Document:

AGREEMENT BETWEEN COMPANY AND SOUTH ATLANTIC CANNERS

  Exhibit 10.12
  
 
 
 March 1, 1994
 Board of Directors
South Atlantic
Canners
601 Cousar Street
Bishopville, SC 29010
 Dear Sirs’:
 This letter is intended to outline our mutual intent to establish a long term relationship under which Coca-Cola Bottling Co. Consolidated and or it’s affiliates, (“CCBCC”), would maintain long term
membership in the South Atlantic Canners production co-operative (“SAC”). As inducement to enter into this long term arrangement, SAC will hire CCBCC to manage SAC pursuant to a long term management agreement (the “Contract”).
During the term of the Contract, the SAC Board of Directors (the “BOD”) will use its best efforts to see that a representative of CCBCC will be elected to serve on the BOD. This letter is intended to summarize the general intent of the
parties with regard to this transaction, which will be more fully described in the Contract and a membership agreement between SAC and CCBCC.
 Upon execution
of the Contract CCBCC will agree to long term membership at SAC with a minimum annual commitment to purchase 4 million cases of cans, and a commitment for 20oz PET and 2 Liter PET to be determined (“CCBCC Membership”). Under the Contract,
CCBCC will be paid to manage the day to day operations of SAC under the direction of the BOD. As part of the Contract, it will be CCBCC’s responsibility to oversee the acquisition and installation of two high speed production lines, one
generally suited for 2 liter PET bottles and one generally suited for 20 ounce PET bottles, (the “Expansion”). CCBCC Membership will not become effective if the BOD does not authorize the Expansion and the required financing or if the
Expansion cannot be undertaken for unforeseen circumstances. Upon execution of this letter agreement, CCBCC will begin to plan the Expansion and will have 60 days to determine the ultimate feasibility of the Expansion and its projected costs. If the
Expansion is deemed to be feasible, can be accomplished for not more than $15 million, the BOD approves the capital expenditures, acceptable financing is obtained and the Contract is
 
 

  executed, CCBCC will immediately begin to undertake the Expansion and CCBCC Membership will become effective.
 Existing members will not be required to purchase PET bottle products from SAC. It is anticipated that SAC will finance the Expansion under a bank agreement which will require loan guarantees. SAC
members that choose to purchase PET bottle products will be required to provide loan guarantees using an allocation method similar to that used at Southeastern Container.
 SAC will amend its Bylaws to authorize the BOD to enter into a management contract of the type contemplated in this letter. No changes in the bylaws of SAC are contemplated under this agreement. SAC will remain a
separate legal entity in its current form without change. It is anticipated that the PET operation of SAC will be established as a separate allocation unit within SAC, and allocations of net earnings from the PET operation will be made to the
members of SAC who participate in this unit.
 Management Agreement Outline:
 Duration: Long term contract (10 years +)
 Management Fee:
CCBCC will receive $.15 for each physical case produced at SAC. The fee will be increased annually by the increase in the CPI * The management fee will compensate CCBCC for all of the services it normally provides to its
production centers out of its Charlotte, NC headquarters operation (a summary of these services is attached). All costs incurred on behalf of SAC by CCBCC (with the exception of the Charlotte based services) including the cost for all employees that
are located “on site” at SAC will be charged to SAC. “On site” employees include all direct and indirect labor as well as all management and administrative employees that arc based in Bishopville.
 Responsibilities of the BOD and CCBCC: As required by law, the business and affairs of SAC will be exercised under the direction of
the BOD. In this regard, the BOD will set policies for the organization, approve the annual budget, review and supervise the financial performance of the company, review and approve long and short term business plans, approve major financial
undertakings, including major financial commitments, and generally supervise the performance of the company in accordance with the direction established by the BOD. It will be the BOD’s responsibility to assure that all costs will be allocated
fairly to the various products produced at SAC. Product pricing and rebates will be at the discretion of the BOD and will be the same for all members participating in all units including the new PET allocation unit.
       *    not to exceed a total management fee
of 25¢ per case for the first 10 years of the agreement, with increases thereafter as provided in the final document
 
 

