As filed with the Securities and Exchange Commission on March 8, 2002
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
COTT BEVERAGES INC.
AND OTHER REGISTRANTS
(SEE TABLE OF CO-REGISTRANTS BELOW)
(Exact name of registrant as specified in its charter)
Georgia 2086 58-1947565
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation of Organization) Classification Code Number) Identification Number)
5405 CYPRESS CENTER DRIVE, SUITE 100
TAMPA, FLORIDA 33609
(813) 342-2500
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
Mark R. Halperin, Esq.
Cott Corporation
207 Queen's Quay West, Suite 340
Toronto, Ontario Canada M5J 1A7
(416) 203-5604
(Name, address, including zip code, and telephone number, including area
code, of agent for service)
COPY TO:
H. John Michel, Jr.
Drinker Biddle & Reath LLP
One Logan Square, 18th & Cherry Streets
Philadelphia, Pennsylvania 19103-6996
(215) 988-2700
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable following the effectiveness of this registration statement and
satisfaction of all other conditions to the exchange offer described in the
prospectus included herein.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
CALCULATION OF REGISTRATION FEE
Proposed
Maximum Proposed Maximum Amount of
Title of Securities Amount to be Offering Price Aggregate Registration
to be Registered Registered Per Unit Offering Price(1) Fee
8% Senior Subordinated
Notes due 2011, Series B $275,000,000 100% $275,000,000 $25,300
Guarantees of 8%
Senior Subordinated
Notes, due 2011, N/A N/A N/A N/A
Series B(2)
(1) The registration fee has been calculated pursuant to Rule 457(f)(2). The
Proposed Maximum Aggregate Offering Price is estimated solely for the purpose of
calculating the registration fee.
(2) Represents the guarantees of the 8% Senior Subordinated Notes due 2011,
Series B, to be issued by the Co-Registrants. Pursuant to Rule 457(n) under the
Act, no additional registration fee is being paid in respect of the guarantees.
The guarantees are not traded separately.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
TABLE OF CO-REGISTRANTS
Exact Name of State or Other Primary standard
registrant Jurisdiction of Industrial I.R.S. Employer
As specified in its Incorporation or Classification Identification
charter Organization Number Number
Cott Corporation Canada 2086 None
Cott Holdings Inc. Delaware & Nova 2086 58-2020185
Scotia
Cott USA Corp. Georgia 2086 58-1947564
Cott Vending Inc. Delaware 2086 80-0003395
Interim BCB, LLC Delaware 2086 None
THE ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF EACH OF THE CO-REGISTRANT'S PRINCIPLE EXECUTIVE OFFICES IS C/O COTT
CORPORATION 207 QUEEN'S QUAY WEST, SUITE 340, TORONTO, ONTARIO M5J 1A7, (416)
203-3898.
THE NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF THE AGENT FOR SERVICE OF EACH OF THE CO-REGISTRANTS IS MARK R.
HALPERIN, ESQ., C/O COTT CORPORATION, 207 QUEEN'S QUAY WEST, SUITE 340,
TORONTO, ONTARIO CANADA M5J 1A7.
THE INFORMATION IN THIS PRELIMINARY PROSPECTUS IS NOT COMPLETE AND MAY BE
CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT
AN OFFER TO SELL THESE SECURITIES, AND WE ARE NOT SOLICITING OFFERS TO BUY THESE
SECURITIES, IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED MARCH 8, 2002
PROSPECTUS
[LOGO]
COTT BEVERAGES INC.
PAYMENT OF PRINCIPAL AND INTEREST GUARANTEED BY
COTT CORPORATION
OFFER TO EXCHANGE
8% SENIOR SUBORDINATED NOTES DUE 2011, SERIES B THAT HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933
FOR
ANY AND ALL OUTSTANDING
8% SENIOR SUBORDINATED NOTES DUE 2011, SERIES A
($275,000,000 IN PRINCIPAL AMOUNT OUTSTANDING)
THE EXCHANGE OFFER
The exchange offer expires at 5:00 p.m., New York City time, on
_______________, 2002, unless extended.
The exchange offer is not conditioned upon the tender of any minimum
aggregate amount of the outstanding 8% Senior Subordinated Notes due 2011,
Series A, which we refer to in this prospectus as the outstanding 8% notes.
All of the outstanding 8% notes tendered according to the procedures in
this prospectus and not withdrawn will be exchanged for an equal principal
amount of exchange notes.
The exchange offer is not subject to any condition other than:
- compliance of the exchange offer with securities laws;
- proper tender of the outstanding 8% notes;
- representation by the holders of the outstanding 8% notes that
they are not our affiliates, that they are acquiring the exchange
notes in the ordinary course of business and that at the time the
exchange offer is completed the holders do not plan to participate
in distributing the exchange notes; and
- no judicial or administrative proceeding is pending or threatened
that would limit us from proceeding with the exchange offer.
THE EXCHANGE NOTES
We previously issued $275,000,000 aggregate principal amount of the
outstanding 8% notes. These securities were not registered under the Securities
Act of 1933. We are now offering you the opportunity to exchange the outstanding
8% notes for an equal amount of registered exchange notes. The terms of the
exchange notes are substantially identical to those of the outstanding 8% notes,
except that we have registered the exchange notes with the SEC, meaning that
they will not be subject to the transfer restrictions applicable to the
outstanding 8% notes. We will not apply to list any of the exchange notes on any
securities exchange or arrange for them to be quoted on any quotation system.
The exchange notes will be our unsecured senior subordinated obligations
and will be guaranteed on a senior subordinated basis by Cott Beverages Inc.'s
ultimate parent company, Cott Corporation, and by certain of Cott Corporation's
United States subsidiaries. The exchange notes will be subordinated in right of
payment to all of Cott Beverages Inc.'s existing and future senior debt, and
each guarantee will be subordinated in right of payment to all of the applicable
guarantor's existing and future senior debt.
Interest on the exchange notes will accrue from December 21, 2001, or from
the most recent interest payment date that occurs before we complete the
exchange offer, and is payable on June 15 and December 15 of each year,
beginning on June 15, 2002. The notes will mature on December 15, 2011. We may
redeem the notes on or after December 15, 2006. Until December 15, 2004, we may
redeem up to 35% of the notes from the proceeds of an equity offering.
YOU SHOULD CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE 16 OF
THIS PROSPECTUS BEFORE PARTICIPATING IN THE EXCHANGE OFFER.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is ______________, 2002.
TABLE OF CONTENTS
Page Page
Forward-Looking Statements.... 2 Description of Other Indebtedness 42
Prospectus Summary............ 4 Description of Notes......... 44
Risk Factors.................. 16 Certain Federal Income Tax
The Exchange Offer............ 25 Considerations............ 93
Use of Proceeds............... 38 Plan of Distribution......... 98
Ratio of Earnings to Fixed Charges 38 Legal Matters................ 99
Capitalization................ 39 Experts...................... 99
Selected Historical Consolidated Where You Can Find More
Financial Data............. 40 Information.................. 99
You should rely only on the information contained or incorporated by
reference in this document. We have not authorized any other person to provide
you with different information in connection with this exchange offer. If anyone
provides you with different or inconsistent information, you should not rely on
it. You should assume the information appearing in this document is accurate
only as of the date on the front cover of this document. Our business, financial
condition, results of operations and prospects may have changed since that date.
This document is based on information provided by us and other sources we
believe are reliable. We have summarized certain documents and other information
in a manner we believe to be accurate, but we refer you to the actual documents
for a more complete understanding of what we discuss in this document. In making
an investment decision, you must rely on your own examination of our business
and the terms of this offering and the notes, including the merits and risks
involved. You should contact us with any questions about this exchange offer or
if you require additional information to verify the information contained in
this document. Any decision to participate in the exchange offer must be based
on the information contained in this document.
We are not making an offer to sell, or soliciting an offer to buy, the
outstanding 8% notes or the exchange notes in any jurisdiction where, or to any
person to or from whom, the offer or sale is not permitted. We are not making
any representation to you regarding the legality of your investment in the
exchange notes under any legal investment or similar laws or regulations. You
should not consider any information in this document to be legal, business or
tax advice. You should consult your own attorney, business advisor and tax
advisor for legal, business and tax advice regarding an investment in the
exchange notes.
The federal securities laws prohibit trading in our securities while in
possession of material non-public information with respect to us.
Our consolidated financial statements are prepared in accordance with
United States generally accepted accounting principals ("GAAP") in U.S.
dollars. Unless otherwise indicated, all amounts in this report are in U.S.
dollars and U.S. GAAP.
-1-
FORWARD-LOOKING STATEMENTS
In addition to historical information, this document and documents and
reports incorporated by reference in this document contain statements relating
to future events and Cott's future results. These statements are
"forward-looking" within the meaning of the Private Securities Litigation Reform
Act of 1995. These statements are included throughout this document, including
in the sections entitled "Prospectus Summary" and "Risk Factors" and relate, but
are not limited to projections of revenues, earnings, earnings per share, cash
flows, capital expenditures or other financial items, discussions of estimated
future revenue enhancements and cost savings. These statements also relate to
our business strategy, goals and expectations concerning our market position,
future operations, margins, profitability, liquidity and capital resources. We
have used the words "anticipate," "believe," "continue," "could," "estimate,"
"expect," "intend," "may," "plan," "predict," "project," "should," "will" and
similar terms and phrases to identify forward-looking statements in this
document and in the documents incorporated by reference in this document.
Although we believe the assumptions upon which these forward-looking
statements are based are reasonable, any of these assumptions could prove to be
inaccurate and, as a result, the forward-looking statements based on those
assumptions could be incorrect. Our operations involve risks and uncertainties,
many of which are outside our control, and any one or a combination of which
could also affect whether the forward-looking statements ultimately prove to be
correct.
Actual results and trends in the future may differ materially from our
forward-looking statements depending on a variety of factors, and are qualified
in their entirety by reference to the factors described in "Risk Factors" and
elsewhere in this document including, but not limited to:
- loss of key customers, particularly Wal-Mart, and the commitment of our
private label beverage customers to their own private label beverage programs;
- increases in competitor consolidations and other market-place
competition, particularly among branded beverage products;
- our ability to identify and acquire acquisition candidates and to
integrate into our operations the businesses and product lines that we acquire;
- fluctuations in the cost and availability of beverage ingredients and
packaging supplies, and our ability to maintain favorable arrangements and
relationships with our suppliers;
- unseasonably cold or wet weather, which could reduce demand for our
beverages;
- our ability to protect the intellectual property inherent in our new
and existing products;
- adverse rulings, judgments or settlements in our existing litigation,
and the possibility that additional litigation will be brought against us for
intellectual property infringement, product liability claims or otherwise;
- product recalls or changes in or increased enforcement of the laws and
regulations that affect our business;
- currency fluctuations that adversely affect the exchange rate between
the U.S. dollar and the pound sterling, the Canadian dollar and other
currencies;
-2-
- changes in interest rates;
- changes in consumer tastes and preference and market demand for new and
existing products;
- changes in general economic and business condition; and
- increased acts of terrorism or war.
Many of these factors are described in greater detail in our other filings
with the SEC. All future written and oral forward-looking statements
attributable to us or persons acting on our behalf are expressly qualified in
their entirety by the previous statements. We undertake no obligation to update
any information contained in this document or to publicly release the results of
any revisions to any forward-looking statements that may be made to reflect
events or circumstances that occur, or that we become aware of, after the date
of this document. Undue reliance should not be placed on forward looking
statements.
-3-
PROSPECTUS SUMMARY
The exchange notes will be issued by Cott Beverages Inc., an indirect
wholly-owned subsidiary of Cott Corporation, and will be guaranteed by Cott
Corporation and certain of its U.S. subsidiaries. As used in the document,
except where the context otherwise requires or as otherwise indicated, "we,"
"our," "ours," "us" and similar expressions refer to Cott Corporation, Cott
Beverages Inc. and their direct and indirect subsidiaries. You may obtain the
information incorporated by reference in this document as described under "Where
You Can Find More Information." You should consider carefully the matters
discussed under the caption "Risk Factors" before exchanging your outstanding 8%
notes.
BUSINESS
Cott Beverages Inc. is the indirect United States operating subsidiary of
Cott Corporation, which is the leading supplier of premium quality, retailer
brand carbonated soft drinks in the United States, Canada and the United
Kingdom. Cott Corporation operates its Canadian business through its Cott
Beverages Canada division and its United Kingdom business through its
wholly-owned indirect subsidiary, Cott Beverages Ltd. In addition to carbonated
soft drinks, our product line includes clear, sparkling flavored beverages,
juices and juice-based products, bottled water, organic and energy beverages and
iced teas. Our products are sold principally under customer controlled private
labels, but we also offer products under brand names that we either own or
license from others.
Cott Beverages Inc. was incorporated in Georgia in 1991, and its principal
executive offices are located at 5405 Cypress Center Drive, Suite 100, Tampa,
Florida 33609. Cott Corporation was incorporated under the laws of Canada on
July 25, 1955, and its principal executive offices are located at 207 Queen's
Quay West, Suite 340, Toronto, Ontario, Canada M5J 1A7.
-4-
THE EXCHANGE OFFER
Background of the Outstanding
8% Notes................... We issued $275 million aggregate principal
amount of our 8% Senior Subordinated Notes due
2011 to Lehman Brothers Inc., BMO Nesbitt Burns
Corp. and CIBC World Markets Corp., as the
initial purchasers, on December 21, 2001. The
initial purchasers then sold the outstanding 8%
notes to qualified institutional buyers in
reliance on Rule 144A under the Securities Act
and to non-U.S. persons outside the United
States in reliance on Regulation S under the
Securities Act. Because they were sold under
exemptions from registration rather than being
registered, the outstanding 8% notes are
subject to transfer restrictions.
In connection with issuing the outstanding 8%
notes, we entered into a registration rights
agreement in which we agreed to deliver to you
this prospectus and to use our best efforts to
file and cause to become effective a registration
statement offering to exchange the outstanding 8%
notes for publicly tradeable notes having
substantially identical terms.
The Exchange Offer......... We are offering to exchange up to $275 million
principal amount of exchange notes for an
identical principal amount of the outstanding
8% notes. You may only exchange the
outstanding 8% notes in $1,000 increments. The
terms of the exchange notes are identical in
all material respects to the outstanding notes
except that the exchange notes have been
registered under the Securities Act. Because
we have registered the exchange notes, the
exchange notes will not be subject to transfer
restrictions and holders of exchange notes will
not have registration rights.
Resale of Exchange Notes... We believe that you may offer, sell or
otherwise transfer the exchange notes without
complying with the registration and prospectus
delivery provisions of the Securities Act if:
- you acquire the exchange notes in
the exchange offer in the ordinary course of
your business;
- you are not participating and have no
understanding with any person to participate
in the distribution of the exchange notes at
the time the exchange notes are issued to you
in the exchange offer; and
- you are not an affiliate of ours.
-5-
Each broker-dealer that receives exchange notes
for its own account in exchange for the
outstanding 8% notes that the broker-dealer
acquired through market-making or other trading
activities must acknowledge that it will deliver
a prospectus meeting the requirements of the
Securities Act in connection with any resale of
those exchange notes. A broker-dealer may use
this prospectus for an offer to resell, resale
or other retransfer of the exchange notes issued
to it in the exchange offer.
Expiration Date............ The exchange offer will expire at 5:00 p.m.,
New York City time, on _________________, 2002,
unless we extend the exchange offer. We may
extend the exchange offer until all of the
outstanding 8% notes are tendered. You may
withdraw any outstanding 8% notes that you
tender at any time before 5:00 p.m., New York
City time, on the expiration date. See "The
Exchange Offer - Expiration Date; Extensions;
Amendments."
Withdrawal Rights.......... You may withdraw any outstanding 8% notes that
you tender by furnishing a notice of withdrawal
to the exchange agent or by complying with
applicable Automated Tender Offer Program
(ATOP) procedures of The Depository Trust
Company at any time before 5:00 p.m., New York
City time on the expiration date. See "The
Exchange Offer - Withdrawal of Tenders."
Accrued Interest on the
Exchange Notes and
Outstanding 8% Notes ...... The exchange notes will bear interest from
December 21, 2001 or from the most recent
interest payment date that occurs before we
complete the exchange offer.
Conditions to the
Exchange Offer............. The exchange offer is subject only to the
following conditions:
- compliance of the exchange offer with
securities laws;
- proper tender of the outstanding 8% notes;
- representation by the holders of the
outstanding 8% notes that they are not our
affiliates, that they are acquiring the
exchange notes in the ordinary course of
business and that at the time the exchange
offer is completed the holders do not plan to
participate in distributing the exchange
notes; and
- no judicial or administrative proceeding is
pending or threatened that would limit us from
proceeding with the exchange offer.
Representations and
Warranties By participating in the exchange offer, you
represent to us that, among other things:
-6-
- you will acquire the exchange notes
in the ordinary course of your business;
- at the time the exchange notes are issued
to you in the exchange offer, you are not
participating in and have no understanding
with any person to participate in the
distribution of the exchange notes you
receive; and
- you are not an affiliate of ours or, if you
are an affiliate, you will comply with the
registration and prospectus delivery
requirements of the Securities Act to the
extent applicable.
Procedures for Tendering
Outstanding 8% Notes....... To accept the exchange offer, you must send the
exchange agent either:
- a properly completed and executed letter of
transmittal; or
- a computer-generated message transmitted by
means of The Depository Trust Company's ATOP
system that, when received by the exchange
agent, will form a part of a confirmation of
book-entry transfer in which you acknowledge
and agree to be bound by the terms of the
letter of transmittal;
and either
- a timely confirmation of book-entry transfer
of your outstanding 8% notes into the
exchange agent's account at The Depository
Trust Company; or
- the documents necessary for compliance with
the guaranteed delivery procedures described
below.
Other procedures may apply to holders of
certificated notes. For more information, see
"The Exchange Offer - Procedures for Tendering."
-7-
Tenders by Beneficial
Owners.................... If you beneficially own outstanding 8% notes that
are registered in the name of your broker,
dealer, commercial bank, trust company or other
nominee and you wish to tender them in the
exchange offer, please contact the registered
holder as soon as possible and instruct that
holder to tender on your behalf in compliance
with the instructions in this prospectus.
Guaranteed Delivery
Procedures................ If you are unable to comply with the procedures
for tendering, you may tender your outstanding
8% notes according to the guaranteed delivery
procedures described in this prospectus under
the heading "The Exchange Offer - Guaranteed
Delivery Procedures."
Acceptance of the Outstanding
8% Notes and Delivery of
Exchange Notes............. If the conditions described under "The Exchange
Offer - Conditions" are satisfied, we will
accept for exchange any and all outstanding 8%
notes that are properly tendered before the
expiration date.
Effect of Not Tendering.... Because the outstanding 8% notes have not been
registered under the federal securities laws,
they bear a legend restricting their transfer
absent registration or the availability of an
exemption from registration. Any of the
outstanding 8% notes that are not tendered or
that are tendered but not accepted will remain
subject to restrictions on transfer. After we
complete the exchange offer, we will have no
further obligation, except under limited
circumstances, to provide for registration of
the outstanding 8% notes under the federal
securities laws.
Federal Income Tax
Considerations............. See "Certain Federal Income Tax Considerations"
for a discussion of U.S. federal income tax
considerations you should consider before
tendering the outstanding 8% notes in the
exchange offer.
Exchange Agent............. HSBC Bank USA is serving as exchange agent for
the exchange offer. The address for the
exchange agent is listed under "The Exchange
Offer - Exchange Agent."
-8-
THE EXCHANGE NOTES
The form and terms of the exchange notes are the same as the form and
terms of the outstanding 8% notes except that the exchange notes will be
registered under the Securities Act and, accordingly, will not be subject to the
same transfer restrictions. The exchange notes will evidence the same debt as
the outstanding 8% notes, and both the exchange notes and the outstanding 8%
notes are governed by the same indenture. The following terms are applicable to
both the exchange notes and the outstanding 8% notes. In this document, the term
"notes" refers to both the exchange notes and the outstanding 8% notes. We
define certain capitalized terms used in this summary in the "Description of
Notes - Certain Definitions" section of this prospectus.
Issuer..................... Cott Beverages Inc., which we refer to as the
issuer.
Securities Offered......... $275,000,000 aggregate principal amount of 8%
Senior Subordinated Notes due 2011.
Maturity Date.............. December 15, 2011.
Interest Payment Dates..... June 15 and December 15 of each year,
commencing on June 15, 2002.
Mandatory Redemption....... The issuer will not be required to make
mandatory redemption or sinking fund payments
with respect to the notes.
Optional Redemption........ The issuer may redeem the notes in whole or in
part at any time on or after December 15, 2006,
at the redemption prices specified under
"Description of Notes - Optional Redemption."
Prior to December 15, 2004, the issuer may
redeem up to 35% of the notes with the proceeds
of an equity offering, at a price specified
under "Description of Notes - Optional
Redemption."
Guarantees................. All payments with respect to the notes will be
fully and unconditionally guaranteed, jointly
and severally, on a senior subordinated basis
by our parent company, Cott Corporation, and by
certain of its U.S. restricted subsidiaries.
The guarantees will rank equally with all of
the guarantors' existing and future senior
subordinated debt. The guarantees will be
subordinated to all of the guarantors' existing
and future senior debt. If we cannot make
payments on the notes when they are due, the
guarantors must make them instead. See
"Description of Notes - Guarantees."
-9-
Change of Control.......... If we experience a change of control as
described in the indenture along with a ratings
decline as described in the indenture, the
issuer must offer to repurchase the notes at
101% of the principal amount of the notes, plus
accrued and unpaid interest and liquidated
damages, if any, to the date of repurchase.
For more details, see "Description of Notes -
Repurchase at the Option of Holders - Change of
Control Triggering Event."
Ranking.................... The notes will be unsecured senior subordinated
obligations of the issuer. The notes will rank:
- subordinate in right of payment to
all existing and future senior
indebtedness of the issuer, including our
senior secured credit facility;
- equal in right of payment with any
future senior subordinated indebtedness of
the issuer; and
- senior in right of payment to any future
junior subordinated indebtedness of the
issuer.
As of December 29, 2001 and giving effect to the
application of the net proceeds from the offering
of the outstanding 8% notes as described under
"Use of Proceeds," the notes were subordinated to
approximately $123.7 million of the issuer's
senior indebtedness.
Certain Covenants.......... The issuer will issue the notes under an
indenture with HSBC Bank USA, as trustee. The
indenture contains limitations on, among other
things:
- the payment of dividends and other
distributions with respect to our capital
stock and the purchase, redemption or
retirement of our capital stock or
indebtedness subordinated to the notes;
- the right of restricted
subsidiaries to make certain payments and
distributions;
- our ability to incur additional
debt or issue certain preferred stock;
- the incurrence of liens on assets
to secure certain debt;
- asset sales;
-10-
- transactions with affiliates;
- sale and leaseback transactions;
- engaging in certain business
activities; and
- certain mergers or consolidations
and transfers of assets.
These covenants are subject to exceptions. See
"Description of Notes - Certain Covenants."
Exchange Offer; Registration
Rights..................... Under a registration rights agreement among the
issuer, the guarantors and the initial
purchasers of the notes, the issuer and the
guarantors have agreed to:
- file with the SEC a registration statement
with respect to an offer to exchange the
outstanding 8% notes for notes of the issuer
having substantially identical terms as the
outstanding 8% notes (except that the
exchange notes will not contain terms with
respect to transfer restrictions) within 90
days after the date of the original issuance
of the notes; and
- use their best efforts to cause the
registration statement to become effective
under the Securities Act within 150 days
after the date of the original issuance of
the notes.
Under certain circumstances, in lieu of a
registered exchange offer, the issuer and the
guarantors have agreed to file a shelf
registration statement with respect to the notes
and to use their reasonable best efforts to keep
the shelf registration statement effective for at
least two years after the date of the original
issuance of the notes. Liquidated damages will be
payable under certain circumstances if the issuer
and the guarantors do not comply with their
obligations under the registration rights
agreement. For more details, see "Description of
Notes - Registration Rights; Liquidated Damages."
-11-
Use of Proceeds............ We will not receive any cash proceeds from the
exchange offer. We used the net proceeds from
the December 21, 2001 issuance of the
outstanding 8% notes, together with additional
borrowings of approximately $16.6 million under
the senior secured credit facility and $13.3
million of available cash, to redeem in full
the 9.375% Senior Notes due 2005 and the 8.5%
Senior Notes due 2007 of Cott Corporation. We
refer to these notes below as the 2005 notes
and the 2007 notes, respectively.
Risk Factors............... You should consider carefully the information
provided in "Risk Factors" and all the other
information provided to you in this document in
deciding whether to exchange your outstanding
8% notes.
-12-
SUMMARY HISTORICAL CONDENSED CONSOLIDATED AND OTHER CONSOLIDATED PRO FORMA
FINANCIAL DATA
The following table shows certain of Cott Corporation and its
subsidiaries' summary historical condensed consolidated financial data and other
consolidated pro forma financial data. The summary historical financial
information presented below as of and for the year ended December 29, 2001, the
year ended December 30, 2000, the year ended January 1, 2000, the 48-week period
ended January 2, 1999 and the year ended January 31, 1998 was derived from the
consolidated financial statements audited by PricewaterhouseCoopers LLP. The
basis of preparation of the pro forma financial data is described in note 4 to
the table. You should read the information in the table in conjunction with the
consolidated financial statements and the "Management's Discussion and Analysis
of Financial Condition and Results of Operations" sections of the reports that
we have filed with the SEC and that are incorporated by reference into this
document.
<Table>
<Caption>
FISCAL YEARS ENDED
JANUARY JANUARY JANUARY DECEMBER DECEMBER
31, 1998 2, 1999 1, 2000 30, 2000 29, 2001
(53 WEEKS) (48 WEEKS) (52 WEEKS) (52 WEEKS) (52 WEEKS)
(in millions of U.S. dollars, except ratios)
INCOME STATEMENT DATA:
Sales . . . . . . . . $1,051.4 $ 961.9 $ 993.7 $ 990.6 $1,090.1
Operating income 27.3 (69.0) 46.2 75.9 93.3
(loss) (1) . . .
Net income (loss) . . (4.7) (109.5) 18.5 25.4 39.9
OTHER FINANCIAL DATA:
Cash from operating 54.0 (9.7) 56.9 91.5 93.4
activities
Cash from investing (180.5) (42.1) (5.6) (62.4) (158.6)
activities
Cash from financing 179.2 (19.3) (76.4) (23.2) 62.7
activities
EBITDA (2) . . . . . 87.8 51.3 82.5 111.2 133.5
Ratio of fixed
charges to
earnings . . . . . 1.0x (1.6)x 1.4x 2.3x 2.7x
Interest expense . . . . . . . . . . . . . . . . . . . 33.8
Ratio of EBITDA to interest expense . . . . . . . . . 4.0x
Ratio of total indebtedness (3) to EBITDA . . . . . . 3.1x
AS OF DECEMBER 29, 2001
PRO FORMA
ACTUAL 2001 2001 (4)
(AUDITED) (UNAUDITED)
(in millions of U.S. dollars)
BALANCE SHEET DATA:
Total assets . . . . . . . . . . . . . . . . . . $1,065.4 $766.0
Total indebtedness . . . . . . . . . . . . . . . 692.3 415.9
Shareowners' equity . . . . . . . . . . . . . . 195.4 185.8
(footnotes on the following page)
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YEAR ENDED
DECEMBER 29, 2001
(UNAUDITED)
PRO FORMA FINANCIAL DATA (5):
Pro forma EBITDA . . . . . . . . . . . . . . . . . . . . . . $140.8
Pro forma interest expense . . . . . . . . . . . . . . . . . 36.8
Pro forma ratio of EBITDA to interest expense . . . . . . . . 3.8x
Pro forma ratio of total indebtedness to EBITDA . . . . . . . 3.0x
(1)The operating loss for the 48-week period ended January 2, 1999 reflected an
unusual charge of $77.2 million. The operating income for the year ended
January 31, 1998 included an unusual charge of $21.7 million. See note 5 to
the Selected Historical Consolidated Financial Data on page 41 of this
document for information.
(2)EBITDA represents income before unusual items, other expense (income),
interest expense, income taxes, and depreciation and amortization of
property, plant and equipment, goodwill and intangible and other assets.
EBITDA does not represent and should not be considered an alternative to net
income or cash flow from operations as determined by generally accepted
accounting principles. Further, EBITDA does not necessarily indicate whether
cash flow will be sufficient for our working capital or capital expenditures,
or to allow us to react to changes in our industry or economic changes
generally. We believe that EBITDA is a frequently used measure that provides
additional information for determining our ability to meet debt service
requirements, and it is one of the indicators upon which we, our lenders, and
certain investors assess our financial performance and our capacity to
service debt. We therefore interpret the trend that EBITDA depicts as one
measure of our operating performance. Because EBITDA is not calculated in the
same fashion by all companies and analysts, the EBITDA measures presented by
us may not necessarily be comparable to other similarly titled measures of
other companies. Therefore, in evaluating EBITDA data, investors should
consider, among other factors: the non-GAAP nature of EBITDA data; actual
cash flows; and the actual availability of funds for similarly titled
measures reported by other companies.
(3)Adjusted for the repayment of the 2005 notes and 2007 notes on January 22,
2002 from cash in trust.
(4)The pro forma balance sheet data gives effect to the application of the net
cash proceeds of the notes to repay in full the 2005 notes and the 2007
notes, including interest, the prepayment penalty relating to the 2005 notes
and 2007 notes and the write off the unamortized portion of the financing
fees relating to these notes.
(5)The consolidated pro forma financial data for the year ended December 29,
2001 has been derived from the historical financial statements of Cott
Corporation and incorporates the assumptions described below. The pro forma
financial data are not necessarily indicative of what the financial position,
results of operations and cash flow would have been assuming the completion
of the transactions and assumptions described below, nor do they purport to
project results for any future periods. The pro forma data should also be
read with the information and financial statements appearing in or
incorporated by reference in the document.
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The pro forma financial data are based on the following assumptions:
(a) the repayment of the 2005 and 2007 notes;
(b) the write-off of the prepayment penalty and financing costs of $9.6
million, net of the related income tax benefit, related to the repayment
of the 2005 and 2007 notes, has been excluded from the calculations
because it would have represented a one-time charge against earnings;
(c) the Royal Crown purchase and related financing which occurred in July
2001 occurred on December 31, 2000; and
(d) no pro forma adjustments have been made for the business combination with
Polar Corporation, which occurred in September 2001.
The PricewaterhouseCoopers report incorporated by reference in this document,
and the opinion of PricewaterhouseCoopers in that report, relate to our
historical financial information. They do not extend to the pro forma financial
information included in this offering memorandum and you should not read the
report or opinion to do so.
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RISK FACTORS
Your investment in the exchange notes will involve risks. Before you
decide to exchange the outstanding 8% notes, you should consider carefully the
following risk factors and the other information included or incorporated by
reference in this document. This section includes or refers to forward-looking
statements. You should refer to the explanation of the qualifications and
limitations on these forward-looking statements discussed on page 2 of this
document.
RISKS RELATING TO THE NOTES
THE AMOUNT OF OUR DEBT COULD LIMIT OUR OPERATIONAL FLEXIBILITY OR OTHERWISE
ADVERSELY AFFECT OUR FINANCIAL CONDITION.
Giving effect to the application of the net proceeds of the issuance of
the notes, as described in "Use of Proceeds," our consolidated indebtedness as
of December 29, 2001 was $415.9 million, and an additional $46.6 million was
available under our senior secured credit facility.
We are subject to the risks normally associated with this level of debt,
including the risks that:
- we may have difficulties obtaining additional or favorable
financing for capital expenditures, working capital, acquisitions
or other purposes;
- a significant portion of our cash flow will be used to make debt
service payments, which will reduce the funds that would otherwise
be available to us for operations and future business opportunities;
- our debt level could limit our flexibility in planning for,
or reacting to, changes in our business and the industry in which
we operate;
- our debt level may place us at a competitive disadvantage
relative to less leveraged competitors;
- our debt level makes us vulnerable to the impact of
economic downturns and adverse developments in our business; and
- the portion of our debt that is subject to variable interest rates
makes us more vulnerable to the impact of an increase in interest
rates.
Our ability to meet our expenses and debt obligations, to refinance our
debt obligations and to fund capital expenditures will depend on our future
performance, which will be affected by the risks discussed in " - Risks relating
to our business," as well as general economic, financial and other factors
beyond our control. Based upon current levels of operations, we believe cash
flow from operations, amounts available under our senior secured credit facility
and available cash will be adequate to meet our anticipated future requirements
for working capital, capital expenditures and scheduled payments of principal
and interest on our indebtedness, including the notes.
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We cannot assure you, however, that our business will generate sufficient
cash flow, or that we will be able to borrow funds under our senior secured
credit facility in an amount sufficient to enable us to meet our working capital
needs, to service our indebtedness, including the notes, or to make capital
expenditures. If we are unable to generate sufficient cash flow from operations
or to borrow sufficient funds to service our debt, we may be required to sell
assets, reduce capital expenditures, refinance all or a portion of our existing
debt (including the notes) or obtain additional financing, and we may not be
able to do these things on terms acceptable to us, if at all. Additionally, our
ability to incur additional debt will be restricted under the covenants
contained in our senior secured credit facility and the indenture relating to
the notes.
IN THE EVENT OF OUR BANKRUPTCY OR LIQUIDATION, YOU WILL BE PAID ONLY FROM ANY
ASSETS REMAINING AFTER PAYMENTS TO HOLDERS OF SENIOR DEBT; AND IF THERE IS A
DEFAULT UNDER THE SENIOR DEBT YOU MAY NOT BE PAID.
The notes and the guarantees are general unsecured obligations,
subordinate in right of payment to all of Cott Beverages Inc.'s and the
guarantors' existing and future senior debt, including all indebtedness under
our senior secured credit facility. In the event of insolvency, liquidation,
reorganization or a similar proceeding relating to Cott Beverages Inc. or any of
the guarantors, the senior debt of that entity must be paid in full before the
principal of, and premium, if any, and interest on the notes or the obligations
under any guarantee of the notes may be paid. In the event of a bankruptcy,
liquidation or reorganization of Cott Beverages Inc. or any of the guarantors,
you will participate in the remaining assets of Cott Beverages Inc. or any of
the guarantors ratably (based upon respective amounts owed to each holder or
creditor) with all holders of subordinated indebtedness of Cott Beverages Inc.
or any of the guarantors that is of the same ranking as the notes. If any of
these events occur, we cannot assure you that there would be sufficient assets
to pay amounts due on the notes or the guarantees. In addition, the indenture
provides that no payment with respect to the notes or any guarantee may be made
if a payment default or, after certain notice, a non-payment default occurs with
respect to certain designated senior debt under certain circumstances. Giving
effect to the application of the net proceeds of the offering of the outstanding
8% notes , as of December 29, 2001 Cott Beverages Inc. had $123.7 million of
senior debt and the guarantors had $0.5 million of senior debt (excluding their
guarantees of borrowings under our senior secured credit facility). See
"Description of Notes - Subordination."
YOUR RIGHT TO RECEIVE PAYMENTS ON THE NOTES AND GUARANTEES IS UNSECURED AND WILL
BE EFFECTIVELY SUBORDINATED TO THE ISSUER'S AND THE GUARANTORS' EXISTING AND
FUTURE SECURED INDEBTEDNESS AND THE INDEBTEDNESS OF THE NON-GUARANTOR
SUBSIDIARIES.
