[LETTERHEAD OF THE COCA-COLA COMPANY]
August 22, 2001
Mr. Charles S. Frenette
Atlanta, Georgia
Dear Charlie:
This letter outlines the terms under which you will separate from
The Coca-Cola Company (the Company). You have resigned as
Executive Vice President of The Coca-Cola Company and as President
and Chief Operating Officer, Europe, Eurasia and Africa Group of
The Coca-Cola Export Corporation, effective immediately. You have
agreed to remain an employee of The Coca-Cola Company at your total
current rate of annual base salary as set by the Compensation Committee
("Base Salary") until October 31, 2001, (the "Separation Date").
The Board of Directors has accepted your resignation and the terms and
conditions described in this letter have been approved by the
Compensation Committee (or the appropriate Subcommittee) of the
Board.
Your repatriation to Atlanta, Georgia will be effective October 1, 2001.
Effective with your Separation Date, you will receive a lump sum payment
of two years Base Salary. Payments will be offset by all salary
continuation, severance payments and any other applicable payments due
to you as a result of your separation under the laws of any country.
You are eligible for a prorated Annual Incentive for 2001, payable in 2002,
based upon your performance and after results are certified under the
terms of the Executive Performance Incentive Program and the Executive
Incentive Plan.
You will also be paid prorated payments for performance periods in
progress under the Long Term Incentive Plan after results are certified,
according to plan terms.
Both annual incentive and LTI payments will be subject to applicable taxes
and may be subject to hypothetical tax withholdings. These payments will
be certified at the same time as awards for other officers (in February
2002) and paid to you within sixty (60) days after the awards are certified
under the terms of the plan, but in no event later than March 31, 2002.
Mr. Charles S. Frenette
Atlanta, Georgia
August 22, 2001
Page 2
As soon as reasonably practical after your Separation Date, you will also
receive a payment of $1,500,000.
Related to your stock option grants, the following actions will be taken,
effective with your separation:
- The retention grant made in February 2000 will be forfeited.
- Options granted before 1997 are vested and will remain exercisable
according to their terms (i.e., six months to exercise after your
Separation Date).
- Options granted after 1996 will fully vest on your Separation Date and
will remain exercisable for the seven-year period beginning on the
Separation Date, unless the original term of option expires earlier.
In exchange for the treatment of your options as noted above, your option
agreements for the grant made in May 2001 is hereby amended as
follows:
"1 (a) (v) Notwithstanding anything to the contrary contained herein, in
the event that you should disparage the Company, its officers or employees
this option will be forfeited. Disparagement means negative oral statements
to the media which can be accurately demonstrated in fact to be
attributable to you or negative statements in publications which can be
accurately demonstrated in fact to be attributable to you."
Restrictions on your 72,500 shares of restricted stock will be released as of
your Separation Date, and shares will be delivered as soon as reasonably
practicable thereafter. The performance award, which could have resulted in a
future award of 125,000 restricted shares, will be forfeited.
Mr. Charles S. Frenette
Atlanta, Georgia
August 22, 2001
Page 3
Your retirement benefits will consist only of those benefits already vested. As
soon as reasonably practicable after the Separation Date you will receive a lump
sum distribution of your Thrift Benefit under the Supplemental Plan according to
the terms of that plan. Also, your account in the Compensation Deferral and
Investment Program will be deferred in accordance with your irrevocable election
until you reach age 55, less elected early payments. At that time, you will
begin to receive monthly income from that program until age 80. Subject to your
elections and the terms and conditions of such plans, you will receive your
other vested benefits in the Thrift and Investment Plan, the Employee Retirement
Plan and the Supplemental Benefit Plan. You have been provided with a separate
letter detailing your vested pension and CDIP payments.
While you remain on payroll, your current benefits coverage will continue. The
Company will reimburse you for the cost of COBRA continuation of benefit
coverage for you, your spouse and your eligible dependents until the earlier of
the eighteen-month anniversary of your Separation Date or your obtaining
employment that provides medical coverage.
TAXES
-----
You are entitled to a consultation with Ernst & Young, at no cost to you, to
discuss the implications of your repatriation and the Company's tax equalization
program. The Company will provide tax preparation through the services of Ernst
& Young for the current year's tax returns. You will remain in the tax
equalization program for the year of repatriation, and for 2002, if the annual
incentive or LTI payments described above are taxable in the UK or to collect
foreign tax credits. The Company will determine whether you remain in the tax
equalization program for subsequent years, in order to collect foreign tax
credits. As long as you are retained in the tax equalization program, the
Company will have Ernst & Young prepare your tax returns at Company expense.
