Exhibit 10.1
CONFIDENTIAL PORTIONS OF THIS AGREEMENT HAVE BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR SUCH
PORTIONS. ASTERISKS DENOTE OMISSIONS.
The Coca-Cola Company
Coca-Cola Plaza
Atlanta, Georgia

              ADDRESS REPLY TO        P.O. BOX 1734        ATLANTA, GA       
404 676-2121 

March 10, 2008
Mr. Henry W. Flint
Vice-Chairman of the Board of Directors
Coca-Cola Bottling Company Consolidated
4100 Coca-Cola Plaza
Charlotte, NC 28211-3481

             
 
  Re:   TCCC/CCBCC/ByB Brand Innovation
and Distribution Collaboration Agreement     

Dear Hank:
As set forth in our August 29, 2007 Letter Agreement, TCCC and CCBCC have agreed
to a new holistic collaborative framework for the TCCC-CCBCC business
relationship. In consideration of significant TCCC financial and other
commitments to CCBCC as provided for in that Letter Agreement, CCBCC has agreed
to enter into a beverage brand innovation and distribution collaboration
arrangement with TCCC. This arrangement is intended and designed to increase the
likelihood of the commercial success of both TCCC and CCBCC in regards to
innovative brand and product ideas. We are very excited about the prospects of
this opportunity.
This Letter Agreement on brand innovation and distribution collaboration expands
on Part IV of the August 29, 2007 Letter Agreement and governs the brand
relationship contemplated by the August 29, 2007 Letter Agreement until mutually
terminated by both parties in writing.
Covered CCBCC and ByB Brands
All existing non-alcoholic beverage brands owned by CCBCC or ByB and all brands
owned by such entities on and following the date of this Agreement (“Developed
Brands”) are covered within the scope of this Agreement with the exception of
the Cinnabon® Premium Lattes brand (and all line extensions and other products
under the Cinnabon® trade name), for which ByB is a licensee. CCBCC and ByB
agree to

 

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consider in good faith whether and under what terms it could include the
Cinnabon® brand within the scope of this Agreement, but there is no obligation
to do so.
It is expressly acknowledged and understood that the development, ownership and
introduction of brands by CCBCC or BYB pursuant to the August 29, 2007 Letter
Agreement and this Letter Agreement are not otherwise prohibited by the Focus
and Commitment Letter dated August 28, 2007. It is further understood, however,
that the Focus and Commitment Letter does specifically prohibit CCBCC and BYB
from distributing any new third party brands through August 31, 2010, unless
otherwise provided therein or otherwise agreed to by TCCC, but that the
Developed Brands are not considered to be third party brands for that purpose.
This Agreement does not in any manner govern, subordinate, interfere with, or
otherwise affect CCBCC’s merchandising and marketing of current or future TCCC
brands. CCBCC’s actions in respect to such TCCC brands will be solely governed
by existing and future contractual obligations and past business practices
relating to those brands.
Ownership of Developed Brands
CCBCC and ByB own and will continue to own each Developed Brand and sufficient
rights to use the applicable formula in connection therewith until such time
that ownership of such brand is transferred to TCCC or a third party as
contemplated by this Agreement.
Nothing contained in this Agreement shall be deemed or construed to impose any
limitations upon the manner in which CCBCC or ByB deals with existing or future
licensors, licensees, distributors, or manufacturers with respect to Developed
Brands to the extent they remain owned by CCBCC or ByB. Notwithstanding, CCBCC
expressly agrees not to distribute or license Developed Brands to or through
Pepsico or any Pepsico Bottler.
TCCC Purchase Option for Developed Brands
To facilitate CCBCC’s and ByB’s comfort in investing in brand and product
innovation and distribution, they grant to TCCC, and TCCC accepts, the option to
purchase Developed Brands in accordance with the following processes, terms, and
conditions:
CCBCC and ByB agree to notify TCCC, in writing and on a brand by brand basis,
within thirty (30) business days following the earlier occurrence of either:
(a) such Developed Brand achieving $50MM Net Operating Revenue in any
consecutive twelve month period (continual rolling twelve month periods), or
(b) the later of (i) the fifth anniversary of the date of this Letter Agreement,
or (ii) the fifth year anniversary of the first wholesale or retail sale of such
Developed Brand by either CCBCC, ByB, or any of their distributors or licensees
that is followed by at least six consecutive months of sales of such Developed
Brand that

 