Because the notes and the guarantees are general unsecured senior
subordinated obligations of Cott Beverages Inc. and the guarantors, they are
effectively junior to any secured debt that the issuer and the guarantors have
and may have in the future to the extent of the value of the assets securing
that debt. In the event of liquidation, dissolution, reorganization, bankruptcy
or any similar proceeding regarding Cott Beverages Inc.'s assets or the assets
of the guarantors, whether voluntarily or involuntarily instituted, the holders
of the issuer's and the guarantors' secured debt will be entitled to be paid
from the assets of Cott Beverages Inc. or the guarantor, as applicable, before
any payment may be made with respect to the notes or the guarantees. Our senior
secured credit facility, as amended, is secured by substantially all of our
personal property. As of December 29, 2001, giving effect to the application of
the net proceeds of the offering of the outstanding 8% notes, Cott Beverages
Inc. and the guarantors had total secured debt of $124.2 million. The notes are
also structurally subordinated to the debt obligations of those subsidiaries of
Cott Corporation that are not guarantors. As of December 29, 2001, our
non-guarantor subsidiaries had total assets of $246.5 million and had total
indebtedness of $16.9 million. In the event of a bankruptcy, liquidation or
similar events with respect to
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Cott Corporation, the assets held in each of our non-guarantor subsidiaries will
be available to pay the issuer's obligations on the notes or the guarantors'
obligations under their guarantees only after the debt obligations of those
non-guarantor subsidiaries are satisfied in full. If any of the foregoing events
occurs, we cannot assure you that Cott Beverages Inc. or the guarantors will
have sufficient assets to pay amounts due on its and the guarantors' secured
debt and the notes or the guarantees. As a result, you may receive less,
ratably, than the holders of secured debt in the event of Cott Beverages Inc.'s
or any of the guarantors' liquidation, dissolution, reorganization, bankruptcy
or other similar occurrence.
OUR DEBT INSTRUMENTS IMPOSE RESTRICTIONS AND LIMITATIONS ON US THAT MAY
ADVERSELY AFFECT OUR ABILITY TO OPERATE OUR BUSINESS.
The indenture relating to the notes contains covenants that restrict or
limit, among other things, our ability to:
- pay dividends and other distributions with respect to our capital
stock and purchase, redeem or retire our capital stock or
indebtedness subordinated to the notes;
- incur additional indebtedness or issue certain preferred
stock;
- enter into asset sales;
- enter into transactions with affiliates;
- incur liens on assets to secure certain debt;
- engage in certain business activities; and
- engage in certain mergers or consolidations and transfers of
assets.
In addition, our senior secured credit facility contains other and
sometimes more restrictive covenants, including the prohibition on making
voluntary or optional prepayments of certain of our indebtedness, including the
notes. Under our senior secured credit facility, we are required to comply with
specified financial covenants, including maintaining specified levels of
consolidated leverage and interest and fixed charge coverages. These financial
ratios become more restrictive over the life of our senior secured credit
facility. Our ability to comply with these covenants may be affected by many
events beyond our control and we cannot assure you that our future operating
results will be sufficient to comply with the covenants, or in the event of a
default, to remedy that default. Our failure to comply with those financial
covenants or to comply with the other restrictions contained in our senior
secured credit facility could result in a default, which could cause that
indebtedness (and by reason of cross-acceleration or cross-default provisions,
indebtedness under our indentures and other indebtedness) to become immediately
due and payable. If we are unable to repay those amounts, the lenders under our
senior secured credit facility could proceed against the collateral granted to
them to secure that indebtedness. If those lenders accelerate the payment of the
senior secured credit facility, we cannot assure you that our assets would be
sufficient to pay that indebtedness and our other indebtedness, including the
notes.
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THE GUARANTEES OF CERTAIN AFFILIATES OF THE ISSUER COULD BE DEEMED FRAUDULENT
CONVEYANCES UNDER CERTAIN CIRCUMSTANCES, AND A COURT MAY TRY TO SUBORDINATE OR
AVOID SUCH GUARANTEES.
The issuer's obligations under the notes are guaranteed on a general
unsecured senior subordinated basis by certain of its affiliates. Various
preference or fraudulent conveyance laws have been enacted for the protection of
creditors and may be used by a court to subordinate or avoid guarantees. Under
certain circumstances, a court could hold that other obligations of a guarantor
could be superior to the obligations under its guarantee.
To the extent that a court finds that at the time a guarantor entered into
a guarantee either:
- the guarantee was incurred with the intent to hinder, delay or
defraud any present or future creditor or that a guarantor
contemplated insolvency with a design to favor one or more
creditors to the exclusion in whole or in part of others; or
- the guarantor did not receive fair consideration or reasonably
equivalent value for issuing the guarantee and, at the time it
issued the guarantee, the guarantor
(a) was insolvent or rendered insolvent by reason of the
issuance of the guarantee,
(b) was engaged or about to engage in a business or transaction
for which the guarantor's remaining assets constituted
unreasonably small capital or
(c) intended to incur, or believed that it would incur, debts
beyond its ability to pay debts as they matured, the court
could avoid or subordinate the guarantee in favor of the
guarantor's other creditors.
In this case, among other things, a legal challenge of one of the
guarantees on fraudulent conveyance grounds may focus on the benefits, if any,
realized by the guarantor as a result of the issuance of the notes. To the
extent a guarantee is avoided as a fraudulent conveyance or held unenforceable
for any other reason, you would cease to have any claim in respect of that
guarantor.
We cannot assure you that a court would conclude that the notes and the
guarantees were incurred for proper purposes and in good faith. We also cannot
assure you that a court would conclude that, after giving effect to the
indebtedness incurred in connection with the issuance of the notes and the
issuance of the guarantees, the guarantors are solvent and will continue to be
solvent, will have sufficient capital for carrying on their respective
businesses and will be able to pay their debts as they become absolute and
mature.
THE ISSUER MAY NOT BE ABLE TO FINANCE A CHANGE OF CONTROL OFFER AS REQUIRED BY
THE INDENTURE.
Upon a change of control under the indenture that also results in a
ratings downgrade, the issuer will be required to offer to repurchase all of the
notes then outstanding at 101% of the principal amount, plus accrued and unpaid
interest and liquidated damages, if any, to the repurchase date. Before
repurchasing any of the notes, the issuer must either repay all of its senior
debt (including debt under our senior secured credit facility) or obtain
required consents, if any, from holders of senior debt to allow it to repurchase
the notes. If a change of control and rating decline were to occur today, the
issuer would not have the financial resources immediately available to repay all
of its senior debt and any other debt that would become payable and to
repurchase all of the notes, and would have to seek to raise additional
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financing. If this were to occur, we cannot assure you that we would be able to
obtain such additional financing.
YOU MAY SUFFER ADVERSE CONSEQUENCES IF YOU DO NOT EXCHANGE THE OUTSTANDING 8%
NOTES.
Any of the outstanding 8% notes that are not exchanged for exchange notes
will not be registered with the SEC or in any state. Unless the outstanding 8%
notes are registered, they only may be offered and sold pursuant to an exemption
from, or in a transaction that is not subject to, the registration requirements
of the Securities Act. Depending upon the percentage of the outstanding 8% notes
exchanged for exchange notes, the liquidity of the outstanding 8% notes may be
adversely affected.
WE CANNOT ASSURE YOU THAT ANY ACTIVE TRADING MARKET WILL DEVELOP FOR THE NOTES.
We do not intend to list the notes on any national securities exchange or
to seek the admission of the notes for trading on the Nasdaq National Market.
The initial purchasers are not obligated to make a market in the notes and any
market-making activities with respect to the notes may be discontinued at any
time without notice. In addition, any market-making activity will be subject to
the limits imposed by the Securities Act and the Exchange Act and may be limited
during the registered exchange offer and the pendency of any shelf registration
statement. Accordingly, we cannot assure you that an active public or other
market will develop for the notes or provide you with assurances as to the
liquidity of the trading market for the notes. If a trading market does not
develop or is not maintained, you may experience difficulty in reselling the
notes or may be unable to sell them at all and their illiquidity may reduce the
price a purchaser is willing to pay. If a market for the notes develops,
that market may be discontinued at any time. If a public trading market develops
for the notes, future trading prices of the notes will depend on many factors,
including, among other things, prevailing interest rates, our financial
condition and results of operations and the market for similar notes. Depending
on those and other factors, the notes may trade at a discount from their
principal amount.
RISKS RELATING TO OUR BUSINESS
BECAUSE A SMALL NUMBER OF CUSTOMERS ACCOUNT FOR A SIGNIFICANT PERCENTAGE OF OUR
SALES, OUR REVENUES COULD DECLINE IF WE LOSE ANY SIGNIFICANT CUSTOMER.
Our customers include many large national and regional grocery,
mass-merchandise, drugstore, wholesale and convenience store chains in our core
markets of the United States, Canada and the United Kingdom. For the year ended
December 29, 2001, sales to Wal-Mart Stores, Inc. and Safeway, Inc. accounted
for approximately 39% and 11%, respectively, of our total consolidated net
sales. For the same period, our top ten customers accounted for approximately
72% of our total consolidated net sales. We expect that sales of our products to
a limited number of customers will continue to account for a high percentage of
our sales for the foreseeable future. The loss of Wal-Mart would, and the loss
of one of our other significant customers could, have a material adverse effect
on our business, financial condition and results of operations.
WE MAY BE UNABLE TO COMPETE SUCCESSFULLY IN THE HIGHLY COMPETITIVE BEVERAGE
MARKET.
The markets for our products are extremely competitive. Competition in our
various markets could cause us to lose market share, reduce pricing or increase
capital and other expenditures. The companies that produce and sell the major,
national-brand beverages located in our core geographic markets possess
significantly greater financial and marketing resources than we possess. Private
label beverages that we supply to our customers compete for access to shelf
space with branded beverage products on the basis of
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quality and price. Even though shelf space is primarily controlled by our
private label customers, we have no assurance that they will allocate space to
the private label products that we supply to them. In addition, entry of any of
the national-brand companies into the private label segment of the beverage
market could have a material adverse effect on our business, financial condition
and results of operations. We also face competition from other private label
beverage manufacturers in the United States and the United Kingdom, some of
which possess substantial bottling facilities.
WE ARE EXPANDING OUR OPERATIONS, AND IF WE FAIL TO MANAGE OUR EXPANDING
OPERATIONS SUCCESSFULLY, OUR BUSINESS AND FINANCIAL RESULTS MAY BE MATERIALLY
AND ADVERSELY AFFECTED.
In recent years, we have grown our business and beverage offerings
primarily through acquisitions of other companies and product lines. A part of
our strategy is to continue to expand our business through acquisitions. To
succeed in this strategy, we must identify appropriate acquisition or strategic
alliance candidates. Increased competition for acquisition candidates may result
in a combination of fewer acquisition opportunities and less advantageous
acquisition terms. The success of this strategy also depends in significant part
on our ability to manage and integrate acquisitions and other alliances at a
pace consistent with the growth of our business. This may also divert our
management's attention from other aspects of our business.
As we seek to expand our operations, we expect to encounter a number of
risks, which will include:
- the need to add additional management and other critical
personnel;
- the risk of succeeding to the liabilities of the businesses and
product lines that we acquire;
- the need to add additional equipment and capacity;
- the risk of failing to predict shifts in consumer preferences and
to match our acquisition strategy to these shifts;
- risks associated with increasing the scope, geographic diversity
and complexity of our operations; and
- the risk that our acquisitions will not result in the revenues,
operating efficiencies or other benefits that we anticipate.
We cannot assure you that acquisition opportunities will be available,
that we will have access to the capital required to finance potential
acquisitions, that we will continue to acquire businesses and product lines or
that any of the businesses or product lines that we acquire will be integrated
successfully into our business or prove profitable.
IF WE ARE UNABLE TO MAINTAIN AN ADEQUATE SUPPLY OF INGREDIENTS AND PACKAGING
SUPPLIES, WE MAY BE UNABLE TO DELIVER PRODUCTS TO OUR CUSTOMERS.
The principal ingredients we need in order to produce our products are
concentrate, sweeteners and carbon dioxide. We make most of the concentrates we
need ourselves using ingredients from third parties and source the remaining
concentrates and other ingredients from outside vendors. We also purchase our
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primary packaging supplies, including polyethylene terephthalate (PET) bottles,
caps and preforms, cans and lids, labels, cartons and trays, from outside
vendors.
We have a variety of suppliers for many of our materials, and we maintain
long-standing relationships with many of these suppliers. We typically enter
into annual supply arrangements rather than long-term contracts with suppliers,
but we have long-term agreements with respect to some of our key packaging
supplies, such as aluminum cans and lids and PET bottles, and some of our key
ingredients, such as artificial sweeteners. If we are forced to replace one or
more of these key suppliers, our ingredient and packaging supply costs may
increase.
None of the ingredients or packaging supplies that we use to produce or
package our products are currently in short supply, although the supply of
specific ingredients and packaging supplies could be adversely affected by
economic factors such as industry consolidation, energy shortages, ability to
access raw materials, governmental controls, labor disputes, weather conditions
and other factors.
OUR INGREDIENTS AND PACKAGING SUPPLIES VARY IN COST AND WE MAY BE UNABLE
EFFECTIVELY TO PASS RISING COSTS ON TO OUR CUSTOMERS.
The underlying commodity costs of our ingredients and packaging supplies,
such as resin for PET, aluminum for cans, and high fructose corn syrup, are
cyclical and historically have been subject to price volatility. The majority of
our contracts allow our suppliers to alter the costs they charge us for
ingredients and packaging supplies based on changes in these commodity costs at
certain predetermined times and subject to defined guidelines, meaning that we
bear the risk of shifts in the market costs of these commodities. A portion of
our ingredients and packaging supplies are subject to fixed prices for one-year
terms, after which we typically negotiate new terms based upon prevailing market
conditions. If the cost of these ingredients or packaging supplies increase, we
may be unable to pass these costs along to our customers through corresponding
or contemporaneous adjustments to the prices we charge.
OUR BEVERAGE SALES ARE SEASONAL AND MAY SUFFER WITHOUT SUFFICIENT PERIODS OF
WARM WEATHER.
Sales of beverages are seasonal, with the highest sales volumes generally
occurring in the second and third fiscal quarters, which correspond to the
warmer months of the year. Accordingly, our sales volume tends to decrease
during cold and wet weather months, and can be affected by unseasonably cold or
wet weather conditions in our core markets. On the other hand, when the weather
is unseasonably warm, we may not have access to adequate production capacity to
meet seasonal sales demands. The inability to match our production to changes in
the weather could have a material adverse effect on our business, financial
condition and results of operations.
OUR SUCCESS DEPENDS IN PART ON OUR INTELLECTUAL PROPERTY, WHICH WE MAY BE UNABLE
TO PROTECT.
Our success depends in part on our intellectual property. To protect this
intellectual property, we rely principally on contractual restrictions, such as
nondisclosure and confidentiality agreements, in our agreements with employees,
consultants and customers, and on the common law of trade secrets and
proprietary "know-how." We also rely on trademark protection.
We may not be successful in protecting our intellectual property for a
number of reasons, including:
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- our competitors may independently develop intellectual property
that is similar to or better than ours;
- employees, consultants and customers may not abide by their
contractual agreements, and the cost of enforcing those
agreements may be prohibitive, or those agreements may prove to
be unenforceable or more limited than we anticipate;
- foreign intellectual property laws may not adequately protect our
intellectual property rights; and
- our trademarks may be challenged, invalidated or circumvented.
If we are unable to protect our intellectual property, it would weaken our
competitive position, and we could face significant expense to protect or
enforce our intellectual property rights.
THIRD PARTIES MAY CLAIM THAT WE ARE INFRINGING ON THEIR INTELLECTUAL PROPERTY,
WHICH COULD CAUSE US TO INCUR SIGNIFICANT LITIGATION COSTS OR OTHER EXPENSES, OR
PREVENT US FROM SELLING SOME OF OUR PRODUCTS.
If we are found to infringe on the intellectual property rights of others,
we could incur significant damages, be enjoined from continuing to manufacture,
market or use the affected product, or be required to obtain a license to
continue manufacturing or using the affected product. A license could be very
expensive to obtain or may not be available at all. Similarly, changing our
products or processes to avoid infringing the rights of others may be costly or
impracticable.
Occasionally, third parties assert that we are, or may be, infringing on
or misappropriating their intellectual property rights. In these cases, we will
defend against claims or negotiate licenses where we consider these actions
appropriate. Intellectual property cases are uncertain and involve complex legal
and factual questions. If we become involved in this type of litigation, it
could consume significant resources and divert our attention from our business.
WE MAY INCUR MATERIAL LOSSES AND COSTS AS A RESULT OF PRODUCT LIABILITY CLAIMS
THAT MAY BE BROUGHT AGAINST US OR ANY PRODUCT RECALLS WE HAVE TO MAKE.
We may be liable if the consumption of any of our products causes injury,
illness or death. We also may be required to recall some of our products if they
become contaminated or are damaged or mislabeled. A significant product
liability judgment against us or a widespread product recall could have a
material adverse effect on our business, financial condition and results of
operations. We are insured against product liability claims with a limitation of
$65 million. We are insured against product recalls with a limitation of $10
million, a $2 million deductible, and a 20% coinsurance provision. However, we
cannot assure you that our insurance coverage will be adequate to protect us or
will remain available on terms that are economically reasonable.
COMPLIANCE WITH VARIOUS REGULATORY AND ENVIRONMENTAL LAWS COULD INCREASE THE
COST OF OPERATING OUR BUSINESS.
Our operations and properties are subject to regulation by various
federal, state and local government entities and agencies as well as foreign
government entities. We cannot assure you that we have been or will at all times
be in compliance with all regulatory requirements or that we will not incur
material costs or liabilities in connection with regulatory requirements.
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As a producer of beverages, we are subject to production, packaging,
quality, labeling and distribution standards in each of the countries where we
have operations, including, in the United States, those of the federal Food,
Drug and Cosmetic Act. The operations of our production and distribution
facilities are subject to various federal, state and local environmental laws
and workplace regulations. These laws and regulations include, in the United
States, the Occupational Safety and Health Act, the Unfair Labor Standards Act,
the Clean Air Act, the Clean Water Act and laws relating to the maintenance of
fuel storage tanks. Compliance with, or any violation of, current and future
laws or regulations could require material expenditures by us or otherwise have
a material adverse effect on our business, financial condition and results of
operations.
WE ARE NOT IN COMPLIANCE WITH THE REQUIREMENTS OF THE ONTARIO ENVIRONMENTAL
PROTECTION ACT AND COULD BE ADVERSELY AFFECTED IF THE ONTARIO GOVERNMENT SEEKS
TO ENFORCE IT AGAINST US.
The Ontario Environmental Protection Act provides that a minimum
percentage of a bottler's soft drink sales within specified areas in Ontario
must be made in refillable containers. Currently, we are not in compliance with
the requirements of the Ontario Act. To comply with these requirements, we and
many other industry participants would have to significantly increase our sales
in refillable containers.
Ontario is not enforcing the Ontario Act at this time, but if they choose
to enforce it in the future we could incur fines for non-compliance and the
possible prohibition of sales of soft drinks in non-refillable containers in
Ontario, while compliance with the Ontario Act could result in reduced margins.
Although we are working with industry groups to review possible alternatives to
the provisions of the Ontario Act to propose to the Ontario government, we
cannot assure you that we will succeed in these efforts.
OUR GEOGRAPHIC DIVERSITY SUBJECTS US TO THE RISK OF CURRENCY FLUCTUATIONS.
Fluctuations in the exchange rate between the U.S. dollar and the Canadian
dollar, the pound sterling and other currencies may affect our reported results
and competitive position. We do not generally manage our exposure to foreign
currency risk by hedging the currency of our net assets in non-U.S. subsidiaries
through foreign exchange contracts. Accordingly, we are exposed to currency
fluctuations in respect of our outstanding non-U.S. dollar denominated net asset
balances.
TERRORIST ATTACKS AND THREATS OR ACTS OF WAR MAY NEGATIVELY IMPACT OUR BUSINESS,
FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Our business is affected by general economic conditions and fluctuations
in consumer confidence and spending, which can decline as a result of numerous
factors outside of our control, such as terrorist attacks and acts of war.
Recent terrorist attacks in the United States, as well as events occurring in
response to or in connection with them, including future terrorist attacks
against U.S. targets, rumors or threats of war, actual conflicts involving the
United States or its allies, or military or trade disruptions impacting our
suppliers or our customers, may adversely impact our operations. As a result,
there could be delays or losses in the delivery of ingredients and packaging
supplies to us, decreased sales of our products and extension of time for
payment of accounts receivable from our customers. Any or a combination of these
occurrences could have a material adverse effect on our business, financial
condition and results of operations.
- 24 -
THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
We issued $275 million aggregate principal amount of the outstanding 8%
notes to the initial purchasers on December 21, 2001 in transactions not
registered under the Securities Act of 1933 in reliance on exemptions from
registration under that act. The initial purchasers then sold the outstanding 8%
notes to qualified institutional buyers in reliance on Rule 144A under the
Securities Act and to non-United States persons outside the United States in
reliance on Regulation S under the Securities Act. Because they have been sold
pursuant to exemptions from registration rather than being registered, the
outstanding 8% notes are subject to transfer restrictions.
In connection with the issuance of the outstanding 8% notes, we agreed
with the initial purchasers that promptly following the issuance of the
outstanding 8% notes, we would:
- file with the SEC a registration statement related to the exchange
notes;
- use our best efforts to cause the registration statement to become
effective under the Securities Act; and
- offer to the holders of the outstanding 8% notes the opportunity to
exchange the outstanding 8% notes for a like principal amount of
exchange notes upon the effectiveness of the registration statement.
Our failure to comply with these agreements within certain time periods
would result in additional interest being due on the outstanding 8% notes. We
filed a copy of the registration rights agreement with the initial purchasers as
an exhibit to the registration statement of which this prospectus is a part.
As a result of the filing and effectiveness of the registration statement
of which this prospectus is a part, we will not be required to pay an increased
interest rate on the outstanding 8% notes unless we either fail to timely
consummate the exchange offer or fail to maintain the effectiveness of the
registration statement to the extent we agreed to do so. Following the closing
of the exchange offer, holders of the outstanding 8% notes not tendered will not
have any further registration rights except in limited circumstances requiring
the filing of a shelf registration statement, and the outstanding 8% notes will
continue to be subject to restrictions on transfer. Accordingly, the liquidity
of the market for the outstanding 8% notes that are not tendered in the exchange
offer will be adversely affected.
You may not participate in the exchange offer unless you will acquire the
exchange notes you receive in the ordinary course of your business and, at the
time you receive the exchange notes, you are not participating in and have no
understanding with any person to participate in distributing the exchange notes.
Based on existing interpretations of the Securities Act by the staff of the SEC
described in several no-action letters to third parties, we believe that if you
meet the preceding requirements and you are neither a broker-dealer nor our
affiliate, then you may offer for resale, resell or otherwise transfer the
exchange notes that you receive in the exchange offer without further compliance
with the registration and prospectus delivery provisions of the Securities Act.
We do not intend to seek our own no-action letter, and we cannot assure you
that, if we were to seek our own no-action letter, the staff of the SEC
- 25 -
would make a similar determination regarding the exchange notes as it has in the
no-action letters referenced above.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions stated in this prospectus and
in the letter of transmittal, we will accept all outstanding 8% notes properly
tendered and not withdrawn before 5:00 p.m., New York City time, on the
expiration date. After authentication of exchange notes by the trustee or an
authenticating agent, we will issue $1,000 principal amount of the exchange
notes in exchange for each $1,000 principal amount of the outstanding 8% notes
accepted in the exchange offer.
By tendering the outstanding 8% notes for exchange notes in the exchange
offer and signing or agreeing to be bound by the letter of transmittal, you will
represent to us that:
- you will acquire the exchange notes you receive in the exchange offer
in the ordinary course of your business;
- at the time the exchange notes are issued to you in the exchange
offer, you are not participating and have no understanding with any
person to participate in the distribution of the exchange notes you
receive;
- you are not an affiliate of ours or, if you are an affiliate, you will
comply with the registration and prospectus delivery requirements of
the Securities Act to the extent applicable; and
- if you are a broker-dealer that will receive exchange notes for your
own account in exchange for outstanding 8% notes that you acquired as
a result of market-making or other trading activities, you will
deliver a prospectus, as required by law, in connection with any
resale of those exchange notes.
Each broker-dealer that receives exchange notes for its own account under
the exchange offer in exchange for outstanding 8% notes that it acquired as a
result of market-making or other trading activities must acknowledge that it
will deliver a prospectus in connection with any resale of the exchange notes.
The letter of transmittal states that, by so acknowledging and by delivering a
prospectus, a broker-dealer will not be admitting that it is an "underwriter"
within the meaning of the Securities Act. During the ninety day period following
the exchange offer, to the extent required by applicable securities laws, we
will promptly comply with any such broker dealer's written request for copies of
this prospectus and any amendment or supplement to this prospectus for use in
connection with resales of exchange notes. See "Plan of Distribution."
The exchange notes will evidence the same debt as the outstanding 8% notes
and will be issued under and entitled to the benefits of the same indenture. The
form and terms of the exchange notes are identical in all material respects to
the form and terms of the outstanding 8% notes except that:
- the exchange notes will be issued in the exchange offer, which is
registered under the Securities Act;
- 26 -
- the exchange notes will not be subject to the same transfer
restrictions that the outstanding 8% notes are subject to as a result
of not being issued in a registered transaction; and
- provisions for an increase in the stated interest rate on the
outstanding 8% notes will not apply to the exchange notes with
respect to registration requirements.
As of the date of this prospectus, $275 million aggregate principal amount
of the outstanding 8% notes was outstanding. In connection with the issuance of
the outstanding 8% notes, we arranged for the outstanding 8% notes to be issued
and transferable in book-entry form through the facilities of The Depository
Trust Company, acting as depositary. The exchange notes will also be issuable
and transferable in book-entry form through The Depository Trust Company.
This prospectus, together with the accompanying letter of transmittal,
initially is being sent to all registered holders as of the close of business on
_____________, 2002. We intend to conduct the exchange offer as required by the
Exchange Act, and the rules and regulations of the SEC under the Exchange Act,
including Rule 14e-1, to the extent applicable.
Rule 14e-1 describes unlawful tender offer practices under the Exchange
Act. This rule requires us, among other things:
- to hold our exchange offer open for 20 business days;
- to give ten business days notice of any change in the terms of this
exchange offer; and
- to issue a press release if we extend the exchange offer.
The exchange offer is not conditioned upon any minimum aggregate principal
amount of the outstanding 8% notes being tendered, and holders of the
outstanding 8% notes do not have any appraisal or dissenters' rights under
applicable corporate law or under the indenture in connection with the exchange
offer. We will be considered to have accepted the outstanding 8% notes tendered
according to the procedures in this prospectus when, as and if we have given
oral or written notice of acceptance to the exchange agent. See "-- Exchange
Agent." The exchange agent will act as agent for the tendering holders for the
purpose of receiving exchange notes from us and delivering exchange notes to
those holders.
If any tendered outstanding 8% notes are not accepted for exchange because
of an invalid tender or the occurrence of other events described in this
prospectus, certificates for these unaccepted outstanding 8% notes will be
returned, at our cost, to the tendering holder of outstanding 8% notes or, in
the case of outstanding 8% notes tendered by book-entry transfer, into the
holder's account at The Depository Trust Company according to the procedures
described below, as promptly as practicable after the expiration date.
Holders who tender outstanding 8% notes in the exchange offer will not be
required to pay brokerage commissions or fees or, subject to the instructions in
the letter of transmittal, transfer taxes related to the exchange of the
outstanding 8% notes in the exchange offer. We will pay all charges and
expenses, other than applicable taxes, in connection with the exchange offer.
See " - Solicitation of Tenders; Fees and Expenses."
- 27 -
NEITHER WE NOR OUR BOARD OF DIRECTORS MAKE ANY RECOMMENDATION TO YOU AS TO
WHETHER TO TENDER OR REFRAIN FROM TENDERING ALL OR ANY PORTION OF YOUR
OUTSTANDING 8% NOTES IN THE EXCHANGE OFFER. MOREOVER, NO ONE HAS BEEN AUTHORIZED
TO MAKE ANY SUCH RECOMMENDATION ON OUR BEHALF. YOU MUST MAKE YOUR OWN DECISION
WHETHER TO TENDER IN THE EXCHANGE OFFER AND, IF YOU DECIDE TO TENDER, THE AMOUNT
OF THE OUTSTANDING 8% NOTES TO TENDER, AFTER READING THIS PROSPECTUS AND THE
LETTER OF TRANSMITTAL AND CONSULTING WITH YOUR ADVISORS, IF ANY, BASED ON YOUR
OWN FINANCIAL POSITION AND REQUIREMENTS.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "expiration date" means 5:00 p.m., New York City time, on
_______________, 2002, unless we, in our sole discretion, extend the exchange
offer, in which case the term "expiration date" means the latest date to which
we extend the exchange offer.
We expressly reserve the right, in our reasonable discretion:
- to delay acceptance of any outstanding 8% notes or to terminate the
exchange offer and to refuse to accept outstanding 8% notes not
previously accepted, if any of the conditions described under "--
Conditions" have occurred and have not been waived by us;
- to extend the expiration date of the exchange offer;
- to amend the terms of the exchange offer;
- to purchase or make offers for any outstanding 8% notes that remain
outstanding subsequent to the expiration date; or
- to the extent permitted by applicable law, to purchase outstanding 8%
notes in the open market, in privately negotiated transactions or
otherwise.
The terms of the purchases or offers described in the fourth and fifth
clauses above may differ from the terms of the exchange offer.
We will follow any delay in acceptance, termination, extension or
amendment as promptly as practicable by oral or written notice to the exchange
agent and by making a public announcement. If the exchange offer is amended in a
manner we determine to constitute a material change, we will promptly disclose
the amendment in a manner reasonably calculated to inform you of the amendment.
Without limiting the manner in which we may choose to make public
announcements of any delay in acceptance, termination, extension or amendment of
the exchange offer, we will not be obligated to publish, advise, or otherwise
communicate any public announcement, other than by making a timely press
release.
You should note that, although we are not obligated to do so, if some of
the holders of the outstanding 8% notes do not tender on a timely basis, we may
extend the exchange offer to allow them to
- 28 -
participate in the exchange and to avoid the significant reduction in liquidity
associated with holding an unexchanged note.
INTEREST ON THE EXCHANGE NOTES
The exchange notes will bear interest from December 21, 2001, or from the
most recent interest payment date that occurs before we complete the exchange
offer. Accordingly, holders of outstanding 8% notes that are accepted for
exchange will not necessarily receive interest that is accrued but unpaid on the
outstanding 8% notes at the time of tender. Interest on the exchange notes will
be payable semi-annually on each June 15 and December 15, beginning on June 15,
2002.
PROCEDURES FOR TENDERING
Only a registered holder of record may tender its outstanding 8% notes in
the exchange offer. If you are a beneficial owner of outstanding 8% notes that
are registered in the name of your broker, dealer, commercial bank, trust
company or other nominee or if you hold them in book-entry form and you wish to
tender, then you should contact the registered holder promptly and instruct the
registered holder to tender on your behalf. If you are a beneficial owner and
you wish to tender on your own behalf, then you must, before completing and
executing the letter of transmittal and delivering your outstanding 8% notes,
either make appropriate arrangements to register ownership of your outstanding
8% notes in your name or obtain a properly completed bond power from the
registered holder. Transferring record ownership may take considerable time.
Your decision to tender will constitute an agreement among you, us and the
exchange agent according to the terms and subject to the conditions described in
this prospectus and in the letter of transmittal.
If you wish to tender outstanding 8% notes, but you cannot comply with the
procedures described above on a timely basis or your outstanding 8% notes are
not immediately available, then you must comply with the procedures for
guaranteed delivery described below.
YOUR METHOD OF DELIVERING THE OUTSTANDING 8% NOTES AND THE LETTER OF
TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT YOUR
ELECTION AND RISK. DELIVERY OF THESE DOCUMENTS WILL BE DEEMED MADE ONLY WHEN
ACTUALLY RECEIVED BY THE EXCHANGE AGENT OR DEEMED RECEIVED UNDER THE DEPOSITORY
TRUST COMPANY'S AUTOMATED TENDER OFFER PROGRAM PROCEDURES DESCRIBED BELOW. IN
ALL CASES, YOU SHOULD ALLOW SUFFICIENT TIME TO ASSURE DELIVERY TO THE EXCHANGE
AGENT BEFORE THE EXPIRATION DATE. DO NOT SEND YOUR LETTER OF TRANSMITTAL OR
OUTSTANDING 8% NOTES TO US. YOU MAY ALSO REQUEST THAT YOUR BROKER, DEALER,
COMMERCIAL BANKER, TRUST COMPANY OR NOMINEE EFFECT YOUR TENDER AS DESCRIBED IN
THIS PROSPECTUS AND IN THE LETTER OF TRANSMITTAL.
Outstanding 8% Notes Held in Certificated Form
To validly tender outstanding 8% notes that you hold in physical form, the
exchange agent must receive, before 5:00 p.m., New York City time, on the
expiration date, at its address set forth in this prospectus:
- 29 -
- a properly completed and validly executed letter of transmittal, or a
manually signed facsimile thereof, together with any signature
guarantees and any other documents required by the instructions to the
letter of transmittal; and
- certificates for tendered outstanding 8% notes.
Outstanding 8% Notes Held in Book-Entry Form
We understand that the exchange agent will make a request promptly after
the date of this prospectus to establish accounts for the outstanding 8% notes
at The Depository Trust Company to facilitate the exchange offer, and subject to
their establishment, any financial institution that is a participant in The
Depository Trust Company may make book-entry delivery of the outstanding 8%
notes by causing The Depository Trust Company to transfer the outstanding 8%
notes into the exchange agent's account for the 8% notes using The Depository
Trust Company's procedures for transfer.
If you desire to transfer outstanding 8% notes held in book-entry form
with The Depository Trust Company, the exchange agent must receive, before 5:00
p.m., New York City time, on the expiration date, at its address set forth in
this prospectus, a confirmation of book-entry transfer of outstanding 8% notes
into the exchange agent's account at The Depository Trust Company, which is
referred to in this prospectus as a "book-entry confirmation," and:
- a properly completed and validly executed letter of transmittal, or
manually signed facsimile thereof, together with any signature
guarantees and other documents required by the instructions in the
letter of transmittal; or
- an agent's message transmitted pursuant to The Depository Trust
Company's Automated Tender Offer Program.
Tender of Outstanding 8% Notes Using The Depository Trust Company's
Automated Tender Offer Program (ATOP)
The exchange agent and The Depository Trust Company have confirmed that
the exchange offer is eligible for ATOP. Accordingly, The Depository Trust
Company participants may electronically transmit their acceptance of the
exchange offer by causing The Depository Trust Company to transfer outstanding
8% notes held in book-entry form to the exchange agent in accordance with The
Depository Trust Company's ATOP procedures for transfer. The Depository Trust
Company will then send a book-entry confirmation, including an agent's message,
to the exchange agent.
The term "agent's message" means a message transmitted by The Depository
Trust Company, received by the exchange agent and forming part of the book-entry
confirmation, stating that The Depository Trust Company has received an express
acknowledgment from the participant that it has received and agrees to be bound
by the terms of the letter of transmittal, and that we may enforce this
agreement against the participant. If you use ATOP procedures to tender
outstanding 8% notes, you will not be required to sign and deliver a letter of
transmittal to the exchange agent, but you will be bound by its terms as if you
had done so.
