awards under this Plan in the sole discretion of the Committee.
     (b) Consultants . Consultants are eligible for Awards under this Plan in the sole discretion of the Committee.
     (c) Nonemployee Directors . Nonemployee Directors are eligible for Awards under this Plan, in their capacities as directors.
          5. Common Stock Available for Awards. Subject to the provisions of paragraph 15 hereof, there shall be available for Awards under this Plan granted wholly or partly in Common Stock (including rights or options that may be exercised for or settled in Common Stock) an aggregate of 9,000,000 shares of Common Stock plus any shares that are subject to Substitute Awards. In the sole discretion of the Committee, 2,000,000 shares of Common Stock may be granted as Incentive Options. Additionally, the number of shares of Common Stock that are the subject of Awards under this Plan, that are cancelled, forfeited, terminated, expire unexercised or that are settled through issuance or consideration other than shares of Common Stock (including, without limitation, cash), shall again immediately become available for Awards hereunder. The number of shares reserved for issuance under the Plan shall be reduced only to the extent that shares of Common Stock are actually issued in connection with the exercise or settlement of an Award. The Committee may from time to time adopt and observe such procedures concerning the counting of shares against the Plan maximum as it may deem appropriate. The Committee and the appropriate officers of the Company shall be authorized to, from time to time, take all such actions as any of them may determine are necessary or appropriate to file any documents with governmental authorities, stock exchanges and transaction reporting systems as may be required to ensure that shares of Common Stock are available for issuance pursuant to Awards.
          6. Administration .
     (a) Authority of the Committee . Subject to the provisions hereof, this Plan shall be administered and interpreted by the Committee. The Committee shall have full and exclusive power and authority to administer this Plan and to take all actions that are specifically contemplated hereby or are necessary or appropriate in connection with the administration hereof. The Committee shall also have full and exclusive power to interpret this Plan and to make factual and legal determinations and to adopt such rules, regulations and guidelines for carrying out this Plan as it may deem necessary or proper, all of which powers shall be exercised in the best interests of the Company and in

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keeping with the objectives of this Plan. Subject to paragraph 6(c) hereof, the Committee may, in its sole discretion, provide for the extension of the exercisability of an Award, accelerate the vesting or exercisability of an Award, eliminate or make less restrictive any restrictions contained in an Award, waive any restriction or other provision of this Plan or an Award or otherwise amend or modify an Award in any manner that is (i) not materially adverse to the Participant to whom such Award was granted, (ii) consented to by such Participant or (iii) authorized by paragraph 15(c) hereof; provided, however, that no such action shall permit the term of any Option to be greater than ten years from the applicable grant date. The Committee may make an Award to an individual who it expects to become an employee of the Company or any of its Subsidiaries within the next six months, with such Award being subject to the individual’s actually becoming an employee within such time period, and subject to such other terms and conditions as may be established by the Committee. The Committee may correct any defect or supply any omission or reconcile any inconsistency in this Plan or in any Award in the manner and to the extent the Committee deems necessary or desirable to further the Plan purposes. Any decision of the Committee in the interpretation and administration of this Plan shall lie within its sole discretion and shall be final, conclusive and binding on all parties concerned.
     (b) Limitation of Liability. No member of the Committee or officer of the Company to whom the Committee has delegated authority in accordance with the provisions of paragraph 7 of this Plan shall be liable for anything done or omitted to be done by him or her, by any member of the Committee or by any officer of the Company in connection with the performance of any duties under this Plan, except for his or her own willful misconduct or as expressly provided by statute.
     (c) Prohibition on Repricing of Awards . No Award may be repriced, replaced, regranted through cancellation or modified without shareholder approval (except in connection with a change in the Company’s capitalization), if the effect would be to reduce the exercise price for the shares underlying such Award.
          7. Delegation of Authority . Except with respect to matters under Section 162(m) that are required to be determined or established by the Committee to qualify Awards to Executive Officers as qualified “performance-based compensation,” the Committee may delegate to the Chief Executive Officer and to other senior officers of the Company or to such other committee of the Board its duties under this Plan pursuant to such conditions or limitations as the Committee may establish.
          8. Awards . (a) The Committee shall determine the type or types of Awards to be made under this Plan and shall designate from time to time the Participants who are to be the recipients of such Awards. Each Award shall be embodied in an Award Agreement, which shall contain such terms, conditions and limitations as shall be determined by the Committee in its sole discretion and may be signed by the Participant to whom the Award is made and by an Authorized Officer for and on behalf of the Company. Awards may consist of those listed in this paragraph 8(a) and may be granted singly, in combination or in tandem. Awards may also be made in combination or in tandem with, in replacement of, or as alternatives to, grants or rights under this Plan or any other plan of the Company or any of its Subsidiaries, including the plan of

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any acquired entity; provided that, except as contemplated in paragraph 15 hereof, no Option may be issued in exchange for the cancellation of an Option with a higher exercise price nor may the exercise price of any Option be reduced. All or part of an Award may be subject to conditions established by the Committee, which may include, but are not limited to, continuous service with the Company and its Subsidiaries, achievement of specific business objectives, increases in specified indices, attainment of specified growth rates and other comparable measurements of performance. Upon the termination of employment by a Participant, any unexercised, deferred, unvested or unpaid Awards shall be treated as set forth in the applicable Award Agreement.
     (i) Option . An Award may be in the form of an Option. An Option awarded pursuant to this Plan may consist of an Incentive Option or a Nonqualified Option. Incentive Options may not be awarded to Nonemployee Directors. The price at which shares of Common Stock may be purchased upon the exercise of an Option shall be not less than the Fair Market Value of the Common Stock on the date of grant. The term of an Option shall not exceed ten years from the date of grant. Subject to the foregoing provisions, the terms, conditions and limitations applicable to any Options awarded pursuant to this Plan, including the term of any Options and the date or dates upon which they become exercisable, shall be determined by the Committee.
     (ii) Stock Appreciation Right . An Award may be in the form of a Stock Appreciation Right. The strike price for a Stock Appreciation Right shall not be less than the Fair Market Value of the Common Stock on the date on which the Stock Appreciation Right is granted. The term of a Stock Appreciation Right shall not exceed ten years from the date of grant. Subject to the foregoing limitations, the terms, conditions and limitations applicable to any Stock Appreciation Rights awarded pursuant to this Plan, including the term of any Stock Appreciation Rights and the date or dates upon which they become exercisable, shall be determined by the Committee.
     (iii) Stock Award . An Award may be in the form of a Stock Award. The terms, conditions and limitations applicable to any Stock Awards granted pursuant to this Plan shall be determined by the Committee, subject to the limitations specified below. Any Stock Award which is not a Performance Award shall have a minimum Restriction Period of three years from the date of grant, provided that (i) the Committee may provide for earlier vesting following a change in control or other specified events involving the Company or upon an Employee’s termination of employment by reason of death, disability or retirement, (ii) such three-year minimum Restricted Period shall not apply to a Stock Award that is granted in lieu of salary or bonus, and (iii) vesting of a Stock Award may occur incrementally over the three-year minimum Restricted Period; provided, however, that such three-year minimum Restricted Period shall not apply to any Substitute Award.
     (iv) Performance Award. Without limiting the type or number of Awards that may be made under the other provisions of this Plan, an Award may be in the form of a Performance Award. The terms, conditions and limitations applicable to any Performance Awards granted to Participants pursuant to this Plan shall be determined by the Committee, subject to the limitations specified below. Any Stock Award which is a

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Performance Award shall have a minimum Restriction Period of one year from the date of grant, provided that the Committee may provide for earlier vesting following a change in control or other specified events involving the Company, or upon a termination of employment by reason of death, disability or retirement, subject to the limitations specified below. The Committee shall set Performance Goals in its sole discretion which, depending on the extent to which they are met, will determine the value and/or amount of Performance Awards that will be paid out to the Participant and/or the portion of an Award that may be exercised.
          (A) Nonqualified Performance Awards . Performance Awards granted to Employees or Nonemployee Directors that are not intended to qualify as qualified performance-based compensation under Section 162(m) shall be based on achievement of such Performance Goals and be subject to such terms, conditions and restrictions as the Committee or its delegate shall determine.
          (B) Qualified Performance Awards . Performance Awards granted to Executive Officers under the Plan that are intended to qualify as qualified performance-based compensation under Section 162(m) shall be paid, vested or otherwise deliverable solely on account of the attainment of one or more pre-established, objective Performance Goals established and administered by the Committee in accordance with Section 162(m) prior to the earlier to occur of (x) 90 days after the commencement of the period of service to which the Performance Goal relates and (y) the lapse of 25% of the period of service (as scheduled in good faith at the time the goal is established), and in any event while the outcome is substantially uncertain. A Performance Goal is objective if a third party having knowledge of the relevant facts could determine whether the goal is met. Such a Performance Goal may be based on one or more business criteria that apply to an Executive Officer, one or more business units, divisions or sectors of the Company, or the Company as a whole, and if so desired by the Committee, by comparison with a peer group of companies. A Performance Goal may include one or more of the following and need not be the same for each Executive Officer:
    revenue and income measures (which include revenue, gross margin, income from operations, net income, net sales and earnings per share);
 
    expense measures (which include costs of goods sold, selling, general and administrative expenses and overhead costs);
 
    operating measures (which include volume, margin, productivity and market share);
 
    cash flow measures (which include net cash flow from operating activities and working capital);
 
    liquidity measures (which include earnings before or after the effect of certain items such as interest, taxes, depreciation and amortization, and free cash flow);

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    leverage measures (which include debt-to-equity ratio and net debt);
 
    market measures (which include stock price, total shareholder return and market capitalization measures);
 
    return measures (which include return on equity, return on assets and return on invested capital);
 
    corporate value measures (which include compliance, safety, environmental and personnel matters); and
 
    other measures such as those relating to acquisitions, dispositions or customer satisfaction.
Unless otherwise stated, such a Performance Goal need not be based upon an increase or positive result under a particular business criterion and could include, for example, maintaining the status quo , performance relative to a peer group determined by the Committee or limiting economic losses (measured, in each case, by reference to specific business criteria). In interpreting Plan provisions applicable to Performance Goals and qualified Performance Awards, it is the intent of the Plan to conform with Section 162(m), including, without limitation, Treasury Regulation §1.162-27(e)(2)(i), as to grants to Executive Officers and the Committee in establishing such goals and interpreting the Plan shall be guided by such provisions. Prior to the payment of any compensation based on the achievement of Performance Goals applicable to qualified Performance Awards, the Committee must certify in writing that applicable Performance Goals and any of the material terms thereof were, in fact, satisfied. Subject to the foregoing provisions, the terms, conditions and limitations applicable to any qualified Performance Awards made pursuant to this Plan shall be determined by the Committee to the extent permitted by Section 162(m).
     (b) The Committee shall adjust the Performance Goals (either up or down) and the level of the Performance Award that a Participant may earn under this Plan, to the extent permitted pursuant to Section 162(m), if it determines that the occurrence of external changes or other unanticipated business conditions have materially affected the fairness of the goals and have unduly influenced the Company’s ability to meet them, including without limitation, events such as material acquisitions, changes in the capital structure of the Company, and extraordinary accounting changes. In addition, Performance Goals and Performance Awards shall be calculated without regard to any changes in accounting standards that may be required by the Financial Accounting Standards Board after such Performance Goals are established. Further, in the event a period of service to which a Performance Goal relates is less than twelve months, the Committee shall have the right, in its sole discretion, to adjust the Performance Goals and the level of Performance Award opportunity.
     (c) Notwithstanding anything to the contrary contained in this Plan, the following limitations shall apply to Awards that are not Substitute Awards made hereunder:

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     (i) no Participant may be granted, during any one-year period, Awards consisting of Options or Stock Appreciation Rights that are exercisable for more than 500,000 shares of Common Stock; and
     (ii) no Participant may be granted, during any one-year period, Stock Awards covering or relating to more than 250,000 shares of Common Stock (the limitation set forth in this clause (ii), together with the limitation set forth in clause (i) above, being hereinafter collectively referred to as the “Stock-based Awards Limitations”).
          9. Awards to Nonemployee Directors . The Committee may grant a Nonemployee Director of the Company one or more Awards and establish the terms thereof in accordance with paragraph 8 consistent with the provisions therein for the granting of Awards to Employees and subject to the applicable terms, conditions and limitations set forth in this Plan and the applicable Award Agreement.
          10. Award Payment; Dividends; Substitution; Fractional Shares .
     (a) General . Payment of Awards may be made in the form of cash or Common Stock, or a combination thereof, and may include such restrictions as the Committee shall determine, including, in the case of Common Stock, restrictions on transfer and forfeiture provisions. If payment of an Award is made in the form of Restricted Stock, the applicable Award Agreement relating to such shares shall specify whether they are to be issued at the beginning or end of the Restriction Period. In the event that shares of Restricted Stock are to be issued at the beginning of the Restriction Period, the certificates evidencing such shares (to the extent that such shares are so evidenced) shall contain appropriate legends and restrictions that describe the terms and conditions of the restrictions applicable thereto. In the event that shares of Restricted Stock are to be issued at the end of the Restricted Period, the right to receive such shares shall be evidenced by book entry registration or in such other manner as the Committee may determine.
     (b) Deferral . With the approval of the Committee, amounts payable in respect of Awards may be deferred and paid either in the form of installments or as a lump-sum payment; provided, however, that if deferral is permitted, each provision of the Award shall be interpreted to permit the deferral only as allowed in compliance with the requirements of Section 409A and any provision that would conflict with such requirements shall not be valid or enforceable. The Committee intends that any Awards under the Plan satisfy or qualify as exempt from the applicable requirements of Section 409A to avoid imposition of applicable taxes thereunder. The Committee may permit selected Participants to elect to defer payments of some or all types of Awards in accordance with procedures established by the Committee. Any deferred payment of an Award, whether elected by the Participant or specified by the Award Agreement or by the Committee, may be forfeited if and to the extent that the Award Agreement so provides.
     (c) Dividends and Interest . Rights to dividends or Dividend Equivalents may be extended to and made part of any Award consisting of shares of Common Stock or

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units denominated in shares of Common Stock, subject to such terms, conditions and restrictions as the Committee may establish. The Committee may also establish rules and procedures for the crediting of interest on deferred cash payments and Dividend Equivalents for Awards consisting of shares of Common Stock or units denominated in shares of Common Stock.
     (d) Fractional Shares . No fractional shares shall be issued or delivered pursuant to any Award under this Plan. The Committee shall determine whether cash, Awards or other property shall be issued or paid in lieu of fractional shares, or whether fractional shares or any rights thereto shall be forfeited or otherwise eliminated.
          11. Stock Option Exercise . The price at which shares of Common Stock may be purchased under an Option shall be paid in full at the time of exercise in cash or, if elected by the Participant, the Participant may purchase such shares by means of tendering Common Stock or surrendering another Award, including Restricted Stock, valued at Fair Market Value on the date of exercise, or any combination thereof. The Committee, in its sole discretion, shall determine acceptable methods for Participants to tender Common Stock or other Awards. In accordance with the rules and procedures established by the Committee for this purpose and subject to applicable law, Options may also be exercised through “cashless exercise” procedures approved by the Committee involving a broker or dealer approved by the Committee. Unless otherwise provided in the applicable Award Agreement, in the event shares of Restricted Stock are tendered as consideration for the exercise of an Option, a number of the shares issued upon the exercise of the Option, equal to the number of shares of Restricted Stock used as consideration thereof, shall be subject to the same restrictions as the Restricted Stock so submitted as well as any additional restrictions that may be imposed by the Committee.
          12. Taxes . The Company shall have the right to deduct applicable taxes from any Award payment and withhold, at the time of delivery or vesting of cash or shares of Common Stock under this Plan, an appropriate amount of cash or number of shares of Common Stock or a combination thereof for payment of taxes required by law or to take such other action as may be necessary in the opinion of the Company to satisfy all obligations for withholding of such taxes. The Committee may also permit withholding to be satisfied by the transfer to the Company of shares of Common Stock theretofore owned by the holder of the Award with respect to which withholding is required. If shares of Common Stock are used to satisfy tax withholding, such shares shall be valued based on the Fair Market Value when the tax withholding is required to be made.
          13. Amendment, Modification, Suspension or Termination . The Board or the Committee may amend, modify, suspend or terminate this Plan for the purpose of meeting or addressing any changes in legal requirements or for any other purpose permitted by law, except that (i) no amendment or alteration that would materially adversely affect the rights of any Participant under any Award previously granted to such Participant shall be made without the consent of such Participant and (ii) no amendment or alteration shall be effective prior to its approval by the shareholders of the Company to the extent shareholder approval is otherwise required by applicable legal requirements.

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          14. Assignability . Unless otherwise determined by the Committee in the Award Agreement, no Award or any other benefit under this Plan shall be assignable or otherwise transferable. Any attempted assignment of an Award or any other benefit under this Plan in violation of this paragraph 14 shall be null and void.
          15. Adjustments .
     (a) The existence of outstanding Awards shall not affect in any manner the right or power of the Company or its shareholders to make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in the capital stock of the Company or its business or any merger or consolidation of the Company, or any issue of bonds, debentures, preferred or prior preference stock (whether or not such issue is prior to, on a parity with or junior to the Common Stock) or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding of any kind, whether or not of a character similar to that of the acts or proceedings enumerated above.
     (b) In the event of any subdivision or consolidation of outstanding shares of Common Stock, declaration of a dividend payable in shares of Common Stock or other stock split, then (i) the number of shares of Common Stock reserved under this Plan, (ii) the number of shares of Common Stock covered by outstanding Awards in the form of Common Stock or units denominated in Common Stock, (iii) the exercise or other price in respect of such Awards, (iv) the Stock-based Award Limitations described in paragraph 8(c) hereof, (v) the number of shares of Common Stock covered by Awards to Nonemployee Directors granted pursuant to paragraph 9 hereof, and (vi) the appropriate Fair Market Value and other price determinations for such Awards shall each be proportionately adjusted by the Board to reflect such transaction. In the event of any other recapitalization or capital reorganization of the Company, any consolidation or merger of the Company with another corporation or entity, the adoption by the Company of any plan of exchange affecting the Common Stock or any distribution to holders of Common Stock of securities or property (other than normal cash dividends or dividends payable in Common Stock), the Board shall make appropriate adjustments to (i) the number of shares of Common Stock covered by Awards in the form of Common Stock or units denominated in Common Stock, (ii) the exercise or other price in respect of such Awards, and (iii) the appropriate Fair Market Value and other price determinations for such Awards, (iv) the number of shares of Common Stock covered by Awards to Nonemployee Directors automatically granted pursuant to paragraph 9 hereof and (v) the Stock-based Award Limitations described in paragraph 8(b) hereof, to give effect to such transaction shall each be proportionately adjusted by the Board to reflect such transaction; provided that such adjustments shall only be such as are necessary to maintain the proportionate interest of the holders of the Awards and preserve, without exceeding, the value of such Awards.
     (c) In the event of a corporate merger, consolidation, acquisition of property or stock, separation, reorganization or liquidation, the Board may make such adjustments to Awards or other provisions for the disposition of Awards as it deems equitable, and shall be authorized, in its sole discretion, (i) to provide for the substitution of a new

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Award or other arrangement (which, if applicable, may be exercisable for such property or stock as the Board determines) for an Award or the assumption of the Award, regardless of whether in a transaction to which Section 424(a) of the Code applies, (ii) to provide, prior to the transaction, for the acceleration of the vesting and exercisability of, or lapse of restrictions with respect to, the Award and, if the transaction is a cash merger, provide for the termination of any portion of the Award that remains unexercised at the time of such transaction or (iii) to cancel any such Awards and to deliver to the Participants cash in an amount that the Board shall determine in its sole discretion is equal to the fair market value of such Awards on the date of such event, which in the case of Options or Stock Appreciation Rights shall be the excess of the Fair Market Value of Common Stock on such date over the exercise price of such Award (for the avoidance of doubt, if the exercise price is less than Fair Market Value the Option or Stock Appreciation Right may be canceled for no consideration).
          16. Restrictions . No Common Stock or other form of payment shall be issued with respect to any Award unless the Company shall be satisfied based on the advice of its counsel that such issuance will be in compliance with applicable federal and state securities laws. Certificates evidencing shares of Common Stock delivered under this Plan (to the extent that such shares are so evidenced) may be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations and other requirements of the Securities and Exchange Commission, any securities exchange or transaction reporting system upon which the Common Stock is then listed or to which it is admitted for quotation and any applicable federal or state securities law. The Committee may cause a legend or legends to be placed upon such certificates (if any) to make appropriate reference to such restrictions.
          17. Unfunded Plan . Insofar as it provides for Awards of cash, Common Stock or rights thereto, this Plan shall be unfunded. Although bookkeeping accounts may be established with respect to Participants who are entitled to cash, Common Stock or rights thereto under this Plan, any such accounts shall be used merely as a bookkeeping convenience. The Company shall not be required to segregate any assets that may at any time be represented by cash, Common Stock or rights thereto, nor shall this Plan be construed as providing for such segregation, nor shall the Company, the Board or the Committee be deemed to be a trustee of any cash, Common Stock or rights thereto to be granted under this Plan. Any liability or obligation of the Company to any Participant with respect to an Award of cash, Common Stock or rights thereto under this Plan shall be based solely upon any contractual obligations that may be created by this Plan and any Award Agreement, and no such liability or obligation of the Company shall be deemed to be secured by any pledge or other encumbrance on any property of the Company. Neither the Company nor the Board nor the Committee shall be required to give any security or bond for the performance of any obligation that may be created by this Plan.
          18. Section 409A of the Code . Notwithstanding anything in this Plan to the contrary, if any Plan provision or Award under the Plan would result in the imposition of an applicable tax under Section 409A, that Plan provision or Award shall be reformed to avoid imposition of the applicable tax and no such action shall be deemed to adversely affect the Participant’s rights to an Award.

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          19. Governing Law . This Plan and all determinations made and actions taken pursuant hereto, to the extent not otherwise governed by mandatory provisions of the Code or the securities laws of the United States, shall be governed by and construed in accordance with the laws of the State of Delaware.
          20. No Right to Employment or Directorship . Nothing in the Plan or an Award Agreement shall interfere with or limit in any way the right of the Company or a Subsidiary to terminate any Participant’s employment or other service relationship at any time, nor confer upon any Participant any right to continue in the capacity in which he or she is employed or otherwise serves the Company or any Subsidiary. Further, nothing in the Plan or an Award Agreement constitutes any assurance or obligation of the Board to nominate any Nonemployee Director for re-election by the Company’s shareholders.
          21. Successors . All obligations of the Company under the Plan with respect to Awards granted hereunder shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company.
          22. Effectiveness . This Plan is effective [ ], 2008, the date on which it was approved by the shareholders of the Company. The Plan shall continue in effect for a term of ten years after the date on which the shareholders of the Company approve the Plan, unless sooner terminated by action of the Board.

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Exhibit 10.20
FORM OF
DR PEPPER SNAPPLE GROUP, INC.
ANNUAL CASH INCENTIVE PLAN
          1. Plan . This Dr Pepper Snapple Group, Inc. Annual Cash Incentive Plan (this “Plan”) was adopted by Dr Pepper Snapple Group, Inc., a Delaware corporation (the “Company”), to reward certain employees of the Company or its Subsidiaries by enabling them to receive performance-based cash compensation.
          2. Objectives . This Plan is designed to attract and retain employees of the Company and its Subsidiaries and to stimulate the active interest of such persons in the development and financial success of the Company and its Subsidiaries. These objectives are to be accomplished by making cash awards under this Plan based on the achievement of certain performance goals. All awards payable under the Plan to Executive Officers are intended to be deductible by the Company under Section 162(m) (as such terms are defined below).
          3. Definitions . As used herein, the terms set forth below shall have the following respective meanings:
     “Authorized Officer” means the Chairman of the Board or the Chief Executive Officer of the Company (or any other senior officer of the Company to whom either of them shall delegate the authority to execute any Award Agreement).
     “Award Agreement” means any written agreement (including in electronic form) between the Company and a Participant setting forth the terms, conditions and limitations applicable to a Performance Cash Award.
     “Board” means the board of directors of the Company.
     “Cadbury Board” means the board of directors of Cadbury Schweppes plc.
     “Code” means the Internal Revenue Code of 1986, as amended from time to time.
     “Committee” means, on and after the Separation Date, the Compensation Committee of the Board, any successor committee thereto or such other committee of the Board as may be designated by the Board to administer the Plan and, prior to the Separation Date, a committee of the Cadbury Board appointed by the Cadbury Board.
     “Employee” means an employee of the Company or any of its Subsidiaries and an individual who has agreed to become an employee of the Company or any of its Subsidiaries and actually becomes such an employee within the following six months.
     “Executive Officer” means a “covered employee” within the meaning of Section 162(m)(3) or any other executive officer designated by the Committee for purposes of exempting compensation payable under the Plan from the deduction limitations of Section 162(m).

 


 

     “Participant” means an Employee to whom a Performance Cash Award has been made under this Plan.
     “Performance Cash Award” or “Award” means the grant of any award to a Participant pursuant to such applicable terms, conditions and limitations as the Committee may establish in accordance with the objectives of the Plan, which award is subject to the attainment of one or more Performance Goals.
     “Performance Goal” means a standard established by the Committee, to determine in whole or in part whether a Performance Cash Award shall be earned.
     “Publicly Traded Date” means the first day the U. S. Securities and Exchange Commission declares the Form 10 registration statement effective.
     “Section 162(m)” means Section 162(m) of the Code and any Treasury Regulations and guidance promulgated thereunder.
     “Section 409A” means Section 409A of the Code and any Treasury Regulations and guidance promulgated thereunder.
     “Separation Date” means [                    ], 2008.
     “Subsidiary” means (i) in the case of a corporation, any corporation of which the Company directly or indirectly owns shares representing 50% or more of the combined voting power of the shares of all classes or series of capital stock of such corporation which have the right to vote generally on matters submitted to a vote of the shareholders of such corporation and (ii) in the case of a partnership or other business entity not organized as a corporation, any such business entity of which the Company directly or indirectly owns 50% or more of the voting, capital or profits interests (whether in the form of partnership interests, membership interests or otherwise).
          4. Eligibility . All Employees are eligible for Performance Cash Awards under this Plan in the sole discretion of the Committee.
          5. Administration .
     (a) Authority of the Committee . Subject to the provisions hereof, this Plan shall be administered and interpreted by the Committee. The Committee shall have full and exclusive power and authority to administer this Plan and to take all actions that are specifically contemplated hereby or are necessary or appropriate in connection with the administration hereof. The Committee shall also have full and exclusive power to interpret this Plan and to make factual and legal determinations and to adopt such rules, regulations and guidelines for carrying out this Plan as it may deem necessary or proper, all of which powers shall be exercised in the best interests of the Company and in keeping with the objectives of this Plan. The Committee may, in its sole discretion, provide for the acceleration of vesting of a Performance Cash Award, eliminate or make less restrictive any restrictions contained in a Performance Cash Award, waive any restriction or other provision of this Plan or a Performance Cash Award or otherwise

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amend or modify a Performance Cash Award in any manner that is (i) not materially adverse to the Participant to whom such Performance Cash Award was granted, or (ii) consented to by such Participant. The Committee may make a Performance Cash Award to an individual who it expects to become an employee of the Company or any of its Subsidiaries within the next six months, with such Performance Cash Award being subject to the individual’s actually becoming an employee within such time period, and subject to such other terms and conditions as may be established by the Committee. The Committee may correct any defect or supply any omission or reconcile any inconsistency in this Plan or in any Performance Cash Award in the manner and to the extent the Committee deems necessary or desirable to further the Plan purposes. Any decision of the Committee in the interpretation and administration of this Plan shall lie within its sole discretion and shall be final, conclusive and binding on all parties concerned.
     (b) Limitation of Liability. No member of the Committee or officer of the Company to whom the Committee has delegated authority in accordance with the provisions of paragraph 6 of this Plan shall be liable for anything done or omitted to be done by him or her, by any member of the Committee or by any officer of the Company in connection with the performance of any duties under this Plan, except for his or her own willful misconduct or as expressly provided by statute.
          6. Delegation of Authority . Except with respect to matters under Section 162(m) that are required to be determined or established by the Committee to qualify Performance Cash Awards to Executive Officers as qualified “performance-based compensation” the Committee may delegate to the Chief Executive Officer and to other senior officers of the Company or to such other committee of the Board its duties under this Plan pursuant to such conditions or limitations as the Committee may establish.
          7. Performance Cash Awards .
     (a) The Committee shall determine the type or types of Performance Cash Awards to be made under this Plan and shall designate from time to time the Participants who are to be the recipients of such Performance Cash Awards. Each Performance Cash Award shall be embodied in an Award Agreement, which shall contain such terms, conditions and limitations as shall be determined by the Committee in its sole discretion and may be signed by the Participant to whom the Performance Cash Award is made and by an Authorized Officer for and on behalf of the Company. All or part of a Performance Cash Award may be subject to conditions established by the Committee, which may include, but are not limited to, continuous service with the Company and its Subsidiaries. Upon the termination of employment by a Participant, any deferred, unvested or unpaid Performance Cash Awards shall be treated as set forth in the applicable Award Agreement.
The terms, conditions and limitations applicable to any Performance Cash Awards granted to Participants pursuant to this Plan shall be determined by the Committee, subject to the limitations specified below. The Committee shall set Performance Goals in its sole discretion which, depending on the extent to which they are met, will determine the amount of Performance Cash Awards that will be paid out to the Participant.

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     (i) Nonqualified Performance Cash Awards . Performance Cash Awards granted to Employees that are not intended to qualify as qualified performance-based compensation under Section 162(m) shall be based on achievement of such Performance Goals and be subject to such terms, conditions and restrictions as the Committee or its delegate shall determine.
     (ii) Qualified Performance Cash Awards . Performance Cash Awards granted to Executive Officers under the Plan that are intended to qualify as qualified performance-based compensation under Section 162(m) shall be paid on account of the attainment of one or more pre-established, objective Performance Goals established and administered by the Committee in accordance with Section 162(m) prior to the earlier to occur of (x) 90 days after the commencement of the period of service to which the Performance Goal relates and (y) the lapse of 25% of the period of service (as scheduled in good faith at the time the goal is established), and in any event while the outcome is substantially uncertain. A Performance Goal is objective if a third party having knowledge of the relevant facts could determine whether the goal is met. Such a Performance Goal may be based on one or more business criteria that apply to an Executive Officer, one or more business units, divisions or sectors of the Company, or the Company as a whole, and if so desired by the Committee, by comparison with a peer group of companies. A Performance Goal may include one or more of the following and need not be the same for each Executive Officer:
    revenue and income measures (which include revenue, gross margin, income from operations, net income, net sales and earnings per share);
 
    expense measures (which include costs of goods sold, sales, general and administrative expenses and overhead costs);
 
    operating measures (which include volume, margin, productivity and market share);
 
    cash flow measures (which include net cash flow from operating activities and working capital);
 
    liquidity measures (which include earnings before or after the effect of certain items such as interest, taxes, depreciation and amortization, and free cash flow);
 
    leverage measures (which include equity ratio and net debt);
 
    market measures (including those relating to stock price, total shareholder return and market capitalization measures);
 
    return measures (which include return on equity, return on assets and return on invested capital);

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    corporate value measures (which include compliance, safety, environmental and personnel matters); and
 
    other measures such as those relating to acquisitions, dispositions or customer satisfaction.
Unless otherwise stated, such a Performance Goal need not be based upon an increase or positive result under a particular business criterion and could include, for example, maintaining the status quo , performance relative to a peer group determined by the Committee or limiting economic losses (measured, in each case, by reference to specific business criteria). In interpreting Plan provisions applicable to Performance Goals and qualified Performance Cash Awards, it is the intent of the Plan to comply with Section 162(m), including, without limitation, Treasury Regulation §1.162-27(e)(2)(i), as to grants to Executive Officers and the Committee in establishing such goals and interpreting the Plan shall be guided by such provisions. Prior to the payment of any compensation based on the achievement of Performance Goals applicable to qualified Performance Cash Awards, the Committee must certify in writing that applicable Performance Goals and any of the material terms thereof were, in fact, satisfied. Subject to the foregoing provisions, the terms, conditions and limitations applicable to any qualified Performance Cash Awards made pursuant to this Plan shall be determined by the Committee to the extent permitted under Section 162(m).
     (b) The Committee shall adjust the Performance Goals (either up or down) and the level of the Performance Cash Award that a Participant may earn under this Plan, to the extent permitted pursuant to Section 162(m), if it determines that the occurrence of external changes or other unanticipated business conditions have materially affected the fairness of the goals and have unduly influenced the Company’s ability to meet them, including without limitation, events such as material acquisitions, changes in the capital structure of the Company, and extraordinary accounting changes. In addition, Performance Goals and Performance Cash Awards shall be calculated without regard to any changes in accounting standards that may be required by the Financial Accounting Standards Board after such Performance Goals are established. Further, in the event a period of service to which a Performance Goal relates is less than 12 months, the Committee shall have the right, in its sole discretion, to adjust the Performance Goals and the level of Performance Cash Award opportunity.
     (c) Notwithstanding anything to the contrary contained in this Plan, the amount payable to a Participant under this Plan in respect of any one-year period shall not exceed $5,000,000.
          8. Performance Cash Award Payment .
     (a) General . Payment of Performance Cash Awards shall be made in the form of cash, and may include such restrictions as the Committee shall determine.
     (b) Deferral . With the approval of the Committee, amounts payable in respect of Performance Cash Awards may be deferred and paid either in the form of

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installments or as a lump-sum payment; provided, however, that if deferral is permitted, each provision of the Performance Cash Award shall be interpreted to permit the deferral only as allowed in compliance with the requirements of Section 409A and any provision that would conflict with such requirements shall not be valid or enforceable. The Committee intends that any Performance Cash Awards under the Plan satisfy or qualify as exempt from the applicable requirements of Section 409A to avoid imposition of applicable taxes thereunder. The Committee may permit selected Participants to elect to defer payments of Performance Cash Awards in accordance with procedures established by the Committee. Any deferred payment of a Performance Cash Award, whether elected by the Participant or specified by the Award Agreement or by the Committee, may be forfeited if and to the extent that the Award Agreement so provides.
          9. Taxes . The Company shall have the right to deduct applicable taxes from any Performance Cash Award payment and withhold, at the time of delivery or vesting of cash under this Plan, an appropriate amount of cash for payment of taxes required by law or to take such other action as may be necessary in the opinion of the Company to satisfy all obligations for withholding of such taxes.
          10. Amendment, Modification, Suspension or Termination . The Board or the Committee may amend, modify, suspend or terminate this Plan for the purpose of meeting or addressing any changes in legal requirements or for any other purpose permitted by law, except that (i) no amendment or alteration that would materially adversely affect the rights of any Participant under any Performance Cash Award previously granted to such Participant shall be made without the consent of such Participant and (ii) no amendment or alteration shall be effective prior to its approval by the shareholders of the Company to the extent shareholder approval is otherwise required by applicable legal requirements.
          11. Assignability . Unless otherwise determined by the Committee in the Award Agreement, no Performance Cash Award or any other benefit under this Plan shall be assignable or otherwise transferable. Any attempted assignment of a Performance Cash Award or any other benefit under this Plan in violation of this paragraph 11 shall be null and void.
          12. Adjustments . In the event of a corporate merger, consolidation, acquisition of property or stock, separation, reorganization or liquidation, the Board may make such adjustments to Performance Cash Awards or other provisions for the disposition of Awards as it deems equitable, and shall be authorized, in its sole discretion, (i) to provide for the substitution of a new Performance Cash Award or other arrangement (which, if applicable, may be exercisable for such property or stock as the Board determines) for a Performance Cash Award or the assumption of the Performance Cash Award, (ii) to provide, prior to the transaction, for the acceleration of the vesting of the Performance Cash Award or (iii) to cancel any such Performance Cash Awards and to deliver to the Participants cash in an amount that the Board shall determine in its sole discretion.
          13. Unfunded Plan . This Plan shall be unfunded. Although bookkeeping accounts may be established with respect to Participants who are entitled to cash, any such accounts shall be used merely as a bookkeeping convenience. The Company shall not be required to segregate any assets that may at any time be represented by cash or rights thereto, nor

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shall this Plan be construed as providing for such segregation, nor shall the Company, the Board or the Committee be deemed to be a trustee of any cash or rights thereto to be granted under this Plan. Any liability or obligation of the Company to any Participant with respect to a Performance Cash Award of cash or rights thereto under this Plan shall be based solely upon any contractual obligations that may be created by this Plan and any Award Agreement, and no such liability or obligation of the Company shall be deemed to be secured by any pledge or other encumbrance on any property of the Company. Neither the Company nor the Board nor the Committee shall be required to give any security or bond for the performance of any obligation that may be created by this Plan.
          14. Section 409A of the Code . Notwithstanding anything in this Plan to the contrary, if any Plan provision or Performance Cash Award under the Plan would result in the imposition of an applicable tax under Section 409A, that Plan provision or Performance Cash Award shall be reformed to avoid imposition of the applicable tax and no such action shall be deemed to adversely affect the Participant’s rights to a Performance Cash Award.
          15. Governing Law . This Plan and all determinations made and actions taken pursuant hereto, to the extent not otherwise governed by mandatory provisions of the Code or the securities laws of the United States, shall be governed by and construed in accordance with the laws of the State of Delaware.
          16. No Right to Employment . Nothing in the Plan or an Award Agreement shall interfere with or limit in any way the right of the Company or a Subsidiary to terminate any Participant’s employment or other service relationship at any time, nor confer upon any Participant any right to continue in the capacity in which he or she is employed or otherwise serves the Company or any Subsidiary.
          17. Successors . All obligations of the Company under the Plan with respect to Performance Cash Awards granted hereunder shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company.
          18. Effectiveness . This Plan is effective [ ], 2008. The Plan shall continue in effect for a term of 10 years, unless sooner terminated by action of the Board.

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Exhibit 10.21
FORM OF
DR PEPPER SNAPPLE GROUP, INC.
EMPLOYEE STOCK PURCHASE PLAN
Section 1
PURPOSE
          The purpose of the Dr Pepper Snapple Group, Inc. Employee Stock Purchase Plan is to provide Employees of the Company and its Designated Subsidiaries with an opportunity to acquire a proprietary interest in the Company’s long-term performance and success through the purchase of shares of Common Stock at a price that may be less than the Fair Market Value of the stock on the date of purchase from funds accumulated through payroll deductions.
Section 2
BACKGROUND
          The Plan is intended to qualify as an “employee stock purchase plan” under Code Section 423. The Plan will, accordingly, be construed so as to extend and limit participation in a manner within the requirements of that Code section. The terms of the Plan as contained in this document will apply with respect to Purchase Periods beginning on and after the Effective Date.
Section 3
DEFINITIONS
          As used in the Plan, the following terms, when capitalized, have the following meanings:
      “Board” means the Board of Directors of the Company.
      “Business Day” means a day that the New York Stock Exchange, or such other principal exchange on which the Common Stock is traded, is open for trading.
      “Code” means the Internal Revenue Code of 1986, as amended.
      “Committee” means the committee described in Section 11.
      “Common Stock” means the common stock, par value $.01 per share, of the Company, or any stock into which that common stock may be converted, reclassified or exchanged.
      “Company” means Dr Pepper Snapple Group, Inc., a Delaware corporation, and any successor entity.
      “Compensation” means (a) for salaried Employees, the regular base salary or wages, and commissions, paid by the Company or a Designated Subsidiary for services

 


 

performed by such Employees which are computed on a weekly, biweekly, monthly, annual or other comparable basis, before any payroll deductions for taxes or any other purposes; and (b) for hourly Employees, wages paid by the Company or a Designated Subsidiary for services performed by such Employees which are computed on a biweekly or other comparable basis, before any payroll deductions for taxes or any other purposes. However, in the case of both (a) and (b) above, Compensation shall not include overtime, shift premium, bonuses and other special payments, incentive payments, pension, severance pay, foreign service premiums or other foreign assignment uplifts or any other extraordinary compensation, nor Company or Designated Subsidiary contributions to a retirement plan or any other deferred compensation or employee benefit plan or program of the Company or any Designated Subsidiary.
      “Contributions” means all amounts contributed by a Participant to the Plan in accordance with Section 6.
      “Designated Subsidiary” means a Subsidiary that has been designated by the Board or the Committee as eligible to participate in the Plan as to its eligible Employees.
      “Effective Date” means [                    ], 2008.
      “Employee” means any person who performs services as an employee for, and who is classified as an employee on the payroll records of, the Company or a Designated Subsidiary.
      “Fair Market Value” of a share of Common Stock means, as of a particular date, (i) if             shares of Common Stock are listed on a national securities exchange, the closing sales price per share of Common Stock on the consolidated transaction reporting system for the principal national securities exchange on which shares of Common Stock are listed on that date, or, if there shall have been no such sales reported on that date, on the last preceding date on which such a sale was so reported, (ii) if the Common Stock is not so listed, but is traded on an over the counter market, the mean between the closing bid and asked price on that date, or, if there are no such prices available for such date, on the last preceding date on which such prices shall be available, as reported by the National Quotation Bureau Incorporated, or (iii) if shares of Common Stock are not publicly traded, the most recent value determined by an independent appraiser appointed by the Company for such purpose.
      “Offering Date” means the first Business Day of each Purchase Period.
      “Participant” means a participant in the Plan as described in Section 5.
      “Payroll Deduction Account” means the bookkeeping account established for a Participant in accordance with Section 6.
      “Plan” means the Dr Pepper Snapple Group, Inc. Employee Stock Purchase Plan, as set forth herein, and as amended and restated from time to time.

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      “Purchase Date” means the last Business Day of each Purchase Period or such other date as required by administrative operational requirements.
      “Purchase Period” means a period of twelve months commencing on January 1 of each calendar year and ending on the following December 31, or such other period as determined by the Committee; provided that in no event may a Purchase Period exceed 27 months. The initial Purchase Period following the Effective Date may be a short Purchase Period beginning on the date selected by the Committee (but no earlier than the date of effectiveness of the initial registration statement on Form S-8 filed by the Company with respect to the Plan), and ending on a date selected by the Committee.
      “Purchase Price” means an amount equal to 85% to 100% of the Fair Market Value of a Share on one of the following dates: (i) the Offering Date, (ii) the Purchase Date or (iii) the lower of the Offering Date or the Purchase Date, as the Committee in its sole discretion shall determine and communicate to the Participants.
      “Share” means a share of Common Stock, as adjusted in accordance with Section 13.
      “Subsidiary” means each corporation in an unbroken chain of corporations beginning or ending with the Company if, on or after the Effective Date, each of the corporations other than the last corporation in the chain owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in the chain.
Section 4
ELIGIBILITY
     (a)  Eligible Employees. Any person who is an Employee as of an Offering Date in a given Purchase Period will be eligible to participate in the Plan for that Purchase Period, subject to the requirements of Section 5 and the limitations imposed by Code Section 423(b). Notwithstanding the foregoing, the Committee may, on a prospective basis, (i) exclude from participation in the Plan any or all Employees whose customary employment is 20 hours per week or less or is not for more than five months in a calendar year, and (ii) impose an eligibility service requirement of up to two years of employment. The Committee may also determine that a designated group of highly compensated employees (within the meaning of Code Section 414(q)) are ineligible to participate in the Plan.
     (b)  Five Percent Shareholders. Notwithstanding any other provision of the Plan, no Employee will be eligible to participate in the Plan if the Employee (or any other person whose stock would be attributed to the Employee pursuant to Code Section 424(d)) owns an amount of capital stock of the Company and/or holds outstanding options to purchase stock which equals or exceeds five percent (5%) of the total combined voting power or value of all classes of stock of the Company or a Designated Subsidiary.

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Section 5
PARTICIPATION
          An Employee may elect to become a Participant in the Plan by completing such enrollment documents as are provided by the Committee or its designee, including where applicable a payroll deduction authorization form, and submitting them to the Committee or its designee in accordance with the administrative requirements and any limitations established by the Committee. The enrollment documents will set forth the amount of the Participant’s Contributions, which may be established as a percentage of the Participant’s Compensation or a specific dollar amount; provid e d, however, in no event shall a Participant’s Contributions exceed an amount of compensation which would give the Participant the right to purchase a number of shares at an annual rate which exceeds the accrual limit specified in Code Section 423(b)(8) for a calendar year. Contributions to the Plan may be also subject to such other limits designated by the Committee, including any minimum Contribution amount or percentage.
          The Plan is a discretionary plan. Participation by any Employee is purely voluntary. Participation in the Plan with respect to any Purchase Period shall not entitle any Participant to participate with respect to any other Purchase Period.
Section 6
CONTRIBUTIONS
     (a)  Payroll Deductions. A Participant’s Contributions with respect to a Purchase Period will begin on the first payroll paid with respect to such Purchase Period and will end on the last payroll paid on or before the Purchase Date of said Purchase Period, unless the Participant elects to withdraw from the Plan as provided in Section 9. A Participant’s enrollment documents will not remain in effect for successive Purchase Periods unless the Committee otherwise provides.
     (b)  Payroll Deduction Account. For each payroll for which the Participant has elected to make Contributions to the Plan by means of payroll deduction or otherwise (as approved by the Committee), the Committee will credit the amount of each Participant’s Contributions to the Participant’s Payroll Deduction Account. A Participant may not make any additional payments to the Participant’s Payroll Deduction Account, except as expressly provided in the Plan or as authorized by the Committee.
     (c)  No Interest. No interest or other earnings will accrue on a Participant’s Contributions to the Plan or be payable to a Participant upon any payment to or withdrawal by such Participant of funds from such Participant’s Payroll Deduction Account.
     (d)  Non-U.S. Contributions. In countries where payroll deductions are not permissible or feasible, the Committee may, in its sole discretion, permit an Employee to participate in the Plan by alternative means. Except as otherwise specified by the Committee, Contributions (including payroll deductions) made with respect to Employees paid in currencies other than U.S. dollars will be accumulated in local currency and converted to U.S. dollars as of the Purchase Date.

4


 

Section 7
STOCK PURCHASES
     (a)  Automatic Purchase. Effective as of the close of business on each Purchase Date, but subject to the limitations of Section 8, each Participant will be deemed, without further action, to have automatically purchased the number of whole Shares that the Participant’s Payroll Deduction Account balance can purchase at the Purchase Price specified by the Committee as applicable for that Purchase Period on that Purchase Date and such Shares will be considered to be issued and outstanding. Except as otherwise specified by the Committee, any amounts that are not sufficient to purchase a whole Share will be returned to each Participant following the Purchase Period.
     (b)  Delivery of Shares. Purchased Shares shall be credited in book entry form as soon as practicable after each Purchase Date to an account administered by a designated custodian, bank or financial institution. The Committee may require that Shares be retained by the account administrator for a specified period of time and may restrict dispositions during that period, and the Committee may establish other procedures to permit tracking of disqualifying dispositions of the Shares or to restrict transfer of the Shares. A Participant shall not be permitted to pledge, transfer, or sell Shares until they are issued in book entry, except as otherwise permitted by the Committee and subject to the Company’s policies regarding securities trading.
     (c)  Notice Restrictions. The Committee may require, as a condition of participation in the Plan, that each Participant agree to notify the Company if the Participant sells or otherwise disposes of any Shares within two years of the Offering Date or one year of the Purchase Date for the Purchase Period in which the Shares were purchased.
     (d)  Shareholder Rights. A Participant will have no interest or voting right in a Share until a Share has been purchased on the Participant’s behalf under the Plan.
Section 8
LIMITATION ON PURCHASES
     (a)  Limitations on Aggregate Shares Available During a Purchase Period. With respect to each Purchase Period, the Committee, at its discretion, may specify the maximum number of Shares that may be purchased or such other limitations that it may deem appropriate, subject to the aggregate number of Shares authorized under Section 12 of this Plan. If the number of Shares to be purchased on a Purchase Date exceeds the number of Shares available for purchase under the Plan, the Shares purchased on such Purchase Date shall be reduced to an amount determined by the Committee not to exceed the number of Shares so available for purchase and shall be allocated by the Committee pro rata among the Participants in the Purchase Period in proportion to the relative amounts credited to their accounts. Any amounts not thereby applied to the purchase of Shares under the Plan shall be refunded to the Participants after the end of the Purchase Period, without interest.
     (b)  Limitations on Participant Purchases. Participant purchases are subject to the following limitations:

5


 

     (1) Purchase Period Limitation. Subject to the calendar year limits provided in (2) below, the maximum number of Shares that a Participant will have the right to purchase in any Purchase Period will be determined by dividing (i) the accrual limit specified in Code Section 423(b)(8) by (ii) the Fair Market Value of one Share on the Offering Date for such Purchase Period.
     (2) Calendar Year Limitation. No right to purchase Shares under the Plan will be granted to an Employee if such right, when combined with all other rights and options granted under all of the Code Section 423 employee stock purchase plans of the Company, its Subsidiaries or any parent corporation (within the meaning of Code Section 424(e)), would permit the Employee to purchase Shares with a Fair Market Value (determined at the time the right or option is granted) in excess of the accrual limit specified in Code Section 423(b)(8) for each calendar year in which the right or option is outstanding at any time, determined in accordance with Code Section 423(b)(8).
     (c)  Refunds. As of the first Purchase Date on which this Section 8 limits a Participant’s ability to purchase Shares, the Participant’s payroll deductions will terminate, and the unused balance will be returned to such Participant without interest.
Section 9
WITHDRAWAL FROM PARTICIPATION
          Subject to the Company’s policies regarding securities trading, a Participant may cease participation in a Purchase Period at any time prior to the Purchase Date and withdraw all, but not less than all, of the Contributions credited to the Participant’s Payroll Deduction Account by providing at least 15 days’ prior written notice in the form and manner prescribed by the Committee. Partial cash withdrawals shall not be permitted. If a Participant elects to withdraw, the Participant may not make any further Contributions to the Plan for the purchase of Shares during that Purchase Period. A Participant’s voluntary withdrawal during a Purchase Period will not have any effect upon the Participant’s eligibility to participate in the Plan during a subsequent Purchase Period.
Section 10
EMPLOYMENT TERMINATION
     (a)  In General. If a Participant’s employment with the Company or a Designated Subsidiary terminates for any reason, the Participant will cease to participate in the Plan and the Company or its designee will refund the balance in the Participant’s Payroll Deduction Account without interest.
     (b)  Leaves of Absence. The Committee may establish administrative policies regarding a Participant’s rights to continue to participate in the Plan in the event of such Participant’s leave of absence.

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Section 11
PLAN ADMINISTRATION AND AMENDMENTS
          The Plan will be administered by the Committee, which will be appointed by the Board. The Committee will initially be the Compensation Committee of the Board unless and until the Board appoints another committee to administer the Plan; provided, however, that such committee shall satisfy the independence requirements under Section 16 of the Securities Exchange Act of 1934, as amended, and as prescribed by any stock exchange on which the Common Stock is listed.
          Subject to the express provisions of the Plan, the Committee will have the discretionary authority to interpret the Plan and to make factual and legal determinations; to take any actions necessary to implement the Plan; to prescribe, amend, and rescind rules and regulations relating to the Plan; and to make all other determinations necessary or advisable in administering the Plan. All such determinations will be final and binding upon all persons. The Committee may request advice or assistance or employ or designate such other persons as are necessary or appropriate for proper administration of the Plan.
          To the fullest extent permitted by law, the Company shall indemnify and hold harmless any member of the Board or any Committee and other individuals performing services on behalf of the Committee, against any liability, cost or expense arising as a result of any claim asserted by any person or entity under applicable laws with respect to any action or failure to act of such individuals taken in connection with this Plan, except claims or liabilities arising on account of the willful misconduct or bad faith of such Board member, Committee member or individual.
Section 12
RESERVED SHARES
          Subject to adjustments as provided in Section 13, the maximum number of Shares available for purchase under the Plan on or after the Effective Date is 2,250,000 Shares. Shares issued under the Plan may be Shares of original issuance, Shares held in treasury, or Shares that have been reacquired by the Company.
Section 13
CAPITAL CHANGES
     (a) Changes in Capitalization . Subject to any required action by the shareholders of the Company, the right to purchase Shares covered by a current Purchase Period and the number of Shares which have been authorized for issuance under the Plan for any future Purchase Period, the maximum number of Shares each Participant may purchase each Purchase Period (pursuant to Section 8), as well as the price per Share and the number of Shares covered by each right under the Plan which have not yet been purchased shall be proportionately adjusted, as determined by the Committee, for any increase or decrease in the number of issued Shares resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Common Stock, or any other increase or decrease in the number of Shares effected without receipt of consideration by the Company. Except as expressly provided in the immediately

7


 

preceding sentence and unless otherwise determined by the Committee, no issuance by the Company of shares of stock of any class, or securities convertible into or exchangeable for shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of Shares hereunder.
     (b)  Dissolution or Liquidation . In the event of the proposed dissolution or liquidation of the Company, the Purchase Period then in progress shall be shortened by the Committee’s setting a new Purchase Date and shall terminate immediately prior to the consummation of such proposed dissolution or liquidation, unless provided otherwise by the Committee. The new Purchase Date selected by the Committee shall be before the date of the Company’s proposed dissolution or liquidation. Each Participant will be notified in writing, at least 10 business days prior to the new Purchase Date or such shorter period as the Committee may determine, that the Purchase Date for the Participant’s right to purchase Shares has been changed to the new Purchase Date and that the applicable number of Shares will automatically be purchased on the new Purchase Date, unless prior to such date the Participant has withdrawn from the Plan as provided in Section 9 hereof.
     (c)  Merger or Asset Sale . In the event of a proposed sale of all or substantially all of the assets of the Company, or the merger or consolidation of the Company with or into another entity, unless provided otherwise by the Committee each outstanding right to purchase Shares shall be assumed, or an equivalent right to purchase shares substituted, by the successor or resulting entity or a parent or subsidiary of the such entity. In the event that the successor or resulting entity refuses to assume or substitute the right to purchase Shares or if so determined by the Committee, any Purchase Period then in progress shall be shortened by the Committee’s setting a new Purchase Date and any Purchase Period then in progress shall end on the new Purchase Date. The new Purchase Date selected by the Committee shall be before the effective date of such proposed sale, merger or consolidation. Each Participant will be notified in writing at least 10 business days prior to the new Purchase Date or such shorter period as the Committee may determine that the Purchase Date for the Participant’s right to purchase Shares has been changed to the new Purchase Date and that the applicable number of Shares will be purchased automatically on the new Purchase Date, unless prior to such date the Participant has withdrawn from the Plan as provided in Section 9 hereof.
Section 14
AMENDMENT OR TERMINATION OF THE PLAN
          The Board or the Committee, in its sole discretion, may suspend or terminate the Plan, or amend the Plan in any respect; provided, however, that the stockholders of the Company must approve any amendment to the extent required by Code Section 423 or the requirements of any stock exchange on which the Common Stock is listed.
          The Plan and all rights of Employees under the Plan will terminate: (a) immediately following the Purchase Date on which the number of Shares purchased on such date has been reduced pursuant to Section 8(a), unless otherwise determined by the Board, or (b) at any date at the discretion of the Board or the Committee. Upon termination of the Plan, each Participant will receive the balance in the Participant’s Payroll Deduction Account, without interest.

8


 

Section 15
REGULATORY AND TAX COMPLIANCE; LISTING OF SHARES
          The Plan, the grant and exercise of the rights to purchase Shares under the Plan, and the Company’s obligation to sell and deliver Shares upon the exercise of rights to purchase Shares, will be subject to all applicable federal, state and foreign laws, rules and regulations, and to such approvals by any regulatory or government agency as may be required or desirable. The Plan is intended to comply with Rule 16b-3 under the U.S. Securities Exchange Act of 1934, as amended. Any provision inconsistent with such Rule shall be inoperative and shall not affect the validity of the Plan.
          If at any time the Board or the Committee shall determine that the listing, registration or qualification of the Shares covered by the Plan upon any national securities exchange or reporting system or under any applicable law is necessary or desirable as a condition of, or in connection with, the sale or purchase of Shares under the Plan, no Shares will be sold, issued or delivered unless and until such listing, registration or qualification shall have been effected or obtained, or otherwise provided for.
Section 16
NON-U.S. JURISDICTIONS
          The Committee may, in its sole discretion, adopt such rules or procedures to accommodate the requirements of local laws of non-U.S. jurisdictions, including rules or procedures relating to the handling of payroll deductions, conversion of local currency, payroll taxes and withholding procedures, as the Committee in its sole discretion deems appropriate. The Committee may also adopt rules and procedures different from those set forth in the Plan applicable to Participants who are employed by specific Designated Subsidiaries or at certain non-U.S. locations that are not intended to be within the scope of Code Section 423, subject to the provisions of Section 12, and may where appropriate establish one or more sub-plans for this purpose.
Section 17
MISCELLANEOUS
     (a)  Nontransferability . Except by the laws of descent and distribution, no benefit provided hereunder, including a right to purchase Shares, shall be subject to alienation, assignment, or transfer by a Participant (or by any person entitled to such benefit pursuant to the terms of this Plan), nor shall it be subject to attachment or other legal process of whatever nature, and any attempted alienation, assignment, attachment, or transfer shall be void and of no effect whatsoever and, upon any such attempt, the benefit shall terminate and be of no force or effect. During a Participant’s lifetime, rights granted to the Participant hereunder shall be exercisable only by the Participant. Shares of Common Stock shall be delivered only to the Participant or, in the event of his death, his properly designated beneficiary entitled to receive the same or, in the absence of such designation, to the executor, administrator or other legal representative of the Participant’s estate.

9


 

     (b)  Tax Withholding. The Company or any Designated Subsidiary shall have the right to withhold from all payments hereunder any federal, state, local, or non-U.S. income, social insurance, or other taxes that it deems are required by law to be withheld with respect to such payments. If such withholding is insufficient to satisfy such Federal, state, local or non-U.S. taxes, the Participant shall be required to pay to the Company or Designated Subsidiary, as the case may be, such amount required to be withheld or make such other arrangements satisfactory to the Company or such Designated Subsidiary, as the Committee shall determine.
     (c)  No Employment Right. Nothing contained in this Plan nor any action taken hereunder shall be construed as giving any right to any individual to be retained as an officer or Employee of the Company or any other employer or subsidiary or affiliate of the Company.
     (d)  Equal Rights and Privileges. All eligible Employees shall have equal rights and privileges with respect to the Plan so that the Plan qualifies as an “employee stock purchase plan” within the meaning of Section 423 or any successor provision of the Code and related regulations. Any provision of the Plan which is inconsistent with Section 423 or any successor provision of the Code shall without further act or amendment by the Company be reformed to comply with the requirements of Section 423.
     (e)  No Rights as Shareholder. A Participant shall not be considered a shareholder with respect to Shares to be purchased until the Purchase Date. Thus, a Participant shall not have a right to any dividend or distribution on Shares subject to purchase during a Purchase Period.
     (f)  Relationship to Other Benefits. It is not intended that any rights or benefits provided under this Plan be considered part of normal or expected compensation for purposes of calculating any severance, redundancy, termination indemnity, end of service awards, pension, retirement, profit sharing, or group insurance plan or similar benefits or payments. No payment under this Plan shall be taken into account in determining any benefits under any severance, termination, end of service awards, pension, retirement, profit sharing, or group insurance plan of the Company or any Designated Subsidiary or subsidiary or affiliate of the Company.
     (g)  Expenses. The expenses of implementing and administering this Plan shall be borne by the Company. Any brokerage fees for the subsequent transfer or sale of Shares acquired under this Plan shall be paid by the Participant (or his beneficiary or estate, if applicable).
     (h)  Titles and Headings. The titles and headings of the Sections and subsections in this Plan are for convenience of reference only, and in the event of any conflict, the text of this Plan, rather than such titles or headings, shall control.
     (i)  Application of Funds. All funds received by the Company under the Plan shall constitute general funds of the Company.
     (j) Nonexclusivity of Plan. Neither the adoption of the Plan by the Board nor the submission of the Plan to the stockholders of the Company for approval shall be construed as creating any limitations on the power of the Board to adopt such other incentive arrangements as it may deem desirable, including, without limitation, the granting of stock options otherwise than

10


 

under the Plan, and such arrangements may be either applicable generally or only in specific cases.
     (k)  Duration of Plan. Notwithstanding any provision in the Plan, no rights to purchase Shares shall be granted hereunder prior to the Effective Date. Following termination of the Plan in accordance with Section 14, the Plan shall remain in effect until all rights granted under the Plan prior to such termination have been exercised or expired, vested or forfeited, and/or otherwise satisfied.
     (l)  Governing Law. This Plan and all determinations made and actions taken pursuant hereto, to the extent not otherwise governed by mandatory provisions of the Code or the securities laws of the United States, shall be governed by and construed in accordance with the laws of the State of Delaware.

11

 

Exhibit 10.22
 
 
CREDIT AGREEMENT
dated as of
March 10, 2008
among
DR PEPPER SNAPPLE GROUP, INC.,
as Borrower
THE LENDERS AND ISSUING BANK PARTY HERETO
and
JPMORGAN CHASE BANK, N.A.
as Administrative Agent
BANK OF AMERICA, N.A.
as Syndication Agent
GOLDMAN SACHS CREDIT PARTNERS L.P.,
MORGAN STANLEY SENIOR FUNDING, INC.
and
UBS SECURITIES LLC
as Documentation Agents
J.P. MORGAN SECURITIES INC.
and
BANC OF AMERICA SECURITIES LLC
as Joint Lead Arrangers
J.P. MORGAN SECURITIES INC.,
BANC OF AMERICA SECURITIES LLC,
GOLDMAN SACHS CREDIT PARTNERS L.P.,
MORGAN STANLEY SENIOR FUNDING, INC.
and
UBS SECURITIES LLC
as Bookrunners
 
 

 


 

TABLE OF CONTENTS
             
        Page  
 
           
ARTICLE I Definitions     1  
Section 1.01.
  Defined Terms     1  
Section 1.02.
  Classification of Loans and Borrowings     20  
Section 1.03.
  Terms Generally     21  
Section 1.04.
  Accounting Terms; GAAP     21  
 
           
ARTICLE II The Credits     21  
Section 2.01.
  Commitments     21  
Section 2.02.
  Loans and Borrowings     22  
Section 2.03.
  Requests for Borrowings     22  
Section 2.04.
  Swingline Loans     23  
Section 2.05.
  Letters of Credit     24  
Section 2.06.
  Funding of Borrowings     28  
Section 2.07.
  Interest Elections     28  
Section 2.08.
  Termination and Reduction of Commitments     29  
Section 2.09.
  Repayment of Loans; Evidence of Debt     30  
Section 2.10.
  Prepayment of Loans     31  
Section 2.11.
  Fees     32  
Section 2.12.
  Interest     33  
Section 2.13.
  Alternate Rate of Interest     33  
Section 2.14.
  Increased Costs     34  
Section 2.15.
  Break Funding Payments     35  
Section 2.16.
  Taxes     35  
Section 2.17.
  Payments Generally; Pro Rata Treatment; Sharing of Set-offs     37  
Section 2.18.
  Mitigation Obligations; Replacement of Lenders     39  
 
           
ARTICLE III Representations and Warranties     39  
Section 3.01.
  Organization; Powers     40  
Section 3.02.
  Authorization; Enforceability     40  
Section 3.03.
  Governmental Approvals; No Conflicts     40  
Section 3.04.
  Financial Condition; No Material Adverse Change     41  
Section 3.05.
  Properties     41  
Section 3.06.
  Litigation and Environmental Matters     41  

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TABLE OF CONTENTS
(continued)
             
        Page  
 
           
Section 3.07.
  Compliance with Laws and Agreements     42  
Section 3.08.
  Investment Company Status     42  
Section 3.09.
  Taxes     42  
Section 3.10.
  ERISA     42  
Section 3.11.
  Disclosure     42  
Section 3.12.
  Margin Regulations     43  
Section 3.13.
  Labor Matters     43  
Section 3.14.
  Separation Transactions     43  
 
           
ARTICLE IV Conditions     44  
Section 4.01.
  Effective Date     44  
Section 4.02.
  Initial Funding Date     44  
Section 4.03.
  Conditions to Transaction Closing Date     46  
Section 4.04.
  Conditions to Each Credit Event After the Transaction Closing Date     48  
 
           
ARTICLE V Affirmative Covenants     48  
Section 5.01.
  Financial Statements; Ratings Change and Other Information     49  
Section 5.02.
  Notices of Material Events     50  
Section 5.03.
  Existence; Conduct of Business     50  
Section 5.04.
  Payment of Obligations     50  
Section 5.05.
  Maintenance of Properties; Insurance     50  
Section 5.06.
  Books and Records; Inspection Rights     50  
Section 5.07.
  Compliance with Laws     51  
Section 5.08.
  Use of Proceeds     51  
Section 5.09.
  Additional Guarantors     51  
Section 5.10.
  Ratings     51  
 
           
ARTICLE VI Negative Covenants     52  
Section 6.01.
  Liens     52  
Section 6.02.
  Fundamental Changes     52  
Section 6.03.
  Investments, Loans, Advances, Guarantees and Acquisitions     53  
Section 6.04.
  Financial Covenants     54  
Section 6.05.
  Transactions with Affiliates     54  
Section 6.06.
  Restrictive Agreements     54  

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TABLE OF CONTENTS
(continued)
             
        Page  
 
           
Section 6.07.
  Subsidiary Indebtedness     55  
 
           
ARTICLE VII Events of Default     55  
 
           
ARTICLE VIII The Administrative Agent; the Agents and the Collateral Account     57  
Section 8.01.
  The Administrative Agent; the Agents     57  
Section 8.02.
  Collateral Account     59  
 
           
ARTICLE IX Miscellaneous     60  
Section 9.01.
  Notices     60  
Section 9.02.
  Waivers; Amendments     61  
Section 9.03.
  Expenses; Indemnity; Damage Waiver     62  
Section 9.04.
  Successors and Assigns     63  
Section 9.05.
  Survival     66  
Section 9.06.
  Counterparts; Integration; Effectiveness     66  
Section 9.07.
  Severability     67  
Section 9.08.
  Right of Setoff     67  
Section 9.09.
  Governing Law; Jurisdiction; Consent to Service of Process     67  
Section 9.10.
  WAIVER OF JURY TRIAL     67  
Section 9.11.
  Headings     68  
Section 9.12.
  Confidentiality     68  
Section 9.13.
  Interest Rate Limitation     69  
Section 9.14.
  Patriot Act     69  
Section 9.15.
  No Advisory or Fiduciary Responsibility     70  
Section 9.16.
  Release of Guarantors     70  
 
           

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TABLE OF CONTENTS
(continued)
             
           
SCHEDULES :        
 
           
Schedule 2.01
  Commitments        
Schedule 2.05
  Existing Letters of Credit        
Schedule 3.01(b)
  Subsidiaries        
Schedule 3.06
  Disclosed Matters        
Schedule 6.01
  Existing Indebtedness        
Schedule 6.01
  Existing Liens        
Schedule 6.06
  Existing Restrictions        
EXHIBITS :
Exhibit A — Form of Assignment and Assumption
Exhibit B — Form of Opinion of Borrower’s Counsel
Exhibit C — Form of Guaranty
ANNEXES
Annex I — Information Memorandum
Annex II — Separation Documents

iv


 

          CREDIT AGREEMENT dated as of March 10, 2008, among DR PEPPER SNAPPLE GROUP, INC., as Borrower, the LENDERS and ISSUING BANKS party hereto, JPMORGAN CHASE BANK, N.A., as Administrative Agent, BANK OF AMERICA, N.A., as Syndication Agent, and GOLDMAN SACHS CREDIT PARTNERS L.P., MORGAN STANLEY SENIOR FUNDING, INC. and UBS SECURITIES LLC, as Documentation Agents.
WITNESSETH:
          WHEREAS, the Borrower has requested, and the Lenders and Issuing Bank are willing to make available to the Borrower, the credit facilities described in this Agreement upon and subject to the terms and conditions hereinafter set forth;
          NOW, THEREFORE, in consideration of the premises, covenants and agreements set forth herein, the parties hereto agree as follows:
ARTICLE I
Definitions
          SECTION 1.01. Defined Terms. As used in this Agreement, the following terms have the meanings specified below:
          “ ABR ”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Alternate Base Rate.
          “ Adjusted LIBO Rate ” means, with respect to any Eurodollar Borrowing for any Interest Period, an interest rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest Period multiplied by (b) the Statutory Reserve Rate.
          “ Administrative Agent ” means JPMorgan Chase Bank, N.A., in its capacity as administrative agent for the Lenders hereunder, and, as applicable, JPMorgan Chase Bank, N.A., in its capacity as collateral agent for the Lenders hereunder.
          “ Administrative Questionnaire ” means an Administrative Questionnaire in a form supplied by the Administrative Agent.
          “ Affiliate ” means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.
          “ Agents ” means, collectively, the Administrative Agent, Syndication Agent and Documentation Agent.
          “ Alternate Base Rate ” means, for any day, a rate per annum equal to the greater of (a) the Prime Rate in effect on such day and (b) the Federal Funds Effective Rate in effect on such day plus 1 / 2 of 1%. Any change in the Alternate Base Rate due to a change in the Prime Rate or the Federal Funds

 


 

Effective Rate shall be effective from and including the effective date of such change in the Prime Rate or the Federal Funds Effective Rate, respectively.
          “ Applicable Percentage ” means, (a) with respect to any Revolving Credit Lender, the percentage of the total Revolving Credit Commitments represented by such Lender’s Revolving Credit Commitment, (b) with respect to any Term Lender, the percentage of the total Term Loan Commitments represented by such Lender’s Term Loan Commitment and (c) with respect to any Lender, the percentage of the total Commitments represented by such Lender’s Commitments. If the applicable Commitments have terminated or expired, the Applicable Percentages shall be determined based upon the applicable Commitments most recently in effect, giving effect to any assignments.
          “ Applicable Rate ” means, for any day, with respect to any ABR Loan or Eurodollar Loan, or with respect to the Unused Commitment Fees payable hereunder, as the case may be, the applicable rate per annum set forth below under the caption “ABR Spread”, “Eurodollar Spread” or “Unused Commitment Fee Rate”, as the case may be, based upon the ratings by Moody’s and S&P, respectively, applicable on such date to the Index Debt:
                         
    ABR   Eurodollar   Unused Commitment
Index Debt Ratings:   Spread   Spread   Fee Rate
 
                       
Category 1
Index Debt ratings of at least BBB+ by S&P and/or Baa1 by Moody’s
    0.00 %     1.00 %     0.15 %
 
                       
Category 2
Index Debt ratings less than Category 1, but at least BBB by S&P and/or Baa2 by Moody’s
    0.50 %     1.50 %     0.20 %
 
                       
Category 3
Index Debt ratings less than Category 2, but at least BBB- by S&P and/or Baa3 by Moody’s
    1.00 %     2.00 %     0.30 %
 
                       
Category 4
Index Debt ratings less than Category 3, but at least BB+ by S&P and/or Ba1 by Moody’s
    1.25 %     2.25 %     0.375 %
 
                       
Category 5
Index Debt ratings less than Category 4
    1.50 %     2.50 %     0.50 %
For purposes of the foregoing, (i) if either Moody’s or S&P shall not have in effect a rating for the Index Debt (other than by reason of the circumstances referred to in the last sentence of this definition), then such rating agency shall be deemed to have established a rating in Category 5; (ii) if the ratings established or deemed to have been established by Moody’s and S&P for the Index Debt shall fall within different Categories, the Applicable Rate shall be based on the higher of the two ratings unless one of the two ratings is two or more Categories lower than the other, in which case the Applicable Rate shall be determined by reference to the Category next below that of the higher of the two ratings; and (iii) if the ratings established or deemed to have been established by Moody’s and S&P for the Index Debt shall be changed (other than as a result of a change in the rating system of Moody’s or S&P), such change shall be effective as of the date on which it is first announced by the applicable rating agency, irrespective of when notice of such change shall have been furnished by the Borrower to the Agent and the Lenders

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pursuant to Section 5.01 or otherwise. Each change in the Applicable Rate shall apply during the period commencing on the effective date of such change and ending on the date immediately preceding the effective date of the next such change. If the rating system of Moody’s or S&P shall change, or if either such rating agency shall cease to be in the business of rating corporate debt obligations, the Borrower and the Lenders shall negotiate in good faith to amend this definition to reflect such changed rating system or the unavailability of ratings from such rating agency and, pending the effectiveness of any such amendment, the Applicable Rate shall be determined by reference to the rating most recently in effect prior to such change or cessation.
          “ Approved Fund ” has the meaning assigned to such term in Section 9.04.
          “ Assignment and Assumption ” means an assignment and assumption entered into by a Lender and an assignee (with the consent of any party whose consent is required by Section 9.04), and accepted by the Administrative Agent, in the form of Exhibit A or any other form approved by the Administrative Agent.
          “ Audited Financial Statements ” has the meaning assigned to such term in Section 4.02(k).
          “ Availability Period ” means the period from and including the Transaction Closing Date to but excluding the earlier of the Revolving Credit Facility Maturity Date and the date of termination of the Revolving Credit Commitments in full.
          “ Board ” means the Board of Governors of the Federal Reserve System of the United States of America.
          “ Bookrunners ” means, collectively, J.P. Morgan Securities Inc., Banc of America Securities LLC, Goldman Sachs Credit Partners L.P., Morgan Stanley Senior Funding, Inc. and UBS Securities LLC, in their capacities as bookrunners.
          “ Borrower ” means Dr Pepper Snapple Group, Inc., a Delaware corporation.
          “ Borrowing ” means an advance of (a) Revolving Loans of the same Type, made, converted or continued on the same date and, in the case of Eurodollar Loans, as to which a single Interest Period is in effect, (b) Term Loans of the same Type, made, converted or continued on the same date and, in the case of Eurodollar Loans, as to which a single Interest Period is in effect, or (c) a Swingline Loan, as applicable.
          “ Borrowing Request ” means a request by the Borrower for a Borrowing in accordance with Section 2.03.
          “ Business ” means the beverage business in the United States, Canada, Mexico and the Caribbean owned by Cadbury on the Effective Date and to be owned by the Borrower upon consummation of the Separation Transactions.
          “ Bridge Loan ” means that certain 364-day loan made pursuant to the Bridge Loan Agreement in an aggregate principal amount of up to $2,000,000,000.
          “ Bridge Loan Agreement ” means that certain 364-Day Senior Unsecured Bridge Loan Agreement dated as of the date hereof, among the Borrower, the lenders party thereto and JP Morgan Chase Bank, N.A., as administrative agent.

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          “ Bridge Loan Documents ” means the Loan Documents (as defined in the Bridge Loan Agreement).
          “ Business Day ” means any day that is not a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to remain closed; provided that, when used in connection with a Eurodollar Loan, the term “ Business Day ” shall also exclude any day on which banks are not open for dealings in dollar deposits in the London interbank market.
          “ Cadbury ” means Cadbury Schweppes plc, a public limited company organized under the laws of England and Wales with registered number 0052457.
          “ Cadbury Material Adverse Effect ” means a material adverse effect on the business, operations, property or financial condition of Cadbury and its subsidiaries taken as a whole.
          “ Cadbury UK ” means Cadbury plc, a United Kingdom public limited company incorporated in England and Wales with registered number 0649739.
          “ Capital Lease Obligations ” of any Person means the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP.
          “ Change in Control ” means (a) 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 SEC thereunder as in effect on the date hereof), of Stock representing more than 35% of the aggregate ordinary voting power represented by the issued and outstanding Stock of the Borrower, (b) occupation of a majority of the seats (other than vacant seats) on the board of directors of the Borrower by Persons who were neither (i) nominated by the board of directors of the Borrower nor (ii) appointed by directors so nominated or (c) a termination of Cadbury UK’s and its subsidiaries’ indemnification obligations under the Tax Sharing and Indemnification Agreement pursuant to the change of control provision therein.
          “ Change in Law ” means (a) the adoption of any law, rule or regulation after the date of this Agreement, (b) any change in any law, rule or regulation or in the interpretation or application thereof by any Governmental Authority after the date of this Agreement or (c) the compliance by any Lender or the Issuing Bank (or, for purposes of Section 2.14(b), by any lending office of such Lender or by such Lender’s or the Issuing Bank’s holding company, if any) with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the date of this Agreement.
          “ Class ”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are Revolving Loans, Term Loans or Swingline Loans.
          “ Code ” means the Internal Revenue Code of 1986, as amended from time to time.
          “ Collateral Account ” means a deposit account that is (a) established by and with the Administrative Agent for the purpose of receiving the proceeds of the Term Loans on the Initial Funding Date (if the Initial Funding Date occurs prior to the Transaction Closing Date), (b) in the name of the Borrower and (c) over which the Administrative Agent has exclusive control and a perfected first-priority Lien as security for the Obligations.

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          “ Commitment ” means, with respect to any Lender, such Lender’s Revolving Credit Commitment, if any, and such Lender’s Term Loan Commitment, if any, and “ Commitments ” means the aggregate Revolving Credit Commitments and Term Loan Commitments of all Lenders.
          “ Consolidated ” means, with respect to any Person, the consolidation of accounts of such Person and its subsidiaries in accordance with GAAP.
          “ Consolidated Cash Interest Expense ” means, with respect to any Person, for any period, the Consolidated Interest Expense of such Person and its subsidiaries for such period less the Consolidated Non-Cash Interest Expense of such Person and its subsidiaries for such period.
          “ Consolidated EBITDA ” means, with respect to any Person, for any period, Consolidated Net Income of such Person for such period plus (A) without duplication and to the extent deducted in determining such Consolidated Net Income, the sum of (1) the aggregate amount of Consolidated Interest Expense for such period, (2) the aggregate provision for federal, state, local or foreign taxes based on income or profits or capital for such period, (3) all amounts attributable to depreciation, amortization (including amortization of goodwill or other intangible assets) or impairment of goodwill or other intangible assets for such period, (4) any extraordinary or non-recurring non-cash charges for such period (provided, however , that cash expenditures in respect of charges added back pursuant to this clause (4) shall be deducted in determining Consolidated EBITDA for the period during which such expenditures are made), (5) the aggregate amount of all non-cash compensation charges incurred during such period arising from the grant of or the issuance of Stock or Stock Equivalents, (6) the aggregate amount of any extraordinary losses plus any loss realized by such Person or any of its subsidiaries in connection with any dispositions that occur during such period, (7) the aggregate amount of any fees, expenses or charges paid on or prior to the Transaction Closing Date related to the Separation Transactions and the negotiation, execution and delivery of this Agreement, the Bridge Loan and the Senior Notes, (8) the aggregate amount of any fees, expenses or charges paid after the Transaction Closing Date related to a refinancing of the Bridge Loan, if any, and (9) for periods prior to the Transaction Closing Date, the aggregate amount of corporate costs allocated to the Borrower in its combined financial statements and minus (B) (1) for periods prior to the Transaction Closing Date, the Borrower’s good faith estimate of its costs of operating on a stand-alone basis as if the Separation Transactions had occurred, which in no event shall be less than $11.25 million per fiscal quarter (pro-rated in the case of a period comprising less than a full fiscal quarter), and (2) without duplication and to the extent included in determining such Consolidated Net Income, the sum of (i) any extraordinary gains and any non-recurring non-cash gains during such period, (ii) any credit for federal, state, local or foreign taxes based on income or profits or capital during such period, and (iii) any other gains realized by such Person or any of its subsidiaries in connection with any dispositions that occur during such period. Notwithstanding the foregoing, the following amounts (representing the aggregate effect of adjustments to (a) add back (I) restructuring charges, reserves and integration costs, (II) anticipated benefits of organizational restructuring, (III) losses associated with the launch of Accelerade and (b) subtract profits and gains associated with Glaceau) shall be added-back without duplication in determining Consolidated EBITDA during the following periods:
         
Four Fiscal Quarters Ending   Net Add Back Amount
June 30, 2008
  $68 million
September 30, 2008
  $51 million
December 31, 2008
  $34 million
March 31, 2009
  $17 million

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          “ Consolidated Interest Expense ” means, with respect to any Person, for any period, the amount of interest expense reflected on the consolidated statement of income of such Person and its subsidiaries for such period in conformity with GAAP.
          “ Consolidated Net Income ” means, with respect to any Person, for any period, the amount of net income reflected on the consolidated statement of income of such Person and its subsidiaries for such period in conformity with GAAP.
           “Consolidated Net Tangible Assets” means, with respect to any Person, as of any date of determination, the total assets less the sum of goodwill, net, and other intangible assets, net, in each case reflected on the Consolidated balance sheet of such Person and its subsidiaries as of the end of the most recently ended fiscal quarter of such Person for which financial statements have been delivered to the Administrative Agent pursuant to clause (a) or (b), as applicable, of Section 5.01, determined on a consolidated basis in accordance with GAAP.
          “ Consolidated Non-Cash Interest Expense ” means, with respect to any Person, for any period, the sum of the following amounts to the extent included in the definition of Consolidated Interest Expense of such Person: (a) the amount of debt discount and debt issuance costs amortized, (b) charges relating to write-ups or write-downs in the book or carrying value of existing Indebtedness, (c) interest payable in evidences of Indebtedness or by addition to the principal of the related Indebtedness and (d) other non-cash interest.
          “ Consolidated Total Debt ” means, with respect to any Person, as of the date of determination, the aggregate amount of Indebtedness reflected on the consolidated balance sheet of such Person and its subsidiaries as of such date in conformity with GAAP, plus , without duplication, synthetic leases, letters of credit (but only to the extent drawn and not reimbursed).
          “ Control ” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “ Controlling ” and “ Controlled ” have meanings correlative thereto.
          “ Credit Event ” has the meaning assigned to such term in Section 4.04.
          “ Default ” means any event or condition which constitutes an Event of Default or which upon notice, lapse of time or both would, unless cured or waived, become an Event of Default.
          “ Disclosed Matters ” means the events, actions, orders, decrees, judgments, inquiries, investigations, reviews, suits and proceedings and the environmental matters disclosed in Schedule 3.06.
          “ Documentation Agents ” means Goldman Sachs Credit Partners L.P., Morgan Stanley Senior Funding, Inc. and UBS Securities LLC.
          “ dollars ” or “ $ ” refers to lawful money of the United States of America.
          “ Early Commitment Termination Date ” means the earlier of (i) April 18, 2008, if by that date the shareholders of Cadbury have not duly approved the Separation Transaction at a court meeting

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and a general meeting as contemplated in the Registration Statement, (ii) the time any borrowings are made under the UK Facility and (iii) 3:00 p.m. New York City time on May 13, 2008.
          “ Effective Date ” has the meaning assigned to such term in Section 4.01.
          “ Environmental Laws ” means all laws, rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions or binding agreements issued, promulgated or entered into by any Governmental Authority, relating to the protection of the environment, preservation or reclamation of natural resources, the management, release or threatened release of any Hazardous Material or, as such relate to exposure to Hazardous Materials, to health and safety matters.
          “ Environmental Liability ” means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of the Borrower or any Subsidiary directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.
          “ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated and rulings issued thereuder.
          “ ERISA Affiliate ” means any trade or business (whether or not incorporated) that, together with the Borrower, is treated as a single employer under Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code
          “ ERISA Event ” means (a) any “reportable event”, as defined in Section 4043 of ERISA or the regulations issued thereunder with respect to a Plan (other than an event for which the 30-day notice period is waived); (b) any failure to satisfy statutory minimum funding standards; (c) the filing pursuant to Section 412(d) of the Code of an application for a waiver of the minimum funding standard with respect to any Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to the termination of any Plan; (e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the Borrower or any of its ERISA Affiliates of any liability with respect to the withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA.
          “ Eurodollar ”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Adjusted LIBO Rate.
          “ Event of Default ” has the meaning assigned to such term in Article VII.
          “ Excluded Subsidiary ” means (a) any Subsidiary that is not a wholly-owned Material Subsidiary, (b) any Foreign Subsidiary, (c) any Subsidiary that is prohibited by applicable law from guaranteeing the Obligations; provided that “Excluded Subsidiary” shall not include any Subsidiary that

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guarantees, directly or indirectly, or otherwise provides a Guarantee for, any Material Indebtedness of the Borrower or any other Loan Party or (d) Juice Guys Care, Inc. and Cadbury Schweppes Americas Employee Relief Fund, so long as each remains qualified as a not-for-profit corporation.
          “ Excluded Taxes ” means, with respect to the Administrative Agent, any Lender, the Issuing Bank or any other recipient of any payment to be made by or on account of any obligation of the Borrower hereunder, (a) income or franchise Taxes imposed on (or measured by) its net income by the United States of America, or by the jurisdiction under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable lending office is located, (b) any branch profits Taxes imposed by the United States of America (or any political subdivision thereof) or any similar Tax imposed by any other jurisdiction in which the Borrower is located and (c) in the case of a Foreign Lender (other than an assignee pursuant to a request by the Borrower under Section 2.18(b)), any withholding tax that is imposed on amounts payable to such Foreign Lender at the time such Foreign Lender becomes a party to this Agreement (or designates a new lending office), except to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new lending office (or assignment), to receive additional amounts from the Borrower with respect to such withholding tax pursuant to Section 2.16(a).
          “ Facilities ” means (a) the Revolving Credit Facility and (b) the Term Loan Facility.
          “ Federal Funds Effective Rate ” means, for any day, the weighted average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average (rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for such day for such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it.
          “ Fee and Syndication Letter ” means that letter agreement dated March 10, 2008, addressed to the Borrower and Cadbury from the Administrative Agent and the Bookrunners and accepted by the Borrower and Cadbury on March 10, 2008.
          “ Financial Officer ” means the chief financial officer, principal accounting officer, senior vice president — corporate finance, treasurer or controller of the Borrower.
          “ Financing Transactions ” means the execution, delivery and performance of the Loan Documents and the Bridge Loan Documents by the Loan Parties party thereto, the borrowing of Loans, the borrowing of the Bridge Loan or the issuance of the Senior Notes, as applicable, and the use of the proceeds thereof.
          “ Foreign Lender ” means any Lender that is organized under the laws of a jurisdiction other than that in which the Borrower is located. For purposes of this definition, the United States of America, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.
          “ Foreign Subsidiary ” means any Subsidiary that is not organized under the laws of the United States, any state thereof or the District of Columbia.
          “ GAAP ” means generally accepted accounting principles in the United States of America, as in effect from time to time.

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          “ Governmental Authority ” means the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.
          “ Guarantee ” of or by any Person (the “ guarantor ”) means any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or other payment obligation of any other Person (the “ primary obligor ”) in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other payment obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other payment obligation of the payment thereof, (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other payment obligation or (d) as an account party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness or payment obligation; provided , that the term Guarantee shall not include endorsements for collection or deposit in the ordinary course of business, or customary and reasonable indemnity obligations in effect on the Effective Date or entered into in connection with any acquisition or disposition of assets.
          “ Guarantor ” means each Subsidiary party to or that becomes party to the Guaranty.
          “ Guaranty ” means the Guaranty, executed and delivered by each Guarantor, in substantially the form of Exhibit C, as the same may be amended, supplemented or otherwise modified from time to time.
          “ Hazardous Materials ” means all explosive or radioactive substances or wastes, petroleum or petroleum distillates, asbestos or asbestos containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances, materials or wastes of any nature regulated as hazardous or toxic, or a pollutant or contaminant, pursuant to any Environmental Law.
          “ Immaterial Insolvency Event ” means, as of any date, any Default under clause (h) of Article VII with respect to any Guarantor that is a Material Subsidiary or group of Guarantors that are Material Subsidiaries in connection with which an executive officer of such Subsidiary and the general counsel of the Borrower each have certified (in writing to the Administrative Agent) that (a) they believe that the commencement of the involuntary proceeding or involuntary petition causing such Default is without merit and not expected to be sustained in the applicable proceeding and (b) the Borrower has in good faith undertaken commercially reasonable efforts to dismiss such proceeding or petition or otherwise cure such Default; provided that, at no time shall any such Material Subsidiary subject to such Default (i) have Consolidated Net Tangible Assets as of December 31, 2007 in the aggregate with all other Guarantors that are Material Subsidiaries subject to such Default and all other Subsidiaries subject to the events of the type described in clause (h) of Article VII, equal to or exceeding 10% of the Consolidated Net Tangible Assets of the Borrower at such date and (ii) have Consolidated gross revenues for the fiscal year ended December 31, 2007 in the aggregate with all other Guarantors that are Material Subsidiaries subject to such Default and all other Subsidiaries subject to the events of the type described in clause (h) of Article VII, equal to or exceeding 10% of the Consolidated gross revenues of the Borrower for such period, in each case determined in accordance with GAAP.
          “ Immaterial Subsidiary ” means, any Subsidiary of the Borrower (including any Foreign Subsidiary) that has been designated by the Borrower as an “Immaterial Subsidiary” for purposes of this Agreement; provided that at no time shall (A) (i) the Consolidated Net Tangible Assets of any Immaterial

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Subsidiary (as determined as of the last day of the most recently ended fiscal quarter of the Borrower for which financial statements have been delivered pursuant to the clauses (a) or (b), as applicable, of Section 5.01 (or prior to such delivery, as of December 31, 2007)) equal or exceed 5% or, together with all other Immaterial Subsidiaries and their subsidiaries, 10%, of the Consolidated Net Tangible Assets of the Borrower at such date or (ii) the Consolidated gross revenues of such Subsidiary for the four fiscal quarter period ending on the last day of the most recently ended fiscal quarter of the Borrower for which financial statements have been delivered pursuant to the clauses (a) or (b), as applicable, of Section 5.01 (or prior to such delivery, as of December 31, 2007) equal or exceed 5% or, together with all other Immaterial Subsidiaries and their subsidiaries, 10%, of the Consolidated gross revenues of the Borrower for such period, in each case determined in accordance with GAAP, or (B) any Immaterial Subsidiary own, or be licensed to use, any Material Intellectual Property.
          “ Indebtedness ” of any Person means, without duplication, (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person, (d) all obligations of such Person in respect of the deferred purchase price of property or services (excluding (i) accounts payable incurred in the ordinary course of business and not overdue by more than 120 days and (ii) any earn-out obligation until such earn-out obligation becomes a liability on the balance sheet of such Person in accordance with GAAP and if not paid after becoming due and payable), (e) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the Indebtedness secured thereby has been assumed, (f) all Guarantees by such Person of Indebtedness of others, (g) all Capital Lease Obligations of such Person, (h) all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit and letters of guaranty and (i) all obligations, contingent or otherwise, of such Person in respect of bankers’ acceptances. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor. The amount of Indebtedness of any Person for purposes of clause (e) above shall be deemed to be the lesser of (i) the aggregate unpaid amount of such Indebtedness and (ii) the fair market value of the property encumbered thereby as determined by such Person in good faith.
          “ Indemnified Taxes ” means Taxes other than Excluded Taxes.
          “ Indemnitee ” has the meaning set forth in Section 9.03(b).
          “ Index Debt ” means senior, unsecured, long-term indebtedness for borrowed money of the Borrower that is not guaranteed by any other Person or subject to any other credit enhancement.
          “ Information Memorandum ” means that certain Confidential Information Memorandum relating to the Borrower, the Business and the Transactions to be used in connection with the syndication of the Facilities.
          “ Initial Funding Date ” has the meaning assigned to such term in Section 4.02.
          “ Interest Election Request ” means a request by the Borrower to convert or continue a Revolving Borrowing in accordance with Section 2.07.
          “ Interest Payment Date ” means (a) with respect to any ABR Loan (including any Swingline Loan), the last day of each March, June, September and December, and (b) with respect to any

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Eurodollar Loan, the last day of the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a Eurodollar Borrowing with an Interest Period of more than three months’ duration, each day prior to the last day of such Interest Period that occurs at intervals of three months’ duration after the first day of such Interest Period.
          “ Interest Period ” means with respect to any Eurodollar Borrowing, the period commencing on the date of such Borrowing and ending on the numerically corresponding day in the calendar month that is one, two, three or six months (or, with the consent of each Lender, nine or twelve months) thereafter, as the Borrower may elect; provided , that (i) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless, in the case of a Eurodollar Borrowing only, such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day and (ii) any Interest Period pertaining to a Eurodollar Borrowing that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month of such Interest Period. For purposes hereof, the date of a Borrowing initially shall be the date on which such Borrowing is made and, in the case of a Revolving Borrowing, thereafter shall be the effective date of the most recent conversion or continuation of such Borrowing.
          “ Investments ” has the meaning assigned to such term in Section 6.03.
          “ Issuing Bank ” means each Lender or Affiliate of a Lender that (a) is listed on the signature pages hereof as an “Issuing Bank” or (b) hereafter becomes an Issuing Bank with the approval of the Administrative Agent and the Borrower and that agrees to be bound by the terms hereof applicable to Issuing Banks pursuant to an agreement with and in form and substance satisfactory to the Administrative Agent and the Borrower.
          “ JPMCB ” means JPMorgan Chase Bank, N.A.
          “ LC Disbursement ” means a payment made by the Issuing Bank pursuant to a Letter of Credit.
          “ LC Exposure ” means, at any time, the sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit at such time plus (b) the aggregate amount of all LC Disbursements that have not yet been reimbursed by or on behalf of the Borrower at such time. The LC Exposure of any Revolving Credit Lender at any time shall be its Applicable Percentage of the total LC Exposure at such time.
          “ LC Obligations ” means, as at any date of determination, the aggregate amount available to be drawn under all outstanding Letters of Credit plus the aggregate of all Unreimbursed Amounts, including all LC Disbursements. For purposes of computing the amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section 2.05.
          “ Lenders ” means the Term Lenders and the Revolving Credit Lenders as listed on Schedule 2.01 and any other Person that shall have become a party hereto pursuant to an Assignment and Assumption, other than any such Person that ceases to be a party hereto pursuant to an Assignment and Assumption. Unless the context otherwise requires, the term “Lenders” includes the Swingline Lender.
          “ Letter of Credit ” means any letter of credit issued pursuant to this Agreement.

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          “ LIBO Rate ” means, with respect to any Eurodollar Borrowing for any Interest Period, the rate appearing on Reuters Screen LIBOR01 Page (or otherwise on the Reuters screen) (or on any successor or substitute page of such Service, or any successor to or substitute for such Service, providing rate quotations comparable to those currently provided on such page of such Service, as determined by the Administrative Agent from time to time for purposes of providing quotations of interest rates applicable to dollar deposits in the London interbank market) at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period, as the rate for dollar deposits with a maturity comparable to such Interest Period. In the event that such rate is not available at such time for any reason, then the “ LIBO Rate ” with respect to such Eurodollar Borrowing for such Interest Period shall be the rate at which dollar deposits with a maturity comparable to such Interest Period are offered by the principal London office of the Administrative Agent in immediately available funds in the London interbank market at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period.
          “ Lien ” means, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, hypothecation, encumbrance, charge or security interest in, on or of such asset and (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset.
          “ Loan Documents ” means, collectively, this Agreement, each Promissory Note, the Fee and Syndication Letter, the Guaranty and, to the extent expressly designated as a “Loan Document” by the Borrower and the Administrative Agent, each certificate, agreement or document executed by the Borrower or any of its Subsidiaries and delivered to the Administrative Agent or any Lender in connection with or pursuant to any of the foregoing.
          “ Loan Parties ” means, as of any date, the Borrower and each Subsidiary party to the Guaranty on such date.
          “ Loans ” means the loans made by the Lenders to the Borrower pursuant to this Agreement.
          “ Material Adverse Change ” means any material adverse change in the business, operations, property or financial condition of the Borrower and its Subsidiaries taken as a whole.
          “ Material Adverse Effect ” means a material adverse effect on (a) the business, operations, property or financial condition of the Borrower and its Subsidiaries taken as a whole, (b) the ability of the Borrower and the Guarantors (taken as a whole) to perform their payment obligations under this Agreement or (c) the rights and remedies of the Lenders under this Agreement.
          “ Material Indebtedness ” means Indebtedness (other than the Loans and Letters of Credit) of any Loan Party or Material Subsidiary, or payment obligations in respect of any Swap Agreement, that is outstanding in an amount exceeding the Minimum Threshold. For purposes of determining Material Indebtedness, the “payment obligations” of such Loan Party or Material Subsidiary in respect of any Swap Agreement at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that such Loan Party or such Material Subsidiary would be required to pay if such Swap Agreement were terminated at such time.
          “ Material Intellectual Property ” means any trademarks, tradenames, copyrights, patents and other intellectual property owned or licensed by the Borrower or any of its Subsidiaries that is material to the business of the Borrower and its Subsidiaries.

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          “ Material Subsidiary ” means, at any date of determination, any Subsidiary (including any Foreign Subsidiary) that is not an Immaterial Subsidiary.
          “ Maturity Date ” means (a) with respect to the Revolving Facility, the Revolving Credit Facility Maturity Date, (b) with respect to the Term Loan Facility, the Term Loan Facility Maturity Date, provided, however , that in each case, if such date is not a Business Day, the Maturity Date shall be the next preceding Business Day.
          “ Minimum Threshold ” means $75,000,000.
          “ Moody’s ” means Moody’s Investors Service, Inc.
          “ Multiemployer Plan ” means a multiemployer plan as defined in Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate has any obligation, contingent or otherwise.
          “ Obligations ” means the Loans, the LC Obligations and all other amounts owing by the Borrower to the Administrative Agent, any Lender, any Issuing Bank, any Affiliate of any of them or any Indemnitee, of every type and description (whether by reason of an extension of credit, opening or amendment of a letter of credit or payment of any draft drawn thereunder, loan, guarantee, indemnification or otherwise), present or future, arising under this Agreement or any other Loan Document, whether direct or indirect (including those acquired by assignment), absolute or contingent, due or to become due, now existing or hereafter arising and however acquired and whether or not evidenced by any note, guarantee or other instrument or for the payment of money, including all letter of credit and other fees, interest, charges, expenses, attorneys’ fees and disbursements and other sums chargeable to the Borrower under this Agreement or any other Loan Document, and all obligations of the Borrower under any Loan Document to provide cash collateral for LC Obligations.
          “ Offering Memorandum ” means a complete preliminary prospectus or preliminary offering memorandum or preliminary private placement memorandum customary for Rule 144A offerings, which shall in any event contain (a) the Audited Financial Statements and the Pro Forma Financial Statements delivered to the Bookrunners pursuant to Section 4.02(k), (b) summary guarantor/nonguarantor net sales, income from operations, EBITDA, assets and debt information for the fiscal years ended December 31, 2007, December 31, 2006 and January 1, 2006 and (c) all other information that would be necessary for the investment banks thereunder to receive a customary comfort letter from independent accountants in connection with an offering of the Senior Notes.
          “ Other Taxes ” means any and all present or future stamp or documentary taxes or any other excise or property taxes, or similar charges or levies arising from any payment made hereunder or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement.
          “ Participant ” has the meaning set forth in Section 9.04(c).
          “ Patriot Act ” means the USA Patriot Act of 2001 (31 U.S.C. 5318 et seq. ) as amended from time to time.
          “ PBGC ” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entity performing similar functions.
          “ Permitted Acquisitions ” means any acquisition by the Borrower or a Subsidiary (including any investments by the Borrower or any Subsidiary in any other Subsidiary for purposes of financing such acquisition) of all or substantially all of the outstanding Stock (other than directors’

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qualifying shares) in, or all or substantially all the assets of, or all or substantially all the assets constituting a division or line of business of, a Person if:
          (a) no Default would result therefrom and, at the time contractually binding obligations with respect to such acquisition are incurred, no Event of Default described in clauses (a), (b) (solely with respect to interest or commitment fees), (h) or (i) of Article VII has occurred and is continuing; and
          (b) the Borrower shall be in compliance, on a pro forma basis, with the covenants set forth in Section 6.05 as if and for the last day of the most recently ended fiscal quarter of the Borrower for which financial statements have been delivered pursuant to the clauses (a) or (b), as applicable, of Section 5.01.
          “ Permitted Encumbrances ” means:
          (a) Liens imposed by law for taxes, assessments or governmental charges that are not overdue for a period of more than thirty (30) days or that are being contested in good faith in compliance with Section 5.04;
          (b) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s and other like Liens imposed by law, arising in the ordinary course of business and securing obligations that are not overdue by more than thirty (30) days (or if more than thirty (30) days overdue, are unfiled and no other action has been taken to enforce such Liens) or are being contested in compliance with Section 5.04;
          (c) (i) pledges and deposits made in the ordinary course of business in compliance with workers’ compensation, unemployment insurance and other social security laws or regulations and (ii) pledges and deposits in the ordinary course of business securing liability for reimbursement or indemnification obligations of (including obligations in respect of letters of credit or bank guarantees for the benefit of) insurance carriers providing property, casualty or liability insurance to the Borrower or any Subsidiary;
          (d) deposits to secure the performance of bids, trade contracts (other than for the repayment of borrowed money), leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature (including those to secure health, safety and environmental obligations), in each case in the ordinary course of business;
          (e) judgment liens in respect of judgments that do not constitute an Event of Default under clause (k) of Article VII;
          (f) easements, restrictions, rights-of-way and similar encumbrances and minor title defects on real property imposed by law or arising in the ordinary course of business that do not secure any payment obligations and do not, in the aggregate, materially detract from the value of the affected property or interfere with the ordinary conduct of business of the Borrower or any Subsidiary;
          (g) leases, licenses, subleases or sublicenses granted to others in the ordinary course of business which do not (i) interfere in any material respect with the business of the Borrower and its Subsidiaries, taken as a whole, or (ii) secure any Indebtedness;
          (h) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods in the ordinary course of business;

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          (i) Liens (i) of a collection bank on the items in the course of collection, (ii) attaching to commodity trading accounts or other commodities brokerage accounts incurred in the ordinary course of business and (iii) in favor of a banking or other financial institution arising as a matter of law encumbering deposits or other funds maintained with a financial institution (including the right of set off) and which are customary in the banking industry;
          (j) any interest or title of a lessor under leases entered into by the Borrower or any Subsidiaries in the ordinary course of business and financing statements with respect to a lessor’s right in and to personal property leased to such Person in the ordinary course of such Person’s business other than through a capital lease;
          (k) Liens arising out of conditional sale, title retention, consignment or similar arrangements for sale of goods entered into by the Borrower or any Subsidiaries in the ordinary course of business;
          (l) Liens deemed to exist in connection with Permitted Investments and reasonable customary initial deposits and margin deposits and similar Liens attaching to commodity trading accounts or other brokerage accounts maintained in the ordinary course of business and not for speculative purposes;
          (m) Liens that are contractual rights of set-off (i) relating to the establishment of depository relations with banks or other financial institutions not given in connection with the issuance of Indebtedness, (ii) relating to pooled deposit or sweep accounts of the Borrower or any Subsidiary to permit satisfaction of overdraft or similar obligations incurred in the ordinary course of business of the Borrower and the Subsidiaries or (iii) relating to purchase orders and other agreements entered into with customers of the Borrower or any Subsidiary in the ordinary course of business;
          (n) Liens solely on any cash earnest money deposits made by the Borrower or any Subsidiaries in connection with any letter of intent or purchase agreement;
          (o) ground leases in respect of real property on which facilities owned or leased by the Borrower or any of its Subsidiaries are located;
          (p) Liens on insurance policies and the proceeds thereof securing the financing of the premiums with respect thereto;
          (q) any zoning or similar law or right reserved to or vested in any Governmental Authority to control or regulate the use of any real property that does not materially interfere with the ordinary conduct of the business of the Borrower or any Subsidiary; and
          (r) Liens on specific items of inventory or other goods and the proceeds thereof securing such Person’s obligations in respect of documentary letters of credit or banker’s acceptances issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory or goods.
          “ Permitted Investments ” means:
          (a) direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America (or by any agency thereof to the extent such obligations are backed by the full faith and credit of the United States of America), in each case maturing within one year from the date of acquisition thereof;

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          (b) investments in commercial paper maturing within 270 days from the date of acquisition thereof and having, at such date of acquisition, the highest credit rating obtainable from S&P or from Moody’s;
          (c) investments in certificates of deposit, banker’s acceptances and time deposits maturing within 180 days from the date of acquisition thereof issued or guaranteed by or placed with, and money market deposit accounts issued or offered by, any domestic office of any commercial bank organized under the laws of the United States of America or any State thereof which has a combined capital and surplus and undivided profits of not less than $500,000,000;
          (d) fully collateralized repurchase agreements with a term of not more than 30 days for securities described in clause (a) above and entered into with a financial institution satisfying the criteria described in clause (c) above; and
          (e) money market funds that (i) comply with the criteria set forth in SEC Rule 2a-7 under the Investment Company Act of 1940, (ii) are rated AAA by S&P and Aaa by Moody’s and (iii) have portfolio assets of at least $5,000,000,000.
          “ Person ” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.
          “ Plan ” means any employee pension benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in respect of which the Borrower or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.
          “ Prime Rate ” means the rate of interest per annum publicly announced from time to time by JPMorgan Chase Bank as its prime rate in effect at its office located at 270 Park Avenue, New York, New York; each change in the Prime Rate shall be effective from and including the date such change is publicly announced as being effective.
          “ Pro Forma Financial Statements ” has the meaning assigned to such term in Section 4.02(k).
          “ Promissory Note ” has the meaning assigned to such term in Section 2.09(e).
          “ Qualified CP Draw ” means the borrowing of a Revolving Loan the proceeds of which are used to repay obligations under a short-term commercial paper program of the Borrower; provided that at the time of such borrowing, the ratings of the Index Debt and the corporate ratings of the Borrower shall be at least BBB from S&P and Baa2 from Moody’s, and each such ratings shall be stable and not subject to “negative watch” or “negative outlook”.
          “ Register ” has the meaning set forth in Section 9.04(b)(iv).
          “ Regulation S-X ” means Regulation S-X of the Securities Act of 1933, as amended.
          “ Registration Statement ” means the Registration Statement on Form 10, under the Securities Exchange Act of 1934, as amended, of the Borrower filed with the SEC on February 12, 2008, including the exhibits filed therewith, without giving effect to any subsequent amendments filed thereto; provided , however , that Exhibits 99.1, 2.1, 10.1, 10.2 and 10.3 contained in the Registration Statement

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filed on February 12, 2008 shall, for the purposes of this definition, mean Annex I (Information Memorandum) and Annex II (Separation Documents) hereof.
          “ Related Parties ” means, with respect to any specified Person, such Person’s Affiliates and the respective partners, directors, officers, employees, agents and advisors of such Person and such Person’s Affiliates.
          “ Required Lenders ” means, at any time, Lenders having more than 50% in total of (a) the aggregate outstanding amount of the Revolving Credit Commitments or, after the Revolving Credit Facility Maturity Date (or if earlier, any other date on which the Revolving Credit Commitments have been terminated in full), the aggregate Revolving Credit Exposure and (b) the principal amount of the Term Loans then outstanding.
          “ Required Revolving Credit Lenders ” means, at any time, the Revolving Credit Lenders having more than 50% of the Revolving Credit Commitments or, after the Revolving Credit Facility Maturity Date (or if earlier, any other date on which the Revolving Credit Commitments have been terminated in full), the aggregate Revolving Credit Exposure at such time.
          “ Revolving Credit Commitment ” means, as to each Revolving Credit Lender, its obligation to (a) make Revolving Loans to the Borrower pursuant to Section 2.01(b), (b) purchase participations in LC Disbursements, and (c) purchase participations in Swingline Loans, in an aggregate principal amount at any one time outstanding not to exceed the amount set forth opposite such Lender’s name on Schedule 2.01 under the caption “Revolving Credit Commitment” or opposite such caption in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable, as such amount may be adjusted from time to time in accordance with this Agreement. The aggregate amount of the Revolving Credit Commitments as of the Effective Date is $500,000,000.
          “ Revolving Credit Exposure ” means, with respect to any Lender at any time, the sum of the outstanding principal amount of such Lender’s Revolving Loans and its LC Exposure and Swingline Exposure at such time.
          “ Revolving Credit Facility ” means the Revolving Credit Commitments and the provisions herein related to the Revolving Loans, Swingline Loans and Letters of Credit.
          “ Revolving Credit Facility Maturity Date ” means the fifth anniversary of the Initial Funding Date.
          “ Revolving Credit Lender ” means, at any time, any Lender that has a Revolving Credit Commitment at such time.
          “ Revolving Loan ” means a Loan made pursuant to Section 2.01(b).
          “ S&P ” shall mean Standard & Poor’s Ratings Services, a Division of The McGraw-Hill Companies, Inc.
          “ SEC ” means the Securities and Exchange Commission or any successor thereto.
          “ Senior Notes ” means an aggregate of up to $2,000,000,000 of the Borrower’s senior unsecured notes to be issued in an unregistered offering conducted pursuant to Rule 144A and Regulation S under the U.S. Securities Act of 1933, as amended, the terms of which shall not require scheduled

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principal payments to be made at any time prior to the later of the Revolving Credit Facility Maturity Date and the Term Loan Facility Maturity Date.
          “ Separation and Distribution Agreement ” means the Separation and Distribution Agreement among Cadbury and the Borrower and, solely for certain sections set forth therein, Cadbury UK, substantially in the form of the most recent draft delivered to the Bookrunners on or prior to the date hereof and contained in Annex II, as amended to the extent permitted under Section 3.14(d).
          “ Separation Documents ” means (i) the Separation and Distribution Agreement, (ii) the Transition Services Agreement between Cadbury and the Borrower substantially in the form of the most recent draft delivered to the Bookrunners on or prior to the date hereof and contained in Annex II, (iii) the Employee Matters Agreement among Cadbury, the Borrower and, solely for certain sections set forth therein, Cadbury UK substantially in the form of the most recent draft delivered to the Bookrunners on or prior to the date hereof and contained in Annex II, (iv) the Omnibus Stock Incentive Plan of 2008 substantially in the form of the most recent draft delivered to the Bookrunners on or prior to the date hereof and contained in Annex II, (v) the Annual Cash Incentive Plan substantially in the form of the most recent draft delivered to the Bookrunners on or prior to the date hereof and contained in Annex II, (vi) the Employee Stock Purchase Plan substantially in the form of the most recent draft delivered to the Bookrunners on or prior to the date hereof and contained in Annex II, (vii) the Tax Sharing and Indemnification Agreement, (vii) the Know-How Agreement among Cadbury, the Borrower and its Subsidiaries substantially in the form of the most recent draft delivered to the Bookrunners on or prior to the date hereof and contained in Annex II and (viii) the Domain Names Agreement among Cadbury and the Borrower substantially in the form of the most recent draft delivered to the Bookrunners on or prior to the date hereof and contained in Annex II, in each case, as amended to the extent permitted under Section 3.14(d).
          “ Separation Transactions ” means the series of transactions pursuant to which Cadbury intends to effect a separation of the Business from its global confectionary business and beverage business through a distribution of the common stock of the Borrower to shareholders of Cadbury and a transfer of the Business to the Borrower pursuant to the Separation and Distribution Agreement and as contemplated and described in the Registration Statement.
          “ Solvent ” means, with respect to any Person as of any date of determination, that, as of such date, (a) the value of the assets of such Person (both at fair value and present fair saleable value) is greater than the total amount of liabilities (including contingent and unliquidated liabilities) of such Person, (b) such Person is able to pay all liabilities of such Person as such liabilities mature and (c) such Person does not have unreasonably small capital. In computing the amount of contingent or unliquidated liabilities at any time, such liabilities shall be computed at the amount that, in light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.
          “ Statutory Reserve Rate ” means a fraction (expressed as a decimal), the numerator of which is the number one and the denominator of which is the number one minus the aggregate of the maximum reserve percentage (including any marginal, special, emergency or supplemental reserves) expressed as a decimal established by the Board to which the Administrative Agent is subject with respect to the Adjusted LIBO Rate, for eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of the Board). Such reserve percentage shall include those imposed pursuant to such Regulation D. Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be subject to such reserve requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to any Lender under such Regulation D or any comparable regulation. The

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Statutory Reserve Rate shall be adjusted automatically on and as of the effective date of any change in any reserve percentage.
          “ Stock ” means shares of capital stock (whether denominated as common stock or preferred stock), beneficial, partnership or membership interests, participations or other equivalents (regardless of how designated) of or in a corporation, partnership, limited liability company or equivalent entity, whether voting or non-voting.
          “ Stock Equivalents ” means all securities convertible into or exchangeable for Stock and all warrants, options or other rights to purchase or subscribe for any Stock, whether or not presently convertible, exchangeable or exercisable.
          “ subsidiary ” means, with respect to any Person (the “ parent ”) at any date, any corporation, limited liability company, partnership, association or other business entity of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power or, in the case of a partnership, more than 50% of the general partnership interests are, as of such date, owned, controlled or held.
          “ Subsidiary ” means any subsidiary of the Borrower. Prior to the Initial Funding Date, all references to Subsidiaries shall refer to those subsidiaries of Cadbury constituting a part of the Business and that will become Subsidiaries upon the consummation of the Separation Transactions.
          “ Swap Agreement ” means any agreement with respect to any swap, forward, future or derivative transaction or option or similar agreement involving, or settled by reference to, one or more rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value or any similar transaction or any combination of these transactions; provided that no phantom stock or similar plan providing for payments only on account of services provided by current or former directors, officers, employees or consultants of the Borrower or the Subsidiaries shall be a Swap Agreement.
          “ Swingline Exposure ” means, at any time, the aggregate principal amount of all Swingline Loans outstanding at such time. The Swingline Exposure of any Lender at any time shall be its Applicable Percentage of the total Swingline Exposure at such time.
          “ Swingline Lender ” means JPMorgan Chase Bank, in its capacity as lender of Swingline Loans hereunder.
          “ Swingline Loan ” means a Loan made pursuant to Section 2.04.
          “ Syndication Agent ” means Bank of America, N.A..
          “ Taxes ” means any and all present or future taxes, levies, imposts, duties or similar charges imposed (including by deduction or withholding) by any Governmental Authority.
          “ Tax Sharing and Indemnification Agreement ” means the Tax Sharing and Indemnification Agreement among Cadbury, the Borrower and, solely for certain sections set forth therein, Cadbury UK substantially in the form of the most recent draft delivered to the Bookrunners on or prior to the date hereof and contained in Annex II.

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          “ Term Borrowing ” means a borrowing consisting of simultaneous Term Loans of the same Type and, in the case of Eurodollar Loans, having the same Interest Period made by each of the Term Lenders pursuant to Section 2.01(a).
          “ Term Lender ” means (a) at any time on or prior to the Initial Funding Date, any Lender that has a Term Loan Commitment at such time and (b) at any time after the Initial Funding Date any Lender that holds Term Loans at such time.
          “ Term Loan ” means an advance made by any Term Lender under the Term Loan Facility.
          “ Term Loan Commitment ” means, as to each Term Lender, its obligation to make Term Loans to the Borrower pursuant to Section 2.01(a) in an aggregate principal amount at any one time outstanding not to exceed the amount set forth opposite such Term Lender’s name on Schedule 2.01 under the caption “Term Loan Commitment” or opposite such caption in the Assignment and Assumption pursuant to which such Term Lender becomes a party hereto, as applicable, as such amount may be adjusted from time to time in accordance with this Agreement. The aggregate amount of the Term Loan Commitments as of the Effective Date is $1,900,000,000.
          “ Term Loan Facility ” means the Term Loan Commitments and the provisions herein related to the Term Loans.
          “ Term Loan Facility Maturity Date ” means the fifth anniversary of the Initial Funding Date.
          “ Transaction Closing Date ” has the meaning assigned to such term in Section 4.03.
          “ Transactions ” means, collectively, the Financing Transactions and the Separation Transactions.
          “ Type ”, when used in reference to any Loan or Borrowing, refers to whether the rate of interest on such Loan, or on the Loans comprising such Borrowing, is determined by reference to the Adjusted LIBO Rate or the Alternate Base Rate.
          “ UK Facility ” means the £1,750,000,000 multi-currency revolving credit facility to be made available to Cadbury pursuant to the terms of the facility agreement dated on or about the date of this agreement and made between, amongst others, Cadbury UK as borrower, Cadbury as guarantor and JP Morgan Chase Bank, N.A., Bank of America N.A., Goldman Sachs Credit Partners L.P., Morgan Stanley Senior Funding Inc. and UBS AG, London Branch as lenders.
          “ Unreimbursed Amount ” has the meaning assigned to such term in Section 2.05(e).
          “ Unused Commitment Fee ” has the meaning assigned to such term in Section 2.11(a).
          “ Withdrawal Liability ” means liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.
          SECTION 1.02. Classification of Loans and Borrowings . For purposes of this Agreement, Loans may be classified and referred to by Class ( e.g. , a “Revolving Loan”) or by Type ( e.g. , a “Eurodollar Loan”) or by Class and Type ( e.g. , a “Eurodollar Revolving Loan”). Borrowings also may

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be classified and referred to by Class ( e.g. , a “Revolving Borrowing”) or by Type ( e.g. , a “Eurodollar Borrowing”) or by Class and Type ( e.g. , a “Eurodollar Revolving Borrowing”).
          SECTION 1.03. Terms Generally . The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The word “will” shall be construed to have the same meaning and effect as the word “shall”. Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (c) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement and (e) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.
          SECTION 1.04. Accounting Terms; GAAP . (a) Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time; provided that, if the Borrower notifies the Administrative Agent that the Borrower requests an amendment to any provision hereof to eliminate the effect of any change occurring after the date hereof in GAAP or in the application thereof on the operation of such provision (or if the Administrative Agent notifies the Borrower that the Required Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith.
          (b) In calculating the ratios set forth in Section 6.04, (i) pro forma effect shall be given to any Permitted Acquisitions or dispositions of all or substantially all the Stock or assets of any Subsidiary or any division or line of business of the Borrower or any Subsidiary that occur during the applicable reference period, or thereafter and on or prior to the reporting date with respect thereto, as if they had occurred on the first day of the applicable reference period or as of the last day of the applicable quarter, as the case may be and (ii) for any period prior to the Transaction Closing Date, pro forma effect shall be given to the Transactions as if the Indebtedness incurred in connection therewith had been incurred on the first date of the applicable reference period.
ARTICLE II
The Credits
          SECTION 2.01. Commitments . (a) Term Loan . Each Term Lender, subject to the terms and conditions set forth herein, severally and not jointly with the other Term Lenders, agrees to make on the Initial Funding Date a single Term Loan to the Borrower in an aggregate principal amount not to exceed such Term Lender’s Term Loan Commitment. Once prepaid or repaid, no Term Loan may be re-borrowed.

