UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

☒  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 2, 2017

Commission File Number 0-9286

 

COCA‑COLA BOTTLING CO. CONSOLIDATED

(Exact name of registrant as specified in its charter)

 

 

4100 Coca‑Cola Plaza,
Charlotte, North Carolina 28211

(Address of principal executive offices)   (Zip Code)

(704) 557-4400

(Registrant's telephone number, including area code)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  ☐    No  ☒

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

 

 

 

 

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COCA‑COLA BOTTLING CO. CONSOLIDATED

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED APRIL 2, 2017

INDEX

 

 

 

 

 

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PART I - FINANCIAL INFORMATION

COCA‑COLA BOTTLING CO. CONSOLIDATED

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

See Accompanying Notes to Consolidated Financial Statements.

 

 

 

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COCA‑COLA BOTTLING CO. CONSOLIDATED

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See Accompanying Notes to Consolidated Financial Statements.

 

 

 

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COCA‑COLA BOTTLING CO. CONSOLIDATED

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

 

See Accompanying Notes to Consolidated Financial Statements.

 

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COCA‑COLA BOTTLING CO. CONSOLIDATED

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See Accompanying Notes to Consolidated Financial Statements.

 

 

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COCA‑COLA BOTTLING CO. CONSOLIDATED

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

See Accompanying Notes to Consolidated Financial Statements.

 

 

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COCA‑COLA BOTTLING CO. CONSOLIDATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

1.Significant Accounting Policies and New Accounting Pronouncements

 

The consolidated financial statements include the accounts of Coca‑Cola Bottling Co. Consolidated and its majority-owned subsidiaries (the “Company”). All significant intercompany accounts and transactions have been eliminated. The consolidated financial statements reflect all adjustments, including normal, recurring accruals, which, in the opinion of management, are necessary for a fair statement of the results for the interim periods presented:

 

 

The consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial reporting and the instructions to Form 10-Q and Article 10 of Regulation S-X. The accounting policies followed in the presentation of interim financial results are consistent with those followed on an annual basis. These policies are presented in Note 1 to the consolidated financial statements included in the Company's Annual Report on Form 10‑K for the fiscal year ended January 1, 2017 filed with the U.S. Securities and Exchange Commission (the “SEC”).

 

The preparation of consolidated financial statements, in conformity with GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

Significant Accounting Policies

 

In the ordinary course of business, the Company has made a number of estimates and assumptions relating to the reporting of results of operations and financial position in the preparation of its consolidated financial statements in conformity with GAAP. Actual results could differ significantly from those estimates under different assumptions and conditions. The Company included in its Annual Report on Form 10‑K for the year ended January 1, 2017 under the caption “Discussion of Critical Accounting Policies, Estimates and New Accounting Pronouncements” in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” set forth in Part II, Item 7, a discussion of the Company’s most critical accounting policies, which are those most important to the portrayal of the Company’s financial condition and results of operations and require management’s most difficult, subjective and complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.

 

The Company did not make changes in any significant accounting policies during the first quarter of 2017. Any changes in critical accounting policies and estimates are discussed with the Audit Committee of the Board of Directors of the Company during the quarter in which a change is contemplated and prior to making such change.

 

Recently Adopted Pronouncements

 

In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-09 “Improvements to Employees Share Based Payment Accounting,” which simplifies several aspects of the accounting for employee-share based transactions including the accounting for income taxes, forfeitures and statutory tax withholding requirements, as well as classification in the statement of cash flows. The new guidance is effective for annual and interim reporting periods beginning after December 15, 2016. The Company adopted this guidance in the first quarter of 2017 and there was no impact to the Company’s consolidated financial statements.

 

In July 2015, the FASB issued ASU 2015-11 “Simplifying The Measurement of Inventory.” The new guidance requires an entity to measure most inventory “at lower of cost and net realizable value” thereby simplifying the current guidance under which an entity must measure inventory at the lower of cost or market. The new guidance is effective for annual and interim periods beginning after

 

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December 15, 2016. The Company adopted this guidance in the first quarter of 2017 and there was no material impact to the Company’s consolidated financial statements.

 

Recently Issued Pronouncements

 

In January 2017, the FASB issued ASU 2017-04 “Simplifying the Test for Goodwill Impairment,” which eliminates the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge. The new guidance is effective for the annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. The Company does not anticipate the adoption of this guidance will have a significant impact on its consolidated financial statements.

 

In January 2017, the FASB issued ASU 2017-01 “Clarifying the Definition of a Business,” which clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions or disposals of assets or businesses. The new guidance is effective for annual periods beginning after December 15, 2017, including interim periods within those periods. The impact to the Company’s consolidated financial statements will depend on the facts and circumstances of any specific future transactions.

 

In February 2016, the FASB issued ASU 2016-02 “Leases.” The new guidance requires lessees to recognize a right-to-use asset and a lease liability for virtually all leases (other than leases meeting the definition of a short-term lease). The new guidance is effective for fiscal years beginning after December 15, 2018 and interim periods beginning the following year. The Company is in the process of evaluating the impact of the new guidance on the Company’s consolidated financial statements. Additionally, the Company is evaluating the impacts of the standard beyond accounting, including system, data and process changes required to comply with the standard.

 

In January 2016, the FASB issued ASU 2016-01 “Recognition And Measurement Of Financial Assets And Financial Liabilities.” The new guidance revises the classification and measurement of investments in equity securities and the presentation of certain fair value changes in financial liabilities measured at fair value. The new guidance is effective for annual and interim reporting periods beginning after December 31, 2017. The Company is in the process of evaluating the impact of the new guidance on the Company’s consolidated financial statements.

 

Over the past several years, the FASB has issued several accounting standards for revenue recognition:

 

 

The Company does not plan to early adopt this guidance. The Company has started its evaluation process to assess the impact of the new guidance on the Company’s consolidated financial statements and to determine whether to adopt a full retrospective approach or a modified retrospective approach. The evaluation process includes tasks such as performing an initial scoping analysis to identify key revenue streams, reviewing current revenue-based contracts and evaluating revenue recognition requirements in order to prepare a high-level road map and implementation work plan. Based on the Company’s preliminary review, it does not expect this guidance to have a material impact on net sales. As the Company completes its overall assessment, the Company is also identifying and preparing to implement changes to its accounting policies and practices, business processes, systems and controls to support the new revenue recognition and disclosure requirements.

 

2.Acquisitions and Divestitures

 

As part of The Coca‑Cola Company’s plans to refranchise its North American bottling territories, the Company has engaged in a series of transactions since April 2013 with The Coca‑Cola Company and Coca‑Cola Refreshments USA, Inc. (“CCR”), a wholly-owned subsidiary of The Coca‑Cola Company, to significantly expand the Company’s distribution and manufacturing operations. This

 

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expansion includes acquisition of the rights to serve additional distribution territories previously served by CCR (the “Expansion Territories”) and related distribution assets, as well as the acquisition of regional manufacturing facilities previously owned by CCR (the “Expansion Facilities”) and related manufacturing assets (collectively, the “Expansion Transactions”).

 

2016 Expansion Transactions

 

During 2016, the Company acquired distribution rights and related assets for the following territories: Easton, Salisbury, Capitol Heights, La Plata, Baltimore, Hagerstown and Cumberland, Maryland; Richmond, Yorktown and Alexandria, Virginia; Cincinnati, Dayton, Lima and Portsmouth, Ohio; and Louisa, Kentucky. The Company also acquired the Expansion Facilities and related manufacturing assets in Sandston, Virginia; Silver Spring and Baltimore, Maryland; and Cincinnati, Ohio during 2016. Collectively, these are the “2016 Expansion Transactions.” The details of the 2016 Expansion Transactions are included below.

 

Easton and Salisbury, Maryland and Richmond and Yorktown, Virginia Expansion Territories Acquisitions and Sandston, Virginia Expansion Facility Acquisition (“January 2016 Expansion Transactions”)

 

An asset purchase agreement entered into by the Company and CCR in September 2015 (the “September 2015 APA”) contemplated, in part, the Company’s acquisition of distribution rights and related assets in the territory served by CCR through CCR’s facilities and equipment located in Easton and Salisbury, Maryland and Richmond and Yorktown, Virginia. In addition, an asset purchase agreement entered into by the Company and CCR in October 2015 (the “October 2015 APA”) contemplated, in part, the Company’s acquisition of the Expansion Facility and related manufacturing assets in Sandston, Virginia. The closing of the January 2016 Expansion Transactions occurred on January 29, 2016, for a cash purchase price of $65.7 million, which will remain subject to adjustment in accordance with the terms and conditions of the September 2015 APA and the October 2015 APA.

 

Alexandria, Virginia and Capitol Heights and La Plata, Maryland Expansion Territories Acquisitions (“April 1, 2016 Expansion Transaction”)

 

The September 2015 APA also contemplated the Company’s acquisition of distribution rights and related assets in the territory served by CCR through CCR’s facilities and equipment located in Alexandria, Virginia and Capitol Heights and La Plata, Maryland. The closing of the April 1, 2016 Expansion Transaction occurred on April 1, 2016, for a cash purchase price of $35.6 million, which will remain subject to adjustment in accordance with the terms and conditions of the September 2015 APA.

 

Baltimore, Hagerstown and Cumberland, Maryland Expansion Territories Acquisitions and Silver Spring and Baltimore, Maryland Expansion Facilities Acquisitions (“April 29, 2016 Expansion Transactions”)

 

On April 29, 2016, the Company completed the remaining transactions contemplated by (i) the September 2015 APA, by acquiring distribution rights and related assets in Expansion Territories served by CCR through CCR’s facilities and equipment located in Baltimore, Hagerstown and Cumberland, Maryland, and (ii) the October 2015 APA, by acquiring the Expansion Facilities and related manufacturing assets in Silver Spring and Baltimore, Maryland. The closing of the April 29, 2016 Expansion Transactions occurred for a cash purchase price of $69.0 million, which will remain subject to adjustment in accordance with the terms and conditions of the September 2015 APA and the October 2015 APA.

 

Cincinnati, Dayton, Lima and Portsmouth, Ohio and Louisa, Kentucky Expansion Territories Acquisitions and Cincinnati, Ohio Expansion Facility Acquisition (“October 2016 Expansion Transactions”)

 

On October 28, 2016, the Company completed the initial transactions contemplated by (i) a distribution asset purchase agreement entered into by the Company and CCR in September 2016 (the “September 2016 Distribution APA”), by acquiring distribution rights and related assets in the Expansion Territories served by CCR through CCR’s facilities and equipment located in Cincinnati, Dayton, Lima and Portsmouth, Ohio and Louisa, Kentucky, and (ii) a manufacturing asset purchase agreement entered into by the Company and CCR in September 2016 (the “September 2016 Manufacturing APA”), by acquiring the Expansion Facility and related manufacturing assets located in Cincinnati, Ohio. The closing of the October 2016 Expansion Transactions occurred for a cash purchase price of $98.2 million, which will remain subject to adjustment in accordance with the terms and conditions of the September 2016 Distribution APA and the September 2016 Manufacturing APA.

 

 

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The fair value of acquired assets and assumed liabilities of the 2016 Expansion Transactions as of the acquisition dates is summarized as follows:

 

 

The goodwill for the 2016 Expansion Transactions is all included in the Nonalcoholic Beverages segment and is primarily attributed to operational synergies and the workforce acquired. Goodwill of $6.0 million and $13.1 million is expected to be deductible for tax purposes for the January 2016 Expansion Transactions and the October 2016 Expansion Transactions, respectively. No goodwill is expected to be deductible for the April 1, 2016 Expansion Transaction or the April 29, 2016 Expansion Transactions.

 

The fair value of the acquired identifiable intangible assets as of the acquisition dates is as follows:

 

 

Q1 2017 Expansion Transactions

 

During the first quarter of 2017, the Company acquired distribution rights and related assets for the following Expansion Territories: Anderson, Bloomington, Fort Wayne, Indianapolis, Lafayette, South Bend and Terre Haute, Indiana and Columbus and Mansfield, Ohio. Additionally, during the first quarter of 2017, the Company acquired the Expansion Facilities and related manufacturing assets located in Indianapolis and Portland, Indiana. Collectively, these are the “Q1 2017 Expansion Transactions.” The details of the Q1 2017 Expansion Transactions are included below.

 

Anderson, Fort Wayne, Lafayette, South Bend and Terre Haute, Indiana Expansion Territories Acquisitions (“January 2017 Expansion Transaction”)

 

The September 2016 Distribution APA contemplated, in part, the Company’s acquisition of distribution rights and related assets in the territory served by CCR through CCR’s facilities and equipment located in Anderson, Fort Wayne, Lafayette, South Bend and Terre Haute, Indiana. The closing of the January 2017 Expansion Transaction occurred on January 27, 2017, for a cash purchase price of $31.6 million, which will remain subject to adjustment in accordance with the terms and conditions of the September 2016 Distribution APA.

 

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Bloomington and Indianapolis, Indiana and Columbus and Mansfield, Ohio Expansion Territories Acquisitions and Indianapolis and Portland, Indiana Expansion Facilities Acquisitions (“March 2017 Expansion Transactions”)

 

On March 31, 2017, the Company completed the final transactions contemplated by (i) the September 2016 Distribution APA, by acquiring distribution rights and related assets in the Expansion Territories served by CCR through CCR’s facilities and equipment located in Bloomington and Indianapolis, Indiana and Columbus and Mansfield, Ohio, and (ii) the September 2016 Manufacturing APA, by acquiring the Expansion Facilities and related manufacturing assets located in Indianapolis and Portland, Indiana. The closing of the March 2017 Expansion Transactions occurred for a cash purchase price of $108.7 million, which will remain subject to adjustment in accordance with the terms and conditions of the September 2016 Distribution APA and the September 2016 Manufacturing APA.

 

The fair value of acquired assets and assumed liabilities of the Q1 2017 Expansion Transactions as of the acquisition date is summarized as follows:

 

 

The goodwill for the Q1 2017 Expansion Transactions is included in the Nonalcoholic Beverages segment and is primarily attributed to operational synergies and the workforce acquired. No goodwill is expected to be deductible for tax purposes for the January 2017 Expansion Transaction or the March 2017 Expansion Transactions.

 

The fair value of the acquired identifiable intangible assets as of the acquisition date is as follows:

 

 

The Company has preliminarily allocated the purchase price of the 2016 Expansion Transactions and the Q1 2017 Expansion Transactions to the individual acquired assets and assumed liabilities. The valuations are subject to adjustment as additional information is obtained.

 

The anticipated amount the Company could pay annually under the acquisition related contingent consideration arrangements for the Expansion Transactions is in the range of $20 million to $36 million.

 

 

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Q1 2017 and 2016 Expansion Transactions Financial Results

 

The financial results of the Q1 2017 Expansion Transactions and the 2016 Expansion Transactions have been included in the Company’s consolidated financial statements from their respective acquisition or exchange dates. These Expansion Transactions contributed the following amounts to the Company’s consolidated statement of operations:

 

 

The Company incurred transaction related expenses for the Expansion Transactions of $0.7 million in the first quarter of 2017 and $0.9 million in the first quarter of 2016. These expenses are included within Selling, delivery and administrative expenses on the Consolidated Statements of Operations.

 

Q1 2017 Expansion Transactions and 2016 Expansion Transactions Pro Forma Financial Information

 

The purpose of the pro forma is to present the net sales and the income from operations of the combined entity as though the current year acquisitions had occurred as of the beginning of each period presented. The pro forma combined net sales and income from operations do not necessarily reflect what the combined Company’s net sales and income from operations would have been had the acquisitions occurred at the beginning of each period presented. The pro forma financial information also may not be useful in predicting the future financial results of the combined company. The actual results may differ significantly from the pro forma amounts reflected herein due to a variety of factors.

 

The following tables represent the Company’s unaudited pro forma net sales and unaudited pro forma income from operations for the Q1 2017 Expansion Transactions and the 2016 Expansion Transactions.

 

 

 

3.Inventories

 

Inventories consisted of the following:

 

 

The growth in the inventory balance at April 2, 2017, as compared to January 1, 2017, is primarily a result of inventory acquired through the completion of the Q1 2017 Expansion Transactions.

 

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4.Property, Plant and Equipment, Net

 

The principal categories and estimated useful lives of property, plant and equipment were as follows:

 

 

The growth in the property, plant and equipment balance at April 2, 2017, as compared to January 1, 2017, is primarily a result of property, plant and equipment acquired through the completion of the Q1 2017 Expansion Transactions.

 

Depreciation and amortization expense, which includes amortization expense for leased property under capital leases, was $33.0 million in the first quarter of 2017 and $23.4 million in the first quarter of 2016.

 

5.Franchise Rights

 

There was no material activity for franchise rights for the first quarter of 2016. A reconciliation of the activity for franchise rights for the first quarter of 2017 is as follows:

 

 

In connection with the closing of the March 2017 Expansion Transactions, the Company, The Coca-Cola Company and CCR entered into a comprehensive beverage agreement (the “Final CBA”) on March 31, 2017, and concurrently converted the Company’s franchise rights within the territories in which the Company distributed Coca‑Cola products prior to beginning the Expansion Transactions (the “Legacy Territory”) to distribution rights within Other identifiable assets, net on the consolidated financial statements. Prior to this conversion, the Company’s franchise rights resided entirely within the Nonalcoholic Beverage segment.

 

6.Goodwill

 

A reconciliation of the activity for goodwill for the first quarter of 2017 and the first quarter of 2016 is as follows:

 

 

 

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The Company’s goodwill reside entirely within the Nonalcoholic Beverage segment. The Company performs its annual impairment test of goodwill as of the first day of the fourth quarter. During the first quarter of 2017, the Company did not experience any triggering events or changes in circumstances indicating the carrying amounts of the Company’s goodwill exceeded fair values.

 

7.Other Identifiable Intangible Assets, Net

 

Other identifiable intangible assets consisted of the following:

 

 

 

A reconciliation of the activity for other identifiable intangible assets for the first quarter of 2017 and the first quarter of 2016 is as follows:

 

 

Concurrent with its entrance into the Final CBA, the Company converted its franchise rights for the Legacy Territory to distribution rights, with an estimated useful life of 40 years, during the first quarter of 2017.

 

 

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8.Other Accrued Liabilities

 

Other accrued liabilities consisted of the following:

 

 

9.Debt

 

Following is a summary of the Company’s debt:

 

 

 

The Company had capital lease obligations of $46.9 million on April 2, 2017 and $48.7 million on January 1, 2017. The Company mitigates its financing risk by using multiple financial institutions and only entering into credit arrangements with institutions with investment grade credit ratings. The Company monitors counterparty credit ratings on an ongoing basis.

 

On February 27, 2017, the Company sold $125 million aggregate principal amount of senior unsecured notes due 2023 to PGIM, Inc. (“Prudential”) and certain of its affiliates pursuant to the Note Purchase and Private Shelf Agreement dated June 10, 2016 between the Company, Prudential and the other parties thereto (the “Private Shelf Facility”). These notes bear interest at 3.28%, payable semi-annually in arrears on February 27 and August 27 of each year, and will mature on February 27, 2023 unless earlier redeemed by the Company. The Company used the proceeds toward repayment of outstanding indebtedness under the Revolving Credit Facility and for other general corporate purposes. The Company may request Prudential to consider the purchase of additional senior unsecured notes of the Company under the facility in an aggregate principal amount of up to $175 million.

 

In October 2014, the Company entered into a five-year unsecured revolving credit facility (the “Revolving Credit Facility”), and in April 2015, the Company exercised an accordion feature which established a $450 million aggregate maximum borrowing capacity on the Revolving Credit Facility. The $450 million borrowing capacity includes up to $50 million available for the issuance of letters of credit. Borrowings under the Revolving Credit Facility bear interest at a floating base rate or a floating Eurodollar rate plus an applicable margin, dependent on the Company’s credit rating at the time of borrowing. At the Company’s current credit ratings, the Company must pay an annual facility fee of 0.15% of the lenders’ aggregate commitments under the Revolving Credit Facility. The Revolving Credit Facility has a scheduled maturity date of October 16, 2019.

 

In June 2016, the Company entered into a five-year term loan agreement for a senior unsecured term loan facility (the “Term Loan Facility”) in the aggregate principal amount of $300 million, maturing June 7, 2021. The Company may request additional term loans

 

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under the agreement, provided the Company’s aggregate borrowings under the Term Loan Facility do not exceed $500 million. Borrowings under the Term Loan Facility bear interest at a floating base rate or a floating Eurodollar rate plus an applicable margin, dependent on the Company’s credit rating, at the Company’s option. The Company used the proceeds from the Term Loan Facility toward repayment of outstanding indebtedness under the Revolving Credit Facility and toward repayment of the $164.8 million of Senior Notes that matured on June 15, 2016.

 

The Revolving Credit Facility, the Term Loan Facility and the Private Shelf Facility include two financial covenants: a consolidated cash flow/fixed charges ratio and a consolidated funded indebtedness/cash flow ratio, each as defined in the respective agreements. The Company was in compliance with these covenants as of April 2, 2017. These covenants do not currently, and the Company does not anticipate they will, restrict its liquidity or capital resources.

 

The indentures under which the Company’s public debt was issued do not include financial covenants but do limit the incurrence of certain liens and encumbrances as well as the indebtedness by the Company’s subsidiaries in excess of certain amounts.

 

All outstanding long-term debt has been issued by the Company and none has been issued by any of its subsidiaries. There are no guarantees of the Company’s debt.

 

10.Derivative Financial Instruments

 

The Company is subject to the risk of increased costs arising from adverse changes in certain commodity prices. In the normal course of business, the Company manages these risks through a variety of strategies, including the use of derivative instruments. The Company does not use derivative instruments for trading or speculative purposes. All derivative instruments are recorded at fair value as either assets or liabilities in the Company’s consolidated balance sheets. These derivative instruments are not designated as hedging instruments under GAAP and are used as “economic hedges” to manage certain commodity price risk. Derivative instruments held are marked to market on a monthly basis and recognized in earnings consistent with the expense classification of the underlying hedged item. Settlements of derivative agreements are included in cash flows from operating activities on the Company’s consolidated statements of cash flows.

 

The Company uses several different financial institutions for commodity derivative instruments to minimize the concentration of credit risk. While the Company would be exposed to credit loss in the event of nonperformance by these counterparties, the Company does not anticipate nonperformance by these parties.

 

The following table summarizes pre-tax changes in the fair value of the Company’s commodity derivative financial instruments and the classification of such changes in the consolidated statements of operations.

 

 

The following table summarizes the fair values and classification in the consolidated balance sheets of derivative instruments held by the Company:

 

 

The Company has master agreements with the counterparties to its derivative financial agreements that provide for net settlement of derivative transactions. Accordingly, the net amounts of derivative assets are recognized in either prepaid expenses and other current assets or other assets in the Company’s consolidated balance sheets and the net amounts of derivative liabilities are recognized in other accrued liabilities or other liabilities in the consolidated balance sheets. The following table summarizes the Company’s gross derivative assets and gross derivative liabilities in the consolidated balance sheets:

 

 

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The following table summarizes the Company’s outstanding commodity derivative agreements:

 

 

Subsequent to the end of the first quarter of 2017, the Company entered into additional agreements to hedge certain commodity costs for 2017. The notional amount of these agreements was $38.1 million.

 

11.Fair Values of Financial Instruments

 

GAAP requires assets and liabilities carried at fair value to be classified and disclosed in one of the following categories:

 

 

The following methods and assumptions were used by the Company in estimating the fair values of its financial instruments. There were no transfers of assets or liabilities between Levels in any period presented.

 

 

 

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The following tables summarize, by assets and liabilities, the carrying amounts and fair values by level of the Company’s deferred compensation plan, commodity hedging agreements, debt and acquisition related contingent consideration:

 

 

 

Under the Final CBA, the Company will make a quarterly sub-bottling payment to CCR on a continuing basis for the grant of exclusive rights to distribute, promote, market and sell specified covered beverages and beverage products in the Expansion Territories. This acquisition related contingent consideration is valued using a probability weighted discounted cash flow model based on internal forecasts and the WACC derived from market data, which are considered Level 3 inputs. Each reporting period, the Company adjusts its acquisition-related contingent consideration liability related to the territory expansion to fair value by discounting future expected sub-bottling payments required under the Final CBA using the Company’s estimated WACC. These future expected sub-bottling payments extend through the life of the related distribution assets acquired in each Expansion Territory, which is generally 40 years. As a result, the fair value of the acquisition related contingent consideration liability is impacted by the Company’s WACC, management’s estimate of the amounts that will be paid in the future under the Final CBA, and current sub-bottling payments (all Level 3 inputs). Changes in any of these Level 3 inputs, particularly the underlying risk-free interest rate used to estimate the Company’s WACC, could result in material changes to the fair value of the acquisition related contingent consideration and could materially impact the amount of noncash expense (or income) recorded each reporting period.

 

The acquisition related contingent consideration is the Company’s only Level 3 asset or liability. A reconciliation of the Level 3 activity is as follows:

 

 

The Company recorded an unfavorable fair value adjustment to the contingent consideration liability of $12.2 million during the first quarter of 2017, which was primarily a result of the final settlement of territory values for the Paducah and Pikeville, Kentucky Expansion Territory acquisitions and the Norfolk, Fredericksburg and Staunton, Virginia, and Elizabeth City, North Carolina Expansion Territory acquisitions, which closed in May 2015 and October 2015, respectively. The Company recorded an unfavorable fair value adjustment to the contingent consideration liability of $17.2 million during the first quarter of 2016, which was driven

 

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primarily by a change in projected future operating results of the acquired Expansion Territories subject to sub-bottling fees. These adjustments were recorded in other expense, net on the Company’s consolidated statements of operations.

 

12.Other Liabilities

 

Other liabilities consisted of the following:

 

 

Pursuant to a territory conversion agreement entered into by the Company, The Coca‑Cola Company and CCR in September 2015 (as amended), upon the conversion of the Company’s bottling agreements to the Final CBA on March 31, 2017, the Company received a one-time $87.1 million fee from CCR. This was recorded as a deferred liability and will be amortized as a reduction to cost of sales over a period of 40 years. As of April 2, 2017, $2.2 million was recorded in accrued liabilities and $84.9 million was recorded to other liabilities on the consolidated financial statements.

 

13.Commitments and Contingencies

 

Manufacturing Cooperatives

 

The Company is a shareholder of South Atlantic Canners, Inc. (“SAC”), a manufacturing cooperative in Bishopville, South Carolina from which it is obligated to purchase 17.5 million cases of finished product on an annual basis through June 2024. All eight shareholders of the cooperative are Coca‑Cola bottlers and each has equal voting rights. The Company receives a fee for managing the day-to-day operations of SAC pursuant to a management agreement. The Company purchased 6.7 million cases and 6.5 million cases of finished product from SAC in the first quarter of 2017 and the first quarter of 2016, respectively.

 

The Company is also a shareholder of Southeastern Container (“Southeastern”), a plastic bottle manufacturing cooperative from which it is obligated to purchase at least 80% of its requirements of plastic bottles for certain designated territories.

 

The Company has an equity ownership in both SAC and Southeastern. The following table summarizes the Company’s purchases from these manufacturing cooperatives:

 

 

The Company guarantees a portion of SAC’s and Southeastern’s debt, which resulted primarily from the purchase of production equipment and facilities and expires at various dates through 2023. The amounts guaranteed were as follows:

 

 

 

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In the event either of these cooperatives fails to fulfill its commitments under the related debt, the Company would be responsible for payments to the lenders up to the level of the guarantees. The following table summarizes the Company’s maximum exposure under these guarantees if these cooperatives had borrowed up to their aggregate borrowing capacity:

 

 

 

The members of both cooperatives consist solely of Coca‑Cola bottlers. The Company does not anticipate either of these cooperatives will fail to fulfill its commitments. The Company further believes each of these cooperatives has sufficient assets, including production equipment, facilities and working capital, and the ability to adjust selling prices of its products to adequately mitigate the risk of material loss from the Company’s guarantees.

 

The Company holds no assets as collateral against the SAC or Southeastern guarantees, the fair value of which is immaterial to the Company’s consolidated financial statements. The Company monitors its investments in SAC and Southeastern and would be required to write down its investment if an impairment was identified and the Company determined it to be other than temporary. No impairment of the Company’s investments in SAC or Southeastern has been identified as of April 2, 2017, and there was no impairment in 2016.

 

Other Commitments and Contingencies

 

The Company has standby letters of credit, primarily related to its property and casualty insurance programs. These letters of credit totaled $29.7 million on both April 2, 2017 and January 1, 2017.

 

The Company participates in long-term marketing contractual arrangements with certain prestige properties, athletic venues and other locations. The future payments related to these contractual arrangements as of April 2, 2017 amounted to $84.1 million and expire at various dates through 2026.

 

The Company is involved in various claims and legal proceedings which have arisen in the ordinary course of its business. Although it is difficult to predict the ultimate outcome of these claims and legal proceedings, management believes the ultimate disposition of these matters will not have a material adverse effect on the financial condition, cash flows or results of operations of the Company. No material amount of loss in excess of recorded amounts is believed to be reasonably possible as a result of these claims and legal proceedings.

 

The Company is subject to audits by tax authorities in jurisdictions where it conducts business. These audits may result in assessments that are subsequently resolved with the authorities or potentially through the courts. Management believes the Company has adequately provided for any assessments likely to result from these audits; however, final assessments, if any, could be different than the amounts recorded in the consolidated financial statements.

 

14.Income Taxes

 

The Company’s effective tax rate, as calculated by dividing income tax benefit by loss before income taxes, for the first quarter of 2017 and the first quarter of 2016 was 45.5% and 36.0%, respectively. The increase in the effective tax rate benefit was primarily driven by a reduction in the valuation allowance resulting from the Company’s assessment of its ability to use certain loss carryforwards, partially offset by the repricing of net deferred tax liabilities as a result of the Expansion Territories being located in higher tax rate jurisdictions.

 

The Company’s effective tax rate, as calculated by dividing income tax benefit by loss before income taxes minus net income attributable to noncontrolling interest, for the first quarter of 2017 and the first quarter of 2016 was 42.2% and 33.6%, respectively.

 

The Company had uncertain tax positions, including accrued interest, of $3.0 million on April 2, 2017 and $2.9 million on January 1, 2017, all of which would affect the Company’s effective tax rate if recognized. While it is expected the amount of uncertain tax

 

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positions may change in the next 12 months, the Company does not expect such change would have a significant impact on the consolidated financial statements.