- 30 -
SIGNATURES
Signatures on a letter of transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by a member firm of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.
or a commercial bank or trust company having an office or correspondent in the
United States or an "eligible guarantor institution" within the meaning of Rule
17Ad-15 under the Exchange Act, unless outstanding 8% notes tendered with the
letter of transmittal are tendered:
- by a registered holder who has not completed the box entitled "Special
Registration Instructions" or "Special Delivery Instructions" in the
letter of transmittal; or
- for the account of an institution eligible to guarantee signatures.
If the letter of transmittal is signed by a person other than the
registered holder or The Depository Trust Company participant who is listed as
the owner, the outstanding 8% notes must be endorsed or accompanied by
appropriate bond powers that authorize the person to tender the outstanding 8%
notes on behalf of the registered holder or The Depository Trust Company
participant who is listed as the owner, in either case signed in the name of the
registered holder(s) who appears on the outstanding 8% notes or the The
Depository Trust Company participant who is listed as the owner. If the letter
of transmittal or any of the outstanding 8% notes or bond powers are signed or
endorsed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, those persons should so indicate when signing, and unless waived by
us, evidence satisfactory to us of their authority to so act must be submitted
with the letter of transmittal.
If you tender your notes through ATOP, signatures and signature guarantees
are not required.
DETERMINATIONS OF VALIDITY
All questions as to the validity, form, eligibility, including time of
receipt, acceptance and withdrawal of the tendered outstanding 8% notes will be
determined by us in our reasonable discretion. We reserve the right, in our
reasonable discretion, to reject any and all outstanding 8% notes not properly
tendered or any outstanding 8% notes our acceptance of which would, in the
opinion of our counsel, be unlawful. We also reserve the right, in our
reasonable discretion, to waive any irregularities or conditions of tender as to
particular outstanding 8% notes. Unless waived, any defects or irregularities in
connection with tenders of outstanding 8% notes must be cured within the time
that we reasonably determine. Although we intend to notify holders of defects or
irregularities related to tenders of outstanding 8% notes, neither we, the
exchange agent nor any other person is obligated to notify you of defects or
irregularities related to your tender of outstanding 8% notes, nor shall we or
any of them incur liability for failing to so notify you. Tenders of outstanding
8% notes will not be considered to have been made until the irregularities have
been cured or waived. Any outstanding 8% notes received by the exchange agent
that we determine are not properly tendered or that we otherwise reject, and as
to which the defects or irregularities have not been cured or waived by us will
be returned by the exchange agent to the tendering holder, unless otherwise
provided in the letter of transmittal, as soon as practicable following the
expiration date.
GUARANTEED DELIVERY PROCEDURES
If you wish to tender your outstanding 8% notes and:
- 31 -
- your outstanding 8% notes are not immediately available;
- you cannot complete the procedure for book-entry transfer on a timely
basis;
- you cannot deliver your outstanding 8% notes, the letter of
transmittal or any other required documents to the exchange agent
before the expiration date; or
- you cannot complete a tender of outstanding 8% notes held in
book-entry form using The Depository Trust Company's ATOP procedures
on a timely basis;
then you may effect a tender through an eligible institution described under
"-- Procedures for Tendering - Signatures" or using ATOP's guaranteed delivery
procedures.
We will accept a tender of outstanding 8% notes made by or through an
eligible institution if:
- before 5:00 p.m., New York City time, on the expiration date, the
exchange agent receives from an eligible institution a properly
completed and duly executed notice of guaranteed delivery, by
facsimile transmittal, mail or hand delivery, that: (1) gives the name
and address of the holder, the certificate number or numbers of the
holder's outstanding 8% notes and the principal amount of the
outstanding 8% notes tendered, (2) states that the tender is being
made, and (3) guarantees that, within five business days after the
expiration date, a properly completed and validly executed letter of
transmittal or facsimile, together with a certificate(s) representing
the outstanding 8% notes to be tendered in proper form for transfer,
or a confirmation of book-entry transfer into the exchange agent's
account at The Depository Trust Company of the outstanding 8% notes
delivered electronically, and any other documents required by the
letter of transmittal will be deposited by the eligible institution
with the exchange agent; and
- the properly completed and executed letter of transmittal or a
facsimile, together with the certificate(s) representing all tendered
outstanding 8% notes in proper form for transfer, or a book-entry
confirmation, and all other documents required by the letter of
transmittal are received by the exchange agent within five business
days after the expiration date.
We will accept a tender made through ATOP if:
- before 5:00 p.m., New York City time, on the expiration date, the
exchange agent receives an agent's message from The Depository Trust
Company stating that The Depository Trust Company has received an
express acknowledgement from the participant in The Depository Trust
Company tendering the outstanding 8% notes that they have received and
agree to be bound by the notice of guaranteed delivery; and
- the exchange agent receives, within five business days after the
expiration date, either: (1) a book-entry confirmation, including an
agent's message, transmitted via ATOP procedures; or (2) a properly
completed and executed letter of transmittal or a facsimile, together
with the certificate(s) representing all tendered outstanding 8% notes
in proper form for transfer, or a book-entry confirmation, and all
other documents required by the letter of transmittal.
- 32 -
Upon request to the exchange agent, a notice of guaranteed delivery will
be sent to holders who wish to tender their outstanding 8% notes according to
the guaranteed delivery procedures described above.
WITHDRAWAL OF TENDERS
Except as otherwise provided in this prospectus, you may withdraw your
tender of outstanding 8% notes at any time before 5:00 p.m., New York City time,
on the expiration date. To withdraw a tender of outstanding 8% notes in the
exchange offer:
- the exchange agent must receive a written or facsimile transmission of
a notice of withdrawal at its address listed below before 5:00 p.m.,
New York City time, on the expiration date; or
- you must comply with the appropriate procedures of ATOP.
Any notice of withdrawal must:
- specify the name of the person having deposited the outstanding 8%
notes to be withdrawn;
- identify the outstanding 8% notes to be withdrawn, including the
certificate number or numbers and principal amount of the outstanding
8% notes or, in the case of outstanding 8% notes transferred by
book-entry transfer, the name and number of the account at the
depositary to be credited;
- be signed by the same person and in the same manner as the original
signature on the letter of transmittal by which the outstanding 8%
notes were tendered, including any required signature guarantee, or be
accompanied by documents of transfer sufficient to permit the trustee
for the outstanding 8% notes to register the transfer of the
outstanding 8% notes into the name of the person withdrawing the
tender; and
- specify the name in which any of these outstanding 8% notes are to be
registered, if different from that of the person who deposited the
outstanding 8% notes to be withdrawn.
We will determine all questions as to the validity, form and eligibility,
including time of receipt, of the withdrawal notices in our reasonable
discretion. Any outstanding 8% notes that are withdrawn will be judged not to
have been tendered according to the procedures in this prospectus for purposes
of the exchange offer, and no exchange notes will be issued in exchange for
those outstanding 8% notes unless the outstanding 8% notes so withdrawn are
validly retendered. Any outstanding 8% notes that have been tendered but are not
accepted for exchange will be returned to the holder of the outstanding 8% notes
without cost to the holder or, in the case of outstanding 8% notes tendered by
book-entry transfer, into the holder's account at The Depository Trust Company
according to the procedures described above. This return or crediting will take
place as soon as practicable after withdrawal, rejection of tender or
termination of the exchange offer. Properly withdrawn outstanding 8% notes may
be retendered by following one of the procedures described above under "--
Procedures for Tendering" at any time before the expiration date.
- 33 -
CONDITIONS
The exchange offer is subject only to the following conditions:
- compliance of the exchange offer with securities laws;
- proper tender of the outstanding 8% notes;
- representation by the holders of the outstanding 8% notes that they
are not our affiliates, that they are acquiring the exchange notes in
the ordinary course of business and that at the time the exchange
offer is completed the holders do not plan to participate in
distributing the exchange notes; and
- no judicial or administrative proceeding is pending or threatened that
would limit us from proceeding with the exchange offer.
EXCHANGE AGENT
HSBC Bank USA, the trustee under the indenture, has been appointed as
exchange agent for the exchange offer. In this capacity, the exchange agent has
no fiduciary duties and will be acting solely on the basis of our directions.
Requests for assistance and requests for additional copies of this prospectus or
of the letter of transmittal should be directed to the exchange agent. You
should send certificates for outstanding 8% notes, letters of transmittal and
any other required documents to the exchange agent addressed as follows:
By Mail, Overnight Courier or Hand Delivery:
HSBC Bank USA
425 Fifth Avenue
New York, New York 10018
Attn: Issuer Services
Telephone: 212-525-1404
By Facsimile Transmission: To confirm receipt of notice
(for eligible institutions only) of Guaranteed Delivery by Telephone:
212-525-1300 212-525-1404
DELIVERY OF THE LETTER OF TRANSMITTAL TO AN ADDRESS, OR TRANSMISSION VIA
FACSIMILE, OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on the
Letter of Transmittal is required to be guaranteed by an "Eligible Institution"
under the instructions thereto, such signature guaranteed must appear in the
applicable space provided in the signature box of the Letter of Transmittal.
- 34 -
SOLICITATION OF TENDERS; FEES AND EXPENSES
We will bear the expenses of soliciting the holders of outstanding 8%
notes to determine if they wish to tender them for exchange notes. The principal
solicitation under the exchange offer is being made by mail. Additional
solicitations may be made by our officers and regular employees and our
affiliates in person, by telegraph, telephone or fax.
We have not retained any dealer-manager in connection with the exchange
offer and will not make any payments to brokers, dealers or other persons
soliciting acceptances of the exchange offer. We will pay the exchange agent
reasonable and customary fees for its services and will reimburse the exchange
agent for its reasonably out-of-pocket costs and expenses in connection with the
exchange offer, and will indemnify the exchange agent for all losses and claims
incurred by it as a result of the exchange offer. We may also pay out-of-pocket
expenses that the exchange agent incurs in forwarding copies of this prospectus,
letters of transmittal and related documents to the beneficial owners of the
outstanding 8% notes and in handling or forwarding tenders for exchange. We will
pay other expenses to be incurred in connection with the exchange offer,
including fees and expenses of the trustee, accounting and legal fees and
printing costs.
You will not be obligated to pay any transfer tax in connection with the
exchange, unless you instruct us to register exchange notes in the name of, or
request that notes not tendered or not accepted in the exchange offer be
returned to, a person other than yourself, in which event you will be
responsible for the payment of any applicable transfer tax.
ACCOUNTING TREATMENT
We will record the exchange notes at the same carrying value as we have
recorded the outstanding 8% notes, as reflected in our accounting records on the
date of the exchange. Accordingly, we will not recognize any gain or loss for
accounting purposes upon the closing of the exchange offer. We will amortize the
expenses of the exchange offer over the term of the exchange notes.
PARTICIPATION IN THE EXCHANGE OFFER; UNTENDERED NOTES
Participation in the exchange offer is voluntary. You should consult your
financial and tax advisors in deciding what action to take.
As a result of the making of, and upon acceptance for exchange of all of
the outstanding 8% notes tendered under the terms of, this exchange offer, we
will have fulfilled a covenant contained in the terms of the registration rights
agreement. If you do not tender in the exchange offer, you will continue to hold
your outstanding 8% notes and will be entitled to the rights, and subject to the
limitations, applicable to the outstanding 8% notes under the indenture. In this
event, however, you will no longer be entitled to any rights under the
registration rights agreement that by their terms terminate or cease to have
further effect as a result of the making of this exchange offer. See
"Description of Notes." All untendered outstanding 8% notes will continue to be
subject to the restrictions on transfer described in the indenture. To the
extent the outstanding 8% notes are tendered and accepted, there will be fewer
outstanding 8% notes remaining following the exchange, which could significantly
reduce the liquidity of the untendered notes.
In the future, although we are not obligated to do so, we may seek to
acquire untendered outstanding 8% notes in the open market or through privately
negotiated transactions, through subsequent
- 35 -
exchange offers or otherwise. We intend to do so, if at all, in compliance with
the applicable requirements of the Exchange Act, and the rules and regulations
of the SEC under the Exchange Act, including Rule 14e-1, to the extent
applicable. We have no present plan to acquire any outstanding 8% notes that are
not tendered in the exchange offer or to file a registration statement to permit
resales of any outstanding 8% notes that are not tendered in the exchange offer,
except in those circumstances in which we may be obligated to file a shelf
registration statement.
REGISTRATION RIGHTS AGREEMENT
The following summary of the material provisions of the registration
rights agreement does not restate the agreement in its entirety. We urge you to
read the registration rights agreement in its entirety because it, and not this
description, defines your registration rights. See "Where You Can Find More
Information."
Under the registration rights agreement, we agreed to file under the
Securities Act the exchange offer registration statement of which this
prospectus is a part. Once the SEC declares the registration statement
effective, we will offer to the holders of the outstanding 8% notes who are able
to make certain representations the opportunity to exchange their outstanding 8%
notes for exchange notes.
We will file with the SEC a shelf registration statement to cover resales
of the outstanding 8% notes by the holders who satisfy certain conditions
relating to the provision of information in connection with the shelf
registration statement if any of the following apply:
(1) we are not required to file the exchange offer registration statement
or permitted to consummate the exchange offer because the exchange offer
is not permitted by applicable law or SEC policy; or
(2) you notify us before the 20th day following consummation of the
exchange offer that:
(a) you are prohibited by law or SEC policy from participating in the
exchange offer;
(b) you may not resell the exchange notes you acquired in the exchange
offer to the public without delivering a prospectus, and the
prospectus contained in the exchange offer registration statement is
not appropriate or available for such resales; or
(c) you are a broker-dealer and you own notes that you acquired
directly from us or an affiliate of ours.
We are required by the registration rights agreement:
(1) to use our best efforts to cause the SEC to declare the applicable
registration statement effective as promptly as possible;
(2) to file the exchange offer registration statement with the SEC on or
before 90 days after December 21, 2001;
(3) to use our best efforts to cause the SEC to declare the exchange offer
registration statement effective on or before 150 days after December 21,
2001;
(4) unless the exchange offer would not be permitted by applicable law
or SEC policy, to:
- 36 -
(a) commence the exchange offer; and
(b) use our best efforts to issue, on or before 30 business days or
longer if required by the federal securities laws after the date on
which the SEC declares the exchange offer registration statement
effective, exchange notes for all outstanding 8% notes tendered before
then in the exchange offer; and
(4) if obligated to file the shelf registration statement, to use our
best efforts to do so on or before 30 days after the filing obligation
arises and to cause the SEC to declare the shelf registration
statement effective on or before 90 days after the obligation arises.
We will be required to pay liquidated damages, in an amount equal to $0.05
per week per $1,000 principal amount of notes, to each holder of notes with
respect to the first 90-day period immediately following the occurrence of any
of the following:
(1) our failure to file any of the registration statements required by the
registration rights agreement on or before the date specified for such
filing;
(2) the SEC's failure to declare the applicable registration statement
effective on or before the required date; or
(3) our failure to complete the exchange offer within 30 business days
after the required date for effectiveness of the exchange offer
registration statement; or
(4) after the SEC declares the applicable registration statement
effective, the registration statement subsequently ceases to be effective
or usable in connection with resales of during the periods specified in
the registration rights agreement.
The amount of the liquidated damages will increase by an additional $0.05
per week per $1,000 principal amount of notes with respect to each subsequent
90-day period until we have cured the registration defaults described in (1)
through (4) above, up to a maximum amount of liquidated damages for all
registration defaults of $0.50 per week per $1,000 principal amount of notes.
We will pay all accrued liquidated damages on the dates and in the manner
specified in the registration rights agreement.
You will be required to make certain representations to us, as described
in the registration rights agreement, in order to participate in the exchange
offer. For your notes to be included in the shelf registration statement, if
applicable, and for you to benefit from the provisions regarding Liquidated
Damages set forth above, you will be required to deliver certain information to
be used in connection with the shelf registration statement and to provide
comments on the shelf registration statement within the time periods described
in the registration rights agreement. You will be deemed to have agreed to
indemnify us against certain losses arising out of written information that you
furnish to us for inclusion in any shelf registration statement. You will also
be required to cease using the prospectus included in the shelf registration
statement under certain circumstances if we notify you to that effect.
- 37 -
USE OF PROCEEDS
We will not receive any cash proceeds from the exchange offer. We used the
$267.4 million in net proceeds from the offering of the outstanding 8% notes,
after deducting the initial purchasers' discounts, together with additional
borrowings of approximately $16.6 million under our senior secured credit
facility and available cash of $13.3 million, to redeem the 9.375% Senior Notes
due 2005 and 8.5% Senior Notes due 2007 of Cott Corporation.
RATIO OF EARNINGS TO FIXED CHARGES
We have computed the ratio of earnings to fixed charges for each of the
following periods on a consolidated basis. You should read the ratio of earnings
to fixed charges in conjunction with our audited consolidated financial
statements that are incorporated by reference into this document.
JANUARY 31, JANUARY 2, JANUARY 1, DECEMBER 30, DECEMBER 29,
1998 1999 2000 2000 2001
(53 WEEKS) (48 WEEKS) (52 WEEKS) (52 WEEKS) (52 WEEKS)
---------- ---------- ---------- ---------- ----------
Ratio of Earnings to Fixed
Charges 1.0x (1.6x)* 1.4x 2.3x 2.7x
* In the period ended January 2, 1999, earnings were insufficient to cover fixed
charges by $39.0 million.
For purposes of computing the ratio of earnings to fixed charges,
"earnings" consist of adding pre-tax income from continuing operations before
minority interests and equity income (loss) and fixed charges, and deducting the
minority interest of subsidiaries that have not incurred fixed charges. "Fixed
charges" represent the sum of interest expense, interest included in
discontinued operations, amortized premiums, discounts and financing fees and an
estimate of interest within rental expense.
- 38 -
CAPITALIZATION
The following table shows Cott Corporation's consolidated capitalization as of
December 29, 2001, as reported and giving effect to the application of the net
proceeds of the offering of the outstanding 8% notes as described under "Use of
Proceeds." The information presented below should be read in conjunction with
our consolidated financial statements and other financial information included
or incorporated by reference in this document.
AS OF
DECEMBER 29, 2001
(in millions of U.S. dollars) REPORTED PRO FORMA
------ ------
(audited) (unaudited)
Cash and short-term investments ............. $ 3.9 $ 3.9
Cash in trust ............................... 297.3 --
Short-term bank indebtedness ................ 34.2 34.2
Long-term debt (including current portion)(1)
Term Bank Loans .......................... 96.5 96.5
8% Senior Subordinated Notes due 2011(2) . 267.4 267.4
9.375% Senior Notes due 2005 ............. 152.4 --
8.5% Senior Notes due 2007 ............... 124.0 --
Other .................................... 1.0 1.0
------ ------
Total long-term debt .................. 641.3 364.9
------ ------
Deferred consideration on acquisition ....... 16.8 16.8
Shareowners' equity
Capital stock(3) ......................... 237.1 237.1
Retained earnings (deficit)(4) ........... 2.0 (7.6)
Accumulated other comprehensive income(5) (43.7) (43.7)
------ ------
Total shareowners' equity ............. 195.4 185.8
------ ------
Total capitalization .............. 586.5 597.8
====== ======
(1) For further details, see note 17 of our audited consolidated financial
statements for the year ended December 29, 2001, incorporated by reference
herein.
(2) The $7.6 million discount from the face amount of the notes has been
recorded as a reduction in the related liability.
(3) For further details, see note 20 of our audited consolidated financial
statements for the year ended December 29, 2001, incorporated by reference
herein.
(4) Includes the after tax impact of the write-off of the prepayment penalty
and financing fees of $9.6 million related to the redemption of the 9 3/8%
Senior Notes due 2005 and the 8 1/2% Senior Notes due 2007.
(5) Includes the cumulative currency translation adjustment account.
- 39 -
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
The following table shows, for the periods and dates indicated, Cott
Corporation's and its subsidiaries' selected historical consolidated financial
information. The selected historical consolidated financial information as of
and for the year ended December 29, 2001, the year ended December 30, 2000, the
year January 1, 2000, the 48-week period ended January 2, 1999 and the year
ended January 31, 1998 was derived from the consolidated financial statements
audited by PricewaterhouseCoopers LLP.
You should read the information in the table in conjunction with the
audited consolidated financial statements, other financial information and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" section of the reports that we have filed with the SEC and
incorporated by reference into this document.
PRO FORMA
JANUARY JANUARY JANUARY DECEMBER DECEMBER DECEMBER
31, 1998 2, 1999 1, 2000(1) 30, 2000(2) 29, 2001(3) 29, 2001(4)
(53 WEEKS) (48 WEEKS) (52 WEEKS) (52 WEEKS) (52 WEEKS) (52 WEEKS)
--------- --------- --------- --------- --------- ---------
(unaudited)
Sales $ 1,051.4 $ 961.9 $ 993.7 $ 990.6 $ 1,090.1 $ 1,096.1
Cost of sales 905.9 862.4 847.9 825.5 902.7 895.9
Selling, general and
administrative 96.5 91.3 100.8 91.3 94.1 97.5
Unusual items(5) 21.7 77.2 (1.2) (2.1) -- --
--------- --------- ---------- ---------- --------- ---------
OPERATING INCOME (LOSS) 27.3 (69.0) 46.2 75.9 93.3 102.7
--------- --------- --------- --------- --------- ---------
INCOME (LOSS) FROM CONTINUING
OPERATIONS 0.4 (95.8) 21.4 26.6 39.9 44.5
Cumulative effect of changes in
accounting principles(6) -- (9.9) (2.1) -- -- --
Discontinued operations(7) (5.1) (3.8) (0.8) -- -- --
Extraordinary item -- -- -- (1.2) -- --
--------- --------- --------- --------- --------- ---------
NET INCOME (LOSS) $ (4.7) $ (109.5) $ 18.5 $ 25.4 $ 39.9 $ 44.5
========= ========= ========= ========= ========= =========
INCOME (LOSS) PER SHARE - BASIC
Income (loss) from continuing
operations $ 0.10 $ (1.53) $ 0.35 $ 0.44 $ 0.66 $ 0.73
Cumulative effect of changes
in accounting principles $ -- $ (0.16) $ (0.03) $ -- $ -- $ --
Discontinued operations $ (0.08) $ (0.05) $ (0.01) $ -- $ -- $ --
Extraordinary item $ -- $ -- $ -- $ (0.02) $ -- $ --
Net income (loss) $ (0.07) $ (1.74) $ 0.31 $ 0.42 $ 0.66 $ 0.73
========= ========= ========= ========= ========= =========
INCOME (LOSS) PER SHARE -
DILUTED
Income (loss) from continuing
operations $ 0.10 $ (1.53) $ 0.35 $ 0.44 $ 0.66 $ 0.73
Cumulative effect of changes
in accounting principles $ -- $ (0.16) $ (0.03) $ -- $ -- $ --
Discontinued operations $ (0.08) $ (0.05) $ (0.01) $ -- $ -- $ --
Extraordinary item $ -- $ -- $ -- $ (0.02) $ -- $ --
Net income (loss) $ (0.07) $ (1.74) $ 0.28 $ 0.38 $ 0.58 $ 0.64
========= ========= ========= ========= ========= =========
CASH DIVIDEND $ 0.05 $ 0.03 $ -- $ -- $ -- $ --
========= ========= ========= ========= ========= =========
BALANCE SHEET DATA
Total assets $ 861.5 $ 699.2 $ 589.6 $ 621.6 $ 1,065.4 $ 766.0
Current maturities of long-term
debt 19.5 12.5 1.6 1.6 281.8 5.4
Long-term debt 388.3 365.2 322.0 279.6 359.5 359.5
Shareowners' equity 230.9 122.0 142.3 158.5 195.4 185.8
- ------------------
- 40 -
(1) During the year, Cott completed a series of planned divestitures of
non-core businesses.
(2) During the year, Cott acquired the assets of the private label beverage and
the Vintage(TM) brand seltzer water businesses of Concord Beverage Company
and completed the divestiture of its polyethylene terephthalate preform
blow-molding operations.
(3) During the year, Cott acquired certain assets of Royal Crown Company Inc.
("Royal Crown Assets") and formed a new business with Polar Corporation.
(4) The pro forma balance sheet data gives effect to the application of the net
cash proceeds of the notes to repay in full the 2005 notes and the 2007
notes, including interest, the prepayment penalty relating to the 2005
notes and 2007 notes and the write off the unamortized portion of the
financing fees relating to these notes. The pro forma income statement
information has been derived as discussed in note 4 to the Summary
Historical Condensed Consolidated and Other Consolidated Pro Forma
Financial Data on page 13 of this document.
(5) Unusual item for the 48-week period ended January 2, 1999 includes a $25.3
million restructuring charge, a $28.3 million write down of impaired
assets, a $17.8 million write down of businesses held for sale and a $5.3
million loss on disposal of our bottling operations in Norway. The
restructuring charge was for a restructuring program undertaken by Cott to
focus on businesses in core markets, fix its cost structure and strengthen
the management team. The restructuring charge represented expected cash
payments and included severance covering approximately 110 employees,
termination costs relating to leases, and other contractual obligations.
The $28.3 million write down of assets to net realizable value is in
connection with manufacturing rationalization, discontinued products or
customers, and expected divestitures of certain investments and
manufacturing facilities.
The unusual item for the year ended January 31, 1998 included a charge of
$19.6 million for the regionalization of operations and related termination
costs of co-packers' agreements in the United States, termination of
distributors' agreements in the United Kingdom, and severance for
streamlining operations and elimination of senior management positions in
Canadian and corporate offices. Unusual items for the year also included
$1.9 million to settle employment obligations with the estate of the late
Gerald N. Pencer, the former Chairman, President and Chief Executive
Officer of Cott.
(6) The change in accounting principle related to costs of start-up activities
for the year ended January 1, 2000. Starting in January 1999, costs of
start-up activities and organization costs were expensed as incurred. The
initial adoption resulted in a charge of $2.1 million, net of a deferred
tax recovery of $1.2 million. For the year ended January 2, 1999, the
charge for the change in accounting principle relates to development costs
for new packaging and prepaid contract costs. These costs were expensed as
incurred starting in October 1998. Previously, development costs for
packaging were amortized over three years and prepaid contract costs were
amortized over the term of the related contract. The $9.9 million charge
for the initial adoption was net of a tax recovery of $1.1 million.
(7) During the year ended January 31, 1998, Cott decided to dispose of its food
business and recorded a loss from discontinued operations of $3.1 million,
net of a deferred tax recovery of $1.2 million, for Destination Products
International, Inc. ("DPI"). The loss to the measurement date was $2.0
million, net of income taxes of $1.3 million. During the period ended
January 2, 1999, Cott recorded an additional loss of $3.8 million, net of a
deferred tax recovery of $0.4 million, reflecting a revision in the
estimated proceeds on disposition. The assets of DPI were sold in May 1999
for cash proceeds of $6.9 million (C$10.1 million) and Cott recorded a loss
on disposal of $0.8 million, net of a deferred tax recovery of $0.5
million. For the year ended January 31, 1998, the 48-week period ended
January 2, 1999 and the year ended January 1, 2000, discontinued operations
included an allocation of interest relating to debt attributable to DPI of
$1.8 million, $0.9 million and $0.3 million, respectively. Sales of
discontinued operations for each of these years were $28.5 million, $28.5
million and $14.4 million, respectively.
(8) Capital expenditures exclude the cost of acquisitions and proceeds from
divestitures.
- 41 -
DESCRIPTION OF OTHER INDEBTEDNESS
SENIOR SECURED CREDIT FACILITY
On July 19, 2001, Cott Corporation and Cott Beverages Inc. entered into a
$150 million senior secured credit facility provided by a syndicate of lenders
led by Lehman Brothers Inc., as arranger, First Union National Bank, as
syndication agent and working capital facility agent, Bank of Montreal, as
Canadian administrative agent and Lehman Commercial Paper Inc., as general
administrative agent. The facility was subsequently amended as of December 13,
2001 and further amended as of December 19, 2001 to authorized Cott to increase
the facility by $25 million. Cott Corporation's and Cott Beverages Inc.'s
obligations under the senior secured credit facility are secured by a lien on
substantially all personal property assets of Cott Corporation and its
restricted U.S. and Canadian subsidiaries and are guaranteed by certain of Cott
Corporation's subsidiaries. Guarantors of the senior secured credit facility
include, among others, guarantors of the notes. The following summary of the
material provisions of the senior secured credit facility is not complete and is
subject to all the provisions of the senior secured credit facility.
Cott Beverages Inc. is required to make mandatory prepayments under the
senior secured credit facility under certain circumstances, including receipt of
excess cash flow. Cott Beverages Inc. must apply 0% to 50% of Cott Corporation's
excess cash flow - the percentage depends on Cott Corporation's ratio of total
debt to EBITDA - from each fiscal year to repay outstanding loans starting in
2003 based on the excess cash flow for 2002.
The senior secured credit facility consists of:
- a five and a half year $100 million term loan facility, of which $96.5
million was outstanding as of December 29, 2001. The facility has
scheduled payments which can be accelerated by the prepayments for
excess cash flows.
- a $75 million revolving credit facility expiring in December 2005, of
which $46.6 million was available as of December 29, 2001. The amount
of the revolving credit facility can be increased by up to an
additional $50 million at the request of Cott Beverages Inc. if
existing lenders or other entities willing to commit to such
additional amount are identified. Five million dollars of the
revolving credit facility may be borrowed directly by Cott Corporation
from the Bank of Montreal.
Borrowings under the senior secured credit facility bear interest at
either a base rate or a eurodollar rate, plus an applicable margin. The
applicable margin for the term loan facility is 1.75% for U.S. bank rate loans
and 3.00% for eurodollar loans. The applicable margins for the revolving credit
facility will vary in relation to the ratio of Cott Corporation's consolidated
total debt to consolidated EBITDA, as determined under our senior secured credit
facility. In addition to paying interest on the outstanding principal, we pay a
facility fee to the lenders in respect of the revolving credit commitments,
whether used or unused, at a rate ranging from 0.375% to 0.50% per annum
depending on Cott Corporation's consolidated ratio of total debt to EBITDA.
The senior secured credit facility contains negative covenants limiting
the ability of Cott Corporation, Cott Beverages Inc. and certain of their
subsidiaries to, among other things, incur debt, make payments on subordinated
indebtedness, create liens, engage in fundamental changes, make distributions or
stock repurchases, make loans and advances, engage in sales and leasebacks,
change fiscal year, agree to
- 42 -
negative pledge clauses, make investments, engage in transactions with
affiliates, sell assets, engage in mergers and acquisitions and enter into hedge
agreements.
The senior secured credit facility requires Cott Corporation to maintain
certain consolidated financial ratios, including: maximum total debt to EBITDA,
decreasing from a ratio of 3.25 to 1.00 to a ratio of 2.00 to 1.00; minimum
EBITDA to fixed charges, increasing from a ratio of 1.00 to 1.00 to a ratio of
1.25 to 1.00; and minimum EBITDA to interest expense, increasing from a ratio of
3.25 to 1.00 to 4.00 to 1.00. The change in financial ratios is over the
four-year period ending on December 31, 2005. Capital expenditures are limited
to $50 million with a 50% unspent carry forward. Failure to satisfy any of these
financial covenants constitutes an event of default under the senior secured
credit facility. The senior secured credit facility also includes other
customary events of default, including certain changes of control.
SENIOR SECURED UK CREDIT FACILITY
Effective November 30, 2000, Cott Beverages Ltd., a wholly-owned UK-based
subsidiary of Cott Corporation, entered into a L10.0 million demand bank credit
facility with Lloyds TSB Bank plc, expiring on June 30, 2002. Obligations under
the credit facility are secured by a lien on all of the assets of Cott Beverages
Ltd. Borrowings under the senior secured UK credit facility bear interest either
at the base rate plus 1.0% or LIBOR plus 0.75%. As of December 29, 2001, no debt
was outstanding under the UK credit facility.
- 43 -
DESCRIPTION OF NOTES
You can find the definitions of certain terms used in this description
below under the subheading " - Certain Definitions." In this description, the
word "Cott" refers only to Cott Corporation and not to any of its subsidiaries.
Cott Beverages Inc. (formerly known as BCB USA Corp.), which we refer to
as the "Issuer," issued the outstanding 8% notes and will issue the exchange
notes under an indenture among itself, the Guarantors and HSBC Bank USA, as
trustee. The terms of the notes include those stated in the indenture and those
made part of the indenture by reference to the Trust Indenture Act of 1939.
The following summary of the material provisions of the indenture does not
restate the indenture in its entirety. We urge you to read the indenture because
it, and not this description, defines your rights as a holder of notes. To
obtain a copy of the indenture, refer to the caption "Where You Can Find More
Information." Certain defined terms used in this description but not defined
below under " - Certain Definitions" have the meanings assigned to them in the
indenture.
BRIEF DESCRIPTION OF THE NOTES AND THE GUARANTEES
THE NOTES
The notes:
- are general unsecured obligations of the Issuer;
- are subordinated in right of payment to all existing and future Senior
Debt of the Issuer;
- are pari passu in right of payment with any future senior subordinated
indebtedness of the Issuer; and
- are unconditionally guaranteed by the Guarantors on a senior
subordinated basis.
THE GUARANTEES
The notes are guaranteed by Cott and all of Cott's Domestic Subsidiaries.
Each guarantee of the notes:
- is a general unsecured obligation of that Guarantor;
- is subordinated in right of payment to all existing and future Senior
Debt of that Guarantor; and
- is pari passu in right of payment with any future senior subordinated
indebtedness of that Guarantor.
- 44 -
As of December 29, 2001 and giving effect to the application of the net
proceeds from the offering of the outstanding 8% notes as described under "Use
of Proceeds," the notes were subordinated to approximately $123.7 million of the
issuer's senior indebtedness. As indicated above and as discussed in detail
below under the caption " - Subordination," payments on the notes and under
these guarantees will be subordinated to the payment of the applicable Senior
Debt. The indenture permits us, the Issuer and the other Guarantors to incur
additional Senior Debt.
Not all of Cott's subsidiaries will guarantee the notes. In the event of a
bankruptcy, liquidation or reorganization of any of these non-guarantor
subsidiaries, the non-guarantor subsidiaries will pay the holders of their debt
and their trade creditors before they will be able to distribute any of their
assets to us. The Issuer, Cott and the other Guarantors generated 86% of Cott's
consolidated revenues in the year ended December 29, 2001 and held approximately
81% of Cott's consolidated assets as of December 29, 2001.
As of the date of the indenture, all of our subsidiaries other than
Northeast Finco Inc. and its Subsidiaries will be "Restricted Subsidiaries."
However, under the circumstances described below under the subheading " -
Certain Covenants - Designation of Restricted and Unrestricted Subsidiaries," we
will be permitted to designate certain of our other subsidiaries as
"Unrestricted Subsidiaries." Our Unrestricted Subsidiaries will not be subject
to many of the restrictive covenants in the indenture. Our Unrestricted
Subsidiaries will not guarantee the notes. As of December 29, 2001, Cott and its
Restricted Subsidiaries have invested approximately $29.5 million, excluding
acquisition costs, in Northeast Finco Inc.