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          (b) Revolving Loans . Subject to the terms and conditions set forth herein, each Revolving Credit Lender agrees to make Revolving Loans to the Borrower from time to time during the Availability Period in an aggregate principal amount that will not result in such Lender’s Revolving Credit Exposure exceeding such Revolving Lender’s Revolving Credit Commitment. Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrower may borrow, prepay and reborrow Revolving Loans.
          SECTION 2.02. Loans and Borrowings . (a) Each Revolving Loan shall be made as part of a Borrowing consisting of Revolving Loans made by the Revolving Credit Lenders ratably in accordance with their respective Revolving Credit Commitments. Each Term Loan shall be made as part of a Borrowing consisting of Term Loans made by the Term Lenders ratably in accordance with their respective Term Loan Commitments. The failure of any Lender to make any Loan required to be made by it shall not relieve any other Lender of its obligations hereunder; provided that the Commitments of the Lenders are several and no Lender shall be responsible for any other Lender’s failure to make Loans as required.
          (b) Subject to Section 2.13, each Borrowing shall be ABR Loans or Eurodollar Loans as the Borrower may request in accordance herewith; provided that each Swingline Loan shall be an ABR Loan. Each Lender at its option may make any Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan; provided that any exercise of such option shall not affect the obligation of the Borrower to repay such Loan in accordance with the terms of this Agreement; and provided further that, as a result of the exercise of such option, such Lender, or such foreign branch or Affiliate of such Lender shall not be entitled to receive any greater payment under Section 2.14 or 2.16 than such Lender is entitled to prior to exercising such option.
          (c) At the commencement of each Interest Period for any Eurodollar Borrowing, such Borrowing shall be in an aggregate amount that is an integral multiple of $1,000,000 and not less than $10,000,000. At the time that each ABR Borrowing is made, such Borrowing shall be in an aggregate amount that is an integral multiple of $1,000,000 and not less than $10,000,000; provided that an ABR Revolving Borrowing may be in an aggregate amount that is equal to the entire unused balance of the total Revolving Credit Commitments or that is required to finance the reimbursement of an LC Disbursement as contemplated by Section 2.05(e). Each Swingline Loan shall be in an amount that is an integral multiple of $100,000 and not less than $500,000. Borrowings of more than one Type and Class may be outstanding at the same time; provided that there shall not at any time be more than a total of fifteen (15) Eurodollar Revolving Borrowings and ten (10) Eurodollar Term Borrowings outstanding.
          (d) Notwithstanding any other provision of this Agreement, the Borrower shall not be entitled to request, or to elect to convert or continue, any Borrowing if the Interest Period requested with respect thereto would end after the Term Loan Facility Maturity Date or the Revolving Credit Facility Maturity Date, as applicable.
          SECTION 2.03. Requests for Borrowings . To request a Borrowing, the Borrower shall notify the Administrative Agent of such request by telephone (a) in the case of a Eurodollar Borrowing, not later than 11:00 a.m., New York City time, three (3) Business Days before the date of the proposed Borrowing or (b) in the case of an ABR Borrowing, not later than 12:00 noon, New York City time, the same Business Day as the proposed Borrowing; provided that any such notice of an ABR Revolving Borrowing to finance the reimbursement of an LC Disbursement as contemplated by Section 2.05(e) may be given not later than 10:00 a.m., New York City time, on the date of the proposed Borrowing. Each such telephonic Borrowing Request shall be irrevocable and shall be confirmed promptly by hand delivery or telecopy to the Administrative Agent of a written Borrowing Request in a

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form approved by the Administrative Agent and signed by the Borrower. Each such telephonic and written Borrowing Request shall specify the following information in compliance with Section 2.02:
               (i) the aggregate amount of the requested Borrowing;
               (ii) the date of such Borrowing, which shall be a Business Day;
               (iii) whether such Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing;
               (iv) in the case of a Eurodollar Borrowing, the initial Interest Period to be applicable thereto, which shall be a period contemplated by the definition of the term “Interest Period”; and
               (v) the location and number of the Borrower’s account to which funds are to be disbursed, which shall comply with the requirements of Section 2.06.
If no election as to the Type of Revolving Borrowing is specified, then the requested Revolving Borrowing shall be an ABR Borrowing. If no Interest Period is specified with respect to any requested Eurodollar Borrowing, then the Borrower shall be deemed to have selected an Interest Period of one month’s duration. Promptly following receipt of a Borrowing Request in accordance with this Section, the Administrative Agent shall advise each Lender of the details thereof and of the amount of such Lender’s Loan to be made as part of the requested Borrowing.
          SECTION 2.04. Swingline Loans . (a) Subject to the terms and conditions set forth herein, the Swingline Lender agrees to make Swingline Loans to the Borrower from time to time during the Availability Period, in an aggregate principal amount at any time outstanding that will not result in (i) the aggregate principal amount of outstanding Swingline Loans exceeding $25,000,000 or (ii) the sum of the total Revolving Credit Exposures exceeding the Revolving Credit Commitments then in effect; provided that the Swingline Lender shall not be required to make a Swingline Loan to refinance an outstanding Swingline Loan. Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrower may borrow, prepay and reborrow Swingline Loans.
          (b) To request a Swingline Loan, the Borrower shall notify the Administrative Agent of such request by telephone (confirmed by telecopy), not later than 12:00 noon, New York City time, on the day of a proposed Swingline Loan. Each such notice shall be irrevocable and shall specify the requested date (which shall be a Business Day) and amount of the requested Swingline Loan. The Administrative Agent will promptly advise the Swingline Lender of any such notice received from the Borrower. The Swingline Lender shall make each Swingline Loan available to the Borrower by means of a credit to the general deposit account of the Borrower with the Swingline Lender (or, in the case of a Swingline Loan made to finance the reimbursement of an LC Disbursement as provided in Section 2.05(e), by remittance to the Issuing Bank) by 3:00 p.m., New York City time, on the requested date of such Swingline Loan.
          (c) The Swingline Lender may by written notice given to the Administrative Agent not later than 12:00 noon, New York City time, on any Business Day require the Revolving Credit Lenders to acquire participations on such Business Day in all or a portion of the Swingline Loans outstanding. Such notice shall specify the aggregate amount of Swingline Loans in which the Revolving Credit Lenders will participate. Promptly upon receipt of such notice, the Administrative Agent will give notice thereof to each Revolving Credit Lender, specifying in such notice such Revolving Credit Lender’s Applicable Percentage of such Swingline Loan or Loans. Each Revolving Credit Lender hereby

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absolutely and unconditionally agrees, upon receipt of such notice as provided above, to pay to the Administrative Agent, for the account of the Swingline Lender, such Revolving Credit Lender’s Applicable Percentage of such Swingline Loan or Loans. Each Revolving Credit Lender acknowledges and agrees that its obligation to acquire participations in Swingline Loans pursuant to this paragraph is absolute and unconditional and shall not be affected by any circumstance whatsoever, including the occurrence and continuance of a Default or reduction or termination of the Revolving Credit Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever. Each Lender shall comply with its obligation under this paragraph by wire transfer of immediately available funds, in the same manner as provided in Section 2.06 with respect to Loans made by such Revolving Credit Lender (and Section 2.06 shall apply, mutatis mutandis , to the payment obligations of the Revolving Credit Lenders), and the Administrative Agent shall promptly pay to the Swingline Lender the amounts so received by it from the Revolving Credit Lenders. The Administrative Agent shall notify the Borrower of any participations in any Swingline Loan acquired pursuant to this paragraph, and thereafter payments in respect of such Swingline Loan shall be made to the Administrative Agent and not to the Swingline Lender. Any amounts received by the Swingline Lender from the Borrower (or other party on behalf of the Borrower) in respect of a Swingline Loan after receipt by the Swingline Lender of the proceeds of a sale of participations therein shall be promptly remitted to the Administrative Agent; any such amounts received by the Administrative Agent shall be promptly remitted by the Administrative Agent to the Revolving Credit Lenders that shall have made their payments pursuant to this paragraph and to the Swingline Lender, as their interests may appear; provided that any such payment so remitted shall be repaid to the Swingline Lender or to the Administrative Agent, as applicable, if and to the extent such payment is required to be refunded to the Borrower for any reason. The purchase of participations in a Swingline Loan pursuant to this paragraph shall not relieve the Borrower of any default in the payment thereof.
          SECTION 2.05. Letters of Credit . (a) General . Subject to the terms and conditions set forth herein, the Borrower may request the issuance of Letters of Credit for its own account, in a form reasonably acceptable to the Administrative Agent and the Issuing Bank, at any time and from time to time during the Availability Period. In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any form of letter of credit application or other agreement submitted by the Borrower to, or entered into by the Borrower with, the Issuing Bank relating to any Letter of Credit, the terms and conditions of this Agreement shall control.
          (b) Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions . To request the issuance of a Letter of Credit (or the amendment, renewal or extension of an outstanding Letter of Credit), the Borrower shall hand deliver or telecopy (or transmit by electronic communication, if arrangements for doing so have been approved by the Issuing Bank) to the Issuing Bank and the Administrative Agent (reasonably in advance of the requested date of issuance, amendment, renewal or extension) a notice requesting the issuance of a Letter of Credit, or identifying the Letter of Credit to be amended, renewed or extended, and specifying the date of issuance, amendment, renewal or extension (which shall be a Business Day), the date on which such Letter of Credit is to expire (which shall comply with paragraph (c) of this Section), the amount of such Letter of Credit, the name and address of the beneficiary thereof and such other information as shall be necessary to prepare, amend, renew or extend such Letter of Credit. If requested by the Issuing Bank, the Borrower also shall submit a letter of credit application on the Issuing Bank’s standard form in connection with any request for a Letter of Credit. A Letter of Credit shall be issued, amended, renewed or extended only if (and upon issuance, amendment, renewal or extension of each Letter of Credit the Borrower shall be deemed to represent and warrant that), after giving effect to such issuance, amendment, renewal or extension (i) the LC Exposure shall not exceed $75,000,000 and (ii) the sum of the total Revolving Credit Exposures shall not exceed the total Revolving Credit Commitments.

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          (c) Expiration Date . Each Letter of Credit shall expire at or prior to the close of business on the date one year after the date of the issuance of such Letter of Credit (or, in the case of any renewal or extension thereof, one year after such renewal or extension); provided that, a Letter of Credit may provide for automatic renewals for additional periods of up to one year, subject to a right on the part of the Issuing Bank to prevent any such renewal from occurring by giving notice to the beneficiary during a period satisfactory to the Administrative Agent in advance of any such renewal.
          (d) Participations . By the issuance of a Letter of Credit (or an amendment to a Letter of Credit increasing the amount thereof) and without any further action on the part of the Issuing Bank issuing such Letter of Credit or the Revolving Credit Lenders, the Issuing Bank hereby grants to each Revolving Credit Lender, and each Revolving Credit Lender hereby acquires from the Issuing Bank, a participation in such Letter of Credit equal to such Revolving Credit Lender’s Applicable Percentage of the aggregate amount available to be drawn under such Letter of Credit. In consideration and in furtherance of the foregoing, each Revolving Credit Lender hereby absolutely and unconditionally agrees to pay to the Administrative Agent, for the account of the Issuing Bank, such Revolving Credit Lender’s Applicable Percentage of each LC Disbursement made by the Issuing Bank and not reimbursed by the Borrower on the date due as provided in paragraph (e) of this Section, or of any reimbursement payment required to be refunded to the Borrower for any reason. Each Revolving Credit Lender acknowledges and agrees that its obligation to acquire participations pursuant to this paragraph in respect of Letters of Credit is absolute and unconditional and shall not be affected by any circumstance whatsoever, including any amendment, renewal or extension of any Letter of Credit or the occurrence and continuance of a Default or reduction or termination of the Revolving Credit Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever.
          (e) Reimbursement . If the Issuing Bank shall make any LC Disbursement in respect of a Letter of Credit, the Borrower shall reimburse such LC Disbursement by paying to the Administrative Agent an amount equal to such LC Disbursement not later than 12:00 noon, New York City time, on the date that such LC Disbursement is made, if the Borrower shall have received notice of such LC Disbursement prior to 10:00 a.m., New York City time, on such date, or, if such notice has not been received by the Borrower prior to such time on such date, then not later than 12:00 noon, New York City time, on (i) the Business Day that the Borrower receives such notice, if such notice is received prior to 10:00 a.m., New York City time, on the day of receipt, or (ii) the Business Day immediately following the day that the Borrower receives such notice, if such notice is not received prior to such time on the day of receipt; provided that, if such LC Disbursement is not less than $1,000,000, the Borrower may, subject to the conditions to borrowing set forth herein, request in accordance with Section 2.03 or 2.04 that such payment be financed with an ABR Revolving Borrowing or Swingline Loan in an equivalent amount and, to the extent so financed, the Borrower’s obligation to make such payment shall be discharged and replaced by the resulting ABR Revolving Borrowing or Swingline Loan. If the Borrower fails to make such payment when due, the Administrative Agent shall notify each Lender of the applicable LC Disbursement, the payment then due from the Borrower in respect thereof (the “ Unreimbursed Amount ”) and such Revolving Credit Lender’s Applicable Percentage thereof. Promptly following receipt of such notice, each Lender shall pay to the Administrative Agent its Applicable Percentage of the payment then due from the Borrower, in the same manner as provided in Section 2.06 with respect to Revolving Credit Loans made by such Revolving Credit Lender (and Section 2.06 shall apply, mutatis mutandis , to the payment obligations of the Lenders), and the Administrative Agent shall promptly pay to the Issuing Bank the amounts so received by it from the Revolving Credit Lenders. Promptly following receipt by the Administrative Agent of any payment from the Borrower pursuant to this paragraph, the Administrative Agent shall distribute such payment to the Issuing Bank or, to the extent that Revolving Credit Lenders have made payments pursuant to this paragraph to reimburse the Issuing Bank, then to such Revolving Credit Lenders and the Issuing Bank as their interests may appear. Any payment made by a Revolving Credit Lender pursuant to this paragraph to reimburse the Issuing Bank for any LC

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Disbursement (other than the funding of ABR Revolving Loans or a Swingline Loan as contemplated above) shall not constitute a Loan and shall not relieve the Borrower of its obligation to reimburse such LC Disbursement.
          (f) Obligations Absolute . The Borrower’s obligation to reimburse LC Disbursements as provided in paragraph (e) of this Section shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement under any and all circumstances whatsoever and irrespective of (i) any lack of validity or enforceability of any Letter of Credit or this Agreement, or any term or provision therein, (ii) any draft or other document presented under a Letter of Credit proving to be forged, fraudulent or invalid in any respect or any statement therein being untrue or inaccurate in any respect, (iii) payment by the Issuing Bank under a Letter of Credit against presentation of a draft or other document that does not comply with the terms of such Letter of Credit, or (iv) any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section, constitute a legal or equitable discharge of, or provide a right of setoff against, the Borrower’s obligations hereunder. Neither the Administrative Agent, the Revolving Credit Lenders nor the Issuing Bank, nor any of their Related Parties, shall have any liability or responsibility by reason of or in connection with the issuance or transfer of any Letter of Credit or any payment or failure to make any payment thereunder (irrespective of any of the circumstances referred to in the preceding sentence), or any error, omission, interruption, loss or delay in transmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit (including any document required to make a drawing thereunder), any error in interpretation of technical terms or any consequence arising from causes beyond the control of the Issuing Bank; provided that the foregoing shall not be construed to excuse the Issuing Bank from liability to the Borrower to the extent of any direct damages (as opposed to consequential damages, claims in respect of which are hereby waived by the Borrower to the extent permitted by applicable law) suffered by the Borrower that are caused by the Issuing Bank’s failure to exercise care when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof. The parties hereto expressly agree that, in the absence of gross negligence or willful misconduct on the part of the Issuing Bank (as finally determined by a court of competent jurisdiction), the Issuing Bank shall be deemed to have exercised care in each such determination. In furtherance of the foregoing and without limiting the generality thereof, the parties agree that, with respect to documents presented which appear on their face to be in substantial compliance with the terms of a Letter of Credit, the Issuing Bank may, in its sole discretion, either accept and make payment upon such documents without responsibility for further investigation, regardless of any notice or information to the contrary, or refuse to accept and make payment upon such documents if such documents are not in strict compliance with the terms of such Letter of Credit.
          (g) Disbursement Procedures . The Issuing Bank shall, promptly following its receipt thereof, examine all documents purporting to represent a demand for payment under a Letter of Credit. The Issuing Bank shall promptly notify the Administrative Agent and the Borrower by telephone (confirmed by telecopy) of such demand for payment and whether the Issuing Bank has made or will make an LC Disbursement thereunder; provided that any failure to give or delay in giving such notice shall not relieve the Borrower of its obligation to reimburse the Issuing Bank and the Revolving Credit Lenders with respect to any such LC Disbursement. On the last Business Day of each month, the Issuing Bank shall submit to the Administrative Agent a report in reasonable detail setting forth any activity taken with respect to each Letter of Credit that it has issued at the request of the Borrower that was outstanding as of the date of the report last submitted.
          (h) Interim Interest . If the Issuing Bank shall make any LC Disbursement, then, unless the Borrower shall reimburse such LC Disbursement in full on the date such LC Disbursement is made, the unpaid amount thereof shall bear interest, for each day from and including the date such LC Disbursement is made to but excluding the date that the Borrower reimburses such LC Disbursement, at

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the rate per annum then applicable to ABR Revolving Loans; provided that, if the Borrower fails to reimburse such LC Disbursement when due pursuant to paragraph (e) of this Section, then Section 2.12(d) shall apply. Interest accrued pursuant to this paragraph shall be for the account of the Issuing Bank, except that interest accrued on and after the date of payment by any Revolving Credit Lender pursuant to paragraph (e) of this Section to reimburse the Issuing Bank shall be for the account of such Revolving Credit Lender to the extent of such payment.
          (i) Replacement of the Issuing Bank . The Issuing Bank may be replaced at any time by written agreement among the Borrower, the Administrative Agent, the replaced Issuing Bank and the successor Issuing Bank. The Administrative Agent shall notify the Revolving Credit Lenders of any such replacement of the Issuing Bank. At the time any such replacement shall become effective, the Borrower shall pay all unpaid fees accrued for the account of the replaced Issuing Bank pursuant to Section 2.11(b). From and after the effective date of any such replacement, (i) the successor Issuing Bank shall have all the rights and obligations of the Issuing Bank under this Agreement with respect to Letters of Credit to be issued thereafter and (ii) references herein to the term “Issuing Bank” shall be deemed to refer to such successor or to any previous Issuing Bank, or to such successor and all previous Issuing Banks, as the context shall require. After the replacement of an Issuing Bank hereunder, the replaced Issuing Bank shall remain a party hereto and shall continue to have all the rights and obligations of an Issuing Bank under this Agreement with respect to Letters of Credit issued by it prior to such replacement, but shall not be required to issue additional Letters of Credit.
          (j) Cash Collateralization . On the Revolving Credit Facility Maturity Date (or if earlier, any other date on which the Revolving Credit Commitments have been terminated in full) and, if any Event of Default under clauses (a), (b), (f), (h) or (i) of Article VII) shall have occurred and be continuing, on the Business Day that the Borrower receives notice from the Administrative Agent or the Required Revolving Credit Lenders demanding the deposit of cash collateral pursuant to this paragraph, the Borrower shall deposit in an account with the Administrative Agent, in the name of the Administrative Agent and for the benefit of the Revolving Credit Lenders, an amount in cash equal to 103% of the LC Exposure as of such date plus any accrued and unpaid interest thereon; provided that the obligation to deposit such cash collateral shall become effective immediately, and such deposit shall become immediately due and payable, without demand or other notice of any kind, upon the occurrence of any Event of Default with respect to the Borrower described in clause (h) or (i) of Article VII or any other date upon which the Revolving Credit Commitments are terminated in full. Such deposit shall be held by the Administrative Agent as collateral for the payment and performance of the obligations of the Borrower under this Agreement. The Administrative Agent shall have exclusive dominion and control, including the exclusive right of withdrawal, over such account. Other than any interest earned on the investment of such deposits, which investments shall be made at the option and sole discretion of the Administrative Agent and at the Borrower’s risk and expense, such deposits shall not bear interest. Interest or profits, if any, on such investments shall accumulate in such account. Moneys in such account shall be applied by the Administrative Agent to reimburse the Issuing Bank for LC Disbursements for which it has not been reimbursed and, to the extent not so applied, shall be held for the satisfaction of the reimbursement obligations of the Borrower for the LC Exposure at such time or, if the maturity of the Loans has been accelerated (but subject to the consent of Required Revolving Credit Lenders), be applied to satisfy other obligations of the Borrower under this Agreement. If the Borrower is required to provide an amount of cash collateral hereunder as a result of the occurrence of an Event of Default, such amount (to the extent not applied as aforesaid) shall be returned to the Borrower within three Business Days after all Events of Default have been cured or waived.
          (k) Schedule 2.05 contains a schedule of certain letters of credit issued prior to the Effective Date by JPMCB for the account of the Borrower. On the Transaction Closing Date (i) such letters of credit, to the extent outstanding, shall be automatically and without further action by the parties

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thereto converted to Letters of Credit issued pursuant to this Section 2.05 for the account of the Borrower and subject to the provisions hereof, and for this purpose the fees specified in Section 2.11(b) shall be payable (in substitution for any fees set forth in the applicable letter of credit reimbursement agreements or applications relating to such letters of credit) as if such letters of credit had been issued on the Transaction Closing Date, (ii) the issuers of such Letters of Credit (unless otherwise an Issuing Bank) shall be deemed to be “Issuing Banks” hereunder solely for the purpose of maintaining such letters of credit, for purposes of Section 2.16(e) relating to the obligation to provide the appropriate forms, certificates and statements to the Borrower and the Administrative Agent and any updates required by Section 2.16(e) and for purposes of Section 9.04(b)(iv) relating to the entries to be made in the Register, (iii) the face amount of such letters of credit shall be included in the calculation of LC Obligations and (iv) all liabilities of the Borrower with respect to such letters of credit shall constitute Obligations. No letter of credit converted in accordance with this clause (k) shall be amended, extended or renewed without the prior written consent of the Administrative Agent.
          SECTION 2.06. Funding of Borrowings . (a) Each Lender shall make each Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds by 12:00 noon, New York City time, to the account of the Administrative Agent most recently designated by it for such purpose by notice to the Lenders; provided that Swingline Loans shall be made as provided in Section 2.04. On the Initial Funding Date, the Administrative Agent will deposit the proceeds of the Term Loans into the Collateral Account (if the Transaction Closing Date does not occur on the same date) and will release such funds (or make such funds available) on the Transaction Closing Date to the Borrower for the purposes of funding the Separation Transactions on such date as contemplated in Section 5.08(a). After the Transaction Closing Date, the Administrative Agent will make any Revolving Loans available to the Borrower by promptly crediting the aggregate amounts so received from the Revolving Credit Lenders, in immediately available funds, to an account of the Borrower pursuant to instructions of the Borrower on file with the Administrative Agent and designated by the Borrower in the applicable Borrowing Request; provided , that Base Rate Revolving Loans made to finance the reimbursement of an LC Disbursement as provided in Section 2.05(e) shall be remitted by the Administrative Agent to the Issuing Banks.
          (b) Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Borrowing that such Lender will not make available to the Administrative Agent such Lender’s share of such Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with paragraph (a) of this Section and may, in reliance upon such assumption, make available to the Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the Administrative Agent, then the applicable Lender and the Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount with interest thereon, for each day from and including the date such amount is made available to the Borrower to but excluding the date of payment to the Administrative Agent, at (i) in the case of such Lender, the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation or (ii) in the case of the Borrower, the interest rate applicable to ABR Loans. If such Lender pays such amount to the Administrative Agent, then such amount shall constitute such Lender’s Loan included in such Borrowing.
          SECTION 2.07. Interest Elections . (a) Each Borrowing initially shall be of the Type specified in the applicable Borrowing Request and, in the case of a Eurodollar Borrowing, shall have an initial Interest Period as specified in such Borrowing Request. Thereafter, the Borrower may elect to convert such Borrowing to a different Type or to continue such Borrowing and, in the case of a Eurodollar Borrowing, may elect Interest Periods therefor, all as provided in this Section. The Borrower may elect different options with respect to different portions of the affected Borrowing, in which case

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each such portion shall be allocated ratably among the Lenders holding the Loans comprising such Borrowing, and the Loans comprising each such portion shall be considered a separate Borrowing. This Section shall not apply to Swingline Borrowings, which may not be converted or continued.
          (b) To make an election pursuant to this Section, the Borrower shall notify the Administrative Agent of such election by telephone by the time that a Borrowing Request would be required under Section 2.03 if the Borrower were requesting a Borrowing of the Type resulting from such election to be made on the effective date of such election. Each such telephonic Interest Election Request shall be irrevocable and shall be confirmed promptly by hand delivery or telecopy to the Administrative Agent of a written Interest Election Request in a form approved by the Administrative Agent and signed by the Borrower.
          (c) Each telephonic and written Interest Election Request shall specify the following information in compliance with Section 2.03:
     (i) the Borrowing to which such Interest Election Request applies and, if different options are being elected with respect to different portions thereof, the portions thereof to be allocated to each resulting Borrowing (in which case the information to be specified pursuant to clauses (iii) and (iv) below shall be specified for each resulting Borrowing);
     (ii) the effective date of the election made pursuant to such Interest Election Request, which shall be a Business Day;
     (iii) whether the resulting Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing; and
     (iv) if the resulting Borrowing is a Eurodollar Borrowing, the Interest Period to be applicable thereto after giving effect to such election, which shall be a period contemplated by the definition of the term “Interest Period”.
If any such Interest Election Request requests a Eurodollar Borrowing but does not specify an Interest Period, then the Borrower shall be deemed to have selected an Interest Period of one month’s duration.
          (d) Promptly following receipt of an Interest Election Request, the Administrative Agent shall advise each Revolving Credit Lender or Term Lender, as applicable, of the details thereof and of such Lender’s portion of each resulting Borrowing.
          (e) If the Borrower fails to deliver a timely Interest Election Request with respect to a Eurodollar Borrowing prior to the end of the Interest Period applicable thereto, then, unless such Borrowing is repaid as provided herein, at the end of such Interest Period such Borrowing shall be converted to an ABR Borrowing. Notwithstanding any contrary provision hereof, if an Event of Default has occurred and is continuing and the Administrative Agent, at the request of the Required Lenders, so notifies the Borrower, then, so long as an Event of Default is continuing (i) no outstanding Borrowing may be converted to or continued as a Eurodollar Borrowing and (ii) unless repaid, each Eurodollar Borrowing shall be converted to an ABR Borrowing at the end of the Interest Period applicable thereto.
          SECTION 2.08. Termination and Reduction of Commitments . (a) Unless previously terminated, (i) the Revolving Credit Commitments shall terminate on the Revolving Credit Facility Maturity Date; provided that, if both the Initial Funding Date and the Transaction Closing Date have not occurred prior to the Early Commitment Termination Date, then the Revolving Credit

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Commitments shall terminate on the Early Commitment Termination Date and (ii) the Term Loan Commitments shall terminate on the Initial Funding Date immediately after giving effect to all Borrowings of Term Loans which are made on such date; provided that, if the Initial Funding Date does not occur prior to the Early Commitment Termination Date, then the Term Loan Commitments shall terminate on the Early Commitment Termination Date.
          (b) The Borrower may at any time terminate, or from time to time reduce, the Revolving Credit Commitments; provided that (i) each reduction of the Revolving Credit Commitments shall be in an amount that is an integral multiple of $1,000,000 and not less than $10,000,000 and (ii) the Borrower shall not terminate or reduce the Revolving Credit Commitments if, after giving effect to any concurrent prepayment of the Revolving Loans in accordance with Section 2.10, the sum of the Revolving Credit Exposures would exceed the total Revolving Credit Commitments.
          (c) The Borrower shall notify the Administrative Agent of any election to terminate or reduce the Revolving Credit Commitments under paragraph (b) of this Section at least three Business Days prior to the effective date of such termination or reduction, specifying such election and the effective date thereof. Promptly following receipt of any notice, the Administrative Agent shall advise the Revolving Credit Lenders of the contents thereof. Each notice delivered by the Borrower pursuant to this Section shall be irrevocable; provided that a notice of termination of the Revolving Credit Commitments delivered by the Borrower may state that such notice is conditioned upon the occurrence of an event, in which case such notice may be revoked by the Borrower (by notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied. Any termination or reduction of the Revolving Credit Commitments shall be permanent. Each reduction of the Revolving Credit Commitments shall be made ratably among the Lenders in accordance with their respective Revolving Credit Commitments.
          SECTION 2.09. Repayment of Loans; Evidence of Debt . (a) The Borrower hereby unconditionally promises to pay:
          (i) in respect of Revolving Loans, to the Administrative Agent for the account of each Revolving Credit Lender, the then unpaid principal amount of each Revolving Credit Loan on the Revolving Credit Facility Maturity Date (or if earlier, the date of the termination of the Revolving Credit Commitments in full);
          (ii) in respect to the Term Loans, to the Administrative Agent for the account of each Term Loan Lender, in consecutive quarterly installments, in the an aggregate amount equal to (i) 10% in the case of installments due in the first and second year following the Initial Funding Date, (ii) 15% in the case of installments due in the third and fourth years following the Initial Funding Date, and (iii) 50% in the case of installments due in the fifth year following the Initial Funding Date, in all cases of the aggregate principal amount of the Term Loans outstanding immediately following the Initial Funding Date (which payments in each case shall be reduced as a result of the application of prepayments in accordance with Section 2.10), on the last day of each March, June, September and December and on the Term Loan Facility Maturity Date, with the first such payment to be made on June 30, 2008 to be applied against the Term Loans ( provided , however , that the Borrower shall repay the entire unpaid principal amount of the Term Loans on the Term Loan Facility Maturity Date);
          (iii) in respect of Swingline Loans, to the Swingline Lender the then unpaid principal amount of each Swingline Loan on the earlier of the Revolving Credit Facility Maturity Date (or if earlier, the date of the termination of the Revolving Credit

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Commitments in full) and the first date after such Swingline Loan is made that is the 15th or last day of a calendar month and is at least three Business Days after such Swingline Loan is made; provided , that on each date a Revolving Borrowing is made, the Borrower shall repay all Swingline Loans then outstanding.
          (b) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such Lender resulting from each Loan made by such Lender, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder.
          (c) The Administrative Agent shall maintain accounts in which it shall record (i) the amount of each Loan made hereunder, the Class and Type thereof and the Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder for the account of the Lenders and each Lender’s share thereof.
          (d) The entries made in the accounts maintained pursuant to paragraph (b) or (c) of this Section shall be prima facie evidence of the existence and amounts of the obligations recorded therein (absent manifest error); provided that the failure of any Lender or the Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the obligation of the Borrower to repay the Loans in accordance with the terms of this Agreement.
          (e) Any Lender may request that Loans made by it be evidenced by a promissory note (a “ Promissory Note ”). In such event, the Borrower shall prepare, execute and deliver to such Lender a Promissory Note payable to the order of such Lender (or, if requested by such Lender, to such Lender and its registered assigns) and in a form approved by the Administrative Agent.
          SECTION 2.10. Prepayment of Loans . (a) The Borrower shall have the right at any time and from time to time to prepay any Borrowing in whole or in part, subject to prior notice in accordance with paragraph (b) of this Section.
          (b) The Borrower shall notify the Administrative Agent (and, in the case of prepayment of a Swingline Loan, the Swingline Lender) by telephone (confirmed by telecopy) of any prepayment hereunder (i) in the case of prepayment of a Eurodollar Borrowing, not later than 12:00 noon, New York City time, three Business Days before the date of prepayment, (ii) in the case of prepayment of an ABR Borrowing, not later than 12:00 noon, New York City time, one Business Day before the date of prepayment or (iii) in the case of prepayment of a Swingline Loan, not later than 12:00 noon, New York City time, on the date of prepayment. Each such notice shall be irrevocable and shall specify the prepayment date and the principal amount of each Borrowing or portion thereof to be prepaid; provided that, a notice of prepayment delivered by the Borrower may state that such notice is conditioned upon the occurrence of an event, in which case such notice may be revoked by the Borrower (by notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied. Promptly following receipt of any such notice of prepayment relating to the Term Loans, the Administrative Agent shall advise the Term Lenders of the contents of such notice. Each prepayment of the Term Loans shall be applied to reduce the remaining future quarterly installment amounts thereof payable under Section 2.09(a)(ii) as directed by the Borrower.
          (c) If the Transaction Closing Date has not occurred on or prior to the Early Commitment Termination Date, the Borrower shall immediately prepay the entire principal amount of the Loans then outstanding, together with all accrued but unpaid interest and fees thereon and all other Obligations of the Borrower owing on such date (other than indemnities and contingent claims which by

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their terms would survive the termination of this Agreement). The Borrower authorizes the release of all funds on deposit in the Collateral Account on such date and hereby irrevocably authorizes and directs the Administrative Agent to apply such funds to such Obligations in the manner set forth in Section 2.17(b) without any further action or authorization by the Borrower. In the event there are excess funds in the Collateral Account after all such Obligations have been paid in full, such funds shall be made available to the Borrower.
          SECTION 2.11. Fees . (a) The Borrower agrees to pay to each Revolving Credit Lender a commitment fee on the actual daily amount by which the Revolving Credit Commitment of such Revolving Credit Lender exceeds (i) the aggregate outstanding principal amount of such Lender’s Revolving Loans and (ii) such Lender’s LC Exposure (the “ Unused Commitment Fee ”) from the Initial Funding Date hereof through the Revolving Credit Facility Maturity Date (or if earlier, the date of the termination of the Revolving Credit Commitments in full) at the Applicable Rate payable, in arrears (x) on the last day of March, June, September and December of each year, commencing on the first such date to occur after the Initial Funding Date and (y) on the Revolving Credit Facility Maturity Date (or if earlier, the date of the termination of the Revolving Credit Commitments in full). All Unused Commitment Fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day).
          (b) The Borrower agrees to pay (i) to the Administrative Agent for the account of each Revolving Credit Lender a participation fee with respect to its participations in Letters of Credit, which shall accrue at the same Applicable Rate used to determine the interest rate applicable to Eurodollar Revolving Loans on the average daily amount of such Revolving Credit Lender’s LC Exposure (excluding any portion thereof attributable to unreimbursed LC Disbursements) during the period from and including the Initial Funding Date to but excluding the later of the date on which such Revolving Credit Lender’s Commitment terminates and the date on which such Lender ceases to have any LC Exposure, and (ii) to the Issuing Bank a fronting fee, which shall accrue at the rate or rates per annum separately agreed upon between the Borrower and the Issuing Bank on the average daily amount of the LC Exposure (excluding any portion thereof attributable to unreimbursed LC Disbursements) during the period from and including the Initial Funding Date to but excluding the later of the date of termination of the Revolving Credit Commitments and the date on which there ceases to be any LC Exposure, as well as the Issuing Bank’s standard fees with respect to the issuance, amendment, renewal or extension of any Letter of Credit or processing of drawings thereunder. Participation fees and fronting fees accrued through and including the last day of March, June, September and December of each year shall be payable on the third Business Day following such last day, commencing on the first such date to occur after the Initial Funding Date; provided that all such fees shall be payable on the date on which the Revolving Credit Commitments terminate and any such fees accruing after the date on which the Revolving Credit Commitments terminate shall be payable on demand. Any other fees payable to the Issuing Bank pursuant to this paragraph shall be payable within 10 days after demand. All participation fees and fronting fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day).
          (c) The Borrower agrees to pay to the Agents and the Bookrunners the additional fees, the amount and dates of payment of which are embodied in the Fee and Syndication Letter.
          (d) All fees payable hereunder (other than under the Fee and Syndication Letter) shall be paid on the dates due, in immediately available funds, to the Administrative Agent (or to the Issuing Bank, in the case of fees payable to it) for distribution, in the case of facility fees and participation fees, to the Lenders and Bookrunners. Fees paid shall not be refundable under any circumstances. All fees payable under the Fee and Syndication Letter shall be paid in accordance with the terms thereof.

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          SECTION 2.12. Interest . (a) The Loans comprising each ABR Borrowing (including each Swingline Loan) shall bear interest at the Alternate Base Rate plus the Applicable Rate.
          (b) The Loans comprising each Eurodollar Borrowing shall bear interest at the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing plus the Applicable Rate
          (c) Notwithstanding the foregoing, if any principal of or interest on any Loan or any fee or other amount payable by the Borrower hereunder is not paid when due (after giving effect to any applicable grace periods), whether at stated maturity, upon acceleration or otherwise, such overdue amount shall bear interest, after as well as before judgment, at a rate per annum equal to (i) in the case of overdue principal of any Loan, 2% plus the rate otherwise applicable to such Loan as provided in the preceding paragraphs of this Section or (ii) in the case of any other amount, 2% plus the rate applicable to ABR Loans as provided in paragraph (a) of this Section.
          (d) Accrued interest on each Loan shall be payable in arrears on each Interest Payment Date for such Loan and, in the case of Revolving Loans, upon termination of the Revolving Credit Commitments; provided that (i) interest accrued pursuant to paragraph (c) of this Section shall be payable on demand, (ii) in the event of any repayment or prepayment of any Loan (other than a prepayment of an ABR Revolving Loan prior to the end of the Availability Period), accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment and (iii) in the event of any conversion of any Eurodollar Loan prior to the end of the current Interest Period therefor, accrued interest on such Loan shall be payable on the effective date of such conversion.
          (e) All interest hereunder shall be computed on the basis of a year of 360 days, except that interest computed by reference to the Alternate Base Rate at times when the Alternate Base Rate is based on the Prime Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap year), and in each case shall be payable for the actual number of days elapsed (including the first day but excluding the last day). The applicable Alternate Base Rate, Adjusted LIBO Rate or LIBO Rate shall be determined by the Administrative Agent, and such determination shall be conclusive absent manifest error.
          SECTION 2.13. Alternate Rate of Interest . If prior to the commencement of any Interest Period for a Eurodollar Borrowing:
          (a) the Administrative Agent determines (which determination shall be conclusive absent manifest error) that adequate and reasonable means do not exist for ascertaining the Adjusted LIBO Rate or the LIBO Rate, as applicable, for such Interest Period; or
          (b) the Administrative Agent is advised by the Required Lenders that the Adjusted LIBO Rate or the LIBO Rate, as applicable, for such Interest Period will not adequately and fairly reflect the cost to such Lenders (or Lender) of making or maintaining their Loans (or its Loan) included in such Borrowing for such Interest Period;
then the Administrative Agent shall give notice thereof to the Borrower and the Lenders by telephone or telecopy as promptly as practicable thereafter and, until the Administrative Agent notifies the Borrower and the Lenders that the circumstances giving rise to such notice no longer exist, (i) any Interest Election Request that requests the conversion of any Borrowing to, or continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective, and (ii) if any Borrowing Request requests a Eurodollar Revolving Borrowing, such Borrowing shall be made as an ABR Borrowing; provided that if the circumstances giving rise to such notice affect only one Type of Borrowings, then the other Type of Borrowings shall be permitted.

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          SECTION 2.14. Increased Costs . (a) If any Change in Law shall:
     (i) impose, modify or deem applicable any reserve, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Lender (except any such reserve requirement reflected in the Adjusted LIBO Rate) or the Issuing Bank; or
     (ii) impose on any Lender or the Issuing Bank or the London interbank market any other condition affecting this Agreement or Eurodollar Loans made by such Lender or any Letter of Credit or participation therein;
and the result of any of the foregoing shall be to increase the cost to such Lender of making or maintaining any Eurodollar Loan (or of maintaining its obligation to make any such Loan) or to increase the cost to such Lender or the Issuing Bank of participating in, issuing or maintaining any Letter of Credit or to reduce the amount of any sum received or receivable by such Lender or the Issuing Bank hereunder (whether of principal, interest or otherwise), then the Borrower will pay to such Lender or the Issuing Bank, as the case may be, such additional amount or amounts as will compensate such Lender or the Issuing Bank, as the case may be, for such additional costs incurred or reduction suffered.
          (b) If any Lender or the Issuing Bank determines that any Change in Law regarding capital requirements has or would have the effect of reducing the rate of return on such Lender’s or the Issuing Bank’s capital or on the capital of such Lender’s or the Issuing Bank’s holding company, if any, as a consequence of this Agreement or the Loans made by, or participations in Letters of Credit held by, such Lender, or the Letters of Credit issued by the Issuing Bank, to a level below that which such Lender or the Issuing Bank or such Lender’s or the Issuing Bank’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s or the Issuing Bank’s policies and the policies of such Lender’s or the Issuing Bank’s holding company with respect to capital adequacy), then from time to time the Borrower will pay to such Lender or the Issuing Bank, as the case may be, such additional amount or amounts as will compensate such Lender or the Issuing Bank or such Lender’s or the Issuing Bank’s holding company for any such reduction suffered.
          (c) A certificate of a Lender or the Issuing Bank setting forth the amount or amounts necessary to compensate such Lender or the Issuing Bank or its holding company, as the case may be, as specified in paragraph (a) or (b) of this Section shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay such Lender or the Issuing Bank, as the case may be, the amount shown as due on any such certificate within ten (10) days after receipt thereof.
          (d) Failure or delay on the part of any Lender or the Issuing Bank to demand compensation pursuant to this Section shall not constitute a waiver of such Lender’s or the Issuing Bank’s right to demand such compensation; provided that the Borrower shall not be required to compensate a Lender or the Issuing Bank pursuant to this Section for any increased costs or reductions incurred more than 180 days prior to the date that such Lender or the Issuing Bank, as the case may be, notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s or the Issuing Bank’s intention to claim compensation therefor; provided further that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 180-day period referred to above shall be extended to include the period of retroactive effect thereof.
          (e) Notwithstanding anything to the contrary herein, this Section 2.14 shall not apply to any Taxes, which are governed exclusively by Section 2.16.

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          SECTION 2.15. Break Funding Payments . In the event of (a) the payment of any principal of any Eurodollar Loan other than on the last day of an Interest Period applicable thereto (including as a result of an Event of Default), (b) the conversion of any Eurodollar Loan other than on the last day of the Interest Period applicable thereto, (c) the failure to borrow, convert, continue or prepay any Eurodollar Loan on the date specified in any notice delivered pursuant hereto (regardless of whether such notice may be revoked under Section 2.10(b) and is revoked in accordance therewith), or (d) the assignment of any Eurodollar Loan other than on the last day of the Interest Period applicable thereto as a result of a request by the Borrower pursuant to Section 2.18, then, in any such event, the Borrower shall compensate each Lender for the loss, cost and expense attributable to such event. In the case of a Eurodollar Loan, such loss, cost or expense to any Lender shall be deemed to include an amount determined by such Lender to be the excess, if any, of (i) the amount of interest which would have accrued on the principal amount of such Loan had such event not occurred, at the Adjusted LIBO Rate that would have been applicable to such Loan, for the period from the date of such event to the last day of the then current Interest Period therefor (or, in the case of a failure to borrow, convert or continue, for the period that would have been the Interest Period for such Loan), over (ii) the amount of interest which would accrue on such principal amount for such period at the interest rate which such Lender would bid were it to bid, at the commencement of such period, for dollar deposits of a comparable amount and period from other banks in the eurodollar market. A certificate of any Lender setting forth any amount or amounts that such Lender is entitled to receive pursuant to this Section shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay such Lender the amount shown as due on any such certificate within ten (10) days after receipt thereof.
          SECTION 2.16. Taxes . (a) Any and all payments by or on account of any obligation of the Borrower hereunder shall be made free and clear of and without deduction for any Indemnified Taxes or Other Taxes; provided that if the Borrower shall be required to deduct any Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section) the Administrative Agent, Lender or Issuing Bank (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make such deductions and (iii) the Borrower shall pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law.
          (b) In addition, the Borrower shall pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law.
          (c) The Borrower shall indemnify the Administrative Agent, each Lender and the Issuing Bank, within twenty (20) days after written demand therefor, for the full amount of any Indemnified Taxes or Other Taxes paid by the Administrative Agent, such Lender or the Issuing Bank, as the case may be, on or with respect to any payment by or on account of any obligation of the Borrower hereunder (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section) and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority (which demand shall be made within 180 days of the earlier of (x) if the Administrative Agent, such Lender or the Issuing Bank received written notice from a Governmental Authority demanding payment of such Indemnified Taxes or Other Taxes, the date the Administrative Agent, such Lender or the Issuing Bank received such written notice or (y) the date the Administrative Agent, such Lender or the Issuing Bank filed a tax return on which such Indemnified Taxes or Other Taxes is reflected). A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender or the Issuing Bank, or by the Administrative Agent on its own behalf or on behalf of a Lender or the Issuing Bank, shall be conclusive absent manifest error. If the Borrower determines in good faith that a reasonable basis exists for contesting an Indemnified Tax or Other Tax

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with respect to which it has made an indemnification payment under this subsection (c), the relevant Administrative Agent, Lender or Issuing Bank shall cooperate with the Borrower in challenging such Tax at the Borrower’s expense and if requested by the Borrower in writing; provided , however , that no Administrative Agent, Lender or Issuing Bank shall be required to take any action hereunder that, in the sole discretion of such Administrative Agent, Lender or Issuing Bank, would cause such Administrative Agent, Lender or Issuing Bank to suffer any material economic, legal or regulatory disadvantage. Additionally, nothing herein contained shall interfere with the right of an Administrative Agent, Lender or Issuing Bank to arrange its tax affairs in whatever manner it thinks fit nor oblige any Administrative Agent, Lender or Issuing Bank to make available its tax returns or disclose any information relating to its tax affairs or any computations in respect thereof to the Borrower or require any Administrative Agent, Lender or Issuing Bank to do anything that would materially prejudice its ability to benefit from any other refunds, credits, reliefs, remissions or repayments to which it may be entitled.
          (d) As soon as practicable after any payment of Indemnified Taxes or Other Taxes by the Borrower to a Governmental Authority, the Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.
          (e) (i) Each Lender (other than a Lender described in Treasury Regulation Section 1.6049-4(c)(1)(ii)(A)(1) unless reasonably requested by the Borrower and the Administrative Agent in writing) shall deliver documentation prescribed by applicable laws as will enable the Borrower or the Administrative Agent to determine whether or not such Lender is subject to United States federal backup withholding or information reporting requirements, but only if such Lender is legally entitled to do so.
               (ii) Any Foreign Lender that is entitled to an exemption from or reduction of withholding tax under the law of the jurisdiction in which the Borrower is located, or any treaty to which such jurisdiction is a party, with respect to payments under this Agreement shall deliver to the Borrower (with a copy to the Administrative Agent), at the time or times prescribed by applicable law, such properly completed and executed documentation prescribed by applicable law or reasonably requested by the Borrower as will permit such payments to be made without withholding or at a reduced rate. Without limiting the foregoing, each Foreign Lender shall deliver to the Borrower and the Administrative Agent on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), but only if such Foreign Lender is legally entitled to do so, whichever of the following is applicable:
          (A) two (2) duly completed copies of Internal Revenue Service Form W-8BEN (or successor form) claiming eligibility for benefits of an income tax treaty to which the United States is a party;
          (B) two (2) duly completed copies of Internal Revenue Service Form W-8ECI (or successor form);
          (C) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under section 881(c) of the Code, (x) a certificate to the effect that such Foreign Lender is not (I) a “bank” within the meaning of section 881(c)(3)(A) of the Code, (II) a “10 percent shareholder” of the Borrower within the meaning of section 881(c)(3)(B) of the Code, or (III) a “controlled foreign corporation” described in section 881(c)(3)(C) of the Code and (y) two duly completed copies of Internal Revenue Service Form W-8BEN (or successor form); or

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                    (D) any other form prescribed by applicable laws (including Internal Revenue Service Form W-8IMY) as a basis for claiming exemption from or a reduction in United Stated federal withholding tax duly completed together with such supplementary documentation as may be prescribed by applicable law to permit the Borrower to determine the withholding or deduction required to be made.
               (iii) Each Lender, if reasonably requested by the Borrower or the Administrative Agent, shall deliver to the Borrower and the Administrative Agent such additional duly completed forms, certificates or documentation described in this subsection (e) that such Lender is legally entitled to so deliver upon or prior to the expiration or obsolescence of any such forms, certificates or documentation previously delivered by it pursuant to this subsection (e). Additionally, each Lender shall deliver to the Borrower and the Administrative Agent such additional duly completed forms, certificates or documentation described in this subsection (e) that such Lender is legally entitled to so deliver after the occurrence of a change in the material facts reflected on any such forms, certificates or documentation previously delivered by it pursuant to this subsection (e) (or if, as a result of such change in material facts, such Lender is no longer legally entitled to deliver any forms, certificates or documentation pursuant to this subsection (e), such Lender shall so notify the Borrower and the Administrative Agent).
          (f) For any period with respect to which a Lender has failed to provide the Borrower with the appropriate form, certificate or other document described in subsection (e) above (other than if such failure is due to a change in law, or in the interpretation or application thereof, occurring after the date on which a form, certificate or other document originally was required to be provided or if such form, certificate or other document otherwise is not required under subsection (e) above, including because such Lender is not legally entitled to provide such form, certificate or other document), such Lender shall not be entitled to indemnification under subsection (a) or (c) of this Section 2.16 with respect to Indemnified Taxes imposed by the United States by reason of such failure.
          (g) If the Administrative Agent or a Lender determines, in its sole discretion, that it has received a refund of any Taxes or Other Taxes as to which it has been indemnified by the Borrower or with respect to which the Borrower has paid additional amounts pursuant to this Section 2.16, it shall pay over such refund to the Borrower (but only to the extent of indemnity payments made, or additional amounts paid, by the Borrower under this Section 2.16 with respect to the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of the Administrative Agent or such Lender and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund); provided , that the Borrower, upon the request of the Administrative Agent or such Lender, agrees to repay the amount paid over to the Borrower ( plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Administrative Agent or such Lender in the event the Administrative Agent or such Lender is required to repay such refund to such Governmental Authority. This Section shall not be construed to require the Administrative Agent or any Lender to make available its tax returns (or any other information relating to its taxes which it deems confidential) to the Borrower or any other Person.
          SECTION 2.17. Payments Generally; Pro Rata Treatment; Sharing of Set-offs . (a) The Borrower shall make each payment required to be made by it hereunder (whether of principal, interest, fees or reimbursement of LC Disbursements, or of amounts payable under Section 2.14, 2.15 or 2.16, or otherwise) prior to 12:00 noon, New York City time, on the date when due, in immediately available funds, without set-off or counterclaim. Any amounts received after such time on any date may, in the discretion of the Administrative Agent, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon. All such payments shall be made to the Administrative Agent at its offices at 270 Park Avenue, New York, New York, except payments to be made directly to the Issuing Bank or Swingline Lender as expressly provided herein and except that

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payments pursuant to Sections 2.14, 2.15, 2.16 and 9.03 shall be made directly to the Persons entitled thereto. The Administrative Agent shall distribute any such payments received by it for the account of any other Person to the appropriate recipient promptly following receipt thereof. If any payment hereunder shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day, and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension. All payments hereunder shall be made in dollars.
          (b) If at any time insufficient funds are received by and available to the Administrative Agent to pay fully all amounts of principal, unreimbursed LC Disbursements, interest and fees then due hereunder, such funds shall be applied (i) first, towards payment of interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties, and (ii) second, towards payment of principal and unreimbursed LC Disbursements then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal and unreimbursed LC Disbursements then due to such parties.
          (c) If any Lender shall, by exercising any right of set-off or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Loans or participations in LC Disbursements or Swingline Loans resulting in such Lender receiving payment of a greater proportion of the aggregate amount of its Loans and participations in LC Disbursements and Swingline Loans and accrued interest thereon than the proportion received by any other Lender, then the Lender receiving such greater proportion shall purchase (for cash at face value) participations in the Loans and participations in LC Disbursements and Swingline Loans of other Lenders to the extent necessary so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Loans and participations in LC Disbursements and Swingline Loans; provided that (i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest, and (ii) the provisions of this paragraph shall not be construed to apply to any payment made by the Borrower pursuant to and in accordance with the express terms of this Agreement or any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or participations in LC Disbursements to any assignee or participant, other than to the Borrower or any Subsidiary or Affiliate thereof (as to which the provisions of this paragraph shall apply). The Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against the Borrower rights of set-off and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of the Borrower in the amount of such participation.
          (d) Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders or the Issuing Bank hereunder that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders or the Issuing Bank, as the case may be, the amount due. In such event, if the Borrower has not in fact made such payment, then each of the Lenders or the Issuing Bank, as the case may be, severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender or Issuing Bank with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation.
          (e) If any Lender shall fail to make any payment required to be made by it pursuant to Section 2.04(c), 2.05(d) or (e), 2.06(b), 2.17(d) or 9.03(c), then the Administrative Agent

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may, in its discretion (notwithstanding any contrary provision hereof), apply any amounts thereafter received by the Administrative Agent for the account of such Lender to satisfy such Lender’s obligations under such Sections until all such unsatisfied obligations are fully paid.
          SECTION 2.18. Mitigation Obligations; Replacement of Lenders . (a) If any Lender requests compensation under Section 2.14, or if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.16, then such Lender shall use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.14 or 2.16, as the case may be, in the future and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.
          (b) If (i) any Lender requests compensation under Section 2.14, (ii) the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.16, (iii) any Lender defaults in its obligation to fund Loans hereunder or (iv) in connection with any proposed amendment, modification, waiver or termination requiring the consent of all the Lenders or all affected Lenders, the consent of the Required Lenders is obtained but the consent of any Lender whose consent is required is not obtained, then the Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in Section 9.04), all its interests, rights and obligations under this Agreement to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that (i) the Borrower shall have received the prior written consent of the Administrative Agent (and if a Revolving Credit Commitment is being assigned, the Issuing Bank), which consent shall not unreasonably be withheld, (ii) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans and participations in LC Disbursements and Swingline Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder, from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts) and (iii) in the case of any such assignment resulting from a claim for compensation under Section 2.14 or payments required to be made pursuant to Section 2.16, such assignment will result in a reduction in such compensation or payments. A Lender shall not be required to make any such assignment and delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply.
ARTICLE III
Representations and Warranties
          To induce the Lenders and the Administrative Agent to enter into this Agreement, (i) on and as of the Effective Date, the Borrower makes each of the representations and warranties set forth in Sections 3.01(a) and 3.02 below (but only with respect to the Borrower) and in Section 3.11 below, (ii) on and as of the Initial Funding Date, the Borrower makes each of the representations and warranties set forth in Sections 3.01, 3.02, 3.03, 3.04(a), 3.05, 3.06(a)(i), 3.07, 3.08, 3.09, 3.10, 3.11 and 3.12 below, (iii) on and as of the Transaction Closing Date, the Borrower makes each of the representations and warranties set forth in Section 3.14 and, with respect to each of the Guarantors becoming party to the Guaranty after the Initial Funding Date and on or prior to the Transaction Closing Date, each of the representations and warranties set forth in Sections 3.01(a), 3.02, 3.03(a), 3.03(b) and 3.08 applicable to

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such Guarantors and (iv) on and as of each date after the Transaction Closing Date as required by Section 4.04, the Borrower makes each of the representations and warranties set forth below:
          SECTION 3.01. Organization; Powers . (a) Each of the Loan Parties is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, and has all requisite corporate power, limited liability company power or limited partnership power and authority, as applicable, to carry on its business as now conducted and, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect, is qualified to do business in, and is in good standing in, every jurisdiction where such qualification is required.
          (b) Schedule 3.01(b) sets forth the name and jurisdiction of organization of each Material Subsidiary that is expected to be a Material Subsidiary after the Transaction Closing Date, pursuant to the Separation Documents as modified in accordance with Section 3.14(d). On the Transaction Closing Date, each Material Subsidiary will be a wholly-owned Subsidiary of the Borrower.
          SECTION 3.02. Authorization; Enforceability . The Financing Transactions are within each Loan Party’s corporate powers and have been duly authorized by all necessary corporate and, if required, stockholder action. Each of this Agreement and the other Loan Documents has been duly executed and delivered by each Loan Party and constitutes a legal, valid and binding obligation of such Loan Party, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.
          SECTION 3.03. Governmental Approvals; No Conflicts . (a) The Financing Transactions (i) do not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority, except such as have been obtained or made and are in full force and effect, (ii) will not violate the charter, by-laws or other organizational documents of the Borrower or any Loan Party, (iii) will not violate any applicable law (including ERISA and Environmental Laws) or regulation or any order of any Governmental Authority, and (iv) will not violate or result in a default under any indenture, agreement or other instrument binding upon the Borrower or any Loan Party or its assets or give rise to a right thereunder to require any payment to be made by the Borrower or any of its Subsidiaries, except in the case of clauses (i), (iii) and (iv) above for any such violations or defaults that, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.
          (b) The Financing Transactions will not (i) violate the charter, by-laws or other organizational documents of Cadbury or any subsidiary of Cadbury that owns or, immediately prior to the Separation Transactions, has owned, the Borrower, (ii) violate or result in a default or a right to require any payment under any material indenture or other material debt agreement binding upon Cadbury or any subsidiary of Cadbury that owns or, immediately prior to the Separation Transactions, has owned, the Borrower or any of their respective assets or give rise to a right thereunder to require any payment to be made by such Person and (iii) violate or result in a default under any agreement or other instrument (excluding those referred to in clause (ii) above) binding upon Cadbury or any subsidiary of Cadbury that owns or, immediately prior to the Separation Transactions, has owned, the Borrower or any of their respective assets or give rise to a right thereunder to require any payment to be made by such Person, except in the case of this clause (iii), for any such violations or defaults that, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.
          (c) The Separation Transactions (i) will not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority, except such as have been (or will be prior to consummation of the Separation Transactions) obtained or made and are (or will be at

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the time of the consummation of the Separation Transactions) in full force and effect, (ii) will not violate the charter, by-laws or other organizational documents of Cadbury or any subsidiary of Cadbury involved in the Separation Transactions or identified in Schedule 2.01(a) of the Separation and Distribution Agreement, (iii) will not violate any applicable law (including ERISA and Environmental Laws) or regulation or any order of any Governmental Authority and (iv) will not violate in any material respect or result in a material default or a right to require a material payment under any material indenture, any other agreement or other instrument binding upon Cadbury or any subsidiary of Cadbury involved in the Separation Transactions or identified in Schedule 2.01(a) of the Separation and Distribution Agreement, or any of their respective assets, or give rise to a right thereunder to require any material payment to be made by any such Person, except in the case of clauses (i), (iii) and (iv) above (other than, in the case of clause (iv), with regards to any indentures and other material debt agreements) for any such violations or defaults that, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect or a Cadbury Material Adverse Effect.
          SECTION 3.04. Financial Condition; No Material Adverse Change . (a) The Borrower has heretofore furnished (or, with respect to the fiscal year ended December 31, 2007 and the Pro Forma Financial Statements, will furnish prior to the Initial Funding Date) to the Lenders its (i) Audited Financial Statements, all reported on by Deloitte & Touche LLP and (ii) the Pro Forma Financial Statements. The Audited Financial Statements described in clause (i) above, present fairly, in all material respects the combined financial position, results of operations and cash flows of the Borrower as of such dates and for such periods in accordance with GAAP and have been prepared in all material respects in accordance with Regulation S-X. The Pro Forma Financial Statements have been prepared in all material respects in accordance with Regulation S-X and related SEC and other applicable guidance and based on assumptions which are reasonable and set forth therein.
          (b) Since December 31, 2007, there has been no Material Adverse Change (other than the Disclosed Matters set out on Part II of Schedule 3.06).
          SECTION 3.05. Properties. (a) The Borrower and its Subsidiaries have good title to, or valid leasehold interests in, all its real and personal property material to their business, except for (i) minor defects in title that do not interfere with their ability to conduct their business as currently conducted or to utilize such properties for their intended purposes and (ii) except for other defects to title that, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.
          (b) The Borrower and its Subsidiaries collectively own, or are licensed to use, all trademarks, tradenames, copyrights, patents and other intellectual property used in their business, and such use by the Borrower and its Subsidiaries, to the best of knowledge of the Borrower, does not infringe upon the material rights of any other Person except as could not reasonably be expected to have a Material Adverse Effect.
          SECTION 3.06. Litigation and Environmental Matters . (a) There shall be no investigation or review pending by any Governmental Authority with respect to, or actions, suits, inquiries, investigations or proceedings pending (or, to the best of knowledge of the Borrower, threatened) before, or orders, judgments or decrees of, any governmental entity, (i) that could reasonably be expected to restrain, prevent or impose materially adverse conditions upon the Transactions (which for the avoidance of doubt shall not be deemed to include the SEC review of the Form 10 or similar regulatory review under United Kingdom securities law) or (ii) that could reasonably be expected to have a Material Adverse Effect (other than the Disclosed Matters set out in Part I of Schedule 3.06, to the extent that they do not result in aggregate payments, damages, losses or liabilities of the Borrower and its Subsidiaries in excess of $50,000,000 in the aggregate).

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          (b) Except for the Disclosed Matters and except with respect to any other matters that, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect, the Borrower and its Subsidiaries (i) have not failed to comply with any Environmental Law or to obtain, maintain or comply with any permit, license or other approval required under any Environmental Law, (ii) have not become subject to any Environmental Liability, and (iii) have not received notice of any claim with respect to any Environmental Liability.
          SECTION 3.07. Compliance with Laws and Agreements . The Borrower and its Subsidiaries are in compliance with (a) their charter, by-laws or other organizational documents, (b) all laws, regulations and orders of any Governmental Authority applicable to them or their property and (c) all indentures, agreements and other instruments binding upon them or their property, except, in the case of clauses (b) and (c) of this Section, where the failure to do so, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.
          SECTION 3.08. Investment Company Status . No Loan Party is a “registered investment company” or a company “controlled” by a “registered investment company” or a “principal underwriter” of a “registered investment company” as such terms are defined in, or subject to regulation under, the Investment Company Act of 1940.
          SECTION 3.09. Taxes . The Borrower and its Subsidiaries have timely filed or caused to be filed all Tax returns and reports required to have been filed and have paid or caused to be paid all Taxes required to have been paid, except (a) Taxes that are being contested in good faith by appropriate proceedings and for which the Borrower or such Subsidiary, as applicable, has set aside on its books adequate reserves or (b) to the extent that the failure to do so could not reasonably be expected to have a Material Adverse Effect.
          SECTION 3.10. ERISA . No ERISA Event has occurred or is reasonably expected to occur that, when taken together with all other such ERISA Events for which liability is reasonably expected to occur, could reasonably be expected to have a Material Adverse Effect. The present value of all accumulated benefit obligations under each Plan (based on the assumptions used for purposes of Statement of Financial Accounting Standards No. 87) did not, as of the date of the most recent financial statements reflecting such amounts, exceed the fair market value of the assets of such Plan, and the present value of all accumulated benefit obligations of all underfunded Plans (based on the assumptions used for purposes of Statement of Financial Accounting Standards No. 87) did not, as of the date of the most recent financial statements reflecting such amounts, exceed the fair market value of the assets of all such underfunded Plans, in each case by an amount that, if required to be paid by the Borrower and its Subsidiaries, could reasonably be expected to have a Material Adverse Effect.
          SECTION 3.11. Disclosure . The written information (including, without limitation, the Information Memorandum, the Registration Statement and of the other reports, financial statements, certificates or other information) and oral information (with any such oral information being limited to formal due diligence meetings and calls) furnished by or on behalf of the Borrower, Cadbury, and their respective Affiliates to the Administrative Agent or any Lender in connection with the Transactions (including the sale of the Business considered in 2007) or the negotiation of this Agreement or delivered hereunder, taken as a whole (as modified or supplemented by other information so furnished prior to the relevant measurement date for this representation and warranty), does not contain any material misstatement of fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that, with respect to projected financial information, the Borrower represents only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time; it being recognized by the Lenders that such projections are as to future events and are not to be viewed as facts and that actual results during

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the period or periods covered by any such projections may differ significantly from the projected results and such differences may be material.
          SECTION 3.12. Margin Regulations . No Loan Party is engaged principally, as one of its important activities, in the business of extending credit for the purpose of carrying any margin stock (as such term is defined in Regulation U of the Board as in effect from time to time). No more than 25% of the value of the assets of either the Borrower or the Borrower and its Subsidiaries on a Consolidated basis, respectively, is represented by margin stock.
          SECTION 3.13. Labor Matters . (a) There are no strikes, work stoppages, slowdowns or lockouts pending or threatened against or involving the Borrower or any of its Subsidiaries, other than those that, in the aggregate, could not reasonably be expected to have a Material Adverse Effect.
          (b) There are no unfair labor practices, grievances, complaints or arbitrations pending, or, to the best knowledge of the Borrower, threatened, against or involving the Borrower or any of its Subsidiaries, nor are there any arbitrations or grievances threatened involving the Borrower or any of the Material Subsidiaries, other than those that, in the aggregate, could not reasonably be expected to have a Material Adverse Effect.
          SECTION 3.14. Separation Transactions . As of the Transaction Closing Date:
          (a) The Separation Transactions have been consummated in all material respects in accordance with each of the Separation Documents and substantially in the manner described in the Registration Statement.
          (b) The Separation Transactions are within each Loan Party’s corporate powers and have been duly authorized by all necessary corporate and, if required, stockholder action. Each of the Separation Documents has been duly executed and delivered by each Loan Party party thereto and constitutes a legal, valid and binding obligation of such Loan Party, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.
          (c) The Separation Transactions (i) do not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority, except such as have been obtained or made and are in full force and effect, (ii) will not violate the charter, by-laws or other organizational documents of the Borrower or any other Loan Party, (iii) will not violate any applicable law (including ERISA and Environmental Laws) or regulation or any order of any Governmental Authority and (iv) will not violate in any material respect or result in a material default or a right to require a material payment under any material indenture, any other agreement or other instrument binding upon the Borrower or any other Loan Party, or any of their respective assets, or give rise to a right thereunder to require any material payment to be made by any such Person, except in the case of clauses (i), (iii) and (iv) above (other than, in the case of clause (iv), with regards to any indentures and other material debt agreements) for any such violations or defaults that, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.
          (d) Each of the Separation Documents has been entered into and is effective in substantially the same form as the draft agreements set forth in the definition thereof. None of the Separation Documents has been amended or otherwise modified in any material respect and no material provision therein has been waived, except as otherwise agreed to by the Bookrunners and except for such waivers, amendments or modifications that do not materially adversely affect the interests of the Lenders

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(it being understood that, any change to the Separation Documents whereby an indemnification obligation of Cadbury or any of its subsidiaries existing on the Effective Date for which the Borrower or any of its Subsidiaries are indirectly liable is transferred to the Borrower or any of its Subsidiaries so that the Borrower or such Subsidiary is directly liable to Cadbury’s (or its subsidiary’s) counterparty under the underlying contract pursuant to which such indemnification obligation arose, shall not be considered to materially and adversely affect the interests of the Lenders so long as the scope and terms of such indemnification obligation are not changed following such transfer).
ARTICLE IV
Conditions
          SECTION 4.01. Effective Date . This Agreement shall be effective on the date (the “ Effective Date ”) on which the Administrative Agent (or its counsel) shall have received from each applicable party either (i) a counterpart of this Agreement, the Bridge Loan Agreement and the Fee and Syndication Letter signed on behalf of such party or (ii) written evidence satisfactory to the Administrative Agent (which may include telecopy transmission or electronic ”.pdf” of a signed signature page of this Agreement) that such party has signed a counterpart of this Agreement, the Bridge Loan Agreement and the Fee and Syndication Letter.
          SECTION 4.02. Initial Funding Date . The obligations of the Lenders to make the Term Loan hereunder shall not become effective until the time and date (such time and date, the “ Initial Funding Date ”) on which each of the following conditions is satisfied (or waived in accordance with Section 9.02); provided that the Initial Funding shall occur no earlier than April 10, 2008 (it being understood and agreed that if on the Initial Funding Date the Transaction Closing Date has not occurred, then the proceeds of the Term Loans shall be deposited directly into the Collateral Account on such date):
          (a) The Administrative Agent shall have received a copy of the articles or certificate of incorporation (or equivalent organizational document) of the Borrower, certified as of a recent date by the Secretary of State of the state of organization of the Borrower, together with certificates of such official attesting to the good standing of the Borrower;
          (b) The Administrative Agent shall have received a certificate, dated the Initial Funding Date, of the Secretary or an Assistant Secretary of the Borrower certifying (A) the names and true signatures of each officer of the Borrower that has been authorized to execute and deliver any Loan Document or other document required hereunder to be executed and delivered by or on behalf of the Borrower, (B) the by-laws (or equivalent organizational document) of the Borrower as in effect on the date of such certification, (C) the resolutions of the Borrower’s board of directors approving and authorizing the execution, delivery and performance of the Loan Documents to which it is a party, and (D) that there have been no changes in the certificate of incorporation (or equivalent organizational document) of the Borrower from the certificate of incorporation (or equivalent organizational document) delivered pursuant to paragraph (a) above;
          (c) The Administrative Agent shall have received, for the account of each Lender requesting the same at least two (2) Business Days prior to the Initial Funding Date, a Promissory Note (which may for purposes of this Section 4.01(c) be a copy delivered by facsimile or electronic “.pdf” transmission to be followed promptly with an original of such Promissory Note by overnight courier or messenger) of the Borrower conforming to the requirements of Section 2.09(e) herein;
          (d) The Borrower, Cadbury and their respective Affiliates shall have complied in all material respects (and shall be deemed to have so complied if they have not received written notice of

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any material non-compliance) with the Fee and Syndication Letter; provided , however , that if, on or prior to the Transaction Funding Date, (i) the Borrower, Cadbury or any such Affiliate failed to comply with Section 3 thereof (other than the requirements set forth in clauses (c) and (d) of the second paragraph and in the last paragraph thereunder) and (ii) the Borrower, Cadbury and/or their respective Affiliates cured such non-compliance within two (2) Business Days of receipt of such notice, then the Borrower shall be deemed to have complied with the Fee and Syndication Letter for purposes of this clause (d);
          (e) At least five (5) Business Days prior to the Initial Funding Date, the Lenders shall have received all documentation and other information required by bank regulatory authorities under applicable “know-your-customer” and anti-money laundering rules and regulations, including the Patriot Act, to the extent requested by the Lenders at least ten (10) Business Days prior to the Initial Funding Date;
          (f) The Administrative Agent shall have received a favorable written opinion dated the Initial Funding Date (addressed to the Administrative Agent and the Lenders and dated the Initial Funding Date) of Shearman & Sterling LLP, counsel for the Loan Parties, substantially in the form of Exhibit B. The Administrative Agent also shall have received a copy of a written opinion dated the Initial Funding Date (addressed to Cadbury) of Shearman & Sterling LLP, counsel to Cadbury, covering such matters as have been previously agreed between Shearman & Sterling LLP and each of the Bookrunners, in form and substance satisfactory to the Administrative Agent. The Borrower hereby requests such counsel to deliver such opinions;
          (g) The Administrative Agent shall have received a certificate from a Financial Officer of the Borrower dated the Initial Funding Date certifying that on such date, the Borrower and its subsidiaries (on a consolidated basis) are Solvent, both before, and on a pro forma basis after giving effect to, the Transactions;
          (h) (A) The representations and warranties set forth in Sections 3.01(a), 3.02, 3.03, 3.04(a), 3.05, 3.06(a)(i), 3.07, 3.08, 3.09, 3.10, 3.11 and 3.12 shall be true and correct in all material respects on and as of the Initial Funding Date; (B) at the time of and immediately after giving effect to the Borrowing on the Initial Funding Date, (x) no Default as a result of the Borrower’s failure to observe or perform any covenant, condition or agreement contained in Sections 5.02, 5.03(a) (with respect to the Borrower’s existence only), 5.03(b), 5.04, 5.05, 5.08 or in Article VI (other than for avoidance of doubt, Section 6.04) shall have occurred and be continuing, (y) no Event of Default under clause (c) of Article VII with respect to any representation and warranty under Article III made by the Borrower on the Effective Date shall have occurred, and (z) no Event of Default under clauses (h), (i) or (j) of Article VII shall have occurred and be continuing and (C) the Administrative Agent shall have received a certificate, dated the Initial Funding Date and signed by the president, a vice president or Financial Officer of the Borrower, confirming compliance with the conditions contained in clauses (A) and (B) above.
          (i) The Index Debt and the corporate ratings of the Borrower shall be rated at least “BBB-”, which rating may be subject to a “negative outlook” from S&P but not subject to “negative watch” or “development” and “Baa3” from Moody’s, which rating shall be stable and not subject to “negative watch”, “negative outlook” or “development”;
          (j) The Borrower has received (i) proceeds from the issuance of the Senior Notes or from borrowings under the Bridge Loan Agreement of at least $2,000,000,000 (less transaction costs and original issue discount incurred in connection therewith) or (ii) commitments to fund the Bridge Loan from the Bookrunners subject only to the satisfaction of conditions substantially similar to those set forth in Section 4.03 of this Agreement;

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          (k) Each of the Bookrunners shall have received and be satisfied with (i) the audited combined financial statements of the Borrower for the fiscal year ending December 31, 2007, which such audited financial statements may exclude (A) guarantor/non-guarantor financial information and (B) quarterly financial information for completed fiscal periods (it being understood that the financial information for the fiscal years ending December 31, 2006 and January 1, 2006 presented with the financial information for the fiscal year ending December 31, 2007 will be the same in all material respects as that contained in the Registration Statement) (the “ Audited Financial Statements ”) and (ii) unaudited pro forma combined balance sheets of the Borrower and its Subsidiaries as of December 31, 2007 and unaudited pro forma statement of operations for the fiscal year ended December 31, 2007, adjusted to give effect to the consummation of the Transactions as if such Transactions, with respect to the pro forma combined balance sheets had occurred on December 31, 2007 and with respect to the pro forma statement of operations had occurred on January 1, 2007, to the extent permitted under Regulation S-X and related SEC and other applicable guidance (together, the “ Pro Forma Financial Statements ”). The Audited Financial Statements shall be prepared, in all material respects in accordance with GAAP and with Regulation S-X and the Pro-Forma Financial Statements shall be prepared, in all material respects in accordance with Regulation S-X and related SEC and other applicable guidance and based on assumptions which are reasonably set forth therein. The Bookrunners shall be deemed to be satisfied with the Audited Financial Statements if no Bookrunner shall have contacted the Borrower indicating such Bookrunner is not satisfied with the Audited Financial Statements within three (3) Business Days following delivery of the Audited Financial Statements. Following the delivery of the Audited Financial Statements, the Borrower shall provide the Bookrunners with an opportunity, by telephone or otherwise, to conduct customary auditor due diligence with representatives of the Borrower during which representatives of Deloitte & Touche LLP will be present (in person or by telephone) and participate in a customary manner, the result of which the Bookrunners shall be satisfied with. Each of the Bookrunners agrees to have its representatives available for the auditor due diligence promptly following the delivery of the Audited Financial Statements and each of the Bookrunners agrees to not unreasonably delay the completion of the auditor due diligence. The Bookrunners shall be deemed to be satisfied with the auditor due diligence if no Bookrunner shall have contacted the Borrower indicating such Bookrunner is not satisfied with the results of the auditor due diligence within two (2) Business Days following completion of the auditor due diligence; and
          (l) The Administrative Agent shall have received all fees and other amounts due and payable on or prior to the Initial Funding Date, including, to the extent invoiced, reimbursement or payment of all out-of-pocket expenses (including reasonable fees and expenses of counsel) required to be reimbursed or paid by the Borrower hereunder.
Notwithstanding the foregoing, the obligations of the Lenders to make the Term Loans shall not become effective unless each of the foregoing conditions is satisfied (or waived pursuant to Section 9.02) at or prior to 3:00 p.m., New York City time, on the Early Commitment Termination Date (and, in the event such conditions are not so satisfied or waived, the Commitments shall terminate at such time). Notwithstanding any other provision of this Agreement, the only condition precedent to the making of the Loans on the Initial Funding Date are those set forth in this Section 4.02. Notwithstanding any other provision of this Agreement, the only conditions precedent to the depositing of the Term Loans into the Collateral Account on the Initial Funding Date are those set forth in this Section 4.02 and, if such conditions are satisfied, no additional conditions, including without limitation the absence of any other breaches or defaults under the Loan Documents or the making of any other representations under the Loan Documents or the Separation Documents, shall be a condition precedent to the depositing of the Term Loans into the Collateral Account on the Initial Funding Date.
          SECTION 4.03. Conditions to Transaction Closing Date . The obligation of the Administrative Agent (i) to release the funds deposited into the Collateral Account pursuant to Section

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4.02 (if applicable) and (ii) to apply the proceeds of the Term Loans for the purposes specified in Section 5.08(a) shall not become effective until the time and date (such time and date, the “ Transaction Closing Date ”) on which each of the following conditions is satisfied (or waived in accordance with Section 9.02):
          (a) The Initial Funding Date shall have occurred or shall occur on the Transaction Closing Date;
          (b) (A) The representations and warranties set forth in Section 3.14 shall be true and correct on and as of such date, and, with respect to each of the Guarantors becoming party to the Guaranty after the Initial Funding Date and on or prior to the Transaction Closing Date, each of the representations and warranties set forth in Sections 3.01(a), 3.02, 3.03(a), 303(b) and 3.08 applicable to such Guarantors shall be true and correct in all material respects on and as of the Transaction Closing Date; (B) at the time of and immediately after giving effect to the consummation of the Transactions on the Transaction Closing Date, no Default specified under clause (h) (other than an Immaterial Insolvency Event) or clause (i) of Article VII shall have occurred and be continuing with respect to the Borrower or a Guarantor and (C) the Administrative Agent shall have received a certificate, dated the Transaction Closing Date and signed by the president, a vice president or Financial Officer of the Borrower, confirming compliance with the conditions contained in clauses (A) and (B) above;
          (c) No orders, judgments or decrees of any governmental entity, enjoining or prohibiting the consummation of the Financing Transactions shall have been issued and remain outstanding on the Transaction Closing Date;
          (d) The Index Debt and the corporate ratings of the Borrower are rated “BBB-” or higher from S&P which rating may be subject to “negative outlook” but not subject to “negative watch” or “development” and “Baa3” or higher from Moody’s, which rating shall be stable or stable subject to “development” but not subject to “negative watch” or “negative outlook” from the Initial Funding Date through April 30, 2008; and
          (e) There shall have occurred a period of at least five (5) consecutive Business Days prior to the Transaction Closing Date commencing on the later of (i) the date which the SEC confirms it is prepared to declare the Registration Statement effective and (ii) the date the Borrower has furnished to the Administrative Agent an Offering Memorandum.
          (f) The Administrative Agent shall have received a Guaranty, duly executed by each Material Subsidiary that is not an Excluded Subsidiary, together with (i) a copy of the articles or certificate of incorporation (or equivalent organizational document) of such Material Subsidiaries, certified as of a recent date by the Secretary of State of the state of organization of each such Material Subsidiary, together with certificates of such official attesting to the good standing of such Material Subsidiaries, (ii) a certificate of the Secretary or an Assistant Secretary of each such Material Subsidiary certifying (A) the names and true signatures of each officer of such Material Subsidiary that has been authorized to execute and deliver the Guaranty or other document required hereunder to be executed and delivered by or on behalf of such Material Subsidiary, (B) the by-laws (or equivalent organizational document) of such Material Subsidiary as in effect on the date of such certification, (C) the resolutions of such Material Subsidiary’s board of directors approving and authorizing the execution, delivery and performance of the Guaranty, and (D) that there have been no changes in the certificate of incorporation (or equivalent organizational document) of such Material Subsidiary from the certificate of incorporation (or equivalent organizational document) delivered pursuant to clause (i) above and (iii) a favorable written opinion (addressed to the Administrative Agent and the Lenders and dated the Transaction Closing Date) of Shearman & Sterling LLP, counsel for the such Material Subsidiaries, and/or local

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counsel in the jurisdiction of such Material Subsidiaries’ formations, collectively, covering such matters with respect to each Guarantor as are contemplated in the form of opinion attached as Exhibit B (with reasonable variation to account for local law and opinion practice).
Notwithstanding the foregoing, the obligations of the Administrative Agent to release proceeds of the Term Loans deposited in the Collateral Account or, if the Initial Funding Date has not occurred, to apply the proceeds of the Term Loans directly as contemplated in Section 5.08(a), shall not become effective unless each of the foregoing conditions is satisfied (or waived pursuant to Section 9.02) at or prior to 3:00 p.m., New York City time, on the Early Commitment Termination Date (and, in the event such conditions are not so satisfied or waived, the funds on deposit in the Collateral Account shall be applied towards the repayment of the Obligations in accordance with Section 2.10(c) and all of the Commitments shall terminate at such time). Notwithstanding any other provision of this Agreement, the only conditions precedent to the making of Loans or the release of Loans from the Collateral Account on the Transaction Closing Date are those set forth in this Section 4.03 and, if such conditions are satisfied, no additional conditions, including without limitation the absence of any other breaches or defaults or the making of any other representation under the Loan Documents or the Separation Documents, shall be a condition precedent to the release of Loans from the Collateral Account on the Transaction Closing Date.
          SECTION 4.04. Conditions to Each Credit Event After the Transaction Closing Date . The several obligations of each Lender, including the Swingline Lender, to make a Loan on the occasion of any Borrowing after the Transaction Closing Date and of the Issuing Bank to issue, amend, renew or extend any Letter of Credit after the Transaction Closing Date (each a “ Credit Event ”), is subject to the satisfaction of the following conditions:
          (a) With respect to any Loan, the Administrative Agent shall have received a duly executed Borrowing Request (or, in the case of Swing Loans, a duly executed notice in compliance with Section 2.03(c)), and, with respect to any Letter of Credit, the Administrative Agent and the Issuing Bank shall have received a duly executed Letter of Credit request in compliance with Section 2.04(a) hereof or, in each case, such other notice or request satisfactory to the Administrative Agent;
          (b) The representations and warranties set forth in this Agreement (other than, in the case of a Qualified CP Draw, those contained in Sections 3.04(b) and 3.06) and in the other Loan Documents shall be true and correct in all material respects on and as of the date of such Borrowing or the date of issuance, amendment, renewal or extension of such Letter of Credit, as applicable; provided , however , that, the representations and warranties contained in Sections 3.09, 3.10 and 3.13 shall only be made on the first Credit Event following the Transaction Closing Date; and
          (c) At the time of and immediately after giving effect to such Borrowing or the issuance, amendment, renewal or extension of such Letter of Credit, as applicable, no Default shall have occurred and be continuing.
After the Transaction Closing Date, each Borrowing and each issuance, amendment, renewal or extension of a Letter of Credit shall be deemed to constitute a representation and warranty by the Borrower on the date thereof as to the matters specified in paragraphs (b) and (c) of this Section 4.04.
ARTICLE V
Affirmative Covenants

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          Until the Commitments have expired or been terminated and the principal of and interest on each Loan and all fees payable hereunder shall have been paid in full and all Letters of Credit shall have expired or terminated and all LC Disbursements shall have been reimbursed, the Borrower covenants and agrees with the Lenders that (it being understood that, for purposes of the covenants made by the Borrower as set forth below, such covenants shall be construed as though the Separation Transactions have been consummated):
          SECTION 5.01. Financial Statements; Ratings Change and Other Information . The Borrower will furnish to the Administrative Agent and each Lender:
          (a) on or before the date on which such financial statements are required to be filed with the SEC (after giving effect to any permitted extensions) or, if such financial statements are not required to be filed with the SEC, on or before the date that is ninety (90) days after the end of each such fiscal year, its audited consolidated balance sheet and related statements of operations, stockholders’ equity and cash flows as of the end of and for such year, all certified by Deloitte & Touche LLP or other independent public accountants of recognized national standing (without a “going concern” or like qualification or exception and without any qualification or exception as to the scope of such audit) to the effect that such consolidated financial statements present fairly in all material respects the financial condition and results of operations of the Borrower and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP;
          (b) on or before the date on which such financial statements are required to be filed with the SEC (after giving effect to any permitted extensions) with respect to each of the first three quarterly accounting periods in each fiscal year of the Borrower or, if such financial statements are not required to be filed with the SEC, on or before the date that is forty-five (45) days after the end of each such quarterly accounting period, its consolidated balance sheet and related statements of operations, stockholders’ equity and cash flows as of the end of and for such fiscal quarter and the elapsed portion of the fiscal year ended with the last day of such quarterly period, setting forth in each case in comparative form the figures for the corresponding period or periods of (or, in the case of the balance sheet, as of the end of) the previous fiscal year, all certified by one of its Financial Officers as presenting fairly in all material respects the financial condition and results of operations of the Borrower and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP, subject to normal year-end audit adjustments and the absence of footnotes;
          (c) concurrently with any delivery of financial statements under clause (a) or (b) above, a certificate of a Financial Officer of the Borrower (i) certifying as to whether a Default has occurred and, if a Default has occurred, specifying the details thereof and any action taken or proposed to be taken with respect thereto, (ii) setting forth reasonably detailed calculations demonstrating compliance with Section 6.05 and (iii) stating whether any change in GAAP or in the application thereof has occurred since the date of the audited financial statements referred to in Section 3.04 and, if any such change has occurred, specifying the effect of such change on the financial statements accompanying such certificate;
          (d) promptly after the same become publicly available, copies of all periodic and other reports, proxy statements and other materials filed by the Borrower or any Material Subsidiary with the SEC, or with any national securities exchange, or distributed by the Borrower to its shareholders generally, as the case may be;
          (e) promptly after Moody’s or S&P shall have announced a change in the rating established or deemed to have been established for the Index Debt or the corporate rating of the Borrower, written notice of such rating change;

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          (f) promptly following any request therefor, such other information regarding the operations, business affairs and financial condition of the Borrower or any Subsidiary, or compliance with the terms of this Agreement, as the Administrative Agent or any Lender may reasonably request.
Information required to be delivered pursuant to subsections (a), (b) and (d) of this Section 5.01 shall be deemed to have been delivered if such information, or one or more annual or quarterly or other reports or proxy statements containing such information shall have been posted and available on the website of the SEC at http://www.sec.gov (and a confirming electronic correspondence is delivered or caused to be delivered by the Borrower to the Administrative Agent providing notice of such availability).
          SECTION 5.02. Notices of Material Events . The Borrower will furnish to the Administrative Agent and each Lender prompt written notice of the following:
          (a) the Borrower having knowledge of any Default; and
          (b) the Borrower having knowledge of the filing or commencement of any action, suit or proceeding by or before any arbitrator or Governmental Authority against or affecting the Borrower or any Subsidiary that, if adversely determined, could reasonably be expected to have a Material Adverse Effect.
Each notice delivered under this Section shall be accompanied by a statement of a Financial Officer or other executive officer of the Borrower setting forth the details of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto.
          SECTION 5.03. Existence; Conduct of Business . The Borrower will, and will cause each of its Material Subsidiaries and any Loan Party to, do or cause to be done all things necessary to preserve, renew and keep in full force and effect (a) its legal existence and (b) the rights, licenses, permits, privileges and franchises material to the conduct of its business; except in the case of clause (b), to the extent that failure to do so, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect; provided that the foregoing shall not prohibit any merger, consolidation, liquidation or dissolution permitted under Section 6.03 or any of the Separation Transactions.
          SECTION 5.04. Payment of Obligations . The Borrower will, and will cause each of its Material Subsidiaries and any Loan Party to pay its Tax liabilities, that, if not paid, could reasonably be expected to have a Material Adverse Effect before the same shall become delinquent or in default, except where (a) the validity or amount thereof is being contested in good faith by appropriate proceedings and (b) the Borrower or such Subsidiary or such Loan Party has set aside on its books adequate reserves with respect thereto in accordance with GAAP.
          SECTION 5.05. Maintenance of Properties; Insurance . The Borrower will, and will cause each of its Material Subsidiaries and any Loan Party to, (a) keep and maintain all property material to the conduct of its business in good working order and condition, ordinary wear and tear excepted, and (b) maintain, with financially sound and reputable insurance companies, insurance (which may include self-insurance and co-insurance) in such amounts and against such risks as are customarily maintained by companies engaged in the same or similar businesses operating in the same or similar locations, except in the case of clauses (a) and (b), to the extent that the failure to do so could not, based upon the facts and circumstances existing at the time, reasonably be expected to have a Material Adverse Effect.
          SECTION 5.06. Books and Records; Inspection Rights . The Borrower will, and will cause each of its Subsidiaries to, keep proper books of record and account in which full, true and correct (in all material respects) entries are made of all dealings and transactions in relation to its business and

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activities, to the extent required by GAAP. The Borrower will, and will cause each of its Subsidiaries to, permit any representatives designated by the Administrative Agent or any Lender, upon reasonable prior notice, to visit and inspect its properties, to examine and make extracts from its books and records, and to discuss its affairs, finances and condition with its officers and independent accountants, all at such reasonable times during normal business hours; provided that, unless an Event of Default shall have occurred and be continuing, only one (1) visit shall be permitted during any calendar year. The Administrative Agent and the Lenders shall give the Borrower the opportunity to participate in any discussions with the Borrower’s independent public accountants. Notwithstanding anything to the contrary in this Section 5.06, none of the Borrower or any of its Subsidiaries will be required to disclose, permit the inspection, examination or making copies or abstracts of, or discussion of, any document, information or other matter that (i) constitutes non-financial trade secrets or non-financial proprietary information, (ii) in respect of which disclosure to the Administrative Agent or any Lender (or their respective representatives) is prohibited by Law or (iii) is subject to attorney-client or similar privilege or constitutes attorney work product.
          SECTION 5.07. Compliance with Laws . The Borrower will, and will cause each of its Subsidiaries to, comply with all laws (including ERISA and Environmental Laws), rules, regulations and orders of any Governmental Authority applicable to it or its property, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.
          SECTION 5.08. Use of Proceeds . The Borrower (and to the extent distributed to them by the Borrower, each Loan Party) shall use the entire amount of the proceeds of the Loans (a) on the Transaction Closing Date, solely to consummate the Transactions in a manner consistent with the Registration Statement and in all material respects with the Separation Documents, including retaining at least $100,000,000 in unrestricted cash on its consolidated balance sheet after giving effect to the Transactions and (b) thereafter, for working capital and general corporate purposes. No part of the proceeds of any Loan will be used, whether directly or indirectly, for any purpose that entails a violation of any of the Regulations of the Board, including Regulations U and X.
          SECTION 5.09. Additional Guarantors . To the extent not delivered to the Administrative Agent on or before the Transaction Closing Date (including Persons that become Material Subsidiaries of the Borrower after the Transaction Closing Date), the Borrower agrees promptly to do, or cause each Material Subsidiary (other than any Excluded Subsidiary) of the Borrower to, unless otherwise agreed by the Administrative Agent, deliver to the Administrative Agent such duly executed supplements and amendments to the Guaranty, in each case in form and substance reasonably satisfactory to the Administrative Agent and as the Administrative Agent deems necessary or advisable in order to ensure that each Material Subsidiary (other than any Excluded Subsidiary) of the Borrower guaranties, as primary obligor and not as surety, the full and punctual payment when due of the Obligations or any part thereof and to take such other actions necessary or advisable to ensure the validity or continuing validity of such guaranties as may be required by law or as may be reasonably requested by the Administrative Agent and, if requested by the Administrative Agent, deliver to the Administrative Agent legal opinions relating to such guaranties, which opinions shall be in form and substance, and from counsel, reasonably satisfactory to the Administrative Agent.
          SECTION 5.10. Ratings . The Borrower will use commercially reasonably efforts to maintain corporate ratings and ratings in respect of the Index Debt from both Moody’s and S&P.

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ARTICLE VI
Negative Covenants
          Until the Commitments have expired or terminated and the principal of and interest on each Loan and all fees payable hereunder have been paid in full and all Letters of Credit have expired or terminated and all LC Disbursements shall have been reimbursed, the Borrower covenants and agrees with the Lenders that (it being understood that, for purposes of the covenants made by the Borrower as set forth below, such covenants shall be construed as though the Separation Transactions have been consummated and shall not in any way prohibit the consummation of the Separation Transactions):
          SECTION 6.01. Liens . The Borrower will not, and will not permit any Subsidiary to, create, incur, assume or permit to exist any Lien on any property or asset now owned or hereafter acquired by it, or assign or sell any income or revenues (including accounts receivable) or rights in respect of any thereof, except:
          (a) Permitted Encumbrances;
          (b) any Lien on any property or asset of the Borrower or any Subsidiary existing on the date hereof (with all such Liens securing Indebtedness of any Loan Party for borrowed money being set forth in Schedule 6.01); provided that (i) such Lien shall not apply to any other property or asset of the Borrower or any Subsidiary (other than the proceeds or products of the property or asset originally subject to such Lien) and (ii) such Lien shall secure only those obligations which it secures on the date hereof and extensions, renewals and replacements thereof that do not increase the outstanding principal amount thereof;
          (c) Liens of any Subsidiary in favor of any Loan Party;
          (d) Liens securing Indebtedness outstanding in a principal amount not in excess of $100,000,000 consisting of capital leases or purchase money obligations provided that such Liens do not encumber any property other than property financed by such Indebtedness or subject to such capital lease;
          (e) Liens on the assets of any Foreign Subsidiary; provided that to the extent such Liens secure Indebtedness, such Indebtedness is permitted under Section 6.08; and
          (f) Liens not otherwise permitted by clauses (a) through (d) above securing obligations, the aggregate outstanding principal amount of which as of the date of any incurrence thereof shall not exceed (together with all Indebtedness of Subsidiaries that are not Guarantors permitted pursuant to Section 6.08) 10% of the Consolidated Net Tangible Assets of the Borrower as of such date; provided that no Lien permitted pursuant to this clause (e) shall encumber any Material Intellectual Property.
          SECTION 6.02. Fundamental Changes . (a) The Borrower will not, and will not permit any Subsidiary to, merge into or consolidate with any other Person, or permit any other Person to merge into or consolidate with it, or sell, transfer, lease or otherwise dispose of (in one transaction or in a series of transactions) all or substantially all of the assets of the Loan Parties, taken as a whole, or the Borrower and its Subsidiaries taken as a whole (in each case, whether now owned or hereafter acquired), or liquidate or dissolve, except that, if at the time thereof and immediately after giving effect thereto no Default shall have occurred and be continuing (i) any Person may merge into the Borrower in a transaction in which the Borrower is the surviving corporation, (ii) any Subsidiary may merge into any Subsidiary in a transaction in which the surviving entity is a Subsidiary, (iii) any Subsidiary may sell, transfer, lease or otherwise dispose of its assets to any Subsidiary; provided that any sale, transfer, lease

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or other disposition to any Subsidiary that is not a Guarantor shall not be prohibited by Section 6.03(c), (iv) any Subsidiary may liquidate or dissolve if the Borrower determines in good faith that such liquidation or dissolution is in the best interests of the Borrower and is not materially disadvantageous to the Lenders.
          (b) The Borrower will not, and will not permit any of its Subsidiaries to, engage to any material extent in any business other than businesses of the type conducted by the Borrower and its Subsidiaries on the date of execution of this Agreement and businesses reasonably related thereto.
          SECTION 6.03. Investments, Loans, Advances, Guarantees and Acquisitions . The Borrower will not, and will not permit any of its Subsidiaries to, purchase, hold or acquire (including pursuant to any merger with any Person that was not a wholly owned Subsidiary prior to such merger) any capital stock, evidences of indebtedness or other securities (including any option, warrant or other right to acquire any of the foregoing) of, make or permit to exist any loans or advances to, Guarantee any obligations of, or make or permit to exist any investment or any other interest in, any other Person, or purchase or otherwise acquire (in one transaction or a series of transactions) any assets of any other Person constituting a business unit (“ Investments ”), except:
          (a) cash and Permitted Investments;
          (b) Investments existing on the date hereof and any modification, replacement, renewal, reinvestment or extension thereof;
          (c) loans or advances or other Investments made by (i) any Loan Party to any other Loan Party, (ii) by any Subsidiary that is not a Loan Party to the Borrower or any other Subsidiary and (iii) by any Loan Party to a Subsidiary that is not a Loan Party in an aggregate amount outstanding not to exceed $100,000,000;
          (d) Investments consisting of intercompany cash balances among the Borrower and its Subsidiaries in connection with liquidity management in the ordinary course of business;
          (e) loans or advances to officers, directors and employees of the Borrower or the Subsidiaries (i) for reasonable and customary business-related travel, entertainment, relocation and analogous ordinary business purposes, (ii) in connection with such Person’s purchase of equity interests of the Borrower and the Subsidiaries and (iii) for purposes not described in the foregoing clauses (i) and (ii), to the extent permitted by law, in an aggregate principal amount outstanding not to exceed $5,000,000;
          (f) Investments in Swap Agreements;
          (g) Investments held by a Subsidiary acquired after the date hereof or of a corporation merged or consolidated with a Subsidiary in accordance with Section 6.02 after the date hereof to the extent that such investments were not made in contemplation of or in connection with such acquisition, merger or consolidation and were in existence on the date of such acquisition, merger or consolidation;
          (h) Permitted Acquisitions; provided that, any Permitted Acquisition by any Loan Party of assets located outside of the United States (or any Investment by a Loan Party in a subsidiary that is not a Guarantor for the purpose of consummating a Permitted Acquisition) shall only be permitted if the Investment in such Permitted Acquisition is otherwise permitted pursuant to clause (i) below; and

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          (i) Permitted Acquisitions not permitted pursuant to clause (g) above and other Investments in an aggregate amount not exceed 15% of the Consolidated Net Tangible Assets of the Borrower as of such date, net of any return representing return of capital or repayment of Indebtedness in respect of any such investment made pursuant to this clause (h) and valued at the time of the making thereof.
Notwithstanding anything to herein to the contrary, in the event that (i) Consolidated Total Debt of the Borrower as of the last day of any fiscal quarter for which financial statements have been delivered to the Administrative Agent pursuant to clause (a) or (b), as applicable, of Section 5.01 to (ii) Consolidated EBITDA of the Borrower for the last four fiscal quarters ending on the last day of such fiscal quarter is less than 3.25:1, then the covenant set for in this Section 6.03 shall cease to be of any further force and effect.
          SECTION 6.04. Financial Covenants .
          (a) Leverage . The Borrower will not permit the ratio of (i) Consolidated Total Debt of the Borrower as of the last day of any fiscal quarter ending during any period set forth below to (ii) Consolidated EBITDA of the Borrower for the last four fiscal quarters ending on the last day of such fiscal quarter to be greater than the ratio set forth below opposite such period:
         
PERIOD   MAXIMUM LEVERAGE RATIO
 
       
The Initial Funding date through June 30, 2009
    3.75 to 1  
 
       
July 1, 2009 through December 31, 2009
    3.50 to 1  
 
       
January 1, 2010 through December 31, 2010
    3.25 to 1  
 
       
January 1, 2011 through the latest Maturity Date of the Facilities
    3.00 to 1  
          (b) Interest Coverage . The Borrower shall not permit the ratio of (i) Consolidated EBITDA of the Borrower for any four fiscal quarter period ending on or after June 30, 2008 to (ii) Consolidated Cash Interest Expense of the Borrower for such period to be less than 3.25 to 1.
          SECTION 6.05. Transactions with Affiliates . The Borrower will not, and will not permit any of its Subsidiaries to, sell, lease or otherwise transfer any property or assets to, or purchase, lease or otherwise acquire any property or assets from, or otherwise engage in any other transactions with, any of its Affiliates, except (a) in the ordinary course of business at prices and on terms and conditions not less favorable to the Borrower or such Subsidiary than could be obtained on an arm’s-length basis from unrelated third parties, (b) compensation to employees, officers, directors or consultants in the ordinary course of business and reimbursement of directors’ and officers’ expenses and payment of directors’ and officers’ indemnities, and (c) transactions between or among the Borrower and any Subsidiary.
          SECTION 6.06. Restrictive Agreements . The Borrower will not, and will not permit any of its Subsidiaries to, directly or indirectly, enter into, incur or permit to exist any agreement or other arrangement (other than the Bridge Loan Agreement) that prohibits, restricts or imposes any condition

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upon (a) the ability of the Borrower or any Subsidiary to create, incur or permit to exist any Lien upon any of its property or assets, or (b) the ability of any Subsidiary to pay dividends or other distributions with respect to any shares of its capital stock or to make or repay loans or advances to the Borrower or any other Subsidiary or to guarantee Indebtedness of the Borrower or any other Subsidiary; provided that (i) the foregoing shall not apply to restrictions and conditions imposed by law or by this Agreement, (ii) the foregoing shall not apply to restrictions and conditions existing on the Initial Funding Date identified on Schedule 6.06 delivered on or prior to the Initial Funding Date (but shall apply to any extension or renewal of, or any amendment or modification expanding the scope of, any such restriction or condition) or at the time any Subsidiary becomes a Subsidiary of the Borrower, so long as such agreement was not entered into solely in contemplation of such Person becoming a Subsidiary of the Borrower, (iii) the foregoing shall not apply to customary restrictions and conditions contained in agreements relating to the sale of a Subsidiary pending such sale, provided such restrictions and conditions apply only to the Subsidiary that is to be sold, (iv) clause (a) of the foregoing shall not apply to restrictions or conditions imposed by any agreement relating to secured Indebtedness permitted by this Agreement if such restrictions or conditions apply only to the property or assets securing such Indebtedness or to any agreement evidencing Indebtedness if such restriction is no more restrictive than the provisions of Section 6.01 of this Agreement, (v) the foregoing shall not apply to customary anti-assignment provisions in contracts restricting the assignment thereof (including customary provisions in leases restricting assignability or subleasing), (vii) the foregoing shall not apply to restrictions under any documents relating to the formation of any non-wholly-owned Subsidiary, (viii) clause (a) of the foregoing shall not apply in the case of any Subsidiary of the Borrower that is not a Guarantor, to restrictions or conditions imposed by any agreement evidencing Indebtedness that is permitted by Section 6.07 of this Agreement and (ix) the foregoing shall not apply to licenses or contracts which by the terms of such licenses and contracts prohibits the granting of Liens on the rights contained therein.
          SECTION 6.07. Subsidiary Indebtedness . The Borrower will not permit the aggregate principal amount of Indebtedness of Subsidiaries that are not Guarantors (excluding any Indebtedness of such Subsidiary owed to the Borrower or another Subsidiary, but including any Guarantee by such Subsidiary of Indebtedness of the Borrower) at any time to exceed (together with all secured obligations permitted pursuant to Section 6.01(f)) 10% of the Consolidated Net Tangible Assets of the Borrower as of such date; provided however, that nothing in this Section 6.07 shall prohibit intercompany Indebtedness of Subsidiaries to the extent outstanding prior to the Transaction Closing Date.
ARTICLE VII
Events of Default
          If any of the following events (“ Events of Default ”) shall occur:
          (a) the Borrower shall fail to pay any principal of any Loan or any reimbursement obligation in respect of any LC Disbursement when and as the same shall become due and payable, whether at the due date thereof or at a date fixed for prepayment thereof or otherwise;
          (b) the Borrower shall fail to pay any interest on any Loan or any fee or any other amount (other than an amount referred to in clause (a) of this Article) payable under this Agreement, when and as the same shall become due and payable, and such failure shall continue unremedied for a period of five (5) Business Days;
          (c) any representation or warranty made or deemed made by or on behalf of the Borrower or any Loan Party in or in connection with this Agreement or in any report, certificate, financial

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statement or other document furnished pursuant to or in connection with this Agreement or any amendment or modification hereof or waiver hereunder, shall prove to have been incorrect in any material respect when made or deemed made;
          (d) the Borrower shall fail to observe or perform any covenant, condition or agreement contained in Sections 5.02(a), 5.03 (with respect to the Borrower’s existence) or 5.08 or in Article VI;
          (e) the Borrower or any Loan Party shall fail to observe or perform any covenant, condition or agreement contained in this Agreement (other than those specified in clause (a), (b) or (d) of this Article) or the other Loan Documents, and such failure shall continue unremedied for a period of thirty (30) days after the earlier of (i) the day a Financial Officer of the Borrower first has knowledge of such failure and (ii) the Administrative Agent giving notice thereof to the Borrower (which notice will be given at the request of any Lender);
          (f) the Borrower or any Material Subsidiary shall fail to make any payment (whether of principal or interest and regardless of amount) in respect of any Material Indebtedness, when and as the same shall become due and payable, and such failure shall continue after any applicable grace period;
          (g) any event or condition occurs that results in any Material Indebtedness becoming due prior to its scheduled maturity or that enables or permits (with or without the giving of notice, the lapse of time or both) the holder or holders of any Material Indebtedness or any trustee or agent on its or their behalf to cause any Material Indebtedness to become due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity; provided that this clause (g) shall not apply to secured Indebtedness that becomes due as a result of the voluntary sale or transfer of the property or assets securing such Indebtedness or mandatory prepayments required by Section 2.10(d) of the Bridge Loan Agreement;
          (h) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (i) liquidation, reorganization or other relief in respect of the Borrower or any Material Subsidiary or its debts, or of a substantial part of its assets, under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect or (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Borrower or any Material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered;
          (i) the Borrower or any Material Subsidiary shall (i) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (h) of this Article, (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Borrower or any Material Subsidiary or for a substantial part of its assets, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors or (vi) take any action for the purpose of effecting any of the foregoing;
          (j) the Borrower or any Material Subsidiary shall become unable, admit in writing its inability or fail generally to pay its debts as they become due;

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          (k) one or more judgments for the payment of money in an aggregate amount in excess of the Minimum Threshold (to the extent not covered by independent third-party insurance as to which the insurer has been notified of such judgment and has not denied coverage thereof) shall be entered against the Borrower, any Loan Party or any Material Subsidiary and the same shall remain undischarged for a period of forty-five (45) consecutive days during which execution shall not be effectively stayed, or any action shall be legally taken by a judgment creditor to attach or levy upon any assets of the Borrower, such Loan Party or such Material Subsidiary to enforce any such judgment;
          (l) an ERISA Event shall have occurred that results in liability of the Borrower, any Loan Party or any Material Subsidiary in an aggregate amount which could reasonably be expected to have a Material Adverse Effect;
          (m) a Change in Control shall occur; or
          (n) any Loan Document shall cease to be valid and enforceable against any Loan Party thereto, or any Loan Party shall so assert in writing;
then, and during the continuance of any Event of Default (other than an event with respect to the Borrower described in clauses (h) or (i) of this Article), and at any time thereafter during the continuance of such event, the Administrative Agent may, and at the request of the Required Lenders shall, by notice to the Borrower, take either or both of the following actions, at the same or different times: (i) terminate the Commitments, and thereupon the Commitments shall terminate immediately, and (ii) declare the Loans then outstanding to be due and payable in whole (or in part, in which case any principal not so declared to be due and payable may thereafter be declared to be due and payable), and thereupon the principal of the Loans so declared to be due and payable, together with accrued interest thereon and all fees and other obligations of the Borrower accrued hereunder, shall become due and payable immediately, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower; and in case of any Event of Default with respect to the Borrower described in clauses (h) or (i) of this Article, the Commitments shall automatically terminate and the principal of the Loans then outstanding, together with accrued interest thereon and all fees and other obligations of the Borrower accrued hereunder, shall automatically become due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower. Notwithstanding the foregoing, in the event any Event of Default (other than an Event of Default described in clause (h) or (i) above that is not an Immaterial Insolvency Event) occurs and is continuing during the period after the Initial Funding Date and through the Transaction Closing Date, then the rights of the Administrative Agent to take the actions described pursuant to clauses (i) and (ii) above shall be suspended until after the Transaction Closing Date has occurred.
ARTICLE VIII
The Administrative Agent; the Agents and the Collateral Account
          SECTION 8.01. The Administrative Agent; the Agents . (a) Each of the Lenders and the Issuing Bank hereby irrevocably appoints the Administrative Agent as its agent and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof, together with such actions and powers as are reasonably incidental thereto.
          (b) The bank serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent, and such bank and its Affiliates may accept deposits from, lend

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money to and generally engage in any kind of business with the Borrower or any Subsidiary or other Affiliate thereof as if it were not the Administrative Agent hereunder.
          (c) The Administrative Agent shall not have any duties or obligations except those expressly set forth herein. Without limiting the generality of the foregoing, (a) the Administrative Agent shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing, (b) the Administrative Agent shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby that the Administrative Agent is required to exercise in writing as directed by the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 9.02), and (c) except as expressly set forth herein, the Administrative Agent shall not have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower or any of its Subsidiaries that is communicated to or obtained by the bank serving as Administrative Agent or any of its Affiliates in any capacity. The Administrative Agent shall not be liable for any action taken or not taken by it with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 9.02) or in the absence of its own gross negligence or willful misconduct. The Administrative Agent shall be deemed not to have knowledge of any Default unless and until written notice thereof is given to the Administrative Agent by the Borrower or a Lender, and the Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement, (ii) the contents of any certificate, report or other document delivered hereunder or in connection herewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement or any other agreement, instrument or document, or (v) the satisfaction of any condition set forth in Article IV or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.
          (d) The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing believed by it to be genuine and to have been signed or sent by the proper Person. The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to be made by the proper Person, and shall not incur any liability for relying thereon. The Administrative Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.
          (e) The Administrative Agent may perform any and all its duties and exercise its rights and powers by or through any one or more sub-agents appointed by the Administrative Agent. The Administrative Agent and any such sub-agent may perform any and all its duties and exercise its rights and powers through their respective Related Parties. The exculpatory provisions of the preceding paragraphs shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent.
          (f) Subject to the appointment and acceptance of a successor Administrative Agent as provided in this paragraph, the Administrative Agent may resign at any time by notifying the Lenders, the Issuing Bank and the Borrower. Upon any such resignation, the Required Lenders shall have the right, subject to the consent of the Borrower (unless an Event of Default under clauses (a), (b), (h) or (i) if Article VII has occurred and is continuing), to appoint a successor. If no successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within sixty (60) days after the retiring Administrative Agent gives notice of its resignation, then the retiring Administrative

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Agent may, on behalf of the Lenders and the Issuing Bank, appoint a successor Administrative Agent which shall be a bank with an office in New York, New York, or an Affiliate of any such bank. Upon the acceptance of its appointment as Administrative Agent hereunder by a successor, such successor shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations hereunder. The fees payable by the Borrower to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor. After the Administrative Agent’s resignation hereunder, the provisions of this Article and Section 9.03 shall continue in effect for the benefit of such retiring Administrative Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while it was acting as Administrative Agent.
          (g) Each Lender acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any related agreement or any document furnished hereunder or thereunder.
          (h) Anything herein to the contrary notwithstanding, none of the Agents, the Bookrunners or the Arrangers listed on the cover page hereof shall have any powers, duties or responsibilities under this Agreement or any of the other Loan Documents, except in their capacity, as applicable, as Agent, the Swingline Lender, a Lender or any Issuing Bank hereunder.
          SECTION 8.02. Collateral Account . (a) Each of the Lenders and the Issuing Bank hereby irrevocably appoints the Administrative Agent as its collateral agent in respect of the Collateral Account and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof, together with such actions and powers as are reasonably incidental thereto.
          (b) On or prior to the Initial Funding Date, the Administrative Agent shall establish the Collateral Account. The Collateral Account and all funds and other property therein shall be held in accordance with this Agreement by the Administrative Agent, until released or applied in accordance with the terms hereof.
          (c) The Borrower, as security for the full, prompt and complete payment and performance when due (whether at stated maturity or otherwise by operation of Section 2.10 hereunder, by acceleration or otherwise) of the Obligations, hereby mortgages, pledges and hypothecates to the Administrative Agent for the benefit of the Lenders, and grants to the Administrative Agent for the benefit of the Lenders a lien on and security interest in, all of its right, title and interest in, to and under all funds, cash and any cash equivalents from time to time on deposit or held in the Collateral Account and all proceeds thereof.
          (d) The parties hereto and the Administrative Agent agree: (i) that all items of taxable income or gain realized on the Collateral Account shall be reported as taxable income or gain of the Borrower; (ii) that the Administrative Agent shall issue an IRS Form 1099 (or any successor form) relating to such taxable income or gain to and in the name of the Borrower; and (iii) that the Borrower shall promptly deliver such certificates and other documents as required by applicable regulation and as the Administrative Agent may reasonably request in connection with the foregoing, including, without limitation, a completed, executed Form W-9. The Borrower understands that the failure to provide

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properly completed applicable withholding tax forms may cause the Administrative Agent to become obligated to withhold a portion of any distributions of the Collateral Account pursuant to applicable provisions of the Code. The Administrative Agent shall be responsible only for income reporting to the Internal Revenue Service with respect to income earned on the Collateral Account. The Administrative Agent shall have no other duties or responsibilities with respect to administering tax withholding, payments or reporting for persons receiving distributions pursuant to this Agreement. Notwithstanding the foregoing, the Administrative Agent may report and withhold any taxes as it determines may be required by any law or regulation in effect at the time of the distribution.
          (e) It is understood and agreed that the Administrative Agent shall have no obligation to invest any of the funds in the Collateral Account, provided that all interest and other amounts earned on the deposits shall be deposited in the Collateral Account and only be released and applied in accordance with the terms hereof (including Sections 2.10(c) and 4.03).
          (f) On the Transaction Closing Date, subject only to the satisfaction of the conditions specified in Section 4.03 hereof, the Lenders hereby authorize Administrative Agent to release all funds in the Collateral Account to the Borrower for uses specified in Section 5.08(a); provided however, if the Transaction Closing Date does not occur on or prior to the Early Commitment Termination Date, the Borrower irrevocably instructs the Administrative Agent to apply such funds in the Collateral Account for the prepayment of the Obligations in accordance with Section 2.10(c).
ARTICLE IX
Miscellaneous
          SECTION 9.01. Notices . (a) Except in the case of notices and other communications expressly permitted to be given by telephone (and subject to paragraph (b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopy or, to the extent provided in paragraph (b) below, electronic mail, as follows:
     (i) if to the Borrower, to it at Dr Pepper Snapple Group, Inc. 5301 Legacy Drive, Plano, Texas 75024, Attention of John Stewart, Executive Vice President & Chief Financial Officer (Telecopy No. (972) 673-7879);
     (ii) if to the Administrative Agent, to JPMorgan Chase Bank, Loan and Agency Services Group, 1111 Fannin, 10th Floor, Houston, Texas 77002, Attention of Cherry Arnaez (Telecopy No. (713) 750-2782), with a copy to JPMorgan Chase Bank, 270 Park Avenue, New York 10017, Attention of Barbara R. Marks (Telecopy No. (212) 270-3279);
     (iii) if to the Issuing Bank, to JPMorgan Chase Bank, 270 Park Avenue, New York 10017, Attention of Barbara R. Marks (Telecopy No. (212) 270-3279);
     (iv) if to the Swingline Lender, to JPMorgan Chase Bank, 270 Park Avenue, New York 10017, Attention of Barbara R. Marks (Telecopy No. (212) 270-3279); and
     (v) if to any other Lender, to it at its address (or telecopy number) set forth in its Administrative Questionnaire.

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          (b) Notices and other communications to the Lenders hereunder may be delivered or furnished by electronic communications pursuant to procedures approved by the Administrative Agent; provided that the foregoing shall not apply to notices pursuant to Article II unless otherwise agreed by the Administrative Agent and the applicable Lender. The Administrative Agent or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications.
          (c) Any party hereto may change its address or telecopy number for notices and other communications hereunder by notice to the other parties hereto. All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt.
          (d) NONE OF THE ADMINISTRATIVE AGENT, THE BOOKRUNNERS, THE ISSUING BANKS, ANY OF THE LENDERS, OR ANY RELATED PARTY OF ANY OF THE FOREGOING PERSONS OR ANY OF THEIR OFFICERS, DIRECTORS, PARTNERS, EMPLOYEES, AGENTS, ADVISORS OR REPRESENTATIVES (COLLECTIVELY, THE “ AGENT PARTIES ”) SHALL BE LIABLE FOR ANY DAMAGES ARISING FROM THE USE BY UNINTENDED RECIPIENTS OF ANY INFORMATION OR OTHER MATERIALS DISTRIBUTED BY IT THROUGH TELECOMMUNICATIONS, ELECTRONIC OR OTHER INFORMATION TRANSMISSION SYSTEMS IN CONNECTION WITH THIS AGREEMENT, THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY, AND EACH SUCH PARTY EXPRESSLY DISCLAIMS LIABILITY FOR ERRORS OR OMISSIONS IN SUCH TELECOMMUNICATIONS, ELECTRONIC OR OTHER INFORMATION TRANSMISSION SYSTEMS OR THEREBY, EXCEPT TO THE EXTENT ARISING FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH PARTY IN THE USE OF SUCH SYSTEMS, AS DETERMINED BY A FINAL, NON- APPEALABLE JUDGMENT OF A COURT OF COMPETENT JURISDICTION. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD-PARTY RIGHTS OR FREEDOM FROM VIRUSES OR CODE DEFECTS IS MADE BY THE AGENT PARTIES IN CONNECTION WITH SUCH TELECOMMUNICATIONS, ELECTRONIC OR OTHER INFORMATION TRANSMISSION SYSTEMS.
          SECTION 9.02. Waivers; Amendments . (a) No failure or delay by the Administrative Agent, the Issuing Bank or any Lender in exercising any right or power hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Administrative Agent, the Issuing Bank and the Lenders hereunder are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of this Agreement or consent to any departure by the Borrower therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Loan or issuance of a Letter of Credit shall not be construed as a waiver of any Default, regardless of whether the Administrative Agent, any Lender or the Issuing Bank may have had notice or knowledge of such Default at the time.
          (b) Neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Borrower and the Required Lenders or by the Borrower and the Administrative Agent with the consent of the Required

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Lenders; provided that no such agreement shall (i) increase the Commitment of any Lender without the written consent of such Lender, (ii) reduce the principal amount of any Loan or LC Disbursement or reduce the rate of interest thereon, or reduce any fees payable hereunder, without the written consent of each Lender affected thereby, (iii) postpone the scheduled date of payment of the principal amount of any Loan or LC Disbursement, or any interest thereon, or any fees payable hereunder, or reduce the amount of, waive or excuse any such payment, or postpone the scheduled date of expiration of any Commitment, without the written consent of each Lender affected thereby, (iv) change Section 2.17(b) or (c) in a manner that would alter the pro rata sharing of payments required thereby, without the written consent of each Lender, or (v) change any of the provisions of this Section or the definition of “Required Lenders” or any other provision hereof specifying the number or percentage of Lenders required to waive, amend or modify any rights hereunder or make any determination or grant any consent hereunder, without the written consent of each Lender; provided further that no such agreement shall amend, modify or otherwise affect the rights or duties of the Administrative Agent, the Issuing Bank or the Swingline Lender hereunder without the prior written consent of the Administrative Agent, the Issuing Bank or the Swingline Lender, as the case may be. Notwithstanding the foregoing or any other provision in any Loan Document, the Borrower shall execute any amendment to this Agreement and any other Loan Document to the extent required to comply with the terms of the Fee and Syndication Letter.
          SECTION 9.03. Expenses; Indemnity; Damage Waiver . (a) The Borrower shall pay (i) all reasonable and documented out-of-pocket expenses (including due diligence expenses, syndication expenses, consultant’s fees and expenses, travel expenses, and reasonable fees, charges and disbursements of one counsel and if reasonably required by the Administrative Agent, local counsel or specialist counsel, and, if counsel for the Administrative Agent determines in good faith that there is a conflict of interest that requires separate representation for any Agent, any Bookrunner, the Issuing Bank or any Lender, one additional counsel for each Person subject to such conflict of interest) incurred by the Bookrunners, the Administrative Agent, and their respective Affiliates, in connection with the syndication of the credit facilities provided for herein, the preparation and administration of this Agreement or any amendments, modifications or waivers of the provisions hereof (whether or not the transactions contemplated hereby or thereby shall be consummated), (ii) all reasonable and documented out-of-pocket expenses incurred by the Issuing Bank in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder and (iii) all reasonable and documented out-of-pocket expenses incurred by any Agent, the Bookrunners, the Issuing Bank or any Lender, including the fees, charges and disbursements of any counsel for the Administrative Agent, the Bookrunners, the Issuing Bank or any Lender in connection with the enforcement or protection of its rights in connection with this Agreement, including its rights under this Section, or in connection with the Loans made or Letters of Credit issued hereunder, including all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans or Letters of Credit.
          (b) The Borrower shall indemnify the Administrative Agent, the Bookrunners, the Issuing Bank and each Lender, and each Related Party of any of the foregoing Persons (each such Person being called an “ Indemnitee ”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses, including the fees, charges and disbursements of any counsel for any Indemnitee, incurred by or asserted against any Indemnitee arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement or any agreement or instrument contemplated hereby, the performance by the parties hereto of their respective obligations hereunder or the consummation of the Transactions or any other transactions contemplated hereby, (ii) any Loan or Letter of Credit or the use of the proceeds therefrom (including any refusal by the Issuing Bank to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), (iii) any actual or alleged presence or release of Hazardous Materials on or from any property owned or operated by the Borrower or any of its Subsidiaries, or any Environmental Liability related in any way to the Borrower or any of its Subsidiaries,

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or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the bad faith, gross negligence or willful misconduct of such Indemnitee. To the extent that the undertakings to defend, indemnify, pay and hold harmless as set forth in this Section 9.03(b) may be unenforceable in whole or in part because they are violative of any law or public policy, the Borrower shall contribute the maximum portion that it is permitted to pay and satisfy under applicable law to the payment and satisfaction of all such losses, claims, damages, liabilities and related expenses incurred by the Indemnitees or any of them.
          (c) To the extent that the Borrower fails to pay any amount required to be paid by it to the Administrative Agent, the Bookrunners, the Issuing Bank or the Swingline Lender under paragraph (a) or (b) of this Section, each Lender severally agrees to pay to the Administrative Agent, the Bookrunners, the Issuing Bank or the Swingline Lender, as the case may be, such Lender’s Applicable Percentage with respect to Facilities (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount; provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent, the Bookrunners, the Issuing Bank or the Swingline Lender in its capacity as such.
          (d) To the extent permitted by applicable law, the Borrower shall not assert, and hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement or any agreement or instrument contemplated hereby, the Transactions, any Loan or Letter of Credit or the use of the proceeds thereof.
          SECTION 9.04. Successors and Assigns . (a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby (including any Affiliate of the Issuing Bank that issues any Letter of Credit), except that (i) the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Lender (and any attempted assignment or transfer by the Borrower without such consent shall be null and void) and (ii) no Lender may assign or otherwise transfer its rights or obligations hereunder except in accordance with this Section. Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby (including any Affiliate of the Issuing Bank that issues any Letter of Credit), Participants (to the extent provided in paragraph (c) of this Section) and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent, the Issuing Bank and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.
          (b) (i) Subject to the conditions set forth in paragraph (b)(ii) below, any Lender may assign to one or more assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it) with the prior written consent (such consent not to be unreasonably withheld) of:
     (A) the Borrower; provided that no consent of the Borrower shall be required for an assignment to (i) any Lender, any Affiliate of a Lender, or any Approved Fund, (ii) any assignee at any time prior to the completion of a Successful Syndication (as defined in the Fee and Syndication Letter) except assignments of Revolving Credit Commitments on or prior to the Initial Funding Date to a Person who is not a commercial or investment bank, or (iii) any

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assignee if an Event of Default under clauses (a), (b), (h) or (i) of Article VII has occurred and is continuing;
     (B) the Administrative Agent, provided that no consent of the Administrative Agent shall be required for an assignment of any Commitment to an assignee that is a Lender with a Commitment immediately prior to giving effect to such assignment; and
(ii) Assignments shall be subject to the following additional conditions:
     (A) except in the case of an assignment to a Lender or an Affiliate of a Lender or an assignment of the entire remaining amount of the assigning Lender’s Commitment or Loans of any Class, the amount of the Commitment or Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent) shall not be less than $5,000,000 unless each of the Borrower and the Administrative Agent otherwise consent, provided that no such consent of the Borrower shall be required if an Event of Default under clauses (a), (b), (h) or (i) of Article VII has occurred and is continuing;
     (B) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement, provided that this clause shall not be construed to prohibit the assignment of a proportionate part of all the assigning Lender’s rights and obligations in respect of one Class of Commitments or Loans or to prohibit assignment of a proportionate part of all the assigning Lender’s rights and obligations in respect of one Class of Commitments or Loans;
     (C) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee of $3,500; and
     (D) the assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire in which the assignee designates one or more Credit Contacts to whom all syndicate-level information (which may contain material non-public information about the Borrower and any of it Subsidiaries, and their related parties or their respective securities) will be made available and who may receive such information in accordance with the assignee’s compliance procedures and applicable laws, including Federal and state securities laws.
          For the purposes of this Section 9.04(b), the term “ Approved Fund ” has the following meaning:
Approved Fund ” means any Person (other than a natural person) that is engaged in making, purchasing, holding or investing in bank loans and similar extensions of credit in the ordinary course of its business and that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.
     (i) Subject to acceptance and recording thereof pursuant to paragraph (b)(iv) of this Section, from and after the effective date specified in each Assignment and

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Assumption the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 2.14, 2.15, 2.16 and 9.03) to the extent that any claim thereunder relates to an event arising prior to such assignment. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this Section 9.04 shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with paragraph (c) of this Section.
     (ii) The Administrative Agent, acting for this purpose as an agent of the Borrower, shall maintain at one of its offices a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitment of, and principal amount of the Loans and LC Disbursements and any interest thereon owing to, each Lender pursuant to the terms hereof from time to time (the “ Register ”). The entries in the Register shall be conclusive absent manifest error, and the Borrower, the Administrative Agent, the Issuing Bank and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrower, the Issuing Bank and any Lender, at any reasonable time and from time to time upon reasonable prior notice.
     (iii) Upon its receipt of a duly completed Assignment and Assumption executed by an assigning Lender and an assignee, the assignee’s completed Administrative Questionnaire (unless the assignee shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph (b) of this Section and any written consent to such assignment required by paragraph (b) of this Section, the Administrative Agent shall accept such Assignment and Assumption and record the information contained therein in the Register; provided that if either the assigning Lender or the assignee shall have failed to make any payment required to be made by it pursuant to Sections 2.04(c), 2.05(d) or (e), 2.06(b), 2.17(d) or 9.03(c), the Administrative Agent shall have no obligation to accept such Assignment and Assumption and record the information therein in the Register unless and until such payment shall have been made in full, together with all accrued interest thereon. No assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this paragraph.
          (c) (i) Any Lender may, without the consent of the Borrower, the Administrative Agent, the Issuing Bank or the Swingline Lender, sell participations to one or more banks or other entities (a “ Participant ”) in all or a portion of such Lender’s rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans owing to it); provided that (A) such Lender’s obligations under this Agreement shall remain unchanged, (B) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (C) the Borrower, the Administrative Agent, the Issuing Bank and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any

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amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in the first proviso to Section 9.02(b) that affects such Participant. Subject to paragraph (c)(ii) of this Section, the Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.14, 2.15 and 2.16 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section.
     (ii) A Participant shall not be entitled to receive any greater payment under Section 2.14 or 2.16 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower’s prior written consent. A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 2.16 unless the Borrower is notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Borrower, to comply with Section 2.16(e) as though it were a Lender and in any event shall not be entitled to any greater payment than the applicable Lender that sold such participation to such Participant would have been entitled to receive.
          (d) Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including without limitation any pledge or assignment to secure obligations to a Federal Reserve Bank, and this Section shall not apply to any such pledge or assignment of a security interest; provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.
          SECTION 9.05. Survival . All covenants, agreements, representations and warranties made by the Borrower herein and in the certificates or other instruments delivered in connection with or pursuant to this Agreement shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of this Agreement and the making of any Loans and issuance of any Letters of Credit, regardless of any investigation made by any such other party or on its behalf and notwithstanding that the Administrative Agent, the Issuing Bank or any Lender may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any fee or any other amount payable under this Agreement is outstanding and unpaid or any Letter of Credit is outstanding and so long as the Commitments have not expired or terminated. The provisions of Sections 2.14, 2.15, 2.16 and 9.03 and Article VIII shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment of the Loans, the expiration or termination of the Letters of Credit and the Commitments or the termination of this Agreement of any provision hereof.
          SECTION 9.06. Counterparts; Integration; Effectiveness . This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement, the other Loan Documents and any separate letter agreements with respect to fees payable to the Administrative Agent constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Except as provided in Section 4.01, this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof which, when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. Delivery of an executed counterpart of a signature page of this

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Agreement by telecopy or other electronic communication shall be effective as delivery of a manually executed counterpart of this Agreement.
          SECTION 9.07. Severability . Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.
          SECTION 9.08. Right of Setoff . If an Event of Default shall have occurred and be continuing, each Lender and each of its Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other obligations at any time owing by such Lender or Affiliate to or for the credit or the account of the Borrower against any of and all the obligations of the Borrower now or hereafter existing under this Agreement held by such Lender to the extent then due and owing, irrespective of whether or not such Lender shall have made any demand under this Agreement. Each Lender agrees to notify the Borrower promptly of its exercise of any rights under this Section, but the failure to provide such notice shall not otherwise limit its rights under this Section or result in any liability to such Lender. The rights of each Lender under this Section are in addition to other rights and remedies (including other rights of setoff) which such Lender may have.
          SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of Process . (a) This Agreement shall be construed in accordance with and governed by the law of the State of New York.
          (b) The Borrower hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of the Supreme Court of the State of New York sitting in New York County and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement shall affect any right that the Administrative Agent, the Issuing Bank or any Lender may otherwise have to bring any action or proceeding relating to this Agreement against the Borrower or its properties in the courts of any jurisdiction.
          (c) The Borrower hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement in any court referred to in paragraph (b) of this Section. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.
          (d) Each party to this Agreement irrevocably consents to service of process at the address provided for Section 9.01. Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law.
          SECTION 9.10. WAIVER OF JURY TRIAL . EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY

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ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY 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 AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
          SECTION 9.11. Headings . Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.
          SECTION 9.12. Confidentiality . (a) Each of the Administrative Agent, the Bookrunners, the Issuing Bank and the Lenders agrees to maintain the confidentiality of the Information (as defined below in accordance with such person’s customary procedures for handling confidential information of such nature), except that Information may be disclosed (i) to its and its Affiliates’ partners, directors, officers, employees and agents, including accountants, legal counsel and other advisors (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (ii) to the extent requested by any regulatory authority, (iii) to the extent required by applicable laws or regulations or by any subpoena or similar legal process ( provided that, unless prohibited by applicable law or court order, such disclosing party shall use reasonable efforts to notify the Borrower prior to such disclosure), (iv) to any other party to this Agreement, (v) to any rating agency when required by it, provided that, prior to any disclosure, such rating agency shall undertake in writing to preserve the confidentiality of any such information, (vi) in connection with the exercise of any remedies hereunder or any suit, action or proceeding relating to this Agreement or the enforcement of rights hereunder, (vii) subject to an agreement containing provisions no less restrictive than those of this Section, to (1) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement or (2) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the Borrower and its obligations, (viii) with the consent of the Borrower or (ix) to the extent such Information (1) becomes publicly available other than as a result of a breach of this Section or (2) becomes available to the Administrative Agent, any Bookrunner, the Issuing Bank or any Lender from a source other than the Borrower not known by such person to be in breach of any legal or contractual obligation not to disclose such information to the Administrative Agent, the Bookrunners, the Issuing Bank or such Lender. In addition, the Administrative Agent, each Bookrunner, the Issuing Bank and each Lender may disclose the existence of this Agreement and the information about this Agreement to market data collectors, similar service providers to the lending industry, and service providers in connection with the administration and management of this Agreement and the other Loan Documents; provided that, no such Person shall disclose the identity of the Borrower. For the purposes of this Section, “ Information ” means all information received from the Borrower or any of its Affiliates relating to the Borrower or its business, other than any such information that is available to the Administrative Agent, any Bookrunner, the Issuing Bank or any Lender on a nonconfidential basis prior to disclosure by the Borrower or any of its Affiliates unless the Administrative Agent has actual knowledge that such information is being made available by a Person in breach of any legal or contractual obligation not to disclose such information. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.

