Exhibit 10.3

 

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETED
ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF
1934, AS AMENDED.

 

[g201708081949395952317.jpg]

COCA-COLA PLAZA

ATLANTA, GEORGIA

 

J. Alexander M. Douglas, Jr.

President, Coca-Cola North America

 

 

P. O. Box 1734

Atlanta, GA  30301

______

404 676-4421

Fax 404-598-4421

 

June 22, 2017

 

J. Frank Harrison III

Chairman and Chief Executive Officer

Coca-Cola Bottling Co. Consolidated

4100 Coca-Cola Plaza

Charlotte, NC  28211

 

 

Re:

Amendment to Upfront Purchase Price Adjustment for Transfer Sales Return Letter
Agreement

 

Dear Frank,

Reference is made to that certain letter agreement, dated as of March 31, 2017
(the “TSR Letter Agreement”), by and between The Coca‑Cola Company, a Delaware
corporation (“Company”), and Coca-Cola Bottling Co. Consolidated, a Delaware
corporation (“Bottler”), regarding certain valuation adjustments agreed to by
Company and Bottler and certain credits or payments to be made by Company to
Bottler in connection with (a) Bottler’s acquisition of production facilities
from Coca‑Cola Refreshments USA, Inc., a Delaware corporation and a wholly-owned
subsidiary of Company (“CCR”), and (b) the conversion to the RMA (as defined
therein) of the bottle contracts authorizing Bottler to manufacture, produce and
package certain Company‑owned and –licensed beverage products at its legacy
production facilities.  Capitalized terms used and not otherwise defined in this
letter agreement have the respective meanings ascribed to such terms in the TSR
Letter Agreement.

This letter agreement sets forth the mutual agreement of Company and Bottler
that the TSR Letter Agreement is hereby amended by deleting the sixth paragraph
thereof in its entirety and replacing such paragraph with the following:

The Legacy Facility Credit for Bottler will be calculated by Company following
the date hereof in accordance with the formula Legacy Facility Credit = [X]/[Y],
where “[X]” is the pre-tax annual return earned by Bottler on historical sales
of Authorized Covered Beverages produced at the Legacy Facilities (the “Exports
Return”), net of the cost difference to Bottler under

 

Classified – Confidential

--------------------------------------------------------------------------------

the pricing set forth in the RMA for Bottler’s purchases for distribution in the
First-Line Territory of Authorized Covered Beverages produced by other Regional
Producing Bottlers (the “Imports Cost Difference”), and “[Y]” is [***].  For
purposes of the foregoing formula, (a) the Exports Return will be an amount
equal to (i) Bottler’s annual net revenue on sales to other U.S. Coca-Cola
Bottlers of Authorized Covered Beverages produced at the Legacy Facilities
(calculated as Bottler’s historic price by SKU in 2016 for such sales after any
applicable deducts, credits, or other adjustments provided to the buyer
multiplied by Bottler’s annual sales volume by SKU for all such transfer sales),
less (ii) Bottler’s actual manufacturing cost of goods (calculated as Bottler’s
actual manufacturing cost of goods per physical case in accordance with the NPSG
Standardized Methodology (as defined below) multiplied by Bottler’s annual sales
volume by SKU for all such transfer sales), less (iii) Bottler’s centrally
managed production expenses (calculated based on the per case rate agreed by
Company and Bottler multiplied by Bottler’s 2016 annual sales volume by SKU for
all such transfer sales), less (iv) Bottler’s actual freight cost for such sales
(calculated per physical case in accordance with the NPSG Standardized
Methodology (as defined below) multiplied by Bottler’s annual sales volume by
SKU for all such transfer sales); and (b) the Imports Cost Difference will be an
amount equal to the sum of (i) (A) the difference between the historic price for
Authorized Covered Beverages purchased by Bottler from other applicable Regional
Producing Bottlers’ Expansion Facilities under the Finished Goods Supply
Agreements between CCR and Bottler in effect during 2016 and the actual
manufacturing costs of such Authorized Covered Beverages (calculated in
accordance with the NPSG Standardized Methodology), multiplied by (B) the volume
of Authorized Covered Beverages by applicable SKU purchased in 2016 by Bottler
for distribution in its legacy territory from other Regional Producing Bottlers’
Expansion Facilities, plus (ii) (A) the difference between the historic price by
SKU in 2016 charged to Bottler by other Regional Producing Bottlers for
Authorized Covered Beverages in Bottler’s legacy distribution territory and the
actual manufacturing costs of such Authorized Covered Beverages purchased by
Bottler from such other Regional Producing Bottlers’ legacy facilities
(calculated in accordance with the NPSG Standardized Methodology), multiplied by
(B) the volume of Authorized Covered Beverages by applicable SKU purchased by
Bottler in 2016 for distribution in its legacy territory from other Regional
Producing Bottlers’ legacy facilities.  As used herein, “NPSG Standardized
Methodology” means the standardized methodology determined by the NPSG to
calculate [***]. Bottler acknowledges that Bottler’s historical financial data
is necessary to compute the Legacy Facility Credit described above and that such
data is subject to review and validation by the Company prior to the payment of
any Legacy Facility Credit.

 

Classified – Confidential

2

 

[***] – THIS CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT.

--------------------------------------------------------------------------------

 

Except as expressly set forth in this letter agreement, all terms of the TSR
Letter Agreement shall continue in full force and effect.

[Remainder of page intentionally left blank; signature page follows]

 

 

Classified – Confidential

3

--------------------------------------------------------------------------------

Very truly yours,

/s/ J. A. M. Douglas, Jr.

J. Alexander M. Douglas, Jr.

President, Coca-Cola North America

 

 

Agreed to and Accepted
as of the date first written above:

 

COCA-COLA BOTTLING CO. CONSOLIDATED

 

By:

/s/ James E. Harris

     Name:  James E. Harris

     Title:    Executive Vice President