  The day to day affairs of the company will be handled by CCBCC which shall provide management services to SAC under the Contract. In this
regard, CCBCC will produce products which meet franchise company specifications and will deliver all products within reasonable age standards as approved by the BOD. CCBCC will prepare annul budgets for BOD review and approval and will report
monthly financial results in a format acceptable to the BOD which generally communicate SAC’s financial position and financial performance versus budget. CCBCC will be responsible for general accounting, billing, collections, accounts payable,
payroll, maintenance of fixed asset records, tax accounting and return preparation, negotiation of and administration of all financings, purchasing of raw materials, administration of benefit plans, acquisition of insurance policies, monitoring
compliance with all relevant EPA and OSHA regulations, internal audit of policy compliance and any other services generally provided by Charlotte HQ based employees for CCBCC’s manufacturing operations. As discussed above, the performance of
these duties will be the responsibility of CCBCC, however the cost of these items will be borne by either CCBCC or SAC based on the model that all functions that are currently being performed by Charlotte HQ based personnel will be covered by the
management fee and all “on site” employees’ costs and third party fees and other charges for specific materials or service will be borne by SAC. An exhaustive list of these services will be prepared and attached to the final
agreement. CCBCC will also perform such other management functions in the normal course of business as may be determined from time to time by the BOD.
 The
members will provide reasonable estimates of annual volume requirements by brand and package to CCBCC for planning purposes each year for CCBCC to use in preparing annual budgets. The members will also provide product orders to CCBCC in a manner and
within time parameters as reasonably requested by CCBCC.
 CCBCC has a firm policy of working to maintain a union free work environment. The BOD will authorized
CCBCC as manager to use all reasonable means to ensure that SAC maintains its union free status.
 The BOD will authorize annually or as deemed necessary by the
BOD an independent audit of the financial results and financial position of SAC. CCBCC will provide full access to its books and records to SAC auditors. However, CCBCC will not be required to provide sensitive information, including but not limited
to its raw material costs to SAC members. These costs will be provided to independent auditors as needed in the audit process but they will be bound by confidentiality with regard to releasing this information. CCBCC will represent, and auditors can
confirm, that the amounts charged to SAC for materials and services purchased on its behalf will be the actual
 
 

  costs incurred by CCBCC. With exception for potential differing specifications, source of supply and freight cost, it is CCBCC’s intent that materials
purchased on behalf of SAC will be identical in cost and quality to those purchased for CCBCC directly.
 The BOD will provide CCBCC the authority required to
meet its responsibilities as manager and will use reasonable business judgment in considering annual operating and capital spending budget proposals submitted by CCBCC as manager. The BOD will also use reasonable business judgment in considering
changes to these budgets based on changes in the underlying cost assumptions or production volume requirements. It will be the BOD’s responsibility to assure that all costs will be allocated fairly to the various products produced at SAC.
Product pricing and rebates will be at the discretion of the BOD and will be the same for all members.
 The Contract will provide for reasonable quality and
service standards which must be met by CCBCC (definitions to be included in the final agreement). If CCBCC is in violation of these requirements or otherwise fails to comply in all material respects with the policies and directions of the BOD and,
within 90 days following written notice from the BOD, is unable to comply, the BOD will have the right to cancel the Contract. In order for the BOD to cancel the Contract it must determine in its reasonable business judgment that an alternative
manager could have meet the performance requirements during the time of CCBCC’s non-compliance and the BOD must require similar performance requirements of the management it chooses to replace CCBCC. In the event the BOD chooses to cancel the
Contract, CCBCC will have the option to continue its Membership. After termination, CCBCC will have the same rights to cancel its purchase commitments as any other SAC member with regard to product pricing, however, in the event CCBCC cancels its
purchase commitments, it may not withdraw from its guarantee of the debt used for the Expansion, except in accordance with the terms of the guarantee. If the Contract is terminated, CCBCC must provide such services in the Contract requested by the
BOD during a reasonable transition period under the then existing terms of the Contract. *
 Other: In the unlikely event after this
transaction is consummated there is a dispute between the parties that cannot be resolved in the ordinary course of business, each party will designate a representative to meet and negotiate in good faith for up to 5 business days. If these
negotiations are not successful in resolving the issue, the parties agree to binding arbitration of the dispute to be scheduled as soon as is practical under the circumstances.
       *    CCBCC will sign the same basic purchase agreement as other members. CCBCC
will have the same right to terminate its membership and discontinue purchasing as other members; provided, however, that CCBCC will not terminate its membership or discontinue purchasing at specified levels while it serves as manager of
SAC.
 