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          (b) Notwithstanding the provisions of Section 9.12(a) or anything contrary set forth herein, each party to this Agreement (and each of their respective employees, representatives or other agents) may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the facilities in relation to the Financing Transactions and all materials of any kind (including opinions or other tax analyses) that are provided to the Borrower relating to such tax treatment and tax structure. However, any information relating to the tax treatment or tax structure will remain subject to the confidentiality provisions set forth above (and the foregoing sentence will not apply) to the extent reasonably necessary to enable the parties hereto, their respective affiliates, and their and their respective affiliates’ directors and employees to comply with applicable securities laws. For this purpose, “tax treatment” means U.S. federal or state income tax treatment, and “tax structure” is limited to any facts relevant to the U.S. federal income tax treatment of the transactions contemplated by this Agreement but does not include information relating to the identity of the parties hereto or any of their respective affiliates.
          (c) EACH LENDER ACKNOWLEDGES THAT INFORMATION AS DEFINED IN SECTION 9.12(a) FURNISHED TO IT PURSUANT TO THIS AGREEMENT MAY INCLUDE MATERIAL NON-PUBLIC INFORMATION CONCERNING THE BORROWER AND ITS RELATED PARTIES OR THEIR RESPECTIVE SECURITIES, AND CONFIRMS THAT IT HAS DEVELOPED COMPLIANCE PROCEDURES REGARDING THE USE OF MATERIAL NON-PUBLIC INFORMATION AND THAT IT WILL HANDLE SUCH MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH THOSE PROCEDURES AND APPLICABLE LAW, INCLUDING FEDERAL AND STATE SECURITIES LAWS.
          (d) ALL INFORMATION, INCLUDING REQUESTS FOR WAIVERS AND AMENDMENTS, FURNISHED BY THE BORROWER OR THE ADMINISTRATIVE AGENT PURSUANT TO, OR IN THE COURSE OF ADMINISTERING, THIS AGREEMENT WILL BE SYNDICATE-LEVEL INFORMATION, WHICH MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION ABOUT THE BORROWER AND ITS SUBSIDIARIES, AND THEIR RELATED PARTIES OR THEIR RESPECTIVE SECURITIES. ACCORDINGLY, EACH LENDER REPRESENTS TO THE BORROWER AND THE ADMINISTRATIVE AGENT THAT IT HAS IDENTIFIED IN ITS ADMINISTRATIVE QUESTIONNAIRE A CREDIT CONTACT WHO MAY RECEIVE INFORMATION THAT MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH ITS COMPLIANCE PROCEDURES AND APPLICABLE LAW.
          SECTION 9.13. Interest Rate Limitation . Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to any Loan, together with all fees, charges and other amounts which are treated as interest on such Loan under applicable law (collectively the “ Charges ”), shall exceed the maximum lawful rate (the “ Maximum Rate ”) which may be contracted for, charged, taken, received or reserved by the Lender holding such Loan in accordance with applicable law, the rate of interest payable in respect of such Loan hereunder, together with all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent lawful, the interest and Charges that would have been payable in respect of such Loan but were not payable as a result of the operation of this Section shall be cumulated and the interest and Charges payable to such Lender in respect of other Loans or periods shall be increased (but not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon at the Federal Funds Effective Rate to the date of repayment, shall have been received by such Lender.
          SECTION 9.14. Patriot Act . Each Lender subject to the Patriot Act hereby notifies the Borrower and each Guarantor that, pursuant to Section 326 of the Patriot Act, it is required to obtain, verify and record information that identifies the Borrower and each Guarantor, including the name and

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address of the Borrower and each Guarantor and other information that will allow such Lender to identify the Borrower and each Guarantor in accordance with the Patriot Act.
          SECTION 9.15. No Advisory or Fiduciary Responsibility . In connection with all aspects of each transaction contemplated hereby (including in connection with any amendment, waiver or other modification hereof or of any other Loan Document), the Borrower acknowledges and agrees that: (i) (A) the arranging and other services regarding this Agreement provided by the Administrative Agent and the Bookrunners are arm’s-length commercial transactions between the Borrower and its Affiliates, on the one hand, and the Administrative Agent and the Bookrunners, on the other hand, (B) the Borrower has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (C) the Borrower is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby and by the other Loan Documents; (ii) (A) each of the Administrative Agent, the Bookrunners and the Lenders is and has been acting solely as a principal and, except as expressly agreed in writing by the relevant parties, has not been, is not, and will not be acting as an advisor, agent or fiduciary for the Borrower or any of its Affiliates, or any other Person, (B) irrespective of whether any Lender, any Bookrunner, the Administrative Agent or any of their Affiliates has advised or is advising the Borrower on other matters, the Borrower shall not claim any such fiduciary, advisory or agency relationship or services and the Borrower acknowledges that none of the Administrative Agent, any Lender, any Bookrunner or any of their Affiliates owes a fiduciary or similar duty to Cadbury, Cadbury UK, the Borrower, or the Business in connection with the Transactions or the process leading thereto and; and (iii) the Administrative Agent, the Lenders and the Bookrunners and their respective Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Borrower and its Affiliates, and no Agent nor any Bookrunner or Lender has any obligation to disclose any of such interests to the Borrower or its Affiliates.
          SECTION 9.16. Release of Guarantors . (a) Notwithstanding anything to the contrary contained herein or in any other Loan Document, upon request of the Borrower in connection with (i) any disposition of a Subsidiary that is a Guarantor as permitted by the Loan Documents and immediately following such disposition such Subsidiary will no longer be a Subsidiary of the Borrower or (ii) a Subsidiary becoming an Excluded Subsidiary (including by being designated in writing by the Borrower as an “Immaterial Subsidiary” in accordance with the terms of this Agreement) as permitted by the Loan Documents, the Administrative Agent shall (without notice to, or vote or consent of, any Lender) take such actions as shall be required to release any guarantee obligations under any Loan Document of any Guarantor being disposed of in such disposition, to the extent necessary to permit consummation of such disposition in accordance with the Loan Documents, or becoming an Excluded Subsidiary, in accordance with the Loan Documents.
          (b) Notwithstanding anything to the contrary contained herein or any other Loan Document, when the principal and interest with respect to all Loans and all other monetary payment Obligations which are then due and payable have been paid in full and all Commitments have terminated or expired, upon request of the Borrower, the Administrative Agent shall (without notice to, or vote or consent of, any Lender) take such actions as shall be required to release all guarantee obligations under any Loan Document of any Guarantor. Any such release of guarantee obligations shall be deemed subject to the provision that such guarantee obligations shall be reinstated if within 180 days after such release (or such longer period under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect during which any payment in respect of the Obligations guaranteed thereby can be annulled, avoided, set aside, rescinded, invalidated, declared to be fraudulent or preferential or otherwise required to be refunded or repaid) any portion of any payment in respect of the Obligations guaranteed thereby shall be rescinded or must otherwise be restored or returned upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Borrower or any Guarantor, or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, the

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Borrower or any Guarantor or any substantial part of its property, or otherwise, all as though such payment had not been made; provided , however , that any such reinstated guarantee shall be released immediately upon the Obligations being indefeasibly paid in full.
[SIGNATURE PAGES FOLLOW]

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     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.
         
  DR PEPPER SNAPPLE GROUP, INC.,
as Borrower
 
 
  By   /s/   
    Name:      
    Title:      
 
[SIGNATURE PAGE TO CREDIT AGREEMENT]

 


 

         
  JPMORGAN CHASE BANK, N.A., individually and as
Administrative Agent, a Joint Lead Arranger and a
Lender, as an Issuing Bank and as Swingline Lender
 
 
  By   /s/   
    Name:      
    Title:      
 
         
  J.P. MORGAN SECURITIES INC., as Bookrunner
 
 
  By   /s/   
    Name:      
    Title:      
 
[SIGNATURE PAGE TO CREDIT AGREEMENT]

 


 

         
  BANC OF AMERICA SECURITIES LLC, as a Joint
Lead Arranger and a Bookrunner
 
 
  By   /s/   
    Name:      
    Title:      
 
         
  BANK OF AMERICA, N.A., as Syndication Agent and as a Lender
 
 
  By   /s/   
    Name:      
    Title:      
 
[SIGNATURE PAGE TO CREDIT AGREEMENT]

 


 

         
  GOLDMAN SACHS CREDIT PARTNERS L.P., as a
Documentation Agent, a Bookrunner and a Lender
 
 
  By   /s/   
    Authorized Signatory   
       
 
[SIGNATURE PAGE TO CREDIT AGREEMENT]

 


 

         
  MORGAN STANLEY SENIOR FUNDING, INC., as a
Documentation Agent, a Bookrunner and a Lender
 
 
  By   /s/   
    Name:      
    Title:      
 
[SIGNATURE PAGE TO CREDIT AGREEMENT]

 


 

         
  UBS SECURITIES LLC, as Bookrunner and
Documentation Agent
 
 
  By   /s/   
    Name:      
    Title:      
 
     
  By   /s/    
    Name:      
    Title:      
 
  UBS LOAN FINANCE LLC, as a Lender
 
 
  By   /s/   
    Name:      
    Title:      
 
     
  By   /s/    
    Name:      
    Title:      
 
[SIGNATURE PAGE TO CREDIT AGREEMENT]

 

 

Exhibit 10.23
 
 
364-DAY BRIDGE CREDIT AGREEMENT
dated as of
March 10, 2008
among
DR PEPPER SNAPPLE GROUP, INC.,
as Borrower
THE LENDERS PARTY HERETO
and
JPMORGAN CHASE BANK, N.A.
as Administrative Agent
BANK OF AMERICA, N.A.
as Syndication Agent
GOLDMAN SACHS CREDIT PARTNERS L.P.,
MORGAN STANLEY SENIOR FUNDING, INC.
and
UBS SECURITIES LLC
as Documentation Agents
J.P. MORGAN SECURITIES INC.
and
BANC OF AMERICA SECURITIES LLC
as Joint Lead Arrangers
J.P. MORGAN SECURITIES INC.,
BANC OF AMERICA SECURITIES LLC,
GOLDMAN SACHS CREDIT PARTNERS L.P.,
MORGAN STANLEY SENIOR FUNDING, INC.
and
UBS SECURITIES LLC
as Bookrunners
 
 

 


 

TABLE OF CONTENTS
             
        Page
 
           
ARTICLE I Definitions     1  
Section 1.01.
  Defined Terms     1  
Section 1.02.
  Classification of Loans and Borrowings     19  
Section 1.03.
  Terms Generally     19  
Section 1.04.
  Accounting Terms; GAAP     19  
 
           
ARTICLE II The Credits     20  
Section 2.01.
  Commitments     20  
Section 2.02.
  Loans and Borrowings     20  
Section 2.03.
  Requests for Borrowings     21  
Section 2.04.
  Reserved     21  
Section 2.05.
  Reserved     21  
Section 2.06.
  Funding of Borrowings     21  
Section 2.07.
  Interest Elections     22  
Section 2.08.
  Termination and Reduction of Commitments     23  
Section 2.09.
  Repayment of Loans; Evidence of Debt     23  
Section 2.10.
  Prepayment of Loans     23  
Section 2.11.
  Fees     24  
Section 2.12.
  Interest     25  
Section 2.13.
  Alternate Rate of Interest     25  
Section 2.14.
  Increased Costs     26  
Section 2.15.
  Break Funding Payments     26  
Section 2.16.
  Taxes     27  
Section 2.17.
  Payments Generally; Pro Rata Treatment; Sharing of Set-offs     29  
Section 2.18.
  Mitigation Obligations; Replacement of Lenders     30  
 
           
ARTICLE III Representations and Warranties     31  
Section 3.01.
  Organization; Powers     31  
Section 3.02.
  Authorization; Enforceability     31  
Section 3.03.
  Governmental Approvals; No Conflicts     32  
Section 3.04.
  Financial Condition; No Material Adverse Change     32  
Section 3.05.
  Properties     33  
Section 3.06.
  Litigation and Environmental Matters     33  

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TABLE OF CONTENTS
(continued)
             
        Page
 
           
 
           
Section 3.07.
  Compliance with Laws and Agreements     33  
Section 3.08.
  Investment Company Status     33  
Section 3.09.
  Taxes     33  
Section 3.10.
  ERISA     34  
Section 3.11.
  Disclosure     34  
Section 3.12.
  Margin Regulations     34  
Section 3.13.
  Labor Matters     34  
Section 3.14.
  Separation Transactions     34  
 
           
ARTICLE IV Conditions     35  
Section 4.01.
  Effective Date     35  
Section 4.02.
  Bridge Funding Date     36  
Section 4.03.
  Conditions to Transaction Closing Date     38  
 
           
ARTICLE V Affirmative Covenants     40  
Section 5.01.
  Financial Statements; Ratings Change and Other Information     40  
Section 5.02.
  Notices of Material Events     41  
Section 5.03.
  Existence; Conduct of Business     41  
Section 5.04.
  Payment of Obligations     41  
Section 5.05.
  Maintenance of Properties; Insurance     41  
Section 5.06.
  Books and Records; Inspection Rights     42  
Section 5.07.
  Compliance with Laws     42  
Section 5.08.
  Use of Proceeds     42  
Section 5.09.
  Additional Guarantors     42  
Section 5.10.
  Ratings     42  
 
           
ARTICLE VI Negative Covenants     43  
Section 6.01.
  Liens     43  
Section 6.02.
  Fundamental Changes     43  
Section 6.03.
  Investments, Loans, Advances, Guarantees and Acquisitions     44  
Section 6.04.
  Financial Covenants     45  
Section 6.05.
  Transactions with Affiliates     45  
Section 6.06.
  Restrictive Agreements     46  
Section 6.07.
  Subsidiary Indebtedness     46  

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TABLE OF CONTENTS
(continued)
             
        Page
 
           
 
           
ARTICLE VII Events of Default     46  
 
           
ARTICLE VIII The Administrative Agent; the Agents and the Collateral Account     48  
Section 8.01.
  The Administrative Agent; the Agents     48  
Section 8.02.
  Collateral Account     50  
 
           
ARTICLE IX Miscellaneous     51  
Section 9.01.
  Notices     51  
Section 9.02.
  Waivers; Amendments     52  
Section 9.03.
  Expenses; Indemnity; Damage Waiver     53  
Section 9.04.
  Successors and Assigns     54  
Section 9.05.
  Survival     57  
Section 9.06.
  Counterparts; Integration; Effectiveness     57  
Section 9.07.
  Severability     57  
Section 9.08.
  Right of Setoff     57  
Section 9.09.
  Governing Law; Jurisdiction; Consent to Service of Process     57  
Section 9.10.
  WAIVER OF JURY TRIAL     58  
Section 9.11.
  Headings     58  
Section 9.12.
  Confidentiality     58  
Section 9.13.
  Interest Rate Limitation     60  
Section 9.14.
  Patriot Act     60  
Section 9.15.
  No Advisory or Fiduciary Responsibility     60  
Section 9.16.
  Release of Guarantors     61  

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SCHEDULES :
   
 
Schedule 2.01
  Commitments
Schedule 3.01(b)
  Subsidiaries
Schedule 3.06
  Disclosed Matters
Schedule 6.01
  Existing Indebtedness
Schedule 6.01
  Existing Liens
Schedule 6.06
  Existing Restrictions
EXHIBITS :
Exhibit A — Form of Assignment and Assumption
Exhibit B — Form of Opinion of Borrower’s Counsel
Exhibit C — Form of Guaranty
ANNEXES
Annex I — Information Memorandum
Annex II — Separation Documents

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          CREDIT AGREEMENT dated as of March 10, 2008, among DR PEPPER SNAPPLE GROUP, INC., as Borrower, the LENDERS party hereto, JPMORGAN CHASE BANK, N.A., as Administrative Agent, BANK OF AMERICA, N.A., as Syndication Agent, and GOLDMAN SACHS CREDIT PARTNERS L.P., MORGAN STANLEY SENIOR FUNDING, INC. and UBS SECURITIES LLC, as Documentation Agents.
WITNESSETH:
          WHEREAS, the Borrower has requested, and the Lenders are willing to make available to the Borrower, the credit facility described in this Agreement upon and subject to the terms and conditions hereinafter set forth;
          NOW, THEREFORE, in consideration of the premises, covenants and agreements set forth herein, the parties hereto agree as follows:
ARTICLE I
Definitions
          SECTION 1.01. Defined Terms. As used in this Agreement, the following terms have the meanings specified below:
          “ ABR ”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Alternate Base Rate.
          “ Adjusted LIBO Rate ” means, with respect to any Eurodollar Borrowing for any Interest Period, an interest rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest Period multiplied by (b) the Statutory Reserve Rate.
          “ Administrative Agent ” means JPMorgan Chase Bank, N.A., in its capacity as administrative agent for the Lenders hereunder, and, as applicable, JPMorgan Chase Bank, N.A., in its capacity as collateral agent for the Lenders hereunder.
          “ Administrative Questionnaire ” means an Administrative Questionnaire in a form supplied by the Administrative Agent.
          “ Affiliate ” means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.
          “ Agents ” means, collectively, the Administrative Agent, Syndication Agent and Documentation Agent.
          “ Alternate Base Rate ” means, for any day, a rate per annum equal to the greater of (a) the Prime Rate in effect on such day and (b) the Federal Funds Effective Rate in effect on such day plus 1 / 2 of 1%. Any change in the Alternate Base Rate due to a change in the Prime Rate or the Federal Funds

 


 

Effective Rate shall be effective from and including the effective date of such change in the Prime Rate or the Federal Funds Effective Rate, respectively.
          “ Applicable Percentage ” means with respect to any Lender, the percentage of the total Commitments represented by such Lender’s Commitments. If the applicable Commitments have terminated or expired, the Applicable Percentages shall be determined based upon the applicable Commitments most recently in effect, giving effect to any assignments.
          “ Applicable Rate ” means, for any day, with respect to any ABR Loan or Eurodollar Loan, the applicable rate per annum set forth below under the caption “ABR Spread” or “Eurodollar Spread”, as the case may be, based upon the ratings by Moody’s and S&P, respectively, applicable on such date to the Index Debt:
                 
    ABR   Eurodollar
Index Debt Ratings:   Spread   Spread
                 
Category 1
               
Index Debt ratings of at least BBB+ by S&P and/or Baa1 by Moody’s
    0.00 %     1.00 %
                 
Category 2
               
Index Debt ratings less than Category 1, but at least BBB by S&P and/or Baa2 by Moody’s
    0.50 %     1.50 %
                 
Category 3
               
Index Debt ratings less than Category 2, but at least BBB- by S&P and/or Baa3 by Moody’s
    1.00 %     2.00 %
                 
Category 4
               
Index Debt ratings less than Category 3, but at least BB+ by S&P and/or Ba1 by Moody’s
    1.25 %     2.25 %
                 
Category 5
               
Index Debt ratings less than Category 4
    1.50 %     2.50 %
For purposes of the foregoing, (i) if either Moody’s or S&P shall not have in effect a rating for the Index Debt (other than by reason of the circumstances referred to in the last sentence of this definition), then such rating agency shall be deemed to have established a rating in Category 5; (ii) if the ratings established or deemed to have been established by Moody’s and S&P for the Index Debt shall fall within different Categories, the Applicable Rate shall be based on the higher of the two ratings unless one of the two ratings is two or more Categories lower than the other, in which case the Applicable Rate shall be determined by reference to the Category next below that of the higher of the two ratings; and (iii) if the ratings established or deemed to have been established by Moody’s and S&P for the Index Debt shall be changed (other than as a result of a change in the rating system of Moody’s or S&P), such change shall be effective as of the date on which it is first announced by the applicable rating agency, irrespective of when notice of such change shall have been furnished by the Borrower to the Agent and the Lenders pursuant to Section 5.01 or otherwise. Each change in the Applicable Rate shall apply during the period commencing on the effective date of such change and ending on the date immediately preceding the effective date of the next such change. If the rating system of Moody’s or S&P shall change, or if either such rating agency shall cease to be in the business of rating corporate debt obligations, the Borrower and the Lenders shall negotiate in good faith to amend this definition to reflect such changed rating system or

2


 

the unavailability of ratings from such rating agency and, pending the effectiveness of any such amendment, the Applicable Rate shall be determined by reference to the rating most recently in effect prior to such change or cessation.
          “ Approved Fund ” has the meaning assigned to such term in Section 9.04.
          “ Asset Sale ”: means, with respect to any asset, real property or other tangible or intangible property of the Borrower or its Subsidiaries, or any interest therein, any sale, assignment, conveyance, transfer, lease, or other disposition or series of related dispositions thereof, outside the ordinary course of business and resulting in proceeds exceeding $10,000,000 but excluding sales, assignments, conveyances, transfers, leases or other dispositions among the Borrower and its Subsidiaries or pursuant to the Separation Documents in connection with the Transactions.
          “ Assignment and Assumption ” means an assignment and assumption entered into by a Lender and an assignee (with the consent of any party whose consent is required by Section 9.04), and accepted by the Administrative Agent, in the form of Exhibit A or any other form approved by the Administrative Agent.
          “ Audited Financial Statements ” has the meaning assigned to such term in Section 4.02(k).
          “ Board ” means the Board of Governors of the Federal Reserve System of the United States of America.
          “ Bookrunners ” means, collectively, J.P. Morgan Securities Inc., Banc of America Securities LLC, Goldman Sachs Credit Partners L.P., Morgan Stanley Senior Funding, Inc. and UBS Securities LLC, in their capacities as bookrunners.
          “ Borrower ” means Dr Pepper Snapple Group, Inc., a Delaware corporation.
          “ Borrowing ” means an advance of Loans of the same Type, made, converted or continued on the same date and, in the case of Eurodollar Loans, as to which a single Interest Period is in effect.
          “ Borrowing Request ” means a request by the Borrower for a Borrowing in accordance with Section 2.03.
          “ Bridge Funding Date ” has the meaning assigned to such term in Section 4.02.
          “ Business ” means the beverage business in the United States, Canada, Mexico and the Caribbean owned by Cadbury on the Effective Date and to be owned by the Borrower upon consummation of the Separation Transactions.
          “ Business Day ” means any day that is not a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to remain closed; provided that, when used in connection with a Eurodollar Loan, the term “ Business Day ” shall also exclude any day on which banks are not open for dealings in dollar deposits in the London interbank market.
          “ Cadbury ” means Cadbury Schweppes plc, a public limited company organized under the laws of England and Wales with registered number 0052457.

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          “ Cadbury Material Adverse Effect ” means a material adverse effect on the business, operations, property or financial condition of Cadbury and its subsidiaries taken as a whole.
          “ Cadbury UK ” means Cadbury plc, a United Kingdom public limited company incorporated in England and Wales with registered number 0649739.
          “ Capital Lease Obligations ” of any Person means the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP.
          “ Change in Control ” means (a) 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 SEC thereunder as in effect on the date hereof), of Stock representing more than 35% of the aggregate ordinary voting power represented by the issued and outstanding Stock of the Borrower, (b) occupation of a majority of the seats (other than vacant seats) on the board of directors of the Borrower by Persons who were neither (i) nominated by the board of directors of the Borrower nor (ii) appointed by directors so nominated or (c) a termination of Cadbury UK’s and its subsidiaries’ indemnification obligations under the Tax Sharing and Indemnification Agreement pursuant to the change of control provision therein.
          “ Change in Law ” means (a) the adoption of any law, rule or regulation after the date of this Agreement, (b) any change in any law, rule or regulation or in the interpretation or application thereof by any Governmental Authority after the date of this Agreement or (c) the compliance by any Lender (or, for purposes of Section 2.14(b), by any lending office of such Lender or by such Lender’s holding company, if any) with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the date of this Agreement.
          “ Code ” means the Internal Revenue Code of 1986, as amended from time to time.
          “ Collateral Account ” means a deposit account that is (a) established by and with the Administrative Agent for the purpose of receiving the proceeds of the Loans on the Bridge Funding Date (if the Bridge Funding Date occurs prior to the Transaction Closing Date), (b) in the name of the Borrower and (c) over which the Administrative Agent has exclusive control and a perfected first-priority Lien as security for the Obligations.
          “ Commitment ” means, as to each Lender, its obligation to make Loans to the Borrower pursuant to Section 2.01 in an aggregate principal amount at any one time outstanding not to exceed the amount set forth opposite such Lender’s name on Schedule 2.01 under the caption “Commitment” or opposite such caption in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable, as such amount may be adjusted from time to time in accordance with this Agreement. The aggregate amount of the Commitments as of the Effective Date is $2,000,000,000.
          “ Consolidated ” means, with respect to any Person, the consolidation of accounts of such Person and its subsidiaries in accordance with GAAP.
          “ Consolidated Cash Interest Expense ” means, with respect to any Person, for any period, the Consolidated Interest Expense of such Person and its subsidiaries for such period less the Consolidated Non-Cash Interest Expense of such Person and its subsidiaries for such period.

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          “ Consolidated EBITDA ” means, with respect to any Person, for any period, Consolidated Net Income of such Person for such period plus (A) without duplication and to the extent deducted in determining such Consolidated Net Income, the sum of (1) the aggregate amount of Consolidated Interest Expense for such period, (2) the aggregate provision for federal, state, local or foreign taxes based on income or profits or capital for such period, (3) all amounts attributable to depreciation, amortization (including amortization of goodwill or other intangible assets) or impairment of goodwill or other intangible assets for such period, (4) any extraordinary or non-recurring non-cash charges for such period (provided, however , that cash expenditures in respect of charges added back pursuant to this clause (4) shall be deducted in determining Consolidated EBITDA for the period during which such expenditures are made), (5) the aggregate amount of all non-cash compensation charges incurred during such period arising from the grant of or the issuance of Stock or Stock Equivalents, (6) the aggregate amount of any extraordinary losses plus any loss realized by such Person or any of its subsidiaries in connection with any dispositions that occur during such period, (7) the aggregate amount of any fees, expenses or charges paid on or prior to the Transaction Closing Date related to the Separation Transactions and the negotiation, execution and delivery of this Agreement, the Bridge Loan and the Senior Notes, (8) the aggregate amount of any fees, expenses or charges paid after the Transaction Closing Date related to a refinancing of the Bridge Loan, if any, and (9) for periods prior to the Transaction Closing Date, the aggregate amount of corporate costs allocated to the Borrower in its combined financial statements and minus (B) (1) for periods prior to the Transaction Closing Date, the Borrower’s good faith estimate of its costs of operating on a stand-alone basis as if the Separation Transactions had occurred, which in no event shall be less than $11.25 million per fiscal quarter (pro-rated in the case of a period comprising less than a full fiscal quarter), and (2) without duplication and to the extent included in determining such Consolidated Net Income, the sum of (i) any extraordinary gains and any non-recurring non-cash gains during such period, (ii) any credit for federal, state, local or foreign taxes based on income or profits or capital during such period, and (iii) any other gains realized by such Person or any of its subsidiaries in connection with any dispositions that occur during such period. Notwithstanding the foregoing, the following amounts (representing the aggregate effect of adjustments to (a) add back (I) restructuring charges, reserves and integration costs, (II) anticipated benefits of organizational restructuring, (III) losses associated with the launch of Accelerade and (b) subtract profits and gains associated with Glaceau) shall be added-back without duplication in determining Consolidated EBITDA during the following periods:
     
Four Fiscal Quarters Ending   Net Add Back Amount
June 30, 2008
  $68 million
September 30, 2008
  $51 million
December 31, 2008
  $34 million
March 31, 2009
  $17 million
          “ Consolidated Interest Expense ” means, with respect to any Person, for any period, the amount of interest expense reflected on the consolidated statement of income of such Person and its subsidiaries for such period in conformity with GAAP.
          “ Consolidated Net Income ” means, with respect to any Person, for any period, the amount of net income reflected on the consolidated statement of income of such Person and its subsidiaries for such period in conformity with GAAP.

5


 

          “ Consolidated Net Tangible Assets ” means, with respect to any Person, as of any date of determination, the total assets less the sum of goodwill, net, and other intangible assets, net, in each case reflected on the Consolidated balance sheet of such Person and its subsidiaries as of the end of the most recently ended fiscal quarter of such Person for which financial statements have been delivered to the Administrative Agent pursuant to clause (a) or (b), as applicable, of Section 5.01, determined on a consolidated basis in accordance with GAAP.
          “ Consolidated Non-Cash Interest Expense ” means, with respect to any Person, for any period, the sum of the following amounts to the extent included in the definition of Consolidated Interest Expense of such Person: (a) the amount of debt discount and debt issuance costs amortized, (b) charges relating to write-ups or write-downs in the book or carrying value of existing Indebtedness, (c) interest payable in evidences of Indebtedness or by addition to the principal of the related Indebtedness and (d) other non-cash interest.
          “ Consolidated Total Debt ” means, with respect to any Person, as of the date of determination, the aggregate amount of Indebtedness reflected on the consolidated balance sheet of such Person and its subsidiaries as of such date in conformity with GAAP, plus , without duplication, synthetic leases, letters of credit (but only to the extent drawn and not reimbursed).
          “ Control ” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “ Controlling ” and “ Controlled ” have meanings correlative thereto.
          “ Debt Issuance ” means, with respect to any Person, any incurrence or issuance of Specified Indebtedness by such Person.
          “ Default ” means any event or condition which constitutes an Event of Default or which upon notice, lapse of time or both would, unless cured or waived, become an Event of Default.
          “ Disclosed Matters ” means the events, actions, orders, decrees, judgments, inquiries, investigations, reviews, suits and proceedings and the environmental matters disclosed in Schedule 3.06.
          “ Documentation Agents ” means Goldman Sachs Credit Partners L.P., Morgan Stanley Senior Funding, Inc. and UBS Securities LLC.
          “ dollars ” or “ $ ” refers to lawful money of the United States of America.
          “ Early Commitment Termination Date ” means the earlier of (i) April 18, 2008, if by that date the shareholders of Cadbury have not duly approved the Separation Transaction at a court meeting and a general meeting as contemplated in the Registration Statement, (ii) the time any borrowings are made under the UK Facility and (iii) 3:00 p.m. New York City time on May 13, 2008.
          “ Effective Date ” has the meaning assigned to such term in Section 4.01.
          “ Environmental Laws ” means all laws, rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions or binding agreements issued, promulgated or entered into by any Governmental Authority, relating to the protection of the environment, preservation or reclamation of natural resources, the management, release or threatened release of any Hazardous Material or, as such relate to exposure to Hazardous Materials, to health and safety matters.

6


 

          “ Environmental Liability ” means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of the Borrower or any Subsidiary directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.
          “ Equity Issuance ” means the issue or sale of any Stock by the Borrower or any of its Subsidiaries (other than (i) any such issuance of common Stock of the Borrower occurring in the ordinary course of business to any director, member of the management or employee of the Borrower or its Subsidiaries or (ii) any such issuance of Stock of the Borrower or any of its Subsidiaries (A) to the Borrower of any of its Subsidiaries or (B) pursuant to the Separation Documents in connection with the Transactions.
          “ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated and rulings issued thereuder.
          “ ERISA Affiliate ” means any trade or business (whether or not incorporated) that, together with the Borrower, is treated as a single employer under Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code
          “ ERISA Event ” means (a) any “reportable event”, as defined in Section 4043 of ERISA or the regulations issued thereunder with respect to a Plan (other than an event for which the 30-day notice period is waived); (b) any failure to satisfy statutory minimum funding standards; (c) the filing pursuant to Section 412(d) of the Code of an application for a waiver of the minimum funding standard with respect to any Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to the termination of any Plan; (e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the Borrower or any of its ERISA Affiliates of any liability with respect to the withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA.
          “ Eurodollar ”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Adjusted LIBO Rate.
          “ Event of Default ” has the meaning assigned to such term in Article VII.
          “ Excluded Subsidiary ” means (a) any Subsidiary that is not a wholly-owned Material Subsidiary, (b) any Foreign Subsidiary, (c) any Subsidiary that is prohibited by applicable law from guaranteeing the Obligations; provided that “Excluded Subsidiary” shall not include any Subsidiary that guarantees, directly or indirectly, or otherwise provides a Guarantee for, any Material Indebtedness of the Borrower or any other Loan Party or (d) Juice Guys Care, Inc. and Cadbury Schweppes Americas Employee Relief Fund, so long as each remains qualified as a not-for-profit corporation.

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          “ Excluded Taxes ” means, with respect to the Administrative Agent, any Lender or any other recipient of any payment to be made by or on account of any obligation of the Borrower hereunder, (a) income or franchise Taxes imposed on (or measured by) its net income by the United States of America, or by the jurisdiction under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable lending office is located, (b) any branch profits Taxes imposed by the United States of America (or any political subdivision thereof) or any similar Tax imposed by any other jurisdiction in which the Borrower is located and (c) in the case of a Foreign Lender (other than an assignee pursuant to a request by the Borrower under Section 2.18(b)), any withholding tax that is imposed on amounts payable to such Foreign Lender at the time such Foreign Lender becomes a party to this Agreement (or designates a new lending office), except to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new lending office (or assignment), to receive additional amounts from the Borrower with respect to such withholding tax pursuant to Section 2.16(a).
          “ Facilities ” means the Commitments and the provisions herein related to the Loans.
          “ Federal Funds Effective Rate ” means, for any day, the weighted average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average (rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for such day for such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it.
          “ Fee and Syndication Letter ” means that letter agreement dated March 10, 2008, addressed to the Borrower and Cadbury from the Administrative Agent and the Bookrunners and accepted by the Borrower and Cadbury on March 10, 2008.
          “ Financial Officer ” means the chief financial officer, principal accounting officer, senior vice president — corporate finance, treasurer or controller of the Borrower.
          “ Financing Transactions ” means the execution, delivery and performance of the Loan Documents and the Revolver and Term Loan Documents by the Loan Parties party thereto, the borrowing of Loans, the borrowing of the Revolver and Term Loan or the issuance of the Senior Notes, as applicable, and the use of the proceeds thereof.
          “ Foreign Lender ” means any Lender that is organized under the laws of a jurisdiction other than that in which the Borrower is located. For purposes of this definition, the United States of America, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.
          “ Foreign Subsidiary ” means any Subsidiary that is not organized under the laws of the United States, any state thereof or the District of Columbia.
          “ GAAP ” means generally accepted accounting principles in the United States of America, as in effect from time to time.
          “ Governmental Authority ” means the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.

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          “ Guarantee ” of or by any Person (the “ guarantor ”) means any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or other payment obligation of any other Person (the “ primary obligor ”) in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other payment obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other payment obligation of the payment thereof, (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other payment obligation or (d) as an account party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness or payment obligation; provided , that the term Guarantee shall not include endorsements for collection or deposit in the ordinary course of business, or customary and reasonable indemnity obligations in effect on the Effective Date or entered into in connection with any acquisition or disposition of assets.
          “ Guarantor ” means each Subsidiary party to or that becomes party to the Guaranty.
          “ Guaranty ” means the Guaranty, executed and delivered by each Guarantor, in substantially the form of Exhibit C, as the same may be amended, supplemented or otherwise modified from time to time.
          “ Hazardous Materials ” means all explosive or radioactive substances or wastes, petroleum or petroleum distillates, asbestos or asbestos containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances, materials or wastes of any nature regulated as hazardous or toxic, or a pollutant or contaminant, pursuant to any Environmental Law.
          “ Immaterial Insolvency Event ” means, as of any date, any Default under clause (h) of Article VII with respect to any Guarantor that is a Material Subsidiary or group of Guarantors that are Material Subsidiaries in connection with which an executive officer of such Subsidiary and the general counsel of the Borrower each have certified (in writing to the Administrative Agent) that (a) they believe that the commencement of the involuntary proceeding or involuntary petition causing such Default is without merit and not expected to be sustained in the applicable proceeding and (b) the Borrower has in good faith undertaken commercially reasonable efforts to dismiss such proceeding or petition or otherwise cure such Default; provided that, at no time shall any such Material Subsidiary subject to such Default (i) have Consolidated Net Tangible Assets as of December 31, 2007 in the aggregate with all other Guarantors that are Material Subsidiaries subject to such Default and all other Subsidiaries subject to the events of the type described in clause (h) of Article VII, equal to or exceeding 10% of the Consolidated Net Tangible Assets of the Borrower at such date and (ii) have Consolidated gross revenues for the fiscal year ended December 31, 2007 in the aggregate with all other Guarantors that are Material Subsidiaries subject to such Default and all other Subsidiaries subject to the events of the type described in clause (h) of Article VII, equal to or exceeding 10% of the Consolidated gross revenues of the Borrower for such period, in each case determined in accordance with GAAP.
          “ Immaterial Subsidiary ” means, any Subsidiary of the Borrower (including any Foreign Subsidiary) that has been designated by the Borrower as an “Immaterial Subsidiary” for purposes of this Agreement; provided that at no time shall (A) (i) the Consolidated Net Tangible Assets of any Immaterial Subsidiary (as determined as of the last day of the most recently ended fiscal quarter of the Borrower for which financial statements have been delivered pursuant to the clauses (a) or (b), as applicable, of Section 5.01 (or prior to such delivery, as of December 31, 2007)) equal or exceed 5% or, together with all other Immaterial Subsidiaries and their subsidiaries, 10%, of the Consolidated Net Tangible Assets of the Borrower at such date or (ii) the Consolidated gross revenues of such Subsidiary for the four fiscal quarter

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period ending on the last day of the most recently ended fiscal quarter of the Borrower for which financial statements have been delivered pursuant to the clauses (a) or (b), as applicable, of Section 5.01 (or prior to such delivery, as of December 31, 2007) equal or exceed 5% or, together with all other Immaterial Subsidiaries and their subsidiaries, 10%, of the Consolidated gross revenues of the Borrower for such period, in each case determined in accordance with GAAP, or (B) any Immaterial Subsidiary own, or be licensed to use, any Material Intellectual Property.
          “ Indebtedness ” of any Person means, without duplication, (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person, (d) all obligations of such Person in respect of the deferred purchase price of property or services (excluding (i) accounts payable incurred in the ordinary course of business and not overdue by more than 120 days and (ii) any earn-out obligation until such earn-out obligation becomes a liability on the balance sheet of such Person in accordance with GAAP and if not paid after becoming due and payable), (e) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the Indebtedness secured thereby has been assumed, (f) all Guarantees by such Person of Indebtedness of others, (g) all Capital Lease Obligations of such Person, (h) all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit and letters of guaranty and (i) all obligations, contingent or otherwise, of such Person in respect of bankers’ acceptances. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor. The amount of Indebtedness of any Person for purposes of clause (e) above shall be deemed to be the lesser of (i) the aggregate unpaid amount of such Indebtedness and (ii) the fair market value of the property encumbered thereby as determined by such Person in good faith.
          “ Indemnified Taxes ” means Taxes other than Excluded Taxes.
          “ Indemnitee ” has the meaning set forth in Section 9.03(b).
          “ Index Debt ” means senior, unsecured, long-term indebtedness for borrowed money of the Borrower that is not guaranteed by any other Person or subject to any other credit enhancement.
          “ Information Memorandum ” means that certain Confidential Information Memorandum relating to the Borrower, the Business and the Transactions to be used in connection with the syndication of the Facilities.
          “ Interest Election Request ” means a request by the Borrower to convert or continue a Borrowing in accordance with Section 2.07.
          “ Interest Payment Date ” means (a) with respect to any ABR Loan, the last day of each March, June, September and December, and (b) with respect to any Eurodollar Loan, the last day of the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a Eurodollar Borrowing with an Interest Period of more than three months’ duration, each day prior to the last day of such Interest Period that occurs at intervals of three months’ duration after the first day of such Interest Period.
          “ Interest Period ” means with respect to any Eurodollar Borrowing, the period commencing on the date of such Borrowing and ending on the numerically corresponding day in the

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calendar month that is one, two, three or six months (or, with the consent of each Lender, nine or twelve months) thereafter, as the Borrower may elect; provided , that (i) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless, in the case of a Eurodollar Borrowing only, such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day and (ii) any Interest Period pertaining to a Eurodollar Borrowing that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month of such Interest Period. For purposes hereof, the date of a Borrowing initially shall be the date on which such Borrowing is made.
          “ Investments ” has the meaning assigned to such term in Section 6.03.
          “ Lenders ” means (a) ay any time prior to the Bridge Funding Date, any Lender that holds a Commitment at such time and (b) at any time after the Bridge Funding Date any Lender that holds Loans at such time.
          “ LIBO Rate ” means, with respect to any Eurodollar Borrowing for any Interest Period, the rate appearing on Reuters Screen LIBOR01 Page (or otherwise on the Reuters screen) (or on any successor or substitute page of such Service, or any successor to or substitute for such Service, providing rate quotations comparable to those currently provided on such page of such Service, as determined by the Administrative Agent from time to time for purposes of providing quotations of interest rates applicable to dollar deposits in the London interbank market) at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period, as the rate for dollar deposits with a maturity comparable to such Interest Period. In the event that such rate is not available at such time for any reason, then the “ LIBO Rate ” with respect to such Eurodollar Borrowing for such Interest Period shall be the rate at which dollar deposits with a maturity comparable to such Interest Period are offered by the principal London office of the Administrative Agent in immediately available funds in the London interbank market at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period.
          “ Lien ” means, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, hypothecation, encumbrance, charge or security interest in, on or of such asset and (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset.
          “ Loan Documents ” means, collectively, this Agreement, each Promissory Note, the Fee and Syndication Letter, the Guaranty and, to the extent expressly designated as a “Loan Document” by the Borrower and the Administrative Agent, each certificate, agreement or document executed by the Borrower or any of its Subsidiaries and delivered to the Administrative Agent or any Lender in connection with or pursuant to any of the foregoing.
          “ Loan Parties ” means, as of any date, the Borrower and each Subsidiary party to the Guaranty on such date.
          “ Loans ” means the loans made by the Lenders to the Borrower pursuant to this Agreement.
          “ Material Adverse Change ” means any material adverse change in the business, operations, property or financial condition of the Borrower and its Subsidiaries taken as a whole.

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          “ Material Adverse Effect ” means a material adverse effect on (a) the business, operations, property or financial condition of the Borrower and its Subsidiaries taken as a whole, (b) the ability of the Borrower and the Guarantors (taken as a whole) to perform their payment obligations under this Agreement or (c) the rights and remedies of the Lenders under this Agreement.
          “ Material Indebtedness ” means Indebtedness (other than the Loans and Letters of Credit) of any Loan Party or Material Subsidiary, or payment obligations in respect of any Swap Agreement, that is outstanding in an amount exceeding the Minimum Threshold. For purposes of determining Material Indebtedness, the “payment obligations” of such Loan Party or Material Subsidiary in respect of any Swap Agreement at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that such Loan Party or such Material Subsidiary would be required to pay if such Swap Agreement were terminated at such time.
          “ Material Intellectual Property ” means any trademarks, tradenames, copyrights, patents and other intellectual property owned or licensed by the Borrower or any of its Subsidiaries that is material to the business of the Borrower and its Subsidiaries.
          “ Material Subsidiary ” means, at any date of determination, any Subsidiary (including any Foreign Subsidiary) that is not an Immaterial Subsidiary.
          “ Maturity Date ” means the 364th day after the Bridge Funding Date.
          “ Minimum Threshold ” means $75,000,000.
          “ Moody’s ” means Moody’s Investors Service, Inc.
          “ Multiemployer Plan ” means a multiemployer plan as defined in Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate has any obligation, contingent or otherwise.
          “ Net Cash Proceeds ” means proceeds received by the Borrower or any of its Subsidiaries after the Bridge Funding Date in cash or cash equivalents from any (a) Asset Sale (including any such proceeds received by way of deferred payment of principal pursuant to a note or installment receivable or purchase price adjustment receivable or otherwise, but only as and when received) net of (i) the reasonable cash costs of such sale, assignment or other disposition, (ii) taxes paid or reasonably estimated to be payable as a result thereof, (iii) any amount required to be paid or prepaid on Indebtedness secured by the assets subject to such Asset Sale and (iv) reasonable reserves for purchase price adjustments and indemnification payments in connection therewith, (b) Recovery Event or (c)(i) Equity Issuance, or (ii) Debt Issuance, in each case net of brokers’ and advisors’ fees and other costs incurred in connection with such transaction; provided that, (A) to the extent that the distribution to the Borrower or any Subsidiary of any Net Cash Proceeds would (1) in the case of Net Cash Proceeds received by a Foreign Subsidiary, result in material adverse tax consequences to the Borrower or its Subsidiaries, (2) result in a material breach of any material agreement governing Indebtedness of such Subsidiary permitted to exist or to be incurred by such Subsidiary under the terms of this Agreement or (3) in the case of Net Cash Proceeds received by a Foreign Subsidiary, be limited or prohibited under applicable local law, the application of such Net Cash Proceeds to the prepayments of the Loans pursuant to Section 2.10(d) shall be deferred on terms to be agreed between the Borrower and the Administrative Agent and (B) any Net Cash Proceeds pursuant to clause (a) or (b) above which are received on or after the Bridge Funding Date and prior to the Transaction Closing Date, the application of such Net Cash Proceeds to the prepayments of the Loans pursuant to Section 2.10(d) shall be deferred until the no later than the 5th Business Day following the Transaction Closing Date.

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          “ Obligations ” means the Loans and all other amounts owing by the Borrower to the Administrative Agent, any Lender, any Affiliate of any of them or any Indemnitee, of every type and description (whether by reason of an extension of credit, opening or amendment of a letter of credit or payment of any draft drawn thereunder, loan, guarantee, indemnification or otherwise), present or future, arising under this Agreement or any other Loan Document, whether direct or indirect (including those acquired by assignment), absolute or contingent, due or to become due, now existing or hereafter arising and however acquired and whether or not evidenced by any note, guarantee or other instrument or for the payment of money, including all letter of credit and other fees, interest, charges, expenses, attorneys’ fees and disbursements and other sums chargeable to the Borrower under this Agreement or any other Loan Document.
          “ Offering Memorandum ” means a complete preliminary prospectus or preliminary offering memorandum or preliminary private placement memorandum customary for Rule 144A offerings, which shall in any event contain (a) the Audited Financial Statements and the Pro Forma Financial Statements delivered to the Bookrunners pursuant to Section 4.02(k), (b) summary guarantor/nonguarantor net sales, income from operations, EBITDA, assets and debt information for the fiscal years ended December 31, 2007, December 31, 2006 and January 1, 2006 and (c) all other information that would be necessary for the investment banks thereunder to receive a customary comfort letter from independent accountants in connection with an offering of the Senior Notes.
          “ Other Taxes ” means any and all present or future stamp or documentary taxes or any other excise or property taxes, or similar charges or levies arising from any payment made hereunder or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement.
          “ Participant ” has the meaning set forth in Section 9.04(c).
          “ Patriot Act ” means the USA Patriot Act of 2001 (31 U.S.C. 5318 et seq. ) as amended from time to time.
          “ PBGC ” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entity performing similar functions.
          “ Permitted Acquisitions ” means any acquisition by the Borrower or a Subsidiary (including any investments by the Borrower or any Subsidiary in any other Subsidiary for purposes of financing such acquisition) of all or substantially all of the outstanding Stock (other than directors’ qualifying shares) in, or all or substantially all the assets of, or all or substantially all the assets constituting a division or line of business of, a Person if:
          (a) no Default would result therefrom and, at the time contractually binding obligations with respect to such acquisition are incurred, no Event of Default described in clauses (a), (b) (solely with respect to interest or commitment fees), (h) or (i) of Article VII has occurred and is continuing; and
          (b) the Borrower shall be in compliance, on a pro forma basis, with the covenants set forth in Section 6.04 as if and for the last day of the most recently ended fiscal quarter of the Borrower for which financial statements have been delivered pursuant to the clauses (a) or (b), as applicable, of Section 5.01.
          “ Permitted Encumbrances ” means:

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          (a) Liens imposed by law for taxes, assessments or governmental charges that are not overdue for a period of more than thirty (30) days or that are being contested in good faith in compliance with Section 5.04;
          (b) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s and other like Liens imposed by law, arising in the ordinary course of business and securing obligations that are not overdue by more than thirty (30) days (or if more than thirty (30) days overdue, are unfiled and no other action has been taken to enforce such Liens) or are being contested in compliance with Section 5.04;
          (c) (i) pledges and deposits made in the ordinary course of business in compliance with workers’ compensation, unemployment insurance and other social security laws or regulations and (ii) pledges and deposits in the ordinary course of business securing liability for reimbursement or indemnification obligations of (including obligations in respect of letters of credit or bank guarantees for the benefit of) insurance carriers providing property, casualty or liability insurance to the Borrower or any Subsidiary;
          (d) deposits to secure the performance of bids, trade contracts (other than for the repayment of borrowed money), leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature (including those to secure health, safety and environmental obligations), in each case in the ordinary course of business;
          (e) judgment liens in respect of judgments that do not constitute an Event of Default under clause (k) of Article VII;
          (f) easements, restrictions, rights-of-way and similar encumbrances and minor title defects on real property imposed by law or arising in the ordinary course of business that do not secure any payment obligations and do not, in the aggregate, materially detract from the value of the affected property or interfere with the ordinary conduct of business of the Borrower or any Subsidiary;
          (g) leases, licenses, subleases or sublicenses granted to others in the ordinary course of business which do not (i) interfere in any material respect with the business of the Borrower and its Subsidiaries, taken as a whole, or (ii) secure any Indebtedness;
          (h) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods in the ordinary course of business;
          (i) Liens (i) of a collection bank on the items in the course of collection, (ii) attaching to commodity trading accounts or other commodities brokerage accounts incurred in the ordinary course of business and (iii) in favor of a banking or other financial institution arising as a matter of law encumbering deposits or other funds maintained with a financial institution (including the right of set off) and which are customary in the banking industry;
          (j) any interest or title of a lessor under leases entered into by the Borrower or any Subsidiaries in the ordinary course of business and financing statements with respect to a lessor’s right in and to personal property leased to such Person in the ordinary course of such Person’s business other than through a capital lease;
          (k) Liens arising out of conditional sale, title retention, consignment or similar arrangements for sale of goods entered into by the Borrower or any Subsidiaries in the ordinary course of business;

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          (l) Liens deemed to exist in connection with Permitted Investments and reasonable customary initial deposits and margin deposits and similar Liens attaching to commodity trading accounts or other brokerage accounts maintained in the ordinary course of business and not for speculative purposes;
          (m) Liens that are contractual rights of set-off (i) relating to the establishment of depository relations with banks or other financial institutions not given in connection with the issuance of Indebtedness, (ii) relating to pooled deposit or sweep accounts of the Borrower or any Subsidiary to permit satisfaction of overdraft or similar obligations incurred in the ordinary course of business of the Borrower and the Subsidiaries or (iii) relating to purchase orders and other agreements entered into with customers of the Borrower or any Subsidiary in the ordinary course of business;
          (n) Liens solely on any cash earnest money deposits made by the Borrower or any Subsidiaries in connection with any letter of intent or purchase agreement;
          (o) ground leases in respect of real property on which facilities owned or leased by the Borrower or any of its Subsidiaries are located;
          (p) Liens on insurance policies and the proceeds thereof securing the financing of the premiums with respect thereto;
          (q) any zoning or similar law or right reserved to or vested in any Governmental Authority to control or regulate the use of any real property that does not materially interfere with the ordinary conduct of the business of the Borrower or any Subsidiary; and
          (r) Liens on specific items of inventory or other goods and the proceeds thereof securing such Person’s obligations in respect of documentary letters of credit or banker’s acceptances issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory or goods.
          “ Permitted Investments ” means:
          (a) direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America (or by any agency thereof to the extent such obligations are backed by the full faith and credit of the United States of America), in each case maturing within one year from the date of acquisition thereof;
          (b) investments in commercial paper maturing within 270 days from the date of acquisition thereof and having, at such date of acquisition, the highest credit rating obtainable from S&P or from Moody’s;
          (c) investments in certificates of deposit, banker’s acceptances and time deposits maturing within 180 days from the date of acquisition thereof issued or guaranteed by or placed with, and money market deposit accounts issued or offered by, any domestic office of any commercial bank organized under the laws of the United States of America or any State thereof which has a combined capital and surplus and undivided profits of not less than $500,000,000;
          (d) fully collateralized repurchase agreements with a term of not more than 30 days for securities described in clause (a) above and entered into with a financial institution satisfying the criteria described in clause (c) above; and

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          (e) money market funds that (i) comply with the criteria set forth in SEC Rule 2a-7 under the Investment Company Act of 1940, (ii) are rated AAA by S&P and Aaa by Moody’s and (iii) have portfolio assets of at least $5,000,000,000.
          “ Person ” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.
          “ Plan ” means any employee pension benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in respect of which the Borrower or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.
          “ Prime Rate ” means the rate of interest per annum publicly announced from time to time by JPMorgan Chase Bank as its prime rate in effect at its office located at 270 Park Avenue, New York, New York; each change in the Prime Rate shall be effective from and including the date such change is publicly announced as being effective.
          “ Pro Forma Financial Statements ” has the meaning assigned to such term in Section 4.02(k).
          “ Promissory Note ” has the meaning assigned to such term in Section 2.09(e).
          “ Recovery Event ” any settlement of or payment in respect of any property or casualty insurance claim or any condemnation proceeding (including taking of property) relating to any asset, real property or other tangible or intangible property of the Borrower or its Subsidiaries, in each case, resulting in proceeds exceeding $10,000,000.
          “ Register ” has the meaning set forth in Section 9.04(b)(iv).
          “ Regulation S-X ” means Regulation S-X of the Securities Act of 1933, as amended.
          “ Registration Statement ” means the Registration Statement on Form 10, under the Securities Exchange Act of 1934, as amended, of the Borrower filed with the SEC on February 12, 2008, including the exhibits filed therewith, without giving effect to any subsequent amendments filed thereto; provided , however , that Exhibits 99.1, 2.1, 10.1, 10.2 and 10.3 contained in the Registration Statement filed on February 12, 2008 shall, for the purposes of this definition, mean Annex I (Information Memorandum) and Annex II (Separation Documents) hereof.
          “ Related Parties ” means, with respect to any specified Person, such Person’s Affiliates and the respective partners, directors, officers, employees, agents and advisors of such Person and such Person’s Affiliates.
          “ Required Lenders ” means, at any time, Lenders having more than 50% in total of the principal amount of the Loans then outstanding.
          “ Revolver and Term Loan ” means those certain commitments and loans made pursuant to the Revolver and Term Loan Agreement in an aggregate amount of up to $2,400,000,000.
          “ Revolver and Term Loan Agreement ” means that certain Credit Agreement dated as of the date hereof, among the Borrower, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent.

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          “ S&P ” shall mean Standard & Poor’s Ratings Services, a Division of The McGraw-Hill Companies, Inc.
          “ SEC ” means the Securities and Exchange Commission or any successor thereto.
          “ Senior Notes ” means an aggregate of up to $2,000,000,000 of the Borrower’s senior unsecured notes to be issued in an unregistered offering conducted pursuant to Rule 144A and Regulation S under the U.S. Securities Act of 1933, as amended, the terms of which shall not require scheduled principal payments to be made at any time prior to the later of the Revolving Credit Facility Maturity Date (as defined in the Revolver and Term Loan Agreement) and the Term Loan Facility Maturity Date (as defined in the Revolver and Term Loan Agreement).
          “ Separation and Distribution Agreement ” means the Separation and Distribution Agreement among Cadbury and the Borrower and, solely for certain sections set forth therein, Cadbury UK, substantially in the form of the most recent draft delivered to the Bookrunners on or prior to the date hereof and contained in Annex II, as amended to the extent permitted under Section 3.14(d).
          “ Separation Documents ” means (i) the Separation and Distribution Agreement, (ii) the Transition Services Agreement between Cadbury and the Borrower substantially in the form of the most recent draft delivered to the Bookrunners on or prior to the date hereof and contained in Annex II, (iii) the Employee Matters Agreement among Cadbury, the Borrower and, solely for certain sections set forth therein, Cadbury UK substantially in the form of the most recent draft delivered to the Bookrunners on or prior to the date hereof and contained in Annex II, (iv) the Omnibus Stock Incentive Plan of 2008 substantially in the form of the most recent draft delivered to the Bookrunners on or prior to the date hereof and contained in Annex II, (v) the Annual Cash Incentive Plan substantially in the form of the most recent draft delivered to the Bookrunners on or prior to the date hereof and contained in Annex II, (vi) the Employee Stock Purchase Plan substantially in the form of the most recent draft delivered to the Bookrunners on or prior to the date hereof and contained in Annex II, (vii) the Tax Sharing and Indemnification Agreement, (vii) the Know-How Agreement among Cadbury, the Borrower and its Subsidiaries substantially in the form of the most recent draft delivered to the Bookrunners on or prior to the date hereof and contained in Annex II and (viii) the Domain Names Agreement among Cadbury and the Borrower substantially in the form of the most recent draft delivered to the Bookrunners on or prior to the date hereof and contained in Annex II, in each case, as amended to the extent permitted under Section 3.14(d).
          “ Separation Transactions ” means the series of transactions pursuant to which Cadbury intends to effect a separation of the Business from its global confectionary business and beverage business through a distribution of the common stock of the Borrower to shareholders of Cadbury and a transfer of the Business to the Borrower pursuant to the Separation and Distribution Agreement and as contemplated and described in the Registration Statement.
          “ Solvent ” means, with respect to any Person as of any date of determination, that, as of such date, (a) the value of the assets of such Person (both at fair value and present fair saleable value) is greater than the total amount of liabilities (including contingent and unliquidated liabilities) of such Person, (b) such Person is able to pay all liabilities of such Person as such liabilities mature and (c) such Person does not have unreasonably small capital. In computing the amount of contingent or unliquidated liabilities at any time, such liabilities shall be computed at the amount that, in light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.

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           Specified Indebtedness ” means, with respect to any Person, all Indebtedness of the type specified in clause (a) or (b) of the definition of “Indebtedness”, other than (i) Indebtedness consisting of capital leases or purchase money obligations, (ii) Indebtedness under the Revolver and Term Loan Agreement, (iii) Indebtedness among the Borrower and its Subsidiaries, (iv) Indebtedness arising pursuant to the Separation Documents (if any) and (v) Indebtedness incurred by such Person in the ordinary course of business.
          “ Statutory Reserve Rate ” means a fraction (expressed as a decimal), the numerator of which is the number one and the denominator of which is the number one minus the aggregate of the maximum reserve percentage (including any marginal, special, emergency or supplemental reserves) expressed as a decimal established by the Board to which the Administrative Agent is subject with respect to the Adjusted LIBO Rate, for eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of the Board). Such reserve percentage shall include those imposed pursuant to such Regulation D. Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be subject to such reserve requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to any Lender under such Regulation D or any comparable regulation. The Statutory Reserve Rate shall be adjusted automatically on and as of the effective date of any change in any reserve percentage.
          “ Stock ” means shares of capital stock (whether denominated as common stock or preferred stock), beneficial, partnership or membership interests, participations or other equivalents (regardless of how designated) of or in a corporation, partnership, limited liability company or equivalent entity, whether voting or non-voting.
          “ Stock Equivalents ” means all securities convertible into or exchangeable for Stock and all warrants, options or other rights to purchase or subscribe for any Stock, whether or not presently convertible, exchangeable or exercisable.
          “ subsidiary ” means, with respect to any Person (the “ parent ”) at any date, any corporation, limited liability company, partnership, association or other business entity of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power or, in the case of a partnership, more than 50% of the general partnership interests are, as of such date, owned, controlled or held.
          “ Subsidiary ” means any subsidiary of the Borrower. Prior to the Bridge Funding Date, all references to Subsidiaries shall refer to those subsidiaries of Cadbury constituting a part of the Business and that will become Subsidiaries upon the consummation of the Separation Transactions.
          “ Swap Agreement ” means any agreement with respect to any swap, forward, future or derivative transaction or option or similar agreement involving, or settled by reference to, one or more rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value or any similar transaction or any combination of these transactions; provided that no phantom stock or similar plan providing for payments only on account of services provided by current or former directors, officers, employees or consultants of the Borrower or the Subsidiaries shall be a Swap Agreement.
          “ Syndication Agent ” means Bank of America, N.A.
          “ Taxes ” means any and all present or future taxes, levies, imposts, duties or similar charges imposed (including by deduction or withholding) by any Governmental Authority.

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          “ Tax Sharing and Indemnification Agreement ” means the Tax Sharing and Indemnification Agreement among Cadbury, the Borrower and, solely for certain sections set forth therein, Cadbury UK substantially in the form of the most recent draft delivered to the Bookrunners on or prior to the date hereof and contained in Annex II.
          “ Transaction Closing Date ” has the meaning assigned to such term in Section 4.03.
          “ Transactions ” means, collectively, the Financing Transactions and the Separation Transactions.
          “ Type ”, when used in reference to any Loan or Borrowing, refers to whether the rate of interest on such Loan, or on the Loans comprising such Borrowing, is determined by reference to the Adjusted LIBO Rate or the Alternate Base Rate.
          “ UK Facility ” means the £1,750,000,000 multi-currency revolving credit facility to be made available to Cadbury pursuant to the terms of the facility agreement dated on or about the date of this agreement and made between, amongst others, Cadbury UK as borrower, Cadbury as guarantor and JP Morgan Chase Bank, N.A., Bank of America N.A., Goldman Sachs Credit Partners L.P., Morgan Stanley Senior Funding Inc. and UBS AG, London Branch as lenders.
          “ Withdrawal Liability ” means liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.
          SECTION 1.02. Classification of Loans and Borrowings . For purposes of this Agreement, Loans may be classified and referred to by Type ( e.g. , a “Eurodollar Loan”). Borrowings also may be classified and referred to by Type ( e.g. , a “Eurodollar Borrowing”).
          SECTION 1.03. Terms Generally . The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The word “will” shall be construed to have the same meaning and effect as the word “shall”. Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (c) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement and (e) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.
          SECTION 1.04. Accounting Terms; GAAP . (a) Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time; provided that, if the Borrower notifies the Administrative Agent that the Borrower requests an amendment to any provision hereof to eliminate the effect of any change occurring after the date hereof in GAAP or in the application thereof on the operation of such provision (or if the Administrative Agent notifies the Borrower that the Required Lenders request an amendment to

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any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith.
          (b) In calculating the ratios set forth in Section 6.04, (i) pro forma effect shall be given to any Permitted Acquisitions or dispositions of all or substantially all the Stock or assets of any Subsidiary or any division or line of business of the Borrower or any Subsidiary that occur during the applicable reference period, or thereafter and on or prior to the reporting date with respect thereto, as if they had occurred on the first day of the applicable reference period or as of the last day of the applicable quarter, as the case may be and (ii) for any period prior to the Transaction Closing Date, pro forma effect shall be given to the Transactions as if the Indebtedness incurred in connection therewith had been incurred on the first date of the applicable reference period.
ARTICLE II
The Credits
          SECTION 2.01. Commitments . (a) Each Lender, subject to the terms and conditions set forth herein, severally and not jointly with the other Lenders, agrees to make on the Bridge Funding Date a single Loan to the Borrower in an aggregate principal amount not to exceed such Lender’s Commitment. Once prepaid or repaid, no Term Loan may be re-borrowed.
          (b) Notwithstanding any other provision of this Agreement, each Lender’s Commitment shall be reduced, on a pro rata basis, by an amount equal to the aggregate Net Cash Proceeds received by the Borrower or any of its Subsidiaries during the period commencing on the Effective Date and ending on the Bridge Funding Date from any Debt Issuance or Equity Issuance.
          SECTION 2.02. Loans and Borrowings . (a) Each Loan shall be made as part of a Borrowing consisting of Loans made by the Lenders ratably in accordance with their respective Commitments. The failure of any Lender to make any Loan required to be made by it shall not relieve any other Lender of its obligations hereunder; provided that the Commitments of the Lenders are several and no Lender shall be responsible for any other Lender’s failure to make Loans as required.
          (b) Subject to Section 2.13, each Borrowing shall be ABR Loans or Eurodollar Loans as the Borrower may request in accordance herewith. Each Lender at its option may make any Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan; provided that any exercise of such option shall not affect the obligation of the Borrower to repay such Loan in accordance with the terms of this Agreement; and provided further that, as a result of the exercise of such option, such Lender, or such foreign branch or Affiliate of such Lender shall not be entitled to receive any greater payment under Section 2.14 or 2.16 than such Lender is entitled to prior to exercising such option.
          (c) At the commencement of each Interest Period for any Eurodollar Borrowing, such Borrowing shall be in an aggregate amount that is an integral multiple of $1,000,000 and not less than $10,000,000. At the time that each ABR Borrowing is made, such Borrowing shall be in an aggregate amount that is an integral multiple of $1,000,000 and not less than $10,000,000. Borrowings of more than one Type may be outstanding at the same time; provided that there shall not at any time be more than a total of ten (10) Eurodollar Term Borrowings outstanding.

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          (d) Notwithstanding any other provision of this Agreement, the Borrower shall not be entitled to request, or to elect to convert or continue, any Borrowing if the Interest Period requested with respect thereto would end after the Maturity Date.
          SECTION 2.03. Requests for Borrowings . To request a Borrowing, the Borrower shall notify the Administrative Agent of such request by telephone (a) in the case of a Eurodollar Borrowing, not later than 11:00 a.m., New York City time, three (3) Business Days before the date of the proposed Borrowing or (b) in the case of an ABR Borrowing, not later than 12:00 noon, New York City time, the same Business Day as the proposed Borrowing. Each such telephonic Borrowing Request shall be irrevocable and shall be confirmed promptly by hand delivery or telecopy to the Administrative Agent of a written Borrowing Request in a form approved by the Administrative Agent and signed by the Borrower. Each such telephonic and written Borrowing Request shall specify the following information in compliance with Section 2.02:
          (i) the aggregate amount of the requested Borrowing;
          (ii) the date of such Borrowing, which shall be a Business Day;
          (iii) whether such Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing;
          (iv) in the case of a Eurodollar Borrowing, the initial Interest Period to be applicable thereto, which shall be a period contemplated by the definition of the term “Interest Period”; and
          (v) the location and number of the Borrower’s account to which funds are to be disbursed, which shall comply with the requirements of Section 2.06.
If no Interest Period is specified with respect to any requested Eurodollar Borrowing, then the Borrower shall be deemed to have selected an Interest Period of one month’s duration. Promptly following receipt of a Borrowing Request in accordance with this Section, the Administrative Agent shall advise each Lender of the details thereof and of the amount of such Lender’s Loan to be made as part of the requested Borrowing.
          SECTION 2.04. Reserved .
          SECTION 2.05. Reserved .
          SECTION 2.06. Funding of Borrowings . (a) Each Lender shall make each Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds by 12:00 noon, New York City time, to the account of the Administrative Agent most recently designated by it for such purpose by notice to the Lenders. On the Bridge Funding Date, the Administrative Agent will deposit the proceeds of the Loans into the Collateral Account (if the Transaction Closing Date does not occur on the same date) and will release such funds (or make such funds available) on the Transaction Closing Date to the Borrower for the purposes of funding the Separation Transactions on such date as contemplated in Section 5.08(a).
          (b) Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Borrowing that such Lender will not make available to the Administrative Agent such Lender’s share of such Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with paragraph (a) of this Section

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and may, in reliance upon such assumption, make available to the Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the Administrative Agent, then the applicable Lender and the Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount with interest thereon, for each day from and including the date such amount is made available to the Borrower to but excluding the date of payment to the Administrative Agent, at (i) in the case of such Lender, the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation or (ii) in the case of the Borrower, the interest rate applicable to ABR Loans. If such Lender pays such amount to the Administrative Agent, then such amount shall constitute such Lender’s Loan included in such Borrowing.
          SECTION 2.07. Interest Elections . (a) Each Borrowing initially shall be of the Type specified in the applicable Borrowing Request and, in the case of a Eurodollar Borrowing, shall have an initial Interest Period as specified in such Borrowing Request. Thereafter, the Borrower may elect to convert such Borrowing to a different Type or to continue such Borrowing and, in the case of a Eurodollar Borrowing, may elect Interest Periods therefor, all as provided in this Section. The Borrower may elect different options with respect to different portions of the affected Borrowing, in which case each such portion shall be allocated ratably among the Lenders holding the Loans comprising such Borrowing, and the Loans comprising each such portion shall be considered a separate Borrowing.
          (b) To make an election pursuant to this Section, the Borrower shall notify the Administrative Agent of such election by telephone by the time that a Borrowing Request would be required under Section 2.03 if the Borrower were requesting a Borrowing of the Type resulting from such election to be made on the effective date of such election. Each such telephonic Interest Election Request shall be irrevocable and shall be confirmed promptly by hand delivery or telecopy to the Administrative Agent of a written Interest Election Request in a form approved by the Administrative Agent and signed by the Borrower.
          (c) Each telephonic and written Interest Election Request shall specify the following information in compliance with Section 2.03:
          (i) the Borrowing to which such Interest Election Request applies and, if different options are being elected with respect to different portions thereof, the portions thereof to be allocated to each resulting Borrowing (in which case the information to be specified pursuant to clauses (iii) and (iv) below shall be specified for each resulting Borrowing);
          (ii) the effective date of the election made pursuant to such Interest Election Request, which shall be a Business Day;
          (iii) whether the resulting Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing; and
          (iv) if the resulting Borrowing is a Eurodollar Borrowing, the Interest Period to be applicable thereto after giving effect to such election, which shall be a period contemplated by the definition of the term “Interest Period”.
If any such Interest Election Request requests a Eurodollar Borrowing but does not specify an Interest Period, then the Borrower shall be deemed to have selected an Interest Period of one month’s duration.

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          (d) Promptly following receipt of an Interest Election Request, the Administrative Agent shall advise each Lender of the details thereof and of such Lender’s portion of each resulting Borrowing.
          (e) If the Borrower fails to deliver a timely Interest Election Request with respect to a Eurodollar Borrowing prior to the end of the Interest Period applicable thereto, then, unless such Borrowing is repaid as provided herein, at the end of such Interest Period such Borrowing shall be converted to an ABR Borrowing. Notwithstanding any contrary provision hereof, if an Event of Default has occurred and is continuing and the Administrative Agent, at the request of the Required Lenders, so notifies the Borrower, then, so long as an Event of Default is continuing (i) no outstanding Borrowing may be converted to or continued as a Eurodollar Borrowing and (ii) unless repaid, each Eurodollar Borrowing shall be converted to an ABR Borrowing at the end of the Interest Period applicable thereto.
          SECTION 2.08. Termination and Reduction of Commitments . Unless previously terminated, the Commitments shall terminate on the Bridge Funding Date or the date on which the Commitments are reduced to zero pursuant to Section 2.01(b); provided that, if both the Bridge Funding Date and the Transaction Closing Date have not occurred prior to the Early Commitment Termination Date, then the Commitments shall terminate on the Early Commitment Termination Date.
          SECTION 2.09. Repayment of Loans; Evidence of Debt . (a) The Borrower hereby unconditionally promises to pay to the Administrative Agent for the account of each Lender, the then unpaid principal amount of each Loan on the Maturity Date (or if earlier, the date of the termination of the Commitments in full).
          (b) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such Lender resulting from each Loan made by such Lender, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder.
          (c) The Administrative Agent shall maintain accounts in which it shall record (i) the amount of each Loan made hereunder, the Type thereof and the Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder for the account of the Lenders and each Lender’s share thereof.
          (d) The entries made in the accounts maintained pursuant to paragraph (b) or (c) of this Section shall be prima facie evidence of the existence and amounts of the obligations recorded therein (absent manifest error); provided that the failure of any Lender or the Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the obligation of the Borrower to repay the Loans in accordance with the terms of this Agreement.
          (e) Any Lender may request that Loans made by it be evidenced by a promissory note (a “ Promissory Note ”). In such event, the Borrower shall prepare, execute and deliver to such Lender a Promissory Note payable to the order of such Lender (or, if requested by such Lender, to such Lender and its registered assigns) and in a form approved by the Administrative Agent.
          SECTION 2.10. Prepayment of Loans . (a) The Borrower shall have the right at any time and from time to time to prepay any Borrowing in whole or in part, subject to prior notice in accordance with paragraph (b) of this Section.

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          (b) The Borrower shall notify the Administrative Agent by telephone (confirmed by telecopy) of any prepayment hereunder (i) in the case of prepayment of a Eurodollar Borrowing, not later than 12:00 noon, New York City time, three Business Days before the date of prepayment or (ii) in the case of prepayment of an ABR Borrowing, not later than 12:00 noon, New York City time, one Business Day before the date of prepayment. Each such notice shall be irrevocable and shall specify the prepayment date and the principal amount of each Borrowing or portion thereof to be prepaid; provided that, a notice of prepayment delivered by the Borrower may state that such notice is conditioned upon the occurrence of an event, in which case such notice may be revoked by the Borrower (by notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied. Promptly following receipt of any such notice of prepayment relating to the Loans, the Administrative Agent shall advise the Lenders of the contents of such notice.
          (c) If the Transaction Closing Date has not occurred on or prior to the Early Commitment Termination Date, the Borrower shall immediately prepay the entire principal amount of the Loans then outstanding, together with all accrued but unpaid interest and fees thereon and all other Obligations of the Borrower owing on such date (other than indemnities and contingent claims which by their terms would survive the termination of this Agreement). The Borrower authorizes the release of all funds on deposit in the Collateral Account on such date and hereby irrevocably authorizes and directs the Administrative Agent to apply such funds to such Obligations in the manner set forth in Section 2.17(b) without any further action or authorization by the Borrower. In the event there are excess funds in the Collateral Account after all such Obligations have been paid in full, such funds shall be made available to the Borrower.
          (d) (i) At any time on or after the Bridge Funding Date, upon receipt by the Borrower or any of its Subsidiaries of Net Cash Proceeds arising from any Asset Sale, Recovery Event (except to the extent that Net Cash Proceeds received in connection with such Recovery Event are applied within 180 days of receipt thereof to the replacement or repair of the assets giving rise thereto), Debt Issuance or Equity Issuance, the Borrower shall prepay the Loans in an amount equal to 100% of such Net Cash Proceeds;
     (ii) The Borrower shall notify the Administrative Agent not later than the date of receipt by the Borrower or applicable Subsidiary of receipt of any Net Cash Proceeds subject to this Section 2.10(d). Each such notice shall specify the prepayment date and the principal amount of each Borrowing or portion thereof to be prepaid;
     (iii) Subject to the terms of the proviso in the definition of “Net Cash Proceeds”, each prepayment of Loans under this Section 2.10 shall be accompanied by accrued interest to the date of such prepayment on the amount prepaid and shall be made no later than the fifth Business Days after following the date of such receipt.
     (iv) Any prepayment of Net Cash Proceeds made pursuant to this Section 2.10 on or after the Bridge Funding Date, but prior to the Transaction Closing Date, shall be made by the Borrower providing notice to the Administrative Agent to release a portion of the funds in the Collateral Account equal to the amount of such Net Cash Proceeds and apply the funds so released to the prepayment of the Loans.
          SECTION 2.11. Fees . (a) The Borrower agrees to pay to the Agents and the Bookrunners the fees, the amount and dates of payment of which are embodied in the Fee and Syndication Letter.

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          (b) All fees payable hereunder (other than under the Fee and Syndication Letter) shall be paid on the dates due, in immediately available funds, to the Administrative Agent for distribution, in the case of facility fees and participation fees, to the Lenders and Bookrunners. Fees paid shall not be refundable under any circumstances. All fees payable under the Fee and Syndication Letter shall be paid in accordance with the terms thereof.
          SECTION 2.12. Interest . (a) The Loans comprising each ABR Borrowing shall bear interest at the Alternate Base Rate plus the Applicable Rate.
          (b) The Loans comprising each Eurodollar Borrowing shall bear interest at the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing plus the Applicable Rate
          (c) Notwithstanding the foregoing, if any principal of or interest on any Loan or any fee or other amount payable by the Borrower hereunder is not paid when due (after giving effect to any applicable grace periods), whether at stated maturity, upon acceleration or otherwise, such overdue amount shall bear interest, after as well as before judgment, at a rate per annum equal to (i) in the case of overdue principal of any Loan, 2% plus the rate otherwise applicable to such Loan as provided in the preceding paragraphs of this Section or (ii) in the case of any other amount, 2% plus the rate applicable to ABR Loans as provided in paragraph (a) of this Section.
          (d) Accrued interest on each Loan shall be payable in arrears on each Interest Payment Date for such Loan; provided that (i) interest accrued pursuant to paragraph (c) of this Section shall be payable on demand, (ii) in the event of any repayment or prepayment of any Loan, accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment and (iii) in the event of any conversion of any Eurodollar Loan prior to the end of the current Interest Period therefor, accrued interest on such Loan shall be payable on the effective date of such conversion.
          (e) All interest hereunder shall be computed on the basis of a year of 360 days, except that interest computed by reference to the Alternate Base Rate at times when the Alternate Base Rate is based on the Prime Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap year), and in each case shall be payable for the actual number of days elapsed (including the first day but excluding the last day). The applicable Alternate Base Rate, Adjusted LIBO Rate or LIBO Rate shall be determined by the Administrative Agent, and such determination shall be conclusive absent manifest error.
          SECTION 2.13. Alternate Rate of Interest . If prior to the commencement of any Interest Period for a Eurodollar Borrowing:
          (a) the Administrative Agent determines (which determination shall be conclusive absent manifest error) that adequate and reasonable means do not exist for ascertaining the Adjusted LIBO Rate or the LIBO Rate, as applicable, for such Interest Period; or
          (b) the Administrative Agent is advised by the Required Lenders that the Adjusted LIBO Rate or the LIBO Rate, as applicable, for such Interest Period will not adequately and fairly reflect the cost to such Lenders (or Lender) of making or maintaining their Loans (or its Loan) included in such Borrowing for such Interest Period;
then the Administrative Agent shall give notice thereof to the Borrower and the Lenders by telephone or telecopy as promptly as practicable thereafter and, until the Administrative Agent notifies the Borrower and the Lenders that the circumstances giving rise to such notice no longer exist, any Interest Election

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Request that requests the conversion of any Borrowing to, or continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective.
          SECTION 2.14. Increased Costs . (a) If any Change in Law shall:
     (i) impose, modify or deem applicable any reserve, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Lender (except any such reserve requirement reflected in the Adjusted LIBO Rate); or
     (ii) impose on any Lender or the London interbank market any other condition affecting this Agreement or Eurodollar Loans made by such Lender or participation therein;
and the result of any of the foregoing shall be to increase the cost to such Lender of making or maintaining any Eurodollar Loan (or of maintaining its obligation to make any such Loan) or to reduce the amount of any sum received or receivable by such Lender hereunder (whether of principal, interest or otherwise), then the Borrower will pay to such Lender such additional amount or amounts as will compensate such Lender for such additional costs incurred or reduction suffered.
          (b) If any Lender determines that any Change in Law regarding capital requirements has or would have the effect of reducing the rate of return on such Lender’s capital or on the capital of such Lender’s holding company, if any, as a consequence of this Agreement or the Loans made by such Lender to a level below that which such Lender or such Lender’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s policies and the policies of such Lender’s holding company with respect to capital adequacy), then from time to time the Borrower will pay to such Lender such additional amount or amounts as will compensate such Lender or such Lender’s holding company for any such reduction suffered.
          (c) A certificate of a Lender setting forth the amount or amounts necessary to compensate such Lender or its holding company as specified in paragraph (a) or (b) of this Section shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay such Lender the amount shown as due on any such certificate within ten (10) days after receipt thereof.
          (d) Failure or delay on the part of any Lender to demand compensation pursuant to this Section shall not constitute a waiver of such Lender’s right to demand such compensation; provided that the Borrower shall not be required to compensate a Lender pursuant to this Section for any increased costs or reductions incurred more than 180 days prior to the date that such Lender, as the case may be, notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s intention to claim compensation therefor; provided further that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 180-day period referred to above shall be extended to include the period of retroactive effect thereof.
          (e) Notwithstanding anything to the contrary herein, this Section 2.14 shall not apply to any Taxes, which are governed exclusively by Section 2.16.
          SECTION 2.15. Break Funding Payments . In the event of (a) the payment of any principal of any Eurodollar Loan other than on the last day of an Interest Period applicable thereto (including as a result of an Event of Default), (b) the conversion of any Eurodollar Loan other than on the last day of the Interest Period applicable thereto, (c) the failure to borrow, convert, continue or prepay any Eurodollar Loan on the date specified in any notice delivered pursuant hereto (regardless of whether such

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notice may be revoked under Section 2.10(b) and is revoked in accordance therewith), or (d) the assignment of any Eurodollar Loan other than on the last day of the Interest Period applicable thereto as a result of a request by the Borrower pursuant to Section 2.18, then, in any such event, the Borrower shall compensate each Lender for the loss, cost and expense attributable to such event. In the case of a Eurodollar Loan, such loss, cost or expense to any Lender shall be deemed to include an amount determined by such Lender to be the excess, if any, of (i) the amount of interest which would have accrued on the principal amount of such Loan had such event not occurred, at the Adjusted LIBO Rate that would have been applicable to such Loan, for the period from the date of such event to the last day of the then current Interest Period therefor (or, in the case of a failure to borrow, convert or continue, for the period that would have been the Interest Period for such Loan), over (ii) the amount of interest which would accrue on such principal amount for such period at the interest rate which such Lender would bid were it to bid, at the commencement of such period, for dollar deposits of a comparable amount and period from other banks in the eurodollar market. A certificate of any Lender setting forth any amount or amounts that such Lender is entitled to receive pursuant to this Section shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay such Lender the amount shown as due on any such certificate within ten (10) days after receipt thereof.
          SECTION 2.16. Taxes . (a) Any and all payments by or on account of any obligation of the Borrower hereunder shall be made free and clear of and without deduction for any Indemnified Taxes or Other Taxes; provided that if the Borrower shall be required to deduct any Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section) the Administrative Agent or Lender (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make such deductions and (iii) the Borrower shall pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law.
          (b) In addition, the Borrower shall pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law.
          (c) The Borrower shall indemnify the Administrative Agent and each Lender, within twenty (20) days after written demand therefor, for the full amount of any Indemnified Taxes or Other Taxes paid by the Administrative Agent or such Lender, as the case may be, on or with respect to any payment by or on account of any obligation of the Borrower hereunder (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section) and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority (which demand shall be made within 180 days of the earlier of (x) if the Administrative Agent, such Lender received written notice from a Governmental Authority demanding payment of such Indemnified Taxes or Other Taxes, the date the Administrative Agent, such Lender received such written notice or (y) the date the Administrative Agent, such Lender filed a tax return on which such Indemnified Taxes or Other Taxes is reflected). A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender, or by the Administrative Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error. If the Borrower determines in good faith that a reasonable basis exists for contesting an Indemnified Tax or Other Tax with respect to which it has made an indemnification payment under this subsection (c), the relevant Administrative Agent or Lender shall cooperate with the Borrower in challenging such Tax at the Borrower’s expense and if requested by the Borrower in writing; provided , however , that no Administrative Agent or Lender shall be required to take any action hereunder that, in the sole discretion of such Administrative Agent or Lender, would cause such Administrative Agent or Lender to suffer any material economic, legal or regulatory disadvantage. Additionally, nothing herein contained shall interfere with the right of an

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Administrative Agent or Lender to arrange its tax affairs in whatever manner it thinks fit nor oblige any Administrative Agent or Lender to make available its tax returns or disclose any information relating to its tax affairs or any computations in respect thereof to the Borrower or require any Administrative Agent or Lender to do anything that would materially prejudice its ability to benefit from any other refunds, credits, reliefs, remissions or repayments to which it may be entitled.
          (d) As soon as practicable after any payment of Indemnified Taxes or Other Taxes by the Borrower to a Governmental Authority, the Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.
          (e) (i) Each Lender (other than a Lender described in Treasury Regulation Section 1.6049-4(c)(1)(ii)(A)(1) unless reasonably requested by the Borrower and the Administrative Agent in writing) shall deliver documentation prescribed by applicable laws as will enable the Borrower or the Administrative Agent to determine whether or not such Lender is subject to United States federal backup withholding or information reporting requirements, but only if such Lender is legally entitled to do so.
               (ii) Any Foreign Lender that is entitled to an exemption from or reduction of withholding tax under the law of the jurisdiction in which the Borrower is located, or any treaty to which such jurisdiction is a party, with respect to payments under this Agreement shall deliver to the Borrower (with a copy to the Administrative Agent), at the time or times prescribed by applicable law, such properly completed and executed documentation prescribed by applicable law or reasonably requested by the Borrower as will permit such payments to be made without withholding or at a reduced rate. Without limiting the foregoing, each Foreign Lender shall deliver to the Borrower and the Administrative Agent on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), but only if such Foreign Lender is legally entitled to do so, whichever of the following is applicable:
                    (A) two (2) duly completed copies of Internal Revenue Service Form W-8BEN (or successor form) claiming eligibility for benefits of an income tax treaty to which the United States is a party;
                    (B) two (2) duly completed copies of Internal Revenue Service Form W-8ECI (or successor form);
                    (C) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under section 881(c) of the Code, (x) a certificate to the effect that such Foreign Lender is not (I) a “bank” within the meaning of section 881(c)(3)(A) of the Code, (II) a “10 percent shareholder” of the Borrower within the meaning of section 881(c)(3)(B) of the Code, or (III) a “controlled foreign corporation” described in section 881(c)(3)(C) of the Code and (y) two duly completed copies of Internal Revenue Service Form W-8BEN (or successor form); or
                    (D) any other form prescribed by applicable laws (including Internal Revenue Service Form W-8IMY) as a basis for claiming exemption from or a reduction in United Stated federal withholding tax duly completed together with such supplementary documentation as may be prescribed by applicable law to permit the Borrower to determine the withholding or deduction required to be made.
               (iii) Each Lender, if reasonably requested by the Borrower or the Administrative Agent, shall deliver to the Borrower and the Administrative Agent such additional duly

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completed forms, certificates or documentation described in this subsection (e) that such Lender is legally entitled to so deliver upon or prior to the expiration or obsolescence of any such forms, certificates or documentation previously delivered by it pursuant to this subsection (e). Additionally, each Lender shall deliver to the Borrower and the Administrative Agent such additional duly completed forms, certificates or documentation described in this subsection (e) that such Lender is legally entitled to so deliver after the occurrence of a change in the material facts reflected on any such forms, certificates or documentation previously delivered by it pursuant to this subsection (e) (or if, as a result of such change in material facts, such Lender is no longer legally entitled to deliver any forms, certificates or documentation pursuant to this subsection (e), such Lender shall so notify the Borrower and the Administrative Agent).
          (f) For any period with respect to which a Lender has failed to provide the Borrower with the appropriate form, certificate or other document described in subsection (e) above (other than if such failure is due to a change in law, or in the interpretation or application thereof, occurring after the date on which a form, certificate or other document originally was required to be provided or if such form, certificate or other document otherwise is not required under subsection (e) above, including because such Lender is not legally entitled to provide such form, certificate or other document), such Lender shall not be entitled to indemnification under subsection (a) or (c) of this Section 2.16 with respect to Indemnified Taxes imposed by the United States by reason of such failure.
          (g) If the Administrative Agent or a Lender determines, in its sole discretion, that it has received a refund of any Taxes or Other Taxes as to which it has been indemnified by the Borrower or with respect to which the Borrower has paid additional amounts pursuant to this Section 2.16, it shall pay over such refund to the Borrower (but only to the extent of indemnity payments made, or additional amounts paid, by the Borrower under this Section 2.16 with respect to the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of the Administrative Agent or such Lender and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund); provided , that the Borrower, upon the request of the Administrative Agent or such Lender, agrees to repay the amount paid over to the Borrower ( plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Administrative Agent or such Lender in the event the Administrative Agent or such Lender is required to repay such refund to such Governmental Authority. This Section shall not be construed to require the Administrative Agent or any Lender to make available its tax returns (or any other information relating to its taxes which it deems confidential) to the Borrower or any other Person.
          SECTION 2.17. Payments Generally; Pro Rata Treatment; Sharing of Set-offs . (a) The Borrower shall make each payment required to be made by it hereunder (whether of principal, interest, fees or of amounts payable under Section 2.14, 2.15 or 2.16, or otherwise) prior to 12:00 noon, New York City time, on the date when due, in immediately available funds, without set-off or counterclaim. Any amounts received after such time on any date may, in the discretion of the Administrative Agent, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon. All such payments shall be made to the Administrative Agent at its offices at 270 Park Avenue, New York, New York, except that payments pursuant to Sections 2.14, 2.15, 2.16 and 9.03 shall be made directly to the Persons entitled thereto. The Administrative Agent shall distribute any such payments received by it for the account of any other Person to the appropriate recipient promptly following receipt thereof. If any payment hereunder shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day, and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension. All payments hereunder shall be made in dollars.
          (b) Reserved .

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          (c) If any Lender shall, by exercising any right of set-off or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Loans resulting in such Lender receiving payment of a greater proportion of the aggregate amount of its Loans and accrued interest thereon than the proportion received by any other Lender, then the Lender receiving such greater proportion shall purchase (for cash at face value) participations in the Loans of other Lenders to the extent necessary so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Loans; provided that (i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest, and (ii) the provisions of this paragraph shall not be construed to apply to any payment made by the Borrower pursuant to and in accordance with the express terms of this Agreement or any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans to any assignee or participant, other than to the Borrower or any Subsidiary or Affiliate thereof (as to which the provisions of this paragraph shall apply). The Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against the Borrower rights of set-off and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of the Borrower in the amount of such participation.
          (d) Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders hereunder that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders the amount due. In such event, if the Borrower has not in fact made such payment, then each of the Lenders severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation.
          (e) If any Lender shall fail to make any payment required to be made by it pursuant to Section 2.06(b), 2.17(d) or 9.03(c), then the Administrative Agent may, in its discretion (notwithstanding any contrary provision hereof), apply any amounts thereafter received by the Administrative Agent for the account of such Lender to satisfy such Lender’s obligations under such Sections until all such unsatisfied obligations are fully paid.
          SECTION 2.18. Mitigation Obligations; Replacement of Lenders . (a) If any Lender requests compensation under Section 2.14, or if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.16, then such Lender shall use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.14 or 2.16, as the case may be, in the future and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.
          (b) If (i) any Lender requests compensation under Section 2.14, (ii) the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.16, (iii) any Lender defaults in its obligation to fund Loans hereunder or (iv) in connection with any proposed amendment, modification, waiver or termination requiring the

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consent of all the Lenders or all affected Lenders, the consent of the Required Lenders is obtained but the consent of any Lender whose consent is required is not obtained, then the Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in Section 9.04), all its interests, rights and obligations under this Agreement to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that (i) the Borrower shall have received the prior written consent of the Administrative Agent, which consent shall not unreasonably be withheld, (ii) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder, from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts) and (iii) in the case of any such assignment resulting from a claim for compensation under Section 2.14 or payments required to be made pursuant to Section 2.16, such assignment will result in a reduction in such compensation or payments. A Lender shall not be required to make any such assignment and delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply.
ARTICLE III
Representations and Warranties
          To induce the Lenders and the Administrative Agent to enter into this Agreement, (i) on and as of the Effective Date, the Borrower makes each of the representations and warranties set forth in Sections 3.01(a) and 3.02 below (but only with respect to the Borrower) and in Section 3.11 below, (ii) on and as of the Bridge Funding Date, the Borrower makes each of the representations and warranties set forth in Sections 3.01, 3.02, 3.03, 3.04(a), 3.05, 3.06(a)(i), 3.07, 3.08, 3.09, 3.10, 3.11 and 3.12 below and (iii) on and as of the Transaction Closing Date, the Borrower makes each of the representations and warranties set forth in Section 3.14 and, with respect to each of the Guarantors becoming party to the Guaranty after the Bridge Funding Date and on or prior to the Transaction Closing Date, each of the representations and warranties set forth in Sections 3.01(a), 3.02, 3.03(a), 3.03(b) and 3.08 applicable to such Guarantors:
          SECTION 3.01. Organization; Powers . (a) Each of the Loan Parties is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, and has all requisite corporate power, limited liability company power or limited partnership power and authority, as applicable, to carry on its business as now conducted and, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect, is qualified to do business in, and is in good standing in, every jurisdiction where such qualification is required.
          (b) Schedule 3.01(b) sets forth the name and jurisdiction of organization of each Material Subsidiary that is expected to be a Material Subsidiary after the Transaction Closing Date, pursuant to the Separation Documents as modified in accordance with Section 3.14(d). On the Transaction Closing Date, each Material Subsidiary will be a wholly-owned Subsidiary of the Borrower.
          SECTION 3.02. Authorization; Enforceability . The Financing Transactions are within each Loan Party’s corporate powers and have been duly authorized by all necessary corporate and, if required, stockholder action. Each of this Agreement and the other Loan Documents has been duly executed and delivered by each Loan Party and constitutes a legal, valid and binding obligation of such Loan Party, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency,

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reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.
          SECTION 3.03. Governmental Approvals; No Conflicts . (a) The Financing Transactions (i) do not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority, except such as have been obtained or made and are in full force and effect, (ii) will not violate the charter, by-laws or other organizational documents of the Borrower or any Loan Party, (iii) will not violate any applicable law (including ERISA and Environmental Laws) or regulation or any order of any Governmental Authority, and (iv) will not violate or result in a default under any indenture, agreement or other instrument binding upon the Borrower or any Loan Party or its assets or give rise to a right thereunder to require any payment to be made by the Borrower or any of its Subsidiaries, except in the case of clauses (i), (iii) and (iv) above for any such violations or defaults that, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.
          (b) The Financing Transactions will not (i) violate the charter, by-laws or other organizational documents of Cadbury or any subsidiary of Cadbury that owns or, immediately prior to the Separation Transactions, has owned, the Borrower, (ii) violate or result in a default or a right to require any payment under any material indenture or other material debt agreement binding upon Cadbury or any subsidiary of Cadbury that owns or, immediately prior to the Separation Transactions, has owned, the Borrower or any of their respective assets or give rise to a right thereunder to require any payment to be made by such Person and (iii) violate or result in a default under any agreement or other instrument (excluding those referred to in clause (ii) above) binding upon Cadbury or any subsidiary of Cadbury that owns or, immediately prior to the Separation Transactions, has owned, the Borrower or any of their respective assets or give rise to a right thereunder to require any payment to be made by such Person, except in the case of this clause (iii), for any such violations or defaults that, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.
          (c) The Separation Transactions (i) will not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority, except such as have been (or will be prior to consummation of the Separation Transactions) obtained or made and are (or will be at the time of the consummation of the Separation Transactions) in full force and effect, (ii) will not violate the charter, by-laws or other organizational documents of Cadbury or any subsidiary of Cadbury involved in the Separation Transactions or identified in Schedule 2.01(a) of the Separation and Distribution Agreement, (iii) will not violate any applicable law (including ERISA and Environmental Laws) or regulation or any order of any Governmental Authority and (iv) will not violate in any material respect or result in a material default or a right to require a material payment under any material indenture, any other agreement or other instrument binding upon Cadbury or any subsidiary of Cadbury involved in the Separation Transactions or identified in Schedule 2.01(a) of the Separation and Distribution Agreement, or any of their respective assets, or give rise to a right thereunder to require any material payment to be made by any such Person, except in the case of clauses (i), (iii) and (iv) above (other than, in the case of clause (iv), with regards to any indentures and other material debt agreements) for any such violations or defaults that, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect or a Cadbury Material Adverse Effect.
          SECTION 3.04. Financial Condition; No Material Adverse Change . (a) The Borrower has heretofore furnished (or, with respect to the fiscal year ended December 31, 2007 and the Pro Forma Financial Statements, will furnish prior to the Bridge Funding Date) to the Lenders its (i) Audited Financial Statements, all reported on by Deloitte & Touche LLP and (ii) the Pro Forma Financial Statements. The Audited Financial Statements described in clause (i) above, present fairly, in all material respects the combined financial position, results of operations and cash flows of the Borrower as of such dates and for such periods in accordance with GAAP and have been prepared in all material respects in

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accordance with Regulation S-X. The Pro Forma Financial Statements have been prepared in all material respects in accordance with Regulation S-X and related SEC and other applicable guidance and based on assumptions which are reasonable and set forth therein.
          (b) Since December 31, 2007, there has been no Material Adverse Change (other than the Disclosed Matters set out on Part II of Schedule 3.06).
          SECTION 3.05. Properties. (a) The Borrower and its Subsidiaries have good title to, or valid leasehold interests in, all its real and personal property material to their business, except for (i) minor defects in title that do not interfere with their ability to conduct their business as currently conducted or to utilize such properties for their intended purposes and (ii) except for other defects to title that, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.
          (b) The Borrower and its Subsidiaries collectively own, or are licensed to use, all trademarks, tradenames, copyrights, patents and other intellectual property used in their business, and such use by the Borrower and its Subsidiaries, to the best of knowledge of the Borrower, does not infringe upon the material rights of any other Person except as could not reasonably be expected to have a Material Adverse Effect
          SECTION 3.06. Litigation and Environmental Matters . (a) There shall be no investigation or review pending by any Governmental Authority with respect to, or actions, suits, inquiries, investigations or proceedings pending (or, to the best of knowledge of the Borrower, threatened) before, or orders, judgments or decrees of, any governmental entity, (i) that could reasonably be expected to restrain, prevent or impose materially adverse conditions upon the Transactions (which for the avoidance of doubt shall not be deemed to include the SEC review of the Form 10 or similar regulatory review under United Kingdom securities law) or (ii) that could reasonably be expected to have a Material Adverse Effect (other than the Disclosed Matters set out in Part I of Schedule 3.06, to the extent that they do not result in aggregate payments, damages, losses or liabilities of the Borrower and its Subsidiaries in excess of $50,000,000 in the aggregate).
          (b) Except for the Disclosed Matters and except with respect to any other matters that, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect, the Borrower and its Subsidiaries (i) have not failed to comply with any Environmental Law or to obtain, maintain or comply with any permit, license or other approval required under any Environmental Law, (ii) have not become subject to any Environmental Liability, and (iii) have not received notice of any claim with respect to any Environmental Liability.
          SECTION 3.07. Compliance with Laws and Agreements . The Borrower and its Subsidiaries are in compliance with (a) their charter, by-laws or other organizational documents, (b) all laws, regulations and orders of any Governmental Authority applicable to them or their property and (c) all indentures, agreements and other instruments binding upon them or their property, except, in the case of clauses (b) and (c) of this Section, where the failure to do so, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.
          SECTION 3.08. Investment Company Status . No Loan Party is a “registered investment company” or a company “controlled” by a “registered investment company” or a “principal underwriter” of a “registered investment company” as such terms are defined in, or subject to regulation under, the Investment Company Act of 1940.
          SECTION 3.09. Taxes . The Borrower and its Subsidiaries have timely filed or caused to be filed all Tax returns and reports required to have been filed and have paid or caused to be

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paid all Taxes required to have been paid, except (a) Taxes that are being contested in good faith by appropriate proceedings and for which the Borrower or such Subsidiary, as applicable, has set aside on its books adequate reserves or (b) to the extent that the failure to do so could not reasonably be expected to have a Material Adverse Effect.
          SECTION 3.10. ERISA . No ERISA Event has occurred or is reasonably expected to occur that, when taken together with all other such ERISA Events for which liability is reasonably expected to occur, could reasonably be expected to have a Material Adverse Effect. The present value of all accumulated benefit obligations under each Plan (based on the assumptions used for purposes of Statement of Financial Accounting Standards No. 87) did not, as of the date of the most recent financial statements reflecting such amounts, exceed the fair market value of the assets of such Plan, and the present value of all accumulated benefit obligations of all underfunded Plans (based on the assumptions used for purposes of Statement of Financial Accounting Standards No. 87) did not, as of the date of the most recent financial statements reflecting such amounts, exceed the fair market value of the assets of all such underfunded Plans, in each case by an amount that, if required to be paid by the Borrower and its Subsidiaries, could reasonably be expected to have a Material Adverse Effect.
          SECTION 3.11. Disclosure . The written information (including, without limitation, the Information Memorandum, the Registration Statement and of the other reports, financial statements, certificates or other information) and oral information (with any such oral information being limited to formal due diligence meetings and calls) furnished by or on behalf of the Borrower, Cadbury, and their respective Affiliates to the Administrative Agent or any Lender in connection with the Transactions (including the sale of the Business considered in 2007) or the negotiation of this Agreement or delivered hereunder, taken as a whole (as modified or supplemented by other information so furnished prior to the relevant measurement date for this representation and warranty), does not contain any material misstatement of fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that, with respect to projected financial information, the Borrower represents only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time; it being recognized by the Lenders that such projections are as to future events and are not to be viewed as facts and that actual results during the period or periods covered by any such projections may differ significantly from the projected results and such differences may be material.
          SECTION 3.12. Margin Regulations . No Loan Party is engaged principally, as one of its important activities, in the business of extending credit for the purpose of carrying any margin stock (as such term is defined in Regulation U of the Board as in effect from time to time). No more than 25% of the value of the assets of either the Borrower or the Borrower and its Subsidiaries on a Consolidated basis, respectively, is represented by margin stock.
          SECTION 3.13. Labor Matters . (a) There are no strikes, work stoppages, slowdowns or lockouts pending or threatened against or involving the Borrower or any of its Subsidiaries, other than those that, in the aggregate, could not reasonably be expected to have a Material Adverse Effect.
          (b) There are no unfair labor practices, grievances, complaints or arbitrations pending, or, to the best knowledge of the Borrower, threatened, against or involving the Borrower or any of its Subsidiaries, nor are there any arbitrations or grievances threatened involving the Borrower or any of the Material Subsidiaries, other than those that, in the aggregate, could not reasonably be expected to have a Material Adverse Effect.
          SECTION 3.14. Separation Transactions . As of the Transaction Closing Date:

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          (a) The Separation Transactions have been consummated in all material respects in accordance with each of the Separation Documents and substantially in the manner described in the Registration Statement.
          (b) The Separation Transactions are within each Loan Party’s corporate powers and have been duly authorized by all necessary corporate and, if required, stockholder action. Each of the Separation Documents has been duly executed and delivered by each Loan Party party thereto and constitutes a legal, valid and binding obligation of such Loan Party, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.
          (c) The Separation Transactions (i) do not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority, except such as have been obtained or made and are in full force and effect, (ii) will not violate the charter, by-laws or other organizational documents of the Borrower or any other Loan Party, (iii) will not violate any applicable law (including ERISA and Environmental Laws) or regulation or any order of any Governmental Authority and (iv) will not violate in any material respect or result in a material default or a right to require a material payment under any material indenture, any other agreement or other instrument binding upon the Borrower or any other Loan Party, or any of their respective assets, or give rise to a right thereunder to require any material payment to be made by any such Person, except in the case of clauses (i), (iii) and (iv) above (other than, in the case of clause (iv), with regards to any indentures and other material debt agreements) for any such violations or defaults that, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.
          (d) Each of the Separation Documents has been entered into and is effective in substantially the same form as the draft agreements set forth in the definition thereof. None of the Separation Documents has been amended or otherwise modified in any material respect and no material provision therein has been waived, except as otherwise agreed to by the Bookrunners and except for such waivers, amendments or modifications that do not materially adversely affect the interests of the Lenders (it being understood that, any change to the Separation Documents whereby an indemnification obligation of Cadbury or any of its subsidiaries existing on the Effective Date for which the Borrower or any of its Subsidiaries are indirectly liable is transferred to the Borrower or any of its Subsidiaries so that the Borrower or such Subsidiary is directly liable to Cadbury’s (or its subsidiary’s) counterparty under the underlying contract pursuant to which such indemnification obligation arose, shall not be considered to materially and adversely affect the interests of the Lenders so long as the scope and terms of such indemnification obligation are not changed following such transfer).
ARTICLE IV
Conditions
          SECTION 4.01. Effective Date . This Agreement shall be effective on the date (the “ Effective Date ”) on which the Administrative Agent (or its counsel) shall have received from each applicable party either (i) a counterpart of this Agreement, the Revolver and Term Loan Agreement and the Fee and Syndication Letter signed on behalf of such party or (ii) written evidence satisfactory to the Administrative Agent (which may include telecopy transmission or electronic “.pdf” of a signed signature page of this Agreement) that such party has signed a counterpart of this Agreement, the Revolver and Term Loan Agreement and the Fee and Syndication Letter.

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          SECTION 4.02. Bridge Funding Date . The obligations of the Lenders to make the Loan hereunder shall not become effective until the time and date (such time and date, the “ Bridge Funding Date ”) on which each of the following conditions is satisfied (or waived in accordance with Section 9.02); provided that the Bridge Funding shall occur no earlier than April 10, 2008 (it being understood and agreed that if on the Bridge Funding Date the Transaction Closing Date has not occurred, then the proceeds of the Loans shall be deposited directly into the Collateral Account on such date):
          (a) The Administrative Agent shall have received a copy of the articles or certificate of incorporation (or equivalent organizational document) of the Borrower, certified as of a recent date by the Secretary of State of the state of organization of the Borrower, together with certificates of such official attesting to the good standing of the Borrower;
          (b) The Administrative Agent shall have received a certificate, dated the Bridge Funding Date, of the Secretary or an Assistant Secretary of the Borrower certifying (A) the names and true signatures of each officer of the Borrower that has been authorized to execute and deliver any Loan Document or other document required hereunder to be executed and delivered by or on behalf of the Borrower, (B) the by-laws (or equivalent organizational document) of the Borrower as in effect on the date of such certification, (C) the resolutions of the Borrower’s board of directors approving and authorizing the execution, delivery and performance of the Loan Documents to which it is a party, and (D) that there have been no changes in the certificate of incorporation (or equivalent organizational document) of the Borrower from the certificate of incorporation (or equivalent organizational document) delivered pursuant to paragraph (a) above;
          (c) The Administrative Agent shall have received, for the account of each Lender requesting the same at least two (2) Business Days prior to the Bridge Funding Date, a Promissory Note (which may for purposes of this Section 4.01(c) be a copy delivered by facsimile or electronic “.pdf” transmission to be followed promptly with an original of such Promissory Note by overnight courier or messenger) of the Borrower conforming to the requirements of Section 2.09(e) herein;
          (d) The Borrower, Cadbury and their respective Affiliates shall have complied in all material respects (and shall be deemed to have so complied if they have not received written notice of any material non-compliance) with the Fee and Syndication Letter; provided , however , that if, on or prior to the Transaction Funding Date, (i) the Borrower, Cadbury or any such Affiliate failed to comply with Section 3 thereof (other than the requirements set forth in clauses (c) and (d) of the second paragraph and in the last paragraph thereunder) and (ii) the Borrower, Cadbury and/or their respective Affiliates cured such non-compliance within two (2) Business Days of receipt of such notice, then the Borrower shall be deemed to have complied with the Fee and Syndication Letter for purposes of this clause (d);
          (e) At least five (5) Business Days prior to the Bridge Funding Date, the Lenders shall have received all documentation and other information required by bank regulatory authorities under applicable “know-your-customer” and anti-money laundering rules and regulations, including the Patriot Act, to the extent requested by the Lenders at least ten (10) Business Days prior to the Bridge Funding Date;
          (f) The Administrative Agent shall have received a favorable written opinion dated the Bridge Funding Date (addressed to the Administrative Agent and the Lenders and dated the Bridge Funding Date) of Shearman & Sterling LLP, counsel for the Loan Parties, substantially in the form of Exhibit B. The Administrative Agent also shall have received a copy of a written opinion dated the Bridge Funding Date (addressed to Cadbury) of Shearman & Sterling LLP, counsel to Cadbury, covering such matters as have been previously agreed between Shearman & Sterling LLP and each of the

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Bookrunners, in form and substance satisfactory to the Administrative Agent. The Borrower hereby requests such counsel to deliver such opinions;
          (g) The Administrative Agent shall have received a certificate from a Financial Officer of the Borrower dated the Bridge Funding Date certifying that on such date, the Borrower and its Subsidiaries (on a consolidated basis) are Solvent, both before, and on a pro forma basis after giving effect to, the Transactions;
          (h) (A) The representations and warranties set forth in Sections 3.01(a), 3.02, 3.03, 3.04(a), 3.05, 3.06(a)(i), 3.07, 3.08, 3.09, 3.10, 3.11 and 3.12 shall be true and correct in all material respects on and as of the Bridge Funding Date; (B) at the time of and immediately after giving effect to the Borrowing on the Bridge Funding Date, (x) no Default as a result of the Borrower’s failure to observe or perform any covenant, condition or agreement contained in Sections 5.02, 5.03(a) (with respect to the Borrower’s existence only), 5.03(b), 5.04, 5.05, 5.08 or in Article VI (other than for avoidance of doubt, Section 6.04) shall have occurred and be continuing, (y) no Event of Default under clause (c) of Article VII with respect to any representation and warranty under Article III made by the Borrower on the Effective Date shall have occurred, and (z) no Event of Default under clauses (h), (i) or (j) of Article VII shall have occurred and be continuing and (C) the Administrative Agent shall have received a certificate, dated the Bridge Funding Date and signed by the president, a vice president or Financial Officer of the Borrower, confirming compliance with the conditions contained in clauses (A) and (B) above.
          (i) The Index Debt and the corporate ratings of the Borrower shall be rated at least “BBB-”, which rating may be subject to a “negative outlook” from S&P but not subject to “negative watch” or “development” and “Baa3” from Moody’s, which rating shall be stable and not subject to “negative watch”, “negative outlook” or “development”;
          (j) The Borrower has received proceeds from the term loan borrowings under the Revolver and Term Loan Agreement of at least $1,900,000,000 (less transaction costs and original issue discount incurred in connection therewith);
          (k) Each of the Bookrunners shall have received and be satisfied with (i) the audited combined financial statements of the Borrower for the fiscal year ending December 31, 2007, which such audited financial statements may exclude (A) guarantor/non-guarantor financial information and (B) quarterly financial information for completed fiscal periods (it being understood that the financial information for the fiscal years ending December 31, 2006 and January 1, 2006 presented with the financial information for the fiscal year ending December 31, 2007 will be the same in all material respects as that contained in the Registration Statement) (the “ Audited Financial Statements ”) and (ii) unaudited pro forma combined balance sheets of the Borrower and its Subsidiaries as of December 31, 2007 and unaudited pro forma statement of operations for the fiscal year ended December 31, 2007, adjusted to give effect to the consummation of the Transactions as if such Transactions, with respect to the pro forma combined balance sheets had occurred on December 31, 2007 and with respect to the pro forma statement of operations had occurred on January 1, 2007, to the extent permitted under Regulation S-X and related SEC and other applicable guidance (together, the “ Pro Forma Financial Statements ”). The Audited Financial Statements shall be prepared, in all material respects in accordance with GAAP and with Regulation S-X and the Pro-Forma Financial Statements shall be prepared, in all material respects in accordance with Regulation S-X and related SEC and other applicable guidance and based on assumptions which are reasonably set forth therein. The Bookrunners shall be deemed to be satisfied with the Audited Financial Statements if no Bookrunner shall have contacted the Borrower indicating such Bookrunner is not satisfied with the Audited Financial Statements within three (3) Business Days following delivery of the Audited Financial Statements. Following the delivery of the Audited Financial Statements, the Borrower shall provide the Bookrunners with an opportunity, by telephone or otherwise,

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to conduct customary auditor due diligence with representatives of the Borrower during which representatives of Deloitte & Touche LLP will be present (in person or by telephone) and participate in a customary manner, the result of which the Bookrunners shall be satisfied with. Each of the Bookrunners agrees to have its representatives available for the auditor due diligence promptly following the delivery of the Audited Financial Statements and each of the Bookrunners agrees to not unreasonably delay the completion of the auditor due diligence. The Bookrunners shall be deemed to be satisfied with the auditor due diligence if no Bookrunner shall have contacted the Borrower indicating such Bookrunner is not satisfied with the results of the auditor due diligence within two (2) Business Days following completion of the auditor due diligence; and
          (l) The Administrative Agent shall have received all fees and other amounts due and payable on or prior to the Bridge Funding Date, including, to the extent invoiced, reimbursement or payment of all out-of-pocket expenses (including reasonable fees and expenses of counsel) required to be reimbursed or paid by the Borrower hereunder.
Notwithstanding the foregoing, the obligations of the Lenders to make the Loans shall not become effective unless each of the foregoing conditions is satisfied (or waived pursuant to Section 9.02) at or prior to 3:00 p.m., New York City time, on the Early Commitment Termination Date (and, in the event such conditions are not so satisfied or waived, the Commitments shall terminate at such time). Notwithstanding any other provision of this Agreement, the only condition precedent to the making of the Loans on the Bridge Funding Date are those set forth in this Section 4.02. Notwithstanding any other provision of this Agreement, the only conditions precedent to the depositing of the Loans into the Collateral Account on the Bridge Funding Date are those set forth in this Section 4.02 and, if such conditions are satisfied, no additional conditions, including without limitation the absence of any other breaches or defaults under the Loan Documents or the making of any other representations under the Loan Documents or the Separation Documents, shall be a condition precedent to the depositing of the Loans into the Collateral Account on the Bridge Funding Date.
          SECTION 4.03. Conditions to Transaction Closing Date . The obligation of the Administrative Agent (i) to release the funds deposited into the Collateral Account pursuant to Section 4.02 (if applicable) and (ii) to apply the proceeds of the Loans for the purposes specified in Section 5.08(a) shall not become effective until the time and date (such time and date, the “ Transaction Closing Date ”) on which each of the following conditions is satisfied (or waived in accordance with Section 9.02):
          (a) The Bridge Funding Date shall have occurred or shall occur on the Transaction Closing Date;
          (b) (A) The representations and warranties set forth in Section 3.14 shall be true and correct on and as of such date, and, with respect to each of the Guarantors becoming party to the Guaranty after the Bridge Funding Date and on or prior to the Transaction Closing Date, each of the representations and warranties set forth in Sections 3.01(a), 3.02, 3.03(a), 3.03(b) and 3.08 applicable to such Guarantors shall be true and correct in all material respects on and as of the Transaction Closing Date; (B) at the time of and immediately after giving effect to the consummation of the Transactions on the Transaction Closing Date, no Default specified under clause (h) (other than an Immaterial Insolvency Event) or clause (i) of Article VII shall have occurred and be continuing with respect to the Borrower or a Guarantor and (C) the Administrative Agent shall have received a certificate, dated the Transaction Closing Date and signed by the president, a vice president or Financial Officer of the Borrower, confirming compliance with the conditions contained in clauses (A) and (B) above;

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          (c) No orders, judgments or decrees of any governmental entity, enjoining or prohibiting the consummation of the Financing Transactions shall have been issued and remain outstanding on the Transaction Closing Date;
          (d) The Index Debt and the corporate ratings of the Borrower are rated “BBB-” or higher from S&P which rating may be subject to “negative outlook” but not subject to “negative watch” or “development” and “Baa3” or higher from Moody’s, which rating shall be stable or stable subject to “development” but not subject to “negative watch” or “negative outlook” from the Bridge Funding Date through April 30, 2008; and
          (e) There shall have occurred a period of at least five (5) consecutive Business Days prior to the Transaction Closing Date commencing on or after the later of (i) the date which the SEC confirms it is prepared to declare the Registration Statement effective and (ii) the date the Borrower has furnished to the Administrative Agent an Offering Memorandum.
          (f) The Administrative Agent shall have received a Guaranty, duly executed by each Material Subsidiary that is not an Excluded Subsidiary, together with (i) a copy of the articles or certificate of incorporation (or equivalent organizational document) of such Material Subsidiaries, certified as of a recent date by the Secretary of State of the state of organization of each such Material Subsidiary, together with certificates of such official attesting to the good standing of such Material Subsidiaries, (ii) a certificate of the Secretary or an Assistant Secretary of each such Material Subsidiary certifying (A) the names and true signatures of each officer of such Material Subsidiary that has been authorized to execute and deliver the Guaranty or other document required hereunder to be executed and delivered by or on behalf of such Material Subsidiary, (B) the by-laws (or equivalent organizational document) of such Material Subsidiary as in effect on the date of such certification, (C) the resolutions of such Material Subsidiary’s board of directors approving and authorizing the execution, delivery and performance of the Guaranty, and (D) that there have been no changes in the certificate of incorporation (or equivalent organizational document) of such Material Subsidiary from the certificate of incorporation (or equivalent organizational document) delivered pursuant to clause (i) above and (iii) a favorable written opinion (addressed to the Administrative Agent and the Lenders and dated the Transaction Closing Date) of Shearman & Sterling LLP, counsel for the such Material Subsidiaries, and/or local counsel in the jurisdiction of such Material Subsidiaries’ formations, collectively, covering such matters with respect to each Guarantor as are contemplated in the form of opinion attached as Exhibit B (with reasonable variation to account for local law and opinion practice).
Notwithstanding the foregoing, the obligations of the Administrative Agent to release proceeds of the Loans deposited in the Collateral Account or, if the Bridge Funding Date has not occurred, to apply the proceeds of the Loans directly as contemplated in Section 5.08(a), shall not become effective unless each of the foregoing conditions is satisfied (or waived pursuant to Section 9.02) at or prior to 3:00 p.m., New York City time, on the Early Commitment Termination Date (and, in the event such conditions are not so satisfied or waived, the funds on deposit in the Collateral Account shall be applied towards the repayment of the Obligations in accordance with Section 2.10(c) and all of the Commitments shall terminate at such time). Notwithstanding any other provision of this Agreement, the only conditions precedent to the making of Loans or the release of Loans from the Collateral Account on the Transaction Closing Date are those set forth in this Section 4.03 and, if such conditions are satisfied, no additional conditions, including without limitation the absence of any other breaches or defaults or the making of any other representation under the Loan Documents or the Separation Documents, shall be a condition precedent to the release of Loans from the Collateral Account on the Transaction Closing Date.