 

Prior tax years beginning in year 2002 remain open to examination by the Internal Revenue Service, and various tax years beginning in year 1998 remain open to examination by certain state tax jurisdictions due to loss carryforwards.

 

15.Accumulated Other Comprehensive Income (Loss)

 

Accumulated other comprehensive income (loss) (“AOCI(L)”) is comprised of adjustments relative to the Company’s pension and postretirement medical benefit plans and foreign currency translation adjustments required for a subsidiary of the Company that performs data analysis and provides consulting services outside the United States.

 

A summary of AOCI(L) for the first quarter of 2017 and the first quarter of 2016 is as follows:

 

 

 

A summary of the impact of AOCI(L) on the income statement line items is as follows:

 

 

 

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16.Capital Transactions 

 

During the first quarter of each year, the Compensation Committee of the Company’s Board of Directors determines whether any shares of the Company’s Class B Common Stock should be issued to J. Frank Harrison, III, in connection with his services for the prior year as Chairman of the Board of Directors and Chief Executive Officer of the Company, pursuant to a performance unit award agreement approved in 2008 (the “Performance Unit Award Agreement”). As permitted under the terms of the Performance Unit Award Agreement, a number of shares were settled in cash each year to satisfy tax withholding obligations in connection with the vesting of the performance units. The remaining number of shares increased the total shares of Class B Common Stock outstanding. A summary of the awards each year is as follows:

 

 

Compensation expense for the Performance Unit Award Agreement, recognized on the share price of the last trading day prior to the end of the fiscal period, was as follows:

 

 

17.Benefit Plans

 

Pension Plans

 

There are two Company-sponsored pension plans. The primary Company-sponsored pension plan (the “Primary Plan”) was frozen as of June 30, 2006 and no benefits accrued to participants after this date. The second Company-sponsored pension plan (the “Bargaining Plan”) is for certain employees under collective bargaining agreements. Benefits under the pension plan for collectively bargained employees are determined in accordance with negotiated formulas for the respective participants. Contributions to the plans are based on actuarial determined amounts and are limited to the amounts currently deductible for income tax purposes.

 

The components of net periodic pension cost were as follows:

 

 

The Company did not make any contributions to the Company-sponsored pension plans during the first quarter of 2017. Anticipated contributions to the two Company-sponsored pension plans will be in the range of $10 to $12 million during 2017.

 

Postretirement Benefits

 

The Company provides postretirement benefits for a portion of its current employees. The Company recognizes the cost of postretirement benefits, which consist principally of medical benefits, during employees’ periods of active service. The Company does not pre-fund these benefits and has the right to modify or terminate certain of these benefits in the future.

 

 

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The components of net periodic postretirement benefit cost were as follows:

 

 

Multi-Employer Benefits

 

Certain employees of the Company, whose employment is covered under collective bargaining agreements, participate in a multi-employer pension plan, the Employers-Teamsters Local Union Nos. 175 and 505 Pension Fund (the “Teamsters Plan”). The Company makes monthly contributions on behalf of such employees. Subsequent to the end of the first quarter of 2017, certain collective bargaining agreements covering the Teamsters Plan expired on April 29, 2017. These agreements were renewed and will now expire in April 2020. The remainder of these agreements will expire July 26, 2018.

 

The risks of participating in the Teamsters Plan are different from single-employer plans as contributed assets are pooled and may be used to provide benefits to employees of other participating employers. If a participating employer stops contributing to the Teamsters Plan, the unfunded obligations of the Teamsters Plan may be borne by the remaining participating employers. If the Company chooses to stop participating in the Teamsters Plan, the Company could be required to pay the Teamsters Plan a withdrawal liability based on the underfunded status of the Teamsters Plan. The Company does not anticipate withdrawing from the Teamsters Plan.

 

In 2015, the Company increased the contribution rates to the Teamsters Plan, with additional increases occurring annually, as part of a rehabilitation plan. This is a result of the Teamsters Plan being certified by its actuary as being in “critical” status for the plan year beginning January 1, 2013, which was incorporated into the renewal of collective bargaining agreements with the unions, effective April 28, 2014 and adopted by the Company as a rehabilitation plan, effective January 1, 2015.

 

18.Related Party Transactions

 

The Coca‑Cola Company

 

The Company’s business consists primarily of the production, marketing and distribution of nonalcoholic beverages of The Coca‑Cola Company, which is the sole owner of the secret formulas under which the primary components of its soft drink products, either concentrate or syrup, are manufactured.

 

As of April 2, 2017, The Coca‑Cola Company owned approximately 35% of the Company’s total outstanding Common Stock, representing approximately 5% of the total voting power of the Company’s Common Stock and Class B Common Stock voting together. As long as The Coca‑Cola Company holds the number of shares of Common Stock it currently owns, it has the right to have a designee proposed by the Company for nomination to the Company’s Board of Directors, and J. Frank Harrison, III, the Chairman of the Board and the Chief Executive Officer of the Company, and trustees of certain trusts established for the benefit of certain relatives of J. Frank Harrison, Jr. have agreed to vote the shares of the Company’s Class B Common Stock which they control, representing approximately 86% of the total voting power of the Company’s combined Common Stock and Class B Common Stock, in favor of such designee. The Coca‑Cola Company does not own any shares of the Company’s Class B Common Stock.

 

 

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The following table and the subsequent descriptions summarize the significant transactions between the Company and The Coca‑Cola Company:

 

 

Coca‑Cola Refreshments USA, Inc. (“CCR”), a wholly-owned subsidiary of The Coca‑Cola Company

 

The Company has a production arrangement with CCR to buy and sell finished products at cost. In addition, the Company transports product for CCR to the Company’s and other Coca-Cola bottlers’ locations. The following table summarizes purchases and sales under these arrangements between the Company and CCR:

 

 

As discussed above in Note 2 to the consolidated financial statements, the Company and CCR have entered into and closed various Expansion Transactions to acquire Expansion Territories previously served by CCR and Expansion Facilities previously owned by CCR. The following table summarizes the definitive agreements and closing dates for each of the Expansion Transactions completed by the Company as of April 2, 2017:

 

 

 

 

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As part of the Distribution Territory Expansion Transactions, the Company has entered into a Final CBA, as described above in Note 2 to the consolidated financial statements. Under the Final CBA, the Company makes a quarterly sub-bottling payment to CCR on a continuing basis for the grant of exclusive rights to distribute, promote, market and sell the authorized brands of The Coca‑Cola Company and related products in the Expansion Territories. The quarterly sub-bottling payment is based on gross profit derived from sales of certain beverages and beverage products that are sold under the same trademarks that identify a covered beverage, beverage product or certain cross-licensed brands. The liability recorded by the Company to reflect the estimated fair value of contingent consideration related to future sub-bottling payments was $304.0 million on April 2, 2017 and $253.4 million on January 1, 2017. Payments to CCR under the Final CBA, including payments under the Company’s initial comprehensive beverage agreements, which were each converted into the Final CBA as of March 31, 2017, were zero during the first quarter of 2017 and $5.0 million during the first quarter of 2016.

 

Glacéau Distribution Termination Agreement

 

On January 1, 2017, the Company obtained the rights to market, promote, distribute and sell glacéau vitaminwater, glacéau smartwater and glacéau vitaminwater zero drops in certain geographic territories including the District of Columbia and portions of Delaware, Maryland and Virginia, pursuant to an agreement entered into by the Company, The Coca‑Cola Company and CCR in June 2016. Pursuant to the agreement, the Company made a payment of $15.6 million during the first quarter of 2017 to The Coca‑Cola Company, which represented a portion of the total payment made by The Coca‑Cola Company to terminate a distribution arrangement with a prior distributor in this territory.

 

Coca‑Cola Bottlers’ Sales and Services Company, LLC (“CCBSS”)

 

Along with all other Coca‑Cola bottlers in the United States, including CCR, the Company is a member of CCBSS, a company formed in 2003 for the purpose of facilitating various procurement functions and distributing certain specified beverage products of The Coca‑Cola Company with the intention of enhancing the efficiency and competitiveness of the Coca‑Cola bottling system in the United States.

 

CCBSS negotiates the procurement for the majority of the Company’s raw materials, excluding concentrate, and the Company receives a rebate from CCBSS for the purchase of these raw materials. The Company had rebates due from CCBSS of $5.2 million on April 2, 2017 and $7.4 million on January 1, 2017.

 

In addition, the Company pays an administrative fee to CCBSS for its services. The Company incurred administrative fees to CCBSS of $0.5 million in the first quarter of 2017 and $0.2 million in the first quarter of 2016.

 

National Product Supply Group Governance Agreement (“NPSG Governance Agreement”)

 

The NPSG Governance Agreement was executed in October 2015 by The Coca‑Cola Company and three other Coca‑Cola bottlers, including CCR, who are Regional Producing Bottlers (“RPBs”) in The Coca‑Cola Company’s national product supply system. Pursuant to the NPSG Governance Agreement, The Coca‑Cola Company and the RPBs have formed a national product supply group (the “NPSG”) and agreed to certain binding governance mechanisms, including a governing board (the “NPSG Board”) comprised of a representative of (i) the Company, (ii) The Coca‑Cola Company and (iii) each other RPB. As The Coca‑Cola Company continues its multi-year refranchising effort of its North American bottling territories, additional RPBs may be added to the NPSG Board. As of April 2, 2017, the NPSG Board consisted of The Coca‑Cola‑Company, the Company and six other RPBs, including CCR.

 

The stated objectives of the NPSG include, among others, (i) Coca‑Cola system strategic infrastructure investment and divestment planning; (ii) network optimization of all plant to distribution center sourcing; and (iii) new product/packaging infrastructure planning. The NPSG Board makes and/or oversees and directs certain key decisions regarding the NPSG, including decisions regarding the management and staffing of the NPSG and the funding for its ongoing operations.

 

The Company is obligated to pay a certain portion of the costs of operating the NPSG. Pursuant to the decisions of the NPSG Board made from time to time and subject to the terms and conditions of the NPSG Governance Agreement, the Company and each other

 

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Regional Producing Bottler will make investments in their respective manufacturing assets and will implement Coca‑Cola system strategic investment opportunities consistent with the NPSG Governance Agreement.

 

CONA Services LLC (“CONA”)

 

The Company is a member of CONA, an entity formed with The Coca‑Cola Company and certain Coca‑Cola bottlers to provide business process and information technology services to its members. Under the CONA limited liability agreement executed January 27, 2016 (as amended or restated from time to time, the “CONA LLC Agreement”), the Company and other members of CONA are required to make capital contributions to CONA if and when approved by CONA’s board of directors, which is comprised of representatives of the members. The Company currently has the right to designate one of the members of CONA’s board of directors and has a percentage interest in CONA of approximately 19%. The Company made capital contributions to CONA of $0.1 million during the first quarter of 2017 and $1.2 million during the first quarter of 2016.

 

The Company is subject to a Master Services Agreement (the “Master Services Agreement”) with CONA, pursuant to which CONA agreed to make available, and the Company became authorized to use, the Coke One North America system (the “CONA System”), a uniform information technology system developed to promote operational efficiency and uniformity among North American Coca‑Cola bottlers. As part of making the CONA System available to the Company, CONA provides certain business process and information technology services to the Company, including the planning, development, management and operation of the CONA System in connection with the Company’s direct store delivery of products (collectively, the “CONA Services”).

 

Pursuant to the Master Services Agreement, CONA agreed to make available, and authorized the Company to use, the CONA System in connection with the distribution, sale, marketing and promotion of nonalcoholic beverages the Company is authorized to distribute under its comprehensive beverage agreements or any other agreement with The Coca‑Cola Company (the “Beverages”) in the territories the Company serves (the “Territories”), subject to the provisions of the CONA LLC Agreement and any licenses or other agreements relating to products or services provided by third-parties and used in connection with the CONA System.

 

In exchange for the Company’s right to use the CONA System and right to receive the CONA Services under the Master Services Agreement, the Company is charged quarterly service fees by CONA based on the number of physical cases of Beverages distributed by the Company during the applicable period in the Territories where the CONA Services have been implemented (the “Service Fees”). Upon the earlier of (i) all members of CONA beginning to use the CONA System in all territories in which they distribute products of The Coca‑Cola Company (excluding certain territories of CCR that are expected to be sold to bottlers that are neither members of CONA nor users of the CONA System), or (ii) December 31, 2018, the Service Fees will be changed to be an amount per physical case of Beverages distributed in any portion of the Territories equal to the aggregate costs incurred by CONA to maintain and operate the CONA System and provide the CONA Services divided by the total number of cases distributed by all of the members of CONA, subject to certain exceptions. The Company is obligated to pay the Service Fees under the Master Services Agreement even if it is not using the CONA System for all or any portion of its operations in the Territories. The Company incurred CONA Services Fees of $2.5 million during the first quarter of 2017 and $1.4 million during the first quarter of 2016.

 

Snyder Production Center (“SPC”)

 

The Company leases the SPC and an adjacent sales facility, which are located in Charlotte, North Carolina, from Harrison Limited Partnership One (“HLP”). HLP is directly and indirectly owned by trusts of which J. Frank Harrison, III, Chairman of the Board of Directors and Chief Executive Officer of the Company, Sue Anne H. Wells, a director of the Company, and Deborah H. Everhart, a former director of the Company, are trustees and beneficiaries. Morgan H. Everett, Vice President and a director of the Company, is a permissible, discretionary beneficiary of the trusts that directly or indirectly own HLP. The SPC lease expires on December 31, 2020. The principal balance outstanding under this capital lease was $14.0 million on April 2, 2017 and $14.7 million on January 1, 2017. The annual base rent the Company is obligated to pay under the lease is subject to an adjustment for an inflation factor. Rental payments related to this lease were $1.0 million in both the first quarter of 2017 and the first quarter of 2016.

 

Company Headquarters

 

The Company leases its headquarters office facility and an adjacent office facility from Beacon Investment Corporation (“Beacon”). The lease expires on December 31, 2021. J. Frank Harrison, III is Beacon’s majority shareholder and Morgan H. Everett is a minority shareholder. The principal balance outstanding under this capital lease was $14.9 million on April 2, 2017 and $15.5 million on January 1, 2017. The annual base rent the Company is obligated to pay under the lease is subject to adjustment for increases in the Consumer Price Index. Rental payments related to this lease were $1.1 million in both the first quarter of 2017 and the first quarter of 2016.

 

 

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19.Net Loss Per Share

 

The following table sets forth the computation of basic net loss per share and diluted net loss per share under the two-class method:

 

 

 

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The 40,000 unvested performance units granted to Mr. Harrison during the first quarter of 2017 pursuant to the Performance Unit Award Agreement were excluded from the calculation of diluted net loss per share for the first quarter of 2017, as the effect of these awards would have been anti-dilutive.

 

NOTES TO TABLE

 

 

20.Supplemental Disclosures of Cash Flow Information

 

Changes in current assets and current liabilities affecting cash flows were as follows:

 

 

21.Segments

 

The Company evaluates segment reporting in accordance with FASB Accounting Standards Codification (“ASC”) 280, Segment Reporting each reporting period, including evaluating the reporting package reviewed by the Chief Operation Decision Maker (“CODM”). The Company has concluded the Chief Executive Officer, Chief Operating Officer and Chief Financial Officer, as a group, represent the CODM.

 

 

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The Company believes four operating segments exist. Nonalcoholic Beverages represents the vast majority of the Company’s consolidated revenues, operating income, and assets. The remaining three operating segments do not meet the quantitative thresholds for separate reporting, either individually or in the aggregate, and therefore have been combined into an “All Other” reportable segment.

 

The Company’s results for its two reportable segments are as follows:

 

 

 

 

 

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Net sales by product category were as follows:

 

 

 

22.Subsequent Events

 

On April 13, 2017, the Company and CCR entered into (i) a distribution asset purchase agreement (the “April 2017 Distribution APA”) regarding the Company’s acquisition of distribution rights and related assets in Expansion Territories previously served by CCR through CCR’s facilities and equipment located in Akron, Elyria, Toledo, Willoughby and Youngstown, Ohio, and (ii) a manufacturing asset purchase agreement (the “April 2017 Manufacturing APA”) regarding the Company’s acquisition of an Expansion Facility and related manufacturing assets previously owned by CCR in Twinsburg, Ohio. On April 28, 2017, the Company completed the transactions contemplated by the April 2017 Distribution APA and the April 2017 Manufacturing APA. At closing, the Company paid a cash purchase price of $87.7 million, which remains subject to adjustment in accordance with the terms of the April 2017 Distribution APA and the April 2017 Manufacturing APA. The Company has not completed the preliminary allocation of the purchase price to the individual acquired assets and assumed liabilities for these transactions. The transactions will be accounted for as a business combination under FASB ASC 805.

 

On April 11, 2017, the Company and The Coca‑Cola Company entered into a non-binding letter of intent which contemplates the Company exchanging certain of its exclusive distribution rights and related assets and working capital relating to the distribution, promotion, marketing and sale of beverage products owned and licensed by The Coca‑Cola Company and certain cross-licensed brands in territory located in south-central Kentucky currently served by the Company’s distribution center located in Somerset, Kentucky for certain like kind assets of CCR, as part of the exchange transactions contemplated by the non-binding letter of intent entered into by the Company and The Coca‑Cola Company on June 14, 2016, as described in the Company’s Current Report on Form 8-K filed with the SEC on June 16, 2016.

 

 

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The following Management’s Discussion and Analysis of Financial Condition and Results of Operations of Coca‑Cola Bottling Co. Consolidated (together with its majority-owned subsidiaries, the “Company,” “we” or “our”) should be read in conjunction with the consolidated financial statements of the Company and the accompanying notes to the consolidated financial statements.

 

The Company’s fiscal year generally ends on the Sunday closest to December 31 of each year. The consolidated financial statements presented are:

 

 

The consolidated financial statements include the consolidated operations of the Company and its majority-owned subsidiaries including Piedmont Coca‑Cola Bottling Partnership (“Piedmont”). Piedmont is the Company’s only subsidiary with a significant noncontrolling interest. The noncontrolling interest consists of The Coca‑Cola Company’s interest in Piedmont, which was 22.7% for all periods presented.

 

Expansion Transactions

 

As part of The Coca‑Cola Company’s plans to refranchise its North American bottling territories, the Company has engaged in a series of transactions since April 2013 with The Coca‑Cola Company and Coca‑Cola Refreshments USA, Inc. (“CCR”), a wholly-owned subsidiary of The Coca‑Cola Company, to significantly expand the Company’s distribution and manufacturing operations. This expansion includes acquisition of the rights to serve additional distribution territories previously served by CCR (the “Expansion Territories”) and related distribution assets (the “Distribution Territory Expansion Transactions”), as well as the acquisition of regional manufacturing facilities previously owned by CCR (the “Expansion Facilities”) and related manufacturing assets (the “Manufacturing Facility Expansion Transactions” and, together with the Distribution Territory Expansion Transactions, the “Expansion Transactions”).

 

As of April 2, 2017, the Expansion Transactions completed and the respective net cash paid amounts are as follows:

 

 

 

 

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The financial results of the Expansion Territories and the Expansion Facilities have been included in the Company’s consolidated financial statements from their respective acquisition or exchange dates. These Expansion Territories and Expansion Facilities contributed the following amounts to the Company’s consolidated statement of operations during the first quarter of 2017 and the first quarter of 2016:

 

 

 

Expansion Transactions

 

A summary of the Expansion Transactions completed by the Company prior to the first quarter of 2017 is included in the Company’s Annual Report on Form 10-K filed with the SEC on March 14, 2017. During the first quarter of 2017, the Company closed the following Expansion Transactions with CCR:

 

Anderson, Fort Wayne, Lafayette, South Bend and Terre Haute, Indiana Expansion Territories Acquisitions (the “January 2017 Expansion Transaction”)

 

On January 27, 2017, the Company acquired distribution rights for certain cross-licensed brands previously distributed in the territories by CCR and related assets for Expansion Territories served by distribution facilities in Anderson, Fort Wayne, Lafayette, South Bend and Terre Haute, Indiana, for a cash purchase price of approximately $31.6 million, which remains subject to post-closing adjustment.

 

This transaction is pursuant to the distribution asset purchase agreement entered into by the Company and CCR on September 1, 2016, as described in the Company’s Current Report on Form 8-K filed with the SEC on September 6, 2016 (the “September 2016 Form 8‑K”) and filed as Exhibit 2.1 thereto (as amended by Amendment No. 1 to Asset Purchase Agreement filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the SEC on January 27, 2017, the “September 2016 Distribution APA”).

 

Bloomington and Indianapolis, Indiana and Columbus and Mansfield, Ohio Expansion Territories Acquisitions and Indianapolis and Portland, Indiana Expansion Facility Acquisitions (“March 2017 Expansion Transactions”)

 

On March 31, 2017, the Company acquired distribution rights for certain cross-licensed brands previously distributed in the territories by CCR and related assets for Expansion Territories served by distribution facilities in Indianapolis and Bloomington, Indiana and Columbus and Mansfield, Ohio (the “March 2017 Expansion Territories”). In addition, on March 31, 2017, the Company acquired two Expansion Facilities located in Indianapolis and Portland, Indiana and related manufacturing assets (the “March 2017 Expansion Facilities”). The Company completed these two acquisitions for a cash purchase price of approximately $108.7 million, which remains subject to post-closing adjustment.

 

The March 2017 Expansion Territories acquisition is pursuant to the September 2016 Distribution APA. The March 2017 Expansion Facilities acquisition is pursuant to the manufacturing asset purchase agreement entered into by the Company and CCR on September 1, 2016 (the “September 2016 Manufacturing APA”), as described in the September 2016 Form 8‑K and filed as Exhibit 2.2 thereto.

 

Together, the January 2017 Expansion Transaction and the March 2017 Expansion Transactions, are the “Q1 2017 Expansion Transactions.”

 

Amendment to September 2016 Distribution APA

 

On January 27, 2017, the Company and CCR amended the September 2016 Distribution APA to, among other things, accelerate (i) the anticipated date for the closing of the March 2017 Expansion Transactions from October 2017 to March 2017, and (ii) the Company’s acquisition of territory served by a distribution facility in Terre Haute, Indiana from the March 2017 Expansion Transactions to the January 2017 Expansion Transaction.

 

 

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Final Comprehensive Beverage Agreement

 

In connection with the closings for the March 2017 Expansion Territories described above, the Company, The Coca‑Cola Company and CCR entered into a comprehensive beverage agreement (the “Final CBA”) on March 31, 2017, pursuant to which CCR granted the Company certain exclusive rights to distribute, promote, market and sell the Covered Beverages and Related Products distinguished by the Trademarks (as such terms are defined in the Final CBA) in the March 2017 Expansion Territories, in exchange for the Company agreeing to make a quarterly sub-bottling payment to CCR on a continuing basis, based on gross profit derived from sales of certain beverages and beverage products that are sold under the same trademarks that identify a Covered Beverage, Related Product or certain “cross-licensed” beverage brands not owned or licensed by The Coca‑Cola Company.

 

Other than the Covered Beverages, Related Products and expressly permitted existing cross-licensed brands, the Final CBA provides that, subject to certain limited exceptions, the Company will not be permitted to produce, manufacture, prepare, package, distribute, sell, deal in or otherwise use or handle any Beverages, Beverage Components (as such terms are defined in the Final CBA) or other beverage products unless otherwise consented to by The Coca‑Cola Company. The Final CBA has a term of ten years and is renewable by the Company indefinitely for successive additional terms of ten years each unless earlier terminated as provided therein.

 

The Final CBA includes:

 

 

As described below under “Bottling Agreement and RMA Conversions,” each of the Company’s initial comprehensive beverage agreements with The Coca‑Cola Company and CCR for the Expansion Territories the Company previously acquired from CCR (the “Initial CBAs”) and other Bottling Agreements (as defined below) has been amended, restated and converted into the Final CBA as of March 31, 2017. A summary of the Final CBA is provided in the Company’s Current Report on Form 8-K filed with the SEC on April 4, 2017 (the “April 2017 Form 8-K”), and the Final CBA is filed as Exhibit 10.5 to this Quarterly Report on Form 10-Q (this “Report”).

 

Final Regional Manufacturing Agreement

 

In connection with the closings for the March 2017 Expansion Facilities described above, the Company and The Coca‑Cola Company entered into a regional manufacturing agreement (the “Final RMA”) on March 31, 2017, pursuant to which The Coca‑Cola Company granted the Company the rights to manufacture, produce and package Authorized Covered Beverages (as defined in the Final RMA) at the March 2017 Expansion Facilities for distribution by the Company for its own account in accordance with the Final CBA and for sale by the Company to certain other U.S. Coca‑Cola bottlers and to the Coca‑Cola North America division of The Coca‑Cola Company in accordance with the Final RMA.

 

Under the Final RMA, The Coca‑Cola Company will, from time to time, unilaterally establish the prices (or certain elements of the formula used to determine the prices) that the Company charges for sales of Authorized Covered Beverages to The Coca‑Cola Company or to certain U.S. Coca‑Cola bottlers. Subject to the right of The Coca‑Cola Company to terminate the Final RMA in the event of an uncured default by the Company, the Final RMA has a term that continues for the duration of the term of the Final CBA. Other than Authorized Covered Beverages, certain cross-licensed brands that the Company is permitted to distribute under the Final CBA, and certain other expressly permitted cross-licensed brands, the Final RMA provides that the Company will not manufacture any Beverages, Beverage Components or other beverage products unless otherwise consented to by The Coca‑Cola Company.

 

The Final RMA includes:

 

 

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The Final RMA is similar in many respects to the initial regional manufacturing agreements entered into by the Company and The Coca‑Cola Company for the Expansion Facilities the Company previously acquired from CCR (the “Initial RMAs”), a copy of which was filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on May 5, 2016 (the “May 2016 Form 8-K”). As described below under “Bottling Agreement and RMA Conversions,” each of the Company’s Initial RMAs has been amended, restated and converted into the Final RMA as of March 31, 2017.

 

Bottling Agreement and RMA Conversions

 

Upon the consummation of the March 31, 2017 Expansion Transactions, each of the Company’s existing bottling agreements for The Coca‑Cola Company beverage brands, including each of the Company’s Initial CBAs, master bottle contracts, allied bottle contracts and other bottling agreements with The Coca‑Cola Company or CCR that authorize the Company to produce and/or distribute the Covered Beverages or Related Products (collectively, the “Bottling Agreements”), were automatically amended, restated and converted into the Final CBA (the “Bottling Agreement Conversion”) pursuant to the territory conversion agreement entered into by the Company, The Coca‑Cola Company and CCR on September 23, 2015, as described in the September 2015 Form 8-K and filed as Exhibit 10.1 thereto (as amended by the First Amendment to Territory Conversion Agreement filed as Exhibit 10.47 to the Company’s Annual Report on Form 10-K filed with the SEC on March 18, 2016, the “Territory Conversion Agreement”). The Bottling Agreement Conversion included all of the Company’s Bottling Agreements for the Expansion Territories and for all other territories in the United States where the Company (or one of its affiliates) has rights to market, promote, distribute and sell beverage products owned or licensed by The Coca‑Cola Company (the “Legacy Territories”), provided that the sub-bottling payment required under the Final CBA will not apply with regards to the Legacy Territories.

 

Concurrent with the Bottling Agreement Conversion on March 31, 2017, each of the Company’s Initial RMAs were also automatically amended, restated and converted, pursuant to their terms, into the Final RMA (the “RMA Conversion”). The Final RMA also provides the Company the rights to manufacture, produce and package Authorized Covered Beverages at the Company’s four legacy manufacturing facilities (the “Legacy Facilities”), which rights were previously granted to the Company pursuant to certain Bottling Agreements that have now been amended, restated and converted into the Final CBA as part of the Bottling Agreement Conversion.

 

Pursuant to the Territory Conversion Agreement, on March 31, 2017 CCR paid the Company and its subsidiaries a one-time fee (which is subject to final adjustment) of $87.1 million upon the Bottling Agreement Conversion, an amount equivalent to 0.5 times the EBITDA the Company and its subsidiaries generated during the twelve-month period ended January 1, 2017 from sales in the Legacy Territories of Beverages either (i) owned by The Coca‑Cola Company or licensed to The Coca‑Cola Company and sublicensed to the Company and its subsidiaries, or (ii) owned by or licensed to Monster Energy Company on which the Company and its subsidiaries pay, and The Coca‑Cola Company receives, a facilitation fee.

 

Piedmont Final Comprehensive Beverage Agreement

 

In connection with the Bottling Agreement Conversion, the existing Bottling Agreements between The Coca‑Cola Company and Piedmont, a partnership formed by a wholly-owned subsidiary of the Company and a wholly-owned subsidiary of The Coca‑Cola Company to distribute and market finished bottle, can and fountain beverage products under trademarks of The Coca‑Cola Company and other third-party licensors in portions of the Legacy Territories located in North Carolina, South Carolina, Virginia and Georgia (the “Piedmont Territories”), also were amended, restated and converted into a final comprehensive beverage agreement (the “Piedmont CBA”).

 

Pursuant to the Piedmont CBA, The Coca‑Cola Company granted Piedmont certain exclusive rights to distribute, promote, market and sell the Covered Beverages and Related Products distinguished by the Trademarks in the Piedmont Territories. The Piedmont CBA is substantially similar to the Final CBA and, as with the treatment of the Legacy Territories under the Final CBA, there is no requirement for Piedmont to make quarterly sub-bottling payments to CCR for the Piedmont Territories. Piedmont did not enter into a Final RMA with The Coca‑Cola Company, as Piedmont does not own any regional manufacturing facilities. A summary of the Piedmont CBA is provided in the April 2017 Form 8-K and the Piedmont CBA is filed as Exhibit 10.6 to this Report.

 

Omnibus Letter Agreement

 

On March 31, 2017, the Company, certain of its subsidiaries and The Coca‑Cola Company entered into a letter agreement (the “Omnibus Letter Agreement”) pursuant to which the parties agreed that, for purposes of determining compliance with (i) the

 

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equivalent case volume per capita change rate obligation under the Final CBA, the Piedmont CBA and any other comprehensive beverage agreements between The Coca‑Cola Company and a subsidiary of the Company (collectively, the “CCBCC Group CBAs”) (the “Equivalent Case Volume Obligation”) and (ii) the capital expenditures obligation under the CCBCC Group CBAs and the Final RMA (the “Capital Expenditures Obligation”), the equivalent case volume per capita and the capital expenditures of the Company and its subsidiaries, in both instances, will be calculated in the aggregate. For instance, the Capital Expenditures Obligation will apply to the entire territory covered by the CCBCC Group CBAs and the Final RMA in the aggregate, and not with respect to any individual territory under a particular agreement, and will include all expenditures in such respect made by the Company and its subsidiaries.

