Britvic

The Group has a long-standing business relationship with PepsiCo and has distributed the Pepsi brand since 1987. The Group has the exclusive right to package, sell and distribute Pepsi and 7UP carbonated soft drink beverages (and certain derivative products) in Great Britain, Ireland, the Isle of Man and Gibraltar (unless and until it becomes a Spanish possession) (such jurisdictions are collectively referred to as the ‘‘Territory’’) under arrangements with PepsiCo and its subsidiary, Seven-Up International. In 2006, according to Canadean, the Group distributed 603 million litres of Pepsi products in Great Britain, which represented approximately 45% of the total volume supplied by the Group in 2006.

The PepsiCo arrangements are contained within a series of agreements in GB for carbonates, Ireland, Gatorade in GB and V Water in GB. The exclusive bottling appointments (the ‘‘Exclusive Bottling Appointments’’ or ‘‘EBAs’’) each cover a concentrate price and marketing agreement (the ‘‘Franchise Performance Agreement’’) and a co-operative advertising and marketing agreement (the ‘‘Co-op Agreement’’). On 10 March 2004, PepsiCo, Seven-Up International and Britvic agreed to extend the GB carbonates relationship on substantially similar financial (and other) terms by entering into a new set of agreements.

The revised GB carbonates Exclusive Bottling Appointments each have a new term which runs until 31 December 2018 with an extension upon flotation until 31 December 2023. These Exclusive Bottling Appointments set out a series of obligations relating to the acquisition of concentrate and the bottling and distribution of the products. Under the Exclusive Bottling Appointments, the Group is prohibited from distributing competing drinks within the Territory and cannot actively solicit sales from outside the Territory. The Exclusive Bottling Appointments also provide the Group with a right of first refusal in relation to the packaging and distribution within the Territory of any new carbonated soft drink developed by PepsiCo or Seven-Up International.

The revised GB carbonates Exclusive Bottling Appointments each have a new term which runs until 31 December 2018 with an extension upon flotation until 31 December 2023. These Exclusive Bottling Appointments set out a series of obligations relating to the acquisition of concentrate and the bottling and distribution of the products. Under the Exclusive Bottling Appointments, the Group is prohibited from distributing competing drinks within the Territory and cannot actively solicit sales from outside the Territory. The Exclusive Bottling Appointments also provide the Group with a right of first refusal in relation to the packaging and distribution within the Territory of any new carbonated soft drink developed by PepsiCo or Seven-Up International.

The GB carbonates Franchise Performance Agreement has a three-year term, renewed regularly. The agreement provides the framework for the parties to agree their short-term operating strategy and business targets. It also contains a series of investment and sales targets for each year of the term, which the Group must use its reasonable endeavors to meet, including a requirement to install a specified quantity of branded vending and dispense equipment and performance targets as to market share and sales growth. The Group must also use its best endeavors to maintain distribution of all pack formats at certain specified levels. The agreement also sets out the required annual expenditure of both Britvic and PepsiCo in relation to the advertising and promotion to support the brands (which is split on a 50/50 basis) and in respect of promotional discounts and customer account development. The agreement also provides the mechanism for establishing the concentrate price for each year of the term.

The Co-op Agreement is a one-year agreement renewed annually which provides a detailed breakdown of the advertising and promotional expenditure agreed under the Franchise Performance Agreement.

In the event that the Franchise Performance Agreement and Co-op Agreement are not renewed whilst the Exclusive Bottling Appointments remain in place, the Exclusive Bottling Appointments set out the basis for establishing the concentrate price year-on-year and the required ongoing advertising and promotional spend of the Group and PepsiCo.

The Exclusive Bottling Appointments entitle PepsiCo or Seven-Up International (as the case may be), to terminate the arrangements in a range of circumstances (including a breach of a material term or condition of the Franchise Performance Agreement). Each Exclusive Bottling Appointment may also be terminated in the event that: any competitor of PepsiCo or Seven-Up International (as the case may be) acquires either directly or (in circumstances where the Selling Shareholder(s) know(s) the identity of the ultimate purchaser) indirectly 10% or more of the issued share capital of the Company from one or more of the Selling Shareholders; or any third party acquires a 40% stake in Britvic Soft Drinks Limited (including indirectly through the acquisition of Ordinary Shares in the Company). The appointments will also be capable of termination if the Company disposes of the Robinsons brand or any brand with an EBA Brand Contribution of 35% or more of Britvic’s total EBA Brand Contribution in the previous financial year. In the event that either Exclusive Bottling Appointment is terminated by reason of any of the Selling Shareholders selling 10% or more of the issued share capital of the Company (as described above), Britvic terminating the agreement without cause, or Britvic disposing of the Robinsons brand, there is provision for the payment of substantial liquidated damages to PepsiCo or Seven-Up International (as the case may be), calculated by reference to the amount spent on concentrate by the Group with PepsiCo or Seven-Up International (as the case may be), and the amount contributed by PepsiCo or Seven-Up International (as the case may be) to advertising and marketing in the 18-month period prior to termination. Each Exclusive Bottling Appointment is inter-conditional.

Britvic Soft Drinks Limited, a Britvic subsidiary, entered into a distribution agreement with PepsiCo effective from 1 September 2005 (the ‘‘Distribution Agreement’’) pursuant to which Britvic Soft Drinks Limited was appointed as the exclusive distributor for Gatorade in the Territory. The Distribution Agreement has an initial term until 31 July 2008 and is renewable every third anniversary. The Distribution Agreement establishes the parties’ intent to enter into exclusive bottling arrangements as soon as practicable. In addition, the Distribution Agreement grants Britvic Soft Drinks Limited a non-exclusive, royalty free, non-transferable sub-licence to use the Gatorade trade mark in the Territory.

PepsiCo (through one of its subsidiaries) also has a 5% shareholding in Britvic which it retained on flotation.

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