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ARTICLE V
Affirmative Covenants
          Until the Commitments have expired or been terminated and the principal of and interest on each Loan and all fees payable hereunder shall have been paid in full, the Borrower covenants and agrees with the Lenders that (it being understood that, for purposes of the covenants made by the Borrower as set forth below, such covenants shall be construed as though the Separation Transactions have been consummated):
          SECTION 5.01. Financial Statements; Ratings Change and Other Information . The Borrower will furnish to the Administrative Agent and each Lender:
          (a) on or before the date on which such financial statements are required to be filed with the SEC (after giving effect to any permitted extensions) or, if such financial statements are not required to be filed with the SEC, on or before the date that is ninety (90) days after the end of each such fiscal year, its audited consolidated balance sheet and related statements of operations, stockholders’ equity and cash flows as of the end of and for such year, all certified by Deloitte & Touche LLP or other independent public accountants of recognized national standing (without a “going concern” or like qualification or exception and without any qualification or exception as to the scope of such audit) to the effect that such consolidated financial statements present fairly in all material respects the financial condition and results of operations of the Borrower and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP;
          (b) on or before the date on which such financial statements are required to be filed with the SEC (after giving effect to any permitted extensions) with respect to each of the first three quarterly accounting periods in each fiscal year of the Borrower or, if such financial statements are not required to be filed with the SEC, on or before the date that is forty-five (45) days after the end of each such quarterly accounting period, its consolidated balance sheet and related statements of operations, stockholders’ equity and cash flows as of the end of and for such fiscal quarter and the elapsed portion of the fiscal year ended with the last day of such quarterly period, setting forth in each case in comparative form the figures for the corresponding period or periods of (or, in the case of the balance sheet, as of the end of) the previous fiscal year, all certified by one of its Financial Officers as presenting fairly in all material respects the financial condition and results of operations of the Borrower and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP, subject to normal year-end audit adjustments and the absence of footnotes;
          (c) concurrently with any delivery of financial statements under clause (a) or (b) above, a certificate of a Financial Officer of the Borrower (i) certifying as to whether a Default has occurred and, if a Default has occurred, specifying the details thereof and any action taken or proposed to be taken with respect thereto, (ii) setting forth reasonably detailed calculations demonstrating compliance with Section 6.04 and (iii) stating whether any change in GAAP or in the application thereof has occurred since the date of the audited financial statements referred to in Section 3.04 and, if any such change has occurred, specifying the effect of such change on the financial statements accompanying such certificate;
          (d) promptly after the same become publicly available, copies of all periodic and other reports, proxy statements and other materials filed by the Borrower or any Material Subsidiary with the SEC, or with any national securities exchange, or distributed by the Borrower to its shareholders generally, as the case may be;

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          (e) promptly after Moody’s or S&P shall have announced a change in the rating established or deemed to have been established for the Index Debt or the corporate rating of the Borrower, written notice of such rating change;
          (f) promptly following any request therefor, such other information regarding the operations, business affairs and financial condition of the Borrower or any Subsidiary, or compliance with the terms of this Agreement, as the Administrative Agent or any Lender may reasonably request.
Information required to be delivered pursuant to subsections (a), (b) and (d) of this Section 5.01 shall be deemed to have been delivered if such information, or one or more annual or quarterly or other reports or proxy statements containing such information shall have been posted and available on the website of the SEC at http://www.sec.gov (and a confirming electronic correspondence is delivered or caused to be delivered by the Borrower to the Administrative Agent providing notice of such availability).
          SECTION 5.02. Notices of Material Events . The Borrower will furnish to the Administrative Agent and each Lender prompt written notice of the following:
          (a) the Borrower having knowledge of any Default; and
          (b) the Borrower having knowledge of the filing or commencement of any action, suit or proceeding by or before any arbitrator or Governmental Authority against or affecting the Borrower or any Subsidiary that, if adversely determined, could reasonably be expected to have a Material Adverse Effect.
Each notice delivered under this Section shall be accompanied by a statement of a Financial Officer or other executive officer of the Borrower setting forth the details of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto.
          SECTION 5.03. Existence; Conduct of Business . The Borrower will, and will cause each of its Material Subsidiaries and any Loan Party to, do or cause to be done all things necessary to preserve, renew and keep in full force and effect (a) its legal existence and (b) the rights, licenses, permits, privileges and franchises material to the conduct of its business; except in the case of clause (b), to the extent that failure to do so, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect; provided that the foregoing shall not prohibit any merger, consolidation, liquidation or dissolution permitted under Section 6.03 or any of the Separation Transactions.
          SECTION 5.04. Payment of Obligations . The Borrower will, and will cause each of its Material Subsidiaries and any Loan Party to pay its Tax liabilities, that, if not paid, could reasonably be expected to have a Material Adverse Effect before the same shall become delinquent or in default, except where (a) the validity or amount thereof is being contested in good faith by appropriate proceedings and (b) the Borrower or such Subsidiary or such Loan Party has set aside on its books adequate reserves with respect thereto in accordance with GAAP.
          SECTION 5.05. Maintenance of Properties; Insurance . The Borrower will, and will cause each of its Material Subsidiaries and any Loan Party to, (a) keep and maintain all property material to the conduct of its business in good working order and condition, ordinary wear and tear excepted, and (b) maintain, with financially sound and reputable insurance companies, insurance (which may include self-insurance and co-insurance) in such amounts and against such risks as are customarily maintained by companies engaged in the same or similar businesses operating in the same or similar locations, except in the case of clauses (a) and (b), to the extent that the failure to do so could not, based upon the facts and circumstances existing at the time, reasonably be expected to have a Material Adverse Effect.

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          SECTION 5.06. Books and Records; Inspection Rights . The Borrower will, and will cause each of its Subsidiaries to, keep proper books of record and account in which full, true and correct (in all material respects) entries are made of all dealings and transactions in relation to its business and activities, to the extent required by GAAP. The Borrower will, and will cause each of its Subsidiaries to, permit any representatives designated by the Administrative Agent or any Lender, upon reasonable prior notice, to visit and inspect its properties, to examine and make extracts from its books and records, and to discuss its affairs, finances and condition with its officers and independent accountants, all at such reasonable times during normal business hours; provided that, unless an Event of Default shall have occurred and be continuing, only one (1) visit shall be permitted during any calendar year. The Administrative Agent and the Lenders shall give the Borrower the opportunity to participate in any discussions with the Borrower’s independent public accountants. Notwithstanding anything to the contrary in this Section 5.06, none of the Borrower or any of its Subsidiaries will be required to disclose, permit the inspection, examination or making copies or abstracts of, or discussion of, any document, information or other matter that (i) constitutes non-financial trade secrets or non-financial proprietary information, (ii) in respect of which disclosure to the Administrative Agent or any Lender (or their respective representatives) is prohibited by Law or (iii) is subject to attorney-client or similar privilege or constitutes attorney work product.
          SECTION 5.07. Compliance with Laws . The Borrower will, and will cause each of its Subsidiaries to, comply with all laws (including ERISA and Environmental Laws), rules, regulations and orders of any Governmental Authority applicable to it or its property, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.
          SECTION 5.08. Use of Proceeds . The Borrower (and to the extent distributed to them by the Borrower, each Loan Party) shall use the entire amount of the proceeds of the Loans (a) on the Transaction Closing Date, solely to consummate the Transactions in a manner consistent with the Registration Statement and in all material respects with the Separation Documents, including retaining at least $100,000,000 in unrestricted cash on its consolidated balance sheet after giving effect to the Transactions and (b) thereafter, for working capital and general corporate purposes. No part of the proceeds of any Loan will be used, whether directly or indirectly, for any purpose that entails a violation of any of the Regulations of the Board, including Regulations U and X.
          SECTION 5.09. Additional Guarantors . To the extent not delivered to the Administrative Agent on or before the Transaction Closing Date (including Persons that become Material Subsidiaries of the Borrower after the Transaction Closing Date), the Borrower agrees promptly to do, or cause each Material Subsidiary (other than any Excluded Subsidiary) of the Borrower to, unless otherwise agreed by the Administrative Agent, deliver to the Administrative Agent such duly executed supplements and amendments to the Guaranty, in each case in form and substance reasonably satisfactory to the Administrative Agent and as the Administrative Agent deems necessary or advisable in order to ensure that each Material Subsidiary (other than any Excluded Subsidiary) of the Borrower guaranties, as primary obligor and not as surety, the full and punctual payment when due of the Obligations or any part thereof and to take such other actions necessary or advisable to ensure the validity or continuing validity of such guaranties as may be required by law or as may be reasonably requested by the Administrative Agent and, if requested by the Administrative Agent, deliver to the Administrative Agent legal opinions relating to such guaranties, which opinions shall be in form and substance, and from counsel, reasonably satisfactory to the Administrative Agent.
          SECTION 5.10. Ratings . The Borrower will use commercially reasonably efforts to maintain corporate ratings and ratings in respect of the Index Debt from both Moody’s and S&P.

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ARTICLE VI
Negative Covenants
          Until the Commitments have expired or terminated and the principal of and interest on each Loan and all fees payable hereunder have been paid in full, the Borrower covenants and agrees with the Lenders that (it being understood that, for purposes of the covenants made by the Borrower as set forth below, such covenants shall be construed as though the Separation Transactions have been consummated and shall not in any way prohibit the consummation of the Separation Transactions):
          SECTION 6.01. Liens . The Borrower will not, and will not permit any Subsidiary to, create, incur, assume or permit to exist any Lien on any property or asset now owned or hereafter acquired by it, or assign or sell any income or revenues (including accounts receivable) or rights in respect of any thereof, except:
          (a) Permitted Encumbrances;
          (b) any Lien on any property or asset of the Borrower or any Subsidiary existing on the date hereof (with all such Liens securing Indebtedness of any Loan Party for borrowed money being set forth in Schedule 6.01); provided that (i) such Lien shall not apply to any other property or asset of the Borrower or any Subsidiary (other than the proceeds or products of the property or asset originally subject to such Lien) and (ii) such Lien shall secure only those obligations which it secures on the date hereof and extensions, renewals and replacements thereof that do not increase the outstanding principal amount thereof;
          (c) Liens of any Subsidiary in favor of any Loan Party;
          (d) Liens securing Indebtedness outstanding in a principal amount not in excess of $100,000,000 consisting of capital leases or purchase money obligations provided that such Liens do not encumber any property other than property financed by such Indebtedness or subject to such capital lease;
          (e) Liens on the assets of any Foreign Subsidiary; provided that to the extent such Liens secure Indebtedness, such Indebtedness is permitted under Section 6.08; and
          (f) Liens not otherwise permitted by clauses (a) through (d) above securing obligations, the aggregate outstanding principal amount of which as of the date of any incurrence thereof shall not exceed (together with all Indebtedness of Subsidiaries that are not Guarantors permitted pursuant to Section 6.08) 10% of the Consolidated Net Tangible Assets of the Borrower as of such date; provided that no Lien permitted pursuant to this clause (e) shall encumber any Material Intellectual Property.
          SECTION 6.02. Fundamental Changes . (a) The Borrower will not, and will not permit any Subsidiary to, merge into or consolidate with any other Person, or permit any other Person to merge into or consolidate with it, or sell, transfer, lease or otherwise dispose of (in one transaction or in a series of transactions) all or substantially all of the assets of the Loan Parties, taken as a whole, or the Borrower and its Subsidiaries taken as a whole (in each case, whether now owned or hereafter acquired), or liquidate or dissolve, except that, if at the time thereof and immediately after giving effect thereto no Default shall have occurred and be continuing (i) any Person may merge into the Borrower in a transaction in which the Borrower is the surviving corporation, (ii) any Subsidiary may merge into any Subsidiary in a transaction in which the surviving entity is a Subsidiary, (iii) any Subsidiary may sell, transfer, lease or otherwise dispose of its assets to any Subsidiary; provided that any sale, transfer, lease or other disposition to any Subsidiary that is not a Guarantor shall not be prohibited by Section 6.03(c),

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(iv) any Subsidiary may liquidate or dissolve if the Borrower determines in good faith that such liquidation or dissolution is in the best interests of the Borrower and is not materially disadvantageous to the Lenders.
          (b) The Borrower will not, and will not permit any of its Subsidiaries to, engage to any material extent in any business other than businesses of the type conducted by the Borrower and its Subsidiaries on the date of execution of this Agreement and businesses reasonably related thereto.
          SECTION 6.03. Investments, Loans, Advances, Guarantees and Acquisitions . The Borrower will not, and will not permit any of its Subsidiaries to, purchase, hold or acquire (including pursuant to any merger with any Person that was not a wholly owned Subsidiary prior to such merger) any capital stock, evidences of indebtedness or other securities (including any option, warrant or other right to acquire any of the foregoing) of, make or permit to exist any loans or advances to, Guarantee any obligations of, or make or permit to exist any investment or any other interest in, any other Person, or purchase or otherwise acquire (in one transaction or a series of transactions) any assets of any other Person constituting a business unit (“ Investments ”), except:
          (a) cash and Permitted Investments;
          (b) Investments existing on the date hereof and any modification, replacement, renewal, reinvestment or extension thereof;
          (c) loans or advances or other Investments made by (i) any Loan Party to any other Loan Party, (ii) by any Subsidiary that is not a Loan Party to the Borrower or any other Subsidiary and (iii) by any Loan Party to a Subsidiary that is not a Loan Party in an aggregate amount outstanding not to exceed $100,000,000;
          (d) Investments consisting of intercompany cash balances among the Borrower and its Subsidiaries in connection with liquidity management in the ordinary course of business;
          (e) loans or advances to officers, directors and employees of the Borrower or the Subsidiaries (i) for reasonable and customary business-related travel, entertainment, relocation and analogous ordinary business purposes, (ii) in connection with such Person’s purchase of equity interests of the Borrower and the Subsidiaries and (iii) for purposes not described in the foregoing clauses (i) and (ii), to the extent permitted by law, in an aggregate principal amount outstanding not to exceed $5,000,000;
          (f) Investments in Swap Agreements;
          (g) Investments held by a Subsidiary acquired after the date hereof or of a corporation merged or consolidated with a Subsidiary in accordance with Section 6.02 after the date hereof to the extent that such investments were not made in contemplation of or in connection with such acquisition, merger or consolidation and were in existence on the date of such acquisition, merger or consolidation;
          (h) Permitted Acquisitions; provided that, any Permitted Acquisition by any Loan Party of assets located outside of the United States (or any Investment by a Loan Party in a subsidiary that is not a Guarantor for the purpose of consummating a Permitted Acquisition) shall only be permitted if the Investment in such Permitted Acquisition is otherwise permitted pursuant to clause (i) below; and

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          (i) Permitted Acquisitions not permitted pursuant to clause (g) above and other Investments in an aggregate amount not exceed 15% of the Consolidated Net Tangible Assets of the Borrower as of such date, net of any return representing return of capital or repayment of Indebtedness in respect of any such investment made pursuant to this clause (h) and valued at the time of the making thereof.
Notwithstanding anything to herein to the contrary, in the event that (i) Consolidated Total Debt of the Borrower as of the last day of any fiscal quarter for which financial statements have been delivered to the Administrative Agent pursuant to clause (a) or (b), as applicable, of Section 5.01 to (ii) Consolidated EBITDA of the Borrower for the last four fiscal quarters ending on the last day of such fiscal quarter is less than 3.25:1, then the covenant set for in this Section 6.03 shall cease to be of any further force and effect.
          SECTION 6.04. Financial Covenants .
          (a) Leverage . The Borrower will not permit the ratio of (i) Consolidated Total Debt of the Borrower as of the last day of any fiscal quarter ending during any period set forth below to (ii) Consolidated EBITDA of the Borrower for the last four fiscal quarters ending on the last day of such fiscal quarter to be greater than the ratio set forth below opposite such period:
     
PERIOD   MAXIMUM LEVERAGE RATIO
 
   
The Initial Funding date through June 30, 2009
  3.75 to 1
 
   
July 1, 2009 through December 31, 2009
  3.50 to 1
 
   
January 1, 2010 through December 31, 2010
  3.25 to 1
 
   
January 1, 2011 through the Maturity Date
  3.00 to 1
          (b) Interest Coverage . The Borrower shall not permit the ratio of (i) Consolidated EBITDA of the Borrower for any four fiscal quarter period ending on or after June 30, 2008 to (ii) Consolidated Cash Interest Expense of the Borrower for such period to be less than 3.25 to 1.
          SECTION 6.05. Transactions with Affiliates . The Borrower will not, and will not permit any of its Subsidiaries to, sell, lease or otherwise transfer any property or assets to, or purchase, lease or otherwise acquire any property or assets from, or otherwise engage in any other transactions with, any of its Affiliates, except (a) in the ordinary course of business at prices and on terms and conditions not less favorable to the Borrower or such Subsidiary than could be obtained on an arm’s-length basis from unrelated third parties, (b) compensation to employees, officers, directors or consultants in the ordinary course of business and reimbursement of directors’ and officers’ expenses and payment of directors’ and officers’ indemnities, and (c) transactions between or among the Borrower and any Subsidiary.

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          SECTION 6.06. Restrictive Agreements . The Borrower will not, and will not permit any of its Subsidiaries to, directly or indirectly, enter into, incur or permit to exist any agreement or other arrangement (other than the Revolver and Term Loan Agreement) that prohibits, restricts or imposes any condition upon (a) the ability of the Borrower or any Subsidiary to create, incur or permit to exist any Lien upon any of its property or assets, or (b) the ability of any Subsidiary to pay dividends or other distributions with respect to any shares of its capital stock or to make or repay loans or advances to the Borrower or any other Subsidiary or to guarantee Indebtedness of the Borrower or any other Subsidiary; provided that (i) the foregoing shall not apply to restrictions and conditions imposed by law or by this Agreement, (ii) the foregoing shall not apply to restrictions and conditions existing on the Initial Funding Date (as defined in the Revolver and Term Agreement) on Schedule 6.06 delivered on or prior to the Initial Funding Date (as defined in the Revolver and Term Agreement) (but shall apply to any extension or renewal of, or any amendment or modification expanding the scope of, any such restriction or condition) or at the time any Subsidiary becomes a Subsidiary of the Borrower, so long as such agreement was not entered into solely in contemplation of such Person becoming a Subsidiary of the Borrower, (iii) the foregoing shall not apply to customary restrictions and conditions contained in agreements relating to the sale of a Subsidiary pending such sale, provided such restrictions and conditions apply only to the Subsidiary that is to be sold, (iv) clause (a) of the foregoing shall not apply to restrictions or conditions imposed by any agreement relating to secured Indebtedness permitted by this Agreement if such restrictions or conditions apply only to the property or assets securing such Indebtedness or to any agreement evidencing Indebtedness if such restriction is no more restrictive than the provisions of Section 6.01 of this Agreement, (v) the foregoing shall not apply to customary anti-assignment provisions in contracts restricting the assignment thereof (including customary provisions in leases restricting assignability or subleasing), (vii) the foregoing shall not apply to restrictions under any documents relating to the formation of any non-wholly-owned Subsidiary, (viii) clause (a) of the foregoing shall not apply in the case of any Subsidiary of the Borrower that is not a Guarantor, to restrictions or conditions imposed by any agreement evidencing Indebtedness that is permitted by Section 6.07 of this Agreement and (ix)the foregoing shall not apply to licenses or contracts which by the terms of such licenses and contracts prohibits the granting of Liens on the rights contained therein.
          SECTION 6.07. Subsidiary Indebtedness . The Borrower will not permit the aggregate principal amount of Indebtedness of Subsidiaries that are not Guarantors (excluding any Indebtedness of such Subsidiary owed to the Borrower or another Subsidiary, but including any Guarantee by such Subsidiary of Indebtedness of the Borrower) at any time to exceed (together with all secured obligations permitted pursuant to Section 6.01(f)) 10% of the Consolidated Net Tangible Assets of the Borrower as of such date; provided however, that nothing in this Section 6.07 shall prohibit intercompany Indebtedness of Subsidiaries to the extent outstanding prior to the Transaction Closing Date.
ARTICLE VII
Events of Default
          If any of the following events (“ Events of Default ”) shall occur:
               (a) the Borrower shall fail to pay any principal of any Loan when and as the same shall become due and payable, whether at the due date thereof or at a date fixed for prepayment thereof or otherwise;
               (b) the Borrower shall fail to pay any interest on any Loan or any fee or any other amount (other than an amount referred to in clause (a) of this Article) payable under this Agreement,

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when and as the same shall become due and payable, and such failure shall continue unremedied for a period of five (5) Business Days;
               (c) any representation or warranty made or deemed made by or on behalf of the Borrower or any Loan Party in or in connection with this Agreement or in any report, certificate, financial statement or other document furnished pursuant to or in connection with this Agreement or any amendment or modification hereof or waiver hereunder, shall prove to have been incorrect in any material respect when made or deemed made;
               (d) the Borrower shall fail to observe or perform any covenant, condition or agreement contained in Sections 5.02(a), 5.03 (with respect to the Borrower’s existence) or 5.08 or in Article VI;
               (e) the Borrower or any Loan Party shall fail to observe or perform any covenant, condition or agreement contained in this Agreement (other than those specified in clause (a), (b) or (d) of this Article) or the other Loan Documents, and such failure shall continue unremedied for a period of thirty (30) days after the earlier of (i) the day a Financial Officer of the Borrower first has knowledge of such failure and (ii) the Administrative Agent giving notice thereof to the Borrower (which notice will be given at the request of any Lender);
               (f) the Borrower or any Material Subsidiary shall fail to make any payment (whether of principal or interest and regardless of amount) in respect of any Material Indebtedness, when and as the same shall become due and payable, and such failure shall continue after any applicable grace period;
               (g) any event or condition occurs that results in any Material Indebtedness becoming due prior to its scheduled maturity or that enables or permits (with or without the giving of notice, the lapse of time or both) the holder or holders of any Material Indebtedness or any trustee or agent on its or their behalf to cause any Material Indebtedness to become due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity; provided that this clause (g) shall not apply to secured Indebtedness that becomes due as a result of the voluntary sale or transfer of the property or assets securing such Indebtedness;
               (h) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (i) liquidation, reorganization or other relief in respect of the Borrower or any Material Subsidiary or its debts, or of a substantial part of its assets, under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect or (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Borrower or any Material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered;
               (i) the Borrower or any Material Subsidiary shall (i) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (h) of this Article, (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Borrower or any Material Subsidiary or for a substantial part of its assets, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors or (vi) take any action for the purpose of effecting any of the foregoing;

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               (j) the Borrower or any Material Subsidiary shall become unable, admit in writing its inability or fail generally to pay its debts as they become due;
               (k) one or more judgments for the payment of money in an aggregate amount in excess of the Minimum Threshold (to the extent not covered by independent third-party insurance as to which the insurer has been notified of such judgment and has not denied coverage thereof) shall be entered against the Borrower, any Loan Party or any Material Subsidiary and the same shall remain undischarged for a period of forty-five (45) consecutive days during which execution shall not be effectively stayed, or any action shall be legally taken by a judgment creditor to attach or levy upon any assets of the Borrower, such Loan Party or such Material Subsidiary to enforce any such judgment;
               (l) an ERISA Event shall have occurred that results in liability of the Borrower, any Loan Party or any Material Subsidiary in an aggregate amount which could reasonably be expected to have a Material Adverse Effect;
               (m) a Change in Control shall occur; or
               (n) any Loan Document shall cease to be valid and enforceable against any Loan Party thereto, or any Loan Party shall so assert in writing;
then, and during the continuance of any Event of Default (other than an event with respect to the Borrower described in clauses (h) or (i) of this Article), and at any time thereafter during the continuance of such event, the Administrative Agent may, and at the request of the Required Lenders shall, by notice to the Borrower, take either or both of the following actions, at the same or different times: (i) terminate the Commitments, and thereupon the Commitments shall terminate immediately, and (ii) declare the Loans then outstanding to be due and payable in whole (or in part, in which case any principal not so declared to be due and payable may thereafter be declared to be due and payable), and thereupon the principal of the Loans so declared to be due and payable, together with accrued interest thereon and all fees and other obligations of the Borrower accrued hereunder, shall become due and payable immediately, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower; and in case of any Event of Default with respect to the Borrower described in clauses (h) or (i) of this Article, the Commitments shall automatically terminate and the principal of the Loans then outstanding, together with accrued interest thereon and all fees and other obligations of the Borrower accrued hereunder, shall automatically become due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower. Notwithstanding the foregoing, in the event any Event of Default (other than an Event of Default described in clause (h) or (i) above that is not an Immaterial Insolvency Event) occurs and is continuing during the period after the Bridge Funding Date and through the Transaction Closing Date, then the rights of the Administrative Agent to take the actions described pursuant to clauses (i) and (ii) above shall be suspended until after the Transaction Closing Date has occurred.
ARTICLE VIII
           The Administrative Agent; the Agents and the Collateral Account
          SECTION 8.01. The Administrative Agent; the Agents . (a) Each of the Lenders hereby irrevocably appoints the Administrative Agent as its agent and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof, together with such actions and powers as are reasonably incidental thereto.

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               (b) The bank serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent, and such bank and its Affiliates may accept deposits from, lend money to and generally engage in any kind of business with the Borrower or any Subsidiary or other Affiliate thereof as if it were not the Administrative Agent hereunder.
               (c) The Administrative Agent shall not have any duties or obligations except those expressly set forth herein. Without limiting the generality of the foregoing, (a) the Administrative Agent shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing, (b) the Administrative Agent shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby that the Administrative Agent is required to exercise in writing as directed by the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 9.02), and (c) except as expressly set forth herein, the Administrative Agent shall not have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower or any of its Subsidiaries that is communicated to or obtained by the bank serving as Administrative Agent or any of its Affiliates in any capacity. The Administrative Agent shall not be liable for any action taken or not taken by it with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 9.02) or in the absence of its own gross negligence or willful misconduct. The Administrative Agent shall be deemed not to have knowledge of any Default unless and until written notice thereof is given to the Administrative Agent by the Borrower or a Lender, and the Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement, (ii) the contents of any certificate, report or other document delivered hereunder or in connection herewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement or any other agreement, instrument or document, or (v) the satisfaction of any condition set forth in Article IV or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.
               (d) The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing believed by it to be genuine and to have been signed or sent by the proper Person. The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to be made by the proper Person, and shall not incur any liability for relying thereon. The Administrative Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.
               (e) The Administrative Agent may perform any and all its duties and exercise its rights and powers by or through any one or more sub-agents appointed by the Administrative Agent. The Administrative Agent and any such sub-agent may perform any and all its duties and exercise its rights and powers through their respective Related Parties. The exculpatory provisions of the preceding paragraphs shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent.
               (f) Subject to the appointment and acceptance of a successor Administrative Agent as provided in this paragraph, the Administrative Agent may resign at any time by notifying the Lenders and the Borrower. Upon any such resignation, the Required Lenders shall have the right, subject to the consent of the Borrower (unless an Event of Default under clauses (a), (b), (h) or (i) if Article VII

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has occurred and is continuing), to appoint a successor. If no successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within sixty (60) days after the retiring Administrative Agent gives notice of its resignation, then the retiring Administrative Agent may, on behalf of the Lenders, appoint a successor Administrative Agent which shall be a bank with an office in New York, New York, or an Affiliate of any such bank. Upon the acceptance of its appointment as Administrative Agent hereunder by a successor, such successor shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations hereunder. The fees payable by the Borrower to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor. After the Administrative Agent’s resignation hereunder, the provisions of this Article and Section 9.03 shall continue in effect for the benefit of such retiring Administrative Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while it was acting as Administrative Agent.
               (g) Each Lender acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any related agreement or any document furnished hereunder or thereunder.
               (h) Anything herein to the contrary notwithstanding, none of the Agents, the Bookrunners or the Arrangers listed on the cover page hereof shall have any powers, duties or responsibilities under this Agreement or any of the other Loan Documents, except in their capacity, as applicable, as Agent, or a Lender hereunder.
          SECTION 8.02. Collateral Account . (a) Each of the Lenders hereby irrevocably appoints the Administrative Agent as its collateral agent in respect of the Collateral Account and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof, together with such actions and powers as are reasonably incidental thereto.
               (b) On or prior to the Bridge Funding Date, the Administrative Agent shall establish the Collateral Account. The Collateral Account and all funds and other property therein shall be held in accordance with this Agreement by the Administrative Agent, until released or applied in accordance with the terms hereof.
               (c) The Borrower, as security for the full, prompt and complete payment and performance when due (whether at stated maturity or otherwise by operation of Section 2.10 hereunder, by acceleration or otherwise) of the Obligations, hereby mortgages, pledges and hypothecates to the Administrative Agent for the benefit of the Lenders, and grants to the Administrative Agent for the benefit of the Lenders a lien on and security interest in, all of its right, title and interest in, to and under all funds, cash and any cash equivalents from time to time on deposit or held in the Collateral Account and all proceeds thereof.
               (d) The parties hereto and the Administrative Agent agree: (i) that all items of taxable income or gain realized on the Collateral Account shall be reported as taxable income or gain of the Borrower; (ii) that the Administrative Agent shall issue an IRS Form 1099 (or any successor form) relating to such taxable income or gain to and in the name of the Borrower; and (iii) that the Borrower shall promptly deliver such certificates and other documents as required by applicable regulation and as

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the Administrative Agent may reasonably request in connection with the foregoing, including, without limitation, a completed, executed Form W-9. The Borrower understands that the failure to provide properly completed applicable withholding tax forms may cause the Administrative Agent to become obligated to withhold a portion of any distributions of the Collateral Account pursuant to applicable provisions of the Code. The Administrative Agent shall be responsible only for income reporting to the Internal Revenue Service with respect to income earned on the Collateral Account. The Administrative Agent shall have no other duties or responsibilities with respect to administering tax withholding, payments or reporting for persons receiving distributions pursuant to this Agreement. Notwithstanding the foregoing, the Administrative Agent may report and withhold any taxes as it determines may be required by any law or regulation in effect at the time of the distribution.
               (e) It is understood and agreed that the Administrative Agent shall have no obligation to invest any of the funds in the Collateral Account, provided that all interest and other amounts earned on the deposits shall be deposited in the Collateral Account and only be released and applied in accordance with the terms hereof (including Sections 2.10(c) and 4.03).
               (f) On the Transaction Closing Date, subject only to the satisfaction of the conditions specified in Section 4.03 hereof, the Lenders hereby authorize Administrative Agent to release all funds in the Collateral Account to the Borrower for uses specified in Section 5.08(a); provided however, if the Transaction Closing Date does not occur on or prior to the Early Commitment Termination Date, the Borrower irrevocably instructs the Administrative Agent to apply such funds in the Collateral Account for the prepayment of the Obligations in accordance with Section 2.10(c).
ARTICLE IX
Miscellaneous
          SECTION 9.01. Notices . (a) Except in the case of notices and other communications expressly permitted to be given by telephone (and subject to paragraph (b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopy or, to the extent provided in paragraph (b) below, electronic mail, as follows:
          (i) if to the Borrower, to it at Dr Pepper Snapple Group, Inc. 5301 Legacy Drive, Plano, Texas 75024, Attention of John Stewart, Executive Vice President & Chief Financial Officer (Telecopy No. (972) 673-7879);
          (ii) if to the Administrative Agent, to JPMorgan Chase Bank, Loan and Agency Services Group, 1111 Fannin, 10th Floor, Houston, Texas 77002, Attention of Cherry Arnaez (Telecopy No. (713) 750-2782), with a copy to JPMorgan Chase Bank, 270 Park Avenue, New York 10017, Attention of Barbara R. Marks (Telecopy No. (212) 270-3279);
          (iii) if to any other Lender, to it at its address (or telecopy number) set forth in its Administrative Questionnaire.
               (b) Notices and other communications to the Lenders hereunder may be delivered or furnished by electronic communications pursuant to procedures approved by the Administrative Agent; provided that the foregoing shall not apply to notices pursuant to Article II unless otherwise agreed by the Administrative Agent and the applicable Lender. The Administrative Agent or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic

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communications pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications.
               (c) Any party hereto may change its address or telecopy number for notices and other communications hereunder by notice to the other parties hereto. All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt.
               (d) NONE OF THE ADMINISTRATIVE AGENT, THE BOOKRUNNERS, ANY OF THE LENDERS, OR ANY RELATED PARTY OF ANY OF THE FOREGOING PERSONS OR ANY OF THEIR OFFICERS, DIRECTORS, PARTNERS, EMPLOYEES, AGENTS, ADVISORS OR REPRESENTATIVES (COLLECTIVELY, THE “ AGENT PARTIES ”) SHALL BE LIABLE FOR ANY DAMAGES ARISING FROM THE USE BY UNINTENDED RECIPIENTS OF ANY INFORMATION OR OTHER MATERIALS DISTRIBUTED BY IT THROUGH TELECOMMUNICATIONS, ELECTRONIC OR OTHER INFORMATION TRANSMISSION SYSTEMS IN CONNECTION WITH THIS AGREEMENT, THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY, AND EACH SUCH PARTY EXPRESSLY DISCLAIMS LIABILITY FOR ERRORS OR OMISSIONS IN SUCH TELECOMMUNICATIONS, ELECTRONIC OR OTHER INFORMATION TRANSMISSION SYSTEMS OR THEREBY, EXCEPT TO THE EXTENT ARISING FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH PARTY IN THE USE OF SUCH SYSTEMS, AS DETERMINED BY A FINAL, NON- APPEALABLE JUDGMENT OF A COURT OF COMPETENT JURISDICTION. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD-PARTY RIGHTS OR FREEDOM FROM VIRUSES OR CODE DEFECTS IS MADE BY THE AGENT PARTIES IN CONNECTION WITH SUCH TELECOMMUNICATIONS, ELECTRONIC OR OTHER INFORMATION TRANSMISSION SYSTEMS.
          SECTION 9.02. Waivers; Amendments . (a) No failure or delay by the Administrative Agent or any Lender in exercising any right or power hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Administrative Agent and the Lenders hereunder are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of this Agreement or consent to any departure by the Borrower therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Loan shall not be construed as a waiver of any Default, regardless of whether the Administrative Agent, any Lender may have had notice or knowledge of such Default at the time.
               (b) Neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Borrower and the Required Lenders or by the Borrower and the Administrative Agent with the consent of the Required Lenders; provided that no such agreement shall (i) increase the Commitment of any Lender without the written consent of such Lender, (ii) reduce the principal amount of any Loan or reduce the rate of interest thereon, or reduce any fees payable hereunder, without the written consent of each Lender affected thereby, (iii) postpone the scheduled date of payment of the principal amount of any Loan, or any interest thereon, or any fees payable hereunder, or reduce the amount of, waive or excuse any such payment, or postpone the scheduled date of expiration of any Commitment, without the written consent of each Lender affected thereby, (iv)change Section 2.17(b) or (c) in a manner that would alter the pro rata

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sharing of payments required thereby, without the written consent of each Lender, or (v) change any of the provisions of this Section or the definition of “Required Lenders” or any other provision hereof specifying the number or percentage of Lenders required to waive, amend or modify any rights hereunder or make any determination or grant any consent hereunder, without the written consent of each Lender; provided further that no such agreement shall amend, modify or otherwise affect the rights or duties of the Administrative Agent hereunder without the prior written consent of the Administrative Agent. Notwithstanding the foregoing or any other provision in any Loan Document, the Borrower shall execute any amendment to this Agreement and any other Loan Document to the extent required to comply with the terms of the Fee and Syndication Letter.
          SECTION 9.03. Expenses; Indemnity; Damage Waiver . (a) The Borrower shall pay (i) all reasonable and documented out-of-pocket expenses (including due diligence expenses, syndication expenses, consultant’s fees and expenses, travel expenses, and reasonable fees, charges and disbursements of one counsel and if reasonably required by the Administrative Agent, local counsel or specialist counsel, and, if counsel for the Administrative Agent determines in good faith that there is a conflict of interest that requires separate representation for any Agent, any Bookrunner, the Issuing Bank or any Lender, one additional counsel for each Person subject to such conflict of interest) incurred by the Bookrunners, the Administrative Agent, and their respective Affiliates, in connection with the syndication of the credit facilities provided for herein, the preparation and administration of this Agreement or any amendments, modifications or waivers of the provisions hereof (whether or not the transactions contemplated hereby or thereby shall be consummated) and (ii) all reasonable and documented out-of-pocket expenses incurred by any Agent, the Bookrunners or any Lender, including the fees, charges and disbursements of any counsel for the Administrative Agent, the Bookrunners or any Lender in connection with the enforcement or protection of its rights in connection with this Agreement, including its rights under this Section, or in connection with the Loans made hereunder, including all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans.
               (b) The Borrower shall indemnify the Administrative Agent, the Bookrunners and each Lender, and each Related Party of any of the foregoing Persons (each such Person being called an “ Indemnitee ”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses, including the fees, charges and disbursements of any counsel for any Indemnitee, incurred by or asserted against any Indemnitee arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement or any agreement or instrument contemplated hereby, the performance by the parties hereto of their respective obligations hereunder or the consummation of the Transactions or any other transactions contemplated hereby, (ii) any Loan or the use of the proceeds therefrom, (iii) any actual or alleged presence or release of Hazardous Materials on or from any property owned or operated by the Borrower or any of its Subsidiaries, or any Environmental Liability related in any way to the Borrower or any of its Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the bad faith, gross negligence or willful misconduct of such Indemnitee. To the extent that the undertakings to defend, indemnify, pay and hold harmless as set forth in this Section 9.03(b) may be unenforceable in whole or in part because they are violative of any law or public policy, the Borrower shall contribute the maximum portion that it is permitted to pay and satisfy under applicable law to the payment and satisfaction of all such losses, claims, damages, liabilities and related expenses incurred by the Indemnitees or any of them.
               (c) To the extent that the Borrower fails to pay any amount required to be paid by it to the Administrative Agent or the Bookrunners under paragraph (a) or (b) of this Section, each Lender

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severally agrees to pay to the Administrative Agent or the Bookrunners, as the case may be, such Lender’s Applicable Percentage with respect to the Facilities (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount; provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent or the Bookrunners in its capacity as such.
               (d) To the extent permitted by applicable law, the Borrower shall not assert, and hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement or any agreement or instrument contemplated hereby, the Transactions or any Loan or the use of the proceeds thereof.
          SECTION 9.04. Successors and Assigns . (a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that (i) the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Lender (and any attempted assignment or transfer by the Borrower without such consent shall be null and void) and (ii) no Lender may assign or otherwise transfer its rights or obligations hereunder except in accordance with this Section. Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants (to the extent provided in paragraph (c) of this Section) and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.
               (b) (i) Subject to the conditions set forth in paragraph (b)(ii) below, any Lender may assign to one or more assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it) with the prior written consent (such consent not to be unreasonably withheld) of:
          (A) the Borrower, provided that no consent of the Borrower shall be required for an assignment to (i) any Lender, an Affiliate of a Lender, an Approved Fund, (ii) any assignee at any time prior to the completion of a Successful Syndication (as defined in the Fee and Syndication Letter) or (iii) if an Event of Default under clauses (a), (b), (h) or (i) of Article VII has occurred and is continuing or at any time prior to the completion of a Successful Syndication (as defined in the Fee and Syndication Letter), any other assignee; and
          (B) the Administrative Agent, provided that no consent of the Administrative Agent shall be required for an assignment of any Commitment to an assignee that is a Lender with a Commitment immediately prior to giving effect to such assignment; and
(ii) Assignments shall be subject to the following additional conditions:
          (A) except in the case of an assignment to a Lender or an Affiliate of a Lender or an assignment of the entire remaining amount of the assigning Lender’s Commitment or Loans, the amount of the Commitment or Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the

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Administrative Agent) shall not be less than $5,000,000 unless each of the Borrower and the Administrative Agent otherwise consent, provided that no such consent of the Borrower shall be required if an Event of Default under clauses (a), (b), (h) or (i) of Article VII has occurred and is continuing;
          (B) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement;
          (C) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee of $3,500; and
          (D) the assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire in which the assignee designates one or more Credit Contacts to whom all syndicate-level information (which may contain material non-public information about the Borrower and any of it Subsidiaries, and their related parties or their respective securities) will be made available and who may receive such information in accordance with the assignee’s compliance procedures and applicable laws, including Federal and state securities laws.
          For the purposes of this Section 9.04(b), the term “ Approved Fund ” has the following meaning:
Approved Fund ” means any Person (other than a natural person) that is engaged in making, purchasing, holding or investing in bank loans and similar extensions of credit in the ordinary course of its business and that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.
          (i) Subject to acceptance and recording thereof pursuant to paragraph (b)(iv) of this Section, from and after the effective date specified in each Assignment and Assumption the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 2.14, 2.15, 2.16 and 9.03) to the extent that any claim thereunder relates to an event arising prior to such assignment. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this Section 9.04 shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with paragraph (c) of this Section.
          (ii) The Administrative Agent, acting for this purpose as an agent of the Borrower, shall maintain at one of its offices a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitment of, and principal amount of the Loans and any interest thereon owing to, each Lender pursuant to the terms hereof from time to time (the “ Register ”). The entries in the Register shall be conclusive absent manifest error, and the

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Borrower, the Administrative Agent and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice.
          (iii) Upon its receipt of a duly completed Assignment and Assumption executed by an assigning Lender and an assignee, the assignee’s completed Administrative Questionnaire (unless the assignee shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph (b) of this Section and any written consent to such assignment required by paragraph (b) of this Section, the Administrative Agent shall accept such Assignment and Assumption and record the information contained therein in the Register; provided that if either the assigning Lender or the assignee shall have failed to make any payment required to be made by it pursuant to Sections 2.06(b), 2.17(d) or 9.03(c), the Administrative Agent shall have no obligation to accept such Assignment and Assumption and record the information therein in the Register unless and until such payment shall have been made in full, together with all accrued interest thereon. No assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this paragraph.
               (c) (i) Any Lender may, without the consent of the Borrower or the Administrative Agent sell participations to one or more banks or other entities (a “ Participant ”) in all or a portion of such Lender’s rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans owing to it); provided that (A) such Lender’s obligations under this Agreement shall remain unchanged, (B) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (C) the Borrower, the Administrative Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in the first proviso to Section 9.02(b) that affects such Participant. Subject to paragraph (c)(ii) of this Section, the Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.14, 2.15 and 2.16 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section.
          (ii) A Participant shall not be entitled to receive any greater payment under Section 2.14 or 2.16 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower’s prior written consent. A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 2.16 unless the Borrower is notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Borrower, to comply with Section 2.16(e) as though it were a Lender and in any event shall not be entitled to any greater payment than the applicable Lender that sold such participation to such Participant would have been entitled to receive.
               (d) Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including without limitation any pledge or assignment to secure obligations to a Federal Reserve Bank, and this Section shall not apply to any such pledge or assignment of a security interest; provided that no such pledge or

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assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.
          SECTION 9.05. Survival . All covenants, agreements, representations and warranties made by the Borrower herein and in the certificates or other instruments delivered in connection with or pursuant to this Agreement shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of this Agreement and the making of any Loans, regardless of any investigation made by any such other party or on its behalf and notwithstanding that the Administrative Agent or any Lender may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any fee or any other amount payable under this Agreement is outstanding and unpaid and so long as the Commitments have not expired or terminated. The provisions of Sections 2.14, 2.15, 2.16 and 9.03 and Article VIII shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment of the Loans, the expiration or termination of the Commitments or the termination of this Agreement of any provision hereof.
          SECTION 9.06. Counterparts; Integration; Effectiveness . This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement, the other Loan Documents and any separate letter agreements with respect to fees payable to the Administrative Agent constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Except as provided in Section 4.01, this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof which, when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. Delivery of an executed counterpart of a signature page of this Agreement by telecopy or other electronic communication shall be effective as delivery of a manually executed counterpart of this Agreement.
          SECTION 9.07. Severability . Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.
          SECTION 9.08. Right of Setoff . If an Event of Default shall have occurred and be continuing, each Lender and each of its Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other obligations at any time owing by such Lender or Affiliate to or for the credit or the account of the Borrower against any of and all the obligations of the Borrower now or hereafter existing under this Agreement held by such Lender to the extent then due and owing, irrespective of whether or not such Lender shall have made any demand under this Agreement. Each Lender agrees to notify the Borrower promptly of its exercise of any rights under this Section, but the failure to provide such notice shall not otherwise limit its rights under this Section or result in any liability to such Lender. The rights of each Lender under this Section are in addition to other rights and remedies (including other rights of setoff) which such Lender may have.
          SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of Process . (a) This Agreement shall be construed in accordance with and governed by the law of the State of New York.

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               (b) The Borrower hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of the Supreme Court of the State of New York sitting in New York County and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement shall affect any right that the Administrative Agent or any Lender may otherwise have to bring any action or proceeding relating to this Agreement against the Borrower or its properties in the courts of any jurisdiction.
               (c) The Borrower hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement in any court referred to in paragraph (b) of this Section. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.
               (d) Each party to this Agreement irrevocably consents to service of process at the address provided for Section 9.01. Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law.
          SECTION 9.10. WAIVER OF JURY TRIAL . EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY 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 AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
          SECTION 9.11. Headings . Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.
          SECTION 9.12. Confidentiality . (a) Each of the Administrative Agent, the Bookrunners and the Lenders agrees to maintain the confidentiality of the Information (as defined below in accordance with such person’s customary procedures for handling confidential information of such nature), except that Information may be disclosed (i) to its and its Affiliates’ partners, directors, officers, employees and agents, including accountants, legal counsel and other advisors (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (ii) to the extent requested by any regulatory authority, (iii) to the extent required by applicable laws or regulations or by any subpoena or similar legal process ( provided that, unless prohibited by applicable law or court order, such disclosing party shall use reasonable efforts to notify the Borrower prior to such disclosure), (iv) to any other party to this Agreement, (v) to any rating agency when required by it, provided that, prior to any disclosure,

58


 

such rating agency shall undertake in writing to preserve the confidentiality of any such information, (vi) in connection with the exercise of any remedies hereunder or any suit, action or proceeding relating to this Agreement or the enforcement of rights hereunder, (vii) subject to an agreement containing provisions no less restrictive than those of this Section, to (1) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement or (2) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the Borrower and its obligations, (viii) with the consent of the Borrower or (ix) to the extent such Information (1) becomes publicly available other than as a result of a breach of this Section or (2) becomes available to the Administrative Agent, any Bookrunner or any Lender from a source other than the Borrower not known by such person to be in breach of any legal or contractual obligation not to disclose such information to the Administrative Agent, the Bookrunners or such Lender. In addition, the Administrative Agent, each Bookrunner and each Lender may disclose the existence of this Agreement and the information about this Agreement to market data collectors, similar service providers to the lending industry, and service providers in connection with the administration and management of this Agreement and the other Loan Documents; provided that, no such Person shall disclose the identity of the Borrower. For the purposes of this Section, “ Information ” means all information received from the Borrower or any of its Affiliates relating to the Borrower or its business, other than any such information that is available to the Administrative Agent, any Bookrunner or any Lender on a nonconfidential basis prior to disclosure by the Borrower or any of its Affiliates unless the Administrative Agent has actual knowledge that such information is being made available by a Person in breach of any legal or contractual obligation not to disclose such information. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.
               (b) Notwithstanding the provisions of Section 9.12(a) or anything contrary set forth herein, each party to this Agreement (and each of their respective employees, representatives or other agents) may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the facilities in relation to the Financing Transactions and all materials of any kind (including opinions or other tax analyses) that are provided to the Borrower relating to such tax treatment and tax structure. However, any information relating to the tax treatment or tax structure will remain subject to the confidentiality provisions set forth above (and the foregoing sentence will not apply) to the extent reasonably necessary to enable the parties hereto, their respective affiliates, and their and their respective affiliates’ directors and employees to comply with applicable securities laws. For this purpose, “tax treatment” means U.S. federal or state income tax treatment, and “tax structure” is limited to any facts relevant to the U.S. federal income tax treatment of the transactions contemplated by this Agreement but does not include information relating to the identity of the parties hereto or any of their respective affiliates.
               (c)  EACH LENDER ACKNOWLEDGES THAT INFORMATION AS DEFINED IN SECTION 9. 12(a) FURNISHED TO IT PURSUANT TO THIS AGREEMENT MAY INCLUDE MATERIAL NON-PUBLIC INFORMATION CONCERNING THE BORROWER AND ITS RELATED PARTIES OR THEIR RESPECTIVE SECURITIES, AND CONFIRMS THAT IT HAS DEVELOPED COMPLIANCE PROCEDURES REGARDING THE USE OF MATERIAL NON-PUBLIC INFORMATION AND THAT IT WILL HANDLE SUCH MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH THOSE PROCEDURES AND APPLICABLE LAW, INCLUDING FEDERAL AND STATE SECURITIES LAWS.
               (d)  ALL INFORMATION, INCLUDING REQUESTS FOR WAIVERS AND AMENDMENTS, FURNISHED BY THE BORROWER OR THE ADMINISTRATIVE AGENT PURSUANT TO, OR IN THE COURSE OF ADMINISTERING, THIS AGREEMENT WILL BE

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SYNDICATE-LEVEL INFORMATION, WHICH MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION ABOUT THE BORROWER AND ITS SUBSIDIARIES, AND THEIR RELATED PARTIES OR THEIR RESPECTIVE SECURITIES. ACCORDINGLY, EACH LENDER REPRESENTS TO THE BORROWER AND THE ADMINISTRATIVE AGENT THAT IT HAS IDENTIFIED IN ITS ADMINISTRATIVE QUESTIONNAIRE A CREDIT CONTACT WHO MAY RECEIVE INFORMATION THAT MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH ITS COMPLIANCE PROCEDURES AND APPLICABLE LAW.
          SECTION 9.13. Interest Rate Limitation . Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to any Loan, together with all fees, charges and other amounts which are treated as interest on such Loan under applicable law (collectively the “ Charges ”), shall exceed the maximum lawful rate (the “ Maximum Rate ”) which may be contracted for, charged, taken, received or reserved by the Lender holding such Loan in accordance with applicable law, the rate of interest payable in respect of such Loan hereunder, together with all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent lawful, the interest and Charges that would have been payable in respect of such Loan but were not payable as a result of the operation of this Section shall be cumulated and the interest and Charges payable to such Lender in respect of other Loans or periods shall be increased (but not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon at the Federal Funds Effective Rate to the date of repayment, shall have been received by such Lender.
          SECTION 9.14. Patriot Act . Each Lender subject to the Patriot Act hereby notifies the Borrower and each Guarantor that, pursuant to Section 326 of the Patriot Act, it is required to obtain, verify and record information that identifies the Borrower and each Guarantor, including the name and address of the Borrower and each Guarantor and other information that will allow such Lender to identify the Borrower and each Guarantor in accordance with the Patriot Act.
          SECTION 9.15. No Advisory or Fiduciary Responsibility . In connection with all aspects of each transaction contemplated hereby (including in connection with any amendment, waiver or other modification hereof or of any other Loan Document), the Borrower acknowledges and agrees that: (i) (A) the arranging and other services regarding this Agreement provided by the Administrative Agent and the Bookrunners are arm’s-length commercial transactions between the Borrower and its Affiliates, on the one hand, and the Administrative Agent and the Bookrunners, on the other hand, (B) the Borrower has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (C) the Borrower is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby and by the other Loan Documents; (ii) (A) each of the Administrative Agent, the Bookrunners and the Lenders is and has been acting solely as a principal and, except as expressly agreed in writing by the relevant parties, has not been, is not, and will not be acting as an advisor, agent or fiduciary for the Borrower or any of its Affiliates, or any other Person, (B) irrespective of whether any Lender, any Bookrunner, the Administrative Agent or any of their Affiliates has advised or is advising the Borrower on other matters, the Borrower shall not claim any such fiduciary, advisory or agency relationship or services and the Borrower acknowledges that none of the Administrative Agent, any Lender, any Bookrunner or any of their Affiliates owes a fiduciary or similar duty to Cadbury, Cadbury UK, the Borrower, or the Business in connection with the Transactions or the process leading thereto and; and (iii) the Administrative Agent, the Lenders and the Bookrunners and their respective Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Borrower and its Affiliates, and no Agent nor any Bookrunner or Lender has any obligation to disclose any of such interests to the Borrower or its Affiliates.

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          SECTION 9.16. Release of Guarantors . (a) Notwithstanding anything to the contrary contained herein or in any other Loan Document, upon request of the Borrower in connection with (i) any disposition of a Subsidiary that is a Guarantor as permitted by the Loan Documents and immediately following such disposition such Subsidiary will no longer be a Subsidiary of the Borrower or (ii) a Subsidiary becoming an Excluded Subsidiary (including by being designated in writing by the Borrower as an “Immaterial Subsidiary” in accordance with the terms of this Agreement) as permitted by the Loan Documents, the Administrative Agent shall (without notice to, or vote or consent of, any Lender) take such actions as shall be required to release any guarantee obligations under any Loan Document of any Guarantor being disposed of in such disposition, to the extent necessary to permit consummation of such disposition in accordance with the Loan Documents, or becoming an Excluded Subsidiary, in accordance with the Loan Documents.
               (b) Notwithstanding anything to the contrary contained herein or any other Loan Document, when the principal and interest with respect to all Loans and all other monetary payment Obligations which are then due and payable have been paid in full and all Commitments have terminated or expired, upon request of the Borrower, the Administrative Agent shall (without notice to, or vote or consent of, any Lender) take such actions as shall be required to release all guarantee obligations under any Loan Document of any Guarantor. Any such release of guarantee obligations shall be deemed subject to the provision that such guarantee obligations shall be reinstated if within 180 days after such release (or such longer period under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect during which any payment in respect of the Obligations guaranteed thereby can be annulled, avoided, set aside, rescinded, invalidated, declared to be fraudulent or preferential or otherwise required to be refunded or repaid) any portion of any payment in respect of the Obligations guaranteed thereby shall be rescinded or must otherwise be restored or returned upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Borrower or any Guarantor, or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, the Borrower or any Guarantor or any substantial part of its property, or otherwise, all as though such payment had not been made; provided , however , that any such reinstated guarantee shall be released immediately upon the Obligations being indefeasibly paid in full.
[SIGNATURE PAGES FOLLOW]

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          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.
         
  DR PEPPER SNAPPLE GROUP, INC.,
as Borrower
 
 
  By   /s/   
    Name:      
    Title:      
 
[SIGNATURE PAGE TO CREDIT AGREEMENT]


 

         
  JPMORGAN CHASE BANK, N.A., individually and as
Administrative Agent, a Joint Lead Arranger and a
Lender
 
 
  By   /s/   
    Name:      
    Title:      
 
  J.P. MORGAN SECURITIES INC., as Bookrunner
 
 
  By   /s/   
    Name:      
    Title:      
 
[SIGNATURE PAGE TO CREDIT AGREEMENT]

 


 

         
  BANC OF AMERICA SECURITIES LLC, as a Joint
Lead Arranger and a Bookrunner
 
 
  By   /s/   
    Name:      
    Title:      
 
  BANK OF AMERICA, N.A., as Syndication Agent and
as a Lender
 
 
  By   /s/   
    Name:      
    Title:      
 
[SIGNATURE PAGE TO CREDIT AGREEMENT]

 


 

         
  GOLDMAN SACHS CREDIT PARTNERS L.P., as a
Documentation Agent, a Bookrunner and a Lender
 
 
  By   /s/   
    Authorized Signatory   
       
 
[SIGNATURE PAGE TO CREDIT AGREEMENT]

 


 

         
  MORGAN STANLEY SENIOR FUNDING, INC., as a
Documentation Agent, a Bookrunner and a Lender
 
 
  By   /s/   
    Name:      
    Title:      
 
[SIGNATURE PAGE TO CREDIT AGREEMENT]

 


 

         
  UBS SECURITIES LLC, as Bookrunner and
Documentation Agent
 
 
  By   /s/   
    Name:      
    Title:      
 
     
  By   /s/    
    Name:      
    Title:      
 
  UBS LOAN FINANCE LLC, as a Lender
 
 
  By   /s/   
    Name:      
    Title:      
 
     
  By   /s/    
    Name:      
    Title:      
 
[SIGNATURE PAGE TO CREDIT AGREEMENT]

 

Table of Contents

Information contained herein is subject to completion or amendment. A Registration Statement on Form 10 relating to these securities has been filed with the United States Securities and Exchange Commission under the United States Securities Exchange Act of 1934, as amended.
 
 
Preliminary and Subject to Completion, dated March 20, 2008
 
INFORMATION STATEMENT
 
(DR. PEPPER SNAPPLE GROUP LOGO)
 
Dr Pepper Snapple Group, Inc.
 
We are furnishing this information statement to the shareholders of Cadbury Schweppes plc (“Cadbury Schweppes”) in connection with the distribution of all of the outstanding shares of common stock of Dr Pepper Snapple Group, Inc. (“DPS”) to shareholders of Cadbury Schweppes. After the distribution is completed, DPS will be a separate company and will own and operate Cadbury Schweppes’ beverage business in the United States, Canada, Mexico and the Caribbean (the “Americas Beverages business”). Cadbury Schweppes’ global confectionery business and its other beverages business (located principally in Australia) will be owned and operated by Cadbury plc, a U.K. company, which will be the new publicly-traded parent company of Cadbury Schweppes.
 
On April 11, 2008, a shareholder vote to approve the distribution is scheduled to be held in the United Kingdom. If shareholders approve the separation and distribution, no further action by Cadbury Schweppes shareholders will be necessary for you to receive the shares of our common stock to which you are entitled in the distribution. You do not need to pay any consideration to DPS, Cadbury Schweppes or Cadbury plc. The distribution remains contingent on, among other things, the approval of Cadbury Schweppes shareholders and the court approval of certain matters in the United Kingdom. The final court approval is scheduled for May 6, 2008. Immediately after the distribution is completed, we will be an independent public company. We expect the distribution to occur on May 7, 2008. For additional details regarding the distribution, see “The Distribution” in this information statement.
 
All of our common stock is currently owned by Cadbury Schweppes. Accordingly, currently there is no public trading market for our common stock. We intend to apply to have our common stock authorized for listing on the New York Stock Exchange under the symbol “DPS.”
 
As you review this information statement, you should carefully consider the matters described in “Risk Factors” beginning on page 14 of this information statement.
 
 
Neither the United States Securities and Exchange Commission nor any U.S. state securities commission has approved or disapproved of these securities or determined if this information statement is truthful or complete. Any representation to the contrary is a criminal offense.
 
 
This information statement does not constitute an offer to sell or the solicitation of an offer to buy any securities.
 
 
The date of this information statement is          , 2008.
 
This information statement is expected to be mailed to shareholders of Cadbury Schweppes on or about          , 2008.


 

 
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In this information statement, references to “DPS,” “our company,” “we,” “us” and “our” refer to Dr Pepper Snapple Group, Inc. and its subsidiaries, references to “Cadbury Schweppes” refer to Cadbury Schweppes plc and its subsidiaries and references to “Cadbury plc” refer to Cadbury plc and its subsidiaries, except in each case where otherwise indicated or the context otherwise requires.
 
We were recently formed for the purpose of holding Cadbury Schweppes’ Americas Beverages business in connection with the separation and distribution described herein and had no operations prior to the separation and distribution. Our company was initially incorporated under the name CSAB Inc. The name of our company was changed from CSAB Inc. to Dr Pepper Snapple Group, Inc. on January 2, 2008.
 
The fiscal years presented in this information statement are the 52-week periods ended December 31, 2007 and 2006, which we refer to as ‘‘2007” and “2006,” respectively, the 52-week period ended January 1, 2006, which we refer to as “2005,” and 53-week period ended January 2, 2005, which we refer to as “2004.” Beginning in 2006, our fiscal year ends on December 31 of each year. In 2005 and 2004, the year end date represented the Sunday closest to December 31.
 
This information statement contains some of our owned or licensed trademarks, trade names and service marks, which we refer to as our brands. All of the product names and logos included in the information statement are either our registered trademarks or those of our licensors.
 
The market and industry data in this information statement is from the following independent industry sources: ACNielsen of the Nielsen Company (“ACNielsen”), Beverage Digest LLC (“Beverage Digest”) and Canadean Limited (“Canadean”). For a description of the different methodologies used by these sources (including the sales channels covered), see “Industry — Use of Market Data in this Information Statement.”


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INFORMATION STATEMENT SUMMARY
 
This summary highlights information contained elsewhere in this information statement. It is not complete and may not contain all the information that may be important to you. You should read the entire information statement carefully, especially the information presented under the heading “Risk Factors,” our unaudited pro forma combined financial statements and our audited combined financial statements included elsewhere in this information statement.
 
Our historical combined financial information has been prepared on a “carve-out” basis from Cadbury Schweppes’ consolidated financial statements using the historical results of operations, assets and liabilities, attributable to Cadbury Schweppes’ Americas Beverages business and including allocations of expenses from Cadbury Schweppes. Our unaudited pro forma combined financial information adjusts our historical combined financial information to give effect to our separation from Cadbury Schweppes, the distribution of our common stock and the related financing, each as described herein.
 
Our Company
 
We are a leading integrated brand owner, bottler and distributor of non-alcoholic beverages in the United States, Canada and Mexico with a diverse portfolio of flavored (non-cola) carbonated soft drinks (“CSDs”) and non-carbonated soft drinks (“non-CSDs”), including ready-to-drink teas, juices, juice drinks and mixers. We have some of the most recognized beverage brands in North America, with significant consumer awareness levels and long histories that evoke strong emotional connections with consumers.
 
The following table provides highlights about our company and our key brands:
 
Our Company
 
     
(DR. PEPPER SNAPPLE GROUP LOGO)
 
•   #1 flavored CSD company in the United States

•   More than 75% of our volume from brands that are either #1 or #2 in their category

•   #3 North American liquid refreshment beverage business

•   $5.7 billion of net sales in 2007 from the United States (89%), Canada (4%) and Mexico and the Caribbean (7%)

•   $1.0 billion of income from operations in 2007
 
Our Key Brands
 
     
(DR. PEPPER)
 
•   #1 in its flavor category and #2 overall flavored CSD in the United States

•   Distinguished by its unique blend of 23 flavors and loyal consumer following

•   Flavors include regular, diet and “Soda Fountain Classics” line extensions

•   Oldest major soft drink in the United States, introduced in 1885
 
     
(SNAPPLE)
 
•   A leading ready-to-drink tea in the United States

•   Teas include premium Snapple teas and super premium white, green, red and black teas

•   Brand also includes premium juices, juice drinks and recently launched enhanced waters

•   Founded in Brooklyn, New York in 1972
 
     
(7 UP)
 
•   #2 lemon-lime CSD in the United States
•   Re-launched in 2006 as the only major lemon-lime CSD with all-natural flavors and no artificial preservatives
•   Flavors include regular, diet and cherry
•   The original “Un-Cola,” created in 1929


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(MOTTS)
 
•   #1 apple juice and #1 apple sauce brand in the United States
•   Juice products include apple and other fruit juices, Mott’s Plus and Mott’s for Tots
•   Apple sauce products include regular, unsweetened, flavored and organic
•   Brand began as a line of apple cider and vinegar offerings in 1876
 
     
(SUNKIST)
 
•   #1 orange CSD in the United States
•   Flavors include orange, diet and other fruits
•   Licensed to us as a soft drink by the Sunkist Growers Association since 1986
 
     
(HAWAIIAN PUNCH)
 
•   #1 fruit punch brand in the United States
•   Brand includes a variety of fruit flavored and reduced calorie juice drinks
•   Developed originally as an ice cream topping known as “Leo’s Hawaiian Punch” in 1934
 
     
(AANDW)
 
•   #1 root beer in the United States
•   Flavors include regular and diet root beer and cream soda
•   A classic all-American soda first sold at a veteran’s parade in 1919
 
     
(CANADA DRY)
 
•   #1 ginger ale in the United States and Canada
•   Brand includes club soda, tonic and other mixers
•   Created in Toronto, Canada in 1904 and introduced in the United States in 1919
 
     
(SCHWEPPES)
 
•   #2 ginger ale in the United States and Canada
•   Brand includes club soda, tonic and other mixers
•   First carbonated beverage in the world, invented in 1783
 
     
(SQUIRT)
 
•   #1 grapefruit CSD in the United States and #2 grapefruit CSD in Mexico
•   Flavors include regular, diet and ruby red
•   Founded in 1938
 
     
(CLAMATO)
 
•   A leading spicy tomato juice brand in the United States, Canada and Mexico
•   Key ingredient in Canada’s popular cocktail, the Bloody Caesar
•   Created in 1969
 
     
(PENAFIEL)
 
•   #1 carbonated mineral water brand in Mexico
•   Brand includes Flavors, Twist and Naturel
•   Mexico’s oldest mineral water, founded in 1928
 
     
(MR AND MRS T)
 
•   #1 portfolio of mixer brands in the United States
•   #1 mixer brand (Mr & Mrs T) in the United States
•   Leading mixers (Margaritaville and Rose’s) in their flavor categories
 
 
Note:   All information regarding the beverage market in the United States is from Beverage Digest, and, except as otherwise indicated, is from 2006. Certain limited United States beverage market information for 2007 is available from Beverage Digest and is contained herein, but in most instances 2006 information is the most recent available from Beverage Digest. All information regarding the beverage markets in Canada and Mexico is from Canadean and is from 2006. All information regarding our brand market positions in the United States is from ACNielsen and is based on retail dollar sales in 2007. All information regarding our brand market positions in Canada is from ACNielsen and is based on volume in 2007. All information regarding our brand market positions in Mexico is from Canadean and is based on volume in 2006. When 2006 information is used, it is the most recent information available from the applicable source. For a description of the different methodologies used by these sources (including sales channels covered), see “Industry — Use of Market Data in this Information Statement.”


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We have built our business over the last 25 years, through a series of strategic acquisitions, into an integrated brand owner, bottler and distributor that is now the third largest liquid refreshment beverage company in North America (according to Beverage Digest and Canadean). Most recently, we acquired several bottling businesses in the United States, which provide us with more control over the bottling, distribution and route-to-market for our products. In 2007, we bottled and/or distributed approximately 45% of our total products sold in the United States (as measured by volume).
 
Our business is currently part of Cadbury Schweppes. Following our separation from Cadbury Schweppes, we will be an independent, publicly-traded company, and Cadbury Schweppes will not retain any ownership interest in us. In connection with the separation, we will enter into a number of agreements with Cadbury plc that will govern our relationship following the separation. These include agreements to provide each other with services during a transition period and indemnify each other against certain liabilities arising from our respective businesses and from the separation. For a more detailed description of the separation, see “The Distribution” and for a more detailed description of these agreements, see “Our Relationship with Cadbury plc After the Distribution.”
 
Our Industry
 
Total retail sales (i.e., sales to end consumers) in 2006 in the U.S. liquid refreshment beverage market were $106 billion, with CSDs accounting for 66.1%, non-CSDs (including ready-to-drink teas, juices, juice drinks and sports drinks) accounting for 19.7% and bottled water accounting for 14.2%. The U.S. liquid refreshment beverage market has grown over the last five years, with average annual volume growth of 3.9% between 2001 and 2006 and average annual retail sales growth of 5.1% over the same period. In 2006, CSD retail sales grew 2.9%, despite a 0.6% decline in volume. Within the CSD market segment, flavored CSDs increased their share (as measured by volume), from 40.1% in 2001 to 42.6% in 2006, and colas lost share from 59.9% in 2001 to 57.4% in 2006. According to the latest available information from Beverage Digest, in 2007 CSD retail sales increased 2.7% despite a 2.3% decline in volume. Non-CSDs have experienced strong volume growth over the last five years with their share of the U.S. liquid refreshment beverage market increasing from 12.7% in 2001 to 16.3% in 2006. Non-CSD volume and retail sales increased by 13.2% and 14.8%, respectively, in 2006, with strong growth in ready-to-drink teas, sports drinks and juice drinks. The Canadian and Mexican markets have exhibited broadly similar trends to those in the United States, except that Mexican CSD volume grew 4.9% in 2006 according to Canadean. All U.S. market and industry data set forth in this paragraph is from Beverage Digest. See “Industry — Use of Market Data in this Information Statement.”
 
Our Strengths
 
The key strengths of our business are:
 
Strong portfolio of leading, consumer-preferred brands.   We own a diverse portfolio of well-known CSD and non-CSD brands, which provides our bottlers, distributors and retailers with a wide variety of products and provides us with a platform for growth and profitability. We are the #1 flavored CSD company in the United States. In addition, we are the only major beverage concentrate manufacturer with year-over-year market share growth in the CSD market segment in each of the last four years. Our largest brand, Dr Pepper, is the #2 flavored CSD in the United States, according to ACNielsen, and our Snapple brand is a leading ready-to-drink tea. Overall, in 2007, more than 75% of our volume was generated by brands that hold either the #1 or #2 position in their category. The strength of our key brands has allowed us to launch innovations and brand extensions such as Dr Pepper Soda Fountain Classics, Mott’s for Tots and Snapple Antioxidant Waters.
 
Integrated business model.   We believe our brand ownership, bottling and distribution are more integrated than the U.S. operations of our principal competitors and that this differentiation provides us with a competitive advantage. Our integrated business model strengthens our route-to-market and enables us to improve focus on our brands. Our integrated business model also provides opportunities for net sales and profit growth through the alignment of the economic interests of our brand ownership and our bottling and distribution businesses.
 
Strong customer relationships.   Our brands have enjoyed long-standing relationships with many of our top customers. We sell our products to a wide range of customers, from bottlers and distributors to national retailers, large foodservice and convenience store customers. We have strong relationships with some of the largest bottlers


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and distributors, including those affiliated with The Coca-Cola Company (“Coca-Cola”) and PepsiCo, Inc. (“PepsiCo”), some of the largest and most important retailers, including Wal-Mart, Safeway, Kroger and Target, some of the largest foodservice customers, including McDonald’s, Yum! and Burger King, and convenience store customers, including 7-Eleven.
 
Attractive positioning within a large, growing and profitable market.   We hold the #3 position in each of the United States, Canada and Mexico, three of the top ten beverage markets by CSD volume, according to Beverage Digest and Canadean. In addition, we participate in many of the growing categories in the liquid refreshment beverage market, such as ready-to-drink teas. We do not participate significantly in colas, which have declined in CSD volume share from 70.0% in 1991 to 57.4% in 2006 in the United States, according to Beverage Digest. We also do not participate significantly in the bottled water market segment, which we believe is a highly competitive and generally low margin market segment.
 
Broad geographic manufacturing and distribution coverage.   As of December 31, 2007, we had 21 manufacturing facilities and more than 250 distribution centers in the United States, as well as 4 manufacturing facilities and more than 25 distribution centers in Mexico. These facilities use a variety of manufacturing processes. Following our recent bottling acquisitions and manufacturing investments, we now have greater geographic coverage with strategically located manufacturing and distribution capabilities, enabling us to better align our operations with our customers, reduce transportation costs and have greater control over the timing and coordination of new product launches.
 
Strong operating margins and significant, stable cash flows.   The breadth and strength of our brand portfolio have enabled us to generate strong operating margins which, combined with our relatively modest capital expenditures, have delivered significant and stable cash flows. These cash flows create stockholder value by enabling us to consider a variety of alternatives, such as investing in our business, reducing debt and returning capital to our stockholders.
 
Experienced executive management team.   Our executive management team has an average of more than 20 years of experience in the food and beverage industry. The team has broad experience in brand ownership, bottling and distribution, and enjoys strong relationships both within the industry and with major customers.
 
Our Strategy
 
The key elements of our business strategy are to:
 
Build and enhance leading brands.   We have a well-defined portfolio strategy to allocate our marketing and sales resources. We use an on-going process of market and consumer analysis to identify key brands that we believe have the greatest potential for profitable sales growth. For example, in 2006 and 2007, we continued to enhance the Snapple portfolio by launching brand extensions with functional benefits, such as super premium teas and juice drinks and Snapple Antioxidant Waters. We intend to continue to invest most heavily in our key brands to drive profitable and sustainable growth by strengthening consumer awareness, developing innovative products and brand extensions to take advantage of evolving consumer trends, improving distribution and increasing promotional effectiveness.
 
Focus on opportunities in high growth and high margin categories.   We are focused on driving growth in our business in selected profitable and emerging categories. These categories include ready-to-drink teas, energy drinks and other functional beverages. We also intend to capitalize on opportunities in these categories through brand extensions, new product launches and selective acquisitions of brand and distribution rights.
 
Increase presence in high margin channels and packages.   We are focused on improving our product presence in high margin channels, such as convenience stores, vending machines and small independent retail outlets, through increased selling activity and significant investments in coolers and other cold drink equipment. We also intend to increase demand for high margin products like single-serve packages for many of our key brands through increased promotional activity and innovation.
 
Leverage our integrated business model.   We believe our integrated brand ownership, bottling and distribution business model provides us opportunities for net sales and profit growth through the alignment of the economic interests of our brand ownership and our bottling and distribution businesses. We intend to leverage our integrated business model to reduce costs by creating greater geographic manufacturing and distribution


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coverage and to be more flexible and responsive to the changing needs of our large retail customers by coordinating sales, service, distribution, promotions and product launches.
 
Strengthen our route-to-market through acquisitions.   The acquisition and creation of our Bottling Group is part of our longer-term initiative to strengthen the route-to-market for our products. We believe additional acquisitions of regional bottling companies will broaden our geographic coverage in regions where we are currently under-represented and enhance coordination with our large retail customers.
 
Improve operating efficiency.   We believe our recently announced restructuring will reduce our selling, general and administrative expenses and improve our operating efficiency. In addition, the integration of recent acquisitions into our Bottling Group has created the opportunity to improve our manufacturing, warehousing and distribution operations.
 
Background and Reasons for the Distribution
 
On March 15, 2007, Cadbury Schweppes announced that it intended to separate its Americas Beverages business from its global confectionery business and its other beverages business (located principally in Australia). The board of directors of Cadbury Schweppes initially determined to simultaneously explore the potential for both a sale of our company to a third party and a distribution of our common stock to Cadbury Schweppes shareholders as alternatives for the separation of the businesses. After determining that difficult debt market conditions would not facilitate an acceptable sale process for the foreseeable future, Cadbury Schweppes announced on October 10, 2007 that it intended to focus on the separation of its Americas Beverages business through the distribution of the common stock of DPS to Cadbury Schweppes shareholders. On February 15, 2008, Cadbury Schweppes’ board of directors approved the distribution of our common stock to the shareholders of Cadbury Schweppes. Cadbury Schweppes believes that the separation of its Americas Beverages business from its global confectionery business and its other beverages business (located principally in Australia) will enhance value for stockholders of DPS and shareholders of Cadbury plc, the new parent company of Cadbury Schweppes, by creating significant opportunities and benefits, including:
 
  •  allowing the management of each company to focus its efforts on its own business and strategic priorities;
 
  •  enabling each company to allocate its capital more efficiently;
 
  •  providing DPS with direct access to the debt and equity capital markets;
 
  •  improving DPS’s ability to pursue strategic transactions through the use of shares of common stock as consideration;
 
  •  enhancing DPS’s market recognition with investors; and
 
  •  increasing DPS’s ability to attract and retain employees by providing equity compensation tied directly to its business.
 
For more information on the distribution, see “The Distribution.”
 
Risk Factors
 
Our new company faces both general and specific risks and uncertainties relating to our business, our separation from Cadbury Schweppes and our being a publicly-traded company following the distribution, which are described in “Risk Factors,” beginning on page 14.
 
Recent Developments
 
New Financing Arrangements
 
On March 10, 2008, we entered into arrangements with a group of lenders to provide us with an aggregate of $4.4 billion of financing. The new arrangements consist of a $2.4 billion senior credit agreement that provides a $1.9 billion term loan A facility and a $500 million revolving credit facility and a 364-day bridge credit agreement that provides a $2.0 billion bridge loan facility. We currently expect to borrow an aggregate of $3.9 billion under the term loan A facility and the bridge loan facility in connection with the separation. We currently intend, subject to


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prevailing market conditions, to replace all or a portion of the bridge loan facility with the proceeds from the issuance of one or more series of notes and/or an alternative term loan facility. See “Description of Indebtedness.”
 
New President and Chief Executive Officer
 
Larry Young was appointed President and Chief Executive Officer of Cadbury Schweppes’ Americas Beverages business on October 10, 2007. Mr. Young was previously our Chief Operating Officer, as well as President, Bottling Group, and has more than 30 years of experience in the bottling and beverages industry.
 
Organizational Restructuring
 
On October 10, 2007, we announced a restructuring of our organization intended to create a more efficient organization. This restructuring will result in a reduction of approximately 470 employees in our corporate, sales and supply chain functions and will include approximately 100 employees in Plano, Texas, 125 employees in Rye Brook, New York and 50 employees in Aspers, Pennsylvania. The remaining reductions will occur at a number of sites located in the United States, Canada and Mexico. The restructuring also includes the closure of two manufacturing facilities in Denver, Colorado (closed in December 2007) and Waterloo, New York (closed in March 2008). The employee reductions are expected to be completed by June 2008.
 
As a result of this restructuring, we recognized a charge of approximately $32 million in 2007. We expect to recognize a charge of approximately $21 million in 2008 related to this restructuring. We expect this restructuring to generate annual cost savings of approximately $68 million, most of which are expected to be realized in 2008 with the full annual benefit realized from 2009 onwards. Savings realized in 2007 were immaterial. As part of this restructuring, our Bottling Group segment has assumed management and operational control of our Snapple Distributors segment.
 
In 2007, we incurred a total of $76 million of restructuring costs, which included the $32 million related to the restructuring announced on October 10, 2007.
 
Accelerade Launch
 
We launched our new, ready-to-drink Accelerade sports drink in the first half of 2007. The launch represented an introduction of a new product into a new beverage category for us and was supported by significant national product placement and marketing investments. Net sales were below expectations despite these investments. We incurred an operating loss of approximately $55 million from the Accelerade launch in 2007, while marketing investments in other brands, predominantly Beverage Concentrate brands, were reduced by approximately $25 million. In addition, we incurred a $4 million impairment charge related to the Accelerade brand which represented the majority of the $6 million of impairment charges we incurred in 2007. Going forward, we intend to focus on marketing and selling Accelerade in a more targeted way to informed athletes, trainers and exercisers, and retailers that are frequented by these consumers, such as health and nutrition outlets, where we expect the product to be financially viable.
 
Glacéau Termination
 
Following its acquisition by Coca-Cola on August 30, 2007, Energy Brands, Inc. notified us that it was terminating our distribution agreements for glacéau products, including vitaminwater, fruitwater and smartwater, effective November 2, 2007. Pursuant to the terms of the agreements, we received a payment of approximately $92 million from Energy Brands, Inc. for this termination in December 2007, and we recorded a $71 million gain in 2007 in respect of this payment. Our 2007 glacéau net sales and contribution to income from operations were approximately $227 million and $40 million, respectively, and were reflected in our Bottling Group segment.


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Questions and Answers About the Distribution
 
The information statement will not be distributed to shareholders until such a vote has occurred. For a more detailed description of the matters summarized below, see “The Distribution.”
 
What is the distribution? The distribution is part of the process by which Cadbury Schweppes will separate its Americas Beverages business from its global confectionery business and its other beverages business (located principally in Australia). Although the separation and distribution have several steps, ultimately, holders of Cadbury Schweppes ordinary shares (and holders of American depositary receipts (“ADRs”) representing Cadbury Schweppes ordinary shares) will receive shares of common stock of Dr Pepper Snapple Group, Inc., a new company which will own Cadbury Schweppes’ Americas Beverages business, and shares of Cadbury plc, a new company which will own Cadbury Schweppes’ global confectionery business and its other beverages business (or ADRs representing such shares). These two companies will be independent from each other after the separation. We intend that the shares of our common stock will be listed on the New York Stock Exchange. It is also intended that the ordinary shares of Cadbury plc will be listed on the London Stock Exchange and ADRs representing its ordinary shares will be listed on the New York Stock Exchange.
 
How will the separation work?
Cadbury Schweppes currently intends to effect the separation and distribution through the following steps:
 
•  Scheme of Arrangement .  Cadbury Schweppes intends to implement a corporate reorganization pursuant to which a new company, Cadbury plc, will become the holding company of Cadbury Schweppes. This corporate reorganization is known as a “scheme of arrangement” under UK law. Pursuant to the scheme of arrangement, all outstanding Cadbury Schweppes ordinary shares will be cancelled and holders of Cadbury Schweppes ordinary shares will receive Cadbury plc ordinary shares, which will represent the ongoing ownership interest in the global confectionery business and its other beverages business (located principally in Australia), and Cadbury plc “beverage shares,” which, ultimately, will entitle the holder to receive our common stock in connection with the distribution which we expect to be completed on May 7, 2008.
 
•  Reduction of Capital and the Distribution of Our Common Stock.   Shortly after the scheme of arrangement becomes effective, Cadbury plc will cancel the Cadbury plc “beverage shares” (pursuant to a “reduction of capital” under UK law) and transfer its Americas Beverages business to us. In return for the transfer of the Americas Beverages business to us, we will distribute all of the shares of our common stock to the holders of Cadbury plc “beverage shares.”
 
For additional information on the distribution, see “The Distribution — Reorganization of Cadbury Schweppes and Distribution of Shares of Our Common Stock” and “The Distribution — Manner of Effecting the Distribution.”


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What will the relationship of Dr Pepper Snapple Group, Inc. and Cadbury plc be after the distribution?
We and Cadbury plc will each be independent, publicly-traded companies with separate management teams and boards of directors. Pursuant to the scheme of arrangement, Cadbury Schweppes will become a subsidiary of Cadbury plc.
 
Prior to the distribution, we will enter into agreements with Cadbury Schweppes to provide each other with services during a transition period and indemnify each other against certain liabilities arising from our respective businesses and from the separation. For additional information on our relationship with Cadbury plc after the distribution, see “Our Relationship with Cadbury plc After the Distribution.”
 
When will the distribution be completed?
We expect the distribution to be completed on May 7, 2008.
 
What is the record date for the distribution of our shares of common stock?
The record date for the distribution of shares of our common stock is expected to be May 1, 2008.
 
What do Cadbury Schweppes shareholders and holders of ADRs have to do to participate in the distribution?
A shareholder vote to approve the separation and distribution is scheduled to be held in the United Kingdom on April 11, 2008. If shareholders approve the separation and distribution, no further action by Cadbury Schweppes shareholders or holders of Cadbury Schweppes ADRs is necessary for you to receive the shares of our common stock to which you are entitled in the distribution. You do not need to pay any consideration to us, Cadbury Schweppes or Cadbury plc. The distribution will remain contingent on the approval of the High Court of Justice of England and Wales, as well as certain other conditions described in “The Distribution” and summarized below under “— What are the conditions to the distribution?”
 
How many shares of our common stock will Cadbury Schweppes shareholders and holders of ADRs receive?
We will distribute 0.12 shares of our common stock for each Cadbury Schweppes ordinary share held at the Scheme Record Time or 0.48 shares of our common stock for each Cadbury Schweppes ADR held at the Depositary Record Time (as defined under “The Distribution”). Based on approximately 2.1 billion Cadbury Schweppes ordinary shares outstanding as of March 13, 2008, a total of approximately 253.4 million shares of our common stock will be distributed. For additional information on the distribution, see “The Distribution — Results of the Distribution.”
 
What are the tax consequences of the receipt of Cadbury plc ordinary shares or Cadbury plc ADRs and our common stock by holders of Cadbury Schweppes ordinary shares?
The receipt of Cadbury plc ordinary shares and shares of our common stock should not constitute a disposal by a holder of Cadbury Schweppes ordinary shares for U.K. tax purposes, and so no chargeable gain or allowable loss should arise for U.K. tax purposes. Where the amount of cash received in lieu of a fractional share of our common stock is “small” as compared to the value of the holding, a U.K. Holder (as defined under “Material Tax Considerations — U.K. Holders”) may treat the cash received as a deduction from the base cost of the holding of common stock, rather than as a partial disposal of the common stock.
 
In the case of any U.K. Holder who, alone or together with persons connected with him, holds more than 5% of, or any class of, shares in or debentures of Cadbury Schweppes, it is a condition for this treatment that the separation and distribution are being effected for


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bona fide commercial reasons and do not form part of a scheme or arrangement of which the main purpose, or one of the main purposes, is an avoidance of liability to U.K. corporation tax or capital gains tax.
 
Cadbury Schweppes has requested a private letter ruling from the U.S. Internal Revenue Service (the “IRS”) that subject to the facts, representations and qualifications contained therein, your receipt of Cadbury plc ordinary shares and our common stock (along with certain related restructuring transactions) will qualify for non-recognition treatment under Sections 355 and 368(a)(1)(F) of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”). Under such treatment, a holder of Cadbury Schweppes ordinary shares or Cadbury Schweppes ADRs who is a U.S. person for U.S. federal income tax purposes will not incur U.S. federal income tax upon the receipt of Cadbury plc ordinary shares or Cadbury plc ADRs and our common stock. Any cash received in lieu of a fractional share of Cadbury plc ordinary shares or our common stock will generally be treated as capital gain or loss.
 
See “Material Tax Considerations.”
 
What are the conditions to the distribution?
The distribution is subject to a number of conditions, including, among others, the approval of Cadbury Schweppes shareholders and the High Court of Justice of England and Wales, the Securities and Exchange Commission (the “SEC”) declaring effective the registration statement of which this information statement forms a part and the completion of the financing related to the distribution. See “The Distribution.”
 
Does Dr Pepper Snapple Group, Inc. intend to pay dividends on the common stock?
We currently intend to retain cash generated from our business to repay our debt and for other corporate purposes and do not currently anticipate paying any cash dividends in the short term. In the long term, we intend to invest in our business and return excess cash to our stockholders. See “Dividend Policy.”
 
Will Dr Pepper Snapple Group, Inc. incur any debt prior to or at the time of the distribution?
On March 10, 2008, we entered into arrangements with a group of lenders to provide us with an aggregate of $4.4 billion of financing. The new arrangements consist of a $2.4 billion senior credit agreement that provides a $1.9 billion term loan A facility and a $500 million revolving credit facility and a 364-day bridge credit agreement that provides a $2.0 billion bridge loan facility. We currently expect to borrow an aggregate of $3.9 billion under the term loan A facility and the bridge loan facility in connection with the separation which, together with our cash on hand, will be used to settle with Cadbury Schweppes related party debt and other balances, reduce Cadbury Schweppes’ net investment in us, purchase certain assets from Cadbury Schweppes related to our business, pay $100 million of fees and expenses related to the new credit facilities and provide us with $100 million of cash on hand immediately after the separation.
 
We currently intend, subject to prevailing market conditions, to replace all or a portion of the bridge loan facility with the proceeds from the issuance of one or more series of notes and/or an alternative term loan facility. See “Description of Indebtedness” and “Risk Factors — Risks Related to Our Business — After our separation from Cadbury Schweppes, we will have


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a significant amount of debt, which could adversely affect our business and our ability to meet our obligations.”
 
Where will trading begin in the common stock?
There is no current trading market for our common stock. We intend to apply to have our common stock authorized for listing on the New York Stock Exchange under the symbol “DPS.” After this listing, shares of our common stock will generally be freely-tradable. For additional information regarding the trading of our common stock, see “Risk Factors — Risks Related to Our Common Stock” and “The Distribution — Market for Our Common Stock.”
 
What will happen to the listing of Cadbury Schweppes ordinary shares and ADRs?
Once the scheme of arrangement becomes effective, Cadbury Schweppes ordinary shares and Cadbury Schweppes ADRs will be delisted from the London Stock Exchange and the New York Stock Exchange, respectively. Ordinary shares of Cadbury plc, the new parent company of Cadbury Schweppes, will be listed on the London Stock Exchange under the symbol “CBRY” and the Cadbury plc ADRs will be listed on the New York Stock Exchange under the symbol “CBY.” See “The Distribution — Reorganization of Cadbury Schweppes and Distribution of Shares of Our Common Stock.”
 
Are there risks associated with owning Dr Pepper Snapple Group, Inc. common stock?
Our new company will face both general and specific risks and uncertainties relating to our business, our separation from, and ongoing relationship with, Cadbury plc and our being a publicly-traded company following the distribution. You should read carefully “Risk Factors,” beginning on page 14.
 
Who do I contact for information regarding Dr Pepper Snapple Group, Inc. and the distribution?
You should direct inquiries relating to the distribution to:
     Dr Pepper Snapple Group, Inc.
     5301 Legacy Drive
     Plano, TX 75024
     Attention: Aly Noormohamed, SVP, Investor Relations
     Tel: (972) 673-6050
 
 
After the distribution, the transfer agent and registrar for our common stock will be:
 
     Computershare Trust Company, N.A.
     250 Royall Street
     Canton, MA 02021
     Attention: Jennifer LaGrow
     Tel: (781) 575-2000
 
 
Corporate Information
 
We were incorporated in Delaware on October 24, 2007. The address of our principal executive offices is 5301 Legacy Drive, Plano, Texas 75024. Our telephone number is (972) 673-7000. We were formed for the purpose of holding Cadbury Schweppes’ Americas Beverages business in connection with the separation and distribution described herein and will have no operations prior to the separation and distribution.


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Summary Historical and Unaudited Pro Forma Combined Financial Data
 
The following table presents our summary historical and unaudited pro forma combined financial data. Our summary historical combined financial data presented below as of December 31, 2007 and 2006 and January 1, 2006 (the last day of fiscal 2005) and for the three fiscal years 2007, 2006 and 2005 have been derived from our audited combined financial statements, included elsewhere in this information statement.
 
Our historical financial data have been prepared on a “carve-out” basis from Cadbury Schweppes’ consolidated financial statements using the historical results of operations, assets and liabilities attributable to Cadbury Schweppes’ Americas Beverages business and including allocations of expenses from Cadbury Schweppes. This historical Cadbury Schweppes’ Americas Beverages information is our predecessor financial information. The results included below and elsewhere in this information statement are not necessarily indicative of our future performance and do not reflect our financial performance had we been an independent, publicly-traded company during the periods presented. You should read this information along with the information included in “Unaudited Pro Forma Combined Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our audited combined financial statements and the related notes thereto included elsewhere in this information statement.
 
On May 2, 2006, we acquired approximately 55% of the outstanding shares of Dr Pepper/Seven Up Bottling Group, Inc. (“DPSUBG”), which combined with our pre-existing 45% ownership, resulted in our full ownership of DPSUBG. DPSUBG’s results have been included in the individual line items within our combined financial statements beginning on May 2, 2006. Prior to this date, the existing investment in DPSUBG was accounted for under the equity method and reflected in the line item captioned “equity in earnings of unconsolidated subsidiaries, net of tax.” In addition, on June 9, 2006 we acquired the assets of All American Bottling Company, on August 7, 2006 we acquired Seven Up Bottling Company of San Francisco and on July 11, 2007 we acquired Southeast-Atlantic Beverage Corp. (“SeaBev”). Each of these four acquisitions is included in our combined financial statements beginning on its date of acquisition. As a result, our financial data is not necessarily comparable on a period-to-period basis.
 
The summary unaudited pro forma combined financial data has been prepared to give effect to:
 
  •  the contribution by Cadbury Schweppes to us of its Americas Beverages business;
 
  •  the distribution of our common stock to Cadbury Schweppes shareholders;
 
  •  the purchase by us from Cadbury Schweppes of software and intangible assets related to our foreign operations for an aggregate of $317 million in cash;
 
  •  the borrowing by us of $3.9 billion under our new credit facilities;
 
  •  the payment by us of $100 million of fees and expenses related to our new credit facilities;
 
  •  the settlement with Cadbury Schweppes of related party debt and other balances and the elimination of Cadbury Schweppes’ net investment in us; and
 
  •  other adjustments as described in the notes to the unaudited pro forma combined financial data.
 
Due to the relatively small size of the 2007 SeaBev acquisition, no adjustments have been reflected in this summary unaudited pro forma combined financial data for this acquisition.


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The unaudited pro forma combined balance sheet data as of December 31, 2007 has been prepared as though the separation, distribution and related financing transactions occurred on December 31, 2007. The unaudited pro forma combined statement of operations data for 2007 has been prepared as though the separation, distribution and related financing transactions occurred on January 1, 2007. The pro forma adjustments are based upon available information and assumptions that we believe are reasonable. The unaudited pro forma combined financial statements are for informational purposes only and are not necessarily indicative of what our financial performance would have been had the transactions reflected therein been completed on the dates assumed. They may not reflect the financial performance that would have resulted had we been operating as an independent, publicly-traded company during those periods. In addition, they are not indicative of our future financial performance. For further information regarding the pro forma adjustments described above, see “Unaudited Pro Forma Combined Financial Data” and our audited combined financial statements and related notes thereto included elsewhere in this information statement.
 
                                         
    Pro Forma     Historical        
    2007     2007     2006     2005        
 
Statements of Operations Data:
  (In millions, except per share data)
Net sales
  $ 5,748     $ 5,748     $ 4,735     $ 3,205          
Cost of sales
    2,617       2,617       1,994       1,120          
                                         
Gross profit
    3,131       3,131       2,741       2,085          
Selling, general and administrative expenses
    2,018       2,018       1,659       1,179          
Depreciation and amortization
    100       98       69       26          
Impairment of intangible assets
    6       6                      
Restructuring costs
    76       76       27       10          
Gain on disposal of property and intangible assets
    (71 )     (71 )     (32 )     (36 )        
                                         
Income from operations
    1,002       1,004       1,018       906          
Interest expense
    363       253       257       210          
Interest income
    (4 )     (64 )     (46 )     (40 )        
Other expense (income)
    (13 )     (2 )     2       (51 )        
                                         
Income before provision for income taxes, equity in earnings of unconsolidated subsidiaries and cumulative effect of change in accounting policy
    656       817       805       787          
Provision for income taxes
    272       322       298       321          
                                         
Income before equity in earnings of unconsolidated subsidiaries and cumulative effect of change in accounting policy
    384       495       507       466          
Equity in earnings of unconsolidated subsidiaries
    2       2       3       21          
                                         
Income before cumulative effect of change in accounting policy
    386       497       510       487          
Cumulative effect of change in accounting policy, net of tax
                      10          
                                         
Net income
  $ 386     $ 497     $ 510     $ 477          
                                         
Earnings per share — basic(1)
  $ 1.52                                  
Earnings per share — diluted(2)
  $ 1.52                                  
Balance Sheets Data:
                                       
Cash and cash equivalents
  $ 100     $ 67     $ 35     $ 28          
Total assets
    9,505       10,528       9,346       7,433          
Current portion of long-term debt
    2,190       126       708       404          
Long-term debt
    1,729       2,912       3,084       2,858          
Other non-current liabilities, including deferred tax liabilities
    1,806       1,460       1,321       1,013          
Total invested equity
    2,936       5,021       3,250       2,426          
 


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    Historical        
    2007     2006     2005        
    (In millions)        
Statements of Cash Flows Data:
                               
Cash provided by (used in):
                               
Operating activities
  $ 603     $ 581     $ 583          
Investing activities
    (1,087 )     (502 )     283          
Financing activities
    515       (72 )     (815 )        
Depreciation expense(3)
    120       94       48          
Amortization expense(3)
    49       45       31          
Capital expenditures
    (230 )     (158 )     (44 )        
Other Financial Data:
                               
EBITDA(4)
  $ 1,177     $ 1,158     $ 1,047          
 
 
(1) The number of shares used to compute pro forma earnings per share — basic is 253.4 million, which is the number of shares of our common stock assumed to be outstanding on the distribution date, based on a distribution ratio of 0.12 shares of our common stock for every Cadbury Schweppes ordinary share as of March 13, 2008.
 
(2) The number of shares used to compute pro forma earnings per share — diluted will be the number of basic shares referenced in note (1) above plus any potential dilution from issuances under stock-based awards granted under our stock-based compensation plans. There will be no potentially dilutive securities outstanding on separation. In the ordinary course of business post separation, we expect to issue stock-based awards under our stock-based compensation plans which, when issued, will be dilutive in future periods.
 
(3) The depreciation and amortization expenses reflected in this section of the table represent our total depreciation and amortization expenses as reflected on our combined statements of cash flows. Depreciation and amortization expenses in our combined statements of operations data are reflected in various line items including “depreciation and amortization,” “cost of sales” and “selling, general and administrative expenses.”
 
(4) EBITDA is defined as net income before interest expense, interest income, provision for income taxes, depreciation and amortization. EBITDA is a measure commonly used by financial analysts in evaluating a company’s liquidity. Accordingly, we believe that EBITDA may be useful for investors in assessing our ability to meet our debt service requirements. EBITDA is not a recognized measurement under U.S. GAAP. When evaluating liquidity, investors should not consider EBITDA in isolation of, or as a substitute for, measures of liquidity as determined in accordance with U.S. GAAP, such as net income or net cash provided by operating activities. EBITDA may have material limitations as a liquidity measure because it excludes interest expense, interest income, taxes and depreciation and amortization. Other companies may calculate EBITDA differently, and therefore our EBITDA may not be comparable to similarly titled measures reported by other companies. A reconciliation of EBITDA to net income is provided below.
 
                         
    Historical
    2007   2006   2005
    (In millions)
 
Net income
  $ 497     $ 510     $ 477  
Interest expense
    253       257       210  
Interest income
    (64 )     (46 )     (40 )
Income taxes
    322       298       321  
Depreciation expense
    120       94       48  
Amortization expense
    49       45       31  
                         
EBITDA
  $ 1,177     $ 1,158     $ 1,047  
                         

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RISK FACTORS
 
Ownership of our common stock involves risk. You should understand and carefully consider the risks below, as well as all of the other information contained in this information statement, including our financial statements and the related notes. Some of the risks relate to our business while others relate to our separation from Cadbury Schweppes and ownership of our common stock. Our business may be adversely affected by risks and uncertainties not currently known to us. If any of these risks or uncertainties develop into actual events, our business and financial performance (including our financial condition, results of operations and cash flows) could be materially and adversely affected, and the trading price of our common stock could decline.
 
Risks Related to Our Business
 
We operate in highly competitive markets.
 
Our industry is highly competitive. We compete with multinational corporations with significant financial resources, including Coca-Cola and PepsiCo. These competitors can use their resources and scale to rapidly respond to competitive pressures and changes in consumer preferences by introducing new products, reducing prices or increasing promotional activities. We also compete against a variety of smaller, regional and private label manufacturers. Smaller companies may be more innovative, better able to bring new products to market and better able to quickly exploit and serve niche markets. Our inability to compete effectively could result in a decline in our sales. As a result, we may have to reduce our prices or increase our spending on marketing, advertising and product innovation. Any of these could negatively affect our business and financial performance.
 
We may not effectively respond to changing consumer preferences, trends, health concerns and other factors.
 
Consumers’ preferences can change due to a variety of factors, including aging of the population, social trends, negative publicity, economic downturn or other factors. For example, consumers are increasingly concerned about health and wellness, and demand for regular CSDs has decreased as consumers have shifted towards low or no calorie soft drinks and, increasingly, to non-CSDs, such as water, ready-to-drink teas and sports drinks. If we do not effectively anticipate these trends and changing consumer preferences, then quickly develop new products in response, our sales could suffer. Developing and launching new products can be risky and expensive. We may not be successful in responding to changing markets and consumer preferences, and some of our competitors may be better able to respond to these changes, either of which could negatively affect our business and financial performance.
 
Costs for our raw materials may increase substantially.
 
The principal raw materials we use in our business are aluminum cans and ends, glass bottles, PET bottles and caps, paperboard packaging, high fructose corn syrup (“HFCS”) and other sweeteners, juice, fruit, electricity, fuel and water. The cost of the raw materials can fluctuate substantially. For example, aluminum, glass, PET and HFCS prices increased significantly in recent periods. In addition, we are significantly impacted by increases in fuel costs due to the large truck fleet we operate in our distribution businesses. Under many of our supply arrangements, the price we pay for raw materials fluctuates along with certain changes in underlying commodities costs, such as aluminum in the case of cans, natural gas in the case of glass bottles, resin in the case of PET bottles and caps, corn in the case of HFCS and pulp in the case of paperboard packaging. We expect these increases to continue to exert pressure on our costs and we may not be able to pass along any such increases to our customers or consumers, which could negatively affect our business and financial performance.
 
Certain raw materials we use are available from a limited number of suppliers and shortages could occur.
 
Some raw materials we use, such as aluminum cans and ends, glass bottles, PET bottles, HFCS and other ingredients, are available from only a few suppliers. If these suppliers are unable or unwilling to meet our requirements, we could suffer shortages or substantial cost increases. Changing suppliers can require long lead times. The failure of our suppliers to meet our needs could occur for many reasons, including fires, natural disasters, weather, manufacturing problems, disease, crop failure, strikes, transportation interruption, government regulation,


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political instability and terrorism. A failure of supply could also occur due to suppliers’ financial difficulties, including bankruptcy. Some of these risks may be more acute where the supplier or its plant is located in riskier or less-developed countries or regions. Any significant interruption to supply or cost increase could substantially harm our business and financial performance.
 
Substantial disruption to production at our beverage concentrates or other manufacturing facilities could occur.
 
A disruption in production at our beverage concentrates manufacturing facility, which manufactures almost all of our concentrates, could have a material adverse effect on our business. In addition, a disruption could occur at any of our other facilities or those of our suppliers, bottlers or distributors. The disruption could occur for many reasons, including fire, natural disasters, weather, manufacturing problems, disease, strikes, transportation interruption, government regulation or terrorism. Alternative facilities with sufficient capacity or capabilities may not be available, may cost substantially more or may take a significant time to start production, each of which could negatively affect our business and financial performance.
 
Our products may not meet health and safety standards or could become contaminated.
 
We have adopted various quality, environmental, health and safety standards. However, our products may still not meet these standards or could otherwise become contaminated. A failure to meet these standards or contamination could occur in our operations or those of our bottlers, distributors or suppliers. This could result in expensive production interruptions, recalls and liability claims. Moreover, negative publicity could be generated from false, unfounded or nominal liability claims or limited recalls. Any of these failures or occurrences could negatively affect our business and financial performance.
 
Our facilities and operations may require substantial investment and upgrading.
 
We are engaged in an ongoing program of investment and upgrading in our manufacturing, distribution and other facilities. We expect to incur substantial costs to upgrade or keep up-to-date various facilities and equipment or restructure our operations, including closing existing facilities or opening new ones. If our investment and restructuring costs are higher than anticipated or our business does not develop as anticipated to appropriately utilize new or upgraded facilities, our costs and financial performance could be negatively affected.
 
Weather and climate changes could adversely affect our business.
 
Unseasonable or unusual weather or long-term climate changes may negatively impact the price or availability of raw materials, energy and fuel, and demand for our products. Unusually cool weather during the summer months may result in reduced demand for our products and have a negative effect on our business and financial performance.
 
We depend on a small number of large retailers for a significant portion of our sales.
 
Food and beverage retailers in the United States have been consolidating. Consolidation has resulted in large, sophisticated retailers with increased buying power. They are in a better position to resist our price increases and demand lower prices. They also have leverage to require us to provide larger, more tailored promotional and product delivery programs. If we, and our bottlers and distributors, do not successfully provide appropriate marketing, product, packaging, pricing and service to these retailers, our product availability, sales and margins could suffer. Certain retailers make up a significant percentage of our products’ retail volume, including volume sold by our bottlers and distributors. For example, Wal-Mart Stores, Inc., the largest retailer of our products, represented approximately 10% of our net sales in 2007. Some retailers also offer their own private label products that compete with some of our brands. The loss of sales of any of our products in a major retailer could have a material adverse effect on our business and financial performance.


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We depend on third-party bottling and distribution companies for a substantial portion of our business.
 
We generate a substantial portion of our net sales from sales of beverage concentrates to third-party bottling companies. During 2007, approximately two-thirds of our beverage concentrates volume was sold to bottlers that we do not own. Some of these bottlers are partly owned by our competitors, and much of their business comes from selling our competitors’ products. In addition, some of the products we manufacture are distributed by third parties. As independent companies, these bottlers and distributors make their own business decisions. They may have the right to determine whether, and to what extent, they produce and distribute our products, our competitors’ products and their own products. They may devote more resources to other products or take other actions detrimental to our brands. In most cases, they are able to terminate their bottling and distribution arrangements with us without cause. We may need to increase support for our brands in their territories and may not be able to pass on price increases to them. Their financial condition could also be adversely affected by conditions beyond our control and our business could suffer. Any of these factors could negatively affect our business and financial performance.
 
Our intellectual property rights could be infringed or we could infringe the intellectual property rights of others and adverse events regarding licensed intellectual property, including termination of distribution rights, could harm our business.
 
We possess intellectual property that is important to our business. This intellectual property includes ingredient formulas, trademarks, copyrights, patents, business processes and other trade secrets. See “Business — Intellectual Property and Trademarks” for more information. We and third parties, including competitors, could come into conflict over intellectual property rights. Litigation could disrupt our business, divert management attention and cost a substantial amount to protect our rights or defend ourselves against claims. We cannot be certain that the steps we take to protect our rights will be sufficient or that others will not infringe or misappropriate our rights. If we are unable to protect our intellectual property rights, our brands, products and business could be harmed.
 
We also license various trademarks from third parties and license our trademarks to third parties. In some countries, other companies own a particular trademark which we own in the United States, Canada or Mexico. For example, the Dr Pepper trademark and formula is owned by Coca-Cola in certain other countries. Adverse events affecting those third parties or their products could affect our use of the trademark and negatively impact our brands.
 
In some cases, we license products from third-parties which we distribute. The licensor may be able to terminate the license arrangement upon an agreed period of notice, in some cases without payment to us of any termination fee. The termination of any material license arrangement could adversely affect our business and financial performance. For example, following its acquisition by Coca-Cola on August 30, 2007, Energy Brands, Inc. notified us that it was terminating our distribution agreement for glacéau products.
 
Litigation or legal proceedings could expose us to significant liabilities and damage our reputation.
 
We are party to various litigation claims and legal proceedings. We evaluate these claims and proceedings to assess the likelihood of unfavorable outcomes and estimate, if possible, the amount of potential losses. We may establish a reserve as appropriate based upon assessments and estimates in accordance with our accounting policies. We base our assessments, estimates and disclosures on the information available to us at the time and rely on legal and management judgment. Actual outcomes or losses may differ materially from assessments and estimates. Actual settlements, judgments or resolutions of these claims or proceedings may negatively affect our business and financial performance. For more information, see “Business — Legal Matters.”
 
We may not comply with applicable government laws and regulations, and they could change.
 
We are subject to a variety of federal, state and local laws and regulations in the United States, Canada, Mexico and other countries in which we do business. These laws and regulations apply to many aspects of our business including the manufacture, safety, labeling, transportation, advertising and sale of our products. See “Business — Regulatory Matters” for more information regarding many of these laws and regulations. Violations of these laws or regulations could damage our reputation and/or result in regulatory actions with substantial penalties. In addition, any significant change in such laws or regulations or their interpretation, or the introduction of higher standards or more stringent laws or regulations,


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could result in increased compliance costs or capital expenditures. For example, changes in recycling and bottle deposit laws or special taxes on soft drinks or ingredients could increase our costs. Regulatory focus on the health, safety and marketing of food products is increasing. Certain state warning and labeling laws, such as California’s “Prop 65,” which requires warnings on any product with substances that the state lists as potentially causing cancer or birth defects, could become applicable to our products. Some local and regional governments and school boards have enacted, or have proposed to enact, regulations restricting the sale of certain types of soft drinks in schools. Any violations or changes of regulations could have a material adverse effect on our profitability, or disrupt the production or distribution of our products, and negatively affect our business and financial performance.
 
We may not be able to renew collective bargaining agreements on satisfactory terms, or we could experience strikes.
 
Approximately 5,000 of our employees, many of whom are at our key manufacturing locations, are covered by collective bargaining agreements. These agreements typically expire every three to four years at various dates. We may not be able to renew our collective bargaining agreements on satisfactory terms or at all. This could result in strikes or work stoppages, which could impair our ability to manufacture and distribute our products and result in a substantial loss of sales. The terms of existing or renewed agreements could also significantly increase our costs or negatively affect our ability to increase operational efficiency.
 
We could lose key personnel or may be unable to recruit qualified personnel.
 
Our performance significantly depends upon the continued contributions of our executive officers and key employees, both individually and as a group, and our ability to retain and motivate them. Our officers and key personnel have many years of experience with us and in our industry and it may be difficult to replace them. If we lose key personnel or are unable to recruit qualified personnel, our operations and ability to manage our business may be adversely affected. We do not have “key person” life insurance for any of our executive officers or key employees.
 
Benefits cost increases could reduce our profitability.
 
Our profitability is substantially affected by the costs of pension, postretirement medical and employee medical and other benefits. In recent years, these costs have increased significantly due to factors such as increases in health care costs, declines in investment returns on pension assets and changes in discount rates used to calculate pension and related liabilities. Although we actively seek to control increases, there can be no assurance that we will succeed in limiting future cost increases, and continued upward pressure in these costs could have a material adverse affect on our business and financial performance.
 
We depend on key information systems and third-party service providers.
 
We depend on key information systems to accurately and efficiently transact our business, provide information to management and prepare financial reports. We rely on third-party providers for a number of key information systems and business processing services, including hosting our primary data center and processing various accounting, order entry and other transactional services. These systems and services are vulnerable to interruptions or other failures resulting from, among other things, natural disasters, terrorist attacks, software, equipment or telecommunications failures, processing errors, computer viruses, hackers, other security issues or supplier defaults. Security, backup and disaster recovery measures may not be adequate or implemented properly to avoid such disruptions or failures. Any disruption or failure of these systems or services could cause substantial errors, processing inefficiencies, security breaches, inability to use the systems or process transactions, loss of customers or other business disruptions, all of which could negatively affect our business and financial performance.
 
We may not realize benefits of acquisitions.
 
We have recently acquired various bottling and distribution businesses and are integrating their operations into our business. We may pursue further acquisitions of independent bottlers and distributors to complement our


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existing capabilities and further expand the distribution of our brands. We may also pursue acquisition of brands and products to expand our brand portfolio. The failure to successfully identify, make and integrate acquisitions may impede the growth of our business. The timing or success of any acquisition and integration is uncertain, requires significant expenses, and diverts financial and managerial resources away from our existing businesses. We also may not be able to raise the substantial capital required for acquisitions and integrations on satisfactory terms, if at all. In addition, even after an acquisition, we may not be able to successfully integrate an acquired business or brand or realize the anticipated benefits of an acquisition, all of which could have a negative effect on our business and financial performance.
 
Determinations in the future that a significant impairment of the value of our goodwill and other indefinite lived intangible assets has occurred could have a material adverse effect on our financial performance.
 
As of December 31, 2007, we had approximately $10.5 billion of total assets, of which approximately $6.8 billion were intangible assets. Intangible assets include goodwill, and other intangible assets in connection with brands, bottler agreements, distribution rights and customer relationships. We conduct impairment tests on goodwill and all indefinite lived intangible assets annually, as of December 31, or more frequently if circumstances indicate that the carrying amount of an asset may not be recoverable. If the carrying amount of an intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. Our annual impairment analysis, performed as of December 31, 2007, resulted in impairment charges of $6 million, of which approximately $4 million was related to the Accelerade brand. For additional information about these intangible assets, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies — Goodwill and Other Indefinite Lived Intangible Assets” and our combined financial statements included elsewhere in this information statement.
 
The impairment tests require us to make an estimate of the fair value of intangible assets. Since a number of factors may influence determinations of fair value of intangible assets, including those set forth in this discussion of “Risk Factors” and in “Special Note Regarding Forward-Looking Statements,” we are unable to predict whether impairments of goodwill or other indefinite lived intangibles will occur in the future. Any such impairment would result in us recognizing a charge to our operating results, which may adversely affect our financial performance.
 
After our separation from Cadbury Schweppes, we will have a significant amount of debt, which could adversely affect our business and our ability to meet our obligations.
 
As of December 31, 2007, on a pro forma basis after giving effect to the new financing arrangements we entered into on March 10, 2008 in connection with the separation and the application of the net proceeds thereof as contemplated under “Unaudited Pro Forma Combined Financial Data” and “Description of Indebtedness,” our total indebtedness would have been $3.9 billion.
 
This significant amount of debt could have important consequences to us and our investors, including:
 
  •  requiring a substantial portion of our cash flow from operations to make interest payments on this debt;
 
  •  making it more difficult to satisfy debt service and other obligations;
 
  •  increasing the risk of a future credit ratings downgrade of our debt, which could increase future debt costs;
 
  •  increasing our vulnerability to general adverse economic and industry conditions;
 
  •  reducing the cash flow available to fund capital expenditures and other corporate purposes and to grow our business;
 
  •  limiting our flexibility in planning for, or reacting to, changes in our business and the industry;
 
  •  placing us at a competitive disadvantage to our competitors that may not be as highly leveraged with debt as we are; and
 
  •  limiting our ability to borrow additional funds as needed or take advantage of business opportunities as they arise, pay cash dividends or repurchase common stock.


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To the extent we become more leveraged, the risks described above would increase. In addition, our actual cash requirements in the future may be greater than expected. Our cash flow from operations may not be sufficient to repay at maturity all of the outstanding debt as it becomes due, and we may not be able to borrow money, sell assets or otherwise raise funds on acceptable terms, or at all, to refinance our debt.
 
In addition, the agreements governing the debt that we will incur in connection with the separation will contain covenants that will, among other things, limit our ability to incur debt at subsidiaries that are not guarantors, incur liens, merge or sell, transfer or otherwise dispose of all or substantially all of our assets, make investments, loans, advances, guarantees and acquisitions, enter into transactions with affiliates and enter into agreements restricting our ability to incur liens or the ability of our subsidiaries to make distributions. These agreements will also require us to comply with certain affirmative and financial covenants. For additional information about our debt agreements, see “Description of Indebtedness.”
 
Risks Related to Our Separation from and Relationship with Cadbury Schweppes
 
We may not realize the potential benefits from the separation.
 
We may not realize the benefits that we anticipate from our separation from Cadbury Schweppes. These benefits include the following:
 
  •  allowing our management to focus its efforts on our business and strategic priorities,
 
  •  enabling us to allocate our capital more efficiently,
 
  •  providing us with direct access to the debt and equity capital markets,
 
  •  improving our ability to pursue acquisitions through the use of shares of our common stock as consideration,
 
  •  enhancing our market recognition with investors, and
 
  •  increasing our ability to attract and retain employees by providing equity compensation tied to our business.
 
We may not achieve the anticipated benefits from our separation for a variety of reasons. For example, the process of separating our business from Cadbury Schweppes and operating as an independent public company may distract our management from focusing on our business and strategic priorities. Although as an independent public company we will be able to control how we allocate our capital, we may not succeed in allocating our capital in ways that benefit our business. In addition, although we will have direct access to the debt and equity capital markets following the separation, we may not be able to issue debt or equity on terms acceptable to us or at all. The availability of shares of our common stock for use as consideration for acquisitions also will not ensure that we will be able to successfully pursue acquisitions or that the acquisitions will be successful. Moreover, even with equity compensation tied to our business we may not be able to attract and retain employees as desired. We also may not realize the anticipated benefits from our separation if any of the matters identified as risks in this Risk Factors section were to occur. If we do not realize the anticipated benefits from our separation for any reason, our business may be adversely affected.
 
Our historical financial performance may not be representative of our financial performance as a separate, stand-alone company.
 
The historical financial information included in this information statement has been derived from Cadbury Schweppes’ consolidated financial statements and does not reflect what our financial condition, results of operations or cash flows would have been had we operated as a separate, stand-alone company during the periods presented. Cadbury Schweppes currently provides certain corporate functions to us and costs associated with these functions have been allocated to us. These functions include corporate communications, regulatory, human resources and benefits management, treasury, investor relations, corporate controller, internal audit, Sarbanes-Oxley compliance, information technology, corporate legal and compliance, and community affairs. The total amount of these allocations from Cadbury Schweppes was approximately $161 million in 2007. All of these allocations are based on what we and Cadbury Schweppes considered to be reasonable reflections of the historical levels of the services and support provided to our business. The historical information does not necessarily


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indicate what our results of operations, financial condition, cash flows or costs and expenses will be in the future as an independent publicly-traded, stand-alone company.
 
Significant changes are expected to occur in our capital structure in connection with our separation from Cadbury Schweppes. We expect to borrow an aggregate of $3.9 billion under the new credit facilities in connection with the separation. As a result of these borrowings our interest expense after the separation is expected to be significantly higher than it was prior to the separation. For additional information, see “Unaudited Pro Forma Combined Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
 
After our separation from Cadbury Schweppes, we may experience increased costs resulting from a decrease in the purchasing power and other operational efficiencies we currently have due to our association with Cadbury Schweppes.
 
We have been able to take advantage of Cadbury Schweppes’ purchasing power in technology and services, including information technology, media purchasing, insurance, treasury services, property support and, to a lesser extent, the procurement of goods. As a smaller separate, stand-alone company, it may be more difficult for us to obtain goods, technology and services at prices and on terms as favorable as those available to us prior to the separation.
 
Prior to the distribution, we will enter into agreements with Cadbury plc, the new holding company of Cadbury Schweppes, under which Cadbury plc will provide some of these services to us on a transitional basis, for which we will pay Cadbury plc. These services may not be sufficient to meet our needs and, after these agreements with Cadbury plc end, we may not be able to replace these services at all or obtain these services at acceptable prices and terms.
 
Our ability to operate our business effectively may suffer if we do not cost effectively establish our own financial, administrative and other support functions to operate as a stand-alone company.
 
Historically, we have relied on certain financial, administrative and other support functions of Cadbury Schweppes to operate our business. With our separation from Cadbury Schweppes, we will need to enhance our own financial, administrative and other support systems. We will also need to rapidly establish our own accounting and auditing policies. Any failure in our own financial or administrative policies and systems could impact our financial performance and could materially harm our business and financial performance.
 
The obligations associated with being a public company will require significant resources and management attention.
 
In connection with the separation from Cadbury Schweppes and the distribution of our common stock, we will become subject to the reporting requirements of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Sarbanes-Oxley Act of 2002 and we will be required to prepare our financial statements according to accounting principles generally accepted in the United States (“U.S. GAAP”) which differs from our historical method of preparing financials, which was generally pursuant to International Financial Reporting Standard (“IFRS”). In addition, the Exchange Act requires that we file annual, quarterly and current reports. Our failure to prepare and disclose this information in a timely manner could subject us to penalties under federal securities laws, expose us to lawsuits and restrict our ability to access financing. The Sarbanes-Oxley Act requires that we, among other things, establish and maintain effective internal controls and procedures for financial reporting and we are presently evaluating our existing internal controls in light of the standards adopted by the Public Company Accounting Oversight Board. During the course of our evaluation, we may identify areas requiring improvement and may be required to design enhanced processes and controls to address issues identified through this review. This could result in significant cost to us and require us to divert substantial resources, including management time, from other activities.
 
Section 404 of the Sarbanes-Oxley Act requires annual management assessments of the effectiveness of our internal control over financial reporting, starting with our 2009 annual report that we will file with the SEC in 2010. In preparation for this, we may identify deficiencies that we may not be able to remediate in time to meet the deadline for compliance with the requirements of Section 404. Our failure to satisfy the requirements of Section 404


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on a timely basis could result in the loss of investor confidence in the reliability of our financial statements, which in turn could have a material adverse effect on our business and our common stock.
 
We and Cadbury Schweppes could have significant indemnification obligations to each other with respect to tax liabilities.
 
We will enter into a tax-sharing and indemnification agreement with Cadbury Schweppes that sets forth the rights and obligations of Cadbury Schweppes and us (along with our respective subsidiaries) with respect to taxes and, in general, provides that we and Cadbury Schweppes each will be responsible for taxes imposed on our respective businesses and subsidiaries for all taxable periods, whether ending on, before or after the date of the separation and distribution.
 
Cadbury Schweppes has, subject to certain conditions, agreed to indemnify us for income taxes that are attributable to certain restructuring transactions undertaken in connection with the separation and distribution and various other transactions between Cadbury Schweppes and us that were entered into in prior taxable periods. Such potential tax liabilities could be for significant amounts. Notwithstanding these tax indemnification obligations of Cadbury Schweppes, if the treatment of these transactions were successfully challenged by a taxing authority, we generally would be required under applicable tax law to pay the resulting tax liabilities in the event that either (1) Cadbury Schweppes were to default on their obligations to us, (2) we breached certain covenants or other obligations or (3) we are involved in certain change-in-control transactions. Thus, since we have primary liability for income taxes in respect of these transactions, if Cadbury Schweppes fails to, is not required to or cannot indemnify or reimburse us, our resulting tax liability could be significant and could have a material adverse effect on our results of operations, cash flows and financial condition.
 
In addition, we generally will be liable for any liabilities, taxes or other charges that are imposed on Cadbury Schweppes, including as a result of the separation and distribution failing to qualify for non-recognition treatment for U.S. federal income tax purposes, if such failure is the result of a breach by us of certain of our representations or covenants, including, for example, our failure to continue the active conduct of the historic business relied upon for purposes of the private letter ruling request submitted to the IRS and taking any action inconsistent with the written statements and representations furnished to the IRS in connection with the private letter ruling request. The parties could have significant indemnification obligations to each other with respect to tax liabilities.
 
The receipt of our common stock could be a taxable transaction for U.S. persons.
 