However, you may be required to pay estimated U.S. federal and state taxes on
your income.
Mr. Charles S. Frenette
Atlanta, Georgia
August 22, 2001
Page 4
TAXES (Continued)
-----------------
Payments made under this agreement after your repatriation date will be subject
to applicable federal, state and local tax withholding and any estimated tax
due. Any UK tax on payments (excluding annual incentive and LTI as noted above)
under this agreement that arises due to i) your decision to remain in or return
to the UK following your repatriation date and/or ii) your bringing funds into
the UK is solely your responsibility, except that the Company will pay any
incremental UK tax on a reasonable amount (not to exceed 6,000 British pounds
per month) that is brought into the UK to cover living expenses through July
2002.
Should you exercise any stock options prior to your repatriation date, such
exercises will be subject to hypothetical tax withholding. When you exercise
stock options following your repatriation date, appropriate federal, state and
local tax will be withheld, and you will be personally liable for paying any
estimated federal, state or local taxes.
The manner in which hypothetical tax withholding and tax equalization works is
described in the International Service Program Guide.
INTERNATIONAL SERVICE PROGRAM
-----------------------------
You have received a letter outlining the allowances and payments under the
International Service Program. In addition to those normal plan allowances, the
following exceptions to policy have been approved for you:
1) Your family will continue to be provided schooling and housing and other
appropriate expatriate provisions, including host country, utility and
automobile allowances, through the end of the 2001 - 2002 school year in
London. You will be grossed up for any incremental tax (after reduction for
applicable credits and exclusions) related to these allowances. This is
contingent upon your family meeting applicable legal requirements to remain
in the UK.
Mr. Charles S. Frenette
Atlanta, Georgia
August 22, 2001
Page 5
INTERNATIONAL SERVICE PROGRAM (Continued)
-----------------------------------------
2) Upon your return to the United States, Home Purchase Assistance will be
provided and Home Sale Assistance (both described in the International
Service Program Guide) of your Atlanta condominium, if it is sold.
RELEASE AND AGREEMENT ON CONFIDENTIALITY AND COMPETITION
--------------------------------------------------------
The terms and conditions in this letter are contingent upon your signing
this letter and executing the attached Full and Complete Release and Agreement
on Confidentiality and Competition.
We appreciate your long and loyal service on behalf of
The Coca-Cola Company.
On behalf of the Board,
/s/ Cathleen P. Black /s/ James E. Chestnut
-------------------------------- ----------------------------
Cathleen P. Black James E. Chestnut
Chairman, Compensation Committee Executive Vice President
The Board of Directors of The Coca-Cola Company
The Coca-Cola Company
Agreed and accepted this 29th day of August, 2001
/s/ Charles S. Frenette
--------------------------------
Charles S. Frenette
FULL AND COMPLETE RELEASE AND
AGREEMENT ON CONFIDENTIALITY AND COMPETITION
In consideration of the benefits provided by The Coca-Cola Company as set
forth in the letter agreement dated August 22,2001, the sufficiency of which is
hereby acknowledged, Charles S. Frenette ("Employee") and The Coca-Cola Company
agree as follows:
Section 1. Full and Complete Release.
-------------------------------------
1.1. Employee, for himself, his heirs, executors, administrators and
assigns remises, releases and forever discharges The Coca-Cola Company and
its subsidiaries (collectively, the "Company"), and their respective
directors, officers and employees of and from all debts, claims, actions,
causes of actions (including, but not limited to, the Employee Retirement
Income Security Act of 1974, as amended, 29 U.S.C., Section 1001, et. seq.,
and those federal, state and foreign laws prohibiting employment
discrimination based on age, sex, race, color, national origin, religion,
handicap or veteran status such as the Age Discrimination in Employment
Act, 29 U.S.C. Section 621 et seq., as amended by the Older Workers Benefit
Protection Act, P.L. 101-433; Equal Pay Act of 1963, 9 U.S.C. Section 206
et seq.; Title VII of The Civil Rights Act of 1964, as amended, 42 U.S.C.
2000e et seq.; the Civil Rights Act of 1866, 42 U.S.C. 1981; Americans with
Disabilities Act, 42 U.S.C. 12101, et seq., Rehabilitation Act of 1973, 29
U.S.C. Section 791 et seq.; the Family and Medical Leave Act, 28 U.S.C.