PRINCIPAL, MATURITY AND INTEREST
The Issuer issued the outstanding 8% notes with an initial maximum
aggregate principal amount of $275.0 million. The Issuer may issue additional
notes under the indenture from time to time after this offering. Any offering of
such additional notes is subject to the covenant described below under the
caption " - Certain Covenants - Incurrence of Indebtedness and Issuance of
Preferred Stock." The notes and any additional notes subsequently issued under
the indenture will be treated as a single class for all purposes under the
indenture, including, without limitation, waivers, amendments, redemptions and
offers to purchase. The Issuer will issue notes only in denominations of $1,000
and integral multiples of $1,000. The 8% notes will mature on December 15, 2011.
Interest on the notes will accrue at the rate of 8% per annum and will be
payable semi-annually in arrears on June 15 and December 15, commencing on June
15, 2002. The Issuer will make each interest payment to the trustee (for the
benefit of the Holders of record on the immediately preceding June 1 and
December 1).
Interest on the notes will accrue from the date of original issuance or,
if interest has already been paid, from the date it was most recently paid.
Interest will be computed on the basis of a 360-day year comprised of twelve
30-day months.
METHODS OF RECEIVING PAYMENTS ON THE NOTES
If a Holder has given wire transfer instructions to the Issuer or the
trustee, the Issuer or the trustee will pay all principal, interest and premium
and Liquidated Damages, if any, on that Holder's notes in accordance with those
instructions. All other payments on notes will be made at the office or agency
of the paying agent and registrar within the City and State of New York unless
the Issuer elects to make interest payments by check mailed to the Holders at
their address set forth in the register of Holders.
- 45 -
PAYING AGENT AND REGISTRAR FOR THE NOTES
The trustee will initially act as paying agent and registrar. The Issuer
may change the paying agent or registrar without prior notice to the Holders of
the notes, and the Issuer or any of its wholly-owned Subsidiaries may act as
paying agent or registrar.
TRANSFER AND EXCHANGE
A Holder may transfer or exchange notes in accordance with the indenture.
The registrar and the trustee may require a Holder to furnish appropriate
endorsements and transfer documents in connection with a transfer of notes.
Holders will be required to pay all taxes due on transfer. The Issuer is not
required to transfer or exchange any note selected for redemption. Also, the
Issuer is not required to transfer or exchange any note for a period of 15 days
before a selection of notes to be redeemed.
GUARANTEES
The notes will be guaranteed by Cott and by each of Cott's current and
future Domestic Subsidiaries. These Guarantees will be joint and several
obligations of the Guarantors. Each Guarantee will be subordinated to the prior
payment in full of all Senior Debt of that Guarantor. The obligations of each
Guarantor under its Guarantee will be limited as necessary to prevent that
Guarantee from constituting a fraudulent conveyance under applicable law. See
"Risk Factors - Risks related to the notes - The guarantees of certain
affiliates of the issuer could be deemed fraudulent conveyances under certain
circumstances, and a court may try to subordinate or avoid such guarantees."
A Guarantor that is a Subsidiary of Cott may not sell or otherwise dispose
of all or substantially all of its assets to, or consolidate with or merge with
or into (whether or not such Guarantor is the surviving Person), another Person,
other than the Issuer or another Guarantor, unless:
(1) immediately after giving effect to that transaction, no Default or
Event of Default exists; and
(2) either:
(a) the Person acquiring the property in any such sale or
disposition or the Person formed by or surviving any such consolidation or
merger assumes all the obligations of that Guarantor pursuant to a
supplemental indenture satisfactory to the trustee; or
(b) the Net Proceeds of such sale or other disposition are applied
in accordance with the applicable provisions of the indenture.
The Guarantee of a Guarantor that is a Subsidiary of Cott will be
released:
(1) in connection with any sale or other disposition of all or
substantially all of the assets of that Guarantor (including by way of
merger or consolidation) to a Person that is not (either before or after
giving effect to such transaction) a Subsidiary of Cott, if the sale or
other disposition complies with the "Asset Sale" provisions of the
indenture;
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(2) in connection with any sale of all of the Capital Stock of that
Guarantor to a Person that is not (either before or after giving effect to
such transaction) a Subsidiary of Cott, if the sale complies with the
"Asset Sale" provisions of the indenture;
(3) upon legal defeasance or covenant defeasance; or
(4) if Cott designates any Restricted Subsidiary that is a Guarantor
as an Unrestricted Subsidiary in accordance with the applicable provisions
of the indenture.
See " - Repurchase at the Option of Holders - Asset Sales."
SUBORDINATION
The payment of principal, interest and premium and Liquidated Damages, if
any, on the notes will be subordinated to the prior payment in full of all
Senior Debt of the Issuer, including Senior Debt incurred after the date of the
indenture.
The holders of Senior Debt will be entitled to receive payment in full of
all Obligations due in respect of Senior Debt (including interest after the
commencement of any bankruptcy proceeding at the rate specified in the
applicable Senior Debt) before the Holders of notes will be entitled to receive
any payment with respect to the notes (except that Holders of notes may receive
and retain Permitted Junior Securities and payments made from the trust
described under " - Legal Defeasance and Covenant Defeasance"), in the event of
any distribution to creditors of the Issuer:
(1) in a liquidation or dissolution of the Issuer;
(2) in a bankruptcy, reorganization, insolvency, receivership or
similar proceeding relating to the Issuer or its property;
(3) in an assignment for the benefit of creditors; or
(4) in any marshaling of the Issuer's assets and liabilities.
The Issuer also may not make any payment in respect of the notes (except
in Permitted Junior Securities or from the trust described under " - Legal
Defeasance and Covenant Defeasance") if:
(1) a payment default on Designated Senior Debt occurs and is
continuing beyond any applicable grace period; or
(2) any other default occurs and is continuing on any series of
Designated Senior Debt that permits holders of that series of Designated
Senior Debt to accelerate its maturity and the trustee receives a notice
of such default (a "Payment Blockage Notice") from the Issuer or the
holders of any Designated Senior Debt.
Payments on the notes may and will be resumed:
(1) in the case of a payment default, upon the date on which
such default is cured or waived; and
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(2) in the case of a nonpayment default, upon the earlier of the
date on which such nonpayment default is cured or waived or 179 days after
the date on which the applicable Payment Blockage Notice is received,
unless the maturity of any Designated Senior Debt has been accelerated.
No new Payment Blockage Notice may be delivered unless and until:
(1) 360 days have elapsed since the delivery of the immediately
prior Payment Blockage Notice; and
(2) all scheduled payments of principal, interest and premium and
Liquidated Damages, if any, on the notes that have come due have been paid
in full in cash.
No nonpayment default that existed or was continuing on the date of
delivery of any Payment Blockage Notice to the trustee will be, or be made, the
basis for a subsequent Payment Blockage Notice unless such default has been
cured or waived for a period of not less than 90 days.
If the trustee or any Holder of the notes receives a payment in respect of
the notes (except in Permitted Junior Securities or from the trust described
under " - Legal Defeasance and Covenant Defeasance") when:
(1) the payment is prohibited by these subordination provisions;
and
(2) the trustee or the Holder has actual knowledge that the
payment is prohibited;
the trustee or the Holder, as the case may be, will hold the payment in trust
for the benefit of the holders of Senior Debt. Upon the proper written request
of the holders of Senior Debt, the trustee or the Holder, as the case may be,
will deliver the amounts in trust to the holders of Senior Debt or their proper
representative.
The Issuer must promptly notify holders of Senior Debt if payment of the
notes is accelerated because of an Event of Default.
As a result of the subordination provisions described above, in the event
of a bankruptcy, liquidation or reorganization of the Issuer or a Guarantor,
Holders of notes may recover less, ratably, than creditors of the Issuer or a
Guarantor who are holders of Senior Debt. See "Risk Factors - Risks relating to
the notes - Your right to receive payments on the notes and guarantees is
unsecured and will be effectively subordinated to the issuer's and the
guarantors' existing and future secured indebtedness and the indebtedness of the
non-guarantor subsidiaries."
"Designated Senior Debt" means:
(1) any Indebtedness outstanding from time to time under the
Credit Agreement; and
(2) any other Senior Debt permitted under the indenture the
principal amount of which is $25.0 million or more and that has been
designated by the Issuer as "Designated Senior Debt."
"Permitted Junior Securities" means:
(1) Equity Interests in the Issuer or any Guarantor; or
- 48 -
(2) debt securities that are subordinated to all Senior Debt and any
debt securities issued in exchange for Senior Debt to substantially the
same extent as, or to a greater extent than, the notes and the Guarantees
are subordinated to Senior Debt under the indenture.
"Senior Debt" means:
(1) all Indebtedness of the Issuer or any Guarantor outstanding from
time to time under Credit Facilities and all Hedging Obligations with
respect thereto;
(2) any other Indebtedness of the Issuer or any Guarantor permitted
to be incurred under the terms of the indenture, unless the instrument
under which such Indebtedness is incurred expressly provides that it is on
a parity with or subordinated in right of payment to the notes or any
Guarantee; and
(3) all Obligations with respect to the items listed in the
preceding clauses (1) and (2).
Notwithstanding anything to the contrary in the preceding three clauses,
Senior Debt will not include:
(1) any liability for federal, state, local or other taxes owed
or owing by Cott, the Issuer or any other Guarantor;
(2) any intercompany Indebtedness of Cott, the Issuer or any
other Guarantor to any Subsidiary or any of its Affiliates;
(3) any trade payables; or
(4) the portion of any Indebtedness that is incurred in violation of
the indenture; provided that Indebtedness under the Credit Agreement will
not cease to be Senior Debt if borrowed based on a written certification
(which can be included in a borrowing request) from an officer of the
borrower to the effect that such Indebtedness was permitted by the
indenture to be incurred.
OPTIONAL REDEMPTION
At any time prior to December 15, 2004, the Issuer may on any one or more
occasions redeem up to 35% of the aggregate principal amount of notes issued
under the indenture at a redemption price of 108% of the principal amount, plus
accrued and unpaid interest and Liquidated Damages, if any, to the redemption
date, with the net cash proceeds of one or more Equity Offerings by the Issuer
or with the net cash proceeds of one or more Equity Offerings by Cott that are
contributed to the Issuer as common equity capital, provided that:
(1) at least 65% of the aggregate principal amount of notes issued
under the indenture remains outstanding immediately after the occurrence
of such redemption (excluding notes held by Cott and its Subsidiaries);
and
(2) the redemption occurs within 45 days of the date of the closing
of such Equity Offering.
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Except pursuant to the preceding paragraph, the notes will not be
redeemable at the Issuer's option prior to December 15, 2006.
On or after December 15, 2006, the Issuer may redeem all or a part of the
notes upon not less than 30 nor more than 60 days' notice, at the redemption
prices (expressed as percentages of principal amount) set forth below plus
accrued and unpaid interest and Liquidated Damages, if any, on the notes
redeemed, to the applicable redemption date, if redeemed during the twelve-month
period beginning on December 15 of the years indicated below:
YEAR PERCENTAGE
---- ----------
2006...............................................104.000%
2007...............................................102.667%
2008...............................................101.333%
2009 and thereafter................................100.000%
MANDATORY REDEMPTION
The Issuer is not required to make mandatory redemption or sinking fund
payments with respect to the notes.
REPURCHASE AT THE OPTION OF HOLDERS
CHANGE OF CONTROL TRIGGERING EVENT
If a Change of Control Triggering Event occurs, each Holder of notes will
have the right to require the Issuer to repurchase all or any part (equal to
$1,000 or an integral multiple of $1,000) of that Holder's notes pursuant to a
Change of Control Offer on the terms set forth in the indenture. In the Change
of Control Offer, the Issuer will offer a Change of Control Payment in cash
equal to 101% of the aggregate principal amount of notes repurchased plus
accrued and unpaid interest and Liquidated Damages, if any, on the notes
repurchased, to the date of purchase. Within ten days following any Change of
Control Triggering Event, the Issuer will mail a notice to each Holder
describing the transaction or transactions that constitute the Change of Control
Triggering Event and offering to repurchase notes on the Change of Control
Payment Date specified in the notice, which date will be no earlier than 30 days
and no later than 60 days from the date such notice is mailed, pursuant to the
procedures required by the indenture and described in such notice. The Issuer
will comply with the requirements of Rule 14e-1 under the Exchange Act and any
other securities laws and regulations thereunder to the extent those laws and
regulations are applicable in connection with the repurchase of the notes as a
result of a Change of Control Triggering Event. To the extent that the
provisions of any securities laws or regulations conflict with the Change of
Control Triggering Event provisions of the indenture, the Issuer will comply
with the applicable securities laws and regulations and will not be deemed to
have breached its obligations under the Change of Control Triggering Event
provisions of the indenture by virtue of such conflict.
On the Change of Control Payment Date, the Issuer will, to the extent
lawful:
(1) accept for payment all notes or portions of notes properly
tendered pursuant to the Change of Control Offer;
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(2) deposit with the paying agent an amount equal to the Change of
Control Payment in respect of all notes or portions of notes properly
tendered; and
(3) deliver or cause to be delivered to the trustee the notes
properly accepted together with an officers' certificate stating the
aggregate principal amount of notes or portions of notes being purchased
by the Issuer.
The paying agent will promptly mail to each Holder of notes properly
tendered the Change of Control Payment for such notes, and the trustee will
promptly authenticate and mail (or cause to be transferred by book entry) to
each Holder a new note equal in principal amount to any unpurchased portion of
the notes surrendered, if any; provided that each new note will be in a
principal amount of $1,000 or an integral multiple of $1,000.
Prior to complying with any of the provisions of this "Change of Control
Triggering Event" covenant, but in any event within 90 days following a Change
of Control Triggering Event, Cott, the Issuer and the other Guarantors will
either repay all outstanding Senior Debt or obtain the requisite consents, if
any, under all agreements governing outstanding Senior Debt to permit the
repurchase of notes required by this covenant. The Issuer will publicly announce
the results of the Change of Control Offer on or as soon as practicable after
the Change of Control Payment Date.
The provisions described above that require the Issuer to make a Change of
Control Offer following a Change of Control Triggering Event will be applicable
whether or not any other provisions of the indenture are applicable. Except as
described above with respect to a Change of Control, the indenture does not
contain provisions that permit the Holders of the notes to require that the
Issuer repurchase or redeem the notes in the event of a takeover,
recapitalization or similar transaction.
The Issuer will not be required to make a Change of Control Offer upon a
Change of Control Triggering Event if a third party makes the Change of Control
Offer in the manner, at the times and otherwise in compliance with the
requirements set forth in the indenture applicable to a Change of Control Offer
made by the Issuer and purchases all notes properly tendered and not withdrawn
under the Change of Control Offer.
The definition of Change of Control Triggering Event includes a phrase
relating to the direct or indirect sale, lease, transfer, conveyance or other
disposition of "all or substantially all" of the properties or assets of Cott
and its Subsidiaries taken as a whole. Although there is a limited body of case
law interpreting the phrase "substantially all," there is no precise established
definition of the phrase under applicable law. Accordingly, the ability of a
Holder of notes to require the Issuer to repurchase its notes as a result of a
sale, lease, transfer, conveyance or other disposition of less than all of the
assets of Cott and its Subsidiaries taken as a whole to another Person or group
may be uncertain.
ASSET SALES
Cott will not, and will not permit any of its Restricted Subsidiaries to,
consummate an Asset Sale unless:
(1) Cott (or the Restricted Subsidiary, as the case may be) receives
consideration at the time of the Asset Sale at least equal to the fair
market value of the assets or Equity Interests issued or sold or otherwise
disposed of;
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(2) for each Asset Sale where consideration exceeds $7.5 million,
such Asset Sale is approved by Cott's Board of Directors and evidenced by
a resolution of the Board of Directors; and
(3) at least 75% of the consideration received in the Asset Sale by
Cott or such Restricted Subsidiary is in the form of cash. For purposes of
this provision, each of the following will be deemed to be cash:
(a) any liabilities, as shown on Cott's or such
Restricted Subsidiary's most recent balance sheet, of Cott or such
Restricted Subsidiary (other than contingent liabilities and
liabilities that are by their terms subordinated to the notes or any
Guarantee) that are assumed by the transferee of any such assets
pursuant to a customary novation agreement that releases Cott or
such Restricted Subsidiary from further liability; and
(b) any securities, notes or other obligations received
by Cott or any such Restricted Subsidiary from such transferee that
are contemporaneously, subject to ordinary settlement periods,
converted by Cott or such Restricted Subsidiary into cash, to the
extent of the cash received in that conversion.
Within 360 days after the receipt of any Net Proceeds from an Asset Sale,
Cott or such Restricted Subsidiary will apply those Net Proceeds at its option:
(1) to repay Senior Debt and, if the Senior Debt repaid is revolving
credit Indebtedness, to correspondingly reduce commitments with respect
thereto;
(2) to acquire all or substantially all of the assets of, or a
majority of the Voting Stock of, another Permitted Business;
(3) to make a capital expenditure; or
(4) to acquire other long-term assets that are used or useful in
a Permitted Business;
provided, that Cott or the Restricted Subsidiary will have complied with clauses
(2), (3) or (4) if, within 360 days of such Asset Sale, Cott or the Restricted
Subsidiary shall have commenced the expenditure or acquisition, or entered into
a binding agreement with respect to the expenditure or acquisition in compliance
with clauses (2), (3) or (4), and that expenditure or acquisition is completed
within a date one year and six months after the date of the Asset Sale; and
provided further that if any such expenditure or acquisition is abandoned after
the date that is one year after the Asset Sale, Cott or the Restricted
Subsidiary will immediately apply the Net Proceeds in accordance with clause (1)
above.
Pending the final application of any Net Proceeds, Cott may temporarily
reduce revolving credit borrowings or otherwise invest the Net Proceeds in any
manner that is not prohibited by the indenture.
Any Net Proceeds from Asset Sales that are not applied or invested as
provided in the second preceding paragraph will constitute "Excess Proceeds."
When the aggregate amount of Excess Proceeds exceeds $15.0 million, the Issuer
will make an Asset Sale Offer to all Holders of notes and all holders of other
Indebtedness that is pari passu with the notes containing provisions similar to
those set forth in the indenture with respect to offers to purchase or redeem
with the proceeds of sales of assets to purchase the maximum principal amount of
notes and such other pari passu Indebtedness that may be purchased out of the
Excess Proceeds. The offer price in any Asset Sale Offer will be equal to 100%
of principal amount
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plus accrued and unpaid interest and Liquidated Damages, if any, to the date of
purchase, and will be payable in cash. If any Excess Proceeds remain after
consummation of an Asset Sale Offer, Cott may use those Excess Proceeds for any
purpose not otherwise prohibited by the indenture. If the aggregate principal
amount of notes and other pari passu Indebtedness tendered into such Asset Sale
Offer exceeds the amount of Excess Proceeds, the trustee will select the notes
and such other pari passu Indebtedness to be purchased on a pro rata basis. Upon
completion of each Asset Sale Offer, the amount of Excess Proceeds will be reset
at zero.
The Issuer will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent those laws and regulations are applicable in connection with each
repurchase of notes pursuant to an Asset Sale Offer. To the extent that the
provisions of any securities laws or regulations conflict with the Asset Sale
provisions of the indenture, the Issuer will comply with the applicable
securities laws and regulations and will not be deemed to have breached its
obligations under the Asset Sale provisions of the indenture by virtue of such
conflict.
The agreements governing Cott's and the Issuer's outstanding Senior Debt
currently prohibit Cott or the Issuer from purchasing any notes, and also
provide that certain change of control or asset sale events with respect to Cott
would constitute a default under these agreements. Any future credit agreements
or other agreements relating to Senior Debt to which Cott or the Issuer becomes
a party may contain similar restrictions and provisions. In the event a Change
of Control or Asset Sale occurs at a time when Cott or the Issuer is prohibited
from purchasing notes, Cott or the Issuer could seek the consent of its senior
lenders to the purchase of notes or could attempt to refinance the borrowings
that contain such prohibition. If Cott or the Issuer does not obtain such a
consent or repay such borrowings, the Issuer will remain prohibited from
purchasing notes. In such case, the Issuer's failure to purchase tendered notes
would constitute an Event of Default under the indenture which would, in turn,
constitute a default under such Senior Debt. In such circumstances, the
subordination provisions in the indenture would likely restrict payments to the
Holders of notes.
SELECTION AND NOTICE
If less than all of the notes are to be redeemed at any time, the trustee
will select notes for redemption as follows:
(1) if the notes are listed on any national securities exchange, in
compliance with the requirements of the principal national securities
exchange on which the notes are listed; or
(2) if the notes are not listed on any national securities exchange,
on a pro rata basis, by lot or by such method as the trustee deems fair
and appropriate.
No notes of $1,000 or less can be redeemed in part. Notices of redemption
will be mailed by first class mail at least 30 but not more than 60 days before
the redemption date to each Holder of notes to be redeemed at its registered
address, except that redemption notices may be mailed more than 60 days prior to
a redemption date if the notice is issued in connection with a defeasance of the
notes or a satisfaction and discharge of the indenture. Notices of redemption
may not be conditional.
If any note is to be redeemed in part only, the notice of redemption that
relates to that note will state the portion of the principal amount of that note
that is to be redeemed. A new note in principal amount equal to the unredeemed
portion of the original note will be issued in the name of the Holder of notes
upon cancellation of the original note. Notes called for redemption become due
on the date fixed for redemption. On and after the redemption date, interest
ceases to accrue on notes or portions of them called for redemption.
- 53 -
On and after the redemption date, interest ceases to accrue on notes or portions
of them called for redemption.
CERTAIN COVENANTS
RESTRICTED PAYMENTS
Cott will not, and will not permit any of its Restricted Subsidiaries
to, directly or indirectly:
(1) declare or pay any dividend or make any other payment or
distribution on account of Cott's or any of its Restricted
Subsidiaries' Equity Interests (including, without limitation, any
payment in connection with any merger or consolidation involving Cott
or any of its Restricted Subsidiaries) or to the direct or indirect
holders of Cott's or any of its Restricted Subsidiaries' Equity
Interests in their capacity as such (other than dividends or
distributions payable in Equity Interests (other than Disqualified
Stock) of Cott or to Cott or a Restricted Subsidiary of Cott);
(2) purchase, redeem or otherwise acquire or retire for value
(including, without limitation, in connection with any merger or
consolidation involving Cott) any Equity Interests of Cott or any
direct or indirect parent of Cott;
(3) make any voluntary or optional payment on or with respect
to, or purchase, redeem, defease or otherwise acquire or retire for
value any Indebtedness that is subordinated to the notes or the
Guarantees; or
(4) make any Restricted Investment (all such payments and
other actions set forth in these clauses (1) through (4) above being
collectively referred to as "Restricted Payments"),
unless, at the time of and after giving effect to such Restricted Payment:
(1) no Default or Event of Default has occurred and is
continuing or would occur as a consequence of such Restricted Payment;
and
(2) Cott would, at the time of such Restricted Payment and
after giving pro forma effect thereto as if such Restricted Payment had
been made at the beginning of the applicable four-quarter period, have
been permitted to incur at least $1.00 of additional Indebtedness
pursuant to the Fixed Charge Coverage Ratio test set forth in the first
paragraph of the covenant described below under the caption " -
Incurrence of Indebtedness and Issuance of Preferred Stock;" and
(3) such Restricted Payment, together with the aggregate
amount of all other Restricted Payments made by Cott and its Restricted
Subsidiaries after the date of the indenture (excluding Restricted
Payments permitted by clauses (2) through (7) and (9) of the next
succeeding paragraph), is less than the sum, without duplication, of:
(a) 50% of the Consolidated Net Income of Cott for
the period (taken as one accounting period) from October 1,
2001 to the end of Cott's most recently ended fiscal quarter
for which internal financial statements are available at the
time of such Restricted Payment (or, if such Consolidated Net
Income for such period is a deficit, less 100% of such
deficit), plus
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(b) 100% of the aggregate net cash proceeds received
by Cott or a Restricted Subsidiary since the date of the
indenture as a contribution to its common equity capital or
from the issue or sale of Equity Interests of Cott (other than
Disqualified Stock) or from the issue or sale of convertible
or exchangeable Disqualified Stock or convertible or
exchangeable debt securities of Cott or a Restricted
Subsidiary that have been converted into or exchanged for such
Equity Interests of Cott (other than Equity Interests (or
Disqualified Stock or debt securities) sold to a Subsidiary of
Cott), plus
(c) to the extent that any Restricted Investment that
was made after the date of the indenture is sold for cash or
otherwise liquidated or any loan or advance is repaid for
cash, the cash return of capital (including cash dividends to
the extent not included in the Consolidated Net Income) with
respect to such Restricted Investment (less the cost of
disposition, if any), plus
(d) to the extent that an entity in which Cott or a
Restricted Subsidiary has made an Investment using amounts
under this clause (3) thereafter becomes a Restricted
Subsidiary, the fair market value of Cott's Investment in such
entity as of the date it becomes a Restricted Subsidiary, plus
(e) to the extent that any Unrestricted Subsidiary of
Cott is redesignated as a Restricted Subsidiary after the date
of the indenture, the lesser of (i) the fair market value of
Cott's Investment in such Subsidiary as of the date of such
redesignation or (ii) such fair market value as of the date on
which such Subsidiary was originally designated as an
Unrestricted Subsidiary.
So long as no Default or Event of Default (except with respect to
clauses (2), (5), (7) and (8) below) has occurred and is continuing or would be
caused thereby, the preceding provisions will not prohibit:
(1) The payment of any dividend within 60 days after the date
of declaration of the dividend, if at the date of declaration the
dividend payment would have complied with the provisions of the
indenture;
(2) the redemption, repurchase, retirement, defeasance or
other acquisition of any subordinated Indebtedness of Cott, the Issuer
or any other Guarantor or of any Equity Interests of Cott in exchange
for, or out of the net cash proceeds of the substantially concurrent
sale (other than to a Subsidiary of Cott) of, Equity Interests of Cott
(other than Disqualified Stock); provided that the amount of any such
net cash proceeds that are utilized for any such redemption,
repurchase, retirement, defeasance or other acquisition will be
excluded from clause (3) (b) of the preceding paragraph;
(3) the defeasance, redemption, repurchase or other
acquisition of subordinated Indebtedness of Cott, the Issuer or any
other Guarantor with the net cash proceeds from an incurrence of
Permitted Refinancing Indebtedness;
(4) the payment of any dividend or other distribution by a
Restricted Subsidiary of Cott to the holders of its Equity Interests on
a pro rata basis;
(5) the repurchase, redemption or other acquisition or
retirement for value of any Equity Interests of Cott or any Restricted
Subsidiary held by any member of Cott's (or any of its Restricted
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Subsidiaries') management pursuant to any management equity
subscription agreement, stock option agreement or similar agreement or
program or other employee benefit plan; provided that the aggregate
price paid for all such repurchased, redeemed, acquired or retired
Equity Interests may not exceed $2.5 million in any calendar year (with
unused amounts in any calendar year being carried over to succeeding
calendar years subject to a maximum of $3.5 million in any calendar
year);
(6) the designation of a Restricted Subsidiary as an
Unrestricted Subsidiary; provided that (x) the assets of such
Restricted Subsidiary immediately prior to such designation consists
only of operations in the United Kingdom, (y) the total assets of such
Restricted Subsidiary less all liabilities of such Restricted
Subsidiary (other than liabilities for which Cott, the Issuer or any
Restricted Subsidiary will be liable immediately after such
designation) is less than 15% of Cott's total consolidated assets less
total consolidated liabilities (on the most recently available
quarterly or annual consolidated balance sheet of Cott prepared in
conformity with GAAP), provided further, that the net assets of such
Restricted Subsidiary may exceed 15% of Cott's net assets to the extent
that Cott would be permitted to make a Restricted Payment in an amount
equal to such excess and (z) immediately prior to and after giving
effect to such designation, Cott could incur at least $1 of additional
Indebtedness under the first paragraph set forth under the caption " -
Incurrence of Indebtedness and Issuance of Preferred Stock" as if the
Fixed Charge Coverage Ratio were 2.75 to 1;
(7) the conversion of any preferred stock of Cott into common
Equity Interests of Cott;
(8) cash dividends on the Convertible Participating Voting
Second Preferred Shares Series 1 of Cott paid in accordance with terms
thereof on the date of the indenture in the event the maximum number of
shares of common stock that may be issued upon conversion thereof is
reached, in an amount not to exceed $6.0 million in any one year; and
(9) other Restricted Payments in an aggregate amount since the
date of the indenture not to exceed $25.0 million.
The amount of all Restricted Payments (other than cash) will be the
fair market value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued by Cott or such Restricted
Subsidiary, as the case may be, pursuant to the Restricted Payment. If the fair
market value of any assets or securities that are required to be valued by this
covenant exceeds $15.0 million, such transaction will be approved by the Board
of Directors whose resolution with respect thereto will be delivered to the
trustee; provided that the Board of Directors' approval in the event of a
Restricted Payment that is not an Investment must be based upon an opinion or
appraisal issued by an accounting, appraisal or investment banking firm of
national standing if the fair market value exceeds $15.0 million. Not later than
the date of making any Restricted Payment, Cott will deliver to the trustee an
officers' certificate stating that such Restricted Payment is permitted and
setting forth the basis upon which the calculations required by this "Restricted
Payments" covenant were computed, together with a copy of any fairness opinion
or appraisal required by the indenture.
INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK
Cott will not, and will not permit any of its Restricted Subsidiaries
to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable, contingently or otherwise, with respect to
(collectively, "incur") any Indebtedness (including Acquired Debt), and Cott and
the Issuer
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will not issue any Disqualified Stock and will not permit any of their
Restricted Subsidiaries to issue any shares of preferred stock; provided,
however, that Cott, the Issuer and any Restricted Subsidiary may incur
Indebtedness (including Acquired Debt), Cott and the Issuer may issue
Disqualified Stock and Restricted Subsidiaries of Cott that are Guarantors may
issue preferred stock, if the Fixed Charge Coverage Ratio for Cott's most
recently ended four full fiscal quarters for which internal financial statements
are available immediately preceding the date on which such additional
Indebtedness is incurred or such Disqualified Stock or preferred stock is issued
would have been at least 2.0 to 1, determined on a pro forma basis (including a
pro forma application of the net proceeds therefrom), as if the additional
Indebtedness had been incurred or the Disqualified Stock or preferred stock had
been issued, as the case may be, at the beginning of such four quarter period;
provided further that no more than $50.0 million of Indebtedness under this
paragraph may be incurred by Restricted Subsidiaries that are not Guarantors so
long as such Restricted Subsidiaries are Foreign Restricted Subsidiaries.
The first paragraph of this covenant will not prohibit the incurrence
of any of the following items of Indebtedness (collectively, "Permitted Debt"):
(1) the incurrence by Cott, the Issuer and any Restricted
Subsidiary of additional Indebtedness and letters of credit under one
or more Credit Facilities in an aggregate principal amount at any one
time outstanding under this clause (1) (with letters of credit being
deemed to have a principal amount equal to the face amount thereunder)
not to exceed the greater of (A) $225.0 million and (B) the sum of (x)
80% of the net book value of the non-Affiliate accounts receivable of
the Person incurring such Indebtedness and its Restricted Subsidiaries
and (y) 50% of the total Eligible Inventory of the Person incurring
such Indebtedness and its Restricted Subsidiaries, in each case
determined in accordance with GAAP, less in either case, the aggregate
amount of commitment reductions resulting from the application of
proceeds from Asset Sales since the date of the indenture; provided,
however, that no more than $50.0 million of Indebtedness under this
clause (1) may be incurred by Restricted Subsidiaries that are not
Guarantors so long as such Restricted Subsidiaries are Foreign
Restricted Subsidiaries;
(2) the incurrence by Cott and its Restricted Subsidiaries of
Existing Indebtedness;
(3) the incurrence by Cott, the Issuer and the Guarantors of
Indebtedness represented by the notes and the related Guarantees;
(4) the incurrence by Cott, the Issuer and any Restricted
Subsidiary of Indebtedness represented by Capital Lease Obligations,
mortgage financings or purchase money obligations, in each case,
incurred for the purpose of financing all or any part of the purchase
price or cost of construction or improvement of property, plant or
equipment or other assets used in or acquired in connection with the
business of Cott, the Issuer or any Restricted Subsidiary, in an
aggregate principal amount not to exceed $75.0 million at any time
outstanding; provided, however, that no more than $50.0 million of
Indebtedness under this clause (4) may be incurred by Restricted
Subsidiaries that are not Guarantors so long as such Restricted
Subsidiaries are Foreign Restricted Subsidiaries;
(5) the incurrence by Cott or any of its Restricted
Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or
the net proceeds of which are used to refund, refinance or replace
Indebtedness (other than intercompany Indebtedness) that was permitted
by the indenture to be incurred under the first paragraph of this
covenant or clauses (2), (3), (4), (5), or (10) of this paragraph;
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(6) the incurrence by Cott or any of its Restricted
Subsidiaries of intercompany Indebtedness or issuance of Disqualified
Stock or preferred stock between or among Cott and any of its
Restricted Subsidiaries; provided, however, that:
(a) if Cott, the Issuer or any Guarantor is the
obligor on such Indebtedness, such Indebtedness must be
expressly subordinated to the prior payment in full in cash of
all Obligations with respect to the notes, in the case of the
Issuer, or the Guarantees, in the case of a Guarantor; and
(b) (i) any subsequent issuance or transfer of Equity
Interests that results in any such Indebtedness being held by
a Person other than Cott or a Restricted Subsidiary of Cott
and (ii) any sale or other transfer of any such Indebtedness
to a Person that is not either Cott or a Restricted Subsidiary
of Cott, will be deemed, in each case, to constitute an
incurrence of such Indebtedness by Cott or such Restricted
Subsidiary, as the case may be, that was not permitted by this
clause (6);
(7) the incurrence by Cott or any of its Restricted
Subsidiaries of (A) Hedging Obligations, (B) Indebtedness in respect of
performance, surety or appeal bonds in the ordinary course of business
or (C) Indebtedness arising from agreements providing for
indemnification, adjustment of purchase price or similar obligations,
or from Guarantees or letters of credit, surety bonds or performance
bonds securing any obligations of Cott or any of its Restricted
Subsidiaries pursuant to such agreements, in any case Incurred in
connection with the disposition of any business, assets or Restricted
Subsidiary of Cott (other than Guarantees of Indebtedness Incurred by
any Person acquiring all or any portion of such business, assets or
Restricted Subsidiary for the purpose of financing such acquisition),
in a principal amount not to exceed the gross proceeds actually
received by Cott or any Restricted Subsidiary in connection with such
disposition;
(8) the guarantee by Cott, the Issuer or any of the Guarantors
of Indebtedness of Cott or any Restricted Subsidiary that was permitted
to be incurred by another provision of this covenant;
(9) the accrual of interest, the accretion or amortization of
original issue discount, the payment of interest on any Indebtedness in
the form of additional Indebtedness with the same terms, and the
payment of dividends on Disqualified Stock in the form of additional
shares of the same class of Disqualified Stock will not be deemed to be
an incurrence of Indebtedness or an issuance of Disqualified Stock for
purposes of this covenant; provided, in each such case, that the amount
thereof is included in Fixed Charges of Cott as accrued; and
(10) the incurrence by Cott or any of its Restricted
Subsidiaries of additional Indebtedness in an aggregate principal
amount (or accreted value, as applicable) at any time outstanding,
including all Permitted Refinancing Indebtedness incurred to refund,
refinance or replace any Indebtedness incurred pursuant to this clause
(10), not to exceed $50.0 million.