The receipt of Cadbury plc ordinary shares or Cadbury plc ADRs and our common stock by holders of Cadbury Schweppes ordinary shares or Cadbury Schweppes ADRs (and certain related restructuring transactions) is intended to qualify for non-recognition treatment under Sections 355 and 368(a)(1)(F) of the Internal Revenue Code. Cadbury Schweppes has requested a private letter ruling from the IRS that, subject to the facts, representations and qualifications contained therein, the receipt of Cadbury plc ordinary shares and our common stock by Cadbury Schweppes stockholders (along with certain related restructuring transactions) will qualify for non-recognition treatment under Sections 355 and 368(a)(1)(F) of the Internal Revenue Code. The IRS has not yet issued a private letter ruling and the failure of the IRS to issue such a private letter ruling would not prevent Cadbury Schweppes from proceeding with the separation and distribution. Notwithstanding any eventual private letter ruling, the IRS could determine on audit that the receipt of Cadbury plc ordinary shares or Cadbury plc ADRs and our common stock should not qualify for nonrecognition treatment because, for example, one or more of the controlling facts or representations set forth in the private letter ruling request was not complete, or as a result of certain actions taken after the separation. If, contrary to any eventual private letter ruling, the receipt of our common stock ultimately is determined not to qualify for nonrecognition treatment under Section 355 of the Internal Revenue Code, a holder of Cadbury Schweppes ordinary shares or Cadbury Schweppes ADRs who is a U.S. person for U.S. federal income tax purposes generally would be treated as receiving a taxable distribution in an amount equal to the fair market value of our common stock (at the time of distribution) that is received by such stockholder and the amount of cash received in lieu of a fractional share of our common stock (without reduction for any portion of their tax basis in their Cadbury Schweppes ordinary shares or Cadbury Schweppes ADRs), which amount would be taxable as a dividend for U.S. federal income tax purposes (provided, as is expected, Cadbury plc has sufficient current and accumulated earnings and profits (including current and accumulated earnings and profits of Cadbury


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Schweppes) as determined for U.S. federal income purposes, or, if not so determined, dividend treatment will be presumed).
 
Risks Related to Our Common Stock
 
Our common stock has no existing public market and the price of our common stock may be subject to volatility.
 
Prior to the distribution, there will be no trading market for our common stock and you will not be able to buy or sell our common stock publicly. Although we intend to apply to have our common stock authorized for listing on the New York Stock Exchange, we cannot predict the extent to which an active trading market for our common stock will develop or be sustained after the distribution.
 
We have not and will not set the initial price of our common stock. The initial price will be established by the public markets. We cannot predict the price at which our common stock will trade after the distribution. In fact, the combined trading prices after the separation of the shares of our common stock and the Cadbury plc ordinary shares that each Cadbury Schweppes shareholder receives in connection with the separation may not equal the trading price of a Cadbury Schweppes ordinary share immediately prior to the separation. The price at which our common stock trades is likely to fluctuate significantly, particularly until an orderly public market develops. Even if an orderly and active trading market for our common stock develops, the market price of our common stock could be subject to significant volatility due to factors such as:
 
  •  general economic trends and other external factors;
 
  •  changes in our earnings or operating results;
 
  •  success or failure of our business strategies;
 
  •  failure of our financial performance to meet securities analysts’ expectations;
 
  •  our ability to obtain financing as needed;
 
  •  introduction of new products by us or our competitors;
 
  •  changes in conditions or trends in our industry, markets or customers;
 
  •  changes in governmental regulation;
 
  •  depth and liquidity of the market for our common stock; and
 
  •  our operating performance and that of our competitors. 
 
In the past, the stock markets have experienced significant price and volume fluctuations. Such fluctuations in the future could result in volatility in the trading price of our common stock.
 
Following the distribution, substantial sales of our common stock could cause our stock price to decline.
 
Sales of substantial amounts of our common stock (or shares issuable upon exercise of options), or the perception that these sales may occur, may cause the price of our common stock to decline and impede our ability to raise capital through the issuance of equity securities in the future. Based on the distribution ratio and the number of shares of Cadbury Schweppes common stock outstanding as of March 13, 2008, we expect that immediately following the distribution, there will be approximately 253.4 million shares of our common stock outstanding. All of these shares will be freely transferable without restriction or further registration under the Securities Act of 1933, as amended (the “Securities Act”), subject to restrictions that may be applicable to our “affiliates,” as that term is defined in Rule 144 of the Securities Act.


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Index funds that hold Cadbury Schweppes ordinary shares likely will be required to sell their shares of our common stock received in the distribution to the extent we are not included in the relevant index. In addition, a significant percentage of the shareholders of Cadbury Schweppes are not resident in the United States. Many of these shareholders may sell their shares immediately following the distribution. The sale of significant amounts of our common stock for the above or other reasons, or the perception that such sales will occur, may cause the price of our common stock to decline.
 
Provisions in Delaware law and our amended and restated certificate of incorporation and by-laws could delay and discourage takeover attempts that stockholders may consider favorable.
 
Certain provisions in Delaware law and our amended and restated certificate of incorporation and by-laws may make it more difficult for or prevent a third party from acquiring control of us or changing our board of directors. Such provisions include, among other things, a classified board of directors with three-year staggered terms, the removal of directors by stockholders only for cause and only by the affirmative vote of the holders of at least two-thirds of the votes which all stockholders would be entitled to cast in any annual election of directors at a meeting and the preclusion of stockholders from calling special meetings. These provisions could have the effect of depriving stockholders of an opportunity to sell their shares at a premium over prevailing market prices, or could deter potential acquirers or prevent the completion of a transaction in which our stockholders could receive a substantial premium over the then-current market price for their shares.


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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
 
This information statement contains forward-looking statements including, in particular, statements about future events, future financial performance, plans, strategies, expectations, prospects, competitive environment, regulation and availability of raw materials. Forward-looking statements include all statements that are not historical facts and can be identified by the use of forward-looking terminology such as the words “may,” “will,” “expect,” “anticipate,” “believe,” “estimate,” “plan,” “intend” or the negative of these terms or similar expressions in this information statement. We have based these forward-looking statements on our current views with respect to future events and financial performance. Our actual financial performance could differ materially from those projected in the forward-looking statements due to the inherent uncertainty of estimates, forecasts and projections, and our financial performance may be better or worse than anticipated. Given these uncertainties, you should not put undue reliance on any forward-looking statements.
 
Our forward-looking statements are subject to risks and uncertainties, including:
 
  •  the highly competitive markets in which we operate and our ability to compete with companies that have significant financial resources;
 
  •  changes in consumer preferences, trends and health concerns;
 
  •  increases in cost of materials or supplies used in our business;
 
  •  shortages of materials used in our business;
 
  •  substantial disruption at our beverage concentrates manufacturing facility or our other manufacturing facilities;
 
  •  our products meeting health and safety standards or contamination of our products;
 
  •  need for substantial investment and restructuring at our production, distribution and other facilities;
 
  •  weather and climate changes;
 
  •  maintaining our relationships with our large retail customers;
 
  •  dependence on third-party bottling and distribution companies;
 
  •  infringement of our intellectual property rights by third parties, intellectual property claims against us or adverse events regarding licensed intellectual property;
 
  •  litigation claims or legal proceedings against us;
 
  •  our ability to comply with, or changes in, governmental regulations in the countries in which we operate;
 
  •  strikes or work stoppages;
 
  •  our ability to retain or recruit qualified personnel;
 
  •  increases in the cost of employee benefits;
 
  •  disruptions to our information systems and third-party service providers;
 
  •  failure of our acquisition and integration strategies;
 
  •  future impairment of our goodwill and other intangible assets;
 
  •  need to service a significant amount of debt;
 
  •  completing our current organizational restructuring;
 
  •  risks relating to our separation from and relationship with Cadbury Schweppes;


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  •  risks relating to our agreement to indemnify, and be indemnified by, Cadbury plc for certain taxes; and
 
  •  other factors discussed under “Risk Factors” and elsewhere in this information statement.
 
Forward-looking statements represent our estimates and assumptions only as of the date that they were made. We do not undertake any duty to update the forward-looking statements, and the estimates and assumptions associated with them, after the date of this information statement, except to the extent required by applicable securities laws. All of the forward-looking statements are qualified in their entirety by reference to the factors discussed above and under “Risk Factors” and elsewhere in this information statement. These risk factors may not be exhaustive as we operate in a continually changing business environment with new risks emerging from time to time that we are unable to predict or that we currently do not expect to have a material adverse effect on our business. You should carefully read this information statement in its entirety as it contains important information about our business and the risks we face.


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DIVIDEND POLICY
 
We currently intend to retain cash generated from our business to repay our debt and for other corporate purposes and do not currently anticipate paying any cash dividends in the short term. In the long term, we intend to invest in our business and return excess cash to our stockholders. The declaration and payment of dividends are subject to the discretion of our board of directors. Any determination to pay dividends will depend on our results of operations, financial condition, capital requirements, credit ratings, contractual restrictions and other factors deemed relevant at the time of such determination by our board of directors.


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CAPITALIZATION
 
The following table presents our capitalization and cash and cash equivalents as of December 31, 2007:
 
  •  on a historical basis
 
  •  on a pro forma basis after giving effect to the adjustments described in “Unaudited Pro Forma Combined Financial Data.”
 
The information below is not necessarily indicative of what our capitalization and cash and cash equivalents would have been had the separation, distribution and related financing transactions been completed as of December 31, 2007. In addition, it is not indicative of our future capitalization and cash and cash equivalents, results of operations or financial condition. This table should be read in conjunction with “Unaudited Pro Forma Combined Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and our audited combined financial statements and the related notes thereto included elsewhere in this information statement.
 
                 
    December 31, 2007  
    Historical     Pro Forma  
    (In millions)  
 
Cash and cash equivalents
  $ 67     $ 100  
                 
Debt:
               
Short-term debt:
               
Debt payable to Cadbury Schweppes (d)
  $ 126     $  
Other payables to Cadbury Schweppes (d)
    175        
Debt payable to third parties (a)
    2       2  
New credit facilities (b)
          2,190  
Long-term debt (excluding current maturities):
               
Debt payable to Cadbury Schweppes (d)
    2,893        
Debt payable to third parties (a)
    19       19  
New credit facilities (b)
          1,710  
                 
Total debt
    3,215       3,921  
                 
Total invested equity (c)
    5,021       2,936  
                 
Total capitalization
  $ 8,236     $ 6,857  
                 
 
 
(a)  Represents capital lease obligations. The short-term portion of these obligations is included within “accounts payable and accrued expenses” in our combined balance sheet.
(b)  Represents an aggregate of $3.9 billion of borrowings under the senior credit facility and the bridge loan facility. Borrowings of $2.0 billion under the bridge loan facility (with a term of 364 days) and $190 million under the term loan A facility of the senior credit facility (representing current maturities of the term loan A) have been classified as short-term debt. Borrowings of $1.7 billion, representing the balance of the term loan A, have been classified as long-term debt. We currently intend, subject to prevailing market conditions, to replace all or a portion of the bridge loan facility with the proceeds of the issuance of one or more series of notes and/or an alternative term loan facility.
(c)  Represents the elimination of Cadbury Schweppes’ net investment in us and the distribution of our common stock to Cadbury Schweppes shareholders.
(d)  Represents the settlement with Cadbury Schweppes of related party debt and other balances.


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SELECTED HISTORICAL COMBINED FINANCIAL DATA
 
The following table presents our selected historical combined financial data. Our selected historical combined financial data presented below as of December 31, 2007 and 2006 and January 1, 2006 (the last day of fiscal 2005) and for the three fiscal years 2007, 2006 and 2005 have been derived from our audited combined financial statements, included elsewhere in this information statement. Our selected historical combined balance sheet data presented below as of January 2, 2005 (the last day of fiscal 2004) have been derived from our historical accounting records, which are unaudited.
 
Our historical financial data have been prepared on a “carve-out” basis from Cadbury Schweppes’ consolidated financial statements using the historical results of operations, assets and liabilities attributable to Cadbury Schweppes’ Americas Beverages business and including allocations of expenses from Cadbury Schweppes. This historical Cadbury Schweppes’ Americas Beverages information is our predecessor financial information. The results included below and elsewhere in this document are not necessarily indicative of our future performance and do not reflect our financial performance had we been an independent, publicly-traded company during the periods presented. You should read this information along with the information included in “Unaudited Pro Forma Combined Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our audited combined financial statements and the related notes thereto included elsewhere in this information statement.
 
On May 2, 2006, we acquired approximately 55% of the outstanding shares of DPSUBG, which combined with our pre-existing 45% ownership, resulted in our full ownership of DPSUBG. DPSUBG’s results have been included in the individual line items within our combined financial statements beginning on May 2, 2006. Prior to this date, the existing investment in DPSUBG was accounted for under the equity method and reflected in the line item captioned “equity in earnings of unconsolidated subsidiaries, net of tax.” In addition, on June 9, 2006 we acquired the assets of All American Bottling Company, on August 7, 2006 we acquired Seven Up Bottling Company of San Francisco and on July 11, 2007 we acquired SeaBev. Each of these four acquisitions is included in our combined financial statements beginning on its date of acquisition. As a result, our financial data is not necessarily comparable on a period-to-period basis.
 
Our financial data for 2003 has been omitted from this information statement because it is not available without unreasonable effort and expense. We believe the omission of the financial data for the year ended December 31, 2003 does not have a material impact on the understanding of our financial performance and related trends.
 


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    2007     2006     2005     2004  
    (In millions)  
 
Statements of Operations Data:
                               
Net sales
  $ 5,748     $ 4,735     $ 3,205     $ 3,065  
Cost of sales
    2,617       1,994       1,120       1,051  
                                 
Gross profit
    3,131       2,741       2,085       2,014  
                                 
Selling, general and administrative expenses
    2,018       1,659       1,179       1,135  
Depreciation and amortization
    98       69       26       10  
Impairment of intangible assets
    6                    
Restructuring costs
    76       27       10       36  
Gain on disposal of property and intangible assets
    (71 )     (32 )     (36 )     (1 )
                                 
Income from operations
    1,004       1,018       906       834  
                                 
Interest expense
    253       257       210       177  
Interest income
    (64 )     (46 )     (40 )     (48 )
Other expense (income)
    (2 )     2       (51 )     2  
                                 
Income before provision for income taxes, equity in earnings of unconsolidated subsidiaries and cumulative effect of change in accounting policy
    817       805       787       703  
Provision for income taxes
    322       298       321       270  
                                 
Income before equity in earnings of unconsolidated subsidiaries and cumulative effect of change in accounting policy
    495       507       466       433  
Equity in earnings of unconsolidated subsidiaries
    2       3       21       13  
                                 
Income before cumulative effect of change in accounting policy
    497       510       487       446  
Cumulative effect of change in accounting policy, net of tax
                10        
                                 
Net income
  $ 497     $ 510     $ 477     $ 446  
                                 
Balance Sheets Data:
                               
Cash and cash equivalents
  $ 67     $ 35     $ 28     $ 19  
Total assets
    10,528       9,346       7,433       7,625  
Current portion of long-term debt
    126       708       404       435  
Long-term debt
    2,912       3,084       2,858       3,468  
Other non-current liabilities
    1,460       1,321       1,013       943  
Total invested equity
    5,021       3,250       2,426       2,106  
                                 
Statements of Cash Flows Data:
                               
Cash provided by (used in):
                               
Operating activities
  $ 603     $ 581     $ 583     $ 610  
Investing activities
    (1,087 )     (502 )     283       184  
Financing activities
    515       (72 )     (815 )     (799 )
Depreciation expense(1)
    120       94       48       53  
Amortization expense(1)
    49       45       31       31  
Capital expenditures
    (230 )     (158 )     (44 )     (71 )
                                 
Other Financial Data:
                               
EBITDA(2)
  $ 1,177     $ 1,158     $ 1,047     $ 929  
 
 
(1) The depreciation and amortization expenses reflected in this section of the table represent our total depreciation and amortization expenses as reflected on our combined statements of cash flows. Depreciation and amortization expenses in our combined statements of operations data are reflected in various line items including “depreciation and amortization,” “cost of sales” and “selling, general and administrative expenses.”
 
(2) EBITDA is defined as net income before interest expense, interest income, provision for income taxes, depreciation and amortization. EBITDA is a measure commonly used by financial analysts in evaluating a company’s liquidity. Accordingly, we believe that EBITDA may be useful for investors in assessing our ability

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to meet our debt service requirements. EBITDA is not a recognized measurement under U.S. GAAP. When evaluating liquidity, investors should not consider EBITDA in isolation of, or as a substitute for, measures of liquidity as determined in accordance with U.S. GAAP, such as net income or net cash provided by operating activities. EBITDA may have material limitations as a liquidity measure because it excludes interest expense, interest income, taxes and depreciation and amortization. Other companies may calculate EBITDA differently, and therefore our EBITDA may not be comparable to similarly titled measures reported by other companies. A reconciliation of EBITDA to net income is provided below.
 
                                 
    2007   2006   2005   2004
    (In millions)
 
Net income
  $ 497     $ 510     $ 477     $ 446  
Interest expense
    253       257       210       177  
Interest income
    (64 )     (46 )     (40 )     (48 )
Income taxes
    322       298       321       270  
Depreciation expense
    120       94       48       53  
Amortization expense
    49       45       31       31  
                                 
EBITDA
  $ 1,177     $ 1,158     $ 1,047     $ 929  
                                 


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UNAUDITED PRO FORMA COMBINED FINANCIAL DATA
 
The following tables present our unaudited pro forma combined financial data and reflects adjustments to our historical combined financial statements to give effect to our separation from Cadbury Schweppes, the distribution of our shares of common stock and related financing transactions. The unaudited pro forma combined balance sheet as of December 31, 2007 has been prepared as though the separation, distribution and related financing transactions occurred on December 31, 2007. The unaudited pro forma combined statement of operations for the year ended December 31, 2007 has been prepared as though the separation, distribution and related financing transactions occurred on January 1, 2007. The pro forma adjustments are based upon available information and assumptions that we believe are reasonable.
 
The unaudited pro forma combined financial data has been prepared to give effect to:
 
  •  the contribution by Cadbury Schweppes to us of its Americas Beverages business;
 
  •  the distribution of our common stock to Cadbury Schweppes shareholders;
 
  •  the purchase by us from Cadbury Schweppes of software and intangible assets related to our foreign operations for an aggregate of $317 million in cash;
 
  •  the borrowing by us of $3.9 billion under our new credit facilities;
 
  •  the payment by us of $100 million of fees and expenses related to our new credit facilities;
 
  •  the settlement with Cadbury Schweppes of related party debt and other balances and the elimination of Cadbury Schweppes’ net investment in us; and
 
  •  other adjustments as described in the notes to the unaudited pro forma combined financial data.
 
Cadbury Schweppes currently allocates certain costs to us, including costs in respect of certain corporate functions provided for us by Cadbury Schweppes. These functions include corporate communications, regulatory, human resources and benefits management, treasury, investor relations, corporate controller, internal audit, Sarbanes-Oxley compliance, information technology, corporate legal and compliance and community affairs. The total amount allocated by Cadbury Schweppes to us in 2007 was $161 million, of which $154 million ($145 million excluding restructuring costs of $9 million) was in cash. As an independent publicly-traded company, effective as of our separation from Cadbury Schweppes, we will assume responsibility for these costs. We believe that our total annual costs on a pro forma basis for 2007, including the incremental costs of being an independent publicly-traded company, would have been approximately $174 million, of which $160 million ($151 million excluding restructuring costs of $9 million) would have been in cash. As a result, our pro forma 2007 costs for the foregoing would have been $13 million higher ($6 million on a cash basis) than the 2007 costs incurred by Cadbury Schweppes which were allocated to us. These additional costs of $13 million are not reflected in our pro forma combined financial data presented below.
 
The unaudited pro forma combined statement of operations includes a historical charge of $21 million (primarily non-cash) related to historical Cadbury Schweppes’ stock based compensation plans. We estimate we will incur approximately $4 million in 2008 prior to the separation related to these existing Cadbury Schweppes stock compensation plans in which our employees are participants. Following the separation, we will issue stock awards under our new Dr Pepper Snapple Group, Inc. Omnibus Stock Incentive Plan of 2008. These awards have been approved by Cadbury Schweppes in terms of the dollar value of the grants but the number of shares underlying the expected grant cannot be determined until the actual grant date of such awards. No pro forma adjustment has been made to reflect the impact of these anticipated new stock incentive awards. In 2008, we currently expect to recognize charges related to these new awards of approximately $8 million.
 
The unaudited pro forma combined statement of operations does not reflect certain non-recurring charges associated with the separation. These charges will include $5 million of bonus payments to be paid to certain members of our management upon our separation from Cadbury Schweppes and $2 million (non-cash) related to the forfeiture and replacement of stock incentive awards, which will be reflected as a charge at separation.


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On July 11, 2007 we acquired SeaBev and it is included in our audited combined financial statements from that date. Due to the relatively small size of the acquisition, no adjustments have been reflected in this summary unaudited pro forma combined financial data.
 
The unaudited pro forma combined financial data is for informational purposes only and is not necessarily indicative of what our financial performance would have been had the transactions reflected therein been completed on the dates assumed. It may not reflect the financial performance that would have resulted had we been operating as an independent, publicly-traded company during those periods. In addition, it is not indicative of our future financial performance.
 
The following unaudited pro forma combined financial data should be read in conjunction with “Selected Historical Combined Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Business” and our historical audited combined financial statements and the related notes thereto included elsewhere in this information statement.


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Dr Pepper Snapple Group, Inc.
 
Unaudited Pro Forma Combined Statement of Operations
For the Year Ended December 31, 2007
 
                         
    Historical     Adjustments     Pro Forma  
    (In millions, except per share data)  
 
Net sales
  $ 5,748     $     $ 5,748  
Cost of sales
    2,617             2,617  
                         
Gross profit
    3,131             3,131  
Selling, general and administrative expenses
    2,018               2,018  
Depreciation and amortization
    98       2 (c)     100  
Impairment of intangible assets
    6             6  
Restructuring costs
    76             76  
Gain on disposal of property and intangible assets
    (71 )           (71 )
                         
Income from operations
    1,004       (2 )     1,002  
Interest expense
    253       110 (b)     363  
Interest income
    (64 )     60 (a)     (4 )
Other income
    (2 )     (11 )(d)     (13 )
                         
Income before provision for income taxes and equity
in earnings of unconsolidated subsidiaries
    817       (161 )     656  
Provision for income taxes
    322       (67 )(e)     272  
              6 (e)        
              11 (d)        
                         
Income before equity in earnings of unconsolidated subsidiaries
    495       (111 )     384  
Equity in earnings of unconsolidated subsidiaries
    2             2  
                         
Net income
  $ 497     $ (111 )   $ 386  
                         
Earnings per share
                       
Basic(f)
                  $ 1.52  
Diluted(g)
                  $ 1.52  
Weighted average shares outstanding (in millions)
                       
Basic(f)
                    253.4  
Diluted(g)
                    253.4  
 
See Notes to Unaudited Pro Forma Combined Financial Data


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Dr Pepper Snapple Group, Inc.
 
Unaudited Pro Forma Combined Balance Sheet
As of December 31, 2007
 
                         
    Historical     Adjustments     Pro Forma  
    (In millions, except share and
 
    per share data)  
 
Assets
Current assets:
                       
Cash and cash equivalents
  $ 67     $ 3,800 (i)   $ 100  
              (1,628 )(j)        
              (1,822 )(k)        
              (317 )(l)        
Accounts receivable:
                       
Trade (net of allowances of $20)
    538             538  
Other
    59             59  
Related party receivable
    66       (39 )(j)      
              (27 )(h)        
Notes receivable from related parties
    1,527       (1,527 )(j)      
Inventories
    325             325  
Deferred tax assets
    81             81  
Prepaid and other current assets
    76             76  
                         
Total current assets
    2,739       (1,560 )     1,179  
Property, plant and equipment, net
    868       7 (l)     875  
Investment in unconsolidated subsidiaries
    13             13  
Goodwill
    3,183             3,183  
Other intangible assets, net
    3,617             3,617  
Other non-current assets
    100       100 (i)     502  
              275 (d)        
              27 (h)        
Non-current deferred tax assets
    8       128 (n)     136  
                         
Total assets
  $ 10,528     $ (1,023 )   $ 9,505  
                         
Liabilities and Invested Equity
                         
Current liabilities:
                       
Accounts payable and accrued expenses
  $ 812     $     $ 812  
Related party payable
    175       (175 )(j)      
Current portion of long-term debt payable to third parties
          2,190 (i)     2,190  
Current portion of long-term debt payable to related parties
    126       (126 )(j)      
Income taxes payable
    22       10 (o)     32  
                         
Total current liabilities
    1,135       1,899       3,034  
Long-term debt payable to third parties
    19       1,710 (i)     1,729  
Long-term debt payable to related parties
    2,893       (2,893 )(j)      
Deferred tax liabilities
    1,324             1,324  
Other non-current liabilities
    136       71 (m)     482  
              275 (d)        
                         
Total liabilities
    5,507       1,062       6,569  
Commitments and contingencies
                       
Shareholders’ Equity:
                       
Common shares, $0.01 par value, 800,000,000 authorized; 253,400,000 outstanding on a pro forma basis
            3 (p)     3  
Contributed surplus
            2,945 (p)     2,945  
Parent Company Equity
                       
Cadbury Schweppes’ net investment
    5,001       (1,822 )(k)      
              (310 )(l)        
              (18 )(m)        
              107 (n)        
              (2,948 )(p)        
              (10 )(o)        
Accumulated other comprehensive income (loss)
    20       (53 )(m)     (12 )
              21 (n)        
                         
Total invested equity
    5,021       (2,085 )     2,936  
                         
Total liabilities and invested equity
  $ 10,528     $ (1,023 )   $ 9,505  
                         
 
See Notes to Unaudited Pro Forma Combined Financial Data


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Dr Pepper Snapple Group, Inc.
 
Notes to Unaudited Pro Forma Combined Financial Data
 
(a)  Represents the removal of $60 million of interest income on related party receivable balances and from our participation in the Cadbury Schweppes’ cash management programs. Following the separation, we will not participate in Cadbury Schweppes’ cash management program.
 
(b) Represents adjustments to reflect:
 
  •  removal of interest expense attributable to related party debt balances;
 
  •  recognition of interest expense attributable to borrowings of $3.9 billion under our new credit facilities;
 
  •  amortization of fees and expenses attributable to our new credit facilities; and
 
  •  recognition of commitment fees on unused amounts attributable to our new revolving credit facility.
 
The following table sets forth the assumed principal outstanding, interest rate and maturity for each component of our new credit facilities:
 
                         
    Principal
             
Facility
  Outstanding    
Interest Rate
    Maturity  
    (In millions)              
 
Bridge loan facility
  $ 2,000       3-month LIBOR plus 2.00%       364 days  
Senior credit facility:
Term loan A facility
    1,900       3-month LIBOR plus 2.00%       5 years  
Revolving credit facility
          3-month LIBOR plus 2.00%       5 years  
                         
Total
  $ 3,900                  
                         
 
 
We have the choice of either a floating rate of LIBOR plus an applicable margin or a floating alternate base rate plus an applicable margin. For the purposes of the unaudited pro forma combined statement of operations, we have assumed that our outstanding borrowings bear interest at three-month LIBOR plus an applicable margin of 2.00%. The assumed applicable margin is based upon our expected debt rating at the time of the separation.
 
For the purposes of the unaudited pro forma combined statement of operations, we have assumed that the commitment fee on our revolving credit facility,which is payable quarterly in arrears, is at a rate of 0.3% (based upon our expected debt rating at the time of the separation) of the unused amounts.
 
The pro forma adjustment to interest expense consists of the following (in millions):
 
         
Removal of interest on related party debt
  $ (234 )
Interest on bridge loan facility
    146  
Interest on term loan A facility
    139  
Amortization of fees and expenses attributable to new credit facilities
    57  
Commitment fees on unused revolving facility
    2  
         
Total
  $ 110  
         
 
The 2007 average three-month LIBOR was 5.30%. Pro forma interest charges on the term loan A and bridge loan facilities were calculated at a rate of 7.30% reflecting the 2007 average three-month LIBOR plus a margin of 2.00%. Fees and expenses attributable to the new credit facilities are amortized on an effective yield basis over the life of the related loan.
 
At March 17, 2008, three-month LIBOR was 2.58%. Using this interest rate, borrowings under the term loan A and bridge loan facilities would bear interest at a rate of 4.58% (representing 2.58% plus 2.00%). Had this rate been applied in the accompanying unaudited pro forma combined statement of operations, pro forma interest expense on the term loan A and bridge loan facilities for 2007 would have been approximately $106 million lower.


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Dr Pepper Snapple Group, Inc.
 
Notes to Unaudited Pro Forma Combined Financial Data
 
A change of one-eighth of 1.00% (12.5 basis points) in the interest rate associated with the floating rate borrowings would result in an additional annual interest expense of approximately $5 million (in the case of an increase to the rate) or an annual reduction of interest expense of approximately $5 million (in the case of a decrease in the rate).
 
In 2007, $6 million of interest was capitalized with respect to ongoing capital projects. We have assumed that $6 million of the pro forma interest expense would also have been capitalized.
 
For a description of the terms of the senior credit facility and bridge loan facility, including the right of the bookrunners under the facilities to modify certain of the terms under certain circumstances, see “Description of Indebtedness.”
 
(c)  Represents incremental depreciation from the purchase of certain software from Cadbury Schweppes in connection with the separation for $7 million. The estimated remaining useful life of these assets is three years resulting in additional annual depreciation expense of $2 million.
 
(d)  In accordance with Financial Accounting Standards Board Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (“FIN 48”), we will record $275 million of unrecognized tax benefits transferred to us at separation. Under the Tax-Sharing and Indemnification Agreement, Cadbury Schweppes has agreed to indemnify us for any liabilities that may arise from the associated tax positions as more fully described in “Our Relationship with Cadbury plc After the Distribution — Description of Various Separation and Transition Arrangements — Tax-Sharing and Indemnification Agreement,” and, accordingly we have recognized a corresponding and offsetting amount reflected under “non-current assets.” We have recorded on the pro forma combined statement of operations $11 million of income tax expense for the accrual of interest, net of tax benefits, associated with these unrecognized tax benefits and a corresponding amount as other income. The actual level of unrecognized tax benefits ultimately realized, if any, and the corresponding amounts paid to us under the tax-sharing and indemnification agreement may not be known for several years.
 
(e)  Represents the adjustment to reflect the $67 million of income tax effects of the pro forma adjustments referenced in notes (a) through (c) above at our U.S. marginal tax rate of 39% and $6 million to reflect the income tax increase attributable to foreign tax credit limitations after separation.
 
(f)  The number of shares used to compute pro forma earnings per share — basic is 253.4 million, which is the number of shares of our common stock assumed to be outstanding on the distribution date, based on a distribution ratio of 0.12 shares of our common stock for every Cadbury Schweppes ordinary share outstanding as of March 13, 2008.
 
(g)  The number of shares used to compute pro forma earnings per share — diluted will be the number of basic shares referenced in note (f) above plus any potential dilution from stock-based awards granted under our stock-based compensation plans. There will be no potentially dilutive securities outstanding on separation. In the ordinary course of business post separation, we expect to issue stock-based awards under our stock-based compensation plans which, when issued, will be dilutive in future periods.
 
(h)  Represents the reclassification of $27 million of other tax indemnification receivables from Cadbury Schweppes that will not be repaid at separation from “related party receivable” to “other non-current assets.’’
 
(i)  Represents an aggregate of $3.9 billion of borrowings under the senior credit facility and the bridge loan facility, net of $100 million of fees and expenses related to the facilities. Borrowings of $2.0 billion under the bridge loan facility (with a term of 364 days) and of $190 million under the term loan A (representing the current maturities of the term loan) have been classified as current liabilities. Borrowings of $1.7 billion, representing the balance of the term loan A, have been classified as long-term debt. The $100 million of fees and expenses related to the new credit facilities are reflected as “other non-current assets.”


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Dr Pepper Snapple Group, Inc.
 
Notes to Unaudited Pro Forma Combined Financial Data
 
 
(j)  Represents the settlement with Cadbury Schweppes of related party debt and other balances as follows (in millions):
 
         
Related party receivable
  $ 39  
Notes receivable from related parties
    1,527  
Related party payable
    (175 )
Current portion of long-term debt payable to related parties
    (126 )
Long-term debt payable to related parties
    (2,893 )
         
Net cash settlement of related party balances
  $ 1,628  
         
 
(k)  Represents the $1,822 million repayment of debt for an affiliated Cadbury Schweppes entity that is unrelated to our business and is not included in our historical combined financial statements. This repayment is reflected as an adjustment to “Parent Company Equity — Cadbury Schweppes’ net investment.”
 
(l)  Represents our purchase for $317 million in cash of certain assets from Cadbury Schweppes in connection with the separation. The assets include software rights and intangible assets related to our foreign operations. Of the $317 million, $7 million is reflected in property, plant and equipment and the difference of $310 million between the purchase price and the historical book value of the amounts transferred has been reflected as an adjustment to “Parent Company Equity — Cadbury Schweppes’ net investment.”
 
(m)  Represents the assumption of employee benefit liabilities for pension and postretirement benefit plans previously sponsored by Cadbury Schweppes. A pension liability of $71 million has been reflected in the pro forma adjustment. In addition, $53 million of unamortized losses related to the pension plans that will be assumed has been reflected as an adjustment to “Accumulated other comprehensive income.” The difference of $18 million has been reflected as an adjustment to “Parent Company Equity — Cadbury Schweppes’ net investment.” The actual pension liability and associated unamortized losses will be finalized at the separation date.
 
(n)  Represents net incremental deferred tax assets associated with the $310 million purchase of intangible assets from Cadbury Schweppes discussed in (l) above, the $71 million assumption of pension liabilities and the related $53 million of unamortized losses in “Accumulated other comprehensive income” discussed in (m) above. The deferred tax assets are reflected at a marginal tax rate of 25.5% for intangible assets related to our foreign operations and the pension liabilities assumed and associated unamortized losses are reflected at our U.S. marginal tax rate of 39%.
 
(o)  Reflects $10 million of income tax liabilities transferred to us at separation and which have been reflected as an adjustment to “Parent Company Equity — Cadbury Schweppes’ net investment.” These liabilities represent income tax payable, based on our tax sharing arrangement, associated with our historical income tax returns that include both our business and other Cadbury Schweppes businesses unrelated to our business that are not included in our historical combined financial statements.
 
(p)  Represents the reclassification of the balance of the remaining “Parent Company Equity — Cadbury Schweppes’ net investment,” after giving effect to all of the foregoing pro-forma separation adjustments into “common shares” of $3 million, to reflect the total par value of our outstanding common stock and contributed “surplus” of $2,945 million.


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MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
You should read the following discussion in conjunction with our audited combined financial statements and related notes and our unaudited pro forma combined financial data included elsewhere in this information statement. This discussion contains forward-looking statements that are based on management’s current expectations, estimates and projections about our business and operations. Our actual results may differ materially from those currently anticipated and expressed in such forward-looking statements as a result of various factors including the factors we describe under “Risk Factors,” “Special Note Regarding Forward-Looking Statements,” and elsewhere in this information statement.
 
The fiscal years presented in this section are the 52-week periods ended December 31, 2007 and 2006, which we refer to as “2007” and “2006”, respectively, and the 52-week period ended January 1, 2006, which we refer to as “2005.” Effective 2006, our fiscal year ends on December 31 of each year. In 2005, the year end date represented the Sunday closest to December 31. References in the financial tables to percentage changes that are not meaningful are denoted by “NM.”
 
Overview
 
We are a leading integrated brand owner, bottler and distributor of non-alcoholic beverages in the United States, Canada and Mexico with a diverse portfolio of flavored CSDs and non-CSDs, including ready-to-drink teas, juices, juice drinks and mixers. Our brand portfolio includes popular CSD brands such as Dr Pepper, 7UP, Sunkist, A&W, Canada Dry, Schweppes, Squirt and Peñafiel, and non-CSD brands such as Snapple, Mott’s, Hawaiian Punch, Clamato, Mr & Mrs T, Margaritaville and Rose’s. Our largest brand, Dr Pepper, is the #2 selling flavored CSD in the United States according to ACNielsen, which generated approximately one-third of our volume in 2007. We have some of the most recognized beverage brands in North America, with significant consumer awareness levels and long histories that evoke strong emotional connections with consumers.
 
We operate primarily in the United States, Mexico and Canada, the first, second and tenth largest beverage markets, respectively, by CSD volume, according to Beverage Digest and Canadean. We also distribute our products in the Caribbean. In 2007, 89% of our net sales were generated in the United States, 4% in Canada and 7% in Mexico and the Caribbean.
 
Our Business Model
 
We operate as a brand owner, a bottler and a distributor through our four segments as follows:
 
  •  our Beverage Concentrates segment is a brand ownership business;
 
  •  our Finished Goods segment is a brand ownership and a bottling business and, to a lesser extent, a distribution business;
 
  •  our Bottling Group segment is a bottling and distribution business; and
 
  •  our Mexico and the Caribbean segment is a brand ownership and a bottling and distribution business.
 
Our Brand Ownership Businesses.   As a brand owner, we build our brands by promoting brand awareness through marketing, advertising and promotion, and by developing new and innovative products and product line extensions that address consumer preferences and needs. As the owner of the formulas and proprietary know-how required for the preparation of beverages, we manufacture, sell and distribute beverage concentrates and syrups used primarily to produce CSDs and we manufacture, bottle, sell and distribute primarily non-CSD finished beverages. Most of our sales of beverage concentrates are to bottlers who manufacture, bottle, sell and distribute our branded products into retail channels. Approximately one-third of our U.S. beverage concentrates by volume are sold to our Bottling Group, with the balance being sold to third-party bottlers affiliated with Coca-Cola or PepsiCo, as well as independent bottlers. We also manufacture, sell and distribute syrups for use in beverage fountain dispensers to restaurants and retailers, as well as to fountain wholesalers, who resell it to restaurants and retailers. In addition, we distribute non-CSD finished beverages through ourselves and through third-party distributors.


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Our beverage concentrates and syrup brand ownership businesses are characterized by relatively low capital investment, raw materials and employee costs. Although the cost of building or acquiring an established brand can be significant, established brands typically do not require significant ongoing expenditures, other than marketing, and therefore generate relatively high margins. Our finished beverages brand ownership business has characteristics of both of our beverage concentrates and syrup brand ownership businesses as well as our bottling and distribution businesses discussed below.
 
Our Bottling and Distribution Businesses.   We manufacture, bottle, sell and distribute CSD finished beverages from concentrates and non-CSD finished beverages and products mostly from ingredients other than concentrates. We sell and distribute finished beverages and other products primarily into retail channels either directly to retail shelves or to warehouses through our large fleet of delivery trucks or through third-party logistics providers.
 
Our bottling and distribution businesses are characterized by relatively high capital investment, raw material, selling and distribution costs, in each case compared to our beverage concentrates and syrup brand ownership businesses. Our capital costs include investing in, and maintaining, our manufacturing and warehouse equipment and facilities. Our raw material costs include purchasing concentrates, ingredients and packaging materials (including cans and bottles) from a variety of suppliers. Our selling and distribution costs include significant costs related to operating our large fleet of delivery trucks (including fuel) and employing a significant number of employees to sell and deliver finished beverages and other products to retailers. As a result of the high fixed costs associated with these types of businesses, we are focused on maintaining an adequate level of volumes as well as controlling capital expenditures, raw material, selling and distribution costs. In addition, geographic proximity to our customers is a critical component of managing the high cost of transporting finished beverages relative to their retail price. The profitability of the bottling and distribution businesses is also dependent upon our ability to sell our products into higher margin channels. As a result of the foregoing, the margins of our bottling and distribution businesses are significantly lower than those of our brand ownership businesses. In light of the largely fixed cost nature of the bottling and distribution businesses, increases in costs, for example raw materials tied to commodity prices, could have a significant negative impact on the margins of our businesses.
 
Approximately three-fourths of our 2007 Bottling Group net sales of branded products come from our own brands, with the remaining from the distribution of third-party brands such as Monster energy drink, FIJI mineral water and Big Red soda. In addition, a small portion of our Bottling Group sales come from bottling beverages and other products for private label owners or others for a fee (which we refer to as co-packing).
 
Integrated Business Model.   We believe our brand ownership, bottling and distribution are more integrated than the U.S. operations of our principal competitors and that this differentiation provides us with a competitive advantage. We believe our integrated business model:
 
  •  Strengthens our route-to-market by creating a third consolidated bottling system, our Bottling Group, in addition to the Coca-Cola affiliated and PepsiCo affiliated systems. In addition, by owning a significant portion of our bottling and distribution network we are able to improve focus on our brands, especially certain of our brands such as 7UP, Sunkist, A&W and Snapple, which do not have a large presence in the Coca-Cola affiliated and PepsiCo affiliated bottler systems. Our strengthened route-to-market following our bottling acquisitions has enabled us to increase the market share of our brands (as measured by volume) in many of the markets served by the bottlers we acquired.
 
  •  Provides opportunities for net sales and profit growth through the alignment of the economic interests of our brand ownership and our bottling and distribution businesses. For example, we can focus on maximizing profitability for our company as a whole rather than focusing on profitability generated from either the sale of concentrates or the bottling and distribution of our products.
 
  •  Enables us to be more flexible and responsive to the changing needs of our large retail customers, including by coordinating sales, service, distribution, promotions and product launches.
 
  •  Allows us to more fully leverage our scale and reduce costs by creating greater geographic manufacturing and distribution coverage.


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Trends Affecting our Business
 
According to the latest available data from Beverage Digest, in 2007, the U.S. CSD market segment grew by 2.7% in retail sales, despite a 2.3% decline in total CSD volume. The U.S. non-CSD volume and retail sales increased by 13.2% and 14.8%, respectively, in 2006. In addition, non-CSDs experienced strong growth over the last five years with their volume share of the overall U.S. liquid refreshment beverage market increasing from 12.7% in 2001 to 16.3% in 2006.
 
We believe the key trends influencing the North American liquid refreshment beverage market include:
 
  •  Increased health consciousness.   We believe the main beneficiaries of this trend include diet drinks, ready-to-drink teas, enhanced waters and bottled waters.
 
  •  Changes in lifestyle.   We believe changes in lifestyle will continue to drive increased sales of single-serve beverages, which typically have higher margins.
 
  •  Growing demographic segments in the United States.   We believe marketing and product innovations that target fast growing population segments, such as the Hispanic community in the United States, will drive further market growth.
 
  •  Product and packaging innovation.   We believe brand owners and bottling companies will continue to create new products and packages such as beverages with new ingredients and new premium flavors, as well as innovative convenient packaging that address changes in consumer tastes and preferences.
 
  •  Changing retailer landscape.   As retailers continue to consolidate, we believe retailers will support consumer product companies that can provide an attractive portfolio of products, a strong value proposition and efficient delivery.
 
  •  Recent increases in raw material costs.   The costs of a substantial proportion of the raw materials used in the beverage industry are dependent on commodity prices for aluminum, natural gas, resins, corn, pulp and other commodities. Recently, these costs on the whole have increased significantly and this has exerted pressure on industry margins.
 
Seasonality
 
The beverage market is subject to some seasonal variations. Our beverage sales are generally higher during the warmer months and also can be influenced by the timing of holidays and religious festivals as well as weather fluctuations.
 
Recent Developments
 
New Financing Arrangements
 
On March 10, 2008, we entered into arrangements with a group of lenders to provide us with an aggregate of $4.4 billion of financing. The new arrangements consist of a $2.4 billion senior credit agreement that provides a $1.9 billion term loan A facility and a $500 million revolving credit facility and a 364-day bridge credit agreement that provides a $2.0 billion bridge loan facility. We currently expect to borrow an aggregate of $3.9 billion under the term loan A facility and the bridge loan facility in connection with the separation. We currently intend, subject to prevailing market conditions, to replace all or a portion of the bridge loan facility with the proceeds from the issuance of one or more series of notes and/or an alternative term loan facility. See “Description of Indebtedness.”
 
Organizational Restructuring
 
On October 10, 2007, we announced a restructuring of our organization intended to create a more efficient organization. This restructuring will result in a reduction of approximately 470 employees in our corporate, sales and supply chain functions and will include approximately 100 employees in Plano, Texas, 125 employees in Rye Brook, New York, and 50 employees in Aspers, Pennsylvania. The remaining reductions will occur at a number of sites located in the United States, Canada and Mexico. The restructuring also includes the closure of two


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manufacturing facilities in Denver, Colorado (closed in December 2007) and Waterloo, New York (closed in March 2008). The employee reductions are expected to be completed by June 2008.
 
As a result of this restructuring, we recognized a charge of approximately $32 million in 2007. We expect to recognize a charge of approximately $21 million in 2008 related to this restructuring. We expect this restructuring to generate annual cost savings of approximately $68 million, most of which are expected to be realized in 2008 with the full annual benefit realized from 2009 onwards. Savings realized in 2007 were immaterial. As part of this restructuring, our Bottling Group segment has assumed management and operational control of our Snapple Distributors segment.
 
In 2007, we incurred a total of $76 million of restructuring costs, which included $32 million related to the restructuring announced on October 10, 2007.
 
Accelerade Launch
 
We launched our new, ready-to-drink Accelerade sports drink in the first half of 2007. The launch represented an introduction of a new product into a new beverage category for us, and was supported by significant national product placement and marketing investments. Net sales were below expectations despite these investments. We incurred an operating loss of approximately $55 million from the Accelerade launch in 2007, while marketing investments in other brands, predominantly Beverage Concentrate brands, were reduced by approximately $25 million. In addition, we incurred a $4 million impairment charge related to the Accelerade brand, which represented the majority of the $6 million of impairment charges we incurred in 2007. Going forward, we intend to focus on marketing and selling Accelerade in a more targeted way to informed athletes, trainers and exercisers, and retailers that are frequented by these consumers, such as health and nutrition outlets, where we expect the product to be financially viable.
 
Glacéau Termination
 
Following its acquisition by Coca-Cola, on August 30, 2007, Energy Brands, Inc. notified us that it was terminating our distribution agreements for glacéau products, including vitaminwater, fruitwater and smartwater, effective November 2, 2007. Pursuant to the terms of the agreements, we received a payment of approximately $92 million from Energy Brands, Inc. for this termination in December 2007, and we recorded a $71 million gain in 2007 in respect of this payment. Our 2007 glacéau net sales and contribution to income from operations were approximately $227 million and $40 million, respectively, and were reflected in our Bottling Group segment.
 
Significant Acquisitions
 
Our Bottling Group was created through the acquisition of several bottling businesses. On May 2, 2006, we acquired approximately 55% of the outstanding shares of DPSUBG, which combined with our pre-existing 45% ownership, resulted in our full ownership of DPSUBG. The purchase price consisted of $370 million in cash and we assumed debt of $651 million in connection with this acquisition.
 
DPSUBG’s results have been included in the individual line items within our combined financial statements beginning on May 2, 2006. Prior to this date, the existing investment in DPSUBG was accounted for under the equity method and reflected in the line item captioned “equity in earnings of unconsolidated subsidiaries, net of tax” in our combined statements of operations.
 
On June 9, 2006, we acquired the assets of All American Bottling Company for $58 million, and on August 7, 2006, we acquired Seven Up Bottling Company of San Francisco for $51 million. On July 11, 2007, we acquired SeaBev for approximately $53 million. Each of these acquisitions is included in our combined statements of operations beginning on its date of acquisition.
 
We refer to the foregoing four acquisitions as our “bottling acquisitions,” and they are reported in our combined financial statements collectively as our Bottling Group segment. We previously have referred to our Bottling Group segment as the Cadbury Schweppes Bottling Group. These bottling acquisitions have had an impact on our results of operations and therefore impact the comparability of our pre- and post-acquisition period results.


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Our Separation from Cadbury Schweppes
 
On March 15, 2007, Cadbury Schweppes announced that its board of directors had approved a plan to separate its Americas Beverages business from its global confectionery business. The Americas Beverages business consists of Cadbury Schweppes’ beverage business in the United States, Canada, Mexico and the Caribbean. Upon separation, DPS will own the Americas Beverages business currently owned by Cadbury Schweppes and its subsidiaries, and shares of our common stock will be distributed to holders of Cadbury Schweppes ordinary shares and ADRs.
 
Our historical financial statements have been prepared on a combined basis from Cadbury Schweppes’ consolidated financial statements using the historical results of operations and assets and liabilities attributed to Cadbury Schweppes’ Americas Beverages business and including allocations of expenses from Cadbury Schweppes. Our combined financial statements are presented in U.S. dollars, and have been prepared in accordance with U.S. GAAP. Our segment information has been prepared and presented on the basis which management uses to assess the performance of our segments, which is principally in accordance with IFRS. Our consolidated and segment results are not necessarily indicative of our future performance and do not reflect what our financial performance would have been had we been an independent publicly-traded company during the periods presented.
 
As explained more fully in “Unaudited Pro Forma Combined Financial Data,” the total amount of these allocations from Cadbury Schweppes was approximately $161 million in 2007 and approximately $142 million in 2006. As an independent publicly-traded company, effective as of our separation from Cadbury Schweppes, we will assume responsibility for these costs. We believe that our total annual costs on a pro forma basis for 2007, including the incremental costs of being an independent publicly-traded company, would have been approximately $174 million. As a result, our 2007 pro forma costs for the foregoing would have been $13 million higher than the 2007 expenses incurred by Cadbury Schweppes which were allocated to us.
 
Segments
 
We currently operate in four segments: Beverage Concentrates, Finished Goods, Bottling Group and Mexico and the Caribbean.
 
  •  Our Beverage Concentrates segment reflects sales from the manufacture of concentrates and syrups in the United States and Canada. Most of the brands in this segment are CSD brands.
 
  •  Our Finished Goods segment reflects sales from the manufacture and distribution of finished beverages and other products in the United States and Canada. Most of the brands in this segment are non-CSD brands.
 
  •  Our Bottling Group segment reflects sales from the manufacture, bottling and/or distribution of finished beverages, including sales of our own brands and third-party owned brands.
 
  •  Our Mexico and the Caribbean segment reflects sales from the manufacture, bottling and/or distribution of both concentrates and finished beverages in those geographies.
 
Our current segment reporting structure is largely the result of acquiring and combining various portions of our businesses over the past several years. Although we continue to report our segments separately, due to the integrated nature of our business model, we manage our business to maximize profitability for our company as a whole. As a result, profitability trends in individual segments may not be consistent with the profitability of our company or comparable to our competitors. For example, following our bottling acquisitions in 2006, we changed certain funding and manufacturing arrangements between our Beverage Concentrates and Finished Goods segments and our newly acquired bottling companies, which reduced the profitability of our Bottling Group segment while benefiting our other segments.
 
We have significant intersegment transactions. For example, our Bottling Group purchases concentrates at an arm’s length price from our Beverage Concentrates segment. We expect these purchases to account for approximately one-third of our Beverage Concentrates segment annual net sales and therefore drive a similar proportion of our Beverage Concentrates segment profitability. In addition, our Bottling Group segment purchases


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finished beverages from our Finished Goods segment. All intersegment transactions are eliminated in preparing our combined results of operations.
 
We incur selling, general and administrative expenses in each of our segments. In our segment reporting, the selling, general and administrative expenses of our Bottling Group and Mexico and the Caribbean segments relate primarily to those segments. However, as a result of our historical segment reporting policies, certain combined selling activities that support our Beverage Concentrates and Finished Goods segments have not been proportionally allocated between those two segments. We also incur certain centralized finance and corporate costs that support our entire business, which have not been directly allocated to our respective segments but rather have been allocated primarily to our Beverage Concentrates segment.
 
The key financial measures management uses to assess the performance of our segments are net sales and underlying operating profit (“UOP”).
 
UOP represents a measure of income from operations. To reconcile total UOP of our segments to our total company income from operations on a U.S. GAAP basis, adjustments are primarily required for: (1) restructuring costs, (2) non-cash compensation charges on stock option awards, (3) amortization and impairment of intangibles and (4) incremental pension costs. In addition, adjustments are required for total company corporate costs and other items, which relate primarily to general and administrative expenses not allocated to the segments and equity in earnings of unconsolidated subsidiaries. To reconcile total company income from operations to the line item “income before provision for income taxes, equity in earnings of unconsolidated subsidiaries and cumulative effect of change in accounting policy” as reported on a U.S. GAAP basis, additional adjustments are required for interest expense, interest income and other expense (income).
 
Components of Net Sales and Costs and Expenses
 
Net Sales
 
We generate net sales primarily from:
 
  •  the sale and distribution of beverage concentrates and syrups;
 
  •  the sale and distribution of finished beverages; and
 
  •  the distribution of products of third parties.
 
We offer a variety of incentives and discounts to bottlers, customers and consumers through various programs to support in the distribution and promotion of our products. These incentives and discounts include cash discounts, price allowances, volume based rebates, product placement fees and other financial support for items such as trade promotions, displays, new products, consumer incentives and advertising assistance. These incentives and discounts, collectively referred to as trade spend, are reflected as a reduction of gross sales to arrive at net sales.
 
We expect our annual net sales growth rate over the next several years to be in the range of 3%-5% (before giving effect to any acquisitions we may make), driven by, among other things, the execution of our strategy including our focus on higher margin opportunities which arise from investing in coolers and other cold drink equipment, expanding our product presence in channels, such as convenience stores, as well as investing in manufacturing facilities. We expect our 2008 net sales growth rate to be in the same range (before giving effect to any acquisitions we may make).
 
Cost of Sales
 
Our cost of sales include costs associated with the operation of our manufacturing and other related facilities, including depreciation, as well as the following:
 
  •  Beverage concentrates cost of sales.   The major components in our beverage concentrates cost of sales are flavors and sweeteners for diet beverage concentrates.
 
  •  Bottler cost of sales.   The major components in our bottler cost of sales are beverage concentrates, packaging and ingredients. Packaging costs and ingredients costs represented approximately 40% and 20%, respectively, of our cost of sales in 2007. Packaging costs include aluminum, glass, PET and paper


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  packaging. Ingredients include HFCS and other sweeteners, agricultural commodities (such as apples, citrus fruits and tomatoes), teas and flavorings.
 
  •  Distributor cost of sales.   The major component in our distributor cost of sales is purchased finished beverages.
 
We anticipate our cost of sales to increase approximately 6% in 2008, principally driven by an increase in commodity costs, including our cost of aluminum and, to a lesser extent, an increase in the cost of PET, apple juice concentrate and HFCS.
 
Selling, General and Administrative Expenses
 
Our selling, general and administrative expenses include:
 
  •  selling and marketing expenses;
 
  •  transportation and warehousing expenses related to customer shipments, including fuel;
 
  •  general and administrative expenses such as management payroll, benefits, travel and entertainment, accounting and legal expenses and rent on leased office facilities; and
 
  •  corporate function expenses allocated from Cadbury Schweppes (as described under “—Our Separation from Cadbury Schweppes”).
 
We expect that our selling, general and administrative expenses in 2008 and in future years to be positively impacted by the cost savings we expect to realize from the organizational restructuring we announced on October 10, 2007 as described under “—Restructuring Costs” below. As discussed in “Unaudited Pro Forma Combined Financial Data,” the $13 million of incremental corporate and other publicly-traded company costs we expect to incur following our separation from Cadbury Schweppes will negatively impact our selling, general and administrative costs.
 
Depreciation and Amortization
 
Our depreciation expense includes depreciation of buildings, machinery and equipment relating to our manufacturing, distribution and office facilities as well as coolers and other cold drink equipment and computer software. Our amortization expense includes amortization of definite-lived intangible assets including our brands, bottler agreements, distribution rights, customer relationships and vending contracts. Depreciation directly attributable to our manufacturing and distribution operations is included in our cost of sales. Amortization related to our long-term vending contracts is recorded in selling, general and administrative expenses. All other depreciation and amortization is included as a separate line item.
 
Restructuring Costs
 
We implement restructuring programs from time to time and incur costs that are designed to improve operating effectiveness and lower costs. These programs have included closure of manufacturing plants, reductions in workforce, integrating back office operations and outsourcing certain transactional activities. When we implement these programs, we incur various charges, including severance and other employment-related costs. In 2007, we incurred $76 million of restructuring costs primarily related to the organizational restructuring we announced on October 10, 2007 and the ongoing integration of our bottling acquisitions. In 2008, we expect to incur approximately $42 million of additional restructuring charges principally with respect to these programs. As discussed in “Information Statement Summary — Recent Developments,” we expect the organizational restructuring announced on October 10, 2007 to generate annual cost savings of approximately $68 million, most of which are expected to be realized in 2008 with the full annual benefit realized from 2009 onwards.
 
Interest Expense
 
Historically, we have borrowed funds from subsidiaries of Cadbury Schweppes. We have also borrowed funds from third-party banks and other lenders. The interest incurred with respect to this debt is recorded as interest expense. We expect our interest expense to increase significantly as the result of borrowings under our new


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$4.4 billion credit facilities. We expect to borrow $3.9 billion under these facilities upon separation, as described in “Unaudited Pro Forma Combined Financial Data.”
 
Interest Income
 
Interest income is the return we earn on our cash and cash equivalents held at third-party banks. Historically, we have also generated interest income from our note receivable balances with subsidiaries of Cadbury Schweppes, which are a result of Cadbury Schweppes’ cash management practices. We expect our interest income to decrease significantly as a result of the repayment of intercompany receivables by Cadbury Schweppes as part of the separation.
 
Other Expense (Income)
 
Other expense (income) includes miscellaneous items not reflected in our income from operations. This line item in future periods will be impacted by the income we will record as a result of Cadbury Schweppes’ agreement to indemnify us for certain tax liabilities as described in “Unaudited Pro Forma Combined Financial Data.”
 
Income Taxes
 
Our effective income tax rate fluctuates from period-to-period and can be impacted by various items, including shifts in the mix of our earnings from various jurisdictions, changes in requirements for tax uncertainties, timing and results of any reviews or audits of our income tax filing positions or returns, and changes in tax legislation. Our effective tax rate in future periods will be impacted by the accrual of interest we will record as a result of the unrecognized tax benefits transferred to us in connection with the separation. We expect any amount recorded in respect of the indemnified unrecognized tax benefits reflected in income taxes will have an offsetting amount recorded in “other expense (income),” unless Cadbury Schweppes fails to, is not required to or cannot indemnify or reimburse us. See “Unaudited Pro Forma Combined Financial Data.”
 
Volume
 
In evaluating our performance, we consider different volume measures depending on whether we sell beverage concentrates and syrups or finished beverages.
 
Beverage Concentrates Sales Volume
 
In our beverage concentrates and syrup businesses, we measure our sales volume in two ways: (1) “concentrates case sales” and (2) “bottler case sales.” The unit of measurement for both concentrates case sales and bottler case sales equals 288 fluid ounces of finished beverage, or 24 twelve ounce servings.
 
Concentrates case sales represent units of measurement for concentrates and syrups sold by us to our bottlers and distributors. A concentrates case is the amount of concentrates needed to make one case of 288 fluid ounces of finished beverage. It does not include any other component of the finished beverage other than concentrates. Our net sales in our concentrates businesses are based on concentrates cases sold.
 
Bottler case sales represent the number of cases of our finished beverages sold by us and our bottling partners. Bottler case sales are calculated based upon volumes from both our Bottling Group and volumes reported to us by our third-party bottlers.
 
Bottler case sales and concentrates case sales are not equal during any given period due to changes in bottler concentrates inventory levels, which can be affected by seasonality, bottler inventory and manufacturing practices, and the timing of price increases and new product introductions.
 
Although our net sales in our concentrates businesses are based on concentrates case sales, we believe that bottler case sales are also a significant measure of our performance because they measure sales of our finished beverages into retail channels.


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Finished Beverages Sales Volume
 
In our finished beverages businesses, we measure volume as case sales to customers. A case sale represents a unit of measurement equal to 288 fluid ounces of finished beverage sold by us. Case sales include both our owned-brands and certain brands licensed to, and/or distributed by, us.
 
Results of Operations for 2007 Compared to 2006
 
Combined Operations
 
The following table sets forth our combined results of operation for 2007 and 2006.
 
                                 
                Dollar Amount
    Percentage
 
    2007     2006     Change     Change  
    (In millions, except% data)  
 
Net sales
  $ 5,748     $ 4,735     $ 1,013       21.4 %
Cost of sales
    2,617       1,994       623       31.2 %
                                 
Gross profit
    3,131       2,741       390       14.2 %
Selling, general and administrative expenses
    2,018       1,659       359       21.6 %
Depreciation and amortization
    98       69       29       42.0 %
Impairment of intangible assets
    6             6       NM  
Restructuring costs
    76       27       49       NM  
Gain on disposal of property and intangible assets
    (71 )     (32 )     (39 )     NM  
                                 
Income from operations
    1,004       1,018       (14 )     (1.4 )%
Interest expense
    253       257       (4 )     (1.6 )%
Interest income
    (64 )     (46 )     (18 )     39.1 %
Other expense (income)
    (2 )     2       (4 )     NM  
                                 
Income before provision for income taxes and equity in earnings of unconsolidated subsidiaries
    817       805       12       1.5 %
Provision for income taxes
    322       298       24       8.1 %
                                 
Income before equity in earnings of unconsolidated subsidiaries
    495       507       (12 )     (2.4 )%
Equity in earnings of unconsolidated subsidiaries
    2       3       (1 )     (33.3 )%
                                 
Net income
  $ 497     $ 510     $ (13 )     (2.5 )%
                                 
 
Net Sales.   The $1,013 million increase was primarily due to increases in our Bottling Group segment, which contributed an additional $931 million mainly due to the inclusion of our bottling acquisitions. Higher pricing and improved sales mix in all remaining segments increased net sales by 3% despite lower volumes. Excluding the impact of our bottling acquisitions, volumes were down 1%, with declines in Dr Pepper and Hawaiian Punch being partially offset by increases in Snapple, Mott’s and Sunkist. The disposal of the Grandma’s Molasses brand in January 2006 and the Slush Puppie business in May 2006 reduced net sales by less than 1%.
 
Gross Profit.   The $390 million increase was primarily due to increases in our Bottling Group segment, which contributed an additional $358 million mainly due to the inclusion of our bottling acquisitions. The remaining increase was primarily due to net sales growth, partially offset by increases in commodity costs, including HFCS and apple juice concentrate, as well as inventory write-offs related to Accelerade.
 
Gross margin was 54% in 2007 and 58% in 2006. The decrease in gross margin was due primarily to the inclusion of our bottling acquisitions (which generally have lower margins than our other businesses) for the full year 2007 as compared to partial periods in 2006.
 
Selling, General and Administrative Expenses.   The $359 million increase was primarily due to increases in our Bottling Group segment, which resulted in an additional $324 million of expenses mainly due to the inclusion of our bottling acquisitions. The remaining increase for all other segments was primarily due to the impact of inflation (particularly in wages and benefits), higher transportation costs as well as higher allocations from Cadbury Schweppes, partially offset by a reduction in annual management incentive plan accruals. Marketing was up slightly as increases in the Finished Goods segment to support new product launches, including Accelerade, Mott’s line extensions, and Peñafiel in the United States, were mostly offset by a reduction in the Beverage Concentrates segment.


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Depreciation and Amortization.   The $29 million increase was principally due to higher depreciation on property, plant and equipment and amortization of definite-lived intangible assets in connection with our bottling acquisitions.
 
Impairment of Intangible Assets.   In 2007, we recorded impairment charges of $6 million, of which approximately $4 million was related to the Accelerade brand.
 
Restructuring Costs.   The $76 million cost in 2007 was primarily due to $32 million of costs associated with the organizational restructuring announced on October 10, 2007 and $21 million of costs associated with the Bottling Group integration. The organizational restructuring announced in October 2007 included employee reductions and the closure of manufacturing facilities.
 
The $27 million cost in 2006 was primarily related to the Bottling Group integration as well as various other cost reduction and efficiency initiatives. The Bottling Group integration and other cost reduction and efficiency initiatives primarily related to the alignment of management information systems, the consolidation of the back office operations from the acquired businesses, the elimination of duplicate functions, and employee relocations.
 
Gain on Disposal of Property and Intangible Assets.   In 2007, we recognized a $71 million gain due to a payment we received from Energy Brands, Inc. as a result of its termination of our contractual rights to distribute glacéau products. In 2006, we recognized a $32 million gain on disposals of assets, attributable to the Grandma’s Molasses brand and the Slush Puppie business.
 
Income from Operations.   The $14 million decrease was due to the $55 million operating loss from the launch of Accelerade, increased selling, general and administrative expenses and $49 million of higher restructuring costs in 2007, partially offset by higher net sales in 2007 and $39 million of higher gain on disposal of property and intangible assets in 2007.
 
Interest Expense.   The $4 million decrease in 2007 was primarily due to a reduction in the interest component paid on a lawsuit settled in June 2007 and a decrease in interest due to the settlement of third-party debt. These decreases were partially offset by an increase in interest on our related-party debt.
 
Interest Income.   The $18 million increase was primarily due to higher related-party note receivable balances with subsidiaries of Cadbury Schweppes.
 
Provision for Income Taxes.   The effective tax rates for 2007 and 2006 were 39.3% and 36.9%, respectively. The increase in the effective rate for 2007 was primarily due to a lower benefit from foreign operations.
 
Results of Operations by Segment for 2007 Compared to 2006
 
We operate our business in four segments: Beverage Concentrates, Finished Goods, Bottling Group, and Mexico and the Caribbean. The key financial measures management uses to assess the performance of our segments are net sales and UOP.


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The following tables set forth net sales and UOP for our segments for 2007 and 2006, as well as the adjustments necessary to reconcile our total segment results to our combined results presented in accordance with U.S. GAAP and the elimination of intersegment transactions.
 
                                 
                Dollar
       
                Amount
    Percentage
 
    2007     2006     Change     Change  
    (In millions, except % data)  
 
Operating Segment Data:
                               
Net sales
                               
Beverage Concentrates
  $ 1,342     $ 1,330     $ 12       0.9 %
Finished Goods
    1,562       1,516       46       3.0 %
Bottling Group
    3,143       2,001       1,142       57.1 %
Mexico and the Caribbean
    418       408       10       2.5 %
Adjustments and eliminations(1)
    (717 )     (520 )     (197 )     NM  
                                 
Net sales as reported
  $ 5,748     $ 4,735     $ 1,013       21.4 %
                                 
 
 
(1) Consists principally of eliminations of intersegment net sales. The increase in these eliminations was due principally to the inclusion of our 2006 bottling acquisitions for the full year 2007 as compared to the inclusion of our 2006 bottling acquisitions for partial periods in 2006. Adjustments in these periods were not material.
 
                                 
                Dollar
       
                Amount
    Percentage
 
    2007     2006     Change     Change  
    (In millions, except % data)  
 
Underlying operating profit
                               
Beverage Concentrates
  $ 731     $ 710     $ 21       3.0 %
Finished Goods
    167       172       (5 )     (2.9 )%
Bottling Group
    130       130       0       0 %
Mexico and the Caribbean
    100       102       (2 )     (2.0 )%
Corporate and other(1)
    (42 )     (14 )     (28 )     NM  
Adjustments and eliminations(2)
    (269 )     (295 )     26       8.8 %
                                 
Income before provision for income taxes and equity in earnings of unconsolidated subsidiaries as reported
  $ 817     $ 805     $ 12       1.5 %
                                 
 
 
(1) Consists of equity in earnings of unconsolidated subsidiaries and general and administrative expenses not allocated to the segments. The change was primarily due to a decrease in our equity in earnings of unconsolidated subsidiaries compared to 2006 as a result of our purchase of the remaining 55% of DPSUBG in May 2006 and an increase in general and administrative expenses related to our IT operations.
 
(2) For 2007, adjustments consist principally of net interest expense of $189 million, restructuring costs of $76 million and depreciation and amortization of $98 million. The 2007 adjustments were partially offset by a portion ($58 million) of the $71 million gain on termination of the glacéau distribution agreements. The balance of the gain ($13 million) is reflected in the Bottling Group UOP. For 2006, adjustments consist principally of net interest expense of $211 million, restructuring costs of $27 million and depreciation and amortization costs of $69 million. These 2006 adjustments were partially offset by the $32 million gain on disposal of the Grandma’s Molasses brand and Slush Puppie business. Eliminations in these periods were not material. Information on restructuring charges by segment is available in note 12 to our audited combined financial statements.


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Beverage Concentrates
 
                                 
                Dollar
       
                Amount
    Percentage
 
    2007     2006     Change     Change  
    (In millions, except % data)  
 
Net sales
  $ 1,342     $ 1,330     $ 12       0.9 %
Underlying operating profit
  $ 731     $ 710     $ 21       3.0 %
 
The $12 million net sales increase was due primarily to price increases, which more than offset the impact of a 1.4% volume decline. The volume decline was due primarily to a 3.3% decline in Dr Pepper partially offset by single digit percentage increases in Sunkist, Schweppes and A&W. The Dr Pepper decline is primarily a result of comparisons to prior period volumes that included the launch of “Soda Fountain Classics” line extensions. Line extensions are usually offered for a limited time period and their volumes typically decline in the years subsequent to the year of launch, as was the case with these line extensions in 2007. The total of all other regular and Diet Dr Pepper volumes (“base Dr Pepper volumes”) declined 0.4%. For 2006, net sales included $8 million for the Slush Puppie business, which was disposed in May 2006.
 
The $21 million UOP increase was due primarily to higher net sales and lower marketing investments (particularly advertising costs) partially offset by higher cost of sales from increased sweetener and flavor costs and increased selling, general and administrative expenses. The lower marketing investments were primarily a result of a reduction in Beverage Concentrates marketing investments to support new product initiatives in our Finished Goods segment, including $25 million for the launch of Accelerade. Selling, general and administrative expenses were higher due primarily to increased corporate costs following our bottler acquisitions, a transfer of sales personnel from the Finished Goods segment to this segment reflecting a sales reorganization, and general inflationary increases, which were partially offset by lower management annual incentive plan accruals.
 
Bottler case sales declined 1.5% in 2007 due primarily to a 2.5% decline in Dr Pepper, and a single and double digit percentage decline in 7UP and Diet Rite, respectively. The Dr Pepper decline results from comparisons to strong volumes in 2006 driven by the “Soda Fountain Classics” line extensions which were nationally introduced in 2005, while the total of base Dr Pepper volumes increased 0.4% compared with the prior year. The 7UP decline primarily reflects the discontinuance of 7UP Plus, as well as the comparison to strong volumes in 2006 driven by the third quarter launch of 7UP “with natural flavors” and heavy promotional support for 7UP and other brands. The Diet Rite decline was due to the shift of marketing investment from Diet Rite to other diet brands, such as Diet Sunkist, Diet A&W and Diet Canada Dry. These declines were partially offset by single digit percentage increases in Sunkist and Canada Dry, which are consistent with the consumer shift from colas to flavored CSDs.
 
Finished Goods
 
                                 
            Dollar
   
            Amount
  Percentage
    2007   2006   Change   Change
    (In millions, except % data)
 
Net sales
  $ 1,562     $ 1,516     $ 46       3.0 %
Underlying operating profit
  $ 167     $ 172     $ (5 )     (2.9 )%
 
The $46 million net sales increase was due to price increases and a favorable shift towards higher priced products such as Snapple and Mott’s. These increases were partially offset by lower volumes and higher product placement costs associated with new product launches. The volume decrease of 2.0% was primarily due to a price increase on Hawaiian Punch in April 2007, which more than offset growth from Snapple and Mott’s. Snapple volumes increased primarily due to the launch of Antioxidant Waters and the continued growth from super premium teas. Mott’s volumes increased due primarily to the new product launches of Mott’s for Tots juice and Mott’s Scooby Doo apple sauce and increased consumer demand for apple juice.
 
The $5 million UOP decrease was due primarily to a $55 million operating loss from Accelerade, partially offset by the strong performance of Mott’s and Snapple products. The $55 million operating loss attributable to Accelerade was primarily due to new product launch expenses to support our entry into the sports drink category. The launch had been supported by significant product placement and marketing investments. In 2007, we had no net


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sales for this product as gross sales were more than offset by product placement fees. UOP was also negatively impacted by higher costs for glass, HFCS, apple juice concentrate, as well as $8 million of costs for the launch of Mott’s line extensions and the launch of Peñafiel in the United States, partially offset by the elimination of co-packing fees previously charged by the Bottling Group segment and lower selling, general and administrative costs due to the transfer of sales personnel from the Finished Goods segment to the Beverages Concentrates segment in connection with a sales reorganization.
 
Bottling Group
 
                                 
            Dollar
   
            Amount
  Percentage
    2007   2006   Change   Change
    (In millions, except % data)
 
Net sales
  $ 3,143     $ 2,001     $ 1,142       57.1 %
Underlying operating profit
  $ 130     $ 130       0       0 %
 
The results of operations for 2006 only include eight months of results from DPSUBG (acquired in May 2006), approximately seven months of results from All American Bottling Corp. (acquired in June 2006), and approximately five months of results from Seven Up Bottling Company of San Francisco (acquired in August 2006), as compared to 2007 which includes a full year of results of operations for these businesses and approximately six months of results from SeaBev (acquired in July 2007).
 
The $1,142 million net sales increase was primarily due to the bottling acquisitions described above, price increases and a favorable sales mix of higher priced non-CSDs. After elimination of intersegment sales, the impact on our consolidated net sales was an increase of $931 million.
 
UOP was flat in 2007 compared to 2006 to the prior year despite the increased net sales. The associated profit from the increased net sales were more than offset by an increase in post-acquisition employee benefit costs, wage inflation costs, higher HFCS costs, the elimination of co-packing fees in 2007 which were previously earned on manufacturing for the Finished Goods segment, and an increase in investments in new markets. Additionally, in 2007, UOP included a portion ($13 million) of the $71 million gain due to the payment we received from Energy Brands, Inc. as a result of their termination of our contractual rights to distribute glacéau products.
 
Mexico and the Caribbean
 
                                 
                Dollar
       
                Amount
    Percentage
 
    2007     2006     Change     Change  
    (In millions, except % data)  
 
Net sales
  $ 418     $ 408     $ 10       2.5 %
Underlying operating profit
  $ 100     $ 102     $ (2 )     (2.0 )%
 
The $10 million net sales increase was due to volume growth of 1.5% and increased pricing despite challenging market conditions and adverse weather, partially offset by unfavorable currency translation. The volume growth was due to the strong performance of Aguafiel and Clamato brands, both of which had double digit percentage increases. Foreign currency translation negatively impacted net sales by $6 million.
 
The $2 million UOP decrease in 2007 despite the increase in net sales was due primarily to an increase in raw material costs, particularly HFCS, higher distribution costs and unfavorable foreign currency translation. Foreign currency translation of expenses negatively impacted UOP by $2 million.


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Results of Operations for 2006 Compared to 2005
 
Combined Operations
 
The following table sets forth our combined results of operations for 2006 and 2005.
 
                                 
                Dollar
       
                Amount
    Percentage
 
    2006     2005     Change     Change  
    (In millions, except % data)  
 
Net sales
  $ 4,735     $ 3,205     $ 1,530       47.7 %
Cost of sales
    1,994       1,120       874       78.0 %
                                 
Gross profit
    2,741       2,085       656       31.5 %
Selling, general and administrative expenses
    1,659       1,179       480       40.7 %
Depreciation and amortization
    69       26       43       165.4 %
Restructuring costs
    27       10       17       NM  
Gain on disposal of property and intangible assets
    (32 )     (36 )     4       NM  
                                 
Income from operations
    1,018       906       112       12.4 %
Interest expense
    257       210       47       22.4 %
Interest income
    (46 )     (40 )     (6 )     (15.0 )%
Other expense (income)
    2       (51 )     53       NM  
                                 
Income before provision for income taxes, equity in earnings of unconsolidated subsidiaries and cumulative effect of change in accounting policy
    805       787       18       2.3 %
Provision for income taxes
    298       321       (23 )     (7.2 )%
                                 
Income before equity in earnings of unconsolidated subsidiaries and cumulative effect of change in accounting policy
    507       466       41       8.8 %
Equity in earnings of unconsolidated subsidiaries
    3       21       (18 )     NM  
                                 
Income before cumulative effect of change in accounting policy
    510       487       23       4.7 %
Cumulative effect of change in accounting policy, net of tax
          10       (10 )     NM  
                                 
Net income
  $ 510     $ 477     $ 33       6.9 %
                                 
 
Net Sales.   The $1,530 million increase was primarily due to increases in our Bottling Group segment, which contributed an additional $1,462 million mainly due to the inclusion of our bottling group acquisitions. The remaining $68 million increase was due primarily to higher pricing, improved sales mix and favorable foreign currency translation. Volumes declined 1.4% primarily reflecting the impact of higher pricing in the Finished Goods segment and lower Beverage Concentrates volumes primarily due to 7UP and Diet Rite, which were partially offset by growth in our Mexico and the Caribbean segment. The disposal of a brand and a business reduced net sales by less than 1%.
 
Gross Profit.   The $656 million increase was primarily due to increases in our Bottling Group segment, which contributed an additional $570 million mainly due to the inclusion of our bottling group acquisitions. The remaining $86 million increase was primarily due to net sales growth, partially offset by higher raw material costs, including PET, glass and sweeteners. As a result of the bottling acquisitions, we were also able to reduce the use of external co-packing, which lowered overall production costs.
 
Gross margin was 58% in 2006 and 65% in 2005. The decrease in gross margin was due to the inclusion of our bottling acquisitions, which generally have lower margins than our other businesses.
 
Selling, General and Administrative Expenses.   The $480 million increase was primarily due to increases in our Bottling Group segment, which contributed an additional $484 million of expenses mainly due to the inclusion


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of our bottling group acquisitions. The remaining $4 million decrease was primarily due to lower marketing investments as well as reduced stock option and pension expenses, partially offset by higher transportation costs driven by fuel and general inflation for wages and benefits.
 
Depreciation and Amortization.   The $43 million increase was primarily due to higher depreciation on property, plant and equipment and amortization of definite lived intangible assets following our bottling acquisitions.
 
Restructuring Costs.   In 2006, the $27 million in expenses was primarily related to integration costs associated with our bottling acquisitions, as well as the outsourcing of certain back office functions, such as accounts payable and travel and entertainment management, to a third-party provider, and a reorganization of our information technology functions. The integration costs associated with our bottling acquisitions primarily related to the alignment of management information systems, the consolidation of back office operations from the acquired businesses, the elimination of duplicate functions, and employee relocations. In 2005, the $10 million in expenses was primarily related to costs from the restructuring of our four North American businesses (Mott’s, Snapple, Dr Pepper/Seven Up and Mexico) into a combined management reporting unit, that occurred in 2004 and the further consolidation of our back office operations that began in 2004.
 
Gain on Disposal of Property and Intangible Assets.   In 2006, we recognized a $32 million gain on the disposals of assets attributable to the disposals of the Grandma’s Molasses brand and Slush Puppie business. In 2005, we recognized a $36 million gain on the disposal of the Holland House brand.
 
Income from Operations.   The $112 million increase was primarily due to the net impact of our bottling acquisitions and strong performance from our Beverage Concentrates segment, partially offset by higher restructuring costs.
 
Interest Expense.   The $47 million increase was primarily due to the increase in related party debt as a result of the bottling acquisitions, which resulted in higher interest expense of $67 million. There was a further increase of $18 million due to higher interest rates on our variable rate related party debt. These increases were partially offset by a reduction of $43 million related to the repayment of certain related party debt.
 
Interest Income.   The $6 million increase is primarily due to fluctuations in related party note receivable balances with subsidiaries of Cadbury Schweppes.
 
Other expense (income).   The $53 million decrease was primarily due to the non-recurring foreign currency translation gain generated in 2005 from the redenomination of a related party debt payable by our Mexico and the Caribbean segment.
 
Provision for Income Taxes.   The effective tax rates for 2006 and 2005 were 36.9% and 39.7% respectively. The lower effective rate in 2006 was due to an income tax benefit related to the American Jobs Creation Act for domestic manufacturing, a greater benefit from foreign operations, changes in state, local and foreign income tax rates and shifts in the relative jurisdictional mix of taxable profits.
 
Equity in Earnings of Unconsolidated Subsidiaries.   The $18 million decrease was due to the impact of our increased ownership of DPSUBG. Prior to May 2, 2006, we owned approximately 45% of DPSUBG and recorded our share of its earnings on an equity basis. On May 2, 2006, we increased our ownership from 45% to 100%. As a result, DPSUBG’s results were reflected on a consolidated basis after May 2, 2006.
 
Cumulative Effect of Change in Accounting Policy, Net of Tax.   In 2005, we adopted Statement of Financial Accounting Standards (“SFAS”) No. 123(R), Share-Based Payment and selected the prospective method of transition. Accordingly, prior period results were not restated and the cumulative impact for additional expense of $10 million was reflected in 2005.


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Results of Operations by Segment for 2006 Compared to 2005
 
The following tables set forth net sales, and UOP for our segments for 2006 and 2005, as well as adjustments necessary to reconcile our total segment results to our combined results presented in accordance with U.S. GAAP and the elimination of intersegment transactions.
 
                                         
                      Dollar
       
                      Amount
    Percentage
 
    2006     2005           Change     Change  
    (In millions, except % data)  
 
Operating Segment Data:
                                       
Net sales
                                       
Beverage Concentrates
  $ 1,330     $ 1,304             $ 26       2.0 %
Finished Goods
    1,516       1,516               0       0 %
Bottling Group
    2,001       241               1,760       NM  
Mexico and the Caribbean
    408       354               54       15.3 %
Adjustments and eliminations(1)
    (520 )     (210 )             (310 )     NM  
                                         
Net sales as reported
  $ 4,735     $ 3,205             $ 1,530       47.7 %
                                         
 
 
(1) Consists principally of eliminations of intersegment net sales. The increase in these eliminations was due primarily to the inclusion of our bottling acquisitions in 2006. Adjustments in these periods were not material.
 
                                         
                      Dollar
       
                      Amount
    Percentage
 
    2006     2005           Change     Change  
    (In millions, except % data)  
 
Underlying Operating Profit
                                       
Beverage Concentrates
  $ 710     $ 657             $ 53       8.1 %
Finished Goods
    172       165               7       4.2 %
Bottling Group
    130       44               86       NM  
Mexico and the Caribbean
    102       96               6       6.3 %
Corporate and other(1)
    (14 )     11               (25 )     NM  
Adjustments and eliminations(2)
    (295 )     (186 )             (109 )     NM  
                                         
Income before provision for income taxes, equity in earnings of unconsolidated subsidiaries and cumulative effect of change in accounting policy as reported
  $ 805     $ 787             $ 18       2.3 %
                                         
 
 
(1) Consists of equity in earnings of unconsolidated subsidiaries and general and administrative expenses not allocated to the segments. The change was primarily due to a decrease in our equity in earnings of unconsolidated subsidiaries for 2006 as a result of our purchase of the remaining 55% of DPSUBG in May 2006, and an increase in general and administrative expenses related to our IT operations.
 
(2) For 2006, adjustments consist principally of net interest expense of $211 million, restructuring costs of $27 million and depreciation and amortization of $69 million. These adjustments were partially offset by the $32 million gain on disposal of the Grandma’s Molasses brand and Slush Puppie business. For 2005, adjustments consist principally of net interest expense of $170 million, restructuring costs of $10 million and depreciation and amortization of $26 million. These adjustments were partially offset by the $36 million gain on the disposal of the Holland House brand and foreign currency translation. Eliminations in these periods were not material. Information on restructuring charges by segment is available in note 12 and information on depreciation is provided in note 15, in each case to our audited combined financial statements.


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Beverage Concentrates
 
                                 
            Dollar
   
            Amount
  Percentage
    2006   2005   Change   Change
    (In millions, except % data)
 
Net sales
  $ 1,330     $ 1,304     $ 26       2.0 %
Underlying operating profit
  $ 710     $ 657     $ 53       8.1 %
 
The $26 million net sales increase was due primarily to price increases, offset by volume declines of 1.8%. Dr Pepper volumes increased 0.6% as the result of “Soda Fountain Classics” line extensions and Sunkist, A&W and Canada Dry volumes increased by single digit percentages, but were more than offset by 7UP and Diet Rite volume declines.
 
The $53 million UOP increase was due primarily to higher net sales and lower cost of sales and marketing expenses (primarily advertising costs), which were partially offset by higher selling, general and administrative expenses. The lower cost of sales was driven by a favorable sales mix shift away from higher cost beverage concentrates products, such as 7UP Plus and Diet Rite, to non-diet products. The higher selling, general and administrative expenses related mainly to an increase in corporate costs following our bottling acquisitions.
 
Bottler case sales increased 0.9% primarily due to growth in Dr Pepper following the launch of Dr Pepper Berries & Cream, the second offering of the “Soda Fountain Classics” line extensions, and single digit percentage increases on Diet Dr Pepper as a result of the “Diet Try It” promotion. Sunkist had a double digit volume percentage increase due to a line extension, and A&W had a single digit volume percentage increase due to new packaging. These increases were partially offset by a decline in 7UP and Diet Rite. The 7UP decline was primarily due to the discontinuation of 7UP Plus which was partially offset by the volume gains in the relaunch of 7UP “with natural flavors” in the third quarter of 2006. The Diet Rite decline was due to a reallocation of marketing investments from Diet Rite to Diet 7UP, Diet Sunkist, Diet A&W and Diet Canada Dry.
 
Finished Goods
 
                                 
            Dollar
   
            Amount
  Percentage
    2006   2005   Change   Change
    (In millions, except % data)
 
Net sales
  $ 1,516     $ 1,516     $ 0       0 %
Underlying operating profit
  $ 172     $ 165     $ 7       4.2 %
 
Net sales were equal to the prior year as volume declines of 3.0% and an unfavorable sales mix were offset by price increases. Volume declines in Snapple and Yoo-Hoo more than offset an increase in Hawaiian Punch.
 
The $7 million UOP increase was due to lower cost of sales, partially offset by higher marketing expenses mainly associated with the launch of Snapple super premium teas. The lower cost of sales was due to supply chain initiatives, including lower ingredient costs from product reformulation and lower production costs as certain products, which were previously co-packed externally, were manufactured in-house. These cost of sales reductions were partially offset by an increase in our cost of HFCS, PET and glass.
 
Bottling Group
 
                                 
            Dollar
   
            Amount
  Percentage
    2006   2005   Change   Change
    (In millions, except % data)
 
Net sales
  $ 2,001     $ 241     $ 1,760       NM  
Underlying operating profit
  $ 130     $ 44     $ 86       NM  
 
Bottling Group results in 2005 included only the results from the former Snapple Distributors segment. Bottling Group’s 2006 results include a full year of sales of $271 million from the former Snapple Distributors segment, and partial year results from our 2006 bottling acquisitions. After elimination of intersegment sales, the


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impact on our consolidated net sales was an increase of $1,462 million. As a result, UOP was $130 million on $2,001 million of net sales in 2006, compared to UOP of $44 million on $241 million of net sales in 2005.
 
Mexico and the Caribbean
 
                                 
            Dollar
   
            Amount
  Percentage
    2006   2005   Change   Change
    (In millions, except % data)
 
Net sales
  $ 408     $ 354     $ 54       15.3 %
Underlying operating profit
  $ 102     $ 96     $ 6       6.3 %
 
The $54 million net sales increase was due to 3.4% volume growth, increased pricing, improved sales mix and favorable foreign currency translation. Volumes increased due to growth in Aguafiel, Clamato and Squirt following our improved penetration of large retail stores and growth in the third-party distributor channel. Foreign currency translation favorably impacted net sales by $15 million.
 
The $6 million UOP increase was due to the increased net sales, partially offset by increases in HFCS and PET costs, higher transportation and distribution costs, increased selling, general and administrative expenses, and unfavorable foreign currency translation. Foreign currency translation negatively impacted cost of sales by $6 million.
 
Critical Accounting Policies
 
The process of preparing our financial statements in conformity with U.S. GAAP requires the use of estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses. These estimates and judgments are based on historical experience, future expectations and other factors and assumptions we believe to be reasonable under the circumstances. The most significant estimates and judgments are reviewed on an ongoing basis and are revised when necessary. Actual amounts may differ from these estimates and judgments. A summary of our significant accounting policies is contained in note 2 to our audited combined financial statements included elsewhere in this information statement.
 
The most significant estimates and judgments relate to:
 
  •  revenue recognition,
 
  •  valuations of goodwill and other indefinite lived intangibles,
 
  •  stock based compensation,
 
  •  pension and postretirement benefits and
 
  •  income taxes.
 
Revenue Recognition
 
We recognize sales revenue when all of the following have occurred: (1) delivery, (2) persuasive evidence of an agreement exists, (3) pricing is fixed or determinable, and (4) collection is reasonably assured. Delivery is not considered to have occurred until the title and the risk of loss passes to the customer according to the terms of the contract between us and the customer. The timing of revenue recognition is largely dependent on contract terms. For sales to other customers that are designated in the contract as free-on-board destination, revenue is recognized when the product is delivered to and accepted at the customer’s delivery site.
 
In addition, we offer a variety of incentives and discounts to bottlers, customers and consumers through various programs to support the distribution and promotion of our products. These incentives and discounts include cash discounts, price allowances, volume based rebates, product placement fees and other financial support for items such as trade promotions, displays, new products, consumer incentives and advertising assistance. These incentives and discounts, which we collectively refer to as trade spend, are reflected as a reduction of gross sales to arrive at net sales. Trade spend for 2007 and 2006 includes the effect of our bottling acquisitions where the amounts of such spend are larger than those related to other parts of our business. The aggregate deductions from gross sales


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recorded by us in relation to these programs were approximately $3,159 million, $2,440 million and $928 million in 2007, 2006 and 2005, respectively. Net sales are also reported net of sales taxes and other similar taxes.
 
Goodwill and Other Indefinite Lived Intangible Assets
 
The majority of our intangible asset balances are made up of goodwill and brands which we have determined to have indefinite useful lives. In arriving at the conclusion that a brand has an indefinite useful life, we review factors such as size, diversification and market share of each brand. We expect to acquire, hold and support brands for an indefinite period through consumer marketing and promotional support. We also consider factors such as our ability to continue to protect the legal rights that arise from these brand names indefinitely or the absence of any regulatory, economic or competitive factors that could truncate the life of the brand name. If the criteria are not met to assign an indefinite life, the brand is amortized over its expected useful life.
 
We conduct impairment tests on goodwill and all indefinite lived intangible assets annually, as of December 31, or more frequently if circumstances indicate that the carrying amount of an asset may not be recoverable. We use present value and other valuation techniques to make this assessment. If the carrying amount of an intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess.
 
Impairment tests for goodwill include comparing the fair value of the respective reporting units, which are our segments, with their carrying amount, including goodwill. Goodwill is evaluated using a two-step impairment test at the reporting unit level. The first step compares the carrying amount of a reporting unit, including goodwill, with its fair value. If the carrying amount of a reporting unit exceeds its fair value, a second step is completed to determine the amount of goodwill impairment loss to record. In the second step, an implied fair value of the reporting unit’s goodwill is determined by allocating the fair value of the reporting unit to all of the assets and liabilities other than goodwill. The amount of impairment loss is equal to the excess of the carrying amount of the goodwill over the implied fair value of that goodwill. See note 8 to our audited combined financial statements included elsewhere in this information statement.
 
The tests for impairment include significant judgment in estimating fair value primarily by analyzing future revenues and profit performance. Assumptions used on our impairment calculations, such as our cost of capital and the appropriate discount rates are based on the best available market information and are consistent with our internal operating forecasts. These assumptions could be negatively impacted by various of the risks discussed in “Risk Factors” in this information statement.
 
Stock-Based Compensation
 
On January 3, 2005, we adopted Statement of Financial Accounting Standards No. 123(R), Share-Based Payment (“SFAS 123(R)”). SFAS 123(R) requires the recognition of compensation expense in our Combined Statements of Operations related to the fair value of employee share-based awards. Prior to the adoption of SFAS 123(R), we applied Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees (“APB25”) and related interpretations when accounting for our stock-based compensation plans. We have selected the modified prospective method of transition; accordingly, prior periods have not been restated. Upon adoption of SFAS 123(R), for awards which are classified as liabilities we were required to reclassify the APB 25 historical compensation cost from equity to liability and to recognize the difference between this and the fair value liability through the statement of operations.
 
We selected the Black-Scholes option pricing model as the most appropriate method for determining the estimated fair value for stock-based awards. The Black-Scholes option pricing model requires the use of highly subjective and complex assumptions which determine the fair value of stock-based awards, including the option’s expected term, expected volatility of the underlying stock, risk-free rate, and expected dividends. These assumptions significantly affect the stock compensation charges associated with each grant and in the case of liability plans, the cost associated with remeasuring the liability at each balance sheet date. Moreover, changes in forfeiture rates affect the timing and amount of stock compensation expense recognized over the requisite service period.


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Under SFAS 123(R), we recognize the cost of all unvested employee stock options on a straight-line attribution basis over their respective vesting periods, net of estimated forfeitures. In addition, we have certain employee share plans that contain inflation indexed earnings growth performance conditions. SFAS 123(R) requires plans with such performance criteria to be accounted for under the liability method. The liability method, as set out in SFAS 123(R), requires a liability be recorded on the balance sheet until awards have vested. Also, in calculating the income statement charge for share awards under the liability method as set out in SFAS 123(R), the fair value of each award must be remeasured at each reporting date until vesting.
 
The compensation expense related to our stock-based compensation plans is included within “selling, general and administrative expenses” in our Combined Statements of Operations. We recognized approximately $21 million ($13 million net of tax), $17 million ($10 million net of tax) and $22 million ($13 million net of tax) of expense in 2007, 2006 and 2005, respectively. See note 14 to our audited combined financial statements for a further description of the stock-based compensation plans.
 
Pension and Postretirement Benefits
 
We have several pension and postretirement plans covering our employees who satisfy age and length of service requirements. There are nine stand-alone and five multi-employer pension plans and five stand-alone and one multi-employer postretirement plans. Depending on the plan, pension and postretirement benefits are based on a combination of factors, which may include salary, age and years of service. One of the nine stand-alone plans is an unfunded pension plan that provides supplemental pension benefits to certain senior executives, and is accounted for as a defined contribution plan.
 
Pension expense has been determined in accordance with the principles of SFAS No. 87, Employers’ Accounting for Pensions which requires use of the “projected unit credit” method for financial reporting. We adopted the provisions of SFAS No. 158 Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans — An amendment of Financial Accounting Standards Board Statements No. 87, 88, 106, and 132(R) (“SFAS 158”) related to recognizing the funded status of a benefit plan and the disclosure requirements on December 31, 2006. We have elected to defer the change of measurement date as permitted by SFAS 158 until December 31, 2008. Our policy is to fund pension plans in accordance with the requirements of the Employee Retirement Income Security Act. Employee benefit plan obligations and expenses included in the combined financial statements are determined from actuarial analyses based on plan assumptions, employee demographic data, years of service, compensation, benefits and claims paid and employer contributions.
 
Cadbury Schweppes sponsors the five defined benefit plans and one postretirement health care plan in which our employees participate. Expenses related to these plans were determined by specifically identifying the costs for our participants.
 
The expense related to the postretirement plans has been determined in accordance with SFAS No. 106, Employers’ Accounting for Postretirement Benefits Other Than Pensions (“SFAS 106”). As provided in SFAS 106, we accrue the cost of these benefits during the years that employees render service to us.
 
The calculation of pension and postretirement plan obligations and related expenses is dependent on several assumptions used to estimate the present value of the benefits earned while the employee is eligible to participate in the plans. The key assumptions we use in determining the plan obligations and related expenses include: (1) the interest rate used to calculate the present value of the plan liabilities, (2) employee turnover, retirement age and mortality and (3) the expected return on plan assets. Our assumptions reflect our historical experience and our best judgment regarding future performance. Due to the significant judgment required, our assumptions could have a material impact on the measurement of our pension and postretirement obligations and expenses.
 
See note 13 to our audited combined financial statements for more information about the specific assumptions used in determining the plan obligations and expenses.
 
Income Taxes
 
Our income taxes are computed and reported on a separate return basis as if we were not a part of Cadbury Schweppes. Our tax rate is based on our net income before tax, statutory tax rates and tax planning benefits available


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to us in the jurisdictions in which we operate. Significant judgment is required in determining our annual tax rate and in evaluating our tax positions. We establish reserves when we believe certain positions may be subject to challenge. We adjust these reserves as the facts and circumstances of each position changes.
 
Deferred taxes are recognized for future tax effects of temporary differences between financial and income tax reporting using rates in effect for the years in which the differences are expected to reverse. We establish valuation allowances for our deferred tax assets when we believe expected future taxable income is not likely to support the use of a deduction or credit in that tax jurisdiction.
 
We have adopted the provisions of FIN 48, Accounting for Uncertainty in Income Taxes (“FIN 48”) effective January 1, 2007. FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with SFAS No. 109, Accounting for Income Taxes. FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.
 
The establishment of a liability for unrecognized tax benefits requires us to identify whether a tax position is more likely than not to be sustained upon examination by tax authorities and also required us to estimate the largest amount of tax benefit that is greater than 50% likely to be realized upon settlement. Whether a tax position is more likely than not to be sustainable, and determining the largest amount that is more likely than not to be realizable upon settlement, are subject to judgment. Changes in judgment can occur between initial recognition through settlement or ultimate de-recognition based upon changes in facts, circumstances and information available at each reporting date. See note 9 to our audited combined financial statements for additional information related to FIN 48.
 
Our effective tax rate for 2007 was 39.3%. See note 9 to our audited combined financial statements.
 
Liquidity and Capital Resources
 
Trends and Uncertainties Affecting Liquidity
 
Upon our separation from Cadbury Schweppes, our capital structure, long-term commitments, and sources of liquidity will change significantly from our historical capital structure, long-term commitments and sources of liquidity. After the separation, our primary source of liquidity will be cash provided from operating activities. We believe that the following will negatively impact liquidity:
 
  •  We will incur significant third party debt in connection with the separation;
 
  •  We will continue to make capital expenditures to build new manufacturing capacity, upgrade our existing plants and distribution fleet of trucks, replace and expand our cold drink equipment, make IT investments for IT systems, and from time-to-time invest in restructuring programs in order to improve operating efficiencies and lower costs;
 
  •  We will assume significant pension obligations; and
 
  •  We may make further acquisitions.
 
New Financing Arrangements
 
On March 10, 2008, we entered into arrangements with a group of lenders to provide us with an aggregate of $4.4 billion of financing. The new arrangements consist of a $2.4 billion senior credit agreement that provides a $1.9 billion term loan A facility and a $500 million revolving credit facility and a 364-day bridge credit agreement that provides a $2.0 billion bridge loan facility. We currently expect to borrow an aggregate of $3.9 billion under the term loan A facility and the bridge loan facility in connection with the separation which, together with our cash on hand, will be used to settle with Cadbury Schweppes related party debt and other balances, reduce Cadbury Schweppes’ net investment in us, purchase certain assets from Cadbury Schweppes related to our business, pay $100 million of fees and expenses related to the new credit facilities and provide us with $100 million of cash on hand immediately after the separation.


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We currently intend, subject to prevailing market conditions, to replace all or a portion of the bridge loan facility with the proceeds from the issuance of one or more series of notes and/or an alternative term loan facility. See “Description of Indebtedness” and “Risk Factors — Risks Related to Our Business — After our separation from Cadbury Schweppes, we will have a significant amount of debt, which could adversely affect our business and our ability to meet our obligations.”
 
We expect to use borrowings under the revolving credit facility for working capital and general corporate purposes.
 
For a description of our new credit facilities, see “Description of Indebtedness.”
 
Capital Expenditures
 
Capital expenditures were $230 million in 2007 compared to $158 million in 2006. Capital expenditures for both years primarily consisted of manufacturing and distribution equipment, cold drink equipment and IT investments for new systems. The increase in 2007 was primarily due to the inclusion of our bottling acquisitions. We plan to incur annual capital expenditures over the next three years in an amount equal to approximately 5% of our net sales. These expenditures are expected to include investments in cold drink equipment, construction of a multi-product manufacturing facility in Southern California, expansion of our capabilities in existing facilities and implementation of route-to-market efficiency initiatives.
 
Restructuring
 
We implement restructuring programs from time to time and incur costs that are designed to improve operating effectiveness and lower costs. These programs have included closure of manufacturing plants, reductions in force, integration of back office operations and outsourcing of certain transactional activities. When we implement these programs, we incur various charges, including severance and other employment-related costs.
 
The restructuring costs of $76 million in 2007 are primarily related to the following:
 
  •  Organizational restructuring announced on October 10, 2007, which will result in the reduction of approximately 470 employees and the closure of two manufacturing facilities in Denver, Colorado (closed in December 2007) and Waterloo, New York (closed in March 2008). The employee reductions are expected to be completed by June 2008. As a result of this restructuring, we recognized a charge of $32 million in 2007.
 
  •  Continued integration of the Bottling Group, which was initiated in 2006, resulted in charges of $21 million.
 
  •  Integration of technology facilities initiated in 2007.
 
  •  Closure of the St. Catharines facility initiated in 2007.
 
The restructuring costs of $27 million in 2006 are primarily related to the following:
 
  •  Integration of the Bottling Group initiated in 2006; and
 
  •  Outsourcing initiatives of our back office operations service center and a reorganization of our IT operations initiated in 2006.
 
We expect to incur an aggregate of approximately $42 million of pre-tax, non-recurring charges in 2008 with respect to the restructuring discussed above. For more information, see note 12 to our audited combined financial statements.
 
Pension Obligations
 
We expect to assume unfunded employee benefit liabilities for pension benefit and postretirement obligations from Cadbury Schweppes for qualified and non-qualified plans. In January 2008, we began to separate commingled pension and postretirement plans in which certain of our employees participate. As a result, we remeasured the projected benefit obligation of the separated plans, which we expect to result in an increase of approximately


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$71 million to our “other non-current liabilities” and a decrease of approximately $53 million to “accumulated other comprehensive income.” See “Unaudited Pro Forma Combined Financial Data.” The actual pension liability and associated unamortized losses will be finalized at the separation date.
 
Acquisitions
 
We may make further acquisitions. For example, we may make further acquisitions of regional bottling companies to further extend our geographic coverage. Any acquisitions may require future capital expenditures and restructuring expenses.
 
Liquidity
 
Based on our current and anticipated level of operations, we believe that our proceeds from operating cash flows, together with amounts we expect to be available under our new financing arrangements, will be sufficient to meet our anticipated liquidity needs over at least the next twelve months.
 
Net Cash Provided by Operating Activities
 
Net cash provided by operating activities was $603 million in 2007 compared to $581 million in 2006. This $22 million increase was primarily due to changes in non-cash adjustments and working capital improvements. The increase in working capital was primarily the result of a $99 million increase in accounts payable and accrued expenses and a $74 million decrease in trade accounts receivable. These changes were partially offset by increases in related party receivables of $55 million, other accounts receivable of $84 million and inventories of $27 million.
 
Net cash from operating activities was $581 million in 2006 compared to $583 million in 2005. The $2 million decrease was primarily due to a decrease in our cash flows from working capital of $89 million partially offset by an increase in net earnings of $33 million, an increase in depreciation of $46 million and an increase in amortization of $14 million. Changes in working capital were a decreased source of cash flow from operations in 2006 compared to 2005, primarily as a result of a $138 million decrease from accounts payables and accrued expenses, partially offset by a $20 million decrease from receivables.
 
Net Cash Provided by Investing Activities
 
Net cash used in investing activities was $1,087 million in 2007 compared to $502 million in 2006. The increase of $585 million was primarily attributable to the issuance of notes receivable for $1,846 million, partially offset by $842 million due to the repayment of notes receivable and a decrease of $405 million for acquisitions, principally the acquisition in 2006 of the remaining 55% interest in DPSUBG.
 
Net cash used in investing activities was $502 million in 2006 compared to $283 million provided by investing activities in 2005. The $785 million increase in 2006 was primarily due to the acquisition of the remaining 55% interest in DPSUBG, higher purchases of property, plant, and equipment, and lower proceeds from asset sales.
 
Net Cash Provided by Financing Activities
 
Net cash provided by financing activities was $515 million in 2007 compared to $72 million used in financing activities in 2006. The $587 million increase in 2007 was due to higher levels of debt issuances and net investment transactions with Cadbury Schweppes, partially offset by increases in debt repayment.
 
Net cash used in financing activities was $72 million in 2006 compared to $815 million in 2005. The $743 million decrease in 2006 was primarily due to increases in net long-term debt and net investment transactions with, and cash distributions to, Cadbury Schweppes.
 
Cash and Cash Equivalents
 
Cash and cash equivalents were $67 million at December 31, 2007 and increased $32 million in 2007 from $35 million at the prior year end. The increase was primarily due to transactions with Cadbury Schweppes.


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Contractual Commitments and Obligations
 
We enter into various contractual obligations that impact, or could impact, our liquidity. The following table summarizes our contractual obligations and contingencies at December 31, 2007. See notes 10 and 13 to our audited combined financial statements included elsewhere in this information statement for additional information regarding the items described in this table.
 
                                                         
          Payments Due in Year  
    Total     2008     2009     2010     2011     2012     After 2012  
                      (In millions)              
 
Long-term debt obligations(1)
  $ 3,019     $ 126     $ 494     $     $ 425     $ 740     $ 1,234  
Capital leases(2)
    21       2       3       3       3       3       7  
Interest payments(3)
    1,083       192       165       161       140       88       337  
Operating leases(4)
    281       72       53       45       36       29       46  
Purchase obligations(5)
    122       36       24       20       11       10       21  
Other long-term liabilities(6)
    44       4       4       4       4       4       24  
                                                         
Total
  $ 4,570     $ 432     $ 743     $ 233     $ 619     $ 874     $ 1,669  
                                                         
 
 
(1) Amounts represent scheduled principal payments for long-term debt. The amount and timing of payments related to our long-term debt will be different from those set forth in this table as the result of borrowings under our new credit facilities.
 
(2) Amounts represent capitalized lease obligations, net of interest. Interest in respect of capital leases is included under the caption “Interest payments” on this table.
 
(3) Amounts represent our estimated interest payments based on: (a) projected interest rates for floating rate debt, (b) specified interest rates for fixed rate debt, (c) capital lease amortization schedules and (d) debt amortization schedules. The amount and timing of interest payments will be different from those set forth in this table as the result of borrowings under our new credit facilities.
 
(4) Amounts represent minimum rental commitment under non-cancellable operating leases.
 
(5) Amounts represent payments under agreements to purchase goods or services that are legally binding and that specify all significant terms, including long-term contractual obligations.
 
(6) Amounts represent estimated pension and postretirement benefit payments for U.S. and non-U.S. defined benefit plans. In addition, on January 1, 2007, we adopted the provisions of FIN 48. As of December 31, 2007 the amount of unrecognized tax benefits was $98 million. This table does not reflect any payments we may be required to make in respect of tax matters for which we have established reserves in accordance with FIN 48. Due to uncertainty regarding the timing of payments associated with these liabilities, we are unable to make a reasonable estimate of the amount and period for which these liabilities might be paid and therefore are not included in the above table.
 
Inflation
 
The principal effect of inflation on our operating results is to increase our costs. Subject to normal competitive market pressures, we seek to mitigate the impact of inflation by raising prices.
 
Effect of Recent Accounting Pronouncements
 
In December 2007, the FASB issued SFAS No. 141 (revised 2007), Business Combinations (“SFAS 141(R)”), which amends the principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, any noncontrolling interest in the acquiree and the goodwill acquired. SFAS 141(R) also establishes disclosure requirements to enable the evaluation of the nature and financial effects of the business combination. SFAS 141(R) is effective for us on January 1, 2009, and we will apply SFAS 141(R) prospectively to all business combinations subsequent to the effective date.


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In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements — An amendment of Accounting Research Bulletin No. 51 (“SFAS 160”). SFAS 160 establishes accounting and reporting standards for the noncontrolling interest in a subsidiary and the deconsolidation of a subsidiary and also establishes disclosure requirements that clearly identify and distinguish between the controlling and noncontrolling interests and requires the separate disclosure of income attributable to controlling and noncontrolling interests. SFAS 160 is effective for fiscal years beginning after December 15, 2008. We will apply SFAS 160 prospectively to all applicable transactions subsequent to the effective date.
 
In June 2007, the FASB ratified Emerging Issues Task Force (“EITF”) Issue No. 06-11 Accounting for Income Tax Benefits of Dividends on Share-Based Payment Awards (“EITF 06-11”), which requires entities to record tax benefits on dividends or dividend equivalents that are charged to retained earnings for certain share-based awards to additional paid-in capital. In a share-based payment arrangement, employees may receive dividends or dividend equivalents on awards of nonvested equity shares, nonvested equity share units during the vesting period, and share options until the exercise date. Generally, the payment of such dividends can be treated as deductible compensation for tax purposes. The amount of tax benefits recognized in additional paid-in capital should be included in the pool of excess tax benefits available to absorb tax deficiencies on share-based payment awards. EITF 06-11 is effective for fiscal years beginning after December 15, 2007, and interim periods within those years. We believe the adoption of EITF 06-11 will not have a material impact on our combined financial statements.
 
In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities — including an amendment of FASB Statement No. 115 (“SFAS 159”). SFAS 159 permits entities to choose to measure many financial instruments and certain other items at fair value. Unrealized gains and losses on items for which the fair value option has been elected will be recognized in earnings at each subsequent reporting date. SFAS 159 is effective for us January 1, 2008. We do not plan to apply SFAS 159 to any of our existing financial assets or liabilities and believe that the adoption of SFAS 159 would not have a material impact on our combined financial statements.
 
In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (“SFAS 157”). SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosure requirements about fair value measurements. SFAS 157 is effective for us January 1, 2008. A one-year deferral is in effect for non financial assets and liabilities that are measured on a nonrecurring basis. We believe that the adoption of SFAS 157 will not have a material impact on our combined financial statements.
 
Quantitative and Qualitative Disclosures About Market Risk
 
We are exposed to market risks arising from changes in market rates and prices, including movements in foreign currency exchange rates, interest rates, and commodity prices.
 
Foreign Exchange Risk
 
Historically, Cadbury Schweppes has managed foreign currency risk on a centralized basis on our behalf. The majority of our net sales, expenses, and capital purchases are transacted in United States dollars. However, we do have some exposure with respect to foreign exchange rate fluctuations. Our primary exposure to foreign exchange rates is the Canadian dollar and Mexican peso against the U.S. dollar. In order to manage exposures and mitigate the impact of currency fluctuations on the operations of our foreign subsidiaries, Cadbury Schweppes historically has entered into foreign exchange forward contracts for significant forecasted receipts and payments. All of these hedged transactions are against firmly committed or forecasted exposures. It is Cadbury Schweppes’ practice not to hedge translation exposure.
 
Following the separation, we may continue to utilize foreign exchange forward and option contracts to manage our exposure to changes in foreign exchange rates.
 
Interest Rate Risk
 
Historically, Cadbury Schweppes has managed interest rate risk on a centralized basis on our behalf through the use of interest rate swap agreements and other risk management instruments. The objectives for the mix between fixed and floating rate borrowings have been set to reduce the impact of an upward change in interest rates while enabling benefits to be enjoyed if interest rates fall.


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Our historic interest rate exposure relates primarily to intercompany loans or other amounts due to, or from, Cadbury Schweppes. Following completion of the separation and the related financing transactions, we will be subject to interest rate risk with respect to our long-term debt under the credit facilities. The principal interest rate exposure relates to amounts expected to be borrowed under our new term loan A and bridge loan facilities. We will incur approximately $3.9 billion of debt with floating interest rates under these facilities. A change in the estimated interest rate on the anticipated $3.9 billion of borrowings under the term loan A and the bridge loan facilities up or down by 1% will increase or decrease our earnings before provision for income taxes by approximately $39 million, respectively, on an annual basis. We will also have interest rate exposure for any amounts we may borrow in the future under the revolving credit facility. If we replace the bridge loan facility with one or more series of notes bearing a fixed rate of interest, our exposure to interest rate risk will be significantly reduced. If we replace the bridge loan facility with an alternative term loan facility bearing a floating rate of interest we will continue to have a similar level of exposure to interest rate risk.
 
Following the separation, we may utilize interest rate swaps, agreements or other risk management instruments to manage our exposure to changes in interest rates.
 
Commodity Risks
 
We are subject to market risks with respect to commodities because our ability to recover increased costs through higher pricing may be limited by the competitive environment in which we operate. Our principal commodities risks relate to our purchases of aluminum, corn (for HFCS), natural gas (for use in processing and packaging), PET and fuel. Historically, Cadbury Schweppes has managed hedging of certain commodity costs on a centralized basis on our behalf through forward contracts for commodities. The use of commodity forward contracts has enabled Cadbury Schweppes to obtain the benefit of guaranteed contract performance on firm priced contracts offered by banks, the exchanges and their clearing houses.
 
Following the separation, we intend to utilize commodities forward contracts and supplier pricing agreements to hedge the risk of adverse movements in commodity prices for limited time periods for certain commodities.
 
Following the separation, commodities forward contracts in existence relating to our business will be transferred to us. The fair market value of these contracts as of December 31, 2007 was a liability of $6 million.


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INDUSTRY
 
Overview
 
United States
 
In the United States, we operate primarily within the non-alcoholic liquid refreshment beverage market. This market consists of CSDs, non-CSDs (including ready-to-drink teas, juices, juice drinks and sports drinks) and bottled water. The U.S. liquid refreshment beverage market has grown over the last five years, with average annual volume growth of 3.9% between 2001 and 2006 and average annual retail sales growth of 5.1% over the same period. In 2006, the market grew by 4.1% in volume and 6.6% in retail sales. Total retail sales in 2006 in the U.S. liquid refreshment beverage market were $106 billion, with CSDs accounting for 66.1%, non-CSDs accounting for 19.7% and bottled water accounting for 14.2%.
 
CSDs.   According to the latest available information from Beverage Digest, in 2007, CSD retail sales increased 2.7% despite a 2.3% decline in volume. In 2006, CSD retail sales grew by 2.9% despite a 0.6% decline in volume. The rise in retail sales in both years was primarily due to price increases in CSDs combined with strong growth of premium-priced energy drinks. The decline in volume in both years was primarily attributable to a combination of increased pricing and consumers switching to non-CSDs and bottled water. Diet CSDs’ volume share of the overall CSD market segment increased from 25.1% in 2001 to 29.5% in 2006.
 
Colas and Flavored CSDs.   Flavored CSDs have become increasingly popular and have gained volume share versus cola CSDs. Within the CSD market segment, colas represented 57.4% of total CSD volume in 2006. Flavored CSDs have increased their share of the overall CSD market segment (as measured by volume) from 40.1% in 2001 to 42.6% in 2006, and colas have lost volume share from 59.9% in 2001 to 57.4% in 2006.
 
Non-CSDs.   Non-CSDs have experienced strong market share, volume and retail sales growth over the last five years. Non-CSD retail sales experienced an average annual growth rate of 8.9% from 2001 to 2006, and non-CSD volume share of the overall U.S. liquid refreshment beverage market increased from 12.7% in 2001 to 16.3% in 2006. Non-CSD volume and retail sales increased by 13.2% and 14.8%, respectively, in 2006, with strong growth in ready-to-drink teas, sports drinks and juice drinks.
 
Bottled Water.   The bottled water market segment consists of both spring waters and purified waters in packages of 1.5 liters or less. Bottled water pricing declined 2% in 2006 as a result of competitive pressures. Volume and retail sales increased by 16.5% and 14.5%, respectively, in 2006. Retail sales of bottled water increased by an average annual growth rate of 14.9% from 2001 to 2006.
 
All U.S. market and industry data set forth above is from Beverage Digest. See “— Use of Market Data in this Information Statement.”
 
Canada and Mexico
 
In the Canadian and Mexican markets, we operate in market segments similar to those in which we operate in the United States. The Canadian and Mexican markets have exhibited broadly similar trends to those in the United States, except that the Mexican CSD volume grew 4.9% in 2006, according to Canadean.
 
Total Canadian soft drink retail sales in 2006, including CSDs, non-CSDs and bottled water, were $16.1 billion. CSDs accounted for 42.1% of total volume in the Canadian soft drink market, or $4.4 billion in retail sales, followed by non-CSDs and bottled water with 37.3% and 20.6% of total volume, and $8.3 billion and $3.4 billion in retail sales, respectively.
 
Total Mexican soft drink retail sales in 2006, including CSDs, non-CSDs and bottled water, were $20.9 billion. CSDs accounted for 70.1% of total volume in the Mexican soft drink market in 2006 or $13.7 billion in retail sales,


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followed by non-CSDs and bottled water with 20.5% and 9.5% of total volume, and $5.2 billion and $2.0 billion in retail sales, respectively.
 
All Canadian and Mexican market and industry data set forth above is from Canadean. See “— Use of Market Data in this Information Statement.”
 
Beverage Market Trends
 
We believe the key trends influencing the North American liquid refreshment beverage market include:
 
  •  Increased health consciousness.   Consumers have become more health conscious in their food and beverage consumption. This trend is a result of increased consumer awareness of health issues, media attention regarding obesity, focus on nutrition in schools and aging trends among consumers. We believe the main beneficiaries of this trend include diet drinks, ready-to-drink teas, enhanced waters and bottled waters.
 
  •  Changes in lifestyle.   Consumers are increasingly looking for convenience due to hurried lifestyles, an increasing number of women in the work force, the rise in single-occupancy households, the increasing urbanization of populations and the decline in formal family meals. We believe changes in lifestyle will continue to drive increased sales of single-serve beverages, which typically have higher margins.
 
  •  Growing demographic segments in the United States.   The growth of various U.S. demographic segments will be increasingly important to the growth of the U.S. liquid refreshment beverage market. For example, according to the U.S. Census Bureau, over the next 20 years, more than 40% of the U.S. population growth is expected to come from the Hispanic population. We believe marketing and product innovations that target fast growing population segments, such as the Hispanic community in the United States, will drive further market growth.
 
  •  Product and packaging innovation.   We believe brand owners and bottling companies will continue to create new products and packages such as beverages with new ingredients and new premium flavors, as well as innovative convenient packaging that address changes in consumer tastes and preferences.
 
  •  Changing retailer landscape.   As retailers continue to consolidate, we believe partnering with key retailers will be instrumental for future success in the beverage industry. We believe retailers will support consumer product companies that can provide an attractive portfolio of products, a strong value proposition and efficient delivery.
 
  •  Recent increases in raw material costs.   The costs of a substantial proportion of the raw materials used in the beverage industry, such as aluminum cans and ends, glass bottles, PET bottles and caps, paperboard packaging, HFCS and other sweeteners, juices and fruits, are dependent on commodity prices for aluminum, natural gas, resins, corn, pulp and other commodities. Recently, these costs on the whole have increased significantly and this has exerted pressure on industry margins.
 
Industry Manufacturing, Sales and Distribution
 
The U.S. beverage industry is comprised of many participants including brand owners, bottling companies and distributors. Market participants adopt different business models, ranging from being exclusively a brand owner, bottler or distributor, to an integrated brand owner, bottler and distributor. Retailers also participate in the beverage industry directly through their own private label products.
 
Traditionally, the CSD industry has employed a licensing model comprised of brand owners who grant licenses to bottling companies. This structure effectively separated the management and marketing of brands, as well as the production of beverage concentrates, from the more capital intensive manufacturing, bottling and distribution of finished beverages. In contrast, brand owners of non-CSDs traditionally have manufactured a larger percentage of


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finished beverages themselves, which are then sold primarily to distributors and retailers. These manufacturing and distribution models are summarized in the following charts:
 
(PERFORMANCE GRAPH)
 
The bottled water market segment includes spring water and purified water. Purified water is typically filtered by the bottler, who bottles the water and sells it to a distributor or retailer. Spring water is typically bottled at the source by the brand owner and is distributed by both the brand owner and by bottlers and distributors.
 
Brand Owners.   Brand owners own beverage brands, formulas and the proprietary know-how required for the preparation of their beverages, either in concentrate form or as a finished beverage. In a traditional CSD licensing model, brand owners manufacture the beverage concentrates, which are highly condensed liquids or powders that contain all of the proprietary flavors and ingredients that make up the unique taste of the beverage. The concentrates are sold to bottling companies pursuant to a license from the brand owner. Brand owners may also manufacture and package the finished beverages for some of their brands and sell the finished beverages direct to retailers, distributors and other third parties. Brand owners maintain strong brands by promoting brand awareness through marketing, advertising and promotion, and by developing new and innovative products and product line extensions that address changes in consumer tastes and preferences.
 
Bottlers and Distributors.   Bottlers are manufacturers and distributors of branded canned or bottled beverages that are ready to be sold to retailers as finished beverages. For CSDs, bottlers purchase beverage concentrates from brand owners and combine it with sweeteners, carbonation and water to create the finished beverages. For non-CSDs, bottlers purchase finished beverages from brand owners and may also manufacture finished beverages. Distributors are independent companies that solely distribute the finished beverages. Bottlers and distributors sell and distribute finished beverages in the territories where they hold brand licenses. These territories may be exclusive or non-exclusive depending on the license arrangements.


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Bottling Systems.   The U.S. bottling industry consists of the following four systems:
 
  •  Coca-Cola Affiliated System.   The Coca-Cola affiliated system includes Coca-Cola Enterprises and Coca-Cola Bottling Co. Consolidated, both of which are partially-owned by Coca-Cola, as well as smaller independent Coca-Cola affiliated bottlers. The Coca-Cola affiliated system primarily manufactures, markets and distributes Coca-Cola branded products, but also manufactures and distributes other brands. For example, Coca-Cola Enterprises is the second largest bottler of our products and the largest Dr Pepper bottler.
 
  •  PepsiCo Affiliated System.   The PepsiCo affiliated system includes Pepsi Bottling Group, PepsiAmericas and Pepsi Bottling Ventures, which are partially-owned by PepsiCo, as well as smaller independent PepsiCo affiliated bottlers. The PepsiCo affiliated system primarily manufactures, markets and distributes PepsiCo branded products. These bottlers also manufacture and distribute other brands. For example, Pepsi Bottling Group is the third largest bottler of our products and the third largest Dr Pepper bottler.
 
  •  DPS System.   The DPS system consists of our Bottling Group segment, which is the largest bottler of our products and the second largest Dr Pepper bottler. Our Bottling Group is further described in this information statement.
 
  •  Independent Bottler System.   The independent bottler system includes smaller independent bottlers that are not part of the other three systems. The independent system is primarily involved with the bottling of our brands.
 