 

In addition, the Omnibus Letter Agreement provides that a breach of the Equivalent Case Volume Obligation or the Capital Expenditures Obligation would result in a default of the CCBCC Group CBAs and/or of the Final RMA, as applicable. Further, pursuant to the Omnibus Letter Agreement, the Company and The Coca‑Cola Company also agreed that the Final RMA supersedes the letter agreement entered into by the Company and The Coca‑Cola Company on April 29, 2016, as described in the May 2016 Form 8-K, and consequently, terminated such letter agreement as of March 31, 2017. A summary of the Omnibus Letter Agreement is provided in the April 2017 Form 8-K, and the Omnibus Letter Agreement was filed as Exhibit 10.1 thereto.

 

Expansion Facilities Discount and Legacy Facilities Credit Letter Agreement

 

In connection with the Company’s acquisitions of the Expansion Facilities and the impact on transaction value from certain adjustments made by The Coca‑Cola Company to the authorized pricing under the Final RMA on sales of Authorized Covered Beverages produced by the Company at the Expansion Facilities and sold to The Coca‑Cola Company and certain U.S. Coca‑Cola bottlers, the Company and The Coca‑Cola Company also entered into a letter agreement on March 31, 2017 (the “Manufacturing Facilities Letter Agreement”) pursuant to which The Coca‑Cola Company agreed to provide the Company with an aggregate valuation adjustment discount of $33.1 million (the “Expansion Facilities Discount”) on the purchase prices for the Expansion Facilities. On March 31, 2017, upon the Company’s acquisition of the March 2017 Expansion Facilities, the parties agreed to apply $22.9 million of the total Expansion Facilities Discount, which represents the portion of the Expansion Facilities Discount applicable to (i) the March 2017 Expansion Facilities and (ii) the Expansion Facilities previously acquired by the Company from CCR. The portion of the Expansion Facilities Discount attributable to each of the remaining Expansion Facilities to be acquired by the Company will be applied at the closing of each such future transaction.

 

The Manufacturing Facilities Letter Agreement also establishes a mechanism to compensate the Company with a payment or credit for the net economic impact to the Legacy Facilities of the changes made by The Coca‑Cola Company to the authorized pricing under the Final RMA on sales of Authorized Covered Beverages produced by the Company at the Legacy Facilities and sold to The Coca‑Cola Company and certain U.S. Coca‑Cola bottlers versus the Company’s historical returns for products produced at the Legacy Facilities prior to the RMA Conversion (the “Legacy Facilities Credit”). The Coca‑Cola Company and the Company have agreed to work together to calculate the Legacy Facilities Credit as promptly as reasonably practicable. A summary of the Manufacturing Facilities Letter Agreement is provided in the April 2017 Form 8-K and the Manufacturing Facilities Letter Agreement is filed as Exhibit 10.8 to this Report.

 

Amended and Restated Ancillary Business Letter

 

On March 31, 2017, the Company and The Coca‑Cola Company amended and restated the letter agreement dated October 30, 2015, a copy of which was filed as Exhibit 10.2 to the November 2015 Form 8-K (as amended and restated, the “A&R Ancillary Business Letter”), to grant the Company advance waivers to acquire or develop certain lines of business involving the preparation, distribution, sale, dealing in or otherwise using or handling of certain beverage products that would otherwise be prohibited under the Final CBA or any similar agreement. Subject to certain limited exceptions described therein, the Company is prohibited from acquiring or developing any line of business inside or outside of its territories governed by the Final CBA or any similar agreement during the term of a focus period expiring January 1, 2020 (the “Focus Period”) without the consent of The Coca‑Cola Company, which consent may not be unreasonably withheld.

 

After the expiration of the Focus Period, only the acquisition or development by the Company of (i) any grocery, quick service restaurant, or convenience and petroleum store business engaged in the sale of Beverages, Beverage Components and other beverage products not otherwise authorized or permitted by the Final CBA, or (ii) any other line of business for which beverage activities otherwise prohibited under the Final CBA represent more than a certain threshold of net sales will require the consent of The Coca‑Cola Company (which consent may not be unreasonably withheld) under the A&R Ancillary Business Letter, subject to certain limited exceptions described therein. A summary of the A&R Ancillary Business Letter is provided in the April 2017 Form 8‑K, and the A&R Ancillary Business Letter was filed as Exhibit 10.2 thereto.

 

 

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Cleveland Letter of Intent

 

On February 6, 2017, the Company and The Coca‑Cola Company entered into a non-binding letter of intent (the “February 2017 LOI”) pursuant to which CCR would grant the Company certain exclusive rights for the distribution, promotion, marketing and sale of beverage products owned and licensed by The Coca‑Cola Company in territory in and around Cleveland, Ohio (the “Cleveland Territory”) currently served by another unaffiliated Coca‑Cola bottler. The February 2017 LOI contemplates that CCR would acquire this distribution business in the Cleveland Territory from the existing Coca‑Cola bottler immediately prior to selling it to the Company. A summary of the February 2017 LOI was provided in the Company’s Current Report on Form 8-K filed February 7, 2017, and the February 2017 LOI was filed as Exhibit 99.2 thereto.

 

Pursuant to the February 2017 LOI, the Company and The Coca‑Cola Company also amended their non-binding letter of intent dated February 8, 2016, as described in the Company’s Current Report on Form 8-K filed with the SEC on February 10, 2016 and filed as Exhibit 99.2 thereto, to remove the portion of the distribution territory located in northern West Virginia served by CCR’s distribution facilities in Wheeling and Fairmont, West Virginia from the Distribution Territory Expansion Transaction contemplated by such letter of intent and agreed that CCR will sell the distribution rights and assets associated with such territory to another unaffiliated Coca‑Cola bottler.

 

Our Business and the Nonalcoholic Beverage Industry

 

Coca‑Cola Bottling Co. Consolidated, a Delaware corporation, produces, markets and distributes nonalcoholic beverages in 16 states. The Company was incorporated in 1980 and, together with its predecessors, has been in the nonalcoholic beverage manufacturing and distribution business since 1902. We are the largest independent Coca‑Cola bottler in the United States. Approximately 92% of our total bottle/can volume to retail customers consist of products of The Coca‑Cola Company, which include some of the most recognized and popular beverage brands in the world. We also distribute products for several other beverage brands including Dr Pepper, Sundrop and Monster Energy. Our purpose is to honor God, serve others, pursue excellence and grow profitably. Our stock is traded on the NASDAQ exchange under the symbol “COKE.”

 

We offer a range of flavors designed to meet the demands of our consumers. Our product offerings include both sparkling and still beverages. Sparkling beverages are carbonated beverages and the Company’s principal sparkling beverage is Coca‑Cola. Still beverages include energy products and noncarbonated beverages such as bottled water, tea, ready to drink coffee, enhanced water, juices and sports drinks.

 

There are two main categories of sales, which include bottle/can sales and other sales. Bottle/can sales include products packaged in plastic bottles and aluminum cans. Other sales include sales to other Coca‑Cola bottlers and “post-mix” products. Post-mix products are dispensed through equipment that mixes the fountain syrup with carbonated or still water, enabling fountain retailers to sell finished products to consumers in cups or glasses.

 

Net sales by product category were as follows:

 

 

 

The nonalcoholic beverage market is highly competitive. Competitive products include nonalcoholic sparkling beverages and still beverages, which are noncarbonated beverages such as bottled water, energy drinks, tea, ready to drink coffee, enhanced water, juices

 

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and sports drinks. Our competitors include bottlers and distributors of nationally and regionally advertised and marketed products, as well as bottlers and distributors of private label beverages. Our principal competitors include local bottlers of Pepsi-Cola and, in some regions, local bottlers of Dr Pepper, Royal Crown and/or 7‑Up products.

 

The principal methods of competition in the nonalcoholic beverage industry are point-of-sale merchandising, new product introductions, new vending and dispensing equipment, packaging changes, pricing, price promotions, product quality, retail space management, customer service, frequency of distribution and advertising. We believe we are competitive in our territories with respect to these methods of competition.

 

Business seasonality results primarily from higher unit sales of the Company’s products in the second and third quarters of the fiscal year. Sales volume can also be impacted by weather conditions. Fixed costs, such as depreciation expense, are not significantly impacted by business seasonality. We have, and believe CCR and other bottlers from whom we purchase finished goods have, adequate production capacity to meet sales demand for sparkling and still beverages during these peak periods.

 

Areas of Emphasis

 

Key priorities for the Company include territory and manufacturing expansion, revenue management, product innovation and beverage portfolio expansion, distribution cost management, and productivity.

 

Revenue Management:  Revenue management requires a strategy that reflects consideration for pricing of brands and packages within product categories and channels, highly effective working relationships with customers and disciplined fact-based decision-making. Revenue management has been and continues to be a key driver which has a significant impact on the Company’s results of operations.

 

Product Innovation and Beverage Portfolio Expansion:  Innovation of both new brands and packages has been and is expected to continue to be important to the Company’s overall revenue. Recent product introductions from the Company and The Coca‑Cola Company include new flavor varieties within certain brands such as Fanta Sparkling Fruit, Minute Maid Refreshment, Monster, Dasani Drops, NOS, and Dasani Sparkling. New packaging introductions over the last several years include the 253 ml bottle, the 1.25-liter bottle, the 7.5-ounce sleek can, the 2-liter contour bottle for Coca‑Cola products, and the 16-ounce bottle/24-ounce bottle package.

 

Distribution Cost Management:  Distribution costs represent the costs of transporting finished goods from Company locations to customer outlets. Total distribution costs were $91.0 million in the first quarter of 2017 and $64.4 million in the first quarter of 2016. Management of these costs will continue to be a key area of emphasis for the Company.

 

The Company has three primary delivery systems:

 

 

Productivity:  A key driver in the Company’s selling, delivery and administrative (“S,D&A”) expense management relates to ongoing improvements in labor productivity and asset productivity.

 

 

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Results of Operations

 

First Quarter Results

 

Our results of operations for the first quarter of 2017 and the first quarter of 2016 are highlighted in the table below and discussed in the following paragraphs:

 

 

Items Impacting Operations and Financial Condition

 

The following items affect the comparability of the financial results:

 

First Quarter 2016

 

 

First Quarter 2016

 

 

Net Sales

 

Net sales increased $240.2 million, or 38.4%, to $865.7 million in the first quarter of 2017, as compared to $625.5 million in the first quarter of 2016. The increase in net sales was primarily attributable to the following (in millions):

 

 

The Company’s bottle/can sales to retail customers accounted for approximately 85% of the Company’s total net sales in the first quarter of 2017, as compared to approximately 83% in the first quarter of 2016. Bottle/can net pricing is based on the invoice price

 

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charged to customers reduced by promotional allowances. Bottle/can net pricing per unit is impacted by the price charged per package, the volume generated in each package and the channels in which those packages are sold.

 

Product category sales volume as a percentage of total bottle/can sales volume and the percentage change by product category were as follows:

 

 

Bottle/can volume to retail customers, excluding the Q1 2017 Expansion Transactions and the 2016 Expansion Transactions, increased 2.6%, which represented a 1.3% increase in sparkling beverages and a 6.0% increase in still beverages in the first quarter of 2017, as compared to the first quarter of 2016.

 

The Company’s products are sold and distributed through various channels, which include selling directly to retail stores and other outlets such as food markets, institutional accounts and vending machine outlets. During the first quarter of 2017, approximately 66% of the Company’s bottle/can volume to retail customers was sold for future consumption, while the remaining bottle/can volume to retail customers was sold for immediate consumption.

 

The following table summarizes the percentage of the Company’s total bottle/can volume and the percentage of the Company’s total net sales, which are all included in the Nonalcoholic Beverages operating segment, attributed to its largest customers:

 

 

Cost of Sales

 

Cost of sales includes the following: raw material costs, manufacturing labor, manufacturing overhead including depreciation expense, manufacturing warehousing costs, shipping and handling costs related to the movement of finished goods from manufacturing locations to sales distribution centers and purchase of finished goods.

 

Cost of sales increased $152.1 million, or 39.9%, to $533.7 million in the first quarter of 2017, as compared to $381.6 million in the first quarter of 2016. The increase in cost of sales was primarily attributable to the following (in millions):

 

 

 

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The following inputs represent a substantial portion of the Company’s total cost of sales: (i) sweeteners, (ii) packaging materials, including plastic bottles and aluminum cans, and (iii) finished products purchased from other vendors.

 

The Company relies extensively on advertising and sales promotion in the marketing of its products. The Coca‑Cola Company and other beverage companies that supply concentrates, syrups and finished products to the Company make substantial marketing and advertising expenditures to promote sales in the local territories served by the Company. The Company also benefits from national advertising programs conducted by The Coca‑Cola Company and other beverage companies. Certain of the marketing expenditures by The Coca‑Cola Company and other beverage companies are made pursuant to annual arrangements. Total marketing funding support from The Coca‑Cola Company and other beverage companies, which includes direct payments to the Company and payments to customers for marketing programs, was $24.4 million in the first quarter of 2017, as compared to $20.4 million in the first quarter of 2016.

 

The Company’s cost of sales may not be comparable to other peer companies, as some peer companies include all costs related to their distribution network in cost of sales. The Company includes a portion of these costs in S,D&A expenses.

 

S,D&A Expenses

 

S,D&A expenses include the following: sales management labor costs, distribution costs from sales distribution centers to customer locations, sales distribution center warehouse costs, depreciation expense related to sales centers, delivery vehicles and cold drink equipment, point-of-sale expenses, advertising expenses, cold drink equipment repair costs, amortization of intangibles and administrative support labor and operating costs.

 

S,D&A expenses increased by $86.9 million, or 37.5%, to $318.4 million in the first quarter of 2017, as compared to $231.5 million in the first quarter of 2016. S,D&A expenses as a percentage of net sales decreased to 36.8% in the first quarter of 2017 from 37.0% in the first quarter of 2016. The increase in S,D&A expenses was primarily attributable to the following (in millions):

 

 

Shipping and handling costs related to the movement of finished goods from manufacturing locations to sales distribution centers are included in cost of sales. Shipping and handling costs related to the movement of finished goods from sales distribution centers to customer locations are included in S,D&A expenses and totaled $91.0 million in the first quarter of 2017 and $64.4 million in the first quarter of 2016.

 

Interest Expense, Net

 

Interest expense, net, increased $0.1 million, or 1.2%, to $9.5 million in the first quarter of 2017, as compared to $9.4 million in the first quarter of 2016.

 

Other Expense, Net

 

Other expense, net, included a noncash charge of $12.2 million in the first quarter of 2017 and $17.2 million in the first quarter of 2016 as a result of fair value adjustments of the Company’s contingent consideration liability related to the Expansion Territories. The adjustment in the first quarter of 2017 was primarily a result of the final settlement of territory values for the Paducah and Pikeville, Kentucky Expansion Territory acquisitions and the Norfolk, Fredericksburg and Staunton, Virginia, and Elizabeth City, North Carolina Expansion Territory acquisitions, which closed in May 2015 and October 2015, respectively. The adjustment in the first quarter of 2016 was driven primarily by a change in projected future operating results of the acquired Expansion Territories subject to sub-bottling fees.

 

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Each reporting period, the Company adjusts its contingent consideration liability related to the newly-acquired Expansion Territories to fair value. The fair value is determined by discounting future expected sub-bottling payments required under the Final CBA using the Company’s estimated weighted average cost of capital (“WACC”), which is impacted by many factors, which include long-term interest rates; projected future operating results; and final settlements of territory values. These future expected sub-bottling payments extend through the life of the related distribution asset acquired in each distribution territory expansion transaction, which is generally 40 years. In addition, the Company is required to pay quarterly the current portion of the sub-bottling fee.

 

Income Tax Benefit

 

The Company’s effective tax rate, calculated by dividing income tax benefit by loss before income taxes, was 45.5% for the first quarter of 2017 and 36.0% for the first quarter of 2016. The increase in the effective tax rate benefit was primarily driven by a reduction in the valuation allowance resulting from the Company’s assessment of its ability to use certain loss carryforwards, partially offset by the repricing of net deferred tax liabilities as a result of the Expansion Territories being located in higher tax rate jurisdictions. The Company’s effective tax rate, calculated by dividing income tax benefit by loss before income taxes minus net income attributable to noncontrolling interest, was 42.2% for the first quarter of 2017 and 33.6% for the first quarter of 2016.

 

Noncontrolling Interest

 

The Company recorded net income attributable to noncontrolling interest, which is related to the portion of Piedmont owned by The Coca‑Cola Company, of $0.6 million in the first quarter of 2017 and $1.0 million in the first quarter of 2016.

 

Other Comprehensive Income, Net of Tax

 

Other comprehensive income, net of tax was $0.4 million in the first quarter of 2017 and $0.3 million in the first quarter of 2016. The increase was primarily a result of actuarial losses on the Company’s pension and postretirement benefit plans.

 

Segment Operating Results

 

The Company evaluates segment reporting in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification 280, Segment Reporting each reporting period, including evaluating the reporting package reviewed by the Chief Operation Decision Maker (“CODM”). The Company has concluded the Chief Executive Officer, Chief Operating Officer and Chief Financial Officer, as a group, represent the CODM.

 

The Company believes four operating segments exist. Nonalcoholic Beverages represents the vast majority of the Company’s consolidated revenues, operating income, and assets. The remaining three operating segments do not meet the quantitative thresholds for separate reporting, either individually or in the aggregate, and therefore have been combined into an “All Other” reportable segment.

 

The Company’s results for its two reportable segments are as follows:

 

 

 

 

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Comparable /Adjusted Results

 

The Company reports its financial results in accordance with U.S. generally accepted accounting principles (“GAAP”). However, management believes certain non-GAAP financial measures provide users with additional meaningful financial information that should be considered when assessing the Company’s ongoing performance. Management also uses these non-GAAP financial measures in making financial, operating and planning decisions and in evaluating the Company's performance. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company's reported results prepared in accordance with GAAP. The Company’s non-GAAP financial information does not represent a comprehensive basis of accounting.

 

The following tables reconcile reported GAAP results to comparable results (non-GAAP) for the first quarter of 2017 and the first quarter of 2016:

 

 

 

Financial Condition

 

Total assets increased to $2.66 billion on April 2, 2017, from $2.45 billion on January 1, 2017. The increase in total assets is primarily attributable to the Expansion Transactions, contributing to an increase in total assets of $185.2 million from January 1, 2017. In addition, the Company had additions to property, plant and equipment of $41.6 million during the first quarter of 2017, which excludes $108.4 million in property, plant and equipment acquired in the Q1 2017 Expansion Transactions.

 

Net working capital, defined as current assets less current liabilities, was $192.9 million on April 2, 2017, which was an increase of $56.9 million from January 1, 2017.

 

Significant changes in net working capital on April 2, 2017 from January 1, 2017 were as follows:

 

 

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Liquidity and Capital Resources

 

Capital Resources

 

The Company’s sources of capital include cash flows from operations, available credit facilities and the issuance of debt and equity securities. The Company has obtained the majority of its long-term debt, other than capital leases, from public markets and bank facilities. Management believes the Company has sufficient sources of capital available to refinance its maturing debt, finance its business plan, including the proposed acquisition of previously announced additional Expansion Territories and Expansion Facilities, meet its working capital requirements and maintain an appropriate level of capital spending for at least the next 12 months from the issuance of these financial statements. The amount and frequency of future dividends will be determined by the Company’s Board of Directors in light of the earnings and financial condition of the Company at such time, and no assurance can be given that dividends will be declared or paid in the future.

 

On February 27, 2017, the Company sold $125 million aggregate principal amount of senior unsecured notes due 2023 to PGIM, Inc. (“Prudential”) and certain of its affiliates pursuant to the Note Purchase and Private Shelf Agreement dated June 10, 2016 between the Company, Prudential and the other parties thereto (the “Private Shelf Facility”). These notes bear interest at 3.28%, payable semi-annually in arrears on February 27 and August 27 of each year, and will mature on February 27, 2023 unless earlier redeemed by the Company. The Company used the proceeds toward repayment of outstanding indebtedness under the Revolving Credit Facility and for other general corporate purposes. The Company may request that Prudential consider the purchase of additional senior unsecured notes of the Company under the facility in an aggregate principal amount of up to $175 million.

 

In October 2014, the Company entered into a five-year unsecured revolving credit facility (the “Revolving Credit Facility”), and in April 2015, the Company exercised an accordion feature which established a $450 million aggregate maximum borrowing capacity on the Revolving Credit Facility. The $450 million borrowing capacity includes up to $50 million available for the issuance of letters of credit. Borrowings under the Revolving Credit Facility bear interest at a floating base rate or a floating Eurodollar rate plus an applicable margin, dependent on the Company’s credit rating at the time of borrowing. At the Company’s current credit ratings, the Company must pay an annual facility fee of 0.15% of the lenders’ aggregate commitments under the Revolving Credit Facility. The Revolving Credit Facility has a scheduled maturity date of October 16, 2019.

 

The Company currently believes all banks participating in the Company’s Revolving Credit Facility have the ability to and will meet any funding requests from the Company. The Company had outstanding borrowings on the Revolving Credit Facility of $122.0 million on April 2, 2017 and $152.0 million on January 1, 2017.

 

In June 2016, the Company entered into a five-year term loan agreement for a senior unsecured term loan facility (the “Term Loan Facility”) in the aggregate principal amount of $300 million, maturing June 7, 2021. The Company may request additional term loans under the agreement, provided the Company’s aggregate borrowings under the Term Loan Facility do not exceed $500 million. Borrowings under the Term Loan Facility bear interest at a floating base rate or a floating Eurodollar rate plus an applicable margin, dependent on the Company’s credit rating, at the Company’s option. The Company used $210 million of the proceeds from the Term Loan Facility to repay outstanding indebtedness under the Revolving Credit Facility. The Company then used the remaining proceeds, as well as borrowings under the Revolving Credit Facility, to repay the $164.8 million of Senior Notes that matured on June 15, 2016.

 

The Revolving Credit Facility, the Term Loan Facility and the Private Shelf Facility include two financial covenants: a consolidated cash flow/fixed charges ratio and a consolidated funded indebtedness/cash flow ratio, each as defined in the respective agreements. The Company was in compliance with these covenants as of April 2, 2017. These covenants do not currently, and the Company does not anticipate they will, restrict its liquidity or capital resources.

 

The indentures under which the Company’s public debt was issued do not include financial covenants but do limit the incurrence of certain liens and encumbrances as well as indebtedness by the Company’s subsidiaries in excess of certain amounts.

 

All outstanding long-term debt has been issued by the Company and none has been issued by any of its subsidiaries. There are no guarantees of the Company’s debt.

 

The Company’s credit ratings are reviewed periodically by the respective rating agencies. Changes in the Company’s operating results or financial position could result in changes in the Company’s credit ratings. Lower credit ratings could result in higher borrowing costs for the Company or reduced access to capital markets, which could have a material impact on the Company’s financial position

 

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or results of operations. There were no changes in these credit ratings during the first quarter of 2017 from the prior year and the credit ratings are currently stable. As of April 2, 2017, the Company’s credit ratings were as follows:

 

 

Net debt and capital lease obligations were summarized as follows:

 

 

 

The Company is subject to interest rate risk on its floating rate debt, including the Company’s $450 million Revolving Credit Facility and its $300 million Term Loan Facility. Assuming no changes in the Company’s financial structure, if market interest rates average 1% more over the next twelve months than the interest rates as of April 2, 2017, interest expense for the next twelve months would increase by approximately $4.2 million.

 

The Company’s only Level 3 asset or liability is the contingent consideration liability incurred as a result of the Expansion Transactions. There were no transfers from Level 1 or Level 2. Fair value adjustments were noncash, and therefore did not impact the Company’s liquidity or capital resources. Following is a summary of the Level 3 activity:

 

 

 

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Cash Sources and Uses

 

The primary sources of cash for the Company in the first quarter of 2017 were debt financings and a one-time fee paid to the Company by CCR as part of the Final CBA. The primary uses of cash in the first quarter of 2017 were acquisitions of Expansion Territories and Expansion Facilities and additions to property, plant and equipment. The primary source of cash for the Company in the first quarter of 2016 was debt financings. The primary uses of cash in the first quarter of 2016 were debt repayments, acquisitions of Expansion Territories and Expansion Facilities and additions to property, plant and equipment. A summary of cash-based activity is as follows: 

 

 

 

Cash Flows From Operating Activities

 

During the first quarter of 2017, cash provided by operating activities was $116.5 million, which was an increase of $131.7 million, as compared to the first quarter of 2016. In addition to the cash generated from the newly acquired Expansion Territories, the increase was driven by an $87.1 million, one-time fee paid to the Company by CCR pursuant to the Territory Conversion Agreement.

 

Cash Flows From Investing Activities

 

During the first quarter of 2017, cash used in investing activities was $197.1 million, which was an increase of $58.3 million, as compared to the first quarter of 2016. The increase was driven primarily by $140.0 million in cash used to finance the Expansion Transactions.

 

Additions to property, plant and equipment during the first quarter of 2017 were $41.6 million, of which $9.4 million were accrued in accounts payable, trade. These additions exclude $108.4 million in property, plant and equipment acquired in the Q1 2017 Expansion Transactions. Additions to property, plant and equipment during the first quarter of 2017 were funded with cash flows from operations and available credit facilities. The Company anticipates additions to property, plant and equipment for the remaining three quarters of 2017 will be in the range of $150 million to $200 million, excluding any additional Expansion Transactions expected to close in 2017.

 

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In addition to the Expansion Transactions, the Company made a $15.6 million payment to The Coca‑Cola Company during the first quarter of 2017 in order to acquire rights to market, promote, distribute and sell glacéau products in certain geographic territories and for The Coca‑Cola Company to terminate a distribution arrangement with the prior distributor in these territories.

 

Additions to property, plant and equipment during the first quarter of 2016 were $36.8 million, of which $8.9 million were accrued in accounts payable, trade. These additions exclude $103.8 million in property, plant and equipment acquired in the 2016 Expansion Transactions completed during the first quarter of 2016.

 

Cash Flows From Financing Activities

 

During the first quarter of 2017, cash provided by financing activities was $90.6 million, which was a decrease of $40.5 million, as compared to the first quarter of 2016. The decrease was driven primarily by a reduction in net borrowings on the Revolving Credit Facility. The one-time fee paid to the Company by CCR in connection with the conversion of the Company’s bottling agreements to the Final CBA contributed to this reduction.

 

During the first quarter of 2017, the Company had no cash payments for acquisition related contingent consideration. The anticipated amount the Company could pay annually under the acquisition related contingent consideration arrangements for the Expansion Transactions is in the range of $20 million to $36 million.

 

Significant Accounting Policies

 

See Note 1 to the consolidated financial statements for information on the Company’s significant accounting policies.

 

Off-Balance Sheet Arrangements

 

The Company is a member of two manufacturing cooperatives and has guaranteed $28.1 million of debt for these entities as of April 2, 2017. In addition, the Company has an equity ownership in each of the entities. The members of both cooperatives consist solely of Coca‑Cola bottlers. The Company does not anticipate either of these cooperatives will fail to fulfill their commitments. The Company further believes each of these cooperatives has sufficient assets, including production equipment, facilities and working capital, and the ability to adjust selling prices of their products to adequately mitigate the risk of material loss from the Company’s guarantees.

 

As of April 2, 2017, the Company’s maximum exposure, if both of these cooperatives borrowed up to their aggregate borrowing capacity, would have been $71.1 million, including the Company’s equity interests. See Note 13 to the consolidated financial statements for additional information.

 

Hedging Activities

 

The Company enters into derivative instruments to hedge certain commodity purchases. Fees paid by the Company for derivative instruments are amortized over the corresponding period of the instrument. The Company accounts for its commodity hedges on a mark-to-market basis with any expense or income reflected as an adjustment of cost of sales or S,D&A expenses.

 

The Company uses several different financial institutions for commodity derivative instruments to minimize the concentration of credit risk. The Company has master agreements with the counterparties to its derivative financial agreements that provide for net settlement of derivative transactions. The net impact of the commodity hedges on cost of sales was a decrease of $1.0 million in the first quarter of 2017 and a decrease of $0.2 million in the first quarter of 2016. The net impact of the commodity hedges on SD&A expenses was an increase of $0.3 million in both the first quarter of 2017 and the first quarter of 2016.

 

Cautionary Information Regarding Forward-Looking Statements

 

Certain statements contained in this Report, or in other public filings, press releases, or other written or oral communications made by Coca‑Cola Bottling Co. Consolidated or its representatives, which are not historical facts, are forward-looking statements subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements address, among other things, Company plans, activities or events which the Company expects will or may occur in the future and may include express or implied projections of revenue or expenditures; statements of plans and objectives for future operations, growth or initiatives; statements of future economic performance, including, but not limited to, the state of the economy, capital investment and financing plans, net sales, cost of sales, S,D&A expenses, gross profit, income tax rates, earnings per diluted share, dividends, pension plan

 

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contributions, estimated sub-bottling liability payments; or statements regarding the outcome or impact of certain new accounting pronouncements and pending or threatened litigation.

 

 

These forward-looking statements may be identified by the use of the words “believe,” “plan,” “estimate,” “expect,” “anticipate,” “probably,” “should,” “project,” “intend,” “continue,” and other similar terms and expressions. Various risks, uncertainties and other factors may cause the Company’s actual results to differ materially from those expressed or implied in any forward-looking statements. Factors, uncertainties and risks that may result in actual results differing from such forward-looking information include, but are not limited to, those listed in Part I – Item 1A of our Annual Report on Form 10-K for the year ended January 1, 2017, as well as other factors discussed throughout this Report, including, without limitation, the factors described under “Significant Accounting Policies” in Part I – Item 2 above, or in other filings or statements made by the Company. All of the forward-looking statements in this Report and other documents or statements are qualified by these and other factors, risks and uncertainties.

 

 

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Caution should be taken not to place undue reliance on the forward-looking statements included in this Report. The Company assumes no obligation to update any forward-looking statements, even if experience or future changes make it clear that projected results expressed or implied in such statements will not be realized, except as may be required by law. In evaluating forward-looking statements, these risks and uncertainties should be considered, together with the other risks described from time to time in the Company’s other reports and documents filed with the Securities and Exchange Commission.

