EXHIBIT 10.8
THE COCA-COLA BOTTLING GROUP (SOUTHWEST), INC.
MANAGEMENT INCENTIVE AGREEMENT
This Management Incentive Agreement ("Agreement") is entered by and among
The Coca-Cola Bottling Group (Southwest), Inc. (the "Company"), Texas Bottling
Group, Inc., Coca-Cola Bottling Company of the Southwest "Employer") and E.T.
SUMMERS, III ("Manager"), effective January 1, 1997.
RECITALS
A. The Company desires to retain the services of certain key managers and
to encourage key managers to seek to attain the financial goals of the Company
through creativity, innovation and good management practices;
B. The Company measures its business success in part by setting financial
goals and evaluating efforts to meet financial goals by increasing revenue and
controlling expenditures;
C. The Company has established a Management Incentive Plan, recorded in
the minutes of the Board of Directors of the Company and expressed in this
Agreement and in similar Agreements with certain other key managers, to
encourage superior long-term performance by key managers of the Company,
Employer and other subsidiary operations of the Company through payments of cash
awards based on the Company's performance during the three-year period from
January 1, 1997 through December 31, 1999; and
D. Manager is currently employed with Employer in a key leadership
position.
AGREEMENT
1. PAYMENT OF BONUS. If Manager qualifies to receive a cash award
pursuant to this Agreement, two-thirds of the Award Payable (defined in Section
2(c) below) will be paid to Manager on March 1, 2000, and one-third of the Award
Payable will be paid to Manager on March 1, 2002. Payments under this Agreement
will be made by Employer, unless Manager has transferred to a position with the
Company or another subsidiary of the Company prior to the payment date, in which
case the Award Payable will be prorated among the employers of the Manager
during the Performance Period on the basis of months worked for each affected
employer.
2. DEFINITIONS.
a. "Cash Flow" is based on the audited financial information of the
Company for each fiscal year in any Performance Period and is determined by
adding the following
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items on the Statement of Operations for Southwest Coca-Cola Bottling
Company, Inc. and Texas Bottling Group, Inc. for the year ended on December
31 of each such year: consolidated net income, income taxes paid or accrued,
interest expense net of interest income, depreciation, amortization,
accruals for Awards under this Plan, and other non-cash charges to the
extent deducted in calculating consolidated net income.
b. "Actual Cash Flow" is Cash Flow as certified to the Board of
Directors of the Company by the Chief Financial Officer of the Company for
purposes of the Plan and this Agreement.
c. "Cash Flow Threshold" is $340,000.000.00.
The Cash Flow Threshold may be adjusted by the Board of Directors of the
Company to incorporate anticipated increases in Cash Flow resulting from the
expansion of the Company's business through acquisition of any other business by
the Company, Employer or Texas Bottling Group, Inc., or conversely to
incorporate decreases in cash flow resulting from divestiture or significant
increases in expenditures not foreseeable on the effective date of this
Agreement. Any change in the Cash Flow Threshold must be approved by the Board
of Directors of the Company prior to the end of the Performance Period. The
Board of Directors of the Company is not required to make any adjustment in the
Cash Flow Threshold, but may take such action in its sole discretion. Any such
change in the Cash Flow Threshold will be effected by written notice to Manager
prior to the end of the Performance Period setting forth the amended Cash Flow
Threshold.
d. "Award" is $200,000.00.
e. "Award Payable" will be calculated by multiplying the Award by the
percentage determined by the following formula (the "Award Formula"):
Percentage = Lesser of y or z, where
y = 150% and
z = Actual Cash Flow - Threshold Cash Flow x 100% + 50%
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$40,000,000
3. REQUIREMENTS TO QUALIFY FOR THE AWARD. To be qualified to receive
the Award Payable, Manager must have been continuously employed by the
Employer, the Company or Southwest Coca-Cola Bottling Company, Inc. during
the Performance Period in his present position or another key management
position, and still actively employed on March 1, 2000 to receive the first
installment, and on March 1, 2002 to receive the second installment. The only
exceptions to these requirements are described in Paragraphs 4, 5, 6 and 7.
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4. RESIGNATION DUE TO DISABILITY. If Manager fails to meet the
requirements of Paragraph 3 above because he has resigned from employment with
Employer, the Company or Southwest Coca-Cola Bottling Company, Inc. after the
Performance Period ends, but prior to a payment date due to a condition which
meets the definition of "disability" in the Company's Long Term Disability
Insurance Policy or is on medical leave, Manager will receive the Award Payable
as provided in this Agreement. If Manager's resignation due to disability occurs
prior to the end of the Performance Period, the Board of Directors may waive the
"continuous employment" requirement and prorate the Award Payable based on the
ratio of the number of months within the Performance Period in which Manager was
actively employed to the 36 months in the Performance Period, and the payment
date of such partial Award Payable may be accelerated in the sole discretion of
the Board of Directors of the Company.