As the CSD industry has matured, brand owners have begun diversifying into higher growth non-CSDs. Today brand owners manufacture a higher percentage of finished beverages than in the past. This has led to an increased focus on alignment of economic interests through the entire manufacturing and distribution chain, which in some cases has resulted in more vertical integration of brand owners, bottlers and distributors.
 
Sales Channels.   The primary retail sales channels for liquid refreshment beverages in the United States include supermarkets, fountains, mass merchandisers, club stores, vending machines, convenience stores, gas stations, small groceries, drug chains, dollar stores and small retail stores. CSD sales are largely concentrated in the supermarkets, fountain and mass merchandisers channels. The consolidation of retailers and the growth of club stores over the last few years has increased the power and influence of these retailers on price, promotional and marketing programs and delivery requirements. The fountain channel, which constituted 23% of the U.S. CSD market segment in 2006 according to Beverage Digest, represents beverages sold at retail that come in disposable cups or glasses, such as CSDs at restaurants, convenience stores or gas stations.
 
Distribution of Finished Beverages.   Finished beverages are distributed to the retail sales channels through four main methods:
 
  •  Direct store delivery.   Finished beverages are delivered directly to the retail stores by bottlers or distributors. In many cases, the bottler or distributor is responsible for stocking and merchandising the product directly on the retail shelf.
 
  •  Warehouse delivery.   Finished beverages are shipped to retailer warehouses, and then delivered by the retailer through its own delivery system to its stores.
 
  •  Fountain foodservice.   Fountain syrup is delivered to fountain customers either through direct store delivery or the customer’s warehouse.
 
  •  Vending operations.   Finished beverages are delivered to vending machines and stocked and filled by vending service operators or bottlers.


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Canada
 
The Canadian beverage industry is similar to the U.S. industry. However, the Canadian industry consists primarily of two CSD bottling systems (compared to four in the United States): the Coca-Cola affiliated system and the PepsiCo affiliated system. The Canadian beverage industry is also characterized by more consolidated retail sales channels than in the United States.
 
Mexico
 
The Mexican beverage industry is similar to the U.S. industry in its manufacturing, bottling and distribution model. However, unlike the United States, the Mexican retail channels are comprised largely of “mom and pop” stores or traditional trade, accounting for approximately 60% of total sales outlets in Mexico according to Canadean. In the past few years, the traditional trade has faced increasing competition from the expansion of the modern food channel (including supermarkets and hypermarkets) and convenience stores. The on-premise channel, which includes restaurants, street stalls, kiosks, hotels and cinemas, is another growing sales channel in Mexico.
 
Use of Market Data in this Information Statement
 
The market and industry data in this information statement is from independent industry sources, including ACNielsen, Beverage Digest and Canadean. Although we believe that these independent sources are reliable, we have not verified the accuracy or completeness of this data or any assumptions underlying such data.
 
ACNielsen, a business of The Nielsen Company, is a marketing information provider, primarily serving consumer packaged goods manufacturers and retailers. We use ACNielsen data as our primary management tool to track market performance because it has broad and deep data coverage, is based on consumer transactions at retailers, and is reported to us monthly. ACNielsen data provides measurement and analysis of marketplace trends such as market share, retail pricing, promotional activity and distribution across various channels, retailers and geographies. Measured categories provided to us by ACNielsen Scantrack include CSDs, energy drinks, single-serve bottled water, non-alcoholic mixers and non-carbonated beverages, including ready-to-drink teas, single-serve and multi-serve juice and juice drinks, and sports drinks. ACNielsen also provides data on other food items such as apple sauce. The ACNielsen data we present in this information statement is from ACNielsen’s Scantrack service, which compiles data based on scanner transactions in certain sales channels, including grocery stores, mass merchandisers, drug chains, convenience stores and gas stations. However, this data does not include the fountain or vending channels, Wal-Mart or small independent retail outlets, which together represent a meaningful portion of the U.S. liquid refreshment beverage market and of our net sales and volume.
 
Beverage Digest is an independent beverage research company that publishes an annual Beverage Digest Fact Book. We use Beverage Digest primarily to track market share information and broad beverage and channel trends. This annual publication provides a compilation of data supplied by beverage companies. Beverage Digest covers the following categories: CSDs, energy drinks, bottled water and non-carbonated beverages (including ready-to-drink teas, juice and juice drinks and sports drinks). Beverage Digest data does not include multi-serve juice products or bottled water in packages of 1.5 liters or more. Data is reported for certain sales channels, including grocery stores, mass merchandisers, club stores, drug chains, convenience stores, gas stations, fountains, vending machines and the “up-and-down-the-street” channel consisting of small independent retail outlets.
 
We use both ACNielsen and Beverage Digest to assess both our own and our competitors’ performance and market share in the United States. Different market share rankings can result for a specific beverage category depending on whether data from ACNielsen or Beverage Digest is used, in part because of the differences in the sales channels reported by each source. For example, because the fountain channel (where we have a relatively small business except for Dr Pepper) is not included in ACNielsen data, our market share using the ACNielsen data is generally higher for our CSD portfolio than the Beverage Digest data, which does include the fountain channel.


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Canadean is a market research and data management company focusing on the international beverage industry and its suppliers. Beverage categories measured by Canadean include packaged water, carbonates, juice, nectars, still drinks, iced/ready-to-drink tea drinks, squash/syrups and fruit powders, sports drinks and energy drinks. Canadean provides data for certain sales channels, including off-premise distribution such as supermarkets, hypermarkets, department stores, “mom and pop” outlets, delicatessens, pharmacies/drugstores, street stalls, specialist drink shops and on-premise distribution such as vending machines, quick service restaurants, eating, drinking and accommodation establishments and institutions. We use Canadean data to assess both our own and our competitors’ performance and market share in Canada and Mexico.
 
In this information statement, all information regarding the beverage market in the United States is from Beverage Digest, and, except as otherwise indicated, is from 2006. Certain limited United States beverage market information for 2007 is available from Beverage Digest and is contained herein, but in most instances 2006 information is the most recent available from Beverage Digest. All information regarding the beverage market in Canada and Mexico is from Canadean and is from 2006. All information regarding our brand market positions in the United States is from ACNielsen and is based on retail dollar sales in 2007. All information regarding our brand market positions in Canada is from ACNielsen and is based on volume in 2007. All information regarding our brand market positions in Mexico is from Canadean and is based on volume in 2006. When 2006 information is used, it is the most recent information available from the applicable source.


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BUSINESS
 
Overview
 
We are a leading integrated brand owner, bottler and distributor of non-alcoholic beverages in the United States, Canada and Mexico with a diverse portfolio of flavored (non-cola) CSDs and non-CSDs, including ready-to-drink teas, juices, juice drinks and mixers. We have some of the most recognized beverage brands in North America, with significant consumer awareness levels and long histories that evoke strong emotional connections with consumers.
 
The following table provides highlights about our company and our key brands:
 
Our Company
 
     
(DR. PEPPER SNAPPLE GROUP LOGO)
 
•   #1 flavored CSD company in the United States

•   More than 75% of our volume from brands that are either #1 or #2 in their category

•   #3 North American liquid refreshment beverage business

•   $5.7 billion of net sales in 2007 from the United States (89%), Canada (4%) and Mexico and the Caribbean (7%)

•   $1.0 billion of income from operations in 2007
 
Our Key Brands
 
     
LOGO
 
•   #1 in its flavor category and #2 overall flavored CSD in the United States

•   Distinguished by its unique blend of 23 flavors and loyal consumer following

•   Flavors include regular, diet and “Soda Fountain Classics” line extensions

•   Oldest major soft drink in the United States, introduced in 1885

 
     
 
•   A leading ready-to-drink tea in the United States

•   Teas include premium Snapple teas and super premium white, green, red and black teas

•   Brand also includes premium juices, juice drinks and recently launched enhanced waters

•   Founded in Brooklyn, New York in 1972

 
     
 
•   #2 lemon-lime CSD in the United States

•   Re-launched in 2006 as the only major lemon-lime CSD with all-natural flavors and no artificial preservatives

•   Flavors include regular, diet and cherry

•   The original “Un-Cola,” created in 1929

 
     
  •   #1 apple juice and #1 apple sauce brand in the United States

•   Juice products include apple and other fruit juices, Mott’s Plus and Mott’s for Tots

•   Apple sauce products include regular, unsweetened, flavored and organic

•   Brand began as a line of apple cider and vinegar offerings in 1876

 


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•   #1 orange CSD in the United States

•   Flavors include orange, diet and other fruits

•   Licensed to us as a soft drink by the Sunkist Growers Association since 1986

 
     
 
•   #1 fruit punch brand in the United States

•   Brand includes a variety of fruit flavored and reduced calorie juice drinks

•   Developed originally as an ice cream topping known as “Leo’s Hawaiian Punch” in 1934

 
     
 
•   #1 root beer in the United States

•   Flavors include regular and diet root beer and cream soda

•   A classic all-American soda first sold at a veteran’s parade in 1919

 
     
 
•   #1 ginger ale in the United States and Canada

•   Brand includes club soda, tonic and other mixers

•   Created in Toronto, Canada in 1904 and introduced in the United States in 1919

 
     
 
•   #2 ginger ale in the United States and Canada

•   Brand includes club soda, tonic and other mixers

•   First carbonated beverage in the world, invented in 1783

 
     
 
•   #1 grapefruit CSD in the United States and #2 grapefruit CSD in Mexico

•   Flavors include regular, diet and ruby red

•   Founded in 1938

 
     
 
•   A leading spicy tomato juice brand in the United States, Canada and Mexico

•   Key ingredient in Canada’s popular cocktail, the Bloody Caesar

•   Created in 1969

 
     
 
•   #1 carbonated mineral water brand in Mexico

•   Brand includes Flavors, Twist and Naturel

•   Mexico’s oldest mineral water, founded in 1928

 
     
 
•   #1 portfolio of mixer brands in the United States

•   #1 mixer brand (Mr & Mrs T) in the United States

•   Leading mixers (Margaritaville and Rose’s) in their flavor categories

 
 
Note:   All information regarding the beverage market in the United States is from Beverage Digest, and, except as otherwise indicated, is from 2006. Certain limited United States beverage market information for 2007 is available from Beverage Digest and is contained herein, but in most instances 2006 information is the most recent available from Beverage Digest. All information regarding the beverage markets in Canada and Mexico is from Canadean and is from 2006. All information regarding our brand market positions in the United States is from ACNielsen and is based on retail dollar sales in 2007. All information regarding our brand market positions in Canada is from ACNielsen and is based on volume in 2007. All information regarding our brand market positions in Mexico is from Canadean and is based on volume in 2006. When 2006 information is used, it is the most recent

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information available from the applicable source. For a description of the different methodologies used by these sources (including sales channels covered), see “Industry — Use of Market Data in this Information Statement.”
 
The Sunkist, Rose’s and Margaritaville logos are registered trademarks of Sunkist Growers, Inc., Cadbury Ireland Limited and Margaritaville Enterprises, LLC, respectively, in each case used by us under license. All other logos in the table above are registered trademarks of DPS or its subsidiaries.
 
Creation of Our Business
 
We have built our business over the last 25 years, through a series of strategic acquisitions, into an integrated brand owner, bottler and distributor that is now the third largest liquid refreshment beverage company in North America, according to Beverage Digest and Canadean. These acquisitions include:
 
  •  1980’s-mid-1990’s — We began building on our then existing Schweppes business by adding brands such as Mott’s, Canada Dry, Sunkist and A&W. We also acquired the Peñafiel business in Mexico.
 
  •  1995 — We acquired Dr Pepper/Seven Up, Inc. (having previously made minority investments in the company), increasing our share of the U.S. CSD market segment from under 5% to approximately 15%, as measured by volume, according to Beverage Digest.
 
  •  1999 — We acquired a 40% (increased to 45% in 2005) interest in DPSUBG, which was then our largest independent bottler.
 
  •  2000 — We acquired Snapple and other brands, significantly increasing our share of the U.S. non-CSD market segment.
 
  •  2003 — We created Cadbury Schweppes Americas Beverages by integrating the way we manage our four North American businesses (Mott’s, Snapple, Dr Pepper/Seven Up and Mexico).
 
  •  2006/2007 — We acquired the remaining 55% of DPSUBG and several smaller bottlers and integrated them into our Bottling Group operations, thereby expanding our geographic coverage.
 
Our Business Today
 
Today, we are a leading integrated brand owner, bottler and distributor of non-alcoholic beverages in the United States, Mexico and Canada, the first, second and tenth, largest beverage markets by CSD volume, respectively, according to Beverage Digest and Canadean. We also distribute our products in the Caribbean. In 2007, 89% of our net sales were generated in the United States, 4% in Canada and 7% in Mexico and the Caribbean. We sold 1.6 billion equivalent 288 ounce cases in 2007.
 
In the CSD market segment in the United States and Canada, we participate primarily in the flavored CSD category. Our key brands are Dr Pepper, 7UP, Sunkist, A&W and Canada Dry, and we also sell regional and smaller niche brands. In the CSD market segment we are primarily a manufacturer of beverage concentrates and fountain syrups. Beverage concentrates are highly concentrated proprietary flavors used to make syrup or finished beverages. We manufacture beverage concentrates that are used by our own bottling operations as well as sold to third-party bottling companies. According to ACNielsen, we had an 18.8% share of the U.S. CSD market segment in 2007 (measured by retail sales), which increased from 18.5% in 2006. We also manufacture fountain syrup that we sell to the foodservice industry directly, through bottlers or through third parties.
 
In the non-CSD market segment in the United States, we participate primarily in the ready-to-drink tea, juice, juice drinks and mixer categories. Our key non-CSD brands are Snapple, Mott’s, Hawaiian Punch and Clamato, and we also sell regional and smaller niche brands. We manufacture most of our non-CSDs as ready-to-drink beverages


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and distribute them through our own distribution network and through third parties or direct to our customers’ warehouses. In addition to non-CSD beverages, we also manufacture Mott’s apple sauce as a finished product.
 
In Mexico and the Caribbean, we participate primarily in the carbonated mineral water, flavored CSD, bottled water and vegetable juice categories. Our key brands in Mexico include Peñafiel, Squirt, Clamato and Aguafiel. In Mexico, we manufacture and sell our brands through both our own bottling operations and third-party bottlers, as we do in our U.S. CSD business. In the Caribbean, we distribute our products solely through third-party distributors and bottlers. According to Canadean, we are the #3 CSD company in Mexico (as measured by volume in 2006) and had a 15.6% share of the Mexican flavored CSD category.
 
In 2007, we bottled and/or distributed approximately 45% of our total products sold in the United States (as measured by volume). In addition, our bottling and distribution businesses distribute a variety of brands owned by third parties in specified licensed geographic territories.
 
We believe our brand ownership, bottling and distribution are more integrated than the U.S. operations of our principal competitors and that this differentiation provides us with a competitive advantage. We believe our integrated business model:
 
  •  Strengthens our route-to-market by creating a third consolidated bottling system, our Bottling Group, in addition to the Coca-Cola affiliated and PepsiCo affiliated systems. In addition, by owning a significant portion of our bottling and distribution network we are able to improve focus on our brands, especially certain of our brands such as 7UP, Sunkist, A&W and Snapple, which do not have a large presence in the Coca-Cola affiliated and PepsiCo affiliated bottler systems.
 
  •  Provides opportunities for net sales and profit growth through the alignment of the economic interests of our brand ownership and our bottling and distribution businesses. For example, we can focus on maximizing profitability for our company as a whole rather than focusing on profitability generated from either the sale of concentrates or the bottling and distribution of our products.
 
  •  Enables us to be more flexible and responsive to the changing needs of our large retail customers including by coordinating sales, service, distribution, promotions and product launches.
 
  •  Allows us to more fully leverage our scale and reduce costs by creating greater geographic manufacturing and distribution coverage.
 
Recent Developments
 
New Financing Arrangements
 
On March 10, 2008, we entered into arrangements with a group of lenders to provide us with an aggregate of $4.4 billion of financing. The new arrangements consist of a $2.4 billion senior credit agreement that provides a $1.9 billion term loan A facility and a $500 million revolving credit facility and a 364-day bridge credit agreement that provides a $2.0 billion bridge loan facility. We currently expect to borrow an aggregate of $3.9 billion under the term loan A facility and the bridge loan facility in connection with the separation. We currently intend, subject to prevailing market conditions, to replace all or a portion of the bridge loan facility with the proceeds from the issuance of one or more series of notes and/or an alternative term loan facility. See “Description of Indebtedness.”
 
New President and Chief Executive Officer
 
Larry Young was appointed President and Chief Executive Officer of Cadbury Schweppes’ Americas Beverages business on October 10, 2007. Mr. Young was previously our Chief Operating Officer, as well as President, Bottling Group, and has more than 30 years of experience in the bottling and beverages industry.


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Organizational Restructuring
 
On October 10, 2007, we announced a restructuring of our organization intended to create a more efficient organization. This restructuring will result in a reduction of approximately 470 employees in our corporate, sales and supply chain functions and will include approximately 100 employees in Plano, Texas, 125 employees in Rye Brook, New York and 50 employees in Aspers, Pennsylvania. The remaining reductions will occur at a number of sites located in the United States, Canada and Mexico. The restructuring also includes the closure of two manufacturing facilities in Denver, Colorado (closed in December 2007) and Waterloo, New York (closed in March 2008). The employee reductions are expected to be completed by June 2008.
 
As a result of this restructuring, we recognized a charge of approximately $32 million in 2007. We expect to recognize a charge of approximately $21 million in 2008 related to this restructuring. We expect this restructuring to generate annual cost savings of approximately $68 million, most of which are expected to be realized in 2008 with the full annual benefit realized from 2009 onwards. Savings realized in 2007 were immaterial. As part of this restructuring, our Bottling Group segment has assumed management and operational control of our Snapple Distributors segment.
 
In 2007, we incurred a total of $76 million of restructuring costs, which included $32 million related to the restructuring announced on October 10, 2007.
 
Accelerade Launch
 
We launched our new, ready-to-drink Accelerade sports drink in the first half of 2007. The launch represented an introduction of a new product into a new beverage category for us and was supported by significant national product placement and marketing investments. Net sales were below expectations despite these investments. We incurred an operating loss of approximately $55 million from the Accelerade launch in 2007, while marketing investments in other brands, predominantly Beverage Concentrate brands, were reduced by approximately $25 million. In addition, we incurred a $4 million impairment charge related to the Accelerade launch, which represented the majority of the $6 million of impairment charges we incurred in 2007. Going forward, we intend to focus on marketing and selling Accelerade in a more targeted way to informed athletes, trainers and exercisers, and retailers that are frequented by these consumers, such as health and nutrition outlets, where we expect the product to be financially viable.
 
Glacéau Termination
 
Following its acquisition by Coca-Cola on August 30, 2007, Energy Brands, Inc. notified us that it was terminating our distribution agreements for glacéau products, including vitaminwater, fruitwater and smartwater, effective November 2, 2007. Pursuant to the terms of the agreements, we received a payment of approximately $92 million from Energy Brands, Inc. for this termination in December 2007, and we recorded a $71 million gain in 2007 in respect of this payment. Our 2007 glacéau net sales and contribution to income from operations were approximately $227 million and $40 million, respectively, and were reflected in our Bottling Group segment.
 
Our Strengths
 
The key strengths of our business are:
 
Strong portfolio of leading, consumer-preferred brands.   We own a diverse portfolio of well-known CSD and non-CSD brands. Many of our brands enjoy high levels of consumer awareness, preference and loyalty rooted in their rich heritage, which drive their market positions. Our diverse portfolio provides our bottlers, distributors and retailers with a wide variety of products and provides us with a platform for growth and profitability. We are the #1 flavored CSD company in the United States. In addition, we are the only major beverage concentrate manufacturer with year-over-year market share growth in the CSD market segment in each of the last four years. Our largest brand, Dr Pepper, is the #2 flavored CSD in the United States, according to ACNielsen, and our Snapple brand is a leading ready-to-drink tea. Overall, in 2007, more than 75% of our volume was generated by brands that hold either


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the #1 or #2 position in their category. The strength of our key brands has allowed us to launch innovations and brand extensions such as Dr Pepper Soda Fountain Classics, Mott’s for Tots and Snapple Antioxidant Waters.
 
Integrated business model.   We believe our brand ownership, bottling and distribution are more integrated than the U.S. operations of our principal competitors and that this differentiation provides us with a competitive advantage. Our integrated business model strengthens our route-to-market and enables us to improve focus on our brands, especially certain of our brands such as 7UP, Sunkist, A&W and Snapple, which do not have a large presence in the Coca-Cola affiliated and PepsiCo affiliated bottler systems. Our integrated business model also provides opportunities for net sales and profit growth through the alignment of the economic interests of our brand ownership and our bottling and distribution businesses. For example, we can focus on maximizing profitability for our company as a whole rather than focusing on profitability generated from either the sale of concentrates or the bottling and distribution of our products.
 
Strong customer relationships.   Our brands have enjoyed long-standing relationships with many of our top customers. We sell our products to a wide range of customers, from bottlers and distributors to national retailers, large foodservice and convenience store customers. We have strong relationships with some of the largest bottlers and distributors, including those affiliated with Coca-Cola and PepsiCo, some of the largest and most important retailers, including Wal-Mart, Safeway, Kroger and Target, some of the largest food service customers, including McDonald’s, Yum! and Burger King, and convenience store customers, including 7-Eleven. Our portfolio of strong brands, operational scale and experience across beverage segments have enabled us to maintain strong relationships with our customers.
 
Attractive positioning within a large, growing and profitable market.   We hold the #3 position in each of the United States, Canada and Mexico, three of the top ten beverage markets by CSD volume, according to Beverage Digest and Canadean. We believe that these markets are well-positioned to benefit from emerging consumer trends such as the need for convenience and the demand for products with health and wellness benefits. In addition, we participate in many of the growing categories in the liquid refreshment beverage market, such as ready-to-drink teas. We do not participate significantly in colas, which have declined in CSD volume share from 70.0% in 1991 to 57.4% in 2006 in the United States, according to Beverage Digest. We also do not participate significantly in the bottled water market segment, which we believe is a highly competitive and generally low margin market segment.
 
Broad geographic manufacturing and distribution coverage.   As of December 31, 2007, we had 21 manufacturing facilities and more than 250 distribution centers in the United States, as well as 4 manufacturing facilities and more than 25 distribution centers in Mexico. These facilities use a variety of manufacturing processes. In addition, our warehouses are generally located at or near bottling plants and geographically dispersed across the region to ensure our product is available to meet consumer demand. We actively manage transportation of our products using our own fleet of more than 5,000 delivery trucks, as well as third-party logistics providers on a selected basis. Following our recent bottling acquisitions and manufacturing investments, we now have greater geographic coverage with strategically located manufacturing and distribution capabilities, enabling us to better align our operations with our customers, reduce transportation costs and have greater control over the timing and coordination of new product launches.
 
Strong operating margins and significant, stable cash flows.   The breadth and strength of our brand portfolio have enabled us to generate strong operating margins which, combined with our relatively modest capital expenditures, have delivered significant and stable cash flows. These cash flows create stockholder value by enabling us to consider a variety of alternatives, such as investing in our business, reducing debt and returning capital to our stockholders.
 
Experienced executive management team .  Our executive management team has an average of more than 20 years of experience in the food and beverage industry. The team has broad experience in brand ownership, bottling and distribution, and enjoys strong relationships both within the industry and with major customers. In addition, our management team has diverse skills that support our operating strategies, including driving organic growth through targeted and efficient marketing, reducing operating costs, enhancing distribution efficiencies, aligning manufacturing and bottling and distribution interests and executing strategic acquisitions.


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Our Strategy
 
The key elements of our business strategy are to:
 
Build and enhance leading brands.   We have a well-defined portfolio strategy to allocate our marketing and sales resources. We use an on-going process of market and consumer analysis to identify key brands that we believe have the greatest potential for profitable sales growth. For example, in 2006 and 2007, we continued to enhance the Snapple portfolio by launching brand extensions with functional benefits, such as super premium teas and juice drinks and Snapple Antioxidant Waters. Also, in 2006, we relaunched 7UP with 100% natural flavors and no artificial preservatives, thereby differentiating the 7UP brand from other major lemon-lime CSDs. We intend to continue to invest most heavily in our key brands to drive profitable and sustainable growth by strengthening consumer awareness, developing innovative products and brand extensions to take advantage of evolving consumer trends, improving distribution and increasing promotional effectiveness.
 
Focus on opportunities in high growth and high margin categories.   We are focused on driving growth in our business in selected profitable and emerging categories. These categories include ready-to-drink teas, energy drinks and other functional beverages. For example, we recently launched Snapple super premium teas and juices and Snapple enhanced waters. We also intend to capitalize on opportunities in these categories through brand extensions, new product launches and selective acquisitions of brands and distribution rights. For example, we believe we are well-positioned to enter into new distribution agreements for emerging, high-growth third party brands in new categories that can use our bottling and distribution network. We can provide these new brands with distribution capability and resources to grow, and they provide us with exposure to growing segments of the market with relatively low risk and capital investment.
 
Increase presence in high margin channels and packages.   We are focused on improving our product presence in high margin channels, such as convenience stores, vending machines and small independent retail outlets, through increased selling activity and significant investments in coolers and other cold drink equipment. We intend to significantly increase the number of our branded coolers and other cold drink equipment over the next few years, which we believe will provide an attractive return on investment. We also intend to increase demand for high margin products like single-serve packages for many of our key brands through increased promotional activity and innovation such as the successful introduction of our A&W “vintage” 20 ounce bottle.
 
Leverage our integrated business model.   We believe our integrated brand ownership, bottling and distribution business model provides us opportunities for net sales and profit growth through the alignment of the economic interests of our brand ownership and our bottling and distribution businesses. We intend to leverage our integrated business model to reduce costs by creating greater geographic manufacturing and distribution coverage and to be more flexible and responsive to the changing needs of our large retail customers by coordinating sales, service, distribution, promotions and product launches. For example, we intend to concentrate more of our manufacturing in multi-product, regional manufacturing facilities, including by opening a new plant in Southern California and investing in expanded capabilities in several of our existing facilities within the next several years.
 
Strengthen our route-to-market through acquisitions.   The acquisition and creation of our Bottling Group is part of our longer-term initiative to strengthen the route-to-market for our products. We believe additional acquisitions of regional bottling companies will broaden our geographic coverage in regions where we are currently under-represented, enhance coordination with our large retail customers, more quickly address changing customer demands, accelerate the introduction of new products, improve collaboration around new product innovations and expand our coverage of high margin channels.
 
Improve operating efficiency.   We believe our recently announced restructuring will reduce our selling, general and administrative expenses and improve our operating efficiency. In addition, the integration of recent acquisitions into our Bottling Group has created the opportunity to improve our manufacturing, warehousing and distribution operations. For example, we have been able to create multi-product manufacturing facilities (such as our Irving, Texas facility) which provide a region with a wide variety of our products at reduced transportation and co-packing costs.


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Our Business
 
We operate our business in four segments: Beverage Concentrates, Finished Goods, Bottling Group and Mexico and the Caribbean.
 
Beverage Concentrates
 
Our Beverage Concentrates segment is a brand ownership business. In this segment we manufacture beverage concentrates and syrups in the United States and Canada. Most of the brands in this segment are CSD brands. In 2007, our Beverage Concentrates segment had net sales of $1.3 billion (before elimination of intersegment transactions).
 
In 2007, Dr Pepper, our largest CSD brand, represented approximately one-half of our Beverage Concentrates segment net sales and volume of over half a billion case sales, with each case representing 288 fluid ounces of finished beverage. 7UP, Sunkist, A&W and Canada Dry together represented approximately 30% of our Beverage Concentrates net sales. Other brands in our Beverage Concentrates segment include: Schweppes, RC, Diet Rite, Vernors, Squirt, Sundrop, Welch’s and Country Time and the concentrate forms of Hawaiian Punch and Snapple.
 
We are the industry leader in flavored CSDs with a 36.5% market share in the United States for 2007, as measured by retail sales according to ACNielsen. We are also the third largest CSD brand owner as measured by 2007 retail sales in the United States and Canada and we own a leading brand in most of the CSD categories in which we compete.
 
Almost all of our beverage concentrates are manufactured at our plant in St. Louis, Missouri. The beverage concentrates are shipped to third-party bottlers, as well as to our own Bottling Group, who combine the beverage concentrates with carbonation, water and sweeteners, package it in PET and glass bottles and aluminum cans, and sell it as a finished CSD to retailers. Concentrate prices historically have been reviewed and adjusted on an annual basis.
 
Syrup is shipped to fountain customers, such as fast food restaurants, who mix the syrup with water and carbonation to create a finished beverage at the point of sale to consumers. Dr Pepper represents most of our fountain channel net sales. In 2007, net sales to the fountain channel constituted approximately 37% of our Dr Pepper beverage concentrates and syrup net sales and approximately 18% of our total CSD concentrates and syrup net sales were to the fountain channel.
 
Our Beverage Concentrates brands are sold by our bottlers, including our own Bottling Group, through all major retail channels including supermarkets, fountains, mass merchandisers, club stores, vending machines, convenience stores, gas stations, small groceries, drug chains and dollar stores. Unlike the majority of our other CSD brands, approximately three-fourths of Dr Pepper volumes are distributed through the Coca-Cola affiliated and PepsiCo affiliated bottler systems.
 
Coca-Cola Enterprises and Pepsi Bottling Group each constitute between 10% to 15% of the volume of our Beverage Concentrates segment.
 
We expect that our CSD brands will continue to play a central role in our brand portfolio. We intend to continue to invest in our CSD brands and focus on expanding distribution, increasing our offerings of CSDs packaged for immediate consumption, concentrating on growing demographics such as the Hispanic population and broadening our brands’ consumer base to geographic regions of the United States where we are under-represented. For example, we plan to capitalize on the opportunities that we believe exist for the Dr Pepper brand on the east and west coasts and elsewhere in the Northeast, while continuing to develop increased consumption in the heartland markets (including Texas, Oklahoma, Louisiana and Arkansas) where the brand historically has enjoyed strong consumer appeal. In addition, we plan to continue to grow Diet Dr Pepper through increased fountain availability, consumer trial and selective product innovation.


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Finished Goods
 
Our Finished Goods segment is a brand ownership and a bottling business and, to a lesser extent, a distribution business. In this segment, we primarily manufacture and distribute finished beverages and other products in the United States and Canada. Most of the beverages in this segment are non-CSDs (such as ready-to-drink teas, juice and juice drinks). Although there are sales of Snapple in all of our segments, most of our sales of Snapple are included in the Finished Goods segment. In 2007, our Finished Goods segment had net sales of $1.6 billion (before elimination of intersegment transactions).
 
In 2007, Snapple, our largest brand in our Finished Goods segment, represented approximately 25% of our Finished Goods segment net sales. Mott’s, Hawaiian Punch and Clamato together represented more than 40% of our Finished Goods segment net sales. The other brands in our Finished Goods segment include: Nantucket Nectars, Yoo-Hoo, Orangina, Mistic, Mr and Mrs T, Rose’s, Margaritaville, Stewart’s, Crush and IBC.
 
We are the third largest manufacturer of non-CSDs by retail sales in the U.S. behind Coca-Cola and PepsiCo., according to ACNielsen.
 
Our Finished Goods products are manufactured in several facilities across the United States and are distributed to retailers and their warehouses by our own distribution network or third-party distributors. The raw materials used to manufacture our finished beverages include aluminum cans and ends, glass bottles, PET bottles and caps, HFCS and juices.
 
We sell our Finished Goods brands through all major retail channels, including supermarkets, fountains, mass merchandisers, club stores, vending machines, convenience stores, gas stations, small groceries, drug chains and dollar stores. In 2007, Wal-Mart Stores, Inc., the largest customer of our Finished Goods segment, accounted for approximately 16% of our net sales in this segment.
 
We plan to continue to invest in our non-CSD brands and focus on enhancing our leading non-CSD brands and capitalizing on opportunities in high growth products and high margin product categories. For example, we plan to continue to revitalize the Snapple brand as a complete line of ready-to-drink teas, juices and waters by building on the momentum from the recent launches of super premium teas and investing in a new Snapple functional water offering while continuing to develop our existing premium tea and juice businesses.
 
Bottling Group
 
Our Bottling Group segment is a bottling and distribution business. In this segment, we manufacture and distribute finished beverages, including our brands, third-party owned brands and certain private label beverages in the United States. The Bottling Group’s primary business is manufacturing, bottling, selling and distributing finished beverages using both beverage concentrates purchased from brand owners (including our Beverage Concentrates segment) and finished beverages purchased from brand owners and bottlers (primarily our Finished Goods segment). In addition, a small portion of our Bottling Group net sales come from bottling beverages and other products for private label owners or others for a fee (which we refer to as co-packing). In 2007, our Bottling Group segment had net sales of $3.1 billion (before elimination of intersegment transactions).
 
We are the fourth largest bottler in the United States by net sales.
 
Approximately three-fourths of our 2007 Bottling Group net sales of branded products come from our own brands, such as Snapple, Mistic, Stewart’s, Nantucket Nectars and Yoo-Hoo, with the remaining from the distribution of third-party brands such as Monster energy drink, FIJI mineral water and Big Red soda. Although the majority of our Bottling Group’s net sales relate to our brands, we also provide a route-to-market for many third-party brand owners seeking effective distribution for their new and emerging brands. These brands give us exposure in certain markets to fast growing segments of the beverage industry with minimal capital investment.


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The majority of the Bottling Group’s sales are through direct store delivery supported by a fleet of more than 5,000 trucks and 9,000 employees, including sales representatives, merchandisers, drivers and warehouse workers. Our Bottling Group’s product portfolio is sold within the United States through approximately 200,000 retailer accounts across all major retail channels. In 2007, Wal-Mart Stores, Inc. accounted for approximately 10% of our Bottling Group’s net sales.
 
Our integrated business model provides opportunities for net sales and profit growth through the alignment of the economic interests of our brand ownership and our bottling and distribution businesses. Our strengthened route-to-market following our bottling acquisitions has enabled us to increase the market share of our brands (as measured by volume) in many of those markets served by the bottlers we acquired. We plan to continue to invest in our Bottling Group and focus on strengthening our route-to-market and by creating greater geographic manufacturing and distribution coverage.
 
Mexico and the Caribbean
 
Our Mexico and the Caribbean segment is a brand ownership and a bottling and distribution business. This segment participates mainly in the carbonated mineral water, flavored CSD, bottled water and vegetable juice categories, with particular strength in carbonated mineral water and grapefruit flavored CSDs. In 2007, our Mexico and the Caribbean segment had net sales of $418 million. In 2007, our operations in Mexico represented approximately 90% of the net sales of this segment.
 
We are the #3 CSD company in Mexico (as measured by volume in 2006) behind Coca-Cola and PepsiCo, with a 5.2% market share according to Canadean.
 
In 2007, Peñafiel, Squirt, Clamato and Aguafiel together represented more than 80% of our Mexico and the Caribbean segment’s net sales.
 
In Mexico, we manufacture and distribute our products through our bottling operations and third-party bottlers and distributors. In the Caribbean, we distribute our products through third-party bottlers and distributors. In Mexico, we also participate in a joint venture to manufacture Aguafiel brand water with Acqua Minerale San Benedetto. We provide expertise in the Mexican beverage market and Acqua Minerale San Benedetto provides expertise in water production and new packaging technologies.
 
We sell our finished beverages through all major Mexican retail channels, including the “mom and pop” stores, supermarkets, hypermarkets, and on premise channels.
 
Marketing
 
Our marketing strategy is to grow our brands through continuously providing new solutions to meet consumers’ changing preferences and needs. We identify those preferences and needs and develop innovative solutions to address those opportunities. These solutions include new and reformulated products, improved packaging design, pricing and enhanced availability. We use advertising, media, merchandising, public relations and promotion to provide maximum impact for our brands and messages.
 
Research and Development
 
Our research and development team is focused on developing high quality products and packaging which have broad consumer appeal, can be sold at competitive prices and can be safely and consistently produced across a diverse manufacturing network. Our research and development team engages in activities relating to: product development, microbiology, analytical chemistry, structural packaging design, process engineering, sensory science, nutrition, clinical research and regulatory compliance. We have particular expertise in flavors and sweeteners.
 
Our research and development team is composed of scientists and engineers in the United States and Mexico. We are in the process of relocating our research and development center to our headquarters in Plano, Texas, which


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we expect to be completed in the second quarter of 2008. By having the core research and development capability at our headquarters, we expect to be able to move more rapidly and reliably from prototype to full commercialization.
 
Customers
 
We primarily serve two groups of customers: bottlers and distributors, and retailers.
 
Bottlers buy beverage concentrates from us and, in turn, they manufacture, bottle, sell and distribute finished beverages. Bottlers also manufacture and distribute syrup for the fountain foodservice channel. In addition, bottlers and distributors purchase finished beverages from us and sell them to retail and other customers. We have strong relationships with bottlers affiliated with Coca-Cola and PepsiCo primarily because of the strength and market position of our key Dr Pepper brand.
 
Retailers also buy finished beverages directly from us. Our portfolio of strong brands, operational scale and experience in the beverage industry has enabled us to maintain strong relationships with major retailers in the United States, Canada and Mexico. In 2007, our largest retailer was Wal-Mart Stores, Inc., representing approximately 10% of our net sales.
 
Competition
 
The liquid refreshment beverage industry is highly competitive and continues to evolve in response to changing consumer preferences. Competition is generally based upon brand recognition, taste, quality, price, availability, selection and convenience. We compete with multinational corporations with significant financial resources. Our two largest competitors in the liquid refreshment beverage market are Coca-Cola and PepsiCo, each representing more than 30% of the U.S. liquid refreshment beverage market by volume, according to Beverage Digest. We also compete against other large companies, including Nestlé, S.A. and Kraft Foods, Inc. As a bottler, we compete with bottlers such as Coca-Cola Enterprises, Pepsi Bottling Group and PepsiAmericas and a number of smaller bottlers and distributors. We also compete with a variety of smaller, regional and private label manufacturers, such as Cott Corp. We have lower exposure to some of the faster growing non-carbonated and bottled water segments in the overall liquid refreshment beverage market. As a result, although we have increased our market share in the overall U.S. CSD market, we have lost share in the overall U.S. liquid refreshment beverage market over the past several years. In Canada and Mexico, we compete with many of these same international companies as well as a number of regional competitors.
 
Manufacturing
 
As of December 31, 2007, we operated 25 manufacturing facilities across the United States and Mexico. Almost all of our CSD beverage concentrates are manufactured at a single plant in St. Louis, Missouri. All of our manufacturing facilities are either regional manufacturing facilities, with the capacity and capabilities to manufacture many brands and packages, facilities with particular capabilities that are dedicated to certain brands or products, or smaller bottling plants with a more limited range of packaging capabilities. We intend to build and open a new, multi-product, manufacturing facility in Southern California within the next several years.
 
We employ approximately 5,000 full-time manufacturing employees in our facilities. We have a variety of production capabilities, including hot fill, cold-fill and aseptic bottling processes, and we manufacture beverages in a variety of packaging materials, including aluminum, glass and PET cans and bottles and a variety of package formats, including single-serve and multi-serve packages and “bag-in-box” fountain syrup packaging.
 
In 2007, 88% of our manufactured volumes were related to our brands and 12% to third-party and private-label products. We also use third-party manufacturers to co-pack for us on a limited basis.
 
We own property, plant and equipment, net of accumulated depreciation, totaling $796 million and $681 million in the United States and $72 million and $74 million in international locations as of December 31, 2007 and 2006, respectively.


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Raw Materials
 
The principal raw materials we use in our business are aluminum cans and ends, glass bottles, PET bottles and caps, paperboard packaging, HFCS and other sweeteners, juice, fruit, electricity, fuel and water. The cost of the raw materials can fluctuate substantially. For example, aluminum, glass, PET and HFCS prices increased significantly in 2007 and 2006. In addition, we are significantly impacted by increases in fuel costs due to the large truck fleet we operate in our distribution businesses.
 
Under many of our supply arrangements for these raw materials, the price we pay fluctuates along with certain changes in underlying commodities costs, such as aluminum in the case of cans, natural gas in the case of glass bottles, resin in the case of PET bottles and caps, corn in the case of HFCS and pulp in the case of paperboard packaging. Manufacturing costs for our Finished Goods segment, where we manufacture and bottle finished beverages, are higher (as a percentage of our net sales) than our Beverage Concentrates segment, as the Finished Goods segment requires the purchase of a much larger portion of the packaging and ingredients.
 
Warehousing and Distribution
 
As of December 31, 2007, our warehouse and distribution network consisted of 21 manufacturing facilities and more than 250 distribution centers in the United States, as well as 4 manufacturing facilities and more than 25 distribution centers in Mexico. Our warehousing is generally located at or near bottling plants and is geographically dispersed across the region to ensure product is available to meet consumer demand. We actively manage transportation of our products using our own fleet of more than 5,000 delivery trucks, as well as third-party logistics providers on a selected basis.
 
Information Technology and Transaction Processing Services
 
We use a variety of information technology (“IT”) systems and networks configured to meet our business needs. Historically, IT support has been provided as a corporate service by the Cadbury Schweppes’ IT team and external suppliers. We are forming our own standalone, dedicated IT function to support our business separate from Cadbury Schweppes and are in the process of separating our systems, services and contracts. Our primary IT data center will be hosted in Toronto, Canada by a third-party provider. We also use two primary vendors for application support and maintenance, both of which are based in India and provide resources offshore and onshore.
 
We also use a business process outsourcing provider located in India to provide certain back office transactional processing services, including accounting, order entry and other transactional services.
 
Intellectual Property and Trademarks
 
Our Intellectual Property.   We possess a variety of intellectual property rights that are important to our business. We rely on a combination of trademarks, copyrights, patents and trade secrets to safeguard our proprietary rights, including our brands and ingredient and production formulas for our products.
 
Our Trademarks.   Our trademark portfolio includes more than 2,000 registrations and applications in the United States, Canada, Mexico and other countries. Brands we own through various subsidiaries in various jurisdictions include: Dr Pepper, 7UP, A&W, Canada Dry, RC, Schweppes, Squirt, Crush, Peñafiel, Aguafiel, Snapple, Mott’s, Hawaiian Punch, Clamato, Mistic, Nantucket Nectars, Mr & Mrs T, ReaLemon, Accelerade and Deja Blue. We own trademark registrations for all of these brands in the United States, and we own trademark registrations for some but not all of these brands in Canada and Mexico. We also own a number of smaller regional brands. Some of our other trademark registrations are in countries where we do not currently have any significant level of business. In addition, in many countries outside the United States, Canada and Mexico, our rights in many of our brands, including our Dr Pepper trademark and formula, have been sold to third parties including, in certain cases, to competitors such as Coca-Cola.
 
Trademarks Licensed from Others.   We license various trademarks from third parties, which licenses generally allow us to manufacture and distribute on a country-wide basis. For example, we license from third parties


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the Sunkist, Welch’s, Country Time, Orangina, Stewart’s, Holland House and Margaritaville trademarks, and we license from Cadbury Schweppes the Rose’s trademark. Although these licenses vary in length and other terms, they generally are long-term, cover the entire United States and include a royalty payment to the licensor.
 
Licensed Distribution Rights.   We have rights in certain territories to bottle and/or distribute various brands we do not own, such as Monster energy drink, FIJI mineral water and Big Red soda. Some of these arrangements are relatively shorter in term, are limited in geographic scope and the licensor may be able to terminate the agreement upon an agreed period of notice, in some cases without payment to us.
 
Intellectual Property We License to Others.   We license some of our intellectual property, including trademarks, to others. For example, we license the Dr Pepper trademark to certain companies for use in connection with food, confectionery and other products. We also license certain brands, such as Dr Pepper and Snapple, to third parties for use in beverages in certain countries where we own the brand but do not otherwise operate our business.
 
Cadbury Schweppes Name.   We have agreed to remove “Cadbury” from the names of our companies after our separation from Cadbury Schweppes. Cadbury Schweppes can continue to use the “Schweppes” name as part of its companies’ names outside of the United States, Canada and Mexico (and for a transitional period, inside of the United States, Canada and Mexico).
 
Bottler and Distributor Agreements
 
In the United States and Canada, we generally grant perpetual, exclusive license agreements for CSD brands and packages to bottlers for specific geographic areas. These agreements prohibit bottlers from selling the licensed products outside their exclusive territory and selling any imitative products in that territory. Generally, we may terminate bottling agreements only for cause and the bottler may terminate without cause upon giving certain specified notice and complying with other applicable conditions. Fountain agreements for bottlers generally are not exclusive for a territory, but do restrict bottlers from carrying imitative product in the territory. Many of our brands such as Snapple, Mistic, Stewart’s, Nantucket Nectars, Yoo-Hoo and Orangina, are licensed for distribution in various territories to bottlers and a number of smaller distributors such as beer wholesalers, wine and spirit distributors, independent distributors and retail brokers. We may terminate some of these distribution agreements only for cause and the distributor may terminate without cause upon certain notice and other conditions. Either party may terminate some of the other distribution agreements without cause upon giving certain specified notice and complying with other applicable conditions.
 
Real Property
 
United States.   Our United States principal offices are located in Plano, Texas, in a facility that we own. We also have a leased office in Rye Brook, New York. Our research and development center is currently located in a leased facility in Trumbull, Connecticut, but we are relocating it to Plano in 2008. As of December 31, 2007, we owned or leased 21 manufacturing facilities across the United States (we closed our Waterloo, New York facility in March 2008). Our largest manufacturing facilities are in St. Louis, Missouri; Northlake, Illinois; Irving, Texas; Ottumwa, Iowa; Houston, Texas; Williamson, New York; Carteret, New Jersey; Carlstadt, New Jersey and Aspers, Pennsylvania. We also operate more than 250 distribution centers across the United States.
 
Canada.   Our last plant in Canada, St. Catharines, was closed in 2007. Beverage concentrates sold to bottlers and finished beverages sold to retailers and distributors are supplied principally from our U.S. locations.
 
Mexico.   Our Mexico and Caribbean operations’ principal office is leased in Mexico City. In Mexico, as of December 31, 2007, we owned three manufacturing facilities, one joint venture manufacturing facility and 27 direct distribution centers, 6 of which are owned and 21 of which are leased.
 
We believe our facilities in the United States and Mexico are well-maintained and adequate for our present operations. We periodically review our space requirements, and we believe we will be able to acquire new space and


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facilities as and when needed on reasonable terms. We also look to consolidate and dispose or sublet facilities we no longer need, as and when appropriate.
 
Employees
 
At December 31, 2007, we employed approximately 20,000 full-time employees, including seasonal workers.
 
In the United States, we have approximately 17,000 full-time employees. We have many union collective bargaining agreements covering approximately 5,000 full-time employees. Several agreements cover multiple locations. These agreements often address working conditions as well as wage rates and benefits. In Mexico and the Caribbean, we employ approximately 3,000 full-time employees and are also party to collective bargaining agreements. We do not have a significant number of employees in Canada.
 
We believe we have good relations with our employees.
 
Regulatory Matters
 
We are subject to a variety of federal, state and local laws and regulations in the countries in which we do business. Regulations apply to many aspects of our business including our products and their ingredients, manufacturing, safety, labeling, transportation, recycling, advertising and sale. For example, our products, and their manufacturing, labeling, marketing and sale in the United States are subject to various aspects of the Federal Food, Drug, and Cosmetic Act, the Federal Trade Commission Act, the Lanham Act, state consumer protection laws and state warning and labeling laws. In Canada and Mexico, the manufacture, distribution, marketing and sale of our many products are also subject to similar statutes and regulations.
 
We and our bottlers use various refillable and non-refillable, recyclable bottles and cans in the United States and other countries. Various states and other authorities require deposits, eco-taxes or fees on certain containers. Similar legislation or regulations may be proposed in the future at local, state and federal levels, both in the United States and elsewhere. In Mexico, the government has encouraged the soft drinks industry to comply voluntarily with collection and recycling programs of plastic material, and we have taken steps to comply with these programs.
 
Environmental, Health and Safety Matters
 
We operate many manufacturing, bottling and distribution facilities. In these and other aspects of our business, we are subject to a variety of federal, state and local environment, health and safety laws and regulations. We maintain environmental, health and safety policies and a quality, environmental, health and safety program designed to ensure compliance with applicable laws and regulations.
 
Legal Matters
 
We are occasionally subject to litigation or other legal proceedings relating to our business. Set forth below is a description of our significant pending legal matters. Although the estimated range of loss, if any, for the pending legal matters described below cannot be estimated at this time, we do not believe that the outcome of any of these, or any other, pending legal matters, individually or collectively, will have a material adverse effect on our business or financial condition although such matters may have a material adverse effect on our results of operations in a particular period.
 
Snapple Distributor Litigation
 
In 2004, one of our subsidiaries, Snapple Beverage Corp. and several affiliated entities of Snapple Beverage Corp., including Snapple Distributors, Inc., were sued in United States District Court, Southern District of New York, by 57 area route distributors for alleged price discrimination, breach of contract, retaliation, tortious interference and breach of the implied duty of good faith and fair dealing arising out of their respective area route distributor agreements. Each plaintiff sought damages in excess of $225 million. The plaintiffs initially filed the case as a class action but withdrew their class certification motion. They are proceeding as individual plaintiffs


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but the cases have been consolidated for discovery and procedural purposes. On September 14, 2007, the court granted our motion for summary judgment, dismissing the plaintiffs’ federal claims of price discrimination and dismissing, without prejudice, the plaintiffs’ remaining claims under state law. The plaintiffs have filed an appeal of the decision and may decide to re-file the state law claims in state court. We believe we have meritorious defenses with respect to the appeal and will defend ourselves vigorously. However, there is no assurance that the outcome of the appeal, or any trial, if claims are refiled, will be in our favor.
 
Holk & Weiner Snapple Litigation
 
In 2007, Snapple Beverage Corp. was sued by Stacy Holk, in New Jersey Superior Court, Monmouth County, and by Hernant Mehta in the U.S. District Court, Southern District of New York. The plaintiffs filed these cases as class actions. The plaintiffs allege that Snapple’s labeling of certain of its drinks is misleading and/or deceptive. The plaintiffs seek unspecified damages on behalf of the class, including enjoining Snapple from various labeling practices, disgorging profits, reimbursing of monies paid for product and treble damages. The Mehta case in New York has since been dropped by the plaintiff. However, the attorneys in the Holk, New Jersey case and a new plaintiff, Evan Weiner, have since filed a new action in New York substantially similar to the New Jersey action. In each case, we have filed motions to dismiss the plaintiffs’ claims on a variety of grounds. We believe we have meritorious defenses to the claims asserted and will defend ourselves vigorously. However, there is no assurance that the outcome of our motions or at trial will be in our favor.
 
Nicolas Steele v. Seven Up/RC Bottling Company Inc.
Robert Jones v. Seven Up/RC Bottling Company of Southern California, Inc.
California Wage Audit
 
In 2007, one of our subsidiaries, Seven Up/RC Bottling Company Inc., was sued by Nicolas Steele, and in a separate action, by Robert Jones, in each case in Superior Court in the State of California (Orange County), alleging that our subsidiary failed to provide meal and rest periods and itemized wage statements in accordance with applicable California wage and hour law. The cases have been filed as class actions. The classes, which have not yet been certified, consist of all employees of one of our subsidiaries who have held a merchandiser or delivery driver position in southern California in the past three years. On behalf of the classes, the plaintiffs claim lost wages, waiting time penalties and other penalties for each violation of the statute. We believe we have meritorious defenses to the claims asserted and will defend ourselves vigorously. However, there is no assurance that the outcome of this matter will be in our favor.
 
We have been requested to conduct an audit of our meal and rest periods for all non-exempt employees in California at the direction of the California Department of Labor. At this time, we have declined to conduct such an audit until there is judicial clarification of the intent of the statute. We cannot predict the outcome of such an audit.
 
Corporate Information
 
We were incorporated in Delaware on October 24, 2007. The address of our principal executive offices is 5301 Legacy Drive, Plano, Texas 75024. Our telephone number is (972) 673-7000. We were formed for the purpose of holding Cadbury Schweppes’ Americas Beverages business in connection with the separation and distribution described herein and will have no operations prior to the separation and distribution.


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OUR RELATIONSHIP WITH CADBURY PLC AFTER THE DISTRIBUTION
 
Description of Various Separation and Transition Arrangements
 
Separation Agreement
 
We intend to enter into a separation and distribution agreement (the “separation agreement”) with Cadbury Schweppes before the distribution of our shares of common stock to Cadbury Schweppes shareholders. The separation agreement will set forth our agreements with Cadbury Schweppes regarding the principal transactions necessary to effect the separation and distribution. It will also set forth other agreements (the “ancillary agreements”) that govern certain aspects of our relationship with Cadbury plc after completion of the separation.
 
Transfer of Assets and Assumption of Liabilities.   The separation agreement will identify assets to be retained, transferred, liabilities to be assumed and contracts to be assigned to each of us and Cadbury Schweppes as part of our separation and will describe when and how these transfers, assumptions and assignments will occur. In particular, the separation agreement will provide that, subject to the terms and conditions contained in the separation agreement:
 
  •  all assets to the extent related to our business (including the stock of subsidiaries, real property and intellectual property) will be retained by or transferred to us, subject to any licenses between the parties;
 
  •  all assets to the extent related to Cadbury Schweppes’ global confectionery business and its other beverages business (located principally in Australia) (including stock of subsidiaries, real property and intellectual property) will be retained by or transferred to Cadbury Schweppes, subject to any licenses between the parties;
 
  •  liabilities will be allocated to, and assumed by, us to the extent they are related to our business;
 
  •  liabilities will be allocated to, and assumed by, Cadbury Schweppes to the extent they are related to its global confectionery business and its other beverages business (located principally in Australia);
 
  •  each party or one of its subsidiaries will assume or retain any liabilities relating to any of its or its subsidiaries’ or controlled affiliates’ debt, regardless of the issuer of such debt, to the extent relating to its business or secured exclusively by its assets;
 
  •  except as may be set forth in or contemplated by the separation agreement or any ancillary agreement, the one-time transaction costs and expenses incurred on or prior to the separation will be borne by Cadbury Schweppes and after the separation will be borne by the party incurring such costs; and
 
  •  other liabilities will be allocated to either Cadbury Schweppes or us as set forth in the separation agreement.
 
Except as may expressly be set forth in the separation agreement or any ancillary agreement, all assets will be transferred on an “as is,” “where is” basis and the respective transferees will bear the economic and legal risks associated with the use of such respective assets both prior to and following the separation.
 
Certain of the liabilities and obligations to be assumed by one party or for which one party will have an indemnification obligation under the separation agreement and the other agreements relating to the separation are, and following the separation may continue to be, the legal or contractual liabilities or obligations of another party. Each such party that continues to be subject to such legal or contractual liability or obligation will rely on the applicable party that assumed the liability or obligation or the applicable party that undertook an indemnification obligation with respect to the liability or obligation, as applicable, under the separation agreement, to satisfy the performance and payment obligations or indemnification obligations with respect to such legal or contractual liability or obligation.


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To the extent that any transfers contemplated by the separation agreement have not been consummated on or prior to the distribution date, the parties will agree to cooperate to effect such transfers as promptly as practicable. In addition, each of the parties will agree to cooperate with each other and use commercially reasonable efforts to take or to cause to be taken all actions, and to do, or to cause to be done, all things reasonably necessary under applicable law or contractual obligations to consummate and make effective the transactions contemplated by the separation agreement and the ancillary agreements.
 
Related Party Balances.   The separation agreement provides for the settlement and capitalization of our related party debt and other balances. We currently expect to borrow an aggregate of $3.9 billion under the new credit facilities in connection with the separation. These borrowings, together with cash on hand, will be used to settle the foregoing related party debt and other balances, reduce Cadbury Schweppes’ net investment in us, purchase certain assets from Cadbury Schweppes related to our business, pay $100 million of fees and expenses related to the new credit facilities and provide us with $100 million of cash on hand immediately after the separation. Any related party debt and other balances that are not settled with the proceeds from our new credit facilities and our cash on hand will be capitalized by Cadbury Schweppes.
 
Releases and Indemnification.   Except as otherwise provided in the separation agreement or any ancillary agreement, each party will release and forever discharge each other party and its affiliates and any person who was at any time prior to the distribution date a shareholder, director, officer, agent or employee of a member of the other party or one of its affiliates from all obligations and liabilities existing or arising from any acts or events occurring or failing to occur or alleged to have occurred or to have failed to occur or any conditions existing or alleged to have existed on or before the separation. The releases will not extend to, among other things, obligations or liabilities under any agreements between the parties that remain in effect following the separation pursuant to the separation agreement or any ancillary agreement, liabilities specifically retained or assumed by or transferred to a party pursuant to the separation agreement or any ancillary agreement or to ordinary course trade payables and receivables.
 
In addition, the separation agreement will provide for cross-indemnities principally designed to place financial responsibility for the obligations and liabilities of our business with us and financial responsibility for the obligations and liabilities of the global confectionery business and its other beverages business (located principally in Australia) with Cadbury Schweppes. Specifically, each party will, and will cause its affiliates to, indemnify, defend and hold harmless the other party and its affiliates and each of their respective officers, directors, employees and agents for any losses arising out of or otherwise in connection with:
 
  •  the liabilities each such party assumed or retained pursuant to the separation agreement;
 
  •  any breach by such party of any shared contract between the companies;
 
  •  any liability for a misstatement or omission or alleged misstatement or omission of a material fact made after the distribution date contained in a document filed with the SEC or the U.K. Financial Services Authority by the other party after the distribution date based upon information that is furnished in writing by such party for inclusion in a filing by the other party; and
 
  •  any breach by such party of the separation agreement, the ancillary agreements or any agreements between the parties specifically contemplated by the separation agreement or any ancillary agreement to remain in effect following the separation.
 
Legal Matters.   In general, each party to the separation agreement will assume liability for all pending and threatened legal matters related to its own business or assumed or retained liabilities and will indemnify the other parties for any liability to the extent arising out of or resulting from such assumed legal matters. Each party will cooperate in defending any claims against the other for events that took place prior to, on or after the date of the separation of us from Cadbury plc.


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Non-Solicitation of Employees.   During the 18-month period following the distribution date, neither party will solicit for employment any of the employees of the other party, provided that this provision shall not prevent either party from advertising in publications of general circulation or soliciting or hiring any employees who were terminated by the other party.
 
Intellectual Property Licenses.   We currently use the Cadbury trademark, including variations and acronyms thereof (the “Cadbury Marks”). In addition, Cadbury Schweppes and its affiliates currently use various marks that we own or hold for use or will own or hold for use following the separation (the “DPS Marks”). Under the separation agreement, we and Cadbury Schweppes and its affiliates will, among other things, have a royalty-free license of limited scope to continue to use the Cadbury Marks or the DPS Marks, as applicable, for up to fifteen (15) months in connection with its ongoing business. The separation agreement also will include licenses of certain copyrights and design rights from us to Cadbury Schweppes and its affiliates, and from Cadbury Schweppes to us.
 
Insurance.   The separation agreement will provide for the rights of the parties to report claims under existing insurance policies for occurrences prior to the separation and set forth procedures for the administration of insured claims. In addition, the separation agreement will allocate among the parties the right to insurance policy proceeds based on reported claims and the obligations to incur deductibles under certain insurance policies.
 
Other Matters.   Other matters governed by the separation agreement include, among others, access to financial and other records and information, intellectual property, legal privilege, confidentiality and resolution of disputes between the parties relating to the separation agreement and the ancillary agreements and the agreements and transactions contemplated thereby.
 
Transition Services Agreement
 
We will enter into a transition services agreement with Cadbury Schweppes pursuant to which each party will provide certain specified services to the other on an interim basis for terms ranging generally from one month to one year following the separation. The specified services include services in the following: human resources, finance and accounting, intellectual property, information technology and certain other services consistent with past practices. The services will be paid for by the receiving party at a charge equal to the cost of the providing party as calculated in the transition services agreement.
 
Tax-Sharing and Indemnification Agreement
 
We will enter into a tax-sharing and indemnification agreement with Cadbury Schweppes that sets forth the rights and obligations of Cadbury Schweppes and us (along with our respective subsidiaries) with respect to taxes, including the computation and apportionment of tax liabilities relating to taxable periods before and after the separation and distribution and the responsibility for payment of those tax liabilities (including any subsequent adjustments to such tax liabilities). In general, under the terms of the tax-sharing and indemnification agreement, we and Cadbury Schweppes will each be responsible for taxes imposed on our respective businesses and subsidiaries for all taxable periods, whether ending on, before or after the date of separation and distribution. However, we will be responsible for taxes attributable to certain assets of the Cadbury Schweppes global confectionery business while owned by us and Cadbury Schweppes will be responsible for taxes attributable to certain assets of the Americas Beverages business while owned by Cadbury Schweppes.
 
In addition, we and Cadbury Schweppes have undertaken certain restructuring transactions in anticipation of the separation and distribution (including transfers of confectionery business assets by us to Cadbury Schweppes) and we have participated in various other transactions with Cadbury Schweppes in taxable periods prior to the separation and distribution. Cadbury Schweppes will, subject to certain conditions, and absent a change-in-control of us as described below, pay or indemnify us for taxes imposed on us in respect of these transactions including taxes resulting from either (i) a change in applicable tax law after the separation and distribution and prior to the filing of the relevant tax return, or (ii) a subsequent adjustment by a taxing authority. These potential tax indemnification obligations of Cadbury Schweppes could be for significant amounts.


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Notwithstanding these tax indemnification obligations of Cadbury Schweppes, if the treatment of these transactions as reported were successfully challenged by a taxing authority, we generally would be required under applicable tax law to pay the resulting tax liabilities in the event that either (i) Cadbury Schweppes were to default on their obligations to us, or (ii) we breached a covenant or we failed to file tax returns, cooperate or contest tax matters as required by the tax-sharing and indemnification agreement, which breach or failure caused such tax liabilities. In addition, if we are involved in certain change-in-control transactions, the obligations of Cadbury Schweppes to indemnify us for additional taxes in respect of the restructuring and other transactions will terminate and Cadbury Schweppes will have no further obligations to indemnify us on account of such transactions. Thus, since we have primary liability for income taxes in respect of these transactions, if a taxing authority successfully challenges the treatment of one or more of these transactions, and Cadbury Schweppes fails to, is not required to or cannot indemnify or reimburse us, our resulting tax liability could be for significant amounts and could have a material adverse effect on our results of operations, cash flows and financial condition.
 
We generally will be required to indemnify Cadbury Schweppes for any liabilities, taxes and other charges that are imposed on Cadbury Schweppes, including as a result of the separation and distribution failing to qualify for non-recognition treatment for U.S. federal income tax purposes, if such liabilities, taxes or other charges are attributable to a breach by us of our representations or covenants. The covenants contained in the tax-sharing and indemnification agreement, for example, generally contain restrictions on our ability to (a) discontinue the active conduct of the historic business relied upon for purposes of the private letter ruling request submitted to the IRS, or liquidate, merge or consolidate the company conducting such active business, (b) undertake certain transactions pursuant to which our stockholders would dispose of a substantial amount of our common stock, or (c) take any action inconsistent with the written statements and representations furnished to the IRS in connection with the private letter ruling request. Notwithstanding the foregoing, we will be permitted to take actions restricted by such covenants if Cadbury Schweppes provides us with prior written consent, or we provide Cadbury Schweppes with a private letter ruling or rulings from the IRS, or an unqualified opinion of counsel that is satisfactory to Cadbury Schweppes, to the effect that such action will not affect the tax-free nature of the separation and distribution or certain restructuring transactions, but we will remain liable for any liabilities, taxes and other charges imposed on Cadbury Schweppes as a result of the separation and distribution or such restructuring transactions failing to qualify as tax-free transactions as a result of such action. Our potential tax indemnification obligations could be for significant amounts.
 
Furthermore, the tax-sharing and indemnification agreement will set forth the rights of the parties in respect of the preparation and filing of tax returns, the control of audits or other tax proceedings and assistance and cooperation in respect of tax matters, in each case, for taxable periods ending on or before or that otherwise include the date of separation and distribution. In addition, with respect to taxable periods before or that include the separation and distribution, Cadbury Schweppes will have significant control over the reporting of various restructuring transactions on our tax returns and over proceedings where Cadbury Schweppes is indemnifying us for taxes that are involved in such proceedings.
 
Employee Matters Agreement
 
We will enter into an employee matters agreement with Cadbury Schweppes providing for our respective obligations to our employees and former employees and for other employment and employee benefits matters. Under the terms of the employee matters agreement, we will generally assume all liabilities and assets relating to employee benefits for our current and former employees, and Cadbury Schweppes will generally retain all liabilities and assets relating to employee benefits for current and former Cadbury Schweppes employees other than current or former beverages employees.
 
On or prior to the date of separation, sponsorship of the Cadbury Schweppes benefit plans that solely cover our current and former employees will be transferred to us, and the Cadbury Schweppes benefit plans that cover our current and former employees and also cover current and former Cadbury Schweppes employees will be split into two separate plans, one covering Cadbury Schweppes employees and one covering our employees. Sponsorship of the plans covering our employees will be transferred to us.


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For transferred plans that are funded, assets allocable to the liabilities of such plans also will be transferred to related trusts established by us. As of the date of separation, current and former employees of us and Cadbury Schweppes will receive credit for service for all periods of employment prior to the date of separation for purposes of vesting, eligibility and benefit levels under any pension or welfare plan in which they participate following the separation. The employee matters agreement also provides for sharing of certain employee and former employee information to enable us and Cadbury Schweppes to comply with our respective obligations.
 
In addition, the employee matters agreement provides for the treatment of holders of awards granted under the Cadbury Schweppes employee share schemes who are current and former employees of our company at the time of separation.
 
Share Options.   Outstanding share options held by our employees under the Cadbury Schweppes share option schemes will, if not exercised at or before the time that the Cadbury Schweppes scheme of arrangement is sanctioned by the United Kingdom regulatory authorities, be converted into options over Cadbury plc ordinary shares with an equivalent value and the replacement options will be subject to the same terms and conditions as the existing options under the applicable Cadbury Schweppes share option scheme. Depending on the applicable Cadbury Schweppes share option scheme, the options over Cadbury plc ordinary shares must be exercised either within 12 months of the separation (or, if later, the third anniversary of the original grant of the options) or 3 months after the separation in the case of the Cadbury Schweppes employee share purchase plan (to the extent of the accumulated savings) or the replacement option will be cancelled without payment.
 
Restricted Stock.   Restricted stock granted to our employees under the Cadbury Schweppes international share award plan will be converted into Cadbury plc ordinary shares and shares of our common stock (in the same manner as other Cadbury Schweppes shareholders) and will be released in full as soon as practicable after the separation.
 
Restricted Stock Units.   Performance awards granted to our employees under the Cadbury Schweppes long term incentive plan, the Cadbury Schweppes bonus share retention plan and the Cadbury Schweppes international share award plan will have their performance measures tested at the time of separation, time pro-rated (based on service through the date of separation) and converted into an award over shares of our common stock with an equivalent value. The converted performance awards will be subject to the same terms and conditions as the existing awards and will be paid out at the end of the applicable normal performance period or at the normal vesting date.
 
Awards to our employees under the Cadbury Schweppes bonus share retention plan that are not subject to performance vesting but are subject to time vesting will be time pro-rated (based on service through the date of separation) and converted into an award over shares of our common stock with an equivalent value. The converted performance awards will be subject to the same terms and conditions as the existing awards and will be paid out at the normal vesting date. Awards under the Cadbury Schweppes bonus share retention plan and the Cadbury Schweppes international share award plan that are neither performance related nor subject to time vesting will be converted into awards over shares of our common stock with an equivalent value. The converted awards will be subject to the same terms and conditions as the existing awards and will be paid out at the normal vesting date.
 
Awards granted to our employees under the Cadbury Schweppes long term incentive plan which are not performance related will be converted into awards over Cadbury plc ordinary shares of an equivalent value and subject to the same terms and conditions as the existing awards. The shares will be released in full as soon as practicable after the separation.
 
Intellectual Property Agreements
 
Various agreements are in effect between us and Cadbury Schweppes relating to the use of certain trademarks, patents and other intellectual property. These include agreements relating to the use and protection of intellectual property where the intellectual property is separately owned by us, Cadbury Schweppes and certain third parties in different countries, as is the case with Dr Pepper and certain other brands. These also include licenses from Cadbury Schweppes to us for the use of the Rose’s trademark and certain technology in our business, and licenses from us to


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Cadbury Schweppes for the use of the Canada Dry trademark with Cadbury Schweppes’ Halls product in the U.S. and the Snapple, Mott’s, Clamato and Holland House trademarks in Cadbury Schweppes’ beverage business located principally in Australia.
 
Debt and Payables
 
The following are descriptions of current related party debt arrangements. All of the following debt will be settled in connection with the separation.
 
Cadbury Ireland Limited.   The total principal we owed to Cadbury Ireland Limited was $40 million at December 31, 2007 and 2006, respectively. The debt bears interest at a floating rate based on 3-month LIBOR. The interest rates were 5.31% and 5.36% at December 31, 2007 and 2006, respectively. The outstanding principal balance is payable on demand and is included in the current portion of long-term debt. We recorded $2 million, $2 million and $1 million of interest expense related to the debt for 2007, 2006 and 2005, respectively.
 
Cadbury Schweppes Finance plc.   We have a variety of debt agreements with Cadbury Schweppes Finance plc with maturity dates ranging from May 2008 to May 2011. These agreements had a combined outstanding principal balance of $511 million and $2,937 million at December 31, 2007 and 2006, respectively. At December 31, 2007 and 2006, $511 million and $2,387 million of the debt was based upon a floating rate ranging between LIBOR plus 1.5% to LIBOR plus 2.5%. The remaining principal balance of $550 million at December 31, 2006 had stated fixed interest rates ranging from 5.76% to 5.95%. We recorded $65 million, $175 million and $99 million of interest expense related to these notes for 2007, 2006 and 2005, respectively.
 
Cadbury Schweppes Overseas Limited.   The total principal we owed to Cadbury Schweppes Overseas Limited was $0 million and $22 million at December 31, 2007 and 2006, respectively. We settled the note in November 2007. The debt bore interest at a floating rate based on Mexican LIBOR plus 1.5%. The actual interest rate was 9.89% at December 31, 2006. We recorded $2 million, $15 million and $40 million of interest expense related to the note for 2007, 2006 and 2005, respectively.
 
Cadbury Adams Canada, Inc.   The total principal we owed to Cadbury Adams Canada, Inc. was $0 million and $15 million at December 31, 2007 and 2006, respectively and is payable on demand. The debt bore interest at a floating rate based on 1 month Canadian LIBOR. The interest rate was 4.26% at December 31, 2006. We recorded $2 million of interest expense related to the debt for 2007 and less than $1 million for both 2006 and 2005.
 
Cadbury Schweppes Americas Holding BV.   We have a variety of debt agreements with Cadbury Schweppes Americas Holding BV with maturity dates ranging from 2009 to 2017. These agreements had a combined outstanding principal balance of $2,468 million at December 31, 2007 and bear interest at a floating interest rate ranging between 6-month USD LIBOR plus 0.75% and 6-month USD LIBOR plus 1.75%. We recorded $149 million of interest expense related to this debt for 2007.
 
Cadbury Schweppes Treasury America.   The total principal we owed to Cadbury Schweppes Treasury America was $0 million and $235 million at December 31, 2007 and 2006, respectively. The debt bore interest at a rate of 7.25% per annum. We repurchased the debt on May 23, 2007. We recorded $7 million and $11 million of interest expense related to this debt for 2007 and 2006, respectively.
 
The related party payable balances of $175 million and $183 million at December 31, 2007 and 2006, respectively, represent non-interest bearing payable balances with companies owned by Cadbury Schweppes and related party accrued interest payable balances associated with interest bearing notes described in note 10 to our combined financial statements. The non-interest bearing payable balance was $75 million and $158 million at December 31, 2007 and 2006, respectively, and the payables are due within one year. The accrued interest payable balance was $11 million and $25 million at December 31, 2007 and 2006, respectively. The intercompany current payable was $89 million as of December 31, 2007. All of the related party payable will be settled in connection with the separation.


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Notes Receivable
 
We had a notes receivable balance from wholly owned subsidiaries of Cadbury Schweppes with outstanding principal balances of $1,527 million and $579 million at December 31, 2007 and 2006, respectively. We recorded $57 million, $25 million and $36 million of interest income related to these notes for 2007, 2006 and 2005, respectively.
 
Allocated Expenses
 
Cadbury Schweppes has allocated certain costs to us, including costs in respect of certain corporate functions provided for us by Cadbury Schweppes. These allocations have been based on the most relevant allocation method for the service provided. To the extent expenses have been paid by Cadbury Schweppes on our behalf, they have been allocated based upon the direct costs incurred. Where specific identification of expenses has not been practicable, the costs of such services has been allocated based upon the most relevant allocation method that management believes is reasonable, which is primarily either as a percentage of net sales or headcount. We were allocated $161 million, $142 million and $115 million of costs in 2007, 2006 and 2005, respectively.
 
Cash Management
 
Cadbury Schweppes historically has used a centralized approach to cash management and financing of operations. As part of this approach, our cash is available for use by, and is regularly swept by, Cadbury Schweppes’ operations in the United States at its discretion. Cadbury Schweppes also funds our operating and investing activities as needed. Transfers of cash, both to and from Cadbury Schweppes’ cash management system, are reflected as a component of “Cadbury Schweppes’ net investment” in our combined balance sheets.
 
Royalties
 
We earn royalties from other Cadbury Schweppes-owned companies for the use of certain brands owned by us. The total royalties we recorded were $1 million, $1 million and $9 million for 2007, 2006 and 2005, respectively.


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MANAGEMENT
 
Executive Officers and Directors
 
Set forth below is information concerning the individuals we currently expect will serve as our executive officers and directors upon the separation.
 
             
Name
 
Age*
 
Position
 
Wayne R. Sanders
    60     Chairman
Larry D. Young
    53     President, Chief Executive Officer and Director
John O. Stewart
    49     Executive Vice President, Chief Financial Officer and Director
James L. Baldwin, Jr.
    46     Executive Vice President and General Counsel
Rodger L. Collins
    49     President — Bottling Group Sales
Randall E. Gier
    46     Executive Vice President — Marketing and R&D
Pedro Herrán Gacha
    46     President — Mexico and the Caribbean
Derry L. Hobson
    57     Executive Vice President — Supply Chain
James J. Johnston, Jr.
    51     President — Finished Goods and Concentrate Sales
Lawrence N. Solomon
    52     Executive Vice President — Human Resources
Terence D. Martin
    64     Director
Pamela H. Patsley
    50     Director
Jack L. Stahl
    54     Director
M. Anne Szostak
    57     Director
 
 
As of December 31, 2007
 
Wayne R. Sanders, Chairman.   Mr. Sanders will serve as Chairman of the Board of Directors and chairman of the nominating and corporate governance committee upon the separation. Mr. Sanders served as the Chairman and the Chief Executive Officer of Kimberly-Clark Corporation from 1992 until his retirement in 2003. Mr. Sanders currently serves on the boards of directors of Texas Instruments Incorporated and Belo Corp. He previously served on the board of directors of Adolph Coors Company. Mr. Sanders is also a National Trustee and Governor of the Boys & Girls Club of America and was a member of the Marquette University Board of Trustees from 1992 to 2007, serving as Chairman from 2001 to 2003.
 
Larry D. Young, President, Chief Executive Officer and Director.   Mr. Young has served as President and Chief Executive Officer of Cadbury Schweppes’ Americas Beverages business since October 2007. Mr. Young joined Cadbury Schweppes’ Americas Beverages as President and Chief Operating Officer of the Bottling Group segment and Head of Supply Chain in 2006 after our acquisition of DPSUBG, where he had been President and Chief Executive Officer since May 2005. From 1997 to 2005, Mr. Young served as President and Chief Operating Officer of Pepsi-Cola General Bottlers, Inc. and Executive Vice President of Corporate Affairs at PepsiAmericas, Inc.
 
John O. Stewart, Executive Vice President, Chief Financial Officer and Director.   Mr. Stewart has served as Executive Vice President and Chief Financial Officer of Cadbury Schweppes’ Americas Beverages business since November 2006. From 1990 to 2004, Mr. Stewart worked for Diageo PLC and its subsidiaries, serving as Senior Vice President and Chief Financial Officer of Diageo North America from 2001 to 2004. From 2004 to 2005, Mr. Stewart was an independent consultant, providing mergers and acquisitions advice to Diageo PLC.
 
James L. Baldwin, Jr., Executive Vice President and General Counsel.   Mr. Baldwin has served as Executive Vice President and General Counsel of Cadbury Schweppes’ Americas Beverages business since July 2003. From


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June 2002 to July 2003, he served as Senior Vice President and General Counsel of Dr Pepper/Seven Up, Inc., and from August 1998 to June 2002 as General Counsel of Mott’s LLP.
 
Rodger L. Collins, President — Bottling Group Sales.   Mr. Collins has served as President of Sales for the Bottling Group segment of Cadbury Schweppes’ Americas Beverages business since October 2007. He had previously served as Midwest Division President for the Bottling Group since January 2005. He also was Regional Vice President (North/East) at DPSUBG from October 2001 to December 2004.
 
Randall E. Gier, Executive Vice President — Marketing and R&D.   Mr. Gier has served as Executive Vice President of Marketing and R&D of Cadbury Schweppes’ Americas Beverages business since February 2004. From 2002 to 2004, he was the Chief Marketing Officer for Yum! Brands International. From 1997 to 2002, Mr. Gier was Chief Marketing Officer for Pizza Hut Inc., and from 1996 to 1997 was Chief Marketing Officer for KFC.
 
Pedro Herrán Gacha, President — Mexico and the Caribbean.   Mr. Herrán has served as President of the Mexico and the Caribbean segment of Cadbury Schweppes’ Americas Beverages business since March 2004. Prior to that, he was President of Cadbury Schweppes Beverages Mexico, a position he had held since January 2000.
 
Derry L. Hobson, Executive Vice President — Supply Chain.   Mr. Hobson has served as Executive Vice President of Supply Chain for Cadbury Schweppes’ Americas Beverages business since October 2007. Mr. Hobson joined the business as Senior Vice President of Manufacturing in 2006 through our acquisition of DPSUBG where he had been Executive Vice President since 1999. Prior to joining our Bottling Group, Mr. Hobson was President and Chief Executive Officer of Sequoia Pacific Systems from 1993 to 1999. From 1988 to 1993, Mr Hobson was Senior Vice President of Operations at Perrier Group.
 
James J. Johnston, Jr., President — Finished Goods and Concentrate Sales.   Mr. Johnston has served as President of Finished Goods and Concentrate Sales for Cadbury Schweppes’ Americas Beverages business since October 2007. Prior to that, he was Executive Vice President of Sales, a position he had held since January 2005. From December 2003 to January 2005, he was first Senior Vice President, then Executive Vice President of Strategy. From October 1997 to December 2003, Mr. Johnston served as Senior Vice President of Licensing. From November 1993 to October 1997, Mr. Johnston served as Senior Vice President of System Marketing.
 
Lawrence N. Solomon, Executive Vice President — Human Resources.   Mr. Solomon has served as Executive Vice President of Human Resources of Cadbury Schweppes’ Americas Beverages business since March 2004. From May 1999 to March 2004, he served as Senior Vice President of Human Resources for Dr Pepper/Seven Up, prior to which he served on Cadbury Schweppes’ global human resources team.
 
Terence D. Martin, Director.   Mr. Martin will serve as a director and chairman of the audit committee upon the separation. Mr. Martin served as Senior Vice President and Chief Financial Officer of Quaker Oats Company from 1998 until his retirement in 2001. From 1995 to 1998, he was Executive Vice President and Chief Financial Officer of General Signal Corporation. Mr. Martin was Chief Financial Officer and Member of the Executive Committee of American Cyanamid Company from 1991 to 1995 and served as Treasurer from 1988 to 1991. Since 2002, Mr. Martin has served on the board of directors of Del Monte (USA) and currently serves as the chairman of its audit committee.
 
Pamela H. Patsley, Director.   Ms. Patsley will serve as a director upon the separation. Ms. Patsley served as Senior Executive Vice President of First Data Corporation from March 2000 to October 2007 and President of First Data International from May 2002 to October 2007. She retired from those positions in October 2007. From 1991 to 2000, she served as President and Chief Executive Officer of Paymentech, Inc., prior to its acquisition by First Data. Ms. Patsley also previously served as Chief Financial Officer of First USA, Inc. Ms. Patsley currently serves on the boards of directors of Molson Coors Brewing Company and Texas Instruments Incorporated, and she is the chair of the audit committee of Texas Instruments Incorporated.
 
Jack L. Stahl, Director.   Mr. Stahl will serve as a director and chairman of the compensation committee upon the separation. Mr. Stahl served as Chief Executive Officer and President of Revlon, Inc. from February 2002 until


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his retirement in September 2006. From February 2000 to March 2001, he served as President and Chief Operating Officer of The Coca-Cola Company and previously served as Chief Financial Officer and Senior Vice President of The Coca-Cola Company’s North America Group and Senior Vice President of The Coca-Cola Company’s Americas Group. Mr. Stahl currently serves on the board of directors of Schering-Plough Corporation.
 
M. Anne Szostak, Director. Ms. Szostak will serve as a director upon the separation. Since June 2004, Ms. Szostak has served as President and Chief Executive Officer of Szostak Partners LLC, a consulting firm that advises executive officers on strategic and human resource issues. From 1998 until her retirement in 2004, she served as Executive Vice President and Corporate Director — Human Resources and Diversity of FleetBoston Financial Corporation. She also served as Chairman and Chief Executive Officer of Fleet Bank — Rhode Island from 2001 to 2003. Ms. Szostak currently is a director of Belo Corp., ChoicePoint, Inc., Tupperware Brands Corporation and Spherion Corporation, where she serves as chair of the compensation committee.
 
Board of Directors
 
At the time of the distribution, we expect that our board of directors will consist of at least seven directors. The New York Stock Exchange requires that a majority of our board of directors qualify as “independent” according to the rules and regulations of the SEC and the New York Stock Exchange by no later than the first anniversary of the separation. We intend to comply with these requirements.
 
Our amended and restated certificate of incorporation and by-laws will provide that the directors will be classified with respect to the time for which they hold office, into three classes. Class I directors will have an initial term expiring in 2009, Class II directors will have an initial term expiring in 2010 and Class III directors will have an initial term expiring in 2011. We expect that Class I will consist of                    , Class II will consist of                     and Class III will consist of                    . For more information, see “Description of Capital Stock — Anti-Takeover Effects of Various Provisions of Delaware Law and Our Certificate of Incorporation and By-laws — Composition of the Board.”
 
Committees of Our Board of Directors
 
Upon completion of the separation, the committees of our board of directors will consist of an audit committee, nominating and corporate governance committee and a compensation committee. Each of these committees will be required to comply with the requirements of the SEC and the New York Stock Exchange applicable to companies engaging in their initial listing, including for the audit committee the independence requirements and the designation of an “audit committee financial expert.” We expect that our board of directors will adopt a written charter for each of these committees, which will each be posted on our website prior to our separation from Cadbury Schweppes.
 
In addition, we may establish special committees under the direction of the board of directors when necessary to address specific issues.
 
Audit Committee
 
Our audit committee will be responsible for, among other things, making recommendations concerning the engagement of our independent registered public accounting firm, reviewing with the independent registered public accounting firm the plans and results of the audit engagement, approving professional services provided by the independent registered public accounting firm, reviewing the independence of the independent registered public accounting firm, considering the range of audit and non-audit fees and oversight of management’s review of the adequacy of our internal accounting controls. Our audit committee currently consists of          ,           and          , with Mr. Martin serving as chair. We expect that, upon completion of the separation from Cadbury Schweppes,          will qualify as the audit committee financial expert.


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Nominating and Corporate Governance Committee
 
Our nominating and corporate governance committee will be responsible for recommending persons to be selected by the board as nominees for election as directors, recommending persons to be elected to fill any vacancies on the board, considering and recommending to the board qualifications for the office of director and policies concerning the term of office of directors and the composition of the board and considering and recommending to the board other actions relating to corporate governance. We expect that, upon completion of the separation, our nominating and corporate governance committee will consist of          ,           and          , with Mr. Sanders serving as chair.
 
Compensation Committee
 
Our compensation committee will be charged with the responsibilities, subject to full board approval, of establishing, periodically re-evaluating and, where appropriate, adjusting and administering policies concerning compensation structure and benefit plans for our employees, including the Chief Executive Officer and all of our other executive officers. We expect that upon completion of the separation our compensation committee will consist of          ,           and          , with Mr. Stahl serving as chair.
 
Code of Ethics
 
Prior to the completion of the separation, we expect that our board of directors will adopt a written code of ethics that is designed to deter wrongdoing and to promote:
 
  •  honest and ethical conduct;
 
  •  full, fair, accurate, timely and understandable disclosure in reports and documents that we file with the SEC and in our other public communications;
 
  •  compliance with applicable laws, rules and regulations, including insider trading compliance; and
 
  •  accountability for adherence to the code and prompt internal reporting of violations of the code, including illegal or unethical behavior regarding accounting or auditing practices.
 
A copy of our code of ethics will be posted on our website immediately prior to our separation from Cadbury Schweppes.
 
Procedures for Approval of Related Persons Transactions
 
Prior to the completion of the separation, we expect that our board of directors will adopt a written policy to be followed in connection with certain related persons transactions involving our company. Under this policy, we expect our board of directors will delegate to our audit committee the responsibility for reviewing and approving transactions with related persons (as defined in the policy) in which we were or are to be a participant, including, but not limited to, any financial transaction, arrangement or indebtedness, guarantee of indebtedness, or any series of similar transactions in which the amount involved exceeds $120,000. In addition, we expect our board to empower our General Counsel to initially review all such transactions and refer to the audit committee for approval those transactions which our General Counsel determines that the related person may have a direct or indirect material interest.
 
In approving related persons transactions, we expect our audit committee to determine, among other things, whether each related persons transaction referred to the audit committee was the product of fair dealing and whether it was fair to our company.
 
Under this policy, we intend to remind our directors and executive officers of their obligation to inform us of any related persons transaction and any proposed related persons transaction. In addition, from time to time, we intend to review our records and inquire of our directors and executive officers to identify any person who may be considered a related person. Using this information, we intend to search our books and records for any related persons transactions in which our company was or is to be a participant.


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Director Compensation
 
Non-executive directors will receive compensation from us for their services on the board of directors or committees. Executive directors will not receive compensation for their services as a director. We expect to compensate our non-executive directors as follows: an annual fee of $100,000, which the director may elect to receive in cash or defer and receive shares of our common stock pursuant to a deferred compensation plan to be adopted by us in connection with the separation, and an annual equity grant of restricted stock units of $100,000. In addition, the chairperson of the audit committee and the compensation committee will receive an annual equity grant of restricted stock units of $30,000 and $25,000, respectively. We also expect to adopt expense reimbursement and related policies for all directors customary for similar public companies. No director compensation was paid in 2007.
 
Mr. Sanders, as Chairman, is entitled to an annual retainer of $100,000, which he may elect to receive in cash or to defer and receive shares of our common stock pursuant to a deferred compensation plan to be adopted by us in connection with the separation. Mr. Sanders will also receive an annual equity grant of our common stock equal to $200,000. Shares acquired through the deferral of his annual retainer and through the annual equity grant will vest on the third anniversary of the date of grant. In addition, in recognition of Mr. Sanders’ services to us in connection with the separation, he will receive a one-time founders’ equity grant upon the separation of our common stock equal to $900,000 that will vest in equal amounts on each of the first, second and third anniversary of the date of grant.
 
Compensation Discussion and Analysis
 
Introduction
 
In 2007, our named executive officers (the “NEOs”) were Larry Young, John Stewart, Randall Gier, James Johnston, Pedro Herrán, Gilbert Cassagne and John Belsito. Historically, each NEO has been covered by the Cadbury Schweppes executive compensation program. This Compensation Discussion and Analysis describes the historical compensation arrangements for our NEOs. The remuneration committee of the board of directors of Cadbury Schweppes is currently in the process of establishing the compensation arrangements for our current NEOs for 2008 as we transition to being an independent public company and to the extent they are now established, they are described in this information statement. Following our separation from Cadbury Schweppes, our board of directors and its compensation committee will establish the future compensation arrangements for our company. As a result, we are not currently able to describe the post separation compensation arrangements that will be established by our board of directors and its compensation committee.
 
We are also in the process of determining how existing awards granted to our employees under Cadbury Schweppes’ plans will be treated following the separation, and will describe how they will be treated in this information statement prior to the distribution.
 
During the last half of 2007, there were a number of changes with regard to our NEOs. On October 12, 2007, Mr. Cassagne, our former President and Chief Executive Officer, left the company and Mr. Young, our Chief Operating Officer and President, Bottling Group, was appointed President and Chief Executive Officer. In addition, on December 19, 2007, Mr. Belsito, the former President, Snapple Distributors, left the company. As a result of the changes in certain of our NEOs’ duties and responsibilities, certain elements of their compensation were adjusted, as further described below.
 
Objectives of the Executive Compensation Program
 
Historically, as administered by the remuneration committee of the board of directors of Cadbury Schweppes, the Cadbury Schweppes executive compensation program was designed to achieve the following core objectives:
 
  •  Total compensation was designed to be competitive in the relevant market, thereby enabling Cadbury Schweppes to attract, retain, motivate and reward high caliber executives;
 
  •  Total compensation awarded to executives was designed to reflect and reinforce Cadbury Schweppes’ focus on financial management and bottom-line performance;


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  •  The achievement of short and long-term business objectives was recognized through a combination of incentives and rewards with a significant weighting on performance-based compensation versus fixed pay; and
 
  •  Equity incentive awards were designed to align the interests of management with those of shareholders of Cadbury Schweppes.
 
Material Elements of the Executive Compensation Program
 
Historically, Cadbury Schweppes’ executive compensation program for the NEOs in 2007 consisted of the following three major elements:
 
  •  Base Salary  — base salary provided NEOs with a fixed level of cash compensation intended to aid in the attraction and retention of talent in a competitive market. Base salary is reflected in the “Salary” column in the Summary Compensation Table.
 
  •  Annual Cash Incentive Compensation  — annual cash incentive compensation encouraged NEOs to focus on our annual financial plan and motivated the performance of the NEOs in alignment with the short-term interests of shareholders of Cadbury Schweppes. Annual cash incentive compensation is reflected in the “Non-Equity Incentive Plan Compensation” column in the Summary Compensation Table.
 
  •  Long-Term Share-Based Incentive Compensation  — long-term share-based incentive compensation rewarded NEOs for achieving quantitative goals that are key drivers of long-term performance. Long-term share-based incentives aligned the interests of executives with those of shareholders of Cadbury Schweppes and provided strong retention and motivational incentives. Long-term share-based incentive compensation is reflected in the “Stock Awards” and “Option Awards” columns in the Summary Compensation Table.
 
Other forms of compensation were also provided to NEOs in 2007 under the Cadbury Schweppes executive compensation program, and included grants under an additional share plan, participation in health plans, retirement plans, perquisites and severance arrangements.
 
Setting Executive Compensation
 
Historically, the compensation of Mr. Cassagne was based on recommendations by Todd Stitzer, the Chief Executive Officer of Cadbury Schweppes, related to Mr. Cassagne’s performance during the year, and approved by the remuneration committee of the board of directors of Cadbury Schweppes. The compensation of the other NEOs was based on recommendations by Mr. Cassagne and approved by Mr. Stitzer. Among the factors considered in setting compensation were individual performance, skill and experience, the NEO’s success in achieving targets set by Cadbury Schweppes, compensation previously granted to the NEO, planned changes in responsibilities and competitive practices.
 
Benchmarking of Compensation
 
In 2007, the remuneration committee of the board of directors of Cadbury Schweppes reviewed compensation awarded to Mr. Cassagne against compensation awarded to executives in similar positions in the Towers Perrin 2007 U.S. CDB General Industry Executive Database Survey (the “Towers Perrin Survey”), a proprietary survey of approximately 45 multinational companies and global consumer goods companies with whom Cadbury Schweppes believes it competes for executive talent. In making assessments, the potential value of the total compensation package, which included base salary, annual cash incentives and long-term share-based incentives, was considered. A similar process was followed by Mr. Stitzer and Mr. Cassagne for purposes of benchmarking the compensation of other NEOs. In addition to the Towers Perrin Survey, Mr. Stitzer and Mr. Cassagne also considered the Hay Group


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2007 Executive Compensation Report: Fast-Moving Consumer Goods Industry, a proprietary survey of approximately 50 multinational consumer goods companies.
 
In October 2007, Cadbury Schweppes also reviewed the base salaries awarded to Mr. Young, in connection with his promotion to President and Chief Executive Officer of our company, and to Mr. Stewart, whose role was expanded to include information technology and shared business services along with additional duties that he will undertake as the Chief Financial Officer of a public company, against similar executive officers in 16 multinational consumer goods companies of similar market capitalization to our business (the “DPS Comparator Group”). The DPS Comparator Group consisted of the following companies:
 
             
Anheuser-Busch
  ConAgra   Hershey   PepsiAmericas
Brown-Forman
  Constellation Brands   Smucker   Pepsi Bottling Group
Campbell Soup
  General Mills   Kellogg   Sara Lee
Coca-Cola Enterprises
  Heinz   Molson Coors   Wrigley
 
The Executive Compensation Program
 
Overview
 
Historically, Cadbury Schweppes generally targeted a competitive level of total compensation, including base salary, annual cash incentive compensation, and long-term share-based incentive compensation, based on the attainment of certain pre-established performance measures.
 
Base Salary
 
Cadbury Schweppes provided a base salary to each NEO, which was reviewed on an annual basis. NEOs were eligible for merit-based increases based on their prior year performance, market competitiveness of their salary and peer group data.
 
In setting the base salary of Mr. Cassagne in 2007, the remuneration committee of the board of directors of Cadbury Schweppes considered Mr. Cassagne’s performance and benchmark information from the Towers Perrin Survey. In setting the base salary of the other NEOs in 2007, Mr. Stitzer and Mr. Cassagne considered each individual’s performance and the market competitiveness of their salary as described above.
 
In October 2007, Mr. Young’s base salary was increased from $647,000 to $800,000 and Mr. Stewart’s base salary was increased from $420,000 to $500,000. Mr. Young’s increase was attributable to his promotion to President and Chief Executive Officer of our company and Mr. Stewart’s increase was attributable to his expanded role to include information technology and shared business services along with additional duties he will undertake as the Chief Financial Officer of a public company. The increases for Mr. Young and Mr. Stewart were established taking into account median base salaries of similar executive officers in the DPS Comparator Group.
 
Annual Cash Incentive Compensation
 
NEOs participated in the Cadbury Schweppes annual incentive plan, a short-term cash incentive plan based on the attainment of overall short-term business results. Each NEO was assigned an annual incentive target between 65% and 100% of each NEO’s annual base salary (the “Target Award”). In the event performance targets were met for each fiscal year, the NEOs were eligible to receive a cash payment equal to their Target Award. Performance measures were determined by the remuneration committee of the board of directors of Cadbury Schweppes to take account of current business plans and conditions and to provide incentives to NEOs to achieve key short-term performance targets.
 
In 2007, Target Awards were based on the achievement of financial performance targets for underlying economic profit (defined as underlying operating profit from operations less a charge for the weighted average cost


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of capital) and growth in revenue. The remuneration committee of the board of directors of Cadbury Schweppes believed that these performance targets were key drivers of our business in the short-term.
 
In 2007, Mr. Herrán, who has primary responsibility for our Mexico and the Caribbean segment, was eligible for a Target Award based 50% on the performance targets achieved by our Mexico and the Caribbean segment and 50% on the performance targets achieved by our business. Each of the other NEOs, including Mr. Young, was eligible for Target Awards based only upon the performance targets achieved by our business. In each case, the weighting of the performance targets was based 60% on underlying economic profit and 40% on growth in revenue.
 
In 2007, each NEO was provided the opportunity to voluntarily defer all or part of his 2006 annual incentive plan award (which otherwise would have been paid in cash in March 2007) and invest such award in Cadbury Schweppes ordinary shares pursuant to the Cadbury Schweppes bonus share retention plan, which is further described below under the section “— Long-Term Share-Based Incentives — Bonus Share Retention Plan.”
 
Annual incentive amounts for 2007 were determined in February 2008 and are set forth in the “Non Equity Incentive Plan Compensation” column of the Summary Compensation Table. Based on a review of the financial performance targets achieved for 2007, cash payments were below each NEO’s Target Award.
 
Long-Term Share-Based Incentives
 
Bonus Share Retention Plan.   The Cadbury Schweppes bonus share retention plan enabled participants to elect to defer all or part of their annual incentive plan awards in the form of an investment in Cadbury Schweppes ordinary shares. Senior executives, including the NEOs, were eligible to participate in the bonus share retention plan. To the extent that participants elected to invest in shares, the plan enabled them to earn an additional matching grant of Cadbury Schweppes ordinary shares (up to 100% of their investment), provided that Cadbury Schweppes attained certain performance targets over a three-year performance period and the participant was continuously employed by Cadbury Schweppes through the date that the award is settled. All of our current NEOs participated in the bonus share retention plan, with a deferral ranging from 25% to 100% of their annual incentive plan award.
 
The determination of matching shares awarded for 2007 was determined in February 2008 and is set forth in the “Stock Awards” column of the Option Exercises and Stock Vested Table. Based on a review of the financial performance targets achieved for the 2005-2007 performance period, the number of shares vested was below the median of the number of matching shares that each NEO was eligible to receive for the performance period.
 
Long Term Incentive Plan.   Under Cadbury Schweppes’ long term incentive plan, NEOs and other senior executives were eligible, at the discretion of the remuneration committee of the board of directors of Cadbury Schweppes, to receive a designated number of Cadbury Schweppes ordinary shares conditional on the achievement of certain performance targets.
 
The vesting of the shares awarded under Cadbury Schweppes’ long term incentive plan in 2007 was based 50% on underlying earnings per share growth and 50% on total shareholder return growth relative to an international group of peer companies equally weighted over a performance period beginning on January 1, 2007 and ending on December 31, 2009. Total shareholder return is defined as share price growth assuming reinvested dividends. At the end of the three-year performance period, the remuneration committee of the board of directors of Cadbury Schweppes will determine how much of the award has been earned. These shares accrue dividend equivalents through the end of the performance period (which will only be paid to the extent the performance targets are achieved). The vesting of these shares is dependent on the executive being continuously employed with Cadbury Schweppes through the date the award was settled.
 
In 2007, the remuneration committee of the board of directors of Cadbury Schweppes granted shares under the long term incentive plan to NEOs. Mr. Cassagne was entitled to shares with a value ranging up to 120% of his base salary and the other NEOs were entitled to shares with a value ranging up to 100% of their base salaries based on the performance targets achieved during the performance period.


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The determination of the number of shares awarded for 2007 was determined in February 2008 and is set forth in the “Stock Awards” column of the Option Exercises and Stock Vested Table. Based on a review of the financial performance targets achieved for the 2005-2007 performance period, the number of shares vested was 55% of the maximum number of shares that each NEO was eligible to receive for the performance period.
 
Other Equity Plans
 
Historically, up to and including 2005, annual awards of share options were granted to the NEOs under the Cadbury Schweppes share option plan. In addition, restricted share awards were granted to certain NEOs under the Cadbury Schweppes international share award plan.
 
Other Compensation Benefits Plans and Programs
 
Historically, Cadbury Schweppes provided the following employee benefit plans and programs to NEOs consistent with local practices and those of comparable companies.
 
Employee Stock Purchase Plan.   Cadbury Schweppes sponsored the employee stock purchase plan that provided employees with an option to purchase Cadbury Schweppes ADRs at a 15% discount over a two-year period from the date of grant. The discount price, which was fixed each September, was based on the closing price of Cadbury Schweppes ADRs on the day before enrollment for the plan began.
 
Retirement Benefits.   Cadbury Schweppes sponsored a qualified defined benefit plan (the personal pension account plan) and two non-qualified defined benefit plans (the pension equalization plan and the supplemental executive retirement plan). In 2007, the personal pension account plan and the pension equalization plan were closed to new participants. In addition, Cadbury Schweppes sponsored a qualified defined contribution plan, and a non-qualified defined contribution plan. The defined benefit plans and defined contribution plans are discussed below in further detail in the narrative following the Pension Benefits Table and the Non-Qualified Deferred Compensation Table, respectively.
 
Perquisites.   Cadbury Schweppes provided some or all of the NEOs with the following additional benefits and perquisites, which are more fully described under the Summary Compensation Table:
 
  •  An automobile allowance;
 
  •  A service allowance to offset the costs of items such as financial, estate and tax planning; and
 
  •  Annual physicals and disability income premiums.
 
In addition, our expatriate NEO, Mr. Herrán, was provided with an expatriate package, including tax equalization and other payments. Certain club membership dues and expenses were also paid on behalf of Mr. Young.
 
Executive Employment Agreements
 
Consistent with our past practices, we have entered into executive employment agreements with our NEOs at the time they became an executive officer. These executive employment agreements are updated from time-to-time, including most recently to principally address changes in tax laws. We believe that it is appropriate for our senior executives to have employment agreements because they provide us with certain contractual protections, including provisions relating to non-competition, non-solicitation of our employees and confidentiality of proprietary information. We also believe that executive employment agreements are useful in recruiting and retaining senior employees. For information regarding the executive employment agreements, see “Historical Executive Compensation Information — Executive Employment Agreements.”


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Pursuant to their executive employment agreements, we provided Mr. Cassagne and Mr. Belsito with certain benefits when they left the company. For information regarding these benefits, see ‘‘Historical Executive Compensation Information — Separation Arrangements Related to Mr. Cassagne and Mr. Belsito.”
 
Historical Executive Compensation Information
 
The executive compensation disclosure contained in this section reflects compensation information for 2007.
 
The following disclosure tables provide compensation information for (1) Mr. Young and Mr. Cassagne, each of whom served as our President and Chief Executive Officer during 2007; (2) Mr. Stewart, our Executive Vice President and Chief Financial Officer; (3) Mr. Gier, Mr. Johnston and Mr. Herrán, the three other executive officers who were our most highly compensated executive officers; and (4) Mr. Belsito, who would have been one of our three most highly compensated officers if he was serving as an executive officer as of December 31, 2007 (collectively, the named executive officers, or “NEOs”). All references to stock options and stock-based awards, other than the employee stock purchase plan, relate to equity awards granted by Cadbury Schweppes to acquire Cadbury Schweppes ordinary shares.
 
Summary Compensation Table
 
The following table sets forth information regarding the compensation earned by NEOs in 2007.
 
Summary Compensation Table
 
                                                                 
                        Change in
       
                        Pension
       
                        Value and
       
                        Non-
       
                        Qualified
       
                    Non-Equity
  Deferred
       
            Stock
  Option
  Incentive Plan
  Compensation
  All Other
   
        Salary
  Awards
  Awards
  Compensation
  Earnings
  Compensation
  Total
Name & Principal Position
  Year   ($)(4)   ($)(5)   ($)(6)   ($)(7)   ($)(8)   ($)(9)   ($)
 
Larry D. Young,
    2007       672,266       514,402       112,168       510,400       35,000       197,411       2,041,647  
President and Chief Executive Officer(1)
                                                               
John O. Stewart,
    2007       425,654       407,965             218,266       5,000       78,288       1,135,173  
Executive Vice President and Chief Financial Officer
                                                               
Randall E. Gier,
    2007       456,577       335,509       329,539       190,378       55,000       57,208       1,424,211  
Executive Vice President, Marketing and R&D
                                                               
James J. Johnston, Jr.,
    2007       435,962       241,532       98,678       182,497       75,000       54,461       1,088,130  
President, Finished Goods and Concentrate Sales
                                                               
Pedro Herrán Gacha,
    2007       431,427       370,375       89,966       89,998       50,000       619,936       1,651,702  
President, Mexico and the Caribbean
                                                               
Gilbert M. Cassagne,
    2007       714,808       448,019       322,341       448,406       910,000       2,257,202       5,100,776  
Former President and Chief Executive Officer(2)
                                                               
John L. Belsito,
    2007       474,000       193,466       77,652       241,414       120,000       80,280       1,186,812  
Former President, Snapple Distributors(3)
                                                               
 
 
(1) Mr. Young was appointed President and Chief Executive Officer on October 10, 2007.
 
(2) Mr. Cassagne, formerly President and Chief Executive Officer, left the company effective October 12, 2007.
 
(3) Mr. Belsito, formerly President, Snapple Distributors, left the company effective December 19, 2007.


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(4) The amounts shown in this column represent the base salary reported on each Form W-2 for each of our NEOs for 2007. Due to our payroll practices, the amounts shown reflect base salary earned between December 21, 2006 and December 22, 2007. Base salary earned between December 23, 2007 and December 31, 2007 will be reported on the 2008 Form W-2 and reflected in the Summary Compensation Table in our 2009 proxy statement.
 
(5) The amounts shown in this column represent the dollar amount of the accounting expense recognized for financial statement reporting purposes for 2007 for all outstanding stock awards granted to the NEOs pursuant to the international share award plan, the bonus share retention plan and the long-term incentive plan, in accordance with the rules of SFAS 123(R). For Mr. Cassagne and Mr. Belsito, these amounts also include the dollar amount of the accounting expense recognized for outstanding stock awards granted pursuant to the integration share success plan. The amounts disregard adjustment for forfeiture assumptions and do not reflect amounts realized or paid to the NEOs in 2007 or prior years. Assumptions used to calculate these amounts (disregarding forfeiture assumptions) are included in note 14 to our audited combined financial statements. For further information on the stock awards granted in 2007, see the Grants of Plan-Based Awards Table.
 
(6) The amounts shown in this column represent the dollar amount of the accounting expense recognized for financial statement reporting purposes for 2007 for all outstanding option awards granted to the NEOs pursuant to the Cadbury Schweppes share option plan in accordance with SFAS 123(R). The amounts disregard adjustment for forfeiture assumptions and do not reflect amounts realized or paid to the NEOs in 2007 or prior years. Assumptions used to calculate these amounts (disregarding forfeiture assumptions) are included in note 14 to our audited combined financial statements. No option awards were granted to the NEOs in 2007.
 
(7) The amounts shown in this column represent the annual incentive awards for 2007 that were paid to our NEOs in March 2008 pursuant to the annual incentive plan.
 
(8) The amounts shown in this column represent an estimate of the aggregate change during 2007 in the actuarial present value of accumulated benefits under the personal pension account plan, the pension equalization plan and the supplemental executive retirement plan (as applicable), as described in more detail below in the Pension Benefits Table. The change in the actuarial present value of the accumulated benefits under the plans was determined in accordance with SFAS 87. Assumptions used to calculate these amounts are included in note 13 to our audited combined financial statements and include amounts that the NEOs may not be currently entitled to receive because such amounts are not vested.
 
(9) The amounts shown in this column represent the following components:
 
                                                 
    Perquisites ($)            
            Disability
  Company
       
    Automobile
  Service
  Income
  Contributions
  Other
   
    Allowance   Allowance   Premiums   ($)(a)   ($)(b)   Total ($)
 
Mr. Young
    30,010       19,000       4,214       27,002       117,185       197,411  
Mr. Stewart
    21,544       14,000       1,986       16,883       23,875       78,288  
Mr. Gier
    19,966       14,000       3,314       18,120       1,808       57,208  
Mr. Johnston
    15,980       14,000       2,965       17,549       3,967       54,461  
Mr. Herrán
    65,413       14,000       3,307       17,114       520,102       619,936  
Mr. Cassagne
    25,627       24,000       2,531       28,703       2,176,341       2,257,202  
Mr. Belsito
    23,515       21,000             18,688       17,077       80,280  
 
 
  (a)  The amounts shown represent Cadbury Schweppes’ matching contributions to the tax-qualified defined contribution plan and non-tax qualified defined contribution plan. The contributions to the tax-qualified defined contribution plan are as follows: for Mr. Young, $9,111; for Mr. Stewart, $8,857; for Mr. Gier, $8,857; for Mr. Johnston, $9,111; for Mr. Herrán, $8,857; for Mr. Cassagne, $9,111; and for Mr. Belsito, $8,857. The contributions to the non-tax qualified plan are as follows: for Mr. Young, $17,891; for Mr. Stewart, $8,026; for Mr. Gier, $9,263; for Mr. Johnston, $8,438; for Mr. Herrán, $8,257; for Mr. Cassagne, $19,592; and for Mr. Belsito, $9,831.
 
  (b)  The amounts shown reflect the following costs: for Mr. Young, $117,185 for club membership dues and expenses; for Mr. Stewart, $1,875 for executive physical and $22,000 for home sale bonus; for Mr. Gier, $1,808 for executive physical; for Mr. Johnston, $3,967 for sporting events; for Mr. Herrán, $23,450 for education expenses, $84,155 for security expenses, $206,228 for tax equalization expenses, $43,156 for location allowance, $53,954 for foreign service premium, $101,789 for housing allowance, $2,300 for tax preparation expenses, $1,078 for cost of living adjustments, $3,296 for 10-year service award and $696 for club membership dues and expenses; for Mr. Cassagne, $2,171,154 for separation payments and $5,187 for 25-year service award; and for Mr. Belsito, $2,075 for


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  executive physical and $15,002 for merit bonus. For additional information about further amounts payable to Mr. Cassagne and Mr. Belsito, see “— Separation Arrangements Related to Mr. Cassagne and Mr. Belsito.”
 
Grants of Plan-Based Awards
 
The following table sets forth information regarding equity plan awards and non-equity incentive plan awards by Cadbury Schweppes to our NEOs for 2007.
 
Grants of Plan-Based Awards
 
                                                                                 
                                Grant Date
       
                                Fair Value of
       
        Estimated Future Payouts Under
  Estimated Future Payouts Under
  Equity
       
        Non-Equity Incentive Plan Awards(1)   Equity Incentive Plan Awards(2)   Incentive
       
    Grant
  Threshold
  Target
  Maximum
  Threshold
  Target
  Maximum
  Plan Awards
       
Name
  Date   ($)   ($)   ($)   (#)   (#)   (#)   (3)($)        
 
Larry D. Young
    2/15/07       200,000       800,000       1,200,000                                                  
      3/29/07                               18,968               63,230       477,041                  
      3/4/07                               23,745               59,363       375,000                  
John O. Stewart
    2/15/07       85,514       342,055       513,083                                                  
      3/29/07                               9,616               32,054       241,833                  
      3/4/07                               1,354               3,385       20,792                  
Randall E. Gier
    2/15/07       74,588       298,350       447,525                                                  
      3/29/07                               10,764               35,886       270,743                  
      3/4/07                               7,470               18,675       121,500                  
James J. Johnston, Jr. 
    2/15/07       71,500       286,000       429,000                                                  
      3/29/07                               10,320               34,400       259,532                  
      3/4/07                               2,351               5,878       38,250                  
Pedro Herrán Gacha
    2/15/07       70,525       282,100       423,150                                                  
      3/29/07                               10,178               33,930       255,986                  
      3/4/07                               4,886               12,215       75,000                  
Gilbert M. Cassagne
    2/15/07       175,073       700,290       1,050,435                                                  
      3/29/07                               8,322               27,740       209,285                  
John L. Belsito
    2/15/07       94,319       377,275       565,912                                                  
      3/29/07                               4,632               15,440       116,488                  
      3/4/07                               878               2,196       49,770                  
 
 
(1) The amounts shown in the first row of these columns for each NEO represent the potential payouts of annual cash incentive compensation granted to our NEOs in 2007 under the annual incentive plan subject to the achievement of certain performance measures. The actual amount of the awards made to the NEOs and paid in cash will be set forth in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table after payment is made.
 
(2) The amounts shown in the second row of these columns for each NEO represent the threshold and maximum payouts of conditional shares granted to our NEOs pursuant to the long term incentive plan, subject to the achievement of certain performance measures. The performance measures are applied over a three-year performance period beginning on January 1, 2007 and ending on December 31, 2009. For more information regarding the terms of the conditional share awards, see the section entitled “— Long-Term Share-Based Incentives — Long Term Incentive Plan.”
 
The amounts shown in the third row of these columns for each NEO represent matched shares granted by Cadbury Schweppes on the portion of the annual incentive award that each NEO earned in 2006 and elected to defer under the bonus share retention plan on March 4, 2007 in the form of Cadbury Schweppes ordinary shares (“basic shares”). In accordance with the terms of the bonus share retention plan, each NEO is eligible for (i) an award equal to 40% of the number of his basic shares if he remains employed through the date the award is paid in the first quarter of 2010 (as shown in the column “Threshold — Estimated Future Payouts Under Equity Incentive Plan Awards”) and (ii) an award equal to 60% of the number of his basic shares if certain performance measures are achieved during the three-year period beginning on January 1, 2007 and ending on December 31, 2009 and the NEO remains employed through the date the award is paid in the first quarter of 2010. The amounts shown in the column “Maximum — Estimated Future Payouts Under Equity Incentive Plan Awards” represent the total maximum number of matched shares that the NEO is eligible to receive.

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(3) The amounts shown in this column represent the grant date fair value of various awards in accordance with SFAS 123(R) based on a potential payout of maximum award. The grant date fair value generally reflects the amount we would expense in our financial statements over the award’s vesting schedule, and does not correspond to the actual value that may be realized by or paid to the NEOs.


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Outstanding Equity Awards
 
The following table sets forth information regarding exercisable and unexercisable stock options and vested and unvested equity awards held by each NEO as of December 31, 2007. All such awards relate to Cadbury Schweppes ordinary shares.
 
Outstanding Equity Awards at Year-End
 
                                                                                 
    Option Awards   Stock Awards    
            Equity
                      Equity Incentive
   
            Incentive
              Market
  Equity Incentive
  Plan Awards:
   
            Plan Awards:
          Number
  Value of
  Plan Awards:
  Market or Payout
   
    Number of
  Number of
  Number of
          of Shares
  Shares
  Number of
  Value of
   
    Securities
  Securities
  Securities
          or Units
  or Units
  Unearned Shares,
  Unearned
   
    Underlying
  Underlying
  Underlying
  Option
      of Stock
  of Stock
  Units, or Other
  Shares, Units, or
   
    Unexercised
  Unexercised
  Unexercised
  Exercise
  Option
  That Have
  That Have
  Rights That Have
  Other Rights
   
    Options
  Options
  Unearned
  Price
  Expiration
  Not Vested
  Not Vested
  Not Vested
  That Have Not
   
Name
  Exercisable (#)   Unexercisable (#)   Options (#)   ($)(1)   Date   (#)   ($)(2)   (#)   Vested($)(2)   Grant Date
 
Larry D. Young
            96,000               10.98       4/1/15                                       4/1/05 (3)
                                              23,745       294,515       35,618       441,778       3/4/07 (4)
                                                              61,666       764,858       4/7/06 (5)
                                                              63,230       784,256       3/29/07 (5)
John O. Stewart
                                            20,000       248,065                       11/30/06 (6)
                                              1,354       16,794       2,031       25,191       3/4/07 (4)
                                                              22,668       281,156       11/6/06 (5)
                                                              32,054       397,573       3/29/07 (5)
Randall E. Gier
    150,000                       8.48       3/26/14                                       3/26/04 (3)
      59,000                       8.78       8/27/14                                       8/27/04 (3)
              41,000               10.50       4/1/15                                       4/1/05 (3)
                                              20,000       248,065                       8/29/06 (6)
                                              1,973       24,472       2,960       36,714       3/4/06 (4)
                                              7,470       92,652       11,205       138,978       3/4/07 (4)
                                                              33,546       416,079       4/7/06 (5)
                                                              35,886       445,102       3/29/07 (5)
James J. Johnston, Jr. 
    32,000                       8.86       9/11/08                                       9/11/98 (3)
      40,000                       8.15       9/3/09                                       9/3/99 (3)
      60,000                       8.17       9/1/10                                       9/1/00 (3)
      65,000                       9.53       8/31/11                                       8/31/01 (3)
      70,000                       9.64       8/23/12                                       8/23/02 (3)
      90,000                       7.02       5/9/13                                       5/9/03 (3)
      64,000                       8.78       8/27/14                                       8/27/04 (3)
              41,000               10.50       4/1/15                                       4/1/05 (3)
                                              2,565       31,814       3,848       47,728       3/4/06 (4)
                                              2,351       29,160       3,527       43,746       3/4/07 (4)
                                                              33,546       416,079       4/7/06 (5)
                                                              34,400       426,671       3/29/07 (5)
Pedro Herrán Gacha
    30,000                       8.86       9/11/08                                       9/11/98 (3)
      40,000                       8.15       9/3/09                                       9/3/99 (3)
      60,000                       8.17       9/1/10                                       9/1/00 (3)
      55,000                       9.53       8/31/11                                       8/31/01 (3)
      55,000                       9.64       8/23/12                                       8/23/02 (3)
      12,500                       6.62       3/14/13                                       3/14/03 (3)
      75,000                       7.02       5/9/13                                       5/9/03 (3)
      43,000                       8.78       8/27/14                                       8/27/04 (3)
              41,000               10.50       4/1/15                                       4/1/05 (3)
                                              20,000       248,065                       8/29/06 (6)
                                              12,000       148,839                       2/16/06 (6)
                                              3,995       49,551       5,993       74,333       3/4/06 (4)
                                              4,886       60,602       7,329       90,903       3/4/07 (4)
                                                              27,626       342,652       4/7/06 (5)
                                                              33,930       420,842       3/29/07 (5)
Gilbert M. Cassagne
    150,000                       8.17       9/1/10                                       9/1/00 (3)
      160,000                       9.53       8/31/11                                       8/31/01 (3)
      175,000                       9.64       8/23/12                                       8/23/02 (3)
      250,000                       7.02       5/9/13                                       5/9/03 (3)
      160,000                       8.78       8/27/14                                       8/27/04 (3)
              145,500               10.50       4/1/15                                       4/1/05 (3)
                                                              27,830       345,182       3/13/03 (5)
                                                              60,351       748,548       4/7/06 (5)
                                                              27,740       344,066       3/29/07 (5)
                                                              50,000       620,162       6/30/06 (7)


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    Option Awards   Stock Awards    
            Equity
                      Equity Incentive
   
            Incentive
              Market
  Equity Incentive
  Plan Awards:
   
            Plan Awards:
          Number
  Value of
  Plan Awards:
  Market or Payout
   
    Number of
  Number of
  Number of
          of Shares
  Shares
  Number of
  Value of
   
    Securities
  Securities
  Securities
          or Units
  or Units
  Unearned Shares,
  Unearned
   
    Underlying
  Underlying
  Underlying
  Option
      of Stock
  of Stock
  Units, or Other
  Shares, Units, or
   
    Unexercised
  Unexercised
  Unexercised
  Exercise
  Option
  That Have
  That Have
  Rights That Have
  Other Rights
   
    Options
  Options
  Unearned
  Price
  Expiration
  Not Vested
  Not Vested
  Not Vested
  That Have Not
   
Name
  Exercisable (#)   Unexercisable (#)   Options (#)   ($)(1)   Date   (#)   ($)(2)   (#)   Vested($)(2)   Grant Date
 
John L. Belsito
    75,000                       8.93       3/16/11                                       3/16/01 (3)
      100,000                       9.53       8/31/11                                       8/31/01 (3)
      100,000                       9.64       8/23/12                                       8/23/02 (3)
      150,000                       7.02       5/9/13                                       5/9/03 (3)
      43,000                       8.78       8/27/14                                       8/27/04 (3)
              34,000               10.50       4/1/15                                       4/1/05 (3)
                                              2,103       26,084       3,155       39,132       3/4/06 (4)
                                              878       10,890       1,318       16,347       3/4/07 (4)
                                                              14,688       182,179       3/13/03 (5)
                                                              31,178       386,708       4/7/06 (5)
                                                              15,440       191,506       3/29/07 (5)
                                                              10,000       124,032       6/30/06 (7)
 
 
(1) The option exercise prices were converted from pounds sterling to U.S. dollars based on a December 31, 2007 currency exchange rate of 1 pound sterling to 1.9973 U.S. dollars.
 
(2) The amount for each row represents the total number of shares or other rights awarded under an equity incentive plan that have not vested multiplied by the closing price of a Cadbury Schweppes ordinary share on the London Stock Exchange on December 31, 2007. The price of an ordinary share was converted from pounds sterling to U.S. dollars based on a December 31, 2007 currency exchange rate of 1 pound sterling to 1.9973 U.S. dollars.
 
(3) Share Option Plan. An option grant does not become exercisable until performance vesting criteria have been satisfied. No portion of the option may be exercised unless the performance measure is satisfied on the third anniversary of the grant date.
 
(4) Bonus Share Retention Plan. The amounts in the “Number of Shares or Units of Stock That Have Not Vested” column will vest on the third anniversary of the applicable grant date if the NEO is employed with Cadbury Schweppes on such date. The amounts in “Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested” column will vest based on Cadbury Schweppes achieving the maximum compound annual growth in aggregate underlying economic profit target over a three-year performance period. Payout could range up to 100% of the conditional shares disclosed. Pursuant to these terms:
 
  •  Mr. Gier, Mr. Johnston, Mr. Herrán and Mr. Belsito were each granted an award subject to a performance period from January 1, 2006 to December 31, 2008 and a vesting date of March 2009; and
 
  •  Mr. Young, Mr. Stewart, Mr. Gier, Mr. Johnston, Mr. Herrán and Mr. Belsito were each granted an award subject to a performance period from January 1, 2007 to December 31, 2009 and a vesting date of March 2010.

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In addition, the amounts shown in the following table represent the number of Cadbury Schweppes ordinary shares (the “basic shares”) that each NEO received on the applicable grant date upon his election to defer all or a portion of their prior year annual incentive plan awards into the bonus share retention plan.
 