 

Item 3.Quantitative and Qualitative Disclosures About Market Risk.

 

The Company is exposed to certain market risks that arise in the ordinary course of business. The Company may enter into derivative financial instrument transactions to manage or reduce market risk. The Company does not enter into derivative financial instrument transactions for trading purposes. A discussion of the Company’s primary market risk exposure and interest rate risk is presented below.

 

Debt and Derivative Financial Instruments

 

The Company is subject to interest rate risk on its floating rate debt, including the Company’s $450 million Revolving Credit Facility and its $300 million Term Loan Facility. Assuming no changes in the Company’s financial structure, if market interest rates average 1% more over the next twelve months than the interest rates as of April 2, 2017, interest expense for the next twelve months would increase by approximately $4.2 million. This amount was determined by calculating the effect of the hypothetical interest rate on the Company’s variable rate debt. This calculated, hypothetical increase in interest expense for the following twelve months may be different from the actual increase in interest expense from a 1% increase in interest rates due to varying interest rate reset dates on the Company’s floating debt.

 

The Company’s acquisition related contingent consideration, which is adjusted to fair value at each reporting period, is also impacted by changes in interest rates. The risk free interest rate used to estimate the Company’s WACC is a component of the discount rate used to calculate the present value of future cash flows due under the Final CBA related to the Expansion Territories. As a result, any changes in the underlying risk-free interest rates will impact the fair value of the acquisition related contingent consideration and could materially impact the amount of noncash expense (or income) recorded each reporting period.

 

Raw Material and Commodity Price Risk

 

The Company is also subject to commodity price risk arising from price movements for certain commodities included as part of its raw materials. The Company manages this commodity price risk in some cases by entering into contracts with adjustable prices to hedge commodity purchases. The Company periodically uses derivative commodity instruments in the management of this risk. The Company estimates a 10% increase in the market prices of these commodities over the current market prices would cumulatively increase costs during the next 12 months by approximately $43.2 million assuming no change in volume.

 

Fees paid by the Company for agreements to hedge commodity purchases are amortized over the corresponding period of the instruments. The Company accounts for commodity hedges on a mark-to-market basis with any expense or income being reflected as an adjustment to cost of sales or S,D&A expenses.

 

Effects of Changing Prices

 

The annual rate of inflation in the United States, as measured by year-over-year changes in the consumer price index, was 2.1% in 2016, as compared to 0.7% in 2015. Inflation in the prices of those commodities important to the Company’s business is reflected in changes in the consumer price index, but commodity prices are volatile and in recent years have moved at a faster rate of change than the consumer price index.

 

The principal effect of inflation in both commodity and consumer prices on the Company’s operating results is to increase costs, both of goods sold and S,D&A. Although the Company can offset these cost increases by increasing selling prices for its products, consumers may not have the buying power to cover these increased costs and may reduce their volume of purchases of those products. In that event, selling price increases may not be sufficient to offset completely the Company’s cost increases.

 

Item 4.Controls and Procedures.

 

As of the end of the period covered by this Report, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s “disclosure controls and procedures” (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), pursuant to Rule 13a-15(b) of the Exchange Act. Based upon

 

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that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of April 2, 2017.

 

There has been no change in the Company’s internal control over financial reporting during the quarter ended April 2, 2017 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

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PART II - OTHER INFORMATION

 

 

The Company is from time to time a party to various lawsuits, claims and other legal proceedings that arise in the ordinary course of business. With respect to all such lawsuits, claims and proceedings, the Company records reserves when it is probable a liability has been incurred and the amount of loss can be reasonably estimated. The Company does not believe any of these proceedings, individually or in the aggregate, would be expected to have a material adverse effect on its results of operations, financial position or cash flows. The Company maintains liability insurance for certain risks that is subject to certain self-insurance limits.

 

 

There have been no material changes to the factors disclosed in Part I, Item 1A Risk Factors in the Company’s Annual Report on Form 10‑K for the year ended January 1, 2017.

 

 

Purchase of Equity Securities

 

The following table provides information about repurchase of the Company’s Common Stock during the quarter ended April 2, 2017:

 

 

 

 

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+ Certain schedules and similar supporting attachments to this agreement have been omitted, and the Company agrees to furnish supplemental copies of any such schedules and similar supporting attachments to the Securities and Exchange Commission upon request.

 

* Certain portions of this exhibit have been omitted pursuant to a request for confidential treatment filed with the Securities and Exchange Commission.

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

 

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Exhibit 10.4

 

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.

 

AMENDMENT NO. 2 TO LIMITED LIABILITY COMPANY AGREEMENT OF

CONA SERVICES LLC

This AMENDMENT NO. 2 TO LIMITED LIABILITY COMPANY AGREEMENT OF CONA SERVICES LLC (this “Amendment”), is entered into and made effective as of February 22, 2017 by each Person listed on the signature page hereto (individually, a “Party” and collectively, the “Parties”).

BACKGROUND

The Parties are parties to that certain Limited Liability Company Agreement of CONA Services LLC (the “Company”), dated as of January 27, 2016 (the “LLC Agreement”) and to Amendment No. 1 to the LLC Agreement, effective as of April 2, 2016 (“Amendment No. 1”).

The Parties wish to amend the LLC Agreement to address eligibility of members to nominate a representative to the Company’s Board of Directors and certain other matters as set forth below.

Except as specifically provided herein, all capitalized terms used but not defined in this Amendment have the meanings given to such terms in the LLC Agreement.

In consideration of the premises and the mutual covenants contained in this Amendment, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the LLC Agreement is amended as follows:

1.Section 1.1 of the LLC Agreement is hereby amended by inserting the following paragraph immediately after the defined term “Assumed Tax Rate”:

“At-Large Representative” has the meaning set forth in Section 6.2(e).  

2.The definition of “Producing Member” in Section 1.1 of the LLC Agreement is hereby deleted and replaced in its entirety by the following:

“Producing Member” means a Member that produces and manufactures Beverage products using the trademarks of TCCC and its affiliates and that receives Services related to the Manufacturing Platform pursuant to a Master Services Agreement with the Company.

3.The definition of “Producing Member Director” in Section 1.1 of the LLC Agreement is hereby deleted and replaced in its entirety by the following:

“Producing Member Director” means a Director appointed by any Producing Member in accordance with Section 6.2.

 

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4.Section 6.2 of the LLC Agreement is hereby deleted and replaced in its entirety by the following:

6.2Voting Rights; Designation of Board Members.

(a)Voting Rights.  Members shall not have any voting rights on any matter, except as provided in this Section 6.2 with respect to the designation or election of Directors, or as otherwise required by applicable law.  If a vote of the Members is required under applicable law, then the Members shall vote together as a single class, and each Member [***] shall be entitled to one vote (regardless of the Percentage Interest of such Member).  [***].

(b)Designation of Board Members.  Each Member agrees that the authorized number of Directors of the Company shall initially be established at six (6), and the Founding Members have each designated a Director as follows:

(i)CCR designated Dominic Wheeler;

(ii)Coke United designated Eric Steadman;

(iii)Coke Consolidated designated Jamie Harris;

(iv)Swire designated Jeff Edwards;

(v)CCB Florida designated Terence Gee; and

(vi)Great Lakes designated Mark Booth.

(c)From the date hereof through December 31, 2025, each Founding Member will have the right to appoint a Director (subject in the case of CCR to the provisions of Section 6.2(g)).  During this time period, the right to designate the Remaining Directors will be held by the non-Founding Members [***], and each such non-Founding Member will have the right to designate [***].

 

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

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(d)After December 31, 2025, the right to designate a Director will be held by the Members [***], and each such Member will have the right to designate [***].

(e)[***].

(f)Additional Directors.

(i)The number of Directors automatically will increase upon the admission of Additional Members or Substituted Members, up to a total of [***] Directors.  If the Board of Directors wishes to increase the number of Directors to more than [***] Directors in total, then such increase will require the unanimous vote of the Directors in accordance with Section 7.1(d).

(ii)If the number of Directors is increased in connection with the admission of Additional Members or Substituted Members, then the vacancy created by such increase in the number of Directors will be filled by [***].

 

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

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(g)Removal.  Any Director shall be removed from the Board of Directors or any committee of the Board of Directors (with or without cause) at the written request of the Member(s) that designated or elected such Director under this Section 6.2, but only upon such written request and under no other circumstances; provided that a Director that was designated pursuant to Section 6.2(c) or Section 6.2(d) by a Withdrawing Member shall be deemed to have been automatically removed at the written request of such Withdrawing Member upon the effective date of the withdrawal from the Company by  such Withdrawing Member.  Notwithstanding the foregoing, the Director designated by [***].

(h)Replacement.  If any Director for any reason ceases to serve as a member of the Board of Directors, whether as a result of death, resignation, removal or otherwise, the resulting vacancy on the Board of Directors shall be filled by a Director designated or elected by the Member(s) that designated or elected such Director initially under this Section 6.2; provided that in connection with a CBA Permitted Transfer of a Member’s entire Membership Interest, if at the time of the Transfer a then-serving Director had been designated by the Transferor pursuant to this Section 6.2, then such Permitted Transferee shall be entitled to immediately replace the Director originally designated by such Transferor; provided, further, that if such Permitted Transferee is a Member that holds the right to designate a Director on the effective date of the Transfer, then its right to designate a Director with respect to the Transferred Membership Interest will be deemed waived (i.e., no Member may designate more than one Director), and the Member with the next highest Percentage Interest will have the right to designate the Director.

 

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

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(i)TCCC Board Participant.  TCCC has the right to appoint a participant in meetings of the Board of Directors (the “Board Participant”).  The initial Board Participant is Michael Mathews.  The Board Participant will have the right to attend each meeting of the Board of Directors in a non-voting capacity [***].

5.Compensation of Directors; Expense Reimbursement.  Section 7.1(g) of the LLC Agreement is hereby deleted and replaced in its entirety by the following:

(g)Compensation of Directors; Expense Reimbursement.  Directors shall not receive any stated salary for services in their capacity as Directors.  Directors may be reimbursed for expenses related to attendance at any regular or special meeting of the Board of Directors or any committees thereof, as determined by the Board of Directors from time to time in its discretion.

6.Section 7.8(b) of the LLC Agreement is hereby deleted and replaced in its entirety by the following:

(b)All costs and expenses incurred by the Company in connection with the design, build and operation of the Manufacturing Platform will be borne solely by the Producing Members.  The basis on which the Producing Members will share costs and expenses associated with the Manufacturing Platform (including design, build and operating costs) will be determined by the Producing Member Directors, consistent with Section 7.8(a).  All such decisions will be made with full transparency to the Members that are not represented by any Producing Member Director, and the Producing Member Directors will consider the input of the Members that are not represented by any Producing Member Director in their decisions.  If a Member that is not a Producing Member as of the date of this Agreement subsequently becomes a Producing Member, that Member will be deemed to be a Producing Member for all purposes hereof and will be entitled to participate in the Manufacturing Platform on the same economic and governance terms as an original Producing Member, including by bearing its respective pro rata share of the design, build and operating costs referred to in this Section 7.8(b) based upon its relative production volumes.  For this purpose, a Member that acquires manufacturing facilities and/or manufacturing rights of an existing Producing Member will be deemed to have borne its share of costs relating to the Manufacturing Platform that relate to the acquired facilities and/or rights and were paid by the selling Member prior to the date of acquisition.  The Company will ensure that (i) costs related to the Distribution Platform and the Manufacturing Platform, respectively, are properly allocated and that such costs are accurately reflected in the fees charged to Members pursuant to the applicable Master Services Agreements, and (ii) the Company’s resources are allocated to the Distribution

 

 

 

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

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Platform and Manufacturing Platform in a manner that does not adversely affect the development and operation of the Distribution Platform in any material respect.

7.Section 7.8(d) of the LLC Agreement is hereby deleted and replaced in its entirety by the following:

(d)The Company and each of the Producing Members will enter into a separate Master Services Agreement with respect to Services relating to the Manufacturing Platform, or the Company and each Producing Member will amend the existing Master Services Agreement entered into by them in order to cover Services relating to the Manufacturing Platform and/or additional Services that may be provided pursuant to the Master Services Agreement.

8.Section 12.2 of the LLC Agreement is hereby deleted and replaced in its entirety by the following:

12.2Amendments.  Except as otherwise expressly provided herein, this Agreement may be amended, modified, or waived only upon the approval of at least eighty percent (80%) of the Directors in accordance with Section 7.1(c); provided, that (i) if any such amendment, modification or waiver would adversely affect in any material respect any Member disproportionately to any other Member similarly situated, such amendment, modification or waiver shall also require the written consent of the Member so adversely affected, and (ii) any amendment to Section 7.1(d) will require the approval of all Directors; provided, further, that, following the approval of any such amendment, modification or waiver in accordance with this Section 12.2 (including any amendment, modification or waiver in accordance with Section 7.1(c)(iii)), each Member hereby agrees to promptly execute and deliver, in its capacity as a Member, a written document that accurately and completely reflects such amendment, modification or waiver (e.g., any amendment or modification will be reflected in a written amendment to this Agreement executed and delivered by all Members that specifically references this Agreement and the provisions herein intended to be amended or modified).

9.No Other Modifications.  Except as expressly set forth in this Amendment, the LLC Agreement shall remain in full force and effect with no further modifications.

10.Entire Agreement.  This Amendment embodies the complete agreement and understanding among the Parties with respect to the subject matter hereof, and supersedes and preempts any prior understandings, agreements or representations by or among the Parties, written or oral, that may have related to the subject matter hereof in any way.

11.Counterparts. This Amendment may be executed simultaneously in two (2) or more separate counterparts, any one (1) of which need not contain the signatures of more than one party, but each of which shall be an original and all of which together shall constitute one and the same agreement binding on all the parties hereto.

12.Applicable Law. This Amendment shall be governed by, and construed in accordance with, the laws of the State of Delaware, without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of Delaware or any other jurisdiction) that would

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cause the application of the laws of any jurisdiction other than the State of Delaware.  Any dispute relating hereto shall be heard in the state or federal courts of Delaware, and the parties agree to jurisdiction and venue therein.

 

 

[signature pages follow]

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IN WITNESS WHEREOF, the undersigned have executed or caused to be executed this Amendment No. 2 to the Limited Liability Company Agreement of CONA Services LLC as of the date first written above.

 

 

 

 

 

 

 

 

 

 

 

 

[Signature Page to Amendment No. 2 to Limited Liability Company Agreement]

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[Signature Page to Amendment No. 2 to Limited Liability Company Agreement]

Exhibit 10.5

 

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.

 

Form EPB First Line and Sub-Bottling

 

EXECUTION VERSION

 

 

 

Comprehensive Beverage Agreement

 

 

between

The Coca-Cola Company,

Coca-Cola Refreshments USA, Inc.,

and

Coca-Cola Bottling Co. Consolidated

 

 

 

 

 

 

 

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TABLE OF CONTENTS

 

 

 

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TABLE OF EXHIBITS

 

 

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TABLE OF SCHEDULES

 

 

 

 

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Comprehensive Beverage Agreement

 

THIS AGREEMENT IS ENTERED INTO BY THE COCA-COLA COMPANY, A DELAWARE CORPORATION (“COMPANY”), COCA-COLA REFRESHMENTS USA, INC., A DELAWARE CORPORATION AND A WHOLLY-OWNED SUBSIDIARY OF COMPANY (“CCR”), AND COCA-COLA BOTTLING CO. CONSOLIDATED, A DELAWARE CORPORATION (“BOTTLER”).

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COMPANY AND BOTTLER AGREE AS FOLLOWS:

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With respect to a stockholder that is an entity, “Permitted Transferee” will also include any Affiliate of such stockholder. For purposes of determining the Permitted Transferees of a Permitted Transferee, such Permitted Transferee shall be deemed a Beneficial Owner under this Agreement.

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Company reserves the right to market, promote, distribute and sell, or authorize others to market, promote, distribute and sell, in the Territory, subject to terms and conditions specified by the Governance Board, any Covered Beverage (including any Multiple Route to Market Beverage) or Related Product (including any Multiple Route to Market Related Product) that the Governance Board designates for distribution in the Territory via means other than Direct Store Delivery.

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Such reintroduced product may not, however, be designated by Company as a Multiple Route to Market Beverage or a Multiple Route to Market Related Product.

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Company or, solely with respect to the Sub-Bottling Territory, Company and CCR, may assign any of their rights and delegate all or any of their duties or obligations under this Agreement to one or more of their Affiliates; provided, however, that any such delegation will not relieve Company or, solely with respect to the Sub-Bottling Territory, Company and CCR, from any of their contractual obligations under this Agreement.  

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Bottler shall obtain and maintain a policy of insurance with insurance carriers in such amounts and against such risks as would be maintained by a similarly situated company of a similar size and giving full and comprehensive coverage both as to amount and risks covered in respect of matters referred to in Section 30 (including Bottler’s indemnity of Company contained therein) and shall on request produce evidence satisfactory to Company of the existence of such insurance.  Compliance with this Section 31 will not limit or relieve Bottler from its obligations under Section 30.  In addition, Bottler will satisfy the insurance requirements specified on Schedule 31.

Bottler covenants and agrees that, except as required by law, it will make no representations or disclosures to the public or any Governmental Authority or to any third party concerning the attributes of the Covered Beverages or Related Products (other than statements consistent with representations or disclosures previously made or authorized by Company), without the prior written consent of Company.  If Bottler is required to make any such representations or disclosures to a Governmental Authority, Bottler first will notify Company before making any such representation or disclosure and will cooperate with Company in good faith to ensure the accuracy of all such information (except to the extent that such Notice and cooperation would otherwise be prohibited under applicable law).  This Section 32 will not apply to financial information disclosed in accordance with applicable securities laws or to marketing and advertising materials used in the ordinary course of business consistent with the provisions of this Agreement.

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If any provision of this Agreement is or becomes legally ineffective or invalid, the validity or effect of the remaining provisions of this Agreement shall not be affected; provided that the invalidity or ineffectiveness of such provision shall not prevent or unduly hamper performance hereunder or prejudice the ownership or validity of the Trademarks.  

Failure of Company, CCR or Bottler (including any of their respective Affiliates) to exercise promptly any right herein granted, or to require strict performance of any obligation undertaken herein by the other party, shall not be deemed to be a waiver of such right or of the right to demand subsequent performance of any and all obligations herein undertaken by Bottler or by CCR or by Company.

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The parties may execute this Agreement in counterparts, each of which is deemed an original and all of which only constitute one original.

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The parties acknowledge and agree that the terms and conditions of this Agreement have been the subject of active and complete negotiations, and that such terms and conditions must not be construed in favor of or against any party by reason of the extent to which a party or its professional advisors may have participated in the preparation of this Agreement.

Company reserves all rights not expressly granted to Bottler under this Agreement or Related Agreements.

[Signature page follows]

 

 

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IN WITNESS WHEREOF, EACH OF COMPANY AND CCR AT ATLANTA, GEORGIA, AND BOTTLER AT CHARLOTTE, NORTH CAROLINA HAVE CAUSED THESE PRESENTS TO BE EXECUTED IN TRIPLICATE BY THE DULY AUTHORIZED PERSON OR PERSONS ON THEIR BEHALF ON THE EFFECTIVE DATE.

 

 

THE COCA-COLA COMPANY

 

 

 

COCA-COLA REFRESHMENTS USA, INC.

 

 

 

COCA-COLA BOTTLING CO. CONSOLIDATED

 

 

 

[Signature Page to Comprehensive Beverage Agreement]

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EXHIBIT A

Covered Beverages

 

The following Beverages and all SKUs, packages, flavor, calorie and other variations (e.g., Sprite Cranberry, Sprite Zero Cranberry) of each such Beverage offered by Company that are identified by the primary Trademark that also identifies such Beverage or any modification of such primary Trademark, such as, e.g., the primary Trademark used in conjunction with a prefix, a suffix or other modifier:

 

Coca-Cola

Caffeine Free Coca-Cola

Diet Coke

Diet Coke with Lime

Diet Coke with Splenda®

caffeine free Diet Coke

Coca-Cola Life

Coca-Cola Zero

caffeine free Coca-Cola Zero

Cherry Coke

Diet Cherry Coke

Cherry Coke Zero

Vanilla Coke

Diet Vanilla Coke

Vanilla Coke Zero

 

Barq’s

Diet Barq’s

DASANI

DASANI Plus

DASANI Sparkling

Fanta

Fanta Zero

Fresca

Mello Yello

Mello Yello Zero

PiBB Xtra

PiBB Zero

Seagram’s ginger ale

Seagram’s mixers

Seagram’s seltzer water

Sprite

Sprite Zero

TaB

VAULT

VAULT Zero

Delaware Punch

Surge

Minute Maid Sparkling

 

Exhibit A – page 1

 

Classified - Confidential

---

FUZE

FUZE iced tea

FUZE Juices

FUZE Refreshments

FUZE slenderize

Glacéau Vitaminwater

Glacéau Vitaminwater Energy

Glacéau Vitaminwater Zero

Glacéau Smartwater

Glacéau Smartwater Sparkling

Glacéau Fruitwater

POWERADE

POWERADE ZERO

 

The following Multiple Route To Market Beverages may be distributed in the Territory via Direct Store Delivery only to the extent specified below, provided, however, that if Company reasonably believes that Bottler’s distribution of any of the Beverages described below does not conform to these conditions, Company will provide Bottler with Notice of the circumstances and a period of 90 days to address such circumstances before asserting that Bottler is in breach of this Agreement:

 

All flavors of Minute Maid® Juices To Go in cans and PET bottles with volume between 10.0 fluid ounces and 1.0 liter, and in such other single serve packages to which Company from time to time provides prior written consent, which consent shall not be unreasonably withheld.

 

All flavors of Minute Maid® Refreshment (cold fill) in 2 liter PET bottles, 12 fluid ounce cans, 20 fluid ounce PET bottles, 16 fluid ounce PET bottles, and 500 milliliter PET bottles, and in such other single serve packages to which Company from time to time provides prior written consent, which consent shall not be unreasonably withheld.

 

All flavors of Gold Peak (hot fill) in 500 milliliter PET Bottles, 64 ounce (1.89 Liter) PET Bottles, and PET bottles with volume between 16.9 fluid ounces and 1.0 liter, and in such other single serve packages to which Company from time to time provides prior written consent, which consent shall not be unreasonably withheld.

 

All flavors of Honest Tea and Honest Ade in 59 fluid ounce PET bottles and in PET bottles with volume between 16.9 fluid ounces and 1.0 liter, and in such other single serve packages to which Company from time to time provides prior written consent, which consent shall not be unreasonably withheld.

 

 

 

Exhibit A – page 2

 

Classified - Confidential

---

EXHIBIT B

 

Trademarks

 

All trademarks, whether owned by Company, licensed by Company or otherwise authorized and approved for use by Company, to identify a Covered Beverage or Related Product identified on Exhibit A or Exhibit F, including any amendments thereto, including:

Coca-Cola

Coca-Cola (Script)

Coca-Cola (Red Disk icon)

Coke

Coca-Cola Bottle (2D symbol and 3D shape)

Dynamic Ribbon

Diet Coke

Coca-Cola Life

Coca-Cola Zero

Cherry Coke

Cherry Coke Zero

Vanilla Coke

Diet Vanilla Coke

Vanilla Coke Zero

Barq’s

Delaware Punch

Surge

Fanta

Fanta Zero

Fresca

Mello Yello

Mello Yello Zero

PiBB

PiBB Xtra

PiBB Zero

Seagram’s

Sprite

SPRITE Bottle (2D symbol and 3D shape)  

Sprite Zero

TaB

VAULT

VAULT Zero

DASANI

DASANI Plus

DASANI Drops

FUZE

FUZE slenderize

FUZE Refreshments

FUZE Drops

Gold Peak

Exhibit B – page 1

 

Classified - Confidential

---

Glacéau Vitaminwater

Glacéau Vitaminwater Energy

Glacéau Vitaminwater Zero

Glacéau Vitaminwater Zero Drops

Glacéau Smartwater

Glacéau Fruitwater

Honest Tea

Honest Ade

Minute Maid

Minute Maid Drops

Minute Maid Juices to Go

Minute Maid Sparkling

POWERADE

POWERADE MOUNTAIN BERRY BLAST

POWERADE ZERO

POWERADE ZERO DROPS

 

 

Exhibit B – page 2

 

Classified - Confidential

---

EXHIBIT C-1

 

First-Line Territory

 

See attached.

 

 

Exhibit C-1 – page 1

 

Classified - Confidential

---

SCHEDULE D

Territories

The geographic areas described below define the Territory subject to the terms and conditions of the Agreement.

IN THE STATE OF ALABAMA:

“In the Cities of Florence and Sheffield, Alabama, and all points in the State of Alabama, and within ten (10) miles of the line of railroad running from Chattanooga, Tennessee, to Memphis, Tennessee, from and including the town of Leighton, Alabama, west to the Mississippi State Line; and in all of the territory in the State of Tennessee within fifty (50) miles of the said City of Sheffield, Alabama, except such territory as may be within fifty (50) miles of Huntsville, Alabama; Nashville, Tennessee, Clarksville, Tennessee; or Jackson, Tennessee (as the Jackson, Tennessee fifty mile radius may be more clearly defined in the Agreement, dated June 1, 1967, by and between Florence Coca-Cola Bottling Company, Inc. and Corinth Coca-Cola Bottling Company), providing that the territory so described does not encroach upon nor conflict with the territory controlled or operated by any other Coca-Cola bottling plant.

“All points in Lauderdale County, Alabama, are included in this contract and all points in Tishomingo County, Mississippi, are specifically excluded.”

(All points referred to are as they existed May 2, 1946.)

 

 

Exhibit C-1 – page 2

---

 

SCHEDULE D

Territories

The geographic areas described below define the Territory subject to the terms and conditions of this Agreement.

Exhibit C-1 – page 3

---

 

 

 

Exhibit C-1 – page 4

---

 

TERM SUB-BOTTLER’S BOTTLE CONTRACT

THIS AGREEMENT, Made and entered into, on the 31st day of December, 1976, by and between FLORIDA COCA-COLA BOTTLING COMPANY a corporation organized and existing under the laws of the State of Florida having its principal office in Daytona Beach, Florida hereinafter called “FIRST LINE BOTTLER,” as Party of the First Part, and PANAMA CITY COCA-COLA BOTTLING COMPANY a corporation organized and existing under the laws of the State of Florida having its principal office in Panama City, Florida hereinafter called “SUB-BOTTLER,” as Party of the Second Part,

W I T N E S E T H:

THAT WHEREAS, As of the close of business December 31, 1954, The Coca-Cola Company succeeded to all of the rights, title, interest, and obligations of its wholly owned subsidiary Parent Bottling Companies; and

WHEREAS, FIRST LINE BOTTLER has received certain rights and privileges in regard to the bottling and selling of Coca-Cola in bottles; and

WHEREAS, FIRST LINE BOTTLER wishes to convey for the term of five (5) year(s) to SUB-BOTTLER the rights that it has so received, limited, however, to the following described territory, to-wit:

All of Bay County, Florida.

That portion of Washington County, Florida lying East and North of a line running from the Northwest corner of Holmes County to but not including Chipley; thence Southwestwardly to but not including Ebro in the Southwest corner of Washington County.

That portion of Gulf County, Florida lying North of a line running due East and West across the County from a point where the dividing line between Bay and Gulf Counties touches the Gulf of Mexico to the Apalachicola River.

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are acknowledged, First Line Bottler, Sub-Bottler and Company agree as follows:

1.Transfer of Territorial Description.  The Panama City Contract is hereby amended by adding thereto the Quincy Territory as described hereafter:

All of Liberty County, Florida.

All of Gadsden County, Florida, except the town of Chattahoochee, Florida, and all points on U. S. Highway #90 from the Western City limits of Chattahoochee, Florida to the Western boundary of Gadsden County.

2.Cancellation of Contracts.  The Quincy Contract and the respective Contracts for Allied Products for the Quincy Territory are hereby cancelled.

3.Agreements in Full Force and Effect.  The Panama City Contract and respective Contracts for Allied Products for the Panama City Territory, as amended hereby, remain in full force and effect as to all their conditions, rights and obligations.

4.Governing Law.  This agreement shall be governed, construed and interpreted under the laws of the State of Georgia.

5.Entire Agreement.  This agreement embodies the entire agreement and understanding among the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings related thereto.

Exhibit C-1 – page 5

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SCHEDULE D

Territories

The geographic areas described below define the Territory subject to the terms and conditions of the Agreement.

(From 1904 contract)

The Central of Georgia Railway, Albany to and including Americus.  Central of Georgia Railway from Albany to Alabama State line.  The Central of Georgie Railway from Smithville to and including Georgetown.  The Central of Georgia Railway from Cuthbert Junction to Alabama State line.  The Seaboard Air Line Railway from Albany to and not including Richland.  Seaboard Air Line, Plains to Americus.  The Albany and Northern Railway from Albany to and including Cordele.  The Atlantic Coast Line Railway from Albany to but not including Thomasville.  The Atlantic Coast Line Railway from Cairo to Alabama State line.  The Atlantic Coast Line Railway from Climax to Florida State line.  The Atlantic Coats Line Railway from Albany to Willacoochee.  The Georgia Northern Railway from Albany to, but not including Pidcock.  The Tifton, Thomasville & Gulf Railway from Tifton to but not including Thomasville.  The Tifton and Northern Railway Tifton to but not including Abbeville.  The Georgia Southern & Florida Railway from Cordele to but not including Sparks.

(Deleted 1931)

Seaboard Air Line Railway from and including Parrott, Ga., to and not including Richland, Ga.

(Added 1931)

The town of Eufaula and all territory in the State of Georgia which may lie within fifteen miles of Eufaula, together with all territory in the State of Alabama adjacent to Eufaula beginning at a point on the Chattahoochee River fifteen miles north of Eufaula and running to but not including the town of Lugo, Ala., to a point half way between Eufaula and White Oak Springs on the Central of Georgia Ry., from thence to a point fifteen miles south of Eufaula on the Chattahoochee River.

(Added 1938)

Beginning at but not including Box Springs; thence to but not including Cusseta; thence to but not including Plains; thence to and including Ellaville; thence to but not including Rupert; thence to Box Springs, Georgia, the point of beginning.

(Added 1939)       Pine Park, Georgia

(Deleted 1939)

That portion of Grady County, Georgia south and east of a line beginning at a point on the eastern boundary of Grady County one and one-half mile north of present Georgia State Highway No. 3 and running southwestwardly, parallel to and one and one-half mile from said highway, to the Georgia-Florida State line.