 

  CCBCC has reviewed the financial statements of SAC dated as of 8-31-93 and is operating under the assumption that SAC’s financial
position was accurately reflected in these statements and that no material adverse changes have occurred with respect to SAC’s financial condition subsequent to 8-31-93.
 By signing below, the parties are committing to work in good faith and as quickly as can be reasonably expected to negotiate mutually acceptable documentation for the transaction as outlined in this letter. With
exception of this commitment to negotiate in good faith, the parties are not contractually obligated to each other with respect to the matters discussed herein until the final documentation contemplated by this letter has been executed. The final
agreements are subject to formal approval by the Boards of Directors of CCBCC and SAC.
 Agreed to on March 1, 1994 by:
  

	  
 	  
 	  
 	  
 	  
 
	  
 	 
 /s/ DAVID V. SINGER
 	  
 	  
 	 
 /s/ A.T. HEATH
 
	  
 	 
 	  
 	  
 	 
 
	  
 	 David V. Singer
 Vice President and Chief Financial Officer
 Coca-Cola
Bottling Co. Consolidated
 	  
 	  
 	 A. T. Heath, III
 Chairman of the Board
 South Atlantic
CannersDESCRIPTION OF THE COMPANY'S 2003 BONUS PLAN

  
 Exhibit 10.15
 
 COCA-COLA BOTTLING CO. CONSOLIDATED
 ANNUAL BONUS PLAN – 2003
  
 PURPOSE
  
 The purpose of this Annual Bonus Plan (the “Plan”) is to promote the best interests of the Company and its Shareholders by providing key management employees with additional incentives
to assist the Company in meeting and exceeding its business goals.
  
 PLAN ADMINISTRATION
  
 The Plan will be administered by the Compensation Committee as elected by the Board of Directors; provided that, so long as the Company and the Plan are subject to the provisions of Section 162(m) of the Internal Revenue Code of
1986, as amended (“Section 162(m)”), either the Compensation Committee shall be composed solely of two or more directors who qualify as “outside directors” under Section 162(m) or, if for any reason one or more members of
the Compensation Committee cannot qualify as “outside directors,” the Board shall appoint a separate Bonus Plan Committee composed of two or more “outside directors” which shall have all of the powers otherwise granted to the
Compensation Committee to administer the Plan.  All references herein to the “Committee” shall be deemed to refer to either the Compensation Committee or to the Bonus Plan Committee, as applicable at any given time.  The
Committee is authorized to establish new guidelines for administration of the Plan, delegate certain tasks to management, make determinations and interpretations under the Plan, and to make awards pursuant to the Plan; provided, however, that
the Committee shall at all times be required to exercise these discretionary powers in a manner, and subject to such limitations, as will permit all payments under the Plan to “covered employees” (as defined 

  in Section 162(m)) to continue to qualify as “performance-based compensation” for purposes of Section 162(m), and any action taken by the Committee
shall automatically be deemed null and void to the extent (if any) that it would have the effect of destroying such qualification.  Subject to the foregoing, all determinations and interpretations of the Committee will be binding upon the
Company and each participant.
  
 PLAN GUIDELINES
 Eligibility:      The Committee is authorized to grant cash awards to any officer, including officers who are directors and to other employees of the Company and its affiliates in key
positions.
 Participation:      Management will recommend annually key positions which should qualify for awards under the Plan.  The
Committee has full and final authority in its discretion to select the key positions eligible for awards.  Management will inform individuals in selected key positions of their participation in the Plan.
  