2601 and 2611 et seq., the Georgia Age
Discrimination Act, Ga. Code Ann. 34-1-2; the Georgia Fair Employment
Practices Act of 1978, Ga. Code Ann. 45-19-20 et seq.; and the Georgia
Equal Employment for the Handicapped Code, Ga. Code Ann. 34-6A-1 et seq.),
suits, dues, sums of money, accounts, reckonings, covenants, contracts,
claims for attorneys' fees, controversies, agreements, promises and all
liabilities of any kind or nature whatsoever, at law, in equity, or
otherwise which he ever had, now has, or which he, his heirs, executors,
administrators and assigns hereafter can, shall or may have, from the
beginning of his employment through the date he executes this Agreement,
including those associated with his employment and separation from
employment with the Company.
1.2. The Company represents and warrants that it is not aware of any
claims, other than receivables for taxes in the ordinary course of an
International Services Associate relationship, that it has against Employee
as of the date hereof.
1.3. Wherein Employee's spouse, child or other immediate family member
makes any claim for loss of consortium, or any other similar claim,
arising out of the employment relationship between the parties and its
termination thereof, Employee will indemnify and hold the Company harmless
from any liability, including costs and expenses (as well as reasonable
attorneys' ees) incurred by the Company as a result of any such claim.
2
1.4. Employee understands and agrees:
(a) No rights or claims are waived that may arise after the date
Employee executes this Agreement;
(b) Employee is advised to consult with an attorney prior to
executing this Agreement;
(c) Employee has 21 days from the receipt of this Agreement within
which to consider the Agreement;
(d) Employee has 7 days following the execution of this Agreement to
revoke the Agreement; and
(e) The Agreement shall not become effective or enforceable until the
revocation period of 7 days has expired.
1.5. It is additionally understood and agreed that this Agreement is not
and shall not be construed to be an admission of liability of any kind on
the part of the party or parties hereby released.
Section 2. Trade Secrets and Confidential Information.
------------------------------------------------------
2.1. Employee will hold in confidence all trade secrets and confidential
information of the Company that came into his knowledge during his
employment with the Company and shall not disclose, publish or make use of
at any time after the date Employee executes this Agreement such trade
secrets or confidential information without the prior written consent of
the Chairman of the Board of Directors of The Coca-Cola Company.
3
2.2. The terms and conditions of this Agreement and the accompanying Letter
Agreement dated August 22, 2001 (the "Letter Agreement") are deemed to be
confidential in nature and neither Employee nor his agents, employees,
representatives, or attorneys will divulge any of the terms and conditions
of these documents to anyone, other than legal, tax and financial advisors.
Section 3. Nondisparagement.
---------------------------------
Employee will not disparage the Company, its subsidiaries, or its officers
or employees. The Company will not disparage Employee. "Disparagement" means a
negative oral statement to the media that can be accurately demonstrated in fact
to be attributable to Employee or the Company (as applicable) or negative
statements in publications that can be accurately demonstrated in fact to be
attributable to Employee or the Company (as applicable).
Section 4. Non Compete and Non Solicitation.
--------------------------------------------
4.1. NON COMPETE. Employee hereby covenants with the Company that he will
not, without the prior written consent of the Chairman of the Board of
Directors of The Coca-Cola Company, either directly or indirectly, for
himself or on behalf of or in conjunction with any other person, company,
partnership, corporation, business, group or other entity, engage, as an
officer, director, owner, partner, member, joint venture, or in any other
capacity, whether as an employee, independent contractor, consultant,
advisor or sales representative:
4
(a) until October 31, 2003, in any business engaged in the
manufacture, sale or distribution of Non-alcoholic Beverages; or
(a) [sic] until October 31, 2004, in performing services for PepsiCo
or its subsidiaries (including but not limited to Pepsi Bottling
Group).
Notwithstanding the foregoing, Employee may:
--------------------------------------------
(i) perform services for any company (other than PepsiCo or its
subsidiaries, including but not limited to Pepsi Bottling
Group), which has a Competing Business Segment, provided
that Employee does not perform services directly for such
Competing Business Segment, and provided Employee notifies
the Chairman of the Board of Directors of The Coca-Cola
Company of the nature of such services (to the extent
consistent with any confidentiality or non-disclosure
obligations Employee may have) in writing prior to beginning
such services;
(ii) perform services for any entity which has an affiliation or
commercial relationship with the Company, provided Employee
notifies the Chairman of the Board of Directors of The
Coca-Cola Company of the nature of such services (to the
extent consistent with any confidentiality or non-
disclosure obligations Employee may have) in writing prior
to beginning such services; or
5
(iii) have an ownership interest in any company engaged in the
manufacture, sale, or distribution of Non-alcoholic
Beverages, provided he is not performing services therefor.