(Added 1968)

That territory in the State of Georgia included within the following boundaries, to-wit: Beginning at but not including Cusseta and running thence in a straight line to where the Seaboard Air Line Railroad from Richland to Americus leaves Webster County; thence to and including Parrott; thence on a straight line toward Eufaula, Alabama to a point 15 miles from Eufaula; thence Northwardly and Westwardly along a circle of 15 miles radius from Eufaula to the Chattahoochee River; thence North along the East bank of the Chattahoochee River to a point due West of Cusseta; thence due East to but not including Cusseta, the point of beginning.

Exhibit C-1 – page 6

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SCHEDULE D

Territories

The geographic areas described below define the Territory subject to the terms and conditions of the Agreement.

All that section of country included within a boundary line beginning at and including Cusseta, Ala., to but not including Buffalo, Ala., thence to the northeast corner of Tallapoosa County, Ala., thence to west along said county line to and including Hollins, Ala., to and including Gabbett, Ala., to and including Guerryton, Ala., to but not including Cochran, Ala., to and including Eufaula, Ala., to and including Parrot, Ga., to and including Ellaville, Ga., to and including Butler, Ga., to and including Neal, Ga., to and including Greenville, Ga., thence to but not including Odessadale, Ga., thence to and including Durand, Ga., thence to but not including Whitesville, Ga., thence to but not including Blanton, Ala., thence to and including Cusseta, Ala., the point of beginning.

(All references above as same existed on October 1, 1915.)

LESS on July 2, 1917:

All territory included within the following boundary lines: commencing at but not including Blanton, Ala.; to and including Tip Top on the Central of Georgia railroad; thence to and including Cleola on the Southern railroad; thence to and including Beall on the A B & A railroad; thence to but not including Ypsailanti; thence to a point on the Flint River where a straight line from Butler to Neal crosses same; from this point on Flint River to and including Neal, Ga., to and including Greenville, Ga., thence to but not including Odessadale, Ga., thence to and including Durand, Ga., thence to but not including Whitesville, Ga., thence to the point of beginning.

LESS on November 1, 1917:

Eufaula, Ala., and all the territory belonging to the undersigned within fifteen miles of Eufaula, Ala., in both Alabama and Georgia.

LESS on August 15, 1924:

Beginning at and including Box Springs; thence to and including Repert; thence to and including Butler; thence to where a straight line from Butler to Neal crosses the Flint River; thence to, but not including Cleola; thence to and including the point of beginning, and all territory within the above described line.

LESS on February 26, 1932:

Beginning at but not including Hannon, Ala.; thence to and including Franklin, Ala.; thence north and east along the Macon and Lee County line to the southwest corner of Chambers County; thence north along said county line to where the Tallapoosa River crosses a straight line from Vichie, Ala., to Buffalo, Ala.; thence to but not including Buffalo, Ala.; thence to and including Cusseta, Ala.; thence to and including Beulah, Ala.; thence to and including Salem, Ala.; thence to and including Marvyn, Ala.; thence to but not including Warrior Stand, Ala.; thence to but not including the point of beginning, including all territory within said line.

LESS on November 19, 1936

Beginning at but not including Franklin or Gabbett, Alabama, thence due north to the northwest corner of Macon County, thence east along the Macon County and Tallapoosa County Line to the intersection of Lee County, thence along the Lee County and Tallapoosa County Line to the intersection of the

Exhibit C-1 – page 7

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Chambers County line, thence along the Tallapoosa County and Chambers County line to the Tallapoosa River, thence southwest along the east bank of the Tallapoosa River to the mouth of the Sougahatchee Creek, thence to the point of beginning.

LESS on November 19, 1936:

Beginning at and including the town of Vichie, Ala.; thence west on a straight line to and including Hollins, Ala.; thence southeast along a straight line drawn between Hollins, Ala., and Franklin, Ala., from Hollins to a point where said line joins the Tallapoosa River; thence north and east along the west bank of the Tallapoosa River to a point where said river intersects a line drawn from Buffalo, Ala., to Vichie; thence along said line to Vichie, Ala., the point of beginning.

LESS on January 1, 1938:

Beginning at but not including Box Springs, thence to but not including Cusseta, thence to but not including Plains, thence to and including Ellaville, thence to but not including Rupert, thence to Box Springs, Ga., the point of beginning.

LESS on October 25, 1938:

That territory in the State of Georgia included within the following boundaries, to-wit: Beginning at but not including Cusseta and running thence in a straight line to where the Seaboard Air Line Railroad from Richland to Americus leaves Webster County; thence to and including Parrott; thence on a straight line toward Eufaula, Alabama to a point 15 miles from Eufaula; thence northwardly and westwardly along a circle of 15 miles radius from Eufaula to the Chattahoochee River; thence north along the east bank of the Chattahoochee River to a point due west of Cusseta; thence due east to but not including Cusseta, the point of beginning.

Exhibit C-1 – page 8

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SCHEDULE D

Territories

The geographic areas described below define the Territory subject to the terms and conditions of the Agreement.

IN THE STATE OF MISSISSIPPI:

That portion of the State of Mississippi included within the following boundaries to-wit:

Beginning at a point on the Wayne-Greene County line which is intersected by the Range Line between Ranges 7 and 8 West and running Northwardly along said Range Line between Ranges 7 and 8 West to the Northeast corner of Section 1 Township 7 North Range 8 West; thence Northwestwardly in a straight line to the Northwest corner of Section 4 T8N R9W; thence North along the Western boundary of Section 33 T9N R9W to the Northwest corner of said Section 33 T9N R9W; thence Westwardly along the Northern boundaries of Sections 32 and 31 T9N R9W and the Northern boundaries of Sections 36 and 35 T9N R10W to the Northwest corner of Section 35 T9N R10W; thence Northwardly along the Eastern boundaries of Sections 27 and 22 T9N Rl0W to the Northeast corner of Section 22 T9N Rl0W; thence Westwardly along the Northern boundaries of Sections 22, 21, 20 and 19 T9N Rl0W to the Northwest corner of Section 19 T9N Rl0W; thence Northwardly along the Eastern boundary of Section 13 T9N R11W to the Northeast corner of Section 13 T9N R11W; thence Northwestwardly in a straight line to the Northwest corner of Section 12 T9N R11W; thence Northwestwardly in a straight line to the Northwest corner of Section 7 T2N R11E; thence Westwardly in a straight line along the Northern boundaries of Sections 12, 11, 10, 9 and 8 T2N R10E to the Northwest corner of Section 8 T2N R10E; thence Northwardly along the Eastern boundary of Section 6 T2N R10E and continuing Northwardly along the Eastern boundary of Section 31 T3N R10E to the Northeast corner of said Section 31 T3N R10E; thence Westwardly along the Northern boundary of Section 31 T3N R10E and the Northern boundaries of Sections 36, 35, 34, 33, 32 and 31 T3N R9E and the Northern boundaries of Sections 36, 35, 34, 33, 32, and 31 T3N R8E and the Northern boundaries of Sections 36, 35, 34, 33, 32 and 31 T3N R7E and the Northern boundaries of Sections 36 and 35 T3N R6E to the point of intersection of a straight line drawn from a point on the Smith-Scott County line that lies due South of a point on the Y. & M. V. Railroad half-way between the towns of Raworth and Forest to the Northeast corner of Simpson County; thence along said straight line to the Northeast corner of Simpson County; thence Southwardly along the Smith-Simpson County line to the Southeast corner of Simpson County; thence East along the Covington-Smith County line to the Eastern boundary of Section 35 T10N R15W; thence Southwardly along the Western boundary of Section 36 T10N R15W and the Western boundaries of Sections 1, 12, 13, 24, 25 and 36 T9N R15W to the Southwest corner of Section 36 T9N R15W; thence Eastwardly along the Southern boundary of Section 36 T9N R15W and the Southern boundaries of Sections 31, 32 and 33 T9N R14W to the Northeast corner of Section 4 T8N R14W; thence Southwardly along the Covington-Jones County line to the southwest corner of Section 34 T8N R14W; thence Eastwardly along the Northern boundaries of Sections 3, 2 and 1 T7N R14W and the Northern boundaries of Sections 6 and 5 T7N R13W to the Northeast corner of Section 5 T7N R13W; thence Southwardly along the Western boundaries of Sections 4, 9, 16 and 21 T7N R13W to the Southwest corner of Section 21 T7N R13W; thence Eastwardly along the Southern boundaries of Sections 21, 22, 23 and 24 T7N R13W to the Southeast corner of Section 24 T7N R13W ; thence Southwardly along the Western boundaries of Sections 30 and 31 T7N R12W to the Southwest corner of Section 31 T7N R12W; thence Eastwardly along the Southern boundaries of Sections 31, 32, 33 and 34 T7N R12W to the Southeast corner of Section 34 T7N R12W; thence Southwardly along the Western boundaries of Sections 2, 11, 14, 23, 26 and 35 T6N R12W to the Forrest-Jones County line; thence Eastwardly along the Forrest-Jones County line and the Perry-Jones County line to the Northwest corner of Section 5 T5N Rl0W; thence Southwardly along the Western boundaries of Sections 5, 8, 17, 20, 29 and 32 T5N R10W to the Southwest corner of Section 32 T5N

Exhibit C-1 – page 9

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R10W; thence Eastwardly along the Southern boundaries of Sections 32 and 33 T5N R10W to the Southeast corner of Section 33 T5N R10W ; thence Southwardly along the Western boundaries of Sections 3, 10, 15, 22, 27 and 34 T4N R10W and the Western boundaries of Sections 3, 10, 15, and 22 T3N R10W to the Southwest corner of Section 22 T3N R10W; thence Eastwardly along the Southern boundaries of Sections 22, 23 and 24 T3N R10W to the Southeast corner of Section 24 T3N R10W; thence Northwardly along the Eastern boundaries of Sections 24, 13, 12 and 1 T3N R10W to the Northeast corner of Section 1 T3N R10W; thence Eastwardly along the Southern boundaries of Sections 31, 32, 33, 34, 35 and 36 T4N R9W to the Southeast corner of Section 36 T4N R9W, said point lying on the Perry-Greene County Line; thence Northwardly along the Perry-Greene County line to the Northeast corner of Perry County; thence Eastwardly along the Greene-Wayne County line to the Range Line between Ranges 7 and 8 West, said point of beginning.

Exhibit C-1 – page 10

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SCHEDULE D

Territories

The geographic areas described below define the Territory subject to the terms and conditions of the Agreement.

IN THE STATE OF NORTH CAROLINA:

All territory in the State of North Carolina west of a line described below:

Starting at the South Carolina line at the dividing point between Rutherford and Cleveland Counties and running north on the dividing line between said counties to Burke County line, thence east on the southern boundary line of Burke County, and also east on the Southern boundary of Catawba County to Catawba River, thence northwest along the Catawba River to the eastern boundary of Caldwell County, thence north along the boundary of Caldwell County to Wilkes County, thence northwest along the boundary of Caldwell County to Wautaga County line, thence north on the western boundary of Wilkes County and the eastern boundary of Ashe County to the Virginia State line.

AND ALSO

Greenville County, South Carolina, in its entirety.

That portion of Anderson County, South Carolina, beginning at a point on the Anderson-Greenville County line due East of the Town of Williamston and running West in a straight line to and including Williamston (as said town existed on July 14, 1937, a town in the Greenville territory); thence Northwardly in a straight line from the Western extremity of the corporate limits of Williamston to the Western extremity of the present corporate limits of the Town of West Pelzer (a town in the Greenville territory, as said town existed on July 14, 1937); thence Northwardly in a straight line to and including the settlement as now constituted adjoining the mill village of Piedmont in Anderson County and nicknamed “Simpsonville”, to a point one hundred (100) feet West of Ayers Grocery Store, in Simpsonville (a point in the Greenville territory); thence East in a straight line in a slightly northeasterly direction to a point on the Anderson-Greenville County line one (1) mile North of State Highway Number 8, which crosses said County line at Piedmont, South Carolina, thence in a Southerly direction along the Anderson-Greenville County line to a point on said line due East of the Town of Williamston, the point of beginning.

All of Pickens County, South Carolina, except that portion lying West and South of a line beginning at a point on the Anderson-Pickens County line two hundred (200) feet East of the Wesleyan College Road and running in a Northwestwardly direction parallel to, and two hundred (200) feet East of said Wesleyan College Road to a point on the highway approximately two-tenths (2/10) of a mile Northeast of the City Limits of the Town of Central, where the Wesleyan College Road joins the Greenville Highway; thence continuing Northwestwardly, at right angles to the Southern Railroad, for a distance of one (1) mile; thence Southwestwardly running parallel to and one (1) mile North of the Southern Railroad, to the Oconee, County line.

That portion of Spartanburg County included within the following boundary lines, to-wit: Beginning at the point of intersection of Greenville, Spartanburg and Laurens Counties; thence Northwardly along the Greenville-Spartanburg County line to a point nearest the Pelham Mill School House; as the same existed on January 23, 1926 thence in an Easterly direction to said school house; thence in a Northerly direction in a straight line to “a point where the present State Highway No. 8 intersects with Groce’s Road near Lyman, South Carolina; thence along said Groce’s Road to the intersection of said road with the track of the Southern Railway Company where said road crosses the said railroad on a bridge; thence along the Holly Springs dirt road to Friendship School House; thence West to a point on the Greenville County line;

Exhibit C-1 – page 11

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thence Southwardly and Southeastwardly to the point of intersection of Greenville, Spartanburg and Laurens Counties, point of beginning.

(It is further understood and agreed that all places where soft drinks are now sold, or may hereafter be sold, now facing or which may hereafter face, on either side of the Groce Road or the Holly Springs Road, herein referred to, shall belong to the territory of the Spartanburg Coca-Cola Bottling Company and that the Coca-Cola Bottling Company of Greenville, S. C. has not now nor will hereafter make any claim to the places facing or to face upon said roads, as herein specified.)

Exhibit C-1 – page 12

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COCA-COLA PLAZA

ATLANTA, GEORGIA

 

 

Coca-Cola Bottling Co. Affiliated, Inc.

c/o Coca-Cola Bottling Co. Consolidated

P.O. Box 31487

Charlotte, North Carolina 28231

Gentlemen:

It is our understanding that you wish to surrender the bottling rights to a portion of the territory covered under the Master Bottle Contract, dated January 11, 1990, and the respective Allied Bottle Contracts held by Coca-Cola Bottling Co. Affiliated, Inc. for the Asheville, North Carolina territory, said portion being described in Exhibit A attached hereto and made a part hereof (the “Territory”), upon the condition that the Territory be added to Schedule D of the Master Bottler Contract and Allied Bottle Contracts held by Coca-Cola Bottling Co. Affiliated, Inc. for the Anderson, South Carolina territory.

Please confirm by signing both copies of this letter that this is your desire and that you have appropriate corporate authority to effect this change in your contractual status, and return one signed copy of this letter to me.

Sincerely,

/s/ E. Virginia Woodlee

 

E. Virginia Woodlee

Manager, Domestic Bottler Contracts

Accepted and agreed to this 30th

day of June, 1993.

COCA-COLA BOTTLING CO.

AFFILIATED, INC.

By: /s/ [Authorized Signatory]

Title: Vice President

EVW/smj

Exhibit C-1 – page 13

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EXHIBIT A

Greenville County, South Carolina, in its entirety.

That portion of Anderson County, South Carolina, beginning at a point on the Anderson Greenville County line due East of the Town of Williamston and running West in a straight line to and including Williamston (as said town existed on July 14, 1937, a town in the Greenville territory); thence Northwardly in a straight line from the Western, extremity of the corporate limits of Williamston to the Western extremity of the present corporate limits of the Town of West Pelzer (a town in the Greenville territory, as said town existed on July 14, 1937); thence Northwardly in a straight line to and including the settlement as now constituted adjoining the mill village of Piedmont in Anderson County and nicknamed “Simpsonville” to a point one hundred (100) feet West of Ayers Grocery Store, in Simpsonville ( a point in the Greenville territory); thence East in a straight line in a slightly northeasterly direction to a point on the Anderson-Greenville County line one (1) mile North of State Highway Number 8, which crosses said County line at Piedmont, South Carolina, thence in a Southerly direction along the Anderson-Greenville County line to a point on said line due East of the Town of Williamston, the point of the beginning.

All of Pickens County, South Carolina, except that portion lying West and South of a line beginning at a point on the Anderson-Pickens County line two hundred (200) feet East of the Wesleyan College Road and running in a Northwestwardly direction parallel to, and two hundred (200) feet East of said Wesleyan College Road to a point on the highway approximately two-tenths (2/10) of a mile Northeast of the City Limits of the Town of Central, where the Wesleyan College Road joins the Greenville Highway; thence continuing Northwestwardly, at right angles to the Southern Railroad, for a distance of one (1) mile; thence Southwestwardly running parallel to and one (1) mile North of the Southern Railroad, to the Oconee County line.

That portion of Spartanburg County included within the following boundary lines, to-wit: Beginning at the point of intersection of Greenville, Spartanburg and Lauren’s Counties; thence Northwardly along the Greenville-Spartanburg County line to a point nearest the Pelham Mill School House, as the same existed on January 23, 1926; thence in an Easterly direction to said school house; thence in a Northerly direction in a straight line to a point where the present State Highway No.  8 intersects with Groce’s Road near Lyman, South Carolina; thence along said Groce’s Road to the intersection of said road with the track of the Southern Railway Company where said road crosses the said railroad on a bridge; thence along the Holly Springs dirt road to Friendship School House; thence West to a point on the Greenville County line; thence Southwardly and Southeastwardly to the point of intersection of Greenville, Spartanburg and Lauren’s Counties, point of beginning.

(It is further understood and agreed that all places where soft drinks are now sold, or may hereafter be sold, now facing or which may hereafter face, on either side of the Groce Road or the Holly Springs Road, herein referred to, shall belong to the territory of the Spartanburg Coca-Cola Bottling Company and that the Coca-Cola Bottling Company of Greenville, S. C. or its successor has not now nor will hereafter make any claim to the places facing or to face upon said roads, as herein specified.)

Exhibit C-1 – page 14

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SCHEDULE D

 

Territories

The geographic areas described below define the Territory subject to the terms and conditions of the Agreement.

IN THE STATE OF NORTH CAROLINA:

That portion of the State of North Carolina included within the following boundaries:

Beginning at the point on the Moore-Lee county line where Deep River first touches said county line and running southwestwardly in a straight line to the southwest corner of Deep River township in Moore County; thence continuing southwestwardly in a straight line to a point on the west line of Carthage township which is equidistant from the northwest and southwest corners of said township; thence westwardly in a straight line to a point on the N. & S. R. R. midway between the towns of Biscoe and Candor; thence due west to the eastern boundary of Troy township in Montgomery County; thence south along the eastern line of Troy township to its southeast corner; thence east to the northeast corner of Cheek Creek township; thence south along the east line of Cheek Creek township to the south line of Montgomery County; thence westwardly along the south line of Montgomery County to the southwest corner of Montgomery County; thence northwardly along the west line of said county to the northwest corner of said county; thence east along the north line of said county to the southeast corner of Davidson County; thence east along the south line of Randolph County to the northeast corner of Eldorado township; thence in a southeasterly direction in a straight line to a point midway between the towns of Ether and Star; thence in a northeasterly direction in a straight line to a point on the northern boundary of Moore County due south of Maffit, a town in Randolph County; thence eastwardly along the northern boundary of Moore County to the western boundary of Lee County; thence south along the Moore-Lee county line to the point on the Moore-Lee county line where Deep River first touches said county line, the point of beginning, excepting from said territory, however, the town of Carbonton.

 

 

Exhibit C-1 – page 15

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SCHEDULE D

Territories

The geographic areas described below define the Territory subject to the terms and conditions of the Agreement.

(Contract June 15, 1928

Amended and Redescribed

September 8, 1938)

All of Cleveland, Gaston, Lincoln, Iredell, Alexander, Rowan, Cabarrus, Stanley,^-Mecklenburg, and Union Counties, North Carolina. All of Davidson County, North Carolina except Abbotts Creek Township, Thomasville Township, Emmons Township, and that portion of Conrad Hill Township east of a line running due north from the northwest corner of Emmons Township to the Thomasville Township boundary line. In Davie County, North Carolina, the Townships of Fulton and Shady Grove, and the Town of Cooleemee as established by the present property lines of the Erwin Mills in Davie County, and all territory within one-half mile of the north, south, east, and west property lines of the said Erwin Mills as now established.

That portion of Anson County, North Carolina, west of a line drawn due north and south thru the county, which line is one mile due east of the most easterly point in the present eastern boundary line of the town of Polkton.

That portion of York County and Cherokee County, South Carolina, north of a line beginning at the southeast corner of Gaston County, North Carolina, and running southwestwardly in a straight line to the most southerly point in the southern boundary line of the Town of Clover in York County, South Carolina as said boundary was located in 1908, and including the Town of Clover as its corporate limits were defined in 1908; thence northwestwardly in a straight line to a point in the southwestern corner of the present boundary line of the Town of Grover in Cleveland County, North Carolina,

(Added October 31, 1973)

That portion of the State of South Carolina included within the following boundaries, to-wit:  Beginning at the Northeast corner of Spartanburg County, South Carolina, and running Southeastwardly along the Cherokee-Spartanburg County Line to a point on said line which lies four and one quarter (4-1/4) miles front the Northeast corner of Spartanburg County; thence Southwardly in a straight line to a point which lies one and one-half (1-1/2) miles measured perpendicularly from a point on the Cherokee-Spartanburg County Line which lies six and one-half (6-1/2) miles from the Northeast corner of said Spartanburg County (it being understood and agreed that Mary-Louise Mill and Mary-Louise Mill Village, as the same existed November 20, 1952, including the store servicing this mill, is in the territory of Coca-Cola Bottling Company of Gaffney); thence Southeastwardly in a straight line to a point on the Cherokee-Spartanburg County Line which lies nine and one half (9-1/2) miles from the Northeast corner of said Spartanburg County; thence Southwardly along the Cherokee-Spartanburg County Line to a point which lies two and eleven-sixteenths (2-11/16) miles from the intersection of Union, Spartanburg, and Cherokee Counties; thence Northeastwardly in a straight line drawn perpendicularly from the last named point for a distance of two and one-fourth (2-1/4) miles; thence Southwardly to the intersection of Spartan-burg, Cherokee and Union Counties; (it being understood and agreed that the store now occupied by R. R. Brown is in the territory of Union Coca-Cola Bottling

Exhibit C-1 – page 16

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Company); thence Southeastwardly along the Union-Cherokee County Line to the Southeast corner of Cherokee County; thence Northwardly along the Western boundary of York County to a point on said boundary due northwest of the Town of Smyrna in York County; thence in a Southeasterly direction in a straight line to but not including Smyrna; thence in a Northeasterly direction in a straight line to and including Bethel Church; thence in a Westerly direction in a straight line to the most Southerly point in the Southern boundary line of the Town of Clover as said boundary was located in 1908, and not including the Town of Clover as its corporate limits were defined in 1908; thence Northwestwardly in a straight line toward the Southwestern corner of the boundary line of the Town of Grover in Cleveland County, North Carolina, (as the same existed on September 8, 1938) to the South Carolina-North Carolina State Line; thence Westwardly along the Northern boundary of Cherokee County to the Northeast corner of Spartanburg County, said point of beginning.

AND ALSO:

That portion of the State of South Carolina included within the following boundaries, to-wit: Beginning at a point on the Cherokee-Spartanburg County Line which lies two and eleven-sixteenths (2-11/16) miles from the intersection of Union, Spartanburg and Cherokee Counties and running Southwestwardly in a straight line and parallel to the Union-Spartanburg County Line for a distance of three and one-half (3-1/2) miles; thence Southeastwardly in a straight line to a point on the Union-Spartanburg County Line which lies three and one-half (3-1/2) miles from the intersection of Union, Spartanburg and Cherokee Counties; thence Southwardly along the Union-Spartanburg County Line to the intersection of Union, Laurens, and Spartanburg Counties; thence Southeastwardly along the Laurens-Union County Line to the intersection of Laurens, Union and Newberry Counties; thence Southwardly along the Union-Newberry County Line to a point on the Union-Newberry County Line which lies one and one-half (1-1/2) miles North of the Seaboard Airline Railway; thence Northeastwardly running parallel to anti one-half mile North of the Seaboard Airline Railway to the Union-Chester County Line; thence Northwardly along the Union-Chester County Line to the inter section of Union, York and Chester Counties; thence continuing Northwardly along the Union-York County Line to the intersection of Union, Cherokee and York Counties; thence Northwestwardly along the Union-Cherokee County Line to the intersection of Union, Spartanburg and Cherokee Counties; thence Northwardly in a straight line to a point which lies two and one-fourth (2-1/4) miles measured per-pendicularly from a point on the Spartanburg-Cherokee County Line which lies two and eleven-sixteenths (2-11/16) miles from the intersection of Spartanburg, Cherokee and Union Counties (it being understood and agreed that the store now occupied by R. R. Brown is included within the above described territory); thence Southwestwardly in a straight line to said point on the Spartanburg-Cherokee County Line which lies two and eleven-sixteenths (2-11/16) miles from the intersection of Spartanburg. Cherokee and Union Counties, said point of beginning.

Attached hereto and made a part hereof are photostatic copies of portions of General Highway Transportation Maps of Spartanburg and Cherokee Counties on which portions of the above described lines are drawn in red.

(Added April 1, 1974 with notations of certain prior deletions)

Exhibit C-1 – page 17

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GREENSBORO, NORTH CAROLINA’S ORIGINAL TERRITORY

(As set out in Contract of February 26, 1937)

The town of Kernersville in Forsyth County, the town of Prospect Hill in Caswell County, North Carolina, and that portion of the State of North Carolina included within the following boundaries, to-wit:

Beginning at the northwest corner of Guilford County; thence running east along the northern boundary of said county to the southwest corner of New Bethel township in Rockingham County; thence north along the western boundary of New Bethel township to its intersection with the eastern boundary of Mayo township; thence northeastwardly along the eastern boundary of Mayo township to the point of intersection with a straight line extending from a point one mile south of the town of Price, to a point one mile south of the town of Leaksville; thence southeastwardly along said line to said point one mile south of Leaksville; thence eastwardly in a straight line to a point one mile south of Ruffin, North Carolina, thence southeastwardly to a point one mile south of the town of Blackwells, North Carolina; thence eastwardly in a straight line toward a point one mile south of the town of Yanceyville, to the eastern boundary of Locust Hill township; thence southwardly along the eastern boundaries of Locust Hill and Stony Creek townships to the northern line of Alamance County; thence west along the northern line of Alamance County to the northwest corner of said county; thence south along the western line of said county to its southwest corner; thence east along the southern line of said county to its southeast corner; thence north along the eastern line of said county to its northeast corner; thence east along the southern line of Caswell County to the southeast corner of Caswell County; thence southeastwardly in a straight line to a point on the Southern Railway one-half way between the town of Hillsboro and University Station; thence in a southwesterly direction in a straight line to but not including the town of Bynum in Chatham County; thence southwardly in a straight line to and including the town of Cumnock in Lee County; thence south in a straight line to but not including Lemon Springs; thence due west to the western boundary of Lee County; thence northwestwardly along the Lee-Moore County line to Deep River; thence southwestwardly in a straight line to the southwest corner of Deep River township in Moore County; thence continuing southwestwardly in a straight line to a point on the west line of Carthage township which is equi-distant from the northwest and southwest corners of said township; thence westwardly in a straight line to a point on the N. & S. R. R. midway between the towns of Biscoe and Candor; thence due west to the eastern boundary of Troy township; in Montgomery County; thence south along the eastern line of Troy township to its southeast corner; thence east to the northeast corner of Cheek Creek township; thence south along the east line of Cheek Creek township to the south line of Montgomery County; thence westwardly along the south line of Montgomery County to the southwest corner of Montgomery County; thence northwardly along the west line of said County to the northwest corner of said County; thence east along the north line of said County to the southeast corner of Davidson County; thence north along the east line of Davidson County to the southeast corner of Emmons township in Davidson County; thence westwardly and northwardly along the southern and western line of Emmons township to the northwest corner of said township; thence due north in a straight line to the south line of Thomasville township; thence westwardly along the south line of Thomasville township to the southwest corner of said township; thence northwardly and eastwardly along the west and north lines of Thomasville township to the west line of Guilford County; thence northwardly along the west line of Guilford County to the northwest corner of said County, the point of beginning.

(All references to Cities and Towns are as they existed on February 26, 1937)

LESS AS

DELETED (Added to Burlington, North Carolina’s Contract as of January 15, 1940)

The town of Prospect Hill in Caswell County, North Carolina; and that part of Orange County, North Carolina, west of a line described as follows: Beginning at the southeast corner of Caswell County; thence

Exhibit C-1 – page 18

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southeastwardly in a straight line to a point on the Southern Railway one-half way between the town of Hillsboro and University Station; thence in a southwesterly direction in a straight line, toward the town of Buynum to the southern line of Orange County.

LESS AS

DELETED (Added to Winston-Salem, North Carolina’s Contract as of June 1, 1949)

In the County of Forsyth, North Carolina, the Town of Kernersville.

(All references to Cities and Towns are as they existed on February 26, 1937)

AND ALSO

BURLINGTON, NORTH CAROLINA’s ORIGINAL TERRITORY:

(As set out in Contract of February 26, 1937)

All of Alamance County, North Carolina; also that part of the townships of Yanceyville and Leasburg in Caswell County, North Carolina, lying south of a line extending across said townships from a point one mile south of the town of Blackwells, North Carolina; thence in a straight line to a point one mile south of the town of Yanceyville; thence in a straight line to a point on the eastern boundary line of Caswell County one mile south of the town of Leasburg; also all of Anderson and Hightowers townships in said county except the town of Prospect Hill.

(All references to Cities and Towns are as they existed on February 26, 1937)

AND ALSO

ADDED (Acquired from Greensboro, North Carolina, as of January 15, 1940)

The town of Prospect Hill in Caswell County, North Carolina; and that part of Orange County, North Carolina, west of a line described as follows:  Beginning at the southeast corner of Caswell County; thence southeastwardly in a straight line to a point on the Southern Railway one-half way between the town of Hillsboro and University Station; thence in a southwesterly direction in a straight line; toward the town of Buynum, to the southern line of Orange County.