5. RESIGNATION DUE TO RETIREMENT. If Manager fails to meet the
requirements of Paragraph 3 above because he has retired from employment with
Employer, the Company or Southwest Coca-Cola Bottling Company, Inc. after the
Performance Period ends, but prior to a payment date in accordance with the
terms of The Coca-Cola Bottling Group (Southwest), Inc. and Affiliates
Retirement Plan, Manager will receive the Award Payable as provided in this
Agreement. If Manager's resignation due to retirement occurs prior to the end of
the Performance Period, the Board of Directors may waive the "continuous
employment" requirement and prorate the Award Payable based on the ratio of the
number of months within the Performance Period in which Manager was actively
employed to the 36 months in the Performance Period.
6. DEATH OF MANAGER. If Manager dies while actively employed with the
Company, Employer or Southwest Coca-Cola Bottling Company, Inc. after the
Performance Period ends, but prior to a payment date, Manager's estate or
designated beneficiary will receive the Award Payable as provided in this
Agreement. If Manager's death occurs prior to the end of the Performance Period,
the Board of Directors may waive the "continuous employment" requirement and
prorate the Award Payable based on the ratio of the number of months within the
Performance Period in which the Manager was actively employed to the 36 months
within the Performance Period, and the payment date of such partial Award
Payable may be accelerated in the sole discretion of the Board of Directors of
the Company.
7. CHANGE OF MAJORITY OWNERSHIP. If, during the term of this Agreement,
the majority ownership of the stock of the Company and/or the Manager's employer
changes, this Agreement shall terminate, and Manager will receive all or any
remaining portion of an Award Payable from the Company, on or before December 31
of the year in which such change of ownership is consummated. If the Change of
Ownership occurs during the Performance Period, the Award Payable will be
determined using an amended Cash Flow Threshold which proportionally adjusts the
factors to be utilized in calculating the Award Payable. For purposes of this
Paragraph 7 and Paragraph 8 below, a.transfer of stock ownership from a person
or entity which was a shareholder on the date of this Agreement (a "current
shareholder") to a person or entity which is (a) controlled by or under common
control with a current shareholder, (b) a family
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member of a current shareholder, or (c) a trust, partnership or other entity
of which a current shareholder or a family member of a current shareholder is
either a grantor, trustee, beneficiary, owner or holder of an equity or
beneficial interest, will not constitute a Change of Majority Ownership of the
Company, the Employer or, if applicable, the Manager's employer.
8. TERMINATION OF AGREEMENT. This Agreement shall terminate immediately
upon the occurrence of the first of the following events: a) payment of the
entire Award Payable; b) voluntary resignation of the Manager; c) termination of
Manager's employment with the Company, the Employer or Coca-Cola Bottling
Company of the Southwest, for any reason other than death, disability or
retirement (as defined in Paragraphs 5 and 6 above); or Change of Majority
Ownership of the Company or Manager's employer. This Agreement and the benefits
of this Agreement may be assigned by the Company to any corporate successor of
the Company, but may not be assigned, pledged, or otherwise transferred by
Manager.
9. AMENDMENTS. Manager recognizes that the Board of Directors of the
Company may determine in its sole discretion that modification, suspension or
termination of the Plan is in the best interest of the Company, and that the
Plan provides that the Board of Directors may act in its sole discretion to
suspend or terminate the Plan in whole or in part. This Agreement may be amended
by written agreement between the Manager, the Employer and the Company. The
Board of Directors of the Company may also make an amendment to the form of all
Agreements for a specific Performance Period, and such amendment shall be
effective for this Agreement when the majority of Participants who are parties
to Agreements for the same Performance Period consent in writing to such
amendment. The Board of Directors may also unilaterally amend this Agreement if
it amends all Agreements for the same Performance Period in order to correct any
defect, supply any omission or reconcile any inconsistency in the Plan or in the
Awards made thereunder that does not constitute the modification of a material
term of the Plan or this Agreement, or take necessary action to effect legal
compliance of the Plan or this Agreement. If Manager transfers from his position
with Employer to a position with Coca-Cola Bottling Company of the Southwest,
this Agreement will be amended by substituting Southwest Coca-Cola Bottling
Company, Inc. for Employer as a party to this Agreement.
10. NOTICES. All notices given under this Agreement shall be in writing
and shall be deemed to be delivered when actually received or shall be deemed
received upon deposit in the United States mail, registered or certified,
postage prepaid and, if to the Company, addressed to the Company at 1999 Bryan
Street #3300, Dallas, Texas 75201, or if to Manager, at his principal place of
residence.
11. EMPLOYMENT AT WILL. Manager acknowledges that this Agreement is not an
employment agreement, and has no relationship to or effect on the terms of
Manager's employment with the Company. Manager acknowledges and affirms that his
employment with the Company is terminable at will, subject only to compliance
with existing law, by Manager or Manager's employer (whether the Company,
Employer or another subsidiary of the Company) at anytime.
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IN WITNESS WHEREOF, this Management Incentive Agreement is executed this
30th day of June, 1997.
THE COCA-COLA BOTTLING GROUP (SOUTHWEST), INC.
By: /s/ ROBERT K. HOFFMAN
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Its: Co-Chairman
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TEXAS BOTTLING GROUP, INC.
By: /s/ ROBERT K. HOFFMAN
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Its: Co-Chairman
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COCA-COLA BOTTLING COMPANY OF THE SOUTHWEST
By: /s/ ROBERT K. HOFFMAN
------------------------------------
Its: Co-Chairman
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MANAGER
/s/ E. T. SUMMERS, III
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E. T. Summers, III
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