                 
    Grant Date   Number of Basic Shares
 
Mr. Young
    3/4/07       59,363  
Mr. Stewart
    3/4/07       3,385  
Mr. Gier
    3/4/06       4,933  
      3/4/07       18,675  
Mr. Johnston
    3/4/06       6,413  
      3/4/07       5,878  
Mr. Herrán
    3/4/06       9,988  
      3/4/07       12,215  
Mr. Cassagne
           
Mr. Belsito
    3/4/06       8,765  
      3/4/07       8,240  
 
(5) Long Term Incentive Plan. Share grants will vest on the third anniversary of the applicable grant date if the NEO is employed with Cadbury Schweppes on such date and based on the achievement of compound annual growth in the aggregate underlying earnings per share target of Cadbury Schweppes and total shareholder return relative to an index of peer companies of Cadbury Schweppes over the applicable performance period. Vesting could range up to 100% of the conditional shares disclosed. Pursuant to these terms:
 
  •  Mr. Cassagne and Mr. Belsito were granted an award subject to a retest for the performance period from January 1, 2003 to December 31, 2008 and a vesting date of March 2009;
 
  •  all of the NEOs were granted an award subject to a three-year performance period from January 1, 2006 to December 31, 2008 and a vesting date of March 2009; and
 
  •  all the NEOs were granted an award subject to a three-year performance period from January 1, 2007 to December 31, 2009 and a vesting date of March 2010.
 
(6) International Share Award Plan . For Mr. Gier and Mr. Herrán, the share awards will vest on the third anniversary of the grant date. For Mr. Stewart, the share award will vest in equal installments on the second and third anniversary of the grant date.
 
(7) Integration Success Share Plan . Awards under the integration success share plan are payable in the first quarter of 2008, subject to compliance with restrictive covenants in the individual’s employment agreement. For further information, see “Separation Arrangements Related to Mr. Cassagne and Mr. Belsito.”


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Option Exercises and Stock Vested
 
The following table sets forth information regarding Cadbury Schweppes ordinary shares acquired in 2007 by each NEO upon the exercise of stock options and vesting of stock awards during 2007.
 
Option Exercises and Stock Vested
 
                                 
    Option Awards   Stock Awards
    Number of
      Number of Shares
   
    Shares Acquired
  Value Realized on
  Acquired on
  Value on
    on Exercise
  Exercise
  Vesting
  Vesting
Name
  (#)(1)   ($)(2)   (#)   ($)(3)
 
Larry D. Young
                    21,051 (5)     229,870  
John O. Stewart
                    20,000 (4)     258,780  
Randall E. Gier
                    13,270 (5)     144,904  
                      6,531 (6)     71,316  
James J. Johnston, Jr. 
                    12,563 (5)     137,184  
                      2,028 (6)     22,145  
Pedro Herrán Gacha
    30,000       200,931       10,811 (5)     118,053  
Gilbert M. Cassagne
                    40,857 (5)     446,145  
John L. Belsito
    20,000       28,440       23,732 (5)     259,146  
 
 
(1) The amounts shown in this column reflect the aggregate number of Cadbury Schweppes ordinary shares underlying the options that were exercised in 2007.
 
(2) The amounts shown in this column are calculated by multiplying (x) the difference between the closing price on the London Stock Exchange of a Cadbury Schweppes ordinary share on the date of exercise and the exercise price of the options by (y) the number of Cadbury Schweppes ordinary shares acquired upon exercise. The amounts shown in this column were converted from pounds sterling to U.S. dollars based on the currency exchange rate on the date of exercise.
 
(3) The amounts shown in this column are calculated by multiplying (x) the closing price of a Cadbury Schweppes ordinary share on the London Stock Exchange on the date of vesting by (y) the number of Cadbury Schweppes ordinary shares acquired upon vesting. The amounts shown in this column were converted from pounds sterling to U.S. dollars based on the currency exchange rate on the date of vesting.
 
(4) The amount shown reflects the number of awards under the international share award plan that vested in 2007.
 
(5) The amounts shown reflect the number of Cadbury Schweppes ordinary shares awarded for the 2005-2007 performance period under the long term incentive plan.
 
(6) The amount shown reflects the number of Cadbury Schweppes ordinary shares awarded for the 2005-2007 performance period under the bonus share retention plan.


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Pension Benefits Table
 
The following table sets forth information regarding pension benefits accrued by each NEO under our defined benefit plans and supplemental contractual arrangements for 2007.
 
Pension Benefits
 
                                 
        Number of
       
        Years
  Present Value of
  Payments
        Credited
  Accumulated
  During Last
        Service
  Benefit
  Fiscal Year
Name
  Plan Name   (#)   ($)(1)   ($)
 
Larry D. Young
    Personal Pension Account Plan       1.67       15,000          
      Pension Equalization Plan       1.67       20,000          
John O. Stewart
    Personal Pension Account Plan       1.15       5,000          
      Pension Equalization Plan       1.15       0          
Randall E. Gier
    Personal Pension Account Plan       3.78       45,000          
      Pension Equalization Plan       3.78       100,000          
James J. Johnston, Jr. 
    Personal Pension Account Plan       15.08       245,000          
      Pension Equalization Plan       15.08       235,000          
Pedro Herrán Gacha
    Personal Pension Account Plan       10.39       135,000          
      Pension Equalization Plan       10.39       225,000          
Gilbert M. Cassagne
    Personal Pension Account Plan       25.74       685,000          
      Pension Equalization Plan       25.74       3,450,000          
      Supplemental Executive Retirement Plan       25.74       455,000          
John L. Belsito
    Personal Pension Account Plan       20.20       330,000          
      Pension Equalization Plan       20.20       600,000          
 
 
(1) The amounts shown reflect the actuarial present value of benefits accumulated under the respective plans in accordance with the assumptions included in note 13 to our audited combined financial statements. These amounts assume that each NEO retires at age 65. The discount rate used to determine the present value of accumulated benefits is 6.20%. The present values assume no pre-retirement mortality and utilize the RP 2000 healthy white collar male and female mortality tables projected to calendar year 2015.
 
Personal Pension Account Plan
 
NEOs are provided with retirement benefits under the Cadbury Schweppes personal pension account plan (the “PPA Plan”), a tax-qualified defined benefit pension plan covering full-time and part-time employees with at least one year of service who were actively employed as of December 31, 2006. The PPA Plan was closed to employees who were hired after December 31, 2006.


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The PPA Plan provides a retirement benefit to participants based on a percentage of the participant’s annual compensation (which includes base salary and annual incentive award). The percentage, which is based on age and years of service, varies as follows:
 
                 
    Age/Service Credit Percentage
    Compensation up to
  Compensation over
Age Plus Years of Service
  Taxable Wage Base   Taxable Wage Base
 
Less than 35
    2 3 / 4 %     5 1 / 2 %
35 but less than 45
    3 3 / 4 %     7 1 / 2 %
45 but less than 55
    4 1 / 2 %     9 %
55 but less than 65
    6 %     11 %
65 but less than 75
    8 %     13 %
75 or more
    10 %     15 %
 
Participants fully vest in their retirement benefits after five years of service or upon attaining age 65. Participants are also eligible for early retirement benefits if they separate from service on or after attaining age 55 with 10 years of service. Participants who leave Cadbury Schweppes before they are fully vested in their retirement benefits forfeit their accrued benefit under the PPA Plan.
 
The Internal Revenue Code places limitations on compensation and pension benefits for tax-qualified defined benefit plans such as the PPA Plan. We have established two non-qualified supplemental defined benefit pension programs (the Cadbury Schweppes pension equalization plan and the Cadbury Schweppes supplemental executive retirement plan), as discussed below, to restore some of the pension benefits limited by the Internal Revenue Code.
 
Pension Equalization Plan
 
Cadbury Schweppes sponsors a pension equalization plan (the “PEP”), an unfunded, non-tax qualified excess defined benefit plan covering key employees who were actively employed as of December 31, 2006 and whose base salary exceeded certain statutory limits imposed by the Internal Revenue Code. As with the PPA Plan, the PEP was closed to employees who were hired after December 31, 2006.
 
The purpose of the PEP is to restore to PEP participants any PPA Plan benefits that are limited by statutory restrictions imposed by the Internal Revenue Code that are taken into consideration when determining their PPA Plan benefits. Participants fully vest in their benefits under the PEP after five years of service. Participants who voluntarily resign from service before they are vested in their benefits under the PEP forfeit their unvested accrued benefit. Participants who are terminated without “cause” or resign for “good reason” are entitled to have their unvested accrued benefits under the PEP automatically vested.
 
In addition, pursuant to the terms of the executive employment agreements, if a NEO is terminated without “cause” or resigns for “good reason” and is not vested in his accrued benefit under the PPA Plan, such NEO will be entitled to have his accrued and unvested benefits under the PPA Plan paid under the PEP. As of December 31, 2007, Mr. Young, Mr. Stewart and Mr. Gier have not vested in their accrued benefits under the PPA Plan.
 
Supplemental Executive Retirement Plan
 
Cadbury Schweppes sponsored a supplemental executive retirement plan (the “SERP”), a non-tax qualified defined benefit plan covering certain senior executives. The SERP was designed to ensure that the total pension benefits due to participants, including benefits under the PPA Plan and PEP, provided a certain level of income at retirement. Combined benefits range from 50% of a participant’s final average compensation after 15 years of service to 60% of final average compensation after 25 years of service. Benefits under the SERP vest after 10 years of service. In 2007, only Mr. Cassagne and Mr. Belsito participated in the SERP. Only Mr. Cassagne’s SERP benefit is fully vested. Mr. Belsito did not satisfy the vesting conditions under the SERP as of the date he left the company


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and forfeited the amount accrued under the SERP. No current or future employees are eligible to participate in the SERP.
 
Deferred Compensation
 
Savings Incentive Plan
 
Cadbury Schweppes sponsors a savings incentive plan (the “SIP”), a tax-qualified 401(k) defined contribution plan. The plan permits participants to contribute up to 75% of their base salary in the SIP within certain statutory limitations under the Internal Revenue Code and Cadbury Schweppes matches 100% of the first 4% of base salary that is deferred to the SIP by a participant. Employees participating in the SIP are always fully vested in their, as well as the employer’s, contributions to the plan.
 
Supplemental Savings Plan
 
The only nonqualified deferred compensation plan sponsored by Cadbury Schweppes for NEOs is the supplemental savings plan (the “SSP”), a non-tax qualified defined contribution plan. The SSP is for employees who are actively enrolled in the SIP and whose deferrals under the SIP are limited by Internal Revenue Code compensation limitations. Employees may elect to defer up to 75% of their base salary over the Internal Revenue Code compensation limit to the SSP, and Cadbury Schweppes matches 100% of the first 4% of base salary that is contributed by these employees. Employees participating in the SSP are always fully vested in their, as well as the employer’s, contributions to the plan. Participants self-direct the investment of their account balances among various mutual funds.
 
The following table sets forth information regarding the nonqualified deferred compensation under the SSP for each NEO for 2007.
 
Nonqualified Deferred Compensation
 
                                         
    Executive
  Registrant
      Aggregate
   
    Contributions in
  Contributions in
  Aggregate Earnings
  Withdrawals/
  Aggregate Balance
    Last Year
  Last Year
  in Last Year
  Distributions
  at Last Year-End
Name
  ($)(1)   ($)(2)   ($)(3)   ($)   ($)
 
Larry D. Young
    53,672       17,891       267               71,829  
John O. Stewart
    150,491       8,026       510               159,327  
Randall E. Gier
    34,737       9,263       7,500               156,323  
James J. Johnston, Jr. 
    18,987       8,438       3,706               73,105  
Pedro Herrán Gacha
    14,450       8,257       (182 )             51,154  
Gilbert M. Cassagne
    146,942       19,592       58,338               1,556,013  
John L. Belsito
    14,746       9,831       12,872               229,612  
 
 
(1) The amounts shown in this column represent the aggregate amount of contributions made by our NEOs to the SSP in 2007. These amounts are included in the “Salary” column of the Summary Compensation Table.
 
(2) The amounts shown in this column represent the aggregate amount of employer contributions to the NEOs’ accounts under the SSP in 2007. These amounts are also included in the “All Other Compensation” column of the Summary Compensation Table.
 
(3) The amounts shown in this column represent the aggregate amount of interest or other earnings credited to the NEOs’ accounts under the SSP in 2007.


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Executive Employment Agreements
 
Consistent with our past practices, we have entered into executive employment agreements with each of our NEOs at the time they became an executive officer. Each agreement is between the NEO and our subsidiary, CBI Holdings, Inc., CBI Holdings, Inc. will be our wholly-owned subsidiary upon separation and is the United States legal entity in which U.S. corporate functions for Cadbury Schweppes’ Americas Beverages business were historically included. The current executive employment agreements each have a term of 10 years. In addition to setting forth their basic duties, the executive employment agreements provide the NEOs with a base salary and entitle them to participate in the annual incentive plan and all other applicable employee compensation and benefit plans and programs. In the event we terminate Mr. Young or Mr. Stewart “without cause” or they resign for “good reason” during the employment term, they are entitled to (1) a lump sum severance payment equal to 12 months of their annual base salary and their Target Award under the annual incentive plan; (2) a lump sum cash payment equal to their annual incentive plan payment, pro-rated through the employment termination date and based on the actual performance targets achieved for the year in which such termination of employment occurred; (3) salary continuation for up to 12 months equal to their annual base salary and their Target Award under the annual incentive plan (subject to mitigation for new employment); and (4) medical, dental and vision benefits for the salary continuation period. In the event we terminate Mr. Gier, Mr. Johnston or Mr. Herrán “without cause” or they resign for “good reason” during the employment term, they are entitled to (1) a lump sum severance payment equal to nine months of their annual base salary and 75% of their Target Award under the annual incentive plan; (2) a lump sum cash payment equal to their annual incentive plan payment, pro-rated through the employment termination date and based on the actual performance targets achieved for the year in which such termination of employment occurred; (3) salary continuation for up to nine months equal to their annual base salary and Target Award under the annual incentive plan (subject to mitigation for new employment); and (4) medical, dental and vision benefits for the salary continuation period. The NEOs are also entitled to outplacement services for their salary continuation period and certain payments under the qualified and non-qualified pension plans. In the event a NEO is terminated without “cause” or resigns for “good reason,” he is entitled to have his unvested accrued benefits under the PEP automatically vested. Such NEO will also be entitled to have his accrued and unvested benefits under the PPA Plan paid under the PEP. In addition, in the event the NEO is terminated due to death or disability, he is entitled to his Target Award, pro rated through the date on which his death or disability occurs.
 
Generally, “cause” is defined as termination of the NEO’s employment for his: (1) willful failure to substantially perform his duties; (2) breach of a duty of loyalty toward the company; (3) commission of an act of dishonesty toward the company, theft of our corporate property, or usurpation of our corporate opportunities; (4) unethical business conduct including any violation of law connected with the NEO’s employment; or (5) conviction of any felony involving dishonest or immoral conduct. Generally, “good reason” is defined as a resignation by the NEO for any of the following reasons: (1) our failure to perform any of our material obligations under the employment agreement; (2) a relocation by us of the NEO’s principal place of employment to a site outside a 50 mile radius of the current site of the principal place of employment; or (3) the failure by a successor to assume the employment agreement.
 
The employment agreements include non-competition and non-solicitation provisions. These provisions state that the NEO will not, for a period of one year after termination of employment, become engaged with companies that are in competition with us, including but not limited to a predetermined list of companies. Also, the NEO agrees for a period of one year after termination of employment not to solicit or attempt to entice away any of our employees or directors.
 
Potential Payments upon Certain Terminations of Employment
 
The following tables below outline the potential payments to Mr. Young, Mr. Stewart, Mr. Gier, Mr. Johnston and Mr. Herrán upon the occurrence of various termination events, including “termination for cause” or “not for


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good reason,” “termination without cause” or “for good reason” or termination due to death or disability. The following assumptions apply with respect to the tables below and any termination of employment of a NEO:
 
  •  The tables include estimates of amounts that would have been paid to Mr. Young, Mr. Stewart, Mr. Gier, Mr. Herrán and Mr. Johnston assuming a termination event occurred on December 31, 2007. The employment of these NEOs did not actually terminate on December 31, 2007, and as a result, these NEOs did not receive any of the amounts shown in the tables below. The actual amounts to be paid to a NEO in connection with a termination event can only be determined at the time of such termination event.
 
  •  The tables assume that the price of Cadbury Schweppes ordinary shares is $12.40 per share, the closing market price per share on December 31, 2007. The price of an ordinary share was converted from pounds sterling to U.S. dollars based on a December 31, 2007 currency exchange rate of £1 to $1.9973.
 
  •  Each NEO is entitled to receive amounts earned during the term of his employment regardless of the manner of termination. These amounts include accrued base salary, accrued vacation time and other employee benefits to which the NEO was entitled on the date of termination, and are not shown in the tables below.
 
  •  For purposes of the tables below, the specific definitions of “cause” and “good reason” are defined in the employment agreements of each NEO and are described below in the section entitled “Employment Agreements.”
 
  •  To receive the benefits under the employment agreements, each of the NEOs is required to provide a general release of claims against us and our affiliates and subject to mitigation for new employment. In addition, if NEOs receive severance payments under the employment agreements, they will not be entitled to receive any severance benefits under the Cadbury Schweppes general severance pay plan.
 
                             
        Termination
      Termination
        for Cause
      Without Cause
        or Resignation
      or Resignation
        without
      for
Name
 
Compensation Element
 
Good Reason
 
Death/Disability
 
Good Reason
 
Larry D. Young
  Salary Continuation Payments(1)   $ 0     $ 0     $ 1,600,000  
    Lump Sum Cash Payments(2)   $ 0     $ 0     $ 800,000  
    Lump Sum Target Award Annual Incentive Plan Payment(3)   $ 0     $ 0     $ 800,000  
    Lump Sum 2007 Annual Incentive Plan Payment(4)   $ 0     $ 800,000     $ 510,400  
    Accelerated Equity Vesting
  •   Stock Options(5)
  $ 0     $ 183,112     $ 183,112  
   
  •   Bonus Share Retention Plan(6)
  $ 0     $ 940,190     $ 940,190  
   
  •   Long Term Incentive Plan(7)
  $ 0     $ 1,032,408     $ 1,032,408  
    Other(9)   $ 0     $ 0     $ 125,756  
                             
    Total   $ 0     $ 2,955,710     $ 5,991,866  
                             


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        Termination
      Termination
        for Cause
      Without Cause
        or Resignation
      or Resignation
        without
      for
Name
 
Compensation Element
 
Good Reason
 
Death/Disability
 
Good Reason
 
                             
John O. Stewart
  Salary Continuation Payments(1)   $ 0     $ 0     $ 900,000  
    Lump Sum Cash Payments(2)   $ 0     $ 0     $ 500,000  
    Lump Sum Target Award Annual Incentive Plan Payment(3)   $ 0     $ 0     $ 400,000  
    Lump Sum 2007 Annual Incentive Plan Payment(4)   $ 0     $ 400,000     $ 218,266  
    Accelerated Equity Vesting
  •   Bonus Share Retention Plan(6)
  $ 0     $ 53,607     $ 53,607  
   
  •   Long Term Incentive Plan(7)
  $ 0     $ 283,116     $ 283,116  
   
  •   International Share Award Plan(8)
  $ 0     $ 115,995     $ 115,995  
    Other(9)   $ 0     $ 0     $ 28,006  
                             
    Total   $ 0     $ 852,718     $ 2,498,990  
                             
                             
Randall E. Gier
  Salary Continuation Payments(1)   $ 0     $ 0     $ 568,013  
    Lump Sum Cash Payments(2)   $ 0     $ 0     $ 344,250  
    Lump Sum Target Award Annual Incentive Plan Payment(3)   $ 0     $ 0     $ 223,763  
    Lump Sum 2007 Annual Incentive Plan Payment(4)   $ 0     $ 298,350     $ 190,378  
    Accelerated Equity Vesting
  •   Stock Options(5)
  $ 0     $ 78,204     $ 78,204  
   
  •   Bonus Share Retention Plan(6)
  $ 0     $ 656,838     $ 656,838  
   
  •   Long Term Incentive Plan(7)
  $ 0     $ 709,391     $ 709,391  
   
  •   International Share Award Plan(8)
  $ 0     $ 114,246     $ 114,246  
    Other(9)   $ 0     $ 0     $ 164,067  
                             
    Total   $ 0     $ 1,857,029     $ 3,049,150  
                             

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        Termination
      Termination
        for Cause
      Without Cause
        or Resignation
      or Resignation
        without
      for
Name
 
Compensation Element
 
Good Reason
 
Death/Disability
 
Good Reason
 
                             
James J.
Johnston, Jr. 
  Salary Continuation Payments(1)   $ 0     $ 0     $ 544,500  
    Lump Sum Cash Payments(2)   $ 0     $ 0     $ 330,000  
    Lump Sum Target Award Annual Incentive Plan Payment(3)   $ 0     $ 0     $ 214,500  
    Lump Sum 2007 Annual Incentive Plan Payment(4)   $ 0     $ 286,000     $ 182,497  
    Accelerated Equity Vesting
  •   Stock Options(5)
  $ 0     $ 78,204     $ 78,204  
   
  •   Bonus Share Retention Plan(6)
  $ 0     $ 302,713     $ 302,713  
   
  •   Long Term Incentive Plan(7)
  $ 0     $ 690,823     $ 690,823  
    Other(9)   $ 0     $ 0     $ 19,067  
                             
    Total   $ 0     $ 1,357,740     $ 2,362,304  
                             
                             
Pedro Herrán Gacha
  Salary Continuation Payments(1)   $ 0     $ 0     $ 537,075  
    Lump Sum Cash Payments(2)   $ 0     $ 0     $ 325,500  
    Lump Sum Target Award Annual Incentive Plan Payment(3)   $ 0     $ 0     $ 211,575  
    Lump Sum 2007 Annual Incentive Plan Payment(4)   $ 0     $ 282,100     $ 89,998  
    Accelerated Equity Vesting                        
   
  •   Stock Options(5)
  $ 0     $ 78,204     $ 78,204  
   
  •   Bonus Share Retention Plan(6)
  $ 0     $ 392,947     $ 392,947  
   
  •   Long Term Incentive Plan(7)
  $ 0     $ 600,292     $ 600,292  
   
  •   International Share Award Plan(8)
  $ 0     $ 266,856     $ 266,856  
    Other(9)   $ 0     $ 0     $ 19,067  
                             
    Total   $ 0     $ 1,620,399     $ 2,521,514  
                             
 
(1) The amount shown represents salary continuation in an amount equal to (x) annual base salary and (y) Target Award. The amount shown represents 100% for Mr. Young and Mr. Stewart and 75% for Mr. Gier, Mr. Johnston and Mr. Herrán, in each case, according to the terms of their respective executive employment agreements.
 
(2) The amount shown represents a lump sum cash payment equal to the annual base salary for Mr. Young and Mr. Stewart and 75% of the annual base salary for Mr. Gier, Mr. Johnston and Mr. Herrán.
 
(3) The amount shown represents a lump sum payment under the annual incentive plan equal to the Target Award for Mr. Young and Mr. Stewart and equal to 75% of the Target Award for Mr. Gier, Mr. Johnston and Mr. Herrán.
 
(4) The amount shown under the “Death/Disability” column represents each NEO’s Target Award, pro-rated through the assumed employment termination date. The amount shown under the “Termination Without

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Cause or Resignation for Good Reason” column represents a lump sum cash payment equal to each NEO’s 2007 annual incentive plan payment, pro-rated through the assumed employment termination date and based on the actual performance targets achieved for the year in which such assumed termination of employment occurred.
 
(5) The amount shown represents the value of the unvested stock options as of December 31, 2007 assuming the performance targets have been achieved. These stock options remain exercisable for 12 months from the employment termination date.
 
(6) The amount shown represents the combined value of (i) Cadbury Schweppes ordinary shares that each NEO elected to defer under the bonus share retention plan (the “basic shares”), (ii) a matched share award equal to 40% of the number of his basic shares, pro-rated through the assumed employment termination date and (iii) a matched share award equal to 60% of the number of his basic shares, pro-rated through the employment termination date and assuming that the maximum performance targets were achieved.
 
(7) The amount shown represents the value of unvested equity awards under the long term incentive plan as of December 31, 2007, assuming the achievement of performance targets and pro-rated through the employment termination date.
 
(8) The amount shown represents the value of unvested share awards under the international share award plan, pro-rated through the employment termination date.
 
(9) The amounts shown in the “Termination Without Cause or Resignation for Good Reason” column reflect the following elements:
 
                                 
            Unvested
   
            Accrued
   
    Medical, Dental
  Outplacement
  Pension
   
    and Vision Benefits
  Services
  Benefit
   
    ($)(a)   ($)   ($)(b)   Total
 
Mr. Young
    12,156       78,600       35,000       125,756  
Mr. Stewart
    12,156       10,850       5,000       28,006  
Mr. Gier
    9,117       9,950       145,000       164,067  
Mr. Johnston
    9,117       9,950               19,067  
Mr. Herrán
    9,117       9,950               19,067  
 
 
  (a)  Estimated combined cash value over the salary continuation period.
 
  (b)  Unvested accrued benefits under the Cadbury Schweppes PPA Plan and PEP to be paid to the NEO under the PEP.
 
Separation Arrangements Related to Mr. Cassagne and Mr. Belsito
 
Mr. Cassagne’s Separation.   Pursuant to the terms of his executive employment agreement, Mr. Cassagne is entitled to (1) a lump sum payment of $1,800,000, which is equal to the sum of his annual base salary and his full Target Award under the annual incentive plan; (2) a lump sum payment equal to his annual incentive plan payment, pro-rated through his employment termination date and based on the actual performance targets achieved for the year in which such termination of employment occurred; (3) salary continuation for up to 12 months equal to a total of $1,800,000 (subject to mitigation for new employment); (4) medical, dental and vision benefits continuation for the salary continuation period; (5) his accrued vested awards under the bonus share retention plan and long term incentive plan; (6) an award under the integration success share plan of 50,000 Cadbury Schweppes ordinary shares in the first quarter of 2008; and (7) transitional employment services for 12 months. Pursuant to the terms of the Cadbury Schweppes share option plan, Mr. Cassagne will be able to exercise all of his vested stock options, as of his departure date, until October 11, 2008. In addition, Mr. Cassagne will be able to exercise all of his unvested performance options for 12 months following the third anniversary of the date of grant, to the extent the performance targets are met at the end of the three-year performance period. To the extent the performance targets are not met at the end of the third anniversary of the date of grant, the performance targets will be reviewed again at the fifth anniversary of the date of grant. If the performance targets are met, Mr. Cassagne will be entitled to


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exercise the options for 12 months following the satisfaction of the performance period. If the performance targets are not met, all of his unvested options will be forfeited.
 
Mr. Belsito’s Separation.   Pursuant to the terms of his executive employment agreement, Mr. Belsito is entitled to (1) a lump sum payment of $853,200, which is equal to the sum of his annual base salary and his full Target Award under the annual incentive plan; (2) a lump sum payment equal to his annual incentive plan payment, pro-rated through his employment termination date and based on the actual performance targets achieved for the year in which such termination of employment occurred; (3) salary continuation for up to 12 months equal to a total of $853,200 (subject to mitigation for new employment); (4) medical, dental and vision benefits continuation for the salary continuation period; (5) his accrued vested award under the bonus share retention plan and long term incentive plan; (6) an award under the integration success share plan of 10,000 Cadbury Schweppes ordinary shares in the first quarter of 2008; and (7) transitional employment services for 12 months. Pursuant to the terms of the Cadbury Schweppes share option plan, Mr. Belsito will be able to exercise all of his vested stock options, as of his departure date, until December 18, 2008. In addition, Mr. Belsito will be able to exercise 100% of his unvested performance options for 12 months following the third anniversary of the date of grant, to the extent the performance targets are met at the end of the three-year performance period. To the extent the performance targets are not met at the end of the third anniversary, the performance targets will be reviewed again at the fifth anniversary of the date of grant. If the performance targets are met, Mr. Belsito will be entitled to exercise the options for 12 months following the satisfaction of the performance period. If the performance targets are not met, all of his unvested options will be forfeited.
 
The tables below include the actual termination payments accrued by Mr. Cassagne and Mr. Belsito as of their date of separation on October 12, 2007 and December 19, 2007, respectively.
 


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        Separation from
Name
 
Compensation Element
 
Service Payment
 
Gilbert M. Cassagne
  Salary Continuation Payments(1)   $ 1,800,000  
    Lump Sum Cash Payments(2)   $ 900,000  
    Lump Sum Annual Incentive Plan Payment(3)   $ 900,000  
    Lump Sum 2007 Annual Incentive Plan Payment(4)   $ 448,406  
    Accelerated Equity Vesting        
   
  •   Stock Options(5)
  $ 227,868  
   
  •   Long Term Incentive Plan(6)
  $ 2,281,155  
   
  •   Integration Success Share Plan(7)
  $ 612,712  
    Other(9)   $ 90,756  
             
    Total   $ 7,260,897  
             
             
John L. Belsito
  Salary Continuation Payments(1)   $ 853,200  
    Lump Sum Cash Payments(2)   $ 474,000  
    Lump Sum Annual Incentive Plan Payment(3)   $ 379,200  
    Lump Sum 2007 Annual Incentive Plan Payment(4)   $ 241,414  
    Accelerated Equity Vesting        
   
  •   Stock Options(5)
  $ 67,437  
   
  •   Long Term Incentive Plan(6)
  $ 1,280,622  
   
  •   Integration Success Share Plan(7)
  $ 124,588  
   
  •   Bonus Share Retention Plan(8)
  $ 304,729  
    Other(9)   $ 23,006  
             
    Total   $ 3,748,196  
             
 
(1) The amount shown represents salary continuation in an amount equal to (x) the annual base salary and (y)  Target Award.
 
(2) The amount shown represents a lump sum cash payment equal to the annual base salary.
 
(3) The amount shown represents a lump sum payment under the annual incentive plan equal to the Target Award.
 
(4) The amount shown represents a lump sum cash payment equal to each NEO’s 2007 annual incentive plan payment, pro-rated through the employment termination date and based on the actual performance targets achieved for 2007.
 
(5) The amount shown represents the value of the unvested stock options through the employment termination date for Mr. Cassagne and Mr. Belsito, October 17, 2007 and December 19, 2007, respectively assuming the performance targets were achieved. To the extent the performance targets are not met at the end of the third anniversary of the date of grant, the performance targets will be reviewed again at the fifth anniversary of the date of grant. If the performance targets are met, each NEO will be entitled to exercise the options for 12 months following the satisfaction of the performance period. If the performance targets are not met, all of their unvested options will be forfeited.
 
(6) The amount shown represents the value of the unvested equity awards under the long term incentive plan through the employment termination date.

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(7) The amount shown represents the value of the unvested award under the integration success share plan pro-rated through the employment termination date.
 
(8) The amount shown represents the combined value of (i) Cadbury Schweppes ordinary shares that Mr. Belsito elected to defer under the bonus share retention plan (the “basic shares”), (ii) a matched share award equal to 40% of the number of his basic shares, pro-rated through the employment termination date and (iii) a matched share award equal to 60% of the number of his basic shares, pro-rated through the employment termination date and assuming that the maximum performance targets were achieved.
 
(9) This amount represents the estimated combined cash value over the salary continuation period of the continuation of medical, dental and vision benefits for Mr. Cassagne ($12,156) and Mr. Belsito ($12,156) and transitional employment services for Mr. Cassagne ($78,600) and for Mr. Belsito ($10,850).
 
New Plans
 
Prior to the separation, we intend to adopt the following plans: the Dr Pepper Snapple Group, Inc. Omnibus Stock Incentive Plan of 2008 (the “stock incentive plan”), the Dr Pepper Snapple Group, Inc. Annual Cash Incentive Plan (the “cash incentive plan”) and the Dr Pepper Snapple Group, Inc. employee stock purchase plan (the “ESPP”).
 
Omnibus Stock Incentive Plan of 2008
 
Prior to the separation, we intend to adopt the Dr Pepper Snapple Group, Inc. Omnibus Stock Incentive Plan of 2008, which will allow us to reward employees, non-employee directors and consultants by enabling them to acquire shares of common stock of Dr Pepper Snapple Group, Inc. The following is a summary of the expected terms of the stock incentive plan, which is qualified in its entirety to the provisions of the stock incentive plan that may be approved by the Cadbury Schweppes share incentive committee.
 
Common Stock Available for Awards.   The maximum number of shares of common stock available for issuance under the stock incentive plan will be 9,000,000 shares. In the discretion of our compensation committee, 2,000,000 of these shares of common stock may be granted in the form of incentive stock options. If any shares covered by an award are cancelled, forfeited, terminated, expire unexercised or are settled through issuance of consideration other than shares of our common stock (including, without limitation, cash), these shares will again become available for award under the stock incentive plan.
 
Eligibility.   Awards may be made under the stock incentive plan to any employee of the company or its subsidiaries, or any of our non-employee directors or consultants. Because participation and the types of awards under the stock incentive plan are subject to the discretion of our compensation committee, the number of participants in the plan and the benefits or amounts that will be received by any participant or groups of participants, if the stock incentive plan is approved, are not currently determinable.
 
Administration.   Prior to the separation, the remuneration committee of the board of directors of Cadbury Schweppes will administer the stock incentive plan. After the separation, our compensation committee will administer the stock incentive plan. Subject to the terms of the stock incentive plan, the administrator of the plan may select participants to receive awards, determine the types of awards and the terms and conditions of awards, interpret provisions of the plan and make all factual and legal determinations regarding the plan and any award agreements.
 
Types of Awards.   The stock incentive plan provides for grants of stock options (which may consist of incentive stock options or nonqualified stock options), stock appreciation rights, stock awards (which may consist of restricted stock and restricted stock unit awards) or performance awards. The terms of the awards will be embodied in an award agreement and awards may be granted singly, in combination or in tandem. All or part of an award may be subject to such terms and conditions established by our compensation committee, including, but not limited to, continuous service with the company and its subsidiaries, achievement of specific business objectives and attainment of performance goals. No award may be repriced without shareholder approval.


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  •  Stock Options and Stock Appreciation Rights.   The stock incentive plan permits the granting of stock options to purchase shares of common stock and stock appreciation rights. The exercise price of each stock option and stock appreciation right may not be less than the fair market value of our common stock on the date of grant. The term of each stock option or stock appreciation right will be set by our compensation committee and may not exceed ten years from the date of grant. Our compensation committee will determine the date each stock option or stock appreciation right may be exercised and the period of time, if any, after retirement, death, disability or other termination of employment during which stock options or stock appreciation rights may be exercised. In general, a grantee may pay the exercise price of an option in cash or shares of common stock. Our compensation committee may allow the grantee to exercise an option by means of a cashless exercise.
 
  •  Stock Awards.   The stock incentive plan permits the granting of stock awards. Stock awards that are not performance awards will be restricted for a minimum period of three years from the date of grant; provided, however, that our compensation committee may provide for earlier vesting following an employee’s termination of employment for death, disability or retirement or upon a change of control or other specified events. The three-year restricted period does not apply to stock awards that are granted in lieu of salary or bonus or to replace awards forfeited in connection with the separation. Vesting of the stock awards may occur incrementally over the three-year restricted period.
 
  •  Performance Awards.   The stock incentive plan permits the granting of performance awards. Performance awards will be restricted for a minimum period of one year from the date of grant; provided, however, our compensation committee may provide for earlier vesting following an employee’s termination of employment for death, disability or retirement or upon a change of control or other specified events. Our compensation committee will determine the terms, conditions and limitations applicable to the performance awards and set the performance goals in its discretion. The performance goals will determine the value and amount of performance awards that will be paid to participants and the portion of an award that may be exercised to the extent such performance goals are met. Performance awards may be designed by our compensation committee to qualify as performance-based compensation under Section 162(m) of the Internal Revenue Code (“Section 162(m)”) but are not required to qualify under Section 162(m). For purposes of Section 162(m), performance goals will be designated by our compensation committee and will be based upon one or more of the following performance goal measures:
 
  •  revenue and income measures (including those relating to revenue, gross margin, income from operations, net income, net sales and earnings per share);
 
  •  expense measures (including those relating to costs of goods sold, selling, general and administrative expenses and overhead costs);
 
  •  operating measures (including those relating to volume, margin, productivity and market share);
 
  •  cash flow measures (including those relating to net cash flow from operating activities and working capital);
 
  •  liquidity measures (including those relating to earnings before or after the effect of certain items such as interest, taxes, depreciation and amortization, and free cash flow);
 
  •  leverage measures (including those relating to debt-to-equity ratio and net debt);
 
  •  market measures (including those relating to stock price, total shareholder return and market capitalization measures);
 
  •  return measures (including those relating to return on equity, return on assets and return on invested capital);


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  •  corporate value measures (including those relating to compliance, safety, environmental and personnel matters); and
 
  •  other measures such as those relating to acquisitions, dispositions or customer satisfaction.
 
Any performance criteria selected by our compensation committee may be used to measure our performance as a whole or the performance of any of our segments, and may be measured for the company alone or relative to a peer group or index.
 
Awards to Non-Employee Directors.   Our compensation committee may grant non-employee directors one or more awards and establish the terms of the award in the applicable award agreement. No award will confer upon any director any right to serve as a director for any period of time or to continue at any rate of compensation.
 
Award Payments.   Awards may be paid in cash, common stock or a combination of cash and common stock. At the discretion of our compensation committee, the payment of awards may also be deferred, subject to compliance with Section 409A of the Internal Revenue Code. In addition, in the discretion of our compensation committee, rights to dividends or dividend equivalents may be extended to any shares of common stock or units denominated in shares of common stock. Under the plan, during any one-year period, participants may not be granted options or stock appreciation rights exercisable for more than 500,000 shares of common stock or stock awards exercisable for more than 250,000 shares of common stock.
 
Adjustments.   If any changes in shares of common stock resulting from stock splits, stock dividends, reorganizations, recapitalizations, any merger or consolidation of the company, or any other event that affects our capitalization occurs, the terms of any outstanding awards and the number of shares of common stock issuable under the stock incentive plan may be adjusted in order to prevent enlargement or dilution of the benefits or potential benefits intended to be made available under the stock incentive plan.
 
Section 162(m) of the Internal Revenue Code.   Section 162(m) limits us to an annual deduction for federal income tax purposes of $1,000,000 for compensation paid to covered employees. Performance-based compensation is excluded from this limitation. The stock incentive plan is designed to permit our compensation committee to grant awards that qualify as performance-based for purposes of satisfying the conditions of Section 162(m).
 
Assignability.   No award under the stock incentive plan is assignable or otherwise transferable, unless otherwise determined by our compensation committee.
 
Amendment, Modification and Termination.   The stock incentive plan will terminate automatically ten years after its effective date, which will be the date of the separation. Our board or our compensation committee may amend, modify, suspend or terminate the stock incentive plan, to the extent that no such action will materially adversely affect the rights of a participant holding an outstanding award under the stock incentive plan without such participant’s consent, and no such action will be taken without shareholder approval, to the extent shareholder approval is legally required.
 
Federal Income Tax Consequences of Awards .
 
  •  Incentive Stock Options.   The grant of an incentive stock option under the stock incentive plan will not be a taxable event for the grantee or the company. A grantee will not recognize taxable income upon exercise of an incentive stock option, except that the alternative minimum tax may apply, and any gain realized upon a disposition of shares of common stock received pursuant to the exercise of an incentive stock option will be taxed as long-term capital gain if the grantee holds the shares for at least two years after the date of grant and for one year after the date of exercise, or the applicable capital gains holding period requirement. We will not be entitled to any tax deduction with respect to the exercise of an incentive stock option, except as discussed below.


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      For the exercise of a stock option to qualify for the foregoing tax treatment, the grantee generally must be an employee of the company from the date the stock option is granted through a date within three months before the date of exercise of the stock option.
 
      If all of the foregoing requirements are met, except the applicable capital gains holding period requirement discussed above, the grantee will recognize ordinary income upon the disposition of the shares in an amount generally equal to the excess of the fair market value of the shares at the time the stock option was exercised over the stock option exercise price, but not in excess of the gain realized on the sale. The balance of the realized gain, if any, will be short-term or long-term capital gain. We will be allowed a tax deduction to the extent the grantee recognizes ordinary income, subject to our compliance with Section 162(m) and to certain tax reporting requirements.
 
  •  Nonqualified Stock Options.   The grant of a nonqualified stock option under the stock incentive plan will not be a taxable event for the grantee or the company. Upon exercising a nonqualified stock option, a grantee will recognize ordinary income in an amount equal to the difference between the exercise price and the fair market value of the shares on the date of exercise. Upon a subsequent sale or exchange of shares acquired pursuant to the exercise of a non-qualified stock option, the grantee will have taxable capital gain or loss, measured by the difference between the amount realized on the disposition and the tax basis of the shares, generally, the amount paid for the shares plus the amount treated as ordinary income at the time the stock option was exercised. If we comply with applicable reporting requirements and with the restrictions of Section 162(m), we will be entitled to a tax deduction in the same amount and generally at the same time as the grantee recognizes ordinary income.
 
  •  Stock Appreciation Rights.   There are no immediate tax consequences of receiving an award of stock appreciation rights under the stock incentive plan. Upon exercising a stock appreciation right, a grantee will recognize ordinary income in an amount equal to the difference between the exercise price and the fair market value of the shares on the date of exercise. If we comply with applicable reporting requirements and with the restrictions of Section 162(m), we will be entitled to a tax deduction in the same amount and generally at the same time as the grantee recognizes ordinary income.
 
  •  Restricted Stock.   A grantee who is awarded restricted stock under the stock incentive plan will not recognize any taxable income for federal income tax purposes in the year of the award, provided that the shares are nontransferable and subject to a substantial risk of forfeiture. However, the grantee may elect under Section 83(b) of the Internal Revenue Code to recognize ordinary income in the year of the award in an amount equal to the fair market value of the shares on the date of the award, less the purchase price, if any, determined without regard to the restrictions. If the grantee does not make such a Section 83(b) election, the fair market value of the shares on the date the restrictions lapse, less the purchase price, if any, will be treated as ordinary income to the grantee and will be taxable in the year the restrictions lapse. We will be entitled to a tax deduction in the same amount and generally at the same time as the grantee recognizes ordinary income.
 
  •  Restricted Stock Units.   A grantee who is awarded a restricted stock unit under the stock incentive plan will not recognize any taxable income for federal income tax purposes and the company will not be entitled to a tax deduction, in each case at that time. When the restricted stock unit award vests and shares are transferred to the grantee, the grantee will recognize ordinary income in an amount equal to the fair market value of the transferred shares at such time less any cash consideration which the grantee paid for the shares, and the company will be entitled to a corresponding deduction. Any gain or loss realized upon the grantee’s sale or exchange of the shares will be treated as long-term or short-term capital gain or loss. The grantee’s basis for the shares will be the amount recognized as taxable compensation plus any cash consideration which the grantee paid for the shares. The grantee’s holding period for the shares will begin on the day after the date the shares are transferred to the grantee.
 
  •  Performance Awards.   The grant of a performance award under the stock incentive plan will not be a taxable event for the company. The payment of the award is taxable to a grantee as ordinary income. If we comply with applicable reporting requirements and with the restrictions of Section 162(m), we will be


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  entitled to a tax deduction in the same amount and generally at the same time as the grantee recognizes ordinary income.
 
Cash Incentive Plan
 
Prior to the separation, we intend to adopt the Dr Pepper Snapple Group, Inc. Annual Cash Incentive Plan, which will allow us to reward employees by enabling them to receive performance-based cash compensation. The following is a summary of the expected terms of the cash incentive plan, which is qualified in its entirety to the provisions of the cash incentive plan that may be approved by Cadbury Schweppes.
 
Eligibility.   Awards may be made under the cash incentive plan to any employee of the company or its subsidiaries, in the discretion of our compensation committee. Because participation and the types of awards under the cash incentive plan are subject to the discretion of our compensation committee, the number of participants in the plan and the benefits or amounts that will be received by any participant, or groups of participants, if the plan is approved, are not currently determinable.
 
Administration.   Prior to the separation, the remuneration committee of the board of directors of Cadbury Schweppes will administer the cash incentive plan. After the separation, our compensation committee will administer the cash incentive plan. Subject to the terms of the cash incentive plan, the administrator of the plan may select participants to receive awards, determine the terms and conditions of awards, interpret provisions of the plan and make factual and legal determinations regarding the plan and any award agreements.
 
Awards.   The terms of the cash awards will be embodied in an award agreement. All or part of an award may be subject to such terms and conditions established by our compensation committee, including, but not limited to, continuous service with the company and its subsidiaries and the attainment of performance goals. For purposes of Section 162(m), performance goals for the performance-based awards will be designated by our compensation committee and will be based upon one or more of the performance goals set forth under “— Omnibus Stock Incentive Plan of 2008 — Types of Awards — Performance Awards.”
 
Our compensation committee will review and determine the terms, conditions and limitations applicable to the awards. For individuals participating in the cash incentive plan for 2008, the weighting of the performance goals currently will be based 60% on our underlying operating profit and 40% on our net sales in 2008. The maximum annual award that may be made to any participant under the cash incentive plan may not exceed $5,000,000.
 
Award Payments.   Awards will be paid in cash. At the discretion of our compensation committee, the payment of awards may also be deferred, subject to compliance with Section 409A of the Internal Revenue Code.
 
Adjustments.   If, during a performance period, any merger, consolidation, acquisition, separation, reorganization, liquidation or any other event occurs which has the effect of distorting the applicable performance measures, the performance goals may be adjusted or modified to the extent permitted by Section 162(m) in order to prevent enlargement or dilution of the benefits or potential benefits intended to be made available under the cash incentive plan.
 
Section 162(m) of the Internal Revenue Code.   The incentive plan is designed to permit our compensation committee to grant awards that qualify as performance-based for purposes of satisfying the conditions of Section 162(m).
 
Assignability.   No award under the cash incentive plan is assignable or otherwise transferable, unless otherwise determined by our compensation committee.
 
Amendment, Modification and Termination.   The cash incentive plan will terminate automatically ten years after its effective date, which will be the date of the separation. Our board or our compensation committee may amend, modify, suspend or terminate the cash incentive plan, to the extent that no such action will materially adversely affect the rights of a participant entitled to an award under the incentive plan without such participant’s


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consent, and no such action will be taken without shareholder approval, to the extent shareholder approval is legally required.
 
Employee Stock Purchase Plan
 
Prior to the separation, we intend to adopt the Dr Pepper Snapple Group, Inc. Employee Stock Purchase Plan that provides for the purchase of shares of our common stock by eligible employees. The following is a summary of the expected terms of the ESPP, which is qualified in its entirety to the provisions of the ESPP that may be approved by the Cadbury Schweppes share incentive committee.
 
Reserved Shares Available for Purchase.   Subject to adjustment, the maximum number of shares available for purchase under the ESPP is 2,250,000 shares.
 
Eligibility.   Eligible employees may include certain employees of the company or its subsidiaries that meet certain requirements defined by our compensation committee (excluding otherwise eligible employees whose participation in the ESPP would cause them to own common stock equaling 5% or more of the combined voting power or value of all classes of our stock).
 
Participation.   Participation in the ESPP will be voluntary and dependent upon each eligible employee’s election to contribute a portion of his or her compensation to an ESPP account, subject to limits set forth in the Internal Revenue Code.
 
Administration.   Our compensation committee will administer the ESPP. Subject to the terms of the ESPP, our compensation committee will have the authority to interpret provisions of the plan and make all factual and legal determinations regarding the plan.
 
Stock Purchases.   At the determination of our compensation committee, subject to limits set forth in the Internal Revenue Code, shares of our common stock may be purchased on the last business day of the purchase period at between 85% to 100% of the fair market value of the common stock on any of (1) the first business day of the purchase period, (2) the last business day of the purchase period or (3) the lower of the first or last business day of the purchase period, as determined by our compensation committee. Our compensation committee may specify the maximum number of shares of common stock that each participant may purchase during any purchase period. A “purchase period” shall be the 12-month period commencing on each January 1, or such other period as may be determined by our compensation committee not to exceed 27 months.
 
Withdrawal of Participation / Termination of Employment.   A participant may elect to cease participation in the ESPP at any time and withdraw all contributions credited to his or her ESPP account. If a participant’s employment with us terminates for any reason, the participant will automatically cease to participate in the ESPP and we will refund all contributions credited to his or her ESPP account without interest.
 
Adjustments.   If, during a purchase period, any changes in shares of common stock resulting from stock splits, stock dividends, reorganizations, recapitalizations, any merger or consolidation of the company, or any other event that affects our capitalization occurs, the right to purchase shares during any purchase period, the maximum number and price of the shares of common stock that may be purchased and the number of shares authorized under the ESPP may be adjusted in order to prevent enlargement or dilution of the benefits or potential benefits intended to be made available under the ESPP.
 
Amendment and Termination.   Our board or our compensation committee may amend, modify, suspend or terminate the ESPP; provided, however, that no such action will be taken without shareholder approval, to the extent shareholder approval is legally required.
 
Federal Income Tax Consequences of Awards.   The ESPP is intended to qualify as an “Employee Stock Purchase Plan” under Section 423 of the Internal Revenue Code (“Section 423”). Under Section 423, a participant who purchases common stock through the ESPP will not recognize any income at the time of the purchase for the


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difference between the fair market value of the common stock at the time of purchase and the purchase price. If a participant disposes of common stock purchased through the ESPP two or more years after the first day of the purchase period or one year or more after the date the purchase right is exercised, whichever is later, the participant will recognize ordinary income equal to the lesser of (1) the amount by which the fair market value of the common stock when purchased exceeds the purchase price, and (2) the amount, if any, by which the common stock’s fair market value at the time of disposition exceeds the purchase price. The participant’s tax basis in the common stock will be increased by the amount recognized as ordinary income and any further gain recognized on the disposition will be treated as long- term capital gain or loss. In general, we will not be entitled to a tax deduction with respect to the disposition of common stock described in this paragraph.
 
If the participant disposes of shares of common stock acquired under the ESPP within two years after the first day of the purchase right period or within one year after the date the purchase right is exercised, whichever is later, the participant will recognize ordinary income, and we will be entitled to a tax deduction in an amount equal to the excess of the fair market value of the common stock on the last day of the purchase right period over the purchase price of the common stock under the ESPP. The participant’s tax basis in the common stock will be increased by the amount recognized as ordinary income. In addition, upon disposition of the common stock, the participant will recognize ordinary income or loss equal to the difference between the price at which the common stock is disposed of and the cost basis of the common stock, as so increased. We will be entitled to any tax deduction with respect to the amount recognized by the participant as ordinary income.


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OWNERSHIP OF OUR COMMON STOCK
 
The following table sets forth the expected beneficial ownership of our common stock calculated as of March 19, 2008, based upon the distribution of 0.12 shares of our common stock for every Cadbury Schweppes ordinary share by:
 
  •  each stockholder who is expected following the distribution to beneficially own more than 5% of our common stock;
 
  •  each executive officer;
 
  •  each of our directors; and
 
  •  all of our executive officers and directors as a group.
 
To the extent our directors and executive officers own ordinary shares of Cadbury Schweppes at the time of the distribution, they will participate in the distribution on the same terms as other holders of ordinary shares of Cadbury Schweppes.
 
Following the distribution, we will have an aggregate of approximately 253.4 million shares of common stock outstanding, based on approximately 2.1 billion ordinary shares of Cadbury Schweppes outstanding on March 13, 2008. Following the distribution, we will have approximately 55,000 holders of our common stock, based upon such number of Cadbury Schweppes shareholders as of March 13, 2008. The percentage ownership of each beneficial owner of Cadbury Schweppes will be the same in DPS after the distribution.
 
The number of shares beneficially owned by each stockholder, director or officer is determined according to the rules of the SEC and the information is not necessarily indicative of beneficial ownership for any other purpose. The mailing address for each of the directors and executive officers listed below is c/o Dr Pepper Snapple Group, Inc., 5301 Legacy Drive, Plano, Texas 75024.
 
                 
    Shares of Common Stock
 
    Beneficially Owned  
Name of Beneficial Owner
  Number     Percent  
 
Wayne R. Sanders
    0       *  
Larry D. Young
    1,617       *  
John O. Stewart
    1,764       *  
James L. Baldwin, Jr.
    2,008       *  
Rodger L. Collins
    0       *  
Randall E. Gier
    8,356       *  
Pedro Herrán Gacha
    2,132       *  
Derry L. Hobson
    0       *  
James J. Johnston, Jr.
    7,810       *  
Lawrence N. Solomon
    6,069       *  
Terence D. Martin
    0       *  
Pamela H. Patsley
    0       *  
Jack L. Stahl
    0       *  
M. Anne Szostak
    0       *  
All executive officers and directors as a group (14 persons)
    29,756       *  
 
 
     * Less than 1%


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DESCRIPTION OF INDEBTEDNESS
 
Overview
 
On March 10, 2008, we entered into arrangements with a group of lenders to provide us with an aggregate of $4.4 billion of financing. The new arrangements consist of a $2.4 billion senior credit agreement that provides a $1.9 billion term loan A facility and a $500 million revolving credit facility (collectively, the “senior credit facility”) and a 364-day bridge credit agreement that provides a $2.0 billion bridge loan facility.
 
We currently expect to borrow an aggregate of $3.9 billion under the term loan A facility and the bridge loan facility prior to the completion of the separation (assuming the conditions to such borrowing have been satisfied or waived) and proceeds will be held in escrow pending completion of the separation. The principal conditions to the release of the escrow funds are:
 
(i) the accuracy of representations and warranties with respect to the separation;
 
(ii) the accuracy of representations and warranties relating to the subsidiary guarantees to be delivered at the time of separation and the absence of specified defaults relating to insolvency of our company or any of our guarantors;
 
(iii) the execution and delivery of the subsidiary guarantees, along with the delivery of customary corporate certificates, resolutions, opinions and other information relating to the guarantors;
 
(iv) the absence of governmental orders, judgments or decrees enjoining or prohibiting the financing transactions;
 
(v) the maintenance by us of specified investment grade corporate and debt ratings from the funding date through April 30, 2008; and
 
(vi) the occurrence of an agreed upon marketing period prior to the release from escrow in which to market notes to be issued by us to refinance any borrowings under the bridge loan facility.
 
The commitments of the lenders to lend under the senior credit facility and bridge loan facility will terminate on April 18, 2008 if the shareholders have not approved the separation by that date and otherwise on May 13, 2008 if all the conditions have not been satisfied or waived by that date.
 
The funds released from escrow will, be used to settle related-party debt and other balances with Cadbury Schweppes, eliminate Cadbury Schweppes’ net investment in us and pay $100 million of fees and expenses related to the new credit facilities.
 
We do not expect to make any borrowings under the revolving credit facility at the time of the separation (except to the extent replacing certain existing letters of credit).
 
We currently intend, subject to prevailing market conditions, to replace all or a portion of the bridge loan facility with the proceeds of the issuance of one or more series of notes and/or an alternative term loan facility. These notes and/or the alternative term loan facility would have terms that would differ from those contemplated for the bridge loan, including longer maturities, non-call periods and higher interest rates. We cannot assure you that we will be able to replace all or a portion of the bridge loan facility with notes or an alternate term loan facility or what the terms of any such notes or facility would be.
 
The documentation relating to the senior credit facility and bridge loan facility contains certain provisions that allow the bookrunners to increase the interest rates or yield of the loans, add collateral, reallocate up to $500 million between the term loan A facility and the bridge loan facility (and vice versa) and modify other terms and aspects of the facilities, in each case within a limit agreed upon by us.


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The following is a description of the material terms of the senior credit facility and the bridge loan facility. The summaries of the facilities are qualified in their entirety by the specific terms and provisions of the senior credit agreement and the bridge loan agreement, respectively, copies of which are included as exhibits to the registration statement of which this information statement is a part. You should read these documents carefully.
 
Senior Credit Facility
 
On March 10, 2008, we entered into a senior credit agreement with J.P. Morgan Securities Inc. and Banc of America Securities LLC, as joint lead arrangers, J.P. Morgan Securities Inc., Banc of America Securities LLC, Goldman Sachs Credit Partners L.P., Morgan Stanley Senior Funding, Inc. and UBS Securities LLC, as joint bookrunners, Bank of America, N.A., as syndication agent, JPMorgan Chase Bank, N.A., as administrative agent, Goldman Sachs Credit Partners L.P., Morgan Stanley Senior Funding, Inc. and UBS Securities LLC, as documentation agents and the lenders parties thereto.
 
Our new senior credit agreement provides senior unsecured financing of up to $2.4 billion, consisting of:
 
  •  a senior unsecured term loan A facility in an aggregate principal amount of $1.9 billion with a term of five years, all of which is expected to be drawn prior to the separation.
 
  •  a revolving credit facility in an aggregate principal amount of $500 million with a term of five years, none of which is expected to be drawn at the time of the separation (except to the extent replacing certain existing letters of credit) and all of which is expected to be available for working capital and general corporate purposes. Up to $75 million of the revolving credit facility is available for the issuance of letters of credit.
 
Interest Rates and Fees
 
Borrowings under the senior credit facility will bear interest at a floating rate per annum based upon the London interbank offered rate for dollars (“LIBOR”) or the alternate base rate (“ABR”), in each case plus an applicable margin which varies based upon our debt ratings, from 1.00% to 2.50%, in the case of LIBOR loans and 0.00% to 1.50% in the case of ABR loans. The alternate base rate means the greater of (a) JPMorgan Chase Bank’s prime rate and (b) the federal funds effective rate plus 1 / 2 of 1%. We anticipate, based on our expected debt ratings, that at the time of the separation the applicable margin for LIBOR loans will be 2.00% and for ABR loans will be 1.00%.
 
Interest is payable on the last day of the interest period, but not less than quarterly, in the case of any LIBOR loan and on the last day of March, June, September and December of each year in the case of any ABR loan.
 
An unused commitment fee is payable quarterly to the lenders on the unused portion of the commitments in respect of the revolving credit facility equal to .15% to .50% (depending upon our debt ratings and expected to be .30% at the time of the separation) per annum.
 
Prepayments
 
We may voluntarily prepay outstanding loans under the senior credit facility at any time, in whole or in part, plus accrued and unpaid interest and certain breakage costs, subject to prior notice.
 
Maturity and Amortization
 
We are required to pay annual amortization (payable in equal quarterly installments) on the aggregate principal amount of the term loan A equal to: (i) 10% per year for installments due in the first and second years following the initial date of funding, (ii) 15% per year for installments due in the third and fourth years following the initial date of funding, and (iii) 50% for installments due in the fifth year following the initial date of funding.


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Principal amounts outstanding under the revolving credit facility are due and payable in full at maturity.
 
Guarantees
 
All obligations under the senior credit facility will be guaranteed by each of our existing and future direct and indirect domestic material subsidiaries, subject to certain exceptions.
 
Certain Covenants and Events of Default
 
The senior credit facility contains customary negative covenants that, among other things, restrict our ability to:
 
  •  incur debt at subsidiaries that are not guarantors;
 
  •  incur liens;
 
  •  merge or sell, transfer, lease or otherwise dispose of all or substantially all assets;
 
  •  make investments, loans, advances, guarantees and acquisitions;
 
  •  enter into transactions with affiliates; and
 
  •  enter into agreements restricting our ability to incur liens or the ability of subsidiaries to make distributions.
 
These covenants are subject to certain exceptions described in the senior credit agreement.
 
In addition, the senior credit facility will require us to comply with the following financial covenants:
 
  •  a maximum total leverage ratio covenant; and
 
  •  a minimum interest coverage ratio covenant.
 
The senior credit facility will also contain certain usual and customary representations and warranties, affirmative covenants and events of default.
 
Bridge Loan Facility
 
On March 10, 2008, we entered into a 364-day bridge credit agreement with J.P. Morgan Securities Inc. and Banc of America Securities LLC, as joint lead arrangers, J.P. Morgan Securities Inc., Banc of America Securities LLC, Goldman Sachs Credit Partners L.P., Morgan Stanley Senior Funding, Inc. and UBS Securities LLC, as joint bookrunners, Bank of America, N.A., as syndication agent, JPMorgan Chase Bank, N.A., as administrative agent, Goldman Sachs Credit Partners L.P., Morgan Stanley Senior Funding, Inc. and UBS Securities LLC, as documentation agents and the lenders parties thereto.
 
Our new bridge credit agreement provides a senior unsecured bridge loan facility in an aggregate principal amount of $2.0 billion with a term of 364 days from the date we fund the bridge loan facility.
 
Interest Rates and Fees
 
Borrowings under the bridge loan facility will bear interest at a floating rate per annum based upon LIBOR or ABR, in each case plus an applicable margin which varies based upon our debt ratings, from 1.00% to 2.50%, in the case of LIBOR loans and 0.00% to 1.50% in the case of ABR loans. We anticipate, based on our expected debt ratings, that at the time of the separation the applicable margin for LIBOR loans will be 2.00% and for ABR loans will be 1.00%.


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Interest is payable on the last day of the interest period, but not less than quarterly, in the case of any LIBOR loan and on the last day of March, June, September and December of each year in the case of any ABR loan.
 
Prepayments
 
We may voluntarily prepay outstanding loans under the bridge loan facility at any time, in whole or in part, plus accrued and unpaid interest and certain breakage costs, subject to prior notice.
 
Under the bridge loan facility, we will be required to prepay outstanding bridge loans, subject to certain exceptions, with net proceeds from any:
 
  •  asset sales, insurance claims and condemnation proceedings; and
 
  •  debt and equity issuances.
 
Prior to the funding of the bridge loan facility, the commitments thereunder will be subject to reduction to the extent we receive net proceeds from certain debt and equity issuances.
 
Guarantees
 
All obligations under the bridge loan facility will be guaranteed by each of our existing and future direct and indirect domestic material subsidiaries, subject to certain exceptions.
 
Certain Covenants and Events of Default
 
The bridge loan facility contains covenants and events of default substantially similar to those contained in the senior credit facility, subject in each case to such variations as are customary for a bridge loan facility.


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DESCRIPTION OF CAPITAL STOCK
 
Our certificate of incorporation and by-laws will be amended and restated prior to the separation. The following description of the material terms of our capital stock contained in the amended and restated certificate of incorporation and by-laws is only a summary. You should refer to our forms of amended and restated certificate of incorporation and by-laws, which are included as exhibits to the registration statement of which this information statement is a part, along with the applicable provisions of Delaware law.
 
General
 
Our authorized capital stock consists of 800,000,000 shares of common stock, par value $0.01 per share, and 15,000,000 shares of preferred stock, all of which shares of preferred stock are undesignated. Our board of directors may establish the rights and preferences of the preferred stock from time to time. After the distribution, there will be approximately 253.4 million shares of our common stock issued and outstanding and no shares of preferred stock issued and outstanding.
 
Common Stock
 
Each holder of our common stock will be entitled to one vote for each share on all matters to be voted upon by the common stockholders and there will be no cumulative voting rights. Subject to any preferential rights of any outstanding preferred stock, holders of our common stock will be entitled to receive ratably the dividends, if any, as may be declared from time to time by the board of directors out of funds legally available. If there is a liquidation, dissolution or winding up of our company, holders of our common stock will be entitled to share in our assets remaining after the payment of liabilities and any preferential rights of any outstanding preferred stock.
 
Holders of our common stock will have no preemptive or conversion rights or other subscription rights and there will not be any redemption or sinking fund provisions applicable to the common stock. After the distribution, all outstanding shares of our common stock will be fully paid and non-assessable. The rights, preferences and privileges of the holders of our common stock will be subject to, and may be adversely affected by, the rights of the holders of shares of any series of preferred stock which we may designate and issue in the future.
 
Preferred Stock
 
Under the terms of our amended and restated certificate of incorporation, our board of directors will be authorized, subject to limitations prescribed by the Delaware General Corporation Law (“DGCL”), and by our amended and restated certificate of incorporation, to issue preferred stock in one or more series without stockholder approval. Our board of directors will have the discretion, subject to limitations prescribed by the DGCL and by our amended and restated certificate of incorporation, to determine the rights, preferences, privileges and restrictions, including voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences, of each series of preferred stock.
 
Anti-Takeover Effects of Various Provisions of Delaware Law and Our Certificate of Incorporation and By-laws
 
Provisions of the DGCL and our amended and restated certificate of incorporation and by-laws could make it more difficult to acquire us by means of a tender offer, a proxy contest or otherwise, or to remove incumbent officers and directors. These provisions, summarized below, would be expected to discourage certain types of coercive takeover practices and takeover bids our board of directors may consider inadequate and to encourage persons seeking to acquire control of us to first negotiate with us. We believe that the benefits of increased protection of our ability to negotiate with the proponent of an unfriendly or unsolicited proposal to acquire or restructure us will outweigh the disadvantages of discouraging takeover or acquisition proposals because, among other things, negotiation of these proposals could result in an improvement of their terms.
 
Composition of the Board.   Our amended and restated certificate of incorporation and by-laws will provide that the directors will be classified with respect to the time for which they hold office, into three classes. One class of


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directors will be originally elected for a term expiring at the annual meeting of stockholders to be held in 2009, another class will be originally elected for a term expiring at the annual meeting of stockholders to be held in 2010 and a third class will be originally elected for a term expiring at the annual meeting of stockholders to be held in 2011, with each director to hold office until his or her successor is duly elected and qualified. Commencing with the 2009 annual meeting of stockholders, directors elected to succeed directors whose terms then expire will be elected for a term of office to expire at the third succeeding annual meeting of stockholders after their election, with each director to hold office until such person’s successor is duly elected and qualified.
 
Board Vacancies to be Filled by Remaining Directors and Not Stockholders. Our amended and restated certificate of incorporation and by-laws will provide that any vacancies, including any newly created directorships, on the board of directors, will be filled by the affirmative vote of the majority of the remaining directors then in office, even if such directors constitute less than a quorum, or by a sole remaining director.
 
Removal of Directors by Stockholders.   Our amended and restated certificate of incorporation and by-laws will provide that directors may be removed by stockholders only for cause and only by the affirmative vote of the holders of at least two-thirds of the votes which all stockholders would be entitled to cast in any annual election of directors.
 
Stockholder Action.   Our amended and restated certificate of incorporation and by-laws will preclude stockholders from calling special meetings and taking action or passing resolutions by written consent.
 
Advance Notice of Director Nominations and Stockholder Proposals. Our amended and restated by-laws will establish advance notice procedures for stockholders to make nominations of candidates for election as directors or to bring other business before the annual meeting of stockholders. As will be specified in our amended and restated by-laws, director nominations and the proposal of business to be considered by stockholders may be made only pursuant to a notice of meeting, at the direction of the board of directors, or by a stockholder who is entitled to vote at the meeting and who has complied with the advance notice procedures that will be provided for in our amended and restated by-laws.
 
To be timely, a nomination of a director by a stockholder or notice for business to be brought before an annual meeting by a stockholder must be delivered to the secretary at our principal executive offices not less than 90 days nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting; provided, however, that in the event that the date of an annual meeting is advanced by more than 30 days or delayed by more than 60 days from such anniversary date, for notice by the stockholder to be timely, it must be delivered not earlier than the 120th day prior to such annual meeting and not later than the close of business on the later of the 90th day prior to such annual meeting or the 10th day following the day on which notice of such annual meeting was mailed or public announcement of the date of such meeting is first made, whichever first occurs. For purposes of the annual meeting of stockholders held following the end of 2008, the date of the preceding year’s annual meeting will be deemed to be April 23, 2008.
 
In the event a special meeting of stockholders is called for the purpose of electing one or more directors, any stockholder entitled to vote may nominate a person or persons as specified in our amended and restated by-laws, but only if the stockholder notice is delivered to the secretary at our principal executive offices not earlier than the 120th day prior to such special meeting and not later than the close of business on the later of (x) the 90th day prior to such special meeting and (y) the 10th day following the day on which notice of the date of such special meeting was mailed or public disclosure of the date of such special meeting was made, whichever first occurs.
 
Amendments to the Certificate of Incorporation and By-laws. Our amended and restated certificate of incorporation and by-laws will require an affirmative vote of two-thirds of the voting power of the outstanding shares to amend certain provisions of our amended and restated certificate of incorporation or by-laws, including the ability of stockholders to call special meetings or act by written consent, the size of the board, the director removal provisions, filling vacancies on the board, indemnification of directors and officers, advance notice provisions, and supermajority voting requirements.
 
Delaware Anti-Takeover Statute.   We will be subject to Section 203 of the DGCL, an anti-takeover statute. In general, Section 203 of the DGCL prohibits a publicly-held Delaware corporation from engaging in a “business


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combination” with an “interested stockholder” for a period of three years following the time the person became an interested stockholder, unless (with certain exceptions) the business combination or the transaction in which the person became an interested stockholder is approved in a prescribed manner. Generally, a “business combination” includes a merger, asset or stock sale, or other transaction resulting in a financial benefit to the interested stockholder. Generally, an “interested stockholder” is a person who, together with affiliates and associates, owns (or within three years prior to the determination of interested stockholder status did own) 15% or more of a corporation’s voting stock. The existence of this provision would be expected to have an anti-takeover effect with respect to transactions not approved in advance by the board of directors, including discouraging attempts that might result in a premium over the market price for the shares of common stock held by stockholders.
 
No Cumulative Voting.   The DGCL provides that stockholders are denied the right to cumulate votes in the election of directors unless our certificate of incorporation provides otherwise. Our certificate of incorporation will not provide for cumulative voting.
 
Limitations on Liability and Indemnification of Officers and Directors.   The DGCL authorizes corporations to limit or eliminate the personal liability of directors to corporations and their stockholders for monetary damages for breaches of directors’ fiduciary duties as directors. Our certificate of incorporation will include provisions that indemnify, to the fullest extent allowable under the DGCL, the personal liability of directors or officers for monetary damages for actions taken as a director or officer of our company, or for serving at our request as a director or officer or another position at another corporation or enterprise, as the case may be. Our certificate of incorporation will also provide that we must indemnify and advance reasonable expenses to our directors and officers, subject to our receipt of an undertaking from the indemnified party as may be required under the DGCL. We will also be expressly authorized to carry directors’ and officers’ insurance to protect our company, our directors, officers and certain employees for some liabilities.
 
The limitation of liability and indemnification provisions in our certificate of incorporation may discourage stockholders from bringing a lawsuit against directors for breach of their fiduciary duty. These provisions may also have the effect of reducing the likelihood of derivative litigation against directors and officers, even though such an action, if successful, might otherwise benefit us and our stockholders. However, this provision will not limit or eliminate our rights, or those of any stockholder, to seek non-monetary relief such as injunction or rescission in the event of a breach of a director’s duty of care. The provisions will not alter the liability of directors under the federal securities laws. In addition, your investment may be adversely affected to the extent that, in a class action or direct suit, we pay the costs of settlement and damage awards against directors and officers pursuant to these indemnification provisions.
 
There is currently no pending material litigation or proceeding against any of our directors, officers or employees for which indemnification is sought.
 
Authorized but Unissued Shares.   Our authorized but unissued shares of common stock and preferred stock will be available for future issuance without your approval. We may use additional shares for a variety of purposes, including future public offerings to raise additional capital, to fund acquisitions and as employee compensation. The existence of authorized but unissued shares of common stock and preferred stock could render more difficult or discourage an attempt to obtain control of us by means of a proxy contest, tender offer, merger or otherwise.
 
Listing
 
We intend to apply to have our common stock authorized for listing on the New York Stock Exchange under the symbol “DPS.”
 
Transfer Agent and Registrar
 
After the distribution, the transfer agent and registrar for our common stock will be Computershare Trust Company, N.A.


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THE DISTRIBUTION
 
Background and Reasons for the Distribution
 
On March 15, 2007, Cadbury Schweppes announced that it intended to separate its Americas Beverages business from its global confectionery business and its other beverages business (located principally in Australia). The board of directors of Cadbury Schweppes initially determined to simultaneously explore the potential for both a sale of our company to a third party and a distribution of our common stock to Cadbury Schweppes shareholders as alternatives for the separation of the businesses. After determining that difficult debt market conditions would not facilitate an acceptable sale process for the foreseeable future, Cadbury Schweppes announced on October 10, 2007 that it intended to focus on the separation of its Americas Beverages business through the distribution of the common stock of Dr Pepper Snapple Group, Inc. to Cadbury Schweppes shareholders. On February 15, 2008, Cadbury Schweppes’ board of directors approved the distribution of our common stock to the shareholders of Cadbury Schweppes. Cadbury Schweppes believes that the separation of its Americas Beverages business from its global confectionery business will enhance value for stockholders of Dr Pepper Snapple Group, Inc. and shareholders of Cadbury plc, the new parent company of Cadbury Schweppes, by creating significant opportunities and benefits, including:
 
  •  Enhancing focus.   The management of each company will be allowed to focus on its own business and strategic priorities. We will be able to continue building our beverage brands by adding scale through new products and strengthening its route-to-market. Cadbury plc will be able to focus on priorities in its global confectionery business and its other beverages business (located principally in Australia).
 
  •  Enabling more efficient capital allocation.   The separation will enable each company to allocate its capital more efficiently.
 
  •  Providing direct access to capital.   The separation will provide us with direct access to the debt and equity capital markets to finance expansion and growth opportunities.
 
  •  Improving ability to pursue strategic transactions.   Our ability to use our shares as consideration will improve our ability to pursue our own strategic initiatives, including acquisitions, joint ventures and investments.
 
  •  Enhancing market recognition with investors.   Following the separation, investors will be able to better assess our strengths and more accurately evaluate our performance compared to companies in the same or similar industry.
 
  •  Increasing ability to attract and retain employees.   The separation will enable us to offer key employees equity-based compensation tied directly to the performance of our business. Incentive compensation arrangements for key employees tied directly to the market performance of our common stock will enhance our ability to attract and retain qualified personnel.
 
Neither we nor Cadbury plc can assure you that any of these benefits will be realized to the extent anticipated, or at all.
 
We do not anticipate any material changes to our operations as a result of the distribution. The Americas Beverages operations conducted by Cadbury Schweppes immediately before the distribution will be the same as the operations conducted by us immediately after the distribution. However, our capital structure and expenses will be different after the distribution. See “Capitalization,” “Unaudited Pro Forma Combined Financial Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”


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Reorganization of Cadbury Schweppes and Distribution of Shares of Our Common Stock
 
On March 15, 2007, Cadbury Schweppes announced its intention to separate its Americas Beverages business from its global confectionery business. On October 10, 2007, Cadbury Schweppes further announced that it was focusing on a distribution of the common stock of the Americas Beverages business to the shareholders of Cadbury Schweppes as the method by which it would separate the Americas Beverages business from its global confectionery business. The distribution will be effected through a series of steps, which ultimately will result in shareholders of Cadbury Schweppes owning:
 
  •  shares of common stock in Dr Pepper Snapple Group, Inc., which will be listed on the New York Stock Exchange; and
 
  •  shares in Cadbury plc, which will be listed on the London Stock Exchange, with American depositary receipts representing Cadbury plc ordinary shares listed on the New York Stock Exchange. 
 
Cadbury Schweppes has scheduled an extraordinary general meeting of shareholders for April 11, 2008 to consider proposals related to the reorganization, separation and the distribution. Approval by 75% of votes cast at the shareholder meeting is necessary. Immediately before the extraordinary general meeting, there will be a shareholder meeting convened by the High Court of Justice of England and Wales (the “U.K. Court”), at which meeting the minimum vote required for the approval of the proposals is not less than 75% of votes (by value) cast at such meeting.
 
Following these shareholder meetings if shareholder approval is obtained, Cadbury Schweppes currently intends to effect the separation and the distribution through the following steps:
 
  •  Scheme of Arrangement.   Cadbury Schweppes intends to implement a corporate reorganization pursuant to which a new company, Cadbury plc, will become the parent company of Cadbury Schweppes. This corporate reorganization is known as a “scheme of arrangement” under U.K. law. Pursuant to the scheme of arrangement, all outstanding Cadbury Schweppes ordinary shares will be cancelled and holders will receive (1) Cadbury plc ordinary shares, which will be the ongoing ownership interest in the global confectionery business and its other beverages business and (2) Cadbury plc “beverage shares,” which, ultimately, will entitle the holders, if the Cadbury plc reduction of capital becomes effective, to receive shares of our common stock in connection with the distribution.
 
  •  Reduction of Capital and the Distribution of Our Common Stock .  Shortly after the scheme of arrangement becomes effective, Cadbury plc will cancel the Cadbury plc “beverage” shares (known as a “reduction of capital”) and transfer its Americas Beverages business to us. In return for the transfer of the Americas Beverages business to us, we will distribute shares of our common stock to holders of Cadbury plc “beverage shares.”
 
The scheme of arrangement, the reduction of capital, the distribution and the other conditions to the completion of the distribution are explained in more detail below.
 
Scheme of Arrangement and the Issue of Cadbury plc Shares
 
Cadbury Schweppes intends to implement a corporate reorganization pursuant to which Cadbury plc, a new company incorporated under the laws of England and Wales, will become the holding company of Cadbury Schweppes. This corporate reorganization will be effected by way of a formal procedure under the United Kingdom Companies Act of 1985 known as a “scheme of arrangement” under U.K. law.
 
If the scheme of arrangement becomes effective, the following will occur:
 
  •  Cadbury Schweppes will become a wholly owned subsidiary of Cadbury plc.


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  •  Cadbury Schweppes ordinary shares will be cancelled and each holder of Cadbury Schweppes ordinary shares will be entitled to receive:
 
  •  0.64 Cadbury plc ordinary shares for every Cadbury Schweppes ordinary share that they hold at the Scheme Record Time (as defined below); and
 
  •  0.36 Cadbury plc “beverage shares” for every Cadbury Schweppes ordinary share that they hold at the Scheme Record Time. The Cadbury plc “beverage shares” will be non-transferable and each 0.36 of a beverage share will represent the right to receive 0.12 shares of our common stock if the Cadbury plc reduction of capital is approved by the U.K. Court.
 
The number of Cadbury plc ordinary shares and Cadbury plc “beverage shares” to be received may change. The Scheme Record Time will be 6:00 p.m. on the business day immediately preceding the date on which the scheme of arrangement becomes effective. The Scheme Record Time is expected to be 6:00 p.m. (United Kingdom time) on May 1, 2008.
 
The scheme of arrangement is subject to various conditions, including, among others, the approval by Cadbury Schweppes shareholders at an extraordinary general meeting and at the U.K. Court convened shareholder meeting, approval by the U.K. Listing Authority and London Stock Exchange to admit the Cadbury plc ordinary shares to trading on the London Stock Exchange, the approval of the U.K. Court and approval by the NYSE to list the Cadbury plc ADRs.
 
The U.K. Court hearing for the scheme of arrangement is scheduled for April 29, 2008.
 
Cadbury plc Reduction of Capital and the Issue of Shares of Our Common Stock
 
Shortly after the scheme of arrangement becomes effective, Cadbury plc intends to implement a reduction of capital, pursuant to which, ultimately, the shares of our common stock will be distributed.
 
If the capital reduction is implemented, the following will occur:
 
  •  the share capital of Cadbury plc will be reduced by decreasing the nominal value of each Cadbury plc ordinary share in order to create distributable reserves in Cadbury plc;
 
  •  the Cadbury plc “beverage shares” will be cancelled; and
 
  •  the holders of the Cadbury plc “beverage shares” will receive 0.12 shares of our common stock for every 0.36 Cadbury plc beverage share that they hold at the Cadbury plc Reduction of Capital Record Time. The shares of our common stock will be distributed by us in consideration of the transfer by Cadbury plc of its Americas Beverages business to us.
 
The record date for the cancellation of the Cadbury plc “beverage shares” and the distribution of shares of our common stock will be at 6:00 p.m. (United Kingdom time) on the business day immediately preceding the date on which the order of the U.K. Court confirming the Cadbury plc reduction of capital is registered by the U.K. Registrar of Companies, which is expected to be on May 6, 2008. This date is referred to as the Cadbury plc Reduction of Capital Record Time.
 
The reduction of capital is subject to various conditions, including, among others, the scheme of arrangement having become effective and the approval of the U.K. Court.
 
The U.K. Court hearing for the Cadbury plc reduction of capital is scheduled for May 1, 2008.


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Conditions to the Distribution
 
We expect that the distribution will be completed on May 7, 2008; provided that, among other things, the following conditions have been satisfied or, to the extent possible, waived by Cadbury Schweppes:
 
  •  shareholder approval at the extraordinary general meeting to be held on April 11, 2008
 
  •  the SEC has declared effective our registration statement on Form 10 under the Exchange Act, of which this information statement forms a part, and no stop orders relating to this registration statement are in effect;
 
  •  Cadbury Schweppes, Cadbury plc and we have received all permits, registrations and consents required under the securities or blue sky laws of states or other political subdivisions of the United States or of foreign jurisdictions in connection with the distribution;
 
  •  Cadbury Schweppes, Cadbury plc and we have received all material permits, registrations, clearances and consents from governmental authorities and third persons necessary to permit the operation of our businesses thereafter;
 
  •  the New York Stock Exchange has approved our common stock for listing, subject to official notice of issuance;
 
  •  Cadbury plc has completed the contribution to us of the assets and operations of its Americas Beverages business described in this information statement;
 
  •  no order, injunction or decree issued by any court of competent jurisdiction or other legal restraint or prohibition preventing consummation of the distribution or any of the transactions related thereto, including the transfers of assets and liabilities contemplated by the separation and distribution agreement, is in effect;
 
  •  the scheme of arrangement having become effective;
 
  •  the Cadbury plc reduction of capital having become effective;
 
  •  we have completed the financing described in “Description of Indebtedness;” and
 
  •  no other events or developments shall have occurred that, in the judgment of the board of directors of Cadbury Schweppes, in its sole and absolute discretion, would result in the distribution having a material adverse effect on Cadbury Schweppes or its shareholders.
 
After shareholder approval for the separation and distribution has been received, you will not be required to take any further action in order to receive our common stock, nor will you be required to make any payment for the shares of our common stock you receive.
 
Manner of Effecting the Distribution
 
The general terms and conditions of the distribution will be set forth in the separation agreement to be entered into by Cadbury Schweppes and us. For a description of the expected terms of that agreement, see “Our Relationship with Cadbury plc After the Distribution — Description of Various Separation and Transition Arrangements — Separation Agreement.”
 
Cadbury Schweppes will contribute the subsidiaries that operate its Americas Beverages business to us, and we will issue our common stock to holders of the Cadbury plc “beverage shares”. The distribution will be made in book-entry form on the basis of 0.12 shares of our common stock for every 0.36 Cadbury plc “beverage shares” held at the Cadbury plc Reduction of Capital Record Time. Fractional shares of our common stock will not be delivered. Instead, the distribution agent will, as soon as is practicable on or after the distribution date, aggregate into whole shares of common stock all the fractional shares of our common stock that otherwise would have been distributed


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and sell them in the open market at the prevailing market prices. The distribution agent, in its sole discretion, without any influence by Cadbury plc or us, will determine when, through which broker-dealer and at what price to sell these whole shares. Any broker-dealer used by the distribution agent will not be an affiliate of either Cadbury plc or us. Following the sale, the distribution agent will distribute the aggregate sale proceeds ratably to holders who were entitled to a fractional interest in our common stock. The amount of this payment will depend on the prices at which the aggregated fractional shares of our common stock are sold by the distribution agent in the open market. We will be responsible for any payment of brokerage fees. For a description of our common stock that you will receive in the distribution, see “Description of Capital Stock.”
 
A book-entry account statement reflecting your ownership of shares of our common stock will be mailed to you, or your brokerage account will be credited for the shares of our common stock, on or about May 16, 2008. We will not issue actual stock certificates, except upon request.
 
Results of the Distribution
 
Following the distribution, we will be an independent, publicly-traded company owning and operating what had previously been Cadbury Schweppes’ Americas Beverages business. We expect that approximately 253.4 million shares of our common stock will be issued and outstanding immediately following the distribution, based upon the distribution of 0.12 shares of our common stock for each Cadbury Schweppes ordinary share, and the approximate number of outstanding Cadbury Schweppes ordinary shares on March 13, 2008. The actual number of shares to be distributed will be determined based on the number of Cadbury plc beverage shares outstanding at the Cadbury plc Reduction of Capital Record Time.
 
On April 11, 2008, a vote of Cadbury Schweppes shareholders to approve the distribution is scheduled to be held. After shareholder approval for the separation and distribution has been received, you will not be required to take any further action in order to receive shares of our common stock in the distribution, nor will you be required to make any payment for the shares of our common stock you receive. The distribution remains contingent on the approval of the scheme of arrangement by the U.K. Court and the subsequent confirmation by the U.K. Court of the Cadbury plc reduction of capital.
 
Cadbury Schweppes American Depositary Receipts
 
Certain holders beneficially own their ordinary shares of Cadbury Schweppes through Cadbury Schweppes ADRs. Pursuant to the scheme of arrangement, the holders of Cadbury Schweppes ADRs will receive new Cadbury plc ADRs. Holders of Cadbury Schweppes ADRs at the Depositary Record Time will be entitled to the Cadbury plc ordinary shares and the Cadbury plc “beverage shares” to which the Cadbury Schweppes ordinary shares underlying their ADRs are entitled. These Cadbury plc ordinary shares and Cadbury plc “beverage shares” will be held on their behalf by JPMorgan Chase Bank, N.A., the ADR Depositary. Pursuant to the Cadbury plc capital reduction, the Cadbury plc “beverage shares” will be cancelled as described above, and the Depositary will be entitled to receive the shares of our common stock. In lieu of distributing our shares to the Depositary, the Depositary will provide our transfer agent with records to enable such transfer agent to distribute the shares of our common stock to the former holders of Cadbury Schweppes ADRs entitled thereto. The Depositary will not be responsible for the distribution of any of our shares.
 
Pursuant to the separation and distribution, holders of Cadbury Schweppes ADRs will:
 
  •  receive 0.64 ADRs of Cadbury plc, which will be listed on the New York Stock Exchange, for each Cadbury Schweppes ADR that they hold at the Depositary Record Time (expected to be 5:00 pm (New York time) on May 1, 2008); and
 
  •  be entitled to receive 0.48 shares of our common stock, which will be listed on the New York Stock Exchange, for each Cadbury Schweppes ADR that they hold at the Depositary Record Time.


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Market for Our Common Stock
 
There is currently no trading market for our common stock. We intend to apply to have our common stock authorized for listing on the New York Stock Exchange under the symbol “DPS.” We have not and will not set the initial price of our common stock. The initial price will be established by the public markets.
 
We cannot predict the price at which our common stock will trade after the distribution. In fact, the combined trading prices after the separation of the shares of our common stock and the Cadbury plc ordinary shares that each Cadbury Schweppes shareholder will receive in the separation may not equal the trading price of a Cadbury Schweppes ordinary share immediately prior to the separation. The price at which our common stock trades is likely to fluctuate significantly, particularly until an orderly public market develops. Trading prices for our common stock will be determined in the public markets and may be influenced by many factors. See “Risk Factors — Risks Related to Our Common Stock — Our common stock has no existing public market and the price of our common stock may be subject to volatility.”
 
Shares of our common stock distributed to holders in connection with the distribution will be transferable without registration under the Securities Act except for shares received by persons who may be deemed to be our affiliates. Persons who may be deemed to be our affiliates after the distribution generally include individuals or entities that control, are controlled by or are under common control with us, which may include certain of our executive officers, directors or principal stockholders. Securities held by our affiliates will be subject to resale restrictions under the Securities Act. Our affiliates will be permitted to sell shares of our common stock only pursuant to an effective registration statement or an exemption from the registration requirements of the Securities Act, such as the exemption afforded by Rule 144 under the Securities Act.
 
Reason for Furnishing this Information Statement
 
This information statement is being furnished solely to provide information to shareholders of Cadbury Schweppes who will receive shares of our common stock in connection with the distribution. It is not provided as an inducement or encouragement to buy or sell any of our securities. You should not assume that the information contained in this information statement is accurate as of any date other than the date set forth on the cover. Changes to the information contained in this information statement may occur after that date, and we undertake no obligation to update the information.


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MATERIAL TAX CONSIDERATIONS
 
The following is a discussion, subject to the limitations and qualifications set forth therein, of the material U.K. and material U.S. federal tax consequences of the receipt of Cadbury plc “beverage shares” and Cadbury plc ordinary shares or Cadbury plc ADRs and the receipt, ownership and disposition of our common stock and is for general information only and is subject to the qualifications and limitations set forth herein. This discussion is based upon current U.K. and U.S. federal tax law, regulations, administrative practice, rulings and court decisions, the current U.S.-U.K. income tax treaty and the current U.S.-U.K. estate tax treaty and interpretations thereof, all as they exist as of the date of this information statement. All of the foregoing may be repealed, revoked or modified at any time, possibly with retroactive effect, so as to result in U.K. and U.S. federal tax consequences different from those discussed below. This discussion assumes that the transaction will be consummated in accordance with the separation and distribution agreement, this information statement and the private letter ruling request submitted to the IRS.
 
U.K. Holders
 
The following is a discussion for U.K. Holders, as defined below, of the material U.K. and U.S. federal tax consequences of the receipt of Cadbury plc “beverage shares” and Cadbury plc ordinary shares and their receipt, ownership and disposition of our common stock. A U.K. Holder for this purpose is a beneficial owner of Cadbury Schweppes ordinary shares that is, for U.K. tax purposes, resident or, in the case of individuals, domiciled and resident or ordinarily resident in (and only in) the United Kingdom for tax purposes and who holds our common stock and Cadbury plc ordinary shares as an investment (and not as securities to be realized in the course of a trade). This discussion is for general information only and does not purport to be a complete description of the consequences of the receipt of Cadbury plc “beverage shares” and Cadbury plc ordinary shares and the receipt, ownership and disposition of our common stock nor does it address the effects of any non-U.K. and non-U.S. tax laws. The tax treatment of a U.K. Holder may vary depending upon such U.K. Holder’s particular situation, and certain U.K. Holders (including, but not limited to, dealers in securities, broker-dealers, insurance companies, collective investment schemes and persons who have acquired (or are deemed for U.K. tax purposes to have acquired) our common stock and Cadbury plc ordinary shares by reason of an office or employment) may be subject to special rules not discussed below.
 
U.K. Holders are urged to consult their own tax advisors as to the specific tax consequences to them of the receipt of Cadbury plc “beverage shares” and Cadbury plc ordinary shares and the receipt, ownership and disposition of our common stock, including the effect of any non-U.K. and non-U.S. tax laws.
 
Receipt of Cadbury plc “Beverage Shares,” Cadbury plc Ordinary Shares and Our Common Stock
 
U.K. Tax Consequences.   U.K. Holders should not be treated as making a disposal or part disposal of their Cadbury Schweppes ordinary shares as a result of receiving Cadbury plc “beverage shares” and Cadbury plc ordinary shares in exchange for Cadbury Schweppes ordinary shares pursuant to the scheme of arrangement, and so no chargeable gain or allowable loss should arise for U.K. tax purposes. Cadbury plc “beverage shares” and Cadbury plc ordinary shares should be treated as the same asset, and having been acquired at the same time and for the same consideration, as those Cadbury Schweppes ordinary shares from which they are derived.
 
Furthermore, U.K. Holders should not be treated as making a disposal or part disposal of their “beverage shares” as a result of receiving our common stock in exchange for “beverage shares” pursuant to the Cadbury plc reduction of capital, and so no chargeable gain or allowable loss should arise for U.K. tax purposes. Our common stock should be treated as the same asset, and having been acquired at the same time and for the same consideration, as those Cadbury plc “beverage shares” from which they are derived.
 
In summary, our common stock and Cadbury plc ordinary shares that will be held by a U.K. Holder following the separation should be treated as the same asset, and having been acquired at the same time and for the same consideration, as Cadbury Schweppes ordinary shares.
 
Accordingly, following the separation, a U.K. Holder’s original base cost in their Cadbury Schweppes ordinary shares should be apportioned between our common stock and their Cadbury plc ordinary shares by reference to the market quotations of our common stock and the Cadbury plc ordinary shares on the first day of dealings in our common stock.


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For a U.K. Holder who, alone or together with persons connected with him, holds more than 5% of, or any class of, shares in or debentures of Cadbury Schweppes, it is a condition for the treatment described in each of the first two paragraphs above that the transactions are being effected for bona fide commercial reasons and do not form part of a scheme or arrangement of which the main purpose, or one of the main purposes, is an avoidance of liability to U.K. corporation tax or capital gains tax. U.K. Holders are advised that clearance under section 138 of the Taxation of Chargeable Gains Act 1992 has been obtained from U.K. H.M. Revenue and Customs (“HMRC”) that it is satisfied that this condition has been met.
 
A U.K. Holder who receives cash in lieu of a fractional share of our common stock or Cadbury plc ordinary shares will normally be treated as having (i) received that fractional share and then (ii) sold the fractional share for cash, thereby making a part disposal of his holding of common stock or Cadbury plc ordinary shares, as the case may be. This may, depending on individual circumstances (including the availability of exemptions and reliefs), give rise to a chargeable gain or allowable loss for the purposes of U.K. taxation on chargeable gains. However, as the amount of cash received should be “small” as compared to the value of his holding of our common stock or Cadbury plc ordinary shares, as the case may be, a U.K. Holder may, under current practice of HMRC, treat the cash received as a deduction from the base cost of the U.K. Holder’s holding of our common stock or Cadbury plc ordinary shares, as the case may be, rather than as a part disposal of such holding. HMRC considers the amount of cash received to be “small” when such amount is 5% or less of the value of such holding or is less than £3,000.
 
U.S. Federal Income Tax Consequences.   A U.K. Holder generally will not be subject to U.S. federal income tax with respect to the receipt of Cadbury plc “beverage shares,” Cadbury plc ordinary shares or our common stock including, any cash received in lieu of a fractional share of Cadbury plc ordinary shares or our common stock. See “U.K. Holders — Taxation of Dispositions of Our Common Stock” for a discussion of the circumstances under which a U.K. Holder would be subject to U.S. federal income tax with respect to cash received in lieu of a fractional share of our common stock.
 
Taxation of Dividends on Our Common Stock
 
U.K. Tax Consequences.   No amounts in respect of U.K. tax will be withheld at source from any dividend payments on our common stock made to U.K. Holders.
 
U.K. Holders of our common stock who are resident for tax purposes in the U.K. will, in general, be subject to U.K. income tax or corporation tax on the gross amount of dividends paid on our common stock, rather than on the amount actually received net of any U.S. withholding tax. Dividends received by such U.K. holders who are within the charge to U.K. corporation tax will be taxed at the prevailing U.K. corporation tax rate. An individual will generally be chargeable to U.K. income tax on dividends paid on our common stock at the dividend ordinary rate (currently 10%) or, to the extent that the amount of the gross dividend when treated as the top slice of his or her income exceeds the threshold for higher rate tax, at the dividend upper rate (currently 32.5%).
 
Credit will generally be available for U.S. tax required to be deducted or withheld from the dividends paid on our common stock against U.K. income tax or U.K. corporation tax to which the holder of our common stock is liable, broadly limited to the amount of such tax attributable to the dividends. As a result, individual U.K. Holders who are chargeable to U.K. income tax at the dividend ordinary rate on the whole of such dividends and who claim such credit through their tax return should have no further U.K. tax to pay in respect of those dividends. Individual U.K. Holders who are chargeable to U.K. income tax on all or any portion of the dividends at the dividend upper rate and who claim that credit through their tax return should be able to offset the amount of the available credit against their U.K. income tax liability. U.K. Holders who are chargeable to U.K. corporation tax on the dividends and who claim that credit should generally be able to offset the amount of the available credit against their U.K. corporation tax liability.
 
U.K. Holders should be aware that the U.K. Government has announced that the taxation of U.K. resident individuals owning shares in non-U.K. resident companies will change from April 6, 2008. In particular, the non-repayable one-ninth dividend tax credit that is currently available in respect of U.K. dividends will be extended to dividends from non-U.K. resident companies, subject to certain conditions which have yet to be finalized.
 
U.K. Holders who are companies should be aware that the U.K. Government is presently consulting on changes to the tax regime for foreign dividends.


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U.S. Federal Income Tax Consequences.   If we make distributions on our common stock, such distributions will constitute dividends for U.S. federal income tax purposes to the extent paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. To the extent not paid from our current or accumulated earnings and profits, distributions on our common stock will constitute a tax-free return of capital and will first be applied against and reduce a U.K. Holder’s adjusted basis in our common stock, but not below zero, and then the excess, if any, will be treated as gain from the sale of common stock. Dividends paid on our common stock to a U.K. Holder (who is not otherwise subject to U.S. federal income tax) generally will be subject to withholding of U.S. federal income tax at a 30% rate. However, assuming such a U.K. Holder satisfies the requirements of the U.S.-U.K. income tax treaty, the rate of withholding on dividends generally is 15%. In order for a U.K. Holder to claim benefits under the U.S.-U.K. income tax treaty in respect of dividends paid by us, the U.K. Holder generally will be required to complete IRS Form W-8BEN and certify under penalties of perjury that it is not a U.S. person for U.S. federal income tax purposes. Special certification and other requirements apply to certain U.K. Holders that are pass-through entities and to U.K. Holders whose stock is held through certain non-U.S. intermediaries. A U.K. Holder that is eligible for the reduced rate of U.S. withholding tax pursuant to the U.S.-U.K. income tax treaty generally may obtain a refund of any excess amounts withheld by timely filing an appropriate claim with the IRS.
 
Taxation of Dispositions of Our Common Stock
 
U.K. Tax Consequences.   A subsequent disposal or deemed disposal of our common stock by a stockholder who is resident or, in the case of individuals, ordinarily resident in the U.K. for tax purposes may, depending on individual circumstances (including the availability of exemptions and reliefs), give rise to a chargeable gain or allowable loss for the purposes of U.K. taxation on chargeable gains.
 
U.S. Federal Income Tax Consequences.   A U.K. Holder generally will not be subject to U.S. federal income tax with respect to any gain realized on the sale or other disposition of our common stock unless: (i) the gain is effectively connected with the conduct of a trade or business in the United States and, if the U.S.-U.K. income tax treaty applies, is attributable to a U.S. permanent establishment of the U.K. Holder (in this case, the U.K. Holder will be subject to U.S. federal income tax on the net gain derived from the disposition in the same manner as if the U.K. Holder was U.S. person for U.S. federal income tax purposes, and if the U.K. Holder is a corporation, it may be subject to the additional “branch profits tax” at a 30% rate or a lower rate specified by U.S.-U.K. income tax treaty, if applicable); (ii) the U.K. Holder is an individual present in the United States for 183 days or more in the taxable year in which the disposition occurs and certain other conditions are met (in this case, the individual U.K. Holder will be subject to a flat 30% U.S. federal income tax on the gain derived from the disposition, which tax may be offset by U.S. source capital losses); or (iii) we are or have been a “United States real property holding corporation” for U.S. federal income tax purposes at any time during the shorter of the U.K. Holder’s holding period for our common stock and the five-year period ending on the date of disposition and one or more other conditions are satisfied. We are not and do not anticipate becoming a United States real property holding corporation.
 
U.S. Federal Estate Tax Considerations
 
An individual who is domiciled in the U.K. for purposes of the U.S.-U.K. estate tax treaty and who is not a national of or domiciled in the United States for purposes of the U.S.-U.K. estate tax treaty generally will not be subject to U.S. federal estate tax with respect to our common stock on the individual’s death provided that any applicable U.K. inheritance tax liability is paid unless the common stock is part of the business property of a permanent establishment of the individual in the United States or pertains to a fixed base of the individual in the United States used for the performance of independent personal services. In the case where the common stock is subject to both U.S. federal estate tax and U.K. inheritance tax, the U.S.-U.K. estate tax treaty generally provides for the U.S. federal estate tax paid to be credited against tax payable in the U.K. or for the tax paid in the U.K. to be credited against the U.S. federal estate tax payable based on priority rules set out in the U.S.-U.K. estate tax treaty.
 
U.S. Information Reporting and Backup Withholding
 
Dividends paid to a U.K. Holder may be subject to information reporting and backup withholding of U.S. federal income tax. A U.K. Holder will be exempt from backup withholding if such U.K. Holder properly provides IRS Form W-8BEN certifying that such U.K. Holder is a non-U.S. person or otherwise meets documentary


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evidence requirements for establishing that such U.K. Holder is a non-U.S. person or otherwise qualifies for an exemption.
 
The gross proceeds from the disposition of our common stock may be subject to information reporting and backup withholding. If a U.K. Holder sells its common stock outside the United States through a non-U.S. office of a non-U.S. broker and the sales proceeds are paid to such U.K. Holder outside the United States, then backup withholding and information reporting requirements generally will not apply to that payment. However, information reporting but not backup withholding generally will apply to a payment of sale proceeds, even if that payment is made outside the United States, if a U.K. Holder sells our common stock through a non-U.S. office of a broker that: (i) is a U.S. person for U.S. federal income tax purposes; (ii) derives 50% or more of its gross income in specific periods from the conduct of a trade or business in the United States; (iii) is a “controlled foreign corporation” for U.S. federal income tax purposes; or (iv) is a non-U.S. partnership, if at any time during its tax year (A) one or more of its partners are U.S. persons who in the aggregate hold more than 50% of the income or capital interests in the partnership; or (B) the non-U.S. partnership is engaged in a U.S. trade or business, unless, in each case, the broker has documentary evidence in its files that the non-U.S. holder is a non-U.S. person and certain other conditions are met, or the non-U.S. holder otherwise establishes an exemption.
 
If a U.K. Holder receives payments of the proceeds of a sale of our common stock to or through a U.S. office of a broker, the payment is subject to both information reporting and backup withholding unless such U.K. Holder properly provides IRS Form W-8BEN certifying that such U.K. Holder is a non-U.S. person or otherwise establishes an exemption. A U.K. Holder generally may obtain a refund of any amounts withheld under the backup withholding rules that exceed such U.K. Holder’s U.S. federal income tax liability by timely filing an appropriate claim with the IRS.
 
U.K. Stamp Duty and Stamp Duty Reserve Tax
 
No U.K. stamp duty or stamp duty reserve tax should be payable by a U.K. Holder as a result of the cancellation of Cadbury Schweppes ordinary shares and the issue of Cadbury plc “beverage shares” and Cadbury plc ordinary shares under the scheme of arrangement or as a result of the issue of our common stock under the Cadbury plc reduction of capital.
 
No U.K. stamp duty will be payable by a U.K. Holder on the transfer of our common stock, provided that any instrument of transfer is not executed in the United Kingdom and does not relate to any property situated, or to any matter or thing done or to be done, in the United Kingdom.
 
No U.K. stamp duty reserve tax will be payable by a U.K. Holder in respect of any agreement to transfer our common stock unless they are registered in a register kept in the United Kingdom by or on our behalf. It is not intended that such a register will be kept in the United Kingdom.
 
Where Cadbury plc ordinary shares are issued or transferred: (i) to, or to a nominee for, a person whose business is or includes the provision of clearance services; or (ii) to, or to a nominee or agent for, a person whose business is or includes issuing depositary receipts, stamp duty (in the case of a transfer to such persons) or stamp duty reserve tax may be payable at the higher rate of 1.5% of the amount or value of the consideration payable or, in certain circumstances, the value of the Cadbury plc ordinary shares or, in the case of an issue to such persons, the issue price of the Cadbury plc ordinary shares (rounded up to the nearest £5 in the case of stamp duty). This liability for stamp duty or stamp duty reserve tax will strictly be accountable by the depositary or clearance service operator or their nominee, as the case may be, but will in practice generally be reimbursed by participants in the clearance service or depositary receipt scheme. Clearance services may opt, under certain circumstances, for the normal rate of stamp duty or stamp duty reserve tax (0.5% of the consideration paid) to apply to issues or transfers of Cadbury plc ordinary shares into, and to transactions within, such services instead of the higher rate of 1.5% generally applying to an issue or transfer of Cadbury plc ordinary shares into the clearance service and the exemption from stamp duty and stamp duty reserve tax on transfer of Cadbury plc ordinary shares while in the service. However, U.K. Holders who hold their Cadbury Schweppes ordinary shares in the form of Cadbury Schweppes ADRs should not suffer a 1.5% charge on the issue of Cadbury plc ordinary shares to the Cadbury plc depository and the receipt of Cadbury plc ADRs.


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U.S. Holders
 
The following is a discussion of the material U.S. federal and U.K. tax consequences of the receipt of Cadbury plc “beverage shares,” Cadbury plc ordinary shares or Cadbury plc ADRs and the receipt, ownership and disposition of our common stock to U.S. Holders that is for general information only and is subject to the qualifications and limitations set forth herein. A “U.S. Holder” for this purpose is a beneficial owner of Cadbury Schweppes ordinary shares or Cadbury Schweppes ADRs that is, for U.S. federal income tax purposes (i) a citizen or resident of the United States, (ii) a corporation (or an entity treated for U.S. federal tax purposes as a corporation) created or organized under the laws of the United States or of any state thereof or the District of Columbia, (iii) an estate the income of which is subject to U.S. federal income tax regardless of its source, or (iv) a trust if (a) (I) a court within the United States is able to exercise primary supervision over the trust, and (II) one or more U.S. persons have authority to control all substantial decisions of the trust, or (b) the trust has made an election under applicable Treasury regulations to be treated as a U.S. person.
 
This discussion is for general information only and does not purport to be a complete description of the consequences of the receipt of Cadbury plc “beverage shares” and Cadbury plc ordinary shares or Cadbury plc ADRs and the receipt, ownership and disposition of our common stock nor does it address the effects of any state, local or, except as set forth herein, non-U.S. tax laws. This discussion does not address the tax consequences to a U.S. Holder (i) that is a resident in, or in the case of individuals, ordinarily resident in the United Kingdom for U.K. tax purposes, (ii) where the holding of our common stock is effectively connected with the conduct of a trade or business in the U.K., and, if the U.S.-U.K. income tax treaty applies, is attributable to a U.K. permanent establishment of the U.S. Holder, or (iii) that owns or controls, directly or indirectly (including by attribution from or through related parties), at least 10% of the voting stock of Cadbury Schweppes or Cadbury plc. The tax treatment of a U.S. Holder may vary depending upon such U.S. Holder’s particular situation, and certain U.S. Holders (including, but not limited to, insurance companies, tax-exempt organizations, financial institutions, broker-dealers, partners in partnerships that hold Cadbury Schweppes ordinary shares or ADRs, pass-through entities, traders in securities who elect to apply a mark-to-market method of accounting, U.S. Holders who hold their Cadbury Schweppes ordinary shares or ADRs as part of a “hedge,” “straddle,” “conversion,” or “constructive sale transaction,” individuals who received Cadbury Schweppes ordinary shares upon the exercise of employee stock options or otherwise as compensation) may be subject to special rules not discussed below. The discussion assumes that U.S. Holders hold their Cadbury Schweppes ordinary shares or Cadbury Schweppes ADRs and our common stock as capital assets within the meaning of Section 1221 of the Internal Revenue Code.
 
Under general U.S. federal income tax principles, a U.S. Holder of Cadbury Schweppes ADRs or Cadbury plc ADRs should be treated as the beneficial owner of the corresponding number of Cadbury Schweppes ordinary shares or Cadbury plc ordinary shares held by the ADR depositary and this summary is based on such treatment.
 
U.S. Holders are urged to consult their own tax advisors as to the specific tax consequences to them of the receipt of Cadbury plc “beverage shares,” Cadbury plc ordinary shares or Cadbury plc ADRs and the receipt, ownership and disposition of our common stock, including the effect of any state, local or non-U.S. tax laws.
 
Receipt of Cadbury plc “beverage shares,” Cadbury plc Ordinary Shares or Cadbury plc ADRs and Our Common Stock
 
U.S. Federal Income Tax Consequences.   Cadbury Schweppes has requested a private letter ruling from the IRS that, subject to the facts, representations and qualifications contained therein, the receipt of Cadbury plc ordinary shares and our common stock by Cadbury Schweppes stockholders (along with certain related restructuring transactions) will qualify for non-recognition treatment under Sections 355 and 368(a)(1)(F) of the Internal Revenue Code, except for cash received in exchange for fractional shares of Cadbury plc ordinary shares or our common stock, which cash generally will be treated as capital gain or loss. The IRS has not yet issued a private letter ruling and the failure of the IRS to issue such a private letter ruling would not prevent Cadbury Schweppes from proceeding with the separation and distribution. Any eventual private letter ruling will be based on various facts and representations, including that certain conditions necessary to obtain favorable tax treatment under the Internal Revenue Code have been satisfied, but the private letter ruling will not represent an independent


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determination by the IRS that these conditions have in fact been satisfied. However, as a matter of practice, the IRS generally will revoke a private letter ruling only in situations involving an omission or material misstatement of a controlling fact or a change of law. Thus, if one or more of the controlling facts or representations contained in any eventual private letter ruling is incorrect in any material respect, our ability to rely on the private letter ruling would be jeopardized and the private letter ruling could be revoked or modified retroactively by the IRS and the receipt of our common stock found taxable. Cadbury Schweppes is not aware of any facts or circumstances that would cause the facts or representations set forth in the request for the private letter ruling to be untrue or incomplete in any material respect. In addition, we have covenanted to refrain from taking certain actions following the distribution that would cause the distribution to fail to qualify for non-recognition treatment under Section 355 of the Internal Revenue Code; however, if one or more of these covenants are breached, the distribution of our common stock could be taxable to U.S. Holders.
 
The general approach in the private letter ruling request submitted to the IRS is to disregard the issuance and subsequent cancellation of the Cadbury plc “beverage shares” as transitory and without effect for U.S. federal income tax purposes. More particularly, the submission for a private letter ruling requests that the IRS disregard the form of the separation and distribution for U.S. federal income tax purposes and, instead, treat the separation and distribution for such purposes as (i) an exchange by Cadbury Schweppes stockholders of Cadbury Schweppes ordinary shares for Cadbury plc ordinary shares in a transaction qualifying for non-recognition treatment under Section 368(a)(1)(F) of the Internal Revenue Code, (ii) a distribution of the common stock of Cadbury Schweppes Americas Inc., the parent corporation of the Americas Beverages business, to holders of Cadbury plc ordinary shares in a transaction qualifying for non-recognition treatment under Section 355 of the Internal Revenue Code, and (iii) an exchange of Cadbury Schweppes Americas Inc. common stock for our common stock in a transaction qualifying for non-recognition treatment under Section 368(a)(1)(F) of the Internal Revenue Code.
 
Following such approach and assuming that the receipt of Cadbury plc ordinary shares or Cadbury plc ADRs and our common stock by holders of Cadbury Schweppes ordinary shares or Cadbury Schweppes ADRs (and certain related restructuring transactions) qualifies for non-recognition treatment under Sections 355 and 368(a)(1)(F) of the Internal Revenue Code, the following will result for U.S. federal income tax purposes:
 
(1) No gain or loss will be recognized by (and no amount will be included in the income of) a U.S. Holder upon the receipt of Cadbury plc ordinary shares or Cadbury plc ADRs and our common stock;
 
(2) Subject to clause (3) below, the aggregate tax basis of the Cadbury plc ordinary shares or Cadbury plc ADRs in the hands of a U.S. Holder immediately after the receipt of the Cadbury plc ordinary shares will be the same as the tax basis at which the U.S. Holder held its Cadbury Schweppes ordinary shares or Cadbury Schweppes ADRs immediately before the receipt of the Cadbury plc ordinary shares or Cadbury plc ADRs;
 
(3) The aggregate tax basis of the Cadbury plc ordinary shares or Cadbury plc ADRs (as determined pursuant to clause (2) above) and our common stock in the hands of a U.S. Holder immediately after the receipt of our common stock, including any fractional share interest for which cash is received, will be the same as the tax basis at which the U.S. Holder held its Cadbury plc ordinary shares or Cadbury plc ADRs immediately before the receipt of our common stock, and such aggregate tax basis will be allocated between the Cadbury plc ordinary shares or Cadbury plc ADRs and our common stock based upon their respective fair market values immediately after the receipt of our common stock;
 
(4) The holding period for each of the Cadbury plc ordinary shares or Cadbury plc ADRs and our common stock received by a U.S. Holder will include the period during which the U.S. Holder held its Cadbury Schweppes ordinary shares or Cadbury Schweppes ADRs; and
 
(5) A U.S. Holder who receives cash in lieu of a fractional share of Cadbury plc ordinary shares or our common stock will be treated as having sold such fractional share for cash and generally will recognize capital gain or loss for U.S. federal income tax purposes in an amount equal to the difference between the amount of cash received and the U.S. Holder’s tax basis in the fractional share. That capital gain or loss generally will be U.S. source long-term capital gain or loss if the U.S. Holder’s holding period for its Cadbury Schweppes ordinary shares or Cadbury Schweppes ADRs exceeds one year. The deductibility of capital losses is subject to limitations under the Internal Revenue Code. Any cash received from sales of fractional shares of Cadbury plc


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ordinary shares in pounds sterling will be included in income in a U.S. dollar amount calculated by reference to the exchange rate in effect on the day the disposition proceeds are received by a U.S. Holder, regardless of whether the pounds sterling are converted into U.S. dollars at that time. Gain or loss, if any, recognized on the sale or disposition of pounds sterling generally will be ordinary U.S. source income or loss. However, if cash received in pounds sterling is converted into U.S. dollars on the day received, a U.S. Holder generally will not be required to recognize foreign currency gain or loss in respect of such cash; and
 
(6) Neither we nor Cadbury plc will recognize gain or loss in respect of the issuance and distribution of our common stock.
 
Treasury regulations governing Sections 355 and 368(a)(1)(F) of the Internal Revenue Code require that certain U.S. Holders with significant ownership in Cadbury Schweppes that receive Cadbury plc ordinary shares and our common stock attach a statement to their U.S. federal income tax return for the taxable year in which such receipt occurs, providing certain information with respect to the receipt of Cadbury plc ordinary shares and our common stock. To the extent required by Treasury regulations, U.S. Holders will be provided with the information necessary to comply with this requirement. U.S. Holders should consult their tax advisors in respect to the foregoing requirement.
 
If, in contrast to the statement above, the receipt of our common stock by holders of Cadbury plc ordinary shares or Cadbury plc ADRs did not qualify for non-recognition treatment under Section 355 of the Internal Revenue Code, then contrary to such statements, each U.S. Holder that receives our common stock will have: (1) a taxable dividend (provided, as is expected, Cadbury plc has sufficient current and accumulated earnings and profits (including the current and accumulated earnings and profits of Cadbury Schweppes) as determined for U.S. federal income purposes, or, if not so determined, dividend treatment will be presumed) in an amount equal to the fair market value of our common stock that was distributed to such U.S. Holder and the amount of cash received in lieu of a fractional share of our common stock (without reduction for any portion of such U.S. Holder’s tax basis in its Cadbury plc ordinary shares or Cadbury plc ADRs); and (2) a tax basis in our common stock received equal to the fair market value of such common stock on the date of receipt, and the holding period for that stock would begin the day after the date of receipt. Further, there would be no adjustment in tax basis for a U.S. Holder’s Cadbury plc ordinary shares or Cadbury plc ADRs and the tax basis of the Cadbury plc ordinary shares or Cadbury plc ADRs would equal the U.S. Holder’s tax basis in its Cadbury Schweppes ordinary shares or Cadbury Schweppes ADRs.
 
Under current law, assuming certain holding period and other requirements are met, U.S. Holders that are individual citizens or residents of the United States are subject to preferential U.S. federal income tax rates on dividends.
 
U.K. Tax Consequences.   A U.S. Holder will incur no U.K. tax upon the receipt of Cadbury plc “beverage shares,” Cadbury plc ordinary shares, Cadbury plc ADRs or our common stock (including cash received in lieu of a fractional share of Cadbury plc ordinary shares or our common stock, if such U.S. Holder is neither resident nor, in the case of individuals, ordinarily resident for tax purposes in the U.K. and does not carry on a trade, profession or vocation in the U.K. through a branch or agency or, in the case of a company, a permanent establishment where such shares have been used, held or acquired for the purpose of such branch, agency or permanent establishment).
 
Taxation of Dividends on Our Common Stock
 
U.S. Federal Income Tax Consequences.   If we make distributions on our common stock, such distributions will constitute dividends for U.S. federal income tax purposes to the extent paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. To the extent not paid from our current or accumulated earnings and profits, distributions on our common stock will constitute a tax-free return of capital and will first be applied against and reduce a U.S. Holder’s adjusted basis in our common stock, but not below zero, and then the excess, if any, will be treated as gain from the sale of common stock. Dividends received by a corporate U.S. Holder will be eligible for the dividends received deduction if the U.S. Holder meets certain holding period and other applicable requirements. Dividends received by a non-corporate U.S. Holder will qualify for reduced rates of taxation if the U.S. Holder meets certain holding period and other applicable requirements.


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Taxation of Dispositions of Our Common Stock
 
U.S. Federal Income Tax Consequences.   A U.S. Holder generally will recognize capital gain or loss on the sale or other taxable disposition of our common stock equal to the difference between (i) the sum of any cash received and the fair market value of any other property received, and (ii) the U.S. Holder’s adjusted tax basis in the common stock. Any capital gain or loss that a U.S. Holder recognizes will be long-term capital gain or loss if the U.S. Holder has held the stock for more than one year. Long-term capital gain of a non-corporate U.S. Holder is eligible for a reduced rate of taxation. The deductibility of capital losses is subject to limitations under the Internal Revenue Code.
 
U.K. Tax Consequences.   A U.S. Holder who is neither resident nor, in the case of individuals, ordinarily resident for tax purposes in the U.K. will not be liable for U.K. tax on chargeable gains on the subsequent disposal or deemed disposal of our common stock unless the U.S. Holder carries on a trade, profession or vocation in the U.K. through a branch or agency or, in the case of a company, a permanent establishment and our common stock has been used, held or acquired for the purpose of such branch, agency or permanent establishment.
 
U.K. Stamp Duty and Stamp Duty Reserve Tax
 
No U.K. stamp duty or stamp duty reserve tax should be payable by a U.S. Holder as a result of the cancellation of Cadbury Schweppes ordinary shares and the issue of Cadbury plc “beverage shares” and Cadbury plc ordinary shares under the scheme of arrangement or as a result of the issue of our common stock under the Cadbury plc reduction of capital.
 
No U.K. stamp duty will be payable by a U.S. Holder on the transfer of our common stock, provided that any instrument of transfer is not executed in the United Kingdom and does not relate to any property situated, or to any matter or thing done or to be done, in the United Kingdom.
 
No U.K. stamp duty reserve tax will be payable by a U.S. Holder in respect of any agreement to transfer our common stock unless they are registered in a register kept in the United Kingdom by or on our behalf. It is not intended that such a register will be kept in the United Kingdom.
 
Where Cadbury plc ordinary shares are issued or transferred: (i) to, or to a nominee for, a person whose business is or includes the provision of clearance services; or (ii) to, or to a nominee or agent for, a person whose business is or includes issuing depositary receipts, stamp duty (in the case of a transfer to such persons) or stamp duty reserve tax may be payable at the higher rate of 1.5% of the amount or value of the consideration payable or, in certain circumstances, the value of the Cadbury plc ordinary shares or, in the case of an issue to such persons, the issue price of the Cadbury plc ordinary shares (rounded up to the next £5 in the case of stamp duty). This liability for stamp duty or stamp duty reserve tax will strictly be accountable by the depositary or clearance service operator or their nominee, as the case may be, but will in practice generally be reimbursed by participants in the clearance service or depositary receipt scheme. Clearance services may opt, under certain circumstances, for the normal rate of stamp duty or stamp duty reserve tax (0.5% of the consideration paid) to apply to issues or transfers of Cadbury plc ordinary shares into, and to transactions within, such services instead of the higher rate of 1.5% generally applying to an issue or transfer of Cadbury plc ordinary shares into the clearance service and the exemption from stamp duty and stamp duty reserve tax on transfer of Cadbury plc ordinary shares while in the service. However, U.S. Holders who hold their Cadbury Schweppes ordinary shares in the form of Cadbury Schweppes ADRs should not suffer a 1.5% charge on the issue of Cadbury plc ordinary shares to the Cadbury plc depository and the receipt of Cadbury plc ADRs.
 
U.S. Information Reporting and Backup Withholding
 
Information reporting requirements will generally apply to U.S. Holders in respect of distributions on our common stock and the proceeds from a sale of our common stock, unless a U.S. Holder is a corporation or other person that is exempt from information reporting requirements. In addition, backup withholding of U.S. federal income tax will apply to those payments if a U.S. Holder fails to provide a taxpayer identification number and certain other information, or a certification of exempt status, or if the U.S. Holder fails to report in full interest and dividend income. Any amounts withheld under the backup withholding rules will be allowed as a refund or credit


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against a U.S. Holder’s U.S. federal income tax liability provided the required information is timely furnished to the IRS.
 
The foregoing discussion of the material U.K. and U.S. federal tax consequences of the receipt of Cadbury plc “beverage shares,” Cadbury plc ordinary shares or Cadbury plc ADRs and the receipt, ownership and disposition of our common stock under current U.K. and U.S. federal tax law is for general information only and is subject to the qualifications and limitations set forth above. The foregoing does not purport to address all U.K. and U.S. federal tax consequences or tax consequences that may arise under the tax laws of other jurisdictions or that may apply to particular categories of holders of Cadbury Schweppes ordinary shares or Cadbury Schweppes ADRs. Holders are urged to consult their own tax advisors as to the particular tax consequences of the receipt of Cadbury plc “beverage shares,” Cadbury plc ordinary shares or Cadbury plc ADRs and the receipt, ownership and disposition of our common stock to them, including the effect of any non-UK and non-U.S. tax laws, and the effect of any repeals, revocations or modifications in tax laws that may affect the tax consequences described above.


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WHERE YOU CAN FIND MORE INFORMATION
 
We have filed with the SEC a registration statement on Form 10 under the Exchange Act, of which this information statement forms a part, with respect to our shares of common stock that holders of ordinary shares and ADRs of Cadbury Schweppes will receive in the distribution. This information statement does not contain all of the information contained in the registration statement and the exhibits to the registration statement. Some items are omitted in accordance with the rules and regulations of the SEC. For additional information relating to us, reference is made to the registration statement and the exhibits to the registration statement, which are on file with the SEC.
 
You may inspect and copy the registration statement and the exhibits to the registration statement that we have filed with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the Public Reference Room. In addition, the SEC maintains an Internet site at www.sec.gov, from which you can electronically access the registration statement, including the exhibits and schedules to the registration statement.
 
Statements contained in this information statement as to the contents of any contract or other document referred to are not necessarily complete and in each instance, if the contract or document is filed as an exhibit, reference is made to the copy of the contract or other documents filed as an exhibit to the registration statement. Each statement is qualified in all respects by the relevant reference.
 
As a result of the distribution, we will be required to comply with the full informational and reporting requirements of the Exchange Act. We will fulfill our obligations with respect to these requirements by filing Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Proxy Statements and Current Reports on Form 8-K and other information with the SEC.
 