(All references to Cities and Towns are as they existed on February 26, 1937)

AND ALSO

WINSTON-SALEM, NORTH CAROLINA’s ORIGINAL TERRITORY:

(As set out in Contract of February 26, 1937)

All of Abbots Creek Township in Davidson County, North Carolina, all of Surry County, North Carolina, except the towns of Elkin and Crutchfield; all of Stokes County, North Carolina; all of Forsyth County, North Carolina, except the town of Kernersville; all of Davie County, North Carolina, except the town of Cooleemee, territory within a quarter of a mile from the town of Cooleemee, and the townships of Fulton and Shady Grove; in Rockingham County, all the townships of Huntsville and Madison, and all of the townships of Mayo and Price lying south of a straight line extending from a point on the Virginia-North Carolina line west of the town of Price, North Carolina, and running southeastwardly through a point one mile south of Price and to a point one mile south of Leaksville, North Carolina.

Exhibit C-1 – page 19

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That portion of Yadkin County, North Carolina lying east of a line running from the point of intersection of Iredell, Davie and Yadkin lines to a point one-fourth mile due east of the town of Footville, thence northwardly in a straight line to a point one mile due west of the present city limits of Yadkinville; thence northwardly in a straight line to a point one mile due west of the present city limits of Boonville; thence due north to the northern boundary of Yadkin County.

(All references to Cities and Towns are as they existed on February 26, 1937)

LESS AS
DELETED (Added to Charlotte, North Carolina, Contract as of April 6, 1937)

The town of Cooleemee, as established by the present property lines of the Erwin Mills in Davie County, and all territory within one-half mile of the north, south, east, and west property lines of the said Erwin Mills.

AND ALSO
ADDED (Acquired from Greensboro, North Carolina, as of June 1, 1949)

In the County of Forsyth, North Carolina, the Town of Kernersville.

(All references to Cities and Towns are as they existed on February 26, 1937)

AND ALSO

RALEIGH, NORTH CAROLINA’s ORIGINAL TERRITORY:
(As set out in Contract of August 6, 1930)

The town of Raleigh and all the territory East, North and South within a radius of fifty miles, and the following territory towards Greensboro on the Southern Road to University Station, on the Southern Road to Clarandon (Clarendon) and on the Seaboard Air Line towards Hamlet as far as Lemon Springs.

Exhibit C-1 – page 20

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2.(DUNN, N.C.):  Part of the above territory is covered by a sub-bottler’s contract dated the 10th day of November, 1925, for Dunn, N.C. Said Dunn, N.C., and the territory covered by said contract, described as follows, to wit:

Beginning at the intersection of the Atlantic Coast Line R.R. and the Harnett and Cumberland County line, thence westward with the Harnett County line to a point where the Cape Fear River enters Cumberland County, thence up the Cape Fear River with the eastern bank to a point where the Norfolk & Southern R.R. crosses the Cape Fear River, thence in a straight line northeastwardly to a point on the Durham and Southern R.R. one mile south of Angier, thence to a point on contact or intersection of Wake, Harnett and Johnson County lines, thence in a straight line eastward to a point where the Atlantic Coast Line R.R. crosses the Neuse River, thence in a straight line to a point of contact or intersection of Johnson, Wayne and Sampson counties, thence with the Johnson and Harnett County lines to the beginning.  Also including all territory in Cumberland and Sampson counties within a radius of 50 miles of Raleigh, N.C. as covered by Raleigh Coca-Cola Bottling Co.’s contract.

is subject to the terms of said sub-bottler’s contract.

LESS:

3.WILSON, N.C., territory, which territory was covered by contract dated July 20, 1909, described as follows, to wit:

The town of Wilson, North Carolina, together with all of the towns in North Carolina named below and all that section of territory included within a boundary line passing through said towns in order mentioned, Baca, Red Oak, Oakland, Bunn, Sutton, Middlesex, Micoe, Pinelevel, Oliver, Beasley, Rosinhill, Dudley, Moyton, Wilbanks, Medora and Baca.

LESS:

4.DURHAM, N.C., territory, which territory was covered by contract with Durham dated February 3, 1911, as amended and revised by contract dated October 31, 1929, described as follows, to wit:

Beginning at a point on the Southern Railway half-way between University Station and Hillsboro; and running to the Southwest corner of Person County; thence along the Western boundary of Person County to a point one mile south of the Southern Railway (Atlantic & Danville Division); thence parallel to and one mile south of this railroad in a northeastwardly direction to the Northern boundary of Person County; thence along this county line to the Person-Granville county line; thence south along this line to a

Exhibit C-1 – page 21

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point one mile south of Holloway Mines, N.C.; thence northeastwardly to the northeast corner of Granville County; thence to and including the town of Ridgeway; thence south to an arc of a circle of fifty miles radius from Raleigh, N.C.; thence southeast along said arc to and including the town of Creek, on Fishing Creek; thence south to and including Inez; thence southwest to a point in Franklin County two miles north of Louisburg; thence west to a point in Franklin County two miles north of Franklinton; thence to a point five miles east of Creedmoor; thence to a point one mile west of Leesville; thence to and including Morrisville; thence to and including Upchurch; thence to and including Ebenezer, on the Norfolk & Southern Railroad; thence north along the Norfolk & Southern Railroad to the station of Seaforth; thence west to a point half-way between Seaforth and Bynum; thence north to a point on the Southern Railway half-way between University Station and Hillsboro, the point of beginning.

PLUS (As included under Raleigh’s Bottler’s Contract on October 11, 1938)

All territory in Franklin County, North Carolina south of a line running from a point five miles east of the town of Creedmoor In Granville County eastwardly in a straight line to a point two miles north of the town of Franklinton in Franklin County; thence eastwardly in a straight line to a point two miles north of the town of Louisburg; thence northeastwardly in a straight line to and including the town of Inez in Warren County.  (Not already covered by Raleigh’s contract, dated August 6, 1930.)

LESS (As surrendered by Raleigh on October 11, 1938)

That portion of Nash County, North Carolina which is within 50 miles of the City of Raleigh, North Carolina.

LESS (As surrendered by Raleigh on May 15, 1957)

That portion of the State of North Carolina, lying within the following described boundaries, to-wit:

Beginning at the intersection of Johnston, Wayne and Sampson Counties, and running Southwardly in a straight line to a point two-tenths (2/10) of one (1) mile Northwest of Monk’s Crossroads on United States Highway Number 701; thence continuing in a Southwardly direction in a straight line to a point where the arc of a circle, having a radius of fifty (50) miles measured from the Triangulation Station Number Two (2) located on top of the Security Bank Building in Raleigh, North Carolina, crosses the Great Coharie Creek in Sampson County; thence continuing clockwise along said arc of a circle, having a radius of fifty (50) miles measured from the Triangulation Station Number Two (2) located on top of the Security Bank Building in Raleigh, North Carolina, to its intersection with the Hoke County line; thence Northwardly along the Hoke-Cumberland County line to the point of intersection of Harnett, Cumberland and Hoke Counties; thence Northeastwardly along the Harnett-Cumberland County line to its intersection with the Cape Fear River; thence Northwardly along the Eastern bank of Cape Fear River to a point where the Norfolk & Southern Railroad crosses the Cape Fear River; thence in a straight line Northeastwardly to a point on the Durham and Southern Railroad one (1) mile South of Angier; thence Northeastwardly in a straight line to the intersection of Wake, Harnett and Johnston Counties; thence Eastwardly in a straight line to a point where the Atlantic Coast Line Railroad crosses the Neuse River, said point lying in Johnston County, thence Southwardly in a straight line to a point of contact or intersection of Johnston, Wayne and Sampson Counties, said point of beginning.

(Added May 1, 1978)

That portion of the States of North Carolina and South Carolina included within the following boundaries:  Beginning at and including the Town of Middendorf, in Chesterfield County, South Carolina, and running Northeastwardly in a straight line to but not including the Town of Cash; thence Southeastwardly in a

Exhibit C-1 – page 22

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straight line to but not including the Town of Marlboro; thence Northeastwardly in a straight line through a point on the S.A.L. Railroad midway between the Towns of McColl and Clio to the North Carolina-South Carolina State line; thence Southeastwardly along said North Carolina-South Carolina State line to a point where the projection of a straight line drawn from but not including Red Springs, Robeson County, North Carolina, to the Eastern boundary (as the same existed on February 19, 1932) of the Town of Red Banks (a station on the S.A.L.R.R.) intersects said North Carolina-South Carolina State line; thence Northwardly along said projection and said straight line drawn from but not including Red Springs to the Eastern boundary (as the same existed on February 19, 1932) of the Town of Red Banks to but not including said Town of Red Springs; thence along the West side of North Carolina State Highway No. 70, including all territory on the West side of said Highway, to a point where the dividing line between Hoke and Robeson Counties crosses said North Carolina State Highway No. 70; thence Northwardly along the Eastern boundary of Hoke County so as to include all of said Hoke County to the intersection of Hoke, Moore, and Harnett Counties; thence Northeastwardly and Northwestwardly along the Northeastern boundary of Moore County to the point where Deep River first touches the Lee-Moore County Line; thence Southwestwardly in a straight line to the Southwest corner of Deep River Township, in Moore County; thence continuing Southwestwardly in a straight line to a point on the West line of Carthage Township, which is equidistant from the Northwest and Southwest corners of said township; thence Westwardly in a straight line to a point on the N. & S.R.R. midway between the Towns of Biscoe and Candor; thence due West to the Eastern boundary of Troy Township, in Montgomery County; thence South along the Eastern line of Troy Township to its Southeast corner; thence East to the Northeast corner of Cheek Creek Township; thence South along the East line of Cheek Creek Township to the South line of Montgomery County; thence Westwardly along the South line of Montgomery County to the Southwest corner of Montgomery County; thence Westwardly along the Stanly-Anson County line to a point which lies due North of a point one (1) mile due East of the most Eastern point in the Eastern boundary line of the Town of Polkton (as the same existed on the 8th day of September, 1938); thence due South through said point one (1) mile due East of the most Easterly point in the Eastern boundary of said Town of Polkton to the North Carolina-South Carolina State line; thence Eastwardly along said North Carolina-South Carolina State line to a point on said line due North of the Town of Chesterfield, in Chesterfield County, South Carolina; thence Southwardly in a straight line to and including the Town of Middendorf, said point of beginning.

(All points referred to above, unless specifically indicated, are as the same existed on December 21, 1948.)

(Deleted December 6, 1984)

All of Thomasville Township and all of Emmons Township and that portion of Conrad Hill Township east of a line running due north from the northwest corner of Emmons Township  to the Thomasville Township line, all lying in Davidson County, North Carolina.

(Deleted January 1, 1985)

All of Lincoln County, North Carolina.  That portion of Gaston County, North Carolina lying within the following boundaries:

Beginning at a point, the southeast corner of Lincoln County, and running in a southwesterly direction in a straight line to the southeast corner of the present boundary line of the Town of Stanley, North Carolina, and including the Town of Stanley, North Carolina; thence west, north and east with the present boundary lines of the Town of Stanley, North Carolina to a point in the present northern boundary line of the Town of Stanley, which point is one-fourth mile west of the center line of the Seaboard Airline Railway right of way; thence northwestwardly, running parallel to and one-fourth of a mile west of the Seaboard Airline

Exhibit C-1 – page 23

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Railway (between Stanley and Lincolnton) to the southern boundary line of Lincoln County; thence in an easterly direction following said Lincoln County line to the point of beginning.

(Deleted February 1, 1985)

Territory described in the Sub-Bottler’s Contract dated January 1, 1938 between Greensboro Coca-Cola Bottling Co. and Biscoe Coca-Cola Bottling Co., Inc. (incorrectly referred to as Biscoe Coca-Cola Bottling Company, Incorporated), described therein as follows:

That portion of the State of North Carolina included within the following boundaries:

Beginning at the point on the Moore-Lee county line where Deep River first touches said county line and running southwestwardly in a straight line to the southwest corner of Deep River township in Moore County; thence continuing southwestwardly in a straight line to a point on the west line of Carthage township which is equidistant from the northwest and southwest corners of said township; thence westwardly in a straight line to a point on the N. & S. R. R. midway between the towns of Biscoe and Candor; thence due west to the eastern boundary of Troy township in Montgomery County; thence south along the eastern line of Troy township to its southeast corner; thence east to the northeast corner of Cheek Creek township; thence south along the east line of Cheek Creek township to the south line of Montgomery County; thence westwardly along the south line of Montgomery County to the southwest corner of Montgomery County; thence northwardly along the west line of said county to the northwest corner of said county; thence east along the north line of said county to the southeast corner of Davidson County; thence east along the south line of Randolph County to the northeast corner of Eldorado township; thence in a southeasterly direction in a straight line to a point midway between the towns of Ether and Star; thence in a northeasterly direction in a straight line to a point on the northern boundary of Moore County due south of Maffit, a town in Randolph County; thence eastwardly along the northern boundary of Moore County to the western boundary of Lee County; thence south along the Moore-Lee county line to the point on the Moore-Lee county line where Deep River first touches said county line, the point of beginning, excepting from said territory, however, the town of Carbonton.

(Deleted February 1, 1985)

That portion of the State of North Carolina included within the following boundaries:

Beginning at the Southeast corner of Montgomery County and running Southeastwardly along the Moore-Richmond County line to the Southernmost corner of Moore County; thence Southeastwardly, Northeastwardly and Northwestwardly around the Southern, Eastern and Northern boundaries of Hoke County so as to include all of said Hoke County to the intersection of Hoke, Moore, and Harnett Counties; thence Northeastwardly and Northwestwardly along the Northeastern boundary of Moore County to the point where Deep River first touches the Lee-Moore County line; thence Southwestwardly in a straight line to the Southwest corner of Deep River Township, in Moore County; thence continuing Southwestwardly in a straight line to a point on the West line of Carthage Township, which is equidistant from the Northwest and Southwest corners of said township; thence Westwardly in a straight line to a point on the N. & S. R.R. midway between the Towns of Biscoe and Candor; thence due West to the Eastern boundary of Troy Township, in Montgomery County; thence South along the Eastern line of Troy Township to its Southeast corner; thence East to the Northeast corner of Cheek Creek Township; thence South along the East line of Cheek Creek Township to the South line of Montgomery County; thence Eastwardly along the Southern boundary of Montgomery County to the Southeast corner of Montgomery County, said point of beginning.

(Deleted September 22, 1986)

Exhibit C-1 – page 24

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IN THE STATE OF NORTH CAROLINA:

All of Lincoln County, North Carolina.  That portion of Gaston County, North Carolina lying within the following boundaries:

Beginning at a point, the southeast corner of Lincoln County, and running in a southwesterly direction in a straight line to the southeast corner of the present boundary line of the Town of Stanley, North Carolina, and including the Town of Stanley, North Carolina; thence west, north and east with the present boundary lines of the Town of Stanley, North Carolina to a point in the present northern boundary line of the Town of Stanley, which point is one-fourth mile west of the center line of the Seaboard Airline Railway right of way; thence northwestwardly, running parallel to and one-fourth of a mile west of the Seaboard Airline Railway (between Stanley and Lincolnton) to the southern boundary line of Lincoln County; thence in an easterly direction following said Lincoln County line to the point of beginning.

(Said points are as same existed on November 11, 1938.)

Exhibit C-1 – page 25

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(Danville, Virginia territory - Contract April 1, 1974)

“In the Cities of Danville, South Boston, Chase City, Va., and Leaksville, N.C., and the following territory in the State of Virginia, to wit; That part of Pittsylvania County, Virginia, that is colored green and lies Last of the line indicated on the map attached hereto, marked “Schedule A” and made a part hereof; all points on the line of railroad running from, and including, the towns of Boydton and Keysville to Danville; at all points on the Norfolk & Western Ry. from South Boston, Va., to the south side of the Staunton River; all points in Charlotte County, Va.; the town of Biery in Prince Edwards County, and all other territory in the State of Virginia within fifty (50) miles of the City of Danville, Va., except all such other territory within fifty miles of Roanoke, Va., not specifically included in the above description.  All points within fifty one (51) miles of Richmond, Va., are specifically excluded from this contract.  The following territory in the State of North Carolina is included in this contract, to wit:  Those points in the State of North Carolina lying north of a direct line beginning at a point one mile south of Price; thence in a southeastwardly direction to a point one mile south of Leaksville; thence to a point one mile south of Ruffin; thence southeastwardly to a point one mile south of Blackswell in Caswell County; thence to a point one mile south of Yanceyville (but it is understood that N.W. Miles Store, in Caswell County is not included in this contract); thence to a point one mile south of Leesburg; thence north along the Caswell-Person County line to a point one mile south of the Southern Railway (Atlantic & Danville Division) at Semora; thence parallel to and one mile south of this railroad in a northeastwardly direction to the northern boundary of Person County; thence along this county line to the Person-Granville County line; thence south along this line to a point one mile south of Holloway Mines, N.C.; thence northeastwardly to the northeast corner of Granville County.  This contract does not include any point that is within 100 miles of Charlotte, N.C.”

Exhibit C-1 – page 26

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COCA-COLA PLAZA

ATLANTA, GEORGIA

 

 

Coca-Cola Bottling Co. Consolidated

P.O. Box 31487

Charlotte, North Carolina  28231

Gentlemen:

It is our understanding that you wish to surrender the bottling rights to a portion of the territory covered under the Master Bottle Contract, dated January 27, 1989, and the respective Allied Bottle Contracts held by Coca-Cola Bottling Co. Consolidated for the Charlotte, North Carolina territory, said portion being described in Exhibit A attached hereto and made a part hereof (the “Territory”), upon the condition that the Territory be added to Schedule D of the Master Bottler Contract and Allied Bottle Contracts held by Coca-Cola Bottling Company of Roanoke, Inc. for the Roanoke, Virginia territory.

Please confirm by signing both copies of this letter that this is your desire and that you have appropriate corporate authority to effect this change in your contractual status, and return one signed copy of this letter to me.

Sincerely,

/s/ E. Virginia Woodlee

 

E. Virginia Woodlee

Manager, Domestic Bottler Contracts

Accepted and agreed to this 22

day of November, 1993.

COCA-COLA BOTTLING CO.

AFFILIATED, INC.

By: /s/ Umesh Kasbekar

Title:  Vice President

EVW/smj

Exhibit C-1 – page 27

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Exhibit A

Territories

The geographic areas described below define the Territory subject to the terms and conditions of the Agreement.

IN THE STATE OF VIRGINIA:

(Danville, Virginia territory -- Contract dated April 1, 1974)

“In the Cities of Danville, South Boston, Chase City, Va., and Leaksville, N. C., and the following territory in the State of Virginia, to wit:

That part of Pittsylvania County, Virginia, that is colored green and lies East of the line indicated on the map attached to contract dated April 1, 1974, marked “Schedule A” and made a part thereof; all points on the line of railroad running from, and including, the towns of Boydton and Keysville to Danville; at all points on the Norfolk & Western Ry. from South Boston, Va., to the south side of the Staunton River; all points in Charlotte County, Va.; the town of Biery in Prince Edwards County, and all other territory in the State of Virginia within fifty (50) miles of the City of Danville, Va., except all such other territory within fifty miles of Roanoke, Va., not specifically included in the above description.  All points within fifty one (51) miles of Richmond, Va., are specifically excluded from this contract.

The following territory in the State of North Carolina is included in this contract, to wit:

Those points in the State of North Carolina lying north of a direct line beginning at a point one mile south of Price; thence in a southeastwardly direction to a point one mile south of Leaksville; thence to a point one mile south of Ruffin; thence southeastwardly to a point one mile south of Blackswell in Caswell County; thence to a point one mile south of Yanceyville (but it is understood that N.W. Miles Store, in Caswell County is not included in this contract); thence to a point one mile south of Leasburg; thence north along the Caswell-Person County line to a point one mile south of the Southern Railway (Atlantic & Danville Division) at Semora; thence parallel to and one mile south of this railroad in a northeastwardly direction to the northern boundary of Person County; thence along this county line to the Person-Granville County line; thence south along this line to a point one mile south of Holloway Mines, N.C.; thence northeastwardly to the northeast corner of Granville County. This contract does not include any point that is within 100 miles of Charlotte, N.C.”

Exhibit C-1 – page 28

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Fayetteville, NC

SCHEDULE D

Territories

The geographic areas described below define the Territory subject to the terms and conditions of this Agreement.

STATE OF NORTH CAROLINA:

“In the Cities of Fayetteville, North Carolina, and Lumberton, North Carolina, and in all of the territory in the State of North Carolina, lying west of a line drawn due north and south through a point one (1) mile west of the town of Clinton, North Carolina, except such territory as may be within fifty (50) miles of either Wilmington, North Carolina or Raleigh, North Carolina, and except also such territory as may be within one hundred (100) miles of Charlotte, North Carolina, except also Columbus County, North Carolina.

It is specifically agreed that the town of Bladenboro, North Carolina is not included in this contract.

That portion of the State of North Carolina, lying within the following described boundaries, to-wit:

Beginning at the intersection of Johnston, Wayne and Sampson Counties, and running Southwardly in a straight line to a point two-tenths (2/10) of one (1) mile Northwest of Monk’s Crossroads on United States Highway Number 701; thence continuing in a Southwardly direction in a straight line to a point where the arc of a circle, having a radius of fifty (50) miles measured from the Triangulation Station Number Two (2) located on top of the Security Bank Building in Raleigh, North Carolina, crosses the Great Coharie Creek in Sampson County; thence continuing clockwise along said arc of a circle, having a radius of fifty (50) miles measured from the Triangulation Station Number Two (2) located on top of the Security Bank-Building in Raleigh, North Carolina, to its intersection with the Hoke County line; thence Northwardly along the Hoke-Cumberland County line to the” point of intersection of Harnett,’ Cumberland and Hoke Counties; thence Northeastwardly along the Harnett-Cumberland County line to its intersection with the Cape Fear River; thence Northwardly along the Eastern bank of Cape Fear River to a point where the Norfolk Southern Railroad crosses the Cape Fear River; thence in a straight line Northeastwardly to a point on the Durham and Southern Railroad one (1) mile South of Angier; thence Northeastwardly in a straight line to the intersection of Wake; Harnett and Johnston Counties; thence Eastwardly in a straight line to a point where the Atlantic Coast Railroad crosses the Neuse River, said point lying in Johnston County; thence Southwardly in a straight line to a point of contact or intersection of Johnston, Wayne and Sampson Counties, said point of beginning.

 

Exhibit C-1 – page 29

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SCHEDULE D

Territories

The geographic areas described below define the Territory subject to the terms and conditions of the Agreement.

IN THE STATE OF NORTH CAROLINA:

The counties of Wilkes, Allegheny; and the towns of Elkin and Crutchfield in Scurry County.

AND

That portion of Yadkin County, North Carolina lying west of a line running from the point of intersection of the Iredell, Davie and Yadkin County lines to a point one-fourth mile due east of the town of Footville; thence northwardly in a straight line to a point one mile due west of the present city limits of Yadkinville; thence northwardly in a straight line to a point one mile due west of the present city limits of Boonville; thence due north to the northern boundary of Yadkin County.

(As existed on February 27, 1937.)

 

Exhibit C-1 – page 30

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SUB-BOTTLER’S CONTRACT
(PERMANENT)

                     

THIS AGREEMENT, Made and entered into, on the           30th           day of June, 1949, by and between    GREENSBORO COCA-COLA BOTTLING CO., a corporation organized and existing under the laws of the State of Delaware, with its principal office in    the State of    North Carolina   , County of           Guilford,           and City of      Greensboro     , as Party of the First Part, and           REIDSVILLE COCA-COLA BOTTLING COMPANY, a  corporation        of the State of           North Carolina          , County of           Rockingham,           and City of           Reidsville,           as Party of the Second Part;

WITNESSETH

THAT WHEREAS, Party of the First Part has received from THE COCA-COLA BOTTLING COMPANY certain rights and privileges in regard to the bottling and selling of Coca-Cola in bottles; and

WHEREAS, Party of the First Part wishes to convey to Party of the Second Part the rights that it has received from The Coca-Cola Bottling Company, limited, however, to the following described territory, to-wit: That portion of the State of North Carolina included within the following boundaries, to-wit:

Beginning at the Southwest corner of New Bethel Township, in Rockingham County, North Carolina, and running North along the Western boundary of New Bethel Township to its intersection with the Eastern boundary of Mayo Township; thence Northeastwardly along the Eastern boundary of Mayo Township to the point of intersection of a straight line extending from a point one (1) mile South of the Town of Price, to a point one (1) mile South of the Town of Leaksville; thence Southeastwardly along said line to a point one (1) mile South of Leaksville; thence Eastwardly in a straight line to a point one (1) mile South of Ruffin, North Carolina; thence Southeastwardly to a point one (1) mile South of the Town of Blackwells, North Carolina; thence Eastwardly in a straight line toward a point one (1) mile South of the Town of Yanceyville to the Eastern boundary of Locust Hill Township; thence Southwardly along said Eastern boundary of Locust Hill Township to the Northeast corner of Stoney Creek Township; thence Southwardly along the Eastern boundary of Stoney Creek Township to the Caswell-Alamance County line; thence Westwardly along said Caswell-Alamance County line to the Southwest corner of Caswell County; thence Southwardly along the Rockingham-Alamance County line to the Southeast corner of Rockingham County; thence Westwardly along the Rockingham-Guilford County line to the Southwest corner of New Bethel Township, said point of beginning.

All disputes which may arise concerning the boundaries of the territory above described, if not adjusted by the interested Parties, shall be determined and adjusted by The Coca-Cola Bottling Company by and with the approval of The Coca-Cola Company.

NOW, THEREFORE, For and in consideration of mutual benefits and promises from one to the other, and other valuable consideration, the receipt of which is hereby acknowledged, IT IS AGREED:

 

 

Exhibit C-1 – page 31

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SCHEDULE D

Territories

The geographic areas described below define the Territory subject to the terms and conditions of this Agreement.

IN THE STATE OF NORTH CAROLINA:

All of Thomasville Township and all of Emmons Township and that portion of Conrad Hill Township east of a line running due north from the northwest comer of Emmons Township to the Thomasville Township line, all lying in Davidson County, North Carolina.

 

Exhibit C-1 – page 32

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SCHEDULE D

Territories

The geographic areas described below define the Territory subject to the terms and conditions of the Agreement.

IN THE STATE OF SOUTH CAROLINA:

That portion of Chesterfield County, South Carolina, included within the following boundaries, to-wit: Beginning at the northwest corner of Chesterfield County and running southeastwardly along the dividing line between Lancaster and Chesterfield Counties to a point due west of the town of Jefferson in Chesterfield County; thence due east in a straight line to but not including Jefferson; thence continuing due east in a straight line to the intersection of a straight line extending from Middendorf northeastwardly to a point on the North Carolina-South Carolina State Line due north of the town of Chesterfield; thence northeastwardly along said line to a point on the North Carolina-South Carolina State Line due north of Chesterfield; thence west along the North Carolina-South Carolina State Line to the northwest corner of Chesterfield County, the point of beginning.

All reference to towns and/or cities hereinabove referred to, are intended to designate the town and/or city limit of such town or city, as of June 21, 1935.

 

Exhibit C-1 – page 33

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SCHEDULE D

Territories

The geographic areas described below define the Territory subject to the terms and conditions of the Agreement.

IN THE STATE OF SOUTH CAROLINA:

That portion of the State of South Carolina included within the following boundaries, to-wit: Beginning at a point on the North Carolina-South Carolina State line due east of Van Wyck in Lancaster County, South Carolina and running westwardly in a straight line to but not including Van Wyck; thence southwestwardly in a straight line to but not including Rowell; thence westwardly in a straight line to and including Lando; thence northwestwardly in a straight line to a point on the York-Chester County line due south of Smith; thence northwestwardly in a straight line to but not including Bullock Creek; thence due west in a straight line to the western boundary of York County; thence southwardly along the western boundary of York County to its intersection with the Chester County line; thence southwardly along the western boundary of Chester County to a point on said boundary one-half mile north of the Seaboard Air-Line Railway; thence southwestwardly, running parallel to and one-half mile north of said railway, to a point on the Union-Newberry County line due north of the town of Whitmire in Newberry County; thence in a straight line to and including Whitmire; thence eastwardly in ‘a straight line to but not including Herbert; thence eastwardly in a straight line to but not including Shelton; thence eastwardly in a straight line to but not including Winnsboro; thence eastwardly in a straight line to the point where the Wateree River intersects the Fairfield-Kershaw County line; thence south along the Fairfield-Kershaw County line to its intersection with the Richland County line; thence southwest, southeast, and northeast along the Richland-Kershaw County line to its intersection with the Wateree River; thence southwardly along the Wateree River to its confluence with the Congaree River; thence southwardly and eastwardly along the Santee River to the point where said river leaves the Clarendon County line; thence northwardly along the eastern boundary of Clarendon County to a point on the Clarendon-Williamsburg County line two miles south of Federal Highway No. 521; thence running eastwardly, parallel to and two miles south of said highway, to the Black River, and thence continuing eastwardly along the northern banks of the Black River to the Williamsburg-Georgetown County line; thence northwardly along the Williamsburg-Georgetown County line to the point where said line is intersected by the Peedee River; thence northwardly along the Peedee River to its intersection with the Lynches River; thence northwardly along the Lynches River to a point on said river due east of the easternmost point in Sumter County; thence due west to the easternmost point in Sumter County; thence northwardly along the Lynches River to the southernmost point in Darlington County; thence continuing northwardly to the point where the ACL Railway running from Elliott to Lamar intersects the western city limits of Lamar; thence due northwest to the Lee-Darlington County line; thence in a northwesterly direction to a point one-half mile north of the point on the SAL Railway halfway between the stations of Una and Alcot; thence due west to the Lynches River; thence northwardly along the Lynches River to the southern boundary of Chesterfield County; thence northeastwardly along the southern boundary of Chesterfield County to a point on said county line due south of a point one mile east of the CM & C Railroad at McBee; thence in a northeasterly direction to but not including Middendorf; thence northeastwardly along a line extending from Middendorf to a point on the North Carolina State line due north of the town of Chesterfield to a point due east of the town of Jefferson in Chesterfield County; thence west to and including the town of Jefferson; thence continuing due west to the Lancaster County line; thence north along the Lancaster County line to the North Carolina-South Carolina State line; thence west and north along said state line to a point on said line due east of the town of Van Wyck in Lancaster County, South Carolina, the point of beginning; EXCEPT, the town of Blaney in Kershaw County and all points, on U.S. Highway No. 1 from the eastern boundary of Richland County to Blaney.