For purposes of determining compliance with this "Incurrence of
Indebtedness and Issuance of Preferred Stock" covenant, in the event that an
item of proposed Indebtedness (including Acquired Debt) meets the criteria of
more than one of the categories of Permitted Debt described in clauses (1)
through (10) above, or is entitled to be incurred pursuant to the first
paragraph of this covenant, Cott will be permitted to classify or later classify
(or reclassify in whole or in part in its sole discretion) such item of
Indebtedness in any manner that complies with this covenant.
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NO SENIOR SUBORDINATED DEBT
The Issuer will not incur, create, issue, assume, guarantee or
otherwise become liable for any Indebtedness that is contractually subordinate
or junior in right of payment to any Senior Debt of the Issuer and senior in any
respect in right of payment to the notes. No Guarantor will incur, create,
issue, assume, guarantee or otherwise become liable for any Indebtedness that is
contractually subordinate or junior in right of payment to the Senior Debt of
such Guarantor and senior in any respect in right of payment to such Guarantor's
Guarantee.
LIENS
The indenture provides that Cott will not, and will not permit any of
its Restricted Subsidiaries to, directly or indirectly, create, incur, assume or
suffer to exist any Lien (other than Liens securing obligations among Cott or
any of its Restricted Subsidiaries) that secures obligations under any
Indebtedness which is pari passu with or subordinated to the notes or the
Guarantees, unless the notes and the Guarantees are equally and ratably secured
with the obligations so secured or until such time as such obligations are no
longer secured by a Lien.
DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES
Cott will not, and will not permit any of its Restricted Subsidiaries
to, directly or indirectly, create or permit to exist or become effective any
consensual encumbrance or restriction on the ability of any Restricted
Subsidiary to:
(1) pay dividends or make any other distributions on its
Capital Stock to Cott or any of its Restricted Subsidiaries, or with
respect to any other interest or participation in, or measured by, its
profits, or pay any indebtedness owed to Cott or any of its Restricted
Subsidiaries;
(2) make loans or advances to Cott or any of its Restricted
Subsidiaries; or
(3) transfer any of its properties or assets to Cott or any of
its Restricted Subsidiaries.
However, the preceding restrictions will not apply to encumbrances or
restrictions existing under or by reason of:
(1) agreements governing Existing Indebtedness and Credit
Facilities as in effect on the date of the indenture and any
amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings of those
agreements, provided that the amendments, modifications, restatements,
renewals, increases, supplements, refundings, replacement or
refinancings are no more restrictive, taken as a whole, with respect to
such dividend and other payment restrictions than those contained in
those agreements on the date of the indenture;
(2) the indenture, the notes and the Guarantees;
(3) applicable law;
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(4) any instrument governing Indebtedness or Capital Stock of
a Person acquired by Cott or any of its Restricted Subsidiaries as in
effect at the time of such acquisition (except to the extent such
Indebtedness or Capital Stock was incurred in connection with or in
contemplation of such acquisition), which encumbrance or restriction is
not applicable to any Person, or the properties or assets of any
Person, other than the Person, or the property or assets of the Person,
so acquired, provided that, in the case of Indebtedness, such
Indebtedness was permitted by the terms of the indenture to be
incurred;
(5) customary non-assignment provisions in leases entered into
in the ordinary course of business and consistent with past practices;
(6) purchase money obligations for property (real or personal,
tangible and intangible) acquired in the ordinary course of business
that impose restrictions on that property of the nature described in
clause (3) of the preceding paragraph;
(7) any agreement for the sale or other disposition of a
Restricted Subsidiary that restricts distributions by that Restricted
Subsidiary pending its sale or other disposition;
(8) Permitted Refinancing Indebtedness, provided that the
restrictions contained in the agreements governing such Permitted
Refinancing Indebtedness are no more restrictive, taken as a whole,
than those contained in the agreements governing the Indebtedness being
refinanced;
(9) Liens securing Indebtedness otherwise permitted to be
incurred under the provisions of the covenant described above under the
caption " - Liens" that limit the right of the debtor to dispose of the
assets subject to such Liens;
(10) provisions with respect to the disposition or
distribution of assets or property in joint venture agreements, assets
sale agreements, stock sale agreements and other similar agreements;
(11) restrictions on cash or other deposits or net worth
imposed by customers under contracts entered into in the ordinary
course of business;
(12) Indebtedness permitted to be incurred by foreign
Restricted Subsidiaries under the caption " - Incurrence of
Indebtedness and Issuance of Preferred Stock"; provided that all such
restrictions in the aggregate restrict no more than 10% of the
Consolidated Cash Flow of Cott and its Restricted Subsidiaries; and
(13) any Credit Facilities of Cott, the Issuer or a Guarantor
in effect after the date of the indenture that are permitted to be
incurred by the indenture, to the extent its provisions are
substantially no more restrictive with respect to such dividend,
distribution or other payment restriction and loan or investment
restriction than those contained in the Credit Agreement as in effect
on the date of the indenture.
MERGER, CONSOLIDATION OR SALE OF ASSETS
Neither Cott nor the Issuer will, directly or indirectly: (1)
consolidate or merge with or into another Person (whether or not Cott or the
Issuer, as the case may be, is the surviving corporation); or (2) sell, assign,
transfer, convey or otherwise dispose of all or substantially all of the
properties or assets of Cott or
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the Issuer, as the case may be, and their respective Restricted Subsidiaries
taken as a whole, in one or more related transactions, to another Person;
unless:
(1) either: (a) Cott or the Issuer, as the case may be, is the
surviving corporation; or (b) the Person formed by or surviving any
such consolidation or merger (if other than Cott or the Issuer, as the
case may be) or to which such sale, assignment, transfer, conveyance or
other disposition has been made is a Person organized or existing under
the laws of the United States, any state of the United States or the
District of Columbia or, in the case of Cott, Canada or any province
thereof;
(2) the Person formed by or surviving any such consolidation
or merger (if other than Cott or the Issuer, as the case may be) or the
Person to which such sale, assignment, transfer, conveyance or other
disposition has been made assumes all the obligations of Cott or the
Issuer, as the case may be, under the notes, the indenture and the
registration rights agreement pursuant to agreements reasonably
satisfactory to the trustee;
(3) immediately after such transaction no Default or Event of
Default exists; and
(4) Cott or the Issuer, as the case may be, or the Person
formed by or surviving any such consolidation or merger (if other than
Cott or the Issuer, as the case may be), or to which such sale,
assignment, transfer, conveyance or other disposition has been made
will, on the date of such transaction after giving pro forma effect
thereto and any related financing transactions as if the same had
occurred at the beginning of the applicable four-quarter period, be
permitted to incur at least $1.00 of additional Indebtedness pursuant
to the Fixed Charge Coverage Ratio test set forth in the first
paragraph of the covenant described above under the caption " -
Incurrence of Indebtedness and Issuance of Preferred Stock."
In addition, neither Cott nor the Issuer will, directly or indirectly,
lease all or substantially all of its properties or assets, in one or more
related transactions, to any other Person.
TRANSACTIONS WITH AFFILIATES
Cott will not, and will not permit any of its Restricted Subsidiaries
to, make any payment to, or sell, lease, transfer or otherwise dispose of any of
its properties or assets to, or purchase any property or assets from, or enter
into or make or amend any transaction, contract, agreement, understanding, loan,
advance or guarantee with, or for the benefit of, any Affiliate (each, an
"Affiliate Transaction"), unless:
(1) the Affiliate Transaction is on terms that are no less
favorable to Cott or the relevant Restricted Subsidiary than those that
would have been obtained in a comparable transaction by Cott or such
Restricted Subsidiary with an unrelated Person; and
(2) Cott delivers to the trustee:
(a) with respect to any Affiliate Transaction or
series of related Affiliate Transactions involving aggregate
consideration in excess of $5.0 million, a resolution of the
Board of Directors set forth in an officers' certificate
certifying that such Affiliate Transaction complies with this
covenant and that such Affiliate Transaction has been approved
by a majority of the disinterested members of the Board of
Directors; and
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(b) with respect to any Affiliate Transaction or
series of related Affiliate Transactions involving aggregate
consideration in excess of $10.0 million, an opinion as to the
fairness to the holders of such Affiliate Transaction from a
financial point of view issued by an accounting, appraisal or
investment banking firm of national standing.
The following items will not be deemed to be Affiliate Transactions
and, therefore, will not be subject to the provisions of the prior paragraph:
(1) any employment agreement entered into by Cott or any of
its Restricted Subsidiaries in the ordinary course of business;
(2) transactions between or among Cott and/or its Restricted
Subsidiaries;
(3) transactions with a Person that is an Affiliate of Cott or
an Affiliate of a Restricted Subsidiary solely because Cott or such
Restricted Subsidiary controls such Person;
(4) payment of reasonable directors fees;
(5) sales of Equity Interests (other than Disqualified Stock)
of Cott;
(6) Restricted Payments that are permitted by the provisions
of the indenture described above under the caption " - Restricted
Payments";
(7) any payments or other transactions pursuant to any
tax-sharing agreement between Cott and any other Person with which Cott
files a consolidated tax return or with which Cott is part of a
consolidated group for tax purposes;
(8) sales of inventory to, or other ordinary course
transactions with, a joint venture or business combination in which
Cott or a Restricted Subsidiary is an equity holder or other party;
provided that the aggregate amount of all such transactions or series
of related transactions do not exceed $7.5 million in any fiscal year;
and
(9) agreements entered into with Permitted Holders in
existence as of the date of the indenture.
DESIGNATION OF RESTRICTED AND UNRESTRICTED SUBSIDIARIES
The Board of Directors of Cott may designate any Restricted Subsidiary
other than the Issuer to be an Unrestricted Subsidiary if that designation would
not cause a Default. If a Restricted Subsidiary is designated as an Unrestricted
Subsidiary, the aggregate fair market value of all outstanding Investments owned
by Cott and its Restricted Subsidiaries in the Subsidiary properly designated
will be deemed to be an Investment made as of the time of the designation and
will reduce the amount available for Restricted Payments under the covenant
described above under the caption " - Restricted Payments" or Permitted
Investments, as determined by Cott. That designation will only be permitted if
the Investment would be permitted at that time and if the Restricted Subsidiary
otherwise meets the definition of an Unrestricted Subsidiary. The Board of
Directors of Cott may redesignate any Unrestricted Subsidiary to be a Restricted
Subsidiary if the redesignation would not cause a Default.
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ADDITIONAL SUBSIDIARY GUARANTEES
If Cott or any of its Restricted Subsidiaries acquires or creates
another Domestic Subsidiary after the date of the indenture, then that newly
acquired or created Domestic Subsidiary will become a Guarantor and execute a
supplemental indenture; provided, however, that the foregoing shall not apply to
subsidiaries that have properly been designated as Unrestricted Subsidiaries in
accordance with the indenture for so long as they continue to constitute
Unrestricted Subsidiaries.
SALE AND LEASEBACK TRANSACTIONS
Cott will not, and will not permit any of its Restricted Subsidiaries
to, enter into any sale and leaseback transaction involving any of its assets or
properties whether now owned or hereafter acquired, whereby Cott or a Restricted
Subsidiary sells or transfers such assets or properties and then or thereafter
leases such assets or properties or any part thereof or any other assets or
properties which Cott or such Restricted Subsidiary, as the case may be, intends
to use for substantially the same purpose or purposes as the assets or
properties sold or transferred.
The foregoing restriction does not apply to any sale-leaseback
transaction if (i) the lease secures or relates to industrial revenue or
pollution control bonds; (ii) the transaction is between Cott and a Restricted
Subsidiary or between Restricted Subsidiaries; or (iii) such sale and leaseback
transaction complied with the covenant set forth under the caption " -
Repurchase at the Option of Holders - Asset Sales."
BUSINESS ACTIVITIES
Cott and its Restricted Subsidiaries, taken as a whole, will not, as a
primary business line, engage in any business other than Permitted Businesses.
PAYMENTS FOR CONSENT
Cott will not, and will not permit any of its Subsidiaries to, directly
or indirectly, pay or cause to be paid any consideration to or for the benefit
of any Holder of notes for or as an inducement to any consent, waiver or
amendment of any of the terms or provisions of the indenture or the notes unless
such consideration is offered to be paid and is paid to all Holders of the notes
that consent, waive or agree to amend in the time frame set forth in the
solicitation documents relating to such consent, waiver or agreement.
REPORTS
Whether or not required by the Commission, so long as any notes are
outstanding, Cott will furnish to the Holders of notes, within the time periods
specified in the Commission's rules and regulations:
(1) all quarterly and annual financial reports on Forms 10-Q
and 10-K, including a "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and, with respect to the
annual information only, a report on the annual financial statements by
Cott's certified independent accountants; and
(2) all current reports required to be filed with the
Commission on Form 8-K.
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If Cott has designated any of its Subsidiaries as Unrestricted
Subsidiaries with combined net assets exceeding 5% of Cott's consolidated net
assets, then the quarterly and annual financial information required by the
preceding paragraph will include or be accompanied by a reasonably detailed
presentation of the financial condition and results of operations of Cott and
its Restricted Subsidiaries separate from the financial condition and results of
operations of the Unrestricted Subsidiaries of Cott.
In addition, following the consummation of the exchange offer
contemplated by the registration rights agreement, whether or not required by
the Commission, Cott will file a copy of all of the information and reports
referred to in clauses (1) and (2) above with the Commission for public
availability within the time periods specified in the Commission's rules and
regulations (unless the Commission will not accept such a filing) and make such
information available to securities analysts and prospective investors upon
request. In addition, Cott, the Issuer and the other Guarantors have agreed
that, for so long as any notes remain outstanding, they will furnish to the
Holders and to securities analysts and prospective investors, upon their
request, the information required to be delivered pursuant to Rule 144A(d)(4)
under the Securities Act.
EVENTS OF DEFAULT AND REMEDIES
Each of the following is an Event of Default:
(1) default for 30 days in the payment when due of interest
on, or Liquidated Damages with respect to, the notes whether or not
prohibited by the subordination provisions of the indenture;
(2) default in payment when due of the principal of, or
premium, if any, on the notes, whether or not prohibited by the
subordination provisions of the indenture;
(3) failure by Cott or any of its Restricted Subsidiaries to
comply with the provisions described under the captions " - Repurchase
at the Option of Holders - Change of Control Triggering Event," " -
Certain Covenants - Restricted Payments," or " - Certain Covenants -
Merger, Consolidation or Sale of Assets";
(4) failure by Cott or any of its Restricted Subsidiaries for
30 days after notice to comply with the provisions described under the
captions " - Repurchase at the Option of Holders - Asset Sales" or " -
Certain Covenants - Incurrence of Indebtedness and Issuance of
Preferred Stock";
(5) failure by Cott or any of its Restricted Subsidiaries for
60 days after notice to comply with any of the other agreements in the
indenture;
(6) default under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced
any Indebtedness for money borrowed by Cott or any of its Restricted
Subsidiaries (or the payment of which is guaranteed by Cott or any of
its Restricted Subsidiaries) whether such Indebtedness or guarantee now
exists, or is created after the date of the indenture, if that default:
(a) is caused by a failure to pay principal of, or
interest or premium, if any, on such Indebtedness after the
expiration of the grace period provided in such Indebtedness
on the date of such default (a "Payment Default"); or
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(b) results in the acceleration of such Indebtedness
prior to its express maturity,
and, in each case, the principal amount of any such Indebtedness,
together with the principal amount of any other such Indebtedness under
which there has been a Payment Default or the maturity of which has
been so accelerated, aggregates $10.0 million or more;
(7) failure by Cott or any of its Restricted Subsidiaries to
pay final judgments aggregating in excess of $10.0 million, which
judgments are not paid, discharged or stayed for a period of 60 days;
(8) except as permitted by the indenture, any Guarantee of the
notes shall be held in any judicial proceeding to be unenforceable or
invalid or shall cease for any reason to be in full force and effect or
any Guarantor, or any Person acting on behalf of any Guarantor, shall
deny or disaffirm its obligations under such Guarantee; and
(9) certain events of bankruptcy or insolvency described in
the indenture with respect to Cott, the Issuer or any other Restricted
Subsidiary.
In the case of an Event of Default arising from certain events of
bankruptcy or insolvency, with respect to Cott, the Issuer, any Subsidiary that
is a Significant Subsidiary or any group of Subsidiaries that, taken together,
would constitute a Significant Subsidiary, all outstanding notes will become due
and payable immediately without further action or notice. If any other Event of
Default occurs and is continuing, the trustee or the Holders of at least 25% in
principal amount of the then outstanding notes may declare all the notes to be
due and payable immediately by giving written notice of the same to the Issuer.
Holders of the notes may not enforce the indenture or the notes except
as provided in the indenture. Subject to certain limitations, Holders of a
majority in principal amount of the then outstanding notes may direct the
trustee in its exercise of any trust or power. The trustee may withhold from
Holders of the notes notice of any continuing Default or Event of Default if it
determines that withholding notes is in their interest, except a Default or
Event of Default relating to the payment of principal or interest or Liquidated
Damages.
The Holders of a majority in aggregate principal amount of the notes
then outstanding by notice to the trustee may on behalf of the Holders of all of
the notes waive any existing Default or Event of Default and its consequences
under the indenture except a continuing Default or Event of Default in the
payment of interest or Liquidated Damages on, or the principal of, the notes.
In the case of any Event of Default occurring by reason of any willful
action or inaction taken or not taken by or on behalf of the Issuer with the
intention of avoiding payment of the premium that the Issuer would have had to
pay if the Issuer then had elected to redeem the notes pursuant to the optional
redemption provisions of the indenture, an equivalent premium will also become
and be immediately due and payable to the extent permitted by law upon the
acceleration of the notes. If an Event of Default occurs prior to December 15,
2006, by reason of any willful action (or inaction) taken (or not taken) by or
on behalf of the Issuer with the intention of avoiding the prohibition on
redemption of the notes prior to December 15, 2006, then the premium specified
in the indenture will also become immediately due and payable to the extent
permitted by law upon the acceleration of the notes.
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The Issuer is required to deliver to the trustee annually a statement
regarding compliance with the indenture. Upon becoming aware of any Default or
Event of Default, the Issuer is required to deliver to the trustee a statement
specifying such Default or Event of Default.
CONSENT TO JURISDICTION AND SERVICE
Cott will expressly submit to the nonexclusive jurisdiction of New York
State and the United States federal courts sitting in The City of New York for
the purposes of any suit, action or proceeding with respect to the indenture or
the notes and for actions brought under federal or state securities laws.
ENFORCEABILITY OF JUDGMENTS
Because a substantial portion of Cott's assets are outside the United
States, any judgment obtained in the United States against Cott, including
judgments with respect to payments under its guarantee may not be entirely
collectible within the United States.
Cott has been informed by Canadian counsel that the laws of the
Province of Ontario permit an action to be brought in a court of competent
jurisdiction in the Province of Ontario on any final and conclusive judgment in
personam of any federal or state court in the State of New York (a "New York
Court") that is not impeachable as void or voidable or otherwise ineffective
under the internal laws of the State of New York for a sum certain if: (i) the
court rendering such judgment has jurisdiction over the judgment debtor, as
recognized by the courts of the Province of Ontario (and submission by Cott in
the indenture to the jurisdiction of the New York Court will be sufficient for
such purpose), (ii) such judgment was not obtained by fraud or in a manner
contrary to natural justice and the enforcement thereof would not be
inconsistent with public policy, as such term is understood under the laws of
the Province of Ontario, (iii) the enforcement of such judgment does not
constitute, directly or indirectly, the enforcement of foreign revenue,
expropriatory or penal laws in the Province of Ontario, (iv) no new admissible
evidence relevant to the action is discovered prior to the rendering of judgment
by the court in the Province of Ontario, (v) the action to enforce such judgment
is commenced in the Province of Ontario within six years of the date of such
judgment and (vi) in the case of a judgment obtained by default, there has been
no manifest error in the granting of such judgment.
Cott has also been informed that, pursuant to the Currency Act
(Canada), a judgment by a court in any province of Canada may only be awarded in
Canadian currency. However, pursuant to the provisions of the Courts of Justice
Act (Ontario), a court in the Province of Ontario shall give effect to the
manner of conversion to Canadian currency of an amount in a foreign currency,
where such manner of conversion is provided for in an obligation enforceable in
Ontario. Accordingly, in Ontario, the amount of the Canadian currency payable in
respect of Cott's guarantee of the notes will be determined (as provided for in
the indenture and the notes) on the basis of the exchange rate in existence on
the business day immediately preceding the date of the collection of a judgment
in Ontario in respect of the notes.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No director, officer, employee, incorporator or stockholder of the
Issuer or any Guarantor, as such, will have any liability for any obligations of
the Issuer or the Guarantors under the notes, the indenture, the Guarantees, or
for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each Holder of notes by accepting a note waives and releases all
such liability. The waiver and release are part of the consideration for
issuance of the notes. The waiver may not be effective to waive liabilities
under the federal securities laws.
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LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Issuer may, at its option and at any time, elect to have all of its
obligations discharged with respect to the outstanding notes and all obligations
of the Guarantors discharged with respect to their Guarantees ("Legal
Defeasance") except for:
(1) the rights of Holders of outstanding notes to receive
payments in respect of the principal of, or interest or premium and
Liquidated Damages, if any, on such notes when such payments are due
from the trust referred to below;
(2) The Issuer's obligations with respect to the notes
concerning issuing temporary notes, registration of notes, mutilated,
destroyed, lost or stolen notes and the maintenance of an office or
agency for payment and money for security payments held in trust;
(3) the rights, powers, trusts, duties and immunities of the
trustee, and the Issuer's and the Guarantors' obligations in connection
therewith; and
(4) the Legal Defeasance provisions of the indenture.
In addition, the Issuer may, at its option and at any time, elect to
have the obligations of the Issuer and the Guarantors released with respect to
certain covenants that are described in the indenture ("Covenant Defeasance")
and thereafter any omission to comply with those covenants will not constitute a
Default or Event of Default with respect to the notes. In the event Covenant
Defeasance occurs, certain events (not including non-payment, bankruptcy,
receivership, rehabilitation and insolvency events) described under " - Events
of Default and Remedies" will no longer constitute an Event of Default with
respect to the notes.
In order to exercise either Legal Defeasance or Covenant Defeasance:
(1) the Issuer must irrevocably deposit with the trustee, in
trust, for the benefit of the Holders of the notes, cash in U.S.
dollars, non-callable Government Securities, or a combination of cash
in U.S. dollars and non-callable Government Securities, in amounts as
will be sufficient, in the opinion of a nationally recognized firm of
independent public accountants, to pay the principal of, or interest
and premium and Liquidated Damages, if any, on the outstanding notes on
the stated maturity or on the applicable redemption date, as the case
may be, and the Issuer must specify whether the notes are being
defeased to maturity or to a particular redemption date;
(2) in the case of Legal Defeasance, the Issuer has delivered
to the trustee an opinion of counsel reasonably acceptable to the
trustee confirming that (a) the Issuer has received from, or there has
been published by, the Internal Revenue Service a ruling or (b) since
the date of the indenture, there has been a change in the applicable
federal income tax law, in either case to the effect that, and based
thereon such opinion of counsel will confirm that, the Holders of the
outstanding notes will not recognize income, gain or loss for federal
income tax purposes as a result of such Legal Defeasance and will be
subject to federal income tax on the same amounts, in the same manner
and at the same times as would have been the case if such Legal
Defeasance had not occurred;
(3) in the case of Covenant Defeasance, the Issuer has
delivered to the trustee an opinion of counsel reasonably acceptable to
the trustee confirming that the Holders of the outstanding notes
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will not recognize income, gain or loss for federal income tax purposes
as a result of such Covenant Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same
times as would have been the case if such Covenant Defeasance had not
occurred;
(4) no Default or Event of Default has occurred and is
continuing on the date of such deposit (other than a Default or Event
of Default resulting from the borrowing of funds to be applied to such
deposit);
(5) such Legal Defeasance or Covenant Defeasance will not
result in a breach or violation of, or constitute a default under any
material agreement or instrument (other than the indenture) to which
Cott or any of its Subsidiaries is a party or by which Cott or any of
its Subsidiaries is bound;
(6) the Issuer must deliver to the trustee an officers'
certificate stating that the deposit was not made by the Issuer with
the intent of preferring the Holders of notes over the other creditors
of the Issuer with the intent of defeating, hindering, delaying or
defrauding creditors of the Issuer or others; and
(7) the Issuer must deliver to the trustee an officers'
certificate and an opinion of counsel, each stating that all conditions
precedent relating to the Legal Defeasance or the Covenant Defeasance
have been complied with.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next two succeeding paragraphs, the indenture
or the notes may be amended or supplemented with the consent of the Holders of
at least a majority in principal amount of the notes then outstanding
(including, without limitation, consents obtained in connection with a purchase
of, or tender offer or exchange offer for, notes), and any existing default or
compliance with any provision of the indenture or the notes may be waived with
the consent of the Holders of a majority in principal amount of the then
outstanding notes (including, without limitation, consents obtained in
connection with a purchase of, or tender offer or exchange offer for, notes).
Without the consent of each Holder affected, an amendment or waiver may
not (with respect to any notes held by a non-consenting Holder):
(1) reduce the principal amount of notes whose Holders must
consent to an amendment, supplement or waiver;
(2) reduce the principal of or change the fixed maturity of
any note or alter the provisions with respect to the redemption of the
notes (other than provisions relating to the covenants described above
under the caption " - Repurchase at the Option of Holders");
(3) reduce the rate of or change the time for payment of
interest on any note;
(4) waive a Default or Event of Default in the payment of
principal of, or interest or premium, or Liquidated Damages, if any, on
the notes (except a rescission of acceleration of the notes by the
Holders of at least a majority in aggregate principal amount of the
notes and a waiver of the payment default that resulted from such
acceleration);
(5) make any note payable in money other than that stated in
the notes;
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(6) make any change in the provisions of the indenture
relating to waivers of past Defaults or the rights of Holders of notes
to receive payments of principal of, or interest or premium or
Liquidated Damages, if any, on the notes;
(7) waive a redemption payment with respect to any note (other
than a payment required by one of the covenants described above under
the caption " - Repurchase at the Option of Holders");
(8) release any Guarantor from any of its obligations under
its Guarantee or the indenture, except in accordance with the terms of
the indenture; or
(9) make any change in the preceding amendment and waiver
provisions.
In addition, any amendment to, or waiver of, the provisions of the
indenture relating to subordination that adversely affects the rights of the
Holders of the notes will require the consent of the Holders of at least 75% in
aggregate principal amount of notes then outstanding.
Notwithstanding the preceding, without the consent of any Holder of
notes, the Issuer, the Guarantors and the trustee may amend or supplement the
indenture or the notes:
(1) to cure any ambiguity, defect or inconsistency;
(2) to provide for uncertificated notes in addition to or in
place of certificated notes;
(3) to provide for the assumption of the obligations of the
Issuer, Cott or any other Guarantor to Holders of notes in the case of
a merger or consolidation or sale of all or substantially all of the
assets of the Issuer, Cott or any other Guarantor;
(4) to provide for the guarantee of the notes by any
additional Guarantor;
(5) to make any change that would provide any additional
rights or benefits to the Holders of notes or that does not adversely
affect the legal rights under the indenture of any such Holder; or
(6) to comply with requirements of the Commission in order to
effect or maintain the qualification of the indenture under the Trust
Indenture Act.
SATISFACTION AND DISCHARGE
The indenture will be discharged and will cease to be of further effect
as to all notes issued thereunder, when:
(1) either:
(a) all notes that have been authenticated, except
lost, stolen or destroyed notes that have been replaced or
paid and notes for whose payment money has been deposited in
trust and thereafter repaid to the Issuer, have been delivered
to the trustee for cancellation; or
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(b) all notes that have not been delivered to the
trustee for cancellation have become due and payable by reason
of the mailing of a notice of redemption or otherwise or will
become due and payable within one year and the Issuer or any
Guarantor has irrevocably deposited or caused to be deposited
with the trustee as trust funds in trust solely for the
benefit of the Holders, cash in U.S. dollars, non-callable
Government Securities, or a combination of cash in U.S.
dollars and non-callable Government Securities, in amounts as
will be sufficient without consideration of any reinvestment
of interest, to pay and discharge the entire indebtedness on
the notes not delivered to the trustee for cancellation for
principal, premium and Liquidated Damages, if any, and accrued
interest to the date of maturity or redemption;
(2) no Default or Event of Default has occurred and is
continuing on the date of the deposit or will occur as a result of the
deposit and the deposit will not result in a breach or violation of, or
constitute a default under, any other instrument to which the Issuer or
any Guarantor is a party or by which the Issuer or any Guarantor is
bound;
(3) the Issuer or any Guarantor has paid or caused to be paid
all sums payable by it under the indenture; and
(4) the Issuer has delivered irrevocable instructions to the
trustee under the indenture to apply the deposited money toward the
payment of the notes at maturity or the redemption date, as the case
may be.
In addition, the Issuer must deliver an officers' certificate and an
opinion of counsel to the trustee stating that all conditions precedent to
satisfaction and discharge have been satisfied.
CONCERNING THE TRUSTEE
If the trustee becomes a creditor of the Issuer or any Guarantor, the
indenture limits its right to obtain payment of claims in certain cases, or to
realize on certain property received in respect of any such claim as security or
otherwise. The trustee will be permitted to engage in other transactions;
however, if it acquires any conflicting interest it must eliminate such conflict
within 90 days, apply to the Commission for permission to continue or resign.
The Holders of a majority in principal amount of the then outstanding
notes will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the trustee, subject to
certain exceptions. The indenture provides that in case an Event of Default
occurs and is continuing, the trustee will be required, in the exercise of its
power, to use the degree of care of a prudent man in the conduct of his own
affairs. Subject to such provisions, the trustee will be under no obligation to
exercise any of its rights or powers under the indenture at the request of any
Holder of notes, unless such Holder has offered to the trustee security and
indemnity satisfactory to it against any loss, liability or expense.
BOOK-ENTRY, DELIVERY AND FORM
The outstanding 8% notes offered and sold to qualified institutional
buyers are represented by one or more global notes in registered, global form
without interest coupons (collectively, the "Rule 144A Global Note"). The Rule
144A Global Note was initially deposited upon issuance with the trustee as
custodian for The Depository Trust Company, in New York, New York, and Cede &
Co., as nominee of
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The Depository Trust Company, in each case for credit to an account of a direct
or indirect participant as described below.
The outstanding 8% notes sold in offshore transactions in reliance on
Regulation S under the Securities Act were initially represented by one or more
temporary global notes in registered, global form without interest coupons
(collectively, the "Regulation S Temporary Global Note"). The Regulation S
Temporary Global Note was registered in the name of Euroclear Bank S.A./N.V.,
("Euroclear") and Clearstream Banking N.A. ("Clearstream"). Beneficial interests
in the Regulation S Temporary Global Note during the Restricted Period may be
held only through Euroclear or Clearstream.
Within a reasonable time period after the expiration of the period of
40 days commencing on the commencement of the notes offering (such period
through and including such 40th day, the "Restricted Period"), the Regulation S
Temporary Global Note will be exchanged for one or more permanent global notes
(collectively, the Regulation S Permanent Global Note" and, together with the
Regulation S Global Note and the 144A Global Note collectively being the "Global
Notes") upon delivery to the Depositary of certification of compliance with the
transfer restrictions applicable to the note pursuant to Regulation S as
provided in the indenture. During the Restricted Period, beneficial interests in
the Regulation S Temporary Global Note may be held only through Euroclear or
Clearstream (as indirect participants in the Depository). See " -- Depositary
Procedures - Exchanges between Regulation S Notes and the Rule 144A Global
Note". Beneficial interests in the Rule 144A Global Note may not be exchanged
for beneficial interests in the Regulation S Global Note at any time except in
the limited circumstances described below. See " -- Depositary Procedures -
Exchanges between Regulation S Notes and the Rule 144A Notes".
Notes that are issued as described below under " - Certificated Notes"
will be issued in the form of registered definitive certificates (the
"Certificated Notes"). Upon the transfer of Certificated Notes, Certificated
Notes may, unless all Global Notes have previously been exchanged for
Certificated Notes, be exchanged for an interest in the Global Note representing
the principal amount of notes being transferred, subject to the transfer
restrictions set forth in the indenture.
Prospective purchasers are advised that the laws of some states require
that certain Persons take physical delivery in definitive form of securities
that they own. Consequently, the ability to transfer beneficial interests in a
Global Note to such Persons will be limited to such extent.
So long as Cede & Co., as nominee of The Depository Trust Company (such
nominee referred to herein as the "Global Note Holder") is the registered owner
of any notes, the Global Note Holder will be considered the sole Holder under
the indenture of any notes evidenced by the Global Notes. Beneficial owners of
notes evidenced by the Global Notes will not be considered the owners or Holders
of the notes under the indenture for any purpose, including with respect to the
giving of any directions, instructions or approvals to the trustee thereunder.
Neither the Issuer nor the trustee will have any responsibility or liability for
any aspect of the records of The Depository Trust Company or for maintaining,
supervising or reviewing any records of The Depository Trust Company relating to
the notes.
Payments in respect of the principal of, and interest and premium and
Liquidated Damages, if any, on a Global Note registered in the name of the
Global Note Holder on the applicable record date will be payable by the trustee
to or at the direction of the Global Note Holder in its capacity as the
registered Holder under the indenture. Under the terms of the indenture, the
Issuer and the trustee will treat the Persons in whose names the notes,
including the Global Notes, are registered as the owners of the notes for the
purpose of receiving payments and for all other purposes. Consequently, neither
the Issuer, the trustee nor any agent of the Issuer or the trustee has or will
have any responsibility or liability for:
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(1) any aspect of The Depository Trust Company's records or
any Participant's or Indirect Participant's records relating to or
payments made on account of beneficial ownership interest in the Global
Notes or for maintaining, supervising or reviewing any of The
Depository Trust Company's records or any Participant's or Indirect
Participant's records relating to the beneficial ownership interests in
the Global Notes; or
(2) any other matter relating to the actions and practices of
The Depository Trust Company or any of its Participants or Indirect
Participants.
The Depository Trust Company has advised the Issuer that its current
practice, upon receipt of any payment in respect of securities such as the notes
(including principal and interest), is to credit the accounts of the relevant
Participants with the payment on the payment date unless The Depository Trust
Company has reason to believe it will not receive payment on such payment date.
Each relevant Participant is credited with an amount proportionate to its
beneficial ownership of an interest in the principal amount of the relevant
security as shown on the records of The Depository Trust Company. Payments by
the Participants and the Indirect Participants to the beneficial owners of notes
will be governed by standing instructions and customary practices and will be
the responsibility of the Participants or the Indirect Participants and will not
be the responsibility of The Depository Trust Company, the trustee or the
Issuer. Neither the Issuer nor the trustee will be liable for any delay by The
Depository Trust Company or any of its Participants in identifying the
beneficial owners of the notes, and the Issuer and the trustee may conclusively
rely on and will be protected in relying on instructions from The Depository
Trust Company or its nominee for all purposes.