 Qualification and Amount of Award:

	1.	Participants will qualify for awards under the Plan based on:
	 	 	 
	 	(a)	Corporate goals set for the fiscal year.
	 	(b) 	Division/Manufacturing Center goals or individual goals set for the fiscal year.
	 	(c)	The Committee may, in its sole discretion, eliminate any individual award, or reduce (but not increase) the amount of compensation payable with respect to any individual award.
	 	 	 
	2.	The total cash award to the participant will be computed as follows:

	 
 	 Gross Cash Award = Base Salary X Approved Bonus % Factor X Indexed Performance Factor X Overall Goal Achievement Factor.
 
	 	 
	 
 	 Notwithstanding the above formula, the maximum cash award that may be made to any individual participant based upon performance for any fiscal year period shall be
$1,000,000.
 
	 	 
	 3.
  
 	 The Base Salary is the participant’s base salary level set for the fiscal year.  The Approved Bonus % Factor is a number set by the Committee (maximum = 100%) to
reflect each participant’s relative responsibility and the contribution to Company performance attributed to each participant’s position with the Company.  
 
	 	 
	 4.
  
  
 	 The Indexed Performance Factor is determined by the Committee prior to making payments of awards for each fiscal year, based on each individual’s performance during such
fiscal year.  Since the Committee is necessarily required to evaluate subjective factors related to each individual’s performance in order to arrive at this number, and since such evaluations cannot be made until after the close of the
fiscal year to which the award relates, the Indexed Performance Factor will automatically be set at 1.2 for all participants who are “covered employees” (as defined in Section 162(m)), in order to allow awards to such participants to
qualify as “performance-based compensation” that is not subject to the deduction limits of Section 162(m).
 
	 	 
	 5.
  
 	 The Overall Goal Achievement Factor used in calculating the Gross Cash Award for each participant will be determined on the basis of multiplying the weightage factor specified
in ANNEX A attached hereto for each of the six performance criteria specified therein (Operating Cash Flow (as defined in ANNEX A), Free Cash Flow (as defined in ANNEX A), Net Income, Unit Volume, Market Share, and an overall
Value Measure (as defined in ANNEX A)) by the percentage specified in the following table for the level of performance achieved with respect to each such goal:
 

         
            
             
  

   

	  Goal Achievement 
 	  Amount of Award
 
	              (in percent)  
 	    (as a % of max.)  
 
	     89.0 or less 
 	   0 
 
	     89.1-94 
 	  80 
 
	     94.1-97 
 	  90 
 
	     97.1-100 
 	  100 
 
	    100.1-105 
 	  110 
 
	    105.1-110 
 	  120 
 

  

	 6. 
 	 The Committee will review and approve all awards.  The Committee has full and final authority in its discretion to adjust the Gross Cash Award determined in accordance with the formula
described above in arriving at the actual gross amount of the award to be paid to any participant; subject, however, to the limitation that such authority may be exercised in a manner which reduces (by using lower numbers for the Indexed Performance
Factor or otherwise), but not in a manner which increases, the Gross Cash Award calculated in accordance with the formula prescribed in Paragraph 2 above.  The gross amount will be subject to all local, state and federal minimum tax withholding
requirements.
 
	 	 
	 7.
 	 Participant must be an employee of the Company on the date of payment to qualify for an award.  Any participant who leaves the employ of the Company, voluntarily or involuntarily,
prior to the payment date, is ineligible for any bonus.  An employee who assumes a key position during the fiscal year may be eligible for a pro-rated award at the option of the Committee, provided the participant has been employed a minimum of
three (3) months during the calendar year.
 
	 	 
	 8.
 	 Awards under the bonus program will not be made if any material aspects of the bottle contracts with The Coca-Cola Company are violated.
 

 Payment Date:      Awards shall be paid upon determination (and certification by the Committee, as provided below) of the results under each of the performance
criteria

  specified in Paragraph 5 above following the closing of the Company’s books for the fiscal year to which such awards relate; provided, however, that
the Committee shall have discretion to delay its certification and payment of awards for any fiscal year until following notification from the Company’s independent auditors of the final audited results of operations for the fiscal year. 
In any event, the Committee shall provide written certification that the annual performance goals have been attained, as required by Section 162(m), prior to any payments being made for any fiscal year.
 AMENDMENTS, MODIFICATIONS AND TERMINATION
  
 The Committee is authorized to amend, modify or terminate the Plan
retroactively at any time, in part or in whole; provided, however, that any such amendment may not cause payments to “covered employees” under the Plan to cease to qualify as “performance-based compensation” under Section
162(m) unless such amendment has been approved by the full Board of Directors of the Company.
  