After separation, we plan to make available, on our website            , our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Proxy Statements, Current Reports on Form 8-K, reports filed pursuant to Section 16 and amendments to those reports as soon as reasonably practicable after we electronically file or furnish such materials with the SEC. In addition, we will post the charters of our Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee and our Code of Ethics on our website. These charters and Code of Ethics are not incorporated by reference in this information statement. We also will provide a copy of these documents free of charge to stockholders upon request by contacting Investor Relations at the address or telephone set forth in “Information Statement Summary — Questions and Answers About the Distribution — Who do I contact for information regarding Dr Pepper Snapple Group, Inc. and the distribution?”


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DR PEPPER SNAPPLE GROUP, INC.
 
INDEX TO FINANCIAL STATEMENTS
 
         
Combined Financial Statements:
       
    F-2  
    F-3  
    F-4  
    F-5  
    F-6  
    F-7  


F-1


Table of Contents

 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
To the Board of Directors of Cadbury Schweppes plc and the Board of Directors of Dr Pepper Snapple Group, Inc.:
 
We have audited the accompanying combined balance sheets of Dr Pepper Snapple Group, Inc., formerly CSAB Inc., (the “Company”) as of December 31, 2007 and 2006, and the related combined statements of operations, cash flows and changes in invested equity for the fiscal years ended December 31, 2007, December 31, 2006 and January 1, 2006. These combined financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these combined financial statements based on our audits.
 
We conducted our audits in accordance with generally accepted auditing standards as established by the Auditing Standards Board (United States) and in accordance with the auditing standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
 
In our opinion, such combined financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2007 and 2006, and the results of its operations and its cash flows for the fiscal years ended December 31, 2007, December 31, 2006 and January 1, 2006 in conformity with accounting principles generally accepted in the United States of America.
 
As discussed in Note 1, the combined financial statements of the Company include allocation of certain general corporate overhead costs from Cadbury Schweppes plc. These costs may not be reflective of the actual level of costs which would have been incurred had the Company operated as a separate entity apart from Cadbury Schweppes plc.
 
As discussed in Note 2 and Note 9 to the combined financial statements, the Company changed its method of accounting for stock based employee compensation as of January 3, 2005 and the Company changed its method of accounting for uncertainty in income taxes as of January 1, 2007, respectively.
 
Dallas, Texas
March 20, 2008


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Table of Contents

DR PEPPER SNAPPLE GROUP, INC.

COMBINED BALANCE SHEETS
 
                 
    December 31,
    December 31,
 
    2007     2006  
    (In millions)  
 
Assets
Current assets:
               
Cash and cash equivalents (Note 2)
  $ 67     $ 35  
Accounts receivable (Note 2):
               
Trade (net of allowances of $20 and $14, respectively)
    538       562  
Other
    59       18  
Related party receivable (Note 16)
    66       5  
Note receivable from related parties (Note 16)
    1,527       579  
Inventories (Notes 2 and 4)
    325       300  
Deferred tax assets (Notes 2 and 9)
    81       61  
Prepaid and other current assets (Note 2)
    76       72  
                 
Total current assets
    2,739       1,632  
Property, plant and equipment, net (Notes 2 and 6)
    868       755  
Investments in unconsolidated subsidiaries (Note 7)
    13       12  
Goodwill (Notes 2 and 8)
    3,183       3,180  
Other intangible assets, net (Notes 2 and 8)
    3,617       3,651  
Other non-current assets (Note 2)
    100       107  
Non-current deferred tax assets (Notes 2 and 9)
    8       9  
                 
Total assets
  $ 10,528     $ 9,346  
                 
 
Liabilities and Invested Equity
Current liabilities:
               
Accounts payable and accrued expenses (Note 5)
  $ 812     $ 788  
Related party payable (Note 16)
    175       183  
Current portion of long-term debt payable to related parties (Note 10)
    126       708  
Income taxes payable (Notes 2 and 9)
    22       12  
                 
Total current liabilities
    1,135       1,691  
Long-term debt payable to third parties (Note 10)
    19       543  
Long-term debt payable to related parties (Note 10)
    2,893       2,541  
Deferred tax liabilities (Notes 2 and 9)
    1,324       1,292  
Other non-current liabilities
    136       29  
                 
Total liabilities
    5,507       6,096  
Commitments and contingencies (Note 11)
               
Cadbury Schweppes’ net investment
    5,001       3,249  
Accumulated other comprehensive income
    20       1  
                 
Total invested equity
    5,021       3,250  
                 
Total liabilities and invested equity
  $ 10,528     $ 9,346  
                 
 
The accompanying notes are an integral part of these combined financial statements.


F-3


Table of Contents

DR PEPPER SNAPPLE GROUP, INC.
 
COMBINED STATEMENTS OF OPERATIONS
 
                         
    Fiscal Years Ended  
    December 31,
    December 31,
    January 1,
 
    2007     2006     2006  
    (In millions)  
 
Net sales
  $ 5,748     $ 4,735     $ 3,205  
Cost of sales
    2,617       1,994       1,120  
                         
Gross profit
    3,131       2,741       2,085  
Selling, general and administrative expenses
    2,018       1,659       1,179  
Depreciation and amortization
    98       69       26  
Impairment of intangible assets (Note 8)
    6              
Restructuring costs (Notes 2 and 12)
    76       27       10  
Gain on disposal of property and intangible assets
    (71 )     (32 )     (36 )
                         
Income from operations
    1,004       1,018       906  
Interest expense
    253       257       210  
Interest income
    (64 )     (46 )     (40 )
Other expense (income)
    (2 )     2       (51 )
                         
Income before provision for income taxes, equity in earnings of unconsolidated subsidiaries and cumulative effect of change in accounting policy
    817       805       787  
Provision for income taxes (Notes 2 and 9)
    322       298       321  
                         
Income before equity in earnings of unconsolidated subsidiaries and cumulative effect of change in accounting policy
    495       507       466  
Equity in earnings of unconsolidated subsidiaries
    2       3       21  
                         
Income before cumulative effect of change in accounting policy
    497       510       487  
Cumulative effect of change in accounting policy, net of tax (Note 14)
                10  
                         
Net income
  $ 497     $ 510     $ 477  
                         
 
The accompanying notes are an integral part of these combined financial statements.


F-4


Table of Contents

DR PEPPER SNAPPLE GROUP, INC.
 
COMBINED STATEMENTS OF CASH FLOWS
 
                         
    Fiscal Years End  
    December 31,
    December 31,
    January 1,
 
    2007     2006     2006  
    (In millions)  
 
Operating activities:
                       
Net income
  $ 497     $ 510     $ 477  
Adjustments to reconcile net income to net cash provided by operations:
                       
Depreciation expense
    120       94       48  
Amortization expense
    49       45       31  
Impairment of assets
    6              
Provision for doubtful accounts
    11       4       1  
Employee stock-based compensation expense
    21       17       22  
Excess tax benefit on stock-based compensation
    (4 )     (1 )     (3 )
Deferred income taxes
    55       14       56  
Gain on disposal of property and intangible assets
    (71 )     (32 )     (36 )
Equity in earnings of unconsolidated subsidiaries, net of tax
    (2 )     (3 )     (21 )
Cumulative effect of change in accounting policy, net of tax
                10  
Other, net
          (6 )     8  
Changes in operating assets and liabilities, net of acquisitions:
                       
Decrease (increase) in trade accounts receivable
    32       (42 )     8  
(Increase) decrease in related party receivables
    (57 )     (2 )     14  
(Increase) decrease in other accounts receivable
    (38 )     46       (40 )
(Increase) decrease in inventories
    (14 )     13       18  
(Increase) decrease in prepaid expenses other current assets
    (1 )     8       (29 )
Increase in other non-current assets
    (8 )     (3 )     (19 )
(Decrease) increase in accounts payable and accrued expenses
    (5 )     (104 )     34  
Increase in related party payables
    12       13       17  
Increase in income taxes payable
    10       2       1  
(Decrease) increase in other non-current liabilities
    (10 )     8       (14 )
                         
Net cash provided by operating activities
    603       581       583  
                         
Investing activities:
                       
Acquisition of subsidiaries, net of cash
    (30 )     (435 )      
Purchases of investments and intangible assets
    (2 )     (53 )     (35 )
Proceeds from disposals of investments and other assets
    98       53       36  
Purchases of property, plant and equipment
    (230 )     (158 )     (44 )
Proceeds from disposals of property, plant and equipment
    6       16       5  
Payments on notes receivables
    1,008       166       680  
Issuances of notes receivables
    (1,937 )     (91 )     (359 )
                         
Net cash (used in) provided by investing activities
    (1,087 )     (502 )     283  
                         
Financing activities
                       
Proceeds from issuance of long-term debt
    2,845       2,086       124  
Repayment of long-term debt
    (3,455 )     (2,056 )     (279 )
Excess tax benefit on stock-based compensation
    4       1       3  
Cash distributions to Cadbury Schweppes
    (213 )     (80 )     (381 )
Change in Cadbury Schweppes’ net investment
    1,334       (23 )     (282 )
                         
Net cash provided by (used in) financing activities
    515       (72 )     (815 )
                         
Cash and cash equivalents — net change from:
                       
Operating, investing and financing activities
    31       7       51  
Currency translation
    1             (42 )
Cash and cash equivalents at beginning of period
    35       28       19  
                         
Cash and cash equivalents at end of period
  $ 67     $ 35     $ 28  
                         
Supplemental cash flow disclosures of non-cash investing and financing activities:
                       
Non-cash transfers of property, plant and equipment to other Cadbury Schweppes companies
  $ 15     $ 15     $ 14  
Non-cash transfers of operating assets and liabilities to other Cadbury Schweppes companies
    22       16       22  
Non-cash conversion of debt to equity contribution
                300  
Non-cash reduction in long term debt from Cadbury Schweppes net investment
    263       383        
Cadbury Schweppes or related entities acquisition payments reflected through Cadbury Schweppes’ net investment
    17       23       27  
Non-cash issuance of note payable related to acquisition
    35              
Non-cash assumption of debt related to acquisition payments by Cadbury Schweppes
    35              
Non-cash transfer of related party receivable to Cadbury Schweppes company
    16              
Operating liabilities expected to be reimbursed by Cadbury Schweppes
    27              
Non-cash reclassifications upon FIN 48 adoption
    90              
Supplemental cash flow disclosures:
                       
Interest paid
  $ 257     $ 204     $ 165  
Income taxes paid
    34       14       14  
 
The accompanying notes are an integral part of these combined financial statements.


F-5


Table of Contents

DR PEPPER SNAPPLE GROUP, INC.
 
COMBINED STATEMENTS OF CHANGES IN INVESTED EQUITY
 
                                 
    Cadbury
    Accumulated
             
    Schweppes’
    Other
    Total
       
    Net
    Comprehensive
    Invested
    Comprehensive
 
    Investment     Income (Loss)     Equity     Income  
          (In millions)        
 
Balance as of January 2, 2005
  $ 2,116     $ (9 )   $ 2,107          
Net income
    477               477     $ 477  
Distributions
    (381 )             (381 )        
Movement in Cadbury Schweppes’ investment, net
    204               204          
Other comprehensive income:
                               
Net change in pension liability
            (1 )     (1 )     (1 )
Foreign currency translation adjustment
            20       20       20  
                                 
Comprehensive income
                          $ 496  
                                 
Balance as of January 1, 2006
    2,416       10       2,426          
Net income
    510               510     $ 510  
Distributions
    (80 )             (80 )        
Movement in Cadbury Schweppes’ investment, net
    403               403          
Adoption of FAS 158 (Note 13)
            (4 )     (4 )        
Other comprehensive income:
                               
Net change in pension liability
            3       3       3  
Foreign currency translation adjustment
            (8 )     (8 )     (8 )
                                 
Comprehensive income
                          $ 505  
                                 
Balance as of December 31, 2006
    3,249       1       3,250          
Net income
    497               497     $ 497  
Movement in Cadbury Schweppes’ investment, net
    1,484               1,484          
Distributions
    (213 )             (213 )        
Adoption of FIN 48 (Note 9)
    (16 )             (16 )        
Other comprehensive income:
                               
Net change in pension liability
            3       3       3  
Foreign currency translation adjustment
            16       16       16  
                                 
Comprehensive income
                          $ 516  
                                 
Balance as of December 31, 2007
  $ 5,001     $ 20     $ 5,021          
                                 
 
The accompanying notes are an integral part of these combined financial statements.


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Table of Contents

DR PEPPER SNAPPLE GROUP, INC.
 
NOTES TO COMBINED FINANCIAL STATEMENTS
As of December 31, 2007 and December 31, 2006 and for the fiscal years
ended December 31, 2007, December 31, 2006 and January 1, 2006
(Amounts in millions, except per share amounts)
 
1.   Background and Basis of Presentation
 
Background
 
Dr Pepper Snapple Group, Inc. (formerly known as CSAB, Inc.) (the “Company”) is a wholly-owned subsidiary of Cadbury Schweppes plc (“Cadbury Schweppes”) that was incorporated as a Delaware corporation on October 24, 2007 to own Cadbury Schweppes’ Americas Beverages business. This business will be transferred to the Company in connection with the separation of the Company from Cadbury Schweppes through the distribution of all its outstanding common shares to Cadbury Schweppes shareholders. The initial capitalization was two dollars. Prior to its ownership of Cadbury Schweppes’ Americas Beverages business, the Company did not have any operations. The Company conducts operations in the United States, Canada, Mexico and parts of the Caribbean.
 
The Company’s key brands include Dr Pepper, Snapple, 7UP, Mott’s, Sunkist, Hawaiian Punch, A&W, Canada Dry, Schweppes, Squirt, Clamato, Peñafiel, Mr & Mrs T, and Margaritaville.
 
Basis of Presentation
 
The accompanying combined financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
 
The combined financial statements have been prepared on a “carve-out” basis from Cadbury Schweppes’ consolidated financial statements using the historical results of operations, assets and liabilities attributable to Cadbury Schweppes’ Americas Beverages business and include allocations of expenses from Cadbury Schweppes. This historical Cadbury Schweppes Americas Beverage information is our predecessor financial information. The Company eliminates from its financial results all intercompany transactions between entities included in the combination and the intercompany transactions with its equity method investees.
 
The combined financial statements may not be indicative of the Company’s future performance and do not necessarily reflect what its combined results of operations, financial position and cash flows would have been had the Company operated as an independent company during the periods presented. To the extent that an asset, liability, revenue or expense is directly associated with the Company, it is reflected in the accompanying combined financial statements.
 
Cadbury Schweppes currently provides certain corporate functions to the Company and costs associated with these functions have been allocated to the Company. These functions include corporate communications, regulatory, human resources and benefit management, treasury, investor relations, corporate controller, internal audit, Sarbanes Oxley compliance, information technology, corporate and legal compliance, and community affairs. The costs of such services have been allocated to the Company based on the most relevant allocation method to the service provided, primarily based on relative percentage of revenue or headcount. Management believes such allocations are reasonable; however, they may not be indicative of the actual expense that would have been incurred had the Company been operating as an independent company for the periods presented. The charges for these functions are included primarily in “selling, general and administrative expenses” in the Combined Statements of Operations.
 
The total invested equity represents Cadbury Schweppes’ interest in the recorded net assets of the Company. The net investment balance represents the cumulative net investment by Cadbury Schweppes in the Company through that date, including any prior net income or loss or other comprehensive income or loss attributed to the Company. Certain transactions between the Company and other related parties within the Cadbury Schweppes group, including allocated expenses, are also included in Cadbury Schweppes’ net investment.


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Table of Contents

 
DR PEPPER SNAPPLE GROUP, INC.
 
NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)
 
The fiscal years presented are the year ended December 31, 2007, which is referred to as “2007,” the year ended December 31, 2006, which is referred to as “2006,” and the 52-week period ended January 1, 2006, which is referred to as “2005.” Effective 2006, the Company’s fiscal year ends on December 31 of each year. Prior to 2006, the Company’s fiscal year end date represented the Sunday closest to December 31 of each year.
 
2.   Significant Accounting Policies
 
Use of Estimates
 
The process of preparing financial statements in conformity with U.S. GAAP requires the use of estimates and judgments that affect the reported amount of assets, liabilities, revenue and expenses. These estimates and judgments are based on historical experience, future expectations and other factors and assumptions the Company believes to be reasonable under the circumstances. These estimates and judgments are reviewed on an ongoing basis and are revised when necessary. Actual amounts may differ from these estimates. The Company’s most significant estimates and judgments include those relating to: revenue recognition, income taxes, pension and postretirement benefit obligations, stock based compensation and valuations of goodwill and other intangibles. Changes in estimates are recorded in the period of change.
 
Revenue Recognition
 
The Company recognizes sales revenue when all of the following have occurred: (1) delivery, (2) persuasive evidence of an agreement exists, (3) pricing is fixed or determinable and (4) collection is reasonably assured. Delivery is not considered to have occurred until the title and the risk of loss passes to the customer according to the terms of the contract between the Company and the customer. The timing of revenue recognition is largely dependent on contract terms. For sales to other customers that are designated in the contract as free-on-board destination, revenue is recognized when the product is delivered to and accepted at the customer’s delivery site.
 
In addition, the Company offers a variety of incentives and discounts to bottlers, customers and consumers through various programs to support the distribution of its products. These incentives and discounts include cash discounts, price allowances, volume based rebates, product placement fees and other financial support for items such as trade promotions, displays, new products, consumer incentives and advertising assistance. These incentives and discounts, collectively referred to as trade spend, are reflected as a reduction of gross sales to arrive at net sales. Trade spend for 2007 and 2006 includes the effect of the Company’s bottling acquisitions (see Note 3) where the amounts of such spend are larger than those related to other parts of its business. The aggregate deductions from gross sales recorded by the Company in relation to these programs were approximately $3,159 million, $2,440 million, and $928 million in 2007, 2006 and 2005, respectively. Net sales are also reported net of sales taxes and other similar taxes.
 
Transportation and Warehousing Costs
 
The Company incurred $736 million, $582 million and $292 million of transportation and warehousing costs in 2007, 2006 and 2005, respectively. These amounts, which primarily relate to shipping and handling costs, are included in selling, general and administrative expenses.
 
Cash and Cash Equivalents
 
Cash and cash equivalents include cash and investments in short-term, highly liquid securities, with original maturities of three months or less.
 
Concentration of Credit Risk
 
Financial instruments which subject the Company to potential credit risk consist of its cash and cash equivalents and accounts receivable. The Company places its cash and cash equivalents with high credit


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Table of Contents

 
DR PEPPER SNAPPLE GROUP, INC.
 
NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)
 
quality financial institutions. Deposits with these financial institutions may exceed the amount of insurance provided; however, these deposits typically are redeemable upon demand and, therefore, the Company believes the financial risks associated with these financial instruments are minimal.
 
The Company performs ongoing credit evaluations of its customers, and generally does not require collateral on its accounts receivable. The Company estimates the need for allowances for potential credit losses based on historical collection activity and the facts and circumstances relevant to specific customers and records a provision for uncollectible accounts when collection is uncertain. The Company has not experienced significant credit related losses to date.
 
No single customer accounted for 10% or more of the Company’s trade accounts receivable for any period presented.
 
The principal raw materials the Company uses in the business are aluminum cans and ends, glass bottles, PET bottles and caps, paperboard packaging, high fructose corn syrup and other sweeteners, juice, fruit, electricity, fuel and water. Some raw materials the Company uses are available from only a few suppliers. If these suppliers are unable or unwilling to meet requirements, the Company could suffer shortages or substantial cost increases.
 
Accounts Receivable and Allowance for Doubtful Accounts
 
Trade accounts receivable are recorded at the invoiced amount and do not bear interest. Past-due status is based on contractual terms on a customer-by-customer basis. The Company determines the required allowance using information such as its customer credit history, industry and market segment information, economic trends and conditions, credit reports and customer financial condition. The estimates can be affected by changes in the industry, customer credit issues or customer bankruptcies. Account balances are charged off against the allowance when it is determined that the receivable will not be recovered.
 
Activity in the allowance for doubtful accounts was as follows:
 
                         
    2007     2006     2005  
 
Balance, beginning of the year
  $ 14     $ 10     $ 12  
Net charge to costs and expenses
    11       4       1  
Acquisition of subsidiaries
          3        
Write-offs
    (5 )     (3 )     (3 )
                         
Balance, end of the year
  $ 20     $ 14     $ 10  
                         
 
Inventories
 
Inventories are stated at the lower of cost or market value. Cost is determined for U.S. inventories substantially by the last-in, first-out (“LIFO”) valuation method and for non-U.S. inventories by the first-in, first-out (“FIFO”) valuation method. Inventories include raw materials, work-in-process, finished goods, packing materials, advertising materials, spare parts and other supplies. The costs of finished goods inventories include raw materials, direct labor and indirect production and overhead costs. Reserves for excess and obsolete inventories are based on an assessment of slow-moving and obsolete inventories, determined by historical usage and demand. Excess and obsolete inventory reserves were $17 million and $7 million as of December 31, 2007 and 2006, respectively.
 
Income Taxes
 
Income taxes are computed and reported on a separate return basis and accounted for using the asset and liability approach under Statement of Financial Accounting Standards (“SFAS”) No. 109, Accounting for Income Taxes (“SFAS 109”). This method involves determining the temporary differences between combined assets and


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Table of Contents

 
DR PEPPER SNAPPLE GROUP, INC.
 
NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)
 
liabilities recognized for financial reporting and the corresponding combined amounts recognized for tax purposes and computing the tax-related carryforwards at the enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The resulting amounts are deferred tax assets or liabilities and the net changes represent the deferred tax expense or benefit for the year. The total of taxes currently payable per the tax return and the deferred tax expense or benefit represents the income tax expense or benefit for the year for financial reporting purposes.
 
The Company periodically assesses the likelihood of realizing its deferred tax assets based on the amount of deferred tax assets that the Company believes is more likely than not to be realized. The Company bases its judgment of the recoverability of its deferred tax asset, which includes U.S. federal and, to a lesser degree, state and foreign net operating loss, or NOL, carryforwards, primarily on historical earnings, its estimate of current and expected future earnings, prudent and feasible tax planning strategies, and current and future ownership changes.
 
Property, Plant and Equipment
 
Property, plant and equipment are stated at cost, net of accumulated depreciation and amortization, plus capitalized interest on borrowings during the actual construction period of major capital projects. Significant improvements which substantially extend the useful lives of assets are capitalized. The costs of major rebuilds and replacements of plant and equipment are capitalized, and expenditures for repairs and maintenance which do not improve or extend the life of the assets are expensed as incurred. When property, plant and equipment is sold or retired, the costs and the related accumulated depreciation are removed from the accounts, and the net gains or losses are recorded in “gain on disposal of property and intangible assets.” Leasehold improvements are amortized over the shorter of the estimated useful life of the assets or the lease term.
 
For financial reporting purposes, depreciation is computed on the straight-line method over the estimated useful asset lives as follows:
 
         
Asset
  Useful Life  
 
Buildings and improvements
    25 to 40 years  
Machinery and equipment
    5 to 14 years  
Vehicles
    5 to 8 years  
Vending machines
    5 to 7 years  
Computer software
    3 to 8 years  
 
Estimated useful lives are periodically reviewed and, when warranted, are updated. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. An impairment loss would be determined when estimated undiscounted future pre-tax cash flows from the use of the asset or group of assets, as defined, are less than its carrying amount. Measurement of an impairment loss is based on the excess of the carrying amount of the asset or group of assets over the long-live asset fair value. Fair value is generally measured using discounted cash flows.
 
Goodwill and Other Indefinite Lived Intangible Assets
 
The majority of the Company’s intangible asset balances are made up of goodwill and brands which the Company has determined to have indefinite useful lives. In arriving at the conclusion that a brand has an indefinite useful life, management reviews factors such as size, diversification and market share of each brand. Management expects to acquire, hold and support brands for an indefinite period through consumer marketing and promotional support. The Company also considers factors such as our ability to continue to protect the legal rights that arise from these brand names indefinitely or the absence of any regulatory, economic or competitive factors that could truncate the life of the brand name. If the criteria are not met to assign an indefinite life, the brand is amortized over its expected useful life.


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Table of Contents

 
DR PEPPER SNAPPLE GROUP, INC.
 
NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)
 
The Company conducts impairment tests on goodwill and all indefinite lived intangible assets annually, as of December 31, or more frequently if circumstances indicate that the carrying amount of an asset may not be recoverable. The Company uses present value and other valuation techniques to make this assessment. If the carrying amount of an intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess.
 
Impairment tests for goodwill include comparing the fair value of the respective reporting units, which are the Company’s segments, with their carrying amount, including goodwill. Goodwill is evaluated using a two-step impairment test at the reporting unit level. The first step compares the carrying amount of a reporting unit, including goodwill, with its fair value. If the carrying amount of a reporting unit exceeds its fair value, a second step is completed to determine the amount of goodwill impairment loss to record. In the second step, an implied fair value of the reporting unit’s goodwill is determined by allocating the fair value of the reporting unit to all of the assets and liabilities other than goodwill. The amount of impairment loss is equal to the excess of the carrying amount of the goodwill over the implied fair value of that goodwill.
 
Definite Lived Intangible Assets
 
Definite lived intangible assets are those assets deemed by the Company to have determinable finite useful lives. Identifiable intangible assets with finite lives are amortized on a straight-line basis over their estimated useful lives as follows:
 
         
Intangible Assets
  Useful Life  
 
Brands
    5 to 15 years  
Bottler agreements and distribution rights
    2 to 16 years  
Customer relationships and contracts
    5 to 10 years  
 
Other Assets
 
The Company provides support to certain customers to cover various programs and initiatives to increase net sales. Costs of these programs and initiatives are recorded in “prepaid expenses and other current assets” and “other non-current assets.” These costs include contributions to customers or vendors for cold drink equipment used to market and sell the Company’s products.
 
The long-term portion of the costs for these programs is recorded in other non-current assets and subsequently amortized over the period to be directly benefited. These costs amounted to $86 million and $100 million, net of accumulated amortization, for 2007 and 2006, respectively. The amounts of these incentives are amortized based upon a methodology consistent with the Company’s contractual rights under these arrangements. The amortization charge for the cost of contributions to customers or vendors for cold drink equipment was $9 million, $16 million and $17 million for 2007, 2006 and 2005, respectively, and was recorded in “selling, general and administrative expenses” in the Combined Statements of Operations. The amortization charge for the cost of other programs and incentives was $10 million, $10 million and $11 million for 2007, 2006 and 2005, respectively, and was recorded as a deduction from gross sales.
 
Research and Development
 
Research and development costs are expensed when incurred and amounted to $24 million, $24 million and $21 million for 2007, 2006 and 2005, respectively. These expenses are recorded in “selling, general and administrative expenses” in the Combined Statements of Operations.


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Table of Contents

 
DR PEPPER SNAPPLE GROUP, INC.
 
NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)
 
Advertising Expense
 
Advertising costs are expensed when incurred and amounted to approximately $387 million, $374 million and $377 million for 2007, 2006 and 2005, respectively. These expenses are recorded in “selling, general and administrative expenses” in the Combined Statements of Operations.
 
Restructuring Costs
 
The Company periodically records facility closing and reorganization charges when a facility for closure or other reorganization opportunity has been identified, a closure plan has been developed and the affected employees notified, all in accordance with SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities (“SFAS 146”).
 
Foreign Currency Translation
 
The functional currency of the Company’s operations outside the U.S. is the local currency of the country where the operations are located. The balance sheets of operations outside the U.S. are translated into U.S. Dollars at the end of year rates. The results of operations for the fiscal year are translated into U.S. Dollars at an annual average rate, calculated using month end exchange rates.
 
The following table sets forth exchange rate information for the periods and currencies indicated:
 
                 
          Yearly
 
Mexican Peso to U.S. Dollar Exchange Rate   Year End     Average  
 
2007
    10.91       10.91  
2006
    10.79       10.86  
2005
    10.64       10.88  
 
                 
          Yearly
 
Canadian Dollar to U.S. Dollar Exchange Rate   Year End     Average  
 
2007
    1.00       1.07  
2006
    1.17       1.13  
2005
    1.17       1.21  
 
Differences on exchange arising from the translation of opening balances sheets of these entities to the rate ruling at the end of the financial year are recognized in “accumulated other comprehensive income.” The exchange differences arising from the translation of foreign results from the average rate to the closing rate are also recognized in “accumulated other comprehensive income.” Such translation differences are recognized as income or expense in the period in which the Company disposes of the operations.
 
Transactions in foreign currencies are recorded at the approximate rate of exchange at the transaction date. Assets and liabilities resulting from these transactions are translated at the rate of exchange in effect at the balance sheet date. All such differences are recorded in results of operations and amounted to less than $1 million, $5 million and $2 million in 2007, 2006 and 2005, respectively.
 
Fair Value of Financial Instruments
 
Pursuant to SFAS No. 107, Disclosure about Fair Value of Financial Instruments (“SFAS 107”), the Company is required to disclose an estimate of the fair value of its financial instruments as of December 31, 2007 and 2006. SFAS 107 defines the fair value of financial instruments as the amount at which the instrument could be exchanged in a current transaction between willing parties.


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Table of Contents

 
DR PEPPER SNAPPLE GROUP, INC.
 
NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)
 
The carrying amounts reflected in the Combined Balance Sheets for cash and cash equivalents, accounts receivable, accounts payable and short-term debt approximate fair value due to the short-term nature of their maturities.
 
The Company’s long-term debt was subject to variable and fixed interest rates that approximated market rates in 2007, 2006 and 2005. As a result, the Company believes the carrying value of long-term debt approximates fair value for these periods.
 
The carrying amount of the Company’s outstanding foreign-currency swaps is equivalent to fair value as of the respective dates in the Combined Balance Sheets.
 
Stock-Based Compensation
 
On January 3, 2005, the Company adopted Statement of Financial Accounting Standards No. 123(R), Share-Based Payment (“SFAS 123(R)”). SFAS 123(R) requires the recognition of compensation expense in the Combined Statement of Operations related to the fair value of employee share-based awards. The Company selected the modified prospective method of transition; accordingly, prior periods have not been restated. Upon adoption of SFAS 123(R), for awards which are classified as liabilities, the Company was required to reclassify the Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, (“APB 25”) historical compensation cost from equity to liability and to recognize the difference between this and the fair value liability through the statement of operations.
 
Under SFAS 123(R), the Company recognizes the cost of all unvested employee stock options on a straight-line attribution basis over their respective vesting periods, net of estimated forfeitures. In addition, the Company has certain employee share plans that contain inflation indexed earnings growth performance conditions. SFAS 123(R) requires plans with such performance criteria to be accounted for under the liability method. The liability method, as set out in SFAS 123(R), requires a liability be recorded on the balance sheet until awards have vested. Also, in calculating the income statement charge for share awards under the liability method as set out in SFAS 123(R), the fair value of each award must be remeasured at each reporting date until vesting.
 
The stock-based compensation plans in which the Company’s employees participate are described further in Note 14.
 
Pension and Postretirement Benefits
 
The Company has several pension and postretirement plans covering employees who satisfy age and length of service requirements. There are nine stand-alone and five multi-employer pension plans and five stand-alone and one multi-employer postretirement plans. Depending on the plan, pension and postretirement benefits are based on a combination of factors, which may include salary, age and years of service. One of the nine stand-alone plans is an unfunded pension plan that provides supplemental pension benefits to certain senior executives, and is accounted for as a defined contribution plan.
 
Pension expense has been determined in accordance with the principles of SFAS No. 87, Employers’ Accounting for Pensions which requires use of the “projected unit credit” method for financial reporting. The Company adopted the provisions of SFAS No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans — An amendment of Financial Accounting Standards Board Statements No. 87, 88, 106, and 132(R) (“SFAS 158”) related to recognizing the funded status of a benefit plan and the disclosure requirements on December 31, 2006. The Company has elected to defer the change of measurement date as permitted by SFAS 158 until December 31, 2008. The Company’s policy is to fund pension plans in accordance with the requirements of the Employee Retirement Income Security Act. Employee benefit plan obligations and expenses included in the Combined Financial Statements are determined from actuarial analyses based on plan assumptions, employee demographic data, years of service, compensation, benefits and claims paid and employer contributions.


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Table of Contents

 
DR PEPPER SNAPPLE GROUP, INC.
 
NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)
 
Cadbury Schweppes sponsors the five multi-employer pension plans in which the Company’s employees participate, and therefore the Company accounts for these as defined contribution plans.
 
The expense related to the postretirement plans has been determined in accordance with SFAS No. 106, Employers’ Accounting for Postretirement Benefits Other Than Pensions (“SFAS 106”). As stated in SFAS 106, the Company accrues the cost of these benefits during the years that employees render service to us.
 
New Accounting Standards
 
In December 2007, the FASB issued SFAS No. 141 (revised 2007), Business Combinations (“SFAS 141(R)”), which amends the principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, any noncontrolling interest in the acquiree and the goodwill acquired. SFAS 141(R) also establishes disclosure requirements to enable the evaluation of the nature and financial effects of the business combination. SFAS 141(R) is effective for its Company on January 1, 2009, and the Company will apply SFAS 141(R) prospectively to all business combinations subsequent to the effective date.
 
In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements — an amendment of Accounting Research Bulletin No. 51 (“SFAS 160”). SFAS 160 establishes accounting and reporting standards for the noncontrolling interest in a subsidiary and the deconsolidation of a subsidiary and also establishes disclosure requirements that clearly identify and distinguish between the controlling and noncontrolling interests and requires the separate disclosure of income attributable to controlling and noncontrolling interests. SFAS 160 is effective for fiscal years beginning after December 15, 2008. The Company will apply SFAS 160 prospectively to all applicable transactions subsequent to the effective date.
 
In June 2007, the FASB ratified Emerging Issues Task Force (“EITF”) Issue No. 06-11 Accounting for Income Tax Benefits of Dividends on Share-Based Payment Awards (“EITF 06-11”), which requires entities to record tax benefits on dividends or dividend equivalents that are charged to retained earnings for certain share-based awards to additional paid-in capital. In a share-based payment arrangement, employees may receive dividends or dividend equivalents on awards of nonvested equity shares, nonvested equity share units during the vesting period, and share options until the exercise date. Generally, the payment of such dividends can be treated as deductible compensation for tax purposes. The amount of tax benefits recognized in additional paid-in capital should be included in the pool of excess tax benefits available to absorb tax deficiencies on share-based payment awards. EITF 06-11 is effective for fiscal years beginning after December 15, 2007, and interim periods within those years. The Company believes the adoption of EITF 06-11 will not have a material impact on its combined financial statements.
 
In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities including an amendment to FASB Statement No. 115 (“SFAS 159”). SFAS 159 permits entities to choose to measure many financial instruments and certain other items at fair value. Unrealized gains and losses on items for which the fair value option has been elected will be recognized in earnings at each subsequent reporting date. SFAS 159 is effective for the Company January 1, 2008. The Company does not plan to apply SFAS 159 to any of its existing financial assets or liabilities and believes that the adoption of SFAS 159 would not have a material impact on its financial statements.
 
In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (“SFAS 157”). SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosure requirements about fair value measurements. SFAS 157 is effective for the Company January 1, 2008. A one-year deferral is in effect for nonfinancial assets and nonfinancial liabilities that are measured on a nonrecurring basis. The Company believes that the adoption of SFAS 157 will not have a material impact on its financial statements.


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Table of Contents

 
DR PEPPER SNAPPLE GROUP, INC.
 
NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)
 
 
3.   Acquisitions
 
On May 2, 2006, the Company acquired approximately 55% of the outstanding shares of Dr Pepper/Seven Up Bottling Group, Inc. (“DPSUBG”), which, combined with the Company’s pre-existing 45% ownership, resulted in the Company’s full ownership of DPSUBG. DPSUBG’s principal operations are the bottling and distribution of beverages produced by the Company’s Beverage Concentrates and Finished Goods segments, and certain beverages produced by third parties, all in North America. The Company acquired DPSUBG to strengthen the route-to-market of its North American beverage business.
 
The purchase price for the approximately 55% of DPSUBG the Company did not previously own was approximately $370 million, which consisted of $347 million cash paid by the Company and $23 million in related expenses paid by Cadbury Schweppes. The full purchase price was funded through related party debt with the subsidiaries of Cadbury Schweppes.
 
The acquisition was accounted for as a purchase under SFAS No. 141 Business Combinations . The following table summarizes the allocation of the purchase price to approximately 55% of DPSUBG’s assets and liabilities:
 
         
    At
 
    May 2,
 
    2006  
 
Current assets
  $ 182  
Investments
    1  
Property, plant and equipment
    190  
Intangible assets
    410  
         
Total assets acquired
    783  
Current liabilities
    184  
Long-term debt
    358  
Deferred tax liabilities
    146  
Other liabilities
    131  
         
Total liabilities assumed
    819  
Net liabilities assumed
    (36 )
Cash acquired
    10  
Goodwill
    396  
         
Total purchase price
  $ 370  
         
 
Included within the allocation of the purchase price in the table above are $410 million of intangible assets which includes indefinite lived Company-related bottler agreements of $282 million, $70 million of customer relationships and contracts and $48 million of non-Company-related bottler agreements being amortized over five to 10 years; and other intangible assets of $10 million being amortized over 10 years.
 
The results of DPSUBG have been included in the individual line items within the Combined Statement of Operations from May 2, 2006. Prior to this date, the existing investment in DPSUBG was accounted for by the equity method. Refer to Note 7.
 
The following unaudited pro forma summary presents the results of operations as if the acquisition of DPSUBG had occurred at the beginning of each fiscal year. The pro forma information may not be indicative of future performance.
 


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DR PEPPER SNAPPLE GROUP, INC.
 
NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)
 
                 
    2006     2005  
 
Net sales
  $ 5,443     $ 5,019  
                 
Net income before cumulative effect of change in accounting principle
  $ 500     $ 457  
                 
Net income
  $ 500     $ 447  
                 
 
The Company also acquired All American Bottling Company (“AABC”) for $58 million on June 9, 2006, Seven Up Bottling Company of San Francisco (“Easley”) for $51 million on August 7, 2006 and Southeast-Atlantic Beverage Corporation (“SeaBev”) for $53 million on July 11, 2007. Goodwill of $20 million and identifiable intangible assets of $63 million were recorded. These acquisitions further strengthen the route-to-market of the Company’s North American beverage business.
 
The goodwill associated with these transactions has been assigned to the Bottling Group, Beverage Concentrates and Finished Goods segments. The amounts assigned to these segments were $195 million, $322 million and $233 million, respectively. The goodwill represents benefits of the acquisitions that are in addition to the fair value of the net assets acquired and the anticipated increased profitability arising from the future revenue and cost synergies arising from the combination. None of the goodwill is deductible for tax purposes.
 
Supplemental schedule of noncash investing activities:
 
In conjunction with the acquisitions of SeaBev, DPSUBG, AABC and Easley, the following liabilities were assumed:
 
                                 
    2007     2006  
    SeaBev     DPSUBG     AABC     Easley  
 
Fair value of assets acquired
  $ 76 (1)   $ 1,189     $ 64     $ 99  
Cash consideration paid by the Company
          (347 )     (58 )     (51 )
Cash expenses paid by Cadbury Schweppes
          (23 )            
                                 
Liabilities assumed
    76       819       6       48  
                                 
 
  (1)   Cash purchase price was paid by Cadbury Schweppes and increased related party debt balance accordingly.
 
4.   Inventories
 
Inventories consist of the following:
 
                 
    December 31,
    December 31,
 
    2007     2006  
 
Raw materials
  $ 110     $ 105  
Work in process
          5  
Finished goods
    245       214  
                 
Inventories at FIFO cost
    355       324  
Reduction to LIFO cost
    (30 )     (24 )
                 
Inventories
  $ 325     $ 300  
                 
Percent of inventory accounted for by:
               
LIFO
    92 %     91 %
FIFO
    8 %     9 %

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DR PEPPER SNAPPLE GROUP, INC.
 
NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)
 
5.   Accounts Payable and Accrued Expenses
 
Accounts payable and accrued expenses consisted of the following:
 
                 
    December 31,
    December 31,
 
    2007     2006  
 
Trade accounts payable
  $ 257     $ 256  
Customer rebates
    200       184  
Accrued compensation
    127       96  
Other current liabilities
    228       252  
                 
Accounts payable and accrued expenses
  $ 812     $ 788  
                 
 
6.   Property, Plant and Equipment
 
                 
    December 31,
    December 31,
 
    2007     2006  
 
Land
  $ 90     $ 79  
Buildings and improvements
    284       265  
Machinery and equipment
    570       472  
Vending machines
    282       258  
Software
    125       105  
Construction-in-progress
    120       75  
                 
Gross property, plant and equipment
    1,471       1,254  
Less: accumulated depreciation and amortization
    (603 )     (499 )
                 
Net property, plant and equipment
  $ 868     $ 755  
                 
 
As of December 31, 2007 and 2006, the amount reflected in “building and improvements” and “machinery and equipment” at cost included $23 million and $1 million of assets under capital lease, respectively. As of December 31, 2007 and 2006, the net book value of assets under capital lease was $22 million and $23 million, respectively.
 
Depreciation expense amounted to $120 million, $94 million and $48 million in 2007, 2006 and 2005, respectively.
 
Capitalized interest was $6 million, $3 million and $1 million during 2007, 2006 and 2005, respectively.
 
7.   Investments in Unconsolidated Subsidiaries
 
The Company has investments in 50% owned Mexican joint ventures accounted for under the equity method of accounting. The carrying value of the investments was $13 million and $12 million as of December 31, 2007 and 2006, respectively.
 
Dr Pepper/Seven Up Bottling Group
 
In 2005, Cadbury Schweppes purchased approximately 5% of DPSUBG, increasing its investment to approximately 45%. On May 2, 2006, the Company purchased the remaining 55% of DPSUBG. As a result DPSUBG became a fully-owned subsidiary and its results were combined from that date forward. Refer to Note 3. As of May 1, 2006 and as of January 1, 2006, the Company owned approximately 45% of DPSUBG. As of January 2,


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Table of Contents

 
DR PEPPER SNAPPLE GROUP, INC.
 
NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)
 
2005, the investment in DPSUBG was approximately 40%. The following schedules summarize DPSUBG’s reported financial information:
 
         
    As of
 
    December 31,
 
    2005  
 
Current assets
  $ 418  
Noncurrent assets
    1,557  
         
Total assets
    1,975  
Current liabilities
    368  
Noncurrent liabilities
    1,081  
         
Total liabilities
    1,449  
Shareowner’s equity
    526  
         
Total liabilities and shareowner’s equity
  $ 1,975  
         
Company equity investment
  $ 235  
         
 
                 
    January 1,
    For The
 
    2006
    Year Ended
 
    to May 1,
    December 31,
 
    2006     2005  
 
Net sales
  $ 708     $ 2,042  
Cost of goods sold
    469       1,298  
                 
Gross profit
  $ 239     $ 744  
                 
Operating income
  $ 32     $ 134  
                 
Net income
  $ 2     $ 45  
                 
 
8.   Goodwill and Other Intangible Assets
 
Changes in the carrying amount of the goodwill for the fiscal years ended December 31, 2007 and 2006 by reporting unit are as follows:
 
                                         
    Beverage
    Finished
    Bottling
    Mexico and
       
    Concentrates     Goods     Group     the Caribbean     Total  
 
Balance as of January 1, 2006
  $ 1,415     $ 989     $ 2     $ 38     $ 2,444  
Acquisitions
    322       233       186             741  
Changes due to currency and other
    (4 )                 (1 )     (5 )
                                         
Balance as of December 31, 2006
  $ 1,733     $ 1,222     $ 188     $ 37     $ 3,180  
Acquisitions
                7             7  
Changes due to currency and other
    (2 )     (2 )                 (4 )
                                         
Balance as of December 31, 2007
  $ 1,731     $ 1,220     $ 195     $ 37     $ 3,183  
                                         
 
The gross carrying amount and accumulated amortization of the Company’s intangible assets other than goodwill as of December 31, 2007 and December 31, 2006 are as follows:
 


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Table of Contents

 
DR PEPPER SNAPPLE GROUP, INC.
 
NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)
 
                                                         
    Weighted
                                     
    Average
    Beginning
    Acquisitions,
          Ending
          Net
 
    Useful Life
    Gross
    (Disposals) &
    Changes Due
    Gross
    Accumulated
    Carrying
 
As of December 31, 2007   (years)     Amount     (Write-offs)     to Currency     Amount     Amortization     Amount  
 
Intangible assets with indefinite lives:
                                                       
Brands
          $ 3,096     $ (10 )   $ 1     $ 3,087     $     $ 3,087  
Bottler agreements
            392       6             398             398  
Distributor rights
            24       1             25             25  
Intangible assets with finite lives:
                                                       
Brands
    9       29                   29       (17 )     12  
Customer relationships
    7       73       3             76       (20 )     56  
Bottler agreements
    7       64       (7 )           57       (19 )     38  
Distributor rights
    2             2             2       (1 )     1  
                                                         
Total
          $ 3,678     $ (5 )   $ 1     $ 3,674     $ (57 )   $ 3,617  
                                                         
 
                                                         
    Weighted
                                     
    Average
    Beginning
    Acquisitions,
          Ending
          Net
 
    Useful Life
    Gross
    (Disposals) &
    Changes Due
    Gross
    Accumulated
    Carrying
 
As of December 31, 2006   (years)     Amount     (Write-offs)     to Currency     Amount     Amortization     Amount  
 
Intangible assets with indefinite lives:
                                                       
Brands
          $ 2,929     $ 168     $ (1 )   $ 3,096     $     $ 3,096  
Bottler agreements
                  392             392             392  
Distributor rights
            7       17             24             24  
Intangible assets with finite lives:
                                                       
Brands
    8       19       10             29       (12 )     17  
Customer relationships
    7             73             73       (8 )     65  
Bottler agreements
    7             64             64       (7 )     57  
Distributor rights
                                           
Pension asset
            2       (2 )                        
                                                         
Total
          $ 2,957     $ 722     $ (1 )   $ 3,678     $ (27 )   $ 3,651  
                                                         
 
Amortization expense on intangible assets was $30 million, $19 million and $3 million in 2007, 2006 and 2005, respectively. No impairment expense was recognized in 2006 and 2005. Amortization expense of these intangible assets over the next five years is expected to be the following:
 
         
    Aggregate
 
    Amortization
 
Year
  Expense  
 
2008
    28  
2009
    24  
2010
    24  
2011
    12  
2012
    6  

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Table of Contents

 
DR PEPPER SNAPPLE GROUP, INC.
 
NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)
 
In 2007, the Company recorded impairment charges of approximately $6 million, primarily related to the Accelerade brand. The Accelerade brand is a component of the Company’s Finished Goods operating segment. The fair values were determined using discounted cash flow analyses. Because the fair values were less than the carrying values of the assets, the Company recorded impairment charges to reduce the carrying values of the assets to their respective fair values. These impairment charges were recorded in “impairment of intangible assets” in the Combined Statement of Operations.
 
In 2007, following the termination of the Company’s distribution agreements for glacéau products, it received a payment of approximately $92 million. The Company recognized a net gain of $71 million after the write-off of associated assets.
 
In 2006, the Company sold the Slush Puppie business and certain related assets, which included certain brands with net book value of $14 million, to the ICEE Company for $23 million. The Company also sold the Grandma’s Molasses brand and certain related assets, which had a net book value of $0 million to B&G Foods for $30 million.
 
In 2005, the Company sold the Holland House brand, which had a net book value of $0 million, for $36 million to Mizkan Americas, Inc.
 
9.   Income Taxes
 
These financial statements reflect a tax provision as if the Company filed its own separate tax return. The Company, however, is included in the consolidated federal income tax return of Cadbury Schweppes Americas, Inc. and subsidiaries.
 
Income before income taxes and cumulative effect of change in accounting policy was as follows:
 
                         
    2007     2006     2005  
 
U.S.
  $ 650     $ 698     $ 706  
Non-U.S.
    169       110       102  
                         
Total
  $ 819     $ 808     $ 808  
                         
 
The provision for income taxes attributable to continuing operations has the following components:
 
                         
    2007     2006     2005  
 
Current:
                       
Federal
  $ 199     $ 220     $ 176  
State
    33       40       32  
Non-U.S.
    41       23       51  
                         
Total current provision
    273       283       259  
                         
Deferred:
                       
Federal
    29       10       44  
State
    4       7       26  
Non-U.S.
    16       (2 )     (8 )
                         
Total deferred provision
    49       15       62  
                         
Total provision for income taxes
  $ 322     $ 298     $ 321  
                         
 
In 2007, 2006 and 2005, the reported amount of income tax expense is different from the amount of income tax expense that would result from applying the federal statutory rate due principally to state taxes, tax reserves and the deduction for domestic production activity.


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DR PEPPER SNAPPLE GROUP, INC.
 
NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)
 
The following is a reconciliation of income taxes computed at the U.S. federal statutory tax rate to the income taxes reported in the Combined Statements of Operations:
 
                         
    2007     2006     2005  
 
Statutory federal income tax at 35%
  $ 287     $ 283     $ 283  
State income taxes, net
    26       28       30  
Impact of non-U.S. operations
    (2 )     (18 )     7  
Other
    11       5       1  
                         
Total provision for income taxes
  $ 322     $ 298     $ 321  
                         
Effective tax rate
    39.3 %     36.9 %     39.7 %
                         
 
The tax effects of temporary differences giving rise to deferred income tax assets and liabilities were:
 
                 
    December 31,
    December 31,
 
    2007     2006  
 
Deferred income tax assets:
               
Pension and postretirement benefits
  $ 6     $ 10  
Compensation accruals
    25       26  
Inventory
    19       10  
Net operating loss and credit carryforwards
    5       9  
Accrued liabilities
    47       40  
Other
    69       23  
                 
      171       118  
                 
Deferred income tax liabilities:
               
Fixed assets
    (124 )     (104 )
Intangible assets
    (1,269 )     (1,234 )
Other
    (13 )     (2 )
                 
      (1,406 )     (1,340 )
                 
Net deferred income tax liability
  $ (1,235 )   $ (1,222 )
                 
 
The major temporary differences that give rise to the net deferred tax liabilities are intangible assets and fixed asset depreciation. The Company has approximately $56 million of U.S. state and foreign net operating loss carryforwards as of December 31, 2007. Of this total, $52 million are state net operating losses. Net operating losses generated in the U.S. state jurisdictions, if unused, will expire from 2008 to 2027. The non-U.S. net operating loss carryforwards of $4 million will expire from 2008 to 2016. No valuation allowance has been provided on deferred tax assets as management believes it is more likely than not that the deferred income tax assets will be fully recoverable.
 
The Company files income tax returns in various U.S. federal, state and local jurisdictions. The Company also files income tax returns in various foreign jurisdictions, principally in Canada, Mexico and the United Kingdom. The U.S. and most state and local income tax returns for years prior to 2003 are considered closed to examination by applicable tax authorities. Federal income tax returns for 2004 and 2005 are currently under examination by the Internal Revenue Service. Certain Canadian tax returns remain open for audit from 2001 and forward, while the Mexican returns are open for tax years 2002 and forward.
 
In July 2006, the FASB issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes (“FIN 48”), which is an interpretation of SFAS 109. The Company has adopted the provisions of FIN 48 effective


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Table of Contents

 
DR PEPPER SNAPPLE GROUP, INC.
 
NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)
 
January 1, 2007, as required. FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.
 
Under FIN 48, the Company is required to determine whether a tax position is more likely than not to be sustained upon examination by tax authorities assuming that the relevant taxing authorities have full knowledge of all relevant information. The tax benefits related to uncertain tax positions to be recorded in the financial statements should represent the maximum benefit that has a greater than fifty percent likelihood of being realized. Changes in judgment can occur between initial recognition through settlement or ultimate de-recognition based upon changes in facts, circumstances and information available at each reporting date.
 
The cumulative effect of adopting FIN 48 was a $16 million increase in tax reserves and a corresponding decrease to opening retained earnings at January 1, 2007. Upon adoption, the Company’s amount of gross unrecognized tax benefit at January 1, 2007 was $70 million.
 
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
 
         
    Amount  
 
Unrecognized tax benefits:
       
Amount at adoption of FIN 48
  $ 70  
Tax positions taken in prior periods:
       
Gross increases
    11  
Gross decreases
    (9 )
Tax positions taken in current period:
       
Gross increases
    30  
Gross decreases
     
Settlements with taxing authorities — cash paid
    (4 )
Lapse of applicable statute of limitations
     
         
Amount as of December 31, 2007
  $ 98  
         
 
The gross balance of unrecognized tax benefits of $98 million excluded $23 million of offsetting tax benefits. The net unrecognized tax benefits of $75 million includes $60 million that, if recognized, would benefit the effective income tax rate. It is reasonably possible that the effective tax rate will be impacted by the resolution of some matters audited by various taxing authorities within the next twelve months, but a reasonable estimate of such impact cannot be made at this time.
 
The Company accrues interest and penalties on its uncertain tax positions as a component of its provision for income taxes. The amount of interest the Company accrued for uncertain tax positions during 2007 was $3 million. There was also a reduction of interest and penalties of $5 million related to changes in estimates and payments during 2007. At December 31, 2007, the Company had a total of $14 million accrued for interest and penalties for its uncertain tax positions.


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Table of Contents

 
DR PEPPER SNAPPLE GROUP, INC.
 
NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)
 
 
10.   Long-term Obligations
 
Debt Payable to Related Parties
 
                 
    December 31,
    December 31,
 
    2007     2006  
 
Loans payable to related parties, with various fixed and floating interest rates(a)
  $ 3,019     $ 3,249  
Less — Current portion
    (126 )     (708 )
                 
Long-term debt payable to related parties
  $ 2,893     $ 2,541  
                 
 
 
(a) Debt agreements with related parties are as follows:
 
Cadbury Ireland Limited (“CIL”)
 
Total principal owed to CIL was $40 million for both 2007 and 2006, respectively. The debt bears interest at a floating rate based on 3-month LIBOR. Actual rates were 5.31% and 5.36% at December 31, 2007 and 2006, respectively. The outstanding principal balance is payable on demand and is included in “current portion of long-term debt.” The Company recorded $2 million, $2 million and $1 million of interest expense related to the debt for 2007, 2006 and 2005, respectively.
 
Cadbury Schweppes Finance plc, (“CSFPLC”)
 
The Company has a variety of debt agreements with CSFPLC with maturity dates ranging from May 2008 to May 2011. These agreements had a combined outstanding principal balance of $511 million and $2,937 million as of December 31, 2007 and 2006, respectively. As of December 31, 2007 and 2006, $511 million and $2,387 million of the debt was based upon a floating rate ranging between LIBOR plus 1.5% to LIBOR plus 2.5%. The remaining principal balance of $550 million as of December 31, 2006 had a stated fixed rate ranging from 5.76% to 5.95%. The Company recorded $65 million, $175 million and $99 million of interest expense related to these notes for 2007, 2006 and 2005, respectively.
 
Cadbury Schweppes Overseas Limited (“CSOL”)
 
Total principal owed to CSOL was $0 million and $22 million as of December 31, 2007 and 2006, respectively. The Company settled the note in November 2007. The debt bore interest at a floating rate based on Mexican LIBOR plus 1.5%. The actual interest rate was 9.89% at December 31, 2006. The Company recorded $2 million, $15 million and $40 million of interest expense related to the note for 2007, 2006 and 2005, respectively.
 
Cadbury Adams Canada, Inc. (“CACI”)
 
Total principal owed to CACI was $0 million and $15 million as of December 31, 2007 and 2006, respectively and is payable on demand. The debt bore interest at a floating rate based on 1 month Canadian LIBOR. The actual rate was 4.26% at December 31, 2006. The Company recorded $2 million of interest expense related to the debt for 2007 and less than $1 million for both 2006 and 2005.
 
Cadbury Schweppes Americas Holding BV (“CSAHBV”)
 
The Company has a variety of debt agreements with CSAHBV with maturity dates ranging from 2009 to 2017. These agreements had a combined outstanding principal balance of $2,468 million as of December 31, 2007 and bear interest at a floating rate ranging between 6-month USD LIBOR plus 0.75% to 6-month USD LIBOR plus 1.75%. The Company recorded $149 million of interest expense related to these notes for 2007.


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Table of Contents

 
DR PEPPER SNAPPLE GROUP, INC.
 
NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)
 
Cadbury Schweppes Treasury America (“CSTA”)
 
Total principal owed to CSTA was $0 million and $235 million as of December 31, 2007 and 2006, respectively. The note carried a stated rate of 7.25% per annum. The note was purchased by an entity within the Company on May 23, 2007. The Company recorded $7 million and $11 million of interest expense related to these notes for 2007 and 2006, respectively.
 
Debt Payable to Third Parties
 
                 
    December 31,
    December 31,
 
    2007     2006  
 
Note payable to a bank. Interest payments due quarterly (interest at CDOR(1) + .325%, due April 2008, payable in Canadian Dollars)(2)
  $     $ 114  
Note payable to a bank. Interest payments due quarterly (interest at CDOR(1) + .45%, due April 2010, payable in Canadian Dollars)(2)
          129  
Bonds payable, 4.90% fixed interest rate. Interest payments due semiannually. Principal due December 2008. Payable in Canadian Dollars(3)
          278  
Capital leases
    21       24  
                 
Total
    21       545  
Less current installments
    (2 )     (2 )
                 
Long-term debt payable to third parties
  $ 19     $ 543  
                 
 
 
(1) CDOR is the average of the annual rates for Canadian Dollar bankers’ acceptances having the specified term and face amount of the banks named in Schedule 1 of the Canadian Bank Act
 
(2) On August 29, 2007, the Company transferred the notes payable to bank obligations of $281 million to a subsidiary of Cadbury Schweppes, with no potential for future recourse against the Company.
 
(3) On August 31, 2007, the Company paid off the outstanding balance of bonds payable.
 
Long-Term Debt Maturities
 
Long-term debt maturities, excluding capital leases, for the next five years are as follows:
 
         
2008
  $ 126  
2009
    494  
2010
     
2011
    425  
2012
    740  
Thereafter
    1,234  
         
    $ 3,019  
         
 
Lines of Credit
 
As of December 31, 2007, the Company had available credit lines totaling $45 million. The Company had letters of credit totaling $9 million outstanding under its existing credit line facilities. Accordingly, the Company’s maximum borrowing base under these facilities was $36 million. The Company also had additional unused letters of credit totaling $23 million for its Bottling Group operations that were not related to any existing credit facilities.


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Table of Contents

 
DR PEPPER SNAPPLE GROUP, INC.
 
NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)
 
Lease Commitments
 
The Company has leases for certain facilities and equipment which expire at various dates through 2020. Operating lease expense was $46 million, $39 million and $21 million in 2007, 2006 and 2005, respectively, and was not offset by any sublease rental income. Future minimum lease payments under capital and operating leases with initial or remaining noncancellable lease terms in excess of one year as of December 31, 2007 are as follows:
 
                 
    Operating
    Capital
 
    Leases     Leases  
 
2008
  $ 72     $ 5  
2009
    53       5  
2010
    45       5  
2011
    36       4  
2012
    29       4  
Thereafter
    46       7  
                 
Total minimum lease payments
  $ 281       30  
                 
Less imputed interest at rates ranging from 6.5% to 12.6%
            (9 )
                 
Present value of minimum lease payments
          $ 21  
                 
 
The future minimum lease commitments for leases that have been expensed as part of restructuring provisions in earlier years are not included in the above table. Of the $21 million above, $19 million is included in “long-term capital lease obligations”, and $2 million is included in “accounts payable and accrued expenses.”
 
11.   Commitments and Contingencies
 
Legal Matters
 
The Company is occasionally subject to litigation or other legal proceedings. Set forth below is a description of the Company’s significant pending legal matters and one recently settled legal matter. Although the estimated range of loss, if any, for the pending legal matters described below cannot be estimated at this time, the Company does not believe that the outcome of these, or any other, pending legal matters, individually or collectively, will have a material adverse effect on the business or financial condition of the Company although such matters may have a materially adverse effect on the Company’s results of operations in a particular period.
 
Snapple Distributor Litigation
 
In 2004, one of the Company’s subsidiaries, Snapple Beverage Corp., and several affiliated entities of Snapple Beverage Corp., including Snapple Distributors, Inc., were sued in United States District Court, Southern District of New York, by 57 area route distributors for alleged price discrimination, breach of contract, retaliation, tortious interference and breach of the implied duty of good faith and fair dealing arising out of their respective area route distributor agreements. Each plaintiff sought damages in excess of $225 million. The plaintiffs initially filed the case as a class action but withdrew their class certification motion. They are proceeding as individual plaintiffs but the cases have been consolidated for discovery and procedural purposes. On September 14, 2007, the court granted the Company’s motion for summary judgment, dismissing the plaintiff’s federal claims of price discrimination and dismissing, without prejudice, the plaintiff’s remaining claims under state law. The plaintiffs have filed an appeal of the decision and may decide to re-file the state law claims in state court. The Company believes it has meritorious defenses with respect to the appeal and will defend itself vigorously. However, there is no assurance that the outcome of the appeal, or any trial, if claims are refiled, will be in the Company’s favor.


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Table of Contents

 
DR PEPPER SNAPPLE GROUP, INC.
 
NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)
 
Holk & Weiner Snapple Litigation
 
In 2007, Snapple Beverage Corp. was sued by Stacy Holk, in New Jersey Superior Court, Monmouth County, and by Hernant Mehta in the U.S. District Court, Southern District of New York. The plaintiffs filed the case as a class action. The plaintiffs allege that Snapple’s labeling of certain of its drinks is misleading and/or deceptive. The plaintiffs seek unspecified damages on behalf of the class, including enjoining Snapple from various labeling practices, disgorging profits, reimbursing of monies paid for product and treble damages. The Mehta case in New York has since been dropped by the plaintiff. However, the attorneys in the Holk, New Jersey case and a new plaintiff, Evan Weiner, have since filed a new action in New York substantially similar to the New Jersey action. In each case, the Company has filed motions to dismiss the plaintiff’s claims on a variety of grounds. The Company believes it has meritorious defenses to the claims asserted and will defend itself vigorously. However, there is no assurance that the outcome of the Company’s motions or at trial will be in its favor.
 
Nicolas Steele v. Seven Up/RC Bottling Company Inc.
Robert Jones v. Seven Up/RC Bottling Company of Southern California, Inc.
California Wage Audit
 
In 2007, one of the Company’s subsidiaries, Seven Up/RC Bottling Company Inc., was sued by Nicolas Steele, and in a separate action by Robert Jones, in each case in Superior Court in the State of California (Orange County), alleging that its subsidiary failed to provide meal and rest periods and itemized wage statements in accordance with applicable California wage and hour law. The cases have been filed as class actions. The classes, which have not yet been certified, consist of all employees of one of the Company’s subsidiaries who have held a merchandiser or delivery driver position in southern California in the past three years. The potential class size could be substantially higher, due to the number of individuals who have held these positions over the three year period. On behalf of the classes, the plaintiffs claim lost wages, waiting time penalties and other penalties for each violation of the statute. The Company believes it has meritorious defenses to the claims asserted and will defend itself vigorously. However, there is no assurance that the outcome of this matter will be in its favor.
 
The Company has been requested to conduct an audit of its meal and rest periods for all non-exempt employees in California at the direction of the California Department of Labor. At this time, the Company has declined to conduct such an audit until there is judicial clarification of the intent of the statute. The Company cannot predict the outcome of such an audit.
 
Dr Pepper Bottling Company of Texas, Inc. Shareholder Litigation
 
On June 1, 2007, the Company settled a lawsuit brought in 1999 by certain stockholders of Dr Pepper Bottling Company of Texas, Inc. for $47 million, which included $15 million of interest. The lawsuit was assumed as part of the DPSUBG acquisition (see Note 3) and was fully reserved as of December 31, 2006.
 
Environmental, Health and Safety Matters
 
The Company operates many manufacturing, bottling and distribution facilities. In these and other aspects of the Company’s business, it is subject to a variety of federal, state and local environment, health and safety laws and regulations. The Company maintains environmental, health and safety policies and a quality, environmental, health and safety program designed to ensure compliance with applicable laws and regulations. However, the nature of the Company’s business exposes it to the risk of claims with respect to environmental, health and safety matters, and there can be no assurance that material costs or liabilities will not be incurred in connection with such claims. However, the Company is not currently named as a party in any judicial or administrative proceeding relating to environmental, health and safety matters which would materially affect its operations.


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Table of Contents

 
DR PEPPER SNAPPLE GROUP, INC.
 
NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)
 
12.   Restructuring Costs
 
Restructuring charges during 2007, 2006 and 2005 were as follows:
 
                         
Operating Segment
  2007     2006     2005  
 
Beverage Concentrates
  $ 24     $ 5     $ 1  
Finished Goods
    20       3       3  
Bottling Group
    16       8        
Mexico and Caribbean
    7       3       1  
Corporate
    9       8       5  
                         
Total Restructuring Costs
  $ 76     $ 27     $ 10  
                         
 
The Company implements restructuring programs from time to time and incurs costs that are designed to improve operating effectiveness and lower costs. These programs have included closure of manufacturing plants, reductions in force, integration of back office operations and outsourcing of certain transactional activities. When the Company implements these programs, it incurs various charges, including severance and other employment-related costs.
 
The charges recorded during 2007 are primarily related to the following:
 
  •  Organizational restructuring announced on October 10, 2007. As of December 31, 2007, this restructuring, which was intended to create a more efficient organization, resulted in the reduction of approximately 450 employees in the Company’s corporate, sales and supply chain functions and included approximately 98 employees in Plano, Texas, 131 employees in Rye Brook, New York and 54 employees in Aspers, Pennsylvania, with the balance occurring at a number of sites located in the United States, Canada and Mexico. The restructuring also includes the closure of two manufacturing facilities in Denver, Colorado (closed in December 2007) and Waterloo, New York (due to close in March 2008). The employee reductions and facilities closures are expected to be completed by June 2008. As a result of this restructuring, the Company recognized a charge of $32 million in 2007.
 
  •  Continued integration of the Bottling Group, which was initiated in 2006, resulted in charges of $21 million.
 
  •  Integration of technology facilities initiated in 2007.
 
  •  Closure of the St. Catharines facility initiated in 2007.
 
The charges recorded during 2006 are primarily related to the following:
 
  •  Integration of the Bottling Group initiated in 2006; and
 
  •  Outsourcing initiatives of the Company’s back office operations service center and a reorganization of the Company’s IT operations initiated in 2006.
 
The charges recorded during 2005 are primarily related to the following:
 
  •  Implementation of additional phases of the Company’s back office operations service center initiated in 2004; and
 
  •  Closure of the North Brunswick plant initiated in 2004.
 
The Company expects to incur approximately $42 million of total pre-tax, non-recurring charges in 2008 with respect to the restructuring items discussed above.


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Table of Contents

 
DR PEPPER SNAPPLE GROUP, INC.
 
NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)
 
Restructuring liabilities along with charges to expense, cash payment and non-cash charges were as follows:
 
                                                 
    Workforce
                               
    Reduction
    Asset
    External
    Closure
             
    Costs     Write-off     Consulting     Costs     Other     Total  
 
Balance at January 2, 2005
  $ 5     $     $     $     $ 2     $ 7  
2005 Charges
    2             5       1       2       10  
2005 Cash payments
    (7 )           (10 )     (1 )     (3 )     (21 )
Due to/from Cadbury Schweppes
    1             5                   6  
                                                 
Balance at January 1, 2006
    1                         1       2  
2006 Charges
    9       3       9       1       5       27  
2006 Cash payments
    (7 )           (12 )     (1 )     (6 )     (26 )
Due to/from Cadbury Schweppes
    (1 )     (3 )     3                   (1 )
                                                 
Balance at December 31, 2006
    2                               2  
2007 Charges
    47       3       10       5       11       76  
2007 Cash payments
    (22 )           (13 )     (5 )     (12 )     (52 )
Due to/from Cadbury Schweppes
    2       (3 )     4             1       4  
                                                 
Balance at December 31, 2007
  $ 29     $     $ 1     $     $     $ 30  
                                                 
 
Restructuring liabilities are included in “accounts payable and accrued expenses.”
 
Restructuring charges recorded by each operating segment were as follows:
 
Beverage Concentrates
 
Beverage Concentrates recorded restructuring costs of $24 million, $5 million and $1 million in 2007, 2006 and 2005, respectively. During 2007, the costs primarily related to the organizational restructuring. There were also additional costs related to various other cost reduction and efficiency initiatives. The cost reduction and efficiency initiatives primarily related to the alignment of management information systems, the consolidation of the back office operations from the acquired businesses, the elimination of duplicate employees, and employee relocations. The Beverage Concentrates segment expects to incur additional charges related to these restructuring plans of approximately $15 million over the next year.
 
During 2006 and 2005, the charges mainly related to the integration of the Bottling Group with existing businesses of American Beverages.
 
Finished Goods
 
Finished Goods recorded restructuring costs of $20 million, $3 million and $3 million in 2007, 2006 and 2005, respectively. During 2007, the costs primarily related to the organizational restructuring in a number of sites located in the United States and Canada. The Finished Goods segment expects to incur additional charges related to this restructuring plan of approximately $11 million over the next year.
 
During 2006, the costs primarily related to the integration of the Bottling Group. During 2005, the charges mainly related to the integration of Finished Goods into the existing business of Americas Beverages. These respective activities were completed in 2007.


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Table of Contents

 
DR PEPPER SNAPPLE GROUP, INC.
 
NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)
 
Bottling Group
 
Bottling Group recorded restructuring costs of $16 million and $8 million in 2007 and 2006, respectively, primarily related to the integration of the Bottling Group as discussed above. Bottling Group expects to incur additional costs related to their restructuring plan of approximately $13 million over the next year.
 
Mexico and the Caribbean
 
Mexico and the Caribbean recorded restructuring costs of $7 million, $3 million and $1 million in 2007, 2006 and 2005, respectively. The costs primarily related to restructuring actions initiated in 2003 to outsource the activities of Mexico and the Caribbean’s warehousing and distribution processes. During 2007, there were also costs related to the organizational restructuring in a number of sites located in Mexico. The cumulative amount related to the reduction in force incurred to date is $1 million. The Company expects to incur additional costs related to this restructuring plan of approximately $2 million over the next year.
 
Corporate
 
The Company recorded corporate restructuring costs of $9 million, $8 million and $5 million in 2007, 2006 and 2005, respectively. During 2007, the costs primarily related to the organizational restructuring. The Company has incurred cumulative costs of $3 million to date and expects to incur additional costs related to this restructuring plan of approximately $1 million over the next year.
 
During 2006, the costs primarily related to restructuring actions initiated in 2006, and the human resource outsourcing program that was initiated in 2005. No further costs are expected to be incurred by the Company in respect of these programs. During 2005, the charges mainly related to the outsourcing of human resources activities in Latin America and the global outsourcing of shared business services that were both initiated in 2005. The human resource outsourcing program was complete in 2005.
 
13.   Employee Benefit Plans
 
Pension and Postretirement Plans
 
The Company has nine stand-alone non-contributory defined benefit plans each with a measurement date of September 30. To participate in the defined benefit plans, employees must have been employed by the Company for at least one year.
 
The Company has five stand-alone postretirement health care plans, which provide benefits to a defined group of employees at the discretion of the Company. These postretirement benefits are limited to eligible expenses and are subject to deductibles, co-payment provisions, and lifetime maximum amounts on coverage. Employee benefit plan obligations and expenses included in the combined financial statements are determined from actuarial analyses based on plan assumptions; employee demographic data, including years of service and compensation; benefits and claims paid; and employer contributions. These funds are funded as benefits are paid, and therefore do not have an investment strategy or targeted allocations for plan assets.
 
Cadbury Schweppes sponsors five defined benefit plans and one postretirement health care plan in which employees of the Company participate. Expenses related to these plans were determined by specifically identifying the costs for the Company’s participants.
 
SFAS 158 requires that beginning in 2008, assumptions used to measure the Company’s annual pension and postretirement medical expenses be determined as of the balance sheet date and all plan assets and liabilities be reported as of that date. For fiscal years ending December 31, 2007 and prior, the majority of the Company’s pension and other postretirement plans used a September 30 measurement date and all plan assets and obligations were generally reported as of that date.


F-29


Table of Contents

 
DR PEPPER SNAPPLE GROUP, INC.
 
NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)
 
U.S. Plans
 
The following table summarizes the components of net periodic benefit cost for the U.S. defined benefit plans recognized in the Combined Statements of Operations:
 
                         
    2007     2006     2005  
 
Service cost
  $ 1     $ 1     $ 1  
Interest cost
    3       2       1  
Expected return on assets
    (4 )     (2 )     (1 )
Curtailments/settlements
    (1 )            
                         
Net periodic benefit costs
  $ (1 )   $ 1     $ 1  
                         
 
Total net periodic benefit cost for the U.S. postretirement plans was less than $0.5 million for 2007, 2006 and 2005. The estimated prior service cost and estimated net loss for the U.S. plans that will be amortized from accumulated other comprehensive loss into periodic benefit cost in 2008 is each less than $0.5 million.
 
The following table summarizes the projected benefit obligation for U.S. plans as of December 31, 2007 and 2006:
 
                                 
          Post-
 
          retirement
 
    Pension Plans     Benefit Plans  
    2007     2006     2007     2006  
 
As of beginning of year
  $ 58     $ 21     $ 6     $ 4  
Service cost
    1       1              
Interest cost
    3       2              
Acquired in business combinations
          35             2  
Actuarial gain/(loss)
    (4 )           1        
Benefits paid
    (3 )     (1 )     (1 )      
Curtailments/settlements
    (9 )                  
                                 
As of end of year
  $ 46     $ 58     $ 6     $ 6  
                                 
Accumulated benefit obligations
  $ 46     $ 57     $ 5     $ 5  
                                 
 
The principal assumptions related to the U.S. defined benefit plans and postretirement benefit plans are shown below:
 
                                                 
    Pension Plans     Postretirement Benefit Plan  
    2007     2006     2005     2007     2006     2005  
 
Weighted-average discount rate
    5.90 %     5.72 %     5.50 %     5.90 %     5.90 %     5.50 %
Expected long-term rate of return on assets
    7.30 %     7.53 %     7.30 %     N/A       N/A       N/A  
Rate of increase in compensation levels
    N/A       N/A       N/A       N/A       4.00 %     4.00 %


F-30


Table of Contents

 
DR PEPPER SNAPPLE GROUP, INC.
 
NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)
 
The following table is a reconciliation of the U.S. defined benefit pension plans’ assets:
 
                 
    2007     2006  
 
Fair value of plan assets
               
As of beginning of year
  $ 56     $ 19  
Actual return of plan assets
    7       2  
Employer contribution
    2       2  
Acquired in business combinations
          34  
Actuarial gain/loss
          1  
Benefits paid
    (3 )     (2 )
Special termination benefits
    (9 )      
                 
As of end of year
  $ 53     $ 56  
                 
 
Benefits paid from the U.S. post-retirement plans were $1 million in 2007 and less than $0.5 million in 2006. The expected long-term rate of return on U.S. pension fund assets held by the Company’s pension trusts was determined based on several factors, including input from pension investment consultants and projected long-term returns of broad equity and bond indices. The plans’ historical returns were also considered. The expected long-term rate of return on the assets in the plans was based on an asset allocation assumption of about 60% with equity managers, with expected long-term rates of return of approximately 8.5%, and 40% with fixed income managers, with an expected long-term rate of return of about 5.5%. The actual asset allocation is regularly reviewed and periodically rebalanced to the targeted allocation when considered appropriate.
 
The asset allocation for the U.S. defined benefit pension plans for December 31, 2007 and 2006 are as follows:
 
                 
    Percentage of Plan Assets  
    December 31,
    December 31,
 
Asset Category
  2007     2006  
 
Equity securities
    60 %     60 %
Fixed income
    40 %     40 %
                 
Total
    100 %     100 %
                 
 
The following table summarizes the Company’s funded status for the U.S. plans as of December 31, 2007 and 2006:
 
                                 
    Pension Plans     Postretirement Benefit Plans  
    December 31,
    December 31,
    December 31,
    December 31,
 
    2007     2006     2007     2006  
 
Projected benefit obligation
  $ (46 )   $ (58 )   $ (5 )   $ (6 )
Plan assets at fair value
    53       56              
                                 
Funded status of plan
  $ 7     $ (2 )   $ (5 )   $ (6 )
                                 
Funded status — overfunded
  $ 8     $ 2     $     $  
Funded status — underfunded
    (1 )     (4 )     (5 )     (6 )


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Table of Contents

 
DR PEPPER SNAPPLE GROUP, INC.
 
NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)
 
The following table summarizes amounts recognized in the balance sheets related to the U.S. plans as of December 31, 2007 and 2006:
 
                                 
          Postretirement
 
    Pension Plans     Benefit Plans  
    December 31,
    December 31,
    December 31,
    December 31,
 
    2007     2006     2007     2006  
 
Other assets
  $ 8     $ 2     $     $  
Current liabilities
                (1 )     (1 )
Non-current liabilities
    (1 )     (4 )     (4 )     (5 )
Accumulated other comprehensive income
          6       1       (1 )
                                 
Net amount recognized
  $ 7     $ 4     $ (4 )   $ (7 )
                                 
 
The following table summarizes amounts included in “accumulated other comprehensive income” for the U.S. plans as of December 31, 2007 and 2006:
 
                                 
          Postretirement
 
    Pension Plans     Benefit Plans  
    December 31,
    December 31,
    December 31,
    December 31,
 
    2007     2006     2007     2006  
 
Prior service cost
  $ 2     $ 2     $     $  
Net (gains) losses
    (2 )     4       1       (1 )
                                 
Amounts in accumulated other comprehensive (income) loss
  $     $ 6     $ 1     $ (1 )
                                 
 
The following table summarizes key pension plan information regarding plans whose accumulated benefit obligations exceed the fair value of their respective plan assets:
 
                                 
        Postretirement
    Pension Plans   Benefit Plans
    December 31,
  December 31,
  December 31,
  December 31,
    2007   2006   2007   2006
 
Projected benefit obligation
  $ 10     $ 22     $ 5     $ 6  
Accumulated benefit obligation
    10       22              
Fair value of plan assets
    9       20              
 
The following table summarizes the expected cash activity for the U.S. defined benefit plans and postretirement benefit plans in the future:
 
                 
        Postretirement
Year
  Pension Plans   Benefit Plans
 
Company contributions — 2008
  $     $  
Benefit payments
               
2008
    2       1  
2009
    2       1  
2010
    2       1  
2011
    2       1  
2012
    2       1  
2013 - 2017
    15       2  


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Table of Contents

 
DR PEPPER SNAPPLE GROUP, INC.
 
NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)
 
For measuring the expected postretirement benefit obligation for the U.S. plans, the following health care cost trend rate assumptions were used:
 
     
Years
 
Rate
 
2007
  9%
2008 - 2015
  0.5% reduction each year
to an ultimate rate of 5%
in 2015
 
The effect of a 1% increase or decrease in health care trend rates on the U.S. postretirement benefit plans would change the benefit obligation at the end of the year and the service cost plus interest cost by less than $0.5 million.
 
Foreign Plans
 
The following table summarizes the components of net periodic benefit cost related to foreign defined benefit plans recognized in the Combined Statements of Operations:
 
                         
    2007     2006     2005  
 
Service cost
  $ 1     $ 1     $ 1  
Interest cost
    1       1       1  
Expected return on assets
    (1 )     (1 )     (1 )
                         
Net periodic benefit costs
  $ 1     $ 1     $ 1  
                         
 
Total net periodic benefit cost for the foreign postretirement plans was less than $0.5 million for 2007, 2006 and 2005. The estimated prior service cost and estimated net loss for the foreign plans that will be amortized from accumulated other comprehensive loss into net periodic benefit cost in 2008 are each less than $0.5 million.
 
The following table summarizes the projected benefit obligation for foreign plans as of December 31, 2007 and 2006:
 
                                 
          Postretirement
 
    Pension Plans     Benefit Plans  
    2007     2006     2007     2006  
 
As of beginning of year
  $ 18     $ 18     $ 2     $ 4  
Service cost
    1       1              
Interest cost
    1       1              
Exchange Adjustments
    2                    
Actuarial (gain)/loss
    (2 )           1       (2 )
Benefits paid
          (1 )            
Curtailments/settlements
          (1 )            
                                 
As of end of year
  $ 20     $ 18     $ 3     $ 2  
                                 
Accumulated benefit obligations
  $ 19     $ 17     $ 3     $ 2  
                                 


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DR PEPPER SNAPPLE GROUP, INC.
 
NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)
 
The principal assumptions related to the foreign defined benefit plans and postretirement benefit plans are shown below:
 
                                                 
        Postretirement
    Pension Plans   Benefit Plans
    2007   2006   2005   2007   2006   2005
 
Weighted-average discount rate
    6.06 %     5.98 %     6.09 %     5.25 %     5.98 %     6.09 %
Expected long-term rate of return on assets
    7.56 %     7.61 %     7.74 %     N/A       N/A       N/A  
Rate of increase in compensation levels
    3.81 %     4.13 %     4.27 %     3.50 %     4.50 %     5.00 %
 
The following table is a reconciliation of the foreign defined benefit pension plans’ assets:
 
                 
    2007     2006  
 
Fair value of plan assets
               
As of beginning of year
  $ 16     $ 14  
Actual return of plan assets
          2  
Employer contribution
    1       1  
Exchange adjustments
    1        
Benefits paid
    (1 )     (1 )
                 
As of end of year
  $ 17     $ 16  
                 
 
Benefits paid from the foreign postretirement plans were less than $0.5 million for 2007 and 2006.
 
The expected long-term rate of return on foreign pension fund assets held by the Company’s pension trusts was determined based on several factors, including input from pension investment consultants and projected long-term returns of broad equity and bond indices. The plans’ historical returns were also considered. The expected long-term rate of return on the assets in the plans was based on an asset allocation assumption of about 44% with equity managers, with expected long-term rates of return of approximately 8.5%, and 56% with fixed income managers, with an expected long-term rate of return of about 5.9%. The actual asset allocation is regularly reviewed and periodically rebalanced to the targeted allocation when considered appropriate.
 
The asset allocation for the foreign defined benefit pension plans as of December 31, 2007 and 2006 are as follows:
 
                 
    Percentage of Plan Assets  
    December 31,
    December 31,
 
Asset Category
  2007     2006  
 
Equity securities
    44 %     43 %
Fixed income
    56 %     57 %
                 
Total
    100 %     100 %
                 


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DR PEPPER SNAPPLE GROUP, INC.
 
NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)
 
The following table summarizes the Company’s funded status for the foreign plans as of December 31, 2007 and 2006:
 
                                 
    Pension Plans     Postretirement Benefit Plans  
    December 31,
    December 31,
    December 31,
    December 31,
 
    2007     2006     2007     2006  
 
Projected benefit obligation
  $ (20 )   $ (18 )   $ (3 )   $ (2 )
Plan assets at fair value
    17       16              
                                 
Funded status of plan
  $ (3 )   $ (2 )   $ (3 )   $ (2 )
                                 
Funded status — overfunded
  $ 2     $ 2     $     $  
Funded status — underfunded
    (5 )     (4 )     (3 )     (2 )
 
The following table summarizes amounts recognized in the Combined Balance Sheets related to the foreign plans as of December 31, 2007 and 2006:
 
                                 
    Pension Plans     Postretirement Benefit Plans  
    December 31,
    December 31,
    December 31,
    December 31,
 
    2007     2006     2007     2006  
 
Other assets
  $ 2     $ 2     $     $  
Non-current liabilities
    (5 )     (4 )     (3 )     (3 )
Accumulated other comprehensive (income) loss
    5       6       (2 )     (2 )
                                 
Net amount recognized
  $ 2     $ 4     $ (5 )   $ (5 )
                                 
 
The following table summarizes amounts included in accumulated other comprehensive (income) loss for the foreign defined benefit plans as of December 31, 2007 and 2006:
 
                                 
    Pension Plans     Postretirement Benefit Plans  
    December 31,
    December 31,
    December 31,
    December 31,
 
    2007     2006     2007     2006  
 
Prior service cost
  $     $     $ (1 )   $ (1 )
Net (gains) losses
    5       6       (1 )     (1 )
                                 
Amounts in accumulated other comprehensive (income) loss
  $ 5     $ 6     $ (2 )   $ (2 )
                                 
 
The following table summarizes key pension plan information regarding plans whose accumulated benefit obligations exceed the fair value of their respective plan assets:
 
                                 
    Pension Plans   Postretirement Benefit Plans
    December 31,
  December 31,
  December 31,
  December 31,
    2007   2006   2007   2006
 
Projected benefit obligation
  $ 17     $ 15     $ 3     $ 2  
Accumulated benefit obligation
    17       15              
Fair value of plan assets
    13       11              


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DR PEPPER SNAPPLE GROUP, INC.
 
NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)
 
The following table summarizes the expected cash activity for the foreign defined benefit plans and postretirement benefit plans in the future:
 
                 
        Postretirement
Year
  Pension Plans   Benefit Plans
 
Company contributions — 2008
  $ 1     $  
Benefit payments
               
2008
    1        
2009
    1        
2010
    1        
2011
    1        
2012
    1        
2013 - 2017
    6       1  
 
For measuring the expected postretirement benefit obligation for the foreign plans, the following health care cost trend rate assumptions were used:
 
     
Years
 
Rate
 
2007
  9%
2008 - 2015
  0.5% reduction each year
to an ultimate rate of 5%
in 2015
 
The effect of a 1% increase or decrease in health care trend rates on the foreign postretirement benefit plans would change the benefit obligation at the end of the year and the service cost plus interest cost by less than $0.5 million.
 
Multi-employer Plans
 
The following table summarizes the components of net periodic benefit cost related to the U.S. multi-employer plans recognized in the Combined Statements of Operations:
 
                                                 
          Postretirement
 
    Pension Plans     Benefit Plans  
    2007     2006     2005     2007     2006     2005  
 
Service cost
  $ 13     $ 12     $ 15     $ 1     $ 1     $ 1  
Interest cost
    17       15       14       1       1       1  
Expected return on assets
    (13 )     (10 )     (10 )     (1 )            
Recognition of actuarial gain
    5       5       5                    
Curtailments/settlements
          2                          
                                                 
Net periodic benefit costs
  $ 22     $ 24     $ 24     $ 1     $ 2     $ 2  
                                                 
 
Each individual component and total periodic benefit cost for the foreign multi-employer plans were less than $0.5 million for all periods presented in the Combined Statement of Operations.
 
The contributions paid into the U.S. and foreign multi-employer plans on the Company’s behalf by Cadbury Schweppes were $30 million, $30 million and $34 million for 2007, 2006 and 2005, respectively.
 
Savings Incentive Plan
 
The Company sponsors a 401(k) Retirement Plan that covers substantially all employees who meet certain eligibility requirements. This plan permits both pretax and after-tax contributions, which are subject to limitations


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DR PEPPER SNAPPLE GROUP, INC.
 
NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)
 
imposed by Internal Revenue Service regulations. The Company matches employees’ contributions up to specified levels. The Company’s contributions to this plan were approximately $12 million in 2007 and $6 million in 2006 and 2005. The Company’s contributions for 2008 are estimated to be approximately $14 million.
 
14.   Stock-Based Compensation Plan
 
Certain of the Company’s employees participate in stock-based compensation plans sponsored by Cadbury Schweppes. These plans provide employees with stock or options to purchase stock in Cadbury Schweppes. Given that the Company’s employees directly benefit from participation in these plans, the expense incurred by Cadbury Schweppes for options granted to its employees has been reflected in the Company’s Combined Statements of Operations in “selling, general, and administrative expenses.” Stock-based compensation expense was $21 million ($13 million net of tax), $17 million ($10 million net of tax) and $22 million ($13 million net of tax) in 2007, 2006 and 2005, respectively.
 
Prior to January 2, 2005, the Company applied APB 25 and related interpretations when accounting for its stock-based compensation plan. Under APB 25, compensation expense was determined as the difference between the market price and exercise price of the share-based award. For fixed plans, compensation expense was determined on the date of grant. For variable plans, compensation expense was measured at each balance sheet date until the award became vested. Stock-based compensation expense for 2007, 2006 and 2005 has been determined based on SFAS 123(R), which the Company adopted effective, January 3, 2005. SFAS 123(R) requires the recognition of compensation expense in the Combined Statements of Operations related to the fair value of employee share-based awards. SFAS 123(R) revised SFAS 123 and supersedes APB 25. The Company selected the modified prospective method of transition; accordingly, prior periods have not been restated. Upon adoption of SFAS 123(R), for awards which were classified as liabilities, the Company was required to reclassify the APB 25 historical compensation cost from equity to liability and to recognize the difference between this and the fair value liability through the current year statement of operations. The cumulative effect of the change in accounting policy for 2005 is recognized as a decrease in net income of $10 million net of tax ($16 million gross) in the Company’s Combined Statements of Operations, as a separate line item “cumulative effect of change in accounting policy.”
 
Since January 2, 2005, the Company has recognized the cost of all unvested employee stock-based compensation plans on a straight-line attribution basis over their respective vesting periods, net of estimated forfeitures. Certain of the Company’s employee share plans contain inflation indexed earnings growth performance conditions. SFAS 123(R) requires plans with such performance criteria to be accounted for under the liability method. The liability method, as set out in SFAS 123(R), requires a liability be recorded on the balance sheet whereas no liability is required for employee share awards accounted for under the equity method. In addition, in calculating the income statement charge for share awards under the liability method, the fair value of each award must be re-measured at each reporting date until vesting whereas the equity method requires the charge be calculated with reference to the grant date fair value. This charge is calculated by estimating the number of awards expected to vest for each plan which is adjusted over the vesting period. This charge includes an allocation of stock-based compensation costs incurred by Cadbury Schweppes but which related to employees of the Company.
 
The outstanding value of options recognized by the equity method has been reflected in “Cadbury Schweppes’ net investment” in “total invested equity,” while the options utilizing the liability method are reflected in “accounts payable and accrued expenses” for the current portion and “other non-current liabilities” for the non-current portion. The Company did not receive cash in any year, as a result of option exercises under share-based payment arrangements. Actual tax benefits realized for the tax deductions from option exercises were $10 million, $5 million and $7 million for 2007, 2006 and 2005, respectively. As of December 31, 2007, there was $6 million of total unrecognized before-tax compensation cost related to nonvested stock-based compensation arrangements. That cost is expected to be recognized over a weighted-average period of 1.7 years. The total intrinsic value of options exercised during the year was $24 million, $13 million and $17 million for 2007, 2006 and 2005, respectively. An


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DR PEPPER SNAPPLE GROUP, INC.
 
NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)
 
expense is recognized for the fair value at the date of grant of the estimated number of shares that will be awarded to settle the awards over the vesting period of each scheme.
 
The Company presents the tax benefits of deductions from the exercise of stock options as financing cash inflows in the Combined Statements of Cash Flows.
 
Awards under the plans are settled by Cadbury Schweppes, through either repurchases of publicly available shares, or awards under the Bonus Share Retention Plan (“BSRP”) and the Long Term Incentive Plan (“LTIP”) will normally be satisfied by the transfer of shares to participants by the trustees of the Cadbury Schweppes Employee Trust (the “Employee Trust”). The Employee Trust is a general discretionary trust whose beneficiaries include employees and former employees of Cadbury Schweppes and their dependents.
 
The Company has a number of share option plans that are available to certain senior executives, including the LTIP and BSRP, and the Discretionary Share Option Plans (“DSOP”), full details of which are included below.
 
Long Term Incentive Plan
 
Approximately 15 senior executives of the Company have been granted a conditional award of shares under the LTIP. This award recognizes the significant contribution they make to shareowner value and is designed to incentivize them to strive for sustainable long-term performance. In 2007, awards for the 2007-2009 performance cycles were made to senior executives. Participants accumulate dividend equivalent payments both on the conditional share awards (which will only be paid to the extent that the performance targets are achieved) and during the deferral period. This part of the award is calculated as follows: number of shares vested multiplied by aggregate of dividends paid in the performance period divided by the share price on the vesting date. The current LTIP has been in place since 1997. In 2004, the Compensation Committee of Cadbury Schweppes (“the Committee”) made a number of changes to the LTIP, and the table below sets forth its key features. As explained below, from 2006, performance ranges for the growth in Underlying Earnings per Share (“UEPS”) are expressed in absolute rather than post-inflation terms.
 
         
    Awards Made Prior
  Awards Made for
   
to 2004
 
2004 Forward
 
Face value of conditional share award made   50%-80% of base salary   50%-120% of base salary (2004 and 2005). 80%-160% of base salary (2006 forward).
Performance conditions   Award is based on Total Stockholder Return (“TSR”) relative to the Comparator Group with a UEPS hurdle.   Half of the award is based on growth in UEPS over the three year performance period. The other half of the award is based on TSR relative to the Comparator Group.
UEPS vesting requirement 1   For the award to vest at all, UEPS must have grown by at least the rate of inflation as measured by the Retail Price Index plus 2% per annum (over three years).   The extent to which some, all or none of the award vest depends upon annual compound growth in aggregate UEPS over the performance period:
     
•   30% of this half of the award will vest if the absolute compound annual growth rate achieved is 6% or more.
     
•   100% of this half of the award will vest if the absolute compound
       


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DR PEPPER SNAPPLE GROUP, INC.
 
NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)
 
         
    Awards Made Prior
  Awards Made for
   
to 2004
 
2004 Forward
 
      annual growth rate achieved is 10% or more.
     
•   Between 6% and 10%, the award will vest proportionately.
TSR vesting requirement 1   The extent to which some, all or none of the award vests depends on our TSR relative to the Comparator Group:   The extent to which some, all or none of the award vests depends upon our TSR relative to the Comparator Group:
   
•   The minimum award of 50% of the shares conditionally granted will vest at the 50th percentile ranking.
 
•   30% of this half of the award will vest at the 50th percentile ranking from 2006.
   
•   100% of the award will vest at the 80th percentile ranking or above.
 
•   100% of this half of the award will vest at the 80th percentile ranking or above.
   
•   Between the 50th and 80th percentiles, the award will vest proportionately.
 
•   Between the 50th and 80th percentiles, the award will vest proportionately.
Re-tests   If the TSR performance criteria is not satisfied in the initial three year performance period, the award will be deferred on an annual basis for up to three years until the performance is achieved over the extended period (i.e., either four, five or six years). If the award does not vest after six years, then it will lapse.   There are no re-tests and the award will lapse if the minimum requirements are not met in the initial three year performance period.
Comparator Group   A weighting of 75% is applied to the UKT companies in the Comparator Group, and 25% to the non-UK based companies.   The Comparator Group has been simplified and amended to include companies more relevant to the Company, and there will be no weighting as between UK and non-UK companies.
 
 
1 For cycles beginning in 2004 and 2005, threshold vesting was 40% of the award, and performance ranges for the growth in UEPS was expressed in post-inflation terms.
 
The TSR measure is a widely accepted and understood benchmark of a company’s performance. It is measured according to the return index calculated by Thomson Financial on the basis that a company’s dividends are invested in the shares of that company. The return is the percentage increase in each company’s index over the performance period. UEPS is a key indicator of corporate performance. It is measured on an absolute basis (real prior to 2006 after allowing for inflation). Sustained performance is therefore required over the performance cycle as each year counts in the calculation.


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DR PEPPER SNAPPLE GROUP, INC.
 
NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)
 
The following companies were selected as comparator companies (the “Comparator Group”) to reflect the global nature of Cadbury Schweppes business:
 
         
    Non-UK-based
  Head Office
UK-based Companies
 
Companies
 
Location
 
Allied Domecq #
  Campbell Soup   US
Associated British Foods
  Coca-Cola   US
Diageo
  Coca-Cola Enterprises   US
Northern Foods
  Colgate-Palmolive   US
Reckitt Benckiser
  ConAgra   US
Scottish & Newcastle
  CSM   Netherlands
Tate & Lyle
  Danone   France
Unilever
  General Mills   US
    Heinz   US
    Hershey   US
    Kellogg   US
    Kraft Foods   US
    Lindt & Sprungli   Switzerland
    Nestlé   Switzerland
    Pepsi Bottling Group   US
    PepsiCo   US
    Pernod Ricard   France
    Procter & Gamble   US
    Sara Lee   US
    Wrigley   US
 
 
# indicates a company dropped from the Comparator Group in 2005 due to it no longer being a publicly quoted company
 
Awards under the LTIP (both before and after 2004) will vest in full following a change in control in Cadbury Schweppes, but only to the extent that performance targets have been met at the time of the change in control unless Cadbury Schweppes decides that the awards would have vested to a greater or lesser extent had the performance targets been measured over the normal period.
 
The maximum number of shares issued under this plan, to all Cadbury Schweppes employees, was 3 million in each of 2007, 2006 and 2005. Awards made under this plan are classified as either equity, for those with TSR vesting conditions, or liabilities, for those with UEPS vesting conditions. The expense recognized by the Company in respect of these awards was $1 million, $1 million and $2 million in 2007, 2006 and 2005, respectively.
 
Bonus Share Retention Plan
 
The BSRP enables participants to invest all or part of their Annual Incentive Plan (“AIP”) award in Cadbury Schweppes shares (“Deferred Shares”) and earn a Cadbury Schweppes match of additional shares after three years. During the three year period, the shares are held in trust. If a participant leaves Cadbury Schweppes during the three-year period, they forfeit some of the additional shares, and in certain cases, it is possible that all of the Deferred Shares and the additional shares may be forfeited.


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DR PEPPER SNAPPLE GROUP, INC.
 
NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)
 
The number of matching shares that will be provided for grants from 2006 is as follows:
 
     
Absolute Compound Annual Growth
   
in Aggregate Underlying Economic
   
Profit (UEP) Over the Three Year
  Percentage of Matching Shares
Deferral Period Equivalent to:
 
Awarded at the End of the Period
 
Below 4%   40% (Threshold)
4%   40%
8%   70%
12% or more   100% (Maximum)
 
There is a straight line sliding scale between those percentages. UEP is measured on an aggregate absolute growth basis, the levels of growth required to achieve the highest levels of share match being demanding. For awards made before 2006, UEP performance was measured on a real basis, with a stepped vesting scale between the threshold and maximum. Awards under the BSRP will vest in full following a change in control in Cadbury Schweppes but only to the extent that performance targets have been met at the time of the change in control unless Cadbury Schweppes decides that the awards would have vested to a greater or lesser extent had the performance targets been measured over the normal period. The 2005-2007 and 2006-2008 cycles are currently expected to result in around two-thirds of the matching shares available being awarded. Actual vesting will depend upon performance over the full vesting period.
 
The BSRP is available to a group of senior executives of the Company. The maximum number of shares issued to employees under this plan was 3 million in each of 2007, 2006 and 2005. The fair value of the shares under the plan is based on the market price of the Cadbury Schweppes ordinary shares on the date of the award. Where the awards do not attract dividends during the vesting period, the market price is reduced by the present value of the dividends expected to be paid during the expected life of the awards. Awards under this plan in 2005 are classified as liabilities. Awards made in 2006 are classified as equity due to changes in the nature of the plan. The expense recognized by the Company in respect of these awards was $3 million, $3 million and $2 million in 2007, 2006 and 2005, respectively.
 
Discretionary Share Option Plans (DSOP)
 
No option grants were made to Executive Directors in 2007 or 2006 as discretionary share options were removed as part of the Cadbury Schweppes’ remuneration program. No rights to subscribe for shares or debentures of any Cadbury Schweppes company were granted to or exercised by any member of any of the Director’s


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Table of Contents

 
DR PEPPER SNAPPLE GROUP, INC.
 
NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)
 
immediate families during 2007. All existing discretionary share option plans which apply to Executive Directors use the following criteria:
 
         
    Annual Grants Made
  Annual Grants Made
   
Prior to May 21, 2004
 
After May 21, 2004
 
Market value of option grant made to Executive Directors
  Customary grant was 300% of base salary and the maximum was 400% of base salary.   Maximum of 200% of base salary. From 2006 onwards, no such grants are made other than in exceptional circumstances.
Performance condition
  Exercise is subject to UEPS growth of at least the rate of inflation plus 2% per annum over three years.   Exercise is subject to real compound annual growth in UEPS of 4% for half the award to vest and 6% real growth for the entire award to vest over three years, measured by comparison to the UEPS in the year immediately preceding grant.
Re-tests
  If required, re-testing has been on an annual basis on a rolling three-year base for the life of the option.   If the performance condition is not met within the first three years, the option will be retested in year five with actual UEPS growth in year five measured in relation to the original base year.
 
DSOP resulted in expense recognized by the Company of $8 million, $10 million and $17 million in 2007, 2006 and 2005, respectively. The DSOP consisted of the following three plans:
 
(i)  A Share Option Plan for directors, senior executives and senior managers was approved by stockholders in May 1994. Options were granted prior to July 15, 2004 and are normally exercisable within a period of seven years commencing three years from the date of grant, subject to the satisfaction of certain performance criteria.
 
(ii) A Share Option Plan for eligible executives (previously called the Cadbury Schweppes Share Option Plan 1994, as amended at the 2004 Annual General Meeting (“AGM”) held on May 21, 2004). Options were granted after July 15, 2004, and are normally exercisable up to the 10th anniversary of grant, subject to the satisfaction of certain performance criteria.
 
(iii) The Cadbury Schweppes (New Issue) Share Option Plan 2004 was established by the Directors, under the authority given by stockholders in May 2004. Eligible executives are granted options to subscribe for new shares only. Subject to the satisfaction of certain performance criteria, options are normally exercisable up to the 10th anniversary of grant.
 
There are performance requirements for the exercising of options. The plans are accounted for as liabilities until vested, then as equity until exercised or lapsed.
 
Other Share Plans
 
Cadbury Schweppes has an International Share Award Plan (“ISAP”) which is used to reward exceptional performance of employees. Following the decision to cease granting discretionary options other than in exceptional circumstances, the ISAP is now used to grant conditional awards to employees, who previously received discretionary options. Awards under this plan are classified as liabilities until vested.


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DR PEPPER SNAPPLE GROUP, INC.
 
NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)
 
Share Award Fair Values
 
The fair value is measured using the valuation technique that is considered to be the most appropriate to value each class of award; these include Binomial models, Black-Scholes calculations, and Monte Carlo simulations. These valuations take into account factors such as nontransferability, exercise restrictions and behavioral considerations. Key assumptions are detailed below:
 
                         
    2007
    BSRP   LTIP   ISAP
 
Expected volatility
    N/A       15%       N/A  
Expected life
    3 years       3 years       1-3 years  
Risk-free rate
    5.5%       N/A       4.9%-5.8%  
Expected dividend yield
    2.5%       2.5%       2.5%-3.0%  
Fair value per award (% of share price at date of
                       
grant)
    185.5%       92.8%UEPS       91.8%-99.3%  
              45.1%TSR          
Possibility of ceasing employment before vesting
                 
Expectations of meeting performance criteria
    40%       70%       100%  
 
                         
    2006
    BSRP   LTIP   ISAP
 
Expected volatility
    N/A       18%       N/A  
Expected life
    3 years       3 years       1-3 years  
Risk-free rate
    4.5%       N/A       4.2%-4.9%  
Expected dividend yield
    2.5%       2.5%       2.3%-2.5%  
Fair value per award (% of share price at date of grant)
    185.2% (1)       92.8%UEPS       93.0%-99.3%  
              46%TSR          
Possibility of ceasing employment before
                       
vesting
                 
Expectations of meeting performance criteria
    40%       70%       N/A  
 
                                 
    2005
    BSRP   LTIP   DSOP   ISAP
 
Expected volatility
    N/A       22%       22%       N/A  
Expected life
    3 years       3 years       (2)       1-3 years  
Risk-free rate
    4.5%       N/A       4.80%       4.3%  
Expected dividend yield
    2.5%       3.0%       3.0%       2.3%-2.5%  
Fair value per award (% of share price at date of grant)
    185.3% (1)       91.4%UEPS       23.0%       93.0%-97.8%  
              49.6%TSR                  
Possibility of ceasing employment before vesting
                9%        
Expectations of meeting performance criteria
    40%       50%       100%       N/A  
 
 
(1) Fair value of BSRP includes 100% of the matching shares available.


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DR PEPPER SNAPPLE GROUP, INC.
 
NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)
 
 
(2) The fair value calculation of a discretionary share option uses an expected life to the point of expected exercise. This is determined through analysis of historical evidenced exercise patterns of option holders.
 
Expected volatility was determined by calculating the historical volatility of the Company’s share price over the previous three years. The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of nontransferability, exercise restrictions and behavioral considerations. The risk-free rates used reflect the implied yield on zero coupon bonds issued in the UK, with periods which match the expected term of the awards valued. The expected dividend yield is estimated using the historical dividend yield of Cadbury Schweppes.
 
A summary of the status of the Company’s non-vested shares, in relation to the BSRP, LTIP and ISAP as of December 31, 2007, and changes during the year ended December 31, 2007, is presented below:
 
                 
    Number of
    Weighted
 
    Non-vested
    Average
 
    Shares
    Grant Date
 
    (’000)     Fair Value  
 
Non-vested as of December 31, 2006
    2,388     $ 6.61  
Granted
    743       4.62  
Vested
    (828 )     6.06  
Forfeitures
    (417 )     5.75  
                 
Non-vested as of December 31, 2007
    1,886       6.26  
                 
 
The total grant date fair value of shares vested during the year was $5 million in 2007 and $1 million in each of 2006 and 2005. The total vested share units at December 31, 2007 was 237,447 with a weighted average grant date fair value of $6.31.
 
A summary of option activity during 2007, in relation to the DSOP, is presented below:
 
                                 
                Weighted
       
          Weighted
    Average
       
          Average
    Remaining
    Aggregate
 
    Shares
    Exercise
    Contractual
    Intrinsic
 
    (’000)     Price     Term     Value  
 
Outstanding at the beginning of the year
    22,669     $ 8.62                  
Exercised
    (6,006 )   $ 8.37                  
Cancelled
    (146 )   $ 9.76                  
Other
    735     $ 10.52                  
                                 
Outstanding at the end of the year
    17,252     $ 9.00       5.3     $ 58,632  
                                 
Exercisable at the end of the year
    13,502     $ 8.58       4.8     $ 51,588  
 
15.   Segments
 
The Company presents segment information in accordance with SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information, which established reporting and disclosure standards for an enterprise’s operating segments. Operating segments are defined as components of an enterprise that are businesses, for which separate financial information is available, and for which the financial information is regularly reviewed by the Company leadership team and the chief operating decision maker.
 
Segment results are based on management reports, which are prepared in accordance with International Financial Reporting Standards. Net sales and underlying operating profit (“UOP”) are the significant financial measures used to measure the operating performance of the Company’s operating segments. UOP is defined as


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Table of Contents

 
DR PEPPER SNAPPLE GROUP, INC.
 
NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)
 
income from operations before restructuring costs, non-trading items, interest, amortization and impairment of intangibles.
 
As of December 31, 2007, the Company’s operating structure consisted of the following four operating segments:
 
  •  The Beverage Concentrates segment reflects sales from the manufacture of concentrates and syrups in the United States and Canada. Most of the brands in this segment are CSD brands.
 
  •  The Finished Goods segment reflects sales from the manufacture and distribution of finished beverages and other products in the United States and Canada. Most of the brands in this segment are non-CSD brands.
 
  •  The Bottling Group segment reflects sales from the manufacture, bottling and/or distribution of finished beverages, including sales of the Company’s own brands and third-party owned brands.
 
  •  The Mexico and Caribbean segment reflects sales from the manufacture, bottling and/or distribution of both concentrates and finished beverages in those geographies.
 
Prior to December 31, 2007, the Company’s operating structure consisted of five operating segments. The five segments include Beverage Concentrates, Finished Goods, Bottling Group, Snapple Distributors, and Mexico and Caribbean. The previously reported Snapple Distributors segments is now reported under the Bottling Group segment. Financial information for all periods presented is reported under the current operating structure consisting of four reportable segments.
 
The Company’s current segment reporting structure is largely the result of acquiring and combining various portions of our business over the past several years. Although the Company continues to report its segments separately, due to the integrated nature of its business model, it manages its business to maximize profitability for the Company as a whole. As a result, profitability trends in individual segments may not be consistent with the profitability of the Company or comparable to its competitors.
 
The Company has significant intersegment transactions. For example, the Bottling Group segment purchases concentrates from the Beverage Concentrates segment. In addition, the Bottling Group segment purchases finished beverages from the Finished Goods segment. These sales are eliminated in preparing the Company’s combined results of operations. Intersegment transactions are included in segments net sales results for all periods presented.
 
The Company incurs selling, general and administrative expenses in each of its segments. In the Company’s segment reporting, the selling, general and administrative expenses of the Bottling Group, and Mexico and the Caribbean segments relate primarily to those segments. However, as a result of the Company’s historical segment reporting policies, certain combined selling activities that support the Beverage Concentrates and Finished Goods segments have not been proportionally allocated between these two segments. The Company also incurs certain centralized finance and corporate costs that support its entire business, which have not been directly allocated to its respective segments but rather have been allocated primarily to the Beverage Concentrates segment.
 
Information about the Company’s operations by operating segment for 2007, 2006 and 2005 is as follows:
 
                         
    2007     2006     2005  
 
Net Sales*
                       
Beverage Concentrates
  $ 1,342     $ 1,330     $ 1,304  
Finished Goods
    1,562       1,516       1,516  
Bottling Group
    3,143       2,001       241  
Mexico and the Caribbean
    418       408       354  
                         
Segment total
    6,465       5,255       3,415  
Adjustments and eliminations
    (717 )     (520 )     (210 )
                         
Net Sales as Reported
  $ 5,748     $ 4,735     $ 3,205  
                         
 
 
Intersegment revenue eliminations from the Bottling Group and Finished Goods segments were reclassified from revenues to adjustments and eliminations. Prior year balances have been recast to reflect these changes.


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DR PEPPER SNAPPLE GROUP, INC.
 
NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)
 
                         
    2007     2006     2005  
 
Underlying Operating Profit
                       
Beverage Concentrates
  $ 731     $ 710     $ 657  
Finished Goods
    167       172       165  
Bottling Group
    130       130       44  
Mexico and the Caribbean
    100       102       96  
                         
Segment total
    1,128       1,114       962  
Corporate and other
    (42 )     (14 )     11  
Adjustments and eliminations
    (269 )     (295 )     (186 )
                         
Income before provision for income taxes, equity in earnings of unconsolidated subsidiaries and cumulative effect of change in accounting policy as reported
  $ 817     $ 805     $ 787  
                         
 
                         
    2007     2006     2005  
 
Depreciation
                       
Beverage Concentrates
  $ 12     $ 11     $ 12  
Finished Goods
    23       21       22  
Bottling Group
    79       51       5  
Mexico and the Caribbean
    9       11       10  
                         
Segment total
    123       94       49  
Corporate and other
    (1 )     (1 )     (2 )
Adjustments and eliminations
    (2 )     1       1  
                         
Depreciation as reported
  $ 120     $ 94     $ 48  
                         
 
                 
    December 31,
    December 31,
 
    2007     2006  
 
Fixed Assets
               
Beverage Concentrates
  $ 84     $ 81  
Finished Goods
    135       131  
Bottling Group
    579       476  
Mexico and the Caribbean
    61       62  
                 
Segment total
    859       750  
Corporate and other
    19       23  
Adjustments and eliminations
    (10 )     (18 )
                 
Property, plant and equipment, net as reported
    868       755  
Current assets as reported
    2,739       1,632  
All other non-current assets as reported
    6,921       6,959  
                 
Total assets as reported
  $ 10,528     $ 9,346  
                 


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Table of Contents

 
DR PEPPER SNAPPLE GROUP, INC.
 
NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)
 
Reconciliation of Segment Information
 
Total segment net sales include Beverage Concentrates and Finished Goods sales to the Bottling Group segment. These sales amounted to $726 million in 2007 and are eliminated in the Combined Statement of Operations.
 
UOP represents a measure of income from operations. To reconcile the segments’ total UOP to the Company’s total income from operations on a U.S. GAAP basis, adjustments are primarily required for: (1) restructuring costs, (2) non-cash compensation charges on stock option awards, (3) amortization and impairment of intangibles and (4) incremental pension costs. In addition, adjustments are required for total company corporate costs and other items. To reconcile UOP to the line item “income before provision for income taxes, equity in earnings of unconsolidated subsidiaries and cumulative effect of change in accounting policy” as reported on a U.S. GAAP basis, additional adjustments are required, primarily for interest expense, interest income and other expense (income).
 
Geographic Data
 
The Company utilizes separate legal entities for transactions with customers outside of the United States. Information about the Company’s operations by geographic region for 2007, 2006 and 2005 is below:
 
                         
    2007     2006     2005  
 
Net sales:
                       
United States
  $ 5,122     $ 4,151     $ 2,675  
International
    626       584       530  
                         
Net sales:
  $ 5,748     $ 4,735     $ 3,205  
                         
 
                 
    December 31,
    December 31,
 
    2007     2006  
 
Property, plant and equipment — net:
               
United States
  $ 796     $ 681  
International
    72       74  
                 
Property, plant and equipment — net
  $ 868     $ 755  
                 
 
Major Customers
 
In 2007, Wal-Mart Stores, Inc. was the Company’s only customer which accounted for 10% or more of total net sales, with $588 million of net sales for the year. These sales were reported primarily in the Finished Goods and Bottling Group segments, contributing 16% and 10% of the segments’ net sales, respectively. No customers contributed 10% or more of total net sales in 2006 or 2005.
 
16.   Related Party Transactions
 
Allocated Expenses
 
Cadbury Schweppes has allocated certain costs to the Company, including costs in respect of certain corporate functions provided for us by Cadbury Schweppes. These allocations have been based on the most relevant allocation method for the services provided. To the extent expenses have been paid by Cadbury Schweppes on behalf of the Company, they have been allocated based upon the direct costs incurred. Where specific identification of expenses has not been practicable, the costs of such services has been allocated based upon the most relevant allocation method to the services provided, primarily either as a percentage of net sales or headcount of the Company. The Company was allocated $161 million, $142 million and $115 million of costs in 2007, 2006 and 2005, respectively.


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Table of Contents

 
DR PEPPER SNAPPLE GROUP, INC.
 
NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)
 
Cash Management
 
Cadbury Schweppes uses a centralized approach to cash management and financing of operations. The Company’s cash is available for use and is regularly swept by Cadbury Schweppes operations in the U.S. at its discretion. Cadbury Schweppes also funds the Company’s operating and investing activities as needed. Transfers of cash, both to and from Cadbury Schweppes’ cash management system, are reflected as a component of “Cadbury Schweppes’ net investment” in the Company’s Combined Balance Sheets.
 
Royalties
 
The Company earns royalties from other Cadbury Schweppes-owned companies for the use of certain brands owned by the Company. Total amounts earned were $1 million, $1 million and $9 million for 2007, 2006 and 2005, respectively.
 
Notes Receivable
 
The Company held a notes receivable balance with wholly owned subsidiaries of Cadbury Schweppes with outstanding principal balances of $1,527 million and $579 million as of December 31, 2007 and 2006, respectively. The Company recorded $57 million, $25 million and $36 million of interest income related to these notes for 2007, 2006 and 2005, respectively.
 
Debt and Payables
 
The Company has entered into a variety of debt agreements with other companies owned by Cadbury Schweppes. These agreements (as well as outstanding balances under the agreements) are described in Note 10.
 
The related party payable balances of $175 million and $183 million as of December 31, 2007 and 2006, respectively, represent non-interest bearing payable balances with companies owned by Cadbury Schweppes, related party accrued interest payable associated with interest bearing notes, and related party payables for sales of goods and services all with companies owned by Cadbury Schweppes. The non-interest bearing payable balance was $75 million and $158 million as of December 31, 2007 and 2006, respectively. The accrued interest payable balance was $11 million and $25 million at December 31, 2007 and 2006, respectively. The intercompany current payable was $89 million as of December 31, 2007.
 
Transactions with Dr Pepper/Seven Up Bottling Group
 
Prior to the Company’s acquisition of the remaining shares of DPSUBG on May 2, 2006, the Company and DPSUBG entered into various transactions in the ordinary course of business as outlined below:
 
Marketing support, co-packing fees and other arrangements
 
The Company assisted DPSUBG in a variety of marketing programs, local media advertising and other similar arrangements to promote the sale of Company-branded products. DPSUBG charged the Company co-packing fees related to the manufacture of certain Company-branded products. The Company paid DPSUBG marketing support, co-packing fees and other fees totaling $41 million and $125 million during 2006 and 2005, respectively.


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Table of Contents

 
DR PEPPER SNAPPLE GROUP, INC.
 
NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)
 
Sales of beverage concentrates
 
DPSUBG bought concentrates from the Company for the manufacture of Company-branded soft drinks. The Company’s concentrates sales to DPSUBG totaled $100 million and $426 million during 2006 and 2005, respectively.
 
Sales of finished goods
 
DPSUBG purchased finished product from the Company for sale to retailers. The Company’s finished product sales totaled $16 million and $53 million during 2006 and 2005, respectively.
 
The Company had recorded receivables from DPSUBG relating to the above transactions totaling $64 million at January 1, 2006.
 
17.   Subsequent Events
 
In January 2008, the Company began to separate commingled pension plans which contained participants of both the Company and other Cadbury Schweppes global companies. As a result, the Company re-measured the projected benefit obligation of the separated pension plans. The Company expects the re-measurement to result in an increase of approximately $71 million to “other non-current liabilities” and a decrease of approximately $53 million to “accumulated other comprehensive income,” a component of invested equity. The actual pension liability and associated unamortized losses will be finalized at the separation date.
 
On March 10, 2008, the Company entered into arrangements with a group of lenders to provide it with an aggregate of $4.4 billion of financing. The new arrangements consist of a $2.4 billion senior credit agreement that provides a $1.9 billion term loan A facility and a $500 million revolving credit facility (collectively, the “senior credit facility”) and a 364-day bridge credit agreement that provides a $2.0 billion bridge loan facility.
 
The Company currently expects to borrow an aggregate of $3.9 billion under the term loan A facility and the bridge loan facility prior to the completion of the separation (assuming the conditions to such borrowing have been satisfied or waived) and the proceeds will be held in escrow pending completion of the separation.
 
Borrowings under the senior credit facility and the bridge loan facility will bear interest at a floating rate per annum based upon LIBOR or the alternate base rate (“ABR”), in each case plus an applicable margin which varies based upon our debt ratings, from 1.00 % to 2.50% in the case of LIBOR loans and 0.00 % to 1.50 % in the case of ABR loans. The alternate base rate means the greater of (a) JPMorgan Chase Bank’s prime rate and (b) the federal funds effective rate plus 1 / 2 of 1%. Based on the Company’s expected debt ratings at the time of the separation, the applicable margin for LIBOR loans would be 2.00% and for ABR loans would be 1.00%. The documentation relating to the senior credit facility and bridge loan facility contains certain provisions that allow the bookrunners to increase the interest rates or yield of the loans, add collateral, reallocate up to $500 million between the term loan A facility and the bridge loan facility (and vice versa) and modify other terms and aspects of the facilities, in each case within a limit agreed upon by the bookrunners and the Company.
 
* * * * *


F-49

 

 
Exhibit 99.2
 
(CADBURY SCHWEPPES)
 
Dear Cadbury Schweppes plc Shareholder:
 
On March 15, 2007, we announced that we intended to separate our Americas Beverages business from our global confectionery business. On October 10, 2007 we indicated that we were focused on effecting the separation of the Americas Beverages business through a demerger. This separation will be effected through the distribution of the common stock of Dr Pepper Snapple Group, Inc., or DPS, a new publicly-traded U.S. corporation, to the shareholders of Cadbury Schweppes plc (Cadbury Schweppes). DPS will own and operate our Americas Beverages business. We will continue to own and operate our global confectionery business under our new name Cadbury plc. We believe that the separation of our Americas Beverages business from our global confectionery business will enhance value for shareholders.
 
We believe that the separation of DPS from Cadbury Schweppes will create significant opportunities and benefits, including allowing the management of each company to focus its efforts on its own business and strategic priorities, enabling each company to allocate its capital more efficiently, providing DPS with direct access to the debt and equity capital markets, improving DPS’s ability to pursue strategic transactions through the use of shares of common stock as consideration, enhancing DPS’s market recognition with investors, and increasing DPS’s ability to attract and retain employees by providing equity compensation tied directly to its business.
 
We encourage you to read the enclosed information statement, which is being provided to all Cadbury Schweppes shareholders in accordance with U.S. law. It describes in detail the distribution of shares of DPS common stock to holders of Cadbury Schweppes ordinary shares and ADRs and contains important business and financial information about DPS.
 
Following the separation and the distribution, Cadbury plc’s ordinary shares will be traded on the London Stock Exchange and Cadbury plc American Depositary Receipts will be traded on the New York Stock Exchange. DPS intends to apply to have its common stock authorized for listing on the New York Stock Exchange under the symbol “DPS.”
 
We look forward to your continued support as a shareholder of Cadbury plc. We remain committed to working on your behalf to build long-term shareholder value.
 
Sincerely,
 
     
Sir John Sunderland
  Todd Stitzer
Chairman
  Chief Executive Officer
Cadbury Schweppes plc
  Cadbury Schweppes plc
 
April   , 2008

 

 
Exhibit 99.3
 
(DR. PEPPER SNAPPLE GROUP LOGO)
 
Dear Dr Pepper Snapple Group, Inc. Stockholder:
 
It is our great pleasure to welcome you as a stockholder of Dr Pepper Snapple Group, Inc.
 
We are a leading integrated brand owner, bottler and distributor of non-alcoholic beverages in the United States, Canada and Mexico. We have some of the most recognizable beverage brands in North America, including Dr Pepper, Snapple, 7UP, Mott’s, Sunkist, Hawaiian Punch, A&W and Clamato. We are excited about our prospects and believe that as an independent company we will be well positioned to realize growth opportunities for our business.
 
We invite you to learn more about us by reading the enclosed information statement. We thank you in advance for your support as our business begins a new and exciting chapter in its long and successful history.
 
Sincerely,
 
     
Wayne Sanders
  Larry Young
Chairman (Designate)
  President and Chief Executive Officer
Dr Pepper Snapple Group, Inc. 
  Dr Pepper Snapple Group, Inc.
 
April      , 2008