CERTIFICATED NOTES
Subject to certain conditions, any Person having a beneficial interest
in a Global Note may, upon prior written request to the trustee, exchange such
beneficial interest for notes in the form of Certificated Notes. Upon any such
issuance, the trustee is required to register such Certificated Notes in the
name of, and cause the same to be delivered to, such Person or Persons (or their
nominee). All Certificated Notes would be subject to the legend requirements
applicable to the outstanding notes. In addition, if:
(1) The Depository Trust Company (a) notifies the Issuer that
it is unwilling or unable to continue as depositary for the Global
Notes and the Issuer fails to appoint a successor depositary or (b) has
ceased to be a clearing agency registered under the Exchange Act;
(2) the Issuer, at its option, notifies the trustee in writing
that it elects to cause the issuance of the Certificated Notes; or
(3) there has occurred and is continuing a Default or Event of
Default with respect to the notes;
then, upon surrender by the Global Note Holder of its Global Note, notes in such
form will be issued to each person that the Global Note Holder and The
Depository Trust Company identify as being the beneficial owner of the related
notes.
Neither the Issuer nor the trustee will be liable for any delay by the
Global Note Holder or The Depository Trust Company in identifying the beneficial
owners of notes and the Issuer and the trustee may
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conclusively rely on, and will be protected in relying on, instructions from the
Global Note Holder or The Depository Trust Company for all purposes.
DEPOSITORY PROCEDURES
The following description of the operations and procedures of The
Depository Trust Company, Euroclear and Clearstream are provided solely as a
matter of convenience. These operations and procedures are solely within the
control of the respective settlement systems and are subject to changes by them.
The Issuer takes no responsibility for these operations and procedures and urges
investors to contact the system or their participants directly to discuss these
matters.
The Depository Trust Company has advised the Issuer that The Depository
Trust Company is a limited-purpose trust company created to hold securities for
its participating organizations (collectively, the "Participants") and to
facilitate the clearance and settlement of transactions in those securities
between Participants through electronic book-entry changes in accounts of its
Participants. The Participants include securities brokers and dealers (including
the Initial Purchasers), banks, trust companies, clearing corporations and
certain other organizations. Access to The Depository Trust Company's system is
also available to other entities such as banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a
Participant, either directly or indirectly (collectively, the "Indirect
Participants"). Persons who are not Participants may beneficially own securities
held by or on behalf of The Depository Trust Company only through the
Participants or the Indirect Participants. The ownership interests in, and
transfers of ownership interests in, each security held by or on behalf of The
Depository Trust Company are recorded on the records of the Participants and
Indirect Participants.
The Depository Trust Company has also advised the Issuer that, pursuant
to procedures established by it:
(1) upon deposit of the Global Notes, The Depository Trust
Company will credit the accounts of Participants designated by the
Initial Purchasers with portions of the principal amount of the Global
Notes; and
(2) ownership of these interests in the Global Notes will be
shown on, and the transfer of ownership of these interests will be
effected only through, records maintained by The Depository Trust
Company (with respect to the Participants) or by the Participants and
the Indirect Participants (with respect to other owners of beneficial
interest in the Global Notes).
Investors in the Rule 144A Global Notes who are Participants in The
Depository Trust Company's system may hold their interests therein directly
through The Depository Trust Company. Investors in the Rule 144A Global Notes
who are not Participants may hold their interests therein indirectly through
organizations (including Euroclear and Clearstream) which are Participants in
such system. Investors in the Regulation S Global Notes must initially hold
their interests therein through Euroclear or Clearstream, if they are
participants in such systems, or indirectly through organizations that are
participants in such systems. After the expiration of the Restricted Period (but
not earlier), investors may also hold interests in the Regulation S Global Notes
through Participants in the The Depository Trust Company system other than
Euroclear and Clearstream. Euroclear and Clearstream will hold interests in the
Regulation S Global Notes on behalf of their participants through customers'
securities accounts in their respective names on the books of their respective
depositories, which are Euroclear Bank S.A./N.V., as operator of Euroclear, and
Citibank, N.A., as operator of Clearstream. All interests in a Global Note,
including those held through Euroclear or Clearstream, may be subject to the
procedures and requirements of The Depository Trust
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Company. Those interests held through Euroclear or Clearstream may also be
subject to the procedures and requirements of such systems. The laws of some
states require that certain Persons take physical delivery in definitive form of
securities that they own. Consequently, the ability to transfer beneficial
interests in a Global Note to such Persons will be limited to that extent.
Because The Depository Trust Company can act only on behalf of Participants,
which in turn act on behalf of Indirect Participants, the ability of a Person
having beneficial interests in a Global Note to pledge such interests to Persons
that do not participate in the The Depository Trust Company system, or otherwise
take actions in respect of such interests, may be affected by the lack of a
physical certificate evidencing such interests.
EXCEPT AS DESCRIBED BELOW, OWNERS OF INTEREST IN THE GLOBAL NOTES WILL
NOT HAVE NOTES REGISTERED IN THEIR NAMES, WILL NOT RECEIVE PHYSICAL DELIVERY OF
NOTES IN CERTIFICATED FORM AND WILL NOT BE CONSIDERED THE REGISTERED OWNERS OR
"HOLDERS" THEREOF UNDER THE INDENTURE FOR ANY PURPOSE.
Payments in respect of the principal of, and interest and premium and
Liquidated Damages, if any, on a Global Note registered in the name of The
Depository Trust Company or its nominee will be payable to The Depository Trust
Company in its capacity as the registered Holder under the indenture. Under the
terms of the indenture, the Issuer and the trustee will treat the Persons in
whose names the notes, including the Global Notes, are registered as the owners
of the notes for the purpose of receiving payments and for all other purposes.
Consequently, neither the Issuer, the trustee nor any agent of the Issuer or the
trustee has or will have any responsibility or liability for:
(1) any aspect of The Depository Trust Company's records or
any Participant's or Indirect Participant's records relating to or
payments made on account of beneficial ownership interest in the Global
Notes or for maintaining, supervising or reviewing any of The
Depository Trust Company's records or any Participant's or Indirect
Participant's records relating to the beneficial ownership interests in
the Global Notes; or
(2) any other matter relating to the actions and practices of
The Depository Trust Company or any of its Participants or Indirect
Participants.
The Depository Trust Company has advised the Issuer that its current
practice, upon receipt of any payment in respect of securities such as the notes
(including principal and interest), is to credit the accounts of the relevant
Participants with the payment on the payment date unless The Depository Trust
Company has reason to believe it will not receive payment on such payment date.
Each relevant Participant is credited with an amount proportionate to its
beneficial ownership of an interest in the principal amount of the relevant
security as shown on the records of The Depository Trust Company. Payments by
the Participants and the Indirect Participants to the beneficial owners of notes
will be governed by standing instructions and customary practices and will be
the responsibility of the Participants or the Indirect Participants and will not
be the responsibility of The Depository Trust Company, the trustee or the
Issuer. Neither the Issuer nor the trustee will be liable for any delay by The
Depository Trust Company or any of its Participants in identifying the
beneficial owners of the notes, and the Issuer and the trustee may conclusively
rely on and will be protected in relying on instructions from The Depository
Trust Company or its nominee for all purposes.
Subject to the transfer restrictions applicable to the outstanding 8%
notes, transfers between Participants in The Depository Trust Company will be
effected in accordance with The Depository Trust Company's procedures, and will
be settled in same-day funds, and transfers between participants in Euroclear
and Clearstream will be effected in accordance with their respective rules and
operating procedures.
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Subject to compliance with the transfer restrictions applicable to the
notes described herein, cross-market transfers between the Participants in The
Depository Trust Company, on the one hand, and Euroclear or Clearstream
Participants, on the other hand, will be effected through The Depository Trust
Company in accordance with The Depository Trust Company's rules on behalf of
Euroclear or Clearstream, as the case may be, by its respective depositary;
however, such cross-market transactions will require delivery of instructions to
Euroclear or Clearstream, as the case may be, by the counterparty in such system
in accordance with the rules and procedures and within the established deadlines
(Brussels time) of such system. Euroclear or Clearstream, as the case may be,
will, if the transaction meets its settlement requirements, deliver instructions
to its respective depositary to take action to effect final settlement on its
behalf by delivering or receiving interests in the relevant Global Note in The
Depository Trust Company, and making or receiving payment in accordance with
normal procedures for same-day funds settlement applicable to The Depository
Trust Company. Euroclear participants and Clearstream participants may not
deliver instructions directly to the depositories for Euroclear or Clearstream.
The Depository Trust Company has advised the Issuer that it will take
any action permitted to be taken by a Holder of notes only at the direction of
one or more Participants to whose account The Depository Trust Company has
credited the interests in the Global Notes and only in respect of such portion
of the aggregate principal amount of the notes as to which such Participant or
Participants has or have given such direction. However, if there is an Event of
Default under the notes, The Depository Trust Company reserves the right to
exchange the Global Notes for legended notes in certificated form, and to
distribute such notes to its Participants.
Although The Depository Trust Company, Euroclear and Clearstream have
agreed to the foregoing procedures to facilitate transfers of interests in the
Rule 144A Global Notes and the Regulation S Global Notes among participants in
The Depository Trust Company, Euroclear and Clearstream, they are under no
obligation to perform or to continue to perform such procedures, and may
discontinue such procedures at any time. Neither the Issuer nor the trustee nor
any of their respective agents will have any responsibility for the performance
by The Depository Trust Company, Euroclear or Clearstream or their respective
participants or indirect participants of their respective obligations under the
rules and procedures governing their operations.
EXCHANGE OF GLOBAL NOTES FOR CERTIFICATED NOTES
A Global Note is exchangeable for definitive notes in registered
certificated form if:
(1) The Depository Trust Company (a) notifies the Issuer that
it is unwilling or unable to continue as depositary for the Global
Notes and the Issuer fails to appoint a successor depositary or (b) has
ceased to be a clearing agency registered under the Exchange Act;
(2) the Issuer, at its option, notifies the trustee in writing
that it elects to cause the issuance of the Certificated Notes; or
(3) there has occurred and is continuing a Default or Event of
Default with respect to the notes.
In addition, beneficial interests in a Global Note may be exchanged for
Certificated Notes upon prior written notice given to the trustee by or on
behalf of The Depository Trust Company in accordance with the indenture. In all
cases, Certificated Notes delivered in exchange for any Global Note or
beneficial interests
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in Global Notes will be registered in the names, and issued in any approved
denominations, requested by or on behalf of the depositary (in accordance with
its customary procedures) and will bear the applicable restrictive legend
referred to in the indenture unless that legend is not required by applicable
law.
EXCHANGE OF CERTIFICATED NOTES FOR GLOBAL NOTES
Certificated Notes may not be exchanged for beneficial interests in any
Global Note unless the transferor first delivers to the trustee a written
certificate (in the form provided in the indenture) to the effect that such
transfer will comply with the appropriate transfer restrictions applicable to
such notes.
EXCHANGES BETWEEN REGULATION S NOTES AND RULE 144A NOTES
Prior to the expiration of the Restricted Period, beneficial interests
in the Regulation S Global Note may be exchanged for beneficial interests in the
Rule 144A Global Note only if:
(1) such exchange occurs in connection with a transfer of the
notes pursuant to Rule 144A; and
(2) the transferor first delivers to the trustee a written
certificate (in the form provided in the indenture) to the effect that
the notes are being transferred to a Person:
(a) who the transferor reasonably believes to be a
qualified institutional buyer within the meaning of Rule 144A;
(b) purchasing for its own account or the account of
a qualified institutional buyer in a transaction meeting the
requirements of Rule 144A; and
(c) in accordance with all applicable securities laws
of the states of the United States and other jurisdictions.
Beneficial interest in a Rule 144A Global Note may be transferred to a
Person who takes delivery in the form of an interest in the Regulation S Global
Note, whether before or after the expiration of the Restricted Period, only if
the transferor first delivers to the trustee a written certificate (in the form
provided in the indenture) to the effect that such transfer is being made in
accordance with Rule 903 or 904 of Regulation S or Rule 144 (if available) and
that, if such transfer occurs prior to the expiration of the Restricted Period,
the interest transferred will be held immediately thereafter through Euroclear
or Clearstream.
Transfers involving exchanges of beneficial interests between the
Regulation S Global Notes and the Rule 144A Global Notes will be effected in The
Depository Trust Company by means of an instruction originated by the trustee
through the The Depository Trust Company Deposit/Withdraw at Custodian system.
Accordingly, in connection with any such transfer, appropriate adjustments will
be made to reflect a decrease in the principal amount of the Regulation S Global
Note and a corresponding increase in the principal amount of the Rule 144A
Global Note or vice versa, as applicable. Any beneficial interest in one of the
Global Notes that is transferred to a Person who takes delivery in the form of
an interest in the other Global Note will, upon transfer, cease to be an
interest in such Global Note and will become an interest in the other Global
Note and, accordingly, will thereafter be subject to all transfer restrictions
and other procedures applicable to beneficial interest in such other Global Note
for so long as it remains such an
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interest. The policies and practices of The Depository Trust Company may
prohibit transfers of beneficial interests in the Regulation S Global Note prior
to the expiration of the Restricted Period.
SAME DAY SETTLEMENT AND PAYMENT
The Issuer will make payments in respect of the notes represented by
the Global Notes (including principal, premium, if any, interest and Liquidated
Damages, if any) by wire transfer of immediately available funds to the accounts
specified by the Global Note Holder. The Issuer will make all payments of
principal, interest and premium and Liquidated Damages, if any, with respect to
Certificated Notes by wire transfer of immediately available funds to the
accounts specified by the Holders of the Certificated Notes or, if no such
account is specified, by mailing a check to each such Holder's registered
address. The notes represented by the Global Notes will be eligible to trade in
the PORTAL(SM) Market and to trade in The Depository Trust Company's Same-Day
Funds Settlement System, and any permitted secondary market trading activity in
such notes will, therefore, be required by The Depository Trust Company to be
settled in immediately available funds. The Issuer expects that secondary
trading in any Certificated Notes will also be settled in immediately available
funds.
Because of time zone differences, the securities account of a Euroclear
or Clearstream participant purchasing an interest in a Global Note from a
Participant in The Depository Trust Company will be credited, and any such
crediting will be reported to the relevant Euroclear or Clearstream participant,
during the securities settlement processing day (which must be a business day
for Euroclear and Clearstream) immediately following the settlement date of The
Depository Trust Company. The Depository Trust Company has advised the Issuer
that cash received in Euroclear or Clearstream as a result of sales of interests
in a Global Note by or through a Euroclear or Clearstream participant to a
Participant in The Depository Trust Company will be received with value on the
settlement date of The Depository Trust Company but will be available in the
relevant Euroclear or Clearstream cash account only as of the business day for
Euroclear or Clearstream following The Depository Trust Company's settlement
date.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the indenture.
Reference is made to the indenture for a full disclosure of all such terms, as
well as any other capitalized terms used herein for which no definition is
provided.
"Acquired Debt" means, with respect to any specified Person:
(1) Indebtedness of any other Person existing at the time such
other Person is merged with or into or became a Subsidiary of such
specified Person, whether or not such Indebtedness is incurred in
connection with, or in contemplation of, such other Person merging with
or into, or becoming a Subsidiary of, such specified Person; and
(2) Indebtedness secured by a Lien encumbering any asset
acquired by such specified Person.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control,"
as used with respect to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting securities, by
agreement or otherwise; provided that beneficial ownership of 10% or
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more of the Voting Stock of a Person will be deemed to be control. For purposes
of this definition, the terms "controlling," "controlled by" and "under common
control with" have correlative meanings.
"Asset Sale" means:
(1) the sale, lease, conveyance or other disposition of any
assets or rights, other than sales of inventory in the ordinary course
of business consistent with past practices; provided that the sale,
conveyance or other disposition of all or substantially all of the
assets of Cott and its Restricted Subsidiaries taken as a whole will be
governed by the provisions of the indenture described above under the
caption " - Repurchase at the Option of Holders - Change of Control
Triggering Event" and/or the provisions described above under the
caption " - Certain Covenants - Merger, Consolidation or Sale of
Assets" and not by the provisions of the Asset Sale covenant; and
(2) the issuance of Equity Interests in any of Cott's
Restricted Subsidiaries or the sale of Equity Interests in any of its
Subsidiaries.
Notwithstanding the preceding, the following items will not be deemed
to be Asset Sales:
(1) any single transaction or series of related transactions
that involves assets having a fair market value of less than $5.0
million;
(2) a transfer of assets between or among Cott and its
Restricted Subsidiaries;
(3) an issuance of Equity Interests by a Restricted Subsidiary
to Cott or to another Restricted Subsidiary;
(4) the sale or lease of equipment, inventory, accounts
receivable or other assets in the ordinary course of business or that
is worn out, obsolete or damaged or no longer used or useful in the
business;
(5) the sale or other disposition of cash or Cash Equivalents
and other current assets;
(6) a Restricted Payment or Permitted Investment that is
permitted by the covenant described above under the caption " - Certain
Covenants - Restricted Payments";
(7) any disposition of assets in exchange for assets of
comparable fair market value that are used or usable in any Permitted
Business, provided that (x) if the fair market value of the assets so
disposed of, in a single transaction or in a series of related
transactions, is in excess of $10.0 million, such transaction shall be
approved by the Board of Directors, (y) if the fair market value of the
assets so disposed of, in a single transaction or in a series of
related transactions, is in excess of $25.0 million, Cott shall obtain
an opinion or report from an independent financial advisor confirming
that the assets received by Cott and the Restricted Subsidiaries in
such exchange have a fair market value of at least the fair market
value of the assets so disposed and (z) any cash or Cash Equivalents
received by Cott or a Restricted Subsidiary in connection with such
exchange (net of any transaction costs of the type deducted under the
definition of "Net Proceeds") shall be treated as Net Proceeds of an
Asset Sale and shall be applied in the manner set forth in the covenant
described under the caption " - Repurchase at the Option of Holders -
Asset Sales";
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(8) Licenses of intellectual property that are in furtherance
of, or integral to, other business transactions entered into by Cott or
a Restricted Subsidiary entered into in the ordinary course of
business; and
(9) Like-kind property exchanges pursuant to Section 1031 of
the Internal Revenue Code.
"Attributable Debt" in respect of a sale and leaseback transaction
means, at the time of determination, the present value of the obligation of the
lessee for net rental payments during the remaining term of the lease included
in such sale and leaseback transaction including any period for which such lease
has been extended or may, at the option of the lessor, be extended. Such present
value shall be calculated using a discount rate equal to the rate of interest
implicit in such transaction, determined in accordance with GAAP.
"Beneficial Owner" has the meaning assigned to such term in Rule 13d-3
and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial
ownership of any particular "person" (as that term is used in Section 13(d)(3)
of the Exchange Act), such "person" will be deemed to have beneficial ownership
of all securities that such "person" has the right to acquire by conversion or
exercise of other securities, whether such right is currently exercisable or is
exercisable only upon the occurrence of a subsequent condition. The terms
"Beneficially Owns" and "Beneficially Owned" have a corresponding meaning.
"Board of Directors" means:
(1) with respect to a corporation, the board of directors of
the corporation;
(2) with respect to a partnership, the Board of Directors of
the general partner of the partnership; and
(3) with respect to any other Person, the board or committee
of such Person serving a similar function.
"Capital Lease Obligation" means, at the time any determination is to
be made, the amount of the liability in respect of a capital lease that would at
that time be required to be capitalized on a balance sheet in accordance with
GAAP.
"Capital Stock" means:
(1) in the case of a corporation, corporate stock;
(2) in the case of an association or business entity, any and
all shares, interests, participations, rights or other equivalents
(however designated) of corporate stock;
(3) in the case of a partnership or limited liability company,
partnership or membership interests (whether general or limited); and
(4) any other interest or participation that confers on a
Person the right to receive a share of the profits and losses of, or
distributions of assets of, the issuing Person.
"Cash Equivalents" means:
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(1) United States dollars;
(2) securities issued or directly and fully guaranteed or
insured by the United States government or any agency or
instrumentality of the United States government (provided that the full
faith and credit of the United States is pledged in support of those
securities) having maturities of not more than six months from the date
of acquisition;
(3) certificates of deposit and eurodollar time deposits with
maturities of six months or less from the date of acquisition, bankers'
acceptances with maturities not exceeding six months and overnight bank
deposits, in each case, with any lender party to the Credit Agreement
or with any domestic commercial bank having capital and surplus in
excess of $500.0 million and at least a rating of "A" or equivalent
thereof by Moody's or a rating of "A" or equivalent thereof by S&P;
(4) repurchase obligations with a term of not more than seven
days for underlying securities of the types described in clauses (2)
and (3) above entered into with any financial institution meeting the
qualifications specified in clause (3) above;
(5) commercial paper having the highest rating obtainable from
Moody's or S&P and in each case maturing within six months after the
date of acquisition;
(6) money market funds at least 95% of the assets of which
constitute Cash Equivalents of the kinds described in clauses (1)
through (5) of this definition; and
(7) investments of a nature similar to the foregoing in
countries other than the United States where Cott or its Restricted
Subsidiaries are then doing business; provided that references to the
U.S. Government shall be deemed to mean foreign countries having a
sovereign rating of "A" or better from either Moody's or S&P.
"Change of Control" means the occurrence of any of the following:
(1) the direct or indirect sale, transfer, conveyance or other
disposition (other than by way of merger or consolidation), in one or a
series of related transactions, of all or substantially all of the
properties or assets of Cott and its Subsidiaries taken as a whole to
any "person" (as that term is used in Section 13(d)(3) of the Exchange
Act);
(2) the adoption of a plan relating to the liquidation or
dissolution of Cott or the Issuer;
(3) the consummation of any transaction (including, without
limitation, any merger or consolidation) the result of which is that
(A) any "person" (as defined above) other than the Permitted Holders,
becomes the Beneficial Owner, directly or indirectly, of more than 35%
of the Voting Stock of Cott, measured by voting power rather than
number of shares and (B) the Permitted Holders Beneficially Own,
directly or indirectly, in the aggregate, a lesser percentage of the
Voting Stock of Cott, measured by voting power rather than number of
shares, than such other person;
(4) the first day on which a majority of the members of the
Board of Directors of Cott are not Continuing Directors; or
(5) Cott consolidates with, or merges with or into, any
Person, or any Person consolidates with, or merges with or into, Cott,
in any such event pursuant to a transaction in which any of the
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outstanding Voting Stock of Cott or such other Person is converted into
or exchanged for cash, securities or other property, other than any
such transaction where the Voting Stock of Cott outstanding immediately
prior to such transaction is converted into or exchanged for Voting
Stock (other than Disqualified Stock) of the surviving or transferee
Person or a Person of which the surviving or transferee Person is a
wholly-owned Subsidiary constituting a majority of the outstanding
shares of such Voting Stock of such surviving or transferee Person or a
Person of which the surviving or transferee Person is a wholly-owned
Subsidiary (immediately after giving effect to such issuance).
"Change of Control Triggering Event" means both the occurrence of a
Change of Control and a Rating Decline.
"Commission" means the United States Securities and Exchange
Commission.
"Consolidated Cash Flow" means, with respect to any specified Person
for any period, the Consolidated Net Income of such Person for such period plus:
(1) an amount equal to any extraordinary loss plus any net
loss realized by such Person or any of its Subsidiaries in connection
with an Asset Sale, to the extent such losses were deducted in
computing such Consolidated Net Income; plus
(2) provision for taxes based on income or profits of such
Person and its Restricted Subsidiaries for such period, to the extent
that such provision for taxes was deducted in computing such
Consolidated Net Income; plus
(3) consolidated interest expense of such Person and its
Restricted Subsidiaries for such period, whether paid or accrued and
whether or not capitalized (including, without limitation, amortization
of debt issuance costs and original issue discount, non-cash interest
payments, the interest component of any deferred payment obligations,
the interest component of all payments associated with Capital Lease
Obligations, imputed interest with respect to Attributable Debt,
commissions, discounts and other fees and charges incurred in respect
of letter of credit (excluding charges included in cost of goods sold
or selling, general and administrative expenses in connection with
worker's compensation or the export of products) or bankers' acceptance
financings, and net of the effect of all payments made or received
pursuant to Hedging Obligations), to the extent that any such expense
was deducted in computing such Consolidated Net Income; plus
(4) depreciation, amortization (including amortization of
goodwill and other intangibles but excluding amortization of prepaid
cash expenses that were paid in a prior period) and other non-cash
expenses (excluding any such non-cash expense to the extent that it
represents an accrual of or reserve for cash expenses in any future
period or amortization of a prepaid cash expense that was paid in a
prior period) of such Person and its Subsidiaries for such period to
the extent that such depreciation, amortization and other non-cash
expenses were deducted in computing such Consolidated Net Income; minus
(5) non-cash items increasing such Consolidated Net Income for
such period, other than the accrual of revenue in the ordinary course
of business,
in each case, on a consolidated basis and determined in accordance with GAAP.
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"Consolidated Net Income" means, with respect to any specified Person
for any period, the aggregate of the Net Income of such Person and its
Restricted Subsidiaries for such period, on a consolidated basis, determined in
accordance with GAAP; provided that:
(1) the Net Income (but not loss) of any Person that is not a
Restricted Subsidiary or that is accounted for by the equity method of
accounting will be included only to the extent of the amount of
dividends or distributions paid in cash to the specified Person or a
Restricted Subsidiary of the Person;
(2) the Net Income of any Restricted Subsidiary of Cott other
than the Issuer will be excluded to the extent that the declaration or
payment of dividends or similar distributions by that Restricted
Subsidiary of that Net Income is not at the date of determination
permitted without any prior governmental approval (that has not been
obtained) or, directly or indirectly, by operation of the terms of its
charter or any agreement, instrument, judgment, decree, order, statute,
rule or governmental regulation applicable to that Restricted
Subsidiary or its stockholders (other than due to restrictions
contained in Credit Facilities of any such Restricted Subsidiary
permitted under clause (13) of the covenant " - Certain Covenants -
Dividend and Other Payment Restrictions Affecting Subsidiaries" that
limit but do not absolutely prohibit the payment of dividends or
similar distributions);
(3) the Net Income of any Person acquired in a pooling of
interests transaction for any period prior to the date of such
acquisition will be excluded;
(4) the cumulative effects of changes in accounting principles
will be excluded;
(5) any non-cash write-up or non-cash write-down of assets
(including deferred assets and excluding any such non-cash write-up or
non-cash write-down to the extent that it represents an accrual of or
reserve for cash expenses in any future period or amortization or a
prepaid cash expense that was paid in a prior period) will be excluded
(but solely to the extent that this adjustment to Consolidated Net
Income is used to determine whether Cott or a Restricted Subsidiary may
make Investments pursuant to clause (3) of the first paragraph of the
covenant captioned "Restricted Payments"); and
(6) any redemption premiums paid on the Refinanced Notes will
be excluded.
"Continuing Directors" means, as of any date of determination, any
member of the Board of Directors of Cott who:
(1) was a member of such Board of Directors on the date of the
indenture; or
(2) was nominated for election or elected to such Board of
Directors with the approval of a majority of the Continuing Directors
who were members of such Board at the time of such nomination or
election.
"Credit Agreement" means that certain Credit Agreement, dated as of
July 19, 2001 as amended as of December 13, 2001 and as further amended as of
December 19, 2001, by and among Cott, the Issuer and Lehman Brothers Inc., First
Union National Bank, Bank of Montreal and Lehman Commercial Paper Inc.,
providing for up to $175.0 million of borrowings, including any related notes,
guarantees, collateral documents, instruments and agreements executed in
connection therewith, and in each case as amended,
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modified, renewed, refunded, replaced or refinanced from time to time including
any amendment, modification, renewal, refinancing, that increases the amount of
credit available thereunder.
"Credit Facilities" means, one or more debt facilities (including,
without limitation, the Credit Agreement) or commercial paper facilities, in
each case with banks or other institutional lenders providing for revolving
credit loans, term loans, receivables financing (including through the sale of
receivables to such lenders or to special purpose entities formed to borrow from
such lenders against such receivables) or letters of credit, in each case, as
amended, restated, modified, renewed, refunded, replaced or refinanced in whole
or in part from time to time.
"Default" means any event that is, or with the passage of time or the
giving of notice or both would be, an Event of Default.
"Disqualified Stock" means any Capital Stock that, by its terms (or by
the terms of any security into which it is convertible, or for which it is
exchangeable, in each case at the option of the holder of the Capital Stock), or
upon the happening of any event, matures or is mandatorily redeemable, pursuant
to a sinking fund obligation or otherwise, or redeemable at the option of the
holder of the Capital Stock, in whole or in part, on or prior to the date that
is 91 days after the date on which the notes mature. Notwithstanding the
preceding sentence, any Capital Stock that would constitute Disqualified Stock
solely because the holders of the Capital Stock have the right to require Cott
or the Issuer to repurchase such Capital Stock upon the occurrence of a change
of control or an asset sale will not constitute Disqualified Stock if the terms
of such Capital Stock provide that Cott or the Issuer may not repurchase or
redeem any such Capital Stock pursuant to such provisions unless such repurchase
or redemption complies with the covenant described above under the caption " -
Certain Covenants - Restricted Payments."
"Domestic Subsidiary" means any Restricted Subsidiary of Cott other
than Cott Investments LLC that was formed under the laws of the United States or
any state of the United States or the District of Columbia.
"Eligible Inventory" means, with respect to any Person, Inventory (net
of reserves for slow moving inventory) consisting of finished goods held for
sale in the ordinary course of such Person's business, that are located at such
Person's premises and replacement parts and accessories inventory located at
such Person's premises. Eligible Inventory shall not include obsolete items,
work-in-process, spare parts, supplies used or consumed in such Person's
business, Inventory subject to a security interest or lien in favor of any
non-Affiliate other than the administrative agent under the Credit Agreement,
bill and hold goods, defective goods, if non-salable, "seconds," and Inventory
acquired on consignment.
"Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Equity Offering" means any public or private sale of Capital Stock
(other than Disqualified Stock) made for cash on a primary basis by Cott or the
Issuer after the date of the indenture.
"Existing Indebtedness" means Indebtedness of Cott and its Restricted
Subsidiaries (other than Indebtedness under the Credit Agreement) in existence
on the date of the indenture, until such amounts are repaid.
"Fixed Charges" means, with respect to any specified Person for any
period, the sum, without duplication, of:
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(1) the consolidated interest expense of such Person and its
Restricted Subsidiaries for such period, whether paid or accrued,
including, without limitation, amortization of debt issuance costs and
original issue discount, non-cash interest payments, the interest
component of any deferred payment obligations, the interest component
of all payments associated with Capital Lease Obligations, imputed
interest with respect to Attributable Debt, commissions, discounts and
other fees and charges incurred in respect of letter of credit
(excluding charges included in the cost of goods sold or selling,
general and administrative expenses other than in connection with
worker's compensation or the export of products) or bankers' acceptance
financings, and net of the effect of all payments made or received
pursuant to Hedging Obligations; plus
(2) the consolidated interest of such Person and its
Restricted Subsidiaries that was capitalized during such period; plus
(3) any interest expense on Indebtedness of another Person
that is Guaranteed by such Person or one of its Restricted Subsidiaries
or secured by a Lien on assets of such Person or one of its Restricted
Subsidiaries, whether or not such Guarantee or Lien is called upon;
plus
(4) the product of (a) all dividends, whether paid or accrued,
on any series of preferred stock of such Person or any of its
Restricted Subsidiaries, other than dividends on Equity Interests
payable solely in Equity Interests of such Person (other than
Disqualified Stock) or to Cott or a Restricted Subsidiary, times (b) a
fraction, the numerator of which is one and the denominator of which is
one minus the then current combined federal, state and local statutory
tax rate of such Person, expressed as a decimal, in each case, on a
consolidated basis and in accordance with GAAP.
Fixed Charges shall exclude, however, any premiums, penalties, fees and expenses
(and any amortization thereof) payable in connection with the offering of the
notes, or the prepayment of the Refinanced Notes. In addition, any payments of
interest or related expenses relating to the Refinanced Notes once the same have
been discharged shall be excluded.
"Fixed Charge Coverage Ratio" means with respect to any specified
Person for any period, the ratio of the Consolidated Cash Flow of such Person
for such period to the Fixed Charges of such Person for such period. In the
event that the specified Person or any of its Subsidiaries incurs, assumes,
Guarantees, repays, repurchases or redeems any Indebtedness (other than ordinary
working capital borrowings) or issues, repurchases or redeems preferred stock
subsequent to the commencement of the period for which the Fixed Charge Coverage
Ratio is being calculated and on or prior to the date on which the event for
which the calculation of the Fixed Charge Coverage Ratio is made (the
"Calculation Date"), then the Fixed Charge Coverage Ratio will be calculated
giving pro forma effect to such incurrence, assumption, Guarantee, repayment,
repurchase or redemption of Indebtedness, or such issuance, repurchase or
redemption of preferred stock, and the use of the proceeds therefrom as if the
same had occurred at the beginning of the applicable four-quarter reference
period.
In addition, for purposes of calculating the Fixed Charge Coverage
Ratio:
(1) acquisitions that have been made by the specified Person
or any of its Restricted Subsidiaries, including through mergers or
consolidations and including any related financing transactions, during
the four-quarter reference period or subsequent to such reference
period and on or prior to the Calculation Date will be given pro forma
effect as if they had occurred on the first
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day of the four-quarter reference period and Consolidated Cash Flow for
such reference period will be calculated on a pro forma basis in
accordance with Regulation S-X under the Securities Act, but without
giving effect to clause (3) of the proviso set forth in the definition
of Consolidated Net Income;
(2) the Consolidated Cash Flow attributable to discontinued
operations, as determined in accordance with GAAP, and operations or
businesses disposed of prior to the Calculation Date, will be excluded;
and
(3) the Fixed Charges attributable to discontinued operations,
as determined in accordance with GAAP, and operations or businesses
disposed of prior to the Calculation Date, will be excluded, but only
to the extent that the obligations giving rise to such Fixed Charges
will not be obligations of the specified Person or any of its
Restricted Subsidiaries following the Calculation Date.
"Foreign Restricted Subsidiaries" means any Restricted Subsidiary of
Cott other than a Domestic Subsidiary.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect on the date of the indenture.
"Guarantee" means a guarantee other than by endorsement of negotiable
instruments for collection in the ordinary course of business, direct or
indirect, in any manner including, without limitation, by way of a pledge of
assets or through letters of credit or reimbursement agreements in respect
thereof, of all or any part of any Indebtedness.
"Guarantors" means each of:
(1) Cott;
(2) Cott Holdings Inc., Cott USA Corp., Cott Vending Inc.,
Interim BCB, LLC; and
(3) any other Subsidiary of Cott that executes a Guarantee in
accordance with the provisions of the indenture;
and their respective successors and assigns.
"Hedging Obligations" means, with respect to any specified Person, the
obligations of such Person incurred in the normal course of business and
consistent with past practices and not for speculative purposes under:
(1) interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements;
(2) foreign exchange contracts and currency protection
agreements entered into with one of more financial institutions is
designed to protect the person or entity entering into the agreement
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against fluctuations in interest rates or currency exchanges rates with
respect to Indebtedness incurred and not for purposes of speculation;
(3) any commodity futures contract, commodity option or other
similar agreement or arrangement designed to protect against
fluctuations in the price of commodities used by that entity at the
time; and
(4) other agreements or arrangements designed to protect such
person against fluctuations in interest rates or currency exchange
rates.