Exhibit C-1 – page 34

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AND ALSO IN THE STATE OF SOUTH CAROLINA (Territory added by Amendment April 1, 1973)

That portion of Williamsburg County, South Carolina, lying South of a line beginning at a point on the Williamsburg-Clarendon County Line two (2) miles South of Federal Highway Number 521 and running Eastwardly parallel to and two (2) miles South of said highway to the Black River and thence continuing Eastwardly along the Southern bank of the Black River to the Williamsburg-Georgetown County Line.

 

Exhibit C-1 – page 35

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(NEW)
SUB-BOTTLER’S CONTRACT

                     

THIS AGREEMENT, Made and entered into, on the       20^th     day of        September        1916 by and between                     Charleston Coca-Cola Bottling Company                     of the State of           South Carolina          , County of           Charleston           and __Georgetown Coca-Cola Bottling Company _ of the State __South Carolina__ County of    Georgetown    and City of    Georgetown    as party of the second part;

WITNESSETH

THAT WHEREAS, party of the first part has received from THE COCA-COLA BOTTLING COMPANY certain rights and privileges in regard to the bottling and selling of bottled Coca-Cola; and

WHEREAS, party of the first part wishes to convey to party of the second part the rights that it has received from The Coca-Cola Bottling Company, limited, however, to the following described territory, to-wit:

County of Georgetown, State of South Carolina

NOW THEREFORE, For and in consideration of mutual benefits and promises from one to the other, and other valuable consideration, the receipt of which is hereby acknowledged, IT IS AGREED:

FIRST:  That party of the first part hereby gives and conveys to party of the second part the right that it received from THE COCA-COLA BOTTLING COMPANY to use the trade-mark name COCA-COLA, and all labels and designs pertaining thereto, in connection with the product “Bottled Coca-Cola” in the territory hereinbefore described and party of the first part agree not to convey, assign or transfer the right of usage of said name in said territory to any other party whatsoever and said party of the first part agrees to obtain and furnish to party of the second part, and only to obtain for the territory herein referred to, sufficient syrup for bottling purposes to meet the requirements of party of the

Exhibit C-1 – page 36

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SCHEDULE D

Territories

The geographic areas described below define the Territory subject to the terms and conditions of the Agreement.

IN THE STATE OF TENNESSEE:

In the city of Columbia, Tennessee, and all the territory in Williamson and Maury counties that lies south of a line drawn due east and west across Williamson County through a point one mile south of Franklin, Tennessee; also, all the territory in Lewis and Hickman counties, except the town of Napier, lying east of a line drawn one mile east of and parallel with the line of railroad that runs from Colesburg, Tennessee, to Allens Creek, Tennessee, but it is understood and agreed that this contract does not include any territory that is within fifty miles of either Huntsville, Alabama, or Sheffield, Alabama.

It is further agreed that this contract does not include any point that is north of a due east and west line drawn through a point one mile south of Franklin, Tennessee.

AND ALSO:

In the city of Lewisburg, Tennessee, and all points in Marshall County, Tennessee lying south of a line drawn due east and west across said county through a point one mile south of the town of Chappel Hill, Tennessee.

 

 

 

Exhibit C-1 – page 37

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SCHEDULE D

Territories

The geographic areas described below define the Territory subject to the terms and conditions of the Agreement.

IN THE STATE OF TENNESSEE:

In the City of Dickson, Tennessee, and at all points in Benton, Humphreys and Dickson counties, Tenn., south of a line drawn due east and west through the center of the City of Nashville, Tenn. through said counties: at all points in Hickman and Lewis counties west of a line drawn one mile east of and parallel with the line of the N.C. & S.T.L. Ry., between Bon Aqua and Hohenwald inclusive: all points in Perry County that are not within fifty miles of Florence, Alabama or Jackson, Tennessee.

It is specifically understood that no point that is within fifty miles of either Jackson, Tenn. or Florence, Alabama, in included in this description.

 

 

 

Exhibit C-1 – page 38

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SCHEDULE D

Territories

The geographic areas described below define the Territory subject to the terms and conditions of the Agreement.

IN THE STATE OF TENNESSEE:

In the City of Fayetteville, Tennessee, and all points in the State of Tennessee that are in Lincoln, Bedford and Moera Counties, within fifty (50) miles of the City of Huntsville, Alabama, except such points as are within fifty miles of Nashville or Chattanooga, Tennessee. Except also all points along the main line of the N.C. & St.L.Ry. from Wartrace, Tenn. to Estill Springs, Tenn. Including points in Franklin County, Tennessee except such points in Franklin County as may be along and within six miles of that section of the N.C. & St.L.Ry., extended south from Belvidere, Tennessee to where it crosses the Lincoln County east boundary line. The town of Elora, in Lincoln County, is not included in this contract.

It is agreed and understood that this contract does not include any point that is within fifty (50) miles, air line, of Nashville or Chattanooga, Tenn., nor any point along the main line of the N.C. & St.L.Ry. from Wartrace, Tenn. to Estill Springs, Tenn., nor any point in Franklin County, Tenn., on or within six miles of that section of the N.C. & St.L.Ry. extending south from Belvidere, Tenn. to where it crosses the Lincoln County east boundary line.

AND ALSO

“Territory in Franklin County, Tennessee, lying along and within six (6) miles of the line of railroad running from Belvidere, Tenn., to the Lincoln County east boundary line,, but not including any point in Franklin County, Tenn., that may be within fifty (50) miles, air line, of Chattanooga, Tennessee, or any point on the N.C. & St.L.Ry. running from Wartrace, Tennessee, to Estill Springs, Tenn. The town of Elora, in Lincoln County, Tennessee is included in this contract.”

“Beginning at a point in Franklin County, Tennessee, in the arc formed by a fifty (50) mile radius drawn from Chattanooga, Tennessee, which point is one mile air line, southwardly of the point where State Highway No. 130 intersects said arc. Thence along a meandering line running in a northwestwardly direction, following and parallel to the route of State Highway No. 130 but one mile to the south and west thereof until said meandering line intersects the Franklin-Moore County boundary line. Thence with the Moore-Franklin County line in a northwestwardly direction to the common intersection of the Moore, Franklin and Coffee County boundary line, thence northwestwardly with the Moore-Coffee County line to the Cumberland Springs Road; thence northwestwardly along the Cumberland Springs Road to its intersection with Old State Highway No 55. Thence northeastwardly along Old State Highway No. 55 to its intersection with State Highway No. 130. Thence continuing on Old State Highway No. 55 eastwardly for approximately one-fourth mile to the intersection of Old State Highway No. 55 and the Moore-Coffee County line as it existed in 1930. Thence northeastwardly with the said previous Moore-Coffee County line to a point on said line one mile southwestwardly from the N. C. & St. L. Ry. that runs from Wartrace to Estill Springs; thence in a northwestwardly direction along a line that is one mile southwestwardly from and parallel to this railroad to a point where said line intersects U. S. Highway No. 41A; thence northwestwardly along U. S. Highway No. 41A to the Moore-Bedford County line, and thence eastwardly with the Moore-Bedford County line to the common intersection of the Moore, Bedford and Coffee County lines, thence northwardly with the Coffee-Bedford County line to its intersection with the line of N. C. & St. L. Ry. , last above-mentioned, thence southeastwardly with said line of Ry. to the point where the same intersects the above-mentioned arc of a fifty (50) mile radius from Chattanooga, Tenn., thence counter-clockwise along said arc to the point of beginning.

Exhibit C-1 – page 39

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The foregoing is shown outlined by hatched lines on the attached map which is hereby made a part of this contract.

It is understood that both sides of that part of Cumberland Springs Road referred to above are to be and remain in the territory of Coca-Cola Bottling Works of Tullahoma, Inc., Tullahoma, Tennessee, and that both sides of that part of Old Highway No. 55 referred to above are to be and remain in the territory of Party of the First Part.”

AND ADDING THE FOLLOWING:

“That part of Belvidere, Tennessee in Franklin County that is within fifty (50) miles of Chattanooga, Tennessee.”

 

 

 

Exhibit C-1 – page 40

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SCHEDULE D

Territories

The geographic areas described below define the Territory subject to the terms and conditions of the Agreement.

IN THE STATE OF TENNESSEE:

In the City of Murfreesboro, Tennessee and at all other points in Rutherford County, Tennessee, except Lavergne; all points in Cannon County, Tennessee, and all points in Coffee County, Tennessee that are within fifty (50) miles of Nashville, Tennessee. Including Beech Grove, in Coffee County, and the town of Rover in Bedford County.

 

 

Exhibit C-1 – page 41

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E. Virginia Woodlee

Assistant Secretary

Manager, Contracts Administration

Contractual Affairs Department

 

Coca-Cola USA

Division of

The Coca Cola Company

April 17, 1989

Mr. Marion Red

Coca-Cola Bottling Company of Nashville, Inc.

P. O. Box 40818

Nashville, Tennessee 37204

Dear Mr. Red:

It is our understanding that you wish to surrender the bottling rights to a portion of the territory covered under the Master Bottle Contract, dated January 27, 1989, and the respective Allied Bottle Contracts held by Coca-Cola Bottling Company of Nashville, Inc. for the Nashville, Tennessee territory, said portion being described in Exhibit A attached hereto and made a part hereof (the “Territory”) and commonly referred to as the Murfreesboro territory, upon the condition that a Master Bottle Contract and Allied Bottle Contracts for the Territory be issued to Coca-Cola Bottling Works of Murfreesboro, Tenn.

Please confirm by signing both copies of this letter that this is your desire and that you have appropriate corporate authority to effect this change in your contractual status. Send one signed copy of this letter to the Contractual Affairs Department, Coca-Cola USA.

Sincerely,

THE COCA-COLA COMPANY

Coca-Cola USA Division

/s/ E. Virginia Woodlee

E. Virginia Woodlee

Assistant Secretary

Accepted and agreed to this 24

day of April, 1989.

COCA-COLA BOTTLING COMPANY OF

NASHVILLE, INC.

 

By: /s/ [Authorized Signatory]

Title:  President

 

P.O. Drawer 1734

Atlanta, GA 30301

404 676-2435

 

Exhibit C-1 – page 42

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EXHIBIT A

Territories

The geographic areas described below define the Territory subject to the terms and conditions of the Agreement.

IN THE STATE OF TENNESSEE:

In the City of Murfreesboro, Tennessee and at all other points in Rutherford County, Tennessee, except Lavergne; all points in Cannon County, Tennessee, and all points in Coffee County, Tennessee that are within fifty (50) miles of Nashville, Tennessee. Including Beech Grove, in Coffee County, and the town of Rover in Bedford County.

 

 

 

Exhibit C-1 – page 43

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SCHEDULE D

Territories

The geographic areas described below define the Territory subject to the terms and conditions of the Agreement.

(Contract - November 1, 1921)

In the City of Nashville, Tennessee, and all the territory within fifty miles of said City of Nashville, Tenn., including the town of Smithville; with the following exceptions, to wit; - points in Dickson County lying south of a line drawn due east and west through the center of the City of Nashville, Tenn.; all points in Williamson and Hickman Counties south of a line drawn due east and west through a point one mile south of Franklin, Tenn.; all points in Hickman County lying west of a line drawn one mile east of and parallel with the line of railroad running from Colesburg, Tenn., to Allens Creek, Tenn.; all points in Marshall County south of a line drawn due east and west across said county through a point one half mile south of the town of Chappel Hill, Tenn.

Added November 1, 1929

“In the City of Clarksville, Tenn., and at all points lying north of a line drawn due east and west, and west of a line drawn due north and south through the City of Nashville, Tenn., that are not less than thirty five (35) miles nor more than fifty miles from the City of Nashville, Tenn., and at all such other territory as may be within fifty (50) miles of the City of Clarksville, Tenn., lying north of said line drawn due east and west, through the City of Nashville, lying in the following counties, namely: Montgomery, Stewart, Houston, Benton, Dickson and Humphreys, Tenn.; all of Todd County, Ky., that part of Logan County, Ky., within fifty miles of Nashville, Tenn., that lies west of a line drawn due north and south through the City of Nashville, and all other points in Logan County, Ky., that are more than fifty miles from Nashville, Tenn., that part of Christian County, Ky., lying east of a line drawn from a point five miles east of Mannington direct to a point five mile east of Hopkinsville, thence to a point one mile southeast of Tulane, thence to a point one mile southeast of Howell, thence direct south to the Tennessee State line.

This contract shall not include any point that is within fifty miles of Jackson, Tenn., nor any point within fifty miles of Nashville, Tenn., not specifically included in the above description. Such territory as may be within fifty miles of Paducah, Ky., in the State of Tennessee, and such territory in the State of Kentucky within sixty five miles of Paducah, Ky., is specifically excepted from this contract, also the territory lying along the two branches of the L. & N. Ry., entering Bowling Green, Ky., between the outside limits of the present territory of the Coca-Cola Bottling Works of Nashville, Tenn., and the City of Bowling Green, Ky.”

Added June 1, 1955

“That part of DeKalb County that is more than fifty miles from Nashville, and within the following described lines; along a line drawn from the 50 mile radius of Nashville through Temperance Hall and Buckner. Temperance Hall is included in this contract but Buckner is specifically excluded. Thence west of but not including stops on highway 56 that runs from Buckner to Smithville to the corporate limits of Smithville as they existed in 1921, thence clockwise around the corporate limits of Smithville as they existed in 1921 to the points of intersection of these corporate limits with Highway 26 that runs from Smithville to Dowelltown, thence due south one mile, thence westwardly along a line drawn one mile south of and parallel to Highway 26 to its intersection with a 50 mile radius from Nashville.”

Exhibit C-1 – page 44

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Deleted July 5, 1955

“In the City of Clarksville, Tennessee, and all points in the County of Montgomery, Tennessee, except such points as are within thirty-five (35) miles of Nashville, Tennessee; all of Stewart County, except points within fifty miles of Paducah, Kentucky; all of Houston County, Tennessee; all points in Benton, Humphreys and Dickson Counties lying north of a line drawn due east and west through the City of Nashville, Tennessee, except such points in Dickson County that are within thirty-five (35) miles of the City of Nashville, Tennessee; also points in Robertson County, Tennessee, that are more than thirty-five (35) miles from the City of Nashville, Tennessee.

This contract shall not include any point that is within fifty (50) miles of Jackson, Tennessee, nor any point within thirty-five (35) miles of Nashville, Tennessee. Such territory as may be within fifty miles of Paducah, Kentucky, in the State of Tennessee, is also specifically excepted from this contract.”

Deleted May 21, 1956

In the City of Russellville, Ky., and at all points in Logan County, Ky., except such points in Logan County, Ky. that are within fifty miles of Nashville, Tenn. and that lie east of a line drawn due north and south through the City of Nashville, Tenn.

All points in Todd County, Ky.

That part of Christian County, Ky. lying east of a line drawn from a point five miles east of Mannington direct to a point five miles east of Hopkinsville, thence to a point one mile southeast of Tulane, thence to a point one mile southeast of Howell, thence direct south to the Tennessee State Line.

Deleted June 1, 1956

In the City of Shelbyville, Tennessee, and at all points in Bedford County, Tennessee, that are within fifty (50) miles of Nashville, Tennessee, - it being understood and agreed that the towns of Rover, in Bedford County, and Beech Grove, in Coffee County, are not included.

 

 

Exhibit C-1 – page 45

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NOTE TO FILE (NASHVILLE, TN):

See territory sale/transfer in Asset Purchase/Exchange Agreement among The Coca-Cola Company, Coca-Cola Refreshments USA, Inc. and Coca-Cola Bottling Co. Consolidated, constituting surrender of the following territory from the Nashville, TN Master Bottle Contract and amendment of its Schedule D, effective May 2, 2015:

In the State of Tennessee:

The City of Paris and all points in Henry County; Also, all points In Benton County lying north of a line drawn due east and west through the City of Nashville.

Exhibit C-1 – page 46

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SCHEDULE D

Territories

The geographic areas described below define the Territory subject to the terms and conditions of the Agreement.

All points in Smyth and Washington Counties, Virginia.

Lee County, Virginia:  At all points in Lee County, Virginia including the town of Blackwater, Virginia, that are within 50 miles airline distance of Bristol, Virginia, and south of Wallens Creek.

Scott County, Virginia:  All points in Scott County, Virginia, except all points on the Carolina, Clinchfield and Ohio Railroad from a point one mile west of Fort Blackmore to the west boundary line of Russell County, Virginia.

Russell County, Virginia:  At all points in Russell County, Virginia south of a line drawn from a point on the Russell County line five miles south of and paralleling the line of the N. & W. Railroad to a point five miles south of the N. & W. Railroad on the west boundary line of Tazewell County.  It is specifically agreed and understood that all points along and on State Highway 64 and U. S. Highway 19, from its junction with State Highway 71, to the vest boundary of Tazewell County, Virginia, is included in this territory.  It is further understood and agreed that Lebanon is in this territory.

Bland County, Virginia:  At all points in Bland County, Virginia south and east of a line drawn in a north and westwardly direction from the point where State Highway 623 intersects the boundary line between Bland and Tazewell Counties through a point 11 miles north of the town of Bland, thence in a straight line to a point on the boundary line between Bland and Giles Counties, Virginia.

Wythe County, Virginia:  All territory in Wythe County west and north of a line drawn across Wythe County from a point one mile west of Kent to a point one mile west of Speedwell, Virginia.

Grayson County, Virginia:  All points in Grayson County, Virginia that are within 50 miles airline distance of the center of the city of Bristol, Virginia.

It is specifically understood and agreed that no point in the State of North Carolina is included in this agreement.

All points in Johnson County, Tennessee.

Carter County, Tennessee: All points in Carter County, Tennessee lying east of a straight line drawn in a northwestwardly direction, from a point on the North Carolina state line at the junction of the southeast corner of Unicoi County, Tennessee, and the southwest corner of Carter County, Tennessee, to a point on the present south corporate limits of Elizabethton, Tennessee, where Holly Lane Street, if extended, would cross the present southern boundary limits of Elizabethton, Tennessee, thence following Holly Lane Street north through the City of Elizabethton to the present northern city limits of Elizabethton, thence to a point on Holly Lane Street if extended, one mile north of the Watauga River; thence with the meanderings and a a distance at all times of

Exhibit C-1 – page 47

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one mile from the Watauga River to a point at the junction of Washington. Sullivan, and Carter Counties, Tennessee.  It is also specifically understood and agreed that all points north and east of the line running from the point one mile north of the Watauga River on Holly Lane Street if extended, and following the meanderings of the River at one mile to a point at the junction of Washington, Sullivan, and. Carter Counties, Tennessee, is specifically understood and agreed that both sides of Holly Lane Street are in Bristol, Virginia territory.

Sullivan County, Tennessee:  Bristol, Tennessee and all points in Sullivan County, Tennessee, east and north of a line drawn in a north-westwardly direction from the junction of the Watauga and the South Fork Holston River on the Washington and Sullivan Counties, Tennessee lines, to the intersection of Bluff and Fuller Streets in the Highland Park suburb of Kingsport, Tennessee, thence west on Bluff Street to the present eastern corporate limit of Kingsport, Tennessee, thence north on the present eastern corporate limits of Kingsport, Tennessee, to the intersection of the present north corporate limits of Kingsport, Tennessee, thence following the present north corporate limits of the City of Kingsport, Tennessee to the intersection of the north and west present corporate limits of the present corporate limits of Kingsport, Tennessee, thence due west in a straight line to the North Fork Holston River.  It is also specifically understood and agreed that both sides of Bluff Street are not in Bristol, Virginia territory.  It is further understood and agreed that both sides of Fuller Street, and all points in Sullivan County, Tennessee within two miles of the Tri-City Airport (airport close to Kingsport) are expressly included in Bristol, Virginia territory.

 

 

Exhibit C-1 – page 48

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Lynchburg, VA

SCHEDULE D

Territories

The geographic areas described below define the Territory subject to the terms and conditions of the Agreement.

IN THE STATE OF VIRGINIA:

In the City of LYNCHBURG, VA, also at FARMVILLE, VA, and the following territory within fifty miles of the said City of Lynchburg, VA, to wit:

The territory lying north of a straight line drawn due east and west through the town of Rustburg, VA and south of a direct line drawn from a point one mile north of the present City limits of Howardsville in Albemarle County, thence to a point on Highway 56, one and one-half miles north of present city limits of Shipman, thence to a point one mile south of Parr, thence direct west to a point on the fifty mile radius line drawn with Roanoke as the center. Also, south of a direct east and west line drawn from said point one mile north of the present City limits of Howardsville through and in Buckingham County to Shores (in Fluvanna County), except such territory as may be within fifty-one (51) miles of either Richmond, VA or Roanoke, VA, or within twenty-five (25) miles of Clifton Forge, VA. Also, in all the territory within fifty miles of Roanoke, VA lying east of the western boundary line of Campbell County; also all points within fifty miles of Roanoke, VA lying northeast of a line drawn from and including the towns of Sedalia, Charlemont, Perrowville, to but not including the town of Forest Depot, thence to the Campbell County line. Also, all points in Campbell County, VA; also all points in Prince Edwards County, except Briery, that are not within fifty-one (51) miles of the City of Richmond, VA.

It is agreed and understood that this contract does not include any points south of the Staunton River, nor any point within fifty-one (51) miles of Richmond, VA, twenty-five miles of Clifton Forge, VA, or within fifty (50) miles of Roanoke, VA not specifically included in the above description, and, further, does not include any point in Charlotte County, VA.

 

 

Exhibit C-1 – page 49

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SCHEDULE D

Territories

The geographic areas described below define the Territory subject to the terms and conditions of the Agreement.

Virginia Territory:

‘In the City of Norton, Virginia.  All points in Wise, Dickenson and Buchanan Counties, Virginia. Points in Lee County, Virginia, lying East of a direct line drawn from a point one mile East of the center of the Town of St. Charles; thence to a point one mile East of the center of the Town of Pennington Gap; thence direct South to the North bank of Wallen Creek, - said territory in Lee County being that lying North of Wallen Creek and East of the line set out above.

Points in Scott County, Virginia, on and along the line of the Carolina, Clinchfield & Ohio Railway from a point one mile West of, and including, the Town of Fort Blackmore, in a Northeasterly direction to the Russell County West Boundary Line.

Points in Russell County, Virginia, lying North of a line drawn five miles South of and paralleling the line of the N. & W. Ry., but not including any point in said county that may be on State Highway No. 64 and U. S. Highway No. 19 from their junction with Highway No. 71, - specifically excluding the Town of Lebanon, Virginia, and not including any point in Tazewell County, Virginia.”

Kentucky Territory:

“In the City of Hazard, Kentucky, and in all the territory within the boundaries of Letcher, Perry and Knott Counties, Kentucky, except such territory as may be within fifty (50) miles of either Middlesboro, Kentucky, Winchester, Kentucky, or Bristol, Virginia.”

 

 

Exhibit C-1 – page 50

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Mr. Umesh Kasbekar

Coca-Cola Bottling Co. Consolidated

P. 0. Box 31487

Charlotte, NC 28231

Dear Umesh:

Further to our discussions about the St. Paul, VA territory, I am, asking you to sign below indicating your desire and agreement to surrender all of the former St. Paul bottling documents so that the St. Paul territory automatically reverts to its First Line, ROBC, INC., Norton.  I ask that you sign on behalf of both the First Line, ROBC, INC., for the acceptance of the surrender of the Sub-Bottler Bottle Contract, and on behalf of the Sub-Bottler itself for the surrender of the Sub-Bottler Bottle Contract and the agreements for our other Company beverages.

It is my understanding from conversations with Mark that ROBC, INC. will have a sub-licensing arrangement with St. Paul Coca-Cola Bottling Company, Incorporated for the St. Paul territory for a finite period of time at the end of which Coca-Cola Bottling Company of Roanoke, Inc. will become the sub-licensee.  Please let me know if I am mistaken about that.  Otherwise, I will await documentation from you effecting that arrangement. At any rate, Norton will be one territory only, and it will include the former St. Paul territory.

Please retain one copy for your records and return one signed copy to me.

Thank you for your help.

Sincerely,

 

/s/ E. Virginia Woodlee

 

E. Virginia Woodlee

Manager, U. S. Bottler Contracts

EVW/smj

(Signature lines on attached page.)

Exhibit C-1 – page 51

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Mr. Umesh Kasbekar

June 30, 1998

Page 2

 

Agreed to as of June 12, 1998

By: /s/ Umesh Kasbekar                           

 

ST. PAUL COCA-COLA BOTTLING
COMPANY, INCORPORATED

Agreed to as of June 12, 1998

By: /s/ Umesh Kasbekar                           

ROBC, INC.

 

 

Exhibit C-1 – page 52

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ROBC, Inc.

200 W. 9^th Street Plaza

Suite 209

Wilmington, DE 19801

Gentlemen:

Your Company currently holds the Master Bottle Contract, dated January 27, 1989, as amended, and the respective Allied Bottle Contracts for the Norton, Virginia territory. Portions of the Norton, Virginia territory located in the Commonwealth of Kentucky were sold to Coca-Cola Enterprises Inc. under the Franchise Acquisition Agreement dated September 29, 2000 by and among WVBC, Inc., a Delaware corporation, ROBC, Inc., a Delaware corporation, and Coca-Cola Enterprises Inc., a Delaware corporation.

It is our understanding that you wish to surrender the bottling rights to the Kentucky portion of the territory covered by the above referenced Bottle Contracts.  Therefore, effective September 29, 2000, the territory descriptions on Schedule ID of the above referenced Bottle Contracts will be amended as reflected on Exhibit A attached hereto and made part hereof (such surrendered Kentucky portion of such territory being referred to as the “Territory”), upon the condition that the Territory be added to Schedule D of the Master Bottle Contract and Allied Bottle Contracts held by Coca-Cola Enterprises Inc.

Please confirm by signing both copies of this letter that this is your desire and that you have appropriate corporate authority to effect this change in your contractual status, and return one signed copy of this letter to us.

Sincerely,

 

/s/ W. Thomas Haynes

 

 

Accepted and agreed to:

ROBC, Inc

By: /s/ Umesh Kasbekar                        

Title: Vice President

Exhibit C-1 – page 53

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Exhibit A to the Letter Agreement dated September 29, 2000

SCHEDULE D

Territories

The geographic areas described below define the Territory subject to the terms and conditions of this Agreement.

Virginia Territory:

“In the City of Norton, Virginia. All points in Wise, Dickenson and Buchanan Counties, Virginia.  Points in Lee County, Virginia, lying East of a direct line drawn from a point one mile East of the center of the Town of St. Charles; thence to a point one mile East of the center of the Town of Pennington Gap; thence direct South to the North bank of Wallen Creek, - said territory in Lee County being that lying North of Wallen Creek and East of the line set out above.

Points in Scott County, Virginia, on and along the line of the Carolina, Clinchfield & Ohio Railway from a point one mile West of, and including, the Town of Fort Blackmore, in a Northeasterly direction to the Russell County West Boundary Line.

Points in Russell County, Virginia, lying North of a line drawn five miles South of and paralleling the line of the N. & W. Ry., but not including any point in said county that may be on State Highway No. 64 and U. S. Highway No. 19 from their junction with Highway No. 71, - specifically excluding the Town of Lebanon, Virginia, and not including any point in Tazewell County, Virginia.”

Kentucky Territory:

“In the City of Hazard, Kentucky, and in all the territory within the boundaries of Letcher, Perry and Knott Counties, Kentucky, except such territory as may be within fifty (50) miles of either Middlesboro, Kentucky, Winchester, Kentucky, or Bristol, Virginia.”

Excluded from the above territory by amendment dated September 29, 2000:

All of the licensed bottling territory within the Commonwealth of Kentucky, being included in the description above.

As further clarification, the boundary of the licensed bottling territory will follow the Kentucky state line as it borders the State of Virginia.

 

 

Exhibit C-1 – page 54

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SCHEDULE D

Territories

The geographic areas described below define the Territory subject to the terms and conditions of this Agreement.

“In the City of Roanoke, Va., also Pulaski, Va., and in all the territory in the State of Virginia within a radius of fifty miles of Roanoke, except the territory within a radius of twenty five miles of Clifton Forge, Va., lying north of a straight line drawn direct from the town of Newcastle to a point one half mile north of the town of Alpine, but the towns of Rapps Mill, Natural Bridge Station and Natural Bridge Post Office, in Rockbridge County shall be included in this contract, all other points in Rockbridge County being specifically excluded herefrom.  The following territory is also excepted, namely; that territory within fifty miles of Roanoke that is in Campbell County and Amherst County, also that part of Bedford County lying northeast of a direct line drawn through a point one half mile south of the towns of Sedalia, Charlemont and Perrowville, thence to a point one half mile east of Forest Depot, thence to the Campbell County line; except also all points in Pittsylvania County lying along and east of the line of railroad running from Danville, Va., through Gretna to Lynchburg; except also, all points on the line of railroad running from Stuart, Va. to Danville, Va., that are more than fifty miles from Roanoke.

This contract shall also include all territory in the counties of Carroll and Grayson that is not within fifty miles of Bristol, Va.

It is agreed that all territory in Mercer County, West Va., and in Tazewell County, Virginia, is specifically excluded from territory to be operated or controlled by the Roanoke Coca-Cola Bottling Works,

All territory in Wythe County, Virginia, south and east of a direct line drawn from a point one mile west of Kent to a point one mile west of Speedwell, is also included in this contract.”

AND, WHEREAS, Said Contract of November 1, 1921, was amended on January 2, 1939, to add the following territory:

“All points in Henry and Patrick Counties, Virginia, not already covered by contract of November 1, 1921.”

continued...

Exhibit C-1 – page 55

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“Those parts of Pulaski County and Giles County, Virginia, which are more than 50 miles from Roanoke.”