For purposes hereof:
--------------------
"Competing Business Segment" means any segment of the business of
a company which manufactures, sells or distributes Non-alcoholic
Beverages; and "Non-Alcoholic Beverages" means ready to drink,
shelf-stable carbonated soft drinks, coffee, tea, water or
fruit-based beverages
4.2. NON SOLICITATION. Employee hereby covenants with the Company that he
will not, until October 31, 2004, without the prior written consent of the
Chairman of the Board of Directors of The Coca-Cola Company, solicit or
attempt to solicit for employment for or on behalf of any corporation,
partnership, venture or other business entity any person who, on the last
day of Employee's employment with the Company or within 12 months prior to
that date, was employed by the Company or its direct or indirect
subsidiaries as a manager or executive and with whom Employee had material
contact during the course of his employment with the Company (whether or
not such person would commit a breach of contract).
6
Section 5. Reasonable and Necessary Restrictions.
-------------------------------------------------
5.1 Employee acknowledges that during the course of his employment with the
Company he has received or will receive and has had or will have access to
confidential information and trade secrets of the Company, including but
not limited to confidential and secret business and marketing plans,
strategies, and studies, detailed client/customer lists and information
relating to the operations and business requirements of those
clients/customers and, accordingly, he is willing to enter into the
covenants contained in this Agreement in order to provide the Company with
what he considers to be reasonable protection for its interests.
5.2 Employee acknowledges that the restrictions, prohibitions and other
provisions hereof, are reasonable, fair and equitable in scope, terms and
duration, are necessary to protect the legitimate business interests of the
Company. Employee covenants that he will not challenge the enforceability
of this Agreement nor will he raise any equitable defense to its
enforcement.
Section 6. Severability.
-------------------------
If fulfillment of any provision of this Agreement, at the time such
fulfillment shall be due, shall transcend the limit of validity prescribed by
law, then the obligation to be fulfilled shall be reduced to the limit of such
validity; and if any clause or provision contained in this Agreement operates or
would operate to invalidate this Agreement, in whole or in part, then such
clause or provision only shall be held ineffective, as though not herein
contained, and the remainder of this Agreement shall remain operative and in
full force and effect.
7
Section 7. Indemnification.
----------------------------
To the fullest extent permitted by law, the Company shall indemnify
Employee (including the advancement of expenses) for any judgments, fines,
amounts paid in settlement and reasonable expenses, including attorneys fees,
incurred by Employee in connection with the defense of any lawsuit or other
claim for which the Employee is made a party by reason of his being an officer,
director or employee of the Company or any of its subsidiaries or as a result of
Employee being a director, at the Company's request, of any company in which the
Company has an equity interest, including without limitation, any such matters
which arise after Employee's separation. Through December 31, 2001 and for at
least three years thereafter, the Company shall use its reasonable best efforts
to maintain customary director and officer liability insurance covering Employee
for acts and omissions during the period he was employed by the Company.
Section 8. Dispute Resolution.
------------------------------
All controversies, claims or disputes arising out of or related to this
Agreement or the Letter Agreement shall be settled in Atlanta, Georgia, under
the rules of the American Arbitration Association then in effect, and judgment
upon such award rendered by the arbitrator(s) may be entered in any court of
competent jurisdiction. The arbitrators fees shall be split equally among the
parties. In the event that the Company and Employee enter into arbitration,
based upon the Company's assertion that Employee has violated his
non-disparagement obligations in the Letter Agreement, the Company will
reimburse Employee for all reasonable attorneys fees expended during the course
of the arbitration.
8
Section 9. Governing Law.
--------------------------
This Agreement and the accompanying Letter Agreement are the complete
understanding between Employee and The Coca-Cola Company in respect of the
subject matter of this Agreement and supersede all prior agreements relating to
the same subject matter. Employee acknowledges that he has not relied upon any
representations, promises or agreements of any kind except those set forth
herein and in the accompanying Letter Agreement in signing this Agreement.
Employee has read and reviewed this Agreement, fully understands it and
voluntarily signs same.
Date: 27/08/01
/s/ Charles S. Frenette
--------------------------------------
Charles S. Frenette
The Coca-Cola Company
/s/ James E. Chestnut
--------------------------------------
James E. Chestnut
Executive Vice President
9
Severance Agreement - Coca-Cola Co. and Charles S. Frenette
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