"Indebtedness" means, with respect to any specified Person, any
indebtedness of such Person, whether or not contingent:
(1) in respect of borrowed money;
(2) evidenced by bonds, notes, debentures or similar
instruments or letters of credit (or reimbursement agreements in
respect thereof);
(3) in respect of banker's acceptances;
(4) representing Capital Lease Obligations;
(5) representing the balance deferred and unpaid of the
purchase price of any property which is due more than 6 months after
the date of placing such property in service or taking delivery and
title thereto, except any such balance that constitutes an accrued
expense or trade payable arising in the ordinary course of business; or
(6) representing any Hedging Obligations,
if and to the extent any of the preceding items (other than letters of credit
and Hedging Obligations) would appear as a liability upon a balance sheet of the
specified Person prepared in accordance with GAAP. In addition, the term
"Indebtedness" includes all Indebtedness of others secured by a Lien on any
asset of the specified Person (whether or not such Indebtedness is assumed by
the specified Person) and, to the extent not otherwise included, the Guarantee
by the specified Person of any Indebtedness of any other Person.
The amount of any Indebtedness outstanding as of any date will be:
(1) the accreted value of the Indebtedness, in the case of any
Indebtedness issued with original issue discount; and
(2) the principal amount of the Indebtedness, together with
any interest on the Indebtedness that is more than 30 days past due, in
the case of any other Indebtedness.
"Inventory" means, with respect to any Person, all inventory in which
such Person has any interest, including goods held for sale and all of such
Person's raw materials (but excluding any hazardous materials), work in process,
finished goods, packing and shipping materials, and raw and packaging materials,
wherever located, and any documents of title representing any of the above.
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"Investments" means, with respect to any Person, all direct or indirect
investments by such Person in other Persons (including Affiliates) in the forms
of loans (including Guarantees or other obligations), advances or capital
contributions (excluding commission, travel and similar advances to officers and
employees made in the ordinary course of business), purchases or other
acquisitions for consideration of Indebtedness, Equity Interests or other
securities, together with all items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP. If Cott or any
Restricted Subsidiary of Cott sells or otherwise disposes of any Equity
Interests of any direct or indirect Restricted Subsidiary of Cott such that,
after giving effect to any such sale or disposition, such Person is no longer a
Subsidiary of Cott, Cott will be deemed to have made an Investment on the date
of any such sale or disposition equal to the fair market value of the Equity
Interests of such Restricted Subsidiary not sold or disposed of in an amount
determined as provided in the final paragraph of the covenant described above
under the caption " - Certain Covenants - Restricted Payments." The acquisition
by Cott or any Restricted Subsidiary of Cott of a Person that holds an
Investment in a third Person will be deemed to be an Investment by Cott or such
Restricted Subsidiary in such third Person in an amount equal to the fair market
value of the Investment held by the acquired Person in such third Person in an
amount determined as provided in the final paragraph of the covenant described
above under the caption " - Certain Covenants - Restricted Payments."
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law,
including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes of any jurisdiction).
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Net Income" means, with respect to any specified Person, the net
income (loss) of such Person, determined in accordance with GAAP and before any
reduction in respect of preferred stock dividends, excluding, however:
(1) any gain (or loss), together with any related provision
for taxes on such gain (or loss), realized in connection with: (a) any
Asset Sale; or (b) the disposition of any securities by such Person or
any of its Subsidiaries or the extinguishment of any Indebtedness of
such Person or any of its Subsidiaries; and
(2) any extraordinary gain (or loss), together with any
related provision for taxes on such extraordinary gain (or loss).
"Net Proceeds" means the aggregate cash proceeds received by Cott or
any of its Restricted Subsidiaries in respect of any Asset Sale (including,
without limitation, any cash received upon the sale or other disposition of any
non-cash consideration received in any Asset Sale), net of the direct costs
relating to such Asset Sale, including, without limitation, legal, accounting
and investment banking fees, and sales commissions, and any relocation expenses
incurred as a result of the Asset Sale, taxes paid or payable as a result of the
Asset Sale, in each case, after taking into account any available tax credits or
deductions and any tax sharing arrangements, and amounts required to be applied
to the repayment of Indebtedness, other than Senior Debt secured by a Lien on
the asset or assets that were the subject of such Asset Sale and any reserve for
adjustment in respect of the sale price of such asset or assets established in
accordance with GAAP.
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"Non-Recourse Debt" means Indebtedness:
(1) as to which neither Cott nor any of its Restricted
Subsidiaries (a) provides credit support of any kind (including any
undertaking, agreement or instrument that would constitute
Indebtedness), (b) is directly or indirectly liable as a guarantor or
otherwise, or (c) constitutes the lender;
(2) no default with respect to which (including any rights
that the holders of the Indebtedness may have to take enforcement
action against an Unrestricted Subsidiary) would permit upon notice,
lapse of time or both any holder of any other Indebtedness (other than
the notes) of Cott or any of its Restricted Subsidiaries to declare a
default on such other Indebtedness or cause the payment of the
Indebtedness to be accelerated or payable prior to its stated maturity;
and
(3) as to which the lenders have been notified in writing that
they will not have any recourse to the stock or assets of Cott or any
of its Restricted Subsidiaries.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Permitted Business" means the lines of business conducted by us and
our Restricted Subsidiaries on the date hereof and any business incidental or
reasonably related thereto including, without limitation, all beverage
businesses or which is a reasonable extension thereof as determined in good
faith by our Board of Directors and set forth in an officer's certificate
delivered to the trustee.
"Permitted Holders" means (i) any or all of THL Equity Advisors IV,
LLC, Thomas H. Lee Equity Fund IV, L.P., Thomas H. Lee Foreign Fund IV, L.P.,
Thomas H. Lee Foreign Fund IV-B, L.P., 1997 Thomas H. Lee Nominee Trust, THL
Coinvestors III-A, LLC, THL Coinvestors III-B, LLC, Thomas H. Lee Charitable
Investment Partnership, L.P., Thomas H. Lee Company and THL-CCI Limited
Partnership or any Affiliates of any of the foregoing, any beneficiaries of the
1997 Thomas H. Lee Nominee Trust and Paine Webber Capital and PW Partners 1997
L.P. and (ii) the estate of Gerald N. Pencer, Nancy Pencer, any one or more of
the lineal descendants of Nancy Pencer and/or or their spouses, any trust
established solely for the benefit of any one or more of such persons, or a
partnership in which all of the equity interests are owned by any one or more of
such persons or a corporation wholly owned by any one or more of such persons,
and each of their respective Affiliates and Associates (as such term is defined
in Rule 405 under the Securities Act) and any charitable trust of which Nancy
Pencer is a trustee, in each case at the time of determination.
"Permitted Investments" means:
(1) any Investment in Cott or in a Restricted Subsidiary of
Cott;
(2) any Investment in Cash Equivalents;
(3) any Investment by Cott or any Subsidiary of Cott in a
Person, if as a result of such Investment:
(a) such Person becomes a Restricted Subsidiary of
Cott; or
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(b) such Person is merged, consolidated or
amalgamated with or into, or transfers or conveys
substantially all of its assets to, or is liquidated into,
Cott or a Restricted Subsidiary of Cott;
(4) any Investment made as a result of the receipt of non-cash
consideration from an Asset Sale that was made pursuant to and in
compliance with the covenant described above under the caption " -
Repurchase at the Option of Holders - Asset Sales";
(5) any acquisition of assets solely in exchange for the
issuance of Equity Interests (other than Disqualified Stock) of Cott;
(6) any Investments received in compromise of obligations of
such persons incurred in the ordinary course of trade creditors or
customers that were incurred in the ordinary course of business,
including pursuant to any plan of reorganization or similar arrangement
upon the bankruptcy or insolvency of any trade creditor or customer;
(7) Hedging Obligations permitted to be incurred under the " -
Certain Covenants - Incurrence of Indebtedness and Issuance of
Preferred Stock" covenant;
(8) transactions permitted under clause (7) of the definition
of "Asset Sales";
(9) other Investments in any Person having an aggregate fair
market value (measured on the date each such Investment was made and
without giving effect to subsequent changes in value), when taken
together with all other Investments made pursuant to this clause (9)
that are at the time outstanding not to exceed $60.0 million; and
(10) loans, advances and guarantees to or in favor of
co-packers and other suppliers to assist them, by making plant
improvements or purchasing materials or equipment or otherwise, in
meeting production requirements of Cott or its Subsidiaries in an
amount not to exceed $20.0 million outstanding at any one time.
"Permitted Refinancing Indebtedness" means any Indebtedness of Cott or
any of its Subsidiaries issued in exchange for, or the net proceeds of which are
used to extend, refinance, renew, replace, defease or refund other Indebtedness
of Cott or any of its Subsidiaries (other than intercompany Indebtedness);
provided that:
(1) the principal amount (or accreted value, if applicable) of
such Permitted Refinancing Indebtedness does not exceed the principal
amount (or accreted value, if applicable) of the Indebtedness extended,
refinanced, renewed, replaced, defeased or refunded (plus all accrued
interest on the Indebtedness and the amount of all expenses and
premiums incurred in connection therewith);
(2) such Permitted Refinancing Indebtedness has a final
maturity date later than the final maturity date of, and has a Weighted
Average Life to Maturity equal to or greater than the Weighted Average
Life to Maturity of, the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded;
(3) if the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded is subordinated in right of payment to
the notes, such Permitted Refinancing Indebtedness
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has a final maturity date later than the final maturity date of, and is
subordinated in right of payment to, the notes on terms at least as
favorable to the Holders of notes as those contained in the
documentation governing the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded; and
(4) such Indebtedness is incurred either by Cott, the Issuer,
a Guarantor or by the Subsidiary who is the obligor on the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, limited
liability company or government or other entity.
"Rating Agencies" means (i) S&P and (ii) Moody's and (iii) if S&P or
Moody's or both shall not make a rating of the notes publicly available, a
nationally recognized United States securities rating agency or agencies, as the
case may be, selected by Cott, which shall be substituted for S&P or Moody's or
both, as the case may be.
"Rating Category" means (i) with respect to S&P, any of the following
categories: A, BBB, BB, B, CCC, CC, C and D (or equivalent successor
categories); (ii) with respect to Moody's, any of the following categories: A,
Baa, Ba, B, Caa, Ca, C and D (or equivalent successor categories); and (iii) the
equivalent of any such category of S&P or Moody's used by another Rating Agency.
In determining whether the rating of the notes has decreased by one or more
gradations, gradations with Rating Categories (+ and -, for S&P; 1, 2 and 3 for
Moody's; or the equivalent gradations for another Rating Agency) shall be taken
into account (e.g., with respect to S&P, a decline in a rating from BB+ to BB,
as well as from BB- to B+, will constitute a decrease of one gradation).
"Rating Date" means the date which is 90 days prior to the earlier of
(x) a Change of Control and (y) public notice of the occurrence of a Change of
Control or of the intention by the Company or any Person to effect a Change of
Control.
"Rating Decline" means the decrease (as compared with the Rating Date)
by one or more gradations (including gradations within Rating Categories) of the
rating of the notes by either Rating Agency on, or within six months after, the
date of public notice of the occurrence of a Change of Control or of the
intention by the company or any Person to effect a Change of Control (which
period shall be extended for so long as the rating of the notes is under
publicly announced consideration for possible downgrade by any of the Rating
Agencies); provided, however, that in the event the notes are not rated by two
Rating Agencies at the time a Change of Control occurs, a Rating Decline shall
be deemed to have occurred.
"Refinanced Notes" means the outstanding 9 3/8% Senior Notes Due 2005
issued pursuant to an indenture, dated as of June 27, 1995, between Cott and The
Bank of New York, as trustee, and 8-1/2% Senior Notes Due 2007 issued pursuant
to an indenture, dated as of June 16, 1997, between Cott and Marine Midland
Bank, as trustee.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" of a Person means any Subsidiary of the
referent Person that is not an Unrestricted Subsidiary.
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"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date hereof.
"S&P" means Standard & Poor's Ratings Service and its successors.
"Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which the payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and will not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"Subsidiary" means, with respect to any specified Person:
(1) any corporation, association or other business entity of
which more than 50% of the total voting power of shares of Capital
Stock entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers or trustees of the
corporation, association or other business entity is at the time owned
or controlled, directly or indirectly, by that Person or one or more of
the other Subsidiaries of that Person (or a combination thereof); and
(2) any partnership (a) the sole general partner or the
managing general partner of which is such Person or a Subsidiary of
such Person or (b) the only general partners of which are that Person
or one or more Subsidiaries of that Person (or any combination
thereof).
"Unrestricted Subsidiary" means (a) Northeast Finco Inc., (b) any
Subsidiary of an Unrestricted Subsidiary and (c) any Subsidiary of Cott (other
than the Issuer or any successor to the Issuer) that is designated by the Board
of Directors as an Unrestricted Subsidiary pursuant to a Board Resolution, but
only to the extent that such Subsidiary:
(1) has no Indebtedness other than Non-Recourse Debt;
(2) is not party to any agreement, contract, arrangement or
understanding with Cott or any Restricted Subsidiary of Cott unless the
terms of any such agreement, contract, arrangement or understanding are
no less favorable to Cott or such Restricted Subsidiary than those that
might be obtained at the time from Persons who are not Affiliates of
Cott;
(3) is a Person with respect to which neither Cott nor any of
its Restricted Subsidiaries has any direct or indirect obligation to
maintain or preserve such Person's financial condition or to cause such
Person to achieve any specified levels of operating results;
(4) has not guaranteed or otherwise directly or indirectly
provided credit support for any Indebtedness of Cott or any of its
Restricted Subsidiaries; and
(5) has at least one director on its Board of Directors that
is not a director or executive officer of Cott or any of its Restricted
Subsidiaries and has at least one executive officer that is not a
director or executive officer of or any of its Restricted Subsidiaries.
Any designation of a Subsidiary of Cott as an Unrestricted Subsidiary
will be evidenced to the trustee by filing with the trustee a certified copy of
the Board Resolution giving effect to such designation
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and an officers' certificate certifying that such designation complied with the
preceding conditions and was permitted by the covenant described above under the
caption " - Certain Covenants - Restricted Payments." If, at any time, any
Unrestricted Subsidiary (other than Northeast Finco Inc. or any of its
Subsidiaries) would fail to meet the preceding requirements as an Unrestricted
Subsidiary, it will thereafter cease to be an Unrestricted Subsidiary for
purposes of the indenture. Any Indebtedness of any such Restricted Subsidiary
that has ceased to be an Unrestricted Subsidiary pursuant to the preceding
sentence will be deemed to be incurred by a Restricted Subsidiary of Cott as of
such date and, if such Indebtedness is not permitted to be incurred as of such
date under the covenant described under the caption " - Certain Covenants -
Incurrence of Indebtedness and Issuance of Preferred Stock," Cott will be in
default of such covenant. In addition, in the event Cott or any of its
Restricted Subsidiaries enters into a transaction with Northeast Finco Inc. such
that holders of Indebtedness of Northeast Finco Inc. have recourse to Cott and
its Restricted Subsidiaries as a result of such transaction, Cott and its
Restricted Subsidiaries will be deemed to be in default of the covenant
described under the caption " - Certain Covenants - Incurrence of Indebtedness
and Issuance of Preferred Stock." The Board of Directors of Cott may at any time
designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided
that such designation will be deemed to be an incurrence of Indebtedness by a
Restricted Subsidiary of Cott of any outstanding Indebtedness of such
Unrestricted Subsidiary and such designation will only be permitted if (1) such
Indebtedness is permitted under the covenant described under the caption " -
Certain Covenants - Incurrence of Indebtedness and Issuance of Preferred Stock,"
calculated on a pro forma basis as if such designation had occurred at the
beginning of the four-quarter reference period; and (2) no Default or Event of
Default would be in existence following such designation.
"Voting Stock" of any Person as of any date means the Capital Stock of
such Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing:
(1) the sum of the products obtained by multiplying (a) the
amount of each then remaining installment, sinking fund, serial
maturity or other required payments of principal, including payment at
final maturity, in respect of the Indebtedness, by (b) the number of
years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment; by
(2) the then outstanding principal amount of such
Indebtedness.
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CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of certain United States federal income tax
considerations relevant to the exchange of outstanding 8% notes for the exchange
notes in the exchange offer. This summary is based on currently existing
provisions of the Internal Revenue Code of 1986, as amended (the "Code"),
existing and temporary Treasury regulations promulgated thereunder, and
administrative and judicial interpretations thereof, all as in effect on the
date hereof and all of which are subject to change, possibly with retroactive
effect, or different interpretations. This discussion does not address the tax
consequences to subsequent purchasers of notes and is limited to purchasers who
hold the notes as capital assets, within the meaning of Section 1221 of the
Code. Moreover, this discussion is for general information only and does not
address all of the tax consequences that may be relevant to particular
purchasers in light of their personal circumstances or to certain types of
purchasers (such as certain financial institutions, insurance companies,
tax-exempt entities, dealers in securities or currencies, persons holding notes
as part of a hedging, integrated, conversion or constructive sale transaction or
a straddle, traders in securities that elect to use a mark-to-market method of
accounting for their securities holdings, persons liable for alternative minimum
tax, or holders of notes whose "functional currency" is not the U.S. dollar) or
the effect of any applicable state, local or foreign tax law.
If a partnership holds the notes, the tax treatment of a partner will
generally depend on the status of the partner and the tax treatment of the
partnership. A partner of a partnership holding the notes should consult its tax
advisors.
HOLDERS OF THE NOTES ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO
THE PARTICULAR TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND
DISPOSITION OF THE NOTES, INCLUDING THE APPLICABILITY OF ANY FEDERAL TAX LAWS OR
ANY STATE, LOCAL OR FOREIGN TAX LAWS, AND ANY CHANGES (OR PROPOSED CHANGES) IN
APPLICABLE TAX LAWS OR INTERPRETATIONS THEREOF.
As used herein, the term "U.S. Holder" means a beneficial owner of a
note who is an individual citizen or resident of the United States (including
certain former citizens and former long-term residents), a corporation,
partnership or other entity created or organized in or under the laws of the
United States or any political subdivision thereof, an estate, the income of
which is subject to United States federal income taxation regardless of its
source, or a trust if (1) a U.S. court is able to exercise primary supervision
over the administration of the trust and one or more United States persons have
authority to control all substantial decisions of the trust, or (2) the trust
has a valid election in effect under applicable United States Treasury
regulations to be treated as a United States person. A "Non-U.S. Holder" is a
beneficial owner who is not a U.S. Holder.
PAYMENT OF INTEREST ON NOTES
Interest paid or payable on a note will be taxable to a U.S. Holder as
ordinary interest income from domestic sources, generally at the time it is
received or accrued, in accordance with such U.S. Holder's regular method of
accounting for United States federal income tax purposes. Our failure to
consummate the Registered Exchange Offer or to file or cause to be declared
effective the shelf registration statement as described under "Description of
Notes - Registration Rights; Liquidated Damages" will cause a U.S. Holder to
recognize as ordinary income the additional interest payable as a result of such
failure when that amount is accrued or paid, in accordance with such U.S.
Holder's regular method of accounting. According to United States Treasury
regulations, the possibility of a change in the interest rate will not affect
the amount
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of interest income recognized by a U.S. Holder (or the timing of such
recognition) if the likelihood of the change, as of the date the notes are
issued, is remote. We believe that the likelihood of a change in the interest
rate on the notes, as of the date the notes were issued, was remote and do not
intend to treat the possibility of a change in the interest rate as affecting
the yield to maturity of any note.
Because the stated principal amount of the notes exceeds their issue
price by more than a de minimus amount, there will be original issue discount
with respect to the notes and U.S. Holders will be required for federal income
tax purposes to accrue such original issue discount into income in advance of
the receipt of cash with respect thereto using a constant yield method under the
provisions of the Internal Revenue Code and Treasury regulations relating to
original issue discount.
EXCHANGE OF OUTSTANDING 8% NOTES PURSUANT TO THE EXCHANGE OFFER
The exchange of outstanding 8% notes for exchange notes pursuant to the
exchange offer will not be a taxable event for United States federal income tax
purposes. You will not recognize gain or loss upon the receipt of exchange
notes. The basis and holding period of the exchange notes will be the same as
the basis and holding period of the corresponding outstanding 8% notes.
SALE, EXCHANGE OR RETIREMENT OF THE NOTES
Upon the sale, exchange, redemption, retirement at maturity or other
disposition of a note, the U.S. Holder generally will recognize capital gain or
loss equal to the difference between the sum of cash plus the fair market value
of all other property received on such disposition (except to the extent such
cash or property is attributable to accrued but unpaid interest, which will be
taxable as ordinary income) and such U.S. Holder's adjusted tax basis in the
note. A U.S. Holder's adjusted tax basis in a note generally will equal the cost
of the note to such holder increased by original issue discount if any included
in income through the date of disposition, less any principal payments received
by such U.S. Holder.
Gain or loss recognized by a U.S. Holder on the disposition of a note
generally will be capital gain or loss and will be long-term capital gain or
loss if, at the time of such disposition, the U.S. Holder's holding period for
the note is more than one year. Long-term capital gains of individuals generally
may be subject to tax at a lower tax rate. The deduction of capital losses is
subject to certain limitations. U.S. Holders of notes should consult tax
advisors regarding the treatment of capital gains and losses.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Backup withholding may apply to certain payments ("reportable
payments") of principal, interest and original issue discount on a note to a
U.S. Holder, and to proceeds paid to a U.S. Holder from the sale or redemption
of a note before maturity. We, our agent, a broker, the Trustee or any paying
agent, as the case may be, will be required to deduct and withhold the
applicable tax from any reportable payment that is subject to backup withholding
tax, if, among other things, a U.S. Holder fails to furnish his taxpayer
identification number (social security or employer identification number),
certify that such number is correct, certify that such holder is not subject to
backup withholding or otherwise comply with the applicable requirements of the
backup withholding rules. Certain holders, including all corporations and
financial institutions, are not subject to backup withholding and reporting
requirements. Any amounts withheld under the backup withholding rules from a
reportable payment to a U.S. Holder will be allowed as a credit against such
U.S. Holder's United States federal income tax and may entitle the U.S. Holder
to a refund, provided that the required information is furnished to the Internal
Revenue Service.
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The amount of any reportable payments, including interest and original
issue discount, made to the record U.S. Holders of notes (other than to holders
that are exempt recipients) and the amount of tax withheld, if any, with respect
to such payments will be reported to such U.S. Holders and to the Internal
Revenue Service for each calendar year.
NON-U.S. HOLDERS
The following discussion is a summary of certain United States federal
income tax and estate tax consequences to a Non-U.S. Holder that holds a note.
No United States federal withholding tax under Sections 1441 and 1442 of the
Code will be imposed with respect to the payment by us or our paying agent of
principal or interest (including original issue discount) on a note owned by an
Non-U.S. Holder (the "Portfolio Interest Exception"), provided that:
- the Non-U.S. Holder or the Financial Institution holding the note on
behalf of the Non-U.S. Holder provides a statement, which may be
provided on IRS Form W-8BEN, IRS Form W-8EXP, or IRS Form W-8IMY, as
applicable (an "Owner's Statement"), to us, our paying agent or the
person who would otherwise be required to withhold tax, certifying,
under penalties of perjury, that such Non-U.S. Holder is not a United
States person and providing the name and address of the Non-U.S.
Holder;
- such interest is treated as not effectively connected with the
Non-U.S. Holder's United States trade or business;
- such interest payments are not made to a Non-U.S. Holder within a
foreign country that the Internal Revenue Service has listed on a list
of countries having provisions inadequate to prevent United States tax
evasion;
- interest payable with respect to the notes is not deemed contingent
interest within the meaning of the portfolio debt provisions;
- such Non-U.S. Holder does not actually or constructively own 10% or
more of the total combined voting power of all classes of our stock
entitled to vote;
- such Non-U.S. Holder is not a controlled foreign corporation within
the meaning of Section 957 of the Code that is related to us within
the meaning of Section 864(d)(4) of the Code; and
- the beneficial owner is not a bank whose receipt of interest on a note
is described in Section 881(c)(3)(A) of the Code.
As used herein, the term "Financial Institution" means a securities
clearing organization, bank or other financial institution that holds customers'
securities in the ordinary course of its trade or business that holds a note on
behalf of the owner of the note. A Non-U.S. Holder who does not qualify for the
Portfolio Interest Exception would, under current law, generally be subject to
United States federal withholding tax at a flat rate of 30% (or lower applicable
treaty rate) on interest payments. However, a Non-U.S. Holder will not be
subject to the 30% withholding tax if such Non-U.S. Holder provides us with a
properly executed:
- IRS Form W-8BEN (or other applicable form) claiming an exemption from
or reduction in withholding under the benefit of a tax treaty; or
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- IRS Form W-8ECI (or other applicable form) stating that the interest
paid on the notes is not subject to withholding tax because it is
effectively connected with the beneficial owner's conduct of a trade
or business in the United States. The 30% United States federal
withholding tax will generally not apply to any gain that a Non-U.S.
Holder recognizes upon the redemption, retirement, sale, exchange or
other disposition of a note.
In general, gain recognized by a Non-U.S. Holder upon the redemption,
retirement, sale, exchange or other disposition of a note will not be subject to
United States federal income tax unless such gain or loss is effectively
connected with a trade or business in the United States of such Non-U.S. Holder.
However, a Non-U.S. Holder may be subject to United States federal income tax at
a flat rate of 30% (unless a lower applicable treaty rate applies) on any such
gain if the Non-U.S. Holder is an individual deemed to be present in the United
States for 183 days or more during the taxable year of the disposition of the
note and certain other requirements are met.
If a Non-U.S. Holder is engaged in a trade or business in the United
States and if interest (including original issue discount) on a note is
effectively connected with the conduct of such trade or business, the Non-U.S.
Holder, although exempt from United States federal withholding tax as discussed
above, will be subject to United States federal income tax on such interest on a
net income basis in the same manner as if the holder were a U.S. Holder. In
addition, if such holder is a foreign corporation, it may be subject to a branch
profits tax equal to 30%, or applicable lower tax treaty rate, of its
effectively connected earnings and profits for the taxable year, subject to
adjustments. For this purpose, interest (including original issue discount) on a
note will be included in such foreign corporation's effectively connected
earnings and profits.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Backup withholding and information reporting requirements generally do
not apply to payments of principal and interest (including original issue
discount) made by us or a paying agent to a Non-U.S. Holder if the Owner's
Statement described above is received, provided that the payor does not have
actual knowledge that the holder is a U.S. Holder. If any payments of principal
and interest (including original issue discount) are made to the beneficial
owner of a note by or through the foreign office of a foreign custodian, foreign
nominee, broker (as defined in applicable Treasury regulations), or other
foreign agent of such beneficial owner, backup withholding and information
reporting also will not apply, assuming the applicable Owner's Statement
described above is received (and the payor does not have actual knowledge that
the beneficial owner is a United States person) or the beneficial owner
otherwise establishes an exemption. Information reporting requirements (but not
backup withholding) may apply, however, to a payment by a foreign office of such
a custodian, nominee, broker or agent that is:
- a United States person;
- a foreign person that derives 50% or more of its gross income for
certain periods from the conduct of a trade or business in the United
States;
- a foreign partnership in which one or more United States persons, in
the aggregate, own more than 50% of the income or capital interests in
the partnership or a foreign partnership that is engaged in a trade or
business in the United States; or
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- a controlled foreign corporation within the meaning of Section 957 of
the Code unless the holder is a Non-U.S. Holder and certain other
conditions are met or the holder otherwise establishes an exemption.
Payment of principal and interest (including original issue discount)
on a note to a Non-U.S. Holder by a United States office of a custodian, nominee
or agent, or the payment by the United States office of a broker of the proceeds
of sale of a note, will be subject to both backup withholding and information
reporting unless the beneficial owner provides the Owner's Statement described
above (and the payor does not have actual knowledge that the beneficial owner is
a United States person) or otherwise establishes an exemption.
U.S. FEDERAL ESTATE TAX
Subject to applicable estate tax treaty provisions, notes beneficially
owned by an individual Non-U.S. Holder at the time of death will not be included
in such Non-U.S. Holder's gross estate for United States federal estate tax
purposes provided that:
- such individual Non-U.S. Holder does not actually or constructively
own 10% or more of the total combined voting power of all classes of
our stock entitled to vote within the meaning of the Code and
applicable Treasury regulations; and
- the interest payments with respect to such note would not have been,
if received at the time of such individual's death, effectively
connected with the conduct of a United States trade or business by
such individual Non-U.S. Holder.
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PLAN OF DISTRIBUTION
Broker-dealers that receive exchange notes in exchange for outstanding
8% notes that the broker-dealer acquired as a result of market-making activities
or other trading activities will be required to deliver a copy of this
prospectus, as amended or supplemented, in connection with the resale of
exchange notes. Each broker-dealer that receives exchange notes for its own
account in the exchange offer will be required to acknowledge that it will
deliver a prospectus in connection with any resale of the exchange notes. During
the ninety day period following the exchange offer, to the extent required by
applicable securities laws, we will promptly comply with any broker-dealer's
written request for copies of this prospectus and any amendment or supplement to
this prospectus for use in connection with resales of exchange notes.
We will not receive any proceeds from any sale of exchange notes by
broker-dealers. Exchange notes received by broker-dealers for their own account
in the exchange offer may be sold from time to time in one or more transactions
in the over-the-counter market, in negotiated transactions, through the writing
of options on the exchange notes or in a combination of these methods of resale,
at market prices prevailing at the time of resale, at prices related to those
prevailing market prices or at negotiated prices. Any resale may be made
directly to purchasers or to or through broker-dealers who may receive
compensation in the form of commissions or concessions from any broker-dealers
or the purchasers of any exchange notes. Any broker-dealer that resells exchange
notes that it received for its own account in the exchange offer and any
broker-dealer that participates in a distribution of the exchange notes may be
deemed to be an "underwriter" within the meaning of the Securities Act, and any
profit on any resale of exchange notes and any commission or concessions
received by such person may be considered underwriting compensation under the
Securities Act. The letter of transmittal states that a broker-dealer's
acknowledgment that it will deliver a prospectus will not be regarded as an
admission that the broker-dealer is an "underwriter" within the meaning of the
Securities Act.
We have agreed to pay all expenses incident to the exchange offer and
will indemnify the holders of the outstanding 8% notes, including any
broker-dealers, against certain liabilities, including liabilities under the
Securities Act.
- 98 -
LEGAL MATTERS
The validity of the notes and the guarantees will be passed upon for
the issuer and the guarantors, respectively, by Drinker Biddle & Reath LLP,
Philadelphia, Pennsylvania, U.S. counsel for the issuer and the guarantors.
EXPERTS
The consolidated financial statements incorporated in this document by
reference to the Annual Report on Form 10-K of Cott Corporation for the year
ended December 29, 2001 have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATION
Cott Corporation files annual, quarterly and special reports, proxy
statements and other information with the SEC. Cott Corporation's SEC filings
are available to the public over the Internet at the SEC's web site at
http://www.sec.gov. You also may read and copy any document we file at the SEC's
public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. Please
call the SEC at 1-800-SEC-0330 for further information on the public reference
room. Cott Corporation's common stock is listed and traded on the Toronto Stock
Exchange under the ticker symbol "BCB," and on Nasdaq under the ticker symbol
"COTT."
This document "incorporates by reference" the information Cott
Corporation files with the SEC, which means that we can disclose important
information to you by referring you to those documents. The information
incorporated by reference is considered to be part of this document, and
information that we file later with the SEC will automatically update and
supersede the information in this document. We incorporate by reference the
documents listed below and any future filings we make with the SEC under
Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as
amended, until the exchange offer is completed:
- Our Annual Report on Form 10-K for the year ended December 30,
2001, except that our Annual Report to Shareowners for the
year ended December 30, 2001 filed as Exhibit 13 thereto and
our Proxy Circular for the 2002 Annual and Special Meeting of
Shareowners are not incorporated into this document by
reference other than the sections of those documents that are
specifically incorporated into our Annual Report on Form 10-K
by reference.
You may request a copy of each of these filings at no cost, by writing
or telephoning us at the following address or telephone number:
Cott Beverages Inc.
c/o Cott Corporation
207 Queen's Quay West, Suite 340
Toronto, Ontario M5J 1A7
Attention: Vice President - Treasurer
(416) 203-3898
- 99 -
PART II INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Corporation laws of the States of Georgia and Delaware, and
those of Canada and Nova Scotia and our charter and bylaws, or operating
agreement, as the case may be, include provisions designed to limit the
liability of our officers and directors against certain liabilities. These
provisions are designed to encourage qualified individuals to serve as our
officers and directors.
Article IX of the bylaws of both Cott Beverages Inc. and Cott USA Corp.
provide that each respective company will indemnify and otherwise protect its
officers, directors, employees and agents under the circumstances described in
and to the extent permitted by the corporate laws of the State of Georgia.
Moreover, Article 8 of the Articles of Incorporation of Cott USA Corp. provides
that, to extent permitted under Georgia Business Corporation Code (the "GBCC"),
no director shall be personally liable for monetary damages for any breach of
the duty of care or other duty as a director.
Section 14-2-202(b)(4) of the GBCC provides that a corporation's
articles of incorporation may include a provision that eliminates or limits the
personal liability of directors for monetary damages to the corporation or its
shareholders for any action taken, or any failure to take any action, as a
director; provided, however, that the Section does not permit a corporation to
eliminate or limit the liability of a director for appropriating, in violation
of his or her duties, any business opportunity of the corporation, for
- - acts or omissions including intentional misconduct or a knowing
violation of law,
- - voting for or assenting to an unlawful distribution (whether as a
dividend, stock repurchase or redemption, or otherwise) as provided in
Section 14-2-832 of the GBCC, or
- - receiving from any transaction an improper personal benefit.
Section 14-2-202(b)(4) also does not eliminate or limit the rights of the
corporation or any shareholder to seek an injunction or other nonmonetary relief
in the event of a breach of a director's duty to the corporation and its
shareholders. Additionally, Section 14-2-202(b)(4) applies only to claims
against a director arising out of his or her role as a director, and does not
relieve a director from liability arising from his or her role as an officer or
in any other capacity.
Sections 14-2-850 to 14-2-859, inclusive, of the GBCC govern the
indemnification of directors, officers, employees, and agents. Section 14-2-851
of the GBCC permits indemnification of an individual for liability incurred by
him or her in connection with any threatened, pending or completed action, suit
or proceeding, whether civil, criminal, administrative, arbitrative or
investigative and whether formal or informal (including, subject to certain
limitations, civil actions brought as derivative actions by or in the right of
the corporation) in which he or she is made a party by reason of being a
director of the corporation and a director who, at the request of the
corporation, acts as a director, officer, partner, trustee, employee or agent of
another foreign or domestic corporation, partnership, joint venture, trust,
employee benefit plan or other entity. This section permits indemnification if
the director acted in good faith and reasonably believed (1) in the case of
conduct in his or her official capacity, that such conduct was in the best
interests of the corporation, (2) in all other cases other than a criminal
proceeding, that
such conduct was at least not opposed to the best interests of the corporation,
and (3) in the case of a criminal proceeding, that he or she had no reasonable
cause to believe his or her conduct was unlawful. If the required standard of
conduct is met, indemnification may include judgments, settlements, penalties,
fines or reasonable expenses (including attorneys' fees) incurred with respect
to a proceeding.
A Georgia corporation may not indemnify a director under Section
14-2-851 in the following instances:
- - in connection with a proceeding by or in the right of the corporation,
except for reasonable expenses incurred by such director in connection
with the proceeding provided it is determined that such director met
the relevant standard of conduct set forth above, or
- - in connection with any proceeding with respect to conduct for which
such director was adjudged liable on the basis that he or she received
an improper personal benefit. Prior to indemnifying a director under
Section 14-2-851 of the GBCC, a determination must be made that the
director has met the relevant standard of conduct. Such determination
must be made by: (1) a majority vote of a quorum consisting of
disinterested directors, (2) a majority vote of a duly designated
committee of disinterested directors, (3) duly selected special legal
counsel, or (4) a vote of the shareholders, excluding shares owned by
or voted under the control of directors who do not qualify as
disinterested directors.
