Exhibit 10.74
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.
XXXXXXX, III ("Manager"), effective January 1, 1998.
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
form January 1, 1998 through December 31, 2000; 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, 2001, and one third
of the Award Payable will be paid to Manager on March 1, 2003. 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 Manager during the Performance Period on the basis of months
worked for each affected employer.
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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 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 $309,000,000.00.
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%
--------------------------------------
$23,000,000
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 Xxxxxxxxx
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Xxxx-Xxxx Xxxxxxxx Company, Inc. during the Performance Period in his present
position or another key management position, and still actively employed on
March 1, 2001 to receive the first installment, and on March 1, 2003 to
receive the second installment. The only exceptions to these requirements are
described in Paragraphs 4, 5, 6 and 7.
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 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,
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the Award Payable will be terminated 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 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 it 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 amendments. 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 0000 Xxxxx Xxxxxx #0000, Xxxxxx, Xxxxx 00000, or if to Manager, at his
principal place of residence.
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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 her 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 any
time.
IN WITNESS WHEREOF, this Management Incentive Agreement is executed this
26th day of February, 1998.
THE COCA-COLA BOTTLING GROUP
(SOUTHWEST), INC.
By: /s/ Xxxxxx X. Xxxxxxx
--------------------------
Its: Co-Chairman
--------------------------
TEXAS BOTTLING GROUP, INC.
By: /s/ Xxxxxx X. Xxxxxxx
--------------------------
Its: Co-Chairman
--------------------------
COCA-COLA BOTTLING COMPANY
OF THE SOUTHWEST
By: /s/ Xxxxxx X. Xxxxxxx
--------------------------
Its: Co-Chairman
--------------------------
MANAGER
/s/ E. T. Xxxxxxx, III
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E. T. Xxxxxxx, III
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