“In the State of Virginia:  That portion of territory lying within the following described boundaries, to-wit:  Beginning at a point on the dividing line between West Virginia and Craig County, Virginia that is one mile due north of the 37° and 30’ latitudinal line, thence along a line drawn in an easterly direction and parallel to this 37° and 30’ latitudinal line to a point one mile west of a point due north of the town of New Castle;  thence in a straight line southeast to a point two and one-half miles due south of the town of New Castle;  thence northeast in a straight line to a point three-fourths of a mile due north of the Natural Bridge of Virginia.  Thence, in a straight line to a point one mile due east of the Natural Bridge of Virginia;  thence in a straight line to the point at which the James River flows into Rockbridge County from Botetourt County.  Thence, southeastwardly along the dividing line between Botetourt and Rockbridge Counties to the intersection of Botetourt, Rockbridge and Bedford Counties.  Thence, southeastwardly in a straight line drawn through a point one-half mile due north of the town of Forest to the dividing line between Bedford and Campbell Counties but specifically excluding the towns of Sedalia, Perrowsville, and Charlemont.  Thence, in a southwestwardly direction along the dividing line between Bedford and Campbell Counties to the intersection of Bedford, Campbell and Pittsylvania Counties.  Thence, along the dividing line between Campbell and Pittsylvania Counties to a point one mile west of the Southern Railway running from Danville to Lynchburg.  Then in a southerly direction along a line, which at each point shall be one mile due west of a corresponding point on said Southern Railway to a point where this line intersects a 50 mile radius drawn with Roanoke, Virginia, as the center.  Thence, along the arc of a circle with this same radius and center in a clockwise direction to its intersection with the dividing line between Henry and Pittsylvania Counties.  Thence, southwardly along the dividing line between Henry and Pittsylvania Counties to its intersection with the North Carolina State line.  Thence west along the southern boundaries of Henry, Patrick and Carroll Counties to the intersection of the Carroll and Grayson County lines, thence, along the southern boundary of Grayson County to its intersection with a 50 mile radius drawn with Bristol, Virginia as the center.  Thence, along the arc of a circle with this same radius and center in a counter-clockwise direction to its intersection with the dividing line between Grayson and Smyth Counties.  Thence, in a northeasterly direction along the dividing line between Grayson and Smyth Counties to the intersection of Grayson and Wythe and Smyth Counties.  Thence, in a northeasterly direction to a point one mile west of Speedwell, thence in a northeasterly direction to a point one mile west of Kent;  thence, northeasterly to the intersection of Wythe, Bland and Pulaski Counties.  Thence, in a northerly and easterly direction along the dividing line between Bland and Pulaski Counties to the intersection of Bland, Pulaski and Giles Counties.  Thence, northwestwardly along the dividing line between Bland and Giles Counties to the West Virginia State line.  Thence, northeastwardly along the Virginia-West Virginia State line to the point of beginning.”

continued...

Exhibit C-1 – page 56

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“In the State of Virginia, the cities of Clifton Forge, Covington, Buena Vista, and Lexington and all points in Bath, Allegheny, Craig, Botetourt,  and Rockbridge Counties that are located within the following described line:

Beginning at a point on the dividing line between West Virginia and Craig County, Virginia that is one mile due north of the 37° and 30’ latitudinal line, thence along a line drawn in an easterly direction and parallel to this 37° and 30’ latitudinal line to a point one mile west of a point due north of the town of New Castle;  thence in a straight line southeast to a point two and one-half miles due south of the Town of New Castle;  thence northeast in a straight line to a point three-fourths of a mile due north of the Natural Bridge of Virginia.  Thence, in a straight line to a point one mile due east of the Natural Bridge of Virginia;  thence in a straight line to the point at which the James River flows into Rockbridge County from Botetourt County.  Thence southeastwardly along the dividing line between Botetourt and Rockbridge Counties to the intersection of Botetourt Rockbridge and Bedford Counties.  Thence starting again at the original beginning point;  thence northerly along the western boundary line of Craig, Allegheny and Bath Counties to the intersection of Bath and Highland Counties;  thence eastwardly along the Bath-Highland County boundary line to the Augusta-Bath County line;  thence southwardly along said line to the Rockbridge-Bath County lines.  Then leaving the Augusta County line in a southwesterly direction along the Rockbridge-Bath County line approximately one and seven-eights miles to a point on said boundary line;  (thence, extending in a straight line through part of said Rockbridge County in a southeasterly direction, passing through a point in the center line of Virginia State Highway No. 42, as it existed in September, 1957, one-half mile southeast of the center of the town of Bells Valley, Virginia, and ending at a point in the center of U. S. Highway No. 11, as it existed in September, 1957, one-half mile southwest of the center of the town of Fairfield, Virginia;  thence extending in another straight line in a more southerly direction,  through the remainder of Rockbridge County, Virginia, passing through a point in the center line of Virginia State Highway No. 608, as it existed in September, 1957, one-half mile northeast of the center of the town of Midvale, Virginia;  and continuing to the boundary line between Rockbridge and Amherst Counties, Virginia);  thence southwardly along said boundary line to the intersection of Botetourt, Rockbridge, and Bedford Counties.”

 

 

Exhibit C-1 – page 57

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Coca-Cola Bottling Co. Consolidated

P. O. Box 31487

Charlotte, North Carolina 28231

Gentlemen:

It is our understanding that you wish to surrender the bottling rights to a portion of the territory covered under the Master Bottle Contract, dated January 27, 1989, and the respective Allied Bottle Contracts held by Coca-Cola Bottling Co. Consolidated for the Charlotte, North Carolina territory, said portion being described in Exhibit A attached hereto and made a part hereof (the “Territory”), upon the condition that the Territory be added to Schedule D of the Master Bottler Contract and Allied Bottle Contracts held by Coca-Cola Bottling Company of Roanoke, Inc. for the Roanoke, Virginia territory.

Please confirm by signing both copies of this letter that this is your desire and that you have appropriate corporate authority to effect this change in your contractual status, and return one signed copy of this letter to me.

Sincerely,

 

/s/ E. Virginia Woodlee

 

E. Virginia Woodlee

Manager, Domestic Bottler Contracts

Accepted and agreed to this 22

day of November, 1993.

COCA-COLA BOTTLING CO.

CONSOLIDATED

By: /s/ Umesh Kasbekar

Title: Vice President

EVW/smj

 

Exhibit C-1 – page 58

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Exhibit A

Territories

The geographic areas described below define the Territory subject to the terms and conditions of the Agreement.

IN THE STATE OF VIRGINIA:

(Danville, Virginia territory -- Contract dated April 1, 1974)

“In the Cities of Danville, South Boston, Chase City, Va., and Leaksville, N. C., and the following territory in the State of Virginia, to wit:

That part of Pittsylvania County, Virginia, that is colored green and lies East of the line indicated on the map attached to contract dated April 1, 1974, marked “Schedule A” and made a part thereof; all points on the line of railroad running from, and including, the towns of Boydton and Keysville to Danville; at all points on the Norfolk & Western Ry. from South Boston, Va., to the south side of the Staunton River; all points in Charolotte County, Va.; the town of Biery in Prince Edwards County, and all other territory in the State of Virginia within fifty (50) miles of the City of Danville, Va., except all such other territory within fifty miles of Roanoke, Va., not specifically included in the above description.  All points within fifty one (51) miles of Richmond, Va., are specifically excluded from this contract.

The following territory in the State of North Carolina is included in this contract, to wit:

Those points in the State of North Carolina lying north of a direct line beginning at a point one mile south of Price; thence in a southeastwardly direction to a point one mile south of Leaksville; thence to a point one mile south of Ruffin; thence southeastwardly to a point one mile south of Blackswell in Caswell County; thence to a point one mile south of Yanceyville (but it is understood that N. W. Miles Store, in Caswell County is not included in this contract); thence to a point one mile south of Leasburg; thence north along the Caswell-Person County line to a point one mile south of the Southern Railway (Atlantic & Danville Division) at Semora; thence parallel to and one mile south of this railroad in a northeastwardly direction to the northern boundary of Person County; thence along this county line to the Person-Granville County line; thence south along this line to a point one mile south of Holloway Mines, N. C.; thence northeastwardly to the northeast corner of Granville County. This contract does not include any point that is within 100 miles of Charlotte, N. C.”

Exhibit C-1 – page 59

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SUB-BOTTLERS CONTRACT

THIS AGREEMENT, Made and entered into, on the     30^th       of      April                       1942 by and between            Coca-Cola Bottling Company of Norton, Inc.,         a           Corporation organized and existing under the laws of the State of               Virginia            , having             its principal office, however, in the City of                Norton, Virginia                 , as party of the first part, and    St. Paul Bottling Company, Inc.,                                                                                   a

          corporation               of the State of                  Virginia             County of        Wise       and City of     St. Paul                                                 as party of the second part:

WITNESSETH

That Whereas, party of the first part has received from the Coca-Cola Bottling Co. (Thomas), Inc., of Chattanooga, Tennessee, certain rights and privileges in regard to the bottling and selling of bottled Coca-Cola; and

Whereas, party of the first part wishes to assign to party of the second part, on the conditions hereinafter stated, the rights that it has received from the Coca-Cola Bottling Co. (Thomas), Inc., of Chattanooga, Tennessee, limited, however, to the following described territory, to-wit:

In the City of St. Paul, Virginia; all points along and on the line of the N. & W. Ry, from St. Paul to the western boundary line of Tazewell County, and including all that part of Russell County, Virginia, lying north of a line drawn five miles south of and paralleling the line of the N. & W. Ry., but not including any point in said county that may be on state Highway No.64 and U. S. Highway No.19 from their junction with Highway No. 71, specifically excluding the town of Lebanon, VA., and not including any point in Tazewell County, Va.

Including all points on the C. C. & O.R.R., from a point one mile west of, and including the town of Fort Blackmore, in a northeasterly direction to the Russell County west boundary line.

Also, all points along and within two miles, on either side, of the C. C. & O.R.R., from St. Paul to the Virginia-Kentucky State line.

All errors and conflicts in and between the lines of the territory above described and those of adjacent bottlers shall be submitted to and fixed by the Coca-Cola Bottling Co. (Thomas), Inc., of Chattanooga, Tennessee, if not adjusted by the parties concerned.

And Whereas, party of the second part is desirous of obtaining the right to bottle Coca-Cola in the territory hereinbefore described:

Now, Therefore, For and in consideration of mutual benefits and promises from one to the other, and other valuable consideration, the receipt of which is hereby acknowledged, It is Agreed:

FIRST: That the party of the first part hereby assigns to the party of the second part the sole and exclusive right and license that it received from the Coca-Cola Bottling Co. (Thomas), Inc., of Chattanooga, Tennessee, to use and vend on bottled Coca-Cola the trade-mark name Coca-Cola, and all labels and designs pertaining thereto, in connection with the product “Bottled Coca-Cola” in the territory hereinbefore described, and party of the first part agrees not to assign or transfer the right of usage of said name in said territory to any other party whatsoever; and said party of the first part agrees to obtain and

Exhibit C-1 – page 60

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furnish to party of the second part, and only to obtain, for the territory herein referred to, sufficient syrup for bottling purposes to meet the requirements of party of the second part in the territory herein described, provided party of the first part can obtain the delivery to it of such syrup from the Coca-Cola Bottling Co. (Thomas), Inc., of Chattanooga, Tennessee, under the contract existing between party of the first part and said the Coca-Cola Bottling Co. (Thomas), Inc., of Chattanooga, Tennessee.  Nothing herein, however, shall give party of the second part any interest in the name Coca-Cola, labels, etc., except the right of usage in connection with Bottled Coca-Cola, nor shall this contract in any way interfere with the use of said name Coca-Cola, labels, etc., in connection with the fountain product of The Coca-Cola Company, it being understood and agreed that the use herewith given shall be confined to the bottled product; the names, labels, etc., in connection with the fountain product having been reserved by The Coca-Cola Company.

 

 

Exhibit C-1 – page 61

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Mr. Umesh Kasbekar

Coca-Cola Bottling Co. Consolidated

P. 0. Box 31487

Charlotte, NC 28231

Dear Umesh:

Further to our discussions about the St. Paul, VA territory, I am, asking you to sign below indicating your desire and agreement to surrender all of the former St. Paul bottling documents so that the St. Paul territory automatically reverts to its First Line, ROBC, INC., Norton.  I ask that you sign on behalf of both the First Line, ROBC, INC., for the acceptance of the surrender of the Sub-Bottler Bottle Contract, and on behalf of the Sub-Bottler itself for the surrender of the Sub-Bottler Bottle Contract and the agreements for our other Company beverages.

It is my understanding from conversations with Mark that ROBC, INC. will have a sub-licensing arrangement with St. Paul Coca-Cola Bottling Company, Incorporated for the St. Paul territory for a finite period of time at the end of which Coca-Cola Bottling Company of Roanoke, Inc. will become the sub-licensee.  Please let me know if I am mistaken about that.  Otherwise, I will await documentation from you effecting that arrangement. At any rate, Norton will be one territory only, and it will include the former St. Paul territory.

Please retain one copy for your records and return one signed copy to me.

Thank you for your help.

Sincerely,

 

/s/ E. Virginia Woodlee

 

E. Virginia Woodlee

Manager, U. S. Bottler Contracts

 

EVW/smj

(Signature lines on attached page.)

Exhibit C-1 – page 62

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Mr. Umesh Kasbekar

June 30, 1998

Page 2

Agreed to as of June 12, 1998

By: /s/ Umesh Kasbekar

ST. PAUL COCA-COLA BOTTLING
COMPANY, INCORPORATED

Agreed to as of June 12, 1998

By: /s/ Umesh Kasbekar

ROBC, INC.

 

Exhibit C-1 – page 63

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SCHEDULE D

Territories

The geographic areas described below define the Territory subject to the terms and conditions of the Agreement.

“In the City of Beckley or Mabscot, W. Va., also, Mullens, W. Va., and in all the territory within an air line radius of twenty (20) miles from said City of Beckley, W. Va., except points in Mercer County, W. Va., and except all points north and east of the main line of the C. & O. Ry. beginning at, but not including, Glade to a point where a twenty (20) mile air line radius line drawn with Beckley as the center crosses the Greenbrier river; except also all points on Paint Creek from Hickory Camp to Kingston both inclusive and all points on Cabin Creek.  This contract shall include points on the C & O Ry. from and including Kaymoor to Keeney Creek station and all points on the Keeney Creek branch of the C. & O. Ry., to the Fayette County east line.  All points in Wyoming County, W. Va., are also included in this contract.”

“All points in Greenbrier County, Pocahontas County, and Monroe County, West Virginia.

That part of Summers County not within twenty (20) miles of Beckley, thus giving to Beckley, all of Summers County, West Virginia.

That territory within twenty (20) miles of Beckley, West Virginia, on and along the line of the C & O Railroad, where said railroad crosses the 20 mile radius line from Beckley, and runs from Hinton, West Virginia, to Glade, West Virginia.”

 

Exhibit C-1 – page 64

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SCHEDULE D

Territories

The geographic areas described below define the Territory subject to the terms and conditions of the Agreement.

IN THE STATE OF WEST VIRGINIA:

In the City of Northfork, West Virginia, Welch, West Virginia, Bluefield, West Virginia, and all points in McDowell and Mercer Counties, West Virginia, also, all points in Tazewell County, Virginia.

IN THE STATE OF VIRGINIA:

That part of Bland, County Virginia, north and west of a line drawn in a north and eastwardly direction from, the point where state Highway #623 intersects the boundary line between Bland and Tazewell Counties through a point one and one-half (1/1/2) miles north of the town of Bland; thence in a straight line to a point on the boundary line between Bland and Giles Counties, Virginia.

 

 

Exhibit C-1 – page 65

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Charleston, WV Territory

SCHEDULE D

Territories

The geographic areas described below define the Territory subject to the terms and conditions of the Agreement.

“In the City of Charleston, West Virginia at all points along the line of the Chesapeake & Ohio R.R. from Hurricane to Hinton, West Virginia, that are not within twenty (20) miles of Beckley, West Virginia, including Hurricane, West Virginia; at all points on the Kanawha River and the K. & M. R.R. within fifty (50) miles of Charleston, and at all other points in the State of West Virginia within fifty (50) miles of said city that are not within fifty (50) miles of the City of Parkersburg, West Virginia, nor within fifty (50) miles of Catlettsburg, Kentucky, and not within twenty (20) miles of Beckley, West Virginia. Logan County, West Virginia is entirely excluded from this contract. All points on Paint Creek from Hickory Camp to Kingston, both inclusive, and all points on Cabin Creek are included in this contract, but all points on the C. & O. R. R. from and including Kaymoor to Keeneys Creek Station and all points on the Keeneys Creek branch of the C. & O. R. R. from Keeneys Creek Station East to the Fayette County line are specifically excluded."  (All references to counties, towns, railroads, etc., referred to above are as same existed on November 1, 1921.)

“In the City of Parkersburg, W. Va., and in all the territory within fifty (50) miles from said City, except the following territory, which is definitely excluded from this contract:  All points within twenty-five (25) miles of Zanesville, Ohio; all points in Guernsey County, Ohio; that part of Noble County, Ohio, lying north of a direct east and west line drawn across said county through a point one mile south of the city limits of the City of Caldwell in Noble County, Ohio; the following townships in Vinton County, Ohio, viz: Vinton and Wilksville; that part of Clinton township that is within fifty (50) miles of Parkersburg, W. Va., (but not eliminating the town of Dundas); the townships of Morgan and Springfield in Gallia County, Ohio; that part of Huntington, Raccoon, Perry and Green townships in Gallia County, Ohio, that is within fifty (50) miles of Parkersburg, W. Va.; the town of Salem Center in Meigs County, Ohio; that part of Milton township, in Jackson County, Ohio, that is within fifty (50) miles of Parkersburg, W. Va.; that part of Belmont County, Ohio, that is within fifty (50) miles of Parkersburg, West Virginia.

The following territory is included as a part of this contract:  All of Swan and Elk townships in Vinton County, Ohio. All of Monroe County, Ohio. That part of Wetzel County, West Virginia, that is more than fifty (50) miles from Parkersburg, with the exception of Clay and Church Districts. That part of Doddridge County, W. Va., and that part of Tyler County, W. Va., more than fifty (50) miles from Parkersburg, W. Va., and not more than fifty (50) miles from Wheeling, W. Va.”

THAT PART OF LINCOLN COUNTY, WEST VIRGINIA BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:

“That part of Lincoln County lying East of a line drawn as follows:  Beginning at a point on the Putnam-Lincoln County line approximately one and three-quarters (1-3/4) mile west of Garretts Bend Post Office and two and one-quarter (2-1/4) miles southwest of the intersection of Kanawha, Putnam and Lincoln Counties; thence in a southeasterly direction to a point on West Virginia Primary Road #14 approximately one-quarter (1/4) mile west of Sod Post Office (Sod Post Office being located at the intersection of Primary Road #14 and Secondary Road #14); thence to a point on the Lincoln-Boone County line to a point one (1) mile south of Alkol, W. Va., where latitude 85° 55 minutes crosses said line.”

Exhibit C-1 – page 66

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Pikeville, Kentucky Territory:

“In the the City of Pikeville, Kentucky, and all points in Floyd County, Kentucky, and Pike County, Kentucky, that are south of a line drawn due east and west through a point one mile south of the town of Prestonburg in Floyd County, provided that none of said territory is within fifty miles of Bristol, Va., Middlesboro, Ky., or Winchester, Ky.

It is agreed that all points within seven and one-half (7-1/2) miles of the boundary line between Pike County, Ky., and the West Virginia state line are specifically excepted from this contract”.

Williamson, West Virginia Territory:

“In the City of Williamson, W. Va., and that part of Mingo County, W. Va., lying south of a line drawn due east and west across said county through a point two miles north of Nolan, W. Va.; also that part of Pike County, Ky., within five miles of the boundary line between the States of Kentucky and West Virginia”.

“In the City of Logan, West Virginia, and all points in Logan County, West Virginia, that are not within twenty (20) miles of Beckley, West Virginia.”

Exhibit C-1 – page 67

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EXCLUDED FROM THE ABOVE TERRITORY IS THE FOLLOWING:

IN THE STATE OF WEST VIRGINIA:

In the City of Sistersville, W. Va., and that part of Wetzel County, W. Va., that is within fifty (50) miles of Parkersburg, W. Va.; that part of Tyler County, W. Va., lying north of a direct line drawn across said county from and including the town of Wick to Piney (in Wetzel County); that part of Pleasants County, W. Va., north of a line drawn through the town of St. Marys, including St. Marys. Also that part of Monroe County, Ohio, that is within fifty (50) miles of the city of Parkersburg, W. Va.

It is understood and agreed that this does not include any point that is more than fifty (50) miles from the city of Parkersburg, W. Va.

(All points referred to are as the same existed on February 1, 1951.)

AND ALSO:

That part of Wetzel County, West Virginia that is more than fifty (50) miles from Parkersburg, with the exception of Clay and Church Districts.

(All points referred to are as the same existed on February 5, 1952).

AND ALSO:

That part of Monroe County, Ohio, that is more than fifty (50) miles from Parkersburg, W. Va.

(All points referred to are as the same existed on May 12, 1952.)

Excluded from the above territory by amendment dated September 29, 2000:

All of the licensed bottling territory within the Commonwealth of Kentucky, being included in the description above.

All of the licensed bottling territory within the State of Ohio being included in the description above.

As further clarification, the boundary of the licensed bottling territory will follow the Ohio and Kentucky state lines as they border the states of Virginia and West Virginia.

Exhibit C-1 – page 68

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SCHEDULE D

Territories

The geographic areas described below define the Territory subject to the terms and conditions of this Agreement.

In the City of Clarksburg, West Virginia, and all the territory in said State of West Virginia within fifty (50) miles of said City of Clarksburg, except such territory as may be within fifty (50) miles of either the cities of Wheeling, Parkersburg or Charleston, West Virginia, or Cumberland, Maryland; except also, all points in Marion and Tucker counties, West Virginia; except also all points in Randolph County, West Virginia, that are north of a line drawn due east and west from-the western boundary line of Randolph County through the town of Adolph, and east of a direct line drawn from Adolph, Randolph County, to Samp in Webster County.  The following territory is also specifically excepted from this contract, to wit:  All points in Monongalia and Preston counties.

Including, - All points in Webster County, West Virginia; all points in Nicholas and Braxton Counties, West Virginia, except points that are within an air line distance of fifty (50) miles of the cities of Charleston or Parkersburg, West Virginia.

AND ALSO:

That part of Harrison County, West Virginia, within fifty (50) miles of Wheeling, West Virginia.

AND

In the City of Morgantown, West Virginia, and all points in Monongalia County, West Virginia, also the following towns, and all points west thereof, to wit: Gladesville, Reedsville, Browns Mills, Bretz, Masontown and Cascade, all of said points being in Preston County, West Virginia.

Clay and Church Districts in Wetzel County, West Virginia.

In the City of Waynesburg, Pennsylvania, and all points in Greene County, Pennsylvania.

Exhibit C-1 – page 69

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SCHEDULE D

Territories

The geographic areas described below define the Territory subject to the terms and conditions of the Agreement.

IN THE STATE OF WEST VIRGINIA:

In the cities of Elkins and Thomas, West Virginia; all points in Tucker County, West Virginia, except those listed below, and all points in Randolph County, West Virginia, except that part of Randolph County lying south of a line drawn due east and west from the town of Adolph to the western boundary line of said county, and west of line drawn direct from the town of Adolph, Randolph County, to Samp, Webster County, West Virginia.

This contract also includes points in Grant County, West Virginia, on the Western Maryland Railroad from and including the town of Bayard south to the Tucker County line.

Excluded from the above is that part of Tucker County, West Virginia, lying north of a direct east and west line drawn across said County through the town of Davis; also that part of Grant County, West Virginia, lying along the Western Maryland Railroad from and including the town of Bayard south to the Tucker County line.

The town of Parsons, West Virginia is to remain in territory, while the town of Davis, West Virginia is excluded.

Exhibit C-1 – page 70

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SCHEDULE D

Territories

The geographic areas described below define the Territory subject to the terms and conditions of this Agreement.

In the City of Huntington, W. Va., and all territory in the following counties in West Virginia: Cabell, Logan, McDowell, Mercer, Mingo and Wayne. That part of Lincoln County lying west of a line drawn as follows:  Beginning at a point on the Putnam-Lincoln County line approximately one and three-quarters (1-3/4) mile west of Garretts Bend Post Office and two and one-quarter (2-1/4) miles southwest of the intersection of Kanawha, Putnam and Lincoln Counties; thence in a southeasterly direction to a point on West Virginia Primary Road #14 approximately one-quarter (1/4) mile west of Sod Post Office (Sod Post Office being located at the intersection of Primary Road #14 and Secondary Road #14); thence to a point on the Lincoln-Boone County line to a point one (1) mile south of Alkol, W. Va., where latitude 85° 55 minutes crosses said line. That part of Mason County not within a radius of fifty (50) miles of Parkersburg; that part of Putnam County within one-half (1/2) mile of the C & O Railroad from the Cabell-Putnam County line to, but not including Hurricane as it existed in 1921.

In the State of Ohio:  All of the territory in the following counties:  Lawrence, Scioto, Pike, and Jackson.  In Vinton County, the following townships:  Vinton, Wilkesville and Clinton Townships, except the town of Dundas (as Dundas existed in 1932).  In Meigs County, the town of Salem Center only (as Salem Center existed in 1932).  In Adams County, the following townships:  Green, Jefferson, Meigs, Franklin, Sprigg, Monroe, Tiffin, Oliver and Bratton.  In Highland County, Brush Creek Township.  In Ross County, Paxton Township. In Gallia County, the following townships:  Guyan, Ohio, Harrison, Walnut, Greenfield, Perry, Green, Raccoon, Springfield, Huntington and Morgan, and that part of Clay Township not within (50) miles of Parkersburg, W. Va.

In the State of Virginia:  All points in Tazewell County.

That part of Bland County, Virginia, north and west of a line drawn in a north and eastwardly direction from the point where State Highway #623 intersects the boundary line between Bland and Tazewell Counties through a point one and one-half (1-1/2) mile north of the town of Bland; thence in a straight line to a point on the boundary line between Bland and Giles Counties, Va.

In the State of Kentucky: All of the territory in the following counties:  Pike, Floyd, Martin, Johnson, Lawrence, Elliot, Carter, Boyd, Greenup and Lewis.  That part of Mason County, Kentucky, that is within five (5) miles of the Ohio River beginning at a point on said river five (5) miles east of the City of Maysville, Kentucky (as said city existed in 1921) continuing eastwardly to the Mason-Lewis County line.

EXCLUDED FROM THE ABOVE IS THE FOLLOWING:

The following territory in West Virginia, to wit: all points along and west of the Norfolk & Western Ry. beginning at a point two miles south of Wayne, Wayne County, W. Va.; and following the line of the Norfolk & Western Ry. to a point two miles north of Nolan, W. Va., but not including any point that may be more than five miles east of said line of the N. & W. Ry. running from said point two miles south of Wayne to said point two miles north of Nolan, W. Va.

In the City of Williamson, W. Va., and that part of Mingo County, W. Va., lying south of a line drawn due east and west across said county through a point two miles north of Nolan, W. Va.

In the City of Logan, West Virginia, and all points in Logan County, West Virginia, that are not within twenty (20) miles of Beckley, West Virginia.

Exhibit C-1 – page 71

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In the City of LOUISA, KENTUCKY and all points in Lawrence and Johnson Counties, Ky.; that part of Floyd Co., Ky. lying north of a line drawn due east and west across said county through a point one mile south of Prestonburg, Floyd Co. Ky.; that part of Martin County, Ky. lying west of a direct line drawn from Davella, Martin County, Ky. to Steele, Pike County, Ky.; also that part of Martin County lying north of a direct line drawn due east and west from Davella, Ky. to a point two miles north of Nolan, W. Va.

In the City of Pikeville, Kentucky, and all points in Floyd County, Kentucky, and Pike County, Kentucky, that are south of a line drawn due east and west through a point one mile south of the town of Prestonburg in Floyd County, provided that none of said territory is within fifty miles of Bristol, Va., Middlesboro, Ky., or Winchester, Kentucky.

It is agreed that all points within seven and one half (7-1/2) miles of the boundary line between Pike County, Ky., and the West Virginia state line are specifically excepted from this contract.

That part of Pike County, Ky., within five miles of the boundary line between the States of Kentucky and West Virginia.

Exhibit C-1 – page 72

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SCHEDULE D

Territories

The geographic areas described below define the Territory subject to the terms and conditions of the Agreement.

 

IN THE STATE OF WEST VIRGINIA:

All points in Pocahontas County, West Virginia.

Exhibit C-1 – page 73

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EXECUTION COPY

ASSET ACQUISITION AGREEMENT

THIS AGREEMENT is executed and delivered this 29th day of September, 2000, by and among THE COCA-COLA BOTTLING COMPANY OF WEST VIRGINIA, INC., a West Virginia corporation ("CCBCWV"), COCA-COLA BOTTLING COMPANY OF ROANOKE, INC., a Delaware corporation ("CCBCR") (CCBCWV and CCBCR are sometimes referred to herein collectively as "Sellers" and individually as a "Seller") and COCA-COLA ENTERPRISES INC., a Delaware corporation ("Enterprises").

IN CONSIDERATION of the representations, warranties, covenants and agreements contained in this Agreement, the parties, intending to be legally bound, hereby agree as follows:

ARTICLE I

PURCHASE OF ASSETS AND RIGHTS

LIABILITIES EXCLUDED AND ASSUMED

1.01      Purchased Assets.

(a)At the Closing (as defined in Section 7.01), subject to the terms and conditions of this Agreement, Sellers shall sell, assign, convey, transfer, and deliver to Enterprises, and Enterprises shall purchase, accept and acquire from Sellers, the Purchased Assets (as defined below), consisting of certain assets of Sellers relating to their businesses of distributing carbonated and non-carbonated soft drinks and packaged water within the portions of the states of Ohio and Kentucky in which such distributions are made pursuant to the Master Bottle Contract between The Coca-Cola Company, a Delaware corporation ("The Coca-Cola Company") and Coca-Cola Bottling Works of Charleston, Inc., dated December 31, 1986; the Master Bottle Contract between The Coca-Cola Company and Coca-Cola Bottling Works of Charleston, Inc. (Huntington, WV Territory), dated December 31, 1986; and the Master Bottle Contract between The Coca-Cola Company and Lonesome Pine Coca-Cola Bottling Company dated January 27, 1989 (collectively, the "Territory").  As further clarification, the Territory's boundary will follow the Ohio and Kentucky state lines as they border the states of Virginia and West Virginia.

(b)As used in this Agreement, the term "Business" refers only to the businesses of Sellers conducted within the Territory.

(c)The "Purchased Assets" shall consist collectively of all right, title and interest of Sellers in and to:

Exhibit C-1 – page 74

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Lexington, KY Territory

 

Exhibit C-1 – page 75

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Exhibit C-1 – page 76

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EXHIBIT C-2

 

Sub-Bottling Territory

 

Johnson City/Morristown Subterritory:

 

Exhibit C-2 – page 1

 

Classified - Confidential

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