Section 14-2-853 of the GBCC provides that a Georgia corporation may,
before final disposition of a proceeding, advance funds to pay for or reimburse
the reasonable expenses incurred by a director who is a party to a proceeding
because he or she is a director, provided that such director delivers to the
corporation a written affirmation of his or her good faith belief that he or she
met the relevant standard of conduct described in Section 14-2-851 of the GBCC
or that the proceeding involves conduct for which liability has been eliminated
under a provision of the articles of incorporation as authorized by Section
14-2-202(b)(4), and a written undertaking by the director to repay any funds
advanced if it is ultimately determined that such director was not entitled to
such indemnification. Section 14-2-852 of the GBCC provides that directors who
are successful with respect to any claim brought against them, which claim is
brought because they are or were directors of the corporation, are entitled to
mandatory indemnification against reasonable expenses incurred in connection
therewith.
The GBCC also allows a Georgia corporation to indemnify directors made
a party to a proceeding without regard to the above-referenced limitations, if
authorized by the articles of incorporation or a bylaw, contract, or resolution
duly adopted by a vote of the shareholders of the corporation by a majority of
votes entitled to be cast, excluding shares owned or voted under the control of
the director or directors who are not disinterested, and to advance funds to pay
for or reimburse reasonable expenses incurred in the defense thereof, subject to
restrictions similar to the restrictions described in the preceding paragraph;
provided, however, that the corporation may not indemnify a director adjudged
liable (1) for any appropriation, in violation of his or her duties, of any
business opportunity of the corporation, (2) for acts or omissions which involve
intentional misconduct or a knowing violation of law, (3) for unlawful
distributions under Section 14-2-832 of the GBCC (discussed above) or (4) for
any transaction in which the director obtained an improper personal benefit.
Section 14-2-857 of the GBCC provides that an officer of a corporation
(but not an employee or agent generally) who is not a director has the mandatory
right of indemnification granted to directors under Section 14-2-852, subject to
the same limitations as described above. In addition, a corporation
may, as provided by either (1) the articles of incorporation, (2) the bylaws,
(3) or by general or specific actions by the board of directors or (4) contract,
indemnify and advance expenses to (a) an officer who is not a director (unless
such officer who is also a director is made party to a proceeding if the sole
basis on which he or she is made a party is an act or omission solely as an
officer) for appropriating, in violation of his or her duties, any business
opportunity of the corporation, for acts or omissions including intentional
misconduct or a knowing violation of law, for voting for or assenting to an
unlawful distribution (whether as a dividend, stock repurchase or redemption, or
otherwise) as provided in Section 14-2-832 (discussed above) of the GBCC, or for
receiving from any transaction an improper personal benefit, and (b) to an
employee or agent who is not a director to the extent that such indemnification
is consistent with public policy.
Certain provisions addressing the liability of officers and directors
apply in the case of Cott Corporation ("Cott") as well. Under the Canada
Business Corporations Act, a corporation may indemnify certain persons
associated with the corporation against all costs, charges and expenses
(including an amount paid to settle an action or satisfy a judgment) reasonably
incurred by him or her in respect of any civil, criminal, administrative,
investigative or other proceeding in which he or she is involved because of that
association with the corporation or other entity. Indemnifiable persons are
current and former directors or officers or other individual who acts or acted
at the corporation's request as a director or officer, or an individual acting
in a similar capacity.
The law permits indemnification only if the indemnifiable person acted
honestly and in good faith with a view to the best interests of the corporation
or, as the case may be, to the best interest of the other entity for which the
individual acted as a director or officer in a similar capacity at the
corporations request and, in the case of a criminal or administrative action or
proceeding that is enforced by a monetary penalty, he or she had reasonable
grounds for believing his or her conduct was lawful and he or she was not judged
by a court or other competent authority to have committed any fault or omitted
to do anything he or she ought to have done. With the approval of the court, a
corporation may also indemnify an indemnifiable person in respect of an action
by or on behalf of the corporation.
Section 7.02 of Cott's by-laws provide that, without in any manner
derogating from or limiting the mandatory provisions of the Canada Business
Corporations Act but subject to the conditions contained in the by-laws, Cott
shall indemnify any of its directors or officers, former directors or officers,
and each individual who acts or acted at Cott's request as a director or
officer, or each individual acting in a similar capacity of another entity,
against all costs, charges and expenses, including an amount paid to settle an
action or satisfy a judgement, reasonably incurred by the individual in respect
of any civil, criminal, administrative, investigative or other proceeding in
which the individual is involved because of that association with Cott or other
entity to the extent that the individual seeking the indemnity:
- - acted honestly and in good faith with a view to the best interests of Cott
or, as the case may be, to the best interest of the other entity for which
the individual acted as a director or officer or in a similar capacity at
the request of Cott; and
- - in the case of a criminal or administrative action or proceeding that is
enforced by a monetary penalty, the individual had reasonable grounds for
believing that the individual's conduct was lawful.
Both the Canada Business Corporations Act and Cott's by-laws expressly
provide for Cott to advance moneys to a director, officer or other individual
for the costs, charges and expenses of a proceeding referenced above. The
individual is required to repay the moneys if he or she does not fulfill
the aforementioned conditions. Section 7.05 of the Cott's by-laws states that
subject to the limitations contained in the Canada Business Corporations Act,
Cott may purchase and maintain insurance for the benefit of its directors and
officers as such, as the board may from time to time determine.
In addition to the provisions found in its charter and bylaws, Cott has
entered into an indemnification agreement with its President and Chief Executive
Officer (the "Executive ") by way of an employment agreement. Under the
employment agreement, if the Executive is made a party, or is threatened to be
made a party, to any action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that he is or was a
director, officer or employee of Cott or is or was serving at the request of
Cott as a director, officer, member, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, including service with
respect to employee benefit plans, whether or not the basis of such proceeding
is the Executive's alleged action in an official capacity while serving as a
director, officer, member, employee or agent, Cott shall indemnify and hold
harmless the Executive to the fullest extent legally permitted or authorized by
Cott's certificate of incorporation or bylaws or resolutions of Cott's board of
directors or, if greater, by the laws of the Province of Ontario, and the
Federal Laws of Canada applicable to the Cott, against all cost, expense,
liability, and loss (including, without limitation, attorney's fees, judgments,
fines, ERISA excise taxes or penalties and amounts paid or to be paid in
settlement) reasonably incurred or suffered by the Executive in connection
therewith, and such indemnification shall continue as to the Executive even if
he has ceased to be a director, member, employee or agent of Cott or other
entity and shall inure to the benefit of the Executive's heirs, executors and
administrators. Cott shall advance to the Executive all reasonable costs and
expenses incurred by him in connection with a proceeding within 20 days after
receipt by Cott of a written request for such advance. Such request shall
include an undertaking by the Executive to repay the amount of such advance if
it shall ultimately be determined that he is not entitled to be indemnified
against such costs and expenses.
The Memorandum of Association (Nova Scotia) and Amended and Restated
Certificate of Incorporation of another of the Guarantors, Cott Holdings Inc.
("Cott Holdings") provides that, to the extent permitted by the laws of Delaware
and Nova Scotia, no director shall be personally liable for monetary damages for
breach of a fiduciary duty as a director. Furthermore, under the Memorandum of
Association (Nova Scotia) and Amended and Restated Certificate of Incorporation,
the liability of a director shall be limited or eliminated to the fullest extent
authorized by the laws of the General Corporation Law of Delaware (the "GCL")
and the Companies Act of Nova Scotia. The Articles of Association and Bylaws of
Cott Holdings provide terms consistent with the Memorandum of Association (Nova
Scotia) and Amended and Restated Certificate of Incorporation. Under the
Articles of Association and Bylaws, Cott Holdings indemnifies any current or
former director and officer, and one who acts or acted at the company's request
as a director or officer of a body corporate of which the company is or was a
shareholder or creditor (or a person who undertakes or has undertaken any
liability on behalf of Cott Holdings or any such body corporate) and his heir or
legal representative, against all costs, charges and expenses incurred in
respect of any civil, criminal or administrative action or proceeding to which
one is made a party by reason of being or having been a director or officer of
Cott Holdings or such body corporate (including an amount paid to settle an
action or satisfy a judgement) incurred by him or her in respect of any such
action or proceeding for the recovery of claims of employees or former employees
of Cott Holdings or such body corporate (including, without limitation, claims
for wages, salaries and other remuneration or benefits) or in respect of any
claim based upon the failure of Cott Holdings to deduct, withhold, remit or pay
any amount for taxes, assessments and other charges of any nature whatsoever as
required by law if (i) such person acted honestly and in good faith with a view
to the best interests of the company, and (ii) in the case of a criminal or
administrative action or proceeding that is enforced by a
monetary penalty, the individual has reasonable grounds for believing that his
or her conduct was lawful. Subject to limitations of the GCL and the Companies
Act of Nova Scotia, Cott Holdings may purchase and maintain insurance for the
benefit of its officers and directors as such, as the board may from time to
time determine.
The Companies Act (Nova Scotia) does not restrict a company from
indemnifying directors and provides that in any proceeding against a director or
person occupying the position of director for negligence or breach of trust in
which it appears to the court hearing the case that the director or other such
person is or may be liable in respect of the negligence or breach of trust, but
has acted honestly and reasonably and ought fairly to be excused for the
negligence or breach of trust, the court may relieve the individual, either
wholly or partly, from liability on such terms as the court may think proper.
Section 145 of the GCL provides that a corporation may indemnify
directors and officers as well as other employees and individuals against
expenses (including attorneys' fees), judgments, fines, and amounts paid in
settlement in connection with specified actions, rules, or proceedings, whether
civil, criminal, administrative, or investigative (other than action by or in
the right of the corporation (a "derivative action"), if they acted in good
faith and in a manner they 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 their conduct was unlawful. A
similar standard is applicable in the case of derivative actions, except that
indemnification extends only to expenses (including attorneys' fees) incurred in
connection with the defense or settlement of such action, and the statute
requires court approval for any indemnification where the person seeking
indemnification has been found liable to the corporation. The statute further
provides that it is not exclusive of other rights to indemnification provided in
a corporation's charter or by-laws, or by agreement, disinterested director or
stockholder vote, or otherwise.
In addition, under Section 102(b)(7) of the GCL, a corporation may
provide in its certificate of incorporation that a director may not be
personally liable to the corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director, except for liability for
- - any breach of the director's duty of loyalty to the corporation or its
stockholders,
- - acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law,
- - payment of unlawful dividends or unlawful stock purchases or redemptions,
or
- - any transaction from which the director derived an improper personal
benefit.
The GCL permits the advance payment by the corporation of an
indemnified person's expenses prior to the final disposition of an action. In
the case of a current director or officer, the indemnified person must undertake
to repay any amount advanced if it is later determined that he or she is not
entitled to indemnification.
The charter and bylaws of Cott Vending Inc. ("Cott Vending") contain
provisions with respect to liability and indemnification consistent with the
provisions of the GCL discussed above. Under the Seventh Article to Cott
Vending's certificate of incorporation, a director has no personal liability to
the corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director except to
the extent that Section 102(b)(7) of the GCL expressly provides that such
liability may not be eliminated or limited. Under Article Six of the bylaws, any
director or officer who is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether, criminal,
administrative or investigative, by reason of the fact that such person is or
was a director or officer of Cott Vending or served as a representative of
another enterprise at the request of Cott Vending shall be indemnified against
all expenses, judgments, fines, excise taxes and amounts paid in settlement
actually and reasonable incurred in connection with such action, suit or
proceeding to the extent permissible under Delaware law. Officers and directors
are entitled to advances for defending such actions from Cott Vending for
payment of expenses in defending the action to the extent permissible under
Delaware law. Upon the request of a person for indemnification under Article Six
of the bylaws, a determination as to whether indemnification is permissible is
made by the board of directors or a committee thereof, or by independent legal
counsel if the board or committee so directs or is not empowered by statute to
make such decision.
Another of the Guarantors organized under the law of the State of
Delaware, Interim BCB, LLC ("Interim BCB") provides for indemnification of its
managers and members in its amended and restated operating agreement. Section
18-108 of the Delaware Limited Liability Company Act ("DLLCA") provides that a
limited liability company has the power to indemnify and hold harmless any
member or manager or other person from and against any and all claims and
demands whatsoever, subject to the standards and restrictions, if any, as set
forth in the limited liability company agreement. Under Article 4.6 of the
Amended and Restated Operating Agreement of Interim BCB, Interim BCB must
indemnify each of its managers and members and make advances for expenses to
each arising from any loss, cost, expense, damage, claim or demand, in
connection with Interim BCB, the manager's or member's status as a manager or
member of Interim BCB, the manger's or member's participation in the management,
business and affairs of Interim BCB or such manager's or member's activities on
behalf of Interim BCB to the fullest extent permitted by Section 18-108 of the
DLLCA. In addition, no manager is liable to Interim BCB, any of its members, or
other manager for an action taken in the managing of the business or affairs of
Interim BCB if he or she performs the duty of his or her office (1) in a manner
he or she believes in good faith to be in the best interest of Interim BCB and
(2) with such care as an ordinarily prudent person in a like position under
similar circumstances. Furthermore, no manager is liable to Interim BCB or any
members for any loss or damage except loss or damage resulting from intentional
misconduct or knowing violation of law or a transaction for which a manager
received a personal benefit in violation or breach of the amended and restated
operating agreement.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
Number Description
- ------ -----------
2.1+ Asset Purchase Agreement by and between Concord Beverage
Company and Concord Beverage LP, dated as of October 18, 2000
(incorporated by reference to Exhibit 2.1 to Cott
Corporation's Form 8-K dated as of October 18, 2000).
2.2+ Agreement of Sale by and between Concord Beverage Company and
Concord Beverage LP, dated as of October 18, 2000
(incorporated by reference to Exhibit 2.2 to Cott
Corporation's Form 8-K dated as of October 18, 2000).
2.3 Acquisition Agreement, dated November 20, 1997, among Cott UK
Limited, Cott Corporation and the several persons listed in
Schedule 1 to the Agreement relating to the
acquisition of Hero Drinks Group (U.K.) Limited (incorporated
by reference to Exhibit 10.2 to Cott Corporation's Form 10-K
dated March 31, 2000).
2.4 (*) Asset Acquisition and Facility Use Agreement, dated April
13, 2000, between BCB USA Corp. (since renamed "Cott Beverages
Inc.") and Schmalbach-Lubeca Plastic Containers USA, Inc.
relating to the sale of the PET perform blow molding operation
(incorporated by reference to Exhibit 10.1 to Cott
Corporation's Form 10-Q dated May 16, 2000).
2.5+ (*) Asset Purchase Agreement by and among Royal Crown Company,
Inc., Cott Corporation and BCB USA Corp. dated as of June 13,
2001 (incorporated by reference to Exhibit 2.1 to Cott
Corporation's Form 8-K dated July 19, 2001).
3.1 Articles of Incorporation of Cott Corporation (incorporated by
reference to Exhibit 3.1 to Cott Corporation's Form 10-K dated
March 31, 2000).
3.2 By-laws of Cott Corporation (incorporated by reference to
Exhibit 3.2 to Cott Corporation's Form 10-K dated March 8,
2002).
3.3 Articles of Incorporation Cott Beverages Inc. (filed
herewith).
3.4 Bylaws of Cott Beverages Inc. (formerly BCB USA Corp. and
prior to that Cott Beverages USA Inc.) (filed herewith).
3.5 Amended and Restated Certificate of Incorporation Cott
Holdings Inc. (filed herewith).
3.6 Memorandum of Association and Amended and Restated Certificate
of Incorporation of Cott Holdings Inc. (filed herewith)
3.7 Articles of Association and Bylaws of Cott Holdings Inc.,
(filed herewith).
3.8 Articles of Incorporation of Cott USA Corp., as amended
(filed herewith).
3.9 Bylaws of Cott USA Corp. (filed herewith).
3.10 Certificate of Incorporation of Cott Vending Inc. (filed
herewith).
3.11 Bylaws of Cott Vending Inc. (filed herewith).
3.12 Certificate of Formation of Interim BCB, LLC (filed herewith).
3.13 Amended and Restated Operating Agreement of Interim BCB, LLC
(formerly Destination Products International, LLC) (filed
herewith).
4.1 Subscription Agreement dated as of June 12, 1998 for
Convertible Participating Voting Second Preferred Shares,
Series 1 of Cott Corporation (as issuer) (incorporated by
reference to Exhibit 4.2 to Cott Corporation's Form 10-K dated
March 31, 2000).
4.2 Letter Agreement dated as of November 3, 1999, regarding
standstill provisions between Cott Corporation and the Thomas
H. Lee Company (incorporated by reference to Exhibit 4.3 to
Cott Corporation's Form 10-K dated March 31, 2000).
4.3 Indenture dated as of December 21, 2001, between Cott
Beverages Inc. (as issuer) and HSBC Bank USA (as trustee)
(incorporated by reference to Exhibit 10.5 to Cott
Corporation's Form 10-K dated March 8, 2002).
4.4 Registration Rights Agreement dated as of December 21, 2001,
among Cott Beverages Inc., the Guarantors named therein and
Lehman Brothers Inc., BMO Nesbitt Burns Corp. and CIBC World
Markets Corp. (incorporated by reference to Exhibit 10.5 to
Cott Corporation's Form 10-K dated March 8, 2002).
5.1 Opinion of Drinker Biddle & Reath LLP (filed herewith).
10.1 (*) Termination Agreement, dated November 1, 1999, among Cott
Beverages USA, Inc. (now "Cott Beverages Inc.") and Premium
Beverages Packers, Inc, (incorporated by reference to Exhibit
10. 1 to Cott Corporation's Form 10-K dated March 31, 2000).
10.2 (*) Supply Agreement, dated December 21, 1998, among Wal-Mart
Stores, Inc. and Cott Beverages USA, Inc. (now "Cott Beverages
Inc.") (incorporated by reference to Exhibit 10. 3 to Cott
Corporation's Form 10-K dated March 31, 2000).
10.3 (**) Employment Agreement of Frank E. Weise III dated June 11,
1998 (incorporated by reference to Exhibit 10.5 to Cott
Corporation's Form 10-K dated March 31, 2000), as amended July
3, 2001 (incorporated by reference to Exhibit 10.2 of Cott
Corporation's Form 10-Q for the period ended June 30, 2001).
10.4 (**) Employment Agreement of Mark Benadiba dated October 7,
1997, as amended December 19, 1997 (incorporated by reference
to Exhibit 10. 7 to Cott Corporation's Form 10-K dated March
31, 2000), and as further amended September 25, 2000
(incorporated by reference to Exhibit 10.6 to Cott
Corporation's Form 10-K dated March 7, 2001).
10.5 (**) Employment Agreement of Paul R. Richardson dated August
23, 1999 (incorporated by reference to Exhibit 10. 8 to Cott
Corporation's Form 10-K dated March 31, 2000), as amended
February 18, 2002 (incorporated by reference to Exhibit 10.5
to Cott Corporation's Form 10-K dated March 8, 2002).
10.6 (**) Employment Agreement of Raymond P. Silcock dated August
17, 1998 (incorporated by reference to Exhibit 10.9 to Cott
Corporation's Form 10-K dated March 31, 2000).
10.7 (**) Employment Agreement of Mark R. Halperin dated July 14,
2000 (incorporated to Exhibit 10.10 to Cott Corporation's Form
10-K dated March 8, 2002).
10.8 (**) Amended 1999 Executive Incentive Share Compensation Plan
effective January 3, 1999 (incorporated by reference to
Exhibit 10.8 to Cott Corporation's Form 10-K for the year
ended December 30, 2000).
10.9 (**) 2000 Executive Incentive Share Compensation Plan
effective January 2, 2001 (incorporated by reference to
Exhibit 10.9 to Cott Corporation's Form 10-K for the year
ended December 30, 2000).
10.10 (**) 2001 Executive Incentive Share Compensation Plan
effective January 2, 2002 (incorporated to Exhibit 10.10 to
Cott Corporation's Form 10-K dated March 8, 2002).
10.11 (**) Second Canadian Employee Share Purchase Plan effective
January 2, 2001 (incorporated by reference to Exhibit 10.11 to
Cott Corporation's Form 10-K for the year ended December 30,
2000).
10.12 Share Plan for Non-Employee Directors effective January 2,
2002 (incorporated to Exhibit 10.12 to Cott Corporation's Form
10-K dated March 8, 2002).
10.13 (*) Credit Agreement dated as of July 19, 2001 between BCB USA
Corp. (since renamed "Cott Beverages Inc."), Cott Corporation
and the Several Lenders, Lehman Brothers Inc., First Union
National Bank, Bank of Montreal and Lehman Commercial Paper,
Inc. (incorporated by reference to Exhibit 10.1 to Cott
Corporation's Form 8-K dated July 19, 2001), as amended
December 13, 2001 and December 19, 2001 (incorporated to
Exhibit 10.13 to Cott Corporation's Form 10-K dated March 8,
2002).
10.14 Services Agreement among Cott Corporation, Deuteronomy Inc.
and Don Watt consulting agreement dated June 1, 1999
(incorporated to Exhibit 10.14 to Cott Corporation's Form 10-K
dated March 8, 2002).
12.1 Computation of Ratios of Earnings to Fixed Charges (filed
herewith).
21.1 List of Subsidiaries of Cott Corporation and Cott Beverages
Inc. (filed herewith).
23.1 Consent of Independent Accountants (filed herewith).
23.2 Consent of Drinker, Riddle & Reath LLP (included in Exhibit
5.1 above)
25.1 Form T-1, Statement of Eligibility under the Trust Indenture
Act of 1939 of HSBC Bank USA (filed herewith).
99.1 Form of Letter of Transmittal (filed herewith).
- ------------------
+ In accordance with Item 601(b)(2) of Regulation S-K, the exhibits to this
Exhibit have been omitted and a list briefly describing those exhibits is
contained in the Exhibit. The Registrant will furnish a copy of any
omitted exhibit to the Commission upon request.
(*) Document is subject to request for confidential treatment.
(**) Indicates a management contract or compensatory plan.
ITEM 22. UNDERTAKINGS
A. Each of the undersigned registrants hereby undertakes to deliver or cause to
be delivered with the prospectus, to each person to whom the prospectus is sent
or given, the latest annual report, to security
holders that is incorporated by reference in the prospectus and furnished
pursuant to and meeting the requirements of Rule 14a-3 or Rule 14c-3 under the
Securities Exchange Act of 1934; and where interim financial information
required to be presented by Article 3 of Regulation S-X is not set forth in the
prospectus, to deliver, or cause to be delivered to each person to whom the
prospectus is sent or given, the latest quarterly report that is specifically
incorporated by reference in the prospectus to provide such interim financial
information.
B. Each of the undersigned registrants hereby undertakes to respond to requests
for information that is incorporated by reference into the prospectus pursuant
to item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
C. Each of the undersigned registrants hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrants
have duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Toronto, Canada on March 8, 2002.
COTT BEVERAGES INC.
COTT CORPORATION
COTT USA CORP.
COTT VENDING INC.
INTERIM BCB, LLC
By: /s/ Frank E. Weise III
-----------------------------------
Frank E. Weise III
President
COTT HOLDINGS INC.
By: /s/ Colin D. Walker
-----------------------------------
Colin D. Walker
President
Pursuant to the requirements of Section 13 or 15(d) the Securities
Exchange Act of 1934, the Registrants have duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized.
With respect to Cott Beverages Inc. and Cott USA Corp.:
/s/ Frank E. Weise III President and Chief Executive Date: March 8, 2002
------------------------------------ Officer and Director
Frank E. Weise III (Principal Executive Officer)
/s/ Raymond P. Silcock Executive Vice President and Date: March 8, 2002
--------------------------- Director
Raymond P. Silcock (Principal Financial Officer)
/s/ Mark R. Halperin Senior Vice President, Secretary Date: March 8, 2002
------------------------------------ and Director
Mark R. Halperin
With respect to Cott Holdings Inc.:
/s/ Colin D. Walker President Date: March 8, 2002
------------------------------------ (Principal Executive Officer)
Colin D. Walker
/s/ Raymond P. Silcock Executive Vice President Date: March 8, 2002
--------------------------- (Principal Financial Officer)
Raymond P. Silcock
/s/ Mark R. Halperin Senior Vice President, Secretary Date: March 8, 2002
------------------------------------ and Director
Mark R. Halperin
/s/ Tina Dell'Aquila Vice President, Controller, Date: March 8, 2002
------------------------------------ Assistant Secretary and Director
Tina Dell'Aquila
/s/ Catherine Brennan Vice President, Treasurer and Date: March 8, 2002
--------------------------- Director
Catherine Brennan
With respect to Interim BCB, LLC:
/s/ Frank E. Weise III President and Chief Executive Date: March 8, 2002
--------------------------------- Officer and Manager
Frank E. Weise III (Principal Executive Officer)
/s/ Raymond P. Silcock Executive Vice President and Date: March 8, 2002
------------------------ Manager
Raymond P. Silcock (Principal Financial Officer)
/s/ Colin D. Walker Senior Vice President and Date: March 8, 2002
--------------------------------- Manager
Colin D. Walker
With respect to Cott Vending Inc.:
/s/ Frank E. Weise III President and Director Date: March 8, 2002
--------------------------------- (Principal Executive Officer)
Frank E. Weise III
/s/ Raymond P. Silcock Executive Vice President and Date: March 8, 2002
------------------------ Director
Raymond P. Silcock (Principal Financial Officer)
/s/ Colin D. Walker Senior Vice President and Director Date: March 8, 2002
---------------------------------
Colin D. Walker
With respect to Cott Corporation:
/s/ Frank E. Weise III Chairman, President and Chief Date: March 8, 2002
--------------------------------- Executive Officer, Director
Frank E. Weise III (Principal Executive Officer)
/s/ Raymond P. Silcock Executive Vice-President and Date: March 8, 2002
------------------------ Chief Financial Officer
Raymond P. Silcock (Principal Financial Officer)
/s/ Serge Gouin Director Date: March 8, 2002
------------------------------------
Serge Gouin
/s/ Colin J. Adair Director Date: March 8, 2002
------------------------------------
Colin J. Adair
/s/ W. John Bennett Director Date: March 8, 2002
------------------------------------
W. John Bennett
/s/ C. Hunter Boll Director Date: March 8, 2002
------------------------------------
C. Hunter Boll
/s/ Thomas M. Hagerty Director Date: March 8, 2002
---------------------------
Thomas M. Hagerty
/s/ Stephen H. Halperin Director Date: March 8, 2002
------------------------------------
Stephen H. Halperin
/s/ David V. Harkins Director Date: March 8, 2002
---------------------------------
David V. Harkins
/s/ True H. Knowles Director Date: March 8, 2002
------------------------------------
True H. Knowles
/s/ Donald G. Watt Director Date: March 8, 2002
------------------------------------
Donald G. Watt
INDEX TO EXHIBITS
Number Description
- ------ -----------
2.1+ Asset Purchase Agreement by and between Concord Beverage Company and Concord Beverage LP, dated as
of October 18, 2000 (incorporated by reference to Exhibit 2.1 to Cott Corporation's Form 8-K dated
as of October 18, 2000).
2.2+ Agreement of Sale by and between Concord Beverage Company and Concord Beverage LP, dated as of
October 18, 2000 (incorporated by reference to Exhibit 2.2 to Cott Corporation's Form 8-K dated as
of October 18, 2000).
2.3 Acquisition Agreement, dated November 20, 1997, among Cott UK Limited, Cott Corporation and the
several persons listed in Schedule 1 to the Agreement relating to the acquisition of Hero Drinks
Group (U.K.) Limited (incorporated by reference to Exhibit 10.2 to Cott Corporation's Form 10-K
dated March 31, 2000).
2.4 (*) Asset Acquisition and Facility Use Agreement, dated April 13, 2000, between BCB USA Corp. (since
renamed "Cott Beverages Inc.") and Schmalbach-Lubeca Plastic Containers USA, Inc. relating to the
sale of the PET perform blow molding operation (incorporated by reference to Exhibit 10.1 to Cott
Corporation's Form 10-Q dated May 16, 2000).
2.5+ (*) Asset Purchase Agreement by and among Royal Crown Company, Inc., Cott Corporation and BCB USA
Corp. dated as of June 13, 2001 (incorporated by reference to Exhibit 2.1 to Cott Corporation's Form
8-K dated July 19, 2001).
3.1 Articles of Incorporation of Cott Corporation (incorporated by reference to Exhibit 3.1 to Cott
Corporation's Form 10-K dated March 31, 2000).
3.2 By-laws of Cott Corporation (incorporated by reference to Exhibit 3.2 to Cott Corporation's Form
10-K dated March 8, 2002).
3.3 Articles of Incorporation Cott Beverages Inc. (filed herewith).
3.4 Bylaws of Cott Beverages Inc. (formerly BCB USA Corp. and prior to that Cott Beverages USA Inc.)
(filed herewith).
3.5 Amended and Restated Certificate of Incorporation Cott Holdings Inc. (filed herewith).
3.6 Memorandum of Association and Amended and Restated Certificate of Incorporation of Cott Holdings Inc.
(filed herewith)
3.7 Articles of Association and Bylaws of Cott Holdings Inc. (filed herewith).
3.8 Articles of Incorporation of Cott USA Corp., as amended (filed herewith).
3.9 Bylaws of Cott USA Corp. (filed herewith).
3.10 Certificate of Incorporation of Cott Vending Inc. (filed herewith).
3.11 Bylaws of Cott Vending Inc. (filed herewith).
3.12 Certificate of Formation of Interim BCB, LLC (filed herewith).
3.13 Amended and Restated Operating Agreement of Interim BCB, LLC (formerly Destination Products
International, LLC) (filed herewith).
4.1 Subscription Agreement dated as of June 12, 1998 for Convertible Participating Voting Second
Preferred Shares, Series 1 of Cott Corporation (as issuer) (incorporated by reference to Exhibit 4.2
to Cott Corporation's Form 10-K dated March 31, 2000).
4.2 Letter Agreement dated as of November 3, 1999, regarding standstill provisions between Cott
Corporation and the Thomas H. Lee Company (incorporated by reference to Exhibit 4.3 to Cott
Corporation's Form 10-K dated March 31, 2000).
4.3 Indenture dated as of December 21, 2001, between Cott Beverages Inc. (as issuer) and HSBC Bank USA
(as trustee) (incorporated by reference to Exhibit 10.5 to Cott Corporation's Form 10-K dated March
8, 2002).
4.4 Registration Rights Agreement dated as of December 21, 2001, among Cott Beverages Inc., the
Guarantors named therein and Lehman Brothers Inc., BMO Nesbitt Burns Corp. and CIBC World Markets
Corp. (incorporated by reference to Exhibit 10.5 to Cott Corporation's Form 10-K dated March 8,
2002).
5.1 Opinion of Drinker Biddle & Reath LLP (filed herewith).
10.1 (*) Termination Agreement, dated November 1, 1999, among Cott Beverages USA, Inc. (now "Cott
Beverages Inc.") and Premium Beverages Packers, Inc, (incorporated by reference to Exhibit 10. 1 to
Cott Corporation's Form 10-K dated March 31, 2000).
10.2 (*) Supply Agreement, dated December 21, 1998, among Wal-Mart Stores, Inc. and Cott Beverages USA,
Inc. (now "Cott Beverages Inc.") (incorporated by reference to Exhibit 10. 3 to Cott Corporation's
Form 10-K dated March 31, 2000).
10.3 (**) Employment Agreement of Frank E. Weise III dated June 11, 1998 (incorporated by reference to
Exhibit 10.5 to Cott Corporation's Form 10-K dated March 31, 2000), as amended July 3, 2001
(incorporated by reference to Exhibit 10.2 of Cott Corporation's Form 10-Q for the period ended June
30, 2001).
10.4 (**) Employment Agreement of Mark Benadiba dated October 7, 1997, as amended December 19, 1997
(incorporated by reference to Exhibit 10. 7 to Cott Corporation's Form 10-K dated March 31, 2000),
and as further amended September 25, 2000 (incorporated by reference to Exhibit 10.6 to Cott
Corporation's Form 10-K dated March 7, 2001).
10.5 (**) Employment Agreement of Paul R. Richardson dated August 23, 1999 (incorporated by reference to
Exhibit 10. 8 to Cott Corporation's Form 10-K dated March 31, 2000), as amended February 18, 2002
(incorporated by reference to Exhibit 10.5 to Cott Corporation's Form 10-K dated March 8, 2002).
10.6 (**) Employment Agreement of Raymond P. Silcock dated August 17, 1998 (incorporated by reference to
Exhibit 10.9 to Cott Corporation's Form 10-K dated March 31, 2000).
10.7 (**) Employment Agreement of Mark R. Halperin dated July 14, 2000 (incorporated to Exhibit 10.10 to
Cott Corporation's Form 10-K dated March 8, 2002).
10.8 (**) Amended 1999 Executive Incentive Share Compensation Plan effective January 3, 1999
(incorporated by reference to Exhibit 10.8 to Cott Corporation's Form 10-K for the year ended
December 30, 2000).
10.9 (**) 2000 Executive Incentive Share Compensation Plan effective January 2, 2001 (incorporated by
reference to Exhibit 10.9 to Cott Corporation's Form 10-K for the year ended December 30, 2000).
10.10 (**) 2001 Executive Incentive Share Compensation Plan effective January 2, 2002 (incorporated to
Exhibit 10.10 to Cott Corporation's Form 10-K dated March 8, 2002).
10.11 (**) Second Canadian Employee Share Purchase Plan effective January 2, 2001 (incorporated by
reference to Exhibit 10.11 to Cott Corporation's Form 10-K for the year ended December 30, 2000).
10.12 Share Plan for Non-Employee Directors effective January 2, 2002 (incorporated to Exhibit 10.12 to
Cott Corporation's Form 10-K dated March 8, 2002).
10.13 (*) Credit Agreement dated as of July 19, 2001 between BCB USA Corp. (since renamed "Cott Beverages
Inc."), Cott Corporation and the Several Lenders, Lehman Brothers Inc., First Union National Bank,
Bank of Montreal and Lehman Commercial Paper, Inc. (incorporated by reference to Exhibit 10.1 to
Cott Corporation's Form 8-K dated July 19, 2001), as amended December 13, 2001 and December 19,
2001 (incorporated to Exhibit 10.13 to Cott Corporation's Form 10-K dated March 8, 2002).
10.15 Services Agreement among Cott Corporation, Deuteronomy Inc. and Don Watt consulting agreement dated
June 1, 1999 (incorporated to Exhibit 10.14 to Cott Corporation's Form 10-K dated March 8, 2002).
12.1 Computation of Ratios of Earnings to Fixed Charges (filed herewith).
21.1 List of Subsidiaries of Cott Corporation and Cott Beverages Inc. (filed herewith).
23.1 Consent of Independent Accountants (filed herewith).
23.2 Consent of Drinker Biddle & Reath LLP (included in Exhibit 5.1 above).
Number Description
- ------ -----------
25.1 Form T-1, Statement of Eligibility under the Trust Indenture Act of 1939 of HSBC Bank USA (filed
herewith).
99.1 Form of Letter of Transmittal (filed herewith).