 SHAREHOLDER APPROVAL REQUIREMENT
  
 So long as the Company and the Plan are subject to the provisions of Section 162(m), no awards shall be paid to any participants under the Plan unless the performance goals under the Plan (including any
subsequent Plan amendments as contemplated above) shall have received any approval of the Company’s shareholders required in order for all such payments to “covered employees” to qualify as “performance-based compensation”
under Section 162(m).

   
 ANNEX A 
  
 APPROVED
PERFORMANCE CRITERIA FOR
 AWARDING BONUS PAYMENTS
 CORPORATE
GOALS
  

	 	  
 	 WEIGHTAGE 
 	   
 
	 	   PERFORMANCE INDICATOR  
 	 FACTOR*  
 	 GOAL*  
 
	 	   
 	   
 	   
 
	1.	  Operating Cash Flow (A)
 	  
 	  
 
	  
 	  

	   
 	   
 
	2.	  Free Cash Flow (B) 
 	  
 	  
 
	  
 	   
 	   
 	   
 
	3.	  Net Income
 	  
 	  
 
	  
 	   
 	   
 	   
 
	4.	  Unit Volume
 	  
 	    
 
	  
 	   
 	   
 	   
 
	5.	  Market Share
 	  
 	  
 
	  
 	   
 	   
 	   
 
	6.	  Value Measure
 	  
 	  
 
	  
 	   
 	   
 	   
 
	 	 Total 
 	  100% 
 	  
 

  * Set as Part of Approved
Plan                        
 
 NOTES:
  

	 1.
 	 Operating cash flow is defined as income from operations before depreciation and amortization of goodwill and intangibles.
 
	 	 
	 2.
 	 Free cash flow is defined as the net cash available for debt or lease pay down after considering non-cash charges, capital expenditures, taxes and adjustments for changes in
assets and liabilities.  Specifically excluded would be acquisitions and capital expenditures made because of acquisitions.  Specifically excluded from free cash flow are net proceeds from:
 
	 	 
	 
 	 –          Investment in or sale of franchise territories 
 
	 
 	  –          Sales of real estate 
 
	 
 	  –          Sales of other assets 
 
	 
 	 –          Other items as defined by the Committee. 
 
	 	 
	 3.
 	 Net Income is defined as the after-tax reported earnings of the Company.
 
	 	 
	 4.
 	 Unit Volume is defined as bottle, can and pre-mix cases converted to 8 oz. cases.
 

	 5.
 	 If, and to the extent that, excluding any of the following items increases the level of goal achievement with respect to any of 
 the performance indicators, then such item
shall be excluded from determination of the level of goal achievement:
 
	 	 
		– 	Unbudgeted events of more than $50,000.
	 
 	 –	Impact of non-budgeted acquisition or joint venture transactions occurring after the commencement of the fiscal year 
 performance period.
	 
 	  –
 	Adjustments required to implement unbudgeted changes in accounting principles (i.e., new FASB rulings).
	 
 	  –
 	Unbudgeted changes in depreciation and amortization schedules. 
	 
 	 –
 	Unbudgeted premiums paid or received due to the retirement of refinancing of debt or hedging vehicles. 
	 	 
	 
 	 The Committee shall, however, have discretion to include any of these specifically excluded items, but only to the extent that the exercise of such discretion would reduce (but
not increase) the amount of any award otherwise payable under the Plan.
 
	 	 
	 6.
 	 Bonus program will not be in force if any material aspects of the Bottle Contracts with TCCC are violated.
 
	 	 
	 7.
 	 For purposes of determining incentive compensation, accounting practices and principles used to calculate “actual” results will 
 be consistent with those used in
calculating the budget.

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