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generate a minimum of $250,000 in Net Operating Revenue for such six month
period.
For purposes of this Agreement, “Net Operating Revenue” with respect to any
Developed Brand is defined as all billings to customers at agreed-upon prices
for products of that Developed Brand shipped by the owner of such Developed
Brand to such customers, less all royalties, pricing allowances, rebates,
discounts, product returns and cooperative marketing program costs applicable to
such Developed Brand; provided, that in the case of billings by ByB to CCBCC, or
by TCCC to any of its affiliates after it has acquired the Developed Brand,
“agreed upon prices” shall generally represent the lowest price charged to
external customers for such products.
Within two (2) years after its receipt of such notice, TCCC may, by giving
written notice thereof to CCBCC, exercise an option to purchase the Developed
Brand that is the subject of such written notice. CCBCC and ByB agree not to
offer or sell to any third party any Developed Brand in any period prior to the
expiration of the two year period that commences upon the provision of written
notice to TCCC as contemplated above.
Upon TCCC’s election to purchase a Developed Brand, CCBCC shall select one of
the following two purchase price options:
     (a) [***], or
     (b) [***].
If TCCC subsequently transfers ownership of any purchased Developed Brand to a
third party, TCCC and CCBCC will mutually agree to determine in good faith a
mechanism for continuation of the royalty or payment to compensate CCBCC for
future royalty lost as a result of such sale.
To the extent TCCC for any reason fails to exercise a purchase option for a
Developed Brand within the time permitted, CCBCC/ByB may, if it so chooses,
engage in discussions with third parties with respect to the sale of such
Developed Brand. However, CCBCC/ByB agree to give TCCC prompt written notice
upon their receipt of a bona-fide non-binding proposal or letter of intent or
firm offer from any third party to purchase any Developed Brand. TCCC will have
thirty (30) days following the receipt of such bona-fide offer notice from
CCBCC/ByB to agree, by written notice to CCBCC/ByB of its agreement to do so, to
purchase the Developed Brand on the identical terms and conditions as the third
party offer. If TCCC does not match the third party offer within such thirty
(30) day period, CCBCC/ByB shall be free to accept such offer.
In conjunction with TCCC’s purchase of any Developed Brand, CCBCC/ByB agree to
pay, or to expressly undertake to pay as and when due, all amounts accrued under
any and all open third party accounts and agreements through the time of such
purchase (including amounts coming due by reason of such purchase) with respect
to any remaining brand acquisition costs or to the prior development,
production, marketing or

 

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distribution of such Developed Brand (other than distribution contract
termination costs, which are provided for below). TCCC will assume all
obligations accruing from and after its purchase of such Developed Brand under
all agreements entered into by CCBCC or ByB with third parties with respect to
the production, marketing or distribution of such Developed Brand. To the extent
TCCC, CCBCC, or ByB incur distribution contract termination costs in connection
with or within the twelve (12) months following TCCC’s purchase of a Developed
Brand, or any longer period to the extent that certain distribution contracts
cannot be terminated within twelve months, TCCC and CCBCC will split such
termination costs on a 50/50 basis.
TCCC, CCBCC and ByB agree to document and complete all Developed Brand transfer
transactions contemplated hereby as soon as practicable following agreement to
do so, and in any event within sixty (60) days after TCCC’s election to purchase
such Developed Brand.
TCCC System Distribution of Developed Brands
ByB may, with TCCC’s written consent, sell in wholesale quantities Developed
Brands to Bottlers of the Coca-Cola System under terms and conditions that may
be mutually agreed upon between TCCC, ByB, and the Bottlers. This consent
obligation does not apply to any bottling or distribution territory assigned to
CCBCC by TCCC. TCCC, CCBCC and ByB agree that TCCC’s consent may be conditioned
upon such economic arrangements, including a coordination fee or other value
provided to TCCC, as may be mutually agreeable to TCCC, CCBCC and ByB.
Formation of TCCC/ByB Innovative Brand Development Council
It is imperative to the success of this collaboration and to competitive and
effective current and future brand distribution that there is ongoing
collaboration among the parties with respect to CCBCC/ByB brand development and
opportunities. To that end, beginning in 2008, ByB agrees to form an Innovative
Brand Development Council, the membership of which will include at least two
mutually acceptable TCCC-appointed participants and at least two mutually
acceptable CCBCC-appointed participants. While TCCC representatives will have no
role in the management of Developed Brands while owned by CCBCC/ByB, they will
be provided access to sufficient information regarding Developed Brands to
enable TCCC to make informed brand purchase and System distribution decisions.
The scope and content of such information regarding Developed Brands will be
determined by mutual agreement of TCCC and CCBCC. The Council will formally meet
no less than two (2) times per year.
TCCC, CCBCC and ByB agree to hold the terms of this Agreement and all related
information exchanges as highly confidential except to the extent that such
information is required to be disclosed per SEC or other governmental laws or
regulations and to the extent disclosure is reasonably necessary for such party
to perform its obligations hereunder or exercise its rights hereunder or with
respect to the Developed Brands. Each of TCCC and CCBCC agrees that, prior to
its first public disclosure of the terms of this Agreement, it will, with no
less than ten (10) days notice (unless the circumstances

 

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requiring such public disclosure do not permit at least ten days notice, in
which case such party will provide such prior notice to the other party as is
reasonably practicable under the circumstances), notify the other party of its
intention to make such public disclosure and give the other party the
opportunity to comment on the content of such disclosure.

     
Acknowledged and Agreed:
   
 
   
/s/ Gray Lindsey
 
Gray Lindsey
   
Senior Vice-President,
   
Business Development
   

     
Acknowledged and Agreed:
   
 
   
/s/ Henry W. Flint
 
Henry W. Flint
   
Vice-Chairman
   

     
c:
  Bill Elmore
 
  Frank Harrison
 
  J.A.M. Douglas
 
  Melody Justice
 
  Steve Westphal